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BBC Worldwide Greatly Ups Online Forecast After Unexpected Growth

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BBC Worldwide is raising online revenue forecasts after watching growth outstrip its expectations. The broadcaster’s commercial subsidiary had targeted getting 10 percent of total revenues from online but is now raising that to 18 percent, CEO John Smith told Reuters’ (NSDQ: RTRSY) media summit in London (via Reuters): “We think we will be able to beat it. It has gone from one percent to nearly four percent in just 18 months. So already we are starting to see that probably we have under-egged the extent to which we will see more of our revenues coming from the internet.” It wasn’t clear what exactly is responsible for the growth.

Increasing profitability from the money-makng group is good news for its public service parent, which draws investment from its subsidiary and has been charged with taking more revenue from commercial sources following a lower-than-hoped-for license fee settlement.

BBC Worldwide targeted online acquisitions in June after growing annual profits 24 percent to £111 million (digital revenue edged up to £13.9 million though the overall loss more than doubled to £3.9 million on development investment). Sure enough, it bought Lonely Planet last month for an estimated £100 million, and more buys are coming: “You have got to fill gaps through M&A activity and there are all sorts of gaps for us.” It’s planning 15 portals based around “passions” like motoring and gardening and, now it’s rolling out ads across the BBC’s non-UK websites, there’s even more potential.

Kangaroo: The Daily Mail’s (LSE: DMGT) take on Kangaroo – the mixed-model on-demand TV venture jointly announced by BBC Worldwide, ITV (LSE: ITV) and Channel 4 yesterday – is predictably negative. It quotes Conservative MP Philip Davies,- a member of the media, culture and sport select committee – complaining that BBC programmes license payers have already financed will now be offered with advertising or for viewing after another payment. In fact, BBC Worldwide would point out, this is already the way the world works when BBC shows are licensed to UKTV channels and others after their initial public service window. One thing may put the corporation on a collision course with controversy, however – when Kangaroo is available on TV sets, archive BBC shows under the BBC brand will come with ads or charges. The BBC Trust, in deliberating the proposal, may want to ask itself whether Mr Davies has a point.