BRITISHBOLDCREATIVE
The BBC’s programmes and services in the next Charter.
September 2015.

Contents

	Introduction

4

Part one: The BBC Today	Is the BBC successful today?
	1.1 Does the BBC work in practice?
13	1.2 How has that success been achieved?
15	1.3 The BBC is at the heart of our lives
18	1.4 The BBC helps make Britain what it is20	1.5 The BBC makes the UK a more creative nation
21
1.6 Is the licence fee justified?
1011	Is the BBC distinctive and of high quality?
	2.1 What is distinctiveness?
25	2.2 How distinctive are we?
23
24	What do audiences want from the BBC?
	3.1 The public want more from the BBC46	3.2 Portraying the whole country47	3.3 Investment in programmes is falling50	3.4 The BBC in its market context
42
43Part two: The future of the BBC	An Open BBC
4.1 An internet-fit BBC
59	4.2 The BBC—Britain’s creative partner59	4.3 Open platforms for content
57

58

	Inform	5.1 The BBC’s role to inform in the internet age
64	5.2 BBC Newstream: telling the UK story, better and faster65
5.3 Helping the local news market to fill gaps in local democracy67	5.4 We want to invest in the World Service
685.5 An internet-fit, open BBC News
62

63

2

	Educate
	6.1 The BBC’s role to educate in the internet age
70	6.2 The Ideas Service72	6.3 UK Arts73	6.4 A New Age of Wonder74	6.5 iPlay75	6.6 Curriculum support across the UK6970	Entertain	7.1 The BBC’s role in entertainment81	7.2 UK content aggregation82	7.3 Entertaining the whole UK83	7.4 The next radio revolution84	7.5 A new music discovery service from the BBC
77
79

Part three: Financing the future	Funding tomorrow’s BBC
8.1 The BBC’s financial context
89
8.2 The BBC has transformed its efficiency
93
8.3 Efficiency is a process, not a destination94	8.4 We will increase our commercial income95	8.5 The BBC’s investment needs
96	8.6 Funding our proposed investments
8788	An open, more distinctive BBC

993

Introduction—
byTony Hall, Director-General
September 2015

The BBC is approaching its centenary in 2022 andthe decisions taken over the coming months will
shape the BBC for the next generation.
This document heralds a more open BBC than everbefore. It sets out how the BBC will reform andthrive in the internet age. Our proposals will lead toa more creative, more distinctive, more personalised
BBC. They build on the BBC’s many strengths but
remain true to our founding mission—to inform,
educate and entertain.
Critically, they reflect the financial times that we live
in, focused on an efficient BBC, producing thehighest-quality programmes and delivering services
providing great value for money.

4

If we make the right choices now, Britain can have a
BBC that excels globally—a BBC that is a powerhousefor creative and economic growth for the whole of
the United Kingdom.
The BBC belongs to the public. We are stewards for
an institution that they cherish.
As I said on my first day as Director-General, I believe
the BBC’s best days lie ahead. British, Bold andCreative—I believe this document heralds a better
BBC for everyone.

The starting-point for our programme of change is aconsidered account of what we already do and therelationship we have with our audiences across the UK
and around the world.
For the case for the BBC doesn’t rest on ideologicalarguments, nor on debates between economists. It
rests on what we do.
The BBC has a very simple purpose. We’re here to
make great programmes and services. That’s why
people love the BBC. That’s why they enjoy it. That’s
why they trust it. That’s why they value it. That’s what
they pay us to do.
The BBC enhances the lives of everyone in the UK
in more ways than ever before and more often thanever before. We fire the imagination and the curiosityof our audiences.
We take them on adventures they never thoughtof. We allow them to wander through knowledge,
to be introduced to new ideas, to stumble upon
new interests.
We connect them to new worlds and to each other.
Sometimes we just make them laugh and that’s
great, too. We entertain, we educate, we inform,
but we also innovate and inspire. As R.H. Tawney
wrote “Only those institutions are loved which touch
the imagination.”46 million British citizens use the BBC every day.
Virtually everyone every week.
At the heart of the philosophy behind the BBC is avery simple, very democratic idea: everybody shouldhave access to the best, whoever they are, wherever
they live, rich or poor, old or young. We are here to
bring the best to everyone.
5

For 93 years, the BBC has played this role in our
culture; we are part of what makes us the UK.
We reflect and celebrate its different Nations andcommunities. We are part of the fabric of thecountry. We’re part of how other people see us andwhy many people abroad would like to have a BBCof their own. We’re the cornerstone of one of themost successful media industries in the world.
The licence fee is critical to this idea.
Because the BBC is funded by the licence fee, its
mission is universal. Because everybody pays, it ischeaper for everyone. Because it is funded directlyby the public, they hold us to high standards. Because
the BBC’s funding is independent, thatgives us creative freedom.
That creative freedom is more important than ever.
When we’re making programmes we don’t start witha gap in the market and try to fill it. We start with theidea and then make it happen.
We want the BBC in the next decade to be theplace people come to make brilliant programmes,
programmes of distinction. For producers, directors,
writers, artists to have the creative freedom todo things they would find it hard to do elsewhere.
We want to employ the best people with the best
ideas doing their best work. To get great teams towork together. To help the next generation of talentfind their voice. To be confident to take risks, pushboundaries and try new things. Not to be afraid ofcontroversy. For the BBC to be the showcase of thebest Britain can offer—not just to this country, but tothe world.
Our role in the next decade is to enable content of
the highest quality, made in Britain, for audiences toenjoy. I believe a BBC with that level of creativeambition would be more distinctive than ever, andmore successful than ever with audiences.
The BBC’s mission was set nearly a century ago by
its founding father, Lord Reith. It was to inform, toeducate and to entertain. That mission is as pertinent
today as it was then. And is as necessary in the future
as it is now.
For we, like every other broadcaster, are facing aworld in transition. At present, most of our audiences
enjoy the BBC’s programmes and services scheduled
over the airwaves. That won’t end. The majority ofpeople will continue to enjoy radio and television, as
now, over the next decade.
But increasingly, in a way made possible by theinternet and mobile devices, people are enjoying
what they want, whenever they want, wherever
they are.
It’s perfectly possible that by the middle of the next
decade that becomes the main route to what the
BBC does.
So for the next ten years, we will need to ride twohorses—serving those who have adopted the internet,
while at the same time making sure that those whowant to carry on watching and listening to traditional
channels continue to be properly served, too.
We will be moving to an internet-fit BBC, to be readyfor an internet-only world whenever it comes. But weshould try to move at the pace of our audiences.
The internet age strengthens the case for the BBC
and its enduring role. In the internet era it is easier
to find information but harder to know whether totrust it. It is easier to find small communities but
harder for the nation to speak to itself and to the6world. It is easier to make content but harder to findthe financial support for high-quality work. And theinternet age is great for those who can afford it andaccess it—but those that can’t risk being left on themargins of society.
To these issues, the BBC provides a response. In theinternet age, our mission is simple: great British
programmes, and a trusted guide—for everyone.
We want to take all the opportunities the internet
creates to inform, educate and entertain in new ways.
And to that traditional mission we would add a silent,
fourth imperative—to enable. We want to open the
BBC to be Britain’s creative partner, to become aplatform for this country’s incredible talent.
The internet will transform our mission to inform in
the coming decade. It will be easier to offer more
people, more information, more quickly. So we will
make a transition from rolling news to streaming news.
News in the palm of your hand.
We will open up the BBC to other news providers,through a new partnership which we hope will help
local journalism to thrive. We propose to reconfigure
our news coverage to meet the changing needs ofaudiences in Scotland, Wales and Northern Ireland.
We want to build on the authority of BBC World
Service to reach half a billion people each year, and inparts of the world that need it most.
We are recommitting to the importance of the BBC
as an educator. We are proposing a new children’s
service—iPlay—building on the strengths of CBBC
and CBeebies. We’re committing to work withlike-minded organisations, large and small, on a new‘Ideas Service’ that brings together what the BBC does
across arts, culture, science, history and ideas with thework done by this country’s most respected arts,
cultural, scientific and intellectual institutions.

Our audiences believe in the continuing role of the
BBC as entertainer. It is their number one priority.
Drama, comedy and entertainment help us tounderstand who we are, to make sense of our lives
and bring us together. But rather than cede internet
distribution to others we will open up the iPlayer tothe best of British content. In music, we and ourpartners in the industry propose a new discovery
service to showcase the best in music today and be achampion for new British music.
All of this answers a bigger question not just for
our audiences but for the health of Britain’s vibrantcreative economy. Who will invest in high-quality
British programming for radio, television and online?
Ofcom is clear in its review of public service
broadcasting that the amount of money going into
British programming is falling yet audiences are evermore committed to the purposes of public service
broadcasting. Ofcom found that the BBC remains thecornerstone of the PSB system. Investment in the BBC
is investment in Britain’s creative industries.
The BBC is also one of Britain’s great global successstories. Our news services are globally trusted
and admired. The BBC’s commercial arm, BBC
Worldwide, takes British programmes—in-houseand independently produced—to the world. We
want our influence on behalf of the UK to grow.
The UK is one of the most creative nations in theworld. We want it to stay that way.
These proposals do not mean a bigger BBC. They
do mean a better BBC. No one should doubt thatthe budget settlement announced by the Chancellor in
his July Budget will mean some very difficult choices
ahead. The BBC faces a tough financial challenge.
Having already saved 40% of the BBC’s revenues inthis Charter period, we must save close to another
20% over the next five years.

7

Our share of TV revenues in the UK will fall fromabout 20% now to some 12% by the end of theCharter. Our size relative to the giants of the media
world is small, and over the next decade will diminish.
So we will have to manage our resources ever more
carefully and prioritise what we believe the BBC
should offer. We will inevitably have to either close or
reduce some services.
We will also have to change the way we work. We
all want a simpler, more effective organisation where
as much money as possible goes on programmes andservices. We all want a BBC that will pioneer andadapt what we do for the new challenges we face,whilst holding on to the values that make us distinctive
and different. Above all, we all want the BBC as a true
partner with other organisations. We will inform,
educate, entertain—and enable.
For all who care about the BBC, this is a time tolisten, reflect and to welcome debate. Make the rightchoices now and Britain will enjoy a BBC that excels
in a global digital age, closer than ever to those who
pay for it, doing a great and vital job for the creativityof these isles.
The BBC is a great national asset. We are stewards
for the next generation.

This document is the first of a series for
Charter Review.
It starts from the funding agreement for the BBC
announced in the July Budget. In setting out the BBC’s
strategy for the next Charter period, we addressthemes in the Government’s consultation paper about
the mission, scale and scope, and value for money of
the BBC. We will respond in full to the policyquestions in the consultation paper in October.
This document answers the following questions,chapter by chapter.
In Part One we look at the BBC today. Chapter One
asks: is the BBC successful? Does it work in practiceand how has that success been achieved? We outline
the value that the BBC provides to audiences today.
We explore the BBC’s contribution to society, to thecreative economy, and how the licence fee is thefundamental underpinning of the BBC’s public value.
In Chapter Two, we tackle the question of
distinctiveness. How should it be defined, howdistinctive are the BBC’s services and where canwe be meaningfully more distinctive?
Chapter Three asks what audiences want from the
BBC in future. We use Ofcom’s public service
broadcasting review as our starting-point for the
public’s needs and set the BBC in its market context.

8

Part Two looks at the BBC of tomorrow. Chapter
Four outlines a vision for the BBC for the nextCharter: a BBC that is internet-fit and Britain’s creative
partner. It explains how we can take the best
principles and practice of internet thinking and apply
them to our products and services to make them thebest they can be for audiences and the strongest
support to the UK’s creative and cultural sector.
Chapters Five, Six and Seven then explore in moredetail how we propose to reinvent how we inform,
educate and entertain in line with that vision, so we
can modernise and preserve the best of public service
broadcasting for the future.
Part Three looks at how we can fund the BBC of
tomorrow within the Budget agreement agreed with
the Government. It outlines our proposals to improve
efficiency further, to increase our commercial income
and how we propose to live within our means.
Following this plan, we will publish our production
proposals later this month, and answer the Green
Paper’s policy questions in October.
The BBC belongs to the public. It only works thanks
to its partners. We look forward to receiving theviews of each so we can improve our proposals andagree the BBC’s future for the next generation.

PART ONE:THE BBC TODAY

1

Is the BBC successful today?

Compared with other great British institutions, theBBC is still young. There are still people who canremember a time before the whole country could
listen to their Prime Minister or their King, before, inother words, the BBC was there to support our
national culture and public life.
Before broadcasting, as the BBC’s first DirectorGeneral put it, “Most of the good things of this world[were] badly distributed and most of the people [had]to go without them.”
Beginning with the wireless, the BBC has helped to
remedy that.
Everyone has been able to take a front-row seat.
And at all the best shows. Everyone can share in thepolitical debate that used to be the preserve of a few.
Everyone can travel the globe, see the sights,
experience the culture, not just of Britain but thewhole world.
The BBC has helped open up the country and even
the world to the British people.
Whatever the theoretical arguments that have been
made about the existence of the BBC, it is practicalexperience of it that makes the organisation’s case day
after day.

10

The most eloquent statement that the BBC can makeis now made and always has been made by its
programmes, by its creativity, the thread that connects
Richard Dimbleby in a Lancaster bomber, That Was
The Week That Was, Doctor Who, Monty Python’s Flying
Circus, Radio 4, Michael Buerk’s reporting of thefamine in Ethiopia, Boys from the Blackstuff, The Proms,
Match of the Day, Panorama, Planet Earth, The Archers,
EastEnders to Wolf Hall, Chris Evans, The FA Cup and
The Great British Bake Off.
The best programmes, for everyone. The BBC is able
to promise that with confidence, a confidence that
one can have in no other arrangement. The
advantages of any other policy are speculative. The
advantages of the BBC are concrete and demonstrable.
The British people wouldn’t want to be without the
BBC and what it offers. That, in one sentence, is thecase for the BBC.

1.1

Does the BBC work in practice?
Emphatically, yes. This assertion can be supportedwith hard data.
Our services reach 97% of the UK population every
week, with an average of around eight-and-a-halfhours of TV and over ten hours of BBC Radio per
head.1 And as technology has changed the BBC has
often set the pace. Our top ten apps have been

downloaded 80m times2 and BBC sites are the third
most popular overall on mobile devices in the UK,behind only Google and Facebook. 3 Of the top 75
websites in the world, only the BBC’s is British. 4
That performance has improved over the current
Charter. We reach as many people as we did at thestart, and they give us higher marks.

BBC audience performance over the Charter period5
2007–08
2014–15(or year when comparable
data available)

Pan-BBC reachaverage weekly %

96.9
96.9

Pan-BBC time per user
average weekly HH:MM

18:44
18:17

BBC TV reachaverage weekly %

86.0
82.0

BBC TV time per user
average weekly HH:MM

10:52
10:17

BBC TV Appreciation(AI) mean /100

78.5
80.9

BBC Radio reachaverage weekly %

66.1
65.3

BBC Radio time per user
average weekly HH:MM

17:07
15:39

BBC Radio Appreciation(AI) mean /100
BBC Online reachaverage weekly %

78.9
80.2
37.0
50.2

The time people spend with us, and their appreciation for the quality of our content, has meant that support for
the BBC has risen over this Charter period. They give us seven out of ten, on average, higher than 2007/08.
Eight out of ten people say they would miss the BBC if it did not exist, considerably higher than any otherbroadcaster. 6 Despite a notable drop to 6.0 out of 10 during the Savile crisis in 2012, levels of trust have risen
and are higher now than they were at the start of this Charter.7

1

11

GfK for the BBC, Cross-Media Insight Survey, 6,000 UK adults per quarter; RAJAR; BARB; 2014/15

2

As of 10 August 2015

3

comScore Mobile Metrix, UK, Unique Visitors, [P] BBC Sites, June 2015

4

comScore MMx, desktop only, Worldwide, Unique Visitors, [P] BBC Sites, June 20155

 an-BBC reach and time per user / BBC Online average weekly reach: GfK for the BBC, Cross-Media Insight Survey, 6,000 UK adults, 16+ perPquarter, 2009/10 and 2014/15; BBC TV average weekly reach 15+ mins and time per user: BARB, 4+, 2010/11 and 2014/15; BBC Radio average
weekly reach 15+ mins and time per user: RAJAR, 15+, 2007/08 and 2014/15; Appreciation Index (AIs): Pulse by GfK for BBC, 2007/08 and 2014/15

6

Purpose Remit Survey by NatCen for the BBC Trust, 2,298 UK adults, autumn 2014

7

Kantar Media for the BBC, 6,000-12,000 UK adults per year

Public perceptions of the BBC have improved over this Charter period

8(Score out of ten)
General impressionof the BBC

2007–08
2014–15

6.6
7.0

I trustthe BBC

5.9
6.3

I’m glad the
BBC exists

6.9
7.5

BBC maintains highstandards of quality

6.3
7.0

BBC is a great ambassador for the
UK to the world

6.5
7.2

BBC helps people understand andmake up their mind on issues

5.9
6.3

This approval is reflected in public support for the licence fee. While no form of taxation is universally popular,
long-term polling shows that there has been an increase in public backing for the licence fee over this Charter
period. Support is higher now at close to 50% than it was in 2004 when 31% backed the licence fee, and higher
than it was 25 years ago. By contrast, support for subscription has been falling over the past ten years and is
now the least popular option.9

Long-term polling shows an increase in public backing for the licence fee since 200410
Which of the following would you like to see as the main source of BBC funding?

Licence fee

Advertising

31%

31%

43%

51%

24%
23%

Subscription

12

36%

30%

2004

2009

21%
2011

47%

47%

21%

27%

25%

2012

53%

26%

48%

29%

22%

17%

20%

2013

2014

2015

8

 antar Media for the BBC, 6,000-12,000 UK adults per year. Scale: general impression: 1 = extremely unfavourable, 10 = extremely favourable;
K
other statements: 1 = strongly disagree, 10 = strongly agree92015: Ipsos MORI, 2,062 UK adults 15+; 2004: ICM Unlimited, 1,037 UK adults 18+; 1980s and 1990s: BBC Corporate Image surveys

102 004: ICM Unlimited, 1,037; 2009: ICM Unlimited, 1,001; 2011: ICM Unlimited, 1,034; 2012: Ipsos MORI, 2,078; 2013: Ipsos MORI, 1,034; 2014: Ipsos
MORI, 1,015; 2015: Ipsos MORI, 2,062. All UK adults except 2009 which is GB

1.2

How has that success been achieved?
How has this approval been gained?
Does it result from people being, say, asked to give agreater proportion of their income to fund the BBC?
Or from the BBC taking up a bigger and bigger shareof a stagnant media market?
The answer is that the high marks accorded the BBC
by its audiences are built on great programmes andservices, during a period when the organisation was
responding to an understandable requirement not to
put a greater financial burden on licence fee payers.

We diversified our portfolio. Over two Charter
periods we created new services for audiences who
were getting less from the BBC—for example, theAsian Network, BBC Three and BBC ALBA. We
launched new services to make the BBC even more
distinctive—from 6 Music to BBC Four and Radio 4
Extra. We helped the country switch to digital
television. We pioneered new services like the iPlayer
and News Online. And all for a smaller licence fee,taking inflation into account.

The BBC is providing much more, for less11
The BBC 20 years ago

The BBC today£153.21 per household (in 2015 prices)
0.23% of GDP£145.50 per household
0.21% of GDP

Plus new obligations of c£500m
Limited competition:
46% share of TV and radio consumption

Extraordinary competition:
42% share of TV and radio consumption

20 hours per person per week
TV and radio

20 hours per person per week
TV, radio, online

Thanks to that diversification, we still serve everyone. Our share of the TV and radio audience stayed flat atjust over 40%12 , and we continue to reach almost all UK adults every week.
That has been achieved despite the BBC becoming much smaller relative to the market. Our share ofindustry revenues fell from 40% to 25%.13 We went from being two of 11 TV channels in 1984, to two out of
61 TV channels in 1994, to nine out of 536 in 2014.14

13

11

BBC analysis

12

BARB, RAJAR

131994 40%: PwC, Zenith, WARC, ONS, BBC Annual Report; 25%: BBC Annual Report 2014/15, Ofcom 2014

14

BFI, Ofcom

Number of channels in the UK
1984

1994

Number of BBC
TV channels

22

Number of UK
TV channels

11

2004

2014

8

9

61
379
536

It is a similar picture in radio, where the BBC has gone from 50 out of 226 radio stations in 1995 to 56 outof 413 now.15
In the past few years, we have shrunk as the market has grown. The licence fee was frozen, and the BBC
was required to find £500m a year to fund the World Service, subsidise rural broadband and support S4C
and local television. As a result, the licence fee for BBC services fell from £4.1bn to £3.5bn in real terms. In
the same period ITV grew by 12% and Sky by 7% in real terms.16

Licence fee for BBC services(2014/15 prices)17
2010/11Today£4.1bn£3.5bnSo, funding for the BBC has fallen relative to the market over the past 25 years, and in real terms over the past
five. Yet its share of audience was stable. There is no evidence that the BBC has maintained its share at theexpense of market growth.

