BBC Annual Reportand Accounts 2014/15

The BBC’s mission is toinform, educate and entertain

BBC Annual Reportand Accounts 2014/15

Presented to Parliament by the Secretary of State forCulture, Media and Sport by Command of Her Majesty
Extended versions of the financial statements provided in Part Twoof this report are laid before Parliament on 14 July 2015 and areavailable online at bbc.co.uk/annualreport© BBC Copyright 2015
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Contents

The BBC exists to serve the public,
and its mission is to inform, educate
and entertain

The BBC Trust’s
review and assessment
The Trust exists to get the best out of the BBC forlicence fee payers. It is the governing body of the
BBC and sets the strategic direction, measures
performance and holds the Executive to account

The BBC Executive’s review
and assessment
The Executive is responsible for theoperational delivery of BBC services andthe direction of BBC editorial and creative
output in line with the framework set by
the TrustOur role and purpose
This year in summary
Serving everybody
Better value for money
The BBC’s objectives

145 Additional information
145 Glossary
146 Index
IBC Contacts

08

Chairman’s foreword

11
12
14
22
26
28
29

Setting strategy and assessing performance

31

Understanding audiences
Inside the Trust

35
36
38
42

46

Setting strategy
Quality and distinctivenessValue for money
Serving all audiences
Innovating online
Overseeing commercial and other activities

BBC Trustees
Governance
Trust finances

Director-General’s introduction

Part Two

Part Two

The BBC at a glance

Strategic report
51 Delivering our strategy
55
58

Our achievements and new faces
Delivering our strategy in 2014/15

67
68
76
80
82

Performance

83
84
88
90
92
93

How we run the BBC

Performance by content area
The BBC in each of the nations
Performance by genre
Network supply
Our people (including headcount, severance pay and talent spend)
Diversity
Developing new skills and talentPartnerships
Supporting good causes

Governance and finance report
97 Governance
98 Executive Board
100 Report of the Senior Independent Director
102 Governance report and Nominations Committee
104 Remuneration report
115 Audit Committee report
120 Risks and opportunities
124 Fair Trading report
127 Finance and commercial
128 Review of the Managing Director, BBC Finance and Operations
130 Financial achievements
132 Charter Review and future challenges
133 Financial overview
134 Commercial trading
143 Summary financial statement
144 Auditor’s report

BBC Annual Report and Accounts 2014/15

Part One

Part One

02
02
03
03
04
05

Overview

Overview

01

The BBC at a glance

Our role and purpose
The BBC serves the public interest throughthe promotion of its six public purposes.

The BBC exists to serve the public, and its

mission is to inform, educate and entertain.
Within the overall public purposes, the Trustsets the strategic framework for the BBC, andthe Executive, led by the Director-General,delivers the BBC’s services and creative output.

02

The following pages outline the strategic

objectives agreed by the Trust and the Executive
and provide some highlights illustrating how theBBC has worked to achieve them.

Sustaining citizenshipand civil society
The BBC provides high-quality
news, current affairs andfactual programming to engage
its audiences in importantcurrent events and ideas.

Representing the UK,
its nations, regions
and communities
The BBC reflects the UK’s
many communities, promoting
awareness of different culturesand viewpoints, but also brings
audiences together for sharedexperiences.

Promoting educationand learning
Education and learning lie
at the heart of the BBC’s
mission and have a part toplay in the delivery of all its
public purposes.

Bringing the UK to the world
and the world to the UK
The BBC supports a global
understanding of international
issues and broadens UK
audiences’ experience ofdifferent cultures.

Stimulating creativity
and cultural excellence
The BBC encourages interest,
engagement and participationin cultural, creative andsporting activities acrossthe UK.

Delivering to the public
the benefit of emerging
communications,
technologies and services
In promoting its otherpurposes, the BBC helps
audiences to get the bestout of emerging media
technologies.



BBC Annual Report and Accounts 2014/15

This year in summary

Overview

Serving everybody with a range ofgreat content delivered in new ways

Reaching new audiences
Audience reach
Percentage of UK adults who use
BBC TV, radio or online each week.

Total time spent
Length of time these audiences
spend with the BBC each week.

97%

18.3hrs

Leading the way with digital content

Highlights of the year

2013/14: 96%

2013/14: 18.5 hrs

Wolf Hall
The series attracted six million viewers at its launch and became
BBC Two’s highest-rated drama series since at least 2002.
iPlayer
The iPlayer window has been extended from seven to
30 days, giving audiences more time to watch and listen
to the BBC content they love.

Global NewsA record 283 million
people accessed theBBC’s Global News
services per week.

Apps
The BBC Weather app reached
five million downloads withineight months of relaunch(an average of 15 downloads
per minute).

Digital radio
6 Music is the first digital-only
radio station to reach two
million weekly listeners. And
Radio 4 Extra has now achieveda weekly audience of overtwo million listeners.
BBC Annual Report and Accounts 2014/15

EastEnders
The 30th anniversary was watchedby over 21 million people – 37% of
the UK population – across theweek and generated the highest
ever appreciation index (AI) score
for the show.
03

This year in summary

Better value for money

Cost per household

Ongoing savings

Public support for the licence fee

A six-year licence fee settlement wasagreed in 2010 which has frozen thelicence fee at £145.50 until 2017.

This year we have saved £484 million
through our Delivering Quality First
programme and are on track toachieve the full £700 million per annum
savings required by 2016/17.

48% of the public support the licence
fee as the means of funding the BBC,compared with 29% for advertisingand 20% for subscription.

Per day

40p

£484m

2013/14: 40p

Source: Ipsos MORI

How your monthly licence fee is spent 2014/15£12.13 per household

BBC spend in the external creative economy 2014/15
Total of £1.1bn

1. Television £7.27(2013/14: £8.00)

1. Independent programmes
transmitted £468m(2013/14: £484m)
2. Artists, contributors
and copyright £280m(2013/14: £282m)
3. External programme facilities
and resources £232m(2013/14: £257m)
4. Acquired programmes
transmitted £66m
(2013/14: £59m)
5. BBC performing
groups £25m
(2013/14: £25m)
6. External online
expenditure £22m
(2013/14: £20m)

2. Radio £1.94(2013/14: £2.30)
3. Licence fee collection andpension deficit costs £0.85(2013/14: £0.49)
4. BBC World Service £0.73(2013/14: n/a)
5. Other services andproduction costs £0.73(2013/14: £0.73)
6. Online £0.61(2013/14: £0.61)
2014/15

2013/14Spend% ofper year licence£mfee

Television
Nine channels
Radio
15 network stationsand Local Radio
OnlineBBC Online and BBC iPlayer
BBC World Service
Other services andproduction costs
Licence fee collection
and pension deficit costs

Spend
% of
per year licence£m
fee2,368 60 2,276 66
653 16 650 19
201
254
229
290

5
6
6
7

174

The cumulative impact and spending power of over 20 million
television licences can deliver more than content alone.
As well as in-house staff, we are able to provide work for many
freelance individuals and thousands of large and small businesses
across the UK – delivering sustainable benefits to digital andcreative industries, as well as the wider British economy.
This external spend is in addition to the c.£1.1 billion internal spend the BBC makes within thecreative industries.

5

205 6
151 4

The above analysis corresponds to UK PSB Group content expenditure on page 139, although thecosts incurred to generate other income are excluded as they are not funded from the licence fee.

04

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BBC Annual Report and Accounts 2014/15

Overview

The BBC’s objectives
This year the BBC has aimed to deliver four
strategic objectives.

Make the most creative anddistinctive output

Innovate online to createa more personal BBC

Create outstanding content to build

Innovate online and enhance people’s

the BBC’s reputation in key genres
and make each service as distinctive as
it can be

personal connection with the BBC

Ensure the BBC reflects the diversityof the UK

Serve all audiences
Maintain the mass appeal of channels
Pursue universal access on new

platforms and keep pace with new
consumption behaviours

Better reflect the different nations,regions and communities of the UK

Improve value for money througha simpler, more efficient and more
open BBCCreate a simpler, more efficient andmore open BBC

Build new creative partnerships
Engage staff with the strategy

Charter Review will frame the debate on the BBC’s future.
The Royal Charter is the constitutional basis
for the BBC. The current Charter runs until
31 December 2016 and sets out the public
purposes of the BBC, guarantees its
independence, and outlines the dutiesof the Trust and the Executive Board.
As we approach the end of this Charter
period, there will be a wide-ranging processof consultation and review that will set out theframework under which the BBC will operate
in the years ahead.
Although a government-led process, Charter
Review provides an opportunity for the BBC
to talk in more depth to the public and to test
reaction to new ideas for the future.
BBC Annual Report and Accounts 2014/15

We will do this in a range of ways and the Trust
has already announced plans for widespread
public engagement, including public seminars
and a comprehensive research programme,from focus groups and online surveys, to moresophisticated studies of public attitudes
towards the BBC’s services and its funding.
When we put our case to the Government
we must make sure it is for a BBC that is efficient,
open, distinctive and innovative, and that
continues to be relevant to everyone acrossthe UK who pays for it.

05

06

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BBC Annual Report and Accounts 2014/15

The BBC Trust’s
review and assessment
The Trust exists to get the best out of the
BBC for licence fee payers. It is the governing
body of the BBC and sets the strategic
direction, measures performance andholds the Executive to account

BBC Annual Report and Accounts 2014/15

08

Chairman’s foreword

11

Setting strategy andassessing performance

12
14
22
26
28
29

Setting strategy
Quality and distinctivenessValue for money
Serving all audiences
Innovating online
Overseeing commercial and other activities

31

Understanding audiences
Inside the Trust

35
36
38
42

Part One

Part One

BBC Trustees
Governance
Trust finances

07Chairman’s foreword

The next year will be pivotal for the BBC as its future is debatedand determined for the next generation.

“Only through proper, evidence-based debate will
we build the best BBC for the next generation.’’On the cusp of Charter Review, I have three initial observations.
First, the BBC is an extraordinary thing. It’s not perfect; there
are things it could do differently or do better. But when you
stand back from it, the BBC has been one of our country’s great
achievements of the past century. It delivers important public
services and is a critical and valuable catalyst for and contributor
to the UK creative economy, while achieving universal appeal andpopular relevance. It is precious – something the UK should be
proud of. It continues to reach nearly 97% of us every week forroughly a third of the price of a national daily broadsheet. And
outside this country it is widely regarded with respect andaffection, not least thanks to the World Service.

My fellow Trustees and I are focused on bringing the public’s
voice into that debate and understanding what they want the
BBC to deliver in the future. We will ensure the public are given
the opportunity to have their say on what the BBC will look
like tomorrow.
From my first nine months as Chairman, I think the BBC starts
from a strong position. Looking at the past year, it has had somenotable successes on screen and on air, it has made good progressin delivering value for money and it has taken steps towards
providing a more personal service.

Second, the level of expectation about what the BBC shoulddeliver is huge. Our research shows the public – the BBC’s owners– still believe its mission to inform, educate and entertain matters
as much as ever. And they want that mission translated into
consistently high-quality content, which is accessible on thetechnology of their choice, which reflects, serves and represents
the full diversity of the UK and its different, nations, regions andcommunities, as well as specific groups like children; and which
represents great value for money.

Taking content first. Since its inception the Trust has pushed the
BBC to make ever more distinctive programmes, and in the past
year we have specifically asked it to focus on the quality, variety
and originality of its drama on BBC One. Acclaimed dramas like
Happy Valley, The Missing and Remember Me are notable examples
of distinctiveness and there has been a corresponding increase in
the number of people seeing BBC drama as providing something‘fresh and new’ over the year.

Third, the BBC faces very significant challenges. There arecontinuing cost pressures from the rise in the price of rights,
notably in sports, but increasingly in drama and broader talent
inflation too, as well as from the costs of dual running on
traditional broadcast media and on-demand and mobile. The
population is more varied and diverse in its tastes than ever,
and a wider range of services and editorial approaches is needed
to meet their needs. And the global market is exploding with new,non-UK based media giants, with which the BBC must compete
if the UK is to retain its place as a world leader in creative anddigital media.

“The BBC is a critical and valuable catalyst for andcontributor to the UK creative economy, whileachieving universal appeal and popular relevance.”

All of this means there are very real questions to ask about whatsort of BBC we want in the future and how it needs to adapt tosurvive and prosper. We need to address changes both in what
audiences expect and what the market will sustainably offer. We
need to determine how much the public are willing to pay for
their BBC, and modernise the means of payment so that it covers
catch-up viewing on services like iPlayer and future consumption
patterns and behaviours. Finally, we need to make sure the mosteffective governance structure is in place. Only through proper,
evidence-based debate about all of these questions will webuild the best BBC for the next generation.

08



Our review of the BBC’s television services, published lastsummer, found there was still further to go on distinctiveness,in reaching out to all parts of the UK and on engaging with specificsectors of the audience, particularly those from black, Asian andminority ethnic (BAME) backgrounds. But overall it found the
TV channels performing very strongly. For my part, I thoughtLife Story, Poldark, Bake Off and Nafiseh Kohnavard’s andQuentin Sommerville’s extraordinary reporting from the recently
liberated Syrian town of Kobane showed the BBC at its very best.

BBC Annual Report and Accounts 2014/15

But the Trust’s role is to push the BBC further, even when it issucceeding, and there is more that the music radio stations can
do to build on their excellent track record. For example, Radio 3
should continue to push the bounds of distinctiveness across all
its schedules and Radio 2 needs to harness its richly deserved
success and popularity to reach out more to BAME listeners.
As well as great programmes, audiences want to know thatthey are getting value for money. Today’s BBC is a much more
efficient place and it is on course to achieve an ambitious£1.5 billion savings plan.

A very clear challenge for the BBC in the years ahead will beto keep pace with new technologies and adapt to new market
realities, so that it continues to serve all audiences. Among the
proposals the BBC has put forward for modernising its portfolio,
is the proposition to move BBC Three to online only. The Trust ispart way through considering this proposal, alongside some otherchanges to television services.
While predictions of the death of so-called ‘linear’ television arepremature, the BBC needs to recognise that young audiences inparticular expect ever more personal and interactive services
that are accessible on a range of devices – TV on their own terms.
There are some good examples of innovation at the BBC, forexample, through the recently launched Radio 1 iPlayer channel
and new apps for CBBC and BBC News that encompass a more
personalised format. Through personalisation and a better useof data, the BBC should start to grow the reach of BBC Online,
whose figures currently remain largely static.

The BBC can’t be all things to all people, but as a universal public
service broadcaster it must strive to serve all audiences. The
move towards greater devolution, seen at national level throughNonetheless, efficiency should be a never-ending journey
the Scottish independence referendum and at regional level inand there is more for the BBC to do. It should become a better
areas like Greater Manchester, is all part of the changing context
partner for other organisations, becoming simpler to navigate andthat the BBC needs to reflect. Having visited Salford, Glasgow,
easier to work with, so that it can pool resources that enable it to
Cardiff and Belfast since becoming Chairman, I have seen not only
make the licence fee pound go further, building on previous andthe steps the BBC is taking to do this, but also the desire from theexisting successful partnerships, like those with the British
different nations and regions of the UK to be better reflected andMuseum and at the Commonwealth Games in Glasgow. It needs
portrayed by the BBC.
to do more to get a commercial return for licence fee payers fromits content, while recognising the dual constraints of the complex This isn’t just about simple economics and job creation, although
web of rights and the intensity of global competition.
the BBC has an essential role here. It is about ensuring that thewhole of the UK’s rich diversity is reflected on screen and on theEvery year independent value for money reviews are carried out
airwaves, so that the BBC provides a truly universal service. And
for the Trust, some by the National Audit Office (NAO). This year
in addition to regional and national representation and portrayal,
a review by independent experts found the BBC has made good
we know that there remains a long way to go in ensuring
progress in driving down talent costs, although it can do more to
representation and portrayal in terms of ethnic background,bring on new talent. And in two separate reviews the NAO foundgender, age and disability, as well as in addressing disparity inthat, while there is scope to use space better, the BBC has madeconsumption amongst different age groups. Steps are being taken
good progress in rationalising and upgrading its estate and thatto do better, but the Trust is determined to hold the Executive to
the Corporation’s efficiency programme has brought real value
account on this and we will also be striving to ensure the voices
for licence fee payers, although delivering efficiencies will becomeof all groups in society are heard during Charter Review.
increasingly challenging in the years ahead.
It is clear that the scope for further efficiencies at the BBC is going
to be central to the future discussions about the size of the licencefee. The BBC also has a role to play in helping other organisations
become more efficient and effective through its support for
wider creative society, for example by helping train the industry.

BBC Annual Report and Accounts 2014/15“The BBC can’t be all things to all people,
but as a universal public service broadcasterit must strive to serve all audiences.”

09

Part One: Chairman’s foreword

During the year we also completed a review of the BBC’s music
radio stations, which found that the public continue to value themhighly, that they provide a distinctive alternative to commercial
radio and that the BBC’s support is of critical importance to themusic sector, something underlined by this year’s inaugural BBC
Music Awards. Special mention must go to 6 Music, a station thathas gone from being threatened with closure five years ago, tobeing the first digital station to achieve audiences of more than
two million.

Chairman’s foreword

This move towards increasing devolution also underlines theimportance of the BBC’s role in plugging the democratic deficit inlocal news coverage. This means the BBC not only has to provide
first rate local news itself, but also partner with other local andregional news outlets to ensure people are being kept informedof what is happening in their area so they can make informed
choices at the ballot box and hold their democratically elected
representatives to account.

“Today’s BBC is a much more efficient place andit is on course to achieve an ambitious £1.5 billion
savings plan. Nonetheless, efficiency should bea never-ending journey and there is more for
the BBC to do.”One topic that takes up an awful lot of debate around the BBC is
its governance. Audiences understandably care most about the
programmes they pay for, but good governance is important andthe public need to know the BBC is in safe hands. I have been
impressed by the Trust’s achievements in increasing transparency,
better defining services through licences, enforcing rigorous
editorial standards and ensuring audiences are heard andrepresented. But my fellow Trustees and I believe the current
governance system can be improved. We need intelligent reform,
retaining the good and changing where necessary.
It has been a challenging year for the Trust in terms of personnel.
Lord Patten sadly had to step down as Chairman last May on
health grounds and then Vice-Chairman Diane Coyle did an
excellent job of stepping into the role before my appointment in
the autumn. My colleagues and I are indebted to both for their
excellent work and commitment.
By the time next year’s Annual Report is published, it is likely thatmuch about the future of the BBC will have been decided. There
has been a lot in the past year that shows why the BBC is such animportant public institution culturally, economically andinternationally. In order to stay relevant it has to stay connected tothe diverse public it serves throughout the UK and be confident
about its ability to deliver its mission. For my part I will ensure theTrust carries out much more audience engagement so that wehave a debate about the future of the BBC with the public – itsowners – at the very forefront. That, I believe, is the key tokeeping the BBC extraordinary.

Rona Fairhead
Chairman
16 June 2015

10

BBC Annual Report and Accounts 2014/15

Part One: Setting strategy and assessing performance

Setting strategy andassessing performance
Reporting on the BBC’s progress against
its four strategic objectives: making
creative and distinctive output; serving
all audiences; innovating online; andimproving value for money

BBC Annual Report and Accounts 2014/15

11

Setting strategy and assessing performance

Setting strategy

The Trust agreed the BBC’s four overall objectives for 2014/15.
This section summarises our assessment of progress against
those objectives, including the more specific priorities that theTrust identified at the start of the year.
Quality and distinctivenessObjective
Make the most creative and distinctive output.
Specific priority
To improve the quality, variety and originality of new dramaon BBC One (particularly in peak time).
Assessment
This has been an excellent year for BBC programmes andother content, with some particular successes in TV drama
and comedy.
In common with other public service broadcasters, there has
been a dip in some of the audience appreciation scores for TV.
However, more people now say ‘the BBC has lots of fresh andnew ideas’, while 76% say that the BBC produces high-quality
programmes and content across TV, radio and online.
The BBC has delivered successfully against its specific priority,with a strong range of high-quality programmes on BBC One,such as Poldark, Happy Valley and The Missing.
Nonetheless, the Trust will continue to push for ever greater
creativity and distinctiveness.
Next steps
We will continue to track audience perceptions as to whether
BBC TV is distinctive, including carrying out more research.
We will continue to push for greater distinctiveness,particularly on mainstream services.

Value for money
Objective
Improve value for money through a simpler, more efficient,and more open BBC.
Specific priorities
To ensure firm control of overall headcount, including
continued reductions in the number of senior managers.
To pursue more partnerships with other cultural andcreative organisations across the UK.
Assessment
The BBC continues to demonstrate a strong record in improving
its efficiency and productivity, as the recent NAO report onthe ‘Delivering Quality First’ savings programme showed.
The majority of licence fee payers think that the BBC provides
good value for money and the Trust’s review of talent costs
showed significant progress in this area.
Many of the more challenging savings initiatives are yet tocome, so more work is needed to hit the overall savings targets
for the final years of the plan.
Steps have been taken to provide a clearer account of overall
headcount, and targets are now also more clearly built into
divisional budgets within the BBC. Further work in this area
will be needed in order to achieve future efficiency targets.
Next steps
There will be increasing pressure on the BBC’s income andthere is work to do to set the appropriate level of future
efficiency ambitions as part of the Charter Review.
For the public, value for money is second only to impartiality
when people are asked what is most important for the futureBBC. The Trust’s job will be to test the BBC’s costs and savings
plans over the coming year.

12

BBC Annual Report and Accounts 2014/15

Innovating online

Objective
Serve all audiences.

Objective
Innovate online to create a more personal BBC.

Specific priority
To make tangible progress in reflecting better the diversityof the UK population in the BBC’s workforce and its output,in particular increasing the number of women on air.

Specific priority
We did not set a specific priority for this objective – rather,
we aimed to give the BBC a remit to innovate and enhancepeople’s personal connection with the BBC.

Assessment
This objective is becoming increasingly challenging as different
audience groups become more diverse, not only in termsof culture and ethnic background, but also in their habits
and expectations as technology provides a greater range of
personalised choices to individual consumers. It is encouraging
that the proportion of people who agree that the BBC
provides programmes or content ‘for people like me’ hasrisen from 59% to 64%.

Assessment
The Trust recognises the strong and clear focus of the BBC’s
current strategy in this area.

Nonetheless, the Trust is clear that the BBC must do all it can
to stay relevant to all audiences across the UK. This is vital to
the BBC’s long-term future as a universal service.
There is more to do to address existing disparities between
the on-screen population and the actual population(particularly in terms of gender and ethnicity); in the amount oftime that younger people spend with the BBC; and in audience
perceptions as to whether the BBC fairly represents all the
UK’s nations and regions, religions and ethnicities.
The Director-General and his team have shown laudable
public ambition and commitment to change. The proportionof women at senior management level has risen this year andsome progress has been made on staff diversity. However,it has yet to feed through into change on air and in audience
perceptions, and the specific priority has not yet been met.

Part One: Setting strategy and assessing performance

Serving all audiences

Quality scores for online services are high but have declined
slightly this year, and the number of people reached by thoseservices remains flat, at around 50%.
The positive steps the BBC has made this year, including
innovations such as the Radio 1 iPlayer channel (approved by
the Trust) and new apps for CBBC and BBC News with a more
personalised format, may help to increase the reach of online
services. This is very important in ensuring the BBC retains its
relevance to all licence fee payers.
Next steps
We will continue to monitor the reach of BBC online services.
We look forward to receiving and considering the BBC’s plansfor new ways to allow people to ‘sign-in’ for a different andmore personalised experience.

Next steps
While we understand that this change will not happen
overnight, we expect the Executive to continue to make it apriority to measure and improve performance in this area.
All the major UK broadcasters have jointly developed a newtool for monitoring on-screen diversity, which we will use overthe course of the next year to measure progress and identify
areas for further improvement.

BBC Annual Report and Accounts 2014/15

13

Setting strategy and assessing performance

Quality and distinctiveness

Service performance

Overview
High-quality, distinctive programmes are central to the public’s
enduring affection for the BBC. Each week, 97% of adults in the
UK are informed, educated and entertained by BBC programmes,
a considerable endorsement given the wide range of media
choices available today.
People continue to rate the BBC highly for the quality of its
programmes, and some audience perceptions in this area havebeen improving during this Charter period. Our annual Purpose
Remit Survey, which assesses how well the BBC is performing
against its public purposes, showed that people’s overall
impression of the BBC remains, on average, higher than it wasat the start of the Charter – and people would still be much
more likely to miss the BBC if it wasn’t there than they would
any other broadcaster.
Very importantly, the majority of the public (76%) believes thatthe BBC offers high-quality programmes and content, and our
research also shows that the BBC is scoring ever more highlywith regard to offering something that they feel is ‘fresh and new’.
This is particularly pleasing given the emphasis we have placedon the importance of distinctive content. We have seen, throughour more detailed performance reviews of individual services,
how this is the foundation of the BBC’s success in serving its
audiences well.

However, we cannot ignore the fact that it is becoming increasingly
challenging for the BBC to satisfy younger, less well-off andnon-white audiences. Younger adults tend to watch TV and listen
to the radio less overall, instead accessing more content online.
These trends are affecting many of the BBC’s TV and radio
services, and the BBC’s online content is not yet meeting the gap
left by younger people spending less time watching or listening
to linear TV and radio services. The BBC has a duty to serve
everyone, and it needs to continue to find ways to transformmainstream services to serve younger people better.

The BBC’s mission:	Inform, educate,entertain
New research we’ve doneshows that the public believe
the three pillars of the BBC’s
mission should not change, and‘entertain’ was rated highest of
all when people were given alist of words which have been
associated with the BBC.

BBC Two’s output includes factual programmes such as
Inside The Commons

14

BBC Annual Report and Accounts 2014/15

Performance summary

How the BBC measures up

Next steps
 The BBC should increase further
the distinctiveness of its offer andwe will continue to track audience
perceptions of quality.

Fresh and new
Audience ratings measuring whether
audiences think the BBC offers something‘fresh and new’ have risen noticeably.

How the BBC measures up

Next steps
 We expect the BBC to continue tooffer audiences content that they feelis ‘fresh and new’ and will monitor
performance over the year.

70.6%

70.5%

73.3%

2012/132013/142014/15

Radio – audience appreciation
Audience appreciation of BBC radio remains
high and stable compared with last year.

How the BBC measures up

Next steps
 We will publish the conclusionsof our review of the BBC’s speechradio output in the summer andbegin work to review both local
and national radio services.

BBC Online – audience appreciation
Audience appreciation of the BBC’s online
services has declined this year.

How the BBC measures up

Next steps
 We expect the BBC to increase
the reach of its online services
and develop its plans for a more
personalised service. We willcontinue to track audience
perceptions of quality.

BBC Annual Report and Accounts 2014/15

Part One: Setting strategy and assessing performance

Television – audience appreciation
Audience appreciation of BBC television,
while remaining high, has fallen slightly forthe second year running.

15

Setting strategy and assessing performance

Quality and distinctivenessTelevision
Overall, watching TV remains very popular, with 85% of adults
watching at least 15 minutes of BBC TV each week – although
this has fallen slightly, reflecting the trend in TV viewing overall
and the increased choice of entertainment online. In particular,
younger and black, Asian and minority ethnic (BAME) viewers
are watching less TV.
In our review of BBC TV, published in July 2014, we challenged
the Executive to improve appeal amongst these audiences.
We discussed these challenges regularly with the Executive during
the year, and we want to see changes in the coming year which
will enable BBC television to serve younger audiences better.

“BBC One should not only entertain and delightaudiences, but also frequently challenge andsurprise them.”
Former BBC Trustee, David Liddiment

We also asked the Executive to increase further the
distinctiveness of its offer, which we know from our survey isvery important to audiences, and essential for ensuring the BBC
remains relevant. While average appreciation of BBC TV fellslightly in common with trends for other broadcasters, BBC
TV’s average ‘fresh and new’ score improved.
The BBC is making progress on this issue, but we will continue to
track audience perceptions, including carrying out more research
if necessary, to ensure it continues. The BBC’s public funding gives
it a unique opportunity to take creative risks and we willencourage it to do so at every opportunity.

BBC OneBBC One remains the most watched channel in the UK, withan average of 73% of adults switching on each week, although
this is slightly down from 75% last year, reflecting a moregeneral fragmentation of viewing amongst channels. But with
programmes like The Great British Bake Off and the FIFA World
Cup Final, BBC One shows that it can still bring audiences of allages and backgrounds together for must-see programmes.
Last year we made it a priority for the Executive to improve
the quality, variety and originality of new drama on BBC One,particularly in peak time. We have been pleased to see a strong
performance from a range of new dramas such as Happy Valley,
The Missing and Poldark, as well as returning series including
Last Tango in Halifax, The Village and Call the Midwife. There wasan increase in perceptions of drama being ‘fresh and new’,although overall appreciation was down slightly.
BBC Two
BBC Two broadcast some highly acclaimed and popular
programmes, from dramas like Wolf Hall, Peaky Blinders and
The Fall, to its award-winning birthday celebration, The Story of
the Twos. Overall, fewer people watched the channel this year
but its core offer of factual programmes remained popular,
including food and other lifestyle shows, documentaries andinternational current affairs.
BBC Three
BBC Three plays an important role for younger audiences –reaching 24% of 16- to 34-year-olds each week (some of whom
watch no other BBC TV) with its unique mix of UK-originatedfactual and entertainment programmes, news and current affairs.
Highlights in the year included Murdered By My Boyfriend, which
achieved extremely high audience appreciation scores.
In December the Trust received proposals from the Executive
to close BBC Three and relaunch it as an online-only offer.
We began an assessment of these proposals and expect topublish our final conclusions in the autumn. Further informationon the process can be found on page 28.

Audience members enjoy a tour of The One Show studio in London

16



BBC Annual Report and Accounts 2014/15

Part One: Setting strategy and assessing performance

BBC Radio 3 is loved by its listeners for its range of classical,
jazz and contemporary music

BBC Four
BBC Four plays a significant role in the BBC’s promotion of artsand culture and the channel continues to be very highly rated
with an average appreciation score of 84, and a ‘fresh and new’score of 82. Its reach is stable at 14% of UK adults. Popular
programmes included French drama Spiral, which achievedvery high audience appreciation scores.
Children’s
While there is a wide and growing range of content for children
on TV and online, the BBC continues to be the only broadcasterto offer them a range of new UK programmes. Children clearlyappreciate this, since the BBC’s channels are the most watchedamong their target audience and are highly rated for their quality.
However, the way in which school-age children watch
programmes is changing fast: fewer children aged six to 12 arewatching CBBC, and instead many are using iPlayer – CBBC
now has the highest proportion of iPlayer viewing of any BBC TV
channel. The CBBC app for mobiles and tablets was releasedin December and so far has been downloaded around 250,000
times. This move onto different platforms presents a challenge
for the BBC, which must continue to develop its offer to ensure
CBBC remains the most popular children’s channel.
Unlike CBBC, CBeebies’ weekly reach amongst its target
audience has remained fairly stable at around 40%, and it remains
far more popular than any other pre-school channel. Morechildren are also watching CBeebies online – it was accessed byaround 1.4 million unique browsers each week, and its app has
now been downloaded more than 4.1 million times.
BBC ALBA
BBC ALBA’s reach amongst the Scottish population fell this year
from 18% to 16%. However, among Gaelic speakers, reachincreased slightly from 72% to 73% and audience approvalremained high.

BBC Annual Report and Accounts 2014/15

Music radio review
Consulting audiences
The Trust’s assessment of theBBC’s six music radio stations
was based on extensive audience
research, a public consultation andfeedback from the wider industry,including commercial radio andrepresentatives from across theUK music sector.
Radio
Overall, listening to the radio remains very popular, witharound 90% of adults tuning in each week. But the time they
spend listening to the radio continues to fall, particularly
amongst younger listeners.
BBC radio continues to appeal to a significant proportionof those listeners, with 65% of adults tuning in each week,slightly down from 67% the previous year. An average 74%
of listeners rated BBC network stations highly when asked
about their general impression.
This year, we reviewed the BBC’s six music radio stations:Radio 1, 1Xtra, Radio 2, 6 Music, Radio 3 and Asian
Network. This underlined the critical importance of the
BBC to the music sector, and that the high level of support
given by its stations to new, UK and live music makes themdistinct from commercial radio. Listeners’ perceptions of
the quality of the stations are high and around 49% of UK
adults listen to at least one of the six stations each week.
We will soon be publishing conclusions of our review ofRadio 4, Radio 5 live and their sister digital stations.

17Setting strategy and assessing performance

Quality and distinctiveness

Audience members can visit New Broadcasting House to see how
radio programmes are madeRadio 1 and 1Xtra
Radio 1 continued to perform well, reaching a large proportionof its young target audience: this year, 38% of 15- to 29-year-oldslistened to it. Radio 1 is clearly focusing well on serving a young
audience; it broadcasts a wide range of music and, through its
focus on new music, plays a significant role in developing new
UK talent. Radio 1’s daytime speech output also helps deliver
the BBC’s public purposes within its music entertainment
programmes, although we think it could do even better.
1Xtra also performed well, reaching 6% of 15- to 24-year-olds
each week, who rate it highly. Through its specialist music andexpert presenters, it is meeting its remit to serve young listeners
with distinctive music and speech programmes.
Radio 2, 6 Music and Asian Network
Radio 2 remains the most popular radio station in the UK, withmore than 15 million listeners each week. Perceptions of quality
are high, and people praise Radio 2 for its well-establishedpresenters, mature tone, mix of music, high production values,
and daily current affairs. However, Radio 2 reaches considerably
fewer than average BAME listeners in its target group of over
35-year-olds, so we have asked the Executive to find ways toaddress this disparity.

“The BBC’s six music radio stations are doing
well and are seen as go-to services for millionsof UK listeners on a quest to discover and beentertained by music.”
BBC Trustee, Bill Matthews

6 Music’s audience grew again this year and it was clear from ourmusic radio review that its listeners are huge fans of the station’s
distinctive range of music and informed presenters.
Asian Network reached a growing audience with its mix of music
and speech programmes this year. Our review of the station
found that it is appreciated by British Asians for the high qualityof its programmes and its unique relevance to them.
18Radio 3
Radio 3 is loved by its listeners and by a wide range of stakeholders
in the world of classical and other music. Listeners feel it plays
the best classical, jazz and contemporary music, and they value
the presenters as authoritative and expert. During the review,
we looked in some detail at its music and programming, andconcluded that Radio 3 is very distinctive and should maximisethat distinctiveness across its schedule.
Radio 4 and 5 live
Radio 4 performed well again this year, with 20% of UK adults
listening each week, although this was down slightly from lastyear’s record level. The average Radio 4 listener still tunes infor more than 11 hours each week.
Radio 4 Extra reached a record 2 million people this year.
This is particularly encouraging in light of the considerable
budget cuts it has made.
Radio 5 live and 5 live sports extra are facing the same challenges
as all sports TV and radio services, namely that more people aregoing online for sports coverage. 5 live’s audience fell below
6 million listeners this year, while 5 live sports extra reachedaround 1 million listeners. Time spent with 5 live also dropped
to its lowest level, with listeners tuning in for just over six hours
a week. In response, the service is developing its own online
presence, offering a growing range of short-form clips.
Nations and regions radio
Radio stations in the nations and across the English regions
continued to perform a very important role in serving listeners’
interests in a way that pan-UK network services cannot. The
services compete for listeners with the BBC’s network stations,however, and in some areas this poses challenges.
Fewer people listened to Radio Wales and Radio Cymru this year
and both stations are looking at ways to improve what they offer
so that they can continue to maintain the appeal of Welsh news
and other programmes to their audiences.

BBC Annual Report and Accounts 2014/15

In contrast, Radio Ulster/Foyle continued to perform verystrongly, with 36% of adults in Northern Ireland listening eachweek. The station is clearly meeting audiences’ very strong
interest in news and current affairs.

The BBC’s radio stations in the nations andacross the English regions perform a very
important role in serving listeners’ interests
in a way that pan-UK services cannot.
BBC Local Radio in England continued its long period of gradualdecline, reaching 16% of audiences this year. Nonetheless, it has
a key role in delivering programmes for the over 50s and otherswith a strong interest in local issues, and we will be examining
this as part of our service review. We will look also at the roleof local news online and of regional TV news and current affairs
in order to get a picture of how audiences are served with local
programmes across all the BBC’s services.
News and current affairs
The BBC is highly regarded internationally for the quality andtrustworthiness of its journalism. Licence fee payers expect the BBC
to set the very highest standards of fairness and independence,as well as of impartiality and accuracy. The BBC’s lack of any
commercial or state influence is the bedrock of its trustworthinessamongst its audiences. Our Purpose Remit Survey showed thatthe majority of UK adults continued to believe that the BBC offers
high quality and independent journalism, while three-quarters of
the public believed that this is a very important role for the BBC.
BBC news and current affairs programmes and content reachmore than 80% of UK adults each week across TV, radio andLast year we said that we would monitor perceptions of accuracy
and impartiality, which fell a little in 2013. This year perceptions
were fairly stable overall, although audiences in Scotland showed
how challenging it was for the BBC to satisfy all parts of theaudience with its referendum coverage. Audiences continued
to rate BBC News much more highly than other news providers,
although perceptions of trust in BBC News have not returnedto the record levels of 2012.
BBC World Service
This year the World Service reached 210 million people
across the globe, going above 200 million for the first time.
Reach increased across all platforms and although radio is still
the way that most people access the World Service, TV anddigital are growing at a much faster rate.
Whilst the World Service has continued to grow around theglobe, of particular importance for UK audiences has been theincreased contribution the World Service and bilingual reporters
have made to coverage on domestic news, particularly around theEbola crisis, Islamic State and the coverage of the Malaysianpassenger airliner disaster in the Ukraine.
People around the world have respect and affection for the BBC– Kofi Annan called the World Service ‘Britain’s greatest gift to
the world’. This has tangible knock-on benefits for the UK,
encouraging people to do business, visit and study here. The
respect people have for the World Service also helps the BBC
to make programmes in other parts of the world and attract
global talent.

The BBC World Service reaches over 200 million adults around the globe

BBC Annual Report and Accounts 2014/15

19

Part One: Setting strategy and assessing performanceRadio Scotland played a key role, along with BBC Scotland’s TV
and radio news, in keeping audiences well informed during theScottish referendum, and its reach remained stable at 20%.
These services will be integral to keeping Scotland informed,
and we will be considering their performance later this year
in a service review of all nations radio and news services.

online. TV and radio remain the most popular source of news,
but more and more people are using the BBC’s online service toaccess it. Our review of the BBC’s news and current affairs statedthat the BBC must continue to develop the content and deliveryof online and digital news so that it remains relevant for all
audiences. Since then, the Executive has made major changes tothe BBC’s News app, Newsbeat website and main site. They have
evolved the services to meet users’ more personalised interests
better with, for example, options to choose a relevant local news
feed alongside UK and international news.

Setting strategy and assessing performance

Quality and distinctivenessEditorial standards

The public quite rightly expect far higher standards from the
BBC than from any other broadcaster. The BBC’s independence
is central to these standards, and is valued by the public as aguarantee of the integrity and impartiality of news and factual
programmes – the BBC is regarded as a gold standard ofbroadcasting around the world.
The BBC is the UK’s most trusted broadcaster, but in the last few
years that level of trust has fallen slightly and we have emphasised
to the Executive the importance of regaining the public’s
confidence. Trust in the BBC has not increased and the BBC must
continue to find ways to build public trust and confidence further
in it as an organisation, as well as in its programmes.
The Trust’s role in holding the Executive to high editorial
standards, including acting on complaints from the public,is essential to that endeavour.
Impartiality
Divisive events at home and abroad – shocking violence in the
Middle East, extremism in the UK, an independence referendumin Scotland, and the run-up to the most hard fought generalelection in living memory – all put a premium on the BBC’scommitment to impartiality.
Each year, the BBC runs a survey of perceptions of thetrustworthiness and impartiality of BBC News compared withother media. This year, BBC News continued to far outstrip its
closest rival as the most trusted news provider – 57% comparedwith just 11% – while 53% said that they were most likely to turnto the BBC for impartial news. However, as sources of news
proliferate, broadcasters including the BBC have seen a dip
in the number of people who rate them highly for impartiality.

BBC editorial complaints
Number of complaints received by the BBC in 2014/15
Graphic shows
BBC editorial complaints
Numberof complaints
received by the BBC in 2013/14
Stage 3: Appeals
toStage
1: Editorial
and general complaints 94% answered on time
the Trust’s
Editorial
192,459
down
12%Standards
Committee
Stage
2: Editorial
to the Editorial Complaints Unit 84%
98% answeredon complaints
time
326
answered on time
485 down 3%
18%Stage 3: Appeals to the Trust’s Editorial Standards CommitteeStage
2:
Editorial
96% answered on timecomplaints
to the277 down 3%
Editorial Complaints Unit
85% answered on time

With impartiality at the heart of the BBC’s mission, we will
monitor this closely in the coming months to ensure weunderstand fully the factors driving this change.
Impartiality in programmes requires content to reflect a broad
range of opinion and perspectives – this is also important if the
BBC is to serve all its increasingly diverse audiences. In 2013, we
commissioned an independent review of breadth of opinion in
BBC News, and in December 2014, BBC News reported backto us on measures it had taken to implement the review’s findings.
We welcomed the progress being made, but re-emphasised thenecessity of reflecting the broadest possible range of opinions andexperiences, if the BBC is to serve all audiences in an increasingly
diverse society.
In advance of the 2015 General Election, we consulted on theElection Guidelines that BBC programme makers must comply
with in the coverage of both local and general elections, andpublished them in March. We heard an appeal from the
Democratic Unionist Party because they were not includedin the proposed televised UK leaders’ debates. We judged thatthe BBC’s editorial decision had been reasonable and was inline with the Guidelines.
We also consulted on and approved allocation criteria for Party
Election Broadcasts which were published in March.

Appeals received by the Editorial Standards Committee
Pie chart shows
Complaints
not upheld
the Editorial
Standards
Percentage breakdown of Appeals
received
by theby
Editorial
Standards
Committee (on appeal from the Executive)
Committee
14% – Complaints not upheld by the Editorial Standards Committee (onComplaints upheld/partiallyappeal from the Executive)
3%
upheldthe
EditorialStandards
Standards
5%19% – Complaints notupheld/partiallyupheldbyby
theEditorial
Committee
Committee
67% – Not considered by the Editorial Standards Committee because
there was no reasonable prospect of success

583

20%

89%

Stage 1: Editorial
and general complaints
96% answered on time259,88635%

20

Complaints not consideredby the Editorial Standards
Committee because there
was no reasonable prospectof success

BBC Annual Report and Accounts 2014/15

Radio 1’s Big Weekend also breached the Guidelines on harmand offence, because the coverage included seven instances ofoffensive language by two artists broadcast between 5.30pm
and 7pm. We were particularly concerned because this issue hadcome up before during previous Big Weekends and in other live
outdoor music events. The Executive have since drawn up new
guidance, putting in place tighter editorial controls.

Handling complaints
In the past year, we received 326 editorial complaints on appeal.
In most cases the BBC had complied with the Guidelines, but
not in all.

Ensuring the BBC’s independence
We know that audiences expect the BBC to be held to thehighest standards, and they also strongly support its editorial
independence – an independence guaranteed by the Royal
Charter. We will be diligent in discharging our duty to defend theBBC’s right to make its own editorial decisions within the boundsof the Editorial Guidelines as the BBC enters into discussions
about the new Charter.

There were two particularly concerning breaches this year, one
in a Newsbeat report in June 2014, and the other during BBC
Radio 1’s Big Weekend in May 2014, both of which were brought
to our attention by the Executive, although we received nocomplaints from the public about them. When these breaches
were identified and following the publication of our findings,
we required the directors of the divisions concerned to appear
and explain how lessons had been learned.
The Newsbeat report breached the Guidelines on harm andoffence and impartiality. This was because it included an interview
with a British extremist fighting with ISIS recorded by a non-BBC
journalist and the BBC report did not challenge the claims theextremist was making, while the online report did not include
any context about the conflict. The broadcast report was also
the subject of a complaint to Ofcom which was upheld. Following
the complaint, the online report was significantly rewritten to
include more context and challenge to the claims that were being
made, while the Executive introduced tighter editorial processes
for Newsbeat.

Independent research carried out for the Trust and publishedearlier this year found very little support for any government
intervention in the BBC. People see a need for independent
scrutiny and regulation, but they prefer this to be done by aseparate body representing licence fee payers, not by governmentor MPs. While the BBC rightly attends Parliamentary committee
hearings, the number of these hearings has been on an overall
upward trend in recent years, with increasing evidence that somecommittees want to question the BBC on its editorial coverageand decision making. It is an important principle that the BBC
makes editorial decisions free from Parliamentary andGovernment pressure and interference. We believe thatappropriate boundaries should be set to define more clearly
the BBC’s relationship with the state to protect the BBC’s
editorial independence.

