PART TWO: BBC Annual Report and Accounts 2006/2007

PART TWO:

The BBC is required under the terms of its Charter toproduce an Annual Report and Accounts in two parts.
The BBC Trust prepares the first part, the BBC Executive
prepares the second and each reflects the different roles
and responsibilities of the two bodies.Together the twoparts make up the BBC’s review and assessment of its year.

Annual Report andAccounts 2006/2007
The BBC Executive’s review and assessment

Contents

01
02
24
26

Director-General’s introduction
About the BBC
Executive Board
The BBC at a glance

28
32
38
44
52
53

Review of services
Future Media & Technology
VisionAudio & Music
Journalism
Commercial activities
Engaging with the audience

Performance
54 Statements of Programme
Policy commitments 2006/2007
64 Broadcasting facts and figures
76 Managing responsibly
Finance82 Financial overview
86 Governance and financial
statements
147 Getting in touch with the BBC
148 Other information

This is what we do...

British Broadcasting Corporation
Broadcasting House
London W1A 1AA
bbc.co.uk© BBC 2007

Welcome

As I write this, our friend and colleague
Alan Johnston remains missing in Gaza.
Perhaps by the time you read it, thesituation will have changed. For now though,Alan’s family and those who know him at
the BBC are trapped in a suspended stateof anxiety and uncertainty.
In photos and on camera – unsurprisingly
given the stories he covers – Alan has
a serious look, the very picture of aformidable BBC foreign correspondent.
Off camera he has a different side – fiercely
intelligent and engaged in the debate, butwith a mischievous twinkle in his eye.
More than anything else the BBC is built
on the talent, courage and integrity of themen and women who work for it.These
qualities matter in everything we do, but
nowhere more than in our journalism. In
Iraq, Afghanistan, Gaza and in many othercountries and regions, BBC journalists
remain when other news organisations
have left. They know that agency copy
and pictures – no matter how good – areno substitute for the immediacy, integrity,
accuracy and human empathy of eye­witness reportage.
We take the safety of our journalists andeveryone else who works for and with
the BBC, incredibly seriously.We also haveto recognise there are assignments andvital stories to report that can never bemade risk-free.
It has been a momentous year for
the BBC in other ways – a strong
new Charter, a challenging licence fee
settlement and Creative Future, our
vision of what the BBC could become
if it achieves its full creative potential
in the new digital environment.

With The Street, Life On Mars and How
Do You Solve A Problem Like Maria? it was afine year for TV drama and entertainment,
while Planet Earth combined extraordinary
technical innovation with awe-inspiring
artistry.Two years ago, perception ofquality was a significant concern for the
BBC Governors; in 2006/2007, manyof the key measures in this area went up.
BBC Radio proved it’s possible to growaudiences while strengthening a reputation
for creativity and excellence. Our online
and interactive services broke one record
after another.
But there were bumps along the way as
well.The editorial mistakes on Blue Peterand Saturday Kitchen were so serious
because, despite being unintentional, theywent right to the heart of our contract
with our audiences – a contract basedon trust.We are taking every step we canto minimise the chances of such mistakes
happening again.
Our response to the telephonycontroversy was part of a broader effort
by the BBC to become more open andmore willing to learn from its mistakes.
The new BBC Trust has begun a broad andsearching debate about the impartiality,
quality and distinctiveness of the BBC’s
services. It is a debate we welcome.
We believe that a more open BBC will
be a stronger BBC and one which serves
the public better.
Behind the scenes, BBC Worldwide
delivered triple the profits of three
years ago back to the public services.
The transformation of the BBC
gathered pace, releasing money andresources for new investment but
without audiences reporting any lossof quality in existing services.

Our present task is to develop detailedplans for the future which we can place
before the BBC Trust. Some – like the BBC
iPlayer and high definition television – will
rely on new digital technologies. But weknow that success for the BBC ultimately
depends not on technology but on thecreativity and professionalism of ourpeople. As the public have always known,
they are our most precious resource.
Which is why the story of Alan Johnston
matters so much.

Mark Thompson
Director-General
12 June 2007

Aboutthe BBCMonthly licence fee breakdown
The purpose of the BBC is to enrichpeople’s lives with great programmes
and services that inform, educate
and entertain. Our vision is to be themost creative, trusted organisationin the world.
Everyone has a unique relationshipwith the BBC and our audience wants
us to provide them with momentsof delight, inspiration, excitement andentertainment.They also expect us
to be factual, honest and act withintegrity. Our aspiration is not only
to create exceptional content andservices but to offer everyone anexperience of the BBC that truly
makes a difference to their lives.
The BBC is constitutionally establishedby a ten-year Royal Charter with anaccompanying agreement which setsout our obligations to licence fee
payers in detail.After an extensive
period of consultation and negotiation
our Charter was renewed this year.
Our aim is to evolve into a BBC thatcan provide the greatest programmes
and services for our audience in thedigital age and deliver the maximum
amount of value for their licence fee.

This is what we do...

49p

£7.54

Over 240 websites on
bbc.co.uk, supporting thefull breadth of output

Eight national TV channels
including BBC One and
BBC Two plus regional
programming

£1.17

75p

Ten national radio stations,broadcasting a range of music,
news and sport

Forty local radio stations,from Radio nan Gàidheal
to Radio Jersey£1.01

The total cost of a TV licenceper month per household

Cost of broadcasting all TV
and radio output, plus cost ofcollecting the TV licence fromover 25 million homes= £10.96

Going to
the ends ofthe earth…

How we spent your £10.96
monthly licence fee
49p helped pay for the BBC’s online
services, ranging from innovative anddistinctive content such as GCSE Bitesize,
to services like interactive live sports
streams that reflect and extend the rangeof the BBC's programmes.
£7.54 helped pay for over 4,800 hours ofprogrammes each month across eight TV
channels, ranging from high quality drama(eg Life on Mars, Jane Eyre, Torchwood) tofactual output (eg Planet Earth, The Powerof Art) and children’s programmes (eg Charlieand Lola, Jackanory).
£1.17 helped pay for over 6,500 hoursof radio programmes each month on ten
national radio stations, spanning a range ofdistinctive speech and music-based output
from the Today programme on Radio 4 to
Wake Up to Wogan on Radio 2. It also goes
towards events such as the Proms season
and the Radio 1 Big Weekend.
75p each month goes towards 40 local
radio stations, including programming in
Welsh and Gaelic, helping to connect
people to their communities.
£1.01 of your licence fee each month isspent on getting the programmes to you
through the network of analogue and digitaltransmitters across the UK, and on collecting
TV licence fees.
Across TV, radio, and online your licence fee
also goes towards BBC News coverage ofmajor events both in the UK and overseas, andcurrent affairs (eg Panorama, Whistleblower).

A year of change
The new Charter is much clearer in defining
just what the licence fee payer should expect
of us as we move to the wholly-digital,
on-demand world. We have to demonstrate
more clearly and transparently that our plans
for the future will deliver real public benefit.
And so the evolution of the BBC has begun.
Our Creative Future initiative has provided
the editorial blueprint which will ensure we
strive to be more creative in our content,
programmes and services. We need to fully
embrace the opportunities of digital, as with
the iPlayer, which will make our broadcast
content available to licence fee payers when
they want it. We have restructured, aiming
to be a more simple organisation, with fewer,
more coherent multimedia output divisions,and with slimmer central services. And
we must be more open to audiences
and to partners such as the independent
production sector, who now have more
opportunities than ever before to contribute
ideas and content through our Window ofCreative Competition initiative.
This evolution is taking place against thebackground of a licence fee settlement whichis considerably less than we had asked for,presenting real challenges and hard decisions
ahead. It calls for further evolution andredefinition of our priorities, and continually
inventive thinking about our services, ourorganisation, how we can make the money
go further and how, ultimately, we truly
deliver lasting value to our audiences andto the nation.
The BBC’s Public Purposes
The new Charter and Agreement set out six
Public Purposes for the BBC which underpin
everything we do.
Sustaining citizenship and civil society:maintaining and growing our reputation
as the standard-setter in independent, highquality journalism and encouraging debate
amongst a wide audience about news,
current affairs and other topical issues.

It also involves building a greater
understanding of UK parliamentary
processes and political institutions
and helping people to make full useof information technologies.
Promoting education and learning:enabling people to learn about manydifferent topics, passions and interests inways they will find engaging, entertaining
and challenging, and promoting andsupporting formal educational goals
for children, teenagers and adults.
Stimulating creativity and cultural
excellence: maintaining a world-class
reputation for creative and innovative
content that breaks new ground and sets
trends whilst at the same time supports
the creative economy by engaging anddeveloping the very best talent.
Representing the UK, its nations, regions
and communities: portraying andcelebrating the rich range of cultures andcommunities across the UK at national,
regional and local level across therange of our output; creating sharedexperiences from great state occasions,
important national sports events andgreat entertainment that draw large
and diverse audiences.
Bringing the UK to the world andthe world to the UK: sustaining andgrowing the BBC’s reputation as themost respected voice in international
broadcasting and to inform conversationand global debate on significant
international issues as well as bringing
international film, music, arts and othercreative work to UK audiences.
Taking a leading role in the switchover
to digital television: promoting and helping
to deliver the benefit of emerging
communications technologies and services.
On the following pages you will find ten
stories about the BBC this year, many ofwhich demonstrate how we are fulfillingthese Public Purposes.

Going to
the ends ofthe earth…

How we spent your £10.96
monthly licence fee
49p helped pay for the BBC’s online
services, ranging from innovative anddistinctive content such as GCSE Bitesize,
to services like interactive live sports
streams that reflect and extend the rangeof the BBC's programmes.
£7.54 helped pay for over 4,800 hours ofprogrammes each month across eight TV
channels, ranging from high quality drama(eg Life on Mars, Jane Eyre, Torchwood) tofactual output (eg Planet Earth, The Powerof Art) and children’s programmes (eg Charlieand Lola, Jackanory).
£1.17 helped pay for over 6,500 hoursof radio programmes each month on ten
national radio stations, spanning a range ofdistinctive speech and music-based output
from the Today programme on Radio 4 to
Wake Up to Wogan on Radio 2. It also goes
towards events such as the Proms season
and the Radio 1 Big Weekend.
75p each month goes towards 40 local
radio stations, including programming in
Welsh and Gaelic, helping to connect
people to their communities.
£1.01 of your licence fee each month isspent on getting the programmes to you
through the network of analogue and digitaltransmitters across the UK, and on collecting
TV licence fees.
Across TV, radio, and online your licence fee
also goes towards BBC News coverage ofmajor events both in the UK and overseas, andcurrent affairs (eg Panorama, Whistleblower).

A year of change
The new Charter is much clearer in defining
just what the licence fee payer should expect
of us as we move to the wholly-digital,
on-demand world. We have to demonstrate
more clearly and transparently that our plans
for the future will deliver real public benefit.
And so the evolution of the BBC has begun.
Our Creative Future initiative has provided
the editorial blueprint which will ensure we
strive to be more creative in our content,
programmes and services. We need to fully
embrace the opportunities of digital, as with
the iPlayer, which will make our broadcast
content available to licence fee payers when
they want it. We have restructured, aiming
to be a more simple organisation, with fewer,
more coherent multimedia output divisions,and with slimmer central services. And
we must be more open to audiences
and to partners such as the independent
production sector, who now have more
opportunities than ever before to contribute
ideas and content through our Window ofCreative Competition initiative.
This evolution is taking place against thebackground of a licence fee settlement whichis considerably less than we had asked for,presenting real challenges and hard decisions
ahead. It calls for further evolution andredefinition of our priorities, and continually
inventive thinking about our services, ourorganisation, how we can make the money
go further and how, ultimately, we truly
deliver lasting value to our audiences andto the nation.
The BBC’s Public Purposes
The new Charter and Agreement set out six
Public Purposes for the BBC which underpin
everything we do.
Sustaining citizenship and civil society:maintaining and growing our reputation
as the standard-setter in independent, highquality journalism and encouraging debate
amongst a wide audience about news,
current affairs and other topical issues.

It also involves building a greater
understanding of UK parliamentary
processes and political institutions
and helping people to make full useof information technologies.
Promoting education and learning:enabling people to learn about manydifferent topics, passions and interests inways they will find engaging, entertaining
and challenging, and promoting andsupporting formal educational goals
for children, teenagers and adults.
Stimulating creativity and cultural
excellence: maintaining a world-class
reputation for creative and innovative
content that breaks new ground and sets
trends whilst at the same time supports
the creative economy by engaging anddeveloping the very best talent.
Representing the UK, its nations, regions
and communities: portraying andcelebrating the rich range of cultures andcommunities across the UK at national,
regional and local level across therange of our output; creating sharedexperiences from great state occasions,
important national sports events andgreat entertainment that draw large
and diverse audiences.
Bringing the UK to the world andthe world to the UK: sustaining andgrowing the BBC’s reputation as themost respected voice in international
broadcasting and to inform conversationand global debate on significant
international issues as well as bringing
international film, music, arts and othercreative work to UK audiences.
Taking a leading role in the switchover
to digital television: promoting and helping
to deliver the benefit of emerging
communications technologies and services.
On the following pages you will find ten
stories about the BBC this year, many ofwhich demonstrate how we are fulfillingthese Public Purposes.

Inspiring
communities
in the nations
and regions

Around the UK national and local
radio gives people the chance toinspire their communities. The Stephen
Nolan Show in Belfast gave a voice
to a terminally ill mother. Her local
health authority refused to funda home care programme and waspressing her to give up her newborn
child for fostering.While her healthy
baby remained in hospital, she
contacted the show in desperation.
Her story caused a public outcry.
Due to the sheer size and emotionof the public response, the healthauthority changed tack and the baby
was returned home.
Elsewhere, the problem of abusive
neighbours was highlighted in
Merseyside, a council was persuaded
to re-think its plans to close down ahome for adults with severe learning
difficulties in Scotland and a schoolcommunity was motivated to tackle
bullying in Shropshire. In Devon,
presenter Gordon Sparks’ frank
discussion about his testicularcancer resulted in local doctors
reporting an increase in patientsseeking testicular cancer tests after
listening to his story.

This is what we do...

…to create
programmes
everyonetalks about

Five years in the making, Planet Earthbroke new boundaries by using
emotive storytelling techniques togive the audience a truly cinematic
experience. Shot entirely in highdefinition and using a heligimble,
an aerial photography system ona helicopter, the programme tookviewers to some extraordinary
places.The crew travelled to
376 remote locations to give an
unparalleled view of the world’s
landscapes and incredible footageof creatures never seen before on
television. Each episode offered an
entirely different proposition; fromthe greatest rivers to the mightiest
mountains, the team sought out themost iconic wildlife to tell the storyof our planet.
Twelve million people watched Planet
Earth and it received the highest
audience appreciation score of any
British programme on TV this year.
The series has been sold to 95
countries and territories and the
DVD was the highest ever TV DVD
pre-order on Amazon. It has alreadygenerated over £22million of grossrevenue and significant profit which,through BBC Worldwide, helps tofund future programme-making.

This is what we do...

…to create
programmes
everyonetalks about

Five years in the making, Planet Earthbroke new boundaries by using
emotive storytelling techniques togive the audience a truly cinematic
experience. Shot entirely in highdefinition and using a heligimble,
an aerial photography system ona helicopter, the programme tookviewers to some extraordinary
places.The crew travelled to
376 remote locations to give an
unparalleled view of the world’s
landscapes and incredible footageof creatures never seen before on
television. Each episode offered an
entirely different proposition; fromthe greatest rivers to the mightiest
mountains, the team sought out themost iconic wildlife to tell the storyof our planet.
Twelve million people watched Planet
Earth and it received the highest
audience appreciation score of any
British programme on TV this year.
The series has been sold to 95
countries and territories and the
DVD was the highest ever TV DVD
pre-order on Amazon. It has alreadygenerated over £22million of grossrevenue and significant profit which,through BBC Worldwide, helps tofund future programme-making.

This is what we do...

Inspiring
communities
in the nations
and regions

Around the UK national and local
radio gives people the chance toinspire their communities. The Stephen
Nolan Show in Belfast gave a voice
to a terminally ill mother. Her local
health authority refused to funda home care programme and waspressing her to give up her newborn
child for fostering.While her healthy
baby remained in hospital, she
contacted the show in desperation.
Her story caused a public outcry.
Due to the sheer size and emotionof the public response, the healthauthority changed tack and the baby
was returned home.
Elsewhere, the problem of abusive
neighbours was highlighted in
Merseyside, a council was persuaded
to re-think its plans to close down ahome for adults with severe learning
difficulties in Scotland and a schoolcommunity was motivated to tackle
bullying in Shropshire. In Devon,
presenter Gordon Sparks’ frank
discussion about his testicularcancer resulted in local doctors
reporting an increase in patientsseeking testicular cancer tests after
listening to his story.

This is what we do...

Using phonelines in our
programmesAudiences increasingly want toparticipate in our programmes.
Most of the time it works very well.
Connie Fisher was selected by theaudience as winner of How Do You
Solve A Problem Like Maria? And
12 million people voted for theirfavourites on Strictly Come Dancing,raising £1.4million for Children
in Need.
But occasionally it goes wrong.
We didn’t always make it obvious tocallers to Saturday Kitchen that some
programmes were pre-recorded andwe were wrongly accused of cheating
the public.We accepted the language
used was not clear enough and took
immediate steps to ensure future
programmes are live.Then Blue Peterwas found to have run an unfair
competition.When there was atechnical failure retrieving phoneline information, a child in the studio
was asked to phone and give ananswer on air.The child was awarded
the prize.This was a serious errorof judgement and we broadcast an
apology.We have since undertaken
a comprehensive review of the useof phone lines in our programmes.

This is what we do...

Bringing
the worldto the UK

The BBC’s global network ofcorrespondents and bureaux means
we have an unrivalled ability todeliver independent and impartial
journalism from wherever in theworld there’s a big story.
Our biggest story has been Iraq,
where we are the only European
broadcaster to maintain a permanent
presence in the face of considerable
dangers and difficulties.World Editor
John Simpson was the only British
journalist who covered the trialof Saddam Hussein from start tofinish and was there to witness his
sentencing to death.The subsequent
coverage of his hanging caused us tonavigate various editorial dilemmas
about what pictures we should or
shouldn’t show. During the year the
Today programme and the Ten O’ClockNews sent presenters John Humphrysand Huw Edwards to report firsthand on life on the frontline. Huw
Edwards was there for the fourthanniversary of the onset of theconflict, when we had a week ofspecial coverage exploring aspectsof daily life throughout the country.

This is what we do...

Iraq

Delighting
sports fanswith newtechnology

Audiences on bbc.co.uk rose from
12.9 million to 15.6 million regularmonthly users in the last year andBBCi, our interactive ‘red button’service for digital viewers, currently
has an extraordinary annual growthrate of over 30%.
One of the most popular online
and interactive areas is sport, andnowhere was this more evident
than during the 2006 Ashes
series. Test Match Special’s (TMS)
world-renowned commentators
provided live commentary from
Australia through the night online
and on interactive TV, as well as
on radio. At the close of play every
morning, a TMS podcast was available
to download and quickly became
established in the overall top five
chart on iTunes. Fans could also
subscribe to the Ashes Alarm Clock –an SMS message that woke themwith the latest scores. During the
day ten-minute video highlights werestreamed – offering non-Sky Sports
subscribers the first chance to watch
the action.The TMS blog gave cricket
fans a platform to discuss the action– with 3.5 million page impressions
in December.

This is what we do...

Givingchildren apowerful
voice

Newsround broke new ground thisyear with a pioneering investigation
into child poverty in the UK:
The Wrong Trainers told the stories
of six children, using animation
and a narrative of their own voices.
Dillon (right) didn’t have anyone tolook after him, lived in squalor andwas hungry, with mould on his feet.
The Wrong Trainers gave him thechance to be heard and showed kids
and adults alike how they can effectchange.The programme was later
used for a brainstorm on childpoverty hosted by the Chancellorof the Exchequer and went on to
win a Royal Television Society award.
The programme can still be viewed
on the CBBC website.
In response to the overwhelming
interest on the CBBC website
during the 2005 London bombings,
That Summer Day was commissioned
to re-tell the day’s events froma child’s perspective. A big hit for
the whole family was Evacuation,
which used adult reality formats
and techniques to help children
experience what it would havebeen like to be an evacuee in
the Second World War.

This is what we do...

Creating
drama
throughout
the UKThe high octane sci-fi thriller
Torchwood follows a team of modern
day investigators as they use futuristic
technology to solve alien and human
mysteries.The first two episodes
were watched by 2.6 million viewers,
the highest ever audience (so far)for a BBC Three programme.
Created by award-winning writer
Russell T Davies, with Chris Chibnall
as co-producer and lead writer,
Torchwood is both set and madein Cardiff.
Two of our most loved dramas,
Life on Mars (made by independent
production company, Kudos) andDoctor Who, also came out of ourworld-class production centre
in Wales. This is part of ourcommitment to producing
programming throughout the UK.
Scotland brought us Sea of Souls,
now in its third series, and Waterloo
Road.And we make great drama in
Northern Ireland too. New for thisyear were Lilies, Rough Diamond and
The Amazing Mrs Pritchard. Murphy’sLaw, with James Nesbitt, in thetitle role, returned in 2007 fora fifth series.

This is what we do...

Tacklingthe issues
that makeyou think

In The Secret Life of the Manic
Depressive on BBC Two, Stephen Fry
took a frank and honest look at his
own and other people’s experiencesof living with bipolar disorder.
He gave a glimpse of what it islike to live with the condition andtalked openly about his own suicide
attempts. Surprisingly, he said that
if he was offered the chance topress a magic button to rid himselfof the disease he wouldn’t take it.
Also on BBC Two, the Rain in My
Heart documentary-maker Paul
Watson took us on a harrowing
journey following four alcoholics into
the depths of their despair.Two ofthem didn’t make it back out again.
Both programmes were supportedby the BBC Action Line – a hugevolume of calls came from people
who had never spoken about theirproblem.The same was true after
programmes dealing with rape, debt
and gambling. Many callers told us
the programmes and the Action Line
have made a real difference totheir lives.

This is what we do...

“I went into my garage, sealed the door with a duvet I ’ dbrought and got into my car. I sat there for at least,
I think, two hours in the car, my hands on the ignition key.” ”
Stephen Fry“ I get really depressed and didn’ t realise there was help.
I’m sure Stephen Fry has helped thousands with the programme.”
Viewer calling BBC Action LineSharing
breakfastwith ourlisteners

At around 8am on an average
weekday more than 11 million UK
adults are tuned into a BBC Radiostation.That’s 62% of all adults
listening to the radio and morethan twice as many as are watching
any television on any channel atthat time.
Nearly 8 million people choose
to wake up to Wogan on Radio 2,
making Terry’s show the mostlistened to breakfast show in Britain.
Chris Moyles on Radio 1 is hardon his heels with an audience every
week that has just topped 7 million –that’s three-quarters of a million
more than at the same time last year.
The Today programme on Radio 4,
winner of a Sony Gold award, added
listeners this year too.
But it’s not all about the three showswith the largest audiences.Whether
it’s Breakfast on Five Live, Sonia Deolon the Asian Network, Good Morning
Scotland on BBC Radio Scotland or
any of our other national or local
stations, there is something on ourbreakfast menu for everyone.

This is what we do...

Investingin ourpresenters

Controversy erupted last year
when the alleged salaries of top
BBC presenters in TV and radio
were leaked to newspapers. Manyof the figures quoted were totally
inaccurate. Some commentators
suggested we were overpaying ourstars and misusing the licence fee
to poach talent from competitors.
Others in commercial broadcasting
accused us of increasing salaries anddisrupting the market.We responded
that the market for talent was driven
by the commercial sector. Presenterswere often offered far more by rival
broadcasters but chose to come andwork for the BBC.
The Director-General, MarkThompson, told the press as well as
MPs that he didn’t think he should
apologise for paying the market rate
for key talent the audience loves.
Most of the on-air talent the BBC
employs is modestly rewarded andthe handful of exceptions represents
some of the best-loved faces andvoices in UK broadcasting.We believethat licence fee payers expect the bestfrom the BBC even if that means asignificant outlay.

This is what we do...

Executive
Board

The Executive Board manages theoperations of the BBC. It is chairedby the Director-General and, under
the terms of the new Charter,
now has a significant minority of
non-executive directors.The
Executive Board is supported byfour sub-committees: Nominations,
Remuneration, Audit and Fair Trading,and also a number of management
groups, including the BBC Direction
Group, Finance Committee andfour Group Boards covering theareas of Vision, Audio & Music,
Journalism and Future Media &Technology.The Boards of BBC
Commercial Holdings and BBC
Worldwide support the Executive
Board on commercial matters.
The Executive Board is responsible
for the delivery of BBC services
and day-to-day operations acrossthe organisation against the plansthat have been agreed with the
BBC Trust.The BBC Trust holds
the Executive Board to account.

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10 11 1213 14 1524 Part Two: BBC Annual Report and Accounts 2006/2007

1 Mark Thompson
Director-General since June 2004. Chair of
the Executive Board and the BBC Direction
Group (previously the Executive Direction
Group until December 2006), made up of all
the BBC’s divisional directors. Previously Chief
Executive, Channel 4 (2002–2004). Former
BBC positions include Director of Television;
Director of National & Regional Broadcasting;Controller BBC Two; Head of Factual; Headof Features; Editor, Panorama, and Editor,
Nine O’Clock News.
2 Mark Byford
Deputy Director-General since January
2004. Chair of the Journalism Board whichbrings together all the BBC’s journalism at aninternational, UK, national, regional and local
level.Trustee of the BBC Pension Scheme.
Former BBC positions include Director,
Global News and World Service; Directorof Regional Broadcasting; Head of Centre,
Leeds, and Home Editor,Television News.
3 Jenny Abramsky CBE
Director of Audio & Music since November
2006, incorporating previous responsibilities
as Director of Radio since April 2000.
Responsible for the commissioning,scheduling and production of programmingfor BBC Radios 1, 2, 3, 4, Five Live, BBC
Asian Network, BBC 6 Music, 1Xtra, Five
Live Sports Extra and BBC 7; she is also
responsible for Classical Music Television,
Television Music Entertainment, the Electric
Proms, the BBC Proms and the four BBC
Performing Groups based in England.
Previous BBC positions include Directorof Continuous News; Controller, BBC Radio
Five Live; Editor, Radio News & Current
Affairs, and Editor, Today.
4 Jana Bennett OBE
Director of Vision since November 2006,
incorporating previous responsibilities as
Director of Television since April 2002. Has
overall creative and leadership responsibility
for BBC One, BBC Two, BBC Three,
BBC Four, CBBC and CBeebies, as well
as overseeing content on the UKTV joint
venture channels and BBC America.
Also responsible for the four genre-led
commissioning groups: Fiction, Knowledge,
Children’s and Entertainment; all in-housetelevision and multimedia content creation
through BBC Vision Studios, rights andbusiness affairs, and commercial andbusiness development in Vision Operations.
A non-executive director of BBC Worldwide
Limited. Previously General Manager andExecutive Vice-President at Discovery
Communications Inc. in the US; Directorof Production at the BBC; Head of BBC
Science; Editor, Horizon, and Senior Producer
on Newsnight and Panorama.
5 Tim Davie
Director of Marketing, Communications &Audiences since April 2005. Responsible forall the BBC’s marketing, publicity, press andPR, audience services and audience research

activities.Trustee, BBC Children in Needsince September 2005. Director of Freesat(UK) Limited and a non-executive directorof Digital UK. Previously at PepsiCo from1993, latterly as Vice-President, Marketingand Franchise, PepsiCo Europe. Joined
Procter & Gamble’s marketing department
in 1991.
6 Ashley Highfield
Director of BBC Future Media & Technology
since November 2006, incorporating previous
responsibilities as Director, New Media &Technology since October 2000. Responsible
for all new media platforms and gateways
such as bbc.co.uk and interactive television,
BBC Information & Archives, as well as theBBC’s search and navigation and metadata
strategies which are vital to opening up theBBC’s archives. He is also responsible for
the BBC’s technology portfolio, technicalinnovation and research. Previously Managing
Director of Flextech Interactive, thepay-television company’s new media division.
Former positions include Head of IT & New
Media for NBC’s European channels.
7 Stephen Kelly
Director of BBC People since October
2006. Responsible for all the BBC’s people
and organisation issues.Trustee of the
BBC Pension Scheme. Previously Chief
HR Officer at BT Global Services, BT’s global
networked IT services business, where he
was responsible for all HR related issues
worldwide and in addition was responsible
for the business integration of all BT’s
acquisitions outside the UK. Before joining
BT, Stephen led HR functions in British
Rail, National Provident Institution andBalfour Beatty.
8 Zarin PatelGroup Finance Director since January 2005.
Responsible for financial strategy, planning,
control, corporate reporting activities, risk
management, procurement and licencefee collection.Trustee of the BBC Pension
Scheme and non-executive director of BBC
Worldwide Limited. Former BBC positions
include Head of Revenue Management
and Group Financial Controller.Trained asa chartered accountant with KPMG, where
she spent 15 years before joining the
BBC in 1998. Governor, University of
the Arts London, and member of their
Audit Committee.
9 John Smith
Chief Executive of BBC Worldwide Limited
since June 2004 and formerly BBC Chief
Operating Officer and Director of Finance.
Non-executive director at Severn Trent PLC
and Chairman of their Audit Committee. Has
also held a non-executive directorship with
Vickers PLC, was a member of the advisoryboard of Zurich Financial Services UK and
was a Director of the Royal Television Society.
Member of the Accounting Standards Board
until November 2004 and AccountancyAge
Financial Director of the Year in 2001.

10 Caroline Thomson
Chief Operating Officer since November
2006, incorporating previous responsibilities
as Director of Strategy since December
2004 and Director, Policy and Legal(formerly Public Policy) since May 2000, andassuming additional responsibility for BBC
Workplace and Business Continuity. Lead
Director of the Charter Renewal Task Forcesince June 2004.Trustee of the BBC Pension
Scheme. Non-executive director of Digital
UK and of The Pensions Regulator. Former
positions include Deputy Chief Executive,
BBC World Service; Commissioning Editor,
Science and Business at Channel 4, andpolitical assistant to Roy Jenkins.
11 Marcus Agius
Appointed non-executive Director andSenior Independent Director in December
2006. Responsible for chairing the BBC
Executive Board’s Remuneration Committee.
Chairman of Barclays PLC.Trustee of theRoyal Botanic Gardens, Kew and Chairmanof the Foundation and Friends of the Royal
Botanic Gardens, Kew. Previously Chairmanof Lazard London; Deputy Chairman of
Lazard LLC and Chairman of BAA PLC.
12 Dr Mike Lynch OBE
Appointed non-executive Director in
January 2007.Technology entrepreneur
and founder and CEO of Autonomy plc.
Confederation of British Industry’s
Entrepreneur of the Year, winner of an IEEAward for Outstanding Achievement andawarded an OBE for Services to Enterprise.
13 David Robbie
Appointed non-executive Director in
January 2007. Responsible for chairing the
BBC Executive Board’s Audit Committee.
Previously Group Finance Director at CMG
PLC, then Chief Financial Officer at RoyalP&O Nedlloyd N.V. before joining Rexam
PLC as Group Finance Director in 2005.
Also a trustee of the Almeida Theatre.
14 Dr Samir Shah OBE
Appointed non-executive Director in
January 2007. Chief Executive of Juniper
Communications Limited and former Headof Political Programmes and Head of Current
Affairs at the BBC. Chair of the Runnymede
Trust, a trustee of the Victoria and AlbertMuseum and Special Professor in Post-Conflict
Studies in the School of Modern Languages
and Cultures, University of Nottingham.
15 Robert Webb QC
Appointed non-executive Director in January
2007. Responsible for chairing the BBC
Executive Board’s Fair Trading Committee.
Appointed QC in 1988. Previously Headof Chambers, 5 Bell Yard and a Recorder of
the Crown Court between 1993 and 1998.
Became General Counsel for British Airways
PLC in 1998. Also non-executive director of
the London Stock Exchange and of Hakluyt &Co Ltd and a Board Member of London First.
An Honorary Fellow of UNICEF.

Part Two: BBC Annual Report and Accounts 2006/2007 25

The BBC at a glance
VisionBBC One aims to be the UK’s
most valued television channel,
with the broadest rangeof quality programmes of
any UK mainstream network.

BBC Two brings challenging,
intelligent television to a wide
audience by combining serious
factual and specialist subjects
with inventive comedy anddistinctive drama.

BBC Three is dedicated toinnovative British content andtalent, providing a broad mixof programmes aimed primarily
at younger audiences.

CBeebies offers a mix of highquality, UK-produced programmes
designed to encourage learning
through play for younger children
in a consistently safe environment.

The CBBC channel offers adistinctive mixed schedule for
6 to 12 year olds, encouraging
the development of existing andnew interests and helping children
to understand and embrace theworld around them.

BBC jam offered a free online
service, providing interactive
resources structured aroundkey elements of the school
curriculum.This service wassuspended in March 2007.

BBC Four aims to be British
television’s most intellectuallyand culturally enriching channel,
offering a distinctive mix of
documentaries, performance,music, film and topical features.

Future Media & Technology

bbc.co.uk provides innovativeand distinctive online content,
promoting internet use todevelop a deeper relationshipwith licence fee payers and tostrengthen BBC accountability.

BBCi offers digital television
audiences all day, up-to-the-minutecontent including news, weather,learning, entertainment andinteractive programming.

Journalism – Nations & Regions
BBC English Regions servesa wide range of urban and ruralcommunities and aims to be
the most trusted and creative
community broadcaster in England.

BBC Northern Ireland provides
something of value for everyonein the community through its
broad portfolio of programmes
and services that reflect local
interests and experiences.

26 Part Two: BBC Annual Report and Accounts 2006/2007

BBC Cymru Wales is committed
to producing services thatreflect the unique culture andhistory of Wales, and its socialand political landscape.

BBC Scotland produces a broad
range of distinctive televisionand radio programmes for all
age groups that properly reflect
the diverse nature of Scotland.

Journalism

BBC News seeks to provide
the best journalism in theworld and aspires to be
the world’s most trusted
news organisation: accurate,
impartial and independent.

BBC News 24 delivers
news, analysis and insight,
supported by the BBC’s
newsgathering operations,
all day, every day of the year.

BBC World Service provides
global news, analysis andinformation in English and32 other languages on radio
and the internet.

BBC World is acommercially-funded global
24-hour television news
and information channel.

BBC Parliament is the only UK
channel dedicated to the coverageof politics, featuring debates,
committees and the work of thedevolved chambers of the UK.

Audio & MusicBBC Radio 1 offers a high-quality
service for young audiences
combining the best new music, acomprehensive range of live studiosessions, concerts and festivals, andtailored speech output.

BBC Five Live Sports Extra isa part-time network providing
additional sports coverage throughrights already owned by BBC Radio
Five Live to deliver greater value
to licence fee payers.

BBC Radio 2 brings listeners
a broad range of popular andspecialist music focused on British
talent and live performances,complemented by a broad rangeof speech output.

1Xtra plays the best incontemporary black music, witha strong emphasis on deliveringhigh-quality live music andsupporting new British artists.

BBC Radio 3 is centred onclassical music, and also provides
a broad spectrum of jazz andworld music, drama and arts,
and includes live and specially
recorded performances.

BBC 6 Music engages with loversof popular music by offering thebest music from the BBC soundarchive together with current
releases outside the mainstream,
complemented by music news
and documentaries.

BBC Radio 4 uses the powerof the spoken word to offer
programming of depth which seeks
to engage and inspire with a unique
mix of factual programmes, drama,
readings and comedy.

BBC 7 is a speech-based digitalradio service offering comedy,
drama and readings mainly fromthe BBC archive. It is also thehome of children’s speech radio.

BBC Radio Five Live broadcasts
live news and sport 24 hours
a day, presenting events as they
happen in an accessible style.

BBC Asian Network offers
challenging debate, informed
journalism, music, sport,
entertainment and drama
to audiences of British Asians
from different generations.

BBC Sport provides network coverageof UK sport, including big national
sporting events and a wide rangeof specialist and Olympic sports
across television, radio andinteractive media. It also provides
comprehensive sports news.

Part Two: BBC Annual Report and Accounts 2006/2007 27

Reviewof services
FutureMedia &
Technology
This year has seen record growth forour on-demand services. Users ofbbc.co.uk increased significantly andpeaked at over 16 million people
in the UK in February 2007. Ourpermanent interactive TV service
BBCi grew more than 30% to reach
14 million ‘red button’ pressers amonth, and our mobile content isamong the most accessed in the
UK with a 29% reach.
Page impressions to bbc.co.uk now
average over 3 billion per month.
Audiences increasingly want audio
and video on their terms, on theirfavourite sites; our recent deal
to place video clips on YouTube
illustrates we are becoming evermore innovative.
We have focused on preparing for
the BBC Trust’s go-ahead to launchservices which include an archivetrial and the BBC iPlayer, and theimminent overhaul of much of our
web offering under the banner of‘bbc 2.0’.

Review of services
Future Media & Technology

300,000
people around the world took partin the Climate Change Experiment –the world’s biggest ever distributed
computing experiment to try to
predict the world’s climate for the
next 75 years.

This year we announced the launch of thelong-awaited BBC iPlayer, which gives users
the chance to catch up and download up
to 450 hours of BBC TV from the previous
seven days. Based on feedback from trialists
we have expanded the proposal to include
cable and mobile implementation.
The BBC iPlayer has been through an
exhaustive process of public scrutiny, led
by the BBC Trust, and will help us take a
substantial leap forward in the on-demand
world. With the BBC iPlayer, video joins
streamed audio – the Radio Player – which
we have made available for some time.
The context for any new technology is rapid
and continuous change in communications.
Broadband now reaches 23.6 million adults(49% of the population) and 8.1 million
adults in the UK now have 3G-enabledmobile phones (17% of the population).

Above: How To Improve Your Memory
How To Improve Your Memory invited participants
to test their memory with interactive challenges
and solve the ‘Memory Manor Mystery’ – basedon a real-life painting theft.
Below: The BBC archive trial
The BBC archive trial helped users to go
deeper into the archive through collections ofprogrammes grouped around ideas, subjects,
time or people.

In 2006/2007 on-demand services werelaunched both by new market entrants suchas YouTube and by established players withnew products such as Channel 4 and its
4oD. Multichannel digital TV reacheda milestone when the number of people
watching Freeview overtook those viewing
traditional analogue TV on their main sets
for the first time. Freeview also overtook
Sky as the most popular UK digital platform.
Online is growing faster than any of ourother services. bbc.co.uk audiences rose toover 16 million users during the course of
the last year and BBCi, our interactive red
button services for digital viewers, currently
enjoys an extraordinary annual growthrate of more than 30%. In March bbc.co.uk
achieved the third biggest reach for any
UK site, with only Google and MSN ahead.
It is important to undertake extensive trials
before committing public money to develop
future services and to find out what does
not work as well as what does. Last year
some of the trials we undertook included:delivering TV and radio services to audiences
via a number of mobile technologies,
including 3G mobile networks andhandsets with DAB receiving capability
experiments with Flickr, Second Lifeand YouTube.The Flickr trial, encouraging
people to share their photos with one
another directly rather than sending themto the BBC, generated more than 10,000
pictures from over 2,000 users during
Radio l’s Big Weekend

30 Part Two: BBC Annual Report and Accounts 2006/2007

a technical trial to provide catch-up
TV and navigation on personal
video recorders
experimenting with barcode recognition
technology through mobile phones at
London Zoo
a podcast trial by our Ouch! site fordisabled users. It was so popular that thenews the trial was ending led to a petition
to continue the service
Not everything we try works.The
TARDISODES, one-minute Doctor Who
episodes via mobile phones and bbc.co.uk,
were not the hit we expected although they
were popular on broadband.

A major strategic review of BBC online
has resulted in us closing or ‘mothballing’some of our underused sites, for example
bbc.co.uk/cult – a site about television
programmes with a cult audience (suchas Star Trek); bbc.co.uk/monarch, which
supported the Monarch of the Glen TV series;
and the radio drama bbc.co.uk/darkhouse.
We also rationalised our sports message
boards – a decision which was not popularwith some fans – in order to concentrateon doing a smaller number of big things well.
The Net Promoter measurement tool has
provided us with a snapshot of what theaudience really values across a wide rangeof output, and this will be an asset in helping
us to decide where to focus our effort.
We improved navigation and search facilities
to offer a search capability for stills and audio
visual material. Users of the UK edition of
bbc.co.uk can also customise the site, choosing
local news, sports and weather for their own
front page.We launched more participatory
sites within bbc.co.uk, such as the new Radio 1
site and GetCooking. On our News pages our
new ‘live stats’ give the user a snapshot ofwhat other people are reading, watching,listening to and emailing around the world.
News remains one of the most popular
content areas online, along with sports andchildren’s services – and not just in the UK.
There are 2 million downloads of our
podcasts every month. In 2006/2007, 70
BBC News and BBC Sport editors posted
500 blogs, revealing the story behind thestories and how they make their difficult
daily news judgements. In the first ten
months, they got over 30,000 commentsfrom readers in response.
The Have Your Say site receives 12,000 emails
every day (many more on big news days)
and we have all become familiar with hearing
emails read out on air. User-generated
content (UGC) has entered the broadcasting
mainstream, whether it is squaddies sendingin pictures from Afghanistan taken on theircamera phones or the pictures of poor living
conditions supplied by soldiers’ families aftera Ten O’Clock News item.
We put extra investment into the BBC’s
UGC hub this year, allowing for more
initiatives. For example, we took a laptop,
digital camera and satellite link to a remotedrought-stricken village in Ethiopia, where
we put questions emailed in by readers andviewers around the world to the villagers.
At the same time, a reporter covered theevent for BBC World TV and the World
Service.The BBC did not set the agenda –readers’ questions did. And the villagers told
their stories directly.
Audience enthusiasm for UGC cansometimes run ahead of our ability to use
it. When snow fell in the UK in February,
viewers sent in 12,000 still photos. But it
just goes to show the demand is out there!
BBC journalism is not the only thing that haschanged with interactivity. Our sports website
came of digital age in 2006/2007 during theWorld Cup. Skillswise helps growing numberswith literacy and numeracy.The Climate
Change Experiment enrolled 300,000 of us
in the world’s biggest distributed computing
project to try to predict world climate up to2080, making a significant contribution to thedebate on global warming.

The BBC’s interactive services, BBCi –which won an international Emmy for bestinteractive television service – encompass
text, video and audio, many made available
through the red button to digital TV viewers.
These provide additional information, extra
or alternative coverage or the chance to sendin a comment to a programme as it airs.
Sports fans have been among the keenest
users: 5.35 million people used our World
Cup interactive services, with another5.9 million requesting live matches and video

clips on broadband. Before the tournament
started, press commentators speculated thatthe volume of traffic might crash the whole
UK internet, but we managed to handle it.
Our Ashes Alarm Clock meant cricket fanscould be woken by an alert on their mobile
phone bringing them the latest score from
Down Under.
In the arts, we run an interactive Film
Network showcasing new British filmmakers.
Its catalogue currently contains over
300 shorts.
Children are also important users. Researchdone earlier this year found that 66% of
7 to 15 year olds use BBCi, and 67% use ouronline services – high figures even given thataround 95% of this age group have accessto the services.
BBC News Interactive introduced
a video bulletin and SMS alerts to mobile
phones. It also experimented with ways toallow users to personalise the news theyreceive on their mobile phone.

Above: Planet Earth online
Exclusive content online complemented theprogramme and included clips, downloadable
screensavers and interactive video tours.
Below: Catch-up TV
BBCi+ (the DTT Push Video on Demand trial)
offered viewers 50 hours of BBC programmes
on demand each week, recorded onto a
specially adapted Freeview DTR.

In addition to our established relationshipwith Siemens, we have entered into strategic
partnerships with companies such as
Microsoft and IBM to help us deliver toour technology objectives. We have also
embarked on an exciting distribution
relationship with YouTube to make ourcontent available within a leading social
networking phenomenon, with an objective
to use short-form content to bring newusers into BBC services such as BBC iPlayer.
Freesat is a new proposition we arelaunching with ITV to provide a Freeview­
like service for satellite users.There is also a
tremendous amount of work to be done toprepare for bbc 2.0, as the web continues toshift from being predominantly a publishingmedium to one where data is shared acrosssites and between users, in other words
we want the BBC to become a part of theinternet rather than simply being on it. We
expect mobile services to play a significant
part in the BBC’s future and we plan towork with the industry to position the UK
as the most exciting mobile environment
in the world.
The new BBC site at Salford will need to be
fitted out with state-of-the-art equipment,
and we are also looking at ways to optimise
the use of technology across our businessto ensure we can deliver content efficiently
and effectively to the outlets from which
our audiences want to get it.

Halved– the cost per user reached ofbbc.co.uk over the past four years
driven by increased usage.

Part Two: BBC Annual Report and Accounts 2006/2007 31

Reviewof services
VisionThis year, our reputation for
high-quality programmes has
been market-leading, drawing
critical acclaim alongside audience
recognition. From Planet Earth to theWorld Cup summer to Life on Mars,
creative ideas teamed with the bestproduction techniques have attracted
large audiences.The launch of thehigh-definition trial – showcasing
programmes such as Great British
Summer,Torchwood and Jane Eyre
– demonstrated the richness of
this technology.
The decline in reach has beenslowed, BBC Two has broadened
its appeal as we continue work
to clearly define the channel, andaudiences to BBC Four have shown
further increases.The number ofviewers watching the portfolio of
BBC channels remains higher thanthat of any other broadcaster.
A priority continues to be younger
viewers. Increased competition ischallenging our Children’s services,and we’re responding by increasing
investment in original programmes.
BBC Three has grown its target
audience of 16–34 year olds.
Offering the full breadth ofprogramming across all our services iskey: we continue to do this as we move
forward in this on-demand world.

progressed. Jonathan Ross remained essential
late-night viewing on Fridays, and, in a movethat provoked controversy, signed a newcontract with the BBC despite fierce
competition from rival broadcasters.
It has been a year of drama resurgenceon BBC One, starting the year with a
new Doctor Who, played brilliantly byDavid Tennant.The series exceeded all
expectations and became a national talking
point.Then in the second series of Life on
Mars, Detective Sam Tyler found time travela riskier business – his enforced stay in 1973
came to a thrilling and tantalising climax.
Other ambitious dramas included anadaptation of Jane Eyre, our gritty school
drama Waterloo Road, and Robin Hood, our21st-century take on an evergreen hero.
The last two series extended our policyof commissioning drama that appeals toyounger viewers. Five Days, the story of ayoung mother’s abduction, gripped audiences
over two weeks in an innovative scheduling
pattern. Recovery, by BAFTA winner
Tony Marchant, showed our continuingcommitment to single dramas. We enjoyed
our most successful Christmas for years,
featuring brand new versions of Dracula and
The Wind in the Willows, and an adaptationof Philip Pullman’s Ruby in the Smoke starring
Billie Piper. However, not all our dramas
worked as well: neither the high-octane
political thriller The State Within nor the
Innocence Project attracted as many viewers
as we would have liked.
EastEnders is, in many ways, the anchor of
the BBC One schedule.The story of Billyand Honey’s Down’s syndrome baby drewa big reaction from the audience.The
Down’s Syndrome Association praised the“thoughtful and responsible” handling of
the story.The show won a BAFTA as Best
Continuing Drama and seven awards at the2006 British Soap Awards, including Best Soap.
Entertainment has also been a success story,
particularly on Saturday night.The awardwinning How Do You Solve A Problem Like
Maria? created a new genre and establishedlinks between Saturday night television
entertainment and the world of musicaltheatre. It also made an unlikely TV starout of Andrew Lloyd Webber. Strictly Come
Dancing continued to dominate viewing in
the autumn, the audience responding morestrongly than ever and taking part via phonelines, texts, websites and the red button. Sadly,
our revival of the reality series Castaway failed
to match the impact or the popularity of theoriginal and lost audiences as the series

In factual programming, Planet Earth was
the biggest series ever made by the BBC’s
Natural History Unit.The series, shot in highdefinition, brought us images of animals in
the wild that have never been seen before.
It was so popular with viewers that it
received the highest audience appreciation
scores of any British programme on any
channel this year. Planet Earth was narrated
by Sir David Attenborough, who alsopresented two impactful documentaries that
helped set the agenda on climate change.
Other notable successes in factual included
the documentary series Trawlermen, andAlan Yentob’s surprising and innovative arts
series Imagine.
In comedy, the two-part Christmas finaleof The Vicar of Dibley kept over 10 million
viewers alternately laughing and crying as
vicar, Geraldine Granger, met and married
her dream beau. Little Britain bowed out
in style with two specials, and other new
comedies which gained a foothold in theschedule included the award-winning
Not Going Out, Jennifer Saunders’ Jam andJerusalem and the Nicholas Lyndhurst
vehicle After You’ve Gone.
Saturday Kitchen came into the spotlight
this year as part of the wider industry
controversy around the use of phone lines
in TV programmes.Viewers were invited tophone in for the opportunity to take part ina programme. In several cases it was stated
it would be next week’s show when in fact
the show was being recorded later that day.
The language we used was not clear although
there was no deliberate intention to mislead
the public. As soon as the problem came tolight, we took immediate action with theindependent producer to ensure all future
programmes would be live.
We watched the final Grandstand this year
and said goodbye to Top of the Pops after
42 years. Another long-running BBC One
institution, Panorama, made a successful
move to peak-time viewing after a numberof years on the fringes of the schedule.
Last summer we ran a pilot of The ONE
Show – a live, topical magazine programmewith guests and special features. Feedback
from the audience was very positive andthe show is returning as a regular fixture
in our early evening schedule.

Above: The Vicar of Dibley
Dawn French and Richard Armitage in the final
episode of The Vicar of Dibley which attracted
over 13 million viewers – the most popularcomedy show on any channel this year.
Below: Jane Eyre
Ruth Wilson appeared as the heroine and Toby
Stephens as the infamous Mr Rochester in thispopular adaptation of the classic novel, givinga boost to Sunday evening ratings.

4 out of 5

people in the UK watch BBC One.

