October 12, 2020
Ofcom is seeking evidence to inform its review of the boundary between BBC Studios and the BBC’s licence fee-funded services (the Public Service). The BBC’s commercial activities generate returns that supplement income from the licence fee. These returns can be reinvested in BBC programmes and services. Most of these activities are run through the BBC’s commercial subsidiary, BBC Studios, which produces and distributes content for people to watch in the UK and around the world.
Ofcom’s job is to ensure that BBC Studios does not, as a result of its relationship with the Public Service, distort the market or gain an unfair competitive advantage. Given developments both in the media landscape and in BBC Studios over the past few years, Ofcom is launching a review to assess the relationship between BBC Studios and the Public Service. This will include looking at how BBC Studios has implemented Ofcom Requirements.
Ofcom is inviting views and evidence from interested or affected parties by 4 December 2020, including on the following areas:
- operational separation between BBC Studios and the Public Service;
- supply and pricing of goods and services between BBC Studios and the Public Service; and
- the commercial rate of return earned by BBC Studios.
Ofcom has also published a Mediatique report on the markets in which BBC Studios currently operates.
Separately, Ofcom has set out its view on BBC Studios’ changes to its “lines of business” and is consulting on changes to Ofcom’s Requirements.
Ofcom says that it considers BBC Studios’ reduction of its lines of business from five to two, which involved combining its production and distribution activities, is consistent with other production companies of a similar size and scope. It therefore considers that the lines of business appear to be appropriate. However, Ofcom is proposing to require BBC Studios to provide additional confidential reporting to Ofcom. If implemented, this would allow the regulator to monitor more closely the activities of the production and distribution line of business.
Ofcom is also proposing to require the BBC to give Ofcom three months’ notice of any future changes to its commercial subsidiaries or its lines of business. Should Ofcom become concerned about any such changes in the future, including where it considers these changes are inconsistent with its rules or the Charter and Agreement, it would, subject to consultation, be able to step in to prevent them.
Responses to this consultation must also be submitted to Ofcom by 4 December 2020. To access the call for evidence on Ofcom’s review of BBC Studios, click here. To access the “lines of business” consultation, click here.