BBC Annual Report and Accounts 2002/2003

Purpose, vision and values
Our purpose is to enrich people’s lives with
programmes and services that inform, educate
and entertain
Our vision is to be the most creative organisationin the world
Our values
Trust is the foundation of the BBC: we are
independent, impartial and honest
Audiences are at the heart of everything we do
We take pride in delivering quality and value
for money
Creativity is the lifeblood of our organisation
We respect each other and celebrate ourdiversity so that everyone can give their best
We are one BBC: great things happen when we
work together

•
•
•
•
•
•

Contents

Commercial activities
How the BBC’s commercial
subsidiaries performed
54 BBC Worldwide Limited
56 BBC Ventures Group Limited

2 Chairman’s foreword An historic and successful year
as the BBC delivered the full range of its digital services
4 Board of Governors The men and women who
make sure the BBC puts the public interest first
5 Running the BBC How the BBC Governors,
Director-General and Executive Committee work toensure the BBC serves the public effectively

6 Summary of the year
Key facts about the BBC’s
finances and audiences in
2002/2003

8 Governors’ assessment of
performance How well did the BBC
meet the objectives set by theGovernors for 2002/2003?

58 Putting audiences first What audiences told
the BBC on key issues and how the BBC wasaccountable to licence payers and Parliament
64 The BBC in the community What the BBC
did to achieve high standards of corporatesocial responsibility
67 BBC people and talent Training, talent andhow Making it Happen is developing creativity
and values
68 Compliance Governors and auditors report on all aspectsof the BBC’s legal, financial and management obligations

16 Director-General’s review
A richer range of more distinctive
programmes created a landmark
year for the BBC

82 Financial review Overview of the BBC business andcomplete audited accounts

18 Executive Committee The directors responsible for theBBC’s output and operations

122 Broadcasting facts and figures

85 Financial statements

132 Getting in touch with the BBC
Review of services About
BBC programmes andservices in 2002/2003

133 Glossary and other information

20 Television
28 Radio
36 Nations & Regions
42 News
46 Learning
48 New Media
50 BBC World Service& Global News

Front cover:The Queen’s Golden Jubilee celebrations.
Left: DJ Erick Morillo at BBC Radio 1’s Newquay Dance Party.
Above, clockwise from the top: The Life of Mammals, Bitesize,
3 Non-Blondes, Jeremy Vine, The Lost Prince, listening-in in Baghdad,
The Office.

1Chairman’s foreword

As ever, the BBC had an overriding responsibility to licencepayers to reflect and analyse the debate that was happening
in the country, and to report the war itself with a totalcommitment to impartiality and the truth.The troubled
circumstances of war were no reason to compromise theeditorial standards of the BBC’s news output.
Despite periods of intense pressure from across the
spectrum, BBC news continued to serve licence payers with
its traditional attachment to the truth, and nothing but thetruth, during the war. Of course there were some individual
errors along the way, but our audiences recognised that thetrust they have always placed in the BBC would not be
betrayed. Not only did they turn to the BBC as a source
The BBC celebrated its 80th birthday with a concert atof news in overwhelming numbers, but the evidence clearly
the Birmingham Symphony Hall last November. For an
octogenarian, the organisation is in rude health.Audience shows that they trusted the BBC more than any otherinformation source.
approval ratings have climbed to new highs, and all the

new digital television and radio services which wereplanned three years ago have been launched.A portfolioof services is now in place which is suited to the digitalage, and which enables the BBC to bring more value
than ever before to all of our licence payers. Overall,the Governors believe that the BBC has enjoyed a verystrong year.A clear improvement in the range andambition of programmes has been achieved, especiallyon BBC One, and audience numbers have been very
robust in the face of increased competition.
Two events have dominated the past year.The Queen’s
Golden Jubilee celebrations, and particularly the magicalweekend of parties across Britain last June, united the nation
in a way which some had thought impossible in the modern
age. Less happily, the war in Iraq challenged the unity of thenation and therefore put a spotlight on the accuracy andimpartiality of BBC reporting.

BBC journalists and news professionals placed themselves ingreat jeopardy to serve audiences during the war. Six were
injured and two were killed. We continue to mourn their loss.
In other, more normal, arenas, the BBC enjoyed a year of
considerable progress.The Governors expect it to be apublic service broadcaster that can appeal to a massaudience. We reject the notion that the BBC should be
marginalised into a small corner of the broadcastinglandscape, or that it should overlook its historic mandate
to serve all UK audiences with equal passion.The BBC mustbe allowed to respond to the opportunities created by new
media technologies. And we doubt whether a better way
can be found to fund the organisation than the licence fee.

To retain public legitimacy, the licence fee must of course
provide value for money to every household. So audienceratings, and particularly audience reach, must be a relevant
indicator of the BBC’s success. Here the BBC has done well,
It is the view of the Governors that the BBC responded
magnificently to both of these great events. Even our harshest with radio flourishing almost across the board, BBCi reaching
critics recognised that the BBC brought something special to new heights in page impressions and user reach, BBC One
its coverage of the Jubilee. Without the universal reach of the increasing its share in both analogue and multi-channel
BBC, and without its unparalleled skill in bringing such stirring homes, and BBC Two remaining the only terrestrial channel
to increase overall share in the face of vastly increased digital
events into every home in Britain, the sense of a truly
competition.
national celebration, of an outpouring of patriotism, would
have been much diminished.
But we do not need to be reminded that mass audiences are
not enough to sustain the objectives set in the BBC’s Charter.
The onset of war in Iraq provided a different challenge.

2 Annual Report and Accounts 2002/2003

Nothing would be easier than to maximise audience sharewith populist and derivative programming. And nothing would
be more pointless.The BBC’s mission is to provide a package
which is richer and more ambitious than could be provided
by the commercial sector alone.

Shortly after becoming Chairman, I announced reforms to
the BBC’s system of governance, designed to sharpen the
distinction between the Governors and the Executive, and to
set more transparent objectives for the organisation to fulfil.
This report gives a much fuller account by the Governorsof the extent to which the objectives which we set a year
Again, the BBC has done well in this critical objective in the
ago have been attained. Progress has been made across theyear under review. It has been a year of great programmes,
board, but further improvement is needed in many areas,
like The Gathering Storm, The Life of Mammals, The Lost Prince, and most of the objectives have therefore been left in place
Great Britons and countless others. It has been a year in which for the year ahead.
BBC One and BBC Two have shown the benefit of greatly
increased programme budgets, and in which the BBC’s digital One objective will never change. It is no accident that the
television channels have greatly added to the daily choiceorganisation is named the British Broadcasting Corporation.
available to viewers. It has been a year in which BBC national As foreign influences threaten to become harder for theand local radio has managed, even against its own demanding commercial sector to resist, it will be even more important
standards, to attain new distinction.
for the BBC to uphold the standard of indigenous
programming in the nation whose name we proudly bear.
Remarkably, more new national BBC services were launched It is a challenge which we relish, and are ready to meet.
over the last 18 months than in the first eight decades of
the BBC’s history. Some of these new services are alreadya success. Some will take time to build. All of them will
be needed to fulfil the BBC’s public service remit in theyears ahead.
Gavyn Davies
The launch of new services and the greater investment in
Chairmanprogrammes has meant that the long-planned reduction in
the BBC’s positive cash balance has happened in the past
year. The BBC is on target with all its medium-term financial
objectives. The commercial businesses are thriving in difficult
market conditions, and are returning funds to benefit ourlicence payers.The BBC has attained, and exceeded, all theGovernors’ targets to reduce bureaucracy and waste inside
the organisation.Three quarters of all the extra money thathas been ploughed into programmes in recent years hascome from self help, not from a higher licence fee.
The Director-General, Greg Dyke, his senior management
team and the staff they lead deserve to be rewarded
adequately for what they have achieved.The BBC’s policy,
over time, is to pay executives and staff at around the medianfor comparator groups in other public or private UK
organisations.This year, because of the reduced competition
for top staff from the private sector, the average bonus paid
to the executive group has fallen despite the excellent
performance of the organisation.

Annual Report and Accounts 2002/2003 3

Board of Governors

Gavyn Davies OBE Chairman from
October 2001 and formerly ViceChairman. Also chairs the Property
Committee and the Remuneration
Committee. Advisory Director atGoldman Sachs International.
Previously at Goldman Sachs he was
Chairman of the Global Investment
Research Department and Chief
International Economist. He wasa member of the Policy Unit at
10 Downing Street from 1974 to
1979 and chaired an independent
review into the future funding of the
BBC in 1999. Born in 1950.
Rt Hon The Lord Ryder ViceChairman since January 2002.
Chairman of the Fair Trading
Compliance Committee and memberof the Property Committee and theRemuneration Committee. Privy
Councillor since 1990. Created life
peer in 1997. MP for mid-Norfolk
from 1983 to 1997. Parliamentary
Under Secretary at MAFF; Economic
Secretary to the Treasury; Paymaster
General then Government Chief
Whip from 1988 to 1995. Political
Secretary to Margaret Thatcher from1975 to 1981. Director of Ipswich
Town FC since 1999. Chairman of

4 Annual Report and Accounts 2002/2003

Eastern Counties Radio until his
appointment to the BBC. Born in1949.

Television’s Play For Today from 1978
to 1981. Born in 1943.

Dame Ruth Deech DBE BBC
Governor since October 2002.
Member of the Fair Trading
Compliance Committee. Honorary
Bencher of the Inner Temple; a
Rhodes Trustee; Honorary Fellowof the Society of Advanced Legal
Studies; Principal of St Anne’s
College, Oxford, and a Pro-Vice
Chancellor of Oxford University.
Chairman of the Human Fertilisationand Embryology Authority from1994 to 2002. Born in 1943.

Dermot Gleeson BBC Governor
since November 2000. Memberof the Audit Committee and theProperty Committee. Executive
Chairman of the M J Gleeson Group
Limited. A director of the Housing
Corporation from 1990 to 1995
and of the Construction Industry
Training Board from 1995 to 2002.
Former Head of the Home Affairs
Section of the Conservative
Research Department and amember of Christopher Tugendhat’s
cabinet in the European Commission
from 1977 to 1979. Born in 1949.

Sir Richard Eyre CBE BBC Governor
from 1995 to May 2003, when heretired due to pressure of other work.
Was a member of the Programme
Complaints Committee. Freelancetheatre, film and television director
and writer. Directed and co-wrote
the Oscar-winning film Iris. After ten
years in regional theatre in Leicester,
Edinburgh and Nottingham, became
Director of the Royal National
Theatre from 1988 to 1997, directing
27 productions and producing over
100 more. Series producer of BBC

Baroness Hogg BBC Governor since
February 2000. Member of the Audit
Committee, the Fair Trading Compliance
Committee and the Remuneration
Committee. Sarah Hogg is nonexecutive Chairman of 3i Group plc
and Frontier Economics. She is adirector of GKN, Carnival Corporation
and Carnival plc. She is also a memberof the House of Lords Economic
Affairs Committee. Made a life peerin 1995. Born in 1946.

Professor Merfyn Jones The BBC’s
National Governor for Wales since
January 2003. Member of the Councils
and Advisory Bodies Committee.
Historian and broadcaster. Professorof Welsh History at the Universityof Wales, Bangor, specialising in themodern and contemporary historyof society and politics in Wales.
Since 1998 he has been Pro-Vice
Chancellor of the University. He is
also the author of a number ofbooks and articles. Born in 1948.
Professor Fabian Monds CBE
The BBC’s National Governor for
Northern Ireland since August 1999.
Member of the Programme
Complaints Committee, the Fair
Trading Compliance Committee
and the Councils and Advisory
Bodies Committee. Specialist incommunications and information
systems. Chairman of Invest
Northern Ireland and of theNorthern Ireland Centre for Trauma
and Transformation in Omagh. Former
Pro-Vice Chancellor of the University
of Ulster. Founding partner of Medical
and Scientific Computer Services
Limited and WesternConnect
Limited. Born in 1940.

Dame Pauline Neville-Jones DCMG
BBC International Governor since
January 1998. Chairs the Audit
Committee and the Governors’
World Service Consultative Group.
Member of the Programme
Complaints Committee and theRemuneration Committee. Chairmanof QinetiQ Group plc and Chairmanof the Information Assurance
Advisory Council. From 1996 to2000 she worked for NatWest
markets and its corporate advisoryarm, Hawkpoint Partners. A career
member of the Diplomatic Service
from 1963 to 1996, including a fiveyear secondment in Brussels andthree years as Political Director in
the Foreign and Commonwealth
Office. Born in 1939.
Angela Sarkis CBE BBC Governor
since October 2002. Member of theProgramme Complaints Committee.
Independent consultant; nonexecutive director on the
Correctional Services Board at
the Home Office; a member of
the Interim House of Lords
Appointments Commission, andAdviser to the Department for
Education and Skills on teacher
workload management. Chair of
the NCVO Diversity Project; amember of the Active Community
Unit Advisory Panel at the Home
Office, and Vice-President of theAfrican Caribbean Evangelical
Alliance. A chief executive of the
Church Urban Fund from 1996
to January 2002. From 1996 to
July 2002 she was a trustee of
BBC Children in Need. Born in 1955.

The Board of Governors, from left
Standing: Lord Ryder, Baroness Hogg,
Professor Fabian Monds, Dermot
Gleeson, Angela Sarkis, Sir Robert
Smith
Seated: Dame Ruth Deech, Ranjit
Sondhi, Gavyn Davies, Professor
Merfyn Jones, Dame Pauline
Neville-Jones

Sir Robert Smith The BBC’s
National Governor for Scotland
since August 1999. Chairman of theProgramme Complaints Committee
and member of the Audit
Committee, Property Committee
and Councils and Advisory Bodies
Committee. Chairman of BBC
Children in Need trustees. Chairmanof the Weir Group from July 2002
and member of the Board of the
British Council. Formerly Chief
Executive and Vice-Chairman ofDeutsche Asset Management;a director of the Financial Services
Authority, and Chairman of theBoard of Trustees of the National
Museums of Scotland. Born in 1944.
Ranjit Sondhi CBE BBC Governor
since August 1998 with special
responsibility for the English Regions.
Chairman of the English National
Forum and Councils and Advisory
Bodies Committee and memberof the Programme Complaints
Committee. Senior Lecturer at the
University of Birmingham’s Westhill
College.Trustee of the National
Gallery and Chairman of the Heartof Birmingham Primary Care Trust.
Former Deputy Chairman of theCommission for Racial Equality andformer member of the Independent
Broadcasting Authority and theRadio Authority. Born in 1950.

Roger Jones OBE served as the BBC’s
National Governor for Wales from
December 1996 until the expiry of his
term of office in December 2002.
Sir Anthony Young served as a BBC
Governor from August 1998 until the
expiry of his term of office in July 2002.

Running the BBCThis report explains how the BBC delivered its
public service remit in 2002/2003.The BBC’s Board ofGovernors ensures that it does so by setting key
objectives, approving strategy and policy and monitoring
and assessing performance.
The Governors’ assessment of the BBC’s performanceagainst the objectives set by them for 2002/2003
can be found on pages 8 to 15, while pages 20 to 53
provide an account of how BBC channels and services
have delivered the BBC’s public purposes over the year.
The Governors also safeguard the BBC’s independence
and ensure compliance and public accountability.
Fair trading, effective management and compliance withlegal obligations and editorial guidelines are key areas;
detailed reports can be found on pages 68 to 81 andin the Broadcasting facts and figures section on pages
122 to 131.The BBC’s audited financial statements areon pages 85 to 121.The Governors also undertake avariety of activities to ensure that they are in touch withthe views of audiences.This year the focus was on tasteand decency, the relevance of BBC news and current
affairs output, ensuring that proper account is taken of
the views of Asian audiences, and the public purposesof BBCi. Reports are provided on pages 58 to 63.
The Governors appoint the Director-General and, withhim, other members of the Executive Committee, anddetermine their remuneration.The policy on Executive
Committee remuneration is set out in detail on page 77.
The Director-General is the BBC’s chief executive andeditor-in-chief. BBC operations are run by the directorsof nine programming and broadcasting divisions and fiveprofessional services, and by the chief executives of theBBC’s commercial services.They report to the DirectorGeneral and, together, make up the Executive Committee.
This proposes key objectives, develops strategy andpolicy in the light of set objectives, and operates allservices within the strategic and policy framework
approved by the Governors.

Below: Sir Richard Eyre

Annual Report and Accounts 2002/2003 5

Summary of the year

In 2002/2003 the BBC:an additional £346million on UK programmes and• Spent
services as a result of increased income and savings
licence fee collection and reduced evasion,• Improved
increasing income by £54million
more public service programmes through a• Funded£124million cash return from its commercial subsidiaries,
which also contributed to reductions in support costs• Reduced overheads to 13% from 24% three years ago
86% of transmitted programme spend on analogue• Spent
services■ Analogue transmitted
programme spend £1,756m■ Digital transmitted■■■■

programme spend £280m
Programme related spend £343m
Overheads £346m
Licence fee collection costs £146m
Transmission costs £141m

These figures are explained in more detail on page 95

Programme spend by genreChildren£118m

Speech – Local radio£122m(including Nations)Music and arts

£177m

Sport

£416m

Spend on local televisionand radio in the Nations
and English Regions
In addition to the local
spend shown below,£325million was spentoutside London on
network televisionand radio
Northern
Ireland
£58m

Drama

£356m

Scotland
£100m
Wales

Factual and learning£329m

Entertainment

£381m

£97m

English Regions£208m

Total: £463m
News

£479m

Total: £2,378m

6 Annual Report and Accounts 2002/2003

-------------------------------------In 2002/2003 the BBC:>

Made progress on extending the range and distinctiveness of its output with new strategies for arts, politics, current affairs and religion>

Achieved a record approval score of 7.1 out of 10 in January 2003 and an average of 6.8 over the year (see approval chart below)>

Completed its portfolio of services, launching the remaining 4 of 9 new digital services>

Provided audiences with cheap, easy access to digital terrestrial services through its partnership in Freeview – by the end of March retailers
had sold over 680,000 Freeview boxes and more than 1.4 million homes could receive DTT broadcasts>

Reached 92.7% of the population with its services. People spent an average of 21 hours 16 minutes a week with BBC television andradio – 44.4% of their viewing and listening and 24.2% of their leisure time (see weekly reach chart below)>

Attracted an average of 38% of all UK adult internet users to BBCi on the web, with a record 43% in March 2003.The number of BBCiinteractive television users also continued to rise (see BBCi chart below)>

Maintained BBC One’s share of viewing, increased BBC Two’s, and continued BBC Radio’s outstanding audience performance (see share chart
below). BBC Radio 2 remained the most popular radio station in the UK, ending the year with over 13 million listeners a week and a 15.7% share>

Averaged 5.7 million viewers for the 6.30pm regional television news – the most popular news programme in the UK>

Established a Global News division, bringing together all the BBC’s international news services

2

20

2

30
20

0

0

2002/2003
2001/2002

Television 2002/2003
Television 2001/2002
Radio 2002/2003
Radio 2001/2002
Combined television and radio 2002/2003
Combined television and radio 2001/2002

Source: National broadcast survey

010

Source: 1BMRB Access (monthly reach)
2Interactive television tracking study (monthly reach)

Source: BARB, TNS/Infosys, RAJAR, age 4+,
average 15-minute weekly reach for the year
See glossary page 133 for an
explanation of the measuresused here131
televisionawards0

BBCi on the internet 2002/20031
BBCi on the internet 2001/2002
BBCi interactive television 2002/2003 2
BBCi interactive television 2001/2002

11.2
11.1

4
3.7

40

6.2

63.4
63.5

5.7

6.8

6

4

50.6

50
40

60

%

50.2

60

26.5
26.5

8

Millions of users

BBC share of viewing
and listening

39.1
38.6

10

80
6.8

6

%

100

8

BBCi on the internet andinteractive television use

8.3

Mean score out of 10

87.1
86.8

10

Weekly reach of
BBC services
92.7
93.0

Audience approvalof the BBC

Total BBC Television (including
digital channels) 2002/2003
Total BBC Television (including
digital channels) 2001/2002
BBC One 2002/2003
BBC One 2001/2002
BBC Two 2002/2003
BBC Two 2001/2002
Total BBC Radio 2002/2003
Total BBC Radio 2001/2002
Source: BARB, TNS/Infosys, RAJAR, age 4+,
average share for the year

81
radio
awards16
new media
awardsAnnual Report and Accounts 2002/2003 7

Governors’ assessment of performance

As Governors, we are responsible for judging how
effectively the BBC is fulfilling its public service remit.
We monitor the delivery of key objectives which we
set last year and assess the performance of every BBC
service against a published Statement of Programme
Policy. We are advised by a network of advisory
bodies across the UK and are supported by a team ofprofessionals, independent of BBC management.This is
our assessment of a year of strong BBC performance.

Objective 1: Underpin the BBC’s public service
remit by extending the range and quality of its
radio and television services, with a focus on
broadcasting more high-impact, memorable
programmes, particularly arts and current affairs.
This year has seen delivery of distinctive, high-impact andmemorable programming across the extended range ofBBC services on both radio and television. In response to
our previous concerns, arts programming on television is
showing strong signs of revitalisation.We are also pleased
to see new initiatives in current affairs.The main challenges
now lie in consistently achieving quality across all BBC
content and in the development of a strong, integrated
portfolio of services which complement each other.

We approved a new arts strategy for television to build onsome high-impact output this year including programmes
on Turner, Jane Austen, George Eliot and Vivaldi as well as
Rolf on Art and Peter Ackroyd’s Dickens.This year will see
further onscreen results, including a new arts strand, Imagine,on BBC One.
Current affairs programming has witnessed a revival during
the year with significant successes both in long-runningstrands like Panorama and experimentation in new formats
like Real Story. Event days running across the BBC’s services
focused on crime and Iraq and reached a total of more than
20 million people. A new peaktime current affairs series will
launch later this year on BBC Two. Radio too has had notablesuccesses with File on Four: Mothers of Dead Babies, The Cuban
Missile Crisis, With Us or Against Us and The Making of Saddam.
The recommendations from the politics review conductedlast year are now being implemented and, although it is too
soon to judge their overall success, we are satisfied withthe ambition of the new programming to engage a wider
audience in politics. Some of the early signs are positive
with the Politics Show recording a 25% increase in audience
compared with its predecessor, On the Record.
Over the next year, we expect BBC One and BBC Two
to work more closely together on scheduling to avoid bothchannels showing programmes of the same genre at thesame time. In addition, we welcome the fact that BBC Two
will change its peaktime mix to make its offer more
distinctive, mainly by reducing lifestyle programming.

Network radio has had an excellent year. BBC Radio 4 wasvoted Sony Station of the Year and for the first time its
audience reach exceeded 10 million. It has also been aparticularly good year for BBC Radio Five Live with the
football World Cup and the Commonwealth Games inManchester. Overall, BBC Radio ended the year with a weekly
audience reach of 67.9% and achieved an average approval
Objective 2: Strengthen the BBC’s digital services,score of 7.8 out of ten across all of its services.
to ensure that the overall portfolio has somethingof value for everyone, provides a wide range ofThree years ago, we approved a large increase in investment interactive learning opportunities and helps to drivein BBC Television in direct support of this objective and thedigital take-up.
schedules during this year have reflected the impact of that
increase. Real improvements have been achieved on BBC
Following the strengthening of the BBC’s digital services,
One and BBC Two schedules with strong performances
which we believe will help to drive digital take-up on bothacross genres. Highlights include Great Britons, Moses, The Fall radio and television, attention now needs to focus onof Milosevic, Stephen Poliakoff ’s The Lost Prince, The Gathering
making the portfolio work effectively for audiences, andStorm and The Office, as well as outstanding coverage of live
on further developing the range of interactive learning
events like the Jubilee celebrations.
opportunities on television.

Far left: Niclas Fasth lining up a putt
at the 34th Ryder Cup at The Belfry.
Left: Rolf Harris portrayed himself
as Toulouse-Lautrec in his second
series of Rolf on Art.
Right: Allan Little in Havana where he
explored the Soviet and Cuban sides
to the story of the missile crisis on
its 40th anniversary for BBC Radio 4.

8 Annual Report and Accounts 2002/2003

2002/2003 has been a landmark year with the launch of the
final elements of the digital portfolio developed by the BBC
in 2000 and subsequently approved by the Secretary of State.
We commend the significant effort made to launch BBC Threeand three digital radio networks to complete the BBC’s digitaloffering of eight television and ten radio networks.
There have been some notable successes.The BBC’s digitalonly television services now reach 35% of digital households
compared to 23% last year, and the digital radio networks
are already listened to by a larger audience than anticipatedwith listeners tuning in via digital television and the internet.
CBeebies, which launched in February 2002, has establisheditself as the leading children’s channel in the UK. While otherservices have taken longer to establish themselves, thesechannels are being launched into a competitive market andwill need several years to build audiences. We will monitor
their cost and performance closely as they develop further.
A highlight of the past year has been the BBC’s commitment
to the future of digital terrestrial television through the launchof Freeview. Over 680,000 digital terrestrial boxes were soldby retailers between Freeview’s launch in October and theend of March, bringing the total number of homes capableof receiving digital terrestrial television to 1.4 million.
Encouraging progress has been made in the developmentof interactive learning services. 37 new interactive services
were launched around television output such as The Lifeof Mammals, compared with five the previous year.The
BBC’s broadband television trial in Hull has successfully
demonstrated how locally-focused television services canbe delivered in a digital environment.The Digital Curriculum,the BBC’s online curriculum service, which was approvedby the Government in January, will bring our digital learning
ambitions to fruition.
We look forward to the Government’s review of the
purpose and role of the BBC’s online services in the lightof their success to date.
Improving awareness and audiences for the new digitalchannels is a priority, and for this reason we have included an
extra element in this objective for the year ahead. Objective
2 (2003/2004): Strengthen the BBC’s digital services, with theaim of providing something of value for all digital audiences.
Above right: Ross Boatman as JMW
Turner in a dramatised biography of
Britain’s greatest landscape painter.
Right:Tamzin Outhwaite and Danny
Young in the drama Out of Control,
part of the Cracking Crime day.
Left: The Life of Mammals website
attracted 300,000 page impressions
a week.

Annual Report and Accounts 2002/2003 9

Governors’ assessment of performance

In particular provide a wide range of interactive learning
opportunities and help to drive digital take-up by extending
the availability of the services and focusing on cross-channel
commissioning and scheduling.

Objective 3: Bring younger audiences to BBC
services by developing bold and innovative
programmes and content with a particular focus
on making the BBC’s news and current affairs
more relevant and engaging for this group
without diminishing the BBC’s commitment toparliamentary reporting.
New services and programming have been launched foryounger viewers and we will be monitoring closely the
progress of these initiatives over the coming year.
Significant effort has been made over the last year to try
to reverse the long-term fall in consumption of the BBC’s
services amongst under 35s by launching two new targeted
services, BBC Three and 1Xtra.The early signs are promising.
BBC Three, which has substantial public service commitments,
is already reaching a wider audience than BBC Choice which
it replaced in February 2003. We are committed to giving thisnew channel time to experiment with content and formats
and build audiences.
Work has begun to engage younger audiences with news
and current affairs as part of the BBC’s public service remit.
The genre features at the heart of all services targeted at thisaudience, differentiating them from commercial alternatives.
The BBC is experimenting with innovative formats for BBC
Three’s The News Show and 1Xtra’s TX using experience
gained from BBC Radio 1’s Newsbeat.That said, people inpublic workshops we held across the country often say thatthey are more concerned about the relevance of the content
than formats. Over the next year we will be able to determine
whether these views are borne out by behaviour.
BBC News online is now a vital part of the BBC’s news andcurrent affairs portfolio and is particularly successful at reaching
younger people. As younger audiences turn away fromtraditional media, the BBC has a responsibility to exploit thepotential of new technologies to engage them via new media.

Right: Jamaica 40 season celebrated
on BBC television and radio.
Far right: BBC Radio 1 live, loud andcrowded.

10 Annual Report and Accounts 2002/2003

It is too soon to judge whether the BBC is managing tobring younger audiences to political programming. Following
our approval of a new politics strategy in September 2002,
we look forward to new programming which is being
targeted at under 35s in 2003/2004. We recognise the scaleof the challenge the BBC faces in common with the rest of
the media world in trying to connect younger people with
politics but the BBC has a public service duty to persevere.
New and existing output, such as The Daily Politics and This
Week, has enabled the BBC to maintain its commitment toparliamentary reporting.
Looking ahead, we will be closely monitoring the developmentof the new services, output and initiatives developed to try
to achieve this objective.The programming needs to be
relevant and engaging for this audience while upholding theBBC’s editorial standards.

Objective 4: Continue to seek new ways of attracting
audiences from the UK’s ethnic minorities, throughboth mainstream and targeted services.
New services and initiatives are being put in place, but
it will take time and increased marketing effort to realise
the benefits.
The BBC has launched two nationwide radio services aimed
at ethnic minorities, a segment of the audience that the BBC
finds harder to reach via some of its established radio
networks. Six months after its launch as a nationwide digital
service, BBC Asian Network has almost tripled its weekly
reach to 433,000. While audiences to 1Xtra cannot bemeasured accurately yet, evidence suggests that the networkis already attracting a wide-ranging audience of young fans ofblack music via the internet and digital television. One of BBC
Radio’s biggest ongoing challenges is to serve ethnic minority
listeners in London, an area where 46% of the UK’s ethnic
minorities live.
Eight Race in the Media awards and seven EMMA awards
over the last year reflect the BBC’s efforts to cater for ethnic
minority interests in targeted programming as well as in an
increasing range of more mainstream programming, such as
Babyfather and the Jamaica 40 season. Extensive efforts have

been made by the BBC this year to understand ethnic
minority audiences better and we look forward to more
output that serves cross-cultural interests, recognising its
value in promoting understanding between segments ofsociety. But we also recognise the challenge of getting theright balance of programming to cater for the full range of
ethnic minority audiences.

improvements particularly pronounced in Wales andNorthern Ireland. Our independent advisory bodies made it
clear that they judged the improvement in approval to be adirect consequence of the deployment of increased spendingon targeted programming and services over the last two
years.The appeal of BBC One has been strengthened inWales, Northern Ireland and Scotland through increased
investment in non-news programmes, including drama andFurther progress has been made in increasing ethnic minority comedy reflecting local culture. A branded zone on the digital
portrayal in mainstream programming on television and radio. version of BBC Two in Wales and Northern Ireland (BBCA significant proportion of the cast of Holby City are from
2W and BBC Two NI respectively) has provided a venue forminority ethnic groups, as are presenters on all services
creativity and experimentation.
aimed at younger audiences, reflecting the relatively younger
profile of the ethnic minority population. BBC Three is
Inside Out, a new regional current affairs programme for BBC
committed by its remit to bringing a diverse range ofOne, was launched in all 11 English Regions in September
presenters and talent to screen.
2002 and has substantially boosted the audience for regional
current affairs.The BBC’s commitment to well-funded regional
It is disappointing that, despite these efforts, there is little
television news programming continues to meet audienceevidence so far that the BBC is attracting more people from needs. BBC local news programmes outperformed local
ethnic minorities to its output.The reach and share of bothcompetition in all but three areas of the UK. Regional and
BBC Radio and BBC Television amongst ethnic minorities has national audiences’ political interests are also being served bydecreased slightly. Radio’s reach fell from 46.9% to 45.2% and the 20-minute opt-out during the Politics Show, the BBC One
television’s from 78.6% to 78.3%. Awareness of both BBC
replacement for On the Record.
mainstream and targeted programming amongst ethnic
minorities remains low. Moreover, the BBC also faces intense Local and national radio have continued to perform strongly,
competition for this audience from the huge range of nichewith audience weekly reach hitting 11.1 million during thecommercial services. We recognise that it will take time toyear, its best ever reach figure. BBC Radio Wales and BBC
turn around perceptions of the BBC and its output amongst
Radio Scotland performed particularly strongly, with BBC
ethnic minorities. Marketing campaigns this year haveRadio Wales achieving its highest weekly audience ever. BBC
demonstrated that awareness can be improved with clearerRadio Ulster/Foyle still reaches relatively more radio listeners
signposting to programming of potential interest.
than any of the BBC’s national radio services.

Objective 5: Ensure that the BBC is meeting theneeds of audiences in all nations and regions of
the UK.
Following consultation with the Broadcasting Councils
for Scotland,Wales and Northern Ireland and the English
National Forum, we conclude that the strategy agreed
with them in autumn 2000 is enabling the BBC to deliverconsiderably improved programming and services toaudiences across the UK.

Connecting with local communities via new media has beena focus of the year and a key part of the BBC’s public service
remit. Last year saw the number of Where I Live sites rise to
55 providing the BBC with a local web presence in all areasof the UK and improving the BBC’s connection with local
communities, particularly the younger segments. Four new
Open Centres and eight new BBC buses offering internet
training and other learning opportunities are also helping local
communities to connect with the BBC.

Audience approval of the BBC has risen in Scotland, Walesand Northern Ireland, and across the English regions, with
Left: Reporting Scotland, with (l to r)
Sally Magnusson, Jackie Bird andDavid Robertson, is Scotland’s mostpopular television news programme.
Right: Fame Academy winner David
Sneddon and runner-up Sinead
Quinn celebrate with a duet.

11Governors’ assessment of performance

The BBC recognises and is committed to its public service
role to provide indigenous language programming. BBC Radio
Cymru has seen a small growth in its reach and share overthe last year in line with the increase in the Welsh-speaking
population identified by the 2001 Census.

bringing benefit to the people we serve.The values are set
out in full on the inside front cover of this report.

Independent research by MORI shows that understanding
among BBC staff of the BBC’s purpose and values has
increased year on year.This same survey showed that
The BBC still faces a number of challenges in trying to serve corporate level communications from the BBC’s top team
all audiences across the UK. We note that efforts to develop also scored highly, putting the BBC among the top ten
companies in four out of six measures. However, otherlocal drama in Scotland and Wales have yet to attract
consistently high audiences but we recognise that it takes time measures in the MORI research, such as how valued the staff
for these initiatives to deliver results. While the BBC’s national feel, and how collaborative the organisation is, while improving,
and regional news output is performing strongly, compared to show there is still much to achieve. For real change to takeother news sources, the general decline in early evening news root, there will need to be more tangible results from the
Making it Happen initiative in the coming year.
audiences will be a growing challenge and we look forward
to other initiatives to try to address this.
For the year ahead, the BBC has in place a major change plan
to implement the new values across the BBC. With this inmind, we have changed the emphasis of this objective to
Objective 6: Make the BBC feel a more creative,
focus directly on Making it Happen. Objective 6 (2003/2004):
collaborative and exciting organisation, in which
Implement the recommendations of Making it Happen,
all staff fully understand its purpose and values.
particularly around values and leadership, in order tomake the BBC a more creative, collaborative and exciting
The main vehicle for delivering this objective has been theorganisation in which all staff fully understand its purpose
Making it Happen initiative launched in early 2002, withand shared values.
the aim of bringing about fundamental cultural change
within the organisation over a number of years. Despite thedifficulty of assessing cultural change, we are satisfied that a
Objective 7: Ensure that the BBC is morehuge challenge has already been met in generating interest
representative of the audiences it serves.
and involvement in this project, and in increasing staff
In particular:
understanding of the BBC’s purpose and values.We agreewith the Executive that it will be vital to maintain momentum ● accelerate progress towards the BBC’s target
over the year ahead to deliver tangible results bothof 10% of its total workforce and 4% of seniorfor BBC staff and for our audiences with even better
management coming from ethnic minorities
programmes.
by December 2003
● increase the proportion of people with
The year saw the beginning of Making it Happen in practice.
disabilities working for the BBC
One early success was establishing Upfront, an innovative
four-day induction course for all new staff aimed at
The BBC is on track to achieve the targets for ethnic
understanding the BBC’s purpose and values. By the end
minorities but further effort is needed to improve theof March 2003 more than 2,250 people had attended. In
representation of people with disabilities.
addition, through a series of consultation sessions, 10,000
staff participated in shaping a vision of the future of the BBC. The BBC hit its 4% target for ethnic minorities in senior
Six core values emerged during this process which not only
management a year early in December 2002, reaching 4.3%
emphasise collaboration, respect and creativity, but also put
audiences at the heart of what the BBC does and strive for
quality and value for money, and trustworthiness. We fully
endorse the implementation of these values as a means of
Left: Getting close to local
communities – Digital Storytellingin Wales.
Right: Hugh Dancy, Romola Garaiand Hugh Bonneville in the classic
period drama Daniel Deronda.

12 Annual Report and Accounts 2002/2003

by March 2003, and we are optimistic that this progress canbe maintained.The proportion of staff from ethnic minorities
at senior management feeder grades is even higher, standingat 6.4% in March 2003.
The proportion of ethnic minority staff across the organisation
as a whole has increased to 9.5%, from 8.9% at the beginningof the year, and it is hoped that the BBC will achieve thetarget of 10% by December 2003. Significant efforts havebeen made to attract ethnic minorities to the organisation
through a wide range of recruitment campaigns and outreach
initiatives. Over the last year The Writers’ Room has run writing
masterclasses, competitions and development projects withbudding writers from a diverse range of backgrounds acrossthe country. Overall 14% of applications to the third year of
BBC Talent came from ethnic minorities and we hope it willbear fruit in future years.
The proportion of staff declaring a disability has fallen slightly
over the year from 1.8% to 1.6% by March 2003. Unofficiallythe actual figure may be higher than this since there is a
widely acknowledged unwillingness of some staff who aredisabled under the Government’s new definition to declaretheir disability. While we still look to management to improve
the representation of disabled people, there are encouraging
indications of progress.The BBC has an access strategy inplace and is seeking to improve recruitment of people withdisabilities through targeted advertising in the disability press.
It was also named Diversity in Employment Champion at the
British Diversity Awards last November for its Extend
disability work placement scheme.
We recognise that only if the BBC’s programme making,commissioning, scheduling and marketing divisions are
representative of the audience they serve, can the BBC hope
to connect with its entire audience.The What’s Your Problem?
season of disability dramas and documentaries on BBC Twodemonstrated how complex subjects could be tackled onscreen and provided a showcase for disabled actors.

Objective 8: Continue to increase the amountof money available to spend on the BBC’s public
services with a particular focus on:● increasing the cash flow to the BBC from
improved licence fee collection

increasing the contribution of the BBC’scommercial subsidiaries to its public services● further reducing overheads● improving efficiency in programme production
whilst maintaining quality of output●

We are satisfied that large steps have been taken to
progress this objective. Over the next year, programme
production costs need to be benchmarked to determine
if further efficiencies are achievable.We have also agreed
with the Executive to look for ways to conduct a thoroughreview of effectiveness-based, value for money measuresof BBC performance.
Considerable effort has been made over the past year toincrease the amount of money available for programme making.
Progress has been made in improving the efficiency of licencefee collection through lower collection costs and reducing
evasion to 7.2%. During the financial year, gross licence fee
income has increased by £126million of which £54million was
raised through improved licence fee collection. In April 2000,
a target of 15% was set for overheads as a proportion of
output spending.This was met in March 2002.This year the
BBC has reduced the cost of overheads still further.They now
account for 13% of output spend compared to 24% in 1999.
The BBC’s commercial subsidiaries contributed £147million
back to the BBC in 2002/2003, up from £142million in theprevious year, of which £124million was in cash and£23million was generated by savings in support costs. Only
BBC World, the BBC’s global television news service, has yet
to generate a positive cash flow. It is targeted to break evenby 2006.
This report documents how the BBC’s licence fee income
has been distributed – by genre and by channel.The levelof funding of the services is scheduled to stay broadly thesame until 2007. It is timely now to conduct a thoroughbenchmarking exercise to ensure that the BBC’s programmecosts are justified in relation to the value and quality of its
programmes, as compared with other broadcasters.
We will endeavour, over the next year, to go beyond themeasurement of unit cost, developing valid and readily
comprehensible ways of measuring the value of BBC
programmes and services to the licence payer, both as

Left: Don’t give up – The Writers’
Room talent scheme helped 5,000
people.
Right: Christopher Eccleston andPeter Kirby in Flesh and Blood, partof BBC Two’s What’s Your Problem?
disability season.
Far right: Sinners, a powerful dramafrom Northern Ireland.

Annual Report and Accounts 2002/2003 13

Governors’ assessment of performance

consumer and as citizen, with particular reference to theBBC’s public service remit. For this reason, we have changed
the emphasis of this objective to include effectiveness as wellas efficiency. Objective 8 (2003/2004): Continue to increase
the amount of money available to spend on the BBC’s public
services by enhancing the efficiency and effectiveness of theway the BBC operates.

The BBC’s system of governance and accountability has beenmodernised over the past year to ensure we are able to fulfil
our regulatory functions. An independent team now supports
us in monitoring the delivery of the BBC’s public interest
remit. Last year’s Annual Report was subject to Parliamentary
Select Committee scrutiny on the day of publication, making
the BBC the only public body to enter into such open public
consultation.

Objective 9: Earn greater appreciation from UK
audiences for the BBC as an open, creative andtrusted public service organisation.

We are aware that research among MPs reveals that the BBC
does not command equal confidence across the political
spectrum. We receive regular reports providing reassurance
that the BBC is impartial. Enhanced quarterly reports on the
BBC’s impartiality will in future enable us to assess this issueeven more rigorously (see page 80).

There has been an improvement in the BBC’s standing with
its audiences, driven by appreciation of the BBC’s values
and brand.The BBC is consistently the most trusted
broadcaster in public surveys.Although much work has
been done to gain credit for increased openness, there
still remains some scepticism, particularly among opinion
formers, as to whether the BBC has done enough.

The BBC attaches great importance to its role as a corporate
citizen. 2002/2003 saw the launch of the BBC’s Corporate
Social Responsibility Centre with the function of coordinating
all CSR initiatives across the BBC.These include large-scalecharity events such as BBC Children in Need and Sport Relief
2002/2003 has seen a continuation of the upward trend inas well as a range of community and voluntary work
the BBC’s approval rating from all parts of the UK. On a scale undertaken by BBC staff across the country. For more detailsof one to ten, the BBC averaged 6.8 throughout the year,
on the activities of the Corporate Social Responsibility
peaking at 7.1 in January, the highest score since the measure Centre see pages 64 to 66.
started. In addition, independent industry research by the
ITC/BSC demonstrated that the BBC is the most trusted
For the coming year, the BBC faces some key challenges,
news provider. In answer to the questions “Who do you trust particularly in terms of perceptions of its openness. It must
to tell the truth?” and “Are news providers impartial?”, theensure the BBC’s governance arrangements work well withBBC scored more highly than all other broadcasters.
the new regulator Ofcom; enhance the BBC’s accountability
to Parliament; increase accessibility, and demonstrate even
Substantial success has been achieved over the past year
more actively our commitment to corporate citizenship.
in making the BBC more accessible to the communities
it serves.There has been improved dialogue with audiences
through a series of public accountability seminars and events Objective 10: Build on the impact made by thewhich have focused on taste and decency, news and current
BBC’s global news services in the past year throughaffairs, and on BBCi.The number of contacts made by thea coordinated global news strategy across radio,
public to the BBC rose to almost 2.5 million and 90% of
television and new media.
those rated the BBC’s customer service as excellent or very
good.There is still room for improvement in the way
2002/2003 saw the formation of a new division, BBC World
feedback and complaints from audiences are handled within
Service & Global News, bringing together under one
programme departments and a review of this process is
now under way.

Left: DJs Rampage in the
new digital studios of 1Xtra.
Right: Meera Syal with
Jimi Mistry in The Kumars at No.42.

14 Annual Report and Accounts 2002/2003

management all the BBC’s international news offering onradio, on television and online. In addition, we approved acoordinated global news strategy as central to the BBC’s
reputation and brand abroad. BBC coverage of the war in
Iraq demonstrated the heightened impact of that strategy.
All international services responded outstandingly, resulting
in large increases in audiences for BBC World, and a hugerise in use of the BBC’s international website.

interactive debates with audiences. One of the aims for theyear ahead will be to develop such joint initiatives further
to the benefit of all BBC services. We look forward to thefull implementation of the global news strategy which will
strengthen further the BBC’s impact and reputation abroad.

BBCi launched an international-facing news site last July, whichenables international online users to access stories moreeasily. Online traffic has increased by over 200% in the past
year with 227.7 million page impressions recorded in March
2003 for the combined international-facing site in English
and BBC World Service’s language sites. Much of that growthis attributable to the war in Iraq, so the challenge for the year
ahead will be both to maintain that growth and to build
awareness of the BBC’s new media offer.

Upholding editorial standards
The Governors ensure that the BBC maintains high editorial
standards, monitoring its compliance with the BBC Producers’
Guidelines and with the Code on Impartiality and Accuracy
included in them. Overall, we were satisfied that in 2002/2003
the BBC had met the standards expected of it (see page 80).

