BBC Studios: make or break
Tom Harrington
+44 207 851 0918
tom.harrington@endersanalysis.com
10 May 2017 [2017-037]
Related reports:
The matter of Peak TV and what it means
for the UK [2016-089]
BBC TV - impact on investment in UK
content [2015-080]
BBC TV airwaves beyond 2026? [2015-082]
The launch of BBC Studios—the relocation of most of the
broadcaster’s in-house production capability into a
commercial subsidiary—gives it the ability to compete for
work elsewhere at the expense of a guaranteed quota at
the BBC
The upside is large, with the opportunity to retain an
increased amount of intellectual property, a requirement
of growing importance. However, so is the risk, with
sustainability dependent upon a major cultural shift; from
comfortably retained provider to competitive production
engine
Outside of a weak track record when competing for work,
other entwined issues must be overcome for success in the
medium term; demonstration of transparency in the
commissioning process and watertight transfer pricing
practices, and the dispelling of state aid concerns
Lord Tony Hall’s 2014 “Compare and Compete” speech1—which contained the
seed of the BBC’s transfer of the bulk2 of its in-house production capability and
responsibility into a wholly-owned commercial enterprise—laid out his conception
of a modern BBC. It is one where “freedom and entrepreneurial spirit” is given the
opportunity to bloom, where monopoly is wrong and complacency is dangerous.
And in terms of production, with the creation of BBC Studios, it is one where the
shackles of serving a single master are removed, plugging the leakage of
frustrated talent and releasing decades of latent creativity and commercially
desirable television.
In the current climate, such a radical re-direction is understandable. The BBC has
been kept in check by quotas and the ‘Terms of Trade’ 3 at a time when the value of
programme IP escalates as local and international platforms salivate for content
and formats. Coupled with the fading value of EPG prominence and the ongoing,
uncertain fug hanging off the licence fee, bold moves had to be made to safeguard
the broadcaster. And BBC Studios is that gambit, relinquishing the guaranteed
production of 50% of BBC original programming in return for the ability to pitch
and potentially develop content for anyone who is buying.
Hall’s characterisation of the path that the new entity will take is one of unbridled
opportunity and flexibility, of being more than just another independent producer,
a positivity re-iterated in the subsequent reams of consultation and approval
documentation. The BBC envisage Studios as something of a foundational stone
 for the sector. Rather than merely just another big body in a crowded market, it
foresees the company’s expertise and commitment to training, its spread and
influence around the UK, and unique genre specialisation as having an enriching
effect on the industry; especially one that it is being pressured to decentralise.
But this ideal centres on an imagining of an organisation that has long chafed for
greater creative scope. That this is the case is uncertain. In this report we calculate
the size and value of work that Studios will launch with and assess its ability to
retain that programming and secure projects from sources other than the BBC.
With concerns around its relationship with BBC Worldwide, Commissioning and
other Public Service divisions, we consider the EU’s state aid provisions, and the
related requirements for transfer pricing compliance, and transparency. Alongside
these, a fundamental challenge emerges: transforming a comfortable culture of
reliance, where workflow and revenue is guaranteed, to an ambitious,
entrepreneurial and ultimately, successful one.

Studios’ inherited production slate

The initial yardstick for BBC Studios is the performance of the in-house production
units prior to the separation. With the benefit of the transfer of continuing series,
as well as those projects already commissioned, the company has been given the
advantage of launching with a considerable body of work.
Figure 1: Estimated BBC original commissioned hours 2015/16
Title
1,600
1,400
1,200 599
1,000
806
800
600
400 897 247
161 323
200 494
250 81 313
150 62
0

Note: Children’s production will not transfer to Studios

In-house External suppliers [Source: Enders Analysis, BBC]
Figure 2: Estimated value of BBC in-house commissions by genre, 2015/16 (£m)

Drama 150

Entertainment 22 0.5

Comedy 22

Knowledge 85 9

Daytime 25 3

Children's 50 4

0 20 40 60 80 100 120 140 160

Note: Children’s production will not transfer to Studios
Quota (guaranteed) WoCC (competitive) [Source: Enders Analysis, BBC]