14

15

Ofcom, BBC

16F ull-year revenue data taken from company reports: ITV (Group external revenues) for calendar year 2011 and calendar year 2014; Sky(adjusted Group revenues, excluding Europe) for year ending June 2011 and year ending June 2014. ‘Real terms’ refers to 2014/15 prices

17

BBC analysis

1.3

The BBC is at the heart of our lives
The duty for a national broadcaster funded through a licence fee is not just that it reaches a broad audience,but that it does so in a substantial way. We see it as our duty to be part of the lives of our audience, to makesure that in exchange for their fee, they are receiving a service that is of constant and deep value.
The available evidence suggests that we are discharging that duty.

07:45

08:00

12.5m start the daywith BBC Radio
500,000 browsers
check the BBC
Weather site

17:00

17:15

7.0m listen to BBC
Radio Drivetime
3.4m watch
Pointless on
BBC One08:15

3.8m watch
BBC Breakfast

18:00

6.0m watch the
BBC Six o’clock
News

09:00

2.0m browsers
access BBC Online

18:30

6.6m watch BBC
Regional News

18:45

300,000 under 7s
get ready for bed
with CBeebies
Bedtime Hour

09:15–12:00

13:00

15:45

4.8m listen to
BBC Radio 2
2.2m browsers
access BBC Online
3.4m watch the
BBC One o’clockNews
On weekday
afternoons:
300,000 children
watch CBBCOn Saturday pm in the football season:

19:00

19:30–22:00

22:00

3.1m listen to 5live or BBC Local Radio
2.8m browsers check BBC Sport site
23:00

1.2m tune into The
Archers on Radio 4

16.4m turnon BBC TV
6.1m watch the
BBC Ten o’clockNews
500,000
BBC iPlayer
requests

The BBC acts as a constant part of people’s days, dovetailing with everyday routine, a powerful, consistentpresence.
In new research,18 70 UK households, skewed towards people who were against paying the full licence fee,
agreed to go without the BBC for nine days, and were given the equivalent £3.60 instead.

18

15

MTM Research, ‘Life without the BBC: household study’, 70 UK households, July 2014–March 2015

Having spent time without the BBC, however, more than two-thirds of these households changed their minds.
They said they had underestimated the role of the BBC in their daily routines. Without the BBC there, theyrealised the extent to which it was woven into their lives, from getting them up in the morning to accompanying
them in the car to helping them to put their children to bed. They valued the quality of the BBC and told us
they missed its unique content and services.
There are millions of different BBCs. Every listener, viewer and user can make up their own BBC from ourvariety of services. But because we all pay for the same bundle of services, everyone pays less for their BBC.
This is the value of the licence fee. It enables us to be broad—catering to both popular tastes and thosecommercial providers would not find viable. It enables us to be deep, providing audiences with a range ofservices that can be combined to satisfy their individual tastes.

The BBC is different for every household19

From a sample of 1,038 households, we counted 825
different combinations of BBC services used in a week
791 households
used their own
unique combinationthat no otherhousehold in thesample used

= 10 households

No more than 3% of households used
the same combination of BBC services

19

16

Kantar Media for the BBC, 1,038 UK households, July–August 2015

Almost every household uses a different group of services20

On social media/YouTubeHouseholds of 16–29s

On social media/YouTubeHouseholds with children aged 0–5

20

17Households of 65+

 antar Media for the BBC, 1,038 UK households, July-August 2015; BARB, RAJAR, 2014/15. Services shown = those with high reach orKa high index (meaning that they are disproportionately important) per household type. Logos displayed in no particular order

1.4

The BBC helps make Britain what it is
The BBC’s services are not just high quality and loved
by audiences. They help make Britain a better place.

This should not be taken for granted. It is particularly
British and particularly a product of having the BBC.

They bring the country together. The BBC turns things
as diverse as ballroom dancing (Strictly Come Dancing),
home baking (The Great British Bake Off ), business(The Apprentice), classical and pop music (The Proms,
The Voice UK, Radio 1’s Big Weekend), as well as
charitable causes (Children in Need, Comic Relief ) andsport (Wimbledon, The Olympics, The FA Cup) into
national events. They become shared pastimes
everyone can experience and talk about.

In the US, for example, such moments are much lesswidely shared and much rarer. Outside sport, thebiggest US audiences are not much bigger than ours,
though their population is five times bigger.

On-demand technology, far from separating people,
has added to that shared experience: audiences can allcatch up on the programmes their friends and family
have enjoyed.

18

Another advantage of the BBC to the country’s senseof itself and community life is that it reflects, andreports upon, the whole of the United Kingdom.
In news, sport, documentaries and comedy—on local
radio, and in television programmes made specificallyfor the Nations, as well as in minority languages acrossthe UK—our services help connect audiences with
their cultures and heritage, and ensure that thecountry is having an informed conversation with itself.

91% of the UK watched the 2012 Olympics
on BBC TV. 95% of the audience felt
the BBC’s coverage met or exceeded
their expectations

BBC One is part of the fabric of a British
Christmas Day. Over this Charter period,
it has shown, on average, seven of the top
10 programmes watched live on the day

The New Year’s Eve Fireworks was
the most viewed BBC show of 2013,
with 13.5m tuning in

18.7m watched the 2011 Royal Wedding
Ceremony live on BBC One

BBC TV coverage on Election Night
2015 reached over 19m people

The 2014 World Cup Final match attracted
an audience of 15m on BBC One

The 30th anniversary of EastEnders waswatched by over 21m people —37% of
the population

Four in five UK adults consumed the BBC’s
World War One centenary content

61% of the population watched the BBC’s
2013 Wimbledon TV coverage with 17m
watching Andy Murray win the championshipBut programmes and services can do more.
They can fix problems that other methods can’t.
How to get more students to study science; how to
encourage citizenship; how to work through difficult
questions. These are problems that voters care about
but governments struggle to address directly.

Policy-makers know that culture matters just as muchas the delivery of services. But they rarely have thetools to change culture. This is where public service
broadcasting (PSB) can help. It provides a forum
where people can debate what matters, change ordeepen the views they have, and gradually arrive at
better answers.

Informed citizenship

Aiding children’s learning

Literacy and literature for all

Democracy Day on the BBC marked the750th anniversary of England’s firstparliament and helped awareness of theanniversary to almost double overnightfrom 19% to 34% of UK adults

Bitesize is used by 82% of secondary pupils
in school. Over the Charter period morethan 200,000 school pupils have taken partin the BBC News School Report tobecome journalists for the day

The CBeebies Storytime app has been
downloaded 1.2m times. Meanwhile, BBC
Two’s Wolf Hall adaptation helped to
double public awareness of the novel andincrease readership by 40%

Engaged citizenship

Encouraging the study of science

Raising participation in sport

BBC 2015 General Election coveragereached 89% of all adults and 84% of
16–34s in results week. 60% of people
felt the BBC provided the best coverageof the campaign

The BBC’s Year of Science reached 45.4m
people. Professor Brian Cox credits it withan increase in those studying science

The BBC’s Get Inspired programme aims
to encourage participation in sport andfitness. Over 30,000 people took part in
the People’s Cup

Charitable contribution

Igniting appreciation for the arts

Supporting new talentOver the Charter period, the BBC’s charity
appeals have raised a total of £937m

The BBC’s Ten Pieces musical initiative,
which aims to open up the world ofclassical music to children, has engaged
half of all UK primary schools

BBC Introducing alone has discovered
more than 30 artists that havesubsequently signed to major and significant
indie record labels in the past 12 months

This power to understand our society is why the UK emerges as the global leader for TV that helps people tolearn. Out of 61 channels here and abroad, BBC One is rated highest for helping people to learn new things andjoint highest for helping people to understand what is happening in the world and in their country today. 21

21

19

Populus for the BBC, 14 countries (500 adults per country), May–June 2015

1.5

The BBC makes the UK a more creative nation
The value audiences get from the BBC is the central
part of its case. But there is another practicalobservation worth making.
The UK has the BBC, and few other countries are inbetter creative shape than the UK.
Over a sustained period, the creative industries havegrown much faster than the economy as a whole, interms of gross value added (GVA), exports andemployment.
Britain’s competitive position has not come about byaccident.
The UK has created a media system in this country
based upon:• An astonishing strength and depth of creative
talent—the writers, directors, producers,musicians, actors and those involved back-stage• A creative network with strong connections andtalent that flows between its different constituent
parts—between TV and film, radio and music, andbroadcasting and the performing arts
• Public-private competition—in broadcasting, as inculture and the arts, the UK has a mixed ecologyof publicly funded and commercial organisations
that compete to the benefit of all. Public funding—
now at only around a fifth of total TV revenues—
has supported rather than crowded-out a vibrant
UK media market.
The BBC supports all of these things. It has beensuggested that our robust media market is a rebuke to
the BBC, and has grown despite it. The opposite is thecase. The BBC is proud of Britain’s media market andbelieves it is as strong as it is partly because of theBBC.
The BBC’s public service remit requires us to invest in
new, home-grown creative ideas and talent, and thelicence fee enables us to do so at scale. From TV tomusic, writing to film, the BBC is a key part of why the
UK is such a great exporter of creativity.
Analysis by Frontier Economics22 has identified theprincipal channels through which the BBC supports
private sector growth.

First, the BBC is the single biggest investor in TV andradio. It uses the licence fee to discover and fund thebest British ideas and talent—whether in-house orfrom independent companies—and connect themwith an audience at home and abroad. The BBC
invested around £2.2bn of licence fee income directlyin the creative sector in 2013/14. £1.2bn of this total
was invested outside the BBC, with around £450m in
small and micro-sized creative businesses. 86% of its
creative suppliers are small or micro-sized. While thelicence fee accounts for around 20% of UK TV
broadcast revenues, it is converted into around 40%of the investment in original UK TV content.
Second, the BBC is the best shop window to theworld for British talent and programme-makers. Manyof the TV programmes invested in by the BBC go on
to generate big economic returns through secondary
sales and exports (from Wolf Hall to Silent Witness).
BBC Worldwide distributes both BBC programmes
and those of independent producers, and is the largest
distributor in the world outside the major US studios.
Third, as Ofcom’s PSB review highlighted, the BBC isthe cornerstone of the PSB system. When the BBC
performs well, commercial broadcasters raise their
game to compete for audiences, which challenges the
BBC to aim higher—in a positive feedback loop not azero-sum game.
Fourth, the ‘ripple effects’ from the BBC’s investments
go well beyond broadcasting. BBC iPlayer was thecatalyst for the development of the UK’s video-ondemand market—now by far the largest in Europe.
As Reed Hastings, Chief Executive of Netflix, put it,“The iPlayer really blazed the trail. That was long
before Netflix and really got people used to this ideaof on-demand viewing.”
The BBC is recognised as being indispensable to the
UK’s position as a global music leader. Radio 1 andRadio 2, in particular, discover and promote new
home-grown music talent and exposure on theirairwaves drives music sales. The BBC makes the hits
that others play.
Finally, the BBC strengthens the productive capabilityof the creative sector and, critically, spreads thebenefits of growth across the UK. It does this by
discovering and championing the next generation of
British on-screen and back-stage talent. In the past 12

22 Frontier Economics, The contribution of the BBC to the UK’s creative industries, April 201520

months, BBC Introducing has discovered over 30
artists that have subsequently signed to major andsignificant indie record labels.
Oscar-winning directors such as Danny Boyle and
Tom Hooper, or global acting stars such as David
Oyelowo, Martin Freeman and Daniel Craig, all had
early breaks on the BBC. The BBC also strengthens
the creative sector by acting as an ‘anchor tenant’ for

1.6

Policy-makers do not have to choose between
commercial success and the BBC. The two support
each other. Damage either and you damage both.

Is the licence fee justified?
The BBC works in practice, but what about the way it
is financed?
What is the policy rationale for institutions like theBBC, in today’s world? Now that broadcasting issubject to greater competition, why not leave it
entirely to the market?
We should start with the goals we want to achieve—
what does a good outcome look like in the different
spheres of our lives? Then we should decide the bestmeans to reach these goals.
What is the best mix of market-based and public
solutions? What is the best way to fund services withdifferent purposes? The choices made will vary by
area and will, critically, depend on the weight society
attaches to social, cultural and moral criteria as well as
to growth and efficiency. This can never be a scientificexercise—it, ultimately, comes down to thejudgements we make together, in particular throughCharter Review.
British people want a range of high-quality original
British content that is widely available and consumed.
Access to culture, media and information should be abasic human right, ensured regardless of a person’s
private ability to pay for it. But making it available is
not enough—it must be used as well. When everyone
takes part it confers benefits on well-being andcohesion, democracy and education.

21

media/digital clusters across the UK—in Salford andGreater Manchester with MediaCityUK, in Bristol with
the Natural History Unit, in Cardiff with the drama
village and in Glasgow with Pacific Quay.

The best means to achieve these goals is a mix ofpublic and private institutions with different remits
and funding models.
The competition for quality between the BBC,the commercial public service broadcasters(ITV/STV/UTV, Channel 4, S4C and Channel 5) andsubscription broadcasters like Sky, has led to higher
levels of investment and better, more varied output.
Ofcom has shown there is widespread support
for the enduring purposes of public service
broadcasting, which go beyond correcting market
failures. The PSBs are the engine of UK originalcontent, providing over 80%—£2.5bn—of theinvestment in content every year.
The BBC is a unique, vital part of this successful
ecology. It fits comfortably alongside market institutions.
Like universities, public libraries, museums, theatresand galleries, we ensure people have access to anduse content that informs, educates and entertains.
Along with commercial radio, newspapers, websites,
Britain offers greater choice of media than almost
anywhere else.
The licence fee plays a central role.
It makes sure the service is for everyone. It is theguarantee of the BBC’s universality. It ensures that—
because everyone pays—everyone pays less andeveryone benefits.

For each hour consumed, programmes on BBC TV
cost about five times less per household than those on
pay TV23 . The public can make a simple, direct link
between the benefits they receive from the BBC andthe payments they make. The BBC is, as a result,directly accountable to the public while still being
independent from political control.
Because of the licence fee, people get greater
choice of media: from a distinctive BBC, from the
support the licence fee provides to Britain’s
creative economy and from a bigger overall pot forinvestment in programmes. Investment lost from thelicence fee would not be replaced from advertisingand subscription. 24
The licence fee ensures that the public gets better
programmes, for less, than under any other approach.
Because everyone pays, the cost to the individual
falls to the lowest it can be for the best and most
universal service.

demand, and to bring forward legislation to do so
within the next 12 months.
The Government’s option in the Green Paper for
medium-term reform of the licence fee by universallylevying it on all households, as happens in Germany,
merits consideration. This further modernisation
would reflect the universal usage of the BBC and thevalue its services deliver to society as a whole. It
would also safeguard investment in the creative
economy for the long-term.
The licence fee has been continuously modernised—
first to cover TV, then colour TV, and most recently,
live usage over the internet. This is a process thatshould continue. Alternative funding methods, suchas subscription, would fundamentally change thenature of the BBC and destabilise the UK’s broadcast
ecology, which is based on competition for quality—
but not competition for funding—between the BBC
and the market.

But whereas the principle of the licence fee remains
right, the current mechanism needs to be updated toreflect changing technologies and audience behaviour.
We welcome the Government’s commitment toextend the TV licence fee to cover PSB video-on-

23 Mediatique, Index of cultural inflation, August 201524	Reuters Institute for the Study of Journalism, February 2014, ‘What if there were no BBC’. Available at http://reutersinstitute.politics.ox.ac.uk/
publication/what-if-there-were-no-bbc-television22

2

Is the BBC distinctive
and of high quality?

So, this Charter Review is not having to fix a failing public service. But the Government’s Green Paper
necessarily and legitimately poses questions about the future.

23

2.1

What is distinctiveness?
An important question raised by the Green Paper
concerns the question of whether the BBC isdistinctive. Is a body established as a public institution
now merely doing what any private company could do?
The BBC has a duty to serve everyone—but not withjust anything.
Universality needs to be achieved through thesustained quality of our programmes, within a uniquely
broad range of genres.
The licence fee gives us creative freedom. We havethe privilege of being able to make good programmes,
without also having to consider whether they will
make a profit. That privilege should be felt ineverything we do.
We should aim for every programme to be the best inthat genre. What counts as best will vary from genre
to genre. Judging whether we have succeeded will
always be subjective. We will frequently fail. Others
will often make better programmes. But every BBC
programme should aim to be the best—any that do
not should not be commissioned.
Individual programmes should be judged on their own
merit, rather than by comparison to otherprogrammes in the market. It does not make practicalsense to say that the BBC should only make aprogramme if another broadcaster never would. Thatwould mean that when ITV made Broadchurch, theBBC would have to stop making Happy Valley.
Nor does it make creative sense. We do not motivate
our teams by asking them to make programmes thatare different. We make good programmes by finding
the best talent, with the best ideas, and giving them
freedom. We do not start with a gap in the market,
and try to fill it. We start with the idea and then makeit happen.
The distinctiveness of services can be judged bycomparison. We propose a simple definition: overall,
the range of programmes in a BBC service should beclearly distinguishable from its commercial
competitors.
Why overall? Why does the BBC make some of thesame types of programmes as the commercial sector?

24

The most important reason is that it makes those
programmes well.
The licence fee then means audiences pay less for
those programmes from the BBC, but get more fromthe whole market, as competition brings the best outof pay, advertising and publicly funded broadcasters.
That wider choice only happens if the BBC meets thistest of distinctiveness—compared to competitors, do
we make fewer programmes that are commerciallyattractive and more of those that are not? If we aped
the market, audiences would just get more of thesame shows. But by making some of the most popular
shows we increase choice.
The public supports the licence fee because of that
range. What makes it possible to have a licence fee tofund news coverage or documentaries or live classicalmusic is the broad support that comes from providing
programmes for all.
The licence fee allows us to be innovative, bold, takerisks. The Green Paper—in stressing distinctiveness—is right to insist that our overall output should show
strong evidence of this.
But we need to define distinctiveness clearly. It does
not mean that the BBC should never make aprogramme that the commercial sector might make,nor that a programme’s distinctiveness can be judged
by comparison. It should mean that every BBC
programme aspires to be the best in that genre, andthat overall every BBC service should be clearly
distinguishable from its commercial competitors.

2.2

How distinctive are we?
How well do we do today in providing a distinctive
offering and can we do better?
To examine that, we have measured all the BBC’s
services against their competitors. We summarise
the analysis below. For those who wish to study it
in more detail, a version of this chapter citing all
sources is available online.
Overall, the BBC’s services are more distinctive thanthey have ever been. For example, 30 years ago, afifth of BBC One’s peak-time schedule consisted offoreign series like Dallas, The Rockford Files and Kojak.
Today, it is zero.

25

Many services, through the process of BBC
Trust service licence reviews, have become
more distinctive through this Charter.
Some are unique. It is hard to find a service tocompare to Radio 4 or BBC Alba. Where there
are direct competitors, our overall offer isclearly distinctive.

BBC One and ITV’s balance of output isvery different in peak time
BBC One is the BBC’s most important service. It
is the UK’s favourite channel across all age groups,
socio-economic groups and in all parts of thecountry. It is available in 18 different versions,with extra programmes for each of the Nations.
It reaches three-quarters of the population every
week, who watch it for over seven and a half
hours a week. Three million people a week use
BBC One and no other BBC service.

News

News
19%

23%

Factual

12%
11%

27%

Factual
Drama
Soaps

BBC One is also almost certainly the world’s bestchannel. In an international survey of 14 countries,
people in different parts of the world were asked
to rate the quality of their biggest channels.
Viewers in the UK were most satisfied with their
television and BBC One rated highest on quality
out of 66 major TV channels—with 79% of UK
adults rating it as good quality, higher than any
other channel in any country surveyed.

12%

Drama

20%
Entertainment

Soaps
14%

11%
5%
1%
7%

25%

Entertainment

2% Comedy
4% Feature films
Sport
8%

ComedyFeature films
Sport

BBC Two and Channel 4 have very
different peak time audiences
BBC Two is Britain’s third largest TV channel byshare. It has a rich, multi-genre mix aimed at asmart, curious mainstream audience—it reaches
half the British population every week and ranks
third in the world for quality.

(proportion of the BBC Two and Channel 4
peak audience by age group)
BBC Two100%
90%

BBC Two is a place for creative talent to dotheir most distinctive, signature work in drama,
comedy and documentaries. Writers andperformers say it offers them a unique
combination, an audience big enough to wantto produce for, and one that welcomes
innovation. As a result, it has nurtured and built
some of the BBC’s biggest hits, like Top Gear,
The Great British Bake Off, The Apprentice andHave I Got News for You.
BBC Two’s genre mix is very different from BBC
One and ITV. Its commitment to knowledge andfactual output is perhaps closest to Channel 4’s,
but their approach is so different that theaudiences they serve are quite dissimilar.