Performance against the BBC Statements ofProgramme Policy 2002/2003
In July 2002 the BBC published its first set of Statements
BBC World Service celebrated its 70th anniversary inof Programme Policy, explaining how it planned to deliver
December with 14 hours of live broadcasting culminating in a its public service remit in 2002/2003.The Statements were
special birthday lecture given by the United Nations’ Secretary based on the objectives we set for the year.
General, Kofi Annan. His personal testimony reflected BBC
World Service’s reputation as the international broadcaster
Performance against the Statements includes the quality,
most recognised for trust and objectivity. In an increasingly
range and distinctiveness of programmes and content.
competitive radio market, BBC World Service has maintained The Review of services in this Annual Report (on pages 20
its 150 million weekly listeners but, as short-wave listening
to 49) describes what each service has delivered.
declines, it faces the continuing challenge of building evermore partnerships with FM rebroadcasters across the world. In addition,The BBC Statements of Programme Policy
2002/2003 included a number of measurable commitments
The commercial television service, BBC World, has seen
in key areas. A report on performance against these isa 25% increase in distribution in the past year. It is now
included on page 122.The vast majority of the measurable
available in 255 million homes in more than 200 countries
commitments has been achieved.
and territories, of which over 100 million homes have
24-hour availability. A new business plan for the channel,
We consider that overall the BBC’s contribution to public
approved by the Governors and Fair Trading Complianceservice broadcasting in 2002/2003 delivered the ambitions
Committee, aims for the channel to break even in 2006.
set out in the Statements.
This year the channel was on budget with a £15million loss.
During the war in Iraq, BBC World dramatically increased its
The BBC published Statements of Programme Policy
distribution and built its reputation, particularly in the United 2003/2004 in April this year. Next year’s Annual Report andStates, but, at the same time, it lost revenue as a result of
Accounts will report on performance against them and on
reduced advertising during the conflict.
further progress on the BBC’s objectives.

Joint editorial initiatives such as Talking Point, aired across all
three platforms, have engaged international figures suchas Hamid Karzai, Aung San Suu Kyi and Tony Blair in global

Our oversight of impartiality included introducing quarterly,
rather than half-yearly, reporting and the introduction ofassessment by independent external experts. Over the nextyear, we will undertake more work to satisfy ourselves that
BBC output continues to meet the highest standards ofimpartiality.
Far left: Nick Woolley in southern
Iraq in March 2003.
Left: David Dimbleby leads the BBC
One debate, Iraq – Britain Decides.
Right: Inside Out Midlands presenter
Ashley Blake.

Annual Report and Accounts 2002/2003 15

Director-General’s review

BBC Radio is playing a catalytic role in the take-up of digitalradio with five new stations: BBC Five Live Sports Extra,
6 Music, 1Xtra, BBC Asian Network and BBC 7. Digital radio
has started to come of age this year with many more listeners
via the internet and digital television. Analogue BBC Radio has
enjoyed yet another extraordinary year, winning over 53% of
the available audience in the first quarter of 2003 . BBC Radio4, the UK’s biggest investor in new radio drama, broke records
again and won the Sony Station of the Year award, while BBCRadio 2 firmly remains the nation’s most popular radio station
with over 13 million listeners a week.

In the 12 months between February 2002 and February
2003 the BBC launched more new national services thanin the previous 80 years: in all we launched four national
television channels and five national radio stations. It was aremarkable achievement that all were launched successfully,
on time and were of high quality.These new channels fulfilled
the BBC’s commitment both to extend choice for licencepayers and to promote the development of digital Britain.
Among the new television channels were two, CBeebies and
CBBC, which have taken first and fifth place respectively foraudience share among children’s channels, within 12 monthsof going on air, by offering distinctive British-based content.
BBC Four has had a very successful first year, winning Royal
Television Society and documentary awards and reaching
more than 12 million viewers with its eclectic mix of arts,
drama, performance and current affairs.This year we also
secured consent from the Government to launch BBC Three,
aimed at younger adults. When we launched it in February
2003 it completed our new digital channel portfolio andsurprised many with the breadth and originality of its UKbased productions.

BBC Television is sometimes criticised for failing to produce
programmes of range and distinction but viewers must judge
for themselves. A revitalised and refreshed BBC One is now
established as Britain’s favourite channel and continues tolead ITV in audience share. In an Independent Television
Commission survey which asked viewers which channel theywould choose if they could only have one, BBC One cameout top for the first time. BBC Two leads innovation on British
television and, after a very successful year, is now introducing
more current affairs and arts programmes into peak viewing.
News, broadcast impartially and independently, is at
the heart of our public service remit. We have stuck tothese principles, often in the face of intense political andcommercial pressure, through a violent and uncertain period.
One measure of how much the public trusts and values thiscommitment is that 93% of the UK population used BBC
television, radio, text or online services in the first two weeksof the war in Iraq. Our news, current affairs and BBC World
Service journalists took great risks to bring impartial accountsof the conflict to the British public and audiences around theworld. Award-winning BBC cameraman Kaveh Golestan and
Kamaran Abdurazaq Muhamed, a Kurdish translator, were

Left: BBC World Affairs Editor
John Simpson was injured innorthern Iraq.
Above left: BBC Three launched in
February 2003, completing the BBC’s
portfolio of television services.
Above:The award-winning BBC
Sport campaign for the World Cup.

16 Annual Report and Accounts 2002/2003

both killed. John Simpson, Stuart Hughes, Craig Summers,
Fred Scott,Tom Giles and Dragan Petrovic were all injured.
We owe them all a great debt.
Bringing the UK together for times of great nationalcelebration is another of the BBC’s central purposes.The
summer of 2002 saw the BBC do just that and help create a
joyful national mood.The BBC staged classical and pop music
concerts from Buckingham Palace for the Queen’s Golden
Jubilee and captured the imagination of the public at home
and around the world, with more than 29 million people
watching our television coverage in the UK alone.The World
Cup 2002 and the Manchester Commonwealth Games
completed this happy summer counterpoint to the sometimes
solemn and formal nature of our unique national role.

Delivering value for money for licence payers and values forour staff are complementary objectives. Eighteen months ago
we launched Making it Happen with the ambition of making
the BBC the most creative organisation in the world. At thesame time we are engaged in driving down costs. On both
fronts we are making progress. We have reduced overhead
costs from 24% to 13% in three years and, partially as aresult of this, have increased programme investment by£616million over two years. In the past year 10,000 of ouremployees attended Just Imagine staff sessions, resulting ina series of initiatives including the publication of our six corevalues, which we believe will help make the vision of
a One BBC that serves and enriches all our lives a reality.

The first full year of increased investment in BBC Nations &Regions has seen a rise in approval for the greater range ofdistinctive national and regional programmes. We continue,
Greg Dyke
through our drama and current affairs programmes, to make Director-Generalsure we serve all audiences in the UK. BBC regional television
news programmes now outperform the commercial
competition in all but three areas of the UK and over theyear the 6.30pm BBC regional news has remained the mostpopular news slot on British television.
Letting audiences know about the wealth of BBC content
enables licence payers to get the most value from ourservices. Our award-winning marketing and communications
campaigns have often become talking points in themselves.
Important as connecting programmes to our audiences is, wehave also achieved a much greater understanding of our viewers
and listeners through our call centres and online forums.

Above: BBC Four’s broadcast of theworld premiere of Nicholas Maw’s
new opera Sophie’s Choice.
Left: Andy Kershaw and Verity Sharp,
BBC Radio 3 presenters for the2002 WOMAD festival.
Right: Balamory produced by BBC
Scotland for CBeebies.

Annual Report and Accounts 2002/2003 17

Executive Committee

Greg Dyke Director-General since
January 2000, having joined the BBC
as D-G Designate in November
1999. Previously Chairman and Chief
Executive of Pearson Television from1995 to 1999. Former posts include
Editor in Chief of TV-am (1983);
Director of Programmes for TVS(1984), and Director of Programmes(1987), Managing Director (1990)
and Group Chief Executive (1991) at
London Weekend Television. He has
also been Chairman of Channel 5;
Chairman of the ITA; a directorof ITN, Channel 4 and BSkyB, anda non-executive director ofManchester United FC.
Jenny Abramsky CBE Director ofRadio & Music since April 2000.
Responsible for BBC Radios 1, 2, 3, 4,
Five Live, Asian Network, 6 Music,
1Xtra, Five Live Sports Extra, BBC 7,
television classical music, Music Live,the BBC Proms and the three BBC
orchestras based in England.
Previously Director of Continuous
News; Director of Radio; Controllerof BBC Radio Five Live; Editor, RadioNews & Current Affairs, and Editor,
Today programme.

The Executive Committee,
from left
Back row: Alan Yentob,
Mark Byford, Jana Bennett,
Roger Flynn, Caroline
Thomson, Greg Dyke
Front row: Pat Loughrey,
Jenny Abramsky,
Peter Salmon

18 Annual Report and Accounts 2002/2003

Jana Bennett OBE Director of
Television since April 2002.
Responsible for the BBC’s output
on BBC One, BBC Two, BBC Threeand BBC Four and for overseeing
content on the UKTV joint venturechannels and the international
channels BBC America and BBC
Prime. Previously General Manager
and Executive Vice President at
Discovery Communications Inc.
in the US. Former positions include
Director of Production at BBC; Headof BBC Science; Editor of Horizon,
and Senior Producer on Newsnightand Panorama.
Glenwyn Benson Director, Factual &Learning since January 2003. Joint
Director, with Michael Stevenson,
March 2001– January 2003.
Responsible (until January 2003 withMichael Stevenson) for all generaland specialist factual programmes
and content, and learning for both
adults and children, across television,
radio and interactive media.
Previously Controller of Specialist
Factual programmes. Former
positions include Head of BBC
Science and Editor, Panorama.

This is a caption

Mark Byford Director of World
Service & Global News since
October 2001. Responsible for all
the BBC’s international news andinformation services across all media
including BBC World Service radio,
BBC World television and theinternational-facing online newssites. Previously Director of Regional
Broadcasting. Former positions
include Head of Centre, Leeds andHome Editor Television News.
Stephen Dando Director of
Human Resources & InternalCommunications since June 2001.
Responsible for all BBC people andorganisation issues, including staff
communications. Previously global
Human Resources Director at
Guinness Limited. Former positions
include Group Management
Development Director, Diageo,
and spells with UDV Europe, United
Distillers, Ferranti International andAustin Rover.
Andy Duncan Director of Marketing& Communications since June 2001.
Responsible for all the BBC’s
marketing, publicity, press and PR,

customer services and audience
research activities. Previously
European Director for Unilever’s
Food and Beverages division. Former
positions include UK Marketing
Director then European Marketing
Director with Unilever’s UK Foodand Beverages division and
Chairman of the Tea Council.
Carolyn Fairbairn Director ofStrategy & Distribution since April
2001. Responsible for strategicplanning and the distribution of BBC
services. Previously Director ofStrategy. Former positions include
Director of Strategy, BBC Worldwide
Limited; working in the Downing
Street Policy Unit, and for McKinsey
and Company.
Roger Flynn Chief Executive of
BBC Ventures Group Limited sinceJune 2001. Responsible for theBBC’s commercial media services
businesses: BBC Broadcast Limited,
BBC Technology Holdings Limited,
BBC Resources Limited and BBC
Vecta Limited. Previously Managing
Director of Prudential Retail. Former
positions include General Manager,

World Sales and Distribution, British
Airways and Commercial Director,
Virgin Communications Group.
Rupert Gavin Chief Executive of
BBC Worldwide Limited since July
1998. Responsible for all the BBC’scommercial consumer activities inhome markets and around theworld. Previously Managing Directorof BT’s Consumer Division. Former
positions include Director ofInformation, Communications andEntertainment for BT and Deputy
Managing Director of Dixons StoresGroup.
Ashley Highfield Director of New
Media & Technology since October
2000. Responsible for BBC internet
output, interactive television andnew platforms (broadband, mobileetc), the BBC’s technology portfolio,
technical innovation, and research anddevelopment. Previously Managing
Director of Flextech Interactive, thepay television company’s new media
division. Former positions include
Head of IT and New Media for
NBC’s European Channels.

Pat Loughrey Director of Nations &Regions since May 2000. Responsiblefor BBC programmes and services in
Scotland, Wales, Northern Irelandand the English Regions. Previously
Controller, BBC Northern Ireland.
Former positions include Head ofProgrammes and Head of
Educational Broadcasting for BBC
Northern Ireland, and teaching andbroadcasting in Ireland and Canada.
Peter Salmon Director of Sport
since November 2000. Responsible
for all BBC Sport activity across
television, radio and new media.
Previously Controller, BBC One,for three years. Former positions
include Director of Programmes at
Granada TV; Controller of Factual
Programmes at Channel 4, andHead of Features at BBC Bristol.
Richard Sambrook Director ofNews since March 2001. Responsible
for broadcast news operations andthe provision of daily news andcurrent affairs programming for all
UK-wide BBC television, radio andonline services. Previously Deputy
Director, News. Former positions

include Acting Director of Sport;
Head of Newsgathering, and News
Editor and Deputy Editor, Nine
O’Clock News.
John Smith Director of Finance,
Property & Business Affairs sinceApril 2000. Responsible for all BBC
finances including television licencecollection and property strategy.
AccountancyAge Financial Directorof the Year (2001). Previously with
British Rail Group, overseeing
de-mergers. Non-executive directorof Vickers plc until December 1999.
Member of the AccountingStandards Board.
Caroline Thomson Director, Policy& Legal Division (Director of Public
Policy, July 2000 – May 2003).
Responsible for the BBC’s main
policies in editorial, regulatory andcompliance areas, legal affairs,
government relations, corporatesocial responsibility and for thehandling of programme complaints.
Previously Deputy Director, BBC
World Service. Former positions
include Director of Strategy &Corporate Affairs, BBC World

Service; Commissioning Editor,
Science & Business at Channel 4
and political assistant to Roy Jenkins.
Alan Yentob Director of the Drama,
Entertainment & CBBC division sinceApril 2000. Responsible for all
creative output in these areas,
including BBC Films, and for talentmanagement across the BBC.
Chairman of the Institute ofContemporary Arts. Previously
Director of BBC Television;
Controller of BBC One and BBC
Two; Head of Music & Arts, andfounder Editor, Arena.
Michael Stevenson was Joint Director,
Factual & Learning from April 2000
until January 2003. He was responsible(with Glenwyn Benson) for all generaland specialist factual programmes andcontent, and learning for both adults
and children, across television, radio
and interactive media.

From left
Back row: Glenwyn Benson,
Rupert Gavin, Richard
Sambrook, Ashley Highfield,
Andy Duncan
Front row: Stephen Dando,
Carolyn Fairbairn, John Smith

Annual Report and Accounts 2002/2003 19

Review of services: Television

20 Annual Report and Accounts 2002/2003

Popular choiceThis has been a pivotal year for BBC Television as it
aimed to extend the depth, range and impact of its
programmes while establishing new free-to-air channels
as part of the BBC’s portfolio for the digital age.

BBC One is Britain’s mostpopular channel with thewidest range of programmesof any broadcaster.

focused on the channel’s unique role in covering major
events in UK life and on improving popular drama.
BBC One’s drama repertoire spanned period productions
like Daniel Deronda and The Lost Prince, modern political
intrigues such as The Project and satire like Jeffrey Archer –The Truth. Other highlights included the award-winning social
drama Out of Control, shown as part of the Cracking Crime day,and the successful debut of contemporary thriller Spooks andthe modern, Manchester-based drama Cutting It.

With more than half the UK population now able to view
multichannel broadcasts, BBC Television competes in a rapidlychanging broadcasting world.This year the BBC aimed to
improve range and distinctiveness with a stronger focus onarts across all the channels, the refreshment of politics andcurrent affairs, a new strategy for religion and more ambitious
Returning series that performed well included Born and Bred,
content on BBC One.The public responded positively
Judge John Deed, Red Cap, Murphy’s Law, Messiah andwith share of viewing and reach for the channel portfolio
The Inspector Lynley Mysteries. Long-running drama serial
improving in both analogue and digital homes.
EastEnders consistently provoked debate about subjects
rarely aired before the watershed. Casualty and Holby City
The launch of the digital terrestrial service Freeview inmaintained a substantial following as did Doctors in daytime.
November enabled the BBC’s new television services to be
Drama also played a key role as part of a wider initiative
received by those who previously did not consider digital toto improve BBC appreciation among Northern audiences.
be for them.The new digital channels can also be sampled
The exploits of the Geordie builders in a new series ofby analogue viewers on dedicated programme zones on
Auf Wiedersehen, Pet attracted audiences of over 10 million
BBC One and BBC Two.
viewers. Merseybeat brought in a well above average sharein the North West and attracted an average 6 million viewers
Delivering its ambitions means working with the widest
with a 25% audience share across the UK.
possible range of creative talent and developing better
relations with the UK’s independent producers, which BBC
Opening doors to new subjects that viewers might not
Television is actively undertaking.
ordinarily watch is the cornerstone of the BBC One arts
strategy. Landmark arts programming included a documentary
BBC Oneon the painter Turner, while the drama Daniel Deronda andOverall it was a strong year for BBC One. According to thefilm Mansfield Park were supported by documentaries on the
ITC/BSC survey The Public’s View 2002, BBC One is now
authors George Eliot and Jane Austen on whose work they
the channel most people would choose if they could havewere based. Rolf on Art attracted an average audience of
only one. Its share of viewing was less than 0.1% lower than
5.7 million for its second series.
last year despite the continuing growth of viewer choice
and it remained the UK’s most watched channel.
BBC One’s popularity stems in part from its commitment toprovide unique live broadcasts of great moments of national
The second year of a three-year strategy to refresh BBC
and international life.The past year saw coverage ranging
One, with the benefit of a £90million increase in budget,
Facing, left: Stephen Poliakoff ’s first
period drama for BBC One,The Lost Prince, revealed the touchingstory of Prince John, the epileptic
younger son of King George V andQueen Mary.

Left: Robert Lindsay and Zoë
Wanamaker returned as Ben and
Susan Harper in the much loved
comedy My Family.

21

Review of services: Television

Anne Robinson and Phillip
Schofield’s annual test of the nation’s
IQ exploited the possibilities of bothinteractive television and the website
to involve viewers.

from the solemnity of the Queen Mother’s funeral and thememorial service for the British victims of the 11 September
New York terrorist attacks, to the joyous atmosphere of The
Queen’s Golden Jubilee concerts, with the Party at the Palace
attracting 15 million viewers at its peak.

dramatic reconstructions to produce high-impact peaktime
films.These complemented scheduled faith services and series
such as Songs of Praise and The Heaven and Earth Show.

2002 was the summer of sport on BBC One. A fresh
approach to coverage won new fans and ground-breaking
interactive technology led 4 million viewers to click theirremote control red button during the World Cup footballand Wimbledon tennis. Helped by the BBC’s presentation
team, audiences peaked at over 13 million for five of England’s
World Cup games, making BBC One the overall popularwinner with viewers.The memorable summer concluded
with the Commonwealth Games from Manchester, forwhich the BBC Sports team won a BAFTA award.
Strengthening current affairs with high impact analysis
programmes has been a priority. Panorama made headlines
with major exclusives on horse racing corruption, the dangers
of Seroxat and investigations into global terrorism. Inside Out(see English Regions, page 38) was launched when regional
current affairs moved from BBC Two to BBC One, doubling
the average audience to 3.4 million viewers a week.
Westminster coverage moved from BBC Two to BBC One
with the new programme This Week.
BBC One broadcast around 25 major peaktime factual series
and single programmes. Landmark natural history and science
programmes were enhanced by interactive television. David
Attenborough’s The Life of Mammals, along with Robert
Winston’s Human Instinct and the innovative day-long event
The Abyss Live, combined quality with impact. A new strategy
for religious programmes based around scrutiny, celebration,
diversity and surprise was reflected in Moses and The Virgin
Mary, which combined state-of-the-art computer graphics and

BBC One remains firm in its commitment to making serious
issues accessible to everyone. Factual event days on crime
and Iraq sparked national debate and both reached around
7 million viewers.The Hitting Home season engaged audienceswith the difficult subject of domestic violence through acreative mix of documentary, current affairs and drama.
Creating events, as well as broadcasting them, is central to
BBC One and the fully interactive and entertaining Test the
Nation – the annual national IQ challenge – provoked debate
and perplexity in equal measure among millions of viewers.
The CBBC zones alongside daily children’s programmes on
BBC One and BBC Two have proved to be a success withyoung audiences. The Saturday Show on BBC One took thelead from ITV for the first time in three years.
Fame Academy gave budding performers the chance ofa lifetime to be trained by the best in the music businesswhile raising nearly £1million for musical bursaries foryoung people.The final was the top-rated entertainment
programme on BBC One for the 16 to 34 year old age
group in 2002 (excluding Christmas week).
Daytime television continued to win new audiences anddevelop programmes like Bargain Hunt, Escape to the Country
and Flog It! that can transfer to peak time. Creating original
daytime single drama is a risk, but BBC One took it on
successfully with the launch of The Afternoon Play.
While Friday night with My Family, Alistair McGowan’s Big
Impression, All About Me, Friday Night with Jonathan Rossand Have I Got News for You – which made the news itself –Left: Goal! David Beckham’s
penalty beats Argentina in the2002 World Cup.
Right: Professor Robert Winston
explored why we behave the way
we do in Human Instinct.
Below right: This Week brought afresh approach to late night political
discussion on BBC One.

22

Summer of
sport

Four of the year’s top-rated
television programmes
featured England’s World
Cup football matches.

struck a rich seam, Saturday night entertainment is still oneof the most challenging areas for BBC One. No single
compelling format has broken through in the year although
The National Lottery Jet Set, The Weakest Link Celebrity Special,
Comic Relief Does Fame Academy and one-off specials such as
Elton John at the Albert Hall have been more successful.The
return of Parkinson bolstered the late evening schedule.
BBC One is the only UK channel to invest substantially inproviding a family Christmas schedule and that commitment
was rewarded. BBC One was once again the most popularchannel during the festive season, with the special edition of
Only Fools and Horses winning a 67% share of the audience.
Over the year, intense competition led to a decline among
younger audiences in the South East. However, new presentersand more ethnic minority casting on popular mainstream
programmes have led to a substantial rise in approval.
Nonetheless, the share of viewing amongst minority audiences
dropped.These are challenges for the year ahead.
BBC Two
BBC Two’s continued strategy of bringing intelligence,sophistication, innovation and pleasure to a diverse audiencehas delivered considerable success over the past year.The
quality of the channel’s output has been consistently high,winning it 30 awards.
Channel-defining strands like Newsnight, Correspondent,
Horizon,Timewatch and The Money Programme provided astrong core for BBC Two’s mixed-genre schedule. BBC Two’s
ability to address factual subjects with conviction produced
The Hunt for Britain’s Paedophiles which was three years in themaking and El Alamein won critical and ratings success.There
were large audiences for the second series of A History of
Britain, the religious documentary Country Parish and therevitalised motoring classic, Top Gear.The channel’s reputation
Above right: Manchester hairdressers
in love and war in BBC One’s drama,
Cutting It.
Right: Tipping the Velvet, BBC Two’s
colourful Victorian lesbian love story.
Left: Charles Darwin, Andrew Marr’s
natural selection for Great Britons,
came fourth with viewers.

Annual Report and Accounts 2002/2003 23

Review of services: Television

as the home for breakthrough comedy grew with Double Takeand Dead Ringers and the multi-award-winning comedy
The Office, while Marion and Geoff, I’m Alan Partridge, and
The League of Gentlemen returned to great success.
Drama on BBC Two included Tipping the Velvet; Murder; Real
Men; Flesh and Blood, the centrepiece of a BBC Two disability
season; This Little Life, a powerful one-off drama that won
the Dennis Potter award for new screenwriting; and Albert
Finney’s award-winning portrayal of Sir Winston Churchillin The Gathering Storm.
The wartime leader was the eventual winner of GreatBritons. With nominees spanning 400 years of British culture
from Queen Elizabeth I to Princess Diana, the series set thecountry talking.The critical and popular success of GreatBritons made it one of the ten most memorable BBC
programmes in late 2002. Building on that success, The Big
Read has now set out to find the UK’s best-loved book andextend the BBC’s commitment to promoting literacy.
BBC Two uses a range of genres to reflect the experiencesof diverse audiences. A major success has been the continued
commitment to higher impact programmes such as the
Jamaica 40 season, Babyfather and The Kumars at No.42, alongwith What’s Your Problem?, which dealt with issues of disability
in a series of dramas, documentaries and short films.
BBC Two’s success in leisure-based programming such as
gardening, cookery and house makeovers, has been widelyadopted by the rest of the industry. A new strategy, set out
in the BBC Statements of Programme Policy 2003/2004, will
aim for a reduction in makeover programming and theintroduction of more arts and current affairs output into thepeaktime evening schedule, while continuing the channel’s
drive to reinvent and reinvigorate contemporary factual
output from What Not to Wear to Life Laundry.The challenge

Top left: Albert Finney won a
US Golden Globe as Sir Winston
Churchill in The Gathering Storm.
Left: 3 Non-Blondes, the first all-girlhidden camera comedy show, on
BBC Three.

24 Annual Report and Accounts 2002/2003

Above left: BBC Two’s The Huntfor Britain’s Paedophiles.
Above: Successful new drama Burn It,
on BBC Three.

Digital futures

From February 2002 to
February 2003 the BBC
launched four new digital
television services.

over the next year will be to refocus key areas of the evening to be commissioned from a web format on BBCi and brings
schedule to deliver that objective.
to life the workings of stock markets in an accessible andhugely popular way, gaining 5 million page impressions on
BBC Three
the BBCi website each week.
The launch of BBC Three to replace BBC Choice in February
2003 completed the BBC’s television channel portfolio andOriginal comedy and entertainment are important genres
equipped it to reach the 25 to 34 year old audience who were for younger audiences. 3 Non-Blondes and former Fast Show
being underserved by the BBC.The richness and breadth of
regular Swiss Toni have become hits while Two Pints of Lagerthe opening few weeks’ programming mix surprised many
and a Packet of Crisps attracted good ratings for a digitaland enabled it to reach 25% of the target audience. While
channel. Well known entertainment talents Dom Joly and
it is still early days, the channel’s weekly reach of 15.1% isJohnny Vaughan have become established faces on thesignificantly higher than the audience for BBC Choice.
channel. Other successes included the new drama serial Burn
It, Grease Monkeys, featuring young Asian talent, and the hip
BBC Three’s ambition is to reach discerning, media-savvy young architecture series Dream Spaces.
viewers who have high and varied expectations from modern
television. Unusually for a digital channel, BBC Three offers a
After a good launch, BBC Three now has the difficult task of
mixed schedule, with at least 90% home-grown programmes, converting a strong brand identity into greater audience
more than 80% of which are first-time commissions.
share over the next 12 months.
This commitment to original British production has led toexperimental and radically different programmes such as the
BBC Fouranimations Angry Kid, from the Oscar-winning team that created It has been a very successful first year for BBC Four, which
Wallace and Gromit, and the surreal comedy Monkeydust.
has established itself critically, winning RTS, BAFTA andGrierson documentary awards, and won a vociferously loyal
BBC Three has a strong commitment to providing its audience core audience. BBC Four’s other unique output has broughtwith relevant news, documentaries and current affairs. Original intellectual innovation to what had been a sparsely served
investigations such as Blood Diamonds and Jailed by the Statesection of multichannel broadcasting.
were screened and new formats such as The War This Week
were taken up by BBC One. The News Show won recognition The Pinter at the BBC season, in collaboration with BBC
for its fresh approach to the day’s events in a peaktime strand Two, presented the greatest television tribute to a living
while The Third Degree is gaining recognition as an innovative
playwright by broadcasting all his works, and enriched bothand authoritative current affairs programme.The channel
channels. BBC Four offered context and depth to BBC
explored difficult issues with bold series like Body Hits, looking at seasons and extra programming such as the Billy Elliot
the biological impact of an excessive lifestyle on the human body. documentary at Christmas, which followed the film’s
premiere on BBC One and was watched by 400,000
BBC Three has already succeeded in transforming traditionalviewers. Other collaborative benefits included increasing
genres and pushing the boundaries of cross-genre
the number of episodes of Storyville from eight to 52 andcollaboration. Celebdaq is the first television programme
provocative documentary series like Holidays in the Axis of Evil
Total television share (%)
all homes 2002/2003
■
■
■
■
■
■
■

* Share in digital homes for 2002/2003
shown in brackets

BBC One 26.5% (18.8%*)
BBC Two 11.2% (6.0%* )BBC digital channels 1.4% (3.3%* )ITV1 23.9% (18.2%* )Channel 4 9.8% (6.2%*)
Five 6.3% (4.1%* )Other channels 20.9% (43.3%*)

Right: Aardman Animation’sAngry Kid on BBC Three.

Source: BARB,TNS/Infosys, age 4+
Differences due to rounding
Total BBC Television share 39.1%(2001/2002 38.6%)

25

Review of services: Television

Storyville on BBC Four and BBC Twoshowed documentaries frominternationally-respected film makers.
Here, More than a Life by Luke
Holland.

which brought new talent and programming to both BBC Two absorbing Copenhagen and Peter Nichols’ A Day in the Deathand BBC Four.
of Joe Egg.
BBC Four has enabled the BBC to offer a degree and depth oforiginated contemporary arts coverage not previously available
on subscription in multichannel households. As the sponsor andbroadcaster of the Samuel Johnson Prize, the channel has helped
to bring a higher profile to non-fiction publishing. It offered two
extra weeks of BBC Proms coverage and pioneered simple,
interactive programme notes for each concert.The channel’srole in supporting the arts led to BBC Four sessions at
the Barbican and a growing involvement with global music,
showcased in coverage of the BBC Radio 3 Awards forWorld Music.The Readers and Writers Roadshow toured
the UK to enable well known authors to talk directly toaudiences.
BBC Four has brought some challenging and controversial
material to the screen including The Situation Room andStrange New World. Such programmes are part of its remit
to encourage programme and film makers to take risks.
Documentaries such as Ceausescu – King of Communism,
In Love with Terror and a profile of the controversial fashion
photographer Corinne Day, who originated the ‘heroin chic’
look in the 1990s and discovered British supermodel Kate
Moss, showed the rewards of this dynamic approach.

BBC Four has also brought a global perspective to reporting
news and current affairs which allows it to span the gap
between these genres in its mid-evening BBC Four News.
Although low audience figures for individual programmes
attracted adverse press comment, the channel was watchedby more than 12 million people in its first year. While it wasnever envisaged as a mainstream channel, the challenge for
BBC Four is to broaden its audience in its second year.
CBBC
The CBBC channel offers new, mainly UK programming,in a mixed-genre schedule for the six to 12 age range. Aftera slow start, by the end of the year it had risen from 16th
to fifth place for share of children’s viewing. Its average weekly
reach amongst children was 6.5%. Unlike many other children’schannels, CBBC offers an alternative platform for those whowant British content. Despite encouraging signs of growth,
improving its audience performance further is a priority forthe coming year.

Bold new series such as Stitch Up, Kerching!, Serious Jungle
and the original drama premiere of My Dad’s The Prime
Minister, augmented with familiar series Byker Grove andSingle drama and world cinema have been distinctive
Grange Hill, have helped create the distinctive appeal ofelements in the channel’s diverse programming. BBC Four has CBBC. BBC Scotland has been an important provider oftaken bold steps towards becoming the home of world
channel exclusives such as the fantasy series Raven, a blend ofcinema on British television and broadcast the premieregame show, intrigue and suspense. More than three-quarters
screening of a number of significant films including François
of the CBBC budget is spent commissioning new and original
Dupeyron’s controversial anti-war drama The Officers’ Ward.
programmes, accounting for a quarter of all airtime.

Collaboration with the theatre world brought productions tothe screen, including Vincent in Brixton which was nominatedfor three Olivier awards, Michael Frayn’s intellectually

Left: 17 years after it wascommissioned, the BBC screened
The Falklands Play, Ian Curteis’
dramatisation of Margaret Thatcher’s
war preparations, on BBC Four.
Right: Darcey Bussell and Jonathan
Cope perform Tryst filmed in France
and shown on BBC Four.

26 Annual Report and Accounts 2002/2003

The number of daily bulletins produced by Newsroundincreased to seven a day and included a week of live
broadcasts from Africa and war bulletins from Iraq.

Music in thenight

The Queen’s Jubilee Promat the Palace achieved oneof the highest everaudiences for a classicalconcert on television.

Class TV, blocks of curriculum-based programming forteachers and school-age children, has been an important partof the schedule with programmes across English, history,geography and languages.
The new children’s digital channels make extensive use ofinteractive content. CBBC monthly page impressions passed
the 16 million mark in December 2002 and the website
became the eighth most popular destination on BBCi.
CBeebies
CBeebies, which offers a range of educational andentertainment programmes to children under the age of six,has built on its success since its launch in 2002 and is now themost popular children’s channel in digital homes with an average
weekly 15.2% reach and 6.9% share of all children’s viewing.
It is a safe, dedicated space for pre-school children to watch,play and learn, and reinforces the trust between parents,
their children and the BBC. It has met its remit of offering
80% originally-produced programmes with a strong
interactive learning through play element.
Outstanding programmes over the year included thepremiere of the first preschool drama, Balamory, madeby BBC Scotland; the new magazine show Tikkabilla, andflagship shows, Fimbles,Teletubbies and Tweenies.
CBeebies included more educational programming throughout
the day than any other channel aimed at this age group.The
CBeebies website achieved between 7 million and 8 million
page impressions per week providing further learning
opportunities through games and stories, and advice forparents to help their children develop their full potential.

Above right: BBC Scotland produced
Balamory for CBeebies.
Right: Bold new series Stitch Uplaunched on CBBC.
Left: Serious Jungle gave eight children
the chance to help endangeredorang-utans.

Annual Report and Accounts 2002/2003 27

Review of services: Radio

28 Annual Report and Accounts 2002/2003

2 remains 1

BBC Radio 2 is the mostlistened-to station in
the UK with 13 million
weekly listeners.

In its 80th anniversary year, the BBC’s portfolio ofnational radio networks was transformed with thecompletion of the launch of its new digital services. It
was an historic year in other ways, with unique live
broadcasts of the Queen’s Jubilee Concerts, Music Liveacross the UK, and award-winning music and speech,
documentary and reportage that won record audiences.

at 1.1%. BBC Radio 4 had a particularly good year, achievinga record reach of over 10 million and a share of 11.8%. It wasalso awarded Sony Station of the Year. BBC Radio Five Live
ended the year with a reach of 6.4 million, while share wasup slightly at 4.7%.

BBCi websites are an integral part of each network andthe new BBC Radio Player offers the chance to listen again
to many radio programmes during the seven days after
broadcast. It has revealed significant audiences for audio on
demand – approximately a million requests are received each
week, just ten months since launch.

BBC Radio 1
For many young people BBC Radio 1 is their first introduction
to the BBC’s public service values.The station is listened toby half the UK’s 15 to 24 year olds and has a weekly reachof 12.8 million (aged four and over) and an audience shareof 8.4%. Reaching this demanding and constantly changing
audience is a challenge for BBC Radio 1. It continues to be
the most successful national network in its appeal to youth
and ethnic minority audiences. However, BBC Radio 1’s reach
and, in particular, its share have declined in the face ofcompetition from the commercial sector for young listeners.

BBC local and national radio services also had outstanding
figures with a record weekly reach of 11.1 million and a shareof 11.5% (see Nations & Regions, pages 36 to 41). For the
The year ended with the BBC attracting 53.5% of the total
first time the UK audience to the BBC’s digitally-delivered
radio audience and reaching 33.3 million people a week,
World Service was measured at an impressive 1.4 million (seea year on year increase of 400,000 listeners.The record
pages 50 to 53 for a full BBC World Service report). BBC
listening figures came at the end of a year of challenge,
consolidation and innovation for BBC Radio with considerable Asian Network was also measured nationally for the first timeand recorded a weekly reach of 433,000.There continues,
changes of talent, tough commercial competition and the
however, to be room for improvement in BBC network radio
development of new digital and online services.To stay at
the forefront of the digital broadcasting revolution BBC Radio reach in Northern Ireland, Scotland and the North ofEngland and also amongst black and Asian adults in London,
completed the successful launch of its five digital stations –BBC Five Live Sports Extra, 6 Music, 1Xtra, BBC Asian Network although outside the capital listening is evenly balanced
between ethnic minority and white listeners.
and BBC 7.

Almost all of the BBC’s national networks posted record
listening figures, although for a second year BBC Radio 1
experienced a slight decline in its target audience of 15 to
24 year olds. It nevertheless achieved a small growth in reachamong younger female listeners. BBC Radio 2 consolidated
its position as the UK’s favourite station with a weekly reachof 13.2 million, up a third of a million on the previous year
and with a 15.7% share. For the first time in five years,
BBC Radio 3 consistently achieved a reach of over 2 million
listeners a week although its share was fractionally down

Sara Cox’s Breakfast Show remains the most listened to youth
breakfast show in the UK, attracting an average 7 million
listeners a week.The newly relaunched Official Chart Show,
now hosted by 24 year old Wes Butters, saw its audiencegrow to 2.7 million. John Peel was awarded the 2002 Sony
Right: At 24, Wes Butters became
the new face of the relaunched
Official Chart Show.

Facing, left: Jeremy Vine became the
new lunchtime voice of BBC Radio 2.
Above: Destiny’s Child hit the roadfor BBC Radio 1.
Right: Sara Cox meets her fans at
One Big Sunday.

29

Review of services: RadioAward for lifetime achievement for his 36 years of ceaselesspromotion of new music on BBC Radio 1.
Championing new music and showcasing the best
contemporary live acts is at the heart of the BBC Radio 1
remit. One Big Sunday toured the country, attracting crowdsof up to 100,000 to see a wide range of acts such as
Destiny’s Child and Super Furry Animals.Tens of thousandsof dance fans also turned out for Dance Parties in Newquay
and Sheffield.The BBC Radio 1 summer of live music
culminated in October with One Live, a week-long
Nottingham festival that showcased local bands alongsideestablished stars. BBC Radio 1 also took a global perspectivewith shows from the Miami Winter Music Conference, Ayia
Napa, Ibiza, Berlin, and even the Swiss Alps.

1Xtra is already demonstrating its journalistic credentials.
DJ Spoony and TX presenter Derren Lawford teamed up
with BBC Radio Five Live reporters for Who’ll Show Racism
the Red Card? – an investigation into racism in football.The
new station also led the journalistic field when families of thevictims of the New Year’s Eve Birmingham shootings spoke
first to 1Xtra. TX Unltd, which fulfils 1Xtra’s Statements ofProgramme Policy commitment to a daily hour-long discussion
programme, participated in the BBC’s Iraq day with a live
round-the-table discussion featuring members of the 1Xtra
audience panel.
During the day and into drivetime, the sound of 1Xtra
is mainstream, but in the evening and at night it is more
eclectic, highlighting a range of styles covering the urban
music spectrum from the best of soca and reggae to hiphop and drum & bass.

BBC Radio 1’s contemporary soundtrack is augmented byNewsbeat, which engages younger listeners with news, current
affairs and politics, and The Sunday Surgery, offering practical
A Monday night slot on BBC Radio 1 enables 1Xtra tohelp with exams, careers, family, body issues, lifestyles andshowcase its offering to a wider analogue audience than the
drug awareness.
predominantly metropolitan listeners to the digital service.
Eight months after launch, the 1Xtra website passed aYoung people are heavy users of websites and BBC Radio 1
million page impressions a week, becoming one of the mostrelaunched its own website and added the innovative
popular BBC online destinations.
‘listen again’ service. With One Life and the new One
Music education-based websites, the network provides
comprehensive personal, learning and career resources aswell as valuable online exposure for new artists that canand does lead to national broadcasts.
1Xtra from the BBC
1Xtra was launched to fill a gap in radio services for youngfans of urban music.The digital station has brought new talent
to air and features a mixture of speech-based programming
which tackles issues relevant to its audience.

Left: 1Xtra turned up the volume
for the Trinidad Carnival.
Right: Edith Bowman and Colin
Murray, popular new voices on
BBC Radio 1.

30 Annual Report and Accounts 2002/2003

Three cheers

BBC Radio 3 isthe world’s biggest
commissioner of newclassical music works.

BBC Radio 2
In a crowded radio marketplace, BBC Radio 2 has continued
to increase its audience and remains the most listened tostation in the UK, maintaining its appeal for its core audience
whilst extending its reach among new younger audiences.
The final quarter of the year saw significant schedule changes
including the retirement of Jimmy Young, Jeremy Vine taking
over the lunchtime slot and the death of Your Hundred Best
Tunes presenter Alan Keith.
The BBC Radio 2 repertoire covers more than 40 yearsof popular music and culture and offers the widest selectionof popular and specialist music on radio.The station’s soundis shaped by such diverse presenters as Russell Davies andJonathan Ross, Mica Paris, Ken Bruce, Michael Parkinson andTerry Wogan, who achieved a new record with a weekly
reach of 7.9 million.The station continues to invest in specialist
music shows, documentaries, readings, comedy and otherspeech output as well as popular mainstream programming.
Over the year, the range of music documentaries has included
series exploring Jamaican music, the history of Asian music in
Britain, the current state of music in the United States and punks
at middle age. Live and Exclusive has brought performancesfrom legendary stars such as David Bowie, Elvis Costello andJames Taylor.
The BBC marked the Golden Jubilee with Music Live andover 500 hours of radio and television broadcasts. BBCRadio 2 was at the heart of these celebrations as well ascelebrating a host of musical events across a wide range ofmusical genres seldom found on other radio stations.
BBC Radio 3
BBC Radio 3 has never been bolder in its scheduling or theambition of its output, with programmes spanning a broad
range from classical to world music, and from drama to arts
Above right:Terry Wogan’s breakfast
show on BBC Radio 2 gained 600,000
new listeners, taking it to a newrecord audience of nearly 8 million.
Right: Elvis Costello starred on
BBC Radio 2’s Live and Exclusive.
Left:The BBC Proms were relayed
at public events across the UK.

Annual Report and Accounts 2002/2003 31

Review of services: Radiodebate. Increased commissioning of new work, live output andspecials, such as Monsoon Night, are just some of thecomponents that made up the station’s offering in the past year.
In its music output, BBC Radio 3 continued to offer its
audience considerably more than traditional western classicalmusic. Partnership with the London Jazz Festival, the Awards
for World Music and broadcasts from UK festivals from
Brighton to Orkney, contributed to a rich schedule of diversemusical styles. However, classical music remains at the heartof the schedule, and new partnerships with UK orchestras in
Birmingham, Bournemouth and Manchester have ensured agreater range of classical music on the network.
BBC Radio 3 broadcasts live every concert from the BBC
Proms.The past year saw the most successful BBC Proms ever,achieving over 2 million listeners. Major progress in making the
BBC Proms more distinctive and accessible continued, and theLast Night of the Proms interactive television service reached
0.3 million unique users, making it the most successful BBCi
service of its kind.
BBC Radio 3 continues to fulfil its role as a significant cultural
patron. It is the world’s largest commissioner of new classicalworks. It also provides the major outlet for the BBC’s six
performing groups, as well as supporting new artists, throughinitiatives such as the BBC Radio 3 New Generation Artists
scheme. BBC Radio 3 is also an important commissionerof new writing through The Wire, while continuing to provide
access to classical theatre, including Shakespeare, Middleton
and Congreve.
BBC Radio 4
BBC Radio 4 ended this year with a record reach of 10.3 million
listeners a week, approximately one in five of all UK adults.
The network saw audience increases across its schedule with
The Archers and Woman’s Hour both reporting record weekly
Above left: Deidre Gribben,
composer of the original music for
BBC Radio 3 drama Grace Notes.
Left: Bembeya Jazz, finalists in the
BBC Radio 3 Awards for World Music.
Below left: Members of the BBC
Philharmonic taking part in the world's
first Supermarket Symphony, a BBC
partnership with North City Arts.

Right: Britannia ruled again at theLast Night of the Proms.

32 Annual Report and Accounts 2002/2003

Four encore

BBC Radio 4, is the UK’s
biggest investor in radio
drama.

reach figures of 4.9 million and 2.9 million respectively.
BBC Radio 4 journalism has focused on the major issues ofthe year through programmes from Today to The World at
One, PM and The World Tonight. John Humphrys won the SonyGold Award for his outstanding contribution on Today, whichreaches 6.6 million adults each weekday morning, and which
was described by the judges as a “beacon of contemporary
journalism”.
Investigative journalism continued to flourish. For example,
File on Four: Mothers of Dead Babies was an investigation
into cot death, which considered, amongst others, the Sally
Clark case, and led to questions about miscarriages of justice.
Discussion of moral and ethical dilemmas included Fergal
Keane’s revealing interviews in Taking a Stand.
BBC Radio 4 has provided unrivalled speech broadcasting
through programmes such as Start the Week, with newpresenter Andrew Marr, and In Our Time with Melvyn Bragg.
Documentary programmes ranged from the Arab influenceon European history to the dilemmas facing Californian
entrepreneurs after the dot.com crash.
The station remains the UK’s biggest investor in radio drama,commissioning over 350 new plays and short stories a year.
Classic highlights included Brideshead Revisited, On the
Waterfront and C P Snow’s Strangers and Brothers.The
network is known and loved for its vast award-winning
comedy output including Dead Ringers, Just a Minute and new
programmes such as the surreal sketch show Little Britain,
which introduced us to such characters as a troubled
transvestite and the not so famous actor, Olivier Lawrence.
For children, BBC Radio 4 has provided the weekly magazine
programme Go4It and family drama including His Dark
Materials, as well as an interactive website.
Above right: John Humphrys andSarah Montague asking the toughpolitical questions on Today.
Right: Revelations of Brian Aldridge’s
affair with Siobhan Hathaway in The
Archers riveted 4.9 million listeners
a week.

