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BBC Worldwide FY 08 operating profit up 17 % at ?117.7 million

MUMBAI:BBC Worldwide‘s operating profit rose 17 per cent to ?117.7 million (from ?100.6 milion in 2007) in the 12-month period ended 31 March 2008.


During the period, sales has increased from ?810.4 million to ?916.3 million, a surge of 13 per cent from the year ago period.


BBC Worldwide CEO John Smith said that the proportion of sales from outside the UK had increased from 46 to 49 per cent of the total.


Significant profit growth was delivered by BBC Worldwide‘s sales, distribution, home entertainment, content and production businesses, with magazines put on circulation in a challenging market.


Good progress was made in increasing BBC Worldwide‘s presence in Australia, India and the US, which have been identified as top priority markets.


During the financial year, BBC Worldwide also made significant long-term investments in its digital and global brands strategies, launching bbc.com – an advertising-funded internet platform for web-users outside the UK. It has also build the Top Gear brand and acquired a majority stake in Lonely Planet, the renowned travel information publisher.


Smith says, "BBC Worldwide has achieved another year of double-digit profit growth, while also making significant strategic investments in new businesses to prepare the company for the digital media world.


"The continued international appeal of our content and formats, coupled with high demand for home entertainment and the strengthening in key markets of our channels and production operations, has enabled the company to report very good results."


BBC Worldwide non-executive chairman Etienne de Villiers said, "BBC Worldwide is on track to achieve its five-year growth plan and return a substantial stream of additional funding to its parent, the BBC, for the long term. The company is firing on all cylinders and well placed to deal with the challenges ahead."


BBC DG Mark Thompson says, "The figures from BBC Worldwide once again demonstrate its importance to the corporation. It generates profits and dividends that the BBC can reinvest in making outstanding programmes and developing online applications for the benefit of all licence fee payers.


"Increasingly I believe partnerships, like those we have with Virgin Media, or as in the proposed joint venture Kangaroo, will be critical in delivering future success for BBC Worldwide."


In terms of the trading outlook, Smith indicated that profits for the current financial year could be affected by the changing global economic conditions and that the company plans further significant investments in new businesses, such as Kangaroo, the commercial media player currently being developed jointly with ITV and Channel 4, which is subject to approvals.


He also announced a strategic review to improve the performance of the children‘s business and the closure of Audiocall, the telephone services business where payments to charities were wrongly withheld last year.


"These two issues aside, I remain confident that the company as a whole is in very good shape, and that the investments we have made across our key growth businesses will deliver new, sustainable, growing profits for the BBC," said Smith.


In the channel business sales grew by 8.8 per cent to ?183.3m, with improvements evenly spread between UK and overseas markets.


Europe, Middle East and Africa sales and profit growth were driven by UKTV portfolio of channels, while US sales, predominantly from BBC America, continued to grow in US dollar terms.


Audiences have responded favourably to the newly launched suite of international BBC-branded channels – BBC Entertainment, CBeebies, BBC Knowledge, BBC Lifestyle and BBC HD – showcasing the best UK content.


A new schedule and a raft of high-profile UK series such as Torchwood and Top Gear helped double BBC America‘s ratings in the key 25-54 age group and add seven million subscribers overall.


Sales now include commission from BBC World News, the BBC‘s commercially funded, 24-hour, global news and information channel. BBC World News‘s advertising revenue grew by more than 20 per cent year on year, and full-time distribution grew by eight per cent to 159 million households.


UKTV, Britain‘s second-biggest digital broadcaster, a joint venture with Virgin Media, had a successful year. Its nine channels, which include UKTV Gold and UKTV History, offer a range of programming from across entertainment, drama, lifestyle and factual and reach 20 million unique homes via pay-TV and free-to-air platforms.


The launch by UKTV of Dave, a new entertainment channel aimed mainly at men in the 16-44 age group, was a particular success. The channel rapidly tripled its audience share, to become the third most popular non-terrestrial entertainment channel for this viewer group.