26

Channel 4

33%

80%
70%

60%

60%
35%

50%
40%
30%
55 and over
35–54yrs
16–34yrs
4–15yrs

26%

20%
10%
0%

25%
11%
3%

7%

In its 12 years as a broadcast channel, BBC Three
has made a range of innovative, distinctive shows—programmes like Our War, The House of Tiny Tearaways,
Being Human, and Murdered By My Boyfriend, among
many others. Given that level of innovation and risk, it
is not surprising that some output was less successful
or that some strayed too far from the BBC’s remit.
But BBC Three has had a constant focus on its target
audience and the need to provide it with relevant,British content.

The online BBC Three will have a mix of documentary,
current affairs, news, drama, comedy and entertainment.
It will continue to offer new perspectives and open
people’s minds to new subjects or issues. It will
innovate digitally and offer a range of content which
we know young audiences consume and we want toinnovate in—short-form video, image-led storytelling,
and blog posts from contributors that will makepeople laugh and think. It will live on the platforms
where young audiences are.

BBC Three is now poised to make another distinctive
move—the first major TV channel in the world, we
believe, to go wholly online. The shift will play to BBC
Three’s strengths, offering something distinctive andnew, with the aim of enhancing the BBC’s reputation
with young audiences. It will stimulate the market forproviders of digital entertainment, information andeducation for 16–34 year olds and build demand for
new forms of content.

BBC Four is one of the UK’s most popular
digital channels

27

20
14
/1
5

20
13
/1
4

20
11
/12

/1
0

9

20
10
/11

09
20

/0
08
20

07
/0

8

7
20

/0

/0
06
20

05

20
12
/13

This singular editorial perspective is reflected in its
ratings for quality and originality. The channel’s
distinctive programme policy has also made it the
UK’s fourth largest digital channel in its broadcast
hours by reach and the largest factual digitalchannel in reach and share.

20

BBC Four has become a household name in the
British TV landscape. It is renowned for a highly
distinctive editorial outlook that celebrates the very
best of global culture, creativity and ideas alongsidea brave and innovative approach to programming,
including pioneering foreign language drama, music
and performance programming, and innovative
seasons like ‘Slow Week’.

6(Weekly reach to the UK population (%), all homes)

14.2

14.0 13.6

1.3

1.1

1.1

0.9

0.7

0.7

12.5
10.5

4.5

0.1

5.6

0.2

7.0

0.2

Sky Arts 1

7.7

0.3

8.8

0.5

0.5

0.7

0.2

0.3

0.4

Sky Arts 2

BBC FourCBBC and CBeebies are the clear public service
advertising-free alternative to the increasing numberof non-UK channels and online media for children.
CBeebies and CBBC are unique for their commitment
to UK content. They provided 86% of all first-run
UK-originated children’s programming in 2014
among PSB channels. As quotas on others havebeen removed, the BBC stands as the last majorcommissioner of original British output.

They are also among children’s favourite channels.
CBeebies reaches 45% of children age 0–6. CBBC isamong the most popular channels for children aged
channel for children aged 6–12 but the linear channel
has lost audience as children change their media
behaviour. Responding to this shift is one of the BBC’s
most important tasks.
Online, they provide a safe environment forchildren to make the most of digital content
without being exposed to the dangers of theunregulated internet world.

Spend on UK output for children (£m, 2014)
100

50

0
BBC

Non-BBCCBBC is one of the favourite channels for 6–12s(Average weekly reach % among 6–12s, all homes)
50

CBBC
CITV
Cartoon Network
28%
25

Disney Channel
Nickelodeon

19%
16%
16%
14%
13%
11%
09%
09%

Boomerang
Disney XD
Pop
Nicktoons0
2010/1128

2011/122012/132013/142014/15

The BBC News Channel is themost watched continuous news
channel in the UK, reaching aroundnine million viewers a week,
compared to five million for the
next biggest. Viewers see it as thebest news channel by far.

Who is best for continuous news?
(% rating channel best)
57%

23%

BBC News

29

Sky News

BBC Parliament is the only UK
channel dedicated to politics. It
shows debate and committees
from Westminster, Holyrood,
Stormont, Cardiff Bay andStrasbourg.

BBC ALBA offers Scottish Gaelic
speakers a distinctive range ofprogramming that reflects andsupport Gaelic culture, identity
and heritage. It reaches 16% of all
Scottish adults and 73% of
Gaelic-speaking Scottish adults
per week. There is no otherchannel like it in the world.

All our radio stations are distinctive. Some are unique.
BBC Radio 1

Radio 1 entertains and engages a broad range ofyoung listeners with a distinctive mix of worldclass music and speech.
Radio 1 is an internationally renowned tastemaker—it breaks the hits that others play. Itsmusic offer is unique, with greater depth andvariety of music than its competitors and themost open and refreshed playlist in the UK.

3,868
different tracks everymonth

It is a particular champion for new and live music:
65% in daytime is new, and 61% by UK artists.

398 different
tracks amonth

In reaching 38% of 15–29 year olds every week,
it provides an important source of news.
Newsbeat reaches more young people eachweek than the 10 O’Clock News, and Radio 1
broadcasts over 40 documentaries a year
alongside its weekly Surgery show.

Capital FM
Radio 1’s music choices are very different
from others. For instance, Radio 1 shares
3% of tracks with Capital, Capital shares
32% of tracks with Radio 1

BBC Radio 2

Radio 2 is the most popular radio station in the UK,with the widest range of programming from popularand specialist music to speech content ranging fromover 20 hours a week of news and current affairs to
documentaries, arts and comedy. Close to 30% of
UK adults listen to Radio 2 every week.
Music on Radio 2 is hugely distinctive—the station
plays a greater variety of music than any other radio
station in the UK and this includes over 1,100 hoursof specialist music programming every year, including
Jazz, Folk and Country.
Radio 2 adds huge public value by playlisting newartists that get little exposure on commercial radio,
including folk, country, soul and jazz artists. It also
supports heritage artists no longer playedby commercial radio.

30

4,423
different tracks
every month

1,598 different
tracks a monthAbsolute Radio

Radio 2’s music choices are very different
from others. For instance, Radio 2 shares
13% of its tracks with Absolute. Absoluteshares 37% of tracks with Radio 2

The Government’s Green Paper raises the question of whether Radio 1 and Radio 2’s audiences and music
choices overlap, and asks whether “some of the BBC’s services might be serving significantly overlapping
audiences—failing to be sufficiently distinct not only from commercial output, but from other BBC services.”
The evidence shows that these two services do not overlap to any significant degree.

Radio 1 shares just 6% of music tracks with Radio 2. Radio 2 shares 5% of tracks with Radio 1.

4,423
different tracks
every month

3,868 different tracks
every month

BBC Radio 1

232 shared tracks

BBC Radio 2

Just 13% of the combined Radio 1 and Radio 2 audience listen to both stations.

10.4m
weekly listeners

15.2m
weekly listeners

BBC Radio 1
BBC Radio 2
2.9 million
shared audience31Radio 3 is one of the world’s most important music and arts
broadcasters. It supports six performing groups and the world’s largest
music festival, The BBC Proms.
Radio 3 is the most significant commissioner of new music in the world
with nearly 200 original commissions in the past five years. Its music offer
is unique with 57% of music broadcast live or specially recorded.
Compared to Classic FM it repeats far less music in a week.

Music output by uniqueness(Radio 3 and Classic FM)
Repeated tracks
Single plays

BBC Radio 3

Classic FM

BBC Radio 4 broadcasts a unique range of programmes from comedy tofeatures, arts, drama and science, supported by a core of live news andpolitics. 20% of the UK listens to it each week.
There is no other station in the world that covers this range to the same
depth and intellectual rigour. As a result it is achieving a new global
success, with over 300m podcasts downloaded in 2014/15.

32

BBC Radio 5live is a unique combination of news and sport. 75%of the station’s output is news, and the station excels at covering
events of national importance, whether it is the Election, Scottish
Referendum or the Commonwealth Games.
5live’s sports output has never been broader. Together with 5live
sports extra, it represents over 51 different sports from men’s andwomen’s football to cycling.
News output on 5live has never been more distinctive, withexpanded business and science output, investigative journalism andnew digital innovations.
The station’s accessible style and tone attracts a different audiencefrom Radio 4 with close to 40% of its audience aged 15–44,
compared with around one-quarter of Radio 4’s audience.

5live covers a wide range of live sport(live sports covered in 2014)
BBC Radio
5live

talkSPORT

23

4

Only 13% of sports radio listeners listen to both 5live sport and talkSPORT

33

3.68m listen
to sport on 5live

3.18m listen
to talkSPORTBBC Radio
5live

talkSPORTBBC local radio is our network of 39 stations across England, usedby 6.7m adults a week. 2.3m listen to no other BBC Radio and 1.1m
no other radio at all in a week. It has a distinctive mix of speech
and music with a strong spine of local news, information and debate—over 70% of weekday daytime is speech output.
However, audiences for local radio are declining, exacerbating the risks
to coverage of local affairs. We address the issue later.

The BBC Local Radio audience is very different from local
commercial radio(Proportion of audience by age)
55 yrs +24%

35–54 yrs
15–34 yrs

58%
39%

27%
38%
16%
BBC Local Radio

Local Commercial
Radio

There are no stations like the BBC radio networks in the Nations.
They uniquely serve the national audiences in each of Scotland,
Wales and Northern Ireland, covering national stories and reflecting
national culture.
Each of the English-language stations (Radio Scotland, Radio Walesand Radio Ulster/Foyle) reaches between 16% and 36% of their
populations each week and delivers in-depth news, politics andspeech output that reflects issues of national importance andstimulates debate and interaction with the audience.
The BBC’s Nations radio stations also showcase a rich diversity ofarts and drama, music and sports coverage which is important toaudiences and cultural life in the Nations.

34

Our digital radio stations have grown strongly,
expanding listening to digital radio and reachingrecord audiences.

music. Documentaries on both networks coverimportant issues relevant to their target audiences,and of wider national importance.

BBC Radio 6 Music was the first digital station
to reach two million weekly listeners. Audiences
enjoy its distinctive range of alternative music andinformed presenters.

Radio 4 Extra is the BBC’s digital service for its archiveof speech entertainment. Its popularity continues togrow, with record audience reach of 2.2m listeners aweek, fuelled by record numbers of younger listeners.

BBC Asian Network and BBC 1Xtra serve young anddiverse audiences with a mix of news, discussion and

Growth of BBC digital radio(Average weekly reach)
2,200,000

2,000,000

1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

2003
/04

35

2004
/05

2005
/06

2006
/07

2007
/08

2008
/09

2009
/10

2010
/11

2011
/12

2012
/13

2013
/14

2014
/15

BBC Online serves the BBC’s mission, to inform, educate and entertain

BBC Online is the gateway to the BBC on the internet. It is the third biggest BBC
service, providing public service content to half the British population each week. It is
the third biggest service for time spent with younger audiences.
But it is a small part of the internet—just 3% of UK time spent online. It is highly
rated for quality and distinctiveness, and plays a vital role in delivering the BBC’s
mission to inform, educate and entertain online.

InformOnline lets us do what we have always done—
provide impartial, high-quality, distinctive
journalism—but in better, more convenient,more immersive ways.
Most recently, our online coverage of the General
Election was record-breaking. There were 278m
hits on the BBC News website and apps on the
day after the election, up from 9m in 2001, withaudience appreciation scores higher than any otherprovider in the UK.
This success has not come at the expense of others.
News Online is part of a strong online news
market. Its share of news/information time has
fallen to 30% today.

36

The BBC is the most trusted news
online source(who do you associate with ‘trustworthy’?)
BBC News
Sky News
The Guardian
The Telegraph
The Daily Mail
The Huffington Post
Yahoo News
Facebook
Twitter
BuzzFeedEducate
In education and learning we have used online toreimagine our brands and programmes for aconnected world. BBC Arts, Science, Earth, History
and Music extend the BBC’s learning mission frombroadcast to online.

Every month, there are 2 million
journeys from our News website
to our educational and learning
websites like iWonder.

Bitesize has been a mainstay of young people’s
revision regime for over a decade. It uses the BBC’s
biggest programmes like Doctor Who and Horrible
Histories to bring online learning to life. Today,
Bitesize is used by 82% of secondary and 62% ofprimary school children.

In its first week our iWonder guide
What’s the maths behind anamazing FA Cup free kick? had
400,000 visits. Over 75% camefrom the BBC Sport website

Entertain
iPlayer kick-started the online TV boom in the UK. It
is the most distinctive video-on-demand service inthe world—no one else provides such a breadth ofprogramming online, from documentaries to drama
and comedy, to current affairs to live sporting andmusic events. In two out of the past three years, it
has been the UK’s number one brand.

The proportion of UK online users aged
16–64 who have ever used these online players
for TV shows74%
50%

The new iPlayer Radio app means almost all of ourradio programmes are available to download in full,allowing people to listen offline and keep them for
up to 30 days.

26%

BBC iPlayer

37

45%

All 4

ITV Player

Netflix

One further piece of research needs to be taken into account.
Populus undertook an international study asking people from around the world to rate their country’s overall
TV output on quality and then to rate the quality of each of the biggest channels in their country.
The UK emerged as the global leader on overall TV quality, with 72% of UK adults saying TV programmes
overall in the UK are good quality—the highest out of the 14 surveyed countries.

Perceptions of overall TV quality per country rated by respondents in the country25(% Very / fairly good quality)
UK

72%

UAE

69%

USA

61%

Netherlands

57%

Australia

55%

Brazil45%

Sweden45%

Portugal

44%

Denmark

39%

Germany
France

35%
28%

Italy

25%

Japan

25%

Spain

23%

The study confirmed the BBC’s position as the cornerstone of PSB. Out of 66 channels, BBC One received
the highest quality score of all—with 79% of UK adults rating it as good quality—while BBC Two came inclose behind in third place.

25 P opulus survey for the BBC, conducted September–October 2013 in 14 countries (representative sample of 500 adults 18+ per country).
Survey question: ‘What do you think of the quality of television programmes overall in [INSERT COUNTRY NAME]?

38

Perceptions of TV channel quality per country rated by respondents in the country26(% Very / fairly good quality)
BBC One (UK)TV Cultura (BR)BBC Two (UK)
Nederland 1 (NL)
ABC 1 (AU)MBC 2 (UAE)
Dubai TV (UAE)CBS (US)PBS (US)ITV (UK)
ABC (US)NBC (US)
Channel 4 (UK)
Das Erste (DE)ZDF (DE)
Nederland 3 (NL)
SVT1 (SE)MBC 1 (UAE)
Nederland 2 (NL)
Channel 7 (AU)RTL4 (NL)Al Jazeera (UAE)
SVT2 (SE)
Channel 9 (AU)France 2 (FR)DR1 (DK)
RTP1 (PT)
Globo (BR)France 3 (FR)NHK1 (JP)SIC (PT)TV Brasil (BR)TV4 (SE)
Channel Ten (AU)Bandeirantes (BR)
La 1 (ES)La Sexta (ES)TV2 (DK)
Record (BR)SBT (BR)
SBS6 (NL)
M6 (FR)Al Arabiya (UAE)
Antena 3 (ES)Rai 3 (IT)
Channel 5 (UK)
Cuatro (ES)TVI (PT)
TF1 (FR)
Canale 5 (IT)Rai 1 (IT)Rai 2 (IT)
Kanal 5 (SE)Vox (DE)
ProSieben (DE)RTL (DE)
Italia 1 (IT)SAT 1 (DE)TV3 (SE)TV Asahi (JP)TV Tokyo (JP)TBS (JP)NTV (JP)
Rete 4 (IT)Fuji TV (JP)Tele Cinco (ES)

79%
71%

Publicly funded channel
Commercial channel

26   Populus survey for the BBC, conducted September-October 2013 in 14 countries (representative sample of 500 adults 18+ per country). Survey
question: ‘To what extent do you think the quality of programmes on the following television channels in [INSERT COUNTRY NAME] is good or poor?

39

So what do we learn from this analysis?
Firstly, that each of the BBC’s services is successful andloved. The practical success and value of services
ought properly to be the primary concern when
considering how things should be reformed. The
British approach has always been, correctly, tosupport success and deal with failure. The success ofthese services is the most eloquent public policy casefor them.
Second, the analysis shows that the BBC is distinctive,
has become more distinctive, but it is right to believethat the BBC could be even more distinctive.
We therefore propose changes to achieve thisobjective.
BBC One may be seen as the highest-quality channel
in the world but we will raise its standards higher in aworld of global competition. We will work hard tofind the next Sherlock, Doctor Who, Happy Valley and
Car Share. And we will keep factual programmes at theheart of the schedule, using experts and locations that
increase knowledge and understanding.
This means taking risks, accepting that not every
creative experiment will work and embracing theability of BBC One to draw the nation together like noother cultural institution in the UK.
The BBC will always seek to entertain—the role thepublic most associates with us.
Although they want entertainment from the BBC, it
occupies a smaller proportion of the peak schedule of
BBC One than that of ITV and will continue to do so.
We spend just 2% of the licence fee on TV
entertainment programmes.
Occasionally, we will take international formats andmake them into BBC programmes, as we have with
University Challenge, The Apprentice, The Voice UK and
Dragons’ Den. But we aim to discover the next
entertainment format ourselves—and are proposing
to remove in-house quotas and set up BBC Studios tomake that more likely.

40

BBC Two plays a special role in UK broadcasting. No
other channel has a remit like it: multi-genre, forviewers of all ages, showing programmes of depth andsubstance and with a brief to innovate. It was rated
the third highest-quality channel in the world, thanks
to programmes like Wolf Hall, The Fall, Springwatch, The
Eichmann Show, Stargazing Live, The Detectives and The
Wrong Mans.
But the context in which BBC Two operates is now
very different. In the past it may have been comparedwith Channel 4. Now it increasingly competes with
HBO, Netflix and Amazon Prime as much as withdomestic peers.
So we will reinvent BBC Two for the age of global
content. We will build on its reputation as one of thehighest-quality channels in the world to provide evenmore of what makes it most distinctive. And we willcontinue to encourage it to reach a broad audience
with that output.
However, we recognise that world-class quality andinnovation don’t come cheap, so we will focus ourinvestment on the most memorable and channeldefining programmes.
We will make BBC Two’s primary and governing
objective the delivery of this distinctiveness.
BBC Two will offer a unique combination—anaudience big and broad enough to attract and be a
showcase for world-class creative talent, but never aplace so big that audience share comes before
innovation as the measure of success.
We will encourage it to develop shows that can
showcase British talent, whether with fresh new
drama like Peaky Blinders, smart comedy like Episodes,
new formats in factual subjects like Bake Off or themost intelligent television in the world, from culture toscience and history. Success for this BBC Two will notjust be measured in the time audiences spend with it,
but whether those programmes were memorable andworld-class.
Many of the BBC’s radio services are unique, but even
where they are not, they are still distinctive.

In particular, Radio 1 and 2 guide audiences to newmusic. Half the songs played on Radio 1 and Radio 2 indaytime were not played on any comparable station.
To break hits, they have to remain popular stations—otherwise fewer people would be exposed to those
new songs.
The evidence therefore does not suggest the content
of the BBC’s radio services needs to change as part ofCharter Review. But, as we set out later in thisdocument, we believe we can use new technology tohelp more people find that distinctive content.
Our online services are newer, and are still finding
their place in an evolving market. At first, they helped
create that market, with BBC News Online and thenthe iPlayer.
We have a simple role when technology opens up
new creative opportunities—to find what they are,and then to make sure everyone can access them.
Again and again, we have found ways of using newtechnology to deliver new services, before it was
obvious how those could be funded commercially.
But to date, most of our innovation has been in theway we distribute content, not the content itself. That
will change. Rather than commissioning for television,or radio, we will make our content work across all ofour platforms. If the best way of meeting an audienceneed is through content just for online, then we must
do that. Most of all, we will apply the test above—
what would the best of each genre be, and what
would that mean for our online content.
We promise innovation and British creativity, aimed ata broad audience. And we believe that by meetingthat test, we would be clearly distinctive from themarket which is changing fastest in this area. We will
launch a creative review to look at those issues andhow we can better focus our online resources, led by
the BBC’s Director of News and Current Affairs andreporting by the end of 2015.
The BBC is more distinctive than ever, and clearly
distinguishable from the market. Nevertheless, we
intend to become even more distinctive and willreport on our plans to do so over the course ofCharter Review.

41

We want the BBC in the next decade to be the place
people come to see and listen to brilliant
programmes—but also the place to make brilliant
programmes. We want programme-makers to havethe creative freedom to do things they could not do
to such an extent elsewhere. We want to be theshowcase of the best of British content. We want toemploy the best people with the best ideas aiming todo their best work. We want to help the next
generation find its voice. We want to be confident
enough to take risks, to push boundaries, to try new
things and not to be afraid of controversy.
To create a BBC that is truly British, bold and creative.

