BBC Annual Reportand Accounts 2016/17

Inform

EducateEntertain

BBC Annual Reportand Accounts 2016/17

Presented to Parliament by the Secretary of State
for Culture, Media and Sport by command of Her Majesty
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OV E RV I E WContents

The BBC at a glance
Summary of our mission andhow we deliver our purposes
p.02

Forewords from the Chairman
and Director-Generalp.06

Our priorities for next year
p.20

Delivering on our
objectives in 2016/17

How we are run
Under the terms of the new
Royal Charter, the governanceof the BBC has changed

p.14

p.12

Detailed financial statements

The BBC provides distinctive andtailored content to audiences ineach of the nations of the UK

p.124
Overview
02 The year at a glance
Strategic report
06 A message from the Chairman
08 Director-General’s statement
12 New governance
14 Delivering our purposes
15 – Impartial news
16 – Learning for people of all ages
17 – Creative, distinctive, quality content
18 – Reflect diverse communities
19 – Reflecting the UK to the world
20 Our priorities for next year
22 Overview of network service
performance24 – Television
26 – Radio

Performance across the UK

p.36

28
30
32
34
35
36
38
40
42
44
47
49
54
60
61
63

– Online– News in the UK– News across the globe– by reach– by genre
Overview of performanceacross the UK– The BBC in Wales– The BBC in Scotland– The BBC in Northern Ireland– The BBC in England
Deputy Director-Generals’ review
Financial overview
Our people
Diversity and inclusion
Charitable work
Environmental sustainability

Review of
our pan-UK
services
p.22

Governance
64 BBC Board
66 Governance report
67 Remuneration report
74 Audit Committee report
78 Risks and opportunities
82 Viability statement
83 Fair trading report
85 Statement of Board
responsibilities
86 The BBC Trust’s final review
93 Performance data by nation
105 Performance against public
commitments

Financial statements
115 Independent auditor’s report
125 Consolidated income statement
126 Consolidated statement ofcomprehensive loss
127 Consolidated balance sheet
128 Consolidated statement ofchanges in equity
129 Consolidated cash flow statement
130 Key themes for the BBC
131 Notes to the accounts
183 Glossary
Additional information
186 Index
IBC Contact information and feedback
IBC Photo credits

BBC Annual Report and Accounts 2016/17

01

ABOUT THE BBC

The year at a glance

In a busy year that saw the start of a new Royal Charter, we met our efficiency
targets, committed new funding to services in the nations and secured approval forthe launch of BBC Studios. We continued to bring audiences, across the UK andaround the globe, award-winning content on television, on radio and online.

BBC World
ServiceWe’ve announced major increases in funding
for Scotland, Wales and Northern Ireland toreflect the importance we place on serving
and representing the whole of the UK.

The BBC World Service
announced its biggest
expansion since the 1940s,
in a move designed to bringits independent journalism tomillions more people aroundthe world, including in places
where media freedom isunder threat.

26m
26 million people tuned in to BBC
One and the News Channel for ourcoverage of the EU Referendum
result. A record-breaking audiencecame to BBC Online with traffic
peaking at 53 million uniquebrowsers globally, and 24.7 million
unique browsers in the UK.

02

BBC Annual Report and Accounts 2016/17

Planet Earth II
Planet Earth II reached 30.3 million viewers
and had 20 million requests on BBC iPlayer,
making it the best performing natural history
programme in at least 15 years.

OV E RV I E W

BAFTAsThe BBC won 19 out of 25
BAFTA Television Awards
with winners recognised
in nine out of ten genres,
including for Reality andConstructed Factual for
Muslims Like Us.

+17%
BBC Three celebrated its first anniversary as
an online-only channel and was awarded RTS
Channel of the Year 2017. Comedy Fleabag
has proved a resounding success and earned
its star Phoebe Waller-Bridge a raft of awards,
including two accolades from the Royal
Television Society and a BAFTA.

Radio 4’s The Archers team spent over
two years researching its domestic
abuse storyline, and according to Refuge
and Women’s Aid, which run inpartnership the National Domestic
Violence Helpline, in the month thestoryline intensified, there was a 17%
increase in calls to the helpline.

The BBC is a key partner for Hull’s
year as UK City of Culture. Projects
that the BBC will host include a major
new national spoken word festival, aballet for young children made in Hull,and the recruitment of a hundred local
community reporters.

iPlayer Kids
The new iPlayer Kids app
launched in March. With over
10,000 episodes being madeavailable this year alone, it has
all of BBC Children’s worldclass content in one place.

246m
2016 has been the biggest year yet for
BBC iPlayer, which received 246 million
monthly requests on average.

BBC Annual Report and Accounts 2016/17

03

ABOUT THE BBC

Inform. Educate. Entertain.
Distinctive, world-class content that is engaging,risk-taking, educational and award-winning.

We create
cutting edge
content...

Award-winning drama

Channel of the Year

BBC One drama The Night Manager
was the biggest winner in the televisionsection at America’s prestigious Golden
Globes awards.

BBC Three named the Royal Television
Society’s ‘Channel of the Year’ award,
cementing a great first anniversary as
an online-only channel.

BAFTAS

News Channel of the Year

The BBC won 19 out of 25 BAFTA
Television Awards, with winners
recognised in nine out of ten genres.

BBC News won ‘News Channelof the Year’ at the RTS Television
Journalism Awards.

Television

OnlineNine pan-UK television services,
including online-only youth service BBC
Three. National and regional television
services across England, Scotland,
Wales and Northern Ireland.

Services including BBC News, Sport,
Weather, CBBC, iPlayer and iPlayer
Radio and BBC Red Button via a variety
of internet-connected devices includingtablets, smartphones and connected
televisions – as well as computers.

 Read more on content performanceon pages 22 to 35...broadcast
across multiple
channels...

...working withtalent acrossthe UK creative
industries.
 Read more on BBC staff and talenton pages 54 to 60

04

BBC Annual Report and Accounts 2016/17

Radio
Ten UK-wide radio networks and twonational radio services each in Scotland,
Wales and Northern Ireland, 40 local
radio stations in England and theChannel Islands.

BBC World Service

BBC staff

Knowledge-sharing

Our people are talented, diverse,
dedicated and passionate. They makeus what we are.

BBC engineers have always been at theforefront of technological development.
We provide a ‘centre of excellence’,sharing advances and best practiceacross the industry.

Partnerships
We work with organisations that share
our passion for creativity, quality anddistinctiveness.

Investment
The BBC is a major investor in the
UK creative industries, contributing
hundreds of millions of pounds tothe wider sector.

Television, radio and online services in
28 languages, with 11 more announced
in 2016.

Training
We are committed to offering
opportunities to everyone. Since 2014,
1% of our workforce has been made up
of apprentices and in February 2017, weannounced a £1 million scheme torecruit, train and develop journalists
with disabilities.

OV E RV I E W

BBC One drama Poldark

We deliver
our public
purposes...
 Read more on delivering our
purposes on pages 14 to 19...throughour aims andambitions...

To provide impartial news andinformation to help people
understand and engage withthe world around them
To support learning for peopleof all ages
To show the most creative,
highest quality and distinctive
output and services

To reflect, represent and serve
the diverse communities ofall of the UK’s nations andregions and, in doing so,
support the creative economy
across the UK
To reflect the UK, its culture
and values to the world

Our aim is to reinvent the BBC for a newgeneration. We will do this by delivering
against our ambitions.
– Making sure everyone getsvalue from the BBC– World-class creativity– Global reach– F inancial stability–M aking the BBC an evengreater place to work

 Read more on our plans for next
year on pages 20 and 21...ensuring
value formoney for ouraudiences.
 Read more about our finances on
pages 46 to 53

Investing as much money as possible indelivering great content and services.
Reduction in overheads

Senior manager pay bill

95% of the BBC’s controllable spend
this year was focused on content anddelivery, just 5% was spent on running
the organisation.

The ratio of senior managers to total
public service employees is now 1.6%
and the paybill for senior managers has
reduced by over £36 million since 2009.

Talent spend reduction

Total cost savings

Our total spend on on-screen andon-air talent has been reduced to 11.5%
of our internal spend on content.

£172 million of annual savings weredelivered during the year.

BBC Annual Report and Accounts 2016/17

05

ABOUT THE BBC

A message from the Chairman“We believe that the new Charter reaffirms the core
mission of the BBC, making plain that our aim ‘to inform,
educate and entertain’ is as relevant now as it has been
throughout the history of the Corporation.”
Sir David Clementi,
Chairman

The beginning of April 2017 marked amoment of transition for the BBC: a new
unitary Board replaced the previous
arrangements under which governanceresponsibility was split between the BBC
Trust Board and the BBC Executive Board.
The new Board, which has a majority of
non-executive directors and includes the
Director-General and three otherexecutive directors, now has responsibility
for all the activities of the BBC.
This Annual Report and Accounts covers
the year to March 2017; and relates to aperiod where the old arrangements andresponsibilities were in force. Much of the
preparatory work for the Report was done
prior to the year end, but it falls to the new
Board to complete its preparation, organise its
publication and take final responsibility for it.
Since I arrived in post, my focus has been on
establishing the new BBC Board and putting
in place the new system of governancewhich is required by the new Charter.
 Full details of these newarrangements can be foundon pages 12 and 13

06

BBC Annual Report and Accounts 2016/17

These arrangements provide for the firsttime in the BBC’s history a clear distinction
between governance of the BBC, whichfalls unambiguously to the new Board, andexternal regulation of the BBC, which now
lies with the independent industry regulator
Ofcom. Both at executive and non-executive
level we have started to build what will be an
important relationship with our regulator.
The primary task of the Board is to ensure
we meet the obligations placed on the BBC
under the new Charter, which runs to theend of 2027. The period leading up to its
issue involved a significant contribution
from a wide variety of parties, not least
the general public who responded to theGovernment’s consultation paper on the
future of the BBC in unprecedented numbers.
We believe that the new Charter reaffirms
the core mission of the BBC, making
plain that our aim ‘to inform, educate andentertain’ is as relevant now as it has been
throughout the history of the Corporation.
The five core public purposes, set out in
the Charter and detailed on pages 14-19 of
this Report, provide a clear framework fordelivering value to the public and against
which we will be held accountable.

S T R AT E G I C R E P O RT

It is worth highlighting the paramountimportance we attach to the first public
purpose, to ensure the strict impartialityof the BBC. For nearly a century the BBC
has had an essential function as the place
to which the country comes to make sure
it can distinguish fact and fiction. With aplethora of news sources now available,
this role has become more important thanever. The British public put a premium on
trusted and authoritative news coverage.
That is why impartiality, accuracy andindependence will be fundamental principles
driving the work of the new Board.
Whilst much of the year was spent by the
Director-General and the senior management
team on issues concerned with the newCharter, it is clear to me that it has once
again been a great year on-air and onscreen. Management did not allow itself tobe distracted from delivering what mattersmost to audiences: ambitious, high-qualityand distinctive programmes and services.
The introduction from the Director-Generalprovides an overview of some of the highlights.

I would like to thank Rona Fairhead, as
departing chairman of the BBC Trust, and all
the trustees and directors who were partof the previous governance arrangements,
for their work and commitment in the yearthat we are reporting on. I would also liketo welcome my fellow members of the new
Board. All of us understand the scale of the
responsibility in our hands. At the same time,
we are excited about the important challenges
that lie in the 12 months ahead and beyond.

Sir David Clementi
Chairman“For nearly a century the
BBC has had an essentialfunction as the place towhich the country comesto make sure it candistinguish fact and fiction.
With a plethora of news
sources now available, thisrole has become more
important than ever.”Radio 4 Today programme presenters
Sarah Montague and Justin Webb.

BBC Annual Report and Accounts 2016/17

07

ABOUT THE BBC

Director-General’s statement
It’s been another busy year for the BBC, with
distinctive, inspiring and award-winning content
on-screen and on-air, as well as the completionof a successful Charter review process.

The start of a new Charter is a critical
moment. It is the chance to set our sights
high for the next 11 years, and mobilise
the whole of the BBC behind a really clear
and ambitious goal.
That is why, as the new Charter period began,
I set the Corporation a challenge: over the
next few years, I want us to reinvent public
service broadcasting for a new generation.
Of course, this does not somehow mean
forsaking our existing audiences. As I havesaid many times before, we have to ride twohorses in the years ahead: doing brilliant
things on our existing channels and services,
but also innovating in the digital space.
Our task is to reinvent public service
broadcasting for a new generation and also
to ensure it works for all audiences so thateveryone in the country gets value fromthe BBC.
Why is this so important? During the debates
about the Charter, we learned somethingvital: the public continue to believe strongly
in the BBC’s mission. When we look at howsociety is changing, I see the BBC’s mission
as more important to the UK than ever.
Reaching younger audiences
More encouraging still is the fact that, as
Ofcom’s research shows, young people
continue to value public service broadcasting
greatly, as does the general population
overall. However, while young people value
what we do, successfully reaching them is a

08

BBC Annual Report and Accounts 2016/17

whole different matter. In fact, it is one of thesingle biggest strategic issues we now face.
Firstly, because there is so much competition
for their time. Adults spend 8% of their
media time on social media and messaging.
For 16 to 24s, it is 25%. Across the wholeof the television market, time spent withyoung audiences has fallen by 20% to30%. It is the same story with radio.
Increasingly, younger audiences and older
audiences are consuming media in different
ways. This is why we have to respond.
The second big issue is that the media
landscape around us has changed beyond
recognition. It has become hugely moreglobal and competitive.
We are now in an environment where others
are willing to invest huge amounts of money inan attempt to capture market share, andwhere technology companies are increasingly
moving into areas that broadcasters havetraditionally thought of as their own. Despite
these challenges and more, I believe we can bevery confident about our future. We may befinancially small compared with some, but our
impact can be huge.
We are still, by far, the media provider
with whom young audiences spend themost time. We are a powerful providerof programming and services to children:
CBeebies is the top channel for the undersixes, CBBC for the over-sixes, while
Bitesize is a necessity when it comes torevision at GCSE time. For the 16 to 34 age
group, BBC One is still their top television
channel – the one most watch. Overall, they
spend 11 hours with the BBC each week.
It is also a major advantage that we have thestability of an 11-year funding settlement,
and are sure of our budget for the five years
ahead. Of course, we have some hard choices
ahead of us to make sure that we can live
within our means, but we have certainty in an

more than50m
people of all ages came tous for our sports coverage
last summer.

S T R AT E G I C R E P O RT

“I want the BBC
during this Charterto be defined byboldness, originality,
and risk taking.”
Tony Hall,BBC Director-General

uncertain world. We need to make it count.
Perhaps the biggest cause for confidence,
however, is this: over the past year, we have
proved yet again that when you provide real
quality, audiences – young and old – respond.
Distinctive, world-class content
That is why more than 50 million people of
all ages came to us for our sports coverage
last summer; and why – though we only havearound 2% of the total hours of television
sport broadcast – we have more than 40%of the audience. And it is not simply thatthey come to us for the big events. Our
programmes have become big events inthemselves – whether that is The Night
Manager, Ed Balls on Strictly, or Sherlock at
New Year. Planet Earth II was seen by morethan 30 million viewers in the UK and ended
up regularly topping the Sunday night ratings.
We have also learnt over the last year that,when we innovate online, we can have astrong impact. Our children’s apps havenow been downloaded 12 million times.
On YouTube, Radio 1 is the biggest radio
station in the world, and BBC Three is being
truly innovative with short-form content.
We know that, when we do things ofthe highest quality, audiences cometo the BBC. They rely on us for thebest of UK content, delivered in bothtraditional and innovative ways.
Our plan for reinventing public service
broadcasting for a new generation rests onfive key ambitions, supported by 12 pan-BBC

objectives. These are set out on pages 20
and 21. I have already highlighted the vital
importance of ensuring our long-term financial
stability, and of making sure that everyone
gets value from the BBC. As well as these,
I believe that success will depend on us
concentrating on three essential priorities.
First, our creativity. In other words, ourprogrammes and services.
I want the BBC during this Charter to be
defined by boldness, originality and risktaking. I want us to have the courage of ourconvictions, to dare to do the things that
others won’t, and to hear, again and again:“only the BBC would do that”. That does notjust mean doing what no-one else does, but
breaking new ground and leading the way.
This is something we must get rightover the coming years, because it will be
the true test of our creativity and thetrue measure of our distinctiveness.
Of course, we are already on great creative
form, but we know that we can never standstill. We always need to generate new ideas,
innovate further and take greater risks. This
is what has to motivate us constantly in all
our traditionally-delivered services, but wenow also need to look again to the online
space – where competition is high, newaudiences are most present, and where
we can serve them in brilliant new ways.
That means reinventing iPlayer. It was thebiggest revolution of the last Charter, andit has been the number one video-ondemand service in the UK, reaching more
people than any other. Now we need it tomake the leap from a catch-up service toa must-visit destination in its own right.
Our goal, even in the face of rapid growthby our competitors, is for iPlayer to be
the number one online television service
in the UK. That will mean doubling ourreach, and quadrupling the time each
person spends on it every week, and wewant do it by 2020. It is a tough challenge,
but I am confident we will do it.
Innovating in a changing media landscape
We need to do the same for audio. Today
we have some of the best speech and music
radio in the world, but I think we can do somuch more with our world-class content and,at the same time, win new global audiences.
There is a challenge for our news teams too.
Increasingly, we have been looking at thedistinction between ‘fast’ and ‘slow’ news
services. We are up there with the best in theworld at telling people what is happening rightnow, and being where they come to find out
what is going on in real time. Now I want us to
do much more with our ‘slow’ news services.
This is coverage that sets out to explain what
is happening in the world, helping the public
truly to understand the events of a tumultuous
time. That means more of a focus on expertisedrawn from both inside and outside the BBC,
more in-depth analysis, more importantinvestigations and more data-journalism.

BBC Annual Report and Accounts 2016/17

09

ABOUT THE BBC“We are still, by far, themedia provider with whom
young audiences spend themost time.”

By finding out more about our audiences
and what they like, we can make better
content, make it more relevant, and bringit to them more effectively. The closer andmore personal our relationship with ouraudiences, the more they will choose the BBC.
My second major priority is our culture –making the BBC a great place to work.

These are major challenges, and thething that brings all of them together ispersonalisation. This will be a real priority
for the BBC in the months and years ahead.
Data is creating a flight to quality. It means
audiences can find the best of public service
broadcasting, but only if they sign in. We arecontinuing to see growth in the signed-in
audience and had close to 4 million active
signed-in users in May. I want to make thatat least 20 million, and I want us to getthere as quickly as possible. I believe that,perhaps more than anything else, this iswhat our future success will depend on.

As I go around the country, I see plenty ofexamples of where things are going very well.
We have made real progress on simplifying
the Corporation: cutting overheads to just
5%, better than most in the private sector;
reducing layers in many areas; reducing
divisions, boards and the numbers of senior
managers. Of course, this is a journey nota destination, and we can never afford
to be complacent. Different parts of theorganisation are moving at different speeds,
and we still have plenty more to do.
A major priority for me has to be that weare better able to work together acrossteams, and work fast. That is because theold way of doing things – working in silos –simply cannot succeed in the modern media
environment. Nor can the traditional ways ofdelivering services, through big project plans
with budgets allocated years in advance.
Today we have to be much more
entrepreneurial in our make-up. What we
did digitally last summer for the Rio Olympics

is an excellent example. For me, perhaps
the biggest triumph was how our technicaland editorial teams came together to solve
problems and innovate – with the full trustand support of management, without lettinginternal barriers get in their way, making surethey could change, respond and rapidly adapt.
My third priority is being much more
ambitious for the BBC globally.
Today, we punch well above our weightworldwide. As one of the country’s mostvaluable exports, we help the UK punch
above its weight too. I believe that, now,in the post-Brexit world, Britain needs
us more than ever – and that we needto do more than ever for Britain.
That is why, last autumn, I was so proud tobe able to announce the historic expansionof our World Service – the biggest sincethe 1940s. But beyond the World Service,
I believe there are two major factors thatwill be critical to our future global success.
The first is BBC Studios. This represents
a true revolution in the way we source
and make our programmes. Of course,
it means a degree of risk, with thecontesting of current programmes, but
it is also an important opportunity.
In both radio and television, we needto own intellectual property rights for

12m
Number of times the BBC’s
Children’s apps have been
downloaded.

10

BBC Annual Report and Accounts 2016/17

S T R AT E G I C R E P O RT

audiences. I do not want us ever to becomea publisher-broadcaster. I am convincedthat BBC Studios is the only way we willsecure our future as one of the very best
programme-makers in the world.

OUR AIM IS…

…to reinvent the BBC
for a new generation
W E ’ L L D O T H I S T H RO U G H …

…our five ambitions

At the same time, I do not want us just to
be brilliant at making high-quality, distinctive
British programmes. I want us also to be truly
brilliant at exporting them across the globe.
That is why we need BBC Worldwide to
thrive as a strategic partner for BBC Studios,making the very most of our global reach.
That is why I have challenged BBC Worldwide
to look again at how we best grow ourbusiness to deliver more returns back topublic service – to reinvest in yet more
great British programmes and services.

Making sureeveryone getsvalue fromthe BBC–– keep the BBC at the heart ofeveryday life in the UK–– deepen our relationship withall audiences–– be more inclusive–– represent all nations and regions

World-classcreativity–– create a content plan tosupport our creative mission–– be a focal point for originality–– be confident–– be more creative with the best
quality services

Global reach–– maximise our global reach–– make world-class programmes–– broaden our delivery–– grow the World Service

Financial stability–– manage increased competition–– continue our efficiency agenda–– invest in content and services–– live within our means

Making the BBCan even greater
place to work–– make ways of working simpler–– act as one BBC–– value each other andcelebrate success–– be visible and involved

By the time we reach our centenary year
in 2022, we want a BBC that is irresistible
to all our audiences. In a world of nearlimitless choice, we want people to carry onchoosing the BBC. Above all, we want tohave shown that public service broadcasting– underpinned by strong public service
values and a clear public service mission– has even more to offer Britain and theworld in the next century. More, even, thanit has done in its first hundred years.

Tony Hall
Director-General

BBC Studios produces audiencefavourite Countryfile.

BBC Annual Report and Accounts 2016/17

11

ABOUT THE BBC

New governanceFollowing a review led by the Government, the BBC
was granted a new Royal Charter in late 2016, whichruns for 11 years from 1 January 2017.

The way the BBC
is governed haschanged under the
new Royal Charter
Above: Chairman, Sir David Clementi
and Director-General, Tony Hall

The way the BBC is governed and fundedis established by Royal Charter.
In late 2016 – following a wide-ranging
review led by the UK Government – theCorporation was granted a new Charter,
which now runs from 1 January 2017 to
31 December 2027. The Charter, and theaccompanying Framework Agreement,
sets out the constitution of the BBC.
One of the significant changes in the newCharter is the implementation of new
governance and regulatory arrangements
for the BBC. These arrangements formallycame into place on 3 April 2017.
In the area of governance, the former
structure of an Executive Board andthe BBC Trust was replaced with theestablishment of a single BBC Board.

12

BBC Annual Report and Accounts 2016/17

The regulatory arrangements for the
Corporation, which were previously
split between the BBC Trust andOfcom, now fall entirely to Ofcom, as
they do for other UK broadcasters.
The Board
The new, unitary, BBC Board is led bya non-executive Chairman, Sir David
Clementi, and consists of a majority of nonexecutive members alongside executive
members including the BBC’s DirectorGeneral and Editor-in-Chief, Tony Hall.
Of the ten non-executive members, fourare specifically appointed as members
for each of the four nations of the UK.
 Read more about the Board
members on pages 64 and 65

S T R AT E G I C R E P O RT

“This new Board represents a
new era in BBC governance.
For the first time the BBC has
a single governing body withclear responsibility for all of
the BBC.”
Sir David Clementi
Chairman

The Board is responsible for ensuring the
BBC fulfils its mission and public purposes
as set out in the Charter, and it does this by:setting the strategic direction for the BBC;establishing the creative remit; setting theBBC’s budget; and determining the framework
for assessing performance. The Board isaccountable for all of the BBC’s activities– including the publicly funded services in
the UK and around the world, as well as
the Corporation’s commercial activities.

Ofcom’s central responsibility is to regulate
the BBC. It does this by establishing an
Operating Framework and by setting
a licence for the BBC that contains theregulatory conditions it has set for theBBC. Ofcom also assesses performance,
ensures fair and effective competition andregulates the interaction between the BBC’s
public service and commercial activities.
Ofcom also regulates the BBC content andoutput against its Broadcasting Code.

Executive Committee
The Director-General, Tony Hall, chairs an
Executive Committee, which is responsible
for the day-to-day running of the BBC. Nine
directors, who manage large operational areasof the Corporation, sit on this committee.

More detail about Ofcom and their
responsibilities can be found on their website.

The Executive Committee is responsiblefor delivering the BBC’s services inaccordance with the strategy and delegation
framework agreed by the Board, and for
all aspects of operational management.
External regulation
The Office of Communications (‘Ofcom’)is the BBC’s regulator. Ofcom is the regulatory
and competition authority for the UK’s
broadcasting, telecommunications andpostal industries.

Audit arrangements
The Comptroller and Auditor General,
Sir Amyas Morse CBE, has been appointed
as the BBC’s external auditor; he issupported in this role by the National
Audit Office (NAO). Sir Amyas and the
NAO are independent of government.
As part of the new governance arrangements,
the Comptroller and Auditor Generalexamines, certifies and reports on the
BBC’s group accounts and is appointed asauditor of the BBC’s relevant subsidiaries
unless he and the BBC agree otherwise.
More detail about the Comptroller and
Auditor General and the National Audit
Office and their responsibilities can be foundon the National Audit Office’s website.

New Broadcasting House, London

BBC Annual Report and Accounts 2016/17

13

DELIVERING OUR PURPOSES

Delivering our purposes
The BBC’s public purposes describe the public
value the BBC aims to achieve when delivering
its mission to inform, educate and entertain.
 To read the public purposes in full, please visit: bbc.co.uk/
corporate2/insidethebbc/whoweare/bbc_royal_charter1
To provide impartial news andinformation to help people
understand and engage withthe world around them
Read more on pages 15 and 30

Double BAFTA award-winning Damilola, Our Loved Boy23

To support learning forpeople of all ages

To show the most creative,
highest quality and distinctive
output and services

Read more on pages 16 and 59

Read more on pages 17 and 22

4

5

To reflect, represent and serve
the diverse communities of allof the UK’s nations and regions and,in doing so, support the creative
economy across the UK

To reflect the UK, its culture
and values to the world

Read more on pages 18 and 60

14

BBC Annual Report and Accounts 2016/17

Read more on pages 19 and 32

S T R AT E G I C R E P O RT

provide impartial news and
1 To
information to help people
understand and engage withthe world around them

It has been an extraordinary 12 months inboth domestic and global politics, and therole that BBC News plays – to informaudiences with trusted, independent andimpartial news, adding context, analysis
and insight, holding the powerful toaccount, and giving people a sense of placein their community – has been of vital
importance both in the UK and globally.
For our audiences
BBC News continues to be the biggest
provider of news in the UK. We reachedthree-quarters of adults in the UK eachweek in 2016/17; more than any other news
provider. On television, the average BBC
television news viewer watched over two
and a half hours of BBC News each week,whilst on radio, the average listener to BBC
News and current affairs content tunes in for
close to five and a half hours per week, withBBC Radio 4’s Today programme recording
its highest ever audience figures. BBC News
online attracted an average of just under
30 million weekly unique UK browsers.

In comparison with other news organisations
the BBC remains by far the most trusted
source of news in the UK. 57% of people said
that the BBC is the one news source theywould most likely turn to for news they trustand for accurate news coverage, with thenext nearest provider at around 10%. And
the BBC is the news source people say thatthey turn to for impartial news coverage, with
50% of the UK public saying the BBC is theone source they would turn to for impartial
news, far ahead of all other news providers.

BBC current affairs output continues
to set the news agenda and influencenational debate with its emphasis on
world-class original journalism. Panorama’s
investigation into the Panama Papers in Tax
Havens of the Rich and Powerful Exposedreached 4.8 million television viewers.

For societyTime and again audiences come to the BBC
for coverage of major news events when thevalue of BBC News to UK society is mostvisible. During the referendum on the UK’s
membership of the European Union, theBBC was the most used and most trusted
news provider throughout the campaign.
87% of people in the UK closely followed
news about the result of the vote, making
the story the most followed since tracking
began eight years ago. A record 53 million
global unique browsers visited BBC News
online on the day the result was announced,
with 26 million people watching coverageon television on 23 and 24 June. A thirdof all UK adults also consumed BBC News
coverage of the results on social media.

As part of the BBC School Report project,
BBC News worked with 900 schools andaround 30,000 students. Through mentoringand digital training, the programme works withthese young people to explore the themes ofaccuracy and impartiality in news coverage, as
well as helping to promote media literacy. BBC
School Report additionally provides support
for those considering a career in the media.

Globally, the BBC’s coverage of the US
Presidential election helped close to two-thirdsof UK audiences understand what the result
meant for the US, the UK and the world – farahead of other providers – while the BBC’s
network of correspondents brought coverage
and analysis from around the world; including
the terrorist attacks in Nice and acrossEurope, and the ongoing conflict in Syria.

76%
of UK adults used BBC News eachweek in 2016/17.

For the UK
The BBC’s mission to bring impartial andaccurate news to audiences strengthens the
UK and we work to maximise the impact.

The BBC has also announced plans to invest
around £8 million a year in local news
partnerships to improve the provision of local
journalism in the UK. The proposals include
the recruitment of 150 local democracy
reporters; the syndication of BBC local
audio and video content for use by local
and regional news organisations acrossthe UK; and the creation of a shared local
data journalism centre in Birmingham.
The BBC has launched a number ofmeasures in response to new concerns
about the reliability and accuracy ofnews in general. We are working withsocial media platforms and other news
organisations to address the challenges.

BBC News continues to refresh its output
to attract new audiences. New formats
such as BBC Stories are helping to reacha broader audience. A film showcasing a
revolutionary new invention that allowed
a young woman with Parkinson’s disease
to begin drawing again has been viewed
over 60 million times on Facebook alone.

BBC Annual Report and Accounts 2016/17

15

DELIVERING OUR PURPOSES

support learning
2 To
for people of all ages

Learning in its broadest sense is vital to
the wellbeing of any nation, and this has
been reflected in the importance the UK
public attaches to the BBC’s education
purpose and its new focus in the BBC’s
strategic priorities.
For our audiences
Across television, radio and online, theBBC continues to help our audience learn
about an incredible range of subjects
through world-class factual content. The Big
Painting Challenge, The Great British Sewing
Bee and The Great Pottery Throw Down
have all sparked viewers’ passions to takeup new hobbies and acquire new skills.
Overall, more than seven in ten (72%) agree
that they have ‘learned new things fromprogrammes or online content on the BBC’.
From Alphablocks and Numberblocks, Nina
and the Neurons and Do You Know? on
CBeebies, to Newsround, Blue Peter, Absolute
Genius and Horrible Histories on CBBC, ourchildren’s channels provide our youngest
audience with fun and engaging ways tolearn; with a wealth of online resources andactivities helping parents to support thedevelopment of children’s numeracy, language
and social skills through their early years.
For society
BBC Bitesize continues to be a much-valued
resource for millions of children and young
people, supporting them through theirformal education with curriculum-linked
online resources. Average weekly reach is
up 10% year-on-year to 2.1 million unique
UK browsers, peaking at 3.3 million during
the 2016 summer exam period. In 2016 welaunched a new Bitesize revision app which
has already been downloaded more than
500,000 times. Bitesize makes a real difference
to young learners with 81% of users saying
it has helped them to understand theirschoolwork or homework more, 57% of
secondary school users saying it has helped
them to achieve better grades at school, and
30% of those who used it to revise for their
GCSEs or Nationals saying that there was a
subject they wouldn’t have passed without it.

16

BBC Annual Report and Accounts 2016/17

The BBC has also stepped up its support
for schools and teachers in the past year,
reinventing schools television through BBC
Live Lessons and launching a new YouTube
channel BBC Teach, which assists teachers tofind curriculum-linked video for use in lessons.
More than three in five adults (62%) agree
that ‘the BBC helps children/teenagers withwhat they learn at school/college’, rising to 66%
for parents with children in their household.

Radio 2’s 500 Words, now in its eighth year,
inspired over 120,000 children to write shortand creative stories. CBBC’s Awesome Authors
Live, delivered with the Royal Shakespeare
Company and BookTrust, enabled children
to meet some of their favourite authors at
events in Birmingham and at libraries acrossthe UK. 92% of 6 to 12 year-old attendees
surveyed said they planned to do something
new and 88% said they wanted to read more.

Young people were also encouraged to begood citizens through Radio 1 and 1Xtra’s#1MillionHours campaign, with more than
1.1 million volunteering hours being pledged
in total.

For the UK
The BBC has this year worked in partnershipwith a wide range of organisations to delivertransformational educational campaigns that
benefit the wider UK. The BBC micro:bit
is our most ambitious educational initiative
since the original BBC Micro in the 1980s.
Working with over thirty partners, one
million small programmable coding devices
were manufactured and distributed to all
children in Year 7 (or the equivalent) acrossthe UK, inspiring the next generation ofdigital pioneers. Nine in ten Year 7 pupils
surveyed who used the micro:bit said thatit helped show them that anyone can code,and 39% of Year 7 girls who used it said
they would definitely choose ICT/computing
compared to 23% before the campaign
started. Amongst teachers, 93% agreed
that their students learnt something new.

This year the BBC has supported reading andliteracy by leading a national conversation
about books and celebrating the positiveeffects of reading and writing for pleasure.
BBC Comedy Classroom, delivered inpartnership with the National Literacy Trust,provided a unique way for teachers to use
laughter in lessons to promote literacy in a
fun and engaging way. Social media campaign#LovetoRead, designed to engage young
people and prompt conversation aroundbooks, received 900,000 engagements with thecontent such as likes, shares and comments.

Our new schools campaign is BBC Terrific
Scientific, a bold and ambitious initiative toinspire primary school children to get excitedabout science. Delivered in partnershipwith Wellcome and other academic andscience institutions, the initiative supports
the UK’s urgent need for more young people
to secure Science, Technology, Engineeringand Mathematics (‘STEM’) qualifications.

BBC Terrific Scientific aims toinspire primary school children
to get excited about science.

The future of the UK’s creative industries
was again the focus of the Radio 1 Academy,
which this year took place in Exeter inthe run up to Radio 1’s Big Weekend.
Workshops and Q&A sessions helped over
8,000 young attendees. 98% of participants
surveyed saying that they increased theirknowledge by attending and 75% stating theyfelt inspired to do something different.

S T R AT E G I C R E P O RT

show the most creative,
3 To
highest quality and distinctive
output and services

2016/17 has been a rich year for creativity
at the BBC, from Planet Earth II which
attracted record television audiences, toinnovative 360 degree Olympics coverage,to the hugely impactful domestic abusestoryline on The Archers, the compelling
exploration of grief with Rio Ferdinand:Being Mum and Dad, the special
programming that celebrated sevendecades of pioneering music and culture
on Radio 3, coverage of the Invictus
Games and to challenging, criticallyacclaimed comedy and drama like
Fleabag and Taboo.
Digitally, BBC Three became one of thefirst broadcast channels in the world to go
online only; experimenting in form, content
and tone, to inspire and engage younger
audiences across multiple platforms.
 See more about BBC Three online on page 28

For our audiences
We continue to face intense competition andchanging audience behaviours, particularly
amongst younger audiences. That has
put pressure on the audience reach andtime spent with both television and radio.
However, the BBC has maintained its shareof the television broadcasting market.
In terms of quality, appreciation index (‘AI’)scores have held steady for television at 80.3
and for radio at 81. BBC content has been
widely recognised in industry awards, both
domestically and around the world – The
Night Manager won ten awards including
three Golden Globes, while Exodus: Our
Journey to Europe won six awards including
Best Documentary Series at the RTS
Programme Awards. In all, the BBC won 19
BAFTA television awards and 13 RTS awards,
with BBC Three collecting a remarkable
six awards including Channel of the Year.
BBC Radio was also recognised, with 13
golds at the Radio Academy Arias (formerly
known as the Sony Awards) with Radio 2
being named best national radio station.

For society
We have maintained the unique range andbreadth of our services across both radio andtelevision; exceeding our regulatory quotas
for hours in genres such as arts, music andreligion. BBC Trust research showed three
in five (59%) people agreed that the BBC
has lots of fresh and new ideas, with aroundhalf (49%) agreeing that the BBC provides
distinctive programmes and online content
that no other broadcaster would make.
It has also been a strong year for innovation
both in form and technology, with pioneering
immersive soundscapes showcased in a
virtual reality drama, the award-winning
Turning Forest. BBC Taster brought newformats to audiences, like RemArc, orReminiscence Archive, designed to help
trigger memories in people with dementia
using BBC Archive material as stimulation.
BBC Three experimented in new short-form
content, including investigative journalism
in 15-minute Unsolved episodes and theAmazing Humans strand that went viral onsocial media with one video alone viewed
over 95 million times globally on Facebook.

The BBC has opened up its platforms tocollaborate and host partners’ content, to bring
the best possible experience to audiences.
Shakespeare Day Live brought partners like
Shakespeare’s Globe and the British Film
Institute, the RSC, the Hay Festival, the Royal
Opera House and the British Council together.
BBC Radio partnered with Spotify, Deezer,
YouTube and Apple on the BBC Music app,and BBC Introducing continues to team up
with the National Skills Academies and BBC
Local Radio to help build production skills
among young, emerging musical talent.
The BBC also remains committed todeveloping the best in new UK talent throughprogrammes such as Radio 1 and 1Xtra’s
Where It Begins internship scheme, which
offers eight-week, paid placements designed
to attract a diverse range of people to theBBC. Another example is the Make It Digitaltrainee scheme for 16 to 24 year olds, with
BBC Three surfacing new talent such as Maxim
Bady and Kayode Ewumi, who in turn helped
the BBC to win five BAFTA BreakthroughBrits – more than any other broadcaster.

In the digital sphere, music playlists and the
BBC Music app are starting to reinvent theway BBC Radio engages with audiences. BBCRadio has also created new opportunities
for listeners to engage through initiatives
such as Radio 5 live’s real time audienceinteraction in the run up to the European
Union referendum, and pop-up radio stations
such as BBC Music Jazz and Radio 2 Country.
For the UK
In the last year, we have worked with 54
independent UK television production
companies that we hadn’t worked with before,
and met or exceeded the quotas for hoursof output from independent production
across all channels. Of the £1 billion spent
externally by the BBC in the creative economy,£433 million was spent with the independent
production sector, and hundreds of millions
more with rights holders, performers, talent,
directors, production resources and musicians.

Critically-acclaimed drama Taboo.

BBC Annual Report and Accounts 2016/17

17

DELIVERING OUR PURPOSES

reflect, represent and serve the
4 To
diverse communities of all of the UK’s
nations and regions and, in doing so,
support the creative economy acrossthe UKAs the nature of national identityand population diversity becomes
ever more complex, the importanceof the BBC’s mission to represent,
and be representative of, the wholeof the UK will become ever moresignificant. Delivering on this key
public purpose will be a running theme
throughout the next Charter period.
We have recently announced ambitious
new plans to strengthen our programmes
and services in Scotland, Wales andNorthern Ireland.
For our audiences
BBC content remains hugely popular withaudiences across the nations and regions.
Average reach of BBC television viewing is
79% in England, 78% in Northern Ireland,
80% in Scotland and 82% in Wales. Nearly
half of all adults in England (over 19 million)
watch at least three minutes of a BBC regional
television news bulletin each week and BBC
regional television evening bulletins accountfor a third of all television viewing at thattime. The early evening edition of Reporting
Scotland remains Scotland’s most-watched
television news programme, and in Walesand Northern Ireland, Wales Today andNewsline continue to perform strongly.
Local radio in England draws in 6.4 million
people each week. Of those, almost 1 million
people listen to no other radio stations, and aquarter listened to over ten hours per week.
We are doing more to reflect the wholeof the UK to itself. Network dramas
such as The Replacement, The Fall and
Hinterland were set in the nations.
In Wales and across the UK, the 50th
anniversary of the Aberfan disaster in
September 1966 proved particularly
poignant. The Green Hollow, a film poem by
Owen Sheers which included contributions
from the local community, received thehighest audience appreciation rating of
any BBC One programme in five years.
Our programming tackled challenging themes
whilst reflecting the UK’s diverse communities.
Transgender Love on BBC Scotland followed
six transgender individuals in Scotland as they18

BBC Annual Report and Accounts 2016/17

struggled to find love and maintain existing
relationships. A highlight of collaborative
working was the #towerlives project in April,which gave voice to the stories of people
from the culturally diverse Butetown estate in
Cardiff. Asian Network Live featured a rangeof British Asian and global South Asian artists,
connecting with a live event audience of over
3,300, more than 90% of whom were black,
Asian and minority-ethnic (‘BAME’), and was
also available on Red Button, iPlayer and radio.
The BBC’s Black and British season, deliveredin partnership with the Heritage Lottery Fund,Historic England, The National Archives, Black
Cultural Archives and the BFI, celebrated
the role and achievements of black people
in the UK and explored the rich culture andhistory of black Britain with bold, vibrant andprovocative programming across the BBC.
Almost half (46%) of black audiences said theylearned something new from the season.
For society
The national radio stations were indispensable
in reporting the devolved elections of May
2016 and again during March 2017 in Northern
Ireland. BBC Northern Ireland’s television
coverage of the election results reachedmore than half the local adult population.
All platforms played a key role in helping
audiences make sense of the European Union
referendum and what it meant for their nation.
The BBC continued its unique support
for the UK’s indigenous languages across
television, radio and online, and BBC Albaand S4C continued to be key partners
in the delivery of our commitment.
For the UK
The BBC continued to make a significant
contribution to the creative economy acrossthe UK, both within the BBC and across theindependent sector. The BBC’s investment
in Scotland increased significantly, with
network spend rising from the previous
year’s £73 million to over £93 million. In
Wales, this investment stood at £63 million
whilst in Northern Ireland, network
content spend was valued at £30 million.
Significant progress was made in the deliveryof the BBC’s staff diversity targets. BAME
staff now represent 14.5% of the overall

The Black and British season
celebrated the role and achievementsof black people in the UK and
explored the rich culture andhistory of black Britain.

workforce and 10.3% of our leadership teams.
This means we have met our 2017 targets andare on track to meet our target of 15% by
2020. The proportion of staff with a disability
or long-term health condition is 10.2%,
with 9.6% in leadership roles. Women now
represent 48.2% of the workforce with 42.1%
in leadership roles against our 2020 target of
50%. Representation of lesbian, gay, bisexualand transgender (‘LGBT’) staff is 10.5%
across the workforce and 11.5% across ourleadership teams, compared to our 2020 target
of 8%. And the target of having the number
of apprentices making up more than 1% of
the BBC’s workforce was reached in 2014;
two years ahead of schedule. That figure has
now risen from the 2014 total of 177 to over
230, and there is a new ambition of offering
more than 400 apprenticeships by 2018.
 Read more about diversity at
the BBC on page 60

All of these targets are part of the BBC’s
public purpose to find and train the mostcreative talent, whoever and wherever
they are. By doing so, the aspiration isthat the BBC will create a truly diversified
workforce that both reflects and mirrors thechanging dynamics of the UK’s population.

S T R AT E G I C R E P O RT

reflect the UK, its culture
5 To
and values to the world

The BBC is one of the UK’s greatest
cultural exports. Following additional
investment from the Government
this year, we announced the biggest
single expansion of the World Service
since the 1940s. This investment
will deliver services in 12 newlanguages, enhance output in the
Middle East, Africa and Russia, andsupport the digital transformationof the BBC’s global news output.
For our audiences
The BBC reached a total weekly global
audience of 372 million in 2016/17 (348 million
in 2015/16). The weekly reach of the World
Service Group grew to 346 million (from320 million in 2015/16), of which the World
Service accounted for 269 million (up from246 million in 2015/16).

to the BBC for the full picture, as well as foranalysis of the clampdown over the following
months. The World Service also continues
to engage younger, female audiences through100 Women; a multi-format series thatexamines the role of women in the 21st
century. This initiative is now in its third year.
As well as being a distributor of scale, BBC
Worldwide champions British creativity
by investing in, commercialising andshowcasing world-class UK content. Sir
David Attenborough’s Planet Earth II has
now been sold to 168 territories. The US
premiere was the most watched unscripted
telecast ever on BBC AMERICA and themost watched nature programme on US
television in the last five years. A collectionof Planet Earth II content on Tencent
generated over 200 million views in China.

BBC Worldwide reached a weekly audience of
36 million within the year, by exporting highquality content to broadcasters around theworld, and hosting on its own BBC branded
services such as BBC First and BBC AMERICA,a joint partnership with AMC Networks.

BBC Media Action, the BBC’s international
development charity, works with media to
inform, connect and empower people and tohelp bring about lasting change in individuals’
lives. Last year the charity reached morethan 200 million people in 28 of the poorestand most politically fragile countries in theworld, and supported more than 100 training
partnerships to strengthen and showcase themerits of both a free and independent media.

For society
Globally, the need for trusted and reliable news
is greater than ever. Societies are increasingly
fragmented and press freedom in many
countries continues to be under threat. It is in
this context that the BBC is consistently rated
one of the most trusted international news
providers and the World Service continues
to be an invaluable source of news andinformation for audiences across the globe.

For the UK
The BBC remains a source of pride andinfluence for the UK, and licence fee payers
benefit from the BBC’s global strength. BBCWorldwide continues to deliver strong,sustainable financial returns to the BBC,
allowing additional investment in content.
In 2016/17 68% of headline revenues weregenerated outside the UK, with £210 million,
being returned to the BBC in 2016/17.

BBC News has an unparalleled record incovering major global events. We havereported on-the-ground from the Mosul
frontline, whilst the award-winning IslamicState’s Most Wanted in April helped
demonstrate to the world what life forteenagers is like living under the controlof so-called Islamic State in Raqqa, Syria.
In July, BBC Turkish was at the forefrontof reporting the attempted coup against
President Erdogan, with audiences turning

BBC Monitoring continues to provide
a valuable service to the BBC, the UK
Government and a range of other customers
and commercial clients by translating andanalysing news and information fromfreely available media sources aroundthe world covering over 100 different
languages from 150 different countries.

 Read more about World Service
performance on pages 32 and 33

UK audiences, as well as internationally. BBCWorld Service journalists have provided someof the most memorable broadcasting moments
this year, from Feras Kilani facing a bomb
attack in Mosul to Selin Girit at the sceneof the New Year terror attack in Istanbul.

BBC Media Action works
with media to inform, connect
and empower people in
the poorest and mostpolitically fragile countries.

We’ve continued to bring the expertise of
our bilingual World Service journalists to our

BBC Annual Report and Accounts 2016/17

19

DELIVERING OUR PURPOSES

Our priorities for next year
Over the course of the next Charter, we have set
ourselves an overarching aim to reinvent the BBC fora new generation. This summary of the BBC’s Annual
Workplan, published earlier this year, outlines our
strategy for the next year. The full report is available
online: bbc.co.uk/aboutthebbc/insidethebbc/
howwework/reports/annual_plan_2017

Five strategic objectives will
help us focus our efforts overthe next year
Making sure everyone getsvalue from the BBC
Although the BBC’s reach is very high, there
is a significant and growing disparity between
audiences who consume us the most andthose who consume us the least. Over the
next three years, we aim to redress thisimbalance and stem the trend. In the main,
this means appealing more effectively tothe young, ethnic minorities and audiences
across the nations and regions of the UK.
The BBC’s distribution strategy is key tomeeting this objective, drawing audiences
to lesser-known programmes and public
service gems, which is critical to our public
service mission and one of the underpinningsof distinctiveness. The distribution policy
we publish later this year will explain theseobjectives in more detail, and the framework
and principles the BBC will use to deliver them.
Read more on pages 22 to 45

Providing world-classprogrammes and services
The BBC operates in a global media market.
UK audiences compare what we do to thebest that the world can provide. The BBCbrand stands for British content. That is
our overwhelming focus, at a time when
there are multiple risks to the traditional
strength of the British creative economy.

20

BBC Annual Report and Accounts 2016/17

BBC Studios provides a vital pipeline oftalent, expertise and dedication to all
forms of television programming, rightacross the UK, for the whole industry.
Read more at: BBCStudios.com

Extending the global reach of the BBC
With the new funding for the World Service
agreed with the Government, the BBC aims
to extend its reach to 500 million users
by 2022, providing 12 new languages to
add to its existing portfolio of services.
BBC Worldwide has also built a successful
global channels portfolio, generating
profits to invest in UK programmes andextending the BBC brand globally in acomplementary way to the World Service.
Read more on pages 32 and 50

Making the BBC a great place to work
A creative organisation like the BBC relies on
the talents, skills and motivation of its people.
Through an extensive staff engagement
programme, we have listened to what our
staff have to say about working here. We aremaking our ways of working simpler, removing
complexity and making it easier to understandwhat’s going on. We believe that it’s crucial
to ensure that the BBC has a workforce
that reflects the UK today and have set new
workforce targets for 2020 to ensure that ouremployees are as diverse as the UK population.
Read more on pages 54 to 60

Managing the BBC in a way thatprovides financial stability
The five-year funding settlement, agreed
in 2015, provides the BBC with a clear set
of financial parameters within which it will
operate through to 2021/22. From 2017/18,
we will have to absorb inflation at 2% a
year, the equivalent of £400 million a yearby 2021/22. We will continue to drive theefficiency agenda hard, and we will aim toincrease our commercial income as well.
We know where we want to get to, withevery major item of BBC spend subjectedto the ‘Compete or Compare’ approach,and we know the main routes to get there –productive efficiency, schedule mix savings,
reprioritisation and commercial income.
Read more on pages 46 to 53

The BBC’s 12
strategic priorities
To achieve these objectives, the BBC
Board has agreed 12 pan-BBC priorities
which we believe are essential to our
reinvention as we approach the 2020s.
Grow iPlayer and Live: BBC iPlayer is one of
the BBC’s biggest success stories. It has beena market leader for years and transformed
the way audiences watch television. It
reaches six million adults each week. Our
long-term goal is to be the number one
online television service in the face of fierce
competition. We aim over the next few years
to double iPlayer’s reach and quadruple thetime each person spends on the service.

S T R AT E G I C R E P O RT

Providing world-classprogrammes
and services.
Bafta award-winning Happy Valley

Reach 20 million members and review
our brands: One of our major strategic
focuses for 2017/18 is personalisation. We
believe we can provide our audiences witha better service if we know who they are
and what they might be interested in. We
want simple, frictionless discovery of BBC
content across all BBC services, powered bysophisticated, intelligent search. We will use
data to make people’s experiences online andoffline more relevant to them and encourage
active participation, and to improve ouronline products and signed-in experiences.
Prioritise younger audiences: We need
to focus on our younger audiences (0 to 34)
and provide content that they want to watch,
listen to and interact with and ensure thatthey can find it and consume it in ways thatsuit their lives. We need to do this across all
our genres, services and platforms, not just
via the services specifically for the young.
Reinvent and grow audio: Today we havesome of the best speech and music radioin the world, alongside an extraordinary
wealth of audio riches at our disposal. With
our world-class audio content, we will moveit from being predominantly a catch-up andbroadcast-focused experience to a fully
personalised experience with the user at its
heart. We will offer greater flexibility of format,
more short-form and podcasts to sit alongside
the long-form live and on-demand offer.
Mobile news and ‘slow news’: Today, BBC
News Online is the UK’s number one online
news provider. Over 14 million adults use
the BBC News app or website each week.
We will build on the success of BBC Stories,
offering more mobile and social-focused

content aimed at different audience groups andimprove our live news experience, allowing
users to follow live updates from journalists
anywhere in the world. We will make surethat our focus on ‘slow news’ helps people
understand the ‘why’ as well as the ’what’.
Revitalise our education mission: We
believe that the education part of our
mission and purposes has been less visible
and effective than other parts. There is astrong social and strategic case for increasing
our impact in this area. A core part of thatmission is our offer to children. This year,
we will invest more in children’s output andservices. 2017 will see us begin to roll out
this refreshed strategy for children’s content
and services, with an increase in spending
on our children’s digital interactive budget.
Alongside this, Terrific Scientific is a major
18-month campaign to inspire primary school
age children to get excited about science.
Better reflect the diversity of the UK: In an
increasingly devolving UK, it is our commitment
to reflect the diversity of the country across all
its constituent nations and regions. The BBC
already has one of the most diverse workforcesin the UK, and our targets are more stretching
than most FTSE 100 organisations.
A crucial part of our strategy is ourcommitment to non-graduate apprentices
and graduate-level trainees and we have set
a target for them to make up 2.3% of theBBC’s workforce. In addition to apprenticeship
opportunities for new entrants, we plan tobroaden our delivery by offering higher-level
apprenticeships to existing staff, right up to
Masters-level. Our renewed commitment
to the nations of the UK will see a strong

focus this year. We are expecting to exceed
our individual television production targets
for Scotland, Wales and Northern Ireland,
spending proportionately more than eachnation’s percentage of the population.
Grow the World Service: We are seeing
significant investment in the World Service
to parts of the world where there is ademocratic deficit in impartial news. This
will enhance Britain’s place in the world
and the promotion of British values.
Become Britain’s creative partner:
We want to put our technology anddigital capabilities at the service of ourpartners, bringing us closer together forthe good of the country to deliver thevery best to audiences. Our Tomorrow’sWorld partnership and our work with
Hull as UK City of Culture 2017 show thepositive impact that the BBC can have.
Grow BBC Studios and BBC Worldwide:
We have launched BBC Studios as acommercial subsidiary; a landmark momentin the way we produce and supply content
for the BBC. It represents an opportunity tobring in revenue for the BBC Group whilst
supporting the BBC’s public service mission by
sharing our creative ideas with new audiences
around the world. BBC Worldwide’s vitality
and health will be a critical ingredient in
the BBC’s success over the course of theCharter period. BBC Worldwide’s challenge
is to provide £1.2 billion of returns over the
first five years of the next Charter: a morethan 15% uplift on the previous five years.

BBC Annual Report and Accounts 2016/17

21

PERFORMANCE

Overview of network
service performance

Serving everybody with a range ofgreat content delivered in new ways.
Reaching new audiences
Adult reach

Total time spent

General impression

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

Length of time UK
adult audiences
spend with the BBC
each week.

(mean average)

2015/16: 18.3hrs

2015/16: 7/10

95%
2015/16: 96%

18.0hrs

BBC Three drama Thirteen

22

BBC Annual Report and Accounts 2016/17

Audiences’ general
impression of the BBC.

7/10

S T R AT E G I C R E P O RT

Our services
Nine pan-UK television services,
including online-only youth service
BBC Three.

Ten pan-UK radio networks and twonational radio services each in Scotland,
Wales and Northern Ireland.

National and regional television services 40 local radio stations across Englandacross England, Northern Ireland,
and the Channel Islands.
Scotland and Wales.
The BBC World Service television,
radio and online in 28 languages, with
11 more announced in 2016.

Online services including BBC News,Sport, Weather, CBBC and CBeebies,
iPlayer and iPlayer Radio, BBC Red
Button and our vast archive via a
variety of internet-connected devices
including tablets, smartphones
and connected televisions – as wellas computers.

Award-winning content

19

British Academy
Television Awards
May 2017

13

2

8

British Academy
Film Awards
February 2017

Emmy’s
September 2016

RTS ProgrammeAwardsMarch 20175Golden Globes
January 201785

National Television
AwardsJanuary 2017

RTS Television
Journalism Awards
March 2017

7

Broadcast DigitalAwardsJuly 2016

13
13

Audio and Radio
Industry Awards
October 2016

British Academy Children’s Awards
November 2016
BBC Annual Report and Accounts 2016/17

23

PERFORMANCE

Television
The BBC’s portfolio of television channels remain the mostwatched in the UK in what is an increasingly competitiveenvironment for public service broadcasters. BBC One’s
share of viewing is the highest in a decade and television
distinctiveness measures hit an all-time high in 2016/17.

78.8%
overall BBC network
television reach.

BBC television remains the most watchedbroadcasting portfolio in the UK, reachingnearly 79% of individuals each week andattracting 32% of all television set viewing.
In a highly competitive environment, there
have been some notable successes: BBC
One’s share of viewing was the highest in
ten years; BBC Three has had a full year ofinnovating online, winning RTS’s Channelof the Year; the BBC has had its mostsuccessful new drama launch for 15 years,
The Moorside, and BBC television
distinctiveness measures hit an all-time
high, driven by factual programming.
Ever-growing competition for audiences is
impacting on all broadcasters, particularly foryounger viewers for whom online destinations
occupy a greater proportion of their media
time. The BBC’s decision to move BBC Three
online has impacted on broadcast (‘BARB’)measures of BBC reach and time-spentamongst 16 to 34 year olds, but this needs tobe considered in the context of online growthfor our video content offer. BBC iPlayer weekly
reach (unique browsers) grew by 12% yearon-year, with dramas like Taboo and Apple Tree
Yard helping to drive a peak performance inJanuary to March 2017. BBC iPlayer plays animportant role in our portfolio, introducing
younger audiences to a wide range of BBC
content (45% of users are 16 to 34 years old).
The ways in which our audiences discover
and watch content are evolving. For example,

24

BBC Annual Report and Accounts 2016/17

simulcast viewing via BBC iPlayer is growing(especially for sport) with 18% of BBC
iPlayer requests simulcast – rising to 48%
during the weeks of the Olympics. BBC
Three has been successful both on BBC
platforms – with hits like Thirteen, Fleabag,
Clique and Murdered by My Father – andin social spaces with viral content such as
Amazing Humans and Things Not to Say.
Our overall audience share for the BBC held
steady year-on-year at 32%, with a strong
performance from BBC One, Two and Fourcollectively overcoming the lost BBC Threelinear share. The Great British Bake Off had
a hugely successful final year with the BBC
ending on a high with 13.6 million viewers,
including 3.4 million 16 to 34 year olds andone million black and minority ethnic viewers.
Strictly Come Dancing was bigger than ever andPlanet Earth II as a whole reached 30.3 million
viewers and had 20 million requests on
BBC iPlayer, making it the best performing
natural history programme in at least
15 years. Drama continued to attract large
and engaged audiences in 2016/17, with threedramas on BBC One exceeding 10 million
viewers: Sherlock, Call the Midwife and The
Moorside. On BBC Two, Line of Duty, series
three, continued to grow its audience andachieved the highest appreciation score of theyear of all of the major television channels.
However, it was our coverage of the Rio
Olympics that drove the most audience
viewing, with 45.4 million people coming to
the BBC’s television coverage for at least 15
minutes. That’s 76% of the television-owning
population. Altogether, 51.2 million people
watched the summer of sport including
Wales’ epic run to the Euro semi-finals andAndy Murray’s second Wimbledon win.
There were daily, weekly and monthly highs
for the BBC Sport app and website as morethan 100 million global browsers accessed
the website and one million visited BBC

BAFTA-winning Murdered by My Father.
Get Inspired to find out how to get active.
New programmes cut through withaudiences on all our channels. On BBC
One, new entertainment commission
Michael McIntyre’s Big Show launched on
Saturday nights and grew strongly amongst
younger viewers. Upstart Crow was thebiggest launch for a new comedy series in2016 on BBC Two. Fleabag was an audienceand critical hit for BBC Three, resonatingwith both younger and older audiences.
2016 marked the 400th anniversary of
Shakespeare’s death and the BBC dedicateda season of programming to the Bard which
was seen by around 40% of the population.
Comedy Upstart Crow along with The
Hollow Crown: The War of the Roses – aseries of adaptations of Richard III, Henry
IV parts one and two – were thoroughly
enjoyed, earning above average audienceappreciation index scores for their genres.
Ground-breaking documentary and BAFTA
award-winning Exodus, which captures theEuropean refugee crisis with unparalleledaccess to one of the most pressing issuesof our time, was particularly popular withBAME audiences. The Real Marigold On Tour
was a big hit, making it the biggest factual
programme of the year on BBC Two, andthe return of Robot Wars was our youngest

S T R AT E G I C R E P O RT

Television performance by service
Network television

BBC One is our flagship service
and the UK’s most popular
television channel. It unites
and inspires the nation withhigh-quality programmes
across a range of genres that
includes news and current
affairs, drama, comedy,
entertainment and factual.
BBC Two is a mixed-genre
channel with programmes ofdepth and substance. It includes
the greatest amount and range ofknowledge-building programmingon the BBC, complemented
by distinctive comedy, drama
and arts programming.
BBC Four aims to be British
television’s most intellectuallyand culturally enriching channel,
offering an ambitious range ofUK and international arts, music,
culture and factual programmes.
The CBBC channel offers adistinctive mixed schedule for
6 to 12 year olds, with mainly
UK programmes served ina stimulating, creative andenjoyable environment.
CBeebies provides a mix ofhigh-quality, mostly UK-produced,
programmes designed toencourage learning through playin a consistently safe environment
for children under six.

Content
We spent a total of£1,667.4 million on these
services in 2016/17

Reach
UK population who use
the service each week

Time spent watchinga channel each week
Length of time the average
viewer spent each weekwith the service

£M

%

H:M

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

Cost per user hour
How much it costs todeliver each service toindividual users

P£1,115.4m 71.5%

07:33

79.7

6.7p

2015/16: £1,045.8m†

2015/16: 07:34

2015/16: 80.0

2015/16: 6.3p

£403.3m 46.2%

03:08

82.0

9.0p

2015/16: £396.5m

2015/16: 46.1%

2015/16: 03:06

2015/16: 81.9

2015/16: 9.0p

£50.5m 13.5%

01:46

82.6

6.9p

2015/16: £44.2m

2015/16: 12.8%

2015/16: 01:43

2015/16: 83.4

2015/16: 6.5p

£69.5m 4.3%

*

02:30

n/a

20.9p

2015/16: 4.6%

2015/16: 02:31

2015/16: n/a

2015/16: 19.8p£28.7m 7.5%

**

04:10

n/a

3.0p

2015/16: 7.9%

2015/16: 04:21

2015/16: n/a

2015/16: 2.7p†

2015/16: £70.6m

2015/16: £29.1m

2015/16: 71.8%

Reach definition: 15+ minutes consecutive for all channels and services and audiences in TV-owning households aged 4+ (TV). Sources: BARB (TV reach and time spent – all channels include theirsimulcast HD channel where applicable); Appreciation Index: Pulse panel of 20,000 UK adults 16+ by GfK. n/a Data does not currently exist for this measure. Since the publication of the 2015/16
Annual Report, BARB has changed its reach methodology which makes a marginal difference to the 2015/16 reach figures when run now. Here we are stating the 2015/16 figures as they appearedin the 2015/16 Annual Report
N.B. BARB data measures TV set viewing only at present, meaning that iPlayer viewing on other devices is not included in any of the above figures. iPlayer viewing is growing, especially for young-skewed
services such as CBBC* CBBC: among its target audience of 6 to 12 year olds reach was 19.8% and time spent per viewer was 02:52 (based on 15+ min reach). Based on 3+ minute reach, reach was 24.3% of 6 to 12 year-olds
and time spent per viewer was 02:20** CBeebies: among its target audience of 0 to 6 year olds (measured as children aged 4-6 and housewives with children aged 0-3) reach was 39.6% and time spent was 04:47 (based on 15+ min reach)
Based on 3+ minute reach, reach was 45.5% of 0 to 6 year olds and time spent per viewer was 04:10† Full details of the above restatement can be found within note B3

Multi-award-winning Exodus:
Our Journey To Europe.

skewing programme overall with 33% of
the audience being in the 16-34 age range.
CBeebies and CBBC continue to be themost popular children’s television channels
amongst their target audience. Despite
growing competition for children’s media
time and declining time spent watching all
linear channels, CBeebies is holding reach andshare among its target audience, while CBBC
delivered a successful on-screen rebrand.
Highlights from a year of creative successincludes CBeebies bringing Shakespeare topre-school children with A Midsummer Night’s
Dream and the phenomenon of Go Jetters as it
introduces our youngest audience to all cornersof the globe. On CBBC, new drama The Worst
Witch wowed young audiences and children
continued to be informed through Newsroundand, often hard-hitting, documentary strand
My Life. The successful launch of the iPlayer
Kids app, with over 1.3 million downloads,
is ensuring our children’s content reaches
the audience whenever and wherever theywant it. This year of creativity was recognisedwith 10 Children’s BAFTA awards for our
television channels, including Channel of theYear for CBeebies, while CBBC beat nonChildren’s channels to win Best Specialist
Channel at the Broadcast Digital Awards.
2016/17 was also the year in which BBC
Studios was separated from the BBC’s
Content division and secured BBC Trust
approval to launch as a commercial subsidiaryin April 2017. The BBC also put out thefirst network television commissions forcompetitive tendering under the BBC’s‘Compete or Compare’ strategy. The BBC
has committed to competitively tender 100%of relevant television programmes (in drama,
entertainment, comedy and factual) by theend of the current Charter period. The BBC
will also remove the in-house guarantee forchildren’s, sport and non-news related current
affairs programmes by 31 December 2019.