2 | 13 BBC Studios: make or break [2017-037] 10 May 2017

 We estimate that the units that have been transferred from in-house to Studios—
Drama, Entertainment, Comedy, Knowledge4 and Daytime—were tasked with
producing approximately 1,850 hours of original network television in the 2015/16
year, at a value upwards of £315m. The BBC Executive estimate that Studios will
generate £400m in its first year of operation, a combination of primary production
revenues and commercial income from co-production deals and up-front
investment. This turnover would put it on par with the two largest consolidators,
Endemol Shine (£423m) and All3Media (£345m), while incorporating a much wider
spectrum of programming. In terms of hours, Studios would comfortably be the
largest non-Sport producer. Whilst in-house created 54% of the BBC’s original,
non-news related programming in 2015/16 (see Figure 3), as Sport and Children’s
content is not being transferred,5 the corpus of programming inherited by Studios
amounts to approximately 48.5% of BBC programming within the transferred
genres.

Figure 3: Proportion of BBC non-news related original TV hours, by genre, 2015/16

Title
100 6
9 10 14 18
90
80 37 32
30 26 38
70 47
60 5 44 25 5.5
50 31
40
0.75 4.5
30 61 55
20 43 43 50.5
31.25 33.5
10
0

Note: Children’s and Sport production will not transfer to Studios

In-house quota (guaranteed) In-house WoCC (contestable)
Qualifying Indie Non-qualifying Indie
[Source: Enders Analysis, BBC]

A lack of competitiveness?
Although creating work for clients other than the BBC is an essential component
of Studios’ brief—a process that has already actively begun6—the maintenance of
its legacy workflow is initially pivotal. Over the course of the current Charter
period, ending in December 2027, the production guarantee that formerly ring-
fenced 50% of non-news commissioned content for the in-house production units
will be gradually removed; 40% of the guaranteed amount by the end of 2018,
with the entirety being fully contestable by all parties by the end of 2027.7 This first
milestone equates to around 750 hours of Studios’ inherited slate.
The removal of the guarantee began last year, as the first programmes produced
in-house, each of a different genre, were put out to tender. The opportunity to
produce Holby City, Songs of Praise and A Question of Sport was contested, while
independent producers were invited to pitch ideas for Horizon, the science and
philosophy series of standalone documentaries. Of the three tendered, BBC
Studios retained two,8 while Songs of Praise was lost to Nine Lives Media and
Avanti Media, whose pitch reportedly offered superior value for money and more
innovative programme ideas.9
The mixed success of Studios in the initial tender round highlights the real
possibility that a considerable percentage of legacy programming, including that

3 | 13 BBC Studios: make or break [2017-037] 10 May 2017

 which long resided in-house could be lost. It is a fear that is founded in past
performance; the ability of in-house to win work outside of its quota in the now-
defunct, fully contestable 25% of the BBC’s production slate—the Window of
Creative Content (WoCC), which sat alongside the 50% in-house guarantee and
the 25% quota for qualifying independents—was notably poor (see Figure 4).10

Figure 4: BBC in-house production proportion of contestable WoCC hours (%)

