PART TWO:

Annual Report andAccounts 2007/08

The BBC Executive’s review and assessment

07 08
Director- General’s introduction

01

About the BBC

02

BBC & me04

BBC Executive Board

24

BBC at a glance

26

Review of services
Future Media & Technology

29

Vision32

Audio & Music

38

Journalism

44

Commercial activities

52

Engaging with audiences

54

Performance
BBC People

58

Operations
Statements of Programme Policy
commitments 2007/08

62
70

Finance82

Financial overview
Governance and financial statements

86

Getting in touch with the BBC

148

Other information

Inside back cover...quality programming that informs
us, educates us and more often
than not, entertains us. These threetenets are as important today as
when they were first uttered around80 years ago.

THE DIRECTOR- GENERAL
01

WELCOME
When I wrote to you a year ago, our awardwinning Gaza correspondent Alan Johnston
was still missing. We didn’t know if we would
ever see him again. And then, what we’d all
been hoping, working and praying for: Alan’stired but smiling face as he was led to freedom.
But within a few days, we had fresh problems
to deal with: a cluster of issues with phone
votes and competitions, and the mis-editingof a promotional clip of our Monarchy series.
Without public trust the BBC is nothing, so
the moment these issues came to light weknew we had to act quickly and decisively.
Soon, we had designed and launched thebiggest training course in the BBC’s history –not, as some papers mischievously reported,‘integrity seminars’, but a conversation
involving no less that 17,000 BBC people that
explored the ethical issues and dilemmas thatmodern broadcasting throws up. We also now
have a host of new controls and safeguards inplace, but the most important thing is that we
reaffirmed something which the overwhelming
majority of those who work for the BBC havealways known: we serve the public and nothing
matters more than honesty and integrity inour dealings with them.
The public rightly expect more of the BBC.
By year’s end, survey evidence suggested thatpublic trust in the BBC had fully recovered.

Despite these difficulties, the BBC has had ayear of outstanding creative renewal. From
Cranford to Sacred Music to Gavin and Stacey,
television has lived up to our aim – to delightaudiences. And we have seen the nation sharesome of the events that unite us all – from theConcert for Diana to Wales’ triumph at the Six
Nations Rugby championship.
The current creative output from the BBC
is some of the best I can remember. Acrossdrama, news and current affairs, comedy anddocumentaries, the BBC is delivering highquality output for all our audiences, whatever
their interests.
Radio is flourishing under Jenny Abramsky
who leaves us this year having made an
extraordinary impact over her 39 years here.
It is a fitting tribute that BBC radio has neverbeen stronger: Radio 4 has adapted – andwon the plaudits of the entire industry; Radio
2 listeners grow by the day – with 8.1 million
listening to Terry Wogan every morning;and our digital stations are all growing andreaching out to new audiences.
How the BBC adapts to the new digital andon-demand world will shape the future of
the Corporation for the next ten years. At
Christmas we launched BBC iPlayer, offering
BBC television and radio output broadcast
over the previous seven days. Audiences of
all ages embraced it quickly, and by March it
had already reached over 17 million monthly

downloads and streams. And it’s still growing.
There is no evidence that it is impacting
our linear television and radio ratings which
remain very strong.
With Freesat now launched, complementing
our popular Freeview service, it’s clearthat partnerships and collaborations will
increasingly matter to the BBC. True public
service broadcasting means a strong BBC
working alongside other broadcasters like
ITV, Channel 4 and five. A BBC that spends
licence-fee income wisely, keeping costs
to a minimum so the vast majority can beinvested in quality programming that informs
us, educates us and more often than not,entertain us. These three tenets are asimportant today as when they were firstuttered around 80 years ago.
Over the next 12 months the BBC willcontinue to deliver content to audiences,wherever they are, and however they want
to receive it. From across the whole UK,
through BBC iPlayer, bbc.co.uk, DAB radio
and traditional broadcasting, the BBC will
strive to represent the UK at its best.

Mark Thompson

Director-General
19 June 2008

About the BBC

The BBC remains the benchmark for
all broadcasters, wherever they are.
The quality and integrity of its news
and factual output is second to none,
and its creativity in other programmes– its drama is first class, and it is thehome of the most iconic comedy andentertainment ever – make it what
we all aspire to be.
The fact that it does this consistently
on a national and global stage
year after year on radio, televisionand online should be a matter ofconsiderable pride for the UK.
Fritz F. Pleitgen
President of the European
Broadcasting Union

BBC Annual Report and Accounts 2007/08

Building on the foundationthat is ‘inform, educate andentertain’, the BBC has six
public purposes – outlined
here – which provide
a focus for us to create
memorable content andgreat services, and tooffer everyone in the UK
an experience of the
BBC that truly makes adifference to their lives.

