BBC faces budget challenge over absence of Studios dividend

Luther

The UK’s BBC is looking at a £65m budget black hole after it emerged that the impact of Covid-19 on commercial arm BBC Studios (BBCS) will mean that the latter’s annual dividend to its public broadcaster parent is unlikely to be made.

BBCS contributed almost £250 million to its parent broadcaster last year, driven by sales of shows such as drama duo Luther and MotherFatherSon, as well as natural history series Dynasties.

The organisation, which merged its production and distribution arms in 2018, also makes money from producing shows for third-parties for partners such as US-based Quibi and China Mobile’s streamer Migu, and operates streamers including BritBox and numerous ad-supported linear networks around the world.

As such, the impact of Covid-19 on production and advertising has hit BBCS hard, and Fran Unsworth, the BBC’s director of news, yesterday said that the effects of the pandemic would mean that there would be no dividend payment from the broadcaster’s commercial arm.

Last year, that cash dividend totaled £65m. A further £178m, made up of content investment and rights payments, was paid to the broadcaster, with BBCS contributions over the past five years almost topping $1bn.

The lack of a dividend payment would, Unsworth added, further impact future budgets for the broadcaster, which has already paused plans to cut 450 jobs designed to save it £80m by 2022, and delayed the end of the free TV licence for those over 75.

“We still have the savings strategy but actually the BBC’s financial position has got worse since then because they have delayed the [end of the] free licences for the over 75s,” she told a Royal Television Society online event yesterday.