BBC Annual Report and Accounts 2001/2002

This BBC Annual Report and Accounts is available in public
libraries throughout the UK and on the BBC’s website atwww.bbc.co.uk/info. It is also available in Welsh, in an audio
version, in Braille and in a version tailored for people withlearning difficulties.
We also publish the BBC Statements of Programme Policy, settingout the BBC’s objectives and plans for the coming year.This
is available in public libraries and on the BBC’s website atwww.bbc.co.uk/info. It is available in Welsh, in an audio version
and in Braille.
Annual Reviews of BBC Scotland, BBC Wales, BBC Northern
Ireland and BBC English Regions are published simultaneouslywith this document, as is the Annual Review of the BBC World
Service.
The BBC’s wholly-owned commercial subsidiaries, BBC Worldwide
Limited and BBC Ventures Group (BBC Broadcast Limited,
BBC Resources Limited, BBC Technology Holdings Limited andKingswood Warren Ventures Limited) trade at arm’s length fromthe BBC and their accounts are independently audited.This
Annual Report includes a summary of their activities in
2001/2002.
Copies of any of these publications may be obtained by writing
to The Secretary, BBC, Broadcasting House, London W1A 1AA.
This publication has been printed using waterless technology
which eliminates the combination of harmful solvents andpolluting water.The inks and varnishes are soya-based and are
100% free of mineral oils and harmful emissions from volatileorganic compounds.The paper is made from 50% totallychlorine-free pulp from plantation forests, and from 50%
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environmental management system.

Above: The Blue Planet.

Above: In a successful year for BBC
Films, Jim Broadbent won an Oscar forhis performance in Iris.
Left: Simon Schama presented thesecond series of A History of Britain.

Contents

Chairman’s foreword
Running the BBC
Board of Governors
Director-General’s review
Executive Committee

2
4
4
6
8

Delivering value for audiences

10

Performance against last year’s objectives 12
Next year’s objectives
17
Review of services
TelevisionRadio
Nations & Regions
News
New Media
Learning
BBC World Service

18
24
30
34
36
38
40

Putting audiences first42

The BBC in the community

48

People52

Commercial activities
BBC Worldwide Limited
BBC Ventures Group

56
58

Compliance

60

Financial review
Financial statements

70
72

Broadcasting facts and figures

108

Getting in touch with the BBC

116

Above:Yat-Kha, one of the winning
performers in this year’s first BBC
Radio 3 Awards for World Music.
Right: Martin Shaw and Jenny
Seagrove in G F Newman’s dramafor BBC One, Judge John Deed.

Annual Report and Accounts 2001/2002 1

Chairman’s foreword

It is the view of the Governors that 2001/2002 was a very
successful year for the BBC.While there is still more toachieve, real progress was made in delivering programmesof quality and distinction – from the BBC World Service to
BBC Radio 2, from BBC One to the launch of CBeebies –and the BBC met its target to spend more on programmes
and services and less on overheads two years early.Audience
approval rose and the vast majority of the objectives set by
the Governors last year were met.
I was interviewed for the post of BBC Chairman – the firstsuch interview ever to take place under the new open systemfor public appointments – at 3pm on 11 September 2001.
Less than an hour earlier, events of unprecedented terror in
New York City had shaken the world. When, three weeks later,
I moved to the BBC, it was clear that the need to report andreflect on these great global events would be the BBC’s greatest
challenge in my first year as Chairman.
So it proved.The BBC’s news staff responded magnificently
to the challenge. Reporters from around the world covered
the story as a unified team, and all of our key news outlets –domestic television, radio and online, the BBC World Service
and BBC World – added enormously to their reputation by
providing balanced, impartial and in-depth coverage of thischallenging international story.
It was not easy. As the story developed, both at home andoverseas, the BBC’s coverage came under intense scrutiny
and, as in previous conflicts, its impartiality was questioned.
Such criticisms were unfounded and I was proud that our
news operations emerged with flying colours. Indeed, there
is no other news organisation which had the global presence
and skill to better the BBC.
The story is by no means over.There may be more challenges
ahead.Yet life will go on and, at home, the BBC will seek to

2 Annual Report and Accounts 2001/2002

bring great events to all our audiences.The BBC’s traditionalrole in unifying the country has been to the fore in recent
months, with our coverage of the sadness surrounding theQueen Mother’s death, and the happiness which marked theQueen’s Golden Jubilee. Coverage of the Jubilee weekend
showed the BBC at its very best.
In sport, the BBC remains the popular choice at most of thegreatest events. Who can forget – in England at least – Michael
Owen’s hat-trick in Munich, or David Beckham’s penalty against
Argentina? Or Olympic Gold for Britain – and Scotland –in curling? And, across the UK, BBC Children in Need raised
a record £25million for disadvantaged children.
The BBC’s ability to bring people together remains central to
our mission. It is becoming ever more important in view of theincreasing diversity of the UK. People’s outlook, tastes andinterests are based not only on social background and ethnicity,
but frequently on age or family status or on where they live.
The BBC needs to serve them all.
It is right for the public to have high expectations of the BBC.
The Governors have always been charged with the
responsibility of ensuring that the BBC fulfils its public service
remit across all of its services.To do this, we sometimes haveto stand up for the BBC against attacks from self-interested
critics. We will continue to fulfil this role when it is needed.
But we know that independence is a privilege which we must
continue to earn.This is why, in February, I announced a seriesof reforms designed to modernise the governance of the BBC.
These will enable the Governors to concentrate on ensuring
the BBC is delivering the public interest and enable themanagement to focus on the day-to-day running of the BBC.
We will judge these changes a success if the BBC’s independence
is protected and it continues to deliver distinctive programmes
and services to everyone in the UK.

A key objective for all BBC services is to stretch their ambitionand provide more programmes of indisputable quality in moregenres. Even a year which included The Blue Planet, The Way
We Live Now, Perfect Strangers, Conspiracy, A History of Britain
and the BBC Radio 3 Awards for World Music, not to mention the
launch of our new arts and culture channel, BBC Four, was notenough to convince everyone of our unremitting commitment
to quality.The Governors found, however, that, week in, week
out, throughout the year, the BBC sought – not just on BBC
One but across its portfolio of channels and services – tostretch the imagination and to expand the horizons of its
viewers and listeners.
Nevertheless, the BBC can do even better on a moreconsistent basis. Arts and political programmes are two areas
where the BBC faces a similar challenge: to engage a broader
audience while still providing programmes for enthusiasts.
The objectives we have set for the BBC in 2002/2003, laidout in this Report, reflect these priorities. As has been the casethroughout our history, it will be the job of the Governors tohold the organisation to these demanding objectives.
The BBC has always been a mass market broadcaster, but one
which seeks to serve the public in a way which is uniquein the world. As we travel further down the path to a digitalage, nothing in our core purpose has changed. Quality anddistinctiveness in all of our output is our ultimate goal.

Gavyn Davies Chairman

Annual Report and Accounts 2001/2002 3

Running the BBC

The BBC’s Board of Governors is responsible for ensuringthat the BBC fulfils its public service obligations. It safeguards
the BBC’s independence, sets key objectives, approves strategy
and policy, monitors performance and compliance and ensures
public accountability.The Governors appoint the DirectorGeneral and, with him, other members of the Executive
Committee, and determine their remuneration.
The Director-General is the BBC’s chief executive andeditor-in-chief. BBC operations are run by the directors of ten
programming and broadcasting divisions and five professional
services, and by the chief executives of the BBC’s commercial
services.They report to the Director-General and, together,make up the Executive Committee.

The Executive Committee is responsible for running the BBC,proposing key objectives, developing strategy and policy in thelight of set objectives, and operating all services within thestrategic and policy framework approved by the Governors.
The Board of Governors and the Executive Committee sharethe same overall ambition – to ensure that the BBC serves the
public interest as effectively as possible within its remit andfunding. Neither body has other interests, such as shareholder
value, to distract them from this.They work with each otherto achieve this fundamental aim.

Board of Governors
Gavyn Davies OBE Chairman of the
BBC since October 2001. Previously
Vice-Chairman from January 2001.
Also chairs the Commercial
Committee and the Remuneration
Committee. Born in 1950. Economic
adviser to 10 Downing Street Policy
Unit from 1976 to 1979 andeconomist with Phillips & Drew
and Simon & Coates before joining
Goldman Sachs in 1986 as Chief
Economist. From 1991 to 1999 he
was a member of HM Treasury’s
independent forecasting panel; hasalso been an economic adviser tothe House of Commons Treasury
Select Committee and a visiting
professor at the London School of
Economics. In 1999 he chaired an
independent inquiry into the future
funding of the BBC. He is an Advisory
Director at Goldman Sachs.
Rt Hon The Lord Ryder ViceChairman of the BBC since January
2002. Chairman of the Fair Trading
Compliance Committee and memberof the Remuneration Committee.
Born in 1949. Political Secretary to
Margaret Thatcher from 1975 to
1981. MP for mid-Norfolk from 1983
to 1997. Parliamentary Under Secretary

4 Annual Report and Accounts 2001/2002

at MAFF; Economic Secretary to theTreasury; Paymaster General thenGovernment Chief Whip from 1988
to 1995. Privy Councillor since 1990.
Created life peer in 1997. Directorof Ipswich Town FC since 1999.
Chairman of Eastern Counties Radio
until his appointment to the BBC.
Sir Richard Eyre CBE BBC Governor
since 1995 and member of theProgramme Complaints Committee.
Born in 1943. Freelance theatre, film
and television director and writer.
Directed and co-wrote the Oscarwinning film Iris. After ten years inregional theatre in Leicester, Edinburghand Nottingham, was Director of theRoyal National Theatre from 1988 to
1997, directing 27 productions andproducing over 100 more. Series
Producer of BBC TV’s Play for Todayfrom 1978 to 1981.
Dermot Gleeson BBC Governor
since November 2000. Member of the
Audit Committee and the Commercial
Committee. Born in 1949. Executive
Chairman of the M J Gleeson Group
Limited. A director of the Housing
Corporation from 1990 to 1995,
and of the Construction Industry

Training Board since 1995. Former
Head of the Home Affairs Sectionof the Conservative Research
Department and a member ofChristopher Tugendhat’s cabinet in
the European Commission from 1977
to 1979.

and Lansdales Pharmacies Limited.
Chairman of the Cancer ResearchCampaign in Wales, the Industrial Trustin Wales and, since April 2002, of the
Welsh Development Agency.

Baroness Hogg BBC Governor since
February 2000. Member of the
Audit Committee, the Commercial
Committee and the Remuneration
Committee. Born in 1946. Economist
with extensive experience of business,government and the media. Chairmanof 3i Group and also of Frontier
Economics. Director of P&O Princess
and GKN. Sarah Hogg was Head of
the Prime Minister’s Policy Unit from1990 to 1995 and was made a life
peer in 1995.

Professor Fabian Monds CBE
The BBC’s National Governor for
Northern Ireland since August 1999.
Member of the Programme
Complaints Committee and Fair
Trading Compliance Committee. Bornin 1940. Specialist in communications
and information systems. Chairmanof Invest Northern Ireland and of theNorthern Ireland Centre for Trauma
and Transformation in Omagh. Former
Pro-Vice Chancellor of the University
of Ulster. Founding partner of Medical
and Scientific Computer Services
Limited and WesternConnect Limited.

Roger Jones OBE The BBC’s National
Governor for Wales since December
1996 (retires December 2002).
Member of the Audit Committee andFair Trading Compliance Committee.
Chairman of BBC Children in Needand the BBC’s Pension Fund
Trustees. Born in 1943. Founded Penn
Pharmaceuticals in the early 1980s andis also director of Agropharm Limited

Dame Pauline Neville-Jones DCMG
BBC International Governor since
January 1998. Chairs the Audit
Committee and the Governors’ World
Service Consultative Group andmember of the Programme Complaints
Committee and Remuneration
Committee. Born in 1939. A career
member of the Diplomatic Service
from 1963 to 1996, including a fiveThe Board of Governors, from left
Back: Lord Ryder, Professor FabianMonds, Sir Robert Smith, Sir Richard
Eyre, Baroness Hogg, Ranjit Sondhi
Middle: Dame Pauline Neville-Jones,
Gavyn Davies, Dermot Gleeson
Front: Roger Jones
Below: Sir Anthony Young.

year secondment in Brussels and three
years as Political Director in theForeign and Commonwealth Office.
From 1996 to 2000 she worked for
NatWest markets and its corporate
advisory arm, Hawkpoint Partners. She
is Chairman of Qinetiq Group plc andof the Information Assurance Advisory
Council.
Sir Robert Smith The BBC’s National
Governor for Scotland since August
1999. Chairman of the Programme
Complaints Committee and memberof the Commercial Committee. Bornin 1944. Chairman of the Weir Group
from July 2002, member of the Boardof the British Council and member of
the Judicial Appointments Board for
Scotland. Formerly Chief Executive
and Vice-Chairman of Deutsche AssetManagement, a director of the Financial
Services Authority and Chairman of
the Board of Trustees of the National
Museums of Scotland.
Ranjit Sondhi CBE BBC Governor
since August 1998 with special
responsibility for the English Regions.
Chairman of the English National
Forum and member of the Programme
Complaints Committee. Born in 1950.
Senior Lecturer at the University ofBirmingham’s Westhill College.Trusteeof the National Gallery and Chairmanof the Heart of Birmingham Primary
Care Trust. Former Deputy Chairmanof the Commission for Racial
Equality and former member of the
Independent Broadcasting Authority
and the Radio Authority.

Sir Anthony Young BBC Governor
since August 1998 (retires July 2002).
Member of the Fair Trading
Compliance Committee. Born in 1942.
Current President of the TUC General
Council. Senior Deputy General
Secretary of the Communication
Workers Union (CWU) since 1998.
Formerly General Secretary of the
National Communications Union until
its merger with the Union ofCommunication Workers to form
the CWU. European Co-Presidentof the Union Network International.
Member of the Employment Tribunal
Steering Board.

Sir Christopher Bland was Chairmanof the BBC until September 2001 when
he resigned to become Chairman ofBritish Telecom plc.
Heather Rabbatts CBE also served
as a BBC Governor from March 1999
until her resignation in December 2001
to take up the post of Managing
Director of 4Learning at Channel 4.

Annual Report and Accounts 2001/2002 5

Director-General’s review

By any standards it has been a remarkable year at all levels –global, national and local.And on each level the BBC has risen
to major broadcasting challenges, demonstrating what it iscapable of and why it remains one of the world’s mosttrusted and valued broadcasters.
The BBC World Service’s role as a beacon of independence
and integrity even in the most difficult and dangerous conditions
has rarely shone more brightly. In the aftermath of 11 September
the Afghan people turned in their millions to the Persian andPashto services for unbiased reporting of what was happening
to their country.The service, which won the Sony Radio
Academy’s 2001 Award, remains a model of the BBC’s
purpose and values.
On the day that the conflict began, 35 million people in the UK
tuned to the BBC for its coverage of the attacks on America –on television, on radio and on the web. For news of the Queen
Mother’s death and coverage of her funeral, again the BBC was
the broadcaster of choice for three-quarters of the audience.
And on General Election night last June it was BBC radio andtelevision to which the nation turned.
When whole communities come under unprecedented threat,as happened in areas like Devon and Cumbria as the blightof foot-and-mouth disease destroyed thousands of livelihoods
last year, the BBC again comes into its own. BBC local radio
stations became the focal point around the clock for news, for
information and for putting communities in touch. BBC Radio
Cumbria, in particular, provided a quite extraordinary service tocommunities across the county for months on end and was,deservedly, Sony Station of the Year.
These viewing and listening figures and these accolades do notcome to us on a plate. None of them happens on the strength

The BBC launched five new digitalchannels in 2001/2002.
Above: Rugby Sevens from
Hong Kong.

6 Annual Report and Accounts 2001/2002of the BBC’s past glories.They come about, each time and ineach place, only because dedicated and inventive staff acrossthe BBC constantly rise to new challenges, constantly deliver
the strength and quality under pressure that distinguishes our
news and events coverage. If there is a better demonstrationof public service broadcasting, I haven’t found it.
In the past year we have launched BBC interactive television
services, which have achieved a reach of more than eight million
viewers from a standing start, and three new digital television
channels and two new digital radio services. By the end of 2002
three more digital radio channels will be on air and we remain
hopeful of winning Government consent for the launch of
BBC Three.
In April 2000 as part of the One BBC initiative we set ourselves
the target of reducing the proportion of our income spent on
running the BBC from 24% to 15% within four years. By March
2002 we had already achieved it, two years early. Partially as aresult of this, we have been able to increase programme spend
in the past year by a record £270million, and this has started
to make a real difference to the quality and ambition of what
we have produced. We plan to increase programme spend by
a further £180million in 2002/2003.
BBC One has begun to develop the richer mix of programmes
we promised, with more drama and landmark factual
programmes.The channel also overtook ITV in audienceshare for the first time in 2001 – a lead it has held and indeed
increased in 2002. BBC Two’s audience share also rose –a remarkable achievement as more and more homes switch
to digital.
BBC Radio has had a sensational year in terms of audience
figures, with records broken by BBC Radio 4, BBC Radio Five

Above: The Flowerpot Men.
Left:The Xchange crew.

Live and above all by BBC Radio 2.The BBC’s Nations &Regions, marooned for too long on the outer edges of theorganisation, have come in from the cold and are spearheading
a closer relationship between the whole BBC and the distinctive
and diverse communities which make up our audience acrossthe UK.The north of England has also been better reflectedwith dramas such as Merseybeat, Linda Green and, more recently,
Cutting It and Auf Wiedersehen, Pet.
We have refocused our marketing and communications
activities in the past year and achieved a step change in the way
we talk and listen to our audiences, and we have modernised
our approach to human resources and the way we talk andlisten to our staff.
But our vision of One BBC hasn’t yet been achieved.That is why
in February we launched Making it Happen, to help us reach
our long-term goal of making the BBC the most creative
organisation in the world. We have shown over the past year
what a resourceful, inventive and dynamic organisation we are.
Imagine what still greater heights we can scale if we can release
all the innate creativity of every individual who works for us.

Greg Dyke Director-General

Township Opera, seen here performing
Carmen, followed conductor Charles
Hazlewood as he auditioned
untapped talent in South African
townships.

Liz Kershaw

7

Executive Committee

Greg Dyke Director-General since
January 2000, having joined the BBC
as D-G Designate in November 1999.
Previously Chairman and Chief
Executive of Pearson Television from1995 to 1999. Former posts include
Editor in Chief of TV-am (1983),
Director of Programmes for TVS (1984)and Director of Programmes (1987),
Managing Director (1990) and Group
Chief Executive (1991) at London
Weekend Television. He has also been
Chairman of Channel 5, Chairman of
the ITA, a director of ITN, Channel 4
and BSkyB and a non-executive
director of Manchester United FC.
Jenny Abramsky CBE Directorof Radio & Music since April 2000.
Responsible for BBC Radios 1, 2, 3, 4,
Five Live, the Asian Network, newdigital radio services,TV classicalmusic, Music Live, the BBC Proms
and the three BBC orchestras basedin England. Previously Director ofContinuous News. Former posts
include Controller of BBC Radio Five
Live, Editor, Radio News & Current
Affairs and Editor, Today programme.

Glenwyn Benson Joint Director,
Factual & Learning since March 2001.
Responsible (with Michael Stevenson)
for all general and specialist factual
programmes and content, and learningfor both adults and children, across TV,
radio and interactive media. Previously
Controller of Specialist Factual
programmes. Former positions include
Head of BBC Science and Editor,
Panorama.
Mark Byford Director of World
Service and Global News since
October 2001. Responsible for BBC
World Service (since 1998) andwill lead all international news andinformation services across radio,
television and new media. Previously
Director of Regional Broadcasting.
Former positions include Head ofCentre, Leeds and Home Editor,
TV News.
Stephen Dando Director of Human
Resources & Internal Communications
since June 2001 (replaced Gareth Jones,
who left in June 2001). Responsible for
all BBC people and organisation
The Executive Committee, from left
Standing: Peter Salmon, Mark Byford,
Caroline Thomson, John Smith,Rupert Gavin, Alan Yentob,
Carolyn Fairbairn, Pat Loughrey,
Michael Stevenson, Andy Duncan.
Seated: Glenwyn Benson,
Ashley Highfield, Roger Flynn,
Stephen Dando, Jenny Abramsky,
Greg Dyke, Jana Bennett (appointed
April 2002), Richard Sambrook.

8 Annual Report and Accounts 2001/2002

issues, including staff communications.
Previously global Human Resources
Director at Guinness Limited. Former
positions include Group Management
Development Director, Diageo, andspells with UDV Europe, United
Distillers, Ferranti International andAustin Rover.
Andy Duncan Director of Marketing& Communications since June 2001.
Responsible for all the BBC’s
marketing, publicity, press and PR,
customer services and audience
research activities. Previously European
Director for Unilever’s Food andBeverages division. Former positions
include UK Marketing Director thenEuropean Marketing Director with
Unilever’s UK Food and Beverages
division and Chairman of the Tea
Council.
Carolyn Fairbairn Director of Strategy& Distribution since April 2001.
Responsible for strategic planningand the distribution of all BBC services.
Previously Director of Strategy.
Former positions include Director ofStrategy, BBC Worldwide Limited,working in the Downing Street Policy
Unit and for McKinsey and Company.
Roger Flynn Chief Executive of BBC
Ventures Group since June 2001.
Responsible for the BBC’s commercial
media services divisions: BBC
Broadcast Limited, BBC Technology
Holdings Limited, BBC Resources
Limited and Kingswood Warren
Ventures Limited. Previously Managing
Director of Prudential Retail. Former
positions include General Manager,
World Sales and Distribution, British
Airways, and Commercial Director,
Virgin Communications Group.
Rupert Gavin Chief Executive of BBC
Worldwide Limited since July 1998.
Responsible for all of the BBC’scommercial consumer activities inhome markets and around the world.
Previously Managing Director of BT’s
Consumer Division. Former positions
include Director of Information,
Communications and Entertainment
for BT, and Deputy Managing Directorof Dixon’s Stores Group.

Ashley Highfield Director of New
Media & Technology since October
2000. Responsible for BBC internet
output, interactive TV and new
platforms (broadband, mobile etc),
the BBC’s technology portfolio,
technical innovation, and researchand development. Previously Managing
Director of Flextech Interactive,
the pay TV company’s new media
division. Former positions include
Head of IT and New Media for
NBC’s European Channels.
Pat Loughrey Director of Nations &Regions since May 2000. Responsiblefor BBC programmes and services
in Scotland, Wales, Northern Irelandand the English Regions. Previously
Controller, BBC Northern Ireland.
Former positions include Head ofProgrammes and Head of Educational
Broadcasting for BBC Northern
Ireland and teaching and broadcastingin Ireland and Canada.
Peter Salmon Director of Sport
since November 2000. Responsible
for all BBC Sport activity across TV,

radio and new media. Previously
Controller, BBC One for three years.
Former positions include Directorof Programmes at Granada TV,
Controller of Factual Programmes
at Channel 4 and Head of Featuresat BBC Bristol.
Richard Sambrook Director ofNews since March 2001. Responsible
for the BBC’s broadcast news
operations and the provision ofdaily news and current affairs
programming for all UK-wide BBC TV,
radio and online services. Previously
Deputy Director, News. Former
positions include Acting Directorof Sport, Head of Newsgathering,News Editor and Deputy Editor,
Nine O’Clock News.
John Smith Director of Finance,
Property & Business Affairs sinceApril 2000. Responsible for all
BBC finances including TV licencecollection and property strategy. Won
the Accountancy Age Financial
Director of the Year Award in 2001.
Previously with British Rail, overseeing

de-mergers. Non-executive Directorof Vickers plc until December 1999.
Member of the Accounting Standards
Board.
Michael Stevenson Joint Director,
Factual & Learning since April 2000.
Responsible (with Glenwyn Benson)
for all general and specialist factual
programmes and content, and learningfor both adults and children, across TV,
radio and interactive media. Previously
Director of BBC Education. Former
positions include Deputy Directorof Nations & Regions, BBC Secretaryand Deputy Editor, On The Record.
Caroline Thomson Director of Public
Policy since July 2000. Responsible
for the BBC’s main policies in editorial,
regulatory and compliance areas,
legal affairs and government relations.
Previously Deputy Director, BBC
World Service. Former positions
include Director of Strategy &Corporate Affairs, BBC World Service,
Commissioning Editor, Science &Business at Channel 4 and politicalassistant to Roy Jenkins in 1983.

Alan Yentob Director of the Drama,
Entertainment & CBBC division sinceApril 2000. Responsible for all creative
output in these areas, including BBC
Films, and for talent management
across the BBC. Previously Directorof Television. Former positions include
Controller of BBC One and BBC Two,
Head of Music & Arts and founder
Editor, Arena.
Mark Thompson was Director of
Television from April 2000 until his
resignation in December 2001 to
take up the post of Chief Executiveof Channel 4.
Jana Bennett OBE became Director of
Television in April 2002. Responsible for
the BBC’s output on BBC One, BBC Two,
BBC Choice and BBC Four. Previously
General Manager and Executive Vice
President at Discovery Communications
Inc. in the US. Former positions include
Director of Production at BBC, Headof BBC Science, Editor of Horizon andSenior Producer on Newsnight andPanorama.

Annual Report and Accounts 2001/2002 9

Delivering value for audiences
The BBC spent an extra £270million on programmes and services in 2001/2002,
the biggest increase in spending in the BBC’s history. On average people spent
19 hours 54 minutes a week with the BBC – 43.8% of their viewing and listening
and over a fifth of their leisure time (21.3%).

The additional programme spend was partly financed from an above-inflation licence fee increase, but mostly fromgood housekeeping.This included reductions in licence fee evasion, increased contributions from our commercial
subsidiaries and cutting overheads.The objective of spending 85% of BBC income on programmes was achieved
two years ahead of target.A more detailed review of the BBC’s finances is on pages 70 and 71.

UK broadcasting spend
The BBC remains committed to analogue services,
allocating over 87% of spend to them.
■ Digital services £278m

Total £2,591m■ Television £1,372m
BBC One £962m
BBC Two £410m■ Nations & Regions £416m
Nations & Regions television £252m
Nations & Regions radio £164m■ Radio £302m
BBC Radio 1 £38m
BBC Radio 2 £43m
BBC Radio 3 £53m
BBC Radio 4 £90m
BBC Radio Five Live £77m
BBC Asian Network £1m
BBC World Service expenditure was £205million.
The BBC World Service is funded by the Foreign andCommonwealth Office through a Grant-in-Aid.This
cannot be used to cross-subsidise other parts of the
BBC and is only used to fund the BBC World Service.

Children£81m
Speech – Local Radio(inc. Nations) £108m

Music &
Arts
£151m
Sport
£279m

£223m
£278m

BBC One and BBC Two Digital £nil
CBBC, CBeebies £20m
BBC Choice £53m
BBC News 24 £50m
BBC Parliament £4m
BBC Four/Knowledge £32m
Digital text and interactive £11m
Digital radio £8m
BBCi (internet) £100m■ Transmission and collection costs£223m
Licence fee collection costs £95m
Analogue transmission costs £75m
Digital transmission costs £52m

Factual &Learning£334m£1,372m£416m

Differences due to rounding.

Content spend
by genre
The biggest increases inspending were on drama
and entertainment as
part of plans to enrich
BBC One.

Drama
£324m

£302m

Spend on local TV andradio in the Nations
and English Regions
In addition to the local spend
shown below, £291million was
spent outside London on
network television and radio.

Northern Ireland£52m
Scotland£87m

Entertainment
£360m

News
£395m

Total: £2,032m
10 Annual Report and Accounts 2001/2002

Wales
£91m

EnglishRegions£186m

Total: £416m

Audience approval of the BBC
Mean score out of 10
6.8
6.5

2001/2002
2000/2001

Award-winning output from the BBC
During 2001/2002 BBC television and radio programmes andweb content won a string of major national and international
awards.These included:

Source: Pan BBC Tracking Study.



Weekly reach of BBC services
Television
Radio
Combined television and radio%
86.5 (88.4*)
63.4 (60.9*)
93.0 (94.4*)* 2000/2001 figures.
Source: BARB, RAJAR, age 4+, average 15-minute weekly reach for the year.
Reach figures for television have to be treated with caution this year due to a change in measurementby the BARB panel.

Despite increasing demands on leisure time, BBC services
reached 93% of the UK population.
BBCi internet use
Millions
5.6 (4.2*)

2001/2002* 2000/2001 figure.
Source: BBC server logs, adults age 15+. Average monthly use.

BBCi attracted an average of 33% of all UK adult internet users
over the year.
BBC share of viewing and listening
Total BBC television(including digital channels)
BBC One
BBC Two
BBC Radio

2001/2002
2000/2001
2001/2002
2000/2001
2001/2002
2000/2001
Q1 2002
Q1 2001

22 Gold Awards at the Sony Radio Academy Awards
16 Royal Television Society Programme Awards
 12 Royal Television Society Craft and Design Awards
 10 BAFTA Television Programme Awards
 10 British Soap Awards
 10 Broadcasting Press Guild Television and Radio Awards

9 Royal Television Society Sports Awards

8 CRE Race in the Media Awards

8 Royal Television Society Journalism Awards

8 Royal Television Society Educational Awards

7 BAFTA Television Craft Awards

7 EMMA Awards

7 One World Media Awards

6 BAFTA Children’s Film and Television Awards

5 Gold Promax Awards

4 British Comedy Awards

4 Golden Rose of Montreux Awards

3 Emmy Awards

3 Grierson Awards

2 Banff TV Festival Awards

2 Golden Globe Awards
2 Prix Europa Awards

1 BAFTA Interactive Award
1 Prix Italia Award
1 Webby Award 2001
 Queen’s Award for Enterprise (BBC Worldwide)Overall approval of BBC services and of the BBC as anorganisation continued to rise in 2001/2002.

%
38.4
38.2
26.5
26.8
11.1
11.0
52.6
52.1

Plus, Jim Broadbent won an Oscar for his performancein Iris, a BBC Films production.

Source: BARB, age 4+, average share for the year.
RAJAR, age 15+, average share for the year.

BBC One’s share has increased both in analogue and digital
homes, although, because the proportion of digital homes
has increased, overall share has fallen slightly. BBC Two’s sharecontinued to rise. BBC Radio achieved record audiences.
BBC Radio 2 added two million new listeners over the year.

Annual Report and Accounts 2001/2002 11

Performance against last year’s objectives
The BBC had a strong year in 2001/2002, in which almost all the 12 specificobjectives set by the Board of Governors were met.As importantly, it was a year
in which the BBC rose to the challenge of major, unforeseen events. Its responsein each case exemplified its dedication to the values of public service broadcasting.

The Governors’ assessment of the BBC’s performance against
the objectives for 2001/2002 is set out below.
1 Strengthen BBC One, as well as all core televisionand radio services, with a particular focus onoffering a richer mix of content
This objective was met

Top: Armadillo, based on a novel
by William Boyd, was one of a raftof new dramas on BBC One.
Above: Text Message by Jeanette
Winterson, a drama from the newRadio 3 series, The Wire.

12 Annual Report and Accounts 2001/2002

The Governors recognise the tension implicit in seeking
to strengthen the reach and share of BBC One and othercore services while maintaining their distinctiveness.
Nonetheless, they believe that the BBC can make programmesof distinction which appeal to large audiences and theinvestment of an additional £90million in BBC One in the
period from 2001 to 2003 is in direct support of thisobjective.

Highlights on BBC One in the past year ranged from The
Way We Live Now to Walking with Beasts, from Clocking Off
to The Blue Planet and from Your NHS to Only Fools andHorses.The number of annual hours of drama on BBC One
rose from 528 in 2000/2001 to 561 in 2001/2002. At thesame time docu-soaps fell from 48 hours in 2001 toan estimated 26 hours in 2002.The number of genres
broadcast in peak time on BBC One – 15 – continued
to be higher than any other broadcaster. During 2002
more arts programmes, documentaries and serious factual
programmes are being scheduled after the Ten O’Clock News.



Additional investment has helped BBC One reassert itself
as the primary channel for a broad spread of audiences
across the UK. Its share rose both in analogue homes(from 32.1% in 2000/2001 to 34.1% in 2001/2002) anddigital homes (from 18.2% to 18.9%).The aggregate figure
across all homes fell marginally (from 26.8% to 26.5%) as
more homes switched to digital, but across the calendar
year 2001, BBC One was the most-watched television
channel in the UK, for the first time since the 1950s.This
position has been maintained during 2002.

BBC Four News with George Alagiah
and Kirsty Lang.

Far left:The Blue Peter team’s summer
roadshow.
Left: A new look for BBC One.



Audiences for other core services generally rose during
the year. BBC Two’s share increased across all homes from
11.0% in 2000/2001 to 11.1% in 2001/2002, with rises bothin analogue homes (up 0.2%) and in digital homes (up 0.5%).



BBC Radio increased its reach by 1.8 million year on year
and its share from 52.1% in the first quarter of 2001 to
52.6% in Quarter One 2002. BBC Radio 2 gained two
million new listeners during the year and there were alsosignificant rises in reach for BBC Radio 4, BBC Radio Five
Live and BBC Local Radio (including services in the Nations).



3 Ensure we serve and are valued by currently
under-served audiences, particularly the young
and minority ethnic audiences
This objective was met in part

The BBC has a special responsibility, as a publicly fundedbroadcaster, to try to ensure that its programmes andservices offer value to audiences of all ages and from all
ethnic backgrounds.



BBC One’s share among 16 to 34 year olds fell by 0.8%
in 2001/2002, to 23.1%.This was greater than the channel’s
overall fall in share of 0.3% to 26.5%. BBC Radio, however,increased its listening among 15 to 34 year olds from
9.2 million in 2000/2001 to 9.7 million in 2001/2002 andBBC Radio 1 increased its reach in its target audienceof 15 to 24 year olds from 3.5 million to 4.0 million.



Although BBC Choice has increased its reach and share
during the year, the BBC still plans to replace it with a newchannel, BBC Three, explicitly targeted at younger audiences,with a unique high-quality programme mix in which news,
current affairs, education, music and the arts will account fora third of the channel’s new programming.This is dependenton permission from the Secretary of State for Culture,
Media and Sport.

Progress has been made in increasing on-screen diversity.
Popular dramas like BBC One’s Holby City and EastEnders
have successfully reflected multicultural Britain in new ways,
as have programmes on BBC Two such as Babyfather and
The Kumars at No. 42. Overall representation of minority
ethnic groups on BBC television, measured between
September and November 2001, was 11.8%.

2 Launch the approved new digital TV and radio
services, and monitor early performanceThis objective was metStrong public support for the BBC’s digital proposals wasdemonstrated in the consultation process during 2000 andthe current licence fee settlement provides earmarked
funding for new digital services until 2006/2007.Thechallenge set by the Governors in 2001/2002 was for the
BBC to launch services which can begin to play a distinctiverole in these new marketplaces, while recognising that,
especially in radio, initial audiences are likely to be small.
CBeebies and CBBC launched in February 2002. Both carrymuch higher levels of original British-made programming thanany of the commercial channels. CBeebies, for under-sixes,
has achieved critical success and high audiences among
young children in a very short period of time. CBBC,
targeted at six to 13 year olds, has made slower progressinitially in an especially tough market.



BBC Four launched to critical acclaim in March 2002 andattracted an audience reach of 5% in digital homes in its
first month on air – over twice the average achieved by its
predecessor, BBC Knowledge (three-minute reach figures).

The first two of the BBC’s new digital radio services werelaunched – BBC Five Live Sports Extra in February 2002
and 6 Music in March 2002. It is difficult to measureaudiences for digital radio at this stage.The three remaining
services – IXtra, the BBC Asian Network and Network Z(working title) will be launched before the end of 2002.

The BBC is still awaiting permission from the Secretary ofState for Culture, Media and Sport to launch its planned
digital channel for young adults, BBC Three.

Right: Heart of Harlesden.
Far right: Walking with Beasts,
a landmark factual programme which
linked interactive technology to thepower of television.

13

Performance against last year’s objectives

BBC One’s share among Asian viewers increased from
20.3% in 2000/2001 to 21.8% in 2001/2002, although thisstill remains below the UK average. Among black viewers,
however, share of viewing to BBC One fell from 20.9% to18.4% during the year.The story is similar on BBC Two.
In radio, too, listening by both black and Asian people
remains low, with 50% listening to BBC Radio each week
compared with 66% across the total population. Choice forblack and Asian listeners will be increased later in 2002
with the launch of 1Xtra, the new digital service dedicatedto black music culture, and the expansion of the BBC Asian
Network into a UK-wide digital station.

the Nations also increased, with expenditure rising from
£55million in 2000/2001 to £66million in 2001/2002. It isprojected to rise to over £90million in 2002/2003.


Increased investment in local television output in the Nations
during 2001/2002 helped BBC One’s share rise in peak timein Scotland by 0.6% and in Northern Ireland by 1.1%. BBC
One’s share in Wales remains above the network average.



Local radio, including services in the Nations, hit a newrecord in March 2002 with a weekly reach of 10.9 million
listeners a week. BBC regional news remains the market
leader in every Nation and Region at lunchtime and in thelate evening.The same is true of the main 6.30pm early
evening programmes except in Northern Ireland and theNorth East & Cumbria.

Considerable progress has been made in increasing the
localness of BBC services in England. New regional television
news services were launched for London, the South East,
East Yorkshire & Lincolnshire and the Channel Islands
during the year, together with new local radio services for
Oxfordshire, Berkshire and specific towns and cities suchas Swindon, Milton Keynes and Peterborough.Thirty-seven
Where I Live community websites have also been launchedacross England in a major expansion of the BBC’s local
internet presence.

4 Demonstrate improved services to the whole of
the UK as part of the BBC’s ongoing response to
devolution and regional diversity
This objective was met


The BBC has the same responsibility to serve audiencesin every part of the country as towards audiences of allages and ethnic backgrounds.The BBC’s response to
devolution and regional diversity has moved beyond
news and political reporting to entertainment and factual
programming.Tackling underperformance in the North ofEngland has been a priority.

The number of BBC One drama productions set andmade in the North in the past year has increased
significantly, including Linda Green, Merseybeat, Cutting It,
Born and Bred and Auf Wiedersehen, Pet. A new writing
initiative run with regional theatres, Northern Exposure, hasalso been a major success, attracting over 4,000 writers in
its first year.