3

What do audiences want fromthe BBC?

Audiences value the BBC today, but is that changing? Do audiences want more or less from public service
broadcasting and the BBC? Are new entrants giving audiences the programmes they received from public
service broadcasters in the past, or will they create new barriers to getting them?

42

3.1

The public want more from the BBC
To assess the future need for public service broadcasting, the starting place must be an assessment of the viewsof the audience.
Last year, Ofcom did exactly that in their review of public service broadcasting in the UK. That document
provides important context for this Charter Review.
Ofcom found that audiences continue to value public service broadcasting. In fact they value it more than ever,with the importance of many of the public service purposes having risen in the past few years.

Importance of PSB purposes (selected, % rating seven or more out of ten)27
2008
2011
2012
2013
2014

75% 76%
68%

50%

53%

57%

65%

78%

81% 79%81%

78% 80% 79% 80%

82% 81%

85%

68% 69% 67%

58% 60%It shows high-quality
soaps o r dramas
made in the UK

It shows interesting ,programmes about
history, sciences orthe arts

Its regional news
programmes provide
a wide range of goodquality news about
my area

Its programmes help
me understandwhat’s going on in theworld today

Its news programmes
are trustworthy

Ofcom also found that young people still value the concept of public service broadcasting, as much as
audiences overall. There has been no drop—the characteristics of public service broadcasting are just as
important for young audiences, despite them growing up in a media landscape that would have been
unimaginable 20 years ago.

27	Ofcom, July 2015, PSB Annual Report 2015. Available at
http://stakeholders.ofcom.org.uk/binaries/broadcast/reviews-investigations/psb-review/psb2015/PSB_Annual_Report_summary.pdf

4387% 86%

Importance of PSB characteristics (selected, % rating seven or more out of ten)28

Shows new programmes,
made in the UK

All adults

74%

16–24

74%

Shows programmes with new
ideas and different approaches

All adults

73%

16–24

73%

Shows well-made, high quality
programmes

All adults

82%

16–24

80%

Shows programmes that makeme stop and think

All adults

70%

16–24

67%

This preference in theory plays out in reality as well. The top TV channels for 16–24s are the PSB channels.
BBC One is their favourite channel, with a weekly audience of 53% of that age group. ITV1 is next at 45%,
Channel 4 at 39% and E4 at 29%. 29
Younger audiences still use the BBC more than YouTube or Netflix. That is partly because we haveinnovated—for example through Radio 1’s YouTube channel, the biggest online radio station in the world.  

Young people aged 16–24 still use the BBC more than any other service,
but this is under pressure30
15%
Weekly reach %

60%

94%

14:10
Weekly time peruser HH:MM

03:02
YouTube

05:59

Netflix

BBC

Younger and older people’s consumption habits are increasingly different. Younger people watch lesstelevision than older people. They listen to much less radio. And where young audiences go now, older
audiences will follow. Online innovation has slowed the decline. It has not reversed it.

44

28

Ibid.

29

BARB, 2014/5, average weekly reach 15 mins+ consecutive

30 G
 fK for the BBC, Cross-Media Insight Survey, c.6,000 UK adults per quarter, BBC average weekly reach 15 mins or more claimed; YouTube andNetflix average weekly reach 3 mins or more claimed, Q1 2015. N.B. YouTube reach varies depending on source; Netflix weekly reach not numberof subscribers

Total TV and BBC TV performance 2010/11–2014/15, indexed on 2010/1131
Total TV average weekly time per headindexed on 2010/11

BBC TV average weekly time per headindexed on 2010/11

110

110
100

100
91

90

84

80

4+
16–34
4–15

4+
90

90

4–15

80

78

78

70

70

70

16–34

60

60
2010/11 2011/12 2012/13 2013/14 2014/15

2010/11 2011/12 2012/13 2013/14 2014/15

As Ofcom says:“The generation gap between younger and older audiences appears
to be getting wider, with significant differences in opinion, attitudeand habits towards PSB and television more generally. While younger
audiences have always watched less television than older audiences,
our audience research suggests that the connected generation arewatching increasingly less television, and that they may be taking thesehabits with them as they age.”32
If this trend continues, by the mid-2020s, a significant minority of licence fee payers would no longer be a partof the shared conversation that public service broadcasting supports, and might not be getting value to justify
their payment of the licence fee either. Most of all, we would be failing to give them great information,
education and entertainment.
Ofcom’s conclusion is that PSB must modernise for the internet age:

“Public service broadcasters will need freedom to continue to innovate,
as audiences increasingly want content that is delivered over multiple
devices and specifically designed for the internet environment.
Audiences are likely to want more than just traditional televisioncontent from public service broadcasters, and short-form video or
online-first content could potentially serve as an effective way ofdelivering key PSB purposes.”33

31

BARB, based on the TV set and indexed on average weekly time per head32 	Ofcom, 15 December 2014, Public Service Content in a Connected Society. Available at
http://stakeholders.ofcom.org.uk/binaries/consultations/psb-review-3/summary/PSBR-3.pdf

45

33 	O fcom, July 2015 ‘Public Service Broadcasting in the Internet Age’. Available at
http://stakeholders.ofcom.org.uk/binaries/consultations/psb-review-3/statement/PSB_Review_3_Statement.pdf

3.2

Portraying the whole country
The BBC helps connect the UK.
It is our commitment to reflecting the diversity of
the country—across all its constituent Nations andregions—that has brought some of the best content
to our screens. From Gavin and Stacey to Mrs Brown’sBoys, from The Fall and Peaky Blinders to Shetland andPoldark, audiences love the stories that we tell about
their lives across the UK.
However, we know there is a growing need to see
the full diversity of the UK’s cultures and communities
better reflected on screen and on air.
We are working to ambitious targets toimprove diversity.
On screen, we have seen improvements in the
portrayal of the Black, Asian and minority ethnic(BAME) community on BBC One and BBC Two. For
example, we won four awards at the latest Creative
Diversity Network Awards. Across the BBC portrayalof disabled people on screen doubled between 2012
and 2014. Since September 2014 we have invested
over £1.5m out of a new £2.1m Diversity Creative
Development Fund on TV projects with talented
BAME writers and producers.
On air, the Women in Local Radio initiative has seen
the number of breakfast shows with female presentersrise from 15% to 49%.
The Business in Community campaigns on gender andrace and diversity inclusion name the BBC as one of
the top ten public sector organisations thanks tosenior leadership programmes to increase diversity,
including the DG’s leadership programme and ourmentoring scheme. Last year, we opened our doors toyoung people from the widest range of backgroundswith over 350 trainees and apprentices starting their
media careers with us.

46

We will go further with a new BBC Diversity Strategy
for the next five years. For example, we want to workwith the independent production sector to reachour targets and ensure diversity is at the forefrontof programme-making. We will be arranging a
consultation in the autumn, in partnership with PACT,
to bring the sector together and explore this further.
We aim to introduce new diversity guidelines for our
productions in 2016.
Earlier this year Ofcom identified that there was an
immediate issue with audiences about how public
service broadcasting reflected and portrayed British
society. Across the Nations and regions of the UK weknow that the public want us to do more to portraythe full diversity of life across the UK throughout ourprogrammes and services. The UK is changing and it is
not straightforward to represent or portray every
aspect of British life across all of our services.
However, the BBC has a major role to play here, andin the next Charter we will evolve our programmes
and services to meet these changing audience
demands.
During this Charter, we ensured that what we spend
on network television in each Nation broadly matches
its share of the population. But we recognise thatspend is not everything—we need to do more, andbetter, to reflect the lives and experiences of all
licence fee payers.
During the next Charter period we will remaincommitted to investing in programming across the UK
and ensure that the drama and comedy we produce
for BBC One and BBC Two better reflect the diversityof the UK’s Nations and regions.

3.3

Investment in programmes is falling
Ofcom also expressed concern around the fall in investment in original British content:“The substantial fall in spend on all programmes and investment in
new first-run UK originations, with a 17.3% real-terms decline inprogramme spend by the [public service broadcasters], would bea significant concern if that trend were to continue and result in a
noticeable reduction in the volume, range or quality of output”34
We agree with Ofcom’s analysis.
The amount of money being invested in high-quality UK content, outside sport, is falling: 35
Total investment in new, original television in the UK fell in real terms from £2.6bn to £2.4bn
between 2008 and 2013
• In the same period, investment in original British programmes by the PSBs fell by around 15%:
from £2.4bn in 2008 to £2bn in 2013
• The non-public service broadcasting channels have increased their investment but made up less than a thirdof that loss; their investment has increased from £0.24bn to £0.35bn.

Cumulative change in spend on first-run originated UK TV content 2008–2013(£m, excluding sport, at 2013 prices)36
150
100
50

110
BBC

Commercial PSB

Total

0
Multi-channel

-50
-100
-150

-174

-183

-200
-250

-247

As the BBC’s spend has fallen, so overall investment in original British content has gone down. This is because
the BBC is the largest single investor in British creative ideas and talent—while the licence fee accounts foraround 20% of TV revenues, it is converted into around 40% of the investment in original British programmes.
Investment from non-PSBs has not made up the difference. This is a real-life test, over a five-year period, ofwhat happens with a smaller BBC.
In the future, new entrants like Netflix and Amazon are extremely unlikely to make up this deficiency. Whilethe hours of new UK content broadcast each year have fallen from 15,500 to 13,500 over five years, Netflix andAmazon have produced only around 260 hours of original content between them in that time—almost all of it
made in or about the US, not the UK.
34	Ofcom, December 2014, Public Service Content in a Connected Society. Available at
http://stakeholders.ofcom.org.uk/binaries/consultations/psb-review-3/summary/PSBR-3.pdf

47

35

Ibid. Figures quoted exclude spend on sports and are in 2013 prices.

36

Ibid. / BBC analysis

Good though many of their dramas are, they cannot match the UK PSBs for volume, range or audienceappreciation. For the same cost as two series of House of Cards, the BBC made 14 drama series, from Sherlock
to Happy Valley, The Village to Last Tango in Halifax.

$100 million looks like…

It also looks like…

House of Cards

BBC drama from the licence fee• 2 series/c22 hours of content• Viewed by 6% of UK adults• Viewer appreciation 8.0 ⁄ 10

• 14 series/c79 hours of content• Viewed by 72% of UK adults• Viewer appreciation 8.8 ⁄ 10

Nor are satellite and cable channels likely to make up the difference. With Sky and BT spending nearly as
much annually on their next Premier League contract as the BBC spends today on its whole television
output, there simply is not enough left over from subscription revenues to make up the shortfall. And thecontent will be behind a pay-wall.

48

BBC television spend and share compared to Premier League37
2,000
1,800

35%

32.9%

BBC TV
Premier League

1,797

30%

1,712

1,600
25%

1,400
1,200

20%

1,000
15%

800
600

10%

400
5%
200

0.6%

0

0%
Annual spend (£’m)

Viewing share (%)

So looking further into the future, the inevitable shift from advertising to pay-funded services offers no prospectof funding the amount or the range of original British programmes that Ofcom reports that UK audiences value.
Only public service broadcasting will.
Ofcom found some immediate issues emerging from their analysis:“… news consumption and the provision of news for young people,
drama that reflects and portrays British society back to a British
audience, content tailored to the specific needs of the UK Nations
and their regions, religious programming, children’s programming andinvestment in other areas such as music and arts.”38
We have designed our proposals to help address these needs, and the following chapters suggest areas forinvestment in new services and programmes.
But if the BBC does more, will it become too big?

37

E nders Analysis, July 2015, ‘BBC Green Paper: red alert on funding’. BBC TV spend is for 2014/15. Sky/BT spend on Premier League live
UK rights is for season 2016/17

38 	O fcom, July 2015, ‘Public Service Broadcasting in the Internet Age’. Available at
http://stakeholders.ofcom.org.uk/binaries/consultations/psb-review-3/statement/PSB_Review_3_Statement.pdf

49

3.4

The BBC in its market context
The BBC is small compared to the broadcasters it operates alongside. This is not a theoreticalcomparison. Virtually all the companies in the chart below now own or operate broadcasters,
producers or platforms in the UK.

Global revenues for large media companies (£bn)39£30.1£18.6 £18.3

£17.7

£17.6
£15.2
£11.7

£11.3
£5.3

£4.8

£4.0

£3.5

£2.6

£0.9

BBC Supplier
Finished content
Co-production
UK channel /VOD provider
Owns UKproduction

And following the July Budget agreement, the BBC is set to become only 12% of television revenues by
the end of the next Charter.

39

50

L atest full-year revenue data taken from company reports (June 2015—Sky, including Europe revenues; March 2015—BT and BBC; December
2014—Channel 4, ITV, Netflix, Discovery, National Amusements (Viacom and CBS), NBCUniversal, Liberty Global and Time Warner; September
2014—Walt Disney; June 2014—21st Century Fox; December 2013—ARD); figures converted to pounds sterling (XE.com)

BBC share of TV revenues40

22%
17%
12%

2010

2016 forecast

2026 forecast

The £145.50 of the UK TV licence fee today is also smaller than similar countries withmajor public service broadcasters.

Annual licence fee level (2013)41£319.0£291.7£274.9£203.8£183.2£164.7£145.5£135.9£127.2£107.6

£96.4

£84.9

£70.6
£47.3

£45.1

£40.7

£31.3

£22.9

In radio, it is true that we are over half of the revenue of the sector. But despite our size, commercial radio is
growing—its revenues are up. And radio listening is becoming a smaller part of overall listening—for 16–24
year-olds it accounts for only a quarter, less than streamed music. 42 In video-on-demand, the iPlayer still reaches
more people than Netflix, but the gap is narrowing rapidly. 43
Those new ways of distributing content are being provided by global companies—which are using their scale intheir original market to expand into television and radio. That’s why it is relevant that over this period, Google
and Apple have grown from being roughly the same size as the BBC to being respectively eight and 23 times
bigger—because they are building the platforms through which, in future, audiences may well access most of
our information, education and entertainment.

40 Enders Analysis, July 2015, ‘BBC to pay for the over-75s’41

E BU Market Intelligence Service, 2013 (based on members’ data). Figures converted to pound sterling, with annualised average rate for year ending
December 2013 (ECB/OANDA). Note: TV-only in Belgium (French), France, Ireland, Italy, Norway and UK

42	Ofcom, August 2014, Digital Day 2014. Available at:
http://stakeholders.ofcom.org.uk/binaries/research/cross-media/2014/Digital_Day_2014_Overview_of_Findings.pdf
4351

GfK for the BBC, Cross-Media Insight Survey, 6,000 UK adults per quarterGlobal revenues for media companies44

£5bn

£3bn

£0.9bn
£30bn

£44bn

£4bn
£18bn

£11bn

£113bn

£19bn

£57bn
£8bn
£4bn
£4bn
£42bn
£18bn

Although these companies compete for talentdeveloped by the BBC with, for example, Amazon
Prime having taken on the former Top Gear team, orApple Radio 1’s Zane Lowe and his production team,
we think it is unlikely that their investment in content
just for the UK will ever match that of the PSBs.
We should preserve the sources of investment
in British programmes, in particular public
service broadcasting.
The UK has always had the best of both worlds—a thriving domestic sector and inward investment,
particularly from the US. But that has not happenedby accident—it has been achieved through the careful
regulation of broadcasting, combining the investment£9bnof the licence fee, the public service content of
ITV, STV, UTV, S4C, Channel 4 and Channel 5, andthe complementary spending of the other channels.
As a consequence, our creative industries cancompare themselves to the US, despite its muchbigger market. There are not many industries where
the UK goes toe-to-toe with the US, but the creative
industries still do.
Nor is the BBC too big online. We have 3% of theonline traffic in the UK. 45 Our share of online news
has fallen to 30% as the market has grown. We are
happy to be part of a market that means that Britain
has two of the top three English-language newspapersites in the world. 46

44 L atest full-year revenue data taken from company reports for 2014 (Virgin Media is for 2013); figures converted to pounds sterling (XE.com, based onconversion rate at year end of reporting year)45   comScore MMx Multi-Platform, UK, Average Total Minutes, [P] BBC Sites, January-June 201546   Source: comScore MMX, Worldwide, Desktop only, Unique Visitors, January-June 201552

Share of time spent on news/
information websites (%)47
BBC News/information sites
Other news/information sites

70%

30%

Q2 2015

But whereas broadcast markets are growing, the traditional newspaper market is shrinking. Properly
understanding what is happening here is critical. Some people suggest that the BBC has caused thedecline in the newspaper industry. Yet if this were true the decline would only be taking place in Britain.
Self-evidently it is not.
The decline in revenues has been much more severe in markets like the US, where there is no publicly
funded news website. From 2007–2013, advertising revenues declined by 15% every year in the US. In the
UK the decline was 10% a year.

47

53c omScore MMX Desktop only—does not include mobile or tablet viewing, [M] BBC, Average Total Minutes,
Panel only numbers based on a custom deliverable

UK and US newspapers advertising spend48

Display

UK newspapers annual ad spend (£bn)

6

Classified
5

4.9

5.1

4.9

4.7

4.7
4.1

4
2.5

2.6

2.5

2.3

2.3

3.2
1.9

3.2

3.2

1.1

1.1

2.9

3

2.7
1.3

0.9

2

2.4

2.5

2.4

2.4

2.4

1

0

40

2.0

2.1

2.1

2.0

1.8

0.9

1.7

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US newspapers annual ad spend ($bn)

60

50

2.3

2.6

1.0

46.1

15.8

48.2

49.4 49.3
45.4

16.6

17.3

17.0
14.2

37.8

10.0

27.5

30

6.2

25.8
5.6

20
30.3

31.6

32.1

32.3

31.2

0

22.3
4.7

20.7
4.2

20.2

18.9

17.6

16.5

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201348 Enders Analysis, July 2015, ‘Public Service Broadcasting in the modern age’

54

5.0

27.8
21.3

10

23.9

If the BBC caused newspaper decline that decline
might—but only might—be an argument for reducing
its reach and its services. But if it did not cause it, thenthe BBC should certainly be seen as part of thesolution—both in making sure that audience needs
continue to be met, and supporting the market tomake sure we do not become the only provider.

55

There is more for the BBC to do in the next Charter.
We will respond to these needs with a simple
strategy—make great programmes and modernise
our services to continue to serve everyone.

In local news, for example, on current trends the BBC
could become the only traditional news provider insome areas—so to avoid that, we propose to open up
our spending to support local newspapers and others.
Proposals, developed with the industry, are made laterin this document.

Our proposals will respond to how audiencebehaviour is changing. They will serve audience needs
better, just as the iPlayer and Sports app have in thisCharter. That will not just serve young audiences—
indeed it will give everyone more reason to go online,
just as our innovations have done in the past. But
those innovations will help renew public service
broadcasting for younger generations.

As in news, so in other areas, too. We want to open
the BBC to become a resource for others, so that theinvestment in the licence fee is not just an investmentin the BBC. The licence fee already supports a thriving
independent production sector. We investigate later
the way to do the same for culture and science.

But even if we do more, we will become a smaller
part of the market. We will seek to maintain coverageand choice of local news. But in other markets, farfrom the problem being that the BBC is too big, therisk is that the whole British sector begins to look too
small as our markets become global.

PART TWO:THE FUTURE OF THE BBC

4

An Open BBC

Our proposals to make the BBC even more creative and distinctive are just one part of a bigger strategy—one
that responds to the challenges we’ve just outlined and will change the very nature of the organisation and theservices we provide.
We are going to create an open BBC.
The BBC has not traditionally been open—whether to content made by others, or to feedback from its
audience. Indeed, until the 1990s, the BBC commissioned and made all its programmes. And then they werebroadcast to the nation.
Even the BBC’s self-created symbolism reflected this mentality: ‘broadcast’ is the old word for scattering seed,
and the Latin inscription above the entrance to London’s Broadcasting House still reads:“This temple of the arts and muses is dedicated to Almighty God by
the first Governors in the year of our Lord 1931, John Reith being the
Director-General. And they pray that the good seed sown may bring
forth good harvest.”
This very idea—the idea of the BBC as simply a broadcaster, one that sends information out to its audiencesand does not get any back—must be revisited.