Above left: Philip Pullman’s His Dark
Materials starred Terence Stampon BBC Radio 4.
Left: After 35 years delighting
audiences, Just a Minute won
a Sony award.

Annual Report and Accounts 2002/2003 33

Review of services: Radio

Nicky Campbell and Victoria
Derbyshire host the breakfast slot
on BBC Radio Five Live.

BBC Radio Five LiveBBC Radio Five Live has had a memorable year, introducing
a new schedule with refreshed breakfast and morning shows
and new presenters. It ended the year with an audience
reach of 6.4 million listeners each week. Its rolling news
format came into its own featuring continuous live coverageof the conflict in Iraq with Peter Allen presenting coverage
from Kuwait to Baghdad.

The station is a part-time network, seeking to provide sports
fans with a choice of matches, and has consequently enabled
the BBC to extract better value for licence payers from its
portfolio of sporting rights.

Nicky Campbell and Victoria Derbyshire’s new Breakfast
show increased its audience, as did Fi Glover’s new morning
show. With Matthew Bannister in the evenings and Julian
Worricker on Sunday introducing a revamped Five Live
Report, the station had a renewed vigour.
BBC Radio Five Live commentary offered listeners the very
best sporting events including the Cricket World Cup, thePremier League, the FA Cup, Wimbledon,The Open,The
Ryder Cup, Six Nations rugby, and Formula One. Sports
coverage was reduced during the weeks of the conflict in
Iraq to make way for breaking news, but BBC Five LiveSports Extra provided an outlet for commentaries. Access
All Areas broke new ground, taking the listener behind thescenes of a football match to give a better understandingof the game.This format will be extended to other sports
in the coming year. Jeff Randall’s award-winning documentary
Football Finance:The Bankrupt Game offered a rare insight
into the parlous financial state of many clubs.
BBC Five Live Sports Extra
In its first full year of operation, the new digital service BBC
Five Live Sports Extra has broadcast an impressive portfolioof high quality sporting events including Premier League andNationwide League football commentaries.The station has
covered international football, international cricket, rugby andGrand Prix qualifying rounds.

6 Music from the BBC
6 Music is a digital service concentrating on music and artists
not well supported by other stations. Since its launch it has
broadcast an array of live music, featuring over 150 acoustic
appearances, 54 sessions from BBC studios at Maida Vale, andseven of the major music festivals.The archive of BBC sessions
has also yielded some 2,500 exclusive BBC session tracks
giving listeners a complete music experience, be it on air,
online or at gigs.
6 Music has developed The Main Event, featuring archive
sessions and documentary material re-edited to broaden
the context of a new live event.This was successfully pilotedin October 2002 for the Kirsty MacColl tribute concert.
More collaboration is also planned with BBC Radio 2, which
dedicated an evening to 6 Music last year.This form ofcollaboration increases awareness of what 6 Music has tooffer and how listeners can receive it and the other new
services from the BBC.
BBC 7
The launch of BBC 7 in December 2002 completed theBBC’s digital radio portfolio.The station offers the best of
BBC comedy, drama and readings from the archive. It has
significantly extended BBC Radio’s output for children.
BBC 7 broadcasts two programmes a day, seven days a week
for children – The Big Toe Radio Show, a live and interactive
programme for nine to 11 year olds and The Little Toe RadioShow for younger children.

Total radio share (%) Q1 2003
■
■
■
■
■
■
■
■
■
■

BBC Radio 1 7.9%
BBC Radio 2 15.7%
BBC Radio 3 1.1%
BBC Radio 4 11.8%
BBC Radio Five Live 4.7%
BBC Local Radio (inc. Nations) 11.5%
BBC World Service 0.7%
Local commercial radio (260 stations) 36.6%
National commercial radio (3 stations) 7.9%
Other radio 2.1%
Total BBC Radio share Q1 2003 53.5% (Q1 2002 52.6%)
Source: RAJAR age 15+. Differences due to rounding

Left: Rock guitarist Lenny Kravitz
creates some 6 Music.

34 Annual Report and Accounts 2002/2003

New music

6 Music broadcast over
7,500 hours of music
and added 310 concerts
to the BBC archive in its
first year.

Highlights from the BBC’s drama and comedy radio archives
have included Anthony Trollope’s classic Barchester Chronicles
alongside contemporary drama like A Suitable Boy. Comedy
ranges from classics such as Hancock’s Half Hour and The
Goon Show to the more contemporary The League of
Gentlemen and Knowing Me, Knowing You.
During its first week, BBC 7 online achieved 920,000 page
impressions, the highest launch figure for any of the new services
and it now achieves 1.6 million page impressions per month.
BBC 7 is committed to fulfilling the BBC’s remit to driving usageof digital services and is regarded as one of the catalysts for thesurge in DAB digital radio receiver sales since Christmas 2002.
BBC Asian Network
BBC Asian Network relaunched as a national digital network
in October 2002, broadcasting approximately 50% music and50% speech with a strong focus on news and current affairs.
Uniquely, the service continues to address the needs of first
generation Asians, with over 2,000 hours a year of locallyoriginated programmes in a range of South Asian languages.
Broadcasting primarily in English to British Asian communities
across the UK, the station provides a central point fromwhich audiences can get daily national and international news,
sport and music.
The major festivals of the main Asian faiths were marked
over the year with specially commissioned programmes, tocomplement the daily early morning devotional programmes
broadcast throughout the year.
To reflect its new national audience better, the Midlandsbased BBC Asian Network successfully introduced London
output through the daily Sonia Deol programme, providing aforum for debating social issues affecting Asian communities.
Above right: Paula Radcliffe at theCommonwealth Games, covered
on BBC Radio Five Live and BBC
Five Live Sports Extra.
Right: Sonia Deol, morning showpresenter for BBC Asian Network.
Left: Goon but not forgotten on
BBC 7, the most influential comedy
performers in the history of radio.

Annual Report and Accounts 2002/2003 35

Review of services: Nations & Regions

36 Annual Report and Accounts 2002/2003

Home services

Nations & Regions is at the heart of the BBC’s
relationship with its audiences, connecting with
communities in every part of the UK and celebrating
the cultures and diversity of modern Britain.An extra£50million investment in local programmes over the
past two years has helped win higher audiences and has
led to a rise in approval in every part of the country.
Fresh ideas and innovative use of technology enhanced
all of our services. It was a year of real progress for
Nations & Regions.

The BBC’s 6.30pm regional
news is the most popular
news programme on
British television.

BBC networks reflected the UK ever more consistently
with total television hours from the Nations rising by 15%.
Highlights included returning series of Monarch of the Glen,
Two Thousand Acres of Sky and Film 2002/2003 from BBC
Scotland, Messiah 2, Patrick Kielty Almost Live and Sinners from
BBC Northern Ireland and Hidden Gardens, Easy Money andLesley Garrett:The Singer from BBC Wales.

2002 was also the year that the Connecting Communities
strategy began to deepen the BBC’s relationship with its
audience. BBC Open Centres at radio stations in Blackburn,Liverpool, Sheffield and Stoke enabled local people to learn
The 6.30pm BBC regional news remained the most popular
news programme on British television. BBC regional television about the media, acquire IT skills and become involved incommunity broadcasting. Partnerships with lifelong learning
news programmes outperformed the commercial
agencies provided more formal courses and longer-termcompetition in all but three areas of the UK.
learning.Ten BBC buses took these facilities on the road,
carrying PCs and broadcasting equipment to more remote
Local radio across England and the national radio services inareas.
Scotland, Wales and Northern Ireland reached their highest
aggregate audience ever, with 11.1 million adult listeners.
BBC Nations & Regions is committed to enabling audiences
to tell their stories in their own words, with projects like
The BBC is determined to get closer to audiences acrossDigital Storytelling in Wales and Video Nation in England.The
the country. New local services have been created fornewest initiative, Voices, is built on months of engagement withlisteners in North Yorkshire, Wiltshire and Berkshire andunder-represented local communities. Powerful, heartfelt stories
viewers in Oxfordshire, East Yorkshire and Lincolnshire now
from these sources have been broadcast on all services.
have a full regional news service. Seven new Where I Livewebsites brought the total to 42 sites in England with afurther seven in Scotland, five in Wales and one in Northern Despite the strong share performance of news between 6pm
and 7pm, the overall number of viewers has declined (except
Ireland.Total Nations & Regions online page impressionsin Scotland).To address this an ambitious training scheme
more than doubled from 25.1 million in March 2002 toaims to energise storytelling, exploiting the emerging new
52.9 million in March 2003.
technologies of handheld digital cameras and laptop editing.
Audiences to the new politics and current affairs shows have Two hundred staff are being trained every year in a newcentre of excellence in Newcastle.
also more than doubled after their move to BBC One inEngland. New television drama, entertainment and factual
programmes in Scotland, Wales and Northern Ireland added
to average network share in all three nations.

Average audience for regional news bulletins
2002/2003
Millions
8

5.7

6
4

3.1
1.7

2
0

5.1
3.7

n/a*
BBC Onelunchtime
regionalnews

ITV1
lunchtime
regionalnews

BBC Oneearly
evening
regional
news

ITV1
early
evening
regionalnews

BBC Onelate evening
regionalnews

ITV1
late evening
regional
news

Source: BARB, TNS/Infosys*These figures are not available due to variable scheduling of this news programme

Facing page, clockwise from top: Jim
Fitzpatrick presents the Northern
Ireland opt-out for the Politics Show.
The BBC bus in Sunderland wherevisitors can get online. Michelle
Collins and Paul Kaye in the third
series of Two Thousand Acres of Sky.
Left: Lesley Garrett:The Singer from
BBC Wales.

Annual Report and Accounts 2002/2003 37

Review of services: Nations & Regions

English Regions
The move of English Regions’ current affairs programmes
from BBC Two to BBC One more than doubled the audience
to an average of 3.4 million viewers a week.The newprogrammes, with the generic title Inside Out, became themost popular current affairs programmes on BBC One. In
January, with the creation of the new Politics Show, regional
political coverage followed suit in moving to BBC One.
Average audiences for local politics trebled as a result, from
406,000 last year to 1.5 million.
A number of landmark programmes celebrating significant
regional events, achievements or history have been transmitted
across the UK, most notably the archive-driven North East
on Film, broadcast on the BBC Two network in March.
Local radio in England faces competitive challenges in the
big cities, particularly Birmingham and London, where newstrategies are being put in place. Weekly listening to BBC
London 94.9, however, rose to a new record of 437,000
adults and to BBC WM to 373,000 – both significant gains
over the previous year’s figures.
Both performance and approval have improved in the
North of England. In particular, the new regional news
service Look North, based in Hull and serving East Yorkshireand Lincolnshire, quickly established itself as local viewers’
number one choice.
Video Nation has now become an English Regions brand, with
18 schemes across the country producing videos for Where I
Live sites and Video Nation’s central online portal. Football Firstwas developed to support local grassroots sport at youth level,
involving both children and parents in North East England.

This is a caption

Top left: Inside Out presenter DavidWhiteley.
Left: Moses Brazil, a member of
Kent’s Romany Gypsy community
in Voices.
Above: London 94.9 breakfast
presenter, Danny Baker.
Right: BBC Garden Design event at
The Forum in Norwich.

38 Annual Report and Accounts 2002/2003

Voices48 local projects gave
a voice to communities
across the UK.

Northern Ireland
BBC Radio Ulster’s Sony Station of the Year award (forstations with audiences of over 1 million) crowned a yearof high achievement, including a near-record audience shareof 23.6% in the first quarter of 2003.
BBC Northern Ireland’s biggest ever audience outreachprogramme included a new sub-opt in Enniskillen and summer
outside broadcasts including Proms in the Park, attended by
7,000 people. With its successful news, factual andentertainment programmes, these initiatives helped BBC
Northern Ireland achieve its best approval score.
Performance in current affairs and factual genres was
exceptional; the share for current affairs flagship Spotlightwas 32%, 7% above network share for the slot, and up 3
percentage points on last year. It won the RTS Best Regional
Current Affairs award for its film on the exploitation of
migrant workers in Northern Ireland. Local opt-outs added
an average of 5% to network share, and BBC One further
increased its overall share in Northern Ireland, though it
remains 3.3% below the UK average. South City Beat, a series
about the police force’s transition from the RUC into the
new Police Service for Northern Ireland (PSNI), achieved
a healthy 36% share.The sitcom Give My Head Peacecelebrated its 50th episode as Northern Ireland’s favourite
local programme.
The BBC’s coverage of the All Ireland Gaelic FootballChampionship delivered a 35% audience share and Ireland’sstrong performance in the Six Nations Rugby Championshipadded 11% to network share in Northern Ireland.
A strategic review of language provision in Northern Ireland,
completed during the year, will inform further developmentof indigenous language output.

Above right: Northern Ireland’s
Patrick Kielty returned with his series
Almost Live.
Right:Thousands packed Belfast City
Hall grounds for the BBC Proms in
the Park.
Above: Give My Head Peace.

Annual Report and Accounts 2002/2003 39

Review of services: Nations & Regions

ScotlandAs the country’s national broadcaster, BBC Scotland set out tostrengthen its programme range and quality with new drama,
comedy and entertainment, a successful bid for Scottish
football rights, and extended news and current affairs
coverage for the 2003 Parliamentary elections.
BBC One Scotland had a particularly strong year, increasing
average share from 24.5% to 25.1% and outperforming ITV
for the first time since current records began. Its place at theheart of the nation was demonstrated when it won a massive
63% audience share for coverage of the Hogmanay celebrations.
Six nominations for the 2003 Sony Awards demonstrated
the quality of BBC Radio Scotland. News and sport remained
the cornerstones of the station, playing a key role inincreasing the overall reach and creating audience stability.
Sportscene, with 55 live football matches, including coverageof every round of Celtic’s march to the final of the UEFA
Cup, the Scottish Premier League, Scottish Cup, European
and international games, attracted exceptional audiencesfrom across the country and boosted approval for BBC One
in Scotland.
Reporting Scotland reached a new high of 31.4% audienceshare, making it the country’s most popular television news
programme. Holyrood Live, Politics Scotland, Newsnight Scotland
and BBC Radio Scotland combined to create comprehensive
political coverage for the first elections since the Scottish
Parliament was established.
Perhaps the boldest move has been the launch of a new
Scottish soap, River City, a twice-weekly drama series featuringlocal writers and performing talent that generated intenseinterest at launch. Against tough competition, it has settled
down with a loyal and stable audience share of around 22%.
This is a caption

40 Annual Report and Accounts 2002/2003

Top left: Cast of the new Scottish
soap River City.

Above left: Holyrood Live presenter
Iain MacWhirter.

Left: Celtic vs Rangers.

Above: BBC Radio Scotland Voices
project in Ayrshire.

Down our way

Radio services across thenations and regions reacheda record 11 million listeners
in the first quarter of 2003.

Wales
Television programmes for Welsh audiences enjoyed somenotable successes, including The Story of Welsh with Huw
Edwards and Love on the Rock, a docusoap set on Bardsey
Island.The popularity of live televised sport on BBC Wales
was demonstrated when the audience for the live Walesv Italy Euro 2004 qualifying match peaked at over 500,000
viewers – the highest BBC Two Wales audience for any
programme for over six years. Snooker, golf, bowls and, inparticular, rugby all improved on network audience share.
Wales Today performed strongly – nearly 17.4% above ITV’s
early evening news in Wales – and the award-winning current
affairs series Week In Week Out continued its strong showing.
BBC Wales provided ten hours of Welsh language
programming per week for S4C, including Pobol Y Cwm.
Light entertainment programming was expanded on both
BBC One Wales and the new digital channel BBC 2W.
Particular successes were Pub Quiz and the new sitcom
High Hopes. While Valleys-based drama Belonging continued
to attract a loyal following, The Bench and First Degree were
not recommissioned.
BBC Wales’ English language station BBC Radio Wales
achieved its highest audience to date for the first quarterof 2003 with a record 527,000 listeners a week. BBC Radio
Cymru, Wales’ only Welsh language service, extended its daily
broadcasts by two hours, providing more live contributions
from around Wales and new evening programmes foryounger listeners.
A major Digital Storytelling project has resulted in the creationof 96 digital stories at monthly workshops around Wales. As
part of its Digi-nation vision, BBC Wales has also opened two
community studios serving North East and South West Wales.

Top right: Perplexed quizmaster(John Sparkes) in BBC Wales’
comedy Pub Quiz.
Right: BBC National Orchestra
of Wales.
Left: Huw Edwards told The Storyof Welsh.
Below: Week In, Week Out presenter
Louise Elliott.

Annual Report and Accounts 2002/2003 41

Review of services: News

42 Annual Report and Accounts 2002/2003

A trusted voice

The continuing ‘war on terror’ erupted into one story
that dominated the year: the coalition invasion of Iraq tounseat Saddam Hussein. In an increasingly divided, yet moreinterdependent world, BBC News remained the UK’s
most trusted source of information on the conflict.

93% of the UK population
turned to BBC television,
radio, text or online
services in the first two
weeks of the war in Iraq.

massively during the war in Iraq with a record 140 million
page impressions in the first week before settling down
to 3 million users a day – 50% more than usual.

Reporting the war in Iraq
Wars have always been one of the greatest tests of
It has been a year of extraordinary news events, at home and independence and impartiality for a publicly fundedinternationally, when the daily agenda more often encompassed broadcaster such as the BBC, which aims to provide global,
violent crisis than peaceful celebration. Global terrorist attacks, national and local perspectives on key issues and to report
the war in Iraq and continued conflict in the Middle East
all points of view accurately.
resulted in thousands of victims. At home the summer party
spirit of the Queen’s Golden Jubilee, the World Cup and
BBC News responded to the international crisis leading to
the Commonwealth Games had a sombre counterpoint in
the war in Iraq with immediate extra coverage.Throughout
the Queen Mother’s funeral and the Cambridgeshire
the war an average of five extra hours of news coverage wasschoolgirl murders.
broadcast every day on BBC One and BBC Two. BBC News 24
was simulcast on BBC One and BBC Two and Newsnight
broadcast special weekend editions every Saturday night.
The year saw a strong performance from the BBC’s main
BBC Radio Five Live and BBC World Service became rollingnews bulletins on television and radio as a new strategy tofurther strengthen journalism and help audiences make sense news channels and BBC Radio 4 extended all its news
programmes. Current affairs teams responded quickly, withof a complex world was implemented. BBC Radio 4’s news
David Dimbleby leading special programmes.
programmes provided exceptional insight into difficult issues
across the broad range of their output and contributed to
In an ICM poll BBC News was rated most highly for coverage
the network’s Sony Station of the Year award.
of the war across all media. 93% of the UK population used
the BBC to follow events in the first two weeks of the war.
Making news and current affairs more relevant to younger
audiences is a continuing priority and the new digital services According to the same poll BBC One was the most watchedand trusted channel and BBC News 24 was seen by 70% of
have a key role to play across radio, television and online inreaching them.
the population – 40 million people – in the first week of theconflict. 72% of people who used radio to follow the war
New programmes and documentaries were launched on
chose a BBC network service and calls to BBC Radio Five
BBC Three with 60 Seconds, one-minute headline bulletins on Live averaged 2,400 per day.
the hour, The News Show and entertainment-led Liquid News
every weekday evening. 1Xtra provides a targeted news and War reporting in Iraq was characterised by the latest digitaltechnology combined with journalistic access. Although their
documentary service for a young urban audience while
perspective was by definition limited, correspondents
Newsround bulletins increased to seven a day on CBBC.
‘embedded’ with US and UK forces shared the immediacy
BBC News online attracts a high percentage of younger
users – more than 55% are under 35. Use increased
and the danger of the unfolding conflict.
Average audience for network news bulletins
2002/2003
Millions
8

5.3

6
4

5.1
3.4

2.9
1.6

2
0

4.6

BBC OneO’ClockNews

ITV1
lunchtimenews

Source: BARB, TNS/Infosys

BBC Six
O’Clock
News

ITV1 early
eveningnews

BBC TenO’ClockNews

ITV1
ten/nightly
news

Facing left: International news
cameramen and photographers
cover the Iraq relief story.
Above: Rageh Omaar reports liveon the bombardment and fall of
Baghdad.
Right: Happy times as the Queencelebrates her Golden Jubilee.

Annual Report and Accounts 2002/2003 43

Review of services: NewsThe Potters Bar rail crash.

The immediacy of live television and radio has brought new
dilemmas however – how much risk is acceptable to get
pictures and commentary? BBC cameraman Kaveh Golestan
was killed by a land mine in northern Iraq. ITN’s Terry Lloyd
was killed.World Affairs Editor John Simpson was injured anda Kurdish translator working with him, Kamaran Abdurazaq
Muhamed, was killed in northern Iraq. Despite the risks the
BBC believes that its reporters and correspondents, now in
44 countries around the world, should be there to reportwhat they see – not rely on other people’s pictures andinformation.

Spies helped him to gain the RTS award for TV Journalistof the Year.

Strengthening current affairs
The BBC Statements of Programme Policy 2002/2003 included
a commitment to strengthening current affairs in the
peaktime evening schedule. Alongside existing programmessuch as Correspondent and Real Story BBC One respondedwith event days on crime and Iraq. All domestic BBC News
channels took part as well as national and local radio services,
digital and interactive television, online, BBC World Service
and CBBC, reaching more than 20 million people.

BBC News 24
BBC News 24’s average 15-minute weekly reach inmultichannel homes rose by 36% to 2.2 million in 2002/2003.
Simulcasting on BBC One and BBC Two during the war in
Iraq saw it reach 23 million people on one day alone.
Daily business journalism improved significantly, spearheaded
by Business Editor Jeff Randall. Business Today on BBC News24 has been refocused with a later start time (10.30pm) anda distinctive dual presentation from London and New York.
Over the year, BBC News 24 expanded its interactive news
service, adding business and entertainment news and an
occasional archive service, On This Day.

Five years after the launch of BBC News 24, the Government
asked the former editor of the Financial Times, Richard
Lambert, to undertake a review of the channel’s public
service purposes. His report confirmed the importance ofNewsnight’s pioneering debates with Tony Blair answering
the channel to the BBC’s public service portfolio but noted
questions from Jeremy Paxman and audiences which included that it needed to be more distinct from other 24-hour news
swing voters and anti-war protestors was a format later copied channels. In response, the BBC Governors asked BBC Newsby other broadcasters. Newsnight continued to innovate in
24 to develop its rolling news remit with a more analytical
its approach and featured Ms Dynamite, the UK’s new black
agenda, drawing on regional and international correspondents
female star rapper, as a political commentator for a special
to create a broader outlook. The channel is now pressing
debate on young people and gun crime.
ahead with plans to reshape the service.
In its 50th year, Panorama remained at the cutting edgeof television current affairs, with headline-making scoops
such as The Corruption of Racing, The Secrets of Seroxat andA Licence to Murder. Jane Corbin’s worldwide investigations
into characters and issues behind the international crisis
over Iraq and Afghanistan provided valuable insight. Peter
Taylor’s dogged pursuit of truth in the secret world of True

Above: Fiona Bruce in the
BBC newsroom preparing
for the 10 O’clock bulletin.
Right: Newsround, the BBC’s speciallymade news service for children.
Far right: The News Show reporting
to BBC Three viewers.

44 Annual Report and Accounts 2002/2003

New approach to politics
The BBC’s politics review in 2002 sought new ways toconnect with young audiences who do not always engage
with Westminster-dominated political debate but are often
motivated by single issues.The Politics Show, presented byJeremy Vine, replaced On the Record to offer Sunday
lunchtime viewers a more rounded look at politics acrossOn the scene

The BBC hascorrespondents andreporters in 44 countries
around the world.

the UK.The new programme gained an average audienceof 1.5 million and an 18% share – up by 0.3 million and twoshare points. This Week replaced Despatch Box and was
moved from BBC Two to be scheduled immediately after
Question Time on BBC One. It is attracting an average
2.1 million viewers per programme. The Daily Politics, thereplacement for Westminster Live, is on air three times aweek, scheduled in a morning slot to take account of
Parliament’s rescheduling of Prime Minister’s Questions.
BBC Parliament
BBC Parliament has expanded and strengthened its European
coverage with Politique, a new weekly programme on theworkings of the EU, presented from Brussels and Strasbourg.
The channel has been re-designed and re-branded to bring it
into line with the rest of the BBC’s digital portfolio, and a web
presence has been developed to provide additional
supporting material.
A new, clearer, schedule includes a daily repeat slot for The
Record, the presenter-led review of Westminster, as well asa weekly hour-long edition. Briefings, the channel’s weekly
review of politics outside Parliament, runs in a new slot on
Saturday evenings.
Over the year, BBC Parliament increased its broadcast
hours by 30%. More time has been devoted to the nations,as well as to special event coverage – such as the broadcastof the entire original Coronation Day transmission during
the Golden Jubilee celebrations – and increased recessprogramming has given extra time to Select Committee
discussions on crime, health and education. Select committees
are also highlighted in weekend evening schedules.

Above right: Green Goddesses
returned during the firemen’s strike.
Right: Prime Minister Tony Blair faced
Newsnight’s Jeremy Paxman in two
gripping political debates.

Above: David Dimbleby led the Iraq
debate on BBC One.
Right: Evan Davis making sense of
the Euro.

Annual Report and Accounts 2002/2003 45

Review of services: Learning

www.bbc.co.uk/bitesize
46 Annual Report and Accounts 2002/2003

Hard hitting

17,000 people contacted
the BBC for advice during
the Hitting Home season.

Education is at the core of the BBC’s public service remit;
the BBC offers a breadth of subjects no other broadcastercan match. Interactive technology is enabling us to makelearning an intrinsic part of our output on television,
radio and online and to create popular and challenging
programmes that stimulate deeper understanding andknowledge for audiences.

Documentaries exploring human culture and experience,from Walking with Cavemen on BBC One to Double Helix:The
DNA Years on BBC Four, were supported by online learning.
Motherland offered insights into genetics, black history andpersonal identity. It enabled black Britons to track, throughDNA testing, their African roots and made a powerfulimpression on audiences.

Our strategy is to deliver learning to the widest possible
audience, through enriched interactive content to accompany
many of our best television and radio programmes andservices. History and science programmes, such as Pyramid,
Robert Winston’s Human Instinct and David Attenborough’s
The Life of Mammals, stimulated millions to learn morethrough their ‘red buttons’ for the interactive channel andthrough the web, where experiments, tests and hugely
enhanced information provided enjoyable learning.

Formal learning remains a crucial part of the BBC’scommitment. In January 2003, the Secretary of State forCulture, Media and Sport announced that the BBC proposal
for a Digital Curriculum service to provide interactive learningmaterials to schools via the internet could go ahead.The
demand from schoolchildren for online learning was again
demonstrated by the success of the Bitesize revision service,
which hit a peak of 17 million page impressions during the2003 revision season.

In addition, the BBC promotes learning through courses andexhibitions linked to programmes and involving dozens ofcultural institutions from the British Museum to the National
Gallery and the Natural History Museum where 50,000
visited the interactive Life of Mammals exhibition; this later
toured the UK.The BBC also works with universities tomount short courses such as The Life of Mammals Open
University course, already attracting interest from 2,000
people.The 30-year partnership between the BBC and theOpen University has been expanded to provide more highquality peaktime programmes on BBC One, BBC Two, BBC
Three and BBC Four.

Learning outside the classroom was offered to children
through high-quality entertainment on BBC One and thedigital channels CBBC and CBeebies, with supporting BBCi
websites. Sport Academy, developed to encourage young
people to take part in sport, got well over a million page
impressions a week.

It is difficult to raise awareness of a social issue like domestic
violence in a way which is popular with audiences but theHitting Home season did just that. With bold programming
across television and radio and supported by online advice,
it won plaudits including a cross-party motion in Parliament.

Facing, left: Around 90% of GCSE
and Standard Grade students used
Bitesize this year.
Left: David Attenborough stayed on
top with The Life of Mammals.

In Merseyside and Humberside innovative new ways ofreaching audiences traditionally less well served by the
BBC were developed, opening up BBC resources to local
communities. Usage of BBC basic skills websites continued togrow, with Skillswise recognised as the UK’s leading website
for literacy and numeracy, and 1,000 people a week gaininga Becoming WebWise IT qualification.The arts initiative Blast
attracted thousands of teenagers to regional workshops onmusic, art, dance and film making, and is returning for asecond year.

Above: Motherland enabled black
Britons to map their history.
Right: Hitting Home raised awarenessof domestic violence on television,
radio and online.

Annual Report and Accounts 2002/2003 47

Review of services: New Media

48 Annual Report and Accounts 2002/2003

Red watch

BBCi encompasses the BBC’s interactive services acrossthe web, television and mobile devices.With 2 million
web pages and 200,000 audio and video clips, BBCi
provides a public service resource to enable people
to explore topics that interest and entertain them anda forum for dialogue with each other and the BBC.
BBCi on the internet
BBCi’s online service remained Europe’s most widely visitedcontent site. In 2003 BBCi’s monthly reach rose from 34% toa peak of 43%, equivalent to 8.3 million adults (age 15 andover). BBCi gives people in the UK access to local, nationaland global information when its suits them and during the
war in Iraq set new traffic records when demand took page
impressions to 1.182 billion.

BBCi launched 37 interactive
TV services in 2002 to giveviewers greater choice.

BBCi provided users with many opportunities for creative
expression and dialogue, including the BBCi News Talking
Point and Have Your Say services and message boards such as
The Great Debate and the Today board. Over 50 Where I Livesites now connect communities across the UK and cover abroad spectrum of social, cultural and political discussions.
With more than a million messages a month generated byemail, text and chat room message boards, BBCi has becomea national forum, giving a strong voice to its users and offeringa safe and controlled presence on the web. BBCi aims tohelp shape the new media environment and establish a webliterate UK. A family-friendly search engine was launched in
May 2002, providing a protected guide to web exploration.
BBCi is one of the UK’s leading centres for digital innovation.
New services include the BBC Radio Player, providing audio
on demand for internet users to catch up on BBC radio
programmes they missed.

Education continues to be a priority. BBCi developed thelearning home page to offer easier access to all learning
opportunities from the BBC and supported extra educational
BBCi on televisionresources for BBC Learning which were used by 2.9 million
BBCi’s interactive television services broke new ground in theteachers, parents and pupils during the busy revision period
past year when it became the first broadcaster to provide
in 2003.
interactivity across all digital television platforms. Enhanced
services gave 8 million viewers greater choice during theBBCi works with partners ranging from the European Space
Agency to the Arts Council to ensure users can pursue their BBC’s summer of sport and provided additional video, text
interests in depth. BBCi Science and Nature continued to be and graphics for The Life of Mammals, the Chelsea Flower Show
and Fame Academy. Interactive television services were alsopremier destinations.The award-winning BBCi Religion andused to great effect for audience voting during Great Britons
Ethics site developed its representation of the major faithcommunities in the UK further with interactive content on
and Cracking Crime. Test the Nation showed the value ofindividual faiths, religious news, and debate around ethical issues. enabling a mass audience to contribute to a national
television experience and The Murder Game saw viewers
The BBC Sport site offered coverage of UK and worldwide
become interactive detectives to solve a fictional murder.
sporting events and of minority sporting interests. Sport
BBCi’s interactive television services will be a key area fordevelopment in the next year.
Academy was launched in July 2002 with the aim of getting
young people involved in sport, offering skills guides, video
masterclasses, training routines and a range of information.

Monthly BBCi website page impressions
March 2002 to March 2003
1,200

Millions

■
■
■
■
■
■

1,000
800

Other*
Drama and entertainment
Factual & Learning
New Media
Sport
News

600
400

Above: Ghosts of Albion, BBCi’s fullyanimated webcast.

200
0
M

A

M

J

J

A

S

O

N

D

J

F

M

Far left: Interactive services gave
viewers more choice during theBBC’s summer of sport.

Source: BBCi server logs
Only divisions with over 75 million page impressions at March 2003 are shown* Other includes Radio & Music, CBBC, BBC World Service, Nations & Regions, home pageand other

Annual Report and Accounts 2002/2003 49

Review of services: BBC World Service & Global News

50 Annual Report and Accounts 2002/2003

Global links

BBC World Service’s 70thbirthday was celebrated
with a 14-hour programme
linking 50 broadcasts fromaround the world.

The BBC brought together its international news services– BBC World Service radio, BBC World television, andthe BBC’s international-facing online news services –into a single BBC World Service & Global News divisionin December 2002. Its aim is to be the best known andmost respected voice in international news broadcasting– across radio, television and new media – thereby
bringing credit to Britain and to the BBC.

with continuous news and analysis for over 220 hours.
BBC Arabic played a pivotal role in providing independent
information to the people of Iraq and the Arab world. It
was presented live from Cairo each day at breakfast andproduced 13 extra hours daily of news and current affairs
output. Daily interactive World Forums on the English andArabic services, in which a wide range of opinion wasreflected, were a strong and distinctive feature of the output.

The new division is developing a coordinated global news
strategy to present a more coherent offer to audiences andachieve greater international impact for the BBC’s news
services, promoting their values of editorial independence
and impartiality around the world.These values weremaintained in challenging circumstances during the war in
Iraq, when the BBC’s international news services made anoutstanding response during the diplomatic build-up and themilitary conflict.

BBC World Service retained its global audience of at least
150 million weekly listeners in a world of rapidly increasing
competition.This was achieved by expanding local
partnerships and presence on FM.The BBC World Service
is now available on FM in 138 capital cities.The firstindependent city-wide survey in Kabul since the fall of the
Taleban showed that an unprecedented 82% of Afghans werelistening to BBC broadcasts in Persian and Pashto every
week. BBC World Service programmes in Nigeria and Kenya
have a weekly reach of over 30%. Audiences listening on
short wave continue to fall, however, particularly in thedeveloping world and the drive for improved audibility
on FM and MW continues.

Commercially funded television joined the publicly fundedradio and new media services for the first time.The separate
funding streams are respected within a robust fair trading
framework and there is no cross-subsidy.
BBC World Service
BBC World Service built on its reputation for trust,
independence and quality during its 70th anniversary year.
As a multilingual reference point, it displayed a surefootedness of tone and analysis while providing the greatest
breadth and depth of any international broadcaster. Surveys
of nine selected markets around the globe revealed that
BBC World Service was the most trusted and objective
international broadcaster compared to its main international
competitors in each market.
As the war in Iraq began, the BBC World Service in English
undertook its biggest ever news and programming operation,

In the light of changing listening habits, it was decided two years
ago to discontinue direct short wave transmission to the USA
and increase FM rebroadcasts on public radio. Since then,audiences to rebroadcasts have increased by 70% – up from
2.3 million in 2001 to 3.9 million. On average, 22% of opinion
formers in Boston, New York and Washington listen to the
BBC World Service each week.There was a further major
surge in US listening as a result of the build-up to the conflictin Iraq when expanded BBC World Service coverage wastaken by 353 US stations (compared to 265 in March 2002).
Some 70% of the UK population is now aware of BBC World
Service, a year on year increase from 54%.

Facing, left:Tuning in to world news
in Baghdad.
Above right: Nik Gowing reports
from Doha for BBC World.
Right: Broadcasting live from Table
Mountain, South Africa, for the BBC
World Service 70th Anniversarycelebrations.

Annual Report and Accounts 2002/2003 51

Review of services: BBC World Service & Global News

New investment plans focus on content enrichment for radio
services to the Arab world and Afghanistan; FM expansion in
the major global conurbations, and building the multilingualinternet presence with enhanced interactivity.
BBC World Service celebrated its 70th anniversary inDecember 2002 with a global concert – live from Dakar,
Kabul, London, Mexico City and Mumbai – and a special
14-hour programme linking more than 50 outside broadcasts
around the world. In a special 70th anniversary lecture, UN
Secretary General Kofi Annan memorably described BBC
World Service as a “lifeline to learning, enlightenment and tohope itself ”.
BBC World
BBC World has made substantial progress in the past year
towards fulfilling its aims of being the world’s best and mostauthoritative international television news channel andshowcasing the best of BBC journalism. During the conflictin Iraq, its tone, range of contributors and depth of analysis
were distinctive.
There were signs of a real appetite for the BBC’s balanced,
objective and internationalist approach. Global distribution of
BBC World grew by 25% in 2002/2003. It is now available in
255 million homes of which 103 million are on a 24-hourbasis. Hotel distribution has increased by 17% year on year
to 870,000 rooms.Take-up of BBC World’s rolling coverageby terrestrial broadcasters after the war in Iraq broke out
added 80 million households. In the USA, nearly a million
viewers are now watching BBC World via PBS where thechannel is now available in 86% of US television households.
At the outbreak of war in Iraq, evening network news
viewing in the US went up 28% overall with a 33% increase
for the 6pm bulletin on WNET. Research from India, Australia
and South Africa showed that audience levels doubled during
the Iraq conflict.
This is a caption

Above left: UN Secretary General
Kofi Annan presenting a special BBC
World Service anniversary lecturefrom New York.
Left: Head of the BBC Hindi Service
congratulates teenage Indian filmmakers who follow in the footsteps of
BBC World Service as this year’s
One World Media Awards winners.

Above: Click Online can be seenon BBC World.

52 Annual Report and Accounts 2002/2003

Expanding
world

BBC World is now available
in 255 million homes.

New media
The BBC’s international new media service aims to be themost trusted news forum on the internet and to be a hub
for debating key global issues across national and cultural
boundaries.
The international English language version of the BBC newssite – bbcnews.com – was successfully launched in July andbuilt on the BBC’s reputation for convenience, depth, analysis,
expertise and innovation. It won the prestigious 2002 Webbyfor the best news website in the world.
International traffic shot up in the final two months of theyear because of the war in Iraq and the number of users
rose from 7 million to 13 million in March.Year on year, traffic
for the combined international-facing news site in English andthe language services increased by over 200% to 228 million
page impressions.There were particularly large gains foronline services in English, Arabic, Spanish and Persian.
BBC Monitoring
BBC Monitoring, based at Caversham, responded to the highdemand for fast and accurate global media monitoring in thepast year, particularly during the Iraq conflict. It provided key
source material on crucial global events for stakeholders
including the Foreign Office, the Cabinet Office, the Ministryof Defence and the BBC.
Customer satisfaction ratings for usefulness, range, selection
and responsiveness remained at high levels.

BBC World Service & Global News website
page impressions
March 2003
March 2002

Millions
227.7
75.3

Source: BBCi server logs.

Top right: BBC Monitoring provides
key source material on crucial global
events.
Middle right: BBC correspondent
Lyse Doucet.
Right:Tim Sebastian’s Hard Talk.

Annual Report and Accounts 2002/2003 53

Commercial activities: BBC Worldwide Limited

Despite an economic downturn in the global advertising,television and magazine markets affecting many of its
customers, BBC Worldwide Limited achieved record sales
from continuing operations*, record profit and a record
cash flow contribution to the BBC.The company returned£123million to the BBC, an increase of 16% on last year’srecord contribution of £106million. Sales from continuing
operations, including its share of joint ventures, rose to£640million with profit up to £44million.

successfully implemented an additional series of corporate
governance and risk management measures.
More than 40,000 hours of television programming weresold in 2002/2003. According to British Television
Distributors’ Association figures for 2002, BBC Worldwide
accounted for 54% of the total UK television export market,
its highest share to date.

BBC Worldwide exists to maximise the value of the BBC’scontent assets for the benefit of the licence payer, to reinvest
its earnings into public service programming and to extend
the enjoyment of BBC programming among UK audiences
and around the world.

Some of the BBC’s most creative programmes, such as The
Life of Mammals and The Blue Planet, were also the top export
titles, supported in their development by BBC Worldwide
investment.This year’s export success stories from independent
production companies include Spooks, the BBC One series
from Kudos, launched in the USA as MI5.

In performing its commercial role, BBC Worldwide conforms
to rigorous fair trading requirements under the BBC’s Royal
Charter (see page 68). During the year, the company

Coverage of the Golden Jubilee concerts was sold tomore than 80 countries. 160,000 DVDs were also sold. BBCWorldwide subsidiary Audiocall handled the global ticket

BBC Worldwide cash flow to the BBC
2002/2003
2001/2002
2000/2001
1999/2000
1998/1999
1997/1998
1996/1997£ millions
123
106
96
82
81
75
53

Source: BBC Finance* Continuing operations includes BBC Worldwide’s share of joint ventures but excludes BBC
World and beeb.com

Above: Known as MI5in the USA, the BBC’s
Spooks drama series has
now also been sold to
Russian television.
Right: Radio Times sold its
15 billionth copy during
the year.

54 Annual Report and Accounts 2002/2003

Global exports

ballot, with more than 3,000 phone lines in nine languages.
Proceeds from all these activities went to charity (seeDonations, page 81).
The success of The Office demonstrated BBC Worldwide’s
ability to support and market the most innovative of BBC
programmes.The series sold to 25 territories; aired on BBC
America to critical acclaim; became a best selling book of
scripts, and sold more than 1 million videos and DVDs,
becoming the UK’s best selling video/DVD television title.
During the year, BBC World transferred to a new division(see page 51).
With a reach of 550 million homes (including BBC World),
BBC Worldwide is one of the world’s biggest international
television channel operators. BBC America has achieved
remarkable success, reaching 35 million homes across theUSA, and becoming the USA’s second-fastest growing cablechannel.The BBC, BBC Worldwide and Discovery
Communications, Inc. agreed a landmark ten-year extension
to their global co-production partnership. BBC Worldwide’s
joint venture with Flextech Television, UKTV, was once again
profitable, despite the advertising recession and closure of ITVDigital. It maintained its commitment to new channels with thelaunch of UK Bright Ideas and UK History.
BBC Worldwide is the UK’s biggest hardback non-fiction
publisher both by value and by volume. BBC Books becamemarket leaders in gardening and history titles as well as infood and drink, and television tie-in titles. David Attenborough’s
The Life of Mammals, and his autobiography Life on Air, wereamong the year’s most successful titles, selling a total of morethan 368,000 copies and winning WHSmith People’s Choice
Book Awards. BBC Audiobooks won a record 18 Spoken
Word awards, including Publisher of the Year. Some of thebest BBC radio talent was released on audio, such as BBC
Radio 4’s Dead Ringers.

BBC Worldwide is Europe’s
top exporter of television
programmes.

BBC Magazines is the UK’s third-largest magazine publishingbusiness, reaching almost one in five of all UK adults. BBC
Magazines increased circulation by 2.2% year on year in thesecond half of 2002 and improved profitability. Radio Times
sold its 15 billionth copy during the year and a new layout
helped readers to make sense of the multichannel
environment. With the top six pre-school titles, BBCmagazines are clear favourites with younger readers.
In a difficult year for children’s properties, Fimbles emerged asa major success. Its universal theme of children’s natural desire
for discovery is proving popular with broadcasters around theworld, and Fimbles has already sold in countries from France
to Korea.The smallest Fimble was the UK’s top selling soft toy
at Christmas.
BBC Learning developed innovative partnerships with major
educational institutions and publishers including the Open
University.The Lifesign project, a partnership with four UK
universities, is making BBC science programmes such as The
Human Body available on broadband for all students in UK
further and higher education.
BBC Worldwide was again awarded the Worldwide Fund for
Nature’s top rating (three-star) for its continued commitment
to the environment, and was a National Gold Winner in theGreen Apple Environmental Awards. In total, BBC Worldwide
won a record 106 awards during the year, and a national poll
voted the BBC Britain’s greatest export.

Above: BBC America is the USA’s
second fastest growing cablechannel.
Right:The Fimbles – a hit round theworld from France to Korea.