60

50

40

30

20

10

0
2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16
Drama Entertainment Comedy
Knowledge Daytime Children's
Total Note: Children’s production will not transfer to Studios
[Source: Enders Analysis, BBC]
Indeed, in 2015/16, when competing against all-comers for work, in-house was
only able to win 3 hours of production across Drama, Entertainment and Comedy.
This was out of approximately 250 contestable hours. Tellingly, those three genres
made up around 2/3 of the value of the commissions for in-house in 2015/16 (see
Figure 2) meaning that the pivotal retention of that volume of work by Studios is
far from certain.
The lack of competitiveness by BBC in-house in the WoCC quota has been annually
noted in the press, and has inevitably been used as evidence as to the difficulty
that BBC Studios will have when it is required to pitch for the entirety of its work in
a fully competitive environment. In some ways, this is a fair assessment, however,
the way in which BBC Commissioning juggled programming across the three
different quota strands has perhaps overemphasised the weakness of in-house’s
pitching in some genres. As the various quotas operate across total hours and are
not divided by genre, various programming hours were allocated to the in-house
quota, in say Drama, well above 50% of that genre’s hours. This was so as to
balance the comparatively poorer general performance in other genres, such as
Entertainment. The large number of returning soaps, produced in-house,
compounds this. Arguably, a proportion of this “surplus” programming could have
been successful in the WoCC.
The pressure applied by the growth in size and number11 of non-qualifying indies—
production companies that neither own (>25%) nor are owned by broadcasters
(>25% by one, or >50% by two)—is another consideration. If the BBC wished to
work with these companies, who by 2015 accounted for almost half of the
industry’s revenues, it could only commission their programming within the
WoCC. The crowding of this competitive space arguably intensified the difficulty
of success within this quota, above the normal level of the open market.

4 | 13 BBC Studios: make or break [2017-037] 10 May 2017

 Studios’ strengths: from soaps to natural history
Even with these considerations, statistically, in-house had a poor track record
when pitching ideas. Certainly, there will be endeavours to rectify this, but it
remains to be seen whether enough progress can be made in the short-term, in
which time work with the BBC will be relinquished, likely not substituted with
commissions from elsewhere. This inevitability and the ability to be flexible has
already been absorbed into Studios’ strategic outlook, with the redundancy of 300
staff and the transition to a less-permanent workforce the outward manifestation
of this.12
Despite the lack of competitiveness in certain areas, however, there is a
considerable amount of legacy programming that Studios should find very difficult
to lose, some of which is high volume and high value. The most prominent are
continuing drama series such as Eastenders (107 hours/year, approx. £30m),
Casualty (40 hours/year, approx. £23m), Doctors (91 hours/year, approx. £11m),13
and the recently retained Holby City (52 hours/year, £20m). These, along with
similar programmes for the nations, Pobol y Cwm (125 hours/year, approx. £10m)
and River City (25 hours/year, approx. £8m),14 are not just entrenched within their
production units but have been reviewed and validated for cost efficiency via audit
by the National Audit Office.15 And thusly, like in the case of Holby City, it would be
a challenging task for a competing producer to demonstrate that any additional
value that it could bring to these long-running series could outweigh the risk of
handing over the reins of some of Britain’s most-watched shows.
These programmes make up a large proportion of the hours and value outlined in
Figures 1 and 2, with Eastenders, Casualty and Holby City alone making up around
4/5 of total Drama in-house hours and about half of the total value of Drama
commissions. It is not its flashiest output but it is a firm foundation on which
Studios will attempt to maintain its Drama practice.
But if the strength of Studios’ relationship to its soaps is characterised by longevity
and a validated culture of fiscal efficiency,16 quality marks its production of Natural
History and Documentary programmes; Studios’ other pillar of strength.
Due to the lack of granular insight offered by the BBC as to the breakdown of the
Knowledge segment, it is not possible to ascertain the quantity of programming of
this type produced in-house. However, the majority of the approximately 450
hours (including repeats) of BBC nature documentary programming broadcast in
2016 were certainly in-house productions, including perennially strong returning
favourites such as Countryfile (of which 160 hours, new and repeated were shown
in 2016) and the work of Bristol’s Natural History Unit, such as Planet Earth II,
Natural World and Springwatch with its seasonal variations.
It is in this area where in-house unquestionably created world-leading
programming, and with some of it possessing international appeal, the production
of this type of programming within Studios presents the BBC with a substantial
opportunity for local and global exploitation. The growing expansion, in terms of
variety of content, by the major global streaming services creates further
opportunity for Studios, which possessed with the BBC name has inherited a
watermark synonymous with quality in natural history programming.

