BBC Plans Chinese Television Channel

A senior delegation from BBC Worldwide, the corporation's commercial arm, is to visit China this summer with plans for a television channel there.

The focus on international expansion comes as the commercial unit announced it had increased profits by 50% to £55m in the year to March, on sales up 7% to £706m.

The bottom line was boosted by strong sales of the Strictly Come Dancing format - typically sold overseas as Dancing with the Stars - as well as £5m of cost reductions and a £6.5m profit on the disposal of Eve magazine.

Worldwide's financial contribution to the BBC, which includes £84m to buy the rights to the corporation's output, rose by £4m to £145m in the year, its highest to date.

Yesterday's annual report was welcomed by financial analysts for its greater transparency, with a divisional breakdown for the first time. However, there were still suspicions in some quarters that the profit - £42m once disposals were stripped out -should have been higher, given the £84m payment for rights.

John Smith, the chief executive of Worldwide and chief operating officer of the BBC, said he was "pretty confident" of meeting his target to double profits from £37m last year to £74m next year.

International expansion of both the channels and TV sales business is a crucial part of that ambition. Mr Smith will head a team of between five and 10 senior Worldwide executives hoping to start discussions with several joint venture partners as well as the Chinese government in August.

The BBC has had a strained relationship with the Chinese authorities over its news reporting in the past.

Mr Smith said the news content of any future channel was likely to be limited to bulletins. "The attitude of the government there is definitely evolving," he said.

"[It's] becoming more lib eral. It's more possible to enforce intellectual property rights than previously."

Worldwide already runs the entertainment channel Prime in Hong Kong and BBC world is available on satellite. Other media groups, including Rupert Murdoch's News Corporation, have courted the Chinese authorities in recent years in an attempt to capitalise on a potential audience of 1.3 billion people.

Worldwide is keen to expand its TV channels business, which last year made a £4m profit on sales of £141m. It has a series of joint ventures, such as UKTV, as well as wholly owned subsidiaries such as BBC America. The corporation has also targeted India and Latin America, where it hopes to launch a Spanish-language TV channel.

A new director of channels is expected to join Worldwide shortly.

The corporation is planning to launch a new children's channel in the US. The most profitable part of Worldwide is the sale of programmes and formats. Last year the TV sales division made £31.7m, with sales of Strictly Come Dancing particularly strong and expected to reach £20m over five years. Little Britain was the most successful DVD.

The newly transparent report revealed that two divisions, children and new media, lost money in the year. Mr Smith hopes the former will turn around this financial year after restructuring.

The division is also looking to license its books and learning division. Possible partners include media and education group Pearson.

Mr Smith rejected complaints from many of the BBC's commercial rivals that its disposal programme did not go far enough and that it should sell its magazines because the division was "profitable and exploited the BBC brand". The £145m contribution works out at £6 per licence-fee payer.

An industrial dispute has forced the BBC to delay a sale of BBC Resources, its costume and wigs department, to 2007.