BBC One’s share rose by 1% in the North East and 0.9%
in the North West. In Yorkshire and Lincolnshire, where
performance was already higher, the rise was 0.1%. All thesefigures contrast with BBC One’s overall fall in share of 0.3%,
though each remains below the channel’s average share
across the UK.
The proportion of network television programmes madeoutside London and the South East rose again, to a newrecord of 38%. Network programmes commissioned from

Right: BBC One produced a second
award-winning series of Clocking Off,starring Ricky Tomlinson.
Far right: BBC Radio Gloucestershireon the trail of foot-and-mouthdisease.

14 Annual Report and Accounts 2001/2002

5 Reinvigorate the creativity and capabilities of theBBC’s in-house production teams across the BBCThis objective was met


The BBC’s services are only as good as the programmes intheir schedules.The challenge for the year was to provide
a critical mass of new programming which really resonatedwith audiences.



BBC Drama has had a highly creative and successful yearwith new series such as Judge John Deed, Merseybeat andWaking the Dead joining long-running successes such as
Casualty and the reinvigorated EastEnders, which has risen
splendidly to the challenge of maintaining its quality anddistinctiveness while expanding to four episodes a week.
The BBC’s Specialist Factual departments have continued
their long record of success with new productions such as

Far left: Stig of the Dump continued
the strong tradition of children’s
drama on BBC One.
Left: Interactive choices from BBCibrought a new dimension to watching
the Winter Olympics.

The Blue Planet, Walking with Beasts and Son of God and theChildren’s department with Stig of the Dump and I Was aRat. Comedy successes included The Office, Happiness andManchild.
Radio, benefiting from the reintegration of production staff,
has had a strong year creatively, with highlights including new
comedy on BBC Radio 2, new writing in The Wire on BBC
Radio 3 and Dawn Chorus Day and the Poetry Weekend at
the Lowry on BBC Radio 4. BBC network, national andlocal radio won a total of 22 of this year’s 30 Sony Radio
Academy awards.
The television commissioning system is still not working at
maximum effectiveness or as collaboratively as it could infactual programming areas, and this is being addressed by
the incoming Director of Television and her team.

for Culture, Media and Sport for approval to develop
and launch a digital curriculum service.This would bea new public service from the BBC, allowing it to playa significant role, along with others in the public andprivate sectors, in the development of the world’s firstcomprehensive ‘Curriculum Online’ announced by theGovernment in December 2001.The service would
be available via the internet, providing teachers, children
and parents across the UK with a valuable new resourceand encouraging the uptake of e-learning.
8 Deliver greater value for money for licence payers
year on year through increased efficiency and more
effective commercial activities
This objective was metThis continuing objective requires the BBC to explore
ways of delivering the best possible value for money byfurther reducing its overheads and exploiting appropriate
commercial opportunities in both consumer and businessto-business markets.



Licence fee collection achieved a further 0.9% reductionin the evasion rate, which fell from 8.8% to 7.9% (using
the new DCMS methodology). Improvements in collection
provided the BBC with an extra £43million.



The outsourcing of property and facilities management willsave the BBC an estimated £83million by 2006/2007. New
premises across the UK will be more appropriate for amodern broadcasting organisation and more accessible foraudiences.



The introduction of a single finance system (SAP) across allparts of the BBC has reduced the number of suppliers from
140,000 to 31,000 and will halve finance headcount by 2004.



BBC Worldwide Limited contributed £106million to the
BBC this year and is on course to achieve its £210million
target by March 2007. BBC Ventures companies have been
formed to make significant savings for the BBC and toprovide another source of cash flow over time.

6 Achieve a step change in the impact on audiencesof the BBC’s new media services, includinginteractive televisionThis objective was met

The BBC’s aim is to become the UK’s number one digital
destination. A new media strategy designed to increase theattractiveness and impact of the BBC’s online services andto develop innovative interactive television offerings met
with considerable success during the year.
All internet and interactive services across the BBC wererebranded as BBCi last November.Traffic to the BBC’s
website increased by 70% during the year, with significant
growth in educational and children’s services. Interactive
television was launched to critical and popular success, withmore than eight million viewers accessing one of its newservices.

7 Make a compelling case for the BBC leading thedevelopment of a UK-wide digital curriculum andprepare the BBC to play this role
Fulfilling this objective is dependent on approval fromthe Secretary of StateIn May 2002 the BBC applied to the Secretary of StateLeft: 606 – Radio Five Live’s Saturdayphone-in dissects the football action.
Right: Up in Town, a BBC Two seriesof six poignant monologues starring
Joanna Lumley.

Annual Report and Accounts 2001/2002 15

Performance against last year’s objectives

9 Move towards the long-term goal of increasing
the percentage of licence fee income spent on
programmes to 85%

11 Improve diversity internally – to 10% of staff fromminority ethnic backgrounds by end of 2003, with anincrease from 2% to 4% at senior management levels

This objective was met – two years early

Progress continues towards achieving this objectiveThis objective, set in 2000/2001 to be achieved by 2003/2004,
has already been met.The cost of running the BBC was
reduced from 24% in April 2000 to 15% by March 2002.



10 Improve our openness and accountability
to all stakeholders
This objective was metThis continuing objective reflects the Governors’ aim
to ensure that the BBC is a model of openness andaccountability among broadcasters and other public bodies.

A new framework was developed for modernising BBC
accountability and dialogue with audiences in tandem withthe governance reforms announced in February 2002.
A new Governance & Accountability department has
also been formed to provide dedicated support to theGovernors in carrying out their central role of monitoringand supervising the BBC’s public interest remit.



New formats for public consultation were piloted during
2001/2002.This year’s Annual Report is designed to be
more transparent and accessible and for the first time will
be launched outside London (in Birmingham). Statementsof Programme Policy for each of the BBC’s services will be
published simultaneously.



Audience appreciation of the BBC has risen significantly
during the year. Asked “what is your general impression of
the BBC?” the average score, measured on a ten point scale,rose from 6.5 to 6.8 across the year.The BBC scoresconsistently higher than other broadcasters on thesemeasures. Support from opinion formers and MPs in similar
surveys also rose.

The past year has seen a steady advance towards achieving
the higher targets which were set last year, to be achievedby December 2003.The proportion of staff from minority
ethnic groups rose from 8.4% in March 2001 to 8.9% in
March 2002. Over the same period the proportion of senior
managers rose from 2.6% to 3.2%.

12 Drive a change in BBC culture to generate greatercollaboration
Progress continues towards achieving this objectiveCultural change takes time to achieve but there wasevidence of a shift towards greater co-operation between
staff working in different parts of the BBC during the past
year.This was reflected in the increased number of major
projects which brought staff from different parts of the
BBC together, including Your NHS, Walking with Beasts
and The Lost World.



The BBC commissions an annual poll from MORI tomeasure staff attitudes towards internal communication.
In 2001/2002 this showed a further 5% overall improvement
year on year and brought the BBC into MORI’s top ten
communicating organisations.



In February 2002 the Director-General launched Making
it Happen, designed to help achieve the long-term goal of
creating One BBC and making the BBC the most creative
organisation in the world by releasing the innate creativityof every individual who works for it.There are already signsof this initiative bearing fruit.

Left:Trinny Woodall and Susannah
Constantine telling us What Not
to Wear.
Right: Posh and Becks – alias Alistair
McGowan and Ronni Ancona.

16

Next year’s objectives
On the basis of last year’s review of performance and audience needs, these are theobjectives set by the BBC Governors for 2002/2003.

Strengthening BBC programmes and services
Underpin the BBC’s public service remit by extending therange and quality of its radio and television services, witha focus on broadcasting more high-impact, memorable
programmes, particularly arts and current affairs.
Strengthen the BBC’s digital services, to ensure that the overall
portfolio has something of value for everyone, provides a wide
range of interactive learning opportunities and helps to drive
digital take-up.
Connecting with all audiences
Bring younger audiences to BBC services by developing bold
and innovative programmes and content with a particularfocus on making the BBC’s news and current affairs more
relevant and engaging for this group without diminishing theBBC’s commitment to parliamentary reporting.
Continue to seek new ways of attracting audiences fromthe UK’s ethnic minorities, through both mainstream andtargeted services.

Ensure that the BBC is more representative of the audiences
it serves. In particular:
accelerate progress towards the BBC’s target of 10% of its
total workforce and 4% of senior management coming fromethnic minorities by December 2003
 increase the proportion of people with disabilities working
for the BBC.


Providing better value
Continue to increase the amount of money available to spend
on the BBC’s public services with a particular focus on:increasing the cash flow to the BBC from improved licencefee collection
 increasing the contribution of the BBC’s commercial
subsidiaries to its public services
 further reducing overheads
 improving efficiency in programme production whilst
maintaining quality of output.
Enhancing the BBC’s reputation at home and abroad

Ensure that the BBC is meeting the needs of audiences in all
nations and regions of the UK.

Earn greater appreciation from UK audiences for the BBC asan open, creative and trusted public service organisation.

Transforming the BBC

Build on the impact made by the BBC’s global news services
in the past year through a co-ordinated global news strategy
across radio, television and new media.

Make the BBC feel a more creative, collaborative and excitingorganisation, in which all staff fully understand its purpose
and values.

The Statements of Programme Policy which we publish inconjunction with this Annual Report explain in detail how eachof our services plans to deliver the BBC’s public service priorities
in 2002/2003.

Left: Juliet Stevenson reads Jane
Austen’s Persuasion, a Radio 4 Book
at Bedtime.
Right: Babyfather, award-winning new
drama from BBC Two which will
return for a second series.

Annual Report and Accounts 2001/2002 17

Review of services:Television
BBC Television’s three major objectives for the past year have been to strengthen
BBC One, achieving a richer mix of content on the channel; launch the planned new
digital services; and seek ways of giving a better service to currently under-served
audiences, including young people, ethnic minorities and viewers across the northof England.
capt

Above: David Suchet as Augustus
Melmotte in BBC One’s adaptationof Trollope’s The Way We Live Now.
Far left: Gimme, Gimme, Gimme with
Kathy Burke transferred successfully
from BBC Two to BBC One.
Left: Mouse-eared bat on BBC One’s
Natural World.

18 Annual Report and Accounts 2001/2002

The widest range
BBC One offered the widest rangeof peaktime programmes of any
broadcaster, from comedy to current
affairs, from science to the arts
The Lost World

Liza Tarbuck as fun-loving
Northern singer, Linda Green.

A year which began with media watchers predicting steadydecline for BBC Television as the digital age took further hold,ended with three new digital channels successfully launched,
and the creative and editorial renewal of BBC One well under
way.The channel’s share rose in both analogue and digital
homes. Even more against the prevailing trend, BBC Two’saudience share rose to a three-year high.
These achievements need to be seen in the context ofmulti-channel television now being available in almost halfof all UK homes, the vast majority of them digital. Nonterrestrial channels increased their combined audienceshare in the past year from 16.9% to 19.9% – and to 44.7%
in digital homes.
While many excellent new programmes and series haveappeared on BBC television in the past year, others – incommon with any creative organisation committed toinnovation and risk-taking – have occasionally fallen short ofthe best the BBC can achieve.And in some areas of output,
such as arts programming, the mix still needs to improve.
Events of the past year, together with some early successes
with new channels, are vindicating BBC Television’s strategy
of evolving, progressively, a portfolio of free-to-air channels
for the digital age: BBC One, BBC Two, BBC Choice (which
we plan to replace with BBC Three subject to DCMS
permission), BBC Four, CBBC and CBeebies, BBC News 24
and BBC Parliament.The BBC is committed to maintaining

core public service values across that whole portfolio, andprotecting the interests of analogue audiences by maintaining
the centrality of BBC One and BBC Two within this rangeof services.
BBC OneBBC One’s share for the past year was 26.5%, making it themost-watched channel in the UK. Peaktime share rose
marginally to 28.4%.
Last year’s Annual Report explained that it would take18 months before viewers would see the full benefit of theadditional investment in BBC One, the impact of moving ourmain news to 10pm and the development of fresh streams
of programming in different genres.The channel is on course
to achieve this by the autumn of 2002, having received an
additional investment of £36million in the past year, witha further £54million to follow in 2002/2003.
Much new programming of real quality and impact has alreadybeen brought to the screen in the past 12 months. Landmark
factual programmes included The Blue Planet, Walking with
Beasts, Child of Our Time and Your NHS, a major collaboration
between BBC One, News, Nations & Regions, Radio and New
Media, which drew 20 million viewers, listeners and online
users over the course of the day.

Above: Michael Gambon in Stephen
Poliakoff ’s Perfect Strangers.
Right: Michael Owen celebrates his
hat-trick with Steven Gerrard as
England beat Germany 5-1.

19

Review of services: Television

David Jason and Nicholas Lyndhurst
returned for the first of three new
special Only Fools and Horses.

BBC One responded outstandingly to the year’s major news
stories, including the General Election, the death of the Queen
Mother and, above all, the terrorist attacks on 11 September
and their aftermath.

BBC Two and the audience to BBC One’s live coverageof Germany v England in the World Cup Qualifiers peaked
at 14.6 million. Women’s curling came into its own as theunexpected highlight of the Winter Olympics, with 5.9 million
people watching its thrilling climax.

Only Fools and Horses returned on Christmas Day for the firstof three new specials, watched by 21.4 million viewers. Alistair
McGowan’s Big Impression provided a fine showcase for thetalents of Alistair McGowan and Ronni Ancona, Gimme Gimme
Gimme transferred successfully from BBC Two and All About Me
brought disability into mainstream comedy.

Rolf on Art won 6.8 million viewers, more than any television
programme about the visual arts has ever previously achieved.
The BBC is aiming to build on this success with more arts
programming on BBC One in the future.

Inevitably, not all attempts at innovation have worked.
Disappointments included the entertainment series Celebrity
Sleepover and The Joy of Text, a novel Saturday night experience
which did not altogether succeed.

Young audiences remain disproportionately lighter viewers.
Many programmes reflected multicultural Britain more effectively,
particularly BBC One’s popular dramas Holby City, Casualty and
EastEnders. BBC One’s share increased amongst Asian viewers
during the year but fell amongst African-Caribbean viewers.
Work will continue to increase the inclusive appeal of the channel.

Drama has contributed hugely to the channel’s critical andpopular success in the past year. The Way We Live Now, Messiah(with a sequel now in production) and Clocking Off were among
the highlights, together with Armadillo and The Lost World, aninnovative co-venture between the Science and Drama
departments. EastEnders had a formidable year, introducing
some of the most powerful storylines for years and becoming
Britain’s most-watched TV programme with the successful
introduction of a fourth episode on Fridays from August.
The Derby returned to BBC One, Wimbledon attracted morethan two-thirds of the adult population across BBC One andTotal television share (%)
all homes 2001/2002
■
■
■
■
■
■
■
Source: BARB, age 4+. Differences due
to rounding.

BBC One 26.5% (18.9%*)
BBC Two 11.1% (6.2%* )BBC digital channels 0.8% (2.1%* )ITV 1 25.7% (18.3%* )Channel 4 9.9% (6.2%*)
Channel 5 5.9% (3.7%*)
Other channels 19.9% (44.7%*)* Share in digital homes 2001/2002 shownin brackets.

Total BBC Television share was 38.4%(2000/2001 38.2%).

Mum’s the word – Kat (Jessie Wallace)and Zoe Slater (Michelle Ryan) in
EastEnders.

20 Annual Report and Accounts 2001/2002

Northern characters and settings have been more in evidence
in new dramas such as MerseyBeat and Linda Green. Audienceappreciation of the BBC rose across the North and over theyear BBC One’s share rose by 1% in the North West andby 1.1% in the North East – both above the network trend.
Channel share also rose slightly in Scotland, helped by popularsuccesses such as Two Thousand Acres of Sky and Monarch of theGlen, though it fell by 0.3% in Northern Ireland. Commissions
from outside London and the South East accounted for 38%
of total output in 2001/2002 – ahead of the 33% target and theprevious year’s record 37%.

Art for all
Research showed that more UK
adults watched Rolf on Art than visitedart galleries in 2001/2002

The rejuvenation of Daytime has contributed much to BBC
One’s overall success, helped by programmes like the Pebble
Mill drama series Doctors, which will now become a year-round
series, City Hospital and Bargain Hunt.
The year ended with the introduction of a new look for thechannel, with new logo, idents and Rush Hour, the brand filmin which a stunt artist bounds across rooftops to make sure
he’s home in time to catch unmissable programmes on BBC
One. Over the next year our aim is to ensure he has evenmore reason to take such risks.
BBC Two
BBC Two increased its audience share by 0.1% in the past year,
to 11.1%. Peaktime share rose to 10.2%. Both are remarkableachievements as increasing numbers of homes become digital.
£29million of new investment is being provided over two years
to support the channel’s central aim of creating bolder andmore distinctive programmes. In the past year this has produced
major pieces as diverse as Stephen Poliakoff ’s Perfect Strangers,
the Holocaust drama Conspiracy starring Kenneth Branagh, andTony Marchant’s adaptation of Crime and Punishment.The Islam
UK season provided a fresh series of perspectives on a faithwith an estimated 1.3 billion followers worldwide and The Trench
recreated the harsh environment faced in World War One by
the East Yorkshire Regiment with a group of 24 young volunteers
from modern-day Hull.
BBC Two continued to reinvent classic genres. How to be a
Gardener brought a refreshingly down-to-earth approach to thegenre, Louis Theroux returned in fine form and Trading Racesdelivered a fresh perspective on race issues by altering people’s
ethnic appearance and observing the results. A History of Britain
returned for a second series, and its creator and presenter,
Simon Schama, also offered a historian’s perspective on
the Queen Mother’s funeral (shown on BBC One).

Above: Rhona Martin launches thewinning stone to bring Olympic glory
to Britain.
Left: Blue Peter’s Konnie Huq gets the
Kumar treatment from Sanjeev
Bhaskar.

Annual Report and Accounts 2001/2002 21

Review of services: Television

Left:The drama-documentary Smallpox
2002: Silent Weapon, a powerful
exploration of the consequences oflarge-scale biological terrorism.
Right: A Pensioner calls a friend fromthe 2001 Chelsea Flower Show.

Smallpox 2002: Silent Weapon brought emergency planningto the fore in a novel docu-drama format, and Arena: Dirk
Bogarde and David Hockney: A Secret Knowledge for Omnibus
brought distinction to the channel’s arts coverage.
But if one programme defined the channel in the past year it
was surely the innovative workplace comedy series The Office,starring Ricky Gervais, which won a total of seven major awards,
including two BAFTAs and was voted best new comedy of2001 at the British Comedy Awards last December.
In a year of fine drama for BBC Two, As the Beast Sleeps,
Tales from Pleasure Beach and Band of Brothers all stood out,
and Babyfather won Diane Parish the RTS Best Actress award.
Bindi Millionaires, Heart of Harlesden and the comedy success
The Kumars at No. 42 brought the diversity of modern Britain
into the mainstream. Attachments, Dr Terrible and ‘Orrible, while
attracting disappointing audiences, demonstrated the BBC’s
support for innovation.
BBC Choice
While the BBC awaited the Secretary of State’s decision on
its plans to create BBC Three, BBC Choice continued to supply
an alternative approach to young adult viewers in digital homes,

increasing its reach and share to 16.3% and 0.5% respectively
by the end of the year.
Breezeblock, by Rab C Nesbitt creator Ian Pattison, was awell-received drama, Madonna’s Millions successfully blended
financial journalism and humour and Sex, Warts and All provided
a responsible look at the causes of sexually transmitted diseases.
Liquid News successfully developed new ways of providing news
for its target audience and was repeated nightly in a new slot
on BBC One.
CBBC, CBeebies
Taking the first steps to establish a complementary portfolioof public service channels for the digital age, the BBC launched
its two children’s channels in February, with a combined annual
budget of £37million.
CBeebies provides a dedicated space for pre-school children
to watch, play and learn. It has made immediate impact with
its target audience, and is already the number one channel
for younger children. It carries 90% EU programming andincludes a strong educational element, supported by a newinteractive television service.
The CBBC channel offers UK-produced drama, entertainment
and factual programmes, including news, for six to 13 year olds
with a heavy emphasis on interactivity. At least three-quartersof the channel’s output is made up of EU programmes. It is
taking longer to establish the brand in an area of the market

Above:Twinkle the Cat from
CBeebies’ Step Inside.
Left: CBBC presenter Angellica Bell.

22

Steven Spielberg’s Band of Brothers.

Breaking new ground
The BBC launched three new digital
TV channels in 2001/2002: CBBC,
CBeebies and BBC Fourwhere competition for children’s time, across all media, isnotoriously fierce, but early successes include the morning
Xchange block and the weekend Chart Show, a joint venturewith BBC Radio 1.
BBC FourMarch saw a confident launch for the BBC’s new channel
exploring culture, the arts and ideas. BBC Four, which replaced
BBC Knowledge, shared its first night debut with BBC Two andattracted an audience of over six million viewers. Excluding the
BBC Two audience, the channel achieved a three-minute reachof 5% in digital homes in its first month on air.
Early highlights included The Trials of Henry Kissinger, BritArt,
Robert Hughes’ Goya documentary Crazy Like a Genius andStrange New World, an evening analysing the new international
order six months after 11 September. BBC Four staged The
Resurrection Debate from Coventry Cathedral, reflecting thecurrent debate within the Church of England on the meaningof the resurrection. Ian Curteis’ The Falklands Play was screened
to mark the 20th anniversary of the war, and was subsequently
repeated on BBC Two.
BBC Four’s firmly international perspective was demonstrated inits commitment to showing some of the gems of world cinema– an area largely ignored by the host of commercial movie
channels – and by the development of a nightly half-hour news
bulletin with a distinctive emphasis on foreign affairs and abroad international agenda, hosted by George Alagiah.

Mother and son – Natasha Parry and
Adrian Lester in Peter Brook’s The
Tragedy of Hamlet on BBC Four.

Top: The Office with Ricky Gervais andMackenzie Crook, multi award-winning
new comedy from BBC Two.
Above: Kenneth Branagh and Stanley
Tucci star in BBC Two’s outstanding
holocaust drama Conspiracy – The
Meeting at Wannsee.

Annual Report and Accounts 2001/2002 23

Review of services: RadioIt has been a year of remarkable growth for BBC Radio as it rose to the challenge
of developing and launching five new digital services that will double the number ofBBC radio networks from five to ten in a single year.Two of them are already on air;the others will follow by the end of 2002.

Above: Live and Exclusive – Paul Wellerin concert for Radio 2 in the BBCRadio Theatre.
Right: On the beach – Trevor Nelson
broadcasting from Cyprus on Radio 1.
Far right: Radio 1’s Sara Cox in action.

24 Annual Report and Accounts 2001/2002

UK number one
BBC Radio 2 added two million newlisteners and became the UK’s mostpopular radio station
88-91 FMThe year ended with Radio 2, Radio 4 and Radio Five Live allachieving record reach figures (as did BBC Local Radio, seepage 33).This gave the BBC an overall weekly reach of 67.5%– the highest figure recorded under the present RAJAR
system – and a total share of listening of 52.6%.
Radio 2 added two million new listeners in a single year. For
the second year running it was Sony Station of the Year.The
overall fall in the amount of listening to Radio 1 during theyear was a concern, although its reach rose, particularly
among its target audience of 15 to 24 year olds.The underperformance of all the networks – with the notable exceptionof Radio 1 – among ethnic minority audiences requires
attention. Plans are being developed by each service to try
to strengthen their appeal to black and Asian listeners.
Overall network radio share has risen in most regions,notably the Midlands and North.A major development was
the creation of a new factual programmes unit in Manchester;
BBC Music Live attracted around 250,000 people to live music
events in Leeds, Bradford and York during May 2001; Radio 2
presented a special series of programmes from Nottingham
and Cardiff; and Radio 1 produced The Sessions in the Nations,with different weekly shows broadcast simultaneously in
Scotland,Wales and Northern Ireland.Total network radio
spend outside London remained at 31%.
The internet sites for each network have built on the early
success they achieved when launched in 2000 and now reachan estimated two million users a month. In the past year
monthly page impressions have risen from 17 million to 36
million, including a 75% increase in traffic to the Radio 1 site.
BBC Radio 1
Radio 1’s aim is to be the number one youth station. It plays
85% new music – more than any of its close competitors –and has remained the favourite station of its target audienceof 15 to 24 year olds, reaching 52.9% of this age group eachweek. However, its share of listening across the population(aged 4+) fell from 9.6% to 8.8%, and in its target age groupfrom 24.5% to 23.9%, across the year.
Breakfast Show with Sara Cox peaked at 7.8 million listeners aweek in the second quarter of 2001 – a three-year high. Sara’s
programme is the touchstone for millions of young people
and an important launchpad for Radio 1’s campaigns on
exams, getting into work and money management.The failure
to rein in comedian Ali G when he appeared as a guest was aserious lapse, given the age profile of many of the listeners
and stricter new guidelines have been put in place to avoid
similar incidents.The strength and depth of Radio 1’s specialist
music was enhanced this year with several new DJs joining
the station including Fergie,Yousef and Lottie.
In line with its public service remit, Radio 1 appointed
a politics specialist, Polly Billington, with a brief to engage
with younger listeners. She successfully fronted the network’s
General Election coverage, which included interviews withthe three main party leaders in clubs around the UK in frontof young audiences who also put their points directly to theleaders. Since then, she has tackled a series of policy issues
including drugs, crime and education with strong interactive
elements developed through Radio 1’s website, which now
attracts over one million regular users.
Radio 1’s emphasis on live performance saw the developmentof the One Big Sunday concept last summer with large-scale
events staged in Swansea, Manchester, Irvine, Middlesbrough,Plymouth and Leicester, where major artists played to over
60,000 young fans. Six open-air Dance Parties were staged
around the UK and a major New Year event took place in
Belfast. One disappointment was the enforced cancellationof the Love Parade in Newcastle after the City Council was
unable to satisfy local police over health and safety plans.
Total radio share (%) Q1 2002
■ BBC Radio 1 8.4%
■ BBC Radio 2 15.7%■ BBC Radio 3 1.2%
■ BBC Radio 4 11.4%■ BBC Five Live 4.5%
■ BBC Local Radio (inc. Nations) 11.4%■ Local commercial radio (254 stations) 37.7%■ National commercial radio (3 stations) 7.7%
■ Other commercial radio 1.9%
Source: RAJAR age 15+. Difference due to rounding.
Total BBC Radio share Q1 2002 52.6% (Q1 2001 52.1%).

Annual Report and Accounts 2001/2002 25

Review of services: Radio

Right: Britain’s number one –7.5 million people each week
joined Terry Wogan forbreakfast.

BBC Radio 2
The station’s primary aim in the past year has been to continue
to strengthen its appeal to new audiences while maintaining its
commitment to its core older listeners. A key measure of its
success is that it has increased its audience in both categories
and become the most listened-to station in the UK.Twenty-two
per cent more 35 to 54 year olds tuned in, taking the total toover five million, with the number of older listeners (55+) also
rising by 9% to 5.3 million.

the Cambridge Folk Festival and the Country Music Awards
from Nashville. New musical talent is actively supported
through the Young Folk Awards, Chorister of the Year and the
National Youth Brass Band and Big Band Competitions.

Breakfast with Wogan became the most listened-to breakfast
show in Britain with 7.5 million people tuning in every week.
This was one million more listeners than in 2001 – a featmatched by Ken Bruce and Steve Wright. At weekends Jonathan
Ross added 660,000 new listeners during the year. Jimmy Young
was knighted in the New Year’s Honours List and his move wasannounced to a new weekend slot from next year.
Commercial competitors are increasingly targeting the Radio 2
audience. One of the key features that will continue to distinguishthe station from its rivals is its programme range, which last year
extended from comedy such as Jammin’ and documentaries suchas Alan Whicker’s series on 70 years of British television, to aseason of Sunday Summer gala concerts by the BBC Concert
Orchestra and Faith in the Nation week, celebrating andexploring the broad spectrum of beliefs within the UK today.
Another essential element is the network’s commitment to live
music and events. In the past year these have ranged from Liveand Exclusive concerts featuring Sting, the Bee Gees, Elton John,
The Corrs and Paul Weller, to coverage of Celtic Connections,

The rich tradition of Radio 2 music documentaries continued
with, among others, The Colour of Music, narrated by Lionel
Richie, The Bob Dylan Story, presented by Kris Kristofferson, and Bill
Wyman’s look back at the history of British rhythm and blues,
R’n’B in Bright Lights.
BBC Radio 3/BBC Proms
Radio 3 has increased its emphasis on new work and live
performance in the past year, while also developing its jazz,
world music, drama and cultural programming. Its commitment
to offering listeners complete classical musical works, in context,
remains unique in UK radio, as does its patronage of the five
BBC orchestras and the BBC Singers.
The importance of live music was further strengthened with
the introduction last July of Sunday Live, showcasing music fromthe best international festivals such as Salzburg, Amsterdam
and Edinburgh. Distinguished orchestral leadership wasmaintained with Gianandrea Noseda succeeding Yan Pascal
Tortelier at the BBC Philharmonic and Ilan Volkov replacing
Osmo Vanska at the BBC Scottish Symphony Orchestra.
The BBC Proms attracted an average of 730,000 Radio 3 listeners– up 30,000 on last year – and over half of the concerts werecompletely sold out.They also attracted bigger live audiences,including a sharp rise in the number of first-time visitors (anencouraging 19% of the total). Proms in the Park sold out in
Gateshead and the Eden Project in Cornwall, and attracted
audiences of nearly 5,000 in Liverpool and 40,000 in London’sHyde Park.The programme for the Last Night of the Proms was
significantly changed at short notice to reflect the international
concern and mourning that followed 11 September.

Left: Jonathan Ross’s Saturday show
grew its audience to 5.3 million,
bringing over 660,000 new listeners
to Radio 2.
Right: Romanian gypsy band Taraf deHaidouks were Europe/Middle East
winners at the Radio 3 Awards forWorld Music.

26

All that jazz
444,000 people each week now listen
to jazz on BBC Radio 3 – 30% morethan last year

Julian Joseph

The first BBC Jazz Awards, jointly produced with Radio 2, andthe strengthened emphasis on world music exemplify Radio 3’scommitment to musical breadth. 444,000 people a week now
listen to jazz on the network – a 30% rise on last year. WorldMusic Day (1 January) saw live link-ups with musicians in studios
around the world, including a historic live music transmission
from Kabul, and Radio 3’s first Awards for World Music were
enthusiastically received by press and public alike.

capt

In speech, Radio 3’s Night Waves won critical acclaim forproviding the most ambitious cultural review and investigation
on air.The network also continued its commitment to longform drama and commissioned work from exciting new writers
such as David Greig and Ursula Rani Sarma for The Wire.
BBC Radio 4
Radio 4’s commitment to original journalism and its renewedemphasis on comedy have been key features of the past year.
Audience growth has been another, with the network now
attracting ten million listeners a week – 800,000 more than ayear ago. Growth was achieved across the UK, except in Wales,
but relative levels of listening remain low in the nations and thenorth of England.
This led to the decision to create a new Manchester-based
factual programmes unit for Radio 4. Established in January,
it contributed 70 programme items from across the north,including some for Radio 3, in its first six weeks of existence.
Original journalism comes in many forms. In the past yearon Radio 4 it has ranged from File on 4 and Face the Facts
to Farming Today’s coverage of the foot-and-mouth story,
to In Our Time, Letter from America and award-winningdocumentaries such as Roots of Homophobia and The Day They
Made it Rain. It has also brought innovations such as Dawn
Chorus Day, which followed the sun round the earth in thecourse of a day, reflecting on the different animal and bird
Left: Andy Kershaw, winner of two
Sony Golds and a Silver this year
for his world music programmes onRadio 3.
Right: British and US national anthems
were played back to back in a breakfrom tradition at the Last Night of theProms on 15 September last year.

27

Review of services: Radio

Right:The Children’s Cello Choirof the Amazon in Radio 4’s Music fromthe Rainforest.
Far right: Radio Five Live’s Wright(right) and Bright (left).

choruses, and Today programme co-presentations from Kabul,
Islamabad, Jerusalem, Washington, New York and Kuala Lumpur
in the wake of 11 September. In the breadth and depth of its
programming, the network increasingly appeals to people withan intelligent interest in public and foreign affairs seeking
exploration and analysis.
Comedy, led by Dead Ringers and the winner of this year’s SonyGold Comedy award, I’m Sorry I Haven’t a Clue, attracted nearlyfive million listeners a week while new successes included The
Now Show, Think the Unthinkable, the surreal comedy series The
Boosh and The In Crowd, featuring new writing and performing
talent from north-west England.

BBC Radio Five Live
Audiences to Five Live rose to 6.4 million – more than 750,000
higher than last year.The breakfast and drivetime duos of Julian
Worricker and Victoria Derbyshire and Peter Allen and Jane
Garvey both won Sony Gold awards, Chiles on Saturday won
the Sony Gold Sports award and Alan Green was voted Speech
Broadcaster of the Year.
Audiences for live sport rose to more than four million listeners
a week. Sport on 5 has been extended to offer sports journalism,
live coverage and breaking stories seven days a week and thestation’s all-important contract for Premiership footballcommentary rights has been successfully renegotiated.

The station rose to the challenge of reporting 11 September andits aftermath. Simon Mayo’s new afternoon slot introduced a
new approach to politics coverage, Nicky Campbell mounted
a special live simulcast with the BBC Asian Network to reporton the effects of the Gujarat earthquake and Fi Glover
Audiences for plays, stories and readings all increased during the increased the late night audience. Her fresh approach included
year. Drama spanned The Archers, with over 4.5 million listeners; broadcasting an entire programme on British race relations fromLittle Dorrit with Sir Ian McKellen; a new Alan Bennett play, Hymn; a Cleckheaton curry house.
The Stone Diaries, run across a single week in January, and A
Woman in Waiting, which won the Sony Gold award for drama. Documentaries are an increasing part of Five Live’s schedules.
My Sporting Life, presented by Denise Lewis, examined sport
Finally, the decision to re-run the 20 year old radio classic Lordof the Rings was vindicated when, over 13 successive Saturdays, as an agent of social cohesion while 73 Million to One raised
serious doubts about the conviction of solicitor Sally Clarke
it drew the highest audience for a radio drama in ten years.
for the murder of her two children.
Radio 4’s award-winning In Touch has covered issues such as thechanges in copyright law that allow greater access to books forvisually impaired people and the cultural issues surrounding
British Asian communities.

Above: Sue MacGregor (left)
who retired from Radio 4’s Today
programme after 18 years, shares her
Desert Island Discs with Sue Lawley.
Left: Chris Watson taking soundings onRadio 4’s innovative Dawn Chorus Day.

28 Annual Report and Accounts 2001/2002

Sports Extra!
The BBC launched its first new
digital radio station, BBC Five LiveSports Extra, offering increased
choice for sports fans
England defeat India, February 2002

Simon Mayo joined Radio Five Livelast May to present a new weekday
afternoon show.

capt

Digital radio
The first two of the BBC’s new digital radio services approvedby the Secretary of State last September are now on air.
BBC Five Live Sports Extra launched on 2 February withcoverage of Manchester United against Sunderland and will
provide licence payers with greater value from the rights heldby the BBC.
One month later 6 Music took to the air with a menu of classic
live recordings from the BBC’s archives mixed with favourites
from the 70s, 80s and 90s and a distinctive playlist of iconic
artists brought to the airwaves by presenters who areknowledgeable and passionate about music.
The three remaining services will be launched by the end of
2002. 1Xtra, a sister station to Radio 1, will provide the best incontemporary black music. Network Z (working title) will offera mix of entertainment, comedy, the best in radio drama andreadings and dedicated children’s programmes.The UK-wide
BBC Asian Network will build on the foundations laid by theexisting regional AM service to examine life in Britain today andacross the world from a distinctively Asian perspective. All theBBC’s digital services are available on digital radio, digital satellite
television and via the internet (rights permitting). Most are alsoavailable to digital cable subscribers. BBC radio will extend
digital transmission coverage from 60% to 85% of the UK
population by early 2004 and the supply of affordable digitalradio sets, a critical driver for growth, is at last in prospect.

Above: Phill Jupitus, the first voice on
new digital radio service 6 Music.
Early riser – Victoria Derbyshire, who
co-presents Five Live’s Breakfast
programme with Julian Worricker.

Annual Report and Accounts 2001/2002 29

Review of services: Nations & Regions
New programmes, more localised services and a stronger relationship with
communities in many parts of the UK have been achieved in the past year asa result of the BBC’s biggest-ever injection of new resources into the Nations
and Regions.

A £50million investment, to be completed in 2002/2003,
has created new television entertainment, comedy, drama andconsumer strands in Scotland, Wales and Northern Ireland andenabled us to increase the localness of television news, radio
services and especially the BBC’s online presence across England.
In parallel, the Nations have also contributed more televisionand radio programmes to the BBC’s networks, with expenditurerising from £64million to £78million in the past year. BBC One
highlights included Monarch of the Glen, Two Thousand Acres ofSky, Rockface and Film 2002 from BBC Scotland, Score from BBC
Wales and Messiah and Patrick Kielty Live from BBC Northern
Ireland. On BBC Two they included BBC Wales’s Tales from
Pleasure Beach and Lifters and BBC Northern Ireland’s As theBeast Sleeps with its powerful and fresh perspective on postceasefire Belfast.
Overall BBC performance improved in many areas. BBC One
outperformed ITV in Scotland for the first time ever, remained
well ahead of HTV in Wales, and rose to within four points of
UTV, ITV’s most successful local company, in Northern Ireland.
Audiences have also improved in the Midlands and North ofEngland.
BBC regional television news has continued to be the choice ofmost viewers at all points of the day.The 6.30pm regional news
remains the highest performing news slot anywhere on British
television, with a 32% share across the year and makes a key
contribution to BBC One’s overall performance.
Local radio, together with the Nations’ dedicated radio services,reached a record 10.9 million listeners a week in the firstquarter of 2002. BBC Radio Cumbria was voted Sony Stationof the Year in its category and BBC Radio Ulster won the News
Coverage Award for its reporting of the Holy Cross school
dispute.There were music Golds for BBC London 94.9’s
Charlie Gillett and BBC Three Counties Radio’s Big George.

Above: Farewell to Hector in BBC
Scotland’s Monarch of the Glen.
Right: Award-winning presenter Tam
Cowan takes to his taxi for BBC
Scotland.

