The BBC’s merger of its global commercial division BBC Worldwide and its production arm BBC Studios will free up the British pubcaster to compete against the likes of Netflix and Amazon in the digital age, but also will lead to several short-term road bumps.

The move is the latest in a long line of “seismic” decisions made by the corporation to future-proof it and comes less than a year after BBC Studios was launched as a commercial subsidiary to allow it to make shows for external broadcasters such as ITV and Sky as well as U.S. and international networks.

Strictly Come Dancing
“Strictly Come Dancing”
REX/Shutterstock

It will make the new £1.4 billion ($1.9 billion) company — to be known as BBC Studios starting in April — the second-largest UK superindie group behind 21st Century Fox-owned Endemol Shine Group, in line with ITV Studios and RTL Group-backed FremantleMedia, ahead of Discovery and Liberty Global-owned All3Media, and twice the size of the Banijay Group. It will also bring together, in part, 15 BBCWW-backed production companies including Tim Hincks’ and Peter Fincham’s Expectation, Tessa Ross’ House Productions, War and Peace producer Lookout Point and Steve Coogan’s Baby Cow with BBC Studios’ four production departments responsible for shows including Top Gear, Doctor Who, Luther, Strictly Come Dancing and Blue Planet II.

It comes after director general Tony Hall warned that there could be a funding shortfall of £500M ($670M) over the next 10 years, one that will not be plugged by the likes of Netflix, Amazon, Apple and Facebook, according to the former Royal Opera House boss. Last month, he said, “The BBC has always shown a great ability to adapt to new challenges and make them opportunities,” clearly a precursor to today’s news.

BBC Studios is already BBC Worldwide’s largest supplier of content, and the corporation has said previously that a “thriving partnership between the two will be essential to the BBC securing its future as one of the very best programme-makers in the world.”

The BBC will hope that the merger, which will be led by chief executive Tim Davie and chief creative officer Mark Linsey, will help it deliver more global hits and put together more partnerships such as the David Attenborough-fronted natural history documentary series, produced by BBC Studios’ Natural History Unit and four-fifths funded by BBC Worldwide and international partners. It also will hope it can help it compete in the high-end drama space; BBC Studios is currently producing the BBC One and Amazon Prime co-production Good Omens, an adaptation of Terry Pratchett’s novel by Neil Gaiman and starring David Tennant, and it will need BBCWW’s funding expertise to piece together further deals. BBC Studios still is waiting for its first third-party commission since its launch in April and could perhaps receive some tips from BBCWW, which has produced a number of non-BBC titles over the last few years including Riz Ahmed’s crime drama The Night Of for HBO.

The Night Of
“The Night Of”
HBO

BBC Worldwide executives and industry heavyweights pointed to the fact that BBCWW’s core mission is to make money for the publicly funded corporation. Last year, according to its financial results, it returned £210.5M ($280M) to the BBC, down slightly from the £222.2M ($298M) it delivered across 2015-2016. One former BBC executive told Deadline the merger was “inevitable” and that the two-pronged approach was helpful to get the deal past government regulators.

However, there will be a number of tricky short-term issues to manage. Putting together two multimillion-pound companies is never easy, and the merger is expected to lead to some job losses. The BBC announced that the merged company would have around 3,000 staff. This will include around 1,500 from BBC Studios, which already reduced its workforce by around 10% ahead of its commercial launch and lost a number of employees following the move of long-running format Songs of Praise to rival producers Avanti Media and Nine Lives Media as part of a tender process. It also will include about 1,500 staff from BBCWW; this is down from the 1,712 that it employed in the 2016-2017 financial year, though it’s understood that a number of these employees were from BBC Advertising, which moved from being part of BBCWW to BBC Global News.

If the merger is successful, the BBC would be able to point to the next generation of scripted and non-scripted hits and will waltz off with a tranche of shows as globally recognized as Strictly Come Dancing (known as Dancing With the Stars to ABC viewers).