Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Report annually on commercial investment returns and optimisation of debt limits and cash reserves.
Conclusion
The BBC does not provide clear information about its commercial investments, or targets and actual returns from its commercial activities. The BBC has sought to offset real-terms reductions in licence fee income by increasing savings and boosting returns from its commercial arm. It has reported transparently on progress against its savings target, making savings of £564 million to date against a target of £700 million for 2022–23 to 2027–28 in its PSB activities. However, the BBC failed to report in its 2024–25 Accounts progress against its commercial returns target of 1.5 billion over the same period, and we note that the previous reporting of commercial returns lacks clarity. We welcome the commitment to report this clearly in future, and note the stated £1 billion achieved to date. We recognise the BBC must balance reinvesting in commercial growth with providing returns to support public service broadcasting, and that this often involves using its increased debt limits to fund growth. The recent acquisition of BritBox illustrates the strategy of investing to monetise content and 3 secure longer-term returns. However, while the BBC told us it does assess expected returns and debt serviceability when making such decisions, these assessments are not visible to Parliament. recommendation In addition to its commitment to report transparently in its Annual Report and Accounts on its current commercial returns target, the BBC should report annually on its returns on investment from commercial activities and how it has optimised use of its debt limit and cash reserves.
Government Response Summary
The BBC partially agreed, committing to publish BBC Commercial’s overall returns, including dividends, annually in its Annual Report and Accounts. It also noted existing reporting to Ofcom but did not explicitly commit to reporting on the optimisation of debt limits and cash reserves.
Government Response
Accepted
HM Government
Accepted
The BBC partially agrees with the Committee’s recommendation. Accounts publication. The BBC is committed to report whatever is required under accounting regulations. While the BBC already also provides a substantial amount of information on its commercial activities in its Annual Report and Accounts, it will ensure that BBC Commercial’s overall returns including dividends to the BBC Group are published annually in its Annual Report and Accounts. The BBC Group already reports annually to Ofcom who monitor its commercial activities. Annual reporting to Ofcom includes detailed financial performance of BBC Studios and BBC Studioworks, its two core commercial businesses, including revenue, direct and common costs, and therefore both Gross Profit and percentage profit margin (Earnings Before Interest, Taxes, Depreciation, and Amortisation). The BBC Group’s reporting obligations to Ofcom are detailed in the BBC’s Annual Report and Accounts, along with its other general duties in relation to commercial activities.