57

4.1

An internet-fit BBC
Technology has changed. When the BBC was
founded, the limits of wireless technology meant thatbeyond writing to the Radio Times, audiences could
not easily make themselves heard.
Society has changed. The BBC’s creation predated
universal suffrage. This was a top-down society—it
was not controversial to believe that people needed
to be informed, educated and entertained, rather thanhaving any role to play themselves, or indeed to haveany choice of what was broadcast.
Deference has disappeared over the decades. But
even at the turn of this century the media lagged
behind, still in a world of broadcast, failing toaccommodate fully people’s desire to choose what
they consumed and failing to take advantage of theway audiences are themselves creative.
The internet has taken the brakes off. It has changed
what it is possible to do.
Where broadcast had been one to everyone, today’s
media are one to one, one to many, many to many.
Some YouTube stars like Zoella can have as many
subscribers as Virgin TV. Others like Devin Super
Tramp can create a high-quality natural history video
that has been seen nearly 50m times.
The internet has not replaced television or radio.
Radio 2 has 15m listeners a week. 49 84% of TV
viewing across all devices is still live. 50 The BBC One
10 o’clock News reaches 15m adults a week. 51 Zoellastarred on The Great British Bake Off, even if her
cake did not.
Some say that broadcasting will be replaced over the
next decade. We disagree. The BBC must remain abroadcaster. In ten years, channels like BBC One orRadio 4 will still be crucial. We expect at least half ofall viewing and listening will be live. The long-form,
lean-back drama will be as important to our society as
it has been since Sophocles. We will continue to invest
in those services and make sure they are world class.

This would not just be about distributing traditional
programme types in new ways, important though thathas been with the iPlayer. The medium will change themessage—we would be making different types ofprogramme and formats.
And we would be commissioning differently too, nolonger treating TV, radio and online as separate sets ofservices, for instance, but looking across everythingthat we do to make the content that meets audienceneeds properly. Over the ten years of the nextCharter, that could have profound impacts on the
shape and nature of our portfolio.
There is no choice between broadcast and online,
mass and personal. Success comes where sharedexperience meets individual involvement. Think of
Springwatch where this year thousands of viewers
tracked the arrival of spring and found that it made its
way up the British Isles at a speed of 1.9 miles anhour. 52 Or breaking news, where the smartphone now
always provides the first pictures of any major story,
and the evening TV bulletin the journal of record.
We want to become internet-fit to be ready for aninternet-only world. Super-fast broadband and 5G will
help pave the way. But, on current trends, the UK will
not be internet-only in the next ten years. Some of
the things we most enjoy about the broadcast world
today, like big channels and huge national events, aregoing to become even more precious over the next
decade.
But the long-term direction is clear. And to meet thatchallenge, the BBC needs to become internet-fit. But
it needs, even more, to be Britain’s creative partner.

But they will have been complemented by a new setof internet-first services. The BBC will remain abroadcaster but be more than that, too.

58

49

RAJAR, 2014/15

50

3Reasons, HY2 2015

51

BARB, 3 min+, 16+, 2014/15

52

Woodland Trust, How fast was spring 2015? Available at www.naturescalendar.org.uk/bswresults

4.2

The BBC—Britain’s creative partner
In the next Charter, we propose to work with thewidest range of partners.
We would become a platform for Britain’s institutionsof ideas, our museums, theatres and festivals, ouruniversities and research institutions. We would work
better with our competitors. Local newspapers would
be invited to provide BBC local services. We would
open the iPlayer to other people’s programmes. We
would put our technology and digital capabilities at theservice of the wider industry.
To reap the benefits of this openness, the BBC would
need to become a better partner.
We are often told that partnership is something weseem to do to people, rather than with them. In thenext Charter, that must change, as we learn how towork in a genuinely collaborative way with like-minded
institutions, with suppliers, individuals andcompetitors.

4.3

Most of all, we would give power to our audiences.
We would engage them in citizen science. We would
help them take up a sport or create in the arts. We
would ask them to test new products. We would givethem our content to share, curate and mutate. We
would ask them to advise us on how we run the BBC.
This is a fundamental change of approach for the BBC.
We do not propose to change our mission of inform,
educate and entertain. But we would add a silent
fourth imperative—to enable, so that everyone fromour licence fee payers to our competitors see us as apartner to help them achieve their goals.

Open platforms for content
So the BBC would have a new attitude—no longer
closed, but open to others. But this is not just about
attitude. It’s also about applying platform thinking toour online products.
At the moment, the BBC’s apps and websites stillbroadcast content. On our News app, reporters
communicate to audiences. Bitesize tells students what
they need to know. The iPlayer takes the programmesthat have been on the radio or television and makes
them available later on. It’s a one to everyone model.
By contrast, the internet has enabled platforms
to flourish.
What do we mean by platform? We mean a placethat enables multiple producers and users to interact
and create value for each other. Platforms bring
together content from many providers, not just one.
Platforms thrive by encouraging everyone to create,share and participate.

59

We can bring unique value to these partnerships.
Mass audiences from day one. Personalised access.
Curatorial expertise to help users find the very best
content—both what they want and what they mightneed. Our non-commercial, trusted ethos. Long-term
commitment and public accountability.

For example, Wikipedia is better for everyone
because of the staggering c787m edits from over 26m
users since 2001. YouTube has created a new way forpeople to create, share and watch short-form video.
Medium, Tumblr and Pinterest have created thriving
communities writing, posting, sharing and discussing.
Platforms can be managed or open. Managed
platforms are those like Hulu, the US video aggregator,that pull together content from select partners (likeFox, NBC, ABC, Disney, WWE and even the BBC).
Open platforms are those like YouTube on whichanyone can publish. They usually encourage andenable lots of interaction between providers andusers. On these platforms providers and users can be
the same person.
We propose to apply platform thinking to our online
products. This is not about replicating YouTube or any
other provider, or about allowing professional content
to be overwhelmed by user generated content. It is
about opening us up to the best quality output, fromthe broadest range of professional providers. And
it is about seeding that output in the places whereaudiences will find it.
In news, for instance, audiences come to the BBC forstories they trust—so it would not be right to allow
anyone to post their journalism on our site. In any
case, that would just replicate what dozens ofcommercial sites already do. But we would open up
our news platform to content from other providers—creating a fund for local newspapers and others tocreate content for our services and syndicating
finished stories to newspaper sites.
In entertainment, we would create a managed
platform. The iPlayer could offer access to content
from other broadcasters or to new partners. This
would be more convenient for audiences, who could

find more British programming in one place, and beable to use their data across all that expanded
catalogue to find the best of those programmes justfor them. The same will be true of iPlay, our proposedchildren’s service, where we would provide content
from carefully chosen partners and give children much
more scope to interact and create content.
The Ideas Service that we suggest later would curate
collections of content from the BBC and others—
video, text and audio. Our responsive radio proposal
would provide listeners with the very best speechradio, whether from the BBC or other organisations.
Our arts network would bring together the very bestin arts performances from the BBC, the Tate, Opera
North, the Edinburgh Festivals and many others.

For example
MyBBC is your window onto
the BBC—the best from all
our products and services, justfor you and all in one place.

The News, Ideas andTV services will provide
the very best content form
the BBC and beyond. They
will be complemented by aseries of additional online
services.
Our learning and young
services together with ournews offer for young
audiences will together
provide a clear, coherent,
online offer for young
audiences.

My
favourites

Recommended
for meMost popular
this week

Sharedby friends

Inform

EducateEntertain

The News Service

The Ideas Service

The TV Service

For example:— International language
services— UK National News stream— UK Local News stream— News for young audiences

For example:— UK Arts Online— UK Science Online

For example:— iPlayer— BBC LiveThe Learning Service
For example:— Bitesize

The Music Service
For example:— Music streaming

The Young Service
For example:— iPlay
Including content from the
BBC and trusted partners. e.g.
These services will include
content from a range ofproviders

60

BBC

Local
partner

Local
partner

Including content from the
BBC and trusted partners. e.g.
BBC

MuseumUniversity

We’ll use data to make sureusers discover the best
content

Data

We’ll open our tools andtechnology so others caneasily create content.

Infrastructure

Including content from the
BBC and trusted partners. e.g.
BBC

Music
label

UK
broadcasterHow will audiences find what they need? These
services would call on the BBC’s role as a trusted
guide as never before. We would still sift through theworld’s content, music, ideas to find what we thinkaudiences want or need to know. If we think Syria is
the top story of the day, it will always lead our news,
but we will also be able to use data and social curation
to get audiences to what they need to know.

past, and use that information to provide bespoke
recommendations of what they might try next. The
potential is huge—creating news personalised to
information about your health, or suggestions about
what to learn, based on data individuals share with us
and our partners. We already make so much content
that we think audiences could enjoy. Personalisation
allows us to get it to them better.

Channel schedulers would be there to do the hard
work of putting together a succession of programmesthat audiences would enjoy each evening. But thosewill just be one of the many types of playlists that the
BBC platform makes possible, matched bypersonalised playlists, playlists from others, playlists tounderstand subjects, playlists from the archive.

Finally, that will all feed through to the programmesthat we make. We have recently introduced BBC
Taster to test new services. But that will now becomecommonplace at the BBC, with data becoming criticalto what we commission next, not replacing thejudgement of our experts, writers or producers, but
helping them make even better decisions.

With so much to choose from, audiences will want to
get the best for them. Personalisation—our myBBC
project—will help. Audiences can sign in so that weand our partners know what they have liked in the

An outward-looking BBC sharing its cultural andeconomic capital with the nation—in essence, a joint
venture—would have appalled that absolute monarch,
Lord Reith. But its time has come.
Sir Peter Bazalgette, Chair, Arts Council England61

5

InformAll citizens have a stake in the news. In a democracy, it
is an essential public service. Government by thepeople cannot function without it. Every member ofthe public needs access to reliable information to
make good decisions for themselves, theircommunities, their countries and their shared future.
The BBC is the most trusted source of news in thiscountry, 53 the most trusted in the world.
This is because BBC News stands for quality. Its
greatest asset is the public’s trust. And that is rooted
in an uncompromising commitment to accuracy,
impartiality, diversity of opinion and fair treatment ofpeople in the news.
The BBC’s most important task is to inform andexplain, to contribute to a better-informed society, amore engaged citizenship and a world of greater

53

62

understanding. Our mission must be to explain thecomplexity of the world we live in—to report thenews that matters and provide the context andanalysis that makes sense of it.
The licence fee allows us to invest in the resources todo this in a unique way. The BBC reports from morecountries, and to more people than any otherinternational news broadcaster. It sustains an extensive
newsgathering operation at a global, national and local
level. It supports the journalistic expertise andspecialisms required to help sort the truth from thenoise. Across the regions and Nations of the UK, it
attends to the interests of everybody, rich and poor,
young and old.

Ipsos MORI for the BBC, 1,906 UK adults 15+ who follow the news, January 2015

5.1

The BBC’s role to inform in the internet age
These values are more important than ever in theinternet age. The need for independent, impartial andinsightful news has never been greater. There is asurfeit of data, but a shortage of understanding; more
official information, but less public trust. In many
countries, there is not more freedom of expression,
but less. And there are growing information gaps,
between the older and younger generations, between
richer and poorer people, between those who are
actively online and those who are not.
It is easy to find something on the internet that seems
to be a fact but is not. Or something that appears tobe news but is really just somebody’s take on thenews. There are sources of news that entertain or
enrage; others that take sides or push a line. There’s
more news, but also a lot more noise. The sheer scaleof information now available makes the BBC morerather than less useful.
People say the news is in the throes of an internet
revolution. In fact, it has barely begun.
Today, we still tell and share stories in much the same
way that we have for decades. In the years to come,we will look back at our early forays into journalism
online with the same wry nostalgia that we watch old
footage of broadcasters reading the radio bulletins forthe cameras in the first days of television news over
60 years ago.

The BBC, therefore, is proposing an agenda of reformand renewal to fulfil the promise of the internet age.
As audience needs change, we want to be the world’s
most trusted and reliable provider of news on screensof all sizes.
By the time of the BBC’s centenary in 2022, ourambition is to make the most of the internet alongsideradio and television to increase the global audience to500m people. In doing so, our priority will be serving
people—from Russia to North Korea, North Africa to
the Middle East—who so sorely need reliable
information.
And we want to remain the leading provider ofregional TV and local radio news across the UK, butbuild on this to address the growing accountability gap
in the reporting of local government institutions andpublic services. Across the country, power is being
devolved. At the same time, the numbers of reporters
covering government services and public institutions
has been falling. In addressing this problem, we want
to work with the local and regional press that shares
this responsibility. Our aim is to be part of the revivalof local journalism. So, the BBC proposes to open up.
It will open up its archive of video and audio news; itwill make available its data journalism; and it will invite
other news organisations to compete with the BBC toprovide reporting of local public services.

The internet will transform the news in the coming
decade. It will be easier to offer more people more
information more quickly. If we make the most of it, it
will inform and empower us more than ever before.

Collecting, analysing, carefully evaluating and thendisseminating information will always be an expensive
business, but it’s essential to a properly functioning
democracy. Offhand, I can’t think of a better argument
for the licence fee.
John Humphrys, journalist

63

5.2

BBC Newstream: telling the UK story, better and faster
The BBC is at the heart of news in the UK, part of avibrant and competitive news market. News from the
BBC reaches more than 80% of all UK adults eachweek across television, radio and online. 54 More thanhalf of all audiences cite the BBC as their mostimportant news source. 55 The public actively chooses
to use the BBC despite having access to more sourcesof news and information than ever before.
The BBC’s success does not prevent people fromfinding and using other sources of news. Only a small
proportion of people—around 16%—get their news
exclusively from the BBC. 56 Ofcom has found that on
average audiences use four sources of news57 andmulti-sourcing is likely to grow further as audiences
move online. People go to different news sources fordifferent things.
We remain by far the most trusted source of news in
the UK. 57% of the public cite the BBC when asked toname the one source they trust most, far ahead of thenext nearest (ITV on 11%). 58 The BBC news website isfive times more likely to be chosen as a source to“check whether something is true” than the next
closest provider 59 and is the most shared news brandin the English language on Twitter. 60
But a generational change in the way audiences
consume the news is underway. TV News in the UKreached 92% of over 55s every week on average lastyear and this has been stable over the past decade.
Amongst 16-34s, this falls to 52% every week—down
from 69% in 2004. 61 But young people value thechoice of an impartial news provider: they just prefer
to consume their news in a different way, on asmartphone rather than a smart TV.

From rolling news to streaming news

While TV and radio will remain enduring platforms,
mobile is rapidly catching them up as the key way toconsume news. According to research for the Reuters
Digital News Report, across all 12 countries surveyed
25% of online news users say their smartphone is now
their main way of accessing online news. That rises to
41% for those under 35. 62 In the past year, mobile
phones outnumbered people for the first time.
Mobile provides the best opportunity to deliver amore personalised news service, and to create
innovative ways of informing audiences. The news will
no longer just be news stories, but also the relevant
data, context and information that everyone needs,
delivered to fit into their lives.
So we will make a transition from rolling news to
streaming news. BBC Newstream will be a new
streaming offer for mobiles. It will be a more videobased service, complemented by audio, graphics andtext live from BBC News. It offers the possibility ofnews that is personal, portable and on-demand.
We must harness the potential of mobile platforms to
explain to audiences the complexity of the world welive in by adopting a new form of journalism. This will
include what has become known as ‘WDIAM
journalism’ (What Does It All Mean), which helps
audiences understand key terms or background tostories. With relevant personal data, mobile products
can also deliver services that provide useful civic
information based on where you live or your interests.

So, with an eye both to financial reality and futureneed, we believe it is time to renew the offer, and inparticular to change the provision of live andcontinuous news.

54 Kantar Media for the BBC, c12,000 UK adults, 2014/15
55	Ofcom, June 2014, News consumption in the UK: research report. Available at:
http://stakeholders.ofcom.org.uk/binaries/research/tv-research/news/2014/Ofcom_News_Report_2014_slides.pdf
56 	Ibid.
57

Ibid.

58

Ipsos MORI for the BBC, 1,906 UK adults 15+ who follow the news, January 201559

 opulus, UK adults 18+, June 2014. “Please indicate which ONE site/ app you would go to for the following tasks”/“When I want to check whetherP
something I’ve heard is true”

60	
http://blog.newswhip.com/index.php/2015/08/the-biggest-twitter-publishers-of-july-2015#SiLf85cWq0iazIys.97
61

BARB, 16+, 3 min reach, 2004 and 2014, BARB genres: ‘News: National/International’ and ‘News: Miscellaneous’62	Reuters Digital News Report, June 2015. Available at http://www.digitalnewsreport.org

64

5.3

Helping the local news market to fill gaps in local democracy
We believe that news really matters to people where
they live and work. The BBC’s biggest TV audiences
for news are for our evening regional bulletins. As
power is devolved, there is even more need now forreporting about public institutions and services acrossthe UK.
But the growth of online news has had a very direct
impact on the newspaper industry in all Westerncountries, and on local newspapers in particular.
The BBC is not responsible for these structuralchanges. The BBC does not compete for advertisingin these sectors. And similar trends have been seen
in markets around the world where there is noequivalent public service news provider. But the
combination of a decline in the number of reporters
working in local newspapers and the regional pressmeans there is a growing likelihood that people inpower are less—and feel themselves to be less—accountable for local decisions. This is not goodfor our democracy, our government institutions
and our citizens.
The BBC wants to be part of the answer to thischallenge—but only a part of it. In partnership withsome leading local and regional news organisations,
we are submitting the following proposals fordiscussion, shaping and consultation.

Local Accountability Reporting Service

Under this proposal, the BBC would allocate licencefee funding to invest in a service that reports oncouncils, courts and public services in towns and cities
across the UK. The aim is to put in place a network of
100 public service reporters across the country.
Reporting would be available to the BBC but also,
critically, to all reputable news organisations. In
addition, while it would have to be impartial andwould be run by the BBC, any news organisation—news agency, independent news provider, local paper
as well as the BBC itself—could compete to win thecontract to provide the reporting team for each area.

A shared data journalism centre

Recent years have seen an explosion in data
journalism. New stories are being found daily ingovernment data, corporate data, data obtained
under the Freedom of Information Act and increasing
volumes of aggregated personalised data. This data

65

offers new means of sourcing stories and of holding
public services, politicians and powerful organisations
to account.
We propose to create a new hub for data journalism,
which serves both the BBC and makes available data
analysis for news organisations across the UK. It will
look to partner a university in the UK, as the BBC
seeks to build a world-class data journalism facility that
informs local, national and global news coverage.

A News Bank to syndicate content

The BBC will make available its regional video andlocal audio pieces for immediate use on the internet
services of local and regional news organisations
across the UK.
Video can be time-consuming and resource-intensive
to produce. The News Bank would make available allpieces of BBC video content produced by the BBC’s
regional and local news teams to other media
providers. Subject to rights and further discussion with
the industry we would also look to share longer
versions of content not broadcast, such as sports
interviews and press conferences.
Content would be easily searchable by other news
organisations, making relevant material available to be
downloaded or delivered by the outlets themselves,or for them to simply embed within their own
websites. Sharing of content would ensure licence fee
payers get maximum value from their investment inlocal journalism, but it would also provide additional
content to allow news organisations to strengthen
their offer to audiences without additional costs. We
would also continue to enhance linking out from BBC
Online, building on the work of Local Live.

Reflecting local culture

We are developing a partnership with Arts Council
England to ensure greater reflection of the cultural lifeof the country across the BBC on regional TV, local
radio and UK-wide online. In each English region wewill introduce local arts producers to work withorganisations such as local libraries or theatres toamplify the area’s arts and culture and deliver a new
local radio arts strand. We want BBC local radio to
broaden its agenda to find new ways to reflect thecultural richness of their patch.

At a time when more power is being devolved to
the regions, it is even more important that there isa long-term commitment to media coverage of
democratic institutions to ensure full accountability.
The BBC’s financial contribution to this local democratic
process and the evolution of the UK news market,
through assigning a proportion of its news budget
to independent local news provision, would be asignificant enhancement to its public service remit
and we welcome the BBC’s constructive thinking inthis regard.
David Montgomery, CEO Local World

Strengthening our news in Scotland, Wales and Northern Ireland
As the pace of devolution quickens—and as the UKchanges more quickly than in recent history—we willneed to adapt our services to ensure they fully reflect
and report the increasingly divergent politics of the
UK. The BBC, in principle, should neither lead nor lag
behind constitutional changes in the United Kingdom.
Our priority is to ensure we arm citizens in all fourNations of the UK with the information they need tomake sense of their world and help hold those inpower to account.
In a more devolved UK, news in some parts of thecountry simply does not apply in others. The politics
and economics of the country is becoming morevaried, the business of reporting it more complicated.
The BBC has a responsibility to ensure it is informing
the audience in the most effective and relevant way.
We believe the time has come for us to strike a betterbalance between the delivery of pan-UK news andnews tailored to the distinctive needs and agenda ofthe devolved Nations of the UK.

66

As a start, we will deliver a different BBC News
homepage in each Nation. We will personalise ournews services to reflect personal passions andinterests in every part of the UK.
But we may need to go further. We want to consult
audiences across the country on whether we currently
have the right balance between UK-wide and Nations
news bulletins on television. Our News services today
are very popular and widely used by audiences,including the much-debated BBC Six o’clock News.
But after devolution, the Scottish referendum and in aworld where large aspects of public policy are
devolved in the Nations, there is now a much stronger
case for providing a different balance in how we serve
audiences with the most relevant BBC News andcurrent affairs. We look forward to exploring thevarious options with our partners, stakeholders,audiences and National Governments through theprocess of Charter Review.