Part Two: BBC Annual Report and Accounts 2006/2007 33

Review of services
Vision

8.1 million
people watched footage of Richard
Hammond’s horrific crash as he madehis triumphant return to Top Gear on
BBC Two in January.

Above: David Oyelowo in Shoot the Messenger
One of the most provocative dramas of theyear, Shoot the Messenger explored issues ofunder-achievement rarely aired outside Britain’s
black communities.
Below: The Power of Art
The Power of Art, presented by Simon Schama,drew critical acclaim with its bold approach tothe history of art enabling viewers to approachfamiliar images in a new light.

Finally, BBC One remains the UK’s homefor big events. In 2006, that meant for theWorld Cup final five out of six viewers
chose to watch BBC One. Overall, BBC
One’s performance was stronger and moreconsistent than for many years, as it won
Channel of the Year at the Broadcast Awards
and from Televisual magazine.
In all homes, BBC One’s average 15-minuteweekly reach1 to viewers aged 4+2 was
78.4% or around 44 million people in2006/2007.This was slightly down on
2005/2006 (79.7% or 44.5 million people).

This year has seen some encouraging signs
that BBC Two is starting to stem falling reach.
Some of our best programmes featured
remarkable individuals putting their reputationon the line. Stephen Fry’s The Secret Life of
the Manic Depressive was moving, candid andrevelatory. In Can Gerry Robinson Fix The NHS?
the businessman succeeded in turning
public-sector management into compelling
prime-time TV, while The Choir saw Gareth
Malone transform a group of reluctant
schoolchildren into a choir worthy ofcompeting in the ‘Choir Olympics’ in China.
It was a year of refreshment in popularfeatures, especially food and drink. Autumn
hits included Nigella’s Christmas Kitchen andHeston Blumenthal in Search of Perfection –with drinks provided courtesy of Oz andJames’s Big Wine Adventure. Winter broughta focus on health and diet, with Dr Alice
Roberts: Don’t Die Young and The Truth About
Food both reaching broad audiences.
We had mixed fortunes with drama. Sharon
Foster’s Shoot the Messenger and Joe Fisher’sSoundproof were powerful and distinctive,
but This Life+10, a one-off revival of the
1990s classic, did not please fans of theoriginal, and the political series Party Animals
failed to make impact beyond a small andloyal audience. In comedy, Simon Amstelltransformed Never Mind the Buzzcocks into avehicle for his own fearless brand of celebrity
put-down, while David Mitchell and Robert
Webb found mainstream success with That
Mitchell and Webb Look.

34 Part Two: BBC Annual Report and Accounts 2006/2007

Simon Schama’s The Power of Art brought
art history to the heart of the schedule,
but there was less impact in specialist
factual. We lacked a really substantial sciencelandmark this year, and Horizon is stillin a period of transition. We were also
disappointed with the performance of oursummer schedule which, in spite of somehigh-quality series – The Story of LightEntertainment, Blizzard: Race to the Pole –found it hard to reach big audiences ina highly competitive season of sport andother events.
In documentaries, Paul Watson made aharrowing, unforgettable study of alcoholism,
Rain in My Heart, while Anatomy of a Crime
took a more observational approach to its
subject matter, revealing the truth about
police work. The Conspiracy Files captivatedyounger viewers with its stylish analysis
of some of the conspiracy theories that
propagate on the internet, and Michael
Cockerell’s Blair:The Inside Story set a
standard by which other accounts of
the Blair years will be judged.
In the multi-platform realm, our pioneering
broadband trial came to an end having logged
more than 5 million audio visual requests for
The Apprentice alone, while the legal reality
series The Verdict was supported by a richbroadband site that hosted a passionate
debate among the audience.
This was also, unforgettably, the year ofRichard Hammond’s extraordinary recovery
from his rocket-car crash on the set of Top
Gear.The accident provoked an amazing
outpouring of public affection: his return tothe show in January was watched by over
8 million people.
BBC Two’s average 15-minute weekly
reach1 to viewers aged 4+2 in all homes in
2006/2007 was 57% or 32 million people.
This was slightly down on 2005/2006(59.1% or 33 million people).

In 2006, BBC Three focused particularly
on programmes that would feel important,relevant and entertaining to younger viewers(16–34). Moving forward, BBC Three needs
to work harder to define its brand for thistarget audience.
In factual this meant addressing thoughtprovoking subjects such as how we relate
to our bodies. Covering themes including
obesity and gender identity, the two Body
Image seasons proved very popular withyoung audiences. More controversial was
The Baby Borrowers, which explored thetravails of teen parenting, while Kill It Cook
It Eat It also made a significant mark.
This four-part series took a no-holds-barred
look at how the meat we consume reaches
our tables. However, some of our punchiest
programme titles may have put people off
watching what was highly informative andwell-made content.
It was a strong year for drama andperformance on BBC Three. Torchwood,
created by the Cardiff-based Doctor Whoteam led by Russell T Davis, launched in
November.The first episode was watchedby 2.6 million viewers – one of the highest
audiences for a digital programme in 2006.
Also reaching a large and appreciative
audience was The Manchester Passion, a highly
creative and original piece of live television
played out in Manchester, with soundtracks
of marching bands bringing the crowds out
onto the streets.
Comedy continued to be a crucial genre
for the channel. Little Miss Jocelyn arrived witha bang as television’s first black comedienne
going solo. New talent was a key part of themix, with Comedy Shuffle providing a primetime showcase for the latest performers,
while the returning comedy Ideal and Two
Pints of Lager and A Packet of Crisps provided
cornerstones of the channel schedule.
Clearly, younger viewers are leading the way
when it comes to the enjoyment of content
through digital alternatives to television, so
BBC Three has worked hard in this area.

Alongside the exclusive online comedy, we
made clips of Torchwood, The Cowards and
The Baby Borrowers available to download
on mobile phones. And live music events
such as the Electric Proms were accompanied
by interactive and download services.
BBC Three’s average 15-minute weekly
reach1 to viewers aged 4+2 in multi-channel
homes in 2006/2007 increased significantly
to 17.6% or 8 million people (16.1% or
6.8 million people in 2005/2006).

Named Non-Terrestrial Channel of theYear at the Edinburgh Television Festival
and Best Factual Channel at the 2006/2007
Broadcast Digital Awards, BBC Four has
made itself the home of intelligent andthought-provoking television.

Above: The Baby Borrowers
The Baby Borrowers was a particular successwith younger audiences and had a strong public
purpose in reflecting concern over the highlevels of teenage pregnancy.
Below: Little Miss Jocelyn
Jocelyn Jee Esien, one-third of the hugely
successful 3 Non-Blondes, crashed back onto
the screen this year with her wickedly anarchic
antics in a new comedy sketch series.

We proved the point with everything from
Spike Lee’s acclaimed four-hour film about
New Orleans and Hurricane Katrina, Whenthe Levees Broke: A Requiem in Four Acts,
which won Best Documentary at the Venice
Film Festival, to The Century That Made Us,
our biggest season to date and a major lookat 18th-century Britain.This brought bigname broadcasters such as Andrew Marr,
Michael Portillo, Clarissa Dickson-Wrightand Michael Wood to the channel to present
films, and included a drama of the life of
Britain’s first fashion icon Beau Brummel:
This Charming Man, as well as feature films
and riches from the BBC Archive.
Other fact-based dramas included a braceof British cooks, Fear of Fanny and The SecretLife of Mrs Beeton, literary adaptation in
Wide Sargasso Sea, and a multi-layered
dramatisation of an Ian Rankin short story,
The Reichenbach Falls, though none of thedramas in 2006/2007 quite matched thecritical and audience performance of lastyear’s Fantabulosa. We had comedy successwith Lead Balloon, starring Jack Dee as a
jaded comic, and The Thick of It made awelcome return for a Christmas special. BBC
Four also offered the latest and best in world
cinema – our 26 premieres last year included
Goodbye Lenin and Bad Education – and arevitalised performance from current affairs
in topical, fast-turnaround singles andlandmark series such as Visions of America.

2.6 million
people watched the inaugural episodeof Torchwood on BBC Three – one of
the most successful ever programmes
on a non-terrestrial channel.

Part Two: BBC Annual Report and Accounts 2006/2007 35

Review of services
Vision1 in 2of the industry-voted ‘50 best TV
dramas broadcast recently’ weretransmitted on BBC Four.

Above: Fear of Fanny
Julia Davis delighted audiences with her
portrayal of the fearsome Fanny Cradock who
dressed like a drag queen and became the firstcelebrity TV chef in the 1950s. Mark Gatissplayed her husband-cum-assistant, Johnnie.
Below: Underground Ernie
Set in International Station, a fictional
worldwide underground network, Underground
Ernie has delighted younger viewers. It focuseson the everyday adventures of Ernie, a friendly
Underground supervisor.

Arts documentaries were an importantpart of our schedule too. In Art of Eternity,
Andrew Graham-Dixon traced thedevelopment of Western religious art ina landmark three-part series. Other series
were Soul Britannia, the unlikely tale of how
black American dance music was embraced;
Reader I Married Him, about romantic fiction;
and The Martians and Us, the story ofscience fiction from a British perspective.
Christmas 2006 did not work out quite aswell as the previous year. A mix of Tales ofVillage Life and Adventures for Boys did notprove such a clear and obvious attraction
to the audience as Conan Doyle had in 2005,
and the key lesson we have learned is to focus
our offer in a more specific and propositional
way around subjects of proven appeal.
2006/2007 saw BBC Four offering themenights on topics as disparate as the London
Underground and volcanoes. 1973 Week
included archive and originations and Paul
Merton’s Silent Clowns was the centrepieceof a season celebrating silent film.The Hotel
California season on the US West Coast
scene in the 1970s got much attention, as
did Once Upon a Time in New York, its East
Coast counterpart.
BBC Four’s average 15-minute weekly reach1
to viewers aged 4+2 in multi-channel homes
in 2006/2007 was 7.1% or 3.2 million people– a marked improvement on our 2005/2006
figures (6.1% or 2.6 million people).

36 Part Two: BBC Annual Report and Accounts 2006/2007

CBeebies is now a fully multi-platform brandworking across television, radio, online andinteractive TV. Over the last year it has been
reinvigorated with new content, including
Tommy Zoom, Jackanory Junior, CBeebies
Springwatch, In the Night Garden and Nina
and the Neurons. In particular, we have tried
to increase its appeal to boys and to children
aged 4–6 by providing more action, humourand surprise.
CBeebies also launched on radio. It is available
on BBC 7 three hours a day and on thewebsite. It hosts a lively and fun mix ofmusic, quizzes and stories.
As part of a wider BBC Two broadband
trial CBeebies offered episodes and clips
of Charlie and Lola through the website.
These proved hugely popular, indicating
the big demand from young children andtheir parents for on-demand content.
Established titles such as Teletubbies, Bob
the Builder and Tweenies continue to appeal
to large audiences, and among the regularsCharlie and Lola shows signs of becoming
a family classic. However, we will continue
to invest in new content for CBeebies
to ensure that it remains fresh andcontemporary.
CBeebies average 15-minute weekly reach1
to viewers aged 4+2 in multi-channel homes
in 2006/2007 was 8.2% or 3.7 million
people.This has fallen slightly from2005/2006 (8.8% or 3.7 million people).

This year competition for children’s
audiences increased further. It has been ayear of change and revitalisation for CBBC,
ready for a significant relaunch in autumn
2007. We have focused on developing fewer,
bigger and better programmes as well as
on our interactive and on-demand content
with the aim of building a more trusted anddeeper relationship with 6–12 year olds.
Making really original content that stands
out in a crowded market is our major goal.
After the London bombings on 7 July 2005,
hundreds of children posted their feelingson the CBBC website.These became thestimulus for a powerful drama, That Summer
Day, telling the story of the day from achild’s point of view. A Newsround special,
The Wrong Trainers, made innovative use ofanimation to tell five real and uncomfortablestories about child poverty, narrated by
the children whose stories were being told.
It won an RTS Award.
Last November Blue Peter broadcast a
programme that included a fake winner
to a competition. While this was a mistakethat occurred during the pressure of a live
programme, it was nonetheless a serious
error of judgement. On discovering the
problem we apologised and took a seriesof actions to minimise the chance of asimilar problem recurring.
New dramas included Desperados, anunorthodox drama about a wheelchairbasketball team, and the RTS award-winning
comedy Young Dracula. Distinctive British
factual programming such as Beat the Boss,a series pitting young entrepreneurs against
adults, and Evacuation, taking children backin time for an authentic World War Twoexperience, were hugely successful formats.

Animated series of Shaun the Sheep and
The Secret Show continued to push innovationand originality, giving air time and investment
to British talent. In entertainment, an unusual
mix of comedy and variety brought new
British writers and performers together ina unique prison-based format, The Slammer.
Our ambitious interactive multimedia project
Level Up, for peer-to-peer problem solving,worked exceptionally well online (its website
won a BAFTA) but less well on TV, confirming
to us that children love to take part but are
moving towards online as their preferredmedium of interactivity.
CBBC’s average 15-minute weekly reach1 toviewers aged 4+2 in multi-channel homes
in 2006/2007 has fallen slightly to 5.6% or
2.6 million people (6.0% or 2.6 million
people in 2005/2006).

BBC jam was an online interactive learning
service for school-age students, launchedin early 2006 after a rigorous consultation
process and following approval from theSecretary of State for Culture, Media andSport and the European Commission.The
service had been gradually increasing theamount of distinctive and interactive content
it offered for 5–16 year olds, and had built
up a growing number of users, when it
was suspended in March 2007 following
complaints from the commercial sector.
The BBC recognises that education remains
a vital part of its mission and will continue
to work on ways to serve audiences in thisimportant area.

Jackanory came back to critical acclaim,
showcasing narrators Sir Ben Kingsley andJohn Sessions.
Average 15-minute weekly reach is defined as thepercentage of people who watch television for at least
15 consecutive minutes in an average week2
The population aged 4+ rose by 320,000 to
56.1 million between 2005/2006 and 2006/2007
1

Above: Jackanory
The return of an old favourite, Jackanory,
included John Sessions reading the Lord of theRings parody Muddle Earth and went on tocollect an RTS award.
Below: Sanchez Adams in That Summer Day
Children’s drama That Summer Day retold
the story of the July 2005 London bombingsfrom the perspective of a child.

29,000young people applied to be chosen
for Serious Amazon in which eight young
adventurers took part in a challenging
environmental expedition into the
Amazon rainforest in Peru.

Part Two: BBC Annual Report and Accounts 2006/2007 37

Reviewof services
Audio &Music

The Radio & Music division was
renamed Audio & Music in recognition
that content in sound from the BBC
is available on a host of platforms
beyond traditional radio. Audiences
are changing too. During the year,
weekly requests to the BBC Radio
Player, which makes programmes
available for seven days after
broadcast, increased from 2.6 million
to 3.1 million.
The BBC Radio download andpodcast trial continued, with a 57%
increase in monthly UK download
requests to 3.2 million.We lookforward to launching a permanent
download service next year.
Programme highlights last year
included Five Live Breakfast, theRadio 4 drama Lorilei and Radio
Ballads on Radio 2 – all winnersof Sony Gold awards. In music welaunched the Electric Proms, anambitious multi-platform popular
music counterpart to the BBC
Proms, across TV, radio and online.
Audiences have responded
enthusiastically to our programming.
In the first quarter of 2007 BBCRadio reached 33.46 million adults
a week, with listening share of 56%– record figures under current
measurement systems.

Changes in radio listening habits are
occurring particularly fast among Radio 1’s
young audience, with increasing consumption
via online, digital TV and mobile media.
To meet this challenge we are constantly
looking to deliver our content in ways thatmeet listener demands. bbc.co.uk/radio1
regularly attracts over 3 million users amonth and we often get over 1 million page
impressions a month from audiences using
their mobile phones. The Best of Chris Moyles
is BBC Radio’s most popular podcast, getting
over 800,000 downloads a month during
spring 2007.
We broadcast over 50 hours of live radio
coverage from the Radio 1 Big Weekend in
Dundee. In addition, our ‘red button’ coverage
attracted an estimated 900,000 viewers on
digital TV; there were short video highlights
packages online, and festival-goers shared
their photos on websites such as Flickr.
Investment in creative content and innovationsof this kind helped us achieve an average
audience of over 10 million listeners a week
for the second year running – 53% of whom
did not listen to any other BBC radio. Chris
Moyles finished the year with over 7 million
listeners a week for the first time, but also
took his bond with the audience to a newlevel when he toured the country with his
Red Nose Rallyoke, raising over £744,000
for Comic Relief.
Other events included our live gig with Kaiser
Chiefs in Doncaster, Jo Whiley’s Live Lounge
Tour, and the pan-BBC Electric Proms. Damon
Albarn’s The Good,The Bad and The Queen
performed their debut album live andexclusively for Radio 1 as part of the Electric
Proms while, at the other end of the scale,
Noel Gallagher did a live one-man show ina listener’s living room – one of over 300
sessions of Live Lounge performances during
the year.
We also offered a range of speech content,
including daily news coverage tailored for ayoung audience by our dedicated Newsbeat
team. We produced documentaries on
global warming and Scientology, and a series
on the history of rock bands, while Colin
Murray conducted the first ever broadcast
interviews with serving officers of the security
service MI6.

The live and edgy nature of some
programmes, however, led to a couple ofoccasions where presenters overstepped
the line and Ofcom upheld complaints
against both Chris Moyles and Scott Mills.
As a result, compliance issues were reviewed,
with new procedures being introduced,
including the threat of financial penalty
against offending DJs.
Radio 1 had an average 15-minute weekly
reach1 to adults aged 15+2 of 21.4% or
10.7 million people.This is a significant
increase on 2005/2006 figures (20.6% or
10.2 million people).
Above: Radio 1’s Big Weekend
Colin Murray and Edith Bowman at Radio 1’s
Big Weekend in Dundee – Europe’s biggest
free ticketed event. Red button coverageon digital television attracted an estimatedmillion viewers.
Below: Russell Brand
Russell Brand’s Sunday morning show on
BBC 6 Music became a cult phenomenon andhis new show on Radio 2 is already going down
a storm with audiences.

BBC Radio 2 remains the nation’s
favourite radio station with an audienceof 13.2 million listeners.
We offer established favourites such as Terry
Wogan, Steve Wright and Jonathan Ross.We
also seek to continually innovate, for example
providing a bigger stage for the rising talentof Russell Brand, who transferred from
BBC 6 Music. In April, Radio 2 brought theextraordinary talents of Chris Evans back to
weekday national radio, a decision that somein the audience and press saw as controversial.
The move proved justified with Chris winningover the audience and picking up two SonyGold awards for Best Music Radio Personality
and Best Entertainment.
Other highlights this year included the revived
Radio Ballads created by John Tams, Aled Joneson a Sunday morning, the reshaping of Sunday
evenings with Alan Titchmarsh joining thestation and the premiering of Bob Dylan’s
Theme Time Radio Hour in the UK. Our Liveand Exclusive concerts this year featured
Bruce Springsteen and Coldplay.We launched
the Music Club as an interactive home forthose wishing to learn more about musicmaking. Online, its newsletter already has over
4,400 subscribers and its live performances
included sets from Paul Simon and Ray Davies.
We provide accessible news and current
affairs and encourage debate, particularly
through The Jeremy Vine Show, a programmethat is always challenging. On one occasion
this year it carried an item, labelled as a spoof,
describing the Soham murderer Ian Huntley
as dying in prison. Some people mistook the
spoof for reality and we received a number of44%of all 15–29 year olds listen to Radio 1.

Part Two: BBC Annual Report and Accounts 2006/2007 39

Review of services
Audio & Music

1 in 4
adults listen to Radio 2 – that’s
13.2 million people.

Above: Chris Evans
Chris Evans returned to weekday national radioon Radio 2 and went on to win two SonyGold awards.
Below: The Tchaikovsky Experience
During February, a week on BBC Radio 3 wasentirely dedicated to the music of Tchaikovsky
and Stravinsky.

complaints about it. We recognised the utter
inappropriateness of the item and apologisedat once on air.The journalistic strength ofthe programme made headlines with ourcommissioned report for the Respect Your
Elders campaign, where our research showedwidespread abuse of the elderly.
Our comedy show Out To Lunch sought new
UK talent.The new arts show, The Weekender,
big music documentaries such as Peace, Love
and Soul: 35 Years of Soul Train, and those
providing a wider social context – including
Hang A Thousand Trees With Ribbons, thestory of Phillis Wheatley, a former slave who
became the first internationally published
African female writer – contributed to a wide
and rich mix of programming.The 2007 Sonyaward-winning Musical Map of London from
Malcolm McLaren was followed up with his
equally stimulating Life and Times in LA.
In the autumn, Radio 2 ran a national
competition in which listeners were asked
to take the theme of an encounter with amusical legend to create an imaginative newdrama. Workshops were set up around thecountry to give would-be writers tips andinsights into writing a drama, and the fivewinning entries were broadcast on air
across a week.
Radio 2 had an average 15-minute weekly
reach1 to adults aged 15+2 of 26.5% or
13.2 million people.This is more or lessconsistent with 2005/2006 figures (26.5%
or 13.1 million people).

We continued our substantial support formusical performance, presenting events fromacross the UK and around the world. Radio 3
has maintained its position as the world’s
most significant commissioner of new music.
We introduced a new schedule in early
2007, some aspects of which proved
controversial.The changes were made tocreate more space for musical performance,
particularly in the afternoons. Some listeners
were concerned about the move of Choral
Evensong to Sunday afternoon, although we
believe this will make it available to a wider
audience.The introduction of an evening
repeat for Composer of the Week responded
to requests to hear this popular programme
at a more convenient time.

40 Part Two: BBC Annual Report and Accounts 2006/2007

Some special initiatives during the year havebeen well received and attracted criticalacclaim. We continued the idea of presenting
complete works, following the model of
The Beethoven Experience.This year’s highlights
were an English Music Day on St George’s
Day; the complete works of Tchaikovsky
and Stravinsky over a week; Wilfred Owen’s
complete war poems in November;and Wagner’s Ring Cycle broadcast in its
entirety over 18 hours, with simultaneoustranslation on digital platforms. In each casecomplete performances were interspersedwith interpretation from a wide rangeof commentators.
Our month-long Listen Up festival celebrated
the vitality of the British orchestral scene: in a
new initiative, we invited amateur orchestras
to submit their recordings for broadcast andmany were transmitted during the period.
We also reflected amateur music-making in
our weekly choral programme The Choir, andin our support of the BBC Radio 3 Choir of
the Year award.
As usual, the BBC Proms held an important
place in our schedules, and every concert
programme was broadcast live on the station.
Unfortunately, the trial of a new DAB coding
standard impaired digital sound quality during
the season and the trial was withdrawn.
Radio 3 remains committed to thechallenging and experimental.The BBC
Symphony Orchestra weekend devoted
to the Russian composer Sofia Gubaidulina
was a unique opportunity for the audienceto immerse itself in her music. Likewise, thecast in our production of Harold Pinter’s
modern classic The Homecoming was led
by Pinter himself. We extensively celebrated
the centenary of Samuel Beckett’s birth,
including broadcasting a new productionof Krapp’s Last Tape starring Corin Redgrave.
In November, we launched a new festivalof ideas, Free Thinking, in Liverpool whereexperts and the public were able to joinin discussions about issues facing society.
In the coming year, there will be a majorcollaboration between Radio 3 and Radio 4,
a 60-part history of Western classical music.
We also intend to strengthen Radio 3’s role
as a provider of recommendations regarding
listening and musical performance.
Radio 3 had an average 15-minute weekly
reach1 to adults aged 15+2 of 3.8% or
1.9 million people.This is slightly down on
2005/2006 figures (4.1% or 2 million people).

sympathy for his family. Nick and his wife
Barbara kept audio diaries during his cancer
and it was our privilege to put Nick’s voice
back on air in a programme created fromthem, Fighting To Be Normal.
The Archers reached its 15,000th episodelast November, as beloved and as relevant
as ever. Ruth Archer’s vacillation between
husband David and cowman Sam kept
listeners arguing and guessing until the lastminute, as did Brian’s reluctance to attend
his gay stepson’s civil union. Audience figures
held strong, and showed a steep increasein use of the online Listen Again facility.
Today held its position as the nation’s premier
morning news programme. Highlights included
John Humphrys’ reports from Basra and two
landmark interviews with Tony Blair. His series
of interviews with religious leaders, Humphrysin Search of God, was also highly praised.
A major season, Uncovering Iran, used drama,
documentary, readings and comedy to go
behind the headlines at a time of intense
public interest in the country. Other
memorable current affairs investigations
were Chasing Shadows, File on 4’s report(shared with the World Service) on Poland’spart in America’s secret ‘extraordinary
renditions’, and Tom Mangold’s Driven by Oil,about the oil industry in the modern world.
History is one of our strengths and anarea where Radio 4 currently outperforms
BBC Television. Highlights were the series
The Invention of Childhood and The Makingof Modern Medicine, both presented byexperts rather than actors.
The Memory Experience used comedy, drama
and factual programmes to explore thephenomenon of memory, attracting significant
audience interaction via the website. New
comedy included Down the Line, a spoof
phone-in by Paul Whitehouse and Charlie
Higson, while our drama schedules were
strengthened by new productions of great
stage plays by writers such as Alan Bennett
and David Hare.
Following much press speculation as to who
would succeed Sue Lawley after 18 years,
Kirsty Young took over as host of Desert
Island Discs. As only the fourth presenter inthe programme’s 65-year history, her debut
attracted much comment, both positive andcritical, but Kirsty has settled in well andincreased the audience.
Nick Clarke’s death in December, at 58,
was an immeasurable loss to the BBC andto thousands who wrote to express their

Next year’s schedule will include narrative
histories of Western music and of democracy,
an exploration of contemporary sexuality anda series looking back on the Clinton years.
Radio 4 had an average 15-minuteweekly reach1 to adults aged 15+2 of
18.7% or 9.3 million people.This is slightly
down on 2005/2006 figures (19.2% or
9.5 million people).

Above: The Slavery Project
The Slavery Project on Radio 4 was a speciallycommissioned personal piece starring Lenny
Henry and Adrian Lester who explored thehistory of attitudes to slavery through comedy,
drama and speech.

Whether it was investigating the demise of theChristmas hamper firm Farepak, or reporting
first hand on the situation in Iraq, Radio Five
Live aimed to be breaking the news every
hour of every day.We also gave listeners the
chance to comment on it. A single mother
who lost money through Farepak got in touch
to thank us “for giving a voice to the people”.

Below: Tony Blair on Five LiveThe Prime Minister,Tony Blair, appeared on theRadio Five Live phone-in show and chatted tolisteners about England’s chances in the 2006
World Cup.

We pride ourselves on providing the best
sports coverage and making it as widely
available as possible. As well as our ball-by-ballcoverage of the Ashes, our ‘Ashes Alarm
Clock’ meant listeners could be woken up by
an alert with the latest score on their mobile.
Along with being able to hear every gameof the World Cup live, listeners could sendin their own football stories and have themturned into polished pieces of radio with thehelp of Johnny Vegas and a production team.
If sport on Five Live went fully interactive
in 2006/2007, so did news. We appointed
a new Audience Editor to help get listenerstories on the air and held an ‘audience week’of stories. From October 2006, the audienceteam fed 85 stories through to BBC News
as a whole. A striking example was the cancer
patient who protested on the Breakfast Show
about the benefits system. His story not
only became news, it became the basis ofa parliamentary question and was discussed
at the Prime Minister’s press conference.

15,000– The Archers reached its 15,000th
episode in November 2006.

Radio Five Live had an average 15-minuteweekly reach1 to adults aged 15+2 of 12%
or 6 million people.This is more or lessconsistent with 2005/2006 figures(12% or 5.9 million people).

Part Two: BBC Annual Report and Accounts 2006/2007 41

Review of services
Audio & Music68%
BBC 6 Music has increased its audienceby 68% in the past two years.

Above: Stephen Merchant
In January Stephen joined BBC 6 Music – hesays his show focuses on “music you’ve notheard before”.
Below: Comedy on BBC 7
BBC 7 makes good use of the BBC Archive
to give listeners another chance to hear classic
radio such as Little Britain, Miss Marple and
The Goon Show.

BBC Five Live Sports Extra gave fans more
sports more of the time: from uninterrupted
Test cricket to the first two days of the US
Masters and a second Premiership match as
an alternative to the one on Five Live mostweekends. We carried Formula One practiceand qualifying sessions for the first time andexclusively on Sports Extra. Next year willsee cameras in our studios, enabling video on
demand or vodcasts. We plan more use of
the digital television red button, for example
to offer football commentaries along with
better interactive coverage for Formula One.

Digital radio based mainly on the BBC
Archive presents a challenge: to keep coming
up with new and exciting ways to recycle
classic material.

Radio Five Live Sports Extra had an average
15-minute weekly reach1 to adults aged
15+2 of 1.3% or 0.7 million people.This is asignificant increase on 2005/2006 (1.0% or
0.5 million people).

Science fiction is the most popular type ofdrama on BBC 7. In 2006/2007 we steppedup our 7th Dimension series to one hour aday. We also launched an original interactive
sci-fi drama, The Uncertainty Principle, wherelisteners helped decide the plot.

BBC Northern Ireland’s A Short History of
Ireland was broadcast in full to a network
audience for the first time. Our Indian
Summer season, including drama, comedy
and features, was trailed on BBC Asian
Network and got a strong response from acommunity that has been under-represented
on radio.

Anniversary specials, including a week ofprogrammes marking the 10th anniversaryof Willie Rushton’s death – introduced by thecurrent I’m Sorry I Haven’t A Clue team – havebecome one of BBC 7’s distinctive signatures.
BBC 6 Music has enjoyed rapid audience
growth, welcoming 108,000 new listeners(year-on-year), an increase of around 30%
on the same period last year. It is the home
for those with a passion for popular music.
We combine the old with the new andpresented over 1,000 hours of archive
concerts and music documentaries. Oasis,
Moby and Courtney Love all agreed tocurate editions of our Selector 06 season,playing the music that had influenced them.
In promoting new artists we recorded over
300 new sessions in our own performancearea,The Hub, and at concerts and festivals
around the UK.The station seeks out newpresentation talent too and brought listeners
emerging stars such as the Queens of Noize
and the first regular radio shows from
Russell Brand. On his departure to Radio 2,
we welcomed Russell Howard and also,
later in the year, Stephen Merchant. As theyear ended further revisions to the schedule
were announced, with Shaun Keaveny
launching a new breakfast show and theintroduction of more new presenters, including
filmmaker and reggae aficionado Don Letts.
BBC 6 Music has grown its average 15­
minute weekly reach1 to adults aged 15+2
to 0.9% or 0.4 million people (0.6% or
0.3 million people in 2005/2006).

42 Part Two: BBC Annual Report and Accounts 2006/2007

A highlight of the year was the complete
Chronicles of Narnia, with over 100 actors,
including Paul Scofield as CS Lewis.
In early 2007 we relaunched our children’s
output with a new three hour CBeebies Radio
slot for very young listeners each afternoon.
Next year’s events will include a Hitchhiker’s
Guide To The Galaxy weekend and a Harold
Pinter season.
BBC 7 had an average 15-minute weekly
reach1 to adults aged 15+2 of 1.4% or
0.7 million people.This is an increase on
2005/2006 (1.2% or 0.6 million people).

1Xtra continued to grow its audience froma low base and finished 2006/2007 on a highwith a record 465,000 listeners.Two-thirds
were aged 15–24, with around a third comingfrom ethnic minorities – giving us a uniqueaudience profile within the BBC. Around
140,000 people – 35% – listen to no other
BBC Radio. Challenges remain, however, ingrowing our audience; younger people are
not buying digital radios to the same extent
as older listeners, although they are listening
to digital radio on digital television platforms
and online.
1Xtra has worked hard to raise its profile
over the year, in particular working moreclosely with Radio 1.The 1Xtra Takeovershow has a high-profile slot on Friday nights,
and 1Xtra also allied with Radio 1 for amajor sex survey of young people.
Seventy live events, from across the UK, werebroadcast over the year and we played an
important part in this year’s pan-BBC Electric
Proms. Words, Sounds, Power brought together
classical strings, roots reggae, conscious rap
and poet Benjamin Zephaniah to create
something unique.
With 20% of our output dedicated to talk,
TXU, 1Xtra’s main news show, is establishinga reputation for confronting tough issues
head on. Items such as Without Words
on self-harm generated numerous texts
from listeners.
We were also responsible for a new media
breakthrough when our red button coverageof this year’s Notting Hill Carnival contained
video shot by the DJs themselves using theirmobile phones.
1Xtra has increased its average 15-minuteweekly reach1 to adults aged 15+2 to 0.8%
or 0.4 million people (0.7% or 0.4 million:
2005/2006).

We worked to transform the Asian Networkfrom the ground up this year with an all-new
schedule – new breakfast, arts and culture
and sports shows; a new documentarystrand under the title The Asian Network
Report; a new music policy; and a new dailynews show, The Wrap.
The result was to make the Asian Network
the fastest growing of our radio news
operations with listening figures up 15.5%
for news bulletins on the station. A landmark
was the first radio interview with Briton Mirza
Tahir Hussain after his release from a Pakistanijail. He was set to be executed for murderat the end of the year, but his death sentence
had been commuted following appeals by
HRH The Prince of Wales and others.

Above: Rozina Sini
The Wrap with Rozina Sini on BBC Asian Network
gives listeners everything they need to know
about news, sport and entertainment in
30 minutes.
Below: Feed Your Head
Feed Your Head on IXtra aimed to raiseawareness of mental health issues amongst
young people.

Music is a dynamic area of British Asian lifethat we are committed to reflecting byinvesting in live music and helping to develop
new talent. Our ambitious summer of live
events included DJ workshops in Newcastle,
our mobile ‘Station Wagon’ at WOMAD
in Reading, and a ‘Uni Tour’ which visited
Leicester, Colchester, Birmingham, Guildford
and Nottingham.
Events such as London City Showcase andLondon Mela added to our schedule. Asian
Network night at the Electric Proms showeda depth of talent from the Glaswegian Sikh
production duo Tigerstyle, teamed withclassical strings, to a meeting of musicalminds between the Bombay Dub Orchestra’s
electronic sound and the cinematic vocalsof Swati Natekar.
BBC Asian Network had an average
15-minute weekly reach1 to adults aged
15+2 of 0.9% or 0.4 million people.This wasconsistent with 2005/2006 (0.9% or
0.4 million people).
Average weekly reach for radio is measured by the
number of people aged 15+ who tune to a radio
station within at least one quarter-hour period overthe course of a week. Radio listeners only need to havelistened to the station for at least five minutes withinthat quarter-hour (RAJAR)
2
The population aged 15+ rose by 429,000 to
49.8 million between 2005/2006 and 2006/2007

38%

1of the 1Xtra audience are fromethnic minorities – compared to 6%of the audience to BBC Radio overall(9% of the population as a whole arefrom ethnic minorities).

Part Two: BBC Annual Report and Accounts 2006/2007 43

Reviewof services
Journalism

The Journalism Group brings
together all the BBC’s journalism
at UK-wide, international, national
and local levels across radio,
television and interactive media.
BBC News provides all UK-wide
news and current affairs content
and newsgathering. Global Newsruns all the BBC’s international news
services including the World Service
and BBC World. Nations & Regions
reflect diversity of experience andidentity across the UK with specificservices for Scotland,Wales,
Northern Ireland and the English
Regions. BBC Sport provides alllive multimedia sports coverageand sports journalism.
It has been a strong year for
Journalism marked by outstanding
coverage of the very dangerous
and difficult situations in Iraq and
Afghanistan; the Lebanon conflict
between Israel and Hezbollah; thehistoric developments in the peace
process in Northern Ireland andthe changing political landscapeacross the UK. More than 80%of the population now connects
to BBC Journalism content eachweek. Global News audiences
have increased by 11% to a record
233 million.

Journalism –News

The BBC’s Gaza Correspondent, Alan
Johnston, was kidnapped in Gaza on
12 March 2007. At the time of going topress, his whereabouts remain unknown.
His plight is a reminder of the professional
and personal commitment given by BBC
correspondents operating in difficult anddangerous areas. BBC News invests heavily
in training for hostile environments andproviding appropriate security, butnevertheless we must not underestimate
the risks involved in first-hand reportingfrom all parts of the world.
This year, the most challenging stories
for BBC News have been the conflict in
Lebanon and the continuing conflicts in Iraq
and Afghanistan, the execution of Saddam
Hussein, the Ipswich murders and the cashfor peerages investigation.
Lebanon conflict coverage
The conflict between Israel and Hezbollah
in July and August 2006 posed a major testof our impartiality, our deployment capability
over a sustained period and our ability toconvey complex information to all audiences.
Correspondents were deployed to Israel
and Lebanon but the weight of the campaign
was in Lebanon and the pictorial impact of
events there was stronger than elsewhere.
There were more than 5,000 complaints
about the coverage, representing a quarterof all complaints in the period and increasing
the overall number of complaints by 2,000
in July compared with the previous month.
There were some organised lobbies via
the web. Many complainants alleged bias,
in both directions.
A subsequent audience survey showedthat a majority felt the BBC had provided
the best broadcast coverage of the conflict,with 64% trusting it and only 11% distrustful.
A retrospective editorial assessment concluded
that, although we were rightly proud of
our overall coverage, we did not give ouraudiences enough consistent information
about Hezbollah and its aims.

In the months following the conflict, BBC
journalists continued to cover all sides ofthe debate. Edward Stourton was given
unrivalled access to the protagonists in theconflict when he assessed the diplomaticstory for his Radio 4 series A Tragedy of Errors,
which has received high critical acclaim.
In Crossing Continents and Assignment,
Richard Miron gained unique access toPalestinians who collaborate with theIsraeli secret service.
Iraq and Afghanistan
The safety considerations of operating inboth these areas of conflict are considerable.
In southern Afghanistan and in Basra, BBC
reporters like Alastair Leithhead are often
embedded under the protection of andworking with the military. In Kabul andBaghdad our correspondents like Andrew
North remain independent of the army andwe employ our own security specialists to
help protect them. Both approaches havetheir limitations. We are constantly trying tobalance the safety of our journalists against
our need to provide a rounded and impartial
picture. We share with the audience the factthat we are embedded, and have not allowed
it to stop us undertaking imaginative andcreative programming such as having John
Humphrys present Today from British Army
headquarters in Basra.

Above: Alan Johnston, BBC’s Gaza correspondent
The only international correspondent still living
and working in the Gaza Strip, Alan Johnston
was abducted on the way home from his officein March 2007.
Below: Lebanon
Thousands of Hezbollah supporters gatheredin downtown Beirut to wave Lebanese flags
during the tenth day of a protest to force
the resignation of Lebanese Prime Minister,
Emile Lahoud.

We launched a week of ambitious output tomark the fourth anniversary of the invasionof Iraq which included commissioning an
Iraq-wide opinion poll (with partners ABC).
The execution of Saddam Hussein
There was controversy about our decision
to show footage of events leading up to
Saddam’s hanging. Editorial discussions at
the highest levels prepared the ground fora difficult decision between the need to giveinformation while accepting that, during theChristmas holidays, young children weremore likely to see the disturbing images.
As a result of these deliberations, we did
not show the moment of death anywhereand did not show Saddam in a noose until
after the watershed except on our dedicatednews channels, BBC News 24 and BBC
World. Formal complaints to Ofcom about
our coverage were not upheld.

80%of adults access some BBC News eachweek across TV, radio and online.

Part Two: BBC Annual Report and Accounts 2006/2007 45

Journalism –News

5.2 million
people watched Panorama: The Beautiful
Bung, an exceptionally large audience
for a current affairs programme.

The Ipswich murders
Our decision to run an audio interview
with Tom Stephens, who was arrested –and later released – on suspicion of multiple
murders, provoked complaints fromaudiences, was criticised in the blogosphereand caused debate among BBC News staff.
In retrospect, we accept that some of ourreports were not as cool and objective intone as they should have been. However,
we felt confident about running Mr Stephens’interview – which had been given on
condition of his anonymity – because he
had already made very similar commentsin public in a national newspaper.
Cash for peerages
In March 2006 the Attorney Generalserved an injunction on the BBC to stop us
broadcasting an important new developmentin the Cash for Honours investigation.
The courts subsequently lifted the injunction
and we broadcast a story which was the fruitof concerted investigative effort by a teamof BBC journalists, led by Rita Chakrabarti
and Nick Robinson.

Above: Cash for Honours
Labour’s chief fundraiser, Lord Levy, speaks to
the media as he leaves a north London police
station after being interviewed as part of the
Scotland Yard’s ‘Cash for Honours’ inquiry.
Below: Panorama
Panorama: My Fake Passports and Me
investigated the UK’s border security after
BBC journalist Shahida Tulaganova entered
the UK twice on fake and stolen passports.

Panorama
The move of Panorama to an 8.30pm slot
on Mondays and a duration of 30 minutes
has delivered significantly higher and younger
audiences to the programme. BBC One
still provides hour-long prime-time slots
for major investigations such as the football‘bungs’ programme.
News Interactive
News Interactive introduced a number ofinnovations on the News website, including
customisation of the front page for individual
users, higher profile promotion of video, anda new real-time statistics service sharing withthe audience a wide range of live data on themost read, watched and listened to items on
the site. We also expanded our operations
so that we can now receive words, picturesand videos from the audience seven days aweek – all of which can be verified anddistributed quickly across BBC News outlets.

46 Part Two: BBC Annual Report and Accounts 2006/2007

The News website increased its weekly
users (UK and international) year-on-yearby 27% to just over 12 million, and its rating
for best for news online in the UK rose from
25% to 27%.The site passed 1 billion page
impressions in a month for the first time inJanuary 2007. For the third year running we
won the international Webby award for best
News website, and the ‘People’s Vote’ in thesame category.
The news site raised the profile of video andaudio significantly during the year, including
a dedicated area on the front page and in
the banners across the site.This undoubtedly
contributed to the fact that reach to audio
and video content on the site rose from
600,000 to 1.4 million year-on-year.
Weekly reach to our mobile news service
climbed past 300,000 for the first time,
251,000 for the WAP service and 60,000
for the graphically richer PDA service.
Our digital text service remained steady,retaining a reach of 11% of digital users amonth, while the performance of the news
multiscreen loops behind the red button on
digital TV disappointed, with monthly reach
dropping from 19% to 16% of digital users.
It is hoped that the appointment of a TV
News on-demand editor will help us address
this area of concern.
TV – Average 15-minute weekly reach1 toviewers aged 15+2 for all BBC News output
on BBC One3 was 50.9% or 24 million
adults (51.6% or 24.1 million adults in2005/2006).
Radio – Average 15-minute weekly reach1
to listeners aged 15+2 for all BBC News
increased slightly to 52% or 25.9 million
people (51.8% or 25.6 million people in2005/2006).
Online – Average weekly unique users also
increased to 10% of the UK population 4+4
or 5.6 million people (8% or 4.4 million
people in 2005/2006).

College of Journalism

We have worked throughout the year
to improve the journalism and impact ofNews 24. It now simulcasts the BBC One
bulletins regularly, and the use of key news
presenters such as Huw Edwards, Emily
Maitlis and Ben Brown on the channel
has increased its authority and impact.
The channel works closely with news online,
especially on major themed events such as
World on the Move – about mass migrationand our special live days from Afghanistan
and Pakistan. We launched Your News as our
first journalistic programme made entirely
from ideas, still photos and video clips sent
in by viewers.
BBC News 24’s average 15-minute weekly
reach1 to viewers aged 4+4 in multi-channel
homes in 2006/2007 was 7.2% or 3.3 million
people (7.4% or 3.1 million people in2005/2006).

We made major improvements this year
to the only UK channel entirely dedicatedto politics.The parliamentary rules governing
coverage were modernised so that we
can now show more of the House rather
than just focusing purely on a speaker.
This allows the audience to get a muchbetter feel for the reaction to proceedings.
Technical developments have also meantthat quarter-screen images have been replacedwith a full-screen delivery on Freeview.

The BBC College of Journalism wasestablished this year and undertakes a rangeof activities for the 7,500 staff who practise
journalism across the BBC.The objectivesof the College are to promote the BBC’svalues and the highest ethical and editorial
standards, as well as developing the strongest
craft skills and knowledge base across
BBC journalism.
The College website was launched in
January and aims to be the world’s leading
website on journalism issues. It contains films,
interactive modules, ‘how to’ guides, articles
and a College blog about current issues injournalism. All the material on the site isdelivered by BBC journalists and producedby the College. In other words, the College
facilitates the passing on of knowledge andexperience from the BBC’s top talent to
the entire staff.The blogs are written by
BBC journalists and senior industry figures.
The site contains, among other things,
sections on values, ethical dilemmas, law,writing, audiences and craft skills. Much of
the material is interactive.

Above: Execution of Saddam Hussein
The trial and execution of former Iraqi
President Saddam Hussein raised editorial
dilemmas about how much of the execution
coverage it was ethical to show.
Below: Ipswich murders
In December Detective Chief Superintendent
Stewart Gull of the Suffolk Police confirmedthat police were hunting for a serial killer after
a fifth victim was found.

The College has also delivered pan-BBC
training programmes on areas such as
user-generated content, reporting Israel
and the Palestinians, and reporting the UK.
The College’s law course was completed
by 11,500 staff over a six-month period.
More new initiatives, such as a programme
for all new journalists joining the BBC, will
be rolled out in the coming year.

BBC Parliament’s average 15-minute weekly
reach1 to viewers aged 4+ in multi-channel
homes in 2006/2007 has remained stable
at 0.2% or 90,000 people.

44,000
Average 15-minute weekly reach is defined as thepercentage of people who watch television or listen toradio for at least 15 minutes in an average week2
The population aged 15+ rose by 429,000 to
49.8 million between 2005/2006 and 2006/2007
3
Includes all News output on network services but not
Nations & Regions
4
The population aged 4+ rose by 320,000 to 56.1 million
between 2005/2006 and 2006/2007
1

hours of news per year are produced
by BBC News – that’s equivalent tomore than five hours of broadcastingfor every hour of every day.

Part Two: BBC Annual Report and Accounts 2006/2007 47

Journalism –BBC Global News

233million
people use the BBC’s international
news services on TV, radio and online.

BBC Global News brings together BBC
World Service radio, BBC World television,
the BBC’s international-facing online news
services, BBC Monitoring, and BBC World
Service Trust – the BBC’s dedicatedinternational development charity.
Despite rapidly growing competition,
independent surveys indicate that the
total tri-media weekly audience reach of
the BBC’s international news services isabove 233 million.This is up from around
210 million in 2005/2006.
The BBC’s global reputation for trust andobjectivity remains strong. According to
independent surveys, the combined BBCinternational news services outperformed
both CNNI and international radio
competitors in this area in almost all
major markets.

Above: BBC Website in China
In China access to BBC news websites isblocked but new partnerships have establishedportals for BBC learning and education material.
Below: Production Centre in Africa
New production centres have been opened
in key locations in Africa, including Nairobi and
Abuja, enabling the BBC to report in depth
from across the continent.

The BBC Global News division extended its
commitment to thematic journalism throughspecial seasons illuminating issues beyond theregular news agenda to audiences aroundthe world.Topical weeks of current affairs
and feature programming from countries
in the news, such as Iraq, Afghanistan, Iran,
Russia and Turkey, enabled us to make great
editorial impact with audiences.
Multimedia seasons captured the bigger
trends that lie behind the headlines, enabling
the international news services to get abetter picture of the human experienceof events that can seem distant.
The year’s most ambitious project was
Generation Next, which took a fresh look at
the world through the eyes of the under-18s.
For instance, School Day 24 linked up schools
across international conflicts, tensions anddivides ranging from Israel and Palestine to
Mexico and the USA.
The season’s programmes, such as Assignment
Special on the abuse of children by UN
peace-keepers in Haiti and Liberia, showed
the BBC’s increasing use of multi-platform
commissioning. It was conceived as a
tri-media production for BBC World Service
radio, viewers to BBC World and online
audiences, and for domestic UK audiences
on BBC Two’s Newsnight and Radio 4.

Interactive editorial initiatives, such as theWorld Have Your Say online forums, enabledthousands of people around the world
to take part and share their perspectives,
building bridges across national and linguistic
boundaries.They were a key part of ourcoverage of major world events such as the
Israel–Lebanon conflict, the crisis in Iraq andcontinued global tensions involving Iran.
Usage of our international-facing news sites
continued to reach record levels during
2006/2007.The sites attracted a record
763 million page impressions in March 2007,
up from 546 million last year.There werea record 38.5 million unique online users
during March 2007, up from 32.8 million
a year ago.
BBC World, the commercially fundedinternational English-language news andinformation channel, is now available in over
280 million homes. It is available 24 hours
a day in 147.1 million households aroundthe world, up from 138.8 million last year.
BBC World saw substantial growth inaudiences in Africa, Canada, Egypt, India,
Pakistan and the USA.
BBC World Service’s weekly global audienceestimate, created from independent surveys,
reached a record 183 million across its
33 language services, up 20 million from
163 million in 2005/2006.
There were large BBC radio audience
increases in Bangladesh (up 8.3 million).
Increased survey coverage added 7.5 million
to the estimate in the Democratic Republicof Congo and 7 million in Afghanistan.
Weekly audiences in radio markets in India,
Nigeria, Pakistan and Rwanda all grew by
a million or more during the year.
BBC Monitoring systematically monitored
more than 3,000 radio,TV, press, internet
and news agency sources, translating up
to 100 languages to provide an authoritative
view of world events for stakeholders.
The BBC World Service Trust used media
and communications to reduce poverty andpromote human rights. It worked alongside
local and national media in more than 40
countries in Africa, Asia, the Middle Eastand Europe during 2006/2007.
The BBC World Service Annual Review
is available atbbc.co.uk/worldservice/us/annual_review.