Public perceptions of the impartiality of news providers
Of all news sources, which one source are you most likely
to turn to if you want impartial news coverage?
Pie chart shows:
BBC News
53% of the impartiality of news providers
Publicperceptions
Of all news sources, which one source are you most likely to turn to if
you
want
Other
21%impartial news coverage?
BBC News 50%
21%
Other 21%
Don’t know 5%
Channel 4 4%
4%
Sky
News
7%4%
Don’t
know
3%
ITV 13%
53%
ChannelIpsos
4 3% Mori, 2014
Source:8%

Sky News 8%

11%

ITV 11%The BBC’s Editorial Guidelines reflect the values andstandards we expect of all BBC content
Source: Ipsos MORI, 2015
BBC Annual Report and Accounts 2014/15

21

Part One: Setting strategy and assessing performance

Editorial Guidelines
The BBC’s Editorial Guidelines reflect the values and standards
we expect of all BBC content. Set by the Trust, they are tougher
and far more detailed than the requirements placed on any otherbroadcaster. The Trust’s Editorial Standards Committee is the
final court of appeal when complainants believe the Guidelines
have been breached.

Setting strategy and assessing performance

Value for money

We all pay for the BBC and we should all get good value from it.
This year the BBC has delivered £484 million of savings as partof its five-year savings programme.
A leaner, more efficient organisation
In the past 12 months the BBC has continued to implement
its cost savings programme, Delivering Quality First (DQF).
This programme is designed to insulate audiences from the
combined effects of the flat licence fee and the additional
funding responsibilities that the BBC was handed in 2010.
The DQF programme is made up of efficiency savings, a numberof scope cuts to services, and additional income from the BBC’scommercial subsidiaries. Three years into the programme, DQF
is on track to deliver a permanent £700 million reduction in the
BBC’s cost base by 2016/17. We have been tracking the impactof these savings on audiences and so far we are content that they
have been achieved without a significant effect on the reachor quality of the BBC’s services.
The National Audit Office (NAO) conducted a review of
DQF this year. It found that, to date, the BBC has offeredvalue for money to licence fee payers. The BBC has deliveredsavings broadly in line with targets, and the savings exceed
implementation costs and have only had a limited impact on
performance. However, the NAO also noted that, since most
readily identifiable efficiencies have now been achieved, futuresavings will be more challenging to identify and deliver, since
they will require increasingly more disruptive and risky changes
to structures and ways of working.

In November 2014 the BBC published the results of an efficiency
review, which was based on current and existing work the
Corporation has undertaken either to subject its expenditure
to commercial competition or to benchmark it againstcomparator organisations. This ‘compete or compare’ framework– using competition wherever possible, and external comparisonswhere available, to identify how to increase quality and reduce
costs – is an ongoing part of the BBC’s plans to continuously
improve the efficiency of the organisation and the value thatlicence fee payers receive. We support this process and will
monitor the Executive’s progress closely.
Getting the best value from property
The BBC has conducted a number of recent property moves
designed to upgrade and rationalise its estate, including the exit
and sale of Television Centre and the move to MediaCityUK
in Salford. These developments have also enabled the BBC
to achieve its target of half its staff working outside London ayear early. By positioning the BBC closer to a broader range ofaudiences, the Corporation can ensure it is more in tune withall licence fee payers.
The NAO’s review of property this year supported these moves– it found that the BBC has made good progress in rationalisingand upgrading its estate, but noted that future value for money
will depend upon making better use of its space and maintaining
flexibility. To this end, the BBC has already reduced the sizeof its estate by 29%, and set ambitious space utilisation targets.
These targets will be met, in part, by the BBC subletting muchof the Media Village site in West London. This will unlock thevalue wrapped up in these buildings, enabling it to be reinvested
in services and content.

A number of BBC departments have moved to MediaCityUK in Salford

22



BBC Annual Report and Accounts 2014/15

Performance summary

How the BBC measures up

Next steps
 The BBC will continue the DQF
efficiency programme to deliver
the remaining savings required.

Part One: Setting strategy and assessing performance

Savings
Three years into the programme,
DQF is on track to deliver a permanent£700 million reduction in the BBC’s
cost base by 2016/17.

£484m
Savings this year

Perceptions of value for money
Perceptions of value for money fell slightly
on last year’s score of 58%.

How the BBC measures up

Next steps
 We will continue to ask the Executive
to make savings and improve the way
the BBC is run.

56%
Source: Purpose Remit Survey

Reducing the pay gap
The pay multiple shows the ratio between
the median earnings of BBC staff and the
Director-General.
The multiple has again remained levelwith the previous two years.

BBC Annual Report and Accounts 2014/15

How the BBC measures up

Next steps
 As more public sector organisations
begin to publish their pay multiple,
we will be able to see how the BBC
multiple compares with the public
sector trend.

23Setting strategy and assessing performance

Value for money

During the year the Trust’s Value for Money Committee also
approved the relocation of Wales Broadcasting House from
Llandaff to Cardiff city centre. A key driver for the move was
the outdated and unreliable technology available at Llandaff.
The new facilities in Cardiff will enable BBC Wales to keep pacewith audience expectations – whether creating programmes
for iPlayer, producing content for BBC apps, or simply using
technology to broadcast in the most efficient way. The newheadquarters will also be half the size, cost less to run than thecurrent facilities, and will bring business into the vicinity, helping
to regenerate the area, as well as allow greater engagementwith audiences.
How the NAO supports value for money
Value for money reviews for the BBC Trust, including
those undertaken by the National Audit Office (NAO),
assess whether licence fee payers are getting good value.
The NAO may conduct reviews of any aspects of the
BBC it chooses, at any time, with the exception of
editorial decisions – this is to safeguard the BBC’s editorial
independence. It has access to all necessary information to
conduct its reviews. This year the NAO conducted tworeviews – one on DQF and one on property. In 2015/16
it will conduct one on the BBC’s major programmes andprojects, and one on the World Service.
Improving project delivery and risk management
We have asked the Executive to examine the lessons identified
from recent reviews of project management to ensure they havebeen incorporated into the planning and management of theBBC’s existing projects.
The Trust also continues to monitor major projects throughquarterly reporting from the Executive. These reports update
Trustees on the status of projects which have previously comebefore the Trust’s Value for Money Committee for approval,
as well as other significant or strategic projects.

Separately, we also commissioned a value for money review of
how effectively the Executive manage risk, from the professional
services firm Alvarez & Marsal. The review, which we publish
alongside this Annual Report and Accounts, found that the BBC’s
approach to risk management is well considered, offers robust
support to the organisation and is on a par with the average
UK or American blue chip company. The report also maderecommendations, for example, to better define andcommunicate the level of risk the BBC is prepared to take on.
Reducing the cost of on-air talent
The BBC’s on-air talent is central to its success and this year wecommissioned a review of how the BBC manages the costs of
on-air talent from media consultancy Oliver & Ohlbaum. The
review found that since we imposed a cap on talent costs, theExecutive have reduced spending in this area by 15%, with thisreduction driven disproportionately by lowering the cost of thehighest-paid performers. Critically, the review also found that
there has been a considerable cultural change at the BBC since2008 – both in terms of learning when to let talent go, andalso applying greater and more consistent scrutiny to deals.
Oliver & Ohlbaum went on to conclude that the positive impactof this change should not be underestimated.
The review also found that the BBC’s processes for managing anddeveloping talent were consistent with industry best practice, if
not better. Nonetheless, pressure on talent fees continues to riseas the media industry becomes more competitive; the Trust isclear that in order to minimise future cost increases, the Executive
need to do more – both in terms of consistency of processes andin taking a more formal approach to bringing on new talent.

“We believe that the BBC’s controls around talentcosts are at least as thorough as commercial rivals
and, while there is some scope for improvement,
they are consistent with industry best practice,
if not better.”
Oliver & Ohlbaum’s report into the BBC’s management of on-air talent

The Trust commissioned and published a review of how the BBC manages
its on-air talent costs

24

BBC Annual Report and Accounts 2014/15

For example, in 2014/15 the Trust approved a partnership
under which AMC Networks Inc took a 49.9% equity stakein the cable channel BBC AMERICA. Our assessment of the
proposal included consideration of whether the partnershipwould deliver a better return for the BBC and for licence fee
payers, as well as whether necessary protections for the BBC’s
brand and reputation were in place. The Trust’s duties inoverseeing the BBC’s commercial activities are looked atin more detail on page 29.
Senior Executive pay
This year the Director-General’s base pay was £450,000 per annum
with no entitlement to a performance bonus. This remuneration
is significantly lower than equivalent positions in other UK public
service broadcasters.
The pay multiple between the Director-General and the
median average of BBC staff is 10.7.
In response to public concern in recent years, the BBC has
worked with HMRC to develop specific guidance on how
to determine whether individuals should be engaged on
employment or self employment contracts for tax purposes.
This year, we asked the Executive Board to commission a follow-up
review based on the work of internal audit, to ensure this new
guidance and Deloitte’s recommendations in this area have been
fully implemented. We will publish the findings when it is complete.
Bringing down the number of senior managers
In 2011 the BBC Trust and Executive agreed a strategy forsenior manager pay and numbers, covering the period to
December 2015.

New Broadcasting House is the BBC’s central hub in London

BBC Annual Report and Accounts 2014/15

Since then the number of senior managers employed by the BBC
has fallen by 71 to 413, a 15% reduction. As a consequence, thesenior management pay bill has also reduced by 13% in real terms.
These are significant reductions but two of the targets which the
BBC set have not yet been achieved – a 20% reduction in thenumber of senior managers earning over £150k and a senior
manager population that is 1% of the workforce.
The Executive continues to work towards these objectives andthe Trust will continue to monitor progress. However, meetingthe targets before the end of the year will be challenging.
Therefore we will engage with the Executive on a set ofobjectives to ensure that continued momentum towards a morestreamlined, more efficient management structure is achieved.
The public’s view – the BBC offers good value for money
The Trust is the champion of licence fee payers’ interests, not least
when it comes to ensuring value for money, and we frequently
seek their views on this subject. In a recent survey, some 56%of people told us they believe the BBC offers value for money.
Unsurprisingly, audiences’ perceptions of value for money
increase significantly the more time people spend accessing
the BBC’s content and services.
Creativity is also a key driver of audience perception – people
want something in return for their licence fee that they can’t get
anywhere else. Those who value the BBC’s creative output, be it
fresh programmes or new writers and artists, are more likely tobelieve the BBC offers value for money. Distinctiveness therefore
continues to be a key priority for the Trust.
Ensuring licence fee payers have their say
The BBC belongs to the public so it follows that the public shouldhave the biggest say in its future. As we approach the Charter
Review, and the BBC’s financial plans develop, we will consult withthe public to ensure that their voice is heard in the debate about
where the BBC should focus its resources in the years ahead.

The audience participates in a recording of theVictoria Derbyshire Show

25

Part One: Setting strategy and assessing performance

Value for money in commercial partnerships
The BBC’s commitment to value for money extends also to its
commercial services, which exist primarily to generate profit
which may be used to supplement the licence fee. The Trust
considers this important in maximising the benefits that can bedelivered for licence fee payers. In some cases this involves BBC
Worldwide (the BBC’s main commercial subsidiary) working in
partnership with others. The Trust supports this approach
wherever it serves the interest of licence fee payers.

Setting strategy and assessing performance

Serving all audiences

Serving all audiences is at the very heart of the BBC’s mission
and the BBC is well placed to achieve this, with 97% of UK adults
using the BBC each week.
As the champion of licence fee payers, we are particularly pleased
that nearly everyone is finding something that is relevant to themthrough the BBC. However, the UK is changing fast, and the BBC
has a challenge in representing the increasingly diverse politicaland cultural views of the population, as well as providing content
across the many different platforms in the many different forms
that people want to access it today. This is particularly the case foryounger and BAME audiences who are watching less televisionand listening to less radio than before. To remain relevant to all
licence fee payers, the BBC must represent the whole of the UK
in a number of ways – in its programmes; in how and where it
makes them; and in terms of the people it employs.
Representing the population in programmes
Looking at the public’s feedback on how they are represented in
BBC programmes, the BBC overall is doing quite well – 64% feelthat the BBC provides programmes or content ‘for people likeme’, which is up slightly from the previous year. However, there
is still a gap between performance and expectation, and certain
segments of society are clearly being underserved, particularly
BAME audiences.
Moreover, while there is huge interest in and involvement withnational events in the UK, British identity is complex and evolving,not least in terms of people’s identification with the devolved
nations. For example, the referendum on Scottish independence
raised many interesting questions on devolution and what itmeans for public service broadcasting. These issues will need
to be explored further in the context of the Charter Review.
The BBC has a key role to play in ensuring it represents thenations in news, drama and entertainment, and our researchshows that over half feel that the BBC represents their nation
or region in its content, and supports minority languages.
Nonetheless there is still some way to go, particularly in Scotland,

where only around 50% of the audience feel that their nation
is effectively represented.
The BBC needs to do more to represent the changing face ofthe nation, and already has targets, set in 2012, to increase thediversity of talent on screen by 2017 – with 15% for BAME people(against 10.4% in 2012 ) and 5% for disabled people, which isquadruple the 2012 level of 1.2%.
We welcome the establishment of a cross-industry measurement
system for workforce and on-screen diversity developed by theCreative Diversity Network and look forward to receiving robust
on-screen data. As well as ethnicity, this will help the BBC tomonitor how well women are represented in its programmes.
Improving the representation of women on-air remains a priority.
Making programmes across the UK
Producing more network TV content out of London and in the
devolved nations has been a priority for some time, and the BBC
continues to exceed its 2016 target of 50% out of London with
17% spent in Scotland, Wales and Northern Ireland. This isimportant because it brings economic benefits to the wholeof the UK, and we have seen encouraging progress in creating
sustainable creative economies outside London. For example,
in Northern Ireland production of major dramas for commercial
broadcasters is helping the BBC’s own efforts in building a baseof skills and infrastructure.
Representing the diversity of the UK within the BBC
Within the BBC itself, ensuring the organisation reflects thediversity of audiences remains challenging.
The Executive have worked hard to address this issue and we arepleased to see that the number of BAME staff is at an all-time highthis year, although at just 13.1% there is clearly more to do. BAME
staff are also represented in greater numbers at senior
management and wider leadership level. Similarly, we are pleased
that the proportion of women at senior management level has
risen again this year, as has the number at wider leadership levels.
Disappointingly, the BBC has done less well with regards todisabled staff. The number of disabled staff overall has remained
at 3.8% and, again, there are fewer disabled senior managers.
A new framework for distributing content
This year we have also been working to develop a clearer
framework for overseeing how the BBC distributes content.
Building on the Trust’s existing syndication policy for on-demandcontent, the framework will set clear principles to guide the
BBC and give clarity to the industry and provide value for money.
For audiences, the framework requires that BBC content isuniversally accessible, free to use and is easy to find. For theindustry, the framework requires openness and transparency,
and a fair and non-discriminatory approach to making BBC
content available. A public consultation on the proposed
framework is currently under way.

People are accessing content using a variety of platforms

26



BBC Annual Report and Accounts 2014/15

Performance summary

How the BBC measures up

The BBC maintains near-universal reach,
despite audiences having a huge choiceof other channels and services.

97%

Next steps
 The BBC’s ability to innovate andadapt its services, providing highquality content for everyone, willremain key to its success in the
coming years.

Part One: Setting strategy and assessing performance

Reach of BBC services
The BBC should make its content widely
available to all licence fee payers in waysthat are convenient to them.

2013/14: 96%

Source: BBC Cross Media Insight Survey

Out of London – % of network spend
The BBC is ahead of schedule in meetingits 2016 target to produce more
television outside London.

How the BBC measures up

Next steps
 This remains an important priority
in order to address the perception
amongst audiences outside London
that the BBC could represent
them better.

Representing the nations and regions
The BBC has made progress in improving
audience perceptions in the nations andregions, but viewers and listeners aroundthe UK still want to be better
represented in programmes.

How the BBC measures up
59% of UK adults
believe the BBC
performs well in
representing theirnation or region.

Next steps
 We will continue to monitor
through audience research
how BBC programmes reflect
the UK as a whole.

Source: Purpose Remit Survey

BBC Annual Report and Accounts 2014/15

27

Setting strategy and assessing performance

Innovating online

The Trust wants to enable the BBC to innovate quickly
and enhance people’s personal connection to the BBC.

People today, particularly younger audiences, are increasingly
accessing content online. Gradually viewers are accessing TV
programmes on demand, outside the confines of TV schedules.
This general shift of focus online is a great opportunity for theBBC, since it has been able to lead the way in acting as a catalyst
to change audiences’ behaviour, as it has, for example, with iPlayer
and catch-up TV viewing. In this year’s Purpose Remit Survey, theBBC met or exceeded expectations for providing quality content
online, on mobile phones and tablets, and on digital radio, withscores especially high from younger respondents. The BBC isalso helping to educate young people by getting them involvedin online coding.
But new technology is evolving constantly, and the BBC must
keep pace and adapt to new market realities, in particular giving
younger audiences more personal and portable access to services.
This is a challenge for all broadcasters – how to reach theiraudiences when and how they want – but it’s a particularchallenge for the BBC because of its remit to serve all licencefee payers, and there are still some homes which, for a varietyof reasons, do not have good access to high-speed broadband.
Where the BBC can help people get online, it is doing so, forexample by contributing £150 million a year until April 2017 todeveloping infrastructure in areas that can’t access broadband.
Performance of BBC Online
This year, while the number of devices (measured as ‘uniquebrowsers’) accessing BBC Online continued to rise, the numberof people using the service remained stable at around 50% of UK
adults, and the audience appreciation score for BBC Online also
declined slightly. As well as developing its role as a means to access
BBC TV and radio programmes, the BBC will need to develop
new online content to attract a wider range of users and becomea more universal platform over the course of the next Charter.
The BBC has also been developing a more personalised online
service to help meet the diverse needs of its users, but sign-inlevels remain quite low and new approaches will be needed toaccelerate this.

Broadening appeal to younger audiences
In September, having assessed the Executive’s proposals and taken
advice on market effects from Ofcom, we approved the launch ofa BBC Radio 1 channel on iPlayer, bringing together a curated
selection of Radio 1 video content to appeal to younger audiences.
The channel also extended the time for which catch-up content
is available on iPlayer from seven to 30 days.
In March, we published our review of the BBC’s six music radio
services. We found that many people still listen to music on theradio, although younger audiences increasingly listen to music
online. We found that the BBC has developed the online presenceof its stations, but must consider how it can play a distinctive role
online, just as it has in radio, both to meet audiences’ needs andto continue to support UK music. We will be monitoring
developments in this area in the coming year.
Developing more personalised services
Following the launch of Playlister in October 2013, enabling
listeners to build their own personal music collection, this year the
BBC extended the concept to its news services, enabling people
to get news on the subjects of particular interest to them.
The BBC will continue to develop plans for new ways to allow
people to sign in for a different and more personalised experience.
Consulting on the BBC’s online proposals
In January, we launched the first of two public consultations about
the BBC’s plans to move BBC Three online, enhance the iPlayer
by making selected programmes available there ahead of thescheduled time for broadcast (‘premiering’), and making somecontent from third parties available. (The plan also included
proposals for other services, including the launch of a ‘plus one’version of BBC One and extending the broadcast hours for
CBBC). Working with Ofcom, we are conducting a public value
test to assess both the public value and the market impact of the
package of proposals. Once this assessment is completed, we willconsult again on our provisional conclusions before reaching a final
decision later this year.

Around 50% of the UK adult population access
BBC Online each week.
In our last service review, we asked BBC Online to enable users
to navigate more easily across the site, and we set a service
licence condition that the service should each year increase thenumber of ‘click-throughs’ to external sites, to allow people tofind relevant content beyond BBC Online. This year the number
rose to 17.8 million click-throughs per month (up from 16.7 million
in 2013/14). We continue to encourage the BBC to look for new
ways to increase the traffic to third-party sites, as this helps ensure
the BBC creates wider public value and supports a diversity ofnews providers.
28

BBC Annual Report and Accounts 2014/15

Overseeing commercial and other activities
While the BBC is principally a non-commercial organisation, the content
it produces is a valuable asset that can generate financial returns to be
reinvested in further high-quality content for licence fee payers.

A new framework governing commercial services
This year, following a review and public consultation, including
input from the industry, we introduced a new framework for theBBC’s commercial services, enhancing our oversight with muchclearer requirements. These new arrangements set out therequirements, boundaries and expectations for the operation of
the BBC’s commercial services under four principles governing:strategic alignment between licence fee-funded andcommercial services
how, where, and when commercial business may
be conductedhow we will assess commercial performance and preventany distortion of the market
how we will maintain the necessary financial and operational
separation between publicly funded and commercial activity.
In line with how we assess BBC TV, radio and online services, wewill assess the performance of the commercial services against
this framework every five years.
As part of the new framework, the Trust sets out how it will
decide whether each commercial service is performing sufficiently
to avoid any market distortion. Each service must generate along-term return on investment to the BBC appropriate to themarket it is operating in and must demonstrate to the Trust that
it is not distorting the market. The Trust will review the annual
performance, budget proposals and market evidence for eachcommercial service to ensure that this requirement is being met.
When we published the framework, we also announced that
we would commission an independent review of separation andtransfer pricing practices, covering the levels of transparency andcompliance when the BBC’s commercial services buy rights to
BBC content or pay to use its premises or services. The review, tobe conducted in 2015, will assess whether the necessary controls
and procedures are being applied to ensure that fair market rates
are being paid.
Fair trading
Also this year, we began our third review of the operation of theBBC’s fair trading policy, as required under the BBC Agreement.
The aim of the policy is to establish a clear framework forensuring that the BBC conducts its activities fairly and avoids
distorting the market.

BBC Annual Report and Accounts 2014/15

We are considering whether any changes are required to theframework for it to continue to meet this goal, and, as part of ourreview, we commissioned Fingleton Associates Ltd to undertake
fieldwork and make recommendations as to how the policy
framework and code might be refined in light of experience andof changing market factors. Following completion of this work,
we will launch a public consultation on the policy in the summer.
S4C
This year was the second in which S4C, the Welsh language
broadcaster, was funded substantially from the licence fee.
As part of the operating agreement, and to oversee the useof the licence fee for S4C, the Trust undertakes an annual
performance assessment of S4C. This is published alongside
the S4C Annual Report.
S4C and the BBC continue to develop their collaborative
relationship at both operational and board levels. The availabilityof all S4C programmes on iPlayer this year, which has led to a
substantial increase in online viewing, is a powerful example ofthat partnership. While there are some positive signs of increased
consumption of S4C programmes online and outside Wales, weare concerned to see that the weekly reach of S4C within Wales
has declined again this year from 383,000 to 360,000. The impact
of budget cuts may well be a factor in this, but, mindful of our duty
to oversee licence fee funding to the broadcaster, we hope to see
performance becoming more stable in future years.
BBC Monitoring
BBC Monitoring, which is part of BBC Global News, tracks open
source media across the world and collates material for theGovernment, the BBC and commercial clients to help themunderstand the current issues, trends and developments inlocations of interest to them.
Since April 2013, BBC Monitoring has been operating under a
new funding and governance regime set out in an amendment to
the BBC Agreement, in which it is now funded by the licence fee.
The new regime includes regular reviews by users of the service
both in government and within the BBC, which are then reported
to the Trust.
Dame Janet Smith Review
The Dame Janet Smith Review was established in October 2012by the BBC to conduct an impartial, thorough and independent
review of the culture and practices of the BBC during the years
that Jimmy Savile worked at the Corporation. As of 1 May 2015,
the Review’s Report was finished. However, the Metropolitan
Police has told the Review that it is concerned that publication of
the Report at this stage could prejudice its ongoing investigations
into sexual abuse. As a result, Dame Janet has taken the decisionthat publication of the Report (and its delivery to the BBC) should
be delayed. We accept this decision and note that publication willtake place as soon as possible. While Dame Janet’s review has
been ongoing, the BBC has already taken steps to ensure its
whistle-blowing policies are robust and has undertaken a review
into its child protection policies and practices.
29

Part One: Setting strategy and assessing performance

One of our roles is to oversee the relationship between the
BBC’s commercial services (currently BBC Worldwide, BBC
Global News Ltd and BBC Studios and Post Production) andlicence fee-funded services, ensuring they are similarly alignedwith the public purposes.

30



BBC Annual Report and Accounts 2014/15

Part One: Understanding audiences

Understanding audiences
Consultations, research and Audience
Councils; those we heard from andwhat they said

BBC Annual Report and Accounts 2014/15

31

Understanding audiences

Listening to licence fee payers
The BBC belongs to everybody and it must
be responsive to the public who pay for it.

The BBC Trust’s role is to represent the interests of licence fee
payers. Listening to audiences and reflecting their needs in thedecisions we make has always been our priority, and it is more
important than ever today, as the Royal Charter comes up for
review in 2016.

independent journalism. Most people also felt that the BBC
should continue to pursue the existing six public purposes(set out on page 2), while providing relevant content at many
levels – internationally, at a UK level, within nations and regions,and locally.

We need to understand what people want from the BBC,both as consumers of its content, and as citizens who pay for it.
We use a variety of methods to do so, from public consultation(which is open to anyone who wishes to take part), to targeted
research, both qualitative and quantitative.

We also asked people to tell us how they thought the BBC should
be governed. We gave panellists a list of the different ways the
BBC could be held to account, and asked them which body(ies),
if any, should be responsible for each function. Overwhelmingly,
people felt that government or MPs should not be involved ingoverning the BBC; rather, for most of the functions, they would
prefer an independent body that represents the views of licencefee payers. This work has informed the Trust’s position on the
future governance arrangements for the BBC.

What does the public want from the BBC?
To ensure the public’s voice is heard in the Charter Review
debate, we have embarked on an extensive programme ofresearch, which will use a range of methodologies to uncoverwhat licence fee payers think the BBC of the future should look
like, and what they are willing to pay for it. We began this process
in 2014/15 with our first survey using our new online panel.
Our survey indicated people felt strongly that the BBC’s mission
to inform, educate and entertain was still highly relevant, while
impartiality and value for money were the most important areas
for the BBC to focus on in the future. Ensuring the BBC isindependent from government and MPs was also an importantpriority, alongside providing high-quality programmes andPurpose Remit Survey
One of the main ways we gather audiences’ views is through ourannual Purpose Remit Survey. This gathers the public’s views on
how well the BBC is meeting its six public purposes by asking
people how far they agree with 34 statements, and how
important each statement is to them. These two measures
allows us to analyse a ‘performance gap’, and we use this data tohelp set the BBC’s strategic objectives in line with the public’s
expectations. We have commissioned this survey every year andnow have valuable trend data going back eight years.

Representing licence fee payers is central to the Trust’s role32



BBC Annual Report and Accounts 2014/15

76% of audiences thought that
‘fresh and new’ ideas were important.

But 62% of audiences thought that the
BBC had lots of ‘fresh and new’ ideas.

76%

62%

Audience Councils
Audience Councils – one for each UK nation, and chaired by theTrustee for that nation – bring licence fee payers’ views to thework of the Trust. Members gather audience insight from sources
ranging from surveys to face-to-face meetings, helping to informtheir discussions.
Informing the work of the TrustThis year Councils contributed to our service reviews of BBC
music and speech radio. Members concluded that these services
delivered the BBC’s public purposes and, overall, served theiraudiences well, but should do more to appeal to the increasingly
diverse audience groups across the UK. Councils sought the viewsof younger audiences on the proposal to move BBC Three online.

How the BBC performed
Councils reported strong appreciation for locally produced TV
output in Scotland, Wales and Northern Ireland, and in the English
regions, welcomed investment and innovation in high-quality
journalism regional current affairs and digital services. Members
2013/14: -16%
noted unprecedented BBC activity in Scotland for the
Commonwealth Games and the independence referendum,
increasing the overall audience for BBC output. Audience Council
In general, the public’s views of the BBC remained very stable this Scotland commended BBC coverage of the referendum debate,
year. The proportion who felt the licence fee offers good value for but believed network news coverage came too late, and noted
money (56%), and the proportion who said that they would misssignificant concern among a section of the audience about
the BBC if it wasn’t there (78%), have not changed significantly
perceptions of impartiality. Councils in Wales, Scotland andsince last year. There have been improvements in four out of
Northern Ireland said audiences would welcome more coverage
34 individual statements, and no decreases. Performanceof their affairs on network TV news.
scores for the statement ‘the BBC has lots of fresh and new
ideas’ have continued to improve, as have scores related to thedigital purpose. Statements related to the nations, regions andcommunities purpose continued to show the largest performancegaps, and so remain an area of focus for the Trust.

-14%

Over 23,000 people shared their views with us
in our public consultation on proposed changes
to BBC Three.
Public value test on BBC Three and related proposals
We carry out a public consultation when the BBC proposesclosing or making substantial changes to one of its services. As
we expected, the Executive’s proposal to close BBC Three as alinear channel and to reinvent it online; to launch a BBC One +1
channel; to extend CBBC hours; and to have more online first
and third-party content on iPlayer attracted a large number of
responses from the public. We received over 23,000 responses
to the consultation, while 271,000 people signed a petition toretain BBC Three as a linear channel.

BBC Annual Report and Accounts 2014/15

Representing life in Scotland,
Wales, Northern Irelandand England
The map shows the % of
people in each nation who
think the BBC is good atrepresenting their life in news
and current affairs content.

48%

61%

55%

61%

33

Part One: Understanding audiences

Stimulating creativity
The gap between the number of people that think the BBC
has ‘fresh and new’ ideas and the number who think this isimportant has narrowed.

Understanding audiences

Representing audiences
The need for authentic portrayal across the UK was a theme
common to all Councils. Audience Council England noted thevalue and continuing importance of BBC local radio for the English
heartland audience, while observing variations in the performanceof the individual stations. Audience Council Wales welcomed thefact that new BBC apps now usually include Welsh language andnations’ content from the outset, but believed further steps are
required, such as greater prominence for Welsh language content
on the CBeebies website. All Councils were concerned that too
many licence fee payers remain excluded from some of the BBC’s
services because of lack of digital access including DAB, theavailability of FM and, for some, issues beyond the availabilityof infrastructure such as affordability.
Priorities for the future
Audience Council Northern Ireland recommended a strategic
focus on the BBC’s offer for young people. Audience Council
Wales wanted to see more English language TV produced inWales for audiences there, and Audience Council England wanted
the BBC to focus on providing programmes and services whichroutinely represent the diverse population and audience inEngland. In the aftermath of the referendum, Audience Council
Scotland suggested that the Trust consider ways to strengthen
accountability to licence fee payers in the nations of the UK.

Reaching more people online – our new Audience Panel
This year we set up a new BBC Trust Audience Panel to carryout quantitative surveys in a more cost-effective way. The panel isoperated online, and consists of 10,000 people, aged 16 years andover, who live throughout the UK. Overall, the group reflects theUK’s demographic profile by age, gender, socio-economic grade,
region, nation and ethnicity. The number of panellists in the
devolved nations is boosted further to ensure the views of thenations are fully represented.
The panel will support our audience research when we carry out
service reviews, public value tests, the Purpose Remit Survey, andimpartiality reviews, and it may also supplement the work of the
Audience Councils. We expect to use the panel extensively in
our Charter Review research programme.

Overwhelmingly, audiences have told us that government should
not be involved in governing the BBC34



BBC Annual Report and Accounts 2014/15

Part One: Inside the Trust

Inside the Trust
Who we are, how we operate
and how much it costs

BBC Annual Report and Accounts 2014/15

35

Inside the Trust

BBC Trustees
Getting the best out of the BBC for licence fee payers
Trustees are part time and come from a variety of backgrounds,
bringing a wide range of experience to the BBC.

Rona Fairhead CBE, Chairman
Chairs Trust Management Group.
Other roles
Non-executive director, HSBC Holdings
plc and PepsiCo Inc; non-executive
Chairman, HSBC Northern American
Holdings Inc; UK Trade and Investment
Business Ambassador.

Richard Ayre
Chairs Editorial Standards Committee.
Lead Trustee on transparency issues.
Member of Services Committee.

36



Sir Roger Carr, Vice-Chairman(appointed 1 May 2015)
Member of Value for Money Committee
and Trust Management Group.

Sonita Alleyne OBE
Lead Trustee on diversity and equality.
Member of Editorial Standards Committee
and Value for Money Committee.

Other roles
Chairman, BAE Systems Ltd; senior adviser,
KKR; trustee, Landau Forte Trust Academy
Schools; mentor, Chairman Mentoring
International; member, Prime Minister’s
Business Advisory Group.

Other roles
Founder, Yes Programme Ltd; nonexecutive director, Archant and Cultural
Capital Fund; member, British Board ofFilm Classification; member, London
Legacy Development Corporation;member, St Ville Charitable Trust.

Mark Damazer CBE(appointed 1 April 2015)

Mark Florman(appointed 1 April 2015)

Member of Editorial Standards Committee. Trustee for England (chairs Audience
Council England).
Other roles
Member of Value for Money Committee.
Master, St. Peter’s College Oxford;
trustee, Victoria and Albert Museum;
Other roles
Honorary Fellow of Gonville and Caius
Chairman, Centre for Social Justice;
College, Cambridge.
Chairman, Spayne Lindsay LLP; trustee,
Swedish Chamber of Commerce; trustee,
Foundation for Future London; Chairman,
Time Partners Ltd; strategic adviser, Early
Intervention Foundation.

BBC Annual Report and Accounts 2014/15

Part One: Inside the Trust

Bill Matthews

Aideen McGinley OBE

Nick Prettejohn

Chairs Complaints and Appeals Board.
Trustee for Scotland (chairs Audience
Council Scotland), Chairman,
BBC Pensions Trust. Member of
Editorial Standards Committee.

Trustee for Northern Ireland (chairs
Audience Council Northern Ireland).
Member of Services Committee andTrust Management Group.

Chairs Value for Money Committee.
Lead Trustee on value for money reviews.
Member of Editorial Standards Committee
and Trust Management Group.

Other roles
Director, M2M2 Limited; Deputy Chair/Board
member for Scotland, Security Industry
Authority; Chairman, Hub West Scotland;Member for Scotland, British Transport
Police Authority; non-executive adviser,
Criminal Injuries Compensation Authority;
Ambassador, Royal Edinburgh Military Tattoo.

Other roles
Commissioner, Liverpool Mayoral
Commission on Creativity and Innovation;
Co-Chair, Carnegie Trust Roundtableon Wellbeing in Northern Ireland; jury
member, UK City of Culture 2017; trustee,
Fermanagh Trust; governor, St Michael’s
College, Enniskillen; Director, The AislingCentre; associate, Future Search Associates.

Other roles
Chairman, Scottish Widows; non-executive
director, Lloyds Banking Group plc;
Chairman, Britten-Pears Foundation;
Chairman, Royal Northern Collegeof Music.

Elan Closs Stephens CBE

Suzanna Taverne

Lord Williams of Baglan

Trustee for Wales (chairs Audience
Council Wales).
Member of Services Committee
and Trust Management Group.

Chairs Services Committee.
Member of Value for Money Committee.

Lead Trustee on international services.
Member of Services Committee andTrust Management Group.

Other roles
Emeritus Professor, Aberystwyth
University; non-executive director andChair, Corporate Governance, Welsh
Government; member, S4C Authority;
non-executive director, IMAX Waterloo(BFI); member, National Museums ofWales Development Board.
BBC Annual Report and Accounts 2014/15

Other roles
Non-executive director, Ford Credit
Europe; trustee, StepChange Debt
Charity; trustee, Shakespeare Schools
Festival; advisory board member,
Manchester Business School.

Other roles
Distinguished Visiting Fellow, Chatham
House; member of the international
advisory board, Toledo CITPAX, Toledo
International Centre for Peace; member ofgoverning board, SOAS; member, Swansea
University Council; Chairman, Mines
Advisory Group; Honorary Life Member,
British Society for Middle Eastern Studies.
37

Inside the Trust

Governance
The BBC Trust is the governing body of the BBC.
We are supported by the Trust Unit, a team ofprofessional BBC staff who report directly to us.
The Trust sets the strategic objectives for the BBC and issues aservice licence to every BBC service stating what we expect it
to deliver and how much it can spend. We set the BBC’s editorial
standards and protect the BBC’s independence. The Trust is
separate from the Executive which is led by the Director-General,
who provides the editorial and creative leadership of the BBC andmanages the operational delivery of its services.
The functions and duties of the Trust are outlined in the BBC’s
Royal Charter and the BBC’s Agreement with the Secretary ofState. The Trust operates in accordance with published protocols,
and the way we make decisions is governed by our Standing
Orders. As Trustees we commit to acting in accordance with
our Code of Practice.
The Trust does much of its detailed business through regularmeetings of its committees, and the full Trust comes together
for two days each month to make major decisions, to consider
proposals from the Executive, and to question them about
performance issues.
We publish the minutes of our monthly Trust meetings on our
website. We also publish the evidence and research on which ourdecisions are based, the findings of editorial appeal decisions, andthe outcomes of value for money and service licence reviews.

Assessing our own performance
Every year we review the performance of the Trust and its
committees, and publish the results in the Annual Report. Thisis a commitment we set ourselves in the Trust’s Standing Orders.
This has been a year of change for the Trust, with a new Chairman
and the loss of two long-standing Trustees meaning that we were
below full strength in numbers for much of the year; however,following the 2013 Governance Review, we have been clearer
about the respective roles and responsibilities of the Trust andthe Executive, and the two bodies have worked together toagree the BBC’s strategic objectives.
A new system of quarterly reviews has enabled us to apply
greater consistency and structure when holding the Executive
to account. Over the next year, we will be increasingly involvedin the Charter Review process with the Government, including
discussing the best governance structure for the BBC in the
future. However, we will continue to concentrate on our corefunctions of setting the Corporation’s strategic direction andoverseeing the work of the Executive Board on behalf of licencefee payers.

The Trust Unit
We are supported in our work by the Trust Unit, which provides
independent and objective advice, calling on outside experts
Trustee changes during the year
when necessary. The Unit is made up of BBC staff who are
The Trustees listed on pages 36 and 37 reflect the membership ofindependent of the Executive and report directly to us. It includes
the Trust as at 1 May 2015. Lord Patten stepped down on 6 May
professional staff with expertise across a range of disciplines,
2014. Diane Coyle became Acting Chairman on 6 May 2014, until
including corporate governance, editorial standards, policy
8 October 2014. Rona Fairhead joined as Chairman on 9 Octoberdevelopment, audience research, financial and performance
2014. Alison Hastings and David Liddiment’s terms as Trustees
analysis, economics and law. The Unit advises us on our duties,
ended on 31 October 2014. Diane Coyle’s term as Vice-Chairman
manages the Trust’s supervisory and regulatory functions, andended on 30 April 2015.
provides the Trust with independent assessments of proposals
from the Executive Board. Most Unit staff are based in London;
Trustees’ attendance at Trust meetings (1 April 2014 – 31 March 2015)
others are based in offices in Belfast, Birmingham, Cardiff
Chairmanand Glasgow.
Lord Patten (left 6 May 2014)
1/1
ChairmanRona Fairhead (joined 9 October 2014)

6/6

Vice-Chairman
Diane Coyle

11/11

National Trustees
Alison Hastings (left 31 October 2014)
Bill Matthews
Aideen McGinley
Elan Closs Stephens

6/6
10/11
10/11
11/11

Trustees
Sonita Alleyne
Richard Ayre
David Liddiment (left 31 October 2014)
Nick Prettejohn
Suzanna Taverne
Lord Williams

9/11
10/11
6/6
8/11
10/11
11/11

38



Register of interests
Our Code of Practice requires us to maintain and publish aregister of all external interests that might be seen to affect ourability to perform the duties of a BBC Trustee. This register
includes declarations of all positions of employment, directorships
and voluntary positions, as well as interests of close family
members, if relevant. The Trust’s register of interests is publishedon our website.

BBC Annual Report and Accounts 2014/15

Complaints and Appeals Board
Chair: Bill Matthews
The Complaints and Appeals Board (CAB) handles appeals andcomplaints to the BBC relating to fair trading, Television Licensing,and other general matters which are not editorial. All Trustees
are members of the CAB. The duties of the committee areconducted by panels consisting of at least three Trustees including
the CAB Chairman.

Editorial Standards Committee
Chair: Richard Ayre
The Editorial Standards Committee (ESC) is responsible, on
behalf of the Trust, for establishing the BBC’s editorial standards.
The ESC commissions the BBC’s Editorial Guidelines andmonitors the Executive Board’s compliance with these Guidelines.
As the final stage of the BBC’s complaints process, the ESC
considers appeals relating to breaches of the Editorial Guidelines
as well as related complaints-handling issues. It also has functions
in relation to election and referendum coverage, party politicalbroadcasts, party election broadcasts and referendum campaign
broadcasts. In addition, the committee manages the Trust’s
programme of impartiality reviews and seminars.
Meeting attendance (1 April 2014 – 31 March 2015)
Trustee

Meeting attendance (1 April 2014 – 31 March 2015)
Trustee

AttendanceBill Matthews*

10/10

Richard Ayre*

7/7

Other Trustees attended the following number of panel meetings
Sonita Alleyne

3

Diane Coyle

1

David Liddiment

1

Aideen McGinley

3

Nick Prettejohn

4Elan Closs Stephens1

Suzanna Taverne

3

Lord Williams

1Richard Ayre*

Attendance

13/14

Alison Hastings*

7/7

Sonita Alleyne

12/14

Diane Coyle*

4/4

Bill Matthews

11/14

Nicholas Prettejohn

11/14David Liddiment*

6/7

Rona Fairhead, Chairman of the Trust, is entitled to attend any meetings of the committee,
and between October 2014 and March 2015 she attended three Editorial Standards
Committee meetings.
* Committee membership changes: Alison Hastings and David Liddiment stood down in
October 2014. Richard Ayre took over as Chair from November 2014 and Diane Coylejoined in November 2014.

* Committee membership changes: Richard Ayre was Chairman until October 2014;
Bill Matthews took over in November 2014.

BBC Annual Report and Accounts 2014/15

39

Part One: Inside the Trust

Trust committees
We do much of our work through committees, which can makecertain decisions on behalf of the Trust as a whole. The membersof each committee and their attendance during 2014/15 areshown below. The terms of reference for these committees
can be found on our website.

Inside the Trust

Trust Management Group
Chair: Rona Fairhead

Value for Money Committee
Chair: Nick Prettejohn

The Trust Management Group approves Trust Unit staff
remuneration and severance payments over £75,000 andoversees Trustee expenses, conflicts of interest and hospitality,
and the Trust Code of Practice.

The Value for Money Committee oversees the budget, financial
approvals and value for money processes at the Trust.
Meeting attendance (1 April 2014 – 31 March 2015)
Trustee

Meeting attendance (1 April 2014 – 31 March 2015)
Trustee

Attendance

Rona Fairhead*

1/1

Diane Coyle*

3/3

Aideen McGinley

3/3

Nick Prettejohn

2/3Elan Closs Stephens

3/3

Lord Williams

3/3* Committee membership changes: Diane Coyle was Chair from May 2014 to October
2014. Rona Fairhead became Chair in October 2014.

Attendance

Nick Prettejohn

11/11

Sonita Alleyne

11/11

Diane Coyle*

6/7

Elan Closs Stephens

10/11

Suzanna Taverne

11/11

Rona Fairhead, Chairman of the Trust, is entitled to attend any meetings of the committee
and between October 2014 and March 2015 she attended two Value for Money
Committee meetings.
* Committee membership changes: Diane Coyle left the committee in November 2014.

Services Committee
Chair: Suzanna Taverne
The Services Committee ensures that the BBC’s public services,
together with its distribution and commercial activities, aredelivered in line with the licences and frameworks set by the Trust.
This includes oversight of Trust reviews and regulatory matters.
Meeting attendance (1 April 2014 – 31 March 2015)
Trustee

Attendance

Suzanna Taverne

10/10

Diane Coyle

9/10

Alison Hastings*

5/5David Liddiment*

3/5

Aideen McGinley

9/10

Lord Williams

7/10

Richard Ayre*

5/5

Rona Fairhead, Chairman of the Trust, is entitled to attend any meetings of thecommittee and between October 2014 and March 2015 she attended three Services
Committee meetings.
* Committee membership changes: Alison Hastings and David Liddiment stood downin October 2014. Richard Ayre joined in November 2014.

40



BBC Annual Report and Accounts 2014/15

Expenses
We are reimbursed for expenses incurred on BBC business,
which include travel, accommodation, work-related meals andhospitality. Trustee expenses are governed by the Trust’s Code ofPractice, which is published on our website. Every six months wepublish a full list of all expenses incurred by each Trustee, as wellas the services booked centrally for Trustees by the Trust Unit.
Some of our expenses and support services are classed as taxable
benefits by HM Revenue & Customs, and this figure is publishedin the remuneration table; any tax arising on expenses incurred
is settled by the BBC, except in the case of Rona Fairhead who
has elected to settle her own tax liability.
Chairman’s benefits
Rona Fairhead is not eligible to receive any benefits other thanher fee but has part-time access to a BBC driver and car whenon BBC business.