Annual Report and Accounts 2002/2003 55

Commercial activities: BBC Ventures Group Limited

The BBC Ventures Group of companies was launchedin 2002 to realise the commercial value of the BBC’s
media services and facilities both within the BBC andexternally in order to return cash and cost savings of£300million back to the BBC over a five-year period.
BBC Ventures Group faced difficult market conditions withmany international media businesses’ investment decisions
affected by a volatile stock market. Despite those uncertainties,
the Group had a strong sales year, producing an overall trading
consolidated profit.
BBC Ventures Group comprises four commercial businesses:
BBC Broadcast, BBC Resources, BBC Technology and BBC
Vecta.Together the businesses have almost 3,600 staff, salesof £440million (of which £40million is from sources external
to the BBC) and are leading providers of creative andtechnical broadcast services, production and facilities, both in
the UK and internationally.The four businesses together are

involved in all areas of the modern media lifecycle from theconverging media, broadcast, technology and telecoms
industries to content origination, management anddistribution.
BBC Ventures Group’s strategic approach in the past year
has been to drive efficiencies within the businesses, expand
internationally, develop innovations and grow external
revenues.The year saw an important turning point when, forthe first time, all the Group’s businesses exceeded financial
targets and returned real value to the BBC.The Groupturned a profit before interest and tax of £14.5million, having
delivered price reductions back to the BBC of £23million.
BBC Resources
BBC Resources had a remarkable summer of sport andnational celebration. It provided the BBC and other clientswith extensive outside broadcast facilities for major events
including the Golden Jubilee celebrations, the Commonwealth
Above: Party at the Palace was ahuge operation for BBC Resources.
Far left: Wireless technology from
BBC Vecta with new digital radio
camera.
Left: Colledia, BBC Technology’s
media lifecycle management
software, was launched.

56 Annual Report and Accounts 2002/2003

Big pictureGames and World Rally Championships.The company also
developed initiatives to attract more independent production
companies to take advantage of the BBC’s facilities andstudios. In addition, the post-production side of the businessworked closely with production customers to find new andinnovative ways of keeping pace with evolving technologies.
BBC Resources, with a staff of 1,400, has evolved into thelargest production facilities business in Europe and supplies
services in the outside broadcast, studios, post-production,
design and costumes and wigs market. All areas of thebusiness have exceeded profit expectations for the year.
BBC Technology
BBC Technology was created in 2001 to draw on the BBC’s
expertise in the design, build and operation of systems forcreating, managing and distributing content across all
broadcast, digital media and interactive platforms. Customers
today range from BSkyB to the South African Broadcasting
Corporation.The successful acquisition of IXL’s digital media
solutions business based in San Francisco and Atlanta
accelerated the development of the business in North
America.

BBC Ventures Group’s
cutting-edge technology andresources made 2002’s
summer of sport andcelebrations unforgettable.

BBC Broadcast
Launched in April 2002, BBC Broadcast offers the complete
range of services required to launch, promote, play out andmanage channels and services across television, the internet
and mobile devices. It currently plays out 25 television
channel streams and 12 interactive television streams for
public service, commercial and international broadcasters
and publishes bbc.co.uk.
During a busy year the company worked with the BBC tolaunch and promote its new digital television, interactive
television and radio services; with UKTV to launch extensions
to its existing channels and two new digital channels as well
as delivering creative projects for Discovery Networks Europe,
Emirates Media, HSBC, Central Office of Information and anumber of leading advertising agencies.
BBC Broadcast received industry recognition from the RTS,
British Interactive Multimedia Association (BIMA) and Promax
for the effectiveness of its channel and programme identity
and image campaigns.

BBC Vecta
Created from Kingswood Warren Ventures and renamed in
During the year, BBC Technology played a pioneering role
2003, BBC Vecta’s task is to bring the very latest developments
in managing the production of audio-visual content for thein media technology products to a wider marketplace andUK’s first 3G service, delivered by 3; services include thereturn revenues to the BBC. Working closely with the BBC’s
processing and editing of football highlights so that fans canaward-winning Research & Development team and othersee their favourite goals on a mobile handset’s small screen.
outside partners, its first new product innovation is therevolutionary Digital Wireless Camera which eliminates the
The financial year ended with a major deal with US company need for the cabling required by outside broadcasts, resulting
ESPN, a new contract with satellite broadcaster DirecTV and in greater flexibility and savings. BBC Vecta’s wirelessthe launch of Colledia, an award-winning, innovative productbroadcast division, BBC WiScape, has an extensive network
portfolio for broadcasters that is set to transform news, sport of partners across Europe committed to extending the reachand production environments.
of the new camera to broadcasters around the world.

Left: UK History channel was
launched and promoted by BBC
Broadcast.
Right: BBC Technology and BBC
Broadcast provide instant replay for3G phones.

57

Putting audiences first

Audiences are at the heart of everything the BBC does and,because they directly fund it, they expect the BBC to be
more accountable than other broadcasters.The Governors
aim to ensure that this expectation is met.
Governance reforms intended to improve the BBC’s direct
accountability to the public were announced in 2002. Last
year’s Annual Report included a commitment to greaterpublic involvement based on BBC objectives and the BBC
Statements of Programme Policy.The Governors stressed theunique value of face-to-face dialogue with licence payers
to develop understanding of the BBC’s public service roleand how well it is being achieved.This year saw two key
developments: the introduction of a more deliberative styleof consultation with licence payers and a focus on issues
relating to audience objectives.
Audience reactions to BBC news and current affairs
programming
At workshop sessions between January and April 2003 in
Wolverhampton, Belfast,Tunbridge Wells and Bristol, BBC
Governors met audience groups of different ages and social
profiles to hear their reaction to what the BBC offeredacross the portfolio of analogue and digital services (including
online).These workshops explored how far news and current
affairs programming from the BBC remained in line with its
public service remit: whether it was meeting the needs of the
UK’s diverse audiences in terms of ethnicity, region and age
and what could be done to make it more engaging tounderserved or disengaged audiences.
There was a clear message that the main network televisionbulletins should provide straight reporting and analysis –human interest stories should be left to other broadcasters.
People also felt that there was too much coverage ofentertainment and celebrity stories; this was not what they
expected from a public service broadcaster. Attitudes to BBC
regional news were different, however; people welcomed
local interest and enjoyed a more personal tone.
Overall, the BBC was still seen as both the first port of callfor major news stories and the most trusted broadcaster.
Some were concerned about perceived Government
intervention – even if unjustified, the BBC should take thisconcern on board. It was acknowledged that the timing of the

Above left: Users were consulted on
the BBC’s online services at a
Governors’ seminar.
Left: Accountability workshop withBBC Governor Dame Pauline
Neville-Jones.

58 Annual Report and Accounts 2002/2003

Listening toaudiences

workshops, which coincided with the run up to and durationof the war in Iraq, coloured perceptions of the news agenda.
Participants wanted more context for big stories, with welladvertised current affairs programming to back up news
bulletins. Audiences asked for reassurance that BBC current
affairs programmes were not being marginalised in late-nightor weekend slots or only to be found on BBC Two.
Participants questioned whether the timing of the main BBC
news bulletins was ideal for today’s lifestyle – was 6pm too
early and 10pm too late? Should there be short news
updates throughout the evening? Younger audiences inparticular wanted news at times that suited them and theidea of waiting for big news programmes was felt to be oldfashioned.They stressed, too, that making news more engaging
was not so much a matter of style as of relevance.
Consulting audiences on the BBC’s online services
The Governors monitor the performance of new services in
the context of the BBC’s remit and strategy and the terms ofGovernment consent for their launch. In 1998 consent wasgiven for the BBC to offer online services based on thefollowing objectives:to act as an essential resource offering wide-ranging
unique content
to strengthen accountability and forge a new relationshipwith licence payers
to provide a home for licence payers on the internet andact as a trusted guide•••

Audiences debated issues
with Governors atworkshops on news andonline services.

Views about content varied. Some thought the range was
too wide and navigation difficult and that the site should
focus on augmenting the BBC’s television and radio output
and avoid replicating information available elsewhere.The
majority view, though, was that the BBC’s range of content,style and trustworthiness contributed to the uniqueness of its
online service.
Given the nature of the internet it was suggested that theBBC’s purpose should be to offer distinctiveness, quality andaccuracy online, alongside the core remit to inform, educate
and entertain. Participants stressed the importance of the
BBC website in home learning and its role in enabling people
to follow up interests aroused by programmes.
Opinion was divided about whether there was a need for
the BBC to have a www search engine when others werecommercially available. While some participants questioned
the value of resourcing this, others valued the provision of achild-friendly, UK-focused search engine. All agreed that thelack of advertising was a bonus.
The BBC’s ability to offer comprehensive, tailored regional
and local sites was singled out for praise, although someobserved that it was time to add more depth and appeal
to a wider demographic range.There was debate about
whether the Where I Live sites should act as a conduit for
information within communities or facilitate links to others.

The regulation of message boards was a widely sharedconcern, though well-moderated boards and discussion
At a Governors’ seminar in March 2003, more than 70 users forums extended the audience’s relationship beyond
considered the range and mix of content on www.bbc.co.uk, television and radio. Message boards were felt to be a
the BBC’s use of the internet for accountability, and the public particularly important public service for younger people,
providing them with a forum for anonymous discussion of
purposes of BBC online services. In April, representatives of
personal issues.
the Broadcasting Councils and English National Forum took
up the debate.
The role of BBC online services in developing accountability
to licence payers continued to be important but many were
What the users thought
unaware of the ways in which this was currently done.They
Participants in the Governors’ seminar stressed that being afelt these areas of the website should be more visible,
trusted guide to the internet was a paramount role for theaccessible and understandable.
BBC as a public service broadcaster. At the same time, theBBC should be a pioneer in internet development in the same
way as it has been on television and radio. All agreed that the There was some concern over the funding of BBC online
BBC was a very good starting point for new internet users.
services, particularly as many licence payers did not haveaccess to the internet.The majority of the participants agreed
Far left: Where I Live now has
55 sites across the UK.
Left: Come and visit the BBC –where to find Television Centre
tours online.

Annual Report and Accounts 2002/2003 59

Putting audiences firstthat £5 was a suitable amount of the licence fee for the BBC
to spend on online services. About half of them thought that
it would be appropriate for the BBC to spend more than thisin future.

the BBC and the Asian community is maintained while the
new BBC Asian Network finds its feet, the Governors willin future look for a full range of information to be captured
and routed to them by the Governance & Accountability
department.They will expect, too, that resources will be
What the BBC’s advisers thought
made available to ensure that BBC Asian Network has access
Representatives of the advisory network saw sites such as
to audience consultation and feedback on programme
BBC News, Where I Live and educational sites as the core
strategy which match those of other radio networks.
of what the BBC should be offering.
Systematic consideration of the interests of Asian audiences
will also form part of the business cycle of the Broadcasting
Message boards raised significant issues.The group was divided Councils, English National Forum and Regional and Localover whether the BBC should be ‘connecting communities’ or Advisory Network.
‘connecting with communities’ online. Some thought that it
was the BBC’s role to connect communities and provide a
A new platform for interest groups
platform for sharing information. Others were unsure where The Governors need advice on particular issues of concern
such sites fitted into the public service remit and felt thatto interest groups such as disabled people. Deliberative
there were better ways of putting people in touch with each forums drawn from membership of the Advisory Councils
other. Like the seminar participants, Council members were
offer a new way of considering issues arising out of specialist
concerned about moderation. Overall, the group questioned services and concerns such as race, culture, religion, gender,whether message boards were a good use of resources.
age, sexuality or disability. A disability group has been piloted
and an Asian group will also meet during 2003.
The About the BBC site was considered relatively successful;it provided quite a lot of information about what the BBC
Improving openness and transparency
did, how it was run and policy documents. It did not perform The BBC’s first Statements of Programme Policy was publishedas well in taking account of licence payers’ views, althoughin July 2002 in tandem with the BBC Annual Report. Reform of
there were opportunities for the public to submit comments. the BBC’s business cycle meant that the Statements for
Overall, accountability should have a higher profile on the
2003/2004 followed less than a year later, in April 2003.
BBCi homepage, making it more obvious that there was aforum for users and encouraging both positive and negative
The Governors see the Statements as an opportunity tofeedback, with infrastructure in place to respond to comments. improve the BBC’s accountability. Audience groups wereasked how far their experience as viewers and listeners had
What will happen next?
matched up to the Statements for 2002/2003. Overall, there
The Board of Governors will take account of the views fromboth consultations in considering a report from BBC
management which will be published in the summer.
Listening to Asian audiences
Over the past year, the Governors reviewed the BBC’s
accountability to Asian audiences in the light of feedback
from their consultation on cultural diversity in 2000 and thefact that, now that BBC Asian Network has become a UKwide service, the regional remit and status of the Asian
Network Advisory Council is no longer appropriate.
To ensure that they can monitor how far the BBC meets theneeds of all Asian audiences and that a strong link between
Right: BBC Statements of Programme
Policy published this spring.
Far right: BBC Radio 1 DJs Nihal
and Bobby.

60 Annual Report and Accounts 2002/2003

Speaking up

was a satisfactory fit between expectations, Statements andaudience experience. In terms of accountability, licence payers
continued to be pleasantly surprised by the BBC’s efforts tomake the document accessible to them.They doubted,
though, that there would be much general interest in
information beyond programme plans and would have liked
simple charts indicating exactly how the BBC planned tospend their licence fee.
This Annual Report, and particularly the objectives set by the
BBC Governors for the year ahead, reflect their assessmentof how far the BBC succeeded in delivering its public service
remit in 2002/2003. Further points relevant to the Statements
are incorporated in the report on BBC performance against
objectives on pages 8 to 15; the Review of services on pages
20 to 53; the Compliance section on pages 68 to 81, and theBroadcasting facts and figures section on pages 122 to 131
of this report.
Reports from BBC advisory bodies
Broadcasting Councils and the English National ForumThe BBC is unique in drawing on a network of more than 500
people around the UK for advice on programmes and services.
Broadcasting Councils for Scotland, Wales and Northern
Ireland represent the interests of people in the nations. In
England, Regional Advisory Councils advise the Governors
through the English National Forum (ENF) and are informedin their turn by a network of Local Advisory Councils.

A network of 500 people
around the UK advises theGovernors on programmes
and services.

Sunday lunchtime was felt by some to be inconvenient.
The ENF argued, too, that the South East and East Midlands
regions should have their own dedicated political programme
and that English regional television needed to expand into
genres such as arts, culture and heritage to reflect thediversity of life across England.
Connecting with audiences was a key theme of the year.
The Broadcasting Council for Northern Ireland particularly
noted the contribution that newly appointed regionalcorrespondents were making in this respect and highlighted
the significance of the new studio facilities in Enniskillen. BBC
Wales’ ambitious programme of activities included further
development of the digital storytelling project Capture
Wales/Cipolwg ar Gymru. Local Voices projects, record
attendance at community events and outside broadcasts andincreased accountability all helped deepen the relationshipwith licence payers across the UK. Building on these strengths
was a priority for the year ahead.
In general, the Broadcasting Councils were encouraged by
the range and volume of commissions from Scotland, Walesand Northern Ireland for the BBC networks, which included
some notable successes. Sustaining this was seen as asignificant challenge.

Regional and Local Advisory Councils monitor how wellthe English regions are reflected on BBC network services.
While welcoming new dramas set in the North of England,
The Councils’ most important task is to advise the Governors they continued to feel that more was needed – particularly
on programme and service objectives for BBC Nations &in the case of the Midlands.The London Regional Advisory
Regions and to monitor, through a process of regular review, Council was anxious to ensure that EastEnders portrayed
the extent to which the BBC delivers them. Overall, they felt the full diversity of the capital.
that significant progress had been made against the year’s
objectives.They were encouraged by audience response to
The views of the Broadcasting Councils and the ENF areprogrammes in their area and by the range and diversity of
published in more detail in the Annual Reviews of BBC Scotland,
BBC outreach to different audiences.
Wales, Northern Ireland and the English Regions.These areavailable on the BBC’s website at www.bbc.co.uk/annualreport.
The Broadcasting Council for Scotland welcomed inparticular the introduction of Politics Scotland and looked
The Governors’ World Service Consultative Group
forward to a major review of all BBC Scotland’s news
The World Service Consultative Group (WSCG) provided
journalism in the year to come, noting that this would include the Governors with an independent review of the range andcomment from a wide range of individuals and groups.The
quality of BBC World Service output in English, Arabic, Hausa,
ENF noted the higher audiences to regional current affairs
Somali, Portuguese, Spanish and Chinese. All attracted highand political programmes following their move from BBC Two scores for authority and accuracy.
to BBC One, although the scheduling of the Politics Show at
Right: Voices – in Dallow.

Annual Report and Accounts 2002/2003 61

Putting audiences first

BBC World Service output to Africa in English, Hausa andSomali had made an impressive impact.The WSCG stressed
the strong educational dimension of BBC World Service
output to Africa, which appeals across all socio-economic
groups. It also noted that while the BBC Arabic Service was
performing well in a challenging market, BBC World Service
needed to continue to improve the range and appeal of its
programmes.

programmes and big events, but remained uneasy about thelack of live worship which reflected ordinary faith communities
on television.The commitment in the BBC Statements ofProgramme Policy 2002/2003 to a minimum of 112 hours of
religious output across BBC One and BBC Two a year was
also welcome, although CRAC asked for reassurance that the
projected minimum of 80 hours on BBC One would not be
dominated by Songs of Praise and Heaven and Earth.

BBC World Service achieved a significant impact in the highly
competitive US media environment where co-productions
with American public radio are crucial to attracting audiences.
The WSCG asked BBC World Service to keep these coproductions under review to ensure programmes continued
to demonstrate the BBC’s strengths of accuracy, impartiality,
relevance and depth and did not lose BBC style, tone andvalues.The WSCG agreed that high-profile local partnerships
were essential to the delivery of the output but wasconcerned about low awareness of BBC output in Spanish
and Portuguese in Latin America.

Better representation of non-Christian faiths continued to
be a priority.This was a live issue in view of the BBC’s
strategy to maximise the potential of religion to reach partsof the audience.

Restrictions imposed by the Chinese authorities on the
distribution of BBC World Service limit its impact, both onradio and online.The WSCG urged BBC World Service
to develop local partnerships based on the provision of
education, business, science and language training
programmes and to review the target audience for its
Mandarin online site and the scope for broadening its
agenda beyond news and current affairs.
The Central Religious Advisory Committee
The Central Religious Advisory Committee (CRAC) advises
the BBC on religious broadcasting policy and programmes.
The BBC’s new strategy for religion and ethics was a key
theme of the year. CRAC welcomed the higher profile ofreligious broadcasting and the investment in landmark

It is part of the BBC’s public service remit to provide
information to meet public need and the BBC Religion
website was seen as an important resource for multi-faitheducation. Members felt that more could be done in thearea of religious news and also found there was lessinformation about programmes and many more quizzes
than they expected.
Among many programmes reviewed, CRAC recorded
particular praise for Panorama – Suffer the Little Children.
Although not a religious programme, it was felt that thishad been brave, if frightening, and in the best tradition of
investigative journalism.
Responding to complaints
The Governors’ Programme Complaints Committee(GPCC), is responsible for ensuring that complaints made byviewers and listeners are properly handled.The GPCC alsohears appeals against decisions by the Programme Complaints
Unit (PCU) or by directors of BBC divisions on serious
complaints.The findings on appeals are reported in a quarterly
bulletin. During the year, the Committee considered 39
appeals, of which two were upheld in full and three in part.

Far left: Moses, one of the landmark
programmes at the heart of theBBC’s new religion strategy.
Left: BBC World Service website.

62 Annual Report and Accounts 2002/2003

All day,every day

The PCU deals with complaints which give reason to believethat something broadcast by the BBC’s licence-funded services
may have fallen seriously short of the standards set out in the
BBC Producers’ Guidelines. Its job is to investigate complaints
impartially. When it upholds a complaint, BBC management
is required to take appropriate action. In 2002/2003, the PCU
dealt with 1,596 complaints (794 in 2001/2002) concerning
807 items, of which 137 were wholly or partly upheld – 8.5%of the total. Findings on upheld complaints are published ina quarterly bulletin, together with a note of the action taken
in each case. 49.5% of complaints were answered within thetarget times (20 days or 35 days for more complex cases),
compared with 65% in 2001/2002.This was due to theincreased number of complaints following the introductionof an email complaint facility on BBCi in August 2002.

The BBC’s 24 hour a day
call centres had 2.3 million
audience contacts throughtelephone, email and letters.

A more rigorous system for holding management to accountfor proper handling of complaints has been introduced
this year.The introduction of separate bulletins for the PCU
and GPCC, a new remit for the GPCC, and an external
Editorial Adviser have also emphasised the distinct role of
the Governors as representatives of the public interest.
Governors took part in Drawing the Line workshops aspart of an ongoing consultation with members of the public
about what they find acceptable in the areas of taste anddecency and what standards they expect from the BBC.
The Broadcasting Councils and ENF are now taking these
consultations out to more local audiences. In the light ofrecent complaints, the GPCC also held a seminar with
programme makers, led by the Controller of Editorial Policy,
on how the BBC views current trends in audience
expectations. Recognising that standards are not homogenous
and audience expectations vary for different channels and indifferent contexts, they emphasised the importance of
openness to feedback and inviting comment from audiences.

The PCU also liaises with the Broadcasting Standards
Commission (BSC) on complaints about BBC programmes.
In the year to 31 March 2003, the BSC notified the BBC of
36 fairness and privacy complaints and upheld eight in whole
or in part.The BSC notified the BBC of 1,399 complaints
about standards, and complaints were partly or wholly upheld Accessibility
about 50 broadcast items.The BBC complied with all
BBC Information operates 24 hours a day, seven days a week,
directions given under the BSC’s statutory powers.
handling telephone and written comments and queries fromaudiences. Every comment is logged and reported daily
Complaints about policy, schedule changes, technical standards across the BBC. Overall, contacts for the unsolicited service
or questions of personal preference are forwarded tototalled 1,177,464 this year.The number of unsolicited calls
appropriate areas of the BBC for attention. Overall, the totalrose compared with last year, totalling 796,490.There wasnumber of complaints received at BBC Information centres in also a slight increase in the volume of letters at 123,521.
Belfast, Glasgow and Bangor, by the PCU and by senior
The number of emails increased by another 39% over last
management in 2002/2003 was 118,142 (2001/2002 95,638). year, totalling 257,453. In addition the Audience Lines service
Complaints represented 8.4% of the total number of contacts handled a total of 1,171,958 contacts through live calls,
received by BBC Information this year, compared with 9.6%
automated calls and emails. Overall there were 2,349,422
last year.
contacts with the audience last year through the centres in
Belfast, Glasgow and Bangor.

Right: At accountability workshops
around the UK audiences debatedissues with BBC Governors including
Dermot Gleeson (far right).

Annual Report and Accounts 2002/2003 63

The BBC in the community

Working together
The BBC is part of every community in the UK. It is often
the centre point of people’s search for information and aims
to help them connect with their communities. It is also asignificant part of the corporate community as an institutionthat people trust and value. A coordinated approach to its
social investment, ethical practice, community support andenvironmental responsibility aims to enable the diverse partsof BBC corporate activity to add up to a meaningful wholeand so enhance the BBC’s reputation for corporate citizenship.
To this end, a dedicated Corporate Social Responsibility
Centre has been created and, in 2004, the BBC will publish
its first full CSR report.
Enhancing BBC values
Trust is the foundation of BBC corporate social responsibility.
The BBC aims for the highest standards of corporate behaviour.
122 companies and organisations voluntarily submitted reports
to Business in the Community’s first Corporate Responsibility
Index.The media sector had the highest participation rate andthe BBC’s performance topped that group.
What the BBC is doing
Every day staff undertake work that demonstrates theBBC’s public service commitment.The range is vast, but
the examples below capture its spirit.
BBC Audience Lines take around 2 million calls a year
from people seeking advice on social issues highlighted
in programmes. Issues covered last year included abuse,bereavement, addiction and health.
BBCi Hull is part of a £25million investment which is driving
the BBC’s Connecting Communities vision and providing
a new digital multimedia centre, a new regional television
news service, a BBC bus and a BBC Open Centre. Withlearning partners and teachers, the BBC is also working to
unlock the potential of new technology and new programme
making techniques.
Altogether Now run by BBC Radio Leeds was the biggest
social action project ever undertaken by a BBC Local Radiostation.Two members of staff worked full time in one of themost deprived areas of Britain.They set up a radio studio ina local school and used it as a base from which to lead 25
community action projects for people of all ages, enabling
Above left: BBC Wales ran an
ambitious audience outreach project.
Left: Pudsey Bear and Terry Wogan
with Dolly Parton who donated asigned guitar for auction for BBC
Children in Need.
Right: Altogether Now at BBC Radio
Leeds.

64 Annual Report and Accounts 2002/2003

Helping others

them to tell their stories and confront the common
stereotyping of their area.
With a workforce of nearly 12,000 in West London, the BBC
has been developing strong links with the local community.
Nearby residents have been consulted on the naming of newbuildings; an open day at BBC Television Centre attracted
over 600 people, and the BBC also helps run a variety of
employee volunteering projects with local organisations.
Employee volunteering is at the heart of the BBC community
involvement programme and, as a member of the London
Benchmarking Group, the BBC’s community contribution lastyear was in keeping with other comparable companies. A
recent example is the BBC’s support for Kids Company – acharity which works with up to 4,000 teenagers a year andneeded help with restructuring its business operations andresolving financial planning issues.
BBC broadcast charitable appeals
The BBC broadcasts charitable appeals to give audiences
the opportunity to donate to a wide range of charities, aswell as helping charities themselves to raise awareness of
their work. Market research this year showed that over
90% of the public think that the BBC should carry major
broadcast appeals such as BBC Children in Need and Red
Nose Day, and that people trust the BBC to ensure that
their money is spent well.
The BBC Governors oversee the allocation of appeals forindividual charities on BBC Radio 4 and BBC One throughthe Appeals Advisory Committee (AAC), which also advises
them on policy and helps them scrutinise major broadcast
appeals.This year, the AAC revised the BBC’s appeals policy,
restating the purpose of broadcast appeals and explaining theBBC’s role more clearly. It also helped frame the Sport Relief
appeal, considering how the money should be distributed andworking to ensure its fit with other BBC appeals andfundraising projects.

BBC Children in Need has
raised over £300million in
23 years and £13.5million
in just one night lastNovember.

the UK, to Riders for Health, which trains and helps African
people in delivering health and welfare services to ruralcommunities. BBC Local Radio in England, BBC Wales and
BBC Northern Ireland also carried regular appeals for local
charities, while BBC Scotland continued to reflect the work of
Scottish charities across its programmes. Last year, BBC Local
Radio stations raised more than £1million in cash, including£40,000 towards a multiple sclerosis centre in Lincolnshireand more than £200,000 for a children’s hospice in
Humberside. BBC Radio Cornwall staged the most successful
local radio appeal ever – raising more than £600,000 to help
pay for an oncology centre at Truro.
July’s Sport Relief appeal raised over £10million for projects
working overseas with disadvantaged communities and also in
the UK where sport was an agent of social change in the livesof young people. In November 2002, Blue Peter launched its
WaterWorks Appeal to help people in East Africa get accessto safe clean water supplies close to their homes. Children’s
bring and buy sales have raised £1.3million to date – more thandouble the £500,000 target. Audiences donated £13.5million on
the night to BBC Children in Need and, so far, donations total£25million for disadvantaged children across the UK. Red Nose
Day in March 2003 raised £55.8million, and donations continue.
The money will go to help some of the poorest and mostdisadvantaged communities in Africa and the UK.
The BBC and the environment
In 2002/2003 the BBC made real progress on reducing its
negative impact on the environment through implementing

Last year, BBC network television and radio carried appeals
for 64 individual UK charities.The weekly BBC Radio 4 Appeal
raised over £900,000 for 51 charities (excluding BBC Children
in Need).The monthly Lifeline appeal on BBC One raisedover £210,000 for charities ranging from the Sickle Cell
Society, which supports people affected by this illness in
Left: Open day at
Television Centre.
Right: Red-nosed Ruby
Wax raises money for
Comic Relief.

65

The BBC in the community

environmental projects. Action focused on five areas (seebelow). Better measurement and management systems
helped monitor progress.
As the BBC moves into the future, its environmental
management will need to adapt to changing circumstances.
Rapid change in the BBC’s business and the move towards
more digital, interactive and internet services are fundamentallychanging how information and programme content are delivered.
This will impact on environmental performance. At the sametime, the BBC increasingly relies on service partnerships tohelp manage and deliver environmental activities.
Waste
The BBC has taken up the challenge of reducing its waste
and increasing the level of recycling. As around 70% comprises
paper waste, the focus has been on implementing paper
recycling schemes. Initial pilot schemes have been expanded
across BBC offices around the UK and extended to include
the recycling of batteries, toners and tapes. In areas where
there is high use, newspapers, cardboard, aluminium cans andglass are also collected separately and recycled. 32% of theBBC’s waste was recycled in 2002 (up from 17% in 2001)
and the organisation is on track to achieve an ambitious
target of 55% by 2005.
To promote the reuse of office equipment, Swapshop waslaunched in 2002.This is an online noticeboard which allows
staff to transfer unused items such as furniture, electronicequipment and props to others who can use them. On air,
BBC Radio Essex, Cambridgeshire and Northampton joined
up with their local communities to promote a Slim Your Bin
campaign, supporting awareness and providing information
on waste recycling.
Energy and climate change
The BBC supports efforts to reduce climate change throughcarbon dioxide (CO2) reduction. For each programme hourbroadcast, the BBC’s stated target is to reduce the level ofgreenhouse gases produced by 8% from 2002 to 2010 –in line with Government guidelines. In 2002, greenhouse gaslevels (measured as CO2) reduced to 0.43 tonnes per
broadcast hour (down from 0.44 tonnes in 2001).
The BBC reduced its CO2 emissions through the use of lowcarbon technologies such as the combined heat and power
Right: Smart thinking – the BBC’selectric car experiment.
Far right: New BBC buildings will
conform to high environmental
standards.

66 Annual Report and Accounts 2002/2003

plant at Television Centre and buying green electricity. Over
2002, 7% of the BBC’s electrical energy was from renewablesources such as windmills and hydroelectric power. In totalaround 22% of the BBC’s total energy consumption has zerocarbon emissions.
Total building energy use went up to 490 GWh in 2002 from
425 GWh in 2001. An energy programme is now in place toinvestigate how digital broadcasting will affect energy
consumption.
Buildings
Major developments are under way in London, Birmingham
and Glasgow with smaller developments in many other cities.
New office buildings at White City, London are on target toachieve an Excellent BREEAM rating.The Mailbox building in
Birmingham has solar shading and uses natural lighting.
A process is in place to ensure that timber procured during
construction is from sustainably-managed sources. BBC
buildings include a large number of specialist technical areas
which are not covered by environmental rating schemes suchas BREEAM. An appropriate environmental building benchmark
for broadcast buildings is being developed.
Transport
The apparent increase in the BBC’s transport emissions to
1.48 tonnes per person from 1.23 tonnes per person in 2001
was due to better data capture. In fact, in 2002, significant
improvements were made as 20% of the taxis used by the
BBC moved to green fuels (LPG or hybrid fuels). A cab sharescheme was also launched on the back of a computerisedbooking system which automatically identifies similar journeys
occurring at the same time and offers cab sharing – saving on
fares and fuel.
Supply chain
The BBC’s purchasing activities have an impact on theenvironment through the choice of products bought andindirectly through the activities of suppliers. Progress has been
made in working with suppliers. An environmental questionnaire
now forms part of all tenders. 63% of the BBC’s top 100
suppliers have an environmental policy and the BBC has
ongoing dialogue with 80% of its top 20 suppliers regarding
the environment.
The BBC publishes a full environment report at www.bbc.co.uk/info.

BBC people and talent

Between May and November 2002 more than 10,000 BBC
staff made their voices heard in Just Imagine workshops – theBBC’s largest ever staff consultation – as part of Making it
Happen, the cultural change programme to transform the
BBC into the world’s most creative organisation.
Out of that process emerged, for the first time, a core set of
BBC values (see inside front cover) that place creativity andaudiences at the heart of the BBC’s purpose and inspire
people to work collaboratively and enjoy their jobs.
The key to creativity is the development of staff andrecruiting and retaining new talent.The BBC spends£53.3million a year on staff training (including £8million on
trainees) – a commitment that benefits the entire UK
broadcasting industry. It invested over £200,000 in providing
reduced-price training for freelancers and most major
broadcasters rely on the BBC for their craft training.The BBC
is also a major funder of Skillset (the sector skills organisation
for the audio video industries) and the National Film andTelevision School.
BBC Talent was launched three years ago in order to give
people from all walks of life the chance to get their firstbreak in broadcasting. Last year it promoted 16 schemes
spanning presenting opportunities on CBBC, sports reportingon BBC Radio Five Live, weather presenting for BBC English
Regions and a wide variety of production jobs. Newcomers
get a chance to work on the established networks and new
digital platforms. In 2002, new talent recruits worked on
Tomorrow’s World, New Comedy Awards, Football Focus andGrandstand on BBC One, new sitcoms and comedy pilots
for the launch of BBC Three, and two new documentary
series – Making It and Serious Jungle – on CBBC. BBC Talentaims to reach the widest possible audience through major
marketing and communication campaigns and by staging
auditions and events in 22 towns and cities across the UK.

Just imagine

10,000 people participatedin shaping the future of the
BBC in the biggest staff
consultation ever held.

All 39 BBC Local Radio stations in England also helped in
the search for new urban musicians and vocalists who will
get the chance to perform music of black origin on DJ Trevor
Nelson’s programme.
Two other talent schemes have helped bring fresh voices
to BBC drama, entertainment and children’s production. The
Writers’ Room, champion of talent and diversity, has helped
over 5,000 writers, resulting in commissions across the radio
and television networks. Northern Exposure, a scheme run inpartnership with regional theatres to develop and produce
new comedy and drama writing, worked with over 2,300
writers in two years.
In 2002/2003, the BBC also launched Upfront, its residential
four-day induction programme for all new staff. Wherever
they have come from and whatever job they do in the BBC,Upfront gives them a chance to make a television
programme, interview for a radio programme and build
their own web page, as well as helping them understand thebreadth and complexity of the BBC.The aim is to get new
staff on Upfront in their first or second week and the target isfor 75% of all new starters with a three-month contract orlonger to attend Upfront within their first four weeks at theBBC. Over 2,250 staff attended Upfront during the year.
Learn.Gateway, the personal learning portal for everyone in
the BBC, was one of the most popular sites on Gateway, theBBC’s intranet, with over 10,000 visitors per month of whom
up to 4,000 were active users of the learning modules. Over6,000 staff have completed personal development plans on
Gateway and most of them have finished three or more
modules from the plan.

Left: BBC Talent – a chance to breakinto broadcasting.
Below: All staff were encouraged tocontribute their views at Making it
Happen sessions.

Annual Report and Accounts 2002/2003 67

Compliance

The Governors have clear responsibilities under theBBC’s Charter to ensure that the BBC behaves
responsibly and follows all applicable regulations andcodes of practice.

commercial operations report to the Committee on theiractivities and all staff with commercial responsibilities are
required by the Committee to be trained in the BBC’s fairtrading policies.

They must satisfy themselves that the BBC:● complies with all legal obligations● has an appropriate management structure● maintains sensible controls to protect its assets● adheres to its own guidelines and codes of practice

The management of the BBC’s fair trading arrangements isregularly tested by the British Standards Institute and thesearrangements have been accredited with the ISO 9001:2000
quality standard.The last assessment conducted in November
2002 confirmed that the procedures are continuing tooperate effectively.

On the following pages the Governors and independent
auditors report formally on the BBC’s policies, procedures
and compliance as follows:

By their nature, fair trading judgements are complex,
reflecting the constantly developing environment in which
the media industries operate.Through the FTCC, the BBC’s
1 Fair trading
68 Governors bring informed scrutiny and balanced judgements
2 Financial statements
71 to bear on the important issues of policy that arise from the
3 Risk and control processes
72 BBC’s engagement in commercial ventures.
4 Other corporate responsibilities
75
5 Governors’ remuneration report
76 In its response to the Richard Lambert review of BBC News
6 Programmes, channels and promotions
80 24 against its DCMS approval, the BBC offered to consider
7 Donations and acknowledgements
81 explicitly on fair trading grounds the relationship between
BBC News and BBC World every year.This would include
1 Fair trading
commissioning a triennial benchmarking exercise forGovernors’ statement on fair trading
independent consultants to confirm that marginal cost pricing
Commercial activities and fair trading
remains market practice and annual verification by external
The BBC’s core purpose is to provide public service
auditors that the marginal cost principle is appropriately applied
broadcasting funded by the licence fee. Licence payers’
in dealings between BBC News and BBC World. Following a
investments, built up over many years, have produced areport from external auditors, the Governors are satisfied thatcritical mass of talent and production capability for the BBC,the marginal cost principle has been applied appropriately.
together with an unparalleled archive of past programming.
These assets have a secondary value, over and above their
Fair trading complaints
use on public service channels and outlets.The BBC has aAmong the responsibilities of the Head of Fair Trading is
responsibility to ensure that this value is properly developed
advising the FTCC and the Executive Committee on any faircommercially, and used to the benefit of licence payers.
trading complaints which have been laid against the BBC.The
Head of Fair Trading may be contacted at BBC, BroadcastingIn pursuing commercial activities, the BBC is, like otherHouse, London W1A 1AA.The FTCC publishes a quarterly
organisations, fully subject to both domestic and European
bulletin of the BBC’s response to any allegations of breaches
competition law. However, unlike other organisations, the BBC’s of the Fair Trading Commitment.
responsibility to trade fairly is reflected in further and moredemanding requirements arising from its Royal Charter. In
Events of the year
particular, the Charter requires the avoidance of cross-subsidy External challenges
between the BBC’s publicly funded and commercial activities. During the year there were no formal investigations of theBBC’s commercial activities by external bodies, eg the Office
Fair trading compliance proceduresof Fair Trading (OFT) or the European Commission. However,
The BBC’s fair trading obligations are embodied in its Faira number of complaints were made to the Board of Governors
Trading Commitment, compliance with which is scrutinised
or to the Head of Fair Trading alleging that the BBC was inthroughout the year by a standing committee of the Board of breach of its guidelines.
Governors, the Fair Trading Compliance Committee (FTCC).
● RM plc and others had issued a legal challenge to the BBC
The Committee is advised directly by independent auditors
in the High Court.The claimants alleged the illegal use
commissioned and managed by the Governance &of state aid and that the BBC was acting ultra vires its
Accountability department and by the BBC’s Head of Fair
Charter and Agreement with the Secretary of State. On
Trading and Head of Internal Audit, if necessary without the
27 January 2003 the case was settled.The claimants andmediation of BBC management. All subsidiaries andthe BBC agreed that the claimants would withdraw the68 Annual Report and Accounts 2002/2003

● Sequence, a Welsh web development and hosting agency,
wrote to the BBC Chairman asserting that BBC MediaArc,
a commercial associate of the BBC, had unfairly won a● RM plc also wrote to the BBC Chairman alleging breachcontract to supply internet streaming services to theof the BBC Commercial Policy Guidelines resulting from
Welsh Assembly. In particular, Sequence alleged that thediscussions with a potential distribution partner in thewinning tender may not be commensurate with what
context of the BBC’s proposed Digital Curriculum service.
might be expected to be earned in the market in the
An internal inquiry (see page 75) concluded that somelong term. After intensive investigation of the tender offer
preliminary discussions had taken place but that there was
accepted by the National Assembly of Wales, and theno systematic failure of the BBC’s fair trading processes.
costs of supporting the service, the BBC concluded that
Following the inquiry, two senior members of staff decided
the margins added to BBC MediaArc’s estimated costs
to leave the BBC. RM plc also raised questions about
were sufficient to be consistent with market practice.
the BBC’s compliance with the Public Procurement
Regulations.The BBC has confirmed to RM plc that it● ITN wrote to the Secretary of the BBC challenging a
is satisfied that it complied with these regulations.
statement made in the BBC Annual Report 2001/2002.
The statement alleged that the OFT had rejected ITN’s● The BBC received a complaint from TAC (a tradeallegation that a number of carriage agreements for BBCi
association which represents the interests of independents(News) with third party portals were in breach of
producing mainly for broadcasters in Wales), challenging
competition law. ITN disputed that the OFT had rejected
the terms under which BBC Wales had won an open
its case.The BBC accepts that it was incorrect in stating
commercial tender to supply Welsh rugby coverage tothat OFT had rejected ITN’s complaint and makes the
S4C.TAC suggested that the provision of commercial
following correction:
programming by BBC Wales to S4C is in itself a breach of
the BBC Commercial Policy Guidelines.TAC also subsequently The BBC Annual Report 2001/2002 stated that following an
alleged that the BBC held and abused a dominant
investigation by the OFT, under the Competition Act 1998, theposition in responding to the rugby tender. Following
OFT rejected ITN’s complaint which alleged that a number of
an investigation, the BBC confirmed it was satisfied thatcarriage agreements for BBCi (News) with third party portals
the supply of rugby programming by BBC Wales towere in breach of competition law. Since publication of the report
S4C was not inconsistent with BBC Commercial Policy
it has transpired that in fact ITN chose to withdraw its complaint
Guidelines. It also refuted any alleged market dominancefollowing correspondence with the OFT.
while pointing out that a dominant firm would not in any
event be precluded from competing fairly for business.
All external challenges are reported in the BBC Fair Trading
Bulletin which is available from the Head of Fair Trading at● The British Internet Publishers Association (BIPA) wrote to BBC, Broadcasting House, London W1A 1AA or online at
the BBC Chairman raising a concern about the openness
www.bbc.co.uk/info.
of the approval process for new BBC services and inparticular the process for the BBC’s Online proposition
Governors’ opinion(which gained initial approval in 1997).The letter also
The Governors consider that the policies contained inclaimed that statements made by the BBC during legal
the BBC’s Fair Trading Commitment are consistent with theproceedings brought by RM plc against the BBC’s proposed requirements of the Royal Charter and the accompanying
Digital Curriculum service, cast doubt on the value of the Agreement.Through the FTCC, they have gained reasonable
BBC’s Fair Trading Commitment.The BBC responded,assurance that the system of controls and procedures
explaining that the approvals process is now more open
designed to ensure that these policies are applied throughout
and there is full opportunity for interested parties to make the BBC has been operating effectively throughout the year.
representations to the BBC and to the Government on
all new public service proposals from the BBC. In its
Independent Fair Trading Auditors’ report to the
response to BIPA, the BBC was not able to comment on
Governors of the BBC for the year ended 31 March 2003
the legal proceedings (which were ongoing at the time)
We have audited, in our role as the BBC’s Fair Trading
but it made clear that it had a robust compliance
Auditors, the system of internal controls established within
infrastructure that has ISO accreditation and is subject tothe BBC to provide the Governors with reasonableannual fair trading audits by independent accountants.
assurance that the BBC has complied with its published Fair
The BBC remains fully committed to compliance with
Trading Commitment for the year ended 31 March 2003.
its fair trading obligations.
Our instructions for this audit, which included the scope ofwork to be undertaken, were agreed with the Governors’
judicial review proceedings on the basis that each side
would pay their own costs.

