Recommendation 22

In 2019–20, the returns paid by commercial businesses for the BBC to use on its programme-making were £208 million, equivalent to under 6% of licence fee income.41 The BBC Director-General has identified increasing commercial income as one of the organisation’s four strategic priorities.42 In March 2021 the BBC’s main commercial subsidiary, BBC Studios, announced a new target to increase commercial returns by 30% in the five years from 2022–23.43 We asked the BBC if there is room to be more ambitious 35 C&AG’s report, paras 3.3, 3.8 36 Q46 37 Q75 38 C&AG’s report, para 2.16 39 C&AG’s report, para 2.17 40 Qq 91 to 94 41 C&AG’s report, para 15 42 C&AG’s report, Figure 17 43 BBC shares detail of ambitious plans to build commercial income - BBC Media Centre, 10 March 2021 14 BBC strategic financial management in this target, which equates to a 4.5% annualised growth rate. The BBC considers this to be a decent base plan as the market is not going to be growing at 4.5% and so it beats the wider market rate. It believes it can go a lot further than that, but it does not quite know the limits of what it can achieve and says that more work is needed to understand this. However, the BBC cautioned about the need to be realistic, arguing that commercial returns will not replace the licence fee in the medium term.44