BBC Studios profits rocket past $250M

BBC Studios hit record £226M ($267M) profits last year and the corporation splashed the cash on drama as it emerged from the pandemic, according to the Annual Report out today. However, the report contained worrying statistics on how many Brits are using the BBC each week, coming at a time when it is under pressure from the government.

BBC Studios, the corporation’s commercial arm, had a strong year as Director General Tim Davie placed more stress on generating higher commercial returns, with turnover increasing by 30% to £1.6B ($1.9B) and EBITDA rising by 56% to £226M, topping £200M for the first time.

The gains, which were put down to the strong performance of key brands such as Doctor Who and Top Gear plus new shows The Outlaws, The Pursuit Of Love and This is Going to Hurt, come as BBC Studios’ borrowing limit has been increased by the government to £750M ($887M).

The outfit’s distribution arm struck more than £400M ($472M) worth of content sales and the production arm won 104 new commissions, one quarter of which were for third parties. Last year, it won 74 new commissions, 16 of which were for third parties. Shows delivering this year include Apple TV+’s Prehistoric Planet and season two of Amazon Prime Video’s Good Omens.

Looking ahead, BBC Studios CEO Tom Fussell, who replaced Davie after a lengthy search last year, said the outfit is in a “favorable position amidst continuing demand for high-quality content, a large proportion of sales from multi-year carriage deals and a robust production slate.”

“Whilst not immune from wider geo-political and market dynamics, where audience habits continue to shift and competition increases, BBC Studios is a business in good shape with strong prospects for growth,” it added.

BBC Studios therefore exceeded its five-year target of returning £1.2B ($1.4B) to the BBC from 2016/17, with a £1.5B target in place over the next five years.

The BBC is still chasing huge savings of around £285M ($336M) per year due to the upcoming license fee freeze, however, and BBC Studios’ profits remain a small portion of its overall £3.8BN ($4.5B) license fee income, which rose slightly last year.

“Significant challenges”

Writing in the report, Davie hailed a strong year but said “it is disappointing to face a two-year freeze and we will have to absorb the considerable costs of inflation in this period.”

“This presents us with significant challenges especially given that the BBC’s income for UK services is already 30% lower than a decade ago in real terms,” he added.

BBC Studios’ success came as the BBC adapted to a post-lockdown world by splashing the cash on drama, increasing spend by 30% to £376M ($444M), while comedy and entertainment spend rose by 17% to £214M ($252M), according to the heavily detailed near-300 page report.

Overall content spend shot up by 27.5% to £1.78B ($2.1B), as the BBC was able to return to commissioning as normal, having spent at least three months of the 2020/21 period being unable to make programs due to COVID-19.

More concerning for BBC bosses were statistics buried deep in the report showing that UK viewers spent one hour less time using BBC services per week last year compared to the previous one, dropping to 7 hours 12 mins per week average, while the overall proportion of Brits watching the BBC fell by 3pp to 73%.

The BBC will likely float the lifting of COVID restrictions as the reason for the drop, with life returning to vague normality, while pointing to an increase in BBC iPlayer sign-ins of 1.5M to 12.1M, but the figures will no doubt be concerning those at the very top.

There was also disappointment for youth-skewing BBC Three, as viewing to the channel from its 16-34 year old target audience fell by around 10M minutes per week. The network, which recently returned to linear TV, reaches just 6% of 16-34 year olds per week.

Other notable nuggets from the report included DG Davie’s pay shooting up by 15% to £494,000, a fall in headcount of almost 1,000 and a rise in the amount of time it takes for the corporation to resolve bullying cases to more than 100 days for the first time in three years. Deadline