48 Part Two: BBC Annual Report and Accounts 2006/2007

Journalism –Nations & Regions
Good progress has been achieved in making
more English Regions’ programmes available
on demand this year. Increasing numbers of
BBC Local Radio listeners are tuning in via
the internet, with 40 hours of programmes
now available each week on a Listen Again
facility at each station.Viewing of BBC
regional news has also been made moreconvenient, with all of the early evening
television news stories now available via
broadband. Weekly regional television
programmes including The Politics Show
will follow shortly.
An on-air pilot was conducted in six local
radio transmission areas in the West Midlands
over a nine-month period to test the appetite
for more on-demand local video news.
It received a warm reception from viewers
and consideration is now being given to
future services.
The 40% annual growth in usage of the BBC’s
local online services in England continues toprovide a solid basis for further developmentson this platform. However, research suggeststhat some of those sites are given low marks
for relevance and value by users. We will seek
to improve them in 2007 and beyond.
This year has also seen a renewedemphasis on delivering more distinctive,
original journalism. The weekly regional
television series Inside Out has led theway by revealing a wide range of stories.
There have also been more multi-platformprojects in which television, radio andonline joined forces for pan-BBC initiatives.
The average 15-minute weekly reach1 of
BBC Local Radio in England to adults aged
15+2 in 2006/2007 was 18.8% or 7.5 million
people3.This has fallen slightly since
2005/2006 (19.5% or 7.8 million people).

In a year of major political transition,
BBC Northern Ireland has provided
authoritative coverage of key events andenhanced its service offering with an editor’s
blog and online studio debates as part ofthe coverage of the Assembly elections.
BBC Radio Ulster and Radio Foyle havethe highest combined reach (38%) of any
national radio station in the UK. A further
series of scheduling changes was initiatedto maintain and develop the station’s
appeal, including a new weekday afternoon
programme, the introduction of specialist
music strands and a different mix of cultural
programming at weekends. All of this activity
was complemented by the launch of a new
website with improved navigation and easieraccess to our Listen Again facility. A fall in
the reach and share of BBC Radio Foyle
is being addressed.

Above: Inside Out West
Inside Out West’s film about a man with
Tourette’s syndrome who achieved his goalof seeing his music performed on stage wasnominated for a human rights award.
Below: Gerry Anderson On The Air
On The Air on BBC One Northern Ireland takessome of the most idiosyncratic phone-ins from
Gerry Anderson’s radio programme and showsthem in animated form.

Locally produced television programmes
continued to reflect the dynamism anddiversity of community life in Northern Ireland.
Programmes profiled local achievements inscience and the arts; explored a range ofhistorical and environmental themes; reflecteddifferent aspects of linguistic and cultural
diversity, and showcased new comedy talent.
40% of local programmes were producedby the independent sector, reflecting BBC
Northern Ireland’s critical role in supportingthe creative industries at local level.
BBC Northern Ireland’s network
programming included television current
affairs, drama and entertainment and arange of programmes for BBC radio.Titles
included Panorama: TV’s Dirty Secrets, Lilies
and Rough Diamond.
BBC Radio Ulster & Foyle had a combined
average 15-minute weekly reach1 to adults
aged 15+2 of 38% or 0.5 million people3(41.4% or 0.6 million people in 2005/2006).

38%
of adults in Northern Ireland listen
to their BBC national radio station.

Part Two: BBC Annual Report and Accounts 2006/2007 49

Journalism –Nations & Regions

1 in 4
adults listen to Radio Scotland – morethan any other radio station in Scotland.

Above: Torchwood
John Barrowman and fellow cast members
in Torchwood, a BBC Wales production.
It has proved to be one of the most successfulprogrammes ever transmitted on a
non-terrestrial channel.
Below: My Name is Misbah
Molly Campbell hit the headlines when she was
abducted as a schoolgirl. Now living in Pakistan
and using her Islamic name, she talked frankly
about her life in this BBC Scotland programme.

BBC Wales produced three hit drama series
for the BBC’s networks this year. Along withanother successful series of Doctor Who,it launched Torchwood on BBC Three. It alsodelivered the second and final run of Life On
Mars (made by independent company Kudos)
soon to be followed by Ashes to Ashes.
The new media output that complemented
these programmes was innovative andsuccessful. A range of radio drama was also
produced for Radio 4 and Radio 3. For the
local audience, the drama team produced
another series of Belonging, which continues tobe very popular with the BBC Wales audience.
Factual productions included The Trees that
Made Britain and another series of Tribe for
BBC Two. Local factual output for BBC One
and BBC Two Wales included Frontline Iraq
and An American in Aberfan. BBC Wales’s
25-year partnership with S4C was formalised
for the first time this year in a new three-year
Strategic Agreement between the BBC Trustand the S4C Authority. BBC Wales fulfilled
its statutory obligations to provide 520 hoursof licence fee funded programmes to S4C,
and its contribution – including the popular
drama Pobol y Cwm and a daily news service,
Newyddion – continued to form the bedrockof S4C’s schedule.
During the year, BBC Radio Wales delivered
a new editorial strategy, involving newpresenters and formats, and it has developed
a network of 20 community reporters topromote a deeper connection with thedifferent localities of Wales. BBC Radio
Cymru has strengthened its programmingfor younger audiences, with expanded
sports and event coverage.
Current affairs and political programmingwere at the cutting edge of public debate.
Dragon’s Eye, Taro Naw and Week In Week
Out investigated a range of subjects including
problems of the Welsh ambulance service,
the impact of new rape laws, bed blocking in
hospitals and ageism in the workplace.
The average 15-minute weekly reach1 of
BBC Radio Wales to adults aged 15+2 in
2006/2007 increased to 18.3% or 0.4 million
people3 (17.2% or 0.4 million people in2005/2006).
The average 15-minute weekly reach1 of
BBC Radio Cymru to adults aged 15+2 in
2006/2007 was 6.5% or 0.2 million people3(6.9% or 0.2 million people in 2005/2006).

50 Part Two: BBC Annual Report and Accounts 2006/2007

BBC Scotland TV reached 43% of the
population this year, with news, sport andcomedy proving the most popular. After
lengthy public consultations, Radio Scotland
made changes in both style and content,
putting extra emphasis on new comedy,
entertainment and drama alongside its
existing strengths in news, live sport andlive music. With over 1 million listeners
each week, Radio Scotland transmits more
live music than all commercial stations in
Scotland combined. On Radio nan Gàidheal,
youth programming was the focus ofmulti-platform commissioning, and Rapal, aradio platform for young and up-and-coming
bands, was extended to television andthe web.
WAP services were exploited for news,
sport and River City, and Reporting Scotland
was offered for the first time via vodcast.
However, the soap JCN16 offered via mobile
did not elicit the hoped-for response among
the target youth audience. Highland 2007
saw a number of radio shows relocating to
the Highlands and coverage of Scotland’sMusic ’07 offered a year-long series of live
music events across all broadcast platforms.
Production of programmes for networktransmission included another series ofStill Game and the nation’s quiz show
Your Country Needs You and a pre-school
children’s soap, Me Too! Nina and the
Neurons, was not only a huge success on
CBeebies but its website and game achieved
well over 2.5 million page impressions in
its first week.
Devolved politics will continue to offer achallenge to our news provision.We will also
be working with the Gaelic Media Service todevelop proposals for a Gaelic digital service.
This will be subject to a Public Value Test.
The average 15-minute weekly reach1 of
BBC Radio Scotland to adults aged 15+2 in
2006/2007 has more or less remained stable
at 23.1% or one million people3 (23.7% or
one million people in 2005/2006).
Average weekly reach for radio is measured by the
number of people aged 15+ who tune to a radio
station within at least one quarter-hour period overthe course of a week. Radio listeners only need to havelistened to the station for at least five minutes withinthat quarter-hour (RAJAR)
2
The population aged 15+ rose by 429,000 to
49.8 million between 2005/2005 and 2006/2007
3
Figures are based on population in the relevanttransmission area1

Journalism –Sport
The World Cup was the highlight of a richsporting year: 48 million people watched thetournament, which was also shown on highdefinition TV and streamed on broadband,
both for the first time.The BBC coverage
was by far and away the most popular, withfive out of six people choosing to watch
the final on BBC One.
bbc.co.uk/sport was the most popularinternet sports website during the World
Cup with 3.4 million unique users. Our 58%
share of the total online audience was threetimes our nearest rival, the official Fifa site.
We had 500,000 users of our streamed
audio (Radio Player) every day and served
60,000 concurrent video streams for thebigger afternoon games, making it the mostpopular video service we have ever offered.
Fans are not the only ones making big
numbers in the sporting world these days.
Broadcasting rights to major sports arehugely competitive and the BBC constantly
has to balance the rights to show eventswith delivering value for money to licencefee payers. We were very disappointed tolose rights to the FA Cup (from the startof the 2008/2009 season), especially since
we believe our coverage has done a lot torevitalise the competition. But we start a
new three-year deal with the Premier
League in autumn 2007, including Matchof the Day, MOTD2, Football Focus and Final
Score, while Radio Five Live will continue toprovide all the action from many of the vital
matches.The World Cup in 2010 and 2014
will be on the BBC, as will the 2008 and2012 Olympics.The Six Nations, Open Golf,
Wimbledon and the London Marathon areamong our other top sports contracts.
Recognising the need to improve thejournalism within our sports coverage weappointed our first sports editor, Mihir Bose.
He immediately delivered an early scoop
about the spiralling cost of the 2012
Olympics – confirmed by the Government
three weeks later. We also launched Inside
Sport, a sports news show hosted by Gabby
Logan on BBC One on Mondays with arepeat on BBC Two the following Sunday.

Neither tennis nor athletics did as well thisyear as in previous years, possibly because
there were no high-profile British contenders.
Your Game, our partnership project with
the FA and the Premier League, aimed atinner-city young people, was appreciated by
the participants but did not have the impact
we wanted.
This year also saw the final appearance ofGrandstand. As so much of our sport was
already outside the Grandstand brand, we
felt we could serve our audience betterby offering new formats and greater choice.
Another favourite, Sports Personality of theYear, was given a makeover. After being
forced to turn down numerous requests fortickets to the show in the past, we moved
this year from Television Centre to the
5,000-seat NEC in Birmingham. It was agreat success – both for the thousandsof members of the public who, for the firsttime, could attend in person, and for the
millions watching at home.

Above: Wimbledon
Amelie Mauresmo’s joyous triumph in theLadies Singles provided a heart-warming
end to the tournament and was watchedby viewers both live and by those using the
red button interactive TV.
Below: World Cup
The BBC’s coverage of the World Cup
attracted 48 million viewers, some of whomwere able to watch the tournament inhigh definition for the first time.

The average 15-minute weekly reach1 of
BBC Sport on TV to viewers aged 4+2 in
2006/2007 has increased to 31.8% or 17.8
million people (31.5% or 17.5 million people
in 2005/2006).
Average 15-minute weekly reach is defined as thepercentage of people who watch television for atleast 15 consecutive minutes in an average week2
The population aged 4+ rose by 320,000 to
56.1 million between 2005/2006 and 2006/20071

5:1– the ratio of people who choseto watch live coverage of the World
Cup final on BBC One versus
the competition.

Part Two: BBC Annual Report and Accounts 2006/2007 51

Reviewof services
Commercial
activities

BBC Worldwide generates profits
which are returned to the BBC forinvestment in new programming andservices.This not only supplements
licence fee income, but also raises
awareness of British creative talentand culture all around the world.
In 2006/2007 the business had a very
successful year. Profits of £111million
represent a threefold increase overthree years and operating profits,
before exceptional items, exceeded£100million. Sales were up by 3% to£810million, or 8% excluding disposals.

Profits from global TV sales were up 19%
to £40.2million, driven particularly bycontemporary drama such as Doctor Who
and the landmark natural history series Planet
Earth. BBC Magazines maintained its sales
and profit levels in a weak market, Global TV
Channels and Content & Production showedvery strong growth with profits up to£20.9million and £9.5million respectively.
BBC Worldwide’s joint venture with
Woolworths, 2 entertain, had hit DVD
titles in Planet Earth and Doctor Who. During
the year, BBC Worldwide sold its majority
shareholding in BBC Books to Random
House so that it could flourish in a dedicatedbook publishing environment. In Digital Mediathe main focus was on developing proposals
for two new businesses: the introduction oflimited amounts of advertising on bbc.com,
the international version of bbc.co.uk, and acommercial media player via which people
can pay to stream or download programmes
after the BBC’s free seven-day period. BBCWorldwide, in conjunction with the BBC,also struck a major deal with YouTube toshow BBC Archive clips on its video-sharing
website in return for a share of futureadvertising revenues.

The final actions relating to governanceand scope from the 2004 BBC Commercial
Review were put in place.Two more nonexecutive Board directors were appointed:
Simon Clift, Global Chief Marketing Officer,
Unilever and Thomas Geitner, formerly Chief
Technology Officer at Vodafone PLC.The
magazine subsidiary Origin Publishing was
sold, along with its non-BBC specialist titles.
Over the next five years BBC Worldwide
intends to increase revenues from ex-UK
activity to two-thirds, and from online
businesses to over 10%; the company alsoplans to expand the new Global TV channels
and Content & Production businesses swiftly,
and to use strategic partnerships andacquisitions to help achieve all these aims.
The USA has been targeted as a key market
for expansion, as well as India and Australia.
US media heavyweight Garth Ancier was
appointed as President, BBC Worldwide
America, in February with a brief to deliversignificant growth in the US across all
businesses. A new portfolio of BBC-branded
thematic TV channels has been developed.
The first of these to launch, BBCEntertainment in Hong Kong and Singapore
in October 2006, has been well received.
The Content & Production team has also
identified key markets for setting up or
acquiring new production offices to help
develop more winning TV formats such as
Dancing with the Stars (Strictly Come Dancing)around the world.
BBC Worldwide has set itself a target of
doubling profits again over the next five years.
Significant investment is required in 2007/2008
to achieve this, therefore lower profits are
forecast for 2007/2008, but these will still be
double the level of three years ago.
BBC Worldwide’s Annual Review is availableat www.bbcworldwide.com/annualreview.
BBC Resources
BBC Resources has achieved sales of£126million and profit before interest andtax of £5million.This is slightly down overall
from 2005/2006 and income in the Studios
business fell as some Children’s and News
programmes moved away from a studioenvironment.This was mitigated in partby a healthy growth in income fromIndependents. During 2006 the BBC
announced that it would consider proposals
for the future ownership of BBC Resources
during 2007.The BBC has engaged
Ernst & Young to advise on sale options.

52 Part Two: BBC Annual Report and Accounts 2006/2007

95– Planet Earth has generated sales to
95 countries and territories to date.
Internationally, there have been 12 bookdeals and 27 DVD deals.

Above: Doctor Who
David Tennant and Freema Agyeman in
Doctor Who, which was one of the top brands
in terms of revenue for BBC Worldwide in
2006/2007 thanks to TV sales, merchandisingand publishing activity.
Below: Life on MarsJohn Simm and Philip Glennister in Life on
Mars, which is one of a raft of contemporary
dramas from both in-house production andindependent companies which have soldwell internationally.

Engagingwith theaudience
Hillsborough; Jonathan Ross’s comments
about Baroness Thatcher in his interview
with David Cameron on Friday Night With
Jonathan Ross on 23 June; changes to themessage boards on Five Live 606 and9/11 The Conspiracy Files alleging that the
programme was biased in favour of official
9/11 findings – many complaints were theresult of a lobby.
Interacting directly with our audienceis important to us and there are now
so many ways for people to comeinto the BBC.They can vote in ourentertainment shows, take part incompetitions, be in a studio audience,
attend an event, get informationor support after some of ourprogrammes, come on our tours,
attend our open centres and tell us
what they think of our programmes
and services. Millions of people hada face-to-face experience with us
this year and millions more phoned,
texted, wrote, emailed, voted, sent
us their photos and videos, or posted
on a blog.

BBC Information
BBC Information is the virtual front door
for our audience. In the last year we have
handled over 1 million contacts from thepublic. 70% of these were unsolicited and
30% solicited, ie a call to action was trailed
within or after a programme. 91% of all calls
were answered in 30 seconds; 87% of emails
were responded to within one day andevery letter received a reply within ten days.
Responding to complaints
The BBC has a commitment to ensurethat it handles complaints and comments
effectively and a new three-stage complaints
system was implemented in 2005.
This year we dealt with just under 124,000
complaints, 90% of which were answered
within ten working days.The single biggest
issue, generating the highest volume ofcomplaints in 2006/2007, was the
Israel/Lebanon conflict. Many of thecomplaints were the result of lobby activity– especially from the US – but the natureof the rest was complex with few single
issues. Other notable issues were the choiceof Kelvin McKenzie as a presenter on two
programmes in light of his comments while
the editor of the Sun newspaper about

BBC Information: Action LineThe Action Line provides further sources ofhelp on social action issues.The programmes
which generated the most calls dealt with
NHS care homes, debt, homelessness andbipolar disorder.
Studio audiences
Many of our shows have a live audience andwe recruit the majority of them. Our mostpopular TV show this year was Strictly Come
Dancing. We had 218,000 calls on the firstday tickets were released and of those
155,000 were made in the first half anhour. On Radio, Friday Night is Music Nighttickets were the quickest to be snappedup, closely followed by The News Quiz and
The Now Show.

Above: Strictly Come Dancing
Mark Ramprakash and Karen Hardy, winners ofStrictly Come Dancing in 2006. On the first day
they become available, we had 155,000 callsin half an hour from people requesting tickets
to see a live recording of the show.
Below: BBC Tours
Young visitors enjoy getting their hands onsome real live equipment on a tour of
Television Centre.

Studio tours
Television Centre had 50,502 tour visitors
last year, of whom 67% were under 18.
Our popular guides include actors, continuity
announcers, presenters, teachers and a
Dame Edna impersonator. We won two
awards: Group Travel Awards – Best
Company/Venue Offering Guided Tours
2006 and a Tour London Gold Award 2006.
Of visitors asked 95% said that they would
recommend the tour to a friend.
News and Sport on TourBBC News and Sport on Tour took placeat events around the UK.Visitors could havea go at reading the news on television orradio in our special studios.They could also
try out some of the technical roles involvedin getting programmes on air and checkout some of our interactive services. Someof our top national and regional TV andradio presenters were there to give tips
and advice.

8 million
people had a first-hand experience
with the BBC this year, attending events,
watching the World Cup on big screens,coming to our buildings and seeing
our shows.

Part Two: BBC Annual Report and Accounts 2006/2007 53

Performance
Statements ofProgramme
Policycommitments
2006/2007
Statements of Programme Policy(SoPPs) are annual promises tolicence fee payers from the BBC.
Structured around the BBC’s Public
Purposes, they highlight just some of
the ways that each service delivers
high quality, creative and memorable
content from Planet Earth and Jane
Eyre on BBC One to news and live
music on Asian Network and Radio2; from ‘pressing red’ for choice ofsport commentary via BBCi toRadio Foyle’s Across the Line, one ofmany programmes across our radio
portfolio which showcase unsigned
and emerging talents; and much moreacross more than 350,000 original
hours and 27 distinct UK services.
SoPPs are written by BBC management
and approved by the BBC Trust,which then tracks how the BBC
meets them.
These pages summarise performanceagainst SoPPs 2006/2007. Unlessotherwise stated, all commitments
are minimum hours or percentages
and include originations, repeats
and acquisitions. SoPPs forthe year ahead can be found atbbc.co.uk/info/statements2007.

54 Part Two: BBC Annual Report and Accounts 2006/2007

Television
The BBC’s Television services have a statutory regulatory requirement to meet Tier 2 quotas, agreed annually with Ofcom,
for independent production, regional programme-making, news and current affairs programmes, levels of original production,and regional programming. For performance against these quotas, see UK programme quotas on page 75.
BBC OneCommitment

ActualHours of arts and music

45

82

Hours of current affairs programmes

90

212

… including in peak-time

48.5

49

Hours of new factual programmes

650

937

Hours of religious programming (as part of 112 hours with BBC Two)

80

116

Hours of sports programmes

260

707

Hours of children’s programmes (joint commitment with BBC Two)

500

1,941

Priorities
Landmark factual and peak-time current affairs Panorama successfully moved to weekday peak slot. Are We Changing Planet Earth?
and Planet Earth both performed strongly. Extended impact of docudrama with Krakatoa, Hannibal and 9/11: The Twin Towers.
Repeats in peak-time Repeat levels just ahead of target at 8.4% in peak-time.
Extend reach to younger audience Doctor Who and Robin Hood and weekday drama including Life on Mars and Spooks successfully reached
younger viewers, as did entertainment offers like Strictly Come Dancing.
Reputation for national events We led BBC coverage of the 2006 FIFA World Cup, which reached nearly 50 million through BBC television.
The Eurovision Song Contest and Last Night of the Proms both once more performed well.

BBC TwoCommitment

ActualNew hours of factual programmes

500

842

Hours of children’s programmes (joint commitment with BBC One)

500

1,941

Hours of arts and music programming

200

324

Hours of news

100

558

Hours of current affairs

240

283

Hours of sport

430

921

Hours of religious programming (as part of 112 hours with BBC One)

20

27

Priorities
Maintain reach Reach in peak stable at 45% due to strong output across all genres including Top Gear,The Apprentice, The Path To 9/11,
Torchwood and Coast.
Popular factual for younger audiences Programmes increasing channel share among 25–44 year olds included The Apprentice, Dragons’ Den,
and Tribe. Cooking formats maintained wide appeal, including Masterchef Goes Large. Top Gear continued to grow.
Comedy, including new talent Mid-week comedy line-up revived, with return of The Catherine Tate Show and Extras, launch of That Mitchelland Webb Look, and transfer of Lead Balloon from BBC Four.
Explore broadband Reach in peak stable at 45% due to strong output across all genres including Top Gear, The Apprentice, The Path To 9/11,
Match of the Day, Torchwood and Coast.

Part Two: BBC Annual Report and Accounts 2006/2007 55

Performance
Statements of Programme Policy
commitments 2006/2007
BBC Three

Commitment

ActualHours of new music and arts

50

53

% of output with interactive support

20%*

Hours of new factual, knowledge-building programmes

50

82

Hours of new current affairs programmes

1517% of hours broadcast from news, current affairs, education, music and the arts

c.15%

26%

Eligible budget spent on programmes produced outside the M25

33%

37%

Priorities
Broaden appeal and reach Reach grew. Comedy included I’m With Stupid and Rob Brydon’s Annually Retentive. Factual output like Body Image
and Death Detective was distinctive. Torchwood performed strongly.
Reputation for new approaches MOBOs transmitted live for first time. Red button attracted viewers for T In The Park and the Reading/Leeds
Festivals. All new comedies premiered online. First online-only commission: The Cowards.
New talent initiatives The Parky provided a platform for new animation shorts; year ended with launch of BBC Three New Film Makers Award.

BBC FourCommitment

ActualNumber of new international film titles premiered

20

26

Number of new international documentaries

30

36

Priorities
Broaden appeal of network Lead Balloon was our highest ever rating comedy, while Charlie Brooker’s Screenwipe drew in a younger audience.
Dramas, like The Quatermass Experiment and Fear of Fanny, performed strongly across the slate.
Bigger seasons Seasons, covering diverse themes like 18th Century and Anthropology, drew in viewers. Science Fiction Britannia won ourhighest ever reach (14% of all viewers sampled it).

CBeebies

Commitment

ActualInvestment in new UK programming

75%

77%

Programme hours

4,500

4,691

New UK programming

25%

29%

Hours of children’s programming on BBC One and BBC Two (including CBBC)

500

1,941

Priorities
Restructure the schedule As a result of research, a new approach to ‘zoning’ was introduced to the schedule in March 2007.
More new UK titles A raft of new programmes launched, including In the Night Garden, Tommy Zoom, Mama Mirabelle’s Home Movies,
Nina and the Neurons, Numberjacks and Jackanory Junior.
Strengthen our commitment to older viewers BARB data shows that new programmes like Underground Ernie, Lunar Jim, Jackanory Juniorand Lazy Town have brought 4–6 year olds back to CBeebies.

*Indicates commitment met

56 Part Two: BBC Annual Report and Accounts 2006/2007

CBBC

Commitment

ActualDaily news bulletins

3

4

Hours of news

85

86

Hours of factual and schools programming

1,000

1,308

Hours of drama

650

955

Hours of continuity

150

231

Hours of children’s programming on BBC One and BBC Two (including CBBC)

500

1,941

Priorities
New programmes New factual titles include Level Up, Roar and Wonderful World of Weird; dramas include That Summer Day,Young Draculaand the popular MI High (formerly I Spy).
Enhance interactive and online proposition Development of Adventure Rock (formerly CBBC World) and games site – including six games
genuinely accessible to children with motor function issues – well advanced, with launch planned for this summer.

Radio
BBC Radio made a voluntary pledge that at least 10% of eligible hours on its national analogue radio networks would be made byindependent producers. In 2006/2007 it achieved 13.5% overall.
BBC Radio 1

Commitment

ActualHours of news, sport and current affairs

310

330

% of schedule devoted to specialist music or speech-based programmes

40%

41.5%

% of ‘new’1 music in mainstream output

45%

55%

% of music in mainstream output from UK acts

40%

48%

Live events and festivals broadcast

c.25

29

New sessions and Live Lounge performances

250

340

New documentaries

40

45

Hours of original opt-outs from Scotland, Wales and Northern Ireland

c.200

220

Priorities
Simplify the structure of the schedule New schedule – including Colin Murray and ‘new music’ guides – trailed across daytime Radio 1
output, and television. Early signs suggest some increased slot shares year-on-year.
Develop interactive content ~3 million unique users online. Red button technology and video diaries enhance live sessions. Mobile content
page impressions regularly top 1 million monthly. Podcasting (via BBC Radio trial) still growing.
Ensure distinctiveness of programmes New and UK music key. Crossover with commercial stations under 25% of tracks. Live music fromfestivals, events like Radio 1’s Big Weekend in Dundee, and live gigs.

BBC Radio 2

Commitment

ActualHours of specialist music programmes

1,100

1,171

Hours of musical theatre and film music

60

79

Hours of arts programming

100

102

% of speech output

c.33%

50%

Hours of religious output

170

186

Hours of news and original current affairs programming, including regular news bulletins 800

868

Pre-release or less than one month since release1

Part Two: BBC Annual Report and Accounts 2006/2007 57

Performance
Statements of Programme Policy
commitments 2006/2007
Priorities
Seek a more diverse audience Jeremy Vine increased diversity of his guests and range of subjects they cover. We explored how musicians
have responded to disability in I Don’t Need No Doctor.
Comedy Out To Lunch launched, showcasing new and aspiring stand-ups. Further series also commissioned, plus three satellite shows
to showcase talent emerging from original show.
Live music Live sessions in Jonathan Ross, Dermot O’Leary and Ken Bruce shows, among others, and from diverse talent and events
including Coldplay, Bruce Springsteen, The Eurovision Song Contest and Proms in the Park.

BBC Radio 3

Commitment

Actual% of live or specially recorded music

50%

52%

Live or specially recorded performances

500

587

New musical works

30

43

Documentaries on arts and cultural topics

30

37% of budget spent outside the M25

40%

44%

Priorities
Special broadcasts Unique broadcasts included Wagner’s Ring in a Day, a day of English music on St George’s Day, Wilfred Owen’s war
poems, and Delius Festival in Bradford.
Improved text service on digital platforms Using text to identify musical pieces, enhanced ring cycle with text translation. Regular podcastsof learning material. Relaunched message boards, and took listeners’ requests for Comic Relief.

BBC Radio 4

Commitment

ActualHours of news and current affairs

2,500

3,521

Hours of original drama and readings

730

746

% of new Afternoon Plays that are first or second commissions

25%

25%

Hours of original comedy

180

230

Hours of original documentaries

200

227

Hours of original religious programming

200

273

Priorities
Impact of drama Series of plays on betrayal, by Alan Bennett, Julian Mitchell, Hugh Whitemore, Robert Bolt and David Hare. Season wonvery positive press and high message board traffic.
Widen appeal through:• narrative history Big themes tackled: This Sceptred Isle: Empire took us up to Indian independence; The Invention of Childhood, by Michael
Morpurgo; The Making of Modern Medicine, on the development of western healing since Aristotle.
• sense of occasion Multi-genre season The Memory Experience attracted significant online interaction; as did the blog for our major series
on the environment, Planet Earth Under Threat.
• current events Weekly series of dramas, From Fact to Fiction, written and recorded in response to current events. New weekly strands
launched: Profile and Last Word.

BBC Radio Five Live

Commitment

ActualHours of news coverage

6,000 (c.70%)

6,506 (74%)

Hours of documentaries

50

66

58 Part Two: BBC Annual Report and Accounts 2006/2007

Priorities
Encourage listening via digital platforms Around one-third of trails broadcast on Five Live carry a digital message.
Increase UK news content Three late night programmes made by BBC Manchester every week. Collaboration with Asian Network includes
Ashes series. Also working together on improving internal processes.
Maximise the BBC’s sports rights Uninterrupted coverage of every match from the football World Cup; quarter of a million digital viewers
listened via red button service; Formula One coverage included more reporting from practice and qualifying stages. F1 podcast launched.

BBC Radio Five Live Sports Extra
Priorities
England’s home test matches All test matches between England and Sri Lanka, and England and Pakistan broadcast uninterrupted last year.
Formula One More coverage of practice and qualifying now offered, subject to other broadcast commitments.
Promote Five Live Sports Extra Around one-third of trails broadcast on Five Live carry a digital message.

1Xtra

Commitment

Actual% of new music

70%

71%

% of music from the UK

40%

40%

Live music events

50

70% of output dedicated to news, documentaries and social action

approx. 10%

10%% of speech-based output

approx. 20%

27%

1Priorities
Speech programming Around a quarter of output is speech, led by TXU with its news and documentaries on issues like gun/knife crime,
teenage parenthood, and self-harming.
Improve awareness of the network The 1Xtra Takeover launched on Radio 1 to help raise awareness. We are exploring other ways tocollaborate. 1Xtra continues to build its presence through live music events.
Increase reach Although digital radio ownership still dominated by 35–54 year old men, latest RAJAR data (Q1 2007) shows audiences up 4%.

BBC 6 Music

Commitment

ActualHours of archive concert performances

400

498

% of music that is concert tracks and sessions from the BBC’s archive

15%

15%

New sessions

275

434

Hours of documentaries and essays

550

569

Priorities
Extend reach Reach up 23%. After success with Russell Brand, we have added Stephen Merchant, Shaun Keaveny, Nemone, Jo Mace,
Immran Ahmed and Asha to enrich our offer.
Broaden the appeal of the network Broader music mix since independent research identified areas for growth – also reflected in generalprogramming and in search for new talent. Listening among females up by over 50% year-on-year (RAJAR Q1 2007).
New British artists The Rebel Playlist focuses on new artists, offering opportunities for further exposure across the schedule. Club Fandango
opens with bands chosen from shortlist featuring predominantly new UK artists.

Pre-release or less than one month since release1

Part Two: BBC Annual Report and Accounts 2006/2007 59

Performance
Statements of Programme Policy
commitments 2006/2007
BBC 7

Commitment

ActualHours of comedy

2,800

3,193

Hours of drama

2,800

3,460

Hours of original new comedy

10

22

Hours of original new drama

20

35

Hours of children’s programming

1,400

1,460

Priorities
Attract new audiences Reach up 12% ~700k. BBC 7 targets the over 30s, but also serves children, and has collaborated with Radio 4,
and Asian Network (Indian Summer).
New comedy, drama and children’s Highlights include Navy Lark and Salutes You Sir!, a homage to forces comedy. Comedy Club introducedon Sundays. New dramatisations of Doctor Who and Chronicles of Narnia. CBeebies Radio launched.
Additional ways to listen and interact Weekly newsletter has 15,000+ subscribers. Winners of Christmas competition saw own experiences
turned into short features. Big Toe Radio Show encourages younger listener input.

BBC Asian Network

Commitment

ActualProportion speech: music

50:50

52:48

% music from UK artists

40%

50%

Hours of language programmes per day

3–5

3.5

Priorities
Improve editorial ambition through:• new regular documentary strand Launched in September, covering diverse subjects like Asians in UK armed forces, Asian porn,
Asian comedy, honour killings, Asian identity, and controversy surrounding Shilpa Shetty.
• relationship with BBC News Improved two-way flow of information and expertise, with more use of Asian Network reporters on other
outlets, including Mirza Hussain and Misbah Rana.
• news Breakfast and morning shows relaunched. New launches at lunchtime and drivetime, and late night music with Bobby Friction/DJ Kayper.
Specialist music shows launched on Saturdays.
• live music Live performances nearly trebled, including sessions for Nikki Bedi and Bobby Friction/DJ Kayper, and events like London Melaand Edinburgh Festival. Hosted a night at Electric Proms.

BBC Future Media
bbc.co.uk

Commitment

ActualNew interactive guides (Parliament and the EU)2

2

Number of new British shorts streamed on Film Network

300

400

% (by value) of eligible content and services from external suppliers

25%

30%

Priorities
Reach among UK internet users Restated 56% target achieved in Q1 2007. Growth due to enhanced news, information and educational
content, plus new entertainment formats like Wannabes.
Improve quality and impact Registered users up 75% to 7 million, giving users access to richer service. BBC also has channels on YouTubeand expanded its presence in Second Life over the year.

60 Part Two: BBC Annual Report and Accounts 2006/2007

BBCi
Priorities
Increase reach Reach to our permanent service up nearly one-third to 15 million (33% to 41%), due to service improvements (like betternavigation and signposting) and greater cross promotion.
Improve quality and impact Won international interactive Emmy award for Best Interactive TV Service. BBCi red button access times slightly
slower, signs of improvement now showing due to technical changes.
Enable access to on-demand services Video on demand content trialled over cable trial. iPlayer approval received after year end;
implementation over BBCi to happen in 2007/2008.

BBC News
BBC News 24 and BBC Parliament both met their statutory obligation for at least 90% of broadcast hours to be originations, and to
spend at least 30% of ‘relevant programme’2 budgets (representing 25% of hours by volume) outside the M25.
BBC News 24

Commitment

ActualHourly news service
News summary on the half-hour
Hourly business news from 9am to 7pm on weekdays
More international news than other main continuous news channel(s) in UK

3

More local/regional news than other main continuous news channel(s) in UK
Hours of sports news across the year

100

106

Priorities
Coverage of major events China Day; Iraq Week; World on the Move assessed global migration. Live days around Afghanistan, Iraq, Israel,
Lebanon, Pakistan, plus coverage of the French election campaign.
User-generated content UGC now a regular part of the output. Piloted Your News which uses viewers’ ideas, photographs and video clips.
Showcase the best BBC journalism Weekend film and Christmas series from correspondents around the globe like Paul Wood, Alastair
Leithead, John Simpson and Jeremy Bowen.The best of Newsnight and high-profile Politics Show interviews.

BBC ParliamentCommitment

Actual

Weekly hours of coverage of the Westminster Parliament (normal week)70

70

Weekly hours of Select Committees

10

11

Hours of proceedings of the Scottish Parliament

100

124

Hours of proceedings of the Welsh Assembly

100

105

Hours of programming from Brussels and Strasbourg

100

154

Priorities
Interactive text and on-demand video New service providing on screen text reflecting content in Parliamentary statements and debates.
Highlights available on-demand online.
Delivery on Freeview Full screen delivery achieved in November.

‘Relevant programme’ excludes news
Excluding international celebrity news during monitoring period

23Part Two: BBC Annual Report and Accounts 2006/2007 61

Performance
Statements of Programme Policy
commitments 2006/2007
Nations & Regions
BBC Nations & Regions has no statutory commitments but works with BBC television and radio networks and interactive services
to provide content for audiences in England and throughout the UK. In 2006/2007, Radio Scotland, Radio Wales, Radio Cymru andRadio Ulster/Foyle each made a voluntary commitment to commission at least 10% of eligible hours from independent producers.
The levels achieved were: Radio Scotland (17%), Radio Wales (10%), Radio Cymru (10%) and Radio Ulster/Foyle (9%4). In future years,
SoPPs from BBC Nations & Regions will be service based.
BBC English Regions

Commitment

ActualHours of local radio output

230,000

247,254% of repeats

<2.5%

*

Speech content of BBC local radio in core hours (6am–6pm)

60%

68%

Speech content of BBC local radio at breakfast peak

100%

100%

Hours of regional TV news

3,500

3,964

Original hours of local and regional television (non-news programming)

250

283

Priorities
Conclude pilot of Local TV Pilot concluded successfully. Research shows strong public support for the proposal.
Launch new local radio stations Proposed stations await approval to launch.

BBC Scotland

Commitment

ActualHours of television news and current affairs

460

491

…of which are current affairs and political coverage

100

131

% of network television’s children’s output from BBC Scotland

18%

13%

Hours of new network drama, factual, arts and entertainment programmes

200

236

Hours of radio news and current affairs

2,200

2,820

Hours of arts coverage on radio (including narrative repeats of daily arts show)

200

209

Hours of original music and arts coverage on radio and television

200

455

Number of subject areas contributed to BBC jam

Service suspended

5

Priorities
Reach on BBC One Scotland Reach across BBC One Scotland’s mixed-genre opt-out portfolio ahead of target (40% versus 35%).
Music on Radio Scotland We transmitted more live music than all other stations in Scotland combined, increasing our range to introduce
new genres like urban music and jazz.
New comedy on television Five comedy pilots transmitted across the year.To encourage new talent, we ran a series of writers’ workshops
linked to the Glasgow Comedy Festival.
Regional news service News text service delivered across six regions; other community content included in outreach activities (like Highland
2007 and SoundTown).

BBC Cymru Wales

Commitment

ActualHours of news and current affairs on BBC Radio Wales

1,500

1,538

Hours on BBC Radio Wales, excluding news and current affairs (excluding opt-outs)

5,300

5,583

Hours of news and current affairs on BBC Radio Cymru

1,000

1,033

Due to process of tendering 15.00–17.00 slot
Excluding weekly specialist music strands on radio*Indicates commitment met
4
5

62 Part Two: BBC Annual Report and Accounts 2006/2007

Hours on BBC Radio Cymru, excluding news and current affairs (excluding opt-outs)

6,200

6,301

Hours of English language television news and current affairs

460

475

Hours of originated television output in English

780

813

Hours of news on S4C

180

216

Hours of Welsh language television programming for S4C

520

524

Hours of coverage of proceedings at the National Assembly on S4C2

500

565

6

Priorities
Hours of Welsh language television A new Strategic Partnership agreement will govern our supply of programmes to S4C from 2007/2008.
English language television Examples include The Welsh in London with Huw Edwards; sitcom High Hopes, and a powerful film to mark the40th anniversary of the Aberfan disaster.
Share and reach of both radio services Radio Wales averaged weekly reach of 17.3% and share of 8.9%. Radio Cymru dropped gains from2005/2006 with both share and reach closer to levels of two years ago.
Contributions to the UK-wide networks Included Torchwood, Doctor Who, and Tribe on television; on radio, dramas included Sunbathing in
the Rain by Gwyneth Lewis and Meic Povey’s Fire of the Dragon.

BBC Northern Ireland

Commitment

ActualOriginated hours of local radio

8,400

8,756

Hours of news and current affairs on BBC Radio Foyle

380

510

Hours of news and current affairs on BBC Radio Ulster

1,550

1,778

Hours of new comedy on BBC Radio Ulster

20

23

Programmes within Ulster Scots radio series

40

78

Originated hours of local television

640

664

Originated single documentaries

20

31

Originated TV series

40

40

Hours of television news and current affairs

325

381

Hours of factual programming for BBC One Northern Ireland

100

146

Hours of television arts documentaries

3

4

Hours of music performance on television

12

15

Hours of new comedy on television

10

11

Hours of Irish language output on TV

13

21

Hours of schools provision on radio and television

16

16

Priorities
New comedy, music, history and factual/current affairs Successes included On the Air and The Blame Game (comedy), ATL @ Vital (music),
The Lion Game (history) and Sorry For Your Trouble and Waterworld (factual).
Social action/citizenship projects Men’s health and mental well-being campaigns delivered, in addition to RaW, Breathing Places andNo Home. Storyfinders project launched.
Storytelling and creativity My Story extended on Radio Ulster, and Days Like These introduced – both encouraged listeners to sharememories and reflections. Both projects supported by websites.
Digital distribution Radio Ulster website relaunched with more audio and video pieces available to download. Newsline accessible online.

Including children’s weekday bulletin and weekly summary suitable for Welsh learners

6Part Two: BBC Annual Report and Accounts 2006/2007 63

Performance
Broadcasting
facts and figures

1
2
3
4
5
6
7
8
9
10
11
12

13
14
15
16
17
18
19
20
21
22
23

Average 15-minute weekly reach
Average audience share
Subtitling output on BBC Television
Audio description on
BBC Television
Signing on BBC Television
BBC Network Television hoursof output by genre
BBC Television hours of output
by origin
BBC Network Television hours
of repeats
BBC Network Radio hoursof output by genre
BBC Radio hours of output
by origin
Average weekly bbc.co.uk
page impressions
Average monthly and weekly reachof Future Media & Technology(millions of users)
Weekly audio visual (AV) hours
consumed from bbc.co.uk
Cost per hour of BBC-originatedprogrammes by service
Cost per hour of BBC-originatedprogrammes by genre
BBC spend outside London
Creative spend outside the BBC
TV programming produced
by independent producers
Top ten external producers
for BBC Television by spend
Radio programming produced
by independent producers
Top five external producers
for BBC Radio by spend
Future Media & Technology content
produced outside the BBC
Content cost per user hourfor service

64 Part Two: BBC Annual Report and Accounts 2006/2007

Table 1: Average 15-minute weekly reach: BBC and competitors
The table shows the percentage of people who watch or listen to television or radio for at least 15 minutes in an average week.
All homes

All multichannel homes

Analogue terrestrial homes

2006/07 2005/06 2004/05 2006/07 2005/06 2004/05 2006/07 2005/06 2004/05
55.8m155.4m145.6m142.5m137.5m110.5m113.2m117.9m156.1m1
%
%
%
%
%
%
%
%
%

Total BBC Television and Radio reach2

92.5

92.7

92.9

–

–

–

–

–

–

BBC Television
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament

84.4
78.4
57.0
14.0
5.6
4.4
6.6
5.7
0.2

85.3
79.7
59.1
11.8
4.5
4.2
6.4
5.4
0.2

86.6
81.9
61.4
9.4
3.0
3.5
5.8
4.2
0.2

83.1
76.3
52.5
17.6
7.1
5.6
8.2
7.2
0.2

83.6
77.1
52.9
16.1
6.1
6.0
8.8
7.4
0.2

84.5
78.7
53.3
14.8
4.8
5.6
9.0
6.7
0.3

89.2
86.1
74.2
–
–
–
–
–
–

89.7
86.7
74.7
–
–
–
–
–
–

90.2
87.2
75.3
–
–
–
–
–
–

Other channels (total)3
All ITV
ITV1
ITV27
ITV37
ITV4
CITV
All Channel 4
Channel 410
E47
More 47
Film47
All five
five
five Life
five USAll Sky channels
Sky OneSky News
Discovery7
Nickelodeon7
Nick Jr.
Disney7
UKTV Gold7UKTV History7
UKTV
Living7

64.8
74.7
70.4
17.7
10.3
6.5
2.5
66.1
60.3
15.5
8.3
9.311
42.2
41.2
5.012
5.112
33.5
13.3
3.7
4.5
4.1
3.1
4.1
10.9
5.6
23.7
8.6

58.6
75.9
73.0
16.9
8.6
4.85
0.16
65.5
62.3
13.6
7.08
–
–
43.4
–
–
31.7
14.2
4.1
5.2
3.9
2.9
3.2
11.2
4.4
22.5
8.8

52.0
77.5
76.0
13.9
3.34
–
–
64.6
62.6
8.4
–
–
–
43.9
–
–
30.7
14.8
4.0
5.1
4.4
2.6
3.8
11.0
3.6
20.4
8.7

81.2
73.8
68.3
22.1
12.9
8.2
3.1
64.3
57.0
19.4
10.4
11.611
42.2
40.9
6.112
6.312
42.3
16.6
4.8
5.6
5.1
3.8
5.2
13.7
7.0
30.0
10.7

81.2
74.4
70.5
23.0
11.7
6.35
0.26
62.2
57.9
18.4
9.18
–
–
43.0
–
–
45.1
19.6
6.0
7.0
5.7
4.1
4.5
15.8
5.9
31.5
12.2

81.4
75.1
72.7
21.4
5.04
–
–
59.7
55.8
13.0
–
–
–
42.9
–
–
48.4
22.8
6.3
8.0
7.0
4.1
6.0
17.2
5.6
32.0
13.5

–
–
77.5
–
–
–
–
–
71.4
–
–
–
–
40.6
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
79.6
–
–
–
–
–
72.6
–
–
–
–
43.1
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
81.3
–
–
–
–
–
71.4
–
–
–
–
44.5
–
–
–
–
–
–
–
–
–
–
–
–
–

49.8m14%49.4m14%48.9m14%

BBC Radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Radio Five Live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
BBC Local Radio (including Nations)
BBC World Service9

66.4
21.4
26.5
3.8
18.7
12.0
1.3
0.8
0.9
1.4
0.9
19.9
2.7

66.5
20.6
26.5
4.1
19.2
12.0
1.0
0.7
0.6
1.2
0.9
20.5
2.6

66.6
20.4
27.2
4.2
19.3
12.7
0.8
0.6
0.5
0.9
1.0
20.8
2.6

BBC Local Radio in England13
BBC Scotland13
BBC Wales13
BBC Cymru13
BBC Ulster (& Foyle)13

18.8
23.1
18.3
6.5
38.0

19.5
23.7
17.2
6.9
41.4

19.9
22.9
18.4
7.1
36.8

All commercial radio
Virgin AM/FMClassic FM
talkSPORT
All local commercial radio

62.6
4.8
11.8
4.7
50.8

62.2
5.1
12.1
4.4
50.6

63.8
5.1
12.6
4.6
52.5

Source:Television: BARB TNS/Infosys, age 4+;
Radio: RAJAR, age 15+, both average for the year
1
People aged 4+ as at March, source: BARB
2
Combined share of viewing/listening to BBC Television
and Radio reach age 4+. Source: BARB/RAJAR
3
Excludes BBC One, BBC Two, ITV1, Channel 4 and five4
ITV3 launched in November 2004
5
ITV4 data launched in November 2005
6
CITV data launched in March 2006
7
Includes the first transmission and +1 hourtime-shifted channels
8More 4 data launched in October 2005
9
UK only
10
Includes S4C
11
Film4 launched on Freeview in July 2006
12
five Life and five US launched in October 2006
13
Figures are for listening within the station target
service area eg Scotland
14
People aged 15+ as at March: RAJAR/Ipsos-Mori
Part Two: BBC Annual Report and Accounts 2006/2007 65

Performance
Broadcasting facts and figures

Table 2: Average audience share: BBC and competitors
The table shows the percentage of hours of viewing or listening in an average week.
All homes

All multichannel homes

Analogue terrestrial homes

2006/07 2005/06 2004/05 2006/07 2005/06 2004/05 2006/07 2005/06 2004/05
55.8m155.4m142.5m137.5m113.2m117.9m145.6m110.5m156.1m1
%
%
%
%
%
%
%
%
%

Total BBC Television and Radio share2

42.6

42.7

43.1

–

–

–

–

–

–

BBC Television
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament

34.3
22.7
8.6
0.8
0.3
0.4
1.0
0.5
0.0

34.9
22.9
9.4
0.6
0.2
0.4
0.9
0.4
0.0

36.2
24.4
9.6
0.5
0.2
0.3
0.8
0.4
0.0

30.7
20.1
6.9
1.0
0.4
0.5
1.2
0.6
0.0

29.8
19.2
7.0
0.9
0.3
0.6
1.3
0.6
0.0

29.7
19.7
6.7
0.8
0.3
0.5
1.3
0.6
0.0

48.7
33.3
15.4
–
–
–
–
–
–

48.0
32.5
15.5
–
–
–
–
–
–

47.9
32.9
15.0
–
–
–
–
–
–

Other channels (total)3
All ITV
ITV1
ITV27
ITV37
ITV4
CITV
All Channel 4
Channel 410
E47
More 47
Film47
All five
five
five Life
five USAll Sky channels
Sky OneSky News
Discovery7
Nickelodeon7
Nick Jr.
Disney7
UKTV Gold7UKTV History7
UKTV
Living7

34.1
22.7
19.4
1.7
1.1
0.4
0.2
12.2
9.6
1.5
0.5
0.811
5.9
5.6
0.312
0.412
6.8
1.3
0.4
0.4
0.4
0.4
0.5
1.1
0.5
3.1
0.4

30.5
23.6
21.1
1.5
0.9
0.35
1.66
11.4
9.8
1.4
0.48
–
–
6.3
–
–
6.3
1.4
0.4
0.5
0.4
0.4
0.3
1.1
0.4
2.9
0.9

27.3
23.9
22.3
1.2
0.34
–
–
10.6
9.8
0.8
–
–
–
6.5
–
–
6.5
1.5
0.4
0.4
0.4
0.3
0.3
1.2
0.3
2.6
0.8

42.6
21.7
17.4
2.0
1.4
0.5
0.3
11.4
8.2
1.9
0.7
1.011
5.2
4.8
0.412
0.512
8.5
1.6
0.5
0.5
0.5
0.4
0.6
1.4
0.6
3.8
1.1

42.4
21.6
18.2
2.0
1.2
0.45
2.06
10.2
8.1
1.8
0.68
–
–
5.2
–
–
9.2
1.9
0.6
0.7
0.5
0.5
0.5
1.6
0.5
4.0
1.2

42.5
20.9
18.5
1.8
0.54
–
–
8.8
7.6
1.0
–
–
–
5.2
–
–
10.2
2.2
0.6
0.7
0.6
0.5
0.5
1.8
0.4
4.0
1.3

–
–
27.1
–
–
–
–
–
15.1
–
–
–
–
8.4
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
28.7
–
–
–
–
–
14.2
–
–
–
–
8.8
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
29.2
–
–
–
–
–
13.8
–
–
–
–
8.8
–
–
–
–
–
–
–
–
–
–
–
–
–

BBC Radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Radio Five Live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
BBC Local Radio (including Nations)
BBC World Service9

54.9
10.1
15.8
1.2
11.4
4.3
0.2
0.2
0.2
0.4
0.3
10.2
0.7

54.9
9.3
15.9
1.2
11.7
4.4
0.1
0.2
0.2
0.3
0.3
10.9
0.6

54
8.5
16.3
1.2
11.3
4.6
0.1
0.1
0.1
0.2
0.3
10.9
0.6

BBC Local Radio in England13
BBC Scotland13
BBC Wales13
BBC Cymru13
BBC Ulster (& Foyle)13

9.8
8.4
9.6
4.2
24.9

10.4
9.1
9.1
4.6
26.3

10.6
8.3
9.5
4.3
22.5

All commercial radio
Virgin AM/FMClassic FM
talkSPORT
All local commercial radio

43.1
1.5
4.2
1.9
32.3

43.1
1.6
4.2
1.8
32.8

44.1
1.5
4.2
1.7
34.3

66 Part Two: BBC Annual Report and Accounts 2006/2007

Source:Television: BARB TNS/Infosys, age 4+;
Radio: RAJAR, age 15+, both average for the year
1
People aged 4+ as at March, source: BARB
2
Combined share of viewing/listening to BBC Television
and Radio reach age 4+. Source: BARB/RAJAR
3
Excludes BBC One, BBC Two, ITV1, Channel 4 and five4
ITV3 launched in November 2004
5
ITV4 data launched in November 2005
6
CITV data launched in March 2006
7
Includes the first transmission and +1 hourtime-shifted channels
8More 4 data launched in October 2005
9
UK only
10
Includes S4C
11
Film4 launched on Freeview in July 2006
12
five Life and five US launched in October 2006
13
Figures are for listening within the station target
service area eg Scotland

Table 3: Subtitling output on BBC Television
The table shows the number of hours of programmes which have subtitles.
It includes the actual percentage of hours and the target percentage of hours.

BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24

Subtitled hours

Actual for year

Target for year

2006/07

2005/06

2006/07%

2005/06%

2006/07%

2005/06%

13,916 13,144
9,719 9,516
2,783 2,542
2,771 2,534
3,917 3,286
4,089 3,866
7,059 6,149

96.8
95.5
86.2
84.1
90.3
87.4
80.8

91.6
91.7
78.3
77.0
75.7
82.3
70.4

95.0
95.0
80.0
80.0
80.0
80.0
80.0

90.0
90.0
70.0
70.0
70.0
70.0
70.0

Note: A target has been set for 100% of programming output to be subtitled by 2008/2009
Note: BBC Parliament is not subject to Ofcom subtitling targets on the basis of audience size

Table 4: Audio description on BBC Television
The table shows the number of hours of programmes which have been audio described.
It includes the actual percentage of hours and the target percentage of hours.
Audio
described hours

Actual for year

Target for year

2006/07

2005/06

2006/07%

2005/06%

2006/07%

2005/06
%

976
800
790
487
632
560

719
628
615
332
552
431

11.2
9.5
24.5
14.8
14.6
12.0

8.2
7.4
18.9
10.1
12.7
9.2

8.0
8.0
8.0
8.0
8.0
8.0

6.9
6.9
6.9
6.9
6.9
6.9

BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
Note:Targets have been set for 10% of programming output to be audio described by 2008/2009
Note: BBC News 24 is not subject to audio description targets due to the narrative nature of the output
Note: BBC Parliament is not subject to Ofcom audio description targets on the basis of audience size

Table 5: Signing on BBC Television
The table shows the number of hours of programmes which have been signed.
It includes the actual percentage of hours and the target percentage of hours.
Signinterpreted hours

BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24

Actual for year

Target for year

2006/07

2005/06

2006/07%

2005/06%

2006/07%

2005/06
%

369
410
139
139
206
208
361

308
312
117
129
172
176
336

4.2
4.9
4.3
4.2
4.7
4.5
4.1

3.5
3.7
3.6
3.9
4.0
3.8
3.8

4.0
4.0
4.0
4.0
4.0
4.0
4.0

3.4
3.4
3.4
3.4
3.4
3.4
3.4

Note:Targets have been set for 5% of programming output to be signed by 2008/2009
Note: BBC Parliament is not subject to Ofcom signing targets on the basis of audience size

Part Two: BBC Annual Report and Accounts 2006/2007 67

Performance
Broadcasting facts and figures

Table 6: BBC Network Television hours of output by genre
The table shows the number of hours of each genre broadcast on each channel. It includes orginations, acquired programmes and repeats.
For BBC One and BBC Two the table also shows the number of hours of each genre broadcast in peak hours.
BBC OneFactual
Education (formal)1
News and weather
Current affairs
Entertainment
SportChildren’s
Drama
Film
Music and arts
Religion
Continuity
Total network hours(excluding opt-outs)
Included in total network hours
are acquired programmes of
Included in total network
hours are parliamentary
programmes of

BBC One(in peak hours)

2006/07

2005/06* 2006/07

1,931
5
2,463
212
435
707
479
1,088
662
82
116

1,810
3
2,508
192
427
670
673
1,038
657
111
97

245

BBC Two

BBC Two(in peak hours)

2005/06

2006/07

2005/06* 2006/07

290
–
279
49
263
86
–
431
36
9
17

323
–
290
43
252
54
–
409
49
30
7

1,577
1,374
558
283
662
921
1,462
226
701
324
27

1,638
1,578
673
271
595
1,027
1,165
174
733
340
45

259

39

49

295

8,425

8,445

1,499

1,506

1,300

1,476

80

9

64

1

BBC Three

2005/06

2006/07

2005/06* 2006/07

2005/06*

763
2
–
75
333
166
–
61
55
123
20

751
7
1
69
269
233
–
69
36
133
29

1,300
–
32
114
966
24
–
390
227
75
2

1,407
–
114
69
864
36
–
285
200
162
1

958
10
6
212
321
–
–
358
202
1,132
36

1,044
2
7
241
227
–
–
305
194
1,185
17

336

45

46

108

119

75

82

8,410

8,575

1,643

1,643

3,238

3,257

3,310

3,304

55

1,522

1,597

99

74

271

287

416

522

2

118

131

–

–

–

–

–

–

The CBBC Channel

Education (formal)
News and weather
Children’sFilm1

Continuity
Total network hours
Included in total network hours are acquired programmes of
Included in total network hours are parliamentary programmes of

CBeebies

68 Part Two: BBC Annual Report and Accounts 2006/2007

BBC News 24

BBC Parliament

2006/07

2005/06* 2006/07 2005/06*

2006/07

2005/06

2006/07

2005/06

563
–
3,560
3

614
–
3,427
–

200
–
4,042
–

140
–
4,055
–

–
8,468
–

–
8,468
–

–
8,760
–

–
8,760
–

231

313

449

516

292

292

–

–

4,357

4,354

4,691

4,711

8,760

8,760

8,760

8,760

878
–

646
–

688
–

866
–

285
82

178
70

127
8,760

135
8,760

Education (formal) includes Education for children, Open University and BBC Learning Zone
*The comparative hours from 2005/2006 have been restated due to the application of the new Ofcom genres for 2006/2007
1

BBC FourTable 7: BBC Television hours of output by origin
The table shows where programmes were made and broadcast.
Hours of programmes made in:England(excluding London)

London2006/07

2005/06+ 2006/07

Northern Ireland

2005/06+ 2006/07

Scotland2005/06+ 2006/07

Wales

2005/06+ 2006/07

Total

2005/06+ 2006/07

2005/06+

First Transmission: Originated programmes Network BBC One and BBC Two
Factual and learning
934 1,040
724
629
1
51
38
4
15
–
Education (formal)1
News and weather
3,019 3,176–––
Current affairs
344
366
61
39
4
Entertainment
498
483
102
84
2
Sport
952 1,031
467
406–
Children’s
410
279
20
8
–
Drama
293
310
190
162
24
Film
4
2
2
–
–
Music and arts
186
200
11
15
–
Religion
14
20
94
94
–

3
1
–
5
8
–
–
–
–
–
1

40
2
–
2
8
–
10
8
–
39
7

63
1
–
3
8
–
48
21
–
22
3

29
–
–
–
–
–
12
26
–
9
–

34
1
–
–
1
–
–
24
–
13
1

1,728
57
3,019
411
610
1,419
452
541
6
245
115

1,769
56
3,176
413
584
1,437
335
517
2
250
119

Subtotal

8,603

8,658

1,452

31

18

116

169

76

74

First Transmission: Originated programmes Digital channels
Factual and learning
200
227
76
4
–
3
Education (formal)1
News and weather
10,524 11,191–
Current affairs
135
147
6
Entertainment
151
103
14
Sport
24
5
–
Children’s
333
575
22
Drama
11
12
10
Film
3
1
–
Music and arts
182
188
14
Religion
4
–
3

6,705

6,945

84
–
–
5
12
31
64
7
–
27
1

1
–
4
2
–
–
–
–
–
3
–

–
–
–
2
–
–
–
–
–
–
–

15
–
131
–
4
–
61
1
–
35
–

22
–
162
–
–
–
34
–
–
46
–

4
–
109
–
–
–
2
12
–
30
–

11
296
344
–
7
–
159 10,768 11,512
–
143
154
6
169
121
–
24
36
5
418
678
12
34
31
–
3
1
23
264
284
1
7
2

Subtotal

231

10

2

247

264

157

217 12,133 13,163

First Transmission: Originated programmes Nations and Regions
Factual and learning
1
1
11
14
–
–
–
–
Education (formal)1
News and weather
300
303 3,664 3,640
Current affairs
9
9
94
90
Entertainment
–
–
1
–
Sport
–
–
28
29
Children’s
–
–
–
–
Drama
–
–
–
–
Film
–
–
–
–
Music and arts–
1–
6
Religion
–
–
–
–

109
9
342
39
48
113
–
–
–
4
–

103
2
350
36
50
93
–
–
–
1
–

99
4
433
58
19
163
14
53
–
25
–

85
12
452
64
23
141
19
53
–
42
–

91
4
434
41
8
202
–
4
–
29
–

89
7
470
39
15
190
–
7
–
24
–

311
17
5,173
241
76
506
14
57
–
58
–

292
21
5,215
238
88
453
19
60
–
74
–

Subtotal

841

6,453

6,460

11,571 12,449

310

1,675

148

314

3,798

3,779

664

635

868

891

813

Acquired programmes
Total first transmissions*987 1,148
19,573 20,856

–
5,621

11
5,473

4
709

–
655

–
1,231

–
1,324

1
1,047

4
992 1,163
1,136 28,181 29,444

Repeats
Network
Nations and Regions

23,140 21,204
–
–

2,284
7

2,974
2

22
197

24
221

600
227

737
237

486
291

333 26,532 25,272
281
722
741

Continuity
Open University
BBC Learning Zone

1,697
–
–

1,921
–
–

30
–
–

32
–
–

122
–
–

170
–
–

215
–
–

182
–
–

152
–
–

163
–
–

Total hours of broadcasting

44,410 43,981

7,942

8,481

1,050

1,070

2,273

2,480

1,976

2,216
–
–

2,468
–
–

1,913 57,651 57,925*Of which independents
Network
Nations and Regions

2,282
13

1,880
13

395
63

401
60

30
126

18
97

82
180

98
164

55
136

54
129

2,844
518

2,451
463

*Of which parliamentary programming

3,349

3,751

120

111

29

28

221

251

187

255

3,906

4,396

Education (formal) includes Education for children, Open University and BBC Learning Zone
The comparative hours from 2005/2006 have been restated due to the application of the new Ofcom genres for 2006/2007

1+

Part Two: BBC Annual Report and Accounts 2006/2007 69

Performance
Broadcasting facts and figures

Table 8: BBC Network Television hours of repeats
The table shows the number of hours of repeats shown on BBC One and BBC Two.
BBC One2006/07

2005/06

BBC Two
2006/07

2005/06

Hours of network programmes in peak time (6pm–10.30pm)
Repeats in peak time (6pm–10.30pm)
Of which narrative repeats
Of which digital transfers% repeats in peak time

1,643 1,643 1,643 1,643
138
146
495
450
2
4
114
47
1
12
37
70
8.4%
8.9% 30.1% 27.4%

Total hours of network programmes
Repeats
Of which narrative repeats
Of which digital transfers% repeats in all hours

8,425 8,445 8,410 8,575
2,774 2,602 4,450 4,567
404
337
265
187
112
176
539
453
32.9% 30.8% 52.9% 53.3%

Repeats include transfers from BBC’s digital channels (but not digital premieres).
BBC One has a commitment to keep repeats below 8.5% of peak-time hours. In 2006/2007, repeats were 8.4% of peak-time hours (2005/2006 8.9%).

Table 9: BBC Network Radio hours of output by genre
The table shows the number of hours of each genre broadcast on each radio station.
BBC Radio 1*

BBC Radio 2

BBC Radio 3

BBC Radio 4

BBC Radio Five Live

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

Music
News and weather
Sport
FactualCurrent affairs
Drama
Arts
Entertainment
Religion
Schools
Children’sPresentation

8,309
295
35
171
–
–
77
32
–
–
–
61

8,219
304
35
89
–
–
115
73
–
–
–
148

7,337
364
–
13
504
1
102
54
186
–
–
199

7,328
476
–
21
353
12
112
69
192
–
–
197

8,152
75
–
–
–
84
316
–
60
–
17
56

8,073
75
–
–
–
89
309
–
59
–
99
56

–
2,374
793
1,391
1,147
1,076
414
494
273
169
26
21

–
2,374
655
1,305
1,194
1,081
430
509
298
209
26
54

–
6,506
2,037
–
66
–
–
–
–
–
–
151

–
6,549
2,009
–
56
–
–
–
–
–
–
146

Total hours

8,980

8,983

8,760

8,760

8,760

8,760

8,178

8,135

8,760

8,760

BBC Five LiveSports Extra

1Xtra

BBC 6 MusicBBC 7

BBC Asian Network

Total network radio
2006/07

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

Music
News and weather
Sport
FactualCurrent affairs
Drama
Arts
Entertainment
Religion
Schools
Children’sPresentation

–
–
1,433
–
–
–
–
–
–
–
–
–

–
–
1,209
–
–
–
–
–
–
–
–
–

7,733
303
80
–
520
–
–
4
–
–
–
120

7,718
306
80
–
510
–
–
–
–
–
–
146

8,238
325
–
–
–
–
–
–
–
–
–
197

8,238
325
–
–
–
–
–
–
–
–
–
197

–
–
–
–
–
3,460
–
3,215
–
–
1,460
625

–
–
–
–
–
3,495
–
3,158
–
–
1,457
650

1,663
2,400
353
–
1,233
98
755
156
565
–
–
126

2,844 41,432 42,420
1,240 12,642 11,649
390 4,731 4,378
6 1,575 1,421
1,690 3,470 3,803
120 4,719 4,797– 1,664966– 3,955 3,809
572 1,084 1,121
–
169
209
– 1,503 1,582
234 1,556 1,828

Total hours

1,433

1,209

8,760

8,760

8,760

8,760

8,760

8,760

7,349

7,096 78,500 77,983*BBC Radio 1 operates nations’ opt-outs

70 Part Two: BBC Annual Report and Accounts 2006/2007

2005/06

Table 10: BBC Radio hours of output by origin
The table shows where in the UK programmes were made and broadcast.
Programmes produced in:
LondonEngland(excluding London)

Northern Ireland

Scotland

Wales

Total

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

2006/07

2005/06

BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Five Live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network

8,754
5,480
6,606
6,366
8,309
1,433
8,758
8,188
8,738
869

8,763
5,529
6,496
6,339
8,505
1,209
8,758
8,500
8,737
780

4
3,200
987
1,540
447
–
2
482
7
6,480

2
3,150
1,064
1,553
252
–
2
260
10
6,316

71
7
68
43
–
–
–
–
9
–

72
13
78
41
3
–
–
–
13
–

78
69
315
163
4
–
–
90
6
–

73
64
361
133
–
–
–
–
–
–

73
4
784
66
–
–
–
–
–
–

73
4
761
69
–
–
–
–
–
–

8,980
8,760
8,760
8,178
8,760
1,433
8,760
8,760
8,760
7,349

8,983
8,760
8,760
8,135
8,760
1,209
8,760
8,760
8,760
7,096

Total network radio hours
Nations and regions hours
total split as below:

63,501 63,616 13,149 12,609

198

220

725

631

927

907 78,500 77,983

8,760

8,760 238,494 227,619

8,756

8,809 13,164 11,961 15,546 15,375 284,720 272,524

English Local Radio
Radio Scotland
Radio nan Gàidheal
Radio WalesRadio Cymru
Radio Ulster & Foyle

8,760
–
–
–
–
–

8,760 238,494 227,619
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
8,756

–
–
–
–
–
8,809

Total radio hours

72,261 72,376 251,643 240,228

8,954

9,029 13,889 12,592 16,473 16,282 363,220 350,507

–
9,990
3,174
–
–
–

–
9,115
2,846
–
–
–

–
–
–
7,390
8,156
–

– 247,254 236,379– 9,990 9,115– 3,174 2,846
7,256 7,390 7,256
8,119 8,156 8,119– 8,756 8,809

Table 11: Average weekly bbc.co.uk page impressions
The table shows page impressions viewed in an average week and includes pages accessed from the UK and abroad.
UK and international page impressions1

2006/07
millions

2005/06
millions

2004/05
millions

News and sport
Education2
Other bbc.co.uk

334.9
25.5
380.4

268.1
27.5
343.2

187.0
15.5
228.1

Total bbc.co.uk

740.8

638.8

430.6

BBC World Service, accessed via bbc.co.uk sites
BBC World Service, accessed via key partners3

33.1
4.7

29.0
3.1

19.2
1.2

Total BBC World Service

37.8

32.1

20.4

Source: Sage Metrics (BBC server logs), BBC World Service
1
Includes page impressions from international-facing site (average weekly figure for 2004/2005 was 55.4 million), funded by Grant-in-Aid, also includes page impressions for the
Global News Division home pages from December 2005 (weekly average was 35.2 million)
2
Education comprises all schools and lifeskills sites (excluding BBC jam)3
Key partner websites host BBC World Service text and audio

Part Two: BBC Annual Report and Accounts 2006/2007 71

Performance
Broadcasting facts and figures

Table 12: Average monthly and weekly reach of Future Media &Technology (millions of users)
2006/07

2005/06

2004/05(Jun to Mar)millions
millions

Unique users (server log based)1 Weekly

millions

bbc.co.uk unique users (UK only)
bbc.co.uk unique users(UK + international)

14.8

12.3

8.7

28.3

24.3

17.3

2006/07
millions

2005/06
millions

2004/05
millions

14.3

13.7

10.6

14.0
1.4

10.7
0.99

n/a6
n/a10

2006/07
millions

2005/06
millions

2004/05
millions

3.2

3.2

3.5

Claimed usage (survey based) Monthly

bbc.co.uk2,3
BBCi (interactive television – 24/7)
Crossplatform (Dsat, DTT, Dcable)4
BBC WAP (mobile site)8Average monthly reach

BBCi (interactive television –enhanced TV programmes)7

Source: BBC server logs, based on cookie data
Source for 2006/2007: TNS New Media Tracker, Monthly Omnibus Survey,
UK adults age 16+
3
Source for 2004/2005 and 2005/2006: BMRB Access, Monthly Omnibus Survey,
GB adults age 15+
4Digital satellite performance only of BBCi 24/7 ‘always on’ digital text services
available on Digital Satellite, Digital Terrestrial and Digital Cable. Source: TNS NewMedia Tracker UK adults age 16+
5
Crossplatform (Digital Satellite, Freeview and Digital Cable) measure only available
from October 2005
6
Comparable data not available. New methodology from October 2005
7
Digital satellite performance only of BBCi interactive TV programmes (eg Olympics,
Little Britain).The number and size of services available each month fluctuates andtherefore so does the number of viewers interacting. Source: BARB, viewers aged 4+
in digital satellite homes
8
Source for 2006/2007 and 2005/2006: TNS Media Tracker, Monthly Omnibus Survey(WAP questions asked quarterly), UK adults age 16+
9
For 2005/2006 data only includes three quarters: September 2005, December 2005,
and March 2006
10
Comparable data not available. New methodology from September 2005
1
2

Table 13: Weekly audio visual (AV) hours consumed frombbc.co.uk
The table shows the number of hours of streaming and downloadsof BBC programming per week.
2006/07
millions

2005/06
millions

2004/05
millions

UK and international AV consumption
hours in million
Radio – live streams
Audio on-demand streams
Other broadband and narrowband video
and audio streams

2.9
1.5

2.3
1.3

1.4
0.9

1.2

1.0

0.6

Total AV from bbc.co.uk

5.6

4.6

2.9

Source: Sage Metrics (BBC server logs)

72 Part Two: BBC Annual Report and Accounts 2006/2007

Table 14: Cost per hour of BBC-originated programmes
by service
The table shows the cost per hour of programmes made by the
BBC for each service.
2006/07£’000

2005/06£’000

Television channels
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament
BBCi

97.4
84.1
178.7
77.8
85.0
75.2
5.4
0.7
0.0

92.0
85.7
146.4
73.6
75.3
59.1
5.0
0.5
0.0

Radio stations
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Five Live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
English Local Radio
Radio Scotland
Radio nan Gàidheal
Radio WalesRadio Cymru
Radio Ulster & Foyle

3.1
4.1
4.2
10.5
6.9
1.7
0.7
0.6
2.8
1.2
0.4
2.8
0.9
1.5
1.2
1.4

3.3
4.0
4.1
11.5
6.6
1.3
0.7
0.5
3.7
1.1
0.4
2.6
1.1
1.5
1.2
1.4

Onlinebbc.co.uk
BBC jam

0.2
5.1

0.2
1.8

New Media metrics applied:– bbc.co.uk a weekly reach metric from Sage Metrics– Reach to BBCi 24/7 is survey based whilst BBCi eTV is measured
by BARB
Note: The comparatives for BBC One and BBC Two have been restated based on
the new service licence reporting. Last year there was a figure for Nations & Regions
Television which has been split out and included within BBC One and BBC Two forservice licence reporting purposes.
Nations & Regions Local Radio has been split out between the regional radio stations.

Table 15: Cost per hour of BBC-originated programmes by genre
The table shows the cost per hour of programmes made by the
BBC for each genre.
2006/07£’000

2005/06£’000

Analogue television programmes
Factual and learning
Education (formal)*News and weather
Current affairs
Entertainment
SportChildren’s
Drama
Film
Music and arts
Religion

98.7
70.6
25.9
100.2
220.9
163.8
82.9
472.8
267.2
129.6
106.4

99.6
108.2
27.5
104.0
223.5
136.2
76.7
486.3
250.0
122.6
104.9

Digital television programmes
Factual and learning
Education (formal)*News and weather
Current affairs
Entertainment
SportChildren’s
Drama
Film
Music and arts
Religion

137.9
–
4.4
128.5
203.7
59.1
83.1
556.6
60.3
67.1
214.4

143.4
116.0
4.1
116.1
221.2
27.6
72.7
506.5
120.0
69.4
150.0

*Education (formal) includes education for children, Open University and
BBC Learning Zone
Note:(i) The comparatives have been restated due to Ofcom requirements.
(ii) The comparatives for News and weather and Current affairs havebeen restated due to a reclassification of certain programmes.

Table 17: Creative spend outside the BBC
The table shows the amount of money for creative purposes spenton organisations external to the BBC.

Independent programme productions transmitted
External programme facilities and resources
Acquired programmes transmitted
Artists, contributors and copyright
Performing groups

2006/07£m

2005/06
£m

399
243
88
304
28

353
241
80
276
29

1,062

979

Table 18:TV programming produced by independent producers
as a percentage of eligible hours
The table shows the percentage of TV programmes produced
outside of the BBC as a percentage of eligible hours.
The actual percentage is compared against the target percentage
of programmes.

TargetActual

2006
%

2005
%

25
35

25
31

There is a statutory requirement for 25% of eligible hours of TV programming to
be produced by independent producers. It is Ofcom’s responsibility to report
BBC’s performance against this requirement: the 35% in 2006 is the BBC’s self
assessment figure.

Table 19:Top ten external producers for BBC Television by spend
This list shows the ten external producers with whom the BBC
spent the most on commissioned TV programmes.

Table 16: BBC spend outside London
The table shows the cost of BBC programmes made in the nations
and regions.

2006/2007
1 Endemol
2 Kudos Film and Television
3 Tiger Aspect Productions
4 Hat Trick Productions
5 Talkback Thames
6 Shine
7 Wall to Wall
8 World Productions
9 Granada
10 Red Productions

2005/2006
Hat Trick Productions
Kudos Film and TelevisionTalkback Thames
Tiger Aspect Productions
Endemol
Lion Television
Wall to Wall
Zenith Entertainment
Open Mike Productions
Mentorn

2006/07£m

2005/06
£m

300
49
85
71

267
37
105
66

505

475

126
13
27
23

128
13
26
23

189

190

Other programme costs incurred outside London
Other costs, including transmission

33
137

48
122

Total spend in the nations and regions

864

835

TargetActual

306

270

47

47

The BBC has made a voluntary commitment to 10% (2005/2006 10%) ofeligible hours of radio programming being produced by independent producers.
Data based on financial year.

Television
England
Northern Ireland
Scotland
Wales
Radio
England – local radio
Northern Ireland
Scotland
Wales

Included within television originations
is network spend of
Included within radio originations
is network spend of

The BBC spent £383million on external programme production in the financial
year 2006/2007 (£335million in 2005/2006).

Table 20: Radio programming produced by independent producers
as a percentage of eligible hours
The table shows the percentage of radio programmes produced
outside of the BBC as a percentage of eligible hours.
The actual percentage is compared against the target percentage
of programmes.
2006/07%

2005/06
%

10.0
13.5

10.0
14.2

Note: Comparatives have been restated to conform to Ofcom definitions ofspend outside London.
Part Two: BBC Annual Report and Accounts 2006/2007 73

Performance
Broadcasting facts and figures

Table 21:Top five external producers for BBC Radio by spend
This list shows the five external producers who were paid the mostto produce radio programmes for the BBC.

Table 23: Content cost per user hour per service

2006/2007
1 Somethin’ Else
2 Smooth Operations
3 Unique
4 Pier Productions
5 USP Limited

2005/2006
UniqueSomethin’ Else
Smooth Operations
Pier Productions
Classic Arts Productions

Note: Activity with external producers is monitored on a calendar year basis
in line with Ofcom requirements.
The BBC spent £17million on external programme production in the financial
year 2006/2007 (£16million in 2005/2006).

Table 22: Future Media & Technology content produced outside
the BBC as a percentage of eligible spend
The table shows the percentage of Future Media & Technology
content produced outside of the BBC as a percentage of eligible
spend.The actual percentage is compared against the target
percentage of content.

TargetActual

2006/07%

2005/06
%

25
30

–
17

The BBC has made a voluntary commitment to 25% (by value) of eligible online
content being sourced from outside the BBC from 2006/2007. Future Media &Technology had an external spend of £8.3million in 2005/2006.

2006/07£

2005/06£

Television channels
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament
BBCi

0.07
0.07
0.16
0.21
0.15
0.02
0.12
0.24
0.04

0.06
0.06
0.21
0.29
0.17
0.02
0.14
0.22
0.04

Radio stations
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Five Live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
English Local Radio
Radio Scotland
Radio nan Gàidheal
Radio WalesRadio Cymru
Radio Ulster & Foyle

0.01
0.00
0.05
0.01
0.02
0.03
0.06
0.04
0.03
0.05
0.02
0.06
0.09
0.04
0.09
0.03

0.01
0.00
0.05
0.01
0.02
0.03
0.06
0.05
0.03
0.06
0.02
0.05
0.09
0.04
0.08
0.03

Onlinebbc.co.uk
BBC jam

0.16
2.56

0.17
1.79

Note: BBCi, bbc.co.uk and BBC jam are calculated to give a cost per user reached.

Definition of terms
Peak time (television)
RepeatNarrative repeat
Digital transfers
Digital premiere
Originations
Acquisitions
Weekly reach (radio)
Weekly reach (television)
Share (radio)
Share (television)

18.00–22.30 BBC One and Two
A re-broadcast of a programme previously shown on the same or another BBC television channel
Re-broadcast of a programme within seven days of first transmission
Re-broadcast of a programme on BBC One or BBC Two previously shown on one of BBC’s digitalchannels (eg BBC Three or Four)
A programme commissioned for BBC One or BBC Two but first shown (premiered) on one of theBBC’s digital television channels (eg Spooks)
Programmes produced for transmission on the BBC
Programmes originally produced for transmission by a different broadcaster, either in the UK or overseas
The percentage of adults in the UK aged 15+ who tune to a radio station within at least one 15-minuteperiod in an average week (as measured by RAJAR)
The percentage of individuals in the UK aged 4+ who watch at least 15 consecutive minutes of
television in an average week (as measured by BARB)
The percentage of total hours of listening in an average week
The percentage of the total viewing audience

74 Part Two: BBC Annual Report and Accounts 2006/2007

UK programme quotas
Under the Communications Act 2003 the BBC has a duty to ensurethat not less than 25% of the amount of time allocated to thebroadcasting of qualifying television programmes is allocated to thebroadcasting of a range and diversity of independent productions.
Ofcom are required to report the extent to which the BBC has
performed that duty. In addition the BBC is required to meet anumber of other programme production obligations, the so-called‘Tier 2’ quotas, for which Ofcom are required to monitor compliance.
Ofcom are expected to formally report the BBC’s performance inthe calendar year 2006 against these quotas in its Communications
Market 2007 review. However, the BBC fully expects to exceed allof the quotas and its self assessment figures are provided here:
2006
Quota Achievement

Independent production quota1
Hours of qualifying programmes acrossall channels
25%
Hours of qualifying programmes on BBC One
25%
Hours of qualifying programmes on BBC Two
25%
Regional programme making2
Spend on qualifying programmes
30%
Hours of qualifying programmes
25%News and current affairs programmes3
Hours of News on BBC One
1,380
Hours of News on BBC One in peak
275
Hours of current affairs on BBC One and
BBC Two365
Hours of current affairs on BBC One and
BBC Two in peak
105
Levels of original production4
BBC One70%
BBC One in peak90%
BBC Two70%
BBC Two in peak80%
BBC Three80%
BBC Three in peak70%
BBC Four
70% approx
BBC Four in peak
50%
CBeebies
80% approx
CBBC Channel
70%
BBC News 24
90%
BBC Parliament
90%
Regional programming5
Hours of regional programming
6,580
Hours of programmes made in therelevant area
95%
Hours of BBC One news
3,920
Hours of BBC One news in peak
2,010
Hours of non-news programming in peak
1,030
All non-news programmes adjacent to peak
355

35%
30%
41%
32%
30%
1,569
283

EU programme quotas
European Community legislation requires broadcasters in Member
States to ensure that a majority of their television programmes(excluding news, sports events, games, adverts, teletext services
and teleshopping) are European works.The legislation also requires
broadcasters to ensure that at least 10% of their European works(excluding works of the kind described above) are made byindependent producers.
Ofcom are expected to formally report the BBC’s performance inthe calendar year 2006 in its Communications Market 2007 review.
However, the BBC’s self assessment is that it exceeded the EU
quotas. Of the relevant BBC One and BBC Two output, 82% wasof European origin (80% in 2005) and 24% was made by European
independent producers (21% in 2005). Of the relevant output ofall BBC channels (including BBC Three, BBC Four, CBeebies, the
CBBC Channel and BBC News 24), 88% was of European origin
and 26% was made by European independent producers (87% and
24% respectively in 2005).
AwardsIn 2006/2007 the BBC received more than 230 programme-related
awards across television, radio and new media.These included
32 Baftas (TV, Children’s and Craft); 52 RTS awards (Programme,
Journalism, Sports, Educational, North West, Craft and Design);
18 Sony Golds; 4 Webby awards and 3 International Emmys.

477
113
83%
98%
84%
96%
82%
70%
74%
60%
84%
80%
95%
98%
7,073
99%
4,622
2,245
1,148
375

The BBC is subject to a 25% independent production quota across all channels
and on BBC One and BBC Two individually
2
The BBC has used Ofcom’s definitions of regional production from 1 January 2006
3
These quotas and performance figures are for network programming only. The News
quota specifically excludes overnight transmissions of News 24
4
Original productions include all BBC commissioned programmes including repeats.
For BBC Three and BBC Four they exclude repeats of programmes first shown on
another channel
5
These figures represent regional programmes across BBC One and BBC Two
1

Part Two: BBC Annual Report and Accounts 2006/2007 75

Managing
responsibly

Managing our business responsibly
remains a priority for the BBC, andthis includes complying with regulatory
and legislative requirements. Our
protocols and compliance in the areasof fair trading, freedom of information,
data protection and occupational risk
management, including health andsafety, are described in this section.
Another aspect of managing
responsibly is making a major
contribution to both the broadcast
industry and to society in general.
The following pages also illustratesome of the activities we undertake tofulfil our corporate social responsibility
as well as our investment in, andengagement with, our staff and thewider industry.

Fair trading
Executive statement on fair trading
The BBC is a public service broadcaster
responsible for promoting its Public
Purposes through the provision of output
that informs, educates and entertains.
It has a special responsibility to ensure thatwhenever it engages in activity it does soin a way that reflects its commitment tofair trading.
The scope of the BBC’s fair trading
obligations has historically been enshrined
in its Fair Trading Commitment and thishas continued to apply during the courseof this financial year. Further detail on
the Commitment can be found atbbc.co.uk/foi/docs/commercial_activities/
commercial_policy_and_fair_trading/Fair_
Trading_Commitment.htm. However, thescope and structure of the BBC’s fair trading
obligations have changed under the terms ofthe new Charter and Agreement that cameinto effect on 1 January 2007.
Fair trading during 2006/2007
The BBC’s core purpose is to provide public
service broadcasting, funded by the licencefee. Licence fee payers’ investments, built up
over many years, have produced a criticalmass of talent and production capability
for the BBC, together with a significant
archive of past programming.These assets
have a secondary value and the BBC has
a responsibility to ensure that this value
is developed commercially for the benefitof licence fee payers.
The BBC’s Fair Trading Commitment isunderpinned by the Fair Trading Guidelines
which provide a detailed operationalframework building on the principlesof the Fair Trading Commitment.
Compliance with the Fair Trading
Commitment was scrutinised by a standing
committee of the Board of Governors up
to 31 December 2006. From 1 January 2007
the Trust Fair Trading Policy and Appeals
Committee has undertaken this function
on behalf of the Trust with management
scrutiny being undertaken by the Executive
Fair Trading Committee (EFTC). EFTC
comprises three non-executive directors
and two Executive Board members.

In its response to the Lambert Review in2002 of BBC News 24 the BBC offered
to consider the relationship between BBC
News and BBC World including a triennial
benchmarking exercise by independent
consultants to confirm that marginal costpricing remains market practice and anannual review by external auditors to
confirm that the marginal costing principle
has been appropriately applied.The latest
benchmarking was completed in April 2007
and confirmed that marginal cost pricing
remained market practice.The EFTC is
satisfied that the marginal cost principle
has been appropriately applied.
The management of the BBC’s fair tradingarrangements have been accredited with
the ISO 9001:2000 quality standard andperformance against this standard isregularly tested by the British Standards
Institute.The most recent assessment,
conducted in December 2006, confirmedthat the procedures are continuing tooperate effectively.

Fair trading complaints
In April 2006 the BBC introduced a revised
fair trading complaints and appeals framework
separating the handling of complaints, to beinvestigated by BBC Executive, and appeals, tobe undertaken by the Trust. Public guidanceon the complaints and appeals process canbe found at bbc.co.uk/bbctrust/appeals/
index.html.
The BBC dealt with five fair trading
complaints during the year. One complaint
was the subject of an appeal to the Trustand was upheld. Details of these issues canbe found in the BBC’s Fair Trading Bulletin atbbc.co.uk/info/policies/fairtrading_complaints/
and on the Trust’s appeals pagebbc.co.uk/bbctrust/appeals/fair_trading_appeal_findings.html.
Executive report on BBC World Service
Trading Protocols
BBC World Service purchases English language
programme making and technical and support
services from other divisions of the BBC (theSupplier Divisions) and also receives services
from and supplies services to the BBC’scommercial subsidiaries (the Subsidiaries).

Four commercial criteria
From 1 January 2007, the BBC Agreement
requires the BBC Executive to ensure that
all its commercial services meet thefollowing four commercial criteria.
Commercial services must:(i) fit with the BBC’s Public Purposes activities(ii) exhibit commercial efficiency(iii) not jeopardise the good reputation of
the BBC or the value of the BBC brand(iv) comply with the Fair Trading Guidelines
and in particular avoid distorting
the market.
Having received reports from relevant senior
management, the BBC Executive is satisfied
that all its commercial services have met theabove criteria for the period 1 January to
31 March 2007.
Annual fair trading audit
The Trust commissions independent auditors,
PricewaterhouseCoopers LLP (PwC), toundertake an annual fair trading audit todetermine whether BBC management
has established and applied a system ofinternal controls which provide reasonableassurance that it has complied with the
Fair Trading Commitment. PwC confirmed
this to be the case for the year ended
31 March 2007. Further details of theaudit and opinion can be found atbbc.co.uk/bbctrust/research/index.html.

It was agreed by a joint Foreign andCommonwealth Office (FCO)/BBC World
Service Working Group that the BBC would
draw up guidelines to govern the trading
relationship between BBC World Service andother parts of the BBC, in order to ensure
clear separation between Grant-in-Aid andlicence fee income. Each of the Supplier
Divisions then drew up detailed agreementswith the Subsidiaries.
KPMG LLP (the BBC’s external auditors)
have received a summary of the value oftransactions and the related cash flows whichhave taken place during the year between
BBC World Service and the Supplier Divisions
and Subsidiaries. KPMG LLP have reported
to EFTC that, in their opinion, the information
included in the summary of transactions forthe year ended 31 March 2007 has been
accurately extracted from the books andrecords of BBC World Service and theSupplier Divisions and Subsidiaries, and has
been properly prepared on the basis of costallocation and apportionment methods set
out in the agreements between BBC World
Service and Supplier Divisions and Subsidiaries
and, on this basis, there has been no material
cross-subsidy between Grant-in-Aid andlicence fee funds or between Grant-in-Aid
and the BBC’s commercial subsidiaries.

Part Two: BBC Annual Report and Accounts 2006/2007 77

Managing responsibly

Executive statement on BBC World Service
Trading Protocols
The EFTC is responsible for monitoring
and reviewing compliance with the Trading
Protocols. Following reports by the Headof Fair Trading and by internal and external
auditors EFTC is satisfied that:
the Trading Protocols reflect therequirements of the FCO/BBC World
Service Working Groupagreements are in place which areconsistent with the Trading Protocols
there has been no material cross-subsidy
between Grant-in-Aid and licence fee
funds or between Grant-in-Aid and theBBC’s commercial subsidiaries.
New fair trading regime for 2007/2008
The new BBC Charter and Agreement thattook effect on 1 January 2007 requires theTrust to have regard to the competitive
impact of the BBC’s activities on the wider
market. As a result the Trust has developed
a Competitive Impact Framework(the Framework) which is due to comeinto effect from 1 July 2007.
The Framework will apply to all BBC
trading activities, including the BBC’s
public service and commercial activities.
Further information is available atbbc.co.uk/bbctrust/framework/index.html.
The Executive Board is responsible for
implementing and ensuring compliancewith the requirements of the Framework.
The BBC Executive remains committed to fairtrading and will continue to further develop
and refine its fair trading systems to delivercompliance against its fair trading obligations.

ComplianceFreedom of information
The BBC became subject to the Freedomof Information Act (FOIA) on 1 January 2005.
In the 2006/2007 financial year the BBC
received 897 requests for information (RFIs).
Of these, the BBC believed 50% were outof scope of the Act (the Act only applies tothe BBC for information held for purposes
other than journalism, art and literature, theso-called ‘designation’). All or some of theinformation was released in 510 (57%) ofrequests, including those where the BBC
did not believe the Act applied; 92% of RFIs
were responded to within the 20 working
days’ statutory time frame, or extended
legitimately under the Act.
There were 28 requests for internal reviewsof BBC FOI decisions in 2006/2007. The BBC
was notified of 57 cases being referred to
the Information Commissioner’s Office (ICO)
during 2006/2007. Of these matters 26 wereresolved (two were resolved in favour of thecomplainant, three partly in favour of the BBC
and partly in favour of the complainant, ten
in favour of the BBC and 11 were resolved
informally with the ICO not making any
decision) and 31 are still awaiting resolution.
Four cases have been referred to the
Information Tribunal. Of the matters heard
in 2006/2007 one was resolved in the favourof the BBC, three were resolved in favour ofthe other party. Of these three cases the BBC
released the information originally requested
in two cases (the information in these twocases was the same – the Governors’ Board
Meeting minutes relating to the meeting held
after the Hutton Report was published).
In the other case the BBC appealed thedecision to the High Court (the information
originally requested in this case was the Balen
Report on reporting on the Middle East).
The decision not to release the Balen
Report under the FOIA was upheld by the
Information Commissioner, but overturned
on appeal to the Information Tribunal.
On 27 April the High Court overturned theInformation Tribunal’s decision that the BBC
must disclose the Balen Report. Mr Justice
Davis ruled that the Tribunal did not have thepower to hear appeals where the Information
Commissioner finds that the Act does not
apply and refused a judicial review whichsought to overturn the Commissioner’s
original decision.
The BBC also provides an FOI publication
scheme on its website, as required by the Act.
The site had 1,308,290 hits during 2006/2007,
with 829,246 documents downloaded.

78 Part Two: BBC Annual Report and Accounts 2006/2007

Data protection
Information Policy & Compliance (IPC)
received 29 formal Subject Access Requests(SARs) under the Data Protection Act.
Twenty-six were delivered within the 40-day
statutory timetable.There have been noreferrals to the ICO on data protection issues
during the three years that the IPC has been
in existence (April 2004 to March 2007).
Costs of compliance
As a result of operating in the UK
broadcasting marketplace, and by virtueof being a public body, the BBC incurs
substantial costs in ensuring that it complies
with all relevant legislation. In 2006/2007,
these costs of compliance are estimated tobe £14.8million (£16.4million in 2005/2006).
Included in this figure is a £3.5million
subscription paid to Ofcom (£3.5million
in 2005/2006). It also includes the cost oftransmission licences and staff employed
to monitor compliance and reportagainst commitments including Ofcom
requirements, DCMS consents and fairtrading. However these costs are notcomplete since they do not include any
allocation of indirect overheads. Of thetotal, £1.5million is the direct cost ofcompliance of the Trust Unit for thethree months ended 31 March 2007,
also separately disclosed in Part Oneof the Annual Report and Accounts.
Occupational risk management
Context of policy and organisation for
health and safety
The Director-General has responsibility forensuring that the organisation has a healthand safety policy and complies with it.
Implementation is delegated so thatmanagers are responsible for the activities
under their control. Strategy is approvedby the Executive Board, which also monitors
performance.The Management Committee
for Occupational Risk Compliance (MCORC)
has delegated responsibility for: setting
strategy for compliance, objectives andstandards; monitoring progress of actions;investigating failures; and reviewing audits.
It reports key issues to the Executive Board.
MCORC is the focal point for issues raised
through divisional management meetings, local
safety forums and team briefs. Safety support
is provided to the BBC by the Occupational
Risk Management (ORM) department.

The BBC’s policy and organisation for health,safety and the environment are set out inthe BBC People section of this chapter.
Overall goal of policy for healthand safety
Our overall goal to provide and maintaina safe and healthy working environment forour employees, the people we work withand for those who visit us is to be achieved
through effective identification of risk; setting
and reviewing health and safety targets;measurement and continual improvement ofhealth and safety performance; compliancewith legislation; and effective cooperation
with competent third parties.
Significant risks and action to tackle them
Risks associated with familiar environments
include stress, manual handling and driving
as well as studio and location filming, major
outdoor events and procurement initiatives.
Those working overseas often face uniqueand more difficult challenges as illustrated
recently by the abduction of Alan Johnston
in Gaza.To mitigate such risks there iscontinued investment in providing specialist
support to staff working in areas of conflictand other high-risk environments.
Long-term health and safety targets
The BBC’s health and safety targets are thatby 2010 we will reduce1:
the number of working days lost per
100,000 from work-related injury andill health by 30%
the incidence rate of reportable accidents
by 60%
the incidence rate of cases of work-related
ill health by 20% by 2010.
Objectives and progress towards
achieving them
To ensure compliance with our 2006/2007
objectives:
The BBC’s safety website was revised
to provide easier-to-access and more
up-to-date and relevant information
to users.
A series of tools has been designed
to assist managers to understand andperform their safety responsibilities.
A standard model has been developed
for the vetting of production contractors
which will now be applied to all contractors.

Responsibility for providing health advice
for work-related illness and vaccinations to
UK staff travelling overseas was transferred
to Capita.
An IT solution to allow easier and moreaccurate reporting of sickness absence isbeing piloted.This will significantly improve
our ability to identify and control
preventable work-related ill health.
Objectives for 2007/2008
The Executive Board has agreed new
objectives for 2007/2008 as outlined below:
To have demonstrable implementation of ahealth, safety and security risk management
system meeting the requirements of
OHSAS 18001.
To update corporate standards andguidelines for the effective managementof key risks.
To comply with mandatory corporate
requirements for occupational risk training
and be able to demonstrate this.
Performance and progress against targets
Reportable injuries have reduced from 62
in the year 2000/2001 to 31 in 2006/2007.
The incident rate has fallen in the same
period from 277 per 100,000 full-time staff
to 140 per 100,000.
The incident rate of suspected cases ofwork-related ill health has been reduced
from 23 per thousand in 2000/2001 to
10.7 in 2006/2007. The main reasons for
suspected work-related ill health have been
attributed to stress, upper limb disorders
and other musculoskeletal problems.
There were 126,492 reported absencedays during 2006/2007.The estimatedcost of this is approximately £20million.
There were no fatalities during 2006/2007.
Enforcement
The BBC communicates regularly with
enforcing authorities. It worked closely with
the Health and Safety Executive during its
investigations into the crash of a jet powered
car during filming of Top Gear.The Executive
Board receives a quarterly report which
includes a summary of: contact with theenforcing authorities, reportable accidents
and other significant safety issues. No
enforcement action has been taken.

Arrangements for consulting with employees
The National Joint Council for Health and
Safety (NJC) includes BBC senior managers
and safety representatives providing aforum for discussions of strategic issues.
Arrangements have been put in place toconsult BBC staff through regular teambriefings. In 2007 the NJC is to be replaced
by a Consultative Committee, which has
increased focus on strategic issues.
Nature and effectiveness of
training programme
The BBC is an active participant in the joint
industry grading scheme for UK-based Stuntand Special Effects professionals.The scheme
is designed to ensure the highest levels ofsafety competence for professionals working
in the media industry. New grading rules
have been agreed for stunt professionals andthe scheme will be extended to other trades.
The BBC has worked with other Broadcasters
and TalkBack Thames to benchmark andrecognise our core production health andsafety training courses. A safety passport
scheme is being piloted, in partnership with
Skillset, to assist the media sector in more
effectively managing the risks of a mobile
and transferable workforce.
We recorded training given to 7,600 peopleon safety issues and many people receive
specialist training in addition to this. We
have identified over 6,000 people whowill require specific training to use the IT
safety tools.
Our driver training programme is in its
second year and has now trained over
1,800 people.
Audit activity
Audits of specific occupational risk topic
areas are conducted through the BBC’s
Internal Audit department. Pan-BBC topics
reviewed in the prior year included: theprovision of occupational risk training,
electrical safety at outdoor events, and falls
from height. Planned topics for 2007/2008
include: risk assessment; asbestos; safety ofwater systems and occupational road risk.

From the position measured in the year 2000

1

Part Two: BBC Annual Report and Accounts 2006/2007 79

Managing responsibly

Corporate social responsibility
For us, corporate responsibility andpartnership working is all about helping
meet our Public Purposes. It is aboutengaging those who have a stake in the
BBC and ensuring that we take into accountsocial, community and environmental
consequences of our activities.
Here are just some examples of what
we do:
Charities
We, the BBC Public Service, do not makecharitable donations but that does not stop
us making a huge difference to people’s
lives. We give air time to support fundraisingand raise public awareness.This is overseenby the BBC Charity Appeals Advisory
Committee, made up of independent
experts who advise and support us onpolicy matters relating to charity appeals.
Comic Relief was bigger and better thanever this year, raising over £60million.The
star-studded appeal night included all thefamiliar comedy faces – Lenny Henry, Dawn
French, Harry Hill and some more surprisingones as Tony Blair asked Catherine Tate
“Am I bovvered?”The BBC has a unique22-year partnership with Comic/Sport
Relief, an independent charity set up to
help end poverty and social injustice.
Children in Need is the BBC’s corporatecharity, which supports thousands of children
and young people who have experienced
homelessness, abuse, poverty, serious illness,disabilities or addictions. We give grants tovoluntary organisations and target themoney to areas of greatest need across the
UK. For example, in 2006 a grant of £24,000
was made to a playgroup in Wiltshire to pay
for a specialist worker to help children with
communication difficulties. Another grantof £39,848 went to a football project inBirmingham which helps children at risk
from drug dealers and gangs.

The BBC World Service Trust is ourinternational development charity, working
with people in developing and transitionalcountries improving the quality of their lives
through the use of the media. World Class
is a great example of the work of the Trust.
The project has been twinning schools in
the UK with schools in Africa and Asia.
More than 2,000 schools in the UK havesigned up and it now has its own dailynews bulletin aimed at 6–12 year olds.
Donations and acknowledgements
Political and charitable donations
The BBC does not make political donations.
UK Public Service Broadcasting does
not make cash donations to charities but
provides service in kind. During 2006/2007,
services with a cash equivalent value of£305,000 (2005/2006 £228,000) were
provided to charities. In addition tobroadcast appeals, BBC Commercial
Businesses donated £12,000 to charities
during the year (£6,000 in 2005/2006).
Financial grants
The BBC acknowledges financial grants
from the European Commission for various
technical research projects.
Sustaining citizenshipWe want to encourage people to get
involved in their local community, to bebetter informed about issues affecting theirlives and get them thinking about how they
can take part in the democratic process.
For example, the editor of Question Time
was asked to step aside in 2006 for a special
edition of the programme, produced andedited by the winners of Schools Question
Time. Pupils from four winning schools joinedDavid Dimbleby to research, produce andedit their own version of the BBC One
programme.The programme is part of awider education initiative which aims toengage young people in society and politics.
In autumn 2006 more than half thesecondary schools in the UK downloaded
the free resource pack to support theteaching of citizenship in the classroom.

