Communications Committee calls for part privatisation of BBC Worldwide

25 January 2010

A proposal to part privatise BBC Worldwide and allow it to become a major global brand for distributing British television content is today put forward in a report by the all party House of Lords Select Committee on Communications.

The Committee, who took evidence on both the British television and film industries, also call for a law banning camcording in cinemas and bigger tax breaks for low budget films to support the British film industry.

They are highly critical of the Government’s failure to intervene in the Project Kangaroo case for video on demand, which was blocked by the Competition Commission. A decision the Committee say was against the interests of the British television industry.

British television industry

The Committee say the British television industry employs about 80,000 people and has overseas earnings of over £1bn a year. They make a range of recommendations including:

  • The BBC should agree to sell part of BBC Worldwide to create a public private company. This would enable it to become a global distributor of UK content on a much greater scale, producing additional profits, employment and opportunities for British production companies, which they can use to fund UK content.
  • Given the significant fall in spending on children’s programming (48 per cent) since 2003, the Committee suggest the Government should consider introducing an extension of the film tax credit to children’s programming on a trial basis.
  • The Committee strongly regret the Government’s failure to intervene in the Competition Commission’s investigation into Project Kangaroo, the video on demand joint venture between BBC Worldwide, ITV and Channel 4.
  • The Committee see a serious risk that the decision to block Kangaroo will mean that UK programme makers will lose an additional revenue opportunity and leave the market open to US video on demand services.

On films

On films the Committee say that the British film industry employs around 35,000 people and has overseas earnings of over £1bn a year. Their proposals include:

  • Raise the tax relief level on UK films with a budget of less than £5m from 20 per cent to 30 per cent to help independent British filmmakers to fund their productions.
  • New legislation to make it a criminal offence to record a film in a cinema by camcorder in order to protect the UK film industry from piracy. Such laws already exist in the US, mainland Europe, Canada and Australia. The Committee also support the Government’s efforts to combat unlawful peer-to-peer file sharing.
  • The UK Film Council should not be so reliant on lottery funds. The Committee regrets the 15 per cent reduction in UKFC funding for the next three years because of the demands of the 2012 Olympics.

The Committee say that one of the strengths of the British film and television industries is their highly skilled workforce. However the provision of training is now patchy and the financial crisis has caused companies to reduce their training budgets. They say this is against the long term interests of the industries

The Committee also suggests that the Government should consider introducing tax incentives for the videogames industry in the UK. Other countries, including France and Canada, provide support for their industries.

Commenting Lord Fowler, Chairman of the House of Lords Communications Committee, said:

"At a time where there is substantial public concern about British companies being taken over from abroad there is the opportunity to establish a British owned global brand. BBC Worldwide has been immensely successful in developing the commercial income of the BBC and now has a revenue of around £1 billion a year. All the evidence suggests that there is further scope to expand but to do this will require private capital. It cannot be achieved by using the license fee. A company with private investment but retaining a BBC shareholding could achieve both bigger profits and also major proceeds from the sale.

"The Government has failed to even give a view when the Competition Commission ruled against Project Kangaroo which was a joint project of the BBC, ITV and Channel 4 to make their products available as ‘video on demand’. The blocking of Kangaroo has had the self defeating effect of leaving the market wide open to American competition. We are very concerned at the Government’s failure to understand the value of the project to British content producers. We urge the Department to review its policy in this area to ensure that similar mistakes are not made in the future."

On films Lord Fowler said:

"British films are a major industry with more potential to expand. One of the greatest concerns put to us was the issue of piracy – part of which is dealt with in the Digital Economy Bill now before the Lords. The glaring omission is camcorder crime when new films are recorded at the cinema by camcorder, and then sold as DVDs. There is no legitimate issue of freedom here. It is theft which ultimately does great damage to the industry and those working in it. We believe that we should follow the example of most other countries in Europe and make it a criminal offence."

Image: iStockphoto

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