World Service?

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.
[an error occurred while processing this directive]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?

"This is a company with billions of pounds of taxpayers' money trying to grind me into the dirt," says Kelvin Mackenzie, the former editor of the U.K.'s Sun newspaper and an outspoken BBC basher who now runs a small radio company that includes a station dedicated to sports. He complains bitterly that the BBC uses public money to overpay for broadcast rights to sports, making such events as Wimbledon, the Grand National or the British Open unaffordable for a smaller company such as his. The BBC, he rages, is "a significant anticommercial force."

These are serious charges, and ones the BBC is growing accustomed to hearing. "It comes up all the time," says Roger Flynn, who runs BBC Ventures Group, the Beeb's other commercial arm, which sells BBC services — such as its studios and use of a brand-new broadcast center — to businesses. He and others say that the BBC has bent over backwards to ensure that its commercial operations compete fairly and don't touch any license-fee money. But the criticism is likely to figure high on the agenda of an upcoming review of the BBC's charter — a once-a-decade look at the Corporation's mandate — since at its core the debate is about what the BBC is and what it should become.

By tradition, the Beeb is supposed to produce programs in the "public interest," although exactly what that means has never been unequivocally defined. At the same time, it tries to be popular in order to justify the license fee. It's a difficult juggling act, and competitors — and many viewers too — complain that it is using public money to duplicate the same cooking, gardening and home makeover shows as other broadcasters. At a Royal Television Society gathering in Cambridge last month, an executive from Walt Disney asked pointed questions about why the BBC had felt it necessary to start two new digital channels for children, competing with Disney's own programming. In a widely noted speech in August, Tony Ball, the outgoing chief executive of Rupert Murdoch's BSkyB, wanted to know why the BBC is spending €144 million per year on imported programming, most of it from America, when commercial channels could do the same without wasting public cash."I really cannot see why public money is being diverted to those poor struggling Hollywood studios in this way," Ball said.