30 Annual Report and Accounts 2001/2002

National interest
An extra £50million investment
is creating new programmes andservices across the UK

Sky High

capt

Many of the BBC’s buildings outside London have become
seriously run down over recent years. Within a new commercial
property framework designed to minimise costs to the licencepayer, work began on 16 new multimedia developments during
the past year. A further nine were completed, including Sheffield,
Edinburgh and Tunbridge Wells. Norwich is nearing completion.
ScotlandStrengthening television comedy and entertainment for Scottish
audiences has been the priority this year, alongside preparations
for a new twice-weekly year-round Scottish soap to be launchedthis autumn. Successes have included the new quiz show Caledonia
MacBrains, and comedy in The Live Floor Show.Tam Cowan won
two Royal Television Society (RTS) Awards for programmes
like the football-based comedy chat show Offside. In the Tartan
Shorts series, which showcases new Scottish drama talent, Cry
for Bobo won the RTS Regional Programme award.
It was an excellent year for Reporting Scotland which moved
to dual presentation in the summer and increased its audienceshare to 29%, opening up a 4% lead over its rivals.The
programme capped the year by winning the Prix Circom
2002 for Europe’s best regional news programme.
BBC Radio Scotland enjoyed its best audiences for two years,
reaching more than one million listeners a week and increasing
its share of listening to over 10%. The Lesley Riddoch Show, aSony Silver winner for the second year, Good Morning Scotland
and Saturday afternoon sport were strong performers.
Overall approval of the BBC has risen in Scotland over the past
year, though it remains below the UK average. Specific local
approval measures are also lower. A ‘connecting communities’
strategy, including local internet portals, offering tailored news,
information and interactivity to people in seven different
Scottish regions, is being developed to improve the social andgeographic reach of BBC services in all parts of Scotland.

Above: BBC Wales’s network drama
Tales from Pleasure Beach appealed toaudiences around the UK.
Left: The John Daly Show (BBC One
Northern Ireland) with guest Victoria
Beckham.

Annual Report and Accounts 2001/2002 31

Review of services: Nations & Regions

Stephen Evans reports from New Yorkfor BBC Wales’s O Flaen dy Lygaid.

Wales
Creating new programmes to appeal to viewers across Wales
has been the key goal for BBC Wales in the past year. Successes
on BBC One have included The Bench, a new high-volume drama
set in a South Wales magistrates’ court (which will now go out
in daytime on the BBC One network), the family drama Belonging
and strong factual series X-Ray and Life Matters.
At the same time, BBC 2W, the new digital ‘zone’ with anemphasis on Welsh leisure, arts and sport, has started to carveout a niche for itself with programmes as diverse as Hot Houses,
a local property magazine, History Hunters and live Friday nightrugby.
Wales Today maintained its dominant position by 12 share points
across the year. BBC Radio Wales appointed a new editor andsuccessfully introduced a livelier tone and style, broadening thestation’s appeal beyond its traditional older, predominantly South
Wales heartland. Its reach has risen slightly, to 17.6%, but thestation still needs to drive up listening hours. BBC Radio Cymru’s
weekly reach among Welsh speakers rose to 37%.
A pioneering project using new digital technology to enablepeople across Wales to tell their stories has met with great
success in different Welsh communities during the year andfive Where I Live sites, offering local internet services fordifferent areas of Wales, are being developed.
Northern Ireland
BBC Two NI Digital, a new ‘zone’ of dedicated programmes,
was established last November. New strands included Fair Play,Sky High, Big Crash and the entertainment review First Stop.
Give My Head Peace and The John Daly Show helped BBC One
dominate Friday nights. Other successes included The Children’s,
Country Practice and The Blitz, a season marking the 60th
anniversary of the major bombing raids on Belfast, which
BBC approval in the Nations and English Regions
2000 to 2002
Scotland
Wales
Northern Ireland
England total

Top: Ken Stott as DCI Metcalfe in BBC
Northern Ireland’s psychologicalthriller Messiah, for BBC One.
Above:The cast of BBC Wales’s new
drama series, The Bench, set in a South
Wales magistrates’ court.

South
Midlands
North

Source: Pan BBC tracking study.

32 Annual Report and Accounts 2001/2002

2001/2002
2000/2001
2001/2002
2000/2001
2001/2002
2000/2001
2001/2002
2000/2001
2001/2002
2000/2001
2001/2002
2000/2001
2001/2002
2000/2001

Mean score out of 10
6.5
6.4
6.7
6.6
6.6
6.2
6.8
6.6
6.9
6.7
6.9
6.6
6.6
6.4

Where I Live
Local BBC websites already cover
37 cities and areas of England, withmore on the way

culminated in a nostalgic concert that revived the wartime
spirit.

capt

The higher profile of local entertainment and factual
programming contributed to a sharp increase in approval of therole the BBC plays in the local community. It has been a recordbreaking year for BBC Radio Ulster/BBC Radio Foyle, which
achieved a weekly reach of 40% for the past nine months.
BBC Northern Ireland’s online site consistently gained overtwo million page impressions a month. Further web initiatives
include linking people and their stories in new ways to drawout the common threads between and within communities
under the Sense of Place umbrella.
English Regions
A long-cherished goal was achieved last September with thecreation of dedicated television, radio and online services forthe capital, all under the new BBC London brand, together witha separate South East region based in Tunbridge Wells. Anotherwas realised in January with the launch of regional news for
digital satellite viewers, using new interactive technology.
Increasing the localness and relevance of television, radio andonline services has been the year’s major objective. New
services have been introduced for Look North viewers in East
Yorkshire and Lincolnshire and for Spotlight viewers in the
Channel Islands. BBC Radio Berkshire has been fully separated
from BBC Radio Oxfordshire and split broadcasting developed
to reach specific towns and communities such as Swindon,
Milton Keynes and Peterborough.
Local online received unprecedented investment, with a further
22 Where I Live sites going live during the past year, bringing
the total to 37. London, Nottingham and Manchester were
outstanding performers. Seven more sites will follow in
2002/2003, focused on areas least well-served by local radio.
Average audience for regional news bulletins
Calendar 2001*
Millions
8

6.0

6

4.5
4

2.4

2.0

2
0

4.9

3.0

BBC OneLunchtime
RegionalNews

ITV1
Lunchtime
RegionalNews

BBC OneEarly
Evening
Regional
News

ITV1
Early
Evening
RegionalNews

BBC OneLate
Regional
News

ITV1
Late
Regional
News

Source: BARB 2001 (*Q1 2002 programme data is not yet available under the new
BARB system).

Top: Emily Maitlis presents the new
BBC London News.
Above: Producer Caz Grahamreporting for Sony Station of the Year,
BBC Radio Cumbria.
Left: One of over 250 Jam Cam sites
on BBCi.

Annual Report and Accounts 2001/2002 33

Review of services: NewsOne news story dominated last year: the attack on the World Trade Centre,
the collapse of the Twin Towers and the subsequent conflict in Afghanistan.
On 11 September, BBC News was the nation’s first choice as people sought
to learn what had happened and to make sense of it all.

The BBC’s public mission has always rested heavily on thedefining quality of its journalism and this was evident, not just in
the immediate aftermath of the attack on America, but also inthe days and weeks that followed, across all our news output.
BBC News reacted quickly on all fronts, producing 33 extra
hours of news programming across the five radio networks,
more than 40 hours of live rolling news for BBC World Service
and an extra 14 hours of news on BBC One and BBC Two.
This was supplemented with strong current affairs including
The World’s Most Wanted, One Day of Terror for Correspondent
on BBC Two and a special Analysis for BBC Radio 4.
Levels of audience interaction also reached an all-time high,with 15 million page impressions recorded to the BBCi News
website on 11 September and a record 23 million the following
day. Within five days 75,000 people had emailed their thoughts
and reactions as the world struggled to understand the mostshocking images for a generation. Surveys showed that a clear
majority of the audience considered the BBC’s news coverageon all media to have been the best.
BBC News 24 came of age as demand for the latest news
reached record levels. Significantly, the audience then stayed
at a higher level, with an average weekly reach of 3.3 million
in March 2002, a million higher than a year before and only
0.2 million behind Sky News. BBC News 24’s reach, however,including overnight simulcasting on BBC One, remains far
higher at seven million viewers a week.The enhancements
in production quality achieved in the past year will be taken
further in 2002/2003.
The BBC’s General Election coverage in June 2001 was again
the public’s first choice, with over 18 million people tuning to
the results between 10pm on Thursday night and lunchtime
the following day – more than double ITV’s audience. But theelection clearly failed to engage many of the public, especially

Above: Half-mast – an American flagin the ruins of the World Trade
Centre.
Right: BBC Political Editor Andrew
Marr reports from outside Number 10.

34 Annual Report and Accounts 2001/2002

Attack on America
On 11 September, 35 million people
in the UK tuned to BBC News on TV,
radio and online

Far left: BBC World Affairs Editor John
Simpson prepares to enter Afghanistan
undercover, dressed in a traditional
female burka.
Left: Orla Guerin reporting from Israel.

younger voters, and the BBC has embarked on a major review
of its political coverage with a view to modernising its output
without diminishing its commitment to Parliamentary reporting.
As Political Editor, Andrew Marr has already played a major rolein making BBC coverage more accessible – an achievement
honoured by major awards from both BAFTA and the Royal
Television Society in the past year.
High points in the past year’s current affairs output haveincluded a strong debut by Kenyon Confronts, which was thehighest-performing television current affairs strand last year withan average of 4.2 million viewers. Notable Panoramas included
Jeffrey Archer: A Life of Lies and John Simpson’s Afghanistan:
The Dark Ages, both attracting over five million viewers.
Audiences for some programmes in the series’ new Sunday
evening slot, however, remained disappointing. On BBC Two
Smallpox 2002: Silent Weapon achieved high impact and3.4 million viewers, and on BBC Radio 4 File on 4’s exposé
of the Independent Learning Account led to a change ingovernment policy.
Question Time travelled much more widely across the country,
broadening the profile of its live audiences and panellists andincreasing its ratings, especially among younger viewers but
errors were made in the tone and timing of the edition of
13 September when the US Ambassador was a panellist.
The Oryx libel case was another cause of concern (seepage 47).

The Ten O’Clock News continued to perform strongly in its new
slot, with 5.1 million viewers over the year, and audiences forboth Breakfast News and the One O’Clock News rose.The Six
O’Clock News fell back slightly after Home and Away moved
to a new slot on Channel 5, but it remained well ahead of
ITV’s early evening news.
Business coverage was strengthened across the output,
led by the new Business and Economics editors, Jeff Randall
and Evan Davis. New posts were created to improvereporting from the North of England, including a social affairscorrespondent, a politics correspondent, a BBC Radio 1
reporter and a BBC Radio 4 news post.
As the BBC rolls out its new digital TV and radio channels,
distinctive news services are being provided by BBC News,
tailored to the interests and needs of their specific audiences.
These are already on air for BBC Four and 6 Music, with 1Xtra
to follow later in the year, with its own 15-strong news team.
A closer relationship is being developed to support the BBC
Asian Network’s UK-wide journalism as the station prepares
to go national.

Average audience for network news bulletins
Calendar 2001*
Millions
8

5.9

6

5.1

5.1
4.3

4

2.9
2.0

2
0

BBC OneO’ClockNews

ITV1
LunchtimeNews

BBC Six
O’Clock
News

ITV1 Early
EveningNews

BBC TenO’Clock
News

ITV1
Ten/Nightly
News

Source: BARB 2001 (* Q1 2002 programme data is not yet available under the new
BARB system).

Jeremy Paxman on the set of BBC
One’s General Election nightprogramme, Vote 2001.

Annual Report and Accounts 2001/2002 35

Review of services: New MediaThe past year has seen major advances for BBC New Media, with the creation of
BBCi bringing together previously separate services, the launch of ground-breaking
interactive digital television and substantial growth in traffic to the BBCi website.

Above: Walking with Beasts caught
viewers’ imagination and extended
their involvement through enhanced
interactivity.
Right: Kitchen tips from BBCi.

36 Annual Report and Accounts 2001/2002

Logging on
The BBCi website is the mostvisited content site in Europe

BBCi on the web
The BBC’s web strategy aims to foster a range of distinct digitalcommunities, providing them with information and interaction.
250 message boards are now live on the site, attracting 250,000
messages a month, and live online chats are providing uniqueaccess to celebrities and experts.The local dimension of BBCi
has also expanded during the past year with websites for
Scotland, Wales and Northern Ireland as well as 37 WhereI Live sites now live across England.
The sites created for major BBC programmes such as Walking
with Beasts, Living with Cancer and Blood of the Vikings fulfil two
aims.They provide added value to audiences watching or
listening to major programmes or series and also strengthen
the online content that is available in key categories such aslearning, health, science and history.

Wimbledon Interactive last June, offered viewers a choice offive different live matches and was watched by 4.5 million
viewers. It was followed by other major sports events: the Open
Golf from Royal Lytham, the Winter Olympics from Salt Lake
City and the FA Cup.
BBC Children in Need broke new ground this year wheninteractive television enabled viewers to make donations fromtheir armchairs with a click of the remote control, raising over
£500,000 in this way. Other entertainment innovations haveincluded Top of the Pops, The Saturday Show and Antiques
Roadshow, all offering users new kinds of choice and interactivity.
In January 2002 BBCi enabled the English Regions to introduce
an interactive application offering digital satellite viewers achoice of five different regional news programmes.The six
remaining services will be added before the end of 2002.

The whole BBCi website was radically remodelled in November
2001, making it easier to use and providing for the first time
Over 100 different interactive applications have been launched
a consistent look, common navigation principles and searchin the course of the year. BBC News Interactive provides multifacilities across all pages and sections of the site.
streams of the day’s major news stories and was watched bythree million viewers in its first six weeks on air. Other roundOver the past year traffic to the BBC’s website has continued
the-clock services include CBeebies games and information andto grow, with reach among internet users rising from 28.7% toeducation offerings such as travelcams and GCSE Bitesize on
34% and monthly page impressions (PIs) from 322 million indigital cable platforms.
March 2001 to 549 million in March 2002.
New technologies
BBCi’s achievements were widely recognised by both the new
BBC New Media’s search for innovative ways of using new
media press and by the industry during 2001/2002. Nine major
technology never stops. A BBC partnership involving the Factualawards were won, including two BAFTAs, a Promax, an EMMA,& Learning division and the BBC’s Yorkshire region is developinga Sports Industry Award and the Prix Europa (for the BBC
pioneering community and learning services for people in theRadio 1 website).
Hull area served by a local broadband infrastructure as yet
unique in the UK. During the past year BBC broadband content
BBCi on television
has also been provided to Freeserve,Telewest and AOL
BBCi aims to create high-quality, innovative interactive services
subscribers (ensuring that it is only distributed to licence payers
across all digital television platforms.These have already beenin this country) and a new WAP service supplying news, sport
used by over eight million viewers.The first major event,and listings to mobile phone users was launched.
Monthly BBCi website page impressions
March 2001 to March 2002 (millions)■ Other■ Drama, Entertainment

600
500

and Children’s

400■ Sport■ Factual & Learning■ News

300
200
100
0
M

A

M

J

J

A

S

O

N

D

J

F

M

Source: BBC server logs. Only divisions with over 60 million page impressions at March 2002
are shown.
* Other includes Radio and Music, World Service, Nations and Regions and Homepage.

The Saturday
Show goesinteractivewith Nihal.

37

Review of services: Learning
The BBC’s educational role sits at the heart of its public service remit.The primarychallenge is to develop that learning dimension across all BBC output, harnessing newtechnologies as well as traditional ones, and creating popular and effective forms oflearning for 21st century Britain.

Above and right: How to Build a
Human told the extraordinary storyof how we are made and the way
genes and hormones shape us fromthe cradle to the grave.

38 Annual Report and Accounts 2001/2002

Wising up
10,000 people have gained NVQs
after completing the BBC’s Becoming
Webwise online course

Education is no longer regarded by the BBC as a discrete areaof activity pursued by a single department. Instead, the new
Factual & Learning division works with production divisions
across the BBC to build learning possibilities into theiractivities from the earliest planning stages.
Interactive learning is at the core of this approach – using
the power of television and radio to bring more people into
learning. Over the past year viewers’ and listeners’ interest
has been engaged by some of the BBC’s best and mostpopular programmes, then extended through the web orinteractive television. Users discover more about the subject,
developing practical skills or even taking follow-up courses
offered by academic institutions.This offers new ways oflearning, at users’ own pace, following whatever direction they
themselves choose, that are impossible with conventional
broadcasting.
Landmark factual programmes such as The Blue Planet,
A History of Britain, Walking with Beasts and How to Builda Human have successfully adopted this approach, between
them encouraging viewers to travel further into areasof natural history, science or history.
Similarly, How to be a Gardener, run in partnership with theRoyal Horticultural Society, achieved 900,000 page impressions
in a single week during its transmission – three times theusual traffic to the BBC’s gardening website. OneMusic,
developed with BBC Radio 1, offers aspiring young musiciansa one-stop shop for comprehensive information on thebusiness of music making in the UK today – from learning torecord a demo to devising a business plan for touring a band.
Community-based learning projects such as Nature on
Snowdon, the interactive local history initiative in Merseyside,and the BBC’s major broadband project in Hull havedemonstrated the potential to develop the local learning

Left and above: The Blue Planet –filmmakers travelled the world tocapture the life of the oceans.

dimension. So too have the BBC’s first Open Centres, which
offer both formal and informal learning opportunities throughnew technology, supported by local education authority
tutors.The first centre, in Blackburn, attracted 2,000
registered learners in its first year, more than a quarter ofthem unemployed people.
Ten thousand people have gained an NVQ accreditation ininternet literacy after completing the BBC’s Becoming Webwise
online course, developed in partnership with further
education colleges.The site also achieved up to 850,000 page
impressions (PIs) a week. Skillswise, launched during the year,
allowed people to improve their literacy and numeracy skills
online, supporting the national drive to raise standards.
The BBC took eight out of 11 RTS Educational Awards. It also
maintained its output for schools across all media.The GCSE
Bitesize and Standard Grade Bitesize online revision sites
continued to demonstrate their value, attracting a record
number of hits, 4.3 million in a single week in the run up to
the 2001 summer exam season.
In May 2002 the BBC applied to the Secretary of State forCulture, Media and Sport for approval to develop and launcha ‘digital curriculum’ service.This would be a new public
service from the BBC, allowing it to play a significant role,
along with others in the public and private sectors, in thedevelopment of the world’s first comprehensive ‘Curriculum
Online’, announced by the Government in December 2001.
The service would be available via the internet, providing
teachers, children and parents across the UK with a valuable
new resource and encouraging the uptake of e-learning.
The BBC regards the proposed digital curriculum as one of
the most important elements of its education offering and,if the service is approved, will work with teachers and othersin the industry to ensure its successful implementation.

Alan Titchmarsh’s How to be a
Gardener attracted three times theusual traffic to BBCi’s gardening
website.

Annual Report and Accounts 2001/2002 39

Review of services: BBC World Service
At times of world conflict the BBC World Service, with its core values ofaccuracy, trust and impartiality, has often found itself playing a crucial role
for local people caught up in events. Nowhere in recent times has this been
more true than in Afghanistan in the past year.

Above: William Reeve (right) and
Rageh Omaar in the BBC’s Kabul
office.
Right:Taleban officials listening to the
BBC World Service.

40 Annual Report and Accounts 2001/2002

Global standing
BBC World Service won the top
Sony 2001 Award for its coverageof 11 September and Afghanistan

capt

Under Taleban rule, with no television and no credible national
newspapers, radio was the main source of news andinformation. Listening to the BBC’s Pashto and Persian services
has been a way of life in Afghanistan, and the war-torn
population tuned in their millions to what is a unique lifeline ofaccurate and independent information in their ravaged country.

Nepali section, responded to the dramatic murder of almost
the entire Nepalese royal family in Kathmandu by doubling its
output and working round the clock as official government andpalace sources provided scant information on the shootings. Major
coverage of the Zimbabwe presidential election was achieved
despite the fierce reporting restrictions imposed on the BBC.

Broadcasts on these key language services and in Arabic, Urdu
and English were expanded rapidly after 11 September. Shortwave transmission power was boosted and an additional
medium-wave transmitter hired in the region to improve
distribution.The Foreign and Commonwealth Office provided
an additional £2.8million to support the immediate response.

The overall global radio audience for the BBC World Service
fell by three million in the past year, from the record high of
2001, to 150 million weekly listeners.These figures reflect asteep decline in radio consumption in India, where fewer than
one in four people now listen to any radio. However, the global
audience figure does not take account of high listening in areas
like Afghanistan and Somalia, where it is not possible at present
to carry out comprehensive, reliable audience surveys.

Within minutes of the first attack on the World Trade Centre,
the World Service English language service began the longest
continuous broadcast in its history, lasting more than 40 hours.
A special edition of its interactive phone-in programme, Talking
Point, generated 30,000 emails from across the world.
But the story does not end there.Through the work of theWorld Service Trust, the BBC has played a central role in thereconstruction of the media in Afghanistan, including training
journalists, providing technology support and helping equip new
radio studios. More than 150 journalists have already received
training from a team led by William Reeve, previously the BBC
correspondent in Kabul.
In recognition of its response to 11 September, the BBC World
Service won the top Sony Radio Academy 2001 Award, withspecial praise for its outstanding coverage in Afghanistan. Baqer
Moin, Head of the Persian and Pashto services, also received
the Commonwealth Broadcasting Association’s most prestigious
honour, the Elizabeth R Award, in recognition of the extraordinary
contribution made by his teams throughout the conflict.
One of the BBC World Service’s smallest language teams, theNearly 30% of listeners, seven million more than a year ago,
now access the BBC World Service through the growing
network of nearly 2,000 local broadcasting station partners
around the world. Listeners to FM re-broadcasts in the USA
rose by 25% to their highest level ever, 2.9 million, and inAustralia they doubled to two million. Both areas saw direct
short-wave transmissions discontinued or reduced last year
in response to audiences’ changing listening habits.
The BBC World Service’s multilingual website achieved dramatic
year-on-year growth, with usage rising by 92% over the year, andwas judged the world’s best radio website in the 2001 Webby
Awards.
BBC Monitoring, based at Caversham, responded to theparticularly high demand for fast and accurate global media
monitoring in the past year. It provided key source material
in the wake of 11 September for stakeholders including theForeign Office, the Cabinet Office, the Ministry of Defence
and the BBC. Customer satisfaction ratings are at their highest
level ever.

BBC World Service/World News growth
in internet traffic
March 2002
March 2001

Million page impressions
75.3
39.3

Source: BBC Server logs.

Right: BBC World Service provided
extensive coverage of the Africa Cupof Nations.
Far right:The Nepali section doubled
its output in response to the murderof members of the Nepalese royalfamily.

Annual Report and Accounts 2001/2002 41

Putting audiences first
The BBC’s licence fee funding gives it a unique set of responsibilities. Chief among
them is to put the public interest first, in all that it does.This requires us to be moreaccountable than other broadcasters to the audiences that pay for BBC programmes
and services.

Modernising BBC accountability
The governance changes announced in February 2002
emphasise the Governors’ responsibility for ensuring thatthe BBC serves the public interest.To do this they must be
proactive in seeking the views of licence payers, responsive
to their needs and concerns, and open in accounting to themfor what the BBC does – especially as individual Governors
take responsibility for oversight of particular objectives.
From September 2002, a new public involvement programme
will be introduced, based on BBC objectives and BBC
Statements of Programme Policy and designed to makethe reporting of key decisions, plans and performance clear
to licence payers.
The BBC’s perceived Westminster and London bias, in terms of
where and to whom it is accountable, will also be addressed bystrengthening the connection between the Governors and theBBC’s Broadcasting Councils in Scotland, Wales and Northern
Ireland and the Regional Advisory Councils across England,drawing them more closely into the monitoring of objectives.
Statements of Programme Policy
The Government now requires each broadcaster with public
service obligations to produce annual Statements of Programme
Policy showing how it will deliver its obligations. Over theyear the BBC has undertaken extensive research with typicalaudience groups for each of its main services.The BBC’s first
set of Statements will be published with this Annual Report,
reflecting this feedback and, over the year, we will consult
audiences on the objectives contained within them.
Accountability to Government, Parliaments andAssemblies
The BBC is accountable to the Westminster Parliament.The
Annual Report is laid before Parliament and since 1999 theCulture, Media and Sport Select Committee has taken up
the BBC’s offer to appear before them to discuss it shortly
after publication. Regular briefings are also provided to
Parliamentarians on a wide range of issues.
Broadcasting is a ‘reserved power’, in other words it is not
devolved to the Scottish Parliament, the National Assembly for
Wales or the Northern Ireland Assembly.The BBC takes active
steps, nonetheless, to keep members of these elected institutions
informed about its policy, its services and future strategy.
Above, right and far right: Membersof the public at BBC workshops.

42 Annual Report and Accounts 2001/2002

Drawing the Line
We consulted the public on issuesof language, taste and violence

EastEnders

Listening to audiences
Putting the public first
When Gavyn Davies became Chairman in October 2001, hemade it clear that improving the BBC’s direct accountability
to the public would be one of his priorities. During his initialmonths as Chairman he met members of the public in a
programme of over 30 events.These ranged from public
meetings, focus group consultations with minority audiences,
online chats and on-air debates to going out with a television
detector van to get first hand experience of audience attitudes
to paying for the BBC. What he learned contributed to thecontinuing modernisation of the BBC’s accountability.

There was a unanimous view that the BBC should not transmit
programmes unsuitable for family audiences before the 9pm
watershed.The move of BBC news from 9pm to 10pm meant,however, that this natural punctuation of the evening had
been lost – with programmes which many considered to beunsuitable for family viewing now starting at 8.30pm. A later
watershed on weekends was proposed, as family viewing habitstended to be different on non-school days.

Despite the shocking nature of some of the material they
viewed, there was a consensus among audience groups that news
coverage should not be sanitised and that honest reporting was
the most important factor; moreover shock could sometimes
Drawing the Linebe valuable in raising awareness. Nonetheless, there was concern
The Governors are responsible for maintaining editorial standards about a perceived trend towards gratuitous scenes of violence,and for ensuring an appropriate response to complaints. Research and certain reports were felt to be intrusive and voyeuristic.
indicates that people expect more of the BBC than they do of‘Live’ reporting on continuous news services was identified asother broadcasters and disappointment is greater when it fails
a particular issue because less editorial control was possible.
to measure up. But, while there are clear guidelines on issuesof fairness, impartiality and privacy, guidance on other standards People attached considerable importance to warning
is more subjective. Between November 2001 and April 2002
introductions into programmes (and within programmes in thea series of workshops was held under the title Drawing the Line. case of news).They were also particularly concerned with what
These gave Governors an opportunity to explore directly withwas suitable for younger viewers, and asked for extra vigilanceaudiences what they find acceptable in these areas.
with regard to the content of programmes aimed at a young
audience such as Top of the Pops. However, contrary to the
The events were held in locations around the UK (Southampton, indications of some current research, people felt that theLeeds, Leicester and Edinburgh), and involved a range of people language and behaviour in EastEnders were actually milder thanfrom different demographic groups, independently recruitedthey would be in real life and welcomed this as appropriate tothough an audience research company. In small workshop
the time of transmission.
sessions they viewed and discussed extracts from BBC
television programmes chosen to highlight areas of possible
Feedback from this exercise, together with audience research,
concern with regard to bad language, sex and nudity, violence
regular editorial policy reports, and feedback from the BBC’s
and the presentation of news issues. Predictably, cultural
Customer Services operations, will inform Governors’ oversightbackground affected attitudes to programmes and there wasof editorial policy and complaints handling, and the judgement
some difference in outlook between generations, but overallof the Programme Complaints Committee.
there was a surprising degree of consensus on key issues.

Annual Report and Accounts 2001/2002 43

Putting audiences first

Believe it or Not
Believe it or Not was the title of a Governors’ seminar held in
November 2001 which examined the changing spiritual andmoral landscape of Britain and asked what ‘religious
broadcasting’ should be and how it could best be delivered toa diverse and complex audience.The audience was recruited toprovide a cross-section of radio, television and online users,
including searchers and non-believers as well as people fromthe major faiths.Their concerns focused on three themes:

The seminar provided an opportunity to explore a numberof critical issues, including the maintenance of BBC editorial
standards as user-generated content becomes moreprevalent; value for money; and the challenge of developing
an iTV strategy when services differ so much from platform
to platform.

In response, the Director-General said the BBC must be bravein reflecting society’s changes and emphasised the BBC’scommitment to making quality programmes which appealed
to a wide audience and to ‘naturalising’ non-Christian faiths.The
seminar dovetailed with the process of strategy development
being led by the BBC’s new Head of Religion and Ethics, giving
Governors, commissioners and programme makers a chance,
before the strategy is set in stone, to explore these issues withaudiences.

Over the past year, the Governors consulted them on a rangeof strategic issues through seminars on broadcasting regulationand the modernisation of the BBC’s governance andaccountability and on recent trends in national and regional
identity around the UK.

Reports from BBC advisory bodies
Broadcasting Councils and the English National Forum
On behalf of licence payers, a network of more than 500
 a desire to be told more about their own and other religions
people around the UK advises the Governors on programmes
through television and radio – apart from personal religious and services. Broadcasting Councils for Scotland, Walesand Northern Ireland represent the interests of people inbelief, this was a matter of interest to them as citizens
 a desire for quality – not just more programmes but ones
the Nations. In England, Regional Advisory Councils advise
the Governors through the English National Forum (ENF).
that count and show care, depth and integrity a desire for programmes to recognise and reflect the
They are informed, in turn, by a network of Local Advisory
Councils.
complexity within religions and ways of expressing faith

The BBC and interactivity
The BBC has made a significant investment in developing
interactive services.The aim of this seminar, held in March 2002,
was to provide an opportunity for the Governors to get togrips with the latest research on interactive television (iTV),
what it means for audiences, and what it means for the BBC.
Practical demonstrations provided an opportunity for hands-on
experience of how the BBC is developing interactive news andinformation services on all digital television platforms.

Audiences asked for extra vigilance inthe content of programmes for young
people.

44 Annual Report and Accounts 2001/2002

The Councils’ most important task is to advise the Governors
on programme and service objectives for the Nations andEnglish Regions and to monitor, through a process of regularreview, the extent to which the BBC delivers them.
This year saw the delivery of the first new programmes andservices resulting from increased investment in the BBC’s Nations
and Regions.The Broadcasting Councils welcomed these warmly
but stressed the importance of monitoring audience reaction
and raising awareness of the new output.The ENF particularly
welcomed additional investment in more BBC Open Centres
and Mobile Zones (see page 48), in local radio and in extending
regional television to more local audiences.

Speaking up
More than 500 people around the
UK advise the BBC Governors on
programmes and services

All the Councils emphasised the need to build closer
relationships across the full range of audiences and communities,
paying particular attention to underserved social groups andyoung people. Appropriate diversity in on-air portrayal also
continued to be an issue, as did the need to build approvalof the BBC around the UK by delivering programmes andschedules which met the needs of local audiences. Modernisingaccountability so as to achieve the BBC’s published governanceand accountability reforms will be a priority in the coming year.

The ENF highlighted the role of the BBC in fostering politicalinterest and debate in the critical areas of racial intolerance,social integration and poverty.The scheduling of regional
political programmes remained a significant issue.
The views of the Broadcasting Councils and the ENF are publishedin more detail in the Annual Reviews of BBC Scotland, Wales,
Northern Ireland and the English Regions.

Continuing to build production by Scotland, Wales andNorthern Ireland for the UK networks was also identified asa significant priority by the Broadcasting Councils.The ENF
argued that the small amount of network output made in the
English Regions and lack of network exposure for regional
programmes was at odds with the BBC’s stated objective
to foster talent across the programme-making spectrum.

World Service Consultative Group
The World Service Consultative Group, which provides theGovernors with independent external advice on the range
and quality of BBC World Service output, reviewed output inEnglish, Arabic, Bengali, Hindi, Urdu, Persian and Pashto during
2001/2002.This selection followed the Committee’s usual
three-year cycle but was also informed by the aftermathof 11September and the conflict in Afghanistan.

Among more specific issues, the Broadcasting Council for Wales
recommended a review of BBC Wales’s Welsh-language output,
with a view to providing better value for Welsh licence payers,
and stressed the need to raise awareness of BBC 2W and of
BBC Radio Cymru and BBC Radio Wales as distinct services.

The international news situation for the period of theassessment was exceptional. Independent assessors’ reports
provided striking evidence of the BBC World Service’s uniquepositioning, authority and trustworthiness in such circumstances,and the value and impact of its broadcasts.

The Broadcasting Council for Scotland drew attention to theneed for more appropriate measures of approval for the BBC
in Scotland.The Council also recommended building on thestrong audience performance of BBC news by refreshing andrevitalising editorial content across radio and television, andflagged up the need to continue to extend the reach of BBC
Radio Scotland.

The BBC World Service English website also attracted highscores from assessors, particularly for its authority and accuracy.
Scores for ease of use and navigability had improved on theprevious year.

The Broadcasting Council for Northern Ireland emphasised theimportance of delivering high-quality sports programming, in linewith a recent review of sports strategy.They drew attention, too,
to the need to refresh the output of BBC Radio Ulster/Foyle
while still maintaining their traditional high-quality programming.



The Consultative Group identified a number of areas where theassessors’ reports indicated room for improvement:
making the style of the BBC World Service Arabic radio
output more accessible and appealing to its audience reviewing the BBC World Service output strategy for India
in the light of growing competition from television

Religious broadcasting remains
central to the BBC’s public service
role.Thousands attended the 40th
anniversary concert for Songs of Praise,
held at London’s Royal Albert Hall.

Annual Report and Accounts 2001/2002 45

Putting audiences first

thoroughly reviewing the BBC World Service output in Hindi
to better respond to audience needs and expectations
 improving audibility across the Indian sub-continent by
seeking to persuade Indian broadcasting authorities to makeFM outlets available
 exploring the feasibility of separating broadcasts to Iran,Afghanistan and Tajikistan
 reviewing the balance of content in Persian broadcasts, andon the BBC World Service Persian website, to ensure thatthey are adequately covering and interpreting the issues ofimportance to all the political communities in the region


CRAC highlighted some very strong programming on radio andon television. Son of God earned particular praise for its openminded approach, scholarship and intelligence, coupled withsensitivity to issues of faith. It was felt to be a good exampleof the quality expected of the BBC. Islam UK – which reflected
the experience of ordinary Muslims in the UK – was welcomed
for the way in which it demystified Islam.
The new BBC Religion website was praised for its user-friendly
content and links to other BBC sites – particularly History,
Education and BBC World Service. More disappointing was thecontinuing lack of mention of religion on the BBCi homepage.

It was clear that poor audibility and unattractive presentationstyle discouraged people from listening, even if they had a highopinion of the content broadcast.The Consultative Group
recommended the BBC World Service to give a high priority
to addressing these issues across the full range of its output.

CRAC’s most significant programme criticisms concerned
portrayal.The lack of accuracy in representing Buddhism wasa recurring theme. Other instances included the inaccurate
representation of Catholic priests in Waking the Dead andwhat was felt to be stereotypical and old fashioned portrayalof Welsh people in Songs of Praise on St David’s Day 2002. It wasCentral Religious Advisory Committee
The Central Religious Advisory Committee (CRAC) advises the observed, too, that coverage following events of 11September
did not include the situation of the Sikh community, which had
BBC on religious broadcasting policy and programmes.
suffered from being wrongly confused with Muslims, and that
The events of 11 September provided a powerful demonstration future plans did not include any reflection of Sikh interestsof the importance of religious broadcasting in enabling a shocked despite the size of the Sikh community in the UK.
public to come together in prayer and grief.They also highlighted
Handling complaints
the role religious broadcasting needs to play in helping
The Governors ensure that the BBC has a proper systemaudiences make sense of their world, overcoming prejudice,for handling programme complaints.
breaking down stereotypes and promoting peace.
These were key themes for CRAC this year and members
agreed with the views expressed at the Governors’ seminarthat more should be done to reflect non-Christian faiths.
They pointed out, though, how little religious output of any
persuasion was on offer. In their view, the amount of worshipprogrammes, in particular, was too small and they feared thata shift to a more educational approach would result in the
devotional thrust at the heart of religion being lost.

Complaints about policy, schedule changes, technical standards orquestions of personal preference are forwarded to appropriate
areas of the BBC for attention. Overall, the total number ofcomplaints received at BBC Information Centres in Belfast,
Glasgow and Bangor, by the Programme Complaints Unit (PCU)
and by senior management in 2001/2002 was 95,638. Complaints
represented 9.6% of the total number of contacts received by
BBC Information this year, compared to 7.3% last year.

Left: One Night with Robbie Williams
illustrated the challenge of getting thetone right for everyone.
Right: BBC English Regions Governor
Ranjit Sondhi – a member of theProgramme Complaints Committee –joins the debate at an audience
workshop.

46 Annual Report and Accounts 2001/2002

On call
The BBC handled over one million
information requests last year – byphone, letter and email

The PCU deals with complaints which give reason to believethat something broadcast by the BBC’s licence funded services
may have fallen seriously short of the standards set out in the
BBC Producers’ Guidelines. Its job is to investigate complaints
impartially and to recommend appropriate redress.

high-profile difficulties in the factual area, notably thecontroversy surrounding the MacIntyre Undercover fashion
investigation and the libel action set in motion against the
Ten O’Clock News by Oryx Natural Resources, over a story
for which the BBC has apologised.

In 2001/2002, the PCU dealt with 794 complaints concerning
515 items, of which 231 were wholly or partly upheld – 29% of
the total. Poor taste was the most common topic of complaint(33%).The findings on upheld complaints are published in aquarterly bulletin, together with a note of the action taken ineach case. Sixty-five per cent of complaints were answered
within the target times (20 days or 35 days for more complex
cases), compared with 62% in 2000/2001.

While not wishing to discourage the BBC from making waves
through investigative journalism, the Board noted the challengeof risk taking and the need for programme makers to checkmaterial thoroughly and to be aware of their responsibilities
to behave fairly and edit legitimately.

