BBC Fair Trading: BBC Worldwide Group Trading …downloads.bbc.co.uk/aboutthebbc/insidethebbc/howwework/...and services BBC Worldwide Limited (“BBC Worldwide”) obtains from the

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BBC Fair Trading:

BBC Worldwide Group Trading

Manual

20 December 2017

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Introduction

This document sets out the specific arrangements the BBC is implementing to set charges for the goods

and services BBC Worldwide Limited (“BBC Worldwide”) obtains from the BBC Public Service. Many of

these arrangements, and supporting Service Level Agreements, are in place. The BBC expects that all of the

arrangements described in this document will be fully implemented by the 2018-2019 financial year.

Table 1 summarises the goods and services BBC Worldwide may use from the BBC Public Service and for

which there are arrangements in place. BBC Worldwide will not necessarily use all of these services on a

regular basis. Table 2 summarises the goods and services that BBC Worldwide may provide to the BBC

Public Service. Table 3 summarises the commercial agreements BBC Worldwide has with the BBC Public

Service that allow it to exploit intellectual property (IP) owned by the BBC Public Service. This document

describes the methodologies in place where BBC Worldwide either currently pays the BBC Public Service

for these rights, or where BBC Worldwide expects to have the option to invest in new IP developed by the

BBC Public Service.

Tables 1, 2 and 3 also describe the BBC’s approach to charging for these goods and services. The

remainder of this document further describes all goods and services traded between BBC Worldwide and

the BBC Public Service.

The BBC has carried out an internal review to ensure that all services potentially traded between the BBC

Public Service and BBC Worldwide have been covered by this Manual. This included:

A review of activity from both BBC Worldwide and the BBC Public Service;

A review of transfer prices from the prior BBC Trust Fair Trading regime; and

An accounting review from the BBC’s finance accounting team.

The activity, service and finance reviews provide assurance that all significant costs are covered by the

transfer pricing arrangements.

Where any additional or new service activity is identified between the BBC Public Service and BBC

Worldwide or one of its subsidiaries, then an appropriate transfer pricing process will be put in place.

Part of the annual budget process will include a review of the transfer pricing arrangements. This will

identify the need for any changes to these arrangements. This Group Trading Manual will be updated each

year and published via the BBC website. Each year details of any changes to these methodologies and the

impact thereof will also be set out.

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Table 1: Summary of BBC Worldwide transfer pricing from the BBC Public Service

Services Provided Price Basis Rationale Apportionment Methodology

Archives

Archive - including material for

Motion Gallery

Verifiable, comparable

information on market price

Benchmarking data provides a market price

range; the BBC Public Service then uses its

internal cost base to set a transfer price in

line with the market benchmark

Based on usage of archive and associated

services, including staff time

Commercial Rights and Business Affairs (CRBA)

CRBA Central Operations and

Support







Based on usage of CRBA systems, advice, and

support, including staff time

External Communications

External communications Verifiable, comparable






Based on usage (staff time)

Press Cutting Service Market price from contract

agreed with external supplier

External supplier appointed using a

competitive open market process. Price paid

to contractor for service is therefore a

market price.

Based on pass through cost of BBC Worldwide

subscribers as a percentage of total users

Finance

Centre of Excellence (COE) Verifiable, comparable






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Business Process Operations (IBM

Outsourced Processes)

Market price from contract





market price.

Based on proportion of BBC Worldwide spend

of total BBC spend

Finance staff Verifiable, comparable






Based on number and type of FTE allocated to

BBC Worldwide

Tax and Treasury Verifiable, comparable







HR

HR Admin Verifiable, comparable






Based on BBC Worldwide’ dedicated FTEs as a

proportion of total BBC Group’s FTEs

HR Admin Outsourced Market price from contract





market price.

