This is taken from the Dail Telegraph:

Globe-trotting Auntie alarms rivals
(Filed: 31/03/2006)

BBC's 'aggressive pursuit of profit' is fuelling fears of unfair competition, writes Russell Hotten

The BBC's expansion plans sound like a bid for global media domination. There will be an "aggressive" pursuit of profit, said BBC executive John Smith, as he talked this week of proposals for children's programmes in the US, satellite TV in India and a new global website.

You could feel the blood boiling in the offices of the Beeb's commercial rivals. And just to rub their noses in it, Smith said BBC Worldwide, the corporation's money-making arm, was on course to exceed its profits target.

Profits this year would be about £6m ahead of expectations, at £80m, said Smith, Worldwide's chief executive. Next year he expects that total to hit £100m. It sounds like good news. Except that critics in the commercial sector claim this success is leveraged off the back of the BBC's unique position as a publicly funded body. The BBC's "outside" activities do nothing that the private sector could not do, say rivals. It is a case of unfair competition, they claim.

News that Smith is planning a huge international expansion, possibly via acquisitions and funded by borrowing, is set to inflame the dispute over the BBC's role. And it comes just as the charter renewal negotiations get underway.

There is a view prevalent at the BBC, and among supporters at Westminster, that criticism is born out of resentment; that other media giants dislike the corporation because it stands in the way of them making money.

Such simplicity irritates rivals, who say this "jealousy" argument is used as a smokescreen to hide their legitimate arguments.

According to one media expert: "The two sides are so entrenched, that often they just shout at each other rather than talk."

At the root of opposition to the BBC's commercial activities is that it is not compatible with the corporation's public service broadcasting remit. From this flows two other criticisms: the BBC's cross-promotion of commercial interests on public services and its ability to effectively subsidise (strongly denied by the BBC) commercial enterprises in a way that rivals could never do.

BBC Worldwide has six divisions, spanning children's TV and global sales, but it is the powerful magazines arm that is most controversial. With sales of about 100m a year, the division is the third largest publisher in the UK.

Rival publishers think that these magazines should be licensed or even sold. Where, they ask, do such magazines fit into the BBC's public service remit.

Dawn Cordy, director of magazines at Egmont, the UK's second largest publisher of children's magazines, said: "The BBC trades on its name in the magazine sector, and so they should. The BBC's magazine publishing is very good, but of course with the advantage of brilliant content paid for in the main by public funds.

"We look forward to the day the BBC approach us, and indeed our competitors, inviting us to pitch against their commercial arm to publish a BBC magazine under licence," she said. "I also think the BBC could potentially realise more money this way."

The BBC says that it operates strictly in the commercial arena, and that the practice of plugging magazines after screening their TV-related programmes has stopped. "There is no cross-subsidy, and when, for example, we launch a magazine we pay for it at commercial rates and have no access to licencepayers' money," said a spokesman.

The BBC's so-called fair trade rules are audited each year to ensure no cross-subsidy. But in the new White Paper the BBC trustees will review the fair trade arrangements, suggesting that concerns remain.

Critics will certainly not be pacified by the international expansion, which is likely to widen the net of opponents from the commercial sector. The BBC's plans include a bbc.com website (as opposed to bbc.co.uk), launched in 2007 and supported by advertising. There will also be a paid-for download service. The bbc.co.uk site attracts about 1bn monthly page impressions from outside the UK, mostly from the US, so for Smith this is an ideal foundation on which to build a global brand through bbc.com.

But, inevitably, this website will compete for advertising with rival internet sites. Just as some of the BBC's outside broadcasting events compete for sponsorship with the commercial sector, so an advertising-backed website will, critics fear, take away their ad revenues.

As an example of the BBC's power as a provider of internet news and entertainment, the commercial sector points to the corporation's planned expansion in the UK of local website services. These will compete with regional and local newspapers. The Newspaper Society says the BBC is being anti-competitive in that a huge corporation is stifling attempts by local media to get a foothold on the internet.

Yet, the corporation cannot understand the fuss. "The critics want it both ways. They complain about the public funding, and they complain about it when we are being commercial. At the end of the day, the licence payer benefits because Worldwide's profits offset the licence fee."