From us to them; How the BBC became a world player

Global TV may earn the corporation pounds 1bn a year, writes Paul Mungo

You've seen the advertisements. On 1 November, you'll be able to see the television channels. On that day, the BBC - through its business arm, BBC Worldwide - will dip its toe into the rolling waters of British commercial television with the launch of UKTV, a four-channel network of cable and satellite-delivered "niche" channels.

The launch has been heralded in newspaper and magazine ads over the past two weeks. But despite the hype, UKTV is only a small step toward the BBC's eventual goal of becoming a worldwide broadcaster. "They're not thinking just about the UK now," notes one industry analyst. "They're rolling out across the whole of the globe in the next few years."

For British viewers, UKTV's principal importance may be that it will be the first BBC-backed network in this country to carry advertising. For the BBC, UKTV is a template for its international ambitions, which include launching joint-venture, audience-targeted "niche" channels in major television markets, supported by subscription and advertising. Commercial channels, in other words.

The UKTV network will comprise UK Horizons (factual series and natural history); UK Arena (music and arts); UK Style ("lifestyle" programming); and an already relaunched and "refreshed" version of the existing UK Gold service. The latter broadcasts "archival" programmes - old repeats.

UKTV is a joint venture between Flextech, a publicly quoted cable and satellite company, and BBC Worldwide. The principal shareholder in Flextech is Tele-Communications Inc - or TCI - a company that effectively dominates the US cable industry.

The BBC is about to sign a controversial "partnership" deal with TCI that will lead to two new joint-venture international television networks - Animal Planet and People and Arts - as well as a BBC America channel. For the corporation, the deal is seen as a relatively cheap way to gain distribution for its programming in large television markets throughout the world, notably the US. Critics, however, have suggested the price of the deal is the surrender of the BBC's editorial independence to TCI.

The BBC is not paying towards the start-up costs of any of the three channels in the TCI joint venture. "Our contribution is our programming and our brand," explains a BBC Worldwide spokeswoman.

But will the corporation's editorial integrity be compromised? Certainly commercial logic dictates that in the bright new world of digital broadcasting, large companies with substantial archives - such as the BBC - can vastly enhance the value of their catalogue through international distribution.

Hence the plethora of BBC Worldwide channels, all of which rely on existing BBC resources or programming. The most widely available is BBC World, a 24-hour news and information channel broadcast to 187 countries. Set up to rival Ted Turner's CNN, BBC World will muscle in on CNN's home market early next year when it launches in North America. Ironically, the only country that will never receive BBC World is the UK. In Britain, the corporation is launching a non-commercial news channel, called BBC News 24, early next month.

Also up and running is BBC Prime, a general entertainment channel distributed to Europe by European Channel Management, a company jointly owned by Pearson Television of the UK, the American cable operator Cox Communications and BBC Worldwide. In Australia, UKTV, a subscription channel set up by Foxtel, part of Rupert Murdoch's News Ltd, Pearson and BBC Worldwide, broadcasts a mix of programmes from the BBC and Thames Television, a Pearson subsidiary.

Those ventures, however, will be dwarfed by the BBC-TCI partnership. Animal Planet, described as the "all animal all the time network" is already operating in the US and continental Europe. It will be launched in Latin America this month and will roll out worldwide (including, possibly, the UK) "as appropriate". People and Arts, a cultural channel, is also launching in Latin America this month, and will then begin transmitting to the US. BBC America is expected to begin broadcasting early next year.

All of this brings in revenue. BBC Worldwide is not a small organisation, nor a minor adjunct to the BBC's main function of providing public-service broadcasting to the UK. Last financial year, BBC Worldwide had a turnover of pounds 354m, of which pounds 73.5m went to support the BBC's broadcasting activities. Within the lifetime of the present BBC charter - in other words, by 2005 - that contribution is expected to triple to more than pounds 210m, on a turnover that itself could grow to more than pounds 1bn. Though that contribution is still relatively small beer compared to the pounds 1.8bn the BBC gets from the licence fee, it is clear that BBC Worldwide is set to become a substantial corporation in its own right - and one with growing expertise in running commercial television channels.

Could such money-spinning spell the end of the traditional funding of the BBC? The corporation is adamant: "It is committed to preserving the licence fee at all costs," a spokesman insisted. Others see it differently; softly, softly, they believe, the BBC is laying the foundations for its survival in a possible post-licence fee age, thanks to the expansion of BBC Worldwide.