BBC Annual Report and Accounts 2016/17

25

PERFORMANCERadio
Despite global competition in audio, BBC Radio remains
an integral part of British daily life – informing, educatingand entertaining 34.7 million people every week with an
unrivalled range of speech and music content.

Across BBC Radio, the stations, with theirtailored audience offer, enrich the livesof millions with world-class content,
memorable moments, expert presentersand enhanced digital presence.
BBC Radio 1 continued to champion UK music
to a young audience, with 61% of all additions
to its playlist coming from UK artists in 2016.
Radio 1 and 1Xtra’s listeners volunteered
over #1MillionHours to UK charities. Radio
1’s videos have received 1.4 billion views on
YouTube and the station’s four inspirational
Teen Heroes were welcomed to Kensington
Palace by the Duke and Duchess of Cambridge.
1Xtra Live outreach sessions enabled young
people in Liverpool to learn about the musicindustry from the stations’ DJs, and BBC
Asian Network Live represented the bestin Asian music championed by the station.
BBC Radio 2 received a record-breaking
123,436 entries for its 500 Words shortstory competition for children and two
million people watched Sounds of the 80s
on the Red Button in 2016. Its dedication to
showcasing a wide range of specialist music
continued, with regular shows featuring
jazz, blues, country and folk, and the station
celebrated Black History Month with thestory of Caribbean soldiers in World War I
and remembered Sir Terry Wogan in a live
memorial service from Westminster Abbey.
For its 70th anniversary, BBC Radio 3 marked
seven decades of pioneering music andculture with special commissions, including anembedded composer with Sound and Music,
a premiere of an undiscovered Joe Orton play,a new Matthew Herbert commission, and‘Pass the baton’ dedicated to performances
by BBC’s orchestras and choirs across the
UK. The BBC Proms presented eight weeks
of world-class music including a celebrationof the cello and an inaugural ‘Proms at…’series taking the festival to a carpark in
Peckham amongst four new London venues.

26

BBC Annual Report and Accounts 2016/17

BBC Radio 4 and Today reached record
on-air audiences. The Archers’ domestic
violence storyline created headlines andKwame Anthony Appiah explored mistaken
identities in his BBC Reith Lectures. Janet
Suzman introduced a dramatisation of
Primo Levi’s Periodic Table and Melvyn Bragg
celebrated the history of the North ofEngland. Jeremy Irons read the complete
collection of T.S. Eliot’s English poems
and a series of documentaries analysed
The New World as 2017 began. Inspired by
Twelfth Night, comedian John Finnemore
took over Radio 4 as the Lord of Misrule.
BBC Radio 4 Extra brought a season ofclassic musicals from the radio archives,
and Angela Barnes took over as the hostof satirical sketch show Newsjack.
Radio 5 live engaged its audiences aroundthe biggest news stories, with 4,000 listeners
contacting the station the day before theBrexit vote. It launched a competition tofind the country’s best Young Commentatorof the Year and Emma Barnett and Nihal
Arthanayake joined as daytime presenters,
while Colin Murray returned to present
sport panel show Fighting Talk.

BBC Radio finalised its new Commissioning
Framework, opening up 60% of eligible hours
for competition from the independent sector
and restructured the division to separate
commissioning from programme production.
The first programme slots to be commissioned
under the new framework were confirmed.
BBC Music’s year has seen a rich variety ofpartnerships, initiatives and programming
across television, radio and online. The BBC’s
extensive Glastonbury coverage reached18.9 million people on television. BBC MusicMy Generation was a season of programmescelebrating decades of pop music, and theprestigious Mercury Prize, won by grime
artist Skepta, was broadcast live on BBC
Four and BBC Radio 6 Music. BBC Music Day
saw people around the UK making a music
contribution to their community, and BBC
Music television highlights included BBC MusicAwards, Robbie Rocks Big Ben, Michael Bublé atthe BBC and David Bowie: the Last Five Years.

Radio 5 live and 5 live sports extra offered
live coverage of the Rio 2016 Olympics andthe Paralympics, plus coverage of Euro 2016
and regular highlights such as Wimbledon.
BBC Radio 6 Music remained the mostlistened to digital station. The 6 Music Festival
broadcast live from Glasgow and the ‘Art isEverywhere’ season encouraged listeners
to make art inspired by what they heard on
air. The station supported BBC Learning’s#LovetoRead campaign with live broadcasts
from libraries in Rochdale and Orkney.
BBC iPlayer Radio launched improved
station homepages, and BBC Radio and BBC
Music achieved record online audiencesfor Radio 4 and big music events, including
Glastonbury and the BBC Proms.

The BBC Proms broadcast liveon BBC Radio 3.

S T R AT E G I C R E P O RT

Radio performance by service
Network radio

BBC Radio 1 broadcasts a
distinctive mix of new music andentertainment for 15 to 29 year
olds, as well as providing tailored
news, documentaries and advice
campaigns for young adults.
BBC 1Xtra plays the best incontemporary black music,
with a strong emphasis ondelivering high-quality live music
and supporting new artists.
BBC Radio 2 broadcastsa unique mix of music andspeech programmes covering
a diverse mix of live pop androck, comedy, documentaries
and religious output, as well as
running social action campaigns
to over 14 million listeners.
BBC Radio 3 centres on classicalmusic, around which it provides
a broad spectrum of jazz,
world music, arts programmes,
religion and drama. There isa strong emphasis on musicalperformance across the UK.
BBC Radio 4 is a mixed-speechradio station, offering in-depth
news and current affairs anda wide range of other speechprogrammes including drama,
readings, comedy, factual andmagazine programmes.
Originally launched in 2002
as BBC 7, the station was
relaunched in April 2011 as BBC
Radio 4 Extra. The digitalonly network is the principal
outlet for the BBC’s archive ofspeech entertainment, including
comedy, drama and readings.
BBC Radio 5 live broadcasts
continuous news and live sports
coverage, bringing major news
stories and sports events to its
listeners as they happen, andproviding context through wideranging analysis and discussion.
BBC Radio 5 live sports extra
brings a greater choice oflive action to sports fans byextending live coverage ofvarious sporting events.
BBC 6 Music is a digital radio
station that entertains lovers of
popular music with a service thatcelebrates the alternative spirit of
popular music from the 60s to thepresent day, complemented bymusic news and documentaries.
BBC Asian Network offers
speech and music appealing
to British Asians, with afocus on news and current
affairs. It broadcasts mainly inEnglish, but does offer some
programmes in other languages.

Content
We spent a total of£288.2 million on these
services in 2016/17

Reach
UK population who use
the service each week

Time spent listening toa service each week
Length of time the average
listener spent each weekwith the service

£M

%

H:M

£35.9m 17.5%

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

Cost per user hour
How much it costs todeliver each service toindividual users

P

*

06:16

78.8

1.2p

2015/16: £36.2m

2015/16: 19.3%

2015/16: 06:11

2015/16: 78.9

2015/16: 1.1p

£6.6m

1.8%

**

04:45

82.5

2.8p

2015/16: £4.6m

2015/16: 1.9%

2015/16: 04:56

2015/16: 82.4

2015/16: 1.7p

£51.2m 28.0%

11:54

82.0

0.5p

2015/16: 28.5%

2015/16: 11:53

2015/16: 82.2

2015/16: 0.5p

£37.4m 3.7%

06:15

82.7

5.7p

2015/16: £37.7m

2015/16: 06:21

2015/16: 82.0

2015/16: 5.5p

£87.9m 20.9%

11:12

80.8

1.3p

2015/16: £88.6m

2015/16: 20.0%

2015/16: 11:30

2015/16: 80.6

2015/16: 1.4p

£3.0m

3.8%

05:56

78.6

0.5p

2015/16: £3.1m

2015/16: 3.7%

2015/16: 05:48

2015/16: 77.4

2015/16: 0.5p

£45.5m 10.4%

06:41

79.9

2.3p

2015/16: £45.5m

2015/16: 10.3%

2015/16: 06:35

2015/16: 78.8

2015/16: 2.4p

£2.7m

2.3%

02:52

85.3

1.5p

2015/16: £2.5m

2015/16: 2.7%

2015/16: 03:19

2015/16: 85.4

2015/16: 1.0p

£10.9m 4.3%

09:39

81.1

0.9p

2015/16: £7.9m

2015/16: 4.0%

2015/16: 09:09

2015/16: 82.4

2015/16: 0.7p

£7.1m

1.2%

‡

06:11

80.3

3.4p

2015/16: £6.6m

2015/16: 1.1%

2015/16: 05:52

2015/16: 80.1

2015/16: 3.5p

2015/16: £44.6m

2015/16: 3.8%†

Reach definition: 15+ minutes for all stations and audiences aged 15+
Sources: RAJAR (Radio reach and time spent). Appreciation Index: Pulse panel of 20,000 UK adults 16+ by GfK
Excludes programme Coming up on 5 live sports extra* Radio 1: among its target group of 15 to 29 year olds reach was 34.1% and time spent was 06:10** 1Xtra: among 15 to 24 year olds reach was 5.6% and time spent was 04:25† Radio 2: among its target group of 35+ year olds reach was 34.3% and time spent was 12:50‡ Asian Network: among its target group of Asians under 35 reach was 14.9% and time spent was 04:24. Ethnicity definitions in RAJAR from FY 2014/15: Asian = White and Asian, Indian, Pakistani,
Bangladeshi, Any Other Asian Background

BBC Annual Report and Accounts 2016/17

27

PERFORMANCE

Online2016/17 saw BBC Online used by 51.5% of UK adults, level with
51.4% in 2015/16. BBC Online is still consistently in the top fivehighest reaching sites in the UK and the only British service to rank
in that top five – all the others are based in the US. Mobile usage
has continued to dominate. It’s the biggest screen in terms of traffic
to BBC Online – averaging 43% throughout the year and peaking
at 47% during the week of the EU Referendum.

2.3m
unique browsers made the England vsWales, Euro 2016 clash the biggest live
video streaming event on BBC Online ever

BBC News continued to be the trusted
guide to the biggest stories online. The
day after the EU Referendum saw a record
24.7 million browsers to BBC News online
in the UK. And globally, the day after the
US Presidential Election resulted in thesecond biggest day for BBC News with
51.2 million browsers.
BBC Sport remained the home of sport online
in 2016 – with our coverage of Euro 2016,
the Rio 2016 Olympic Games, Wimbledon
and the Premier League, ensuring fans could
catch the action wherever they were.

in the face of fierce competition from US
competitors, BBC iPlayer is still one of the
UK’s most-used video-on-demand services.
In a market this competitive, we know weneed to invest and grow BBC iPlayer tomaintain its position as a market leader.

With 2.3 million unique browsers, theEngland vs Wales Euro 2016 clash was thebiggest live video streaming event on BBC
Online ever. Last year, we worked closelywith British sporting partners to makeother UK sports available via the BBCSport website to many passionate fans.
Over the last year, we continued to deliver
more personal services for viewers andlisteners – with close to four million active
signed-in users a month now.
In February, we started rolling out ‘Pin andPair’, enabling viewers to sign-in to connected
televisions to start benefiting from personalisedfeatures such as the ability to resume watchingan episode or series started on another device.
Later this year we will ensure no-one misses
out from these personalised experiences as
we will be asking all viewers and listeners
to sign in to BBC iPlayer, BBC iPlayer
Radio and some of our mobile apps toenjoy a more tailored BBC experience.
In an increasingly challenging market and

BBC iPlayer programme requests grew 9%
year-on-year. 2017 started with recordbreaking BBC iPlayer audiences – as Sherlock
returned, and critically acclaimed dramas Apple
Tree Yard and Taboo hit the screens. And,connected television consumption continued
to dominate, with 45% of iPlayer programme
requests coming from connected televisions.
BBC Three has had a successful first year
since moving online with the number ofyoung people consuming content each week
in its new form increasing over the year.
For shorter content, BBC Three has been
particularly successful on Facebook. This isdue to a number of viral successes, including
our weekly series Amazing Humans and Things
Not To Say, both of which are snackable,
sharable content with real public purpose.
The number of users globally engaging with
BBC content on Facebook was 6.9 million
per week in March 2017, up from 266,000
in its launch month in February 2016.

BBC iPlayer programme
requests grew 9%
year-on-year.

28

BBC Annual Report and Accounts 2016/17

S T R AT E G I C R E P O RT

Online performance by service

BBC Online comprises the BBC’s
portfolio of online products on
desktop, connected TV, mobile
and tablet, including news, sport
and weather; our children’s
services CBBC and CBeebies;
and Knowledge & Learning – aswell as IP-delivered TV andradio services, with both live
and on-demand programmes
available on BBC iPlayer.

Content
We spent a total of£185.5 million on these
services in 2016/17

Reach
UK population who use
the service each week

Time spent watchinga service each week
Length of time the average
viewer spent each weekwith the service

£M

%

H:M

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

Cost per user reach
How much it costs todeliver each service toindividual users

P£185.5m 63.3%

n/a

n/a

11.2p

2015/16: £152.3m*

2015/16: n/a

2015/16: n/a

2015/16: 9.4p

Apr-Jun 2016

Jul-Sep 2016

Oct-Dec 2016

Jan-Mar 2017

%

%

%

%

3.5%

4.7%

5.3%

8.1%

2015/16: 63.1%

Reach% of 16 to 34 year olds who
use the service each week

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

Reach definition: 3+ mins for BBC Online/Red Button, and adults aged 16+. Source: Cross-Media Insight Survey by GfK, 16+. n/a Data does not currently exist for this measure
BBC Three: BBC modelled data using inputs from: Facebook, comScore, BARB, Cross-Media Insight Survey by GfK. UK 16-34 year olds
BBC Three is now included in the content cost, but the reach of BBC Three on BBC television and third-party platforms is not yet fully captured in cost per user reach* Full details of the above restatement can be found within note B3

On YouTube, there were 10.7 million
views of BBC Three content in March 2017(2.4 million in the UK) compared with
1.3 million at launch (857,000 in the UK).
Since November, BBC Three has seen an
average one million unique browsers per
week to its own website and produced anumber of hits on BBC iPlayer including
Thirteen – with the first episode receiving
over three million requests. Comedy Fleabagalso proved a resounding success with critics
and audiences and won a range of awards.
The BBC continues to pioneer with the latest
technology and experiment with new ideas
and content. We launched the BBC News‘skill’ on the Amazon Alexa voice platform,and explored the potential of virtual reality
storytelling with a number of pilots, including
The Turning Forest, which premiered at the
Tribeca film festival. We also trialled streaming
Ultra HD content on the service – with fourstunning minutes of Planet Earth II footage
available in Ultra HD and Hybrid Log-Gamma(‘HLG’) on compatible connected televisions –the highest quality the BBC has ever broadcast.
Make it Digital continued to work withpartners to inspire all our audiences tobe creative in the digital world. Over
1.3 million weather reports were received

from Weather Watchers, and we worked
with libraries across the UK to develop
digital confidence in older audiences.
Young people engaged enthusiastically with
the BBC micro:bit. Thousands of school
children took part in Build it Scotland, with
one activity involving the digital creationof their local landmark in 3D. And theCareers Quiz helped point young people
towards the right digital careers for them.

An episode of BBC Three’s
Amazing Humans about theballet dancer, Gabi Shull, went
viral on Facebook with over
95 million views globally.

BBC Annual Report and Accounts 2016/17

29

PERFORMANCE

News in the UK
BBC News continues to be the biggest provider of news in
the UK and remains by far the most trusted source of news
in the country, with audiences coming to the BBC time andagain for coverage of major news events.

During the EU Referendum, the BBC’s job
was to navigate the competing claims of
Leave and Remain, without fear or favour,
while explaining as fully as possible theissues and implications for Britain.
Research shows we provided the mostconsumed and best regarded coverage.
During results week, 93% of UK adults
consumed BBC News coverage.
Even before the term ‘Fake News’ had becomecommon currency, BBC News was armed
to deal with falsehood, exaggeration anddeception. Our principal fact checking service
Reality Check runs across television, online
and social media. Through the Referendum
campaign and across the US Presidential
Election, it challenged claims from public
figures and weighed them against the evidence.
BBC News cannot edit the internet, but we
do not have to stand aside – where we seedeliberately misleading stories masquerading
as news, Reality Check will say so.
BBC News has sought to listen to andunderstand the UK. Our award-winningprisons coverage and the special series ofreports on the NHS led the public debate.
Meanwhile, 5 live news brought the full rangeof public opinion within communities to ourstory-telling in often fascinating, sometimes
poignant and ever thought-provoking radio.
All 38 local radio stations staged special EU
Referendum debate programmes, while the
11 Inside Out current affairs programmes on
BBC One have broken stories close to home.
It has been an exceptional year for longform, in-depth, agenda-setting current affairs.
Laura Kuenssberg’s trio of documentaries
disentangled Brexit. Panorama broke thePanama Papers story, exposed abuse in WestCountry care homes and revealed the plotter
behind the Tunisia beach terror attack. Perhaps
the most important change, though, in the
BBC’s current affairs programming cameon BBC Three with the gripping Unsolved
series, the ground-breaking Obesity: The
Post Mortem and Stacey Dooley’s unflinchinginvestigation of child sexualisation in Japan.
It’s easy to take radio current affairs for
granted, because it sets the standard forintelligent story-telling and investigative
journalism. A couple of must-listens: 50 Things
That Made the Modern Economy and Intrigue:
Murder at the Lucky Holiday Hotel.

The BBC News UK app had 7.5 million
monthly unique browsers. BBC Stories offers
personal story-telling of real lives. And welaunched Slow News: a drive to get beyond theheadlines and the breaking news to understandthe ‘why’ as well as the ‘what’ of the news.
This has meant improving data journalism,
establishing a World Service intelligence unit,
building an expert network and commissioning
considered, in-depth analysis of the forces
driving events at home and abroad.
And, of course, what continues to distinguish
BBC News is international news coverage.
Our reputation for courageous, accurate andimpartial news coverage of some of the mostcontested issues from the most dangerous
corners of the earth is hard-won. We areproud of our reporters that cover such places
and take every step to keep them safe.
In consequential times, when the news
itself is contested, the BBC aims tooffer news you can trust – news that isreliable, independent and for all of us.

News performance by service

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

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

Content
We spent a total of£49.6 million on these
services in 2016/17

Reach
UK population who use
the service each week

Time spent watchinga channel each week
Length of time the average
viewer spent each weekwith the service

Cost per user hour
How much it costs todeliver each service toindividual users

£M

%

H:M

P

£47.8m 9.9%

02:46

5.7p

2015/16: £46.6m

2015/16: 10.3%

2015/16: 02:41

2015/16: 5.5p

£1.8m

0.6%

01:52

4.9p

2015/16: £1.9m

2015/16: 0.6%

2015/16: 02:12

2015/16: 7.0p

Reach definition: 15+ minutes for all channels and services and on audiences in TV-owning households aged 4+ (TV). Sources: reach and time spent BARB (TV)Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 14.2% and 1.4% respectively (15.8% and 1.6% among 16+ population)

30

BBC Annual Report and Accounts 2016/17

S T R AT E G I C R E P O RT

The BBC News Channel wasnamed the winner of the Royal
Television Society’s News
Channel of the Year award.

93%

93% of adults consumed coverageon BBC News during the EU
Referendum results week.

The BBC News UK app
had 7.5 million monthly
unique browsers.

The Victoria Derbyshire show
received a BAFTA Television
Award for its coverage of thefootballers’ abuse story.

Panorama’s Teenage Prison Abuse Exposed
won the BAFTA Television Award for best
current affairs programme – from a shortlist
in which all of the nominations were for
BBC programmes.

BBC Annual Report and Accounts 2016/17

31

PERFORMANCE

News across the globe
In a tumultuous news year, the task of explaining theworld to Britain and Britain to the world was bothmore challenging and more necessary than ever.

In November we announced the fulldetails of our biggest expansion since the1940s, thanks to the £289 million funding
boost from the UK Government,
equivalent to £85 million per year to 2020.

Weekly audience by service

We will launch services in Afaan Oromo,
Amharic, Gujarati, Igbo, Korean, Marathi,
Pidgin, Punjabi, Serbian, Telugu, Tigrinya,
and Yoruba – as well as enhancing
our existing services in Russia, Africa
and around the Arab world.

Global BBC (BBC World Service
Group and BBC Worldwide)

We began this expansion with the launch of
our full Thai language website, upgraded fromthe Facebook only ‘pop-up’ service we set
up after the military coup in that country.
The BBC’s international news services
continued to attract record audiences
across the world, with the latest figures –the Global Audience Measure – showing
a weekly audience of 345.5 million, an
increase of 7.9% since last year.

2016/172015/16

Year-on-yearchange

M

M

%

347.7
320.3
246.3
90.6
144.6
41.6
83.5
39.2

7.1
7.9
9.1
21.6
6.9
-7.5
18.8
-14.3

372.4
BBC World Service Group
345.5(Total Global News audience)
BBC World Service
268.7
BBC World Service television
110.2
BBC World Service radio
154.5
BBC World Service online
38.5
BBC World News channel
99.2
bbc.com and social media
33.6
^

*

*

The increase has been driven across platforms
as people continue to come to BBC News.
For instance, in Iran the BBC World Service
has a weekly audience of 1.4 million on
encrypted messaging app Telegram. The
number of people accessing World Service
English by internet audio has shot up by 152%.

^ This figure does not include content from BBC Worldwide* The method for calculating the total online audience has changed from 2016. New research has led to improved understanding of
those coming to both BBC websites and social media
BBC World News channel and bbc.com are commercially funded

The BBC’s total weekly global audience,
including all international content, now stands
at 372.4 million, taking us ever closer to the
Director-General’s target of a 500 million
global audience by the BBC’s centenary.

this year, from Feras Kilani facing a bomb
attack in Mosul to Selin Girit at the sceneof the New Year terror attack in Istanbul.
We’ve launched new programmes on
World Service English, as well as celebrating
the 50th anniversary of the much-loved
Outlook. Our new monthly radio debate
programme, World Questions, has travelledaround the globe, giving people the chance
to hold their leaders to account. New artsand science programmes and World Service
podcasts have enriched the airwaves.

We’ve continued to bring the expertise of
our bilingual World Service journalists to our
UK audiences, as well as internationally. BBCWorld Service journalists have provided someof the most memorable broadcasting moments

32

BBC Annual Report and Accounts 2016/17

The Global Audience Measure is an annual update of how many people are consuming the BBC weekly for all services in all countries
across all platforms (Television, Radio, website and social media). Key to this is de-duplication i.e. ensuring that a person who consumes
multiple BBC services or platforms or on multiple devices, is not counted many times in the top level totals. For example BBC World
Service Television, radio and online audience is less than the sum of its parts to ensure we do not count people more than once whenlooking at the total World Service audience

Our now annual #100Women season,
putting women’s voices and stories at
the heart of our output, hosted its firstever live festival in Mexico City.
We are transforming ourselves for the
21st century, but our mission remains
unchanged; bringing trusted news andinformation to millions around the world.

S T R AT E G I C R E P O RT

BBC World Service reach across all platforms by language service

World Service English
Afrique
ArabicAzeri
Bengali
BrasilBurmeseChineseGreat Lakes
Hausa
Hindi
Indonesian
KyrgyzLearning English
Mundo

2016/172015/16

Year-on-yearchange

M

M

%

75.2
10.5
42.9
0.1
16.5
6.3
6.0
0.8
1.4
23.6
12.5
3.9
3.0
1.9
6.8

65.8
14.8
36.7
0.1
6.2
7.4
6.0
0.8
3.2
23.3
6.3
4.7
3.0
2.1
6.9

14.4
-29.1
16.9
10.8
168.7
-13.9
0.8
-2.2
-57.8
1.5
99.3
-17.1
0.0
-8.2
-0.8
**

**

Nepali
PashtoPersianRussianSinhalaSomali
Swahili
Tamil
Thai
TurkishUK China
Ukrainian
Urdu
Uzbek
Vietnamese

2016/172015/16

Year-on-yearchange

M

M

%

5.2
6.7
18.0
3.9
0.9
3.6
16.1
9.5
1.6
1.5
0.1
3.6
11.6
0.7
0.9

5.3
6.6
17.9
4.4
0.9
3.6
17.2
9.6
1.2
1.7
0.0
2.9
11.9
0.6
1.5

-1.3
1.0
0.5
-11.6
0.6
-0.3
-6.8
-0.2
31.6
-15.4
121.6
21.8
-2.5
10.6
-38.4
**

**

The Global Audience Measure is an annual update of how many people are consuming the BBC weekly for all services in all countries across all platforms (Television, Radio, website and social media). Key tothis is de-duplication i.e. ensuring that a person who consumes multiple BBC services or platforms or on multiple devices, is not counted many times in the top level totals. For example BBC World Service
television, radio and online audience is less than the sum of its parts to ensure we do not count people more than once when looking at the total World Service audience
The method for calculating the total online audience has changed from 2016. New research has led to improved understanding of those coming to both BBC websites and social media** All figures are rounded to one decimal place and percentage increases/decreases in the reach of smaller services, therefore, may not be reflected in the actual numbersPeter Okwoche
reports for Focus on
Africa from Uganda.

BBC Annual Report and Accounts 2016/17

33

PERFORMANCE

Performance by reach
Television
Weekly reach

BBC network television versus
main commercial groups

All BBC Television

All ITV television

All Channel 4 television

All Channel 5 television

All Sky television

%

%

%

%

%

78.8%

67.7%

58.9%

41.9%

40.1%

2015/16: 80.3%

2015/16: 68.4%

2015/16: 60.7%

2015/16: 42.4%

2015/16: 40.5%*

Source: BARB 4+ in TV-owning households, 15+ minutes consecutive reach* Excludes S4C

Weekly television reach %2012/132013/142014/15

2015/162016/17

10 0
90
85.6

83.9

80

82.0

80.3

78.8
73.8 72.3

70

70.5

68.4 67.7

65.8

64.0

60

61.9 60.7

58.9

50
44.0 43.1 42.6
42.4 41.9

40BBC portfolio

ITV portfolio

Channel 4 portfolio(excluding S4C)

45.0 43.9

Channel 5 portfolio

41.6 40.5 40.1

SKY portfolio

Source: BARB, 4+ in TV owning-households, 15+ minutes consecutive reach
ITV and Channel 4 portfolio figures do not match 2012/13 figures in the Annual Report owing to a TechEdge reach methodology change that was implemented at the end of 2013

Television set share
Portfolio

Share

BBC Portfolio

ITV Portfolio

Channel 4 Portfolio

Channel 5 Portfolio

Sky Portfolio

%

%

%

%

%

32.2%

21.5%

10.3%

6.3%

8.3%

2015/16: 32.3%

2015/16: 21.3%

2015/16: 10.7%

2015/16: 6.1%

2015/16: 8.4%

Source: BARB. Based on individuals 4+, Channel 4 portfolio excludes S4C

Radio
Weekly reach

BBC Radio compared tocommercial stations

All BBC radio

All commercial
radio

All BBC
network radio

All pan-UK
commercial radio

All BBC
local radio

All local
commercial radio

%

%

%

%

%

%

64.3%

64.7%

59.1%

35.3%

15.7%

50.0%

2015/16: 65.2%

2015/16: 64.7%

2015/16: 59.7%

2015/16: 33.9%

2015/16: 16.2%

2015/16: 50.8%

Source: RAJAR, 15+, 15-minute reach

34

BBC Annual Report and Accounts 2016/17

S T R AT E G I C R E P O RT

Performance by genre
Network hours of output by genreNews and weather

H

H

H

H

3,313 hrs

886 hrs

6 hrs

11,517 hrs

209 hrs

423 hrs

112 hrs

1,640 hrs

2,188 hrs

3,374 hrs

1,220 hrs

3,458 hrs

61 hrs285 hrs

1,435 hrs

42,793 hrs

88 hrs73 hrs

20 hrs574 hrs

541 hrs

217 hrs

97 hrs4,550 hrs

290 hrs

694 hrs

73 hrsn/a

548 hrs

409 hrs

44 hrs6,815 hrs

177 hrs

249 hrs

11 hrs

n/a

n/a

n/a

4 hrs

112 hrs

824 hrs

950 hrs

208 hrs

5,117 hrs

2015/16: 3,385 hrs
Current affairs

2015/16: 184 hrs
Factual

2015/16: 2,264 hrs
Music and arts

2015/16: 51 hrs
Religion

2015/16: 92 hrs
Drama

2015/16: 576 hrs
Film

2015/16: 359 hrs
Entertainment

2015/16: 575 hrs
Comedy2015/16: 177 hrs

Schools/formal education

2015/16: n/aSport

2015/16: 604 hrs

2015/16: 819 hrs

2015/16: 343 hrs

2015/16: 3,382 hrs

2015/16: 282 hrs

2015/16: 50 hrs

2015/16: 278 hrs

2015/16: 788 hrs

2015/16: 317 hrs

2015/16: 294 hrs

2015/16: 95 hrs

2015/16: 1,034 hrs

2015/16: 6 hrs

2015/16: 113 hrs

2015/16: 1,311 hrs

2015/16: 1,425 hrs

2015/16: 24 hrs

2015/16: 106 hrs

2015/16: 101 hrs

2015/16: 27 hrs

2015/16: 28 hrs

2015/16: n/a

2015/16: 2 hrs

2015/16: 11,543 hrs

2015/16: 1,645 hrs

2015/16: 3,476 hrs

2015/16: 42,236 hrs

2015/16: 573 hrs

2015/16: 4,632 hrs

2015/16: n/a

2015/16: 7,385 hrs*

2015/16: n/a

2015/16: 104 hrs

2015/16: 5,483 hrs

BBC Three became an online-only channel on 16 February 2016. Therefore, hours of output on network linear television are only shown until 15 February 2016 and do not include online programming.
The comparison with 2014/15 is not like-for-like. All long-form content from BBC Three is broadcast on either BBC One or BBC Two and is included in the figures for those channels* The radio comedy hours are disclosed within the Entertainment genre

Network hours of output by genreChildren’s

H

H

H

H

2 hrs

7 hrs

4,751 hrs

4,386 hrs

2015/16: 2 hrs

2015/16: 8 hrs

2015/16: 4,090 hrs

2015/16: 4,393 hrs

Education (formal) includes education for children, Open University and BBC Learning Zone
CBBC and CBeebies programming moved from BBC One and BBC Two, to transmit only on its digital channels from December 2012

BBC Annual Report and Accounts 2016/17

35

PERFORMANCE

Performance of the BBC
across the UK overview

Wales vs Belgium, Euro 2016 Championship quarter-finals

The BBC is committed to serving its audiences acrossthe UK, providing high-quality, distinctive and relevant
content for licence fee payers, helping to maintain reachand providing an effective vehicle to reflect the rangeof cultures and communities.
Dedicated services
The BBC also provides a range of
dedicated, cross-genre output for
Scotland, Wales and Northern Irelandand the English regions across television,
radio and online. Each area makes
television and radio programmes fortheir local audience and for the network.

36

BBC Annual Report and Accounts 2016/17

We have major production centres in
Glasgow, Cardiff, Belfast, Salford, Bristol,
Birmingham and London.

S T R AT E G I C R E P O RT

Network supply
Over half of network television production is in the nations and regions, with 50.6% fromoutside London and more than 19% from Scotland, Wales and Northern Ireland.
Network television programming spend byregion as a percentage of eligible spend

BBC Local Radio** and nations radio hoursof output
2016
225,0202015
226,367

London

2016
49.4%

2015
51.9%

England (excl. London)

Scotland

10.3%

7.7%

London

7,977

8,014

Wales

5.8%

7.1%

Scotland

11,977

12,133
13,842

Northern Ireland

3.1%

1.8%

Wales

14,594

Total nations

19.2%

16.6%

Northern Ireland

8,560

8,616

Total

268,128

268,972

Midlands

1.5%

1.8%

North of England

19.7%

17.4%
9.3%

South of England

7.6%

Multi-region*

2.6%

3%

Total regions excl. London

31.4%

31.6%

Total nations and regions

50.6%

48.1%

Grand total

100%

100%

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

10.3%
11,977 hrs

3.1%
8,560 hrs
31.4%
5.8%

225,020 hrs

14,594 hrs
49.4%

7,977 hrs

BBC Annual Report and Accounts 2016/17

37

PERFORMANCEThe BBC in Wales
In a year marked by the EU Referendum, the National
Assembly Elections and Wales’ unprecedented successat the Euro 2016 Championship, the BBC performed
strongly in Wales, with 97% of Welsh adults using the
BBC each week.

The Green Hollow – broadcast on BBC One
Wales and BBC Four to mark the 50th
anniversary of the Aberfan disaster –achieved the highest audience appreciation
score of any television programme shown
on BBC One over the last five years.
The audience performance of both BBC
television and radio in Wales continued
to be the highest of all four UK nations,driven by the strong performance of BBC
One Wales, Radio 1 and Radio 2.
Local television programming producedfor BBC One Wales and BBC Two Wales
continued to contribute to this success,attracting 840,000 viewers each week(around 30% of audiences in Wales).
The BBC announced a major investment inEnglish language television output for Wales,with an additional £8.5 million every yearby 2019. It will deliver more than 130 hoursof additional programming each year across
BBC One Wales, BBC Two Wales and BBC
iPlayer in areas like comedy, drama andentertainment, and will enable BBC Wales
to reach out to younger audiences anddevelop its online and mobile news services.
News and sport dominated local programmingin English and Welsh – reflecting a momentous
political year and the historic success of thenational team at Euro 2016. Coverage of
the National Assembly elections included
comprehensive overnight results programmes
on BBC One Wales and S4C, and a special
Ask The Leader audience programme
stripped across a single week on BBC One
Wales in the run-up to the election.
The excitement of Euro 2016 was reflectedacross both BBC Wales and network services,with five Wales matches broadcast live on
both the BBC and S4C. The quarter-final
victory over Belgium produced the largest
television audience ever recorded for a
Welsh sporting fixture, with a peak audienceof 1.27 million in Wales. It was also the38

BBC Annual Report and Accounts 2016/17

The Green Hollow marked
the 50th anniversary of
the Aberfan disaster.

third-highest television audience in Wales
this century, only exceeded by the 2012
Olympics opening and closing ceremonies.
In the arts, BBC Wales and Arts Council Wales
joined forces in April 2016 to launch a Get
Creative weekend, to encourage people of
all ages to discover and explore their creative
talents through a wide range of free eventsand ‘taster’ sessions. The pilot initiative saw
more than 120 events held across Wales,
involving more than 80 organisations.
The year also saw significant growth inmobile and social media usage in Wales.
Elis in Euroland and the Tower project set in
the Butetown area of Cardiff also exploredthe opportunities provided by social
platforms to reach younger audiences.
Across drama, factual and music, network
television production spend in Wales
represented 5.8% of total BBC investment
in 2016, including the 30th anniversary
year of Casualty, Russell T Davies’ joyous
reimagining of A Midsummer Night’s Dream, thereturn of Sherlock and Danny Brocklehurst’s
Ordinary Lies to BBC One. The new
Doctor Who spin-off Class, also producedin Wales, premiered on BBC Three.
BBC Radio Wales and Radio Cymru

provided extensive coverage of the National
Assembly Election, the EU Referendum andWales’ adventures at Euro 2016. In its 40th
anniversary year, BBC Radio Cymru also
launched a pilot ‘pop up’ station – Radio
Cymru Mwy – to assess the audience appetite
for an alternative breakfast programme.
The 50th anniversary of the Aberfan
disaster was marked with a range of special
programming on television and radio,
including Huw Edwards’ revealing accountof the injustices faced by the community
in the aftermath of the tragedy.
BBC programming for S4C continued to play
an important role at the heart of the channel’sschedule, with the popular drama Pobol y
Cwm and Newyddion 9 forming the bedrockof the channel’s nightly schedule. In addition,
S4C programming continued to perform
strongly on BBC iPlayer with 88,000 requests
to view content each week on average.
Alongside this success, BBC Cymru Fyw – theWelsh language online and mobile service –continued to grow its user base, attracting
53,000 unique browsers each week.

S T R AT E G I C R E P O RT

Performance by service
Dedicated services

BBC Radio Wales is a speech-led
service for adults, which offers awide range of genres and reflects
the issues, events, culture andinterests of the people of Wales.
BBC Radio Cymru is a speech
and music radio service for Welsh
speakers, which offers a wide
range of genres and reflects
the issues, events, culture andinterests of the people of Wales.

Content
We spent a total of£27.8 million on these
services in 2016/17

Reach
Wales population who use
the service each week

Time spent watchingor listening to a service
each week
Length of time the average
listener spent each weekwith the service

£M

%

H:M

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

Costs per user hour
How much it costs todeliver each service toindividual users

P£14.2m 13.9%

08:19

82.7

9.1p

£13.6m 4.2%

10:42

78.8

22.6p

2015/16: £15.1m

2015/16: £14.2m

2015/16: 14.8%*

2015/16: 4.3%

2015/16: 08:15

2015/16: 10:47

2015/16: 82.5

2015/16: 77.0

2015/16: 9.0p

2015/16: 22.3p

Reach definition: 15+ minutes for all services and on audiences aged 15+
Sources: reach and time spent RAJAR; Appreciation Index: Pulse panel of 20,000 UK adults, 16+ by GfK. Data based on Total Survey Area (‘TSA’)* BBC Radio Cymru reaches 16.7% of the 15+ Welsh-speaking population in a week who use the service for 12:23 a week on average. Welsh-speaking listeners give it an average Appreciation Index scoreof 78.8. RAJAR data (reach and time per listener) based on ‘Understand Welsh’; Appreciation Index data based on ‘Speak Welsh Fluently & Speak Welsh but not Fluently’

Reaching our audiences
Adult reach: percentage of adults
who use BBC television, radio or
online each week97%
2015: 97%

General impressionof the BBC

7/10

Iolo’s Great Welsh Parks – this four-partreturning series continues to deliver astrong audience for BBC Wales with anaverage audience of over a quarter of amillion and a strong share of 21%.

2015/16: 7/10

Performance by platform
Weekly reach of dedicated Welsh
news services on television

Weekly reach of
BBC Television47%
2015/16: 48%

82%

Weekly reach of
BBC Radio

Weekly reach of BBC Online
and Red Button

71%

64%

2015/16: 72%

21%

2015/16: 83%

4m
Looking at all our online content (English
and Welsh language), the average weekly
usage of BBC Wales online content for
2016/17 increased to 4 million uniquebrowsers – the highest level yet.

2015: 63%

Sources: Cross-media Insight Survey by GfK. Kantar Media, BARB, RAJAR	Read more about performance by service
in Wales on page 93

BBC Annual Report and Accounts 2016/17

39

PERFORMANCEThe BBC in Scotland
In a year which included a Scottish Parliamentary
Election, a UK Referendum vote on membership ofthe European Union and an American Presidential
Election, BBC Scotland News offered comprehensive
coverage of all, across television, radio and online.

Reporting Scotland bulletins continued toreach half of all adults (16+) each week in
Scotland, with the early evening edition
maintaining its average audience of nearly
half a million viewers each night. BBC
Scotland’s current affairs offer was
refreshed with the introduction of theweekly Timeline, on BBC Two Scotland,
hosted by Glenn Campbell and Shereen
Nanjiani. And the BBC Scotland
investigation, The Great Military Charity
Scandal, drew an audience of 461,000 andprompted a Charity Commission enquiry.
In February 2017, the BBC announced
the biggest single investment in broadcast
content in Scotland in over 20 years, with
£19 million to be invested, annually, in a new
television channel and in digital developments,
and around £20 million extra, per year,
to March 2019, to be invested in network
television production from Scotland.
In a particularly productive year for drama,
the dark, four-part thriller One of Us,
described by the London Evening Standard
as ‘Tarantino-meets-Shakespeare’, attracted
a UK average audience in excess of fivemillion and a share of 22%. The three-part
The Replacement, set in Glasgow, attracted
7.3 million UK viewers and a 28% audienceshare. Edinburgh formed the backdrop for
BBC One’s three-part Rillington Place, basedon the life of serial killer John Christie, andClique, BBC Three’s intense six-part teen
drama about friendship tested to extremes.
River City remained the most appreciatedof all television soaps viewed in Scotland.
Factual documentaries were also to the fore
across the year. The Mart, set in Thainstone

85m
The number of times the ‘Voice Recognition
Elevator’ comedy clip from Burnistoun, posted
on social media, has been viewed.

40

BBC Annual Report and Accounts 2016/17

Still Game drew a UK
average audience of
3.8 million and a 16% shareon network television.

cattle market near Inverurie, returned fora second series and attracted an average
audience of 439,000 in Scotland and a
22% share. The focus turned to the southof Scotland for The River, which charted
life along the River Tweed. And Landwardcelebrated its 40 years on air with a special
programme, Muck, Sweat and Steers.
There were also standout documentary
series on the social history of Scottish football(Scotland’s Game); our national drink (Scotch!
The Story of Whisky) and childhood (Growing
up in Scotland: A Century of Childhood).
Filmed in Renfrew, Robot Wars made its returnto the BBC after more than 12 years, on BBC
Two, and Still Game, back after a nine-year
hiatus, drew a UK average audience of 3.8
million and a 16% share on network television(1.7 million, 58% share in Scotland). Mrs Brown’sBoys remained the most-watched BBC
network programme in Scotland on Christmas
Day for the fourth year in a row. By the endof March, a clip from Burnistoun, posted onsocial media in December, had been viewed
85 million times and shared 1.54 million times.
Live music coverage was rich and varied, withT in the Park, Travis and the BBC Scottish
Symphony Orchestra at the Barrowlands andCeltic Connections just some of the highlights.

The drama series Teacup Travels further
established itself as a firm CBeebies’
favourite and CBBC’s Lifebabble returned
to offer more advice on the difficult
issues that impact on young lives.
BBC ALBA continued to appeal to both Gaelicspeaking and English language audiences, with arich variety of mixed-genre programmes. The
landmark BBC Scotland documentary series
Highlands – Scotland’s Wild Heart was re-voiced
into Gaelic and broadcast as A’Ghaidhealtachd.
To coincide with the Dementia AwarenessWeek in May 2016, Radio Scotland launched
Memories and Conversations, a major fiveweek season exploring new approaches
to the condition. And for eight days, up
to St Andrew’s Day, a new digital popup service, BBC Radio Scotland Music
Extra, combined archive and original
music content, showcasing the best ofhome-grown and international talent.
BBC Scotland Online’s reach continued to rise,
driven largely by traffic to BBC News Scotland
Online and BBC Sport Scotland Online.
	Read more about performance by service
in Scotland on page 97

S T R AT E G I C R E P O RT

Performance by service
Dedicated services

BBC ALBA offers, to Gaelic
speakers and learners, adistinctive range of originatedprogramming that reflects
and supports Gaelic culture,
identity and heritage.
BBC Radio Scotland is a speechled service for adults. Mixedgenre programming reflects thediversity of Scottish culture andcovers national and international
issues and events relevant tolisteners across the country.
BBC Radio nan Gàidheal offers acomprehensive speech and music
radio service for Gaelic speakers.
Mixed-genre programmingreflects the diversity of Scottish
culture and, from a Gaelic
perspective and through themedium of the Gaelic language,
covers national and international
issues and events relevant tolisteners across the country.

Content
We spent a total of£30.8 million these
services in 2016/17

Reach
Scotland population who
use the service each week

Time spent watchingor listening to a service
each week
Length of time the average
viewer or listener spenteach week with the service

£M

%

H:M

£6.0m 13.2%

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

Costs per user hour
How much it costs todeliver each service toindividual users

P

01:55

n/a

9.6p

£21.1m 20.3% 07:18

75.8

6.0p

£3.7m 68.4% 08:40

n/a

15.6p

2015/16: £5.5m

2015/16: £22.9m

2015/16: £3.9m

2015/16: 15.0%

2015/16: 21.0%

2015/16: 69.0%

2015/16: 01:59

2015/16: 06:55

2015/16: 08:27

2015/16: n/a

2015/16: 76.0

2015/16: n/a

2015/16: 7.8p

2015/16: 6.6p

2015/16: 16.3p

BBC Alba: TNS Scottish Opinion Survey. Base: all aged 16+ in Scotland. BBC Alba reaches 67.2% of the Gaelic-speaking population in Scotland who use the service for 05:23 a week on average. TRP Panel
BBC Radio Scotland: Reach definition: 15+ minutes and on audiences aged 15+. Sources: reach and time spent RAJAR; Appreciation Index: Pulse panel of 20,000 UK adults, 16+ by GfK. Data based on their
Total Survey Area (‘TSA’)
BBC Radio nan Gàidheal: TRP Panel: Gaelic-speaking 16+ population in Scotland
n/a Data does not currently exist for this measure

Reaching our audiences
Adult reach: percentage of adults
who use BBC television, radio or
online each week94%
2015: 95%

General impressionof the BBC

6/10
2015/16: 6/10

2nd
A triumphant return for Scotland’s
popular comedy series Still Game,in which the highest performing
episode became the 2nd mostwatched programme of the past
decade in Scotland (after the 2012
Olympic Games closing ceremony).

Performance by platform
Weekly reach of dedicated Scottish
news services on television

Weekly reach of
BBC Television50%
2015/16: 51%

80%

Weekly reach of
BBC Radio

Weekly reach of BBC Online
and Red Button

56%

59%

2015/16: 59%

2015/16: 83%1m
Highlands: Scotland’s Wild Heart, thefour-part landmark documentary series,
narrated by Ewan McGregor, reachedover 1 million viewers in Scotland.

2015: 61%

Sources: Cross-media Insight Survey by GfK. Kantar Media, BARB, RAJAR

BBC Annual Report and Accounts 2016/17

41

PERFORMANCEThe BBC in Northern Ireland
We had another eventful year of broadcasting in
2016/17. Our output reflected political developments
at Stormont and elsewhere, cultural and sportingachievements and historical commemorations.

We deepened our creative links andpartnerships and increased our presenceon the BBC’s UK-wide networks. Local
services maintained their popularity, andwe connected with audiences across theregion through a series of BBC events. We
also announced an £11 million package ofadditional investment for BBC Northern
Ireland over the next three years. It will
underpin the reach, diversity and ambitionof our services and help to secure their
future in a fast-changing world.
Our news and current affairs output included
coverage of two Assembly elections andthe EU Referendum. We reported on issues
affecting the devolved institutions and their
future operation, providing audiences withinformation, analysis and an important forum
for debate. And we made effective use of
our specialist and regional correspondents incovering stories about different sectors andplaces. BBC Newsline reflected the dynamic,
and sometimes fast-changing, nature of thelocal news agenda and Spotlight continued to
attract big audiences and much critical acclaim
for its investigations. We also reflected local
interest in the Olympics and Euros 2016
and The Queen’s visit to Northern Irelandas part of her 90th birthday celebrations.
BBC Radio Ulster/Foyle remained the mostlistened to radio station in Northern Ireland.
Its success is built on the enduring appealof different programme strands, including

55%of the adult population in Northern Ireland
watched BBC television coverage of theAssembly election results in March 2017.

42

BBC Annual Report and Accounts 2016/17

My Mother and Other
Strangers – BBC network
television drama from
Northern Ireland.

Talkback, On Your Behalf and Your Placeand Mine – all of which reached birthday
milestones during the year. Stephen Nolan’s
weekday programme continued to energise
debate about politics and much else besides,
and we celebrated matters cultural andcommunity with coverage of Hallowe’encelebrations in Derry-Londonderry, the Ulster
Orchestra’s 50th birthday and events linked
to BBC Music Day. We also highlighted thebenefits of reading in an ambitious series ofprogrammes and events as part of Book Week
with Libraries NI; showcased new talent andvoices; and secured industry-wide recognition
with awards for a range of programmes,
presenters and the team at BBC Radio Foyle.
We delivered several drama series for
BBC network television, including Line ofDuty and My Mother and Other Strangers.
Our achievements in this area owe muchto an established and highly effective
partnership with NI Screen. Consolidatingthese gains and ensuring even better
cultural representation and portrayal acrossdifferent programme genres will remain
key priorities over the next period.
BBC Northern Ireland television reflects

community life in its different aspects anddiversity. Its schedule included speciallycommissioned programmes about the 1916
centenaries, the spectacle of BBC Proms in thePark and the Belfast Tattoo and other output
about our linguistic heritage and traditions. True
North returned with revealing documentaries
about people, their lives and experiences andwe gave audiences plenty of laugh out loudentertainment with The Blame Game and amuch-awaited reprise of Give My Head Peace.
We have also been innovative in thedevelopment and application of newtechnologies, acquiring expertise with benefits
for the BBC as a whole. BBC Rewind has
begun to unlock the potential of our televisionand radio archives and we have enhanced therange and impact of local BBC content on
digital platforms. We have also extended BBC
learning provision linked to the curriculumin Northern Ireland, including several
initiatives focused on the attainment gap.
	Read more about performance by service
in Northern Ireland on page 101

S T R AT E G I C R E P O RT

Performance by service
Dedicated services

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

Content
We spent a total of£17.5 million on these
services in 2016/17

Reach
Northern Ireland
population who use theservice each week

Time spent watchingor listening to a service
each week
Length of time the average
listener spent each weekwith the service

£M

%

H:M

£17.5m 34.3% 11:19
2015/16: £17.7m

2015/16: 36.2%

2015/16: 10:47

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

Costs per user hour
How much it costs todeliver each service toindividual users

P

74.9

2015/16: 74.2

5.9p
2015/16: 5.7p

Reach definition: 15+ minutes for audiences aged 15+
Sources: reach and time spent RAJAR; Appreciation Index: Pulse panel of 20,000 UK adults, 16+ by GfKData based on Total Survey Area (‘TSA’)

Reaching our audiences
Adult reach: percentage of adults
who use BBC television, radio or
online each week94%
2015: 96%

General impressionof the BBC

6/10

Wild Ireland: The Edge of the World on
BBC Two was watched by an audienceof 1.6 million across the UK and received
high appreciation scores.

2015/16: 6/10

Performance by platform
Weekly reach of dedicated Northern
Irish news services on television

Weekly reach of
BBC Television52%
2015/16: 53%

78%

Weekly reach of
BBC Radio

Weekly reach of BBC Online
and Red Button

59%

55%

2015/16: 60%

1.6m

2015/16: 80%

25%
In 2016, BBC Northern Ireland
television’s history content,commemorating the centenariesof the Battle of the Somme andthe Easter Rising reached 25%
of Northern Irish viewers.

2015: 56%

Sources: Cross-media Insight Survey by GfK. Kantar Media, BARB, RAJAR

BBC Annual Report and Accounts 2016/17

43

PERFORMANCEThe BBC in England
The BBC’s base in MediaCityUK in Salford is now
five years old and goes from strength to strength
as the exciting home of innovation and output.

At the start of 2017, the Salford studios
were used to film the audition rounds of
BBC One talent search show Let It Shine.
Other programmes produced out of
Salford include A Question of Sport, Matchof the Day, Blue Peter, Football Focus, BBC
Breakfast and You and Yours. The Salfordbase is also home to BBC Sport and BBC
Children’s including the BBC’s twochildren’s channels. More than 750 staff
working on digital output are now basedin Salford, delivering iPlayer, the BBC
homepage and the BBC Sport website, as
well as designing and developing the BBC’s
new digital services.
Elsewhere in England, drama was a big draw.
The highlights included Sally Wainwright’s
To Walk Invisible, which looked at the lives of
the Brontë sisters, and the second series ofglobal smash Poldark, which has given sucha boost to the Cornish tourism industry.
Yorkshire-set The Moorside, recounting theabduction of Shannon Matthews, reached12.7 million people in the UK over two
episodes. The programme performed especiallywell in the North of England and, perhaps to
be expected, exceptionally well in Yorkshire
where it reached close to 30% of people.
Another drama success was the third seriesof Peaky Blinders. The programme performed
particularly strongly in the West Midlands,
where it is set and where some of the filming
takes place. The BBC in the Midlands had an
excellent year with the Birmingham-based
Drama Village producing popular daytime
soap Doctors and worldwide hit Father Brown.
The BBC’s central Birmingham base, theMailbox, has been transformed in recent years
following a deliberate decision to invest in
the site. There are now more than 700 BBC
staff based in the Mailbox, with functions
such as HR and the BBC Academy moving

44

BBC Annual Report and Accounts 2016/17

Radio 5 live presenter
Nihal Arthanayake.

in during the last two years. Later this year,
BBC Three will relocate to the Mailbox. The
channel’s commissioning, publishing and someproduction of short-form content, along withthe social media team that supports it, will
start to move to Birmingham in the autumn.
The Mailbox is also home to Radio 4’s
The Archers, regional and local services
for the West Midlands, some Asian
Network programming, BBC Digital
England and BBC English Regions HQ.
BBC Radio 5 live is the only pan-UK radio
station based outside London, now firmly
settled in Salford. Across England, the BBC’s 37
local radio stations continue to serve, reflect
and champion their areas, while holding power
to account and providing an outlet for original
local journalism. Our regional television news
programmes at 18:30 on BBC One collectively
are the most watched news output in England.
Our regional teams have made a raft of great
content this year. In the North East, thedocumentary The Gift of Hearing followed Jo
Milne, who is deaf, as she worked on a projectto give implants to deaf children in Bangladesh.
Inside Out, the only television current affairs

programme exclusively for England, returned
with more original journalism, including an
investigation into supermarket pricing.
The BBC in Bristol continues to be an
important production hub. Teams making
popular network television programmessuch as Countryfile, Gardeners’ World, Antiques
Roadshow, Flog It and DIY SOS are based at
the BBC’s Bristol site. The BBC’s worldfamous Natural History Unit is also basedin Bristol. Planet Earth II was given a special
screening in the city attended by Sir David
Attenborough and members of the public.
Bristol also continues to be a centre of
excellence for network radio production.
Finally, the BBC has promised to be“unashamedly Hull-centric” in 2017 to markthe East Yorkshire city’s turn as the UK’s Cityof Culture. A host of our programmes havebeen to Hull to broadcast from the city andto make programmes there, including Radio
Two’s Jeremy Vine show and Songs of Praise.
On New Year’s Eve, Hull became the firstcity ever to guest edit the Today programme.
Our regional and local services have been
providing extensive coverage of the eventsand there’s more to come throughout 2017.

S T R AT E G I C R E P O RT

Performance by service
Dedicated services

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

Content
We spent a total of£112.9 million on these
services in 2016/17

ReachTime spent watching
England population who use or listening to a service
the service each week
each week
Length of time the average
listener spent each weekwith the service

£M

%

H:M

£112.9m 14.6%
2015/16: £119.8m

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

2015/16: 15.0%

08:36
2015/16: 08:51

Costs per user hour
How much it costs todeliver each service toindividual users

P

82.7
2015/16: 82.4

4.0p
2015/16: 3.9p

Reach definition: 15+ minutes for audiences aged 15+
Sources: reach and time spent RAJAR; Appreciation Index: Pulse panel of 20,000 UK adults, 16+ by GfKData based on Total Survey Area (‘TSA’)

Reaching our audiences
Adult reach: percentage of adults
who use BBC television, radio or
online each week

94%

General impressionof the BBC

7/10

2015: 96%

2015/16: 7/10

Performance by platform
Weekly reach of dedicatedEnglish news services on
television

Weekly reach of
BBC Television

Weekly reach of
BBC Radio

Weekly reach of BBC Online
and Red Button

43%

79%
2015/16: 80%

65%
2015/16: 65%

64%

North of England

Midlands

South of England

London

94%

95%

97%
2015: 97%93%

2015/16: 45%

2015: 63%

Reach by region

2015: 96%

2015: 96%

2015: 94%

General impression by region
North of England

Midlands

South of England

London

7/10

7/10

7/10

7/10

2015/16: 7/10

2015/16: 7/10

2015/16: 7/10

2015/16: 7/10

Sources: Cross-media Insight Survey by GfK. Kantar Media, BARB, RAJAR

BBC Annual Report and Accounts 2016/17

45

FINANCE AND PEOPLE

Finance and operations
The BBC has met tough efficiency
targets in the final year of the Delivering
Quality First savings programme but weface new challenges in implementing therequirements of the new Royal Charter
whilst maintaining great British content.
Our priority is to invest as much moneyas possible in content and services forlicence fee payers by minimising ourrunning costs and making the BBC
simpler and leaner.

p.47
Deputy Director-General’s review
The BBC is transforming to meetthe challenges of the next Charter
period, adapting to new governanceand regulation frameworks
Read more on pages 47 and 48

BBC One drama SS-GB

p.50

p.52

Commercial trading
The BBC’s wholly-owned
subsidiaries are maximising themoney that they deliver back to the
BBC for investment into content

Delivering efficiencies
Our strong record of delivering
ambitious savings has continued
through the Delivering Quality First
efficiency programme

Read more on pages 50 and 51

46

BBC Annual Report and Accounts 2016/17

Read more on page 52

S T R AT E G I C R E P O RT

Finance Review by the Deputy Director-General“This year has
been one oftransformationand change.”
Anne Bulford,
Deputy Director-General95%of the BBC’s controllable spend thisyear was spent on content anddelivery, with just 5% spent on
running the organisation.

£722m
against a target of £700 million, hasbeen saved through the Delivering
Quality First efficiency programme.

During the year I was honoured to beappointed as the Deputy DirectorGeneral, a role created as part of a
new senior leadership team structure.
In addition to continuing to leadfinance, operations, HR, legal, anddesign and engineering, I have taken
on additional responsibilities forour marketing and audiences teams
and a new centralised commercial
rights and business affairs group.

were delivered during the year, bringing
the total DQF savings to £722 million by
31 March 2017 (of which £712 million aresustainable savings). Despite this achievement,
we cannot stand still. In order to address
our future financial challenges, we needto find further savings of £800 million ayear by 2021/22. We have already begun
to deliver against this target, delivering£91 million of annual savings during 2016/17(in addition to the £81 million DQF savings).

The professional support teams acrossthe BBC work together to ensure wedeliver content and reach out to audiencesin the most effective way, drawing on awide range of skills and experience.
Our focus this year has been on modernisingand simplifying activities to improve services
and ensure we spend as much of the licence
fee as possible on the content and services thatmatter most to audiences. From transforming
HR provision and switching provider ofoutsourced finance and accounting services,to co-sourcing internal audit, developing
a new property strategy for London,
successfully delivering complex procurements
and insourcing Creative Services; we havebeen transforming the BBC’s capabilities.

We have reshaped business structuresand now have a BBC with fewer layers anddivisions. We are providing the technology
to enable a modern and efficient workforce,
including reprocuring some of our technology
services. This has led to a BBC that is financiallywell managed and less bureaucratic – a BBC
that is more streamlined, with more visible
and accessible leaders. In their most recent
report on our workforce planning, the NAO
made some important recommendations for
future improvement, but they recognised
the steps we have taken to simplify theBBC; to increase the diversity of ourworkforce; and to reduce payroll costs by
6% in real terms (including almost halving
the number of senior managers), as well as
improving management and reporting.

Delivering efficiencies
Our strong track record of delivering
efficiencies continues. 2016/17 was the final
year of the DQF programme and I am pleased
to report that we have exceeded the £700
million target. £81 million of annual savings

Cutting property costs is a key strand of theBBC’s efficiency plan. A new financial deal
was agreed during the year which significantly
lowers the ongoing cash costs of Broadcasting
House, in London. This deal also secures theBBC’s long term ownership and occupation

BBC Annual Report and Accounts 2016/17

47

FINANCE AND PEOPLE

of Broadcasting House beyond the current
leasing arrangement, facilitating the BBC’s
outright ownership in 2045. The cash cost ofoccupation has been reduced by £10 million
a year against the baseline cash cost. Thesesavings are expected to increase each year to£34 million per annum by 2033 (against our
cash cost baseline). This profile of annual cash
payments have been extended from 2033
through to 2045, to re-profile the existingcommitments and to purchase the reversionary
interest in the freehold over this final period.
The technology reprocurement programme
was completed during the year, delivering
future annual savings in excess of £30 million,
which is on top of the £45 million of annual
DQF savings already delivered by thetechnology reprocurement programme. We
have transformed the way we provide andmanage technology, providing greater flexibility
and access to new technology as it emerges.
In 2016/17 we achieved over £60 millionof savings across our external spend on
goods and services, covering areas such as
production services, travel and broadcast
equipment. This was £8 million above
an already challenging target, achieved in
maximising opportunities to drive further
competition. We also surveyed our top 100
suppliers (representing circa 84% of ourexternal spend), and received consistently
favourable feedback on our buying processes
and on how we manage our key contracts.
‘Compete or Compare’ continues to be an
integral strand of our approach to driving
ongoing efficiencies. The framework ensuresthat everything we do is challenged in themarket or benchmarked against it, ensuring
value for money while maintaining quality.
During 2016/17 an internal review concluded
that 90% of BBC controllable spend now
satisfied the ‘Compete or Compare’ criteria.
We also continue to focus on reducing ourrunning costs to ensure we are investing
as much money as possible into content
for licence fee payers. 95% of the BBC’scontrollable spend this year was focusedon content and delivery, with 5% spent on
running the organisation. This is well below
both the public sector average of 11%, andthe regulated industry average of 9%.
Since year end, the actuarial valuation of
the Pension Scheme as at 1 April 2016 has
been finalised. The valuation showed afunding shortfall of £1,775 million (previously£2,054 million at 1 April 2013). A new

repayment plan has been agreed between
the BBC and the Pension Scheme Trustees,
with repayments due until 31 December
2028. The repayment plan is considered torepresent an affordable plan to address the
deficit, without compromising services toaudiences or pension scheme members.
Change in governance and regulation
This financial year has been one oftransformation and change in governanceand regulation as explained elsewhere inthis report. The National Audit Office(‘NAO’) will become our financial
auditor for the 2017/18 financial year.
The licence fee has been secured for theCharter period and will increase in line with
inflation until 2021/22, the first time in nearlya decade. From 1 September 2016, television
licensing legislation was updated to include thewatching or downloading of BBC television
programmes on-demand through the iPlayer.
This has contributed to the year-on-yearincrease in licence fee income in 2016/17.
Additional funding has also been secured
from the Foreign & Commonwealth Office
to invest in the BBC World Service. We
have been awarded nearly £290 million in
new funding over the next four years, whichis the biggest increase in the World Service
since the 1940s. As a result, millions more
people around the world will have accessto trusted, independent BBC journalism.
Looking forward
On 1 April 2017, the BBC launched BBC
Studios as a wholly-owned commercial
subsidiary. This represents an opportunity
to bring creative ideas to new audiences
around the world, as – for the first time –BBC Studios will be able to make British, bold,creative programmes for other broadcasters,
as well as playing a vital role in the BBC’s
future by delivering quality programmes andcreating valuable intellectual property.
The UK is changing and changing fast. The
media habits of our audiences are vastlydifferent compared with five years ago.
Younger audiences consume less of the BBC
owing to increased competition for theirtime from other media providers especiallyonline, and other forms of entertainment.
We need to focus on reinventing the BBC
for a new generation along with deliveringa more personal, more digital experience– to be more relevant to, and moreconvenient in, the lives of our audiences.

We also need to draw on the creative
strengths of the whole of the UK to represent
the diversity of our nations and regions. The
appointment of a new Director for the Nations& Regions during the year has provided anincreased level of insight into the nature of
the challenges facing the BBC in serving ouraudiences even better in these parts of the UK.
Greater devolved powers, a growing sense ofnational identity, and raised expectations ofpublic service broadcasting have resulted ingreater levels of investment in the nations:–– in Scotland, we are investing £19 million inlaunching a new, dedicated television channel– BBC Scotland. We are also increasing theamount of Scottish network television
production which means we will spend£20 million a year more, over the next
three years, compared to 2015.
–– in Wales, by 2019 we’ve committed tospending an additional £8.5 million on
television output every year. By the time BBC
Wales moves into its new home in Cardiff
city centre, we’ll have effectively increased
our investment in English language
programming by 50%. It will double ourinvestment in genres such as drama, comedy
and entertainment. In news and current
affairs, it will help us move faster online andreach out to younger audiences, as well as
provide more specialist reporting.
–– in Northern Ireland, £11 million of additional
funding will be invested over the next three
years. This will transform our digital output– for news and sport and more. It means
more drama, factual and comedy content.
–– investment plans for England are currently
under consideration.
We need to be more seamless in how wework together across technical and editorial
teams, more nimble in how we allocate
budgets, and more responsive in how wereact to rapid changes across our industry.
If we are to truly reinvent the BBC for a
new generation, we have to be much more
entrepreneurial in our make-up, and this will
be a particular focus for me in the year ahead.
The Charter reaffirms our core mission,
endorses our scale and scope, and provides
us with the firm foundations we needto invest in a strong, world-class BBC.
The BBC’s financial settlement provides
us with greater clarity about our future
income and allows us to plan for the toughchoices we know we will have to make.

