BBC told to rein in commercial activities.

Summary: LONDON - The commercial arm of Britain's BBC has grown out of control and must be reined in to prevent the publicly funded broadcaster further damaging rivals and its own reputation, an influential report said.

The Commons Culture, Media and Sport Select Committee said in a report on Tuesday it was worried by the path the BBC Worldwide had taken in recent years, including its "controversial" purchase of the Lonely Planet travel company.

"Worldwide's new activities risk jeopardising the reputation of the BBC and have had an adverse impact on its commercial competitors," the report said.

BBC Worldwide, which sells programmes, programme formats, magazines, DVDs and books based on its brands, has grown strongly in recent years and posted profits of 118 million pounds ($176.1 million) in 2007-08.

The wider corporation, which is funded by a guaranteed 3.4 billion pound fee paid by TV viewers, has been criticised for chasing commercial revenues through Worldwide by many of its rivals who are struggling against a sharp fall in advertising.

While the Commons committee said it generally backed the role of BBC Worldwide to exploit BBC intellectual property, it said it was increasingly concerned about some decisions.

"There is clearly a balance to be drawn," it said.

"The new businesses ... particularly its minority stakes in overseas production companies, its controversial acquisition of Lonely Planet, and its growing portfolio of magazines, suggest that the balance has been tipped too far in favour of Worldwide's unrestricted expansion."

The committee said it recommended the BBC Trust, which oversees the corporation, reinstate the rule that all commercial activity should have a clear link to core BBC programming.

It also suggested the BBC should consider selling more of its rights for exploitation on the open market rather than offering them exclusively to Worldwide. It also questioned why the BBC should produce its own magazines.

"We believe it is in the interests of the UK's creative economy as a whole that BBC Worldwide's activities are reined back," it said.

Pact, the trade body for independent producers, welcomed the report as a positive step towards a more transparent BBC Worldwide. Carolyn McCall, the chief executive of the Guardian Media Group, told the MediaGuardian Web site she looked forward to Worldwide being brought under control.

In light of the problems facing commercial broadcasters, the media regulator and government have indicated they would support a partnership between BBC Worldwide and Channel 4, the publicly owned but advertising-funded broadcaster.

However, the committee warned this move could make BBC Worldwide an even more aggressive commercial organisation that could damage the whole industry further.

In response to the report, the BBC said Worldwide was designed to maximise commercial value as requested by successive governments, but said it had already proposed some changes and would expand on these once it has settled any negotiations with Channel 4.

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