PART 2

THE BBC EXECUTIVE’S
REVIEW AND ASSESSMENT
Drama Sherlock, starring Benedict
Cumberbatch and Martin Freeman,
returned for a second series inJanuary 2012.

CONTENTS AND SUBJECT INDEXPart 2 BBC Executive contents
Overview

2-1 Director-General’s introduction
2-2 Understanding the BBC’s finances
2-4 Performance by service
2-8 Television
2-9 Radio
2-10 News
2-11 Future Media
2-12 Nations & Regions
Delivering our strategy

2-14 Distinctiveness and quality
2-15 The best journalism in the world
2-16 	Inspiring knowledge, music
and culture
2-17 Ambitious drama and comedy
2-20 Outstanding children’s content
2-21 	Content that brings the nationand communities together
2-22 Value for money
2-23 Serving all audiences
2-26 Openness and transparency

Managing the business

2-28 Chief Operating Officer’s review
2-29 Working together
Governance2-40 Executive Board
2-42 Risks and opportunities
2-44 Governance report
2-47 Remuneration report2-52 Audit Committee report
2-55 Fair trading reportManaging our finances

2-58 Chief Financial Officer’s review
2-59 Summary financial performance
2-60 Financial overview
2-68 Collecting the licence fee
2-69 Looking forward with confidence
2-70 Auditor’s report
2-71 Glossary
2-72 Contact us/More information

Subject Index

Part 1

Part 2

Board remuneration
Commercial strategy
Complaints
Delivering Quality First
Digital switchover
Distribution
Editorial priorities
Editorial standards
Efficiency
Equality and diversity
Executive Board directors
Fair trading
Impartiality
Licence fee
Public purposes
Reach by service
Senior manager remuneration
Service performance
Spend by service
Strategic objectives–– Do more to serve all audiences–– Improve value for money–– Increase distinctiveness and quality–– Set new standards in openness and transparency
Syndication of BBC content
Talent costs
Trust expenditure
Trust in the BBC
Trustees

1-9/1-32
1-8
1-3/1-19
1-4/1-6–
1-17–
1-3/1-18
1-6
1-16
–
1-20
1-18
1-7
1-10
–
1-7/1-33
1-11 to 1-15
–
1-4
1-17
1-2/1-6 to 1-9
1-2/1-13
1-22
1-3/1-17
1-7
1-33
–
1-26

2-48
2-36
2-55
2-14
2-25
2-25
2-14
2-38
2-59/2-61
2-31
2-40
2-55
2-15
2-3/2-62
2-14
2-4
2-30
2-4 to 2-7
2-64
2-14
2-23 to 2-25
2-22
2-14 to 2-21
2-26
2-11
2-33
2-65
2-15
2-49

Presented to Parliament in accordance with the BBC Royal Charter 2006 (article 45),
available at www.bbc.co.uk/bbctrust/about/how_we_govern/charter_and_agreement/

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

DIRECTOR-GENERAL’S INTRODUCTION
excellent dramas on that channel, including The
Shadow Line and The Hour – part of a broader
wave of renewal and creative energy on BBC Two
which encompassed documentary and comedy as
well. In a very strong year for BBC Radio, I would
pick out BBC Radio 2 and English Local Radiofor particular mention: in both cases, quality anddistinctiveness are winning out and finding new
audiences as well as retaining existing ones. Fromphone hacking to the Arab Spring to the Eurozone
crisis, it was a momentous year for news and, timeand again, our journalists rose to the occasion.
Although representing less than a third of thehours of TV news broadcast in the UK, BBC TV
News represents nearly three-quarters of all hours
of news consumed, not because it is structurally
dominant but because audiences trust it morethan journalism from other providers. Our digital
services continue to prosper with extraordinary
audience growth in mobile and a BBC iPlayer
which last year saw nearly two billion streams ofprogrammes to the UK’s 26 million households.
The sun dips below the edge of the
Behind the scenes, the transformation of thestadium. For a few moments the crowd
BBC into a fully digital enterprise gathered pace.
– tens of thousands here, but billions in
Our new digital broadcasting and production
front of TV screens, computers, phones
and tablets on every continent – fall silent. centre in Salford and the new Roath Lock Studios
And then the show begins. This is London, in Cardiff came on stream smoothly, both ontime and on budget. Both are living proof of ouras the BBC World Service still reminds
its listeners, and the date is Friday 27 July commitment to a historic shift of investment andcreative opportunity to the nations and the North
2012: the start of the greatest show onof England.
earth, not to mention the biggest single
broadcasting event in the BBC’s history.
Delivering Quality First has meant difficult choices
for the BBC. In my judgement it is the last such
London 2012 is about many things. Outstanding
exercise that can be contemplated without the
sport, captured on TV and radio and the web
kind of deep cuts to BBC services which thewith more authority and passion, more new
public has made it only too clear they are against.
creative ideas and more technical innovation
Nonetheless, after extensive public consultation,
than we’ve seen in any previous Olympic Games.
the BBC Trust has approved a sensible andAn event staged in a capital city which, from thebalanced set of proposals which I believe will
moment BBC cameras captured the Olympic
maximise public value and minimise damage
torch arriving in Cornwall, has involved andto the range and quality of the service we offer
inspired people all over the United Kingdom.
our audiences.
A commitment to the Cultural Olympiad fromthe most ambitious ever Proms to BBC Radio 1’s
Every few years one captain leaves the bridge,
Hackney weekend to Shakespeare. But 2012 is also another arrives and the liner sails on. I’m very
about the unique relationship between this country proud of what we’ve achieved over the pastand its national broadcaster.
eight years at the BBC and I wish my successor
every success. I’ve had the great good fortune
Today the public’s general impression of and trustof spending 30 years in the company of the bestin the BBC are at historic highs. 96% of the UK
colleagues anyone could hope for – original,
population consume our services every week andfunny, creative, sceptical, clever, kind, incorrigibly
the average amount of time they spend in ourcompany is nearly 19 hours. Despite digital, despite disputatious, almost invariably, like me, true
believers in public service broadcasting. I am very
the plethora of alternatives now available to our
grateful to the Board of Governors of the BBC
audiences, public support for the BBC and theand the BBC Trust for appointing me andlicence fee has been growing, not declining. That’s
a credit to the extent to which the BBC’s founding supporting me through thick and thin. I want tothank them for giving me the privilege of helping
values and its commitment to serve its audiences
the BBC to serve you.
here and around the world are still alive and well.
In 2011/12 we made progress on many of the goals
that we’ve set ourselves over the past eight years.
The creative revival of drama across TV and radio
continued, with Life and Fate on BBC Radio 4 andMark Thompson
a splendid second series of Sherlock on BBC One.
Director-General
Particularly pleasing to me as a former Controller
21 June 2012of BBC Two was the spectacular sequence ofAnnual Report and Accounts 2011/12 2-1

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

UNDERSTANDING THE BBC’S
FINANCES
The licence fee supports the greatest volume and range of original
television and radio programming and public service online content tobe found in the UK. Facing the dual challenge of a licence fee frozen
at current levels and new funding commitments, the BBC is making
the licence fee go further, through efficiency savings and by generating
revenues from the pursuit of a strong commercial strategy.

BBC Group
BBC World Service and BBC
Monitoring

Commercial operations

Licence fee funded services

£277m

£222m

£3,606m

BBC World Service first broadcast
to the world in 1932. The service,across radio, TV and online, iscurrently funded by the Foreign andCommonwealth Office.

BBC Worldwide is the BBC’s main
wholly owned commercial subsidiary,
which works to maximise income from
BBC programme rights and properties,
to offset the licence fee.

This year 180 million people tuned into
the World Service for impartial andindependent news. Including the BBCcommercial services, globally the BBCreached an audience of 239 million.

BBC Studios & Post Production
works with the BBC, otherbroadcasters – ITV, Channel 4,
Channel 5 and Sky – as well as othermedia and independent production
companies to create great content.

The BBC is established by Royal
Charter and our UK public service
broadcasting activities are funded bya licence fee paid by UK households.
Last year, we provided the following
to home audiences:

Grant-in-Aid and Grant income

BBC Monitoring is funded by the
Cabinet Office. It is an open source
news and information publisher,offering around the clock news,
comment and reaction from theworld’s press, radio, TV and theinternet. Reports are translated into
English from more than 100 languages,
from Afrikaans to Yoruba.

Combined profit before interestand tax

BBC World News offers 24-hour
news, information and analysis in
English across the globe. It is funded bysubscription and advertising revenues.

Licence fee income• ten UK-wide TV services• nations and regions TV services
across England, Scotland, Walesand Northern Ireland• ten UK-wide radio networks• two national radio services eachin Scotland, Wales and Northern
Ireland• 40 local radio stations in England• BBC Online

Looking ahead

Looking ahead

Looking ahead

As part of the Government’sComprehensive Spending Review it wasagreed that funding for BBC Monitoringand BBC World Service would transfer
to the licence fee from 1 April 2013 and1 April 2014 respectively.

To ensure the BBC’s commercial
operations continue to support thelicence fee in future years in addition
to promoting the BBC and British
creativity to international audiences,
BBC Worldwide has been refreshingits company strategy.

In future, the licence fee will
additionally have to pay for BBC
World Service and BBC Monitoring,and for the BBC to establish apartnership fund for new local
television services (as much as
an initial £25million in 2013, and£5million per annum in subsequent
years), establish a new partnershipmodel for Welsh language TV
service S4C (contributing £76million
each year in 2013 and 2014) andprovide support for broadband
roll-out.

We have begun a six-year savings
programme to meet the reduction in
BBC World Service funding. With theapproval of the Foreign Secretary, fivelanguage services have closed, and radio
broadcasts of other services have ceased.

It intends to invest more to increase its
focus on fast-growing BBC-branded
services, such as its wholly-owned andoperated channels, around the world.

We will reduce our current costs by£700million a year by 2017 to meetthese new obligations.

2-2 Annual Report and Accounts 2011/12

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

The licence fee
In parallel with the Government’sComprehensive Spending Review, a new six-year
licence fee settlement was agreed with theSecretary of State in October 2010, in effectfreezing the licence fee at £145.50 until the endof the current BBC Royal Charter period in
December 2016 – the equivalent of just under
40p per current licensed household per day.
As well as supporting the commissioning,
creation and broadcasting of the whole rangeof BBC television, radio and online content, thelicence fee also has a broader economic impact,in supporting the wider creative economy.

The latest survey of this economic contribution
to the UK economy concluded that the BBC
made a contribution of at least £8.1billion in
2009/10. This means that over £2 of economic
value is generated by each £1 of the licence fee.
We aim to continue to deliver an economic valueof at least twice the value of the licence fee in the
future, spreading its economic benefit across the
UK. We will repeat this survey every two years
and report publicly on our success in meeting
this target. The next survey will be producedin autumn 2012. For previous reports visit
www.bbc.co.uk/aboutthebbc/reports.

40p
per dayThis year the licence fee was held at £145.50.
This is how it was spent:Monthly spend per licence fee

Licence fee rates across Europe £2011/12317.74 Switzerland*
277.94 Norway*
264.27 Denmark*231.14 Austria*
210.70 Finland
194.58 Sweden
180.22 Germany
145.50 UK
133.65 Republic of Ireland
104.41 France
93.55 Italy** Rate includes VAT
GBP 1 = EUR 1.20
52.48 Czech Republic

Other
£2.04
Monthly(17%)spend per licence fee
OtherOnline £2.04£0.60 (17%)(5%)
Online
£0.60
(5%)
Radio
£2.04
(17%)
Radio
£2.04
(17%)

Television
£7.45
(61%)
Television
£7.45
(61%)

Source: Broadcasting Fee Association. All licences run for a calendar year except the
UK which runs from 1 April to 31 March. Euro exchange rate used as of 1 January 2012(£1=€1.20). Cost is total per licence to domestic customer for TV and radio.

Investing in the best of British
The cumulative impact and spending power of over 20 million
television licences can deliver more than content alone. As wellas in-house staff, we are able to provide work for many freelance
individuals and thousands of large and small businesses acrossthe UK – delivering sustainable benefits to digital and creative
industries as well as the wider British economy.
BBC spend in creative economy £m
11/12
10/11
09/10

489
467
440

Independent programmes transmitted
External programme facilities and resources
Acquired programmes transmitted

229
75
230
77
237
93

277
289
299

25 1,095
24 1,087
24 1,093

Artists, contributors and copyright
BBC performing groups

Annual Report and Accounts 2011/12 2-3

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

PERFORMANCE BY SERVICE
Network television

BBC One is our flagshipservice and the UK’s mostpopular television channel.
It unites and inspires thenation with high-quality
programmes across a
range of genres which
includes news and current
affairs, drama, comedy
and entertainment.

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

The BBC HD channel isa high-definition television
showcase for a rangeof programming fromacross the BBC’s othertelevision services.

BBC ALBA offers, toGaelic speakers andlearners, a distinctive rangeof originated programmingthat reflects and supports
Gaelic culture, identity
and heritage.

Content £m

We spent a total of£1,708.0million oncontent for these services
last year

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC HDBBC ALBA*

BBC Three is constantly
innovating to provoke
thought and to entertain
audiences from 16-yearolds to 30-somethings
with original comedy,
drama and factual
programming thatcelebrates new
British talent.

BBC Four aims to be
British television’s mostintellectually and culturally
enriching channel, offering
an ambitious range ofUK and internationalarts, music, culture andfactual programmes.

The CBBC channel
offers a distinctive mixedschedule for 6–12 yearolds, with mainly UK
programmes served in a
stimulating, creative andenjoyable environment.

CBeebies provides a mixof high-quality, mostly UKproduced, programmes
designed to encouragelearning through playin a consistently safe
environment for children
under six.

Reach %

Time spent
watching achannel eachweek hours:mins

Appreciationindex byservice mean

Costs per User
Hour p

UK population who use
the service each week

Length of time theaverage viewer spenteach week with thechannelAggregate of how
people rated individual
programmes, expressed
as a number out of 100

1,041.1 (1,130.9)

78.8 (78.8)

07:20 (07:25)

82

(81)

6.1

(6.4)

416.6 (421.0)

54.3 (55.1)

03:22 (03:29)

83

(83)

7.8

(7.4)

83.8

(84.7)

23.3 (22.7)

01:51 (01:45)

84

(83)

6.5

(7.0)

49.2

(50.8)

12.5 (10.6)

01:38 (01:37)

85

(84)

8.1

(9.8)

81.9

(78.3)

7.4(7.0)

03:00 (02:56)

n/a

(n/a)

9.0

(8.6)

29.2

(28.5)

9.0(8.6)

04:05 (04:02)

n/a

(n/a)

2.5

(2.5)

1.2

(2.1)

3.7

(3.4)

01:35 (01:57)

83

(85)

0.7

(1.0)

5.0

(5.0)

11.91

(4.3)

n/a

(n/a)

10.8 (21.8)

n/a

(n/a)

Reach definition: 15 minutes for all channels and services and on audiences aged 4+, in line with industry standards.
Source: BARB.
( ) Figures in brackets from 2010/11.
* Source: TNS SOS, Base: All aged 16+ in Scotland.
1
BBC ALBA was launched on Freeview and digital cable in June 2011. Reach data reflects the channel post this launch (Jun 2011 to Mar 2012).
n/a Data does not currently exist for this measure.
2-4 Annual Report and Accounts 2011/12

How much it costs todeliver each service toindividual users

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

Network radio

BBC Radio 1 broadcasts
a distinctive mix of newmusic and entertainmentfor 15–29 year-olds aswell as providing tailored
news, documentaries
and advice campaigns foryoung adults.

BBC 1Xtra plays the bestin contemporary blackmusic, with a strongemphasis on deliveringhigh-quality live music
and supporting new
UK artists.

BBC Radio 2 broadcastsa unique mix of music
and speech programmes
covering a diverse mix oflive pop and rock, comedy,
documentaries andreligious output, as wellas running social action
campaigns to over 14
million listeners.

BBC Radio 3 centres onclassical music, aroundwhich it provides a broad
spectrum of jazz, worldmusic, arts programmes,
religion and drama. Thereis a strong emphasis onmusical performancefrom across the UK.

BBC Radio 5 Livebroadcasts continuous
news and live sports
coverage, bringing major
news stories and sports
events to its listeners
as they happen, andproviding context throughwide-ranging analysis
and discussion.

BBC Radio 5 Live Sports
Extra brings a greater
choice of live action tosports fans by extending
live coverage of various
sporting events.

BBC 6Music is a digitalradio station thatentertains lovers of
popular music with aservice that celebrates
the alternative spirit of
popular music from the
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 onnews and current affairs.
It broadcasts mainly inEnglish, but does offersome programmes
in other languages.

Content £mReach %

Time spent
listening to aservice eachweek hours:mins

We spent a total of£293.7million on content
for these services last year

UK population who use
the service each week

Length of time theaverage listener spenteach week with theservice

BBC Radio 1
BBC 1Xtra
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 4 Extra
BBC Radio 5 LiveBBC 5 Live Sports Extra
BBC 6MusicBBC Asian Network

38.4(36.7)

7.2

(7.4)

1.9

47.2

(46.7)

Originally launchedin 2002 as BBC 7, thestation was relaunchedin April 2011 as BBC
Radio 4 Extra. The
digital-only networkis the principal outlet
for the BBC’s archiveof speech entertainment,
including comedy, drama
and readings.

Appreciationindex byservice mean

Costs per User
Hour pAggregate of how
people rated individual
programmes, expressed
as a number out of 100

How much it costs todeliver each service toindividual users(22.6)

07:56 (08:05)

79

(77)

0.8

(0.7)

(1.5)

05:03 (04:46)

81

(80)

2.8

(3.9)

27.4 (27.2)

11:53 (11:54)

81

(81)

0.5

(0.5)

37.8 (37.3)

4.0

(4.1)

06:06 (05:50)

83

(82)

5.8

(5.9)

88.1 (92.8)

20.4 (20.3)

12:09 (12:06)

81

(80)

1.3

(1.4)

5.0

3.0

(2.0)

05:34 (05:56)

81

(80)

1.1

(1.7)

51.1 (55.4)

12.2 (12.9)

07:20 (07:33)

78

(76)

2.1

(2.1)

2.6

(2.5)

1.7

(1.3)

03:08 (02:42)

85

(84)

1.8

(2.6)

7.8

(7.3)

2.6

(2.3)

07:56 (08:23)

83

(81)

1.4

(1.4)

8.5

(8.6)

1.0

(0.9)

06:31 (05:19)

(5.3)

22.3

BBC Radio 4 is a mixed
speech radio station,offering in-depth news
and current affairs anda wide range of otherspeech programmes
including drama, readings,
comedy, factual andmagazine programmes.

76

(71)

5.0

(6.7)

Reach definition: 15 minutes for all channels and on audiences aged 15+, in line with industry standards.
Source: RAJAR.
( ) Figures in brackets from 2010/11.
Annual Report and Accounts 2011/12 2-5

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

PERFORMANCE BY SERVICECONTINUED
Future MediaBBC Online comprises
the BBC’s portfolioof online products on
desktop, TV, mobile andtablet, including News,Sport and Weather, ourchildren’s services CBBC
and CBeebies, and Factual& Learning – as well as
IP-delivered TV and Radio
services, with both live andon-demand programmes
available on BBC iPlayer.

BBC Red Button delivers
interactive services andcontent to digital televisionviewers, including up-tothe-minute content
and information acrossnews, sport, weather,learning, entertainment,interactive programmingand major events.

Content £m

We spent a total of£128.8million on content
for these services last year

Reach %UK population who use theservice each week

Time spentAppreciation
with each service index by service
each week
mean
Aggregate of how
hours:mins
Length of time the averageuser spent each week withthe service

BBC Online
BBC Red Button

people rated individual
programmes, expressed asa number out of 100

Costs per User
Reached p

How much it costs todeliver each service toindividual users

115.3 (125.8)

42.5(41.6)*

n/a

77

(80)

6.1

(8.5)

13.5 (14.9)

31.3 (31.0)

n/a

79

(77)

2.0

(2.3)

Reach definition: 3+ minutes for both services, and on audiences aged 16+.
Sources: CMI (Online), Nunwood (Red Button).
( ) Figures in brackets from 2010/11.
* The 2010/11 figure has been restated due to a change in methodology; the calculation now includes people who have accessed BBC Online via both desktop and mobile.
n/a Data does not currently exist for this measure.
2-6 Annual Report and Accounts 2011/12

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

Journalism, and national and local radio services

The BBC News Channel
is a 24-hour impartial
and independent
news service offering
breaking news, analysis
and insight. It provides
fast and comprehensive
coverage of local, UK andinternational events asthey unfold.

BBC Parliament is the UK’s
only channel dedicated topolitics. It shows debates
and committees from
Westminster, Holyrood,
Stormont, Cardiff Bay
and Strasbourg as wellas political programmes
from across the UK.

BBC Global News brings
together the BBC World
Service, BBC WorldNews television channel,
the BBC’s internationalfacing online news
services in English, BBC
Monitoring and BBC
World Service Trust.

BBC Local Radio isa primarily speechbased service of news,
information and debate,with a strong emphasis
on interactivity.

BBC Radio Wales is a
speech-led service for
adults, which offers awide range of genres andreflects the issues, events,
culture and interests ofthe people of Wales.

BBC Radio Cymru isa speech and music
radio service for Welsh
speakers, which offers awide range of genres andreflects the issues, events,
culture and interests ofthe people of Wales.

BBC Radio Ulster isa speech-led service,providing a mix ofprogrammes thatreflect news, eventsand community life in
all its different aspects
and diversity.

BBC Radio Foyle is a
speech-led service foraudiences in the NorthWest of Northern
Ireland. It provides
a mix of news andother programming
which complements,
and contributes to,
BBC Radio Ulster’s
region-wide service.

Content £mReach %

Time spent
watching or
listening to aservice eachweek hours:mins

We spent a total of£225.7million on content
for these services last year

Local population withinreach of service who use
service each week

Length of time the average
viewer or listener spenteach week with the service

BBC News Channel
BBC Parliament
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/Foyle

BBC Scotland is a speechled service for adults. It
covers a wide range ofgenres and reflects theissues, events, culture
and interests of thepeople of Scotland.

BBC Radio nan Gàidheal
offers a comprehensive
speech and music
radio service for Gaelic
speakers. It covers awide range of genres andreflects the issues, events,
culture and interests ofthe people of Scotlandfrom a Gaelic perspective
and through the mediumof the Gaelic language.

Appreciationindex by service
mean

Costs per User
Hour pAggregate of how
people rated individual
programmes, expressed asa number out of 100

How much it costs todeliver each service toindividual users

42.4(47.1)

12.2*(12.2)

02:30 (02:37)

n/a

(n/a)

4.7

2.1

(2.0)

0.5*

(0.5)

02:04 (01:40)

n/a

(n/a)

7.2

(8.2)

112.7 (114.8)

17.4(17.3)(09:35)

82

(80)

3.0

(3.2)

23.2 (23.8)

22.6(22.2)

06:51 (06:59)

79

(79)

3.6

(3.8)

72.91

(72.4)

n/a

(n/a)

09:50
n/a

(n/a)

6.6
12.9

(4.9)

(6.8)
(13.7)

13.0 (13.0)

18.7(18.6)(09:26)

82

(82)

5.3

(5.7)

11.4 (11.8)

5.5

(5.9)

11:00 (11:48)

n/a

(n/a)

14.5

(12.9)

17.3 (16.2)

36.5(36.9)

11:20 (12:20)

85

(84)

5.5

(4.8)

10:02

Reach definitions: 15 minutes for all channels and services, and on audiences aged 4+ (TV) and 15+ (radio).
Sources: BARB (TV), RAJAR (Radio).
* Three minute reach for BBC News Channel and BBC Parliament – in line with industry standard for news services – would be 18.2% and 1.2% respectively.
( ) Figures in brackets from 2010/11.
n/a Data does not currently exist for this measure.
1
Source: Lèirsinn. Base: Gaelic-speaking population.
Annual Report and Accounts 2011/12 2-7

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

TELEVISION
Audiences constantly expect more from the BBC when it comes to freshness,originality and innovation. This year we’ve strengthened quality and distinctiveness,while also increasing overall reach and providing better value for money.
George Entwistle, Director, Vision

Distinctive, high-quality content
In a year that has delivered our strongest
audience appreciation scores so far, producers
can feel proud of creating some truly memorable
programmes. There’s been a wealth of fresh,distinctive and highly original content, including
Sir David Attenborough’s wonderful series,
Frozen Planet, watched by 28 million people.
Call the Midwife and Mrs Brown’s Boys both
became appointments to view. BBC Two’s
Stargazing Live inspired millions to learnsomething new, with more than 100,000
attending events across the UK. BBC Two
drama re-emerged in the shape of The Hour,
The Shadow Line, United and Page Eight. BBC
Three continues to connect with young people –from the immediacy of Our War to the intimacyof Alex’s story in A Life Fast Forward. And BBC
Four’s sophisticated content offer saw audiences
grow apace.
Delivering value for money
While measures for quality and distinctivenesshave improved over the year, so too has thevalue we’re delivering to licence fee payers.
We’re four years through a really stretchingefficiency programme, with average Cost per
User Hour at 6.4p, down from 6.6p the previous
year and 7.0p in 2009/10.
BBC network television weekly reachversus main commercial groups % 2011/12(2010/11 figures in brackets)
All BBC Television
86.6 (86.1)
Total other channels
87.3
All ITV
75.6(75.6)All Channel 4
67.1 (66.9)
All Channel 5
45.4(44.5)

46.4(40.9)All Sky

2-8 Annual Report and Accounts 2011/12(83.9)

Partnerships
We’ve learnt from our partnerships across theworld of science in 2010 and books in 2011, andnow we are enriching our relationships withthe arts community. Working with the RSC
and other creative leaders we’ve commissioned
a multimedia Shakespeare season, withperformances and documentaries on BBC Two
and BBC Four and a new online resource forstudents. In an experimental partnership with
Arts Council England, we’ve created The Space
to foster creativity and help develop digitalproduction skills.
2012 – an exceptional year
The BBC continues to cherish its position at theheart of UK public life, with BBC One leading
the way for audiences in 2012 – from the UEFA
European Championship to the celebrations of
the Queen’s Diamond Jubilee, and culminatingin the London Olympics.