Anne Bulford
Deputy Director-General
22 June 201748

BBC Annual Report and Accounts 2016/17

S T R AT E G I C R E P O RT

Financial overview
How we use the licence fee
The way in which the BBC is funded places
significant responsibilities on it as an organisation:–– to provide value for money by focusing
expenditure on the programmes andservices the public most want from the BBC–– to ensure that the output is then delivered ascost efficiently as possible–– to ensure effective and efficient collection of
the licence fee–– to maximise funding from other sources,
most significantly BBC Worldwide, the BBC’scommercial trading operation for
exploitation of BBC content, in a mannerconsistent with the terms of its Charter andother obligations
Results for the year
Year-on-year spend can vary significantly
from year to year due to the timing of major
sporting events and investment in change
programmes including restructuring. Overall,the BBC’s financial objective is to manage to abreakeven income and expenditure result overtime, whilst ensuring adequate cash reserves
and borrowing facilities to manage timing
differences and provide financial contingency.
Our results for this year show an accounting

deficit, at group level, of £129 million (2016:
surplus of £74 million). The year-on-yearchange is partly attributable to the cyclicalimpact of major one-off sporting events thisyear, such as the Olympic Games and UEFAEuro 2016, and to investment in change. In
addition there are a number of accounting
charges to income and expenditure, with no
impact on cash. These include a change to an
accounting estimate relating to amortisation of
distribution rights and fair value movements onfinancing arrangements for some of the BBC’sbuildings. As planned, the BBC drew down on
cash reserves previously built up to allow us to
manage this period of change and the timing ofpension deficit contributions. The BBC’s cash
balance reduced at the end of the year to £256
million from £335 million held at 1 April 2016.
Overall we have maintained sound financial
management with good cash reserves andcontinued delivery against financial targets.
We have continued to successfully manage
the financial challenges facing us, giving asound base to meet our future commitments
and deliver our strategic ambitions.
IncomeTotal licence fee income increased by
1.2% or £44 million from £3,743 million to

How your monthly licence fee isspent 2016/17£12.13 per household
Television
2015/16

£6.92
£7.01

Radio
2015/16

£2.02
£2.06

BBC World Service£0.90
2015/16£0.84
Other services andproduction costs£0.82
2015/16£0.79
Online2015/16

£0.90
£0.76

Licence fee collection
and pension deficit
costs
£0.57
2015/16£0.67£3,787 million. This increase was due to a
combination of factors, including closure of
the iPlayer loophole (which was supported bya targeted marketing campaign), household
growth and improvements in collection.
Licence fee collection
Effective financial management is a key partof the BBC’s unique relationship with its
audiences. This includes spending the licence
fee efficiently and collecting a television licencefee from everyone who is required to buy one.

Summary consolidated income statement
For the year ended 31 March 2017
2017
£m

2016
£m

The total of licence fees collected

3,787

3,743

The licence fee remained flat at £145.50 in 2016/17. 1.2%
increase due to household growth, closure of the iPlayer
loophole, a targeted marketing campaign and improvements
in collection.

Commercial (mainly BBC
Worldwide) income

1,167

1,084

Increase due to World Service grant income, growth
in royalties and rental income, along with favourable
exchange gains.

4,954

4,827

Operating costs

The cost of producing all content
and of running the BBC, includingsums provided to fund future
efficiency initiatives(4,943)(4,790)Restructuring costs

Sums provided to fund future
efficiency initiatives

(50)

(21)

Further development of savings plans.

Share of results of associates Our share of the profit of businesses
and joint ventures
where we control 50% or less46

40

Increase due to improved results for investments held by
BBC Worldwide.

Gain on sale of operations
and disposal of fixed assets

Profit on disposal of operations andfixed assets

8

97

In 2015/16, a gain was recorded on the sale of freehold land
from the West London Media Village site.

Net financing costs

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

(134)

(79)

Increase due to exchange rate losses on borrowings andfair value movements on financial instruments, which are
non-cash items.

Taxation charge

The net tax liability of the BBC on
its taxable profits

(10)

–

(129)

74

Income statement classification

What is it?

Licence fee income

Other income and revenue

Total income

Group (deficit)/surplus
for the year

For further details, please refer to the detailed financial statements on page 124.

What has happened?

Increase due to major sporting events such as the Olympic
Games and UEFA Euro 2016, and an accounting estimatechange relating to amortisation of distribution rights.

Tax charge arises on commercial activities. An overprovision inprevious years was used to reduce the tax charge in 2015/16.

BBC Annual Report and Accounts 2016/17

49

FINANCE AND PEOPLE

This is the fourth year of the new licence fee
contract and total cost savings of £220 million
are expected to be delivered over the ten
years of the contract, releasing more funding
to be spent on our programmes and services.
Licence fee statement
As in previous years, the BBC prepares alicence fee revenue statement audited by the
NAO. This account sets out the amounts wecollected in the year and paid over to HM
Government. Alongside their audit work, theNAO examines our collection arrangements
and reports on them to Parliament. Moreon the licence fee revenue statement can befound on our website: bbc.co.uk/aboutthebbc.

Commercial trading andother income
The licence fee is supplemented byincome from the commercial exploitationof licence fee funded content andinfrastructure through three commercial
subsidiaries – BBC Worldwide, BBC
Global News and BBC Studioworks.
BBC Worldwide
BBC Worldwide exists to support the BBC
public service mission and to maximise
income to the Group on its behalf. It
returned £210 million to the BBC thisyear, above £200 million for the thirdyear running (2015/16: £222 million).
2016/17 was another strong year for BBC
Worldwide. It delivered headline sales of£1,060 million which is a 3% increase fromprior year (2015/16: £1,029 million). The
principal business activity of BBC Worldwide isthe export of premium content (purchased insterling), which lead to the business benefitingfrom currency fluctuations this year, alongwith growth in branded services (including
UKTV) and sales to subscription video-ondemand (‘SVOD’) services. Headline profitof £157 million was £23 million higher thanprior year (2015/16: £134 million), reflecting
both gains from exchange rate benefits
and growth in trading profits, despite thecontinuing increase in the cost of content.
All four geographic regions of the company
showed growth in profits in the year.

In addition to the outstanding performanceof Planet Earth II around the world andthe continued success of Dancing with theStars, the company saw a return to strengthof Top Gear and a Doctor Who Christmas
Special, which was the top-performing title
for BBC AMERICA over the period.

Operating profits were impacted bya number of non-cash items, including
amortisation adjustments for content assets.

This year saw the BBC Player channel
companion TV Everywhere application (‘app’)launch on new platforms in Asia. The company
also launched BritBox, a video streaming
service centred on British television, in the
US in partnership with ITV plc and with
AMC Networks as a minority shareholder.

BBC Worldwide is witnessing accelerationin the shifts underway in its markets andtakes strength from the breadth of its
operations both geographically and bybusiness line as a global premium content
business. The company actively manages its
activities towards the areas of highest growthand keeps transformation as its central
theme. Progress remained strong acrossthe three pillars of the company strategy:
premium content; global brands; and gradualtransformation to digital products and services.
The company continued to focus content
investment into premium titles. Investing£174 million in content in the year (2015/16:£162 million), with investment in BBCcommissioned content increasing to £99 million(2015/16: £93 million), supporting on-screen
programmes across the BBC’s channels.
Relationships continued to be built acrossthe independent sector, working with over
250 independent UK producers and investing£146 million (2015/16: £116 million). BBCWorldwide took equity stakes in five worldclass talent-led British independent producers,
supporting British entrepreneurship andintellectual property (‘IP’) generation while
enhancing the future of its own content supply.
New channel brands included the launchof BBC Earth in India during March 2017,
along with Sony. The company continues tomonitor the best approach to each individual
market and this has led to the decision toclose its Latin America channels in April 2017.

Commercial trading:Headline sales

BBC Worldwide
BBC Global NewsBBC Studioworks

50

Headline result

2016/17£m

2015/16£m

2016/17£m

2015/16
£m

1,060
110
24

1,029
101
24

157
2
3

134
0
(2)

BBC Annual Report and Accounts 2016/17

Subsequent to the end of the year, weannounced the closure of the BBC Store
video download service. We continue
to look to innovate in digital services.
BBC Worldwide concentrates hard on its
culture, and its people continue to impresswith their originality, generosity and dedication.
The company’s staff engagement scorereflected this, rising to 73% (2016: 70%)
against a global norm of 58%. The drive for
efficiency continued throughout the year withan overall 3% reduction in workforce, despite
the impact of acquisitions during the year.
Focus has also been on capital efficiency –a new partnership established with AccessEntertainment and Lookout Point to form
Benchmark Television which will offer
producers financing ahead of securing acommission; and a new slate deal was agreed
with Europe-based television and film company
Anton (for up to £150 million over three
years). Both of these invest in premium drama.
BBC Worldwide will accelerate its
strategy to deliver at a world-class level
throughout its content and operations,in order to remain successful.
BBC Global NewsBBC Global News operates the BBC’s twocommercially-funded international news
services: BBC World News, the 24-hourglobal news television channel, and thedigital platform bbc.com (including the bbc.
com website, a News app, and a Sportapp). BBC Global News’ mission is to be
the best and most trusted international
news provider in the world, while growing
the BBC’s international news audiences andoperating as a commercially efficient business.

S T R AT E G I C R E P O RT

Global news page views –all platforms monthly average million
1, 5 0 0
1, 2 0 0

+15%
1,278
1,114

900
600
300
15/16

16/17

In 2016/17 BBC World News’ global footprint
continued to expand, growing by 2% over
the year and now available to a record 450
million households (up from 441 million in
2015/16). The growth was driven by gains
in Africa, Asia Pacific, and Out of Home.
Audiences on bbc.com continued to grow,with strong increases in markets such as India
and the US. bbc.com attracted an averageof 97 million monthly unique browsers, up
9% from 2015/16. Total page views acrossall platforms (website, apps, and connected
televisions) reached a record monthly averageof nearly 1.3 billion, up 15% from the previous
year. This strong performance was driven
by the BBC’s coverage of two major news
events – the UK’s EU Referendum and the
US Presidential Election. More than 21 million
browsers visited bbc.com on the day of the
EU Referendum result, setting a new record
for daily traffic on bbc.com, while 60 million
browsers consumed US election content
over the course of 2016, making it the biggest
ongoing news story on bbc.com to date.
The BBC News app continued to perform
well with page views growth exceeding
expectations – up 30% year-on-year.
BBC Global News continued to enhance theBBC’s digital proposition for international
audiences. Innovation launches included ‘Videosof the Day’, a ground-breaking new vertical
video experience in the News app; and a newedition of bbc.com, which offers Canadianaudiences targeted and more relevant
content from the BBC’s global coverage.
Off-platform consumption of BBC content
plays a key role in BBC Global News’content distribution strategy. BBC Global
News continued its successful partnerships
with MSN, Yahoo!, AOL.ON, YouTube,
LinkedIn, Flipboard, Line, Facebook,Apple and SmartNews, and entered into

a new agreement with News Republic.
The BBC launched on Facebook’s video
streaming service, Facebook Live, winninga NewsWhip Whippy award for best
Facebook Live producer. On social media,
BBC News has over 42 million Facebook
likes globally and BBC World News hasover 20 million followers on Twitter.
In 2016/17, BBC Global News was recognised
for the excellence of its journalism with anumber of awards, including an Emmy forcoverage of the European Migrant Crisis, anda David Bloom Award for reporting from
Colombia. bbc.com’s Capital feature site won
a Shorty award for its Leading without limbs
video online and the BBC won several Webbyawards, including awards for the BBC Earthand BBC Culture feature sites and the ‘Videosof the Day’ vertical video app experience.
Global News recorded an operating profitof £2 million in 2016/17, an improvementof nearly £2 million from 2015/16.
BBC Studioworks (formerly BBC Studios
and Post Production)
BBC Studioworks is a wholly-owned
commercial subsidiary of the BBC, serving
both the BBC and external clients. In May
2016, the company was renamed as BBC
Studioworks as part of a rebranding exercise
designed to support the company’s corporate
growth strategy. The company delivered astrong financial performance for the year.
In the year ended 31 March 2017, turnover,
operating and net profit all improved. The
operating profits of £3.4 million show aturnaround from the £2.3 million loss recorded
last year, resulting in a net profit of £2.8 million(2016: loss of £2.1 million). This profit growth
was a result of the company’s strategy to moveaway from non-core operations; as well as
successful business development initiatives; astronger sales mix; and effective cost control.
During the year, BBC Studioworks welcomed
a number of existing and new clients to its
studios and post production facilities. Over
30 show titles were successfully deliveredfrom Elstree including the continuing drama,
EastEnders, the 14th series of BBC Studios’
Strictly Come Dancing, BBC Studios’ Let it
Shine, Sky’s award-winning A League of theirOwn, Channel 5’s Lip Sync Battle UK; as wellas numerous quiz shows such as E4’s Virtually
Famous, ITV’s Celebrity Juice and The Chase.
The BBC One quiz show Pointless reacheda significant milestone in 2017 producing its
1,000th episode with BBC Studioworks.

BBC Studioworks continued toprovide services to EastEnders while
the post production team worked ona number of projects including BBC’s
Strictly Come Dancing, It Takes Two andChildren in Need Appeal Show 2016.
BBC Studioworks has also been finalising
the refurbishment of its studios and postproduction facilities on the Television
Centre site in West London, with Studios
1, 2 and 3 and other facilities at Television
Centre reopening to clients in September
2017. This is a substantial expansion forthe company and will supplement thecompany’s existing facilities in Elstree.
BBC Studios
After year end, BBC Studios – the television
production arm of the BBC – became a whollyowned commercial subsidiary of the BBC. This
represents an opportunity to share creativeideas with new audiences around the world, as– for the first time – BBC Studios will be able
to make programmes for other broadcasters.
This will also present an opportunity toincrease revenue for the BBC Group.
BBC World Service
BBC World Service operates under alicence which sets out the remit and scopeof its services, its annual budget and its
main commitments. The performance ofthe service is regularly reviewed against its
licence, in the same way as the other BBC
services. The current operating licence
sets out a target for total cash spend of atleast £245 million p.a. This year, the total
BBC World Service spend of £246 million
was higher than target and represented a
2.4% increase in spend from prior year.
During the year, the Foreign & Commonwealth
Office (‘FCO’) agreed to invest £289 millionof grant funding into BBC World Service overa four-year period to March 2020. £34 millionof this funding was received during 2016/17.
This investment is the single biggest increasein the World Service budget ever committed
by a government. This funding will help
complete the transformation of the World
Service from a predominantly short wave
radio service to a fully digital-first operation,
as well as providing additional televisioncontent, launching of news content in 11 newlanguages, and a material expansion in Russian,Arabic and World Service English output.
Once fully operational, World Service will haverecruited approximately 1,400 new roles in
51 different locations around the world, withthree new major production centres being
established in Delhi, Nairobi and Lagos.

BBC Annual Report and Accounts 2016/17

51

FINANCE AND PEOPLE

Delivering efficiencies
2016/17 was the final year of the BBC’s DQF
programme. £81 million of annual savings
were delivered during the year, bringing thetotal DQF savings to £722 million (of which£712 million are sustainable savings). This
exceeds the £700 million target and has beenreviewed by our auditors, Ernst & Young LLP.
During the latest licence fee settlement, thelink between inflation and the licence fee
was restored from 1 April 2017, however
the BBC was given the responsibility forfunding the licences for over-75’s households.
This settlement is the main driver of a very
tough set of financial challenges, meaning
the BBC has to find a total of £800 million
a year of savings by 2021/22. This equates
to an average savings target of 4% a year
for five years. We have already begun todeliver against this challenge – a further£91 million of annual savings were achieved
during 2016/17 (in addition to the £81 million
annual savings delivered by DQF), by creating
a simpler, leaner BBC. Actions to achieve
this included merging divisions, continuing
to reduce senior manager numbers, andrestructuring back office and support services.
Given the BBC’s successful past record,
achieving a further £800 million a year savings
target, on top of the £712 million recurring
DQF savings already delivered, will be
extremely challenging. The BBC’s property
bill has already reduced by circa £90 million
in six years, enterprise technology spend has
fallen by 23% in three years, and the numberof senior managers has nearly halved in eight
years. A recent PwC study concluded that the
BBC was already amongst the most efficientorganisations in the public sector and regulatedindustries in terms of managing overheads. In
2016/17, 95% of the BBC’s controllable spend
was focused on content and delivery, with 5%
spent on running the organisation. This is well
below both the public sector average of 11%,and the regulated industry average of 9%.

52

BBC Annual Report and Accounts 2016/17‘Compete or Compare’, the BBC’s approach
to identifying efficiencies in the cost basethrough competition or benchmarking, isan integral strand of the BBC’s approach todriving ongoing efficiencies. The frameworkensures that everything the BBC does ischallenged in the market or benchmarked
against it. This drives up quality and reduces
costs. An independent study undertakenby PwC during 2015/16 concluded that87% of BBC controllable spend satisfiedthe ‘Compete or Compare’ criteria, either
through direct competition or rigorouscomparison and benchmarking. During
2016/17, an internal review concluded
that over 90% of BBC controllable spend
now satisfied the criteria used by PwC.
Since September 2016, three returning seriescommissioned by Television Content havebeen subject to a competitive tendering
process, with pitches being invited from BBC
Studios (from 1 April 2017) and independent
producers. Whilst the BBC will retain
intellectual property rights for the programmes
put to tender, and they will continue to beshown on BBC television, the tendering
process will decide which supplier makes
those series. So far Holby City; A Question ofSport; and Songs of Praise have been opened
up to competition. The first two tenders
were won by BBC Studios and the latter wasawarded to two independent producers.
Property costs
Cutting property costs is a key strand of theBBC’s efficiency plan. A new financial deal
was agreed during the year which significantly
lowers the ongoing cash costs of Broadcasting
House, in London. This deal also secures theBBC’s long term ownership and occupationof Broadcasting House beyond the current
leasing arrangement, facilitating the BBC’s
outright ownership in 2045. The cash cost ofoccupation has been reduced by £10 million
a year against the baseline cash cost. Thesesavings are expected to increase each year to£34 million per annum by 2033 (against our
cash cost baseline). This profile of annual cash
payments have been extended from 2033
through to 2045, to re-profile the existingcommitments and to purchase the reversionary
interest in the freehold over this final period.

The BBC has reduced its property footprint
by approximately 40% since 1998 andtotal property savings since 2011 are now
at approximately £90 million a year. The
BBC plans to vacate four other London
properties in the near future, giving rise
to a further £7 million a year of savings.
Technology
We have recently re-procured the coretechnology services contract, which
provides critical IT and technology services
to programme makers and staff. The newcontract will transform how the BBC will
provide and manage its technology in the
future, to make the organisation ready forthe digital age. Since 2004 most of the BBC’s
outsourced technology services have beendelivered by one external provider, but
the new contract is non-exclusive, allowing
services to be delivered by a combination of
third parties and our in-house teams. Thisapproach will give the BBC greater flexibility
and access to new technology as it emerges.
These technology reprocurements will leadto long-term savings that will amount tohundreds of millions of pounds over thecourse of the contracts, including savingsin the region of £75 million per annum.
Our people
The National Audit Office (‘NAO’) recently
published its latest value for money reviewof the BBC, looking at how it manages andplans its workforce. The NAO acknowledgedthat the BBC has reduced the cost and sizeof its payroll workforce between 2010/11 and2015/16 by 6% and 4% respectively. It has alsoachieved a 40% reduction in the number of
its senior managers from 540 in 2010/11 to
319 by December 2016. The NAO report
also recognised that the structure of the BBC
had been simplified through fewer layers ofmanagement and streamlined professional
support services. As the NAO concluded,
these changes have helped the BBC to improvevalue for money and, taken together, they
represent a significant achievement. The NAO
made some recommendations for the future
which the BBC is committed to implementing.

S T R AT E G I C R E P O RT

Focusing spend
The BBC concentrates its expenditure on the
production of programmes and other content
and its delivery to audiences and users, andthe essential infrastructure to support this.
Year-on-year spend can vary significantly
because of the cycle of major sports events.
Total content spend increased by 3% to£2,734 million (2015/16: £2,664 million) thisyear, which was largely due to additional
investment in our coverage of the Olympic
Games and European Football Championships.
All 26 service licences operated within theiroperating parameters during the year.
Restatement
During the year, the assumptions used in thecalculation of finance lease assets and liabilities
were updated to meet IFRS. The impact of
this change in calculation on the result for
the year ended 31 March 2016 is to increase
the surplus for the year by £14.4 million.

Cash
The BBC’s cash balance at the end of the yearis £256 million, which is a £79 million reduction
from prior year (2016: £335 million). Cashgenerated from operations has been offset
by a £220 million pension deficit payment
made in March 2017. The current strong
financial position of the BBC, along with thesuccessful delivery of recent saving plans,leaves the Corporation in a good position
to meet its future obligations (which include
pension deficit repayments) and to continue
delivering world-class content to its audiences.
Tax
The BBC is a committed and prudent tax
payer in all the countries in which it operates.
Its commercial operations undertake
appropriate and legitimate tax planningmeasures in accordance with the spirit
and intention of all laws and regulations.

Pension costs
At 31 March 2017, the accounting pension deficit(as defined by IAS 19) had increased by 14%
to £1,149 million, compared to £1,011 million
a year ago. The increase during the current
year was due to a net loss from changes inthe valuation assumptions of £248 million,an annual operating charge of £193 million
and net finance costs of £32 million, offset
by contributions paid of £335 million.
This accounting valuation is only a ‘snapshot’at a particular date, and is therefore sensitive
to short-term market fluctuations. It has
no impact on the actual cash cost of paying
down the pension scheme deficit, which isreviewed at triennial actuarial valuations.
The most recent triennial actuarial valuation
was completed in June 2017 and showed afunding shortfall of £1,769 million as at 1 April
2016 (previously £2,054 million at 1 April2013). A new repayment plan has been agreed
between the BBC and the Pension Scheme
Trustees. The agreed repayment plan runs
until 31 December 2028 and is considered
to represent an affordable plan to address
the deficit, without compromising services
to audiences or pension scheme members.
The BBC continues to work actively with
the Pension Scheme’s Trustees to ensure
the Scheme delivers security for members
and value for the licence fee payers.

The Hollow Crown – The War of the Roses

BBC Annual Report and Accounts 2016/17

53

FINANCE AND PEOPLE

Our people

p.55
Our people
We are making the BBC an evengreater place to work, valuing andrespecting diverse contributions
and celebrating successes
Read more on pages 55 to 59

Radio 1 DJ Clara Amfo presenting the Radio 1 Teen Awards

p.60

p.61

Diversity and inclusion
The more diverse our workforce,the better able we are to respondto and reflect our audiences in all
their diversity

Charitable work
We have been broadcasting andsupporting charity appeals since
1923 and our appeals have become
a vital part of our remit

Read more: bbc.co.uk/diversity

54

BBC Annual Report and Accounts 2016/17

Read more: bbc.co.uk/charityappeals

S T R AT E G I C R E P O RT

Our culture and our people are fundamental to the continued
delivery of outstanding programmes and services to ouraudiences. 93% of our people say they are proud to work for
the BBC and 91% are prepared to put in extra effort to help
deliver great content. Over the year we have been working
together to ‘make the BBC an even greater place to work’
where our people can be at their creative best.

At the same time we have achieved substantial
organisation change and efficiency. The
structure of our divisions has been reorganised
and a new Executive Committee wasformed in September 2016, in preparation
for the changed governance and regulatory
structure linked to the new 11-year Charter
period. The final role closures linked to the
Delivering Quality First (‘DQF’) programme
have been completed and our 2017 diversity
and inclusion targets have been achieved. The
formal response to the Dame Janet Smithreview into our culture and practices was
published in November 2016, setting out themeasures already in place and controls toensure they are maintained; the year also saw
the completion of the HR Transformation
Programme which will deliver 30% of
ongoing savings to the cost of HR services.
Efficient and effective organisation design
Throughout the year as restructuring hastaken place, organisation design principles havebeen applied. These have included minimising
management numbers and layers and limiting
the numbers and spend on professional
support roles so that as much as possible
can be directed to creating content andservices. Currently 95% of our controllable
spend is directed to content and services.
We remain committed to locating at least
50% of employees outside of London and 53%

are currently based outside of the M25. New
roles continued to be created in Birmingham
and planning is underway to move BBC
Three there from London in 2017. This willbring our Birmingham base to full capacity.
We have also been implementing acareer path framework aligning job titlesand descriptions to job families andcommunities enabling employees to better
understand career progression paths.
The major organisation redesign activities
during the year have focused on realigning
our divisions:–– Television was split into two separate
divisions, Content and Studios. The latterbecoming a commercial entity on 1 April
2017. Both divisions saw a significant numberof people changes in senior roles–– a new division of Nations and Regions wasformed, bringing Scotland, Northern Irelandand Wales together with the main Englandhubs of the North, the Midlands and theSouth West–– Radio and Education activities were brought
together in a new division–– professional support areas have combinedwith Marketing and Audiences and ourtechnology operations to create a newdivision headed by the Deputy DirectorGeneral. This included bringing together

three separate parts of the organisation
which were combined to create the Design
and Engineering division–– a new Executive Committee of ten members
was established in September 2016, bringing
together the new division leads
The HR team also completed theirtransformation programme, reducing thecost of HR services by 30%, and insourcing
resourcing and HR administration activities,
creating a new HR Service Centre
in Birmingham.
Our workforce numbers and mix
Over the course of a year, the scale andprofile of the BBC’s overall workforce isaffected by a number of factors. These
include the mix between in-house andindependent programme and content supply;changes to our insourcing/outsourcing
service model; the launch of new audiencefacing initiatives; and headcount reductions
arising from savings programmes. Workforce
plans are in place to optimise the mix ofpermanent and flexible resource and wecontinuously review and control headcountto ensure value for money is achieved.
Average annual salaried headcount for 2016/17
increased slightly. At March 2017, this increase
included 179 new roles recruited as part of theadditional investment in World Service 2020.

UK PSB staff by nation (equivalent full time) %31 March 201731 March 2016

England (excl. London)

34

36

31 March 201534

London47

45

46

Scotland

7

7

7

Wales

8

8

8

Northern Ireland

4

4

4

Percentages have been rounded to the nearest decimal

BBC Annual Report and Accounts 2016/17

55

FINANCE AND PEOPLE

Total average headcount (equivalent full time)
2016/7

2015/6

2014/5UK public service
broadcasting

19,357

19,269*19,333*

BBC Worldwide

1,706

1,759

1,824

Other commercial
business

208

237

247

21,271

21,265

21,404

Group total*

Restated with programme contracted staff (orchestras andsingers), increasing in 2015/16 by 349 and 2014/15 by 359

Throughout the year, roles were closed through:–– the conclusion of the five-year DQF
Programme (‘Delivering Quality First’). A
total of £722 million savings and a reductionof over 1,800 roles were delivered for public
service staff throughout this programme–– the simplification programme announced in2015, which committed to delivering £50
million savings and an expected reduction of
1,000 roles across the group. 859 posts haveso far been closed that will lead to a saving of£44.2 million. The final reductions andsavings will over-achieve the targets andcomplete in Autumn 2017
A new savings initiative announced during
the year requires all divisions to identify anddeliver further savings for the next five years.
Plans to achieve this are being developed.
Whilst reductions in headcount have been
made, there is a continued requirement
to invest and recruit in different skill
types to build the BBC of the future. Key
investments have been made this year in:

Spend on Talent:
2016/2017
Spend
£000s

Less than £40k

2015/16***
Volumes

Spend
£000s

Volumes

Variance£000s

69,92240,32873,59946,223(3,677)£40k – £100k

72,346

1,278

69,418

1,236

2,928

£100k – £150k

16,717136

18,088150(1,515)£150k – £500k

21,25689

25,006101(3,597)£500k – £1m

3,348

5

2,845

£1m – £5m

3,959

2

3,794

6,019

1,582

5,562

1,838

457

193,567

43,420198,31249,555(4,736)

Organisations

**

Total

7*

503
165

*

The number of individuals in the £500,000+ category was aggregated in previous years in order to protect the personal
information of those individuals, in line with data protection best practice** Organisations are groups of individuals contracted as one – for example external orchestras – so it is not possible to list numbersof individuals against this spend*** The 2015/16 numbers have been restated for consistency with information disclosed under article 37(2) of the Royal Charter 2016
These tables, above and below, are based on monies paid in the financial year 2016/17. For four individuals, the timing of cash payments
made in the financial year materially distorts their banding. We have therefore fairly reflected the substance of these payments in thetable. In the case of two of these individuals, material payments that took place between the end of the financial year and the date ofthis report which relate to work done in 2016/17 have been included. In the case of the other two individuals, payments in relation to
long-term agreements have been apportioned evenly over the contract term

Senior manager and talent pay disclosure:
Senior managers

TalentOther staff andcontractors

Total£150,000 – £199,999£200,000 – £249,999£250,000 – £299,999£300,000 – £349,999£350,000 – £399,999£400,000 – £449,999£450,000 – £499,999£500,000 – £549,999£550,000 – £599,999£600,000 – £649,999£700,000 – £749,999£850,000 – £899,999£1,750,000 – £1,799,999£2,200,000 – £2,249,999

71
13
2
6
1
1
1
–
–
–
–
–
–
–

39
23
10
4
6
5
2
1
1
1
1
1
1
1

21
2
–
–
–
–
–
–
–
–
–
–
–
–

131
38
12
10
7
6
3
1
1
1
1
1
1
1

Total

95

96

23

214

Band

56

BBC Annual Report and Accounts 2016/17–– Design and Engineering, including key
digital skills–– World Service: following the Government
funding announcement in November 2016
specifically ring-fencing £289 million, World
Service News is expanding in 12 newlanguage services across 50 countries.
To date, 179 of the new staff have been
recruited both in the UK and internationallyand significant recruitment will continue until
April 2019–– additional apprentices and trainees–– production-related increase–– insourcing activities previously carried out
elsewhere including Finance, HR, Technology
and Marketing and Audiences creative roles
On screen talent
We want the BBC to be the place where
the best artists want to work and deliver
great programmes. Across radio, televisionand our digital services, our audiences
expect us to offer the best range of mostloved, creative, engaging, authoritative anddiverse talent in British broadcasting.
The BBC remains committed to keeping spend
on on-screen and on-air talent to no morethan 15% of overall internal spend on content(with a 1% tolerance). This approach has
been endorsed by independent consultants
Oliver and Ohlbaum as an appropriate
response to changing market conditions.
In 2016/17, total talent spend of £194 million
represents 11.5% of the BBC’s internal spend
on content. This includes the World Service.
Talent pay disclosure
Under the terms of our Royal Charter, we are
required to publish an annual report for eachfinancial year from the BBC Remuneration
Committee with the names of people
working for the BBC who are paid morethan £150,000 from licence fee revenue
in a financial year set out in pay bands of£50,000. We have for some time disclosed
earnings of any employee who is classified
as a senior manager and this information is
publicly available on the BBC’s website.
This is the first time we are publishing this typeof information in the format agreed, with fullnames and pay bands.
The full talent pay disclosure annex can befound at: bbc.co.uk/aboutthebbc/insidethebbc/
howwework/accountability/bbc_talent_pay

The adjacent table summarises the distributionof categories by band for 2016/17.

S T R AT E G I C R E P O RT

Severance
Driving efficiencies across the BBC has aninevitable impact on jobs. We continue tobe fully committed to managing job losses
through redeployment and retraining wherever
possible and our current severance policy is:–– one month’s pay for each year of service up
to a maximum of 12 months’ pay. For those
employees who joined before January 2013,
the maximum is higher at 24 months’ pay–– a cap on redundancy payments of £150,000–– a maximum length of notice period of
six months
We are currently awaiting further clarificationon the Government’s proposed cap on
redundancy, which received Royal Assent
on 4 May 2016.
Where redundancy severance is paid:–– notice will be served and worked in full–– if an individual wishes to leave earlier thanthe end of their notice period they must
waive the remaining notice period and will
receive no payment for it–– in exceptional cases, for example when there
is a need to protect the confidentiality ofsensitive information, individuals may be
asked to work from home or be prepared toundertake other duties during their noticeAll severance payments over £75,000
are signed off by the Senior Management
Remuneration Committee. During the year
there were ten instances where employees
received payment in lieu of notice inaddition to a severance payment. Eight ofthese related to a TUPE into the BBC in
Northern Ireland where there were no
ongoing roles. One was overseas and inline with local legal requirements and one
related to a contract that was revoked
before the individual began work. During
the year, there was one case involving total
payments in excess of £150,000. In this casethe individual received less than £150,000
but there were additional material legal fees.
There has been one employee who returnedin a freelance capacity outside of policy.
Remuneration
It remains our policy to provide remunerationthat attracts, motivates and retains the
key talent required to lead and deliver
outstanding public service broadcasting,whilst recognising the BBC’s status as apublicly-funded corporation, which mustdeliver value to the licence fee payer.
In August 2016, we implemented a pay deal
for all staff in grades 2 to 11 of 1% with a£400 minimum underpin. There was noautomatic pay increase for senior managers,
and increases were awarded on a case-by-casebasis, capped at the lower of 1% or £1,000.
Senior managers
Throughout the year we continued tofocus on reducing the number of senior
managers wherever possible, in line withour commitments in the 2009 and 2011
reward strategies. The senior manager paybill(including Executive Board members) is now£42.2 million compared to £78.5 million
in 2009, and the total number of senior
managers, including Board members, is 312.
This compares to 640 in 2009 and represents
a reduction of 51%. Over the last year, senior
manager numbers have decreased by 47
and our percentage of senior managers tototal public service employees is now 1.6%.
During the next year we will complete
a grading review of this population.
The Senior Manager Remuneration
Committee, originally established in
September 2012 by the Executive Board
Remuneration Committee, continues
to meet regularly and signs off all salaryadjustments for senior managers and anyothers in excess of £75,000. Our current
senior manager numbers by salary band are:Band

2015/1692

122£100,000–£149,999

124

140

£150,000–£199,999

67

65£200,000–£249,999

17

22£250,000–£299,999

34£300,000–£349,999
Total*

3

1

306

354**

* Total excludes Executive Board Members** Restated to remove two Pension Fund senior managers

During 2016 we commenced a review
looking to modernise many of our terms
and conditions of employment, looking
for opportunities to make them simpler,
fairer and more consistent. This review
is being undertaken together with our
joint union representatives and outcomes
will be concluded during 2017.
Supporting and getting the best fromour people
In February 2016, Dame Janet Smithpublished her report reviewing the culturesand practices of the BBC during the yearsof Jimmy Savile and Stuart Hall. Our full
response was published in November 2016
and set out the actions taken to address
recommendations made in a range of externalreports and reviews. These included theRespect at Work review of 2013, the Good
Corporation review of Whistle Blowing andChild Protection Policies/Processes of 2015
and Dame Janet Smith’s review of 2016.

Our response outlined the work we haveundertaken across three areas to ensurethat the abuse could not happen again:

Severance payments: all staff (including senior management)
1 April 2015–31 March 2016

Payment band

Spend
£000s

Volumes

Spend
£000s

Under £10k

348

59

286

45

£10k–£50k

6,622

220

5,675

189

Volumes£50k–£75k

5,672

92

5,104

81

£75k–£100k

3,880

44

5,036

58

£100k–£150k

16,567

124

9,809

75

Over £150k

0

0

0

0

33,089539

25,910448

Total

2016/17£50,000–£99,999

At the same time, a further external
review and audit of the BBC’s policies
and processes, undertaken by Good
Corporation, and reporting on the progress
made since 2015, was published.

Severance:

1 April 2016–31 March 2017

UK senior manager headcount by salary band:–– our policies to ensure the protection of ourstaff, children and young people–– the systems and routes we have in place forpeople to be able to raise a complaint, aconcern or to blow the whistle–– the functions and capabilities we have within
the organisation to effectively investigate
such complaints, whether internal or external
We continue to regularly review and develop
our practices to ensure we maintain bestpractice in these areas.

BBC Annual Report and Accounts 2016/17

57

FINANCE AND PEOPLE

Throughout 2016/17 interviews and focus
groups were conducted with teams of
employees around the organisation to listen
to feedback and suggestions to ensure
we are providing appropriate support
and focused on ‘making the BBC an evengreater place to work’. We have aligned
our activities around four key pillars:–– making ways of working simpler – looking
to simplify or remove complex practices
and finding ways to enable staff to do theirbest work–– acting as One BBC – working collaboratively
and recognising that we are stronger when
we work together–– valuing each other and celebrating success –respecting our diverse contributions andtaking time to recognise the quality of work
produced by all staff–– being visible and involved – ensuring all staff
know what is expected of them and get fully
involved, and that managers and leaders arevisible not only to their own teams anddepartments, but across the organisation,
listening, sharing and inspiring
We have introduced a ‘Simpler, Smarter,
Greener’ campaign across the organisation,collecting suggestions and implementing
improvements. In February 2017 werefreshed our BBC values and introduced
a BBC Code of Conduct – a documentthat brings together our policies, standards
and expectations of behaviour into a single
place, making it clear to our employees andfreelancers what they must be aware of
and what they can expect from the BBC.
Support for our team managers across the BBC
has been strengthened throughout the yearwith the introduction of new communication
tools, roadshows and development activities.

Our annual engagement survey was conducted
early in 2017. 67% of staff participated(compared to 54% last time) and our overall
engagement score increased by 2% to69%. This is 9% higher than the median UK
engagement (Source: Ipsos Mori – 2017).
A separate survey was also conducted acrossour freelancer and agency contractors,
which attracted a 53% response rate –an increase of 19% from last time.
Of particular note were 93% of employees
agreeing with the statement “I amproud to work for the BBC”. Most areas
showed improving scores and actionplans are being put in place to address
specific areas requiring improvement.
We continue to work closely with ourunions and are committed to building
positive and constructive relationships withall our people and their representatives.
During 2016/17 there were two separate
instances of strike action. One lasting 24
hours involving 12 employees and a second
lasting 36 hours involving 86 employees.
Human rights
The BBC takes human rights seriously; athome in the UK and across the globe.
Every member of staff has the right to returnhome in the same state of health in which
they left for work, and to form trade unions.
Some staff are required to work in highrisk environments, such as those in hostilesurroundings, covert filming or covering events
such as terrorist incidents. Our High Risk Teamadvises and oversees training and provisionof equipment for staff to ensure they areappropriately prepared to undertake their role.

School Report
11 to 16 year old students
from nearly 900 schools
across the UK took part in
BBC News School Report.

Our Terms of Trade require any suppliers wework with, and any sub-contractors they use,to adhere to the codes of practice publishedby the Equality and Human Rights Commission
and the Equality Commission Northern Ireland.
BBC Group modern slavery statement
The BBC Group is committed torunning its business responsibly and tomaintaining a high standard of ethicaland environmental trade practices.
The BBC is supportive of the aims of theModern Slavery Act 2015 and, in publishingan annual statement, the BBC recognises theimportance of the role it can play in preventing
human trafficking and slavery within its spheresof influence, to create a culture of awarenessand transparency and actively engage inthe eradication of modern day slavery.
This statement is published in accordance with
the Modern Slavery Act 2015. It sets out thesteps taken by the BBC and its other relevantgroup companies during the previous financial
year to prevent modern slavery and humantrafficking in its business and supply chains.
The full statement is available at:downloads.bbc.co.uk/aboutthebbc//reports/
pdf/bbcmsa2016.pdf

Developing our people
Through our BBC Academy, training andprofessional development is provided
for all BBC staff. A significant amount oftraining is delivered online or remotely, tooffer staff flexibility and also to increase
efficiency and reduce travel. Over 65,000
unique training sessions were completed
in 2016/17, of which 60% were online.
Support has been provided to BBC Studios andRadio as they move into a more competitive
programme supply environment. Creative
radio workshops have been delivered toseveral hundred people and in BBC Studios,the focus has been on developing business andcommercial skills in addition to craft skills.
Globally, the Academy has played a central
role in the expansion of World Service overthe next four years (World Service 2020)and has created online training content infive additional languages (Bangla, Kyrgyz,
Somali, Spanish and Ukrainian). These haveprovided journalists with support to ensure
standards such as impartiality and accuracy
are maintained when existing material istranslated or original content created.

58

BBC Annual Report and Accounts 2016/17

S T R AT E G I C R E P O RT

Comprehensive training programmes havealso been developed and delivered for over
1,000 new journalists in Nairobi, Lagos,
Moscow, Delhi and Cairo, as well as the
UK. These programmes provide essential
technical, editorial and production skills,
giving people the confidence and capability
to contribute to the BBC’s goal of reachinga global audience of half a million.
Other support to News and our journalists
has been through face-to-face and online
training courses to support the launch of theBBC’s new News computer system, OpenMedia. Over the next four years, this projectwill see more than 10,000 users migrate
across in 100+ sites in the UK and overseas.
Almost 5,000 hours of training on deliveryof video content on digital platforms has
also been delivered to News employees.
Across the whole of the BBC, UK and overseas,
over 30,000 health and safety courses havebeen completed this year through a combinationof online and face-to-face delivery.
New talent: apprenticeships andtraining schemes
We are committed to continuing to invest in
apprenticeships (aimed at non-graduates) andtrainees (who are mainly graduates)and haveset an ambition of 2.3% of our employees being
apprentices or trainees by the end of 2018.
In September 2016, there were 237
apprentices spread across the BBC, inproduction, journalism, engineering, digital,business and legal departments. Combinedwith our 100 graduate trainees, this means
we are providing 337 high-quality, paid
opportunities for young people to begin
their career in the broadcasting sector.
Our opportunities are across the UK –in London, Birmingham, Bristol, Cardiff,
Salford, Glasgow and Belfast and across theBBC’s regional television and local radio
network. Working with partner organisations
enables us to find high-quality talent incommunities historically not well connectedto the broadcasting industry. Our degreelevel Business Apprentices and Production
Apprentices are 29% and 24% Black, Asianand minority ethnic (‘BAME’) respectively,
and in production, trainees with a declareddisability make up 23%, while for ourapprentices this number increases to 32%.

All our programmes continue to be very
popular. Over 6,000 applied for our
Production Trainee Scheme, 3,500 for
our Journalism Trainee Scheme and 3,000
for our Production Apprenticeship.
The Broadcast Engineering Degree
Apprenticeship, which is now in its fourthyear has resulted in us hiring and training 74
broadcast engineers to date, some of whom
have gone on to undertake a BBC Masters
qualification in Broadcast Engineering.
In addition to our paid opportunities, we
also provided 1,176 BBC work experienceplacements during 2016. Our BBC Make
It Digital (pre-employment) traineeship,
developed in partnership with Job Centres
nationwide, the Skills Funding Agency
and nations’ devolved governments has,so far, seen around 1,700 young people
take up the programme across the UK
and we have now launched a virtual BBC
Make It Digital traineeship which offers
employability advice to young people.
Outreach and bringing new skills
to the industry
In line with our Charter commitments
we work in partnership with others todeliver events and learning opportunities
for the wider media sector.

In partnership with Creative Skillset welaunched the Production Co-ordination
Training Programme to tackle an industry-wideskills gap. The first 28 delegates, many from
non-media backgrounds, have been through acomprehensive ‘bootcamp’, learning everythingfrom health and safety to negotiation skills.
Another 34 will be recruited by the summer.
Our partnership with the National Film andTelevision School has continued, delivering a
number of co-branded short courses aroundskills gaps in continuing drama. Talented
students have been successfully placed in craft
drama roles in a range of BBC productions
such as EastEnders, Holby City and Doctors.
A series of co-branded training and skills
days were also run in partnership withBAFTA, the Royal Television Society and
Women in Film & Television, including theaward-winning diversity initiative – Expert
Women’s Day, which trained a number offemale experts to contribute in their subject
areas for future BBC news and current affairs
output across television, radio and online.

BBC News School Report was held on
16 March 2017 across a number of BBC sites,
and gave 11 to 16 year old students fromnearly 900 schools across the UK the chance
to make their own reports for a real audience,using lesson plans, BBC learning resources andthe help of BBC volunteer mentors. It teaches
young people how news is made: how to put
together a news story and how to check facts
and sources, which is increasingly important asthey come across ‘fake news’ in all its forms.
Digital Cities event weeks were organised
in Birmingham, Bristol, Manchester, Belfast,
Cardiff and Glasgow. They feature a wide
range of activities provided by the BBC,
Creative Skillset and many other partners
at venues across a city and provide an
opportunity to promote cross-sector
collaboration and learning, highlighting
opportunities to develop skills and explore
the next set of digital opportunities.

BBC Annual Report and Accounts 2016/17

59

FINANCE AND PEOPLE

Diversity and inclusion
The BBC is already one of the most diverse and inclusive workforces in the UK.
Having such diversity across our people enables us to reflect the diverse
communities of the whole of the UK in the content of our output and services.

We have met thetargets previously set
for 2017 and are on
track to meet the morestretching 2020 targets.

BBC Young Dancer 2017

During 2016, we updated our diversity andinclusion strategy with commitments thatby 2020:–– our workforce will be at least as diverse as
any other in the industry–– we will have met portrayal targets that covera much wider range of diversity than any
other broadcaster–– we will have hardwired diversity andinclusion into everything that we do
Substantial progress towards these goals
has already been made and following a
recent census, our diversity and inclusion
statistics show that we have met the targets
previously set for 2017 and are on track tomeet the more stretching 2020 targets.
F ull details are provided in the Equality
Information Report: bbc.co.uk/corporate2/diversity/
newsandevents/equality-information-report-2017

As a result of our more diverse workforce,
portrayal across our content and services
is noticeably improving. We are seeing and60

BBC Annual Report and Accounts 2016/17

We continue to sponsor a number of initiatives
across the BBC. These include developing
Diversity and Inclusion Commissioning
Guidelines, a Clore Leadership programme,
Creative Access Internships, AssistantCommissioners Development Programme
and a £2.1 million Diversity Development Fund.
Externally we collaborate with a numberof partners and are an active member of
the Creative Diversity Network, where wehave played a key role in the cross industry
initiative creating Diamond, a diversity
monitoring system. The first results fromthis are due to be published by the end of2017 and will measure the progress we aremaking in our on-screen portrayal targets
of 5% for on-screen disability and 15% foron-screen Black, Asian and minority ethnic.

Workforce

31 March 20172017 target

2020 target

48.2%

n/a

50%

hearing a wider range of stories and voices
than ever before. From fresh new televisioncontent to our favourite heritage brands. On
television, iPlayer and radio, through our sports
coverage, Children’s content and BBC Learning
initiatives and on stage with our performing
groups and in accessible product design.

Women (all staff)
Women (leadership)

42.1%

n/a

50%

Disability (all staff)

10.2%

5.3%

8%

Disability (leadership)

9.6%

5%

8%

BAME (all staff)

14.5%

14.2%

15%

BAME (leadership)

10.3%

10%

15%

LGBT (all staff)

10.5%

n/a

8%

LGBT (leadership)

11.5%

n/a

8%

S T R AT E G I C R E P O RT

Charitable work
The BBC has been broadcasting appeals for charities
since 1923 and they are an important part of our remit
as a public service broadcaster.

The challenges children and young people
face are diverse and complex – the loss of aparent, disability, mental ill health, child sexual
exploitation. Nearly a third of children in the
UK are living in poverty. Around 1.6 million
children are living in severe poverty, surviving
without at least one basic necessity such as
regular meals, adequate winter clothing or asafe, warm home to live in. BBC Children in
Need, with the support of the BBC, works
tirelessly to fund over 2,400 projects whichtackle these challenges, with fresh thinking
and ideas that support the most vulnerable,build their confidence and resilience and makea lasting, positive change in their young lives.
F or more information, please
visit: bbcchildreninneed.co.uk

DIY SOS for Children In Need

Over £123 million
was raised by the BBC
in the financial year
2016/17.
Alongside support for our two corporatecharities – BBC Children in Need and BBC
Media Action, and partnerships with Comic
Relief and St Martin-in-the-Fields, there areweekly and monthly appeals for a broad rangeof charities. Over £123 million was raisedby the BBC in the financial year 2016/17.
BBC Children in NeedIn 2016, people from every corner of
the UK came together to help positively
change the lives of disadvantaged children
and young people in local communities.
Once again, the BBC gave its support forthe charity through a host of inspiring
programming. From BBC Children in Need

Rocks for Terry; a star-studded night ofentertainment celebrating the life of legendary
broadcaster Sir Terry Wogan, to the returnof The One Show’s Rickshaw Challenge,
which saw young people supported by BBC
Children in Need funded projects peddle
470 miles alongside Matt Baker. Charity
specials from DIY SOS, Countryfile and Songsof Praise warmed the hearts of viewers whilst
an exceptional film, Prison, My Parents & Me,
documented difficulties faced by children
and young people who have lost a parent
in the criminal justice system. Meanwhile,
BBC radio stations, inspired by the ‘Do Your
Thing’ fundraising campaign, channelled
passions, hobbies and fears to fundraise. In
addition, the charity’s focus on year-roundfundraising saw events such as Gung-Ho!,an inflatable obstacle course challenge, andCarFest North and South hosted by Chris
Evans engage fundraisers throughout 2016.
The appeal culminated in the announcementof a record-breaking fundraising total of £46.6
million during November’s spectacular appeal
show, this sum has continued to grow and a
final total will be announced this summer.

BBC Media Action
The BBC’s international development charity
uses media and communication to transform
lives, working with partners to reach morethan 200 million people a year in someof the world’s most challenging places.
BBC Media Action helps people improvetheir health, take part in civic life, realise
their rights, improve their economic security
and opportunities and survive disasters.
Its ‘lifeline’ training programmes help
broadcasters and relief agencies give people
life-saving information in the wake ofhumanitarian crises. It mentors and trains
journalists and broadcasters and produces
television, radio and multimedia programmes.
Last year the charity delivered 100 projects
in more than 16 countries. This included
Afghanistan, where less than half of allchildren aged between one and two are fully
immunised against preventable childhood
diseases such as polio. Last year, BBCMedia Action launched a radio magazine
programme to encourage parents to discussfamily health. After only a few months on air,audience analysis showed the programme had
motivated people to take their children for
vaccinations. In Kenya, where past elections
have been marked by organised violence,the charity developed a new discussion
show to get young people more involved inpolitical life. In South Sudan, where conflict

BBC Annual Report and Accounts 2016/17

61

FINANCE AND PEOPLE

has displaced large sections of the population,
BBC Media Action trained and mentored
radio producers to make programmes about
peace-building, maternal health and education.
As a result, several stations reported theirstaff had learned new skills in sourcing andfact-checking, interviewing and production.
In Syria, it launched a drama aimed at bridging
social, political and religious divides between
people affected by the long-running civil war.
In 2016/2017, BBC Media Action was
supported by a range of funders including
the Bill and Melinda Gates Foundation,
EU Humanitarian aid and Civil Protection(‘ECHO’), Swedish International Development
Cooperation Agency (‘SIDA’), the UK’s
Department for International Development(‘DFID’), UN agencies and USAID. Total
income in 2016/17 was £43 million.
F ind out more about BBC Media Action’s
projects: bbc.co.uk/mediaaction

Broadcast appeals
The idea to grant, often smaller charities,
airtime on the BBC, goes back to Lord
Reith. A thorough selection process for the
weekly and monthly appeals is led by theBBC’s Appeals Advisory Committee. BBC
production teams work hard with each andevery charity, enabling them to make themost of this opportunity. Presenters give
their time freely. The benefit of the appeal
goes well beyond the money raised; it alsolies in the opportunity for charities to share
their work and raise awareness with a muchwider audience. This year, the Radio 4 andBBC One Lifeline appeals have raised over£1.1 million for 60 charities, with a wide rangeof causes both in the UK and overseas.
Y ou can see the results here: bbc.co.uk/
charityappeals/about/amounts-raised

Charities that meet the criteria canapply for a BBC appeal here: bbc.co.uk/
charityappeals/appeals/apply-now.
There is a separate selection process forbroadcast appeals on BBC television and radioin Northern Ireland, which last year broadcast
13 appeals and a special Christmas-time appeal.
The BBC Radio 4 Christmas appeal marked
the 90th year of a long partnership with
St Martin-in-the-Fields, for their workwith homeless people and those at risk ofhomelessness across the UK. The appeal
raised a new record: £2,846,596. Many
Radio 4 presenters could be found taking
telephone donations on the day of the appeal.

62

BBC Annual Report and Accounts 2016/17

Comic Relief
W1A trail for Red Nose Day
2017.

The BBC also broadcast two appeals forthe Disaster Emergency Committee, thesehelped towards totals of £22 million for
Yemen and £55 million for East Africa.
Comic Relief
With a shared belief in the power ofentertainment to motivate the nation tochange lives here and overseas, the BBC
partnership remains absolutely central andvital to all Comic Relief does during its Red
Nose Day and Sport Relief campaigns.
Red Nose Day 2017 was an exceptional
demonstration of how the whole BBC getsbehind this national charitable event.
BBC television dedicated a whole Friday
evening and also customised many of its
existing programmes to Comic Relief specials.
Radio 1 and Radio 2 also ran fundraising
events with Radio 2 DJ Sara Cox valiantly
dancing to 80s music for 24 hours andraising over £1.2 million in doing so.
The One Show, Countryfile, Saturday Kitchen,
Loose Ends, Let’s Sing and Dance for Comic Relief
and other shows all took part. As did Blue Peterwith its comedy classroom. There was also awell-received factual one hour documentary,
The Red Nose Convoy, in which six popularstars drove to see projects in Kenya andUganda, delivering vital equipment including
medical supplies, mosquito nets and bikes.
Comic Relief worked closely with the
BBC to encourage the British public to get
involved and ‘make your laugh matter’. Comic
Relief’s high level of public participationand engagement meant people across thewhole of the UK took part in the campaign,
be it by watching the television, listening to
the radio, seeing digital original sketches,
fundraising, buying a nose or donating.

On 24 March, the campaign culminatedin the usual appointment-to-view night ofunpredictable comedic live moments intercut
with sketches and hard-hitting appeal films.
The night was produced by BBC Studios with
Richard Curtis, as well as other contributing
writers, directors and artists. The ambition
this year was to put comedians back at thecentre of the stage and provide a selection oftalent and material that appealed to a wide
range of audiences – young and old – sothe evening was hosted by a refreshed anddiverse comedy line-up including Sir Lenny
Henry, Warwick Davis, Sally Phillips, JonathanRoss, Romesh Ranganathan, Greg Davis,
Miranda Hart and featuring newcomers
such as Joe Lycett and Luisa Omeilan.
Highlights included a La La Land-inspired
opening sequence, James Corden’s Carpool
Karaoke with Take That, a special shortfilm of Red Nose Day Actually and WIA
trails. Ed Sheeran and Kurupt FM and Rag‘n’ Bone Man were also very popular.
The overnight audience for the evening was
6.2 million viewers and it peaked at overeight million.
At the end of the Red Nose Day weekend, thetotal raised was over £73 million, which willbe spent helping people living in the world’s
poorest communities and right here in the UK.
Read more about Comic Relief ’s work:
comicrelief.com

S T R AT E G I C R E P O RT

Environmental sustainability
Our environmental sustainability strategy focuses on
reducing the environmental impacts of our operations,embedding sustainable practices in programme-making
and inspiring our staff to take action.

We have been reporting performance toenvironment targets since 2009 and havemade good progress, including reducing
carbon emissions from our buildings by 40%,
cutting 60,000 tonnes of CO2e from ourfootprint. Recycling rates increased to 67%,
and transport emissions have reduced inabsolute terms by 11% – over 4,000 tonnesof CO2e since 2008, a per-BBC traveller
reduction of 4%. We are currently setting
new goals for this new Charter period.
From 1 April 2017 we are purchasing
renewable electricity to cover our usage at
the majority of our sites, which will makea significant impact, reducing the size ofour carbon footprint. This is a positive step
and we continue our efforts to reduce ourenergy demand through efficient operationof our properties and technology.
Our programme teams continue to embracegreener ways of working, with a further 81
programmes achieving sustainable production
certification under the BAFTA albert scheme,
which was originally created at the BBC.
Shows carrying the badge during the year
include EastEnders, Still Open All Hours,
and the Doctor Who Christmas Special.
We promote sustainable ways of working
across the industry and now require
independent production companies whomake television programmes for the
BBC to use the albert carbon calculator
to footprint their television production,
as well as our in-house teams.
Inside the BBC, staff knowledge andawareness are supported in-house through‘Carbon Literacy’ training, with over
320 BBC staff taking the course. Deputy
Director-General, Anne Bulford launcheda staff campaign promoting ‘simpler,smarter and greener’ ways of working,asking staff for their ideas and support.
You can find more information at:
bbc.co.uk/responsibility/environment

BBC environment targets

Absolute reduction in energy consumption

Absolute reduction in CO2 emissions
from buildings
Reduction in water use (per person)

Reduction in waste (tonnes) to landfill(per person)
Amount of waste recycled
Reduction in transport CO2 emissions(per BBC user)

Target2016/172016/17
Performance against
baseline

%

%

-20%
-20%
-25%
-25%
70%
-20%

-39%
-40%
-43%
-90%
67%
-4%

Greenhouse gas emissions

91,426
18.5

Greenhouse gas emissions (tonnes CO2 emissions, scopes 1 and 2)
Carbon intensity (tonnes CO2 emissions/total group Income £m):

Greenhouse gas data is for UK-based and representative World Service bureaux; detailed information and explanatory notes can befound online at: bbc.co.uk/responsibility/environment
Baseline year: 2008

Sustainable production

In-house Children’s and television
to use albert to carbon footprint
production
BBC average carbon footprint for
television production per productionhour
BBC Children’s and television
productions to complete albertsustainable production certification
process

Target2016/17

Performance
2016/17

100%
N/A
25

88%
15.8
81

on track

productions

on track

tonnes CO2

productions

Albert is a carbon calculator which helps production teams across the broadcasting industry calculate the carbon emissions associatedwith television production
Albert certification helps productions take steps to reduce environmental impacts. Successful productions are awarded a one, two or
three star rating and may display a badge of programme credits. Productions which have completed the process have progressed to theaudit stage

BBC Annual Report and Accounts 2016/17

63

G OV E R N A N C E

BBC Board
The Board is responsible for ensuring the BBC fulfils its mission and public
purposes as set out in the Charter. It replaced the two-tier structure of the
BBC Trust and the BBC Executive Board as the Corporation’s governing bodyfrom 3 April 2017.
The Board is chaired by Sir David Clementi and consists of ten non-executive
directors, including the Chairman, and four executive directors, including the
Director-General.

Sir David Clementi
Chairman

Tony Hall
Lord Hall of Birkenhead CBEAnne Bulford OBE
Deputy Director-General

Director-General and Editor-in-Chief

64

Simon BurkeTim Davie

Non-executive director
Chair, Audit and Risk Committee

Chief Executive Officer,
BBC Worldwide

BBC Annual Report and Accounts 2016/17

Tanni Grey-Thompson,
Baroness Grey-Thompson DBE
Non-executive director

G OV E R N A N C E

The Chairman and the four nations’ nonexecutive directors are appointed by HM The
Queen on the recommendation of Ministers
and the remainder of the Board are appointed
by the BBC through the Board’s Nominations
Committee. The Board members for Walesand Northern Ireland are yet to be appointed.
Full biographies of all Board members,
including their other roles, can be foundon the BBC’s website.

Ian Hargreaves CBE

Tom Ilube

Non-executive director
Chair, Editorial Guidelines andStandards Committee

Non-executive director
Chair, Fair Trading Committee

This is the membership of the Board as atJune 2017. Throughout the reporting year
membership has changed. Please referto pages 67 and 71 for further details.
The Board delegates some of its responsibilities
to sub-committees and information on thecommittees can be found at: bbc.co.uk/
aboutthebbc/insidethebbc/
Executive Committee
The Director-General chairs an Executive
Committee, which is responsible for the
day-to-day running of the BBC. Nine directors,
who manage large operational areas of the
Corporation, also sit on this Committee.
They are:Ken MacQuarrie

Steve Morrison

Director, Nations and Regions

Non-executive director
Member for Scotland
Chair, Remuneration Committee–– Tony Hall, Director-General–– Anne Bulford, Deputy Director-General–– Tim Davie, CEO BBC Worldwide–– James Harding, Director, News andCurrent Affairs–– Valerie Hughes D’Aeth, Group HR Director–– Mark Linsey, Director, BBC Studios–– Ken MacQuarrie, Director, Nations
and Regions–– Charlotte Moore, Director of Content–– Matthew Postgate, Chief Technology
and Product Officer–– James Purnell, Director of Radioand Education
The Executive Committee is responsible fordelivering the BBC’s services in accordancewith the strategy agreed by the Board, andfor all aspects of operational management.

Sir Nicholas Serota CH

Ashley Steel

Non-executive director

Non-executive director
Member for England Find out more: bbc.co.uk/aboutthebbc/
insidethebbc/managementstructure/seniormanagement

BBC Annual Report and Accounts 2016/17

65

G OV E R N A N C E

Governance report
We comply with corporate governance best practice
BBC Corporate Governance Framework
The BBC’s corporate governance framework
is defined in its Royal Charter and theaccompanying Framework Agreement. You
can find the Charter and Agreement on the
BBC’s website at: bbc.co.uk/corporate2/
insidethebbc/whoweare/bbc_royal_charter–– division of responsibilities between Chairman
and Chief Executive (UK Corporate
Governance Code principle A.2.1 and A.3.1)–– evaluation of the Chairman (UK Corporate
Governance Code principle B6.3)–– make-up of Board (UK Corporate
Governance Code principle B.1.2)

The Charter requires the BBC to have regard
to generally accepted principles of good
corporate governance. Although the BBC is
not a listed company, it has opted to adopt
best practice and follow the provisions of
the Financial Conduct Authority’s Listing
Rules and the Financial Reporting Council’s
2014 UK Corporate Governance Code,where appropriate, in order to deliver thesame governance standards as companies
quoted on an EU regulated stock market.

Due to the impending change in thegovernance arrangements, the BBC also did
not comply with the following principle:

The BBC has complied with the corporate
governance requirements of the Charter andAgreement and has also substantially compliedwith the UK Corporate Governance Code.
There are a number of components of the UK
Corporate Governance Code that are either
not appropriate to the circumstances of the
BBC or where compliance with the BBC’s
Charter or Agreement overrides compliancewith the UK Corporate Governance
Code, and these are set out below.
The main areas where the BBC’s Charter
overrode the UK Corporate Governance Codeduring 2016/17 were related to the governancestructure and the operation of the BBC’s
former governing bodies. During this period
the BBC had a two-tier governance structure,
consisting of the BBC Trust and the Executive
Board. On 3 April 2017, following the grantingof a new Charter, this arrangement was
replaced by a single Board. The BBC compliedwith the requirements of its Charter, andtherefore was not able to meet the following
principles of the Corporate Governance Code:66

BBC Annual Report and Accounts 2016/17–– external evaluation of the Board(UK Corporate Governance Codeprinciple B.6.2)
In addition, there are two areas where the UK
Corporate Governance Code is not relevant to
the BBC, these are:Make-up of remuneration (UK Corporate
Governance Code principle D.1.1): The BBC
sets levels for executive remuneration thatshould be sufficient to attract, retain andmotivate directors of the quality required to
run the organisation successfully, in line withthis principle. However, this principle also
requires aligning executive remuneration to
the notion of enhancing shareholder value
by making performance-related elementsof remuneration a significant proportion of
total remuneration. By virtue of the BBC’s
licence fee funding and its status as a public
corporation, the BBC has determined that theamount of variable (or performance-related)
remuneration that may be earned by staff
within the public service should be limited.
There is no variable pay for any BBC PublicService executive director and bonuses havebeen stopped. Tim Davie receives an elementof performance-related pay in his role as Chief
Executive Officer of BBC Worldwide, theBBC’s wholly-owned commercial subsidiary.

Interaction with shareholders (UKCorporate Governance Code principles
B.7.1, B.7.2, D.2.4 and section E): The
BBC is not a profit-oriented company withshareholders and so provisions relating tointeraction with shareholders do not apply.
Cost of compliance
In 2016/17, the BBC incurred costs estimatedat £15.6 million (2015/16: £14.2 million) toensure that we complied with all relevant
legislation. This includes the BBC’s annual£1.4 million regulatory fee to Ofcom.

