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It crowed that the successful sales of rights and merchandise for programmes such as The Office, Fimbles and Walking with Beasts would enable it to contribute a record £123m to the BBC's coffers this year - a 16% rise on 2002.

All five commercial divisions of BBC Worldwide are now making a profit - something that has not happened since the mid-90s.

Indeed, BBC Worldwide has turned in double-digit profit growth for the past four years, in stark contrast to the overall media sector, which has been struggling badly since 2000.

For many, this performance encapsulates the 'new BBC'. Long gone is the paternalistic, often patronising, tone of the first half of the 20th century.

Gone, too, is the bureaucratic, occasionally incompetent, culture of the latter half. The new BBC is an aggressive, entrepreneurial beast, thriving in our consumer age.

But is this what we expect - or, indeed, want - from this most trusted of British brands?

BBC Worldwide, a wholly owned subsidiary of the BBC, now employs the language of private sector marketers. Take Fimbles, for example. It is a programme and licensing concept aimed at two- to four-year-olds, which was created last year.

BBC Worldwide talked of turning Fimbles into a global brand. Its merchandising strategy involved releasing a tight range of products initially, in order to create a demand, and securing premium shelf space in the run-up to Christmas.

And it worked. Fimbles was the children's success story of the past year.

Fimbles Magazine continues to sell 132,000 copies each month and the programme has already been sold to more than a dozen countries, such as France and Korea.

Another BBC character licence, Tweenies, aimed at three- to four-year-olds, even tied up with that symbol of international consumerism McDonald's for a promotion earlier this year.

"Shouldn't the BBC be educating kids rather than encouraging them to eat fast food?" asks one marketing director, who is also the mother of a young child.

So is the BBC now more Disney than Auntie? "There are similarities with Disney," concedes Rupert Gavin, chief executive of BBC Worldwide. "We have a comparable approach to branding and extrapolate brands across many territories."

Licensing boon

Beyond this raw commercialism, there is also criticism that the BBC is not operating on a level playing field. This, say some, is why it can achieve such impressive growth.

"The BBC can launch character licences on a unique platform," says a senior executive at a rival media company. "It is a platform funded by the licence fee-payer and is not subjected to the same commercial imperatives we are."

It is a common grumble that has increased in volume with the BBC's expanded children's programming output through its digital channels CBBC and CBeebies.

Gavin responds: "That's not a fair criticism. We have to compete for the rights for our properties. In any case, children's programming is something that has to be created. The fact that we are thinking how it can be exploited commercially, doesn't influence the actual programming decision. Programmes are selected in isolation, working within the editorial decision. The strategy of how best to extend the brand is taken afterward."

Others question whether a record such as Bob the Builder, based on a BBC programme, would be given preferential play listing on BBC radio.

BBC Worldwide vehemently denies this and is quick to point out that no licence fee money is used in developing commercial activities. It says strict fair trading regulations apply between the public service and commercial arms of the BBC.

Gavin also cites the example of surprise-hit comedy The Office, which was the nation's best-selling TV show on video and DVD when it was released last year. "People questioned it at the beginning, but it proved to be a runaway success, exceeding all our expectations."

He argues that much of BBC Worldwide's success is due to its 'portfolio' business with the ability to think in the "long term".

"Unlike Carlton or Granada, only 15% of our revenue comes from advertising, which makes us less vulnerable to the fluctuations of the media market.

If other companies were more diverse, they would be more insulated," he says.

BBC Worldwide's business is indeed highly diverse these days. BBC channels sold abroad have also performed strongly over the past year.

BBC America did particularly well during the recent war in Iraq, when US viewers apparently yearned for another nation's point of view. The BBC's international reputation for integrity and independence stood it in good stead.

But putting its news and current affairs heritage aside, BBC Worldwide also has three game show concepts - including The Weakest Link - either on air or in pilot for three major US networks.

BBC Worldwide turned in healthy video, DVD and book sales last year.

BBC Books is now the leading hardback adult non-fiction publisher - top sellers include Rick Stein's Food Heroes and Delia's Vegetarian Collection - and has begun its assault on the educational books market.

Its magazines business continues to flourish, now selling more than 100 million copies annually. Radio Times sold its 15 billionth copy during the year; women's title Eve saw an 11% increase in newsstand sales; and Top of the Pops magazine widened its circulation advantage over rival Smash Hits to 100,000, selling nearly a quarter of a million copies per issue.

In May, BBC Worldwide even launched a record label, Inversion Records, which has already signed Argentine guitarist Dominic Miller. This growing portfolio meant sales of more than £640m for the year to March 2003, with the upward trajectory set to continue.

But the success of its commercial arm causes the BBC a fresh set of problems.

It encourages some to question its very funding formula. The Conservative Party is likely to make it a manifesto commitment at the next General Election to cut the £112-a-year licence fee as a result of the BBC's commercial operations.

And it may go even further, having recently commissioned a task force, headed by former Channel 5 chief executive David Elstein, to look into whether the broadcaster should carry advertising. This reflects a popular cry among commercial media companies, who believe the diversifying BBC is distorting an already competitive market and using its muscle to stymie their own ventures.