144hrsWe introduced audiences to 144
hours of brand new British drama,
with 46 original titles across the year

37m

More than 37 million people choose
to watch our factual programmes
every weekOverview | Delivering our strategy | Managing the business | Governance | Managing our finances

RADIO
BBC Radio has successfully grown audiences by maintaining a clear focus on
the distinctiveness and ambition of its programmes, as well as leading on digital
innovation across the radio sector.
Tim Davie, Director, Audio & Music

Ninety years
BBC Radio approaches its 90th anniversary in2012 with reach and approval ratings at record
levels. Ninety per cent of the population listens
to the radio each week, with two-thirds tuning
into BBC stations. A key challenge for the wholeradio industry is to maintain this performanceand attract younger listeners. The BBC’s public
service role is clear: driving collaboration andpartnership across the sector while pushing to
make our own stations distinctive.
Outstanding content
We are building value by investing in distinctive,
high-quality and ambitious programming. From
BBC Radio 4’s eight-hour adaptation of Vasily
Grossman’s Life and Fate, scheduled in every
drama slot across one week, to BBC Radio 1’s
Teen Awards, which celebrated overlooked‘Teen Heroes’ in front of 10,000 young people
at Wembley Arena, and from BBC Radio 2’schildren’s writing competition 500 Words, to
the Spirit of Schubert Season on BBC Radio 3,
which saw the station devote 200 hours to thecomposer’s work.

BBC radio weekly reach compared
to commercial stations % 2011/12(2010/11 in brackets)
All BBC Radio
67.3 (67.0)
All Commercial Radio
64.5 (64.6)
All BBC Network Radio
60.9 (60.7)
All National Commercial Radio
30.5 (29.4)
BBC Local Radio
18.6 (18.5)
All Local Commercial Radio
51.7 (52.2)

Digital growth and innovation
This year, BBC 1Xtra became the fourth BBC
digital network to reach a million listeners,
while the rebranding of BBC Radio 7 to BBC
Radio 4 Extra saw audiences rise to 1.6 million
in the second quarter of 2011. We reachedthe milestone of a billion downloads for radio
programmes and, with 42.6% of people saying
they live in a household with a digital audio
broadcasting (DAB) receiver, DAB now accounts
for 19% of all listening hours. The Radioplayer,
our online listening partnership with UKcommercial radio, now attracts seven million
regular users, just a year after launch.
Transforming the organisation
We have opened up more radio output tocompetition from independent producers.
Ambitious savings targets for in-houseproduction and management continue to drive
efficiency, and have helped keep cost per listenerhour across the radio portfolio at just 1.6p. BBCRadio continues to represent outstanding value
for money.

81

The Audience Appreciation Index
for BBC Radio pushed above 80
for the first time ever

5.4m

There were a record
5.4 million users of our radio
and music websites

Annual Report and Accounts 2011/12 2-9

Overview | Delivering our strategy | Managing the business | Governance | Managing our financesNEWS
The public sees the BBC as the leading source of accurate, trustworthy andimpartial news. That’s a prize we guard carefully and never take for granted.
We work hard to earn the trust of our audiences every day.
Helen Boaden, Director, BBC News Group

Reaching all audiences
More than 80% of UK adults consumed BBC
News each week this year across television,
radio and online. BBC News continued to attract
record audiences, with the BBC News Channel
reaching 13.2 million individuals on the day of theriots across England, radio news reaching 28.8
million weekly listeners in the second quarterof 2011, and the number of unique users of the
BBC News website, including the BBC World
Service, growing to 39 million a week globally.
Trust
The trust our audiences place in us is basedon our sustained commitment to rigorous
impartiality, independence, fairness and accuracy.
Despite pressure on resources, BBC News aims
to remain the most trusted news provider in theworld; to continue to reach at least 80% of British
adults; and to reach 250 million people globally.
We will achieve this by staying true to our policyof eyewitness reporting, specialist analysis andinvestigative current affairs.

Continuous news weekly reach (000s)
2011/122010/11

BBC News Channel

10,451

10,367

Sky News

6,307

6,250

Source: BARB, Base: 4+, three-minute reach.

Memorable stories
In a momentous news year we reported on
uprisings across the Arab world and the topplingof Colonel Gaddafi. We covered the aftermathof the devastating earthquake and tsunami
in Japan, the death of Osama Bin Laden, thegun and bomb attack in Norway that killed 77
people, the riots in England, and the death ofNorth Korean leader, Kim Jong-il. Our specialist
editors led our coverage of the world’s economiccrisis and the troubles in the Eurozone. Panorama
ran an acclaimed undercover investigation intoabuse at a Bristol care home.
Working together
Over the next five years, we aim to create asingle, integrated, BBC newsgathering service tomake the best use of our journalists across the
UK and the world. The BBC World Service will
merge with BBC News in 2014, while retaining
its separate identity. We want to share content
more effectively across the BBC and invest in
distinctive journalism to meet our savings targets,
while aiming to deliver the same quality of output
for our different audiences.

69.2%

BBC television news reached 69.2%
of UK adults each week, the highest
level since 2007

3m

The @BBCBreaking Twitter
account has more than three
million followers

2-10 Annual Report and Accounts 2011/12

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

FUTURE MEDIAOur aspiration is that 2012 will do for digital what the Coronation didfor television. Our work over the past year has set us up to achieve this.
Ralph Rivera, Director, Future MediaOne service
We are joining up our audience-facing products
to create an integrated service which is greaterthan the sum of its parts. By acting as a single
service, we can create new and surprisingaudience journeys, the digital evolution of the
traditional channel, which introduces people
to content they may not have come to before.
A shared look and design will make everything
we do feel consistent and easy to use.
A world-class experience acrossfour screens
Our digital services are no longer tied to asingle device, like a desktop, but increasingly
are available on all digital platforms – desktop,
mobile, tablet and connected TV – driven byrecent innovations. The unique characteristics
of each of these devices allow us to create
outstanding experiences for our audiences thatmeet different needs – wherever they are andwhatever they are doing. This was reflectedin our growing reach figures, which peakedat 43 million average weekly unique browsers
in February this year.

Extending reach through partnershipAs the digital media landscape evolves there area growing number of ways to reach audiences.
Our content was available on over 500 different
models from 37 different manufacturers in the
UK last year, through partnerships with major
providers including Virgin, Xbox and Apple.
These partnerships underpin our commitment
to universal availability and accessibility, while
the publication of a new syndication policy
ensures that we can continue to get full credit
for our content.
Working together across the UK
BBC Online and BBC Red Button are truly
networked services: six of our ten online
products are now based in Salford and thecreation of multiple editions allows us to reflect
different audience experiences around the UK
and across the world. Through working together
and with others, we can ensure that we create
truly outstanding content, invested with new
and distinctive creative ideas.

43m

1.2bn

191.7m1.3m

BBC Online reached a record
43 million average weekly uniquebrowsers in February

BBC iPlayer programme requests
reached 191.7 million in the monthof February – the highest ever

There have been 1.2 billion podcast
downloads worldwide since theservice began five years ago

Our Give an Hour campaign,
promoting media literacy, prompted
1.3 million people to get involved

Annual Report and Accounts 2011/12 2-11

Overview | Delivering our strategy | Managing the business | Governance | Managing our finances

NATIONS & REGIONS
1

2

3

4

1 BBC West production,
The Lark Ascending.
2 Watching Ourselves: 60 Yearsof Television in Scotland.
3 The Story of Wales.
4 6 Degrees.

England
BBC Local Radio in England is a major providerof news and original journalism across radio,
television and online. In the last year we haveprioritised high-quality journalism, exemplified
by Hot Seat, which calls those in authority to
account. Our new political reporters have been
active across local radio and beyond, bringing
depth to coverage. Over the last year we
generated over half of the BBC’s news stories
on the web. We provided extensive coverage
and analysis of the riots which affected English
cities, with reporting teams working in the mostdifficult circumstances to bring our audiences adetailed and accurate account of events.
ScotlandBBC Scotland’s television news output attracted
some of the highest audiences in over a decade,as did the documentary The Scheme, withan average audience of 840,000 and a 45%
audience share. Audience appreciation for River
City continued to grow. The reach of all BBC
Scotland’s television news bulletins continued toincrease, with the 6.30pm edition of Reporting
Scotland attracting some of its largest audiencesin the past decade, and close to one million
viewers watching on the day of the storms on
3 January. A new programme strategy for BBC
Radio Scotland was endorsed by the BBC Trustand we have already begun to reshape theschedules to ensure that its distinctive offering
remains popular with listeners. BBC ALBA’s
availability on Freeview has now increased its
weekly audience to over 500,000 viewers.

Network TV programming spend by region as a % ofeligible spend
LondonWales
BBC Wales’ English language output on BBC
One and BBC Two reached nearly a million
viewers every week. A highlight of the year was
The Story of Wales, six hour-long programmes
presented by Huw Edwards on 30,000 years ofWales’ history. The series received the second
highest Audience Appreciation score (92) of any
BBC One series this year. In a Welsh National
Assembly election year, BBC Radio Wales’ key
news teams toured the country to explore
the issues. News and current affairs continued
to drive BBC Radio Cymru’s output, with
programmes such as Post Cyntaf, Taro’r Post, Post
Prynhawn, Dau o’r Bae and Manylu providing
comprehensive analysis and insight into Welsh,
UK and global stories. Our online sites attracted
2.38 million unique weekly browsers.
Northern Ireland
BBC Northern Ireland’s services retained theirbroad popularity and appeal, with several new
drama projects, extensive coverage of theAssembly election and the Queen’s visit to the
Republic of Ireland, and the exploration of life
in contemporary Northern Ireland throughdocumentary series and debates. We enhanced
our business and economics coverage and madeeffective use of social media in finding new ways
to connect with, and involve, our audiences. BBCRadio Ulster/Foyle saw several editorial changes
over the year, including a new focus on businessissues in Good Morning Ulster and additional
sports bulletins. Arts and cultural events in the
North-West found a region-wide audiencethrough a weekly edition of Arts Extra from
BBC Radio Foyle.

BBC Local Radio and Nations Radio hours of output
2011/122010/11

2011

2010

59.0%

62.2%

London

8,784

8,760

238,725

238,461

Scotland

9.0%

7.4%

England (excluding London)

Wales

5.3%

5.0%

Scotland

16,17915,917

Northern Ireland

2.0%

0.8%

Wales

15,824

15,790

9,310

9,285

288,822

288,213

Total Nations

16.3%

13.2%

Northern Ireland

Midlands

3.7%

3.9%

Total

North of England

9.4%

7.7%

South of England

11.1%

13.0%

Multi-region*

0.5%

n/a

Total English Regions

24.7%

24.6%

Total Nations & Regions

41.0%

37.8%

Grand total

100.0%

100.0%

Network television spend based on Ofcom definitions by calendar year.
* Multi-region is a new category for 2011, covering programmes made outsideof London but which cannot be attributed to any one nation or region.
2-12 Annual Report and Accounts 2011/12

The BBC has committed that, by 2016, 50% of network
TV programming spend will be from outside of London and
17% from the Nations. In addition there is an interim target of
12% from the Nations by 2012 – which the BBC
has already exceeded.

DELIVERING OUR STRATEGYThe BBC’s mission is to enrich people’s lives with programmes
and services that inform, educate and entertain, and our vision
is to be the most creative organisation in the world. We strive
to achieve these aims across television, radio, online – regionally,nationally and internationally. This section provides an accountof how we have achieved this throughout the year.
BBC Derby presenter Phil Trow
interviews Derby’s Mayor at a Royal
Wedding street party.

Overview | Delivering
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DELIVERING OUR STRATEGYIn December 2010 the BBC Trust identified four primary strategic objectives
for the BBC up to 2016:• to increase the distinctiveness and quality of its output• to improve the value for money it provides to licence fee payers• to do more to serve all audiences• to set new standards of openness and transparency

KPI

Increase distinctivenessand quality‘General impression of the BBC’
11/12
10/11

7.0
6.8

Source: Kantar Media for the BBC,12,009 adults 16+ FY11/12, general
impression: mean score out of 10 where
1 = extremely unfavourable and
10 = extremely favourable.

To meet these objectives within theparameters of a new, challenging licence fee
settlement requires a significant programme oforganisational and cultural change. The DirectorGeneral put forward proposals to the BBC Trustin October 2011 for how the BBC should pursue
these‘I objectives
in the long term – entitledtrust the BBC’
Delivering
QualityFirst.
11/12
6.6
10/11
6.4 subject to public
The proposals
have since been
consultation and the Trust published its final
conclusions in May 2012. Meanwhile, the Trust’s
four objectives have continued to be at the heartof the BBC’s strategy, and we report on eachone below.

Distinctiveness and quality

The BBC’s mission is to inform, educate andentertain audiences with programmes andservices of high quality, originality and value. In
doing so, we must promote our public purposes.
The BBC Trust assesses how well we aredelivering the public purposes, and what more
KPI

KPI

Increase distinctivenessand quality
Average AI – Television

Increase distinctivenessand quality
BBC TV fresh and new

11/12
10/11

82.6
81.6

Average AI – Radio
11/12
10/11

80.6
79.7

Average AI – Online
11/12
10/11

77.1
80.5

Source: Average AI Television andRadio: Pulse, panel of 20,000 UK adults
16+ by GfK for the BBC, TV channels
measured: BBC One, BBC Two, BBC
Three, BBC Four and BBC HD.
Online: Online Quality Survey by
eDigital Research for the BBC.

2-14 Annual Report and Accounts 2011/12

11/12
10/11

70.4
67.8

Source: Pulse panel of 20,000 UK adults
16+ by GfK for the BBC, TV channels
measured: BBC One, BBC Two, BBC
Three, BBC Four and BBC HD.

we need to do, and publishes a summaryof its findings in Part 1 of the Annual Reportand Accounts.
Maintaining distinctiveness and quality has been
identified by the BBC Trust as key to the deliveryof the purposes. We have been pursuing thisby focusing on five editorial priorities across ourportfolio of services. We aim to provide:• the best journalism in the world• inspiring knowledge, culture and music• ambitious UK drama and comedy• outstanding children’s content• content that brings together the nationand communities
By focusing in these areas, the BBC can mostclearly distinguish itself from other broadcasters
and ensure high-quality output. Some headlines
from our output in each area are set out in thefollowing pages.
Assessing distinctiveness and quality
We regularly ask audiences what they thinkof BBC programmes and services. Audienceappreciation indices (AIs) provide an averagescore out of 100, indicating the quality whichaudiences perceive in our content. We also
ask people the degree to which they thinkprogramming is ‘fresh and new’, giving us aseparate indication of its relative distinctiveness.
On both of these key measures, this was astrong year for the BBC. Average overall AIs
increased, to 82.6 for television programmes(up from 81.6 in the previous year) and 80.6
for radio (79.7). The overall score for television
programmes being considered ‘fresh and new’grew to 70.4 (67.8), reflecting our continuing
focus on distinctiveness and originality.
Average online AIs fell from 80.5 in 2010/11
to 77.1 this year following a number of large
relaunches of high-traffic sites towards the endof 2011/12. We know from experience thatscores tend to drop following a change andrecover as audiences become used to the
new sites.

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The best journalism in the world
Across radio, television and online, BBC News
reached over 80% of the UK population every
week. The BBC News Channel remains themost watched news channel in the UK, with anaverage weekly reach of more than ten million
viewers. BBC One’s News at Ten was the UK’s
most watched UK-wide bulletin.
Among the BBC’s political coverage, The Sunday
Politics replaced The Politics Show, with opt-outs
for different parts of the UK. BBC Parliamentmarked the centenary of the 1911 Parliament
Act with an evening of documentaries anda series of Speaker’s lectures on great 20th
century parliamentarians.
Panorama continued to deliver strong
investigative reporting, and its average audiencerose to three million. International subjects
included Britain’s role in returning Libyan
opposition figures who faced torture, theuprisings in Syria and human rights abusesin Zimbabwe’s diamond mines. At home,
Undercover Care: The Abuse Exposed revealed
serious abuses at a private residential hospital,
leading to reviews of procedure. It won three
Royal Television Society (RTS) awards andwas named Best Documentary at theBroadcast Awards.
On BBC Two, Newsnight won an RTS award as
the ‘must watch news programme of the year’,
while its economics expert Paul Mason won
the specialist journalist award. Elsewhereon BBC Two, Putin, Russia and the Westfeatured interviews with Russian insiders
and key world figures.
Audiences for news and current affairs on radio
reached record levels. BBC Radio 4’s Today
peaked at 7.2 million listeners a week, a million
more than five years ago. The extension of
The World at One to 45 minutes has enabled
BBC Radio 4 to respond more nimbly to key
stories. The Reith Lectures on BBC Radio 4 took‘securing freedom’ as their theme, providing
a global platform for the Burmese opposition
leader, Aung San Suu Kyi, to make her firstbroadcasts after 15 years of house arrest.
The BBC Trust’s service review of BBC Radio 5
Live reported that audiences perceived its news
programming to be “high quality and distinctive,
having breadth, depth, wit and intelligence.” Anexample of its distinctive approach to engaging
with its audience was an award-winning live ‘AVdebate’ to illustrate how a new voting system
might work.
The BBC’s global news coverage was dominatedby the Arab uprisings. The BBC was the only
UK broadcaster to maintain a presence in Libya
throughout the conflict. During the Arab Spring,the BBC Arabic television service saw its weekly
estimated reach increase from 13.5 million to
24.4 million in the Middle East, while in Egypt it
quadrupled to 9.3 million. BBC Persian almost
doubled its weekly television reach in Iran to an
estimated six million, despite continued attempts
to jam the service.
BBC World News increased its reach in key
markets, and overtook Euronews in Europe forthe first time. Online, BBC.com is ahead of target
for digital reach, and BBC World Service sites
have achieved equivalent success.
Performance highlights
In a year when trust in the media has beenin the spotlight, trust in the BBC has risen toits highest level since current records began:
67% say they trust the BBC, up from 56%
in 2004. When the public is asked to namethe one news provider they trust the most,the BBC is selected by eight times as many
people (59%) as the next nearest provider.
People say they trust BBC news mostbecause of its accuracy and impartiality,
high quality, reputation and public funding.

Average audiences to news
programmes 2011/12
millions (2010/11 in brackets)
Breakfast news
BBC One 1.5 (1.5)
ITV1/Daybreak 0.7 (0.7)

Lunchtime news
BBC One 2.6 (2.6)
ITV1 0.9 (1.0)

Early evening network news
BBC One4.3 (4.4)
ITV1
3.2 (3.3)
Channel 4 0.7 (0.8)
Channel 5 0.7 (0.7)

Early evening regional news
5.4 (5.5)

BBC OneITV1

3.2 (3.2)

Late night news (10pm)
4.4 (4.4)

BBC One2.2 (2.3)
ITV1

BBC network hoursof output by genreNews and weather
BBC One
11/12
10/11

2,456
2,421

BBC Two
11/12 882
10/11 932

BBC Three
11/12 34
10/11 32

BBC Four
11/12 6
10/11 6

Radio
11,430
11,542

11/12
10/11

Current affairs
BBC One
11/12
10/11

250
224

BBC Two
273
296

11/12
10/11

BBC Three
11/12
10/11

192
253

BBC Four
11/12
10/11

128
150

Radio
Senior Cameraman, Fred Scott, with FSA fightersin Homs, Syria.

11/12
10/11

2,120
2,164

Annual Report and Accounts 2011/12 2-15

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BBC network hoursof output by genre
FactualBBC One
11/12
10/11

2,399
2,302

BBC Two
1,888
1,786

11/12
10/11

BBC Three
11/12
10/11

1,430
1,403

BBC Four
11/12
10/11

1,162
1,081

Radio
11/12
10/11

2,359
2,576

Music and arts
BBC One11/12 98
10/11 102

BBC Two
11/12
10/11

328
353

BBC Three
11/12 79
10/11 70

BBC Four
11/12
10/11

1,355
1,425

Radio
11/12
10/11

41,72741,709Inspiring knowledge, culture and music
In an exceptional year for factual programming,
Frozen Planet on BBC One stood out. The
series reached 28 million people, almost half
the UK population.
On BBC Two, Stargazing Live made history
when a viewer discovered a new planet during
the series. It is estimated that over 100,000
people attended events across the UK and
more than 150,000 children became involved
through BBC Learning. So You Want To Be
A Scientist on BBC Radio 4 also encouraged
audiences to get involved, with listeners devising
their own experiments.
Science came to a mainstream peak-timeaudience on BBC One, with series including
Richard Hammond’s Journey to the Centre of thePlanet, Earthflight, Nature’s Miracle Babies, Inside
the Human Body and Planet Dinosaur. Horizon
Specials on BBC Two provided authoritative
coverage from expert presenters of subjects
including the quest for the Higgs boson.
Among religious output, The Life of Muhammad,
presented by Rageh Omar, explored therelevance of the story of Muhammad to ourworld today. Other television output included
The Seven Wonders of Buddhism, Jerusalem: The
Making of a Holy City and Reverse Missionaries,
which brought today’s missionaries from the
Caribbean, Asia and Africa back to the home
towns of the original missionaries. BBC Radio 2’s
Faith In The World Week considered how
women are served by religion, while BBC One’s
Songs of Praise marked its 50th birthday with a
one-hour special from Alexandra Palace.
A range of powerful documentaries portrayed
life in Britain today. BBC Three’s Alex: A Life Fast
Forward, about a 21 year-old with bone cancer,
gained the highest audience appreciation ratingof any BBC programme this year. Protecting ourChildren on BBC Two, following social workers in
Bristol, was described as “astonishingly revealing”

Religion
BBC One
11/12
10/11

102
98

BBC Two
11/12
10/11

27
50

BBC Four
11/12
10/11

53
37

Radio
11/12
10/11

1,211
1,181

BBC One’s Frozen Planet reached almost half of the
UK population.
2-16 Annual Report and Accounts 2011/12

by the Daily Telegraph. A collaboration between
BBC Three and BBC Learning, Up for Hire
helped young people acquire greater confidence
and skills in a difficult employment market.
BBC 1Xtra tackled the issue of homophobia
and rap music in No Homo – Hip Hop’s Last
Taboo, and gave a unique, first-hand insight into
homelessness, in Bored, Broke and Bedless. On
CBBC, Newsround presented a 15-minute special
on domestic abuse and its impact on children.
BBC Two’s ambitious and extensive Money
Season included the investigative documentary,
RBS: Inside the Bank That Ran Out of Money.
Mark Zuckerberg: Inside Facebook had exclusive
access to the Facebook founder. In Made in
Britain, Evan Davis analysed the key engines of
the UK economy in the wake of the economic
crash. Whilst CBBC took five children across theworld to see the reality of life for the people who
make their favourite possessions in Show Me
What You’re Made Of.
In The Diamond Queen Andrew Marr looked at
the life and reign of HM The Queen, featuring
interviews with all the Queen’s grandchildren andwith several of her 12 former Prime Ministers.
Meanwhile on BBC Radio 4, The Art of Monarchy
was an eight-part series in collaboration with theRoyal Collection.
History output on BBC Radio 4 included Sportand the British, a 30-part series to launch theOlympic year, and the landmark Russia: The Wild
East, chronicling a thousand years of Russian
history over 50 episodes. On BBC Two, Melvyn
Bragg on Class and Culture provided an insightful
look at the subject over the past century.
BBC Radio 3’s Free Thinking Festival in
Gateshead provided a weekend of thoughtprovoking talks, debates and performances, ahigh point in a rich year of speech output.
The New Generation Thinkers scheme waslaunched, to search for the brightest academic
minds with the potential to create fascinating

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broadcasts. Laurels and Donkeys on BBC Radio
4 featured new poems by Andrew Motion,
drawing on soldiers’ experiences of war from1914 to the present day. The programme has
been shortlisted for the Ted Hughes Award for
New Work in Poetry. CBBC’s In My Life: Ballet
School followed two Liverpool brothers with apassion for ballet, and examined the dilemmas
and challenges they faced.
Knowledge, culture and music are central to theremit of BBC Four. Landmark series included
Regency, examining the cultural significance ofthat period. HRH The Prince of Wales offeredinsights into the life of Hubert Parry, in The
Prince and the Composer, Simon Russell-Beale
told the history of the Symphony (supported byin-depth output on BBC Radio 3), and Benedict
Cumberbatch presented a passionate advocacyof Terence Rattigan’s work.
The BBC Philharmonic Orchestra marked themove to its new home in Salford Quays withsome extraordinary collaborations, includinga Dubstep Symphony, written with Nero andbroadcast on BBC Radio 1 and BBC 1Xtra, and a
special edition of Friday Night is Music Night on
BBC Radio 2, featuring some of musical theatre’s
leading lights.
The BBC Proms again broke records, with over
300,000 people attending the concerts, including
around 36,000 first-timers. Highlights included
the rarely performed, gargantuan Havergal Brian
Gothic Symphony and an evening to mark Steve
Reich’s 75th birthday. High-definition television
coverage was provided for the first time.
BBC 6Music celebrated its tenth anniversary inMarch with a week of special sessions from theBBC’s legendary Maida Vale studios.
A number of innovative ideas were employed
to bring the BBC’s uniquely diverse range of
specialist music to new audiences. On BBC
Radio 1, Zane Lowe took over the breakfast
show for a week, while BBC Radio 2 bravely
turned its schedule on its head in June for 2Day,
including jazz at breakfast with Jamie Cullumand Simon Mayo.

Performance highlights
This year saw a strong performance infactual television. Overall AIs were up to
83.7 from 82 in 2010/11. There were somevery high scores for individual programmes.
Alex: A Life Fast Forward recorded thehighest, at 95. Frozen Planet achieved thehighest AI for a series on BBC One with aseries average of 94 and The Choir: Military
Wives, on BBC Two, resonated strongly withaudiences with an average AI of 91. On BBC
Radio 2, Sounds of the 60s had a weekly
reach of 3.6 million. The AI of 87 was highfor a music programme and 83% of listeners
agreed the show was original and different.

BBC Radio 2 competition, 500 Words, asked children
to send in their own stories.