5.4

We want to invest in the World Service
The internet is shrinking the globe, and the impact of
the rest of the world on the UK is growing.
Things happening elsewhere in the world are now
happening everywhere in the world. From thehealthcare industry to the energy market, religious
extremism to cybercrime, global developments aremaking a bigger and bigger impact on the UK.
In many parts of the world the media is less free thanit was ten years ago, most obviously in Russia, but alsoin places like Turkey or Thailand. There has also been
the growth of big state-sponsored news organisations
and from news aggregated by digital platforms. Al
Jazeera, China Central Television (CCTV) and Russia
Today can command vast resources.
The service offered by these organisations can be ofhigh quality, but reflects a particular world-view andthe agenda of its backers.
As the UK’s stake in what happens elsewhere in theworld increases, and with the possibility of stateservices from less free countries dominating global
debate and news provision, the value to democracy
and liberty of the BBC’s global reach is higher thanever.
To that end we propose to invest in our global news
services.

The world’s best-known and most respectedvoice in international news

The BBC World Service is the UK’s most important
cultural export. It inspires and illuminates the lives of
millions around the world, helping them make sense of
the world they live in. It is one of the UK’s bestsources of cultural influence. We want to invest in it
so it can respond properly to a changing world and wewill discuss with Government their potential interest ininvesting more in the World Service from outside thelicence fee.
We would propose to invest in the following areas:• A bigger digital presence in Russian through a new
digital service on platforms such as YouTube andthe Russian equivalent Rutube, together with TV
bulletins for neighbouring states. We would also
start a feasibility study for a satellite TV channel for
Russia• A daily news programme, seven days a week, forNorth Korea, initially delivered through Short
Wave, and news for Ethiopia and Eritrea on
Medium Wave and Short Wave

67

• New or extended digital and mobile offers inIndia and Nigeria• More regionalised content on the BBC Arabic
Service to better serve audiences across theregion, and target new audiences, with increased
coverage of North Africa and the Gulf.

Building the best English-language digital news
service in the world

If Britain is to have a voice in the world, then the BBC
has a crucial role in making sure that voice is heard.
English is a global language. The world trusts the BBC.
Britain should take advantage. To stay a leading global
provider of news and information, we must extend
our reach to 500 million users by 2022. This number
would mean we could compete in impact with theleading global media companies.
However, there are limits to how much British
households can be expected to fund news for othersaround the world to consume, despite the benefits.
Our online news around the world and the television
service BBC World News—also run by the World
Service Group—are already commercially funded. So
our ambitions must be commercially self-sufficient.
We would aim for any increase in public funding for
the World Service to be matched by external income
for our other global news services over the Charter.
This means commercial ambition; seeking revenue
from audiences outside the UK; and being open to
funding from governments and civil society. The
World Service Group already exploits commercial
opportunities in television, online and, in a small way,
radio. Through BBC Monitoring and BBC Media
Action, it also relies on government contracts,
commercial income and donations. We would need toincrease revenue from all such sources.
To do that, bbc.com will have to experiment,
exploring new advertising deals, subscription services,
live events, syndication packages and commercial
opportunities across all platforms and languages.
The proposition, though, is simple: access foradvertisers to a global audience; and a product for
consumers that is the most trusted and reliable news
service in the world—ranging from the strongest
reporting of world affairs to accessible analysis ofbusiness and the economy to new forums for opinions
and ideas.

The BBC is the best export of Britain to the world
Malala Yousafzai, Recipient, Nobel Peace Prize 2014

5.5

An internet-fit, open BBC News
The BBC’s most important task is to inform. This is a
programme of reform to ensure it does that better
than ever before.

efforts, every part of the country would beguaranteed coverage of their local democracy andsociety.

Our Newstream service should help us reach younger
audiences—thanks to the proposals in this document,
we predict that the reach of BBC News would remain
at 80% every week and that audiences would beengaging meaningfully with a broad range of news.

Through these proposals, we would reinvent BBC
News, making our values work in the internet age. We
would be a trusted guide through the blizzard of
information, helping to sort information frommisinformation. And we would do that for everyone.

We would open up our services to local news
partners and arts organisations. Thanks to our joint

68

6

EducateHow does one find a supernova?
Take 40,000 volunteers. Add the SkyMapper telescope. And go on a five-day hunt for unidentified celestial
objects. This year, Stargazing Live’s volunteers made almost two million classifications of heavenly bodies,including five sought-after supernovae, the extremely bright exploding stars that provide vital clues on thehistory and future of the universe.
Five supernovae. 40,000 citizen scientists. Two million stars. Five million viewers. A chain reaction of learning.
Only the BBC can do that. And in the next Charter we want to do much, much more, helping make Britain
the most knowledgeable nation in the world and showcasing the UK’s cultural and intellectual institutions
around the globe.

69

6.1

The BBC’s role to educate in the internet age
Whether in arts, history, natural history, philosophy
or science, the UK is among the best places on
earth for ingenuity and knowledge.
UK talent is universally famous. This country ishome to some of the finest cultural, education andresearch institutions. And the UK has a national
public service broadcaster that, through its
expertise and the millions of people it reaches daily,
has played no small part in stoking and supportingthat enthusiasm over the past 90 years.
But there are challenges too.
Organisations are often working in isolation fromone another. Access is far from universal63 . Digitaltechnology, while offering dizzying opportunities, isin danger of dividing the haves from the have-nots.
And it can be hard to know what matters and what
is true.

6.2

The question for the BBC, and the wider sector
too, has long been the same: how do wecollaborate better, to make the most of ourresources, for the benefit of all?
Through widespread discussion, a new proposal has
emerged: the creation of a national partnership thatthrough its technical expertise, its local and global
infrastructure, and its audience reach, becomes aplatform for collaboration in science, engineering,
history, the arts and culture, and other disciplines
this country excels in.
A strong example of what an open BBC can be.

The Ideas Service
In the 20th century, Britain created the World Service,a democratic gift to the world. In this century, buildingon the wealth of British knowledge and culture, weshould offer the world another gift of similar value: theIdeas Service.
So what is the Ideas Service?
It would bring together what the BBC does acrossarts, culture, science, history and ideas and add to it
work done by many of this country’s most respected
arts, culture and intellectual institutions. It would also
make the most of the BBC’s rich archive heritage—
from speech radio to our television collections—andopen it up for others.
For curious audiences around the world, the BBC
would create and manage an online platform that,working with partners, would provide the gold
standard in accuracy, breadth, depth, debate andrevelation. It would offer audiences the thrill ofdiscovery and the reassurance of reliability.
It would draw together online all the things we alreadydo that we know the audience love and cherish: for

instance, from Radio 4, BBC Four, BBC Two, Radio 3,
our services in the Nations, iWonder and BBC
Learning among many others. All of these have beenplaying their individual parts as broadcast and digitalcontent-providers—but until now we have noteffectively brought them together to become morethan the sum of their parts. This is the opportunity—in tandem with our partners.
Central to the Ideas Service will be strong curation,
through a combination of editorial, algorithmic andsocial methods. To reinforce that, the Service would
have its own commissioning budget to initiate andcommission content across television, radio and online
to create most impact for audiences.
The Ideas Service would cross genres, but not mix
them all up. There would be parts of the service
dedicated just to the arts or to science, as we illustrate
below. But much of the joy would come fromdiscovery and serendipity where, say, art meets
medical science or where history meets theatricalperformance.

63	As a Warwick Commission report in spring 2015 revealed, this is particularly pronounced in the arts where ‘the wealthiest,
better educated and least ethnically diverse 8% of the population forms the most culturally active segment of all’70

The Ideas Service would work across broadcast andonline. We already do that for anniversaries such as
World War One or Shakespeare—using the power of
television and radio to bring audiences to an
important cultural or historical subject, but then using
online to help them explore in greater depth,
participate and learn. We will now plan to use thatpower throughout the year.

This online platform would be a destination in its
own right, where audiences go to find out what’s new
or to deepen their understanding of a topic. But we
expect that would only be a minor part of how it isconsumed. Mostly, people would find its content
through a variety of other routes—from search
queries to on location in a museum, from a GCSE
reading list to a programme on BBC One or Radio 1.

Users would be asked to sign in to the service so that
we could personalise content to what they wereinterested in. We would use that data to introduce
them to new subjects and important questions. We
would give the content to them to play with—whether to make their own playlists, or to take to acompletely different environment

The Ideas Service would obviously attempt to havegood reach and audience appreciation but it would
judge itself on other metrics too. We want it to bring
the finest intellectual and cultural institutions—and individuals—from every corner of the country
to a much wider audience in the UK and globally.
We want it to inspire new generations in theircuriosity and ambition.

For partners, the BBC would provide the underlying
infrastructure, access to archive, supporting
commissioning for large initiatives and creative andtechnical expertise where required. We would makeit easy for partners to contribute to the Ideas Service.
In this way it would act as a bridge between
institutions and link them to an even wider public.

We are extremely ambitious for this new service.
Today, it is, perhaps, more concept than product,with some initial steps, projects and partners to giveit reality. But the enthusiasm of our partners andour own track record of internet innovation gives
us confidence that there is a great opportunity here.

Britain is ready to lead the world in knowledge.
Our public institutions, from museums to universities,
are home to world-leading thinkers and researchers,
and our cities and industries are driven by great
entrepreneurs. These are priceless resources, holding
the keys to economic growth and inspiring the next
generation of scientists, artists, industrialists andengineers. They all have stories to tell. The BBC is
uniquely placed to make those stories available toeveryone. Why? Because the BBC is an institution
whose primary goal is to make Britain a better place,with direct access to the entire population of the UK,
young and old. It is trusted, and has a unique creativeskills base—nobody is better at communicating ideas
Professor Brian Cox, The University of Manchester

71

6.3

UK Arts
The Ideas Service will be a home for the arts.
The Ideas Service would, through a new UK
Arts platform, bring Britain’s world-class arts
organisations—from the internationally recognised
brands like the BBC itself, the Tate, the Edinburgh
Festivals, Whitworth, the Royal Court, the British
Museum and the Royal Shakespeare Company tothose who champion excellence and innovation inside
the UK like Slung Low, Tramway, Liverpool Biennial
and Manchester’s Contact Theatre—together in adigital, global, one-stop-shop for the very best of
British culture.
UK Arts would enable the sector to become far morethan the sum of its parts and, through the sheer
power of the brands involved and the support ofbroadcast, engage millions.
It would be curated, focusing content around the big
event of the moment—from Shakespeare 2016 to
Hull, the UK’s City of Culture in 2017. Using the latest
technology, audiences will be able to participate andplay with content, whether re-editing archive, remixing
museum collections, or watching great performances
as they choose.

not to mention individual organisations’ home sites.
But it is where the story comes together, providing
the framework for day-to-day editorial collaborationand technology sharing.
The power of the big brands will be crucial. But so will
discovering and nurturing new talent. It will be herethat the Darcey Bussells, Kate Tempests and Chiwetel
Ejiofors of tomorrow could find their first exposure toa wider public.
For the first time, partners will have a stake in the
BBC’s wider arts output, able to collaborate indevising broadcast seasons that complement or
influence their own forward plans, bringing the whole
sector together in new national moments that canreach the broadest audiences.
Earlier this year, Martha Lane Fox set up the DOT
EVERYONE movement and outlined a simple vision:
to make the UK brilliant at the internet. The BBC will
work with DOT EVERYONE and we hope the Ideas
Service will be an important way of helping arts andculture organisations make the most of the internet toreach new audiences, explore new online formats andbecome global leaders.

Importantly, UK Arts is not the final destination forcontent, which will travel as far as it can through social
media and other distribution platforms like YouTube,

This partnership will give audiences, people inthis country and an international audience, an
unprecedented opportunity to see work by major
companies, by emerging companies, and by young
artists. It’s a great platform to show what’s vital,
exciting and special about what’s happening in the
United Kingdom today
Sir Nicholas Serota, Director, Tate

72

6.4

A New Age of Wonder
Another starting-point for the Ideas Service is UK
Science—a new, open platform that links universities,
museums, schools, the learned societies and the wider
science and engineering communities. We’redeveloping this with The Royal Society, The Science
Museum Group, The Natural History Museum, The
Royal Institution, The Wellcome Trust, The British
Science Association, The British Library, The British
Academy, Universities UK, The Royal Academy ofEngineering, the Eden Project, The Academy ofMedical Sciences, The Royal Botanic Gardens, Kew
and many others across the country.
Science plays an essential role in our economy, ourculture and our democracy. And the BBC is uniquelyplaced to bring together a new kind of partnershipwith the sector to inform, educate, entertain—andenable. To provide unparalleled access to the wealthof scientific research and resources across the country,
expand on the science of everyday life, and inspire
future generations of scientists and engineers.
Working with partners, we are planning the largest
public scientific engagement campaign in British
history. It is an idea that will help make the UK theworld’s leading knowledge economy, and the bestplace in the world to do science.
We will begin in September 2016 with a majorcross-institutional campaign around 100 greatquestions in science—science that matters toeveryone. Some questions will be inspirational; others
will be central to the national debate and policy
challenges the country faces.

73

The breadth of the campaign will allow engagement
at all levels of expertise—from primary school
students to post-doctoral researchers andprofessors. And we will be engaging millions morecitizen scientists to help set the questions—and to
discover the answers.
As part of this we will build a new online platformthat links partners—locally and nationally. It will
provide new experiences and new content foreveryone, as well as opening up the archive andcurating the assets of all partners. There will be
multiple entry points and serendipitous interactions
to deliver a new kind of engagement that will enrich
our democracy, drive our economy, and provide
enjoyment and wonder to all.
The platform would, for instance, use precise
geo-locating technologies in order to provide accessto content that is close to audiences—creating a new
dynamic between the public and public spaces likethe beaches of the Jurassic Coast and Rutherford’slaboratory at The University of Manchester, which ispassed by thousands of people a day, unaware thatthe atomic nucleus was discovered just a stone’s
throw away.

This is a golden opportunity. A New Age of Wonder
will deliver a step change in public engagement, public
participation and public celebration of science. We
have a national public service broadcaster with theexpertise and audience reach to deliver unprecedented
access to everyone
Sir Paul Nurse, President of the Royal Society

Arts and science are two examples of what the Ideas Service can do. But the Ideas Service will not be limited to
traditional subjects or genres. That’s not how audiences think or how services like Radio 4 work.
Where Google’s mission is to organise the world’s information, ours would be to help everyone understand it.
We will work with anyone who can help us all understand the world. Over time, we would build up content on
the big questions that humans have cared about, and our trusted guides would make it easy for us all to findwhat we needed to know. We will offer people new ways to participate, engage and learn, and with ourpartners help ensure Britain continues to be a world leader in arts, culture, science and ideas.

6.5

iPlay
Education, of course, is not just for adults.
The experience of childhood is changing, and changing
rapidly. Social, economic and technological changes arealtering it. So the BBC has to respond.
The BBC has a proud record in children’s media.
We will remain committed to informing, educating andentertaining all UK children. We will maintain our roleas the provider of world-class, UK-produced, content
for children, complementing their consumption of thehigh-quality international content they increasingly
enjoy and supporting this vital part of the UK’s
creative economy.
To that end, we would make the full range of BBC
content for this audience available through a single
online platform called iPlay, designed around theneeds of children, their parents and carers. It would
deliver tailored, age-appropriate material that changes
and develops from childhood through adolescence74

and into the first stages of adulthood. It would feature
a wide range of content forms, from long-form video
to interactive formats, most of it commissioned
specifically for the children’s audience from in-houseand external teams, but also including appropriate
content from across the whole BBC. It would be awindow giving access to the full breadth of BBC’s
knowledge, information and content allowing children
and young people to search safely and learn from all
the BBC’s resources with the widest range of ageappropriate material in one place.
iPlay would have learning and making at its core—encouraging children to be active creators, not justpassive consumers.
Children grow up at different rates, and iPlay would
allow them to move at their own pace. Instead ofcorralling all children into two categories, the audienceof CBeebies and of CBBC, they would now each havetheir individual collection of programmes and content,
based on their age and consumption.

iPlay would be free from any commercial influence andtherefore pester-power. It would let children interact
with others in an environment safe from the threats inthe wider internet and to express their creativity inways that the Blue Peter viewer of 20 years ago could
never have imagined. We would help children exploreand develop their innate creativity by providing a setof tools that can be used for a wide range of
projects—storytelling, pictures, animations, music,
language, blogs, vlogs and podcasts, coding, app
development, 3D printing and much more.
This new online environment would help children to
explore, create, connect, share and learn. It would
bring together all of the BBC’s content for children in
one place and it would include content which appeals
to children from trusted partners, too. It would be an

6.6

We want to make new types of programmes foryoung adults, too. We will make a start with the new
BBC Three. As it will not be a broadcast channel, it
will not have to consist only of half-hour and hour-longprogrammes. We have set up a team in Birmingham
to explore what could work best. But we areinterested in going further, and stimulating the
production market outside London. We would beinterested in receiving proposals from cities or regions
who would like to set up a centre of excellence forexperimental online content. If there is enoughinterest, we would run a competition to decide thelocation, and what support the BBC could promise.

Curriculum support across the UK
The BBC also has a role in supporting more formal
education—with learner guides and curriculum
resources, which are extremely popular and highlyused. We bring these together under our Bitesize
banner, which is used by over 80% of all secondary
school students every year to support their formal
education.
Across the UK the school curriculum is devolved, andis increasingly different. Our plan is to develop
curriculum resources for each Nation, ensuring that75interactive service where children help shape theoutput and contribute their own ideas, developing
digital and creative skills in the process.

our offer for students in Scotland, Wales andNorthern Ireland is as comprehensive as it is in
England. In Wales we will also provide Welsh-language
content.
In this area we recognise that we have to develop ourmaterial with appropriate regard for our impact oncommercial providers, and we will. We also believethat as a UK-wide provider of services we need toensure that our service in this area is consistent acrossthe four Nations of the UK.

The BBC is part of everyone’s childhood in thiscountry, from much-loved programmes to being atrusted source of information, helping children andyoung people learn and discover. This is very positive
to see the BBC evolving to enrich education andentertainment for a digitally engaged young audience
for now and in the future
Anne Longfield, Children’s Commissioner for EnglandThrough these proposals, we would reinvent how we deliver the BBC’s mission in education.
We would create two new services—iPlay for children and the Ideas Service for everyone. We would be
open—working with the greatest cultural, educational and intellectual institutions in the country. And we would
give power to our audiences, whether encouraging young people to play and be creative, or their parents to do
the same.

767Entertain

People often think that John Reith invented the triad of ‘inform, educate, entertain’. But the credit should go toDavid Sarnoff, the founder of American commercial radio, who wrote that its function was “entertaining,
informing and educating the nation.” Reith can take credit only for re-ordering the three and, characteristically,turning them into imperatives.
Reith’s instinct to move entertainment to third place was the start of a long and tortuous relationship between
the BBC and its most popular genres.
A reader’s letter in the very first issue of the Radio Times in 1923 set the tone for the debates that have lasted
ever since:“Frankly, it seems to me that the BBC are mainlycatering for the listeners who… pretend to appreciate
only and understand only highbrow music andeducational and ‘sob’ stuff. Surely, like a theatremanager, they must put up programmes which willappeal to the majority and must remember that it is
the latter that provide the main bulk of their income.”

77

The balance between reaching everyone and being
distinctive has continued in theory ever since, but
was resolved very early in practice. As Huw
Wheldon said, “The BBC’s core duty [is] to entertain
the public, for the simple reason that unless listeners
and viewers found a programme agreeable theywouldn’t stay with it long enough to be educatedor informed.”
Entertaining the nation is and will continue to be
inseparable from the BBC’s mission. Drama is how
we tell our national story. Comedy explores ourmost uncomfortable questions. Entertainment brings
us together and provides huge enjoyment.
But it is in these areas that the market is changing
most. Something remarkable is happening. British
content is more popular globally than ever. In drama
and entertainment, programmes and formats
developed in the UK are travelling around the world
as never before.
At the same time, US programmes in similar genresare more accessible than ever, through Sky, Netflix,
Amazon and others. British talent, actors, directors
and writers now find themselves at the heart of a78

global industry. And the global success of British
drama and entertainment is a catalyst to the wider
creative industries.
So how should the BBC’s role evolve in theinternet age?
We should start with drama. For many audiences itis the most important and most valued thing they
expect from the BBC. However, audiences’
expectations of quality are getting higher and higher
as the market for premium scripted television
becomes global.
We will make some of the best drama in the world.
We will support British writers and directors. We
will look for modern stories, originality and diversity.
But we will also broaden our drama offer, scaling up
the creative ambition of what we do best andcompeting for quality globally. We will try new
approaches to contemporary drama and withimaginative, high-concept series that can appeal toyounger audiences and provide new opportunities
for the UK drama industry.
But what about entertainment itself? Should the
BBC provide as much as it does today?

