BBC Commercial Holdings Ltd - Annual Reports and Consolidated Financial Statements 2017/18

Date: 11.07.2018     Last updated: 03.09.2018 at 16.26


The ‘BBC Commercial Holdings Ltd - Annual Reports and Consolidated Financial Statements’ sets out the consolidated financial statements for BBC Commercial Holdings, which is the parent company for all of the BBC’s commercial subsidiaries. BBC Commercial Holdings Limited primarily comprises the following commercial subsidiaries of the BBC which undertake commercial activities:

  • BBC Worldwide group – Revenue primarily generated by worldwide television channels, sales and distribution, production & formats and consumer products;
  • BBC Studios group – On 1 April 2017, BBC Studios Limited became a wholly-owned commercial subsidiary. Together with the special purpose vehicles Grafton House Limited, Comedy Productions Limited and Natural History & Factual Productions Limited a new BBC Studios group was formed. This group generates revenue from the production of programme content across factual, drama, comedy and entertainment genres;
  • BBC Global News group – Incorporates BBC World Distribution Limited, BBC Global News Limited and The group generates its revenue through the commercial exploitation of global news through the BBC World News television channel and website. Revenue is also generated through video news on demand available to channel operators and through mobile devices; and
  • BBC Studioworks Limited - The provision of equipment, facilities and services for use in programme production.

Each of these commercial subsidiaries contains one line of business, except the BBC Worldwide group which contains four:

  • Content sales - operations related to the investment in a catalogue of both in-house and independently produced programmes and the exploitation of the distribution rights in these and other programmes across the world to broadcasters and platform owners.
  • Branded services - BBC branded channels and digital consumer propositions, including our share of the results of our Joint Venture and associate operations in BritBox, BBC America and UKTV, and those of our digital branded services including BBCPlayer in Asia.
  • Production and formats - activities in our business related to the production of scripted and non-scripted shows for broadcasters, including revenues generated through holding a stake in certain independent production companies, and the licensing of formats to third parties around the world.
  • Consumer products - activities such as the sale of physical products (including DVDs and CDs), downloads, live events and other licensing activities.

BBC Worldwide group results:

During 2017/18, BBC Worldwide generated headline sales (revenue including share of joint ventures and associates revenue) of £1,044.0 million, which is a 1.5% reduction from prior year (2017: £1,059.9 million). The business achieved growth in BBC branded channels, acquired a majority stake in Sid Gentle (an independent production company) and matched the previous year record in content sales with the business again being the largest distributor of UK content. Furthermore, production and formats grew in Global Markets whilst a reduction in the Americas reflected fewer hours of Dancing With the Stars. This sales growth was more than offset by the inter-company transfer of advertising sales to Global News, continuing decline in the DVD market and the impact of contract renewals in UKTV.

EBITDA of £118.3 million was 42% higher than last year. This reflected a strong performance in content sales, cost efficiencies across branded services and overhead savings. These offset significant currency pressure and a decline in consumer products. 2016/17 also included one-off specific items such as a change in amortisation profile.

Free cash flow (pre interest and tax) is the cash flow available to settle interest and taxation obligations and to pursue discretionary opportunities that enhance shareholder value (e.g. acquisitions, dividends and debt repayment). It is calculated as operating cash flow less capital expenditure. Free cash flow of £121.4 million was 34% higher than the prior year (2017: £90.8 million). Once adjusted for one-off specific items, alongside foreign exchange and joint venture performance, this represents a 41% increase in owned and operated free cash flow.

The results for the year for the BBC Worldwide group by line of business, was as follows:





Headline revenue


Headline revenue £m


Content sales





Branded services





Production & formats





Consumer products





Group adjustments










Content sales: 2017/18 sales were in line with the previous year’s record level. The EBITDA in 2016/17 included one-off specific items such as a change in amortisation profile, leading to an increase this year.

Branded services: The reduction in sales is due to pressures on pay TV and advertising revenue. The upside in EBITDA is driven by cost efficiencies and restructures during prior and current years.

Production & formats: The increases in sales and EBITDA are largely driven by the acquisition of a majority stake in Sid Gentle Films Limited.

Consumer products: The reduction in sales is due to a decline in the DVD market. The EBITDA in 2016/17 included one-off specific items such as a change in amortisation profile, leading to an increase this year.

BBC Studios is a subsidiary of the BBC, which creates distinctive, much-loved content across a wide range of genres. In a highly competitive market, BBC Studios provides a stable and large-scale source of Intellectual Property (IP) for the BBC Group, generating value for audiences and returns for licence fee payers.