Citizenship

Learning

Creativity

Community

GlobalDigitalNews and Current Affairs willremain in peaktime schedules,
including BBC One

We will develop new talent – andsome of the best from the digitalchannels will get terrestrial outings

Our content will offer the best of
the UK to the world as well as bring
the best of the world to the UK

Educational and interactive output
will be offered to children in a safe
environment

Our local and nations’ news
and information will reflect theconcerns and priorities of the area

We will offer services and content
on digital platforms, to stimulateinterest in digital adoption

Sustaining citizenship and civil society:

Stimulating creativity and cultural
excellence: the BBC has a long-standing

Bringing the UK to the world and the world
to the UK: the BBC’s global news services

the BBC’s journalism has an unparalleledglobal standing in newsgathering, specialist
expertise and analysis, eyewitness reportage,
professional presentation and high-profile
interviews – bringing trusted, independentand high-quality journalism to our audiencesthat explains the stories that matter to them.
Our UK-wide, international, national and local
channels and services cover a wide range ofstories tailored for specific audiences, andsupported by our flagship domestic channel
BBC News. Fresh this year is our 8pm
weekday summary on BBC One which has
successfully increased the reach of our news
content to younger audiences.

reputation for creative and innovative content
that breaks new ground and sets trends –such as David Frost’s That Was The Week
That Was bringing satire to television in the
1960s and which made a reappearance thisyear. TW3 was responsible for developing
and launching the careers of those who went
on to appear in The Two Ronnies and Monty
Python, among others, and helped to establish
an environment for comedy developmentthat can be traced to The Mighty Boosh and
Gavin and Stacey on BBC Three and Radio 4’s
eclectic comedy offer including The Now Showand Down the Line. The BBC is still home tomuch of the UK’s very best talent.

provided independent and internationallyrespected news and analysis to audiences
around the world. We also sell content
and formats like Strictly Come Dancing and
The Weakest Link in the global marketplace.

We also have a strong commitment tocover and explain UK democratic processes,
including the devolved institutions and theWestminster parliament, giving context andanalysis to help build a greater understanding.
Local and Nations’ services are primary
outlets for holding local politicians to account.

Representing the UK, its nations, regions
and communities: the modern UK is an

The BBC’s public purposes are:Promoting education and learning: the BBC
promotes and supports formal and informal
education for children, teenagers and adults– including children’s radio output on BBC 7
that builds knowledge, skills and confidence,
Key Stage 1 curricular goals are informallysupported via CBeebies, Bitesize online revision
for older school students (especially popular
at exam time!), adult learners of Welsh, Gaelic
or Irish with Colin and Cumberland online, andgeneral or specialist factual programmes –such as regulars Horizon and The Culture Show,or this year’s Life in Cold Blood.

Enabling people to learn about new topics, ormore about an existing passion, in ways they
will find engaging, entertaining and challenging
is fundamental to what the BBC does.

incredibly diverse place, home to a richrange of cultures and communities. The
BBC portrays and celebrates this diversity
at national, regional and local levels. We
broadcast in English, Welsh and Gaelic,and offer a range of programmes in otherindigenous languages. The Asian Network,for example, broadcasts primarily in English,
but also in eight other languages from theIndian sub-continent – providing a lifeline toolder listeners who may not have a strong
understanding of English.
We also encourage people to shareexperiences, from the great state occasions
to important sports events. Our new HD
television service will come into its own inAugust with the Beijing Olympics, offering
the best quality sports pictures ever seen in
the UK.

We also bring in or partner in content to
inform debate within the UK on significant
world issues. Sunday mornings on BBC
Parliament this year saw extensive coverage
and analysis of the US Presidential primaries.
Radio 2 and Radio 3 covered major music
festivals and performance – including
Glastonbury, T in the Park and opera fromNew York’s Metropolitan Opera House.
BBC Four remains the home of internationalfilm on British television.
Taking a leading role in the switchover
to digital television: digital switchover is

now under way in the UK. The BBC willcontinue to promote and deliver the benefitof emerging communications technologies
and services – such as Freeview, Freesat
and the recently launched BBC iPlayerand HDTV – to all audiences.
On the following pages you will find thestories of some individuals’ relationships
with the BBC this year. Every one of themcan be tracked back to ‘inform, educate
and entertain’.

