MacBank snaps up BBC media services business

Macquarie Bank has shown it considers no diversification too broad, buying the BBC’s media services business, BBC Broadcast, in the UK for almost $400 million.

MacBank has beaten 17 other bidders to acquire BBC Broadcast, which offers promotions, subtitling and video on demand through broadband and mobile phones. It has a contract to service all of the BBC’s units until 2015.

The $392 million outlay means Macquarie Bank has expended even further, boasting 6500 staff in 23 countries, with $89 billion in assets under management.

MacBank acquired BBC Broadcast as part of a consortium, Creative Broadcast Services Ltd, which includes Macquarie Capital Alliance Group (MCAG). The bank itself will sell its 35% interest to clients over the next six to nine months.

The sale of the one time BBC department follows a BBC review of its commercial businesses, which has found that while the multimedia content maker’s services are vital, they do not need to be owned by the UK broadcasting giant.

MCAG chief, Michael Cook, says the acquisition is a landmark transaction.

“The MCAG bid was successful in some quite complex and demanding circumstances. What we have here is essentially a privatisation of an iconic British business.

“It’s a very unique asset, underpinned by very significant contracted cash flows, but with the potential to expand internationally.

“The areas in which BBC operates are very strong growth markets in the UK, Europe and elsewhere in the world, and so we see that there are likely to be significant revenue opportunities going forward.

“One thing that we find attractive is that we would hope that further operational efficiencies and growth will come through the transition of the business to the private sector.”

Macquarie Bank will commit £40 million in equity to the consortium, and intends to sell down some or all of its proposed investment to institutional investors or to a Macquarie-managed fund within six-to-nine months.

The deal is expected to be finalised next month if it gets government approval.

Unions feared a sell-off would mean job cuts, but Creative Broadcast Services has agreed to a one-year moratorium on compulsory job losses.
The BBC’s Director General says it is the “best possible deal for the BBC as a whole.”

BBC Broadcast Limited is a profitable and successful company and was previously part of BBC Television.

Specialists in the delivery and promotion of digital media, BBC Broadcast offers “the complete range of services required to promote, playout and provide access to broadcast content across all media, from television to mobile phones. BBC Broadcast’s expertise comes from the long standing provision of these services to the BBC and UKTV.”

BBC Broadcast was put up for sale following the BBC’s internal review of its commercial businesses announced in December 2004. The commercial review team concluded that whilst the services provided by BBC Broadcast are vital to the BBC, they did not necessarily need to be owned by the Corporation anymore.

With over 1000 staff in London and almost 100 around the UK, as well as an office in the US, and revenues in excess of £100million, BBC Broadcast is the largest playout and channel management business in the UK.

BBC Broadcast delivers the following services:

· Promotions, design and branded content

· Navigation Services (e.g. electronic programme guides)

· Access Services (e.g. subtitling, signing and audio description)

· Content Playout, including ‘video-on-demand’ (e.g. video via broadband and mobile phones)

· Interactivity

It is a profitable business, much of which is secured against long-term contracts that underpin future growth from new services including video-on-demand (via TV, mobile and broadband services for example), next generation navigation devices and enhanced branded content.

Initially focussed within the UK, BBC Broadcast has successfully won business globally and is developing plans to expand in Europe, Asia and the USA.

BBC Broadcast’s state-of-the art Broadcast Centre has been designed and built to exploit the changes in the delivery and promotion of media content brought about by the convergence of IT, media and communications markets. The company is in the final stages of the largest migration of channels in broadcast history as it relocates its 61 streams including public service and commercial channels and interactive streams from Television Centre to the Broadcast Centre.

See a video presentation of what the company does by clicking below.