The National Audit Office says BBC Studios needs to “continue to evolve in a dynamic market”.
The BBC commercial arm, which includes the BBC’s production unit, as well as international channels and the domestic UKTV, has returned £1.9 billion to the BBC by substantially growing its income and profits.
However, the NAO notes that in 2023-24, BBC Studios’ income and profits dropped, partly due to challenging market conditions, including a global slow-down in content spend and fewer programmes being commissioned, as well as high-value contracts coming to an end the year before.
There has also been investment in digital services including BBC.com, U (formerly UKTV Play) and BritBox International that have all impacted on profit.
“BBC Studios has so far been successful in exceeding its income and profit expectations. It now faces significant challenges in realising its ambitious plans for future growth. It has diversified its business to adapt to changes in a fiercely competitive market, but is falling short of its targets for producing new intellectual property through content creation,” said Sir Geoffrey Clifton-Brown, Chair of the Committee of Public Accounts. “BBC Studios must strike the right balance between generating short-term returns to the BBC and delivering sustainable growth that will enable it to keep up in this dynamic market.”
The NAO is concerned that challenging market conditions could impact BBC Studios’ ambition to double its size between 2021-22 and 2027-28.
It says the BBC remains reliant on the IP from BBC programmes created before the 2018 merger. Of the ten titles from its production business which provided the most profit to the BBC in 2023-24, only one was from new IP generated by BBC Studios.
In a statement BBC Studios’ CEO, Tom Fussell said: “We welcome the NAO’s positive assessment of our business and its recognition that we have adapted our strategy and diversified our business in response to changing market conditions and audience behaviours. We’re a trusted supplier of platform-defining shows to both the BBC and global streamers; we bring international audiences impartial, trusted news and the best of British streaming through the world’s biggest English language news website and our Britbox service; and we’re home to some of the world’s most loved entertainment brands, from generational children’s hit Bluey to established favourites like Doctor Who and Strictly Come Dancing/Dancing with the Stars that touch the hearts of audiences around the world. This success gives us a strong foundation for our future growth ambitions and we are grateful to the NAO for their recognition and recommendations.”
BBC Studios’ growth plans involve exploiting existing successful key brands and IP, such as Doctor Who and the animation series Bluey; the production of more content for non-BBC third parties; and a larger share of income and profits to come from digital and streaming services.
