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BBC Brands Beyond Britain

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BBC Worldwide has its sights set on the U.S. with a strong pipeline of brands that will resonate with consumers and retailers across channels.


The Children's and Licensing unit, one of seven business units of BBC Worldwide, has been through a choppy couple of years, but is now poised for a bright future under new leadership and a newly implemented strategy for growth.

BBC Worldwide, which is the commercial arm of the BBC and the champion of some of the world's best-known brands from Teletubbies to Planet Earth, is also parent to one of the world's largest licensors—ranked No. 21 in License! Global's Top 100 Licensors—and second-largest licensor in the U.K. Its business units produced revenues of over £1 billion (over $1.6 billion) last year and profits of £103 million ($168 million). Each year, BBC reinvests profits into programming as a vital engine of revenue that supports TV programs that have become favorites worldwide.

The view ahead aims to soften the effects of peaks and troughs and expand international business so that rather than 80 percent of its revenue being home grown and 20 percent from overseas, it will be the other way around.

When Neil Ross Russell arrived a year ago as managing director of Children's and Licensing, he found a business set up for boom and not for lean times. "It wasn't an appropriate structure for a modern licensing business," he recalls. So he set about refocusing the business in three core areas and then, as he puts it, "crashed things together."

Just as BBC Worldwide moved into its sparkling new headquarters in White City, located in West London, Russell implemented a significant realignment that would focus on brand management, international expansion, and adult and family licensing.

"It was deliberately fast," says Russell. "We could do analysis paralysis or we could crash it together and see where the chips lie. We had just moved into this new building and I knew we had to act quickly."

In May, Russell made a major strategic move by appointing U.S. brand executive, Tom Keefer, formerly with Mattel, as global head of licensing. to be based in New York. It represented a key appointment in Russell's plan, first, because his strategy for international expansion starts with the U.S. and, second, because he is keen to re-import knowledge and experience of the U.S. licensing and retail markets back to Europe. While it's Keefer's first foray into working with television brands, the former Mattel exec has extensive experience working with global consumer brands.

Both executives admit that for international expansion—meaning expansion to the U.S.—they have a strong sense of urgency because it's where the biggest "prizes" are to be had. "The big step and change in our business won't be from the U.K. So Keefer was appointed to build our international business starting in the U.S. All the work we've done in the last year has crystallized the fact that we're part of a global market," says Russell.

And after the 2010 digital switchover, all homes will have 40 channels and BBC Worldwide has to plan to survive in that landscape.

"We must make sure that 'Teletubbies,"In the Night Garden,' and other shows, all become long-term performing brands, and we start this by getting into the U.S.; says Russell.

Keefer's priority is to crack the code in the U.S. by making the BBC brands retail focused and that means thinking about the consumer, as well as the retailer.

"I tend not to ask, 'How do you get stuff onto the shelf?' but rather, 'How do you get it off the shelf?'" explains Keefer. It's common for European licensors to think that there are only two retailers that matter in the U.S., Walmart and Target. But Keefer argues that there are plenty of retailers and retail channels from grocers such as Kroger, to pharmacy retailers such as CVS and warehouse clubs such as Costco and Sam's, where the BBC brands are largely underexploited. The strategy is to address head-on the concerns that retailers have the world over—improving margins and offering differentiation.

Says Keefer: "We plan to build a continual BBC brand presence at retail"

The reason both Keefer and Russell are so confident that it will be possible to do this is because of the unique relationship that exists between BBC Worldwide and the BBC. The BBC's remit, which is to make programs that engage and entertain, means there is a constant supply of diverse and excellent brands coming down the pipeline.

"I believe that with tent-pole programming and by keeping things refreshed, we can deliver exactly what retailers want," says Keefer.

It helps, of course, for them to know that something has already been tried successfully in the U.K. and that global partners are in place. Now that the BBC has resources in the U.S., it can execute retail initiatives in a way that it couldn't so easily before. And, for the moment, the creative work will continue to be done in the U.K. because it is important to have one global voice. Resources for approvals and customizing work for retailers may come later.

Russell adds, "The strength of our business is that it doesn't rest on individual brands, but in having a very strong portfolio of brands year-on-year, so our message to Walmart and Target and other retailers is that BBC will still be here in five, 10 and 15 years. You might not be getting the same brands, but they will still be just as strong."

It was clear to Russell from the time he joined BBC that children's brands were a priority for international expansion. "It's a rich time for BBC's children's brands, with significant new programs beginning their lifecycles," he says. "The news is that we're building a bigger children's business," says Keefer. "Our main focus now is getting ready for In the Night Garden, ZingZillas and 3rd & Bird! These brands make a significant preschool offering and I believe there is a need for quality preschool in the U.S."

Significantly, In the Night Garden, (No. 2 toy in the U.K. last year, and another groundbreaking program from Ragdoll, which created the Teletubbies) isn't yet on air in the U.S. Russell says that this is an intended wait for the right broadcast platform. Unlike in the U.K., where there are two BBC children's channels—CBBC and CBeebies—there is no 'home' for BBC children's programs in the U.S.