03THE JOURNALIST �

05Mishal Husain,
NEWS PRESENTER“I work across news programmes on
television and radio, though my main homeat the moment is our international channel
BBC World News. I feel very privileged towork for an organisation that offers so manydifferent types of services to our users andso has the scope for me to challenge myself
and explore my own potential. Wherever I
am in the world, those three letters B.B.C.
mean something to people. Of course, such
recognition also has great responsibility –we all have to live up to high standards as
faces or voices of the Beeb. I think the futureof BBC News is strong, as long as we areahead of the game in how we deliver content
and in what that content is – we should not
shy away from featuring international stories
on the domestic news, as long as they havea resonance with UK audiences. We need tomake sure we connect with the stories wecover and transmit to those who watch us,
listen to us, or use our services. That’s the
key to safeguarding our future.”

Global news is a crucial element of the BBC’s
newsgathering and reporting activities aroundthe world. This year we’ve launched BBC Arabic
TV – and are planning to launch BBC Persian
TV later in 2008. Both services are part of a
£30million Grant-in- Aid restructuring investment
at the World Service. Other improvements
include enhancements to new media services(including Spanish and Urdu), more FM
distribution for our radio services, betterinternational newsgathering facilities – all ofwhich will enhance the BBC’s reputation as atrusted voice in global news. In other areas,
we launched a nightly newscast, BBC WorldNews America, on BBC World News, and theinternational news site element of bbc.com

The children

07

Cormac (6) and Rory (4),
BRIGHTON

Mum Louise says “It’s hard work being
their age. Everywhere they look, they’rebombarded with toys and sweets thatapparently they can’t live without. The
lack of ads on the BBC is a real godsend,
something I didn’t fully appreciate when
I worked there and before I became afull-time mum, oddly enough*. And it’salso funny how my feelings towards theplace have evolved over the years as mypriorities have changed – from viewer
to employee to parent. Today, we watch
CBeebies and CBBC on Freeview anduse the CBeebies website, mainly for
Balamory karaoke though I also look at
the Grownups messageboard to see whatparents are currently discussing. It is great
having dedicated channels, especially forpre-school when you’re often at home
all day. Programme quality is high andthere’s a wide range – not just cartoons.
Justin Fletcher (aka Mr Tumble) is the best
presenter on children’s television. He isbrilliant; not at all patronising. He’s the
mum’s favourite on the messageboard!
We all sit down and watch The Sarah Jane
Adventures and Jackanory together. I reallylike us to be able to do this and all get
something out of it, and now they’re older
we can do that.”* Louise left the BBC in early 2006.

Justin – with his friend Mr Tumble – presents
Something Special, a programme that is
supported with Makaton signs and symbols
to make its content welcoming and accessible
to children in the early stages of language
development, and especially those withspecial communication needs. The BBC’s
offer to children last year comprised over
10,000 hours of television content alone –repeatable blocks on CBBC and CBeebies,
as well as slots on BBC One and BBC Two,websites, BBCi and on- demand services.
More than 1,000 hours across a range ofgenres – drama, factual, entertainment
and news – were originated from both
independent production companies andin-house departments. There are over
20 children’s channels in the UK, but our
purpose is simple: to ensure that our children
have access to the very best programmes andservices. The 17 million children who use ourservices each week – including the many fans
who watch Justin and Mr Tumble – seemto agree.

THE ‘STRICTLY’FANSUte Scholl & Anna Leatherdale,
ARGENTINE TANGO TEACHERS,
DEVON

Ute: “I took up dancing because I wanted
to be able to move better to music. Now,of course, I love Strictly Come Dancing. It
attracts the attention of a wide and varied
audience, and because of it more people havedeveloped an interest in dance. Each newseries brings new students to our classes.”
Anna: “I initially took up dancing because I
enjoyed the social interaction that it offers –something that Strictly has been a catalyst for
round here, as Ute says.”

