Advanced Television

BBC C4 deal would make £200m

May 13, 2009

A commercial partnership being negotiated between BBC Worldwide and Channel 4 would generate annual turnover of £800m (E895m) and a profit of £200m, John Smith, the chief executive of BBC Worldwide, told the House of Lords communications committee. That partnership would include the corporation’s commercial arm’s UK assets, including its 50% stake in the UKTV pay-TV channels business and its 60% stake in DVD business 2Entertain.

Smith said the new BBC/Channel 4 venture would also look to buy the remaining stakes in the two businesses from their current owners – Virgin Media owns the other 50% of UKTV and the now defunct Woolworths plc had 40% of 2Entertain.

“If you form the venture with Channel 4 which would include these stakes, the effect on Worldwide is not that significant from a turnover point of view. The effect is much more substantial for Channel 4 as they get the benefit of 50% of the turnover. On top of that, both organisations would get 50% of the synergies.”

Smith, who said around half of BBC Worldwide’s business currently came from the UK, said the corporation and Channel 4 would each hold 50% of the new venture, receiving half each of the estimated £200m annual profits.

He added that he expected an agreement to be signed within weeks, echoing comments made by his counterpart at Channel 4, Andy Duncan. “We are agreed on all the things that would really matter. There is not much fundamental disagreement, just a few things we haven’t run to ground." Elsewhere it emerged one of those things is that the BBC wants C4 to relinquish any future claims over license fee money, something C4 has said it will not do.

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