Environment
High-quality wildlife programmes such as
Planet Earth give our audiences a uniqueand stunning insight into the natural world.
But we are aware that audiences are
increasingly concerned about the possible
impact such filming might have on the
wildlife and their surroundings.
Our Natural History Unit’s ethical guidelines
on filming animals stress that “the welfareof the subject is more important than thesequence”. The growing use of high definition
cameras means we can often film from muchfurther away, limiting disturbance. And wetake special precautions when we do haveto get up close, such as installing cameras
all year round to minimise disturbance.
We believe that programmes like Springwatch
raise the audience’s awareness of the world
around them and teach them about theenvironment. We know there is a balance
to strike between such benefits and any
negative impact on the environment, which
we continuously strive for.
Managing the rest of environmental impact
also remains a priority and we are setting
tough targets for carbon emissions, waste,water, impact on land and procurement as
part of a medium-term strategy that weare currently developing.
Partnerships
Increasingly we have recognised the potential
for achieving greater impact by creating
formal relationships, collaborations andnetworks with other organisations. A great
example of this was teaming up with a wide
range of homelessness charities as part of
our No Home season in November 2006.
Together we were able to raise awareness,
recruit volunteers and stimulate anational debate.
We are rightly proud of our corporate
responsibility and partnership work andthis continues to be recognised with our
successful performance in the Business in theCommunity Corporate Responsibility Index
2006, in which we received Platinum status.
To find out more, including some of
the challenges we face, please visit
bbc.co.uk/outreach.

80 Part Two: BBC Annual Report and Accounts 2006/2007

BBC People
Employee engagement – relationships
with trade unions
The BBC takes a proactive approach tocommunicating and consulting with its staff.
This year has been a momentous one for
the BBC and it has taken care to engage
with staff through frequent and open
communications.The BBC has also put
time and money into helping its leadershipdevelop these behaviours.
The BBC has a good working relationshipwith its three recognised trade unions:
BECTU (Broadcasting Entertainment
Cinematograph and Theatre Union),
NUJ (National Union of Journalists) and
AMICUS. At all levels within the BBC,regular meetings between the unions
and management are held.
The challenging Value for Money programme
has entered its third and final year.This large
scale efficiency programme has affected almost
every area of the BBC and during its second
year has meant that in excess of 1,000
members of staff have left the Corporation.
Training and development
The new governance structure for BBC
Training & Development (BBC T&D) is now
firmly embedded in the organisation. Last
year the Learning Board commissioned 37
new learning projects from the department,each strategically important to the BBC.
Some of these projects are outlined below.
Production training
As part of the BBC’s high definition trials
in 2006, BBC T&D provided training for 500
BBC staff and freelances in this exciting
high-quality format.
Network radio services moved into
refurbished, state-of-the-art studios andoffices in London’s Broadcasting House in2006. Production training delivered 2,000
days of training to ensure that programmes
went on air smoothly using the mostsophisticated tapeless transmission
systems available.

The Future Now project is a major
programme of training, giving production
staff the cutting edge knowledge and skills
needed to produce multi-platform content.
The initiative has had immediate impact withthe development of the Football Focus brand,
the relaunch of Tomorrow’s World within
BBC News Online and the development ofa major landmark series across all platforms
for transmission in winter 2007.
Trainee schemes
A number of trainee schemes werelaunched in 2006/2007.These include:

Directors Academy – eight multi-camera
directors who have all gone on to work
either on EastEnders or Doctors.
Vision Design Scheme – talented designers
across the UK on a 12-month placement
across BBC programmes. Previous trainees
from this scheme have gone on to work
on Doctor Who,Torchwood and othermajor BBC drama and entertainment
programmes.
Supporting the industry
The BBC has led the industry in establishingstandards for foundation training and safety.
A foundation programme for researchers
was successfully piloted and will launch in2007. BBC T&D has also collaborated withother key broadcasters and production
companies to agree common standards
in health and safety training and theintroduction of a ‘safety passport’.

BBC T&D launched Connect & Create,a new service that will develop the skillsof BBC staff while working with 15
organisations across the UK. Connect &Create aims to benefit 450 BBC staff and
1,500 external individuals in 2007/2008.

The Director-General chairs the Diversity
Board, which reviews progress against
the strategy, and sets priorities for action.
The strategy establishes four areas ofaccountability which together ensure thatdiversity is hardwired into key organisational
processes: audiences, output and content,
business planning and workforce.
The BBC is committed to reflecting the‘nation unto itself ’, and to improving therepresentation of diverse people andcommunities off and on air. There are
numerous examples of storylines, characters,features and programmes which reflect thediversity of modern UK reality, including
ethnicity, disability, age, faith, sexuality, class,political affiliation and regional perspectives.

Broadcast Technology Assistants schemefor 18 trainees over a 20-monthprogramme.

We delivered over 6,000 days of training
to 260 organisations and 1,990 individuals
worldwide. We also trained 380 freelancesand offered a number of subsidised training
courses for freelances via Skillset.

Diversity
Diversity for the BBC is a creative
opportunity to engage the totality of
the UK audience.

As part of its commitment to reflecting
the UK communities that it serves, the BBC
has set itself targets for the representationof black and minority ethnic people in its
workforce and at senior management (SM)grades of 12.5% and 7% respectively, to be
met by December 2007.There is also a 4%
target for disabled staff to be met within thissame period.
As of 31 March 2007, the figures stoodat 10.5% and 5% for ethnic minority staff
overall and at Senior Management level
respectively (10.3% and 5.3% in March
2006).The percentage of disabled staff
stood at 2.6% (2.7% in March 2006).
The slow progress on the workforce
targets reflects the impact of widespreadbusiness restructuring.
The BBC also continues to comply with
its legal obligations.The Corporation has
developed and published Equality Schemes
on Disability and Gender and has justcompleted a thorough update and review of
the BBC Race Equality Scheme to ensure thatany relevant new public functions are also
covered.This was published on 12 June 2007.

Part Two: BBC Annual Report and Accounts 2006/2007 81

Finance
Financial
overview

In 2006/2007 we have continued
to focus on delivering value to all
licence fee payers.
We have achieved this by becoming
more efficient, improving the returnon our assets through the Commercial
Businesses, and delivering the content
that licence fee payers tell us theyvalue most.
Two years ago we committed toachieving annual efficiency savings
under our three year Value forMoney programme of £355million.
To date we have made savings of£228million a year, and are on trackto achieve our target by the endof 2007/2008.
We have continued to grow
our Commercial Businesses, with
BBC Worldwide making record
profits before interest and tax
of £111million.
Spend on the BBC’s services wasup 5% to £3,036million, with moremoney going into original drama andentertainment, especially on BBC One.
Following the licence fee settlementin January 2007, we face big challenges
in finding enough money to create
the content that our audiences want.
And these challenges call for new
thinking about how we produce
content and create value.

9.2%

£111m

Combined cost of licence feecollection and evasion as apercentage of income, downfrom 9.6% last year

BBC Worldwide profit before
interest and tax, up 24% fromlast year, with sales up 8%
on continuing businesses
and return on sales of 14%

£864m

88%

Total spend in the nations
and regions, ensuring thatthe licence fee helps support
the wider UK economy

Percentage of UK PublicService Broadcasting
expenditure on programmes –only 11.5% of the licence feegoes on running the BBC£228m£1.1bnAnnual savings achieved
to date for reinvestment inprogrammes, as part of Valuefor Money review (expected
to increase to £355million
next year)

Total external spend in the
UK creative industry, withindependent production
companies, artists, andprogramme resources

Introduction
This year we received a new six year
licence fee settlement from the Government,
and pressed on with our programme
to save £355million each year throughgreater efficiency.
It was also an important year in terms ofmeeting the targets which the Government
set for UK Public Service Broadcasting (PSB)
at the time of the last licence fee settlement.
First, we achieved the objective of finishing
the year with income and expenditurebroadly in balance, and with nil borrowings1.
Second, we exceeded the Government’s
target for creating our own extra funding
to reinvest in content.This was achieved
through greater efficiency and increasing
revenue from our Commercial Businesses.
Over the seven year period we made over
£4,000million against the Government’s
target of £3,290million2.
This has put the BBC on a sound financial
footing heading into the next Charter period.
Review of financial performance
The BBC has no shareholders, so ourfinancial performance cannot meaningfully
be measured in terms of bottom line profit.
Instead, our objective is to deliver the best
possible value to all licence fee payers, through:collecting the licence fee as efficiently
as possible whilst minimising the numberof evadersmaximising the returns from the BBC’s
assets and, through our Commercial
Businesses, to reinvest in programmes
prioritising expenditure on the content
which licence fee payers tell us theyvalue mostrunning the BBC as efficiently as possible
IncomeBBC Group income rose by £172million,
with an extra £147million from UK
PSB, £9million from the World Service
Grant-in-Aid and BBC Monitoring grant, and£16million from the Commercial Businesses.

‘Borrowings’ is defined here in accordance with the
Department for Culture, Media and Sport definition
for setting the BBC’s borrowing limit
2
In 1999/2000 real terms
1

Net licence fee income
Licence fee income of £3,243million
represented an increase of £142million(4.6%) on the previous year3.The rise in net
licence fee income, after deducting collection
costs, is due partly to the annual increase of
RPI+1.5% agreed in the previous licence fee
settlement, together with a rise in the numberof households and savings on collection costs.
The combined cost of evasion and collection
was 9.2% of income, down from 9.6% lastyear. Collection costs have continued tofall as a percentage of income, down from
4.9% last year to 4.1%.This is in part due
to encouraging people to pay in morecost-effective ways. Direct debit sales now
account for 63% of all licences in force,
whilst online sales doubled to over 1 million
during the year.
Evasion increased this year, to 5.1% from an
all-time low last year of 4.7%.This increase
is equivalent to £14million income foregone,
and is in part due to demographic factors
in that recent population growth has been
primarily in urban areas and multi-occupancy
housing where evasion is higher andpopulations more transient. Moreover,
operating in a low-evasion environment it
is increasingly difficult to reach, and hold on
to, those people who do not want to pay.
We are continuing to look for new andinnovative ways to reduce evasion.
In 2006, following a competitive tender, we
made the decision to stop selling TV licencesat the Post Office and award the contract
to PayPoint. Albeit temporarily, this adversely
affected a small percentage of licence fee
payers and in the short term contributed
to a slight rise in evasion. However, moving
to PayPoint will save the BBC around£100million over six years.
Commercial Businesses
BBC Worldwide had another successful
year, with income of £810million4 (up 8% on
continuing businesses), profit before interestand tax of £111million (up 24%), and returnon sales of 14% (2006 11%). Operating
profit before exceptional items grew to£101million (up 28%).This year BBC
Worldwide returned £75million in dividends(2005/2006 £57million) and invested
a further £96million directly into BBC
programmes (2005/2006 £89million).

UK PSB income also includes non-licence fee income(described in Note 1(b) to the financial statements).
This income totalled £29million (2006 £24million)3

All parts of the business grew profits
year-on-year (with the exception of
Digital Media which continues to invest
for proposed future high profile launches
including bbc.com). Global TV Sales, whichsells BBC programmes overseas, saw a
19% increase in income (including joint
ventures), supported by strong brands(Planet Earth, Doctor Who) while BBC
formats continue to be popular overseas.
During the year BBC Worldwide disposedof its stake in Animal Planet US at a pre-tax
profit of £46million. A majority stake in theBooks business was also sold, earning a
pre-tax profit of £13million.
Profit before interest and tax grew fasterthan sales partly from the disposal of lessprofitable businesses, and also from higher
profits on BBC America following achange in arrangements with Discovery
Communications Inc (see Note 2d).
BBC Resources achieved an income of£126million (down 2%) and profit before
interest and tax of £5million (2006 £6million).
Income in the Studios business fell as some
programme makers in BBC Children’s andNews moved productions away from astudio environment, mitigated in part by ahealthy growth in income from independent
production companies. In line with therecommendations of the Commercial Review
in 2004, the BBC has begun the process
for the sale of BBC Resources, expected
to take place in 2007/2008.
BBC World achieved income of £40million(up 12%) and a loss before interest and tax of£12million (2006 £15million loss).The second
consecutive year of double digit growth wasachieved in spite of the continuing weak US
dollar. Full-time distribution has been securedin the USA on Cablevision and Verizon withdiscussions continuing with a number of the
major operators.
World Service
The World Service is funded byGovernment Grant-In-Aid, which is set inthree-yearly spending reviews (the current
review covers 2005/2006–2007/2008).

Including joint ventures

4

Part Two: BBC Annual Report and Accounts 2006/2007 83

Finance
Financial overview

This was a year of significant transition,with the implementation of the changes
announced in the World Service 2010
strategic review.The savings resulting fromthe ten language service closures in
2005/2006 were spent on restructuringcosts and the start-up phase of Arabic TV
launching in autumn 2007.The World
Service recorded a surplus before interestand tax of £11million, which was plannedin order to fund restructuring payments
charged to income and expenditure in
2005/2006 but falling due in 2006/2007.
Expenditure
Expenditure on UK PSB rose by £83million
to £3,316million, driven by increases on
television (up £109million), especially BBC
One. Digital UK Limited, the organisation
leading the digital switchover process, also
incurred costs of £12million, of which the
BBC contributed £10million.
Our focus has been on increasing efficiency,
and prioritising programme spend where
it delivers most value.
Efficiency
2006/2007 was the second year of ourthree-year Value for Money efficiency
programme to make £355million annual
recurring cost savings across the BBC.
The money we save will enable us toinvest in new content and services.
To date we have made £228million savings,
and are on track to achieve the £355million
annual target by the end of 2007/2008.
Around 60% of the total to date comes from
simplifying and automating our business andprogramme-making processes, one-quarter
from savings on contracts with suppliers
and outsourcing more activities, and the rest
from rationalising our property portfolio.
The one-off costs incurred this year in making
these annual savings were £108million.
Examples of efficiencies made to date acrossthe production process include greater useof digital technology; in News, for example,
we rolled out a digital production system
replacing the old tape-based system andenabling journalists to view, edit, and produce
reports more quickly. We have introduced
more preferred supplier deals for programme
resources and redesigned production teams
to be more cost-effective.

We are also driving savings through betteruse of buildings such as the new home of
BBC Scotland at Pacific Quay which, as theworld’s first fully digital broadcast operation,
will revolutionise our television, radio andonline content production processes. For
support services a key element of ourstrategy is to extend outsourcing further,including the BBC’s first offshoring deal, forfinancial and accounting services.
An important measure of our efficiency isthe amount spent on overheads (ie costs
not directly related to programme-making).
This year overheads were broadly stable at
11.5% of UK PSB expenditure, from 11.1%
last year, and down from 24% in 1999/2000.
Programme spend
This year we have prioritised newinvestment in original entertainment anddrama. In drama, for example, output has
increased across the portfolio, particularly
on BBC One with more investment on
Saturday evenings (Doctor Who, Robin Hood)and midweek pre-watershed (Waterloo
Road). Our audience research indicates that
BBC One is seen by viewers as the bestchannel for drama, and that they want morehigh quality original drama on the channel.
Both in 2006/2007 and going forward, weface a number of pressures on our cost base:Around one-third of our costs are staff,
meaning that tight payroll management
is essential.
Approximately 20% of costs are on
programme resources and spend withindependent production companies,
where market conditions and increasing
demand for content is affecting prices
in some genres.
Nearly 20% of costs are on buying rights,
including on-air talent and sports rights.
With the fragmentation of audiences, allbroadcasters are seeing the benefits of
attracting viewers and listeners throughrecognised names or sports events.
During the year we have supported
the wider creative economy, spending£1,062million directly in creative industries(2006 £979million). We also spent£864million outside London (2006£835million), reflecting our commitment
to use the licence fee to support businesses
across the UK.

Market research conducted in the run-up
to Charter Review found that a majority oflicence fee payers considered the BBC to begood value. On average people were willingto pay around £18.50 per month for BBC
services when the licence fee actually costjust over £10 per month5.
As part of the new governancearrangements under the BBC Trust, from2007/2008 the annual budgets for each ofour 27 core services must be agreed with
the Trustees and published (Note 28 to thefinancial statements shows the actual costof these services in 2006/2007). If we areforecasting a variance of more than 10% to
any service budget this must be reported
to, and approved by, the Trustees.
Group operating deficit
The Group operating deficit of £176million
includes a charge of £205million in respectof pension scheme operating costs(see Note 4b).
Profit/loss on termination/disposalof operations
The Executive Board’s decision to suspend
BBC jam, the BBC’s online interactive
learning service for 5 to 16 year olds, on
20 March 2007 has necessitated a provisionof £16million for the costs of redundancy
and terminating supplier contracts.This ispartly offset by the profit on sale of BBC
Worldwide’s Books business.
Balance sheet
Group net assets have increased to£1,399million (2006 £1,197million).This is due
primarily to an increase in the valuation of the
BBC Pension Scheme (‘the Scheme’) (seebelow). Excluding the Pension Scheme, net
assets are £1,064million (2006 £1,032million).
Net current assets fell to £377million(2006 £476million), mainly due to a loan
facility within Commercial Businesses
becoming due within one year (with acorresponding drop in creditors fallingdue after more than one year). We havealso reduced provisions to £143million(2006 £196million), with most of last year’s
restructuring provision having either beenutilised or released (see Note 17).
The BBC has no shareholder equity, andtherefore all net assets are represented
by reserves (see Note 18).

‘Measuring the value of the BBC: A Report by the
BBC and Human Capital’, October 2004

5

84 Part Two: BBC Annual Report and Accounts 2006/2007

Cashflow statement
With the exception of the Commercial
Businesses, cash generation is not a key
financial objective for the BBC. Effective cash
management is, however, critical to ensuringthat we remain within our borrowing limit.
There was a slight decrease in Group cash
during the year of £16million, with a net
inflow from operating activities offset by net
expenditure on fixed assets and programmes
for future sale.
Some of the major investments planned
for the next Charter period will, however,require us to generate extra cash. Efficiency
savings will contribute to this, but otheroptions include increasing borrowings (theBBC can borrow up to £200million under
the terms of the Charter) and sale ofassets (such as property, or stakes in
Commercial Businesses).
Treasury policies
The BBC’s main treasury management risks
are ensuring that the BBC has sufficient liquid
funds to meet its obligations as they fall due,and that it is compliant with any borrowing
limits (in particular, those set out in theCharter and any external loan covenants)(see Note 23).
Critical accounting policies
Those accounting policies which require ahigh degree of judgement, and which havea material impact on the financial statements,
are described here.
Pensions.Whilst we believe the assumptions
described in Note 8c vi are reasonable,
they represent judgements about future
events which are by nature uncertain.
Provisions. Provisions represent our best
estimate of future financial liabilities, but theseestimates necessarily involve judgements.
All of our accounting policies are describedin more detail in the financial statements.

International Financial Reporting Standards
UK listed companies are required to producegroup accounts under International Financial
Reporting Standards (IFRS) for financial years
beginning on or after 1 January 2005. Whilst
the BBC ordinarily complies with applicableaccounting standards, as was the case last year,
we have decided not to adopt IFRS in ourannual accounts for 2006/2007 (see page146 for further information).

Key resources
The BBC has a number of valuable resources
which enable it to address these risks andhelp deliver our strategic objectives:

However, we have continued to review the
impact that adoption of IFRS would haveon the Group accounts, and a summaryof that impact is presented on page 146.
Our intention is that we will continue toprepare financial statements on a basis
consistent with that used by Her Majesty’s
Treasury in the preparation of the Wholeof Government Accounts.

Security of funding. The licence fee
settlement, backed up by continued growthin the Commercial Businesses, means that
we can plan our spending on content andservices with relative certainty.

People. As a creative organisation, ourpeople are our most valuable asset, andour recruitment process, and training anddevelopment programmes (see page 81),ensure we attract and retain the best.

Brand and reputation. Recently voted theUK’s strongest business brand6, the BBCbrand and reputation ensure that westand out in the media landscape.

Principal risks and uncertainties
Details on the BBC’s risk management
processes are included in the ‘Governanceand financial statements’ section of thisAnnual Report and Accounts.The principal
risks and uncertainties facing theorganisation are described below.
Loss of relevance to audiences due todecline in quality and distinctiveness ofcontent, and/or failure to make content
readily available using the latest technology.
Mitigated by extensive audience researchand programme strategy focusing on
quality and distinctiveness, and ongoing
initiatives around new distribution platforms(eg BBC iPlayer).
Disruption to output resulting from, forexample, loss of transmission or industrial
action. Mitigated by business continuity
planning for all broadcast critical sites andprocesses, and liaison with unions overstaffing issues.
Breach of editorial standards, or legal
and other regulatory requirements.
Mitigated by extensive training and support
for staff on editorial standards andlegal/regulatory compliance.

Looking forward: the licence fee settlement
In January 2007 the Government announced
the level of the TV licence fee for the next
six years.The settlement puts the BBC in theprivileged position of ensuring licence fee
funding for the next six years, and we will
aim to supplement it with around £3.6billion
through further efficiency savings, more
efficient licence fee collection, and income
from the Commercial Businesses. It does,
however, require us to pay for some of thecosts associated with digital switchover suchas Digital UK communications, and the Digital
Switchover Help Scheme.
Moreover, the licence fee will now increaseby fixed percentages rather than by increases
linked to inflation.This means that we bear
the risk that our real spending power will be
reduced if inflation rises at a faster rate thanthe level of the licence fee – a 1% rise ininflation would reduce our spending powerby around £30million per annum.
The key challenges now are to determine
which mix of existing and new services will
provide the best overall value to licence fee
payers, and how to deliver those services as
efficiently as possible without compromisingon quality.

Breach of statutory financial borrowing
limit. Mitigated by long-term cash
forecasting and annual budgeting (including
cashflow), with monthly financial reportingto the Executive Board and the Trust.
Zarin PatelGroup Finance Director
19 June 2007
Superbrands UK Survey, February 2007

6

Part Two: BBC Annual Report and Accounts 2006/2007 85

Finance
Governanceand financial
statements

87 Corporate governance framework
90 Accountability andinternal control
92 Executive Board
Remuneration report
95 Executive Board
responsibility statement
95 Independent auditor’s report
97 Financial statements
146 High level IFRS reconciliation

BBC corporate governance framework
Effective governance is at the core of theBBC’s ability to operate successfully in the
global business environment. During theyear, with the new Royal Charter coming
fully into force on 1 January 2007, the BBC
has made further progress in advancing its
corporate governance agenda.

Under the direction of the Board ofGovernors for the nine months to
31 December 2006, and the new Executive
Board for the three month period to
31 March 2007, the BBC has compliedwith the 2003 FRC Code, except in thefollowing areas where the 2003 FRC Codeis not appropriate:

The new Charter makes radical changes
to the governance of the BBC by replacing
the Board of Governors with the BBC Trustand creating a new formally constituted
Executive Board with its role andresponsibilities defined in the Charter.

The previous Governors were required tosatisfy themselves that the activities of the
BBC were carried out in accordance withthe highest standards of probity; both theTrust and the Executive Board are required
to have regard to appropriate standards ofcorporate governance. Although the BBC
is not a listed company it has voluntarily
chosen to follow the relevant provisionsof the Financial Services Listing Rules
and the Combined Code on corporate
governance issued by the Financial
Reporting Council in 2003 (‘the 2003
FRC Code’) in order to be consistent
with UK public limited companies.

Principle of the 2003 FRC CodeBBC Position

Explanation

A.2 – There should be a clear division of
responsibilities at the head of the company
between the running of the Board and theexecutive responsibility for the running of
the company’s business. No one individual
should have unfettered powers of decision.

The BBC has complied with this provisionin the nine months to 31 December 2006.

The Charter specifies that the DirectorGeneral may be the Executive Chairmanof the Executive Board. In addition, the roleof the BBC Trust in scrutinising strategies
ensures that no one individual has
unfettered powers.

From 1 January 2007 the Chairman of the
Executive Board is the Director-General
who is equivalent to the Chief Executive.

Due to the roles of the Chairman andChief Executive being held by the same
individual, the Chairman holds no othersignificant commitments.
A.3 – The Board should include a balanceof executive and non-executive directors(and in particular independent
non-executive directors).

The BBC has complied with this provisionfrom 1 January 2007 onwards with the
exception of the requirement that at least
half the Board, excluding the Chairman,
should comprise non-executive Directors.

Under the previous charter, Governors wereappointed by HM The Queen in Council on
advice from Ministers in accordance with theNolan principles that public appointments
should be made on merit.The members of
the Trust are appointed on the same basis.
The new Executive Board comprises ten
executive Directors and five non-executive
Directors.The new Charter specifies that
non-executive Directors must not be lessthan one-third and not equal to or morethan half the members of the Executive
Board. Director biographies are detailedon page 25.
The Executive Board considers all of the
non-executive Directors to be independent
for the purpose of the 2003 FRC Code.

A.4 – There should be a formal andtransparent procedure for the appointmentof new directors to the Board.

The BBC has complied with this provisionfrom 1 January 2007 onwards.

As stated above, Governors were appointed
by the Queen in Council under the previous
Charter. From 1 January 2007, members of
the Executive Board are appointed by the
newly formed Executive Board Nominations
Committee and, in the case of non-executive
directors, are approved by the BBC Trust.
Where the Director-General is also the
Chairman of the Executive Board, heis appointed directly by the BBC Trust;in other cases the appointment of the
Director-General by the Executive Board
must be approved by the Trust.
Part Two: BBC Annual Report and Accounts 2006/2007 87

Finance
Governance andfinancial statements
Principle of the 2003 FRC CodeBBC Position

Explanation

B.2 – There should be a formal andtransparent procedure for developing policy
on executive remuneration and for fixing the
remuneration packages of individual directors.
No director should be involved in deciding
his or her own remuneration.

The BBC has complied with this provision
except in the following instance:

All BBC Governors were independent ofmanagement and therefore the Governors
determined the Chairman was independent
for the purpose of setting the remunerationof the Executive Board.

The Chairman of the Board of Governors wasa member of the Remuneration Committee
for the period to 31 December 2006.

How the BBC has applied the remuneration
principles is detailed within the remuneration
report on pages 92 to 95.
D – Relations with shareholders.

Principles contained within this provision
are inapplicable.

Provisions relating to shareholders can only
be applied by analogy to the licence fee
paying public.The way in which the Trust
upholds the interests of licence fee payers
is detailed in Part One of the Annual Reportand Accounts on pages 9 to 11.

E – Institutional shareholders.

Principles contained within this provision
are inapplicable.

Provisions relating to shareholders can only
be applied by analogy to the licence fee
paying public.The way in which the Trust
upholds the interests of licence fee payers
is detailed in Part One of the Annual Reportand Accounts on pages 9 to 11.

A revised 2003 FRC Code on Corporate
Governance was issued on 23 June 2006.
This code applies to reporting periods
beginning on or after 1 November 2006 andsupersedes the 2003 FRC Code.The BBC
is compliant with the key provisions of the
new code which will be considered for theforthcoming financial year in the 2007/2008
Annual Report and Accounts.

services and activities. More information
on how the Executive Board operates isdetailed below. Profiles of individual Trustees
and the responsibilities of the Trust canbe found in Part One of the Annual Reportand Accounts. A register of interests forboth Trustees and the members of the
Executive Board is maintained.The Trustees’
register of interests is available online atbbc.co.uk/bbctrust.The Executive Board’s
register may be inspected by written
application to the Director, BBC People,
MC2 B4 Media Centre, 201 Wood Lane,
London W12 7TQ.

Board structure
Under the previous Charter for the period
to 31 December 2006, the operations of
the BBC were managed by the Executive
Board, made up of BBC executive Directors
and chaired by the Director-General.
The Governors were members of the
Corporation and acted as guardians of public
interest. Further details of the role andresponsibilities of the Board of Governors
can be found in Part One of the Annual
Report and Accounts.
Under the new Charter, fully in force from
1 January 2007, the Executive Board has
been reconstituted and strengthened by
the appointment of a significant minority
of non-executive Directors, nominated bya Nominations Committee of the Boardand approved by the Trust.The functionsof the Executive Board and Trust are clearly
defined. Operational responsibility rests with
the Executive Board, and the Trust, as the
body responsible for strategic directionof the BBC, scrutinises the performance of
the Executive Board in delivering the BBC’s

Operation of the Executive Board
The Executive Board is responsible fordelivering the BBC’s services in line with thepriorities set by the BBC Trust. Its members
meet monthly with the exception of August.
Summary minutes of meetings from
1 January 2007 are available online atbbc.co.uk/info/running/executive/minutes.shtml.
The Executive Board is responsible for
all aspects of operational management of
the BBC (except the Trust Unit), including
the following:delivering the BBC’s services in accordancewith purpose remits, service licences andother strategies
directing the BBC’s editorial andcreative output
ensuring compliance with all the BBC’s
legal and regulatory requirements(including initial handling of complaints

88 Part Two: BBC Annual Report and Accounts 2006/2007

about the BBC), except where theseareas specifically relate to the BBC Trustor the Trust Unit
ensuring compliance with all therequirements which the Trust placeson the Executive Board
making proposals to the Trust for anythingwhich the Trust is required to approveappointing and holding to account the
management of the BBC and its subsidiaries
conducting the BBC’s operational financial
affairs to ensure value for money
accounting to the BBC Trust for its own
performance and the performance of the
BBC and its subsidiaries
complying with any decision from the
BBC Trust in relation to the exercise of
its functions.
In practice, the Executive Board is able
to delegate some of its responsibility toother management groups. Any delegationfrom the Executive Board is stated in
the relevant standing orders for eachgroup and a framework for reporting
and review is established.
Assessment of the performance of the
Executive Board in delivering the BBC’s
services and activities is conducted by theTrust in accordance with the new Charter.
As the new Executive Board has only beenin place from 1 January 2007, assessmentof performance by the Trust has yet tobe conducted.

In line with the provisions set out in the newCharter, four Executive Board sub-committees
have been formed.The main responsibilitiesof these sub-committees are explained
elsewhere in this Annual Report and Accounts.
Audit Committee (page 91)
Remuneration Committee (page 92)
Nominations Committee (see below)
Fair Trading Committee (page 77)
Board appointments and theNominations Committee
The Executive Board Nominations
Committee was established in January 2007.
The purpose of the Committee is to makerecommendations on suitable candidates forappointment to the Executive Board, withthe exception of the Chairman (who isappointed by the BBC Trust), and ensure an
appropriate balance of expertise and ability.
The Nominations Committee is responsible
for ensuring that the procedure forappointing new Directors is rigorous andtransparent.The selection process will
generally involve interviews with a selectionof candidates, with appointments made on
merit and against objective criteria.

The Senior Non-Executive Director isappointed for an initial term of three years.
Non-executive Directors are appointed for
two year terms. Executive Director terms of
appointment vary with individual contractsof employment.

both executive and non-executive, of the
Executive Board as well as with the Trust.
It also carries the responsibility of chairing
the Executive Nominations Committee
for non-executive appointments.
Through the position, I have set out toprovide a point of contact, in case of need,for the Trust to ensure that I am aware of
their views. I have also met, separately, fromtime to time with the Director-General toensure that I am aware of any relevant issues
within the Executive Board.

The Committee meets at least once a year.
Membership of this Committee changes
depending on whether non-executive or
executive appointments are being made.
Information and professional development
Directors receive an induction programme
and a wide range of information about thecompany on joining.This includes backgroundinformation on the BBC, its Directors,
details of Board procedures and Directors’
responsibilities. In addition the Directors’
induction is supplemented via access tovarious external training programmes.

In addition, during the period I have met
with the non-executive Directors separatelyfrom the Executive Board to discuss the
Executive Board’s performance and chaired
the Executive Nominations Committee,
overseeing the establishment of theappointment framework for Executive
Board members.

Senior Independent Director’s Report
I am pleased to have the opportunity toreport on my activities during the period in
my role as Senior Independent Director.The
role of Senior Independent Director, createdin December 2006, is a developing one
which places particular emphasis on ensuring
effective communication between members,

There are no issues arising from these
discussions that I feel necessary to highlightin this report.
Marcus Agius
Senior Independent Director
19 June 2007

Executive Board attendance
The attendance record of Executive Board members is detailed below. Attendance of Individual Governors at Board of Governors’ meetings andsub-committee meetings up to December 2006 and of Trustees from January 2007 is recorded in Part One of the Annual Report and Accounts.
ExecutiveBoard(to
31 December
2006)

Executive
Board
(from
1 January
Audit Fair Trading Nominations Remuneration
2007) Committee1 Committee2 Committee3 Committee4

Number of meetings for the period

7

3

1

1

1

1

Mark Thompson
Mark Byford
Jenny Abramsky
Jana Bennett
Tim Davie
Ashley Highfield
Stephen Kelly5
Zarin PatelJohn Smith
Caroline Thomson
Marcus AgiusDr Mike Lynch
David Robbie
Dr Samir Shah
Robert Webb
Jeremy Nordberg5

7
7
6
7
6
6
3
4
5
6
–
–
–
–
–
4

3
3
3
3
3
3
3
3
3
3
2
3
2
3
3
–

1
–
–
–
–
–
–
1
–
–
–
1
1
1
–
–

–
–
–
–
–
–
–
1
–
1
1
–
–
1
1
–

1
1
–
–
–
–
–
–
–
–
1
1
–
–
–
–

1
–
–
–
–
–
1
–
–
–
1
1
–
–
1
–

Membership of the Committee: David Robbie (Chair), Mike Lynch and Samir Shah. Mark Thompson and Zarin Patel are regular attendees
Membership of the Committee: Robert Webb (Chair), Samir Shah, Marcus Agius, Zarin Patel and Caroline Thomson
3
Membership of the Committee differs depending on the appointment (non-executive or executive) being made. Marcus Agius, Mark Thompson and Mike Lynch are members
for all appointments. Mark Byford is a member for executive appointments and a regular attendee for non-executive appointments. Mark Thompson chairs for executive
appointments and Marcus Agius for non-executive appointments
4
Membership of the Committee: Marcus Agius (Chair), Robert Webb and Mike Lynch. Mark Thompson and Stephen Kelly are regular attendees
5
Jeremy Nordberg was Acting Director, BBC People until October 2006. Stephen Kelly joined the BBC as Director, BBC People in October 2006
1
2

Part Two: BBC Annual Report and Accounts 2006/2007 89

Finance
Governance andfinancial statements
Accountability and internal control
The Executive Board, newly formed on
1 January 2007 to include non-executive
members, is now responsible for ensuring
there is a process for managing significant
risks to the BBC, and for maintaining
an adequate system of internal control
and reviewing its effectiveness. Until
31 December 2006, the Executive Direction
Group, now known as the BBC Direction
Group, carried this responsibility, although
underlying processes have been continuous.
Risk identification and management
An ongoing process for identifying, evaluating,managing, monitoring and reporting
significant risks to the BBC, which accords
with the Turnbull guidance, has been in place
for the year ended 31 March 2007 and up
to the date of approval of this BBC Annual
Report and Accounts.The overall managementof risk within the BBC is considered tobe most effectively managed through theengagement of the entire Executive Board
and, for that reason, risk management is notdelegated to a sub-committee. Key elementsof the process include:
The Director of each BBC business group
has a clear responsibility for identificationand management of risks facing theirbusiness. Each business group maintains
a register of identified key business risks
which may have an impact on theaccomplishment of its strategic objectives
or achievement of its core businesspurposes, together with identified current
controls and actions planned in response.
Risk registers are subject to regular review
and assessment throughout the year, andfeed into consideration of risk exposure
at both local and BBC board level.
The Executive Board, the BBC Direction
Group, and the Executive Direction Group
before it, each receive regular reportson the BBC’s risk exposure, including
identification of controls currently in placeand further actions planned to manage
those risks effectively, and highlighting
issues for their particular attention.
These reports include: an annual baseline
assessment, followed by quarterly updates,of the BBC’s management of each of therisk categories currently deemed critical to
the success of the BBC business; quarterly
assessments of the key risks facing each
BBC business group; and ad hoc reports
in response to any major unexpected
increase in exposure to any significant risk.

Specialist business functions oversee
the pan-BBC management of certain
major areas of risk, ensuring appropriate
frameworks and arrangements are in place
to provide for consistency across thebusiness, and ensuring appropriate executive
sponsorship and management ownershipof these. Such specialist functions include:
the Business Continuity Unit; Occupational
Risk; the Change@BBC Team (co-ordinating
the BBC’s change programme).
The responsibility to minimise the risk of
fraud and the consequential loss to thelicence fee payer is taken very seriously:a clear fraud policy clarifies responsibilities
for the controls in place to minimise therisk of fraudulent activity; all suspected
incidents of fraud are investigated; anti-fraud
workshops continue across the BBC to
identify key fraud risks and to promotefraud awareness; application of the policy
and of other measures is overseen by
the Anti-Fraud Group, which reports to
the Audit Committee.
An internal risk management function
works with management and the
Executive Board to ensure the continued
operation and appropriate developmentof processes to identify, evaluate andmanage the significant risks facing theBBC. Periodic reports on the process
are submitted to the Audit Committee.
Internal control
The Executive Board, supported by senior
management teams, is responsible forestablishing and maintaining the BBC’s
system of internal control, for reviewing
its effectiveness and for ensuring necessary
actions are taken to remedy significant
failings or weaknesses identified.The BBC’s
system of control is designed to manage
rather than eliminate the risk of failure toachieve business objectives: although nosystem of internal control can provide
absolute assurance against material
misstatement or loss, the BBC’s controls
are designed to provide reasonableassurance that assets are safeguarded,transactions are appropriately authorised
and material errors or irregularities areeither prevented or detected on a timely
basis. Key elements of the BBC’s system
of internal control include:

90 Part Two: BBC Annual Report and Accounts 2006/2007

Comprehensive financial and otherreporting processes, within business groups
and up to the Executive Board, including
monthly management reporting, business
reviews, an annual budget cycle withregular interim forecasts, long-termplanning, performance review andexception reporting.
Formalised authorisation processes,with the maintenance of proper records
whenever these are necessary, covering
all financial transactions, all programmecommissioning and production, all major
project expenditure, and all contracts,with clearly defined criteria when
Executive Board approval is required.
Processes to ensure compliance with allapplicable laws and regulations, including
Ofcom requirements.
Processes to manage risks associated withthe outsourcing of key business services(eg licence fee collection, finance transaction
processing, HR services, technology systems
and support) and to ensure continuity ofongoing business operations.
Formalised policies and procedures
concerning all material business processes,
to ensure the flow of timely, relevant andreliable information across the business.
Processes to ensure the professionalism
and competence of staff, including
recruitment policies, performance appraisal
systems, and training programmes todevelop and maintain required skills
and knowledge.
Internal Audit
The BBC has an Internal Audit department
which is a core part of the Business Assurancefunction. Internal Audit’s authority, and its
independence, is assured by its separate
reporting relationship to the Director-Generaland to the Audit Committee.The scope ofInternal Audit includes the examination andevaluation of the adequacy and effectivenessof the BBC’s system of internal control.
The work programme of Internal Audit
extends throughout all activities of the BBC
and covers the exercise of the BBC’s rightof audit over external parties, including
independent production companies andsuppliers of key outsourced business services.

Internal Audit undertakes regular testing ofcontrol systems and core business processes,
and the consistency of their application
across the BBC, under a plan agreed annuallywith the Audit Committee.The audit planis based on a continuing assessment of key
risks, with due consideration to value formoney to the licence fee payer, and covers allmaterial financial, operational and compliance
controls. Any significant control failings
or weaknesses revealed by testing arereported promptly to appropriate levelsof management.The results of testing arereported at each meeting of the Audit
Committee, which scrutinises the operationof the BBC’s internal controls over its key
risks throughout the year.
Executive Board Audit Committee
Details of the membership and arrangementsof the Governors’ Audit Committee, which
operated until 31 December 2006, are given
in Part One of the Annual Report and Accounts.
The Executive Board Audit Committee
consists of the following non-executive
Directors: David Robbie (Chairman),Mike Lynch and Samir Shah. All wereappointed by the Executive Board
Nominations Committee in January 2007.
The Executive Board is satisfied that David
Robbie has significant, recent and relevant
financial experience.The Committee
augments the broad range of skills of its
three members with advice from financial
professionals within the BBC’s Internal
Audit and Finance teams and from external
advisers, including the external auditors,
thus ensuring that the Committee is kept
abreast of recent and relevant financial
developments. Upon formation of theCommittee, all members were provided
with induction packs and met with membersof BBC management, to extend theirknowledge of the BBC business and therole of the Audit Committee within it.
Since its formation, the Audit Committee
has set its Terms of Reference, and thesehave been approved by the Executive Board.
It will, along with the Board, review its
effectiveness annually.The Audit Committee’s
written terms of reference are available atbbc.co.uk/info/running/executive/standing_orders.shtml. Its principal role is to review:the effectiveness of the system ofinternal control, considering reports frommanagement and from internal and external
auditors on processes for managing
significant risks to the organisation, including
subsidiary companies

In considering legal and regulatory
requirements, the Audit Committee has
reviewed relevant developments, including
receiving presentations from managementon the impact of proposed changes inaccounting and reporting standards.

the BBC’s financial statements, including
accounting policies, compliance with legal
and regulatory requirements, and thefindings of the external and internal auditors

Minutes of each Audit Committee meeting
are, once approved, made available to the
Executive Board and to the Trust for noting.
Recommendations of the Audit Committee
on any area within its remit where action or
improvement is needed are reported backto the Executive Board by whatever route isdeemed most appropriate to the nature andcircumstances of the issue.The Committee
Chairman shall formally report to the
Executive Board at least once a year on
all matters within the Committee’s duties
and responsibilities.

the BBC’s relationship with the external
auditors, including their engagement, thescope of and approach to their work, theirfees, their effectiveness and their
independence, including the observance ofthe policy relating to the engagement of
the external auditors in non-audit work
the activities and plan of work and theeffectiveness of Internal Audit.
The Executive Board Audit Committee has
fulfilled its responsibilities, and in particularsince its formation has:considered the findings of the internal andexternal auditors, sought assurance frommanagement that control issues highlighted
are being addressed and taken specificreports from management on matters ofsignificant concern
reviewed the BBC’s financial statements,
accounting policies and compliancereviewed and approved the policy forengaging the external auditor in additional
work and the observance of that policy
reviewed and approved the work plan ofInternal Audit
reviewed the processes in place for the
management of risk and for whistle-blowing.
The Executive Board Audit Committee met
twice from 1 January 2007 to the date of
approval of the Annual Report and Accounts.
The meetings were attended by the DirectorGeneral, the Group Finance Director, theHead of Business Assurance (also Head ofInternal Audit) and representatives from theexternal auditors.The Committee meetsregularly with the external auditors without
any member of management present.The
Chairman of the Audit Committee meetsroutinely with the Head of Business
Assurance, alone or with the external
auditors, but without management.

Independence of external auditors
The BBC complies with the guidance
governing the conduct of external audit set
out in the 2003 FRC Code.The external
auditors appointed by the BBC are KPMG
LLP as auditors of the financial statements,
and PricewaterhouseCoopers LLP as thefair trading auditors.The Audit Committee,
the Fair Trading Compliance Committee,
KPMG LLP and PricewaterhouseCoopers
LLP themselves all have safeguards inplace to avoid the possibility of theauditors’ objectivity and independence
being compromised.
The Audit Committee regularly reviews theindependence of its external auditors.The
Audit Committee holds discussions with theexternal auditors without management being
present.The Audit Committee reviews thelevel of non-audit fees paid to KPMG LLP.
Any significant consulting work is put out tocompetitive tender. Recruitment from KPMG
LLP into any senior management position in
the BBC requires the prior approval of the
Audit Committee.The BBC’s policies inrelation to services procured from theexternal auditors are:non-audit services, above a £50,000
threshold, proposed to be commissioned
from the external auditors must be notified
to, and approved by, the Audit Committee
above an established de minimis level theplanned work must be submitted tocompetitive tender and, in the event thatthe external auditors are to be awarded
the contract, the prior approval of the
Audit Committee must be obtainedPart Two: BBC Annual Report and Accounts 2006/2007 91

Finance
Governance andfinancial statements
the external auditors are specifically
excluded from being considered forcertain types of work where theirinvolvement could be perceived toprejudice their ability to express an
independent and objective opinion.
Whistle-blowing
The BBC has a ‘whistle-blowing’ or‘protected disclosure’ policy.The policy
facilitates the anonymous communication
to the BBC of any incident in which there isa suspicion that there has been a breach of
the BBC’s codes. A ‘whistle-blowing’ hotline
is administered by an independent external
company to ensure anonymity. Each reported
incident is notified to the Head of Business
Assurance, who ensures that every incident
is investigated, a response communicatedand action taken as appropriate. Annually, theAudit Committee reviews both the process
and the appropriateness of actions taken
in regard to significant incidents.
Executive Board remuneration report
This report sets out the BBC’s remuneration
policy and details the remuneration received
by the members of the Executive Board.
The BBC is exempt from the requirementsof the Directors’ Remuneration Report
Regulations 2002 and those of the Financial
Services Authority, but this report has been
prepared as if those requirements apply
wherever the disclosure provisions are
relevant and applicable.The sections on
pensions and remuneration received by
the Executive Board members are audited
by KPMG LLP.
Remuneration Committees: constitution
and operation
Until 31 December 2006, the Remuneration
Committee was a sub-committee of theBoard of Governors and was accountable
for the overall remuneration policy for theBBC’s Executive Board and for determining
their base pay and any bonus awards.
The Governors’ Remuneration Committee
was chaired by Anthony Salz and the othermembers were Deborah Bull and Michael
Grade. Director-General (Mark Thompson)and Director, BBC People (Stephen Kelly
from 3 October 2006), also attended
to advise on matters relating to othermembers of the Executive Board and theoverall performance of the BBC. Neither
was present when matters concerning
their own remuneration were considered.

From 1 January 2007, upon creation of the
BBC Trust, the Governors’ Remuneration
Committee was replaced by two committees,
the Remuneration and Appointments
Committee of the Trustees and the
Executive Remuneration Committee, which
is a sub-committee of the Executive Board.
The Remuneration and Appointments
Committee advises the Trust on the
remuneration strategy for the executive
Directors and Director-General, including
the application of the strategy in relation to
the Director-General’s remuneration as wellas the fees of the non-executive Directors.
The Executive Remuneration Committee is
responsible for determining the remunerationof executive members of the Executive
Board (excluding the Director-General) in
accordance with agreed strategy, approvedby the Trust.This includes setting the base
pay and determining any bonus awards.
The members of the Executive Remuneration
Committee are non-executive Directors.
The Committee is chaired by Marcus Agiusand the other members are Mike Lynch
and Robert Webb.
The meetings of the Executive Remuneration
Committee are also attended, on invitation,by the Director-General (Mark Thompson)and Director, BBC People (Stephen Kelly),
to advise on matters relating to othermembers of the Executive Board and theoverall performance of the BBC. Neither ispresent when matters concerning their own
remuneration are considered.The Executive
Remuneration Committee has access tointernal expertise through the BBC’s Headof Reward, who also attends the meetings.
Complying with the 2003 FRC Combined
Code on Corporate Governance, theExecutive Remuneration Committee takes
specialist advice from external professional
advisers on remuneration matters,
particularly market practice. During theyear, the Remuneration Committee received
advice from Hay Group on comparative
market data in the determination of pay
and benefits for the Executive Board.