Annual Report and Accounts 2002/2003 69

ComplianceFair Trading Compliance Committee.These instructions
include agreement that our audit should be conducted inaccordance with relevant auditing standards, agreement on
the limit of our liability in respect of this work and agreementthat our duty of care in respect of this work is solely to theBBC. We are satisfied that the agreed scope of our audit was
sufficient to enable us to express the opinion set out below.
Respective responsibilities of Governors, management andauditors
The Governors are responsible for ensuring that the BBC
meets all the requirements of competition law and trades
fairly.They have established its Fair Trading Commitment,
determine the objectives of the system of internal controls
designed to ensure compliance with this Commitment andmonitor the outcomes of those controls.They are also
responsible for preparing the Governors’ Statement of fairtrading compliance, as included in this BBC Annual Report,
which includes a statement on fair trading.
The BBC’s management is charged by the Governors with
operating a system of internal controls designed to ensurecompliance with the Fair Trading Commitment, including
identifying and assessing risks that could threaten fair trading
and designing and implementing responses to such risks.
As the BBC’s Fair Trading Auditor, it is our responsibility toform an independent view, based on our audit work, as tothe extent to which the BBC has established, and applied,a system of internal controls which provide reasonableassurance that it has complied with its Fair Trading Commitment
during the year. We have reviewed specific decisions reachedby the BBC on fair trading issues only in so far as this isnecessary to form an opinion on the system of internal
controls. Our audit was not designed to express an opinion
on the quality of the specific decisions taken by the BBC withregards to fair trading. We have also reviewed whether theGovernors’ statement on fair trading reflects our findings ofthe BBC’s compliance with its system of internal controls, andwe report if it does not.
This opinion has been prepared for and only for the BBC
in accordance with our instructions which were agreed
with the Secretary of the BBC on behalf of the Governors’
Fair Trading Compliance Committee. We do not, in giving
this opinion, accept or assume responsibility for any otherpurpose or to any other person to whom this reportis shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Basis of audit opinion
We have carried out a programme of procedures and tests
designed to provide us with the assurance that we wereseeking. Our work consisted of enquiry and assessment toenable us to form a view as to whether an appropriate system
70 Annual Report and Accounts 2002/2003

of internal controls was in place. We also reviewed theprocessing of a sample of material transactions to provide
us with reasonable assurance that the system of internal
controls had been applied.
As with any system of control, however effective, it is notpracticable to ensure that no errors or irregularities haveoccurred without being detected. Our audit work wastherefore designed to give the Governors reasonableassurance, but not certainty, as to the adequacy of the system
of internal controls which were in place and being applied todeliver compliance with the Fair Trading Commitment during
the year. 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 the system of internal controls has been followed anddecisions have been taken with the greatest care.
OpinionIn our opinion the BBC has established and has applieda system of internal controls which provide reasonableassurance that it has complied with its Fair Trading
Commitment for the year ended 31 March 2003.
PricewaterhouseCoopers LLP
Chartered Accountants

London19 June 2003

Governors’ report on BBC World Service Trading Protocols
BBC World Service is responsible for commissioning andscheduling its own programmes and for making programmes
for its language services, but purchases English language
programme making and technical and support services
from other divisions of the BBC (the Supplier Divisions).
BBC World Service also receives services from andsupplies services to the BBC’s commercial subsidiaries(the Subsidiaries).
It was agreed by a joint Foreign and Commonwealth Office(FCO)/BBC World Service Working Group that the BBC
would draw up guidelines to govern the trading relationshipbetween BBC World Service and other parts of the BBC,in order to ensure that BBC World Service maintains
its distinctive voice and to preserve the clear separation
between Grant-in-Aid and licence fee income.These Trading
Protocols were approved by the Governors’ Fair Trading
Compliance Committee (FTCC) in 1997. Each of the
Supplier Divisions then drew up detailed agreements with
BBC World Service, specifying:● the services to be provided● criteria to ensure the quality of the services● the cost of the services
The FTCC is responsible for monitoring and reviewing
compliance with the Trading Protocols.The FTCC receives
regular reports from management on the effectiveness of thesystems and procedures in place to ensure compliance with
the Trading Protocols.
KPMG LLP (the external auditors) have reviewed a summaryof the value of transactions and the related cash flows whichhave taken place during the year between BBC World Service
and the Supplier Divisions and Subsidiaries. KPMG LLP havereported to the Governors that, in their opinion, theinformation contained in the summary of transactions for theyear ended 31 March 2003 has been accurately extracted
from the books and records of BBC World Service and theSupplier Divisions and Subsidiaries and has been properly
prepared on the bases of cost allocation and apportionment
methods set out in the agreements between BBC World
Service and the Supplier Divisions and Subsidiaries and, on
this basis, there has been no material cross-subsidy between
Grant-in-Aid and licence fee funds or between Grant-in-Aid
and the BBC’s commercial subsidiaries.
Governors’ statement on BBC World Service Trading Protocols
Following regular reports to the FTCC by the Head of Fair
Trading and internal and external auditors, the Governors are
satisfied that:● the Trading Protocols reflect the requirements of the
FCO/BBC World Service Working Group● agreements are in place which are consistent with the
Trading Protocols● there has been no material cross-subsidy between Grantin-Aid and licence fee funds or between Grant-in-Aid andthe BBC’s commercial subsidiaries
2 Financial statements
Statement of Board of Governors and Executive
Committee responsibilities for the preparation of thefinancial statements
The Governors and Executive Committee are required by
the BBC’s Charter to prepare financial statements for eachfinancial year which give a true and fair view of the state ofaffairs of the BBC and of its income and expenditure for that
period. In preparing those financial statements, the Governors
and Executive Committee are required to:● select suitable accounting policies and then apply themconsistently● make judgements and estimates that are reasonable andprudent● state whether applicable accounting standards have been
followed and disclose and explain any material departuresin the financial statements● prepare the financial statements on a going concern basis
unless it is inappropriate to do so
In addition, the Governors and Executive Committee
have voluntarily decided to comply with the accounting anddisclosure provisions of the Companies Act 1985 and, whereapplicable, of the Financial Services Authority Listing Rules.

They are also responsible for keeping adequate accounting
records and taking such steps as are reasonably open tothem to safeguard the assets of the BBC and to preventand detect fraud and other irregularities.
Report of the independent auditors to the Governorsof the British Broadcasting Corporation (BBC)We have audited the financial statements on pages 85 to 121.
In addition to our audit of the financial statements, theGovernors have engaged us to audit the information in the
Governors’ remuneration report that is described as having
been audited, which the Governors have prepared as if the
BBC were a listed company and which is thus compliant with
Schedule 7A to the Companies Act 1985.
This report is made solely to the BBC’s Governors, as a body,in accordance with the Royal Charter for the continuanceof the BBC which came into force on 1 May 1996 (theCharter). Our audit work has been undertaken so that wemight state to the BBC’s Governors those matters we are
required to state to them in an auditor’s report and for noother purpose.To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
BBC and the BBC’s Governors as a body, for our audit work,for this report, or for the opinions we have formed.
Respective responsibilities of the Governors and Executive
Committee and Auditors
The Governors and Executive Committee are responsible
for preparing the BBC Annual Report and the Governors’
remuneration report. As described earlier on this page, thisincludes responsibility for preparing the financial statementsin accordance with applicable United Kingdom law andaccounting standards. Our responsibilities as independent
auditors are established in the United Kingdom by statute, by
the Auditing Practices Board, our profession’s ethical guidance
and, in accordance with the terms of our appointment,
the Companies Act 1985 and the Charter.
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the part of the Governors’ remuneration
report to be audited have been properly prepared inaccordance with the Companies Act as if that Act had
applied to these financial statements. We also report to you
if, in our opinion, the financial information on page 6 is notconsistent with the financial statements, if the BBC has not
kept proper accounting records, if we have not received all
the information and explanations we require for our audit,
or if information specified by law regarding the Governors’
and Executive Committee remuneration and transactions
with the BBC is not disclosed.
In addition to our audit of the financial statements, theGovernors have engaged us to review their corporate
Annual Report and Accounts 2002/2003 71

Compliancegovernance statement as if the BBC were required to comply
with the Listing Rules of the Financial Services Authority inrelation to these matters.We review whether the statementon pages 72 to 75 reflects the BBC’s compliance with theseven provisions of the Combined Code specified for audit
review by those rules and we report if it does not.We are notrequired to form an opinion on the effectiveness of the BBC’s
corporate governance procedures or its internal controls.
We read the other information contained in the BBC Annual
Report, including the corporate governance statement, andthe unaudited part of the Governors’ remuneration reportand consider whether it is consistent with the audited
financial statements. We consider the implications for ourreport if we become aware of any apparent misstatements
or material inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with AuditingStandards issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence relevantto the amounts and disclosures in the financial statements
and the part of the Governors’ remuneration report to beaudited. It also includes an assessment of the significant
estimates and judgements made by the Governors andExecutive Committee in the preparation of the financial
statements, and of whether the accounting policies areappropriate to the BBC’s circumstances, consistently appliedand adequately disclosed.
We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary
in order to provide us with sufficient evidence to givereasonable assurance that the financial statements and thepart of the Governors’ remuneration report to be audited
are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation of
information in the financial statements and the part of theGovernors’ remuneration report to be audited.
OpinionIn our opinion the financial statements give a true and fairview of the state of affairs of UK Public Service Broadcasting(the ‘Home Services’ in the Charter) and the BBC as at
31 March 2003 and of the deficit of the BBC for the year
then ended and the financial statements and the part of theGovernors’ remuneration report to be audited have been
properly prepared in accordance with the provisions of theBBC’s Charter and the Companies Act 1985 as if that Act
had applied to these financial statements.
KPMG LLP
Chartered Accountants
Registered Auditor
72 Annual Report and Accounts 2002/2003

London19 June 2003

3 Risk and control processes
The Governors are appointed as trustees for the public
interest to ensure that the BBC is properly accountable to
Parliament, licence payers and to viewers and listeners. Partof this role requires the Governors to satisfy themselves thatthe BBC is applying the highest standards of corporate
governance.
The BBC follows the seven principles of public life set out in
the Nolan Committee reports on Standards in Public Life.
The Combined Code, issued by the London Stock Exchange inJune 1998, sets out principles of good governance.The BBCvoluntarily complies with the Combined Code to the extent it
is applicable.The requirements of the Combined Code apply
to the BBC with two exceptions. Firstly, those requirements
relating to the appointment of non-executive directors areinapplicable as the Governors are appointed by the Queenin Council and their remuneration is set by the Secretaryof State for Culture, Media and Sport. Secondly, thoserequirements relating to shareholders can only be applied to
the licence-paying public, rather than shareholders, throughthe stewardship of the Governors.
How the BBC has applied the remuneration principles iscovered separately within the remuneration report on pages
76 to 79.
Board structure
The Governors are the members of the Corporation.They
act as trustees for the public interest while the Executive
Committee takes responsibility for day-to-day operations.
Details of the Board of Governors and Executive Committee
are summarised on pages 4 to 5 and 18 to 19. A register ofinterests for both the Governors and Executive Committee
is maintained and may be inspected by written application to
the Secretary of the BBC.
The Board of Governors refers some matters to subcommittees.The main responsibilities of these subcommittees are explained elsewhere in this Annual Reportas follows:
Governors’ Programme Complaints Committee (page 62)
Governors’ Fair Trading Compliance Committee (page 68)
Governors’ Audit Committee (page 74)
Governors’ Remuneration Committee (page 76)
The Governors are supported by the Governance &Accountability department.
Governance arrangements for commercial subsidiaries
In July 2002 the Secretary of State approved theestablishment of a new subsidiary, BBC Commercial Holdings
Limited, to coordinate and manage the activity andfinancing needs of the principal commercial subsidiaries.The
BBC’s public service aims are enshrined in the company’s
Memorandum of Association and many of its powers,
including the power to appoint directors, are exercisable
subject to prior approval of the Board of Governors.The
new company replaces the old Commercial Board which
was a sub-committee of the Executive Committee.
Relationship with Parliament and licence holders
The BBC lays its Annual Report and Accounts before
Parliament. Governors or BBC Executives may be, andfrequently are, called before Parliamentary SelectCommittees to answer MPs’ questions about the BBC’s
activities and plans.
Approval for new channels and services, public orcommercial, must be sought from the Secretary of State forCulture, Media and Sport.
BBC World Service is funded by Grant-in-Aid and isaccountable to Parliament through the Foreign andCommonwealth Office (FCO). Although it is editoriallyindependent its aims and priorities are agreed with the FCO.
The BBC seeks to keep the public fully informed about its
services and the way in which it operates, and to be open
and candid about both successes and failures.The BBC will
withhold information only where there is a genuine matterof copyright, contractual or commercial confidentiality atstake or where legitimate considerations of privacy apply.
Information is made available, and audience views obtained,
in a variety of ways, many of which are discussed elsewherein this Annual Report.These include the BBC Statements ofProgramme Policy, internet services, public events andmany publications.

is responsible for maintaining an adequate system of internal
control and for reviewing its effectiveness. Such a system isdesigned to manage rather than eliminate the risk of failure
to achieve business objectives and can provide only
reasonable, and not absolute, assurance against material
misstatement or loss.
The Governors and Executive Committee consider that
there is an ongoing process for identifying, evaluating andmanaging significant risks faced by the BBC.The process has
been in place for the year ended 31 March 2003 and up to
the date of approval of this BBC Annual Report and Accounts.
It has been reviewed by the Governors and Executive
Committee and accords with the guidance set out in the
ICAEW’s guidance for directors, Internal control: Guidancefor directors on the Combined Code.
While an established system of risk management and control,
including procedures to monitor and evaluate key risks, hasbeen in existence throughout the year, the Governors andExecutive Committee recognise the importance of ensuringthat the process remains appropriate in respect of recent
internal reorganisations and the expansion in the BBC’s
services.
The key control procedures operating during the year aredescribed under the following headings:● risk management
Each of the BBC’s top risks has a named owner on the
Executive Committee who is responsible for ensuring that
progress on the management of their given risk is reported toall of the Executive Committee on a regular basis.The BBC’s
top risks and associated action plans have been reviewed
during the year.The director of each division had a clear
responsibility during the year for the identification andAccountability and internal control
management of risks facing their business. Divisional
Financial reporting and going concern
management has progressed the review of risks associated
The respective responsibilities of the Governors and Executive with the achievement of their divisional objectives.
Committee and the external auditors are set out on page 71. Consideration of these risks includes a review in each divisionof the impact of the BBC’s top risks and reporting on the
A review of the financial position of the BBC is included on
management of those risks via reports to the Executive
pages 82 to 84.This, together with the Director-General’sCommittee.The risks identified, and the actions planned inreview on pages 16 and 17, provides an assessment of the
response, are maintained in a risk register in each division
BBC’s performance and current position.
which is verified by BBC Internal Audit.
The going concern basis has been adopted in the preparationof the financial statements as the Governors and Executive
Committee believe that the BBC has adequate resources tocontinue its operations for the foreseeable future.
Internal control
The responsibilities in relation to internal control are clearly
defined.The Governors are ultimately responsible for theproper use of public money whilst the Executive Committee● monitoring of controls
BBC Internal Audit undertakes regular testing of control
systems and compliance with core business processes undera plan agreed with the Audit Committee.This programmeof testing, which is updated three times each year, is basedon a continuing assessment of key risks.The results of testing
are reported at each meeting of the Audit Committee which
scrutinises the operation of the BBC’s controls throughout
the year.
Annual Report and Accounts 2002/2003 73

Compliance● divisional controls
The divisions’ management has responsibility for ensuring thatexisting controls and procedures are followed. Key controls
over major business risks include maintaining and regularly
updating risk registers, performance review and exception
reporting. Reviews by BBC Internal Audit monitor theoperation of divisional controls to ensure that they are
consistently applied and, as a minimum, meet the BBC-wide
control policy.
● computer systems
The BBC has established controls and procedures over the
security of data held on computer systems. Arrangements arein place for computer processing to continue and data to beretained in the event of the failure of the BBC’s own dataprocessing facility.

Each financial year the divisions update their five-year plansand prepare detailed budgets for the following financial year.
The annual budget of each division is reviewed by the
Director of Finance, Property & Business Affairs.The overallbudget is approved by the Director-General, the Executive
Committee and the Board of Governors.
The performance of each division is subject to continuous
monitoring and at the end of the year every division is
subject to a rigorous performance review verifying how
effectively they had met their objectives.

Governors’ Audit Committee
The Audit Committee meets at least four times each year,
and is charged with:● reviewing the effectiveness of internal control● approving and monitoring the BBC Internal Audit● controls over outsourced transaction processing
work plan
The majority of the BBC’s finance transaction processing● considering issues arising from external and internal(excluding BBC Worldwide and BBC World) is outsourced
audit work
to a service company, Media Accounting Services Limited● reviewing management’s response to internal control(medas) which is independent of the BBC.The Director ofissuesFinance, Property & Business Affairs has established● approving the external audit fee
monitoring procedures to review the performance of medas● discussing with the external auditors their strategy
on a regular basis.These include regular review by BBC
and plansInternal Audit in a programme of work informed by a
● reviewing the independence of the auditors, specificallycontinuing assessment of key risks and issues.
considering and approving any non-audit services● reviewing the performance and effectiveness of the● licence fee collection
external auditors
The outsourcing contract for the collection of the licence fee ● reviewing the external auditors’ reports
was awarded to Capita from July 2002.The BBC monitors and ● reviewing and approving the financial statements
reviews the provisions put in place by Capita to ensure thecollection of the fee in the event of business interruption as
In reviewing the financial statements of the BBC thewell as other controls and reporting procedures. Safeguards are Committee considers any significant issues, and thein place to protect the BBC’s collection data and alternative
appropriateness of accounting policies adopted in relationcollection processes have been identified that may be adopted to significant or unusual transactions where more than one
in the event of a failure of the core collection process.
policy may apply.
● whistle-blowing
The BBC has a ‘whistle-blowing’ policy.The policy facilitates
the anonymous communication to the BBC of any incident inwhich there is a suspicion that there has been wrongdoing.
The process is administered by an independent external
company to ensure anonymity. Each reported incident is
notified to the BBC Head of Internal Audit who ensures thatevery incident is investigated, a response communicated andaction taken as appropriate.

The Committee is comprised exclusively of Governors of
the BBC. Members of the executive management attend
meetings by request of the Committee.

● financial reporting and business performance
The BBC has a comprehensive system for reporting financial
results and business performance. During the year eachdivision prepares monthly reports and accounts.These
results are reviewed locally and the consolidated resultsof the BBC are reviewed at Executive Committee and Boardof Governors’ meetings each month.

Independence of external auditors
Both the Committee and the external auditors themselves
have safeguards in place to avoid the possibility of theauditors’ objectivity and independence being compromised.

74 Annual Report and Accounts 2002/2003

The Committee has considered the recommendations
contained in the report of the Financial Reporting Council(issued January 2003), the Smith Report, and have implemented
the necessary measures to ensure that the BBC fully meets
those recommendations.

The Audit Committee regularly reviews the independenceof its external auditors, currently KPMG LLP.The Committee

holds discussions with the external auditors without
management being present.The Committee reviews the levelof non-audit fees paid to KPMG LLP. Any significant consulting
work is put out to competitive tender. Recruitment fromKPMG LLP into any senior management position requires
the prior approval of the Audit Committee.

Statement of compliance with the Combined Code ofBest Practice
The BBC has complied throughout the year ended
31 March 2003 with the specific provisions in Section 1 of the
Combined Code with the exception of those provisions relating
to non-executive directors and shareholder requirements
which, as discussed earlier, are not applicable to the BBC.

The BBC’s policies in relation to services procured from theexternal auditors are:● all non-audit services proposed to be commissioned fromthe external auditors must be notified to the Audit
Committee● above an established de minimis level the planned work
must be submitted to competitive tender and, in the eventthat the external auditors are to be awarded the contract,
the prior approval of the Audit Committee must be
obtained● the external auditors are specifically excluded from being
considered for certain types of work where the effectcould be to prejudice their ability to express an
independent and objective opinion

4 Other corporate responsibilities
Ethical policy
The BBC seeks to meet the highest standards of ethical,
employment and environmental practice.The BBC has a codeof conduct which requires its suppliers to operate on thesame principles.This requires all direct suppliers, who in turnare required to supervise their sub-contractors, to observe
best practice in the following areas: general employment
practices, the employment of appropriate workers, worker
insurance, working environment, respect for the individual
worker, environmental standards, equal opportunities andfreedom of association.

Events of the year
The BBC’s system of controls, as stated above, is designed to
manage risks rather than eliminate them entirely. During theyear the BBC has reviewed lessons learnt from the following
incidents, updating controls where considered appropriate.

Human resources
The BBC continues to hold the Investors in People (IiP)
accreditation across the whole BBC. It is taking active steps
to improve its performance in all areas by a programmeof rigorous self-assessment every year.The BBC invests
a considerable amount of money and time in training anddeveloping its staff as detailed on page 67.

Oryx
During the year the BBC settled a legal challenge with Oryx
Natural Resources, paying damages and costs to Oryx.The
claim for libel arose from a report contained in a special
news bulletin on 31 October 2001.The BBC issued anapology for the incorrect report in November 2001.The BBC
investigated the circumstances giving rise to the incorrect
report and has taken appropriate measures to seek toprevent a recurrence.
Digital Curriculum
During the year the BBC identified that some inappropriate
activities had taken place relating to the proposed Digital
Curriculum service.The Digital Curriculum was at the time
awaiting approval by the Secretary of State for Culture, Mediaand Sport.The BBC discovered that the activity that had
taken place was contrary to disclosures in certain statements
submitted to the court in preparation for the BBC’s defenceof a legal action brought by RM plc. An internal inquiry was
conducted by the BBC’s Head of Internal Audit on behalf of
the Chairman of the BBC to establish why the activities hadtaken place. Following the inquiry two senior members of
BBC staff decided to leave. RM plc subsequently withdrew its
legal challenge with each party meeting their own legal costs.

The BBC monitors staff views through an annual staff survey.
It also has various consultation mechanisms including, atcorporate level, the BBC Forum. Regular meetings are also heldwith the recognised unions: BECTU (Broadcasting Entertainment
Cinematograph and Theatre Union), the NUJ (National
Union of Journalists) and AMICUS (formerly the AEEU).
Internal communication
Progress in improving internal communication is measured
by an annual survey of staff opinion conducted by MORI.
The latest of these, conducted in December 2002, showedthat the BBC continues to make progress in key areasof communication and remains one of MORI’s top tenorganisations.
Health and safety
The BBC is committed to providing a safe and healthy place
to work and to ensuring that its staff and other people are
not placed at risk by its activities.To ensure the BBC drives
continuous improvement against this commitment, and as aresult of the heightened terrorist and conflict threats, theoccupational health and safety and security functions havebeen brought together under one head, and their integrated
offering made more accessible to programme makers andmanagement.

Annual Report and Accounts 2002/2003 75

Compliance

A significant amount of resource was geared to the issues
surrounding the war in Iraq and response to the terrorist
threat with pan-BBC and divisional procedures continually
undergoing revision to ensure BBC journalists/crews in thefield, overseas bureaux/offices, and UK sites and staff areprovided with the means to do their jobs safely.
The BBC continues to promote knowledge of and contributeto the development of safe practices within the broadcast andproduction industries through joint industry bodies. At aninternational level the BBC plays a key role in gaining industrywide acceptance of the need for the adoption of safe practices
by all media staff engaged in newsgathering activities.
UK reportable accidents for the past 12 months decreased
from 65 to 48 and there were no fatalities. Of the reportable
type incidents, 20 were ‘major injuries’.Taking the accidents
which occurred to BBC employees in the UK, the accident
incident rate per 100,000 employees for the 12 months was
188, representing a 26% reduction for the same group in theprevious year. Suspected cases of occupationally related ill healthseen by BBC medical officers also continued the downward
trend from the previous year. In 2002/2003, the incidence
rate of suspected cases of occupational illness (of all types)
was 17.78 per 1,000 employees per annum.This compareswith 19.47 per 1,000 employees per annum in 2001/2002.
The requirements contained in the Government’s Revitalising
Health and Safety challenge have required extensive internal
review of the mechanisms for capturing and collating
information.This has resulted in the adoption of a BBC-wide
accident/incident database.
The BBC was not subject to any HSE enforcement action
and had no convictions for health and safety offences.
During the coverage of the war in Iraq, there were two
major incidents which led to the deaths of a freelancecameraman and a locally engaged interpreter and the footamputation of a news team producer. A number of BBC
personnel also suffered shrapnel wounds and their health isbeing monitored by occupational health.
For a number of years the BBC has ensured, throughapplication of its Hostile Environments Policy, that all those
deployed to war zones receive an intensive six-day hostileenvironment training course. In addition, due to the nature of
the conflict, the BBC introduced specific training for chemical,
biological, radiological and nuclear threats including the issueof specialist suits and equipment.

5 Governors’ remuneration report
This report sets out the BBC’s policy on the remunerationof the BBC’s Governors and of members of the Executive
Committee. Although the BBC is exempt from therequirements introduced by the Directors’ Remuneration
Report Regulations 2002 and those of the Financial Services
Authority, the report has been prepared as if thoserequirements did apply wherever the disclosure provisions
are relevant and applicable. Only the following sections of
the Governors’ remuneration report are subject to audit:
Remuneration received and Governors’ and Executive
Committee pensions.
Remuneration Committee: constitution and operation
The remuneration policy for members of the Executive
Committee is set by the Remuneration Committee, a subcommittee of the Board of Governors.This Committee deals
with all matters relating to the remuneration of members of
the Executive Committee and is accountable to the Board ofGovernors for the determination and maintenance of overall
remuneration policy and review and agreement of Executive
Committee basic salaries, bonus awards and benefits,
including pension arrangements.The Committee considers
the performance of individual members of the Executive
Committee before recommending their annual remuneration
and bonus awards to the full Board of Governors.
The members of the Committee during the year were
Gavyn Davies (Chairman), Baroness Hogg, Dame Pauline
Neville-Jones and Lord Ryder. In addition, meetings areattended by the Director-General, who advises on mattersrelating to the other members of the Executive Committee
and the overall performance of the BBC and by the Directorof Human Resources & Internal Communications. Neither
is present when matters concerning their own remuneration
are considered.
In its constitution and operation the Committee complies
with the Combined Code on Corporate Governance.The
Committee places high value on the independence of its
decision-making processes. In consultation with the Director of
Human Resources & Internal Communications and the BBC’s
Head of Compensation and Benefits, the Committee takes
specialist advice from external professional advisers on
particular remuneration matters, particularly in connection
with the consideration of external market practice. During theyear, the Committee nominated and received independent
advice from both Monks Partnership and the Hay Group on
comparative market data to assist in the determination of pay
and benefits for the Executive Committee.
Governors: remuneration policy
The Governors receive a fee determined by the Secretaryof State for Culture, Media and Sport.They are additionallyreimbursed for expenses incurred on BBC business. Expenses

76 Annual Report and Accounts 2002/2003

regarded by the Inland Revenue as taxable are settled in fullby the BBC, including any related tax payments, and reported
as benefits in the table on page 78.The increase in annual
remuneration notified for 2002/2003 was 2.5% for theVice-Chairman and the national Governors, and 2.5% for
the Chairman and other Governors (2001/2002 2.7%
and 3.6% respectively).
Executive Committee: remuneration policy
The remuneration policy for Executive Committee members
tries to balance the BBC’s status as a public corporation (andthe expectation that all areas of spend, including executive
remuneration, must deliver value to the licence payer) withthe fact that the BBC operates in a competitive, commercial
environment and needs to offer remuneration that enables it
to attract, retain and motivate high calibre individuals with theskills and abilities required to lead the BBC.
In doing so, the remuneration policy seeks to:● remunerate individuals fairly for individual responsibility
and contribution, while providing an element of
performance-related pay, reflecting the underlying
performance of the BBC● take into account wider salary policy and employment
conditions within the rest of the BBC and the relationshipthat should exist between the remuneration of Executive
Committee members and that of other employees● have regard to the market median levels of total cash
reward of relevant comparator organisations in bothpublic and private sectors
The Committee’s approach to policy going forward willcontinue to reflect these principles, underpinned by regularreview and monitoring of remuneration policy and practicein organisations outside the BBC.
External data reviewed by the Committee shows that salaries
paid at main Board level across the private sector as a whole,and in the media industry in particular, are significantly higher
than in the BBC for organisations of similar size and complexity,
while the opportunities for annual and long-term bonus
payments are also much greater. Conversely the pay levels forsenior civil servants and other public sector managers are lower.
The remuneration levels set by the Governors fall between
the pay of the most senior managers in the public service
and those in comparable commercial businesses to reflect
the BBC’s unique position as a publicly-funded organisation
operating and competing in a commercial industry.
Elements of remuneration
Basic salary
Basic salaries are reviewed in August each year, taking into
account external market levels and internal comparisons
as well as the individual’s responsibilities and performance.
The basic salary is paid as a fixed sum monthly in cash.

Annual bonus
During 2002 the Committee conducted a thorough reviewof the policy and approach to variable pay for Executive
Committee members. Recognising the importance of
maintaining a balance between basic salary and an annual
bonus scheme reflecting individual performance andcontribution, the Committee considered it appropriate forannual bonuses to have a maximum level of 30% of basesalary and a mix of qualitative and quantitative targets andmeasures.This year, for the first time, the Committee
exercised its discretion to adjust the level of payments totake account of broader external market considerations
which has resulted in reduced average bonus awards, despitea very strong performance level against the BBC’s objectives.
The achievement of BBC-wide objectives accounts for up to
30% of the maximum bonus, with the same level of award
applying to all members of the Executive Committee,
thereby reinforcing the value and importance of collective
performance. Achievement of divisional objectives accounts
for up to 40%, and individual performance and contribution
for the remaining 30% of any award. For the year underreview the targets related primarily to objectives which wereset by the Governors and published in the 2001/2002 Annual
Report.
In the case of the commercial businesses (BBC Worldwide
and BBC Ventures Group), the annual bonus plan is directly
linked to the achievement of specific financial performancetargets relating to sales, cash flow and PBIT. Whilst the
maximum annual bonus opportunity is 30% in common withother members of the Executive Committee, the framework
is based on:● for the Chief Executive of BBC Ventures Group, up to
80% of any award for the achievement of PBIT and cash
flow targets and up to 20% for individual performance● for the Chief Executive of BBC Worldwide, up to 66% of
any award for the achievement of sales, cash, and PBIT
targets and up to 33% for individual performance
Bonuses are reflected in the financial statements on an
accruals basis for the performance period under review.
Actual payments are made in July each year.
A long-term incentive plan is also in place for the Chief
Executive of BBC Worldwide which provides for a bonus of
up to a maximum 20% of salary based on the achievementof headline BBC cash flow targets over a three-year period.
The first three-year plan period in the scheme which
commenced in April 1999 ended on 31 March 2002 andgenerated a payment to Rupert Gavin of 14.75% of salary.
For the current and future years, any awards under the plan
are reflected in the financial statements on an accruals basis.
The Governors have also approved the establishment of acomparable plan to be put in place for the Chief Executive
Annual Report and Accounts 2002/2003 77

Complianceof BBC Ventures Group based on the achievement offinancial performance targets.
Benefits
In addition to salary and bonus, the main contractual benefits
provided are a car and fuel allowance, private healthinsurance, pension and life insurance. With the exception of
the post of the Director of Nations & Regions, it has been
the policy for some years that new appointees to the
Executive Committee are not eligible for provision of achauffeur-driven car.The Director-General’s contract provides
for a chauffeur-driven car, but no additional entitlement to apersonal car or fuel allowance.
Pensions
All members of the Executive Committee are eligible toparticipate in the BBC Pension Scheme which provides
salary-related pension benefits on a defined benefit basis,
with an accrual rate of 1/60th of the final salary per year ofservice, subject to the Inland Revenue earnings cap whereappropriate. Only basic salary is pensionable.The scheme
provides for early retirement on medical grounds and life
insurance cover of four times salary.
A variety of special arrangements has been made for thoseindividuals who joined the BBC late in their careers whose
earnings exceed Inland Revenue limits, including funded andunfunded arrangements outside the BBC Pension Scheme.
Employment contracts
The policy of the Remuneration Committee is for thecontracts of employment of Executive Committee members
to contain a maximum notice period of one year. Eachcontract expires on the 60th birthday of the director whichis the normal BBC retirement age, but is subject to earlier
termination for cause or if notice is given under the contract.
There is no entitlement to any additional remuneration in
the event of early termination other than in the case oftermination on grounds of redundancy.
Outside interests
Where there is no potential for conflict of interest and withthe prior agreement of the Board of Governors, membersof the Executive Committee may hold external directorships.
It is likely that not more than two external directorships
may be held at the same time, of which only one should bein a commercial organisation. Governors assess such requests
against rigorous criteria to ensure that conflicts of interest
do not arise. Remuneration which arises from directorships
agreed since the introduction of this policy in 1997, or
subsequent to appointment, is paid to the BBC. During theyear only two Executive Committee members held
appointments as executive directors of external organisations.

78 Annual Report and Accounts 2002/2003

Remuneration received
The remuneration of Governors or Executive Committee
members appointed or leaving during the year is included
in respect of their period of membership only.
Total
2003
£000

Total
2002
£000

Governors

Fees Benefits
£000
£000

Gavyn Davies (Chairman)
Dame Ruth Deech (appointed 23 October 2002)
Sir Richard Eyre
Dermot Gleeson
Baroness Hogg
Professor Merfyn Jones (appointed 1 January 2003)
Roger Jones (retired 31 December 2002)
Professor Fabian Monds
Dame Pauline Neville-JonesRt Hon The Lord Ryder (Vice-Chairman)
Angela Sarkis (appointed 23 October 2002)
Sir Robert Smith
Ranjit Sondhi
Sir Anthony Young (retired 31 July 2002)

80
7
15
15
15
7
20
27
27
27
7
27
20
5

19
2
2
8
3
–
1
1
7
3
2
1
1
2

99
9
17
23
18
7
21
28
34
30
9
28
21
7

66*
–
17
22
17
–
30
32
29
7**
–
32
22
18

Governors who retired during 2001/2002

299
–

52
–

351
–

292
55

299

52

351

347

* Appointed Chairman part-way through 2001/2002** Appointed Governor part-way through 2001/2002
For three months, the fees relating to Sir Robert Smith were paid direct to Deutsche Bank, which
released him for the required time to the BBC. Since July 2002 fees have been paid direct to Sir
Robert Smith

Annual Taxablebonus benefits
£000
£000

Executive Committee

Salary£000

Greg Dyke
Jenny Abramsky
Jana Bennett1 (appointed 20 April 2002)
Glenwyn Benson
Mark Byford
Stephen Dando
Andy Duncan2
Carolyn Fairbairn2,3
Roger Flynn
Rupert Gavin
Ashley Highfield
Pat LoughreyPeter Salmon
Richard Sambrook
John Smith
Michael Stevenson (resigned 23 January 2003)
Caroline Thomson
Alan Yentob4

368
211
216
185
235
221
231
122
231
278
230
191
205
222
227
151
179
228

88
45
47
37
54
49
55
32
65
62
45
41
46
49
47
–
35
67

3,931

864

–

–

3,931

864

128

–

Total
2003
£000

Total
2002
£000

Defined benefit schemes

Annual values

Members who resigned
during 2001/2002

Payments under long-term
incentive plans5
Payment to former director 6

8
18
181
16
17
2
15
15
18
22
19
48
28
16
26
24
22
26

469
273
Accrued–
Executive
pension
226 Committee
at 31
March
294 member(age at2003
222* 31 March 2003)£000pa235*
6
248 Greg Dyke (55)
Jenny
Abramsky
(56)
126
243*
1,2
2
339 Jana Bennett (47)
Glenwyn
Benson
(55)
24
294
88
259 Mark Byford (44)Stephen
Dando
(41)
3
273
Andy
Duncan(40)
3260
Carolyn
Fairbairn
(42)
9
311
Roger
Flynn
(40)
3
233
Rupert
Gavin
(48)
8
226
AshleyHighfield
(37)
4
302
83
Pat Loughrey (47)521 5,316 4,707 Peter Salmon3 (46)32
Richard Sambrook (46) 90–– 399 John Smith (45)87
13MichaelStevenson(42)521 5,316 5,106
Caroline Thomson (48) 45
113
Alan Yentob (56)
45
40
2

464
274
444
238
306
272
301
169
314
362
294
280
279
287
300
175
236
321

130

Increasein
accruedpensionover
year£000paDefinedcontribution
schemes

4

Transfer values
Transfervalue ofaccruedpension
at 31
March
2003
£000

Increase inTransfer transfer
value of value lessaccrued directors’
pension contribat 31
utions
March
over
2002
year
£000
£000

2
92
58
8 2,566 2,279
2
14
–
4
497
388
12
774
887
2
18
10
2
18
10
2
61
66
2
18
10
2
75
67
2
21
16
8
888
979
10
337
281
11
936 1,007
9
814
945
2
107
123
3
543
580
13 2,294 1,916

30
275
10
97
(124)
4
4
(10)
4
4
1
(101)
52
(85)
(147)
(20)
(42)
363

BBC
contributions
to moneypurchase
schemes
2003
2002
£000
£000

59
–
37
26
–
50
40
18
40
36
40
–
32
–
–
22
24
–

52
–
–
17
–
37*
21*
18
22*
35
34
–
21
–

424

291

–

5

424

296

–
18
16
–

– Members who resigned* Appointed to the Committee part-way through 2001/2002

in 2001/2002

1) Included in the benefits for Jana Bennett is £167,000 in respect of costs incurred in connection
with her relocation from the USA in order to take up her appointment with the BBC. A significant
proportion of this amount arises from the grossing-up for tax purposes of the fees relating to thesale of her former home in the USA* Appointed part-way through 2001/2002

2) The bonus figures for Andy Duncan and Carolyn Fairbairn include an additional payment of£5,000 each reflecting their contribution to securing the Digital Terrestrial Television (DTT) licences

1) Jana Bennett was appointed during the year.The increase in transfer values and in accrued
pension in the above table is in respect of the period from her appointment on 20 April 2002

3) Carolyn Fairbairn took a period of unpaid leave during the year2) The accrued benefits shown for Jana Bennett assume that she will complete the two-year service
period required before benefits can be claimed

4) The bonus figure for Alan Yentob includes an additional payment of £20,000 in respect of his
on-screen presentation activity during the year5) The long-term incentive plan is in respect of Rupert Gavin
6) Michael Stevenson resigned from the Executive Committee but remained a member of BBC staff
until 30 April 2003. £94,000 of the £128,000 was a payment in lieu of notice in line with his
contractual entitlement

Governors and Executive Committee pensions
The BBC provides pension benefits to the Chairman of theGovernors and to Executive Committee members. Detailsof defined benefit entitlements to Executive Committee
members who served during the year are shown in the first
five columns of the following table.The BBC also makes
contributions to money purchase schemes in respect ofcertain members as shown in the last two columns.

3) The increase in accrued pension for Peter Salmon includes additional pension of £7,000 per
annum arising from a transfer-in of £106,000 during the year4) The transfer value of accrued pension benefits represents the estimated cost to the pension
scheme of providing the pension benefit accrued to date.The value is affected by a number offactors, which include age of individual, pensionable salary, years of pensionable service andinvestment market conditions at the date of calculation (in accordance with Actuarial GuidanceNote GN11). It is not a sum paid or due to the individual and therefore cannot be meaningfully
added to remuneration.The effect of the investment market conditions on the transfer value varies
according to the person’s age. For older members the calculation reflects the yields on index-linked
gilts, while for younger members the calculation reflects the dividend yield on the FTSE All-Share
Index. Over the year to March 2003, the index-linked gilt yield has fallen, thereby increasing transfer
values linked to gilts, whereas the All-Share dividend yield has increased (due to falling market
values), thereby reducing transfer values linked to equities.The effect of this is that transfer values
have increased for older members and decreased for younger members

Gavyn Davies has waived his entitlement to pension benefits
from the BBC in 2003 and 2002.

Annual Report and Accounts 2002/2003 79

Compliance

6 Programmes, channels and promotions
The framework of content regulation under which the BBC
operates will change markedly during the year ahead as
Ofcom assumes its statutory powers.This section reports on
a number of editorial compliance matters, some of which will
come partly under Ofcom’s auspices in due course.

BBC Statements of Programme Policy
The BBC Statements of Programme Policy 2002/2003 included alarge number of measurable commitments.Table 1 on page 122
shows that the BBC met these with the following exceptions:● 1Xtra: 1Xtra made a commitment to provide around 20%
speech output, half of which would be news, documentaries
and social action. In its first eight months on air, it has
Upholding editorial standards
achieved 19.1% speech with 6.9% news, documentaries and
The Governors ensure that the BBC maintains high editorialsocial affairs. Radio & Music management have taken steps
standards, monitoring its compliance with the BBC Producers’
to ensure that 1Xtra is on track to achieve both these
Guidelines and with the Code on Impartiality and Accuracy
commitments over its first full year which will ensure it
included in them. Overall, the Governors were satisfied that inmeets the terms of its DCMS approval.
2002/2003 the BBC had met the standards expected of it.
● Northern Ireland: BBC Northern Ireland committed
They noted, nonetheless, a serious breach of the guidelines
to deliver 100 hours of politics in 2002/2003 but only
relating to product prominence in the Christmas episode ofachieved 77 hours, primarily due to the suspension of theAbsolutely Fabulous.This had been thoroughly investigated andNorthern Ireland Assembly in October 2002.
appeared to be an aberration rather than an indication of● English Regions: BBC English Regions committed to making
serious problems on that programme or elsewhere; steps had
all main regional news programmes at 6.30pm available
been taken to avoid a repetition.
on digital satellite but is now expecting to achieve thisin October 2003.This is linked to the BBC’s decision to
The portrayal of real people in drama also raised issues forbroadcast its services unencrypted on digital satellite.
programme makers, particularly in the areas of consent,● Regional production: BBC Television said that at least 33%
factual accuracy and privacy.The Governors also noted thatof network output across all BBC television channels
striking the balance of audience expectations around thewould be made outside London and the South East.This
watershed hour was an increasing challenge. As a result of ayear 31% was produced outside London and the South
Governors’ seminar, an internal project will look at audience
East – slightly down on the restated figure for 2001/2002
expectations for new channels.The labelling of difficult content
of 32%, despite increased investment (see Table 14,
will also be addressed over the coming year.
page 130). Last year’s figure has been restated following
a review of the eligibility criteria to reflect changes in BBC
The Governors’ oversight of impartiality included introducing
output since the commitment was originally devised ten
quarterly rather than half-yearly reporting and theyears ago. In future Ofcom will agree such targets with theintroduction of assessment by independent external
BBC as part of its Tier 2 content regulation so further
experts.Over the next year Governors will undertake morechanges in the eligibility criteria will be published in next
work to satisfy themselves that BBC output continues toyear’s Annual Report.
meet the highest standards of impartiality.
UK programme quotas
The Governors approve the BBC Producers’ Guidelines andUnder the Broadcasting Act 1990 the BBC has a duty to
all subsequent amendments, receive a quarterly complaints
ensure that not less than 25% of the amount of time allocatedreport from BBC Information, including complaints to theto the broadcasting of qualifying television programmes is
Programme Complaints Unit (PCU) and to BBC department allocated to the broadcasting of a range and diversity ofheads, and conduct a twice-yearly review of editorial policy.
independent productions.The Director-General of the Office
The Governors’ Programme Complaints Committee (GPCC) of Fair Trading (OFT) is required to report to the Secretary of
considers appeals by complainants against decisions on
State for Culture, Media and Sport periodically on the extent
serious editorial complaints taken by the PCU or by BBC
to which the BBC has, in his opinion, performed that duty.
management and reports monthly to the Board. On behalf of
the Governors, the GPCC also ensures that complaints to
His report for the period 1 April 2001 to 31 March 2002
the BBC are properly handled (see page 62).
was published in March 2003. It concluded that while theBBC had achieved a satisfactory range and diversity of
New service approvals
independent productions, it had not met the quota –All new BBC public services launched since 1 January 1997
achieving 21.8%.
require the approval of the Secretary of State for Culture,
Media and Sport.The key terms of the approval are also
Recent takeovers by broadcasters of major independentcontained in the Statement of Programme Policy for eachproducers have had the effect of removing their status asof these services.The next section reports by exception on
independents for the purposes of UK legislation and makeperformance against the Statements for 2002/2003.
it increasingly difficult for the BBC to meet the quota. If such
80 Annual Report and Accounts 2002/2003

production companies had been counted towards the
2001/2002 total, the BBC would have met its hours target.
The DCMS has acknowledged this issue and has committed
to amending the relevant secondary legislation to reinstate
suppliers such as Endemol which is a significant supplierto the BBC but which had its status changed following a
takeover by a foreign broadcaster. Producers owned by UK
broadcasters will still be unable to claim independent status.
The BBC’s total commitment in 2001/2002 to external
suppliers of qualifying output amounted to 27.5% of hours
and 29.4% of spend.
EU programme quotas in the calendar year 2002
European Community legislation requires Member States
to ensure that broadcasters reserve for European works
a majority proportion of their television transmission time
excluding the time devoted to news, sports events, games,
adverts, teletext services and teleshopping.The legislation
also requires broadcasters to reserve at least 10% of theirtransmission time for European works (excluding works ofthe kind described above) made by independent producers.
The BBC exceeded EU quotas in the calendar year 2002.
Of the relevant BBC One and BBC Two output, 81% wasof European origin (2001 79%) and 13% was made by
European independent producers (2001 11%). Of therelevant output of all BBC channels (including BBC Choice –now BBC Three, BBC Four, CBeebies, CBBC and BBC News24), 85% was of European origin (2001 88%) and 19% wasmade by European independent producers (2001 20%).
European channel broadcasting regulation
The BBC broadcasts two television channels in Europe,
BBC Prime and BBC World. Both channels were originallyoperated by European Channel Broadcasting Limited, awholly owned subsidiary of BBC Worldwide Limited, but
on 1 December 2002 the Secretary of State approved thetransfer of the business and assets of the BBC World channel
to a new company, BBC World Limited, which became awholly owned subsidiary of BBC Commercial Holdings
Limited. Both channels are licensed by the ITC as satellite
television services.
In accordance with the principles on which the Secretaryof State’s approval was originally granted:● arm’s length trading relationships were maintained
between the BBC and the companies responsible for
the BBC World and BBC Prime channels● the companies operating the channels complied fully with
the BBC Commercial Policy Guidelines and the Fair Trading
Commitment and with applicable provisions of EU law● the programmes shown on the two channels compliedwith relevant ITC codes and the BBC-made programmes
were produced in accordance with BBC Producers’
Guidelines
On air promotions: Office of Fair Trading undertaking
Following the 1992 report of the Monopolies and Mergers
Commission (on the publicising, in the course ofbroadcasting, of goods supplied by the broadcaster), the BBCgave an undertaking to the Office of Fair Trading to use only
still trails to give information about BBC magazines.The termsof the undertaking also commit the BBC not to exceed morethan seven minutes as an aggregate across a seven-day
period in relation to on air promotions of BBC magazines
on its television services. Although the legal obligation applies
only to BBC magazines, the Governors’ Fair Trading
Commitment commits to apply the spirit of the undertaking
to all on air promotions of commercial products.
During the period 1 April 2002 to 31 March 2003 thetotal on the BBC’s television services for all BBC magazines(including Radio Times) was 3 hours 10 minutes and
30 seconds of transmission (2001/2002 2 hours 25 minutes
30 seconds), which averages out at 3 minutes 40 seconds
in a seven-day period (2001/2002 2 minutes 45 seconds).
The total for all commercial products (including BBC
Worldwide and independent products) was 4 hours
38 minutes (2002 4 hours 37 minutes 30 seconds) which
averages out to 5 minutes 20 seconds (2001/2002 5 minutes
19 seconds) in a seven-day period.
7 Donations and acknowledgements
BBC policy is not to make political donations.
In addition to broadcast appeals detailed on page 65,
donations to charities by BBC commercial businesses
amounted to approximately £9,000 during the year
(2002 £8,500). A total of £1.1million in copyright royalties
was paid to Golden Jubilee Events Limited in respect of anagreement between the BBC, Golden Jubilee Events Limited
and BBC Worldwide Limited in regard to producing, staging
and broadcasting the Golden Jubilee musical concerts at
Buckingham Palace in June 2002. Golden Jubilee Events
Limited is a subsidiary of the Queen’s Golden Jubilee Trust,to which all of its profits are donated.
The BBC acknowledges financial grants from the European
Commission for various technical research projects.