However, Russell won't reveal whether there are plans for a BBC America children's channel, but what he does say is that there are opportunities in the U.S. kids' broadcasting arena for the first time in years, thanks to changes in the marketplace such as the recent joint venture between Hasbro and Discovery Communications to create a rebranded kids' network to debut in late 2010.

Starting from a small base, it's easy for Keefer to suggest his targets for growth are in double or triple figures. "What's more," he says, "is that this is such an exciting proposition because BBC brands are under-represented in licensing and retail and we are now poised to ignite those brands."

Another key to Russell's strategy is to put brand management at the heart of the business. Speaking like a true management consultant, he says that if you look at the P&L, you see peaks and troughs and that if you've got a cash cow that's fine but it will die quickly. What you have to do is turn it into a rising star by exploiting it steadily and turning it into a real brand.

"The challenge is to look at the BBC portfolio of brands and make sure we only have the right brands with genuine licensing opportunities," says Russell.

The pipeline of BBC programs is so rich that Russell has affected a detailed analysis not just of what's in the portfolio but how it relates to what's on air on the BBC, on air across all channels and also in terms of product categories.

"The result has given us a clearer picture of where the gaps and overlaps are and is proving vital for planning," he says.

Russell's vision is of the licensing business as a service to retailers, filling the gaps, and in his mind he pictures the aisle of a supermarket with BBC properties filling every sector and product category. Now complete, the analysis has turned up some interesting gaps, which can now be put to the creative community.

One surprising fact in the analysis revealed that there is a gap for properties for boys aged 2 to 4, for example. Product categories were also surprising—arts and crafts, for this age group, for example, aren't licensed very thoroughly.

One thing that strikes any look at the BBC portfolio is that, in spite of having some of the biggest brands of the last 10 years, there isn't an obvious "evergreen," or brand that scores very highly on a continual basis.

"Teletubbies," for example, is on air every day still but isn't one of the top five preschool brands in the world any more. Russell says that this is a result of the riches on offer; that it's tempting always to focus on the new things. "Most of the things we might call evergreen have been around a long time and are owned by companies that put the brand at the center of everything they do; it's their raison d'être," he says. "That's why we now need brand people here at BBC Worldwide to manage and guide our brands into becoming long-term successes. For Teletubbies, for example, this means invigorating it, to make it interesting to retailers to continue to want to buy it—a very nice problem to have."

For Russell, the Holy Grail will be to know which brands to back for licensing and he is refreshingly clear about this. "Most programs that go on air will not turn into huge licensing successes," he says. ZingZillas; for example, is one that we think will hit the sweet spot." He says that, historically, there was an assumption that if a program is for kids, then all the ancillary rights were relevant. But that's not so and the numbers say it all: there are about a thousand children's brands on air and only a few of them at Tesco.

Such is the reality that Russell says it's almost safer to start with the assumption that something won't work, or to think of brands as working or not working for licensing rather than by age group. "I think this way you get a clearer idea of what we need. The good thing for us is that the BBC has only one remit and that's to make good programs and we can be entirely confident in this," he says.

The model for children's programs is the same for adults and this is where Russell sees huge potential at home and overseas. "Adult and family programs make fantastic brands. Many of them are underexploited. Brands like Planet Earth and Top Gear offer huge emotional attachment, passion, willingness to spend money and they are increasingly international." He believes that Doctor Who and Top Gear are sleeping giants in the U.S. "They command such a passionate following from fans that are finding their way to the shows online and paying to download them," he says.

BBC America, which airs both (along with "Primeval" and "Torchwood") is the fastest-growing channel in the U.S. and is now in 64 million homes.

One year on, Russell admits that he crashed things together and some chips have fallen out. "But I crashed together those three areas of focus right at the beginning and they were the right things to do," he says. "Now what's most exciting is that, although we're not out of the woods, there's a very, very bright light at the end of the tunnel."

With the business now aligned to manage each brand, case by case, and to exploit retail opportunities in the U.S., the light should get even brighter.

As Keefer says, "I've always worked on a global scale. But this is the first time the emerging market is the U.S."

senior vice president, global licensing A native Californian, Keefer began his career with Newsweek International in London, becoming international advertising director for Life magazine. He returned to the U.S. with Alan Pascoe & Associates to work on the Davis Cup and the Commonwealth Games and then worked for L.A. Gear and K-Swiss before joining Mattel's boys' division in 1998. In 2004, he became senior vice president, general manager of one of Mattel's cross-functional customer business teams. Before joining BBC Worldwide, Keefer worked with Global Brands Group on the FIFA/2010 World Cup and, concurrently, for Green Rubber LLC.