5 | 13 BBC Studios: make or break [2017-037] 10 May 2017

 Pitching outside the BBC
Generally, however, it is difficult to substantiate the belief that BBC in-house
consistently created programming of the distinctive, supreme type that has
bolstered the narrative to support an optimistic short-term view for Studios. Some
claims have been joltingly lofty, for example founding director Mark Linsey
asserting that the company has “a reputation as the best programme makers in
the world…producing quality and delivering distinctive programmes right across
all specialisms.”17
But while the scope of production is certainly broad, with perhaps the exception of
its Natural History programmes and the sumptuous adaptation of War and Peace,
most of what has been produced recently in-house was generally indistinguishable
with other content on the BBC, and arguably interchangeable with comparable
programmes on the UK’s other major television channels.18 The internal opinion
that there is a certain tonal exceptionalism inherent in the content and that
therefore viewers are knowledgeable of its work’s provenance is debatable. In
regard to drama—with the concession of budgetary factors and the content
constraints of the pre-watershed broadcasting environment—the vast majority fell
short of the standard of premium US cable channels and the major streaming
services; hoping to compete internationally, this is significant.19
Some of the fault for this lies with the BBC itself, and by extension the public
which it caters for in its role as the commissioning agent. One of the notions
offered to corroborate the creation of Studios was the continual loss of in-house
talent, frustrated by the inability to have work commissioned by its single client.
Anecdotally this did occur, however this account conflicts to a degree with the
representation of a cheery, proactive, creative culture making the best television
in the world. In reality, the environment and output appears somewhat more
grounded.
The scope of what the BBC shows across its channels is also an important
consideration when gauging the prospect of Studios competing successfully for
work outside of the broadcaster. The narrative offered in the Studios’
establishment process was that there were ideas and formats generated in-house
that, being determined of a type unsuitable for broadcast by the BBC, were not
produced. These ideas, which it was claimed would have likely found a home on
another broadcaster were necessarily left to wither on the vine. This conception,
however, can only be validated if the scope of what the BBC does broadcast is
underplayed; in reality it is astoundingly, and credibly broad. The BBC certainly
does “high TV”, which other channels may not, but there is little to separate it and
others by its suite of, say, reality programmes, contest and talk shows. For
example, one can look to BBC1’s The Sheriffs are Coming, a fly-on-the-wall series
following High Court enforcement officers attempting to evict recalcitrant
tenants, or Claimed and Shamed which is in its eighth season of trying to catch
insurance fraudsters on camera; these perhaps unexpectedly are identical to much
of Channel 5’s primetime.
Certainly, there are formats and genres of which the BBC commissions
comparatively less than other broadcasters and thus, space constraints may well
have meant that some fine ideas did fall through the cracks. As such, even given
the breadth of what the BBC offers on its channels, and online, some of the ideas
that were not developed would have been passed by the broadcaster on
suitability, rather than quality grounds. However, given the scarcity of these types
of programmes on the BBC, Studios will lack the short-term advantage in this area

6 | 13 BBC Studios: make or break [2017-037] 10 May 2017

 it has in others; it will be unable to demonstrate a level of experience and expertise
to set them apart in the market.
On a related note, BBC Studios concede that the BBC will continue to be its major
client, due to both its continuing responsibility to produce existing series and
projects and because of Studios’ undoubted experience in the creation of certain
types of programming of which the BBC is the major or only outlet. The
importance of this central relationship has been demonstrated in revenue terms
above. However, with regard to the structure of the entity’s creative and
developmental pipeline, there is a possibility that the existence of a dominant
client could cause distortion. If the most likely destination for your ideas continues
to be the BBC, would those ideas that had the greatest chance of success there not
be prioritised at the expense of ideas more suitable for others?