92 Part Two: BBC Annual Report and Accounts 2006/2007

Non-executive Directors:
remuneration policy
The non-executive Directors receive a fee,determined by the Trustees, reflecting thecomplexity of the role and the time required
to execute the role effectively.The fee levels
are set with reference to rates paid by otherUK corporations, but at a level such thatthe non-executive Directors would not befinancially dependent on the BBC.The feelevels are reviewed every other year, the next
review being effective from 1 January 2009.
Each non-executive Director receives abase fee (currently £35,000 per annum). An
additional fee (currently £5,000 per annum)
is received by the Senior Independent
Director and the chair of each Board
committee for each role performed.They
are additionally reimbursed for expenses
incurred on BBC business, and any tax
arising on those expenses is settled directlyby the BBC.The fees and expenses arereported in the table on page 94.
Executive Directors: remuneration policy
The Executive Remuneration Committee
determines the remuneration of executive
Directors (except in respect of the
Director-General) in accordance witha strategy approved by the Trust. The
remuneration strategy is to offer remunerationthat attracts, motivates and retains the key
talent required to lead the BBC and to deliver
outstanding public service broadcasting. In
doing so the remuneration policy seeks to:
remunerate individuals fairly for individual
responsibility and contribution;
determine base pay. In setting base pay
the Remuneration Committee takes
into account the base pay of the BBC’s
principal competitors and the otherorganisations with which it competes
for talent, without paying more than isnecessary.The policy recognises that many
competitor organisations are able to offer
significant levels of variable pay, including
financial performance-related bonuses andshare-based awards which are not possible
within the BBC.Therefore, determiningbase pay at a moderate premium to themedian base pay of its competitors isdeemed necessary;
provide a limited element of variable
pay linked to the achievement of key
objectives and overall contribution to
BBC performance; andtake into account remuneration policy
within the rest of the BBC and to consider
the relationship between the remunerationof Executive Board members and that ofother employees.
Elements of remuneration
The main elements of remuneration
are base pay, annual bonus and pension.
Base pay
Base pay is reviewed with effect from
1 August each year taking into accountindividual responsibilities and performance,competitive market pressures and internal
comparators.The Executive Remuneration
Committee receives specialist advice fromexternal professional advisers, Hay Group,
on remuneration matters, particularlycomparative market data. In 2005, it wasdetermined that 10% was the appropriate
moderate premium to median market pay
against which to benchmark salaries.
Annual bonus
Bonuses for executive Directors (except
John Smith) are limited to 10% of basepay, and are based on the achievement ofdivisional value for money targets, accounting
for up to 5% of base pay, with divisionaltransformational measures accounting forthe other 5% of base pay.These objectives
were agreed by the previous Board ofGovernors and continued following transition
to the BBC Trust.
It is intended that the bonus arrangementsfor 2007/2008 for all members of the
Executive Board will follow a similar
structure to 2006/2007.
Benefits
In addition to base pay, annual bonus andpension, the other main contractual benefits
are a car and fuel allowance, private healthinsurance, and life assurance. It has been thepolicy for some years that new appointees
to the Executive Board are not eligible
for provision of a chauffeur-driven car.
The Director-General’s contract provides
for a chauffeur-driven car, but no entitlement
to a personal car or fuel allowance.
Executive pensions
Executive members of the Executive Board
are eligible to participate in the BBC Pension
Scheme, which provides for pension benefits
on a defined benefit basis. For any employee
joining on or before 1 November 2006, theaccrual rate is 1/60th of the final pensionablesalary per year of service. For an employee
who joined after this date, the accrual is

1.67% of their average pay adjusted in linewith price inflation. In each case, earnings
are subject to a maximum annual limit(£108,600 per annum in 2006/2007) for
those who joined the Pension Scheme after
31 May 1989.The Pension Scheme provides
for early retirement on medical grounds
and life assurance of four times base pay
up to a prescribed limit.
For an executive member of the Executive
Board who joined after 31 May 1989, where
their base pay exceeds the maximum annual
limit, a variety of arrangements were put inplace, including funded and unfundedarrangements outside of the BBC Pension
Scheme. Until 31 March 2006, for the
Executive Board, all of these arrangements
were funded through a Funded Unapproved
Retirement Benefits Scheme (FURBS), butsince 1 April 2006, a cash pension supplementof the same value has been paid instead.
With the new pensions regime effectivefrom April 2006, any participating employee
who reaches or exceeds the new Lifetime
Allowance (LTA) may opt out of the Pension
Scheme and instead receive a cash pension
supplement replacing BBC contributions
to the Pension Scheme. Details of defined
benefit entitlements are shown below:

Defined benefit schemes
Annual values

Executive Director(age at 31 March 2007)

Executive Board
Jenny Abramsky (60)Jana Bennett (51)Mark Byford (48)
Stephen Dando (45)
Tim Davie (39)Ashley Highfield (41)Stephen Kelly (41)1
Zarin Patel (46)John Smith (49)Mark Thompson (49)
Caroline Thomson (52)Transfer values2

Accruedpension at
31 March
2007£’000 pa

Increase inaccruedpensionover theyear£’000 pa

Transfervalue ofaccruedpension at
31 March
2007
£’000

190
9
171
8
4
12
1
16
173
5
58

13
2
15
–
2
2
1
3
20
2
4

3,887
126
2,489
87
27
96
7
159
2,637
64
1,130

Transfer
Increase invalue oftransfer
accruedvalue lesspension atmembers’
31 March contributions
2006
over year
£’000
£’000

3,849
92
2,117
76
12
74
–
126
2,195
38
1,014

29
28
347
10
9
16
4
27
413
20
108

Stephen Kelly was appointed an Executive Board member and joined the Pension Scheme on 1 October 2006. As at 31 March 2007, he had less than two years’ service and sowould not be entitled to a deferred pension if he had left the Pension Scheme on this date. However, for comparison with the other Executive Board members, his accrued benefits
have been calculated and valued assuming that he will complete the two years’, service requirement
2
The transfer value of accrued pension benefits represents the estimated cost to the Pension Scheme of providing the pension benefits accrued to date.The value is affected bymany factors, including age, pensionable salary, pensionable service and investment market conditions at the date of calculation (in accordance with Actuarial Guidance Note GN11).
It is not a sum paid or due to the individual and therefore cannot be meaningfully added to remuneration.The effect of the investment market conditions on the transfer value
varies according to the member’s age – for older members the calculation reflects the yields on index-linked gilts, whilst for younger members the dividend yield on the
FTSE All-Share Index is the more significant determinant
1Part Two: BBC Annual Report and Accounts 2006/2007 93

Finance
Governance andfinancial statements
Remuneration received
The remuneration of the Governors,Trustees and Executive Board members during the year is shown below:
Remuneration
Total
beforeremuneration
Total
pensionPension and pension
Expenses/
Other remuneration contributions contributions contributions
benefits remuneration4 2006/2007
2005/2006
2005/2006 2005/2006
£’000
£’000
£’000
£’000
£’000
£’000

Fee/base pay£’000

Annualbonus3£’000

Executive Directors
Jenny Abramsky
Jana Bennett
Mark Byford
Stephen Dando1
Tim Davie
Ashley Highfield
Stephen Kelly
Zarin Patel
Caroline Thomson
Mark Thompson

316
343
425
19
291
292
155
312
291
624

–
–
–
–
–
–
–
–
–
–

13
20
12
1
15
12
8
13
15
9

–
70
–
5
100
55
105
61
55
155

329
433
437
25
406
359
268
386
361
788

322
353
456
292
287
311
–
324
317
619

–
65
–
71
–
53
–
64
48
151

322
418
456
363
287
364
–
388
365
770

Executive Directors (excluding John Smith)

3,068

–

118

606

3,792

3,281

452

3,733

John Smith

354

80

26

–

460

444

–

444

Total executive Directors

3,422

80

144

606

4,252

3,725

452

4,177

Non-executive Directors
Marcus Agius5
Mike Lynch5David Robbie5
Samir Shah5
Robert Webb5

17
9
10
9
10

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

17
9
10
9
10

–
–
–
–
–

–
–
–
–
–

–
–
–
–
–

Total non-executive Directors

55

–

–

–

55

–

–

–

3,477

80

144

606

4,307

3,725

452

4,177

192

–

17

–

209

–

–

–

Total Governors

235

–

60

–

295

434

–

434

Total

3,904

80

221

606

4,811

4,159

452

4,611

2

Total Executive Board
6

Total Trustees

6

Stephen Dando resigned 23 April 2006
John Smith’s base pay, bonus and benefits are included at their full rate, although the cost to the BBC Public Service Broadcasting Group is restricted to 25% of base pay for theperiod up to 30 September 2006 and zero thereafter3
The executive Directors who primarily focus on licence fee funded business waived their contractual rights to be considered for an annual bonus for 2006/2007. John Smith waived
his right to £18,000 of the annual bonus awarded to him. In addition to the annual bonus taken an equal amount has been foregone as was the case last year, and has been
invested in the Long-Term Incentive Plan for BBC Worldwide, which may vest in March 2010 subject to future performance. Awards made in 2005 and 2006 under the LTIP may
vest in 2008 and 2009 respectively.
4
Other remuneration comprises the following:a. In previous years, the BBC’s contributions to FURBS for executive Directors were shown in the pensions table. From April 2006, the FURBS arrangements were replaced bya cash pensions supplement, and as such are not required to be shown in the summary of remuneration received and are shown under ‘other remuneration’. Remuneration
information in respect of 2006 has been expanded to present the FURBS contributions in order to demonstrate the comparability of Directors’ rewards.
b. For Tim Davie it also includes a payment of £45,000 in respect of FURBS contributions relating to 2005/2006 which was not finalised in the previous year
c. For Stephen Kelly it also includes a payment of £75,000 which he received on joining (1 October 2006) as compensation for loss of performance related benefits from his
previous employment.This is repayable (on a pro-rata basis) if he leaves the BBC within two years of joining
5
Marcus Agius was appointed 1 December 2006, Mike Lynch, David Robbie, Samir Shah and Robert Webb were appointed 1 January 2007
6
The remuneration of the new Trustees is for the period 1 November 2006 to 31 March 2007 and the remuneration of the Governors is for the period 1 April 2006 to
31 December 2006.Trustees that were previously Governors are included from 1 January 2007. Further details are provided in Part One of the Annual Report and Accounts
1
2

There were no payments in respect of termination or compensation for loss of office paid to or receivable by Trustees or Executive Board
members during the year.

94 Part Two: BBC Annual Report and Accounts 2006/2007

BBC’s Commercial Businesses
Separate remuneration arrangements
apply for John Smith, the Chief Executive
Officer (CEO) of BBC Worldwide, whose
responsibility is for the BBC’s Commercial
Businesses.These arrangements have notchanged since last year’s report.
In his capacity as CEO of BBC Worldwide,
John Smith participates in the annual bonus
and long-term incentive plans of BBC
Worldwide which are established by the
Board of BBC Commercial Holdings.The
annual bonus is limited to 50% of base pay
and is determined by profit.The Long-Term
Incentive Plan is driven by profit and returnon sales targets, and out-performanceagainst major international media sectorbusinesses over one and three-year
performance periods.These plans are notfunded by the licence fee, the full costsof the annual bonus and the long-term
incentive plans are self-funded by thecommercial revenues of BBC Worldwide.
For 2006/2007, the cost to the BBC PublicService Broadcasting Group was restricted
to 25% of John Smith’s base pay for theperiod to 30 September 2006, reflecting his
public services responsibilities to that date.
Since 30 September 2006, John Smith has
remained a member of the BBC’s Executive
Board, but no cost is borne by the BBC
Public Service Broadcasting Group.
Employment contracts
Employment contracts of executive
Directors do not include a notice periodof more than one year, and are subject toearlier termination for cause.
As at 31 March 2007, the unexpired term
and notice period of each Executive Board
member was a maximum of 12 months.
There is no entitlement to any additional
remuneration in the event of earlytermination other than in the case oftermination for reason of redundancy.
Outside interests
Where there is no potential for conflictof interest and with the prior agreement of
the Director-General and the Nominations
Committee, executive members of the
Executive Board may hold external
directorships. In principle, no more than two
external directorships can be held at thesame time, of which only one should be in
a commercial organisation. Any remuneration
which arises from directorships is paid to
the BBC. During the year, John Smith served

as a non-executive director of Severn
Trent PLC and Caroline Thomson served
as non-executive director of The Pensions
Regulator. For information on how to
obtain the Executive Board’s register ofinterests see page 88. It is recognised that
non-executive Directors will probably holddirectorships and the restrictions applying
to executive Directors do not apply to them.
Executive Board responsibility statement
Statement of Executive Board
responsibilities in respect of the Annual
Report and Accounts
The Charter requires that an annual reportand statement of accounts is prepared under
UK Generally Accepted Accounting Principles
and audited.The Trustees’ responsibilities aredetailed in Part One of the Annual Reportand Accounts.The Executive Board is
responsible for the operating and financial
review, statements of compliance withapplicable codes and regulations and thestatement of accounts.The Executive Board
has undertaken to prepare the statementof accounts (or ‘financial statements’) for
each year that give a true and fair view ofthe state of affairs of the BBC and of theincome and expenditure for that period.
In preparing those financial statements the
Executive Board has undertaken to:
Select suitable accounting policies andthen apply them consistently.

The Executive Board is responsible forkeeping proper accounting records that
disclose with reasonable accuracy at any
time the financial position of the BBC andto enable them to ensure that the financial
statements comply with the Companies Act
1985.They have general responsibility fortaking such steps as are reasonably open
to them to safeguard the assets of the
BBC and to prevent and detect fraud andother irregularities.
The Executive Board is responsible for the
maintenance and integrity of the corporate
and financial information included on
the BBC’s website. Legislation in the UK
governing the preparation and disseminationof financial statements may differ fromlegislation in other jurisdictions.
Statement of disclosure of information
to auditors
The Executive Board members who held
office at the date of approval of the Annual
Report and Accounts confirm that, so far as
they are each aware, there is no relevant
audit information of which the BBC’s
auditors are unaware; and each Executive
Board member has taken all the steps thatthey ought to have taken as an Executive
Board member to make themselves awareof any relevant audit information and toestablish that the BBC’s auditors are awareof that information.
Going concern
The going concern basis has been adopted
in the preparation of the financial statements
as the Executive Board believes that the
BBC has adequate resources to continue
its operations for the foreseeable future.

Make judgements and estimates that arereasonable and prudent.
State whether applicable UK accounting
standards have been followed, subject
to any material departures disclosed andexplained in the financial statements.

This statement was approved by the
Executive Board.

Prepare the financial statements on
the going concern basis, unless it isinappropriate to presume that the BBC
will continue in business, in which casethere should be supporting assumptionsor qualifications as necessary.
In addition, the Executive Board has elected
to comply with the accounting and disclosure
provisions of the Companies Act 1985 and,
where applicable, the Financial Services
Authority Listing Rules which apply to acompany listed on an EU regulated market
except that International Financial ReportingStandards have not been adopted.

Mark Thompson
Director-General
19 June 2007

Part Two: BBC Annual Report and Accounts 2006/2007 95

Finance
Governance andfinancial statements
Independent auditor’s report
Independent Auditor’s report to theTrustees of the British Broadcasting
Corporation (BBC)We have audited the group and UK PublicService Broadcasting financial statements(the ‘financial statements’) of the BBC for
the year ended 31 March 2007, which
comprise the Group Income and Expenditure
Account, the Group and UK Public Service
Broadcasting Balance Sheets, the Group
Cash Flow Statement, the Group Statementof Total Recognised Gains and Losses andthe related notes (pages 97 to 145).
These financial statements have been
prepared under the accounting policies
set out therein.
In addition to our audit of the financial
statements, the Trustees have engaged us
to audit the information in the Trustees’,
Governors’ and Executive Board
Remuneration Reports (together ‘theRemuneration Reports’) that are describedas having been audited, which have been
prepared as if the BBC were a listedcompany and which is thus compliant withpart 3 of Schedule 7A to the Companies
Act 1985.
This report is made solely to the BBC’s
Trustees, as a body, in accordance with theRoyal Charter for the continuance of the
BBC which came into force on 1 January
2007 (‘the Charter’) and in accordance withthe terms of our engagement. Our audit
work has been undertaken so that we mightstate to the BBC’s Trustees those matters
we are required to state to them in anauditor’s report and for no other purpose.
To the fullest extent permitted by law, we
do not accept or assume responsibility toanyone other than the BBC and the BBC’s
Trustees as a body, for our audit work,for this report, or for the opinions wehave formed.
Respective responsibilities of the Trustees
and Executive Board and Auditors
The Trustees and Executive Board are
responsible for preparing the Annual Reportand Accounts, the Remuneration Reports
and the financial statements in accordancewith applicable law and United Kingdom
Accounting Standards (United Kingdom
Generally Accepted Accounting Practice)as set out in the Statement of Trustees’ andExecutive Board’s Responsibilities on page 32
of Part One and page 95 of Part Two of thisAnnual Report and Accounts. Our responsibility,in accordance with the terms of ourappointment, is to audit the financial
statements and the parts of the Trustees’
Remuneration Reports to be audited inaccordance with relevant legal and regulatory
requirements and International Standards on
Auditing (UK and Ireland) and the Charter.
We report to you our opinion as to whether
the financial statements give a true and fairview and whether the financial statements
and the parts of the Remuneration Reports
to be audited have been properly prepared inaccordance with the Companies Act 1985 as
if that Act had been applied to these financial
statements.We also report to you if, in our
opinion, the BBC has not kept properaccounting records, if we have not received all
the information and explanations we require
for our audit, or if information specified by law
regarding Trustees’, Governors’, and Executive
Board remuneration and other transactions
is not disclosed.
In addition to our audit of the financial
statements, the Trustees have engaged us
to review the Corporate Governancestatement as if the BBC were required tocomply with the Listing Rules of the Financial
Services Authority in relation to thesematters. We review whether the Corporate
Governance Statement on pages 82 to 95
reflects the BBC’s compliance with the nine
provisions of the 2003 Financial Reporting
Council Combined Code specified for our
review by the Listing Rules of the Financial
Services Authority, and we report if it doesnot. We are not required to consider
whether the statements on internal control
cover all risks and controls, or form an
opinion on the effectiveness of the BBC’s
corporate governance procedures or its
risk and control procedures.
We read other information contained in
the Annual Report and Accounts, and consider
whether it is consistent with the audited
financial statements.This information includes
the Chairman’s statement in Part One of
the Annual Report and Accounts, the DirectorGeneral’s report on page 1, the Trustees’
review of services in Part One of theAnnual Report and Accounts, the Financial
overview on pages 82 to 85, the Corporate
Governance Statement and the unauditedparts of the Remuneration Reports.
We consider the implications for ourreport if we become aware of any apparent
misstatements or material inconsistencies
with the financial statements. Our
responsibilities do not extend to any
other information.

96 Part Two: BBC Annual Report and Accounts 2006/2007

Basis of audit opinion
We conducted our audit in accordancewith International Standards on Auditing(UK and Ireland) issued by the Auditing
Practices Board. An audit includes
examination, on a test basis, of evidence
relevant to the amounts and disclosuresin the financial statements and the partsof the Remuneration Reports to be audited.
It also includes an assessment of thesignificant estimates and judgements madeby the Executive Board in the preparationof the financial statements, and of whether
the accounting policies are appropriate
to the Group’s and UK Public Service
Broadcasting’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit
so as to obtain all the information andexplanations which we considered necessary
in order to provide us with sufficientevidence to give reasonable assurance thatthe financial statements and the parts of theRemuneration Reports to be audited arefree from material misstatement, whether
caused by fraud or other irregularity or
error. In forming our opinion we also
evaluated the overall adequacy of thepresentation of information in the financial
statements and the parts of theRemuneration Reports to be audited.
OpinionIn our opinion:
the financial statements give a true and fairview, in accordance with United Kingdom
Generally Accepted Accounting Practice,of the state of the Group’s and UK PublicService Broadcasting’s affairs as at
31 March 2007 and of the Group’s surplus
for the year then ended; andthe financial statements and the partsof the Remuneration Reports which wehave been engaged to audit have been
properly prepared in accordance withthe provisions of the Charter and theCompanies Act 1985 as if that Act had
applied to these financial statements.
KPMG LLP
Chartered Accountants
Registered Auditor, London
19 June 2007

Finance
Financial statements
Consolidated statement of income and expenditure
For the year ended 31 March 2007

Note

2007
£m

2006
£m

13c

4,415.8(238.5)

4,234.5(229.5)

Group income

14,177.3

4,005.0

Operating expenditure excluding exceptional costs
Exceptional distribution costs
Exceptional restructuring costs

2d4c(4,262.9) (4,094.1)(46.0)–(44.5)(119.1)

Total operating expenditure2(4,353.4) (4,213.2)

Income (including share of joint ventures)
Less: share of joint ventures

Group operating deficit
Share of operating surplus of associates and joint ventures(176.1)40.7(208.2)
31.2

3
5
6

(135.4)(5.2)
55.7(177.0)
125.2
16.0

7a
7b
8b ii

(84.9)
14.4
(7.5)
162.6

(35.8)
13.5(12.0)
65.7

Surplus before taxation and minority interest

1

84.6

31.4

Taxation9(23.9)(27.7)

60.7
–

3.7
(0.1)

60.7

3.6

Operating deficit: Group and share of associates and joint ventures(Loss)/profit on sale and termination of operations
Profit on disposal of fixed assets
Deficit before interest and taxation
Interest receivable and similar items
Interest payable and similar items
Other net finance income (from defined benefit pension scheme)

Surplus after taxation and before minority interest
Minority interest
Surplus for the financial year18

All results arise from continuing operations.
There is no significant difference between the results as disclosed above and the results on an historicalcost basis.

Part Two: BBC Annual Report and Accounts 2006/2007 97

Finance
Financial statements
Balance sheetsat 31 March 2007

Fixed assets
Intangible assets
Tangible assets
Investment in programmes for future saleInterests in trade investments
Investment in subsidiaries

Note

Group
2007
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

10
11
12
13a
13e

10.2
708.9
98.5
5.0
–

19.3
697.2
106.5
–
–

–
496.8
–
–
295.0

–
493.0
–
–
283.9

196.4
(129.5)179.5(134.3)

–
–

–
–

66.9
1.0

45.2
1.1

–
–

–
–

890.5

869.3

791.8

776.9

Interest in joint ventures– share of gross assets and goodwill– share of gross liabilities
Interests in associates

13a
13a

Current assets
Stocks

14

476.9

462.4

463.5

447.6

Debtors due after more than one year
Debtors due within one year

15
15

74.4
696.9

45.9
727.1

38.9
569.8

26.9
582.8

Total debtors
Cash at bank and in hand

21

771.3
144.7

773.0
160.2

608.7
93.4

609.7
104.6

Creditors – amounts falling due within one year

16b1,392.9(1,015.6)

1,395.6(919.8)1,165.6(751.2)

1,161.9(729.5)

377.3

475.8

414.4

432.4

1,267.8

1,345.1

1,206.2

1,209.3(60.4)(143.2)(116.8)(196.2)(26.9)(115.7)(33.3)(164.5)

1,064.2

1,032.1

1,063.6

1,011.5

339.7
(5.2)

170.2
(5.3)

–
–

–
–

1,398.7

1,197.0

1,063.6

1,011.5

Net current assets
Total assets less current liabilities
Creditors – amounts falling due after morethan one year
Provisions for liabilities

16c
17

Net assets excluding pension asset/(liability)
Pension asset
Pension liability

8b i
8b i

Net assets
Represented byOperating reserve excluding pension reserve
Pension reserve

18
18

279.3
334.5

257.5
164.9

278.7
–

237.0
–

Total operating reserve
Capital reserve
Revaluation reserve

18
18
18

613.8
782.5
2.4

422.4
771.3
3.2

278.7
782.5
2.4

237.0
771.3
3.2

1,398.7–

1,196.9
0.1

1,063.6–

1,011.5–

1,398.7

1,197.0

1,063.6

1,011.5

Minority interest

The financial statements were approved by the Executive Board and signed on 19 June 2007 on its behalf by:

Mark Thompson Director-General

98 Part Two: BBC Annual Report and Accounts 2006/2007

Zarin Patel Group Finance Director

Finance
Financial statements
Consolidated statement of total recognised gains and losses
For the year ended 31 March 2007

Group surplus for the financial year
Exchange differences on retranslation
Actuarial gain on defined benefit pension schemes

Note

2007
£m

2006
£m

18
8b iii

60.7
(2.7)
143.8

3.6
1.9
661.1

201.8

666.6

Total recognised gains and losses relating to the year

Reconciliations of movement in reserves
For the year ended 31 March 2007

Group
2007
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

60.7
141.1

3.6
663.0

52.1
–

41.4
–

Increase in reserves during the year
Opening reserves

201.8
1,196.9

666.6
530.3

52.1
1,011.5

41.4
970.1

Closing reserves

1,398.7

1,196.9

1,063.6

1,011.5

Surplus for the financial year
Other recognised gains and losses relating to the year (net)

Part Two: BBC Annual Report and Accounts 2006/2007 99

Finance
Financial statements
Consolidated cash flow statement
For the year ended 31 March 2007
Reconciliation of Group operating deficit to net cash flow from operating activities
2007
£m

2006
£m

Group operating deficit
Depreciation and amortisation
Difference between pension charge and cash contribution(Profit)/loss on disposal of tangible fixed assets
Increase in stocks
Increase in debtors
Increase in creditors(Decrease)/increase in provisions(176.1)
221.6
136.8
(1.1)
(16.7)
13.6
21.6(66.1)(208.2)
197.3
135.1
2.4
(6.8)
(28.7)
47.5
77.5

Net cash inflow from operating activities

133.6

216.1

2007
£m

2006
£m

133.6

216.1

22.4

19.8

Return on investments and servicing of financeInterest received
Interest paid
Interest paid on finance leases

12.6
(7.0)
(0.5)

13.5
(9.2)
(0.5)

Net cash inflow from return on investments and servicing of finance

5.1

3.8

Taxation
Taxation paid

(21.1)(12.0)

Capital expenditure and financial investments
Purchase of tangible fixed assets
Investment in programmes for future sale
Investment in intangible fixed assets
Repayment of loan to associate undertaking
Drawdown of loan to joint venture
Proceeds from the sale of tangible fixed assets(144.7)(109.5)
–
0.3
(0.8)
79.9

(130.7)(73.6)
(0.4)
0.4
–
20.2

Net cash outflow from capital expenditure and financial investments(174.8)(184.1)

–
(0.9)
(5.5)
26.6

(0.8)
–
(4.1)
166.1

Net cash inflow from acquisitions and disposals

20.2

161.2

Net cash (outflow)/inflow before use of liquid resources and financing(14.6)

204.8

Management of liquid resources
Sale of other liquid resources

–

41.9

Net cash inflow from management of liquid resources

–

41.9

Financing
Increase in loans
Repayment of loans
Capital repayment of finance leases
Repayment of loan notes

20.4
(7.0)
(9.5)
(4.8)

57.0
(135.0)
(9.4)
(0.5)

Net cash outflow from financing(0.9)(87.9)(15.5)

158.8

Cash flow statement
Note

Net cash inflow from operating activities
Dividends received from joint ventures and associates

Acquisitions and disposals
Purchase of a subsidiary
Purchase of trade investment
Purchase of interest in associates and joint ventures
Proceeds from sale of operations(Decrease)/increase in cash in the year

100 Part Two: BBC Annual Report and Accounts 2006/2007

13a

19

20

Finance
Financial statements
Statement of accounting policies
This section explains the BBC’s main
accounting policies, which have been
applied consistently throughout the year
and in the preceding year except wherestated. A footnote in italics follows somepolicies to explain technical aspects of
the accounting treatment in plain English.
The financial statements have been preparedin accordance with the provisions of theBBC’s Charter and Agreement, which
requires them to be prepared in accordancewith UK Generally Accepted Accounting
Principles (UK GAAP).
Although not mandatory, the BBC has
in previous years chosen to follow theaccounting and disclosure provisions of
the Companies Act 1985 and the Financial
Services Authority Listing Rules to ensurethat its financial statements were preparedon a basis consistent with those of UK
public limited companies.
Following changes in company law, if it had
continued to report as if it were a public
limited company, the BBC would have
prepared its Group financial statements inaccordance with EU-adopted International
Financial Reporting Standards (IFRS) from
1 April 2005. However, reporting under
IFRS would be inconsistent with theBBC’s Charter and Agreement and with
Government reporting. Instead, the current
financial statements have been preparedin accordance with UK GAAP and theprovisions of the Companies Act 1985, asapplicable to a listed company not preparing
its financial statements in accordance with
EU-adopted International Financial
Reporting Standards.
In line with other companies, the BBC files
with Companies House audited financial
statements for all its subsidiary companies.
Basis of accounting
The financial statements have been prepared
under the historical cost accounting
convention, as modified by the revaluationof certain plant, machinery, furniture andfittings, financial instruments, derivatives andthe investment in BBC World Service and
BBC Monitoring.
Adoption of amendments
to accounting standards
The BBC has adopted the following
amendments to applicable UK accounting
standards for the first time in theseGroup accounts.

Amendment to FRS 23 (IAS 21) ‘The
Effects of Changes in Foreign Exchange
Rates’ Net Investment in a Foreign
Operation:This has had no impact on thestatement of income and expenditure or
the balance sheet.
Amendment to FRS 26 (IAS 39) ‘Financial
Instruments: Measurement’ Recognition
and Derecognition.This has requiredconsideration of whether certain liabilities
that had previously been derecognised inaccordance with normal practice, as there
was a remote likelihood of settlement,
need to be reinstated pending legal
extinguishment.This has had no significant
impact on the statement of income andexpenditure or the balance sheet.The
effect on prior years was not significant
and therefore no prior year adjustment
has been made.
The BBC has not adopted the amendments
to FRS 26 (IAS 39) ‘Financial Instruments:
Measurement’ Various Amendments inrelation to financial guarantee contracts.
Where one entity within the Group enters
into financial guarantee contracts toguarantee the indebtedness of other entities
within the Group, the BBC considers these
to be insurance arrangements, and accounts
for them as such. In this respect, the BBC
treats the guarantee contract as a contingent
liability until such time as it becomesprobable that a payment will be required
under the guarantee.
Adoption of new accounting standards
The BBC has adopted FRS 29 (IFRS 7)‘Financial Instruments: Disclosures’ for the
first time in these Group accounts.The
adoption of FRS 29 requires a change
in disclosure in certain notes to the financial
statements, principally Note 23. As a resultcomparative figures in the notes have been
represented accordingly, but this has notchanged any of the amounts recorded in
the primary financial statements forfinancial instruments.
Basis of consolidation
The Group comprises:
UK Public Service Broadcasting (thedeemed parent entity) and thosesubsidiaries incorporated to act on its
behalf, notably Centre House Productions
Limited, BBC Property Limited, BBC
Property Investment Limited, BBC Free
to View Limited and Digital UK Limited(UK Public Service Broadcasting Group)

BBC World Service (and its subsidiaries)
and BBC Monitoring
Commercial subsidiary companies
comprising BBC Commercial Holdings
Limited and its various subsidiaries(notably BBC Resources Limited, BBC
World Group and BBC Ventures Group– which includes BBC Worldwide)
Unless otherwise stated, the acquisition
method of accounting has been adopted.
Under this method, the results ofsubsidiaries acquired or disposed of in
the year are included in the consolidated
statement of income and expenditure fromthe date of acquisition or up to the dateof disposal.
The Group accounts include the resultsof UK Public Service Broadcasting, BBC
World Service, BBC Monitoring and allother businesses controlled by the BBC(subsidiaries) together with the BBC’s shareof the results of businesses over which
the BBC has influence but not control(associates) and those which the BBC jointly
controls (joint ventures).
An associate is an undertaking in which
the Group has a long-term interest, usually
between 20% and 50% of the equity voting
rights, and over which it exercises significant
influence. A joint venture is an undertaking
in which the Group has a long-term interest
and over which it exercises joint control.
UK Public Service Broadcasting income
and expenditure accountA separate statement of income andexpenditure reflecting the results of UK PublicService Broadcasting has not been presented,
as permitted by Section 230 of theCompanies Act 1985 as if it were a company.
Investments in Group undertakings
Other than the BBC World Service and
BBC Monitoring, investments are recordedon the balance sheet of UK Public Service
Broadcasting at cost less provision for any
impairment in value.
The funding of UK Public Service
Broadcasting, BBC World Service and BBC
Monitoring is legally separate and cross­subsidisation is not permissible. Accordingly,
for the purposes of preparing UK PublicService Broadcasting’s balance sheet, UK
Public Service Broadcasting is considered tohave investments in BBC World Service and
BBC Monitoring equal to the net assets ofthese entities.

Part Two: BBC Annual Report and Accounts 2006/2007 101

Finance
Financial statements
Statement of accounting policies
IncomeIncome, which excludes value added tax,
trade discounts and sales between Group
companies, is comprised of the following
key classes of revenue, which are recognised
as follows:
Television licences
Income derived from television licences
is recognised when receivable from the
Department for Culture, Media and Sport.
This represents the value of licences issued
in the year.The amount which can be paid in
cash to the BBC for any year cannot exceed
the total amount voted by Parliament forthat year. Any excess between the valueof licences issued and the amount voted
is recognised in the following year.
Grants from Government departments
Grants are recognised when receivable fromthe relevant Government department.The
BBC World Service receives Grant-in-Aid
from the Foreign and Commonwealth
Office and BBC Monitoring receives a grantfrom the Cabinet Office.These grants areintended to meet estimated expenditurein the year but unexpended receipts forthe year, within predetermined limits, are
not liable to surrender.
Provision of equipment, facilities andservices (including programme-making
facilities and services)
With the exception of long-term
contracts, income is recognised whenthe equipment, facilities and services
are provided to customers.
For long-term contracts, the amountof profit attributable to the stage ofcompletion is recognised when theoutcome of the contract can be foreseenwith reasonable certainty.Turnover
for such contracts is stated at the cost
appropriate to their stage of completion
plus attributable profits, less amounts
recognised in prior years. Provision ismade for any future losses as they areforeseen.
Distribution and advertising income,licence fees from international television
programme sales and sale of promotionalmerchandise and income from publishingThis income is recognised on provisionof services, the start of the licence period
or delivery of merchandise respectively.
Where programme rights have not beendelivered by the start of the licence
period, revenue is recognised on deliveryof the rights.

Sales of merchandise are stated after
deduction of the sales value of actualand estimated returned goods.

pensionable pay.The assets of the BBC’s
main pension scheme are held separatelyfrom those of the Group.

The distinction between the various income
sources is important. The BBC is careful not tocross-subsidise commercial, UK Public Service
Broadcasting or Grant-in-Aid and grant funded
activities. More information on these BBC fairtrading requirements and policies can be foundon pages 77 and 78 of this report.

Pension scheme assets are measured using
market values. Pension scheme liabilities
are measured using a projected unit credit
method and discounted at the current
rate of return on a high quality corporatebond of equivalent term and currency tothe liability.

Foreign currency translation
Transactions in foreign currencies aretranslated into sterling at the rates of exchangeruling at the date of the transactions.

The difference between the value of thepension scheme assets and pension scheme
liabilities is a surplus or a deficit. A pension
scheme surplus is recognised to the extent
that it is recoverable and a pension scheme
deficit is recognised in full.The movementin the scheme surplus/deficit is split between
operating charges, finance items and, in thestatement of total recognised gains andlosses, actuarial gains and losses. Amounts
are charged to expenditure so as to spreadthe cost of pensions over employees’
working lives with the BBC.

Monetary assets and liabilities denominatedin foreign currencies are translated into
sterling at the rates of exchange rulingat 31 March. Surpluses and deficits arisingfrom the translation of assets and liabilities
at these rates of exchange, together withexchange differences arising from trading,are included in the statement of income
and expenditure.
The profit and loss accounts and cash
flows of overseas subsidiaries are translated
into sterling at average rates for the year.
Exchange differences arising on consolidationfrom the retranslation of the opening net
assets of overseas subsidiaries and any
related long-term foreign currency
borrowings together with the differences
arising when the profit and loss accounts
are retranslated at the rates ruling at theyear end, are taken to the operating reservethrough the statement of total recognised
gains and losses.
As these financial statements are prepared insterling, the BBC’s foreign currency transactions
and balances must be translated, atappropriate exchange rates, into sterling.
Pension costs
The BBC operates both defined benefit
and defined contribution pension schemes
for the benefit of employees.
The amounts charged as expenditure forthe defined contribution schemes represent
the contributions payable by the BBC for
the accounting periods in respect ofthese schemes.
The defined benefit schemes, of which
the majority of staff are members, provide
benefits based on final, or career average,

102 Part Two: BBC Annual Report and Accounts 2006/2007

The BBC Pension Scheme is a Group-wide
scheme and UK Public Service Broadcastingand its subsidiary undertakings are unable toidentify their shares of the underlying assets
and liabilities of the scheme on a reasonable
and consistent basis.Therefore as requiredby FRS 17 ‘Retirement benefits’, UK PublicService Broadcasting accounts for the scheme
as if it were a defined contribution scheme.
As a result the expenditure charged for UK
Public Service Broadcasting represents thecontributions payable in the year.
On retirement, members of the BBC’s main
pension scheme are paid their pensions froma fund which is kept separate from the Group.
The BBC makes cash contributions to that fundin advance of members’ retirement.
Research and development
Research and development expenditureis written off as incurred.
Intangible fixed assets
Goodwill
Purchased goodwill (representing the excessof the fair value of the purchase consideration
plus any related costs of acquisition overthe fair value attributable to the separable
net assets acquired) arising on acquisitionof a subsidiary or business, is capitalised
and amortised on a straight line basis overits useful economic life (usually 20 years),
subject to reviews for impairment. On thesubsequent disposal or termination of abusiness, the surplus or deficit is calculated
after charging the unamortised amountof any related goodwill. As is permitted
by FRS 10 ‘Goodwill and intangible assets’goodwill arising in periods up to 1 April 1998
remains offset against the operating reserve.
On disposal, goodwill previously written off
against reserves is transferred to the statementof income and expenditure for the year.
Goodwill arises when the BBC pays more fora business than the sum of that business’ net
assets acquired, representing the fact that theGroup places more value on the business entity
as a whole (usually due to expected synergies
or earning potential of that business). Thispremium is treated as an asset in its own rightand held on the Group’s balance sheet, withan assumed economic life of 20 years. As withany other asset, the profit or loss on sale ordisposal (in this case sale/disposal of thebusiness) is calculated after writing off theamount still held on the Group’s balance sheet.
Other intangibles
Other intangibles are capitalised andamortised on a straight line basis overtheir useful economic life (usually 2–4 years)
subject to reviews for impairment.
Tangible fixed assets
Expenditure on tangible fixed assets is
capitalised together with incremental
internal direct labour costs incurred on
capital projects.Tangible fixed assets arestated in the balance sheet at cost lessaccumulated depreciation and any
provision for impairment.
UK Public Service Broadcasting’s plantand machinery is stated at the estimatedcurrent replacement cost of the assets, as
at 31 March 1993, adjusted for remaining
service potential, or cost if acquired later,
less accumulated depreciation.
BBC World Service’s and BBC Monitoring’s
plant and machinery and furniture andfittings are stated at the estimated current
replacement cost of the assets, as at
1 April 1996, as adjusted for remaining
service potential, or cost if acquired later,
less accumulated depreciation.There is no
significant difference between the net bookvalue of these tangible fixed assets andtheir value as determined on an historicalcost basis.

Depreciation is calculated so as to write off
the cost or valuation, less estimated residual
value, of fixed assets on a straight line basis
over their expected useful lives. Depreciationcommences from the date an asset isbrought into service.The BBC’s useful lives
for depreciation purposes for the principal
categories of assets are:Land and buildings
Freehold land – not depreciatedFreehold and long-leasehold buildings– 50 years
Short-leasehold land and buildings– unexpired lease term

If the recoverable amount of an asset(or cash generating unit) is estimated tobe less than its carrying amount, the resulting
impairment loss is recognised in the statementof income and expenditure immediately.
An impairment occurs when an asset
would otherwise be recorded in the financial
statements at an amount greater thanis recoverable from its use or sale.
Originated programme stocks
and work in progress
Originated programme stocks and workin progress, including those commissioned
from independent producers, are stated at
the lower of cost and net realisable value.
With the exception of the costs of prepaid
repeats of independent programmes, thefull stock value is written off on firsttransmission.

Plant and machinery
Computer equipment – 3 to 5 years
Electrical and mechanical infrastructure– 10 to 25 years
Other – 3 to 10 years
Furniture and fittings – 3 to 10 years
The BBC has revalued its assets once, when
the internal market was introduced, but haschosen not to revalue them on an ongoingbasis. This reflects the fact that they are usedwithin the BBC rather than being held forresale or their investment potential. Assets
are therefore included at the amount they
cost when purchased or constructed (in eithercase less subsequent depreciation).
Investment in programmes for future sale
Investment in programmes for future saleis stated at cost, after writing off the costsof programmes that are consideredirrecoverable, less accumulated amortisation.
Amortisation of investment in programmes
for future sale is charged to the statement ofincome and expenditure over the estimatedaverage marketable life of the programmegenre which is generally between two
and ten years.The cost and accumulated
amortisation of investment in programmes
for future sale are reduced by programmes
which are fully written off.
The cost of programmes for sale is charged
to the statement of income and expenditure
to match the expected timing of income fromfuture sales.
Impairment of fixed assets
The Group reviews the carrying amounts
of its fixed assets when there is an indicationthat those assets may have suffered an
impairment loss.

Cost includes all direct costs, production
overheads and a proportion of otherattributable overheads.
Programme development costs are
expensed to the statement of income andexpenditure until such time as there is astrong indication that the development work
will result in a commissioned programme
when any further costs are capitalised aswork in progress.
Net realisable value is based upon arm’s
length contract prices negotiated between thechannel controllers and programme makers.
Acquired programmes and film stocks
The costs of acquired programmes and film
stocks are written off on first transmission
except to the extent that further showings
are likely in the foreseeable future, when they
are written off according to their expectedtransmission profile. Assets and liabilities
relating to acquired programmes arerecognised at the point of payment orcommencement of the licence period,
whichever is earlier. Agreements for the futurepurchase of programmes whose licence
period has not commenced and where there
has been no payment by the balance sheet
date are disclosed as purchase commitments.
Other stocks
Raw materials and other physical stocks
are stated at the lower of cost and net
realisable value.

Part Two: BBC Annual Report and Accounts 2006/2007 103

Finance
Financial statements
Statement of accounting policies
Provisions
A provision is recognised in the balance
sheet when the Group has a present legal
or constructive obligation arising from past
events and it is probable that an outflow of
economic benefits will be required to settle
the obligation. Provisions that are payable
over a number of years are discounted to
net present value at the balance sheet dateusing a discount rate appropriate to theparticular provision concerned.
Taxation
Deferred tax is computed under the liability
method. Full provision, without discounting,is made in respect of timing differences
between certain items in the financial
statements and their treatment for taxation
purposes at the balance sheet date except
as otherwise required by FRS 19 ‘Deferredtax’. Deferred tax assets are recognised tothe extent that it is regarded as more likely
than not that they will be recovered.
Deferred tax is corporation tax which is
not payable at a specific time but which is
expected to become payable in the future.
Operating leases
Operating lease rentals are written off on astraight line basis over the term of the lease.
The BBC receives operating lease income
which is also accounted for on a straightline basis over the term of the lease.
An operating lease is a lease in which thelessee has not taken on the risks and rewardsof owning and operating the asset. The lessee –the BBC – has not acquired an asset but ishiring it, so the hire charge is included in the
BBC’s costs.
Finance leases
Assets acquired under finance leases areincluded within fixed assets at the totalof the lease payments due over the life of
the lease discounted at the rate of interest
inherent in the lease.The same amount isincluded in creditors. Rental payments areapportioned between the finance element,
which is charged in the statement of income
and expenditure, and the capital element,
which reduces the lease creditor.
A finance lease is a lease that transfers
substantially all the risks and rewards ofowning and operating an asset to the lessee.
Effectively the lessee owns the asset and has
financed it by borrowing, so the asset andborrowing are included separately in thebalance sheet.

Reserves
Each year an amount equivalent to the costs
expended by UK Public Service Broadcasting,
BBC World Service and BBC Monitoring on
capital assets over and above depreciation,
adjusted for disposals, is transferred to thecapital reserve so that, at the balance sheet
date, the amount of the capital reserve isequivalent to the historical cost net bookvalue of UK Public Service Broadcasting,
BBC World Service and BBC Monitoring
fixed assets.

Some hedging contracts are undertaken
in order to limit the Group’s exposure toforeign exchange fluctuations.The fair valueof foreign currency forward contract rates
is determined by using forward exchange
market rates at the balance sheet date.

The revaluation reserve reflects thedifference between the net book value ofthe fixed assets of BBC World Service and
BBC Monitoring at historic cost comparedwith their revalued amount.

The Group’s loans are stated at amortised
cost using the effective interest rate.

The pension reserve represents the net
surplus or liability of the Group’s defined
benefit pension schemes.
Cash and liquid resources
Cash, for the purposes of the cash flow
statement, comprises cash in hand anddeposits repayable on demand, lessoverdrafts payable on demand. Liquid
resources are current asset investments
which are readily convertible into known
amounts of cash at, or close to, theircarrying values.They comprise money
market deposits and liquidity funds with a
notice period in excess of one working day.
Financial instruments
The Group does not enter into speculative
derivative contracts. However some derivative
financial instruments are used with a view tomanaging the BBC’s exposure to fluctuations
in foreign currency exchange rates andinterest rates.
Derivative financial instruments are initiallyrecognised at cost and are subsequently
remeasured to fair value at the balance
sheet date with movements recorded in
the statement of income and expenditure.
A limited number of derivative financial
instruments are used to hedge the Group’s
exposure to fluctuations in interest rates.
The fair value of interest swaps is theestimated amount that the Group would
receive or pay to terminate the swap at
the balance sheet date, taking into accountcurrent interest rates and the current
creditworthiness of swap counterparties.

104 Part Two: BBC Annual Report and Accounts 2006/2007

The Group does not apply hedge accounting
but instead allows movements in the fairvalues of the hedging contracts to flow to
the statement of income and expenditure
as they arise.

Financial instruments include all contractual
arrangements to deliver or receive cash.
Therefore they include trade debtors andcreditors and loans as well as more complex
instruments such as derivatives. Forward
exchange contracts provide certainty over thesterling amount of future expenses and income
denominated in a foreign currency by fixing
the exchange rate rather than waiting for theprevailing exchange rate at the time of thetransaction or payment. Interest rate swaps
effectively swap a floating rate loan into a fixed
rate loan, or vice versa.
Depending on how exchange rates and interest
rates move between the time the Group enters
into the transaction and the year end, thesederivatives can either be profitable (‘in themoney’) or loss-making in their own right.
However, the rationale in entering into thesederivatives is not to profit from currency
markets or interest rate fluctuations, but
to provide stability to the BBC’s cashflows.
The movements relating to these derivatives(ie where they are either in profit or lossmaking) are taken to the Group’s statementof income and expenditure for the year.

Finance
Financial statements
Notes to the financial statements

Note 1 provides analysisof the different businessareas within the BBC.
The business areas havebeen chosen on the basisof the services provided
and the separation ofactivities financed bydifferent income sources.
UK Public Service
Broadcasting Group
comprises the UK PublicServices (as defined in theAgreement) and thosesubsidiary companies
incorporated to act solely
on behalf of those public
service operations.
BBC World Service and
BBC Monitoring comprise
broadcasting and media
monitoring activities.
Commercial Businesses
comprise businesses which
generate external income
from exploitation of theBBC’s programmes, otherassets and skill base.

1 Analysis of income, surplus/(deficit) and net assets
1a Analysis of income, surplus/(deficit) and net assets by activity
UK Public
Service
Broadcasting
Group
Note
£m

BBC
World
Serviceand BBC
Monitoring£m

Commercial
Businesses
£m

Total
£m

2007
Total income
Less: Intra-group income

3,386.8(115.0)

271.1
(1.5)

974.2
(99.8)

4,632.1(216.3)

Total external income
Less: Share of joint ventures

3,271.8
–

269.6
–

874.4
(238.5)

4,415.8(238.5)

1b,d,g,h3,271.8

269.6

635.9

4,177.3

1e,h(63.3)

10.8

104.4

51.9

Group income(Deficit)/surplus before interest, taxationand non-cash pension costs
Defined benefit pension scheme– additional operating costs*†– other net finance income*Net interest receivable
Surplus before taxation and minority interest

4b
8b ii

(136.8)
162.6
6.9

1f,h

84.6
774.8

Net assets (excluding pension asset)

169.7

119.7

1,064.2
334.5

Net pension asset*

1,398.7

Net assets
2006
Total income
Less: Intra-group income

3,242.1(117.3)

260.5
(0.3)

976.6
(127.1)

4,479.2(244.7)

Total external income
Less: Share of joint ventures

3,124.8
–

260.2
–

849.5
(229.5)

4,234.5(229.5)

1b,d,g,h3,124.8

260.2

620.0

4,005.01e,h(105.7)

(1.9)

206.9

99.3

Group income(Deficit)/surplus before interest, taxationand non-cash pension costs
Defined benefit pension scheme– additional operating costs*†– other net finance income*Net interest receivable(135.1)65.7
1.5

Surplus before taxation and minority interest
Net assets (excluding pension asset)

31.4
1f,h

730.5

158.6

143.0

1,032.1

Net pension asset*

164.9

Net assets

1,197.0*In accordance with FRS 17 these items are not split between business classes because they are managed centrally across theGroup and it is not possible to allocate them on a reasonable and consistent basis†The actual employer cash contribution to the defined benefit pension scheme is included in the surplus/(deficit) before interest,
taxation and non-cash pension costs of each entity. The additional operating cost is the cost to the Group over and above thesecash contributions

Part Two: BBC Annual Report and Accounts 2006/2007 105

Finance
Financial statements
Notes to the financial statements
1b UK Public Service Broadcasting Group income
2007
£m

2006
£m

Colour
Monochrome
Concessionary
Over 75s
Quarterly payment scheme premium

2,737.1
1.5
0.9
486.6
16.8

2,622.3
1.8
0.9
459.2
16.4

Total licence fee income
Other income*

3,242.928.9

3,100.6
24.2

Total external income

3,271.8

3,124.8

Licence fee income*Included within other income is £1.4million contributed by other broadcasters towards the costs of Digital UK Limited (see Note 2a)During the year 3.4 million (2006 3.3 million) colour licences were issued under the quarterly payment
scheme at a premium of £5 each (2006 £5). Households in which one or more persons over the age of
75 reside, as their primary residence, are entitled to a free licence.The BBC is reimbursed for these freelicences by the relevant Government departments.

Licences in force

2007
Numberm

2006
NumbermColour
Monochrome*
Over 75s
Concessionary

20.9
–
4.0
0.2

20.8
0.1
3.9
0.2

25.1

25.0

2007
£

2006
£

131.5044.00
5.00

126.5042.00
5.00

The income from licences
represents the value of all
licences issued in the year.

Other income includes theprovision of content andservices to overseas
broadcasters, concert ticket
sales and exploitation of
the programme archive.

Licences in force are thosewhich are still valid as at
31 March each year.

*There are 33,000 monochrome licences in force at 31 March 2007
Licence fees

Colour
Monochrome
Concessionary

From 1 April 2007 the colour, monochrome and concessionary licence fees were increased to £135.50,£45.50 and £7.50 respectively.
1c Geographical analysis of UK Public Service Broadcasting GroupUK Public Service Broadcasting Group income and deficit arise in the UK.The net assets used by these
operations are located in the UK.
1d BBC World Service and BBC Monitoring income
2007
£m

2006
£m

BBC World Service*
BBC Monitoring**

242.0
27.6

241.5
18.7

Total external income

269.6

260.2

*Includes Grant-in-Aid receivable from the Foreign and Commonwealth Office of £239.5million (2006 £239.1million)**Includes Grant of £24.6million receivable from the Cabinet Office (2006 subscriptions of £15.8million from various Government bodies)

106 Part Two: BBC Annual Report and Accounts 2006/2007

Licence fees are set by the
Department for Culture,
Media and Sport.