7.1

The BBC’s role in entertainment
When audiences are asked what they want from the BBC, they put entertainment right at the top. Over 80% of
the public support the Reithian mission. Indeed, ‘entertain’ is rated highest of all when people are given a list ofwords associated with the BBC.

Audience views of what the BBC’s mission should be (%)64
Entertain

64

Inform59

Educate43

Engage25

Inspire23

Explain16

Bring together

14

Challenge

13

Create13Innovate

10

Reflect

7

Provoke

5

Protect

3

Provide training

1

Our audiences love our entertainment. Strictly Come
Dancing and The Voice UK are two of the UK’s bestloved programmes, with average audiences ofbetween eight and ten million viewers. 65 They appeal
across all age groups and demographics, and provide
great value for money. The 2% of the licence fee thatwe spend on TV entertainment becomes 4% of all thetime that audiences spend with the BBC. 66
We do entertainment in a distinctive, BBC, way. In our
choice of presenters, judges and competitors, wereflect the full range and diversity of the UK. We aim
at all times to respect and treat with dignity those
who are competing on our programmes. Audiences to
BBC entertainment programmes have highexpectations that they will ‘learn something new’ fromwhat they are watching, and give BBC One a muchhigher score on this metric than ITV. 67
BBC entertainment has been an important part ofthe sector. Together with ITV and Channel 4, weraise the bar for quality and innovation. Rather thanBBC competition having harmed others, ITV’s
weekend evening entertainment programming hasflourished over the past decade.
Competition for quality works. And one of theclearest symptoms of that is the free flow of talent.
Throughout our history, we have trainedentertainment talent that has gone on to otherbroadcasters, and benefited the whole sector.

64 ICM Unlimited for the BBC, 2,111 UK adults (online), November/December 2014. Here are some words that other people have used to describe what
they feel the BBC should do. Please drop and drag up to three words that you think most apply?
65	BARB, latest series Strictly Come Dancing 2014, The Voice UK 2015
66	BBC analysis

79

67

GfK for the BBC, Pulse panel, Saturday 1800–2229, 2014/15

Morecambe and Wise made a high-profile
switch from BBC One to ITV in 1978

Sir Bruce Forsyth went from The Generation Game on
BBC One to ITV and programmes such as Play Your Cards
Right and The Price Is Right
Ant & Dec were first on primetime with BBC One’s
Friends Like These before moving to primetime on ITV
and shows such as Pop Idol, Britain’s Got Talent andI’m a Celebrity…Get Me Out Of Here!

Alesha Dixon went from competing in and judging Strictly
Come Dancing to being a judge on Britain’s Got TalentJames Corden co-wrote and starred in Gavin & Stacey on
BBC Three and co-presented Sport Relief 2010 and now hosts
The Late Late Show with James Corden on CBS
The BBC should always make entertainment, thoughless of it than commercial networks.
But we want the next global entertainment
format to be created in Britain. The licence fee gives
us the freedom to experiment. BBC One gives us
the platform to test those new ideas.
So, we will be working with British independent
producers and setting up our own BBC Studios—at the heart of the BBC—to find the next
success stories.

80

BBC Studios will have the values and quality of theBBC. It will have a mission to inspire audiences athome and around the world with bold British
creativity. It will find and nurture the next generationof British on-screen and back-stage talent. It will
delight in range and specialism, making the full range ofgenres and not just those with the most commercial
appeal. It will ensure the full value of BBC-madecontent is returned to the licence fee payer. We will
set out our detailed plans for BBC Studios later in
September and consult stakeholders.

7.2

UK content aggregation
Drama, entertainment and comedy remain relaxed,lean-back experiences. The internet has only mademarginal changes to the type of drama we consume—
the length of episodes now suit the story, rather thanthe conventions of the fixed TV schedule, but apartfrom that the form has not changed much.
But the internet has already transformed how dramaand other long-form video are distributed, driven inpart by BBC iPlayer. Digital distribution of drama andcomedy has seen the rise of a new group ofcommissioners and distributors. It has encouraged all
the UK broadcasters to think more strategically about
their on-demand offers and the importance ofpremium content.
The BBC wants to explore new potential
opportunities to aggregate UK original content, tohelp audiences and industry alike. The aim would be
simple—to increase the traffic to, and investment in,
UK original content.

81

Our ambition is for a video service open to other UK
content commissioners that gives all partners criticalmass and ensures that deals with global players are
not the only way for UK producers and broadcasters
to reach audiences. At its heart would be a free offer,with BBC content funded from the licence fee andcommercial content through other business models.
We would also aim to make it possible to buy andkeep programmes, as we are doing with BBC Store.
One possible route is to use the iPlayer, leveraging its
brand, technology and reach, but there are otherpossible solutions, any of which we would need to
discuss and agree with partners.
We want to create a platform for Britain’s creativity,
and an even better experience for UK audiences.
These ideas are at a very early stage and we would
want to discuss them with others.

7.3Entertaining the whole UK
While we know that audiences across the UK love andadmire the BBC’s drama, comedy and documentaries,
they also tell us clearly they think we need to do moreto capture the distinctive stories of our four Nations.
So we are setting ourselves a clear creative challenge:
to adapt the BBC to a changing UK. In the coming
years we want to tell new and different stories. We
want to find new storytellers in every part of theUK—people who live and breathe the changing
landscape. And we want to tell these new stories in
new ways and in new places, because technology andmarkets are changing.
We start from a position of strength. In each Nationof the UK 95% of adults consume the BBC eachweek. 68 And in this Charter period there have been
notable successes in terms of BBC performance in the
Nations. For example, increases in BBC TV share in
Wales, Northern Ireland and Scotland means that the
BBC is moving closer to serving all Nations moreequally on TV. 69
The fact that further change may now be required
should not mask this progress.
In Northern Ireland, for example, the contrast
between network and local performance is striking.
While BBC network services there continue tounderperform against the UK average, BBCRadio Ulster and Radio Foyle deliver enormous
weekly reach.70
In Scotland, time spent with BBC services has been
more stable than the UK average.71 However, there isclearly a growing demand for programming that better
serves the distinctive needs of Scotland and reflects
Scottish life.72
In Wales, BBC network services continue to perform
strongly but the provision of local English-language
programming across the BBC and ITV has declined ata faster rate than in any other nation.

We believe that the supply of BBC and commercially
funded programming in each of the Nations needs
addressing.
Firstly, we will improve how we portray and represent
the different Nations of the UK on our pan-UK
network services.
Secondly, we will strengthen the services for each
Nation. We propose to create an interactive digital
service for each of the Nations of the UK. By creating
curated ‘channels’ on our existing digital services—such as iPlayer—we will be able to deliver a uniqueoffer, allowing the BBC to showcase existing content
as well as new digital-first content, from ourselves andfrom a greater range of partners.
But significant new investment in a broader range ofprogramming, such as drama, comedy andentertainment, cannot be delivered within the current
Budget agreement with the Government. As weoutline in the next chapter, funding these ambitions
would require additional income.

Indigenous language services

The BBC is fully committed to broadcasting andproviding services in the UK’s indigenous minority
languages. The programmes and services we currently
provide—through our own services and in
conjunction with our partners—are a vital part of theBBC’s role. We will continue to support and work
closely with our key strategic partners, including S4C,
MG ALBA and NI Screen.
In response to the growing audience challenges facedby these services, we want to work closely with ourpartners to move faster online to reach younger,
digital audiences with content that is relevant to theirlives. We will use—and share—myBBC technologies
to enable more personalised services that can betterreflect differing passions and levels of fluency.

68 Cross-Media Insight Survey by GfK, average weekly reach, 2014: Wales 97%, Northern Ireland 95%, Scotland 95%, UK 97%
69

BARB, 2010/11–2014/15

70

RAJAR, 2014/15

71

 ARB, 4+, Scotland and UK, average weekly BBC time per head, 2010/11–2014/15; RAJAR, 15+, Scotland and UK average, average weekly BBC time perBhead, 2007/08–2014/15

72 Purpose Remit Survey by NatCen Social Research for the BBC Trust, Wales 364, Scotland 359, Northern Ireland 358, England 1,217, autumn 2014

82

7.4

The next radio revolution
90% of the UK listens to radio each week.73 Almost allof that listening is live. Just press a button and you’relistening to one of your favourite stations, which gives
you regular traffic, news, sport and weather updates
as well as top-quality music and speech.
But the way that people listen is changing. There are
hundreds of thousands of stations from around theworld available for free online. New devices are
putting vast amounts of audio content in your pocket.
People still want the simplicity and companionship oflive radio but they also increasingly want theexperience to be more personalised and more in theircontrol, whether at home, on the move, or in the car.
The BBC will meet this need by helping audiences
easily create their own, individual radio channels,
based on their needs, wherever they are, whatevertime of day. Listeners will be able to combine
live and on-demand BBC radio content withmusic playlists and regular updates for news,
sport, travel, weather and other alerts. We will
also make personalised recommendations basedon listeners’ habits and choices.
This means listeners will get access to all theirfavourite audio content in one place, but also discover
new things that suit their tastes and needs, without
having to search through thousands of programmes. It
will support varied schedules that mix speech, music
and news. It will help people discover the enormous
breadth of British creativity and journalism on BBC
Radio, allowing them to listen to local and Nations
news and radio alongside our national stations and theWorld Service. All the BBC Radio that you want, inyour pocket, at home, or on the move.

Schedule
7AM
Chris Evans(Live)
Today (8–8:20)
In Our Time (8:20–8:30)
Charlie Sloth(On Demand)

TED Radio Hour
(On Demand)

ComedyIn Short
Annie Mac interview(On Demand)

1PM
Classical Music

Front Row
(On Demand)
Book of the Week
Steve Lamacq (live)
Eddie Mair
Jamie Cullum(On Demand)

Swipe to switch
to alternative

73

83

RAJAR, 15+, 2014/15

The Infinite
Monkey Cage(On Demand)

11PM

Football Commentary (live)

Book at Bedtime

7.5

A new music discovery service from the BBC
The BBC is the most significant music broadcaster inthe world.
It is our largest genre by volume, with over 40,000
hours of content a year. We have a highly distinctive
commitment to all music, new and old, and tosupporting and showcasing the full breadth of musicalgenres. Our role as the leading independent curator ofmusic is made possible through our employment ofsome of the most trusted guides to music in the world
who are loved and respected by our audiences.
The BBC has supported the UK music industry
from its inception, playing a central role in the healthand vitality of UK music—the UK is one of only
three net exporters of music globally. We are thesingle biggest licensee of music in the UK and thelargest employer of professional musicians. Throughground-breaking initiatives such as BBC Introducing
and Radio 3’s New Generation Artists, we bring newtalent to the mainstream.
But we must adapt if we are to remain relevant toaudiences, and remain a cornerstone of the wider
music industry.
The rapid growth in digital and online access to music
is responsible for significant change in the UK musicindustry and is affecting how audiences use our music
services. We must evolve our music offering so that itserves new audience needs and habits and allows us
to remain a strong partner and contributor to the UK
creative sector.
To that end, we have developed a digital music
proposal with the music industry, which builds on BBC
Music’s Playlister. It would make the 50,000 tracks the
BBC broadcasts every month available to listen online,
for a limited period. Audiences would be able toaccess this music via playlists curated by the BBC, andthey would be able to build their own playlists basedon the music they hear and love on the BBC.
Through this digital music offer, we would reinvent ourrole as a trusted guide, in partnership with ouraudience and with the UK music industry. Together,
the BBC and its audiences would curate music in newways, enabling the discovery of more of all the music
we play across the schedules of our many radio
stations and TV channels.

84

We would make this product a champion for new UK
music, whether that is the latest unsigned talent from
BBC Introducing or a classical performance of newmusic commissioned and broadcast by Radio 3. We
would also use it to increase our support for specialist
genres, independent artists and labels—those whoare less supported by the wider broadcast and digitalmarket but for whom there are enthusiastic audiences.
We would do this by featuring their music prominently
in the playlists we curate, and we would add to therange of broadcast tracks by also offering a set
proportion of music from them which has notpreviously featured on BBC services.
Exclusive and unique live performances would be a big
part of our service, whether it’s a Live Lounge, aperformance from Radio 1’s Big Weekend, or aforgotten gem from our classical archive. Tracks will
also link back to their original broadcast on the BBC,enabling audiences to discover more long-form radio
and television programming.
Our music product would be the only one in themarket which would be fully open and integrated withother digital providers. Users will be able to transfer
playlists between digital music products, and accessthem after BBC availability has expired throughthird-party providers.
We want our digital music offer to benefit audiences
and artists. We are working with the industry todevelop this proposal in a way that achieves that
objective, whether it’s by providing the first audience
for an unsigned or undiscovered artist, or by working
to license the product in a way that benefits artists
fairly. We may also look at ways to deploy our digital
curation skills globally, showcasing the best UK music
to audiences across the world.
This distinctive music discovery product would meanthat the BBC could stay a key catalyst for the UK
music industry, and it would be part of an exciting
digital future for music on the BBC.

Music is at the heart of the BBC, from theirprogrammers and presenters through to theirprogramming and live output, throughout theirdigital and broadcast arenas. I firmly believe the
BBC respects and values music more than any
other broadcaster in the world
David Joseph, Chairman and CEO of Universal Music UK

This will be a Charter of transition.
We don’t know how these innovations will do. We will close those that fail, and expand those that work. In
time, those success stories may mean we no longer need some existing services. Streaming news may replacerolling news. Children may prefer iPlay to scheduled television. The Ideas Service might mean we no longer
need BBC Four.
In an ideal world, we would move with the audience. Although much of the audience is consuming in newways, a large part continue to enjoy radio and television as they always have done—live and through channels.
For the next Charter, we need to serve both audiences.
Other things being equal, we would therefore add these innovations to our portfolio initially, and only phaseout services once they were no longer needed by audiences.
But that depends on funding.

85

PART THREE:FINANCING THE FUTURE

8

Funding tomorrow’s BBC

In this section we begin by outlining the BBC’s financial context.74 We briefly review our efficiency record anddescribe our future plans for further efficiency through our ‘Compete or Compare’ framework. We outline ourplans to increase our commercial income and the investment needs for the proposals in this document.
In Section 8.6 we bring this together to set out how we propose to fund our proposed investments and thechallenges this will create. In total, we will need to deliver annual savings equivalent to around 3.5% of our costbase—a cumulative saving of close to 20% over five years. This will not be easy and will require changes to ourservices.

7487

 nless otherwise stated, data in this chapter is taken from BBC financial analysis, the BBC Annual Report and Accounts 2014/15 and ‘Driving efficiency
Uat the BBC’, November 2014

8.1

The BBC’s financial context
As announced at the time of the last Budget, theGovernment and the BBC have agreed a framework
for licence fee funding for the period from 2017/18.
This includes a number of changes that will have an
impact on the BBC’s revenues.
Under the current Charter, the Government
compensates the BBC for the cost of free television
licences for those over 75. That will be phased out
over three years, from 2018/19. The BBC will be able
to ask for voluntary payments from those over 75 inthis Parliament and to reform the policy from 2020.
In return, the Government will increase the BBC’s
income in three ways:• Modernise the licence fee, to adapt it to cover
PSB VoD services as well as live TV• Phase-out the ‘ring-fenced’ money fromthe licence fee which is being used to support
broadband roll-out• Increase the licence fee in line with inflation (CPI)over the next Charter period, subject to Charter
Review conclusions on the purposes and scope of
the BBC, and the BBC undertaking efficiency
savings that are equivalent to those expected fromother parts of the public sector.
The impact of these changes is uncertain, but webelieve that they will prove overall to be cash neutral
for the BBC. However, this is equivalent to a c10% realterms cut because of the impact of inflation.
In order to absorb inflation and normal levels ofinvestment as well as fund some innovation, the BBC
will continue to deliver savings. But a combination ofservice reprioritisation, commercial growth and policychanges will be needed to balance the books and fundthe ideas set out in this document.
This will inevitably mean changes to our portfolio.

88

In parallel with the Budget agreement, theGovernment’s TV licence fee enforcement review,
undertaken by David Perry QC, concluded thatlicence fee evasion should not be decriminalised andthat the current system is broadly fair, proportionate
and provides good value for both licence fee payers
and taxpayers.
We will implement the review’s recommendations on
how to improve our current enforcement policies andalso discuss the other recommended changes with theGovernment.
Our financial plans take no account of potential
decriminalisation. As our response to the review setout, the move to a civil model would likely result in afinancial impact on licence fee payers of around£200m a year. Were decriminalisation to be
introduced in the absence of any compensating
measures, it would require profound cuts to BBC
content and investment in the creative sector.

8.2

The BBC has transformed its efficiency
Over the past 20 years, the BBC has transformed its efficiency and productivity, delivering more services for less,and is now as efficient as comparable organisations.
In the 1990s the BBC embarked on the most radical marketisation programme in the public sector.
Producer Choice introduced competition for everything from studios to security. The 1990 Broadcasting Act
ensured at least 25% of TV content was made by independent producers, and the BBC introduced a purepurchaser-provider split to implement that. The combined impact was an immediate and significant efficiency
dividend of over 6% a year from 1993 to 2000.
Having harvested the main savings from these structural reforms, the BBC then turned to continuous
improvement programmes, resulting in an average improvement of 4% a year. Our efficiency record issignificantly ahead of the public sector even when the cost of making the changes is taken into account.

Cumulative annual net efficiencies from 2005/06 to 2014/15
40%
35%
30%
25%
20%
15%
10%

BBC
35%

27%

Government
27%

5%
0%

Having taken over responsibility for collecting the licence fee from the Home Office in 1991, the BBC cut thelevel of evasion and the cost of collection by more than half. The combined cost of collection and evasion is now
at around 8% of the licence fee—down from almost 18% in 1991/92. Household growth over the period added
a further c0.7% income a year, or around four million households over 24 years.
We invested that efficiency dividend in innovation. While the BBC shrank relative to the market, its value toaudiences rose. Our share of broadcast revenues fell from around 40% to 25%—yet the BBC’s reach and share
across TV and radio were stable. As a consequence, support from the public rose.
But after the financial crisis in 2008, it was time to freeze the licence fee. Households were struggling, and would
welcome the saving. So, the BBC led the public sector by voluntarily freezing the licence fee in 2011/12 and theGovernment required that to continue until 2016/17. As a result, the licence fee has fallen in real terms whileother household costs have risen sharply.

89Index of prices rises of selected goods and services within categories(2009–2014), nominal prices75
130

120

110
Licence fee
100

90
2009

2010

2011

2012

2013

Transportation

Communication services

Subscription
video services

Other cultural andrecreational services

Physical media

Combined basket

2014

Licence fee

The licence fee also had to pay for £500m of new
obligations a year. That licence fee settlement led to a
new drive to make savings, the Delivering Quality First
programme, to pay for the new obligations and offset
inflationary pressures in the cost base.
By the end of this Charter, we will have saved £1.6bn
in cumulative annual savings, over 40% of the BBC’s
addressable cost base.
The majority of these savings have resulted fromgenuine productivity improvements:• Procurement savings in 2013/14 alone exceeded£90m by re-procuring major contracts andensuring that the BBC pays competitive prices.
BBC procurement has been awarded ‘gold’
standard by the Chartered Institute of Purchasing
and Supply and independent reviews haveconcluded that it is in the top 25% of companies
for effectiveness75

90

M ediatique, Index of cultural inflation, 2015

• Property savings of £75m a year have come fromreducing our building capacity by 35%. This
includes exiting Television Centre (saving £30m
per year) and other White City buildings• We are making technology services savings ofover £90m in the two years from 2015 to 2017
• We implemented pension reform that led the
public sector, including closing the defined benefit
pension scheme to new joiners and limiting how
benefits build up for existing members. At thetime, the reforms reduced the pension scheme’sfunding deficit by around £0.5bn• Our pay restraint, combined with headcountreductions, has delivered over £150m a year in
reduced costs• Since 2009 we have reduced the number of senior
managers and the bill for them by more than athird, saving over £20m a year. Redundancy
payments have been capped.

I have to testify that the BBC have done, in my view, agood job of addressing their cost structure. They havebeen successful with their cost reduction work over a
period of time; they have set targets and they haveachieved them. I am impressed with that and we havereported on it on various occasions and always given
positive comment about it. The criticism I have always
made of it is that it does not tend to have what I call adestination model
Sir Amyas Morse, Comptroller and Auditor General, National Audit Office, at the Culture,
Media and Sport Select Committee, July 2014

The BBC has developed and is now implementing a strategy of ‘Compete or Compare’ to ensure that
there are clear ‘destination models’ for our activities and a culture of continuous improvement.
PwC have compared the BBC’s overheads to industry benchmarks. They found that the BBC compares
well—we are close to the top 25% of regulated industries for expenditure on general overheads, andwell above average compared to media companies.76
In July, we announced we would find a further £50m of productive efficiencies by 2017/18. We will bemerging divisions, cutting down management layers and improving processes. As a result, more than
1,000 posts will be lost.
Following these steps, our overheads will be in the top 25% when compared to benchmarks ofcompanies that operate in regulated industries.

