UK communications regulator Ofcom will launch a review of BBC Studios after the BBC “reduced the granularity” of its financial reporting for the merged commercial and production divisions.
The government-approved regulatory and competition authority has stated that the BBC has withdrawn its “voluntary commitment” to reporting separate and distinct financials for its production and distribution businesses.
Ofcom was notified in April of changes the BBC had made to the lines of business in how the new BBC Studios would report its financials, including the uniting of five previous lines of business into two.
“The BBC did not engage with stakeholders about the effect of the removal of its commitment and only published a superficial explanation of the reasons for the change,” read a statement from Ofcom’s second annual report into the BBC.
The UK regulator will now consider, as part of its review of BBC Studios, whether the lines of business provide “sufficient transparency” for both Ofcom and the additional stakeholders on the performance of the different activities within BBC Studios.
“This will include whether there should be any changes to the trading and separation requirements and we will publish our views, to give stakeholders an opportunity to comment, as a priority within this review,” Ofcom said, noting that a lack of engagement will likely result in a more intrusive role for the governing body.
Reached for comment, a BBC Studios spokesperson said: “We have had constructive discussions with Ofcom so far about its forthcoming review into BBC Studios, and will continue to engage fully.”
Ofcom will liaise with BBC’s director general Tony Hall over the coming months to ensure that the body’s concerns are “fully taken into account” by the BBC board. The regulator expects to see an articulated plan areas of concern in the BBC’s annual plan and budget setting process for 2020/21, which will be published at the end of March 2020.
The news stems from the March 2018 merger of BBC Studios, the BBC’s independent production unit, and BBC Worldwide, its commercial distribution division. BBC Studios produces such content as Blue Planet II, Strictly Come Dancing, Antiques Roadshow, EastEnders and Top Gear.
Elsewhere in Ofcom’s report on the British public broadcaster, the regulator says that while the BBC is “generally serving viewers and listeners well,” it stands to lose a sizable amount of its younger audience as numbers for young adults and children are trending downwards. For example, in 2018, for the first time, less than half (49%) of young people aged 16-24 tuned into BBC TV channels in an average week, according to the report.
The BBC had not replied to a request for comment from Realscreen at press time regarding the upcoming review.
(With files from Barry Walsh)