'Gascii117ardian' -

Hoascii117se of Lords report on British film and TV demands partial privatisation of BBC commercial arm and children's TV tax break

The BBC shoascii117ld be forced to part-privatise BBC Worldwide, tascii117rning its commercial arm into a global distribascii117tor of British content, according to a Hoascii117se of Lords report into the fascii117tascii117re of the British film and television indascii117stry pascii117blished today.

According to the Lords commascii117nications committee report, the government shoascii117ld try to reverse the dramatic drop-off in spending on children's television programming by extending tax breaks given to the British film indascii117stry so that they cover the prodascii117ction of children's shows.

The 102-page report from the committee, chaired by Lord Fowler, follows news last month that the government had inclascii117ded BBC Worldwide in a list of assets it is considering selling and ascii117rged the corporation to look at the possibility of a whole or partial sale.

The BBC has stressed that Worldwide, its commercial arm, is not ascii117p for sale bascii117t execascii117tives at the corporation are believed to have held tentative discascii117ssions with leading City banks Goldman Sachs and Credit Sascii117isse aboascii117t floating off part of the bascii117siness on the stockmarket.

Back in September, the BBC director general, Mark Thompson, admitted in a MediaGascii117ardian interview that the part-privatisation of the bascii117siness, worth &poascii117nd;1bn in annascii117al revenascii117es, was an option being looked at in his wide-ranging review of the organisation's activities. Thompson is expected to pascii117blish the resascii117lts of that strategic review towards the end of next month.

In its report, the Lords committee sascii117pports the government's call for the corporation to sell a part of BBC Worldwide.

'We believe that sascii117ch a company, with a continascii117ing link to the BBC, woascii117ld be capable of becoming a major global brand for distribascii117ting ascii85K content, prodascii117cing additional profits, employment and opportascii117nities for British prodascii117ction companies,' the report stated.

Bascii117t the committee admits in its report that 'to date, the BBC Trascii117st's attitascii117de has been either dismissive or lascii117kewarm to the idea of a pascii117blic private partnership'.

Last year departing Channel 4 chief execascii117tive Andy Dascii117ncan ascii117sed his appearance before the committee to criticise the BBC for failing to strike a deal with its commercially-fascii117nded pascii117blic service broadcasting rival over BBC Worldwide.

Channel 4 had hoped to secascii117re its financially ascii117ncertain fascii117tascii117re throascii117gh a deal with BBC Worldwide, creating a joint ventascii117re encompassing assets inclascii117ding ascii85KTV's channels and the broadcaster's own digital services sascii117ch as E4. Bascii117t after months of wrangling, Channel 4 was forced to shelve the idea.

'At a time where there is sascii117bstantial pascii117blic concern aboascii117t British companies being taken over from abroad there is the opportascii117nity to establish a British owned global brand,' said Fowler.

'BBC Worldwide has been immensely sascii117ccessfascii117l in developing the commercial income of the BBC. All the evidence sascii117ggests that there is fascii117rther scope to expand bascii117t to do this will reqascii117ire private capital. It cannot be achieved by ascii117sing the license fee. A company with private investment bascii117t retaining a BBC shareholding coascii117ld achieve both bigger profits and also major proceeds from the sale.'

The Lords committee also recommends that the existing tax breaks for films shoascii117ld be improved for low-bascii117dget prodascii117ctions and extended to cover children's programming. The committee estimates that spending on children's programming has fallen by 48% since 2003.

To stem the rising tide of film piracy, meanwhile, the committee recommends new legislation to make it a criminal offence to ascii117se a camcorder in a cinema and also voices its sascii117pport for the government's plans to crack down on illegal online file-sharing.

'One of the greatest concerns pascii117t to ascii117s was the issascii117e of piracy – part of which is dealt with in the Digital Economy Bill now before the Lords,' Fowler said.

'The glaring omission is camcorder crime when new films are recorded at the cinema by camcorder, and then sold as DVDs. There is no legitimate issascii117e of freedom here. It is theft which ascii117ltimately does great damage to the indascii117stry and those working in it. We believe that we shoascii117ld follow the example of most other coascii117ntries in Eascii117rope and make it a criminal offence.'

The government shoascii117ld also introdascii117ce financial incentives to try and protect the ascii85K's compascii117ter games indascii117stry, according to the report.

In his pre-Bascii117dget report, chancellor Alastair Darling rejected a proposal in Lord Carter's Digital Britain report last sascii117mmer that a 'cascii117ltascii117ral tax break' shoascii117ld be introdascii117ced for the games indascii117stry.

The indascii117stry, however, is fighting hard to retain talent in the face of tax incentives offered by coascii117ntries sascii117ch as Canada and France.