Trustees’ remuneration table
Fees1
£000

Taxablebenefits
£000

Total
2014/15£000

Total
2013/14£000

Appointment
term startdateAppointment
term enddate

Rona Fairhead2**

53

2

55

–

9 Oct 14

8 Oct 18

Lord Patten3*

11

–

11

111

1 May 11

6 May 14

Diane Coyle4*

87

–

87

71

1 Nov 0630 April 15

Alison Hastings5

22

–

22

38

1 Nov 06

31 Oct 14

Bill Matthews6*

38

–

38

38

1 Jan 1131 Dec 16

Aideen McGinley

38

–

38

38

1 Nov 12

31 Oct 16

Elan Closs Stephens

38

–

38

38

1 Nov 1031 Oct 18

Sonita Alleyne

33

–

33

33

1 Nov 12

31 Oct 16

Richard Ayre

33

–

33

33

1 Aug 1031 Jul 18

Anthony Fry 7

–

–

–

19

1 Nov 08

31 Oct 13

David Liddiment5

19

–

19

33

1 Nov 06

31 Oct 14

Nick Prettejohn

33

–

33

8

1 Jan 1431 Dec 17

Suzanna Taverne

33

–

33

33

1 Jan 1231 Dec 15

Lord Williams

33

–

33

33

1 Dec 1130 Nov 15

Total Trustees

471

2

473

526

Chairman and Vice-Chairman

National Trustees

Trustees

Notes
1 Trustees took an 8.3% voluntary reduction in pay, in parallel with the then Director-General and Executive Board, in September 2010. This will remain in effect until 31 August 2015.
2 Rona Fairhead began her appointment on 9 October 2014; accordingly her fees for 2014/15 only relate to her time in office and do not cover the full year.
3 Lord Patten ended his appointment on 6 May 2014; accordingly his fees for 2014/15 only relate to his time in office and do not cover the full year.
4 Diane Coyle was Acting Chairman from 6 May 2014 until 8 October 2014; accordingly her fees include her salary increase during this time.
5 Alison Hastings and David Liddiment ended their appointments on 31 October 2014; accordingly their fees only relate to their time in office and do not cover the full year.
6 Bill Matthews is the Chairman of the Board of the BBC Pension Trust Ltd, the corporate trustee of the BBC Pension Scheme. He is separately remunerated for this role.
Further details are available in the BBC Pension Scheme Annual Report and Accounts.
7 Anthony Fry ended his appointment on 31 October 2013; accordingly his fees for 2013/14 only relate to his time in office and do not cover the full year.
* These Trustees all had taxable benefits less than £1,000 which have been rounded to nil. The total amount incurred by these Trustees was £126.63.
** Rona Fairhead is not eligible to receive any benefits other than her fee but has part-time access to a BBC driver and car when on BBC business.

BBC Annual Report and Accounts 2014/15

41

Part One: Inside the Trust

Trustees’ remunerationFees
Our fees as Trustees are determined by the Secretary of State
for Culture, Media and Sport. In September 2010 Trustees took
a voluntary 8.3% pay cut (equivalent to a month’s salary), in
parallel with the then Director-General and other Executive
Board members. The reduced fees for Trustees will remain in
effect until 31 August 2015 and are reflected in the table below.
The one exception to this is the Chairman, whose level of fees
was reduced by 23% in 2010, and therefore a further discount has
not been applied. Trustees do not receive severance pay or othercompensation for loss of office.

Inside the Trust

Trust finances
We run our operations as efficiently as possible
and our direct expenditure for 2014/15 was well
below that for the previous year.
In line with the rest of the BBC, we are committed to making
savings. Specifically, we are committed to keeping our direct
expenditure below 0.31% of total licence fee income. This year,
direct expenditure represented 0.21% of total licence fee income(2013/14: 0.25%).
Director and senior management remuneration
Nicholas Kroll, previously Director, BBC Trust, stepped downfrom his role on 20 June 2014. After a short period when the
Deputy Director, Alex Towers, acted as Director, Jon Zeff wasappointed to the role on 16 July 2014. Jon stepped down on
19 April 2015 and has been replaced by Alex Towers on apermanent basis.
The aggregate emoluments and base pay for the position during
2014/15 were: Nicholas Kroll £54,773 (of which £53,040 was basepay), Alex Towers £18,301 (£16,254 base pay) and Jon Zeff
£154,103 (£127,742 base pay). In 2013/14 Nicholas Kroll’s
emoluments and base pay was £246,480 (£238,680 base pay).

The position holder is a member of the BBC Pension Scheme.
Over 2014/15 the Trust Unit had five senior managers as wellas the Director, and our website provides an analysis of theirremuneration split into £5,000 salary bands.
See page 41 for Trustees’ remuneration which is audited.
Reporting regulations
The Royal Charter requires the Annual Report and Accounts
to be externally audited. We asked Ernst & Young LLP (EY)to confirm that we have accurately presented the Trust’s
expenditure, including Trustees’ remuneration, in Part One.
EY’s report is included next to the statement of Trust
Responsibilities on page 43. The BBC is exempt from therequirements of the Large and Medium-sized Companies andGroups (Accounts and Reports) Regulations 2008 and those of
the Financial Conduct Authority but, where relevant, we have
prepared this report as if those requirements apply.
Trust people

Trust expenditure statementNote2014/15£000

2013/14£000

Trustee remuneration

1

521

583

Staff costs

2

4,002

4,203

Other operating costs

3

3,183

4,534

4, 5

7,706

9,320

Ofcom regulatory fees

6

2,204

2,666

Ofcom Market Impact Assessment fees

7

332

–

Ofcom Significance Test fees

8

–

–

Direct Trust expenditure

Total Ofcom fees payable by Trust

2,536

2,666

Total Trust expenditure

10,242

11,986

2014/15

2013/14

Trustees

11.8

11.8

Trust Unit staff (EFT)1

61.8

61.8

Average for year

Note
1 Trust Unit staff are those employed directly by theTrust Unit. Of the 61.8 average equivalent full-time(EFT) Trust Unit staff for 2014/15, 13 EFTs werebased outside London and supported the work theTrust undertakes in Wales, Scotland, Northern
Ireland and England (2013/14: 14). 10.2% come froma black, Asian or minority ethnic background(2013/14: 12%); 5.3% are disabled (2013/14: 5.7%);
and 70% are women (2013/14: 65.9%).

Notes
1 The remuneration received by each Trustee is shown in the table on page 41. The figure in the table above includes social
security costs.
2 Staff costs include wages and salaries, social security costs and employer’s pension contributions.
3 Operating costs include direct expenditure on activities such as research, legal advice, other specialist advisory services and theTrust’s consultation activities and stakeholder events.
4 This represents direct external spend by the Trust. The Trust also made use of shared services, which included property
provision, finance, HR and information services that were provided by the BBC public services.
5 Of direct Trust expenditure, £731,245 relates to spend on Trust activities in the four nations (2013/14: £952,153).
6 Ofcom allocates its costs of television and radio regulation to the BBC and the other UK broadcasting channels. The Trust pays
the BBC’s share of that allocation.
7 Ofcom Market Impact Assessment (MIA) fees cover Ofcom’s direct and indirect costs in undertaking the MIA for public
value tests.
8 Ofcom Significance Test fees cover Ofcom’s direct and indirect costs in undertaking work to input to the Trust’s significance tests.

42

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BBC Annual Report and Accounts 2014/15

1. Agree Trustees’ remuneration to confirmation from the
Department for Culture, Media and Sport (DCMS).
2. Agree that the expenditure as shown in the Trust
expenditure statement has been accurately extracted fromthe books and records of the Trust on the basis of the notes
to the Trust expenditure statement.
We report our findings below:
A. With respect to item 1 we found that all Trustees’
remuneration was confirmed by the DCMS.
B. With respect to item 2 we found that the expenditure asshown in the Trust expenditure statement has been accurately
extracted from the books and records of the Trust on the basisof the notes to the Trust expenditure statement.
Because the above procedures do not constitute either an audit
or a review made in accordance with International Standards on
Auditing or International Standards on Review Engagements (orrelevant national standards or practices), we do not express any
assurance on the Trust expenditure statement.
Had we performed additional procedures or had we performed
an audit or review of the financial statements in accordance with
International Standards on Auditing (UK and Ireland) orInternational Standards on Review Engagements, we might haveidentified other issues that would be of relevance to you.
Our report is solely for the purpose set forth in the firstparagraph of this report and for your information and is not to
be used or relied upon by any other parties. This report relates
only to the accounts and items specified above and does notextend to any financial statements of the British Broadcasting
Corporation, taken as a whole. To the fullest extent permitted
by law, we do not assume responsibility to anyone other than the
Trustees of the British Broadcasting Corporation for this report.

Richard Wilson
For and on behalf of Ernst & Young LLP
1 More London Place
London SE1 2AF
16 June 2015
BBC Annual Report and Accounts 2014/15

Statement of responsibilities in respect of theAnnual Report and Accounts
The BBC’s Royal Charter requires that an annual report andstatement of accounts is prepared in two parts, Part One by
the Trust and Part Two by the Executive Board. The Executive
Board’s responsibilities are detailed in the Governance sectionof Part Two of this Annual Report. In summary, the Executive
Board is responsible for preparing the financial statements andstatements of compliance with applicable corporate governancecodes and remuneration regulations, and delivering these to
the Trust within Part Two of this Annual Report. The Executive
Board has prepared the financial statements in accordance with
International Financial Reporting Standards as adopted by the
EU (EU IFRS), reflecting the fact that EU IFRS are widely usedin the UK, are being adopted in the public sector, and that theiruse would be permitted under the Companies Act 2006.
These financial statements are audited by external auditors.
In preparing its associated corporate governance disclosures, theExecutive Board has elected to comply with the UK Corporate
Governance Code, and, where applicable, the Financial Conduct
Authority Listing Rules which apply to a company quoted on an
EU regulated market.
In order to comply with those requirements, the Annual Reportmust include disclosures on the governance arrangements of theTrust as well as those of the Executive Board. These disclosures
are the responsibility of the Trust, and are included in Part Oneof this Annual Report.
The Charter also requires the Trust to prepare a statement of its
expenditure and include it within Part One of the Annual Report.
Statement of disclosure of information to auditors
The Trustees who held office at the date of approval of thisAnnual Report and Accounts confirm that, so far as each isaware, there is no relevant audit information of which the BBC’s
auditors are unaware; and each Trustee has taken all the steps
that he or she ought to have taken as a Trustee to make himself
or herself aware of any relevant audit information and toestablish that the BBC’s auditors are aware of that information.
This statement was approved by the Trust on 16 June 2015.

Rona Fairhead
Chairman
16 June 201543

Part One: Inside the Trust

Report of Ernst & Young LLP to the BBC Trust
We have performed the procedures agreed with you and set
out below with respect to the Trust expenditure statement.
Our engagement was undertaken in accordance with theInternational Standard on Related Services 4400 applicable toagreed-upon procedures engagements. The procedures were
performed for the purpose of meeting the obligations of theTrust under the Royal Charter dated October 2006 and are
as follows:Filming on location for BBC One’s Poldark

44



BBC Annual Report and Accounts 2014/15

The BBC Executive’s review
and assessment
The Executive is responsible for the operationaldelivery of BBC services and the direction of BBC
editorial and creative output in line with theframework set by the Trust

46

Director-General’s introduction

Part Two

Part Two

Strategic report
51 Delivering our strategy
55
58

Our achievements and new faces
Delivering our strategy in 2014/15

67
68
76
80
82

Performance

83
84
88
90
92
93

How we run the BBC

Performance by content area
The BBC in each of the nations
Performance by genre
Network supply
Our people (including headcount, severance pay and talent spend)
Diversity
Developing new skills and talentPartnerships
Supporting good causes

Governance and finance report
97 Governance
98 Executive Board
100 Report of the Senior Independent Director
102 Governance report and Nominations Committee
104 Remuneration report
115 Audit Committee report
120 Risks and opportunities
124 Fair Trading report
127 Finance and commercial
128 Review of the Managing Director, BBC Finance and Operations
130 Financial achievements
132 Charter Review and future challenges
133 Financial overview
134 Commercial trading
143 Summary financial statement
144 Auditor’s report

BBC Annual Report and Accounts 2014/15

45

Director-General’s introduction

Creative excellence

In June 2014 I visited Barrington Court, a Tudor manor housein Somerset, to watch the filming of Wolf Hall. I was expecting tosee brilliant performances from world-class actors and that’s what
I saw, as viewers themselves did when the show was broadcast
on BBC Two. But as well as the obvious talent on-screen and in
the director’s chair, I was struck by the breadth of skills across all
aspects of the production, from lighting and set-design down
to the craft skills involved in the creation of costumes.

“This fantastic programming, across all genresfrom drama to natural history, underlines the
single point that I make most often. The case for
the BBC doesn’t rest on ideological arguments
or debates between economists. It rests on what
we do. On our programmes and services.”

The ability to support such a variety of skills is one of the uniquestrengths of the BBC and one of the benefits that it brings to the
UK’s creative economy. It also underpins our offer to audiences,
allowing us to produce amazing content in genres as different
from each other as historical drama and natural history, and informs ranging from TV programmes to mobile apps.

Tony Hall, Director-General

A world away from Somerset, David Attenborough’s seriesLife Story presented the BBC with a very different production
challenge. To make this landmark natural history series the crew
visited six continents, walked 1,035 kilometres through theCongo rainforest, consumed over 2,000 malaria pills, spent 297
nights in tents and hired two skidoos. The final programme that
was aired on BBC One couldn’t have been more different from
Wolf Hall, but, like all of our output in 2014/15, these shows had
two things in common: a commitment to creative excellence
and a sense of public service.

Damian Lewis plays Henry VIII in BBC Two’s Wolf Hall

46



These values apply to our regular programming as much as toone-off natural history or drama landmarks. For the 30th birthday
week of EastEnders the team took the incredibly bold decision
to broadcast live. It was a decision that paid off, with more than
21 million people watching the shows and the climactic episodes
generating over one million tweets – the most ever fora UK drama.
BBC Radio showed similar creative success in everything fromdaily breakfast shows to iconic annual events, with this year’s
Reith lectures exploring the extraordinary progress – andfallibility – of medicine, and the Chris Evans Breakfast showon Radio 2 becoming the biggest and most listened to radio
show on UK radio.
I’d like to thank all of our staff for the hard work which has madethis content possible. This fantastic programming, across all genresfrom drama to natural history, underlines the single point that
I make most often. The case for the BBC doesn’t rest on
ideological arguments or debates between economists.
It rests on what we do. On our programmes and services.

Filming Natural History Unit series Life Story

BBC Annual Report and Accounts 2014/15

Raymond Blanc and Kate Humble present Kew on a Plate

The BBC tells each story in whatever way works best. Often thiswill be as a traditional TV or radio show, but increasingly it will bein an interactive or immersive form, like the new formats we aretrying on BBC Taster.
This year the BBC created many new types of content and new
ways of bringing it to our audience. The BBC Weather app moved
the forecast beyond a linear, scheduled slot to real-time, localised
information; Playlister made it easier than ever to find and sharemusic played by the BBC; our iWonder guides helped people tolearn in new ways and Red Button+ vastly increased the content
and choices available to TV viewers.
Our existing online services were also strengthened this year,with our relaunched News app and iPlayer making ourprogrammes even more unmissable by moving from sevento 30 day catch-up. We will continue to bring digital skills andstaff into the BBC in future years to make sure that we remaina technological pioneer.

Partnerships
The quality of the BBC’s output depends not just on the talentand dedication of the Corporation’s own staff but also on ahuge range of partners. In the last year we have worked with
the Arts Council, the British Film Institute, Russell Group
universities, the city councils of Bristol, Glasgow and Birmingham,
and cultural or scientific institutions including the British Museum
and Kew Gardens.

BBC Annual Report and Accounts 2014/15

In Birmingham, BBC Radio 1Xtra partnered with the City
Council, Birmingham City University and many others to produce
a month of events including MC workshops, a school visit wherechildren were taught how to DJ, and a Q&A with artists held
in a local barbershop.
The benefits of these partnerships are many and varied. Our
1Xtra partnership in Birmingham built up to 1Xtra Live, wheresome of the best UK and international acts played in the city,
our collaboration with the commercial subsidiary of the Open
University led to the BBC’s first massive open online course(MOOC), and our work with Kew Gardens resulted in the
Kew on a Plate series on BBC Two, in which Kate Humble andRaymond Blanc grew, and then ate, heritage vegetables at Kew.

Bringing the nation together
Coverage of major events has always been a central part ofwhat we do. No other broadcaster is as successful as the BBC
in bringing the family and the nation together to watch history
being made, whether that’s in music, politics or sport.
In 2014/15 we set ourselves the objective of providing exceptional
coverage of the World War One Centenary, the 800th
anniversary of the Magna Carta, the FA Cup, and the Glasgow
Commonwealth Games. The response from our audiencedemonstrated how successfully this objective was achieved.
As well as covering events, the BBC also creates them. Highlightsfrom this year included the BBC Music Awards, the 6 Music
Festival and a spectacular Radio 1 Big Weekend from Glasgow;
alongside game-changing national campaigns to boost digital skills
and to increase participation in the arts.

47

Part Two: Director-General’s introduction

New kinds of content

Director-General’s introduction

In our ‘Make it Digital’ initiative the BBC is working with partners
including BT, Google, Microsoft, Technology Will Save Us,
Samsung and ARM and will put almost a million programmabledevices into schools up and down the country – one for every
child aged 11 and 12 (those in year 7 in England and Wales, S1 in
Scotland and year 8 in Northern Ireland). We’re also working
with the Skills Funding Agency, the Department for Work andPensions’ Job Centres and a host of UK training suppliers to reachup to 5,000 unemployed young people around the country andhelp them boost their digital skills and get a foot on the job ladder.

Championing the arts
Our arts campaign is equally ambitious. ‘Get Creative’ is ayear-long celebration of British arts, culture and creativity whichaims not just to increase the appreciation and understandingof art, but to inspire the public to create art for themselves.
It encompasses the whole range of creative expression, be thatthrough painting or music, tap dance or knitting, and is being madepossible by partnerships with more than 100 arts organisations,
including the Royal Shakespeare Company, National Theatre
Wales and Voluntary Arts.
‘Get Creative’ is just one example of our commitment to artsand music. Radio 3 and Radio 4 have been central to the BBC’sarts coverage this year, through their regular concerts andprogrammes and also through one-off seasons and serials
like the Dylan Thomas Centenary, the Decameron and the
Literary Proms on Radio 3; and War and Peace, Melvyn Bragg’s
History of Ideas and Neil MacGregor’s Germany: Memories
of a Nation on Radio 4.

We’ve also launched both BBC Arts and BBC Music as online
destinations; created a successful new arts slot on Saturday nights
on BBC Two (with shows about Simon Rattle, Hockney and
Hampton Court); inspired school children to play classical music
through the Ten Pieces project; brought TV and radio services
together for the Hay and Edinburgh festivals, and created the
BBC Music Awards.
This work has strengthened the BBC’s position as one of thecountry’s main arts institutions and as a cornerstone of the UK’s
global success in music.

The creative economy
Finding and training entry-level talent is just one of the ways inwhich the BBC strives to make the UK the world’s most creative
nation. The BBC also works with – and creates employment in –thousands of creative suppliers; invests £2.2 billion a year in thecreative industries; and provides a global shop window of British
creativity through BBC Worldwide.
From television to music, writing to filming, the BBC is a huge partof why the UK is such a great exporter of creativity – and why
over a sustained period the creative industries have grown much
faster than the wider UK economy.

The main stage at Radio 1’s Big Weekend in Glasgow

48

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BBC Annual Report and Accounts 2014/15

Television still of Jeremy Bowen interviewing Syrian President
Bashar-al-Assad in February 2015

This is particularly important when the issues are complex andcontested, or when stories are breaking.
The Scottish Referendum was a major event in 2014/15 and in thehistory of the UK. This was a contentious topic, particularly in the
final weeks leading up to the poll, and our coverage of it was
unequalled in its depth.
The conflicts in the Middle East remained a critical news story
in 2014/15 and the BBC brought an unparalleled level of expertiseand access to its reporting from the region. Jeremy Bowen
secured an interview with Syrian President Bashar al-Assad thatwas covered in all BBC News bulletins and picked up externally.
For breaking stories, our new ‘BBC Live’ technology now brings
together the best of the BBC’s output and the best of social media
to provide an interactive, immersive experience. Since its creation
it has been used for 40 major events and stories and has
generated over a billion page views.

The best of the BBC
As well as explaining the world the BBC can also act as a guidein another sense, leading people to the best of our own output
and at the same time helping them to find stories, experiences
and content created by other organisations and individuals.
I believe that this creates a bigger opportunity for the BBC thanfor any other broadcaster – because we produce such a wide
range of content. The more we know about what our audience
want and like, across all genres and platforms, the more we canpoint them to the great things that we’re doing.
In 2014/15, we put in place the building blocks, making it possible
to collate and analyse sign-in data. In the next financial year
we will start to deliver new services, providing personalised
recommendations on iPlayer and the BBC homepage,
recommending News and Sport stories.

By doing this the BBC will reinvent public service broadcastingOutside the UK the World Service has also found new, more agile through data, helping people to find their way to the best of
ways to tell stories, moving a long way from its shortwave-only
our shared culture.
roots to provide news in TV bulletins and on social media. This
flexibility is vital in a rapidly changing world, as was tested andproven by this year’s pop-up service for Thailand and televisionbulletins for the Ukraine.
BBC Annual Report and Accounts 2014/15

49

Part Two: Director-General’s introduction

Through the World Service and BBC Worldwide, the BBC
remains an instantly recognisable global brand and mark of quality,
reaching more than 308 million people each week. To ensure thisIn the internet age it is easy to find information, but harder toknow whether to trust it. There are many small online communities success continues, BBC Worldwide partnered with AMC
Networks in the USA this year. This commercial joint venture
representing particular world views and interests, but fewerwith an American operator will help BBC AMERICA to reach
impartial, universal sources of information and knowledge. This
more people – and bring a wealth of new titles to UK andmakes the BBC’s ability to both get its facts right and provide
global audiences.
in-depth analysis more necessary than ever. The BBC is the place
where audiences go to find out what’s really happening and why.

A trusted guideDirector-General’s introduction

The Committee has suggested another route to modernising thelicence fee – a universal household levy. Both proposals aim toensure that the licence fee remains truly universal in the internet
In a democracy everyone should have the right to share in thiscommon culture, so the BBC will provide great British programmes age. This is vital. Because everyone pays for the BBC, eachhousehold pays less – only 40p per day – and the BBC is able
and services, and be a trusted guide, for everyone.
to provide content for all.
The Corporation is uniquely placed to both bring the country
together and reflect its differences because it has no commercial
imperative. It can serve all of the nations, demographics and local A mission for the internet age
communities that make up the UK, not just those that can
Our mission for the internet age is to provide world-classgenerate a profit.
programmes and services, and be a trusted guide, for everyone.
Young people are particularly important. They are using linear
Delivering this mission during a time of unprecedented change
channels less than their parents did, and as they increasingly
is a difficult task, which will require technical expertise anddiscover and watch video online the BBC must do more to bringteamwork. As I joined the Stargazing Live team to watch the sun
its programmes and services to them.
fade and brighten at the solar eclipse in March, saw the amazing
The creation of iPlayer earlier in this Charter period played a huge aerial shots that the team had produced from above the clouds
role in making online, on-demand television mainstream. In thein the Faroe Islands, heard the lessons going out live to schools
next financial year we propose to go further and bring an entire
across the country and even joined our audience in a search forchannel online. The proposal to make BBC Three digital-led will
new supernovae, it was clear to me that the BBC has both ofhelp the BBC to create new types of content shaped around thethese qualities, but also the bravery and ambition required toneeds of younger audiences, and also to learn the tools andreshape itself once again.
techniques required to flourish in a future where most of its
content will be accessed through the internet.

For everyone

The BBC’s dedication to all audiences is underpinned by theuniversal licence fee. I welcome the recommendations on thelicence fee in the Culture, Media and Sport Select Committee’s
Future of the BBC report. In particular, I’m heartened by theCommittee’s support for a ten-year Charter period and its
endorsement of our proposal to require people to pay thelicence fee even if they only catch up on iPlayer.

Tony Hall
Director-General
16 June 2015

Filming The Great British Bake Off with Mary Berry50

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BBC Annual Report and Accounts 2014/15

Part Two: Strategic report – Delivering our strategy

Delivering our strategy
Our achievements for the year and how
we’ve delivered our strategy in 2014/15

Actor Toby Jones plays Neil Baldwin in BAFTA award-winning
drama Marvellous

BBC Annual Report and Accounts 2014/15

51

Strategic report – Delivering our strategy

Content highlights

We brought stand-out content, big moments andthe benefit of new technologies to audiences.

Wolf Hall
The series attracted six million viewers at its launch andbecame BBC Two’s highest-rated drama series since atleast 2002.

Partnerships
Neil MacGregor’s Germany: Memories of a Nation built on the
success of the History of the World in 100 Objects to tell thefascinating and complex story of 600 years of German history
through a Radio 4 series and a linked exhibition at the British
Museum. Other partnerships in 2014/15 included the Make it
Digital initiative with ARM, Barclays, BT, Google, Microsoft
and Samsung, and the Food season with Kew Gardens.
BBC News app
We relaunched the app to offer
a more personalised experience,with users able to add specialisednews feeds of their choice.

The Chris Evans Breakfast ShowThe Chris Evans Breakfast Show on Radio 2 became thebiggest and most listened to radio show on UK radio.
World War One
Centenary
The BBC broadcast ayear of content across
television, radio andonline to mark thecentenary of WW1.
This informative andmoving coverage has
now been collated at:bbc.co.uk/ww1

52



Scottish Referendum
The Salmond/Darling clash was the most-watched politicaldebate ever in Scotland and the day of the result was at thetime, the second busiest day ever for BBC News online with
23.4 million unique browsers globally.
BBC Annual Report and Accounts 2014/15

BBC Weather app
Reached five million downloads within eight months ofrelaunch (an average of 15 downloads per minute).

Global NewsA record 283 million people accessed the BBC’s Global News
services per week.
Part Two: Strategic report – Delivering our strategy

School ReportMore than 1,000 schools
across the UK took
part in this year’s BBC
News School Report.
30,000 11- to 16-year-old
students became
journalists for the day
and made their own
news reports for a realaudience.

iPlayer
The iPlayer window has been extended from seven to
30 days, giving audiences more time to watch and listen to
the BBC content they love. In January 2015 iPlayer enjoyedits best month on record with 343 million requests.
Digital radio
6 Music is the first digital-only
radio station to reach two
million weekly listeners.
And Radio 4 Extra has now
achieved a weekly audienceof over two million listeners.
EastEnders
The 30th anniversary was watched by over 21 million people– 37% of the UK population – across the week and generated
the highest ever AI scores for the show.
BBC Annual Report and Accounts 2014/15

53

Strategic report – Delivering our strategyPeter Pan
Our screening of JM Barrie’s classic tale achieved the biggest
CBeebies audience of the year.

World Cup Final
The match attracted 15 million viewers on BBC One,
four times our nearest competitor.
Get Creative
More than 750
organisations acrossthe country joined
Get Creative, ouryear-long campaign
to drive participationin British arts, culture
and creativity.

Commonwealth Games
Audiences were highly appreciative of the CommonwealthGames on the BBC with four in five saying coverage was
high-quality and captured the mood of the occasion.
BBC Sport Online
Events over the summer
including the World Cup,
Wimbledon, the British
Grand Prix and The
Open drew 77.5 million
unique browsers globallyto the site in June, beating
the previous record of
73.6 million set during theLondon 2012 Olympics.

54



Dylan Thomas Season
To mark the centenary of Dylan Thomas’ birth, the BBC
produced a season of programmes, animations and readings
across TV, radio and online, including a performance ofUnder Milk Wood featuring a host of Welsh stars.
BBC Annual Report and Accounts 2014/15

Corporate achievements
We continued the journey of changing the BBC
to make sure we are more efficient, representative,
fair and innovative.

BBC World Service
The World Service was successfully integrated into
BBC News and its £245 million costs are now paid
from the licence fee.

Out-of-London
For the first time, the majority of BBC staff are basedoutside London, in the nations and regions, meaning that
the Corporation has hit its 12-year target one year early.
Part Two: Strategic report – Delivering our strategy

Savings
Almost £1.6 billion per annum of cumulative
annual savings will have been delivered by
the end of the Charter period.

£1.6 billion
Comic Relief
The charity has now raised a total of over £1 billion
in partnership with the BBC.
Prioritising spend on content
92% of controllable spend is now spent on
content, distribution and related support.

92%
BBC Annual Report and Accounts 2014/15

Digital Trainees
Our Make it Digital Traineeship will offer up to 5,000 young
unemployed people short-term BBC traineeships to help
them boost their digital skills and get a foot on the job ladder.
This is the largest traineeship of its kind in the UK.
55

Strategic report – Delivering our strategy

New faces

New stories, new voices, new images and new ideas are the lifeblood of the BBC.
The freshness and originality of our programmes, and their ability to inspire and delight,
depend on finding new artists, presenters, writers, musicians, actors and athletes
and bringing them to a mass audience. Here are some of the new faces of 2014/15.
Nikki Fox
In June 2014 Nikki Fox
became the newdisability correspondentfor BBC News.

Oxford University Women’s Boat ClubFor the first time, the female crews in the Boat Race werecompeting on the same course, the same day, and the same
BBC TV channel as the men. Oxford won.
Aidan Turner
Aidan’s first lead role
was in the hugely
popular Cornish saga
Poldark.

Carrie Gracie
Carrie Gracie is BBC News’ first editor for China, based in Beijing.
George Ezra
George debuted on the
BBC Introducing stage
at Glastonbury 2013;
his first album Wantedon Voyage reachednumber one in the UKa year later.

Marvin Humes
This former member of the boyband JLS is now hosting
The Voice alongside Emma Willis.

George the Poet
George the Poet was the face of the Radio 1 Hackney
Weekend in 2012 and was nominated for BBC Sound of 2015.
56



Gabriel Prokofiev
The 2014 BBC Proms
saw the world premiereof Gabriel Prokofiev’s
new violin concerto,
based on the opening
year of World War One
and titled 1914.

BBC Annual Report and Accounts 2014/15

Jermaine Jenas
Jermaine retired from
Queen’s Park Rangers
in 2014 to become apundit on Match of the
Day and Radio 5 Live.

Emma Barnett
Emma Barnett is the women’s editor of The Telegraph andpresents 5 Live’s Hit List, a rundown of the top 40 news,
sport, politics and showbiz stories of the week.

Part Two: Strategic report – Delivering our strategy

Maggie Aderin-Pocock
This UCL space scientist took her first regular presenting roleon the The Sky at Night in February 2014, having previously
presented Do We Really Need the Moon? and In Orbit: How
Satellites Rule Our World on BBC Two.
Atul Gawande
Surgeon and writer Atul
Gawande gave last year’s
Reith Lectures, describing
the future and the limitsof medicine.

Sam SmithCambridgeshire singer
Sam Smith was the
BBC Sound of 2014 andperformed at Radio 1’s
Big Weekend in Glasgow
the same year.

Annabelle Davis
Annabelle stars in
top-rated CBBC Drama
The Dumping Ground.

Clara Amfo
Clara began her career with CBBC and then 1Xtra, andbecame the host of The Official Chart on Radio 1 in 2015.
BBC Annual Report and Accounts 2014/15

57

Strategic report – Delivering our strategy

Delivering our strategy in 2014/15

The BBC has a mission to inform, educate and entertain
The BBC has never been rooted in a technology but in an idea:
its mission to inform, educate and entertain. This mission remains
as relevant today as it was when the Corporation was foundedby wireless manufacturers almost a century ago. It was written
into the first Royal Charter in 1927 and has continued to shape
the BBC’s output through the development of television in theforties, the first experiments with colour TV in the fifties, thelaunch of BBC Online in the nineties, and the creation of iPlayer
in the 21st century.

our collective and national life. The BBC produces the only British
website in the UK’s top ten, has over seven million fans discussing
BBC Sport on Facebook and has over 15 million followers on
Twitter for BBC Breaking. It’s where the population of the UK
celebrates together and shares moments of crisis; where theyjoin in debate and argument, where they agree and agree to differ.
The second trend that has been accelerating throughout thisCharter period is the use of aggregators and social media assources of news. As the distinction between fact and rumour
blurs online, there is a greater opportunity and role for the BBCin providing impartial and independent news.

The internet age has created new opportunities
The internet makes new journalistic tools possible – like thefor the BBC to deliver its Reithian mission
Explainers on News Online, or the blogs from the BBC’s expert
For the past 20 years, broadcasting has been in the digital era but,until recently, it was relatively unaffected by the growth of theinternet. In the next 10 years that will change.
As this Annual Report describes, the shifts in audience behaviour
and the media market that were seen in 2014/15 exemplify threeinternet-driven trends that have been developing throughout theCharter period and that bring new opportunities for the BBC to
inform, educate and entertain the UK.
The first of these trends is the fragmentation of the audience andthe proliferation of digital platforms and providers bringing thementertainment and information. People have never had such amazing
choice and access to content, but this increased choice means that
there are fewer places and moments where the UK comes together
in a shared conversation. It is easier to find small communities, butharder for the nation to speak to itself and to the world.
The BBC is the place where the UK can come together; a daily
companion and a vital connection to the rest of the world. It
exists not only to enhance individual lives but also to enhance

BBC iPlayer Original Comedy Short, Funny Valentines:
Music Lovers

58

correspondents – but the Corporation’s journalism will always
rely on reporters on the ground, where it matters. In a world
where trust is at a premium, the BBC guarantees news that istrusted and gets its facts right.

The third trend is the rise of powerful global media companies.
Ten years ago, the BBC and Apple had the same global revenues;
today, Apple is over 20 times bigger. The increasing power ofglobal media players creates a greater need for high-quality
British programming, both to reflect our licence fee payers’ lives
on-screen and to represent the UK to the world. The BBC is
uniquely placed to produce this content, and by doing so it helps
to support the wider UK creative economy, with £2.2 billion of
direct investment a year.
These three trends – the fragmentation of audiences and content
providers, the clamour of competing facts and opinions online, andthe rise of global media providers – present new opportunities
for the BBC to deliver its mission even more effectively, but also
show how critical this mission remains to the cultural andeconomic health of the nation.

Filming BBC One’s BAFTA award-winning drama Happy Valley

BBC Annual Report and Accounts 2014/15

James Nesbitt in BBC One’s The Missing

The BBC has successfully delivered its mission, both in this Charter
period and in this financial year.
The Corporation’s strategy for 2014/15 set out three aims: tobe the best place for creativity, to make our channels even betterand to innovate online.
But this creative success could only happen if the BBC was also
successful in other ways, by saving money, boosting productivity,
meeting its public commitments and stimulating the creative
economy. These operational achievements underpin the creative
excellence that viewers experience across the BBC.

The best place for creativity

Behind these numbers are millions of individual moments when
our audiences have been inspired, informed or amused by BBC
content, across all platforms from TV to mobile and in genres as
varied as drama, news, music and arts.

Part Two: Strategic report – Delivering our strategy

The BBC has fulfilled its mission in 2014/15

Lacey Turner with cast and crew members filming Our GirlWorld-class drama
At the beginning of the year, the BBC set itself the goal ofenhancing the breadth of its drama content and investing in
more high-quality drama on BBC One.
Dramas on BBC One this year included the gritty tour of duty
in Afghanistan depicted in Our Girl; Richard Curtis’ Esio Trot, abeautiful reworking of a Roald Dahl story for Christmas 2014;
the critically acclaimed crime drama Happy Valley; the Cornish
period drama Poldark; and the hauntingly brilliant The Missing.
The quality and range of dramas across all BBC channels meansthat the proportion of the UK population watching BBC drama
landmarks is higher than the proportion of the American
population watching comparable dramas in the United States.

The ambition to become the best place for creativity is aboutchanging what the BBC does for its audience, so the main
measure of whether it has been achieved is the number of people Wolf Hall was the highest rating drama on BBC Two for a decade,that the BBC has reached, the amount of content that they havebut the channel also carried contemporary political drama in
consumed, and whether that content inspired and delighted them. the form of The Honourable Woman; and quirkier shows like
Marvellous, which told the inspirational and incredible story ofSome services have seen declines in consumption in recent years,
Neil Baldwin. Part biography, part fantasy, part musical, this film
highlighting the increased competition for our audience’s timeabout a man with learning difficulties achieved one of the BBC’s
and attention and the need for continued investment, but overall
highest audience appreciation scores of the year.
audience measures have improved across the Charter period.
The BBC now reaches 97% of UK adults every week, and between Impartial, high-quality journalism
2007/08 and 2014/15 overall impressions of the BBC rose fromIn 2014/15 the Corporation aimed to bolster its reputation as
6.6 out of ten to 7.0. Despite far greater media choice, support
the most respected news organisation in the UK and the world,
for the licence fee as a means of funding the BBC has increased
to develop new ways to explore and explain society, and toover the last decade.
increase its global audience.

BBC Annual Report and Accounts 2014/15

59Strategic report – Delivering our strategy

Stewardship of public money

The BBC remains the nation’s most respected guide to what ishappening in the world, with impartiality and trust scores far
higher than those of any other broadcaster. More than 50% of
UK adults name the BBC as the news provider that they would
turn to first for impartial news coverage, compared to just 11%
for the nearest competitor.
BBC News continues to find innovative ways to bring facts andanalysis to its audience, particularly online, where an explosionof information and misinformation has increased the need for atrusted guide. A new app was launched for BBC News in 2014/15,
with the BBC Weather app becoming the fastest-growing BBC
mobile product.

Anne Bulford
Managing Director,
BBC Finance and Operations
I am confident we offered great value from the licence feein 2014/15. The BBC today is leaner and better run.
A key BBC objective for the year was to ‘improve value formoney through a more efficient and open BBC’.
In November a progress review found that since 2007
we have reached cumulative annual savings of £1.25 billion,
putting us on track to deliver almost £1.6 billion per annum
by 2016/17. This has been achieved through property, mostnotably in 2014/15 sales in West London; savings fromtechnology procurement deals; reducing the cost of ourpeople and other initiatives around the BBC.
In February the Select Committee for Culture Media andSport concluded this achievement was commendable given
the small impact on audiences and services. Delivering
Quality First and our property strategy were positively
reviewed by the NAO this year for their efficiency gains.
92% of controllable spend is now spent on content anddistribution and their related support. The remainder goeson the professional support needed to run the BBC. Overall,
we calculate that the BBC has cut the proportion spent on
overheads by almost a third over five years.
We continue to manage budgets within the constraints ofa flat licence fee and the other obligations such as funding
the World Service and broadband rollout. This is achievablebecause Delivering Quality First is now producing £484 million
annual recurring savings. However, the need for scope cuts isincreasing as we enter the programme’s final years.
We have a good track record. With increased competition
and benchmarking, we will identify more opportunities toreduce costs and improve the business. We won’t stoppushing for more efficiency so the licence fee goes into theprogramming and services that people love, but maintaining
the current range is becoming increasingly challenging.

60

In the next Charter period, BBC News will focus on engaging
younger audiences, developing formats and content specificallyfor mobile platforms, and producing more data journalism andanalysis to give audiences the background and context that theyneed to understand a story.
2014/15 was also the year when the World Service was successfully
brought into the BBC News fold and funded from the licence fee
for the first time.
Working as part of a wider BBC News division has helped theWorld Service to find new ways of reaching a global audience.
Listeners who once clustered around short-wave radios can
now be reached individually through social media and collectively
through television. This was the first year in which the World
Service Group reached more people through its TV content than
through its radio broadcasts, and also the first year in which its
English language audience rose above 50 million people per week.
BBC Worldwide’s global channels and services also reach millions
of people across the world, bringing the BBC’s total global weekly
audience to over 308 million.
A leading voice in music and the arts
In music, Brian Wilson, Kylie Minogue, One Direction, Pharrell
Williams and 26 other artists launched the new BBC Music sitewith the extraordinary and beautiful ‘God Only Knows’ trail.
This was part of the Corporation’s commitment to reinforce itsrole as the leading supporter of British music, a commitment thatwas bolstered by the BBC Music Awards in December 2014, theTen Pieces initiative to inspire schoolchildren with classical music
and the launch of the digital music discovery tool Playlister.
The Proms remain a centrepiece of music on BBC Radio, withthis year’s Proms including a focus on Sir Harrison Birtwistle,
Sir Peter Maxwell Davies, William Walton and Richard Strauss,the premiere of the first violin concerto ‘1914’ by Gabriel Prokofievand ‘Requiem Fragments’ by John Tavener and a CBeebies prom
for younger children. More than 100,000 tickets for the live BBC
Proms concerts were sold in the first day of ticket sales.
The BBC also set out to achieve a breakthrough in its confidence,commitment and investment in arts in 2014/15. At the core of thisis a series of creative partnerships, for example, working with the
BBC Annual Report and Accounts 2014/15

British Museum to tell the story of German history through an
exhibition and a Radio 4 series, and with the Royal Shakespeare
Company on the forthcoming Shakespeare season. This year also
saw the launch of BBC Arts as an online hub for arts coverage andthe creation of a new arts slot on Saturday nights on BBC Two.

Creative economy and partnerships

This year also saw the launch of Get Creative, a celebration of
British art, culture and creativity that aims to inspire participationin all forms of art. Get Creative is led by the BBC and the What
Next? arts movement and will promote all forms of creativity
from design to ballet, culminating in a celebratory weekend in
February 2016.
A central role for education
The BBC has committed to launching a project on the scale of
Get Creative every year. The campaign for 2015 is Make it Digital,
which aims to capture the spirit of the BBC Micro in the eighties
and teach the nation to code by giving programmable devices toalmost a million children in the UK, with partners including ARM,
Microsoft, Samsung and Technology Will Save Us.
This will be followed by a campaign to mark the 400th anniversaryof Shakespeare’s death in 2016.

The BBC aimed to improve its channels in 2014/15 by investingin BBC One and BBC Two to make sure that they continue tothrive, by reimagining the way that live events are covered, by
proposing the establishment of BBC One +1 and by launchinga ‘Connected Red Button’ service.
The new technology for covering live events, called BBC Live,has been transformative, combining text, social media and video
to provide an immersive, enthralling experience of the biggest
sports, news and cultural events in the calendar
The proposal for BBC One +1 is currently being considered by
the BBC Trust and is focused on ensuring that our audience getmore access to the programmes that they have already paid for.
Connected Red Button has been successfully launched, under
the name Red Button +, and enables viewers to bring TV, online
and iPlayer together on their main television screens. It improvesaudiences’ experience of our channels by offering them far more
content to enjoy than the original red button service, and at thesame time acts as a test-bed and pilot for a future in which agreater proportion of television will be delivered via the internet.
These technological innovations build on the foundations
provided by Freeview, which helped to drive digital switchoverearlier in the Charter period; and YouView, a free-to-air internet
television service created by the BBC and six other broadcasters
and telecommunications operators.

The creative industries are a major success story for the UK,
generating almost £77 billion Gross Value Added, £17 billion
service exports and 1.7 million jobs per year and growing
faster than the rest of the UK economy.
Part Two: Strategic report – Delivering our strategy

Making our channels even better

Tim Davie
CEO, BBC Worldwide
and Director, Global

The BBC plays a key role in supporting and partnering with
the UK’s creative industries and helps to create the conditions– in terms of investment, competition, skills and training, andinnovation – for a high-growth creative economy.
The BBC directly invested c.£2.2 billion in the UK’s creative
industries in 2013/14, through investment in intellectual
property, purchases from 2,700 creative suppliers andspending on employment and skills. To highlight just one,
the BBC Make it Digital Traineeship will help 5,000 young
unemployed people boost their digital skills.
The BBC’s activity also results in positive spillover effects,
generated from nurturing of creative talent, training anddevolution of significant activities outside London and theSouth East. MediaCityUK in Salford alone – with around200 firms and 4,400 jobs – has become one of the largest
media clusters in Europe.
BBC Worldwide acts as a showcase for the UK’s creative
industries overseas, as the largest TV programme distributor
outside the US major studios, operator of BBC channels inover 120 territories and by building the BBC and British
creativity brands around the world.
BBC Worldwide represents over 250 British indies, returned£113 million to the independent production sector in 2014/15
and supports a number of creative industries export
initiatives such at UKTI’s Sector Advisory Group, GREAT
Festivals and the Technology Innovators Forum (TIF-In).

On radio, 6 Music became the first digital-only station to reachover two million listeners a week.