Based on pass through of costs based on BBC

Worldwide’s allocation by headcount of

relevant services

HR Staff Verifiable, comparable







BBC Worldwide

Internal Communications &

Engagement (including Diversity &

Verifiable, comparable Benchmarking data provides a market price


Based on allocation by headcount, including

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Inclusion) information on market price internal cost base to set a transfer price in


staff time

Legal

Legal assistance and advice across

the BBC Group








Marketing & Audiences

Marketing & Audiences Staff Verifiable, comparable







BBC Worldwide

Audience Data – bespoke reports

or research

If commissioned from third

parties: Market price from

contract agreed with external

supplier




market price.

Based on pass through of third party cost for

BBC Worldwide

If undertaken by BBC Public

Service: Verifiable, comparable






Based on reports or research commissioned,

including staff time

Creative Services Verifiable, comparable






Based on creative services provided, including

staff time

Pensions

BBC Group pension schemes Verifiable, comparable Benchmarking data provides a market price


Based on cost of pension scheme provided to

BBC Worldwide staff (i.e. number of BBC

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information on market price internal cost base to set a transfer price in


Worldwide staff with pension schemes)

Policy

Policy Verifiable, comparable







Procurement

Corporate Insurance Market price from contract





market price.

Based on BBC Worldwide proportion of cover

required from the total market price BBC

group pays for insurances.

Corporate Insurance support costs Verifiable, comparable








Procurement and Central Agency Verifiable, comparable







Procurements via preferred

supplier lists






market price.

Based on pass through of price of items

procured by BBC Worldwide

Property

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Office space in the UK and

Overseas







Based on floor space occupied by BBC

Worldwide (m²)

Quality, Risk & Assurance

Internal Audit and Risk; Safety,

Security and Resilience







Based on usage (staff time) and number and

type of FTE allocated to BBC Worldwide

Simultaneous European Relay

Procurement of SER arrangements

overseas in relation to the BBC

Public Service channels







Based on fees payable to the BBC Public

Service minus gross commission as taken by

BBC Worldwide

Strategy

Subscription Service Market price from contract





market price.

Based on allocation of third party costs to BBC

Worldwide

Technology

Technology staff Verifiable, comparable







Core Technology Service and End

User Compute Service (“EUC”)






Based on use of relevant service by BBC

Worldwide’s users

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market price.

Non-Core Technology Service

(other non-core)

If commissioned from third



supplier




market price.

Based on use of relevant service by BBC

Worldwide’s users

If undertaken by BBC Public

Service: Verifiable, comparable






Based on allocated cost to BBC Worldwide

Training – BBC Academy

Face to face and online training

courses







Based on use

Development of new courses;

training courses and events

(Masterclasses)







Based on the price to develop/deliver new

courses for BBC Worldwide, including staff

time

Training Courses and Events:

Informal Events







N/A – no charge – these course/events are

provided free of charge as they are open to

external third parties as well as to BBC

Worldwide

New Talent Schemes Verifiable, comparable






Based on use of new talent schemes by BBC

Worldwide, including staff time

Other Verifiable, comparable Benchmarking data provides a market price


Based on use, including staff time where

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information on market price internal cost base to set a transfer price in


relevant

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Table 2: Summary of BBC Worldwide transfer pricing to the BBC Public Service


Content Rights Management

Management of repeat fees Verifiable, comparable



range; BBC Worldwide then uses its internal

cost base to set a transfer price in line with

the market benchmark


Finance

Business Process Operations If commissioned from third



supplier




market price.

Based on proportion of the BBC Public Service

spend of total BBC Worldwide spend or pass

through based on the BBC Public Service’s use

of relevant service

If undertaken by BBC

Worldwide: Verifiable,

comparable information on

market price


range; BBC Worldwide then uses its internal

cost base to set a transfer price in line with

the market benchmark


Pensions

Private pension schemes Market price from contract


BBC Worldwide pays a private pension

provider for this service provided at market

price

Based on cost of pension scheme provided to

BBC Public Service staff (i.e. number of BBC

Public Service staff who are members of

private pension schemes)

Procurement

Procurements via preferred Market price from contract External supplier appointed using a Based on pass through of price of items

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supplier lists agreed with external supplier competitive open market process. Price paid


market price.

procured by BBC Worldwide on behalf of the

BBC Public Service

Property

Office space overseas Market price from contract


BBC Worldwide procure property at a

market rate and pass through cost.