Ute: “Most of our students have been
motivated to learn to dance, or dance better,by the show. The down side, of course, is thatmany of them start with the expectation oflearning a dance perfectly in one week! ”
Anna: “Our day jobs take up much of ourtime, but when not dancing we also enjoy
watching movies, documentaries andcostume dramas. We love Radio 4. We listen
to Women’s Hour, The Archers and In Living
Memory. We’re really pleased that the BBC
still invests in producing good radio plays.”

Radio 4 is one of the biggest commissionersof drama and readings in the world – withover 730 original hours last year. In dramaalone, the BBC offers something foreveryone. There’s family drama on television
like Doctor Who and Robin Hood on
Saturday evenings, for example, and more
adult-oriented drama at later times in theschedules like Waking the Dead and Spooks.
And we still offer the great entertainment
programmes like Strictly or factual content
like Andrew Marr’s History of Modern Britainthat give us all something to talk about over
the week ahead.
Last year we were nominated for 489
awards nationally and internationally –including BAFTA, RTS, Webby, Grierson,
Prix Europa and Prix Italia – and won 213of them. Nominations and awards arerecognition of the vision, effort and talentsof many individuals, and we are proud of all
those who work on our behalf to make great
quality programmes and content. The BBC
could not inform, educate or entertain its
audiences without them.

09THE FAMILY

Cathy Mary MacMillan,
DOUNE CARLOWAY ON THE ISLE OF LEWIS“I’m really interested in people, which colours the typeof programmes I watch and listen to. Of course, we’re
Gaelic speakers here and we watch and listen to whatever
we can – the children do too, from the cartoons on BBC
Two each morning to Thursday evenings on BBC Two.
We enjoy programmes from the community, about
the communities, and on at sensible times. Radio nan
Gàidheal produced a documentary series on our village.
It’s a small place and so we were all involved. It looked at
our history, but portrayed us as a dynamic culture that’s
developing and growing from experience to experience.
Really positive stuff. And Coinneach MacIomhair (Kenny
MacIver) is like a friend I listen to every day. We’re all
really excited about the new digital television service
and that will have programmes that appeal to non-Gaels
as well. Eòrpa is already incredibly popular with lots ofpeople in Scotland. Of course, the BBC’s Scottish news
(Reporting Scotland) is a staple; Question Time too. The
BBC understands the different levels of community.”

The BBC gets involved with the communities where it works in manydifferent ways. As well as making programmes and content that reflect
local and national experience, we provide opportunities for new sharedmemories through live events and concerts, many of which are free forpeople to attend. We are also associated with several registered charities
and others receive our support via broadcasts. Last year our charitable
activities included:* BBC Children in Need raised £36million* Radio 4 and Lifeline appeals raised nearly £1.5million* The BBC Performing Arts Fund received over £450,000 from
Dance X and Any Dream Will Do phone lines* The BBC Wildlife Fund raised over £1.6million* In March 2008 Sport Relief raised over £20million* The BBC World Service Trust invested external grants
and voluntary contributions worth about £18million fromthe Department for International Development and the EU,among other organisations
For more on our corporate social responsibility work see
www.bbc.co.uk/outreach11

THE INDEPENDENTPRODUCER

13

Claire Parker,
EXECUTIVE PRODUCER,KUDOS FILM AND TV“As a viewer, I know what a thrill it is to tune
into a brand new drama for the first time,hoping that it will entice and seduce you into
its world. As a producer, I know thatdeveloping dramas like Hustle and Life On
Mars, which aspire to do that, takes timeand commitment. You have to be passionate
about each project. Over the past sevenyears we’ve been ambitious to makeprogrammes in that way, as we have evolved
from a small company into a major supplierof drama. It’s really important that the UKcontinues to have a healthy creative sector
which entertains, inspires and challenges.
Broadcasting drama which reflects different
voices and views of the world is essential toreflect viewers’ experiences fully. All UK
broadcasters understand this and it is vitalthat independent producers like us have good
ongoing relationships with the BBC, but also
Channel Four and ITV. There’s room foreveryone – vigorous competition at boththe supplier and buyer ends can only begood for audiences.”
BBC Vision has a statutory requirement for 25%
of eligible hours to be produced by independent
producers. In addition, for the first full year
last year, independents and others (such asother broadcasters) were also able to bid for
up to 25% more. In the calendar year 2007*,
independents produced 39% of qualifying hours
for the BBC (versus 35% in 2006). A further
1.4% was produced by other external suppliers.
Including external programme producers, lastyear the BBC spent nearly £1.2bn in the UK’s
creative economy – around £33million morethan the previous year.
Kudos was the top independent supplier to BBC
Vision by spend in 2007. The rest of the top
ten were: Tiger Aspect Productions, Endemol,
Hat Trick Television, talkback THAMES, Lion
Television, Shed Productions, Wall to Wall
Television, 12 Yard Productions, and Carnival
Films. Four of these companies were not in the
top ten in 2006.
We also have a voluntary commitment to 10%of eligible hours of radio programming for the UK
networks – in 2007/08 we achieved 13%(13.5% in 2006).