A sub-committee of the Governors, the Programme
Complaints Committee, hears appeals against the decisions of
the PCU. During the year, the Committee received 24 requests
for appeal. Full consideration was given to all of these.Two
appeals were upheld in part and three in full.
The PCU also deals with the Broadcasting Standards
Commission (BSC) on complaints about BBC programmes.
In the year to 31 March 2002, the BBC received 36 notificationsof fairness and privacy complaints from the BSC. Eleven werewholly or partly upheld.The Commission notified the BBCof 1,746 complaints about standards, and complaints werepartly or wholly upheld about 14 broadcast items or series.The
BBC complied with all directions given under the Commission’s
statutory powers.
Upholding editorial standards
The Governors ensure that the BBC maintains high editorial
standards, monitoring its compliance with the BBC Producers’
Guidelines and with the Code on Impartiality and Accuracy
included in them. Overall, they were satisfied that in 2001/2002
the BBC had met the standards expected of it, despite somecapt

The BBC had risen to the challenge of the events of
11September, keeping audiences informed and enabling debate.
Being accurate, impartial and informative in the coverage ofIslam was a priority.The one wrong call was the tone of
Question Time on 13 September.
Judging expectations and getting tone right is increasingly
challenging in a diverse society where there are ‘audiences’
rather than a single ‘audience’. One Night with Robbie Williams
illustrated this and respect for the watershed remains aparticular challenge for drama.
Accessibility
BBC Information operates 24 hours a day, seven days a week,
handling telephone and written comments and queries fromaudiences. Every comment is logged and reported daily acrossthe BBC.The number of unsolicited calls dealt with by the callcentre this year was 781,501, down 10% on last year. 119,566
letters were handled this year and BBC Information received
over 185,000 emails – a 40% increase over last year. Page
impressions on the BBC Information website increased byover 50%.

Urfat Hussain in They Think It’s All Islam,part of the BBC’s Islam UK season
which reflected the experience ofordinary Muslims in the UK.

Annual Report and Accounts 2001/2002 47

The BBC in the community
As both a broadcaster and a responsible and ethical employer, the BBC engages
directly in the life of the communities in which it operates.This involvement takes
many different forms, some based on partnerships with other organisations, andall reflecting the social and environmental responsibility which the BBC sees as an
essential part of its public service role.
BBC Open Centres
BBC Open Centres aim to expand the scope of the BBC’s
relationship with local communities.The concept was launched
in Blackburn last year and has now been extended to Sheffield,
Merseyside and Wrexham, with Stoke, Hull, Brighton and threefurther Welsh centres to follow.Through partnerships with local
education authorities and other bodies, each offers opportunities
for local people, on a drop-in basis or through more formal
courses, to learn about the media, acquire IT skills and become
involved in community broadcasting.
A series of buses complements the building-based OpenCentres.The buses take media facilities out to towns and villages,
while also enabling the stations to involve people from all cornersof their editorial area in their broadcasts. Piloted in Lancashire,these buses will operate in the areas covered by BBC Radio
Derby, Newcastle, Cumbria, Lincolnshire and Cleveland. A
similar project is also planned in rural mid-Wales with theestablishment of a touring community studio.
Community involvement
The BBC’s community involvement programme encourages
active citizenship by staff so that the skills and talent which the
public has paid for through the licence fee can be invested backinto communities. Staff can identify volunteering opportunities
from a regularly updated intranet site or can explore otheravenues through their own contacts.
A team from BBC London recently helped clear old tyres,plastic bottles and other debris from part of the Lower Lea
area, getting to know local people and helping improve theenvironment. BBC Radio Cumbria staff spent a day working
with Eden Community Outdoors, converting a double-decker
bus into a mobile youth club, and also helped restore Kirkby
Stephen East station on the Settle-Carlisle line.

Above: Encouraging access at theBBC’s new Open Centre in Sheffield.
Right:The BBC National Orchestra
of Wales’ education and outreachprogramme takes live music into
communities across Wales.
Far right: Media on the move: the BBC
Lancashire Mobile Zone takes learningout into the community.

48 Annual Report and Accounts 2001/2002

Raising millions
BBC Children in Need raised
a record-breaking £25million
for children across the UK
in 2001

Musicians from the BBC National Orchestra of Wales havespent the past year on a voluntary community music-making
project in Corwen in North Wales, culminating in a large-scale
public concert and the release of a CD, and staff from Television
Centre and Bush House in London have donated nearly 400
books to local hospitals, nurseries and schools.
A programme of media skills sessions has been organised inschools, colleges and community organisations in different partsof the UK.This included a series of workshops led by the
Director-General at Regent’s College in Leicester where thestudents, more than 90% of whom are from minority ethnic
groups, were given a flavour of the opportunities that exist in
broadcasting.
A mentoring project has also been established in several areasof the country, with youngsters attending workshops andworking in small groups with staff from different disciplines
to learn about the media at first hand.
Charitable appeals
A record-breaking performance by BBC Children in Need in 2001
– raising £25million to help disadvantaged children in all parts of
the UK – highlighted another key aspect of the BBC’s role in thecommunity. Broadcast appeals give audiences the opportunity to
donate to a wide range of charities, as well as helping charities
themselves to raise awareness of their work.
The BBC Governors oversee the allocation of the regular
weekly and monthly appeals on BBC Radio 4 and BBC One
through the Appeals Advisory Committee (AAC), whose
members they appoint.
The AAC also advises the Governors on policy issues andassists them in the scrutiny of specific fundraising projects suchas BBC Children in Need and Comic Relief. In particular this year,
they helped with plans for the Sport Relief appeal in July 2002,

looking at how the money would be distributed and ensuringthat it provides an appropriate fit with other BBC appeals andfundraising projects.
Last year, the BBC carried appeals for 64 individual UK charities.
The weekly BBC Radio 4 Appeal raised over £994,000 for 51
charities (excluding Children in Need).This included £470,000
raised by the traditional BBC Radio 4 Christmas appeal on
behalf of the St Martin in the Fields church for its work withhomeless people in London and around the UK.The monthly
Lifeline appeal on BBC One raised just under £340,000 forcharities ranging from Deafblind UK to the Canon Collins
Educational Trust for Southern Africa.
BBC local radio in England, and BBC Wales and BBC Northern
Ireland carried regular appeals for charities working in theirregion or nation. For example, BBC Radio Cambridgeshire
awarded grants of nearly £40,000 to over 80 charities acrossthe county, most of it raised by an annual on-air auction run
by the station’s staff and local volunteers. BBC Scotland also
reflected the work of Scottish charities across its programmes.
In November 2001, Blue Peter launched its Wheel Help Appeal.
So far, viewers have raised over £939,000 through bring andbuy sales.The money is being used by Help The Aged to buy
minibuses, scooters and adapted cars for isolated elderly people.
Following the terrorist attacks of 11 September, the BBC
screened a fundraising event in aid of the United Way 911
Fund, which included opportunities for audiences to donate
via an internet site. We also took part in an emergency appeal
in February 2002 following the eruption of the Nyiragongo
volcano in the Congo.The appeal, which raised a total of£1.6million, was requested by the Disasters Emergency
Committee, an umbrella organisation which co-ordinates UK
appeals on behalf of 14 aid agencies in response to majorinternational disasters.

Annual Report and Accounts 2001/2002 49

The BBC in the community

Socially responsible investment
The BBC is committed to conducting its business in accordancewith the principles established by Lord Nolan’s committee
on standards in public life.The trustees of the BBC Pension
Scheme, who are committed to the same standards, haveestablished policies on both socially responsible investment andcorporate governance.These aim to ensure that all companies
in which they invest operate in a socially responsible way,
including environmental and ethical considerations.The policy
is also designed to follow best practice and take accountof the recommendations of the Combined Code on corporate
governance.
Ethical policy
The BBC seeks to meet the highest standards of ethical,
employment and environmental practice. In the past year a newcode of conduct has been introduced requiring our suppliers tooperate on the same principles.This requires all direct suppliers,
who in turn are required to supervise their sub-contractors,
to observe best practice in the following areas: generalemployment practices, the employment of appropriate workers,
worker insurance, working environment, respect for theindividual worker, environmental standards, ethical standards,
equal opportunities and freedom of association.
The BBC and the environment
In many of its programmes the BBC explores environmental
issues and often exposes abuses. It is therefore all the more
important that, as a major organisation with more than 25,000
employees working in over 500 buildings across the UK, theBBC recognises the direct impact of its operations on theenvironment and the responsibility this brings to conduct its
business in an environmentally friendly manner.
In 2000 the Board of Governors approved a formal
environmental policy. Strategy is driven by a cross-divisional
steering group, led by Jenny Abramsky as Environment Champion.

Progress is monitored and reported annually, in summary formin this report and more fully in the BBC’s environment reportpublished on www.bbc.co.uk/info, which follows global reporting
initiative guidelines. Last year’s document was shortlisted for the
2001 ACCA Environmental Reporting Awards.
The BBC has developed new indicators and targets in thepast year to help focus on its environmental performance.
The new policy, and the strategy we are now pursuing under
the five headings that follow, take full account of the Turnbull
Report, the Company Law Review, the Global Greening
Initiative and the Government’s call for the country’s top 350
companies to report openly on their environmental activities.
Above all, they reflect the view of audiences, licence payers,
staff and the communities in which the BBC operates that
we should adopt environmentally sound and sustainable
practices which protect and improve the quality of life ineach place.
Waste
Seventeen per cent of BBC waste was recycled last year, up from
12% in 2000/2001. Our target is to increase this to 55% by2005 and to achieve a 10% reduction in waste sent to landfill
by 2003. Recycled paper is used to make toilet rolls and hand
towels that our waste contractor LS Trillium then purchases for
BBC use. Used toner cartridges are recycled through a special
arrangement with Hewlett Packard that converts them backinto credits which go to Children in Need and the BBC’s
Procurement department has donated £12,000 to BBC
charities for the exchange of printers and consumables.
BBC Technology Limited has recovered 6,729 items ofcomputer equipment for donation to the Tools for Schools
scheme. Environmentally sound disposal of old video, audio
and film tapes is another priority, and the BBC Specialist Factual
division has begun recycling tapes through a company in
the Netherlands, with 2,500 recycled during March 2002.

Left and above: BBC Training &Development’s skillXchange teamenables BBC staff to work on
community projects, such as creating
a wildflower garden from wasteland
at a primary school in London (left),and running a workshop on web
design for young people (above).

50 Annual Report and Accounts 2001/2002

Tools for schools
6,729 items of old BBC computerequipment were recovered last year
for donation to schools

Utilities
Total BBC energy use rose in the past year with the launchof new digital television and radio channels. An estimated
126,027 tonnes of carbon dioxide were released – a 5% riseon 2000/2001.The BBC’s target is now to reduce energy
consumption per broadcast hour by 8% by 2010, based on the
new 2002 baseline. Water consumption rose 8% to 431,905
cubic metres where data was available and new targets will be
set for the coming year.
The combined heat and power system at Television Centre in
London, which uses steam generated from the turbine’s waste
heat, has saved 10,392 tonnes of CO2.The proportion ofenergy from low carbon sources has increased from 0.3% to
14% and the BBC is currently tendering for all its local radio
stations to be entirely supplied with ‘green’ electricity.
Property
All the BBC’s premises have a direct impact on energy andwater consumption, waste disposal and the local transport
infrastructure. We are introducing energy efficient schemes
wherever we can and actively support environmental venturesin the communities in which we operate.The BBC came thirdout of 18 leading companies invited to participate in the 2002
Property Environment Group benchmarking survey whichmeasures the success of their environmental practices.
Rigorous standards are being applied to the BBC’s major
property development programme in London and across the
UK to ensure that best environmental practice is achieved atevery stage of the design, external construction and internal
fitting process and throughout the full life cycle of all newbuildings.The facade for Pacific Quay in Glasgow has been
designed to maximise daylight potential and the major new
development at BBC White City will be powered by its own
energy centre, using sustainable technologies. Minimal use will
be made of air conditioning in the new buildings and rainwatercollection schemes will feed landscaped areas.The new Mailbox
development in Birmingham will use canal water for coolingthe building.
Transport and travel
Transport planning to help staff travel to, from and between
places of work led to the introduction in 2000 of a half-hourly
shuttle bus between the BBC’s main premises in the W1 andW12 areas of London.This is now saving 10,000 individual tube,
taxi or car journeys a year, a 25% rise on last year, cutting costs
and reducing congestion.The fleet has been upgraded to newtechnology diesel engines and now also carries packages, savingaround 1,500 courier trips a year. A car-sharing scheme has
been introduced to reduce the number of mini-cab trips by
10% and the BBC is working with Ford on an 18 month trialof a totally electric ‘Think’ car.
Supply chain and procurement
BBC purchasing activity in a typical year generates business
worth over £700million, providing the opportunity to have apositive influence on the environmental policies of some 20,000
suppliers. Early in 2002 a new purchasing policy was endorsed,
which included assessment of the environmental impact of IT
and stationery contracts. BBC Music magazine has followed thelead of BBC Wildlife which last year became the first consumer
magazine in the world to carry the Forest Stewardship Council(FSC) trademark, requiring the highest ethical standards
throughout the production chain, from forest owners and paper
manufacturers to publishers and printers.

Left: Artist’s impression of BBC
Scotland’s new headquarters to bebuilt at Pacific Quay, Glasgow.
Below: BBC London’s energy-efficient
Smart car.

51

PeopleGreat programmes are only possible because of the dedication and creativity of all
the people who work for the BBC.The BBC sinks or swims on the strength of theirideas and their collective endeavours as performers, presenters, producers, writers,
journalists, editors, cameramen, studio technicians, press officers or accountants.

More than 40% of the BBC’s expenditure is on people. Some
25,000 of them are on the payroll – 18,606 in the BBC Home
Services, 1,797 in the BBC World Service and 5,165 in the
BBC’s commercial divisions.
So to motivate and encourage them, to train and develop themand to recruit the right people into the organisation is perhaps
the most important challenge we face. Only by getting this right
can we achieve the constant process of creative renewal thatis the key to the BBC’s present and future success.
New talent
Kasey Clarke was working as a waitress in a pizza bar when she
heard about BBC Talent. She is now working as a broadcast
assistant on 1Xtra, the BBC’s new digital radio station devoted
to black music culture. After successfully presenting Lifting theBonnet Sangita Myska is moving to Holiday and Summer Holiday
on BBC One and David Garrido is a sports reporter on BBC
News 24.
In the past year BBC Talent has offered 300 people like Kasey,
Sangita and David from across the UK their first break in the
broadcasting business – as presenters, reporters, actors, writers
or in behind-the-scenes roles. Its aim is simple: to attract thenext generation of new talent to work for the BBC and, in theprocess, improve the BBC’s contact with young people andother groups who often see it as out of touch, distant andold fashioned.
BBC Talent began in 2000 with six schemes and has
mushroomed since then. In 2001 it doubled to 12 schemes
and attracted an extraordinary 140,000 applications. With BBC
Drama Series it visited 12 cities and auditioned 12,000 actors
for roles in top series like Casualty and EastEnders.Thirty-threewere offered contracts as a result. All 39 BBC local radio
stations in England joined forces to discover new presenter
talent, many with unusual backgrounds.The BBC’s Urban Music

Above: Sangita Myska, presenter of
Lifting the Bonnet and Holiday, wasrecruited through BBC Talent.
Right and far right:Twelve thousand
actors were auditioned across the
UK for parts in top BBC dramas
EastEnders and Casualty.

52 Annual Report and Accounts 2001/2002

Different perspectives
1,700 BBC journalists across the
UK took part in diversity awarenessseminars in the past year

Scheme held a nationwide search for the best new performers
on the black music scene.
The third year of BBC Talent has now been launched with 16
schemes, including opportunities for interactive presenters, filmmakers and animators for BBC Choice and presenters for BBC
One science programmes. More locations than ever before –70 in total – will be used for auditions in 22 different UK towns
and cities.This year’s website has already received 2.5 million hits.
Other BBC talent schemes included the New Writing initiative,
which has helped the script editor on Doctors identify ten newwriters as the series expands to a year-round drama, andNorthern Exposure, a major new initiative to find and nurture
drama and comedy writers across the north of England.
Run in partnership with regional theatres, it has worked withmore than 4,000 writers in its first year.
Diversity
The changing face of Britain today creates several challenges
for the BBC. Firstly, because as a public service broadcaster,
we have specific obligations to meet the needs of minorities
and special interest groups. Secondly, because research suggests
minority ethnic groups tend to use BBC services less than the
majority of white audiences.Thirdly, because if the BBC fails
to reflect in its programming the multiculturalism that the young
in particular now take for granted, there is a real danger of
becoming irrelevant to major parts of our audience.

world in which we live today, not the world of yesterday.
The steady increase in the number of women in management
positions across the BBC has continued in the past year.
By March 2002 the BBC had achieved its targets at senior
executive and, for the first time, at middle manager levels.
Targets for ethnic minorities were raised last year. Against the
new target of 10% employment by the end of 2003, figuresrose from 8.4% to 8.9% by March 2002. For senior staff, where
the target is now 4%, the level rose to 3.2%.
To help the BBC meet its targets by next year, diversity actionplans, monitored quarterly, have been put in place in every
division. A new Ascend development scheme has been createdproviding bespoke training courses for, to date, 80 ethnic
minority staff members to help them develop their potential
to move to higher grade employment.
A major success of the past year has been a Diversity
Roadshow. 1,700 BBC journalists attended awareness-raisingseminars as it travelled round the UK. Sixty-seven per cent of
those attending said they were “likely to change their editorial
approach” as a result.

BBC Scotland has set up a second diversity traineeship,
designed to provide a comprehensive introduction to television,
radio and online production, and the appointment of Community
Affairs Researchers at each of the BBC’s 11 English regional
The BBC’s workforce is open to everyone irrespective of theirnews centres has helped build stronger, more credible links
race, colour, creed, ethnic or national origin, marital status, gender, with under-represented communities across each region.
disability or age.This is not a matter of simply complying with
Journalistic experience was not a criterion for these jobs; anrelevant legislation, or of so-called political correctness, but a clear enquiring mind, research skills and a background of community
business imperative if the BBC is to provide an equally relevant involvement were.
service to all licence payers. We aim to create a BBC where
diversity is seen as an asset, not an issue; which is open to talent While progress in terms of gender and ethnicity has beenfrom all communities and all cultures; and which reflects theencouraging, staff with disabilities remain under-represented.
Diversity: proportion of women in management
Senior executives

Senior managers
Middle managers andsenior professionals

Target for 2003
31 March 2002
31 March 2001
Target for 2003
31 March 2002
31 March 2001
Target for 2003
31 March 2002
31 March 2001

%
30.0
36.7
36.9
40.0
35.5
34.1
40.0
40.1
38.0

Source: BBC HR Management Information.

Annual Report and Accounts 2001/2002 53

PeopleThe Northern Exposure talent initiative
is working with new writers acrossthe north of England.

Two specific measures have been taken to try to bring moredisabled people into the BBC workforce. New guidelines havebeen produced on recruiting and employing disabled people,
ensuring that the legal responsibilities laid down in the Disability
Discrimination Act are met in full.The BBC has established an
Access Unit and set aside funds to help meet adjustment costs.
In addition, the Extend work experience scheme, which offers
three months’ work experience for qualified disabled people,
has created many new opportunities. Out of 43 placements
to date, 23 have been completed and 13 participants havesubsequently gained paid work with the BBC.
Human resources
The One BBC approach, first set out by Greg Dyke in April
2000, has put less money into running the BBC and more into
programmes. It has also galvanised the BBC’s internal culture
to become more collaborative. But there is further to go if the
innate creativity of BBC people is to achieve its full potential.
The Making it Happen initiative, announced this year, is designed
to take this forward, to encourage more risk taking, to explore
new ways of working and to seek out new and fresh ways ofconnecting with our audiences.
A significant achievement this year was gaining Investors in
People (IiP) accreditation across the whole BBC, which is oneof the largest and most complex organisations to have attained
this important quality standard.
5,511 people joined the BBC in the past year. A further
6,699 changed jobs within the organisation. As part of a full
overhaul of human resources operations, a new specialist
recruitment department has been established and, for the
first time, a comprehensive approach to induction is being
introduced for all new joiners, including a common, four-day
course for staff at every level.

Above: On the lookout – Ian Wrightleads the hunt for new BBC talent.

54 Annual Report and Accounts 2001/2002

At a time when many organisations are closing such schemes,
the BBC remains committed to its final salary pension scheme,
open to all permanent staff.
Succession and development planning remains an organisational
weakness that will be addressed as a priority in the coming
year, together with a more systematic approach to staff
development and training, modernised to meet the BBC’schanging needs. Investment will be increased further from lastyear’s spend of £38million, which included 38,000 days’ training
for some 18,500 people inside and outside the BBC. Staff in allareas have access to a growing range of opportunities throughcoaching, courses, workshops, online learning and secondments.
The BBC monitors staff views through an annual staff survey.
It also has various consultation mechanisms, including at
corporate level, the BBC Forum. Regular meetings are also
held with the recognised unions: BECTU (Broadcasting
Entertainment Cinematograph and Theatre Union), the NUJ(National Union of Journalists) and AMICUS (formerly the
AEEU).
Internal communication
Progress in improving internal communication is measured
by an annual survey of staff opinion conducted by MORI.
The latest of these, conducted in December, shows a further
increase of 5% in the overall quality of communication andputs the BBC into MORI’s top ten organisations for the firsttime.There is, however, still more to be done to embedcommunication as an integral part of the leadership roleacross the BBC.
Health and safety
The welfare and safety of BBC staff has been a primaryconsideration in a year dominated by major stories at home
and abroad, from foot-and-mouth disease to Afghanistan.

New faces, new voices
Over 300 people have been given
their first break in broadcasting by
BBC TalentSpecialist training for staff has been a priority and the BBC
also contributed to the development of safety practices
within the industry.
The number of reportable incidents in the past 12 months fell
from 72 to 62, of which 15 were classed as ‘major injuries’.The
BBC was not subject to any HSE enforcement action and hadno convictions for health and safety offences.
The BBC-wide health and safety policy was revised during theyear, in line with the Government’s Revitalising Safety challenge
to industry, and relaunched in November. Its focus is on
ensuring commitment, clear responsibilities, knowledge and skills,
employee involvement and improvement throughout the BBC.
A new corporate Health and Safety Committee operates withformal delegated authority from the Executive Committee andhas agreed the safety plan for the coming year. Within eachdivision, a nominated Board member has responsibility for
health and safety, and staff and elected Safety Representatives
contribute to developing a safety culture. Formal arrangements,
including safety forums, ensure consultation and co-operation.
There were 7,446 recorded attendances at formal safety
training sessions, representing about 30% of employees, anda significant expansion of the material on the BBC’s Gateway
intranet site has made it more easily accessible to staff.

Diversity: proportion of people from ethnic minorities
in the workforce
BBC Group
London Home
Services
BBC World Service

ScotlandTarget for 2003
31 March 2002
31 March 2001
Target for 2003
31 March 2002
31 March 2001
Target for 2003
31 March 2002
31 March 2001
Target for 2003
31 March 2002
31 March 2001

%
10.0
8.9
8.4
10.0
9.6
9.4
10.0
27.8
27.4
3.0
1.6
1.2

Wales

Northern Ireland

English Regions

%
6.0
2.1
1.5
2.0
1.0
1.0
8.0*
6.1
5.0

Target for 2003
31 March 2002
31 March 2001
Target for 2003
31 March 2002
31 March 2001
Target for 2003
31 March 2002
31 March 2001

*Average figure: English Regions have set individual targets for each region.
BBC Ventures’ staff based outside London are included in Nations and Regions totals.
Source: BBC HR Management Information.

Annual Report and Accounts 2001/2002 55

Commercial activities: BBC Worldwide Limited
In a year of difficult trading conditions in many domestic and overseas markets,
BBC Worldwide Limited increased its sales, grew its business activities and delivered
profits in excess of its plans. It contributed over £100million to the BBC for the
first time.

Left and below: Successful new booktitles (left) and a range of merchandisefor adults and children contributed
to BBC Worldwide’s sales growth in
2001/2002.

Total sales across BBC Worldwide rose to £660million lastyear, with sales growth, including joint ventures, at 12% –in double figures for the third year running.
A £106million cash flow contribution was invested back into the
BBC – up from £96million last year. Cash flow growth remains
ahead of projections and BBC Worldwide is on course toachieve its £210million target by 2006/2007.
BBC Worldwide won a record 84 industry awards during theyear, including the Queen’s Award for Enterprise in recognitionof the success of its television export business, now the biggest
outside the USA.This was measured over a three-year period
from 1999 to 2001, during which BBC Worldwide grew thisbusiness by almost 35%, from £146million to £195million.
Programme exports had been helped over the period by a runof major creative successes from different BBC departments,
including The Weakest Link, Teletubbies, Tweenies, Walking with
Dinosaurs, Walking with Beasts and The Blue Planet.
Video and DVD sales and profits increased this year as BBC
Worldwide grew its DVD business both in the UK and, througha deal with Warner Brothers, in the US. Delia’s How to Cook –Book Three and a range of children’s titles including Tweenies
Annual 2002 delivered strong sales and the businessconsolidated its position in the audio book market with thesuccessful acquisition of Chivers.

56 Annual Report and Accounts 2001/2002

A good read
20% of UK adults now read a
BBC magazine every month

BBC Worldwide retained its position as the UK’s third largest
magazine publisher and outperformed its larger competitorswith copy sales growing 2% overall in a flat market when theindustry had been hit by declining advertising revenues. Tweenies
was the biggest UK success for the children’s division and two
new touring shows were launched during the year.The
phenomenal success of Teletubbies continues overseas with a
Mandarin version broadcast in China for the first time.
BBC Worldwide is the largest UK-based provider ofinternational television channels.These now reach more than
450 million homes across the globe – a steep rise from the
365 million achieved last year.
The recommendations of a review of BBC Worldwide’s
operations and relationship to the wider BBC were implemented
during the year. A new Commercial Board, chaired by the
Director-General, oversees the strategy and performance of
BBC Worldwide and BBC Ventures on behalf of the Executive

Committee. Collaboration and business transparency
between BBC Worldwide and BBC output divisions havebeen strengthened. Distribution reports analysing thecommercial performance on all investments made since
1997/1998 are now shared across the BBC on a quarterly basis
and closer partnerships have been established on key talent
contracts and marketing activities such as the annual BBC
Showcase trade fair which licenses television programmes
to overseas customers.
In July 2001, BBC Worldwide’s internal organisation was
streamlined to improve focus, increase efficiency and reflect theinternational reach of the business. As a result unnecessary
duplication has been removed and there is closer integrationof the Regional operations.The restructuring has helped
contribute towards the £21million delivered in efficiency savings.
Prompt action by BBC Worldwide senior management
mitigated the impact of charges brought by the Hong Kong
authorities against toy sourcing agent EMS for alleged fraud
against BBC Worldwide.The Governors’ report on pages 60 to
69 confirms that action has been taken to address the issues
raised by an independent investigation into the alleged fraud.
BBC Worldwide achieved its diversity target, with just over
10% of its staff now from minority ethnic groups. Including
overseas offices, the figure is 13%.

BBC Worldwide Limited cash flow to the BBC£ millions
106
96
82
81
75

2001/2002
2000/2001
1999/2000
1998/1999
1997/1998

The Weakest Link – Anne Robinson
and other international presentersof a format that has become a global
success story.

Annual Report and Accounts 2001/2002 57

Commercial activities: BBC Ventures GroupBBC Ventures Group was formed in February 2002 to exploit business-to-business
opportunities and, like BBC Worldwide Limited, operates within the frameworkof the BBC’s Commercial Board.

BBC Ventures Group brings together BBC Resources Limited,a BBC subsidiary company providing production facilities anddesign services in-house and in external markets since 1998,
and BBC Technology Limited, which began trading as a
subsidiary on 31 March 2001 designing, building and operating
systems for managing and distributing content on multimedia
platforms.
During the year BBC Broadcast Limited was incorporated asa third subsidiary, which commenced trading on 2 April 2002
providing a comprehensive range of playout and channel
management services. Kingswood Warren Ventures Limited has
been formed to exploit technological intellectual property rights.
Approval for the incorporation of a holding company, BBC
Ventures Group Limited, is awaiting a decision from DCMS.This
would enable this group of companies to operate with higher
borrowing levels, like BBC Worldwide, ring-fenced from theBBC’s Public Sector Borrowing Requirement limits.
Market conditions in the past year were highly challenging,
especially following the bursting of the ‘dot.com’ bubble and thefinancial difficulties of many media and technology companies.
Despite this difficult environment, the group’s results were
substantially improved over those of last year, with an overall
trading loss of £5.4million (compared to a £9million loss in
2000/2001).
Additionally, many of BBC Ventures Group’s businesses havecontractual obligations to deliver BBC cost savings, ie lower
prices for strategically purchased services. In 2001/2002,£12.6million was delivered back to the BBC – which was twice
the target figure.The key task for the new Group in 2002/2003
will be to drive up the performance of the businesses throughthe agreed strategy for growth.

Above: Music Live attracted around
250,000 people in Leeds, Bradford
and York to live music concerts andbroadcasts supported by BBC
Resources.
Right: Internet streaming is a growtharea for BBC Technology.

58 Annual Report and Accounts 2001/2002

Behind the scenes
BBC Resources mounted theUK’s biggest-ever outside broadcast
operation for the Queen Mother’s
funeral

BBC Resources Limited
Revenue performance has improved slowly but consistently
over the past year, with more realistic business targets being
set. Operating losses of £6.3million were recorded over theyear, an improvement on last year’s figure of £12.8million,but £8million was returned in cash for the BBC to use inprogramme making.The 2001/2002 figures largely reflect lossesof £4million by BBC Resources’ interactive design agency,
MediaArc, which has now been significantly re-structured,
including the transfer of the Belfast operation to BBC
Technology.
TV Studios had a good year, achieving profitability for the
first time ever. So did Outside Broadcasts, winning contracts
including Chrysalis’ World Rally Championships and the TWI
snooker contract, and providing the expertise behind the BBC’smuch-acclaimed national events coverage.
During the year total headcount fell to 1,605, as just over 1,000
staff who provide technical, editing and engineering support to
BBC Nations & Regions’ operations were transferred back into
their core business.
BBC Technology Limited
BBC Technology has successfully pitched for several high-profile
contracts in the past year, most notably winning a five-year
contract from Hutchison 3G for the provision of a media
production facility for their third-generation mobile phoneservice in the UK.The cutting-edge technology this involves
offers important prospects for further commercial success in
new and emerging broadcast markets.

based in San Francisco and Atlanta, was a further strategicallyimportant acquisition, adding considerable expertise in digitalinteractive television and a recognised presence in the US
market. During the year BBC Technology contributed £16million
in cash to the BBC.
BBC Broadcast Limited
The centre of excellence in broadcasting and presentation
operations which existed within BBC Television was incorporated
into a limited company structure on 2 April 2002.These skills
are now being offered in the wider marketplace for the firsttime. In addition to its specialist services in playout, media
planning and channel management, BBC Broadcast offers
creative services such as channel branding, promotions and trails,
and access services such as audio description and sign language.
Broadcast currently supplies services for 17 public service andcommercial television channels, all the BBC’s national and local
radio services and BBCi. Potential customers include existingbroadcasters, new media and telecommunications companies,
and new contracts already won include the production oftrailers for Discovery Network Europe.
Kingswood Warren Ventures Limited
Kingswood Warren Ventures Limited is a company within the
BBC Ventures Group which aims to secure commercial returns
for the BBC by exploiting opportunities arising from work
undertaken by BBC Research and Development or other
BBC departments. Opportunities will be developed throughpartnerships, joint ventures or by launching commerciallysuccessful products or services, where clear market
opportunities can be identified.

The acquisition of Intel’s Reading-based media streaming andhosting operation during the year helped establish a newpartnership with Real Networks as its Gold Pass streaming
partner in Europe, which includes streaming Channel 4’s
Big Brother. IXL’s consulting and systems integration business,

Above: BBC Four’s launch was
supported by the creative skills of
BBC Broadcast.
Left: Wimbledon 2001 was supported
by teams across all of BBC Ventures
Group.

Annual Report and Accounts 2001/2002 59

Compliance
The Governors have clear responsibilities under the BBC’s Charter to ensure thatthe BBC behaves responsibly and follows all applicable regulations and codes ofpractice.They must satisfy themselves that the BBC complies with all legal obligations,has an appropriate management structure, maintains sensible controls to protect its
assets, and adheres to its own guidelines and codes of practice.
On the following pages the Governors and independent
auditors report formally on the BBC’s policies, procedures andcompliance as follows:
1 Fair trading
2 Financial statements
3 Risk and control processes
4 Governors’ remuneration report
5 Programmes from independent producers
6 Other rules
1 Fair trading

The Committee is advised directly by independent auditors
and by the BBC’s Head of Fair Trading and Head of Internal
Audit, if necessary, without the mediation of BBC management.
All subsidiaries and commercial operations report to the
60 Committee on their activities, and all staff with commercial
62 responsibilities are required by the Committee to be trained
63 in the BBC’s fair trading policies.
66
69 The management of the BBC’s fair trading arrangements is
69 regularly tested by the British Standards Institute and thosearrangements have been accredited with the ISO 9000:2001
quality standard.

Governors’ statement on fair trading
Commercial activities and fair trading
The BBC’s core purpose is to provide public service
broadcasting funded by the licence fee. Licence payers’
investments, built up over many years, have produced a criticalmass of talent and production capability for the BBC, together
with an unparalleled archive of past programming.These assets
have a secondary value, over and above their use on public
service channels and outlets.The BBC has a responsibility toensure that this value is properly developed commercially,
and used to the benefit of licence payers.
In pursuing commercial activities, the BBC is, like otherorganisations, fully subject to both domestic and European
competition law. However, unlike other organisations, the BBC’s
responsibility to trade fairly is reflected in further and moredemanding requirements arising from its Royal Charter. In
particular, the Charter requires the avoidance of cross-subsidy
between the BBC’s publicly funded and commercial activities.
Fair trading compliance procedures
The BBC’s fair trading obligations are embodied in its Fair
Trading Commitment, compliance with which is scrutinised
throughout the year by a standing committee of the Board ofGovernors, the Fair Trading Compliance Committee (FTCC).
The recently published BBC document BBC Governance in the
Ofcom Age included the following commitment:

By their nature, fair trading judgements are complex, reflecting
the constantly developing environment in which the media
industries operate.Through the FTCC, the BBC’s Governors
bring informed scrutiny and balanced judgements to bear on
the important issues of policy that arise from the BBC’s
engagement in commercial ventures.
Fair trading complaints
Among the responsibilities of the Head of Fair Trading is toadvise the FTCC and the Executive Committee on any fairtrading complaints which have been laid against the BBC.
He may be contacted at BBC, Broadcasting House, London,
W1A 1AA.The FTCC publishes a quarterly bulletin of any
allegations of breaches of the Fair Trading Commitment.
Events of the year
External challenges
During the year, no complaints were upheld against the BBC.
There were no new formal investigations of the BBC’scommercial activities by external bodies, eg the Office of Fair
Trading (OFT) or the European Commission. However, anumber of complaints were made to the Board of Governors
or to the Head of Fair Trading that the BBC was in breach of its
guidelines:
Burrows, a media consultant, wrote to the BBC’s• Bob
Director-General alleging that BBC Wales was unfairly“The Governors’ key responsibilities for monitoring regulatorycompliance – on fair trading and on programme standards –will be fulfilled more independently than at present. Advice to
the Governors by external auditors on fair trading compliancematters will be contracted directly by the Governors”.
The new arrangements bring greater clarity to fair trading
compliance responsibilities: BBC management is responsible forday-to-day compliance and Governors – through the FTCC –are responsible for monitoring how effectively management is
operating in these areas.

60 Annual Report and Accounts 2001/2002••

refusing to supply production facilities to independent
producers.The BBC explained in detail to Mr Burrows
that there was no refusal to supply facilities for use byindependent producers. Due to restructuring, BBC Wales,at the time of the enquiry by the independent producer,
was not in a position to identify whether the requested
facilities would be available for commercial use.
The British Internet Publishers’ Association (BIPA) has
written to the BBC Chairman alleging a number of unfair
trading practices by BBCi, the BBC’s online service. A letterof response has been sent to BIPA defending the activities
of BBCi.
Intelfax, a commercial provider of access services (egsubtitling), sent a letter to the BBC expressing concern
about how BBC Broadcast Limited will trade fairly in••the commercial marketplace.The BBC responded thatincorporation works to create operational and financial
separation of commercial and licence-fee-funded activities,
ensuring that BBC Broadcast Limited receives no crosssubsidy or other unfair advantage from the licence-feefunded BBC. Moreover, the BBC’s Commercial Policy
Guidelines require that BBC Broadcast Limited earns a rateof return on its business commensurate with market practice.
IPC Media wrote to the BBC Chairman complaining that
two trails for BBC Worldwide Limited magazines had beentransmitted without the appropriate disclaimer, namely that
other magazines are available.The BBC responded thanking
IPC for bringing the issue to its attention and explaining thatthe two examples of inappropriate trailing were a result ofa failure in the BBC’s automated processes. In future, manual
checks on the computer process by senior editorial staff will
be introduced to ensure that only appropriate slides arebroadcast.
RM plc, a major provider of electronic educational resourcesto schools in the United Kingdom, has issued a legal
challenge to the BBC alleging illegal use of state aid and thatthe BBC is acting ultra vires its Charter and Agreement inrelation to the BBC’s proposal to introduce a new digitalcurriculum service.The BBC is defending the action.