Based on floor space occupied by the BBC

Public Service (m²)

Technology


(other non-core)






market price.

Based on use of relevant services provided to

the BBC Public Service by BBC Worldwide

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Table 3: Summary of BBC Worldwide’s rights acquisitions from the BBC Public Service


Rights acquisition

Upfront investment (to acquire

rights) in BBC in-house production

Market price derived by

benchmarking for a licence to

exploit IP

The BBC Public Service benchmarks prices

charged to BBC Worldwide against the

prices paid by third parties for equivalent

rights

Based on a separate licensing agreement which

specifies the prices for each title.

Rights archive licensing

Market price derived by

benchmarking for a licence to

exploit IP

The BBC Public Service benchmarks prices

charged to BBC Worldwide against the

prices paid by third parties for equivalent

rights

Based on a separate licensing agreement which

applies pre-agreed commercial terms for the

rights licenced in respect of each title.

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Further description of goods and services the BBC Public Service

may provide to BBC Worldwide

ARCHIVES

The Archives team provides an Archive Library Service which includes the provision of research,

management and loans services to facilitate access to and management of BBC archive content including the

duplication and provision of content which is made available via BBC Motion Gallery and for which BBC

Worldwide pays the BBC Public Service. BBC archive content is any content created during the

production process plus any accompanying business records that meet selection criteria set by BBC

Archives.

BBC Motion Gallery is a footage licensing service provided by BBC Worldwide, offering creative

professionals and clients a collection of stock footage with licensing worldwide. BBC Motion Gallery also

produces and distributes short form programmes for broadcast on television and new media platforms.

The Archive Library Service is charged on a pay-as-you-use basis when required by any production

company, including BBC Worldwide.

BBC archive content can be accessed via a number of different BBC Archive Systems and Nations Archive

systems. The Archives team also manages a number of third party licensing and subscription services. If

BBC Worldwide wants to access Third party licensing and subscription services for non-BBC (i.e.

commercial) purposes, BBC Worldwide will pay the BBC Public Service market rate for these based on the

costs that the BBC Public Service pays for its subscriptions.

COMMERCIAL RIGHTS AND BUSINESS AFFAIRS

CRBA Central Operations and Support

The CRBA Central Operations service provides support services such as ACON, Fast Clear and

Compliance Manager systems, including processing and support in relation to queries relevant to ACON,

and tracking existing rights.

The CRBA Central Support service provides advice and support from the BBC’s central CRBA team, and

includes lobbying and negotiating deals with talent unions and rights owners on behalf of BBC Worldwide

as part of the BBC Group. The Central Support service also includes support and advice provided by

technology lawyers.

Given the nature of these services, appropriate safeguards are put in place (including NDA’s, confidentiality

clauses, Terms of Use) where relevant to ensure that information is kept confidential.

EXTERNAL COMMUNICATIONS

External Communications Service

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The External Communications service includes weekend and out of hours support and advice on issues

regarding public relations, the media and public affairs specific to BBC Worldwide, designed to help

promote BBC Worldwide's services and talent to the global creative industry, and/or defend BBC

Worldwide's reputation when necessary.

There are a number of External Communications posts in Press/Media Relations and/or Public Affairs that

are part dedicated to BBC Worldwide on an ongoing basis offering aforementioned support to BBC

Worldwide.

Press Cutting Service

The Press Cutting service includes early bird round ups, BBC daily media news and BBC national press for

BBC Worldwide staff identified by the business.

FINANCE

Centre of Excellence (COE)

The Finance Centre of Excellence (COE) represents Finance and Accounting costs of a team working

exclusively for BBC Worldwide, and consists of activities required to assist production of BBC

Worldwide’s Management and Statutory Accounts. This cost also includes undertaking various month end

accounting processes and GL reconciliations, in addition to responding to queries and maintaining financial

data.