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Strategic report – Delivering our strategy

Getting you the best from the BBC

Innovating online
The BBC has always approached technological change withoutfear, helping the sector to innovate with advances like colour
television, Ceefax and news online. This has continued throughout
this Charter period and in 2014/15.
The revolutionary technology of the current Charter period
was BBC iPlayer, which has had a huge influence on the growthand normalisation of online TV viewing. In January 2015, a
record-breaking 264 million TV iPlayer requests were made.

James Purnell
Director of Strategy
and Digital

In 2014/15 the BBC set itself the objective of improving iPlayer bymoving from seven to 30 days catch up and launching a Radio 1
video channel, and creating a BBC Store, allowing viewers to buy
and keep digital programmes they love. These objectives have all
been achieved, with BBC Store due to launch later this year.

In 2014, we laid the foundations for a more personal BBC
based on asking audiences to sign into our services. This
will allow us to take a profound step towards a BBC thatorganises itself around its audience as individuals.

The BBC has also introduced a new digital live experience acrossits websites that combines the best video, audio, text and statistics
with the BBC’s world-class digital journalism, bringing people
together around live events – from the World Cup to the
Commonwealth Games and Scottish Referendum.

In the next financial year we will start this journey by delivering
new services that place audiences firmly at the centre ofa BBC experience. We have already started to rollout theability to rate programmes, have iPlayer favourites follow
you across all your devices and get personalised content
recommendations in the BBC homepage. Later this year, we’ll
add more personalised recommendations in areas like news
and iPlayer. We’ll also start to offer audiences personalised
notifications – for example to notify them when theirfavourite programmes are due to end on iPlayer or a newseries is due to start. Over time this will extend to include
sports matches, interviews, road traffic updates and breaking
news. These new features will all be available wherever ouraudiences are, on whatever device they are using.
Beyond these early developments, our online teams are
already using these new capabilities to design imaginative
new versions of our key products for learners, music fansand children. These will allow our audiences to take personal
journeys to gain a new skill, discover new music and learn
whilst being entertained. The insight that we gain from acloser relationship with audiences will also help our creative
teams commission and make even better content for all who
use the BBC.
And all of this is building towards our vision for a truly
personalised BBC that will allow us to reinvent public service
broadcasting itself in a way that not only helps audiences
discover brilliant content, but links them with otherinstitutions, helps them become more active, or taps into
their own creativity.

62The next stage in the BBC’s online transformation will be tochange how our audiences watch, listen to and use content fromacross the BBC, by introducing new features that will recommend
programmes and services, and personalise and tailor the BBC.
This year, the BBC has already put in place a heart icon, whichallows people to highlight and share the content that they love.
In 2015/16 many more features will launch, revolutionising online
broadcasting and reshaping the BBC’s programming around theneeds and interests of its audience.

The BBC has cut costs and increased efficiency
The creative successes and online innovations of 2014/15, and theentire Charter period, have been achieved at the same time as
cuts in costs and increases in productivity.
Around £1.6 billion per annum of cumulative annual savings will
have been delivered by the end of the Charter, and cuts inoverheads mean that 92% of controllable spend is now spent on
content and distribution and their related support. At the sametime the BBC has absorbed some major additional costs, inparticular the World Service, broadband ring fence and S4C.
As well as cutting costs and taking on additional obligations, theBBC continually strives to be as efficient as possible in all areas of
its work. This is done by ensuring that controllable spend is either
subject to market competition or compared to the market andinternal benchmarks. Over 70% of BBC costs are already treatedin this way – more than for other public sector organisations – andthe BBC intends to go even further, reaching over 85% of spend
by the end of this Charter in 2017 and continuing to increase into
the next Charter period.
BBC Annual Report and Accounts 2014/15

Outside these efficiency programmes, most of the BBC’s savings
have been one-off changes related to people, property or
procurement. This means that further cuts in real-term funding
might be more likely to have an impact on the consumption of
BBC services.

The BBC as witness to the nation’s story

Cost of colour licence fee £Cost of licence fee
Real-term value of the licence fee

James Harding
Director of News
The BBC has told the story of British life, home and abroad,for almost a century. If it happened and it mattered, the BBC
was there to tell the tale.

We have been able to maintain this range of services and content
in recent years, even though the funding available for the BBC’s
UK Public Services will be 26% lower in real terms by 2016/17 thanit otherwise would have been and the proportion of households
owning a television has declined.
Productivity has increased in terms of the number of services, andin spite of hugely increased competition from new platforms andproviders, the time that the average person spends with the BBC
remains at the same high level today as it was 20 years ago.
Pan-BBC time per user per week

When kings have died or princes and princesses have beenborn, war has been declared or peace proclaimed, the British
public has heard about it first on the BBC. Governments
form and dissolve under the BBC’s impartial eye.

Part Two: Strategic report – Delivering our strategy

Productivity has increased
BBC productivity has increased enormously. Twenty years ago
the licence fee cost £147.44 in current prices and the BBC had two
network television channels and five radio stations, in addition to
local and nations output. Now the licence fee costs slightly less –£145.50 – and the BBC offers nine television channels, 11 radio
stations, local and nations output, and a wealth of online andmobile services, including iPlayer and bbc.co.uk, as well as a rangeof additional obligations.

And where once families gathered around the wireless, then
the television, now they can also receive news on a growing
range of mobile devices. At home, at work, or on the move,people can connect to British history as it unfolds.
The story that the BBC began telling in 1922 has continued
into 2015. The BBC marked, as no one else could, thehundredth anniversary of the start of the First World War,culminating in dazzling coverage of the moat of poppies at
the Tower of London.
If the BBC was there when the people of the United Kingdom
came together, it was also there when they were divided.
The referendum on Scottish independence polarised andenergised political debate, and the BBC’s coverage of it waswatched by more than half of the population of Scotland.
Beyond national borders, the need for clear, impartial
reporting of events grows ever greater amid the dissonanceand clamour of an increasingly connected world. The BBC
World Service provides a voice, broadcast in 28 languages,
which can be heard by those who have no other reliable
source of information. For the distressed, the oppressedor merely the curious, that voice can be a precious gift.
As history unfolds, wherever it leads, the BBC will be there
to tell the real story.

BBC Annual Report and Accounts 2014/15

63Strategic report – Delivering our strategy

The BBC’s role in society

Public commitments have been fulfilled
As well as delivering strong audience performance and cutting
costs, the BBC also met all of the public commitments made in
the last Charter. Particular successes in the Charter period weredigital switchover, the use of a ‘Window of Creative Competition’to increase access for independent producers in television, thelaunch of iPlayer, the establishment of BBC Alba, the BBC’s
support for DAB and Freesat, and the creation of BBC Northin Salford.
BBC North was audited by the National Audit Office in 2013and given a clean bill of health, and work has now started on thecreation of a creative hub and centre of excellence for training
in Birmingham.

Danny Cohen
Director of Television
Broadcasting has enormous power, not just to entertainand delight people but also to change their lives.
This year the BBC used its ability to speak to the whole UK
to raise money for Comic Relief and for Children in Need.
Red Nose Day in March took the total amount of money
raised by Comic Relief and the BBC to over a billion pounds
and Children in Need raised more than £32 million on
the night of the appeal, the highest total since the telethon
began in 1980.
To retain its ability to grip and inspire the UK audience, theBBC needs to continue to get the best talent and the best
ideas, wherever they are to be found.
Nurturing entry-level talent is the main aim of the BBC’s
outreach activity, from long-running initiatives like theWritersroom to annual events like School Report, whenthe BBC opens its doors to 30,000 schoolchildren, teaches
them how news is made, and lets them produce andbroadcast their own reports.
This year we launched a new diversity access scheme,
providing 20 fully paid traineeships for ethnic minority
graduates across all genres of programme making, andalso created a month of events in Birmingham around the
1Xtra Live festival to give young people the practical skills
to build on their talent as DJs, singers and dancers.

The BBC has supported the UK creative economy
Producing high-quality British content is not just good for theBBC’s audience. It also helps to represent the UK to the world,reflect and strengthen British culture, and support thecreative economy.
The BBC has been the cornerstone of the public service
broadcasting system and an engine of investment in British
content, critical to keeping the UK a world-class creative nation.
In addition to direct investment in the creative industries the
BBC creates jobs in other organisations – for example in its
2,700 creative suppliers – and provides a pipeline of talent to fillthem through its training, apprenticeship and outreach schemes.
Nurturing entry-level talent is an important part of this,and in 2014/15 all of this activity was brought into the BBC
Academy. Grassroots initiatives like the Writersroom and
BBC Introducing continue to flourish, and this year the BBC
announced a scheme to create up to 5,000 digital traineeships
for unemployed young people.
The British media sector has historically been concentrated in
London, but the BBC has been uniquely successful in devolving
funding and production to other parts of the UK. MediaCityUK
in Salford hosts over 3,000 BBC staff and as a result of this has
become the biggest media cluster outside London, with around
200 other firms employing a further 4,400 people.

This work doesn’t just help the BBC to find new on, andoff-screen talent; it also helps the Corporation to understandand reflect its rapidly changing audience so that we cancontinue to inform, educate and entertain the whole UK.

64

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BBC Annual Report and Accounts 2014/15

Great content and a trusted guide,
for everyone

Changing world

At the beginning of the year the BBC said it would aim to be
the best place for creativity, make its channels even better, andinnovate online. Individual BBC television channels and radio
stations face greater competition for audiences, so some of them
have seen declines in consumption this year, as is the case acrossthe television and radio industries. However, the BBC’s continued
strong performance on total reach and the public’s overall opinionof the BBC demonstrate that these objectives have been met.
This creative success is the real measure of the BBC’s performancein 2014/15, as ultimately what matters is what viewers see on air.
But this is underpinned by operational achievements that havehelped to prepare the BBC for the next Charter period by cutting
costs, increasing efficiency and supporting the creativity of the UK.

The first of these is great content. The value of the BBC rests onwhat it does; on creating brilliant, world-class programming that
informs, educates, entertains and delights its audience. Creativity
will remain the cornerstone of the BBC, in everything from a
drama on BBC One to a mobile app or a symphony orchestra.
The second is acting as a trusted guide. The BBC is the mostimpartial and most shared news provider. But it is not just in news
where trust matters. The internet makes it easier than ever toexplore new topics and interests, but audiences need a trusted
place to start, a place to inspire them and nurture their interest.
The BBC will provide this through its programming on science,
health, art, cooking, sport, history, music and a wealth of othertopics, as well as through major annual campaigns like Get Creativeand Make it Digital.
All viewers and listeners deserve the best content, and in a
democracy all citizens need a guide that they can trust. For thisreason the third focus for the next Charter period is universality.
The BBC welcomes the debate around the future of the licence
fee and the support that has been shown for modernising it
so that it remains truly universal even as ownership of television
sets declines.

BBC Annual Report and Accounts 2014/15

Audience expectations are changing dramatically as digitaltechnology offers a wide range of new media experiences.
Responding to this change – and staying at the forefront ofdigital innovation – has never been more important.

Part Two: Strategic report – Delivering our strategy

In spite of these creative and operational successes, the BBC
needs to change. The next Charter will be a challenging periodof transition, in which broadcasting will move towards aninternet‑first future. The BBC can give audiences even more inthat future, but only if it continues to be a pioneer and find new
ways of delivering its mission. To do this the BBC will focus on
three things in the next Charter period.

Helen Boaden
Director of RadioThat’s why we’ve created online destinations for BBC Musicand BBC Arts, enhanced iPlayer with 30-day catch-up andlaunched a new weather app that became our fastest growing
BBC app ever. We offered the Proms in HD Sound online andcelebrated a billion downloads of our podcasts.
Change is particularly acute amongst young audiences.
Teenagers are still listening to services like Radio 1 in huge
numbers – the station reaches over a third of the country’s
16-24-year-olds every week – but on new devices, and theyalso expect video and social media to be part of it. So weoffer Radio 1 on Facebook, on YouTube – where the station
has become the most successful radio station globally – andthrough the newly launched iPlayer video channel.
These digital-first behaviours are why we plan to move
BBC Three online next year, creating new kinds ofcontent – especially short, shareable films – which fit withthe powerful documentaries and comedies we know
BBC Three audiences love.
Plans are also under way for a much more personalised
BBC experience. Every audience member will be able tosign in online and immediately have the services they wantat their fingertips, receive a range of recommendations toother content and be able to play back seamlessly acrosstheir mobile, PC or tablet.

65

Strategic report – Delivering our strategy

Audience reachThe big choice

Percentage of UK adults who use BBC TV, radio, or online each week

The BBC is loved by millions of people, in millions of different
ways. Every day, viewers are enthralled by the BBC’s dramas,families are brought together around its comedies, fans arethrilled by its sports coverage, teenagers dance to its music,
and children are lulled to sleep by its bedtime stories.
At £2.80 a week, it is great value for money.

97%
2013/14: 96%

The BBC’s requirement to serve all audiences is particularly
important as the population becomes more diverse. A broadcaster
free from commercial constraint is better able to serve all of theaudiences that make up the UK, regardless of where they are orwhat they earn.

The BBC is one of the great things about Britain. It’s Britain’s
voice in the world. It’s the biggest single investor in ourcreative economy. It helps connect the family of nations
that is the United Kingdom.

Serving everyone also requires the BBC to continue to changewith its audience. The BBC reaches more young people than any
other broadcaster, but their media behaviour is changing fasterthan that of older audiences, particularly online. The Corporationneeds to anticipate these changes by creating new forms ofcontent and bringing them to young people in new ways.

But as we approach the BBC’s hundredth birthday in 2022,
we face the biggest choice about its future for a generation.
The media we use is changing dramatically and our competition
is global. The BBC will carry on making TV and radio but mustalso prepare the way for a time where everything is delivered
through the internet. The BBC has been a pioneer andinnovator in the past but now needs to be far more radical
than it has ever been.

The reinvention of BBC Three as the UK’s first online channel
will be central to this (if approved) and will act as a template for
BBC services in a future where more television and radio content
is accessed through the internet.

To make that transition, the BBC will need support andinvestment. And if we make the right choices about its
future, the BBC could have as much impact in its second
century as in its first.

Providing great content and a trusted guide, for everyone, is theBBC’s mission for the internet age. It is an ambitious aim and there
is no guarantee of success, but if this mission can be delivered the
Corporation would become a personalised, internet-first service,while remaining a creative beacon to the UK and the world.
The BBC will celebrate its hundredth birthday during the nextCharter, but will still have its best days ahead of it.

Camera overlooking Wimbledon tennis courts

66

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BBC Annual Report and Accounts 2014/15

Part Two: Strategic report – Performance

Performance
How we performed against ourobjectives by content area, genre,
channel or network

Peter Capaldi filming BBC One’s Doctor Who

BBC Annual Report and Accounts 2014/15

67

Strategic report – Performance

Television

BBC Television had a strong year in a challenging
environment for broadcasters, in which audience
reach and time spent with all the major public service
portfolios once again declined.
The BBC’s channels were no different, and as it did forthe industry as a whole, our reach fell quicker among
underserved audiences – particularly young and blackand minority ethnic viewers.
Our overall audience share (including our News andChildren’s channels) increased slightly from 32.8% to 32.9%.
This was driven by the success of BBC One, which grew
0.7% points to enjoy an all-hours share of 21.9%. Shareto BBC Two and BBC Three declined slightly – the former
principally because the previous year included the WinterOlympics. BBC Four remained stable.

EastEnders’ 30th anniversary celebrations
reached over

21 million

viewers prompting over one million tweets

There were many occasions across the year where the UK
came together through BBC One – more people watched theWorld Cup on the BBC than on any other channel, the final of
The Great British Bake Off was the most viewed non-sporting
event of the year with 13.5 million viewers, and the New Year’s
Fireworks were watched by 12.5 million. In February, EastEnders
celebrated its 30th anniversary in style, with the week of special
programmes reaching over 21 million viewers and prompting
over one million tweets over the course of the night when Lucy
Beale’s killer was revealed – the highest ever for a UK soap.

Drama performed strongly. Wolf Hall became BBC Two’s highest
rating original drama series in over a decade, and the likes ofHappy Valley and The Missing drew critical acclaim as well as
impressive viewing figures. A number of important contemporary
factual pieces including Baby P: The Untold Story, Murdered By My
Boyfriend and India’s Daughter sat alongside Life Story and The First
Georgians. Titles such as CBeebies’ Peter Pan Christmas show,
Topsy and Tim and Wolfblood continued our success in delivering
British-made content to children. Strictly Come Dancing and
The Voice UK welcomed new talent, and our rich comedy offering
ranged from Mrs Brown’s Boys to Detectorists.

BAFTA award-winner Georgina Campbell
in Murdered By My Boyfriend

Mackenzie Crook and Toby Jones in BBC Four’s BAFTA
award-winning comedy Detectorists

68

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BBC Annual Report and Accounts 2014/15

Television performance by service
Content (£m)
We spent a totalof £1,748.7 million
on these services
last year

Reach (%)
UK population
who use theservice eachweekTime spent
watching achannel eachweek (h:m)
Length of time theaverage viewer
spent each weekwith the channel

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users

BBC One is our flagship service
and the UK’s most popular
television channel. It unites
and inspires the nation withhigh-quality programmes
across a range of genres that
includes news and current
affairs, drama, comedy,
entertainment and factual.

£1,110.0m 73.3%

07:39

80.4

6.5p

BBC Two is a mixed-genre
channel with programmesof depth and substance. It
includes the greatest amountand range of knowledgebuilding programming on
the BBC, complemented by
distinctive comedy, drama
and arts programming.

£404.8m 47.3%
2013/14: £400.0m

2013/14: 50.3%

03:08

82.2

9.0p

£82.0m2013/14: £81.0m

18.4%*

2013/14: 20.5%

01:49

82.8

8.1p

£46.0m

13.6%

01:42

2013/14: 01:43

84.0

6.6p

2013/14: 14.0%£72.2m

4.9%†

02:34

n/a

18.8p

£27.7m

8.2%‡

04:04

n/a

2.7p

£6.0m

16.2%§

01:56

n/a

8.3p

BBC Three is constantly
innovating to provoke
thought and to entertain
audiences from 16-year-olds
to 30-somethings withoriginal comedy, drama andfactual programming thatcelebrates new British talent.

The CBBC channel offers
a distinctive mixed schedule for6- to 12-year-olds, with mainly
UK programmes served ina stimulating, creative andenjoyable environment.
CBeebies provides a mixof high-quality, mostly
UK-produced, programmes
designed to encourage learning
through play in a consistently
safe environment for children
under six.
BBC ALBA offers, to Gaelic
speakers and learners, adistinctive range of originatedprogramming that reflects
and supports Gaelic culture,
identity and heritage.

2013/14: £48.9m

2013/14: £76.1m

2013/14: £28.7m

2013/14: £5.2m

2013/14: 74.9%

2013/14: 5.7%

2013/14: 8.3%

2013/14: 17.6%

2013/14: 07:30

2013/14: 03:13

2013/14: 01:55

2013/14: 02:54

2013/14: 03:59

2013/14: 01:56

2013/14: 81.5

2013/14: 83.9

2013/14: 83.0

2013/14: 85.1

2013/14: n/a

2013/14: n/a

2013/14: n/a

2013/14: 6.0p

2013/14: 8.2p

2013/14: 6.9p

Part Two: Strategic report – Performance

BBC Four aims to be British
television’s most intellectuallyand culturally enriching
channel, offering an ambitious
range of UK and internationalarts, music, culture and factual
programmes.

2013/14: £1,024m

2013/14: 6.7p

2013/14: 15.4p

2013/14: 2.9p

2013/14: 6.4p

Reach definition: 15+ minutes consecutive for all channels and services and audiences aged 4+ (TV).
Sources: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable); Appreciation Index: Pulse panel of 20,000 UK adults 16+ by GfK
n/a: data does not currently exist for this measure* BBC Three: among its target group of 16-34-year-olds reach was 24.0% and time spent was 2:18
† CBBC: among its target audience of 6-12-year-olds reach was 22.8% and time spent per viewer was 2:58 (based on 15+ min reach). Based on 3+ minute reach, reach was 27.6% of 6-12-year-olds
and time spent per viewer was 2:27
‡ CBeebies: among its target audience of 0-6-year-olds (measured as children aged 4-6 and housewives with children aged 0-3) reach was 40.0% and time spent was 4:33 (based on 15+ minreach). Based on 3+ minute reach, reach was 45.4% of 0-6-year-olds and time spent per viewer was 4:01
§ Source: TNS Scottish Opinion Survey. Base: All aged 16+ in Scotland. Please note no data was available for Nov 14 due to survey issues at TNS.
Arrows denote whether there has been a change of +/-1.1-2.4% or +/-2.5% from the previous year’s AI. AIs have dipped slightly for all major TV broadcasters partly owing to improved measurement
N.B. BARB data measures TV set viewing only at present, meaning that iPlayer viewing is not included in any of the above figures. iPlayer viewing is growing, especially for young-skewed services
such as CBBC

BBC Annual Report and Accounts 2014/15

69

Strategic report – PerformanceRadio

BBC Radio continued to reach large numbers whovalued its programmes, but share of listening and total
hours fell in the face of growing digital competition anda consolidated commercial radio sector.
We have responded to shifts in audience behaviour by
driving digital innovation and ensuring we offer high-quality,
distinctive content.
Radio 1 launched a video channel in iPlayer and took its Big
Weekend – with the Radio 1 Academy – to Glasgow, while 1Xtra
Live came from Birmingham. The stations remained focused on
young audiences, whether celebrating Teen Heroes or tacklingyouth anxiety in documentaries like Jameela Jamil’s The Fear.
Radio 2 offered an unrivalled breadth of music including the Folk
Awards, Proms in the Park and a country music ‘pop-up’ DAB
station. The Radio 2 Book Club celebrated the written word
across the schedule, whilst Jeremy Vine invited contributors toconsider what makes us human.
Alan Davey joined Radio 3 as Controller in January. The station
celebrated International Women’s Day by focusing on femalecomposers and making an ongoing commitment to representing
their work. Earlier in the year the station offered a season on
18th-century music and retold Boccaccio in Decameron Nights.
It also broadcast in surround sound for the first time during the
BBC Proms, in a season that showcased global orchestras andwas attended by 300,000 people, including 33,000 newcomers.

Ten Pieces took classical music to more than

1.5 million

On Radio 4, Dr Atul Gawande’s Reith Lectures examined thefuture of medicine, while Neil MacGregor explored 600 years ofGerman history. The station offered ten hours of Tolstoy in War
and Peace on New Year’s Day this year, which was well received
by the audience. The network reached a record 19.6 million
domestic monthly downloads of its podcasts during March, with
The Archers daily podcast the most popular individual programme.
Radio 5 live saw a record share of its news and sport output on
digital platforms, with its new short-form content now generatingover a million monthly hits. In the past year, BBC Radio 5 live and5 live Sports Extra covered 51 different sports, while
documentaries on 5 live have included specials on disability
and relationships, gaming and loneliness.
6 Music reached the milestone of two million listeners and took the
6 Music Festival to Tyneside, while the Asian Network broadcast
the London Mela and discussion with Amitabh Bachchan.
The launch of BBC Music was marked with the inaugural BBC
Music Awards from Earls Court and Ten Pieces, which took classicalmusic to more than 1.5 million schoolchildren across the UK.
This performance was achieved as the division delivered
significant savings through a major restructuring programme.
In an era of continuous change and digital disruption, BBC Radio
still reaches two thirds of the population every week and retains
a unique role in British cultural life.

schoolchildren across the UK

John Hurt stars in Radio 4’s War And Peace70



BBC Asian Network presenter Noreen Khan

BBC Annual Report and Accounts 2014/15

Radio performance by service

BBC Radio 1 broadcasts a
distinctive mix of new musicand entertainment for
15- to 29-year-olds as wellas providing tailored news,
documentaries and advice
campaigns for young adults.
BBC 1Xtra plays the best incontemporary black music,
with a strong emphasis ondelivering high-quality live
music and supporting newartists.
BBC Radio 2 broadcasts a
unique mix of music and speechprogrammes covering a diversemix of live pop and rock,comedy, documentaries andreligious output, as well as
bringing social action campaigns
to over 14 million listeners.

BBC Radio 4 is a mixed-speechradio station, offering in-depth
news and current affairs anda wide range of other speechprogrammes including drama,
readings, comedy, factual andmagazine programmes.
Originally launched in 2002
as BBC 7, the station was
relaunched in April 2011 as BBC
Radio 4 extra. The digital-only
network is the principal outlet
for the BBC’s archive of speechentertainment, including
comedy, drama and readings.
BBC Radio 5 live broadcasts
continuous news and live
sports coverage, bringing major
news stories and sports events
to its listeners as they happen,
and providing context throughwide-ranging analysis anddiscussion.
BBC Radio 5 live sports extra
brings a greater choice of live
action to sports fans byextending live coverage ofvarious sporting events.

Reach (%)
UK population
who use theservice eachweekTime spent
listening to aservice eachweek (h:m)
Length of time theaverage listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users£40.5m

19.4%*

06:37

77.3

1.1p

£6.2m

1.9%†

05:11

79.2

2.3p

£46.2m

28.4%‡

11:49

81.4

0.5p

£38.4m

3.7%

05:49

2013/14: 06:08

82.1

6.4p

2013/14: 3.8%

£87.8m

20.1%

11:30

80.4

1.4p

£3.9m

3.3%

05:47

77.1

0.7p

£49.1m

10.9%

06:35

2013/14: 06:47

78.3

2.5p

2013/14: 11.6%

1.9%

03:31

83.0

1.3p

2013/14: £40.2m

2013/14: £5.6m

2013/14: £47.8m

2013/14: £40.8m

2013/14: £91.8m

2013/14: £4.1m

2013/14: £49.2m£2.5m

2013/14: £2.4m

BBC Annual Report and Accounts 2014/15

2013/14: 20.3%

2013/14: 2.1%

2013/14: 28.9%

2013/14: 20.8%

2013/14: 3.1%

2013/14: 1.9%

2013/14: 06:23

2013/14: 04:49

2013/14: 11:42

2013/14: 11:26

2013/14: 06:11

2013/14: 03:59

2013/14: 75.2

2013/14: 78.1

2013/14: 80.9

2013/14: 81.9

2013/14: 81.3

2013/14: 79.9

2013/14: 77.4

2013/14: 83.8

2013/14: 1.1p

2013/14: 2.0p

2013/14: 0.5p

2013/14: 6.3p
Part Two: Strategic report – Performance

BBC Radio 3 centres onclassical music, around which
it provides a broad spectrumof jazz, world music, arts
programmes, religion anddrama. There is a strongemphasis on musicalperformance across the UK.

Content (£m)
We spent a totalof £288.8 million
on these services
last year

2013/14: 1.4p

2013/14: 0.8p

2013/14: 2.3p

2013/14: 1.2p

71Strategic report – PerformanceRadio performance by service

BBC 6 Music is a digital radio
station that entertains loversof popular music with a service
that celebrates the alternative
spirit of popular music fromthe 60s to the present day,complemented by music news
and documentaries.
BBC Asian Network offers
speech and music appealing
to British Asians, with a focus
on news and current affairs.
It broadcasts mainly in English,
but does offer some programmes
in other languages.

Content (£m)
We spent a totalof £288.8 million
on these services
last year

Reach (%)
UK population
who use theservice eachweekTime spent
listening to aservice eachweek (h:m)
Length of time theaverage listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users

£8.0m

3.8%

08:38

82.5

0.9p

£6.2m

1.1%§

06:29

74.4

3.1p

2013/14: £7.9m

2013/14: £6.6m

2013/14: 3.5%

2013/14: 1.1%

2013/14: 08:54

2013/14: 06:21

2013/14: 82.3

2013/14: 71.3

2013/14: 0.9p

2013/14: 3.4p

Reach definition: 15+ minutes for all stations and audiences aged 15+
Sources: RAJAR (Radio reach and time spent). Appreciation Index: Pulse panel of 20,000 UK adults 16+ by GfK
Excludes programme ‘Coming up on 5 live Sports Extra’* Radio 1: among its target group of 15-29-year-olds reach was 37.5% and time spent was 06:34† 1Xtra: among 15-24-year-olds reach was 6.2% and time spent was 04:12‡ Radio 2: among its target group of 35+-year-olds reach was 34.7% and time spent was 12:50§ Asian Network: among its target group of British Asians under 35 reach was 14.8% and time spent was 5:07
Arrows denote whether there has been a change of +/-1.1-2.4% or +/-2.5% from the previous year’s AI

72

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BBC Annual Report and Accounts 2014/15

News
BBC News reported on a year of fracturing forces and unifying
events, from complex foreign conflicts to the Tower of London
poppies, marking the centenary of World War One.
BBC News remained the UK’s most important news provider,reaching over 80% of UK adults weekly on all platforms andservices, and 283 million people worldwide. We remain by far
the most trusted source of news in the UK. We continue to
do our best to earn and repay that trust through impartial
reporting and analysis.
Each week, 32 million UK adults watched BBC News on
television, and over 27 million unique browsers in the UK went
to BBC News online each week in the first three months of2015 (more than 65 million worldwide). In the week of the‘Charlie Hebdo’ attacks, a then-record 70.7 million uniquebrowsers came to BBC News online sites and apps globally(just under 30 million in the UK).
While radio reach fell from record levels in 2013, more thanhalf of UK adults still came to BBC Network radio news andcurrent affairs each week in the last quarter of 2014.

We also reported on child sexual exploitation in Rotherham
and at Knowl View children’s home in Rochdale, and on thedeath of teacher Ann Maguire, stabbed at a Leeds school.

Over

27 million
unique browsers in the UK went to
BBC News online each week in thefirst three months of 2015

Part Two: Strategic report – Performance

BBC News continued to bring the world to the UK and the UK
to the world, supported by the integration of the World Service
into BBC News Group this year. In Iraq and Syria we tracked
the rise of the so-called Islamic State, the fate of hostages andthe desperate plight of the Yazidis. Paul Wood came under firewith the Kurdish Peshmerga in Iraq. Jeremy Bowen secured
an exclusive interview with President Assad. Global healthcorrespondents Tulip Mazumdar and Andrew Harding produced
powerful reports on the Ebola epidemic in West Africa. We
reported from both sides of the conflict in Gaza and Ukraine,and the shooting down of Malaysian airliner MH-17.

At home, we followed the course of the Scottish referendum,
from multimedia debates on the News Channel to the results
programme ‘Scotland Decides’ which broadcast continued live
coverage from Glasgow. For current affairs, Robert Peston
examined whether an independent Scotland would be richer orpoorer, and Brian Taylor led us through the daily developments.
In May we covered the local and European elections, and therise of UKIP. Investigations into HSBC, Colin Norris andMazher Mahmood underlined the BBC’s commitment toinvestigative journalism.

Tulip Mazumdar reports from an Ebola virus zone in West Africa

BBC Annual Report and Accounts 2014/15

73Strategic report – Performance

News performance by service

The BBC News Channel
is a 24‑hour impartial andindependent news service
offering breaking news, analysis
and insight. It provides fastand comprehensive coverageof local, UK and international
events as they unfold.

PARLIAMENT

BBC Parliament is the UK’s
only channel dedicated topolitics. It shows debates
and committees from
Westminster, Holyrood,
Stormont, Cardiff Bay andStrasbourg as well as politicalprogrammes from acrossthe UK.

Content (£m)
We spent a totalof £47.9 million
on content forthese services
last year

Reach (%)
UK population
who use theservice eachweekTime spent
watching or
listening to aservice each week(h:m) Length oftime the average
viewer or listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users£46.2m

10.2%*

02:34

n/a

5.8p

£1.7m

0.5%

01:46

n/a

6.3p

2013/14: £48.7m

2013/14: £1.7m

2013/14: 11.2%*

2013/14: 0.5%

2013/14: 02:33

2013/14: 01:50

2013/14: n/a

2013/14: n/a

2013/14: 5.6p

2013/14: 7.3p

Reach definition: 15+ minutes for all channels and services and for audiences aged 4+ (TV)
Source: BARB (reach and time spent)n/a Data does not currently exist for this measure* Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 15.2% and 1.2% respectively (16.9% and 1.3% among 16+ population)

Global performance
The BBC World Service Group is the global division of BBC
News and includes the World Service, World News, bbc.com andMedia Action. BBC World Service is an international multimedia
broadcaster, delivering a wide range of language and regional
services on radio, TV, online and via mobile. BBC World NewsWORLDSERVICE
GROUP

Audience by service (m)World Service Group (Total Global News audience)
World Service
WS TV
WS Radio
WS Online
World News
bbc.comand bbc.com, the BBC’s commercially funded international
24-hour news and information platforms, are owned andoperated by BBC Global News Ltd, a member of the BBC’scommercial group of companies. BBC Media Action is the BBC’sinternational development charity. It uses media and communication
to inform, connect and empower people around the world.

2014/15

2013/14

Year on yearchange (%)

282.6
209.8
74.2
131.6
22.0
84.8
32.3

265.3
191.4
58.7
127.8
18.8
75.8
27.7

6.5
9.6
26.4
3.0
17.0
11.9
16.4

Source: BBC Global Audience Measure (GAM). The GAM is a snapshot of the BBC’s global news weekly audience using the latest data available as of May 2015, covering 245 countries
and territories. Data is compiled from a combination of market surveys, syndicated audience ratings data and web analytics. UK domestic news is excluded from the calculation.
The 2014/15 numbers have included social media (Facebook and YouTube) for the first time, in addition to TV, Radio and Online

74

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BBC Annual Report and Accounts 2014/15

Digital
2014/15 was the year the BBC brought the UK
together, not just online but increasingly on
mobile phones and tablets.
Throughout the year, tablet and mobile combined accounted
for most of the visits to BBC online in any given period andwe successfully refreshed our News, Travel, iPlayer, CBBC
and CBeebies websites so that their new responsive designs
provide a consistent experience across all devices. In March,
BBC News achieved a then-record average weekly reach of
28.4 million browsers.

video channel and our first partner channel, S4C. Audiences haveendorsed these changes: the iPlayer app has been downloaded
30 million times and in January, 2015 iPlayer enjoyed its best monthon record with 343 million requests. In the following month, inthe week of its 30th anniversary, episodes of EastEnders wererequested 8.5 million times.

To capitalise on major national events – including the World Cup,Commonwealth Games, Glastonbury and Edinburgh Festival –we continued to develop BBC Live, making our coverage moreinteractive, social and relevant by blending video, audio, text,
data and social features across all screens.

The year also saw the start of our myBBC programme.
This more personalised BBC began with the relaunch ofNews app’s ‘my News’ section, allowing users to follow updates
on over 42,000 topics. Sport introduced personalised alerts for
football, cricket and Formula 1. Over one million people areusing this service already.

Meanwhile, iPlayer extended the catch-up window from sevento 30 days. We offered more exclusive content including Adam
Curtis’ Bitter Lake and introduced new channels including Radio 1

Finally, we launched a new space where we can test new ideas,
more quickly. BBC Taster was launched to critical and user acclaimin early 2015. Users are invited to try, rate and share the concepts.
Reach (%)
UK population
who use theservice eachweekTime spent
with each service
each week (h:m)
Length of time
the average user
spent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser reached per
week (p)How much it
costs to deliver
each service toindividual users£124.6m

63.6%

n/a

n/a

5.9p

Performance by service
BBC Online comprises theBBC’s portfolio of online
products on desktop, TV,
mobile and tablet, including
news, sport and weather;
our children’s services CBBC
and CBeebies; and Knowledge
and Learning – as well as
IP-delivered TV and radio
services, with both live andon-demand programmes
available on BBC iPlayer. BBC
Red Button and Red Button+deliver interactive services andcontent to digital televisionviewers, including up-to-theminute content and information
across news, sport, weather,entertainment, interactive
programming and major events.

2013/14: £120.0m

2013/14: 63.9%

2013/14: n/a

2013/14: n/a

2013/14: 5.7p

Reach definition: 3+ mins for both services, and on adults aged 16+
Sources: Reach: CMI/GfK
n/a Data does not currently exist for this measure

BBC Annual Report and Accounts 2014/15

75

Part Two: Strategic report – PerformanceContent (£m)
We spent a totalof £124.6 million
on content forthese services
last year

Strategic report – Performance

The BBC in WalesThe BBC was at the heart of national life in Wales throughout
2014/15, providing coverage of the Dylan Thomas centenary
celebrations, Wales’ success at the Glasgow CommonwealthGames, comprehensive live coverage of the Six Nations andAutumn International matches and wide-ranging analysis of theScottish referendum and its implications for Wales.

Wales continues to provide a major contribution to the BBC’s UK
television output – with Doctor Who, Casualty, Crimewatch, Atlantis,
Hinterland and A Poet in New York broadcast across BBC One,
BBC Two and BBC Four. In 2015, total television network production
spend in Wales represents 6.5% of network television spending.
BBC Wales continued to develop its online and mobile service– there were 3.5 million weekly unique browsers to BBC Wales
content, with news and sport still the key drivers. The number of
unique browsers to our Welsh language online service
quadrupled over the past three years and BBC Cymru Fyw, theWelsh language online news service, continued to see strongaudience growth.

The Dylan Thomas season was the most ambitious cultural
season ever produced by BBC Wales. Highlights included a
captivating re-telling of Under Milk Wood, starring an
extraordinary array of Welsh acting talent. Tom Hollander’sportrayal of Dylan in A Poet in New York drew acclaim fromaudiences and critics and won the RTS award for best actor.
BBC Radio Wales’ coverage included a live performance of Under
Milk Wood from the New York theatre where the play was first
performed, while BBC Radio Cymru broadcast an adaptation of
the work featuring the whole cast of the TV series Pobol y Cwm.
Across the season of programming, more than 800,000 people
across Wales followed the BBC’s coverage.

The BBC National Orchestra of Wales was at the heart of BBC
Music’s Ten Pieces campaign – bringing the joy of classical music totens of thousands of children across the UK in an extraordinarycinema production.

The diversity of Wales has inspired our output over the past
12 months. Jamie Baulch’s Looking for my Birth Mum provided acompelling insight into attitudes to race in Wales, the Real Families
season revealed different approaches to family and lifestyle acrossWales, and Benjamin Zephaniah explored the power of poetry
and performance with the people of Townhill in Swansea in Poeton the Estate.

The BBC’s television services continue to perform very strongly
in Wales for reach, share and viewing hours – which like viewer
appreciation scores, are ahead of the UK average. In addition,
the performance of the BBC Radio portfolio in Wales is wellahead of the other nations on all measures, due to a combinationof Radio 1, Radio 2, Radio Wales and Radio Cymru delivering well
for audiences in Wales.

Content (£m)
We spent a totalof £26.9 million
on content forthese services
last year

Reach (%)
Wales’ population
who use theservice eachweekTime spent
watching or
listening to aservice each week(h:m) Length oftime the average
viewer or listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users£14.1m

16.2%

09:22

83.0

7.0p

£12.8m

4.6%

10:49

78.1

19.2p

Performance by service
BBC Radio Wales is a
speech-led service for adults,
which offers a wide range ofgenres and reflects the issues,
events, culture and interestsof the people of Wales.
BBC Radio Cymru is a speech
and music radio service for
Welsh speakers, which offers
a wide range of genres andreflects the issues, events,
culture and interests of thepeople of Wales.

2013/14: £13.4m

2013/14: £11.7m

2013/14: 18.1%

2013/14: 5.6%

2013/14: 08:29

2013/14: 10:12

2013/14: 84.4

2013/14: 80.6

2013/14: 6.5p

2013/14: 15.3p

Reach definition: 15+ minutes and audiences aged 15+
Sources: RAJAR (Radio reach and time spent). Appreciation Index: From Pulse panel of 20,000 UK adults 16+ by GfK
BBC Radio Wales, BBC Radio Cymru: data based on their Total Survey Area (TSA)
Arrows denote whether there has been a change of +/-1.1-2.4% or +/-2.5% from the previous year’s AI

76

BBC Annual Report and Accounts 2014/15

The BBC in Scotland
The past year was dominated by two major events –the Commonwealth Games in Glasgow and the Scottish
Independence Referendum. BBC Scotland provided
comprehensive coverage of both.

During the week of the Scottish Independence Referendum vote,13.2 million UK unique browsers visited the BBC Scotland News
Online website – a new weekly record. The average number ofweekly browsers in 2014/15 was 4.7 million.

Record audiences watched the Games unfold on BBC television,
with live coverage reaching 78% of the audience in Scotland –3.7 million people. The opening ceremony was one of themost watched events of the last decade, attracting, at its peak,
1.8 million viewers in Scotland (9.3 million across the UK).

Drama remained a strong performer, from the CommonwealthGames-linked Glasgow Girls, to River City, still the most appreciatedsoap among audiences in Scotland. Double BAFTA-winnerKatie Morag was voted Best New Series 2015 at the international
Kidscreen Awards in Miami; Shetland was recommissioned
for a third series; as was a two-part adaptation of Iain Banks’
penultimate novel, Stonemouth.

A wide range of cultural content was produced to complement
the 11 days of sport, including Clydebuilt: The Ships That Made
the Commonwealth; I Belong to Glasgow; Commonwealth City and
Kevin Bridges Live at the Commonwealth.
Over 160,000 visitors enjoyed dozens of free, live BBC shows
and performances at the ‘BBC at the Quay’ festival, while the
BBC Radio 1 Big Weekend Concert at Glasgow Green drew
50,000 fans to the world’s largest free festival.
The Scottish Independence Referendum was covered in detailacross the BBC’s broadcast platforms and programmes. Morethan 25 themed debates and documentaries were televised,across local and network services, with additional content onradio and online.

As in 2013, Mrs Brown’s Boys was the UK’s most watched
Christmas Day programme, with 9.7 million viewers (34% share).
BBC ALBA continued to reach an average of over 700,000
viewers a week, 16.2% of the adult population of Scotland,
exceeding the target set for it by the BBC Trust. BBC Radio
Scotland’s weekly reach, hours of listening and share remained
steady. And the BBC Scottish Symphony Orchestra delivered
another year of acclaimed performances, with successful toursof India and China.

Content (£m)
We spent a totalof £25.4 million oncontent for these
services last year

Reach (%)
Scotland’s
population who
use the service
each week

Time spent
watching or
listening to aservice each week(h:m) Length oftime the average
viewer or listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users£21.7m

20.0%

07:09

2013/14: 07:02

75.6

6.5p

2013/14: 20.4%

63.3%‡

07:40

n/a

18.9p

Performance by service
BBC Radio Scotland is a
speech-led service for adults.
Mixed-genre programmingreflects the diversity of
Scottish culture and covers
national and international
issues and events relevant tolisteners across the country.
BBC Radio nan Gàidheal‡
offers a comprehensive speech
and music radio service for
Gaelic speakers. Mixed-genre
programming reflects thediversity of Scottish culture
and, from a Gaelic perspective
and through the medium of the
Gaelic language, covers national
and international issues andevents relevant to listeners
across the country.

2013/14: £22.6m£3.7m

2013/14: £3.8m

2013/14: 64.2%

2013/14: 07:26

2013/14: 78.1

2013/14: n/aPart Two: Strategic report – Performance

A new current affairs programme, Scotland 2014, was introduced;
the Alex Salmond/Alistair Darling debate, from Kelvingrove
Museum on 25 August, attracted 860,000 viewers in Scotland,an audience share of 33%; and the largest ever televised politicaldebate in the UK, in front of 7,500 young voters, came from the
SSE Hydro in Glasgow on 11 September.

A rich crop of factual programming included the World War One
documentary Pipers of the Trenches, Ian Stewart’s Planet Oil, andthe hugely popular three-part What’s The Right Diet for You?
Among those programmes most appreciated by audiencesin Scotland were Danny MacAskill – Riding the Ridge and From
Scotland with Love, which combined archive film and the musicof King Creosote.

2013/14: 6.8p

2013/14: 19.6p

RAJAR reach definition: 15+ minutes and audiences aged 15+. Sources: RAJAR (radio reach and time spent)
Appreciation index: From Pulse panel of 20,000 UK adults 16+ by GfK BBC Radio Scotland: data based on its Total Survey Area (TSA)‡ Source: TRP panel replaced Lèirsinn for the BBC in Jan 15. Average for 14/15 is based on data for both panels. Base: Gaelic-speaking 16+ population
Arrows denote whether there has been a change of +/-1.1-2.4% or +/-2.5% from the previous year’s AI
BBC Annual Report and Accounts 2014/15

77

Strategic report – Performance

BBC in Northern Ireland
We celebrated 90 years of BBC broadcast services in Northern
Ireland with a live concert emphasising the central role of the BBCin cultural and community life, and the constantly changing natureof our work. We are always looking for new and better ways ofserving BBC audiences, and in 2014/15 we introduced schedulechanges on BBC Radio Ulster/Foyle, delivered extensive coverageof major sporting and civic events and brought an increasing
amount of local talent and voices to our network services.
Editorial and technical innovations were also to the fore in our
news programming, including the launch of Local Live. A new
partnership with NI Screen developed our role in supportingthe creative industries and reflected the significant contribution
which the local independent sector makes to the BBC’s output.
Local programmes and services remain popular with BBC
audiences in Northern Ireland – outperforming network
averages, or equivalents, for radio and television and helping todrive audience approval. Highlights this year included: several
agenda-setting Spotlight investigations; news coverage of the local
government and European elections and political tensions at
Stormont; a range of documentaries and series about Troubles
legacies; a remarkable profile of the Dunlop family’s involvementwith motorcycle road racing in Road; and Major Champions.
We also enhanced our coverage of business issues, secured new
broadcast rights for GAA and Ulster Rugby and explored local
linguistic traditions and heritage. And we looked at World War One
and its impact on communities in Ireland through programmes
including World War One At Home and Ireland’s Great War.