Some complaints were unresolved at the time of last year’s
Report.There follows an update as to how these have been
resolved (where there have been further developments during
the year):••

Following an investigation by the OFT, under theCompetition Act 1998, the OFT rejected ITN’s complaint
which alleged that a number of carriage agreements for
BBCi (News) with third party portals were in breach of
the Competition Act.
Independent record producer Robin Millar originally wrote
to the Controller, Fair Trading, on 3 December 2000, alleging
that several BBC Radio 1 disc-jockeys in the dance music
genre discriminate unfairly in favour of artists in whomthey have a financial interest. An investigation by the BBC did
not produce any evidence of unfair trading. Mr Millar has
agreed to supply the BBC’s Head of Fair Trading with any
evidence that he does obtain and the Head of Fair Trading
has committed to undertake an investigation on receipt of
information.

an arm’s length commercial subsidiary was established. BBC
Broadcast Limited received approval from the Secretary ofState on 22 January 2002 and formally began trading on
2 April 2002.
Competition Act 1998
As expected, the Competition Act has seen an increase in thenumber of complaints of anti-competitive behaviour investigatedby the OFT. No successful challenges have been brought against
the BBC under this legislation.
Governors’ opinion
The Governors consider that the policies contained in the
BBC’s Fair Trading Commitment are consistent with therequirements of the Royal Charter and the accompanying
Agreement.Through the FTCC, they have gained reasonableassurance that the framework of controls and procedures
designed to ensure that these policies are applied throughout
the BBC has been operating effectively throughout the year.
Independent Fair Trading Auditors’ report to theGovernors of the BBC
We have audited, in our role as the BBC’s Fair Trading
Auditors, the framework of systems, procedures and internal
controls established within the BBC to provide the Governors
with reasonable assurance that the BBC has complied with
its published Fair Trading Commitment for the year ended
31 March 2002.
Our instructions for this audit, which included the scope ofwork to be undertaken, were agreed with the Governors’ Fair
Trading Compliance Committee.These instructions include
agreement that our audit should be conducted in accordancewith relevant Auditing Standards, agreement on the limit of ourliability in respect of this work and agreement that our dutyof care in respect of this work is solely to the BBC. We aresatisfied that the agreed scope of our audit was sufficient toenable us to express the opinion set out below.

All external challenges are reported in the BBC’s Fair Trading
Bulletin which is available from the Head of Fair Trading at
BBC, Broadcasting House, London, W1A 1AA or online atwww.bbc.co.uk/info.

Respective responsibilities of Governors, management and auditors
The Governors are responsible for ensuring that the BBC
meets all the requirements of competition law and trades fairly.
They have established its Fair Trading Commitment, determine
the objectives of the systems, procedures and internal controls
designed to ensure compliance with this Commitment andmonitor the outcomes of those systems, procedures andinternal controls.They are also responsible for preparing theGovernors’ statement on fair trading compliance as included in
the BBC’s Annual Report, which includes on pages 60 and 61
a statement on fair trading.

BBC Broadcast Limited incorporation
To enable the BBC to engage more actively in the commercial
supply of broadcasting and presentation services while
maintaining compliance with the Commitment and the law,

The BBC’s management is charged by the Governors with
operating the systems, procedures and internal controls
designed to ensure compliance with the Fair Trading
Commitment, including identifying and assessing risks that
Annual Report and Accounts 2001/2002 61

Compliancecould threaten fair trading and designing and implementing
responses to such risks.

draw up guidelines to govern the trading relationship between
BBC World Service and the supplier divisions, in order toensure that BBC World Service maintains its distinctive voiceand to preserve the clear separation between Grant-in-Aid
and licence fee income.These Trading Protocols were approvedby the Governors’ Fair Trading Compliance Committee (FTCC)
in 1997.

As the BBC’s Fair Trading Auditor, it is our responsibility to form
an independent view, based on our audit work, as to the extent
to which the BBC has established, and applied, systems,
procedures and internal controls which provide reasonableassurance that it has complied with its Fair Trading Commitment
during the year. We have also reviewed whether the Governors’ Each of the supplier divisions then drew up detailed agreements
statement on fair trading reflects our findings of the BBC’s
with the BBC World Service, specifying:compliance with that Commitment, and we report if it does not.
the services to be provided
Basis of audit opinion
criteria to ensure the quality of the services, andWe have carried out a programme of procedures and tests
the cost of the services
designed to provide us with the assurance that we wereseeking. Our work consisted of enquiry and assessment to
The FTCC is responsible for monitoring and reviewing
enable us to form a view as to whether appropriate systems,
compliance with the Trading Protocols.The FTCC receives
procedures and internal controls were in place. We also
regular reports from management on the effectiveness of thereviewed the processing of a sample of material transactions
systems and procedures in place to ensure compliance with theto provide us with reasonable assurance that the systems,
Trading Protocols.
procedures and internal controls had been applied.
KPMG (the external auditors) have reviewed a summary of the
As with any system of control, however effective, it is notvalue of transactions and the related cash flows which havepracticable to ensure that no errors or irregularities havetaken place during the year between BBC World Service andoccurred without being detected. Our audit work was
the BBC supplier divisions. KPMG have reported to thetherefore designed to give the Governors reasonable assurance, Governors that, in their opinion, the information contained in
but not certainty, as to the adequacy of the framework of
the summary of transactions for the year ended 31 March 2002
systems, procedures and internal controls which were in place
has been properly extracted from the books and records of theand being applied to deliver compliance with the Fair Trading
supplier divisions and has been properly prepared on the basis
Commitment during the year. Further, because fair trading issues of cost allocation and apportionment methods set out in therequire judgements which ultimately might be tested in a court agreements between BBC World Service and the supplierof law, competition authority or elsewhere, there is always a risk divisions and that, on this basis, there has been no materialof challenge even where systems, procedures and internalcross-subsidy between Grant-in-Aid and licence fee funds.
controls have been followed and decisions have been taken
Governors’ statement on BBC World Service
with the greatest care.
Trading Protocols
Following regular reports to the Fair Trading Compliance
OpinionIn our opinion the BBC has established and has applied systems, Committee by the Head of Fair Trading and internal andexternal auditors, the Governors are satisfied that:procedures and internal controls which provide reasonableassurance that it has complied with its Fair Trading Commitment
the Trading Protocols reflect the requirements of thefor the year ended 31 March 2002.
FCO/BBC World Service Working Groupagreements are in place which are consistent with thePricewaterhouseCoopers
LondonTrading Protocols
Chartered Accountants
20 June 2002
there has been no material cross-subsidy between
Grant-in-Aid and licence fee funds
Governors’ report on BBC World Service Trading Protocols
BBC World Service is responsible for commissioning and
2 Financial statements
scheduling its own programmes and for making programmes
for its language services, but purchases English language
Statement of Board of Governors and Executive Committee
programme-making and technical and support services from
responsibilities for the preparation of the financial statements
other divisions and subsidiaries of the BBC (the supplier
The Governors and Executive Committee are required by thedivisions).
BBC’s Charter and Agreement to prepare financial statements
for each financial year which give a true and fair view of theIt was agreed by a joint Foreign and Commonwealth Office(FCO)/BBC World Service Working Group that the BBC would state of affairs of the BBC and of its income and expenditure

•
•
•

•
•
•

62 Annual Report and Accounts 2001/2002

for that period. In preparing those financial statements, theGovernors and Executive Committee are required to:● select suitable accounting policies and then apply themconsistently● make judgements and estimates that are reasonable andprudent● state whether applicable accounting standards have been
followed and disclose and explain any material departures in
the financial statements, and● prepare the financial statements on a going concern basis
unless it is inappropriate to do so
In addition, the Governors and Executive Committee havevoluntarily decided to comply with the accounting anddisclosure provisions of the Companies Act 1985 and, whereapplicable, of the Financial Services Authority Listing Rules.They
are also responsible for keeping adequate accounting records
and taking such steps as are reasonably open to them tosafeguard the assets of the BBC and to prevent and detectfraud and other irregularities.
Report of the independent auditors to the Governorsof the British Broadcasting Corporation (BBC)We have audited the financial statements on pages 72 to 107.
Respective responsibilities of the Governors and Executive
Committee and Auditors
The Governors and Executive Committee are responsible forpreparing the BBC Annual Report, including, as described earlier
on pages 62 and 63, the financial statements, in accordance withapplicable United Kingdom law and accounting standards. Our
responsibilities as independent auditors are established in the
United Kingdom by statute, by the Auditing Practices Board, ourprofession’s ethical guidance and, in accordance with the termsof our appointment, the Companies Act 1985.
We report to you our opinion as to whether the financial
statements give a true and fair view and are properly preparedin accordance with the Companies Act. We also report to you
if, in our opinion, the financial information on page 10 is notconsistent with the financial statements, if the BBC has not kept
proper accounting records, if we have not received all theinformation and explanations we require for our audit, or if
information specified by law regarding Governors’ and Executive
Committee remuneration and transactions with the BBC is notdisclosed.
We read the other information contained in the BBC Annual
Report, including the corporate governance statement, andconsider whether it is consistent with the audited financial
statements. We consider the implications for our report if webecome aware of any apparent misstatements or materialinconsistencies with the financial statements.

In addition to our audit of the financial statements, theGovernors and Executive Committee have instructed us toreview their corporate governance statement as if the BBC
were required to comply with the Listing Rules of the Financial
Services Authority in relation to these matters. We review
whether the statement on pages 63 to 66 reflects the BBC’s
compliance with the seven provisions of the Combined Codespecified for audit review by those rules and we report if it
does not. We are not required to form an opinion on theeffectiveness of the BBC’s corporate governance proceduresor its internal controls.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards
issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to theamounts and disclosures in the financial statements. It also
includes an assessment of the significant estimates andjudgements made by the Governors and Executive Committee
in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the BBC’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary inorder to provide us with sufficient evidence to give reasonableassurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial
statements.
OpinionIn our opinion the financial statements give a true and fair viewof the state of affairs of the Home Services and the BBC at
31 March 2002 and of the deficit of the BBC for the year thenended and have been properly prepared in accordance withthe provisions of the BBC’s Charter and Agreement and theprovisions of the Companies Act 1985 as if those provisions
had applied to these financial statements.
KPMG
Chartered Accountants
Registered Auditors

London20 June 2002

3 Risk and control processes
The Governors are appointed as trustees for the public interest
to ensure that the BBC is properly accountable to Parliament,
licence payers and to viewers and listeners. Part of this rolerequires us to satisfy ourselves that the BBC is applying thehighest standards of corporate governance.
The BBC follows the seven principles of public life set out in
the Nolan Committee reports on Standards in Public Life.
Annual Report and Accounts 2001/2002 63

Compliance

The Combined Code, issued by the London Stock Exchange inJune 1998, sets out principles of good governance.The BBCvoluntarily complies with the Combined Code to the extent it isapplicable.The requirements of the Combined Code apply to the
BBC with two exceptions. Firstly, those requirements relating to
the appointment of non-executive directors are inapplicable as
the Governors are appointed by the Queen in Council andtheir remuneration is set by the Secretary of State for Culture,
Media and Sport. Secondly, those requirements relating toshareholders can only be applied to the licence-paying public,
rather than shareholders, through the stewardship of theGovernors.

Commonwealth Office (FCO). Although it is editoriallyindependent, its aims and priorities are agreed with the FCO.
The BBC seeks to keep the public informed about its services
and the way in which it operates, and to be candid about both
successes and failures.The BBC will withhold information only
where there is a genuine matter of copyright or contractual
or commercial confidentiality at stake, or where legitimate
considerations of privacy apply. Information is made available
and audience views obtained in a variety of ways, many ofwhich are discussed elsewhere in this Annual Report.These
include the Statements of Programme Policy, internet services,public events and many publications.

How the BBC has applied the remuneration principles is covered
separately within the remuneration report on pages 66 to 69.
Accountability and internal control
Financial reporting and going concern
Board structure
The respective responsibilities of the Governors and Executive
The Governors are the members of the Corporation.They
Committee and the external auditors are set out on page 63.
act as trustees for the public interest while the Executive
Committee takes responsibility for day-to-day operations.
A summary of the financial review of the BBC is included on
Details of the Board of Governors and Executive Committee
pages 70 and 71.This, together with the Director-General’s
are summarised on pages 4 to 5 and 8 to 9. A register ofreview on pages 6 and 7, provides an assessment of the BBC’sinterests for both the Governors and Executive Committee
performance and current position.
is maintained and may be inspected by written application
to the Secretary of the BBC.
The going concern basis has been adopted in the preparationof the financial statements as the Governors and Executive
The Board of Governors refers some matters to subCommittee believe that the BBC has adequate resources tocommittees.The main responsibilities of these sub-committees
continue its operations for the foreseeable future.
are explained elsewhere in this Annual Report as follows:
Governors’ Programme Complaints Committee (page 46)
Internal control
Governors’ Fair Trading Compliance Committee (page 60)
The responsibilities in relation to internal control are clearly
Governors’ Audit Committee (page 65)
defined.The Governors are ultimately responsible for theGovernors’ Commercial Committee (page 65)
proper use of public money whilst the Executive Committee isGovernors’ Remuneration Committee (page 66)
responsible for maintaining an adequate system of internal
control and for reviewing its effectiveness. Such a system isDuring the year the Chairman of the Governors conducted
designed to manage rather than eliminate the risk of failure toa review of the governance arrangements of the BBC. As aachieve business objectives and can provide only reasonable, andresult the distinction between the roles and responsibilities of
not absolute, assurance against material misstatement or loss.
the Governors and the Executive Committee has been clarified
and enhanced. In particular, the Governance & Accountability
The Governors and Executive Committee consider that there
department now provides greater support to the Governors.
is an ongoing process for identifying, evaluating and managing
significant risks faced by the BBC.The process has continued toRelationship with Parliament and licence holders
evolve during the year ended 31 March 2002 and up to the date
The BBC lays its Annual Report and Accounts before Parliament.
of approval of this report and accounts. It has been reviewed byGovernors or BBC Executives may be, and frequently are, called the Governors and Executive Committee and accords with the
before Parliamentary Select Committees to answer MPs’
guidance set out in the ICAEW’s guidance for directors, Internal
questions about the BBC’s activities and plans.
control: Guidance for directors on the Combined Code.
Approval for new channels and services, public or commercial,must be sought from the Secretary of State for Culture, Mediaand Sport.
The BBC World Service is funded by Grant-in-Aid and isaccountable to Parliament through the Foreign and

64 Annual Report and Accounts 2001/2002

While an established system of risk management and control,
including procedures to monitor and evaluate key risks, hasbeen in existence throughout the year, further steps are to
be taken to embed risk management more fully throughout
the BBC and reflect recent internal reorganisations and the
expansion in the BBC’s services.

The key control procedures operating during the year aredescribed under the following headings:
management•TheriskBBC’s
top risks and associated action plans have beenreviewed during the year.The Director of each division had
a clear responsibility for the identification and managementof risks facing their business. Divisional management have madeprogress in their review of risks associated with the achievementof each division’s objectives. Consideration of these risks includes
a review in each division of the impact of the BBC’s top risks.
The risks identified and the actions planned in response are
maintained in a risk register in each division which is verified by
BBC Internal Audit. Reports on the management of the key
risks are considered by the Executive Committee and by the
Audit Committee.

•

monitoring of controls
BBC Internal Audit undertakes regular testing of control
systems and compliance with core business processes undera plan agreed with the Audit Committee.This programme oftesting, which is updated three times each year, is based on acontinuing assessment of key risks.The results of testing arereported to the Audit Committee, which monitors theoperation of the BBC’s controls throughout the year.

incident in which there is a suspicion that there has been
wrongdoing.The process is administered by an independent
external company to ensure anonymity. Each reported incident
is investigated, a response communicated and action taken
as appropriate.
reporting•Thefinancial
BBC has a comprehensive system for reporting financial
results (and business performance). In April 2001 theintroduction of new financial and business processes using SAP
software was successfully completed. During the year eachdivision prepared monthly reports and accounts.These results
were reviewed locally and the consolidated results of the BBC
were reviewed by the Executive Committee and Board ofGovernors each month.
Each financial year the divisions update their five-year plans andprepare detailed budgets for the following financial year.The
annual budget of each division is reviewed by the Director of
Finance, Property & Business Affairs.The overall budget isapproved by the Director-General, the Executive Committee
and the Board of Governors.

Governors’ Audit Committee
The Audit Committee meets four times each year and ischarged with reviewing the effectiveness of internal control;
approving and monitoring the BBC Internal Audit work plan;divisional controls
considering issues arising from Internal Audit work; reviewing
The divisions’ management has responsibility for ensuring thatmanagement’s response to internal control issues; approving theexisting controls and procedures are followed. Key controls
external audit fee; considering the external audit strategy andover major business risks include maintaining and regularlyplans; reviewing the external auditors’ reports, and reviewing
updating risk registers, performance review and exception
reporting. Reviews by BBC Internal Audit monitor the operation and approving the financial statements.
of divisional controls to ensure that they are consistently
The Audit Committee regularly reviews the independence of
applied and, as a minimum, meet the BBC-wide control policy.
its external auditors, currently KPMG.The Committee holds
computer systems
discussions with the external auditors without management
The BBC has established controls and procedures over the
being present.The Committee reviews the nature and levelsecurity of data held on computer systems. Arrangements areof non-audit fees paid to KPMG. Any significant consulting workin place for computer processing to continue and data to be
is put out to competitive tender. Recruitment from KPMG into
retained in the event of the failure of the BBC’s own data
any senior management position requires the prior approval
processing facility.
of a member of the Audit Committee.The Committee also
considers, with management, the performance of the external
controls over outsourced transaction processing
auditors each year and provides feedback to senior members
The majority of the BBC’s finance transaction processingof KPMG unrelated to the audit.
(excluding BBC Worldwide Limited) is outsourced to a service
company, Media Accounting Services Limited (Medas), which isGovernors’ Commercial Committee
independent of the BBC.The Director of Finance, Property &This committee monitors the performance of the BBC’s
Business Affairs has established monitoring procedures to review commercial subsidiaries.The Governors aim to ensure that thethe performance of Medas on a regular basis.These include
BBC maximises the opportunities to earn additional income forregular review by BBC Internal Audit in a programme of work
re-investment in public services, but without using licence fee
informed by a continuing assessment of key risks and issues.
income to support commercial operations and without putting
the licence fee at risk.
whistle-blowing
The BBC has put in place a ‘whistle-blowing’ policy.The policy
facilitates the anonymous communication to the BBC of any

•

•

•

•

Annual Report and Accounts 2001/2002 65

Compliance

Events of the year
The BBC’s system of controls, as stated above, is designed to
manage risks rather than eliminate them entirely. During theyear the BBC has reviewed lessons learnt from the following
incidents, updating controls where considered appropriate.
Broadcast & Business Continuity
On Saturday 30 June 2001 the uninterruptable power supply
in Television Centre failed.This resulted in the total loss of BBC
television programmes for over 20 minutes during peaktime
viewing.The report to the Board of Governors on this incident
highlighted the need for improved co-ordination across thebroadcast delivery chain to achieve clarity of ownership,consistent standards and performance monitoring. In July 2001
the Director-General appointed a Director of Broadcast
Continuity to review the current broadcast infrastructure, andthe processes associated with the delivery of broadcast content
to licence payers. Since then, the Broadcast & BusinessContinuity team has worked with the relevant BBC divisions
to deliver a number of projects aimed at improving the BBC’s
broadcast resilience, including:that in the event of a major disruption, from June
• ensuring
2002, the BBC is able to restore its scheduled analogue•

television services within ten minutes, and maintain its
recorded scheduled output for 48 hours
from January 2003, providing improved resilience for theBBC’s digital services

A key objective for 2002/2003 is to ensure the BBC adopts anagreed target for the level of service delivery to its audiences.
This would not only be an important measure of broadcast
continuity performance but would provide a basis for futurecontinuity planning and investment decisions.
In common with other organisations, the events of 11 September
led the BBC to review its arrangements for dealing with
unplanned contingencies. As a result, Broadcast Continuity’s
remit was extended to encompass wider, business continuity
issues, and the security of the BBC’s people and assets. We
have initiated a two-year programme of improvements to fire
precautions, glass protection and electronic security at
broadcast critical sites. In addition, contingency plans andtheir rehearsal are being given particular priority with theappointment during 2002 of a Head of Contingency Planning& Disaster Recovery to co-ordinate this activity across theorganisation.
Alleged fraud
During the year an allegation of fraud was made against
an agency sourcing the supply of goods to BBC Worldwide
Limited.The supplier is based in Hong Kong, where criminal
charges have been brought against directors of the agency andagainst a former director of BBC Worldwide Limited who isalso charged with conspiracy in the alleged fraud.The potential
66 Annual Report and Accounts 2001/2002

loss to BBC Worldwide Limited is less than £1million and action
is being taken to recover possible losses pending judgement.
Statement of compliance with the Combined Codeof Best Practice
The BBC has complied throughout the year ended 31 March
2002 with the specific provisions in Section 1 of the Combined
Code with the exception of those provisions relating to nonexecutive directors and shareholder requirements which,as discussed earlier, are not applicable to the BBC.
4 Governors’ remuneration report
During 2001, the Governors approved the establishment ofa sub-committee of the Board to act as a Remuneration
Committee.This committee exists to deal with all mattersrelating to the remuneration of members of the Executive
Committee and is accountable to the Board of Governors
for the:and maintenance of overall remuneration policy• determination
review
andagreementof Executive Committee basic• salaries, bonus awards andbenefits, including pension
arrangements
The Committee has no input into the remuneration of its
own members.
This report explains the remuneration policy of the BBC for
both Governors and Executive Committee members andprovides details of their remuneration. In preparing this report
the BBC has complied with all the applicable provisions of the
Combined Code.
Governors: remuneration policy
The members of the Board of Governors receive a fee
determined by the Secretary of State for Culture, Media andSport.They are additionally reimbursed for expenses incurred
on BBC business. Expenses regarded by the Inland Revenue as
taxable are settled in full by the BBC, including any related tax
payments, and reported as benefits in the table on page 68.
The increase in annual remuneration notified for 2001/2002
was 2.7% for the Vice-Chairman and 3.6% for the Chairman
and other Governors (2000/2001 2.9% for the Vice-Chairman,
and 3.6% for the Chairman and other Governors).
Executive Committee: remuneration policy
The Committee considers the performance of the Executive
Committee members before recommending their annual
remuneration and bonus awards.The BBC’s Director of Human
Resources & Internal Communications provides technicalsupport to the Board in this respect but has no input into
decisions affecting his own remuneration.
The Governors aim to ensure that the packages offered toExecutive Committee members:of the BBC’s other commercial subsidiaries based onachievement of those companies’ performance targets.

the BBC to attract, retain and motivate high-calibre• enable
executives
Benefitsarepositionedatthemedianagainstacomparator
group
past, members of the Executive Committee were eligible• (which includes other broadcasting organisations, major listed Inforthea chauffeur-driven
car for business use in addition to acompanies and central government agencies) in terms of
total cash (basic salary plus annual bonus payment, if any)
● remunerate individuals fairly for individual responsibility andcontribution, while providing an element of performancerelated pay reflecting the underlying performance of the BBC● take into account the salary policy within the rest of the
BBC and the relationship that should exist between the
remuneration of Executive Committee members and thatof other employees

company car and fuel for private use. With the exception of
the post of Director of Nations & Regions, new appointees tothe Executive Committee are only eligible for a company car
and fuel for private use.The Director-General is eligible fora chauffeur-driven car but has no additional entitlement to
a company car and fuel for private use. Executive Committee
members are also eligible for medical insurance covering theexecutive and family and, where there is a business need, digital
reception equipment.

In determining appropriate levels, the Remuneration Committee
has access to internal expertise in the remuneration area,
annual surveys conducted by external consulting firms andpublished remuneration information on comparable companies.
The remuneration arrangements for Executive Committee
members include the following components:

Pensions
All members of the Executive Committee are eligible toparticipate in the BBC Pension Scheme, which provides salaryrelated pension benefits on a defined benefit basis, with an
accrual rate of 1/60th of the final salary per year of service,subject to the Inland Revenue earnings cap where applicable.
Only basic salary is pensionable.The Scheme provides for early
retirement on medical grounds and life insurance cover of fourtimes salary.

Basic salary
Basic salaries are reviewed in August each year, taking into
account external market levels and internal comparisons aswell as the individual’s responsibilities and performance.
Annual bonus
The Director-General and other members of the Executive
Committee participate in a performance-based annual bonus
scheme under which payments may be awarded of up to
30% of basic salary.The actual level of payment to individuals
is determined following a review of performance against a
mixture of qualitative and quantitative objectives set at the
beginning of the financial year.The achievement of divisional
objectives accounts for up to 50% of the bonus, achievementof Executive Committee objectives for up to 20% of the bonus,
and there is a discretionary element for individual/operational
performance of up to 30% of the bonus.

A variety of special arrangements have been made for thoseindividuals who have joined the BBC late in their careers whose
earnings exceed Inland Revenue limits, including funded andunfunded arrangements outside the BBC Pension Scheme.
Service contracts
Service contracts for members of the Executive Committee
have been individually determined. All Executive Committee
members have continuing or fixed-term contracts with amaximum of one year’s notice of termination by the BBC or
the individual executive.

Outside interests
With the agreement of the Board of Governors, members of
the Executive Committee may hold external directorships. It is
For the year under review the targets related primarily tolikely that not more than two external directorships of any sortobjectives which were set by the Governors and published(of which only one should be in a commercial organisation)in last year’s Annual Report.
may be held at the same time. Governors assess such requests
against rigorous criteria to ensure that conflicts of interest do
Bonuses are reflected in the financial statements on an accruals not arise. Remuneration which arises from directorships agreed
basis for the performance period under review. Actual payments since the introduction of this policy, or subsequent toare made in July each year.
appointment, is paid to the BBC.
A long-term incentive plan is in place for the Chief Executiveof BBC Worldwide Limited.This is based on the achievementof a specific cash flow target over a three-year period at theend of which a payment of up to 20% of salary could be made.
The Governors have also approved the establishment of acomparable plan to be put in place for the Chief Executive

Remuneration received
The remuneration of Governors or Executive Committee
members appointed or leaving during the year is included in
respect of their period of membership only.The fees relating
to Sir Robert Smith are paid direct to Deutsche Bank which
releases him for the required time to the BBC.
Annual Report and Accounts 2001/2002 67

Compliance

Chairman and Executive Committee pensions
The BBC provided pension benefits to Governors andGavyn Davies (Chairman)
52
1466
6* Executive Committee members during the period as follows:
Total
BBC
Sir Richard Eyre
15
2
17
16
accruedcontriDermot Gleeson
15
7
22
10*
Increase pension atbutionsin accrued 31 March
Transfer Individual’s to money
Baroness Hogg
15
2
17
16
pension per
2002
value ofcontripurchase
Roger Jones
26
4
30
30
annum per annum
increasebutionsschemeabc,defProfessor Fabian Monds
26
6
32
30
£000
£000
£000
£000
£000
Dame Pauline Neville-Jones
18
11
29
18
Rt Hon The Lord Ryder
Sir Christopher Bland
1
7
12
2
–
(Vice-Chairman) (apptd 1.1.2002)
7–
7–
Executive Committee
Sir Robert Smith
26
6
32
26
Greg Dyke
2
4
25
4
52
Ranjit Sondhi
20
2
22
21
Jenny Abramsky
6
118
109
12
–
Sir Anthony Young
15
3
18
17
Glenwyn Benson
4
21
67
12
17
Sir Christopher Bland
Mark Byford
8
75
99
10
–
(Chairman) (retd 30.9.2001)
39
2
41
89
Stephen Dando
1
1
10
3
37
Heather Rabbatts (retd 20.12.2001)
11
3
14
16
Andy Duncan
1
1
10
3
21
285
62
347
295 Carolyn Fairbairn
2
8
15
4
18
Roger
Flynn
1
1
10
4
22
*Appointed part-way through 2000/2001.
Rupert Gavin
2
6
19
4
35
Annual
Total
Total
2
2
11
4
34
Salarybonus Benefits
2002
2001 Ashley Highfield
Executive Committee
£000
£000
£000
£000
£000 Pat Loughrey
9
76
111
10
–
5
22
67
4
21
Greg Dyke
357
97
15 469 454 Peter Salmon
25
79
321
13
–
Jenny Abramsky
205
54
14 273 258 Richard Sambrook
7
78
83
15
–
Glenwyn Benson
179
40
7 226
15* John Smith
2
12
19
4
18
Mark Byford
211
69
14 294 280 Michael Stevenson
3
42
35
5
16
Stephen Dando (apptd 11.6.2001)
173
48
1 222
– Caroline Thomson
11
99
211
14
–
Andy Duncan (apptd 11.6.2001)
181
45
9 235
– Alan Yentob
–
29
4
1
5
Carolyn Fairbairn
187
48
13 248 212* Gareth Jones
–
2
–
–
–
Roger Flynn (apptd 1.6.2001)
188
45
10 243– Philip Langsdale
2
76
142
4
–
Rupert Gavin
270
50
19 339 355 Margaret Salmon
6
70
73
11
–
Ashley Highfield
222
59
13 294 156* Mark Thompson
Pat Loughrey182
46
31 259 195* Gavyn Davies has waived his entitlement to pension benefitsPeter Salmon
199
48
26 273 105* from the BBC.
Richard Sambrook
204
47
9 260
10*
John Smith
219
66
26 311 304 No additional voluntary contributions are included above.
Michael Stevenson
179
36
18 233 218
Caroline Thomson
173
39
14 226 144* The total accrued pension at 31 March 2001 for Sir Christopher
Alan Yentob
221
58
23 302 290 Bland was £6,000. An amount of £20,000 was provided to meet
Gareth Jones (resgd 10.6.2001)
38–
4
42 264 the BBC’s pension contributions in 2000/2001 and 2001/2002
Philip Langsdale (resgd 1.4.2001)–––– 237 under the Charter to former Chairmen and their surviving
Margaret Salmon (resgd 30.4.2001) 189**–
4 193 263 spouses.
Mark Thompson (resgd 12.12.2001) 153–
11 164 272
3,930 895 281 5,106 4,032 The total accrued pension at 31 March 2001 for Greg Dyke
was £2,000.The BBC contribution to money purchase schemes*Appointed part-way through 2000/2001.
for the year ended 31 March 2001 was £51,000 for Greg Dyke**£163,000 of Margaret Salmon’s salary was a payment in lieu of notice in line with herand £158,000 for the other Executive Committee members
contractual entitlement.
in aggregate.
Governors

Fees
£000

Benefits
£000

2002
£000

2001
£000

The total accrued pensions for Sir Christopher Bland, Gareth
Jones, Philip Langsdale and Mark Thompson have been
calculated as at 30 September 2001, 10 June 2001, 1 April 2001
and 12 December 2001 respectively being the dates they
resigned as directors.The total accrued pension for Margaret
68 Annual Report and Accounts 2001/2002

Salmon has been calculated at her date of retirement whichwas 30 June 2001 rather than the date she resigned as adirector (30 April 2001).
Notes to pension benefits
a)
b)
c)
d)

e)
f)

The increase in accrued pension during the year excludes any increase for inflation.
The pension entitlement shown is that which would be paid annually based on service
to the end of the year.
The transfer value has been calculated on the basis of actuarial advice in accordance with
Actuarial Guidance Note GN11.
The transfer value represents the cost to the pension scheme of the increase in annual
pensions but not a sum paid or due to the individual and therefore cannot be meaningfully
added to remuneration.
These are contributions made by the Chairman and Executive Committee members to
the defined benefits scheme during the 2001/2002 financial year.
This is the actual BBC contribution to a separate money purchase (defined contribution)pension scheme.

relevant output of all BBC channels (including BBC Choice, BBC
Knowledge – now BBC Four – and BBC News 24), 88% was ofEuropean origin and 20% was made by European independent
producers.The figures for 2000 were 88% and 15% respectively.
6 Other rules
On-air trails
Following the 1992 report of the Monopolies and Mergers
Commission (on the publicising, in the course of broadcasting,of goods supplied by the broadcaster), the BBC gave an
undertaking to the OFT to use only still trails to giveinformation about BBC magazines.

5 Programmes from independent producers
UK programme quotas
Under the Broadcasting Act 1990 the BBC has a duty to ensurethat not less than 25% of the amount of time allocated to thebroadcasting of qualifying television programmes is allocatedto the broadcasting of a range and diversity of independent
productions.The Director-General of the Office of Fair Trading(OFT) is required to report to the Secretary of State
periodically on the extent to which the BBC has, in his opinion,
performed that duty. His report for the period 1 April 2000
to 31 March 2001 has not yet been published but current
indications are that while the BBC has achieved a satisfactory
range and diversity of independent productions, it will just missthe 25% target for independent production.
Recent takeovers by broadcasters of major independent
producers has had the effect of removing their status as
independents for the purpose of UK legislation and makes it
increasingly difficult for the BBC and other broadcasters tomeet this quota. If such production companies had beencounted towards the 2000/2001 total, the BBC would have met
its target.The DCMS has acknowledged this issue and has
undertaken to amend the relevant secondary legislation toreinstate companies such as Endemol, which are significant
suppliers to the BBC but which had their status changed following
a takeover by a foreign broadcaster.
EU programme quotas in the calendar year 2001
European Community legislation requires Member States
to ensure that broadcasters reserve for European works
a majority proportion of their television transmission time
excluding the time devoted to news, sports events, games,
adverts, teletext services and teleshopping.The legislation
also requires broadcasters to reserve at least 10% of theirtransmission time for European works (excluding works ofthe kind described above) made by independent producers.
The BBC exceeded EU quotas in the calendar year 2001.
Of the relevant BBC One and BBC Two output, 79% wasof European origin (72% in 2000) and 11% was made by
European independent producers (17% in 2000). Of the

The terms of the undertaking also commit the BBC not toexceed more than seven minutes as an aggregate across aseven-day period in relation to on-air promotions of BBCmagazines. During the period 1 April 2001 to 31 March 2002
the total for all BBC magazines (including Radio Times) was
2 hours, 25 minutes and 30 seconds of transmission (2000/2001
1 hour, 39 minutes), which averages out at 2 minutes, 45 seconds
in a seven-day period (2000/2001 1 minute, 54 seconds).The
restriction only applies to BBC magazines.The BBC, however,voluntarily applies the spirit of the undertaking to all BBC
Worldwide Limited products. During 2001/2002 the weekly
total for all BBC Worldwide Limited products has averaged
5 minutes, 1.9 seconds (2000/2001 4 minutes, 11 seconds),
well within the seven-minute restriction.
European Channel Broadcasting Limited
Under DCMS approval for BBC Worldwide Limited dated
23 February 2001 (replacing earlier approvals) it is arequirement that arm’s length trading relationships be
maintained between the Corporation on the one hand and
BBC Worldwide Limited, and the two companies responsible
for the BBC World and BBC Prime Channels in Europe on
the other.The BBC’s Fair Trading Policy was applied and arm’s
length relationships were maintained throughout the year.
On 7 October 1999, the ITC granted satellite services licences
to European Channel Broadcasting Limited in respect of
BBC World and BBC Prime for a period of ten years from
10 October 1999. In addition to compliance with the relevant
ITC codes, the BBC-made programmes shown on the channels
are produced in accordance with the BBC Producers’ Guidelines.
Donations and acknowledgements
The BBC does not make political donations. In addition tobroadcast appeals detailed on page 49, donations to charities
by BBC Worldwide Limited amounted to approximately £8,500
during the year (2001 £19,000), including £3,000 to the Diana,
Princess of Wales Memorial Fund.
The BBC acknowledges financial grants from the European
Commission for various technical research projects.
Annual Report and Accounts 2001/2002 69

Financial review
The BBC is in good financial health.We are spending much more on programmes
and have launched several new services.

We financed the extra spending partly from an above-inflation
licence fee increase, but mostly from self-help measures.
These included reductions in licence fee evasion, reductions
in overheads and increased contributions from our commercial
subsidiaries.

BBC Worldwide increased its sales by 12% to £660million
and its profit before interest and taxation increased to£25.7million. However, its importance to the BBC lies in the£106million cash it returned this year, the majority of whichis invested directly into programmes.

IncomeLicence fee
The licence fee is our most important source of income. In
2001/2002 it provided £2,533million, up £162million on theprevious year. Of this, £43million was raised from our own
improvements in collection effectiveness.The rest came frominflation (£83million) and the above-inflation settlement(£35million) agreed last year by the Government.This RPI+1.5% annual increase in the licence fee will continue until
Charter renewal.

In 1997 we set a target for BBC Worldwide to quadruple its
cash flow to the BBC to £210million by 2007.This year’s resultmeans that BBC Worldwide is exactly on track to achieve thattarget.

The improvements in collection of the licence fee saw evasion
fall to a record low. However, the DCMS has revised the way
evasion is calculated to include businesses and other official
premises in addition to the traditional catchment of households.
This new calculation shows a much bigger opportunity for licencefee sales in the next few years. Under the new method evasion
fell from 8.8% at the start of the year to 7.9% at 31 March 2002.
During the year we appointed a new main contractor for
licence collection, Capita.The change in contractor saw asignificant reduction in collection costs including a rebate from
Consignia for non-performance of contractual obligations. Next
year the BBC will be investing in a new database which Capita
will operate and maintain on its behalf.
Commercial earnings
As part of the current licence fee settlement, the Government
challenged the BBC to increase the amount it raised fromcommercial operations.This year the three commercial
subsidiaries have together contributed £130million in cash to the
BBC and generated savings in support costs of over £12million
for the BBC. Next year the newly incorporated BBC Broadcast
Limited, offering playout and channel management services, will
also contribute to the BBC’s finances.
BBC Worldwide Limited
The BBC’s programmes are a valuable asset. BBC Worldwide,
which is wholly owned, generates commercial income fromthe distribution of television programmes, the operation ofcommercial channels and the publishing of magazines, books,
videos, DVDs, audio tapes, CDs and other licensed products.

70 Annual Report and Accounts 2001/2002

BBC Resources Limited
BBC Resources has made significant progress following its
restructuring at the end of last year when some of the business
was transferred into BBC Technology Limited and into BBC
Nations & Regions operations. Its activities are now focusedon the traditional programme facilities areas of studios, outside
broadcasts, post-production and graphic design.
Although BBC Resources recorded a small loss for the year,
it was cash positive for the first time, contributing £8million in
cash for the BBC to use in programme making.The businessexpects to record its first profit next year.
BBC Technology Holdings Limited
BBC Technology commenced trading on 31 March 2001,
providing technological solutions in media, broadcast andinteractive applications to the BBC and external customers.
It has had a successful first year in which, despite difficult market
conditions, it achieved its business plan and contributed£16million of cash to the BBC.This business also expects
to record a profit next year.
Costs
We promised to increase the percentage of licence fee income
spent on programmes from 76% to 85% by 2004. We actuallyachieved 85% this year, a full two years early.
This year we started to see the results from the new single
SAP accounting and business system, which halves the costof financial management and has also led to a reduction in
procurement costs of £10million.
This, together with other savings across the BBC, means that
overheads are now £67million lower than two years ago andthe BBC remains on course to achieve the target of reducing
overheads by £166million by March 2004.

