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English Heritage recommends listing BBC TV Centre

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The Guardian Newspaper today reports that the sale of the BBC subsidiary BBC Resources Ltd., has cost £3.4m in consultants fees - almost £1m more than the £2.3m trading profit the commercial division is estimated to have made for the last financial year. This loss was released by the BBC following a freedom of information request.

Fourteen months after advisers were appointed to try to sell BBC Resources Ltd., only one of the three business units has been sold - its Outside Broadcast division to Satellite Information Services Limited, for an estimated £20m.

The sale of the BBC subsidiary BBC Resources Ltd., has hit a hurdle after it emerged that the BBC could be left with a loss of up to £15 million on the deal. The cost of transferring the pensions of BBC Resources staff from the BBC pension scheme to its new owners could be up to £50 million according to a Guardian Newspaper report.

Managers from the division will meet with union representatives from BECTU on Monday to discuss this and related sale issues. BECTU general secretary, Gerry Morrissey is quoted as saying: "If the BBC gets less than £50 million for BBC Resources then how can it fulfil its duty of care to licence fee payers?"

It is believed that the BBC had hoped that a surplus in its pension fund could be used to bridge the possible £50 million gap — but the trustees of the fund have said "no". A BBC source said: "This is being discussed at the highest level".

Since April 2004 members of the BBC pension scheme have seen their contributions into it increase regularly, the BBC — like many other employers — having reduced its contribution (to 4.5% of payroll) over a ten year period when the stock market was booming in the 1990s.

The Guardian is seen as a reliable source on BBC matters, having reported the proposed sale of BBC Television Centre back in January 2007, with the formal announcement finally being made by BBC Director General Mark Thompson on October 18, 2007.

Background to the Resources sale[edit]

The Resources business-to-business unit was formed in 1998 and operates television studios, post-production and outside broadcast facilities for it's parent share-holding company, the BBC. It does not own any studios or premises, its assets being staff and equipment.

Advertised for sale on 16th August in the Financial Times, The Times and Broadcast and last year making profits of £5.2 million with a revenue of £126 million, the disposal — led by Ernst & Young — invited expressions of interest for the whole division or for each of its three operations separately. The BBC has yet to release the names of the short-listed companies.

BBC Resources was the first of the BBC's commercial business-to-business divisions to be set up as a limited company and will be the last to be sold, the BBC having previously divested itself of BBC Technology and BBC BroadcastBBC Worldwide, formerly BBC Enterprises, will remain in-house as it earns revenue from the archive, media and licencing of products — in the year to 31 March 2007 Worldwide had a turnover of £810.4 million, generating profits of £111 million.

The BBC wants to use any money raised to be put into international commercial expansion and content, most probably through Worldwide.

It had been intended to float Resources back in 2005, but this was postponed for two years following strike action and ACAS talks in June 2005 — the BBC giving an undertaking that there would be no preparations made to sell the company until January 2007, and no sale allowed before July of this year. The current time-scale would see its disposal by the end of the current financial year in March 2008.

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Satellite Information Services Limited (SIS), the racecourse television company part-owned by William Hill (19%) and Ladbrokes (23%), has been named by the BBC as the preferred bidder for its Outside Broadcasts division, one of three active businesses within BBC Resources Ltd. Other SIS shareholders include, Thales (Racal) (23%), United Business Media (19%), Racecourse Association (10%) and the Tote (6% - all figures rounded).

SIS Chief Executive David Holdgate would not comment on the terms of the deal, thought to be between £20m and £50m, but said it would be "an ideal acquisition for SIS" and "a perfect fit with our existing SISLink and sports coverage". The company has long-term contracts with other leading broadcasters, such as Sky and ITV and provides satellite links for live sport and news.

In a statement, the BBC said that it intended to exchange contracts and transfer the Outside Broadcasts business and around 300 staff in the near future, with Andrew Thornton, BBC project director for the sale of the division, saying that "SIS offered the BBC a good deal and best value for licence fee payers". Mark Tugwell, Director, BBC Outside Broadcasts, added "it's time for our business to flourish under new ownership, without the constraints of BBC ownership".

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The transfer would mean that SIS will be covering major sporting events including the Beijing Olympics for the BBC in August 2008.

BBC Outside Broadcasts[edit]

The division — part of the BBC's commercial subsidiary, BBC Resources Ltd — owns a fleet of 15 television production units plus sound, support and communications vehicles (making a total fleet of over 90) and is based in self-contained premises in Langley, three miles north-west of Heathrow. These units cover events ranging from music festivals and state occasions, to Wimbledon and World Cup football.

BBC Studios[edit]

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On 7th March 2008 the surprise announcement was made that the studios operation — employing around 350 staff at Television Centre and Elstree — would be "retained by the Corporation as a commercial business" after failing to find a buyer.

BBC Post Production[edit]

The fate of this third business has yet to be announced with the BBC continuing negotiations with the preferred bidder "understood to be a company based in west London".

BBC Costume and Wigs[edit]

Was not included in the privatisation — in early October 2007 it was announced that the business was to close within six months and the entire stock sold as a complete collection. The sale fell through, and on 14th February 2008 the department ceased trading, with a BBC spokeswoman adding that "the arrangements [the corporation] was pursuing have not worked out and BBC Resources is currently inviting interested parties to consider making an offer to purchase."

BBC Costume and Wigs — which had been trading as part of BBC Studios — was the second largest collection of its kind in the UK, after the leading suppliers Angels The Costumiers.

Background to the Resources sale[edit]

The Resources business-to-business unit was formed in 1998 and operates television studios, post-production and outside broadcast facilities for it's parent share-holding company, the BBC. It does not own any studios or premises, its assets being equipment and staff (approximately 960 plus 165 administration staff).

Advertised for sale on 16th August 2007 in the Financial Times, The Times and Broadcast and in 2006-07 making profits of £5.2 million with a revenue of £126 million, the disposal — led by Ernst & Young — invited expressions of interest for the whole division or for each of its three operations separately. The BBC has yet to release the name of the preferred bidder for BBC Post Production.

BBC Resources was the first of the BBC's commercial business-to-business divisions to be set up as a limited company and is the last to be sold, the BBC having previously divested itself of BBC Technology and BBC Broadcast. BBC Enterprises, now known as BBC Worldwide, remained in-house as now does BBC Studios.

It had been intended to float Resources back in 2005, but this was postponed for two years following strike action and ACAS talks in June 2005 — the BBC giving an undertaking that there would be no preparations made to sell the company until January 2007, and no sale allowed before July 2007. It had been hoped to dispose of all three divisions by the end of this month.