* In line with Ofcom requirements, television figures aremeasured on a calendar year basis.

The band

15

Kids in Glass Houses,
CARDIFF

Singer Aled says: “The Stereophonics was the first real band
I was aware of, and the fact that they were local meant thatme becoming a musician was possible. So I learnt to play.
Like lots of bands, we weren’t signed when Bethan and Huw*
gave us our first airplay. Bethan managed to get Jo Whiley
interested enough to give our music some play on Radio 1
network. We’ve never looked back. We’ve now had quite a
bit of exposure – mainly Radio 1 but also on Lily Allen’s show
on BBC Three. In all honesty, we could do with more musicbased shows on TV as there are loads of good bands out
there who just need a bit of a boost. Online can be a blessing
as well as a curse – it’s really difficult to stand out or make an
impact. We’ve had a bit of support from the BBC, and a little
bit of good fortune, and have now got a contract. Our firstalbum Smart Casual is due out in May.”* Now called BBC Introducing…in Wales, an opt-out programme available
only in Wales. National versions exist in England, Scotland and NI too,
all of which are dedicated to new and unsigned talent.

The BBC strongly supports live and original music. Last year we
broadcast from a range of live events and concerts across the UK– including Radio 1’s Big Weekend in Preston, Scotland’s T in thePark, 1Xtra Live from Coventry, the Cambridge Folk Festival andthe London Jazz Festival – and from across the globe: the USA,
Cuba, Jordan and Georgia among others. An eclectic mix of music
was covered, including folk, orchestral, R’n’B, Bhangra, and chart.
Radio 1 alone offered over 300 new live studio sessions, andRadio 3 broadcast over 500 concerts – including the whole of
the Proms season (more than 500 hours of Proms content was
broadcast on radio and television in the UK).
To listen to the best in music – live and recently broadcast – log onto Radioplayer via www.bbc.co.uk/music/listen/. For some of thebest in unsigned music visit www.bbc.co.uk/music/introducing/The editor

Tim Levell,BLUE PETER EDITOR“Early last year was a bit rocky for theBBC, and for Blue Peter. We tested ourviewers’ trust and have had to work
hard to win it back. As it turned out,
it was a bit of a catalyst for the good.
We’ve taken part in the ‘Safeguarding
Trust’ seminar and now pull together
more as a team. We’re much morecollaborative in what we do off-screen
and on-screen. And viewers seem to likeit. It’s more exciting for them, and for thepresenters who do more group activities– climbing mountains, competing tocollect CDs for our appeal and evenpumpkin racing. We’ve even cautiously
reintroduced competitions: two viewers
will be part of the Olympics andParalympics handovers to London in
Beijing this August. We really do help
to make memories – everyone under 50
has a good memory of Blue Peter, don’t
they? I hope when the time comes myown kids will too. But in the meantime,
when they’re in bed, my own more
recent TV memories come fromwatching Spooks, Heroes and
The Apprentice on my PVR.”

With so much choice of content and services
out there for viewers and listeners, we’ve had
to be imaginative in how, where and when
we make BBC content available – and that
includes actively seeking out opportunities toengage with people where they want to be.
bbc.co.uk now attracts 17.5 million uniqueusers in the UK each week (Nielsen, March
2008), and this year we made BBC video
content available to audiences via YouTube,
Bebo, MSN and Yahoo. We’re attracting
new and younger audiences through thesesites and making it possible for them to takeour content and embed it in their own blogs
and social network profiles. By pushing theboundaries of traditional linear broadcastingand experimenting in these new areas, we’ve
not only increased our relevance to someaudience groups, like the young, but we’vealso gained a deeper understanding of what
it means for a broadcaster to operate in thesetypes of spaces.

