Media: Auntie embarks on a lucrative relationship

THE BBC's worldwide satellite link with the media, publishing and leisure group, Pearson, announced last week, was well received. Pearson's shares rose. It seemed that Auntie had at last landed a blue- blooded British partner commensurate with her status, after unfortunate flings in the past two years with badly chosen suitors (Star TV, Rupert Murdoch). But will this relationship work out? And for whom?

Ian Hargreaves, the BBC's former director of news and current affairs, now deputy editor at Pearson's Financial Times, argued for an end to genteel poverty on the licence fee in a pamphlet for Demos, the independent think-tank, entitled Sharper Vision. He describes the BBC's link with Pearson as 'a step in the right direction', giving the corporation access to private sector capital and a means of lessening its dependence on the whims of state support.

And, while conceding that organising a hybrid public/privateBBC might prove difficult, he says the bullet has to be bitten: keeping the BBC as a purely publicly funded body was 'a ticket to nowhere'.

David Gordon, chief executive of ITN, is much more sceptical. Along with many colleagues in ITV, he is concerned that trying to divide the BBC into two parts, public service and commercial, is 'like trying to separate the mind from the soul'. He does not see how the corporation can be both things at the same time. And he is worried that the BBC is allowing others to exploit its brand name commercially.

But he does concede that the timing, from a public relations perspective, is immaculate: Auntie is a shrewd old campaigner.

The BBC is waiting for a White Paper, expected next month, confirming a renewal of the licence fee for anything between seven and 10 years: the drawback is that it may be the last such renewal. The White Paper may also recommend privatising the BBC's transmission network.

Michael Heseltine, President of the Board of Trade, is seeking a national media player to give the UK a global presence - a current Government obsession. And voila. The BBC steps forward with Pearson to fill the role.

Last week's announcement allows the corporation to take care of a festering internal problem: there has been great rivalry between the World Service, providing radio through a grant from the Foreign Office; BBC Enterprises, which runs the commercial activities, and upstart World Service Television, the satellite newcomer. Perhaps the most significant real change is that they will, improbably, be merged into a three- legged BBC Worldwide. But the arrangements with Pearson are far from clear. I do not understand (and I am not alone) how, when, and in what quantity (if at all) financial benefits will be delivered to licence payers. Or whether Ian Hargreaves's hopes for a more robustly dual-financed BBC will start to become a reality by this route.

The first two European satellite channels, providing news and current affairs, and entertainment, are not designed as simple joint ventures. Rather, interlocking service companies are planned, with the BBC keeping editorial control, but at arm's length from the hard-nosed commercial side.

Puzzled? Well, the BBC promises transparent accounts to prove to its commercial detractors that it is neither engaged in cross-subsidy, nor selling public assets cheaply.

But there is a credibility problem, since World Service Television, the satellite channel being broadcast by Murdoch's Star TV in the Far East, has been evasive about its accounts. And the BBC's annual reports and accounts, most notably last year's, have been woefully short on hard information.

Further, the biggest operational question is whether pan-European channels, exporting UK programme repeats in English, will make profits in the Nineties after failing so conspicuously in the Eighties, forcing Murdoch to refocus Sky as a British service. Still, while the BBC is finding out, it is keeping the privatisers at bay.