As part of a major change to the BBC’s content supply strategy, BBC Studios became a wholly owned commercial subsidiary of the BBC in April 2017. As a result, BBC Studios no longer has guaranteed business from the BBC, but for the first time the company has been able to make programmes for other broadcasters. This represents a significant opportunity to share creative ideas with new audiences around the world and increase revenue for the BBC Group. BBC Studios is making rapid progress in winning new commissions and has already announced deals with Discovery, Channel 4 and Channel 5.

Management uses the following key measures to monitor the performance of BBC Studios:











Earnings before financing costs, taxation, depreciation and amortisation (EBITDA) including tax credits



Net debt



BBC Studios’ priority this year has been to transform the business for this more competitive, market-driven environment. The group’s strategy is to develop a more balanced portfolio of business by continuing to deliver existing programmes to the highest creative standards while investing in generating new IP and diversifying its customer base beyond the BBC. To support this strategy, efficiency savings were achieved to reduce the company’s cost base and a new flexible operating model was introduced.

These measures have helped deliver a successful first year of trading. Headline sales were £432.0 million, and reductions in overheads helped drive EBITDA (including tax credits) of £7.2 million.

BBC Global News group results:

BBC Global News group

BBC Global News operates the BBC’s two commercially-funded international news services: BBC World News, the 24-hour global news television channel, and the digital platform (including the website, a News app, and a Sport app). BBC Global News’ mission is to be the best and most trusted international news provider in the world, while growing the BBC’s international news audiences and operating as a commercially efficient business.

In 2017/18, BBC World News’ global footprint continued to expand, growing by 2% over the year and the channel is now available to a record 458 million households (up from 451 million in 2016/17). The growth was driven by gains in Europe, the Americas and South Asia. saw a drop in its monthly audience, which averaged 88 million unique browsers in 2017/18. However, engagement levels increased during the year resulting in total page views across all platforms (website, apps and connected TV) remaining stable at a monthly average of 1.3 billion.

Off-platform consumption of BBC content plays a key role in BBC Global News’ content distribution and commercial strategy. BBC Global News continued its successful partnerships and entered into a new agreement with News Republic. BBC News’ social media presence is one of the biggest in international news with over 46 million Facebook likes globally and over 23 million followers on Twitter.

During the year, BBC Advertising (formerly part of BBC Worldwide) was integrated into BBC Global News, doubling the headcount next year to 350 staff. As identified in the NAO's Landscape Review of the BBC's commercial activities, the integration of BBC Advertising presented BBC Global News with a significant financial challenge. Rapid progress was made during the year to meet this challenge and further profitability improvements are planned during 2018/19 in order to ensure the continued achievement of commercial targets.

Management uses the following key measures to monitor the performance of BBC Global News:










Earnings before financing costs, taxation, depreciation and amortisation (EBITDA)



Profit/(loss) before taxation



Net debt



Global News recorded EBITDA of £17.8 million and profit before taxation of £16.4 million in 2017/18. The significant increases in EBITDA and profit before taxation were driven by substantial foreign exchange gains on the year-end valuation of hedged positions (£15.6 million). Excluding these foreign exchange gains, BBC Global News returned an underlying Profit Before Taxation of £0.8 million in 2017/18, due to a combination of strong revenue performance and a cost reduction programme.

Profit before taxation would have been £13.1 million with a full year of BBC Advertising activity and net debt of £52.7 million.

BBC Studioworks results:

BBC Studioworks Limited

BBC Studioworks provides studios and post production services to all the major TV broadcasters and production companies including the BBC. In September 2017, the company opened new and refurbished studios and post production facilities at Television Centre (TVC) in West London. This marked a substantial expansion for the company and supplements its existing portfolio in Elstree.


Management uses the following key measures to monitor the performance of BBC Studioworks:










Earnings before financing costs, taxation, depreciation and amortisation (EBITDA)



Profit before financing costs and taxation



Net funds



BBC Studioworks delivered a strong financial performance for the year, generating £30.8 million of revenue (2017: £26.0 million) and EBITDA of £3.2 million (2017: £4.3 million). The 18% increase in revenue was driven by the re-introduction of TVC into the company’s portfolio, but the high establishment costs of this new facility has resulted in a reduction in EBITDA. Despite these financial challenges, the company still returned profit for the year which surpassed budgetary expectations.