Ambitious drama and comedy
Dramas which audiences loved this year included
Sherlock, Luther and, more recently, Call the
Midwife, which soon became unmissable Sundaynight viewing and one of the BBC’s most popular
dramas ever. The long-awaited adaptation of
Sebastian Faulks’ novel, Birdsong, was watchedby 9.6 million people.
It was also an exceptional year for factual drama,
including The Man Who Crossed Hitler andShirley, launching the Mixed Race Season on
BBC Two, while BBC Four contributed Holy
Flying Circus and Taking Manhattan.
BBC Two gained a growing reputation for highquality and distinctive drama, with an offering
including The Hour, The Shadow Line and The
Crimson Petal and the White. The channel is also
the home of BBC Films, with highlights this year
including David Hare’s Page Eight and United.
On BBC Radio 4 the highlight of 2011 was thelandmark production of Vasily Grossman’s epic
tale Life and Fate, set in and around the Battle of
Stalingrad. Kenneth Branagh, Greta Scacchi andDavid Tennant were among a cast of 67 actors,
with the eight-hour adaptation broadcast acrossa week, taking over all the station’s regular drama
slots. Mervyn Peake’s gothic classics were also
dramatised over six hours, in The History of Titus
Groan. BBC Four continued to show its pick of
the best drama from across Europe, with Borgen
and The Killing II providing compelling viewing
on Saturday nights and generating a growing
audience for distinctive subtitled drama content.
BBC Radio 3 audiences were offered a numberof dramas that explored difficult themes,
including Mogadishu by Vivienne Franzmann,a hard-hitting story of school racism.

BBC network hoursof output by genre
Drama
BBC One
11/12
10/11

690
808

BBC Two
11/12 299
10/11 283

BBC Three
11/12
10/11

291
346

BBC Four
11/12
10/11

305
304

Radio
11/12
10/11

4,996
4,577

Film
BBC One
11/12
10/11

446
486

BBC Two
755

11/12
10/11

660

BBC Three
11/12
10/11

211
224

BBC Four
11/12 121
10/11 173

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BBC network hoursof output by genre
Entertainment(including Comedy)
BBC One
11/12
10/11

709
585

BBC Two
11/12
10/11

629
597

BBC Three
11/12
10/11

1,367
1,179

BBC Four
11/12 126
10/11 143

Radio
11/12
10/11

8,190
7,622

Luther, starring Idris Elba, returned
to BBC One for a second series.
2-18 Annual Report and Accounts 2011/12

On the BBC Asian Network, a series of six halfhour plays gave a platform to Asian actors andwriters in the UK. No Waterfalls in Wembley
brought together school life in Bollywood andNorth London, while Baiju Bawra added acontemporary twist to the ancient tale of loveand revenge.
The most distinctive of archive radio drama andcomedy was showcased on BBC Radio 4 Extra,
launched in April 2011. Building on the success of
BBC Radio 7, it significantly increased its audience
to over 1.5 million listeners a week within threemonths. Special programming for ArmisticeDay included another chance to hear 1995’s
drama documentary Bomber, based on the
Len Deighton novel, broadcast as it was originally,in segments across the day.
The BBC is the only UK broadcaster to invest in
original daytime television drama. 32 BrinkburnStreet marked the 100th anniversary of thecensus, and other daytime commissions included
the award-winning series The Indian Doctor.
The BBC marked the 200th anniversary of thebirth of Charles Dickens with a wide range ofprogramming. Drama productions were led bya distinguished adaptation of Great Expectations,and a completion of The Mystery of Edwin
Drood, while BBC Radio 4 contributed The
Mumbai Chuzzlewits, which transposed Dickens
to modern India, and BBC Four’s Arena revisitedfilms from the archive. A wealth of factual
programming about Dickens and his times
was joined by the comedy satire, The Bleak
Old Shop of Stuff.
In line with our strategy, fewer acquired drama
series in daytime and after peak time meantthat overall there were fewer hours of dramaon BBC One this year. The balance during
those hours was largely made up of archive
comedy, resulting in an increase in reported
hours of entertainment. BBC Three also saw
entertainment hours increase, with repeats of
comedy programming after midnight.
Good comedy continues to resonate withaudiences, particularly when it reflects the
texture of British life. This was a strong year
for television comedy, in which the runaway
success was BBC One’s Mrs Brown’s Boys.
Other hits included Rev and Twenty Twelve,
which cast a satirical eye over the approaching
Olympic Games.
Ab Fab made a triumphant return over
Christmas, and the BBC’s tribute to The Comedy
Genius of John Sullivan also proved hugely
popular with audiences. However, we continue
our search for the comedy greats of the future
by investing in new talent and new formats.
BBC One’s Kevin Bridges: What’s The Story?
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television series for BBC Two.
For the first time, the whole of the BBC, across
television, radio and online, were brought
together at the Edinburgh Festival in a ‘pop-up’venue created by BBC Comedy. Over thecourse of a fortnight, around 100 hours of radio
and 200 hours of television and BBC Red Button
content came from the site, ranging from BBC
Radio 1’s Fun and Filth Cabaret to BBC Radio
4’s Unbelievable Truth, while BBC Three Live @the Fringe featured new faces alongside moreestablished acts.
On BBC Radio 4, Just a Minute celebrated
its 45th anniversary by heading to Mumbai torecord two editions, with Indian comediansjoining regular panellists. The show is so popularin India that local clubs have been set up, where
the game is played with passion. Mark Watson’s
Live Address to the Nation was the station’s first
live comedy series, while other new programmes
included the satirical show Tonight and Polyoaks,
a sitcom about the NHS.
The BBC Radio 2 New Comedy Awards
showcase the UK’s best new stand-up
comedians. BBC Radio 4 Extra also has aremit to showcase new talent. The Comedy
Club, broadcast six nights a week, profiles
contemporary comedy and premieres new
comedy talent. The topical series, Newsjack,has an open door policy allowing any budding
scriptwriter to submit sketches, and thishas resulted in some of the year’s freshest
satirical programmes.

Performance highlights
Call the Midwife represented the mostsuccessful launch of a BBC One drama
ever recorded with first episode audience
figures of 9.8 million and a series averageof 10.6 million. Sherlock returned with anaudience of 10.2 million and an AI of 89,
all up on last season.
BBC Two’s drama offering saw growth
in AIs and in audience assessments ofdistinctiveness.
The Shadow Line had an AI of 86, while 45%
of viewers ‘strongly agreed’ that it was ‘freshand new’.
BBC Four’s European dramas resonatedstrongly with audiences, with Danish
acquisition The Killing II receiving BBC Four’shighest AI of the year, at 92.
In comedy, Mrs Brown’s Boys produced
the best BBC One comedy AI on record(90), with an audience of seven million forthe second series, up from 3.8 million forseries one.

Tom Hollander as Rev. Adam Smallbone in BBC Two
sitcom, Rev.

Call the Midwife was highly appreciated by audiences, witha series average AI score of 90.
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BBC network hoursof output by genreChildren’s
BBC One11/12 471
10/11 459

BBC Two
11/12 1,788
10/11 1,736

CBBC
11/12
10/11

4,374
4,398

CBeebies
11/12
10/11

4,512
4,514

Radio
11/12
10/11

379
1,460

Schools/Formal Education
BBC Two
11/12
10/11

189
198

BBC Four
11/12
10/11

5
6

CBeebies
11/12
10/11

226
214

Radio
11/12
10/11

104
104

Outstanding children’s content
Children’s programming went from strength
to strength, across the whole range ofprogramming provided for young audiences.
From topical programmes and factual output tooriginal drama, the range of genres and formats
and depth of quality of BBC programming forchildren is unrivalled.
The ever-popular Horrible Histories was joinedby the documentary series My Life on CBBCand the natural history programme Andy’s
Wild Adventures on CBeebies. New drama forchildren included Postcode by Tony Marchant,
which explored themes of class and culturalsegregation, poverty and opportunity, andLeonardo, following the adventures of Leonardo
da Vinci in 15th century Florence.
Learning content is core to CBeebies. The
animated series Numtums gave young children
a foundation in basic numeracy all wrappedin a fun, energetic and irreverent format. The
Lingo Show, which began life online, introduced
children to simple vocabulary in French, Spanishand Mandarin. Nina and the Neurons returned
with Brilliant Bodies, answering questions fromchildren themselves about their bodies and how
they work.
On CBBC, The Ministry of Curious Stuff
saw Vic Reeves using his inimitable brand of
humour to answer children’s questions such as“Will dinosaurs ever come back?” Full of bothinformation and misinformation, it brought
comedy to the factual world.
Launching the arrival of CBeebies in its new
home in Salford, Justin’s House entertained a live
theatre audience of 3–6 year-olds with a pantostyle mix of singing, dancing and comedy.

Children continue to be attracted to drama on
our family channels, including Doctor Who andMerlin. Special commissions over Christmas
included The Gruffalo’s Child, watched by 7.6
million, and The Borrowers, a 90-minute film
adaptation of Mary Norton’s classic children’sbooks. Special commissions for children ran
alongside some of the big mainstream successesof the year, such as Stargazing Live and The GreatBritish Bake Off.
BBC Radio 4 Extra’s The 4 O’Clock Show
contains stories and features both children
and adults can enjoy, scheduled just after theend of the school day. Highlights have included
September’s Roald Dahl Month. Family Classics
on Sunday afternoons have featured new
productions including The Silver Sword and Chitty
Chitty Bang Bang.
The 500 Words competition on BBC Radio 2
invited children aged 13 and under to write
stories, and the Chris Evans Breakfast Show
broadcast live from the Hay Festival in June toannounce the winners. Doctor Who – Script
to Screen gave primary school children the
chance to write their own mini-adventure,and thousands of schools used BBC Learning’s
creative writing resources around this competition.
Finally, after 53 years of transmitting on
BBC One, Blue Peter successfully relaunchedin a new prime slot on the CBBC channel
in January 2012 and more than doubled its
audience of 6-12 year-olds.

Performance highlights
The BBC’s children’s channels have become
the most popular channels in the UK forunder-12s. CBeebies is watched by about
half of under-6s each week, and CBBC
by more than 1.8 million 6–12 year-olds.
The CBeebies panto, Strictly Cinderella,reached 603,000 young viewers and a total
audience of 1.2 million on CBeebies, andgathered 733,000 requests on BBC iPlayer.
The CBeebies website achieved the highest
AI of any BBC online site, with a score of 87.
On CBBC the final series of the Sarah
Jane Adventures attracted high audiences
and higher share than the previous series,
peaking at 330,000 children. Tracy Beaker
Returns broke records, with audiences
peaking at 442,000, the largest audience
ever for a CBBC programme. One episodehas been requested on BBC iPlayer over
1.1 million times.
CBBC’s My Life series provided
an insight into the lives of children
across the UK.
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Content that brings the nation andcommunities together
The BBC remains the place where audiences
come together to enjoy major events.
The undoubted highlight of the year was theRoyal Wedding, and almost 35 million people in
the UK watched some BBC coverage of the bigday. Coverage of annual events like the Cenotaph
Memorial on Remembrance Day also remain
hugely popular.
Music events engage big audiences acrossBBC output. BBC 6Music led coverage of the
Glastonbury Festival, with around 50 hours oflive coverage, while around a third of the UK
population watched some television coverage.
The Proms in the Park events around the UK
extended the impact of the Last Night of theProms. Scotland’s T in the Park and the Readingand Leeds Festivals also featured, along withmany smaller festivals including the Green Man
Festival in the Brecon Beacons on BBC Radio 1
and live music from the Cheltenham Jazz Festival
on BBC Radio 2. The BBC Asian Network
helped to host six major Melas over the summer.
The BBC is also the home of must-see television
programmes which become part of the national
conversation, from Strictly Come Dancing to The
Choir: Military Wives.
This year’s Children in Need broke records,
both by raising £26million on the night and by
gaining a bigger audience before 10pm than in
the previous seven years. Sport Relief also had
a tremendous year, raising £50.5million on thenight. David Walliams, John Bishop and Helen
Skelton all pulled off some amazing feats, while
across the country well over a million people
took part in running the mile.

Performance highlights
The BBC’s BAFTA-winning coverage of theRoyal Wedding ceremony was chosen by
74% of the audience.
In sport, the US Masters was shared withSky for the first time and had a higher peak
BBC audience (3.9 million) than in the last
11 years.
BBC Radio 5 Live Sports Extra reached
its biggest ever audiences this year, peaking
at over 1.15 million listeners, making it the
fourth most popular digital radio stationin the UK.
Strictly Come Dancing returned with animpressive series average of 11 million
viewers and a higher AI, at 84.
The BBC Radio 1 Big Weekend reached
5.3 million people on television, up from
2.9 million in the previous year, and on BBC
Three Lady Gaga’s performance at thefestival was the highest reaching music event
ever shown on the channel.

Sport continues to have a central place in the
BBC’s output, across all platforms. The biggest
sporting events command huge audiences,providing dramatic moments which bring thenation together. The power of the BBC to bringin mass audiences to sport is shown by the factthat while the BBC accounts for only 2% of all
television sports output in the UK, it delivers
over 40% of all sports viewing.
Audiences peaked at over nine million for
Wimbledon and more than eight million for the
Six Nations and the thrilling Canadian F1 Grand
Prix. Over half the viewing population watchedsome Match of the Day coverage.
In Britain’s biggest ever year of sport, the BBC’s
portfolio of sports rights remains strong. This
year we extended our deals for Wimbledon and
the Six Nations up to 2017 and our radio rights
deal for England cricket up to 2019. In partnershipwith ITV, we acquired the rights to the 2012
UEFA Football Championship. We renewed ourF1 deal by entering into a partnership with Sky,
under which the BBC will show half of all grands
prix live, with extended highlights of other races.
This represents excellent value for money, while
ensuring that F1 remains available free-to-air forat least the next seven years.

BBC network hoursof output by genre
Sport
BBC One
11/12
10/11

580
697

BBC Two
11/12
10/11

763
965

BBC Three
11/12 30
10/11 101

BBC Four
11/12 2
10/11 1

Radio
11/12
10/11

4,230
4,832

Bringing the nation and communities
together: the Royal Wedding.
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Value for money

The BBC is entering one of the most challenging
periods in its history, dealing with a licence fee
frozen until December 2016 while taking on new
financial commitments: the extra broadcastingrelated activities of BBC World Service, BBC
Monitoring, an expanded partnership with S4C
and support for new local television services
and broadband roll-out. In 2014/15, these
new obligations alone are estimated to add£388million to the BBC’s licence fee-funded costbase. We are determined to rise to this financial
challenge while maintaining or improving theoverall performance and audience appreciationof BBC services.
2011/12 was the penultimate year of theBBC’s Continuous Improvement productivity
programme, introduced after the 2007 licencefee settlement, to make 3% efficiency savings ayear over a five-year period. By the end of lastyear, cumulative efficiency savings are close to£1.5billion, equivalent to 3.6% each year, and weare on course to deliver £2billion in savings by
the end of the programme.
Savings have mainly come through improvementsin the way the BBC operates, throughimplementing technological change or by making
different investment choices. The BBC hascontinued to:• reduce costs by introducing new ways
of working• reduce licence fee collection costs• maximise commercial revenues within
the boundaries set by the BBC Trust• do fewer things better in content areas,
without reducing quality• reduce the senior management pay billby 25%, with a 20% reduction in the numberof senior managers• reduce talent costs when negotiating
new contracts
Over the last year, the estimated overall Cost
per User Hour of the BBC’s television and radio
services has fallen from 4.3p to 4.0p, largely
the result of lower spend and improved reachin television. Radio cost per listener hour has
remained stable at 1.6p, whilst online cost peruser reached has improved to 6.1p from 8.5p.

target of delivering £487million sustainable, cash
releasing net savings by 2012/13, whilst its overall
performance in terms of audience measures
has not declined. The efficiency programme istherefore proving a clear success in the terms
set for it.”
The NAO also reported on the BBC’s
management of its support functions, concludingthat the “BBC has reduced the costs of mostof its support functions over the last five years
and plans to make further savings. Its current
approach to challenging the cost of its support
functions is broadly effective in improving value
for money.”
The BBC will fully implement the NAO’s
recommendations from both reports.

Spreading value outside the BBC
The BBC believes that the future of public
service broadcasting in the UK depends ona vibrant UK creative community. Without
this, the existing range, quality and plurality of
UK public service broadcasting, content andservices would be impossible to sustain. Muchof the licence fee is spent outside the BBC,on independent producers, talent, suppliers,
freelancers and productions.
Over the years, and bolstered by the 25% quota,
the independent television sector has grown insize and in confidence. Today it is responsible
for supplying some of the UK’s most valued
programmes, such as Earthflight, Call the
Midwife and Birdsong.
The BBC operates its own additional Windowof Creative Competition (WoCC), further
increasing opportunities for independents
to be commissioned for entertainment,
comedy, drama, factual and children’s output.
Performance against the television WoCC
can be found in Performance Against Public
Commitments in the download section atwww.bbc.co.uk/annualreport.
In radio, the BBC operates a voluntary quota of
10% of eligible radio programming by broadcast
hours from external radio producers, andhas now put in place a WoCC for the radio
programme market, opening up the available
programming hours to independent producers
by a further potential 10%, across the BBC’s
national networks. The preferred supplier list
has also been dropped to ensure the best ideas
Demonstrating value for money
get to air, wherever they come from.
One way in which the BBC Trust fulfils its duty
to ensure that value for money is achieved by the Overall this year the BBC commissioned 42%
BBC is by commissioning a series of independent and 19% of eligible television and radio content
value for money reviews each year from therespectively from external producers.
National Audit Office (NAO).
In November 2011, the BBC Trust published an
NAO report which looked at the BBC’s progress
to date in delivering its target rate of efficiency
savings. The NAO concluded that “The BBC
is delivering value for money from its efficiency
programme in that it is on track to exceed its

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Syed and Christian contemplate starting a family in
EastEnders, BBC One.

Serving all audiences

The universal nature of the licence fee brings
with it an obligation to try to deliver valued
services to everyone in the UK, as well as
to strive to deliver all the BBC’s services,and the same quality of service, to all partsof the audience.
Each week the BBC reaches almost 96% of the
UK population and on average each of thoseusers spends almost 19 hours with the BBC.
Our continuing strategy is to seek to improvethe extent to which BBC services resonate withpeople in all the UK’s nations and regions andfrom different age groups and communities. In
particular, we must ensure that we increasingly
reflect the devolved nature of the UK’s
government, as well as the distinctive characterof its constituent parts.
BBC services should be available to every
household in the UK that wants to access them.
It is one of the BBC’s purposes to bring thebenefits of new technologies to all audiences.
The BBC must therefore seek to ensure thatevery household has convenient access to eachrelevant service, free at the point of use. It must
do so in a way that safeguards easy, accessible,
open routes to BBC content; sustains quality,
free-to-air platforms; represents value formoney; secures baseline standards of quality,
brand attribution and due prominence; meetslegal obligations; and is technically feasible.

Serving different audiences
Headlines on how the BBC has served audiences
across the different nations and regions of the
UK are set out in the Overview section.
Across its portfolio of UK-wide services, theBBC has seen some significant improvements
in its appeal to particular audiences. Listening to
the BBC Asian Network grew amongst British
Asians, reversing a previous downward trend.
BBC 1Xtra also increased its reach, up from 6.1%
to 7.4% of its target 15–24 audience.
With news and current affairs output inparticular we have striven to target diverse
audiences. Among successes with younger
audiences were BBC Three’s A Dangerous Placeto Meet My Family, which took a young British
Muslim back to the Yemen, and So What If My
Baby Is Born Like Me?, a documentary about
inherited conditions, while BBC Two’s Toughest
Place To Be took British workers to see how
their jobs are carried out in developing countries,
illuminating issues of poverty and hardship.
On BBC Radio 1, Newsbeat has used Facebook
and Twitter to gauge instant reaction tonews stories. ‘Twitter street-teams’ of young
listeners provide audio, video and copy for the
programme. The work of the armed forces has
also featured regularly within Newsbeat, as manyof those serving are within the station’s target
audience so their stories will resonate personallywith some listeners.

KPI

Increase distinctivenessand quality
Caters for a wide range of tastes
FY 11/12
FY 10/11

7.1
7.0

Nov 2010 – March 2011 / Source:
Kantar Media for the BBC, 12,009 adults
16+ FY11/12, mean score out of 10
where 1 = strongly disagree and 10 =strongly agree to a statement: ‘The BBC
caters for a wide range of tastes’.
KPI

Do more to serve
all audiences
Average weekly reach (%)
FY 11/12
FY 10/11

95.7
96.8

Average time spent per user
(hh:mm)FY 11/12
FY 10/11

18.48
19.08

Source: Cross-Media Insight Survey(CMI) by GfK for the BBC, c.33,800
responses, adults 16+.

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Issues affecting the UK’s Asian communities arereflected in the Asian Network Reports, with two
30-minute programmes each weekday. Special
editions of the show covered the rise of Sharia
Law in the UK and looked at why some British
Asian women are fighting to get their dowry
back, typifying the original journalism the network
offers its audience.

from the world of music, politics andentertainment for a memorable evening
in London’s BBC Radio Theatre.

Network programme supply
Network television has continued its
implementation of the network supply strategy,
producing more content in the UK’s nations
and regions outside London, with the overall
programme being ahead of schedule.
Portraying a diverse UK
This year has seen positive progress in reflecting With the opening of MediaCityUK, Blue Peter,
the diversity of people, places and lives across the Newsround, Dragons’ Den, Match of the Day
UK. Examples of programming from Scotland
and Sports Personality of the Year are among thewhich played across the UK are Case Histories
programmes now produced in Salford, which is
and Young James Herriot, Rab C Nesbitt andalso home to the BBC’s new Sport Centre.
Kevin Bridges: What’s the Story?
This year also saw the successful transfer of the
The Story of Ireland transferred from BBC
production of Casualty to Wales and Question
Northern Ireland to BBC Two, while The Indian Time to Scotland, plus the recommissioning
Doctor, Torchwood and Being Human all reflected of Sunday Morning Live in Northern Ireland.
life in Wales.
Further growth in business has seen the
We have also enhanced our portrayal of thesuccessful delivery of a broad range of titles
North of England through dramas such as
from all three nations, from both in-house
Prisoners’ Wives, factual programmes including
and independent production teams.
Junior Doctors, and comedies such as White Van Highlights include:
Man and In With The Flynns.
• in Wales, Sherlock and Merlin, with the second
We continue to develop talent across the UK,
series of Upstairs Downstairs being filmed inand have commissioned new shows this year forthe new Roath Lock studios
Kevin Bridges, John Bishop and Sarah Millican, as• in Scotland, Terry Pratchett: Choosing to Die
well as established talent like Graham Norton,and Richard Hammond’s Journey to the
Rob Brydon and Dara O’Briain.
Bottom of the Ocean, as well as regular arts
Portraying diversity means more to the BBC,output from The Review Show, Culture Show
however, than reflecting different parts of theand Imagine
UK. For example, on BBC Radio 4 In Touch• in Northern Ireland, Atlantis, Hominid, Digging
marked its 50th anniversary with a special showfor Britain, Hidden and Secret Fortune, as wellcelebrating the achievements of blind people.
as regular editions of Panorama
Peter White brought together an array ofPlans
are now in place to further consolidate thetalented blind and visually impaired people
creative focus of network production centres
across the UK, to help support local ecologies
and strengthen creative sustainability as we moveinto the second phase of the strategy between
now and 2016.
The BBC’s targets of 17% of network
programmes being produced in Scotland, Walesand Northern Ireland and 50% outside London
by 2016 are expected to be exceeded before
the end of the Charter period. In 2011, 16.3% ofprogrammes were made in Scotland, Wales andNorthern Ireland, and in all 41% outside London.
For more detail see the table on page 2-12.

The BBC Asian Network broadcasts in
English as well as South Asian languages.
Presenter: Zarina Khan.
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Digital switchover
The switchover to digital television has presented
both a huge challenge and also new opportunities
to ensure that the BBC reaches and serves all
licence fee payers.
Digital UK Limited – owned and funded by the
BBC and other UK public service broadcasters
and digital multiplex licensees – has continued
to work closely with the DCMS and Ofcom tocomplete the process of switchover. It also works
with industry stakeholders and other interested
groups, and helps make sure that viewers knowwhat is happening and when, and what theyneed to do. It is responsible for co-ordinating
and planning the technical roll-out of the digitalterrestrial network.
Over the last year almost 12 million households
were converted to digital. Viewers in Scotland,
Yorkshire, the English Midlands and East Anglia
made the change, with many receiving Freeview(including HD) services for the first time.
By the end of 2011/12, the UK was almost threequarters of the way through switchover in termsof population, and in 2012 we are seeing the restof the UK switch completely to digital television.
Through our wholly-owned subsidiary, DSHS
Limited, the BBC offers practical help to millions
of older and disabled viewers about how they
can continue to watch the programmes andservices they love after switchover. The Digital
Switchover Help Scheme has completed overa million digital installations, and customer
satisfaction levels have remained high: 93% ofcustomers give the Scheme at least eight outof ten, while complaints are running at less than
0.4% of installations.
For more information on the Digital Switchover
Help Scheme, visit www.helpscheme.co.uk orfor advice call Freephone 0800 40 85 900.

BBC Radio 5 Live moved to MediaCityUK with the firstprogrammes broadcasting from their new home in late 2011.

DAB
Fifty new BBC national DAB transmitters werebrought into service over the last year. These
have enabled a million people to access DAB
services for the first time and have ensured that
reliable DAB coverage is now available to morethan 93% of the UK population.
Improvements in other service coverage
An upgrade to BBC Radio Wales’ transmitter
network brought an additional 210,000 people
in Bridgend County, the Vale of Glamorgan and
the Gwent Valleys into FM coverage for the
first time. Gaelic-language television channel
BBC ALBA launched on both Freeview andVirgin Media cable in Scotland, supported byprominence in channel lists and on-screen
programme guides, furthering the BBC’scommitment to deliver services to as broad
an audience as possible.

In March 2012 the Queen visited Salford to officially open
the BBC’s base at MediaCityUK.

Annual Report and Accounts 2011/12 2-25

Overview | Delivering
Delivering our strategy
strategy | Managing the business | Governance | Managing our finances

Openness and transparency

We have made significant progress towards
meeting this objective this year, publishing moredata and information than ever before.
Among the new information we now provide is:• an annual workplan detailing the BBC’s
objectives for the year ahead, any notable
service developments or planned investments
and a summary budget• a much wider range of quarterly information,
including audience data for BBC services andaudiences’ assessments of quality• extended and simplified data about the pay
and expenses of senior BBC managers• talent costs broken down into figures
for aggregate spend

Comedy Twenty Twelve returned to
the BBC for a second series as the teamprepared for the Olympic Games.
2-26 Annual Report and Accounts 2011/12

The BBC has also engaged in more discussions
with industry about its activities and plans.
Notably, BBC Online has engaged in more open
discussion with partners and suppliers, with
two industry briefings taking place in June andNovember 2011. At these, industry delegateswere informed about BBC Online’s strategy andannual workplan and updated about the progressof key products such as TViPlayer and sport.
The briefings were videoed and published on
the BBC Internet blog.
Throughout the year, the BBC has also been
engaged in an open discussion with its staff
and the public about itself, its values and its
operations, through the Delivering Quality
First process.
All this information is available atwww.bbc.co.uk/aboutthebbc/.