Locally produced drama for BBC network television enjoyedconsiderable success with a returning series of The Fall. It wascomplemented by 6Degrees, with its lively portrayal of student
life and an ambitious portfolio of readings, dramas and single
documentaries for BBC network radio. Funding and creative
partnerships allowed us to mount our biggest ever BBC Promsin the Park event at Titanic Belfast and we introduced newawards for young musicians with support from the Arts Councilof Northern Ireland. Musical diversity and excellence was also
showcased through performances of the Ulster Orchestra anda Music City Day concert from The Guildhall in Londonderry.
We continued to build on the strength of our current affairs
programming with a mix of Panorama investigations anddocumentaries for BBC Three. Other programming included:
coverage of the Queen’s visit to Northern Ireland and the baton
relay which preceded the Commonwealth Games; coverageof the Giro d’Italia; Diversity Week on BBC Radio Ulster, which
explored ethnic and cultural diversity; and Playing Our Part,an innovative broadcast appeal on the needs, experiences
and contribution of older people.

Content (£m)
We spent a totalof £17.3 million
on content forthese services
last year

Reach (%)
Northern Ireland’s
population who
use the service
each week

Time spent
watching or
listening to aservice each week(h:m) Length oftime the average
viewer or listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users£17.3m

35.6%

10:02

77.9

6.3p

Performance by service
BBC Radio Ulster is a speechled service, providing a mix ofprogrammes that reflect news,
events and community life in allits different aspects and diversity.
BBC Radio Foyle is a speech-led
service for audiences in the
North-West of Northern
Ireland. It provides a mix ofnews and other programming
which complements, andcontributes to, BBC Radio
Ulster’s region-wide service.

2013/14: £17.4m

2013/14: 36.0%

2013/14: 10:02

2013/14: 81.9

2013/14: 6.3p

Reach definition: 15+ minutes and audiences aged 15+
Sources: RAJAR (Radio reach and time spent). Appreciation index: from Pulse panel of 20,000 adults 16+ by GfK
BBC Radio Ulster/Foyle: data based on its Total Survey Area (TSA)
Arrows denote whether there has been a change of +/-1.1-2.4% or +/-2.5% from the previous year’s AI

78

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BBC Annual Report and Accounts 2014/15

The BBC in EnglandThis year we have increased our impact and connection withaudiences across England through fresh content, strengthenedbases and renewed partnerships. Network dramas and comedies
like Happy Valley and Still Open All Hours resonated strongly,
helping support audience approval and portrayal. Building on
our successes at BBC North in Salford, we began to transformthe BBC in Birmingham and develop plans for other key hubs.
BBC Birmingham is already home to television and radio drama
series plus distinctive BBC local and Asian services. We boosted
our presence and impact by announcing that 200 new roles will
move there, with the BBC Academy at the heart of a new centre
for skills, training and recruitment. In the Autumn, Birmingham
hosted Radio 1Xtra weekend and we announced that the city
would house our partnership with The Space, our initiative with
the Arts Council of England.
A significant network focus on the North East resulted in CBBC
series The Dumping Ground, Wolfblood, Hattie’s War, World’s End
plus BBC One’s Inspector George Gently. Football Focus, Songs ofPraise, CBBC Live and Radio 6 Music went ‘on the road’ across theNorth East, where the BBC was at the heart of the Great North
Run in its 30th year. Arts and music provided opportunities forface-to-face activity with local audiences, with projects including
Liverpool’s Memories of August 1914 and My Bradford, an online
partnership with Bradford Film City.

More than 250,000 people visited our live World War One
centenary events, while audiences had the opportunity toquestion local candidates directly on local issues through morethan 170 television and radio debates ahead of the generalelection. Additionally, robust television debates took place atthe time of the high profile Clacton-on-Sea and Rochester andStrood by-elections and all regions produced special audience-led
programmes examining the subject of English devolution following
the Scottish referendum. We have increased the number of
specialist political reporters – and are considering adding more,in recognition of the importance of covering local democracy
and politics.
In one of the biggest changes to the news schedules for many
years, late BBC One regional bulletins were doubled in length
in the run-up to the election as part of a trial to respond to thechanging viewing habits and demands of the audience. The
programmes successfully held a large audience and allowed ourteams to deliver in-depth news to many viewers who were unable
to see the main regional news offering at 6.30pm.
With an average audience of over four million viewers, the early
evening BBC One regional television news bulletins collectively
remain the most watched news programme in England. The
weekly current affairs series Inside Out continues to attract strongaudiences and appreciation scores from viewers. BBC Local Radio
audience figures are under more pressure although the stations
continue to attract nearly seven million listeners every week.

Reach (%)
England’s
population who
use the service
each week

Time spent
watching or
listening to aservice each week(h:m) Length oftime the average
viewer or listenerspent each weekwith the service

Appreciation
Index by service
Aggregate of
how people
rated individual
programmes,
expressed as anumber out of 100

Cost peruser hour (p)How much it
costs to deliver
each service toindividual users£115.6m

15.5%

08:44

81.2

3.8p

Performance by service
BBC Local Radio is a primarily
speech-based service of news,
information and debate, with astrong emphasis on interactivity.

2013/14: £115.4m

2013/14: 16.4%

2013/14: 09:14

2013/14: 81.1

Part Two: Strategic report – PerformanceContent (£m)
We spent a totalof £115.6 million
on content forthese services
last year

2013/14: 3.4p

Reach definition: 15+ minutes and audiences aged 15+
Sources: RAJAR (Radio reach and time spent). Appreciation Index: from Pulse panel of 20,000 adults 16+ by GfK
BBC Local Radio in England: data based on its Total Survey Area (TSA)
Arrows denote whether there has been a change of +/-1.1-2.4% or +/-2.5% from the previous year’s AI

BBC Annual Report and Accounts 2014/15

79Strategic report – Performance

Performance by genre
Network hoursof output by genre

RadioNews andWeather

3,256 hrs

409 hrs

34 hrs

6 hrs

11,391 hrs

Current
Affairs

197 hrs

443 hrs

166 hrs

111 hrs

1,668 hrs

Factual2,102 hrs

3,356 hrs

971 hrs

1,196 hrs

3,318 hrs

Music
and Arts

44 hrs286 hrs

48 hrs1,434 hrs

42,024 hrs

Religion

86 hrs

50 hrsn/a

21 hrs592 hrs

643 hrs

242 hrs

282 hrs

177 hrs

4,280 hrs

356 hrs

783 hrs

190 hrs

129 hrsn/a

579 hrs

314 hrs

197 hrs

28 hrs7,490 hrs

161 hrs

252 hrs

1,208 hrs

49 hrsn/a*Schools/
Formal Education

n/a

309 hrsn/an/a

112 hrsSport819 hrs

1,087 hrs

167 hrsn/a

5,166 hrs

n/a hrs

4,354 hrs

4,721 hrs

2013/14: 3,322 hrs

2013/14: 188 hrs

2013/14: 2,053 hrs

2013/14: 55 hrs

2013/14: 80 hrs

Drama

2013/14: 606 hrs

Film

2013/14: 443 hrs

Entertainment

2013/14: 631 hrs

Comedy2013/14: 216 hrs

2013/14: n/a

2013/14: 636 hrs

2013/14: 475 hrs

2013/14: 395 hrs

2013/14: 3,228 hrs

2013/14: 281 hrs

2013/14: 69 hrs

2013/14: 314 hrs

2013/14: 753 hrs

2013/14: 316 hrs

2013/14: 273 hrs

2013/14: 335 hrs

2013/14: 1,082 hrs

2013/14: 32 hrs

2013/14: 135 hrs

2013/14: 912 hrs

2013/14: 54 hrs

2013/14: n/a

2013/14: 220 hrs

2013/14: 221 hrs

2013/14: 294 hrs

2013/14: 1,182 hrs

2013/14: n/a

2013/14: 103 hrs

2013/14: 6 hrs

2013/14: 112 hrs

2013/14: 1,157 hrs

2013/14: 1,429 hrs

2013/14: 21 hrs

2013/14: 152 hrs

2013/14: 94 hrs

2013/14: 59 hrs

2013/14: 85 hrs

2013/14: n/a

2013/14: n/a

2013/14: 11,617 hrs

2013/14: 1,759 hrs

2013/14: 2,481 hrs

2013/14: 41,866 hrs

2013/14: 611 hrs

2013/14: 4,932 hrs

2013/14: n/a

2013/14: 7,654 hrs

2013/14: n/a

2013/14: 112 hrs

2013/14: 5,144 hrs* The radio comedy hours are disclosed within the Entertainment genre.

Network hoursof output by genreChildren’s

1 hr

2013/14: 4 hrs

21 hrs2013/14: n/a

2013/14: 6 hrs

2013/14: 4,360 hrs

2013/14: 4,490 hrs

Education (formal) includes education for children, Open University and BBC Learning Zone
CBBC and CBeebies programming moved from BBC One and BBC Two, to transmit only on its digital channels from Dec-12.

80



BBC Annual Report and Accounts 2014/15

Performance by reach
Television
Weekly reach
BBC network television versus
main commercial groups

All BBC
Television

Total otherchannels

82.0%

89.2%*

2013/14: 83.9%

2013/14: 90.3%

All

All

All

All

television

television

television

television

70.5%

62.1%†

42.6%

41.6%

2013/14: 72.3%

2013/14: 64.2%

2013/14: 43.1%

2013/14: 43.9%* Reach of all TV channels minus the BBC portfolio† Includes S4C
Source: BARB, 4+, 15-minute+ reach

Weekly reachPart Two: Strategic report – Performance

Source: BARB / TRP Research
Based on inds 4+
Reach condition = 15+ mins cons
Sky portfolio – includes Flextech from week 1 2011 and excludes Flextech in 2010
ITV and Channel 4 portfolio figures do not match 2012/13 figures in the Annual Report due to TechEdge reach methodology change that was implemented at the end of 2013

Radio

All BBC radio

All commercial
radio

All BBC
network radio

All nationalcommercial
radio

BBC local radio

All local
commercial
radio

65.3%

63.8%

59.6%

31.8%

16.6%

50.6%

Weekly reach
BBC Radio compared tocommercial stations

2013/14: 67.1%

2013/14: 64.9%

2013/14: 61.2%

2013/14: 32.3%

2013/14: 17.6%

2013/14: 51.7%

Source: RAJAR, 15+, 15-minute reach

BBC Annual Report and Accounts 2014/15

81Strategic report – Performance

Network supply
It has been a strong year for network TV production in the Nations
and Regions, with more than 53.3% from outside London and morethan 18% from Scotland, Wales and Northern Ireland.

9.2%

12,494 hrs

2.5%
225,084 hrs

8,722 hrs

Network TV programming spend byregion as a percentage of eligible spend
2014

2013

London

46.7%

47.5%

Scotland
Wales
Northern Ireland

9.2%
6.5%
2.5%

10.9%
6.8%
2.2%

Total nations

18.1%

19.9%

Midlands
North of EnglandSouth of EnglandMulti-region*

1.7%
23.1%
7.6%
2.8%

2.7%
17.2%
8.5%
4.1%

Total regions

35.2%

32.6%

Total nations and regions

53.3%

52.5%

Grand total

100%

100%

6.5%

35.2%
46.7%

13,784 hrs

BBC Local Radio** andnations radio hours of output
2014

2013

LondonEngland (ex London)
Scotland
Wales
Northern Ireland

8,260
225,084
12,494
13,7848,722

7,136
225,267
12,256
13,865
8,782

Total

268,344

267,306

8,260 hrs

Network television spend based on Ofcom definitions
by calendar year
* Multi-region covers programmes made outside London
but which cannot be attributed to any one region or nation** The BBC Local Radio and nations radio hours of output
only includes BBC original programmes and excludes
any repeat programmes82

BBC Annual Report and Accounts 2014/15

Part Two: Strategic report – How we run the BBC

How we run the BBC
Management of the BBC’s relationships
with staff, organisations and partners

The inaugural BBC Music Awards were held in December 2014

BBC Annual Report and Accounts 2014/15

83

Strategic report – How we run the BBC

Our people

Working together for a more efficient BBC

This year we continued to deliver outstanding content to ouraudiences whilst achieving substantial organisational change.

Our workforce

Our aim is always to concentrate spend on what matters mostto our audiences – content and services. 92% of controllable
spend is now spent on content and distribution and their related
support, with less than 8% on the professional support needed
to run the BBC.

At the end of this year, we employed 18,974 full time equivalentstaff, compared to 18,647 last year.

This increase is driven by the need to invest in the digital skills thatare required to build the BBC of the future. We have recruited
a pool of engineering capability in BBC Digital and across theorganisation to continue to build broadcast capability in Salford
A key objective for 2014/15 was to improve value for money
and to work on major strategic projects. These projects include
through a more efficient and open BBC and this year weenhancements to the BBC iPlayer, a programme to personalisepublished a review of how we spend the licence fee and of theefficiency of the organisation. We are continuing to become more our relationship with audiences (called myBBC) and thetechnology to collate the best of BBC content and social
efficient by simplifying our organisation and further streamlining
media around live events. These investments in people more
professional support functions.
than offset the staff reductions arising from the delivery of our
Delivering Quality First (‘DQF’) savings programme.
Additional production staff have also been recruited, as the
BBC made more hours of programming in 2014/15 than in theprevious year.
Table 1: Total average public service broadcasting headcount(equivalent full time)
PublicService
staff

Year

World
Service
staff

Total

2010/11

17,242

2,525

19,767

2011/12

16,8582,196

19,054

2012/13

16,534

2,149

18,683

2013/14

16,672

1,975

18,647

2014/15

17,058

1,916

18,974The BBC has a commitment to have at least 50% of ouremployees based outside of London. This year we achievedthat goal and now have 53%.
In 2013, we unveiled a new creative vision for BBC Birmingham
and a commitment to make England’s second city the new homeof the teams who deliver entry level training schemes, talent andskills development. This year, around 200 human resources,internal communications and BBC Academy jobs began to be
relocated there.
Table 2: UK PSB staff by nation (equivalent full time) %31 Mar2015

31 Mar2014

31 Mar2013

31 Mar2012

England (excl. London)

34

33

32

33

London

46

47

48

48

Scotland

7

8

7

7

Wales

8

8

8

8

Northern Ireland

4

4

4

4

Television news gallery

84



BBC Annual Report and Accounts 2014/15

A fair deal

On-screen talent

It is our policy to provide remuneration that attracts, motivatesand retains the key talent required to lead and to deliver
outstanding public service broadcasting, whilst recognising theBBC’s status as a publicly funded corporation which must deliver
value to the licence fee payer.

We want the BBC to be the place where the best artists want towork to deliver great programmes. Across radio, television andour digital services, our audiences expect us to offer the best
range of most-loved, creative, engaging, authoritative and diverse
talent in British broadcasting. It is vital that we continually review
and improve our practices and our approach to ensure we
attract, retain and develop this talent, whilst also deliveringvalue for money for licence fee payers.

In 2014, we agreed a two-year pay deal. All staff in grades 2-11
who are included in the deal will receive three stages of increases
to their pay, in August 2014, in January 2015, and in August 2015.
We have continued to reduce the number of senior managers
and their cost. The senior manager paybill is now £52 million ascompared to £78.5 million on 1 August 2009.
Table 3: UK PSB senior manager headcount by salary bandBand

2014/15

2013/147

10£70,000-£99,999

137

161

£100,000-£129,999

107

93

£130,000-£159,999

76

73£160,000-£189,999

40

34£190,000-£219,999

16

17£220,000-£249,999

11

9£250,000-£279,999

2

1£280,000-£309,999

2

2£310,000-£339,999

22£340,000-£369,999

00£370,000-£399,999

1

1

401

403

Total** Total excludes Executive Board members.

In 2012, the BBC reviewed the use of Personal Service Companies
as a means of engaging presenters and contributors. We havecontinued to apply an employment test, discussed with HM
Revenue & Customs, to all workers to ensure they have theappropriate employment status. When deemed appropriate,
people have been offered staff employment status as theircurrent contracts expire. This has resulted in a number ofpresenters moving to employment contracts in the last year.

In 2014, we committed to keeping spend on talent to no morethan 16% of overall internal spend on content. The O&O review
endorsed this approach as an appropriate response to changing
market conditions.
Total talent spend of £208 million represents 12.2% of the BBC’sinternal spend on content (internal spend on content now
includes the BBC World Service).
Talent2013/142014/15

Spend
£000s

Volumes

46,80993,20245,154

6,807

774

44,398

662

6,559

Spend
£000s

Volumes

Under £50k

100,009£50k-£100k

50,957

Variance£000s£100k-£150k

15,914134

14,578123

1,336£150k-£250k

14,591

77

15,50383(912)£250k-£500k

11,414

34

8,237

25

£500k-£750k

2,928

6,598

£750k-£1m

836£1m-£5m

5,139

Organisations**

6,621

2,495

6,716

2,229

(95)

208,40950,332

194,234

48,29014,175

Total

9*

787

3,177
(3,670)

14*

4,215

49
924

* The number of individuals in the £500,000+ categories has been aggregated in orderto protect the personal information of those individuals, in line with data protection
best practice.
** Organisations are groups of individuals contracted as one – for example external
orchestra – so it is not possible to list numbers of individuals against this spend.

BBC Annual Report and Accounts 2014/15

85

Part Two: Strategic report – How we run the BBC

Under £70,000

This year, the BBC Trust commissioned a second review of
the BBC’s management of talent. The report, completed byindependent consultants Oliver & Ohlbaum (O&O), foundthat the BBC attracts talent at competitive rates, leveraging
its unique appeal to obtain value from its expenditure on talent.
Furthermore, the report endorsed our approach, noting that
there had been a significant cultural shift towards stronger cost
control, which now represented best practice.

Strategic report – How we run the BBC

Engaging and getting the best from our people
In Autumn 2014, we ran the first BBC-wide staff survey sincesummer 2012. 55% of staff participated in the survey – comparedwith 60% in 2012. The 2014 BBC-wide employee engagementscore was 66%, compared with the Ipsos MORI UK norm of 56%.

an occupational health service
an Employee Assistance Programmecases being investigated and heard outside the divisionfrom which the complaint originatedIn the Respect at Work report of May 2013, there were 22
agreed actions to build a more supportive culture at the BBC.
91% of staff said they felt proud to work for the BBC (comparedwith 90% in 2012), and 94% said they demonstrate the BBC Values We are pleased to confirm that all 22 actions have now been
implemented. There were two further recommendations andin the way they behave at work (compared to 88% in 2012). The
survey results also reported that employees responded positively these are being addressed through team management training.
to the Respect at Work commitments and changes that have
Additionally, we agreed to publish our case numbers for abeen implemented.
two-year period. During 2014/15, the number of bullying andharassment grievance cases reduced from 72 to 46, a reduction
The survey identified some areas for improvement, includingof 36% compared to the same period a year ago. There was one
better communications and stronger leadership. These wereincorporated into an action plan which was published in April 2015. sexual harassment grievance case.
An interim survey of 20% of our employees was conducted
On average, the cases in 2014/15 were open for 83 days, a reductionin April 2015 to enable us to monitor progress. Another fullfrom 85 days in 2013/14. By the last quarter of 2014/15 the average
employee survey will be conducted in autumn 2015.
time to close a case was down to 37 days, and we continue to work
hard to improve the time taken to deal with all cases.
This year we have introduced some enhancements to our
performance development review process to ensure that all
Cases which were upheld or partially upheld represented 29%
employees have objectives that align with the overall BBCof the case outcomes in 2014/15.
strategic objectives and values. For team managers, we have also
For the year 2015/16 we will introduce dedicated internal
introduced a specific objective focused around getting the bestcase managers/investigators and external experts to support
out of team members.
managers when hearing cases in their determination of grievance
We continue to work closely and constructively with our tradeoutcomes, further increasing the level of independence in theunions. During 2014/15 there were no strikes.
bullying and harassment grievance process.

Supporting our staff
In February 2015, we communicated our enhanced approach andpolicy to managing bullying and harassment. The range of support
for staff raising concerns includes:
a confidential bullying and harassment line run by an external
company
an internal and external mediation service‘Here’s One We Made Earlier’ exhibition told the story of BBC
Children’s broadcasting to 60,000 visitors86We have also conducted a thorough independent review ofour child protection and whistleblowing practices to ensure
they are robust. The report, by the GoodCorporation, has foundthat the BBC has strong policies in place, supported by evidenceof a clear commitment to the safeguarding and protectionof children. The GoodCorporation review was originallycommissioned alongside the work of the Dame Janet Smithreview into the culture and practices of the BBC during theyears when Jimmy Savile worked at the Corporation. Dame
Janet’s review is now finished but, as announced in May 2015,

BBC One crime drama Silent Witness

BBC Annual Report and Accounts 2014/15

Children learn about wartime communications
at World War One At Home, Woolwich

its delivery to the BBC and publication has been delayed. We
continue to develop and improve our child protection andwhistleblowing practices, and we are publishing our detailed
response to the recommendations made in the
GoodCorporation’s review alongside this annual report.

It was also agreed that where severance is paid:

Severancein exceptional cases, for example when there is a need toprotect the confidentiality of sensitive information, individuals
may be placed on garden leave during their notice

Since October 2012, when the Delivering Quality First (DQF)
programme began, we have accepted 4,429 requests forvoluntary redundancy and 1,162 employees have left as a resultof compulsory redundancy.
In 2013, the Director-General and the Executive Remuneration
Committee made a number of significant changes to the BBC’s
severance policy:
for those joining the BBC after January 2013, redundancy
entitlement was reduced. Previous entitlement was for one
month’s pay for each year of service up to a maximum of
24 months’ pay. This has been reduced to a maximum of
12 months’ paya cap on redundancy payments of £150,000 was introduced
for all staff (both new and current)notice periods for the executive directors were reduced
from 12 to 6 months

if an individual wishes to leave earlier than the end of theirnotice period they must waive the remaining notice period
and will receive no payment for it

We publish separately a full report on severance arrangements
for this year. This report, from the senior independent director
on the Executive Board, Dame Fiona Reynolds, can be foundonline. The main findings are:there have been no severance payments above £150,000
there have been no payments of pay-in-lieu of notice withseverance
All severance payments over £75,000 have been signed off by
the Senior Manager Remuneration Committee.
Severance payments 2013/14 and 2014/15: all staff(including senior management)*
1 April 201431 March 2015

1 April 201331 March 2014

Payment band

Spend
£000s

Volumes

Spend
£000s

Under £10k

69

11

117

17

£10k<£50k

4,183

141

5,383

186

Volumes£50k<£75k

3,571

58

4,160

68

£75k<£100k

3,259

39

6,052

71

£100k-£150k

6,952

54

7,128

59

Over £150k

0

0

2,762

12

18,034303

25,602413

Total* Excluding on-air talent.

BBC Annual Report and Accounts 2014/15

87

Part Two: Strategic report – How we run the BBC

Driving efficiencies across the BBC has an inevitable impact
on jobs. We continue to be fully committed to managing job
losses through redeployment and retraining where we can.
We continue to provide support to staff at risk of redundancy,
including career support, an online toolkit, and workshops
to help staff identify development needs and career options.

notice will be served and worked in full

Strategic report – How we run the BBC

Payments in lieu of notice 2013/14 and 2014/15:
all staff (including senior management)*

Diversity

1 April 201431 March 2015

1 April 201331 March 2014

Spend
£000s

Volumes

Spend
£000s

Under £5k

2

1

20

7

£5k<£10k

0

0

47

6

£10k<£20k

0

0

51

4

Payment band

Volumes£20k<£30k

0

0

0

0

£30k<£50k

0

0

0

0

Over £50k

0

0

0

0

Total

2

1

118

17

Diversity: percentage of total staff

Severance payments 2013/14 and 2014/15:
senior management staff*
1 April 201431 March 2015

1 April 201331 March 2014

Payment band

Spend
£000s

Volumes

Spend
£000s

Volumes

Under £10k

0

0

0

0

£10k<£50k

50

1

80

2

£50k<£75k

154

3

0

0

£75k<£100k

161

2

365

4

£100k-£150k

1,311

9

1,084

8

Over £150k

0

0

2,088

8

1,676

15

3,617

22

Total
* Excluding on-air talent.

We monitor the profile of our workforce to help ensure we
look and sound like our UK audiences, and to help us focus ourefforts on groups that are underrepresented compared to thewider UK population. This year we announced a new target toincrease black and minority ethnic (BAME) senior level staff(grade 10 – SM1) in the most relevant areas of Television andRadio Production, Broadcast Journalism, and Commissioning and
Scheduling from 8.3% to 10% by 2017, and then to 15% by 2020.
BBC News has also set local targets in London, Birmingham,
Manchester and Leicester to reflect the population. The tablebelow shows our progress in staff diversity against set targets
over the last 12 months:
Employee group

Mar 2015

Mar 2014

BAME – all staff

13.1%

12.6%

BAME – senior managers

7.8%

6.8%

BAME – wider leadership*

9.2%

8.7%

Disabled – all staff

3.8%

3.8%

Disabled – senior managers

2.3%

2.6%

Disabled – wider leadership*

3.0%

3.1%

Women – all staff

48.4%

48.6%

Women – senior managers

38.6%

37.2%

Women – wider leadership*

41.3%

40.9%

* Wider leadership includes grades 10, 11 and senior managers.

We are committed to reflecting the diversity of licence fee payers
in our content and within our own organisation. We know thatsharing diverse perspectives and ideas, and listening to ouraudiences, results in the very best programming and technology.
Our Independent Diversity Action Group, chaired by the
Director-General, advises and supports the BBC on diversity.
The panel comprises: Baroness Tanni Grey-Thompson; Lenny
Henry CBE; Nihal; Tanya Motie; Daniel Oudkerk QC; George
Mpanga; Jason Roberts MBE; and Baroness Floella Benjamin OBE.

World War One drama The Passing Bells88

CBBC’s Horrible Histories: Magna Carta Special starring
comedian Ben Miller as King John

BBC Annual Report and Accounts 2014/15

The Extend Talent Pool offers disabled people the opportunity
to gain employment across the BBC‘Elev8’, our mentoring scheme for disabled staff, has had
38 participants in the two years it has run. ‘RISE’, a similar
scheme for BAME staff, had 41 participants in its first year.

we recruited 31 BAME graduate trainee interns from thesuccessful Creative Access Programme

We believe it is important to continue developing theunderstanding of diversity amongst our staff and we are currently
delivering an extensive programme of training for team managers
on how to support disabled staff more effectively. We are alsodelivering ‘Unconscious Bias’ training to all hiring managers toraise awareness of the potential for bias when making hiring anddevelopment decisions. This is an important part of creating
an inclusive workplace where talent can flourish.

we started working in partnership with organisations including
the Shaw Trust, Leonard Cheshire Disability, and the Royal
National Institute for Blind People (RNIB), to open up 150‘non-media’ support roles to disabled people
the Director-General launched a one-year senior leadershipdevelopment programme for six talented BAME people whoare gaining experience working with senior leaders at the BBC
and learning from the Executive Team

More about the BBC’s diversity policy can be found at:bbc.co.uk/diversity

we’ve begun training six potential ‘Commissioners of the
Future’, from BAME backgrounds, in comedy, drama, factual,
daytime and children’s programming and across BBC Two and
BBC Four. The intention is to deepen their understandingof commissioning, and encourage them and others to put
themselves forward for commissioning roles at the BBC
and elsewhere.

BBC Annual Report and Accounts 2014/15

89

Part Two: Strategic report – How we run the BBC

Over the course of this year we developed a number of new
initiatives which aim to support the delivery of our diversity
commitments:

Strategic report – How we run the BBC

Developing new skills and talent
Under the terms of our Charter, we provide apprenticeships,
entry-level schemes, and professional development for BBC staff,
people embarking on media careers, freelancers and the wider
UK industry. Through our outreach activities, opportunities andskills development, we connect the BBC with people from rightacross the UK.
The BBC Academy is moving to BBC Birmingham during 2015, to
be at the heart of our new Skills & Talent Centre, where we canattract the best new talent to the BBC from all over the UK.
New talent, skills and apprenticeships
In 2013, the Director-General set a target for 1% of the BBC’s
workforce to be apprentices by the end of the licence fee period.
We met this target by 1 November 2014, when the BBC
welcomed 177 non-graduate apprentices into roles in TV andradio production, local journalism, technology and business.
We’ve joined forces with Job Centres around the UK and briefed
Job Centre staff on the skills we’re looking for, in a bid to reach out
to young people who might otherwise never consider working for
the BBC. Of our 46 local apprentices, 60% come from families
where the parents did not go to university (based on 40/46
responses); 47% of the trainees on our current TV production
apprentice scheme are black and minority ethnic (BAME); andour industry-leading graduate level production trainee schemehas 42% BAME trainees.

Reaching more people with our journalism
The decision to make all our content, including video, freely
available worldwide has meant our reach has continued to grow.
The BBC Academy now has sites in 18 of the World Service
languages, all of which provide valuable insights into the practiceof impartial, independent and accountable journalism in partsof the world that are hard to reach.
The BBC College of Journalism has supported the World Service
Group in reaching new audiences through Mobile and Social First
initiatives. This includes training to enable the launch of the Thai
‘pop up’ Facebook service; the Future Voices programme forbi-lingual students; bi-lingual reporter training; training visits to12 overseas bureaux and an international version of our acclaimed
Editorial Leadership Foundation, visiting Nairobi, Delhi, Cairo
and Kathmandu.
Making online news more responsive
Since the start of 2015 hundreds of online journalists across theUK have been trained by the Academy to work on the new BBCNews app and on the responsive design of BBC content formobile devices.
BBC Academy teams also delivered an innovative training
programme to enable the transformation of Newsbeat focusing
on digital storytelling and connecting with young audiences.

Also this year the BBC announced a scheme as part of the Make
it Digital initiative to create up to 5,000 digital traineeships for
unemployed young people, which will offer short-term BBC
traineeships to help people boost their digital skills and get a footon the job ladder. This is the largest scheme of its kind in the UK.

Local Radio apprentices are working in every BBC radio stationin the UK and Channel Islands

90

BBC Annual Report and Accounts 2014/15

Production skills and diversity
The Academy is helping the BBC build a workforce that betterreflects modern Britain. Expert Voices: BAME Talent Days ran
in London, Birmingham, Bristol, Salford and Glasgow, training
106 men and women – they have made 11 media appearances
so far. Our Mama Youth Project students and Stephen LawrenceTrainees received two weeks of specialist training.
Digital Season Salford was a pilot programme to develop
mainstream digital skills through basic and advance teachingof subjects such as online storytelling, coding and software,interacting with the audience, ways of working and connected
and converged technologies. There were 74 sessions andmasterclasses, reaching 1,193 individuals.
Leading technology change
The broadcasting industry moved from tape to file delivery
for programme playout in 2014. To support this significant shift,
the Academy created The File Delivery Made Real programme,
a comprehensive set of online training resources, which wasdelivered with staff from ITV, Channel 4 and post-production
houses, and has so far been accessed by more than 10,000 users.
The sessions were developed in partnership with the Digital
Production Partnership and the International Association of
Broadcasting Manufacturers, and co-funded by Creative Skillset.

BBC Annual Report and Accounts 2014/15

In the first two months after it was published, a total of 34,000
people visited the new BBC Academy presence on iTunesU,
whilst the College of Production podcast is now downloaded
47,000 times per month, more than some established radio
network podcasts. We reached almost a million impressions
through live Twitter Q&A sessions. The Academy presence on
SoundCloud has more than 300,000 followers.
At the same time, the Academy has increased both reachand engagement on Twitter with the CoJo account attracting
36,000 followers, Academy Trainees 55,000 and the Academy
itself 30,000.
Bringing the BBC closer to our audiences
Our outreach work through face-to-face activity, community
support and staff volunteering brings us closer to our audiences,
particularly those we’ve identified as harder to reach. This year,
hundreds of BBC staff volunteers worked with groups acrossthe UK, sharing knowledge and skills, whilst gaining insights into
key audiences.
One highlight was in October, when 100 young people visited
BBC Newsrooms across the country, as part of the Creative
Diversity Network’s work to increase diversity in news
broadcasting. In November, 1Xtra Live came to Birmingham,
and BBC departments including School Report, Radio WM,
Children in Need and the Asian Network came together todeliver 30 outreach sessions.
The School Report programme sees schools coming to the
BBC or us going out to them to teach how news is made andhelp students make their own reports. It reaches 30,000 children
each year, a great way to open our doors to new people.

91

Part Two: Strategic report – How we run the BBC

Digital Bristol Week and Digital Birmingham Week brought
together the creative industries in the respective cities during
2015, to host a week of activities examining digital innovation andskills. Partners included the University of the West of England,
Bristol Media, Bristol City Council, the University of Bristol, thePervasive Media Studio, Engine Shed, the Creative Skills Hub,Birmingham City University, Creative England, Creative Skillset,
the Birmingham Creative City Partnership and Arts Council
England. Delegates from the creative industries, joined membersof the public to attend themed days to learn and share skills.

Digital innovation and e-learning
To help the BBC train its staff and the wider industry more
efficiently, wherever they are in the UK, we are working hardto develop more innovative e-learning.

Strategic report – How we run the BBC

Partnerships

Combining our expertise and resources with those of external
partners allows us to support the wider creative industries andto deliver greater value to audiences.
We have a long history of working with partners – the ‘British
Broadcasting Company’ itself was formed in 1922 by a groupof wireless manufacturers working together. Since then the BBC
has collaborated with countless organisations on television andradio programme projects, promoting education and developing
industry technologies and standards.
This year our partnerships have focused on three big areas: BBC
Arts, the Centenary of World War One and the CommonwealthGames in Glasgow.
BBC Arts
BBC Arts Online launched with a celebration of Culture24’s
Museums at Night, supported by over 500 museums, galleries andheritage sites. This was followed by the first year of a new
three-year agreement with Hay Festival. Across all platforms, wemade our largest commitment to the Edinburgh Festival yet and,in conjunction with Tate Britain, BBC One’s The Big Painting
Challenge launched a search for Britain’s most talented amateur
artist. Other high profile arts partnerships have included Get
Creative, a campaign to celebrate the arts and encourage creativity
launched with What Next?
Our agreement with Arts Council England continues with a new
three-year public value partnership, reflecting shared strategic
ambitions around skills, music, performance capture, diversity
and writing. Central to this is The Space, an innovative online digitalarts channel.

Centenary of World War One
The Centenary of World War One led to the BBC commissioning
our most ambitious season of programmes ever. Our partnershipwith the Imperial War Museums (IWM) supported by the Artsand Humanities Research Council helped to create World War
One At Home, 1,400 stories of places around the country whichstill bear traces of war. Working with IWM, we also preserved
and digitised the archive rushes of the landmark 1964 series The
Great War. The British Council and World Service hosted debates
on World War One, and we worked with 14/18 Now, theCentenary cultural programme, for a number of events,
culminating in an estimated 16 million people joining the broadcast
Lights Out moment on 4 August 2014.
Commonwealth Games in Glasgow
In Glasgow, the BBC worked in partnership with Glasgow Life,DF Concerts, the Glasgow Science Centre, the Glasgow 2014
Organising Committee and the key agencies to deliver the live
16 day cultural programme for the Commonwealth Games.
This showcased content from across radio and TV as well asfrom many external organisations including popular and inclusive
initiatives such as The Big Big Sing.
Other partnerships
In Northern Ireland, a new partnership to develop the creative
industries has been agreed between the BBC and Northern
Ireland Screen.
On radio, our partnership with the British Museum led to Neil
MacGregor’s acclaimed Radio 4 series Germany: Memories of a
Nation. The launch of Ten Pieces was an innovative educational
project representing the BBC’s biggest ever investment inmusic education, working with more than 240 music andarts organisations to open up the world of classical music
to a generation of children.
Royal Botanic Gardens, Kew joined Radio 4 for a scientificexploration of Plants: From Roots to Riches, whilst on television
Raymond Blanc and Kate Humble spent a year at Kew
re‑establishing the kitchen garden for Kew on a Plate. Food was
also the inspiration for the first ever Bristol Food Connections
Festival – over 100 events in partnership with many organisations
including the University of the West of England, Bristol University,
Bristol City Council, Visit Bristol and numerous food anddrinks producers.
Other successful partnerships have been described elsewherein this report, including our radio partnership with the British
Museum; our traineeships collaboration with the Department ofWork and Pensions; and Make it Digital, a set of more than 50
partnerships to support digital creativity through a number of
initiatives including giving a free programmable device to all year 7
children in England and Wales, S1 in Scotland and year 8 in
Northern Ireland.

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Supporting good causes
The BBC has been broadcasting appeals for charities since
1923 and they are an important part of our remit as a public
service broadcaster. We help a broad range of charities to raise
funds and awareness and our audiences are incredibly supportiveof these causes helping to raise more than £114 million during the
2014/15 financial year.
Alongside these broadcast appeals, support for our three
corporate charities – BBC Children in Need, BBC Media Action
and the BBC Performing Arts Fund – and our partnership with
Comic Relief also benefit individuals, communities andorganisations across the UK and around the world.
BBC Children in Need
In November 2014, people from across the UK came together
to raise £32.6 million, the highest ever on-the-night total for BBC
Children in Need. A final total will be announced in the summer.
These funds were raised by galvanising the public to get involved
at the same time as entertaining the UK through related
programming across platforms and the annual, star-studded,
Appeal Show on BBC One.
There were innovative and fun ways to engage the public througha number of BBC initiatives such as The One Show’s Rickshaw
Challenge which saw six young people power a rickshaw for morethan 450 miles across England; Radio 2’s phenomenal range ofactivity; Gareth Malone’s All Star Choir and wide-ranging coverage
across BBC nations and regions.

Its wide-ranging projects include TV and radio discussion shows,mentoring for journalists covering elections, and radio, TV andweb-based dramas that share useful information about issues
such as health, rights and skills. The charity also produces ‘lifeline’radio programmes and short films which are broadcast before
and after emergencies such as earthquakes, floods or conflict.
In 2014, it responded to the Ebola outbreak in West Africa withweekly radio shows and public service announcements in Sierra
Leone and Liberia, a radio drama in Liberia, Sierra Leone andGuinea, and training in 10 countries at risk. “People just didn’tknow who to trust,” said radio producer Mustapha Dumbuya,
who lost 16 family members to the virus, “People called to thankme saying the public service announcement had saved lives.”
In Liberia, 90% of phone-survey respondents who had listened
to the radio show Kick Ebola From Liberia said they had taken steps
to prevent the spread of the disease.
In 2014/15, BBC Media Action’s 87 projects were supported by arange of funders including the UK’s Department for International
Development, the Foreign and Commonwealth Office, the Billand Melinda Gates Foundation and the Paul G. Allen Foundation.
Total income for 2014/15 was in excess of £40 million.
For more information about BBC Media Action please visit:bbc.co.uk/mediaaction

Part Two: Strategic report – How we run the BBC

At the heart of our success was telling the charity’s story; making
audiences aware that BBC Children in Need helps 480,000
children and young people by funding 2,600 projects that support
those facing a range of issues including disability, poverty,
deprivation and neglect in communities across the UK.

BBC Media Action
BBC Media Action is the BBC’s international development charity.
It uses media and communication to transform lives, working withpartner organisations to reach more than 200 million people inmore than 30 countries.

Gareth Malone’s All Star Choir for Children in Need

BBC Annual Report and Accounts 2014/15

93Strategic report – How we run the BBC

BBC Performing Arts Fund
Charities that meet the criteria can apply for an appeal:
The BBC Performing Arts Fund, one of the BBC’s corporate
bbc.co.uk/charityappeals/
charities, announced in May 2015 that it will be closing in early 2016.
There is a separate selection process for broadcast appeals on
In recent years, new forms of technology have changed the pattern BBC television and radio in Northern Ireland, which broadcastof audience voting. These technical developments, enabling
13 appeals last year.
audiences to vote online, via smart phones and social media, havemeant that the amount of residual revenue available to the Fund“I think that the appeal either on radio or on
has decreased and it is clear that this trend will continue.
television is a fairly easy way of spreading the
Since its inception in 2003 as the Fame Academy bursary, the Fundhas awarded over £5 million in funding and previous beneficiaries
include Adele, composer Mark Simpson, soprano Kathryn Rudge
and the 2015 Radio 2 Folk Awards Musician of the Year, Sam
Sweeney.

In December 2014, the Fund awarded 32 Fellowships to emerging
talent in the performing arts. The bespoke placements offer
professional support, training and development opportunities
in addition to the PAF grant of £10,000 per organisation, totalling£320,000 in grants. It awarded a further £156,000 in grants to
17 alumni of its previous Fellowships Scheme in May 2015.
The Fund supports a diverse range of new talent across theperforming arts sector and this round of grants will benefit
choral singing, opera, theatre, dance and music. Legacy grants
range from £5,000 to £10,000 with 17 beneficiaries in total.
For more information about the BBC Performing Arts Fund
please visit: bbc.co.uk/performingartsfund

word about the smaller charities… this is avery important part of their access to the public.’’
Michael Palin

The BBC Radio 4 Christmas appeal with St Martin-in-the-Fields,
in its 88th year, raised £2,313,595, a new record whilst three BBC
Local Radio stations – Radio Suffolk, Radio York and Radio Cumbria– raised over £642,000 for local charities between them.
Responding to Radio York’s announcement that their GoodNight’s Sleep appeal with a local hospice had reached its target,a father of a severely disabled daughter in York tweeted:“this is what local radio is all about @bbc you should be proud!”
The BBC broadcast two appeals across all its platforms for theDisasters Emergency Committee. This helped towards a final totalof £19 million for a Gaza appeal and £37 million for an Ebola appeal.

Broadcast appeals
BBC appeals are an effective way for charities to engage withthe public. We broadcast 49 Radio 4 appeals and 11 BBC One
Lifeline appeals, whilst BBC Local Radio stations also run
charity partnerships.

Michael Parkinson is filmed for a Lifeline charity appeal for prostate cancer

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“The BBC has been a vital part of the Disasters
Emergency Committee by helping reach millions
of people and raising over a £1 billion for disaster
affected communities in the poorest parts of
the world.’’
Clive Jones, CBE – Chair of Trustees, DEC

Comic Relief
The BBC and Comic Relief have been partners since thecharity was created 30 years ago. Each year we broadcast oneof its two alternating appeals, Red Nose Day and Sport Relief.
Red Nose Day 2015 was a special campaign, marking the
moment when the total raised by both campaigns reachedover £1 billion, with a total to date of £1,047,083,706. The
night of television, broadcast this year live from the London
Palladium, averaged an audience of eight million and raised
a record £78,082,988.

Since Comic Relief began, projects funded in the UK havetouched the lives of over 10 million people, and helped over
40 million people in the world’s poorest communities.

We are committed to running the BBC in a way that is responsible
and which has a positive impact for our licence fee payers.
This applies across every aspect of the organisation, including
employment, diversity, our environmental impact and our workwith communities.
As an internationally recognised public service broadcaster,
we aim to be open and transparent in all that we do. We publish
regular corporate responsibility updates, which give moredetail on the work that we do. This year we published two
new reports – Developing Musical Talent and the BBC andEnvironmental Sustainability, which can be found here:
bbc.co.uk/responsibility/reports
You can also find many and varied examples of the way our
corporate responsibility work helps us to deliver our Public
Purposes at: bbc.co.uk/responsibility
Human rights
The BBC takes human rights seriously, at home in the UK andacross the globe. Every member of staff has the right to returnhome in the same state of health in which they left for work, andto form and join trade unions. Some staff are required to workin high-risk environments, such as those in hostile surroundings,
covert filming or covering events such as terrorist incidents.
Our High Risk Team advises and oversees training and provision ofequipment for staff to ensure they are appropriately prepared toundertake their role. Our Terms of Trade require any suppliers
we work with, and any sub-contractors they use, to adhere to
the codes of practice published by the Equality and Human Rights
Commission and the Equality Commission Northern Ireland.

