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BBC Grossly Under Estimates Web Revenues, Yet Layoffs Loom

If you think your company failed to recognize the merit of its website until recently, you’re not alone. The British Broadcasting Company is taking another look at its online efforts and investing new monies after reports showed that its website has earned nearly four percent of its total revenues in just 18 months.

Initially, they had aimed at securing 10 percent of revenues from their online property, over time, but now according to BBC Worldwide Chief Executive John Smith, “we have [probably] under-egged the extent to which we will see more of our revenues coming from the Internet.”

Though the BBC’s efforts focus mainly on television programs, and some magazines, its non-UK Web site, which gives priority to world news, sports and weather as well as offers BBC’s international radio and TV services, attracts more than 40 million international users.

With revenue from online advertising, BBC Worldwide Chief Executive John Smith claims that he will “use the profits that come from that to significantly invest in the site and have an enormous amount more functionality and content on there and promote it.”

According to a BBC FAQ the international and the domestic versions of their website already differ in small ways, aside from the domestic one not displaying ads. The domestic version gives prominence to UK news sport and weather, the other has a greater international focus and is aimed at international users.

Despite surprising healthy ad sales, the profit making arm of the BBC is looking further afield. Among other revenue generating ideas tossed around was “licensing content to other businesses and using magazine publishing and television production skills on the Web to create social networks around areas such as gardening, automotive, wildlife, music and homes.” In addition, the BBC is looking to rework their newly acquired travel website, Lonely Planet, and as well as implement an on-demand content service and social networking offerings. Other mergers and acquisitions loom on the horizon, indefinitely.

What makes this news somewhat controversial is the looming staff cuts at the BBC. The organization’s Director, Mark Thompson, recently announced that 2,500 jobs were to be cut over the coming six years, offset by hiring plans for another 700 — bringing the net cuts to around 1,800 personnel.

As reported in the National Union of Journalists’ (NUJ) December 2007 issue of The Journalist and covered in some detail on Jeremy Dear’s blog, organized BBC workers have threatened institutional action if the corporation does not undertake serious negotiations with staff and union representatives.

One of the main public concerns related to the staff cuts is that the gutting will “decimate the news and current affairs” coverage capabilities of the BBC — which many feel is the original raison d’etre of the largely publicly funded news service.

Labor’s upside here is that talks have taken place and progress is being made. We just wonder if the chat will carry on long enough for the new revenue projections to arrive — maybe the cuts won’t be so necessary after all.