State aid, transfer pricing and transparency

Throughout the establishment of BBC Studios, the spectre of the EU’s state aid
rules—which prohibit EU member states giving financial assistance to some
companies and not others in a way that might distort fair competition20—has hung
above the process. The BBC Trust, in its decision to approve the plans21 was
satisfied that the overall concept, incorporation into a limited company, and the
ongoing operation of BBC Studios were compliant with the regulations, along with
the BBC’s internal fair trading framework. In order for Studios and the BBC to
remain compliant, the following standard rules would have to be followed:
• There must be no cross-subsidisation with bids for all contracts costed
according to standard commercial terms;
• The commercial and public service activities must be separately accounted for,
as, “Only on the basis of proper cost and revenue allocation can it be
determined whether the public financing is actually limited to the net costs of
the public service remit and thus acceptable…”;22 and
• The EU also has a strong preference for “adequate separation between public
service and non-public service activities at the level of the organisation of
the…broadcaster”,23 going on to say that “Functional or structural separation
normally makes it easier to avoid cross-subsidisation of commercial activities
from the outset and to ensure transfer pricing and the respect of the arm’s
length principle”.24
So as to prevent the possibility of public service and commercial activities mixing,
and any subsequent contention of cross-subsidisation, the BBC has a transfer
pricing and separation regime that operates between its public service divisions
and its existing commercial subsidiaries, BBC Worldwide, BBC Global News
Limited and BBC Studioworks; something which has recently been reviewed and
validated, albeit with some minor misgivings.25 The manner in which the regime
was governed, by the Trust, however—commissioning external expert reports to
support its assessment, rather than routinely appraising particular transfer pricing
arrangements—looks set to be replaced by a more rigorous authority in the hands
of the new regulator, Ofcom. Under the new Charter, Ofcom has the powers to
enforce compliance, consider complaints and carry out investigations.26
One area that the Charter does highlight for specific attention by Ofcom is the
necessity that all of the BBC’s commercial services are making a commercial rate
of return. For Studios, this requirement is most relevant to its relationship with
BBC Worldwide, through which its content will likely be exploited; the possibility

7 | 13 BBC Studios: make or break [2017-037] 10 May 2017

 being that, as part of a single group of companies, advantages could be created
through market distortion by one company or unit strategically not operating at
full commercial potential.
The Producers Alliance for Cinema and Television (Pact) suggested that this could
take the form of a transaction that would see Worldwide advance BBC Studios
more money than would be economically viable in a normal arm’s length
arrangement, resulting in a less profitable Worldwide but ensuring that Studios is a
success.27 An ongoing concern around the visibility of Worldwide’s operations
compounds this issue.28 It is important to note, however, that as part of its
approval of BBC Studios the Trust relied on reports from KPMG and EY that found
no evidence to suggest that funding arrangements between the existing
commercial subsidiaries of the BBC were out of line with market practice. The
commitment that Studios will and should “stand on [its] own feet” has been a
mantra from as early as Hall’s foundational speech.
These are largely structural considerations, and time—as well as Ofcom—will
continually arbitrate on their regulatory compliance. But there are already
operational matters that have attracted scrutiny, most notably the level of
transparency of the initial tender round. Both Pact 29 and competitors30 highlighted
the BBC’s refusal to reveal the cost of the talent in the shows on offer; information
that Studios undoubtedly possessed, and which it was claimed offered it an
advantage.
The BBC has taken steps to review the tender process,31 and it should be expected
that a fully compliant and acceptable regime may take time to smooth out. But
while the general lack of success enjoyed previously by in-house in the WoCC
provides some reassurance that there will not, outside of the expressed concerns,
be any favouritism offered by BBC Commissioning to Studios, a perception
amongst outsiders still remains—that Studios is gaining or is likely to gain an
advantage, a legacy of its former habitat within the Corporation, and not aided by
overt issues such as continued sharing of facilities and the inheritance of inertia
from licence fee-funded legacy programming.

