Standard & Poor's said last week that the U.K. government green paper reviewing the British Broadcasting Corp.'s Royal charter will have no impact on the two CMBS transactions tied to the BBC name. The government said it would renew the charter, which will be instated from December 2006 for an additional 10-year period.

Under the new charter, the BBC will continue to be funded primarily by the license fee paid by all U.K. households that own televisions, which is estimated to generate around GBP2.8 billion ($5.3 billion) a year. However analysts at S&P said that, at the moment, the government is looking at the possibility of whether new types of funding may be needed to supplement or replace the TV license fee.

"The government has been considering whether to make a share of license fee money available to other broadcasters," explained analysts at Deutsche Bank Securities. "Delaying this decision until mid-way through the next royal charter, as announced by the U.K. culture secretary following publication of the green paper, is clearly credit positive for the BBC."

It's likely that over the next five years, as the country moves to digital broadcasting, the government will enter into discussions regarding a carve out of the fees paid to the BBC with the aim of distributing a percentage to other broadcasters, but, at the moment analysts report that the amount is likely too small. "The broadcasters are limited to utilizing this fee for public-sector content and, for most of the broadcasters, this is a very small percentage of their programming - so its likely to only cut into 10% of these fees," added one market source. The BBC, in turn, has also been asked to refocus its programming on subjects with greater public service content and less shares oriented.

The BBC has two relevant CMBS outstanding - as the single-borrower in the GBP813 million Juntura (European Loan Conduit 16) and the GBP129 million sale-and-leaseback deal BBC Pacific QuayFinance. "These are 30-year deals and it's quite likely that some change to its [the BBC's] broadcasting could eventually have some affect on revenues but, at the moment, the renewal of its Royal charter won't be an issue for at least another 10- years," said one analyst.

The BBC has an upcoming GBP366 million bond issue, which will be used to refinance cash borrowed by the BBC and property partner Land Securities Trillium to redevelop the London-based White City offices. Barclays Capital will lead the deal and MBIA will provide a triple-A wrap on the deal.

At the moment, the BBC is undertaking some overhead organization to show value for funding. Among the more impressive changes dictated under the new Royal charter is the replacement of the existing board, structure with a new body, the BBC Trust, and management will be delegated by the board.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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