BBC Studios, the commercial arm of U.K. public broadcaster BBC, touted strong business momentum in its annual report on Tuesday, including record full-year revenue and earnings, as well as a 56 percent increase in production sales.
The company lauded “a very healthy year” for its TV channels group saying: “Content sales were strong at over £400 million ($473 million), thanks to key brands like Doctor Who and Top Gear, unscripted landmarks The Universe and Green Planet, alongside hits from our indie partners, including The North Water, This Is Going to Hurt and The Outlaws.” And Tom Fussell, CEO of BBC Studios, said: “Our creative and financial success is clear for all to see.”
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In a conversation with The Hollywood Reporter, Fussell, a former CFO of production firm Shine who previously also worked for Harper Collins U.K. in various commercial director roles and as finance director for Random House in the U.K., discussed opportunities in the production and streaming businesses, potential advertising challenges and why audio is a business with international upside for the BBC’s commercial unit.
In its latest results, BBC Studios highlighted the continued success of long-established content franchises, such as Doctor Who and Top Gear. How do you keep getting value out of them and how key are they and newer hits for the business?
I have worked in many production companies around the world and in commercial businesses. And in other places, we were always relying on one format or another, but we cannot rely on one format or another. We have a huge amount of breadth. And we are winning a lot of business – with the BBC, but also with global platforms and linear channels around the world – with our production distribution business, which turned over 1.15 billion pounds ($1.37 billion) last year, nearly two thirds of that is for revenue that doesn’t come from the BBC, but comes externally, from SVODs and linear channels and the shows we are making there.
So, we are really proud of what we are doing with Doctor Who and Top Gear and Dancing With the Stars. But we also got these other fantastic shows. We just delivered Prehistoric Planet to Apple. We have done Life After Life [adapted from the novel of the same name by Kate Atkinson] for the BBC. And Happy Valley [season 3] has been made by us for the BBC and partners around the world.
So we have a huge breadth, but are always in discussions and looking at what we can do with some of the bigger franchises, like Dancing With the Stars, which will now be moving on to Disney+ in the States. We are really happy with that relationship with Disney.
And we are taking formats, which you may not have noticed [and making local versions]. We made Luther in India. We are making with Lionsgate Ghosts [for the U.S.], and CBS is thrilled with the performance of Ghosts [and has renewed it for season 2]. Welcome to Flatch, which is the format This Country in the U.K., we are also making in the States. And Doctor Foster, we are making in the Philippines.
So you have just got this huge breadth of content that isn’t just about some of the titles you mentioned. Those are very important to us, but we have got this breadth that we can leverage around the world.
Global streamers have often been seen as competing with the traditional BBC linear TV business in Britain, but have also been seen as hungry for quality content produced by the likes of BBC Studios amid increasing competition. How do you see the opportunity to sell to streaming giants today?
Our content really does have a purpose, and we are very proud of everything we do. So if you were watching Strictly Come Dancing in the U.K. last Christmas, you had the Rose [Ayling-Ellis] and Giovanni [Pernice silent dance] moment when the music went off, and you literally sat there thinking, “Okay, this is what it is like to be Rose” [who is deaf] for 20 seconds. If we make things that are different, and that means we can make different premium programs for different customers, we can work it very well. So we can make Prehistoric Planet for Apple, but we can also make Frozen Planet II for the BBC and our other really important customers like Discovery around the world. So we can make sure to use the premium brand, and everyone knows the quality that BBC Studios stands for.
And then we have got investments now, we have taken control of five fantastic scripted businesses. They happen to be in scripted. Through one of them, Lookout Point, we are making a show called The Ballad of Renegade Nell [From Gentleman Jack and Happy Valley writer Sally Wainwright] now for Disney+ as an original. So, you have a huge breadth and standard quality, and then we can make sure that we are working for all the markets and lots of different customers – linear channels, SVODs and the BBC.
Do you expect to strike more deals for production outfits that fit into the BBC Studios mold?
We are always in conversations with talent, whether it is first-look deals, whether we represent them, whether we invest in equity. We are always having conversations across a range of genres. We had minority stakes in many businesses, and we have now taken five majority or wholly-owned stakes in scripted businesses. We are always having conversations and having good conversations around the world around seeing what kind of businesses will fit us. But we have got a very high bar, a very high standard of quality threshold and cultural threshold when we invest in companies.
You mentioned the channels that BBC Studios has around the world. Do you worry about a possible advertising recession that some are predicting?
In the year we just had, our UKTV channels business had a record profit for us and a record share of the of the commercial ad market – their ad sales are done by Channel 4. And Channel 4 and ITV are both saying that they expecting some decline in the market in the next 12 months. So we are planning for that. But we are still investing in those channels. We still want to grow share. And we see really clever things that we are doing, like [rapper and self-taught chef Big Zuu’s food show] Big Zuu’s Big Eats [on UKTV channel Dave] that won a BAFTA has been a fantastic success for us. We have also used Zuu now on one of our formats, Hungry for It, that we made for BBC Three, and that works for us.
Around the rest of the world, we have ad revenues as well. And we are starting to see people predicting, we haven’t seen it in reality yet, downturns. So we keep a very close eye on that. We want to invest in channels and in streaming in the future, building on the success of BritBox. There may well be some economic headwinds in the short term, but we still want to invest, because we come from a good place of strength.
Given the rollout of BritBox in foreign markets, do you plan to launch more BritBox or other streaming or digital services around the world?
We are really, really proud of the joint venture we have with ITV in BritBox, which has got some scripted and entertainment content in there, which leaves a whole raft of other genres we will have a look at. We will look and do diligent work to see whether we should be launching something ourselves or with another partner and whether BBC brands stand alone or whether we need to partner up. The market is changing rapidly. You can see what is happening to people as people are cord cutting, cutting subscriptions in some areas. And you can see what is happening to [companies’] share prices. So this is having an impact, but we will look very carefully around what we can do around driving those services forward and seeing what launching new digital products could mean for us.
Are there any emerging business models or new business opportunities for BBC Studios?
What we are looking at now is that commercial opportunities that we have with the BBC’s audio products outside of the U.K. The BBC has got some wonderful audio brands and audio content. What can we do with that outside of this country? It may be ad-funded, it can be funded in other ways. We will have a look at that.
We are obviously also looking at, with the rest of the market, at FAST [free ad-supported streaming TV] services. That is probably one of the new areas that have have come up in the last year, and people are looking for hedges in a world where subscriptions are hard to get – how do you get advertising?
For us, the focus has really been on building the production business and building on the success of UKTV and then seeing what else we can do with the BBC brand outside of this country.