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24 September 2014
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27.11.03


ABOUT THE BBC


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


The BBC is not responsible for the content of external internet sites


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