Recording BBC Media Action’s family health radio show in Nigeria

BBC Annual Report and Accounts 2014/15

95

Part Two: Strategic report – How we run the BBC

The campaign also saw some extraordinary supporting
BBC content, including Operation Health, which raisedover £2 million through the cross-BBC support of BBC One,The One Show, R1 and R1Xtra; and The Great Comic Relief Bake
Off, which achieved audiences of up to 8.4 million, raised over£0.5 million and prompted the public to download tens of
thousands of fundraising kits.

Corporate and social responsibility

Strategic report – How we run the BBC

Environmental sustainability
Our strategy, The Difference, focuses on targets aimed at
reducing the environmental impact of our operations, engaging
and inspiring staff, and embedding sustainable practices in ourcore business of making programmes – sustainable production.
This year we are introducing additional information to the tablebelow, which updates on our progress and demonstrates ourstrong commitment to sustainable production. We report on
use by BBC productions of the carbon calculator for television
production, albert, the average carbon footprint for theseproductions, and on the number of BBC productions which haveparticipated in the albert+ sustainable production certification
process. We want our audiences to have confidence that teams
across the BBC are trying new ways of working, which reduce
environmental impacts. We are working with broadcasters
and production companies across the industry through ourengagement with the BAFTA albert Consortium to tackle
sustainability together. We continue collectively to promotesustainable production, by providing resources and training
to enable and encourage our industry to transition to moresustainable ways of working.

BBC environment targets

Year 7: 2014/15
TargetPerformance
2016/17 against baseline

We have recorded a further drop in CO2 emissions from ourbuildings and technology, and water use continues to fall in linewith our strategy to concentrate operations in fewer, more
efficiently run, sites. Recycling rates, reported as an average
across the year, increased slightly.
Emissions from travel have reduced, though sustained reductions
will always remain a challenge given the unpredictable nature of
the global events we communicate to our audiences.
We propose to extend the timeframe for the existing targets
to the end of the current Charter period and will introduce newtargets after this Charter Review period when there is clarity
around the BBC’s remit and operations.
You can read more about this area of our work at:bbc.co.uk/responsibility/environment

Sustainable production

Target2016/17

Performance
2014/15In-house Children’s and TV to use
albert to carbon footprint production

100%
on track87%
on track

BBC average carbon footprint for
TV production per production hour

N/A

12.1 tonnes
CO2

25
productions

26
productions

Absolute reduction in energy
consumption

-20%

-33%

Absolute reduction in CO2 emissions
from buildings

-20%

-24%

Reduction in water use(per person)

-25%

-49%

Reduction in waste (tonnes)
to landfill (per person)
Amount of waste recycled

-25%
70%

-71%
66%

Notes
albert is a carbon calculator which helps production teams across the broadcasting industry
calculate the carbon emissions associated with TV production.

-20%

-5%

albert+ is a certification scheme which helps productions take steps to reduce
environmental impacts. Successful productions are awarded a one, two or three star rating
and may display a badge on programme credits. Productions which have completed theprocess have progressed to the audit stage.

Greenhouse Gas emissions
Greenhouse Gas emissions (tonnes CO2 emissions, scopes 1 & 2):
Carbon intensity (tonnes CO2 emissions/Total Group Income £m):

112,907
23.5

Reduction in transport CO2
emissions (per BBC user)

BBC productions to completealbert+ sustainable production
certification process

For more information see: bbc.co.uk/responsibility/environment

Notes on table
Greenhouse Gas data is for UK-based and representative World Service bureaux;detailed information and explanatory notes can be found online at: bbc.co.uk/
responsibility/environment.
96

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BBC Annual Report and Accounts 2014/15

Part Two: Governance and finance report – Governance

Governance
Governance is the way we guarantee
independence, deliver our mission andaccount for our actions

Dustin Hoffman stars in BBC One’s adaptationof Roald Dahl’s Esio Trot

BBC Annual Report and Accounts 2014/15

97

Governance and finance report – Governance

Executive Board

The Executive Board, chaired by the Director-General, and consistingof executive and non-executive directors, is responsible for the deliveryof BBC services and day-to-day operations across the organisation.
Executive directors

Tony Hall, Lord Hall of Birkenhead CBEHelen Boaden

Anne Bulford OBE

Director-General and Chairman,
BBC Executive Board

Director, RadioManaging Director,
BBC Finance and Operations

Danny Cohen

Tim Davie

James Harding

Director, Television

CEO, BBC Worldwide and Director,
GlobalDirector, News and Current Affairs

James Purnell
Director, Strategy and Digital98

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BBC Annual Report and Accounts 2014/15

Non-executive directors
The Executive Board delegatessome of its responsibilities to four
sub-committees:

Dame Fiona Reynolds DBE

Simon Burke

Senior Independent Director; Chairman of Chairman of the Audit Committee
the Remuneration Committee, Fair Trading
Committee, and Nominations Committee
for non-executive appointments

Alice Perkins CB

Fair Trading Committee
The Fair Trading Committee ensuresthat the BBC complies with its fair trading
obligations. It is made up of three
non-executive directors, one of whom
is nominated as chairperson. Other
individuals may be invited to attend
all or part of any meeting as and whenappropriate. This may include (but not
be limited to) the Managing Director,
Finance and Operations, BBC Group
General Counsel, Head of Fair Trading
and Competition Law, external advisersand other relevant BBC members of staff.
Nominations Committee
The Nominations Committee oversees
the process of proposing, appointing
and dismissing members of the Board,
except the Chairman, who is appointed
by the BBC Trust. Membership ofthe committee depends on whether
non-executive or executive appointments
are being made.
Remuneration Committee
The Remuneration Committee decides
the remuneration of executive membersof the Board. It is made up of at least
three non-executive directors. The
Director-General, Managing Director,
Finance and Operations and Director of
HR may also attend.
In general, the committees meetfour times a year, although this canvary depending on the business tobe considered.

Sir Howard Stringer

BBC Annual Report and Accounts 2014/15

Dharmash MistryThis is the membership of the
Executive Board as at April 2015.
Throughout the reporting year
membership has changed. Pleaserefer to pages 110 and 111 forfurther details.
99Part Two: Governance and finance report – Governance

Sir Nicholas Hytner

Audit Committee
The Audit Committee oversees financial
reporting, internal control and risk
management. The committee is madeup of three non-executive directors.
The Director-General, Managing
Director, Finance & Operations, Directorof Risk and Assurance, and external audit
representatives also attend.

Governance and finance report – Governance

Report of the Senior Independent Director
In March 2015 I visited School Report, the day when 30,000
schoolchildren learn how news reports are made and havetheir work shown by the BBC.
The children produced and presented a live news bulletin, sittingin the gallery making decisions about which stories to run and how
to present them in response to changing events. It was
exhilarating to watch.

“Good governance is ultimately about people asmuch as processes. I am confident that we havethe right mix of skills and that the Board isfunctioning as a strong and coherent group.”
Dame Fiona Reynolds

I was struck by the enormous difference between the governanceof the BBC and the production of a live show. The Executive
Board makes decisions that last months or years rather thanseconds, and is focused on strategy and direction rather than theimmediate here and now. But across the BBC the core of our task
is the same: to make the best decisions, based on the best
information available, in response to our changing world.
As members of the Executive Board, we are acutely conscious of
our responsibility for the management and leadership of theworld’s best public service broadcaster. The structures andprocesses that underpin our decisions are not ends in themselves,
but they are vital in making good decision-making possible.
This year we welcomed two new members to the Executive
Board. Dharmash Mistry, a new non-executive director, brings
a wealth of digital experience to the Board from his time atBalderton Capital, Emap and LOVEFiLM; while Tim Davie,
Chief Executive of BBC Worldwide, rejoined the Board.
Tim’s appointment reflects the critical importance of BBC
Worldwide and our desire to have a single strategy for the public
service and commercial elements of the BBC.
Alice Perkins conducted a thorough review of the way the Board
works during the autumn of 2014, covering everything from
regular reporting to Board members to the way we manage theBoard’s agenda and deal with the complex matters that comebefore us.
Following her review, the Board is working more effectively thanever with a renewed focus on strategic decision-making which isso important during this time of change. I’m grateful to all themembers of the Board for contributing to her review, and for thetime and dedication they have given to the governance of the BBC
over the last year.

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BBC Annual Report and Accounts 2014/15

Our priority this year has been to implement the strategy
announced by Tony Hall in October 2013. This has four elements:
lifting creativity and distinctiveness, serving all our audiences,innovating online to create a more personal BBC, and becoming
simpler and more efficient. The Board monitors progress in eacharea, supporting and challenging the Executive to deliver ourambitious goals.

The determination we share to inspire our audiences and provide
a secure future for public service broadcasting is given an eversharper focus as we approach Charter Review and decisions
about the future financing of the BBC. The BBC helps us all live
fuller and more rewarding lives, and our job is to make sure we
combine inspiration with good service, innovation with efficiency,
and delight with great value for money.

We worked with the BBC Trust this year to simplify the way
we work together and reduce overlap. Rona Fairhead became
Chairman of the Trust in October and she has already built astrong relationship with the Executive Board, based on the
Trust’s regulatory responsibilities which include holding us
accountable for delivering our strategy and challenging the
Executive to deliver the best value to our audiences.

As I left School Report in March I was shown the BBC’s new
programmable device that is being given to a million schoolchildren
across the UK. What other organisation is capable of teaching thenation to code, or has the audacity to try? The skills that wereonce the preserve of highly paid professionals are now part ofevery child’s education. It is a privilege to be part of anorganisation that is embracing the future with such vigour andenthusiasm.

Outside the Board, the Audit, Remuneration, Fair Trading andNominations Committees provide vital oversight and assurance
for the BBC. The work of these Committees is described
elsewhere in this report.
Good governance is ultimately about people as much asprocesses. I am confident that we have the right mix of skills
and that the Board is functioning as a strong and coherent
group under Tony’s leadership.

Dame Fiona Reynolds
Senior Independent Director
16 June 2015

Executive Board and Committee attendance
Executive
Board
Number of meetings for the period

Audit Committee
MemberAttendee12

Fair Trading Committee
MemberAttendee53Nominations
Committee
MemberRemuneration Committee
MemberAttendee0

6

Tony Hall

12

Helen Boaden

11

Anne Bulford

11

Danny Cohen

11

James Harding

11

Tim Davie

12James Purnell

11

4

5

5

3

6

Non-executives
Nicholas Hytner

7

Simon Burke

11

5

Fiona Reynolds

12

5

3

6

Alice Perkins

9

3

6

Howard Stringer

11

1/2

Dharmash Mistry

8/8

2/3

4/4

This table does not include business conducted offline and update meetings where no formal business was considered.

BBC Annual Report and Accounts 2014/15

101

Part Two: Governance and finance report – Governance

Executives

Governance and finance report – Governance

Governance report

Good governance is about leadership, accountability and openness
BBC Corporate Governance Framework
The BBC’s corporate governance framework is defined in its
Royal Charter and the accompanying Framework Agreement.
You can find the Charter and Agreement on the BBC Trust’s
website at: bbc.co.uk/bbctrust/about/how_we_govern/charter_
and_agreement/
The BBC’s Charter requires the Executive Board to have regard
to generally accepted principles of good corporate governance.
Although the BBC is not a listed company, it has opted to adopt
best practice and follow the provisions of the Financial Conduct
Authority’s Listing Rules and the Financial Reporting Council’s
2012 UK Corporate Governance Code in order to deliver thesame governance standards as companies quoted on an EU
regulated stock market.
The Executive Board has complied with the requirementsof the Charter and has also substantially complied with the
UK Corporate Governance Code. There are a number ofcomponents of the UK Corporate Governance Code that areeither not appropriate to the circumstances of the BBC or wherecompliance with the BBC’s Charter or Agreement overrides
compliance with the UK Corporate Governance Code. There
are also two areas where the BBC did not fully comply with thespecific requirements of the Code. All of these are set out below.

Areas where compliance with the BBC’s Charter overrides
the UK Corporate Governance Code:Division of responsibilities between Chairman and Chief
Executive (UK Corporate Governance Code principle A.2.1
and A.3.1): As permitted by the BBC’s Charter, the Chairmanof the Executive Board is the Director-General, the chief
executive officer of the BBC. This does not comply with the
UK Corporate Governance Code which requires a clear
division of responsibilities at the head of the company between
the running of the Board and the executive responsible forthe running of the business. No one individual should have
unfettered powers of decision. Whilst the Director-Generalacts as both Chairman and Chief Executive of the BBC
Executive Board, the strategic oversight of the Corporationby the BBC Trust ensures that no single individual has
unfettered powers.
Evaluation of the Chairman (UK Corporate Governance Codeprinciple B6.3): The Director-General of the BBC, being
the Chairman of the Board, has his performance evaluatedby the Chairman of the BBC Trust as opposed to the Senior
Independent Director, as required in the UK Corporate
Governance Code.
Areas of non-compliance with the UK Corporate
Governance Code:External evaluation of the Board (UK Corporate Governance
Code principle B.6.2): In 2013 the BBC Trust and Executive
Board undertook an extensive review of its governanceprocedures and the results were published. The Executive
Board also undertook an internal evaluation of its operations
during the year. However, the last external evaluation of theBoard was completed in 2009, therefore not within the last
three years as required by the UK Corporate GovernanceCode. Given the activities that have been undertaken thisyear the Executive Board believes that non-compliance inthis area has not compromised the quality of the governancearrangements in place during 2014/15 or the execution of the
Executive Board’s responsibilities.

Areas of the UK Corporate Governance Code not relevantto the BBC:Make up of remuneration (UK Corporate Governance
Code principle D.1.1): The BBC sets levels for executive
remuneration that should be sufficient to attract, retain
and motivate directors of the quality required to run theorganisation successfully, in line with this principle. However,this principle also requires aligning executive remuneration
to the notion of enhancing shareholder value by making
performance-related elements of remuneration a significant
proportion of total remuneration. By virtue of the BBC’s
licence fee funding and its public purposes, the Executive
Board has determined that the amount of variable (orperformance-related) remuneration that may be earned bystaff within the public service should be limited. There is no
Composition of the Audit and Remuneration Committees(UK Corporate Governance Code principles C.3.1 and D.2.1):
variable pay for any BBC Public Service executive director
For the first five months of the year both the Audit andand bonuses have been stopped. Tim Davie receives an element
Remuneration Committees comprised two members which,of performance-related pay in his role as Chief Executive
despite being quorate, does not comply with the UK Corporate
Officer of BBC Worldwide, the BBC’s wholly-owned
Governance Code; this was due to a lack of available noncommercial subsidiary.
executive directors to fulfil these roles. A new non-executive
Interaction with shareholders (UK Corporate Governancedirector was appointed as a member of both the Audit andCode principles B.7.1, B.7.2, D.2.4 and section E): The BBC
Remuneration Committees in September 2014; therefore theis not a profit-oriented company with shareholders and
BBC was compliant with these principles for the remainder
so provisions relating to interaction with shareholders doof the financial year.
not apply. In some circumstances, however, it is possible toconsider, by analogy, the way in which the BBC Trust engages
with licence fee payers. This is set out in the Trust’s review andassessment in Part One of this Annual Report and Accounts.

102 

BBC Annual Report and Accounts 2014/15

Nominations
Committee
Cost of compliance
In 2014/15, the BBC incurred costs estimated at £11.7 million(2014: £16.2 million) to ensure that we complied with all relevant
legislation. This includes the BBC’s annual £2.6 million regulatory
fee to Ofcom. During the year a number of enquiries continued,
the costs incurred during 2014/15 on these enquiries were£1.2 million (2013/14: £2.0 million).
The BBC Executive Board
The Executive Board, its sub-committees and other groups towhich it delegates responsibility are responsible for the delivery of
BBC services and day-to-day operations across the organisation.
The BBC Trust is responsible for setting the overall strategic
direction of the BBC and for exercising general oversight of thework of the Executive Board.

Board appointments
The Nominations Committee oversees the process of proposing
members of the Board. Appointments are made by the Executive
Board, with non-executive appointments requiring the approvalof the BBC Trust. The only exception is the Chairman, who isappointed by the BBC Trust. Membership of the Nominations
Committee is dependent on whether it is dealing with executive
or non-executive appointments.
Tim Davie, CEO of BBC Worldwide and Director, Global, wasappointed to the Executive Board, effective 1 April 2014.
Following approval from the BBC Trust, the Nominations
Committee appointed Dharmash Mistry as a new non-executive
director effective 1 September 2014.

The Executive Board delegates some of its responsibility to othermanagerial groups and, in accordance with the requirements andprovisions of the Charter, the following Committees of the Board
continued to operate last year:
Audit Committee
Fair Trading Committee
Nominations Committee
Remuneration Committee

Part Two: Governance and finance report – GovernanceAny delegation from the Executive Board is stated in the relevant
standing orders for each Committee and a framework forreporting and review is established. See: bbc.co.uk/aboutthebbc/
insidethebbc/managementstructure/seniormanagement/
subcom.html
The Executive Board meets monthly (except for August), althoughadditional Board meetings are convened during the year as andwhen required. Summary minutes of the monthly meetings areavailable online at: bbc.co.uk/aboutthebbc/insidethebbc/
managementstructure/seniormanagement/
Induction, performance and development
All new directors receive an induction programme including
Board procedures and directors’ responsibilities. All directors
have access to external independent advice as necessary throughthe Company Secretary.
The BBC Trust formally assesses the performance of the BBC’s
services against the terms of the licences it issues for each BBC
service. The BBC Trust’s review and assessment for 2014/15 canbe found in Part One of this Annual Report.
All the executive directors have their own personal and divisional
objectives, and their performance against them is reviewed bytheir line manager.

BBC Annual Report and Accounts 2014/15

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Governance and finance report – Governance

Remuneration report“Our strategy needs to enable the BBC to continue
Annual statement of the Chair of the
to attract and retain the very best leaders andExecutive Remuneration Committee
highly talented staff.”
Dame Fiona Reynolds

The Executive Remuneration Committee (ERC) recognises theunique way in which the BBC is funded through the licence fee
and our obligations to ensure that we operate responsibly andwith transparency to deliver the best value for our audiences.
As promised in my 2013/14 report, the Committee has continued
to challenge the BBC’s senior management to deliver value andtransparency to licence fee payers. A key 2014/15 objective wasto deliver the promised increased governance around senior
manager remuneration across the BBC. We have done this.
Our task has been helped by the stability of the BBC Executive
Board. The CEO BBC Worldwide & Director, Global was
reappointed to the Executive Board at the start of the year toensure greater alignment between public service broadcastingand our commercial operations as part of our vision to create
One BBC. There have been no other changes to Executive
membership of the Board during the year nor any salary increases.
We have continued to reduce the number of senior managers.
The senior manager paybill is now £52 million as compared to£78.5 million on 1 August 2009. There has been no direct impact
on the quality of the content we produce as a result of thesechanges. Our new processes have also ensured that there
have been no cases of severance paid above £150,000 and nopayments in lieu of notice paid in addition to severance this year.
The full report is available here: bbc.co.uk/aboutthebbc/
insidethebbc/howwework/reports
Throughout the year, the ERC has reviewed the progressagainst the 2011 BBC Executive and Senior Management Pay
Strategy targets and we will continue to do so for the durationof that strategy.
As Tony Hall describes in his foreword, a key challenge for the future
is for the BBC to prepare for an internet-led world. To deliver
this we need to attract talented people who are able to lead thistransformation and have a clear, accountable group of seniorleaders. Our reward strategy needs to enable the BBC tocontinue to attract and retain the very best leaders and highly
talented staff through a combination of our extraordinary output,
compelling creative position and strong public service ethos.
Dame Fiona Reynolds
Chairman of the Remuneration Committee
16 June 2015

Broadcasting House, London

104 

BBC Annual Report and Accounts 2014/15

Remuneration policy for executive directors
1. Remuneration Committees: constitution and operation
The BBC Trust is responsible for setting the remuneration strategy
for the Executive Board and for all aspects of the remunerationof the Director-General and the non-executive directors.
The Executive Remuneration Committee (ERC) is responsible for
implementing the agreed strategy for all executive members of
the Executive Board, with the exception of the Director-General.
Its members are non-executive directors: Dame Fiona Reynolds(Chairman), Alice Perkins (from 1 January 2014) and Dharmash
Mistry (from 1 September 2014).
Complying with the UK Corporate Governance Code 2012, the
ERC takes specialist advice from external professional advisers
on some matters, particularly those relating to market practice.
During the year, the Committee received independent advice
from Towers Watson on matters related to market comparabilityof executive remuneration.
The ERC established the Senior Manager Remuneration
Committee (SMRC) in September 2012, giving it responsibility
for aligning the operational needs of the BBC within the strategic
framework set by the Trust and implemented by the ERC.

2. Executive Board membership and structure
In 2013/2014 the BBC made the latest appointment to the
new Executive Board under Tony Hall’s leadership. This was thereappointment of the role of CEO, BBC Worldwide & Director,
Global to the Board with effect from 1 April 2014.
As at 31 March 2015, the Executive Board comprised six
executive directors employed in the public service; the CEO,BBC Worldwide & Director, Global employed by BBC
Worldwide and six non-executive directors. Details of the
Executive Board membership and full remuneration is provided
in Table 1 on page 110.
3. Executive director pay components
The ERC is committed to setting appropriate levels of pay forexecutive directors that attracts, motivates and retains the best
people to lead the BBC and provide value for the licence fee payer.
The BBC’s executive pay strategy should be fair, transparent andbroadly consistent with the approach to pay for all employees
at the BBC. Progress continues to be made towards thesegoals, including the phased diminution of historic differences inapproaches to pay and benefits between senior and other staff.
The BBC receives regular feedback regarding senior pay from
employees during annual pay negotiations through the tradeunions and via the annual staff engagement survey. This feedback is
considered when setting the pay strategy for the executive directors.
When reviewing the pay for the executive directors, the ERC
considers each component of the total remuneration package
broken down as set out on the table overleaf:
Part Two: Governance and finance report – Governance

BBC Annual Report and Accounts 2014/15

105

Governance and finance report – Governance

Component

Purpose and link to strategy

Operation

Maximum opportunity

Base pay

Base pay is aligned to the market
median for total direct remuneration(salary, annual bonus and annualised
long-term incentive).

Three factors are used todetermine the level of base pay
set for an executive director orsenior manager:

There is no prescribedmaximum salary or
maximum increase.

A discount of 50-80% against
total direct remuneration in thecommercial sector is applied to
executive director roles.

would the rate be consistent
with the discounted market
rate for the job?
does the personal
performance of the executive
director justify the level ofbase pay?
is the level affordable and notdeemed excessive?

Executive directors employed in
the BBC’s commercial businesses
are contractually entitled to a
performance-related annual bonus
funded by the commercial businessand not the licence fee to reward
the achievement of short-term
strategic goals and profit growth.

Executive directors in PublicService are no longer entitled toreceive a performance bonus.

No executive director in
Public Service has received
a bonus since 2008.

Payment of contractual bonuses in
the BBC’s commercial businesses
is subject to the achievement of an
overall headline profit for the
relevant business.

The maximum bonus
payable to an executive
director employed in a BBC
commercial business is 70%
of salary, where target
bonus is 50% of salary.

Pensions are offered in accordancewith the all-employee pension
arrangements.

Directors can elect to join thedefined-contribution scheme
LifePlan.

In addition to pensions, theother main contractual benefit
is life assurance.

The BBC’s defined-benefit
scheme is closed for new joiners.

Current policy provides
a defined contribution
scheme with no salary cap,
and a maximum employer
contribution of 10%
of salary.

Variable pay

Benefits –pension and life
assurance

No executive director hasreceived an in-role salary
increase since 2009.

Existing members of adefined-benefit pension
scheme are capped at
the maximum salary for
their pension schemeor are subject to a cap in
pensionable salary growth.
Executive directors areprovided with death-inservice life assurance
cover of two times theirbasic salary.
Employees who aremembers of either the
BBC Pension Scheme or
LifePlan (the BBC’s definedcontribution plan) areprovided with death-inservice life assurance
cover of four times theirbasic salary.

106 

BBC Annual Report and Accounts 2014/15

Component

Purpose and link to strategy

Operation

Maximum opportunity

Benefits

In April 2012, the BBC removed
the car allowance benefit for all
new executive directors and senior
managers to ensure that future
policy aligns with arrangements
for all BBC employees.

Executive directors who werealready in receipt of a car
allowance have retained it.

The maximum car
allowance benefit received
by any executive director
is £12,900 per annum.
This is a historical benefit.

Executive directors who received
a car allowance payment in2014/15 were: Helen Boaden
and Danny Cohen.
Danny Cohen had his car
allowance frozen on promotion
to the Executive Board.
The Director-General is entitledto a car and driver under earlier
arrangements but has noentitlement to a personal car
allowance or fuel allowance.
During 2014/15 all other executive
directors have had access to a carand driver, shared with the
Chairman of the BBC Trust.

Benefits

Entitlement to private health care
was removed for all new executive
directors with effect from August
2011, to ensure alignment with allother BBC employees.

Executive directors who werealready entitled to funded private
medical insurance have retained it.

Employment
contracts andseverance

Employment contracts of executive
directors have a maximum notice
period of six months, but are
subject to earlier termination
for cause.

There is no contractual
entitlement to any additional
remuneration in the event of earlytermination other than in the caseof termination for reasonof redundancy.

In the event of redundancy,
all executive directors areentitled to payments equal
to one month per year ofservice up to a maximum
payment of £150,000.

Other
remuneration

There is no entitlement to any
other remuneration.

Consideration is given to thereputational risks to the BBC
and the level of payment
is agreed by the Executive
Remuneration Committee
on a case-by-case basis.

There is no prescribedmaximum.

This is a historical benefit.
Part Two: Governance and finance report – Governance

BBC Annual Report and Accounts 2014/15

Executive directors who elected
to take up funded private medical
insurance in 2014/15 were: Helen
Boaden, Danny Cohen and
Tim Davie.

The maximum level of coveroffered is family cover.

107

Governance and finance report – GovernancePensionExecutive directors who joined the BBC before 1 December
2010 are eligible to participate in the BBC Pension Scheme(the Scheme), which provides for pension benefits on a definedbenefit basis. Executive directors who joined the BBC on or after
1 December 2010 are eligible to join LifePlan which is the BBC’s
defined-contribution arrangement. The BBC pays matching
contributions to LifePlan for employee contributions between
4% and 5%. Employee contributions between 6% and 7% arematched plus an additional 1%. Employee contributions of 8% ormore receive the maximum employer contribution of 10%. Thereis no maximum pensionable salary for contributions to LifePlan.
Executive directors who decide not to join LifePlan or are notalready an existing member of the Scheme are, subject to meeting

the relevant criteria, automatically enrolled in the National
Employment Savings Trust (NEST). The BBC and employees
currently pay 1% of qualifying earnings to NEST. Individuals canchoose to opt out of this.
Executive directors’ pension arrangements may be reviewed
and amended in response to changes in legislation or similar
developments.
Features of the BBC’s pension arrangements that our executive
directors participate in are provided in the table below.
Details of the BBC Pension Scheme are available at:bbc.co.uk/mypension/ and details of LifePlan can be found at:www.friendslife.co.uk/microsite/bbc/‘Old’ benefits
defined benefit‘New’ benefits
defined benefit

CAB 2006
defined benefit

CAB 2011
defined benefit

LifePlandefined contribution

National Employment
Savings Trust (NEST)
defined contribution(auto enrolment
arrangement)

30 September 1996

31 October 2006

30 November 2010

1 January 2012

Open to all eligible
employees

Open to all eligible
employees

Accrual60ths accrual

60ths accrual

1.67% accrualadjusted in line with
inflation

BBC will contribute
1% of qualifying
earnings

SalaryFinal pensionable

Final pensionable

Career averagerevalued earnings

1.67% accrual BBC will contribute aadjusted in line maximum of 10% ofwith CPI
salary if employee
Career average contributes 8% withlower sliding scale
revalued earnings

SchemeDate closed

60

60

65

65

N/A

N/A

Earnings cap

Normal pensionable age

Date of joining
before 1 June 1989
uncapped, capped
otherwise

Capped at£145,800

Capped at £145,800

Capped at £142,200

Uncapped

Minimum earnings£5,772 p.a.
Maximum earnings£41,865 p.a.

Pensionable salary
growth before theearnings cap is applied

Limited at 1% p.a.

Limited at 1% p.a.

Limited at 1% p.a.

No restriction

N/A

N/A

7.5%

7.5%

4%

6%

Minimum employee
contribution is 4%

1% of qualifying
earnings

Employee contribution(% of pensionable salary)

Variable remuneration in 2015/16 for BBC Worldwide
The chart represents the potential earnings of the CEO, BBC
Worldwide & Director, Global for the year.
Minimum: a base salary of £400,000, pension related single
figure of £37,000 and taxable benefits of £2,000
Target: the minimum payment plus a bonus of 50% of basesalary (£200,000)
Maximum: the minimum payment plus a bonus of 70% ofbase salary (£280,000)

Bar chart shows
Totalannual
annualremuneration
remuneration £000s
Total
£719
Minimum - £439,000 of which
100% was paid in salary, pension
Salary, pension and benefits
39%
and benefits
£639
Bonus
Target - £639,00031%
of which 69% was paid in salary, pension andbenefits and 31% was paid in bonuses
Maximum - £719,000 of which 61% was paid in salary, pension£439 and 39% was paid in bonuses
and benefits
100%
69%
61%

Minimum

108 TargetMaximum

BBC Annual Report and Accounts 2014/15

4. How does the executive pay policy in the Public Service
differ from that for all other BBC employees?
The ERC has ceased the payment of bonuses to all executive
directors in the Public Service and is moving away from theprevious two-tier benefit structure by phasing out private
medical insurance and car allowances with no new executive
director or senior manager receiving these benefits sinceAugust 2011 and April 2012 respectively. These changes have
simplified and equalised pay arrangements across our employee
population. A full range of benefits can now be purchased by
all staff at all levels of the organisation under our flexible
benefits arrangements.
Executive directors and senior managers are not entitled tothe annual pay review agreed with the National Joint Councilof Trade Unions. Executive directors and senior managers are
not automatically entitled to any form of annual increment nor
are they entitled to any form of progression payment. A cost ofliving increase was applied to the senior management population,
excluding the most senior role and recently recruited employees,
in January 2015. This was in line with what was awarded to othereligible BBC staff and was done in recognition of the impact ofprevious pay freezes has had on pay as this practice cannot be
continuously sustained. Senior salaries are discounted against the
remuneration of equivalent roles in commercial organisations.
The BBC is increasingly aligning senior pay to public sector
organisations with commercial sector activities.

5. The Executive Pay Strategy and Policy for 2014/15 –progressing towards greater consistency and transparency
Throughout 2014/15, the ERC worked to manage and reduce
senior managers by ensuring compliance with the BBC executive
and senior management pay strategy. This strategy was agreed
with the Trust in July 2011, with targets to be delivered by theend of 2015. Since January 2012 the BBC has reduced overall
numbers by 71 senior managers against a target of 70 and paybillby £5.7 million against a target of c£9 million. These reductions
will have contributed to nearly £1.6 billion of cumulative savings
by the end of the Charter period. Reductions thus far havebeen achieved without harming the services we provide to
our audiences.

BBC Annual Report and Accounts 2014/15

The strategy also committed the BBC to two further targets –a 20% reduction in the numbers of senior managers earning over
£150,000; and a senior manager population that is c1% of the total
workforce. We continue to work towards these targets but they
have not yet been achieved. On the first, although we continue
to discount our roles in line with policy, due to changes in theexternal market in which we recruit and the consolidation of anumber of our senior manager roles into larger jobs, we have notachieved the reduction in numbers that were proposed in thestrategy (at 1 March 2015 numbers were 95, against a target of72). We have reported this to the Trust and continue to monitor
salaries at this level. On the second, we are reviewing options forthe definition of our senior leader population in order to give realclarity about the core community who are accountable for leading
and running the BBC.
6. Consideration of BBC Trust views
The BBC Trust has specific responsibilities with regard to the
remuneration of executive directors – these are set out in Part 1of this report. More generally, the Trust has agreed the BBC’s
current executive remuneration strategy. The ERC reports to
the Trust against the strategic objectives we have agreed andseeks feedback from the Trust.
The ERC provides an annual assurance report (covers executive
director pay, benefits and terms and conditions) to the Trust forconsideration and feedback. Members of the Trust have discussed
the report. It was noted there had been no ‘in role’ salary
increases for executive directors and that the discount factor
against remuneration of commercial sector competitors waswithin the range agreed by the Trust.

109

Part Two: Governance and finance report – Governance

The ERC uses the BBC pay multiples, ratios of the DirectorGeneral’s and executive directors’ median earnings to the BBC
median earnings, as a cap to ensure that the BBC continues toreduce the level of remuneration for executive directors relative
to all members of staff.

The BBC continues the practice of discounting BBC executive
directors’ pay against the commercial sector and has maintained apay freeze of executive directors. The agreed discount remains at
between 50% and 80% below commercial sector pay. In order toensure that levels of pay are consistent with the agreed strategy,
the ERC obtains and reviews external market pay data via an
independent advisor. This information was reported to the Trustand provided assurance of our continued delivery against thepolicy. Our executive directors in the public service are paidaround 70% less than similar executives in the commercial sector.
This discount also reflects the substantial additional amounts ofvariable pay (including bonus and long-term incentives) provided
in the commercial sector that are not available to executive
directors working for the public service BBC.

Governance and finance report – Governance

Executive Board annual remuneration report
Annual remuneration of the Executive Board – detail of remuneration received (audited)
Table 1 provides full details of the remuneration earned by all Executive Board members and the total remuneration for Trustees
for 2014/15 compared to the previous year.
Table 1: Executive Board remuneration
2014/15Fee/base pay£000(Note 3)

Taxablebenefits£000(Note 4)

Performance- Compensation
relatedfor loss
remunerationof office£000£000(Note 5)Pensionrelated single
figure£000(Note 6)

Total
remuneration£000

Executive directors
Executive directors as at 31 March 2015
Tony Hall

450

16

–

–

–

466

Helen Boaden

340

15

–

–

65

420

Anne Bulford

395

–

–

–

–

395

Danny Cohen

320

10

–

–

42

372

Tim Davie (Note 1)

400

2

201

–

37

640

James Harding (Note 2)

340

–

–

–

14

354

James Purnell

295

–

–

–

30

325

2,540

43

201

–

188

2,972

Total executive directors as at 31 March 2015
Total former executive directors on the Executive Board prior
to 2014/15
Total executive directors

–

–

–

–

–

–

2,540

43

201

–

188

2,972

37

–

–

–

–

37

Non-executive directors
Non-executive directors as at 31 March 2015
Simon Burke
Nicholas Hytner

33

–

–

–

–

33

Dharmash Mistry

19

–

–

–

–

19

Alice Perkins

33

–

–

–

–

33

Fiona Reynolds

47

–

–

–

–

47

Howard Stringer

33

–

–

–

–

33

Total non-executive directors as at 31 March 2015

202

–

–

–

–

202

Total former non-executive directors on the Executive Board prior
to 2014/15
Total non-executive directors
Total Executive Board
Total Trustees
Total

110 

–

–

–

–

–

–

202

–

–

–

–

202

2,742

43

201

–

188

3,174

471

–

–

–

–

471

3,213

43

201

–

188

3,645

BBC Annual Report and Accounts 2014/15

2013/14
Fee/base
pay£000

Performance Compensation
Taxable-related
for lossbenefits remunerationof office
£000
£000
£000

Pensionrelated single
figure£000

Total
remuneration
£000

449

18

–

–

–

467

Appointed to the Board on 2 April 2013

340

15

–

–

59

414

Appointed to the Board in this role on 15 April 2013

304

–

–

–

–

304

Appointed to the Board on 21 June 2013

287

9

–

–

31

327

Appointed to the Board on 7 May 2013

1

–

–

–

–

1

217

–

–

–

–

217

Appointed to Executive Board on 12 August 2013

295

–

–

–

22

317

Appointed to the Board on 19 March 2013

1,893

42

–

–

112

2,047

Current membership to the Board commenced on 1 April 2014

28

–

–

42

570

70

–

–

154

2,617

37

–

–

–

–

37

Appointed 1 January 2011, current term expires 31 December 2016

–

–

–

–

–

–

Appointed 1 April 2014, term expires 31 March 2017

–

–

–

–

–

–

Appointed 1 September 2014, term expires 31 August 2017

–

–

–

–

–

–

Appointed 1 April 2014, term expires 31 March 2017

47

–

–

–

–

47

Appointed 1 January 2012, current term expires 31 December 2016

8

–

–

–

–

8

Appointed 1 January 2014, term expires 31 December 2016

92

–

–

–

–

92

61

–

–

–

–

61

153

–

–

–

–

153

2,546

70

–

–

154

2,770

525

1

–

–

–

526

3,071

71

–

–

154

3,296

BBC Annual Report and Accounts 2014/15

Part Two: Governance and finance report – Governance

500
2,393

111

Governance and finance report – GovernanceNotes to Table 1: Executive Board remuneration
Note 1: Tim Davie
Tim Davie temporarily assumed the role of Acting DirectorGeneral on 11 November 2012 until Tony Hall assumed the role
on a permanent basis on 2 April 2013. Tim was then re-appointed
to the Executive Board in his role as CEO, BBC Worldwide &Director, Global with effect from 1 April 2014. This role isfunded entirely by the BBC’s commercial operations and is not
paid for or subsidised by the licence fee. The performance-related
remuneration for Tim Davie relates to amounts earned in theyear ended 31 March 2015. The equivalent performance-related
remuneration earned in the year ended 31 March 2014 was£231,000 and is not included in the table for the prior year as
he was not on the Executive Board.
Note 2: James Harding
James Harding joined the BBC as an executive director on
12 August 2013. He joined LifePlan on 1 November 2014
having previously been enrolled in the National Employment
Savings Trust.

Note 4: Taxable benefits
Taxable benefits are: car allowance, private medical insurance
and taxable expenses.
Note 5: Performance-related remuneration
The CEO, BBC Worldwide & Director, Global is contractuallyentitled to an annual bonus. Payment of the bonus is subject tothe achievement of an overall headline profit for that business.
This payment is funded entirely by the BBC’s commercial
operations and not by the licence fee.
The ERC has ceased the payment of bonuses to all executive
directors in the Public Service.
Note 6: Pension-related single figure
This is generally calculated as 20 times the increase in the accrued
pension over the year net of inflation, less the directors’ definedbenefit contributions, plus the employer’s defined contribution.

Note 3: Pension
Employee pension contributions are ordinarily made via a salarysacrifice arrangement as an employer contribution, with acorresponding reduction in salary. Base salaries for executive
directors have not been adjusted to reflect the impact of salarysacrifice to enable like-for-like comparison with prior years
before salary sacrifice was introduced.
Table 2: Defined benefit entitlements
Details of defined benefit entitlements are shown below.

Executive directors

Age as at
31 March 2015

Accruedpension
31 March 2015
(or retirement/leaving theBoard if earlier)Section£000

Director
Accrued defined-benefit
pensioncontributions
31 March 2014
(via salary(or joining thesacrifice) Pension-related
Board if after)
2014/15
single figure
£000
£000
£000

Helen Boaden

59

Old benefits

80

74

16

65

Danny Cohen

41

CAB 2006

18

15

6

42

Tim Davie

47

CAB 2011

8

5

9

37

1 Tim Davie became an active member of the CAB 2011 section as at 1 January 2012 and retains a deferred pension in the new benefits section for service up to that date.
The accrued pension shown relates to CAB 2011 only
2 Directors’ defined-benefit contributions are made via a salary sacrifice arrangement as an employer contribution, with a corresponding reduction in salary. Base salaries for
executive directors have not been adjusted to reflect the impact of salary sacrifice to enable like-for-like comparison with prior years before salary sacrifice was introduced.
To avoid double-counting, the salary sacrifice contribution is treated as a contribution from the director for the purpose of calculating the pension-related single figure
3 The pension-related single figure has been calculated on a pro rata basis to reflect the period each director has served as a member of the Board
4 Tony Hall and Anne Bulford are not currently contributing to a BBC pension arrangement and do not receive any payments-in-lieu of pension-related benefits in respect of theircurrent period of employment
5 James Harding and James Purnell are active members of LifePlan. In 2014/15 the employer contributions to this scheme were £14,335 and £29,500 respectively

112 

BBC Annual Report and Accounts 2014/15

Comparative pay across the BBC: how does executive
directors’ pay compare to that of other BBC employees?
In 2011 the BBC voluntarily agreed to report the top to medianearnings multiple as proposed in the Hutton report ‘Fair Pay
in the Public Sector’. Since 2011, the BBC has published thesefigures each year.
The table below provides a summary of the Director-General’s
to BBC staff’s median earnings, and executive directors’ to medianearnings since 2011. The Director-General to staff multiple has
reduced again from 10.9 to 10.7. This demonstrates a positive
increase in median earnings across the BBC while there has been
no change in the earnings of the Director-General.

8.7

Percentageof paybill

Salary andallowance
costs£mPercentageof paybill

2.16

0.2%

2.49

0.3%

51.53

5.9%

50.73

6.0%

815.0993.8%

786.09

93.7%

Executive director cash
earnings*

2011

Senior manager cash
earnings

16.8

All other BBC staff cash
earnings
Total

868.78

8.9

Earnings calculation includes: basic pay, bonus, continuing allowances, overtime, and othernon-continuing allowances. Median earnings figures are calculated using Director-Generaland Executive Board annual salaries.

The figure for 2015 excludes the CEO, BBC Worldwide &Director, Global whose role is funded entirely by the BBC’scommercial operations.

*A s the data is representative of Public Service Broadcasting, Tim Davie, CEO BBCWorldwide & Global has been excluded.

Changes to Director-General remuneration £000s
£32
£163

SalaryPension supplement
Benefits
Pension*Includes temporary acting allowance

£29
£163

£668

£39
£613

£613
£41
£450*

£450

£450

31/03/2010

31/03/2011

31/03/2012

31/03/2013

31/03/2014

31/03/2015

Severance
No severance has been paid to executive directors during theyear ended 31 March 2015. A detailed report on severance
pay by the Senior Independent Director is available online
www.bbc.co.uk/corporate2/insidethebbc/howwework/reports/
bbc_review_severance_payments_2014_15.

BBC Annual Report and Accounts 2014/15

113

Part Two: Governance and finance report – Governance

The following tables provide a summary of the changes to the
Director-General’s cash earnings for 2014/15 versus the change in
pan-BBC median earnings over the same period. In addition,
through the BBC Executive and Senior Manager Reduction
programme, the BBC has reduced in total cash earnings andearnings as a proportion of total salary costs for BBC executive
directors and senior managers.

839.32

Tony Hall
Total £466

8.1

16.5

2014

2015
Salary andallowancecosts£mTony Hall
Total £467

8.2

11.0

1.8%

Tim Davie
Total £502

8.2

10.9

2012

0.0%

42

Mark Thompson
Total £661

10.7

2013

450

Mark Thompson
Total £808

Executive directors’
median earnings

2014

Director-General cash earnings
Pan-BBC median earnings

Mark Thompson
Total £870

2015

Director-General’searnings

Changefrom 2014

2015
£000

Governance and finance report – Governance

Delivering the strategy in 2015/16
During 2015/16, the ERC will continue to consider all potential
executive director appointments and severance cases to ensurealignment with BBC policy and strategy. The ERC will monitor on
an ongoing basis the senior pay strategy agreed in 2011 and will
implement a new strategy thereafter.
Outside interests
With the prior agreement of the Director-General, executive
members of the Executive Board may hold remunerated external
directorships. The prime purpose of the external directorshipshould be to support personal and career development andthereby give back to the BBC. Remuneration which arises fromdirectorships may be retained by the individual. Executive
directors may also hold non-remunerated posts outside the BBC.
No more than one to two days per month are permitted to fulfil
all external duties.
During the year no executive director held any other
remunerated external directorship. To see the Executive Board’s
register of interests visit: bbc.co.uk/aboutthebbc/insidethebbc/
managementstructure/seniormanagement
The BBC’s commercial businesses
The BBC has staff employed with three commercial subsidiaries:
BBC Worldwide
BBC Studios and Post Production
BBC Global News Ltd
The remuneration policy for the subsidiaries includes thecontractual provision of an annual bonus available to eligible staff,
including directors. The full cost of base pay and annual bonus are
self-funded by the commercial revenues of each subsidiarycompany and are not subsidised by the licence fee.
Remuneration within the commercial subsidiaries is not governedby the BBC’s remuneration policy but is subject to the BBC’s
governance and approval.

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BBC Annual Report and Accounts 2014/15

Audit Committee report
Report of the Chairman of the Executive
Audit Committee
Overview
We design the Executive Audit Committee’s (EAC) agenda
alongside that of the Executive Board, to ensure that all significant
areas of risk are considered during the year in an appropriate
forum.