G OV E R N A N C E

Remuneration report
SummaryThis is the last remuneration report madeunder the framework of the previous Charterand Agreement. During this period, there has
been significant focus on senior pay at the BBC
allied to an increased rigour and consistency
in the management of the whole workforce.

The 2016/17 remuneration reporting
was produced by the Executive Board’s
Remuneration Committee that existed underthe BBC’s governance arrangements for theprevious Charter. The BBC Board has now
established a new Remuneration Committee,
which will approve such reporting in the future.

Since 2011, senior manager headcounthas been reduced by a total of 172 heads
saving a total of £15.2 million, achieving
169% of the target. In the last year, thesenior manager headcount has reduced by
47 heads, at a cost saving of £4.4 million.

During the financial year, the BBC, with theagreement of the BBC Trust, continued tooperate under the principles set out in the2011 Executive and Senior Management Pay
Strategy. That previous strategy continues
to deliver value to the organisation and wehave significantly over-achieved against key
headcount and paybill targets. Senior manager
headcount is now at 312 against a targetof 414. The paybill has now been reducedby £15.2 million, which is 169% of target.

Achieving these reductions was vital to help
drive as much money as possible to content
and creativity, and give the best possible value
for money for the licence fee payer. Now it
is vital that the BBC can look forward andin a climate of intense competition for thebest people, provide an offer to staff that is
attractive, while being right for the distinctive
environment of public service broadcasting.
Given the changes taking place to the BBC’s
governance, it was agreed with the Trust thatlast year was not the time to put in place
a formal new reward strategy. However,preparatory work has been undertaken which
will enable the new BBC Board to develop
a clear strategy for the coming period. This
has included work on the themes of One
BBC, recruitment and retention, performance
management and organisational culture.
The BBC operates within a fast-changing
market with intense competition for talent,with dramatic growth among some new
media companies offering highly attractive
packages. The BBC’s new structure,including BBC Studios, and a new strategy
following Charter review, will ensure theorganisation is able to appeal to all those
who are excited about the opportunities
of working in public service broadcasting.
Introduction
This report sets out the BBC’s remuneration
policy and details the annual remuneration
received by the staff members of the Executive
Board (the executive directors) for the
2016/17 financial year. It has been preparedon the basis that the requirements of theLarge and Medium-sized Companies andGroups (Accounts and Reports) Regulations
2013 and Listing Rules apply to the BBC
wherever these disclosure provisions are
relevant. The sections on pensions andremuneration received by the Executive
Board members have been audited by Ernst& Young LLP, the BBC’s statutory auditors.

During the year, work has continued on the
reorganisation and simplification of the BBC,as we work toward the definition of a newsenior leadership group that will account forless than 1% of the total workforce. This new
structure will be defined and confirmed in
the next financial year. Our current ratio of
senior managers to total population is 1.6% atyear end, down from 1.7% at 31 March 2016.
There have been no substantive changes
in our approach to management of senior
pay in the year, and it is worth stressingthat we continue to operate a significant
discount of our senior salaries to the market,
despite the fact that we are operating
in increasingly competitive commercial
markets for the best and brightest talent.
As part of the reorganisation of the
Corporation, there were a number ofchanges to the Executive Board in thelast year, both in terms of structure andmembership. Mark Linsey joined the Board
in April 2016 as Director, BBC Studios. Then,in July 2016, Anne Bulford changed role,
being appointed Deputy Director-General,
and Charlotte Moore was appointed to theBoard as Director of Content. In August,
Sir Nicholas Serota joined the Board as
non-executive director and, in October
2016, it was announced that a new division,
Radio and Education, was to be created. As
a result of James Purnell being appointed to
the role of Director, Radio and Education on
31 October, he remained on the Board andHelen Boaden stood down from the Board,
having resigned her role as Director, Radio.

The remuneration policy
for executive directors
Remuneration Committees: constitution
and operation
The BBC Trust, up to 31 March 2017, has been
responsible for setting the remuneration
strategy for the Executive Board and for all
aspects of the remuneration of the DirectorGeneral and the non-executive directors.
The Executive Board’s Remuneration
Committee (‘ERC’) was responsible for
implementing the agreed strategy for
all executive members of the Executive
Board, with the exception of the DirectorGeneral. Its members were non-executive
directors: Dame Fiona Reynolds (Chairman),
Alice Perkins and Dharmash Mistry.
Complying with the UK Corporate
Governance Code 2012, the Committee
has taken specialist advice from external
professional advisers on some matters,
particularly those relating to market
practice. During the year, independent
advice was received from Willis Towers
Watson on matters related to market
comparability of executive remuneration.
The Committee established the Senior
Manager Remuneration Committee (‘SMRC’)
in September 2012, giving it responsibility foraligning the operational needs of the BBC
within the strategic framework set by theTrust and implemented by the Committee.
Executive Board membership andstructure
As at 31 March 2017, within the Executive
Board, there were six executive directors
employed in the public service; the CEO BBCWorldwide, employed by BBC Worldwide;and six non-executive directors. Details of
the Executive Board membership and full
remuneration are provided on page 71.
Executive director pay components
The BBC is committed to setting appropriate
levels of pay for executive directors that
attract, motivate and retain the best people
to lead the BBC and provide value for the
licence fee payer. The BBC’s executive
pay strategy is to be fair, transparent andbroadly consistent with the approach to
pay for all employees at the BBC. Progresscontinues to be made towards these goals,
including the phased diminution of historicdifferences in approaches to pay andbenefits between senior and other staff.

BBC Annual Report and Accounts 2016/17

67

G OV E R N A N C E

The BBC receives regular feedback regarding senior pay from employees during annual pay negotiations through the trade unions and via the annual
staff engagement survey. This feedback is considered when setting the pay strategy for the executive directors. When reviewing the pay for the
executive directors, the Committee considers each component of the total remuneration package broken down as follows:
Component

Purpose and link to strategy

Operation

Maximum opportunity

Base pay

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

Three factors are used to determine
the level of base pay set for an
executive director:

There is no prescribed maximum salary or
maximum increase.

A discount of 50-80% against total direct
remuneration in the commercial sector isapplied to executive director roles.

–– would the rate be consistent with thediscounted market rate for the job?
–– does the personal performance of the
Executive justify the level of base pay?
–– is the level affordable to the BBC and notdeemed excessive?

Executive directors employed in the BBC’scommercial businesses are contractuallyentitled to a performance-related annual
bonus funded by the commercial businessand not the licence fee. It is reward for theachievement of short-term strategic goals
and profit growth.

Executive directors in Public Service
are no longer entitled to receive a
performance bonus.

Pensions are offered in accordance with theall employee pension arrangements.

Directors can elect to join the defined
contribution scheme LifePlan.

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

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

Variable pay

Benefits

Payment of contractual bonus in the BBC’scommercial businesses is subject to theachievement of an overall headline profit
and cash target for the business.

No executive director in the public service
has received a bonus since 2008.
The maximum bonus payable to an executive
director employed in a BBC commercial
business is 70% of salary where target bonus
is 50% of salary.
Current policy provides a defined
contribution scheme with no salary cap anda maximum employer contribution of 10%
of salary.
Existing members of a defined benefit pension
scheme are capped at the maximum salary for
their pension scheme or are subject to a cap
in pensionable salary growth.
Executive directors are provided with deathin service life assurance cover of two times
their basic salary. Where they are membersof either the BBC Pension Scheme or LifePlan(the BBC’s defined contribution plan), they areprovided with death-in-service life assurance
cover of four times their basic salary.

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

Executive directors who were already inreceipt of a car allowance have retained it.
Helen Boaden was the only executive
director who received a car allowancepayment in 2016/17, the car allowance wasfrozen on promotion to the Executive Board

The maximum car allowance benefit received
by any executive director is £12,900 p.a.
This is a historical benefit for PublicService directors.

The Director-General is entitled to a carand driver under earlier arrangements
but has no entitlement to a personal car
allowance or fuel allowance.
During 2016/17 all other executive directors
have had shared access to a car and driver.
In April 2011, the BBC removed private
health care benefit for all new executive
directors to ensure that future policy aligns
with arrangements for all BBC employees.

Executive directors who were alreadyentitled to funded private medical insurance
have retained it.
Executive directors who elected to take up
funded private medical insurance in 2016/17
were: Helen Boaden, Charlotte Moore,
Mark Linsey and Tim Davie.

68

BBC Annual Report and Accounts 2016/17

The maximum level of cover offered is family
cover. This is a historical benefit.

G OV E R N A N C E

Operation

Maximum opportunity

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

Component

Purpose and link to strategy

There is no contractual entitlement to any
additional remuneration in the event ofearly termination other than in the case oftermination for reason of redundancy.

In the event of redundancy, all executive
directors are entitled to payments equal to
one month per year served up to maximum
payment of £150,000.

Other
There is no entitlement to any other
remuneration remuneration, so no such payments in year.

However, if other payments were to be
proposed they would be by exception
and consideration would be given to thereputational risks to the BBC, and thelevel of payment would be agreed by the
Executive Remuneration Committee on acase-by-case basis.

There is no prescribed maximum.

PensionExecutive directors who joined the BBC before 1 December 2010 are eligible to participate in the BBC Pension Scheme (‘the Scheme’), which
provides for pension benefits on a defined benefit basis. Executive directors who joined the BBC on or after 1 December 2010 are eligible to join
LifePlan, which is the BBC’s defined contribution arrangement. The BBC pays matching contributions to LifePlan for employee contributions
between 4% and 5%. Employee contributions between 6% and 7% are matched plus an additional 1%. Employee contributions of 8% or more
receive the maximum employer contribution of 10%. There is no maximum pensionable salary for contributions to LifePlan.
Executive directors who decide not to join LifePlan or are not already an existing member of the Scheme are, subject to meeting the relevant
criteria, automatically enrolled into the National Employment Savings Trust (‘NEST’). The BBC and employees currently pay 1% of qualifying
earnings to NEST. Individuals can choose to opt out of this.

SchemeDate closed‘Old’ benefits
defined benefit

30 September 1996

‘New’ benefits
defined benefit

CAB 2006
defined benefit

CAB 2011
defined benefit

31 October 2006 30 November 2010

1 January 2012

Open to all eligible
employees

Open to all eligible
employees

BBC will
contribute a
maximum of
10% of salary
if employee
contributes
8% with lower
sliding scale

BBC will
contribute 1%of qualifying
earnings

Accrual60ths accrual

60ths accrual

1.67% accrualadjusted in linewith inflation

1.67% accrualadjusted in linewith CPI

SalaryFinal pensionable

Final pensionable

Career averagerevalued earnings

Career averagerevalued earning

Normal pensionable age

National Employment
Savings Trust (‘NEST’)
LifePlan defined contribution (autodefined contribution
enrolment arrangement)

60

60

65

65

N/A

N/A

DOJ before
1 June 1989
uncapped, capped
otherwise £150,600

Capped at£150,600

Capped at£150,600

Capped at£144,000

Uncapped

Minimum earnings£5,824 p.a.
Maximum earnings£43,000 p.a.

Pensionable salary
growth before theearnings cap is applied

Limited at
1% p.a.

Limited at
1% p.a.

Limited at
1% p.a.

No restriction

N/A

N/A

Employee contribution(% of pensionablesalary)

7.5%

7.5%

4%

6%

Minimum
employeecontribution
is 4%

1% of
qualifying
earnings

Earnings cap

Executive directors’ pension arrangements may be reviewed and amended in response to changes in legislation or similar developments.
Details of the BBC Pension Scheme are available at: bbc.co.uk/mypension/

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G OV E R N A N C E

How does the executive pay policy in the
Public Service differ from that for all otherBBC employees?
Bonuses have not been paid to executive
directors in the Public Service since 2008, andthe BBC is moving away from the previous
two-tier benefit structure by phasing out
private medical insurance and car allowances.
No new executive director has received
these benefits since August 2011. Thesechanges have simplified and equalised pay
arrangements across our employee population.
A full range of benefits can be purchasedby all staff at all levels of the organisation
under our flexible benefits arrangements.
Executive directors and senior managers
are not entitled to the annual pay review
agreed with the National Joint Council ofTrade Unions and are not automaticallyentitled to any form of annual increment or
progression payment. Senior management pay
was reviewed in August 2016 and awarded
on a case-by-case basis, capped at £1,000.

Nominations Committee
Board appointments
Under the 2006 Charter governancearrangements, a Nominations Committee was
required to oversee the process of proposing
members of the Board. Appointments
were made by the Executive Board, with
non-executive appointments requiring theapproval of the BBC Trust. Membershipof the Nominations Committee wasdependent on whether it was dealing withexecutive or non-executive appointments.

Under the 2016 Charter, the Nominations
Committee of the Board is responsible for
executive appointments and non-executive
appointments to the Board, with the
exception of the Chairman and the nations’members. The current Board was appointed
under the transitional arrangements forappointments set out in the Charter.

Charlotte Moore, Director of Content, wasappointed to the former Executive Board,
effective 13 July 2016. Mark Linsey became
Director, Studios on 26 April 2016 andbecame a member of the former Executive
Board on the same date. Following approval
from the BBC Trust, the Nominations
Committee also appointed Nicholas Serota
as a new non-executive director of the
Executive Board from 1 August 2016.

Executive Board and Committee attendance
Executive
Board

Audit Committee

Fair Trading Committee

Ordinary

MemberMemberNumber of meetings for the period

126

Executives
Tony Hall
Helen Boaden
Anne Bulford
Tim Davie
James Harding
Mark Linsey
Charlotte Moore
James Purnell

12
6/7
12
10
12
11
8/9
10

Non-executives
Simon Burke
Dame Fiona Reynolds
Howard Stringer
Alice Perkins
Nicholas Serota
Dharmash Mistry

11
12
9
11
7/8
11

Attendee

6
6

6
6

6

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

BBC Annual Report and Accounts 2016/17

Attendee4* Anne Bulford was not invited to one Remuneration Committee meeting as it related to her own position

70

Nominations
Committee

4

4
4
4

Remuneration Committee

MemberMember4

8

Attendee

4

8

4

7/7*

4
4

8
7
8

G OV E R N A N C E

Board remuneration
Annual remuneration of the BBC Executive Board
The table below provides full details of the remuneration received by all Executive Board members and the total remuneration for Trustees for
2016/17, compared to previous year.
Executive directors and Trustee remuneration
Details of remuneration received (values in £000s)
Date appointed
to Board

Base pay

Benefits

Pension-related
single figure

Performancerelated

Total

Executive directors
Tony Hall

02/04/2013

2016/172015/16

£450
£450

£17
£15

£0
£0

£0
£0

£467
£465

Anne Bulford

21/06/2013

2016/172015/16

£424
£395

£0
£0

£0
£0

£0
£0

£424
£395

Tim Davie

01/11/2012

2016/172015/16

£400
£400

£2
£2

£40
£38

£223
£224

£665
£664

James Harding

12/08/2013

2016/172015/16

£340
£340

£0
£0

£34
£34

£0
£0

£374
£374

Mark Linsey

26/04/2016

2016/172015/16

£316
n/a

£2
£0

£41
£0

£0
£0

£359
£0

Charlotte Moore

06/07/2016

2016/172015/16

£233
n/a

£2
£0

£31
£0

£0
£0

£266
£0

James Purnell

19/03/2013

2016/172015/16

£295
£295

£0
£0

£30
£30

£0
£0

£325
£325

2016/172015/16£2,458£1,880

£23
£17

£176
£102

£223
£224

£2,880£2,223

2016/172015/16

£198
£340

£9
£15

£0
£40

£0
£0

£207
£395

Total former executive directors

2016/172015/16*

£198
£658

£9
£25

£0
£77

£0
£0

£207
£760

Total Executive Board

2016/172015/16£2,656£2,538

£32
£42

£176
£179

£223
£224

£3,087£2,983

£37
£33
£33
£47
£22
£33

£0
£0
£0
£0
£0
£0

£0
£0
£0
£0
£0
£0

£0
£0
£0
£0
£0
£0

£37
£33
£33
£47
£22
£33

£205

£0

£0

£0

£205

Total executive directors
Former executive directors serving on the Board
Helen Boaden
15/04/2013

Non-executive directors (2016/7)
Simon Burke
Dharmash Mistry
Alice Perkins
Dame Fiona Reynolds
Nicholas Serota
Sir Howard Stringer
Total non-executive directors

01/01/2011
01/09/2014
01/04/2014
01/01/2012
01/08/2016
01/01/2014* Totals for former executive directors 2015/16 include in-year leavers not present in this report
Employee pension contributions are ordinarily made via salary sacrifice arrangement as an employer contribution, with a corresponding reduction in salary. Base salaries for executive directors have notbeen adjusted to reflect the impact of salary sacrifice to enable like for like comparison with prior years before salary sacrifice was introduced
Taxable benefits: car allowance, private medical insurance and other taxable expenses
The pension related single figure is generally calculated at 20 times the increase in the accrued pension over the year net of inflation, less the directors’ defined benefit contributions, plus the employer’s
defined contributions. This is also shown in detail in the defined benefits pension prospective entitlements table on page 72
Tim Davie’s role as the CEO of BBC Worldwide is funded entirely by the BBC’s commercial operations and is not paid for or subsidised by the license fee. Tim Davie is contractually entitled to a bonus, it isfunded entirely by the BBC’s commercial operations. Payment of the bonus is subject to the achievement of an overall headline profit and cash for that business. The performance-related remuneration for
Tim Davie related to amounts earned in the year ending 31 March 2017Charlotte Moore and Mark Linsey were appointed to the Executive Board during 2016/17, as a result of this their earnings are pro-rated for the year in which they were a Board member and earnings for2015/16 are not included in the Board remuneration table

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2016/172015/16

Executive directors
Non-executive directors

Total remuneration£3,087£205£2,983£208

Total Executive Board£3,292£3,191

Total Trustees
Total annual remuneration

£535

£534

£3,827£3,725Chairman-designate
Sir David Clementi was appointed as Chairman-designate of the BBC on 16 February 2017, to undertake the transition to the new governancearrangements set out in the BBC’s Charter. The fees for the Chairman and the new Board members are set by the Secretary of State for Culture,
Media and Sport; the Chairman’s fees are £100,000 p.a. During 2016/17 Sir David Clementi was paid £12,202. The new governance arrangements
came into effect from April 2017 and as such his earnings will be reflected in subsequent years’ directors’ emoluments tables.
Defined benefit pension prospective entitlements

Mark Linsey
Charlotte Moore
Tim Davie

Age at31 March 2017

SectionAccrued pension
31 March 2017(or retirement/leaving the Board if
earlier)

56
48
49

CAB 2006
New benefits
CAB 2011

£24
£25
£12

Accrued pensions
31 March 2016(or joining the Board
if after)Director DB(via salary sacrifice)2016/17Pension-related
single figure

£22
£24
£10

£5
£8
£9

£41
£31
£40

1 Mark Linsey joined the BBC on 1 May 2007. The pension figures shown include the period before he was appointed a director
2 Charlotte Moore joined the BBC on 1 May 2006. The pension shown includes figures before she was a director
3 Tim Davie is an active member of the CAB 2011 section from January 2012 and retains a deferred benefit in the new benefits section for service up to that date. The accrued pension shown relates to
CAB 2011 only

Comparative pay across the BBC: how does executive director pay compare to that of other BBC employees?
In 2011 the BBC voluntarily agreed to report the top-to-median earnings multiple as proposed in the Hutton report ‘Fair Pay in the Public Sector’.
Since 2011, the BBC has published these figures on an annual basis.
The table below provides a summary of the Director-General to BBC staff median earnings and executive directors’ to median earnings figures
since 2011. The Director-General multiple has decreased slightly to 10.2 (subject to audit).

DG earnings
Executive directors’ median earnings

2017

2016

2015

2014

2013

2012

2011

10.2
7.7

10.4
8.2

10.7
8.2

10.9
8.2

11.0
8.1

16.5
8.7

16.8
8.9

Earnings calculation includes: basic pay, bonus, continuing allowances, overtime and other non-continuing allowances. Median earnings figures are calculated using Director-General and all Executive Board
annual salaries
These figures exclude the CEO, BBC Worldwide, whose role is funded entirely by the BBC’s commercial operations

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G OV E R N A N C E

The table below provides a summary of the changes to the Director-General’s cash earnings for 2016/17 versus the change in pan-BBC medianearnings over the same period. This demonstrates a positive increase in median earnings across the BBC while there has been no change in theearnings of the Director-General.

Director-General earnings
Pan-BBC median earnings

2016/17

Change from2015/16

450
44

0%
2%

* As the data is representative of Public Service Broadcasting, Tim Davie, CEO, BBC Worldwide, has been excluded

Severance
No severance was paid to executive directors during the year ended 31 March 2017.
Outside interests
With the prior agreement of the Director-General, executive members of the Executive Board may hold remunerated external directorships.
The prime purpose of the external directorship should be to support personal and career development and thereby give back to the BBC.
Remuneration which arises from external directorships may be retained by the individual. Executive directors may also hold non-remunerated
posts outside the BBC. No more than one to two days per month are permitted to fulfil all external duties.
During the year, one executive director held another remunerated external directorship, where fees were waived. The Executive Board’s registerof interests is available online: bbc.co.uk/aboutthebbc/insidethebbc/managementstructure/biographies/.
The BBC’s commercial businesses
During 2016/17, the BBC had staff employed within three commercial subsidiaries:–– BBC Worldwide–– BBC Studioworks–– BBC Global News Ltd
The remuneration policy for the subsidiaries includes the contractual provision of an annual bonus available to eligible staff, including directors, andit varies between commercial entities. The full cost of base pay and annual bonus are self-funded by the commercial revenues of each subsidiarycompany and are not subsidised by the licence fee.

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Audit Committee report
In the final year of the previous BBC Charter andAgreement, the Executive Audit Committee continued
to provide oversight to the BBC’s systems of financial
reporting, internal control and risk management.

At the same time, it sought, as far as
possible, to support the BBC’s transition to
new governance arrangements, whilst also
considering the ways in which the BBC’s mostprominent risks were changing and developing,given the emergence of new technologies.
The Committee continued to benefit
from an established and experienced
group of non-executives, supported byan effective secretariat. This ensured thatagendas, papers and discussion were of ahigh quality and focused on the mattersmost relevant to the needs of the BBC
and the purposes of the Committee.
The Committee met six times in theyear, with the relevant members of BBC
senior management in attendance. It met
privately each time with the external
auditors and reviewed their effectiveness.
During the year, the Committee: reviewed
the findings and actions arising from internaland external audit activity; oversaw the
management and status of key BBC risks;and reviewed and approved the Annual

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BBC Annual Report and Accounts 2016/17

Report and Accounts. Summaries of theCommittee’s activities were provided tothe main Executive Board and matters were
escalated for resolution where appropriate.
In addition, the Committee formally reviewed
and challenged management on some specificareas of risk or significance, including:–– the risks and opportunities for the BBC in
the changing technology landscape, including
mitigations around data protection andcyber security–– the development and implementationof the BBC’s tax management strategy–– the progress and benefits of major
projects and change activity–– BBC Worldwide’s trading andoperational risks
The Committee also reviewed thearrangements to transition the BBC’s
external audit from EY to the National
Audit Office for the upcoming financial year,
as well as providing input and oversight
to a number of key financial transactions
relating to the BBC’s property portfolio.

During all of its activities the Committee
continued to pay attention to audience
priorities and value for money.
No issues were reported as part of theCommittee’s annual performance review and
the Committee demonstrated a clear anddeveloped understanding of the key risks andchallenges facing the BBC. Overall, this reportwill show that the Committee discharged its
responsibilities effectively during the year.
Now, as we move into the new Charter
period and the BBC’s new governancearrangements, I look forward to chairing the
Audit and Risk Committee and working with
the new members, Ashley Steel and Tom
Ilube, to continue to support, interrogate andchallenge the BBC as it addresses the key
risks and challenges of the coming years.

Simon Burke
22 June 2017

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Executive Audit Committee report
The audit report for 2016/17 was preparedby the Executive Audit Committeethat existed under the BBC’s previous
governance arrangements. The reporthas been discussed by the new Audit andRisk Committee and approved on behalfof the BBC by the new BBC Board.
Role
The main purpose of the Executive Audit
Committee (‘EAC’), as established underthe 2006 Charter and Agreement, was toreview and maintain oversight of the BBC’s
corporate governance, particularly withrespect to financial reporting, internal control
and risk management. In order to gain thisassurance, the EAC had responsibility for:–– monitoring and reviewing the integrity of thefinancial statements of the BBC and thesignificant reporting judgments contained
within them–– reviewing the effectiveness of the BBC’s
system of internal control–– reviewing the process for the identification,
management and reporting of key BBC
strategic and operational risks–– reviewing the assurance processes in place totest and monitor the operation of controls
designed to manage key risks–– monitoring and reviewing the effectivenessand resourcing of the internal audit function–– reviewing the performance of the external
auditor, including auditor independence andobjectivity, scope of work, the provision of
non-audit services and fees–– reviewing the BBC’s systems for thedetection and prevention of fraud, bribery
and money laundering–– reviewing arrangements by which staff of thecompany may, in confidence, raise concerns
about possible improprieties in matters offinancial reporting, illegality or other matters

The Committee also met privately,
without any member of management
present, with both internal audit and theexternal auditors on a regular basis.

The EAC’s Standing Orders set out in moredetail the Committee’s responsibilities.
These were reviewed regularly and werelast updated in September 2016.

Meetings
The Committee met six times during 2016/17,
at key times in the reporting and audit calendar.

Membership
The EAC comprised three non-executive
directors, of whom at least one was
required to have recent and relevant
financial experience. The members
who served during 2016/17 were:

Minutes from the meetings were madeavailable to the Executive Board and to the
BBC Trust. Additionally, the Chairman of
the Committee reported back to the Board
after each meeting on any issues where
action or improvement was required.
Committee time was spent on thefollowing areas.

–– Simon Burke (Chair)–– Dame Fiona Reynolds–– Dharmash Mistry
Simon Burke, the Chairman, has significant,recent and relevant financial experience. In
addition, all of the members of the Committee
were individuals who hold or have held senior
positions in similar sized organisations and havethe experience and skills to properly fulfil their
responsibilities. When appropriate, the skills
and experiences of members were augmented
with advice from internal and external
professionals – for example on matters suchas developments in financial reporting.
Committee meetings were also attended by
the Director-General, the Deputy DirectorGeneral, the BBC’s General Legal Counsel, theDirector of Quality, Risk and Assurance andsenior representatives from internal audit, risk
management, finance and the external auditors.

Integrity of financial reporting
The Committee reviewed the integrity of thefinancial statements of the BBC. In doing so, it:–– identified through discussion with bothmanagement and the external auditor the
key risks of misstatement within the BBC’s
financial statements, including those areas
where significant financial judgements wererequired and which have influenced thefinancial statements–– discussed these risks with the auditor whilst
reviewing and agreeing the external auditors’audit plan–– reviewed and challenged detailed papers
received from management on those areas
requiring significant financial judgement,
taking account of the views of the auditor

Set out below are the key areas of judgement and how the Executive Audit Committee and, where necessary in reviewing the full financial
statements, the new Audit and Risk Committee addressed them.
Area of judgement

The Committee’s response

Pension scheme – assumptions impacting the accounting
pension deficit
The financial statements include a significant deficit on the balance sheet of£1,141 million for the BBC’s defined benefit pension scheme.

The Committee took advice from independent actuaries on theappropriateness of the assumptions used, including how these comparewith those used by other organisations. Scrutiny focused in particular on theassumptions used regarding discount rates, inflation rates and mortality/life
expectancy and how changes in these assumptions would affect the financial
statements, including any movements in these from prior years.

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

The Committee was satisfied that the assumptions used in the financial
statements were reasonable, appropriate to the BBC and supported byindependent actuarial specialists.

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Area of judgement

The Committee’s response

Property – accounting treatment of BBC buildings and
New Broadcasting House refinancing
The BBC holds a significant property portfolio, which continues to berationalised in order to reduce costs. The estate includes properties
held under freehold and those held under finance and operating leases.
Buildings which have been sub-let or available for sub-let may be classified
as investment properties. Judgements relate to the future intentions for any
vacant buildings and the related timescales. This can change the appropriate
accounting treatment and affect the carrying value on the balance sheet.
During the year, the assumptions used in the calculation of finance leaseassets and liabilities were updated to meet IFRS.

The Committee reviewed detailed reports from management, which
explained the treatment for the most significant buildings, including the
projected timescales for future activity and rationale for treatment.

During the year a refinancing took place of the underlying New Broadcasting
House (NBH) lease structure, including securing re-acquisition of theunderlying freehold by the BBC. Through the transaction, the BBC
eliminated inflation volatility and achieved a cash flow benefit throughto 2033. The transaction required a series of new accounting entries(including accounting for the derivative assets and liabilities arising fromthe transactions). The transaction was implemented in a manner that
limited any increase in the BBC’s credit exposure to the derivative
counter-parties involved.
Projects – capitalisation/impairment of capital projects
The BBC undertakes multiple capital projects at any one time. If a material
capital project cannot be completed on time, or will not derive future
benefit to the BBC, this could trigger an impairment charge.
Decisions on whether it is appropriate to capitalise project costs need
to be taken in line with current accounting standards.

It also considered the auditors’ views on the accounting treatment
for these buildings.
In relation to the NBH refinancing transaction, the Committee requested
a specific briefing on the arrangements and were provided with detailed
paperwork on the structure, rationale and accounting treatment for thedeal. The detailed treatment of the transaction continued to be monitored
throughout the year with the Chair of the Audit Committee acting as amember of the Sub Committee that had delegated authority to review theterms of the transaction and approve it. The BBC Trust also considered andapproved the transaction.
The Committee was satisfied that the treatment of these properties within
the financial statements was consistent with management intention and inline with accepted accounting standards.

Reports from management were reviewed, which explained the status ofmajor capital projects and the approach taken to assess whether or not any
impairment charge was required.
The Committee was satisfied that the assessments of impairment
undertaken by management were appropriate and in line with accepted
accounting standards.

Revenue recognition
There is an inherent financial risk around revenue recognition relating totiming of recognition of income. The nature of the risk varies between
the licence fee income in the public services and the commercial income,however in both cases the underlying risk is around year end cut-off.

The Committee considers that the BBC’s existing financial control systems
should ensure that income is properly treated in the financial statements.
There is confidence that management understand the risks in this area andhas suitable controls in place.

Provisions
The financial statements include provisions of £37.8 million as part of theBBC’s programme of restructuring. Judgements in this area are largely
related to the timing of recognition of these provisions, the amount to berecognised and the amount which has been utilised in previous years.

The Committee reviewed and discussed the level of provisions withmanagement. This included consideration of new provisions and any releaseand utilisation of existing provisions. Management confirmed that they haveapplied a consistent approach to the recognition and release of provisions
across the BBC group. The Committee concluded it was satisfied with thelevel of provisions carried and the disclosure in respect of those provisions.

Other less significant provisions totalling £33.3 million require judgements
regarding the assumptions used in quantifying the BBC’s exposure to claims
from various parties, and the likelihood of success of those claims.
Service licences – cost cut-off and allocation between
service licences
Service licences were used by the BBC Trust to regulate the licence fee
funded services. They included an agreed and authorised budget with a 10%
tolerance threshold. Service budgets included costs taken from a numberof different divisions and consequently judgements were required in the
allocation of direct costs and overheads across the various services.

Management confirmed to the Committeethat they were not aware of any material
misstatements or immaterial misstatements
made intentionally to achieve a particularpresentation. The auditors reported
any misstatements that they had foundin the course of their work and that nomaterial amounts remain unadjusted. The
auditors reported any misstatementsthat they had found in the course of76

BBC Annual Report and Accounts 2016/17

The Committee reviewed the outturn against the service licence budgets.
Management confirmed to us that the basis of cost allocation was the sameas in previous years.
The Committee concluded that it was satisfied that the costs wereappropriately classified during the year and in a way which was consistent
with the prior year.

their work and we consider amounts
which remain unadjusted immaterial.
After year end, having reviewed thepresentations and reports from management
and consulted where necessary with theexternal auditors, the newly established Audit
and Risk Committee was satisfied that thefinancial statements appropriately address
the critical judgements and key estimates(both in respect to the amounts reported
and the disclosures). The Committee wasalso satisfied that the significant assumptions
used for determining the value of assets andliabilities have been appropriately scrutinised,challenged and are sufficiently robust.
The Audit and Risk Committee reviewed thegroup financial statements and how these arepositioned within the wider Annual Report.

G OV E R N A N C E

To assist this review, reports from management
and from the internal and external auditors
were considered, which covered:–– the quality and acceptability of accounting
policies, including their compliance withaccounting standards–– compliance with legal and regulatory
requirements–– the clarity of disclosures and their compliancewith relevant reporting requirements–– whether the Annual Report as a whole wasfair, balanced and understandable andprovides the information necessary to assess
the BBC’s performance and strategy
Effectiveness of internal controls and risk
management framework
Internal controls assurance
The Executive Audit Committee reviewed theeffectiveness of the system of internal controls
during 2016/17, taking account of the findings
from internal and external audit reports
and other assurance activity, considering a
number of specific areas during the year:–– the trends and themes from internal audit
activity, questioning representatives ofinternal audit on the outcomes of their work.
A summary of every internal audit, including
key findings and assurance rating was
reviewed by the Committee–– actions arising from independent assurance
activity, including internal and external audit,
National Audit Office and BBC Trust
reviews, were monitored by the Committee
for completion. This was an area followed up
at every meeting to ensure that agreed
actions in respect of any weaknesses foundwere being properly addressed–– for areas which were considered high profileor have received critical assurance findings,
the Committee ensured there was suitablefollow-up and scrutiny over the completionof any improvement plans or agreed actions–– the Committee reviewed the assurance plans
and findings for major project and change
activity in the BBC, including assurance
provided by the BBC Project Management
Office, internal audit and external specialists–– The Committee approved the BBC’s Modern
Slavery statement and reviewed the approachfor ensuring compliance–– fraud and theft reports, including
arrangements in place to prevent, minimiseand detect fraud and bribery, were also
reviewed. The Committee noted that there
had been no significant frauds detected in
the past year–– the findings and progress of actions from theaudits of BBC commercial subsidiaries werealso considered. The Chief Financial Officer
of BBC Worldwide attended to provide an
update on the BBC Worldwide control
environment and management of risk

In 2014, the BBC appointed Ernst & Young
LLP (‘EY’) as the BBC’s external auditors after
a formal tender process. Their appointmentceased at the end of 2016/17, with theappointment of the National Audit Office tothe position of the BBC’s statutory auditors,
as mandated under the new Royal Charter.

Risk management
The Committee considered the processes
for managing significant risks within the BBC.
This work was influenced by the assessmentof the BBC’s principal risks (as set out on
page 78). Changes to the risk profile werereviewed regularly and the effectiveness of
the risk management process assessed.

Relationship with external auditors
The Committee oversaw the relationshipwith EY, including the scope and approach totheir work, their fees, their performance andindependence (including the approval andcompliance with policy on non-audit work).
Specific areas of focus this year have included:

Effectiveness of internal audit
The work of internal audit in 2016/17 wasoverseen by the Committee. This wasa regular item at each meeting, which
the Head of Internal Audit also attends.
During the year the Committee:–– audit risk identification and alignment of thiswith management risk assessment–– challenge to the auditors on how they
addressed these audit risks–– private discussions with the auditors without
management present–– approved the plan of work for the coming
year, ensuring that it was risk-based andstruck a balance between providing
assurance over core business processes andareas of emerging strategic risk–– considered the findings from audit activity,
focusing on audits with unsatisfactory
outcomes and management’s plans toaddress these–– considered the resource requirements forinternal audit and its capability

Change in external auditors
For financial years 2017/18 onwards,
the National Audit Office will be theexternal auditors for the BBC. The
Committee recognised the importanceof this change and reviewed withmanagement the plans for this transition.

During the 2015/16 year, the Committee
reviewed and approved a plan to restructure
the internal audit function from a largely
in-house resourced team to one primarily
resourced from an approved external
provider. This transition was monitoredby the Committee through 2016/17
to ensure satisfactory progress.
The Committee Chairman also met with
the Director of Quality, Risk and Assurance
before each Audit Committee meeting,without management present, to provide
the opportunity for open discussions.
Independence and effectiveness of theexternal auditors
The EAC had a duty to periodically consider
the reappointment of the external auditor
and the rotation of the Group Audit Partner
in order to ensure that the external audit
remained effective and independent.

Non-audit services
As one of the safeguards over the
independence of the external auditors, theCommittee developed and oversaw theBBC’s policy on the commissioning of theauditors to provide non-audit services.
This policy defines the types of services
which the external auditors can and cannot
provide. Additionally it includes thresholds
above which any proposed non-audit
work to be carried out by the external
auditors must be approved in advance by
the Committee. It also defines when work
must be submitted for competitive tender.
EY was not considered for work whichmight compromise its ability to giveindependent opinion on the BBC’s financial
statements. Recruitment from EY into
any senior management position in the
BBC required the prior approval of the
EAC: there was none during the year.
The Committee confirmed that it was
satisfied that the external auditors
fulfilled their responsibilities withdiligence and professional scepticism.

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G OV E R N A N C E

Risks and opportunities
Risks and opportunities affect the ability of the BBC to fulfil its
Charter obligations and public purposes. Our approach to riskneeds to reflect the unique nature of the BBC.

Key to risk movement:
Anticipated movement inrisk over next 12 months
Risk increasing
No risk movement
Risk decreasing

Public purposes:
1  To provide impartial news and4  To reflect, represent and serve the2  To support learning for people

5  To reflect the UK, its culture andinformation to help people
understand and engage withthe world around themof all ages

diverse communities of all of the UK’s
nations and regions and, in doing so,
support the creative economy acrossthe UK
values to the world

3  To show the most creative, highest
quality and distinctive output
and services

To deliver our objectives we must continue
to take creative risks. We must also takeseriously our regulatory and statutory
responsibilities. Just as taking risk iscore to fulfilling our purposes, rigorous
risk assessment and mitigation is thefoundation of delivering what we do.

Our new Charter and Agreement has
been published. The BBC acknowledges
the challenges of evolving audience needs
and the opportunities this offers for the
Corporation for the next 11 years. Throughout
the Corporation, careful considerationof risks and opportunities contributes

to the quality of our programmes, theexcellence of the service we provide andso our ability to serve our audiences. Our
principal strategic and operational risks
and opportunities are set out below.

Strategic risks and opportunities
Principal risks and opportunities

1. Meeting audience needs
The media landscape is changing significantly, as are the habits and tastes of ouraudiences. Our aim is to reinvent the BBC for a new generation, otherwise we face
the risk of failing to meet the needs of our audience, particularly the young andunderserved groups.
1

2

3

4

3

4

5

3. Attracting and retaining talent
The ability to attract, develop and retain the best creative talent across all disciplines
and crafts impacts on the quality of our output and our contribution to creative anddigital economies.
378–– regular re-evaluation of our audience strategy, informed by a constant monitoringof audience performance and market and competitor trends–– annual plan and continuous reassessment of audience-facing priorities

5

2. Securing programme supply
Retaining a diverse range of suppliers is important for the BBC. This ensures the
BBC can continue to deliver the best range of British content for the UK audienceat affordable prices. The changing media market could put this at risk.
2

Key mitigations

BBC Annual Report and Accounts 2016/17–– the launch of BBC Studios is designed to secure the long-term supply of the best
quality content for UK audiences–– ongoing dialogue with the independent production community and stakeholders
to inform our supply strategy–– ongoing assessment of resource allocation informed by audience insight andperformance–– regular re-evaluation of employment, staff engagement and on-air talent strategies–– nurturing entry-level talent via outreach activity

G OV E R N A N C E

Strategic risks and opportunities
Principal risks and opportunities

4. Charter implementation
A new Charter and Agreement is now in force, stipulating new governance andregulatory arrangements that are required to be implemented.
1

2

3

4

5

5. Change at the BBC
The BBC is in the midst of a significant period of operational, organisational andcultural change. The consequent strain on the organisation could affect our ability
to respond quickly to new challenges, or impact on our delivery of creative andstrategic priorities.
3

6. Maintaining the BBC’s reputation
The BBC brand could be damaged as a result of perceived management failures, or
through an inability to respond swiftly, reasonably and proportionately to significant
events.
1

4–– funding constraints may affect our ability to compete for talent and resources
affecting our ability to remain relevant to our audiences–– our production business could fail to secure commissions, leading to a reduction
in IP owned and reduced secondary revenue streams for the BBC–– our commercial subsidiaries could fail to respond to market challenges
4–– new Charter provides the BBC with long-term stability and a strong foundation
to continue to inform, educate and entertain the British public–– new BBC Board has been established and inducted–– Operating Framework put in place by Ofcom, covering regulation of the BBC’s
performance, impact on competition and compliance with content standards; theBBC is required to ensure compliance with that framework–– continuing work on reducing complexity and cost through organisational simplicity,
ensuring key activity and timings are aligned–– corporate Project Management Office overseeing delivery of major projects,
providing delivery confidence assessment–– continuing leadership team emphasis on building an open culture where everyone
feels confident to raise issues–– reviewing alignment of workforce strategy to objectives and delivery of value
for money–– monitoring perceptions of the BBC’s reputation amongst all audiences on acontinuous basis, responding as needed–– Editorial Guidelines to be updated in 20175

7. Maintaining the BBC’s market position
The BBC is operating in a fiercely competitive and global market. This creates anumber of linked risks:3

Key mitigations–– the BBC Studios proposal is designed to support a long-term pipeline of fully-owned
content for the BBC, alongside strategic development of the independent producer
pipeline–– ongoing assessment of our resource allocation informed by audience insight andperformance–– proven delivery by commercial subsidiary of sustainable financial returns, successfully
promoting the BBC globally, showcasing UK creativity and innovation, and achieving
strong business, editorial and creative relationships–– open to industry developments and consequent impact on strategy

5

Operational risks and opportunities
Principal risks and opportunities

Key mitigations

1. Business continuity
Technical failure, infrastructure interdependencies, the actions of third parties (e.g.
disruption to or denial of services by cyber-attack, supplier action or failure) could leadto interruption of broadcast services, with consequent impact on audiences leading to
reputation damage.

–– strong business continuity policies and practices aligned to the international standard–– monitoring of cyber-risks, ensuring fast response–– active involvement in UK and global industry security forums–– regular in-depth risk reviews of potential system vulnerabilities and process
weaknesses

2. Editorial compliance
Failure to uphold our editorial values and standards in all our content could affectour ability to maintain high levels of audience trust, damage our brand or lead tolegal exposure.

–– long-established and effective editorial compliance processes supported byappropriate training–– strong referral procedures and monitoring of high-risk programmes–– widely distributed Editorial Guidelines, with update due in 2017–– complaints handling process

3. Child protection
Failure to protect children on BBC premises or when participating in BBC activities
would have a consequent impact on the individuals, and could lead to reputational
damage and legal challenge for the BBC.

–– positive outcome from independent audit of BBC policies and processes–– final response to Dame Janet Smith report published–– safe recruitment practices followed; DBS/PVG check requirement linked withmandatory Child Protection and Working with Children training–– formal, accredited or recognised training for chaperones continues in partnershipwith PACT and other industry partners; cross industry lobbying for improvements
in training by local authorities–– process for escalation and resolution of potential issues–– developing a three-year strategy with NSPCC

4. Data security
Compromises to BBC data and services, through hacking, other internal or external
attack, or error could lead to disruption to services or disclosure of confidential data,
including sensitive editorial material or sensitive personal data, with consequent
reputational damage and possible financial penalties.

–– data protection policies and practices–– investment in technical capability including range of monitoring and defence walls
against hacking, malware and other attacks–– global staff awareness and education campaigns carrying key security messages–– vigilance regarding potential impacts of broadcasting into new territories

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Operational risks and opportunities
Principal risks and opportunities

Key mitigations

5. Health, safety and security
Failure to meet corporate responsibility for the health, safety, wellbeing and security ofstaff, freelancers, contributors and audiences could result in impact on the individuals
and their families, legal and financial exposure, reputational damage and loss of trust.

–– robust health and safety training in the UK and overseas; specialist equipment andbespoke high-risk processes and procedures for activities in designated hostileenvironments–– proactive response to changing threats, with tailored advice and guidance from
specialist safety teams–– close liaison with UK security authorities over UK security threat level, withvigilance regarding recognised vulnerabilities and roll-out of targeted training andcommunications–– working with media safety and security forums and other broadcasters to raise
standards in the industry as a whole

6. Liquidity and savings
As we transition to the new licence fee settlement, including new commitments, afailure to achieve new and very stretching savings targets could impact services anddamage our reputation and our relationship with audiences and stakeholders.

–– strong governance and frameworks around implementation of our change
programmes to enable the delivery of our strategic vision within available funding–– Charter and licence fee settlement allow more certainty around financial planningand content strategies

7. Regulatory compliance
Failure to comply with the broad range of legal and other regulatory requirements,
or to keep pace with changes, may result in legal or regulatory challenge, a threat toservices or financial penalties.

–– regular monitoring of compliance requirements–– training and communication plans regularly refreshed to ensure good awarenessof need for compliance with newly introduced legislation–– continuing to review and plan for impacts of new legislation, including working
with the industry to monitor and develop best practice solutions for achieving
effective compliance80

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The BBC’s accountability and internal
control processes
During 2016/17, The Executive Board was
responsible for the strategic and operational
management of the BBC (excluding the
BBC Trust Unit). This included safeguarding
its assets and achieving value for moneyby ensuring a process for managing
significant risk issues to the BBC.
The BBC has complied with the UK Corporate
Governance Code, subject to requirementsof the Charter, which requires the Board
to maintain a sound risk management andinternal control systems and to review theireffectiveness at least annually. Such systems
can only provide reasonable and not absoluteassurance against material misstatement orloss. The BBC’s system of control has been
designed to manage (rather than eliminate) therisk of failure to achieve business objectives
and to provide reasonable assurance that
assets are safeguarded, transactions havebeen appropriately authorised and material
errors or irregularities have been either
prevented or detected on a timely basis.
Risk management and internal
control framework
The BBC process for identifying, evaluating
and managing significant risks to the BBCaligns with the best practice noted in the
Financial Reporting Council’s Guidance on
Risk Management, Internal Control and
Related Financial and Business Reporting.
Risk management mechanisms have been
concentrated within divisions, with central
co-ordinating activity in place to manageand escalate pan-BBC issues, such as
editorial standards and safety. The Executive
Board received regular briefings and held
discussions on the principal strategic andoperational BBC risks facing the BBC.

Assessing the effectiveness of risk
management and internal control
The Executive Board used a number of
mechanisms to help it assess the effectivenessof the system of risk management and internal
control in the business. These include:
Risk oversight: The Board delegatedresponsibility for the specific review of risk
and control processes to the Executive
Audit Committee. The EAC met regularly
to provide scrutiny and oversight that
controls were effective and that risks
were being effectively managed (further
information is provided on page 74).
Internal audit: The internal audit function
maintained its independent reporting line
into the Chair of the EAC and conducteda programme of audits, aligned to theprincipal risks facing the BBC. The findingsof the audits have been reported to senior
management and the Audit Committee, withremediating actions tracked for completion.
External audits: The external auditors
have performed their statutory year end
audit with findings reviewed by the Audit
Committee. Any recommended actions
are tracked for completion. In addition, theNational Audit Office has audited the Licence
Fee Trust Statement and has continued its
programme of Value for Money audits.
Whistle-blowing: A protected disclosure
policy is in place, supported by a ‘whistleblowing’ hotline, administered by anindependent external company to ensure
anonymity. The Senior Independent Director
was named on the policy as a contact for theraising of the most serious level of concerns.

The Executive Board oversaw a businessplan to deliver the Trust-approved BBC
strategy. To support this, an appropriateorganisational structure was in place, witha policy framework for all material control
activities and clear delegated authorities.
Monthly, quarterly and annual reporting
processes, both within divisions and up to
the Executive Board, have been in place.

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Viability statement
In accordance with provision C2.2 of the 2014
revision of the UK Corporate Governance
Code, the Board has assessed the prospect of
the Corporation over a longer period than the
12 months required by the ‘Going Concern’
provision. On an annual basis, the Board
considers a rolling three-year plan for the BBC.
The latest three-year plan covering the period
to 31 March 2020 was approved by the former
Executive Board in March 2017 and ratified by
the Board in May 2017. A three-year horizon isconsidered appropriate as this is in line with
the BBC’s budgeting and planning process. The
three-year plan considers cash flows as well as
the financial covenants and credit facilities.
Key assumptions underpinning the three-year
plan, and the associated cash flow forecast, arethe licence fee settlement that set the financial
parameters for the BBC from 2017/18 to
2021/22 and our 2015 document British Bold
Creative that set out the BBC’s vision, strategic
aims and its offer to the public.

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A robust assessment of the principal risksfacing the Corporation, as described in the
Annual Report and Accounts on pages 78 to
80 has been undertaken, including those thatwould threaten its business model, future
performance, solvency or liquidity. Sensitivity
analysis is applied to the cash flow to model
the potential effects should principal risks
actually occur, individually or in unison. Threestress points were identified when acombination of severe but plausible risks weremodelled, however the cash flows remained
within the borrowing limit throughout theperiod modelled.
Taking account of the Group’s current position,
principal risks and the aforementioned
sensitivity analysis, the Board has a reasonable
expectation that the Corporation will be able
to continue in operation and meet its liabilities
as they fall due over the three-year period of
the assessment.

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Fair trading report
Report of the Executive Fair Trading
Committee
The statement below has been made by the
Executive Fair Trading Committee that existed
under the BBC’s governance arrangements forthe previous Charter. The fair trading reportingfor 2016/17 was prepared by that Committee
and has been assured and approved onbehalf of the BBC by the new BBC Board.

Another important component of the fairtrading regime is the process for handlingfair trading complaints. This year there wasone outstanding complaint (received in theprevious reporting year), which was handled
in line with our published procedures. The
BBC Trust ultimately upheld the BBC’s findingson all elements of the complaint. There
were no new complaints received this year.

This is the last report from the Executive Fair
Trading Committee of the BBC’s Executive
Board. During the course of the last Charter,
the Committee focused on ensuring thatthe BBC discharged its responsibilities, as apublicly funded broadcaster, to trade fairly
and pay regard to the impact of its serviceson the wider market. To achieve this, theCommittee oversaw a thorough and wellestablished fair trading regime which was
subject to both internal and external scrutiny.
During this time, of course, the market
conditions in which the BBC operates have alsochanged markedly, with a number of rapidly
growing new entrants and competitors.

Once again, the Committee was pleased
to see that the Fair Trading Framework
received an unqualified audit opinion
from our external auditors.

A core part of the fair trading system is thatthe BBC’s Fair Trading and Competition Law
team works closely with staff throughout
the organisation to ensure that newinternal processes, projects and initiatives
comply with fair trading requirements.
The team also manages a targeted training
programme for staff likely to encounter fairtrading issues. The Fair Trading Committeemonitored compliance with these processes
throughout the year and was satisfied that
effective arrangements were in place.
The Committee’s work, and the work of the
Fair Trading team, was particularly important
this year at a time of change for the BBC. Overthe past 12 months, the team provided advice
on a wide range of issues, of which the mostsignificant was the proposal for BBC Studios
to become a commercial subsidiary. This wasapproved by the BBC Trust in December
2016. Close attention was also paid to theTrust’s review of transfer pricing between
the BBC and its commercial subsidiaries.
The Committee was pleased that the Trust’s
review found that transactions between the
BBC’s commercial services and licence feefunded services are being conducted fairly, inline with rules preventing market distortion,
and with fair prices paid. The Committee
also considered and advised on a numberof fair trading issues for key BBC projects,
including supporting the provision of local
news and the development of personalisation
technology to support BBC services.

Taken together, the Committee believes
this report is evidence of a comprehensive
system, working well, with a low level ofexternal complaints and a consistent andpositive performance against both internaland external oversight. This provides astrong foundation for the transition to the
new regulatory regime for the next Charter
period, which will be overseen by Ofcom.
The BBC’s market impact and that of its
commercial subsidiaries will remain highon the BBC’s agenda. All stakeholders,
including licence fee payers and those
who might be affected by the BBC’s
activities, can be confident that the BBC
remains committed to complying with
its regulatory obligations, designed toprotect fair and effective competitionin the markets in which it operates.
Membership and remit of the Executive
Fair Trading Committee
The key function of the Executive Fair Trading
Committee (‘EFTC’) was to oversee the
BBC Executive’s compliance with the fairtrading obligations. The EFTC comprised
three non-executive directors: Dame
Fiona Reynolds (Chair), Alice Perkins and
Sir Howard Stringer. The EFTC meetings
were also attended by the Deputy Director
General, Group General Counsel, AssistantGeneral Counsel, Head of Fair Trading &Competition Law and the Director of Risk
and Assurance. The Fair Trading Committee
meeting attendance table is on page 70.

The BBC has operated under a detailed
operational Fair Trading Framework whichapplies to all our activities. This has now been
replaced by the requirements of Ofcom’s
Operating Framework which regulate theBBC’s interaction with the market boththrough its Public Service activities and thoseof its commercial arm. Oversight of the BBC’s
compliance with the new Framework willbe the responsibility of the new Fair Trading
Committee, established by the BBC Board.
Under the Fair Trading Framework,
the BBC was subject to annual audit byindependent auditors. The Independent
Auditor’s report is set out on page 115.
The BBC Agreement covering the Charter
period that ended on 31 December 2016
and the transitional arrangements containedin the new Charter which cover the period
from 1 January 2017 to 2 April 2017 required
the BBC Executive to ensure that all ourcommercial services met the following
criteria. Commercial services must:–– fit with public purposes–– show commercial efficiency–– not jeopardise the good reputation of the
BBC or the value of the BBC brand–– comply with the BBC’s Fair Trading
Guidelines, and in particular avoid distorting
the market
Having received reports from relevant
senior management, the BBC is satisfied
that all commercial services have
met the above criteria for the period
1 April 2016 to 31 March 2017.
Under the Fair Trading Framework, the BBC
had a published fair trading complaints andappeals process. The BBC received no fairtrading complaints during the year. Detailsof previous fair trading complaints andthose that went to appeal to the BBC Trustcan be found in our Fair Trading Bulletin
at: bbc.co.uk/aboutthebbc/insidethebbc/
howwework/policiesandguidelines/
fairtrading/complaints_bulletins.html.

Responsibilities of the EFTC included:–– keeping under review the BBC’s Fair Trading
Guidelines–– dealing with fair trading complaints against
the BBC through the appointment of a Fair
Trading Complaints Panel, chaired by andincluding a majority of non-executive
directors–– reviewing ongoing compliance with the BBC’sfour commercial criteria–– commissioning the annual fair trading audit
by independent auditors

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Independent fair trading auditors’
report to the BBC for the year ended
31 March 2017
We have audited, in our role as the BBC’sfair trading auditors, the system of internal
controls established within the BBC to provide
the BBC with reasonable assurance that the
BBC Executive (‘the Executive’) has compliedwith the requirement of the BBC Trust’s Fair
Trading Policies and Framework and the BBC
Executive’s Fair Trading Guidelines whichwere in force for the year ended 31 March2017 (‘the Fair Trading Arrangements’).
Our instructions for this engagement,
including the scope of work to be undertaken,
were agreed with the BBC’s Executive Fair
Trading Committee (the ‘EFTC’) prior toits dissolution. These instructions include
agreement that our audit should be conductedin accordance with International Standard
on Assurance Engagements (‘ISAE’) 3000,
agreement on the limit of our liability inrespect of this work and agreement that our
duty of care in respect of this work is solely
to the BBC. We are satisfied that the agreed
scope of our audit was sufficient to enable
us to express the opinion set out below.
Respective responsibilities of BBC Trust,
BBC Executive and fair trading auditors
For the reporting year covered by this report,
the Trust was responsible for ensuringthat the Executive operated in line with
the BBC’s Fair Trading Arrangements.
The Executive was charged by the Trustwith establishing and operating a system
of internal controls designed to ensurecompliance with the BBC’s Fair Trading
Arrangements for the year ended 31 March
2017, including identifying and assessing risks
that could threaten fair trading and designingand implementing responses to such risks.
As the BBC’s fair trading auditors, it is
our responsibility to form an independentview, based on our audit work, as to theextent to which the BBC has established,
and applied, a system of internal controls
which provide reasonable assurance thatit has complied with the requirements of
its Fair Trading Arrangements for the year
ended 31 March 2017. We have reviewed
specific decisions reached by the BBC on fairtrading issues only in so far as is necessary
to form an opinion on the applicationof the system of internal controls.

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BBC Annual Report and Accounts 2016/17

Our opinion has been prepared for andonly for the BBC in accordance with our
instructions which were agreed with the EFTC
on behalf of the BBC. We do not, in giving
this opinion, accept or assume responsibility
for any other purpose or to any person otherthan those within the BBC to whom thisreport is shown or in to whose hands it may
come, and no other person shall be entitled
to rely on our opinion, save where expressly
agreed by our prior consent in writing.
Our approach
We have performed a reasonable assurance
engagement as defined in ISAE 3000.
The objective of a reasonable assurance
engagement is to perform such proceduresas to obtain information and explanations
which we consider necessary in orderto provide us with sufficient appropriate
evidence to express a conclusion on the BBC’s
compliance with its Fair Trading Arrangements
for the year ended 31 March 2017.
Our work consisted of enquiry and testing
to enable us to form a view as to whether
an appropriate system of internal controls
was in place. We conducted a risk-based
analysis to identify those aspects of the BBC’sfair trading control regime that represents
the most significant fair trading risk, andfocused our detailed testing on those areas.
Individual cases were selected from the BBC’sfair trading log for review. In each case we
examined written records and interviewed
relevant parties to provide us with reasonableassurance that the system of internal control
had been applied, and the appropriatenessof the outcome. Cases examined, and theareas of significant risk around which thework was focused, covered all three of theBBC’s commercial service subsidiaries andincluded examination of transfer pricing andseparation arrangements, use of and payment
for the BBC brand, and the application of
the Trust’s requirement that, subject tofulfilling the public purposes, the BBC should
minimise any negative market impact.

Inherent limitations
As with any system of control, it is notpracticable to ensure that no errors or
irregularities have occurred without being
detected. Our audit work was designed to givethe Executive reasonable assurance as to theadequacy of the system of internal controls
which was in place and being applied to delivercompliance with the requirements of its Fair
Trading Arrangements for the year ended
31 March 2017. 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 riskof challenge even where the system of internal
controls has been followed and decisions
have been taken with the greatest care.
OpinionBased on the results of our procedures, in
our opinion the BBC has established andhas applied a system of internal controlsthat provide reasonable assurance thatit has complied with the requirementsof the Fair Trading Arrangements forthe year ended 31 March 2017.

Deloitte LLP
London22 June 2017

G OV E R N A N C E

Statement of Board
responsibilities inrespect of the ARA

The Charter requires the BBC to prepare
an audited annual report and statementof accounts.

as are reasonably open to it to safeguard
the assets of the BBC and to prevent anddetect fraud and other irregularities.

The Board has accepted its responsibility
for the preparation of a strategic report,
statements of compliance with applicable
codes and regulations (including the Board
remuneration report) and the statementof accounts which are intended by themto give a true and fair view of the state ofaffairs of the BBC and its subsidiaries (the‘Group’) and of the income and expenditure
for that period. The Board has prepared theaccounts in accordance with International
Financial Reporting Standards (‘IFRS’s) as
adopted by the EU. The Board must not
approve the statement of accounts (or‘financial statements’) unless it is satisfied thatthey give a true and fair view of the assets,
liabilities and financial position of the Groupand of the surplus or deficit for that period.

The Board is responsible for the maintenanceand integrity of the BBC’s website. Legislationin the UK governing the preparation anddissemination of financial statements may
differ from legislation in other jurisdictions.

In preparing the financial statements theBoard has:–– selected suitable accounting policies andapplied them consistently–– made judgements and estimates that arereasonable and prudent–– stated whether they have been prepared inaccordance with IFRS as adopted by the EU–– prepared the financial statements on thegoing concern basis as they believe that the
BBC will continue in business
The Board is responsible for keeping properaccounting records that are sufficient toshow and explain the BBC’s transactions
and disclose with reasonable accuracy at
any time the financial position of the Groupand enable them to ensure that the financial
statements and the Board remuneration
report comply with the Charter. It also hasa general responsibility for taking such steps

The Board members who held office at thedate of approval of the Annual Report andAccounts, whose names and functions arelisted in the Governance section of the Annual
Report and Accounts, confirm that, to thebest of each of their knowledge and belief:–– the financial statements, prepared inaccordance with IFRS as adopted by the EU,give a true and fair view of the assets,
liabilities, financial position and deficit of
the Group–– the Annual Report includes a fair review ofthe development and performance of thebusiness and the position of the Group,
together with a description of the principal
risks and uncertainties that it faces–– the Annual Report, taken as a whole, is fair,balanced and understandable and provides
the information necessary for shareholders
to assess the Group’s performance, businessmodel and strategy

Going concern
The directors have prepared cash flow
forecasts for a period in excess of a year
from the date of approval of these financial
statements, and have reviewed these forecasts,
together with the sensitivities and mitigating
factors in the context of available funds.
The directors are satisfied that the BBC
is well placed to manage the risks and has
adequate resources to continue in operation
for the foreseeable future. As a result thegoing concern basis has been adopted in the
preparation of the financial statements.
This statement was approved by the Board.

Sir David Clementi
Chairman
22 June 2017

Statement of disclosure of information
to auditors
The Board members who held office at thedate of approval of the Annual Report andAccounts confirm that, so far as they are eachaware, there is no relevant audit informationof which the BBC’s auditors are unaware; andeach Board member has taken all the steps thatthey ought to have taken as an Board member
to make themselves aware of any relevant
audit information and to establish that theBBC’s auditors are aware of that information.

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The BBC Trust’s final review

p.87
End of Charter Report
Former Chair of the BBC Trust,
Rona Fairhead, provides the Trust’s
summary of the BBC’s performancein 2016/17

Old Broadcasting House

p.88

p.90

Meeting attendance
Trustees met throughout 2016/17
prior to the closure of the BBC
Trust on 2 April 2017

Remuneration and Trust
expenditure
Trustees’ fees and the cost of
running the BBC Trust in 2016/17

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G OV E R N A N C E

The BBC Trust was the governing body of the BBC from January 2007 until
2 April 2017. It set the strategic objectives for the BBC and issued a service
licence to every BBC service stating what it was expected to deliver andhow much it could spend. The Trust upheld the BBC’s editorial standards
and protected the BBC’s independence. The Trust was separate from the
BBC Executive, which is led by the Director-General, providing the editorial
and creative leadership of the BBC and managing the operational deliveryof its services.

Regular business was undertaken inmonthly meetings of the full Trust andits sub-committees. At these meetings,
decisions were made relating to theTrust’s duties and responsibilities,
as well as consideration of proposals
from the Executive Board. Minutesof the monthly Trust meetings were
published, as well as evidence andresearch on which decisions werebased, the findings of all editorial appeal
decisions, and the outcomes of value
for money and service licence reviews.

Chairman’s Introduction to the End
of Charter Report – March 2017
Rona Fairhead, Chairman of the BBC Trust(October 2014 – March 2017)
The new Charter and Agreement puts
the BBC on a strong footing for the
future, enabling it to continue to bebold, creative and independent.

In March 2017, the Trust published its End ofCharter Report on its assessment of the BBC’s
performance during 2016/17, using the datathat was available at the end of December
2016. The End of Charter Report is available at:downloads.bbc.co.uk/bbctrust/assets/files/pdf/
our_work/charter/end_of_charter_review.pdf

On 1 January, the new Charter andAgreement came into effect, following alengthy process of review, collection ofevidence, detailed negotiation, and a huge
public engagement process by the Trust,the BBC and the Government. Our priority
was to make sure the views of the BBC’saudiences were heard loud and clear, andthat Government took account of them.

This report marks the final year of the BBC
Trust, and the end of the 2006 Charter
that laid down the BBC’s purpose, duties
and governance over the last decade.

In many respects this was achieved; theCharter delivers a BBC that can respondto what audiences want – a BBC that isable to be confident, innovative, distinctive
and creatively ambitious. A BBC that willcontinue to offer something to everyone.
Protecting the BBC’s independence was offundamental importance in our negotiations.
The 11-year Charter will put a bigger gap
between forthcoming general elections
and decisions about the BBC’s future.
The BBC’s independence is now the firststatement of principle in the Charter, andits new Board members – only a minority ofwhom will be appointed by the governmentof the day – will all have a clear duty to
defend the Corporation’s independence.

