£115m Canvas open to non-PSB partners

November 4, 2009

Delays in the launch of Project Canvas have led to a significant increase in the costs surrounding the proposed hybrid platform and associated user interface, according to new figures from the BBC Executive released by the BBC Trust.

Total launch costs of £22 million (€22.83m) will be required in the period up to the platform launch, the delays meaning Canvas will no longer be able to take advantage of synergies associated with the launch of Freeview HD next year, and leading the technology-savvy consumer to purchase yet another set-top box.

Another reason for the increase is the removal by the BBC Executive of the barrier that would have barred the participation of organisations other than public service broadcasters (PSBs) or internet service providers. It means that with an anticipated six partners joining the project – in addition to the BBC, ITV, Five and BT have already publically committed – each would pay just under £3.7m towards the launch in its first year. By the end of the first five years of operation Canvas would have cost £115.60m, but with the recovery of some £17 million through placements on the EPG. By far the biggest cost will be marketing at £48.4 million with technology costs running at £30.3m.

The opening of Canvas to the pure commercial sector means the removal of the previous 33.3 to 66.7% split in favour of the PSBs. Instead a number of public service principals will be included in the Articles of Association of the company that will be formed around Canvas, subject to the approval of the BBC Trust.

Project Canvas will invite its founder shareholders to participate for a period of four years. All the partners would have an equal number of shares and new entrants would receive the same number of shares as those held by other members. Shareholders would be able to reduce their commitment after an initial four years.

Prospective shareholders will be expected to demonstrate their ability to make a positive contribute to the project. This includes a commitment to spending a proportion of their marketing budget on promoting the venture.