“Managing risk and assurance ina changing organisation.”
Simon Burke

As indicated last year, effective identification and mapping of risks
has been a key theme for us. We have developed a much morerobust process for this and it has enabled us to base our audit
plan much more closely on the risk map. In this way, internal audits
increasingly form an integral part of the overall assurance andmitigation strategy of the BBC in relation to its risk profiles. I am
satisfied with the progress we have made in this area and we willcontinue to build on it.
We were also pleased to see that the outcome of ourprogramme of internal audit work was a reduction in both thenumber and gravity of matters raised when compared with theprevious year. Our clear-up rate for audit actions also improved.
We have been attentive to progress with some of the high-profile
issues reported in recent years, including child protection, thetreatment of freelancers, and the management of major projects,
especially in IT.

I am satisfied that the activities of the EAC have enabled us to gaina good understanding of the risks and challenges faced by theBBC, and the adequacy and timeliness of the action being taken
to address them.
We endeavour at all times to keep audience priorities andvalue for money at the forefront of our thinking.
No major matters were raised in the annual evaluation of the
EAC’s performance.
Simon Burke
Chairman of the Executive Audit Committee
16 June 2015

BBC Annual Report and Accounts 2014/15

115

Part Two: Governance and finance report – GovernanceOur agenda needs to evolve with the changes in the activity, risks
and balance of the BBC. Accordingly we are increasingly focusedon the impact of digital developments, cyber security and major
technology investment, alongside the continuing work to reducethe BBC’s cost base through the DQF programme and otherinitiatives.

Governance and finance report – GovernanceRole
The main purpose of the EAC is to obtain assurance that thefinancial statements of the BBC have been prepared with integrity
and that the BBC is maintaining and operating a sound system ofinternal control and risk management. In order to gain thisassurance, the EAC has responsibility for:monitoring and reviewing the integrity of the financial
statements of the BBC and the significant reporting
judgements contained within themreviewing the effectiveness of the BBC’s system of internal
control
reviewing the process for the management of risk
monitoring and reviewing the effectiveness of the Internal
Audit function
developing and implementing policy on the engagement of
the external auditor to supply non-audit servicesreviewing the appropriateness of the BBC’s relationshipwith the external auditor, including auditor independence
and objectivity; the provision of non-audit services and feesmonitoring and reviewing the effectiveness of the external
auditormaking recommendations regarding the appointment of
the external auditor
reviewing arrangements by which staff of the BBC may,in confidence, raise concerns about possible improprieties
in matters of financial reporting or other matters

Meetings
We held five meetings during 2014/15, at key times in thereporting and audit calendar.
Minutes from our meetings are made available to the Executive
Board and to the BBC Trust. Additionally, the EAC Chairman
reports back to the Board after each meeting on any issues where
action or improvement is required. We also produce a formal
report to the Board each year and provide our views on the
integrity of the financial statements before the Annual Report
is approved by the Board as a whole.
We spent our time on the following areas:
Integrity of financial reporting
We reviewed the integrity of the financial statements of the BBC:we identified through discussion with both management andthe external auditor the key risks of misstatement within the
BBC’s financial statements, including those areas where
significant financial judgements were required and which haveinfluenced the financial statements
we discussed these risks with the auditor at the time wereviewed and agreed the external auditors’ audit plan and also
at the conclusion of the audit of the financial statements
we reviewed, discussed and challenged detailed papers
received from management on those areas requiring
significant financial judgement, taking account of the viewsof the auditor
We set out opposite how we satisfied ourselves that the key
areas of judgement have been appropriately addressed.

The EAC’s Standing Orders set out in more detail our
responsibilities. These are reviewed regularly and were last
updated in March 2014. They can be read on our website,www.bbc.co.uk/aboutthebbc/insidethebbc/
managementstructure/seniormanagement/subcom.html
Membership
The EAC comprises three non-executive directors, of whom
one must have recent and relevant financial experience.
The members who served during the past year are:Simon Burke
Fiona Reynolds
Dharmash Mistry (from 1 September 2014)
We consider that Simon Burke, EAC Chairman, has significant,recent and relevant financial experience. When appropriate, we
augment the skills and experiences of our members with advice
from internal and external audit professionals – for example on
matters such as developments in financial reporting.
Our meetings are also attended by the Director-General, theManaging Director Finance and Operations, the BBC’s GeneralCounsel, the Director of Risk and Assurance and representatives
from internal audit, risk management and the external auditors.
We also meet privately, without any member of management
present, with both internal audit and the external auditors
on a regular basis.

116 

BBC Annual Report and Accounts 2014/15

Key areas of judgement

Our response

Judgemental assumptions impacting pension deficit
The financial statements include a significant deficit on thebalance sheet of £948.2 million for the BBC’s defined-benefit
pension scheme.

We considered the appropriateness of the assumptions used,
including how these compare with those used by otherorganisations. We focused in particular on the assumptions
used regarding discount rates, inflation rates and mortality/life
expectancy, and obtained an understanding of how changes
in these assumptions would affect the financial statements.
We also considered any movements in these from prior years
along with the external auditor’s view on the assumptions used.
We are satisfied that the assumptions used in the financial
statements are reasonable, appropriate to the BBC andsupported by independent actuarial specialists.

Judgements are required regarding the underlying
assumptions used by the actuaries in calculating the pension
deficit. Changes in these assumptions can result in large
swings in the final numbers disclosed.

We reviewed detailed reports from management which
explained the treatment for the most significant buildings,
including the projected timescales for future activity andrationale for treatment. We also considered the auditors’ viewson the accounting treatment for these buildings. We aresatisfied that the treatment of these properties within thefinancial statements is consistent with management’s intention,and is in line with accepted accounting standards. This includes
the reconsideration of the accounting treatment of Daunus
Limited as described in the financial statements.

Capitalisation/impairment of capital projects
The BBC undertakes multiple capital projects at any one
time. If a material capital project cannot be completed ontime, or will not derive future benefit to the BBC, this could
trigger an impairment charge.

We reviewed reports from management which explained thestatus of major capital projects and the approach taken toassess whether or not any impairment charge was required.
We also considered the auditor’s view. We are satisfied withthe treatment of capital projects, and with the underlying
systems addressing this.

Inappropriate revenue recognition
There is an inherent financial reporting risk around revenue
recognition relating to timing of recognition of income. The
nature of the risk varies between the licence fee income
which is reliant on accurate processing of transactions in the
public services and the commercial income for which theunderlying risk is around year-end cut-off.

We consider that the BBC’s existing financial control systems
should ensure that income is properly treated in the financial
statements. We have discussed the external auditor’s findingsin these areas and also drawn on relevant internal audit work.
We are satisfied that the systems are working as intended andcut-off is accurate.

Judgemental provisions and accruals
The financial statements include provisions in relation
to restructuring of £37.1 million as part of the BBC’s DQF
programme. Judgements in this area are largely related tothe timing of recognition of these provisions and thequantum recognised.

We reviewed and discussed the level of provisions withmanagement. This included consideration of new provisions
and any release and utilisation of existing provisions.
Management confirmed to us that they have applied a
consistent approach to the recognition and release ofprovisions across the BBC group. We also considered theviews of the external auditors in respect of the provisions
and associated disclosures in the accounts. We are satisfied
with the level of provisions carried and the disclosure in
respect of those provisions.

Other less significant provisions totalling £80.7 million require
judgements regarding the assumptions used in quantifying theBBC’s exposure to claims from various parties, and thelikelihood of success of those claims.
Cost cut-off and allocation between service licences
Service licences are used by the BBC Trust to regulate thelicence fee funded services. They include an agreed andauthorised budget with a 10% tolerance threshold. Service
budgets include costs taken from a number of different
divisions and consequently judgements are required in
the allocation of direct costs and overheads across thevarious services.

BBC Annual Report and Accounts 2014/15

Part Two: Governance and finance report – GovernanceComplexity of accounting for property portfolio
The BBC holds a significant property portfolio which
combines properties held under freehold with those held
under finance and operating leases. Within this, the BBC also
holds some vacant buildings as it rationalises its property
estate. Judgements relate to the future intentions for thosevacant buildings and related timescales, which can change theappropriate accounting treatment and affect the carrying
value on the balance sheet. Furthermore, judgements relate
to determining the correct accounting and lease classifications
for all properties.

We reviewed the outturn against the service licence budgets.
Management confirmed to us that the basis of cost allocation
was the same as in previous years.
We also considered the views of the external auditors who had
performed testing on the cost allocation which included testing
the year-end cut-off and testing the assumptions used in spend
allocations across divisions. We concluded that we are satisfied
that the costs have been appropriately classified during the year
and in a way which is consistent with the prior year.
117

Governance and finance report – GovernanceIntegrity of financial reporting (continued)
Management confirmed to us that they were not aware of any
material misstatements or immaterial misstatements madeintentionally to achieve a particular presentation. The auditors
reported to us the misstatements that they had found in thecourse of their work and we are satisfied that no material
amounts remain unadjusted. We confirm that we are satisfied
that the auditors have fulfilled their responsibilities with diligenceand professional scepticism.

Risk management
We considered the processes for managing significant risks within
the BBC. This work is influenced by the assessment of the BBC’s
principal risks set out on pages 120-122. We consideredpresentations from management on:

After reviewing the presentations and reports from management
and consulting where necessary with the auditors, we are satisfied
that the financial statements appropriately address the criticaljudgements and key estimates (both in respect to the amounts
reported and the disclosures). We are also satisfied that thesignificant assumptions used for determining the value of assets
and liabilities have been appropriately scrutinised, challenged andare sufficiently robust.

We continue to have an ongoing interest in project assurance
so that we can ensure that the lessons learned from previous
projects are taken forward. Our review of the Internal Audit planconsidered how audit work on project assurance was integrated
with management’s own project assurance activities. We satisfied
ourselves that ongoing project assurance activity covers bothgovernance and technical assurances.

We reviewed the group financial statements and how these arepositioned within the wider Annual Report. To assist this review
we considered reports from management and from the internaland external auditors to assist our consideration of:
the quality and acceptability of accounting policies, including
their compliance with accounting standards
compliance with legal and regulatory requirements
the clarity of disclosures and their compliance with relevant
reporting requirements
whether the Annual Report as a whole is fair, balanced
and understandable and provides the information necessary
to assess the BBC’s performance and strategy
Effectiveness of internal controls and risk management
framework
Internal controls assurance
We reviewed the effectiveness of the system of internal controls,
taking account of the findings from internal and external audit
reports. Our work in this area was influenced by the Directorof Risk and Assurance’s reports on the effectiveness of internal
control, identified frauds and losses and assurance mapping.
We considered a number of specific areas during the year.

the BBC’s risk appetite in the context of its key strategic andoperating risks
how the BBC is managing its key strategic projects

Effectiveness of Internal Audit
We continued to oversee the work of Internal Audit. This is aregular item at each of our meetings. During the year we have:approved the plan of work for the coming year, ensuring thatit strikes a balance between providing assurance over corebusiness processes and assurance over key projects and areasof significant corporate risk
considered the trends and themes emerging from theoutcome from the audit plan, focusing on any unsatisfactory
audits and management’s plans to address theseconsidered the resource requirements for Internal Auditheld private discussions with the Director of Risk
and Assurance
The EAC Chairman also meets with the Director of Risk andAssurance before each Audit Committee meeting without
management present for an open discussion.

we sought assurance from management that control issues
identified by Internal Audit are being addressed. This is anarea we follow up at every meeting to ensure that agreed
actions in respect of any weaknesses found are being
properly addressedwe considered the audit assurance over implementation ofactions from a number of recent high-profile independent
reviews in areas such as severance pay, freelancer tax
treatment, child protection and whistle-blowing arrangements
we considered the audit assurance over a number of highprofile implementation and change programmes concerning
the upgrade of underlying IT systems and introduction of
improved financial control processes

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BBC Annual Report and Accounts 2014/15

Independence and effectiveness of our external auditors
Appointment of our external auditors
The EAC periodically considers the reappointment of theexternal auditor and the rotation of the Group Audit Partner
in order to ensure that the external audit remains effective
and independent.
During the previous year, and as described in last year’s Annual
Report, we carried out an external tender process and appointed
Ernst & Young LLP (EY) as the BBC’s external auditors. EY took
over from KPMG LLP for the current year audit. Theirappointment is for a period of three years with the option
to extend this for a further two years.
Relationship with external auditors
We oversaw the relationship with EY, including the scope andapproach to their work, their fees, their performance andindependence (including the approval of and compliance with
our policy on non-audit work). Specific areas of focus this year
have included:
audit risk identification and alignment of this withmanagement’s risk assessment
our challenge to the auditors on how they addressed
these audit risks
our private discussions with the auditors without
management present

Part Two: Governance and finance report – GovernanceNon-audit services
As one of our safeguards over the independence of the external
auditors, the EAC has developed, and oversees, the BBC’s policyon the commissioning of the auditors to provide non-audit services.
Following the appointment of EY, we reviewed the policy andconfirmed that it remained applicable. This policy defines thetypes of services which the external auditors can and cannot
provide. Additionally it includes thresholds above which any
proposed non-audit work to be carried out by the external
auditors must be approved in advance by the EAC. It also defines
when work must be submitted for competitive tender.
EY is not considered for work which might compromise its ability
to give an independent opinion on the BBC’s financial statements.
Recruitment from EY into any senior management position in the
BBC requires the prior approval of the EAC.
Arrangements by which staff can raise concerns
During the year we commissioned a report to review ourarrangements by which staff may raise concerns regarding
potential impropriety. We are pleased at the progress madeby management in acting on the recommendations made bythat report, as confirmed to us by Internal Audit.
We also reviewed the levels of fraud and theft reported anddetected, and arrangements in place to prevent, minimise anddetect fraud and bribery. We are pleased to note that there havebeen no significant frauds detected in the past year.

BBC Annual Report and Accounts 2014/15

119Governance and finance report – Governance

Risks and opportunities
Risks and opportunities affect the ability of the BBC to fulfil its
Charter obligations and public purposes. Our approach to riskneeds to reflect the unique nature of the BBC. To deliver our
objectives we must continue to take creative risks. We must also
take seriously our regulatory and statutory responsibilities. Just as
taking risk is core to fulfilling our purposes, rigorous risk assessmentand mitigation is the foundation of delivering what we do.
As the start of negotiations on licence fee funding and Charter
review approaches, the BBC acknowledges the challenges of

evolving audience needs and the opportunities this offers for
the Corporation for the next ten years and beyond. Our carefulconsideration of both contributes to the quality of ourprogrammes and the excellence of the service we provide,and so to our ability to serve our audiences.
The main risks and opportunities to properly serving ouraudiences are set out in three categories below, although all
are interdependent.

Audiences
Failure to continue to improve thequality, distinctiveness andinnovation of our output in all
genres whilst delivering a
streamlined BBC could limit ourability to meet audience needs andexpectations in an ever morecompetitive marketplace.

Detailed monitoring of audience performance and reaction
Strategic planning focusing on delivery of creative ambition and new audience
propositions
Evaluating options to change the in-house production model to secure the long-term
supply of British content for UK audiences
Ongoing dialogue with the independent producer community to adapt to evolution
Development of new online products responding to creative and audience
opportunities
Strategies to build long-term value with underserved audiences
Support for, and partnerships with, the UK’s creative industries
High-impact plans to ensure the BBC reflects the diversity of the UK

Failure to uphold our editorial values
and standards in all our content
could affect our ability to maintainhigh levels of audience trust, damage
our brand or lead to legal exposure.

Effective editorial compliance processes

Inability to build an ever morecreative, dynamic and cohesive
organisation could limit our ability to
attract, develop and retain the best
creative talent and our contribution
to creative and digital economies.

Proactive articulation of what we offer as an employer to the widest population andmost diverse talent in the marketplace

Wide-reaching training
Serious consideration of complaints and their implications
Strong referral procedures and monitoring of high-risk programmes

Developing our leadership population to continue building a creative, innovative andcollaborative environment
Enable managers to recognise and reward significant additional contribution andgrowth in skill, capability and experience throughout the year
Nurturing entry level talent via outreach activity
Actively reviewing and monitoring strategies to attract, develop and retain on-air
talent, reflecting current market conditions

Failure to deliver content whenand how it is demanded, or to
anticipate the next big trends
in technology and content
consumption, could threaten
our connection with audiences.

Anticipating long-term trends in audience preferences and industry developments

Inability to respond swiftly,
reasonably and proportionately tosignificant events or criticisms could
impact on our brand reputation andour efficient delivery to audiences.

Audience relationship a key consideration in all strategy development

120 Regular evaluation of our product portfolio to ensure the best response to evolving
audience demand
Immersive experience across devices, tailored to different audience needs
Further development of personalisation, to enhance audience experienceResponse to major incidents under continual review to ensure alignment withbest practiceRegular review of response protocols, with provision of speedy and appropriate
advice to the Director-General to ensure effectiveness of response

BBC Annual Report and Accounts 2014/15

Delivery
Failure to deliver a flexible and agile
management and governancestructure could limit our ability torespond quickly to new challenges
with consequent impact on deliveryof strategic priorities.

Continuing work on organisational simplicity

Delayed and ineffective
implementation of major projects
could compromise the delivery of
the BBC’s overall ambitions.

Corporate Project Management Office overseeing delivery of major projects,
providing delivery confidence assessment

Implementation of single points of accountability and clarity arounddecision‑making routes
Ongoing work with the Trust to ensure governance arrangements are agile
and responsiveSingle point of accountability for all major projects
Integrated assurance and approvals plans offering independent review and‘three lines of defence’ across the portfolio of projects
Active sharing of lessons learnt from previous projects

Technical failure, infrastructureinterdependencies, industrial actionor the actions of third parties,
including suppliers, could lead tointerruption of broadcast services.

Strong business continuity policies and practices aligned to the international standard,
regularly assessed and rehearsed, with horizon scanning, risk assessments andcontingency planningGood union relationships with regular dialogue
Focus on resilience in key procurements and major projects
Exit plans and contingency plans for key suppliers
Active involvement in UK and global industry and governmental security forums
In-depth reviews of system vulnerabilities and process weaknesses
Continuous improvement programmes for security established both in-house andin third-party IT support company

Inadequate controls could endanger
the health and safety of individuals,
the natural environment andour reputation.

Well developed safety procedures with comprehensive written guidance, supported
by expert advisers

Part Two: Governance and finance report – GovernanceFailure to keep pace with changes tothe information security threat
could increase our exposure tovulnerabilities, especially in light ofadvances in technology and content
delivery.

Global staff awareness and education campaigns carrying key security messages
Development of effective monitoring and forensic capabilities

Robust health and safety training in the UK and overseas, including for staff operating
in inhospitable locations
In response to changes to construction safety legislation which will affect theentertainment industry, working with other broadcasters to understand the impact
Environmental sustainability strategy to reduce impacts from BBC operations
Working with other broadcasters to raise standards in the industry as a whole

Failure to comply with the broad
range of legal and other regulatory
requirements, or to keep pace withchanges, may result in penalties.

Training plans regularly refreshed to ensure compliance with newly introduced
legislation
Continuing to study and plan for impacts of new legislation, including working
with the industry to monitor and develop best practice solutions for achieving
effective complianceChild protection training and guidance strengthened following an independent review

BBC Annual Report and Accounts 2014/15

121Governance and finance report – Governance

Financial
Developments in the UK and global
economic situation impact us andall our stakeholders, and could leadto reduced financial flexibility,
potentially affecting our ability
to meet all our ambitions within
our means.

Contingency planning and business modelling through to 2020, incorporating
different funding scenarios, including changes to inflation, obligations and ourcollection framework
The above used as the basis for rolling cash flow forecasts and to identify funding
pressures and ensure spending plans are realigned where necessary
Tight management of the implementation of savings programmes to enable thedelivery of our strategic vision within available funding
Introduction of ‘compete or compare’ to identify further cost reduction
opportunities

Competition from powerful global
media providers or failure tocapitalise on business and partner
opportunities could impact
commercial revenue, and could
reduce our ability to achieve brandvisibility internationally and torepresent UK creativity to theworld.

Proven delivery by commercial subsidiary of sustainable financial returns, successfully
promoting the BBC globally, showcasing UK creativity and innovation, and achieving
the right business, editorial and creative relationships

Inability or failure to plan adequately
for the range of potential changes toour funding model could limit ourcapability to deliver distinctive
content to audiences in the future.

Engagement with the Government’s Charter and licence fee review process

122 

Global leadership team backed by a regional structure with expertise in local markets
and accountability for regional performance
Commercial subsidiary increasing investment in in-house production to support the
UK content pipeline and contribute towards the BBC’s public purposesParticipation in the Government’s review of options regarding licence
fee enforcement
Structured approach to reviewing value for money for licence fee payers

BBC Annual Report and Accounts 2014/15

The BBC’s accountability and internal control processes
The Executive Board is responsible for the operational
management of the BBC (excluding the Trust Unit). This
includes safeguarding its assets and achieving value for moneyby ensuring there is a process in place for managing significant
risks to the BBC.
The Executive Board is responsible for establishing, maintaining
and reviewing the effectiveness of the BBC’s system of internal
control and for ensuring that necessary actions are taken to
remedy any significant failings or weaknesses identified. Suchsystems can only provide reasonable and not absolute assurance
against material misstatement or loss. Our system of control isdesigned to manage (rather than eliminate) the risk of failure toachieve business objectives and to provide reasonable assurance
that assets are safeguarded, transactions are appropriately
authorised, and material errors or irregularities are either
prevented or detected on a timely basis.
Key elements of our system of internal control include:
Risk identification and management: The Executive Board coordinates and monitors risk management activity within the BBC.
Our process for identifying, evaluating and managing significant
risks to the BBC, which accords with the Turnbull guidance(Internal Control: Guidance to Directors), has been in place forthe year ended 31 March 2015 and up to the date of approval ofthis Annual Report and Accounts. The key risks and opportunities
within the BBC are shown on pages 120 to 122.

Business policies: Formal policies and procedures are in place
for all material business processes to ensure compliance withall applicable laws and regulations, that risks are managed andthat timely, relevant and reliable information is available acrossthe business.

The BBC’s internal audit process
Internal audit, risk management and, until April 2015, investigation
services combine to form our Business Assurance function, whichis led by the Director of Risk and Assurance. (From April 2015 theinvestigations services has been realigned with the BBC’s security
team.) Internal Audit’s authority and independence is assured by
the Director of Risk and Assurance’s independent and directaccess to the Director-General and to the EAC.
Internal audit regularly tests the BBC’s control systems andcore business processes to ensure they are fit for purpose andconsistently applied. The work plan, which is based on a continuing
assessment of key risks, is agreed annually with the EAC andcovers financial, operational and compliance controls, including
the exercise of the BBC’s right of audit over external suppliers
such as independent production companies and service
providers. Any significant control failings or weaknesses identified
are reported to appropriate levels of management. The statusof corrective actions is reported back to the EAC.
Whistle-blowing arrangements
We have a whistle-blowing (protected disclosure) policy tofacilitate the confidential communication via a number of routesof any incident in which there is a suspicion that the BBC’s codes
have been breached. We recognise that there could besensitivities regarding actual or suspected incidents and so weprovide a whistle-blowing hotline administered by an independent
external company to ensure anonymity.
Each incident or suspicion reported is independently investigatedin a confidential manner, a response is communicated and action
taken as appropriate. The EAC is responsible for ensuring that
there are appropriate arrangements in place for the
proportionate investigation of matters reported and forappropriate follow-up action.
The GoodCorporation review into Child Protection (referred
to on page 86 and published alongside this document) also
considered the BBC’s whistle-blowing arrangements.

Cash management: The BBC undertakes regular treasury andcash reporting, analysing funding requirements and liquidity.
Authorisation procedures: Clearly stated formal authorisation
limits and processes cover all financial transactions.
Project governance: The importance of assurance in supporting
project governance and, ultimately, successful project delivery
is recognised. It is now a requirement of all major projects in the
BBC to put in place a robust set of checkpoints and reviews withthe aim of providing senior stakeholders with assurance that the
project is on track, and to identify appropriate actions to be taken
if the project is off course. The roles and expected interventionsof assurance providers (e.g. Internal Audit or independent
technical experts), are defined within the overall project plan.
The project sponsor is responsible for ensuring that the
programme of assurance is sufficient for the project throughout
its life cycle, with independent review and challenge provided byInternal Audit and the BBC Project Management Office.

BBC Annual Report and Accounts 2014/15

123

Part Two: Governance and finance report – Governance

Strategy and financial reporting: The Executive Board approves abusiness plan that aims to deliver the Trust-approved BBC
strategy. Comprehensive monthly, quarterly and annual reporting
processes, both within business groups and up to the Executive
Board, include financial monitoring against the plan, regularreforecasting, analysis of variances, and performance reviews
tracking achievements against the business plan and strategy.

Staff capability: Processes are in place to ensure that our staff areprofessional and competent. These include recruitment policies,
performance appraisals and development programmes.

Governance and finance report – GovernanceFair trading report
Membership and remit of the Executive
Fair Trading Committee

The key function of the Executive Fair Trading Committee (EFTC)
is to oversee the BBC Executive’s compliance with our Fair Trading
obligations. The EFTC comprises three non-executive directors:
Dame Fiona Reynolds (Chair), Alice Perkins and Sir Howard
Stringer. The EFTC meetings are also attended by the Managing
Director, Finance and Operations, Group General Counsel,
Assistant General Counsel, Head of Fair Trading & Competition
Law and the Director of Risk and Assurance. See page 101 for the
Executive Board and Committee attendance table.
Responsibilities of the EFTC include:keeping under review the BBC’s Fair Trading Guidelinesdealing with Fair Trading complaints against the BBC throughthe appointment of a Fair Trading Complaints Panel which ischaired by and includes a majority of non-executive directorsreviewing ongoing compliance with the BBC’s fourcommercial criteria

Having received reports from relevant senior management, theEFTC is satisfied that all commercial services have met the above
criteria for the period 1 April 2014 to 31 March 2015. In relation
to BBC Studios and Post Production, this assessment has taken
account of the review of operations highlighted in last year’s
report. Based on the conclusions of that review, the EFTC
remains satisfied that BBC Studios and Post Production met
the criteria for the previous reporting period 1 April 2013
to 31 March 2014.
The BBC has a published Fair Trading complaints and appeals
process, which can be found at: bbc.co.uk/bbctrust/governance/complaints_framework/fair_trading.html
The BBC has not received any complaints during the year. Detailsof previous Fair Trading complaints and those that went to appeal
to the BBC Trust can be found in our Fair Trading Bulletin at:
bbc.co.uk/aboutthebbc/insidethebbc/howwework/
policiesandguidelines/fairtrading/complaints_bulletins.html
and the BBC Trust’s Complaints and Appeals Board page:bbc.co.uk/bbctrust/our_work/complaints_and_appeals/cab.html

commissioning the annual Fair Trading audit by independent
auditors
The BBC has a detailed operational Fair Trading framework
which applies to all our activities and is outlined in our Fair Trading
Guidelines, found at: bbc.co.uk/aboutthebbc/insidethebbc/
howwework/policiesandguidelines/fairtrading.html
These arrangements are subject to annual audit by independent
auditors and separately have been accredited with the ISO
9001:2008 quality standard. The auditors’ report is set out on
page 126.
The BBC Agreement requires the Executive to ensure that all ourcommercial services meet the following criteria. Commercial
services must:
fit with public purposes
show commercial efficiency
not jeopardise the good reputation of the BBC or the valueof the BBC brandcomply with the BBC’s Fair Trading Guidelines, andin particular avoid distorting the market

124 

BBC Annual Report and Accounts 2014/15

“All stakeholders, including licence fee payers
and those who might be affected by the BBC’s
activities, can be confident that the BBC
remains committed to, and compliant with,
our Fair Trading obligations.”
Dame Fiona Reynolds

Report of the Chairman of the
Executive Fair Trading Committee
As a public service broadcaster, funded by the licence fee, theBBC has a responsibility to ensure that we trade fairly and pay
regard to the impact of our activities on the wider market.
The BBC has a well-established Fair Trading regime which is
subject to both internal and external scrutiny.
The Fair Trading team has continued to work closely with staff
throughout the BBC to ensure that new internal processes
and initiatives comply with Fair Trading requirements. This iscomplemented by a targeted training programme for staff likely
to encounter Fair Trading issues. In addition to this, the Fair
Trading team has continued to work to provide advice tomajor projects to ensure that they are cognisant of the relevant
Fair Trading issues and that they are appropriately managed
throughout the project life cycle. For example, the Fair Trading
team conducted an assessment against the four commercial
criteria of BBC Worldwide Limited’s partnership with AMC
Networks in the USA for a 49.9% stake in the BBC America
channel. This assessment informed the approvals for thispartnership given by the Executive Board and the Trust.

The Fair Trading regime continues to operate effectively withan unqualified audit opinion. The Committee will continue toensure that the BBC’s regulatory requirements are adhered tothrough an approach to compliance which is robust, efficientand proportionate. Fair Trading will also be kept high on the
Executive Board’s agenda. All stakeholders, including licence fee
payers and those who might be affected by the BBC’s activities,
can be confident that the BBC remains committed to, andcompliant with, our Fair Trading obligations.
Dame Fiona Reynolds
Chairman of the Executive Fair Trading Committee
16 June 2015

Buyers in digibooths at the BBC Worldwide Showcase 2015

BBC Annual Report and Accounts 2014/15

125Part Two: Governance and finance report – Governance

The Trust commenced the triennial review of the BBC’s Fair
Trading Policies and Framework, appointing an external
consultancy to review the BBC’s implementation of the Fair
Trading Policies and Framework. The Fair Trading team has
worked closely with the Trust in order to assist this review.
The Trust also published a new Commercial Framework,
setting out publicly the Trust’s requirements, boundaries andexpectations for commercial services.

Governance and finance report – GovernanceOur approach

Independent fair trading auditors’ report
We have performed a reasonable assurance engagement as
to the BBC for the year ended 31 March 2015 defined in ISAE 3000. The objective of a reasonable assurance
We have audited, in our role as the BBC’s fair trading auditors,
the system of internal controls established within the BBC
to provide the BBC with reasonable assurance that the BBC
Executive (‘the Executive’) has complied with the requirementof the BBC Trust’s Fair Trading Policies and Framework and the
Fair Trading Guidelines for the year ended 31 March 2015(‘the Fair Trading Arrangements’).
Our instructions for this engagement, including the scope ofwork to be undertaken, were agreed with the BBC’s Executive
Fair Trading Committee (the ‘EFTC’). These instructions include
agreement that our audit should be conducted in accordance with
International Standard on Assurance Engagements (‘ISAE’) 3000,
agreement on the limit of our liability in respect of this work andagreement that our duty of care in respect of this work is solely
to the BBC. We are satisfied that the agreed scope of our audit
was sufficient to enable us to express the opinion set out below.
Respective responsibilities of BBC Trust, BBC Executive andfair trading auditors
The Trust is responsible for ensuring that the Executive trades
fairly. It is also responsible for preparing the section within the
BBC’s Annual Report entitled ‘Fair Trading’ which includes astatement on fair trading.
The Executive is charged by the Trust with establishing andoperating a system of internal controls designed to ensurecompliance with the BBC’s Fair Trading Arrangements for theyear ended 31 March 2015, including identifying and assessing
risks that could threaten fair trading and designing andimplementing responses to such risks.
As the BBC’s fair trading auditors, 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, a system ofinternal controls which provide reasonable assurance that it hascomplied with the requirements of its Fair Trading Arrangements
for the year ended 31 March 2015. We have reviewed specificdecisions reached by the BBC on fair trading issues only insofar
as this is necessary to form an opinion on the application of thesystem of internal controls. We have also reviewed whether the
Trust’s statement on fair trading reflects our findings of the BBC’s
compliance with its system of internal controls and we report
if it does not.

engagement is to perform such procedures as to obtain
information and explanations which we consider necessary
in order to provide us with sufficient appropriate evidence toexpress a conclusion on the BBC’s compliance with its Fair
Trading Arrangements for the year ended 31 March 2015.

Our work consisted of enquiry and testing to enable us to forma view as to whether an appropriate system of internal controls
was in place. We also reviewed the processing of a sample ofmaterial transactions to provide us with reasonable assurance
that the system of internal control had been applied.
Inherent limitations
As with any system of control, it is not practicable to ensure thatno errors or irregularities have occurred without being detected.
Our audit work was designed to give the Executive reasonableassurance as to the adequacy of the system of internal controls
which was in place and being applied to deliver compliance withthe requirements of its Fair Trading Arrangements for the year
ended 31 March 2015. Further, because fair trading issues require
judgements which ultimately might be tested in a court of law,competition authority or elsewhere, there is always a risk ofchallenge even where the system of internal controls has been
followed and decisions have been taken with the greatest care.
OpinionBased on the results of our procedures, in our opinion the BBC
has established and has applied a system of internal controls thatprovide reasonable assurance that it has complied with therequirements of the Fair Trading Arrangements for the year
ended 31 March 2015.
Deloitte LLP
Chartered Accountants
London16 June 2015

Our opinion has been prepared for and only for the BBC inaccordance with our instructions which were agreed with the
EFTC on behalf of the BBC. We do not, in giving this opinion,
accept or assume responsibility for any other purpose or to any
person other than the Trust or the Executive to whom this reportis shown or in to whose hands it may come, and no other person
shall be entitled to rely on our opinion, save where expressly
agreed by our prior consent in writing.

126 

BBC Annual Report and Accounts 2014/15

The BBC must account for how it responsiblyuses the licence fee and other income

Maggie Gyllenhaal in BBC Two’s The Honourable Woman

BBC Annual Report and Accounts 2014/15

127Part Two: Governance and finance report – Finance and commercial

Finance and commercial

Governance and finance report – Finance and commercial

Review of the Managing Director,
BBC Finance and Operations
Also as planned, the BBC had an accounting deficit at group levelfor 2014/15. This group deficit is £125 million (2013/14: surplus£150 million). This arises from an anticipated delivery phasingof planned savings, combined with investment in change, in
infrastructure and in systems for the digital future. In particular,
revenue investment in online development (including BBC Online,
BBC iPlayer and myBBC) increased by £21 million, in line with theBBC’s strategic priorities. Commercially funded operators would
normally ‘capitalise’ and spread such costs over a number of years
under generally accepted accounting principles but BBC costs arecharged to the income statement because of the unique way the
BBC is funded.

“The focus in 2014/15 was on continuing todeliver efficiencies whilst investing in our
output and funding additional new obligations.”
Anne Bulford

In addition, there were a number of accounting charges to income
and expenditure, with no impact on cash. These include£15 million accelerated depreciation of property and technology
assets in the BBC’s Media Village in London W12 in anticipationof the sale of land and sublease of buildings after the financial year
end. The W12 transaction, completed on 4 June 2015 and not,therefore, reflected in these financial statements, delivered acapital receipt of £87 million and will generate annual recurringsavings of £33 million per annum.
Consolidation of £32 million of BBC World Service group support
costs, investment in digital services, the accounting adjustments
described above and investment in outdated IT systems in Financeand Operations explain a year-on-year increase in group support
costs, which are expected to reduce in 2015/16.

Financial result
Overall, 2014/15 presents a sound financial performance during
which the BBC has made strong progress in the successful
delivery of a radical programme of savings and reform.
From 2010 the licence fee was held flat in nominal terms for six
years and the BBC took on new funding obligations which built up
to £472 million per annum (13% of the licence fee) by April 2014.
At the start of the 2014/15 financial year, the BBC began funding
BBC World Service costs of £243 million which were previously
funded by the Foreign & Commonwealth Office. This is in addition
to the new obligations the BBC began funding in 2013/14,
specifically broadband rollout, S4C and Local TV at a combined
cost of £229 million in 2014/15.

The BBC’s efficiency challenge andmanaging running costs more effectively
The BBC has done a lot to become more efficient but we mustnever stop looking at ways to do more and to concentrate spend
on what matters most to audiences – content and services. As aresult, a key BBC objective delivered for 2014/15 was to ‘improvevalue for money through a more efficient and open BBC’.
The BBC has consistently improved productivity over the past
20 years, increasing the number of services and range of content
we provide for roughly the same price in real terms. While thelicence fee was broadly flat in real terms, the BBC was able toAs planned, the BBC drew down on cash reserves built up at
the start of 2014/15 to manage the transition to full delivery of theplanned annual recurring savings needed to fund new obligations
and other cost pressures, including the need for investment andinnovation, within a licence fee frozen at £145.50 for six years.
The BBC’s cash balance at the end of the year reduced to£406 million from the £526 million held at April 2014. 2015/16
is also a year of transition and we anticipate a further planned
reduction in cash balances over the year.
The BBC’s ‘Delivering Quality First’ (DQF) savings programme
remains on track to deliver annual recurring savings of£700 million by 2016/17. £484 million total savings and £478 million
sustainable savings were delivered by April 2015, above thephased target of £475 million. The National Audit Officereported in February 2015 that the BBC has ‘so far delivered
value for money’ from its savings programmes whilst noting
the significant challenges ahead.
128 Martin Freeman and Anthony Lapaglia in The Eichmann ShowBBC Annual Report and Accounts 2014/15

reinvest savings in new types of content and services, like BBC
Online and BBC iPlayer, for the benefit of licence fee payers and the
UK creative economy. In the current licence fee period however,funding the new obligations, absorbing inflation and finding theinvestment necessary to stay relevant to audiences in the digitalworld requires an unprecedented focus on efficiency – by 2016/17
real-term funding for UK Public Services will be 26% lower in realterms than it would otherwise have been. In 2013 we announcedplans to reinvest a further £100 million per year strategically on newcontent and services, which led us to make difficult scope choices togenerate savings. Overall, this will mean savings of 30% of the BBC’s
addressable cost base over this licence fee period.
Following a comprehensive review, the BBC published in
November 2014 ‘Driving Efficiency at the BBC’. This reporthighlighted the BBC’s strong track record in delivering efficiency
over the past 20 years. Since the mid-1990s, the BBC has
improved productivity by 4.5% per annum whilst the licence fee
has been broadly flat in real terms. The BBC has established astrong culture of market testing and benchmarking activity – over
70% of expenditure is already tested through our ‘compete andcompare’ framework and the figure continues to increase as
the remainder of DQF is delivered.

Since 2011/12, around 30% of the £484 million per annum DQF
and Strategic Initiative savings delivered to date have been madethrough scope reductions. This is expected to rise to almost 50%
in the final years of the programme.
The BBC has also sought to maximise the benefits from its
commercial subsidiaries both through programme content
investment and additional returns to the Public Service
Broadcasting (PSB) Group. As explained on page 135 total returns
to the PSB Group from BBC Worldwide in 2014/15 significantly
increased to £226.5 million (2013/14: £173.8 million). During theyear BBC Worldwide formed a commercial joint venture in
North America with AMC through the partial sale of BBC
AMERICA. This delivered a profit on disposal of £115.9 million,
as well as strengthening and securing BBC AMERICA’s presencein the US market and further enriching the content ‘pipeline’ foraudiences in the UK.
As we enter the last two years of the current licence fee
settlement and Charter we face significant challenges anduncertainties. Continued focus on delivering savings and carefulfinancial management is therefore essential.

Overall the proportion of the BBC’s spend on content, distribution
and related support in 2014/15 was 92% (see table below). This
reflects a 25% reduction in the proportion of the licence fee spenton overheads or general support over the past four years.
Use of the licence fee*
2014

2015
Content,
distribution andTotal
its support£m£mContent,
distribution andits support£m

Generalsupport£m

Television

2,181.1

186.7

2,367.8

Radio

609.5

43.0

652.5

BBC Online

Generalsupport
£m

Total
£m

2,090.5185.2

2,275.7

604.8

44.8

649.6

187.5

13.5

201.0

162.4

12.0

174.4

2,978.1

243.2

3,221.3

2,857.7

242.0

3,099.7

Orchestras and performing groups

29.6

2.9

32.5

25.3

2.6

27.9

S4C**

28.4

2.6

31.0

26.5

2.6

29.1

Development spend

75.4

7.4

82.8

50.1

5.1

55.2

Spend by service licence

BBC World Service operating licence
Total service spend% spend

235.8

17.8

253.6

–

–

–

3,347.3273.9

3,621.2

2,959.6

252.3

3,211.9

92%

8%

100%

92%

8%

100%

* The licence fee after collection costs is also used to fund the BBC’s obligations to broadband rollout and S4C as well as its pension deficit payments** £31 million spent with S4C is the cost of content provided to S4C over and above the £75 million new obligation
BBC Annual Report and Accounts 2014/15

129Part Two: Governance and finance report – Finance and commercial

The BBC works to manage its cost base through a range of
people, property and procurement based saving initiatives suchas rationalising the BBC Estate and moving more activity out of
London, reducing the pension deficit and improving working
capital management. The BBC continues to manage its overheads
through the introduction of new ways of working, ensuring bestvalue for money when contracts are renewed and continuing tomanage talent costs and top management pay. In 2014/15, initialoutlay costs have been incurred to deliver these savings, including
the successful delivery of an IT project within Finance andProcurement and a review of the BBC’s asset base in light of therationalisation of the BBC Estate. These costs have been incurredto generate savings in future years. The exit from TVC and W12
forms a significant part of the rationalisation of the BBC Estate.

Although it is challenging to continue to find further savings, weare on track to deliver nearly £1.6 billion of cumulative annual
savings by the end of the current charter period in 2016/17.
We have already delivered £1.25 billion per year towards thistarget and the majority of these savings have come from true
productivity: doing the same or more for less, particularly inthe three areas of people, property or procurement. Significant
savings have come from structural or one-off opportunities
including reprocuring major contracts, exiting Television Centre
and part of the W12 site, investing in new finance systems to
reduce headcount, and reprocuring major contracts such as the
successful reprocurement of TV playout technology contractsannounced shortly after the financial year end.

Governance and finance report – Finance and commercial

Financial achievements
Pension deficit reduction
Additional payments under the pension
deficit recovery arrangements and a strong
performance of the pension scheme assets
means the pension deficit has reduced from
£1,516 million to £948 million.

£948m -37%
2013/14: £1,516m

Saving licence fee payers money
We are saving licence fee payers £1.25 billion a year thanks
to a concerted savings drive. A report by the National Audit
Office confirms that the BBC has exceeded its efficiency
target up to the end of 2013/14, achieving overall annual
savings of £374 million. These savings had increased to£484 million by the end of 2014/15.

Prioritising spend on content
92% of our core controllable spend is now spent on content,
distribution and related support.
Restructuring costs
The introduction of a £150,000 severance cap
has, in part, contributed to lower restructuringcosts which, at £11 million are £5 million lower
than last year.

£11.1m -33%
2013/14: £16.5m

130 

BBC AMERICA disposal
The partial disposal of BBC AMERICA and formation ofa partnership with AMC, produced a net profit on disposalof £116 million and provides an improved route to market
in the US, helping BBC AMERICA to reach more people
and bring a wealth of new titles to UK and global audiences.

BBC Annual Report and Accounts 2014/15

WORLDSERVICE
GROUP

Senior manager remuneration
We have continued to reduce the numberof senior managers and their cost. The senior
manager paybill is now £52.0 million ascompared to £78.5 million on 1 August 2009,or a third smaller.

£52.0m -34%
2009/10: £78.5m

Funding BBC World Service and new obligations
We have successfully integrated BBC World Service andhave funded new obligations in line with our plans.

Part Two: Governance and finance report – Finance and commercial

Reducing evasion rates
Despite a challenging collection environment we havesuccessfully reduced evasion rates to 5% (2013/14: 5.5%).

Rationalising the BBC estate
There has been a particular focus on rationalising andmodernising the BBC Estate. We have exited both Television
Centre and parts of White City and continue to move moreof our business outside of London. After the year end we
successfully completed the sale of four acres of freehold landin London W12 alongside the sublease of six BBC Media
Village buildings, securing a capital receipt of £87 million andannual recurring savings of £33 million. The BBC Media
Village deal will increase the BBC’s workforce out of London
to 54% next year (Target: 50% by 2016).

BBC Annual Report and Accounts 2014/15

Worldwide investment in content
BBC Worldwide delivered an increase in investment in
BBC commissioned content to £94.4 million (2013/14:£88.9 million). Total returns to the BBC PSB Group in 2014/15
were £226.5 million.

131Governance and finance report – Finance and commercial

Charter Review and future challenges
The BBC’s current Charter ends in 2016 and uncertainty on
future income requires even more careful financial management
until a new agreement is reached. The impact of external
challenges such as the constantly changing media environmentand commercial pressures on BBC spend, requires continued
financial discipline, prioritisation and management.
To keep pace with technology and changing audience
expectations the Director-General announced in October 2013that the BBC would prioritise three areas over the remaining
Charter period:
innovating online
strengthening key programme genres andmaking BBC channels work even better
In 2014/15 the BBC has invested in iPlayer+, myBBC, BBC Musicand BBC Arts, together with further investment in Newsand Drama.
As planned, the BBC drew down cash reserves built up at April
2014 in order to maintain the range and quality of content andservices ahead of the full delivery of DQF and other savings
targets. We also start 2015/16 with sufficient cash reserves tomeet our immediate obligations and safeguard our financial
sustainability. We remain on track to meet our targets but savings
alone will not fund the investments needed and difficult decisions
in relation to scope reductions will inevitably arise.