17

The student

19

Qasim Ahmed,
LAW STUDENT,GLOUCESTER“I heard about Video Nation from my teacher
when I was doing a personal history projectat school. He thought the BBC might beinterested in my story, and was right.
But there was also an element of being in
the right place at the right time. My project
was on Partition, and the anniversary wascoming up, so it caught the mood. Sixty years
ago my family was living in part of the Punjabthat was to become India. We’re Muslim,
so had to move to Pakistan. I’ve been there
several times, but the Video Nation trip was
my first visit to India. It made me realisethat both countries actually have a fair bit ofshared heritage, and have more in common
than I thought. It was a real privilege. I hadn’t
thought that much about the BBC before. But
now I realise just how broad it is. It’s not just
BBC One and Radio 1, or all about London.
And my opinion has definitely changed. If they
asked me to go back, I’d do it in an instant.”

Over 60% of the UK population has a home pc(ONS, August) – which means that the rest –two in five of the population – don’t. For some,
this is down to a lack of confidence – the digital
equivalent of not being able to work yourvideo-recorder and being too embarrassed tosay so. The BBC has always been keen to
support media literacy – raising awareness of
the importance of media literacy to the wider
economy, as well as supporting people as they
develop their skills and knowledge of the media,
So although we primarily offer audiences accessto shared experiences and memories throughour programmes and content, we also support
personal experiences and learning journeys,
as we did with Qasim. If you are a novice, getstarted through www.bbc.co.uk/webwise/
Younger users looking to experiment should visit
www.bbc.co.uk/blast/

To read about other personal journal stories see
bbc.co.uk/videonation
In addition, we are committed to ensuringthat our programmes and services are asaccessible as is reasonably possible to disabled
people. Editorial guidelines show how we can
improve access to our services and encourage
creative approaches and solutions. Last year
we exceeded our targets for subtitling, audio
description and signing for television. (Seepage 57.) You can customise your home page
via www.bbc.co.uk or check out the varietyof content on www.bbc.co.uk/ouchTHE BROADCAST ENGINEER

21

Steve Longhurst,
BBC DISTRIBUTION MANAGER“I’ve been involved with TV and radiotransmitters for over 20 years, mainly
working at the BBC’s R&D department in
Kingswood Warren in Surrey, where things
like Teletext, Nicam and the BBC website
were developed. Digital switchover is easily
the biggest broadcast engineering project
the UK has ever seen. For the viewer it’s
simple, but at the transmitters it’s more
complicated – a bit more than plugging in a
Freeview box. There’s been loads of effort
to make it that user friendly, including arolling regional programme to replace vast
amounts of broadcast plant. There are over
1,100 TV transmitting stations that will haveto go digital over the next four years. Oncework is complete we get to use a helicopter
to assess the performance at the mostimportant sites of the new antennas being
built for digital switchover. This involves
travelling the length and breadth of Britain
to fly round these tall masts collecting data
and then analysing it to prove it’s working
as the manufacturer designed.”

The BBC is taking the lead in readying the UK for
final terrestrial switch off, when all television in
the UK switches to a digital signal. About 25,000
households in Cumbria were first to lose theirterrestrial TV signals (in October 2007). The restof the Border region will switch over in 2008, andthe whole process will end in 2012 when Ulster,
Tyne Tees and London get their turn. Between
now and then, the BBC will have invested around£1billion on facilitating digital roll-out for the UK.
For more information on digital switchover andhow it will affect you, see www.bbc.co.uk/digital

23

Around 2 million people in the UK haveface-to-face contact with the BBC each year.
We find out what the remaining 58 million or
so like and expect through extensive market
research and analysis…
…none of which apparently matters to The
Stig. However, a typical Top Gear viewer does
have a stake in the outcome and might say
the following:“I never think about it, but I guess my dealings
with the BBC change all the time. It’s always
been there, but I watch it nowadays witha more critical eye. I expect my 40p or solicence fee each day to guarantee me
top-quality programmes with the best ideas
and the best talent. Plus, I want them to be
relevant to me and my life, and that’s not justabout programmes but also about how I takethem. At home in the mornings breakfast
radio sets me up for the day, and in the car
I listen to Radio 5 live. And at weekends,
when I’m likely to be out and about, I
download Fighting Talk to my MP3. Then I canlisten when I want – on the bus into town, or
waiting for the girlfriend to get ready – though
it only lasts an hour... Every week without failI now also stream Top Gear, of course, Matchof the Day and The Apprentice. BBC iPlayer
makes the BBC fit in with me.”Last year the licence fee was £135.50 per
household – it’s the same whether you live
alone or as part of a large family. The TV licence
funds the majority of the BBC’s public service
broadcast channels: ten television channels,ten UK-wide network radio stations (including
five on digital only), 46 nations and local radio
services, plus regional opts on BBC One,
BBC Two, Radio 1 and on five English local
radio stations. In addition, it pays for bbc.co.uk,
interactive services on BBCi, and the new
BBC iPlayer and HDTV offers. We invest themoney in activities as immediate as daily radio
magazine programmes as well as long termin the infrastructure that will support British
broadcasting for the future. We offer somethingfor everyone, with services free of adverts andindependent of advertisers, shareholders or
political interests.
BBC World Service is funded by government
grant and not the TV licence fee. Profits fromseparate BBC commercial services help tokeep the licence fee low.
93% of the UK population watched BBC
television, listened to BBC radio or used BBC
online services on average every week last year.