Spending on programmes
Programme spend increased by £270million in 2001/2002,
mostly on drama and entertainment.
We also launched BBC Four, CBBC and CBeebies as new
digital television channels, and BBC Five Live Sports Extra and6 Music, new digital radio services.
We promised to increase programme spend by £450million
in the two years to 2002/2003. We are on course to meetthat target next year.

capt

Pension fund assets
The balance sheet has significantly increased in value since ourprevious published financial statements.The application of new
accounting rules now requires us to include the significant
surplus on the BBC’s pension scheme.This surplus fell from
£1,708million at 31 March 2001 to £965million at 31 March
2002, mainly reflecting the general fall in equity market values.
The surplus continued to allow the BBC and pension fundmembers to contribute at a low rate for now and the scheme
is continuing as a final salary ‘defined benefit’ scheme.

Spending on digital services was £330million, of which£100million was on BBCi (internet services). Over 87%
continues to be focused on analogue.
Result for the year
The BBC does not have shareholders and therefore does not
aim to make a profit. Operating surpluses and deficits simply
represent timing differences between income and expenditure.
The operating deficit has been caused by increasing spend on
services ahead of increases in income.
AssetsProperty
In October 2001 the BBC agreed a 30-year deal with Land
Securities Trillium (LST) covering four million square feet of
BBC property – over half the BBC’s estate. It transfers theburden and risks of property management to LST, allowing the
BBC to concentrate on programme making. It also reduces theBBC’s property operating costs, provides funds for the property
redevelopment programme and releases cash for the corebroadcasting business.Through this deal the BBC will save
£83million on its operating costs in the six years to 2006/2007.
The major strategy to upgrade the estate moved ahead in
the year. Construction has begun at White City of half amillion square feet of space. Planning applications are lodged
with Westminster City Council for the redevelopment of
Broadcasting House. New space has been secured for the BBC
in Birmingham and Norwich and improvements have been
made to the quality of several local radio buildings.
Cash
The cash balance remains high at £227million (in addition
to the £130million of licence payers’ advance deposits under
the TV licence savings stamp scheme). Effective treasury
management has contributed £22million in interest income
this year.The healthy cash position enables the BBC to continue
with the planned increase in programme spending in 2002/2003.

John Smith
Director of Finance, Property & Business Affairs

Financial statements
As a public service broadcaster, the BBC strives to adopt
the highest standards of reporting and transparency of
information. Although not mandatory, we comply with theCompanies Act 1985, UK Accounting Standards and thereporting requirements of the UK Listing Authority sothat we publish financial information to the extent
expected of public companies in the UK.The pages that
follow include that information in detail. We are also
subject to a range of regulatory requirements, and theGovernors report on compliance with these on pages
60 to 69.
These financial statements are available online. Copies
may also be obtained by writing to The Secretary, BBC,Broadcasting House, Portland Place, London W1A 1AA.
In line with other UK companies, we publish and file with
Companies House audited financial statements for all our
subsidiaries.

Annual Report and Accounts 2001/2002 71

Consolidated statement of income and expenditure
for the year ended 31 March

Note

IncomeOperating expenditure

12Group operating deficit*
Share of operating surplus of associates and joint ventures
Operating deficit
Profits and losses on sale and termination of operations
Profit on disposal of fixed assets
Deficit before interest and taxation
Net interest receivable
Other finance income (from defined benefit pension scheme)

3
5
6

7
8

Surplus before taxation

2002
£m

2001
as restated£m3,382.9(3,556.3)

3,164.5(3,294.3)(173.4)1.4(129.8)0.9(172.0)7.7
11.7(128.9)18.2–(152.6)21.6
133.9(110.7)
25.8
169.5

2.9

84.6

Taxation
Minority interest

9(17.7)
(1.1)

(9.6)
0.5

(Deficit)/surplus for the financial year19

(15.9)

75.5

The income and expenditure account for 2001 has been restated for the adoption of FRS 17 (see Note 26a).
The BBC has entered into certain joint ventures with Flextech and Discovery Communications Inc. but has
no obligation to make good its share of their cumulative operating losses (see Note 14d).
The above results are derived from continuing operations in both the current and previous financial periods.
The BBC does not aim to make a profit. Surpluses or deficits represent timing differences between income
and expenditure in each accounting period.
* After charging £179.5million (2001 £156.8million) in respect of pension costs under FRS 17 (see Notes 4
and 8).

72 Annual Report and Accounts 2001/2002

Balance sheetsat 31 March

Note

Fixed assets
Intangible fixed assets
Tangible fixed assets
Investment in programmes for future sale
Other investments

Current assets
StocksCurrent debtors
Long-term debtors
Total debtors
Short-term investments
Cash at bank and in hand
Creditors – amounts falling due
within one year

Group
2002
£m

Group
2001 Home Services
as restated
2002
£m
£m

Home Services
2001
as restated
£m

15.4
760.8
111.8
16.8

0.5
817.0
117.2
1.8

–
520.8
–
299.2

–
466.4
–
339.5

904.8

936.5

820.0

805.9

15

449.4

397.6

425.3

378.0

16

663.6
137.2

648.2
47.8

542.8
113.8

544.7
44.8

800.8
356.8
0.3

696.0
253.4
117.9

656.6
356.8
–

589.5
253.4
80.3

1,607.3

1,464.9

1,438.7

1,301.2(871.2)(844.6)(767.9)(657.7)

736.1

620.3

670.8

643.5

1,640.9

1,556.8

1,490.8

1,449.4

10
12
13
14

16

21
21

17

Net current assets
Total assets less current liabilities
Creditors – amounts falling due after
more than one year

17

(102.5)(51.3)(46.1)(21.7)

Provisions for liabilities and charges

18(82.6)(53.2)(74.6)(48.3)

1,455.8

1,452.3

1,370.1

1,379.4

965.0
(3.9)

1,708.0
(3.7)

–
–

–
–

2,416.9

3,156.6

1,370.1

1,379.4

646.2
961.1

654.5
1,704.3

561.1
–

581.1
–

1,607.3
802.6
6.4

2,358.8
791.1
7.2

561.1
802.6
6.4

581.1
791.1
7.2

2,416.3
0.6

3,157.1(0.5)

1,370.1–

1,379.4–

2,416.9

3,156.6

1,370.1

1,379.4

Net assets excluding pension asset and liability
Pension asset
Pension liability

88Net assets
Represented byOperating reserve excluding pension asset
and liability
Pension reserve
Operating reserve
Capital reserve
Revaluation reserve

19
19

19
19

Minority interest

The balance sheets have been restated for the adoption of FRS 17 (see Note 26a).
The BBC has entered into certain joint ventures with Flextech and Discovery Communications Inc. but has no obligation to make good its share of the net
liabilities which at 31 March 2002 amounted to £82.5million (2001 £88.2million).These liabilities have not been included in the financial statements(see Note 14d).

The financial statements were approved by the Governors and Executive Committee on 20 June 2002
and signed on their behalf by:
Gavyn Davies Chairman
Greg Dyke Director-General
John Smith Director of Finance, Property & Business Affairs

Annual Report and Accounts 2001/2002 73

Statement of total recognised gains and losses
for the year ended 31 March

Group (deficit)/surplus for the financial year
Exchange differences on retranslation of overseas subsidiaries
Actuarial loss on defined benefit pension schemes

Note

2002
£m

2001
as restated£m8b(15.9)
0.5(725.4)75.5
2.4(708.2)(740.8)(630.3)

Total recognised gains and losses relating to the year
Prior year adjustment for the adoption of FRS 17

26a

Total recognised gains and losses since the previous financial year

1,751.5
1,010.7

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).

Reconciliation of movement in reserves
for the year ended 31 March

Group
2002
£m

Home Services
2001
as restated£m(Deficit)/surplus for the financial year
Other recognised gains andlosses relating to the year (net)(15.9)

75.5

(9.3)

32.5

(724.9)(705.8)––(Decrease)/increase in reserves during the year

(740.8)(630.3)

(9.3)

32.5

Opening reserves as previously statedPrior year adjustment for the adoption of FRS 17

1,405.6
1,751.5

1,395.6
2,391.8

1,344.6
34.8

1,335.6
11.3

Opening reserves as restated

3,157.1

3,787.4

1,379.4

1,346.9

Closing reserves

2,416.3

3,157.1

1,370.1

1,379.4

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).

74 Annual Report and Accounts 2001/2002

Group
2001 Home Services
as restated
2002
£m
£m

Consolidated cash flow statement
for the year ended 31 March

Note

2002
£m

2001
£m

20

217.5

129.0

Dividends received from joint ventures and associates

1.1–

Return on investments and servicing of financeInterest received
Interest paid

24.9
(2.8)

26.3
(2.1)

Net cash inflow from return on investments and servicing of finance

22.1

24.2

Taxation
Taxation paid

(13.9)(14.8)

Capital expenditure and financial investments
Purchase of tangible fixed assets
Investment in programmes for future sale
Investment in intangible fixed assets
Proceeds from the sale of investments
Proceeds from sale of investment in programmes
Proceeds from the sale of tangible fixed assets(194.2)(83.2)
(8.7)
0.6
5.9
46.8

(140.8)(76.3)–––
2.3

Net cash outflow from capital expenditure(232.8)(214.8)(9.1)(11.4)
9.0

(0.6)
–
18.7

Net cash (outflow)/inflow from acquisitions and disposals(11.5)

18.1

Net cash outflow before use of liquid resources and financing(17.5)(58.3)

15.0(103.4)2.5
4.2(88.4)

6.7

10.3
–

–
–

10.3

–

(95.6)(51.6)Net cash inflow from operating activities

Acquisitions and disposals
Purchase of a subsidiary net of overdrafts acquired
Investments in joint ventures
Proceeds from sale of operations

11
5

Management of liquid resources
Net cash withdrawn from deposit(Purchase)/sale of other liquid resources

21
21

Net cash (outflow)/inflow from management of liquid resources
The decrease in cash shown hereis due to the BBC policy of investing
surplus cash in short-term liquid
investments.Taking cash and shortterm investments together, the BBC’s
funds at 31 March 2002 remain ata similar level to 31 March 2001
(see Note 21).

Financing
Increase in loans
Repayment of loans

21
21

Net cash inflow from financing
Decrease in cash

21, 22

Annual Report and Accounts 2001/2002 75

Statement of accounting policies

This section explains the BBC’s main accounting policies, whichhave been applied consistently, throughout the year, and with thepreceding year except where stated.A footnote in italics follows
some policies below to explain the technical aspects of theaccounting treatment in plain English.
The financial statements have been prepared in accordance withthe provisions of the BBC’s Charter and Agreement. Although notmandatory, the BBC has chosen to follow the accounting anddisclosure provisions of the Companies Act 1985, applicable UK
accounting standards and the rules of the UK Listing Authority toensure that its financial statements are prepared on a basis whichis consistent with that of UK public limited companies.
Basis of accounting
The financial statements are presented under the historical costaccounting convention as modified by the revaluation of certain plant,
machinery, furniture and fittings.
The Group has also fully adopted FRS 17, Retirement benefits, early.
FRS 17 requires a different accounting policy for the recognition ofpension costs in the financial statements compared with its predecessor,
SSAP 24. Accordingly the 2001 financial statements have been restatedonto a comparable basis. Note 26a provides more details of the effectof this change in accounting policy.
The BBC chooses to adopt all accounting standards early.
Basis of consolidation
The BBC Group comprises the Home Services and those subsidiaries
incorporated to act solely on behalf of, and for the benefit of, theHome Services (notably Centre House Productions Limited and BBC
Property Limited), BBC World Service, and the BBC’s commercial
subsidiary companies, BBC Worldwide Limited (BBC Worldwide), BBC
Resources Limited (BBC Resources) and BBC Technology Holdings
Limited (BBC Technology).The acquisition method of accounting has
been adopted. Under this method, the results of subsidiaries acquiredor disposed of in the year are included in the consolidated statementof income and expenditure from the date of acquisition or up to thedate of disposal.
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 anundertaking in which the Group has a long-term interest and overwhich it exercises joint control.The Group’s share of profits less lossesof associates and joint ventures is included in the consolidated
statement of income and expenditure and its interest in their net
assets is included in the consolidated balance sheet.
A separate statement of income and expenditure reflecting the resultsof the Home Services has not been presented, as permitted by Section
230 of the Companies Act 1985.
These accounts of the BBC Group include the results of the Home
Services, BBC World Service and all businesses controlled by the BBC(subsidiaries) together with the BBC’s share of the results of businesses
where we influence their policies (associates) and those which we jointly
control (joint ventures).

76 Annual Report and Accounts 2001/2002

Investments
Investments are recorded on the balance sheet of the Home Services
at cost less provision for any impairment in value.The funding of theHome Services and BBC World Service is legally separate and crosssubsidisation is not permissible. Accordingly, for the purposes ofpreparing the Home Services’ balance sheet, the Home Services are
considered to have an investment in BBC World Service equal to the
net assets of BBC World Service.
Intangible fixed assets
Goodwill
Purchased goodwill (representing the excess of the fair value of thepurchase consideration plus any related costs of acquisition over thefair value attributable to the separable net assets acquired) arising on
acquisition of a subsidiary or business, is capitalised and amortised overits useful economic life. On the subsequent disposal or terminationof a business, the surplus or deficit is calculated after charging theunamortised amount of 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 thestatement of income and expenditure for the year.
Intellectual property rights
Purchased intellectual property rights are capitalised and amortised
on a straight line basis over the expected useful life of the assets.
IncomeIncome derived from television licences, receivable from the Department
of Culture, Media and Sport, 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 for that year.
Any difference between the value of licences issued and the amountvoted is adjusted in the amount of cash received in the following year.
Any amounts which have not been paid to the BBC are included
within debtors.
BBC Worldwide Limited income is shown net of value added tax andtrade discounts and predominantly represents: licence fees from the
distribution of joint productions; agency income and commission fromthe distribution of programmes on behalf of the BBC and otherproducers; income from joint venture TV channels; and income fromthe sale of magazines, books, videos, compact discs, tapes, DVDs andcharacter merchandise.
BBC Resources Limited and BBC Technology Holdings Limited income
is shown net of value added tax and trade discounts and predominantly
represents income from the provision of equipment, facilities andservices to the BBC and external customers.
BBC World Service income, primarily derived from a Grant-in-Aid
from the Foreign and Commonwealth Office, is intended to meet
estimated expenditure in the year but unexpended receipts for theyear, within predetermined limits, are not liable to surrender.
The distinction between the various income sources is important.The BBC
is careful not to cross-subsidise commercial and public service activities orHome and World Service activities. More information on these BBC fairtrading requirements and policies can be found on pages 60 to 62 of
this Report.

Foreign currency translation
Transactions in foreign currencies are translated into sterling at therates of exchange ruling at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies aretranslated into sterling at the rates of exchange ruling at 31 March orat forward rates where related hedging contracts are in place.
Surpluses and deficits arising from the translation of assets and liabilities
at these rates of exchange, together with exchange differences arisingfrom 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 consolidation from the retranslation of the
opening net assets of overseas subsidiaries and any related long-term
foreign currency borrowings are taken directly to the operating
reserve, together with the differences arising when the profit and loss
accounts are retranslated at the rates ruling at the year end. Other
exchange differences are taken to the statement of income andexpenditure.
As these financial statements are prepared in sterling, the BBC’s foreign
currency transactions and balances must be translated, at appropriate
exchange rates, into sterling.This policy states how those retranslations areincluded in the financial statements and is consistent with the methods
used by many companies.
Pension costs
The BBC operates both defined benefit and defined contribution
pension schemes for the benefit of employees.
The amounts charged as expenditure for the defined contribution
scheme represent the contributions payable by the BBC for theaccounting periods in respect of this scheme.
The defined benefit schemes, of which the majority of staff are members,
provide benefits based on final pensionable pay. Amounts are charged
to expenditure so as to spread the cost of pensions over employees’
working lives with the BBC.The assets of the BBC’s main scheme areheld separately from those of the Group.
As noted above, the BBC has adopted FRS 17, Retirement benefits, earlyand now recognises the position of the scheme at the balance sheet
date.The impact on the results and the financial position of the Groupis disclosed in Note 26a.The main difference between the figures
provided under FRS 17 and SSAP 24 is that the valuation of assets
in the scheme is based on market valuation rather than longer-term
actuarial valuation.This means that there will be greater volatility in thepension scheme surplus as the valuation must reflect market conditions
at a particular point in time. For the BBC this is 31 March each year.
The Home Services have taken advantage of the provisions included
within FRS 17 and account for the scheme as if it were a defined
contribution scheme.This is because it is unable to identify its share of
the underlying assets and liabilities of the scheme on a reasonable andconsistent basis.The expenditure charge under FRS 17 for the Home
Services therefore represents the contributions payable in the year.
On retirement,members of the BBC’s main pension scheme are paid theirpensions from a fund which is kept separate from the BBC Group.The BBC
makes cash contributions to that fund in advance of members’ retirement.

Research and development
Research and development expenditure is written off as incurred.
Tangible fixed assets
Expenditure on fixed assets is capitalised together with incremental
and internal direct labour costs incurred on capital projects.
Depreciation is calculated so as to write off the cost or valuation, lessestimated residual value, of fixed assets on a straight line basis overtheir expected useful lives. Depreciation commences from the datean asset is brought 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– fifty years

Short-leasehold land and buildings– unexpired lease term

Plant and machinery
Computer equipment– three to five years

Electrical and mechanicalinfrastructure– ten to twenty-five years

Other– three to ten years

Furniture and fittings– three to ten years

Home Services’ plant and machinery is stated at the estimated current
replacement cost of the assets, adjusted for remaining service potential,
as at 31 March 1993, or cost if acquired later, less accumulated
depreciation.
BBC World Service’s plant and machinery and furniture and fittings
are stated at the estimated current replacement cost of the assets, asadjusted for remaining service potential, as at 1 April 1996, or cost if
acquired later, less accumulated depreciation.
The BBC has revalued its assets once, when the internal market was
introduced, but has chosen not to revalue its tangible assets on an ongoingbasis.This reflects the fact that they are used within the BBC rather thanbeing held for resale 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 sale is stated at cost, after writing
off the costs of programmes that are considered irrecoverable, lessaccumulated amortisation. Amortisation of investment in programmes
for future sale is charged to the income and expenditure account overthe estimated average marketable life of the programme genre whichis generally between five 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 income and expenditureaccount to match the expected timing of income from future sales.
Originated programme stocks and work in progress
Originated programme stocks and work in progress, including thosecommissioned from independent producers, are stated at the lowerof cost and net realisable value. With the exception of the costs ofAnnual Report and Accounts 2001/2002 77

Statement of accounting policies

prepaid repeats of independent programmes, the full stock value iswritten off on first transmission.
Cost includes all direct costs, production overheads and a proportionof other attributable overheads.
Net realisable value is based upon arm’s length contract prices
negotiated between the channel 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
expected transmission profile.
Assets and liabilities relating to acquired programmes are recognised
at the point of payment or commencement of the licence period;
whichever is earlier. Agreements for the future purchase of programmes
whose licence period has not commenced and where there has beenno payment by the balance sheet date are disclosed as purchasecommitments.
Other stocks
Raw materials and other physical stocks are stated at the lower of costand net realisable value.
Operating leases
Operating lease rentals are written off on a straight line basis over theterm of the lease.
An operating lease is a lease in which the lessee has not taken on the risks
and rewards of owning and operating the asset.The lessee – the BBC –has not acquired an asset but is hiring it, so the hire charge is included in
the BBC’s costs.
Finance leases
Assets acquired under finance leases are included within fixed assets atthe total of 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 are apportioned between thefinance element, which is charged against the income and expenditureaccount, and the capital element, which reduces the lease creditor.
A finance lease is a lease that transfers substantially all the risks andrewards of owning and operating an asset to the lessee. Effectively thelessee owns the asset and has financed it by borrowing, so the asset andborrowing are included separately in the balance sheet.
Deferred tax
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. Deferred tax assets arerecognised to the extent that it is regarded as more likely than not thatthey 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.

78 Annual Report and Accounts 2001/2002

Reserves
The value of the capital reserve is equal to the combined net bookvalue of fixed assets of the Home Services and BBC World Service at
historic cost.
The revaluation reserve reflects the difference between the net bookvalue of fixed assets of the Home Services and BBC World Service at
historic cost compared with their revalued amount.
The operating reserve is the accumulated surplus of the income andexpenditure account to date.
The BBC is careful not to mix Home Services and BBC World Service
reserves. Hence BBC World Service reserves are shown separately in thenotes to the financial statements.
Cash and liquid resources
Cash, for the purposes of the cash flow statement, comprises cash inhand and deposits repayable on demand, less overdrafts payable on
demand. Liquid resources are current asset investments which areeither readily convertible into known amounts of cash at or close to
their carrying values or traded in an active market. Liquid resources
comprise bank deposits not repayable on demand and other shortterm investments which include gilts, certificates of deposit andcommercial paper.
Financial instruments
The Group does not enter into speculative derivative contracts.
Some hedging contracts are undertaken in order to limit theGroup’s exposure to foreign exchange fluctuations. (The accounting
treatment for these contracts is explained in the foreign currencytranslation accounting policy).
Disclosure of the Group’s loans and other financial assets andliabilities is provided within the notes to the financial statements
covering debtors, creditors and cash and debt balances.

Notes to the financial statements
for the year ended 31 March

Note 1 provides analysis of thedifferent business areas within
the BBC.
The Home Services Group comprises
the UK public service broadcasting
operation, the Home Services andthose subsidiary companies
incorporated to act solely on behalfof the Home Services.
BBC Worldwide Limited (BBCWorldwide) generates income fromthe BBC’s programme assets throughthe distribution of television
programmes, the operation ofcommercial channels and the
publishing of magazines, books, videos
and other licensed products.
BBC Resources Limited (BBCResources) and BBC Technology
Holdings Limited (BBC Technology)
and their subsidiaries provide
equipment, facilities and services tothe BBC and external customers.

1 Analysis of income, (deficit)/surplus and net assets
1a Analysis of income, (deficit)/surplus and net assets by activity
Public services
Home
ServicesGroup£m

BBC World
Service£m2,698.2

211.1

659.8

357.4

3,926.5(130.3)(0.4)–(331.3)(462.0)––(81.6)–(81.6)

1b,f

2,567.9

210.7

578.2

26.1

3,382.91d(30.8)

9.4

25.7

(5.4)

(1.1)

Note

2002
Total income
Less:
Intra Group income
Less:
Share of joint ventures
Group external income(Deficit)/surplus before
interest and taxation
Defined benefit pension
scheme– additional operating costs*†– other finance income*Net interest receivable*

Commercial businesses
BBCTechnology
BBCand BBCWorldwide
Resources£m£m(151.5)133.9
21.6

Surplus before taxationand minority interest

2.9

Net assets (excluding pension
asset and liability)

1,083.7

134.3

113.0

124.8

Pension asset (net)*†2,416.9

2001 as restatedTotal income
Less: Intra Group income
Less: Share of joint ventures(Deficit)/surplus before
interest and taxation
Defined benefit pension scheme– additional operating costs*†– other finance income*Net interest receivable*

2,734.7(328.4)
–

204.5
–
–

587.2
–
(67.6)

324.7(290.6)–

3,851.1(619.0)(67.6)

1b,f

2,406.3

204.5

519.6

34.1

3,164.5

1d

(4.2)

11.2

24.7

(9.3)

22.4
(133.1)
169.5
25.8

Surplus before taxationand minority interest
Net assets (excluding
pension asset and liability)
Pension asset (net)*

1,455.8
961.1

Net assets

Group external income

Total
£m

84.6
1,162.9

124.5

95.4

69.5

Net assets

1,452.3
1,704.3
3,156.6

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).
* As permitted by FRS 17 these items are not split between business classes because they are managed centrally

across the whole Group 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(deficit)/surplus before interest and tax of each entity.The additional operating cost is the cost to the Groupover and above these cash contributions.

Annual Report and Accounts 2001/2002 79

Notes to the financial statements

1b Analysis of public services’ income
Home
ServicesGroup£m

BBC World
Service£m

Total public
services£m2,533.0
–
7.7
–
27.2

–
187.9
–
15.6
7.2

2,533.0
187.9
7.7
15.6
34.4

Total external income

2,567.9

210.7

2,778.6

2001
Licence fee
Grant-in-Aid
Open University
Subscriptions
Other income

2,370.8
–
9.1
–
26.4

–
181.8
–
15.3
7.4

2,370.8
181.8
9.1
15.3
33.8

Total external income

2,406.3204.5

2,610.8

2002
£m

2001
£m

2,164.3
3.4
0.8
350.0
16.3
(1.8)

2,052.3
4.2
2.3
307.7
16.5
(12.2)

2,533.0

2,370.8

Note

Other income includes the provisionof content and services to overseas
broadcasters, concert ticket sales andexploitation of our programmearchive.

2002
Licence fee
Grant-in-Aid
Open University
Subscriptions
Other income

1c

1c Licence fee
Licence fee income
Colour
Monochrome
Concessionary
Over 75s
Quarterly payment scheme premium
Other licence fee income and adjustments

Other licence fee income and adjustments include the year-on-year impact of licences issued in the year but
not in force at 31 March either through late or early renewals or through refunds.
During the year 3.3 million (2001 3.3 million) colour licences were issued under the quarterly payment
scheme at a premium of £5 each (2001 £5).
Licences in force are those which arestill valid as at 31 March each year.

Licences in force
Colour
Monochrome
Over 75s
Concessionary

2002
Numberm

2001
Number
m

19.9
0.1
3.6
0.2

19.7
0.1
3.1
0.5

23.8

23.4

Households in which one or more persons over the age of 75 reside, as their primary residence, are entitledto a free licence.The BBC is reimbursed for these free licences by the Department of Work and Pensions.
Licence fees are set by the
Department of Culture, Mediaand Sport.

Licence fees
Colour
Monochrome
Concessionary

2002
£

2001
£

109.0036.50
5.00

104.0034.50
5.00

From 1 April 2002 the colour and monochrome licence fees were increased to £112 and £37.50
respectively.The concessionary licence remained at £5.

80 Annual Report and Accounts 2001/2002

1d Analysis of public services’ surplus/(deficit) before interest and taxation by activity
The Home Services have one principal activity which is the provision of public service broadcasting in the UK.
BBC World Service’s surplus before interest and taxation is analysed as follows:
2002
£m

2001
as restated£m

Broadcasting
BBC Monitoring

8.6
0.8

10.1
1.1

Total surplus before interest and taxation

9.4

11.2

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).
1e Geographical analysis of activity of public services
The public services income and surplus or deficit arises in the UK.The net assets used by the public
services are located in the UK with the exception of BBC World Service net assets of £84.1million(2001 £77.6million) located overseas.
1f Analysis of commercial businesses’ income by activity
2002

2001

Publishing and new media
Programme distribution
Channels
BBC Worldbeeb Ventures Limited
Provision of programme making facilities and services
Provision of technology services
Less intra-Group income

331.7
172.3
46.3
25.5
2.4
148.9
208.5
(331.3)

300.2
150.0
41.7
25.6
2.1
324.7
–
(290.6)

Total external income
Share of joint ventures

604.3
81.6

553.7
67.6

685.9

621.3

The reduction in commercial income from the provision of programme making facilities and services is dueto the re-integration of a significant part of BBC Resources into the Home Services in April 2001.
Technology services were provided by a division of the Home Services in 2001.These services are now
provided by BBC Technology.
This table shows where the customersof our commercial businesses are
based. All commercial income arisesin the UK as this is where BBC
Worldwide acquires the rights it
exploits and where the skills andservices of BBC Technology and
BBC Resources are developed.

1g Geographical analysis of activity of commercial businesses
UnitedKingdom£mAmericas£mRest ofthe world
£m

Total
£m

348.6

110.5

145.2

604.3

6.9

0.7

12.7

20.3

Net assets

195.4

42.4

–

237.8

2001 as restated
Income by destination

330.3

85.7

137.7

553.7

6.9

5.1

3.4

15.4

126.9

38.0

–

164.9

2002
Income by destination
Surplus before interest and taxation

Surplus before interest and taxation
Net assets

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).

Annual Report and Accounts 2001/2002 81

Notes to the financial statements

2 Operating expenditure
2a Analysis of operating expenditure by activity
Total
2002
£m

Total
2001
as restated£m

2,602.1
204.6
568.9
29.2
151.5

2,410.5
193.3
514.0
43.4
133.1

3,556.3

3,294.3

Note

Home Services GroupBBC World Service
BBC Worldwide
BBC Technology and BBC Resources
Additional defined benefit pension scheme operating costs

2b
2c
2d
2d

The 2001 figures have been restated to reflect the adoption of FRS 17 (see Note 26a).
As permitted by FRS 17 the non-cash operating costs are not split between the business activities as it is
not possible to do this on a reasonable and consistent basis.
BBC World Service expenditure of £204.6million excludes £0.4million of expenditure on intra-Group
activities.
2b Home Services Group expenditure
2002
£m

2001
as restated
£m

961.7
410.5
252.3
164.3
38.1
42.7
52.6
89.6
77.0
1.5

919.7
397.9
199.7
160.0
41.1
39.2
53.3
84.4
68.9
1.2

2,090.3

1,965.4

19.7
52.6
50.3
3.9
32.4
11.2
7.8
100.4

2.2
43.3
47.6
3.3
18.6
10.2
4.4
54.2

278.3

183.8

95.4
127.2

131.9
118.3

Home Services – broadcasting expenditure– non-broadcasting expenditure

2,591.2
10.9

2,399.4
11.1

Total

2,602.1

2,410.5

Analogue services
BBC One
BBC Two
National and Regional Television
National, Regional and Local RadioBBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five Live
Asian Network

Digital services
CBBC, CBeebies
BBC Choice
BBC News 24
BBC Parliament
BBC Four (previously BBC Knowledge)
Digital text and interactive television
Digital Radio
BBCi on the internet

Licence fee collection costs
Transmission costs

The figures for 2001 have been restated to reflect the adoption of FRS 17 (see Note 26a).
£0.7million (2001 £2.2million) relating to the block of children’s programmes previously shown on BBC
Choice have been removed from the costs of BBC Choice and restated against the new children’s channels
launched in February 2002.
82 Annual Report and Accounts 2001/2002

2b Home Services Group expenditure continued
In addition £2.4million (2001 £10.1million) of BBC One and BBC Two Digital costs previously reported
within Digital Services have been included with the analogue service costs for 2001 and 2002.This
represents the cost of playout and special equipment which has become standard for all services.
There was increased investment in national and regional television to deliver a richer mix of drama,
entertainment and popular factual output.
The expenditure on Radio 1 in 2000/2001 includes the cost of a significant marketing campaign which
was not repeated in 2001/2002. Investment in programme output is consistent across the two years.
BBC Choice output has included a higher level of original drama and entertainment in 2002.
BBC Four was launched in March 2002. Costs are significantly higher than those of BBC Knowledge due
to high levels of original programming as well as one-off launch costs.
Investment increased in BBCi on the internet (formerly BBC Online) to improve websites which supportand enhance other programme output and to develop the BBC digital curriculum.
Licence fee collection costs have been significantly reduced in 2002 by a rebate from Consignia for nonperformance of contractual obligations.The BBC expects to spend this amount in 2003 on a new database.
Savings have also been made in the costs associated with the change in the licence fee collection contractor
which we anticipated and set aside in 2001. Further savings have been achieved through more focusedmarketing activity.
Of the transmission costs, £52.5million relate to digital services and £74.7million to analogue services.
The principal elements of the non-broadcasting expenditure are Open University Production Centre,
BBC Property Limited and Centre House Productions Limited costs.
2c BBC World Service expenditure
2002
£m

2001
as restated
£m

Radio
Monitoring
Transmission costs
Internet activity

142.1
22.6
30.6
9.3

136.7
21.3
30.2
5.1

Total

204.6

193.3

The figures for 2001 have been restated to reflect the adoption of FRS 17 (see Note 26a).
The expenditure shown for commercial
businesses relates only to commercial
income and excludes expenditure
relating to sales within the BBC.

2d Commercial businesses’ expenditure

Note

Cost of sales
Distribution costs
Administrative and other costs
Amortisation of programme investment

13

BBC Worldwide
2001
2002
as restated£m£m

BBC Technology
and BBC Resources
2001
2002
as restated
£m
£m

299.4
147.0
36.1
86.4

270.6
135.7
32.9
74.8

24.0
–
5.2
–

27.9
–
15.5
–

568.9

514.0

29.2

43.4

The figures for 2001 have been restated to reflect the adoption of FRS 17 (see Note 26a).

Annual Report and Accounts 2001/2002 83

Notes to the financial statements

3 Operating deficit
The operating deficit is stated after charging the following items:

Payments under operating leases:– land and buildings– plant and machinery– other
Research and development
Programme development
Depreciation– owned assets– leased assets
Loss on disposal of tangible fixed assets
Amortisation of investment in programmes for future sale
Amortisation of intangible fixed assets
Auditors’ remuneration:– financial audit – Home Services– other– consultancy and advisory
Fair trading auditors’ remuneration

2002
£m

2001
£m

26.4
9.6
18.4
15.2
23.7

22.9
8.7
22.8
14.6
21.4

121.8
10.9
1.4
86.4
1.4

114.8
–
6.5
74.8
–

0.4
0.5
0.7
0.3

0.4
0.5
0.5
0.3

4 Employees and remuneration
4a Persons employed
The average number of persons employed in the year was:Average for the year
2002
2001
NumberNumberHome Services GroupBBC World Service
BBC Worldwide
BBC Technology and BBC Resources

18,606
1,797
2,170
2,995

16,808
1,696
1,958
3,667

Group total

25,56824,129Within the averages above, 2,166 (2001 2,015) part-time employees have been included at their full-time
equivalent of 1,238 (2001 1,176).
In addition to the above, the Group employed an average full-time equivalent of 1,043 (2001 1,113)
persons on a casual basis and the BBC Orchestra and Singers, employed on programme contracts,
numbered 382 (2001 374) full-time equivalent.
On 31 March 2001 the equivalent of 387 full-time employees transferred to BBC Technology from theHome Services.This transfer is not reflected in the average for 2001.
A further 1,035 employees (1,012 full-time equivalent) transferred from BBC Resources to the Home
Services on 1 April 2001.This transfer is reflected in the average for 2002.

84 Annual Report and Accounts 2001/2002

4b Staff costs
Note

Salaries and wages
Social security costs
Pension costs– main scheme (defined benefit)– other schemes
Redundancy costs88Comprising:Home Services GroupBBC World Service
BBC Worldwide
BBC Technology and BBC Resources
Main pension scheme additional operational cost (defined benefit)

2002
£m

2001
as restated
£m

895.1
77.9

823.4
73.2

177.2
2.3
29.6

154.0
2.8
34.6

1,182.1

1,088.0

758.3
65.4
92.1
114.8
151.5

672.5
61.5
83.3
137.6
133.1

1,182.1

1,088.0

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).
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.
4c Remuneration of the Board of Governors and Executive Committee
The emoluments of the Governors and of the Executive Committee members are disclosed on
pages 66 to 69 in the Governors’ remuneration report.

5 Profit and losses on sale and termination of operations
beeb Ventures Limited– partial disposal– termination cost
BBC for Business

2002
£m

2001
£m

9.0
(1.3)
–

17.1
–
1.1

7.7

18.2

During 2002 the Group made a further partial disposal of shares in beeb Ventures Limited, the subsidiaryowning its internet retail site beeb.com and the internet service provider beeb.net.The transaction gave
rise to income totalling £9.0million in the year (2001 £20.2million) against which a cost of £nil was incurred(2001 £3.1million).
Profits on these partial disposals of beeb Ventures Limited were part of a linked arrangement with a third
party, under which profits on a partial disposal were structured to offset start-up operating losses of thiscompany.
Subsequently, on 22 April 2002 BBC Worldwide announced its intention to terminate the beeb.com
business and exit the internet shopping sector. Certain beeb.com websites will be integrated into BBC
Worldwide’s core operations, operating as marketing rather than transactional websites. Following thisdecision, termination costs of £1.3million have been provided for in the income and expenditure accountin the year ended 31 March 2002.

Annual Report and Accounts 2001/2002 85

Notes to the financial statements

6 Profit on disposal of fixed assets
6a Profit on disposal of intangible fixed assets
During 2002 the Group disposed of its remaining rights in the Noddy and Wallace and Gromit brands,
together with trademarks associated with The Clothes Show.These intangible fixed asset disposals gave riseto net profits totalling £7.3million.
6b Profit/loss on disposal of tangible fixed assets
During 2002 BBC World Service sold a property in Singapore which had been fully depreciated.This
transaction realised a profit of £3.3million.The sales proceeds were reinvested in the new transmitter site
in Oman, with the agreement of the Foreign and Commonwealth Office.
BBC Technology disposed of various fixed assets resulting in a loss of £2.3million during the year.
6c Profit on disposal of investments
During 2002 the Eurosport Consortium, in which the BBC holds an interest, disposed of its 50%
shareholding in SETS (which owns the Eurosport trademark) to TF1, a French broadcasting company,
resulting in a net profit to the Group of £3.4million.

7 Net interest receivable
2002
£m

2001
£m

Interest receivable
Interest payable on bank and other loans
Finance charges payable in respect of finance leases

24.6
(2.8)
(0.2)

27.9
(2.1)
–

Net interest receivable

21.6

25.8

8 Pensions
8a Pension charge
The Group operates several pension schemes.The BBC Pension Scheme and a small unfunded pension
scheme, which is closed to new members, are contributory defined benefit schemes. Additionally a Group
personal pension scheme and other small schemes provide staff with a defined contribution scheme.The
total pension charge included within operating costs for the year under all schemes is £179.5million (2001£156.8million).
Under this scheme the employees
receive a pension based on their final
salary.The BBC must ensure that thepension fund is adequately funded
to meet future pension payments.

8b Principal scheme
The BBC Pension Scheme is the main pension scheme of the BBC Group and covers the majorityof employees.This scheme provides salary-related pension benefits on a defined benefit basis from assets
held in separate, trustee-administered, funds.
The scheme is subject to independent valuation by a professionally qualified actuary at least every three
years, on the basis of which the actuary certifies the rate of employer’s contributions.These, together withthe specified contributions payable by employees and proceeds from the scheme’s assets, are expected tobe sufficient to fund the benefits payable under the scheme.The most recent full actuarial valuation of thescheme was prepared as at 1 April 1999 by Watson Wyatt, consulting actuaries, using the projected unit
method. An interim valuation has been produced by Watson Wyatt as at 31 March each year.The major
assumptions used by the actuary at each valuation were:An estimate of future inflation andsalary increases is used to forecast
the cost of funding future pensionsof pension scheme members.

