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BBC Trust: no more deals – except Virgin Media

November 25, 2009

BBC Worldwide will be allowed to acquire Virgin Media’s 50% stake in pay-TV joint venture UKTV to help secure the financial future of Channel 4, despite a ban on all other merger and acquisition activity imposed by the BBC Trust.

Sir Michael Lyons, the BBC Trust chairman, outlined a tighter remit for BBC Worldwide that will prevent the corporation’s commercial arm making further acquisitions such as the Lonely Planet travel publisher deal.

But Lyons said a deal to buy Virgin Media’s UKTV stake would be approved as exceptional if it was done as part of a partnership with Channel 4 in a deal designed to bridge C4's apparent £100m (E112m) funding gap. The BBC is pushing a C4 / BBCWW deal in order to avoide top slicing of the license fee to help C4.

Lyons said that he was hopeful that the protracted and fraught negotiations with BBC Worldwide might result in a deal now that Channel 4 was coming close to resolving uncertainty about senior management. “Discussions have been going on some time. They have been complicated by different views in Channel 4 about their priorities. I encourage them getting on and completing those discussions.”

When the talks with BBC Worldwide were taking place earlier this year, the idea was to create a joint venture encompassing assets including UKTV’s channels, Channel 4’s own digital services such as E4, and possibly 2Entertain, the DVD distributor in which the corporation’s commercial arm owns 60%.

Meanwhile, The BBC Trust has set out a series of changes to the future remit for BBC Worldwide, the BBC’s commercial arm. These changes follow an 18-month review of the mandate, strategy and governance arrangements for BBC commercial activity, initiated by the Trust.

The changes include:

– An end to mergers and acquisitions unless there are exceptional circumstances; An exit from any activity that is not in keeping with the BBC brand; Divestment of stakes in non-BBC branded international channels over time where it makes commercial sense.

As a specific point, the Trust would not expect to consider a commercial deal of the scale and nature of the Lonely Planet acquisition in future. The Trust will want to ensure that BBC Worldwide’s plans for it secure the best value for licence fee payers and will keep its long-term future under review.

Sir Michael Lyons, Chairman of the BBC Trust said: “Worldwide is a successful business which brings both significant financial benefits for the licence fee payer and a tangible boost to the creative economy. But the Trust and the Executive both acknowledge that the boundaries for Worldwide activity need to be clearer.”

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