BBC
to sell Technology subsidiary
The
BBC is to sell its wholly-owned commercial subsidiary BBC Technology
Ltd.
The
move follows a strategic review of the BBC's technology requirements
for the next decade.
The
review identified potential annual savings for the BBC of between
£20-£30 million if its technology services were outsourced.
The
review concluded that the BBC should conduct an EU procurement process
in which the winner would buy BBC Technology and, as part of that
process, take on about 1,400 staff currently employed by BBC Technology
Ltd.
Combining
the procurement process with the sale of BBC Technology Ltd as a
whole means the BBC can leverage maximum value and, as a result,
invest more money in its programmes and services.
The
sale is subject to the approval of the Secretary of State for Culture,
Media and Sport.
The move offers growth opportunities for the staff at BBC Technology
as the company will undoubtedly attract bids from major technology
businesses with scale and expertise.
There
are 1,400 people likely to transfer with BBC Technology to the successful
bidder after the EU procurement process, which is due to be completed
by Autumn next year.
BBC
Technology was created in 2001 to deliver significant savings to
the BBC through its contract for technology services, including
desktop support, and to generate third party revenues.
The
company has won important contracts in the UK and abroad with companies
such as Hutchison 3G, ESPN (US sports channel), DIRECTV and National
Public Radio.
Last
year, BBC Technology delivered £19 million in profits and
price reductions back to the BBC.
An
internal review carried out by BBC Technology concluded that for
the subsidiary to be competitive further rationalisation would be
needed, which would have resulted in substantial job losses.
BBC
Director-General Greg Dyke said today: "By taking our technical
support contract to the market and selling BBC Technology we can
achieve significant savings over a sustained period of time.
"We
would also expect to receive a significant sum of cash for the business.
"While
some BBC Technology staff will inevitably feel worried about the
prospect of change we've reached the conclusion that this is a win/win
situation for the BBC and the staff.
"This
way the staff will continue working on BBC business but at the same
time BBC Technology, which has been very successful at winning outside
contracts, will get the capital injection it needs to expand further
albeit in someone else's ownership.
"When
we were given our current funding agreement in the year 2000 by
Chris Smith, the then Secretary of State for Culture, Media and
Sport, he made it a condition that we raised an additional £1
billion over the next seven years.
"He
suggested one way of contributing to that was to sell a BBC asset.
This is what is now planned.
"A
major factor in this process will be ensuring that we make employment
terms a priority and future pension arrangements will be an important
issue for the BBC during the commercial negotiations.
"Obviously,
we will be consulting fully with staff and BECTU.
"We
have no plans to sell any other of our commercial subsidiaries."
Roger
Flynn, Chief Executive Officer, BBC Ventures Group, commented: "BBC
Technology has delivered great value to the BBC and this deal will
ensure that we are adding even greater value.
"The
dedication and commitment of the staff has resulted in an impressive
performance over the last two years in a difficult market."
Ann
Wilson, Managing Director, BBC Technology Ltd, commented: "BBC
Technology is, by any standards, a success story.
"Since
its creation, we have moved into profit within three years and,
through the dedication of our staff, have improved the contribution
that technology is making to the BBC.
"We
welcome the opportunity that the procurement and sale will bring,
as it will allow us to grow our products and services in a dynamic
technology environment."
The
BBC's Governors today approved the proposal for sale and procurement,
subject to the DCMS approval.
It
is anticipated that the new contract will begin by the end of 2004.
Notes
to Editors
Roger
Flynn announces intention to leave the BBC
About
BBC Technology Ltd
Founded
in March 2001, BBC Technology Ltd provides products and services
for the BBC, other broadcasters, platform owners, content owners
and government organisations.
Drawing
on eight decades of pioneering technical expertise and innovation
for the BBC, BBC Technology Ltd helps organisations create, manage
and distribute content more effectively across multiple platforms.
BBC
Technology Ltd's products and services include: the award-winning
Colledia product portfolio which creates a tape free broadcast environment,
media communications, internet solutions and consulting services.
Customers
include: BBC News, BSkyB, DirecTV, Inc., ESPN Inc, Hutchison 3G,
SABC and Scottish Enterprise.
BBC
Technology Ltd has 1,400 staff and a turnover of £220 million.
About
BBC Ventures Group
BBC
Ventures Group, the BBC's business to business commercial division,
comprises four operating businesses: BBC Technology Ltd, BBC Broadcast
Ltd, BBC Resources Ltd and BBC Vecta Ltd.
The
group provides a full range of managed media services and facilities
to the BBC and other media companies both in the UK and internationally.
It
has been tasked with maximising commercial return back to the BBC
for the benefit of programme making and other BBC services.
In
2002/03 Ventures turned a £10.5 million loss into a £14.5
million profit, on turnover of £440 million and almost 4,000
staff.
About
BECTU
BECTU
is the independent union for those working in broadcasting, film,
theatre, entertainment, leisure, interactive media and allied areas
who are primarily based in the United Kingdom.
The
union represents permanently employed, contract and freelance workers
within these sectors.
www.bectu.org.uk
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BBC is not responsible for the content of external internet sites
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