01.09.02
Treasury
agrees borrowing limit for BBC's commercial subsidiaries
The
Treasury has agreed a borrowing limit of £350 million for
the BBC's commercial subsidiaries, BBC Ventures Group (encompassing
BBC Resources Ltd, BBC Technology Ltd, BBC Broadcast Ltd and Kingswood
Warren Ventures Ltd) and BBC Worldwide Ltd.
John
Smith, BBC Director of Finance, Property and Business Affairs, said:
"This agreement will allow Worldwide and Ventures to invest
in new opportunities for growth and to provide a bigger return for
re-investment in BBC programming and services, for the benefit of
the licence fee-payer."
As
part of the agreement with the Treasury the BBC has agreed to manage
within a range of covenants designed to ensure safety levels in
all commercial investments.
A
non-trading commercial holding company will be created to hold the
shares in BBC Worldwide and BBC Ventures Group.
Notes
to Editors
The
BBC's commercial subsidiaries exist to exploit BBC assets in the
market place to provide a cash-flow return to supplement the income
from the licence fee for re-investment in programmes and services.
The
BBC's Fair Trading Commitment ensures there is no cross-subsidy
between public service and commercial activities.
BBC
Worldwide has a target of quadrupling the cashflow it delivers to
the BBC over the 10 years to 2006.
Last
year it delivered £106 million on turnover of £660 million.
BBC
Ventures Group expects to record its first profit this year.
This
agreement allows the BBC's commercial subsidiaries to borrow up
to £350 million from investment sources, not from the Government.
The
covenants attached to the borrowing facility ensure that the debt
cannot exceed three times the subsidiaries' earnings and neither
can it exceed 80 per cent of the value of the commercial group's
assets.
The
BBC's public service operation is funded by the licence fee, currently
£112 (colour) or £37.50 (black & white).
The
BBC's public service borrowing limit of £200 million is not
affected by the new agreement.
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