1e BBC World Service and BBC Monitoring surplus/(deficit) before interest and taxation by activity
2007
£m

2006
£m

BBC World Service
BBC Monitoring

11.4
(0.6)

0.7
(2.6)

Total surplus/(deficit) before interest and taxation

10.8

(1.9)

BBC World Service’s surplus of £11.4million arose due to a timing difference between providing for
exceptional restructuring costs relating to a strategic review in 2006 and making the relevant cash payments
in 2007. Provision was made for the cost in 2006 but the cash spend made and paid out of 2007 Grant-in-Aid.
1f Geographical analysis of BBC World Service and BBC Monitoring
BBC World Service and BBC Monitoring income, operating expenditure and surplus arise primarily in the UK.
Location of BBC World Service net assets:

2007
£m

2006
£m

UK
Overseas

52.1
94.5

44.2
90.4

Net assets

146.6

134.6

Location of BBC Monitoring net assets:

2007
£m

2006
£m

UK
Overseas

20.8
2.3

21.6
2.4

Net assets

23.1

24.0

Total net assets

169.7

158.6

2007
£m

2006
£m

New media and home entertainment
Television sales
Magazines
Entertainment and news television channels
Provision of playout and channel management services
Provision of programme-making facilities and services
Less intra-Group income

86.3
249.4
157.9
118.1
–
124.0
(99.8)

109.6
209.3
160.2
112.1
31.5
124.4
(127.1)

Total external income

635.9

620.0

1g Analysis of Commercial Businesses’ income by activity

1h Geographical analysis of Commercial Businesses
UnitedKingdom£mAmericas£mRest ofthe world
£m

Total
£m

2007
External income by destination

273.8

169.4

192.7

635.9

Surplus before interest and taxation

42.2

16.5

45.7

104.4

Net assets

102.0

17.2

0.5

119.7

2006
External income by destination

302.4

147.6

170.0

620.0

Surplus before interest and taxation

167.5

7.6

31.8

206.9

Net assets

106.8

35.9

0.3

143.0

All commercial income originates in the UK as this is where rights for exploitation and the skills and servicesof the Commercial Businesses are developed.
Part Two: BBC Annual Report and Accounts 2006/2007 107

Finance
Financial statements
Notes to the financial statements
2 Operating expenditure
2a Analysis of operating expenditure by activity
UK Public Service Broadcasting activities are funded by the licence fee. The Charter and Agreement between
the BBC and Department for Culture, Media and Sport describes the BBC’s UK Public Services (including
television, radio and online services) and also sets certain obligations on the BBC in relation to digital
switchover; both activities are funded by the licence fee. However, part of the licence fee income has
been specified as being for the purpose of digital switchover and as a result the total UK Public Service
Broadcasting Group expenditure is shown below allocated between these categories.
Note

Expenditure on licence fee funded activities
UK Public Services
Digital switchover (Digital UK Limited)*

2b

Total UK Public Service Broadcasting GroupBBC World Service and BBC Monitoring**
Commercial Businesses
Non-cash pension scheme operating costs***

2c
2d

2007
£m

2006
£m

3,315.7
11.6

3,232.7
4.0

3,327.3
258.8
630.5
136.8

3,236.7
262.1
579.3
135.1

4,353.4

4,213.2*As set out in Note 13f the BBC controls 56% of the voting rights of the company Digital UK Limited (formerly Switchco Limited), andtherefore consolidates its results with those of the BBC. As a result, these costs represent the full expenditure by Digital UK Limited,which is financed by contributions from the BBC and other broadcasters. The BBC contributed £10.2million (2006 £2.9million) being
100% of the communication expenditure and 56% of all other costs incurred by Digital UK Limited**BBC World Service and BBC Monitoring expenditure of £258.8million (2006 £262.1million) excludes £1.5million (2006 £0.3million)of expenditure on the provision of services to other BBC Group companies***In accordance with FRS 17 the non-cash operating costs are not split between the business activities as it is not possible to do thison a reasonable and consistent basis

2b UK Public Services expenditure
A new framework of service licences, issued by the BBC Trust to the BBC’s management, came into effectfrom 1 January 2007.The table below sets out the total expenditure for each group of service licences.
Details of expenditure on each individual service can be found in Note 28.
2007
Services

Note

Content Distribution£m£mInfrastructure/
support
£m

Other
£m

Total
£m

Television
Radio
Online28
28
28

1,836.9
432.6
115.0

99.1
42.6
8.8

383.1
88.4
29.9

–
–
–

2,319.1
563.6
153.7

Regulated spend
Other
Exceptional restructuring costs
Digital UK Limited expenditure

28
28
2a

2,384.5
71.6
–
–

150.5
14.2
–
–

501.4
15.1
–
–

–
134.1
44.3
11.6

3,036.4
235.0
44.3
11.6

2,456.1

164.7

516.5

190.0

3,327.3

Total

108 Part Two: BBC Annual Report and Accounts 2006/2007

The BBC’s online services
were bbc.co.uk and
BBC jam.

2006
Services

Note

Content Distribution£m£mInfrastructure/
support
£m

Other
£m

Total
£m

Television
Radio
Online28
28
28

1,761.4
419.7
108.2

101.4
42.6
8.6

347.3
82.3
34.1

–
–
–

2,210.1
544.6
150.9

Regulated spend
Other
Exceptional restructuring and redundancy costs
Digital UK Limited expenditure

28
28
2a

2,289.3
43.1
–
–

152.6
14.3
–
–

463.7
9.6
–
–

–
153.4
106.7
4.0

2,905.6
220.4
106.7
4.0

2,332.4

166.9

473.3

264.1

3,236.7

2007
£m

2006
£m

BBC World Service:
RadioTransmission and distribution costs
Internet activity

170.4
43.3
16.8

178.4
42.8
14.4

BBC Monitoring

230.5
28.3

235.6
26.5

Total

258.8

262.1

2007
£m

2006
£m

300.4
136.3
46.0
37.5
107.1
3.2

320.1
147.0
–
21.3
82.3
8.6

630.5

579.3

Total

2c BBC World Service and BBC Monitoring expenditure

BBC World Service and
BBC Monitoring
expenditure excludes
expenditure on intraGroup activities.

2d Commercial Businesses’ expenditure
Note
The expenditure shown forCommercial Businesses
relates only to external
income and excludes
expenditure relating tosales within the BBC.

Cost of sales
Distribution costs
Exceptional distribution costs
Administrative and other costs
Amortisation of programme investment
Restructuring costs
Total

12

Exceptional distribution costs of £46.0million relate to a payment by the BBC America television channel(‘BBCA’) to Discovery Communications Inc (‘DCI’). BBCA was launched in the USA in March 1998.
$139million was provided by DCI, an unrelated third party, to finance the launch and operating costs of thechannel. DCI did not have an equity interest in BBCA, but earned a variable commission on advertising sales
and affiliate sales at levels designed to be sufficient to recover its sales service cost and its expenditure in BBCA
(but with no guaranteed level of return from BBCA).
On 30 June 2006, BBCA paid DCI £51.5million to reduce the level of future commission that DCI would
earn for the services provided.This payment, net of amounts accrued in prior years, has resulted in an
exceptional charge for the year of £46.0million.This charge is made on the basis that the future benefits
are uncertain and do not justify it being carried forward as an asset.

Part Two: BBC Annual Report and Accounts 2006/2007 109

Finance
Financial statements
Notes to the financial statements
3 Operating deficit
3a Operating deficit excluding auditors’ remuneration
The operating deficit before interest and taxation is stated after charging/(crediting) the following items:

Payments under operating leases– land and buildings– plant and machinery– other
Depreciation– owned assets– leased assets(Profit)/loss on disposal of tangible fixed assets*
Amortisation of intangible fixed assets
Amortisation of investment in programmes for future sale
Programme development
Research and development
Fair trading auditors’ remuneration (PricewaterhouseCoopers LLP)Net exchange differences
Impairment of trade debtors
Fair value losses on embedded derivatives
Fair value gains on open forward foreign currency contracts

2007
£m

2006
£m

64.2
3.3
13.7

60.8
4.3
12.5

106.8
6.4
(1.1)
1.3
107.1
29.4
14.6
0.3
3.7
0.7
2.1
(0.3)

107.1
6.5
2.4
1.4
82.3
31.7
16.2
0.4
(0.5)
(0.3)
5.1
(4.3)

*The (profit)/loss on disposal of tangible fixed assets represents adjustments to depreciation on disposals in the ordinary courseof business. Exceptional profit on disposals is disclosed separately in Note 6

3b Auditors’ remuneration
The BBC has reported its auditors’ remuneration in accordance with The Companies (Disclosure of Auditor
Remuneration) Regulations 2005 and the comparative has been restated accordingly.

Fees payable for the audit of the BBC’s annual accounts
Fees payable to the BBC’s auditor and its associates for other services– The audit of the BBC’s subsidiaries pursuant to legislation– Other services relating to taxation– Services relating to corporate finance transactions
All other services

110 Part Two: BBC Annual Report and Accounts 2006/2007

2007
£m

2006
£m

1.0

0.7

0.5
0.1
0.1
0.6

0.5
0.3
0.1
0.6

2.3

2.2

4 Employees and remuneration
4a Persons employed
The average number of persons employed in the year was:Average for the year
2007
Number

2006
NumberUK Public Service Broadcasting
BBC World Service and BBC Monitoring
Commercial Businesses

17,9142,214
2,909

18,8602,367
4,150Group total

23,03725,377The decrease in headcount during 2007 is due to the Value for Money programme closures, BBC World
Service language service closures and staff transferring to Red Bee Media Limited.
Within the averages above, 2,743 (2006 2,981) part-time employees have been included at their full-time
equivalent of 1,566 (2006 1,717).
In addition to the above, the Group employed an average full-time equivalent of 872 (2006 823) persons
on a casual basis and the BBC Orchestra and BBC Singers, employed on programme contracts, totalled 380(2006 382) full-time equivalents.
4b Staff costs
Note

Salaries and wages
Social security costs
Pension costs– main scheme (defined benefit)*– other schemes
Redundancy costs

8b ii
4c

Comprising:
UK Public Service Broadcasting
BBC World Service and BBC Monitoring
Commercial Businesses
Main pension scheme additional operating cost (defined benefit)**

2007
£m

2006
£m

969.0
88.9

988.4
88.4

204.9
1.0
21.2

184.9
1.1
129.5

1,285.0

1,392.3

915.6
78.9
153.7
136.8

986.9
100.6
169.7
135.1

1,285.0

1,392.3*£230.9million represents all employer pension contributions made to the BBC Pension Scheme in 2007 (per Note 8b ii), of which£26.0million was provided for as part of the exceptional redundancy cost in 2006**The actual employer cash contributions to the defined benefit pension scheme are borne by each business. The additional operating
cost is the cost to the Group over and above these contributions. It is not possible to allocate this to each business on a reasonable
and consistent basis

Part Two: BBC Annual Report and Accounts 2006/2007 111

Finance
Financial statements
Notes to the financial statements
4c Restructuring costs
Note

Exceptional redundancy costs:– UK Public Service Broadcasting– BBC World Service and BBC Monitoring
Other exceptional restructuring costs

4b
4bNon-exceptional redundancy costs:– UK Public Service Broadcasting– BBC World Service and BBC Monitoring– Commercial Businesses
4b

2007
£m

2006
£m

11.0
0.2
33.3

106.7
12.4
–

44.5

119.1

5.0
1.1
3.9

–
3.9
6.5

10.0

10.4

54.5

129.5

Exceptional restructuring costs relate to the Value for Money programme occurring within UK Public Service
Broadcasting and the strategic review of BBC World Service. 2007 is the second year of the three-year Valuefor Money programme which aims to deliver £355million of ongoing annual cash savings by the end of 2008.
The cost of the majority of post closures resulting from this programme was provided for in 2006 and£83.6million paid during 2007. Other exceptional restructuring costs incurred represent expenditure on
one-off implementation costs of which £31.8million was paid in 2007.
4d Remuneration of the BBC Trust members, the Board of Governors and the Executive Board
The total emoluments of the members of the Executive Board are disclosed on page 94 in the Remuneration
report.The details of emoluments of the members of the BBC Trust and the Governors are disclosed inPart One of the Annual Report and Accounts.

5 (Loss)/profit on sale and termination of operations
Note

Profit on disposal of books businessProfit on sale of Origin Publishing
BBC jam
Loss on termination of retail shops business
Loss on termination of business learning operations
Profit on sale of BBC Broadcast Limited
Profit on sale of BBC Technology Holdings Limited
Profit on disposal of learning business
Loss on termination of teacher learning business(Loss)/profit on sale and termination of operations

19
19

2007
£m

2006
£m

13.3
0.2
(15.9)
(1.9)
(0.9)
–
–
–
–

–
–
–
–
–
108.8
15.2
1.7
(0.5)

(5.2)

125.2

On 20 March 2007 the Executive Board, following a decision by the BBC Trust, suspended BBC jam, the BBC’s
online interactive learning service for 5 to 16 year olds.The Trust’s decision followed extensive discussions
with Government and the European Commission about how to address allegations from some in theindustry that BBC jam was damaging their interests. Accordingly provisions of £14.4million for the costs ofredundancy and terminating contracts with content suppliers and £1.5million to write off stocks held at
31 March 2007 have been made.
In March 2007, BBC Worldwide announced its intention to terminate its Retail shops business. During theyear ended 31 March 2007 termination costs totalling £1.9million were charged to the profit and loss accountin respect of redundancy, lease property termination provisions and other costs of exit.
In 2006, BBC Worldwide announced its intention to terminate its business learning operations. During
the year ended 31 March 2007 termination costs totalling £0.9million were charged to the profit and loss
account, of which £0.5million was in respect of the write off of assets held at 31 March 2006.The balanceof £0.4million comprised the cash costs of exiting the business.

112 Part Two: BBC Annual Report and Accounts 2006/2007

In July 2005, the Group sold BBC Broadcast Limited, a wholly owned subsidiary, for £166.0million consideration
to Creative Broadcast Services Limited, a company owned by Macquarie Capital Alliance Group and Macquarie
Bank Limited. BBC Broadcast Limited provided playout and channel management services, and has since beenrenamed Red Bee Media Limited.
In September 2004 the Group sold BBC Technology Holdings Limited to Siemens Business Services Limited.
A profit of £32.4million was recorded in 2005 after providing £21.1million for the estimated pension liability inrespect of the expected number of BBC Pension Scheme members transferring to Siemens Business Services
Limited. During 2006, after confirmation of the actual staff transferred from the BBC to the Siemens pension
schemes, the value of the pension liability was confirmed as £5.9million, resulting in a further profit of £15.2million.
In October 2005 BBC Worldwide entered into an agreement with Pearson Education Limited to form apartnership named Educational Publishers LLP. In return for the transfer of the assets of its learning division
to the partnership, BBC Worldwide acquired a 15% share in the new partnership together with cash
consideration (net of transaction costs) of £6.3million.The profit on disposal was £1.7million.

6 Exceptional profit on disposal of fixed assets
2007
£m

2006
£m

Disposal of Animal Planet LLC
Disposal of properties
Disposal of music publishing rights

45.8
9.9
–

–
6.7
9.3

Exceptional profit on disposal of fixed assets

55.7

16.0

On 30 April 2004, BBC Worldwide exercised a put option to require Discovery to purchase the Group’s
entire 25% shareholding in Animal Planet LLC. On 3 April 2006 the sale and purchase was completed anda consideration of £45.8million was received by BBC Worldwide.The profit on disposal was £45.8million.
A property at Kendal Avenue was sold in March 2007 for consideration of £12.8million, realising a profitof £9.9million. In 2006 the BBC entered into a sale and leaseback of two regional properties and also
disposed of Melbourne House, the Hippodrome and Motspur Park properties realising a combined profitof £6.7million.
In May 2005 BBC Worldwide completed the sale of its current catalogue of music publishing rights held
within investment in programmes for future sale. Consideration of £10.3million was received, realising a profitof £9.3million.

7 Interest
7a Interest receivable and similar items
2007
£m

2006
£m

Interest receivable
Fair value gains on interest rate swaps

12.6
1.8

13.5
–

Interest receivable

14.4

13.5

2007
£m

2006
£m

Interest payable on bank and other loans
Finance charges payable in respect of finance leases
Fair value losses on interest rate swaps

(7.0)
(0.5)
–

(9.2)
(0.5)
(2.3)

Interest payable and similar items(7.5)(12.0)

7b Interest payable and similar items

Part Two: BBC Annual Report and Accounts 2006/2007 113

Finance
Financial statements
Notes to the financial statements
8 Pensions
8a Group pension schemes
The Group operates several pension schemes.The BBC Pension Scheme, to which most employees belong,
and a small unfunded scheme (which is closed to new members) are contributory defined benefit schemes.
Additionally the Group Personal Pension Scheme and several small schemes are defined contribution schemes.
Note 8b sets out the assets and liabilities and charges for the period for each scheme. Note 8c provides
further details on the BBC Pension Scheme.
8b Pension charges and balances within financial statements
8b i Pension asset/(liability) included in the balance sheet
BBC Pension
Scheme2007£mMarket value of scheme assets
Actuarial value of scheme liabilities

8,128.3(7,788.6)

Closing net pension asset/(liability)

339.7

Unfundedscheme
2007
£m

Total
2007
£m

BBC Pension
Scheme2006£mUnfundedscheme
2006
£m

Total
2006
£m

–
8,128.3
7,846.1(5.2) (7,793.8) (7,675.9)–
7,846.1(5.3) (7,681.2)

(5.2)

(5.3)

334.5

170.2

164.9

8b ii Pension (charges)/income in statement of income and expenditure
Defined benefit schemes
BBC Pension
Scheme£m

DefinedUnfunded contribution
schemeschemes All schemes
£m
£m
£m

2007
Current service cost
Past service cost
Gain on settlements and curtailments*(192.7)(39.8)
1.6

–
–
–

(1.0)
–
–

(193.7)(39.8)
1.6

Total operating charge**(230.9)–(1.0)(231.9)

Expected return on pension scheme assets
Interest on pension scheme liabilities

541.3(378.4)

–
(0.3)

–
–

541.3
(378.7)

Net finance income/(cost)

162.9

(0.3)

–

162.6

Net cost in statement of income and expenditure(68.0)

(0.3)

(1.0)

(69.3)

2006
Current service cost
Past service cost
Gain on settlements and curtailments(194.1)
(9.8)
19.0

(0.2)
–
–

(0.9)
–
–

(195.2)(9.8)
19.0

Total operating charge(184.9)

(0.2)

(0.9)

(186.0)

Expected return on pension scheme assets
Interest on pension scheme liabilities

431.8(365.8)

–
(0.3)

–
–

431.8
(366.1)

66.0

(0.3)

–

65.7

(118.9)

(0.5)

(0.9)

(120.3)

Net finance income/(cost)
Net cost in statement of income and expenditure*There was a curtailment gain of £1.0million in 2007 in respect of the transfer for 80 employees to Siemens, six of whom have elected
to transfer their past service benefits to the Siemens Benefits Scheme. In addition, there was a settlement gain of £0.6million in respectof the bulk transfer payment on 30 June 2006 of £16.8million, for the transfer of BBC Broadcast Limited employees to the Red Bee
Media Pension Plan**£230.9million represents all employer pension contributions made to the BBC Pension Scheme in 2007, of which £26.0million wasprovided for as part of the exceptional redundancy cost in 2006

The net cost in the statement of income and expenditure has decreased by £51.0million.This is due toan increase in the net finance income, consistent with the movements in assumptions, estimated cashflows
and discount rate, partly offset by an increase in past service costs which is largely due to pension
augmentation costs.

114 Part Two: BBC Annual Report and Accounts 2006/2007

The current service cost is
the underlying cost to the
BBC of pension rights
earned by employees
during the year.
The past service costarises from members of
the scheme becoming
entitled to improved
defined retirement benefits,
resulting in a charge foryears of service before theaward of the improvement.
The expected return on
pension scheme assets
comprises estimates basedon predictions of future
performance and economic
conditions.

8b iii Pension gains/(losses) in statement of total recognised gains and losses

These gains and losses
arise from actual
performance being
different from thatpredicted – for example
changes in economic
conditions or thedemographic profile of
BBC employees. Only
defined benefit schemes
give rise to gains and losses
in the statement ofrecognised gains and losses.

2007
£m

2006
£m

Actual return less expected return on pension scheme assets
Experience (losses)/gains arising on scheme liabilities
Changes in assumptions underlying present value of scheme liabilities(113.3)(164.6)421.7

1,249.2
208.6(796.7)

Net gain recognised in statement of recognised gains and losses

143.8

661.1

The actuarial gain has arisen due to changes in assumptions relating to the calculation of the Scheme’s
liabilities and also the introduction of an allowance for commutation.The key change in assumption is that thediscount rate (taken to be the yield on the iBOXX AA Corporate Bond over 15 years index) has risen from
5.0% to 5.4%.
With effect from 6 April 2006 (‘A Day’) a new tax regime applied to UK Pension Schemes.The maximum
amount of benefit that can be taken as tax-free cash has increased. Members of the BBC Pension Scheme
tend to take their tax-free cash from several sources, including by commutation of pension.The allowancefor commutation has been estimated to have a financial effect of reducing liabilities, at 31 March 2007, by justover £100million.
The actuarial gains are offset in part by a lower than expected return on scheme assets, due to a reduction
in net dividend yield in the year, and an experience loss on scheme liabilities due to experience over the year
being less favourable than estimated, partially due to an increase in members taking early retirement.
8b iv Movement in surplus/(deficit) during the year

The defined contribution
schemes do not give rise
to balance sheet pension
assets/liabilities as there isno ongoing liability for theemployer from theseschemes once thecontributions due for theyear have been settled.

Surplus/(deficit) in scheme at startof the year
Movement in the year:
Current service cost
Contributions (from employer)*
Past service costs
Gain on settlements and curtailments
Net finance income/(cost)
Actuarial gain recognised in statement of
total recognised gains and losses
Surplus/(deficit) in scheme at the endof the year

BBC Pension
Scheme2007£mUnfundedscheme
2007
£m

Total
2007
£m

BBC Pension
Scheme2006£mUnfundedscheme
2006
£m

Total
2006
£m

170.2

(5.3)

164.9

(421.8)(5.0)(426.8)(192.7)93.7(39.8)
1.6
162.9

–
0.4
–
–
(0.3)

(192.7)94.1(39.8)
1.6
162.6(194.1)
49.8
(9.8)
19.0
66.0

(0.2)
0.2
–
–
(0.3)

(194.3)
50.0
(9.8)
19.0
65.7

143.8

–

143.8

661.1

–

661.1

339.7

(5.2)

334.5

170.2

(5.3)

164.9

*The contribution shown for the unfunded scheme represents the pensions paid to members during the year. The assumptions for pension
scheme liabilities of the unfunded scheme are the same as the main scheme. As the scheme is unfunded there are no assets and hence
no expected return on assets

The BBC Pension Scheme has seen an increase of £169.5million. Contributions have increased by£43.9million, largely due to redundancy payments comprising pension augmentations and severance pay
waivers.The movements in past service costs and net finance income are explained in Note 8b ii and theactuarial gain is explained in Note 8b iii.

Part Two: BBC Annual Report and Accounts 2006/2007 115

Finance
Financial statements
Notes to the financial statements
8b v History of experience gains and losses
2007

2006

2005

2004

2003

Difference between the actual and expected
return on scheme assets:
Amount (£million)
Percentage of scheme assets(113.3)
1.4%

1,249.2
15.9%

198.7
3.1%

778.4
13.2%

(1,607.9)
32.8%

Experience (loss)/gain on scheme liabilities:
Amount (£million)
Percentage of present value of scheme liabilities(164.6)
2.1%

208.6
2.7%

(1.4)
0.0%

0.1
0.0%

(12.4)
0.2%

Total actuarial gain/(loss) recognised in statementof recognised gains and losses:
Amount (£million)
Percentage of present value of scheme liabilities

143.8
1.8%

661.1
8.6%

80.9
1.2%

778.5
12.3%

(2,013.4)
33.7%

This note shows trends
over a five year history forexperience gains and losses.

8c BBC Pension Scheme
The BBC Pension Scheme is the main pension scheme of the Group and covers the majority of employees.
This scheme provides salary related benefits on a defined benefit basis funded from assets held in separate
trustee-administered funds.The pension scheme trustees manage the scheme in the short, medium and longterm.They make funding decisions based on valuations which take a longer-term view of the assets required
to fund the scheme’s liabilities.Valuations of the scheme are performed by Watson Wyatt, consulting actuaries.
Formal valuations are undertaken at least every three years.
8c i Scheme membership analysis and maturity profile
Contributors
Pensioners
Dependants
Deferred pensioners

2007
Number

2006
Number

2005
Number19,974
17,372
3,744
17,723

19,864
16,803
3,676
16,89021,093
16,567
3,622
16,2418c ii Funding the scheme
As a result of the 2005 market-based valuation by Watson Wyatt, it has been agreed between the Groupand the Trustees that employer contributions will increase to 18.8% on 1 April 2007. It is proposed that
employee contributions will rise from 6% to 7.5% on 1 September 2008 at which point, employer contributions
will decrease from 18.8% to 17.3%. In addition, the BBC and the Trustees have agreed that the BBC will
make good the estimated actuarial shortfall as at 1 April 2007 by making an additional payment of £23million(index-linked) per annum from that date for a period of eight years. Ordinarily the next formal actuarial
valuation would be performed on 1 April 2008, however, it has been brought forward to 1 April 2007
and the contribution levels, including the additional payment, will be reviewed again once the results of thatvaluation are known.
Projections
2009
%

2008
%

2007
%

2006
%

2005
%

2004
%

Employer
Employee

18.8/17.3
6.0/7.5

18.8
6.0

7.5
5.5/6.0

6.0
5.5

5.5
5.0

5.0
4.5

Underlying cost of scheme to BBC as %of pensionable salaries*

18.8/17.3

18.8 19.3/18.8

19.3

19.0

19.5

Contribution rates*Excludes the cost effectively paid for by the employee

116 Part Two: BBC Annual Report and Accounts 2006/2007

The maturity of a scheme
provides an indication of
the cash requirements ofthe scheme and the likely
attitude of the Trustees torisk within their investment
policy. The more mature ascheme, the more likelythat Trustees will favour
low risk investments.

8c iii Scheme cash flows (day-to-day liquidity)
In 2007 cash inflows of the pension scheme exceed its cash outflows, largely as a result of the increase in theemployer’s contribution rate from 6.0% to 7.5% from 1 April 2006 and the employee’s contribution rate from
5.5% to 6.0% from 1 September 2006. Offset against this, was a £16.8million transfer to the Red Bee Media
pension scheme on 30 June 2006.
In 2006 cash outflows of the pension scheme exceeded its cash inflows, however, this includes an outgoingof £29.8million due to transfers out relating to the sale of BBC Technology.
2007
£m

2006
£m

2005
£m

Contributions (employer and employee)
Investment income

163.6
206.4

112.0
189.0

99.0
187.0

Cash inflows
Payments of pensions and transfers out
Expenses

370.0(303.6)(33.5)

301.0(275.0)(29.0)

286.0(239.0)(22.0)

32.9

(3.0)

25.0

2005
£m

2004
£m

2003
£m

Net cash inflow/(outflow)
8c iv Ability to meet long-term commitments and scheme financial position
2007£m

FRS 17 valuation
The FRS 17 valuation takes
assets at their market value
and discounts the accrued
liabilities by reference tothe discount rate of an AA
rated corporate bond.

Scheme assets (Note 8c v)
Scheme liabilities (Note 8c vii)

2006
£m

8,128.3
7,846.1
6,341.7
5,880.0
4,903.0(7,788.6) (7,675.9) (6,763.8) (6,311.6) (5,973.1)

Surplus/(deficit)

339.7

170.2

(422.1)

Percentage by which scheme assets cover liabilities

104%

102%

94%

(431.6) (1,070.1)
93%

82%

The movement in surplus from £170.2million to £339.7million is explained in Note 8b iv.
A deferred tax asset or liability will not arise for the Group because most of the Group’s public service
activity is not subject to taxation.
8c v Scheme assets
The allocation of assets by the Trustees is governed by a need to manage risk against the desire for highreturns and any liquidity needs. A high percentage of assets are held in equities which the Trustees expect
will produce higher returns in the long term.The target allocation, based on market values, for equities is 60%,
bonds and gilts 30% and property 10%.
2007
Type of asset

2006

2005

£m

%

£m

%

£m

%

Equities
Bonds and gilts
Property
Cash

5,337
1,575
981
235

66
19
12
3

5,687
1,116
890
153

73
14
11
2

4,333
1,050
737
222

68
17
12
3

Total assets

8,128

7,846

6,342

Long-term rate of return expected at 31 March (used for market value)

2007
%

2006
%

2005
%

Equities
Bonds and gilts
Property
Cash

7.8
4.8
6.3
4.6

7.7
4.4
6.1
3.9

7.7
4.7
6.2
3.7

Part Two: BBC Annual Report and Accounts 2006/2007 117

Finance
Financial statements
Notes to the financial statements
8c vi Actuarial valuation
The most recent formal valuation was carried out as at 1 April 2005 and, consistent with changes in thevaluation methodology used by other pension schemes, the actuarial valuation of the assets was changed andwas carried out using a market-based method.The previous formal valuation (April 2002) was carried out on
the basis of an assessed value method.The valuation was performed by Watson Wyatt Limited, professionallyqualified actuaries.
The 2005 actuarial valuation shows a surplus of £13.0million (with assets sufficient to cover just over 100%of the benefits due to members).The 2007 actuarial valuation is due to be completed in early 2008.
The key financial and demographic assumptions made by the actuaries were:
2005
Final
%

Key financial and demographic assumptions

Actuarial valuation
Rate of increase in salaries
Rate of increase in pension payments*
Inflation assumption
Discount rate**
Longevity assumption post-retirement (age 60) – Males***Longevity assumption post-retirement (age 60) – Females***

2002
Final
%

4.7
4.5
2.5/2.7
2.5
2.7
2.5
5.45/6.7
6.25
23.5 years 22.0 years
25.7 years 24.5 years*The increase in New Benefit pension payments have been held at 2.5% as in previous years, however, Old Benefits have been
increased in line with the inflation assumption. New Benefits members’ pension increase with RPI up to a limit of 5% (for Old Benefits
the limit is 10%).This assumption is adopted on the basis that in some years RPI may increase above 5% and New Benefit pension
increases will be capped, so on average the increases for New Benefits will be lower than actual RPI.
**A dual discount has been adopted since the assets backing the post-retirement benefits have a different split between equities, bonds,
property and cash to those backing the pension liabilities in payment, with the investment assumptions for post-retirement funding being
more risk averse and therefore leading to a lower discount rate.
***The longevity assumptions have been selected to reflect the characteristics and experience of the membership of the scheme. This has
been done by adjusting standard mortality tables (PMA92C05+1 and PFA92C05+1) which reflect recent research into mortality
experience in the UK. An allowance has been made for future improvements in longevity.

The discount rate used in
the actuarial valuation of
liabilities is that of the
expected return on assets
held by the scheme andis considered to be a
prudent long-term average.

8c vii Scheme liabilities
The calculation of the scheme liabilities, for FRS 17 purposes, requires a number of assumptions, both financial
and demographic, to be made.The actuarial valuation, described in Note 8c vi, has been updated by theactuaries to 31 March 2007.The key assumptions made by the actuaries were:
Key financial and demographic assumptions

FRS 17 valuation
Rate of increase in salaries
Rate of increase in pension payments
Inflation assumption
Discount rate
Longevity assumption post-retirement (age 60) – Males
Longevity assumption post-retirement (age 60) – Females
Scheme liabilities at present value

FRS 17 valuation

118 Part Two: BBC Annual Report and Accounts 2006/2007

2007
%

2006
%

2005
%

5.0
4.9
4.7
3.1
2.9
2.7
3.1
2.9
2.7
5.4
5.0
5.5
23.5 years 23.5 years 22.0 years
25.7 years 25.7 years 24.5 years
2007
£m

2006
£m

2005
£m

7,789

7,676

6,764

The discount rate for the
FRS 17 value is taken as
the rate for an AA rated
corporate bond.

8d UK Public Service Broadcasting pension charge
UK Public Service Broadcasting, in accordance with FRS 17 ‘Group Pension Provision’, accounts for the BBC
Pension scheme as if it were a defined contribution scheme.This is because it is not possible to identify the
UK Public Service Broadcasting’s share of the underlying assets and liabilities of the Scheme on a reasonable
and consistent basis.The expenditure for UK Public Service Broadcasting of £87.5million (2006 £38.2million)
therefore represents the contributions payable in the year. In addition, at 31 March 2007, contributions
totalling £20.1million had been prepaid (2006 nil).The contributions are set based on the funding needs
identified from the actuarial valuation and they may therefore vary from the underlying cost after taking
into account factors such as the actuarial surplus.

9 Taxation
9a Analysis of charges for the year
The charge for the year, based on the rate of corporation tax of 30% (2006 30%) comprised:
2007
£m

2006
£m

Current tax
UK corporation tax
Deduct: double tax relief

20.7
(3.3)

17.6
(3.2)

Adjustments in respect of prior years

17.4
1.1

14.4
0.3

Foreign tax
Share of associates and joint ventures tax

18.5
6.1
11.1

14.7
8.2
8.9

35.7

31.8

(8.4)
(3.4)

(0.4)
(3.7)

(11.8)

(4.1)

23.9

27.7

Note

Total current tax

9b

Deferred tax
Origination and reversal of timing differences
Adjustments in respect of previous years
Total deferred tax

9dTotal charge for the year

9b Factors affecting the tax charge
The Group is only liable to taxation on those activities carried out with a view to making a profit and on rent,
royalties and interest receivable.The BBC does not therefore receive relief for all its expenditure, and the tax
assessed for the year consequently differs from the standard rate of corporation tax in the UK.The differences
are explained below:
Note

Surplus before tax
Surplus before tax multiplied by standard rate of corporation tax
in the UK of 30% (2006 30%)
Effects of
Public Services taxable external income
Disallowable costs of Public Services
Non-cash element of net Group pension charge
Commercial activities
Non-taxable income
Disallowed expenditure
Capital allowances in excess of depreciation
Tax differential regarding overseas earnings
Utilisation of losses brought forward
Other
Adjustments in respect of previous periods
Current tax charge for the year

9a

2007
£m

2006
£m

84.6

31.4

25.4

9.4

5.1
11.5
(7.7)

(2.1)
38.4
20.8

(1.4)
6.4
(1.2)
(2.7)
(0.7)
–
1.0

(38.4)
2.1
(3.8)
1.6
–
3.5
0.3

35.7

31.8

Part Two: BBC Annual Report and Accounts 2006/2007 119

Finance
Financial statements
Notes to the financial statements
9c Factors that may affect future tax charges
The Group anticipates that the future tax charge will not alter significantly since all licence fee income is freeof tax.
9d Deferred tax analysis
2007
£m

2006
£m

3.1
(0.9)
(11.8)
–

10.0
(0.4)
(4.1)
(2.4)

(9.6)

3.1

11.1
(0.1)

13.1
(3.6)

11.0
(20.6)

9.5
(6.4)

(9.6)

3.1

Goodwill£m

Otherintangibles
£m

Group
total
£m

Cost
At 1 April 2006
Disposals
Transfers to investment in associate

22.9
(5.3)
(3.4)

0.7
–
–

23.6
(5.3)
(3.4)

At 31 March 2007

14.2

0.7

14.9

Amortisation
At 1 April 2006
Charge for the year
Disposals
Transfers to investment in associate

3.8
1.1
(0.5)
(0.4)

0.5
0.2
–
–

4.3
1.3
(0.5)
(0.4)

At 31 March 2007

4.0

0.7

4.7

Net book value
At 31 March 2007

10.2

–

10.2

At 31 March 2006

19.1

0.2

19.3

Movement on deferred tax (asset)/provision in the year

Net provision at start of year
Exchange adjustment
Deferred tax credit
Disposal of subsidiary

Note

9a

Net (asset)/provision at end of year
Analysis of deferred tax (asset)/provision at end of year

Accelerated capital allowances
Other timing differences
Deferred tax provision
Deferred tax asset

17
15

Net deferred tax (asset)/provision at year end

10 Intangible fixed assets

In relation to the sale of Origin Publishing Limited, goodwill with a net book value of £3.0million wastransferred to associates (see Note 13a) and goodwill with a net book value of £4.8million was disposedof (see Note 19).
Other intangibles comprise a customer list of names and brand names and this is amortised on a straight line
basis over 2–4 years subject to reviews for impairment.

120 Part Two: BBC Annual Report and Accounts 2006/2007

Goodwill is the difference
between the value paid fora business and the fairvalue of its net assets. It
represents the premium
the purchaser is preparedto pay for the business.

11 Tangible fixed assets
11a Group
Land andbuildings£mPlant and Furniture and Assets undermachinery
fittings construction
£m
£m
£m

Total
£m

Cost or valuation
At 1 April 2006
Additions
Brought into service
Disposals

426.3
4.5
0.2
(3.7)

955.9
62.3
33.4
(29.1)

155.2
8.8
5.0
(7.3)

88.4
69.1
(38.6)(13.5)

1,625.8
144.7–(53.6)At 31 March 2007

427.3

1,022.5

161.7

105.4

1,716.9

Depreciation
At 1 April 2006
Charge for the year
Disposals

235.1
14.1
(1.1)

615.3
85.9
(25.4)

78.2
13.2
(7.3)

–
–
–

928.6
113.2
(33.8)At 31 March 2007

248.1

675.8

84.1

–

1,008.0

Net book value
At 31 March 2007

179.2

346.7

77.6

105.4

708.9

At 31 March 2006

191.2

340.6

77.0

88.4

697.2

Plant and Furniture and Assets undermachinery
fittings construction
£m
£m
£m

Total
£m

11b UK Public Service Broadcasting
Land andbuildings£m

Cost or valuation
At 1 April 2006
Additions
Brought into service
Disposals

355.0
2.5
–
(3.4)

569.0
33.2
19.9
(6.0)

128.2
7.2
2.2
–

61.4
51.5
(22.1)(9.5)

1,113.6
94.4–(18.9)At 31 March 2007

354.1

616.1

137.6

81.3

1,189.1

Depreciation
At 1 April 2006
Charge for the year
Disposals

193.0
11.0
(0.9)

366.1
53.8
(2.6)

61.5
10.4
–

–
–
–

620.6
75.2
(3.5)

At 31 March 2007

203.1

417.3

71.9

–

692.3

Net book value
At 31 March 2007

151.0

198.8

65.7

81.3

496.8

At 31 March 2006

162.0

202.9

66.7

61.4

493.0

Group
2007
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

Undepreciated land
Freehold buildings

16.8
96.6

18.3
105.2

16.5
87.8

18.0
95.5

Total freeholds
Long leaseholds
Short leaseholds

113.4
25.5
40.3

123.5
22.2
45.5

104.3
22.5
24.2

113.5
22.2
26.3

179.2

191.2

151.0

162.0

11c Land and building at net book value

Part Two: BBC Annual Report and Accounts 2006/2007 121

Finance
Financial statements
Notes to the financial statements
11d Finance leases
Assets held under finance leases, capitalised and included in tangible fixed assets:

Cost
Accumulated depreciation
Net book value

Group
2007
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

22.5
(12.9)

15.6
(6.5)

20.4
(11.7)

14.2
(5.9)

9.6

9.1

8.7

8.3

The finance leases relate to IT equipment leased to the BBC.

12 Investment in programmes for future sale
Group
£m

Cost
At 1 April 2006
Exchange adjustment
Financing benefit
Additions
DisposalsElimination in respect of programmes fully amortised

247.0
(0.5)
0.2
103.6
(5.9)
(104.5)

At 31 March 2007

239.9

Amortisation
At 1 April 2006
Charge for the year
DisposalsElimination in respect of programmes fully amortised

140.5
107.1
(1.7)
(104.5)

At 31 March 2007

141.4

Net book value
At 31 March 2007

98.5

At 31 March 2006

106.5

Investment by BBC Worldwide in programmes for future sale relates to programmes provided by the
BBC and external producers.The additions figure above includes £96.3million direct investment in BBC
programmes (2006 £89.0million).

122 Part Two: BBC Annual Report and Accounts 2006/2007

13 Other investments (including BBC World Service and BBC Monitoring net assets)
13a Movements in the year for the GroupInterests injoint ventures
Note£mInterests inassociates
£m

Trade
investments
£m

Group
Total
£m

12.2
13.4

0.2
(3.4)

–
5.0

12.4
15.0

At 31 March 2007

25.6

(3.2)

5.0

27.4

Share of post acquisition reserves
At 1 April 2006
Exchange adjustment
Share of profits/(losses) after taxation
Provision for unrealised profit
Dividends received
Adjustment to reflect effective obligations

6.3
(0.2)
38.2
(0.8)
(22.1)(1.8)

0.6–(13.6)
–
(0.3)
14.7

–
–
–
–
–
–

6.9
(0.2)
24.6
(0.8)
(22.4)
12.9

At 31 March 2007

19.6

1.4

–

21.0

–
0.8
–

0.3
–
(0.3)

–
–
–

0.3
0.8
(0.3)

0.8

–

–

0.8

26.7
–
1.7
(7.5)

–
3.0
–
(0.2)

–
–
–
–

26.7
3.0
1.7
(7.7)

20.9

2.8

–

23.7

66.9

1.0

5.0

72.9

45.2

1.1

–

46.3

Cost
At 1 April 2006
Additions

Loans receivable from joint ventures/associates
At 1 April 2006
Additions
Repayments

13b

13b i

At 31 March 2007
Goodwill
At 1 April 2006
Transfer from intangible fixed assets
Additions
Amortisation

10
13b i

At 31 March 2007
Net book value
At 31 March 2007
At 31 March 2006

13b,c,dPart Two: BBC Annual Report and Accounts 2006/2007 123

Finance
Financial statements
Notes to the financial statements
13b Additions to joint ventures, associates and trade investments
13b i Additions to joint ventures
With effect from 1 April 2006, BBC Worldwide entered into an agreement with Ragdoll Limited to form a
new joint venture company, Ragdoll Worldwide Holdings Limited, which is 50% owned by BBC Worldwide.
The purpose of the joint venture is to bring together intellectual property rights in certain children’s
properties, including Teletubbies and In the Night Garden. No gain or loss arose.
Further details in respect of this transaction are as follows:
Note

£m

Assets contributed to joint venture:– Investment in programmes for future sale
– Cash consideration paid

10.7
1.0

Interest in joint venture undertaking at time of exchange

11.7

Analysed between:
Fair value of share of business acquired
Retained share of net assets contributed to joint venture

5.8
5.9

Interest in joint venture undertaking

13a

11.7

The transaction has been accounted for under Urgent Issues Task Force (UITF) Abstract 31: Exchange ofbusiness or other non-monetary assets for an interest in a subsidiary, joint venture or associate.The accounting
reflects BBC Worldwide’s retention of 50% of its business and divestment of the other 50% in return for a 50%
interest in Ragdoll Worldwide Holdings Limited’s business.
Also with effect from 1 April 2006, BBC Worldwide entered into a second agreement with Ragdoll Limited
to form a second joint venture company, Ragdoll Developments Limited, which is 50% owned by BBC
Worldwide.The purpose of the joint venture is to invest in the development of new intellectual property
rights. Further details in respect of these transactions are as follows:
Note

£m

Investment in joint venture:– Share of net assets of joint venture– Goodwill– Loan to joint venture

1.7
1.7
0.8

Total investment in joint venture

4.2

Comprising:Cash consideration paid in the year
Deferred consideration

1.7
2.5

Total investment in joint venture

13a

The deferred consideration is payable between April 2007 and March 2009.
13b ii Additions to associates and trade investments
Additions to associates and loans receivable from associates include £(3.7)million relating to the disposalof a majority interest in Origin Publishing Limited (see Note 19). In May 2006 BBC Worldwide sold Origin
Publishing Limited, and all of the non-BBC related titles published by it, to a management buy-out team led
by its Managing Director. BBC Worldwide will maintain a 39% stake in Origin Publishing Limited.
In July 2006 BBC Worldwide also entered into an arrangement with Random House Limited to operate
a company named Woodlands Books Limited. In return for the transfer of its books division’s assets, BBC
Worldwide has a 15% share in the company together with cash consideration (see Note 19).
Additions to trade investments of £5.0million relate to BBC Worldwide’s investment in Radio Mid-Day(West) India PVT. Limited, a company registered in India.The principal activity of Radio Mid-Day (West)
India PVT. Limited is to obtain and operate FM radio licences in India.

124 Part Two: BBC Annual Report and Accounts 2006/2007

4.2

13c Group share of joint ventures results and net assets
The following disclosures represent the Group’s equity shares of the assets and liabilities of its joint ventures
based on the results for the latest accounting periods as shown above. Where the latest accounting period
for the joint venture is more than three months prior to the Group’s accounting reference date of 31 March
the latest interim financial information has been used.

Group share of:

2 entertain
Limited£m

UK Gold UK Channel
Holdings Management Other joint
Limited*Limited*ventures£m£m£m

Total joint
ventures£m2007
Turnover

115.3

43.7

33.2

46.3

238.5

Profit/(loss) before tax
Taxation

36.3
(9.4)

9.9
(3.5)

8.4
(2.6)

(0.9)
–

53.7
(15.5)

Profit/(loss) after tax

26.9

6.4

5.8

(0.9)

38.2

Fixed assets
Goodwill
Current assets
Liabilities less than one year
Liabilities more than one year
Loan receivable from joint ventures
Adjustment to reflect effective obligations

5.3
15.6
63.3
(47.7)
–
–
–

–
–
19.7
(7.6)
(18.4)
–
6.3

–
–
33.4
(10.3)(19.5)
–
–

8.4
5.3
44.6
(13.9)(44.4)
0.8
26.0

13.7
20.9
161.0
(79.5)(82.3)
0.8
32.3

Net book value

36.5

–

3.6

26.8

66.9

2006
Turnover

115.2

40.8

36.3

37.2

229.5

Profit/(loss) before tax
Taxation

28.2
(8.5)

7.8
(3.8)

11.7
(3.5)

(1.7)
(0.2)

46.0
(16.0)

Profit/(loss) after tax

19.7

4.0

8.2

(1.9)

30.0

Fixed assets
Goodwill
Current assets
Liabilities less than one year
Liabilities more than one year
Adjustment to reflect effective obligations

5.2
22.6
59.3
(53.5)
–
–

–
–
16.4
(8.9)
(22.7)
15.2

–
–
34.5
(13.4)(25.1)
4.0

7.9
4.1
29.5
(6.4)
(41.5)
18.0

13.1
26.7
139.7
(82.2)(89.3)
37.2

Net book value

33.6

–

–

11.6

45.2

*The figures are based on unaudited financial statements

Part Two: BBC Annual Report and Accounts 2006/2007 125

Finance
Financial statements
Notes to the financial statements
13d Group share of associates’ turnover and net assets
The following additional disclosures are based on the results of the Discovery associates for the year ended
31 December 2006 and the remaining associates’ disclosures are based on the results at the date of theirindividual financial statements.These additional disclosures represent the Group’s equity share of assets andliabilities of those entities.
Group interests in associates

2007
£m

2006
£m

Share of turnover

41.9

49.6

11.2
36.6
(20.1)(125.2)
95.7
2.8

52.0
28.2
(22.5)(160.9)
104.3
–

1.0

1.1

Share of fixed assets
Share of current assets
Share of liabilities due within one year
Share of liabilities due after more than one year
Adjustment to reflect effective obligation
Goodwill
Net interests in associates

Under the terms of the agreements with Discovery and Alliance Atlantis, the Group has no obligation to fundlosses incurred by the entities or to make good their net liabilities. As a result, the Group does not share inlosses of the relevant entities and accordingly no share of losses is included in the financial statements for the year
ended 31 March 2007 (2006 £nil).The Group is entitled to its share of any profits or net assets once theventures’ cumulative profits exceed cumulative losses since incorporation, with the exception of JV Network LLC.
JV Network LLC was formed for the purpose of providing debt funding from Discovery to the other
Discovery joint ventures and BBC Worldwide is not entitled to any profits arising within this entity.The shareof net liabilities not recognised comprises £95.7million (2006 £104.3million) shown in the table as ‘adjustment
to reflect effective obligation’.
13e Movements in the year for UK Public Service Broadcasting
Interest in
BBC World
Service andBBC
Monitoring
net assets£mInterests in
subsidiaries
£m

Total
£m

At 1 April 2006
Surplus for year

158.6
11.1

125.3
–

283.9
11.1

At 31 March 2007

169.7

125.3

295.0

126 Part Two: BBC Annual Report and Accounts 2006/2007

Joint ventures arebusinesses the BBC jointly
controls with other parties.

13f Interests on joint ventures, associates and subsidiaries
13f i Significant joint ventures and their activities
The Group has a 50% equity interest in the following joint ventures which are all incorporated in GreatBritain and registered in England and Wales, unless otherwise stated:
Name of entity

Activity

Partner

2 entertain Limited
UK Gold Holdings Limited
UK Gold Services Limited
UK Channel Management Limited
UKTV New Ventures Limited
UKTV Interactive Limited
JV Programmes LLC2
BBC Haymarket Exhibitions LimitedVideo/DVD
Channels
Channels
Channels
Channels
Channels
Channels
Publishing

Worldwide Media Limited3

Magazines

Dovetail Services (UK)
Holdings Limited
DTV Services Limited4

Magazines

Woolworths
Flextech
Flextech
Flextech
Flextech
Flextech
Discovery
Haymarket Exhibitions
LimitedBennett, Coleman andCompany Limited
Dennis Publishing Limited

Marketing

Insight Property Partnership

Property

Daunus Limited5

Property

Ragdoll Worldwide Holdings LimitedIntellectual
Property Rights
IntellectualRagdoll Limited
Property Rights

1

Ragdoll Developments Limited

Accounting date

28 January 2007
31 March 2007
31 March 2007
31 March 2007
31 March 2007
31 March 2007
31 December 2006
31 December 2006
31 July 2006
31 March 2007

Crown Castle UK Limited,
31 August 2006
British Sky Broadcasting Limited
Land Securities Trillium
31 March 2007
(Media Services) Limited
Land Securities Trillium (BH) 30 November 2006
Limited, Morgan Stanley
Delta LLC, Structured
Finance Management Limited
Ragdoll Limited
31 March 2007
31 March 2007

60% equity interest
Incorporated in the USA
3
Incorporated in India
4
20% equity interest
5100% holding of ‘A’ class shares, representing 10% of the total issued shares of Daunus Limited. The rest of the shares in Daunus Limited
are held by the other partners. The BBC holds its investment in Daunus Limited through a subsidiary, BBC Property Development Limited
1
2

Under the terms of the agreements with Flextech and Discovery, the Group has no obligation to fund losses
incurred by the entities nor to make good their net liabilities. As a result, the Group does not share inlosses/net liabilities of the relevant entities and accordingly no share of these is included in the financial
statements for the year ended 31 March 2007 (2006 £nil).The Group is entitled to its share of any profits or
net assets only once the ventures’ cumulative profits exceed cumulative losses since incorporation.The share of
net liabilities not recognised comprises the £32.3million (2006 £37.2million) shown in Note 13c as ‘adjustment
to reflect effective obligations’.