Business Process Operations

The BPO service may comprise the following elements which are outsourced as a commodity service to

IBM such as: Purchase to Pay, Expenses and Advances, Contributor Payments, Order to Cash, Payroll, and

Application and Infrastructure Management.

Tax and Treasury

The Tax team provides stewardship and controllership to all matters relating to corporate and employment

taxes and VAT. The Treasury team provides stewardship and controllership to all matters relating to

Treasury, including cash and liquidity management.

HR

HR Admin

HR Admin is an HR service centre, providing services such as general HR advice, support and guidance, on

boarding, HR helpdesk, benefits and pension information, and freelance management. Other services are

provided by specialist outsourced suppliers.

HR Staff

The HR function plays a business partnering related role, with a focus on forward looking, large scale

and/or high-impact people, talent and Organisational Design (OD).

.

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There are a number of posts within HR that deal exclusively with BBC Worldwide.

Internal Communications & Engagement (including Diversity & Inclusion)

Internal Communications & Engagement manages BBC-wide internal communications channels including:

Ariel, online news for employees, Gateway, the staff intranet, Team Talk, the monthly briefing for

managers, internal campaigns and advice to senior management.

The Diversity & Inclusion service includes the provision of BBC Group diversity and inclusion policies and

strategies, to enable BBC Worldwide to draw on the widest possible range of experiences, talent and ideas.

LEGAL

The Legal department provides legal assistance and advice across the BBC Group. BBC Worldwide is able

to engage and seek counsel from the following legal departments: General Counsel’s office, commercial

legal, litigation, employment law, intellectual property; workplace, and competition legal.

MARKETING AND AUDIENCES

Marketing & Audiences Staff

The Marketing & Audiences team provides analysis and advice on audience data, reporting and insight

requirements for BBC Worldwide, as well as effective and impactful marketing and social media campaigns.

Marketing services include brand strategy and brand management, media planning and buying, reputation

management, and TV social media strategy. Audience services include supplying and reporting audience

data, audience insight and audience planning and creative strategy.

There are a number of posts within Marketing and Audiences that deal exclusively with BBC Worldwide.

Audience Data

BBC Worldwide receives reports on audience data visiting its websites both from the BBC Public Service

via a third party supplier and also commissions bespoke reports or research from the Marketing &

Audiences team. Bespoke reports are charged to BBC Worldwide.

Creative Services

Creative Services involves the provision of show reels, packaged clips, promotional reels, unit stills, iconic

shots, design work (including guidelines and imagery) and copywriting, as requested by BBC Worldwide.

PENSIONS

The BBC’s principal pension scheme offered to all staff is its defined contribution pension scheme, LifePlan.

This scheme offers to match employee’s contributions; the average matched contribution is eight per cent.

In addition to this scheme, the BBC also has a number of legacy defined benefit pension schemes which are

closed to new members but remain open to new accrual by existing members. BBC Worldwide staff

includes members of both schemes. The BBC Public Service staff who work with BBC Worldwide are also

members of both schemes.

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POLICY

The Policy team helps the BBC achieve its aims by: managing the BBC’s relationship with the UK

Government, Ofcom and European Union political institutions; developing positions on public policy issues

affecting the BBC at UK and EU levels; advising on public policy and regulatory developments relevant to

the BBC, including the BBC Charter and Agreement and Ofcom’s Operating Framework; and supporting

the development and regulatory approval of the BBC’s strategic priorities under the Charter and

Agreement framework.

BBC Policy generally provides a service for the BBC group, not for BBC Worldwide.

PROCUREMENT

Corporate Insurance, including support costs

Corporate Insurance and Support provides specialist insurance advice on insurance coverage, management

and payment of claims falling within the corporate insurance arrangement; and ensures global compliance

statutory and contractual insurance requirements in the UK and abroad.