EXECUTIVE BOARD

The Executive Board manages theBBC. It is chaired by the DirectorGeneral and has a significant
minority of non-executive Directors.
The Executive Board is supported
by four sub-committees:
Nominations, Remuneration, Audit
and Fair Trading, and also a numberof management groups, including the
BBC Direction Group, FinanceCommittee and four Group Boards
covering the areas of Vision, Audio &Music, Journalism, and Future Media& Technology. The Boards of BBC
Commercial Holdings and BBC
Worldwide support the Executive
Board on commercial matters.
The Executive Board is responsible
for the delivery of BBC services andday-to-day operations across theorganisation against the plans thathave been agreed with the BBC
Trust. The BBC Trust holds the
Executive Board to account.

01

02

03

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BBC Annual Report and Accounts 2007/08

01 MARK THOMPSON

Director-General since June 2004. Chairof the Executive Board and the BBC
Direction Group, made up of all theBBC’s divisional directors.
“The BBC News website keeps me going
24/7, but for my family the highlight ofweek – whether live or on BBC iPlayer –remains the amazing Doctor Who.”
02 MARK BYFORD

Deputy Director-General. Board member
since 1998. Chair of the Journalism Board.
Chair Editorial Standards Board,
Complaints Management Board, Learning
Board and London 2012 Olympics
Coordinating Group.
“Robert Preston’s scoop on Northern
Rock; John Simpson’s vivid reports
from Baghdad and Zimbabwe; brilliant
coverage of the Federer/Nadal epic
Wimbledon Men’s Final; and theoutstanding public service role ofLocal Radio during the floods.”

06 ASHLEY HIGHFIELD

Director of BBC Future Media &Technology. Board member since
October 2000.
“BBC iPlayer made all the difference to
how I watched The Apprentice this year.
I also love the look of bbc.co.uk’s new
homepage, and teen service
bbc.co.uk/switch”.

Director of BBC People since October
2006. Trustee of the BBC Pension Scheme.
“Radio 4’s Today programme in themorning, and Chris Evans on Radio 2 on
the way home, are both staples for me.”
08 ZARIN PATELGroup Finance Director since January
2005. Trustee of the BBC Pension Schemeand non-executive Director of BBC
Worldwide Limited.
“Being able to catch more of the stuff I likebecause it’s available on BBC iPlayer or as
downloadable podcasts is just great.”

Director of Vision. Board member sinceApril 2002. Non-executive Director of
BBC Worldwide Limited.
“The range and diversity of our content
has been impressive, from Cranford to
Gavin and Stacey to Earth: The Power of
the Planet to In the Night Garden, to pickjust a few personal highlights – and we’redeveloping some real jewels in our multiplatform offering – like Springwatch,
Long Way Down, Doctor Who, andThe White Season.”
05 TIM DAVIE

Director of Marketing, Communications& Audiences since April 2005. Trustee,
BBC Children in Need. Director ofFreesat (UK) Limited and a non-executive
director of Digital UK.
“Mark Ronson at the Electric Proms.
A standout gig from a recent great
addition to the BBC’s schedules.”