Part Two: BBC Annual Report and Accounts 2006/2007 127

Finance
Financial statements
Notes to the financial statements
13f ii Significant associates and their activities
The Group holds (directly and indirectly) significant interests in the associates listed below which, except
where otherwise stated, are incorporated in Great Britain and registered in England and Wales. A full listof associates is available on request from the General Counsel and Secretary, BBC,The Media Centre,
201 Wood Lane, London W12 7TQ.
Holding of issued
ordinary shares%

Discovery associates:
People and Arts (Latin America) LLC (incorporated in the USA)
Animal Planet (Asia) LLC (incorporated in the USA)
The Animal Planet Europe Partnership
Animal Planet (Latin America) LLC
Animal Planet Japan KK (incorporated in Japan)
JV Network LLC
Animal Planet Japan LLP
Animal Planet Canada Company ULCOther associates:
Parliamentary Broadcasting Unit Limited
Broadcasters Audience Research Board Limited (BARB)The Commonwealth Broadcasting Association
Radio Joint Audience Research Limited (RAJAR)
Frontline Limited
OPL Holdings Limited
Origin Publishing Limited
UKTV Pty Limited (incorporated in Australia)
Jasper Broadcasting Inc (incorporated in Canada)
Jasper Junior Broadcasting Inc (incorporated in Canada)Childrens Character Books Limited
Woodlands Books Limited
Educational Publishers LLP
3sixtymedia Limited
White City Development Partnership

Associates are businesses
over which the BBC exerts
significant influence but
does not have overall
control.

Activity

50
50
50
50
33
50
50
23

Channels
Channels
Channels
Channels
Channels
Channels
Channels
Channels

50
*
*
50
23
39
39
20
20
20
25
15
15
10
**

Content provider
Audience research
Broadcasting forum
Audience research
Publishing
Publishing
Publishing
Channels
Channels
Channels
Books
Books
Education
Production
Property*Broadcasters Audience Research Board Limited and The Commonwealth Broadcasting Association are companies limited by guarantee,of which the BBC is a joint member with other broadcasters**50% partnership share

128 Part Two: BBC Annual Report and Accounts 2006/2007

Subsidiary undertakings arebusinesses the BBC
controls.

13f iii Subsidiary undertakings
The principal subsidiary undertakings of the BBC at 31 March 2007 are listed below. All are wholly owned
and incorporated in Great Britain and registered in England and Wales. A full list of subsidiaries is available on
request from the General Counsel and Secretary, BBC,The Media Centre, 201 Wood Lane, London W12 7TQ.
Name of entity

Activity

BBC Commercial Holdings Limited
BBC Worldwide Limited***

BBC World Limited
BBC Ventures Group Limited
BBC Resources Limited

**
**
**

BBC Free To View Limited
BBC Property Limited
BBC Property Development Limited
BBC Property Investment Limited
Centre House Productions Limited
Digital UK Limited1

*
*
*
*
*
*

Holding company
Publishing, channels andprogramme distribution
Channels
Holding company
Programme making facilities
and services
Holding company for digital licence
Property
Property
Property
Production financing
Digital switchover*Directly owned**Indirectly owned
The BBC controls 56% of the voting rights of Digital UK Limited (previously known as Switchco Limited). Its results have been consolidated
into the Group accounts. Digital UK Limited is a company limited by guarantee of which the BBC is a joint member.The other members
and their shareholdings in Digital UK Limited are: ITV 11%, Channel Four Television Corporation 11%, Channel Five Broadcasting Limited
8.75%, National Grid Wireless 6.25%, SON Limited 3.5%, S4C 2.25% and Teletext Limited 1.25%.

1

14 Stocks
Group
2007
£m

Raw materials
Work in progress– originated programmes– other
Finished programmes– acquired programmes and films– originated programmes
Other
Total

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

1.7

1.7

0.1

0.2

305.3
1.5

287.9
1.9

305.4
–

287.8
0.1

94.5
63.5
10.4

98.5
61.0
11.4

94.5
63.5
–

98.5
61.0
–

476.9

462.4

463.5

447.6

Part Two: BBC Annual Report and Accounts 2006/2007 129

Finance
Financial statements
Notes to the financial statements
15 Debtors
Group
2007
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

124.8

114.9

17.5

17.1

353.9
–
22.1
22.1
3.0
17.8
148.0

318.2
–
34.9
36.0
6.4
22.4
190.8

353.9
47.5
2.3
20.2
–
10.0
118.4

318.2
27.2
14.5
33.9
–
6.6
165.3

691.7
5.2

723.6
3.5

569.8
–

582.8
–

696.9

727.1

569.8

582.8

17.6
6.3
49.5

–
2.7
40.0

–
–
38.9

–
–
26.9

73.4
1.0

42.7
3.2

38.9
–

26.9
–

Total long-term debtors

74.4

45.9

38.9

26.9

Total

771.3

773.0

608.7

609.7

Note

Receivable within one year
Trade debtors
Department for Culture, Media and Sport– licence fee debtors
Amounts owed by subsidiaries
Amounts owed by associates and joint ventures
VAT recoverable
Deferred tax asset
Other debtors
Prepayments
Financial assets

9d

23c

Total current debtors
Receivable after more than one year
Deferred tax asset
Other debtors
Prepayments
Financial assets

9d

23c

16 Creditors
16a Prompt payment policy
It is the BBC’s policy to comply with the Better Payment Practice Code in relation to the payment of
suppliers, provided that the supplier is complying with the relevant terms and conditions of their contracts.
The BBC monitors compliance against the terms of this code. Payments for programme acquisitions are madein accordance with contractual terms.The Group’s number of creditor days outstanding in respect of othertrade creditors at 31 March 2007 was 38 days (2006 35 days).
Residual creditors and associated costs have been excluded for the purpose of this calculation, as they relate
to payments to artists and contributors other than trade creditors.

130 Part Two: BBC Annual Report and Accounts 2006/2007

16b Amounts falling due within one year

Bank and other loans
Bank loan
Unsecured loan notes

Note

Group
2007
£m

21,23
21,23

65.4
0.5

–
5.3

–
–

–
–

65.9

5.3

–

–

70.9
27.8
65.0
27.9
198.8

74.9
31.3
64.4
25.6
169.8

70.9
27.5
38.4
–
137.0

74.7
31.0
41.4
–
119.6

390.4

366.0

273.8

266.7

–
16.6
28.2
5.2
16.6

–
11.5
28.7
4.8
14.7

36.6
6.0
25.8
4.8
7.9

37.2
4.7
26.8
4.7
11.4

66.6

59.7

81.1

84.8

416.8
72.2

393.5
92.1

324.1
72.2

285.9
92.1

489.0
3.7

485.6
3.2

396.3
–

378.0
–

1,015.6

919.8

751.2

729.5

Trade creditors
Programme creditors
Programme acquisitions
Salaries and wages
Residual copyright payments
Other trade creditors

Other creditors
Amounts owed to subsidiaries
Corporation tax
Other taxation and social security
Obligations under finance leases
Other

23b

Accruals and deferred income
Accruals and deferred income
Licence savings stamps deposits and direct debit instalments
Financial liabilities

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

23c

Total
16c Amounts falling due after more than one year

Bank and other loans

Note

Group
2007
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

21,23b

20.0

72.0

–

–

–

3.6

–

3.6

25.5
–
11.3

28.5
–
8.7

4.1
11.5
11.3

3.8
25.9
–

36.8
3.6

37.2
4.0

26.9
–

29.7
–

60.4

116.8

26.9

33.3

Trade creditors
Programme acquisitions
Other creditors
Obligations under finance leases
Amounts owed to subsidiaries
Other
Financial liabilities
Total

23b

23c

Part Two: BBC Annual Report and Accounts 2006/2007 131

Finance
Financial statements
Notes to the financial statements
17 Provisions for liabilities

Group

Note

Licence fee
Restructuring
Litigation and insurance
Property
Deferred tax
BBC jam
Other
Total

5

At 1 April
2006£m

Charge forthe year£m

Utilisedduringthe year£m

Releasedduringthe year£m

At
31 March
2007
£m

19.5
129.4
16.6
13.2
9.5
–
8.0

20.5
32.8
2.8
2.7
5.0
14.4
13.1

(18.6)(93.1)
(1.9)
(0.3)
(3.5)
–
(10.9)(1.5)(11.6)
(0.3)
(1.5)
–
–
(1.1)

19.9
57.5
17.2
14.1
11.0
14.4
9.1

196.2

91.3

(128.3)(16.0)

143.2

Licence fee provisions are made for the expected level of refunds (money repayable on the unexpired
portion of a licence where the licence is no longer required) and revocations (where no money is received
in relation to a licence sold).
The restructuring provision includes a net charge for the year of £11.2million (2006 £119.1million) of
exceptional redundancy costs relating to the change programme occurring within the BBC and non-exceptional
redundancy costs of £10.0million (2006 £10.4million).
Property provisions relate to the cost of returning leasehold properties to their original condition at the endof the lease, and include BBC World Service’s liability of £3.5million (2006 £3.4million) to restore Bush House
to its original condition.
Other provisions consist of a number of balances arising across the BBC in the normal course of business.

UK Public Service Broadcasting

At 1 April
2006£m

Charge forthe year£m

Utilisedduringthe year£m

Releasedduringthe year£m

At
31 March
2007£m

Licence fee
Restructuring
Litigation and insurance
Property
Deferred tax
BBC jam
Other

19.5
116.1
11.3
9.8
3.5
–
4.3

20.5
24.8
1.6
2.6
–
14.4
11.4

(18.6)(79.6)
(0.9)
(0.3)
(3.5)
–
(8.0)

(1.5)
(8.8)
(0.3)
(1.5)
–
–
(1.1)

19.9
52.5
11.7
10.6
–
14.4
6.6

Total

164.5

75.3

(110.9)(13.2)

115.7

132 Part Two: BBC Annual Report and Accounts 2006/2007

18 Reserves
Operatingreserveexcludingpension reserve£m

Pensionreserve£m

Total
operatingreserve£m

Capitalreserve£m

Revaluation
reserve
£m

Total
£m

At 1 April 2006
Exchange difference
Surplus for financial year
Actuarial gain on defined benefit
pension schemes
Revaluation reserve transfer
Pension reserve transfer
Capital reserve transfer

257.5
(2.7)
60.7

164.9
–
–

422.4
(2.7)
60.7

771.3
–
–

3.2
–
–

1,196.9
(2.7)
60.7

–
0.8
(25.8)(11.2)

143.8
–
25.8
–

143.8
0.8
–
(11.2)

–
–
–
11.2

–
(0.8)
–
–

143.8
–
–
–

At 31 March 2007

279.3

334.5

613.8

782.5

2.4

1,398.7

268.1

334.5

602.6

621.8

–

1,224.4

11.2

–

11.2

160.7

2.4

174.3

279.3

334.5

613.8

782.5

2.4

1,398.7

Operatingreserve£m

Capitalreserve£m

Revaluation
reserve
£m

Total
£m

At 1 April 2006
Surplus for financial year
Revaluation reserve transfer
Capital reserve transfer

237.0
52.1
0.8
(11.2)

771.3
–
–
11.2

3.2
–
(0.8)
–

1,011.5
52.1––

At 31 March 2007

278.7

782.5

2.4

1,063.6

267.5

621.8

–

889.3

11.2

160.7

2.4

174.3

278.7

782.5

2.4

1,063.6

Group

Represented by:General Group reserves
BBC World Service and
BBC Monitoring reserves

UK Public Service Broadcasting
UK Public Service
Broadcasting, BBC World
Service and BBC
Monitoring are fundedfrom different sources. As
such, the reserves relating
to BBC World Service and
BBC Monitoring are
maintained separately fromthe rest of the Group andare restricted for use solely
on BBC World Service or
BBC Monitoring activities.

Represented by:
UK Public Service Broadcasting reserves
BBC World Service and
BBC Monitoring reserves

Under FRS 10 ‘Goodwill and intangible assets’ any newly arising goodwill must be capitalised and amortisedover its useful life. As is permitted by the standard, goodwill arising in periods prior to 1999 of £6.8million(2006 £6.8million) remains offset against the operating reserve.
The cumulative translation differences at 31 March 2007 were £(0.8)million (2006 £1.9million), of which£(2.7)million arose during the year (2006 £1.9million). In accordance with FRS 23, any differences relating toyears prior to 2006 have not been separated out and remain within the operating reserve.

Part Two: BBC Annual Report and Accounts 2006/2007 133

Finance
Financial statements
Notes to the financial statements
19 Sale of businesses
In July 2006 BBC Worldwide entered into an arrangement with Random House Limited to operate acompany named Woodlands Books Limited. In return for the transfer of the assets of its books division
to this company, BBC Worldwide has a 15% share in the company together with cash consideration of£21.2million, realising a profit of £13.3million.
In May 2006 BBC Worldwide sold a majority 61% shareholding in Origin Publishing Limited (‘Origin’) toa management buy-out team, led by Origin’s Managing Director, for consideration of £9.3million, realisinga profit of £0.2million. BBC Worldwide has retained a 39% stake in Origin.
Details of the disposal transactions are as follows:Booksbusiness
2007£mOriginPublishing
2007
£m

Total
2007
£m

0.8
–
4.3
(0.3)
13.3

–
4.8
0.4
3.7
0.2

0.8
4.8
4.7
3.4
13.5

18.1

9.1

27.2

Of which:
Cash consideration received
Less transaction costs

21.2
(0.4)

6.0
(0.2)

27.2
(0.6)

Net proceeds from sale of operations
Accrued costs
Deferred consideration

20.8
(2.7)
–

5.8
–
3.3

26.6
(2.7)
3.3

Total consideration, net of transaction costs

18.1

9.1

27.2

2007
£m

2006
£m

(Decrease)/increase in cash in year
Net cash inflow from management of liquid resources
Net cash outflow from financing(15.5)–
0.9

158.8(41.9)
87.9

Change in net debt resulting from cash flows
Non-cash increase in finance leases
Non-cash increase in unsecured loan notes(14.6)
(6.9)
–

204.8
(15.6)(4.3)

Change in net debt
Net funds/(debt) at the beginning of the year

(21.5)
49.6

184.9(135.3)

Net funds at the end of the year

28.1

49.6

Investment in programmes for future sale
Goodwill disposed
Net assets disposed/written off
Interest in associated undertaking recognised
Profit on disposal

20 Reconciliation of net cash flow to movement in net funds/(debt)

134 Part Two: BBC Annual Report and Accounts 2006/2007

21 Analysis of changes in net funds
At 1 April
2006£mCash flows£m

Non-cash At 31 Marchchanges
2007£m£m

Net cashCash at bank and in hand

160.2

(15.5)–

144.7

Gross funds

160.2(15.5)

–

144.7

Debt
Loans from third parties
Unsecured loan notes
Finance leases(72.0)(5.3)(33.3)(13.4)
4.8
9.5

–
–
(6.9)

(85.4)(0.5)(30.7)Net funds

49.6(14.6)

(6.9)

28.1

Made up of:
Public Service (including BBC World Service and BBC Monitoring)
Commercial Businesses
Centre House Productions Limited

110.2(38.6)(22.0)(1.3)(16.0)
2.7

(6.9)
–
–

102.0
(54.6)(19.3)Net funds

49.6(14.6)

(6.9)

28.1

The debt and repayments on finance leases held by Centre House Productions Limited are offset directly bycash held on matching deposits, and the income from them, such that there is no long-term cash flow effect.

22 Reconciliation of net funds/(debt) to the Department for Culture, Media and Sport (DCMS)
borrowing ceilings

Public Services in thiscontext represent the UK
Public Service BroadcastingGroup (excluding Centre
House Productions Limited– see Note 23b) BBCWorld Service and BBC
Monitoring.

Net funds/(debt)
Licence savings stamps deposits anddirect debit instalments
Funds/(borrowings) as defined by DCMS
borrowing ceiling
Borrowing ceiling

Note

PublicServices
2007£mPublic Commercial
Services Businesses
2006
2007
£m
£m

Commercial
Businesses
2006
£m

21

102.0

110.2

(54.6)(38.6)

16b(72.2)(92.1)

–

–

29.8

18.1

(54.6)(38.6)(200.0)(200.0)(350.0)(350.0)

The Public Service borrowing limit of £200million is set by the Secretary of State in accordance with theAgreement between the BBC and DCMS. As at 31 March 2007 and 31 March 2006, and throughout
the financial year, the BBC was in compliance with this borrowing ceiling.
Under the new Charter and Agreement outstanding licence savings stamp deposits and direct debit instalments
are no longer included in the Public Services borrowings. Under the new definition, at 31 March 2007, thePublic Services had net funds of £102.0million (2006 £110.2million).
When the DCMS granted a £350million borrowing limit for BBC Commercial Holdings Limited in July 2002,
three financial covenants were defined which are required to be met as at 31 March each year. As at 31 March
2007 and 31 March 2006 BBC Commercial Holdings Group was in compliance with each of these covenants.

Part Two: BBC Annual Report and Accounts 2006/2007 135

Finance
Financial statements
Notes to the financial statements
23 Financial instruments
The Group has adopted FRS 29 (IFRS 7) ‘Financial Instruments: Disclosure’ for the first time in this financial
year. Accordingly the comparatives have been restated on a consistent basis, but the standard does not
require any changes to the recognition or measurement of financial instruments.
23a Financial risk management
The Group’s financial risk management operations are carried out by a Group Treasury function, withinparameters defined formally within the policies and procedures manual agreed by the Executive Board.
Group Treasury’s activity is routinely reported and is subject to review by internal and external auditors.
Group Treasury uses financial instruments to raise finance and to manage financial risk arising from the BBC’s
operations in accordance with its objectives which are:to ensure the business of the BBC, both Public Services and Commercial, is funded in the most efficientmanner and remains compliant with borrowing limits
to protect the value of the BBC’s assets, liabilities and cash flows from the effects of adverse interest rates
and foreign exchange fluctuations
to maximise the return on surplus funds, whilst ensuring sufficient cash is retained to meet foreseeableliquidity requirements
The Group’s financial instruments, other than those used for treasury risk management purposes, comprise
cash and liquid resources, borrowings and various items such as trade debtors and creditors that arise directlyfrom its operations.The Group finances its operations from these financial instruments.The Group does notundertake speculative treasury transactions.
Market risk
Currency risk
The Group is principally a domestic organisation with the majority of transactions, asset and liabilities arisingin the UK and being sterling based. However, the Group undertakes some transactions in currencies otherthan sterling. Due to movements in exchange rates over time, the amount the Group expects to receiveor pay when it enters into a transaction may differ from the amount that it actually receives or pays when
it settles the transaction.
The Group enters into forward currency contracts, for all significant contracts, to manage this currency risk.
These allow the Group to settle transactions at known exchange rates, thereby eliminating much of thisuncertainty. As a result of this certainty in exchange rates the Group has no significant underlying sensitivity
to currency fluctuations and hence no sensitivity analysis is presented.The Group’s largest overseas operationis BBC Worldwide America, which operates in the USA and whose revenues and expenses are denominatedexclusively in US dollars. However, due to the relative size of BBC Worldwide America and the stability of the
US dollar, the BBC does not consider this to be a significant exposure to currency fluctuations for the Group.
Interest rate risk
The Group’s main exposure to interest rate fluctuations arises on external borrowings. Since March 2003
the Group has been borrowing at floating rates of interest and then using interest rate swaps to generate thedesired interest profile and to manage the Group’s exposure to interest rate fluctuations. Interest rate swaps
are taken out based on projected borrowing requirements, therefore differences will occur between thevalue of swaps and the actual borrowing requirements.
Other price risk of financial assets
The Group invests surplus cash in money market funds and money market deposits, therefore it is not
subject to other price risks, such as market price risk.
Credit risk
The majority of the Group's financial assets are trade receivables (£474.4million).The largest element is thelicence fee debtor (£353.9million) which is received directly from DCMS (not directly from the licence fee
payer) and therefore no significant credit risk attaches to this debtor.The amount of income that the BBC
receives from DCMS is directly related to the amount of licence fee collected from households in the UK.
Of the remaining £120.5million receivables, £14.0million is past due and not impaired. £1.5million has
been provided for during the year against the £2.1million trade receivables which are considered impaired.
However, the Group does not consider this to be a significant impairment of financial assets.The Group
enters into financial guarantees for intra-Group purposes only therefore the credit risk exposure, as a resultof this, is not considered significant.

136 Part Two: BBC Annual Report and Accounts 2006/2007

Market risk comprises
currency risk, interest raterisk and other price risks.
A forward currency
contract is a contract tobuy or sell foreign currency
in exchange for sterling at
a specific rate on a specificdate. By locking into aparticular exchange rate,
the currency risk that may
be associated with a futurepurchase or sale iseliminated.
An interest rate swap is
a contract between two
parties to change the basisof their interest rate
payment or receipts either
from fixed to floating rates
or vice versa. By fixing afloating interest ratecertainty about the levelof future interest payments
can be achieved.
Other price risk is any
price change other thanthose arising from changes
in currency or interest rates.
Credit risk is the risk offinancial loss to the Group
if a customer orcounterparty to a financial
instrument fails to meet its
contractual obligation.

Liquidity risk is the riskthat the Group will not beable to meet its financial
obligations as they fall due.

Liquidity risk
The BBC is subject to limits on its borrowings set by the Secretary of State in accordance with the Agreement
between the BBC and DCMS (see Note 22).The BBC’s Group Treasury manages the Group’s borrowings inorder to comply with these limits together with the terms of any individual debt instruments.The BBC holds
its surplus liquidity in readily convertible financial instruments with highly rated financial institutions.
23b Fair values of financial instruments
The following table shows the fair value and carrying value of the Group’s financial instruments, in categories
according to how the financial instrument is measured. It also shows the maturity profile for each category offinancial asset and liability.
Amountsdue inless than
1 year£m

Amountsdue
between2 and 5years£mAmounts
due after
more than
5 years
£m

Total
£m

5.2

1.0

–

6.2

Loans and receivables:
Trade debtors
Other debtors

474.4
0.2

–
–

–
–

474.4
0.2

Cash at bank and in hand

144.7

–

–

144.7

Financial liabilities at fair value through income and expenditure:
Derivative financial instruments

(3.7)

(3.6)

–

(7.3)

(65.9)(294.3)(27.8)(5.2)–(20.0)
–
–
(4.5)
(3.5)

–
–
–
(21.0)–(85.9)(294.3)(27.8)(30.7)
(3.5)

3.5

3.2

–

6.7

Loans and receivables:
Trade debtors
Other debtors

427.7
4.9

–
–

–
–

427.7
4.9

Cash at bank and in hand

160.2

–

–

160.2

Financial liabilities at fair value through income and expenditure:
Derivative financial instruments

(3.2)

(3.9)

(0.1)

(7.2)

(5.3)
(252.8)(36.6)(4.8)–(72.0)
–
(3.6)
(4.4)
(3.4)

–
–
–
(24.1)–(77.3)(252.8)(40.2)(33.3)(3.4)

2007 – Carrying value and fair value
Financial assets at fair value through income and expenditure:
Derivative financial instruments

Financial liabilities measured at amortised cost:
Loans
Trade creditors
Programme acquisitions
Obligations under finance leases
Provisions for liabilities
2006 – Carrying value and fair value
Financial assets at fair value through income and expenditure:
Derivative financial instruments

Financial liabilities measured at amortised cost:
Loans
Trade creditors
Programme acquisitions
Obligations under finance leases
Provisions for liabilities

As at 31 March 2007 there are no differences between the fair value and carrying value of any of the Group’s
financial instruments.The fair value of forward currency contracts, interest rate swaps and embedded derivatives
are based on market prices and exchange rates at the balance sheet date.These are recorded in the statementof income and expenditure (see Notes 3 and 7).The remaining financial instruments are carried at cost or
amortised cost in accordance with FRS 26 which approximates to fair value.
Part Two: BBC Annual Report and Accounts 2006/2007 137

Finance
Financial statements
Notes to the financial statements
The finance leases include £21.0million (2006 £24.1million) relating to Centre House Productions Limited.
Centre House Productions Limited enters into finance leases as a means of financing drama productions which
result in lower production costs for the BBC.These finance leases are matched by defeasance deposits which
may only be used to settle the finance lease liabilities and therefore do not represent separate assets andliabilities. Consequently they are netted off the finance lease creditor to show the net unmatched liability at theyear end.These defeasance deposits, £235.8million at 31 March 2007 (2006 £250.4million), are structured suchthat the principal on deposit and interest earned will be sufficient to cover the rental obligations on the financeleases until the end of the lease. Accordingly it is not included as borrowing for the purposes of compliancewith the BBC’s borrowing limits.
23c Derivative financial instruments
2007
Greater than one year
Forward foreign currency contracts
Interest rate swaps
Embedded derivatives

Less than one year
Forward foreign currency contracts
Interest rate swaps
Embedded derivatives

2006
Greater than one year
Forward foreign currency contracts
Interest rate swaps
Embedded derivatives

Less than one year
Forward foreign currency contracts
Interest rate swaps
Embedded derivatives

Assets£m

Liabilities
£m

1.0
–
–

(3.5)
–
(0.1)

1.0

(3.6)

2.5
2.7
–

(3.7)
–
–

5.2

(3.7)

1.3
1.2
0.7

(3.4)
(0.2)
(0.4)

3.2

(4.0)

1.6
–
1.9

(3.0)
–
(0.2)

3.5

(3.2)

At 31 March 2007 the Group had entered into a net commitment to purchase foreign currencies amounting
to £65.8million (2006 £90.0million) that mature in the period through to 2012 in order to fix the sterling
cost of commitments through this period (mainly euros and US dollars). After taking into account the effectsof these forward foreign exchange contracts, the Group had no significant currency exposure.
Sterling fixed rate borrowings are achieved by entering into interest rate swap transactions; all outstanding
swaps mature in March 2008. In total, £246.0million (2006 £246.0million) of swaps were entered into which
covers all borrowing facilities.This is £161.0million (2006 £174.0million) more than the current level ofborrowings of £85.0million (2006 £72.0million).
In accordance with FRS 26, the Group has reviewed contracts for embedded derivatives that are required
to be separately accounted for if they do not meet certain requirements set out in the standard. Any such
embedded derivatives have been recognised at fair value.

138 Part Two: BBC Annual Report and Accounts 2006/2007

Defeasance deposits areamounts deposited withbanks which earn the exact
amount of interest needed
to cover the capital
repayment and interest
element of each of thefinance leases. The
defeasance deposits are‘ring-fenced’ and therefore
cannot be used for any
transactions apart from theagreed capital and interest
payments.

23d Borrowing facilities

Facility
Money market lines areshort-term borrowings.

Interest rate

UK Public Service Broadcasting
LIBOR-based loan
Loan – margin of 0.2%
or overdraft
Overdraft – bank base rates
plus 1%
Uncommitted money
Margin of between 0.125% andmarket lines (short-term
0.5% over LIBOR
borrowings)
BBC Commercial Holdings Limited
Multicurrency, revolving
LIBOR plus 0.375% rising tocredit facility agreement
LIBOR plus 0.45% when thefor loans and lettersfacility is more than 50% utilisedof credit
Letter of credit fee is the sameas the bank lending margin, butdoes not include LIBOR
Loan with European
European Investment Bank’s
Investment Bank (secured
own funding costby letters of credit)***Overdraft or money
Money market line – margin
market linesof 0.3%
Overdraft – bank base rates
plus 1%
BBC Worldwide Limited
Loan with European
Investment Bank
(50% secured byletters of credit)***European Investment Bank’s own
funding cost plus a margin of
0.09% on unsecured loans

Total
available£m

Amountdrawn
down at
31 March
2007£mAmountdrawn
down at
31 March
2006
£m

100

–

–

24

–

–

350***

40

47

March 2008*

25

25

25

by June 2007

20

–

–

January 2008

50

20

–

November
2011

Expiry orreview date

May 2007***The BBC Commercial Holdings Limited multicurrency facility agreement is currently under review and the new agreement is due to besigned in June 2007**The UK Public Service Broadcasting LIBOR-based loan has the option to extend to May 2008***Of this amount, up to £100million is available to issue letters of credit in favour of the European Investment Bank to support its
lending under facilities to the Group. At 31 March 2007, in addition to the drawings of £40.0million, £35.9million (2006 £25.0million)
was utilised by way of letters of credit issued to support borrowing under these facilities; £25.6million against the BBC Commercial
Holdings Limited loan and £10.3million against the BBC Worldwide Limited loan

There have been no defaults or breaches of loan covenants during the year (2006 none).

Part Two: BBC Annual Report and Accounts 2006/2007 139

Finance
Financial statements
Notes to the financial statements
24 Commitments
24a Contracts placed for future expenditure

Fixed asset additions
Programme acquisitions and sports rights
Independent programmes

Group
2007
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2006
2007
2006
£m
£m
£m

50.0
994.1
112.1

79.9
918.3
96.3

40.4
939.0
101.5

67.5
861.9
85.7

1,156.2

1,094.5

1,080.9

1,015.1

Fixed asset additions includes a commitment of £13.9million (2006 £43.3million) for the design, build andinstallation of the full technology solution for BBC Scotland’s new broadcasting headquarters at Pacific Quay,
which is expected to be paid within one year.
24b Operating leases
Operating lease commitments payable in the following year, analysed according to the period in which thelease expires:Group
Within one year
In two to five years
After five years

UK Public Service BroadcastingWithin one year
In two to five years
After five years

Land andbuildings
2007£mLand andbuildings
2006
£m

Other
2007
£m

Other
2006
£m

3.0
15.5
58.6

2.7
8.3
41.4

9.7
39.8
8.0

1.4
8.5
3.2

77.1

52.4

57.5

13.1

2.1
12.6
57.5

2.1
6.1
40.9

8.1
34.2
8.0

0.5
2.6
1.0

72.2

49.1

50.3

4.1

24c Other financial commitments
In the ordinary course of business the BBC enters into a large number of contracts with artists and writers
and with providers of other services including licence fee collection and channel distribution.

25 Contingent assets and liabilities
At 31 March 2007 the Group had not provided for contingent liabilities estimated to be £5.6million (2006£6.3million) in respect of guarantees and indemnities. Of this, £1.3million relates to UK Public Service Broadcasting.
The remainder relates to BBC Worldwide’s joint venture, Worldwide Media Limited. BBC Worldwide Limited
has guaranteed bank loans in respect of this joint venture which were rupees 366million (£4.3million) on
31 March 2007.This debt may rise to rupees 400million (£4.7million) over the next two years.
The Group has a number of contingent liabilities arising from litigation.The BBC makes specific provision(see Note 17) for its best estimate of any damages and costs which may be awarded.

140 Part Two: BBC Annual Report and Accounts 2006/2007

An operating lease is alease where the lessee has
not taken on the risks andrewards of owning andoperating the asset.The
lessee (the BBC) is hiring
rather than buying an asset.

26 Post balance sheet events
On 7 June 2007 the BBC invested in BBC Free To View (Satellite) Limited, a wholly owned subsidiary, anda joint venture, Freesat (UK) Limited, 50% owned by BBC Free To View (Satellite) Limited.These companies
have been established to provide a free to air satellite television service.
On 5 June 2007 the BBC invested in DSHS Limited, a wholly owned subsidiary.This company has been
incorporated to provide help with the digital switchover to people aged 75 and over, people with significant
disabilities and people who are registered blind or registered partially sighted.

27 Related party transactions
The related party transactions of the Group have been presented in accordance with FRS 8 ‘Related party
disclosures’. Under the provisions of FRS 8 the BBC has not disclosed transactions between Group entities
where more than 90% of those entities’ voting rights are controlled within the Group.
In all transactions, the terms of trade were negotiated on an arm’s length basis.
27a Transactions with subsidiaries, joint ventures and associated undertakings
Income from joint ventures andassociated undertakings

UKTV
UKTV
JV Programmes LLC
2 entertain Limited
2 entertain Limited
Daunus Limited

Nature of services provided

2007
£m

2006
£m

38.1
4.5
38.9
9.1
17.6

37.3
4.0
29.6
8.4
15.1

9.9
0.2
–
0.3
6.3

1.0
0.8
0.5
0.4
6.8

BBC Haymarket Exhibitions Limited
Dovetail Services (UK) Limited
Frontline Limited
Other

Sale of programmes
Dividends
Sale of programmes
Licensing of programmes and other commissions
Dividends
Reimbursement of Broadcasting House
development costs
Management fees and dividends
Dividends
Dividends
Sale of programmes

Charges payable to subsidiaries,
joint ventures and associated undertakings

Nature of services received

2007
£m

2006
£m

Property services

22.9

104.8

Rent
Digital switchover
Distribution of BBC
Worldwide’s magazinesMarketing services
Marketing services
Purchase of broadcast licences

16.6
10.2

11.5
2.9

2.1
1.7
1.2
0.4

2.0
1.7
1.3
0.3

Insight Property Partnership and theWhite City Development Partnership
Daunus Limited
Digital UK Limited
Frontline Limited
JV Programmes LLC
DTV Services Limited
Parliamentary Broadcast Unit Limited

Note 13 provides details of the other partners in the BBC’s joint ventures.
Amounts owed by/to joint ventures and associated undertakings at the year end are disclosed within
Notes 15 and 16.

Part Two: BBC Annual Report and Accounts 2006/2007 141

Finance
Financial statements
Notes to the financial statements
27b Other transactions
The BBC’s related parties, as defined by FRS 8, the nature of the relationship and the extent of the transactions
with them are summarised below. In the normal course of business the BBC transacts with other parties which
are related to it by virtue of its senior employees being married or closely related to employees of the BBCor individuals who own or are employed at other media, production and broadcasting companies.The BBC
has set procedures for dealing with situations to avoid any conflict of interest. Where transactions have arisen
between connected parties, the BBC Trustee, Governor or employee is not a party to the approval process.
27b i Trustees (from 1 January 2007)
During the period, Diane Coyle and Richard Tait had close family members who were employed by the BBC.
Their remuneration was based on the BBC’s standard terms and conditions applicable to other staff employedin similar capacities.
27b ii Governors (to 31 December 2006)
Deborah Bull is sole Director of Deborah Bull Limited. Deborah Bull Limited received payments totalling£5,258 for the period to 31 December 2006 (for the year ended 31 March 2006 £2,853) for contributions
to various BBC programmes. No amounts were outstanding at 31 March 2007 (2006 £nil).
Michael Grade, who was Chairman of the BBC Board of Governors until 27 November 2006, is non-executive
Chairman of Pinewood Shepperton and non-executive Chairman of Hemscott plc. In the period to
27 November 2006 the BBC paid £2,217,956 (for the year ended 31 March 2006 £2,494,051) to Pinewood
Shepperton for the use of studios and related facilities. At the year end no amounts were outstanding(2006 £16,105).
During the period, Baroness Deech, Professor Merfyn Jones and Ranjit Sondhi had close family members
who were employed by the BBC.Their remuneration was based on the BBC’s standard terms and conditions
applicable to other staff employed in similar capacities.
27b iii Members of the Executive Board and other senior management
Menna Richards is Controller of BBC Wales. Her sister has a controlling interest in Torpedo Limited.
The BBC made payments on contracts to the value of £360,551 (2006 £275,711) with Torpedo Limited
for the provision of independent radio and television programmes in the year. These amounts had been
paid in full by 31 March 2007. Also, the BBC entered into artists’ contracts worth £54,867 (2006 £47,887)
with her husband Patrick Hannan.These amounts had been paid in full by 31 March 2007 (2006 paid in full).
Juniper Communications Limited is co-owned by BBC non-executive Director Samir Shah (70%), his wife
Belkis Shah (20%) and the husband of Jana Bennett (Director BBC Vision) Richard Clemmow (10%). During
the year Juniper Communications Limited has had transactions with the BBC to the value of £623,881 with
£68,000 outstanding at 31 March 2007.
During the year, Jenny Abramsky (Director, BBC Audio & Music), Anne Gilchrist (Creative Director, CBBC),
Jane Tranter (Controller, Drama Commissioning) and Jay Hunt (Controller Daytime) had close family
members who were employed by the BBC.Their remuneration was based on the BBC’s standard terms
and conditions applicable to other staff employed in similar capacities.

142 Part Two: BBC Annual Report and Accounts 2006/2007

Related parties include
Trust members, Governors,
the Executive Board andother senior managers,
their immediate families
and external entities
controlled by them.
Transactions between the
BBC and these relatedparties are explained inthis note.

28 UK Public Services expenditure by service
The following tables show the BBC’s Public Service Broadcasting expenditure analysed both by service
licence, and by certain types of expenditure. Content expenditure includes direct programme costs andprogramme-related spend. It is reported on the same basis as that used by the BBC Trust to determine theservice budgets within the service licence framework.The service licence framework came into effect from
1 January 2007 and requires this approach to reporting expenditure; as a result the comparatives for the year
ended 31 March 2006 have been presented on the same basis.
Infrastructure/
support Other items£m£mContent£m

Distribution£m

1,143.4
433.1
92.9
49.8
39.1
14.0
42.9
2.1
19.6

45.0
26.2
2.4
2.0
2.2
2.1
4.2
3.4
11.6

223.3
92.7
23.7
15.2
11.0
4.4
7.9
0.4
4.5

–
–
–
–
–
–
–
–
–

1,411.7
552.0
119.0
67.0
52.3
20.5
55.0
5.9
35.7

1,836.9

99.1

383.1

–

2,319.1

BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Radio Five Live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
BBC Local Radio*
BBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle

30.8
38.1
33.9
81.0
56.3
2.4
6.4
5.4
5.1
8.9
103.5
22.6
3.2
11.7
10.7
12.6

3.9
4.2
4.2
9.3
6.0
0.3
0.5
0.5
0.5
0.7
4.7
2.8
1.1
1.2
1.6
1.1

8.1
7.8
6.6
14.7
10.9
0.5
2.1
1.4
1.4
2.0
21.1
4.3
0.6
2.4
2.3
2.2

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

42.8
50.1
44.7
105.0
73.2
3.2
9.0
7.3
7.0
11.6
129.3
29.7
4.9
15.3
14.6
15.9

Radio

432.6

42.6

88.4

–

563.6

83.2
31.8

8.8
–

24.0
5.9

–
–

116.0
37.7

115.0

8.8

29.9

–

153.7

Spend regulated by service licence

2,384.5

150.5

501.4

–

3,036.4

Licence fee collection costs
Orchestras and performing groups
S4C
Development spend
DAB digital radio
Digital text

–
18.8
20.8
32.0
–
–

–
–
–
–
8.7
5.5

–
3.3
3.8
5.6
0.2
2.2

134.1
–
–
–
–
–

134.1
22.1
24.6
37.6
8.9
7.7

71.6

14.2

15.1

134.1

235.0

–

–

–

44.3

44.3

2,456.1

164.7

516.5

178.4

3,315.7

x

–

–

–

11.6

11.6

xi,xii2,456.1

164.7

516.5

190.0

3,327.3

2007 Service

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC News 24
BBC Parliament
BBCi

Note
i
ii

iii
iv

Televisionbbc.co.uk
BBC jamv
vi

Online

vii
viii

Other
Exceptional restructuring costsix

Total UK Public Services expenditure
Digital UK Limited expenditure
Total

Total
£m

*The service licence for BBC Local Radio in England covers all of the individual stations

Part Two: BBC Annual Report and Accounts 2006/2007 143

Finance
Financial statements
Notes to the financial statements

Infrastructure/
support Other items£m£mContent£m

Distribution£m

1,048.4
447.1
93.6
47.4
52.5
12.0
42.7
1.9
15.8

45.9
27.3
2.5
2.1
2.3
2.1
4.2
3.4
11.6

200.6
88.8
20.7
11.9
12.4
3.4
5.9
0.3
3.3

–
–
–
–
–
–
–
–
–

1,294.9
563.2
116.8
61.4
67.2
17.5
52.8
5.6
30.7

1,761.4

101.4

347.3

–

2,210.1

BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Radio Five Live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
BBC Local Radio*
BBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle

30.8
35.7
35.9
77.5
60.2
1.6
5.8
4.5
5.0
8.1
96.3
20.7
3.5
10.7
10.0
13.4

4.3
4.4
4.5
9.4
5.5
0.1
0.4
0.5
0.4
0.2
6.1
2.3
1.0
1.1
1.5
0.9

6.7
7.2
6.8
15.2
10.2
0.4
1.1
1.2
1.2
1.7
19.0
4.1
0.7
2.1
2.0
2.7

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

41.8
47.3
47.2
102.1
75.9
2.1
7.3
6.2
6.6
10.0
121.4
27.1
5.2
13.9
13.5
17.0

Radio

419.7

42.6

82.3

–

544.6

72.7
35.5

8.6
–

27.5
6.6

–
–

108.8
42.1

Online

108.2

8.6

34.1

–

150.9

Spend regulated by service licence

2,289.3

152.6

463.7

–

2,905.6

Licence fee collection costs
Orchestras and performing groups
S4C
Development spend
DAB digital radio
Digital text

–
19.0
21.7
2.4
–
–

–
–
–
–
8.7
5.6

–
3.2
3.6
0.4
0.2
2.2

153.4
–
–
–
–
–

153.4
22.2
25.3
2.8
8.9
7.8

43.1

14.3

9.6

153.4

220.4

–

–

–

106.7

106.7

2,332.4

166.9

473.3

260.1

3,232.7

x

–

–

–

4.0

4.0

xi,xii

2,332.4

166.9

473.3

264.1

3,236.7

2006 (as represented) Service

Note

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC News 24
BBC Parliament
BBCi

i
ii

iii
iv

Televisionbbc.co.uk
BBC jam

v
vi

vii
viii

Other
Exceptional restructuring costsix

Total UK Public Services expenditure
Digital UK Limited expenditure
Total*The service licence for BBC Local Radio in England covers all of the individual stations

144 Part Two: BBC Annual Report and Accounts 2006/2007

Total
£m

Infrastructure/support costs

Marketing, press and publicity
On-air trailsMarket research and consumer services
Libraries, learning support and community events
Overheads (excluding restructuring)
Other change costs

Note

2007
£m

% of output
spend(note xiv)

2006
£m

% of output
spend

xiii
xv

45.4
22.2
14.3
77.5
340.4
16.7

1.5
0.7
0.5
2.6
11.5
0.6

40.3
23.7
12.1
85.7
311.5
–

1.4
0.8
0.4
3.1
11.1
–

516.5

473.3

(i) Spend on BBC One has increased in 2007 due to the coverage of the Football World Cup andreinvestment of savings from the BBC Change Programme.
(ii) The reduction in spend on BBC Two reflects no major sporting events being aired on this channel in 2007.
In 2006 The Commonwealth Games and Winter Olympics were transmitted on BBC Two.
(iii) Spend on CBBC has reduced compared to last year as some titles in 2006 were broadcast simultaneously
on both BBC One and CBBC and hence programme costs were split between both channels. However, in2007 simultaneous broadcasting was not used and as such certain programmes were premiered on BBC One
only, thereby reducing the spend on CBBC.This represents a change between channels only and not a
reduction in overall spend on children’s programming.
(iv) Included within BBC News 24 content costs are production costs of £24.3million, Newsgathering costsof £18.1million and other costs of £0.5million (2006 production costs of £23.1million, Newsgathering£19.1million, other costs £0.5million).
(v) Spend on bbc.co.uk has increased due to additional investment on online activities.
(vi) BBC jam, formerly known as the Digital Curriculum, launched in January 2006 with content available
in four subject areas. On 2 March 2007, the BBC Executive Board, following a decision by the BBC Trust,suspended BBC jam.The cost of suspension of BBC jam is shown as a loss on termination of operations(see Note 5) and is therefore not included in this analysis.
(vii) As part of the licence fee funding, the BBC is required to provide Welsh language programming to S4C(the Welsh language channel).
(viii) Development spend is not regulated by service licences and as such has been separately identified.
2007 numbers include costs on the development of new on-demand technology applications.
(ix) Restructuring costs include those costs relating to the change programme occurring within the BBC
which will deliver £355million savings per annum from 2009.
(x) Digital UK Limited expenditure represents the running costs and marketing expense for Digital UK
Limited, the company that will drive switchover in the UK, in line with Government strategy.
(xi) Newsgathering costs of £86.9million (2006 £89.5million) are allocated within content spend acrossall relevant services.
(xii) Of the distribution costs, £74.8million relates to analogue services (2006 £77.2million) and £89.9million
to digital services (2006 £89.7million).
(xiii) Overheads includes expenditure on the BBC’s central non-content functions, for example the
Director-General’s office, BBC People, BBC Finance, policy and legal departments. Spend incorporates
accommodation and staff costs relating to those functions.The proportion of these costs which are directly
attributable to programme-making are included within total programme spend, whilst the costs of services
provided across the BBC as a whole are shown as overhead spend.
(xiv) In 2000 the BBC adopted a target to increase the proportion it spends on programmes, in relation
to its output spend. Output spend excludes licence fee collection costs, distribution costs, exceptional
restructuring costs and Digital UK Limited costs.The BBC targeted to increase the proportion of spend on
programming to 85% which was achieved in 2003, and in 2007 the proportion of output spend incurredon programming was 88%.
(xv) These costs comprise other one-off change costs.

Part Two: BBC Annual Report and Accounts 2006/2007 145

Finance

International Financial Reporting Standards Reconciliation(this page does not form part of the financial statements)
The BBC’s Charter and Agreement requires the BBC to prepare its audited statement of accounts inaccordance with UK Generally Accepted Accounting Principles (UK GAAP).
For a number of years the BBC voluntarily prepared its financial statements on a basis consistent with thatof UK public limited companies; however European and UK legislation now require UK listed companies
to adopt International Financial Reporting Standards as adopted by the EU (IFRS) in their group financial
statements for years beginning on or after 1 January 20051, which would be inconsistent with the BBC’s
Charter and Agreement. Nevertheless, the BBC has continued to review the impact that adoption of IFRS
would have on the group accounts and has presented a summary of the impact that adopting IFRS would
have had on the financial statements.
As at 31 March 2007 the BBC calculated that if it had adopted IFRS its net assets would be reduced by£211million to £1,188million (2006 net assets would have reduced by £145million to £1,052million).
2007
£m

2006
£m

Net assets as reported under UK accounting standards
Lease reclassification
Goodwill non-amortisation
Employee benefits
Deferred tax
Other1,398.7(194.4)
6.7(22.3)(0.7)
0.4

1,197.0(132.8)3.1(15.3)(1.0)
1.2

Net assets as they would be reported under IFRS

1,188.4

1,052.2

Some of the IFRS accounting changes, principally the reclassification of certain operating leases as financeleases, would have an effect on the calculation of Public Service Broadcasting borrowings as defined by the
DCMS borrowing ceiling.The Public Service Borrowing limit of £200million is set by the Secretary of State inaccordance with the Agreement between the BBC and DCMS and is determined by reference to UK GAAP
not IFRS. Borrowings under IFRS would have been £731million, compared with net funds of £30million under
UK GAAP (2006 borrowings under IFRS would have been £676million, compared with net funds of £18million
under UK GAAP).The Agreement definition of borrowings is based on UK accounting standards effective inJuly 2006.
For the year ended 31 March 2007 the BBC calculated that if it had adopted IFRS the surplus for the year
would be reduced by £58million to a surplus of £3million (2006 the surplus for the year would have been
reduced by £43million to a deficit of £39million).
2007
£m

2006
£m

Surplus as reported under UK accounting standards
Lease reclassification
Goodwill non-amortisation
Other

60.7
(61.7)
3.6
0.4

3.6(46.6)
3.1
1.0

Surplus/(deficit) as it would be reported under IFRS

3.0

(38.9)A more detailed reconciliation between the BBC’s results and financial position under UK accounting
standards and what would have been reported if IFRS had been adopted, along with further details of theadjustments, including the IFRS accounting policies and significant assumptions made in implementing thosepolicies (such as the date of transition to the IFRS accounting policies) are available on the BBC’s website
at bbc.co.uk.
1For the BBC the first relevant year would have been the year ended 31 March 2006

146 Part Two: BBC Annual Report and Accounts 2006/2007

Getting in touchwith the BBC
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Part Two: BBC Annual Report and Accounts 2006/2007 147

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Hat TrickPage 37 (That Summer’s Day)
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148 Part Two: BBC Annual Report and Accounts 2006/2007

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Contents

01
02
24
26

Director-General’s introduction
About the BBC
Executive Board
The BBC at a glance

28
32
38
44
52
53

Review of services
Future Media & Technology
VisionAudio & Music
Journalism
Commercial activities
Engaging with the audience

Performance
54 Statements of Programme
Policy commitments 2006/2007
64 Broadcasting facts and figures
76 Managing responsibly
Finance82 Financial overview
86 Governance and financial
statements
147 Getting in touch with the BBC
148 Other information

This is what we do...

British Broadcasting Corporation
Broadcasting House
London W1A 1AA
bbc.co.uk© BBC 2007

PART TWO: BBC Annual Report and Accounts 2006/2007

PART TWO:

The BBC is required under the terms of its Charter toproduce an Annual Report and Accounts in two parts.
The BBC Trust prepares the first part, the BBC Executive
prepares the second and each reflects the different roles
and responsibilities of the two bodies.Together the twoparts make up the BBC’s review and assessment of its year.

Annual Report andAccounts 2006/2007
The BBC Executive’s review and assessment