Although the framework of independence issound, the new Board will need to continue
to protect the BBC’s position robustly inthe face of future challenges. One area ofparticular note is the licence fee funding
settlement. The process of the previous two
settlements was unsatisfactory and the newCharter provides some improvement on
this, including requiring the Government to
consult with the BBC on any future funding
deal. However, what it does not yet do isprovide any public transparency from theGovernment before those funding settlements
are decided. To me, this remains a concern.
A new system of BBC governance andregulation will take effect in April, and I
believe this will provide the greater clarity
and separation of roles that the Trust
called for at the start of the process. I
wish the new Board and its Chairman,
Sir David Clementi, every success.
The BBC’s performance in 2016 gives
us considerable confidence in its future
performance. 95% of adults use the BBC’s
television, radio or online services each week
– an extraordinary achievement in a world
where choice has proliferated enormously overthe past two decades. Yet the BBC continues
to achieve new records: Planet Earth II became
the most watched natural history programmein the UK for at least 15 years; the BBC’s final
series of The Great British Bake Off achieved
record ratings, as did Radio 4’s Today, providing
authoritative and impartial reporting in a yearof hugely significant news events for people
in the UK, US, Europe and around the world.
Internationally the BBC’s audiences continue
to grow and in November the BBC announced
11 new language services in the biggest
World Service expansion since the 1940s.

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No-one should underestimate, however, thecompetitive and managerial challenges theorganisation faces in the next few years. The
BBC must find another £800m per annum
in cost savings, after a decade of significant
efficiencies and while many of its maincompetitors continue to grow their incomes.
The BBC must continue along the path ofsimplifying the organisation, becoming apartner of choice in the industry and providing
even better value for money. But even so,
hard choices will have to be made. The BBC
must operate within a global market for ideas
and talent and, while it has the privilege ofknowing its income for some years ahead, italso knows that that income is largely fixed.
The new Charter charges the BBC with setting
the very highest editorial standards. It mustalso ensure it better represents and portrays
all sections of society and all parts of the UK.
Over the past two years the Trust has urged
the BBC to review its services in the nations,and we very much welcome the announcement
in February this year of new investments in
Scotland and Wales, and the forthcoming
investment announcement for Northern
Ireland. Creating a new channel for Scottish
audiences and delivering a 50% increase in
English language programming from and forWales are very welcome steps, and recognise
the BBC’s commitment to serving all partsof an increasingly devolved and diverse UK.
A further challenge remains – not justfor the BBC but also for the broadcast
media generally – namely how to reachunder-served communities – such as
16-34 year olds and BAME audiences.
Even as the BBC seeks to create outstanding
content on its current channels, it willneed to “ride two horses” simultaneously,
investing in digital, mobile and personalised
services to keep pace with technology
change and audience expectations.

At the heart of the argument for a publiclyfunded national broadcaster is the need forreliable and impartial information to informour democracy. Although the BBC remains far
ahead of all other news providers when UK
audiences are asked to choose a single source
they trust, nonetheless some performance
scores for BBC News are falling (as shown in
the Purpose Remit Survey) and, at a time when
the rise of social media is exacerbating the risks
of fake news, the BBC’s journalism must be
ambitious in the seriousness and analysis of its
reporting to ensure it continues to provide a
distinctive, trusted offering to audiences. The
BBC must explain the news, not just report it.
Alongside work on the new Charter, theTrust has lost none of its focus on its regularresponsibilities – from handling appeals
from complainants, to considering BBC
proposals around financial management
and service changes. Notably this year,
Trustees assessed and endorsed the BBC’s
proposal to turn its production arm BBC
Studios into a commercial subsidiary andreviewed the BBC’s news and radio services
in Northern Ireland, Wales and Scotland.
It has been a privilege to chair the BBC Trustand to work with Tony Hall and his team at theBBC; I wish them continued success. And as
the Trust comes to an end, I want publicly to
express my appreciation for the dedication of
those who contributed to its many successes.
I am enormously grateful to my fellow Trustees
for the tireless dedication and wisdom they
have shown during my time as Chairman.
They have been a joy to work with. None ofus could have discharged our responsibilities
without the hard work, intelligence andprofessionalism of the Trust’s permanent staff
whose role it has been to give us independent
analysis and advice. Their work made a huge
contribution to the Charter negotiations andthey have helped provide the framework
for a strong BBC over the next decade – a
BBC the UK public wants and deserves.
28 March 2017

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BBC Annual Report and Accounts 2016/17

Trustees’ attendance at Trust meetings(1 April 2016–31 March 2017)
Attendance

ChairmanRona Fairhead

16/16

Vice-Chairman
Sir Roger Carr

16/16

National Trustees
Mark Florman

13/16

Bill Matthews

16/16

Aideen McGinley

16/16

Elan Closs Stephens

16/16

Trustees
Sonita Alleyne

15/16

Richard Ayre

14/16

Mark Damazer

13/16

Nick Prettejohn

13/16

Suzanna Taverne

16/16

Lord Williams

14/16

The Trust Unit
The Trust was supported by the Trust
Unit, a team of professional BBC staff,
which provided independent and objective
advice, calling on outside experts whennecessary. The Unit advised on Trustees’
duties, managed the Trust’s supervisory
and regulatory functions and provided theTrust with independent assessments ofproposals from the Executive Board.
Trust committees
Much of the work of the Trust wasdone through committees, which madecertain decisions on behalf of the Trust
as a whole. The members of eachcommittee and their attendance during
2016/17 are shown on the next page.

G OV E R N A N C E

Complaints and Appeals Board
Chair: Bill Matthews
Deputy Chair: Sonita Alleyne

Meeting attendance 1 April 2016–
31 March 2017
Trustee

The Complaints and Appeals Board (‘CAB’)
handled appeals and complaints to the BBC
relating to fair trading, TV Licensing, and othergeneral matters which are not editorial. All
Trustees were members of the CAB. The
duties of the Committee were conducted bypanels consisting of at least two Trustees andat least one of the members was the CAB
Chairman or the CAB Deputy-Chairman.
Meeting attendance 1 April 2016–
31 March 2017
Trustee

AttendanceBill Matthews

11/12

Sonita Alleyne

11/12

Other Trustees attended thefollowing number of meetings
Rona Fairhead*1

Richard Ayre

2

Aideen McGinley

2

Elan Closs Stephens3

Suzanna Taverne

4

Lord Williams

1* Rona Fairhead, Chairman of the Trust, was entitled to attend
any meetings of the Committee. Between 1 April 2016 and
31 March 2017 she attended one CAB meeting

Editorial Standards Committee
Chair: Richard Ayre
The Editorial Standards Committee (‘ESC’)
was responsible, on behalf of the Trust, forestablishing the BBC’s editorial standards.
The ESC commissioned the BBC’s Editorial
Guidelines and monitored the Executive
Board’s compliance with these guidelines.
As the final stage of the BBC’s complaints
process, the ESC considered appeals relating
to breaches of the Editorial Guidelines,
as well as related complaints handlingissues. It also had functions in relation
to election and referendum coverage,
party political broadcasts, party election
broadcasts and referendum campaign
broadcasts. In addition, the Committee
managed the Trust’s programme of
impartiality reviews and seminars.

Meeting attendance 1 April 2016–
31 March 2017
Attendance

Trustee

Attendance

Richard Ayre

10/11

Suzanna Taverne

8/8

Sonita Alleyne

10/11Mark Damazer

7/8

Mark Damazer

11/11

Aideen McGinley

7/8

Bill Matthews

9/11

Elan Closs Stephens

8/8

Nick Prettejohn

9/11

Lord Williams

7/8

Other Trustees attended thefollowing number of meetings

Other Trustees attended thefollowing number of meetings

Rona Fairhead*5

Rona Fairhead*5

Sir Roger Carr

2Mark Florman

1

Aideen McGinley

2

Elan Closs Stephens

2* Rona Fairhead, Chairman of the Trust, was entitled to attend
any meetings of the Committee. Between 1 April 2016 and
31 March 2017 she attended five ESC meetings

Trust Management Group
Chair: Rona Fairhead
The Trust Management Group (‘TMG’)approved Trust Unit staff remunerationand severance payments over £75,000 andoversaw Trustee expenses, conflicts of interestand hospitality, and the Trust Code of Practice.
Meeting attendance 1 April 2016–
31 March 2017
Trustee

Attendance* Rona Fairhead, Chairman of the Trust, was entitled to attend
any meetings of the Committee. Between 1 April 2016 and
31 March 2017 she attended five SC meetings

Value for Money Committee
Chair: Nick Prettejohn
The Value for Money Committee (‘VFM’)
oversaw the budget, financial approvals andvalue for money processes at the Trust.
Meeting attendance 1 April 2016–
31 March 2017
Trustee

Attendance

Nick Prettejohn

5/5Sonita Alleyne

5/5

Sir Roger Carr

1/5Mark Florman

1/5

Suzanna Taverne

4/5

Rona Fairhead

3/3

Sir Roger Carr

2/3

Aideen McGinley

3/3

Other Trustees attended thefollowing number of meetings

Nick Prettejohn

3/3

Rona Fairhead*

Elan Closs Stephens

3/3

Lord Williams

3/33* Rona Fairhead, Chairman of the Trust, was entitled to attend
any meetings of the Committee. Between 1 April 2016 and
31 March 2017 she attended three VFM meetings

Services Committee
Chair: Suzanna Taverne
The Services Committee (‘SC’) ensured
that the BBC’s public services, together
with its distribution and commercial
activities, were delivered in line withthe licences and frameworks set by theTrust. This included oversight of Trust
reviews and regulatory matters.

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T RU S T R E V I E W

Trustees’ remuneration
Fees
Trustees’ fees were determined by the Secretary of State for Culture, Media and Sport. In September 2010, Trustees took a voluntary 8.3% pay cut(equivalent to a month’s salary), in parallel with the then-Director-General and other Executive Board members. The reduced fees for Trustees
remained in effect until 2 April 2017 and are reflected in the table below. Trustees did not receive severance pay or other compensation upon theclosure of the BBC Trust.
ExpensesTrustees were reimbursed for expenses incurred on BBC business, which included travel, accommodation, work-related meals and hospitality.
Trustee expenses were governed by the Trust’s Code of Practice, which was published. Every six months we published a full list of all expenses
incurred by each Trustee, as well as the services booked centrally for Trustees by the Trust Unit. Some of the expenses and support services wereclassed as taxable benefits by HM Revenue & Customs. This figure is published in the remuneration table.
Chairman’s benefits
Rona Fairhead was not eligible to receive any benefits other than her fee but did make use of a BBC driver when required for BBC business.
Trustees’ remuneration (£000s)
Fees1

Taxable benefits

Total
2016/17

Total
2015/16

Appointment
term start dateAppointment
term end date

Rona Fairhead

110

4

114

116

9 October 2014

2 April 2017

Sir Roger Carr

71

0

71

65

1 May 2015

2 April 2017

Diane Coyle

0

0

0

6

1 November 2006

30 April 2015

Chairman and Vice-Chairman

National Trustees
Mark Florman

38

0

38

38

1 April 2015

2 April 2017

Bill Matthews2

38

0

38

38

1 January 2011

2 April 2017

Aideen McGinley

38

0

38

38

1 November 2012

2 April 2017

Elan Closs Stephens

38

0

38

38

1 November 2010

2 April 2017

33

0

33

33

1 November 2012

2 April 2017

Trustees
Sonita Alleyne
Richard Ayre

33

0

33

33

1 August 2010

2 April 2017Mark Damazer3

33

0

33

30

1 April 2015

2 April 2017

Nick Prettejohn

33

0

33

33

1 January 2014

2 April 2017

Suzanna Taverne

33

0

33

33

1 January 2012

2 April 2017

Lord Williams

33

0

33

33

1 December 2011

2 April 2017

1 Trustees took an 8.3% voluntary reduction in pay, in parallel with the then Director-General and Executive Board, in September 2010. This remained in effect until 2 April 2017
2 Bill Matthews is the Chairman of the Board of the BBC Pension Trust Ltd., the corporate trustee of the BBC Pension Scheme. He is separately remunerated for this role. Further details are available in
the BBC Pension Scheme Annual Report and Accounts
3 Mark Damazer requested not to be paid for his first month in office (April 2015); accordingly his fees for 2015/16 reflect this90

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G OV E R N A N C E

Trust expenditure statement

Trustee remuneration
Staff costs
Other operating costs (including project costs)

1
2
3

Direct Trust expenditure before reorganisation costs
Reorganisation costs
Redundancy costs

2016/17£000s

2015/16
£000s

607
3,891
465

588
4,218
2,216

4,963

7,022

2,086

–

4

2,086

–

5 and 6

7,049

7,022

7
8

4,800
1,402
–

–
2,425
445

Total Ofcom regulatory fees payable by Trust

6,202

2,870

Total Trust expenditure

13,251

9,892

Total reorganisation costs
Direct Trust expenditure after reorganisation costs
Ofcom fees
Transition costs
Regulatory fees
Market Impact Assessment fees

Notes
1. The remuneration received by each Trustee is shown in the table on page 90. The figure in the table above includes social security costs
2. Staff costs include wages and salaries, social security costs and employer’s pension contributions
3. Operating costs include direct expenditure on activities such as research, legal advice, other specialist advisory services and the Trust’s consultation activities and stakeholder events
4. During the year, as a result of the changes to BBC governance which resulted from the Charter renewal process, all Trust Unit staff were issued with notification of redundancy, to take effect from
13 April 2017
5. This represents direct external spend by the Trust. The Trust also made use of shared services, which included property provision, finance, HR and information services that were provided by the BBC
public services
6. Of direct Trust expenditure, £748,775 relates to spend on Trust activities in the four nations (£826,823 in 2015/16)
7. During the year, as a result of the changes which resulted from the Charter renewal process, Ofcom began to prepare for their increased responsibilities from April 2017 in respect of BBC governanceand charged their transition costs to the BBC
8. Ofcom allocates its costs of television and radio regulation to the BBC and the other UK broadcasting channels. The Trust pays the BBC’s share of that allocation

Trust People

Trustees (number)
Trust Unit staff (EFT)

Note

Average for year
2016/17

Average for year
2015/16

1 and 2

12
62.8

11.9
63

Notes:
1. Trust Unit staff are those employed directly by the Trust Unit
2. Of the 62.8 average equivalent full time (‘EFT’) Trust Unit staff for 2016/17, 13 EFTs were based outside London and supported the work the Trust undertakes in the four nations – Wales, Scotland,
Northern Ireland and England (13.7 in 2015/16). 10.13% come from a black or minority ethnic background (8.7% in 2015/16), 6.05% are disabled (4.8% in 2015/16) and 66.14% are women (69.8% in
2015/16)

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91

B B C I N T H E N AT I O N S

Additional information

p.93
Nations’ data pack
Detailed performance data byservice in Wales, Scotland andNorthern Ireland

Read more on pages 93-104

BBC drama Line of Duty

p.105

p.124

Performance against Public
Commitments
The BBC’s performance against anumber of public commitments forwhich it is accountable

Consolidated Financial Statements
Primary statements and additional
supporting disclosure notes

Read more on pages 105-114

92

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Read more on pages 124-185

G OV E R N A N C E

The BBC in WalesThe BBC’s expenditure in Wales during 2016/17 was £185.9 million across all services and platforms compared to £195.9 million in 2015/16.
The principal reason for the £10.0 million movement was a £10.5 million decrease on network content spend when compared to the previous year.
Network television spend in Wales in 2016/17 included Casualty, The Living and the Dead, Sherlock, A Midsummer Night’s Dream, To Walk Invisible,
Crimewatch, Bargain Hunt and the Doctor Who Christmas Special; most of the year-on-year decrease is attributable to the scheduling of Doctor Who
series 10, which transmitted in April 2017 and so will be reported in the 2017/18 figures. Class also premiered on BBC Three in 2016/17 and isreported in the network Online and Red Button figures.
In terms of local content there was 663 hours of English language content produced – a decrease of 34 hours principally reflecting fewer hours ofdrama and sport in 2016/17. Welsh language content totalled 649 hours in 2016/17 – including 251 episodes of Pobol y Cwm (34 more than 2015/16)
and over 17 hours coverage of the Wales football team at the 2016 European Championship in France. Both BBC Wales radio services saw
increased output in 2016/17; Radio Wales broadcasted almost 7,600 hours with most of the 154 hours increase reflecting the fact that the station is
now on air from 5am on weekdays (previously 5.30am). Radio Cymru broadcasted 7,262 hours with most of the increase reflecting the output of
the Radio Cymru Mwy pop-up station which aired for 15 weeks from September 2016.
The following pages provide additional detail on the BBC’s performance in Wales, including income, high level expenditure and performance acrossservices provided in Wales.
IncomeThese numbers are estimated as figures for each nation and have been calculated by applying the proportion of licenced premises to the total
number of licences in force. The exact number of licences in force varies on a daily basis. The number of licenced premises are different to thenumber of licences in force as, in some cases, a premise may need more than one licence. Figures exclude concessionary licences for those living
in residential care.

Estimated income
UK
Wales

2017
£m

2016
£m

3,787.2
188.5

3,742.8
186.5

Expenditure by service
Direct and indirect spend relating to programmes produced in the nation.
2017£m

Restated
2016£mNetwork content
Television (inc. sport and childrens)+
Radio
Online and Red Button

54.8
3.3
5.3

68.6
3.8
1.5

Total network spend

63.4

73.9

Local content
Television – BBC One
Television – BBC Two
Radio WalesRadio Cymru
Online and Red Button

22.5
8.7
14.2
13.6
7.5

21.1
11.6
15.1
14.2
6.2

Total local spend

66.5

68.2

Distribution Costs
National Orchestra of Wales
S4C**
Development

20.7
4.7
29.2
1.4

20.2
4.7
28.0
0.9

Total

185.9

195.9

*

+ Network content is attributed on an Ofcom basis, which excludes foreign productions* Full details of the above restatement can be found within note G1 of the notes to the accounts of the financial statements** This represents the television programmes commissioned and produced by BBC Wales and supplied to S4C (excluding programmes commissioned directly by S4C from other producers)

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B B C I N T H E N AT I O N S

Television hours
Local opt-out hours^ (including repeats) on BBC One and BBC Two
2017
Hours

2016
Hours

Drama, comedy, entertainment, music and arts
Daily, weekly news and current affairs
Sport and Leisure
Education, factual and religion

22
392
141
108

31
400
168
98

Total

663

697

2017
Hours

2016
Hours

Drama, comedy, entertainment, music and arts**
Daily, weekly news and current affairs
Sport and leisure
Education, factual and religion

258
272
119
0

246
263
98
9

Total

649

616

^ Television content commissioned specifically for audiences in the nation

S4C** This represents the television programmes commissioned and produced by BBC Wales and supplied to S4C (excluding programmes commissioned directly by S4C from other producers)** This includes repeats where BBC Wales has incurred a charge associated with the transmission of the programmesRadio hours
BBC Radio Wales
2017
Hours

2016
Hours

News and current affairs
General

1,868
5,725

2,168
5,271

Total

7,593

7,439

2017
Hours

2016
Hours

News and current affairs
General

1,335
5,927

1,418
5,582

Total

7,262

7,000

2017
Number

2016
Number

1,187

1,232

BBC Radio Cymru

Headcount
Average headcount reflects those individuals employed to directly support the services produced in Wales.

Average number of persons employed in the year

Average headcount of individuals based in Wales across all services including support functions.
2017
NumberRestated
2016
Number

1,418

1,416

*

Average number of persons employed in the year

* The average number of persons employed during 2015/16 has been restated to include members of the BBC orchestras and BBC singers employed on programme contracts

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Wales’ performance by service – Television

Content
We spent a total of£86.0 million on these
services last year in Wales

Reach
Wales population
who use the service
each week

Time spent watching achannel each week
Length of time the average
Wales viewer spent eachweek with the channel

£M

%

H:M

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

£72.1m 76.6% 08:34

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

£11.3m 50.4% 03:20

BBC Four aims to be British television’s most intellectually andculturally enriching channel, offering an ambitious range of UK
and international arts, music, culture and factual programmes.

£2.6m 13.6%
2015/16: £3.4m

2015/16: 13.0%

01:44

The CBBC channel offers a distinctive mixed schedule for
6-12 year-olds, with mainly UK programmes served in a
stimulating, creative and enjoyable environment.

-

3.7%

02:37

CBeebies provides a mix of high-quality, mostly UK-produced,
programmes designed to encourage learning through play in
a consistently safe environment for children under six.

-

6.3%

03:52

2015/16: £75.8m*

2015/16: 75.9%

2015/16: £22.7m*

2015/16: 49.9%

2015/16: –2015/16: 4.4%

2015/16: –2015/16: 6.6%

2015/16: 08:39

2015/16: 03:17

2015/16: 01:41

2015/16: 02:35

2015/16 04:19

Reach definition: 15+ minutes consecutive for all channels and services and audiences in TV-owning households aged 4+ (TV)
Source: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable)
Since the publication of the 2015/16 Annual Report, BARB has changed its reach methodology which makes a marginal difference to the 2015/16 reach figures when run now. Here we are stating the 2015/16
figures as they appeared in the 2015/16 Annual Report
N.B. BARB data measures TV set viewing only at present, meaning that iPlayer viewing on other devices is not included in any of the above figures. iPlayer viewing is growing especially for young-skewed
services such as CBBC
* Full details of the above restatement can be found within note G1 of the notes to the accounts of the financial statements

Wales’ performance by service – News

Content
We spent a total of£nil on these services lastyear in Wales

Reach
Wales population
who use the service
each week

Time spent watching or
listening to a channel
each week
Length of time the average
Wales viewer or listenerspent each week withthe service

£M

%

H:M

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

-

11.7%

02:59

BBC Parliament is the UK’s only channel dedicated to politics. It showsdebates and committees from Westminster, Holyrood, Stormont, Cardiff
Bay and Strasbourg as well as political programmes from across the UK.

-

0.9%

01:40

2015/16: –2015/16: –2015/16: 12.5%

2015/16: 0.7%

2015/16: 03:13

2015/16: 01:53

Reach definition: 15+ minutes for all channels and services and on audiences in TV-owning households aged 4+
Source: reach and time spent BARB (TV)Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 15.9% and 1.7% respectively (17.8% and 2.0% among 16+ population)

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Wales’ performance by service – Digital

BBC Online comprises the BBC’s portfolio of online products on desktop,
connected television, mobile and tablet, including news, sport andweather; our children’s services CBBC and CBeebies; and Knowledge& Learning – as well as IP-delivered television and radio services, withboth live and on-demand programmes available on BBC iPlayer.

Content
We spent a total of£12.8 million on these
services last year in Wales

Reach
Wales population
who use the service
each week

Time spent with eachservice each week
Length of time the average
Wales user spent each weekwith the service

£M

%

H:M

£12.8m 64.2% n/a
2015/16: £7.7m*

2015/16: 62.8%

2015/16: n/aContent
We spent a total of£3.3 million on these
services last year in Wales

Reach
Wales population
who use the service
each week

Time spent listening to aservice each week
Length of time the average
Wales listener spent eachweek with the service

£M

%

H:M

Reach definition: 3+ mins for both services, and adults aged 16+
Source: Cross-Media Insight Survey by GfK. UK data financial years, Wales data calendar years* Full details of the above restatements can be found within note G1 of the notes to the accounts of the financial statements

Wales’ performance by service – RadioBBC Radio 1 broadcasts a distinctive mix of new music andentertainment for 15- to 29-year-olds as well as providing tailored
news, documentaries and advice campaigns for young adults.
BBC 1Xtra plays the best in contemporary black music, with a strongemphasis on delivering high-quality live music and supporting new artists.

21.9% 07:16
1.8%
05:47
37.1% 12:45£2.3m 3.3% 05:54£1.0m 16.7% 12:02
3.0% 07:41
8.5% 07:44
1.6%
02:38
2.8% 08:57
0.1%*

2015/16: –BBC Radio 3 centres on classical music, around which it provides a broad
spectrum of jazz, world music, arts programmes, religion and drama.
There is a strong emphasis on musical performance across the UK.
BBC Radio 4 is a mixed-speech radio station, offering in-depth news
and current affairs and a wide range of other speech programmes
including drama, readings, comedy, factual and magazine programmes.
Originally launched in 2002 as BBC 7, the station was relaunched in April 2011
as BBC Radio 4 Extra. The digital-only network is the principal outlet for theBBC’s archive of speech entertainment, including comedy, drama and readings.
BBC Radio 5 live broadcasts continuous news and live sports coverage,
bringing major news stories and sports events to its listeners as they happen,
and providing context through wide-ranging analysis and discussion.
BBC Radio 5 live sports extra brings a greater choice of live action tosports fans by extending live coverage of various sporting events.

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

Reach definition: 15+ minutes for all stations and audiences aged 15+
Source: RAJAR (Radio reach and time spent)Excludes programme “Coming up on 5 live sports extra”* Radio 1: among its target group of 15-29 year-olds reach was 48.6% and time spent was 07:39+ 1Xtra: among 15-24 year-olds reach was 5.3%** Radio 2: among its target group of 35+ year-olds reach was 44.5% and time spent was 13:41^ Sample size for the time per user too low to report96

BBC Annual Report and Accounts 2016/17

2015/16: 07:49^

2015/16: –BBC Radio 2 broadcasts a unique mix of music and speechprogrammes covering a diverse mix of live pop and rock,comedy, documentaries and religious output, as well as runningsocial action campaigns to over 14 million listeners.

2015/16: 24.9%+

2015/16: 2.0%

2015/16: 02:20**

2015/16: –2015/16: 36.6%

2015/16: 13:30

2015/16: £2.6m

2015/16: 3.4%

2015/16: 05:42

2015/16: £1.2m

2015/16: 16.6%

2015/16: 11:51

2015/16: –2015/16: 3.0%

2015/16: 07:06

2015/16: –2015/16: 9.1%

2015/16: 06:33

2015/16: –2015/16: 2.8%

2015/16: 03:44

2015/16: –2015/16: 3.1%

2015/16: 08:11^

2015/16: –2015/16: 0.1%

2015/16: ^G OV E R N A N C E

The BBC in Scotland
In 2016/17, BBC Scotland produced a wide range of content across all its platforms, from compelling drama, popular comedy, a range of diverse
documentaries and events coverage for audiences in Scotland and across the UK.
The BBC’s expenditure in Scotland during 2016/17 was £233.0 million across all services and platforms. This represents a circa 11% increase fromthe previous year 2015/16, primarily driven by a significant rise in network television investment. This growth reflects increased drama content
with new titles such as The Replacement and One of Us transmitting alongside the return of must see comedy such as Two Doors Down and thephenomenally successful, Still Game, with audiences of circa 1.7 million in Scotland and circa 3.8 million across the UK.
As a consequence, the value of qualifying BBC network television content from Scotland (relative to all BBC qualifying spend)exceeded the 2016
target of 8.6%, reaching 10.3%.
The following pages provide additional detail on the BBC’s performance in Scotland, including income, high level expenditure and performanceacross services provided in Scotland.
IncomeThese numbers are estimated as figures for each nation have been calculated by applying the proportion of licensed premises to the total numberof licences in force. The exact number of licences in force varies on a daily basis. The number of licenced premises are different to the numberof licences in force as, in some cases, a premise may need more than one licence. Figures exclude concessionary licences for those living inresidential care.

Estimated income
UK
Scotland

2017
£m

2016
£m

3,787.2
321.7

3,742.8
320.1

Expenditure by service
Direct and indirect spend relating to programmes produced in the nations.
2017£m

Restated
2016£mNetwork content
Television (inc. sport and childrens)+
Radio
Online and Red Button

84.2
3.5
5.5

65.6
4.0
3.2

Total network spend

93.2

72.8

Local content
Television – BBC One
Television – BBC Two
Television – BBC ALBARadio Scotland
Radio nan Gàidheal
Online and Red Button

43.0
17.0
6.0
21.1
3.7
6.6

44.5
15.2
5.5
22.9
3.9
5.0

Total local spend

97.4

97.0

Distribution Costs
Scottish Symphony Orchestra
Development

36.0
4.8
1.6

35.5
4.3
1.2

Total

233.0

210.8

*

+ Network content is attributed on an Ofcom basis, which excludes foreign productions* Full details of the above restatement can be found within note G1 of the notes to the accounts of the financial statements

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Television hours
Local opt out hours^ (including repeats) on BBC One and BBC Two
2017
Hours

2016
Hours

Drama, comedy, entertainment, music and arts
Daily, weekly news and current affairs
Sport and leisure
Education, factual and religion

131
499
196
101

139
544
174
104

Total

927

961

2017
Hours

2016
Hours

659
186
225
884
700

685
189
246
877
668

2,654

2,665

2017
Hours

2016
Hours

News and current affairs
General

3,213
5,338

3,072
5,521

Total

8,551

8,593

2017
Hours

2016
Hours

News and current affairs
General

663
4,258

647
4,281

Total

4,921

4,928

2017
Number

2016
Number

1,104

1,160

^ Television content commissioned specifically for audiences in the nation

Hours (including repeats) on BBC ALBA

Drama, comedy, entertainment, music and arts
Daily, weekly news and current affairs
Sport and leisure
Education, factual and religion
Children’s
Total

Radio hours
BBC Radio Scotland

BBC Radio nan Gàidheal

Headcount
Average headcount reflects those individuals employed to directly support the services produced in Scotland.

Average number of persons employed in the year

Average headcount of individuals based in Scotland across all services including support functions.
2017
NumberRestated
2016
Number

1,199

1,228

*

Average number of persons employed in the year
* The average number of persons employed during 2015/16 has been restated to include members of BBC orchestra and BBC singers employed on programme contracts

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Scotland’s performance by service – Television

Content
We spent a total of£144.2 million on these
services last year
in Scotland

Reach
Scotland population
who use the service
each week

Time spent watching achannel each week
Length of time the average
Scotland viewer spent eachweek with the channel

£M

%

H:M

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

£83.8m 74.0% 08:17

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

£45.6m 50.0% 03:12

BBC Four aims to be British television’s most intellectually andculturally enriching channel, offering an ambitious range of UK
and international arts, music, culture and factual programmes.

£4.4m 14.0%

01:46

The CBBC channel offers a distinctive mixed schedule for
6-12 year-olds, with mainly UK programmes served in a
stimulating, creative and enjoyable environment.

£7.7m 3.4%

02:15

CBeebies provides a mix of high-quality, mostly UK-produced,
programmes designed to encourage learning through play in
a consistently safe environment for children under six.

£2.7m 5.5%

03:54

2015/16: £76.1m*

2015/16: £32.7m*

2015/16: £4m

2015/16: £7.5m

2015/16: £2.4m

2015/16: 75.2%

2015/16: 49.1%

2015/16: 13.6%

2015/16: 3.5%

2015/16: 6.4%

2015/16: 08:11

2015/16: 03:11

2015/16: 01:41

2015/16: 02:25

2015/16: 04:21

Reach definition: 15+ minutes consecutive for all channels and services and audiences in TV-owning households aged 4+ (TV)
Source: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable)
Since the publication of the 2015/16 Annual Report, BARB has changed its reach methodology which makes a marginal difference to the 2015/16 reach figures when run now. Here we are stating the 2015/16
figures as they appeared in the 2015/16 Annual Report
N.B. BARB data measures TV set viewing only at present, meaning that iPlayer viewing on other devices is not included in any of the above figures. iPlayer viewing is growing, especially for young-skewed
services such as CBBC
* Full details of the above restatement can be found within note G1of the notes to the accounts of the financial statements

Scotland’s performance by service – News

Content
We spent a total of£nil on these services
last year in Scotland

Reach
Scotland population
who use the service
each week

Time spent watching or
listening to a channel
each week
Length of time the average
Scotland viewer spent eachweek with the service

£M

%

H:M

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

-

9.9%

03:27

BBC Parliament is the UK’s only channel dedicated to politics. It showsdebates and committees from Westminster, Holyrood, Stormont, Cardiff
Bay and Strasbourg as well as political programmes from across the UK.

-

0.8%

02:14

2015/16: –2015/16: –2015/16: 10.7%

2015/16: 1.1%

2015/16: 03:07

2015/16: 01:53

Reach definition: 15+ minutes for all channels and services and on audiences aged 4+. Source: reach and time spent BARB (TV)Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 14.1% and 1.7% respectively (15.4% and 1.9% among 16+ population)

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B B C I N T H E N AT I O N S

Scotland’s performance by service – Digital

BBC Online comprises the BBC’s portfolio of online products on desktop,
connected television, mobile and tablet, including news, sport andweather; our children’s services CBBC and CBeebies; and Knowledge& Learning – as well as IP-delivered television and radio services, withboth live and on-demand programmes available on BBC iPlayer.

Content
We spent a total of£12.1 million on these
services last year
in Scotland

Reach
Scotland population
who use the service
each week

Time spent with eachservice each week
Length of time the average
Scotland user spent eachweek with the service

£M

%

H:M

£12.1m 59.1%
2015/16: £8.3m*

n/a

2015/16: 61.4%

2015/16: n/a

Reach definition: 3+ mins for both services, and on adults aged 16+
Source: Cross-Media Insight Survey by GfK, 16+. UK data financial years, Scotland data calendar years* Full details of the above restatements can be found within note G1 of the notes to the accounts of the financial statements

Scotland’s performance by service – RadioBBC Radio 1 broadcasts a distinctive mix of new music andentertainment for 15- to 29-year-olds as well as providing tailored
news, documentaries and advice campaigns for young adults.
BBC 1Xtra plays the best in contemporary black music, with a strongemphasis on delivering high-quality live music and supporting new artists.

Content
We spent a total of£3.5 million on these
services last year
in Scotland

Reach
Scotland population
who use the service
each week

Time spent listening to aservice each week
Length of time the average
Scotland listener spent eachweek with the service

£M

%

H:M

£0.1m
£0.1m
£1.8m
£1.5m
-

16.1%
0.8%
25.6%
2.7%
12.7%
1.9%
6.9%
1.2%
3.7%
0.4%

2015/16: £0 .1m

2015/16: –BBC Radio 2 broadcasts a unique mix of music and speechprogrammes covering a diverse mix of live pop and rock,comedy, documentaries and religious output, as well as runningsocial action campaigns to over 14 million listeners.
BBC Radio 3 centres on classical music, around which it provides a broad
spectrum of jazz, world music, arts programmes, religion and drama.
There is a strong emphasis on musical performance across the UK.
BBC Radio 4 is a mixed-speech radio station, offering in-depth news
and current affairs and a wide range of other speech programmes
including drama, readings, comedy, factual and magazine programmes.
Originally launched in 2002 as BBC 7, the station was relaunched in April 2011
as BBC Radio 4 Extra. The digital-only network is the principal outlet for theBBC’s archive of speech entertainment, including comedy, drama and readings.
BBC Radio 5 live broadcasts continuous news and live sports coverage,
bringing major news stories and sports events to its listeners as they happen,
and providing context through wide-ranging analysis and discussion.
BBC Radio 5 live sports extra brings a greater choice of live action tosports fans by extending live coverage of various sporting events.

2015/16: £0.1m

2015/16: £2.0m

2015/16: £1.8m

2015/16: -2015/16: –2015/16: –BBC 6 Music is a digital radio station that entertains lovers of popular musicwith a service that celebrates the alternative spirit of popular music from the
60s to the present day, complemented by music news and documentaries.
BBC Asian Network offers speech and music appealing to British
Asians, with a focus on news and current affairs. It broadcasts mainly
in English, but does offer some programmes in other languages.

Reach definition: 15+ minutes for all stations and audiences aged 15+
Source: RAJAR (Radio reach and time spent)Excludes programme Coming up on 5 live sports extra* Radio 1: among its target group of 15-29 year-olds reach was 31.3% and time spent was 06:52+ 1Xtra: among 15-24 year-olds reach was 2.3%. Sample size for time per user too low to report** Radio 2: among its target group of 35+ year-olds reach was 31.0% and time spent was 12:19^ Sample size for time per user too low to report100

BBC Annual Report and Accounts 2016/17

2015/16: –2015/16: –

06:45

**

2015/16: 18.7%

2015/16: 05:53++

2015/16: 0.9%

2015/16: 26.9%

2015/16: 3.2%

2015/16: 14.3%

2015/16: 3.0%

2015/16: 6.8%

2015/16: 1.5%

2015/16: 3.7%

2015/16: 0.5%

2015/16: +
**

11.33
05:20
09:30
05:43
06:24
02:03
09:45
2015/16: 11:29

2015/16: 05:10

2015/16: 10:06

2015/16: 05:24

2015/16: 06:34

2015/16: 01:57

2015/16: 10:01^

2015/16: ^G OV E R N A N C E

The BBC in Northern Ireland
The year-on-year increase in total expenditure to £97.2 million reflects the successful growth of network television drama from Northern Ireland,
all of it produced by the independent production sector. Output in this area included Line of Duty, The Fall and My Mother and Other Strangers.
Additional income also derived from children’s programming or BBC network audiences. Online expenditure increased as a result of BBC Rewind,an archive-based initiative, which is providing programme-makers with much easier access to the BBC’s archive holdings and facilitating new
editorial projects.
The small uplift in average headcount reflects this increased investment in Online services.
Locally-produced content continued to perform strongly across a range of genres on BBC One and BBC Two.
BBC Radio Ulster/Foyle maintained its position as the most listened to radio service in Northern Ireland and secured an increase in the average
hours per listener.
The following pages provide additional detail on the BBC’s performance in Northern Ireland, including income, high level expenditure andperformance across services provided in Northern Ireland.
IncomeThese numbers are estimated as figures for each nation and have been calculated by applying the proportion of licenced premises to the total
number of licences in force. The exact number of licences in force varies on a daily basis. The number of licenced premises are different to thenumber of licences in force as, in some cases, a premise may need more than one licence. Figures exclude concessionary licences for those living
in residential care.

Estimated income
UK
Northern Ireland

2017
£m

2016
£m

3,787.2
99.8

3,742.8
99.0

Expenditure by service
Direct and indirect spend relating to programmes produced in the nation.
2017£m

Restated
2016£mNetwork content
Television (inc. sport and childrens)+
Radio
Online and Red Button

27.3
1.4
1.5

17.8
1.6
0.4

*

Total network spend

30.2

19.8

Local content
Television – BBC One
Television – BBC Two
Radio Foyle/Ulster
Online and Red Button

24.0
5.8
17.5
6.0

24.0
5.6
17.7
5.9

Total local spend

53.3

53.2

Distribution Costs
Development

13.7
–

13.4
–

Total

97.2

86.4

+ Network content is attributed on an Ofcom basis, which excludes foreign productions* Full details of the above restatement can be found within note G1 of the notes to the accounts of the financial statements

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B B C I N T H E N AT I O N S

Television hours
Local opt out^ (including repeats) hours on BBC One and BBC Two
2017
Hours

2016
Hours

Drama, comedy, entertainment, music & arts
Daily, weekly news and current affairs
Sport and leisure
Education, factual and religion

57
489
78
176

48
474
83
173

Total

800

778

2017
Hours

2016
Hours

News and current affairs
General

3,219
5,480

3,065
5,689

Total

8,699

8,754

2017
Number

2016
Number

631

623

2017
Number

2016
Number663

656^ Television content commissioned specifically for audiences in the nation

Radio hours
BBC Radio Foyle/Ulster

Headcount
Average headcount reflects those individuals employed to directly support the services produced in Northern Ireland.

Average number of persons employed in the year

Average headcount of individuals based in Northern Ireland across all services including support functions.

Average number of persons employed in the year

102

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G OV E R N A N C E

Northern Ireland’s performance by service – Television

Content
We spent a total of£57.1 million on these
services last year in
Northern Ireland

Reach
Northern Ireland
population who use theservice each week

Time spent watching achannel each week
Length of time the average
Northern Ireland viewer
spent each week withthe channel

£M

%

H:M

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

£38.0m 71.7%

06:40

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

£13.3m 42.1%

02:51

BBC Four aims to be British television’s most intellectually andculturally enriching channel, offering an ambitious range of UK
and international arts, music, culture and factual programmes.

£1.5m 10.4%

01:34

The CBBC channel offers a distinctive mixed schedule for
6-12 year-olds, with mainly UK programmes served in a
stimulating, creative and enjoyable environment.

£3.6m 5.4%

02:53

CBeebies provides a mix of high-quality, mostly UK-produced,
programmes designed to encourage learning through play in
a consistently safe environment for children under six.

£0.7m 6.9%

03:35

2015/16: £33.5m*

2015/16: 72.4%

2015/16: £7.9m*

2015/16: 41.7

2015/16: £1.2m

2015/16: 9.3%

2015/16: £4.0m

2015/16: 6.4%

2015/16: –2015/16: 8.1%

2015/16: 06:41

2015/16: 02:49

2015/16: 01:31

2015/16: 03:05

2015/16: 04:19

Reach definition: 15+ minutes consecutive for all channels and services and audiences in TV-owning households aged 4+ (TV)
Source: BARB (TV reach and time spent – all channels include their simulcast HD channel where applicable)
Since the publication of the 2015/16 Annual Report, BARB has changed its reach methodology which makes a marginal difference to the 2015/16 reach figures when run now. Here we are stating the 2015/16
figures as they appeared in the 2015/16 Annual Report
N.B. BARB data measures TV set viewing only at present, meaning that iPlayer viewing on other devices is not included in any of the above figures. iPlayer viewing is growing, especially for young-skewed
services such as CBBC
* Full details of the above restatement can be found within note G1 of the notes to the accounts of the financial statements

Northern Ireland’s performance by service – News

Content
We spent a total of£nil on these services lastyear in Northern Ireland

Reach
Northern Ireland
population who use theservice each week

Time spent watching or
listening to a service eachweek
Length of time the average
Northern Ireland viewer
spent each week with theservice

£M

%

H:M

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

-

6.9%

03:22

BBC Parliament is the UK’s only channel dedicated to politics. It showsdebates and committees from Westminster, Holyrood, Stormont, Cardiff
Bay and Strasbourg as well as political programmes from across the UK.

-

0.8%

2015/16: –2015/16: –2015/16: 7.3%

2015/16: 0.7%

2015/16: 03:08*

2015/16: *Reach definition: 15+ minutes for all channels and services and audiences aged 4+
Source: reach and time spent BARB (TV)Three-minute reach for BBC News Channel and BBC Parliament – in line with industry standards – would be 11.2% and 1.6% respectively (13.0% and 2.0% among 16+ population)* Sample size for time per user too low to report

BBC Annual Report and Accounts 2016/17

103

B B C I N T H E N AT I O N S

Northern Ireland’s performance by service – Digital

BBC Online comprises the BBC’s portfolio of online products on desktop,
connected television, mobile and tablet, including news, sport andweather; our children’s services CBBC and CBeebies; and Knowledge& Learning – as well as IP-delivered television and radio services, withboth live and on-demand programmes available on BBC iPlayer.

Content
We spent a total of£7.5 million on these
services last year in
Northern Ireland

Reach
Northern Ireland
population who use theservice each week

Time spent with eachservice each week
Length of time the average
Northern Ireland user spenteach week with the service

£M

%

H:M

£7.5m 54.7% n/a
2015/16: 6.3*

2015/16: 56.5%

2015/16: n/aContent
We spent a total of£1.4 million on these
services last year in
Northern Ireland

Reach
Northern Ireland
population who use theservice each week

Time spent listening to aservice each week
Length of time the average
Northern Ireland listenerspent each week withthe service

£M

%

H:M

Reach definition: 3+ mins for both services, and on adults aged 16+
Source: Cross-Media Insight Survey by GfK. UK data financial years, Northern Ireland data calendar years* Full details of the above restatement can be found within note G1 of the notes to the accounts of the financial statements

Northern Ireland’s performance by service – RadioBBC Radio 1 broadcasts a distinctive mix of new music andentertainment for 15- to 29-year-olds as well as providing tailored
news, documentaries and advice campaigns for young adults.
BBC 1Xtra plays the best in contemporary black music, with a strongemphasis on delivering high-quality live music and supporting new artists.

19.2%
0.6%
13.8%
£0.8m 2.0%
£0.6m 9.6%
2.0%
9.2%
1.7%
1.5%
-

*

2015/16: –BBC Radio 3 centres on classical music, around which it provides a broad
spectrum of jazz, world music, arts programmes, religion and drama.
There is a strong emphasis on musical performance across the UK.
BBC Radio 4 is a mixed-speech radio station, offering in-depth news
and current affairs and a wide range of other speech programmes
including drama, readings, comedy, factual and magazine programmes.
Originally launched in 2002 as BBC 7, the station was relaunched in April 2011
as BBC Radio 4 Extra. The digital-only network is the principal outlet for theBBC’s archive of speech entertainment, including comedy, drama and readings.
BBC Radio 5 live broadcasts continuous news and live sports coverage,
bringing major news stories and sports events to its listeners as they happen,
and providing context through wide-ranging analysis and discussion.
BBC Radio 5 live sports extra brings a greater choice of live action tosports fans by extending live coverage of various sporting events.

2015/16: –2015/16: £0.9m

2015/16: 1.7%

2015/16: £0.7m

2015/16: 9.0%

BBC Asian Network offers speech and music appealing to British
Asians, with a focus on news and current affairs. It broadcasts mainly
in English, but does offer some programmes in other languages.

Reach definition: 15+ minutes for all stations and audiences aged 15+
Source: RAJAR (Radio reach and time spent)Excludes programme “Coming up on 5 live sports extra”* Radio 1: among its target group of 15-29 year-olds reach was 40.8% and time spent was 05:05+ 1Xtra: among 15-24 year-olds reach was 1.3%. Sample size for time per user too low to report** Radio 2: among its target group of 35+ year-olds reach was 16.7% and time spent was 08:55^ Sample size for time per user too low to report> Lower sample size may be responsible for greater variability in the data

104

BBC Annual Report and Accounts 2016/17

2015/16: +
**

08:20
04:15
08:05
2015/16: 08:39>

2015/16: 07:21

2015/16: 08:22^

2015/16: –2015/16: 1.5%

2015/16: ^2015/16: –2015/16: 9.9%

05:05
02:36

2015/16: –BBC 6 Music is a digital radio station that entertains lovers of popular musicwith a service that celebrates the alternative spirit of popular music from the
60s to the present day, complemented by music news and documentaries.

+

2015/16: 1.3%

2015/16: 14.1%

05:33
2015/16: 05:03+

2015/16: –BBC Radio 2 broadcasts a unique mix of music and speechprogrammes covering a diverse mix of live pop and rock,comedy, documentaries and religious output, as well as runningsocial action campaigns to over 14 million listeners.

2015/16: 20.8%

2015/16: –2015/16: –2015/16: 2.1%

2015/16: 2.0

2015/16: 0.1%

2015/16: 04:31>

2015/16: 02:43^

2015/16: ^^2015/16: ^G OV E R N A N C E

P E R F O R M A N C E AG A I N S T P U B L I C C O M M I T M E N T S

Performance against public
commitments 2016/17
The BBC is accountable for a number of public
commitments each year, including programmingand production quotas and service licencecommitments. This document sets out theBBC’s performance against these.
The following pages do not form part of
the financial statements and have therefore
not been audited by Ernst & Young LLP.

Multi-award winning BBC drama Sherlock

BBC Annual Report and Accounts 2016/17

105

P E R F O R M A N C E AG A I N S T P U B L I C C O M M I T M E N T S

1. Ofcom tier 2 quotas
The data presented reflects a calendar rather than financial year.
Note

Independent production quota
Hours of qualifying programmes across all channels
Hours of qualifying programmes on BBC One
Hours of qualifying programmes on BBC Two

1

Regional programme making
Spend on qualifying programmes
Hours of qualifying programmes

2News and current affairs programmes
Hours of news on BBC One
Hours of news on BBC One in peak
Hours of current affairs on BBC One and BBC Two
Hours of current affairs on BBC One and BBC Two in peak3

Levels of original production
BBC OneBBC One in peak
BBC Two
BBC Two in peak
BBC Three
BBC Three in peak
BBC Four
BBC Four in peak
CBeebies
CBBC
BBC News Channel
BBC Parliament

4

Regional programming
Hours of regional programming
Hours of programmes made in the relevant area
Hours of BBC One news
Hours of BBC One news in peak
Hours of non-news programming in peakAll non-news programmes adjacent to peak

5

Notes
1 The BBC is subject to a 25% independent production quota across all channels and on BBC One and BBC Two individually
2 The BBC has used Ofcom’s definitions of regional production from 1 January 2006
3 These quotas and performance figures are for network programming only. The News quota specifically excludes overnight transmissions of BBC News
4 Original productions include all BBC commissioned programmes including repeats. Figures for BBC Three are for the period 01/01/2016 to 16/02/2016
5 These figures represent regional programmes across BBC One and BBC Two

106

BBC Annual Report and Accounts 2016/17

Quota

2016
Achievement

25%
25%
25%

30%
30%
37%

30%
25%

51%
62%

1,380
275
365
105

1,683
296
602
108

70%
90%
70%
80%
70%
70%
c.70%
50%
70%
70%
90%
90%

86%
99.7%
89%
96%
78%
72%
88%
85%
73%
78%
99%
97%

6,270
95%
3,920
2,010
655
280

6,619
99.7%
4,845
2,153
716
383

G OV E R N A N C E

2. Compliance with service licences 2016/17
This section provides the detail of compliance with requirements set out in the service licences established by the BBC Trust. Unless otherwise
stated, hours commitments throughout this section include originations, acquisitions and repeats. The use of the word ‘new’ means that thecommitment includes originations only.
BBC Network Television
Note

Commitment

Actual

2

40
40
110

61
54
140

1

265
140

361
187

1

250
60

356
88

1

280
80

334
176

150

245

3

190

240

1

160

181

1

55

228

70%
25%

73%
40%

BBC Four
Hours of arts and music
Hours of new factual programming

150
60

226
103

CBBC
Hours of drama programming
Hours of news
Hours of factual programming

665
85
550

1,704
92
996

CBeebies
No specific commitments apply––

BBC OneHours of arts and music
Current affairs in peak
Hours of religious programmes
BBC One Scotland
Hours of news and current affairs
Hours of other (non-news) programming each year
BBC One Wales
Hours of news and current affairs
Hours of other (non-news) programming each year
BBC One Northern Ireland
Hours of news and current affairs
Hours of other (non-news) programming each year
BBC Two
Hours of arts and music
BBC Two Scotland
Hours of other (non-news) programming each year including Gaelic output
BBC Two Wales
Hours of other (non-news) programming each year
BBC Two Northern Ireland
Hours of other (non-news) programming each year
BBC Three
Long-form Content
Factual Long-form

4

Notes
1 This output may include repeats and acquisitions
2 BBC One and BBC Two shared
3 Repeats included but current affairs excluded
4 BBC Three linear service licence commitments no longer apply, and have been replaced with two new ‘BBC Three Online’ commitments

BBC One peak time repeats %BBC Two peak time repeats %

10

35

8

8.4

30

8.4
6.4

6

31.1
28.3

28.2

28.4

25

7.1

27.4

25.3

20

5.7
4.8

4

25.8

4.0

15
10

2

5
2010/112011/122012/132013/142014/15

2015/162016/17

2010/112011/122012/132013/142014/15

2015/16

BBC Annual Report and Accounts 2016/17

2016/17

107

P E R F O R M A N C E AG A I N S T P U B L I C C O M M I T M E N T S

2. Compliance with service licences 2016/17
BBC Network RadioNote

BBC Radio 1
Hours of specialist music per week
% of music from UK acts in daytime% of new music in daytime
Number of live events and festivals broadcast
Number of new sessions (excluding repeats)% of eligible hours commissioned from independent producers
Hours of news in daytime each weekday, including two extended bulletins
Regular bulletins during daytime at weekends
Number of new documentaries
Number of major social action campaigns

Commitment

2016/17
results

60
40%
45%
c.10
160
>10%
1

69
47%
60%
19
221
15%
1hr 6 mins

P

ü

40
2

42
3

60%
35%
c.10%
40
1

67%
43%
15%
40
1

P

ü

40%
20%
260
1,100
100
10%
16
130
170

53%
26%
255
1,111
136
14%
18
142
209

BBC Radio 3% of live or specially recorded music
Number of live or specially recorded performances
Number of new musical works commissioned (excluding repeats)
Number of new drama productions broadcast (excluding repeats)% of eligible hours commissioned from independent producers
Number of new documentaries on arts and cultural topics (excluding repeats)% or relevant spend incurred outside the M25

40%
400
20
20
10%
30
40%

59%
611
31
25
25%
52
50%

BBC Radio 4
Hours of news and current affairs programmes
Hours of original drama and readings
Hours of original comedy (excluding repeats)% of eligible hours commissioned from independent producers
Hours of original documentaries (excluding repeats)
Hours of original religious programming (excluding repeats)

2,500
600
180
c.10%
350
200

3,364
622
261
14.5%
392
227

BBC Radio 4 Extra
Weekly hours of comedy
Weekly hours of drama% Radio 4 catch-up programming% of eligible hours commissioned from independent producers

55
55
<15%
10%

68
72
10.75%
24.5%

BBC Radio 1Xtra% of new music in daytime% of music from UK acts in daytime% of eligible hours commissioned from independent producers
Number of documentaries
Hours of news in daytime each weekday, including two extended bulletins
Regular bulletins in daytime at weekends
BBC Radio 2% of music from UK acts in daytime% of new music in daytime
Hours of live music
Hours of specialist music programmes
Hours of arts programming% of eligible hours commissioned from independent producers
Weekly hours of news and current affairs, including regular news bulletins
Hours of new documentaries
Hours of religious output covering a broad range of faiths

1Note
1 Radio 2 under-delivered in 2016/17 due to an unexpected drop in live music on a single specialist music show. We have introduced a new Daytime slot for live music which will address this issue108

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G OV E R N A N C E

2. Compliance with service licences 2016/17
BBC Network Radio
Note

Commitment

2016/17
results

BBC Radio 5 live
% of output that is news coverage% of eligible hours commissioned from independent producers

1

c.75%
10%

75%
14%

BBC Radio 5 live sports extra% of eligible hours commissioned from independent producers

1

10%

14%

2

<30%
400
6,500 (1,150)
300
10%
10
6

32%
413
6,672 (1,008)
312
23%
10
6

50:50
24
30%
30%
10%
10
>10%
20

47:53
24
38%
34%
9%
11
12%
n/a

Commitment

2016/17
results

P
P
P

ü
ü
ü

100

199

70
10
260
100

75
18
356
123

BBC Radio 6 Music% of new music
Hours of archive concert performances
Number of concert tracks or sessions from the BBC music archive (daytime)
Number of new sessions (excluding repeats and acquisitions)% of eligible hours commissioned from independent producers
Average weekly hours of speech-based features, documentaries and essays
Weekly hours of news
BBC Radio Asian Network
Proportion of speech to music daytime
Hours of news and current affairs per week
% of music from UK artists% of new music% of music from South Asia
Coverage of live events or festivals% of eligible hours commissioned from independent producers
Average hours of language programming each week3

1 Radio 5 live and Radio 5 live sports extra combined
2 6 Music slightly exceeded its commitment to new music. However, the new music broadcast by the station does not overlap with rival commercial radio stations
3 The commitment was removed from the Service Licence in August 2016

BBC News
Note

BBC News Channel
More international news than other main continuous news channel(s) in the UK
More local/regional news and perspectives than other main continuous news channel(s) in the UK
Sports news throughout the day, including evening round-up
Hours of sports news
BBC Parliament
Hours of coverage of the Westminster Parliament during a normal sitting week…
… including hours from committees
Hours of proceedings of the Scottish Parliament, Northern Ireland Assembly and Welsh Assembly
Hours of programming (including repeats) from Brussels and Strasbourg

1

1 In addition to sports updates throughout the day, there were hours of dedicated sports news programmes on the News Channel. There were a further 63 hours of Sport Today broadcast on ourovernight joint service with BBC World News, bringing total hours of sport to 262

BBC Annual Report and Accounts 2016/17

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P E R F O R M A N C E AG A I N S T P U B L I C C O M M I T M E N T S

2. Compliance with service licences 2016/17
BBC Nations and English regions
Note

Commitment

2016/17
results

1

60%
100%
85

70%
100%
108.9

BBC Radio Scotland
Weekly hours of radio news and current affairs
Hours of arts coverage (including narrative repeats of daily arts show)% of eligible hours commissioned from independent producers

43
200
c.10%

60
427
14.9%

BBC Radio nan Gaidhael% of eligible hours commissioned from independent producers

c.10%

10.7%

c.5
2

9
15

BBC Local Radio% of speech content in core hours (Monday-Friday, 6am-7pm)% of speech content at breakfast peaktime
Average minimum weekly hours per station of original, locally made programming

2,3

BBC Alba
Weekly hours of originated programming (excluding news), including current affairs and transfersfrom other BBC services
Hours per week aimed at Gaelic language learners (originations only)
Live news programmes each weekday evening (including peaktime) and news review at weekends% of age of eligible hours commissioned from independent producers

P

ü

>50%

86%

BBC Radio Wales
Weekly hours of news and current affairs% of eligible hours commissioned from independent producers

24
>10%

35
21%

BBC Radio Cymru
Weekly hours of news and current affairs% of eligible hours commissioned from independent producers

16
>10%

26
19%

BBC Radio Ulster/BBC Radio Foyle
Weekly hours of news and current affairs on Radio Ulster
Weekly hours of news and current affairs on Radio Foyle
Hours of new comedy% of eligible hours commissioned from independent producers
Hours of indigenous minority language programming, including Ulster Scots and Irish

27
8
20
10%
220

44
25
22
9.6%
252

Notes
1 Unless otherwise stated, hours commitments throughout this document include originations, acquisitions and repeats
2 All Local Radio stations exceeded the minimum weekly hours of original locally made programming
3 Following its establishment as a standalone station BBC Somerset shares some programming with BBC Bristol. For service licence purposes these also contribute to BBC Somerset’s commitment

BBC Digital
Note

BBC Online% of eligible content and services commissioned from external suppliers (by value)
Increase the volume of click-throughs to external sites

BBC Red Button
No specific commitments apply

1

Commitment

2016/17
results

25%
2015/16Monthly averagefor the year
17.8m

31.6%
17.3m

–

–

Note
1 External click performance primarily reflects changing audience behaviour. Desktop users are almost twice as likely to click on an external link as mobile and tablet users, and over the past two years wehave seen a significant migration from desktop to mobile and tablet

110

BBC Annual Report and Accounts 2016/17

G OV E R N A N C E

3. Access services
Audio

Audio described hours

Total hours

Actual for year (%)

2 016 /17

2 016 /17

2 015 /16

2 016 /17

2 015 /16

1,896 1,947 8,736 21.7

22.3

20.0

20.0

2,408 2,323 8,736 27.6

26.6

20.0

20.0

n/a

n/a

31.4

n/a

20.0

1,205 1,176 3,294 36.6

36.8

20.0

20.0

1,771 1,413 5,064 35.0

32.5

20.0

20.0

1,320 1,441 4,707 28.0

30.6

20.0

20.0

2 016 /17

1, 2

Total

2 015 /16

895

n/a

Target for year (%)

8,600 9,195 30,537

Note
1 BBC Three was launched as an online service on 16 February 2016 and there are no figures to report for the period 2016/17
2 All BBC Three long-form content is also broadcast on BBC One and BBC Two and therefore falls under the access service quotas for those channels

BBC Annual Report and Accounts 2016/17

111

P E R F O R M A N C E AG A I N S T P U B L I C C O M M I T M E N T S

3. Access services
Sign interpreted

1, 2

Total

Sign interpreted hours

Total hours

Actual for year (%)

2 016 /17

2 015 /16

2 016 /17

2 016 /17

460

457

453

Target for year (%)

2 015 /16

2 016 /17

2 015 /16

8,736 5.3

5.2

5.0

5.0

457

8,736 5.2

5.2

5.0

5.0

n/a

158

n/a

n/a

5.5

n/a

5.0

177

187

3,294 5.4

5.8

5.0

5.0

261

243

5,064 5.2

5.6

5.0

5.0

244

251

4,707 5.2

5.3

5.0

5.0

514

495

8,736 5.9

5.7

5.0

5.0

2,109 2,248 39,273

Note
1 BBC Three was launched as an online service on 16 February 2016 and there are no figures to report for the period 2016/17
2 All BBC Three long-form content is also broadcast on BBC One and BBC Two and therefore falls under the access service quotas for those channels

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BBC Annual Report and Accounts 2016/17

G OV E R N A N C E

3. Access services
Subtitled

Subtitled hours

2 016 /17

1, 2

Total

2 015 /16

Total hours

Actual for year (%)

2 016 /17

2 016 /17

Target for year (%)

2 016 /17

2 015 /16

14,213 14,188 14,225 99.9

99.9 100

100

9,634 9,676 9,640 99.9

99.9 100

100

n/a

n/a

100

100

100

3,294 3,198 3,294 100

100

100

100

5,062 4,341 5,064 100

100

100

100

4,706 4,701 4,707 100

100

100

100

1,379 1,132 8,736 15.8

138,733 8,733 8,736 100

100

100

100

2,851 n/a

2 015 /16

47,021 48,820 54,402

Note
1 BBC Three was launched as an online service on 16 February 2016 and there are no figures to report for the period 2016/17
2 All BBC Three long-form content is also broadcast on BBC One and BBC Two and therefore falls under the access service quotas for those channels

BBC Annual Report and Accounts 2016/17

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P E R F O R M A N C E AG A I N S T P U B L I C C O M M I T M E N T S

4. Window of Creative Competition (‘WOCC’)
Television
The following table shows the levels of all BBC network television hours from in-house and external suppliers1.
Proportion of all hours produced by qualifying
independent producers for BBC television (%)

Drama

Proportion of all hours produced by non-qualifying
Independent producers for BBC television (%)

Proportion of all hours produced in-housefor BBC television (%)

2016/172015/16% change

2016/172015/16% change

2016/172015/16% change

24

30

-6

12

9

3

65

61

4

Entertainment

29

30

-1

38

37

0

33

32

1

Comedy

46

47

-1

19

10

9

36

43

-7

Knowledge

26

26

0

16

14

2

58

60

-2

Daytime

39

44

-5

28

18

10

33

38

-5

Sport

27

32

-5

0

0

0

73

68

5

Children’s

32

38

-6

12

6

6

56

56

0

Total

30

34

-4

15

13

2

55

54

1

The following table shows the levels of all WOCC hours from in-house and external suppliers2.
Proportion of WOCC hours produced by qualifying
independent producers for BBC television

Drama

Proportion of WOCC hours produced by non-qualifying
independent producers for BBC television

Proportion of WOCC hours produced in-housefor BBC television

2016/172015/16% change

2016/172015/16% change

2016/172015/16% change

21

64

-44

61

36

25

18

–

18

Entertainment

21

20

1

66

77

-11

13

3

10

Comedy

52

68

-15

45

32

12

3

–

3

Knowledge

33

27

5

52

53

-1

15

20

-5

Daytime

20

26

-6

75

56

19

6

18

-13

Sport3

n/a

–

–

n/a

–

–

n/a

100

–

Children’s

31

52

-20

46

27

19

22

22

0

Total

20

33

-13

60

50

10

20

17

3

Radio
The following table shows the levels of radio hours from external suppliers.
Actual %2016/17

Actual %2015/16

Indie
Guaranteed

Indie
WOCC

In-house
WOCC

Total
WOCC

Total
Indie

Indie
Guaranteed

Indie
WOCC

In-house
WOCC

Total
WOCC

Total
Indie

BBC Radio 1

11

4

5

8

BBC Radio 1Xtra

15

0

5

5

15

11

4

5

9

15

15

15

0

5

5

BBC Radio 2

9

4

2

6

15

13

10

4

2

6

14

BBC 6 Music

14

9

0

9

23

14

9

0

9

23

BBC Radio 3

15

10

2

12

25

14

5

6

12

19

BBC Radio 4

10

5

7

12

15

10

5

7

12

15

BBC Radio 4 Extra

24

–

–

–

–

28

–

–

–

–

BBC Radio 5 live
(including BBC 5 live sports extra)

14

10

0

10

25

14

9

0

9

24

Asian Network

13

3

10

13

16

11

2

9

12

14

Total

13

5

4

9

18

12

5

4

10

17

Target

10

10

10

10

Notes
1 The 2016/17 figures only include those programmes which were commissioned before the end of 2016
2 The 2006 Charter and Agreement commitments regarding the WOCC and inhouse guarantee only apply to the end of 2016. The 2016/17 figures only include those programmes which werecommissioned before the end of 2016. The requirement in the 2017 Charter and Agreement commitment to open up the in-house guarantee for competition started in September 2016. The timelines
between commissioning decisions and programme delivery mean that the above figures are in line with the regulatory requirements
3 There were no eligible sport titles in the WOCC in 2016/17

114

BBC Annual Report and Accounts 2016/17

F I N A N C I A L S TAT E M E N T S

I N D E P E N D E N T AU D I TO R’ S R E P O RT

Independent auditor’s reportto the Board of the British
Broadcasting Corporation(‘BBC’) only

Consolidated balance sheet as at 31 March 2017

Respective responsibilities of Boardand auditor
As explained more fully in the Statement ofBoard Responsibilities set out on page 85,
the Board is responsible for the preparationof the Group financial statements and forbeing satisfied that they give a true andfair view. Our responsibility is to audit andexpress an opinion on the Group financial
statements in accordance with the Royal
Charter and Schedule 8 to the Large andMedium sized Companies and Groups(Accounts and Reports) regulations 2008
and International Standards on Auditing(UK and Ireland). Those standards require
us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.