MANAGING THE BUSINESSThe BBC is charged with delivering its public purposes acrossa broad range of services and activities, and managing this is acomplex operation. In this section we show how we manage theorganisation’s corporate and operational activities in collaboration
with our staff and external partners.
BBC factual programming;
Frozen Planet was narrated
by Sir David Attenborough.

Overview | Delivering our strategy | Managing
Managing the businessbusiness | Governance | Managing our finances

CHIEF OPERATING OFFICER’S REVIEWThe role of the Operations Group is to help the BBC deliver transformationalchange – whether it is concerned with technology, strategy, property or ourpeople – or with understanding audiences. It does this while supporting the restof the organisation with an efficient, best-in-class service and implementing its
own plans to reduce much of its costs by 25%.

Operations Group
Following the creation of a single Operations
Group at the start of 2011, we have worked
during the year to provide simpler, more
efficient support to the rest of the organisation.
Taking advantage of the synergies between
departments, we are now able to offer a morejoined-up service, whether that’s Technology
and Workplace collaborating on the move
to New Broadcasting House or Editorial
Policy and Editorial Legal providing sharedcompliance advice.
At the same time as leading the Delivering
Quality First programme, Operations hasdeveloped and now begun to implement
its own savings plan, cutting 25% of its noncontract costs. These savings targets will beachieved by spring 2013. By that time, weestimate that approximately 300 jobs will
have gone. In addition, Operations is also
looking for opportunities to make savingson its major contracts.
Alongside all of this change, we remain focusedupon building trust and appreciation for the
BBC directly and by working with output groups
to delight audiences. We deliver high-quality,
innovative technology, services and advice that
inform and support the BBC’s strategic goals
whilst keeping us on air.

The Switchover Help Scheme has now provided
assistance to over 1.2 million people in total,
ensuring they continue to be able to enjoy their
television services uninterrupted.
We have continued to build on the partnerships
we’ve established in recent years, with the Bristol
Anchor City Partnership leading to the BBCRadio 4 More Than Words festival broadcasting
live from the city in March alongside much closer
ties between the BBC and the local community.
We hope to establish a similar creative
partnership in Birmingham in 2012.
I’m also proud of the recent launch of ‘The
Space’, a joint project with Arts Council England,
to make the best of the glorious summer of artsthat surrounds the Jubilee, the Olympics andthe Paralympics, on as many screens as possible.
With our partners The Space we will showcase
a wealth of new art and will provide access tomuch more, including some of the events of
London 2012.
But we can’t rest on our laurels. Looking ahead,
we still have significant financial challenges
to meet, major projects to deliver as well as
ensuring we remain close to our audiences. 2012
promises to be a historic year for the UK and I
know the BBC will play a critical role in letting thewhole country share in that excitement.

Caroline Thomson
Partnerships and projects
Chief Operating Officer
Operations is responsible for all of the BBC’s
21 June 2012major contracts and projects, including the
migration into London’s New Broadcasting
House which began in earnest at the beginning of
this year, with several of our global services now
broadcasting live from that building. This allows
us to substantially reduce our property footprintin central London as well as bring the BBC
World Service physically closer to our domestic
services. In Salford, the first phase of moves is
now complete, with a wide range of output
from CBeebies and BBC Radio 5 Live to BBC
Breakfast coming from MediaCityUK.
Over the year we have worked with
Government and other stakeholders to deliveron our roadmap for digital terrestrial television.
We have kept digital switchover on track,with over 90% of the country now digital-only.

2-28 Annual Report and Accounts 2011/12

Overview | Delivering our strategy | Managing
Managing the businessbusiness | Governance | Managing our finances

WORKING TOGETHERThe BBC is a complex organisation with operations around the world andacross the UK. A key priority for the next few years will be the simplificationand streamlining of the Corporation so that staff can work more effectively
together and the value of the BBC’s output can be maximised across platforms
and services.

Staff
Our focus this year has been on delivering theorganisational change we need to meet our
Delivering Quality First savings targets and on
continuing to develop a culture that encourages
our employees to give their best.
Great leadership, robust performance
management and a fair deal for staff are thecore elements that underpin our approach toorganisational change. Our BBC leaders andmanagers are essential to the successful deliveryof transformational change. Throughout the lastyear we have engaged an extensive networkof leaders and managers, at all levels within
the organisation, to help design together andeffectively deliver change across the BBC.

The London Apprenticeship Scheme recruited
11 new candidates in April 2012, and the scheme
will continue to operate for at least one further
year, offering a large number of places in BBC
Vision Productions. A further three intakes
are scheduled in Scotland, in the run-up to the2014 Commonwealth Games. The Scheme
has enjoyed success and recognition, with 70%
of first and second year apprentices in London
having secured relevant employment in the BBCor wider industry.
The BBC is also partnering with the host
Olympic Boroughs to provide work experienceplacements for local residents, while the 2012
Community Reporter Scheme, hosted at BBC
centres across the UK, provides training andexperience for volunteers who are interested
Developing talent
in gaining journalism skills.
Our success is built on a creative, skilled and
The move to MediaCityUK in Salford Quays istalented workforce – people who are highly
also providing opportunities both to develop
motivated to deliver the very best content
existing staff and to work with local bodies toto our audiences. Our challenge for this year
support skills acquisition. We have attracted 22
has been to create an environment where
people to our North Digital Apprenticeshiptalent can thrive and develop, within the BBC’s
Scheme, offering employment opportunities
financial constraints.
and training and development. The opening ofWe are committed to recognising and developing
the Drama Village at Roath Lock in Cardiff also
our internal talent, as well as attracting theprovided the opportunity to develop key skills invery best talent from the external market.
the external market and ten apprentices were
We achieved 71% of recruitment to senioroffered 12-month contracts, across production
management roles through internal promotion,and craft roles, in January 2012.
against a target of 70%. We have launched an
A fair deal for staff
online career management tool, supported by
Our ambition is to develop a new contractuala series of workshops, so that employees atdeal for staff that aligns with the broadcast
all levels can identify and manage their careermarket and delivers greater value to theaspirations, and to encourage greater mobility
organisation and to audiences. This year we set
across the UK.
out the scope of this ambition: to reform our pay
London 2012 has provided us with a great
and grading framework and to more closely alignopportunity to create a long-lasting connection
and legacy with audiences, and focus on skills and our redundancy and severance terms with those
employment opportunities for those who might in the industry.
otherwise have found it hard to get into – or had Changing workforce terms and conditions
is inevitably challenging. We have therefore
not considered – working in the media.
The BBC 2012 Apprentice Scheme, being run in encouraged staff to engage directly in an open
debate about the cost and relevance of some
London and Glasgow for a second year, saw 20
apprentices from diverse backgrounds recruited of our core conditions. We held 120 seminars
this year, reaching over 2,000 staff to explore
by the end of March 2012. They are working
alternative pay and allowances options.
both within the BBC and with our partners in
Work to design and implement our new deal
the independent production sector.
will continue throughout 2012/13.
Annual Report and Accounts 2011/12 2-29

Overview | Delivering our strategy | Managing
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OPERATIONSCONTINUED

Across the organisation, locally designed changes
have delivered more efficient operations andways of working, in many cases leading to job
reductions and redundancies. Although union
relationships are generally constructive, theextent of these changes has driven an increase
in days lost through industrial action, with a totalof around 11 days of strike action, two of them
BBC-wide by NUJ members and the remainder
more localised action.
Reaching an agreed pay settlement in 2011 in adifficult economic climate presented a particularchallenge. Many licence fee payers have been
subject to pay freezes and job losses and we
too need to manage pay effectively within our
financial constraints.
Our 2011 pay deal increased salaries by 2% for
those earning less than £60,000, and followed
several years of tough settlements involving
below-inflation increases which have reduced pay
in real terms, particularly for high earners. Overthe past three years we have sought to focus thebenefits of our restricted pay budget on lowerpaid staff.
The year ahead will also be challenging, as we
implement our plans to achieve £700million
savings a year by 2016/17.

We have made significant progress towards
reducing the senior management headcount andpay bill, down by 156 (24%) and £21million (27%)
respectively since August 2009. Pay for senior
managers earning over £150,000 is down by 19%
and we have achieved a reduction in the averagereplacement salary for all senior managers of
10%. We plan to reduce the senior management
workforce by a further 70 posts by 2015, andwant to see the pay bill fall by a further £9million.
We have made further savings by removing
private medical cover and car allowances for
new senior managers from August 2011 andApril 2012 respectively. The bonus freeze
for these grades remains in place for theforeseeable future.
Headcount
As shown in the table, the average year-on-year
equivalent full-time headcount has reduced
by 384 since last year, from 17,242 to 16,858,
reflecting the initial impact of Delivering Quality
First initiatives. The largest divisional reductions
have been in Finance (12.3%) and Vision (12.2%).
Many of the reductions have occurred inadministration and support teams, allowing us tofocus licence fee spend on content and output
and to reduce overheads. Figures for the regional
distribution of staff reflect the relocation of staff
from London to Salford Quays.

Senior manager headcount by salary band

Total average Public Service Broadcasting headcount(equivalent full-time)
Year end 2005/06

18,860Year end 2006/07

17,914

Year end 2007/08

17,677

Year end 2008/09

17,078Year end 2009/10

17,238Year end 2010/11

17,242

Year end 2011/12

16,858UK PSB staff by Nation (equivalent full-time) %2011/122010/11England (excluding London)

33

25

London48

55

Scotland

7

8

Wales

8

8

Northern Ireland

4

4

Band

2011/122010/11

Under £70,000

30

41£70,000 – £99,999

192

230

£100,000 – £129,999

114

128

£130,000 – £159,999

70

77£160,000 – £189,999

29

28£190,000 – £219,999

18

20£220,000 – £249,999

5

7£250,000 – £279,999

6

4£280,000 – £309,999

2

2£310,000 – £339,999

3

3£340,000 – £369,999

00£370,000 – £399,999
Total*

0540

The 2011/12 numbers reflect moves of the Director of BBC North and the Director of BBC
People off the Executive Board and into senior manager population.
* Total excludes Executive Board members.

2-30 Annual Report and Accounts 2011/12

1
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Diversity
Diversity in the workforce provides theopportunity to enhance the BBC’s originality anddistinctiveness and drive creativity and innovation.
Connecting with and listening to our diverse
audiences is vital to our work. Our Equality
and Diversity Strategy, Everyone has a Story(published in May 2011), was heavily informed byresearch and consultation. It lays out our visionand our core equality and diversity objectives.
In January 2012 we published our first annual
Equality Information Report, Telling ourStory, which brings to life our fundamental
commitment to serve and reflect all UK
audiences through our programmes and across
our workforce. It demonstrates progress against
our strategy and how we are meeting our new
obligations under public sector equality duties,
for example by carrying out a programmeof equality analysis to help us assess andmanage the equality implications of our decisionmaking processes.
Specific workforce targets focus our efforts ondiversifying the workforce, but we also lookbeyond these to understand our workforce
profile and seek to reflect modern Britain. In
our 2011 staff census, 54% of staff voluntarily
provided personal data on ethnicity and disability.
49% of the total BBC workforce are female and
37% of senior managers are female. Both figures
are stable year-on-year. The number of staff
who identify as disabled has dropped by 0.5%,
but risen by 0.3% among senior managers. The
black and minority ethnic (BME) staff percentage
remains fairly static at 12.3%, but has risen by
0.8% to 6.8% among senior managers. The
highest concentration of employees (36%) isaged between 30 and 39 years, and the highest
representation of senior managers (44%)
between 40 and 49.
The BBC continues to chair the Creative
Diversity Network (CDN). In December 2011
we hosted the third annual Diversity Awards at
MediaCityUK in Salford to celebrate and reward
diverse creative talent and successful initiatives
to promote diversity. In 2011, the CDN Senior
Mentoring Scheme provided tailored training andmentoring for 34 professionals who are disabledor from a BME background. We have organised
networking and diverse talent showcasing eventsand published research on age portrayal acrossthe media.
Important areas of focus for 2012/13 will beworking to address the drop in the numberof disabled staff, building on existing activity
to increase access to the BBC for those fromdiverse socio-economic backgrounds andleading the CDN in sharing and applying bestpractice to help increase on-air gender andage diversity. For further information, see:www.bbc.co.uk/diversity.

Diversity: percentage of total staff
Target(by end2012)

Actual% point(March change year
2012)
on yearBlack and minority ethnic

12.5

12.3

+0.1

Senior managers,
Black and minority ethnic

7.0

6.8

+0.8

Disabled staff

5.5

3.6

-0.5

Senior manager, disabled staff

4.5

3.3

+0.3

BBC Academy
The Academy’s most important priority has
been to ensure that staff relocating to Salford
and New Broadcasting House are equippedwith the skills to underpin a smooth transition.
This has involved mass participation training
programmes around new technology, newways of working and collaboration. Training
programmes have been delivered on timeand on budget, and 7,200 delegates have been
trained so far. Feedback about the value of the
training has been very positive.
The Academy has also focused on ‘fusion’training, which merges editorial and technicalskills, encouraging collaborations which break
down traditional silos. The BBC is leading the way
with this type of training, highlighted in a Creative
Industries Council report as a key skills gap acrossthe sector.
Part of the fusion programme has involveddelivering training around ‘connectedbroadcasting’. This enables the BBC to develop
more immersive storytelling and reach audiences
via the platforms of their choice.
Building skills across the mobile workforce has
been a major priority. So far, the Academy
has organised and hosted two Fast Train
freelance training events (for television andradio respectively), in partnership with Skillset,
trade bodies and commercial training providers.
These have reached over 700 freelancers withfree taster training and are, by some margin, thebiggest events of their kind ever staged acrossthe industry. Feedback has been excellent fromparticipants and partners alike.
The Academy’s partnership with Arts Council
England, Building Digital Capacity for the Arts,
has delivered skills sharing workshops andseminars to 350 arts organisations, recognising
the need for training which helps to deliver
high quality and original arts content in thedigital space.

Annual Report and Accounts 2011/12 2-31

Overview | Delivering our strategy | Managing
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OPERATIONSCONTINUED

The Blue Peter garden was openedin MediaCityUK in February 2012.

Relocation
BBC North
The move of BBC North to MediaCityUK in
Salford Quays was completed on schedule andunder budget, playing a big part in delivering
the BBC’s commitment to develop the media
industry in the North of England.
More than 2,300 staff now work there, including
BBC Children’s, Sport, BBC Radio 5 Live,BBC Learning, BBC Breakfast and some Future
Media teams. Existing Manchester-based staff
including the BBC Philharmonic Orchestra,
the Religion and Ethics team and North West
Tonight also moved to join them in the newMediaCityUK complex.
Around two-thirds of the MediaCityUK
workforce were existing BBC staff who
relocated from London or our Manchester
Oxford Road building, and a third are new
recruits, many from Greater Manchesteror the North West region.
BBC North aims to lead the way in training
and developing local talent and building on therich mix of skills and experience available in the
North of England, working with colleges anduniversities to train and develop a workforce
for the future.
New Broadcasting House
This year saw the start of the major migration ofaround 4,500 staff from across the BBC to our
new state-of-the-art building, New Broadcasting
House, in London W1.
Since January 2012, almost 800 employees
have moved into the new building. This includes
teams from Global News, Technology andAudio & Music, along with external partners.
The Burmese section successfully broadcast
2-32 Annual Report and Accounts 2011/12

the first live output from the new building on
11 March 2012 and all of the World Service
South Asia hub has now moved, along with theEuropean language services, BBC Brazil and
BBC Mundo. Over the next 18 months the BBC
World Service and Audio & Music moves will
be completed as will the migration of Network
News and Vision.
Over the last 12 months approximately 250
managers from News, Audio & Music andTechnology have completed the W1 leadershipprogramme, which focused on how teams canwork more collaboratively in the new building.
Plans are being rolled out to build on this with aseries of events and networking opportunities forstaff in W1. Over 3,000 staff have already been
inducted and 2,500 days of technology training
have been delivered to equip people with the skills
they need to operate shared broadcast systems.
Work is continuing to develop flexible working
options in order to maximise the efficient use of
space in the new building.
Programme acquisitions
As shown in the table on page 2-3, spend on
acquisitions has been falling in recent years. The
savings generated have been targeted towards
even more UK-originated programming, and thefilm acquisition budget focused on UK films.
We do still aim to bring some of the best foreign
dramas and movies to UK viewers, helping meet
our public purpose of bringing the world to the
UK. However, as with sports rights, we will not
buy at any cost.
The best foreign language films, including Flameand Citron and Mongol, and foreign dramas
such as Borgen, The Killing 2 and The Slap, wereshown on BBC Four over the year, and have
proven their value to audiences.

Overview | Delivering our strategy | Managing
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Supplying the BBC
We choose all our suppliers carefully to ensure
they have appropriate expertise and provide
demonstrable value for money. We have worked
with many suppliers for several years, and someare essential to broadcast continuity. Equally,each year other companies and individuals workwith us for the first time, including on-screen andon-air talent, independent production companies
and other suppliers that have competed for
new contracts.
All our supply arrangements are managed
through procurement teams with specialist
market and business knowledge, to ensure we
consistently achieve quality and value, comply
with all relevant regulations and use industrystandard terms of trade.
Information on all our procurement needs,
including new tenders, can be found on
www.bbc.co.uk/supplying.
TalentWorking closely with artists, presentersand performers, the BBC aims to produce
programmes of the very highest quality while atthe same time driving the best value for licencefee payers. It is vital that we appropriately reward
the talent who make our programmes distinctive
and appreciated. The resurgent market for
talent continues to increase the challenge ofcontrolling costs, and has led to some high-profile
departures to other broadcasters. During thelast 12 months we have continued to develop
new approaches and have been able to reduceoverall talent costs by £9.5million. We willcontinue to nurture and develop talent, offering
the widest range of creative opportunities
across genres and services. This year, we haveworked hard to separate earnings into each pay
bracket, substantially reducing the volume of‘organisations’ and categorising individuals in eachof the pay bands wherever possible.

The Review Show‘s Martha Kearney and Kirsty Wark.
The regular arts programme is produced from Scotland.

2011/12 talent spend
2010/112011/12£000s

Volumes£000s

Volumes

Variance £000s< £50k£102,433

50,029£97,651

49,341-£4,782£50k – £100k£38,259562£42,324637£4,065£100k – £150k£16,990142£15,038

125-£1,952£150k – £250k£14,95880£14,20976-£749£250k – £500k£10,78133£10,617

33

-£164

16

-£2,492£500k – £750k£4,084£750k – £1m£3,315£1m – £5m

£14,647

Organisations*Total£6,01119£823£1,927£9,696-£4,951£7,0982,505£6,685

1,763

-£413

£212,565

53,370£203,054

51,991-£9,511* Organisations are groups of individuals contracted as one – for example external orchestras – so it is not possible to list numbers of individuals against this spend. The number of individuals in the£500,000+ categories has been aggregated in order to protect the personal information of those individuals, in line with data protection best practice.

Annual Report and Accounts 2011/12 2-33

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OPERATIONSCONTINUED

The consistent nature of these files – particularly
their standardised metadata – will enable the
BBC and its partners to share programme
content more cost effectively via the web,mobile, iPlayer and internet-enabled television.
Audiences will benefit from sophisticatedcontent search outcomes across these platforms,
increasing the value of our content to licencefee payers.
The DPP continues to work nationally andinternationally on technical and metadata
standards, and is playing a significant role inbringing the BBC closer to realising ourambition of fully end-to-end digitalproduction and distribution.

The gallery for the BBC Sport Centre,
located at MediaCityUK.

The panel for an episode of BBC
Three’s Free Speech the monthly live
debate and discussion show.

Partnerships
Through partnerships we are able to combine
our expertise and resources with those of
external partners and independent production
companies. This means we can support thewider creative industries while deliveringcontent and products of even greater value
to our audiences.
Digital Production Partnership
The BBC is working successfully with ITV and
Channel 4 to encourage the adoption of filebased (digital) production techniques within
the UK. The three broadcasters have createdthe Digital Production Partnership (DPP),
which is now delivering tangible benefits acrossthe industry.
For the BBC, the DPP helps deliver the benefitsof emerging communication technologies andservices to audiences, and increases value formoney to licence fee payers. The DPP also
helps the smooth and cost-efficient transition to‘end-to-end digital production’ for independent
production companies.
This year the DPP unveiled the UK’s first
Technical and Metadata Standards for file-based
programme delivery. This is an important
breakthrough: all seven major broadcasters(BBC, ITV, Channel 4, Channel 5, S4C, Sky andUKTV), have agreed one common file format,
structure and wrapper to enable television
programmes to be delivered by digital file.
2-34 Annual Report and Accounts 2011/12

Radioplayer
Radioplayer is a partnership between the BBC
and the commercial radio companies, aimed at
growing listening on internet-connected devices.
The industry decided to ‘agree on technology,
compete on content’, and with this in mind set
out to create a simple common radio interface
for computers.
It featured 157 stations at launch, but quickly
grew to 315 by the end of the year. Used byseven million listeners a month, it offers live
streams and catch-up programmes from all BBC
stations, all the main commercial stations, as well
as student and community radio.
In its next year, Radioplayer plans to growbeyond the computer – launching mobile apps,
developing for internet-connected televisions,and helping to shape the digital future of radio byprototyping new forms of ‘hybrid’ radio sets.
The UK is leading the way in working, inpartnership, on common interfaces for radio andthis innovation looks set to spread around theworld, with dozens of other countries interested
in adopting the model.
Media literacy
Partnerships have been at the heart of the media
literacy strategy this year. In October we worked
in partnership with Race Online 2012, UK online
centres and a wide range of other partners toencourage people who are online to Give an
Hour to help people they know to get online.
Awareness of the Give an Hour campaign was
at 30% of adults in the UK and 1.3 million people
took action as a result of the campaign.
In February 2012, the BBC again showed its
commitment to working in partnership topromote media literacy and online safety foryoung people, with the BBC’s Share Take Carecampaign. Working in partnership with the UK
Safer Internet Centre to support Safer Internet
Day, the BBC’s campaign was designed to raiseawareness of the issues around safeguarding
reputation online. Awareness of the campaign
was at 29% of adults in the UK and many said
they had reviewed their privacy settings on social
media as a result.
In the autumn, the Media Literacy team worked
in partnership with the indie Scott Free and withBBC Documentaries to launch the Britain in aOverview | Delivering our strategy | Managing
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The Newsround presenters. The children‘s news programme
is now produced in Salford.

Day project. A series of ‘how-to’ films, fundedby BBC Learning and featuring Dan Snow andJulia Bradbury, showed the audience how toplan, film and upload their contributions to theBBC’s Britain in a Day channel on YouTube.
Thirty workshops were held with diverse groups
across the UK, helping them make films for thisBBC Two project, airing in June 2012. More than
12,000 films have been uploaded so far, providing
a unique picture of the UK on one day in 2011.
BBC Learning’s Salford-based Lab worked with
community film-making groups in Hackney toprovide films for the BBC Three programmeFree Speech, scripted and directed by young
people aged between 16 and 25. The Lab –whose mission is to equip members of theaudience to make great content – will be
providing more material for Free Speech incoming months by working in partnershipwith prisons, colleges and charities.
Julia Somerville, Gloria Hunniford and Angela Rippon tackle
the nation’s consumer problems in Rip Off Britain.
Annual Report and Accounts 2011/12 2-35

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OPERATIONSCONTINUED

The sixth series of Doctor Who
starring Arthur Darvill, Matt Smith andKaren Gillan was the most downloaded
TV show on iTunes in the US.

One of BBC Worldwide’s top sellingbrands, Top Gear.

Worldwide
Headline sales £m
1,085
1,030

11/12
10/11

Headline profit £m
11/12 155
10/11 144

Overseas headline sales £m
11/12
10/11

698
630

Commercial income excludes
Magazines and includes joint ventures.
Prior year numbers have been restated
to exclude discontinued operations.

2-36 Annual Report and Accounts 2011/12

of £121.0million, with a majority of the businesssold to Exponent Private Equity.
Adjusting for this disposal, overall results showedsolid growth. Headline sales on continuing
operations increased 5.4% to £1,085.0million(2010/11: £1,029.8million), and headline profit
on continuing operations was up 7.9% to£154.8million (£143.5million). Profit before tax
excluding gains on disposals increased 13.0%
to £103.5million (£91.6million). Headline profit
margin increased to 14.3% (13.9%).
The increase in revenue was driven by the
Channels, Content & Production and Sales &Distribution businesses, all of which grew atdouble-digit rates and together generated over£90million of additional headline sales comparedto the previous year. The principal drivers ofrevenue growth were:• BBC America performing in line with anambitious investment plan, a strong year at
UKTV and expansion of international BBC
Channel services, including the launch of newchannels and extension of existing channel
feeds into more countries• double-digit revenue growth in the Sales& Distribution business, with a trebling of
programme sales to digital television services• double-digit growth in advertising revenues
for Channels and BBC.com• continuing success with the international
production of Dancing with the Stars alongwith good growth across both scripted
production and other formats
Meanwhile, despite a very successful Christmas
sales period in the UK, Consumer Products
headline sales decreased by 15.8%. This reflecteda subdued market, the impact on UK stock
availability as a result of a fire in a third party
warehouse fire in August, and the delay ofthe launch of Frozen Planet in the US market.
Nevertheless, operating margins improved,reflecting a tight focus on cost and efficiency.
Commercial activities
Returns to the BBC in the year increased by
BBC Worldwide
BBC Worldwide is a wholly owned subsidiary of 18.6% to £215.7million (2011: £181.9million). Overthe BBC, charged with maximising profits on its a third of this was investment into programming
budgets, which totalled £78.1million
behalf. It returned a record £215.7million to the(£78.5million).
BBC in 2011/12, principally through programmeand other rights investment and in dividends.
Dividends returned to the BBC of £139.9million
While its financial contribution supplements the (2010/11: £76.4million) were boosted byproceeds from the BBC Magazines transaction.
licence fee, BBC Worldwide’s business activities
raise the profile of the BBC brand internationally, BBC Worldwide’s strategy is concentrated
and provide a showcase for British talent. BBCaround five priorities: digital growth, international
Worldwide invests in the BBC’s brands andrevenue growth, increasing the scale of its BBChigh-quality British intellectual property forbranded channels, increasing investment in new
exploitation around the world through a range
content, and developing more direct connectionsof activities. These include its own linear channels, with consumers. The company made goodbranded digital products and services, licensing
progress across all fronts.
to third parties, DVD and DTO, local production It was an outstanding year for digital within BBC
and consumer products.
Worldwide, with digital products and services
This year BBC Worldwide delivered anothernow generating 12.8% of headline sales excluding
strong performance, despite mixed economic
joint ventures, up from 8.1% on the year before
conditions in some markets. The company exited on a like-for-like basis. During the year, themost of its consumer magazines business insixth series of Doctor Who became the most
October, for a total consideration
downloaded TV show on iTunes in the USA.