86 Annual Report and Accounts 2001/2002

Rate of increase in salaries
Rate of increase in pension payments
Inflation assumption
Discount rate

2002

2001

2000

4.7%
2.7%
2.7%
6.0%

4.5%
2.5%
2.5%
6.0%

5.0%
3.0%
3.0%
6.2%

This table shows the value of theassets owned by the pension schemeand the rate of growth the trustees
expect in the following year.

8b Pensions continued
The assets in the scheme and the expected rate of return were:Long-term
rate of return
Value atexpected at 31 March 2002
31 March 2002£m

Equities
Bonds and gilts
Property
Cash

7.5%
5.2%
6.3%
4.7%

Total market value of assets
Present value of scheme liabilities

4,421
908
606
284

Long-term
rate of return
expected at
31 March 2001

7.0%
4.7%
6.0%
4.5%

Value at
31 March 2001
£m

4,655
939
606
279

Long-term
rate of return
expected at
31 March 2000

7.0%
5.0%
6.0%
5.0%

Value at
31 March 2000
£m

5,291
969
548
299

6,219
(5,254)6,479(4,771)

7,107(4,730)Surplus in the scheme
Related deferred tax liability

965
–

1,708
–

2,377
–

Net pension asset

965

1,708

2,377

A deferred tax asset will not arise for the Group, mainly due to the fact that most of the Group’s public
service activity is not subject to taxation.

The current service cost is the costto the BBC of pension rights earned
by employees in the year.

The amounts here are estimates
based on predictions of future
performance and economic
conditions.
The actuarial gains and losses
are those resulting from actual
performance being different fromthat predicted – for example fromchanges in economic conditions or
the demographic profile of BBC
employees.

2002
£m

2001
£m

Analysis of amount charged to operating expenditure
Current service cost
Past service cost

132.3
44.9

138.3
15.7

Total operating charge

177.2

154.0

Analysis of amount credited to other finance income
Expected return on pension scheme assets
Interest on pension scheme liabilities

416.4(282.5)457.9(288.4)

Net return

133.9

169.5

Analysis of amount recognised in statement of total recognised gains and losses
Actual return less expected return on pension scheme assets
Experience gains and losses arising on the scheme’s liabilities
Changes in assumptions underlying the present value of the scheme liabilities(532.0)26.6(220.0)(950.9)35.7
207.0

Actuarial loss recognised in thestatement of total recognised gains and losses(725.4)(708.2)

1,708.0

2,377.0(132.3)25.7(44.9)
133.9(725.4)(138.3)23.7(15.7)
169.5(708.2)965.0

1,708.0

Movement in surplus during the year
Surplus in scheme at beginning of year
Movement in year:– current service cost
– contributions– past service costs– other finance income– actuarial loss
Surplus in scheme at end of year

The full actuarial valuation at 31 March 1999 showed the market value of the assets of the scheme to be£6,294million, sufficient to cover 114% of the benefits due to members.There have been no significant
changes to members’ benefits since that time. Contributions have remained steady at 4.5% of pensionable
pay. It has been agreed with the trustees that contributions will remain at that level for the next year.

Annual Report and Accounts 2001/2002 87

Notes to the financial statements

This note is designed to show trends
over several years. Only two years are
currently available since the adoptionof FRS 17.

8b Pensions continued
History of experience gains and losses
Difference between the expected and actual return on scheme assets:
Amount (£million)
Percentage of scheme assets
Experience gains and losses on scheme liabilities:
Amount (£million)
Percentage of the present value of the scheme liabilities
Total amount recognised in the statement of total recognised gains and losses:
Amount (£million)
Percentage of the present value of the scheme liabilities

2002

2001

532.0
8.6%

950.9
14.7%

(26.6)
0.5%(35.7)
0.7%

725.4
13.8%

708.2
14.8%

Home Services
The Home Services have taken advantage of the provisions within FRS 17 and account for the scheme
as if it were a defined contribution scheme.This is because it is not possible to identify their share of theunderlying assets and liabilities of the scheme on a reasonable and consistent basis.The expenditure charge
for Home Services therefore represents the contributions payable in the year.These contributions benefit
from the surplus in the scheme and are lower than the regular cost.
8c Other schemes
The small unfunded pension scheme is valued using assumptions which are the same as those for the main
scheme. At 31 March 2002 the obligation was £3.9million (2001 £3.7million) which is fully provided for in
the accounts. The current cost for the year for this scheme was £0.2million (2001 £0.8million).
The total charge for the Group personal pension scheme and other defined contribution schemes totalled£2.1million (2001 £2.0million).

9 Taxation
9a Analysis of charges for the period
The charge for the year, based on a rate of corporation tax of 30% (2001 30%), comprised:
2002
£m

2001
£m

Current tax
UK corporation tax
Adjustments in respect of previous years

9.8
–

9.2
(5.9)

Foreign tax
Share of associates tax

9.8
7.6
0.3

3.3
6.3
0.3

17.7

9.9

2.8
(2.8)

1.8
(2.1)

–

(0.3)

17.7

9.6

Note

Total current tax

9b

Deferred tax
Origination and reversal of timing differences
Adjustments in respect of previous years
Total deferred tax
Charge for the year

88 Annual Report and Accounts 2001/2002

9d

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 andon 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

2002
£m

Surplus before tax
Surplus before tax multiplied by standard rateof corporation tax in the UK of 30% (2001 30%)
Effects of
Public services taxable external income
FRS 17 net Group pension charge/(credit)
Prior year adjustment for adoption of FRS 17
26a
Commercial activities
Non-taxable income
Disallowed expenditure
Depreciation in excess of capital allowances
Non-taxable profit on sale of shares
Tax losses not Group relieved
Tax differential re overseas earnings
Other
Adjustments in respect of previous periods
Current tax charge for the year

9a

2002
£m

2001
£m

2001
as restated
£m

2.9

84.6

0.9

25.4

6.5
5.2
–

7.5
(10.9)
(9.5)

(3.9)
1.6
1.8
–
1.4
4.4
(0.2)
–

(4.5)
1.6
1.5
(1.5)
3.4
2.1
0.7
(5.9)
5.1

(2.6)

17.7

9.9

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).
9c Factors that may affect future tax charges
The Group anticipates that the future tax charge will not alter materially since all licence fee income is freeof tax.
9d Deferred tax analysis
In accordance with FRS 19, Deferred tax, the Group provides for all deferred tax liabilities in full but does
not recognise deferred tax assets.
Deferred tax provision
Provision at start of year
Exchange adjustment
Deferred tax (credit)/charge
Provision at end of year

Note

2002
£m

2001
£m

9a

–
–
–

0.5
(0.2)
(0.3)

–

–

1.5
–
0.8
1.8

0.2
(1.0)
–
0.8

4.1

–

Deferred tax asset/(liability) not provided
Accelerated capital allowances
Pension accruals
Other timing differences
US timing differences

Annual Report and Accounts 2001/2002 89

Notes to the financial statements

Goodwill is the difference between
the value paid for a business and thefair value of its net assets. It represents
the amount the purchaser is preparedto pay for the name and reputationof the business and its expected
future profit streams.

10 Intangible fixed assets
Intellectual
propertyrights£m

Goodwill
£m

Total
£m

Cost
At 1 April 2001
Additions

–
8.7

0.5
7.6

0.5
16.3

At 31 March 2002

8.7

8.1

16.8

Amortisation
At 1 April 2001
Charge for the year

–
1.1

–
0.3

–
1.4

At 31 March 2002

1.1

0.3

1.4

Net book value
At 31 March 2002

7.6

7.8

15.4

At 31 March 2001

–

0.5

0.5

Goodwill of £6.8million has arisen on the acquisition of Chivers Communications Limited (see Note 11).
An adjustment has been made to goodwill on Cover to Cover Cassettes Limited to reflect increased loannote obligations of £0.8million.The adjustment is included within additions for the year.
Goodwill is amortised on a straight line basis over 20 years reflecting the useful economic life, subject toreviews for impairment.
BBC Technology acquired the intellectual property rights to use software licences for £8.7million during
the year.These are amortised on a straight line basis over three years reflecting the life of the licence.

11 Acquisitions
On 2 July 2001 the Group acquired 100% of the share capital of Chivers Communications Limitedfor £9.1million. In addition, further deferred consideration of £0.8million has been provided in respect of theacquisition of Cover to Cover Cassettes Limited, acquired on 1 December 2000.
Fair value£m

Tangible fixed assets
Current assets

0.6
1.7

Goodwill

2.3
7.6

Fair value of net assets acquired

9.9

Satisfied by:
Cash consideration
Deferred consideration

9.1
0.8

Total consideration

9.9

The net outflow of cash in respect of the purchase of subsidiary undertakings is as follows:
Cash consideration
Overdrafts of subsidiary undertakings purchased

9.1
0.9
10.0

Chivers Communications contributed turnover of £10.3million and operating profit of £1.1million to theresults for the year ended 31 March 2002.The company made an operating profit of £0.3million fromthe beginning of the financial year, 1 February 2001, to the date of acquisition. In its previous financial year
the operating profit was £0.4million.There is no difference between the book value, as recorded in therecords of Chivers Communications prior to the acquisition, and the fair value of the assets acquired.

90 Annual Report and Accounts 2001/2002

12 Tangible fixed assets
12aThe GroupLand andbuildings£mPlant andmachinery£m

Furnitureand fittings£m

Assets underconstruction
£m

Total
£m

Cost or valuation
At 1 April 2001
Reclassification
Acquisitions
Additions
Brought into service
Disposals

533.1
–
0.4
4.3
10.0
(89.9)

790.5
0.7
0.1
74.9
49.4
(39.3)

119.9
(0.7)
0.1
9.6
3.7
(10.2)

91.1
–
–
96.0
(63.1)(17.6)

1,534.6
–
0.6
184.8
–
(157.0)At 31 March 2002

457.9

876.3

122.4

106.4

1,563.0

Depreciation
At 1 April 2001
Reclassification
Charge for the year
Elimination in respect of disposals

192.8
–
14.3
(8.1)

465.9
0.5
104.3
(30.6)

58.9
(0.5)
14.1
(9.4)

–
–
–
–

717.6
–
132.7
(48.1)At 31 March 2002

199.0

540.1

63.1

–

802.2

Net book value
At 31 March 2002

258.9

336.2

59.3

106.4

760.8

At 31 March 2001

340.3

324.6

61.0

91.1

817.0

Home Services’ plant and machinery was revalued at 31 March 1993, prior to the introduction of theinternal market.The valuation was based on the estimated current replacement cost of the assets, adjusted
for service potential.
BBC World Service’s plant and machinery and furniture and fittings were revalued at 1 April 1996 on thesame basis.
Following the introduction of FRS 15, Tangible fixed assets, the assets were retained at their valuation
as adjusted for depreciation.The Group does not plan to revalue assets on an ongoing basis.There is nomaterial difference between the net book value of tangible fixed assets included in the previous table andtheir value as determined on a historical cost basis.
Included within plant and machinery are £19.6million (2001 £nil) of assets held under finance leases.
Included within fixed assets is £24million at cost relating to a relay station in Thailand used by BBC World
Service.These assets are transferable to the Royal Thai Government in return for the payment of a nominalsum. BBC World Service will retain the right to repurchase the assets, should the operation cease, fora similar nominal sum.The use of these assets is not affected by this transaction and therefore they willcontinue to be carried at cost less attributable depreciation in the balance sheet.

Annual Report and Accounts 2001/2002 91

Notes to the financial statements

12b Home Services
Land andbuildings£mPlant andmachinery£m

Furnitureand fittings£m

Assets underconstruction
£m

Total
£m

Cost or valuation
At 1 April 2001
Additions
Brought into service
Transfers from subsidiaries
Disposals

386.8
3.0
7.0
7.0
(3.8)

313.8
16.6
22.9
94.2
(18.1)

68.8
7.3
3.1
17.9
(3.8)

44.5
57.3
(33.0)
1.7(15.4)

813.9
84.2
–
120.8
(41.1)At 31 March 2002

400.0

429.4

93.3

55.1

977.8

Depreciation
At 1 April 2001
Charge for the year
Transfers from subsidiaries
Elimination in respect of disposals

155.4
10.8
2.8
(0.8)

174.0
43.9
45.3
(15.7)

18.1
10.0
16.2
(3.0)

–
–
–
–

347.5
64.7
64.3
(19.5)At 31 March 2002

168.2

247.5

41.3

–

457.0

Net book value
At 31 March 2002

231.8

181.9

52.0

55.1

520.8

At 31 March 2001

231.4

139.8

50.7

44.5

466.4

Transfers from subsidiaries represents assets transferred from BBC Resources on the re-integration of asignificant part of BBC Resources into the Home Services in April 2001.
Included within plant and machinery are £19.8million (2001 £nil) of assets held under finance leases withanother Group company.
12c Land and buildings at net book value comprise:

Freeholds
Long leaseholds
Short leaseholds

Group
2002
£m

Group
2001
as restated£m

Home
Services
2002
£m

Home
Services2001
as restated
£m

226.0
9.9
23.0

307.9
10.2
22.2

210.1
9.9
11.8

211.8
10.2
9.4

258.9

340.3

231.8

231.4

During the year a review of all long and short leasehold buildings was carried out which resulted in somereclassifications.The prior year comparatives have been restated in accordance with this review.
There has been no impairment in the carrying values of freehold properties at the balance sheet date.
Land and buildings in the Group include freehold land at a cost of £34.8million (2001 £64.7million) andin the Home Services £30.6million (2001 £30.4million), none of which is depreciated.

92 Annual Report and Accounts 2001/2002

13 Investment in programmes for future sale
Group
£m

Cost
At 1 April 2001
Exchange adjustment
Additions
Disposals
Financing benefit
Elimination of programmes fully amortised

289.2
1.3
83.2
(3.1)
(0.6)
(46.2)At 31 March 2002

323.8

Amortisation
At 1 April 2001
Exchange adjustment
Charge for the year
DisposalsElimination of programmes fully amortised

172.0
1.0
86.4
(1.2)
(46.2)At 31 March 2002

212.0

Net book value
At 31 March 2002

111.8

At 31 March 2001

117.2

Investment by BBC Worldwide in programmes for future sale relates to programmes provided by the
BBC and external producers.The additions figure above includes £80.5million direct investment in BBC
programmes.
Included in the net book value is £4.2million relating to investments held under a licence agreement(2001 £3.7million).The financing benefit relates to monies received for tax credits on investments in saleand leaseback programmes.

14 Other investments (including BBC World Service net assets)
14a Movements in the year for the GroupInterests
in joint
ventures
Note 14d£m

Interests inassociates
Note 14e£m

Other
investments
£m

Total
Group
£m

At 1 April 2001
Additions
Goodwill
Share of retained profits/(losses)
Dividend received
Adjustment to reflect effective obligations

0.4
2.2
9.2
4.7
(0.5)
(4.5)

1.0
3.6
–
(28.2)
(0.6)
29.1

0.4
–
–
–
–
–

1.8
5.8
9.2
(23.5)(1.1)
24.6

At 31 March 2002

11.5

4.9

0.4

16.8

In October 2001, the BBC formed a joint venture with Land Securities Trillium (LST), the Insight Property
Partnership, which will provide a range of property and development services to the BBC.The BBC
contributed partnership capital of £100 to the Insight Property Partnership, giving rise to goodwill of£9.2million. In addition, the BBC entered into a related partnership with LST which will develop part of theWhite City site, the White City Development Partnership.The cost of the BBC’s investment in this associate
was £3.6million and no goodwill arose.
In March 2002, the BBC and LST acquired an additional property in the White City area through a separate
joint venture.The BBC contributed £2.2million cash to the joint venture to purchase the property. No
goodwill arose on the creation of this joint venture.

Annual Report and Accounts 2001/2002 93

Notes to the financial statements

14b Movements in the year for Home Services
Interest in
BBCWorld Service
net assets
as restated£m

Shares in
subsidiaries£mInterests
in joint
ventures£m

Other
investments
£m

Total
£m

At 1 April 2001
Accumulated surplus
Additions
Disposals

124.5
9.8
–
–

92.3
–
63.0
–

–
–
9.2
–

122.7
–
–
(122.3)

339.5
9.8
72.2
(122.3)

At 31 March 2002

134.3

155.3

9.2

0.4

299.2

The new figure has been restated for the adoption of FRS 17 (see Note 26a).
Additions to shares in subsidiaries represent 63,000,000 ordinary shares issued at £1 each on 29 June 2001
to enable BBC Technology to finance the acquisition of the business from the BBC.
Disposals in other investments comprised £122.3million in loans paid back by the subsidiary undertakings
following the transfer of fixed assets from Home Services in 2001.
Subsidiary undertakings are businesses
we control.

14c Subsidiary undertakings
The Home Services own 100% of the issued ordinary share capital of the following companies which areincorporated in Great Britain:
Cost

2002
£m

2001
£m

BBC Worldwide Limited
BBC Subscription Television Limited (dormant)
BBC Investments Limited (dormant)
BBC News Limited
BBC Property Limited
BBC Property Investments Limited
BBC Property Development Limited (dormant)
BBC Resources Limited
BBC Technology Holdings Limited
Centre House Productions Limited
BBC Digital Programming Services Limited
BBC Broadcast Limited

0.3
–
–
–
1.0
–
–
91.0
63.0
–
–
–

0.3
–
–
–
1.0
–
–
91.0
–
–
–
–

155.3

92.3

OthersThe Group also holds the controlling interest in the following principal subsidiary undertakings which,except where otherwise stated, are incorporated in Great Britain:
Holding ofissued ordinary
shares%Held by BBC World Service:
BBC East Asia Relay Company Limited (incorporated in Hong Kong)
BBC Radiocom (Bulgaria) EOOD (incorporated in Bulgaria)
BBC Radiocom (Hungary) KFT (incorporated in Hungary)
BBC Radiocom (Praha) s.r.o. (incorporated in the Czech Republic)
BBC Radiocom (Slovakia) s.r.o. (incorporated in the Slovak Republic)
BBC Romania SRL (incorporated in Romania)
BBC Polska Sp. z.o.o. (incorporated in Poland)
BBC do Brazil Limitada (incorporated in Brazil)
BBC Radiocom Deutschland GmbH (incorporated in Germany)
BBC Croatia d.o.o. (incorporated in Croatia)
BBC World Service Trust** The BBC World Service Trust is a charitable company limited by guarantee, of which the BBC is thesole member.
94 Annual Report and Accounts 2001/2002

100
100
100
100
100
100
100
100
100
100

14c Subsidiary undertakings continued
Holding ofissued ordinary
shares%Held by BBC Technology Holdings Limited:
BBC Technology Limited
BBC Technology Services Limited
BBC Technology Supply Limited
Kingswood Warren Ventures Limited
BBC Technology Holdings LLC (incorporated in the USA)
BBC Technology Consultancy LLC (incorporated in the USA)
Held by BBC Worldwide Limited:
Publishing
BBC Magazines Inc. (incorporated in the USA)
Galleon Limited
Broadcasting Dataservices Limited
Cover to Cover Cassettes Limited
Chivers Communications Limited
Programme distribution
BBC Worldwide Americas Inc. (incorporated in the USA)
BBC Worldwide Music Limited
UK Programme Distribution Limited
BBC Worldwide Japan KK Limited (incorporated in Japan)
BBC Worldwide (France) SARL (incorporated in France)
BBC Worldwide (Germany) GMBH (incorporated in Germany)
BBC Worldwide (India) Private Limited (incorporated in India)
BBC Worldwide (Singapore) Private Limited (incorporated in Singapore)
BBC Worldwide Canada Limited (incorporated in Canada)
Channels
New Video Channel America LLC (incorporated in the USA)
European Channel Broadcasting Limited
European Channel Management Limited
Investment companies
Worldwide Americas Investments Inc. (incorporated in the USA)
BBC Worldwide Investments Limited
BBC World Service Television Limited
Worldwide Channel Investments Limited
Worldwide Channel Investments (Europe) Limited
Worldwide Channel Investments (Australia) Pty Limited (incorporated in Australia)
Worldwide Channel Investments (Ontario) Limited (incorporated in Canada)Internetbeeb Ventures Limited

100
100
100
100
100
100

100
100
75
100
100
100
100
95
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
86.9

Annual Report and Accounts 2001/2002 95

Notes to the financial statements

Joint ventures are businesses wejointly control with other parties.

14d Interests in joint ventures
The Group, through its subsidiary BBC Worldwide, has major partnership deals with Flextech, the content
division of Telewest Communications plc, for the production and marketing of subscription channels in the UK,
and with Discovery Communications Inc. (Discovery) for incorporating new channels around the world andproviding new co-production funding for programmes.These alliances operate joint ventures, listed below:
Name of entity

Nature of entity

Partner

Date entered

UK Channel Management Limited
UK Gold Holdings Limited
UKTV New Ventures Limited
JV Programmes LLC

Joint venture
Joint venture
Joint venture
Joint venture

Flextech
Flextech
Flextech
Discovery

April 1997
April 1997
October 2001
March 1998

In addition to the arrangements with Flextech and Discovery, BBC Haymarket Exhibitions Limited is includedin the joint venture total and is accounted for separately from the Flextech and Discovery joint ventures,
as are the LST joint ventures (see Note 14a).
The Group share of turnover for Haymarket was £6.4million (2001 £6.4million) and operating surplus was£0.3million (2001 £0.6million).
The following disclosures are based on results for the year ended 31 December 2001 for the Flextech,
Discovery and Haymarket joint ventures and 31 March 2002 for the LST joint ventures.The amounts
disclosed represent the Group’s equity shares of the assets and liabilities of the entities.
UK Gold
Holdings
Limited*£m

UK Channel
Management
Limited*
£m

Other
joint
ventures
£m

Total
joint
ventures£m

2002
Turnover

34.8

28.4

18.4

81.6

Profit/(loss) before tax
Taxation

13.2
(3.4)

(3.0)
–

(1.9)
(0.2)

8.3
(3.6)

Profit/(loss) after tax

9.8

(3.0)

(2.1)

4.7

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

–
–
14.2
(9.4)
(46.0)
41.2

0.1
–
14.0
(7.1)
(44.6)
37.6

2.2
9.2
19.6
(11.6)(11.6)
3.7

2.3
9.2
47.8
(28.1)(102.2)
82.5

–

–

11.5

11.5

2001
Turnover

31.7

20.6

15.3

67.6

Profit/(loss) before tax
Taxation

7.2
(2.4)

(8.8)
–

0.6
(0.2)

(1.0)
(2.6)

Profit/(loss) after tax

4.8

(8.8)

0.4

(3.6)

–
27.7
(9.5)
(71.5)
53.3

0.1
13.2
(7.7)
(40.1)
34.5

–
15.7
(5.2)
(10.5)
0.4

0.1
56.6
(22.4)(122.1)
88.2

–

–

0.4

0.4

BBC Group share of:

Net book value

Fixed assets
Current assets
Liabilities less than one year
Liabilities more than one year
Adjustment to reflect effective obligations
Net book value* The figures for 2002 are based on unaudited financial statements (2001 unaudited).

Under the terms of the agreements with Flextech and Discovery, the Group has no obligation to fundlosses incurred by the entities nor to make good their net liabilities. As a result, the Group does not sharein losses of the relevant entities and accordingly no share of losses is included in the financial statements forthe year ended 31 March 2002 (2001 £nil).The Group is entitled to its share of any profits or net assets
once the ventures’ cumulative profits exceed cumulative losses since incorporation.

96 Annual Report and Accounts 2001/2002

Associates are businesses over which
we exert significant influence but do
not have overall control.

14e Interests in associates
The Group holds significant interests in the following principal associates which, except where otherwise
stated, are incorporated in Great Britain:
Holding ofissued ordinary
shares%Held by Home Services:
Parliamentary Broadcasting Unit Limited
Broadcasters Audience Research Board Limited
The Commonwealth Broadcasting Association
Radio Joint Audience Research Limited (RAJAR)
Delta Ventures Limited
Held by BBC World Service:
Caribbean Relay Company Limited (incorporated in Antigua)
Multimedia Ventures Limited
WRG-FM SA (incorporated in Switzerland)
Held by BBC Worldwide Limited:
Publishing
Frontline Limited
Programme distribution
The Sales Consortium Limited
Tele Alliance Limited
Channels
UK TV Pty Limited (incorporated in Australia)
Animal Planet (Latin America) LLC (incorporated in the USA)†
People and Arts (Latin America) LLC (incorporated in the USA)†
Animal Planet LLC (incorporated in the USA)†JV Network LLC (incorporated in the USA)†
Animal Planet (Asia) LLC (incorporated in the USA)†
Animal Planet Europe Partnership†
Animal Planet Japan KK (incorporated in Japan)†
Animal Planet Japan LLP (incorporated in the USA)†
Jasper Broadcasting Limited (incorporated in Canada)
Jasper Junior Broadcasting Inc (incorporated in Canada)
Animal Planet Canada Company ULC (incorporated in Canada)†
Held by BBC Resources Limited:
3sixtymedia Limited
Held by BBC Property Limited:
White City Development Partnership

33
*
*

50
20
45
50
40

23
25
25
20
50
50
20
50
50
50
33
50
20
20
23
10
**

* Broadcasters Audience Research Board Limited and The Commonwealth Broadcasting Association arecompanies limited by guarantee, of which the BBC is a joint member with other broadcasters.
† Discovery associates.
** 50% partnership share.

Annual Report and Accounts 2001/2002 97

Notes to the financial statements

14e Interests in associates continued
The following additional disclosures are based on the results of the Discovery associates for the year ended
31 December 2001 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.
BBC Group interests in associates

2002
£m

2001
£m

Share of turnover

39.1

32.5

61.4
23.9
(22.3)(104.9)
46.8

45.6
28.6
(19.5)(85.7)
32.0

4.9

1.0

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
Net interests in associates

The results include the Group share of the operating profit of UK TV Pty Limited of £0.1million(2001 £0.1million) and Frontline Limited of £1.0million (2001 £0.2million). Both are accounted forseparately from the Discovery associates.
Under the terms of the agreements with Discovery, the Group has no obligation to fund losses incurredby the entities nor to make good their net liabilities. As a result, the Group does not share in losses of therelevant entities and accordingly no share of losses is included in the financial statements for the year ended
31 March 2002 (2001 £nil).The Group is entitled to its share of any profits or net assets once the ventures’
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.

15 Stocks

Raw materials
Work in progress:– originated programmes– other
Finished programmes:– acquired programmes and films– originated programmes
Other
Total

Group
2002
£m

Group
2001
as restated£m

Home
Services
2002
£m

Home
Services2001
as restated
£m

2.4

3.0

–

–

254.5
6.6

235.6
5.6

254.5
0.1

235.5
–

89.0
80.7
16.2

92.5
49.1
11.8

89.0
80.7
1.0

92.5
49.1
0.9

449.4

397.6

425.3

378.0

The 2001 figures have been restated to reclassify programme loss provisions of £8.5million, previously
reported within other provisions, against originated programme work in progress (see Note 26b).
The increased levels of originated programme work in progress and finished programme stock reflect thelaunch of new television channels.

98 Annual Report and Accounts 2001/2002

16 Debtors

Receivable within one year
Trade debtors
Department of Culture, Media and Sport– licence fee debtors
Amounts owed by subsidiaries
Amounts owed by associates and joint ventures
VAT recoverable
Other debtors
Corporation tax
Prepayments

Receivable after more than one year
Trade debtors
Amounts owed by subsidiaries
Prepayments

Total

Group
2002
£m

Group
2001
£m

Home
Services
2002
£m

Home
Services
2001
£m

146.4

163.7

27.5

22.3

255.5
–
9.2
39.6
36.4
0.6
175.9

272.9
–
5.8
28.1
31.8
3.6
142.3

255.5
58.1
–
30.7
14.2
0.7
156.1

272.9
98.5
–
26.3
21.3
1.2
102.2

663.6

648.2

542.8

544.7

0.2
–
137.0

–
–
47.8

0.2
–
113.6

–
17.6
27.2

137.2

47.8

113.8

44.8

800.8

696.0

656.6

589.5

The increase in prepayments reflects a build-up in rights to broadcast major sporting events and key
acquired programmes (see also Note 23). In addition, the sale of the White City building to Land Securities
Trillium in the year ended 31 March 2002 was settled in part by future reductions in the cost to the BBCof occupying the building.The net present value of this reduction is held as a prepayment to be released
over the term of the lease.
BBC Resources has an unsecured loan facility of £30million with the BBC that is repayable on 30 March
2004. Interest on this facility is charged at 0.8% over bank base rates and appropriate covenants exist to
protect the Home Services from financial risk. At 31 March 2002 none of the facility was drawn down.
BBC Worldwide has an unsecured loan facility of £125million with the BBC that is repayable on 1 April
2003. Interest on this facility is charged at 0.6% over bank base rates and appropriate covenants exist to
protect the Home Services from financial risk. At 31 March 2002, £0.6million of the loan was drawn down.
BBC Technology Services (the principal trading company of the BBC Technology Group) has a loan facilityof £25million with the BBC secured by a floating charge over all assets and undertakings that is repayable
on 30 March 2004. Interest on this facility is charged at 1% over bank base rates and appropriate covenants
exist to protect the Home Services from financial risk. At 31 March 2002 none of the facility was drawn down.

Annual Report and Accounts 2001/2002 99

Notes to the financial statements

17 Creditors
17a Prompt payment policy
It is the BBC’s policy to comply with the CBI prompt payment 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 made inaccordance with contractual terms.The BBC Group’s number of creditor days outstanding in respect ofother trade creditors at 31 March 2002 was 52 days (2001 52 days).
17b Amounts falling due within one year
Group
2002
£m

Group
2001
as restated£m

Home
Services
2002
£m

Home
Services
2001
£m

–
1.9

7.0
–

60.9
–

–
–

1.9

7.0

60.9

–

Payments received on account

2.2

–

–

–

Trade creditors
Programme creditors
Programme acquisitions
Salaries and wages
Residual copyright payments
Licence fee collection creditors
Other trade creditors

75.9
44.0
29.0
56.5
4.6
174.3

91.1
39.7
28.0
53.3
5.4
167.2

75.5
44.0
18.2
–
4.6
117.1

90.9
39.7
17.6
–
5.4
104.2

384.3

384.7

259.4

257.8

41.0
–
1.7
7.2
–

33.9
–
2.0
–
–

24.6
57.9
–
–
10.1

23.8
34.2
0.1
–
–

49.9

35.9

92.6

58.1

302.4

276.9

224.5

201.7

130.5

140.1

130.5

140.1

432.9

417.0

355.0

341.8

871.2

844.6

767.9

657.7

Bank overdrafts
Unsecured loan notes

Other creditors
Other taxation and social security
Amounts owed to subsidiaries
Amounts owed to associates and joint ventures
Obligations under finance leases
Amounts owed to subsidiaries in respect of finance leases

Accruals and deferred income
Accruals and deferred income
Licence saving stamps deposits and direct
debit instalments

Total

The prior year balance for the salaries and wages creditor has been restated to include balances that werepreviously included within other trade creditors (see Note 26b).
The Home Services’ overdraft facility bears interest at bank base rates plus 1%.

100 Annual Report and Accounts 2001/2002

17c Amounts falling due after more than one year
Group
2002
£m

Group
2001
£m

Home
Services
2002
£m

Home
Services
2001£mBank and other loans

29.4

19.1

–

–

Trade creditors
Programme acquisitions
Other trade creditors

36.4
2.9

21.0
0.7

36.4
–

21.0
0.7

39.3

21.7

36.4

21.7

33.8

10.5

–

–

–

–

9.7

–

33.8

10.5

9.7

–

102.5

51.3

46.1

21.7

Note

Other creditors
Obligations under finance leases
Amounts owed to subsidiaries
in respect of finance leases

17d

Total

Creditors falling due after more than one year are all repayable within five years with the exception of thefinance lease obligations (see Note 17d).
Bank and other loans include a US$5million loan from Discovery which is repayable in the following stages:$3million due 31 March 2004; $2million due 31 March 2005.The remainder of the loans consist of multicurrency revolving facilities repayable in full in three years. Interest is payable at LIBOR plus 1.0% for the
US$5million loan and LIBOR plus 0.3% for the multi-currency facilities.
A finance lease transfers substantially
all the risks and rewards of owning an
asset to the lessee (the BBC). So we
recognise the assets within our fixed
assets with the corresponding
borrowings in creditors.

Defeasance deposits are cash deposits
that are linked to a matching creditor.
We can only use these deposits tosettle the linked liability.

17d Obligations under finance leases
The maturity of obligations under finance leases is as follows:
Group
2002
£m

Group
2001
£m

Home
Services
2002
£m

Home
Services
2001£mWithin one year
In the second to fifth years
Over five years

26.2
94.3
237.3

9.7
43.9
125.4

10.1
9.7
–

–
–
–

Less: future finance charges

357.8(89.4)

179.0(52.9)

19.8
–

–
–

Less: defeasance deposits

268.4(227.4)126.1(115.6)

19.8
–

–

41.0

10.5

19.8

–

The finance leases have been entered into by BBC Technology and Centre House Productions Limited.
BBC Technology has entered into finance leases to finance the acquisition of IT equipment which issubsequently leased to other parts of the BBC on an arm’s length basis.
Centre House Productions Limited has entered into finance leases as a means of financing drama
productions which result in a reduction in the production costs to the BBC.The level of obligations has
increased significantly in 2002.These finance leases are matched by the defeasance deposits such that the
principle on deposit and the interest earned will be sufficient to cover the rental obligations on the financeleases until the end of the lease.These deposits may only be used to settle the finance lease liabilities andtherefore these do not represent separate assets and liabilities. Consequently they have been netted off
with the finance lease creditor to show the net unmatched liability at the year end.

Annual Report and Accounts 2001/2002 101

Notes to the financial statements

18 Provisions for liabilities and charges
At 1 April
2001
as restated£m

Licence fee
Restructuring
Litigation and insurance
Property
Pension
Other
Total

Group

Reclassification£m

Utilisedduringthe year£m

Releasedduringthe year£m

Charge forthe year£m

At
31 March
2002
£m

11.9
4.5
14.3
11.9
0.7
9.9

20.9
1.1
–
(1.1)
(0.7)
6.5

(37.1)(3.7)(18.8)
–
–
(7.4)

(8.6)
(1.1)
(2.1)
(0.5)
–
(12.3)

37.8
13.3
21.2
0.2
–
21.8

24.9
14.1
14.6
10.5
–
18.5

53.2

26.7

(67.0)(24.6)

94.3

82.6

The 2001 figures have been restated for the adoption of FRS 17 and to reclassify programme loss
provisions of £8.5million against originated programmes work in progress. £26.7million disclosed inother creditors in Home Services last year has been reviewed and reclassified into provisions in 2002(see Note 26).
Property provisions include BBC World Service’s liability of £3.6million (2001 £3.6million) to restore BushHouse to its original condition, together with amounts relating to other dilapidations and relocations.
Other provisions consist of a number of balances arising across the BBC in the normal course of business.
At 1 April
2001
as restated£m

Licence fee
Restructuring
Litigation and insurance
Property
Other
Total

Home Services

Reclassification£m

Utilisedduringthe year£m

Releasedduringthe year£m

Charge forthe year£m

At
31 March
2002
£m

11.9
3.9
14.3
8.3
9.9

20.9
1.1
–
(1.1)
6.5

(37.1)(3.2)(18.8)
–
(7.4)

(8.6)
(1.0)
(2.1)
(0.5)
(12.3)

37.8
11.1
21.2
0.2
19.6

24.9
11.9
14.6
6.9
16.3

48.3

27.4

(66.5)(24.5)

89.9

74.6

The 2001 figures have been restated for the adoption of FRS 17 and to reclassify programme loss
provisions of £8.5million against originated programmes work in progress (see Note 26).

102 Annual Report and Accounts 2001/2002

The Home Services and BBC World
Service are funded from different
sources. As such, the reserves relating
to the BBC World Service are
maintained separately from the restof the Group and are restricted foruse solely on BBC World Service
activities.

19 Reserves

Operatingreserve excluding
pension reserve
as restatedNote£mPensionreserveas restated
£m

Total
operatingreserveas restated£m

Capitalreserve£m

Revaluation
reserve
£m

Total
£m

607.3
47.2

–
1,704.3

607.3
1,751.5

791.1
–

7.2
–

1,405.6
1,751.5

At 1 April 2001 as restatedExchange adjustments
Deficit for the financial year
Actuarial loss on defined
benefit pension schemes
Revaluation reserve transfer
Pension reserve transfer
Capital reserve transfer

654.5
0.5
(15.9)

1,704.3––

2,358.8
0.5(15.9)

791.1
–
–

7.2
–
–

3,157.1
0.5(15.9)–
0.8
17.8(11.5)(725.4)–(17.8)–(725.4)0.8–(11.5)

–
–
–
11.5

–
(0.8)
–
–

(725.4)–––

At 31 March 2002

646.2

961.1

1,607.3

802.6

6.4

2,416.3

Represented by:General Group reserves
BBC World Service reserves

635.2
11.0

961.1
–

1,596.3
11.0

685.7
116.9

–
6.4

2,282.0
134.3

646.2

961.1

1,607.3

802.6

6.4

2,416.3

Group
At 1 April 2001
as previously statedPrior year adjustment

26a

Under the accounting standard FRS 10, Goodwill and intangible assets, any newly arising goodwill must be
capitalised and amortised over its useful life. As is permitted by the standard, goodwill arising in periods
prior to 1999 of £6.8million (2001 £6.8million) remains offset against the operating reserve.

Note

Operatingreserveas restated£m

Capitalreserve£m

Revaluation
reserve
£m

Total
£m

26a

546.3
34.8

791.1
–

7.2
–

1,344.6
34.8

At 1 April 2001 as restated
Deficit for the financial year
Revaluation reserve transfer
Capital reserve transfer

581.1
(9.3)
0.8
(11.5)

791.1
–
–
11.5

7.2
–
(0.8)
–

1,379.4(9.3)––

At 31 March 2002

561.1

802.6

6.4

1,370.1

Represented by:Home Services reserves
BBC World Service reserves

550.1
11.0

685.7
116.9

–
6.4

1,235.8
134.3

561.1

802.6

6.4

1,370.1

Home Services
At 1 April 2001 as previously statedPrior year adjustment

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).

