BBC's plans for raising billions fade as dot.com bubble bursts

LONDON - The long-term financial plans of the BBC are in doubt because of the crash in internet share values.

Britain's Secretary of State for Culture, Chris Smith, has told the BBC to raise £1.1 billion ($NZ3.8 billion) of revenue by 2006, and the corporation had hoped a large chunk would come from a flotation of Beeb.com, its commercial internet site.

But so steep has been the slump in internet values that plans have been shelved, say BBC insiders.

The BBC had already sold 13.5 per cent of Beeb.com to venture capitalist TH Lee Global Internet Ventures (THLi) for £35 million ($NZ123 million) last August when Beeb Ventures, which is mostly Beeb.com, was valued at £240 million ($NZ844 million).

"The operation can be worth only a fraction of that now," said one market analyst.

The shopping site is running at a loss, its biggest source of revenues coming from a couple of dozen banner advertisements.

About £7 million ($NZ24 million) has already been spent on a marketing campaign to raise internet users' awareness of the site.

A competitor says: "The venture capitalist has taken on all the risk in the belief that there would be losses for a bit, then the site would be worth gazillions. All those assumptions are being reassessed in a big way."

BBC insiders said last year that THLi was looking at an investment of around three years, at which point "we will look at a variety of exit routes. One of those could be a stock market flotation".

That horizon has changed. The chief executive of Beeb Ventures, Julian Turner, said: "THLi is in this for the long term" and there had always been "no fixed mechanism" for the timing of a flotation.

He also said Beeb.net, the BBC's internet service provider, is in profit, and he is happy with growth in traffic at Beeb.com.

BBC Worldwide is said to have been putting pressure on BBC News to allow foreign visitors to its news site to be diverted to a separate commercially-run internet site. But news executives fear the BBC News brand would be "tainted" by that.

- INDEPENDENT