Annual Report and Accounts 2002/2003 81

Financial review

Summary
In the summer of 2000 an ambitious strategy was set out
by the BBC for the period up to the end of the current
Charter in December 2006.This involves very significant
levels of new investment in content and the launch of many
new channels across television and radio.The financial year
2002/2003 marked major strides forward against thatstrategy. Four new channels were launched and the annual
spend on programmes was increased by £346million (17%).
UK Public Service Broadcasting spending versus
the 2000 strategy
3,500

Cash/debt levels
400

£m
*

* From 2003 UK Public Service Broadcasting only
(separate borrowing facilities for commercial
subsidiaries from March 2003)

Launch of
new services

200

0

-200

2000

2001

2002

2003

2004

2005

2006

2007

£m

3,000

2,500

Actual/projected spend
Spending as plannedin 2000 strategy

2,000

2000

2001

2002

2003

2004

2005

2006

2007

Also in the year a groundbreaking approach to television
distribution was put in place with Freeview and substantial
progress has been made with the BBC’s property rebuilding
programme.
All of this was made possible by success in reducing licence
fee evasion, improvements in the performance of thecommercial subsidiaries, and by using the surplus cash balance
built up in earlier years.
Because of this the Group cash balance moved from asurplus of £285million at the start of the year to Groupnet debt of £74million at the end.This mid-Charter period
will be characterised by spending levels being higher thanincome causing temporary debt in UK Public Service
Broadcasting.The cash reduction has been forecast for thelast three years but has been more gradual than originallyplanned. With income rising each year – from the combined
effects of improvements in licence fee collection effectivenessand the RPI + 1.5% annual increases in the level of thelicence fee – there will only be a few more years when bankfinance is being used and the strategy is to break even over
the Charter period.

IncomeLicence fee
The licence fee continues to provide well over 94% of themoney available for BBC services. In 2002/2003 evasion rates
fell from 7.9% to 7.2%. Maintaining and improving collection
efficiency is critically important and one of the BBC’s
objectives for 2002/2003 was to increase the cash inflow to
the BBC from improved licence fee collection.This objective
was achieved. Licence fee revenues of £2,659million were up£126million on 2001/2002:£m
Improvements in collection effectiveness
Inflation
Increase in licence fee above inflation

54
38
34

Year on year increase

126

This increase was achieved against a backdrop of significant
change, with new contractors, Capita and AMV, being broughtin during 2002 to take over collection and enforcement for
the first time. Capita is introducing many changes in the
television licence operation with new detection equipment,
new call centres, faster turnaround times and a new database.
These changes resulted in some increases in collection costs
in 2002/2003 after last year’s unusually low base. Collection
costs in 2002/2003 returned to the medium-term trend of
5.5% of income.
During the year the NAO published its report, Collecting
the Television Licence, in which Sir John Bourne, Comptroller
and Auditor General, praised the BBC for the good workthat it had done to reduce the evasion rate and tostrengthen the collection and enforcement arrangements.
Commercial earnings
Several BBC commercial businesses generate supplementary
cash flow from the exploitation of BBC physical assets andintellectual property.This extra source of cash flow is used
to increase the money available for programmes in UK PublicService Broadcasting.
During the year the BBC created a new holding company,
BBC Commercial Holdings Limited, for all its commercial

82 Annual Report and Accounts 2002/2003

businesses.This new structure provides greater clarity in theseparation of the BBC’s public service operations from its
commercial activities and provides a conduit for loans to thecommercial group, for which the DCMS approved a separate
borrowing limit of £350million in July 2002. Banking facilities
for this group were put in place in March 2003.
Under the current licence fee settlement, the Government
challenged the BBC to increase the amount it raised fromcommercial operations.This was also one of the financial
objectives the Governors set the BBC for 2002/2003. Despitedifficult trading conditions, this objective was achieved with asmall increase year on year. During 2002/2003 the commercial
businesses together contributed £124million to the BBC incash. In addition, a further £23million was made available forprogrammes through savings in support costs on services
provided to the BBC by the commercial businesses. Overall,the commercial businesses contributed a total of £147million
compared with £142million in 2001/2002.
BBC Worldwide and BBC WorldOf the commercial businesses, BBC Worldwide contributes
the most to the BBC. During 2002/2003 BBC Worldwide
increased its cash return to £123million, up from £106million
in 2001/2002.

was also beaten with a total increase of £616million (including
inflation) over the two-year period, of which £346million
occurred in 2002/2003.This extra spend has been used
to enhance programme quality, particularly on BBC One,to increase the range of distinctive localised programmes andto launch the new digital services. During the year the BBC
launched BBC Three and three new digital radio channels(1Xtra, BBC 7 and BBC Asian Network).
The split of the BBC’s expenditure across its different
channels and services is shown in Note 2b to the financial
statements on page 95. All direct programme costs areallocated to each service. Programme related spend, on
areas such as newsgathering, collecting societies, orchestras
and performing rights groups, which was apportioned
across individual services in the previous year, has been
separately analysed this year for greater transparency.The
2002 comparatives have been restated accordingly.
The BBC spent £280million on digital programmes in
2002/2003 up from £184million in 2001/2002. Only 13.7%
of BBC programme spend is on digital services but 47.1%of the population can now receive digital television.

During 2002/2003 the BBC spent £976million in the creative
industry outside the BBC, up from £828million in 2001/2002
BBC World, while increasing its distribution around the world, (see table 19 on page 131).
faced a tough advertising market in 2002/2003. During
2002/2003 it had a cash outflow of £14million (of which
Overheads£9million relating to the period before BBC World was split
The BBC promised to reduce overheads from 24% three
from BBC Worldwide Group is included in BBC Worldwide’s years ago to 15% by March 2004.This target was achieved
cash result). Although not yet profitable, nor contributing cash early and in 2002/2003 reached a new low of 13%.
to the BBC, the channel met its targets for the year and it isplanned to become a net contributor of cash in later years.
Distribution
As part of its cost reduction drive, the BBC made major
BBC Ventures Groupchanges to its channel distribution arrangements. During
The BBC Ventures Group had a strong sales year, bolstered by November 2002 the BBC bid successfully for a 12-year digitala high level of BBC and external activity in the provision
terrestrial television (DTT) licence.The BBC entered into aof programme resources and technology services. For thejoint venture with Crown Castle and BSkyB to develop thefirst time all the businesses in this Group produced a profit,
Freeview free-to-air digital offering.This has been very
including BBC Broadcast which only began trading at the start successful and 680,000 set top boxes had been sold byof the year and BBC Resources which had been loss making
retailers by the year end.This venture is a cost-effective way
since it was formed in 1998.The Group contributed £6million of attracting new viewers and listeners to the BBC’s digitalin cash overall.The cash contribution was down on 2001/2002 services.
due to significant investment in the year by the Group in
capital assets from which the Group expects to generate
From July 2003 the BBC will broadcast its eight television
increased contributions in future years.These businesses alsochannels unencrypted on digital satellite.This will make thehelp the BBC by contributing to cost reductions in the supply BBC’s digital services available to more people and also allowof facilities which amounted to £23million in 2002/2003, up
the BBC to make substantial savings.
from £12million in the previous year.
Result for the year
Expenditure
The BBC does not have shareholders and does not aim to
Spending on programmes
make a profit. Operating surpluses and deficits represent
The BBC promised to increase spend on programmes by at least short-term timing differences between income and£450million in the two years to 2002/2003.This objective
expenditure which will reverse in subsequent years.The
Annual Report and Accounts 2002/2003 83

Financial review

result for 2002/2003, a deficit of £315million, is in line with
the BBC’s five-year plan in which the large improvement inspending on programmes and services is achieved by making
use of the BBC’s historic high cash balances and temporarybank finance within the overall aim of breaking even over theCharter period.

not adopted this standard and the Accounting Standards Board
has delayed its formal adoption date to 2005, as part of theInternational Financial Reporting Standards conversion project.

Along with several other leading companies, the BBC
adopted FRS 17 early. Many other companies, however, haveJohn Smith
Director of Finance, Property & Business Affairs

To put the FRS 17 accounting methodology into perspective,
the health of the BBC Pension Scheme should be consideredin light of the following factors:
Assets and liabilities● the discount rate for the scheme’s liabilities is prescribed
Property
by FRS 17 as the long run bond yield, irrespective of theDuring 2002/2003 the BBC has continued with its very
maturity of the scheme’s liabilities.The scheme’s liabilities
ambitious programme to upgrade its 8 million square footare far from mature and the fact that long run bond yields
property estate. One third of the BBC’s top 100 buildings have
have fallen recently is no reason to believe that the
been upgraded or works are in progress, with another third at
liabilities have increased in practice
the planning stage. Key developments include new buildings for ● the FTSE All-Share Index fell 32% in the year to 31 March
BBC Radio Stoke, Leicester, Leeds and Tunbridge Wells and the2003 compared with a fall in BBC Pension Scheme assets
securing of modern new space in the Mailbox shopping centreof 21% (from £6,219million to £4,903million).The FTSE
in Birmingham and the Forum Building in Norwich.
All-Share Index has risen since 31 March 2003 so if theasset valuation were undertaken more recently a very
The biggest schemes all moved forward in the year. In
different picture would be presented
Glasgow, internal approval was granted for a completely new ● the scheme is still accumulating value each year. Cashbroadcasting centre to house BBC Scotland at Pacific Quay.
receipts to the scheme, from contributions and income from
The planning application will be submitted this summer.
investments, continue to exceed cash outgoings to members
At White City in London, the 550,000 square feet of new● in order to ensure the continued health of the scheme,
buildings moved towards completion and the move into new
the BBC has taken a decision to increase its cash
offices is now six months ahead of schedule. At Broadcasting
contributions to the scheme from the current 4.5% to 6%.
House in central London, planning applications were approved
The increase of 0.5% a year for each of the next three
and work commenced on the redevelopment of the BBC’s
years took effect from 1 April 2003. BBC employees areflagship headquarters to provide a new broadcasting centre foralso increasing their contributions by a similar amount withthe radio networks, BBC World Service and the BBC’s network
their first 0.5% increase taking effect from 1 April 2004.
news journalism.These three schemes are all being carried
These changes increase the value of the fund by aroundout through the 50:50 partnership with Land Securities Trillium.
£200million. FRS 17 does not allow these changes to bereflected in the figures, but the BBC believes that thePension fundincreases in contributions will help ensure the continued
The BBC Pension Scheme, to which the majority of employees
health of the scheme and the BBC will be commissioning
belong, is a final salary (defined benefit) scheme.This scheme
an interim triennial valuation 18 months early in autumn
is a key part of the remuneration offer for BBC staff and the2003 to review their impact
BBC has publicly confirmed its commitment to the scheme● the annual cash cost of the BBC Pension Scheme to the BBC
and that it will remain a defined benefit scheme.
is £33million per annum.This is less than 1% of the BBC’s
income which gives a good deal of flexibility for the future
Although the scheme is managed by the trustees using long- ● the BBC Pension Scheme trustees manage the scheme
term actuarial valuations, the financial statements are required
for the long term.They agree funding decisions based onunder the contentious accounting standard FRS 17 to include
a long-term (actuarial) view of the assets required to fundthe pension scheme at a valuation which reflects the market
the scheme’s liabilities.The most recent actuarial valuation
value of the scheme assets on one day in time irrespective of(April 2002) shows a surplus of £441million with assets
their long-term performance. As is the case for many defined
sufficient to cover 109% of the benefits due to members
benefit pension funds, the market valuation has been hit thisyear by a sharp decline in equity values although this has
Taking all these factors into account the BBC continues tosince begun to reverse. In addition a fall in interest rates has
believe the scheme is well funded and remains committed
led to an increase in the theoretical present value of future
to its long-term financial health.
pension liabilities.This has taken the net valuation of thepension scheme calculated under FRS 17 to a deficit of£1,070million at 31 March 2003.

84 Annual Report and Accounts 2002/2003

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

The BBC does not aim to makea surplus. Surpluses and deficits
represent short-term timing
differences between income andexpenditure which will reversein subsequent years.

Note

Group income
Operating expenditure

12Group operating deficit
Share of operating surplus of associates and joint ventures
Operating deficit(Loss)/profit on sale and termination of operations(Loss)/profit on disposal of fixed assets
Deficit before interest and taxation
Net interest receivable and other similar items
Other finance income (from defined benefit pension scheme)

3
5
6

7
8a

(Deficit)/surplus before taxation and minority interest

2003
£m

2002
£m

3,532.0(3,938.6)

3,382.9(3,556.3)(406.6)2.9(173.4)1.4(403.7)(0.4)(14.3)(172.0)7.7
11.7(418.4)5.1
114.3(152.6)21.6
133.9(299.0)

2.9

Taxation
Minority interest

9(15.7)
0.1(17.7)(1.1)

Deficit for the financial year

18(314.6)(15.9)The BBC has entered into certain joint ventures with Flextech and Discovery Communications Inc. but
has no obligation to make good its share of their cumulative operating losses (see Note 13d).
The above results are derived from continuing operations in both the current and previous financial
periods.
There is no material difference between the results as disclosed above and the results on a historicalcost basis.

Annual Report and Accounts 2002/2003 85

Balance
sheetsat 31 March

Group
2003
£m

Group
2002
£m

UK Public
Service
Broadcasting
2003
£m

15.7
802.9
108.3
17.8

15.4
760.8
111.8
16.8

–
554.2
–
318.3

–
520.8
–
299.2

944.7

904.8

872.5

820.0

14

468.9

449.4

437.7

425.3

15

158.6
605.5

137.2
663.6

131.8
487.3

113.8
542.8

764.1
64.9
69.5

800.8
356.8
0.3

619.1
32.9
7.9

656.6
356.8
–

1,367.4

1,607.3

1,097.6

1,438.7(920.5)(871.2)(782.9)(767.9)

446.9

736.1

314.7

670.8

1,391.6

1,640.9

1,187.2

1,490.8

Note

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

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

10
11
12
13

15

20
20

16

Net current assets
Total assets less current liabilities

UK Public
Service
Broadcasting
2002£mCreditors – amounts falling due
after more than one year

16

(159.4)(102.5)(56.2)(46.1)

Provisions for liabilities and charges

17(72.0)(82.6)(64.3)(74.6)

1,160.2

1,455.8

1,066.7

1,370.1–(1,074.5)

965.0
(3.9)

–
–

–
–

85.7

2,416.9

1,066.7

1,370.1

296.0(1,074.5)

646.2
961.1

203.0
–

561.1
–

(778.5)858.1
5.6

1,607.3
802.6
6.4

203.0
858.1
5.6

561.1
802.6
6.4

85.2
0.5

2,416.3
0.6

1,066.7–

1,370.1–

85.7

2,416.9

1,066.7

1,370.1

Net assets excluding pension
asset and liability
Pension asset
Pension liability

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

18
18

18
18

The BBC has entered into certain joint ventures with Flextech and Discovery Communications Inc.
but has no obligation to make good its share of the net liabilities which at 31 March 2003 amounted
to £62.9million (2002 £82.5million).These liabilities have not been included in the financial statements(see Note 13d).
The financial statements were approved by the Governors and Executive Committee on 19 June 2003
and signed on their behalf by:
Gavyn Davies Chairman
Greg Dyke Director-General
John Smith Director of Finance, Property & Business Affairs

86 Annual Report and Accounts 2002/2003

Consolidated
cash flow statement
for the year ended 31 March

Note

2003
£m

2002
£m

19

(68.3)

217.5

Dividends received from joint ventures and associates

1.3

1.1

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

11.5
(2.0)
(0.2)

24.9
(2.8)
–

Net cash inflow from return on
investments and servicing of finance

9.3

22.1

Taxation
Taxation paid

(12.9)(13.9)

Capital expenditure and financial investments
Purchase of tangible fixed assets
Investment in programmes for future sale
Investment in intangible fixed assets
Proceeds from the sale of investments
Proceeds from the sale of investment in programmes
Proceeds from the sale of tangible fixed assets(179.9)(85.5)
(2.7)
–
0.4
5.4

(194.2)(83.2)
(8.7)
0.6
5.9
46.8

Net cash outflow from capital expenditure andfinancial investments(262.3)(232.8)Acquisitions and disposals
Purchase of a subsidiary net of overdrafts acquired
Investments in joint ventures
Proceeds from sale and termination of operations
Proceeds from disposal of interests in joint ventures and associates

–
(1.2)
3.2
0.1

(9.1)
(11.4)
9.0–

Net cash inflow/(outflow) from acquisitions and disposals

2.1(11.5)(330.8)(17.5)

–
291.9

15.0
(103.4)291.9(88.4)

85.0(25.9)(21.2)
(0.5)

10.3
–
–
–

37.4

10.3

(1.5)

(95.6)Net cash (outflow)/inflow from operating activities

Net cash outflow before use of liquid resources and financing
Management of liquid resources
Net cash withdrawn from deposit
Sale/(purchase) of other liquid resources20

Net cash inflow/(outflow)from management of liquid resources
Financing
New loans
Repayment of loans
Repayment of finance leases
Repayment of loan notes

20
20
20

Net cash inflow from financing
Decrease in cash in the year

20,21

Annual Report and Accounts 2002/2003 87

Consolidated statement of total recognised gains
andlossesfor the year ended 31 March

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

Note

2003
£m

2002
£m

8

(314.6)(3.1)(2,013.4)(15.9)
0.5(725.4)(2,331.1)(740.8)UK Public
Service
Broadcasting
2002£mTotal recognised gains and losses relating to the year

Reconciliationsof movement in reserves
for the year ended 31 March

Group
2002
£m

Deficit for the financial year
Other recognised gains andlosses relating to the year (net)(314.6)(15.9)(303.4)(9.3)(2,016.5)(724.9)––Decrease in reserves during the year
Opening reserves(2,331.1)
2,416.3(740.8)3,157.1(303.4)
1,370.1(9.3)
1,379.4

85.2

2,416.3

1,066.7

1,370.1

Closing reserves

88 Annual Report and Accounts 2002/2003

Group
2003
£m

UK Public
Service
Broadcasting
2003£mStatement of accounting policies

This section explains the BBC's main accounting policies, whichhave been applied consistently throughout the year and in thepreceding year except where stated.A footnote in italics follows
some policies below to explain technical aspects of the accounting
treatment in plain English.
The financial statements have been prepared in accordance withthe provisions of the BBC's Charter and Agreement. Although notmandatory, the BBC has chosen to follow the accounting anddisclosure provisions of the Companies Act 1985, applicable UK
accounting standards and the rules of the UK Listing Authority toensure that its financial statements are prepared on a basis whichis consistent with that of UK public limited companies. In line withother companies, the BBC files with Companies House audited
financial statements for all its subsidiary companies.
Basis of accounting
The financial statements are presented under the historical costaccounting convention as modified by the revaluation of certain
plant, machinery, furniture and fittings.
Basis of consolidation
The BBC Group comprises:● UK Public Service Broadcasting and those subsidiaries
incorporated to act solely on its behalf (notably Centre House
Productions Limited, BBC Property Limited and BBC Property
Investments Limited)● BBC World Service (and its subsidiaries)● Commercial subsidiary companies comprising BBC Resources
Limited and BBC Commercial Holdings Limited and its various
subsidiaries (notably BBC Worldwide Group, BBC World Groupand BBC Ventures Group)

permissible. Accordingly, for the purposes of preparing UK PublicService Broadcasting’s balance sheet, UK Public Service Broadcastingis considered to have an investment in BBC World Service equal to
the net assets of BBC World Service.
IncomeIncome, which excludes value added tax, trade discounts and sales
between Group companies, is comprised of the following key classesof revenue, which are recognised as follows:●

Television licences
Income derived from television licences, receivable from the
Department for Culture, Media and Sport, represents the valueof licences issued in the year.The amount which can be paid in
cash to the BBC for any year cannot exceed the total amountvoted by Parliament for that year. Any difference between thevalue of licences issued and the amount voted is adjusted in theamount of cash received in the following year. Any amounts
which have not been paid to the BBC are included within debtors.

●

Grant-in-Aid from the Foreign and Commonwealth Office
BBC World Service income, primarily derived from a Grant-inAid from the Foreign and Commonwealth Office, is intended
to meet estimated expenditure in the year but unexpended
receipts for the year, within predetermined limits, are not liable
to surrender.

●

Provision of equipment, facilities and services
With the exception of long-term contracts, income is recognised
when the equipment, facilities and services are provided tocustomers.
For long-term contracts, the amount of profit attributable to thestage of completion is recognised when the outcome of thecontract can be foreseen with reasonable certainty.Turnover
for such contracts is stated at the cost appropriate to their stageof completion plus attributable profits, less amounts recognised
in prior years. Provision is made for any losses as soon as they
are foreseen.

Unless otherwise stated, the acquisition method of accounting
has been adopted. Under this method, the results of subsidiaries
acquired or disposed of in the year are included in the consolidated
statement of income and expenditure from the date of acquisition
or up to the date of disposal.
An associate is an undertaking in which the Group has a long-term
interest, usually between 20% and 50% of the equity voting rights,
and over which it exercises significant influence. A joint venture is anundertaking in which the Group has a long-term interest and overwhich it exercises joint control.The Group’s share of profits lesslosses of associates and joint ventures is included in the consolidated
statement of income and expenditure and its interest in their net
assets is included in the consolidated balance sheet.

●

Provision of programme making facilities and services –recognised on provision of service●

Licence fees from distribution of joint productions –recognised on the later of delivery of rights and the start of thelicence period●

Programme distribution and channel income – recognised onprovision of service

A separate statement of income and expenditure reflecting theresults of UK Public Service Broadcasting has not been presented,
as permitted by Section 230 of the Companies Act 1985.

●

Sale of promotional merchandise – recognised on delivery

These accounts of the BBC Group include the results of UK PublicService Broadcasting, BBC World Service and all businesses controlled
by the BBC (subsidiaries) together with the BBC’s share of the results ofbusinesses over which the BBC has influence but not control (associates)
and those which the BBC jointly controls (joint ventures).
Investments
Investments are recorded on the balance sheet of UK PublicService Broadcasting at cost less provision for any impairment
in value.The funding of UK Public Service Broadcasting and BBC
World Service is legally separate and cross-subsidisation is not

The distinction between the various income sources is important.The
BBC is careful not to cross-subsidise commercial, UK Public Service or
BBC World Service activities. More information on these BBC fair trading
requirements and policies can be found on pages 68 to 71 of this report.
Foreign currency translation
Transactions in foreign currencies are translated into sterling at therates of exchange ruling at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies aretranslated into sterling at the rates of exchange ruling at 31 Marchor at forward rates where related hedging contracts are in place.
Surpluses and deficits arising from the translation of assets andAnnual Report and Accounts 2002/2003 89

Statement of accounting policies

liabilities at these rates of exchange, together with exchange
differences arising from trading, are included in the statement ofincome and expenditure.

reserve. On disposal, goodwill previously written off against
reserves is transferred to the statement of income and expenditure
for the year.

The profit and loss accounts and cash flows of overseas subsidiaries
are translated into sterling at average rates for the year. Exchange
differences arising on consolidation from the retranslation of
the opening net assets of overseas subsidiaries and any related
long-term foreign currency borrowings are taken directly to theoperating reserve, together with the differences arising when the
profit and loss accounts are retranslated at the rates ruling at theyear end. Other exchange differences are taken to the statementof income and expenditure.

Intellectual property rights
Purchased intellectual property rights are capitalised and amortised
on a straight line basis over the expected useful life of the assets.

As these financial statements are prepared in sterling, the BBC’s foreign
currency transactions and balances must be translated, at appropriate
exchange rates, into sterling.This policy states how those re-translations
are included in the financial statements and is consistent with themethods used by many companies.
Pension costs
The BBC operates both defined benefit and defined contribution
schemes for the benefit of employees.
The amounts charged as expenditure for the defined contribution
scheme represent the contributions payable by the BBC for theaccounting periods in respect of this scheme.
The defined benefit schemes, of which the majority of staff are
members, provide benefits based on final pensionable pay. Amounts
are charged to expenditure so as to spread the cost of pensions
over employees’ working lives with the BBC.The assets of the BBC’s
main scheme are held separately from those of the Group.
UK Public Service Broadcasting and its subsidiary undertakings
have taken advantage of the provisions included within FRS 17,
Retirement benefits, and account for the scheme as if it were adefined contribution scheme.This is because the pension scheme ismanaged centrally across the whole Group and it is not possible
to allocate the underlying assets and liabilities of the scheme on areasonable and consistent basis.The expenditure charge under
FRS 17 for UK Public Service Broadcasting and its subsidiary
undertakings therefore represents the contributions payable in the year.
On retirement, members of the BBC’s main pension scheme are paid
their pensions from a fund which is kept separate from the BBC Group.
The BBC makes cash contributions to that fund in advance of members’
retirement.
Research and development
Research and development expenditure is written off as incurred.
Intangible fixed assets
Goodwill
Purchased goodwill (representing the excess of the fair value ofthe purchase consideration plus any related costs of acquisition
over the fair value attributable to the separable net assets acquired),arising on acquisition of a subsidiary or business, is capitalised andamortised over its useful economic life. On the subsequent disposal
or termination of a business, the surplus or deficit is calculated after
charging the unamortised amount of any related goodwill. As ispermitted by FRS 10, Goodwill and intangible assets, goodwill arisingin periods up to 1 April 1998 remains offset against the operating

90 Annual Report and Accounts 2002/2003

Tangible fixed assets
Expenditure on fixed assets is capitalised together with incremental
and internal direct labour costs incurred on capital projects.
Depreciation is calculated so as to write off the cost or valuation,less estimated residual value, of fixed assets on a straight line basis
over their expected useful lives. Depreciation commences from thedate an asset is brought into service.
The BBC’s useful lives for depreciation purposes for the principal
categories of assets are:Land and buildings
Freehold land

– not depreciatedFreehold and long-leasehold buildings– fifty years

Short-leasehold land and buildings– unexpired lease term

Plant and machinery
Computer equipment– three to five years

Electrical and mechanicalinfrastructure– ten to twenty-five years

Other– three to ten years

Furniture and fittings– three to ten years

UK Public Service Broadcasting’s plant and machinery is statedat the estimated current replacement cost of the assets, as at
31 March 1993, adjusted for remaining service potential, or cost
if acquired later, less accumulated depreciation.
BBC World Service’s plant and machinery and furniture and fittings
are stated at the estimated current replacement cost of the assets,
as at 1 April 1996, as adjusted for remaining service potential, or
cost if acquired later, less accumulated depreciation.
There is no material difference between the net book value of thesetangible fixed assets and their value as determined on a historicalcost basis.
The BBC has revalued its assets once, when the internal market was
introduced, but has chosen not to revalue its tangible assets on an
ongoing basis.This reflects the fact that they are used within the BBC
rather than being held for resale or their investment potential. Assets
are therefore included at the amount they cost when purchased orconstructed (in either case less subsequent depreciation).
Investment in programmes for future sale
Investment in programmes for future sale is stated at cost, after writing
off the costs of programmes that are considered irrecoverable, lessaccumulated amortisation. Amortisation of investment in programmes
for future sale is charged to the income and expenditure accountover the estimated average marketable life of the programme genre
which is generally between two and ten years.The cost andaccumulated amortisation of investment in programmes for future
sale are reduced by programmes which are fully written off.

The cost of programmes for sale is charged to the income andexpenditure account to match the expected timing of income fromfuture sales.
Originated programme stocks and work in progress
Originated programme stocks and work in progress, including thosecommissioned from independent producers, are stated at the lowerof cost and net realisable value. With the exception of the costs of
prepaid repeats of independent programmes, the full stock value iswritten off on first transmission.
Cost includes all direct costs, production overheads and a
proportion of other attributable overheads.
Net realisable value is based on arm’s length contract prices
negotiated between the channel controllers and programme makers.
Acquired programmes and film stocks
The costs of acquired programmes and film stocks are written off
on first transmission except to the extent that further showings arelikely in the foreseeable future, when they are written off according
to their expected transmission profile.
Assets and liabilities relating to acquired programmes are recognised
at the point of payment or commencement of the licence period,
whichever is earlier. Agreements for the future purchase of
programmes whose licence period has not commenced and where
there has been no payment by the balance sheet date are disclosed
as purchase commitments.
Other stocks
Raw materials and other physical stocks are stated at the lowerof cost and net realisable value.
Deferred tax
Deferred tax is computed under the liability method. Full provision,
without discounting, is made in respect of timing differences between
certain items in the financial statements and their treatment for
taxation purposes at the balance sheet date except as otherwise
required by FRS 19, Deferred tax. Deferred tax assets are recognised
to the extent that it is regarded as more likely than not that they
will be recovered.

A finance lease is a lease that transfers substantially all the risks andrewards of owning and operating an asset to the lessee. Effectively thelessee owns the asset and has financed it by borrowing, so the asset
and borrowing are included separately in the balance sheet.
Reserves
The value of the capital reserve is equal to the combined net bookvalue of fixed assets of UK Public Service Broadcasting and BBC
World Service at historic cost.
The revaluation reserve reflects the difference between the net
book value of fixed assets of UK Public Service Broadcasting and
BBC World Service at historic cost compared with their revalued
amount.
The operating reserve is the accumulated surplus of the income andexpenditure account to date.
The BBC is careful not to mix UK Public Service Broadcasting and BBC
World Service reserves. Hence BBC World Service reserves are shown
separately in the notes to the financial statements.
Cash and liquid resources
Cash, for the purposes of the cash flow statement, comprises cashin hand and deposits repayable on demand, less overdrafts payable
on demand. Liquid resources are current asset investments which
are either readily convertible into known amounts of cash at orclose to their carrying values or traded in an active market. Liquid
resources comprise bank deposits not repayable on demand andother short-term investments which include gilts, certificates ofdeposit and commercial paper.
Financial instruments
The Group does not enter into speculative derivative contracts.
Some hedging contracts are undertaken in order to limit theGroup’s exposure to foreign exchange fluctuations (the accounting
treatment for these contracts is explained in the foreign currencytranslation accounting policy).
Disclosure of the Group’s loans and other financial assets andliabilities is provided within Note 23 to the financial statements.

Deferred tax is corporation tax which is not payable at a specific time
but which is expected to become payable in the future.
Operating leases
Operating lease rentals are written off on a straight line basis over
the term of the lease.
An operating lease is a lease in which the lessee has not taken on therisks and rewards of owning and operating the asset.The lessee – theBBC – has not acquired an asset but is hiring it, so the hire charge isincluded in the BBC’s costs.
Finance leases
Assets acquired under finance leases are included within fixed assets
at the total of the lease payments due over the life of the lease
discounted at the rate of interest inherent in the lease.The sameamount is included in creditors. Rental payments are apportioned
between the finance element, which is charged against the income
and expenditure account, and the capital element which reduces thelease creditor.

Annual Report and Accounts 2002/2003 91

Notes to the financial statements

Note 1 provides analysis of thedifferent business areas within
the BBC.
UK Public Service BroadcastingGroup (referred to as ‘Home
Services’ within the BBC Charter)
comprises the UK public service
broadcasting operations and thosesubsidiary companies incorporated
to act solely on behalf of thosepublic service operations.
BBC World Service comprises theGovernment-funded BBC World
Service and media monitoring
activities.
Commercial Businesses comprisebusinesses which generate external
income from exploitation of theBBC’s programmes, other assets
and skill base.

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

BBC
World
Service£m

Commercial
Businesses
£m

Total
£m

2,797.3(116.1)
–

224.2
(0.5)
–

1,144.0(437.4)(79.5)

4,165.5(554.0)(79.5)

1b,d,g2,681.2

223.7

627.1

3,532.0(Deficit)/surplus before interest and taxation 1e
Defined benefit pension scheme– additional operating costs*†– other finance income*Net interest receivable(331.1)

7.9

41.3(281.9)Note

2003
Total income
Less: Intra-Group income
Less: Share of joint ventures
Group external income(136.5)114.3
5.1

Deficit before taxationand minority interest(299.0)Net assets (excluding pension liability)

771.6

142.8

245.8

Pension liability*(1,074.5)

Net assets

85.7

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

2,698.2(130.3)
–

211.1
(0.4)
–

1,017.2(331.3)(81.6)

3,926.5(462.0)(81.6)

1b,d,g2,567.9

210.7

604.3

3,382.91e(30.8)

9.4

20.3

(1.1)
(151.5)133.9
21.6

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

1,160.2

2.9
1,083.7

134.3

237.8

1,455.8

Pension asset (net)*

961.1

Net assets

2,416.9* As permitted by FRS 17 these items are not split between business classes because they are managed centrally across the whole Group and it is notpossible to allocate them on a reasonable and consistent basis† The actual employer cash contribution to the defined benefit pension scheme is included in the (deficit)/surplus before interest and taxation of each
entity.The additional operating cost is the cost to the Group over and above these cash contributions

92 Annual Report and Accounts 2002/2003

1b UK Public Service Broadcasting Group income
The income from licences represents
the value of all licences issued in theyear.
Other licence fee income andadjustments include the year on year
impact of licences issued in the year
but not in force at 31 March either
through late or early renewals or
through refunds.

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

Licences in force are those which arestill valid as at 31 March each year.

2003
£m

2002
£m

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

2,271.3
2.8
0.9
370.9
15.9
(3.3)

2,164.3
3.4
0.8
350.0
16.3
(1.8)

Total licence fee income
Open University
Other income

2,658.5
0.1
22.6

2,533.0
7.7
27.2

Total external income

2,681.2

2,567.9

Licence fee income

During the year 3.2 million (2002 3.3 million) colour licences were issued under the quarterly payment
scheme at a premium of £5 each (2002 £5).
Licences in force
Colour
Monochrome
Over 75s
Concessionary

2003
Numberm

2002
Number
m

20.1
0.1
3.7
0.2

19.9
0.1
3.6
0.2

24.1

23.8

Households in which one or more persons over the age of 75 reside, as their primary residence, areentitled to a free licence.The BBC is reimbursed for these free licences by the Department for Workand Pensions.
Licence fees are set by the
Department for Culture, Media andSport.

Licence fees
Colour
Monochrome
Concessionary

2003
£

2002
£

112.0037.50
5.00

109.0036.50
5.00

From 1 April 2003 the colour and monochrome licence fees were increased to £116 and £38.50
respectively.The concessionary licence remained at £5.
1c Geographical analysis of UK Public Service Broadcasting GroupUK Public Service Broadcasting Group income and deficit arises in the UK.The net assets used by these
operations are located in the UK.
1d BBC World Service income

Other income is generated from thesale of programmes, co-production
deals, publishing activities and theprovision of media monitoring
services.

2003
£m

2002
£m

Grant-in-Aid
Subscriptions
Other income

201.0
16.1
6.6

187.9
15.6
7.2

Total external income

223.7

210.7

2003
£m

2002
£m

Broadcasting
BBC Monitoring

6.5
1.4

8.6
0.8

Total surplus before interest and taxation

7.9

9.4

1e BBC World Service surplus before interest and taxation by activity

Annual Report and Accounts 2002/2003 93

Notes to the financial statements

1f Geographical analysis of BBC World Service
BBC World Service income and surplus arises in the UK.
Location of BBC World Service net assets:

2003
£m

2002
£m

UK
Overseas

56.1
86.7

50.2
84.1

Net assets

142.8

134.3

2003
£m

2002
£m

Publishing and new media
Programme distribution
Channels
Provision of play out and channel management services
Provision of programme making facilities and services
Provision of technology services
beeb Ventures Limited
Less intra-Group income

338.0
168.8
79.0
98.3
157.7
222.1
0.6
(437.4)

331.7
172.3
71.8
–
148.9
208.5
2.4
(331.3)

Total external income

627.1

604.3

1g Analysis of Commercial Businesses’ income by activity

Play out and channel management services were provided by an internal division of UK Public Service
Broadcasting in 2002. On 2 April 2002 provision of these services transferred to BBC Broadcast Limited.
This table shows where thecustomers of BBC Commercial
Businesses are based.

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

Total
£m

2003
Income by destination

370.0

112.0

145.1

627.1

Surplus/(deficit)before interest and taxation

31.6

(2.5)

12.2

41.3

Net assets

208.1

37.4

0.3

245.8

2002
Income by destination

348.6

110.5

145.2

604.3

6.9

0.7

12.7

20.3

195.4

42.4

–

237.8

Surplus before interest and taxation
Net assets

All commercial income arises in the UK as this is where rights for exploitation and the skills andservices of the Commercial Businesses are developed.

2 Operating expenditure
2a Analysis of operating expenditure by activity
Note

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

2b
2c
2d

Total
2003
£m

Total
2002
£m

2,999.4
215.8
586.9
136.5

2,602.1
204.6
598.1
151.5

3,938.6

3,556.3* BBC World Service expenditure of £215.8million (2002 £204.6million) excludes £0.5million (2002 £0.4million) of expenditure on the provision ofservices to other BBC Group companies** As permitted by FRS 17 the non-cash operating costs are not split between the business activities as it is not possible to do this on a reasonable andconsistent basis

94 Annual Report and Accounts 2002/2003

This year this note has been
expanded to give further detailon programme related spend.
The 2002 figures have been
re-analysed accordingly.

2b UK Public Service Broadcasting Group expenditure
Note

Analogue services
BBC One
BBC Two
National and regional television
National, regional and local radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five Live

Digital services
CBBC, CBeebies
BBC Three (previously BBC Choice)
BBC News 24
BBC Parliament
BBC Four
Digital text and interactive television
1Xtra
BBC Five Live Sports Extra
6 Music
BBC 7
BBC Asian Network
BBCi on the internet

Transmitted programme spend
Programme related spend
Newsgathering
Marketing, press, publicity and events
On-air trails and navigation
Market researchCollecting societies
Orchestras and performing groups
Helplines, one-off events and other programme related spend

i
ii

i
iii
iii
iii
iii

iv

v

Total programme spend
Overheadsvi

Total output spend
Percentage of output spend on programmes
Licence fee collection costs
Transmission costs

Total broadcasting expenditure*

vii
viii

2003
£m

2002
£m

858.9
367.4
211.1
130.8
17.2
21.6
30.2
64.8
53.8

731.0
311.6
188.6
116.1
16.8
21.8
31.0
62.5
50.3

1,755.8

1,529.7

39.9
75.5
23.8
2.7
41.2
9.5
4.0
1.7
4.0
2.2
3.1
72.3

11.0
44.2
25.7
2.5
24.5
7.3
–
0.7
0.2
–
1.8
66.5

279.9

184.4

2,035.7

1,714.1

94.2
63.5
25.5
12.7
52.0
15.5
79.2

94.8
48.3
22.0
11.7
50.4
14.6
76.1

342.6

317.9

2,378.3

2,032.0

346.0

347.5

2,724.3
87%

2,379.5
85%

146.4
141.7

95.4
127.2

288.1

222.6

3,012.4

2,602.1* Total broadcasting expenditure includes an exceptional loss on disposal of fixed assets within overheads of £13.0million (see Note 6).

i) Children’s channels and BBC Four show an increase in costs reflecting their first full year oftransmission. BBC Four costs are greater than those of its predecessor BBC Knowledge due to higher
levels of originated programming.
ii) BBC Three was launched in February 2003 to replace BBC Choice. Increased costs were incurred by
BBC Three due to launch costs for the new channel and additional commissions prior to launch.
Annual Report and Accounts 2002/2003 95

Notes to the financial statements

2b UK Public Service Broadcasting expenditure continuediii) BBC Five Live Sports Extra and 6 Music were both launched at the end of the 2002 financial year, so
have incurred their first full year of costs in 2003. 1Xtra was launched in August 2002 and BBC 7 waslaunched in December 2002.
iv) Total spend on transmissions has risen in line with the BBC’s stated objective to increase spend on
programming.
v) There has been additional marketing spend in the year to support the launch of BBC Three and thedigital radio networks, and to promote digital television services, including Freeview.
vi) Overheads include the central costs of accommodation, technology, finance and human resources.
vii) Licence fee collection costs were unusually low in 2002 due to a number of one-off events such as
the rebate from Consignia for non-performance of contractual obligations. Under the new contractor,
charges in 2003 have returned to their normal levels (collection costs in 2001 were £131.9million).
viii) Of the transmission costs, £73.2million relate to analogue services and £68.5million to digital
services.
BBC World Service expenditureexcludes expenditure spent on
intra-Group activities.

2c BBC World Service expenditure
2003
£m

2002
£m

149.8
22.4
33.2
10.4

142.1
22.6
30.6
9.3

215.8

204.6

Note

2003
£m

2002
£m

12

314.8
133.4
50.3
88.4

323.4
147.0
41.3
86.4

586.9

598.1

2003
£m

2002
£m

28.8
6.5
14.0
17.0
30.6

26.4
9.6
18.4
15.2
23.7

126.5
10.8
4.5
88.4
4.5

121.8
10.9
1.4
86.4
1.4

Radio
Monitoring
Transmission costs
Internet activity

The expenditure shown forCommercial Businesses relates only
to external income and excludes
expenditure relating to sales within
the BBC.

2d Commercial Businesses’ expenditure

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

3 Operating deficit
The operating deficit is stated after charging the following items:
Payments under operating leases– land and buildings– plant and machinery– other
Research and development
Programme development
Depreciation– owned assets– leased assets
Loss on disposal of tangible fixed assets
Amortisation of investment in programmes for future sale
Amortisation of intangible fixed assets

96 Annual Report and Accounts 2002/2003

3 Operating deficit continued
Auditors’ remuneration (KPMG LLP)
– financial audit – UK Public Service Broadcasting– other– further assurance services– tax advisory services– other non-audit services
Fair trading auditors’ remuneration (PricewaterhouseCoopers LLP)

2003
£m

2002
£m

0.6
0.5
0.6
0.2
0.3
0.3

0.4
0.5
0.3
0.2
0.2
0.3

4 Employees and remuneration
4a Persons employed
The average number of persons employed in the year was:Average for the year
2003
2002
NumberNumberUK Public Service Broadcasting
BBC World Service
Commercial Businesses

19,206
2,057
5,885

18,606
1,797
5,165Group total

27,14825,568Within the averages above 2,628 (2002 2,166) part-time employees have been included at theirfull-time equivalent of 1,324 (2002 1,238).
In addition to the above, the Group employed an average full-time equivalent of 1,117 (2002 1,043)
persons on a casual basis and the BBC Orchestra and Singers, employed on programme contracts,
numbered 385 (2002 382) full-time equivalents.
On 2 April 2002 the equivalent of 762 full-time employees transferred to BBC Broadcast Limited fromUK Public Service Broadcasting.This transfer is not reflected in the average for 2002.
4b Staff costs
Note

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

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

8a
8c

2003
£m

2002
£m

988.4
83.0

895.1
77.9

169.7
2.0
22.6

177.2
2.3
29.6

1,265.7

1,182.1

804.2
73.2
251.8
136.5

758.3
65.4
206.9
151.5

1,265.7

1,182.1* The actual employer cash contributions to the defined benefit pension scheme are borne by each business.The additional operating cost is the cost to
the Group over and above these contributions. It is not possible to allocate this to each business on a reasonable and consistent basis

4c Remuneration of the Board of Governors and Executive Committee
The emoluments of the Governors and of the Executive Committee members are disclosed on
pages 76 to 79 in the Governors’ remuneration report.