Final thoughts
What does the success of BBC Studios look like? To answer that it is essential to
look at the underlying reasons for its creation, and in particular at the increasing
necessity for the Corporation to ensure a healthy flow of IP. Ownership of such
allowed the BBC to establish the iPlayer as a viable and successful commodity,
ensured that the BBC Store had a sizeable selection of stock to immediately
present it with market significance and allows it to exploit content through BBC
Worldwide, the proceeds of which subsidise the licence fee. In terms of continuing
to serve its audience across different platforms and maintaining its relevance,
ownership of IP is essential.
However, the establishment of Studios and the resultant loss of a minimum quota
of IP guaranteed to flow back to the broadcaster will result in a scenario whereby
the BBC will likely have a diminishing control over the corpus of programming that
it commissions and broadcasts. Of course, it is hoped that that shortfall will be
filled by programming created for other broadcasters and services, although the
benefit of this will not be seen for a period, and substantial IP ownership will not
automatically be granted as those agreements will not come under the Terms of
Trade.

8 | 13 BBC Studios: make or break [2017-037] 10 May 2017

 As such, in the short term the impact that BBC Studios will have upon its parent
company is likely to be a negative one. Studios will lose programming that it
inherited, and until the transformation from a mindset dominated by quotas and a
single target is lifted and there is reinvigoration within the production units, there
will be a struggle to win work elsewhere. But this is likely temporary, and with the
new commercial enterprise able to pay commercial salaries it is a matter of time
before talent is attracted back. And with high calibre, commercially-minded
personnel, versed on the outward-looking rhythms of the indies, the ability to
create a thriving culture of winning work is possible.

9 | 13 BBC Studios: make or break [2017-037] 10 May 2017

Appendix A: Selection of recent programmes produced in-house by the BBC

Drama Doctor Who Father Brown Luther Our Girl Rillington Place

Silent Witness Thirteen War and Peace Murdered by My

Father

Continuing Eastenders Casualty Holby City Doctors River City

Drama
Pobol y Cwm

Comedy Citizen Khan Inside No. 9 Mrs Brown’s Boys Porridge This Country

Tracey Ullman’s Still Open All W1A Two Doors Down

Show Hours

Natural History Planet Earth II Natural World Springwatch

Science Forces of Nature Horizon Stargazing Live Trust Me I’m a

with Brian Cox Doctor

Documentary Coast Don’t Take My Life and Death Child of Our Time Ben Building:
Baby Row Mussolini,
The World’s Koko: The Gorilla
Monuments and
Biggest Flower Britain’s Muslim Handmade on the Who Talks to
Modernism
Market Soldiers Silk Road People

Unscripted Antiques Countryfile Crimewatch DIY SOS Flog It!

Roadshow

Gardeners’ World

Topical and Live Arctic Live The One Show Rip Off Britain

Entertainment, Glastonbury Invictus Games Top Gear Strictly Come Let It Shine
Music and Dancing
A Question of Remembrance Mastermind Dragons’ Den
Events
Sport Sunday Later… with Jools
Holland

[Source: Enders Analysis, BBC Studios]