Overview | Delivering our strategy | Managing
Managing the businessbusiness | Governance | Managing our financesInternational revenue continues to grow and now
accounts for 64.3% of headline sales (2010/11:
55.5%). This is attributable in part to successin the USA, which now generates revenue of$500million, and the majority disposal of BBC
Magazines, a predominately British business.
BBC Worldwide’s channels are available in 356
million households across the globe (2010/11:
343 million). Strategic progress here includes anadditional ten launches of channel brands acrossthree key regions, including in Taiwan, Thailand
and Indonesia, and the launch of BBC HD in Latin
America. A pilot of the Global BBC iPlayer –a paid-for subscription app for the international
market – was launched in 16 countries.
BBC Worldwide also saw continued successacross formats, with Dancing with the Stars –the international version of Strictly Come Dancing– commissioned in Panama and Georgia. It has
now been licensed to 40 markets.
In 2011/12, BBC Worldwide’s top five brands
accounted for 30% of revenue, and the top 12
for 47%, up from 24% and 36% just three years
earlier. Facebook fans of BBC Worldwide’s key
brands grew to over 23 million and a concerted
focus on e-CRM techniques has seen a doublingof customer contacts to 4.6 million.
BBC Worldwide has a clear and effective
strategy, designed to maximise returns to the
BBC over the long term, while building the BBCbrands around the world. It has an establishedtrack record of success, is diversified acrossthe globe and has a strong portfolio of brands
and businesses.
Looking ahead, while market conditions insome sectors remain uncertain and visibility
limited, the company’s existing portfolio ofbrands and businesses, global diversification anda prudent approach to expenditure in current
and new markets give us confidence about BBC
Worldwide’s position to face the year ahead.
Studios and Post Production
BBC Studios and Post Production continued towork with a wide range of media companies andother clients across the year, making hundredsof shows for UK and international broadcasters,from the award-winning Harry Hill’s TV Burp
for ITV 1 and Morgan Spurlock’s New Britannia
for Sky Atlantic HD, to the blind audition shows
for BBC One’s new Saturday night entertainment
format, The Voice UK.
The company has also expanded its digital media
services arm, working with content owners totransform and restore valuable archive footage
for the commercial digital age.
Despite a challenging economic climate andthe transfer of Sport and Children’s customers
to Salford, BBC Studios and Post Production
performed well, delivering £52.2million revenue
and an operating profit of £4.9million, before
exceptional items.
Highlights of the year include:• providing full post production in the jungle for
ITV’s I’m A Celebrity…Get Me Out Of Here!
and RTL’s German version of the show

• taking Channel 4’s blockbuster Deal or
No Deal live for the first time for two weeks
from the Bristol Paintworks studios• restoring the much loved children’s classic
The Trumptonshire Trilogy for Blu-Ray and
DVD release• upgrading Elstree Studio D facility to HD andmaking CPL Productions’ A League of Their
Own for Sky 1 HD
• diversifying the customer base, including
winning work from Film London and theImperial War Museum to restore andprovide public access to their archives
BBC World News
Our subscription and advertising-fundedinternational 24-hour news and information
channel is now available in more than 330
million households, up by 40 million in the lastyear. It is also available in almost 1.8 million hotel
rooms, 151 cruise ships, 40 airlines, 23 mobile
phone networks and a number of major
online platforms including www.bbc.com/news.
Operating in a highly competitive marketplace,
BBC World News reported an operating profitof £3.8million (2010/11: £9.4million).

Strictly Come Dancing winners Harry Judd and Aliona
Vilani. The programme, known as Dancing with the Stars
internationally, has been seen by an estimated 250 million
viewers and has been licensed to 40 countries.

BBC Studios and Post Production worked on a varietyof shows including The Voice UK.

Annual Report and Accounts 2011/12 2-37

Overview | Delivering our strategy | Managing
Managing the businessbusiness | Governance | Managing our finances

OPERATIONSCONTINUED

A responsible BBC
Editorial guidelines
The BBC’s Editorial Guidelines, available atwww.bbc.co.uk/guidelines/editorialguidelines,
encapsulate the editorial values and the standards
the BBC expects all its programme and content
makers, both in-house and independent, tomeet. The website also contains additional
guidance and links to training modules at the BBC
Academy, which help with learning on how toapply the Guidelines. The Editorial Policy teamis available around the clock to provide further
advice and support.

OutreachThis year many of our outreach activities havefocused on scale – reaching a large audiencethrough activities in the community. Highlights
include Stargazing Live, which attracted tens of
thousands to events including planetarium shows,star parties, astrophotography and night walks.
In March 2012, as part of BBC News School
Report, over 1,000 schools became broadcasters
for their own community. They joined the BBC’s
reporting teams with classrooms turned into
newsrooms as more than 30,000 11–16 year-olds
simultaneously created audio, video and web
news reports.
Corporate responsibility
The other focus of outreach activity has been
Our aspiration is to be an industry leader inon working with local communities, particularly
managing business responsibly. We are active
where the BBC is a major employer. As themembers of the Corporate Responsibility
BBC establishes itself in MediaCityUK in Salford,
Group, the Associate Parliamentary Corporate
Responsibility Group, Business in the Community, outreach activities have sought to develop longterm ties with the local community. We have
the CSR Media Forum and the London
Benchmarking Group. We have also retained our developed staff volunteering schemes with local
Platinum ranking in Business in the Community’s schools and charities and successfully managed ayoung ambassadors’ scheme offering paid work
Corporate Responsibility Index 2012.
placements to local 16–19 year-olds who have
Charity appeals
limited or no experience of the world of work.
The BBC prides itself on helping a broad
Safetyrange of charities to raise funds and awareness
The BBC Safety team is involved across the full
about important causes locally, nationally andrange of BBC output, dealing with coverage ofinternationally. Once again the high-profile
events as varied as the Arab Spring, the Japan
charity appeals were well supported by BBC
earthquake, public disorder in the UK, theaudiences. BBC Children In Need’s appeal in
Royal Wedding, music festivals, Top Gear andNovember raised a record £46million to help
Strictly Come Dancing. The team also works tochange children’s lives in the UK while theensure the safety of thousands of visitors
BBC also broadcast appeals for 63 charitableto events, including the Deadly Sixty and Bangcauses via its weekly BBC Radio 4 appeal andGoes the Theory roadshows and the Doctor
the monthly Lifeline television appeal, and one
Who Experience.
appeal on behalf of the Disasters Emergency
To read BBC health and safety policies visit
Committee for the famine in East Africa. Sportwww.bbc.co.uk/safety.
Relief in March raised £50.5million on the night,
with more money still coming in. For more
Environmental sustainability
information about BBC charity appeals,
We are committed to increasing the sustainability
including how to apply for an appeal, visitof the BBC, in particular our core business ofwww.bbc.co.uk/charityappeals.
making programmes. In November we wereIn addition to helping charities raise money, in the one of the first broadcasters to publish data on
last financial year the BBC provided charities with the carbon footprint of television production,
services worth an equivalent of £547,000 (2011: based on the use of Albert, our carbon£420,000), and the BBC’s commercial businesses calculator. Albert has now been shared withdonated £1,163,000 to charities.
the rest of the UK television industry througha partnership with BAFTA.
During 2012/13 we will refresh ourenvironmental targets, acknowledging that we
Our environmental targets – by 31 March 2013
are some way from reaching them as they stand.
This is mainly due to major new buildings opening
Performance
Targetahead of the closure of Television Centre, whichArea
2011/122012/13
itself accounts for around a quarter of ourenergy usage.
Reduction in energy
3%-20%(per person)
We are also aware of the ever-increasingenergy demands of the modern broadcasting
Reduction in water consumed-1%-25%
environment. We believe, however, that the(per person)
investment we are making in energy efficiency
Reduction in waste to landfill (per person)
-62%
-25%
and our plans to concentrate staff into fewer,% of waste recycled
51%
75%
more efficient buildings will significantly cut ourenvironmental impact.
Reduction in transport CO2 emissions(per BBC user)-8%-20%
To find out more about our plans andapproach to sustainability, seewww.bbc.co.uk/outreach/sustainability.

2-38 Annual Report and Accounts 2011/12

GOVERNANCE
The BBC is a unique organisation, funded by licence fee payers
and providing high-quality and distinctive services in the public
interest. The governance of the BBC is the means by which
we guarantee the organisation’s independence, ensure that
it is delivering its mission and is properly accounting for its actions.
The Royal Wedding was celebrated
throughout the UK. Bunting hanging
in Portland Place outside BBC
Broadcasting House.

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

EXECUTIVE BOARD
The Executive Board, chaired by the Director-General, and its sub-committees
are responsible for the delivery of BBC services and day-to-day operations acrossthe organisation.

Mark Thompson

Director-General since June 2004. Chair of the Executive Board andthe BBC Direction Group, made up of all the BBC’s divisional directors.
Non‑executive Chairman of BBC Worldwide Limited.

Caroline Thomson

Chief Operating Officer. Board member since May 2000. Non-executive
director of Digital UK Limited.

Zarin Patel

Chief Financial Officer since January 2005. Trustee of the BBC Pension
Scheme and non-executive director of BBC Worldwide Limited.

Helen Boaden

Director of News since 2004. Board member since April 2011 as
Director, BBC News Group.

Tim Davie

Director of Audio & Music since September 2008. Board member
since April 2005, previously as Director of Marketing, Audiences
and Communications.

George Entwistle

Director of BBC Vision since May 2011; joined the Board at the sametime. Non-executive director of BBC Worldwide Limited. Previously
Controller of Knowledge Commissioning. Prior to this he was Controllerof Knowledge Commissioning, from January 2008.

Ralph Rivera

Joined the BBC in October 2010 as Director, Digital Media. Board
member – as Director, BBC Future Media – since March 2011.

Marcus AgiusFirst appointed non-executive director and Senior Independent Director
in December 2006. Chairs the BBC Executive Board’s Remuneration
Committee. Group Chairman of Barclays PLC, Chairman of British
Bankers Association, Chairman of the Trustees of the Royal Botanic
Gardens, Kew and Chairman of the Foundation and Friends of theRoyal Botanic Gardens, Kew.

Simon Burke

Appointed non-executive director in January 2011. Chairs the BBC
Executive Board’s Audit Committee. Chairman of Hobbycraft andEagle Eye Solutions.

Sally Davis

Appointed non-executive director in January 2012. Previously CEO
of BT Wholesale, currently a non-executive director of Telenor,
Logitech and the Department for Transport.

Dr Mike Lynch OBEFirst appointed non-executive director in January 2007. Technology
entrepreneur, founder and CEO of Autonomy Corporation plc. Nonexecutive director of Blinkx plc and a Member of the British Library Board.

Brian McBride

Appointed non-executive director in March 2012. Former Managing
Director of Amazon.co.uk. Chairman of MX Data, a member of theAdvisory Board of Numis PLC and Huawei UK, non-executive directorof Computacenter PLC and Monitise plc and Partner with Scottish
Equity Partners.

Dame Fiona Reynolds

Appointed non-executive director in January 2012. Chairs the BBC
Executive Board’s Fair Trading Committee. Director-General of the
National Trust since January 2001, she will step down from this positionin late 2012 and will take up the post of Master of Emmanuel College,
Cambridge in September 2013.
The Executive Board delegates some of its responsibilities
to four sub-committees:
Executive Audit Committee – Chair: Simon Burke
The Executive Audit Committee (EAC) was established under Charter article
35(3). The EAC oversees the BBC’s corporate governance, particularly its
financial reporting, internal control and risk management. The Committee
is made up of three non-executive directors. The Director-General,
Chief Financial Officer, Director of Risk and Assurance, Director Finance,
Procurement & Revenue Management and external audit representatives
also attend. The Committee meets four times a year, and at other times
as required.

Fair Trading Committee – Chair: Dame Fiona Reynolds
The Fair Trading Committee helps ensure that the BBC complies with its
fair trading obligations. It is made up of three non-executive directors.
The Controller of Fair Trading, Director of Risk and Assurance and GeneralCounsel also attend. The Committee meets four times a year, and at othertimes as required.

Nominations Committee
Membership of the Nominations Committee depends on whether nonexecutive or executive appointments are being made. The Committee’schair is taken by a non-executive director for other non-executive director
appointments and the Director-General for executive appointments. The
Committee was established under article 35(4) of the Charter and operates
Executive Remuneration Committee – Chair: Marcus Agiusin accordance with the requirements set out in articles 30 and 31 of the
The Executive Remuneration Committee (ERC) was established under
Charter. It oversees the process of proposing members of the Executive
Charter article 35(3) and in accordance with the requirements set out inBoard. Appointments are subsequently made by the Executive Board itself,
article 33. The ERC decides the remuneration of executive members of thewith non-executive appointments requiring the approval of the Trust.
Board. It is made up of three non-executive directors, and the DirectorThe only exception is the Chairman of the Executive Board, who is appointed
General, Director of Business Operations and Director of Reward also attend. by the BBC Trust.
The Committee meets three times a year, and at other times as required.
2-40 Annual Report and Accounts 2011/12

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our financesMark Thompson
Director-General

Caroline Thomson
Chief Operating Officer

Zarin Patel
Chief Financial Officer

Helen Boaden
Director, BBC NewsGroup

Tim Davie
Director, Audio & Music

George Entwistle
Director, Vision

Ralph Rivera
Director, Future Media

Marcus Agius
Senior Independent
Director

Simon Burke
Non-executive director

Sally Davis
Non-executive director

Dr Mike Lynch OBE
Non-executive director

Brian McBride
Non-executive director

Dame Fiona Reynolds
Non-executive director

The term of office for non-executive director Val Gooding
concluded during 2011/12 and Robert Webb QC stepped
down from his non-executive position in February 2012.
Annual Report and Accounts 2011/12 2-41

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

RISKS AND OPPORTUNITIESRisks and opportunities are at the heart of our decision-making processes and theday-to-day running of the BBC. The Executive Board monitors whether we aretaking too much risk, or failing to capitalise on our opportunities.
Risk management mechanisms are concentrated within divisions and business units with supporting
processes in place to manage project risks and cross cutting issues, such as editorial standards andsafety. We also pay particular attention to our longer-term strategic threats and opportunities so that
we remain competitive in an evolving market.
The Executive Board co-ordinates these processes and monitors the outputs. This ensures wemaintain constant vigilance to emerging risks and opportunities to inform management decision
making. The effectiveness of our approach is kept under review by the Executive Audit Committee.
The tables below provide a summary of the most significant risks and related opportunities impacting
on our audiences, strategy and operations.
Content and audiences: Challenges are mitigated by our editorial strategy and our commitment
to Delivering Quality First.
Our mission is to inform, educate and entertain audiences, and we manage any threats to thisobjective. We must continue to focus on distinctiveness and to capitalise on opportunities to improve
how we serve all audiences, whilst playing our part in the profound changes across the media sector:
Risk

Action now

PlannedAdverse impact on the qualityand distinctiveness of our content
when implementing Delivering
Quality First could disappointaudience expectations• Detailed modelling of
projected impacts• Reinvestment funding available from2013, focused on flagship services,
our five editorial priorities and areasof transformation

Failure to embrace emerging
technologies could threaten
our connection with audiences• Targeted investment in newtechnologies

Failure to uphold our editorial
values and standards in all ourcontent could lead to lossof audience trust, damaging
our brand

2-42 Annual Report and Accounts 2011/12• Increasing concentration ofcreative energy and resourceson the five editorial priorities• Progressing partnerships,
including the successful launchof YouView and The Space• Ensure continued delivery of
ambitious, standout and landmark
content post‑2012• Exploit unique characteristics of all
digital platforms to serve different
audience needs• Continue new partnerships
with industry• Co‑ordinated TV platform
strategy for Freeview, Freesat
and YouView• Continue to monitor long‑term
trends in audience preferences
and industry developments• Strong editorial controls,
effective compliance processes
and serious consideration ofcomplaints• Implement the revised complaints
framework• Ongoing training of production
teams, with focus on skills
and expertise, coupled withsuccession planning• Continue to monitor the Leveson
Inquiry as it proceeds and as reports
are publishedOverview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

Financial and operational: Challenges are mitigated by our business strategy, policies
and procedures.
The prolonged UK and global economic situation impacts on us and all our stakeholders and could
lead to a decline in income and spending power. In addition, the resilience of our operations, and of
the operations of our suppliers and partners, is essential to delivering the services that licence fee
payers expect:
Risk
Continued economic uncertainty
could lead to reduced financial
flexibility and decreased licence
fee income, and inflationarypressures could also significantly
erode our spending power

Action now• Contingency planning andbusiness modelling for a rangeof economic scenarios

Planned• Tight management of theimplementation of phasedsavings targets• Renegotiation of high-risk
contracts to remove links
to inflation• Planning for new funding
responsibilities (for example,
the BBC World Service)• Continued focus on reducing
exposure to pension asset
and liabilities risk
Technical failure, infrastructureinterdependencies, industrial
action or the actions of third
parties including suppliers,
could lead to interruption ofbroadcast services• Business continuity
arrangements in place tomanage the impacts of
disruption, in particular for
new buildings• Exit plans and contingency plans
for key suppliers• Regular programme of rehearsals
planned for the BBC estate toensure continued alignment ofcontinuity arrangements withchanges to the property portfolio
and new technologies

Corporate responsibility: Challenges are mitigated by the strength of our business processes.
Whilst driving our strategy to deliver quality, originality and value to our audiences, and to anticipate
modern audience needs, we must maintain appropriate practices:
Risk

Action now

PlannedInadequate controls could
endanger the health and safety
of individuals, the naturalenvironment and our reputation• Robust health and safety
training in the UK and overseas,
including for staff operating ininhospitable locations• Collaborating on industry-widemeasures to improve safetyof journalists• Provision of dedicatedadvisors for specific high-risk
deployments• Continued focus on targets to
reduce environmental impacts fromenergy and transport emissions,water use and waste• Working with otherbroadcasters to promotea sustainable, green
production industry
Failure to comply with legal andregulatory requirements, or tokeep pace with changes, may
result in penalties• Training plans regularly
refreshed to ensurecompliance with relevant
newly‑introduced legislation• Continuing to monitor introductionof new legislation

Annual Report and Accounts 2011/12 2-43

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

GOVERNANCE REPORTBBC Corporate Governance Framework
The BBC’s Corporate Governance Framework
is defined in the Royal Charter. The Charter
requires the Executive Board to have regard togenerally accepted principles of good corporate
governance. While the BBC is not a listedcompany, it has nonetheless opted to adopt bestpractice and follow the provisions of the Financial
Services Authority’s Listing Rules and the
Financial Reporting Council’s 2010 UK Corporate
Governance Code in order to be consistent withcompanies quoted on an EU-regulated market.
The Executive Board has complied with therequirements of the Charter, which has inturn secured substantial compliance with the
UK Corporate Governance Code. There are,however, a few areas of the UK Corporate
Governance Code that are either not
appropriate to the circumstances of the BBCor where compliance with the Charter overrides
compliance with the Code. The Executive
Board believes that these areas do notcompromise the quality of the governancearrangements in place nor the executionof the Executive Board’s responsibilities.

Cost of compliance
In order to ensure that we complied withall relevant legislation to which the BBC was
subject in 2011/12, we incurred compliance costs
estimated at £15.6million (2010/11: £17.3million),
which includes the BBC’s annual £3.0million
subscription to Ofcom.
Executive Board
The Executive Board usually meets monthly(except for August). Summary minutesof meetings are available online atwww.bbc.co.uk/aboutthebbc/insidethebbc/
managementstructure/seniormanagement.
In practice, the Executive Board delegates someof its responsibility to other managerial groups.
In accordance with the requirements andprovisions of the Charter, the following
Committees continued to operate last year:• Audit Committee• Fair Trading Committee• Nominations Committee• Remuneration Committee
Any delegation from the Executive Board isstated in the relevant standing orders for eachgroup and a framework for reporting and review
is established. See www.bbc.co.uk/aboutthebbc/
insidethebbc/managementstructure/seniormanagement/subcom.html.

Areas of the UK Corporate Governance Code not relevant to the BBC
Make-up of remuneration (UK Corporate Governance Code principle D.1): The BBC sets levels for executive remuneration that should be
sufficient to attract, retain and motivate directors of the quality required to run the organisation 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 elementsof remuneration a significant proportion of total remuneration. By virtue of the BBC’s licence fee funding and its public purposes, the amount ofvariable (or performance-related) remuneration that may be earned should be limited. Variable pay in the form of bonuses for BBC executive
directors has been suspended indefinitely.
Interaction with shareholders (UK Corporate Governance Code principles B.7.1, B.7.2 and section E): The BBC is not a profit-oriented
company with shareholders and so provisions relating to interaction with shareholders clearly do not apply. In some circumstances, however,
it is possible to consider, 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 the Annual Report and Accounts.

Areas where compliance with the Charter overrides the UK Corporate Governance CodeDivision of responsibilities between Chairman and Chief Executive (UK Corporate Governance Code principle A.2): As permitted by theCharter, the Chairman of 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 for the running of the company’s business. No one individual should have unfettered powers of decision. Whilst
the Director-General acts as both Chairman and Chief Executive, the strategic oversight by the BBC Trust ensures that no single individual has
unfettered powers.
Board balance and independence (UK Corporate Governance Code principle B.1): The Executive Board currently comprises 13 directors,of whom seven are executive directors and six are non-executive directors – providing a balance of executive and non-executive directors sothat no individual or small group of individuals can dominate decision taking. This complies with the Charter which specifies that non-executive
directors must not be less than one-third and not equal to or more than one half of the members of the Executive Board. However, this does
not comply with the UK Corporate Governance Code which requires that at least half the board, excluding the chairman, should be independent
non-executive directors. All non-executive directors are considered independent for the purposes of the UK Corporate Governance Code.
Evaluation of the Chairman (UK Corporate Governance Code principle B6.3): The Director-General of the BBC, being the Chairman of
the Board, has his performance evaluated by the Trust. This is performed by the Chairman of the Trust as opposed to the Senior Independent
Director, as required under the UK Corporate Governance Code.

2-44 Annual Report and Accounts 2011/12

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

The Executive Board and its sub-committees are
responsible for the delivery of BBC services andday-to-day operations across the organisation.
An evaluation of the effectiveness of the
Executive Board, its Committees and its
interaction with the Trust took place during 2009.
This was conducted by external consultants
and included interviews with Executive Board
members (both executive and non-executive),
an assessment of the governance protocols,
and the administrative support to the Executive
Board. The report concluded that although
direct comparisons or benchmarking withcorporate boards was difficult given the unusual
governance structure of the BBC, the Board
had been assessed as working well according to
the most important criteria. Recommendations
resulting from the review have been considered
in ongoing work to ensure the effectivenessof the BBC’s governance processes.
Induction, performance anddevelopment
All new directors receive an induction
programme and a wide range of information
about the BBC, on joining. The content of theinduction programme will vary depending onwhether the appointment is to an executive or
non-executive position and whether the new
director was an external candidate or not. The
information always includes details of Board
procedures and directors’ responsibilities. All
directors have access to external independent
advice if they wish.
In accordance with the Charter, the BBC
Trust assesses the performance of the BBC’s
management and its services. This includes
an ongoing review of progress and an annual
performance day, which is attended by both the
Executive Board and the BBC Trust. The Trust’s
review and assessment for 2011/12 can be foundin Part One of this Report.
The performance review processes for the
Executive Board’s Committees continue to
evolve and each reviews their own performanceand effectiveness. No significant issues wereidentified for 2011/12.
All the executive directors have their own
personal and divisional objectives, and theirperformance against them is reviewed by
the Director-General each year, and by the
Remuneration Committee.

