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Trust’s draft framework for BBC commercial services

June 11, 2014

The BBC Trust has published a draft framework setting out the remit and requirements of the BBC’s commercial services – BBC Worldwide, BBC Global News Ltd and BBC Studios and Post Production.

This will be the first time the Trust’s expectations for the BBC’s commercial services have been set out in a single, public document, and mirrors the service licences already in place for individual BBC services such as BBC One and Radio 2.

The commercial services framework stipulates five key principles to ensure that the operations of the BBC’s commercial services are consistent with the principles of licence fee-funded services, and that the services operate fairly in relation to the wider market.

The Trust will now seek views on the draft from industry stakeholders and interested members of the public, before publishing a final framework later this year.

The five principles are:

Strategic alignment of commercial services and public service activities – commercial activity must be consistent with the BBC’s public purposes; and uphold the good reputation of the BBC.
How, where and when commercial business can be conducted –commercial activity should principally focus on securing a return from BBC content and brands. When exceptions are considered the Trust will require a clear rationale. If acquisitions or equity investments are proposed, the Executive Board must be satisfied that they are necessary to meet business objectives and that all other options have been considered. Larger or more significant proposals will be subject to approval from the Trust.
Generating a return for licence fee payers –through a mix of upfront investments and dividends for reinvestment in licence fee-funded public services.
Commercial efficiency – the Trust will set a baseline requirement for commercial efficiency which each commercial subsidiary must meet. The BBC Executive Board must set commercial targets for each business and regularly report on progress to the Trust.
Separation between publicly funded BBC activity and its commercial services – there must be appropriate financial and operational separation between publicly funded and commercial activities to comply with state aid law and ensure the commercial services do not gain an unfair advantage in the market as a result of their links with the BBC.

The framework makes clear that the BBC Executive Board is responsible for setting and reviewing commercial strategies and business plans, although significant commercial proposals remain subject to Trust approval.  The Executive Board will report quarterly to the Trust on the performance of the commercial services.  The Trust will review the BBC’s compliance with the framework at least once every five years.

BBC Trustee and Chair of the Trust’s Services Committee Suzanna Taverne said: “The way that the Trust sets and monitors clear expectations for every BBC service across TV, radio and online has successfully driven improvements for audiences.  We want to apply the same principles to the BBC’s commercial services, which play an important role in both upfront investment and delivering profits back into programmes for UK audiences.  This will mean there are clear, published requirements that we can review performance against and make sure that commercial activity is always appropriate and doesn’t damage the BBC or the wider market.”

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