BBC Faces Cash Squeeze After Commercial Arm BBC Studios Hit Hard by COVID-19

The BBC will not receive a dividend from commercial arm BBC Studios this year due to the financial impact of the COVID-19 crisis.

Fran Unsworth, the BBC’s director of news and current affairs, has said there would be no dividend from BBC Studios due to “the collapse of production and advertising revenues.”

“The BBC’s financial position has gotten worse,” she explained in a webinar held by the Royal Television Society on Thursday.

Last year, BBC Studios profits more than doubled and the outfit returned a total of £243 million ($302 million) to the BBC, including £65 million ($81 million) in dividends. The division is led by Tim Davie, who was last week tapped to replace outgoing director general Tony Hall.

This year’s results, expected in July, will shed more light on the extent of the pandemic’s toll on earnings. However, the BBC’s Annual Plan last month suggested the health crisis has had “a significant impact on the BBC commercial group’s revenue as a result of lower production activity, lost sales and an unprecedented fall in U.K. and global advertising markets.

“This has a knock-on impact to the Public Service as dividend from the commercial businesses has been a growing source of funding and will be reduced as a consequence.”

Unsworth’s division is facing potentially radical cuts as the BBC grapples with the cost of paying for free license fees for those over the age of 75. While the corporation had looked to charge this demographic in a controversial move, that plan was shelved when the health crisis struck.

Earlier this year, plans for BBC News to nix 450 jobs to save £80 million ($100 million) by March 2022 were put on hold when it became clear that the scale of the health crisis would put extra demands on BBC News.

Unsworth said she was working on plans to re-start the process of streamlining the BBC news operation. Ratings for U.K. BBC news and public affairs shows had soared during the pandemic, but Unsworth said that despite this and the appointment of new director general Davie, the planned cuts were likely to happen.

“The whole of the BBC is under [financial] pressure. It’s important to say that this savings target was also about modernizing what we do. It’s about saying ‘Is the way that we deliver news fit for the modern world, where there is an enormous shift to digital from linear platforms?’”

Unsworth said that 90% of BBC staff have been working from home, something that may have long-term implications for how the corp functions.

She said: “We have clearly demonstrated that people don’t need to come into the office all the time. I don’t think we need to go back to working exactly how we did before…That’s something we’ll have to figure out over the next few months.”

Working in lockdown had provided an opportunity for the BBC, whose critics insist it remains too bureaucratic, to reassess its working practices.

While Unsworth stressed that viewing levels to BBC News for all demographic groups had increased during lockdown, she was particularly gratified that 16 to 35-year-olds were using a lot more of the corporation’s news services.

“We thought they were a lost audience for linear TV news bulletins, but they haven’t been. But to be honest, there is a question mark over the longevity of that.

“Everyone is at home and parents might be in charge of the remote control. The decline in linear viewing by young people and the switch to digital is likely to continue when all this is over,” said Unsworth. “It doesn’t make you reverse your strategy but take stock and consider.”

Turning to the BBC’s coverage of the killing of George Floyd and its ramifications in the U.K. Unsworth said that, in the context of the corporation’s obligation to be impartial, “the BBC is not neutral on this story.”

She explained: “The BBC is not impartial about racism. It’s not impartial about what happened in Minneapolis and racism in general, but nonetheless, there are areas where it goes into matters of public policy [such as education provision] which we do have to treat impartially.”

Unsworth continued: “The weight of opinion is that there is a lot of racism in Britain and the BBC accepts that. It is where you start to debate the consequences of that and the issues around it and what you do about it. That requires impartiality.”