Procurement and Central Agency & Preferred Supplier Lists

The Procurement Agency service involves provision of procurement advice, support and contract

management regarding high volume/low value procurements using preferred supplier lists and internal BBC

systems. Central Agency provides services including authorising procurement requests, advice and support

over the best routes to buy, engaging with suppliers and ensuring preferred suppliers are used where

possible.

PROPERTY

BBC Worldwide uses office space in the UK and overseas under licence from the BBC Public Service.

A charge for each location is determined, based on a market benchmark on the price of equivalent class of

office space in the same geographical location (e.g. a cost per m²). It is also cross checked against the total

cost for the building, including relevant overheads like maintenance costs based on the most recent

information. This price is then broken down based on the Net Internal Area (NIA) for that building to

arrive at a cost per m². BBC Worldwide is then charged based on the proportion of the NIA it uses.

QUALITY, RISK & ASSURANCE (QRA)

Internal Audit and Risk

The Internal Audit department is an independent, objective assurance and advisory function. It involves the

assessment of the effectiveness of BBC’s internal controls, management of financial risk and compliance

with regulation and policy.

Safety, Security & Resilience (SSR) Group

The SSR Group is a corporate function that routinely provides professional, technical and operational

support to BBC Worldwide, and is available 24/7, including duty officers.

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SIMULTANEOUS EUROPEAN RELAY AGREEMENT

BBC Worldwide acts as an agent for the BBC Public Service in relation to the exploitation of the BBC

Public Service’s rights to transmit and authorise the transmission of the BBC Public Service channels and

programmes included in those television services by means of simultaneous European relay. BBC

Worldwide takes a commission for this service and passes the remainder of the fee back to the BBC Public

Service.

STRATEGY

Subscription Service

The Strategy team subscribes to a number of external subscription services, of which BBC Worldwide pays

for access to a small number.

TECHNOLOGY

Technology Staff

The Technology team sits within the Design & Engineering division of the BBC. Design & Engineering

delivers products, platforms and services globally, supporting the BBC's digital products and services.

Technology Staff are employed by the BBC Public Service and provide technology expertise and direction

to BBC Worldwide to ensure the effective delivery of all technology services that drive BBC Worldwide’s

operations.

There are a number of posts within Technology that deal exclusively with BBC Worldwide.

Core Technology Service and End User Compute (EUC) Service

The Core Technology Service consists of technology governance, information security, telephony service,

circuits and networks, supported applications, specialist change support, infrastructure storage, core and

technology support.

The EUC Service relates to system access and software licensing for each user within BBC Worldwide.


The Non-Core Technology service involves providing digital products and/or services, such as software

development, software licensing, software tools, content management services, publishing infrastructure,

operational services, hosting and distribution services, and Research & Development (R&D) products and

services.

TRAINING – BBC ACADEMY

Training Courses and Events

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BBC Academy is the BBC’s in house training department, which provides a number of training services pan-

BBC, including training courses and events.

New Talent Schemes

The New Talent department is responsible for the overall management of apprenticeships, trainee schemes

and other pre-entry programmes in the BBC. The service involves talent attraction, recruitment, sourcing

and management placements, induction, financial management, training and pastoral care.

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Further description of goods and services BBC Worldwide may

provide to the BBC Public Service

CONTENT RIGHTS MANAGEMENT

BBC Worldwide manages the administration of royalty and repeat fees to actors and writers for the

content it distributes. As part of this service, BBC Worldwide administers fees for repeats and other uses

payable by the BBC Public Service and charges them for the costs of this service. There are NDAs in place

to protect sensitive and confidential information handled in this process.

FINANCE

The BPO service comprises the following elements which are outsourced such as: Purchase to Pay,

Expenses and Advances, Contributor Payments, Order to Cash, Payroll, and Application and Infrastructure

Management. BBC Worldwide administers local currency payroll for the BBC Group’s overseas office(s),

including for staff employed by the BBC Public Service, for which a charge is made to the BBC Public

Service.

