BBC Worldwide delivers over £200m to BBC for a third year running

BBC Worldwide today announced its financial results for 2016/17, showing an increase in both headline sales and headline profits, and sustaining cash returns to the BBC above £200m for a third successive year.

Tim Davie, CEO of BBC Worldwide and Director, Global, said: “By concentrating our efforts around core areas of growth and being bold in our transformation ambition, BBC Worldwide has delivered another strong year of results. Ever-closer relationships with producers, driving excellent content, along with acute customer focus, creative deal-making and strategic partnerships, are together enabling us to navigate the rapid shifts in the markets where we operate.

“We begin the new year facing a complex set of conditions. The outlook remains unpredictable, but demand so far has largely held up well overall. We are actively evolving our company to stay ahead of market developments. We have an exciting slate – including Blue Planet II, Top of the Lake 2 and McMafia – backed by strong relationships with producers and customers alike. We believe these are robust reasons to give our shareholder, partners and stakeholders confidence in our future prospects.”

Financial results

Headline sales of £1,059.9m (2015/16: £1,029.4m) and headline profit of £157.3m (2015/16: £133.8m) were up 3.0% and 17.6% respectively. Organic headline profit growth[1] was 6.4% and all four regional segments reported growth in headline profit. These results reflect good Content Sales, with sales to SVOD services remaining buoyant; an excellent performance from Branded Services, including the UKTV and BBC AMERICA channel JVs; and beneficial foreign exchange movements. Offsetting factors include the prior year benefit both of a non-recurring music catalogue sale and of the final series of LA-produced Da Vinci’s Demons; and continuing downward pressure globally in Consumer Products.

Cash returns to the BBC remained very strong at £210.5m (2015/16: £222.2m), a record level excluding disposal proceeds in previous years. Equivalent to 12.2% of the BBC’s spend on television content, this additional funding enables the BBC to commission with extra ambition, and represents between one-half and fourth-fifths of funding for much-loved titles Planet Earth II, Doctor Who and Top Gear. The two most significant elements of this return, which was underpinned by free cash generation up 138.3%, at £90.8m (2015/16: £38.1m), were investment in BBC commissions of £99.0m (2015/16: £92.7m), up 6.8%, and dividends of £89.3m (2015/16: £105.5m), down 15.4%, due to lower disposal proceeds in the year. Specific items, which are not reported in headline results so as not to mask the underlying trading performance, included a non-cash content amortisation charge reflecting the increasingly front-loaded pattern of Content Sales arising from the growth of SVOD services, as well as charges in relation to BBC Store and the closure of channels in Latin America.

The financial performance reflected good delivery of the strategy laid out in 2013: focusing on premium content, global brands, and digital transformation.

Premium content

The year’s performance reflects a strong content slate, particularly across drama, factual and children’s, with deliveries including Planet Earth II, Sherlock S4 and Top Gear S24. Total content investment of £173.9m (2015.16: £161.5m) was up 7.7%, with over half invested into the drama genre. Three of our five top-selling programme brands, which included Doctor Who, Orphan Black, Planet Earth II, Sherlock and Top Gear, were made by BBC Studios. The most widely sold programme delivered in the year was Planet Earth II, sold to 154 territories at year-end, and now licensed to a total of 233 territories and breaking ratings records as far afield as the USA, China and France. Sherlock S4 was a close second, sold to 230 territories. Popular British shows made for new international audiences included Dancing Brasil, a 53rd international format licence for Dancing With The Stars, and Stargazing Live for the ABC in Australia. Bake Off Italia broke viewing records in Italy, while on their respective channels The Great Australian Bake Off achieved the highest ratings of all time and Bake Off Brasil became the highest rated cookery show.

Strong demand from VOD clients helped us pass our internal revenue target of £400m in content sales one year early, at £422.4m (2015/16: £384.2m), up 9.9%, maintaining our position as the leading global distributor outside the US studios. A close relationship with BBC Studios saw a deal with BBC One and Amazon for Good Omens, and with Netflix for a second series of comedy Lovesick. BBC Worldwide’s primary content partnership with BBC Studios was complemented by five new equity investments into British talent-led indie start-ups, coupled with increased shareholdings in Lookout Point and Baby Cow, enhancing BBC Worldwide’s access to premium British content.

The year also saw us participate in creating two new premium drama initiatives to increase our investment capability: Benchmark Capital with Lookout Point and Access Entertainment to greenlight projects ahead of broadcaster commission, and a £150m investment partnership with financier Anton.

Global brands

The year saw further expansion of BBC brands, along with strong joint venture performances in the UK and US. Factual brand BBC Earth benefited from the return of Planet Earth II around the world. In Canada, the series marked BBC Earth’s debut in the market, in partnership with Blue Ant Media, and delivered the highest rating of any of its channels over the last six years. BBC Earth also launched in India, with Sony Pictures Network, Serbia and Bosnia. BBC First, in scripted, led a portfolio of high-performing channels in Australia, performed well in Benelux, and debuted on four third-party VOD platforms in Malaysia, Singapore and Hong Kong. CBeebies launched in East Africa, the Middle East, North Africa and Taiwan, and reached agreement for carriage on digital platform iQIYI in China. During the year, we took the decision to close our channels in Latin America, in order to concentrate on programme and format sales in the region, building on recent successes including War & Peace on Globo and Planet Earth II and Top Gear on Discovery.

BBC AMERICA, in its second full year of JV partnership with AMC Networks, posted a 12th straight year of primetime growth – the only US cable channel to achieve this in the year. Stand-out content on the channel included Planet Earth II, the most-watched nature episode in the US in five years; the Doctor Who Christmas special, its top-rated programme in the year; and originals Orphan Black and Dirk Gently. Meanwhile UKTV produced another excellent set of results, with growth in SOCI, revenue and profit, driven by a core of BBC content alongside UKTV original programming.

Direct-to-consumer digital

The year has seen further progress on our direct-to-consumer digital approach of strategic partnerships in key markets. We launched a new TV Everywhere app, BBC Player, in partnership with platforms in Singapore and Malaysia, and struck a partnership with ITV plc to create SVOD service BritBox, which launched in March in the US. Offering the most comprehensive selection of British programming available in the market, its wealth of titles includes Classic Doctor Who, Emmerdale Farm and EastEnders.

Shortly after year-end, we announced the closure of UK download service BBC Store, as the overall level of demand was not strong enough to underpin a sustainable business over the long term.

Segmental performance

All four geographic regions delivered growth in headline profit, with three out of four delivering increased headline sales, the exception being North America where the previous year’s conclusion of LA-produced Da Vinci’s Demons provided unfavourable comparatives. UK results benefited from strong Content Sales, and an increased contribution from UKTV, and DVD, which slowed less than the overall market, helped by Planet Earth II and The Best of Strictly. North America saw reduced production revenue from the end of Da Vinci’s Demons offset by an increase in profit from Branded Services, with BBC AMERICA performing well. BBC channels also performed well in Australia and New Zealand, with strong ratings in Australia for The Night Manager, Death in Paradise and Michael McIntyre’s Big Show. In Global Markets, where profit growth of 61.4% was helped by a particularly strong performance in VOD sales, Sherlock S4 generated over 100m views on digital platform Youku in three months.

Supporting the creative industries

Returns to indies, excluding equity investments, were £146.4m (2015: £116.1m), up 26.1%, and above the £100m mark for a fourth year running. Our catalogue continues to represent over 250 indies, with BBC Worldwide accounting for an important element of the UK’s £1.33bn TV exports.