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BBC underestimates how much it will make from online

LONDON - BBC Worldwide, the commercial arm of the BBC, has fired a shot across the bows of its commercial competitors after revealing it will beat its online revenue targets and plans to increase the amount of money made from growing online activities.

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John Smith, the BBC Worldwide chief executive, told a Reuters media leaders conference in London that the business has underestimated how much money it could make, after realising a target to get 10% of its total revenues from the internet was too low.

He said: "We think we will be able to beat it. It has gone from 1% to nearly 4% in just 18 months. So already we are starting to see that probably we have under-egged the extent to which we will see more of our revenues coming from the internet."

BBC Worldwide generates revenue from making programmes, publishing magazines, acting as a TV sales distributor for other companies and a growing portfolio of global television channels.

The commercial division's pre-tax profit in the year to the end of March increased 24% to £111.1m on sales of £810.4m

Smith revealed there are four main planks to BBC Worldwide's strategy, one of which is exploiting the 40m international users of the website, through advertising.

He said: "We intend to use the profits that come from that to significantly invest in the site and have an enormous amount more functionality and content on there and promote it."

Other plans include licensing content to other businesses and social networks around areas such as gardening, automotive, wildlife, music and homes. It has already launched a channel on YouTube showcasing BBC content.

Smith said a fourth plank of the division's strategy was unveiled earlier this week, when BBC Worldwide, ITV and Channel 4 outlined their launch plans for an on-demand content service next year that would combine more than 10,000 hours of programming.

Smith also said more acquisitions were likely such as the acquisition of the Lonely Planet travel guides earlier this year.

Smith said: "You have got to fill gaps through M&A activity and there are all sorts of gaps for us."

Earlier this month, the corporation launched advertising on its international website for the first time, in conjunction with British Airways, Airbus and watch maker Hublot.

The ads, which are being handled by BBC Worldwide, will only be seen by users outside of the UK, in key markets such as the US.

The BBC's commercial arm hope the controversial move will bring in an estimated £70m a year to the organisation.

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