BBC spends £3.4m on sell-off

Friday, June 27, 2008

Newspaper The Guardian reports today that the sale of the BBC subsidiary BBC Resources Ltd., has cost £3.4m in consultancy fees — over £1m more than the £2.3m trading profit the commercial division is estimated to have made for the last financial year. Details of the failed privatisation were released by the BBC following a freedom of information request, and prior to publication of its annual report on July 8.

Fourteen months after advisers were appointed to try to sell BBC Resources Ltd., only one of the three main business units has been sold — its Outside Broadcast division to Satellite Information Services Limited (SIS), for an estimated £20m. On March 7, 2008 it was also announced that the studios operation would remain in BBC ownership and in early June, the fate of the third business was put on hold with the BBC stating that "like Studios, Post Production will remain within BBC Resources, which will continue to operate as a wholly-owned commercial subsidiary of the BBC."

BBC Resources Ltd. made an operating profit of £6.1m for 2005-06, down from £7.4m the year before, with the BBC accounting for 83.3% of its turnover, down from 87.4% for 2004-05. Last year's published figure for 2006-07 was £5.2 million — with BBC business at 80% of turnover.

BECTU Assistant General Secretary Luke Crawley is quoted as saying: "It's fairly outrageous that around half the profit of the company [announced last year] has been spent trying to sell it. It's an inordinate amount of money. The BBC was promised big returns if it sold BBC Resources but it's only managed to sell outside broadcasts and we do not know how much it made out of that. We think the £3.4m is a poor investment."

Background to the Resources sale

The Resources business-to-business unit was formed in 1998 to operate television studios, post-production and outside broadcast facilities for its parent share-holding company, the BBC. It does not own any studios or premises, its assets being staff and equipment.

BBC Resources was the first of the BBC's commercial divisions to be set up as a limited company and the last to be sold, the BBC having previously divested itself of BBC Technology and BBC Broadcast, although BBC Enterprises — now known as BBC Worldwide — remained in-house.

It had been intended to float Resources back in 2005, but this was postponed for two years following strike action and ACAS talks in June 2005 — the BBC giving an undertaking that there would be no preparations made to sell the company until January 2007, and no sale allowed before July 2007.

Advertised for sale on August 16, 2007 in the Financial Times, The Times and Broadcast, the disposal — led by Ernst & Young — invited expressions of interest for the whole division or for each of its three operations separately.

  Learn more about BBC Resources and BBC Studios on Wikipedia.

On October 18, 2007, Director General Mark Thompson confirmed that Television Centre, the home of BBC Studios and Post Production, would be sold "by the end the financial year 2012/13" with a BBC spokeswoman adding that "this is a full scale disposal of BBC Television Centre and we won't be leasing it back".

On April 1, 2008, BBC Outside Broadcasts was transferred into SIS ownership.

BBC Costume and Wigs

This was the second largest collection of its kind in the UK, after the leading suppliers Angels The Costumiers. It was not included in the privatisation, and in early October 2007 it was announced that the business was to close within six months and the entire stock sold as a complete collection.

BBC Costume and Wigs (part of BBC Studios) ceased trading on February 14, 2008 after failed attempts to sell this business unit as a going concern with a BBC spokeswoman saying that "the arrangements [the corporation] was pursuing have not worked out and BBC Resources is currently inviting interested parties to consider making an offer to purchase."

On March 30 the costume collection — consisting of over 1 million items — was sold to Angels and the collection of wigs and hairpieces was sold separately to The Wig Store (a management buy-out put together by Philippa Devon and Alan Godleman).