BBC Trust

Note: The independent transfer pricing review was published on 10 October 2016.

New arrangements will be introduced from April this year that will bring the BBC Trust’s oversight of the BBC’s commercial services into line with the way that the licence fee-funded services are overseen.      

The arrangements are set out in a new framework for BBC commercial services (currently BBC Worldwide, BBC Global News Ltd and BBC Studios and Post Production), covering the requirements, boundaries and expectations for their operation, in particular their relationship with the licence fee-funded services.  The framework has been developed following a Trust review and a public consultation in 2014 enabling the industry to contribute their views. 

The framework sets out four principles for the commercial services, governing:

• strategic alignment between the licence fee-funded and commercial services;
• how, where, and when commercial business can be conducted;
• how commercial performance will be assessed and how market distortion will be prevented, and;
• how the necessary financial and operational separation between the publicly funded and commercial BBC activity will be maintained.

The Trust will assess the performance of the commercial services against this framework every five years, bringing it into line with the way that BBC TV, radio and online services are currently assessed.

As part of the new framework, the Trust sets out how it will decide whether each commercial service is performing sufficiently to avoid any market distortion.  Each service must generate a long-term return on investment to the BBC appropriate to the market it is operating in.  The Trust will review the annual performance, budget proposals and market evidence for each commercial service to ensure that this requirement is being met.   

The Trust also announces today that it will commission an independent review of separation and transfer pricing practices, covering the levels of transparency and compliance when the BBC’s commercial services buy rights to BBC content or pay to use BBC premises or services.  The review will independently assess whether the necessary controls and procedures are being applied to ensure that fair market rates are being paid. 

The decision to undertake this review follows concerns raised by industry participants during the public consultation about the commercial framework.  Terms of reference will be published later in 2015 and independent advisers will be appointed via a competitive tender.

BBC Trustee Suzanna Taverne said:

"The BBC’s commercial services and activities play an important role in generating returns for reinvestment into BBC content for UK licence fee payers.   This framework clarifies the Trust’s expectations and strengthens our oversight of them, to ensure the performance of the services is regularly and publicly assessed. Having listened to concerns from the industry, we will also launch an independent review later this year to provide assurance around separation and transfer pricing."

The conclusions of the Trust’s review can be found here and the new commercial framework can be found here.   

Notes to Editors

1. The Trust launched its commercial framework review in June 2014.