Report of the Senior Independent Director
The BBC Executive Board has once again had a full agenda to consider during 2011/12
and the non-executive directors have sought to provide appropriate challenge as wellas support to their executive colleagues as each item has been addressed.
Chief among these was Delivering Quality First, where the difficulty of determining how
to produce a better service for licence fee payers at a lower cost resulted in the project
being a major item of discussion and debate at each Board meeting during the year. Great
care was taken to apportion the output of the exercise appropriately as between scope
reductions, cost savings/efficiencies and the generation of funds for new investment.
Suffice it to say that the whole Board was resolved to create as much certainty as possible
in the outcome, recognising that delivering it would require significant cultural change andthat a sensitive and skilful communications strategy would be vital.
Following his appointment as Chairman of the BBC Trust, Lord Patten instigated a
Governance Review to explore how to improve the working relationship between the
BBC Trust and the Executive Board. This has resulted in a shift of emphasis between thetwo boards, with the Trust taking a clearer responsibility for strategy and the Executive
Board a clearer responsibility for delivery/execution. In addition, interactions between thevarious individuals involved have increased. For example, in my role as Senior Independent
Director, I now regularly attend relevant parts of the Trust’s monthly meetings and there
are more frequent meetings of Trustees and directors outside of routine business.
In the light of the phone hacking scandal, the Director-General commissioned a reportexamining editorial practice at the BBC, expanding the remit of the report after
the setting up of the Leveson Inquiry to ensure it covered the same matters. The
Audit Committee (which is comprised exclusively of non-executive directors) also
commissioned a report to review financial transactions. Both gave the BBC a clean billof health. Separately, the Board received a briefing on the witness appearances of the
Director-General and the Chairman of the BBC Trust before the Inquiry.
Towards the end of the financial year, the project to dispose of Television Centre, theBBC’s major property in West London, moved into sharper focus. The importance of thispotential transaction and its structuring has been the subject of detailed Board scrutiny,
and will continue to be so until an outcome has been achieved.
During the year, the only change in executive directorship was the confirmation ofGeorge Entwistle as Director, Vision. Both Robert Webb and Val Gooding retired as
non-executive directors and I would like to record here my appreciation of the significant
contributions each made to our Board and Committee meetings. Both, in their separate
ways, demonstrated the best qualities of a first-rate non-executive director. Happily,
they have been succeeded by three strong new non-executive directors in the formof Sally Davis, Dame Fiona Reynolds and Brian McBride. I have also had the opportunity
to contribute to the BBC Trust’s process for identifying a successor to Mark Thompson
as Director-General.
Finally, I should report that the forthcoming events of 2012 have provided a recurrent
and intensifying backdrop to our proceedings during the year. The whole Board isseized by the responsibility the BBC has to deliver flawless and uplifting coverage of thegreat events which will be occurring. I can assure you there has been no lack of effort,
enterprise, imagination or ambition in seeking to ensure that the BBC is at its best in
dealing with this once-in-a-lifetime combination of circumstances.
Marcus Agius
Senior Independent Director
21 June 2012

Annual Report and Accounts 2011/12 2-45

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GOVERNANCE REPORTCONTINUED
Nominations Committee
Board appointments and departing directors
The Nominations Committee oversees
the process of proposing members of the
Executive Board.
One executive appointment was made during
the year: George Entwistle, Director, Vision(effective 1 May 2011).
The term of office for non-executive director
Val Gooding was concluded during the year,
as planned. Robert Webb QC also stepped
down early from his non-executive role to takeup an executive position elsewhere, leaving on
29 February 2012. Following approval from the
BBC Trust, the Board appointed three new nonexecutive directors for two-year periods: Dame
Fiona Reynolds and Sally Davis from 1 January
2012 and Brian McBride from 1 March 2012.
Executive Board and Committee attendance
Executive
Board

Audit
Committee

Fair Trading
Committee

Nominations
Committee

Remuneration
Committee

Ordinary

Extraordinary

MemberAttendee

MemberAttendee

MemberAttendee

MemberAttendee

Number of meetings
for the period

10

5

4

4

4

4

1

1

8

8

Director, News Group
Helen Boaden

95

Director, Audio & MusicTim Davie

104

Director, Vision
George Entwistle

94

Chief Financial Officer
Zarin Patel

10

5

3

3/3

1/1

Director, Future Media
Ralph Rivera

105

Director-General
Mark Thompson

95

Chief Operating Officer
Caroline Thomson

10

3

3/3

Marcus Agius

10

3

4

Simon Burke

9

3

4

Val Gooding

6/7

1/3

3/3

Dr Mike Lynch*

7

2

1

Sally Davis

3/3

2/2

Brian McBride

1/1

0/0

1/1

Robert Webb

9/9

4

7/7

Dame Fiona Reynolds

3/3

2/2

4

1

8

1/1

Non-executive directors:

3/3

8

6/6
1

1/1

1/1

1

2/2

1/1

* In August 2011 Autonomy Corporation of which Dr Lynch serves as CEO was unexpectedly acquired, requiring the presence of Dr Lynch in the USA during the integration period.

2-46 Annual Report and Accounts 2011/12

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REMUNERATION REPORT
Executive Board remuneration report
This report sets out the BBC’s remuneration
policy and details the remuneration received
by the members of the Executive Board.
It has been prepared on the basis that therequirements of the Large and Mediumsized Companies and Groups (Accounts
and Reports) Regulations 2008 and those of
the Financial Services Authority apply to the
BBC wherever these disclosure provisions
are relevant. The sections on pensions andremuneration received by the Executive Board
members are audited by KPMG LLP.
Remuneration Committees: constitution
and operation
The Remuneration and Appointments
Committee (RAC) of the BBC Trust is
responsible for setting the remuneration strategy
for the Executive Board and is responsible for
all aspects of the remuneration of the DirectorGeneral and the non-executive directors.
The Executive Remuneration Committee(ERC) is responsible for implementing theagreed strategy for all executive members of
the Executive Board, with the exception of
the Director-General. Its members are nonexecutive directors: Marcus Agius (Chairman),
Sally Davis and Brian McBride, who replaced Val
Gooding CBE and Robert Webb QC in January
and March respectively.
Meetings of the ERC are also attended, on
invitation, by the Director-General and the
Director, Business Operations, who advise
on matters relating to other members of the
Executive Board, and the overall performanceof the BBC. The ERC has access to internal
expertise through the BBC’s Head of Reward.
Complying with the UK Corporate Governance
Code 2010, the ERC takes specialist advice
from external professional advisers on somematters, and particularly those relating to market
practice. During the year, independent advice
was received from Towers Watson on mattersrelated to market comparability of executive
remuneration.
Remuneration of non-executive directors
Non-executive directors’ fees are determinedby the Trust.

Report of the Chairman of the Executive Remuneration Committee
Since 2009 the BBC has endeavoured to balance the continuing need to recruit, retain
and motivate high-calibre leaders and staff, whilst reducing its spend on pay and on
the number of senior managers. We are fortunate that a combination of the uniqueemployment offering of the BBC and the strong public service ethos of our people
has meant that we are currently able to retain great people whilst making significant
reductions in senior management spend.
The targets set by the Trust in 2009 for senior management pay bill and headcountreduction were achieved by December 2011: we reduced the pay bill by £21.1million,
26.9% against our target of 25%, and reduced headcount by 156, a reduction of 24.4%
against a 20% target.
Since 2009 we have made sure that, wherever possible, there is a significant reductionin the spend on Executive Board remuneration. Executive pay has been frozen for
four years and bonuses removed indefinitely. We have removed pension supplements
for all executive directors with effect from April 2011, and during 2011, reduced the
remuneration of new, replacement executive directors on average by 32.7%. 2012 alsosees the second of two years of voluntary pay surrender by all those executive directors
who were on the Board in March 2011 and remain in executive director positions inMarch 2012.
The Board Committee undertook its regular assurance exercise to benchmark BBC
Executive pay against the market at the end of 2011, and this confirmed that Executive
Board pay is discounted on average by 70% against the commercial sector which is inline with the current and future strategy agreed by the Trust and an improvement of
12 percentage points to the discount in 2010 (58%).
The focus for 2012/13 will be continued remuneration constraint while retaining asufficiently competitive executive pay offer to ensure that we retain the very best leaders
for the future.
We have agreed with the Trust a new Senior Manager and Executive Pay Strategy for
2011-2015. This strategy sets out clear policy direction for the ongoing managementof executive pay including the continuation of the bonus freeze for executive directors,
the discounting of executive pay and our intention further to reduce the number ofsenior managers in the BBC by 70 by the end of 2015. We expect to achieve these
reductions principally by natural attrition. We have also removed the provision of private
healthcare and car allowance for new senior hires with effect from 1 August 2011 and1 April 2012 respectively.
In recent years the BBC has led the way in executive pay transparency by publishing, infull, the salaries of our most senior leaders, and in July 2011 we became early adoptersof many of the principles set out in the Hutton Review of Fair Pay in the Public Sector,
including the publication of the ratio of executive director median pay to BBC median
pay which is now provided annually in our remuneration report. The publication of thispay multiple allows the public to see exactly how the remuneration of those at the topof the BBC compares to the rest of the organisation. We hope that other broadcasters
and public sector employers adopt a similar, transparent approach to the BBC, allowing
the public to make a comparison. Since first publishing the multiple in July 2011, the figure
has reduced marginally from 8.9 to 8.7 (excluding the impact of the Executive Board one
month’s voluntary pay surrender).
The Committee remains committed to ensuring that the BBC’s investment in executive
pay delivers value and transparency to the licence fee payer at a time when pay growthacross the whole economy is minimal and many licence fee payers are living within areduced annual income. We are proud of the success with which the organisation hasdelivered substantial savings in the pay bill for senior managers while retaining motivatedand talented leaders. As we further reduce numbers in
the coming year our focus will be on continuing to deliver
reductions while taking a close look at retention rates andsuccession strength to ensure that our executive pay strategy
does not damage the calibre and motivation of our current
and future leadership talent.
Marcus Agius
Chairman of the Executive
Remuneration Committee
21 June 2012
Annual Report and Accounts 2011/12 2-47

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REMUNERATION REPORTCONTINUED
Remuneration of executive directors
Strategy and approach for 2011/12
The strategy set by the Trust is intended toprovide remuneration that attracts, motivatesand retains the best talent to lead the BBC. In
July 2011, the ERC agreed, with the Trust, a new
Executive and Senior Management Pay Strategy
which set out a revised approach to pay forthe period 2011 through to 2015. Key principles
within that strategy are:• fewer senior managers, as a continuation of
our strategy to reduce the numbers and costof senior managers across the BBC• a freeze in bonuses: bonus payments remain
withdrawn from executive directors for anindefinite period• fairness in the BBC reward structure, byphasing out funded private medical insurance
and car allowances for new executives andsenior managers with effect from August 2011
and April 2012 respectively• greater transparency, through the publicationof pay multiples (median Executive Board pay
to median BBC pay) in the Annual Report
The Trust and ERC also agreed to continue thepractice of discounting executive directors’ payagainst the commercial sector. As a result,once again this year, the ERC reviewed
independently provided market pay data toensure levels of pay are consistent with thecurrent and agreed strategy. Data obtained for2011 showed that total direct compensationfor our executive directors (base salary plus
variable pay), including the Director-General,
is discounted by between 64% and 78% of thelevel paid by our competitors in the commercial
sector. This differential reflects the substantial
additional amounts of variable pay (including
share-based awards) that are provided in thecommercial sector.
Pay multiples
In 2011 Will Hutton published his review
of Fair Pay in the Public Sector in which herecommended that organisations track, publish
and explain their pay multiples over time – themost appropriate metric being top-to-medianearnings. This would ensure organisationsdelivering public services were accountable
for the relationship between the pay of their
executives and the wider workforce.
Whilst the BBC was not required to comply withthe recommendations of this report, the BBC
Executive agreed with the Trust to voluntarily
publish, track and explain our pay multiples

Table 1: Comparison of executive director total remuneration 2010/11 to 2011/12
2010/112011/12

Executive Director

Remuneration
received4£000s

Executive Director

Remuneration
received4£000sMark Thompson
Director-General

779

Mark Thompson
Director-General

622

Jana Bennett
Director, Vision

440

George Entwistle
Director, Vision

261

Mark Byford
Director of Journalism Group

447

Helen Boaden
Director, News Group354

Tim Davie
Director, Audio & Music422

Tim Davie
Director, Audio & Music349

Erik Huggers
Director, Future Media & Technology

414

Ralph Rivera
Director, Future Media1

26

Ralph Rivera
Director, Future Media

309

Zarin Patel
Chief Financial Officer

403

Zarin Patel
Chief Financial Officer

337

Caroline Thomson
Chief Operating Officer

385

Caroline Thomson
Chief Operating Officer

328

Lucy Adams
Director, BBC People

367

See note 2–

Sharon Baylay3
Director, Marketing, Communications & Audiences

254

Role not replaced–436

See note 22Peter Salmon
Director, BBC North
2

Total

4,373

Total

–
2,560

Ralph Rivera was appointed to Executive Board 1 March 2011.
Lucy Adams and Peter Salmon stepped down from the Executive Board in March 2011 but remain at the BBC in the roles of Director of Business Operations and Director of BBC North respectively.
3
Sharon Baylay stepped down from the Executive Board in November 2010 and left the BBC in June 2011. The role of Director, Marketing, Communications & Audiences was not replaced.
4
Remuneration includes annual salary, taxable benefits and other remuneration received during the financial year but excludes compensation for loss of office.
122-48 Annual Report and Accounts 2011/12

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Table 2: Executive Board remuneration
The remuneration of the Executive Board directors and the membership of the BBC Trust during the year is shown below:
FY 2011/12

FY 2010/11

Total
Taxable remuneration
benefits
2011/12£000£000

Fee/base
pay£000

Taxablebenefits
£000

Other
remuneration£0008

Compensation
for lossof office
£000

Total
remuneration
2010/11£000

Fee/base pay
£0006

–

–

–

–

–

340

14

354

335

15

72

–

422

335

14

349

–

–

–

–

–

248

13

261

322

13

68

–

403

322

15

337

25

1

–

–

26

295

14

309

613

3

163

–

779

613

9

622

Executive directors
Helen Boaden

Appointed to BBC
Board 1 April 2011

Tim Davie
George Entwistle Appointed to BBC
Board 1 May 2011
Zarin Patel
Ralph Rivera

1

Appointed to BBC
Board 1 March 2011Mark Thompson
Caroline Thomson

307

15

63

–

385

307

21

328

Lucy Adams

Stepped down
31 March 2011

293

15

59

–

367

–

–

–

Sharon Baylay2

Stepped down
30 November 2010

207

10

37

392

646

–

–

–

Jana Bennett

Left 6 February 2011

353

13

74

–

440

–

–

–

Mark Byford

Stepped down
31 March 2011

435

12

–

949

1,396

–

–

–

Erik Huggers

Left 25 February 2011

345

13

56

–

414

–

–

–

Peter Salmon

Stepped down
31 March 2011

344

17

75

–

436

–

–

–

3,579

127

667

1,341

5,714

2,460

100

2,560

47

–

–

–

47

47

–

47

3

Total executive directors
Non-executive directors

5

Marcus Agius
Simon Burke

Joined 1 January 2011

10

–

–

–

10

37

–

37

Sally Davis

Joined 1 January 2012

–

–

–

–

–

6

–

6

Mike Lynch

33

–

–

–

33

33

–

33

Brian McBride

Joined 1 March 2012

–

–

–

–

–

–

–

–

Dame Fiona
Reynolds

Joined 1 January 2012

–

–

–

–

–

7

–

7

Val Gooding

Left 31 December
2011

37

–

–

–

37

31

–

31

Robert Webb4

Left 29 February 2012

123

–

–

–

123

115

–

115

David Robbie

Left 31 December
2010

31

–

–

–

31

–

–

–

Samir Shah

Left 31 December
2010

27

–

–

–

27

–

–

–

Total non-executive directors

308

–

–

–

308

276

–

276

3,887

127

667

1,341

6,022

2,736

100

2,836

Total Executive Board
Total Trustees7
Total

588
3,887

127

667

1,341

6,610

492
2,736

100

3,328

Ralph Rivera was issued a relocation package on appointment to BBC (prior to Board appointment). Relocation spend during the 2011/12 year was £14,231, this value is not includedin the numbers above.
2
It was announced in November 2010 that Sharon Baylay would step down from the Executive Board on 30 November 2010 and leave the BBC in June 2011. Included in the 2010/11 total remunerationis compensation for loss of office of £392,000, this was paid during 2011/12.
3
It was announced in November 2010 that Mark Byford would step down from the Executive Board on 31 March 2011 and leave the BBC in June 2011. Included in the 2010/11 total remunerationis compensation for loss of office of £949,000, this was paid during 2011/12.
4
As well as his non-executive director role Robert Webb was non-executive Chairman of both BBC Commercial Holdings Limited and BBC Worldwide Limited. In recognition of these additional
responsibilities he received fees of £82,500 during the 2011/12 financial year. Robert left the BBC in February 2012.
5
Non-executive directors are appointed initially for a period of two years, except the Senior Independent Director, who is appointed for an initial three-year period. Sally Davis, Brian McBrideand Dame Fiona Reynolds surrendered a month’s fees in March 2012.
6
Employee pension contributions are ordinarily made via a salary sacrifice arrangement as an employer contribution, with a corresponding reduction in salary. Base salaries for executive directors havenot been adjusted to reflect the impact of salary sacrifice to enable like-for-like comparison with prior years before salary sacrifice was introduced. The total salary sacrifice by executive directors
during the year was £98,178 (2011: £94,000). In addition executive directors have surrendered an additional one month’s base salary in the financial year ending 31 March 2012. (This excludes newmembers Ralph Rivera, Helen Boaden and George Entwistle, whose appointments were effective, respectively, on 1 March 2011, 1 April 2011 and 1 May 2011).
7
Full detail of Trustee pay for FY 2011/12 can be found in Part 1 of this report.
8
Other remuneration in 2010/11 related to pension arrangements; providing cash supplements for directors subject to the maximum annual limit. These cash supplements were voluntarily surrendered from
1 April 20111

Annual Report and Accounts 2011/12 2-49

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REMUNERATION REPORTCONTINUED
annually so that the public can see exactly how
the remuneration of those at the top of the BBC
compares to the rest of the organisation. The
methodology we use is to compare the median
pay of Executive Board members with themedian pay across the rest of the BBC.
As at 31 March 2012 the multiple of medianearnings within the BBC to executive directors’
median earnings (including the Director-General)
was 8.3 (compared to 8.5 the previous year).
This figure takes into account the Executive
Board’s reduced earnings due to the surrenderof one month’s pay by some Executive Board
members in both 2011 and 2012. Using theirsubstantive annual salary the median multiple
is 8.7 (compared to 8.9 a year earlier).
The multiple of median earnings within the
BBC to the Director-General’s earnings for 2012is 15.1, taking account of the reduced earnings
due to the surrender of one month’s pay. Using
the Director-General’s substantive annual salary
the multiple is 16.5.
Pay multiples(using substantive salaries)
Year

2012

2011

Director-General medianearnings

16.5

16.8

Executive Board medianearnings

8.7

8.9

Earnings calculation includes: basic pay, bonus, continuing allowances,
overtime and other non-continuing allowances. Median earnings
figures are calculated using Director-General and Executive Board
substantive salaries.

In addition to taking account of these pay
multiples when setting and considering pay for
the Executive Board, the ERC consider eachcomponent of the total remuneration packageof executive directors broken down as in thefollowing paragraphs.
Base payThree factors determine the level of base pay
set for an executive director:• Would the rate be recognised as fair by themarket (competitor companies) for the job?
• Does the personal performance of theexecutive justify the level of base pay?
• Is the level affordable to the BBC and notdeemed excessive?
Base pay is aligned at around the market medianfor total remuneration, discounted by a factor of
50–80% to ensure that the BBC does not leadthe market on executive pay in the media sector.
Variable pay
Performance bonuses to a maximum of 10% ofbase pay have historically been paid to executive
directors for achieving efficiency targets andother identified objectives. However, under
2-50 Annual Report and Accounts 2011/12

the current pay strategy, bonuses are indefinitely
suspended. As a result, no discretionary bonuses
were paid in 2011/12.
Benefits
In addition to pensions, the other main
contractual benefits are a car allowance and life
assurance. The Director-General is entitled toa car and driver under earlier arrangements but
has no entitlement to a personal car allowanceor fuel allowance. During 2011/12 there has also
been the temporary allocation of a car and driver
for the use of the Chief Operating Officer andother members of the Executive Board and
BBC Direction Group for the remaining lifeof the car lease arrangement. Private healthinsurance continues to be provided to existing
executive directors, but it will no longer beoffered as a benefit to any future memberof the Executive Board.
PensionMembers of the Executive Board who joined
the BBC before 1 December 2010 are eligible
to participate in the BBC Pension Scheme, which
provides for pension benefits on a defined
benefit basis.
For employees who joined this Scheme before
1 November 2006, the accrual rate is 1/60thof final pensionable salary for each year ofservice. For this group of employees, the normal
pension age is 60. For employees who joined
the Scheme on/after 1 November 2006 andbefore 1 December 2010, benefits build up on acareer average basis and the accrual rate is 1.67%
of pensionable salary for each year of service,adjusted in line with RPI inflation. For this groupthe normal pension age is 65.
For those who joined the Scheme after 31 May
1989 pensionable salary is subject to a maximum
annual limit (£129,600 per annum for 2011/12).
No maximum annual limit is applied to those
who joined on or before 31 May 1989. The
Scheme provides for early retirement on medical
grounds and life assurance of four times life coverpensionable salary up to a prescribed limit.
Following the introduction of a 1% annual limit
on increases in pensionable salary (before themaximum annual limit under the Scheme isapplied) for all employees in the Scheme, from
1 April 2011 the BBC introduced a new section
Career Average Benefits 2011 (CAB2011) under
the Scheme which existing members could join,
during a limited period, by opting out of their
existing section. There is no 1% annual limit on
increases in pensionable salary in this new section
CAB2011. Benefits build up on a career averagebasis and the accrual rate is 1.67% of pensionablesalary for each year of service, ordinarily adjusted
in line with CPI inflation up to a maximum of 4%each year. Under this section the normal pension

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age is 65. There is also a maximum annual limit
on pensionable salary, which was £127,800
per annum for 2011/12.
Members of the Executive Board 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 contributions to LifePlan on a matching,or slightly better, sliding scale. Starting at 4%for employees who pay 4% of pensionablesalary, up to a maximum of 10% for employees
who pay 8% of pensionable salary or more.
There is no maximum pensionable salary forcontributions to LifePlan. There is no maximum
pensionable salary for contributions to LifePlan.
Remuneration received
Table 1 (on page 2-48) provides a summarycomparison of executive director remuneration
by individual from 2010/11 to 2011/12. Table 2(on page 2-49) provides full details of the
remuneration received by all Executive Board
members and the members of the BBC
Trust (collectively) for 2011/12 compared
to previous year.
Employment contracts
Employment contracts of executive directors
have a maximum notice period of 12 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 case of termination
for reason of redundancy.
Outside interests
With the prior agreement of the DirectorGeneral and the Nominations Committee,

executive members of the Executive Board
may hold one remunerated external
directorship, with up to 15 days per year
permitted to fulfil these duties. Remuneration
which arises from directorships may be retainedby the individual. Executive directors may also
hold non‑remunerated posts outside the BBC.
During the year no executive director held anyother remunerated external directorship. To
obtain the Executive Board’s register of interests
visit www.bbc.co.uk/aboutthebbc/insidethebbc/
managementstructure/seniormanagement.
It is recognised that non-executive directors
are likely to have other directorships and therestrictions applying to executive directors
do not apply to them.
Remuneration in the BBC’s commercial
businesses
The BBC has three commercial subsidiaries:• BBC Worldwide• BBC Studios and Post Production• BBC World NewsThe remuneration policy for the subsidiaries
includes the contractual provision of annual
bonus and long-term incentive plans (LTIPs)
available to eligible permanent staff, including
directors. The full cost of base pay, annual bonus
and the LTIPs are self-funded by the commercial
revenues of each subsidiary company and are
not subsidised by the licence fee.
Remuneration within the commercial subsidiaries
is not governed by the BBC’s remuneration
policy and governance arrangements.

Defined benefit schemes

Executive directors

Age as at
31 March
2012

Increase inaccrued pension
over year
Section£000

Total accrued
pension at
31 March 2012£000

Transfer valueof accrued
pension at
31 March 2012£000

Transfer valueof accrued
pension at
31 March 2011£000

Director’s
contributions(excluding
contributions
paid via thesalary sacrificearrangement)£000

Increase intransfer valueless director’s
contributions£000

Helen Boaden1

56

Old Benefits

6

62

1,213

991

0

222

Tim Davie

44

New Benefits

2

14

164

127

0

37

CAB2011

1

1

4

0

0

4

George Entwistle3

49

Old Benefits

5

59

877

710

0

167

Zarin Patel51

New Benefits

3

29

436

349

0

87

2

Ralph Rivera

50

DC LifePlan

See notes

Mark Thompson

54

New Benefits

3

17

293

221

0

72

Caroline Thomson

57

Old Benefits

6

81

1,713

1,436

0

277

4

Helen Boaden was appointed as a director on 1 April 2011, although she joined this Scheme on 1 February 1993. The figures shown include the period before she was appointed as a director.
Tim Davie became an active member of the CAB2011 section as at 1 January 2012 and retains a deferred pension in the New Benefits section for service up to that date. The transfer value
as at 31 March 2012 in respect of each section has been shown separately in this table.
3
George Entwistle was appointed director on 1 May 2011, although he joined the Scheme on 1 August 1990. The figures shown include the period before he was appointed as a director.
4
Ralph Rivera is a member of the LifePlan Defined Contribution Pension Scheme. The total contributions made are currently 25% of base salary. Of this 10% are employer contributions and between
1 April 2011 and 31 March 2012 the BBC paid a total of £29,500 to the Scheme.
1
2

Annual Report and Accounts 2011/12 2-51

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AUDIT COMMITTEE REPORT
Report of the Chairman of the Executive Audit Committee
The past year has, as expected, been one of significant challenge for the BBC. In its
Delivering Quality First programme, the BBC is endeavouring to reduce further its
operating cost base whilst substantially maintaining the scope, and improving the quality,of its broadcast output. This requires not just imagination and relentless focus, but also thedevelopment of new ways of working across many parts of the Corporation.
At times like this, the Executive Audit Committee (EAC) has an important role insupporting the process, but also in ensuring that it is well governed and executed,
as well as providing the Board with regular assurance that the financial targets are on
course to be achieved.
We have therefore invested much time in Delivering Quality First this year, and willcontinue to do so as the programme unfolds. In addition, however, we have addressedsome other important issues. We reviewed the BBC’s controls over key capitalprojects, initiated an overhaul of the risk assessment process, considered aspects of the
management of the property portfolio, and worked to accelerate the implementation ofinternal audit recommendations. We also carried out a special investigation of payments
made in connection with investigative journalism, the results of which formed part of theBBC’s submission to the Leveson Inquiry.
Alongside this, we continued our regular activity, taking a close interest in the findingsof the BBC’s Internal Audit department, requesting follow-up work where appropriate,
and approving its work plan for the coming year. We reviewed the BBC’s financial
reporting and we meet regularly with the BBC’s external auditors, considering withthem their audit approach and discussing any issues they wish to bring to our attention.
The Committee provides the BBC’s management with an independent view, informedby the fine work of the Internal Audit team and by the different perspectives andexperiences of its members. Our aim is to help the BBC achieve its goals and be a betterorganisation, mindful always of audience priorities and giving value for money to licencefee payers.
We set out below the EAC’s formal report, covering the most important things we haveconsidered during the year.
Simon Burke
Chairman of the Executive Audit Committee
21 June 2012

Membership and remit of the Executive Audit
Committee (EAC)
The main purpose of the EAC is to review
and maintain oversight of the BBC’s corporate
governance, particularly with respect to financial
reporting, internal control and risk management.
The EAC comprises three non-executive
directors, of whom one must have recent andrelevant financial experience. The members are:• Simon Burke• Mike Lynch• Fiona Reynolds (appointed 1 January 2012)• Val Gooding (until December 2011)
The EAC considers that Simon Burke hassignificant, recent and relevant financial
experience. When appropriate, the EAC
augments the skills and experiences of its
members with advice from internal and external
2-52 Annual Report and Accounts 2011/12

audit professionals – for example on matterssuch as developments in financial reporting.
EAC meetings are also attended by the DirectorGeneral, the Chief Financial Officer, the Directorof Risk and Assurance and representatives frominternal audit, risk management and external
auditors KPMG LLP. The EAC also meets
privately, without any member of management
present, with both internal audit and the external
auditors on a regular basis.
Minutes from EAC meetings are made available
to the Executive Board and to the BBC Trust.
Additionally the Chairman of the EAC reportsback to the Board after each meeting of the EAC
on any issues where action or improvement isrequired. The EAC Chairman also produces aformal report to the Board each year.
Key areas of focus for the committee in thepast year
The EAC met four times in 2011/12. The key
areas of focus were:Internal controls: The EAC reviewed theeffectiveness of the system of internal controls,
taking account of the findings from internaland external audit reports. The EAC sought
assurance from management that control issues
identified are being addressed.
Financial reporting: The EAC reviewed the groupfinancial statements. To assist this review theEAC considered reports from management andfrom the external auditors regarding compliancewith accounting standards, key judgements
made in preparation of the financial statements
and compliance with legal and regulatory
requirements.
Risk management: The EAC considered theprocesses for managing significant risks within theBBC, including a presentation from management
on how the BBC seeks to minimise risk andmaximise value from its UK property portfolio.
The EAC considered enhancements made bymanagement to the processes for managing
significant risks within the BBC.
Fraud detection processes and whistle-blowing
arrangements: The EAC reviewed theseprocesses and arrangements.
Internal Audit workplan: The EAC continued tooversee the work of Internal Audit. The EAC
approved the plan of work for the coming year
including specific assurance work on the BBC’stransformation programme.
Management of key projects: The EAC reviewed
the controls in place to ensure that the portfolioof key projects is managed effectively. The EAC
considered the role of the BBC’s programmemanagement office which provides a dual roleof delivery assurance and capability development.