Annual Report and Accounts 2002/2003 97

Notes to the financial statements

5 (Loss)/profit on sale and termination of operations
beeb Ventures Limited– partial disposal– termination cost
Wood Norton Hall and Conference Centre

2003
£m

2002
£m

–
(1.5)
1.1

9.0
(1.3)
–

(0.4)

7.7

On 22 April 2002, BBC Worldwide announced its intention to terminate the beeb.com business and exit
the internet shopping sector. Certain beeb.com websites together with beeb.net have been integrated
into BBC Worldwide’s core operations. Following this decision a review of the carrying value of beeb
Ventures Limited’s fixed assets at 31 March 2002 took place and gave rise to a write-down of £1.3million
being charged to the income and expenditure account in 2002. During the year ended 31 March 2003
redundancy and other closure costs totalling £1.5million have been charged to the income andexpenditure account.
On 31 May 2002, the Group sold its Wood Norton Hall and Conference Centre business to a third
party for a consideration of £5.1million.The profit on sale was £1.1million after deducting the costs ofthe disposal.

6 (Loss)/profit on disposal of fixed assets(Loss)/profit on disposal of tangible fixed assets
Profit on disposal of investments
Profit on disposal of intangible assets

2003
£m

2002
£m

(14.3)
–
–

1.0
3.4
7.3

(14.3)

11.7

During 2003 the Group started redevelopment of its Broadcasting House site, which included thedemolition of two properties adjacent to Broadcasting House.The net book value of assets taken out
of use, totalling £13.0million, has been charged to the income and expenditure account.
BBC Technology disposed of various fixed assets resulting in a loss of £1.3million during the year.
During 2002, the Eurosport Consortium, in which the BBC holds an interest, disposed of its 50%
shareholding in SETS (which owns the Eurosport trademark) to TF1, a French broadcasting company,
resulting in a net profit on disposal of investments of £3.4million.The Group also disposed of its remaining
rights and trademarks to certain non-core brands which gave rise to a net profit of £7.3million.

7 Net interest receivable and other similar items

98 Annual Report and Accounts 2002/2003

2003
£m

2002
£m

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

7.5
(2.0)
(0.4)

24.6
(2.8)
(0.2)

Net interest receivable

5.1

21.6

8 Pensions
8a Pension charge
The Group operates several pension schemes.The BBC Pension Scheme and a small unfunded pension
scheme, which is closed to new members, are contributory defined benefit schemes. Additionally theGroup Personal Pension Scheme and other small schemes are defined contribution schemes.The total
pension charges for the year were:
Operating
cost
2003
£m

Net
finance
income
2003
£m

Net
cost
2003
£m

Operating
cost
2002
£m

Net
finance
income
2002
£m

Net
cost
2002
£m

BBC Pension Scheme (Note 8b)
Unfunded defined benefit
schemes (Note 8c)
Defined contribution schemes(Note 8c)

169.7

(114.6)

55.1

177.2

(133.9)

43.3

0.2

0.3

0.5

0.2

–

0.2

1.8

–

1.8

2.1

–

2.1

Total cost /(credit)

171.7(114.3)

57.4

179.5

(133.9)45.6

Under this scheme the employees
receive a pension based on their final
salary.

8b Principal scheme
The BBC Pension Scheme is the main pension scheme of the BBC Group and covers the majority of
employees.This scheme provides salary-related pension benefits on a defined benefit basis from assets
held in separate, trustee-administered, funds.

The actuarial valuation takes into
account future investment returns
and provides a longer-term view ofthe state of the scheme than the‘snap-shot’ FRS 17 valuation.

Actuarial valuation
The scheme is subject to independent valuation by a professionally qualified actuary at least every three
years, on the basis of which the actuary certifies the rate of employer’s contributions.These, together
with the specified contributions payable by the employees and proceeds from the scheme’s assets, areexpected to be sufficient to fund the benefits payable under the scheme.
The most recent full actuarial valuation of the scheme was prepared at 1 April 2002 by Watson Wyatt,consulting actuaries, using the projected unit method. The actuarial valuation showed a surplus of£441million (down from £611million in 1999) and the actuarial value of the assets was sufficient tocover 109% of the benefits due to members after allowing for expected future increases in earnings.
The income to the pension scheme exceeds its cash outgoings each year and long-term performancemeasures show the scheme to be adequately funded and so employer contributions have remained
steady for a number of years. However, in view of the recent short-term volatility of the stock market,
it has been agreed with the trustees that employer contributions will rise by 0.5% a year for three years
from the current 4.5% of pensionable pay, with the first 0.5% increase taking effect from 1 April 2003.
In addition, the employee contributions will rise 0.5% per year from 4.5% to 6% over the three-year
period commencing 1 April 2004.

The market valuation provides a‘snap-shot’ at the balance sheet date.
It is very volatile and can fluctuate
widely from day to day.

Market valuations
Watson Wyatt produces an interim valuation each year based on market values of the scheme assets
and liabilities, as required by FRS 17.

An estimate of future inflation andsalary increases is used to forecast
the cost of funding future pensionsof pension scheme members.

Financial assumptions in scheme valuation
The major assumptions used by the actuary at each valuation were:Rate of increase in salaries
Rate of increase in pension payments
Inflation assumption
Discount rate

2003

2002

2001

4.5%
2.5%
2.5%
5.4%

4.7%
2.7%
2.7%
6.0%

4.5%
2.5%
2.5%
6.0%

Annual Report and Accounts 2002/2003 99

Notes to the financial statements

8 Pensions continued
This table shows the value of theassets owned by the pension
scheme and the rate of growth thatthe trustees expect over time.

The assets in the scheme and the expected rates of return from those assets were:Long-term
rate of return
Value atexpected at 31 March 2003
31 March 2003£m

Equities
Bonds and gilts
Property
Cash

8.3%
4.5%
6.4%
4.0%

Total market valueof assets
Present value ofscheme liabilities(Deficit)/surplus
in the scheme
Related deferred
tax asset/(liability)
Net pension(liability)/asset

3,032
1,021
620
230

Long-term
rate of return
expected at
31 March 2002

7.5%
5.2%
6.3%
4.7%

Value at
31 March 2002
£m

4,421
908
606
284

Long-term
rate of return
expected at
31 March 2001

7.0%
4.7%
6.0%
4.5%

Value at
31 March 2001
£m

4,655
939
606
279

4,903

6,219

6,479

(5,973)(5,254)(4,771)(1,070)

965

1,708

–

–

–

(1,070)

965

1,708

A deferred tax asset or liability will not arise for the Group because most of the Group’s public service
activity is not subject to taxation.
Movement in surplus during the year
2003
£m

2002
£m

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

965.0

1,708.0

33.4(155.7)(14.0)
114.6(2,013.4)

25.7(132.3)(44.9)
133.9(725.4)(Deficit)/surplus in scheme at end of year

(1,070.1)

965.0

2003
£m

2002
£m

Current service cost
Past service cost

155.7
14.0

132.3
44.9

Total operating charge

169.7

177.2

2003
£m

2002
£m

Expected return on pension scheme assets
Interest on pension scheme liabilities

424.0(309.4)416.4(282.5)

Net return

114.6

133.9

Analysis of amount charged to operating expenditure

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

The amounts here are estimates
based on predictions of future
performance and economic
conditions.

Analysis of amount credited to other finance income

100 Annual Report and Accounts 2002/2003

8 Pensions continued
The actuarial gains and losses arethose resulting from actual
performance being different fromthat predicted – for example fromchanges in economic conditions or
the demographic profile of BBC
employees.

This note is designed to show trends
over several years. Only three years
are currently available since theadoption of FRS 17.

Analysis of amount recognised in statement of total recognised gains and losses
2003
£m

2002
£m

Actual return less expected return on pension scheme assets
Experience gains and (losses) arising on the scheme’s liabilities
Changes in assumptions underlying the present value of the scheme liabilities(1,607,9)(12.4)(393.1)(532.0)26.6(220.0)

Actuarial loss recognised in statement of total recognised gains and losses(2,013.4)(725.4)

2003

2002

2001

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

1,607.9
32.8%

532.0
8.6%

950.9
14.7%

Experience gains and (losses) on scheme liabilities:
Amount (£million)
Percentage of the present value of the scheme liabilities

12.4
0.2%

(26.6)
0.5%(35.7)
0.7%(2,013.4)
33.7%(725.4)13.8%(708.2)
14.8%

History of experience gains and losses

Total amount recognised in the statement of total recognised
gains and (losses):
Amount (£million)
Percentage of the present value of the scheme liabilities

8c Other schemes
The small unfunded pension scheme is valued using assumptions which are the same as those for themain scheme. At 31 March 2003 the obligation was £4.4million (2002 £3.9million) which is fully
provided for in the accounts.The current cost for the year for this scheme was £0.5million (2002£0.2million) of which £0.2million (2002 £0.2million) was charged to operating costs and £0.3million(2002 £nil) as interest on pension liabilities.
The total charge for the Group personal pension scheme and other defined contribution schemes
totalled £1.8million (2002 £2.1million).
8d UK Public Service Broadcasting
UK Public Service Broadcasting has taken advantage of the provisions within FRS 17 and accounts forthe scheme as if it were a defined contribution scheme.This is because it is not possible to identify its
share of the underlying assets and liabilities of the scheme on a reasonable and consistent basis.The
expenditure charge for UK Public Service Broadcasting therefore represents the contributions payable inthe year.These contributions are set based on the funding needs identified from the actuarial valuation
and benefit from the actuarial surplus.They are therefore lower than the regular cost.

Annual Report and Accounts 2002/2003 101

Notes to the financial statements

9 Taxation
9a Analysis of charges for the period
The charge for the year, based on the rate of corporation tax of 30% (2002 30%) comprised:
2003
£m

2002
£m

17.7
(3.5)

12.7
(2.9)

14.2

9.8

Adjustments in respect of prior years

(3.0)

–

Foreign tax
Share of associates tax

11.2
5.4
1.1

9.8
7.6
0.3

17.7

17.7

–
(2.0)

2.8
(2.8)

(2.0)

–

15.7

17.7

Note

Current tax
UK corporation tax
Deduct: double tax relief

Total current tax

9b

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

9dTotal charge for the year

9b Factors affecting the tax charge
The Group is only liable to taxation on those activities carried out with a view to making a profit
and on rent, royalties and interest receivable.The BBC does not therefore receive relief for all its
expenditure, and the tax assessed for the year consequently differs from the standard rate ofcorporation tax in the UK.The differences are explained below:
Note(Deficit)/surplus before tax(Deficit)/surplus before tax multiplied by standard rate ofcorporation tax in the UK of 30% (2002 30%)
Effects of
UK Public Service Broadcasting taxable external income
Non-taxable loss in UK Public Service Broadcasting
FRS 17 net Group pension charge
Commercial activities
Non-taxable income
Disallowed expenditure
Depreciation in excess of capital allowances
Tax losses not Group relieved
Tax differential re overseas earnings
Other
Adjustments in respect of previous periods
Current tax charge for the year

102 Annual Report and Accounts 2002/2003

9a

2003
£m

2002
£m

(299.0)2.9(89.7)

0.9

5.7
95.4
6.7

6.5
–
5.2

(0.4)
1.6
–
–
1.8
(0.4)
(3.0)

(3.9)
1.6
1.8
1.4
4.4
(0.2)
–

17.7

17.7

9c Factors that may affect future tax charges
The Group anticipates that the future tax charge will not alter materially since all licence fee income
is free of tax.
9d Deferred tax analysis
Note

2003
£m

2002
£m

9a

–
0.5
(2.0)

–
–
–

(1.5)

–

(4.1)
–
5.6

1.5
0.8
1.8

1.5

4.1

Intellectual
propertyrights£m

Goodwill
£m

Total
£m

Cost
At 1 April 2002
Additions

8.7
4.7

8.1
0.1

16.8
4.8

At 31 March 2003

13.4

8.2

21.6

Amortisation
At 1 April 2002
Charge for the year

1.1
4.0

0.3
0.5

1.4
4.5

At 31 March 2003

5.1

0.8

5.9

Net book value
At 31 March 2003

8.3

7.4

15.7

At 31 March 2002

7.6

7.8

15.4

Movement on deferred tax provision/(asset) in the year
Provision at start of year
Exchange adjustment
Deferred tax credit
Deferred tax asset at end of year
Analysis of deferred tax asset /(liability) at end of year*
Accelerated capital allowances
Other timing differences
US timing differences* In 2002 the deferred tax asset of £4.1million was not recognised

10 Intangible fixed assets
Goodwill is the difference between
the value paid for a business andthe fair value of its net assets.
It represents the amount thepurchaser is prepared to pay for thename and reputation of the businessand its expected future profit
schemes.

Goodwill is amortised on a straight line basis over 20 years reflecting the useful economic life, subject
to reviews for impairment.
The £4.7million additions within intellectual property rights relate to the acquisition of software licences
by BBC Technology.These are amortised on a straight line basis over the life of the licence.
On 28 February 2003 BBC Worldwide acquired 100% of the share capital of Parentwise Limited fora nominal amount.The company had net liabilities of £0.1million and goodwill of £0.1million has arisenon the transaction.
There was no difference between the book value, as recorded in the records of Parentwise Limited
prior to the acquisition, and the fair value of the assets acquired.

Annual Report and Accounts 2002/2003 103

Notes to the financial statements

11 Tangible fixed assets
11a The GroupLand andbuildings£mPlant andmachinery£m

Furniture andfittings£m

Assets underconstruction
£m

Total
£m

Cost or valuation
At 1 April 2002
Additions
Brought into service
Disposals

457.9
3.8
9.3
(16.4)

876.3
80.5
60.9
(37.0)

122.4
8.0
3.6
(7.9)

106.4
114.8
(73.8)(2.3)

1,563.0
207.1–(63.6)At 31 March 2003

454.6

980.7

126.1

145.1

1,706.5

Depreciation
At 1 April 2002
Charge for the year
Elimination in respect of disposals

199.0
15.5
(6.0)

540.1
109.8
(25.2)

63.1
12.0
(4.7)

–
–
–

802.2
137.3
(35.9)At 31 March 2003

208.5

624.7

70.4

–

903.6

Net book value
At 31 March 2003

246.1

356.0

55.7

145.1

802.9

At 31 March 2002

258.9

336.2

59.3

106.4

760.8

Included within plant and machinery are £16.4million (2002 £19.6million) of assets held under financeleases.
One of the BBC’s joint venture partners, Crown Castle UK Limited, has a charge of £3.0million over
the assets of BBC Technology Group.
Included within fixed assets is £24million at cost relating to a relay station in Thailand used by BBC
World Service.These assets are transferable to the Royal Thai Government in return for the paymentof a nominal sum. BBC World Service will retain the rights to repurchase the assets, should theoperation cease, for a similar nominal sum.The use of these assets is not affected by this transaction
and therefore they will continue to be carried at cost less attributable depreciation in the balance sheet.
11b UK Public Service Broadcasting
Land andbuildings£mPlant andmachinery£m

Furniture andfittings£m

Assets underconstruction
£m

Total
£m

Cost or valuation
At 1 April 2002
Additions
Brought into service
Transfers (to)/from subsidiaries
Disposals

400.0
2.6
3.9
–
(16.2)

429.4
39.2
25.2
(30.4)(14.8)

93.3
6.9
3.0
–
(6.2)

55.1
83.9
(32.1)
0.6
(1.6)

977.8
132.6
–
(29.8)(38.8)At 31 March 2003

390.3

448.6

97.0

105.9

1,041.8

Depreciation
At 1 April 2002
Charge for the year
Transfers to subsidiaries
Elimination in respect of disposals

168.2
12.7
(0.2)
(6.0)

247.5
43.2
(16.2)
(9.1)

41.3
9.4
–
(3.2)

–
–
–
–

457.0
65.3
(16.4)(18.3)At 31 March 2003

174.7

265.4

47.5

–

487.6

Net book value
At 31 March 2003

215.6

183.2

49.5

105.9

554.2

At 31 March 2002

231.8

181.9

52.0

55.1

520.8

104 Annual Report and Accounts 2002/2003

11b UK Public Service Broadcasting continued
Included within plant and machinery are £6.7million (2002 £19.8million) of assets held under financeleases with another Group company.
The increase in assets under construction relates to the property investment programme currently
under way (see Financial review pages 82 to 84).
11c Land and buildings at net book value comprise:

Freeholds
Long leaseholds
Short leaseholds

Group
2003
£m

Group
2002
£m

UK Public Service
Broadcasting
2003£m

UK Public Service
Broadcasting
2002
£m

208.9
9.9
27.3

226.0
9.9
23.0

193.4
9.9
12.3

210.1
9.9
11.8

246.1

258.9

215.6

231.8

There has been no impairment in the carrying values of freehold properties at the balance sheet date.
Land and buildings in the Group include freehold land at a cost of £35.0million (2002 £34.8million) andin the UK Public Service Broadcasting operations of £30.8million (2002 £30.6million), none of which isdepreciated.

12 Investment in programmes for future sale
Group
£m

Cost
At 1 April 2002
Exchange adjustment
Additions
Financing benefit
Elimination of programmes fully amortised

323.8(12.7)
86.7(0.4)(76.0)At 31 March 2003

321.4

Amortisation
At 1 April 2002
Exchange adjustment
Charge for the year
Elimination of programmes fully amortised

212.0(11.3)
88.4(76.0)At 31 March 2003

213.1

Net book value
At 31 March 2003

108.3

At 31 March 2002

111.8

Investment by BBC Worldwide in programmes for future sale relates to programmes provided by the
BBC and external producers.The additions figure above includes £82.7million direct investment in BBC
programmes (2002 £80.5million).
Included in the net book value is £4.5million (2002 £4.2million) relating to investments held undera licence agreement.The financing benefit relates to monies received for tax credits on investments
in sale and leaseback programmes.

Annual Report and Accounts 2002/2003 105

Notes to the financial statements

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

Interests inassociates(Note 13e)
£m

Other
investments
£m

Total
Group
£m

At 1 April 2002
Additions
Disposals
Exchange adjustment
Provision against investments
Share of retained profits/(losses)
Dividend received
Adjustment to reflect effective obligations

11.5
1.2
–
–
–
5.2
–
(4.8)

4.9
–
(0.2)
0.2
(0.4)
(24.8)
(1.3)
26.3

0.4
–
–
–
(0.4)
–
–
–

16.8
1.2
(0.2)
0.2
(0.8)
(19.6)(1.3)
21.5

At 31 March 2003

13.1

4.7

–

17.8

13b Movements in the year for UK Public Service Broadcasting
Interest in BBC
World Service
net assets£mShares in
subsidiaries£mInterests in
joint
ventures£m

Other
investments
£m

Total
£m

At 1 April 2002
Accumulated surplus
Additions
Disposals

134.3
8.5
–
–

155.3
–
83.3
(73.3)

9.2
–
1.0
–

0.4
–
–
(0.4)

299.2
8.5
84.3
(73.7)At 31 March 2003

142.8

165.3

10.2

–

318.3

Additions to shares in subsidiaries include 10,000,000 ordinary shares issued at £1 each on 2 April 2002
to enable BBC Broadcast to finance the acquisition of the business from the BBC.
Disposals in shares in subsidiaries relates to the transfer of investments in BBC Technology of£63.0million, BBC Broadcast of £10.0million, and BBC Worldwide of £0.3million to the BBC
Commercial Holdings Group. In consideration BBC Commercial Holdings issued 73,250,000 ordinary
shares at £1 each which were fully subscribed for by UK Public Service Broadcasting.
Subsidiary undertakings arebusinesses the BBC controls.

13c Subsidiary undertakings
UK Public Service Broadcasting operation owns 100% of the issued share capital of the following
companies which are incorporated in Great Britain:
BBC Commercial Holdings Limited
BBC Resources Limited
BBC Free To View Limited
BBC News Limited
BBC Property Limited
BBC Property Investments Limited
BBC Property Development Limited (dormant)
Centre House Productions Limited
BBC Digital Programme Services Limited
BBC Subscription Television Limited (dormant)
BBC Investments Limited (dormant)

106 Annual Report and Accounts 2002/2003

13c Subsidiary undertakings continued
The Group also holds the controlling interest in the following principal subsidiary undertakings which
are held by BBC World Service which owns 100% of the issued share capital:
Held by BBC World Service:
BBC East Asia Relay Company Limited (incorporated in Hong Kong)
BBC Radiocom (Bulgaria) EOOD (incorporated in Bulgaria)
BBC Radiocom (Hungary) KFT (incorporated in Hungary)
BBC Radiocom (Praha) s.r.o. (incorporated in the Czech Republic)
BBC Radiocom (Slovakia) s.r.o. (incorporated in the Slovak Republic)
BBC Romania SRL (incorporated in Romania)
BBC Polska Sp. z.o.o. (incorporated in Poland)
BBC do Brazil Limitada (incorporated in Brazil)
BBC Radiocom Deutschland GmbH (incorporated in Germany)
BBC Croatia d.o.o. (incorporated in Croatia)
BBC World Service Trust** The BBC World Service Trust is a charitable company limited by guarantee, of which the BBC is the sole member

The Group also holds the controlling interest in the following subsidiaries, which unless otherwise statedare incorporated in Great Britain:
Holding of
ordinary shares%

Held by BBC Commercial Holdings Limited:
BBC Worldwide Limited
BBC World Limited
BBC Ventures Group Limited
Held by BBC Ventures Group Limited:
BBC Technology Holdings Limited
BBC Broadcast Limited
Held by BBC Technology Holdings Limited:
BBC Technology Limited
BBC Technology Services Limited
BBC Technology Supply Limited
Kingswood Warren Ventures Limited (renamed BBC Vecta Limited in May 2003)
BBC Technology Holdings LLC (incorporated in the USA)
BBC Technology Consultancy LLC (incorporated in the USA)
Held by BBC Worldwide Limited:
Publishing
BBC Magazines Inc. (incorporated in the USA)
Galleon Limited
Broadcasting Dataservices Limited
Cover to Cover Cassettes Limited
BBC Audiobooks Limited (formerly Chivers Press Limited)
Programme distribution
BBC Worldwide Americas Inc. (incorporated in the USA)
BBC Worldwide Music Limited
UK Programme Distribution Limited
BBC Worldwide Japan KK Limited (incorporated in Japan)
BBC Worldwide France SARL (incorporated in France)
BBC Worldwide Germany GmbH (incorporated in Germany)
BBC Worldwide Canada Limited (incorporated in Canada)
Channels
New Video Channel America LLC (incorporated in the USA)
European Channel Broadcasting Limited
European Channel Management Limited

100
100
100
100
100
100
100
100
100
100
100

100
100
75
100
100
100
100
95
100
100
100
100
100
100
100

Annual Report and Accounts 2002/2003 107

Notes to the financial statements

13c Subsidiary undertakings continued
Holding of
ordinary shares%

Investment companies
Worldwide Americas Investments Inc. (incorporated in the USA)
BBC Worldwide Investments Limited
BBC World Service Television Limited
Worldwide Channel Investments Limited
Worldwide Channel Investments (Europe) Limited
Worldwide Channel Investments (Ontario) Limited (incorporated in Canada)Internetbeeb Ventures Limited
Held by BBC World Limited:
BBC World Distribution Limited
Satellite News Corporation Limited (incorporated in Japan and renamed
BBC World Distribution Japan Limited in April 2003)
BBC World (Singapore) Private Limited (incorporated in Singapore)
BBC World (Australia) Pty Limited (incorporated in Australia)
BBC Worldwide (India) Private Limited (incorporated in India)*

100
100
100
100
100
100
86.9
100
100
100
100
75

* BBC Worldwide Limited holds the remaining 25% interest in the ordinary shares of this company

Joint ventures are businesses
the BBC jointly controls withother parties.

13d Interests in joint ventures
The Group has a 50% equity interest in the following joint ventures which are all incorporated in theUK, unless otherwise stated:
Name of entity

Activity

Partner

Accounting date

UK Channel Management Limited
UK Gold Holdings Limited
UKTV New Ventures Limited
UKTV Interactive Limited
JV Programmes LLC†
BBC Haymarket Exhibitions Limited
Insight Property Partnership
DTV Services Limited*

Channels
Channels
Channels
Channels
Channels
Publishing
Property
Marketing

Flextech
31 December 2002
Flextech
31 December 2002
Flextech
31 December 2002
Flextech
31 December 2002
Discovery Communications Inc. 31 December 2002
Haymarket Exhibitions Limited 31 December 2002
Land Securities Trillium Limited
31 March 2003
Crown Castle UK Limited,
Six months to
British Sky Broadcasting Limited
31 March 2003

† Incorporated in the USA* 33% equity interest

During the year the BBC entered into a new joint venture, DTV Services Limited, to provide marketing
services for digital channels on a terrestrial platform in the UK.The BBC set up a subsidiary, BBC Free
to View Limited (see Note 13c), to hold the BBC’s digital terrestrial multiplex licence and its equity
interest in the joint venture to ensure the costs of this joint venture are managed separately fromlicence fee funded activities.
For a number of years the BBC, through its subsidiary BBC Worldwide, has had major partnership deals
with Flextech, the content division of Telewest Communications plc, for the production and marketingof subscription channels in the UK and with Discovery Communications Inc. for incorporating newchannels around the world and providing new co-production funding for programmes.These alliances
operate the joint ventures listed above.
The Group share of turnover for the Haymarket joint venture was £4.2million (2002 £6.4million) and
its operating surplus share was £0.7million (2002 £0.3 million).
The joint venture with Land Securities Trillium Limited provides a range of property and development
services to the BBC. Related joint ventures and associate companies have been set up to develop
particular BBC properties.
The following disclosures represent the Group’s equity shares of the assets and liabilities of its joint
ventures based on the results for the latest accounting periods as shown above.

108 Annual Report and Accounts 2002/2003

13d Interests in joint ventures continued
UK Gold
Holdings
Limited*£m

UK Channel
Management
Limited*£m

Other joint
ventures*£m

Total joint
ventures£m

2003
Turnover

31.7

28.6

19.7

80.0

Profit/(loss) before tax
Taxation

9.5
(2.7)

0.3
–

(1.0)
(0.9)

8.8
(3.6)

Profit/(loss) after tax

6.8

0.3

(1.9)

5.2

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

–
–
14.3
(10.3)(38.5)
34.5

–
–
27.6
(3.5)
(46.8)
22.7

2.3
10.2
19.4
(13.0)(11.5)
5.7

2.3
10.2
61.3
(26.8)(96.8)
62.9

–

–

13.1

13.1

2002
Turnover

34.8

28.4

18.4

81.6

Profit/(loss) before tax
Taxation

13.2
(3.4)

(3.0)
–

(1.9)
(0.2)

8.3
(3.6)

Profit/(loss) after tax

9.8

(3.0)

(2.1)

4.7

–
–
14.2
(9.4)
(46.0)
41.2

0.1
–
14.0
(7.1)
(44.6)
37.6

2.2
9.2
19.6
(11.6)(11.6)
3.7

2.3
9.2
47.8
(28.1)(102.2)
82.5

–

–

11.5

11.5

BBC Group share of:

Net book value

Fixed assets
Goodwill
Current assets
Liabilities less than one year
Liabilities more than one year
Adjustment to reflect effective obligations
Net book value* The figures for 2003 are based on unaudited financial statements (2002 unaudited)

Under the terms of the agreement with Flextech and Discovery, the Group has no obligation to fundlosses incurred by the entities nor to make good their net liabilities. As a result, the Group does notshare in losses of the relevant entities and accordingly no share of losses is included in the financial
statements for the year ended 31 March 2003 (2002 £nil).The Group is entitled to its share of any
profits or net assets once the ventures’ cumulative profits exceed cumulative losses since incorporation.

Annual Report and Accounts 2002/2003 109

Notes to the financial statements

Associates are businesses over which
the BBC exerts significant influence
but does not have overall control.

13e Interests in associates
The Group holds significant interests in the following principal associates which, except where otherwise
stated, are incorporated in Great Britain:
Holding ofissuedordinary shares%

Held by UK Public Service Broadcasting:Parliamentary Broadcasting Unit Limited
Broadcasters Audience Research Board Limited
The Commonwealth Broadcasting Association
Radio Joint Audience Research Limited (RAJAR)
Held by BBC World Service:
Caribbean Relay Company Limited (incorporated in Antigua)
Multimedia Ventures Limited
WRG-FM SA (incorporated in Switzerland)
Held by BBC Worldwide Limited:
Publishing
Frontline Limited
Channels
UKTV Pty Limited (incorporated in Australia)
Animal Planet (Latin America) LLC (incorporated in the USA)†
People and Arts (Latin America) LLC (incorporated in the USA)†
Animal Planet LLC (incorporated in the USA)†JV Network LLC (incorporated in the USA)†
Animal Planet (Asia) LLC (incorporated in the USA)†
The Animal Planet Europe Partnership†
Animal Planet Japan KK (incorporated in Japan)†
Animal Planet Japan LLP (incorporated in the USA)†
Jasper Broadcasting Inc. (incorporated in Canada)
Jasper Junior Broadcasting Inc. (incorporated in Canada)
Animal Planet Canada Company ULC (incorporated in Canada)†
Held by BBC Resources Limited:
3sixtymedia Limited
Held by BBC Property Limited:
White City Development Partnership

33
*
*

50
45
50
40

23
20
50
50
20
50
50
50
33
50
20
20
23
10

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

110 Annual Report and Accounts 2002/2003**

13e Interests in associates continued
The following additional disclosures are based on the results of the Discovery associates for the year
ended 31 December 2002 and the remaining associates’ disclosures are based on the results at thedate of their individual financial statements.These additional disclosures represent the Group’s equity
share of assets and liabilities of those entities.
BBC Group interests in associates

2003
£m

2002
£m

Share of turnover

37.5

39.1

51.0
14.7
(16.4)(114.5)
69.9

61.4
23.9
(22.3)(104.9)
46.8

4.7

4.9

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

The results include the Group share of the operating profit of UKTV Pty Limited of £0.2million (2002£0.1million) and Frontline Limited of £2.0million (2002 £1.0million). Both are accounted for separatelyfrom the Discovery associates.The Group’s share of the remaining associates, including Jasper
Broadcasting Inc. and Jasper Junior Broadcasting Inc., operated in partnership with Alliance Atlantis,
was £nil (2002 £nil).
Under the terms of the agreements with Discovery and Alliance Atlantis, the Group has no obligation
to fund losses incurred by the entities nor to make good their net liabilities. As a result, the Group does
not share in losses of the relevant entities and accordingly no share of losses is included in the financial
statements for the year ended 31 March 2003 (2002 £nil).The Group is entitled to its share of any
profits or net assets once the ventures’ cumulative profits exceed cumulative losses since incorporation,with the exception of JV Network LLC. JV Network LLC was formed for the purpose of providing
debt funding from Discovery to the other Discovery joint ventures and BBC Worldwide is not entitledto any profits arising within this entity.

14 Stocks

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

Group
2003
£m

Group
2002
£m

UK Public Service
Broadcasting
2003£m

UK Public Service
Broadcasting
2002
£m

4.2

2.4

–

–

245.2
7.3

254.5
6.6

245.1
–

254.5
0.1

97.2
94.9
20.1

89.0
80.7
16.2

97.2
94.9
0.5

89.0
80.7
1.0

468.9

449.4

437.7

425.3

Annual Report and Accounts 2002/2003 111

Notes to the financial statements

15 Debtors

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

Receivable after more than one year
Trade debtors
Other debtors
Prepayments

Total

Group
2003
£m

Group
2002
£m

UK Public Service
Broadcasting
2003£m

UK Public Service
Broadcasting
2002
£m

142.6

146.4

21.9

27.5

254.3
–

255.5
–

254.3
56.0

255.5
58.1

4.9
38.0
22.7
–
143.0

9.2
39.6
36.4
0.6
175.9

–
34.1
5.6
–
115.4

–
30.7
14.2
0.7
156.1

605.5

663.6

487.3

542.8

–
6.9
151.7

0.2
–
137.0

–
–
131.8

0.2
–
113.6

158.6

137.2

131.8

113.8

764.1

800.8

619.1

656.6

The prepayments receivable after more than one year include an amount in respect of the White Citybuilding which is leased from the partnership between the BBC and Land Securities Trillium.This is being
released over the term of the lease.

16 Creditors
16a Prompt payment policy
It is the BBC’s policy to comply with the CBI prompt payment code in relation to the paymentof suppliers, provided that the supplier is complying with the relevant terms and conditions of theircontracts.The BBC monitors compliance against the terms of this code. Payments for programmeacquisitions are made in accordance with contractual terms.The BBC Group’s number of creditor
days outstanding in respect of other trade creditors at 31 March 2003 was 44 days (2002 52 days).

112 Annual Report and Accounts 2002/2003

16b Amounts falling due within one year
Group
2003
£m

Group
2002
£m

UK Public Service
Broadcasting
2003£m

UK Public Service
Broadcasting
2002
£m

70.7
0.9
1.7

–
–
1.9

70.7
–
–

60.9
–
–

73.3

1.9

70.7

60.9

–

2.2

–

–

76.2
35.4
48.6
41.8
164.5

75.9
44.0
29.0
56.5
178.9

72.6
35.0
27.2
–
104.5

75.5
44.0
18.2
–
121.7

366.5

384.3

239.3

259.4

3.1
32.6
–

–
41.0
–

1.3
25.8
69.2

–
24.6
57.9

0.7
8.8

1.7
7.2

–
–

–
–

–

–

1.9

10.1

45.2

49.9

98.2

92.6

327.4

302.4

266.6

224.5

108.1

130.5

108.1

130.5

435.5

432.9

374.7

355.0

920.5

871.2

782.9

767.9

Note

Group
2003
£m

Group
2002
£m

UK Public Service
Broadcasting
2003£m

UK Public Service
Broadcasting
2002
£m

23

87.2

29.4

–

–

33.1
–

36.4
2.9

33.1
–

36.4
–

33.1

39.3

33.1

36.4

23

39.1
–

33.8
–

–
18.3

–
–

23

–

–

4.8

9.7

39.1

33.8

23.1

9.7

159.4

102.5

56.2

46.1

Note

Bank overdrafts and other loans
Bank overdrafts
Bank and other loans
Unsecured loan notes

23

Payments received on accountTrade creditors
Programme creditors
Programme acquisitions
Salaries and wages
Residual copyright payments
Other trade creditors

Other creditors
Corporation tax
Other taxation and social security
Amounts owed to subsidiaries
Amounts owed to associates andjoint ventures
Obligations under finance leases
Amounts owed to subsidiaries inrespect of finance leases

Accruals and deferred income
Accruals and deferred income
Licence savings stamps deposits anddirect debit instalments

Total

16c Amounts falling due after more than one year

Bank and other loans
Trade creditors
Programme acquisitions
Other trade creditors

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

Total

Annual Report and Accounts 2002/2003 113

Notes to the financial statements

17 Provisions for liabilities and charges
At 1 April
2002£m

Utilisedduringthe year£m

Releasedduringthe year£m

Charge forthe year£m

At
31 March
2003£m

Licence fee
Restructuring
Litigation and insurance
Property
Other

24.9
14.1
14.6
10.5
18.5

(20.9)
(8.3)
(2.9)
–
(9.6)

(1.5)
(3.9)
(2.5)
–
(16.4)

19.8
5.2
5.6
2.4
22.4

22.3
7.1
14.8
12.9
14.9

Total

82.6

(41.7)(24.3)

55.4

72.0

Group

Property provisions include BBC World Service’s liability of £3.6million (2002 £3.6million) to restore
Bush House to its original condition, together with amounts relating to other dilapidations andrelocations.
Other provisions consist of a number of balances arising across the BBC in the normal course ofbusiness.
At 1 April
2002£m

Utilisedduringthe year£m

Releasedduringthe year£m

Charge forthe year£m

At
31 March
2003£m

Licence fee
Restructuring
Litigation and insurance
Property
Other

24.9
11.9
14.6
6.9
16.3

(20.9)
(7.3)
(2.9)
–
(9.6)

(1.5)
(2.7)
(2.5)
–
(12.5)

19.8
4.0
5.6
2.4
17.8

22.3
5.9
14.8
9.3
12.0

Total

74.6

(40.7)(19.2)

49.6

64.3

Pensionreserve£m

Total
operatingreserve£m

Capitalreserve£m

Revaluation
reserve
£m

Total
£m

UK Public Service Broadcasting

18 Reserves
Operatingreserveexcludingpensionreserve£m

The UK Public Service Broadcasting
operations and BBC World Service
are funded from different sources.
As such, the reserves relating to
BBC World Service are maintained
separately from the rest of theGroup and are restricted for use
solely on BBC World Service
activities.

Group
At 1 April 2002
646.2
Exchange adjustments(3.1)
Deficit for financial year
(314.6)
Actuarial loss on defined
benefit pension schemes–
Revaluation reserve transfer
0.8
Pension reserve transfer
22.2
Capital reserve transfer(55.5)

961.1––

1,607.3(3.1)(314.6)

802.6
–
–

6.4
–
–

2,416.3(3.1)(314.6)(2,013.4)–(22.2)–(2,013.4)
0.8–(55.5)

–
–
–
55.5

–
(0.8)
–
–

(2,013.4)–––

At 31 March 2003

296.0

(1,074.5)(778.5)

858.1

5.6

85.2

Represented by:General Group reserves
287.2
BBC World Service reserves
8.8(1,074.5)–(787.3)
8.8

729.7
128.4

–
5.6

(57.6)
142.8

296.0

(1,074.5)(778.5)

858.1

5.6

85.2

Under the accounting standard FRS 10, Goodwill and intangible assets, any newly arising goodwill must be
capitalised and amortised over its useful life. As is permitted by the standard, goodwill arising in periods
prior to 1999 of £6.8million (2002 £6.8million) remains offset against the operating reserve.

114 Annual Report and Accounts 2002/2003

18 Reserves continued
Operatingreserve£m

Capitalreserve£m

Revaluation
reserve
£m

Total
£m

UK Public Service Broadcasting
At 1 April 2002
Deficit for financial year
Revaluation reserve transfer
Capital reserve transfer

561.1(303.4)0.8(55.5)

802.6
–
–
55.5

6.4
–
(0.8)
–

1,370.1(303.4)––

At 31 March 2003

203.0

858.1

5.6

1,066.7

Represented by:
UK Public Service Broadcasting reserves
BBC World Service reserves

194.2
8.8

729.7
128.4

–
5.6

923.9
142.8

203.0

858.1

5.6

1,066.7

19 Reconciliation of Group operating deficit to net cash (outflow)/inflow fromoperating activities
2003
£m

2002
£m

Group operating deficit
Depreciation and amortisation
Pension schemes operating costs (non-cash)
Loss on disposal of tangible fixed assets
Increase in stocks
Decrease/(increase) in debtors(Decrease)/increase in creditors(Decrease)/increase in provisions(406.6)
230.2
136.5
4.5
(19.5)
37.3(36.0)(14.7)(173.4)
220.5
151.5
1.4
(51.8)(43.3)
83.2
29.4

Net cash (outflow)/inflow from operating activities(68.3)

217.5

20 Analysis of changes in net funds/(debt)
At 1 April
2002
£m

Cash
flows
£m

Non-cash
movements£m

At 31 March
2003
£m

–
0.3

(70.7)
69.2––(70.7)
69.5

0.3

(1.5)

–

(1.2)

Liquid resources
Short-term investments

356.8(291.9)–64.9

Gross funds

357.1(293.4)

–

63.7

Debt:
Loans from third parties
Unsecured loan notes
Finance leases(29.4)(1.9)(41.0)(59.1)
0.5
21.4

0.4
(0.3)
(28.3)(88.1)(1.7)(47.9)Net funds/(debt)

284.8(330.6)(28.2)(74.0)Net cash
Bank overdrafts
Cash at bank and in hand

The repayments on finance leases held by Centre House Productions Limited are offset directly
by income earned on matching deposits, such that there is no cash flow effect.

Annual Report and Accounts 2002/2003 115

Notes to the financial statements

21 Reconciliation of net cash flow to movement in net funds
2003
£m

2002
£m

Decrease in cash in year
Net cash (inflow)/outflow from management of liquid resources
Net cash inflow from increase in loans and finance leases(1.5)(291.9)(37.2)(95.6)
88.4(10.3)

Change in net funds resulting from cash flows
Non-cash movement on loans
Increase in finance leases(330.6)0.1(28.3)(17.5)(1.9)(30.5)

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

(358.8)284.8(49.9)
334.7

Net (debt)/funds at the end of the year

(74.0)

284.8

22 Borrowing limits
When the Department for Culture, Media and Sport granted a new £350million borrowing limit for
BBC Commercial Holdings Limited in July 2002, three financial covenants were defined which arerequired to be met as at 31 March each year. As at 31 March 2003 BBC Commercial Holdings Groupwas in compliance with each of these covenants.
Of the £350million commercial limit, only £210million is currently available to the commercial
operations until BBC Resources Limited is transferred into the group headed by BBC Commercial
Holdings Limited.This is required to take place before 30 September 2003.

The Public Services borrowing limit
is set within the BBC Charter.

2003
£m

2002
£m

Public Services
Gross borrowing limit

200.0

200.0

Borrowings
Bank overdrafts
Finance leases*

70.7
6.7

60.9
19.8

77.4

80.7

Licence savings stamps deposits and direct debit instalments to extent
not covered by cash and liquid resources**
Licence savings stamps deposits and direct debit instalments
Less: short-term investments
Less: cash at bank and in hand

108.1
(32.9)(20.4)

130.5(356.8)(11.4)

Amount not covered by cash and liquid resources
Gross borrowing

54.8
132.2

–
80.7

* Includes finance leases with commercial subsidiaries but excludes Centre House Productions finance leases** The BBC must be able to repay these on demand and so to the extent that it does not hold cash reserves that match the liability, the balanceis set against the borrowing limit

The Commercial Businesses’
borrowing limit was set during 2003
by the Department for Culture,
Media and Sport.

2003
£m

2002
£m

Commercial Businesses
Net borrowing limit

350.0

n/a

Loans from third parties
Unsecured loan notes
Finance leases

88.1
1.7
15.9

Gross borrowing
Less: Gross funds

105.7(74.3)Net borrowing

31.4

116 Annual Report and Accounts 2002/2003

23 Financial instruments
23a Treasury management and financial instruments
The Group’s treasury operations are managed by a group treasury function within parameters definedformally within the policies and procedures manual agreed by the Executive Committee. Group
Treasury’s activity is routinely reported to the Executive Committee and Board of Governors andis subject to review by internal and external auditors.
Group Treasury uses financial instruments to raise finance and to manage financial risk arising fromits operations in accordance with its objectives which are:● to ensure the business of the BBC, both Public Services and Commercial, is fully funded in the mostefficient manner and remains compliant with borrowing limits● to maximise the return on surplus funds, whilst ensuring sufficient cash is retained to meetforeseeable liquidity requirements● to protect the value of the BBC’s assets, liabilities and cash flows from the effects of adverse interest
rates and foreign exchange fluctuations
The Group’s financial instruments, other than those used for treasury risk management purposes,
comprise cash and liquid resources, borrowings and various items such as trade debtors and creditorsthat arise directly from its operations.The Group finances its operations from these financial
instruments.The main risks to be managed in this are ensuring that the Group has sufficient liquid funds
to meet its obligations as they fall due and that it is compliant with its borrowing limits imposed by theCharter, by the Department for Culture, Media and Sport and by external loan covenants.
The Group also enters into limited foreign exchange and interest rate hedging transactions to manage
its currency risk and interest rate risk.The Group is principally a domestic organisation with the majorityof transactions and assets being in the UK and sterling based. However, the Group undertakes sometransactions in currencies other than sterling and enters into forward currency contracts to manage
this currency risk. Since March 2003 the Group has also entered into interest rate swaps to manage
the interest rate risk now that it has a more significant level of loans.
The Group does not undertake speculative treasury transactions.
23b Cash and borrowing facilities
The Group invests short-term surplus cash in fixed rate investment products. Funds are invested only
in organisations which have a minimum long-term rating of AA.
As at 31 March 2003 UK Public Service Broadcasting had available overdraft facilities of £13.2million
and access to uncommitted bilateral money market lines totalling £45million. Interest is payable on theoverdraft facility at a margin of 1% and on the money market facilities at between 0.125% and 0.5%.
BBC Commercial Holdings’ loans comprise a £350million multicurrency revolving credit facility
agreement repayable in full in March 2008. At 31 March 2003 £85million was drawn down. Interest is
payable at LIBOR plus 0.375%, rising to LIBOR plus 0.45% once the facility is more than 50% utilised.
Of the total amount £100million is available in the form of letters of credit to be issued in favour of theEuropean Investment Bank to support its lending under the facilities detailed immediately below.
The European Investment Bank has made two loan facilities available to BBC Commercial Holdings.
The first, for an amount of £66million, is available for drawing until March 2005 and must either be
repaid in full as a single repayment by March 2013 or on an amortising basis by March 2015.The
second, for £25million, is available for drawing until November 2003 and is repayable in one single
instalment by November 2007.The interest rate applicable on both facilities is determined withreference to the European Investment Bank’s own funding cost and carries no margin above thisfunding rate. At 31 March 2003 nothing was drawn down under either of these facilities.
Other loans include a US$5million loan from Discovery (2002 US$5million) which is repayable in thefollowing stages: US$1.5million due 31 March 2004; US$3.5million due 31 March 2005. Interest is payableat LIBOR plus 1%.
In June 2003 a new £100million loan facility was put in place for UK Public Service Broadcasting whichis available as either a revolving LIBOR-based loan or overdraft to May 2004 plus an option to extend
the facility to May 2005.The facility bears interest at a margin of 0.2% and the overdraft facility bears
interest at bank base rates plus 1%.