10 | 13 BBC Studios: make or break [2017-037] 10 May 2017

1
Tony Hall, speech at the ‘Future of the Licence Fee’ seminar, City University, London, 10
July 2014
2
Approximately 80%. At inception, News, news-related Current Affair, Sport and Children’s
production will remain in-house.
3
The ‘Terms of Trade’ is a 2004 allowance under the Communications Act delivering a
standard template for commercial deals between independent producers and public service
broadcasters, allowing indies to largely retain secondary rights for their own commercial
gain, as well as introducing a revenue share model that favours the producer. The ToT has
allowed for serious growth in the indie sector, its purpose, but despite the argument from
some PSBs that its objective has been completed, reviews have suggested its continuance.
4
Knowledge is an obscuringly broad genre that includes, for the purposes of the BBC’s
internal quotas, those hours of Documentaries, History, Learning, Music, Natural History,
Factual, Religion and Science that are not caught in the Daytime catchment.
5
The reason given for keeping Sport in-house is that it will enable the BBC to continue to
have an integrated approach between Television, Radio, Online and its News teams and to
ensure a critical mass of production to give the BBC the skills to deliver major sporting
events like the Olympics and World Cup. For Children, current arrangements would enable
the broadcaster to respond better to changing media behaviour among young people.
6
“BBC Studios spreads its wings”, Broadcast, 20 April 2017
7
Other milestones for the removal of in-house guarantees include: Children’s, Sport and
non-news related current affairs to remove all guarantees by 2019; a minimum of 60% of
non-news radio hours to be competitive by 2022; 100% of online non-news content to be
competitive by the end of the Charter period; and television news-related current affairs to
be apportioned thusly—40% for in-house, 40% for external, with 20% competitive by a date
to be announced.
8
Studios beat more than a dozen indies to retain A Question of Sport.
9
“BBC loses Songs of Praise to independent production company”, The Telegraph, 10
March 2017
During the same tender period production of Saturday Morning Kitchen was retained by
Cactus TV. As in-house originated the show in 2002, the BBC continues to own the IP but
the programme now resides in the Qualifying Indies quota that makes up 25% of BBC’s non-
news commissions.
10
Sport was included in the WoCC from 2011/12 to 2015/16 in which in-house was awarded
between 78 and 100% of contestable hours. It is possible that this kept the overall
percentage steady despite falls in other genres.
11
A buoyant independent production industry, driven by heightening international demand
and the advantages of retaining IP under the Terms of Trade has led to increasing
consolidation and foreign acquisition.
12
‘BBC Studios to cut 300 staff as hit shows move to private sector’, The Guardian, 13
October 2016
13
Doctors, the 19th season of which screens at 1.45pm on weekdays, is captured under the
Daytime statistics rather than Drama.
14
Screening on S4C and BBC Scotland respectively, neither Pobol y Cwm nor River City are
included in Figures 1 to 4.
15
‘The BBC’s management of the costs of producing continuing drama’, National Audit
Office, March 2011
16
In a benchmarking review conducted by EY it was noted that the BBC appears to
continually seek to reduce production costs, a standard that will be valuable carried over to
Studios.
17
‘TBI Interview: Mark Linsey’s Studios system’, TBI Vision, 19 April 2017
18
Watch BBC Studios’ showreel.
19
In a British context, the performance of in-house’s quality drama on the award circuit has
been fair, but given the volume of programming, and its prominence, hardly remarkable;
winning the Bafta for best drama series twice in the past decade. In all fairness, War and
Peace should beat Netflix’s The Crown this year, but probably won’t, while Murdered by My
Father deserves to win best single drama.
20
See here for treaty provisions on state aid. Publicly-funded broadcasting escapes
prohibition under the rules as an exemption at Article 106(2) is made for undertakings that
are “entrusted with the operation of services of general economic interest”, which includes
PSBs as they meet the “democratic, social and cultural needs of … society”.
21
BBC Trust, ‘Regulatory decision on BBC Studios, December 2016
22
Communication from the Commission on the application of State Aid rules to public service
broadcasting, paragraph 77
23
Ibid para. 86
24
Ibid
25
‘A review of the BBC’s transfer pricing regime’, EY report for the BBC Trust, June 2016
One problem immediately relevant to Studios found by the review concerned the pricing of
the BBC Brand for commercial use by BBC Worldwide. Although a previous benchmarking
review by PwC had determined a rate range for Brand royalties, there was no formal
documentation explaining how the particular rate (within the range) charged to Worldwide
was decided upon.
Another report, from Fingleton Associates mentions certain external transfer pricing advice
that “appeared to be conditional” but “the Executive was not able to demonstrate to us that
those conditions had been met”. The actual advice is not revealed.
26
See Articles 46(6) and 49 in the Royal Charter for the continuance of the British
Broadcasting Corporation, December 2016
27
‘Submission to the BBC Trust consultation on the assessment of BBC Studios, a proposed
commercial service’, Pact, November 2016
28
See p40 of the Fingleton Associates report in endnote 25 and ‘BBC Worldwide: smoke
and mirrors’, The Guardian, July 2014.
29
‘Pact raises concerns over BBC tendering’, Broadcast, 16 March, 2017
30
Broadcast quoted one unnamed indie boss as likening the A Question of Sport tender
process to a ”farce” and a “massive waste of time”.
31
‘BBC to assess tender process’, Broadcast, 28 March 2017
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