BBC blow as OFT launches inquiry on commercial activities

LONDON – The BBC is facing an investigation by the Office of Fair Trading on its money-making commercial activities at BBC Worldwide to see whether it is anti-competitive.

After announcing £55m in profit last week, BBC Worldwide's operations have been called into question by the OFT, which is concerned that private-sector rivals may not be getting a fair deal.

"The provision of such services by the BBC raises inevitable questions about whether it enjoys an unfair competitive advantage," the OFT said in a letter to the corporation.

The competition watchdog raised concerns about whether the BBC, being a public service broadcaster, should be making any money at all.

"It raises the issue of whether the BBC should be engaging in any such activities, given that, by definition, they do not arise from the BBC's exercise of its public service mission," the OFT added.

If the OFT refers the issue to the Competition Commission the BBC could be forced to scale back on either all or some of its commercial activities.

BBC Worldwide incorporates the BBC's book, magazine and DVD divisions and sells BBC formats, like 'Strictly Come Dancing', overseas, as well as operating a number digital channels including BBC America and the UKTV channels with Flextech. 

It recently emerged that BBC Worldwide failed to return a £200m payment to the corporation as a supplement to the licence fee, despite boosting profits by 50%.

BBC Worldwide pledged seven years ago to quadruple the cash it returns to the BBC but is has only returned £145m this year, £55m short of what it owes.

BBC Worldwide chief executive John Smith has promised to double profits next year to make the repayments.

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