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Poor sales, misguided plans, unfortunate circumstances catching up with BBC Enterprises.

As the BBC Britain gathers its resources to lobby the UK government for its Charter renewal in 1996, its commercial arm, BBC Enterprises, is trying to strengthen its position in a bid to offer vital financial and moral support.

A common phrase often cited by sales executives at the "Enterprises" is that the commercial tail should not wag the broadcasting dog. It is an admirable display of loyalty to the BBC, the public service broadcaster that supplies the Enterprises with a catalog of programs financed by the compulsory pound1.5 billion annual revenues from license fee.

The Enterprises was incorporated in 1979 to contribute its profit to the BBC's funding. The above canine metaphor, however, leaves the impression that the Enterprises is a superfluous limb that could be chopped off anytime without damaging the animal. Some say that the company is not aggressive enough. "I think they should be looking to make the Enterprises more profitable. It has the best national archive [of programs], but it is no secret that it is not exploited as fully as it could be," observed one UK program distribution expert. In fact, according to the UK press, BBC Ent. chief executive James Arnold-Baker is likely to be replaced for failing to reap the full potential of the Enterprises' assets when the BBC's new director-general, John Birt, begins his reign in March. The Enterprises denied the story.

In the 1991/92 financial year, total program sales worldwide amounted to 42.4 million. Co-production deals earned the company pound30.3 million. Together, they accounted for 34.6 per cent of the Enterprises pound202.2 million annual turnover, which also includes sales from other activities such as books, videos, magazines and program schedule data. But profit before expenses, taxes and interest yielded only pound5.4 million. And even this low figure represents a 40 per cent increase from the previous year. It is now estimated that, if international sales were given to outside reps, profits from the international sales division alone could increase to pound25 million a year, while costs would be cut dramatically.

The future for the Enterprises is not bright. First, it lost the power of overcharging newspapers for programming information, now set at 800,000 per year, rather than the original pound4 million. Secondly, it could soon lose what has been. called "distorting competition in the companies market through monopolistic use of free airtime," or excessive on-air promotion of its own publications. While developing domestic strategies to overcome these reversals of fortune, the Enterprises is reportedly squandering its limited resources by increasing its investment overseas, when most other magazines are consolidating their sales efforts. Currently, the Enterprises maintains overseas offices in New York, Sydney and Paris. The Enterprises has also been accused of trading with heavy-handed bureaucracy normally associated with its public service broadcaster parent. Here again, when most commercial operations are cutting back on overheads and administrative support in the name of cost-efficiency, the Enterprises is expanding.

In the past, it has sent 48 staff members to sell at MIP-TV, in addition to a separate group for Lionheart, its New York-based division. This compares to eight people for MCA/Universal and 13 from 20th Century Fox.

The Enterprises is confident that its plans will reap profitable fruits. Rather than streamline overheads, it has reorganized the structure instead. It will separate its sales operations into BBC Enterprises International and BBC Enterprises UK Television; the current operations are divided into worldwide program sales and worldwide co-productions.

Graham Massey, director of BBC Enterprises International, in effect, explained that it developed another layer of bureaucracy by creating "genre specialists" that will be dedicated to selling all aspects of the different types of programming.

"Deals are getting much more complicated these days," Massey added. "The multi-media approach to deals is more time-consuming."

He said the new structure is also in tune with the planned Producer Choice policy for the broadcast side in which programming departments will be responsible for their own profit-center.

Massey admitted that he is more than aware of criticisms against the Enterprises marketing strategies. "Nobody is ever happy with the amount of profit they are making. We would like to make more money. But you need customers to do so."

By increasing the number of territories in which Enterprises International owns bureaus, staffed by employees familiar with that country's working practices, "you generate much more traffic," Massey added.

"We are always measuring the cost of such operations against the generation of income."
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Author:Koranteng, Juliana
Publication:Video Age International
Date:Oct 1, 1992
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