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In the Night Garden

BBC Financial Data


SALES £m YEAR 09 08

Channels* 225.6 183.8

Content and Production 88.2 73.9

Digital Media 34.2 21.9

Sales and Distribution* 195.3 212.9

Magazines, Children's and Licensing 210.2 203.4

Home Entertainment 207.1 197.3

Global Brands 43.0 23.1

TOTAL 1,003.6 916.3

Before After Exceptional

Exceptional ltemst

ltemst

PROFIT £m YEAR 09 09 08

Channels* 29.6 29.6 12.6

Content and Production 16.7 16.7 16.0

Digital Media (22.8) (31.7) (10.9)

Sales and Distribution* 433 43.7 46.7

Magazines, Children's and Licensing 13.2 13.2 7.7

Home Entertainment 31.8 23.8 47.7

Global Brands (9.6) (9.6) (2.1)

TOTAL 102.6 85.7 117.7

In 2008/09 Sales and Distribution generated program sales of 235.9m (on which It generated a profit of £15.5m) to the Channels business. The results of Sales and Distribution are shown here net of this inter-business trading. t Stated before group and share of joint-venture exceptional items. A No exceptional items were reported in the year ended March 2.

BBC's Top Performers

From a global licensing, merchandising and retail sales perspective, top performers are Top Gear, Planet Earth, In the Night Garden, Teletubbies and Doctor Who. The focus, looking ahead, is on the following children's brands: In the Night Garden, Teletubbies, Tronji, 3rd & Bird!, ZingZillas; and adult/family brands: Top Gear, Dancing with the Stars/Strictly Come Dancing, Doctor Who, Lonely Planet and BBC Earth.

In the Night Garden

From Ragdoll Productions, this preschool series ended 2008 as the second-biggest license, generating £33.1 million ($54 million) in licensed toy sales in the U.K. (NPD data). The first licensed product went on sale in September 2007 and the brand now boasts a comprehensive U.K. licensing program and is rolling out internationally (Australia, Canada, Spain already on air, followed by France, Nordic and China). Not yet on air in the U.S.

Doctor Who

Doctor Who, which attracts huge audiences in the U.K., promotes the idea of the whole family watching a show together because of its multi-generational appeal. A new series with a new doctor (it is traditional to change him every now and again) starts in 2010. Toy licensee Character Options has seen action figures sold and was awarded toy of the year for its Cyberman helmet. It's one of BBC

48 www.licensemag.com September 2009 America's five most-watched shows. Doctor Who ended 2008 as the ninth biggest toy license in the U.K., generating £17.7 million ($28.8 million) in licensed toy sales.

Top Gear

A lifestyle program built around cars and motoring and irreverent fun boasts a strong international following. It spawned the biggest-selling motoring magazine in the U.K. and 24 licensed international editions, a live stage show, 20 licensees for mens' and children's products, plus a master toy range from Wow Stuff launching this autumn in the U.K. Forty percent of the U.K. audience are women.

Teletubbies

There are 365 episodes of this groundbreaking preschool series made by Ragdoll. Tomy is still master toy licensee across Europe. It airs daily in the U.K. and BBC Worldwide is looking for new international partners to add to the program.

Caption: Neil Ross Russell, managing director, Children's and Licensing and Tom Keefer, senior vice president of global licensing


Neil Ross Russell managing director, Children's and Licensing

Neil Ross Russell assumed his role with BBC in August 2008. Previously, he had been consulting for CBeebies. His career started at EMAP Radio where he was a DJ and club promoter. He worked at Sega Europe, completed an MBA at the London Business School and joined Sparrowhawk Media Group, where he created the groundbreaking channel, KidsCo, a three-way joint venture, whose business model allows all content providers to share in the revenue of the business. Russell and his family live in the house where Terry Nation wrote "Doctor Who" and where, according to local legend, the first Daleks were built in the back garden.


BBC Worldwide Global Business Snapshot

U.K.'s second-largest licensor behind Disney.

■ It was ranked No. 21 on License! Global's Top 100 Licensors with $1.98 billion in worldwide retail sales of licensed products.

■ BBC America is now in 64 million homes after 10 years on air. "Torchwood," "Primeval" and "Top Gear" are among its most-watched shows.

■ BBC Magazines sold about 90 million magazines last year.

■ BBC Worldwide owns the Lonely Planet brand, which it is transforming from a travel book business to a diversified provider of travel information.

■ BBC Worldwide sales were just over £1 billion (up 9.5 percent) with profit of £103 million (down 12.8 percent). It's the first time the business has exceeded sales of £1 billion, something chief executive John Smith called "a significant milestone in the life of BBC Worldwide, and all the more so in trading conditions more challenging than any of us can remember."

■ BBC Worldwide is divided into seven units: Sales and Distribution; Channels; Global Brands; Digital Media; Content and Production; Home Entertainment; and Magazines, Children's and Licensing.

■ Children's and Licensing posted sales of £210.2 million ($342 million) and profit of £13.2 million ($22 million). It is the

New Office, New Culture

Just as Neil Ross Russell came into his post, BBC Worldwide moved into its new Media Centre in 2008. It wasn't just a typical office move, but rather, the open plan and futuristic building has facilitated a new way of working which has had a significant impact on the way business is done. Russell says, "The big impact it has had here is that you bump into people you are working with, you understand their challenges and what they are up against more. And it's helped raise the profile of Children's and Licensing within BBC Worldwide."

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  • APA 6th ed.: Phillips, Sam (September 2009). BBC Brands Beyond Britain. License! p. 38.
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