Does BBC's Lonely Planet deal travel too far from TV remit?

Critics have been quick to seize on the supposed inappropriateness of the BBC's commercial arm, BBC Worldwide, buying a 75% stake in travel guides company Lonely Planet at a cost of £70 million. It is claimed that this compromises the BBC's public service remit.

Indeed, there is disquiet about all of BBC Worldwide's activities, not least from rival media companies. Both Rupert Murdoch and his son, James, who runs BSkyB, have been openly hostile to the "unfair" spreading of the BBC's tentacles into areas they feel properly belong in the market domain. Their complaints are echoed by regional newspaper owners.

The argument runs roughly as follows. The BBC is already Britain's largest media organisation. It is insulated from the harsh "real world" because it enjoys £3.5 billion-a-year income from the licence fees that are paid by virtually every household in the country.

Unlike private companies that are required to turn a profit, and therefore have to police budgets tightly, the BBC squanders a fortune on overstaffing, over-commissioning and overreaching itself.

Having already misused its fee-money muscle to move into new media areas - such as its massive online division, its investment in new channels like BBC3 and BBC4, and its creation of hyperlocal TV stations - it is now misbehaving by building a global empire with a profitseeking private company that exploits BBC products and the BBC brand.

I have to say, as an unashamed supporter of public service broadcasting in general and the BBC specifically, that my eyebrows lifted over the Lonely Planet acquisition. But it does not take a moment's thought to realise the financial logic of BBC Worldwide's enterprises when seen in the context of the Government's refusal to grant a licence fee rise commensurate with the BBC's needs and, most significantly, the BBC's digital switchover commitments.

According to Worldwide's chief executive, John Smith, the £111 million profits it made last year has already helped to reduce the £135.50 colour TV licence by about £9. That's a small percentage, but it will undoubtedly increase because Worldwide's five-year target is to achieve annual profits of £200 million.

Then we have to consider whether the way it is making its money is really as devastating as its commercial rivals would have us believe.

At present, most of Worldwide's revenue comes from within Britain, through magazines, notably Radio Times, and books. It has joint ventures with three publishers, Random House, Penguin and Pearson. It has struck a deal with Woolworths to sell DVDs of its programming. Then there is the joint venture with Virgin Media that enables old BBC programmes to be screened on 10 digital channels, such as UKTV Gold. It may strike some people as odd that advertising revenue from those channels ends up with the BBC, but it's hardly a threat to its public service remit.

However, Smith and his team are now aiming to expand abroad. Hence the launch of eight production bases in India to make local versions of BBC formats - such as The Weakest Link and Dancing with the Stars - as well as to create new shows. Is it so reprehensible to furnish the BBC's coffers by marketing its brand in foreign parts?

That said, the BBC must ensure it continues to have plenty of quality programming to sell, so reports that director-general Mark Thompson is about to kill off factual output in order cut 12% of the corporation's staff are very worrying indeed.

What is required at the BBC is a stiletto, not an axe. Curing the problem of overmanning must not lead to a diminution of content.