76

91

P wC, BBC Efficiency Review—An update on the BBC’s overheads, July 2015

Overhead ratio, BBC compared to public sector and regulated bodies77
Overhead ratio (Overhead costs / total costs)
16.0%
14.0%
12.0%

Public sector
median = 11.2%

10.0%

Regulated industries
median = 8.8%

8.0%

14.1%

6.0%

Regulated industries
top quartile = 6.9%

10.0%
4.0%

7.6%

7.2%

6.4%

2.0%

e
t il

i an

qu

ar

ed

Bo

tt

om

M

ar
qu
To
p

ea
rh
ve
O
C
BB

t il

16
/17
ds

14
/15
ds
ea
rh
ve
C
BB

O

e

0.0%

The BBC already needs to find additional savings in excess of £150m a year by 2017/18 to address the decline inTV penetration to the end of this licence fee settlement. That decline in TV penetration remains a risk in the
new Charter period, although the modernisation of the licence fee provides some mitigation. As outlined
above, we have announced plans to fund at least £50m of these savings through further productive efficiencies
in support functions and management layers, but inevitably some changes in our services will be needed tobridge this gap.
Delivering both the additional savings required in this Charter period (in excess of £150m a year) as well as the
proposed future efficiencies (productive, scheduling mix and reprioritisation) will require radical reform. Given
the BBC’s track record of delivering efficiency, it will inevitably be harder to deliver new savings in the future.

77	Ibid.

92

8.3

Efficiency is a process, not a destination
Nevertheless, we will continue to improve ourefficiency over the next Charter period.  
Within a broadly cash neutral Budget agreement, theBBC will have to deliver efficiency savings in order tomanage inflation in our existing cost base and fundnormal levels of investment in capital expenditure.
Although the BBC has sought to mitigate the impact
of inflation through, for example, long-term fixedprice contracts, we are, naturally, not immune to the
inflationary pressures affecting both the media
industry and the general economy. In many areas the
BBC operates in a global market where we do notcontrol prices. We are experiencing significant costpressures in a growing number of genres; not justsports rights, but now in areas such as drama, natural
history and digital skills, given the intense global
competition for the best ideas and talent.
The BBC Trust and the BBC asked PwC as part oftheir work on the BBC’s efficiency to look at thepotential future efficiency rate that the BBC could
achieve from purely productive efficiency. PwC
evaluated what other organisations are doing, market
trends, external benchmarks and what opportunities
can be identified from a detailed review of areas of
the cost base.
The PwC work recognises the BBC’s long history ofdelivering efficiency means that the future
opportunities are inevitably more limited than in thepast. They advise that we should aim to achieve
around a 1% annual productive efficiency saving,although even this will require major restructuring andsignificant changes to working practices. We will be
publishing their work in due course.
This will not be enough to fund our existing
inflationary pressures and our on-going capital
expenditure. Changes in the scheduling mix, where wewill aim to have limited audience impact, alongsidecareful management of inflation in our long-term
contracts, will deliver further required efficiencies ofaround 1% a year over the period, in addition to those
identified by PwC.
We remain committed to maximising the amount wespend on content. We will use competition where
possible, and comparison where not. The key driver of‘Compete or Compare’ is to secure the best value forlicence fee payers—ensuring we deliver the best
output for the lowest cost.
Currently around two-thirds of the BBC’s costs areopen to some form of market testing and we will

93

increase that towards 80%. Subject to our proposals
for BBC Studios being accepted, we will remove thein-house guarantees that have protected television
production. There will be a few exceptions, like news
or sport, where an integrated production model isvital for quality.
In radio, we are examining ways to increase theopportunities for independent producers to create
content, opening up competition in all areas where
there are creative or economic benefits. These
proposals, which are subject to Trust approval, could
lead to competition for around 60% of eligible
network radio hours. Independent radio producers
should be able to grow substantially, increasing thesustainability of the sector. BBC in-house radio
production would get a creative stimulus, ensuringthat the quality of ideas and production remains at thehighest possible levels.
In online, we would aim to maximise the volume ofcompetition in editorial output. 60%-70% of online
content spend (i.e. almost all non-news and non-sport
spend) would be open for competition by the end of
the next Charter period. The licence fee has helped
create a world-beating television production sector
and we would like to do the same for online andconnected content. We have only scratched thesurface of how the internet will change the content wemake. We want to work with British creative talent,from existing providers to academics and the public to
explore that potential for audiences and companies.
Where we cannot use competition, we will use
comparison. Where the private sector has relevantbenchmarks, we will use them. We expect to be able
to cover nearly 90% of our cost base through either
direct competition or rigorous comparison andbenchmarking.
This programme will be a systematic approach to
every major item of BBC spending over a period offive years. It will provide the destination model of
efficiency for which the NAO has called, and to which
the Comptroller and Auditor General refers above. It
would represent best practice in the public sector, andcompare well to leaders in the regulated private
sector.
The need to use our productive efficiencies, inflation
mitigations and scheduling mix changes to fundexisting inflationary pressures and on-going refresh of
infrastructure means that any funding for new
investments needs to come from either greatercommercial income, increased licence fee income orservice reprioritisation.

8.4

We will increase our commercial income
Over the past 25 years, the BBC’s commercial
activities have grown from the size of a relatively
small business to that of a global leader. In 1989,
BBC Enterprises turned over the equivalent of£368m in today’s prices, generating £25m in trading
profit. Today BBC Worldwide’s turnover is £1bn
and its headline profits are £139m. It is the biggest
distributor of TV programmes in the world, outside
the US studios.
However, for the past few years, BBC Worldwide has
mainly been run for dividend and contribution, rather
than growth. Without this dividend, we would nothave the BBC’s services we have today. To cope withthe last licence fee settlement, the BBC asked BBC
Worldwide to help fill the gap. It has done thissuccessfully, increasing total returns to the BBC by
6.2% a year, from £168m in 2009/10 to £226m in
2014/15, giving more back to the BBC than everbefore. Within that, BBC Worldwide’s investment in
BBC-commissioned content grew from £71m in
2009/10 to £94m in 2014/15.
Worldwide’s core business is investing in anddistributing BBC programmes, whether made by us orby independent producers. That business has grownrevenues at 10% a year from £215m in 2009/10 to£345m in 2014/15. Investing in new content to fuel oursales and distribution business will be a key priority for
BBC Worldwide over the next five years. Of course, if
we had to cut investment in BBC programmes, thatwould also reduce our commercial return from BBC
Worldwide.
We have built a successful global channels portfolio,
which collectively has grown from revenues of £263m
in 2009/10 to £357m in 2014/15. The most importantelements of our channel portfolio are BBC America,
now a joint venture with AMC Networks, and UKTV,a joint venture with Scripps. UKTV is now the biggest
non-PSB channel bundle in the UK, and has grown its
revenues from £229m in 2010 to £283m in 2014.
Over the next few years, we intend to work with ourpartners to grow our channel portfolio further, taking
advantage of continued demand for BBC programmingand new digital opportunities, particularly in English–
language markets.
To that core activity, we will add two new ventures.
First, we will migrate our consumer business to digital.
The market for physical sales, notably DVDs, isdeclining rapidly, affecting the BBC, like everyone else.

94

We have compensated for some of that decline bysyndicating content to Netflix and Amazon Prime in
the UK and overseas.
In the UK, we will now also sell programmes online,
through BBC Store. This was made possible by a new
agreement with PACT—the trade body forindependent producers—in 2013. We agreed to makeprogrammes available for longer on the iPlayer—up
from seven to 30 days—but then allow consumers to
pay to buy them online. These will now be available
through BBC Store as well as iTunes, Amazon andothers. BBC Worldwide intends to continue toexplore a range of new digital routes to market overthe next period, seeking out new ways to serve
audiences and grow value for content producers.
BBC Worldwide is strongly positioned to grow indigital globally due to the strength of our brand andaudience appreciation for our content: between 2011
and 2014 the BBC’s digital revenues from the US
market grew by 35%, significantly faster than the wider
US digital video market which grew by 22% across all
distributors. We want to push this further.
Second, we will ensure that our commercial ventures
always have a strong pipeline of intellectual property,
the lifeblood of the business. The creation of a
successful BBC Studios, as a wholly owned subsidiaryof the BBC, is essential to this.
Alongside a continuing relationship with the thriving
external UK production sector, we believe this
proposal will help to deliver great content into both
our public services and BBC Worldwide, securing
both our public mission and our ambitions forcommercial growth.
If we can deliver all these initiatives, we can aim toincrease returns to licence fee payers. This will not beeasy—it is very much a stretch case. It includes asignificant cost saving and margin improvement
programme and is dependent on the creative successof BBC Studios and market conditions. We forecast
that the impact of these new initiatives, coupled with
continuing strong returns from the underlying BBC
Worldwide portfolio, would be around £1.2bn incumulative returns to the public service BBC over the
next five years—a more than 15% increase on returns
over the previous five years.   
Put simply, BBC Worldwide is materially importantto the BBC’s overall financial model and its ability tofund content.

8.5

The BBC’s investment needs
To respond to Ofcom’s PSB review, we have identified
three priorities:• Modernising services• Content investment• Devolution and diversity
In this document, we have set out our plans tomodernise our services with proposals like the Ideas
Service, iPlay and Newstream, responsive radio andturning iPlayer into a platform. These are essential
investments that the audience would expect from theBBC. Without them, the BBC could find itself in atechnological backwater. It would be as if the BBC oftoday did not offer digital radio, television or the
iPlayer. We have to get on with these investments assoon as possible to remain relevant to audiences.
We must innovate. The new proposals in thisdocument will not be the only ideas we have in thenext Charter. In particular, meeting the needs ofyoung audiences across the next Charter will needmore than the new ideas we have suggested here. It
will require the whole of the BBC’s portfolio ofservices to think differently and to shift investment
within and between services.
Nor will all our innovation be new services of thiskind—BBC services are improving little by little, all thetime. That, too, will require investment.

95

Within our financial agreement, we will do as much as
we can to meet the needs for content investment,
diversity and devolution identified by Ofcom. We
expect to be able to fund more drama for young
audiences, content for the Ideas Service, and to invest
in the Nations, including funding the initiatives above
such as digital news, education and entertainment
services for each Nation. We will protect funding for
the Nations, ensuring they are cut less than otherareas, and make sure that investment works harder,
for instance by portraying the whole country and all of
its Nations better, or by working with partners acrossthe whole of the UK.
In total, we estimate that this will cost around £150m
a year by 2021/22.
However, with our spending on services going down
overall in real terms, we would not be able to reverse
the decline in UK original content spend, invest in theWorld Service, or fund a net increase in spending in
the Nations.
However, as we explain later, a shift to a household
fee could release more investment. Given the newformal role given to the Nations’ Governments in
Charter Review, we intend to consult with them andstakeholders around the country, to specify and cost
our Nations proposals and any additional funding
required.

8.6

Funding our proposed investments
We will aim to fund the £150m for new investments within our current financial envelope. This will befunded by a mixture of reprioritisation, changes to services, as well as commercial income and policy changes.
None is straightforward.
The chart below illustrates the potential impact by 2021/22 of the recent Budget agreement, the existingpressures on the BBC due to falling TV penetration, as well as our proposed mitigations.

BBC financial position by 2021/22, including mitigations from 2017/18(Rounded annualised amounts)(£1.4bn)£0

Transfer of over 75(-£700m)
Inflation over 5 years @ 2%(-£400m)

Budget agreement,
new investment andexisting downsides

17/18 LF shortfall
from TVP (-£150m+)
New investments(-£150m)

Reprioritisation and savingsin 17/18 (+£150m)

Current mitigationsfor 17/18

CPI on LF income(+£350m)
Broadband ring-fence(+£150m)

Licence fee upsides

LF modernisation(+£100m)
Inflation mitigation(+£100m)
Productive efficiency(+£200m)

Planned mitigations
by 21/22

Scheduling mix efficiency(+£100m)

Reprioritisation, 075s payments,
commercial income by 21/22 (£250m+)

96

Reprioritisation orother income by 21/22

There is more downside risk than upside potential.
The costs of the over 75s are relatively certain but
the mitigations are less so. Inflation will impact our
cost base, but delivering productive and schedule
efficiencies, as well as increasing commercial income,is difficult. Even with mitigations and efficiencies,changes to our services will be needed.
The recent Budget agreement will be broadly cash
flat for the BBC over the five-year period. As the
Chancellor said in his Budget speech, “The BBC has
agreed to take on responsibility for funding free TV
licences for the over 75s and in return we were able
to give our valued public broadcaster a sustainable
income for the long term.’’ The Government decided
to transfer the cost of the over 75s TV licence fee
concession to the BBC on a phased basis, starting in
2018/19 with the full liability met by the BBC from2020/21. We estimate this will reduce the BBC’s
licence fee income by around £700m a year.  
The new arrangements include a commitment tomodernise the licence fee, to adapt it to cover PSB
VoD as well as live TV. This will make the licence fee
model sustainable, fairer and safeguard the funding
available for our content and services over the period.
We estimate that the financial benefit will be around£100m a year against our baseline. There is anagreement to phase-out the ‘ring-fenced’ money fromthe licence fee—£150m a year—which is being used
to support broadband roll-out, and a commitment toincrease the licence fee in line with CPI over the nextCharter period. Linking the licence fee to CPI would
deliver income of around £350m a year, at the Bankof England’s target inflation rate of 2%.
Forecasting the impact of these changes over aseven-year period is difficult. We do not knowwhat the precise impact of licence fee modernisation
will be, or how this will interact with on-going
declines in TV penetration. The percentage ofover-75 households that will be willing to make a
voluntary payment is also unknown. Finally, therate of household growth, which increases thenumber of licence fee payers, will depend on
broader economic trends.
Together, we believe that interventions in the
Budget agreement will deliver licence fee incomethat is broadly cash flat over the period to theBBC, although there will be year-on-year ups anddowns. However, there is significant uncertainty
to this forecast, and more risks on the downside
than opportunities on the upside.

97

We also need to find savings of at least £150m in thecurrent licence fee period to cover predicted shortfalls
in income from falling television penetration in thisCharter period.
This combination of inflationary pressures and theexisting need for savings means that the BBC faces a
total challenge in excess of £550m a year by 2021/22,
before we begin to find money for new investments.  
As we enter the new Charter period, and as outlined
in 8.3, the BBC will be looking to find savings fromproductivity and changes to the scheduling mix, alongwith secured mitigations against inflation, that will fundthe on-going inflation in our existing cost base as wellas our on-going capital investment programme. We
have set a stretch target for these savings which totals£400m a year by 2021/22, including those fromproductive efficiencies and scheduling mix changes.  
Alongside this, we aim to increase our commercial
income over the period, but this cannot be sufficient
to pay for the new investment. The proposed newinvestments are a further stretch target of around£150m a year (which excludes any extra money for
the World Service or potential major new investmentsin the Nations). We will therefore need to look atchanges to services, as well as investigating all
opportunities to increase commercial returns andmake policy changes to maximise licence fee income.
The BBC will be able to ask for voluntary paymentsfrom those over 75 in this Parliament and to reformthe policy from 2020. We will give those eligible
households an opportunity to pay voluntarily for a TV
licence and so contribute to the cost of the BBC’s
services. We will also consider how to achieve fairness
between the generations once the BBC takes
responsibility for the policy from 2020. Young people
currently receive less from the BBC, so we will needto consider how far they can be expected to subsidise
free TV licences for those over 75, and the trade-off
with services for all ages.
In summary, the BBC faces a very tough financial
challenge. Before the new Charter period begins, wemust find at least £150m to mitigate falling TV
penetration. Over the following five years we will haveto absorb inflation at 2% a year—the equivalent of£400m a year by 2021/22. This inflation estimate isbased on applying CPI to our cost base and does notinclude any provision for super-inflation in areas likedrama production, sports rights and talent costs,
which we intend to manage through schedulingchanges and other mitigations. And we can not standstill. Our proposed investment in new services will
require an additional £150m.
This means a total saving of £700m a year by 2021/22.
This £700m represents close to 20% of our expected
2016/17 spend, or an average annual savings target ofaround 3.5% a year over the next five years. This is achallenge of the magnitude of our current savings
programme, but without the same scope for one-offsavings. We believe that we can deliver this within the
Budget agreement, although it will require many toughchoices. We will inevitably have to either close or
reduce some services.
We will need the flexibility to respond and change
services as audiences change. It is too early to be
specific about the service changes that we will need tomake and we will now undertake a review process toconsider the options. However, as the BBC Three
proposals demonstrate, there will inevitably be amove from linear to on-demand services.
Although some of the £150m in new investment will
be on new UK original content, in the context of alicence fee falling in real terms it cannot reverse thedecline in content investment. But there is an optionthat might.
The BBC will not be seeking to re-open the July
Budget agreement. Certainty goes both ways—just as
the Government will not reopen it unless it decides tochange fundamentally the scope and purpose of theBBC, we have agreed to a financial envelope and will
stick to this agreement. All the proposals in thisdocument depend on this.
However, there is a way in which the Government
could still reverse the decline in UK original content
investment, invest in the creative industries and meetthe needs of Nations audiences better.
The Government has set out a medium-term funding
option in the Green Paper to modernise the licencefee by levying it on all households. We believe thiswould generate additional revenues. That is a
decision for Government, and we will now discusswith them whether that is a justified investment in
the creative industries.

Investment in the creative industries pays for itself.
We asked PwC to model the impact on the creative
sector and the whole UK economy of licence fee
investment. Using prudent assumptions, for every £1
increase in licence fee revenue, the BBC would
generate about 60p of extra economic value.
PwC’s analysis78 suggests a 15% nominal increase overa five-year period in the BBC’s licence fee income
would likely boost the creative sector GVA by £435m,
total economy GVA by £319m and create 16,200
extra jobs in 2021/22, compared to the counterfactual
where the BBC’s licence fee revenues remained
unchanged.
PwC have demonstrated that this effect works inreverse, too. If the BBC’s income reduced by, say, 25%
over a five-year period, then the PwC analysis
suggests that GDP would be £630m lower in 2021/22
than it otherwise would have been with no change inlicence fee revenues. Less BBC spend means a smaller
creative industry.
This is because the licence fee channels resources into
one of the most productive sectors of the UK
economy, the creative industries. Far from increasing
the deficit, this is an area where public investment
reduces it.
The BBC is in the midst of a radical programme todeliver greater efficiency. The ‘Compete or Compare’framework will ensure that the overwhelming majorityof our spend is reviewed and demonstrably
benchmarked or sourced competitively. We havea continuing commitment to demonstrate value formoney in what we do and to continue to focus
on what matters most to audiences—content andservices. The BBC is a reforming organisation
with every incentive to reduce waste and maximise
money for content.
But delivering savings of around 3.5% a year will
require hard choices in commissioning, scheduling,radical changes in working practices as well as shifts ofspend between services and between different typesof content. The Budget agreement, although providing
long-term clarity, is a c10% cut in real terms. It also
contains risks and uncertainties, especially aroundincome from licence fee modernisation. There will bedifficult choices to come, and the BBC will needflexibility to make these choices.

78	PwC, The impact of a change in the BBC’s licence fee revenue, August 201598

9

An open, more
distinctive BBC

We look forward to hearing what audiences
and partners think of these proposals.
They aim to create an open, more distinctive BBC.
We will find close to 20% savings. As much ofthat as possible will come from efficiency andcommercial growth, but it will inevitably also
require service reductions or closures.
We are going to save more than required by
the Budget agreement, to innovate and makeprogrammes for the whole country.

• Opening up the BBC iPlayer to showcase
content from others• New versions of our education, news andentertainment services in the Nations, as thestart of our consultation about how to reflect
deepening devolution• Strengthening the World Service in parts of
the world where there is a democratic deficit in
impartial news
• A transition from rolling news to streaming news,
with BBC Newstream, bringing the expertiseof our journalism into the palm of your hand

We propose:• The offer of a new partnership with local
newspapers to underpin democratic reporting• A new children’s service—iPlay—creating a single
front-door for children to the wealth of the whole
BBC and our trusted partners beyond—giving
more content to children that matures with them,across more platforms, in a safe and trusted way• A partnership to create an Ideas Service toprovide the public with the best of British ideas
and culture• Finding digital ways to support music discovery tohelp audiences find new music and the best fromthe archive• Investment in original British drama and comedy toenrich content for UK viewers and boost thecreative industries. This will be the backbone of amore distinctive approach across all of the BBC’s
services, from BBC One to online.

• Responsive radio to give audiences a personalised
schedule of programmes

We will reform the BBC. Over the next few months, we will transform our structure,commissioning and budget.
We are stewards of the BBC. We will modernise the BBC to preserve what is best aboutpublic service broadcasting, and hand on a BBC that is bold, British and creative.
A better BBC, for everyone.

99© BBC 2015