Deal to cut BBC’s New Broadcasting House running costs by up to £34m a year

The BBC today completed a new financial deal which secures the long-term ownership and occupation of Broadcasting House beyond 2033 the term of its current leasing arrangement.

A significant proportion of the running costs of New Broadcasting House stem from a leaseback arrangement secured to redevelop the property.

This new property transaction will deliver value for money for generations. Rental payments will be fixed over the remaining lease period leading to a 15 per cent reduction in the current occupancy cost. An immediate reduction in cost of £10m a year will gradually increase to around £34m by the time the current leasing arrangement ends in 2033. This transaction ultimately paves the way towards outright ownership in 2045.

Broadcasting House is home to the One Show, BBC News’s three 24-hour news channels, the World Service’s 28 foreign language stations and its popular national radio stations. It contributes to half of all BBC output with a dozen TV studios and 50 radio or edit suites and the largest newsroom in Europe within the building. Other TV, executive and professional support staff also based there.

Deputy Director-General of the BBC, Anne Bulford, says: “Cutting property costs is a key part of our strategy to provide maximum value for money for the licence fee and with this deal we’ll have cut our buildings bill by some £90m a year since 2011.

“This deal provides real value for money - securing the long-term future of our London base and demonstrating our commitment to meeting the financial challenges we have to address during this Charter.”

Chris Lipscomb, managing director at Morgan Stanley, which led the structuring of the transaction, says: “Morgan Stanley is delighted to have partnered with the BBC in structuring a transaction that enables the BBC to better manage its lease costs through to 2033, and importantly allows it to efficiently gain full ownership of New Broadcasting House in 2045.”

Over a number of years the BBC has been upgrading to fewer more modern properties that are fit for 24 hour broadcast in a digital age without increasing costs. Overall this will mean the BBC will be saving approximately £90m every year. Alongside this, the corporation’s property footprint has been reduced by around 40 per cent since 1998 - a significant achievement within the public sector.

Notes to Editors

• The savings are achieved through the financial structures of the property transaction, known as a cash flow swap, which is being entered into by the BBC and facilitated via investment bank Morgan Stanley and supported by Sennen Finance. This will enable the BBC to lower the rental costs previously agreed in 2003 until 2033, which was previously subject to inflationary increases. Today’s transaction also establishes a final fixed payment plan on New Broadcasting House to acquire the headlease. This will be spread over the period from 2033 to 2045.
• The BBC carried out thorough due diligence on the transaction and was financially advised by KPMG and Linklaters.
• The construction of New Broadcasting House allowed the BBC to save £19m from disposing of other central London buildings no longer required and co-locating the News Division.
• The BBC has also disposed of much of its West London campus. The exit from Television Centre raised £200m and cut annual running costs by £30m. The disposal of land at Media Village generated £87m and the sub-letting of part of that site is saving the BBC a further £33m in annual running cost savings. Total property savings since 2011 are now at approximately £90m a year and will rise to an estimated £114m a year by 2033.
• Property is a key strand of the BBC’s overall efficiency plan, which will hit accumulated savings of £1.6bn later this year.

Related Speeches

• Anne Bulford's speech to the Media and Telecoms Conference