The BBC undertakes commercial activities to generate a return, which can be reinvested in BBC programmes and services and supplement income from the licence fee. These activities need to adapt to the changing environment and respond to opportunities as they arise. Our role as regulator is to ensure that the relationship between the licence fee funded part of the BBC Public Service and the commercial activities does not distort the market or create an unfair competitive advantage. We therefore imposed a number of trading and separation requirements on the BBC (the requirements) to protect fair and effective competition. We support the need for the BBC to innovate, grow and change as long as this is done fairly.
BBC Studios produces and distributes content, owns and operates channels (e.g. UKTV), has a joint venture international subscription video on demand service (BritBox in countries such as the US, Canada and Australia), sells programme formats and consumer products such as DVDs and merchandise.
The requirements state that the BBC must earn a commercial rate of return for its commercial subsidiaries and lines of business. It also needs to set lines of business that are appropriate. In 2019, BBC Studios decided to reduce its lines of business from five to two, and, in particular, to combine the production and distribution activities into a single line of business. This statement assesses these changes to BBC Studios’ lines of business as part of a broader programme of work to review the interaction between BBC Studios and the BBC Public Service. It also sets out a new process for the notification of future changes to the lines of business by the BBC. Ofcom