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances(rather than eliminate) the risk of failure toachieve business objectives and to provide
reasonable assurance that assets are safeguarded,transactions are appropriately authorised andmaterial 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 co-ordinates 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:
The BBC’s accountability and internal
Guidance to Directors), has been in place forcontrol processes
the year ended 31 March 2012 and up to the
The Executive Board is responsible for thedate of approval of this BBC Annual Report andoperational management of the BBC (excluding
Accounts. The key elements of risk management
the Trust Unit). This includes safeguarding its
and oversight activity within the BBC are shownassets and achieving value for money by ensuring
on pages 2-42 to 2-43.
there is a process in place for managing significant
Strategy and financial reporting: The Executive
risk issues to the BBC.
Board approve a business plan that aims to
The Executive Board is responsible fordeliver the Trust-approved BBC strategy.
establishing, maintaining and reviewing theComprehensive monthly, quarterly and annual
effectiveness of the BBC’s system of internalreporting processes, both within business groups
control and for ensuring that necessary actions
and up to the Executive Board, include financial
are taken to remedy any significant failings ormonitoring against plan, regular re-forecasting,weaknesses identified. Such systems can only
analysis of variances and performance reviews
provide reasonable and not absolute assurance
tracking achievements against business plan
against material mis-statement or loss. Ourand strategy.
system of control is designed to manage
Investigative journalism payments: The EAC
requested a review of all payments made forpurposes of investigative journalism. The resultsfrom this review were submitted as part of theBBC’s evidence to the Leveson Inquiry.
Post-investment reviews: The EAC considered
post-investment reviews for major investments.
Relationship with external auditors: The EAC
oversaw the relationship with the external
auditors, including the scope and approachto their work, their fees, their performanceand independence (including the approval andcompliance with policy on non-audit work).

Risk management and oversight processes

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2nd Lineof Defence

1st Line of Defence

Divisional and Business Unit Management,
specialist risk committees(e.g. Editorial Standards and Safety)
Divisional and Business Unit risk appetite and policies

Annual Report and Accounts 2011/12 2-53

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

AUDIT COMMITTEE REPORTCONTINUED
Business policies: Formal policies and procedures
are in place for all material business processes
to ensure compliance with all applicable laws
and regulations, that risks are managed andthat timely, relevant and reliable information
is available across the business.
Cash management: The BBC undertakes regulartreasury and cash reporting, which analyses
funding requirements and liquidity.
Authorisation procedures: Clearly stated formal
authorisation limits and processes cover all
financial transactions.
Staff capability: Processes are in place to ensurethat our staff are professional and competent.
These include recruitment policies, performanceappraisals and development programmes.
The BBC’s internal audit process
Internal Audit, Risk Management andInvestigation Services combine to form ourBusiness Assurance function, which is led by the
Director of Risk and Assurance. Internal Audit’s
authority and independence is assured by the
Director of Risk and Assurance’s independentand direct access to the Director-General andto the EAC.
Internal Audit regularly tests the BBC’s control
systems and core business processes to ensure
they are fit for purpose and consistently applied.
The work plan, which is based on a continuing
assessment of key risks, is agreed annually with
the EAC and covers financial, operational andcompliance controls, including the exercise of
the BBC’s right of audit over external suppliers
such as the independent production companies
and service providers. Any significant control
failings or weaknesses identified are reported toappropriate levels of management. The status ofcorrective actions is reported back to the EAC.

2-54 Annual Report and Accounts 2011/12

Independence of the BBC’s external auditors
We comply with the Corporate Governance
Code guidance on maintaining an appropriate
relationship with external auditors. The BBC
appointed KPMG LLP as external auditors during
2008, after a formal tender process.
The EAC has set a clear policy which defines
the threshold above which proposed non-audit
work to be carried out by KPMG LLP must be
approved in advance by the EAC. It also defines
when it must be submitted for competitive
tender. This is to safeguard and support theexternal auditors’ ability to remain impartial
and objective. KPMG is not considered forwork which might compromise its ability togive independent opinion on the BBC’s financial
statements. Recruitment from KPMG into any
senior management position in the BBC requires
the prior approval of the EAC.
Whistle-blowing arrangements
We have a ‘whistle-blowing’ (protecteddisclosure) policy to facilitate the confidential
communication via a number of routes of
any incident in which there is a suspicion thatthe BBC’s codes have been breached. We
recognise that there could be sensitivities
regarding actual or suspected incidents andso we provide a ‘whistle-blowing’ hotline
administered by an independent external
company to ensure anonymity.
Each incident or suspicion reported isindependently investigated in a confidential
manner, a response is communicated and action
taken as appropriate. The EAC is responsible
for ensuring that there are appropriatearrangements in place for the proportionate
investigation of matters reported and forappropriate follow-up action.

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

FAIR TRADING REPORTMembership 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 nonexecutive directors; these are Dame Fiona
Reynolds (Chair), Marcus Agius and Sally Davis.
The meetings are also attended by the Chief
Operating Officer, Chief Financial Officer,
Controller, Fair Trading & BBC Compliance
Officer, General Counsel and the Directorof Risk and Assurance. Responsibilities of
the EFTC include:• keeping under review the BBC’s Fair Trading
Guidelines• dealing with Fair Trading complaints against the
BBC through the appointment of a Fair Trading
Complaints Panel which is chaired by andincludes a majority of non-executive directors• reviewing ongoing compliance with the BBC’s
Four Commercial Criteria• commissioning the annual Fair Trading audit byindependent auditors
The BBC has a detailed operational Fair Trading
framework which applies to all our activities andis outlined in our Fair Trading Guidelines, foundat www.bbc.co.uk/aboutthebbc/insidethebbc/
howwework/policiesandguidelines/fairtrading.html.
These arrangements are subject to annual audit
by independent auditors and separately havebeen accredited with the ISO 9001:2008 quality
standard. The Auditor’s report is set out on
page 2-56.
The BBC Agreement requires the BBC
Executive to ensure that all our commercial
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 value of the BBC brand• comply with the BBC’s Fair Trading Guidelines,
and in particular avoid distorting the market
Having received reports from relevant senior
management, the BBC Executive is satisfied
that all commercial services have met theabove criteria for the period 1 April 2011
to 31 March 2012.

Report of the Chairman of the Executive Fair Trading Committee

The BBC has a well-established Fair Trading regime which is subject to bothinternal and external scrutiny. As a new non-executive director I took on
responsibility as Chair of the Executive Fair Trading Committee (EFTC)
from Val Gooding part way through the year and I would like to record mythanks to Val for her significant contribution in this role. I will ensure thatthe BBC continues to demonstrate and deliver on its commitment to its
Fair Trading obligations.
Against a backdrop of continued change to the media landscape, this year has
also seen some material changes to the Fair Trading regime. These include
publication by the Trust of an updated Fair Trading Policy (as a result, theExecutive Fair Trading Guidelines are being updated) and the conclusion of theTrust’s governance review which further clarifies the roles and responsibilitiesof the Trust and Executive. Amongst other things this has facilitated a change inthe constitution of the EFTC, which is now comprised solely of non-executive
directors, and the transfer of responsibility to the Executive for commissioning
the annual independent Fair Trading audit.
Overall, the Fair Trading regime continues to operate effectively with an
unqualified audit opinion, continued accreditation of Fair Trading systems andprocesses with the ISO 9001:2008 standard and a relatively modest level of Fair
Trading complaints totalling four during the year.
I am focused on ensuring that Fair Trading remains high on the Executive’s agenda
and that all stakeholders, including licence fee payers and those who might be
impacted by the BBC’s activities, can continue to be reassured that the BBC
remains committed to and compliant with its Fair Trading obligations.
Dame Fiona Reynolds
Chairman of the Executive Fair Trading
Committee
21 June 2012

The BBC has a published Fair Trading complaints
and appeals process, which can be found atwww.bbc.co.uk/bbctrust/about/complaints_
appeals/fair_trading.
The BBC received four Fair Trading complaints
during the year. Details of these, and thosewhich went on appeal to the BBC Trust,can be found in our Fair Trading Bulletin atwww.bbc.co.uk/aboutthebbc/insidethebbc/
howwework/policiesandguidelines/fairtrading/complaints_bulletins.html and on the BBC
Trust’s appeals page at www.bbc.co.uk/bbctrust/
our_work/complaints_appeals/fair_trading/appeal_findings.shtml.

Annual Report and Accounts 2011/12 2-55

Overview | Delivering our strategy | Managing the business | Governance
Governance | Managing our finances

FAIR TRADING REPORTCONTINUED

Independent fair trading auditors’ report to the BBC
for the year ended 31 March 2012
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 Policy and Competitive Impact
Codes from 1 April 2011 to 31 October 2011, the BBC Trust’s
Fair Trading Policies and Framework from 1 November 2011
to 31 March 2012 and the Fair Trading Guidelines (where notinconsistent with the Fair Trading Policies and Framework) from
1 April 2011 to 31 March 2012 (‘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 (EFTC). These instructions include
agreement that our audit should be conducted in accordancewith International Standard on Assurance Engagements (ISAE)
3000, agreement on the limit of our liability in respect of thiswork and agreement that our duty of care in respect of thiswork is solely to the BBC. We are satisfied that the agreed
scope of our audit was sufficient to enable us to express theopinion set out below.
Respective responsibilities of BBC Trust, BBC Executive
and fair 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 ‘Trading Fairly’, which includes
a statement 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 forthe year ended 31 March 2012, including identifying andassessing risks that could threaten fair trading and designingand implementing responses to such risks.
As the BBC’s fair trading auditors, it is our responsibility toform an independent view, based on our audit work, as tothe extent to which the BBC has established, and applied, asystem of internal controls which provide reasonable assurance
that it has complied with the requirements of its Fair Trading
Arrangements for the year ended 31 March 2012. We havereviewed specific decisions reached by the BBC on fair trading
issues only in so far as this is necessary to form an opinion on
the application of the system 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.

2-56 Annual Report and Accounts 2011/12

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 toany person other than the Trust or the Executive to whom
this report is shown or into whose hands it may come, and noother person shall be entitled to rely on our opinion, save where
expressly agreed by our prior consent in writing.
Our approach
We have performed a reasonable assurance engagement as
defined in ISAE 3000. The objective of a reasonable assurance
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
to express a conclusion on the BBC’s compliance with its Fair
Trading Arrangements for the year ended 31 March 2012.
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 ensurethat no errors or irregularities have occurred without being
detected. Our audit work was designed to give the Executive
reasonable assurance as to the adequacy of the system ofinternal controls which was in place and being applied todeliver compliance with the requirements of the Fair Trading
Arrangements for the year ended 31 March 2012. 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 of challenge even where thesystem 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 controlsthat provide reasonable assurance that it has complied with therequirements of the Fair Trading Arrangements for the year
ended 31 March 2012.
Deloitte LLP
Chartered Accountants
London21 June 2012

MANAGING OUR FINANCESThe BBC must manage its finances responsibly, accounting for how
it uses the licence fee and other income in the public interest. Thissection shows how the BBC uses its financial resources, including
the steps being taken to ensure efficiency and to make provision
for future commitments.
Jenny Culshaw presenting from the
BBC Sport Centre in MediaCityUK.

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

CHIEF FINANCIAL OFFICER’S REVIEW
Careful financial management of the licence fee and our commercial businesses
this year has put solid foundations in place for us to transform the way we workover the next five years and to enable us to afford our future obligations, as well
as funding the landmark broadcast events of 2012.

Strong financial foundation
2011/12 has been a year in which we consolidated
our financial position to prepare for future
demands and challenges. It is a year when
we have worked together across the BBC todevelop the detailed plans for Delivering Quality
First, not only to live within the means of ourlicence fee settlement, which cut funding by 16%
in real terms, but also to go further and provide
reinvestment into the key service developments
our audiences will require of us.
Careful management of the BBC’s finances has
meant that as well as funding programmes andother content which have delivered record
audience reach, we have taken early action
to provide funding for future plans.
Our group surplus is inflated by two nonrecurring items: the sale of BBC Worldwide’s
Magazines business (at a profit of £95million) andgains relating to our pension scheme (£45million).
Therefore we have an underlying surplus of£249million. We need this to pay for increased
programme spend in 2012 to cover the Olympics
and the Diamond Jubilee, but also to cover thecosts of implementing our efficiency plans, and of
implementing the new ways of working throughour digital media initiative and the move into
New Broadcasting House. As well as the one-off
profit on the disposal of the Magazines business,the group surplus includes £127million of profit
generated by our commercial activities to beinvested into programmes and to deliver futurecommercial revenues.
This result reflects an increase in licence fee
income of £93million. £74million of which can be
attributed to increased digital switchover activity.
Underlying licence fee income collected roseby £19million due to an increase in household
growth, albeit slower than the historical trends,
but also reflecting our ability to hold evasion rates
level despite difficult economic conditions andpressure on household budgets. This year we
signed a new collection contract that reduces thecost of collection and looks at ways of lowering
evasion rates in the future to offset the risk ofslower rates of household growth.
Our overall cash balance was £262million,
excluding £145million ring-fenced savings fromour digital switchover activity (the Help Scheme
2-58 Annual Report and Accounts 2011/12

and Digital UK). The £145million is due forrepayment to the Government and is on topof £214million we repaid this year from savings
built up in earlier years of this programme.
The public service cash balance will provide thenecessary funding for the restructuring required
to deliver the efficiencies and new ways ofworking needed for our Delivering Quality First
plan. It will also fund our further pension deficit
recovery payments and a planned increase in
spend on content in this landmark year of the
Olympics and the Diamond Jubilee at the level
our audiences expect.
This year we have changed the presentation of
our Annual Report and Accounts to make themsimpler and to present the financial position of
the BBC more logically.
Ready to deliver
We look forward to the financial challenges
with a track record of success in deliveringtrue efficiencies, not cuts. Our Continuous
Improvement programme concluded its fourthand penultimate year by delivering £499millionof continuing savings, bringing the cumulative
total achieved to £1,498million. This translates toa projected out-turn equivalent to 3.6% averageannual savings, exceeding the 3% target set by
the Trust for this licence fee period. The National
Audit Office (NAO) concluded positively on the
programme this year when they examined it
in detail.
In addition to the efficiency challenge, we cannot
forget as we look forward that 2012/13 will be
one of the biggest broadcasting years in the
BBC’s history, with audiences looking to us tocover the year’s historic events with breadth,depth and quality.
Beyond 2012 there are significant challenges.
We need sharp financial focus to manage the
16% reduction in our funding that is necessary
to fund the additional financial obligations of BBC
World Service, BBC Monitoring and S4C fromthe licence fee. I am confident that the BBC is ingood financial shape to meet this challenge.
Zarin Patel
Chief Financial Officer
21 June 2012

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

SUMMARY FINANCIAL PERFORMANCEUK PSB Group spend• 71p in every £1 of licence fee was spent directlyon programmes or the property and technology
infrastructure to support their production …
• … and another 6p in every £1 is spent getting
our services to audiences on analogue, Digital
Terrestrial Television (DTT) and the internet• The cost of collecting the licence fee is 3.4p per£1 collected

Efficiency savings• £1.5billion of sustainable savings achieved since the startof the Continuous Improvement Programme without
deterioration in quality of our content• £559million of recurring annual efficiency savings• We will exceed our 3% annual savings target• Total gross savings are forecast to be £2.1billion(before implementation costs)

Breakdown of UK PSB Group expenditure 2011/12£m%

Service licences – direct content spend
Other direct content spend
Distribution
Property and technology
Other infrastructure and support
Other items including licence fee collection
and digital switchover
Restructuring costs
Pension deficit payment

2,356
90
208
315
304

61
2
6
8
8

387
101
89

10
3
2

Total

3,850

100

Cumulative gross efficiency savings £mProjected
2,000
1,500

499

1,000

434

500
0

2.1bn

559

328
237

237

08/09

09/10

1.5bn

999

565
10/11

11/12

12/13

Total

New savings
Cumulative savings
From 2012/13 we will deliver ongoing annual savings of £559million.

Commercial performance• BBC Worldwide gross sales (excluding Magazines)
up 5.4% on last year
• BBC World News advertising revenue holding steadyin a tough market• BBC S&PP continues to broaden its customer base
• BBC Worldwide returned a record £216million
to Public Service Broadcasting during the year

Commercial income
2011/12£m

UK PSB Group including
BBC World Service and
BBC Monitoring*
BBC Worldwide**
BBC World News
Studios & Post Production (S&PP)

230
1,085
70
52

Headline profit

2010/11 2011/12£m£m

2010/11
£m

n/a
155
4
5

n/a
144
9
6

213
1,030
72
59

		Headline profit is not applicable to this Group.
	Commercial income excludes Magazines and includes joint venture revenue.

***

Annual Report and Accounts 2011/12 2-59

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

FINANCIAL OVERVIEW
With a licence fee fixed until 2017, the BBC might be regarded as being in a morestable position than other commercial businesses, but a fixed licence fee and new
funding commitments (including BBC World Service) mean that the BBC licencefee funding is subject to 16% cuts in real terms.

As well as dealing with its own financial
challenges, the BBC is not immune fromthe effects of the economic downturn:• pressure on household budgets in the UK
poses a continuing challenge for licence feecollection. We have held evasion at 5% for
a number of years now through targeted
collection and helping licence fee payers findtheir most suitable method of payment• difficult trading conditions in some markets
have put pressure on the BBC’s commercial
operations, mitigated to some extent by
successes in new markets• significant inflationary pressures have to be
managed through the delivery of efficiency• BBC World Service has seen reductions to its
grant-in-aid funding in line with the rest of the
public sector• the low returns available on the world’s
financial markets place significant pressureon all pension schemes, including the BBC’s

The Choir: Military Wives scored BBC
Two’s highest AI score (93).
2-60 Annual Report and Accounts 2011/12

We have faced these challenges by bearing
down on our costs and reviewing our businessmodels. In addition to the efficiency plans we are
putting in place, which are reviewed later in thissection, a number of other initiatives have been
implemented. A new contract has been signed
for licence fee collection and we continue to offer
a number of methods to pay the fee.
The BBC earns a return on its programmes
through BBC Worldwide. BBC Worldwide
reinvests part of its profit into ensuring that it is
not left behind by the digital transformation weare seeing in commercial media markets.
We have restructured many of our strategic
contracts to remove automatic indexation basedon published inflation rates.
A pension deficit repayment plan continues tobe followed to ensure that our pension scheme
is brought back into equilibrium in a way that isfair both to our staff and to current and future
licence fee payers and audiences.

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

We are proud of the fact that the BBC’s financial
structures and plans will ensure that the BBC
remains strong, despite these pressures. No
services will close as a result of the plans, andthe services which our audiences value the mostwill be largely protected. We continue to focus
resources on the editorial priorities we know
matter most to our audiences.
Our efficiency achievements this year
As well as planning our future efficiencies under
Delivering Quality First, we have continued todeliver sustainable efficiency savings under
our Continuous Improvement programme,
which has now completed its fourth andpenultimate year.
This year, we delivered another £499million
worth of savings, bringing the cumulative total
achieved since 2008/09 to £1,498million. Ourfull programme is on track to exceed the Trust’s
target of 3% average annual efficiencies, with aprojected out-turn of 3.6%, and total predictedcumulative savings in excess of £2billion by
the end of 2012/13. This has been delivered
without compromising the quality of our
output and whilst delivering record audienceappreciation figures.
Our annual savings achievement is reviewed by
our auditors, KPMG LLP. Additionally, and forthe first time, the NAO examined Continuous
Improvement this year. Their report, issued in
November 2011, commended the programme
and the way it was managed. It confirmed that
we were on track to exceed our target, helpedby clear incentives for management to deliver
the savings targets set for their divisions. They
also made useful recommendations on identifying
cross-divisional initiatives and for further
improvements to performance tracking. We areapplying these findings to the design of Delivering
Quality First.

Efficiency savings by category
Category% of total savings

PeopleRefocusing to get the right mix of people to continue to deliver
distinctive output that audiences value. We are committed toa real-term reduction in talent spend.
Production and process improvement
Using innovative technology to improve how we do things andminimise costs across our operations, from scheduling to shooting.
Procurement and contracts
Releasing funds for programmes and content with savings frombulk buying, outsourcing and renegotiating contracts.
Property and technology
Transforming the way we work, for example using tapeless, digitalproduction to make multiplatform content more efficiently thanever before.
Optimising content quality
Delivering Quality First builds on our existing efficiency programme,with a focus on more effective allocation of commissioning spend
to deliver maximum audience impact.

13%
29%
23%
7%
28%

The successful delivery of Continuous
Improvement shows that the BBC hasembedded a culture of efficiency into its
operations that we can build on to deliver
the ever more challenging savings requiredin the future.
BBC World Service
2011/12 was the first year to reflect the outcomeof the 2010 Comprehensive Spending Review
for BBC World Service, and BBC World Service
has been focused on delivering the first trancheof savings as announced in January 2011. Around
450 posts were closed in the year, althoughhigher levels of redeployment than originallyprojected have provided significant savings on
implementation costs.

Annual Report and Accounts 2011/12 2-61

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

FINANCIAL OVERVIEWCONTINUED

Summary Consolidated Income Statement
For the year ended 31 March 2012

2012
£m

2011
£m

Licence fee income

3,606

3,513

Other income and revenue

1,480

1,480

Total income

5,086

4,993

Operating costs (excluding restructuring costs
and exceptional pension income)(4,750)(4,789)

45

250

(103)

(63)

(4,808)(4,602)

Share of results of associates and joint ventures

21

27

Gain on sale of operations and disposal of fixed assets

100

96

Tax and net financing income

(10)

(31)

Group operating surplus

389

483

Exceptional pension gain
Restructuring costs
Total operating costs

Income Statement
Our results this year show how we havecontinued to manage successfully our financial
challenges, and make sound preparations for the
future. This is reflected in the Income Statement
for the year.
Our group surplus was £389million. This includeda £45million actuarial gain resulting from finalising
the benefits of pension reform undertaken in theprevious year, and a profit of £95million from thedisposal of BBC Worldwide’s Magazines business.
This sale represents a further move in focusing
commercial activities on BBC-branded channels
and platforms.
After excluding these two items, the underlying
surplus was £249million, or 4.9% of our grossincome. Our licence fee funding is managed overthe licence fee period, and costs will not match
income in all years. The surplus this year reflects
savings made to cover the future anticipatedcosts of increased broadcast expenditure in 2012
(Olympics, Diamond Jubilee, European footballchampionships) but also restructuring provisions
to enable the delivery of savings in future years
and to fund major projects like the move to New
Broadcasting House and the new digital ways ofworking. In our recently published Workplan for
2012/13, we are projecting a deficit of £137million
for the year, which this year’s surplus will fund.

2-62 Annual Report and Accounts 2011/12

Income has risen because of increased
digital switchover activity and limited
growth in household numbers
Commercial income has held up
in a challenging economic climate
Despite significant inflationarypressures and increased digital
switchover activity, costs haveremained broadly stable, reflecting
the impact of our efficiency andsavings programmes
Exceptional pension gain results fromthe finalisation of pension scheme
members’ decisions under the recent
pension reform
Restructuring costs relate primarily
to Delivering Quality First initiatives
The gain this year results principallyfrom the sale of BBC Worldwide’s
Magazines business

Licence fee income
Licence fee income increased by £93million
this year, despite the freeze in the licence fee.
Included within the annual licence fee is a sum
to fund the activities of the Digital Switchover
Help Scheme as well as Digital UK. Underspends
within this funding have to be repaid to theGovernment and are therefore netted from
our income. Digital switchover activity was
greater this year than last year, and accountedfor £74million of the £93million increase in our
income. The remainder was the result of modest
household growth. We have also held licence
fee evasion rates at their prior year level despitepressure on household budgets by targeting ourcollection activity and by highlighting easier ways
to pay to licence fee payers.