Consolidated income statement for the year
then ended

Overview

Consolidated statement of comprehensive loss
for the year then ended

Risks of material misstatement–– completeness and occurrence of licence feerevenue around year end–– completeness and occurrence of commercial
income streams around year end–– classification of costs for service licences andcontent spend–– valuation of provisions–– inappropriate capitalisation or unidentified
impairment of capital projects–– valuation of the property portfolio–– judgemental assumptions impacting thepension deficit

Audit scope–– we performed an audit of the complete financial
information of five components–– the five full-scope reporting components where
we performed audit procedures accounted
for 96% of the Group’s total assets, 100%of the Group’s income, 100% of the Group’s
operating costs and 85% of the Group’s deficit
before taxation

Materiality–– overall Group materiality of £10 million, which
represents 0.2% of operating costs

Opinion on financial statements
In our opinion:–– BBC’s financial statements give a true and fairview of the state of the Group’s affairs as at
31 March 2017 and of the Group’s deficit for
the year then ended; and–– The Group financial statements have been
properly prepared in accordance with
International Financial Reporting Standards
as adopted by the European Union.
What we have audited
BBC’s financial statements comprise:

Consolidated statement of changes in equity forthe year then ended
Consolidated cash flow statement for the year
then end
Related notes A to H to the financial statements

The financial reporting framework thathas been applied in their preparation
is applicable law and International
Financial Reporting Standards (‘IFRS’s)
as adopted by the European Union.

This report is made solely to the Board on
terms that have been agreed. Our audit work
has been undertaken so that we might state
to the Board those matters we are required
to state to them in an auditor’s report and,in respect of the separate opinions in relation
to the Remuneration Reports and reportingon Corporate Governance, those mattersthat we have agreed to state to them inour report, and for no other purpose. To
the fullest extent permitted by law, we
do not accept or assume responsibility toanyone other than the BBC and the Board
as a body, for our audit work, for this report,
or for the opinions we have formed.

BBC Annual Report and Accounts 2016/17

115

I N D E P E N D E N T AU D I TO R’ S R E P O RT

Our assessment of risk of material misstatement
We identified the risks of material misstatement described below as they had the greatest effect on our overall audit strategy, the allocation of
resources in the audit and direction of the efforts of the audit team. These risks remain consistent with the prior year; however, articulation of theserisks have been clarified in the current year to define more precisely those which we consider the greatest risks of material misstatement. In
addressing these risks, we have performed the procedures below which were designed in the context of the financial statements as a whole and,
consequently, we do not express any opinion on these individual areas.

Completeness andoccurrence of licencefee revenue aroundyear end – total
revenue recognised£3,787.2 million(2016: £3,742.8 million)
Refer to notes A1
and A2 (financial
disclosures) and noteH (accounting policy).
Communicated in Audit
and Risk Committee
report section 3
and Appendix B

Risks

Our response to these risks

The value of licence fee revenue issignificant. The forecast revenue
from the licence fee forms the basisof the BBC budget and allocatedspend. There could be an incentive
to disclose a revenue figure tomeet the public’s or management’s
expectation. This could exist at the
BBC or at third parties involved inthis revenue recognition process.

We have met with key members of management
and the outsourced service provider who collect
the licence fee on behalf of the BBC, to understandand evaluate any changes in the licence fee
process. We have walked through the licence fee
process and identified key controls in place.

The revenue recognition process forlicence revenue is not complex as therecognition occurs on issuance of thelicence and the amount is a fixed price.
We consider the transactions over theyear end period to have a higher risk
owing to timing differences and focus
our testing over this area. This risk has
remained consistent with the prior year.

We have researched external sources regarding
changes in the licence fee and discussed
these with management. We assessed any
impact on the financial statements.

We have inspected any changes to contractual
agreements between the BBC and third
parties in relation to the licence fee.

We have completed analytical review
procedures by calculating our expected licencefee revenue figure for the year and comparing
this to the licence fee revenue recognised,utilising external evidence on the number ofhouseholds and our expected evasion rates.
We have inspected the year end reconciliationof cash to licence fee revenue. This includes
the licence fee receivable and payableaccounts. We have confirmed the valuation,
existence and completeness of these accounts
by testing a sample of transactions backto cash receipts and licences issued.
We have inspected cut-off documentation
and underlying evidence. We inspected
evidence showing cash payments andlicences issued after year end.
We have examined and obtained support
for material journal entries focusing
on March and April postings.
We performed full scope audit procedures
over this risk area in one location, which
covered 100% of the risk amount.

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BBC Annual Report and Accounts 2016/17

Key observations communicatedto the Audit and Risk Committee

Based upon the audit
procedures performed,
we consider the licencefee revenue to beappropriately stated.

F I N A N C I A L S TAT E M E N T S

Completenessand occurrence ofcommercial income
streams aroundyear end – total
revenue recognised£1,166.8 million(2016: £1,084.2 million)
Refer to notes A1
and A2 (financial
disclosures) and noteH (accounting policy).
Communicated in Audit
and Risk Committee
report section 3
and Appendix B.

Key observations communicatedto the Audit and Risk Committee

Risks

Our response to these risks

The accounting for revenue will differ
depending on the type of sale andterms of the underlying agreement. A
significant proportion of the external
revenue is generated by BBC Worldwide
through channels, distribution andconsumer products. Our area ofemphasis is on the timing of revenue
recognition for these revenue streams
as there are a number of different typesof revenue and a significant proportionof revenue is recognised in the final
quarter of the year, increasing the riskof misstatement due to revenue being
recognised in the wrong period.

We have understood controls relating to therevenue process by revenue type and tested
controls over a number of revenue streams.
As part of our overall revenue recognition testing,for some revenue streams we used data analysis
tools to test the correlation of revenue transactions
to cash receipts for 100% of sales through the year.
This provided us with a high level of assurance
over £460.8 million (40%) of commercial revenue
recognised. For those revenue streams where
we did not use data analysis tools we performed
a test of transactions to source documentationand cash receipts to validate revenue
transactions recorded throughout the period.

Management identified a priorperiod adjustment in thisarea which we agree is notmaterial to the accounts andtherefore remains unadjusted.
Based on our procedures
we are satisfied thatthe completeness andoccurrence of commercial
streams are appropriate.

We have inspected any unusual sales
agreements, including non-standard terms,
discounts or rebates and the sales-relatedbalance sheet reserves for such items.
We performed cut-off tests around year end formaterial items to assess whether revenue had
been recorded in the correct accounting period.
We have inspected a sample of post year end
credit notes and assessed the impact on pre year
end revenue and/or sales related reserves.
As part of our journal entry testing, we obtained
evidence for a sample of manual postings torevenue made around the cut off period toensure that all entries were appropriate.
We performed disaggregated analyticalreview procedures across all revenue streams
compared to expectations to identify
unusual and unexpected variances.
To the extent that substantive analytical proceduresand key item testing was not sufficient, we
performed representative sampling on revenue
items throughout the year. This was assessed foreach revenue stream, and performed by testing
the accuracy of revenue transactions recorded
throughout the period by reviewing underlying
contracts, invoices and cash collection.
Throughout the testing above, we considered
whether revenue had been recognised inaccordance with the terms and conditions of thecontract and in compliance with the BBC’s revenue
recognition policy, particularly cut-off at year end.
We performed full scope audit procedures
over this risk area in three locations, which
covered 100% of the risk amount.

BBC Annual Report and Accounts 2016/17

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I N D E P E N D E N T AU D I TO R’ S R E P O RT

Classification of
costs for service
licences andcontent spend –total expenditure£3,529.3 million(2016: £3,478.7 million)
Refer to note B3(financial disclosures)and note H (accounting
policy). Communicatedin Audit and Risk
Committee reportsection 3 andAppendix B.

Risks

Our response to these risks

Key observations communicatedto the Audit and Risk Committee

In accordance with the 2006 Royal
Charter, for 2016/17 service licenceswere used by the former BBC Trust to
regulate the BBC’s licence fee funded
services and ensure that each service
provides public value. The Trust’s
annual assessment of performanceagainst service licences compared
actual costs for content against an
agreed and authorised baseline budget.
Actual costs may have varied by up
to 10% against budget, but if thistolerance threshold was breached, thematter was referred to the Trust.

We obtained the year end service licencestatement workings and assessed if the allocation
between ‘content and distribution support’and ‘general support’ are consistent between
service licences and with the prior year.

We identified one
misstatements relating to thevaluation of provisions. Uponbringing this to management’s
attention it was adjusted.

We tested significant spend allocations between
service licences obtaining support as to theappropriateness of the basis of allocation used.

We are satisfied thatprovisions have been
established in accordancewith accounting standards andare appropriately disclosed.

Disclosure of service licences is therefore
subject to high levels of scrutiny
from members of the public who
are interested in understanding how
the licence fee is spent on individual
channels and services and is subject
to risk of management override.

We understood and considered any judgemental
allocations of costs across the service licencereporting. We assessed the independence
and competence of any individuals making
the judgements, considering the risk ofmanagement override of controls.

Areas of focus include an assessment of
the appropriateness and consistency of
the allocation of costs between service
licences and the apportionment ofcosts between ‘content and distribution
support’ and ‘general support’ andrisk of management override.
Valuation ofprovisions –£113.1 million(2016: £107.0 million).
Refer to note F8(financial disclosures)and note H (accounting
policy). Communicatedin Audit and Risk
Committee reportsection 3 andAppendix B.

Certain provisions require complex
estimates involving high levels ofjudgement and uncertainty, withmanual intervention increasing therisk further. The judgements andestimates involved also mean thatthe valuation of provisions give rise
to a risk of management override.
Some provisions are material by
nature (rather than amount) andsubject to high levels of scrutiny by
the public. The disclosure of theamounts of these provisions are
therefore matters of public interest.

We obtained and recalculated the central
contribution rate calculations and understood
all estimates and assumptions applied in
the computation of each percentage.

We read the disclosures in the Annual
Report and Accounts, and agreed these
disclosures to the underlying audited financial
information and considered their accuracy.
We performed full scope audit procedures
over this risk area in one location, which
covered 100% of the risk amount.
We tested material provisions for businesspurpose and appropriateness.
For a sample of provisions we obtained
supporting evidence and recalculated
amounts where appropriate.
We calculated the sensitivity of certain provisions
to changes in assumptions used such as discountrates and inflation to determine if this was material.
We tested journal entries made toprovisions to identify unusual postings.
We assessed management’s judgement andestimates applied in the calculation of provisions in
the financial statements by comparing actual costs
to provision amounts made at the end of the prioryear where provisions have materialised to assess
the accuracy of management’s past judgements.
We reviewed the disclosure of provisions
in the financial statements to determine
whether accurate and complete.
We performed full scope audit procedures
over this risk area in five locations, which
covered 100% of the risk amount.

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BBC Annual Report and Accounts 2016/17

We identified one
misstatements relating to thevaluation of provisions. Uponbringing this to management’s
attention it was adjusted.
We are satisfied thatprovisions have been
established in accordancewith accounting standards andare appropriately disclosed.

F I N A N C I A L S TAT E M E N T S

Valuation of theproperty portfolio –total value capitalised£633.3 million(2016: £665.2 million)
Refer to notes D1,
D2, D3, D4, D5, D6,
D7 and G1 (financial
disclosures) and noteH (accounting policies).
Communicated in Audit
and Risk Committee
report section 3
and Appendix B.

Key observations communicatedto the Audit and Risk Committee

Risks

Our response to these risks

The BBC occupies and owns a numberof properties across the UK. Included
within the portfolio are properties which
are carried at historic cost, investment
properties, and properties under either
finance or operating leases. A property
might also be classified as held forsale if it is available for immediate saleand a sale is highly probable. Certain
property transactions, such as the saleand leaseback of Broadcasting House(‘the Daunus asset’), the construction
works associated with the sale andleaseback of Television Centre andaccounting for Media Village include
complex accounting treatment.

We enquired with management, including
Board members and fixed asset accountants,
with regards to changes in the BBC’s property
portfolio. We understood the financial impactof any changes and investigated whether there
were any expected changes in the future
use of the properties. We reviewed Board
minutes. We checked that our understanding
was consistent with the financial statements.

The BBC’s property portfolio forms
a key part of the BBC’s cost savings
initiatives; in relation to both thelocation of properties, and the methodof financing. The BBC has progressedwith plans to become more prominent
outside of London in recent years. The
BBC’s strategy has led to a numberof changes in the property portfolio,
with further relocation and changes toleases expected in the coming years.
There are a number of ongoingproperty transactions. Certain
property transactions involve complex
accounting and the applicationof judgements and therefore are
deemed to be a significant risk.
Note that properties are recorded
at cost, or the lower of fair value andthe present value of minimum lease
payments where acquired through afinance lease, and not market value.
However, should the accounting
treatment not be correctly determined,
the resultant values recorded on thebalance sheet could be incorrect. The
property transactions described below
were areas of focus for our audit.

We performed site visits to material BBC
properties. We understood from enquiries withindividuals at each site, the use of the property
and any expected changes. We assessed
whether the property is used as intended.
We read meeting minutes and press releases. We
remained aware and alert for issues in relation
to the BBC property portfolio. We assessed
the impact on the financial statements.
We read management’s technical accounting papers
relating to property transactions. We understood
any judgements or areas of subjectivity involved.
We assessed and concluded on the accounting
treatment for the valuation of properties.
We reviewed material new or amended lease
contracts. We checked and concluded onwhether the lease should be accounted for
as a finance lease or an operating lease. We
agreed key terms to lease calculations andrecalculated the lease amounts in the financial
statements. We investigated any differences.

The significant transactions
during the year related to
the refinancing of New
Broadcasting House. We
read signed contracts andverified that the accounting
treatment was appropriate.
During the year we identified
a prior period misstatement
relating to the assumptions
used in the calculation offinance lease assets andliabilities. Upon bringing thisto management’s attention,
management consideredthat it was appropriate
to remove an inflationary
assumption originally included
within these calculations
and adjusted the financial
statements to reflect this.
We identified one audit
difference in relation to thediscounting of future receipts,
which was not material to theaccounts and we consider theproperty portfolio amounts
to be reasonably stated.

We understood any variances in the lease
contracts (i.e. factors which drive lease
increases or decreases). We checked that thesehave been accounted for appropriately.
We understood management’s rationale for thereconsideration of the assumptions used in thecalculation of finance lease assets and liabilities
and leading to management’s consideration that
it was appropriate to remove an inflationary
assumption originally included within thesecalculations. We reperformed these calculations
and compared the outputs to those prepared bymanagement. We investigated any differences.
We understood management’s position withregard to investment properties and held
for sale assets at year end. We tested thecompleteness and accuracy of these accounts andconsidered if the disclosures were appropriate.
We performed full scope audit procedures
over this risk area in five locations, which
covered 100% of the risk amount.

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I N D E P E N D E N T AU D I TO R’ S R E P O RT

Inappropriate
capitalisation or
potential impairmentof capital projects– total amount of
capitalised projects£131.7 million(2016: £98.2 million)
Refer to note D1(financial disclosures)and note H (accounting
policy). Communicatedin Audit and Risk
Committee reportsection 3 andAppendix B.

Risks

Our response to these risks

The BBC undertakes multiple capitalprojects at any one time which varyin size, complexity and duration. If
a material capital project cannot becompleted, or will not generate future
benefit to the BBC, this could resultin an impairment, and if significant
by size or nature, this could result
in reputational risk for the BBC.

We obtained a listing of open projects. We
reconciled this listing through to the fixed asset
register and financial statements. We assessed
completeness through enquiry with project
managers and review of meeting minutes.

There are a high number of open capitalprojects; typically over 300. These canbe complex projects and take more than
one year to complete. There is a risk ofassets being inappropriately capitalised,or indicators of impairment not being
identified, leading to an overstatementof tangible and intangible assets.

We gained an understanding of a sample ofopen projects; through enquiring of project
managers, finance and operations teams;
inspecting the business approval form and reading
Board and steering group meeting minutes.
We examined the nature of the costs capitalised
and considered if they met the capitalisation
criteria. We selected a sample of items andtested these to third party evidence.
We performed physical verification for a sample ofprojects to confirm the existence of the asset andto identify any visible indicators of impairment.
We assessed any uncertainty in the performanceof projects based upon the aging of the project,costs incurred to date compared to budget and ourknowledge of the business to determine whether
a provision or impairment should be considered.
We compared budgeted costs of a sample
of projects against actual spend to date.
We examined and obtained support formaterial manual journal entries.
We considered the appropriateness of
the accounting and disclosures.
We performed full scope audit procedures
over this risk area in five locations, which
covered 100% of the risk amount.

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Key observations communicatedto the Audit and Risk Committee

Based on our procedures
performed, we consider
the capital projects tobe reasonably stated.

F I N A N C I A L S TAT E M E N T S

Judgemental
assumptions
impacting pension
deficit – total deficit£1,149.1 million(2016: £1,010.7 million)
Refer to notes C7, C8,
G3 (financial disclosures)and note H (accounting
policies). Communicatedin Audit and Risk
Committee reportsection 3 andAppendix B.

Key observations communicatedto the Audit and Risk Committee

Risks

Our response to these risks

The BBC has a significant pension
deficit. The assumptions used to arriveat the value of the pension deficit arehighly judgemental, and the degree of
public interest in the deficit means that
it is important there is sufficient andcomprehensible disclosure of pension
balances to enable understanding of
the impact of these balances on bothpensioners and the licence fee payer.

We confirmed our understanding of the retirement
benefit schemes and processes undertaken
by management to account for pensions.
We understood significant assumptions
used. We tested the appropriatenessof these assumptions using our pension
specialists and considering consistency withprior year, current market information andknowledge of the BBC pension scheme.

Based on procedures
performed, we consider
that the assumptions
are reasonable and thedisclosure of pension
figures is appropriate.

We tested the completeness and accuracyof the membership data used by the actuary.
We performed this by testing a sample ofmembers and verifying to payroll records.
We tested the valuation of the pension scheme
assets by obtaining third party confirmationsof the amounts and re-performance ofthe valuation of a sample of assets.
We tested the cash contribution and obtained
evidence to support the amounts including bankstatements and authorisation of payment runs.
We tested key transactions and journal entries
during the year. We assessed the appropriatenessof accounting treatment and applicable disclosures.
We performed full scope audit procedures
over this risk area in one location, which
covered 100% of the risk amount.

Scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation ofmateriality and our allocation of performancemateriality determine our audit scope foreach entity within the Group. Taken together,
this enables us to form an opinion on the
consolidated financial statements. We take
into account size, risk profile, the organisationof the group and effectiveness of group-wide
controls, changes in the business environmentand other factors such as recent internal
audit results when assessing the level ofwork to be performed at each entity.
In assessing the risk of material misstatement to
the Group financial statements, and to ensure
we had adequate quantitative coverage ofsignificant accounts in the financial statements,
we selected five components, which
represent most of the activity of the Group.
We performed an audit of the complete
financial information of all five components.
The reporting components where we
performed audit procedures accounted for
100% (2016: 100%) of the Group’s income,
100% (2016: 100%) of the Group’s operating
costs, 85% (2016: 81% of the surplus beforetax) of the Group’s deficit before tax and 96%(2016: 96%) of the Group’s total assets.
We have performed analytical procedureson the aggregated results of the othercomponents in order to identify whether there
are significant risks of material misstatement
for the Group financial statements.
Involvement with component teams
In establishing our overall approach to theGroup audit, we determined the type ofwork that needed to be undertaken at eachof the components by us, as the primary
audit engagement team. Of the five fullscope components, audit procedures were
performed on two of these directly by the
primary audit engagement team. For two
components an additional scoping exercise wasundertaken to determine the statutory entities
that are in scope in order for them to issue afull scope opinion to the primary team. In thecase of the final component, BBC Worldwide,
additional instructions are issued by the
primary audit engagement team to component
auditors from other EY global network firms
who operate under their instruction.
The majority of the audit is conducted by the
primary audit engagement team in the UK,
given the nature of the Group’s activities.
The Group audit team also continued tofollow a programme of planned visits. These
visits involved discussing the audit approachwith the component team and any issues
arising from their work, meeting with local
management, attending planning and closing
meetings, and reviewing key audit working
papers on risk areas. The primary teaminteracted regularly with the component teams
where appropriate during various stages of
the audit, reviewed key working papers andwere responsible for the scope and directionof the audit process. This, together with theadditional procedures performed at Grouplevel, gave us appropriate evidence for our
opinion on the Group financial statements.
Our application of materiality
We apply the concept of materiality in planningand performing the audit, in evaluating theeffect of identified misstatements on theaudit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement
that, individually or in the aggregate, could
reasonably be expected to influence the economic
decisions of the users of the financial statements.
Materiality provides a basis for determining thenature and extent of our audit procedures.

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I N D E P E N D E N T AU D I TO R’ S R E P O RT

We determined materiality for the Groupto be £10 million (2016: £10 million). We
have based materiality on 0.2% of operating
costs, which reflects our consideration of
the expectations of the users of the financial
statement and as agreed with the Audit andRisk Committee. We believe that operating
costs is the most relevant performancemeasure to the stakeholders of the group given
the level of focus stakeholders place on how
efficiently the Group spends the income raised
through the licence fee. Profit-related measureswould not be appropriate as the Group isa public sector broadcaster. For illustration,materiality for the group represents 0.2% of
the Group’s operating costs and 0.2% of theGroup’s total assets. This provided a basis for
identifying and assessing the risk of material
misstatement and determining the nature,timing and extent of further audit procedures.
Performance materiality
The application of materiality at the individual
account or balance level. It is set at an amountto reduce to an appropriately low level the
probability that the aggregate of uncorrected andundetected misstatements exceeds materiality.
On the basis of our risk assessments,
together with our assessment of the Group’s
overall control environment and otherqualitative considerations, our judgement
was that overall performance materiality for
the Group should be 50% (2016: 50%) ofplanning materiality, namely £5 million (2016:£5 million). Our objective in adopting thisapproach was to reduce to an appropriately
low level the probability that the aggregate
of total undetected and uncorrected
misstatements for the accounts as a whole
did not exceed our planning materiality.
Audit work at component locations for the
purpose of obtaining audit coverage oversignificant financial statement accounts isundertaken based on a percentage of total
performance materiality. The performancemateriality set for each component isbased on the relative scale and risk of thecomponent to the Group as a whole andour assessment of the risk of misstatement
at that component. In the current year, therange of performance materiality allocated tocomponents was £1.0 million to £3.8 million(2016: £1.0 million to £3.8 million).

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Reporting threshold
An amount below which identified misstatements
are considered as being clearly trivial.
We agreed with the Audit and Risk
Committee that we would report tothem all uncorrected audit differences inexcess of £0.5 million (2016: £0.5 million),
which is set at 5% (2016: 5%) of planningmateriality, as well as differences belowthat threshold that, in our view warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements
against both the quantitative measuresof materiality discussed above andin light of other relevant qualitative
considerations in forming our opinion.
Scope of the audit of the financial
statements
An audit involves obtaining evidence about
the amounts and disclosures in the financial
statements sufficient to give reasonableassurance that the financial statements arefree from material misstatement, whether
caused by fraud or error. This includes anassessment of: whether the accounting policies
are appropriate to the Group’s circumstancesand have been consistently applied andadequately disclosed; the reasonableness ofsignificant accounting estimates made by the
Board; and the overall presentation of thefinancial statements. In addition, we read all
the financial and non-financial informationin the annual accounts to identify materialinconsistencies with the audited financial
statements and to identify any information thatis apparently materially incorrect based on, ormaterially inconsistent with, the knowledge
acquired by us in the course of performing theaudit. If we become aware of any apparent
material misstatements or inconsistencies weconsider the implications for our report.

Opinion on other matters prescribed by
the terms of our engagement
In addition to our audit of the Groupfinancial statements, the Board has engaged
us to audit the information in the Board
remuneration report that are describedas having been audited, which the Board
has decided to prepare as if the BBC wererequired to comply with the requirementsof Schedule 8 to The Large and Mediumsized Companies and Groups (Accounts andReports) Regulations 2008 (SI 2008 No. 410)
made under the Companies Act 2006.
In our opinion:–– the information given in the Overview,
Strategic report and Governance sectionsof the Annual Report and Accounts, for thefinancial year for which the Group financial
statements are prepared are consistent with
the Group financial statements; and–– the parts of the remuneration report which
we were engaged to audit have been
properly prepared in accordance with
Schedule 8 to The Large and Medium-sizedCompanies and Groups (Accounts andReports) Regulations 2008, as if thoserequirements were to apply to the Group.

F I N A N C I A L S TAT E M E N T S

Matters on which we are required to report by exception
ISAs (UK and
Ireland) reporting

We are required to report to you if, in our opinion, financial and non-financial
information in the Annual Report and Accounts is:

We have no exceptions to report.

–– materially inconsistent with the information in the audited financial statements–– apparently materially incorrect based on, or materially inconsistent with, ourknowledge of the Group acquired in the course of performing our audit–– otherwise misleading
In particular, we are required to consider whether we have identified any
inconsistencies between our knowledge acquired during the audit and the Board’s
statement that they consider the Annual Report and Accounts is fair, balanced
and understandable and whether the Annual Report and Accounts appropriately
discloses those matters that we communicated to the Audit and Risk Committee
which we consider should have been disclosed.
Terms of ourengagement

We are required to report to you if, in our opinion:

We have no exceptions to report.

–– adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us–– the financial statements and the part of the remuneration report to be audited are
not in agreement with the accounting records and returns–– certain disclosures of Board remuneration specified by law are not made; or–– we have not received all the information and explanations we require for our audit
In addition to our audit of the financial statements the Board have engaged us toreview the Corporate Governance statement as if the BBC was required to comply
with the Listing Rules of the Financial Conduct Authority in relation to these matters.
Under the terms of our engagement we are required to review:

Statement on the Board’s assessment of the principal risks that would threaten the solvency or liquidity of the entity
ISAs (UK and
Ireland) reporting

We are required to give a statement as to whether we have anything material to add
or to draw attention to in relation to:

We have nothing material to add or to
draw attention to.

–– the Board’s confirmation in the Annual Report and Accounts that they have carriedout a robust assessment of the principal risks facing the entity, including those thatwould threaten its business model, future performance, solvency or liquidity;–– the disclosures in the Annual Report and Accounts that describe those risks andexplain how they are being managed or mitigated–– the Board’s statement in the Annual Report and Accounts about whether they
considered it appropriate to adopt the going concern basis of accounting in
preparing them, and their identification of any material uncertainties to the entity’s
ability to continue to do so over a period of at least twelve months from the dateof approval of the financial statements–– the Board’s explanation in the Annual Report and Accounts as to how they haveassessed the prospects of the entity, over what period they have done so and why
they consider that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the entity will be able to continue inoperation and meet its liabilities as they fall due over the period of theirassessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions

Richard Wilson (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London22 June 2017

Notes:
1. The maintenance and integrity of the BBC website is the responsibility of the Board; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website
2. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions

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F I N A N C E A N D O P E R AT I O N S

The BBC’s consolidated
financial statements
These financial statements comprise both theprimary statements and additional supporting
disclosure notes. The primary statements are:Consolidated income statement
The income the BBC receives and expenditure incurredby the Group’s operations during the financial year.
Consolidated statement of comprehensive loss
Items of income and expense, including reclassification
adjustments, that are not directly recognised in the income
statement and hence are charged or credited directlyagainst or to reserves.
Consolidated balance sheet
The statement of the assets and liabilities of the BBC at a specificpoint in time, the financial year end.
Consolidated statement of changes in equity
Components that make up the capital and reserves of theGroup and the changes to each component during thefinancial year.
Consolidated cash flow statement
Cash generated by the BBC from its operations and how thosecash flows have been used.

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F I N A N C I A L S TAT E M E N T S

Consolidated income statement
Note

2017
£m

Restated
2016£m

Licence fee income
Other income

A1
A1

3,787.2
1,166.8

3,742.8
1,084.2

Total income

A1

4,954.0

4,827.0C3(4,943.7)(49.6)(4,789.6)(21.4)*

Operating costs excluding restructuring costs
Restructuring costs
Total operating costs

A1(4,993.3)(4,811.0)

Group operating (deficit)/surplus
Gain on disposal of non-current assets
Share of results of associates and joint ventures
Net financing costs

D8
E3
F9

(39.3)
8.3
45.7(134.0)

16.0
96.7
39.7
(78.5)(Deficit)/surplus before taxation
Taxation

G2.1(119.3)
(9.8)

73.9
(0.2)

(Deficit)/surplus for the year

(129.1)

73.7

Attributable to:BBC(129.1)

73.7(Deficit)/surplus for the year

(129.1)

73.7* Full details of the above restatement can be found within note G1

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F I N A N C E A N D O P E R AT I O N S

Consolidated statement of comprehensive loss
2017£m

Restated
2016£m(129.1)

73.7(248.0)(92.7)*

Note(Deficit)/surplus for the year
Other comprehensive income:Remeasurement on defined benefit pension schemes

C7.2(248.0)(92.7)

Exchange differences on translation of foreign operations
Losses on cash flow hedges
Revaluation of available-for-sale financial assets
Deferred tax on financial instruments

30.4(10.1)–
1.8

7.2(12.5)
2.9
2.5

Total items that may be reclassified to the income statement in the future

22.1

0.1

Other comprehensive loss net of tax(225.9)(92.6)

Total comprehensive loss for the year

(355.0)(18.9)

Total items that will not be reclassified to the income statement in the future

Attributable to:BBC(355.0)(18.9)

Total comprehensive loss for the year

(355.0)(18.9)* Full details of the above restatement can be found within note G1

126

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F I N A N C I A L S TAT E M E N T S

Consolidated balance sheet

Non-current assets
Intangible assets (including goodwill)
Property, plant and equipment
Investment properties
Interests in associates and joint ventures
Other receivables
Assets available for sale
Derivative financial instruments
Deferred tax assets
Current assets
Programme-related assets and other inventories
Trade and other receivables
Assets classified as held for sale
Derivative financial instruments
Current tax assets
Cash and cash equivalents
Current liabilities
Trade and other payables
Borrowings
Provisions
Derivatives financial instruments
Current tax liabilities

Note

31 March 2017£m*
Restated
31 March 2016£m*
Restated
31 March 2015
£m

E1
D1
D2
E3
F6.1
D3
G4.2
G2.5

238.3
1,076.4
78.1
258.5
90.4
7.9
490.8
11.3

291.3
1,110.6
82.4
171.8
92.6
7.5
10.1
10.9

275.7
1,227.3
14.1
148.9
28.3
4.4
8.3
12.3

2,251.7

1,777.2

1,719.3

612.9
1,022.4
–
6.6
40.0
256.3

684.7
978.0
–
3.9
26.1
334.8

707.9
949.4
3.0
11.4
20.5
405.8

1,938.2

2,027.5

2,098.0(1,069.7)(14.5)(62.5)(34.0)(10.5)(1,006.3)(67.5)(64.8)(19.3)(6.3)(1,054.3)(49.8)(66.2)(17.0)(4.7)(1,191.2)(1,164.2)(1,192.0)(48.4)(876.7)(50.6)(533.9)(31.4)(1,149.1)(11.6)(875.0)(42.2)(12.8)(21.5)(1,010.7)(10.5)(889.2)(51.6)(18.7)(19.7)(948.5)(2,690.1)(1,973.8)(1,938.2)

B5
F6.2
G4.2
G2.4
F1

F7.1
F3.1
F8
G4.2

Non-current liabilities
Other payables
Borrowings
Provisions
Derivative financial instruments
Deferred tax liabilities
Pension liabilities

F7.2
F3.2
F8
G4.2
G2.5
C7.1

Net assets

308.6

666.7

687.1

Attributable to the BBC:Operating reserve
Hedging reserve
Translation reserve
Other reserves

283.7(21.3)
47.9
(2.1)

660.8
(13.0)
17.5
1.3

679.8
(3.0)
10.3
–

Non-controlling interests

308.2
0.4

666.6
0.1

687.1
–

Total capital and reserves

308.6

666.7

687.1

* Full details of the above restatement can be found within note G1

The financial statements were approved by the Board on 22 June 2017 and signed on their behalf by:			

Tony Hall		
Director-General		Anne Bulford
Deputy Director-General

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F I N A N C E A N D O P E R AT I O N S

Consolidated statement of changes in equity
Note

At 1 April 2015 (* Restated)
Surplus for the year
Exchange differences on translationof foreign operations
Cash flow hedges
Deferred tax on financial
instruments
Revaluation of available for salefinancial assets
Remeasurement on defined benefit
pension scheme

C7.2

Total comprehensive (loss)/income
for the year
Acquisition of subsidiaries
At 31 March 2016 (* Restated)
Deficit for the year
Exchange differences on translationof foreign operations
Cash flow hedges
Deferred tax on financial
instruments
Revaluation of available for salefinancial assets
Remeasurement on defined benefit
pension scheme

C7.2

Operatingreserve£m

Hedging
reserve£m

Translation
reserve£m

Otherreserve
£m

Total
£m

Non-controllinginterests
£m

Total
£m

679.8

(3.0)

10.3

–

687.1

–

687.1

73.7

–

–

–

73.7

–

73.7

–
–

–
(12.5)

7.2
–

–
–

7.2
(12.5)––

7.2(12.5)

–

2.5

–

–

2.5

–

2.5

–

–

–

2.9

2.9

–

2.9

(92.7)–––(92.7)–(92.7)(19.0)(10.0)

7.2

2.9(18.9)–(18.9)

-

-

-

(1.6)

(1.6)

0.1

(1.5)

660.8

(13.0)

17.5

1.3

666.6

0.1

666.7

(129.1)–––(129.1)–(129.1)–––(10.1)

30.4
–

–
–

30.4
(10.1)––

30.4(10.1)

–

1.8

–

–

1.8

–

1.8

–

–

–

–

–

–

–

(248.0)–––(248.0)–(248.0)Total comprehensive (loss)/income
for the year
Changes in non-controlling interest(377.1)
–

(8.3)
–

30.4
–

–
(3.4)

(355.0)
(3.4)

–
0.3

(355.0)(3.1)

At 31 March 2017

283.7

(21.3)

47.9

(2.1)

308.2

0.4

308.6

* Full details of the above restatement can be found within note G1

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F I N A N C I A L S TAT E M E N T S

Consolidated cash flow statement
2017£mRestated
2016
£m

301.1
13.3

179.9
2.5

314.4

182.4

5.3
20.8
24.8
2.7
27.9
(0.4)
(43.7)(169.9)(123.3)

6.3
–
26.6
31.6
24.2
(3.1)
(2.9)
(137.8)(118.6)(255.8)(173.7)(9.7)–(54.0)(72.9)(5.1)
53.6(35.0)(93.7)Net cash used in financing activities(136.6)(80.2)Net decrease in cash and cash equivalents(78.0)(71.5)*

Note

Operating activities:
Cash generated from operations
Tax received

F5

Net cash from operations
Investing activities:
Interest received
Financing income relating to swap transactions
Dividends received from associates and joint ventures
Proceeds from sale of operations
Proceeds from disposal of property, plant and equipment
Acquisition of investments
Acquisition of interests in associates and joint ventures
Purchases of other intangible assets
Purchases of property, plant and equipment

F9

E1

Net cash used in investing activities
Financing activities:
Interest paid
Proceeds from increase in borrowings
Repayments of borrowings
Payment of obligations under finance leases

F9

Cash and cash equivalents at beginning of the year
Effect on foreign exchange rate changes on cash and cash equivalents

F1

334.8
(0.5)

405.8
(0.5)

Cash and cash equivalents at the end of the year

F1

256.3

334.8

* Full details of the above restatement can be found within note G1

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F I N A N C E A N D O P E R AT I O N S

Key themes for the BBC
Page

A.

Where the BBC’s funding comes from
Income and operating results
Licence fee income

B.

138

Financing costs of leasing arrangements
Operating leases
Property provisions
Gain on disposal of non-current assets

145

Gain on sale and termination of operations
Interests in associates and joint ventures

149

Trade and other payables
Provisions and contingent liabilities
Net financing costs
Long-term commitments not reflected in the balance sheet

153

Managing funding (including future costs)
Analysis of net funds
Borrowings and borrowing facilities
Cash generated from operations
Trade and other receivables

130

Key management personnel compensation
Related party transactions with key management personnel
Group pension plans

Investments in the BBC’s commercial activities
Intangible assets
GoodwillF.

133

The property, technology and equipment used by the BBC to make and distribute its programmes
Property, plant and equipment
Investment properties
Assets available for saleObligations under finance leases

E.

Analysis of total operating costs by commercial activities
Programme-related assets and other inventories
PSB ring-fenced expenditure

What the BBC spends on its people
Persons employed
Employee remuneration
Restructuring costs
Remuneration of BBC Trust members and the
BBC Executive Board

D.

131

How the BBC spends the funds
Total operating costs
Auditor’s remuneration
PSB Group expenditureC.

Contribution of commercial operations

BBC Annual Report and Accounts 2016/17

F I N A N C I A L S TAT E M E N T S

Notes to the accounts
A. Where the BBC’s funding comes fromThe Group generates its income from a number of key sources, each source funding different parts of the BBC’s activity. The notes in this section
provide information on the performance in the year for each segment of the BBC Group.
The distinction between the various income sources is important as the BBC must not cross-subsidise its commercial activities through its PSB
Group or grant funded activities; however, the performance of the Group’s commercial activities generates profits that are distributed back to the
BBC and contribute towards the funding of PSB Group activities.
The BBC Group’s operating segments are reported in a manner consistent with the internal reports provided to the BBC Board, and previously
to the BBC Executive Board. The BBC Board is responsible for making strategic decisions, allocating resources and assessing performance of theoperating segments.
Segmental information provided to the BBC Board is aligned to the BBC Group’s income sources. The reportable segments are:–– PSB Group – This primarily receives licence fee income and is responsible for the Group’s public sector activities. During 2016/17 this included
delivery of its obligations under the Service Licence Operating Framework issued by the former BBC Trust;–– BBC Worldwide – Generates revenue from exploiting the various assets of the BBC, for example licencing formats, selling international rights,
merchandising and production facilities;–– Other commercial – These have been aggregated for reporting purposes as they meet the conditions set out in IFRS 8, Operating Segments.
From 1 April 2017 the BBC Board will also receive information relating to BBC Studios following its launch as a wholly-owned commercial subsidiaryof the BBC Group.
The prices charged for services provided by one segment of the BBC Group to another are determined on an arm’s length basis in accordance with
the BBC’s Fair Trading policy.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
A1 Income and operating resultsGroupadjustments
£m

2017

Note

Licence fee income

A2

3,787.2–––

3,787.2

72.8
76.5
39.1
32.9
25.0

828.3
–
0.1
46.6
1.3

120.7
15.7
–
–
–

–
(92.2)–––

1,021.8
–
39.2
79.5
26.3

Other revenue
Intra-group trading
Grant income
Royalties
Rental income

BBC Worldwide
£m

Other
commercials£m

PSB Group
£m

Group
£m

Other income

246.3

876.3

136.4

(92.2)

1,166.8

Total income

4,033.5

876.3

136.4

(92.2)

4,954.0

C3(47.8)(154.1)(100.0)(3,796.9)(1.5)(218.9)–(655.1)

(0.3)
(0.9)
–
(144.8)

–
–
100.0
27.0

(49.6)(373.9)–(4,569.8)

B3, B4(4,098.8)(875.5)(146.0)127.0(4,993.3)

D8
E3(65.3)
0.6
(2.4)

0.8
7.7
48.1

(9.6)
–
–

34.8
–
–

(39.3)
8.3
45.7(67.1)

56.6

(9.6)

34.8

14.7

Restructuring costs
Depreciation and amortisation
Pension deficit reduction contributions
Other operating costs
Total operating costs
Group operating (deficit)/surplus
Gain on disposal of non-current assets
Share of results of associates and joint ventures
Operating segment result
Financing income
Financing costs

F9
F9

5.3
(139.3)

Net financing costs

F9(134.0)G2.1(119.3)(9.8)

Deficit before taxation
Taxation
Deficit for the year

(129.1)

Additional information on total operating costs can be found in note B3 for the PSB Group and note B4 for the commercially funded activities.
Total operating costs for the Group are also analysed further in note B1.

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F I N A N C E A N D O P E R AT I O N S

A. Where the BBC’s funding comes from continued

Note

PSB Group£m

BBC Worldwide
£m

Other
commercials
£m

Group
adjustments
£m

Group
£m

A2

3,742.8–––

3,742.8

Other revenue
Intra-group trading
Grant income
Royalties
Rental income

59.7
65.1
4.0
31.4
22.1

809.5
–
0.1
45.2
0.6

111.6
20.5
–
–
–

–
(85.6)
–
–
–

980.8
–
4.1
76.6
22.7

Other income

182.3

855.4

132.1

(85.6)

1,084.2*
Restated
2016

Licence fee income

Total income
Restructuring costs
Depreciation and amortisation
Pension deficit reduction contributions
Other operating costs
Total operating costs
Group operating (deficit)/surplus
Gain on disposal of non-current assets
Share of results of associates and joint ventures

3,925.1

855.4

132.1

(85.6)

4,827.0

C3(15.1)(152.7)(95.8)(3,761.0)(5.2)(134.5)(3.3)(653.3)

(1.1)
(1.8)
(0.9)
(139.0)

–
–
100.0
52.7

(21.4)(289.0)–(4,500.6)

B3, B4(4,024.6)(796.3)(142.8)152.7(4,811.0)

D8
E3(99.5)
95.2
(2.1)

59.1
1.5
41.8

(10.7)
–
–

67.1
–
–

16.0
96.7
39.7

(6.4)

102.4

(10.7)

67.1

152.4

Operating segment result
Financing income
Financing costs

F9
F9

12.7
(91.2)Net financing costs

F9(78.5)

G2.1

73.9
(0.2)

Surplus before taxation
Taxation
Surplus for the year

73.7

* For an explanation of the above restatement, see note G1A2 Licence fee income
Licence fee
2017£

Licences in force
2017
Number ‘000

Total income
2017£mLicence fee
2016£

Licences in force
2016
Number ‘000

Total income
2016£m

145.50
49.00
7.50
–

21,667
6
176
4,385

3,138.8
0.3
1.2
630.4

145.50
49.00
7.50
–

21,441
7
186
4,363

3,103.1
0.3
1.3
621.7

26,2343,770.7
16.5

25,997

Quarterly payment scheme premium

3,726.4
16.4

Total licence fee income

3,787.2

Colour
Monochrome
Concessionary
Over 75s

3,742.8

During the year 3.3 million (2016: 3.3 million) colour licences were issued under the quarterly payment scheme at a premium of £5 each (2016: £5).
Households in which one or more persons over the age of 75 reside, as their primary residence, are entitled to a free licence. The BBC was
reimbursed for these free licences by the relevant Government department during the year.
A3 Contribution of commercial operations
In the year ended 31 March 2017, a dividend of £89.3 million (2016: £93.0 million) was declared by BBC Worldwide to BBC Commercial Holdings
and a dividend in specie of £0.5 million was declared by BBC Studioworks to BBC Commercial Holdings. A dividend of £86.5 million (2016: £93.0
million) was subsequently declared by BBC Commercial Holdings to PSB Group. The dividends paid are not identifiable in the consolidated primarystatements as these amounts are eliminated during the consolidation process.

132

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F I N A N C I A L S TAT E M E N T S

B. How the BBC spends the funds
This section analyses the total operating costs incurred by the BBC Group. It also analyses the PSB Group’s expenditure by service licence.		
Service licences
During 2016/17 service licences were used by the BBC Trust to regulate the BBC’s licence fee-funded services and ensure that each service provides
public value and contributes to delivering the BBC’s public purposes.
The assessment of performance against service licences compares actual costs for content against an agreed and authorised baseline budget. Actual
costs may vary by up to 10% of the baseline budget to permit management flexibility in its commissioning decisions.
No service was outside of its 10% threshold for the 2016/17 financial year.
Service licences show the cost to the licence fee payer of providing the relevant service and therefore exclude any costs funded by a co-producer.
The table presented in note B3 sets out the PSB Group content expenditure by service.
Where a programme is broadcast on more than one channel, the full cost of the programme is recognised as a cost of the channel where theprogramme is first broadcast. Where a programme is commissioned by two channels, however, the cost of the programme is recognised as a costof the primary channel irrespective of the channel holding the first transmission.
For BBC Online and BBC Red Button, the licence reflects only the incremental costs of getting content to audiences unless the content is specificallycommissioned for one of these two services.
This means the costs reported against individual service licences are not necessarily equivalent to the costs which would be incurred by such a
service on a stand-alone basis.
Development costs (see note B3.1) fund the near-term development of new platforms and services, particularly for BBC Online and Red Button.
This is primarily focused on new features for existing services and also include related support and overhead costs. It is distinct from research costs(see note B3.2) which is focused on much longer-term research of new technology and standards that benefit the whole industry.
World Service operating licence
From 1 April 2014 BBC World Service, having previously been funded by the Foreign & Commonwealth Office, became directly funded by thelicence fee. During 2016/17 the BBC Trust regulated spend on BBC World Service in a similar manner to the BBC’s UK Public Services using an
operating licence.
The BBC committed to spend at least £245 million on BBC World Service activity (including capital expenditure) in 2016/17. The operating licencealso sets a content and distribution budget of £222 million.
World Service Grant Funding
In 2016/17 the Foreign & Commonwealth Office (FCO) awarded a grant to the BBC of £289 million, to be spend over the following 4 years, witha view to assist in the expansion of the World Service.
The funding will be used to enhance BBC’s digital, television and radio services around the world to build the global reach of the World Service andincrease access to news and information.
The BBC maintains editorial and operational oversight and independence, though we report regularly to the FCO on overall spend and the
proportion of that expenditure that can be deemed ‘Overseas Development Assistance’ in nature.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.

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B. How the BBC spends the funds continued
B1 Total operating costs
Total operating costs have been arrived at after charging the following items:
2017£mRestated
2016
£m

109.9
35.6
228.4
0.5
14.1

113.6
35.2
140.2
0.6
–

7.8

11.2

47.0
9.2
48.5
3.8
15.1
71.3
2.0
0.2
(16.9)
6.1
1,387.0

46.7
27.9
50.7
9.2
17.9
87.7
2.1
0.2
1.7
4.8
1,297.2*

Note

Intangible fixed assets, property, plant and equipment and other investments
Depreciation– owned assets– leased assets
Amortisation of intangible fixed assets
Impairment of investments in joint ventures and associates
Impairment of intangible assets

D1
D1, D2
E1
E1

Inventories
Write-downs of programme-related assets recognised as an expense
Other operating costs
Payments under operating leases– land and buildings– plant and machinery– other
Net loss on disposal of tangible fixed assets^
Research costs
Online and television development
Audit and non-audit fees paid to Ernst & Young LLPFair trading auditor’s remuneration (Deloitte LLP)Net exchange differences on settled transactions
Impairment of trade debtors
Staff costs

B3.2
B2

F6.2
C2

^ The loss on disposal of tangible fixed assets represent adjustments to depreciation on disposals made in the ordinary course of business* Full details of the above restatement can be found within note G1

B2 Auditor’s remuneration
Ernst & Young LLP served as independent external auditors for the year ended 31 March 2017 and 31 March 2016. The National Audit Office wereappointed as independent external auditors from 1 April 2017.
The following table presents the aggregate fees for professional services and other services rendered by the external auditors to the BBC:Note

For the audit of the BBC’s annual accounts
For the audit of subsidiaries of the BBC
Audit-related assurance services

2017
£m

2016
£m

0.6
0.8
0.2

0.7
0.9
0.2

Total audit and audit-related assurance services

1.6

1.8

Taxation compliance services
All other services

0.2
0.2

0.2
0.1

Total non-audit services

0.4

0.3

2.0

2.1

Total fees paid

134

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B1

F I N A N C I A L S TAT E M E N T S

B. How the BBC spends the funds continued
B3 PSB Group expenditure
B3.1 PSB Group expenditure by service

Content£m

Distribution£mContent anddistribution
support£m

Generalsupport
£m

Total
£m

BBC One
BBC Two
BBC Four
CBBC
CBeebies
BBC ALBA
BBC News channel**
BBC Parliament

1,115.4
403.3
50.5
69.5
28.7
6.0
47.8
1.8

35.7
20.4
4.4
9.9
4.3
0.9
7.4
6.7

157.1
59.4
8.5
12.1
6.4
0.9
7.8
1.3

78.2
28.9
3.6
5.1
2.0
0.4
1.9
0.1

1,386.4
512.0
67.0
96.6
41.4
8.2
64.9
9.9

Television

1,723.0

89.7

253.5

120.2

2,186.4

35.9
51.2
37.4
87.9
45.5
2.7
6.6
10.9
3.0
7.1
112.9
21.1
3.7
14.2
13.6
17.5

6.3
6.3
6.3
6.7
4.6
1.8
1.9
1.9
1.9
2.3
16.1
2.9
1.3
1.6
1.5
2.0

5.1
4.9
6.5
12.9
6.8
1.3
2.7
2.2
1.3
1.8
14.4
4.3
0.6
3.1
3.0
3.8

1.0
1.8
2.6
5.4
3.1
0.2
0.3
0.5
0.2
0.5
7.7
1.5
0.3
1.0
1.0
1.3

48.3
64.2
52.8
112.9
60.0
6.0
11.5
15.5
6.4
11.7
151.1
29.8
5.9
19.9
19.1
24.6

Radio

471.2

65.4

74.7

28.4

639.7

BBC Online and Red Button***

185.5

45.7

41.2

13.2

285.6

2017 Service

Note

BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 5 live
BBC Radio 5 live sports extra
BBC 1Xtra
BBC 6 MusicBBC 4 Extra
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle

2,379.7

200.8

369.4

161.8

3,111.7

Orchestras and performing groups
S4C (service spend)
Development spend
World Service grant ****BBC World Service operating licence*****

23.2
29.2
57.0
15.1
229.6

–
–
–
–
–

2.9
4.4
7.0
1.8
25.3

1.7
2.1
4.3
1.1
12.9

27.8
35.7
68.3
18.0
267.8

Other service spend

354.1

–

41.4

22.1

417.6

Total service spend

2,733.8

200.8

410.8

183.9

3,529.3

Spend regulated by service licence

82.2
74.5
6.0
100.0
83.3
70.9
47.8

Licence fee collection costs
S4C (direct funding)
Monitoring
PSB Group pension deficit reduction payment
Costs incurred to generate intra-group income
Costs incurred to generate third-party income
Restructuring costs

3,994.0

Total PSB Group content expenditure
Local TV
Broadband rollout ******

3.9
150.0

Total PSB Group expenditure

4,147.9******(49.1)

Lease reclassification*******PSB Group expenditure

4,098.8

A1

BBC Annual Report and Accounts 2016/17

135

F I N A N C E A N D O P E R AT I O N S

B. How the BBC spends the funds continued

Content£m

Distribution£mContent anddistribution
support£m

Generalsupport
£m

Total
£m

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC ALBA
BBC News channel**
BBC Parliament

1,045.8
396.5
52.9
44.2
70.6
29.1
5.5
46.6
1.9

35.8
20.2
7.7
4.1
7.7
4.1
0.9
7.0
6.3

152.5
59.7
13.5
7.7
12.3
6.6
0.9
6.5
1.4

87.2
33.8
4.4
3.8
6.1
2.5
0.5
2.2
0.2

1,321.3
510.2
78.5
59.8
96.7
42.3
7.8
62.3
9.8

Television

Restated
2016 Service*

Note1,693.1

93.8

261.1

140.7

2,188.7

BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 5 live
BBC Radio 5 live sports extra
BBC 1Xtra
BBC 6 MusicBBC 4 Extra
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle

36.2
44.6
37.7
88.6
45.5
2.5
4.6
7.9
3.1
6.6
119.8
22.9
3.9
15.1
14.2
17.7

6.0
6.0
6.0
6.4
4.4
1.6
1.7
1.7
1.7
2.1
14.8
2.9
1.3
1.6
1.5
1.8

5.2
4.7
6.4
13.1
6.9
1.3
3.0
2.4
1.4
1.8
14.9
4.3
0.7
3.0
2.9
3.5

1.3
2.1
3.0
6.6
3.6
0.2
0.3
0.6
0.2
0.5
9.3
1.9
0.3
1.2
1.2
1.5

48.7
57.4
53.1
114.7
60.4
5.6
9.6
12.6
6.4
11.0
158.8
32.0
6.2
20.9
19.8
24.5

Radio

470.9

61.5

75.5

33.8

641.7

152.3

37.9

33.4

13.1

236.7

Spend regulated by service licence

2,316.3

193.2

370.0

187.6

3,067.1

Orchestras and performing groups
S4C (service spend)
Development spend
BBC World Service operating licence******

23.2
28.0
72.0
224.3

–
–
–
–

2.9
4.3
9.2
21.8

2.1
2.4
6.4
15.0

28.2
34.7
87.6
261.1

BBC Online and Red Button***

Other service spend

347.5

–

38.2

25.9

411.6

Total service spend

2,663.8

193.2

408.2

213.5

3,478.7

Licence fee collection costs
S4C (direct funding)
Monitoring
PSB Group pension deficit reduction payment
Costs incurred to generate intra-group income
Costs incurred to generate third-party income
Restructuring costs

114.6
75.3
5.8
95.8
64.5
71.3
15.1

Total PSB Group content expenditure

3,921.1

Local television
Broadband rollout ******

3.5
150.0

******

Total PSB Group expenditure

4,074.6(50.0)

Lease reclassification*******PSB Group expenditure
*
**

A1

4,024.6

Full details of the above restatement can be found within note G1
Included within BBC News channel are production costs of £25.4 million, Newsgathering costs of £20.8 million and other costs of £1.7 million (2016: production costs of £24.7 million,
Newsgathering costs of £21.3 million and other costs of £0.6 million)***
BBC Online and Red Button spend is monitored by annexe (relating to editorial areas of the service). Non-annexe spend covers costs relating to central editorial activities such as the BBC
Homepage, technologies which operate across the service and overheads. The spend for each annexe was: News, Travel & Weather £50.6 million (2016: £50.9 million), Sport £19.1 million (2016:£16.7 million), Childrens £10.4 million (2016: £9.4 million), BBC Three £37.1 million (2016: £10.4 million), Knowledge & Learning £15.4 million (2016: £18.6 million), TV & iPlayer £14.9 million (2016:£16.3 million) and Radio & Music £14.6 million (2016: £13.5 million), giving a total annexe spend of £162.1 million (2016: £135.8 million). Non-annexe spend was £23.4 million (2016: £16.5 million)****
The BBC Word Service Grant is in operation from this financial year and is being used to enhance the World Service by introduction of 12 new languages, improved newsgathering, digitaltransformation and new and improved programmes***** The BBC World Service operating licence includes distribution spend of £38.2 million (2016: £36.6 million). Total Grant-in-aid funding equivalent spend on BBC World Service was £246.0 million(2016: £240.2 million)****** Under the terms of the 2015 licence fee agreement, the BBC has committed to contribute funding toward broadband rollout across the UK and funding for the development of Local TV channels******* In order to reflect the full cost of the PSB Group expenditure by service, finance lease interest is included, although it is not included in the Group operating expenditure136

BBC Annual Report and Accounts 2016/17

F I N A N C I A L S TAT E M E N T S

B. How the BBC spends the funds continued
B3.2 PSB Group support costs
PSB Group support costs include the following:
Content anddistribution
support£m

Generalsupport
£m

2017
£m

*
RestatedContent anddistribution
support£m

Property
HR and training
Policy and strategy
Finance and operations
Marketing, audiences and communication

64.8
13.6
–
12.0
86.8

48.3
26.3
7.8
39.7
–

113.1
39.9
7.8
51.7
86.8

65.8
14.0
–
10.7
86.8

41.7
31.5
9.5
49.1
–

107.5
45.5
9.5
59.8
86.8

Total central costs
Technology
Libraries, learning support andcommunity events
Production and digital support
Research department
Contribution to JVs and spend in other
PSB entities
BBC Trust Unit (excluding restructuring)
Other

177.2
125.7

122.1
47.2

299.3
172.9

177.3
106.3

131.8
60.0

309.1
166.3

28.0
25.8
15.1

–
–
–

28.0
25.8
15.1

28.5
25.0
17.9

–
–
–

28.5
25.0
17.9

28.1
–
10.9

–
11.2
3.4

28.1
11.2
14.3

28.3
–
25.1

–
9.9
11.8

28.3
9.9
36.9

Total support costs

410.8

183.9

594.7

408.4

213.5

621.9

BBC Worldwide
2017£m

BBC Worldwide
2016
£m

Other
commercial
2017
£m

Other
commercial
2016
£m

Total
commercial
2017
£m

Total
commercial
2016£m

Cost of sales
Distribution costs
Administration expenses

653.8
69.8
151.9

572.7
70.8
152.8

113.7
–
32.3

114.2
–
28.6

767.5
69.8
184.2

686.9
70.8
181.4

Total operating costs

875.5

796.3

146.0

142.8

1,021.5

939.1*

Restated
Generalsupport£m*

Restated2016£m* Full details of the above restatement can be found within note G1

B4 Analysis of total operating costs by commercial activities

B5 Programme-related assets and other inventories
The main output of the BBC Group is the production of programmes for broadcast and the sale of rights for others to broadcast. This note
discloses the amounts for those programmes that are in production, completed programmes that are ready for broadcast but not yet aired, andrights secured to broadcast programmes produced independently of the BBC Group. Other inventory for our commercial activities are also
contained in this note.
Originated programmes are stated at the lower of cost and net realisable value, and the full value is written off on first transmission. The costsof acquired programmes and films are also written off on first transmission except to the extent that the numbers of further showings arecontractually agreed, when it is written off according to its expected transmission profile.
2017
£m

2016
£m

Programme-related assets– Rights to broadcast acquired programmes and films– Prepayments to acquire future programme-related rights– Completed originated programmes1– Programmes in production

99.9
308.8
57.5
136.9

92.9
349.1
61.3
169.7

Total programme-related assets
Other inventories

603.1
9.8

673.0
11.7

Total programme-related assets and other inventories

612.9

684.7

1 See Glossary for further details

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C. What the BBC spends on its people
The BBC Group employs a significant number of people. It also provides pension benefits to both current and past employees. This section isbroken into two main parts; the first details employee numbers (excluding freelancers and agency staff), costs and transactions with members of
the BBC Trust and the BBC Executive Board who served during the year. The second presents the key information relating to the BBC Group’s
pension plans.
The analysis provided in the pension notes is based on the IAS 19 estimate of the scheme’s assets and liabilities as at 31 March 2017. The mostrecent actuarial valuation of the pension scheme completed by Willis Towers Watson showed a funding shortfall of £1,769 million at 1 April 2016.
The deficit of the BBC Pension Scheme can change significantly. In this section we provide information to explain the following:–– why the pension liabilities on the balance sheet have changed from one year to another;–– what makes up the charge in the income statement in the year;–– the amount of the scheme assets and liabilities totalling the net defined benefit pension liability on the balance sheet;–– how sensitive the liabilities are to changes in key assumptions; and–– the steps being undertaken by the BBC to fund the defined benefit pension liability.
The movement in the IAS 19 Employee Benefits estimate of the defined benefit scheme liability during the year, specifically the BBC Pension Scheme,is the item which singularly has the greatest impact on the balance sheet position of the Group. The pension note in this section explains in further
detail the reasons behind the movements in the defined benefit pension liability in the year and its degree of sensitivity to changes in the underlying
assumptions used.
Further information on the analysis of the BBC Pension Scheme assets and the assumptions underlying the liabilities are set out in note G3.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
C1 Persons employed
The average number of persons employed in the year was:Average for the year
2017
NumberRestated
2016
NumberPSB Group
BBC Worldwide
Other commercial businesses

19,357
1,706
208

19,2691,759
237

Group total

21,271

21,265** The average number of persons employed during 2015/16 has been restated to include members of BBC Orchestras and BBC Singers employed on programme contracts

Within the averages above 2,882 (2016 restated: 2,850) part-time employees have been included at their full-time equivalent of 1,773(2016 restated: 1,728).
In addition to the above, the Group employed an average full time equivalent of 988 (2016: 821) persons on a casual basis.