BBC Worldwide content and production delivered sales of ?68.5 million, up 35.9 per cent on 2006-07, and profits doubled to ?14.2 million. Growth came from the US where BBC Worldwide‘s Los Angeles production office had a stand-out year, as the popularity of Dancing with the Stars (the international name for Strictly Come Dancing) continued.


Dancing with the Stars continues to delight audiences around the world. In 2007-08, the series has a re-commission rate of nearly 90 per cent and was seen by audiences in 40 countries.


BBC Worldwide‘s new office in Mumbai secured the commission to make the next Dancing with the Stars season for Sony.


Progress was made in developing Top Gear as an international TV format. The commission to make a pilot of this long-running UK motoring show for NBC in the US was secured, and SBS in Australia commissioned the Freehand Group to make a full series of Top Gear Australia for autumn 2008.


In addition to these entertainment formats, progress was made in licensing scripted formats: The office format was sold to UCTV in Chile and Life on Mars format was sold to Antena 3 in Spain.


The newly created in-house format development team, responsible for devising new formats to appeal to particular markets, developed and sold a new game show, How Much Is Enough?, to the Game Show Network in the US.


The well established Indie Unit continued to build relationships with the UK independent sector. It signed new distribution and development deals with Red, Tern TV and Oxford Film and TV. The latter will deliver Simon Schama‘s latest project on America.


BBC Worldwide also secured stakes in UK independent production start-ups Left Bank Pictures Ltd and Cliffhanger Productions Ltd.


The stake BBC Worldwide took in Australian indie The Freehand Group in 2006-07 is starting to reap rewards. As well as the commission to produce Top Gear for SBS in Australia, the new property, Outback Wildlife Rescue, was commissioned and is now selling internationally.


Content and production now has a production office in New York. It has plans to establish further production capability in Europe and Latin America in 2008-09.


The feature film Earth, based on the widely acclaimed natural history series Planet Earth, went on theatrical release in Europe, Asia and the Middle East. Even before the film reaches US audiences next spring, it has outperformed BBC Worldwide‘s previous theatrical natural history release, Deep Blue.


BBC Worldwide Digital Media division delivered sales of ?21.9 million, up 57.6 per cent on the previous year, driven by revenue from syndication of content to partners such as YouTube and Apple iTunes and by the launch of bbc.com.


Overall, BBC Worldwide saw an increase in online revenues from 1.1 per cent to 2.7 per cent of total sales year on year. This reflected growth from Digital Media businesses as well as magazine websites and video on demand sales, whose profits are reported elsewhere.


In October 2007 BBC Worldwide gained BBC Trust approval to introduce advertising to the international traffic to bbc.co.uk. The service, known as bbc.com, was launched in November 2007 and is visible only from outside the UK. The revenues will allow BBC Worldwide to invest to make bbc.com the international showcase for the BBC‘s key brands.


An alliance between BBC Worldwide, Channel 4 and ITV was formed – with the working title, ‘Kangaroo‘ – to develop a new UK on-demand service that will offer over 10,000 hours of TV content on the web. The proposal has been referred to the Competition Commission and is subject to various approvals, including that of the BBC Trust and each broadcaster‘s board.


BBC Worldwide was the first broadcaster in the UK to sell BBC programmes on a download-to-own basis via iTunes, a deal it then repeated in the US. Another deal was struck with Sony Playstation for Top Gear to be downloaded through Gran Turismo TV.


A new business, Global Brands, was established at year end, with Marcus Arthur, who had been MD of BBC Magazines‘ London-based publishing business, appointed MD.


Going forward, Lonely Planet, the travel information group in which BBC acquired a 75 per cent stake in October 2007, and Top Gear, the media motoring brand, will be managed from within this new business area.


In a year in which the market for travel guides was up only 1.3 per cent in volume terms, Lonely Planet grew volume by 6.4 per cent, outperforming its competitors in the main publishing and licensing business.


The year 2008-09 will be a landmark year for Lonely Planet – with the website re-launch, a magazine and a range of new book products in the pipeline.


BBC Worldwide also set up a joint venture in Australia with ACP to publish a local version of the Top Gear magazine – local versions are already available in a number of countries, including Russia, India and China.

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