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

Commercial operations
The licence fee is supplemented by income
from the commercial exploitation of licencefee funded content and infrastructure throughthree commercial subsidiaries – BBC Worldwide,
BBC World News and BBC Studios & Post
Production (S&PP).
As a result of its activities in 2011/12, BBC
Worldwide returned a record £216millionof cash to the BBC (2010/11: £182million),equivalent to 6% of licence fee income. Despite
unpredictability in some of its markets, thecompany has continued to grow. Underlying sales(excluding sales of Magazines) increased 5.4% to£1,085million and the headline profit (excluding
exceptional items) increased to £155million.

During the year, BBC Worldwide wrote
down the carrying value of its investment in
Lonely Planet by £16million. This was caused bycontinued appreciation of the Australian dollar.
At the date of the annual impairment review
in January 2012, the Australian dollar was at
a 28-year high against sterling. Lonely Planet
management have taken steps to reduce thecompany’s Australian cost base to mitigate thepotential impact of further appreciation.
BBC World News continued to deliver highquality journalism to an international audience.
Although both revenue and profits fell slightly
overall in the face of tough economic conditions,advertising revenue in particular came underpressure. Distribution revenue fared better andwas able to show a small improvement. The
company also benefited from the first full yearof a significant cost saving plan.
In a difficult trading environment, S&PP recordeda headline profit of £5million this year. The
company continued to broaden its customer
base, compensating for the loss of income after
BBC Sport and Children’s activities relocated to
Salford where S&PP has no operating base.

The BBC Proms were broadcast live on BBC Radio 3
with over 300,000 people attending the concerts.

Annual Report and Accounts 2011/12 2-63

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

FINANCIAL OVERVIEWCONTINUED

UK Public Service Broadcasting (UK PSB) Group ExpenditureService

Content£m

Distribution£m

Infrastructure/
support
£m

2012
Total
£m

2011
Total
£m

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC HDBBC ALBA
BBC News Channel
BBC Parliament
BBC Red Button

1,041.1
416.6
83.8
49.2
81.9
29.2
1.2
5.0
42.4
2.1
13.5

54.8
19.3
4.4
3.5
3.6
3.9
15.0
1.7
6.9
5.8
18.3

241.7
101.2
24.7
15.1
21.8
9.3
1.6
1.3
8.2
1.4
5.4

1,337.6
537.1
112.9
67.8
107.3
42.4
17.8
8.0
57.5
9.3
37.2

1,400.8
527.4
110.0
67.0
99.2
39.7
11.8
7.6
61.0
8.0
39.5

Television
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 5 LiveBBC Radio 5 Live Sports Extra
BBC 1Xtra
BBC 6MusicBBC Radio 4 Extra
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidhael
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle

1,766.0
38.4
47.2
37.8
88.1
51.1
2.6
7.2
7.8
5.0
8.5
112.7
23.2
3.6
13.0
11.4
17.3

137.2
4.6
4.6
4.7
8.6
5.8
1.2
1.3
1.3
1.3
1.5
8.1
3.0
1.4
1.5
1.6
2.0

431.7
7.6
8.7
10.0
19.2
12.4
1.5
2.6
2.6
1.9
3.0
25.7
5.9
1.0
3.2
2.9
4.5

2,334.9
50.6
60.5
52.5
115.9
69.3
5.3
11.1
11.7
8.2
13.0
146.5
32.1
6.0
17.7
15.9
23.8

2,372.0
48.1
59.1
50.7
119.7
72.8
4.9
11.0
10.7
8.2
12.6
147.3
32.3
6.1
17.0
16.0
21.6

Radio

474.9

52.5

112.7

640.1

638.1

BBC Online

115.3

18.7

52.8

186.8

193.9

Online

115.3

18.7

52.8

186.8

193.9

Spend regulated by service licence

2,356.2

208.4

597.2

3,161.8

3,204.0

The largest element of the BBC’s expenditure is the cost of
programmes and other content supplied to audiences andusers under the 28 service licences the Trust uses to hold BBC
management to account.
Total content spend by service shows that our spending reduced
to £2,356million (2010/11: £2,475million). This reflects the ongoing
impact of our efficiency programme, and the normal biennial
cycle of broadcasting costs with the previous year including thefootball World Cup and no equivalent event in 2011/12.
No service licences spent above the permitted baseline budget
threshold during 2011/12. Five services underspent by morethan 10%:• the BBC HD channel benefited from falling costs of highdefinition productions• BBC 1Xtra, BBC Radio 5 Live and BBC Radio 4 Extra secured
early Delivering Quality First savings• BBC Red Button spent less than budgeted because of adecision to defer some transmissions until 2012/13, coupledwith efficiencies from relocation to Salford

In all cases the delivery of savings did not compromise theeditorial performance of the relevant services.
During the year, the continuing delivery of efficiencies led
headcount to reduce in both licence fee funded operations of the
BBC and in commercial subsidiaries. Staff numbers in the BBCGroup reduced by 4.2% to 21,940 from 22,899 in the year andsalaries and wages paid to staff reduced by 2.1%. In the UK PSBGroup, staff numbers reduced by 2.2% to 16,858 from 17,242,
and there was a 0.8% fall in the pay-bill (excluding restructuringcosts and pension deficit recovery payments).

2-64 Annual Report and Accounts 2011/12

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Managing our financesfinances

Total Public Service Broadcasting Group expenditure

Spend regulated by service licence

Content£m

Distribution£m

Infrastructure/
support
£m

Other
items
£m

2012
Total
£m

2011
Total
£m

2,356.2

208.4

597.2

–

3,161.8

3,204.0

–

–

–

126.1

126.1

123.6

Orchestras and performing groups

23.6

–

5.4

–

29.0

24.0

S4C

23.2

–

6.0

–

29.2

32.2

Research and development spend

Licence fee collection costs

42.7

–

9.8

–

52.5

32.8

UK PSB Group pension deficit reduction payment

–

–

–

89.1

89.1

–

Costs incurred to generate intra-group income

–

–

–

156.8

156.8

152.6

Costs incurred to generate third-party income
Other content-related spend
Restructuring costs
Total UK public services content expenditure

–

–

–

55.9

55.9

64.6

89.5

–

21.2

427.9

538.6

429.8

–

–

–

100.6

100.6

29.6

2,445.7

208.4

618.4

528.5

3,801.0

3,663.4

Digital switchover (Digital UK Limited)

–

–

–

40.8

40.8

25.0

Digital switchover (DSHS Limited)

–

–

–

89.7

89.7

55.3

2,445.7

208.4

618.4

659.0

3,931.5

3,743.7–––(81.7)(81.7)(58.2)

2,445.7

208.4

618.4

577.3

3,849.8

3,685.5

2012
£m

2011
£m

Property

186.9

150.0

HR and training

46.2

48.8

Policy and strategy

9.6

10.8

Total UK PSB Group expenditure
Lease reclassification
UK PSB Group expenditure
Infrastructure and support costs are made up of:Finance and business

56.8

61.3

Marketing, audiences and communication

72.0

70.5

Executive Unit

2.7

4.4

Total central costs

374.2

345.8

Technology

128.0

85.8

Libraries, learning support and community events

36.1

38.6

Divisional running costs

63.7

63.3

BBC Trust Unit (excluding restructuring)

11.9

13.3

Other

4.5

(5.4)

618.4

541.4

Total infrastructure/support costs

Central department costs have all reduced this year in real terms.
The two exceptions are Property and of Technology, whichreflect directly the significant investment the BBC has been
making in both its technology and its operating infrastructure in
recent years (e.g. MediaCityUK, Broadcasting House in London
W1, Digital Media Initiative). As a direct consequence of thisinvestment, annual depreciation and running costs in property
and technology have increased this year.

This investment is essential to support the new ways of working
and to provide the technological capacity, to enable the BBC toproduce the dynamic content our audiences and users require ina digital economy where the platforms used to consume content
have, and will continue to, develop rapidly. As we implement
plans to reduce our property footprint we have to bear thecosts of vacant production sites, both as we ready them for use
and up to the point of disposal. These surplus property expenses
are included in infrastructure and support. The disposal of sites(Television Centre (TVC), White City) in the coming years will
deliver significant savings against current cost levels.

Annual Report and Accounts 2011/12 2-65

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

FINANCIAL OVERVIEWCONTINUED

Summary Consolidated Balance Sheet
For the year ended 31 March 2012

2012
£m

2011
£m

Non-current assets

1,920

1,947

Current assets

2,069

2,052

Current liabilities(1,259)(1,314)Non-current liabilities (excluding pension liabilities)(1,206)(1,357)

Net assets (excluding pension liabilities)

1,524

1,328

Net pension liabilities(1,179)

(927)

345

401

338

394

Net assets
Represented by
BBC reserves
Non-controlling interests

7

7

345

401

Balance sheet
Plant property and equipment (PP&E)
This has been a year of significant further
progress in developing our operating estate andtechnology to deliver ongoing savings throughnew technology and collaborative working, as
well as enhancing programme output. The year
saw the opening of MediaCityUK in Salford andour new Drama Village at Roath Lock in Cardiff.
Additionally, BBC World Service has commenced
operation from New Broadcasting House in
London W1. The Fabric project (our new digitalproduction system) has led development of ourtechnology infrastructure. In total £175million
was invested this year, with W1 (£44million),
North (£37million) and Fabric (£38million) as
the key constituents.
As these new properties and technology
infrastructure become operational, we start
to incur depreciation and the additional cost,
combined with the transfer to current assetsof TVC, as an asset held for sale, means there isa net reduction in the book value of our PP&E
this year. Our depreciation charge increased by£20million this year as a direct consequence of
our investment in our property and technology
infrastructure.
The significant operating facilities we now have in
Salford, Glasgow and Cardiff mean the BBC is ina strong position to meet our target of spending
50% of the network TV budget outside ofLondon by 2016.
Pensions liabilities
Financial markets experienced a volatile year in
2011/12 as investors worried about the possibilityof a double-dip recession in the developed
world, a ‘hard landing’ in China, and the futureof the Eurozone. Bond markets performed
particularly strongly, and conventional fixedcoupon Gilt yields fell to what was reported tobe their lowest level in 300 years.
2-66 Annual Report and Accounts 2011/12

Many of our building and technology
projects of recent years are now
operational which has increased
depreciation. This has led the valueof non-current assets to reduce. TVC
has been reclassified as a current asset‘held for sale’
The estimate of the pension scheme’s
net liabilities reflects changes toscheme benefits, the deficit reduction
payments and changes in the market
valuation of assets

Gilt yields are used to calculate the discount rate
for future liabilities of our pension scheme, andtheir fall from last year has caused the current
value of these liabilities to increase. This is an issue
that all other defined benefit schemes face in thecurrent economic environment. This increasein the value of the scheme’s liabilities was theprimary driver behind a rise in the accounting
valuation of the pension scheme deficit to£1,179million at the year end, from £927million
12 months earlier. The next formal actuarial
valuation of the scheme is due in April 2013, andwe continue to fulfil our obligations under theagreed deficit reduction plan with the pension
scheme trustees, making annual payments of
between £60million and £100million throughto 2021/22.
Twelve months ago, the BBC was in the middleof significant pension reforms to reduce theburden of future pensions on the licence fee.
Consequently, we had to make assumptions on
the choices that staff would be making between
the different options. We now know what the
final choices staff made are, and this has resulted
in a higher saving than we initially projected so
we have recognised a further curtailment gainof £45million in this year’s accounts.
Restructuring provision
The Group has provided £103million of
restructuring costs this year, primarily relating
to those of our Delivering Quality First
plans which are sufficiently advanced tohave been communicated to staff and otherkey stakeholders. This is essential enabling
expenditure for the delivery of our long-termtarget of £700million of annual savings. Further
provisions are expected in 2012/13 as otherdivisions develop their implementation plans
to the point of communication.

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Managing our financesfinances

Summary Consolidated Cashflow Statement
For the year ended 31 March 2012

2012
£m

2011
£m

Net cash inflow from operating activities

266

475

Net cash outflow from investing activities

(203)

(146)

Net cash outflow from financing activities

(136)

(113)

Net (decrease)/increase in cash and cash equivalents

(73)

216

Cash and cash equivalents at the beginning of the year

513

264

Effect of foreign exchange rate changes on cash and cash equivalents

(1)

(1)

Movement in cash held as restricted funds

(32)

34

Cash and cash equivalents at the end of the year

407

513

by region through the UK with just Tyne Teesand Northern Ireland remaining. Both value
for money and customer services targets
have been exceeded.
Many of the people eligible for help withconverting their television for digital switchover
had already switched before the Help Scheme
reached their area. As a result, spending on
support for digital switchover has been lower
than expected, and we will return the part ofSummary Consolidated Cashflow
the licence fee cash that was ring-fenced for thisstatement
Our overall cash balance was £262million at the purpose by the Department for Culture, Mediaend of the year, excluding £145million ring-fenced and Sport (DCMS).
At the end of 2010/11, the amount due to thesavings from our digital switchover activity
DCMS was £266million, and reflecting the(both Digital Switchover Help Scheme andrepayment plan agreed, we returned £214million
Digital UK). Of this, £33million is held by ourduring 2011/12. We made further savings ofcommercial operations for investment in their£93million on the scheme during 2011/12, leaving
development. The remaining £229million cash
a projected £145million due for repaymentbalance will provide:overall, £92million of which will be repaid in the• the accumulated funding for £107million
coming year.
of restructuring cost provisions to deliver
efficiencies and new ways of working, primarily Delivering Quality First
as part of the Delivering Quality First plan
As already described, our Delivering Quality First(£82million provided to date for Deliveringsavings plans will require upfront restructuringcosts to deliver the savings. This will involve
Quality First, but will increase as plans
payment of redundancy costs, as well as somedevelop further)further investment in new technology. To fund• further annual pension deficit recovery
these exceptional items of expenditure, we needpayments (next payment due is £60million)
to set aside the cash now.
• a planned increase in spend on content inthis landmark year of the Olympics and theMovements in cash £mDiamond Jubilee
900
800• the costs of moving into and occupying
266
203
700
New Broadcasting House in W1 and600
completion of our digital production system
136
500
for television (Fabric)
266

The Group’s operating cash surplus
before depreciation and amortisation.
The reduction reflects the lower
operating surplus, plus increased
programme inventory
This increase primarily relates to thepurchase of additional intangible assetsof £53million from the prior year
This is primarily interest paid on
property leases
2012 figure represents:£145million digital underspend;£33million commercial companies;£229million UK PSB Group, BBC
World Service and BBC Monitoring

Programmes for future transmission
The balance sheet also reflects a 11.7% increasein the value of completed programmes,
programmes in production, and advancepayments for sports rights. This increase reflects abuild-up of our stock of special programmes andcontracted sports rights for a year that will bringthe London Olympics and the celebration of the
Queen’s Diamond Jubilee to BBC audiences.

Digital Switchover Help Scheme
The Help Scheme is run by the BBC to support
older and disabled people through digital TV
switchover. Designing and implementing anationwide social care programme has beena new undertaking for the BBC. More than
1.2 million people have taken up this practicalassistance as switchover has rolled out region

33

400

145

300
200

262

247

100
0

Cash
Digitalexcluding Switchover
digitalring-fenced
switchover
cash atbalances start of year
at startof yearCash fromoperatingactivities

Cashoutflowfrominvestingactivities

Cashoutflowfromfinancing
activities

Other
cash flow
movements

DigitalSwitchoverring-fenced
cash atend of year

Cashexcluding
digitalswitchoverbalancesat endof yearAnnual Report and Accounts 2011/12 2-67

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

COLLECTING THE LICENCE FEE
The unique relationship between the BBC and
its audiences has at its core the way in which the
BBC is funded. The BBC needs to maintain thetrust of licence fee payers in the way that welook after their money. As well as spending
the licence fee as efficiently as possible on
programmes and services that our audiences
value, we also need to make sure that we makeit easy to pay for everyone who is required tohave a television licence.
Our new collection contract with Capita
starts in July 2012, and contains incentives toreduce evasion while maintaining perceptionsof fairness. We believe that targeting lower
evasion rates, together with making savings on
the contract, will more than compensate forslower household growth going forward thanhistorically experienced. The eight-year contract
will also deliver savings in our collection costs of£220million (based on existing collection rates),
meaning that more money will be available tospend on programmes and services.
The savings have been made possible by the
success of our campaigns to encourage the useof web-based self-service options for licence fee
payers managing their account, and by the highproportion of licence fee payers now paying byDirect Debit.

BBC Radio 4’s The Reith Lectures,in 2011 entitled Securing Freedom,featured the Burmese pro-democracy
leader Aung San Suu Kyi.
2-68 Annual Report and Accounts 2011/12

Capita will carry out further improvements
to the TV Licensing website, making it eveneasier for licence fee payers to interact withTV Licensing in a way which suits them.
At the same time, we will continue to offer
the cash payment schemes valued by manyof our customers.
For the second year, we have prepared alicence fee revenue statement. This accountsets out the amounts we collected during theyear, and paid over to the DCMS. The NAO
audits the statement. Alongside its audit work,
the NAO examines an aspect of our collection
arrangements and reports on it to Parliament.
This year, the NAO looked at licence expiry
and renewal processes including cancellations,refunds, and licence fee concessions.

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

LOOKING FORWARD WITH CONFIDENCE
In the face of many challenges, 2011/12 canbe seen to have been a strong one for the
BBC financially, and it has put the organisationin excellent shape to deliver on its futurechallenges, specifically:• to make 2012 a year of truly exceptional
output in this ‘once in a generation’ year
• to complete the delivery of the moves to
London W1 and Salford, making them far
more than relocations, but projects which
drive new ways of working to make sure the
BBC can deliver against the further challenges
to come• to deliver £700million of savings to enable
the BBC to live within its means following thelicence fee settlement in 2010
• to be in stable financial shape for the Charter
renewal discussions in 2017
We have committed through Delivering
Quality First to deliver £700million per annumof sustainable savings by the end of 2016/17,
equivalent to 20% of what we currently spend.
This will enable us to take over funding throughthe licence fee of BBC World Service, BBC
Monitoring and S4C and to support local TV
channel development as well as the roll-out
of broadband in the UK. In total these newcommitments are equivalent to 16% of our
2011/12 costs. An additional 4% of savings will
provide a reinvestment fund to enable us to keep
pace with the latest technology and meet evermore demanding audience expectations. All thiswill have to be achieved with a licence fee frozen
until 2016/17 and in an uncertain economic
climate with inflation remaining high.

Putting together a plan to deliver these savings,
whilst minimising the impact on our audiences,
will demand some difficult choices. That is why
we are focusing spend on our five editorial
priority areas:• the best journalism in the world• inspiring knowledge, culture and music• ambitious UK drama and comedy• outstanding children’s content• content that brings together the nationand communities.
In line with this, we have chosen to broadly
maintain current levels of spending on BBC
One, BBC Radio 4, CBBC and CBeebies. We
will reduce spending on the BBC Two daytime
schedule, and focus the remit of BBC Four onscience and the arts.
A key feature of the programme is that support
areas of the BBC will make disproportionately
higher savings of 25% by 2016/17, in order toprotect our programme-making divisions as far
as possible. We will also seek to further reduce
our property footprint by a third and ultimately
vacate West London entirely. This process will
begin in 2013 with our exits from TVC andthe original White City building. By moving ourLondon-based journalists into New Broadcasting
House we will also provide new opportunities
to share facilities and material between domestic
and international teams, increasing the efficiency
of both.

Celebrating the stars: Stargazing Live presenters Prof BrianCox and Dara O‘Briain. The programme formed part of the
BBC Outreach activity.
Annual Report and Accounts 2011/12 2-69

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

AUDITOR’S REPORT
Summary financial
statement
The summary financial statement
contains the BBC’s Summary
Income Statement on page 2-62,
Summary Balance Sheet on page2-66 and Summary Cash Flow
Statement on page 2-67. These
include the key headline datafrom the full financial statements
which are available online in
the download centre atwww.bbc.co.uk/annualreport.
The summary financial statement
does not contain sufficient
information to allow a fullunderstanding of the results
and state of affairs of the BBCGroup as are provided by thefull annual financial statements.
The independent auditors of theBBC, KPMG LLP, have issued an
unqualified audit opinion on thefull financial statements.
The summary financial statement,
including the Governance reportand Executive Remuneration
Report, was approved by the
Executive Board and signed
on its behalf on 21 June 2012 by:Mark Thompson
Director-General

Zarin Patel
Chief Financial Officer

2-70 Annual Report and Accounts 2011/12

Independent auditor’s statement to
the trustees of the British Broadcasting
Corporation (“BBC”)
We have examined the summary financial
statement for the year ended 31 March 2012
which comprises the Summary Consolidated
Income Statement on page 2-62, the Summary
Consolidated Balance Sheet on page 2-66, theSummary Consolidated Cash Flow Statementon page 2-67 and Executive Board Remuneration
Report on pages 2-47 to 2-51.
The BBC’s trustees have engaged us to examine
the summary financial statement which has been
prepared as if the BBC were a quoted company
and entitled to prepare such a statement under
Section 426 of the Companies Act 2006.
This statement is made solely to the BBC’s
Trustees as a body on terms we have agreed.
Our work has been undertaken so that wemight state to the BBC’s trustees those matters
we are required to state to them in such astatement and for no other purpose. To thefullest extent permitted by law, we do not accept
or assume responsibility to anyone other thanthe BBC and the BBC’s Trustees as a body, for
our work, for this statement or for the opinions
we have formed.
Respective responsibilities of directors,
Trustees and auditor
The Trustees and Executive Board are
responsible for preparing the BBC’s Executive’s
review and assessment as if Section 428 of theCompanies Act applied to the BBC and it were aquoted company.
Our responsibility, in accordance with the termsof our engagement, is to report to you our
opinion on the consistency of the summary
financial statement within the BBC’s Executive’s
review and assessment with the full annual
financial statements and the Executive Board
Remuneration Report, and its compliance withthe relevant requirements of section 428 of theCompanies Act 2006 and the regulations madethereunder as if they applied to the BBC and it
were a quoted company.
We also read the other information contained in
the BBC Executive’s review and assessment andconsider the implications for our report if webecome aware of any apparent misstatementsof material inconsistencies with the summary
financial statement.

Basis of opinion
We conducted our work in accordance with
Bulletin 2008/3 The auditor’s statement on thesummary financial statement in the United
Kingdom issued by the Auditing Practices Board.
Our report on the BBC’s full annual financial
statements describes the basis of our audit
opinion on those financial statements and the
Executive Board Remuneration Report.
OpinionIn our opinion the summary financial statement is
consistent with the full annual financial statements
and the Executive Board Remuneration Reportof the BBC for the year ended 31 March 2012
and complies with the applicable requirementsof section 428 of the Companies Act 2006 andthe regulations made thereunder as if they applied
to the BBC and it were a quoted company.

Scott Cormack
For and on behalf of KPMG LLP,
Statutory Auditor
15 Canada Square
London E14 5GL
21 June 2012

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

GLOSSARY
We have used some terms in this report to explain how we run our business,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 from another supplier. Examples of acquired programmes are given
on page 2-32.

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.

Creative economy

The UK’s creative economy includes the organisations and people who work in design and media industries, including indies,actors and writers.

BARB

BARB (Broadcasters Audience Research Board) is the independent 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.

Digital switchover

The process of digital switchover involves turning off the UK’s analogue television broadcasting system by 2012.
For more information see www.helpscheme.co.uk.

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 a monthly subscription. Visit www.freesat.co.uk/. Freesat from Sky is also available for a one-off payment:www.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 www.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.

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

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 body in charge of measuring radio audiences in the UK. It is jointly ownedby the BBC and the RadioCentre on behalf of the commercial sector.

Reach

Reach on television is the number or percentage of an audience group who watch a programme or channel (15 consecutive
minutes each week is the usual BBC measure, versus three minutes on commercial TV); and on radio is the number orpercentage of people aged 15+ who listen to at least five minutes of radio in a 15-minute period during an average week.

Share

The share of total viewing or listening to a particular programme or 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
automatically using 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 information or to know more about how the BBC is run, please visit www.bbc.co.uk/aboutthebbc.

Annual Report and Accounts 2011/12 2-71

Overview | Delivering our strategy | Managing the business | Governance | Managing
Managing our financesfinances

CONTACT US
MORE INFORMATION
Credits and copyright
Photographs are used ©BBCor used under the terms of the
PACT agreement except forpage 2-25 picture of the Queenat MediaCityUK ©Jon Super.
Permission from copyrightholders must be sought
before any photographs
are reproduced.
The text of this document may
be reproduced free of charge inany format or medium providingthat it is done so accurately andnot in a misleading context. It
must be accredited to the BBC.
Designluminous.co.uk

Contacting the BBC
If you wish to find out more about theBBC’s full year performance to March 2012
– including full financial statements and eachservice’s performance against its Statementof Programme Policy, as well as other public
commitments, please visit www.bbc.co.uk/
annualreport.
The Annual Report is also available in Welsh
and in audio version.
If you want information or to know more about
how the BBC is run please visit www.bbc.co.uk/
aboutthebbc. Here you will also find a blog
where senior staff and experts regularly give aninsider’s view of what is happening at the BBC.
For tickets to shows, tours and events please visit
www.bbc.co.uk/showsandtours.
If you have a comment, appreciation or complaint
about BBC programmes and services please visit
www.bbc.co.uk/feedback.
Or write to:
BBC Audience Services
PO Box 1922
Darlington DL3 0UR
Comment line tel: 03700 100 222
Other queries tel: 03700 100 123
Textphone: 03700 100 212
Lines are open 24 hours a day, seven days aweek. Calls may be monitored or recorded fortraining purposes.
BBC TrustIf you have any comments or questions about
the work of the BBC Trust you can contact it
direct by post, email or telephone.
BBC Trust Unit
1st Floor
180 Great Portland Street
London W1W 5QZ
Email: trust.enquiries@bbc.co.uk
www.bbctrust.co.uk
Telephone:
BBC Information line 03700 103 100
Textphone: 03700 100 212
Lines open Monday to Friday between
9.30am and 5.30pm.

2-72 Annual Report and Accounts 2011/12

BBC Audience Councils
The Audience Councils in England, Scotland,
Wales and Northern Ireland help the BBC
Trust to understand the needs and concernsof audiences throughout the UK.
To contact the Audience Councils:
Audience Council England
Email: audiencecouncil.england@bbc.co.uk
Audience Council Scotland
Email: acs@bbc.co.uk
Audience Council Wales
Email: acw@bbc.co.uk
Audience Council Northern Ireland
Email: audiencecouncil.ni@bbc.co.uk
www.bbctrust.co.uk/bbctrust/who_we_are/audience_councils

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