"However much the BBC says there's an arm's length relationship between itself and its commercial arm, it is worth asking why a state-owned broadcaster has any business getting involved in an area where commercial companies already fill the market," argues John Whittingdale MP, the shadow culture secretary.

The strongest defence the BBC has for its aggressively commercial stance is that all the money its commercial ventures make is ploughed back into its programming.

Gavin claims the money BBC Worldwide makes adds more than £5 a year to the value of every licence fee in the UK.

Privately, few media executives really want the BBC to carry advertising.

The fondness for the institution seems to transcend day-to-day business imperatives and most agree that the BBC maintains a high threshold for British television.

Gavin believes that the success of BBC Worldwide may have actually diluted the pressure for the corporation to eventually accept advertising.

"It puts people's perspective of what is possible from the commercial market on a more realistic footing. There was a perception that if the BBC was commercially oriented the floodgates would open, but this has not happened," he claims.

Instead, perhaps the most interesting effect of this commercial prowess is a gradual transformation in the character of the whole institution.

Changing values

The BBC's original mission, set out by Lord Reith, was to inform, entertain and educate. Earlier this year, its values statement was updated with the addition of a broader, more brand-literate vision, which is 'to be the most creative, trusted organisation in the world'.

There has been a determined attempt to leave its out-of-touch 'Auntie' image behind, but critics believe the consumer-led interpretation of the Reithian guidelines is causing the BBC to sideline education and information in favour of entertainment.

The corporation's off-air marketing budget, £15m a year, now dwarfs that of many commercial competitors.

Jim Hytner, ITV's marketing and commercial director, says: "The BBC is now run as a commercial venture. The schedule is created not to ensure breadth for the viewer, but to compete with commercial broadcasters."

He further claims that Fame Academy is the greatest example of this: "It's a copy of Popstars and Pop Idol and will even run again at the same time as Pop Idol 2."

BBC marketing director Andy Duncan denies this. "We would argue that it's not derivative, but takes a new look at nurturing talent. We have to fight for our fair share by making the best programmes and telling the public about them. I feel we are appropriately competitive."

Duncan believes there is a difference between the BBC's industry critics and the viewing public. He says that research reveals that "70% of the public believe what we do is improving their perception of the BBC".

"The vast majority of the BBC is public-focused and not commercially-based. Our audience is telling us that we have assets and we should make more of them," he says.

But the BBC cannot afford to ignore its more influential critics. Although Greg Dyke has publicly stated that the charter review process - to be completed in 2006 - will not "get in the way of what we do for our audience", one eye must be on this critical juncture for the BBC's future.

Even the Labour government, traditionally more sympathetic to the BBC than its Conservative counterpart, has started to get on the back of the corporation. The long-term relationship cannot have been helped by the recent run-in over its coverage of the war in Iraq.

Duncan says his marketing department already has "a couple of people" working on the charter renewal as a project. Expect this to be increased next year.

Like Dyke, Gavin tends to shrug off criticism of the BBC's commercialism with a 'we're damned if we do, damned if we don't' attitude. Dyke said earlier this year: "Those who say we have too much money were the same people who said we weren't efficient. They can't have it both ways."

And Gavin adds: "The BBC used to be seen as incompetent at doing these things and we were told by the government to be more efficient. If people are now saying 'The BBC is a bit aggressive and assertive isn't it?' it shows a reasonable job is being done."

Perhaps the only thing that is certain is that the BBC at the end of this century will be a very different animal to the one we know today.

TIMELINE - BBC

1922: The British Broadcasting Company is formed in October, with John Reith as general manager. Reith's vision is to inform, entertain and educate the public, free from political and market pressures.

1923: Radio Times, the BBC's first commercial venture, is launched. It is still one of the UK's best-selling magazines.

1955: The first commercial broadcaster, ITV, launches in September with an instant impact on BBC TV. Its audience share falls as low as 28%.

1985: The Peacock Committee, formed by Prime Minister Margaret Thatcher, recommends against the BBC carrying advertising, arguing that this would reduce, rather than increase, market competition.

1994: BBC Worldwide is established in May 1994 to bring together all the BBC's international and commercial activities.

1997: BBC Worldwide links with commercial broadcaster Flextech to launch the UK Gold family of channels. It also partners with Discovery to develop channels. BBC News 24 and the first BBC web site are launched.

1999: Greg Dyke is appointed director-general designate. The government sanctions an extra £1bn of licence fees to fund digital services. Tweenies becomes the most successful pre-school programme on TV.

2002: BBC Worldwide becomes the largest UK provider of international TV. BBC Ventures Group is formed to provide media management and distribution services to the BBC and outside clients. Freeview, the digital service set up with BSkyB and Crown Castle offering 24 channels, goes on air.

2003: BBC Vecta, the BBC's venture-capital arm, launches. So does a BBC record label, called Inversion, sparking fears that the BBC is overstepping its remit.