Annual Report and Accounts 2001/2002 103

Notes to the financial statements

20 Reconciliation of Group operating deficit to net cash inflow
from operating activities
2002
£m

2001
as restated£mGroup operating deficit
Depreciation and amortisation
Pension schemes operating costs (non-cash)
Loss on disposal of tangible fixed assets(Increase)/decrease in stocks(Increase)/decrease in debtors
Increase/(decrease) in creditors
Increase/(decrease) in provisions(173.4)
220.5
151.5
1.4
(51.8)(43.3)
83.2
29.4(129.8)
189.6
133.1
6.5
(60.7)(117.1)
84.3
23.1

Net cash inflow from operating activities

217.5

129.0

The 2001 figures have been restated for the adoption of FRS 17 (see Note 26a).

21 Analysis of changes in net funds

Bank overdrafts represent temporary
timing differences on cash at bank.
The Group cash at bank and in hand
shown on the balance sheet is madeup of deposits not repayable on
demand and cash at bank and in hand.

Net cash
Bank overdrafts
Cash at bank and in hand

At 1 April
2001£mCash flows£m

Non-cash
movements£m

At 31 March
2002
£m

(7.0)
102.9

7.0
(102.6)

–
–

–
0.3

95.9

(95.6)–

0.3

Liquid resources
Deposits not repayable on demand
Short-term investments

15.0
253.4

(15.0)
103.4

–
–

–
356.8

Gross funds*

364.3

(7.2)

–

357.1

Loans from third parties
Unsecured loan notes
Finance leases(19.1)–(10.5)(10.3)–––(1.9)(30.5)(29.4)(1.9)(41.0)Net funds

334.7(17.5)(32.4)

284.8

The repayments on finance leases held by Centre House Productions Limited are offset directly by income
earned on matching deposits, such that there is no cash flow effect (see Note 17d).The increase in financelease liabilities represents the amount by which the interest accrued on the leases exceeds that earned on
the deposits together with new defeasance deposits for new finance leases entered into during the year.
Over the course of the lease the interest earned on deposit together with the principal is designed to meetthe finance lease obligations.
2002
£m

2001
£m

BBC funds
TV licence savings stamp deposits and direct debit instalments

226.6
130.5

224.2
140.1

Gross funds

357.1

364.3

*Analysis of gross funds

104 Annual Report and Accounts 2001/2002

22 Reconciliation of net cash flow to movement in net funds
2002
£m

2001
£m

Decrease in cash in the year
Net cash outflow/(inflow) from management of liquid resources
Net cash (inflow) from financing activities(95.6)
88.4(10.3)(51.6)(6.7)–

Change in net funds resulting from cash flows
Issue of loan notes
Finance leases
Exchange adjustments(17.5)(1.9)(30.5)–(58.3)
–
(6.1)
(0.2)

Change in net funds
Net funds at the beginning of the year

(49.9)
334.7(64.6)
399.3

Net funds at the end of the year

284.8

334.7

23 Commitments
23a Contracts placed for future expenditure

Fixed asset additions
Programme acquisitions and sports rights
Independent programmes

Group
2002
£m

Group
2001
£m

Home
Services
2002
£m

Home
Services
2001
£m

45.9
754.4
69.4

37.8
658.3
24.8

13.4
715.2
69.4

19.6
591.5
24.8

869.7

720.9

798.0

635.9

The increase in contractual commitments is due to the renegotiation of favourable long-term contracts for
key programmes and the rights to broadcast major sporting events.
An operating lease is a lease where
the lessee has not taken on the risks
and rewards of owning and operating
the asset.The lessee (the BBC) ishiring rather than buying an asset.

23b 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

Home Services
Within one year
In two to five years
After five years

Land andbuildings
2002£mLand andbuildings
2001
£m

Other
2002
£m

Other asrestated
2001
£m

2.7
12.1
13.0

2.3
11.6
8.8

5.3
9.3
2.5

12.3
16.1
3.2

27.8

22.7

17.1

31.6

1.3
4.4
11.8

2.1
3.5
7.6

1.0
10.8
–

8.0
10.2
–

17.5

13.2

11.8

18.2

The prior year figures for land and buildings have been restated following a review of all the BBC’s leases.
23c 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.

Annual Report and Accounts 2001/2002 105

Notes to the financial statements

24 Contingent liabilities
At 31 March 2002 the Group had unprovided contingent liabilities estimated to be £2.3million(2001 £2.8million) in respect of guarantees and indemnities.
Within BBC World Service, BBC Monitoring’s operating reserve of £7.2million (2001 £7.0million) includes
amounts arising as a result of charging a return on capital employed to its customers, together with otheraccumulated excesses of income over expenditure.There are limitations placed upon these funds andagreement has yet to be reached over their use.
BBC Resources Limited has a contract with 3sixtymedia Limited for the use of studios. In the event thatturnover earned by 3sixtymedia Limited from the BBC falls below specified levels, BBC Resources Limited
is liable to pay a proportion of any redundancy costs which arise as a consequence, up to a maximumof 100%. It is not practicable to quantify the possible amount of any such liability, as it is dependent upon
both the level of redundancy costs and the level of turnover generated by the BBC. In the event that thisliability crystallises, there will be a dilution in BBC Resources Limited’s shareholding in 3sixtymedia Limited.
The Group also has a number of contingent liabilities arising from litigation.The BBC makes specificprovision (see Note 18) against an estimate of any damages and costs which may be awarded.

25 Related party transactions
The related party transactions of the Group have been presented in accordance with FRS 8, Related
party disclosures.
25a Transactions with joint ventures and associated undertakings
Included in the income and expenditure account is income from UKTV and the Discovery joint venturesof £30.3million and £24.2million respectively from sales of programmes.The BBC received £7.7million ofincome from various other associates from sales of programmes. In addition, Frontline Limited charged£6.3million for the distribution of BBC Worldwide Limited’s magazines.
In October 2001 the BBC formed the Insight Property Partnership and the White City Development
Partnership with Land Securities Trillium (LST) as explained in Note 14a.The BBC contributed its interestin the White City site to these partnerships.The consideration received was a combination of cashof £20million, partnership capital of £3.6million and reductions in service payments for property services.
The latter is held as a prepayment on the BBC’s balance sheet. In addition, development work in progress
was transferred to the White City Development Partnership for cash of £17million.The BBC recorded
neither a profit nor a loss on these transfers.The partnerships charged the BBC £25million for property
services during the year.
Amounts owed by/to joint ventures and associated undertakings at the year end are disclosed within
Notes 16 and 17. In all transactions the terms of trade were negotiated on an arm’s length basis.

Related parties include Governors,
the Executive Committee and othersenior managers, their immediatefamilies and external entities
controlled by them.

25b Other transactions
Sir Richard Eyre, Governor, is also Chairman and Managing Director of Chestermead Limited. During
the year Sir Richard Eyre received, either directly or through Chestermead, payments totalling £9,500 for
interviews and contributions to BBC programmes. No amounts were outstanding at the year end. He wasalso writer and director of Iris, a film produced by Fox Iris Productions Limited. BBC Films contributed
towards the financing of this film. Sir Richard Eyre’s wife, Sue Birtwistle, works on a freelance basis for theBBC. During 2001/2002 she received £31,000 for her contribution to Armadillo.
Baroness Hogg, Governor, is also Chairman of Frontier Economics. During the year the BBC paid £45,000
to Frontier Economics for two projects relating to new service launches and the incorporation of BBC
Broadcast Limited. No amounts were outstanding at the year end.
Rt Hon The Lord Ryder, Governor, is also a non-executive director and shareholder of Ipswich Town
Football Club. During the year the BBC paid £1,195,000 to the club in respect of the UEFA Cup and
FA Cup televised fixtures.
Ranjit Sondhi, Governor, is married to Anita Bhalla, who has been employed by the BBC since 1987 invarious production and broadcasting roles. Her current role is Head of Political and Community Affairs for
the English Regions. Her remuneration is based on the BBC’s standard terms and conditions applicable toother staff employed in this capacity.

106 Annual Report and Accounts 2001/2002

Sir Christopher Bland, Chairman of the BBC until 30 September 2001, was also Chairman of British
Telecommunications plc from May 2001. During this time the BBC traded with British Telecommunications
plc in the normal course of business. Sir Christopher Bland was not a party to the approval process forany of this trading.
In the normal course of business, there are a number of transactions between the BBC and other parties
which are related by virtue of the fact that senior employees of the BBC are married to or have family
relations with 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 Governor or employee is not a party to the approval
process.

This is a technical explanation of
how the adoption of the new policy
has changed the figures in last year’s
financial statements.

26 Restatement of comparative figures
26a Adoption of FRS 17, Retirement benefits
The adoption of FRS 17, Retirement benefits, has required changes in the method of accounting for pension
costs. As a result, the comparative figures for 2001 have been restated as follows:
In the Group income and expenditure account the defined benefit pension operating cost, included within
operating expenditure, increased by £101.1million to £154.0million. A new income line, other financeincome, represents the net expected return to the BBC on pension scheme assets after deducting theinterest on the pension scheme liabilities.This offsets the pension scheme cost by £169.5million in 2001
resulting in a net credit of £15.5million to the income and expenditure account for this pension scheme.
In the Group balance sheet the pension provision was reduced by £47.2million, of which £31.5million related
to amounts added during 2001 under the previous accounting policy SSAP 24.The pension scheme surplus
increased net assets by £1,704.3million.
In total, the effect of FRS 17 has been to increase net assets by £1,751.5million.
The impact of adopting FRS 17 on the operating costs for 2002 is similar to that for 2001. However,volatility in the other finance costs results in a net pension charge of £43.3million in the income andexpenditure account in 2002 compared with the credit of £15.5million in 2001.
The Home Services have taken advantage of provisions in the scheme and now account for the scheme
as if it were a defined contribution scheme.This resulted in a decrease in pension costs of £24.0million
in 2001.The pension provision of £34.5million was eliminated and the interest in BBC World Service net
assets increased by £0.3million to £124.5million.The impact of adopting FRS 17 had a similar effect on
Home Services’ results in 2002.
26b Other restatements
The adoption of a new chart of accounts with our new financial system has led to a number of balance
sheet reclassifications this year.The impact is explained under the relevant note to the financial statements.

Annual Report and Accounts 2001/2002 107

Broadcasting facts and figures

A number of new digital radio and television services were launched during the year, and any data included for these services is for the period
since the launch date.The launch dates for the new television channels were: CBBC, 11 February 2002; CBeebies, 11 February 2002; and BBC
Four, 2 March 2002 (BBC Knowledge ceased on 1 March 2002).The launch dates for the new radio stations were BBC Five Live Sports Extra,
2 February 2002 and 6 Music, 11 March 2002.
For an explanation of the terminology used throughout this section (eg BARB, RAJAR, reach etc) see the glossary on the inside back cover.

Programmes and audiences
BARB introduced a new audience panel in January 2002. Reach comparisons across the period should therefore be treated with caution
as subsequent falls in reach may partly be due to methodological changes.
Table 1 15-minute weekly reach by service and platform

All homes
Analogue terrestrial
Digital homes
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001(55.3m*)(55.0m*)(27.4m*)(30.2m*)(24.5m*)(15.7m*)
%
%
%
%
%
%

Total BBC Television and Radio reach

93.0

94.4

–

–

–

–

BBC Television
BBC One
BBC Two
BBC Choice
BBC Four
BBC News 24
CBBC
CBeebies
BBC Knowledge

86.5
82.9
66.0
5.4
1.1
2.9
1.0
3.1
0.8

88.4
85.7
69.1
2.6
–
2.0
–
–
0.4

90.2
86.8
75.9
–
–
–
–
–
–

92.0
89.7
78.4
–
–
–
–
–
–

83.4
78.2
53.7
15.1
2.7
5.6
2.4
7.7
2.3

82.4
78.8
53.9
11.7
–
4.0
–
–
1.5

ITV1
ITV2
Channel 4E4 (launched 18 January 2001)
Channel 5
All Sky channels
Sky OneSky News
Discovery
Nickelodeon
Nick Junior
UK Gold
UKTV
Other channels (total)**

78.0
3.1
62.5
4.6
39.2
25.0
14.3
3.5
3.3
4.8
1.6
9.3
14.2
36.1

82.6
0.4
67.3
3.2
38.5
23.0
14.0
3.2
3.0
4.9
1.4
8.8
12.1
33.0

83.0
–
70.2
–
40.2
–
–
–
–
–
–
–
–
–

87.5
–
74.6
–
39.9
–
–
–
–
–
–
–
–
–

70.6
7.7
52.1
12.2
35.7
58.6
33.0
8.0
6.5
10.7
4.5
20.1
31.9
80.5

72.1
1.6
54.1
11.2
32.3
63.0
37.3
7.7
6.1
13.4
6.5
23.1
33.2
84.3

BBC Radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Local Radio (including Nations)

63.4
23.5
22.9
3.7
17.7
11.2
19.9

60.9
23.5
19.5
3.6
16.8
10.6
19.1

VirginClassic
TalkSport
All local commercial radio

5.7
12.3
4.5
58.5

5.8
11.5
4.1
57.0

Source: BARB, RAJAR, age 4+, average for the year.
* People age 4+ as at March 2002, source: BARB.
** Excludes BBC One, BBC Two, ITV1, Channel 4 and Channel 5.
It is not possible to measure the reach of digital radio services.

108 Annual Report and Accounts 2001/2002

Table 2 Share by service and platform

All homes
Analogue terrestrial
Digital homes
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001(55.3m*)(55.0m*)(27.4m*)(30.2m*)(24.5m*)(15.7m*)
%
%
%
%
%
%

Total BBC Television and Radio share

43.8

43.1

–

–

–

–

BBC Television
BBC One
BBC Two
BBC Choice
BBC Four
BBC News 24
CBBC
CBeebies
BBC Knowledge

38.4
26.5
11.1
0.7
0.1
0.1
0.0
0.5
0.0

38.2
26.8
11.0
0.3
–
0.1
–
–
0.0

48.5
34.1
14.4
–
–
–
–
–
–

46.3
32.1
14.2
–
–
–
–
–
–

27.2
18.9
6.2
1.5
0.1
0.5
0.1
1.3
0.1

25.4
18.2
5.7
1.0
–
0.3
–
–
0.1

ITV1
ITV2
Channel 4E4 (launched 18 January 2001)
Channel 5
All Sky channels
Sky OneSky News
Discovery
Nickelodeon
Nick Junior
UK Gold
All UKTV
Other channels (total)**

25.7
0.2
9.9
0.4
5.9
6.1
1.8
0.4
0.2
0.6
0.2
1.0
1.9
20.7

28.9
0.0
10.3
0.1
5.7
5.4
1.8
0.3
0.2
0.5
0.1
1.1
1.6
17.3

31.4
–
12.1
–
7.4
–
–
–
–
–
–
–
–
0.6

33.8
–
12.6
–
6.8
–
–
–
–
–
–
–
–
0.5

18.3
0.5
6.2
1.1
3.7
14.5
4.0
0.8
0.4
1.1
0.5
2.0
3.9
46.8

19.0
0.1
6.0
0.6
2.9
16.8
4.4
0.6
0.3
1.2
0.6
2.3
4.0
48.2

BBC Radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Local Radio (including Nations)

50.2
9.7
14.1
1.1
10.5
4.1
10.7

49.7
10.6
12.6
1.2
10.4
3.9
11.0

VirginClassic
TalkSport
All local commercial radio

1.5
4.2
1.6
39.9

1.6
4.2
1.4
40.4

Source: BARB, RAJAR, age 4+, average for the year.
* People age 4+ as at March 2002, source: BARB.
** Excludes BBC One, BBC Two, ITV1, Channel 4 and Channel 5.
It is not possible to measure the share of digital radio services.

Annual Report and Accounts 2001/2002 109

Broadcasting facts and figures

Table 3 Top ten programmes 2001/2002
BBC OneAudience
Millions

1
2
3
4
5
6
7
8
9
10

21.35
20.05
11.64
10.46
10.27
10.18
10.13
10.05
9.95
9.70

Only Fools and Horses
EastEnders
Match of the Day Live: England v Albania
Ten O’Clock News
Film: Indiana Jones and the Last Crusade
Antiques Roadshow
Film: Indiana Jones and the Temple of DoomThe Grand National
Casualty
The Blue Planet

BBC Two
1
2
3
4
5
6
7
8
9
10

Band of Brothers
Horizon
Dad’s Army
The Weakest Link
World Championship Snooker
Conspiracy
Shooting Stars
How to be a Gardener
Film: Meet Joe Black
Olympic Grandstand

Table 6* Combined BBC radio and television reachby genre
2000
%

51
22
78
62
50
24
49
71
54
44
33

50
22
78
59
49
25
53
68
53
39
37

Arts and music
Current affairs
Documentaries/features
Drama (non-soap)
Drama (soap)
Films
ComedyOther entertainment
Network news
Regional news
Sport

5.62
Source: BARB Audience Reaction Service.
5.14 Note: Based on respondents giving opinions on programmes. Reach based on at least one programme
5.13 response in the course of a week. Excludes BBC Digital services.
5.10 * The programme genre coding service was not available after December 2001.The figures shown are
for the calendar year.
4.86
4.56
4.56
Table 7 Range of peaktime UK-made programmes on
4.52
network television
4.48
Number of UK-produced genres averaging a half-hour slot during peak
4.35
time in a typical week.This excludes all digital output.
Network
BBC TV

Source: BARB.
Note: For series, highest programme audience shown.

Table 4 Monthly BBCi on the internet page impressions
March 2002 March 2001
Millions
Millions

News and sport
Education
Other BBCi

226.2
53.2
269.9

169.5
25.1
127.7

Total BBCi on the internet (excluding beeb.com)

549.3

322.3

BBC World Service, accessed via BBCi sites
BBC World Service, accessed via key partners

26.2
2.7

12.2
2.9

Total BBC World Service

28.9

15.1

Source: Server logs.
Note: Key partner websites host BBC World Service text and audio.

Table 5 Monthly BBCi on the internet and interactive TV
reach (millions of users)
March 2002 March 2001
Millions
Millions

BBCi on the internet*
BBCi on interactive television**

5.7
3.7

Total BBCi†

8.8

Single plays/films*
Drama series*
UK originated serials*
Long-running serials*
Sitcom – UK originated*
Other comedy*
Variety
Quiz and panel games*
Family/people shows
*
Sport
*
Network news*
Nations and Regions news *Current affairs*
Consumer affairs*
Arts*
Hobbies and leisure pursuits *Natural history*
Science and medical*
Human interest*
Music – contemporary*
Music – classical*
Religious*

4.9– Total 2001/2002
4.9 Total 2000/2001

Source: * Server logs.
** Interactive TV tracking study (began July 2001), digital satellite and digital terrestrial only.
† Total BBCi only counts an individual once for using BBCi services on both the internet and interactive TV.

110 Annual Report and Accounts 2001/2002

2001%

Source: BARB.
Note: Peak time is 6pm to 10.30pm.

BBC
One

*
*
*
*

BBC
Two

*
*

ITV/
C4/C5

ITV

*
*
*

*
*
*

C4

C5

*
*

*

*

*
*
*
*
*
*
*
*

*
*
*
*
*

*
*
*
*
*
*
*

*
*
*
*
*
*

*

*

*

*
*
*

*
*

21

15

12

17

10

10

8

19

13

14

16

10

7

6

*
*
*
*
*

*
*

*
*
*
*
*

*
*
*
*
*

*
*
*

*

*

Hours of output – television
Table 8 Television

On all platforms

On digital platforms only

BBC One
BBC Two
BBC Choice
BBC Four
BBC Knowledge
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001

Hours of output
Factual
Education for children
News and weather
Current affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and arts
Religion

1,341
12
2,792
84
32
802
519
533
561
28
102

1,240
–
2,675
99
31
755
761
593
528
27
107

927
678
381
192
117
682
864
494
62
231
18

966
892
371
183
152
645
831
378
112
220
14

256
–
22
7
–
1,605
1
3,012
310
64
4

495
–
225
–
–
1,185
156
3,275
352
57
–

47
–
27
–
–
–
–
–
13
74
1

–
–
–
–
–
–
–
–
–
–
–

3,290
–
57
–
–
3
–
6
203
1,301
54

4,620
–
4
–
–
1
–
63
31
1,102
27

–
–

–
–

784
601

766
494

–
–

–
–

–
–

–
–

–
–

–
–

Acquired programmesContinuity

1,511
246

1,523
233

2,121
272

2,160
270

1,192
242

1,357
278

43
8

–
–

652
168

317
238

Total network

8,563

8,572

8,424

8,454

6,715

7,380

213

–

5,734

6,403

Open University
Learning Zone

CBBC
CBeebies
BBC News 24
BBC Parliament
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001

Hours of output – digital platforms onlyChildren’s
Education for children
News and weather
Parliamentary

327
72
–
–

–
–
–
–

431
–
–
–

–
–
–
–

–
–
8,760
–

–
–
8,760
–

–
–
–
5,265

–
–
–
5,265

Acquired programmesContinuity

146
38

–
–

133
66

–
–

–
–

–
–

–
–

–
–

Total network

583

–

630

–

8,760

8,760

5,265

5,265

Note: BBC One and BBC Two are broadcast on all platforms. Some programmes are broadcast on both BBC News 24 and BBC One or BBC Two, eg Breakfast and special events, and these are included underboth channels. Acquired programmes are programmes not made or commissioned by the BBC, eg feature films. Continuity is all other output that is not programmes.

Table 9 Subtitling output on BBC television
BBC One/Two
BBC Choice
BBC Four
BBC News 24
CBBC
CBeebies
BBC Knowledge
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001

Subtitled hours

17,396 15,916

Target for year
Actual for year

72%
73.7%

4,331

66%
35%
72.4%* 64.4%

2,800

1,061

30%
30%
48.5%* 53.5%

–

2,327

–
30%
– 26.6%

1,380

311

–

20%
30%
20.3%* 55.6%

560

–

–
30%
– 92.7%

3,923

3,762

–
30%
– 68.2%20%
55.6%** Actual figures for 2000/2001 show the final quarter percentage only. Note: A target has been set for 100% of programming output to be subtitled by 2008/2009.

Table 10 Audio description
Average hours per week

Average hours
Target for year
Actual for year
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001

BBC One
BBC Two
BBC Choice
BBC Four
CBBC
CBeebies
BBC Knowledge

6.9
5.1
6.0
1.5
0.4
1.9
8.3

3.9
3.5
3.5
–
–
–
7.8

2.8%
2.8%
2.8%
4.0%
4.0%
4.0%
2.8%

2.0%
2.0%
2.0%
2.0%
–
–
2.0%

4.2%
3.2%
4.7%
3.0%
0.5%
2.2%
6.9%

2.3%
2.1%
2.4%
–
–
–
6.3%

Total average audio hours per week

30.1

18.7

2.8%

2.0%

3.5%

2.0%

Note:Targets have been set for 10% of programming output to be audio described by 2008/2009. Audio description was launched 15 May 2000.

Annual Report and Accounts 2001/2002 111

Broadcasting facts and figures

Table 11 Signing
Average hours
Target for year
Actual for year
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001

Average hours of signing per week

12.4

9.6

1.4%

1.0%

1.6%

1.3%

Note:Targets have been set for 5% of programming output to be signed by 2008/2009. Signing was launched 29 May 2000.

Table 12 Television hours of output by origin

Table 13 Network television hoursof output, repeats only

Programmes made in

LondonEngland(excluding
London)

Northern
Ireland

Scotland

Total
Wales 2001/2002

Total
2000/2001

First transmission:
Originated programmes
Network BBC One and Two
Factual870
Education for children
36News and weather
3,168
Current affairs
203
Parliamentary
148
Entertainment
723
Sport
1,341
Children’s
258
Drama
278
Music and arts
161
Religion
10

627
3
–
59
–
145
–
84
125
8
101

1
1
–
–
–
4
–
–
16
12
1

48
6
1
3
–
13
–
111
23
11
3

4
1
–
–
–
–
–
–
6
16
–

1,550
47
3,169
265
148
885
1,341
453
448
208
115

1,642
127
3,046
260
181
856
1,471
480
381
212
120

Subtotal

7,196

1,152

35

219

27

8,629

8,776

Nations and Regions
Factual and learning
Education for children
News and weather
Current affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and arts
Religion

–
–
186
5
16
–
–
–
–
–
–

–
–
3,004
101
128
–
–
–
–
–
–

57
2
337
23
80
67
107
7
–
5
–

84
7
375
31
109
49
235
21
4
29
–

42
9
304
13
111
37
227
–
10
22
–

183
18
4,206
173
444
153
569
28
14
56
–

176
30
3,828
220
393
93
513
11
8
43
8

Subtotal

207

3,233

685

944

775

5,844

5,323

Acquired programmes

869

10

–

5

3

887

953

Total first transmissions* 8,272

4,395

720

1,168

805 15,360

15,052

Repeats
Network
Nations and Regions

4,691
–

774
1

12
76

64
124

28
35

5,569
236

5,534
231

Continuity
Open University
Learning Zone

519
784
590

20
–
8

99
–
1

114
–
1

123
–
1

875
784
601

846
766
495

Total hours of broadcasting 14,856

5,198

908

1,471

992 23,425

22,924

434
11

32
81

63
112

4
89

1,557
260

*of which independents

Network
Nations and Regions

950–

112 Annual Report and Accounts 2001/2002

1,483
293

General programmes
Factual and learning
Education for children
News and weather
Current affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and arts
Religion

BBC One2001/2002 2000/2001

339
–
–
5
–
273
25
142
160
2
5

206
–
–
20
–
255
96
151
193
3
2

–
–

–
–

Acquired programmesContinuity

1,075
–

1,031
–

Total

2,026

1,957

448

438

24%

23%

Open University
Learning Zone

Of which narrative
repeats
Repeats as
a % of total output
General programmes

BBC Two
2001/2002 2000/2001

Factual and learning
Education for children
News and weather
Current affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and arts
Religion

379
643
–
11
1
326
17
432
14
50
–

358
766
–
1
2
289
25
339
68
31
–

Open University
Learning Zone

727
561

691
435

Acquired programmesContinuity

1,670
–

1,698
–

Total

4,831

4,703

274

303

57%

56%

Of which narrative
repeats
Repeats as
a % of total output

Hours of output – radio
Table 14 BBC Network radio hours of output
On all platforms
Radio 1
Radio 2
Radio 3
Radio 4
Radio Five Live
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001

Music
News and weather
Sport
Knowledge
National debate
Drama
Arts
Comedy and entertainment
Religion
Schools/continuing education
LeisurePresentations and trailing

8,472
272
33
–
25
–
–
–
–
15
69
145

8,437
276
33
–
25
–
–
6
–
15
63
149

7,422
420
–
86
165
13
118
79
193
–
85
179

7,434
427
–
85
184
13
96
105
189
–
46
181

8,126
18
–
17
–
102
167
–
63
208
–
59

8,112
19
–
10
–
112
180
–
64
197
–
66

–
2,563
696
1,736
765
1,075
340
416
180
44
62
55

–
2,701
453
1,573
714
1,063
362
459
176
46
70
65

–
5,817
2,239
27
469
–
–
31
–
–
37
140

–
5,957
2,161
–
480
–
–
33
–
15
–
114

Total

9,031

9,004*

8,760

8,760

8,760

8,760

7,932

7,682

8,760

8,760

* Radio 1 operates Nations’ opt-outs from The Evening Session on weekday evenings.
On digital platforms only
Five LiveSports Extra
6 Music
Total network radio
2001/2002 2000/2001 2001/2002 2000/2001 2001/2002 2000/2001

Music
News and weather
Sport
Knowledge
National debate
Drama
Arts
Comedy and entertainment
Religion
Schools/continuing education
LeisurePresentations and trailing

–
–
200
–
–
–
–
–
–
–
–
–

n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

504
–
–
–
–
–
–
–
–
–
–
–

n/a 24,524
n/a
9,090
n/a
3,168
n/a
1,866
n/a
1,424
n/a
1,190
n/a
625
n/a
526
n/a
436
n/a
267
n/a
253
n/a
578

23,983
9,380
2,647
1,668
1,403
1,188
638
603
429
273
179
575

Total

200

n/a

504

n/a 43,947

42,966

6 Music

Total
Network

Nations
and Local
Total
Radio* 2001/2002

Total
2000/2001

36,146

8,736 44,882

44,487

Note: Digital radio – all networks are broadcast via DAB (Digital Audio Broadcasting), Dsat (Digital Satellite) and are streamed online.

Table 15 Network radio hours of output by origin
Radio 1

Radio 2

Radio 3

Radio 4Radio
Five Live
Five Live Sports Extra

Programmes produced in London

8,349

5,784

6,617

6,220

8,472

200

504

Programmes produced
outside London
England excluding London
Northern Ireland
Scotland
Wales

412
90
90
90

2,837
15
120
4

1,219
99
367
458

1,434
44
163
71

283
5
–
–

–
–
–
–

–
–
–
–

6,185 213,577 219,762 216,998
253
8,754
9,007
9,057
740 10,394 11,134 10,787
623 13,570 14,193 14,043

Subtotal

682

2,976

2,143

1,712

288

–

–

7,801 246,295 254,096 250,885

Total hours of broadcasting

9,031

8,760

8,760

7,932

8,760

200

504

43,947 255,031 298,978 295,372* Including BBC Asian Network.

Annual Report and Accounts 2001/2002 113

Broadcasting facts and figures

Table 16 Nations’ and Local Radio hours of output
Population*
Total
Age 15+ (000s) 2001/2002

Nations Radio

Northern Ireland:
BBC Radio Ulster
1,306
BBC Radio Foyle
114
ScotlandBBC Radio Scotland(including BBC Radios Orkney and Shetland) 4,176
BBC Radio nan Gaidheal
4,176
Wales:BBC Radio Wales
2,383
BBC Radio Cymru
2,383
Subtotal

Total
2000/2001

6,119
2,635

6,158
2,666

8,326
2,068

8,309
1,856

6,810
6,760

6,741
6,723

32,71832,453

Radio Scotland
Radio nan Gaidheal

23
437
17 18 1422
11 28
32 7 26 2024
29
19
25 3 33
36
13
10 27 34 9
35 1 21
2
16
30 31
6

Radio Ulster
Radio Foyle
Radio WalesRadio Cymru

5

8

12

15

Local Radio

Population*
Total
Age 15+ (000s) 2001/2002

1 Berkshire784
2 Bristol (incl. Somerset Sound opt)
1,227
3 Cambridgeshire603
4 Cleveland700
5 Cornwall
411
6 Cumbria
381
7 Derby583
8 Devon (incl. Plymouth opt)
912
9 Essex
1,163
10 Gloucestershire
460
11 GMR
2,073
12 Guernsey
49
13 Hereford & Worcester487
14 Humberside724
15 Jersey
71
16 Kent
1,284
17 Lancashire
1,126
18 Leeds
1,495
19 Leicester751
20 Lincolnshire484
21 London 94.9 (formerly London Live) 10,292
22 Merseyside
1,616
23 Newcastle
1,355
24 Norfolk
676
25 Northampton
435
26 Nottingham
730
27 Oxford
498
28 Sheffield
1,220
29 Shropshire
357
30 Solent (incl. Dorset opt)
1,458
31 Southern Counties Radio(incl. Brighton, Sussex and Surrey opts) 2,365
32 Stoke599
33 Suffolk
418
34 Three Counties Radio
947
35 Wiltshire Sound
498
36 WM (incl. Coventry & Warks. opt)
2,756
37 York
462
Local RadioBBC Asian Network
Total hours

Total
2000/2001

3,329
7,550
5,710
5,093
5,493
5,666
5,130
6,367
5,269
5,291
6,705
4,179
5,287
5,459
4,228
5,535
5,865
6,266
5,069
5,311
8,736
6,107
5,858
6,229
5,089
5,753
5,469
5,654
5,251
7,364

3,290
7,402
5,437
4,973
5,686
5,283
5,150
5,834
5,023
5,231
6,779
4,007
5,341
5,347
4,212
5,542
5,970
6,188
5,060
5,118
8,736
5,792
5,845
6,208
5,112
5,676
5,389
5,564
5,292
7,376

6,735
5,127
5,140
6,699
7,002
8,815
5,548

6,327
5,095
5,107
6,303
7,964
8,607
5,156

215,378 212,422
4,941

6,935

7,530

255,031 252,405* Based on Total Survey Area (the area over which the radio stations’ audience is measured
for research purposes), age 15+, for RAJAR reporting.
Note: An opt-out radio service broadcasts some of its own programmes for its local area, ‘opting out’of the main service.
Note: Details of BBC radio frequencies are available on www.bbc.co.uk/radio or by calling
08700 100 123.
The number on the map indicates the local radio station listed above.The map is representative
only and does not indicate coverage.

114 Annual Report and Accounts 2001/2002

Financial statistics
Table 17 Spend outside London

Table 21 Cost per hour of originated programmes
2001/2002£m

Cost of Nations and Regions television originations
England
Scotland
Wales
Northern Ireland

75
47
31
27
180

Cost of regional BBC and independent productions
for network television229

Total cost of television originations in the
Nations and Regions

409

Cost of Nations and Local Radio originations
England – Local Radio
Scotland
Wales
Northern Ireland

79
19
18
10
126

2001/2002£000

2000/2001£000

Television channels
BBC One
BBC Two
BBC Choice*
BBC Four
BBC News 24
148
BBC Parliament
CBBC
218 CBeebies
BBC Knowledge

146.1
98.2
107.6
98.5
5.3
0.5
19.6
42.2
72.0

132.3
91.4
52.4
–
5.1
0.5
–
–
62.7

366 Radio stations
BBC Radio 1
BBC Radio 2
71
BBC Radio 3
19
BBC Radio 4
17
BBC Radio Five Live9
BBC Five Live Sports Extra
116 BBC 6 Music

2.7
4.0
3.8
10.7
7.4
1.7
0.4

3.1
3.3
4.0
9.6
6.2
–
–

28.5
0.5

27.8
0.5

2000/2001
£m

70
32
23
23

Cost of regional BBC and independent productions
For network radio

35

Total cost of radio originations in the Nations
and Regions

Nations and Regions
32 Television (BBC One/BBC Two/BBC Choice)Radio (Local Radio/Nations)

161

148

Other programme costs incurred outside London
Other costs, including transmission

51
86

48
104 Table 22 Cost per hour of originated programmes by genre

Total spend in the Nations and Regions

707

666

* BBC Choice included a branded block of children’s programmes shown between 6am and 6pm.

Analogue television programmes
Table 18 Distribution costs
2001/2002 2000/2001 Factual and learning£m£m Education for children
News and weather
Analogue
75
74
Current affairs
Digital5242Parliamentary
Total distribution costs
127
116 Entertainment
SportChildren’s
Drama
Table 19 Comparative cost per household ofviewing/listening per hour
2001/2002 2000/2001 Music and arts
pence
pence Religion
BBCSky multichannels (family package)
All pay television
Video hire

4.6
27.0
19.7
65.6

4.5
22.8
19.4
63.6

638

563

Digital television programmes
Factual and learning
Education for children
News and weather
Current affairs
Source: BARB, RAJAR, BBC Strategy estimates.This table shows how the licence fee compares with otherforms of entertainment for each hour of viewing or listening.
Parliamentary
Entertainment
Sport
Table 20 Creative spend
2001/2002 2000/2001£m£m Children’s
Drama
Independent programme productions transmitted
257
203 Music and arts
Acquired programmes transmitted
96
76 Religion
Artists, contributors and copyright260
259
In-house orchestras
25
25

2001/2002£000

2000/2001
£000

104.2
85.2
51.7
117.5
73.0
176.9
127.8
100.1
518.0
111.9
107.6

92.8
86.4
54.0
118.2
46.7
183.0
101.7
89.9
486.3
109.7
102.0

109.4
–
5.4
74.1
0.7
98.2
–
25.0
267.5
52.9
59.5

78.2
–
5.3
–
0.5
78.3
52.0
5.3
93.7
47.8
–

Annual Report and Accounts 2001/2002 115

Getting in touch with the BBC

BBC Information
We welcome your views on
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116 Annual Report and Accounts 2001/2002

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Explanation of technical terms
and abbreviations used in thisReportBARB Broadcasters’ Audience
Research Board. A joint industry
committee, funded by televisioncompanies and advertising agencies,
which produces audience measurement
and audience reaction data for the
television industry. Data is publishedmonthly. Since 1 January 2002 there
have been modifications to the way
BARB collects viewing figures.This
means figures for 2001 and 2002
are not strictly comparable.
DCMS Department for Culture, Mediaand Sport.The Government
department responsible forbroadcasting.
Narrative repeats Programmes thatappear twice in a weekly schedule.

Designed and produced by C&FD.
Printed in England by Hyway.
The following photographs have been
reproduced courtesy of:Topham, page 6 (Township Opera)
HBO, page 22 (Band of Brothers)
P Victor/MaxPP, page 23(The Tragedy of Hamlet)
Aureo De Freitas Junior, page 28(Music from the Rainforest)
Simon Rix, pages 42, 43, 45 and 46(audience pictures)David Graeme-Baker, page 51(girl at a computer)
stuarthollis.co.uk, page 53(BBC Asian Network)
John Downer Productions, insideback cover (Weird Nature)
Also:
P.A Photo’s
AP/Associated Press

Network programmes The term usedby the BBC to mean programmes
transmitted to at least 11 of our 14
Nations and Regions.
Originated programmes Originatedprogrammes/originations are thefirst showing of programmes directly
produced or commissioned by
the BBC.
Page impressions Page impressions(PIs) measure the total number ofvisits to our website pages.
RAJAR Radio Joint Audience
Research Limited is jointly owned by
the Association of Independent Radio
Companies and the BBC. RAJAR
operates an audience measurement
system for the radio industry. Data ispublished quarterly.
Reach The percentage of peopleviewing or listening to output for adefined period.The standard television
definition (BARB) is three minutes
consecutively, while that for radio(RAJAR) is 15 minutes consecutively.
Usually measured daily or weekly.
Online reach is the number orpercentage of adult internet users(15 years +) who state they haveused the BBCi website in the pastmonth.
Share The amount of viewing of/listening to a given station or service– expressed as a percentage of all
viewing/listening – during a defined
timeband.

Above: Weird Nature, natural history
on BBC One.

Annual Report and Accounts 2001/2002 117

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Website: www.bbc.co.uk© BBC 2002