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C. What the BBC spends on its people continued
C2 Employee remuneration
Note

Salaries and wages
Social security costs
Pension costs
Main scheme (defined benefit)
Other schemes
Restructuring costs

C7.3
C7.3
C3

2017
£m

2016
£m

1,018.1
106.6

990.0
101.5

183.2
29.5
49.6

154.5
29.8
21.4

1,387.0

1,297.2

Comprising:
PSB Group
BBC Worldwide
Other commercial businesses
Group adjustments*

1,259.9
142.9
15.3(31.1)

1,198.8
145.1
18.5(65.2)

Group total

1,387.0

1,297.2* Relates to Group adjustments for the BBC Pension Scheme, reflecting the difference between the operating charge and contributions paid

The actual employer cash contributions to the defined benefit pension scheme are borne by each business.
Employee pension contributions made via salary sacrifice are included within pension costs, with a corresponding reduction in salaries and wages.
C3 Restructuring costs

PSB Group
BBC Worldwide
Other commercial businesses

2017
£m

2016
£m

47.8
1.5
0.3

15.1
5.2
1.1

49.6

21.4

The table above reflects the BBC’s cost of redundancy during the year. For further information on total restructuring costs, please see note F8.
The PSB Group restructuring costs include anticipated redundancies associated with the carve out of BBC Studios activity, ongoing savings initiatives
and costs resulting from the commitment to relocate and increase investment out of London.
BBC Worldwide includes redundancy costs arising as a result of changes within the Group’s organisation structure.
C4 Remuneration of the BBC Trust members and the BBC Executive Board
The total emoluments of the members of the former BBC Executive Board and the former BBC Trust are disclosed in the Remuneration Report.
C5 Key management personnel compensation
Key management personnel are those people who have authority and responsibility for planning, directing and controlling the activities of the BBC.
During 2016/17 this included all members of the BBC Executive Board, including the non-executive directors (see the BBC Executive Remuneration
Report), along with the Trustees and the Director of the Trust Unit (see the Trustees’ Remuneration Report).
Information about the BBC’s structure, senior staff salaries and expenses are published on the BBC’s website.
Key management personnel compensation is as follows:

Short-term employee benefits
Post-employment benefits

2017
£m

2016
£m

4.2
0.4

4.2
0.3

4.6

4.5

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C. What the BBC spends on its people continued
C6 Related party1 transactions with key management personnel
Executive directors:
Charlotte Moore has a close family member who is a Director of Perry Images Limited. During the year the BBC received an immaterial amountof services from Perry Images Limited. There were no outstanding balances as at 31 March 2017.
Trustees:
Elan Clos Stephens has a close family member employed by the BBC on standard terms and conditions.
C7 Group pension plans
The following section includes the key notes relating to BBC Group pension plans and more specifically the BBC Pension Scheme1. Further
supplementary notes on the assumptions underpinning the value of the BBC Pension Scheme asset and liability are disclosed in note G3.
As the BBC Group has two defined benefit pension schemes, the BBC Pension Scheme and the Unfunded Scheme, the information in this section
first analyses the liability and income statement charge between the two schemes (note C7). Separate analysis then follows in respect of the BBC
Pension Scheme to highlight the points outlined below (note C8).
The defined benefit pension schemes give rise to liabilities which are included on the BBC Group balance sheet as the BBC bears the risk
on investment returns, life expectancy (mortality) and inflation related to meeting future pension payments. The net liability consists of two
component parts:–– scheme liabilities: these are the present value of the future pension payments the BBC is required to pay in respect of employee service
performed up to the balance sheet date.
–– scheme assets: these are the assets held by the pension fund, into which the BBC pays annual contributions. The assets are used to fund thepayments to retired members and to generate returns to fund future pension payments.
The BBC Group’s defined contribution plans do not give rise to balance sheet pension assets/liabilities as there is no ongoing liability for theemployer from these plans once the contributions due for the year have been settled. The expenditure on the defined contribution scheme shownin these accounts represents the BBC’s contributions payable in this financial year.
C7.1 Pension liabilities included in the balance sheet
The pension liabilities included in the BBC Group balance sheet comprise both the BBC Pension Scheme and the Unfunded Scheme and are
analysed below:
Pension liabilities
2017
£m

2016
£m

BBC Pension Scheme
Unfunded Scheme(1,140.7)(8.4)(1,003.4)
(7.3)

Total

(1,149.1)(1,010.7)

1 See Glossary for further details

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C. What the BBC spends on its people continued
C7.2 Group pension plans
BBC Pension
Scheme2017£mUnfunded
Scheme
2017
£m

Total
2017
£m

BBC Pension
Scheme2016£mUnfunded
Scheme2016£m

BBC Pension
Total
2016
£m

Deficit in scheme at the start of the year
Movement in the year:
Current service cost1
Contributions (from employer)*
Past service costs1**
Administration costs incurred
Net finance cost1
Settlement gains
Remeasurement1 recognisedin the consolidated statementof comprehensive income(1,003.4)(7.3)(1,010.7)(940.7)(7.5)(948.2)(186.1)
334.3
2.9
(9.8)
(31.9)
–

–
0.4
–
–
(0.2)
–

(186.1)
334.7
2.9
(9.8)
(32.1)–(185.4)
219.8
30.9
(7.7)
(29.9)
2.3

–
0.4
–
–
(0.2)
–

(185.4)
220.2
30.9
(7.7)
(30.1)
2.3(246.7)(1.3)(248.0)(92.7)–(92.7)

Deficit in scheme at the end of the year

(1,140.7)(8.4)(1,149.1)(1,003.4)(7.3)(1,010.7)* The contribution shown for the Unfunded Scheme represents the pensions paid to members during the year** This comprises a past service cost of £0.4 million for augmentations over the year and a past service credit of £3.3 million due to the Pension Increase Exchange1

The assumptions for pension scheme liabilities of the Unfunded Scheme are the same as the main scheme. As the scheme is unfunded there areno assets.
C7.3 Pension charges in consolidated income statement
BBC Pension

Note

2017
Current service cost
Past service costs
Administration costs

C2
C2

Total operating charge
Net finance cost

F9

Net cost in consolidated income statement
2016
Current service cost
Past service costs

C2
C2

Settlement gains
Administration costs
Total operating charge
Net finance cost
Net cost in consolidated income statement

F9

BBC Pension
Scheme£m

Unfunded
Scheme£m

DefinedContribution
Scheme£m

All schemes£m(186.1)
2.9
(9.8)

–
–
–

(29.5)––(215.6)2.9(9.8)(193.0)–(29.5)(222.5)(31.9)(0.2)–(32.1)(224.9)(0.2)(29.5)(254.6)(185.4)
30.9
2.3
(7.7)

–
–
–
–

(29.8)–––(215.2)
30.9
2.3
(7.7)

(159.9)–(29.8)(189.7)(29.9)(0.2)–(30.1)(189.8)(0.2)(29.8)(219.8)

1 See Glossary for further details

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C. What the BBC spends on its people continued
C8 BBC Pension Scheme
The BBC Pension Scheme, a defined benefit scheme, is now closed to new entrants. This plan provides pensionable salary-related benefits on a defined
benefit basis.

The pension scheme is administered by a separate fund that is legally separated from the BBC Group. The Trustees of the pension fund are
required by law to act in the interest of the fund and of all relevant stakeholders of the scheme. The pension scheme Trustees manage the plan in
the short, medium and long term. They make funding decisions based on valuations which take a longer-term view of the assets required to fundthe scheme’s liabilities.
The pension scheme exposes the BBC to the following actuarial risks:
Risk

Description

Investment risk

Actual returns may differ from expected returns. If the return on plan assets is below the discount rate, it will create a plan
deficit. Investments are diversified across and within asset classes, to avoid overexposure to any one asset class or market.

Currency risk

Movements in exchange rates can impact the sterling value of overseas assets held. The scheme ensures that overseas
investments are diversified across currencies and buys forward rate contracts in order to partially hedge against US dollar andeuro exposures.

Counterparty risk

The risk that a counterparty defaults while owing money to the scheme. Collateral is posted by the counterparty for long-termtransactions when the valuation of the transaction is favourable to the scheme.

Interest risk

A fall in interest rates would cause the present value of liabilities to rise. To mitigate this risk, the scheme’s Trustees invest inbonds, derivatives and other investments with predictable long-term cash flows that will tend to rise in price if interest rates fall.

Longevity risk

Longer life expectancy would increase the scheme’s liabilities. The scheme’s Trustees regularly assess the possibility and value ofhedging the scheme’s longevity risk.

Inflation risk

An increase in expected inflation will cause the present value of liabilities to rise if it is not accompanied by a rise in interest
rates. To mitigate this risk, the scheme’s Trustees invest in index-linked bonds, derivatives and other assets whose value is likely
to increase if inflation rises.

Liquidity risk

The risk of the scheme not having sufficient liquid assets to allow it to meet its liabilities and other obligations as they fall due.
The amount of cash held to pay benefits is assessed well in advance to minimise unforeseen sales and transaction costs and thelarge majority of the scheme’s assets are invested in highly liquid assets.

Custody risk

The collapse of the scheme’s custodian could result in a significant proportion of the scheme’s assets being frozen or put at riskof loss. The scheme undertakes rigorous due diligence of the custodian relationship and conducts regular service level reviews.

C8.1 Scheme financial position
Valuations of the scheme are performed by Willis Towers Watson, consulting actuaries. Formal valuations are undertaken at least every three years.
IAS 19 valuation1

Note

2017
£m

2016
£m

Scheme assets
Scheme liabilities

G3.2
G3.1

15,745.2(16,885.9)

12,821.4(13,824.8)(1,140.7)(1,003.4)

93%

93%

Deficit
Percentage by which scheme assets cover liabilities

Key movements in the year are shown in note C7.2.
A deferred tax asset or liability in relation to the scheme does not arise for the BBC Group because most of the BBC Group’s public service activity
is not subject to taxation.

1 See Glossary for further details

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C. What the BBC spends on its people continued
The sensitivities of the Scheme’s liabilities to changes in the principal assumptions are set out below:

2017

Discount rate
Discount rate
Retail price inflation rate
Retail price inflation rate
Mortality rate
Mortality rate

2016

Discount rate
Discount rate
Retail price inflation rate
Retail price inflation rate
Mortality rate
Mortality rate

Assumption used

Movement

Impact on
scheme liabilities
%

2.5%
2.5%
3.2%
3.2%
See note G3.5
See note G3.5

decrease 0.1%
increase 0.1%
decrease 0.1%
increase 0.1%
decrease 1 year
increase 1 year

2.5%
1.8%
2.0%
2.0%
3.4%
3.6%

(416)
307
331
(340)
581
(602)

Assumption used

Movement

Impact on
scheme liabilities%(Increase)/decreaseon scheme liabilities
£m

3.4%
3.4%
3.0%
3.0%
See note G3.5
See note G3.5

decrease 0.1%
increase 0.1%
decrease 0.1%
increase 0.1%
decrease 1 year
increase 1 year

2.2%
1.6%
1.7%
1.8%
3.4%
3.6%

(302)
227
237
(244)
476
(493)

(Increase)/decreaseon scheme liabilities£m

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that thechange in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
In presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit
method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in thestatement of financial position.
C8.2 Funding the scheme
The 2016 actuarial valuation by Willis Towers Watson of the pension scheme showed a funding shortfall of £1,769 million. Consequently, an 11 year
recovery plan (2017 to 2028) was agreed between the BBC and the pension scheme Trustees which details the total amounts to be paid by the
BBC (these amounts include both the employer normal contributions in respect of future service accrual and the amounts payable in respect of thefunding shortfall). Future contributions are to be paid to the pension scheme on or before the due dates shown below.
Due date

31 March 2018
31 March 2019
31 March 2020
31 March 2021
31 March 2022
31 March 2023

Amount
£m

340
125
145
195
180
185

Amount£m

Due date

31 March 2024
31 March 2025
31 March 2026
31 March 2027
31 March 2028
31 December 2028

195
195
195
195
195
195

The next formal actuarial valuation is to be performed as at 1 April 2019.

Contribution rates

Employer
Employee (Old and New Benefits)
Employee (Career Average Benefits 2006)
Employee (Career Average Benefits 2011)

Projection
2018
%

2017
%

2016
%

31.4
7.5
4.0
6.0

16.7
7.5
4.0
6.0

16.7
7.5
4.0
6.0

On the basis of the pension assumptions made above, contributions totalling £340.0 million are expected to be paid in 2017/18.

1 See Glossary for further details

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C. What the BBC spends on its people continued
C8.3 Scheme cash flows (day-to-day liquidity)
Below are the cash flows related to the BBC Pension Scheme (not included in the Group results). The contributions paid have increased due toa £220 million contribution paid in March 2017 (2016: £100 million). As the scheme is now closed to new entrants, the level of contribution from
employees will decrease (as members retire, there are no new entrants to replace the reduction in employee contributions).
2017
£m

2016
£m

Contributions including additional voluntary (employer and employee)
Investment income

337.5
231.4

222.9
222.9

Cash inflows
Payments of pensions and transfers out
Expenses

568.9(459.1)(29.0)

445.8(446.5)(28.1)Net cash inflow/(outflow)

80.8(28.8)

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D. The property, technology and equipment used by the BBC to make and distribute its programmes
The BBC Group uses a significant number of assets in its operations. This section sets out those assets the BBC Group intends to continue to use,those which it is disposing of and any disposals made in the year.
In accordance with IAS 17 Leases the BBC Group includes certain assets leased under finance leases on the balance sheet. For these assets the
BBC Group has obtained substantially all the risks and benefits of ownership, but does not have legal ownership.
The BBC Group has certain obligations to restore leased properties to their original condition at the end of the lease term. The BBC Group makes
provisions for the cost of such restoration works. The amounts provided are included within this section of the notes.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
D1 Property, plant and equipment
Land andbuildings£mPlant andmachinery£m

Furniture andfittings£m

Assets underconstruction
£m

Total
£m

Cost
At 1 April 2015 (*Restated)
Additions
Transfer to investment properties
Transfer from intangible assets
Brought into service
Disposals
Exchange movements

1,100.5
0.7(109.2)–13.0(10.9)
0.2

1,026.4
16.3
–
–
67.8
(61.8)
0.4

124.0
3.2
–
(1.2)
13.7
(17.1)
0.2

102.8
106.9
–
(17.0)(94.5)––

2,353.7
127.1(109.2)(18.2)–(89.8)
0.8

At 31 March 2016 (*Restated)
Additions
Transfer to intangible assets
Brought into service
Disposals
Exchange movements

994.3
0.9
–
8.8
–
0.9

1,049.1
7.7–
51.1(33.9)
0.5

122.8
1.7
–
6.5
(2.3)
0.8

98.2
117.5
(17.6)(66.4)––

2,264.4
127.8(17.6)–(36.2)
2.2

1,004.9

1,074.5

129.5

131.7

2,340.6

Depreciation
At 1 April 2015 (*Restated)
Charge for the year
Transfer to intangible assets
Disposals
Transfer to investment properties
Exchange adjustments
At 31 March 2016 (*Restated)
Charge for the year
Disposals
Exchange adjustments

334.9
41.9
–
(10.2)(37.8)
0.3
329.1
41.8
–
0.7

702.8
92.7
–
(57.4)
–
0.2
738.3
90.0
(30.1)
0.4

88.7
11.2
(0.7)
(13.0)
–
0.2
86.4
9.4
(2.3)
0.5

–
–
–
–
–
–
–
–
–
–

1,126.4145.8(0.7)(80.6)(37.8)
0.7
1,153.8
141.2(32.4)
1.6

At 31 March 2017

371.6

798.6

94.0

–

1,264.2

Net book value
At 31 March 2017

633.3

275.9

35.5

131.7

1,076.4

At 31 March 2016 (*Restated)

665.2

310.8

36.4

98.2

1,110.6

At 31 March 2017

* Full details of the above restatement can be found within note G1

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D. The property, technology and equipment used by the BBC to make and distribute its programmes continued
D2 Investment properties
2017£m

Restated
2016
£m

Cost
At 1 April
Transfer from property, plant and equipment

130.9
–

21.7
109.2

At 31 March

130.9

130.9

Depreciation
At 1 April
Charge for the year
Transfer from property, plant and equipment

48.5
4.3
–

7.7
3.0
37.8

At 31 March

52.8

48.5

Net book value

78.1

82.4

*

* Full details of the above restatement can be found within note G1

The BBC holds investment properties as at 31 March 2017 valued at £181.4 million (2016: £167.8 million). The valuation of these investment
properties was carried out by Lambert Smith Hampton, independent valuers not connected with the Group, in accordance with the RoyalInstitution of Chartered Surveyors (RICS) Valuation Professional Standards. The valuation conforms to International Valuation Standards. In
estimating the fair value1 of the properties, the highest and best use of the properties is their current use.
The property rental income earned by the Group from its investment properties, which are leased out under operating leases, amounted to£19.0 million (2016: £14.4 million). Direct operating expenses incurred on the investment properties, which generated rental income during the year,
amounted to £3.1 million (2016: £2.5 million). Direct operating expenses incurred on the investment properties, which did not generate rental
income during the year, amounted to £0.1 million (2016: £0.3 million).
D3 Assets available for sale1

Unquoted equities

2017
£m

2016
£m

7.9

7.5

D4 Obligations under finance leases1
2017£m

Restated
2016
£m

14.5
675.5

13.5
697.1

690.0

710.6

Minimum lease
payments£m

Interest£mPrincipal
£m

61.8
273.8
855.0

47.3
173.5
279.8

14.5
100.3
575.2

1,190.6

500.6

690.0

62.2
273.5
924.1

48.7
180.0
320.5

13.5
93.5
603.6

1,259.8

549.2

710.6

*

Due within one year
Due after more than one year

See note F3 for full analysis of borrowings, including obligations under finance leases.
Finance lease liabilities are payable as follows:

2017
Not later than one year
Later than one year but not later than five years
Later than five years
2016 ( Restated)
Not later than one year
Later than one year but not later than five years
Later than five years** Full details of the above restatement can be found within note G1
1 See Glossary for further details

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D. The property, technology and equipment used by the BBC to make and distribute its programmes continued
Under the terms of the lease agreements, the BBC has the right to share in the residual value of its key finance lease properties (Broadcasting
House and Pacific Quay). This share will be passed to the BBC as either a cash flow at the end of the lease arrangement, or a reduction in rentals
if the lease agreement is extended for a further term. In addition, the BBC has the right to repurchase each property at the end of the respective
lease agreement.
Interest rates are fixed at the contract date. Leases with a carrying value of £688.5 million (2016 Restated: £706.7 million) have contingent elements
included within their contracts and result in contingent rents of £27.4 million (2016 Restated: £26.3 million) being reflected in operating costs.
Included within the carrying amounts of assets in note D1 and D2 are amounts held under finance leases. Set out below is the analysis of thecarrying amount of assets held under finance leases by asset category:Land andbuildings£m

Investment
Property£m

Plant andmachinery
£m

Total
£m

Net book value
At 31 March 2017

500.6

78.1

1.3

580.0

At 31 March 2016 (*Restated)

529.8

82.4

3.3

615.5

* Full details of the above restatement can be found within note G1

D5 Financing costs of lease arrangements
Interest costs relating to the finance lease obligations are recognised in the income statement at a constant rate over the term of the lease.

Note

2017
£m

Restated
2016
£m

F9

49.1

50.8

2017
£m

2016
£m

97.9
288.4
521.8

100.3
316.2
585.9

908.1

1,002.4*

Financing costs of lease arrangements* Full details of the above restatement can be found within note G1

D6 Operating leases1
The total future minimum lease payments under non-cancellable operating leases are payable as follows:

Not later than one year
Later than one year but not later than five years
Later than five years

The BBC Group’s operating lease agreements primarily relate to office space, land, computers and other IT equipment. Certain contracts include
renewal options, stepped rents or annual RPI uplifts (which are accounted for on a straight line basis) or periodic rent reviews. All leases have beenentered into on commercial terms.
The BBC Group has entered into a number of sublease arrangements. The total future minimum sublease income expected to be received under
non-cancellable subleases at 31 March 2017 is:Due within one year
Due after one year but not later than five years
Due after more than five years

2017
£m

2016
£m

24.5
89.5
263.6

6.1
24.0
33.0

377.6

63.1

1 See Glossary for further details

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D. The property, technology and equipment used by the BBC to make and distribute its programmes continued
D7 Property provisions
Property provisions relate to the cost of returning leasehold properties (accounted for as operating leases) to their original condition at the endof the lease. The average life of these leases is 8 years, and the actual amount payable will depend on the extent of leasehold improvements madeover the remainder of the lease. The majority of this provision is expected to be paid after more than five years and only £1.0 million is expected
to be paid during the next financial year. For full analysis of provisions and contingent liabilities see note F8.
At 1 April£m

Charge forthe year£m

Utilised during
the year£m

Released during
the year£m

At 31 March
£m

37.2
38.7

7.4
2.8

(1.8)
(2.1)

(0.8)
(2.2)

42.0
37.2

2017
£m

2016
£m

Disposal of property, plant and equipment
Disposal of investments in associates and joint ventures

0.6
7.7

95.2
1.5

Total gain on disposal of non-current assets

8.3

96.7

2017
2016

D8 Gain on disposal of non-current assets

In November 2016, the Group and ITV Plc formed a joint venture, Britbox LLC, (‘Britbox’), to launch an SVOD service in the US. In December
2016, AMC Networks Inc., subscribed for 19% of newly-issued Britbox shares, diluting the Group’s stake and crystallising a £6.1 million gain in theGroup’s account for a deemed disposal.
The Group disposed of interests in Slim Film & TV Limited and Next Radio Limited for a total consideration of £2.7 million. As both of theseinvestments had previously been impaired to nil, the full consideration has been recognised as a gain on disposal.
During the year, the Group acquired a further 48% of the shares of Baby Cow. A fair value loss of £1.1 million was recorded upon transaction.
The gain on disposal of properties in the prior year related to the sale of freehold land from the West London Media Village site; overage on thesale of BBC Television Centre; and the sale of BBC Television Centre freehold land.
On 25 April 2015, BBC Worldwide disposed of its interest in Temple Street Productions for a cash consideration of £4.5 million, resulting in a gain
on disposal of investments in associates and joint ventures of £1.5 million. Net assets at the date of disposal were £3.0 million.

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E. Investments in the BBC’s commercial activities
The following section is primarily driven by the commercial activities of the BBC Group and includes information on what assets are used togenerate economic benefits for the BBC Group. The section also includes intangible assets such as goodwill and programme acquisitions, balancesheld to represent the BBC’s interest in associates and joint ventures and the results of any sale of operations that have occurred.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
E1 Intangible assets
Goodwill£m

Programmerights£m

Software£m

Other
intangibles
£m

Total
£m

Cost
At 1 April 2015
Additions
Disposals
Transfer from property, plant and equipment
Exchange movements

33.4
0.4
–
–
0.4

592.4
122.4
(2.8)
–
0.5

190.6
14.5
(34.2)
18.2
–

9.1
0.5
–
–
0.4

825.5
137.8
(37.0)
18.2
1.3

At 31 March 2016
Additions
Disposals
Transfer from property, plant and equipment
Exchange movements

34.2
–
–
–
1.3

712.5
155.8
–
–
2.9

189.1
10.4
(1.3)
17.6
–

10.0
3.7
(0.2)
–
1.4

945.8
169.9
(1.5)
17.6
5.6

At 31 March 2017

35.5

871.2

215.8

14.9

1,137.4

Amortisation and impairment
At 1 April 2015
Charge for the year
Write off
Disposals
Exchange adjustments

–
–
–
–
–

419.2
121.0
–
(2.8)
0.5

126.7
18.7
0.7
(34.2)
–

3.9
0.5
–
–
0.3

549.8
140.2
0.7
(37.0)
0.8

At 31 March 2016
Charge for the year
Disposals
Impairment

–
–
–
–

537.9
201.8
–
–

111.9
24.8
(1.3)
14.1

4.7
1.8
(0.1)
–

654.5
228.4
(1.4)
14.1

Exchange adjustments

–

2.7

–

0.8

3.5

At 31 March 2017

–

742.4

149.5

7.2

899.1

Net book value
At 31 March 2017

35.5

128.8

66.3

7.7

238.3

At 31 March 2016

34.2

174.6

77.2

5.3

291.3

2017
£m

2016
£m

4.6
3.1

4.6
0.7

7.7

5.3

Other intangibles include:

Acquired carrier agreements
Other

Impairments above includes the impairment in full of assets relating to BBC Store (£12.5m) following a full review at 31 March 2017. The Groupaccounting policy is to review the amortisation profile of distribution rights every three years. This review has resulted in a new amortisation profilefor distribution rights which amortises the original cost of investments over a three year period (previously a range from one to ten years) to matchan overall revenue profile updated for recent experience.

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E. Investments in the BBC’s commercial activities continued
E2 Goodwill
All goodwill is recognised in BBC Worldwide.
Goodwill, allocated by cash-generating unit1 (CGU), is analysed as follows:
Goodwill by cash-generating unit

2017
£m

2016
£m

Consumer Distribution
Australian Channels
South African Production

25.4
9.6
0.5

25.4
8.4
0.4

35.5

34.2

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions used for these calculations are discountrates and growth rates. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value ofmoney and the risk specific to each CGU.
BBC Worldwide tests goodwill for impairment in the accounting period in which a business combination takes place, thereafter annually or more
frequently, if there are indications that goodwill might me impaired.
No goodwill impairment has been recognised to date.
Consumer Distribution business
The goodwill in this CGU arose as a result of the acquisition of 2entertain on 6 August 2009. The cash flow projections used in determining value
in use are based on the current business plan approved by management, which covers a five-year period after which cash flows have been
extrapolated using an expected growth rate of -6% (2015: -6%).
A discount rate of 13.9% (2016: 14.9%) has been applied to the cash flows.
Australian Channels business
The goodwill in this CGU arose as a result of the acquisition of UKTV on 1 July 2008. Cash flow projections used in the recoverable amountcalculation are based on financial budgets approved by management covering a period of five years (2016: five years) and a discount rate of
13.9% (2016: 16.0%). Cash flows beyond the forecast period have been extrapolated using an expected growth rate of 1.0% (2016: 1.0%).
The main assumption on which the forecast cash flows are based is licence fee rates. In forming its assumptions about licence fee rates, the Grouphas used a combination of long-term trends and recently contracted terms.
South African Production
The goodwill in this CGU arose as a result of the acquisition of Rapid Blue (Pty) Limited on 28 March 2016. The cash flow projections used indetermining value in used are based on the current business plan approved by management, which covers a five year period after which cash
flows have been extrapolated using an expected long term growth rate of 2.5% (2016: no test was performed as the entity was acquired close
to year end).
A discount rate of 22.5% has been applied to the cash flows.
Management believe that any reasonably possible change in the key assumptions on which the value in use of the above cash-generating units
is based would not result in any impairment.

1 See Glossary for further details

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E. Investments in the BBC’s commercial activities continued
E3 Interests in associates1 and joint ventures1
This note details the BBC Group’s share of net assets in associates and joint ventures, along with the impact that they have on the income
statement. Details of significant associates and joint ventures along with principal subsidiary undertakings, including their activities, are provided
in note G5.
2017
£m

2016
£m

Interest in joint ventures
Interest in associates

53.5
205.0

12.2
159.6

Total interest in associates and joint ventures

258.5

171.8

Share of results of joint ventures
Share of results of associates

31.4
14.3

28.7
11.0

Total share of results of associates and joint ventures

45.7

39.7

The following table presents financial information for joint ventures:
DaunusLimited£m

UKTV Media
Limited£m

Freesat (UK)
Limited
£m

Other
£m

Total
2017
£m

Non-current assets
Current assets
Current liabilities
Non-current liabilities

561.7
57.9
(53.0)(720.4)8.9
261.8(140.0)(54.1)–
11.4–(35.6)

2.8
19.7
(9.4)
–

573.4
350.8
(202.4)(810.1)

Shareholders’ equity(153.8)76.6(24.2)

13.1(88.3)

Adjustment to reflect the BBC Group’s effective obligation
Provision for unrealised profit

153.8
–

(38.4)
(5.1)

15.8
–

(5.2)
(0.8)

126.0
(5.9)

–

33.1

(8.4)

7.1

31.8

Group’s share of net assets/(liabilities) of joint ventures
The net book value is presented within:
Interest in associates and joint ventures
Provisions1Interest in Daunus Limited recognised at cost

53.5
(8.4)
(13.3)
31.8

Income

22.4

348.7

8.9

41.1

421.1

Profit/(loss) after tax

13.2

72.5

(4.9)

(5.1)

75.7

Adjustment to reflect the BBC Group’s effective obligation(13.2)(36.3)

2.4

2.8(44.3)

–

36.2

(2.5)

(2.3)

31.4

DaunusLimited£m

UKTV Media
Limited£m

Freesat (UK)
Limited
£m

Other
£m

Total
2016
£m

Non-current assets
Current assets
Current liabilities
Non-current liabilities

567.9
52.7
(49.2)(753.2)6.8
220.0(137.9)(54.1)

0.1
12.2
(4.7)
(29.7)

0.1
6.5
(8.2)
–

574.9
291.4
(200.0)(837.0)Shareholders’ equity(181.8)34.8(22.1)(1.6)(170.7)

Adjustment to reflect the BBC Group’s effective obligation
Provision for unrealised profit

181.8
–

(17.5)
(5.3)

15.0
–

1.8
–

181.1
(5.3)

–

12.0

(7.1)

0.2

5.1

Share of results of joint ventures

Group’s share of net assets/(liabilities) of joint ventures
The net book value is presented within:
Interest in associates and joint ventures
Provisions1

12.2
(7.1)
5.1

Income

14.2

329.4

8.0

38.4

390.0

Profit/(loss) after tax
Adjustment to reflect the BBC Group’s effective obligation

13.2(13.2)

61.4(30.7)

(4.1)
2.1

(0.6)
0.6

69.9
(41.2)

–

30.7

(2.0)

–

28.7

Share of results of joint ventures

1 See Glossary for further details

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E. Investments in the BBC’s commercial activities continued
The following table presents financial information for associates:
New Video
ChannelAmerica LLC£m

YouView
Limited£m3sixtymedia
Limited
£m

Other
£m

Total
2017
£m

Non-current assets
Current assets
Current liabilities
Non-current liabilities

162.9
92.1
(28.0)(13.5)

0.3
4.9
(8.6)
(34.1)

0.7
4.3
(0.7)
–

6.4
68.6
(36.4)(16.8)

170.3
169.9(73.7)(64.4)Net assets/(liabilities)

213.5(37.5)

4.3

21.8

202.1

Group share net assets
Provision for unrealised profit
Goodwill

107.0
(3.8)
69.6

–
–
–

–
–
–

6.3
(0.3)
26.2

113.3
(4.1)
95.8

Total net book value

172.8

–

–

32.2

205.0

The net book value is presented within:
Interest in associates and joint ventures

205.0
205.0

Income

128.9

11.9

(3.2)

60.1

197.7

Profit/(loss) after tax
Adjustment to reflect the BBC Group’s effective obligation

26.3(12.7)

(2.9)
2.9

(0.1)
0.1

(0.6)
1.3

22.7
(8.4)

Group share of results

13.6

–

–

0.7

14.3

New Video
ChannelAmerica LLC£m

YouView
Limited£m3sixtymedia
Limited
£m

Other
£m

Total
2016
£m

Non-current assets
Current assets
Current liabilities
Non-current liabilities

135.9
69.2
(25.5)
(6.0)

0.2
8.4
(8.3)
(14.9)

0.8
5.2
(1.9)
–

4.4
42.8
(28.1)
(8.4)

141.3
125.6
(63.8)(29.3)Net assets/(liabilities)

173.6(14.6)

4.1

10.7

173.8

Group share net assets
Provision for unrealised profit
Goodwill
Other

87.0
(3.7)
60.2
–

–
–
–
–

0.4
(0.4)
–
–

3.2
(0.2)
12.9
0.2

90.6
(4.3)
73.1
0.2

Total net book value

143.5

–

–

16.1

159.6

The net book value is presented within:
Interest in associates and joint ventures

159.6
159.6

Income

113.6

11.9

7.7

51.5

184.7

Profit/(loss) after tax
Adjustment to reflect the BBC Group’s effective obligation

18.0
(9.0)

(31.0)
31.0

(1.4)
1.4

1.7
0.3

(12.7)
23.7

Group share of results

9.0

–

–

2.0

11.0

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F I N A N C I A L S TAT E M E N T S

F. Managing funding (including future costs)
This section contains the notes to the balance sheet that detail the funding of the BBC Group as well as the assets and liabilities that are primarily
used in the day-to-day transactions of the BBC Group.
It also sets out the external borrowings of the BBC Group. The BBC Group is subject to two specific limits to its borrowings:–– the Public Service net borrowing limit of £200 million is set by the Secretary of State for DCMS in accordance with the Framework
Agreement between the BBC and DCMS.
–– under a direction granted by the Secretary of State for the DCMS a net borrowing limit of £350 million has been set for the BBCcommercial group.
Included within this section are the disclosures required by DCMS in respect of the above limits.
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
F1 Analysis of net funds for DCMS borrowing1 limits
RestatedAt
1 April 2016
£m

Cash
flows
£m

Non-cashchanges£m

Exchange£m

At
31 March 2017£m

Total cash and cash equivalents

334.8(78.0)

–

(0.5)

256.3

Loans and loan notes
Derivatives associated with loans
Finance leases(231.9)7.2(710.6)

54.0
–
72.9

–
(46.4)(52.3)(23.3)––(201.2)(39.2)(690.0)(600.5)
704.0

48.9

(98.7)(23.8)

Leases not included in DCMS borrowing limits**(674.1)
686.0*

Net funds

103.5

11.9

Made up of:
PSB Group
Centre House Productions
BBC Worldwide
Other commercial businesses

265.8
1.0
45.4
(208.7)

186.8
1.5
44.3
(220.7)

Net funds

103.5

11.9

* Full details of the above restatement can be found within note G1** Due to leases having been transacted prior to 2006 and classified as operating leases under UK GAAP at inception

Under the new Charter and Agreement the Public Service net borrowing limit has been increased, with effect from 3 April 2017, to £1.050 billion.
This covers all borrowings including the Finance Leases not included in the DCMS borrowing limits under the previous Charter and Agreement. Of
the limit £850 million is specifically for Finance Leases. The commercial group net debt limit remains £350 million.
F2 Reconciliation of net funds to the DCMS borrowing limits
Public Services1
Capital or current
expenditure£mCommercial
businesses*£m

2017
Net funds/(debt)
Net borrowing limit

186.8(200.0)(228.0)(350.0)

Headroom

386.8

122.0

2016
Net funds/(debt)
Net borrowing limit

266.0(200.0)(163.3)(350.0)

Headroom

466.0

186.7

* Under the terms of the DCMS agreement, BBC Commercial Holdings Limited must satisfy two financial covenants, which need to be satisfied throughout the respective period. During 2016/17 and2015/16, BBC Commercial Holdings Limited was in compliance with both of these covenants

As at 31 March 2017 and 31 March 2016, and during both 2016/17 and 2015/16, the BBC Group did not breach the borrowing limits.

1 See Glossary for further details

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F I N A N C E A N D O P E R AT I O N S

F. Managing funding (including future costs) continued
F3 Borrowings
F3.1 Borrowings due within one year
2017£mRestated
2016£mBank loan
Obligations under finance leases

–
14.5

54.0
13.5

Total

14.5

67.5

*

* Full details of the above restatement can be found within note G1

F3.2 Borrowings due after more than one year
2017£mRestated
2016£mBank loan
Obligations under finance leases

201.2
675.5

177.9
697.1

Total

876.7

875.0

*

* Full details of the above restatement can be found within note G1

Analysis of the BBC Group’s borrowing facilities is set out in note F4.

1 See Glossary for further details

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F I N A N C I A L S TAT E M E N T S

F. Managing funding (including future costs) continued
F4 Borrowing facilities
Total available
31 March 2017£m

Drawn down at
31 March 2017£m

Total available
31 March 2016£m

Drawn down at
31 March 2016£m

Expiry or review date

LIBOR* plus 0.3%
rising to LIBOR* plus
0.15% on utilisations
over 1⁄ 3 and LIBOR*
plus 0.45% on
utilisations over 2⁄ 3

200

–

200

–

15 July 2020

Uncommitted money market lines(short-term borrowings)

Margin of 0.45% over
LIBOR*

–

–

25

–

Reviewed annually

Uncommitted money market lines(short-term borrowings)

Margin of 0.5% over
LIBOR*

25

–

25

–

Reviewed annually

GBP overdraft

Bank base rates
plus 1%

5

–

5

–

Reviewed annuallyMulticurrency overdraft

Banks’ short-termoffered rates for the
relevant currency
plus 1%

5

–

5

–

Reviewed annually

Overdraft *Bank base rate plus
1%. Excess usageat bank base rateplus 2%

1

–

1

–

Reviewed annually

210

210

45

July 201920

9

Reviewed annually

Facility

PSB Group
Sterling revolving credit
facility agreement

Interest rate

BBC Commercial Holdings Limited
Multicurrency, revolving credit
LIBOR* plus 0.6%
facility agreement for loans andrising to LIBOR* plus
letters of credit
0.15% on utilisations
over 1⁄ 3 and LIBOR*
plus 0.15% on
utilisations over 2⁄ 3
Overdraft or money market lines

Money market line –margin of 1.0%
(2015: 1.0%)

20

US Private Placement

Fixed interest
at 2.36%

28

28

28

28

June 2020

US Private Placement**

Fixed interest at 2.71%

173

173

150

150

June 2020

Bank base rate plus
1% up to £2 million,bank base rate plus
3% over £2 million

2

–

2

–

Reviewed annually

Market rate at
drawdown

1

–

1

–

Reviewed annually

BBC Worldwide
Overdraft *Overdraft or working capital loan
for Indian Rupees* The base rate used varies according to the currency drawn. GBP drawings are linked to LIBOR** The US$216 million US placement is hedged to a sterling value of £143 million, valued at the time of the facility being put in place

There have been no defaults or breaches of covenants on these facilities during the year (2016: none).

1 See Glossary for further details

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F I N A N C E A N D O P E R AT I O N S

F. Managing funding (including future costs) continued
F5 Cash generated from operations
2017£m

Restated
2016£mGroup (deficit)/surplus before taxation
Depreciation, amortisation and impairment
Difference between pension charge and cash contribution
Fair value impact of derivatives associated with loans
Fair value impact of other derivatives
Gain/(loss) on disposal of tangible and intangible fixed assets
Gain on sale and termination of operations
Other gains
Share of results of associates and joint ventures
Financing income
Financing costs
Decrease in programme-related assets and inventories
Increase in debtors
Increase/(decrease) in creditors
Increase/(decrease) in provisions(119.3)388.5(141.6)(108.7)
87.0
3.8
–
(2.7)
(45.7)
(5.3)
139.3
71.8
(49.8)
80.1
3.7

73.9
289.0
(60.3)
4.6(13.7)(86.0)–(1.5)(39.7)(12.7)
91.2
23.0(39.4)(35.5)(13.0)Cash generated from operations

301.1

179.9

*

* Full details of the above restatement can be found within note G1

F6 Trade and other receivables
This note discloses the balances that are owed to the BBC Group by third parties and prepayments made by the BBC Group.
F6.1 Other receivables due after more than one year
2017
£m

2016
£m

Other prepayments and receivables
Loans to other entities
Amounts owed by associates and joint ventures

84.5
–
5.9

83.6
3.0
6.0

Total

90.4

92.6

F6.2 Trade and other receivables due within one year
2017£mRestated
2016
£m

276.9
396.0
30.3
31.4
59.8
228.0

233.1
392.9
25.3
42.3
93.8
190.6

1,022.4

978.0*

Trade receivables
Licence fee receivables
Amounts owed by associates and joint ventures
VAT recoverable
Other receivables
Prepayments and other assets
Total* Full details of the above restatement can be found within note G1

Included in the BBC Group’s trade and other receivables at 31 March 2017 are balances of £20.8 million (2016: £44.3 million) which are past due atthe reporting date but not impaired. The aged analysis of these balances is as follows:
Trade receivables past due but not impaired

2017
£m

2016
£m

Up to 3 months
3 to 6 months
Over 6 months

15.4
1.6
3.8

32.6
6.8
4.9

20.8

44.3

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F I N A N C I A L S TAT E M E N T S

F. Managing funding (including future costs) continued
In determining the recoverability (likelihood of receiving payment) of a trade receivable the Group considers any change in the credit qualityof the trade receivable from the date credit was initially granted up to the reporting date. Trade receivables are provided for based on
estimated irrecoverable amounts, determined by reference to past default experience of the counterparty and an analysis of the counterparty’s
financial situation.
There are no significant impairment provisions relating to balances of any individual debtor. Amounts charged to the impairment provision are
written off when there is no expectation of recovery. Subsequent recoveries of amounts previously written off are credited to the income
statement. The impairment provision stands at £7.9 million at 31 March 2017 (2016: £5.2 million).
The movement in the allowance for doubtful debts is set out below:
2017
£m

2016
£m

Balance at the beginning of the year
Impairment losses recognised
Amounts written off as uncollectable
Amounts recovered during the year

5.2
6.1
(1.2)
(2.2)

3.6
4.8
(1.3)
(1.9)

Balance at the end of the year

7.9

5.2

No significant amount has been provided for items that are not yet due for payment.
F7 Trade and other payables
This note details the amounts payable to third parties by the BBC Group.
F7.1 Other payables due within one year
2017£mRestated
2016
£m

376.9
14.6
28.2
34.8
231.1
338.7
45.4

483.9
10.7
27.4
23.1
126.3
288.5
46.4

1,069.7

1,006.3*

Trade and employment-related payables
Amounts owed to associates and joint ventures
Other taxation and social security
Other payables
Accruals
Deferred income (including licence fee payables)
Licence savings stamp deposits and direct debit instalments
Total* Full details of the above restatement can be found within note G1

F7.2 Other payables due after more than one year
2017£mRestated2016£mOther payables

48.4

11.6

Total

48.4

11.6

*

* Full details of the above restatement can be found within note G1

It is the BBC’s policy to comply with the Better Payment Practice Code in relation to the payment of suppliers, provided that the supplier iscomplying with their contracted terms and conditions. The BBC monitors compliance against the terms of this code. Payments for programmeacquisitions are made in accordance with contractual terms. The Group’s number of days outstanding in respect of other trade payables at
31 March 2017 was 21 days (2016: 22 days).

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F. Managing funding (including future costs) continued
F8 Provisions and contingent liabilities
At
1 April 2016
£m

Charge forthe year£m

Utilised during
the year£m

Released during
the year£m

At
31 March 2017
£m

26.7
12.4
5.6
37.2
7.1
18.0

56.3
0.3
1.5
7.4
1.3
5.6

(38.5)
(1.3)
–
(1.8)
–
(1.2)

(6.7)
(1.0)
–
(0.8)
–
(15.0)

37.8
10.4
7.1
42.0
8.4
7.4

Total

107.0

72.4

(42.8)(23.5)

113.1

Included in current liabilities
Included in non-current liabilities

64.8
42.2

62.5
50.6

Total

107.0

113.1

Note

Restructuring
Litigation
Insurance
Property
Share of joint ventures net liabilities
Other

D7
E4

At
1 April 2015£m

Charge forthe year£m

Utilised during
the year£m

Released during
the year£m

At
31 March 2016
£m

37.1
15.6
5.8
38.7
1.5
6.2
12.9

26.2
1.4
–
2.8
–
0.9
17.8

(27.5)
(4.5)
–
(2.1)
–
–
(12.4)

(9.1)
(0.1)
(0.2)
(2.2)
(1.5)
–
(0.3)

26.7
12.4
5.6
37.2
–
7.1
18.0

Total

117.8

49.1

(46.5)(13.4)

107.0

Included in current liabilities
Included in non-current liabilities

66.2
51.6

64.8
42.2

Total

117.8

107.0

Note

Restructuring
Litigation
Insurance
Property
Decommissioning
Share of joint ventures net liabilities
Other

D7
E3

The restructuring charge for the year relates mainly to the restructuring programmes within the PSB Group and BBC Worldwide. The balance at
31 March 2017 relates predominantly to the redundancies generated through BBC Studios restructuring as well as ongoing saving strategies.
Litigation and insurance provisions relate to ongoing legal, insurance and compensation claims against the BBC. The BBC makes specific provision
for its best estimate of any damages and costs which may be awarded. A provision is only made to the extent that the BBC Group considers it
probable that there will be an outflow of economic benefits and the amount can be reliably estimated. There are currently no known individuallymaterial outstanding litigations.
The decommissioning provision was created at 31 March 2013 for the costs of decommissioning the Cyprus shortwave transmission site in
BBC World Service. The remaining provision was released in 2015/16.
Other provisions consist of a number of items arising across the BBC Group in the normal course of business, none are individually material.
There were no other significant contingent liabilities known at the year end (2016: no significant).

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F I N A N C I A L S TAT E M E N T S

F. Managing funding (including future costs) continued
F9 Net financing costs
Set out below is an analysis of the financing income and expenses incurred in the year. These amounts include interest relating to finance leaseliabilities (see note D4) and defined benefit pension schemes (see note C7).
2017£m

Restated
2016
£m

5.3
–

6.3
6.4

5.3

12.7
(5.1)
(0.1)
(3.8)
(1.3)
(50.8)*

Note

Financing income
Interest income
Fair value gains on swaps
Financing costs
Interest expense
Investment expense on liabilities available for trading
Exchange loss on borrowings
Fair value loss on swaps
Interest on obligations under finance leases

D5

(9.7)
(0.1)
(23.3)(25.0)(49.1)

Interest cost on pension plan liabilities1

C7.3(107.2)(32.1)(61.1)(30.1)(139.3)(91.2)(134.0)(78.5)Net financing costs

The net impact of financing can be analysed as:
2017£mRestated
2016£m(49.1)(32.1)(52.8)(50.8)(30.1)
2.4(134.0)(78.5)*Net financing costs of leasing arrangements
Net financing costs related to pension obligations
Net financing (cost)/income related to loans and financial instruments* Full details of the above restatement can be found within note G1

F10 Long-term commitments not reflected in the balance sheet – contracts placed for future expenditureThis note shows amounts to which the BBC Group is contractually committed, but which do not meet the criteria for inclusion in the balance sheet.
It includes fixed (but not variable) payments due under outsourcing contracts for the life of those contracts.
Functions covered by these long-term outsourcing contracts include IT support, content distribution and transmission, facilities management andelements of finance support.

Fixed asset additions
Programme acquisitions and sports rights
Independent programmes
Other fixed payments on long-term outsourcing arrangements

2017
£m

2016
£m

34.5
1,263.0127.7
2,070.7

31.4
1,089.0
138.8
2,206.6

3,495.9

3,465.8

2017
£m

2016
£m

743.0
1,642.3
1,110.6

737.9
1,535.4
1,192.5

3,495.9

3,465.8

Long-term commitments not reflected in the balance sheet are payable as follows:

Not later than one year
Later than one year but not later than five years
Later than five years

1 See Glossary for further details

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F I N A N C E A N D O P E R AT I O N S

G. Other
For additional information on the relevant accounting policies applied in this section please see section H Basis of preparation of the financial
statements and other accounting policies.
G1 Prior period restatement
We have reconsidered the assumptions used in the calculation of finance lease assets and liabilities and now consider it appropriate to remove
an inflationary assumption originally included within the calculations.
The impact of this change on the result for the year ended 31 March 2016 is to increase the surplus for the year by £14.4million. The full impact
on the income statement is set out below:

Operating costs
Financing Costs
Surplus before tax

Restated
2016£mReported
2016£mMovement
2016£m(4,789.6)(91.2)(4,775.7)(119.5)(13.9)
28.3

73.9

59.5

14.4

The impact on the balance sheet is as follows:
Restated
31 March 2016£m

Reported
31 March 2016£m

Movement
31 March 2016£m

Restated
1 April 2015£m

Reported
1 April 2015£m

Movement
1 April 2015£m

Property, Plant and Equipment
Investment properties

1,110.6
82.4

1,137.4
85.2(26.8)(2.8)

1,227.3
14.1

1,258.0
14.5(30.7)(0.4)

Total non-current assets

1,777.2

1,806.8(29.6)

1,719.3

1,750.4(31.1)

Trade and other receivables

978.0

975.4

2.6

949.4

947.2

2.2

Total current assets

2,027.5

2,024.9

2.6

2,098.0

2,095.6

2.4

Trade and other payables
Borrowings(1,006.3)(67.5)(1,006.4)(61.6)

0.1(5.9)(1,054.3)(49.8)(1,054.4)(43.2)

0.1(6.6)

Total current liabilities(1,164.2)(1,158.4)(5.8)(1,192.0)(1,185.5)(6.5)

Other payables
Borrowings(11.6)(875.0)(14.5)(1,020.5)

2.9
145.5

(10.5)(889.2)(13.8)(1,022.5)

3.3
133.3

Total non-current liabilities(1,973.8)(2,122.2)

148.4(1,938.2)(2,074.5)

136.3

Net assets

666.7

551.1

115.6

687.1

586.0

101.1

Operating reserves

660.8

545.3

115.5

679.8

578.7

101.1

Total capital and reserves

666.7

551.1

115.6

687.1

586.0

101.1

Note

2017
£m

2016
£m

(12.1)
22.4
(8.5)

(3.2)
15.5
(16.9)

Total current tax

1.8

(4.6)

Deferred tax
Origination and reversal of temporary differences
Changes in tax rate
Adjustments in respect of prior years

(1.4)
0.7
8.7

5.1
0.5
(0.8)

Total deferred tax

8.0

4.8

9.8

0.2

G2 Taxation
G2.1 Recognised in the income statement
The charge for the year, based on the rate of corporation tax of 20% (2016: 20%) comprised:

Current tax
UK corporation tax
Foreign tax
Adjustments in respect of prior years
1

Total taxation expense in the consolidated income statement

1 See Glossary for further details

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F I N A N C I A L S TAT E M E N T S

G. Other continued
G2.2 Reconciliation of taxation expense
The PSB Group is liable to taxation on those activities carried out with a view to making a profit and on rent, royalties and interest receivable anddoes not therefore receive relief for all its expenditure. The commercial subsidiaries in the BBC Group are taxed in accordance with tax legislation.
As the BBC Group’s public sector ‘free-to-air’ broadcasting activities are not subject to taxation, the tax charge is primarily driven by the results ofthe commercial businesses. The items affecting the standard rate of corporation tax are explained below:
2017
£m

2016
£m

(Deficit)/surplus before tax(119.3)

59.5(Deficit)/surplus before tax multiplied by standard rate of corporation tax in the UK of 20% (2016: 20%)
Effects of:
Public service activities
Public service taxable external income
Utilisation of unrecognised capital losses
Non-taxable public service activities
Commercial activities
Disallowed expenditure (including goodwill impairment)
Losses carried forward
High-end television tax relief
Tax exempt investment saleTax differential on overseas earnings
Tax differential in associates and joint ventures
Tax rate decrease
Adjustments in respect of prior years(23.9)

11.9

6.5
–
30.7

24.0
(15.0)
4.3

(2.0)
2.3
(9.5)
–
11.9
(7.1)
0.7
0.2

3.6
–
(10.7)
(0.3)
5.6
(6.0)
0.5
(17.7)

9.8

0.2

Note

Total tax charge for the year

G2.1

G2.3 Factors that may affect future tax charges
The UK corporation tax rate reduced from 20% to 19% on 1 April 2017.
On 26 October 2015, The Summer Finance Bill 2015, which reduces the main rate of corporation tax to 19% from April 2017 and on 15th
September 2016, The Summer Finance Bill 2016, reduces the corporation tax rate to 17% from April 2020. As these reductions to the rate were
substantively enacted at the balance sheet date, the deferred tax assets have been calculated at 17% in line with when the company anticipates
temporary differences to unwind.
There are many future changes to worldwide taxation systems as a result of the potential adoption by the UK and individual territories of measuresrelating to the OECD Base Erosion and Profit Shifting Actions. The Group continues to actively monitor any developments and evaluate theirpotential impact. The Group does not expect the future tax rate to be materially impacted by these changes to the international tax landscape.
G2.4 Current tax assets
The current tax assets totalling £40 million in 2016/17 includes £15 million (2015/16: £26.1 million) due in respect of film tax credits outstandingon high-end drama and comedy productions following prudent overprovisions made in 2016/17.

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G. Other continued
G2.5 Deferred tax assets/(liabilities)
Fixed asset
temporarydifferences£m

Provisions£mFinancial
instruments£mJoint ventures
and associates£m

Programmerights
£m

Other
£m

Net deferredtax (liability)/asset
£m

4.3

3.9

1.3

(15.7)(6.3)

1.9(10.6)

At 1 April 2016
Net charge/(credit) to theincome statement
Charge to reserves
Acquisition of subsidiary,
JV’s and associates
Exchange differences

1.9
–

(2.2)
–

(2.7)
1.8

(2.2)
–

0.3
–

(3.1)
–

(8.0)
1.8

–
(0.1)

–
0.2

–
–

–
(2.8)

–
(1.0)

(0.1)
0.5

(0.1)
(3.2)

At 31 March 2017

6.1

1.9

0.4

(20.7)

(7.0)

(0.8)

(20.1)

2017
£m

2016
£m

11.3
(31.4)

10.9(21.5)(20.1)(10.6)

Deferred tax asset/(liability) presented within:
Non-current assets
Non-current liabilities

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable
profit is probable. The BBC Group has unrecognised deferred tax assets arising on capital losses totalling £137.3 million (2016: £145.2 million). Theseassets are not recognised on the basis that there is insufficient certainty that capital or operating gains will arise against which the BBC Group canutilise these losses.
G3 Pension plans
Note G3 sets out the additional detailed disclosures related to the BBC Pension Scheme which were not included in note C7 or C8.
G3.1 Changes in the present value of plan liabilities1
The table below illustrates the movement on the scheme liabilities during the year. The key items which affect this are the additional year of pension
benefits earned, any gains or losses relating to participants leaving the pension scheme, changes in assumptions made and benefits paid out during
the year.
2017
£m

2016
£m

Opening present value of plan liabilities
Current service cost
Past service cost
Administration cost
Interest on pension plan liabilities
Remeasurement (gains)/losses:– Experience gains arising on plan liabilities– Changes in financial assumptions1– Changes in demographic assumptions
Contributions by plan participants
Liabilities extinguished on settlements
Benefits paid and expenses

13,824.8
186.1
(2.9)
9.8
462.7

13,707.0
185.4(30.9)
7.7
459.3(141.3)
3,703.6(695.3)0.9–(462.5)(179.1)125.3–
0.9(32.9)(417.9)

Closing present value of plan liabilities

16,885.9

13,824.8

1 See Glossary for further details

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F I N A N C I A L S TAT E M E N T S

G. Other continued
G3.2 Changes in the fair value of plan assets
The table below illustrates the movement on the plan assets during the year. The key items which affect this are the additional year of contributions
made, changes in the value of the pension plan assets (including the investment return) and benefits paid during the year.
The employee contributions to the scheme by members are mainly paid via a salary sacrifice arrangement. These have been treated as employer
contributions.
2017
£m

2016
£m

Opening fair value of plan assets
Interest income on assets
Remeasurements on plan assets1
Contributions by employer
Contributions by plan participants
Assets distributed on settlements
Benefits paid and expenses

12,821.4
430.8
2,620.3334.3
0.9–(462.5)

12,766.3
429.4(146.5)219.8
0.9(30.6)(417.9)

Closing fair value of plan assets

15,745.2

12,821.4

G3.3 Plan assets
The allocation of assets by the Pension Trust Trustees is governed by the need to manage risk against the desire for high returns and any liquidity
needs. A high percentage of assets are held in equities which the Trustees expect will produce higher returns in the long term.
2017Type of asset

Equities
Pooled vehicles
Repurchase agreements
Derivatives
Fixed interest bonds
Index-linked bonds
Property– UK– Pooled investment vehicles
Alternatives*
Cash and other current assets
Total assets
Actual return on pension plan assets

**

2016

£m

%

£m

%

1,499.0
2,624.7(1,639.3)
112.8
1,450.1
6,144.0

10
17
(10)
1
9
39

1,284.1
1,989.9(1,718.1)(33.5)
1,693.7
4,939.0

10
16
(13)
–
13
39

885.2
456.4
3,710.9
501.4

5
3
23
3

855.1
391.7
3,055.1
364.4

7
3
22
3

15,745.2

100

12,821.4

100

3,051.1

282.9* Alternatives are investments in asset classes other than the traditional quoted equities, bonds, property and cash. They include investments in private equity, private credit, hedge funds, infrastructure
and renewable energy investments. They are generally illiquid investments as some may require sufficient time to find buyers willing to pay full market value. They are useful for managing risk as theyenhance portfolio diversification and potentially reduce risk as their cash flows can be well suited to meeting the scheme’s liabilities** This constitutes realised gains from the receipt of investment income (e.g. dividends and rent), transactions where assets are sold and unrealised fair value changes

G3.4 BBC Pension Scheme gains/(losses) in the consolidated statement of comprehensive income

Return on plan assets (excluding amounts included within interest)
Remeasurement gains/(losses)1 arising from:– Experience gains on plan liabilities– Changes in demographic assumptions– Changes in financial assumptions
Net loss recognised in the consolidated statement of comprehensive income

2017
£m

2016
£m

2,620.3(146.5)

141.3
695.3
(3,703.6)

179.1–(125.3)(246.7)(92.7)

1 See Glossary for further details

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F I N A N C E A N D O P E R AT I O N S

G. Other continued
G3.5 Principal actuarial assumptions
The calculation of the scheme liabilities and pension charges, for IAS 19 purposes, requires a number of financial and demographic assumptions to
be made. The principal assumptions used by the actuaries at the balance sheet date were:
2017
%

2016
%

1.00

1.00

3.20
3.00
2.40
2.10
3.20
2.20
2.45

2.95
2.75
2.40
1.85
2.95
1.95
3.40

2017
Numberof years

2016
Numberof years

Retiring today:
Male
Female

27.0
29.3

27.6
30.0

Retiring in 20 years:
Male
Female

28.5
31.0

29.5
32.0

Principal financial assumptions

Rate of increase in salaries
Rate of increase in pension payments:
Old Benefits*
New Benefits*
Career Average Benefits (2006)*
Career Average Benefits (2011)*
Inflation assumption (RPI)
Inflation assumption (CPI)
Discount rate1* For more information on the different pension arrangements, please refer to the Remuneration Report

The average life expectancy assumptions, for members after retirement at 60 years of age, are as follows:

Principal demographic assumptions

The mortality assumptions have been selected to reflect the characteristics and experience of the membership of the scheme and are based on
those used for the actuarial investigation which was carried out for funding purposes as at 1 April 2016. The standard ‘S2’ series of tables, publishedby the CMI, reflect recent research into mortality experience in the UK. A subset of these tables have been used for males and females, with amultiplier of 118% for males and 96% for females. For the allowance for future improvements, the CMI 2016 core projection has been adopted
with a long-term trend of 1.25% for both males and females.
G3.6 Scheme membership analysis and maturity1 profile
Principal demographic assumptions

2017
Number

2016
NumberContributors
Pensioners
Dependants
Deferred pensioners

10,636
19,636
4,308
29,036

11,405
19,536
4,276
29,110

The total number of scheme beneficiaries as at 31 March 2017 was 50,037 (2016: 50,797), excluding dependants. Membership numbers in the table
above are higher as members can hold more than one record. For example, existing members who have joined the Career Average Benefits 2011section from another section of the scheme may have a deferred pensioner record for their benefits built up in the Old Benefits, New Benefits or
Career Average Benefits 2006 sections and a contributing record for their Career Average Benefits 2011 benefits.
The average duration of the benefit obligation at the end of the reporting period is 21 years (2016: 19 years). This number can be subdivided into
the duration related to:–– contributors: 26 years (2016: 25 years)–– pensioners: 14 years (2016: 13 years)–– deferred pensioners: 28 years (2016: 26 years)

1 See Glossary for further details

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G. Other continued
G4 Financial instruments
This section details the financial instruments held by the BBC Group. A financial instrument is a contract that results in one entity recording
a financial asset (a contractual right to receive financial assets, e.g. cash) in their accounts and another entity recording a financial liability.
The BBC Group’s financial instruments, other than those used for treasury risk management purposes, comprise cash and cash equivalents,
borrowings and various items such as trade receivables and payables that arise directly from its operations.
G4.1 Financial risk management
The BBC Group’s financial risk management operations are carried out by a BBC Group Treasury function, within parameters defined formallywithin the policies and procedures manual agreed by the BBC Executive Board. BBC Group Treasury’s activity is routinely reported and is subject
to review by internal auditors.
The BBC Group Treasury function uses financial instruments to raise finance and to manage financial risk arising from the BBC’s operations inaccordance with its objectives which are:–– to ensure the business of the BBC Group, both PSB Group and Commercial, is funded in the most efficient manner and remains compliant withborrowing ceilings;–– to protect the value of the BBC’s assets, liabilities and cash flows from the effects of adverse interest rates and foreign exchange fluctuations; and–– to maximise the return on surplus funds, whilst ensuring sufficient cash is retained to meet foreseeable liquidity requirements.
The BBC Group takes a risk averse approach to the management of foreign currency trading and has implemented a clear economic hedging policy
to minimise volatility in the financial results. A small number of the forward foreign currency contracts entered into by the BBC Group were
designated as hedging instruments in effective cash flow hedges. Hedge accounting is only applied where there is appropriate designation anddocumentation.
The BBC Group is exposed to the following areas of risk arising from financial instruments:–– market risk, principally currency and interest rate risk;–– liquidity risk; and–– credit risk1. The largest element is the licence fee debtor, £396.0 million (2016: £392.9 million). The amount of income that the BBC receives is
directly related to the amount of licence fee collected from households in the UK.
The material risks to the BBC Group are:
Currency risk
The BBC Group is principally a UK-based organisation with the majority of transactions, assets and liabilities being sterling based; however, the
BBC Group undertakes some transactions in currencies other than sterling. Due to movements in exchange rates over time, the amount the
BBC Group expects to receive or pay when it enters into a transaction may differ from the amount that it actually receives or pays when thetransaction is settled.
The most significant currency exposure by total value of transactions is to US dollars. Due to the relative size of this exposure in comparison to the
BBC Group’s sterling-denominated business, the BBC does not consider this to be significant for the BBC Group, but does, however, generally enter
into forward currency contracts to manage, or hedge, this currency risk, which allows the BBC Group to settle transactions at known exchange
rates, reducing uncertainty.
The overall income or expenditure to be recognised in relation to contracts denominated in foreign currency (and the related hedges) is therefore
fixed; however, where these contracts span financial years, the recognition of the fair value of the forward currency contracts results in timing gains/losses in each financial year. These timing gains/losses are therefore a result of market conditions and not variances in underlying contract value.
As a result of this certainty of cash flows the BBC Group has mitigated its underlying sensitivity to currency fluctuations and therefore has notpresented sensitivity analysis as any potential variation is insignificant.
At 31 March 2017, the BBC Group had entered into a net commitment to sell foreign currencies amounting to £224.8 million (2016: £322.1 million)
that mature in the period through to 2021 in order to fix the sterling cost of commitments through this period (mainly euros and US dollars). These
forward foreign exchange contracts mean the BBC Group had no significant currency exposure.

1 See Glossary for further details

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G. Other continued
Interest rate risk
The Group’s main exposure to interest rate fluctuations arises on external borrowings. BBC Commercial Holding’s 2013 private placement included
a tranche of fixed rate sterling debt alongside a tranche of fixed rate US dollar debt, with the latter swapped to fixed rate sterling throughout theperiod of the instrument. Since March 2003, the Group has been borrowing under its revolving credit facilities at floating rates of interest and thenusing interest rate swaps, caps and collars to manage the Group’s exposure to interest rate fluctuations and provide greater certainty of cash flows.
Interest rate swaps, caps and collars are taken out based on projected borrowing requirements, therefore differences will occur between thenotional amount of the swaps, caps and collars and the actual borrowing requirements. The effect of taking out the interest rate swaps, caps andcollars is that in the longer term the Group has no significant underlying sensitivity to interest rate fluctuations and hence no sensitivity analysis has
been presented.
Sterling fixed rate borrowings are achieved by entering into interest rate swap transactions; all outstanding swaps mature by the end of June 2020.
In total, £173.2 million (2016: 240.3 million) of swaps were entered into. The coverage is £28.0 million lower (2016: £8.4 million higher) than thecurrent level of bank loans of £201.2 million (2016: £231.9 million).
Fair value movements in respect of interest rate swaps and interest rate options are recorded through the income statement within financing
income/financing costs as hedge accounting is not applied.
Liquidity risk
Liquidity risk is the risk that the BBC Group will not be able to meet its financial obligations as they fall due. The BBC is subject to ceilings on
its borrowings set by the Secretary of State in accordance with the Agreement between the BBC and DCMS (see note F1). In order to comply
with these ceilings, together with the terms of any individual debt instruments, the BBC’s Group Treasury function manages the BBC Group’s
borrowings by regularly monitoring BBC Group cash flow forecasts. The BBC holds its surplus liquidity in term deposit accounts with highly
rated financial institutions.
G4.2 Fair value of financial instruments
The following table shows the fair value of the BBC Group’s financial instruments, in categories according to how the financial instrument ismeasured. It also shows the maturity profile for each category of financial asset and liability.
Amounts duein less than
one year£m

Amounts due
between two andfive years£mAmounts due
after more than
five years
£m

Total
£m

0.1
6.5

0.1
31.2

–
459.5

0.2
497.2

673.8
256.3

–
–

2.8
–

676.6
256.3

–
–

–
–

230.2
181.4

230.2
181.4

Financial liabilities at fair value
Derivative financial instruments:
Derivatives that are designated in hedge relationships
Derivatives through the income statement
Trade and other payables(21.5)(12.5)
(1.4)

(5.0)
(3.7)
(0.6)

–
(525.2)(8.5)(26.5)(541.4)(10.5)

Financial liabilities measured at amortised cost
Bank loans, overdrafts and loan notes
Trade and other payables
Obligations under finance leases–(369.4)(61.8)(201.2)–(273.8)–(855.0)(201.2)(369.4)(1,190.6)

2017 – Fair value
Financial assets at fair value
Derivative financial instruments:
Derivatives that are designated in hedge relationships
Derivatives through the income statement
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Available for sale financial assets
Other investments
Investment properties

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G. Other continued
Amounts duein less than
one year£m

Amounts due
between two andfive years£mAmounts due
after more than
five years
£m

Total
£m

0.7
3.2

0.1
10.0

–
–

0.8
13.2

626.9
334.4

–
–

2.5
–

629.4
334.4

–
–

–
–

158.9
167.8

158.9
167.8

Financial liabilities at fair value
Derivative financial instruments:
Derivatives that are designated in hedge relationships
Derivatives through the income statement
Trade and other payables(12.0)
(7.3)
(2.0)

(5.0)
(7.8)
(0.6)

–
–
–

(17.0)(15.1)(2.6)

Financial liabilities measured at amortised cost
Bank loans, overdrafts and loan notes
Trade and other payables
Obligations under finance leases(54.0)(472.1)(62.3)(177.9)–(273.5)––(924.1)(231.9)(472.1)(1,259.9)2016 – Fair value (*Restated)
Financial assets at fair value
Derivative financial instruments:
Derivatives that are designated in hedge relationships
Derivatives through the income statement
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Available for sale financial assets
Other investments
Investment properties* Full details of the above restatement can be found within note G1

The fair value and carrying value of financial instruments was the same with the exception of finance leases. At 31 March 2017, the fair value of theGroup’s obligations under finance leases was £500.6 million higher than their carrying value (2016 restated: £549.3 million higher). The fair value
at 31 March 2017 was determined by recalculating the finance lease liability using the current market interest rates, adjusted for appropriate risk
premium. The movement in the interest rates between the inception of each finance lease (used to generate the finance lease models) and
31 March 2017 creates a difference between the carrying value and the fair value.
During 2016/17 the Group entered into a new financing arrangement with regards to New Broadcasting House. This has resulted in a derivative
financial asset of £459.4 million and a derivative financial liability of £525.2 million being recognised as at 31 March 2017.
G4.3 Fair value hierarchy
When calculating the fair value of the BBC Group’s financial instruments (subsequent to the initial recognition), the technique used in eachcalculation has to be allocated to the relevant level of hierarchy in the table below. This disclosure helps to show the level of judgement that the
BBC Group has used in calculating fair values, subsequent to the initial recognition.
Categorisation into the following headings is based on the inputs used for the valuation technique as opposed to the technique itself:–– level 1 fair value measurements are those derived from quoted market prices (unadjusted) in active markets (where transactions occur on afrequent basis and in sufficient volumes for the pricing information to be available on an ongoing basis). The prices are therefore available to thegeneral public for identical instruments and occur on a regular basis, thus ensuring they are continually up to date;–– level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Instruments that would typically fall into this category include thosewhere quoted prices are available for similar, but not identical instruments and instruments where a quoted price is available, but in a non-active
market, i.e. the price may be out of date and therefore require some limited adjustments; and–– level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs). This can include methods such as projected future cash flows and occur where there is little,
or no, market activity.

