BBC THE HIT FACTORY: The BBC makes millions licensing programs abroad and selling tie-ins to monster hits like the award-winning Walking With Dinosaurs
World Service?
	The BBC likes to think of itself as a high-minded public broadcaster. But as it expands its for-profit ventures around the globe, rival media groups are crying foul. How the Beeb learned to love capitalism
	By PETER GUMBEL | London

Posted Sunday, October 5, 2003; 12.48BST
The British Broadcasting Corporation has always turned up its nose at commercials. Unlike state-funded, public-service broadcasting networks in France, Germany and elsewhere, the BBC's domestic channels won't air ads, infomercials or the latest industry fad, "branded content" — ads dressed up to look like factual programming. So when the French automaker Renault this week rolls out a series of two-minute sponsored "documentaries" on British television to accompany the launch of its redesigned Scenic van, viewers of BBC One and BBC Two won't see them. But here's the surprise: the BBC made the spots for Renault.

The Renault series is just one of several promotions that the newly incorporated BBC creative services department has produced over the past 18 months for clients ranging from Lexus to HSBC to Vodafone. "We're not rushing out to shoot every TV commercial under the sun," says Andy Bryant, a 20-year advertising-industry veteran who took over the department last year. "We're just looking to show our strengths. But it's going to be a lucrative area for us."

For many Brits, the BBC remains the nation's high-minded Auntie, an affectionately respected part of the family who eschews commerce and aspires to the ideals of informing and educating the public, not just entertaining it. Outside the U.K., too, the BBC has attained iconic status through decades of plummy World Service radio broadcasts, and more recently through its international TV news and entertainment channels. But Auntie has a split personality: part of the Corporation is now out to make money, even if that means embracing the sort of rank commercialism it used to consider vulgar.

The 81-year-old organization is still primarily funded by a compulsory license fee every television owner in the U.K. pays and, as its annual report coyly points out, "the BBC does not have shareholders and does not aim to make a profit." But since 2000, under director general Greg Dyke, the Corporation has pursued an aggressive commercial expansion strategy designed to make it an international media powerhouse. The strategy has turned the Corporation into a muscular and increasingly contested competitor to media companies in the U.K. and worldwide, a firm that is gaining clout as a book and magazine publisher and online content provider, as well as a broadcaster. "We're fighting in the big boys' league," says Rupert Gavin, chief executive of BBC Worldwide, which runs the corporation's consumer businesses, including the increasingly successful BBC America channel.

The results are striking. At a time when the world's major media companies have been struggling with sluggish economies and slumping advertising, the BBC's commercial operations have grown briskly. Last year, those businesses had revenues of over €1.6 billion — 35% higher than in 2000. Of that money, €211 million was funneled back to the BBC in savings and cash for its noncommercial programming. But for many in the media business who are increasingly bumping up against the BBC in the marketplace, the burning question is: Can a license-fee-funded media behemoth compete fairly? And even if it can, should it?

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