Annual Report and Accounts 2002/2003 117

Notes to the financial statements

23b Cash and borrowing facilities continued
After the year end BBC Resources entered into a £50million revolving credit facility agreement whichis repayable in full in September 2004. Interest is payable at LIBOR plus 0.375%.
23c Maturity of financial liabilities
The Group arranges its borrowings to meet forecast cash flows such that UK Public Service Broadcasting
has access to sufficient funds to meet its commitments. Short-term flexibility is achieved by overdraft
facilities.
The maturity profile of the Group’s financial liabilities, other than short-term creditors, at 31 March was:

2003

Bank loans£mUnsecuredloan notes£mFinanceleases£mTradecreditors
£m

Total
2003
£m

70.7
–
–
–

0.9
2.2
85.0
–

1.7
–
–
–

8.8
5.0
2.0
32.1

–
18.2
14.9
–

82.1
25.4
101.9
32.1

70.7

88.1

1.7

47.9

33.1

241.5

–
–
–
–

–
1.9
27.5
–

1.9
–
–
–

7.2
10.7
2.3
20.8

–
39.3
–
–

9.1
51.9
29.8
20.8

–

29.4

1.9

41.0

39.3

111.6

Overdraft£m

Within one year
Between one and two years
Between two and five years
Greater than five years

2002
Within one year
Between one and two years
Between two and five years
Greater than five years

Obligations under finance leases are in respect of computer hardware £15.9million (2002 £19.6million)
and leases entered into by Centre House Productions Limited £32.0million (2002 £21.4million).
Centre House Productions Limited enters into finance leases as a means of financing drama productions
which result in lower production costs for the BBC.These finance leases are matched by defeasancedeposits which may only be used to settle the finance lease liabilities and therefore do not represent
separate assets and liabilities. Consequently they are netted off the finance lease creditor to show thenet unmatched liability at the year end.These defeasance deposits, £275.3million at 31 March 2003
(2002 £227.4million), are structured such that the principal on deposit and the interest earned will be
sufficient to cover the rental obligations on the finance leases until the end of the lease. Accordingly it is
not included as borrowing for the purposes of compliance with the BBC’s borrowing limits.
The maturity profile of UK Public Service Broadcasting’s financial liabilities, other than short-term
creditors, at 31 March was:
2003
Within one year
Between one and two years
Between two and five years
Greater than five years

Overdraft£m

Financeleases£mTradecreditors£mIntercompany
creditors
£m

Total
2003
£m

70.7
–
–
–

1.9
–
4.8
–

–
33.1
–
–

–
1.6
6.8
9.9

72.6
34.7
11.6
9.9

70.7

6.7

33.1

18.3

128.8

60.9
–

10.1
9.7

–
36.4

–
–

71.0
46.1

60.9

19.8

36.4

–

117.1

2002
Within one year
Between one and two years

Obligations under finance leases are in respect of computer hardware.

118 Annual Report and Accounts 2002/2003

23d Interest rates
The Group’s main exposure to interest rate fluctuations arises on external borrowings. Since March
2003 the Group has borrowed at both fixed and floating rates of interest and then it has used interest
rate swaps to generate the desired interest profile and to manage the Group’s exposure to interest
rate fluctuations.
The Group’s financial assets, excluding short-term debtors, amount to £140.4million at 31 March 2003
of which £134.4million are subject to floating rate interest and the remaining £6.0million of otherdebtors attract no interest.
After taking account of the various interest rate swaps and forward foreign currency contracts enteredinto by the Group, the interest rate profile of the Group’s financial liabilities at 31 March 2003 was:Fixed rate liabilities

Total
£m

Financialliabilities
on whichno interestis paid£m

Floating ratefinancialliabilities£m

Amount£m

2003
Sterling
US dollar

238.4
3.1

65.2
–

87.4
–

85.8
3.1

Total

241.5

65.2

87.4

88.9

Weighted
averageinterest rate
%

3.8%
4.1%

Weighted
averageperiod until
maturityYears

4.5 years
1.4 years

Sterling fixed rate borrowings are achieved by entering into interest rate swap transactions. In addition
to the £70million of swaps included in the fixed rate liabilities of £85.8million shown above, which wereeffective at the year end, an additional £116million of forward starting swaps had been transacted tocover projected borrowings.These additional swaps were transacted at an average rate of 4.63%
maturing in March 2008.
23e Currency exposure
The majority of the Group’s operations are UK-based.The Group has one significant overseas
operation, BBC Worldwide America, which operates in the USA and whose revenues and expenses aredenoted exclusively in US dollars.The Group mitigates part of its exposure on its Group balance sheet
to movements in the US dollar and sterling exchange rate for this overseas operation throughborrowings denominated in dollars.
The Group has a number of transactions involving overseas parties and priced in the currencies of
those parties.The Group’s policy is to eliminate currency exposure at the time of the transaction
through the use of forward contracts.
As at 31 March 2003, after taking into account the effects of forward foreign exchange contracts, theGroup had no significant currency exposures.
23f Gains and losses on hedging contracts
The Group undertakes some transactions in international markets. Due to movements in exchange
rates over time, the amount the Group expects to pay when it enters into a transaction may differ
from the amount that it actually receives or pays when it settles the transaction.The Group manages
its exposure to movements in exchange rates by entering into forward exchange hedging contracts.
These allow the Group to settle transactions at known exchange rates, thereby eliminating much ofthis uncertainty.
At 31 March 2003 the Group had entered into a net commitment to purchase foreign currencies
amounting to £84.5million that mature in the period through to 2007 in order to fix the sterling costof commitments through this period.
Unrealised gains and losses on forward exchange hedging contracts amounted to an unrealised gainof £0.6million at the balance sheet date.
From March 2003 the Group started using interest rate swaps to manage its interest rate profile.
There were no significant unrealised gains or losses on these contracts at 31 March 2003.

Annual Report and Accounts 2002/2003 119Notes to the financial statements

23g Fair values of financial assets and liabilities
There is no significant difference in value between the book value of the Group’s financial instruments
and their fair value.

24 Commitments
24a Contracts placed for future expenditure

Fixed asset additions
Programme acquisitions and sports rights
Independent programmes

An operating lease is a lease
where the lessee has not takenon the risks and rewards of owningand operating the asset.The lessee(the BBC) is hiring rather thanbuying an asset.

Group
2003
£m

Group
2002
£m

UK Public Service
Broadcasting
2003£m

UK Public Service
Broadcasting
2002
£m

95.6
670.1
68.5

45.9
754.4
69.4

76.7
670.0
68.5

13.4
715.2
69.4

834.2

869.7

815.2

798.0

24b Operating leases
Operating lease commitments payable in the following year, analysed according to the period in which
the lease expires:Group
Within one year
In two to five years
After five years

UK Public Service BroadcastingWithin one year
In two to five years
After five years

Land andbuildings
2003£mLand andbuildings
2002
£m

Other
2003
£m

Other
2002
£m

2.6
11.0
17.6

2.7
12.1
13.0

2.3
8.8
1.9

5.3
9.3
2.5

31.2

27.8

13.0

17.1

1.7
3.1
15.1

1.3
4.4
11.8

1.2
3.2
0.1

1.0
10.8
–

19.9

17.5

4.5

11.8

24c Other financial commitments
In the ordinary course of business the BBC enters into a large number of contracts with artists andwriters and with providers of other services including licence fee collection and channel distribution.

25 Contingent liabilities
At 31 March 2003 the Group had unprovided contingent liabilities estimated to be £1.6million(2002 £2.3million) in respect of guarantees and indemnities.
The Group also has a number of contingent liabilities arising from litigation.The BBC makes specificprovision (see Note 17) against an estimate of any damages and costs which may be awarded.

120 Annual Report and Accounts 2002/2003

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

26 Related party transactions
The related party transactions of the Group have been presented in accordance with FRS 8, Related
party disclosures. Under the provisions of FRS 8 the BBC has not disclosed transactions between Group
entities where more than 90% of those entities’ voting rights are controlled within the Group. UK PublicService Broadcasting does not underwrite any of the activities or liabilities of the subsidiaries.
26a Transactions with joint ventures and associated undertakings
Included in the income and expenditure account is income from UKTV of £33.1million relating to
the sale of programmes and JV Programmes LLC of £27.1million relating to the sale of programmes.
There is also £6.0million of income made up of various other associates relating to the sale ofprogrammes. Included in the income and expenditure is income of £0.3million from BBC Haymarket
Exhibitions Limited relating to dividends and management fees. In addition, Frontline Limited charged£2.7million for the distribution of BBC Worldwide Limited’s magazines. In all transactions, the terms oftrade were negotiated on an arm’s length basis.
The BBC and Land Securities Trillium Limited are partners in the Insight Property Partnership and theWhite City Development Partnership. On their formation in 2001 the BBC contributed its interest in
the White City site in return for consideration which included reductions in service payments for future
property services which are held as prepayments in the BBC’s balance sheet.The partnership charged
the BBC £111million for property services during the year (2002 £25million).
Amounts owed by/to joint ventures and associated undertakings at the year end are disclosed within
Notes 15 and 16. In all transactions the terms of trade were negotiated on an arm’s length basis.
26b Other transactions
Ranjit Sondhi, Governor, is married to Anita Bhalla, who has been employed by the BBC since 1987 invarious production and broadcasting roles. Her current role is Head of Political & Community Affairs for
the English Regions. Her remuneration is based on the BBC’s standard terms and conditions applicableto other staff employed in this capacity.
Dame Ruth Deech, Governor, has a daughter who is a journalist in BBC News. Her remuneration isbased on the BBC’s standard terms and conditions applicable to other staff employed in this capacity.
Sir Robert Smith, Governor, has a son-in-law who worked for BBC Wales during the year and now
works for BBC News on a freelance basis. His remuneration and freelance fees are based on the BBC’s
standard terms and conditions applicable to other staff employed in a similar capacity.
Sir Richard Eyre, Governor, is also Chairman and Managing Director of Chestermead Limited. During
the year Sir Richard received either directly, or through Chestermead, payments totalling £3,754 forinterviews and contributions to BBC programmes. No amounts were outstanding at the year end.
Sir Richard Eyre’s wife, Sue Birtwhistle, works on a freelance basis for the BBC. During 2002/2003
she received £19,080 from the BBC.
Rt Hon The Lord Ryder, Governor, is also a non-executive director and shareholder of Ipswich Town
Football Club. During the year the BBC paid £94,814 to the club in respect of television and radio
coverage.
Baroness Hogg, Governor, is also non-executive Chairman of Frontier Economics. During the year the
BBC paid £5,925 to Frontier Economics for a project relating to the incorporation of BBC Broadcast
Limited. No amounts were outstanding at the year end.
In the normal course of business there are a number of transactions between the BBC and other parties
which are related by virtue of the fact that senior employees of the BBC are married to or have family
relations with individuals who own or are employed at other media, production and broadcasting companies.
The BBC has set procedures for dealing with situations to avoid any conflict of interest. Wheretransactions have arisen between connected parties, the BBC Governor or employee is not party
to the approval process.

Annual Report and Accounts 2002/2003 121

Broadcasting facts and figures

This section has been reformatted in line with the BBC’s new reporting obligations in respect of Statements of Programme Policy. The tableon this page appears for the first time. A number of tables which have historically been included in the section but are no longer relevant
have been dropped. Further revisions are anticipated in the content of the section in next year’s report following the introduction of
Ofcom-based reporting requirements during the year.
Table 1 BBC Statements of Programme Policy 2002/2003
Channel or service

Commitment

Achieved

Notes

BBC Television

33% of output made outside London and theSouth East
245 hours of arts and music, virtually all in or nearpeak time
570 hours of news programmes, not including
the overnight BBC News 24 service
80 hours of current affairs, including four Panorama
specials
45 hours of arts and music programmes
Increased spend on drama
650 hours of originated factual programmes
Around 25 major peaktime landmark factual series
and single programmes across all genres
260 hours of sport
80 hours of religion scheduled before midnight
400 hours of children’s programmes
Repeats below 10% in peak time
100 hours of news
230 hours of current affairs
500 hours of factual programmes
200 hours of arts and music
430 hours of sport
100 hours of new children’s programmingN

See page 80

YY

See table 7 (page 126) 109 hours were fully
broadcast in peak plus 125 hours near to peakSee table 7 (page 126)

Y

See table 7 (page 126)

Y
Y
Y
Y

See table 7 (page 126)
See table 7 (page 126), table 18 (page 131)
See table 7 (page 126)
See page 22

Y
Y
Y
Y
Y
Y
Y
Y
Y
Y

Y
Y
Y
Y

See table 7 (page 126)
See table 7 (page 126)
See table 7 (page 126)
7.3%*
See table 7 (page 126)
See table 7 (page 126)
See table 7 (page 126)
See table 7 (page 126)
See table 7 (page 126)
See table 7 (page 126)
This includes all children’s output of which
425 hours were repeats
See table 7 (page 126)
68.2%*
95%*
See page 47

Y
Y
Y
Y
Y
Y
Y

95.8%*
81%*
81%*
See page 44
See page 45
See page 45
See page 49

Y

See page 49

YYY

See page 37 and page 49
93.5%*
See table 10 (page 129) and Note 2b(page 95)
48.8%*
3,144 hours*
See table 9 (page 128)

BBC Oneand BBC Two
BBC One

BBC Two

BBC Four

CBeebies
CBBC
BBC News 24
BBC Parliament
BBCi

BBC Radio 1

20 hours of religious programmes
Around 70% of air time made up of original productions
Around 70% of output made in the EU/EEA
At least one substantial learning project to becommissioned
At least 90% of output made in the EU/EEA
Around 80% of output to be original BBC programming
Around 75% of output made in the EU/EEA
Expanded interactive news service
Expanded European coverage
Increased recess programming
Learning home page offering a one-stop shop for
all learning opportunities from the BBC
Significantly increased volume of interactivity on TV,
including enhanced programming on new channels
Expanded network of local websites
Over 85% of budget spent on content
Reduced cost per page impression and increaseduser time spent online
UK artists to make up 40% of playlist
2,500 hours a year of specialist music
250 hours a year of news and current affairs

122 Annual Report and Accounts 2002/2003

Y
YY

Channel or service

Commitment

Achieved

Notes

BBC Radio 2

1,000 hours of specialist music
150 hours of religious output
500 hours of news and current affairs

YYY

BBC Radio 3

600 hours of original output from the BBC performing
groupsOver 4,000 hours of live or specially recorded
programming; over 50% of output
15,000 programmes a year across 14 genres
700 hours of news bulletinsY

1,194 hours*
See table 9 (page 128)
See table 9 (page 128)
(including National Debate)
625 hours*Y4,028 hours (57.9%)*

Y
Y

Y
Y
Y

See table 9** (page 128)
See table 9 (page 128) included withinnews and weather
See table 9 (page 128) included withinnews and weather
See table 9 (page 128) included withinnews and weather
See table 9 (page 128)
See table 9 (page 128)
See table 9 (page 128)
See table 9 (page 128)161 hours delivered against a pro rata targetof 155 hours*
19.1% speech but only 6.9% news,
documentaries and social action*
See page 80
See table 15 (page 131)
See table 9 (page 128)
See table 8 (page 127)YYY

See table 8 (page 127)
23 hours*
See table 8 (page 127)

Y

See table 8 (page 127)

Y

See table 13 (page 130)

NY

See table 8 (page 127) and page 80
See table 8 (page 127)

Y

See page 41

Y

See table 14 (page 130) and page 37

YYN

11 Roots co-ordinators have been appointed*
See page 37
This should be available by November 2003

YY

See page 37
34 hours*Y

See table 8 (page 127).The Politics Showalso includes 20 minutes of regional news
each week across all regions

BBC Radio 4

BBC Radio Five Live
1Xtra

BBC Asian Network
ScotlandNorthern Ireland

Wales
English Regions

1,300 hours of daily current affairsY

440 hours of weekly current affairs, businessand political programmes
800 hours a year of original drama and readings
300 hours of original comedy
180 hours of religious programming
75% news and current affairs, 25% sport
250 hours a year of daily discussion showsY

Around 20% of output to be speech, of which around
10% will be news, documentaries and social action
programmes
Increased investment
50% high-quality speech programming
100 hours of broadcast political analysis and debate
on BBC Two
Around 515 hours of news and political coverage
At least 20 hours of factual programmes in peak time
At least 16 hours of music and arts across BBC One
and BBC Two
Provide 15% of all BBC One and BBC Two children’s
programmes
Increased hours and coverage on the Gaelic language
service, BBC Radio nan Gaidheal
100 hours of politics
25 hours of the arts and entertainment magazine
show First Stop plus an additional four hours of music
and arts
10 hours of Welsh language television per week
for broadcast on S4C
Increased investment focused on encouraging local
community interaction
Diversity arts researchers in each BBC Region
Increased number of Open Centres and mobile zones
All main regional news programmes at 6.30pm available
on digital satellite
Greater volume of local news provision online
16 hours each year of regional landmark current affairs
programmes
135 hours of political debate, enhanced by online
interaction

Y
Y
Y
Y
Y
N

* Information provided by BBC divisions and authenticated by BBC Internal Audit on a sample basis** BBC Statements of Programme Policy refer to more detailed categorisation of programmes

Annual Report and Accounts 2002/2003 123

Broadcasting facts and figures

BARB introduced a new audience panel in January 2002. Reach comparisions should therefore be treated with caution as changes may
partly be due to a methodological effect.Teething problems following this change mean that some viewing figures in last year’s BBC Annual
Report have been subject to slight change, and have therefore been restated.The coding service used to measure combined BBC Radioand Television reach by genre (last year Table 6) ceased to be available after December 2001.That survey has been replaced by one thatcollects more robust data for a smaller number of programmes. Reach by genre across the full range of BBC Radio output is therefore notavailable. Data for new BBC digital services is for the period since launch only. For launch dates and an explanation of terminology in thissection see page 133.
Table 2 15-minute weekly reach by service and platform
All homes
All multichannel
Analogue terrestrial
Digital homes
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002(55.6m*)(55.3m*) (29.5m*)(28.0m*) (26.0m*)(27.4m*) (26.2m*)(24.5m*)
%
%
%
%
%
%
%
%

Total BBC Television and Radio reach

92.7

93.0

–

–

–

–

–

–

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

87.1
82.9
67.0
8.0
4.9
1.0
–
1.1
4.1
4.1

86.8
83.1
66.1
–
5.5
1.1
0.9
1.1
3.4
2.9

84.1
78.9
56.6
15.1
9.5
2.0
–
2.2
8.2
7.7

83.1
78.2
55.0
–
11.2
2.0
1.8
2.0
6.6
6.0

90.5
87.2
78.1
–
–
–
–
–
–
–

90.4
87.7
76.8
–
–
–
–
–
–
–

83.6
78.3
54.3
16.9
11.0
2.2
–
2.0
9.1
7.3

83.1
77.9
53.1
–
14.9
2.7
2.3
2.6
8.0
5.4

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

63.4
22.6
24.2
3.8
18.1
11.9
19.6

63.5
23.5
22.9
3.7
17.7
11.2
19.9

Source: BARB,TNS/Infosys, RAJAR, age 4+, average for the year. * People age 4+ as at March 2003, source: BARB
Note: It is not possible to measure the reach of digital radio services

Table 3 Share by service and platform

All homes
All multichannel
Analogue terrestrial
Digital homes
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002(55.6m*)(55.3m*) (29.5m*)(28.0m*) (26.0m*)(27.4m*) (26.2m*)(24.5m*)
%
%
%
%
%
%
%
%

Total BBC Television and Radio share

44.4

44.1

–

–

–

–

–

–

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

39.1
26.5
11.2
0.7
0.4
0.1
–
0.1
0.7
0.4

38.6
26.5
11.1
–
0.6
0.1
0.1
0.1
0.6
0.3

29.9
20.2
7.0
1.4
0.8
0.1
–
0.2
1.3
0.7

28.8
20.0
6.8
–
1.2
0.0
0.1
0.1
1.1
0.5

49.6
33.5
16.0
–
–
–
–
–
–
–

48.5
32.9
15.3
–
–
–
–
–
–
–

27.7
18.8
6.0
1.4
0.8
0.1
–
0.1
1.4
0.6

27.2
18.8
6.1
–
1.5
0.1
0.1
0.1
1.3
0.5

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

50.6
8.8
14.7
1.1
10.8
4.4
10.6

50.2
9.7
14.1
1.1
10.5
4.1
10.7

Source: BARB,TNS/Infosys, RAJAR, age 4+, average for the year. * People age 4+ as at March 2003, source: BARB
Note: It is not possible to measure the share of digital radio services. Differences due to rounding
The analogue terrestrial share excludes local terrestrial televison stations

124 Annual Report and Accounts 2002/2003

Table 4 Subtitling output on BBC Television

Subtitled hours
Target for year
Actual for year
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

BBC One
BBC Two
BBC Three/BBC Choice
BBC Four/BBC Knowledge
CBBC
CBeebies
BBC News 24

10,656
7,421
1,453
1,155
2,589
3,772
3,579

10,016
7,379
4,331
4,029
311
560
2,327

76%
76%
40%
40%
40%
40%
40%

72%
72%
35%
30%
30%
30%
30%

76.8%
76.0%
54.0%
43.5%
59.7%
80.2%
41.0%

74.6%
73.5%
64.4%
67.9%
55.6%
92.7%
26.6%

Note: A target has been set for 100% of programming output to be subtitled by 2008/2009

Table 5 Audio description
Audio described hours
Target for year
Actual for year
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

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

415
374
307
117
174
227

360
268
314
405
3
13

4.0%
4.0%
4.0%
4.0%
4.0%
4.0%

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

4.9%
4.5%
11.4%
4.4%
4.0%
4.8%

4.2%
3.2%
4.7%
6.8%
0.5%
2.2%

Note:Targets have been set for 10% of programming output to be audio described by 2008/2009

Table 6 Signing
Sign interpreted hours
Target for year
Actual for year
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

BBC One
BBC Two
BBC Three/BBC Choice
BBC Four/BBC Knowledge
CBBC
CBeebies
BBC News 24

170
218
63
58
94
97
180

121
132
145
103
15
13
120

2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%

1.4%
1.4%
1.4%
1.4%
2.0%
2.0%
1.4%

2.0%
2.6%
2.3%
2.2%
2.2%
2.1%
2.1%

1.4%
1.6%
2.2%
1.7%
2.8%
2.1%
1.4%

Note:Targets have been set for 5% of programming output to be signed by 2008/2009

Annual Report and Accounts 2002/2003 125

Broadcasting facts and figures

Table 7 Network television hours of output

On all platforms

On digital platforms only

BBC Three/
BBC Four/
BBC One
BBC Two
BBC Choice
BBC Knowledge
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

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

1,442
–
2,690
88
34
712
626
449
586
55
84

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

974
683
467
230
149
610
835
568
69
270
33

927
678
381
192
117
682
864
494
62
231
18

522
–
299
19
–
1,039
6
–
196
175
–

256
–
257
7
–
1,370
1
–
310
64
4

597
–
118
150
–
38
–
–
153
916
18

3,337
–
84
–
–
3
–
6
216
1,375
55

–
–

–
–

586
601

784
601

–
–

–
–

–
–

–
–

Acquired programmesContinuity

1,528
257

1,511
246

2,025
270

2,121
272

333
118

257
230

617
71

695
176

Total network

8,551

8,563

8,370

8,424

2,707

2,756

2,678

5,947

Open University
BBC Learning Zone

On digital platforms only
CBBC onCBBC
BBC Choice/CBeebies
BBC News 24
BBC Parliament
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

Education for children
News and weather
ParliamentaryChildren’s

584
–
–
2,451

72
–
–
327

134
–
–
3,191

–
–
–
3,443

–
8,687
–
–

–
8,687
–
–

–
–
6,820
–

–
–
5,253
–

Acquired programmesContinuity

1,021
293

146
38

914
475

1,068
78

–
73

–
73

–
12

–
12

Total network

4,349

583

4,714

4,589

8,760

8,760

6,832

5,265

Note: CBBC on BBC Choice was a service for pre-school audiences

126 Annual Report and Accounts 2002/2003

Table 8 Television hours of output by origin
Programmes made in
England
London(excluding London)
Northern Ireland
Scotland
Wales
Total
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

First transmission:
Originated programmes
Network BBC One and
BBC Two
Factual and learning
Education for children
News and weather
Current affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and arts
Religion

875
68
3,131
224
180
663
1,442
355
294
192
7

870
36
3,168
203
148
723
1,341
258
278
161
10

573
6
–
52
–
111
4
48
169
33
104

627
3
–
59
–
145
–
84
125
8
101

–
2
–
–
–
10
–
–
18
–
–

1
1
–
–
–
4
–
–
16
12
1

36
6
–
4
–
15
–
70
23
11
4

48
6
1
3
–
13
–
111
23
11
3

10
1
–
–
–
3
–
–
–
9
1

4
1
–
–
–
–
–
–
6
16
–

1,496
83
3,131
278
180
802
1,446
473
504
245
116

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

Subtotal

7,431

7,196

1,100

1,152

30

35

169

219

24

27

8,754

8,629

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

113
12
8,085
50
3,728
261
–
993
20
211
–

42
–
8,136
12
3,813
127
–
170
15
93
2

41
10
–
2
–
9
–
22
7
28
3

18
–
1
1
–
1
–
–
2
7
2

–
–
–
6
86
2
–
–
–
2
1

–
–
–
1
86
–
–
–
5
–
–

8
–
–
–
123
–
–
116
2
48
–

2
–
–
1
123
6
–
11
5
16
–

5
–
–
–
123
4
–
–
–
31
–

2
–
–
–
123
–
–
–
–
15
–

167
22
8,085
58
4,060
276
–
1,131
29
320
4

64
–
8,137
15
4,145
134
–
181
27
131
4

Subtotal

13,473

12,410

122

32

97

92

297

164

163

140 14,152

12,838Nations and Regions
Factual and learning
Education for children
News and weather
Current affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and arts
Religion

–
–
285
11
15
–
–
–
–
–
–

–
–
186
5
16
–
–
–
–
–
–

–
–
3,116
112
120
–
32
–
–
–
–

–
–
3,004
101
128
–
–
–
–
–
–

107
2
334
27
49
103
96
–
1
3
–

88
2
342
23
80
84
108
7
–
5
–

94
7
379
35
116
38
239
14
28
30
–

95
7
375
31
109
49
235
21
4
29
–

85
6
353
42
82
38
250
–
11
26
–

73
9
324
13
111
43
244
–
13
30
–

286
15
4,467
227
382
179
617
14
40
59
–

256
18
4,231
173
444
176
587
28
17
64
–

Subtotal

311

207

3,380

3,233

722

739

980

955

893

860

6,286

5,994

1,076

1,028

9

13

2

–

8

5

2

3

1,097

1,049

Total first transmissions* 22,291

20,841

4,611

4,430

851

866

1,454

1,343

1,082

1,030 30,289

28,510Acquired programmes

Annual Report and Accounts 2002/2003 127

Broadcasting facts and figures

Table 8 Television hours of output by origin continued
Programmes made in
England
London(excluding London)
Northern Ireland
Scotland
Wales
Total
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

Repeats
Network
Nations and Regions

17,096–

17,369
–

2,522
2

2,270
1

41
201

27
195

500
142

221
124

133
296

60 20,292
108
641

19,947428

Continuity
Open University
BBC Learning Zone

1,483
586
498

1,042
784
590

26
–
100

20
–
8

51
–
–

99
–
1

170
–
3

114
–
1

149
–
–

137
–
1

1,879
586
601

1,412
784
601

Total hours ofbroadcasting

41,954

40,626

7,261

6,729

1,144

1,188

2,269

1,803

1,660

1,336 54,288

51,682

1,528
–

1,040
–

418
12

442
11

25
93

38
104

82
113

76
112

22
121

4
125

1,600
352

* Of which independents

Network
Nations and Regions

2,075
339

Table 9 Network radio hours of output
Analogue stations
BBC Radio 1*
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five Live
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

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

8,460
270
29
–
34
–
–
–
–
15
65
148

8,472
272
33
–
25
–
–
–
–
15
69
145

7,448
455
–
70
170
13
85
71
192
–
60
196

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

8,109
18
–
–
–
106
204
–
56
208
–
59

8,126
18
–
17
–
102
167
–
63
208
–
59

–
2,585
759
1,721
776
1,079
333
418
182
46
59
55

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

–
650
2,179
27
5,748
–
–
16
–
–
–
140

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

Total

9,021

9,031

8,760

8,760

8,760

8,760

8,013

7,932

8,760

8,760

* BBC Radio 1 operates Nations’ opt-outs from The Evening Session on weekday evenings
Digital stations
BBC Five LiveSports Extra
1Xtra
6 Music
BBC 7
BBC Asian Network
Total network radio
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

Music–
News and weather
–
Sport
1,320
Knowledge–
National debate
–
Drama
–
Arts
–
Comedy and entertainment–
Religion–
Schools/continuing
education–
Leisure–Presentations and trailing
–

–
–
200
–
–
–
–
–
–

4,472
153
43
–
134
–
–
–
–

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

7,876
263
–
–
–
–
–
–
–

454
15
–
–
–
–
–
–
–

–
–
–
163
–
1,004
–
744
–

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

1,395
198
149
366
564
–
–
28
121

–
–
–

–
36
616

n/a
n/a
n/a

–
–
621

–
–
35

–
–
–

n/a
n/a
n/a

–
160
–

Total

200

5,454

n/a

8,760

504

1,911

n/a

2,981

1,320

n/a 37,760
n/a 4,592
n/a 4,479
n/a 2,347
n/a 7,426
n/a 2,202
n/a
622
n/a 1,277
n/a
551
n/a
n/a
n/a

269
380
1,835

267
253
613

n/a 63,740

43,947

Note: All digital radio networks are broadcast via DAB (Digital Audio Broadcasting), Dcable (digital cable), Dsat (digital satellite), DTT (digital terrestrial television) and are streamed online

128 Annual Report and Accounts 2002/2003

24,474
3,757
3,168
1,866
6,772
1,190
625
526
436

Table 10 Monthly BBCi on the internet page impressions
March 2003 March 2002
Millions
Millions

News and sport*
Education
Other BBCi

630.4
41.7
509.6

Table 11 Monthly BBCi on the internet and interactive
television reach (millions of users)
March 2003 March 2002
Millions
Millions

226.2
32.6 BBCi on the internet*
290.5 BBCi on interactive television**
549.3 Total BBCi***

Total BBCi on the internet (excl. beeb.com)

1,181.7

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

71.9
5.4

26.2
2.7

Total BBC World Service

77.3

28.9

8.3
6.2

5.7
3.7

13.3

8.8

Source: * BMRB Access, Monthly Omnibus Survey, adults age 15+
Source: ** Interactive television tracking study, adults age 15+, July 2001 to date for digital satellite
Digital terrestrial study began July 2001 but ended May 2002 following closedown of ITV Digital*** Total BBCi only counts an individual once for using BBCi services on both the internet andinteractive television (digital satellite usage only, no reliable figures available for other platforms)

Source: Server logs
Note: Key partner websites host BBC World Service text and audio* A new international-facing site was launched in July 2002. 150.4 million of the March 2003 page
impressions relate to this new service

Table 12 Network radio hours of output by origin
Analogue stations
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five Live
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

Programmes produced in London

8,332

8,349

5,723

5,784

6,572

6,617

6,241

6,220

8,510

8,472

Programmes produced outside London
England excluding London
Northern Ireland
Scotland
Wales

422
90
89
88

412
90
90
90

2,893
14
124
6

2,837
15
120
4

1,191
89
404
504

1,219
99
367
458

1,487
47
162
76

1,434
44
163
71

248
2
–
–

283
5
–
–

Subtotal

689

682

3,037

2,976

2,188

2,143

1,772

1,712

250

288

9,021

9,031

8,760

8,760

8,760

8,760

8,013

7,932

8,760

8,760

Total hours of broadcasting

Digital stations
BBC Five LiveSports Extra
1Xtra
6 Music
BBC 7
BBC Asian Network
2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002 2002/2003 2001/2002

Programmes produced in London

1,320

200

5,452

n/a

7,659

504

1,911

n/a

330

n/a

Programmes produced outside London
England excluding London
Northern Ireland
Scotland
Wales

–
–
–
–

–
–
–
–

2
–
–
–

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

1,101
–
–
–

–
–
–
–

–
–
–
–

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

2,651
–
–
–

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

Subtotal

–

–

2

n/a

1,101

–

–

n/a

2,651

n/a

1,320

200

5,454

n/a

8,760

504

1,911

n/a

2,981

n/a

Total hours of broadcasting

Total networkradio
2002/2003
2001/2002

Nations andlocal radio*
2002/2003
2001/2002

Total radio
2002/2003
2001/2002

Programmes produced in London

52,05036,146

8,736

8,736

60,78644,882

Programmes produced outside London
England excluding London
Northern Ireland
Scotland
Wales

9,995
242
779
674

6,185
253
740
623

218,028
8,776
10,62013,898

213,583
8,754
10,394
13,570228,023
9,018
11,39914,572219,768
9,007
11,134
14,193

Subtotal

11,6907,801

251,322

246,301

263,012254,102

Total hours of broadcasting

63,74043,947260,058

255,037

323,798

298,984* Including BBC Asian Network until it became a digital station

Annual Report and Accounts 2002/2003 129

Broadcasting facts and figures

Table 13 Nations and local radio hours of output
Nations radio

Population*
Total
Age 15+ (000s) 2002/2003 2001/2002

Northern Ireland:
BBC Radio Ulster
BBC Radio Foyle
Scotland:BBC Radio Scotland(including BBC Radio Orkney/Shetland)
BBC Radio nan Gaidheal
Wales:BBC Radio Wales
BBC Radio Cymru

1,339
113

6,055
2,721

6,119
2,635

Table 14 Spend outside London
4,190
4,190

8,004
2,616

2,412
2,412

6,992
6,906

Subtotal

Berkshire
794
Bristol (including Somerset Sound opt)
1,238
Cambridgeshire
612
Cleveland
794
Cornwall416
Cumbria
384
Derby
588
Devon (including Plymouth opt)
916
Essex
1,173
Gloucestershire
464
GMR
2,081
Guernsey50
Hereford & Worcester
492
Humberside
729
Jersey
74
Kent
1,293
Lancashire
1,134
Leeds
1,506
Leicester
760
Lincolnshire
490
London 94.9
10,384
Merseyside
1,623
Newcastle
1,361
Norfolk
683
Northampton
440
Nottingham
736
Oxford504
Sheffield
1,227
Shropshire
361
Solent (including Dorset opt)
1,659Southern Counties Radio (including
Brighton, Sussex and Surrey opts)
2,383
Stoke
603
Suffolk
422
Three Counties Radio
958
Wiltshire Sound
498
WM (including Coventry & Warks. opt) 2,770
York467
Subtotal

33,294

3,714
7,555
6,373
5,302
5,735
5,853
5,127
6,327
5,522
5,175
6,871
4,231
5,192
5,786
4,294
6,281
5,785
6,406
5,223
5,263
8,736
6,178
6,450
6,430
5,004
6,708
5,497
5,875
5,306
6,684

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

8,460
5,144
5,113
6,895
7,287
8,818
6,249

6,735
5,127
5,140
6,699
6,910
8,907
5,548

Total hours

130 Annual Report and Accounts 2002/2003

222,849 215,378
4,976

2002/2003£m

8,326
Cost of Nations and Regions television originations
2,068
England
Scotland
6,810
Wales
6,760
Northern Ireland
32,718

Local radio

BBC Asian Network*** Based on Total Survey Area (the area over which the radio station’s audience is measured
for research purposes), age 15+, for RAJAR reporting** BBC Asian Network until it became a digital station
Note: An opt-out radio service broadcasts some of its own programmes for its local area, optingout of the main service
Note: Details of BBC radio frequencies are available on www.bbc.co.uk/radio or by calling
08700 100 123

3,915

6,941

260,058 255,037

2001/2002
£m

80
51
35
31

75
47
31
27

197

180

Cost of regional BBC and independent
productions for network television

261

229

Total cost of television originations in the
Nations and Regions

458

409

Cost of Nations and local radio originations
England – local radio
Scotland
Wales
Northern Ireland

87
21
18
10

79
19
18
10

136

126

Cost of regional BBC and independent productions
for network radio

43

40

Total cost of radio originations in the Nations
and Regions

179

166

Other programme costs incurred outside London
Other costs, including transmission

56
95

51
86

Total spend in the Nations and Regions

788

712

Table 15 Cost per hour of originated programmes
2002/2003£000

2001/2002£000

Television channels
BBC One
BBC Two
BBC Three/BBC Choice*
BBC Four
BBC Knowledge
CBBC
CBeebies
BBC News 24
BBC Parliament

160.3
108.7
129.0
58.9
n/a
27.4
39.6
5.7
0.7

146.1
98.2
107.6
98.5
72.0
19.6
42.2
5.8
0.7

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

2.7
4.2
4.0
11.0
7.9
1.3
0.8
0.5
9.0
0.5

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

31.3
0.5

Table 18 Cost per hour of originated programmes
by genre

Analogue television programmes
Factual and learning
Education for children
News and weather
Current affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and arts
2.7
Religion
4.0
3.8 Digital television programmes
10.7 Factual and learning
7.4 Education for children
1.7 News and weather
n/a Current affairs
0.4 Parliamentary
n/a Entertainment
n/a Sport
Children’s
Drama
28.5
Music and arts
0.5
Religion

2002/2003£000

2001/2002
£000

110.6
119.1
50.1
123.3
49.7
177.3
192.2
83.7
526.7
142.7
112.7

104.2
85.2
51.7
117.5
73.0
176.9
127.8
100.1
518.0
111.9
107.6

114.3
–
6.8
57.5
0.7
162.6
–
29.4
234.8
65.3
87.0

109.4
–
6.2
74.1
0.9
162.6
–
25.0
267.5
52.9
59.5

2002/2003£m

2001/2002
£m

319
270
103
284

257
212
96
263

976

828

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

Table 16 BBC News 24
Note 2b (page 95) lays out the cost of BBC services and channels.
This year certain categories of expenditure, including newsgathering,which were previously allocated to individual services and channels,
are shown separately. Had part of this expenditure been allocatedto BBC News 24, its costs would have been as follows:

Total production costs as set out in Note 2b
Newsgathering allocation
Central costs allocation

2002/2003£m

2001/2002
£m

23.8
18.8
7.5

25.7
19.3
7.4

Table 19 Creative spend outside the BBC

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

Note: 1,146 hours of BBC News 24 programming were shown on BBC One and 156 hours on
BBC Two (2001/2002 1,381 hours on BBC One and 77 hours on BBC Two)

Table 17 Distribution costs

2002/2003£m

2001/2002£m

Analogue
Digital

73
69

75
52

Total distribution costs

142

127

Annual Report and Accounts 2002/2003 131

Getting in touch

BBC Information
If you have a question or comment
about BBC programmes or services,
you can ring BBC Information
24 hours a day, seven days a week.
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If you think a programme has fallen
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Room 3152
BBC Broadcasting House
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BBC Broadcasting House
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Belfast BT2 8HQ
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BBC Broadcasting Centre
Pebble Mill Road
Birmingham B5 7QQ

132 Annual Report and Accounts 2002/2003

The Central Religious Advisory
Committee (CRAC) advises the
BBC on religious broadcasting policy
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BBC Broadcasting House
Portland Place
London W1A 1AA
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Glossary and other information

This BBC Annual Report and Accounts
is available in public libraries
throughout the UK and on the
BBC’s website atwww.bbc.co.uk/annual report.
It is also available in Welsh, in an
audio version, in Braille and in a
version tailored for people withlearning difficulties.

Launch dates of new BBC
services
2002/2003
BBC Three
9 February 2003

Page impressions Page impressions(PIs) measure the total number ofvisits to our website pages.

Designed and produced by C&FD.

(BBC Choice ceased on 8 February 2003)

The following photographs havebeen reproduced courtesy of:

We also publish the BBC Statementsof Programme Policy, setting out
the BBC’s objectives and plans forthe year ahead.This is available inpublic libraries and on the BBC’s
website at www.bbc.co.uk/info
It is available in Welsh, in an audio
version and in Braille.

2001/2002
CBBC/CBeebies
BBC Four

RAJAR Radio Joint Audience
Research Limited. Jointly owned by
the Association of Independent
Radio Companies and the BBC.
RAJAR operates an audiencemeasurement system for the radio
industry. Data is published quarterly
and is based on all adults (age 15+).
The exception to this is BBC Radio 1
which reports age 4+.Tables 2 and 3
in Broadcasting facts and figures andthe charts on page 7 use annual data
for all individuals age 4+, in order toreport television and radio data on
the same basis.

Annual Reviews of BBC Scotland,
BBC Wales, BBC Northern Ireland
and BBC English Regions are
published simultaneously with thisdocument, as is the Annual Review
of BBC World Service.
Copies of any of these publications
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Information (details left).
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IXtra
16 August 2002
BBC Asian Network (digital)
28 October 2002
BBC 7
15 December 2002

11 February 2002
2 March 2002

(BBC Knowledge ceased 1 March 2002)

BBC Five Live Sports Extra
2 February 2002
6 Music
11 March 2002
Technical terms andabbreviations
BARB Broadcasters’ Audience
Research Board. A joint industry
committee, funded by televisioncompanies and advertising agencies,
which produces audiencemeasurement and audience reaction
data for the television industry. Datais published monthly. Since 1 January
2002 there have been modifications
to the way BARB collects viewing
figures.This means figures for 2001
and 2002 are not strictly comparable.
BARB data is based on all individuals
aged 4+.
BREEAM Building Research
Establishment Environmental
Assessment Method.
DCMS Department for Culture,
Media and Sport.The Government
department responsible forbroadcasting.
Narrative repeats Programmes thatappear twice in a weekly schedule.
Network programmes The term
used by the BBC to mean
programmes transmitted to at least
11 of our 14 Nations & Regions.

Reach The percentage of peopleviewing or listening to output
for a defined period.
The standard television definition(BARB) is three minutes
consecutively, while that for radio(RAJAR) is 15 minutes consecutively.
The BBC uses 15 minutes
consecutive reach for television
to ensure robust data. Usually
measured daily or weekly.
Online reach is the number orpercentage of adult internet users(15 years +) who state they haveused the BBCi website in the pastmonth.
RTS Royal Television Society.
Share The amount of viewingof/listening to a given station orservice – expressed as a percentage
of all viewing/listening – during adefined timeband.

Printed in England by Cousin.

PA photos front cover image,
pages 11 (Fame Academy), 35 (Paula
Radcliffe), 43 (Jubilee), 44 (Potters
Bar rail crash), 45 (fire strikes),
56 (Party at the Palace)
William Cherry/Pacemaker page 2(Gavyn Davies)
Richard Kendal pages 4, 18, 19(BBC Governors and Executive
Committee)
EMPICS pages 8 (Ryder Cup)and 40 (Celtic vs Rangers)
Rolf Harris page 8 (Rolf on Art)
Huw Davies page 12 (Digital
Storytelling project)
Chris Capstick pages 16 (Greg
Dyke) and 67 (Making it Happen)
Thomas Hegenbart/Focus/Network
page 16 (John Simpson)
Catherine Ashmore page 17(Sophie’s Choice)
Associated Press pages 22 (David
Beckham), 50 (listening to the radioin Baghdad)
Luke Holland page 26 (Storyville)
Penelope Films page 26 (Tryst)
Rob Dawson/Guzelian page 32(Orchestra)
Roy Peters Photography page 36(BBC bus, Sunderland)
Simon Evans page 38(Romany Voices project)
Alex Skibinski page 41(BBC National Orchestra of Wales)
Elizabeth Malby, The Baltimore Sun
page 42 (food aid in Iraq)
Annie Heslop page 52(teenage Indian filmmakers)
Pixsil/Didier Ruef page 53(Lyse Doucet)
Simon Rix pages 58 and 63(accountability event)
Lee Agnew page 61(Voices in Dallow)

Originated programmes Originatedprogrammes/originations are thefirst showing of programmes directly
produced or commissioned by
the BBC.

Annual Report and Accounts 2002/2003 133

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London W1A 1AA
Website: www.bbc.co.uk/annualreport© BBC 2003