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G. Other continued

2017
Greater than one year
Forward foreign currency contracts
Cash flow swaps
Interest rate swaps
Embedded derivatives
Investment properties
Other investments
Other payables
Finance leases
Less than one year
Forward foreign currency contracts
Other payables
Finance leases

Fair value
hierarchy level

Assets£m

Liabilities
£m

1
2
2
2
3
3
3
3

4.6
459.4
26.8
–
181.4
230.2
–
–

(6.9)
(525.2)
–
(1.8)
–
–
(5.8)
(943.9)902.4(1,483.6)

6.6––(34.0)(1.4)(46.3)

6.6(81.7)

1
3
3

Fair value
hierarchy level

Assets£m

Restated
Liabilities
£m

1
2
2
3
3
3
3

2.4
7.7
–
167.8
158.9
–
–

(10.5)
(0.1)
(2.2)
–
–
(0.6)
(939.4)336.8(952.8)

3.9
–
–
–
–

(18.9)
–
(0.4)
(2.0)
(39.9)

3.9(61.2)*

2016
Greater than one year
Forward foreign currency contracts
Interest rate swaps, caps and collars
Embedded derivatives
Investment properties
Other investments
Other payables
Finance leases
Less than one year
Forward foreign currency contracts
Interest rate swaps, caps and collars
Embedded derivatives
Other payables
Finance leases

1
2
2
3
3

* Full details of the above restatement can be found within note G1

Level 3 financial assets recorded at fair value include £222.3 million (2016: £151.4 million) for the asset held in Daunus Limited, the entity that
redeveloped Broadcasting House. The BBC holds a 20% (2016: 10%) share of the issued share capital (preferential in nature) of that company, due
to mature in 2033 at which point in time the BBC receives certain rights in respect of Broadcasting House. The BBC’s shares in Daunus Limited
entitles it to the first £90 million (plus RPI from the start of the lease) of any proceeds on termination of the lease. The fair value estimate has
been based on the £125 million, inflated by RPI, and discounted back to present day. The estimated interest rate used (linked to RPI) was 1.0%
(2016: 1.0%) and the rate used to discount the future cash flows was 1.5% (2016: 2.1%).
The fair value of the investment in Daunus is not included on the balance sheet as it is equity accounted for. See note E3.
Level 3 financial liabilities recorded at fair value and included within other payables relate to written put options1 issued to non-controlling interestsin the Group’s subsidiaries. The fair value of such instruments is calculated based on the strike price1 of the options and management’s best estimateof the date at which options may be exercised1. Embedded derivatives were also assessed as a level 3 financial liability.
As the BBC’s main finance leases include provisions to provide for the BBC’s share of any appreciation in market value these have been classified aslevel 3 financial liabilities.
No transfers between categorisations have occurred during the period.

1 See Glossary for further details

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G. Other continued
The change in fair value of level 3 financial instruments is reconciled as follows:
2017£mOpening balance
Settlements and payments
Unwinding of discount recorded within finance expense
Additions
Change in fair value recorded in operating costs
Change in fair value recorded within reserves
Change in fair value

2016
£m

Financial assets

Financial liabilities

Financial assets

Financial liabilities

326.7
–
–
14.0
–
–
70.9

(985.8)67.2(50.1)(3.4)
2.3–(29.4)

211.7
–
–
118.7
0.1
2.9
(6.7)

(982.9)66.9(49.8)
(1.6)
(3.3)
–
(15.0)

411.6(999.2)326.7(985.7)

Additions relate to the BBC’s properties reclassified as investment properties during the year. See note D2 for further details.
The BBC Group applies cash flow hedge accounting for trades taken out by certain of its commercial subsidiaries in respect of their forecasted foreign
currency transactions1. Hedge accounting is only applied where appropriate designation and documentation exists. Net losses (before tax and noncontrolling interests) recognised in the hedging reserve on forward foreign exchange contracts in cash flow hedge relationships at 31 March 2017 were £10.1
million (2016: £12.5 million net gains). These amounts will be recognised in the income statement in the period when the hedged forecast transaction affects
the income statement, at various dates over the next three years.

The following table details the BBC Group’s remaining contractual maturity for its non-derivative financial liabilities (including obligations underfinance leases) but excludes trade and other payables that were settled in the normal course of business and are due within one year. The table has
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the BBC Group can be required to
pay:

2017
Fixed interest rate instruments
Not later than one year
Later than one year but not later than five years
Later than five years
2016 (*Restated)
Variable interest rate instruments
Not later than one year
Fixed interest rate instruments
Not later than one year
Later than one year but not later than five years
Later than five years

Cash flow£mInterest£mPrincipal
£m

67.2
493.7
855.0

52.7
192.2
279.8

14.5
301.5
575.2

1,415.9

524.7

891.2

54.0

–

54.0

56.4
470.4
933.2

53.4
197.5
320.6

3.0
272.9
612.6

1,514.0

571.5

942.5

* Full details of the above restatement can be found within note G1

1 See Glossary for further details

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G. Other continued
G5 Interests in joint ventures, associates and subsidiaries
The BBC Group holds (directly and indirectly) interests in the following joint ventures, associates and subsidiaries listed below which, except whereotherwise stated, are incorporated in Great Britain and registered in England and Wales.
G5.1 Significant joint ventures and their activities
The BBC Group has an interest in the following joint ventures which are all incorporated in Great Britain and registered in England and Wales,
unless otherwise:

Name of entity

Place of incorporation and principal place of business

Balance sheet dateHolding of issued
ordinary shares%

Commercial joint ventures:
UKTV Media Holdings Limited
Daunus Limited*
Micro:bit Educational Foundation**Freesat (UK) Limited

England and Wales
England and Wales
England and Wales
England and Wales

31 December
30 November
30 September
31 March

50%
20%
20%
50%

Activity

TV channel operator
Property
Educational support
Broadcasting* The BBC’s interest in Daunus Limited increased from 10% to 20% following the acquisition of an additional shareholding during 2016/17. As a result the voting rights held by the BBC total 50%. However,
it is noted that other shareholders do retain certain veto rights** The BBC’s interest in the Micro:bit educational foundation has been established by way of a non-monetary contribution during 2016/17

G5.2 Significant associates and their activities
Name of entity

Place of incorporation and principal place of business

Balance sheet dateHolding of issued
ordinary shares %Activity

YouView Limited
New Video Channel America LLC*
3sixtymedia Limited**

England and Wales
United States
England and Wales

31 March
31 March
31 December

14.2%
50.1%
10.0%

Multiplatform broadcasting
TV channel operator
Production* Whilst BBC Worldwide Limited retain a significant influence over New Video Channel America LLC and has the rights to variable returns, it is not deemed to have control and is therefore recognised as
an associate undertaking** The BBC holds 10% of the total share capital of 3sixtymedia Limited but 20% of the Class A ordinary shares, which gives it significant influence

The most recent financial statements of the above joint ventures have been used for the purposes of equity accounting. Where the balance sheet
date is different to 31 March then management accounts have been used in order to account for the intervening period.
G5.3 Subsidiary undertakings1
Name of entity

Directly owned commercial subsidiaries: (all 100% owned unless stated):
BBC Commercial Holdings Limited
BBC Property Limited
BBC Property Investment Limited
BBC Property Development Limited
Centre House Productions Limited
BBC News Limited
BBC Free to View (Satellite) Limited
BBC Free To View Limited
Media Applications Technologies Limited
BBC Subscription Television Limited
BBC Investments Limited
BBC Digital Programme Services Limited

Country of incorporation or establishment

Broadcast Centre, 201 Wood Lane, London, UK

World Service Trading Limited
BBC World Service Holdings Limited

Broadcasting House, Portland Place, London, UK

DSHS Limited

The Lighthouse, 201 Wood Lane, London, UK

1 See Glossary for further details

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G. Other continued
Name of entity

Country of incorporation or establishment

Indirectly owned commercial subsidiaries: (all 100% owned unless stated):
BBC Worldwide Limited
BBC Worldwide Investments Limited
BBC Earth MD (WWD) Limited
BBC Earth Productions (Africa) Limited
BBC Earth Productions (Life) Limited
BBC Earth Productions Limited
BBC Worldwide Productions (UK) Limited
BBC Magazines Rights Limited
BBC Magazine Holdings Limited
beeb Ventures Limited
European Channel Management Limited
BBC Worldwide Corporate Services Limited
Beeb Rights Limited
European Channel Broadcasting Limited
2 entertain Video Limited
Demon Music Group Limited
DVDS2 Limited
BBC Earth Productions (Giant Films) Limited
Earth Film Productions Limited
2 Entertain Management Limited
BBC Video Limited
MCI Music Publishing Limited
Crimson Productions Limited
F-Beat Records Limited
Demon Records Limited
Bedder 6 Limited
BBC Worldwide Music Limited
BBC Worldwide Productions (Africa) (Pty) Limited
2 entertain Limited
DVDS3 Limited
Tonto Films and Television Limited
UK Programme Distribution Limited
Worldwide Channel Investments Limited

Television Centre, 101 Wood Lane, London, UK

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G. Other continued
Name of entity

Country of incorporation or establishment

Indirectly owned commercial subsidiaries: (all 100% owned unless stated):
BBC Global News Holdings Limited
BBC World Service Television Limited
BBC Global News Limited
BBC World Distribution Limited
bbc.com Limited

Broadcasting House, Portland Place, London, UK

BBC Ventures Group Limited
BBC Grafton House Productions Limited
BBC Children's Productions Limited
BBC Comedy Productions Limited
BBC Store Limited

Broadcast Centre, 201 Wood Lane, London, UK

BBC Studioworks Limited

Neptune House, BBC Elstree Centre, Clarendon Road, Borehamwood,
Hertfordshire, UK

BBC Worldwide (Africa) (Pty) Limited

Office 003H3 Ground Floor, 10 Melrose Boulevard, Gauteng, South Africa

BBC Worldwide Australia Pty Limited
BBC Worldwide Australia Publishing Pty Limited

Level 1, 35-51 Mitchell Street, McMahons Point, NSW, Australia

BBC Worldwide Intermediadora de Programadora Estangeira Ltd

Rua Ferreira de Araujo 741, Andar 1 , São Paulo, Brazil

Nine Productions Incorporated

2200 – 1055 West Hastings St., Vancouver, Canada

Worldwide Channel Investments (Ontario) Ltd
2004370 Ontario Incorporated

Toronto Dominion Bank Tower, Toronto, Canada

Worldwide Knowledge (Beijing) Business Consulting Company Ltd

Unit 7 Floor 9, West Tower, 8 Xinyuan South Road, Chaoyang Beijing,
China

BBC Worldwide Productions Nordics ApS

Mosedalvej 14 , 2500 Valby, Denmark

Erste Weltweit Medien GmbH

Kaiser-Wilhelm-Ring 17-21, 50672 Köln, Germany

BBC Worldwide Media Private Ltd

401 Construction House ‘A’, 24th Road, Khar (W), Mumbai, India

BBC Worldwide Channels Mexico S.A de C.V
BBC Worldwide Mexico S.A de C.V

Avenida Paseo de la Reforma 115, Piso 4 Lomas de Chapultepec,
Distrito Federal 11000 Mexico

BBC Worldwide Polska

Pl. Bankowy 1, 00-139 Warszawa, Poland

BBC Worldwide Channels (Singapore) Pte. Ltd

3 Anson Road, #17-03 Springleaf Tower, Singapore

bbc.com US, Incorporated

Corporation Trust Centre, 1209 Orange Street, New Castle, Delaware USA

BBC Worldwide Americas (401) k Plan Trustees

1120 Avenue of the Americas, 5th Floor, New York, USA

Worldwide Americas Investments Incorporated

Corporation Trust Centre, 1209 Orange Street, New Castle, Delaware USA

Global Hybrid Productions LLC
Sun Never Sets Productions LLC
Bad Wolf Productions LLC
Adjacent Productions, LLC
BBC Worldwide Reality Productions LLC
DWTS Productions LLC
Worldwide Competition Productions LLC

10351 Santa Monica Boulevard, Los Angeles, USA

BBC World Japan Limited

Tokyo Club Bldg. 3-2-6, Kasumigaseki, Tokyo, JapanBBC Global News India Private Limited

301 D-2, Southern Park, District Centre, Saket, New Delhi, India

BBC Global News US LLC

Corporation Service Company, 80 State Street, Albany, NY USA

BBC Worldwide Americas Incorporated

1121 Avenue of the Americas, 5th Floor, New York, USA

BBC Worldwide Australia Holdings Pty Limited

Level 1, 35-51 Mitchell Street, McMahons Point, NSW, Australia

BBC Worldwide Canada Limited

409 King Street West, 5th Floor, Toronto, Canada

BBC Worldwide France Sarl

18-20 Quai du Point du Jour, 92100 Boulogne-Billancourt, France

BBC Worldwide Germany GmbH

Kaiser-Wilhelm-Ring 17-21, 50672 Köln, Germany

BBC Worldwide Holdings B.V

Prins Bernhardplein 200, 1097 JB Amsterdam, Netherlands

BBC Worldwide Japan Limited

Tokyo Club Bldg. 0F, 3-2-6 Kasumigaseki, Tokyo, Japan

Rapid Blue (70% Ownership)

263 Oak Avenue, Ferndale, Randburg, South Africa

BBC Holdings M LLC
LLC BBC R News

115054 Moscow, Bakhrushina street no. 32/1, Russia

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G. Other continued
G6 Reserves
G6.1 Operating reserve
At 31 March 2017, the cumulative goodwill written off to reserves on acquisitions prior to 1999 amounted to £6.8 million. This amount is unchanged
from the prior year and remained in equity upon transition to IFRS as permitted by IFRS 1 First time adoption of IFRS.
G6.2 Hedging reserve
The hedging reserve is used to record the effective portion of cumulative net changes in the fair value of cash flow hedging instruments, related tohedged transactions that have not yet occurred (net of tax). During the current year, losses of £28.1 million were removed from the hedging
reserve and debited to revenue in the income statement (2016: £0.7 million).
G6.3 Translation reserve
The translation reserve comprises all foreign exchange differences arising since the transition to IFRS, from the translation of the financial statementsof foreign operations, as well as from the translation of liabilities that hedge the Group’s net investment in foreign subsidiaries.
G6.4 Other reserve
Other reserve includes revaluation of available for sale financial assets of £nil (2016: £2.9 million) and the fair value of the put option liabilities arisingon acquisition of new subsidiaries. There has been no movement in the fair value uplift of the available-for-sale asset, £2.9 million, and an additional
put option liability of £3.4 million has been recognised during the year in relation to the acquisition of Baby Cow.
G7 Post-balance sheet events
On 1 April 2017 BBC Studios Limited was launched as a wholly-owned commercial subsidiary of the BBC Group, with special provisions in its
framework documents and those of the wider group which set out its role in the BBC’s public mission. BBC Studios will operate in the market,
producing programmes for the BBC and other broadcasters in the UK and internationally
G8 Related party transactions
The following table represents transactions with related parties excluding key management personnel.
Associates, joint venturesand other investments

Rendering of services
Receiving of services
Pension contributions
Dividends received

BBC Pension Scheme

2017
£m

2016
£m

2017
£m

2016
£m

79.4
(95.3)–
24.8

76.2(76.4)
–
26.6

–
–
334.3
–

–
–
219.8
–

8.9

26.4

334.3

219.8

Amounts owed by related parties

BBC Pension Scheme
Associates, joint ventures and other investments

Amounts owed to related parties

2017
£m

2016
£m

2017
£m

2016
£m

–
36.2

–
31.3

(0.8)
(14.5)(0.7)(10.7)

36.2

31.3(15.3)(11.4)In all transactions, the terms of trade were negotiated on an arm’s length basis.
The BBC Group also enters into various transactions with government and local authorities on an arm’s length basis. These transactions include
council tax agreements and corporation tax payments.
Related-party transactions with key management personnel are disclosed in note C6.

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G. Other continued
G9 Segment reporting
Geographical location of income and non-current assets

2017

PSB Group£m

BBC Worldwide
£m

Other
commercials
£m

Group
adjustments
£m

Group
£m

Non-current assets excluding deferred tax andfinancial instruments:
UK
Rest of world

1,148.6
48.9

332.3
244.3

8.5
0.3

(33.3)–

1,456.1
293.5

1,197.5

576.6

8.8

(33.3)

1,749.6

117.7

203.4

0.1

5.2

326.4

4,018.1
15.4

206.8
669.5

26.0
110.4

(92.2)–

4,158.7795.3

4,033.5

876.3

136.4

(92.2)

4,954.0

PSB Group£m

BBC Worldwide
£m

Other
commercials
£m

Group
adjustments
£m

Group
£m

1,191.5
41.4

353.4
201.1

4.3
0.3

(35.8)–

1,513.4
242.8

1,232.9

554.5

4.6

(35.8)

1,756.2

118.4

192.0

5.4

(34.8)

281.0

3,905.8
19.3

200.5
654.9

30.7
101.4

(85.6)–

4,051.4775.6

3,925.1

855.4

132.1

(85.6)

4,827.0

Additions included in fixed assets and investments
External income:UK
Rest of world2016

Non-current assets excluding deferred tax andfinancial instruments:
UK
Rest of world
Additions included in fixed assets and investments
External income:UK
Rest of world

G10 Contingent liabilities
The Group has a number of contingent liabilities arising from litigation and from the rights of customers and suppliers to undertake routine audits.
These arise from trading activities undertaken in the ordinary course of business. The Group makes specific provision for the best estimate of any
amounts which might be awarded as a result of these. A provision is only made to the extent that the directors consider it probable that there will
be an outflow of economic benefits and the amount can be reliably estimated.

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H. Basis of preparation of the financial statements and otheraccounting policies
The BBC is incorporated in the United Kingdom under the Charter.

Going concern
The financial statements are prepared on a going concern basis. The
directors believe this to be appropriate for the reasons set out below.

Statement of accounting policies
The BBC Group is required to select and apply accounting policies foreach type of transaction entered into throughout the year and in thepreceding year. An accounting policy will specify the timing forrecognising and derecognising assets, liabilities, income and expenditure,
how those items will subsequently be measured and where they arepresented in the statement of total income and expenditure, balance
sheet and statement of cash flows.

The directors have prepared and reviewed cash flow forecasts for the
24-month period to 31 March 2019, a period in excess of a year fromthe date of approval of these financial statements. The key factors inthese forecasts are the continuity of the Charter and licence fee, theBBC Pension Scheme deficit and the resultant deficit recovery payments
agreed with the pension scheme Trustees and the realisation of planned
cost savings under the ‘Strategic Plan’ programme.

For ease of reference, accounting policies are grouped below into thesection headings used above for the notes to the accounts.
Use of estimates and judgements
The preparation of financial statements requires the use of certain
critical accounting estimates that affect the reported performance andposition of the Group or areas where assumptions or estimates are
significant to the consolidated financial statements.
It also requires management to exercise judgement in applying the BBCGroup’s accounting policies. These areas involve a higher degree ofjudgement or complexity,
The areas involving a higher degree of judgement or complexity are set
out below and in more detail in the related notes:–– Revenue recognition (note A1)–– Provisions and accruals (note F8)–– Property, Plant and Equipment (note D1)–– Pension scheme and actuarial assumptions (note C7)–– Service licences (note B3)
Basis of preparation
These consolidated financial statements for the BBC Group have been
prepared in accordance with IFRS as adopted by the EU.
The financial statements are principally prepared on the historical costbasis. Areas where other bases are applied are identified in theaccounting policies within the relevant section of the notes.
Where items are sufficiently significant by virtue of their size or nature,they are disclosed separately in the financial statements in order to
aid the reader’s understanding of the BBC Group’s financial positionand performance.
Adoption of new and revised accounting standards
The following new and revised EU endorsed accounting standards havebeen adopted for the first time. They have been applied since 1 April
2016 and have not had a significant impact on the results or financial
position of the Group–– Annual Improvements to IFRS 2012 – 2014 Cycle–– IAS 1 Presentation of Financial Statements–– IAS 11 Joint Arrangements–– IAS 2 Separate Financial Statements–– IAS 38 Intangible Assets–– IAS 16 Property, Plant and Equipment

Under the agreement between the BBC and DCMS effective from
1 January 2007, BBC PSB consolidated net borrowings must not at any
time exceed £200 million. The net borrowing position in the newCharter which came into force on 1 January 2017, with effect from
3 April 2017, must not exceed £1,050 million of which £850 million is
specifically to accommodate previously ‘grandfathered’ finance leases
under the previous Charter
The BBC Group has external funding available, including a £200 million
revolving credit facility which expires in July 2020, which is currently
unutilised. PSB net funds at 31 March 2017 were £187 million,
this equates to a headroom of £387 million against the externalfunding available.
The BBC Group also has a £380 million multicurrency revolving
credit facility available to the BBC commercial operations, with funding
split between a US$259 million US Private Placement (fixed throughforeign exchange swap transactions at £171 million) until June 2020
and a £210 million facility until July 2019. As at the year end theGroup had drawn down £201.2 million of the facilities available(2016: £231.9 million).
The directors of the BBC Group have reviewed these forecasts andtaking all above factors into consideration, together with the sensitivities
and mitigating factors in the context of available funds, they expect the
BBC Group to be able to meet its debts as they fall due for theforeseeable future.
As a result, the directors are satisfied that the going concern basis isappropriate for the preparation of these financial statements.
Basis of consolidation
The BBC Group accounts include the results of the BBC and allbusinesses controlled by the BBC (subsidiaries1) together with the BBC’s
share of the results of businesses over which the BBC has significant
influence but not control (associates1) and those which the BBC jointly
controls (joint ventures1).
The BBC Group accounts for its interests in associates and joint
ventures using the equity method. The equity method means that the
BBC presents its interest in the associates or joint ventures as a single
line item in the balance sheet, measured at the cost of the investment
plus the share of the net result, less dividends received. The equity
accounted result for the year is presented as a single line item in thestatement of income and expenditure.

1 See Glossary for further details

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H. Basis of preparation of the financial statements and otheraccounting policies continued
Changes in the BBC Group’s interests in subsidiaries that do not resultin a loss of control are accounted for as equity transactions, being
movements between reserves attributable to the BBC and noncontrolling interests. A non-controlling interest is the interest in a
subsidiary that is not owned, directly or indirectly, by the BBC. The
non-controlling interest reflects the amount of the net result for theyear and the net assets/(liabilities) which are not attributable to theBBC. The carrying amounts of non-controlling interests are adjusted
to reflect any changes in their, and the BBC Group’s, relative interestsin the subsidiaries. Any difference between the amount by which
the non-controlling interests are adjusted and the fair value of theconsideration paid or received is recognised directly in equity andattributed to the BBC.
When the BBC Group loses control of a subsidiary, the profit or loss on
disposal is calculated as the difference between (i) the aggregate of thefair value of the consideration received and the fair value of any retainedinterest and (ii) the previous carrying amount of the net assets of thesubsidiary (including attributable goodwill) and any non-controllinginterests. Amounts previously recognised in other comprehensive
income in relation to the subsidiary are reclassified to the income
statement or transferred directly to retained earnings as appropriate.
The fair value of any interest retained in the former subsidiary at thedate when control is lost is regarded as the cost on initial recognitionof an investment in an associate or joint venture.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition
method. The cost of an acquisition is measured at the aggregate of thefair values, at the date of exchange, of assets given by the BBC Group in
exchange for control of the acquiree. The acquiree’s identifiable assets,
liabilities and contingent liabilities that meet the conditions forrecognition under IFRS 3 are recognised at their fair value at theacquisition date. Subsequent adjustments to the fair values of net assets
acquired are made within 12 months of the acquisition date where
original fair values were determined provisionally. These adjustments areaccounted for from the date of acquisition. Transaction costs that the
BBC Group incurs in connection with a business combination, such aslegal fees, due diligence fees and other professional and consulting fees,are expensed as incurred. On acquisition, the BBC Group recognises
any non-controlling interest either at fair value or at the non-controllinginterest’s proportionate share of net assets.
When control is obtained in successive share purchases (a ‘step
acquisition’), it is accounted for using the acquisition method at theacquisition date. The previously held interest is remeasured to fairvalue at the acquisition date and a gain or loss is recognised in theincome statement.
Foreign currency transactions1
Transactions in foreign currencies are translated into sterling at the rates
of exchange ruling at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies at thebalance sheet date are translated into sterling at the rate of exchangeruling at that date. Foreign currency gains or losses arising from thetranslation of assets and liabilities at these rates of exchange, together
with exchange differences arising from transactions settled during theyear, are included in the income statement within operating costs.
Non-monetary assets and liabilities measured at historical cost
are translated into sterling at the rate of exchange on the dateof initial recognition.
1 See Glossary for further details

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Financial statements of foreign operations
The assets and liabilities of foreign operations are translated into sterlingat the rate of exchange ruling at the balance sheet date. The income andexpenses of foreign operations are translated into sterling at averagemonthly rates of exchange ruling during the financial period, which isa good approximation for the actual rate. Exchange differences arisingon translation are recognised directly in the translation reserve.
On disposal of an investment in a foreign operation the associatedtranslation reserve balance is released to the income statement.
Accounting policies relevant to section A
Licence fee income
Income from television licences is treated as an amount due fromthe relevant Government department, principally the DCMS. This
represents the value of licences issued in the year, less a deduction
for refunds and cancellations.
Where an element of the licence fee income has been ring-fenced
by the Government for a specific purpose, that income is recognised
when it is due, except if it becomes virtually certain that the BBC’s
expenditure on the ring-fenced purposes will be less than the ringfenced income already received. In this case, the relevant amount oflicence fee income, as agreed with the Government, will be repayable
and recognised as such in the year the obligation to repay arises.
Other income
Other income arises from activities such as the sale of goods, provisionof services and granting of licences. Revenue is measured after
deductions for value added tax, any other sales taxes, trade discounts
and sales between BBC Group companies.
Sale of goods
Revenue is recognised once the significant risks and rewards ofownership of the goods have been passed to the customer and the BBC
has released all managerial involvement surrounding the goods. Sales ofgoods are stated after deduction of the sales value of actual andestimated returned goods. Examples of goods sold include magazines,
books and DVDs.
Sale of services
Revenue is recognised at the point the service has been delivered andthe receipt of the income is probable. Where the delivery is over a
period of time, the revenue is recognised on a straight line basis.
Examples of services sold include advertising and commercial licences
for specific rights associated with TV programmes.
Royalties
Royalty income is recognised on receipt or on an accruals basis, inaccordance with the detail of the relevant agreements, where sufficient
information is available.
Rental income
Rental income is recognised on a straight line basis over the term of
the lease.
Grants from Government departments
Grants are recognised as income in the financial year that they relate to.
Grants from other public bodies
Grants from other public bodies are recognised as income consistently
with the related costs, provided that there is reasonable assurance thatthe BBC will comply with any conditions attached to the grant and thatthe grant will be received.

F I N A N C I A L S TAT E M E N T S

H. Basis of preparation of the financial statements and otheraccounting policies continued
Construction contracts
When the outcome of a construction contract can be estimatedreliably, revenue and costs are recognised by reference to the stageof completion of the contract activity at the balance sheet date. This
is normally measured by the proportion that contract costs incurred
for work performed to date bear to the estimated total contract
costs, except where this would not be representative of the stageof completion. When it is probable that total contract costs will
exceed total contract revenue, the expected loss is recognised
as an expense immediately.
Use of estimates and judgements – Commercial income
Revenue recognition in the BBC’s commercial operations is complex,
with a number of different revenue streams including sale of content toglobal broadcasters, subscription income and revenue from the sale ofphysical and digital products.
The complexity of individual contractual terms may require the Groupto make judgements in assessing when the triggers for revenue
recognition have been met, particularly whether the Group has
sufficiently fulfilled its obligations under the contract to allow revenue
to be recognised.
Accounting policies relevant to section B
Completed originated programmes1, programmes in production andprepayments to acquire future programme-related rights
Completed originated programmes and programmes in production areheld at cost.
Cost includes all direct costs, production overheads and a proportionof other attributable overheads. The proportion of programmes
necessarily taking a substantial period of time to produce is small andas such no borrowing costs are included in cost.
Where, exceptionally, a programme is unable to be broadcast, as soon
as it is virtually certain that this is the case, the full value of the
programme will be written off to the income statement.
Programme development costs are expensed to the income statement
until such time as there is a strong indication that the development work
will result in a commissioned programme1, when any further costs arerecognised as programme-related assets.
Originated programmes that are still in production at the balance
sheet date are recognised as programmes in production, except that
prepayments to acquire future programme-related rights are shown
separately where the BBC has made payments to independent
producers, or the holders of certain rights (for example, rights tobroadcast sporting events), to receive the programme on completion.
Rights to broadcast acquired programmes and films
The rights to broadcast acquired programmes and films are recognised
at cost. The costs of acquired programmes and films are written off on
first transmission except to the extent that the number of further
showings are contractually agreed, when they are written off according
to the expected transmission profile. Assets and liabilities relating toacquired programmes are recognised at the point of payment orcommencement of the licence period, whichever is earlier. Agreements
for the future purchase of rights whose licence period has notcommenced and where there has been no payment by the balance
sheet date are disclosed as purchase commitments.

Where the BBC has invested in independent productions, in addition
to broadcasting rights, the BBC may obtain rights to future royalties
from the sale of rights associated with the production. These residualinterests are recognised initially at cost subject to amortisation
as royalties are received and impaired if anticipated royalties do
not materialise.
Other inventories
Raw materials and other physical inventory, including finished goods,
are stated at the lower of cost and net realisable value.
Works in progress comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred inbringing the assets to their present location and condition. Net realisablevalue represents the estimated selling price less all estimated costs ofcompletion and costs to be incurred in selling and distribution.
Accounting policies relevant to section C
Other employee benefits
Other short and long-term employee benefits, including holiday pay
and long service leave, are recognised as an expense over the period
in which they accrue.
Termination benefits
Termination benefits are expensed at the earlier of when the Group
can no longer withdraw the offer of those benefits and when theGroup recognises costs for a restructure.
Defined contribution plans
The amounts charged as expenditure for the defined contributionplans represent the contributions payable by the BBC for theaccounting period.
Defined benefit plans
The defined benefit plans, of which the majority of staff are members,
provide benefits based on pensionable pay. The assets of the BBC’s
Pension Scheme are held separately from those of the BBC Group.
Pension scheme assets are measured at fair value. Pension scheme
liabilities are measured using the projected unit credit method. The
present value of scheme liabilities is calculated by discounting estimatedfuture cash outflows at the current rate of return on a high-quality
corporate bond of equivalent term and currency to the liabilities.
Remeasurement comprising gains and losses and the return on scheme
assets (excluding interest) are recognised immediately in the balance
sheet with a charge or credit to the statement of comprehensive incomein the period in which they occur. Remeasurement recorded in thestatement of comprehensive income is not recycled. When the benefitsof a plan are changed the resulting change in benefit that relates to past
service is recognised immediately in the income statement. Net interestis calculated by applying a discount rate to the net defined benefit
liability or asset. Defined benefit costs are split into three categories:–– current service cost, past-service cost and gains and losses on
settlements and curtailments;–– net interest expense or income; and–– remeasurement.

1 See Glossary for further details

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H. Basis of preparation of the financial statements and otheraccounting policies continued
The current service cost and past-service cost are included within
operating costs in the consolidated income statement. Curtailments
gains and losses are accounted for as past-service cost. Net interest
expense or income relating to the funded defined benefit pension plans
is included within ‘finance income’ or ‘finance costs’, as relevant, in the
consolidated income statement.
Administration costs directly related to the management of plan assets
are deducted from the return on plan assets, which are recorded asremeasurements in the statement of comprehensive income. Other
administrative scheme expenses associated with running the scheme
are recorded within operating expenses when incurred.
The retirement benefit obligation recognised in the consolidated balance
sheet represents the deficit or surplus in the Group’s defined benefit
schemes. Any surplus resulting from this calculation is limited to thepresent value of any economic benefits available in the form of refunds
from the schemes or reductions in future contributions to the schemes.
Use of estimates and judgement – post retirement benefits
The pension costs and obligations of the BBC Group’s defined benefit
schemes are calculated on the basis of a range of assumptions, including
the discount rate, inflation rate, salary growth and mortality. Differences
arising as a result of actual experience differing from the assumptions,or future changes in the assumptions will be reflected in subsequent
periods. A small change in assumptions can have a significant impact
on the valuation of the liabilities. Further analysis on the sensitivity ofpension assumptions is given in note C8.1.
Accounting policies relevant to section D
Owned assets
Other than as noted below, items of property, plant and equipment arestated at cost less accumulated depreciation and any accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisitionof the asset.
Leased assets
Assets held under finance leases are capitalised within property, plantand equipment and depreciation is provided as appropriate. On initialrecognition the asset is measured at the lower of its fair value and thepresent value of the minimum lease payments.
Depreciation
Depreciation is provided to write off the cost of each item of property,
plant and equipment, less its estimated residual value, on a straight line
basis over its estimated useful life. The major categories of property,
plant and equipment are depreciated as follows:
Land and buildings
Freehold land – not depreciatedFreehold buildings – 50 years
Freehold building improvements – 10 to 50 years
Leasehold buildings – shorter of 50 years or life of lease
Leasehold building improvements – shorter of 50 years or life of lease
Plant and machinery
Computer equipment – 3 to 5 years
Electrical and mechanical infrastructure – 10 to 25 years
Other – 3 to 10 years

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Furniture and fittings – 3 to 10 years
Depreciation methods, estimated useful lives and residual values arereviewed at each reporting date.
Use of estimates and judgements – capital projects
The BBC is completing a number of significant capital projects for whichamounts have been capitalised on the Group’s balance sheet.
The recoverability of these assets is dependent on the achievement ofproject completion and the assets being used in the manner intended
as part of the original business case.
Investment properties
Investment properties are initially recognised at cost and subsequently
carried at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is calculated using a straight line
method to allocate the depreciable amounts over the estimated useful
lives of the properties. The residual values, useful lives and depreciation
method of investment properties are reviewed, and adjusted as
appropriate, at each balance sheet date. The effects of any revision
are included in the profit and loss when the changes arise.
Lease payments
Payments made under operating leases are recognised in the income
statement on a straight line basis over the lease term.
Payments made under finance leases are apportioned between financing
costs and the reduction of the outstanding liability. The financing costs
are allocated to each period so as to produce a constant periodic rateof interest on the remaining balance of the liability.
Use of estimates and judgements – leases
The determination of whether an arrangement is, or contains, a lease, isbased on the substance of the arrangement and requires an assessmentof whether the fulfilment of the arrangement is dependent on the use ofa specific asset or assets and whether the arrangement conveys the rightto use the asset.
In assessing whether a lease is an operating lease or a finance lease,judgement needs to be exercised in determining whether or not
substantially all the risks and rewards of ownership of the leased asset
are held by the BBC Group. Given that finance leases are recognised asliabilities, and operating leases are not, this can have a significant effecton the reported financial position of the BBC. Another key judgement
is the determination of the commencement date of a lease.
When determining the accounting for a finance lease, the BBC
has assessed whether it has the right to use the leased asset at the
inception of the lease, or whether this right passes at a later date(‘the commencement date’).
Where a significant site is being redeveloped, occupation may occur
in distinct phases; consequently, the leased asset and liabilities arerecognised based on the proportion of the site occupied at eachcommencement date.
Non-current assets held for saleNon-current assets (and disposal groups comprising assets and liabilities)
are classified as held for sale if their carrying amount will be recovered
principally through sale rather than continuing use, they are available for
immediate sale and sale is highly probable.

F I N A N C I A L S TAT E M E N T S

H. Basis of preparation of the financial statements and otheraccounting policies continued
On initial classification as held for sale, non-current assets or disposalgroups are measured at the lower of their previous carrying amount andfair value less costs to sell. No amortisation or depreciation is charged
on non-current assets (including those in disposal groups) classified asheld for sale.

Amortisation methods, useful lives and residual values are reviewed
at each balance sheet date and adjusted if appropriate. This review has
resulted in a new amortisation profile for distribution rights whichamortises the original cost of investments over a three year period(previously a range from one to ten years) to match an overall revenue
profile updated for recent experience. This change in estimates results
in a charge of £67.9m

Investments in equity securities
Investments in equity securities held by the Group are classified as being
available for sale and are stated at fair value, with any resultant gain orloss being recognised in the statement of comprehensive income, except
for impairment losses. When these investments are derecognised thecumulative gain or loss previously recognised in the statement ofcomprehensive income is recognised in the income statement.

The useful lives and amortisation methods other classes of intangible
asset are as follows:

Accounting policies relevant to section E
Programme-related intangible assets
Programme-related intangible assets, which include programme rights1
and residual programme rights, are stated at cost, after writing off thecosts of programmes that are considered irrecoverable, lessaccumulated amortisation. The cost and accumulated amortisation ofprogramme-related intangible assets are reduced by programmes which
are fully written off.
Research and development1 expenditure – internally generated
intangible assets
Expenditure on research activities is written off in the income statement
when incurred.
Expenditure on development activities is included on the balance sheet
as an asset only if both of the following conditions are met:–– it is probable that the asset will generate future economic
benefits; and–– the development costs of the asset can be measured reliably.
The assets are measured at cost less accumulated amortisation and any
accumulated impairment losses.
For the PSB Group it is generally unlikely that future economic benefits
in the form of cash inflows will be received, and as a result, otherthan assets created for use by the business in delivering its public
purposes, development costs are only capitalised by the BBC Group’scommercial businesses.
Other intangible assets
Other intangible assets acquired separately by the BBC Group arestated at cost less accumulated amortisation and any accumulated
impairment losses. The identifiable intangible assets acquired as part ofa business combination are shown at fair value at the date of acquisition(in accordance with IFRS 3 Business Combinations) less accumulated
amortisation and any accumulated impairment losses.
Amortisation1
Amortisation is charged to the income statement on a systematic basis
over the estimated useful lives1 of intangible assets, from the date thatthey are available for use, unless such lives are indefinite.

UKTV carrier agreement
Software
Other

Straight line Unexpired term of agreement
Straight line 2 to 5 years
Straight line 3 to 8 years

Impairment1: Non-financial assets
At each balance sheet date, the BBC Group reviews the carrying
amount (net amount held on the balance sheet) of those assets that are
subject to amortisation to determine whether there is an indication thatany of those assets has suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order todetermine the extent of any impairment loss.
For goodwill the recoverable amount is estimated each year at thesame time.
The recoverable amount of an asset is the higher of fair value1 less costs
to sell and value in use. For the purposes of impairment testing, assets
are grouped at the lowest level at which they generate separately
identifiable cash flows (cash-generating units). In assessing value in use,
the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessmentsof the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
An impairment loss is recognised in the income statement for theamount by which the asset’s carrying amount exceeds its recoverable
amount. Where a cash-generating unit is impaired the impairment loss
will first be allocated to reduce goodwill and then to the other assetsof the cash-generating unit on a pro rata basis, except that the carrying
amount of any individual asset will not be reduced below its separately
identifiable recoverable amount.
Impairment losses in respect of goodwill are not reversed. In respectof assets other than goodwill, an impairment loss is reversed if there
has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that theasset’s carrying amount does not exceed the carrying amount thatwould have been determined, net of depreciation or amortisation,
if no impairment loss has been recognised.
Goodwill1
Goodwill is recorded in the balance sheet as the difference between
the fair value of the consideration transferred by the BBC and therecognised amount of non-controlling interests in the acquire comparedto the fair value of the identifiable assets and liabilities acquired. These
are all measured at the date of acquisition. Where the consideration isless than the net assets acquired, the difference is recognised
immediately in the income statement.

1 See Glossary for further details

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H. Basis of preparation of the financial statements and otheraccounting policies continued
Acquisitions prior to 1 April 2007 – as part of the adoption of IFRS, in
accordance with IFRS 1 First-time adoption of IFRS, the Group elected
to restate only those business combinations that occurred on or after
1 April 2007. In respect of acquisitions prior to 1 April 2007, goodwill
is recognised at deemed cost being the amount previously recognised
under UK accounting standards, subject to being tested for impairment
at that date. Goodwill arising in periods up to 1 April 1998 remains
offset against the operating reserve, as was permitted by UK GAAPat the time.

The BBC Group recognises decommissioning liabilities as part ofthe initial cost of the asset, discounted to present value. The Groupreassesses whether there has been a change in this liability basedon the facts and circumstances at each balance sheet date.

Goodwill arising on the acquisition of associates and joint ventures is
included in the carrying amount of the joint venture or associate and istested for impairment as part of the overall balance.

Current tax is the expected tax payable for the year, using tax rates thatare enacted or substantively enacted at the balance sheet date, and any
adjustment to tax payable in respect of previous years. In respect of tax
currently payable:

Subsequent measurement of separately recognised goodwill – goodwill
is tested annually for impairment and is measured at cost less any
accumulated impairment losses. For the purposes of impairment testing
the goodwill is allocated to cash-generating units on the basis of those
expected to benefit from the relevant business combination.
Accounting policies relevant to section F
Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently
measured at fair value less an allowance for estimated impairment. The
allowance is based on objective evidence that the BBC Group will not
be able to recover all amounts due. Changes in the carrying amount of
the allowance are recognised in the income statement.
Trade and other payables
Trade and other payables are recognised initially at fair value andsubsequently measured at amortised cost using the effective
interest method.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of qualifying assets (those necessarily taking a substantial
period of time to get ready for their intended use) are added to thecost of those assets, until such time as the assets are ready for theirintended use.
Originated programmes can be qualifying assets, but those necessarily
taking a substantial period of time to get ready for broadcast are a small
proportion of overall programme investment. Any borrowing costs that
could be attributed to those programmes are not significant and,
therefore, no borrowing costs are capitalised.
All finance income and other borrowing costs are recognised in income
and expense in the period in which they are incurred.
Use of estimates and judgements – provisions
Judgement and estimation techniques are employed in the calculation of
the best estimate of the amount required to settle obligations, including
determining how likely it is that expenditure will be required by theBBC. This can be very complex, especially when there is a wide rangeof possible outcomes.

1 See Glossary for further details

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Accounting policies relevant to section G
Taxation
The tax charge for the period comprises both tax currently payable anddeferred tax. Taxation is recognised in the income statement except tothe extent that it relates to items recognised directly in reserves, inwhich case it is recognised in reserves.

–– the PSB Group is not liable to corporation tax on any surplus licence
fee income or grants received from Government departments,
however, it is fully liable for corporation tax on capital gains and on
all its other external income. Expenditure on capital assets is not
eligible for capital allowances giving rise to temporary differencesthat would lead to deferred tax assets or liabilities. Movements offair value adjustments in the income statement give rise to deferred
tax balances.
–– the BBC’s commercial subsidiaries are liable for corporation tax basedon taxable profit for the year.
Current tax assets and current tax liabilities are offset if, and only if,
there is a legally enforceable right to set off the recognised amounts; andthe entity intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously.
Deferred tax is provided using the balance sheet liability method on
any temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used fortaxation purposes. The amount of deferred tax provided is based on
the tax rates expected to apply in the period when the liability is settled
or the asset is realised using tax rates enacted or substantively enacted
at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset only where
there is a legally enforceable right to set off current tax assets against
current tax liabilities; and the deferred tax assets and the deferred tax
liabilities relate to income taxes levied by the same taxation authority
on either:–– the same taxable entity; or–– different taxable entities which intend either to settle current tax
liabilities and assets on a net basis, or to realise the assets and settle
the liabilities simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to be settled
or recovered.
Financial instruments
The BBC Group holds various derivative1 and non-derivative financial
instruments (including assets such as trade investments and liabilities
such as borrowings). All financial assets are recognised and derecognised
on a trade date. The accounting policy for the major categories offinancial instruments is set out below.

F I N A N C I A L S TAT E M E N T S

H. Basis of preparation of the financial statements and otheraccounting policies continued
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits withmaturities of less than three months. Cash and cash equivalents also
includes licence fee funds collected on behalf of HM Treasury, which are
excluded from the Group’s net funds and in respect of which a separate
creditor is recognised.
Derivative financial instruments
The BBC Group does not enter into speculative derivative contracts,
however, some derivative financial instruments are used to manage theBBC’s exposure to fluctuations in interest rates (interest rate swaps1,
caps1 and collars1) and foreign currency exchange rates (foreign currency
forwards contracts and currency options).
Derivative financial instruments, excluding derivatives held as qualifying
hedges, are initially recognised at fair value and are subsequently
remeasured to fair value at the balance sheet date with movements
recorded in the income statement.
The fair value of interest rate swaps, caps and collars is the estimatedamount that the BBC Group would receive or pay to terminate theswap, cap or collar at the balance sheet date, taking into account current
interest rates, the current creditworthiness of swap, cap or collar
counterparties and the creditworthiness of the BBC.
The fair value of foreign currency forward contract rates is determinedusing forward exchange rates at the balance sheet date.
Hedge accounting
The BBC Group designates certain derivatives as cash flow hedges by
documenting the relationship between the hedging instrument and thehedged item, along with the risk management objectives and its strategy
for undertaking various hedge transactions. Where the hedge is deemed
to have been effective, the effective portion of any changes in the fairvalue of the derivatives that are designated in the hedge are recognisedin other comprehensive income. The accumulated amount in the cash
flow hedge reserve is reclassified to profit or loss in the same period as
the hedged cash flows affect profit or loss. Any ineffective portion of thehedge is recognised immediately in the income statement.
Embedded derivatives
These derivatives are found embedded within other financial
instruments or other host contracts. Once identified they are treatedas derivatives in their own right if their risks and characteristics are notclosely related to those of the host contract and the host contract is
not carried at fair value.
Embedded derivatives are carried on the balance sheet at fair value
from inception1 of the host contract. Unrealised changes1 in fair value
are recognised as gains/losses within the income statement during theperiod in which they arise.

The amount of the loss is measured as the difference between theasset’s carrying amount and the present value of estimated future cash
flows discounted at the financial asset’s original effective interest rate1.
All impairment losses are recognised in the income statement.
Reserves
The operating reserve is the accumulated surplus/deficit to date.
Available for sale reserve includes fair value gains and losses on available
for sale financial assets.
The hedging reserve is used to record the effective portion of the
cumulative net change in the fair value of cash flow hedging instruments
related to hedged transactions that have not yet occurred (net of tax).
The translation reserve is used to record exchange differences arising fromthe retranslation of the net assets and results of overseas subsidiaries.
New standards and interpretations not yet adopted
At the date of authorisation of these financial statements, the following
standards and interpretations which have not been applied in thesefinancial statements were in issue but not yet effective (and in somecases had not yet been adopted by the EU):–– Annual Improvements 2014–2016 Cycle (effective 1 January 2017
and 1 January 2018)–– IAS 40 (effective 1 January 2018) – Investment property–– IFRIC 22 (effective 1 January 2018) – Foreign currency transactions–– IFRS 2 (effective 1 January 2018) – Share-based payment transactions–– IAS 7 (effective 1 January 2017) – Statement of Cash Flows–– IAS 12 (effective 1 January 2017) – Income Taxes
The BBC do not expect to early adopt any of the accounting standards
stated above.
The directors do not expect that the adoption of the standards andinterpretations above would have a material impact on the financial
statements of the Group in future periods, except for the following:
IFRS 9 Financial Instruments (effective 1 January 2018) replaces theexisting guidance in IAS 39. It includes revised guidance on theclassification and measurement of financial instruments, including a new
expected credit loss model for calculating impairment on financial assets,
and the new general hedge accounting requirements. The potential
impact on the Group is currently being assessed.
IFRS 16 Leases (effective 1 January 2019 but not yet EU endorsed)
replaces IAS 17. IFRS 16 will primarily impact the accounting for
operating leases. Such agreements will require the recognition of leaseassets, representing the right to use the leased item, and a respective
liabilities, representing the future lease payments. The potential impact
on the Group is currently being assessed.

Use of estimates and judgements – Impairment of financial assets
Financial assets are assessed at each balance sheet date to determine
whether there is any objective evidence of impairment. Factors
considered in determining whether there is objective evidence of an
impairment include significant financial difficulty of the counterparty andbreach of contract. Individually significant financial assets are tested for
impairment on an individual basis. The remaining financial assets areassessed collectively in groups that share similar credit risk characteristics.

1 See Glossary for further details

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H. Basis of preparation of the financial statements and otheraccounting policies continued
IFRS 15 Revenue from Contacts With Customers (effective 1 January2018) requires the identification of distinct promises within contracts
with customers in order to determine the ‘performance obligations’ thatexist. The transaction price receivable from customers is subsequently
allocated between the identified performance obligations. An initialassessment of the impact on the Group has been undertaken however
further detailed analysis is required on specific revenue streams todetermine if contracts include dynamic or static performance obligations.
Beyond the information above, it is not practicable to provide a
reasonable estimate of the effect of IFRS 9, IFRS 16 and IFRS 15
until a full and detailed review has been completed.

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F I N A N C I A L S TAT E M E N T S

Glossary
With the aim of improving comprehension, the table below explains the financial terms used within the financial statements:
Term

Note

Definition

Amortisation

H

Amortisation is the reduction reflected in the carrying value of the asset as a consequence of theregular use of that asset by the organisation.

Assets available for sale

D3

Assets available for sale are interests in entities in which the BBC has neither control nor asignificant interest.

Associate

E3

An associate is an entity that the BBC Group has significant influence over, but that does not meetthe definition of a joint venture or subsidiary. Significant influence is the power to participate in thefinancial and operating decisions of an entity but is not control or joint control over those policies.

Cash-generating units

E2

Cash-generating units are the smallest group of assets that can independently generate cash flows.

Changes in demographic and financial
assumptions

G3.1

Changes in demographic and financial assumptions represent the changes in estimates used tovalue the future liability. Demographic assumptions include mortality rates, staff turnover and early
retirement. Financial assumptions encompass items such as discount rate and future salary levels.

Commissioned programme

H

A commissioned programme is where an agreement has been made for the programme to be
produced for broadcast.

Credit risk

G4.1

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligation.

Current service cost

C7.2

The current service cost is the underlying cost to the BBC of pension rights earned by employees
during the year.

DCMS borrowings

F1

The DCMS definition of ‘borrowings’ excludes leases which would be classified as operating under
UK GAAP, but which are classified as finance leases under IFRS at the date of transition to IFRS.
These leases are therefore excluded when comparing net debt/funds to DCMS borrowing ceilings.

Deferred tax

G2

Deferred tax is the amount of income tax payable or recoverable in future periods in respect oftaxable or deducible temporary differences, the carry forward of unused losses, and/or the carryforward of unused tax credits. Temporary differences are differences between the carrying amountof an asset or liability in the statement of financial position and its tax base, where the tax base of anasset or liability is the amount attributed to that asset or liability for tax purposes.

Derivative

G4.2

A derivative is an asset or liability that is dependent on, or derives its value from, another asset or
liability and is to be settled in the future.

Discount rate

G3.5

The discount rate for the IAS 19 valuation has been derived with reference to market yields at theend of the reporting period on AA rated sterling-denominated corporate bonds with maturities
consistent with the estimated term of the post-employment benefit obligations. Certain types ofbonds are excluded from the calculating model, either because they have unusual features, arerelatively small or potential outliers, in order to remove the distortion that might otherwise occur
from including unusual, less liquid or potentially misrated bonds. Extrapolation is performed when the
profile of the Scheme’s expected benefit outgo is longer than the cashflows of the available bonds.

Effective interest rateH

An effective interest rate is the rate used to discount future cash flows over the life of the contract
back to present value.

Effective tax rate

G2.2

The tax charge for the year as a percentage of Group surplus/deficit excluding tax.

Exercise

G4.3

Exercise is the point at which the rights in the option are implemented or acted upon.

Fair value

D, G

The fair value of an asset is the amount for which the asset could be exchanged between
knowledgeable, willing parties in an arm’s length transaction.

Finance lease

D4

A finance lease is a lease where the lessee has substantially taken on the risks and rewards ofownership and operating the asset. As such, both the asset and future liability are recognised on thebalance sheet.

Foreign currency transactions

G

As these financial statements are prepared in sterling the BBC’s foreign currency transactions andbalances must be translated at appropriate exchange rates, into sterling. This means that variations
in exchange rates can cause the valuation of investments to fluctuate even when there has been nochange in the health of the underlying business.

Forward foreign currency contracts

G4.3

Under forward exchange contracts you buy or sell a currency at a fixed exchange rate with delivery
made on a given date or dates in the future.

Going concern

H

The directors are required to make a statement that the BBC is a going concern which means it canmeet its debts and continue trading for a period of at least 12 months from the date on which thesefinancial statements were signed.

BBC Annual Report and Accounts 2016/17

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F I N A N C E A N D O P E R AT I O N S

Term

Note

Definition

Goodwill

H

Goodwill is the difference between the value paid for a business and the fair value of its net assets.
It represents the premium the purchaser is prepared to pay for the business.
Consideration, in this context, is the monetary value transferred in exchange for the share inownership of another entity.
Where the BBC does not own an entity outright, the other shareholders are known/disclosed as
non-controlling interests.

IAS 19 valuation

C8.1

The IAS 19 valuation takes assets at their market value and discounts the accrued liabilities byreference to the discount rate of an AA rated corporate.

Impairment

H

An impairment occurs when the carrying value of an asset is higher than the amount that isrecoverable from its use or sale.

Inception

H

Inception is the point at which a contract is confirmed, this is normally the point at which the contract
is signed.

Interest cost on pension plan liabilities

F9

The interest cost on pension plan liabilities represents the increase during the year in the value of theplan liabilities because the benefits are one year closer to settlement.

Interest rate caps

G4.1

Interest rate caps protect against interest rates rising, by setting an upper limit (cap) on the floatinginterest rate, while still allowing the benefit of falling interest rates.

Interest rate collars

G4.1Interest rate collars are the same as interest rate caps except that there is also a lower limit set to thefloating interest rate.

Interest rate swaps

G4.1

Interest rate swaps effectively swap a floating rate loan into a fixed rate loan, or vice versa.

Joint venture

E3

A joint venture is where the BBC Group has joint control over an entity with another partner(s).

Maturity

G3.6

The maturity of a scheme provides an indication of the cash requirements of the scheme and thelikely attitude of the Trustees to risk within their investment policy. The more mature a scheme, themore likely that Trustees will favour low risk investments.

Net finance income/(cost)

C7.2

Net finance income/(cost) is the difference between the expected return on assets and theinterest liabilities.

Operating lease

D6

An operating lease is a lease where the lessee has not taken on the risks and rewards of owning andoperating the asset. The lessee (the BBC) is hiring rather than buying an asset.

Originated programmes

B5

Originated programmes are programmes produced internally by the BBC Group for broadcasting
and/or sale of the rights to broadcast.

Past service cost

C7.2

The past service charges arise from changes to the terms and conditions relating to member’s defined
retirement benefits, resulting in a credit for years of service already given.

Pension Increase Exchange

C7.2

A PIE exercise involves offering defined benefit (DB) scheme members the choice of exchanging
future annual increases on their pensions for a one-off immediate uplift. The uplifted pension does
not then attract any further annual increases. The offer can be made to members currently receiving
pensions, or to members at the point of retirement.

Pension scheme

C7

On retirement, members of the BBC’s defined benefit Pension Scheme are paid their pensions froma fund which is kept separate from the Group to which the BBC makes cash contributions.

Plan liability

F9The plan liability represents the expected amount of money that will be needed in the future to pay
employees for their current and future service to the company.

Programme rights

H

Programme rights are rights held by the BBC that permit a future transmission of a particular
programme or event.

Provisions in relation to associates andjoint ventures

E3

Where the BBC has an obligation to settle an individual net liability of a joint venture, this is reflected
within provisions.

Public services

F2

Public Services in this context represent the PSB Group (excluding Centre House Productions
Limited – see note G4.2).

Put option

G4.3

A put option issued by the BBC provides the holder the rights, but not the obligation to require the
BBC to buy shares at a future date and price determined by the option agreement.

Related parties

C6

Related parties include key management personnel, their immediate families and external entities
controlled by them.

Remeasurement gains and losses

G3.4

These gains and losses arise from actual performance being different from that predicted. Only
defined benefit schemes give rise to gains and losses in the statement of comprehensive income.

184

BBC Annual Report and Accounts 2016/17

F I N A N C I A L S TAT E M E N T S

Term

Note

Definition

Remeasurements

C7.2

Remeasurements which arise from actual performance being different from that predicted give rise togains and losses in the statement of comprehensive income.

Remeasurements on plan assets

G3.2

Remeasurements on plan assets represent the amount by which the assets held by the scheme (suchas equities, bonds and property) have performed better or worse than the expected prior year value.

Research and development

B1

Research and development costs are incurred to explore ideas for new programmes or assets,such as the BBC iPlayer. Research costs are where the ideas are generated, some of which are thendeveloped further into a plan or design where the costs are then categorised as development.

Strike price

G4.3

The strike price is the price the option will sell at.

Subsidiary undertaking

G5.3

A subsidiary undertaking is an entity that is directly or indirectly controlled by the Group. Control
exists where the Group has the power to govern the financial and operating policies of the entity so
as to obtain benefits from its activities. In assessing control, potential voting rights that are currently
exercisable or convertible are taken into account.

Unrealised changes

H

Unrealised changes are those changes that occur to the value of the embedded derivative prior to thepoint at which the derivative is exercised.

BBC Annual Report and Accounts 2016/17

185

A D D I T I O N A L I N F O R M AT I O N

Index
Subject index

Audit Committee ReportAwardsPage number

74
23

BBC Studios
BBC Studioworks
BBC Trust

10-11, 25, 51
51
86-91

BBC World Service

2, 19, 30-31

BBC Worldwide

19, 21, 50

Charities

61-62

Commercial trading

50

Consolidated financial statements

124

Content spend by service – by nation

93, 97, 101Content spend by service – network

25, 27, 29, 30, 32, 33

Diversity and inclusion

60

Efficiency savings

52

Environmental sustainability

63

Human Rights

58

Licence fee- income and expenditure49

Nations and regions

36-45, 93-104

New governance12-13, 48, 66

Performance against public commitments

105

Public purposes

14-19

Reach by service

25, 27, 28, 30-31,33

Remuneration – BBC Executive Board

78-79

Remuneration – BBC senior managers

56

Remuneration – BBC Trust

100

Risks and opportunities
Service performance
Severance pay
Spend by service
Staff – headcount and location
Talent costs
Time spent with each service
Trading fairly
Viability statement

186

BBC Annual Report and Accounts 2016/17

88
25, 27, 29, 30, 32, 33
57
25, 27, 29, 30, 32, 33
56-57
56
25, 27, 29, 30, 32, 33
83-84
82

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Copyright and Photographer credits
Front CoverPlanet Earth II – Ed Charles.
A Harris hawk takes off from a cactus in the desert in thesouthern United States.
Inside Cover
Brexit: The Battle For Britain – BBC/Jeff Overs.
School children taking part in the 500 Words Live Lesson – BBC.
Strictly Come Dancing – BBC/Guy Levy.
Page 01
Wildlife cameraman Vianet Djenguet – BBC/Josh Helliker.
BBC Newsroom in London – BBC/Jeff Overs.
Terrific Scientific Live Lesson – BBC.
Timeline presenters – BBC Scotland/Martin Shields.
BBC Three’s Five By Five series of short films from new writers –BBC Studios/Green Door Pictures/Sally Mais.
Radio 5 live presenter Emma Barnett – BBC/Roscoe & Rutter.
Pages 02-03
Family listen to the radio – BBC Media Action.
Pacific Quay – BBC Scotland.
Planet Earth II, Andean flamingos – BBC NHU/Justin Anderson.
David Dimbleby – BBC/Jeff Overs.
Fleabag – Two Brothers Pictures/Luke Varley.
Kofi Smiles, BBC’s Face of Hull 2017– BBC/Les Gibbon.
The Archers – BBC/Pete Dadds.
Muslims Like Us – Love Productions 2016/Gareth Gatrell.
iPlayer and iPlayer Kids – BBC.

Page 21
Happy Valley – BBC/Red Production Company.

Page 64-65
BBC Board – BBC/Liam Bailey Ltd.

Page 22
Thirteen – BBC/Todd Anthony.

Page 86
Old Broadcasting House – BBC/Jeff Overs.

Page 23
Happy Valley – BBC/Red Production Company.
I, Daniel Blake – Photo Joss Barratt, Sixteen Films Ltd.
Sherlock: The Abominable Bride – BBC/Hartswood Films.
People Just Do Nothing – BBC/Roughcut Television/Jack Barnes.
The Night Manager – BBC/The Ink Factory/Mitch Jenkins.
Casualty – BBC/Alistair Heap.
BBC News presenter George Alagiah – BBC/Jeff Overs.
Murder in Successville – Tiger Aspect Productions.
Radio 2 DJ Chris Evans – BBC.
Topsy and Tim – Darrall Macqueen Ltd.

Page 92
Line of Duty – World Productions/BBC/Aidan Monaghan.

Pages 24-25
Murdered by My Father – BBC/Des Willie.
Exodus: Our Journey To Europe – Hassan Akkad/KEO Films.
Page 26
BBC Proms – BBC/Mark Allan.
Page 31
Newsreader Reeta Chakrabarti – BBC/Jeff Overs.
Newsreader Huw Edwards – BBC/Jeff Overs.
Victoria Derbyshire – BBC/Jeff Overs.
Panorama logo – BBC.
News app on various devices – BBC.

Pages 04-05
Poldark – Mammoth Screen Limited/Robert Viglasky.

Pages 28-29
iPlayer – BBC.
Amazing Humans – BBC.

Page 06
BBC Chairman, Sir David Clementi – BBC/Liam Bailey Ltd.

Page 33
Presenter Peter Okwoche – BBC.

Page 07
Today – BBC/Jeff Overs.

Page 36-37
Wales vs Belgium, Euros 2016 – Meissner/AP/REX/Shutterstock.

Page 09
BBC Director-General, Tony Hall – BBC/Liam Bailey Ltd.

Page 40
Still Game – BBC Scotland.

Page 10CBBC presenters Hacker, Lauren, Karim and Dodge –BBC/Rachel Joseph.

Page 42
My Mother and Other Strangers – BBC/Stefan Hill/Matt Burlem.

Page 11
Countryfile – BBC Studios/Tom Dulat.
Page 13
New Broadcasting House – BBC/Jeff Overs.
Page 14
Damilola, Our Loved Boy – Steffan Hill/Minnow Films.
Page 15The BBC’s Quentin Sommerville reporting in Syria – BBC News.
Page 16
BBC Terrific Scientific – BBC/James Stack.
Page 17
Taboo – Scott Free/Hardy Son & Baker.
Page 18
Presenter David Olusoga – BBC/Des Willie.
Page 19
A radio producer interviews a health worker for a Hausalanguage radio drama – BBC Media Action.

Page 44
Radio presenter Nihal Arthanayake – BBC/Stephen Brooks.
Page 46
SS-GB – Sid Gentle Films Ltd/BBC/Laurie Sparham.
Page 47
BBC Deputy Director-General, Anne Bulford – BBC/LiamBailey Ltd.
Page 53
The Hollow Crown – The War of the Roses – BBC/Carnival Film and
TV/Robert Viglasky.
Page 54
Radio 1 DJ Clara Amfo – BBC.
Page 58
BBC School Report – BBC School Report.
Page 60-62
BBC Young Dancer 2017 – BBC/Ray Burmiston.
DIY SOS for Children in Need – BBC.
W1A for Red Nose Day – BBC.

Page 105
Sherlock – BBC/Hartswood Films/Todd Antony

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