Looking forward
The BBC produces outstanding programmes and services andeveryone at the BBC is dedicated to producing great work. For 3p
per hour of output consumed or 40p a day we believe licence fee
payers can be confident they are getting good value from anorganisation committed to financial rigour and value for money.

BBC Three comedy Cuckoo

132 

The BBC is now operating in the final two years of the existing
Charter and the challenges we face in the remaining period are
significant. Our strategic context has changed: we must respondto pressures from new global competitors and structural changes
in audience behaviour, especially the wide adoption of digitaltechnology and the changing ways audiences access content andservices. This is why we are allocating additional funding and staff
resource to developing our digital offer.
Changes in audience behaviour are also affecting licence fee
income through reduced TV penetration, highlighting thatthe next Charter should consider licence fee modernisation.
Our track record leaves me with no doubt that the BBC will
deliver its strategic ambitions in this Charter period and within
our financial means. However, as I stated in my review last year,
we must be ever mindful of the constraints and financial risksof operating with a frozen licence fee. Our strategic ambitions
cannot be delivered through efficiencies alone and scope
reductions are an inevitable consequence in the future. At thetime of writing, the outcome of the Charter review is unknown
and this represents a significant financial uncertainty beyond
2016/17. I am confident that whatever the outcome, the effective
financial stewardship established by our ability to deliver
efficiencies, means the BBC is in a strong position to react tochanges and make tough choices, to keep producing great content
and services and to play our part in growing the UK creative
economy and promoting British culture around the world.

Anne Bulford
Managing Director, BBC Finance and Operations
16 June 2015

Radio 1 presenter Gemma Cairney

BBC Annual Report and Accounts 2014/15

Financial overview
How we use the licence fee
The way in which the BBC is funded places significant
responsibilities on it as an organisation:to provide value for money by focusing expenditure on the
programmes and services the public most want from the BBCto ensure that the output is then delivered as cost efficiently
as possible
to ensure effective and efficient collection of the licence feeto maximise funding from other sources, most significantly
BBC Worldwide, the BBC’s commercial trading operation,
in a manner consistent with the terms of its Charter andother obligations

Due to careful planning and forecasting and using cash generated
in previous years, the fall in income has not jeopardised thedelivery of content. Spend on operating costs has increased from£4,738 million to £4,914 million reflecting the costs of major one-off
sporting events this year such as the Commonwealth Games in
Glasgow and the FIFA World Cup in Rio, revenue investment intechnology and accounting adjustments made in anticipation of the
London W12 property transaction announced after the financial
year end. These movements drive a deficit of £125 million this year
compared to a surplus of £150 million last year. A deficit was
anticipated at this stage in our plans, as we have taken on the costsof our new obligations ahead of full realisation of the recurrent
annual savings needed to fund them permanently. The table below
provides a summary of the income statement.

Results for the year
Our results for this year show that we have successfully
managed the financial challenges facing us so as to ensure asound base for meeting our future commitments and delivering
our strategic ambitions.
The partial sale of the BBC AMERICA channel during the year,
together with the loss of BBC World Service funding from theForeign & Commonwealth Office has driven a reduction in total
income from £5,066 million to £4,805 million.

Income statement classification

What is it?

2015
£m

2014
£m

Licence fee income

The total of licence fees collected

3,735

3,726

Less than 0.3% increase reflects limited net
growth in the number of households acquiring
a licence and a reduction in evasion

Other income and revenue

Commercial (mainly BBC Worldwide) income
and Grant-in-Aid for World Service

1,070

1,340

No grant-in-aid income for BBC World Service
this year and a fall in sales in BBC Worldwide
through the partial sale of BBC AMERICA partway through the year

4,805

5,066

Operating costs

The cost of producing all content and of running
the BBC(4,903)(4,721)

Restructuring costs

Sums provided to fund future efficiency initiatives

(11)

(17)

Total income

What has happened this year?

Increase reflecting major sporting events such as
the Commonwealth Games and FIFA World Cup
Costs to deliver DQF savings(4,914)(4,738)

Share of results of associates
and joint ventures

Our share of the profit of the businesses where
we control 50% or less33

23

Increase in 2014/15 reflects the share of the new
BBC AMERICA associate following partial sale

Gain on sale of operations

Profit on disposal of operations

116

4

2014/15 reflects the gain on the partial sale of
BBC AMERICA

Gain on disposal of fixed assets

Profit on disposal of fixed assets

8–

Other gains and losses

Share of net liabilities of joint ventures

–

(17)

Accounting adjustment in 2013/14 to recognise
the BBC’s share of the net liabilities of UKTV

Net financing costs

The net interest on the BBC’s pension assets
and liabilities, interest on loans and fair value
movements on derivatives

(143)

(153)

Lower accounting charge for the BBC pension
plan liabilities

Tax and net financing income

The net tax liability of the BBC on its taxable
profits

(30)

(35)

Tax charge arises on commercial activities

(125)

150

Total operating costs

Group (deficit)/surplus forthe year
BBC Annual Report and Accounts 2014/15

133Part Two: Governance and finance report – Finance and commercial

Summary consolidated income statement
For year ended 31 March 2015

Governance and finance report – Finance and commercial

IncomeTotal licence fee income increased by less than 0.3% or £9 million
from £3,726 million to £3,735 million with improved collectionplans offsetting declines in the number of households requiring
a television (Television Penetration rate or TVP).
Licence fee collection
Effective financial management is a key part of the BBC’s uniquerelationship with its audiences. This includes spending the licence
fee efficiently and collecting a television licence fee from everyone
who is required to buy one.

Headline sales
2014/15£m

Headline result

2013/14*£m

2014/15£m

2013/14£m

UK PSB Group

192

516

n/a

n/a

BBC Worldwide

1,002

1,042

139

157

BBC Global News

93

101

(5)

(7)

BBC S&PP

29

29

(1)

(3)

*Restated to incorporate the results of BBC World Service and BBC Monitoring

Collection costs this year of £101 million are marginally lower than
BBC Worldwide
last year (£102 million). This is the second year of the new licencefee contract and total cost savings of £220 million are expected to Achievements
BBC Worldwide operates in a highly competitive global media
be delivered over the eight years of the contract, releasing moremarket and its success depends on securing a strong flow offunding to be spent on our programmes and services.
content from the BBC and independent producers. This challenge
Licence fee statement
is increasing as more independent producers consolidate theirAs in previous years, the BBC prepares a licence fee revenue
own distribution.
statement audited by the National Audit Office (NAO). ThisIn 2014/15 BBC Worldwide debuted three new genre channels:
account sets out the amounts we collected in the year and paid
BBC First, BBC Earth and BBC Brit, all of which offer international
over to HM Government. Alongside their audit work, the NAO
audiences premium first runs across drama, factual and factual
examines our collection arrangements and reports on them toentertainment titles. BBC First’s launch in Australia on the Foxtel
Parliament. More on the licence fee revenue statement can be
subscription platform proved the most successful non-sport
found on our website: bbc.co.uk/aboutthebbc.
channel launch since 2006. BBC Earth and BBC Brit made their
Commercial trading
linear channel debuts in Poland in February and both
The licence fee is supplemented by income from the commercial outperformed established rivals, breaking into the top three in
exploitation of licence fee-funded content and infrastructure
their competitive sets. BBC Earth also became the first genre
through three commercial subsidiaries – BBC Worldwide, BBC
brand to debut on both BBC.com and BBC.co.uk offering fans of
Global News and BBC Studios and Post Production (S&PP).
natural history a wealth of topical content. BBC Earth was the firstto have a UK presence via BBC.co.uk.

BBC Two’s Back In Time For Dinner

134 

BBC Annual Report and Accounts 2014/15

BBC Worldwide also delivered the first ever Doctor Who:
The World Tour this year, visiting seven countries in 12 days
and introducing the 12th Doctor, Peter Capaldi, and his
companion Clara, Jenna Coleman, to international fansand strengthening the brand.
BBC Worldwide delivered a solid year of performance, resulting
in a very significant uplift in returns to the PSB Group to a record£226.5 million (2013/14: £173.8 million). It took good strides inrealising its strategy and transforming the business for the future,
maintaining a high level of investment in premium content,
launching strong genre channels in key markets to amplify theBBC’s brand internationally, entering into a number of key
partnerships, and focusing its digital plans. Its carefully executed
strategy should underpin profit and shareholder returns in theyears ahead, at a time when the BBC is more committed thanever to extracting the maximum future contribution from all its
commercial subsidiaries.

This partnership to develop and co-produce will not only
further enrich the content pipeline for audiences in the UK
and internationally but will also strengthen and secure BBC
AMERICA’s presence in the US market.
Investment in content continued to be the cornerstone of thebusiness. Top-selling shows included Doctor Who, Top Gear, Orphan
Black and Life Hall, reflecting the appetite from global audiencesfor British content.
Worldwide delivered an increase in investment in BBC
commissioned content to £94.4 million (2013/14: £88.9 million)
including much anticipated forthcoming titles such as War andPeace and Dickensian. Overall content investment declined,
partially as a result of the BBC AMERICA deal, to £180.5 million(2013/14: £200.6 million).

James Corden and Mathew Baynton in BBC Two’s
The Wrong Mans

BBC Annual Report and Accounts 2014/15

Gillian Anderson in The Fall

135

Part Two: Governance and finance report – Finance and commercial

The development and trialling of BBC Store, the UK download
to own service, has been a priority this year. The service will beavailable in autumn 2015 and will offer audiences up to 10,000
Profit on ongoing operations, which includes the benefit of just overhours of content including new programmes and previously
five months of BBC AMERICA’s contribution as an associate, wasunavailable gems from the BBC’s archive. Outside the UK, digital£127.2 million (2013/14: £122.2 million), an increase of 4.1%. The
plans have continued to evolve, with detailed work on proposals
business reported headline sales of £1,001.8 million (2013/14:
for the future under way.
£1,042.3 million), down 3.9%. This principally reflects the formationof a partnership with AMC Networks (AMCN), which saw BBC
BBC.com, the international version of BBC.co.uk, reachedWorldwide’s equity in its BBC AMERICA channel reduce from100.8 million unique browsers for the first time in January. The
100% to 50.1% and difficult trading conditions in some markets,site achieved 1.3 billion page views across all platforms by the year
most notably Russia. Headline profit of £138.6 million was down
end. Its international feature sections – BBC Travel, BBC Future,
11.9% on the previous year (2013:14: £157.4 million) due to lower
BBC Autos, BBC Culture, BBC Capital and BBC Earth – together
headline sales. Currency movements impacted headline sales byattracted 8.3 million unique browsers, up 76.6% (2013/14: 4.7 million).
£19.5 million and headline profit by £3.2 million.
The French production business also had an exceptional year,with revenue up over 50%, and local versions of BBC Production’s
The new venture with AMCN saw the coming together of two
Dancing with the Stars, Antiques Roadshow, The Weakest Link andlike-minded content creators to build on previous successful
Love Production’s Sewing Bee and Bake Off generating a totalcollaborations such as Top of the Lake and The Honourable Woman.
primetime average audience of 18.4 million.

Governance and finance report – Finance and commercial

How BBC Worldwide is supporting the BBC througha time of change
2014/15 witnessed a step change in BBC Worldwide’scontribution to the PSB Group, returning £226.5 million(2013/14: £173.8 million), an increase of 30.3%, and equivalent
to over 12.6% of the PSB’s total TV content spend, up from
10.1% in 2013/14.
BBC Worldwide has continued to contribute to thecommissioning of high-quality titles loved by UK audiences.
Within the year, this included Doctor Who and Life Story, the latterwelcoming a domestic audience of 6.5 million, with rights tobroadcast the series acquired for 151 territories, and with over
70% of the series’ funding being made from commercial
investment via BBC Worldwide.
Benefits to the creative economy
Exports are increasingly important to the UK’s television industry,
with TV trade body PACT reporting total sales of UK television
to international markets up 5% to £1,284 million in 2013/14. BBCWorldwide contributed to those exports by attracting over
700 TV buyers from around the world to its Showcase 2015
in Liverpool and an increase of 3.2% to £345.3 million(2013/14: £334.6 million) in TV and digital sales this year.
BBC Worldwide has also brought valuable support to the
independent sector with equity stakes in a select number ofindies, including Lookout Point and Curve Media, with a purpose
to build BBC Worldwide’s capabilities and offer indies a creative
space to nurture their ideas. Altogether, the company returned£113.1 million to the independent sector, down 2.8% on theprevious year (2013/14: £116.4 million).

BBC Worldwide helped give the UK’s creative industries a more
impactful voice, through the UK Trade & Investment’s (UKTI)
Sector Advisory Group, chaired by BBC Worldwide CEO Tim
Davie, which lead the Creative Industries Council’s International
work. This year, BBC Worldwide also became a founder
supporter of the Creative Industries Federation.

BBC Global NewsBBC Global News operates the BBC’s two commercially fundedinternational news services: BBC World News, the 24-hour global
news TV channel, and the digital platform BBC.com (including theBBC.com website, a news app and a sport app). BBC Global
News’ mission is to be the best and most trusted international
news provider in the world, while growing the BBC’s international
news audiences and operating as a commercially sustainablebusiness. BBC Global News’ performance is measured in termsof reach, quality and value (PBIT).
In 2014/15, BBC World News’ global footprint continued to
grow – the channel distribution expanded to reach 398 million
households (2013/14: 388 million). Growth was most notablein the US where the channel is now available in over 40 million
homes, significantly up from just five million homes as recently
as 2012. The most recent polling (Ipsos Affluent Survey USA)reported BBC World News as the news channel with the biggest
audience increase in 2014. Outside the US, BBC World News
performed strongly for news channel viewership, ranking #2
on syndicated surveys in all regions with the exception of Europe.
Audience growth for BBC.com exceeded expectations in 2014/15,
driven by a continued rapid increase in mobile consumption.
BBC.com attracted over 85 million monthly unique browsers on
average, up 8% year-on-year, and achieved a record 101 million
in January 2015.

Bar chart shows
World News distribution – full and part-time households

Bar chart shows
Total monthly page views – all platforms

2013/14: 388 million

2013/14: 1 billion

2014-15: 398 million

2014-15: 1.2 billion

An increase of 3 per cent

An increase of 16 per centWorld News distribution – full and part-time households (millions)388

2013/14

136 

398

2014/15+3%

Total monthly page views – all platforms (billions)

1.2
1.0

2013/14+16%

2014/15

BBC Annual Report and Accounts 2014/15

101 million

unique browsers visited BBC.com
in January 2015
Total page views across all platforms (website, apps and IPTV)
averaged 1.2 billion per month, up 16% year-on-year.
Video is an increasingly important part of the digital news
proposition and in 2014/15, video views grew nearly 50%
year-on-year.
A number of initiatives were launched to enhance the digital
proposition in 2014/15 including investment in regional editions
for Africa, India and Australia. During the year the BBC.com
website moved to a fully responsive platform which optimises
the user experience based on the devices they are using.
Beyond BBC.com, BBC Global News Ltd is extending reachthrough a growing number of syndication agreements with
online partners. In 2014/15, agreements which brought BBC
News to new audiences included Flipboard, MSN, LinkedIn andInternet.org, Facebook’s initiative to improve internet accessin emerging markets.

#1 Twittermost shared news source

In 2014/15, Global News maintained its position as the mosttrusted international news provider.

#1 Provider
most trusted international news

In addition, Global News was recognised for the excellence of
its journalism with a number of awards, including two Emmys
and a Peabody for World News America’s coverage of Syria andthe Central Africa Republic, and an award from ENBA India forthe best news coverage by an international news channel in India.
Global News improved its financial performance in 2014/15,
returning a 34% reduction in operating loss (ahead of target)of £4.6 million for the year (2013/14: loss of £7.0 million).

On social media, World News has over 10 million fans on
Facebook while on Twitter, the BBC continues to be the world’s
most shared news source.
Part Two: Governance and finance report – Finance and commercial

Radio 5 live’s Up All Night football World Cup phone-in

BBC Annual Report and Accounts 2014/15

137Governance and finance report – Finance and commercial

BBC Studios and Post Production

BBC Studios and Post Production (‘S&PP’) is a wholly-owned
commercial subsidiary of the BBC serving both the BBC
and external clients. The company is broken down into two
operating divisions, Studios and Post Production Services andDigital Media Services.
The last financial year has been a period of significant stabilisationand turnaround for S&PP following its relocation from Television
Centre to Elstree and South Ruislip in 2013/14.
S&PP’s Studios and Post Production Services division delivered
an impressive volume and range of projects for broadcasters,
media companies and content owners, with highlights including:full studios and post production services for EastEnders’30th anniversary year, including the hugely successful‘live week’ which became ‘national event’ televisionsupporting independently produced ITV’s Celebrity Juice,
BBC Three’s Sweat the Small Stuff and Channel 4’s The Singer
Takes It All
studio services for Channel 4’s Deal or No Deal at a custombuilt facility in Bristol, and other popular quiz shows such as
BBC’s Pointless and ITV’s The Chasefull studios and post production services to some of the BBC’s
biggest entertainment shows including Strictly Come Dancing
and Children in Need

The award-winning Digital Media Services division of S&PP alsodelivered a number of exciting projects during the year, including
the digital restoration of murder mystery series, Miss Marple, andthe restoration of archive footage of Winston Churchill’s funeral
to mark the 50th anniversary of the event.
The division also worked with a number of clients on storage andmedia management solutions to unlock the value of their content
and preserve it in an accessible medium for years to come.
Most business areas in S&PP have returned to operating
profitability during the year, with revenues growing year-on-year
by 3%, and some £1.5 million has been removed from the fixed
cost base.
This progress is reflected in an 83% reduction in operating loss of£0.5 million (before contributions to the BBC pension deficit andexceptional items), compared to a £3 million loss reported in theprevious year. The company was cash positive from its underlying
operations for the year when the result was adjusted to exclude
non-cash items like depreciation (which is currently high due tothe investment associated with its recent relocation).
S&PP’s ambition is to continue this trajectory back towards
profitable growth, and in doing so, support the BBC public service
mission to deliver value to the licence fee payer. To assist thisfuture growth, S&PP has, during the year, enhanced its offer
to clients through targeted investment in new equipment,
technology and workflows.

hosting many elements of BBC News’ local and European
elections, employing a mix of cutting edge virtual reality
technologies and connecting live feeds from across the nation2014 cast of Strictly Come Dancing

138 

BBC Annual Report and Accounts 2014/15

Results for the year
UK Public Service Broadcasting (UK PSB) Group expenditure
Distribution£mContent anddistribution
support£m

Generalsupport
£m

Total
£m

1,433.6

2015 Service

Content£m

BBC One1,110.0

46.2

161.7

115.7

BBC Two

404.8

24.2

61.2

43.2

533.4

BBC Three

82.0

8.3

15.3

8.6

114.2

BBC Four

46.0

4.4

7.7

5.0

63.1

CBBC

72.2

8.3

12.0

7.8

100.3
41.1

CBeebies

27.7

4.4

6.1

2.9

BBC ALBA

6.0

1.4

0.9

0.7

9.0

BBC News channel*

46.2

7.6

6.6

2.6

63.0

BBC Parliament
Television

1.7

7.0

1.2

0.2

10.1

1,796.6

111.8

272.7

186.7

2,367.8
54.3

BBC Radio 1

40.5

6.2

5.5

2.1

BBC Radio 2

46.2

6.1

5.3

2.8

60.4

BBC Radio 3

38.4

6.1

6.7

3.9

55.1

BBC Radio 4

87.8

6.6

13.1

8.2

115.7

BBC Radio 5 Live

49.1

4.7

7.4

4.9

66.1

BBC Radio 5 Live Sports Extra

2.5

1.5

1.4

0.3

5.7

BBC 1Xtra

6.2

1.7

2.6

0.6

11.1

BBC 6Music

8.0

1.6

2.2

0.7

12.5

BBC 4 Extra

3.9

1.6

1.6

0.4

7.5

BBC Asian Network

6.2

2.0

1.9

0.6

10.7

115.6

13.0

14.0

11.2

153.8

21.7

3.1

4.3

2.3

31.4

BBC Radio nan Gàidhael

3.7

1.3

0.6

0.4

6.0
19.9

BBC Radio Wales

14.1

1.6

2.8

1.4

BBC Radio Cymru

12.8

1.5

2.6

1.4

18.3

BBC Radio Ulster/BBC Radio Foyle

17.3

1.6

3.3

1.8

24.0

Radio

474.0

60.2

75.3

43.0

652.5

BBC Online and Red Button**
Spend regulated by service licence

124.6

38.1

24.8

13.5

201.0

2,395.2

210.1

372.8

243.2

3,221.3
32.5

Orchestras and performing groups

26.3

–

3.3

2.9

S4C

24.5

–

3.9

2.6

31.0

Development spend

66.9

–

8.5

7.4

82.8

BBC World Service operating licence***

215.3

–

20.5

17.8

253.6

Other service spend

333.0

–

36.2

30.7

399.9

Total service spend

2,728.2

210.1

409.0

273.9

3,621.2

BBC Annual Report and Accounts 2014/15

139

Part Two: Governance and finance report – Finance and commercial

BBC Local RadioBBC Radio Scotland

Governance and finance report – Finance and commercial

2015 Service

Content£m

Distribution£mContent anddistribution
support£m

Total service spend

2,728.2

210.1

409.0

Generalsupport
£m

Total
£m

273.9

3,621.2

Licence fee collection costs

101.4

S4C (direct funding)

76.0

PSB Group pension deficit reduction payment

188.4

Costs incurred to generate intra-group income

85.1

Costs incurred to generate third-party income

66.7

Restructuring costs

8.4

Total PSB Group content expenditure

4,147.2

Digital switchover (DSHS Limited)

0.4

Local TV****

2.9

Broadband rollout****150.0

Total PSB Group expenditure

4,300.5

Lease reclassification*****(78.6)PSB Group expenditure

4,221.9*

Included within BBC News channel are production costs of £23.5 million, newsgathering costs of £22.1 million and other costs of £0.6 million (2014: production costs of£26.8 million, newsgathering costs of £21.2 million and other costs of £0.7 million)**
BBC Online spend is monitored by annexe (relating to editorial areas of the service). Non-annexe spend covers costs relating to central editorial activities such as the
BBC homepage, technologies which operate across the service and overheads. The spend for each annexe was: News, Sport and Weather £60.7 million (2014: £47.8 million),Children’s £9.0 million (2014: £9.3 million), Knowledge and Learning £15.5 million (2014: £15.7 million), TV and iPlayer £13.7 million (2014: £11.1 million) and Radio and Music£14.1 million (2014: £11.7 million), giving a total annexe spend of £113.0 million (2014: £95.6 million). Non-annexe spend was £11.6 million (2014: £10.9 million).
*** The BBC World Service operating licence includes distribution spend of £38.5 million. Total Grant-in-aid funding equivalent spend on BBC World Service was £242.6 million**** Under the terms of the latest licence fee agreement, the BBC has committed to contribute funding toward broadband rollout across the UK and funding for the developmentof Local TV channels***** In order to reflect the full cost of the PSB Group expenditure by service, finance lease interest is included, although it is not included in the Group operating expenditure

PSB support costs include the following:
Content anddistribution
support*£m

Generalsupport**
£m

Total
2015
£m

Content anddistribution
support*£mGroup
support**
£m

Total
2014
£m

Property

68.2

93.5

161.7

49.0

92.3

141.3

HR and training

15.7

25.4

41.1

14.7

23.9

38.6

Policy and strategy

–

6.6

6.6

–

9.1

9.1

Finance and operations

19.7

65.4

85.1

20.2

50.1

70.3

Marketing, audiences and communication

69.8

–

69.8

71.9

–

71.9

Total central costs

173.4

190.9

364.3

155.8

175.4

331.2

Technology

106.4

59.3

165.7

79.0

51.4

130.4

Libraries, learning support and community events

30.6

–

30.6

32.0

–

32.0

Divisional running costs

80.4

4.6

85.0

58.4

4.2

62.6

–

10.2

10.2

–

12.2

12.2

BBC Trust Unit (excluding restructuring)
Other

18.2

8.9

27.1

11.3

9.1

20.4

Total support costs

409.0

273.9

682.9

336.5

252.3

588.8

* Content and distribution support costs are those costs directly attributable to delivering our content** General support costs represent the costs of running the BBC which are not directly attributable to content

140 

BBC Annual Report and Accounts 2014/15

Total PSB support costs (which are included in the use of thelicence fee table on page 129) have increased this year, driven
largely by the inclusion of £32 million of BBC World Service costsand £16 million of BBC Monitoring costs, as well as £15 millionof accelerated depreciation related to the exit from ourW12 buildings.

Focusing spend
The BBC concentrates its expenditure on the production ofprogrammes and other content, delivery to audiences and users,
and the essential infrastructure to support this. Year-on-year
spend can vary significantly because of the cycle of major sports
events. Total content spend increased by 13.4% to £2,728 million(2013/14: £2,406 million) reflecting the impact of one-off major
The short-term increase in Finance and Operations spend reflects
sporting events including the Commonwealth Games and FIFA
the cost of the successful re-implementation of the Finance andWorld Cup, together with the embedding of BBC World Service
Procurement IT system, which will generate future DQF savings.
and BBC Monitoring content activities in the PSB Group. Funding
During the year the BBC also invested in updating outdated HR
has all been prioritised for digital content and infrastructure withsystems to reduce cost and to support more standard process
myBBC receiving investment of £22.3 million in the year, as wellacross the BBC, helping to deliver DQF savings. Whilst tangible
as the deployment of significant in-house resource to the area.
progress was made, work is ongoing to integrate some componentsof the new software into existing BBC systems. The BBC has
No service licences spent above the regulated baseline thresholdflexed its approach and absorbed some development costs,
during 2014/15. The BBC Parliament and BBC Radio 4 Extrathough most of this was mitigated by our technology providers.
service licences were the only services to underspend by morethan 10%, delivering additional efficiency savings without
BBC World Service
compromising editorial performance.
BBC World Service became licence fee funded for the firsttime in 2014/15 and this year its business activities have been
Balance sheet
increasingly embedded within the BBC UK News operation as
Following the disposal of a 49.9% stake in New Video Channel
we sought to deliver operating efficiencies. In order to regulate
America LLC (NVCA), formerly a wholly owned subsidiary ofspend on BBC World Service, an operating licence was
BBC Worldwide Americas Inc, a new associate has been formed
resulting in a £141 million increase in interests in associates andestablished to cover a total cash spend of at least £245 million.
joint ventures. Other movements in non-current assets include
This year, the total BBC World Service spend of £243 million
reductions in property, plant and equipment, driven by thewas £2 million lower than the target owing to the deferral ofrationalisation of the BBC Estate continuing with the exit fromexpenditure on decommissioning assets. Year-on-year
White City.
expenditure was up from £239 million.

The BBC’s annual savings achievement is reviewed by our
auditors, Ernst & Young LLP. In addition, the National Audit Officerecently completed its review of the BBC’s DQF efficiency
programme and confirmed that the BBC has exceeded its
efficiency target up to the end of 2013/14.
In July 2014, the Director-General announced that the BBC would
formalise the market testing and benchmarking activity throughapplying a rigorous ‘Compete or Compare’ framework across allareas of expenditure. The aim is to extend competition whereverit can bring greater choice, value for money or innovation, and toensure there is appropriate benchmarking against best practice inthe market, or internally across the BBC. In 2014/15, this approach
has included the benchmarking and competitive procurement oftechnology services, the benchmarking of News output againstinternational broadcasters and the announcement of plans to
introduce greater competition in the TV production market
through the removal of the WoCC and the establishment of BBC
Studios (subject to BBC Trust approval). The BBC is confident thatthe vast majority of its controllable expenditure will have beentested and either sits within, or will sit within market comparator
ranges by the end of this Charter period.

BBC Annual Report and Accounts 2014/15

The BBC’s cash balance included within current assets at theend of the year was £406 million (2013/14: £526 million) and has
reduced since last year as cash reserves built up to manage thetransition to full funding of new obligations including BBC World
Service are drawn down.
Pension costs
At 31 March 2015, the accounting pension deficit (as definedby IAS 19) had reduced by 37% to £948 million compared to£1,516 million a year ago. The reduction during the year was due
to contributions paid of £328 million and a net return on Scheme
assets of £1,673 million being offset by a net loss from changes inthe valuation assumptions of £1,182 million, the annual operating
charge of £191 million and net finance costs of £60 million.
This accounting valuation is only a ‘snapshot’ at a particular date intime, and is therefore sensitive to short-term market fluctuations.
It also has no immediate impact on the cash cost of paying down
the current pension scheme deficit which is reviewed at triennial
actuarial valuations.
The most recent actuarial valuation was completed in 2013 andshowed a funding shortfall of £2,054 million. A plan was agreed
between the BBC and the pension scheme Trustees detailingthe additional contribution amounts to be paid by the BBC overa 12-year period commencing in 2014. The next formal actuarial
valuation of the Scheme is expected to be performed as at
1 April 2016. The BBC regularly looks at ways to reduce thevolatility in the Scheme to provide greater stability for long-term
financial planning. The agreed funding plan is considered to be asensible and affordable means of addressing the deficit, withoutcompromising programmes or pension scheme members. The
BBC will continue to work with the pension scheme’s Trustees
to ensure the Scheme delivers the best value to both members
and licence fee payers.
141

Part Two: Governance and finance report – Finance and commercial

Delivering efficiencies
2014/15 was the third year of the BBC’s DQF programme and afurther £110 million of recurrent annual savings were delivered
to bring the total to £484 million, which is some 2% higher than
the targeted figure for this point of £475 million. The BBC remains
well on track to achieve the full savings target of £700 million perannum by 2016/17.

Governance and finance report – Finance and commercial

Summary consolidated balance sheet
For year ended 31 March 2015
2015
£m

2014
£m

Mainly the BBC’s property, plant, equipment
and investments

1,750

1,598

Increase in the interest in associates and joint
ventures recognising the new BBC
AMERICA associate

Current assets

Programme and other stocks and amounts to bereceived in the next 12 months

2,096

2,258

Reduction in cash balance driven by theoperating deficit for the year

Current liabilities

Amounts to be paid in the next 12 months(1,186)(1,038)

Increase in trade and other payables aroundthe year end

Non-current liabilities(excluding pension liabilities)

Amounts to be paid after the next 12 months(1,126)(1,098)Small increase in borrowings

1,534

1,720

(948)

(1,516)

586

204

586

204

Balance sheet classification

What is it?

Non-current assets

Net assets (excluding
pension liabilities)
Net pension liabilities

The net deficit of the BBC’s pension scheme

Net assets

What has happened this year?

Decrease reflecting improved asset
valuations and the pension deficit
recovery plan

Represented by:
BBC reserves

The net resources available to the BBC for future use

Cash
The BBC’s cash balance of £406 million at the end of the year will be used to fundboth new obligations and strategic initiatives until recurring annual efficiency
savings of £700 million are delivered by 2016/17, and to drive further investment incommercial operations.
Tax
The BBC is a committed and prudent tax payer in all the countries in which it
operates. Its commercial operations undertake appropriate and legitimate tax
planning measures in accordance with the spirit and intention of all laws andregulations.
Summary consolidated cash flow statement
For year ended 31 March 2015
Cash flow classification

What is it?

2015
£m

2014
£m

Net cash inflow fromoperating activities

Surplus of the BBC’s income over its operating costs

147

336

Decrease reflecting the income statement
deficit this year as we manage the transition
to funding new obligations

Net cash used ininvesting activities

Cash invested in property, plant and equipment

(205)

(243)

Cash has been invested in programme rights
and technology infrastructure

Net cash used infinancing activities

Proceeds and repayments from borrowings and net
interest paid on the BBC’s borrowings

(66)

(136)

Net additional borrowings taken out to fundthe BBC’s commercial activities

(124)

(43)

526

575

4

(6)

406

526

Net decrease in cash andcash equivalents
Cash and cash equivalents
at the beginning of the year

The BBC’s cash balance at the beginning of the year

Effect of foreign exchange
rate changes on cash andcash equivalents

The impact of foreign exchange rates on the BBC’s cash

Cash and cash equivalents
at the end of the year

The BBC’s cash at the end of the year

142 

What has happened this year?

Positive movements in exchange rates
impacting the sterling value of our cash

BBC Annual Report and Accounts 2014/15

Summary financial statement
The summary financial information comprises the BBC’ssummary income statement on page 133, summary balance sheet
on page 142 and summary cash flow statement on page 142.
These include the key headline data from the full annual financial
statements which are available online in the download centre at:bbc.co.uk/annualreport.
The summary financial information presented within Part Twoof the BBC’s Annual Report does not constitute the full financial
statements of the BBC for the financial years ended 31 March
2015 and 2014 but represents extracts from them. These
extracts do not provide as full an understanding of the financial
performance and position, or financial and investing activities,of the BBC as the full annual financial statements.
The independent auditor of the BBC, Ernst & Young LLP, hasissued an unqualified audit opinion on the full financial statements
for the year ended 31 March 2015 as did KPMG LLP for the year
ended 31 March 2014.
Statement of the Executive Board’s responsibilities inrespect of Part Two of the BBC’s Annual Report andsummary financial information
The Executive Board has accepted responsibility for preparing
Part Two of the BBC’s Annual Report and the summary financial
information included therein. The summary financial information
is intended by the Board to be consistent with the full annual
financial statements of the Corporation.

In considering the consistency of the summary financial
information with the full annual financial statements, the Executive
Board has elected to:use headings and subtotals in the summary income statement,summary balance sheet and summary cash flow statementthat include, as a minimum, the headings and subtotals shownin bold type in the corresponding primary statements inthe full annual financial statements
include a brief description of the respective headings
ensure that the amounts reported in the summary financial
information agree with the corresponding amounts reported
in the full annual financial statements
include the comparative amount for the immediately
preceding financial year for all amounts reported in thesummary financial information
include an explanation of what has happened in the year,
reflecting the main transactions and events reported in
the full annual financial statements as they affect therespective headinginclude any other information necessary to ensure that thesummary financial information is consistent with the fullannual financial statements for the financial year in question
The summary financial information, the Strategic report andGovernance and finance report (including Executive remuneration
report) were approved by the Executive Board and signed on its
behalf on 16 June 2015 by:Part Two: Governance and finance report – Finance and commercial

Tony Hall
Director-General

Anne Bulford
Managing Director, BBC Finance and Operations

BBC Annual Report and Accounts 2014/15

143Governance and finance report – Finance and commercial

Auditor’s report

Independent auditor’s statement to theTrustees of the British Broadcasting
Corporation (BBC) only
We have examined the summary financial information for theyear ended 31 March 2015, which comprises the Summary
Consolidated Income Statement on page 133, the Summary
Consolidated Balance Sheet on page 142 and the Summary
Consolidated Cash flow Statement on page 142 of Part Twoof the BBC’s Annual Report.
This report is made solely to the Trustees of the British
Broadcasting Corporation (the ‘Corporation’), as a body, in
accordance with the terms of our engagement letter. To thefullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Trustees as a body, for
our work, for this report, or the opinion we have formed.
Respective responsibilities of the Executive Boardand the auditor
The Executive Board is responsible for preparing the summarised
financial information so that it is consistent with the full annual
financial statements of the Corporation.
Our responsibility is to report to you our opinion on theconsistency of the summary financial information, with the fullannual financial statements and the Remuneration Report.
We also read the other information contained in Part Two of theBBC’s Annual Report and consider the implications for our report
if we become aware of any apparent misstatements or materialinconsistencies with the summary financial information
We conducted our work in accordance with Bulletin 2008/3
issued by the Auditing Practices Board. Our report on the
Corporation’s full annual financial statements describes the basisof our opinion on those financial statements and on the Directors’
Remuneration Report.
OpinionIn our opinion the summary financial information is consistent
with the full financial statements and Directors’ Remuneration
Report of the Corporation for the year ended 31 March 2015.

Richard Wilson (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London16 June 2015

144 

BBC Annual Report and Accounts 2014/15

Glossary
We have used some terms in this report to explain how we run ourbusiness, but which might be unfamiliar to our readers. The following
list gives definitions for some of the more frequently used terms.
Acquired programmes
Acquired programmes are bought in a finished state fromanother supplier.
Appreciation Index or AI
Appreciation Index or AI is the aggregate of how much people
say they enjoyed individual programmes, expressed as a number
out of 100.
BARB
BARB (Broadcasters Audience Research Board) is theindependent organisation responsible for providing the official
measurement of UK television audiences.
Cost per user hour
Cost per user hour or cost per listener hour combines service spend
and consumption to help inform an assessment of value
for money.
Creative economy
The UK’s creative economy includes the organisations and people
who work in the design and media industries, including
independent production companies, actors and writers.

FreesatFreesat is a free-to-air satellite TV service provided by the BBC
and ITV, where users pay for the equipment but do not pay amonthly subscription. Visit freesat.co.uk/. Freesat from Sky isalso available for a one-off payment: freesatfromsky.co.uk
Freeview
Freeview is the main UK digital terrestrial television service
transmitted through an aerial and using a set-top box. No
subscription is required. Freeview is the most widely used digital
television platform. It has been available in HD since April 2010.
See freeview.co.uk
HDTV
HDTV – or high-definition television – is available via either a
set-top box or an integrated digital television, and gives viewers
better quality, high-resolution pictures.

Peak time
Peak-time hours for the BBC’s TV services are 6pm-10.30pm.
Radio consumption is very different, and peak time for radiois usually defined as the breakfast and drive-time slots.
PSB
The UK’s Public Service Broadcasters (PSBs) are the BBC, ITV,
Channel 4, Channel 5 and S4C.
RAJAR
RAJAR (Radio Joint Audience Research) is the official bodyin charge of measuring radio audiences in the UK. It is jointly
owned by the BBC and the RadioCentre on behalf of thecommercial sector.
Reach
Reach on television is the number or percentage of an audiencegroup who watch a programme or channel (15 consecutive
minutes each week is the usual BBC measure, versus threeminutes on commercial TV); and on radio is the number orpercentage of people aged 15+ who listen to at least five minutesof radio in a 15-minute period during an average week.
Share
The share of total viewing or listening to a particular programmeor service over a set time, expressed as a percentage of total
hours of viewing/listening.
Unique users
Unique users or unique browsers is a measure for website traffic.
It is not a traditional survey of ‘people’, but is measured automaticallyusing either server logs or by a tag embedded within the web pages.
WoCC
The Window of Creative Competition (WoCC) opens up 25%of eligible TV hours and 10% of eligible radio hours to freecompetition between BBC in-house production and external
producers. WoCCs are on top of pre-existing Ofcom andvoluntary minimums.
If you want more information or to know more about how the
BBC is run, please visit bbc.co.uk/aboutthebbc

BBC Annual Report and Accounts 2014/15

145

Part Two: Governance and finance report – Finance and Commercial

Digital switchover
The process of digital switchover involved turning off the UK’s
analogue television broadcasting system which was completed
in 2012.

ImpactImpact shows how memorable or acclaimed a programme orservice is, and can be measured by the number of awards won
by a service, or comments (positive and negative) generated
in the press.

Governance and finance report – Finance and commercial

Index
Subject index

Overview

Part One

Audit Committee report

115

BBC Worldwide

29

Bullying and harassment cases

93
5Commercial strategy

134

20
5

Delivering Quality First

69
22

Editorial standards
Efficiency savings132
29

Complaints
Content spend by service

134
86

Charities
Charter Review

Part Two

128, 129 141

20
4

22

Environmental sustainability

55, 60, 62,128
96

Equality and diversity

26

88

Executive directors

98

Global News

74

Human rights

95

Impartiality – public perception of news providers

21

Licence fee – income and expenditure133

National Audit Office

22

128

Nations and regions

26, 3276, 82Public purposes

2

Public trust in the BBC

20

Reach by service

14

69

Remuneration – BBC Executive Board

110

Remuneration – BBC senior managers

85

Remuneration – BBC Trust

41

Risks and opportunities

24

120

Service performance

14

68

Severance pay
Spend by service

87
4

69

Staff – headcount, location and diversity

25, 26Strategic objectives – distinctiveness and quality

12, 22Strategic objectives – openness and transparency

12, 14

Strategic objectives – serve all audiences

12, 28Strategic objectives – value for money

12, 26

BBC Studios and Post Production
Talent costs

84, 88138
24

85

Trading fairly

29

124

Trust expenditure

42

Trustees

36

Time spent with each service

146 

69

BBC Annual Report and Accounts 2014/15

Contacts

Contact us
If you have a comment, appreciation or complaint about BBC programmes
and service, contact: bbc.co.uk/feedback or write to:
BBC Audience services, PO Box 1922, Darlington DL3 0UR
Comment line telephone: 03700 100 222
Other queries telephone: 03700 100 123
Textphone: 03700 100 212
BBC Trust
1st floor, 180 Great Portland Street, London W1W 5QZ

More information
If you wish to find out more about theBBC’s full-year performance to March 2015
– including full financial statements andeach service’s performance against its
Statement of Programme Policy, as wellas other public commitments, please visit
bbc.co.uk/annualreport. The Annual Reportis also published in Welsh. An accessible PDF
is available online.

Email: trust.enquiries@bbc.co.uk
Website: bbc.co.uk/bbctrust
BBC information line: 03700 103 100
Textphone: 03700 100 212

Copyright credits
Front cover/Back cover/Pages 3/46/52
Wolf Hall – Company Pictures/Playground
Entertainment for BBC Two
Page 14
Inside the Commons – BBC/Atlantic
Productions
Page 16
One Show studio – BBC/Gar Powell-Evans
Page 18
Radio Theatre in New Broadcasting House–
BBC/Gar Powell-Evans
Page 24
Old Broadcasting House – BBC/Gar PowellEvans
Executive contents page/Page 56
Poldark – BBC/Mammoth Screen/Mike Hogan
Page 46
Life Story – BBC/Theo Webb
Page 47
Kew on a Plate – BBC/Lion Television/
Laura Rawlinson
Page 50
The Great British Bake Off – BBC/Love
Productions/Mark Bourdillon
Page 51
Marvellous – BBC/Tiger Aspect/Fifty Fathoms/
Scott Kershaw
Page 54
Ryder Cup golf course at Gleneagles – BBC/
Steve Wyatt

Page 66
Wimbledon – BBC/Steve Wyatt
Page 68
Detectorists – Channel X North Productions/
Lola Entertainment
Page 73
Tulip Mazumdar in West Africa – BBC/Mark
Georgiou
Page 86‘Here’s one we made earlier’ exhibition –Lowry Arts Centre, Salford, May-Oct 2014
Page 88
The Passing Bells – BBC/Red Planet
Pictures Limited, Horrible Histories –BBC/Lion Television
Page 93Children in Need – BBC Children in Need/
Twenty Twenty

Front cover
Filming BBC Two drama Wolf Hall
Inside front coverChildren pretending to be DaleksPart One cover
6 Music Festival in Gateshead
Setting strategy
New Broadcasting House
Understanding audiences
BBC Introducing stage at T in the Park
Inside the Trust
Trust Boardroom at 180 Great Portland Street
Part Two cover
Filming BBC One’s Poldark
Delivering our strategy
BAFTA award-winning drama Marvellous

Page 95
BBC Media Action – BBC Media Action

PerformancePeter Capaldi filming BBC One’s Doctor Who

Page 97
Esio Trot – BBC/Endor Productions

How we run the BBC
The inaugural BBC Music Awards.
December 2014

Page 127
The Honourable Woman – Drama RepublicPage 128
The Eichmann Show – BBC/Feelgood Fiction

Governance
BBC One’s adaptation of Esio Trot,
starring Dustin Hoffman

Page 130
Alaska: Earth’s Frozen Kingdom – BBC/
Jonathan Feily for BBC Natural History Unit

Finance and commercial
Maggie Gyllenhaal in BBC Two’s
The Honourable Woman

Page 131
Banished – RSJ Films/See-Saw Films

Page 55
Comic Relief – BBC/Comic Relief/Gary Moyes

Page 132
Cuckoo – BBC/Roughcut TV

Page 56
The Voice – BBC/Wall to Wall. Oxford
University Women’s Boat Club – Reuters

Page 134
Back in Time for Dinner – BBC/Wall to Wall/
Duncan Stingemore

Page 58
Funny Valentines – BBC/Merman Films/Guy
Levy. Happy Valley – BBC/Red Production
Company

Page 135
The Wrong Mans – BBC/Hulu/Coco Van Oppens

Page 59
The Missing – BBC/New Pictures Limited.
Our Girl – BBC/Coco Van Oppens

Divider images

Page 135
The Fall (NI) Ltd/Steffan Hill

British Broadcasting Corporation
Broadcasting House
London W1A 1AA
bbc.co.uk© BBC 2015