In addition BBC Worldwide administers some central Finance functions overseas, including payroll,

processing supplier invoices, reimbursing staff expense, issuing recharge invoices and posting journals.

PENSIONS

BBC Worldwide provides and administers private pension schemes for BBC Public Service employees in

certain overseas offices for which the BBC Public Service pays BBC Worldwide.

PROCUREMENT

As part of its ongoing business activity, BBC Worldwide sends staff members to trade shows such as

MIPCOM, MIPTV etc. Additionally, staff members of the BBC Public Service will attend. From time to time,

BBC Worldwide will administer bookings for such events (including the BBC Public Service) and recharge

costs to the BBC Public Service for costs incurred by their attendees.

PROPERTY

The BBC Public Service uses office space in a number of overseas offices under licence from BBC

Worldwide.

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TECHNOLOGY

The Non-Core Technology service involves providing digital products and/or services, such as software

development, software licensing, software tools, content management services, publishing infrastructure,

operational services, hosting and distribution services, and Research & Development (R&D) products and

services.

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Further description of BBC Worldwide’s content acquisitions

from the BBC Public Service

Upfront investment (to acquire rights) in BBC in-house production

BBC Worldwide has historically invested upfront in the rights to BBC in-house productions, to which the

BBC Public Service owns the IP to share the costs of production. In certain exceptional cases BBC

Worldwide will also pay a share of profits back to the BBC Public Service.

Each piece of content has its own licence agreement, which specifies the rights BBC Worldwide has to

exploit the IP, as well as the investment paid to the BBC Public Service. The majority of licences are based

on standard terms agreed between BBC Worldwide and the BBC Public Service; all investments are made

on market terms.

BBC Worldwide will continue to have the option to provide upfront investment to the BBC Public Service

in-house production, such as Radio/Audio, Children’s, Current Affairs and potentially Nations commissions.

Under this arrangement BBC Worldwide would make a one-off investment in the cost of producing a

particular programme, to obtain a licence to exploit the IP for a specified period of time.

The BBC Public Service has used, and will continue to be able to use, the open offer benchmarking process

to ensure that the price BBC Worldwide pays is in line with the market price for BBC commissioned

content.

BBC Worldwide will also have the option to re-invest in the BBC Public Service content when existing

licences expire. This would also be based on standard terms.

Rights archive licensing

Rights archive licensing involves BBC Worldwide contracting with the BBC Public Service to licence

specified rights to exploit the BBC Public Service’s IP for a defined period of time. BBC Worldwide pays an

ongoing return to the BBC Public Service (e.g. a royalty or share of the net profits BBC Worldwide makes

from exploiting the rights acquired under a specific rights archive licence).

Rights archive licensing relates specifically to programmes that have already been commissioned (i.e. no

distributor licenced the rights before production or otherwise has licensed the distribution rights). BBC

Worldwide has licences in place to exploit the BBC Public service IP across a range of genres from BBC in-

house production, reflecting the range of BBC in-house productions’ historical output.

Each piece of content has its own licence, which specifies the rights BBC Worldwide has to exploit the IP,

as well as the payment to the BBC Public Service. The majority of licences are based on standard terms

agreed between BBC Worldwide and the BBC Public Service and were made on market terms (at the time

such terms were entered into).

BBC Worldwide will also have the option to relicense BBC Public Service IP when rights archive licences

expire. This would also be based on standard terms.

Returning series

For returning series, spin offs, or recommissions BBC Worldwide may have already licenced the rights (in

line with the approach described above) to distribute BBC Public Service IP, but BBC Studios or a third

party producer may now be responsible for producing a programme. Any new licensing agreement

between the BBC Public Service and BBC Worldwide in respect of the returning series or spin-off will be

on similar standard terms by separate individual licence.

Documents

BBC Fair Trading: BBC Worldwide Group Trading …downloads.bbc.co.uk/aboutthebbc/insidethebbc/howwework/...and services BBC Worldwide Limited (“BBC Worldwide”) obtains from the