14 DR SAMIR SHAH OBE

Appointed non-executive Director in
January 2007. Chief Executive of Juniper
Communications Limited. Chair of the
Runnymede Trust, trustee of the Victoria
and Albert Museum and Special Professor
in Post-Conflict Studies in the Schoolof Modern Languages and Cultures,
University of Nottingham.
“Trevor Eve in Waking the Dead and as
Hughie Green – an actor at the top of his
game. While on radio, Charles Wheeler
remains peerless.”
15 ROBERT WEBB QC

09 JOHN SMITH

Chief Executive of BBC Worldwide
Limited. Board member since 1997.
“The first time I saw Wild China waswhen we launched the series in Beijing inMarch with our Chinese co-producer. The
sequence of honey-hunters following bees
via feathers stuck to the bees’ bodies wasparticularly amazing.”
10 CAROLINE THOMSON

04 JANA BENNETT OBE

Appointed non-executive Director in
January 2007. Chairs the BBC Executive
Board’s Audit Committee. Group FinanceDirector at Rexam PLC. Trustee of theAlmeida Theatre.
“Cranford and Gavin and Stacey were bothessential quality viewing this year. And
Radio 4’s comedy is a constant sourceof joy, like Friday’s The News Quiz.”

07 STEPHEN KELLY

03 JENNY ABRAMSKY CBEDirector of Audio & Music. Board
member since April 1998.
“Reunion on Radio 4, with Sue MacGregor,
on the Brighton Bomb had an extraordinary
cast list: Patrick Magee, who planted thebomb, looked back on the day and its
repercussions with Lord Hurd (then NI
Secretary), conference producer Harvey
Thomas, and Jo Berry, whose father
Sir Anthony Berry was killed.”

13 DAVID ROBBIE

Chief Operating Officer. Board member
since May 2000. Trustee of the BBC
Pension Scheme. Non-executive Directorof Digital UK.
“I would make sure that I was home on
Friday evenings when The Choir – Boys
Don’t Sing was on – greatly involving
television.”
11 MARCUS AGIUS

Appointed non-executive Director andSenior Independent Director in December
2006. Chairs the BBC Executive Board’s
Remuneration Committee. Chairman of
Barclays PLC. Trustee of the Royal Botanic
Gardens, Kew and Chairman of theFoundation and Friends of the Royal
Botanic Gardens, Kew.
“Gardening is a passion, and every year
I particularly enjoy all the coverage of
the RHS Flower Show at Chelsea.”
12 DR MIKE LYNCH OBE

Appointed non-executive Director in
January 2007. Technology entrepreneur
and founder and CEO of Autonomy plc.
“Coast and Andrew Marr’s History of Britain
were unmissable, In the Night Garden wasa huge hit with my kids, who’ve given up
trying to explain it to me.”Appointed non-executive Director in
January 2007. Chairs the BBC Executive
Board’s Fair Trading Committee.
Appointed QC in 1988. General Counsel
for British Airways. Also non-executive
director of the London Stock Exchange
and of Hakluyt & Co Ltd and Board
Member of London First. Honorary
Fellow of UNICEF.
“My highlight has to be the Christmas
Doctor Who, not only made in Wales,
but with Kylie and some fabulous cameos.”
16 VAL GOODING CBE

Appointed non-executive Director in
January 2008. Chief Executive of BUPA.
Also non-executive board member ofStandard Chartered and J Sainsbury,
Advisory Board Member of Warwick
Business School, Trustee of the British
Museum, non-executive directorof the Lawn Tennis Association.
“Business coverage on Radio 5 live andthe Bottom Line on Radio 4 are constantfavourites. And I loved Lark Rise to
Candleford.”
Employment contracts of Executive Directors have a notice
period of 12 months, and are subject to earlier termination forcause. As at 31 March 2008, the unexpired term and notice
period of each Executive Board member was a maximum of
12 months, although since then Jenny Abramsky and Ashley
Highfield have both announced their intention to leave the BBC.
Non-executive Directors are appointed initially for a periodof two years, except the Senior Independent Director, who
is appointed for an initial three-year period.
There is no entitlement to any additional remuneration in
the event of early termination other than in the case oftermination for reason of redundancy.
Executive Directors may also hold non-remunerated posts
outside the BBC.

25

AT A GLANCE

The BBC Trust assesses theperformance of the BBC’s
management and its services,
outlined on these pages. See
Part One of the BBC Annual
Report and Accounts fortheir review of 2007/08.
You can find this online atbbc.co.uk/annual report

VisionBBC One aims to be the UK’s most valued
television channel, with the broadest
range of quality programmes of any UK
mainstream network

BBC Two brings challenging, intelligent
television to a wide audience by combining
serious factual and specialist subjects withinventive comedy and distinctive drama

BBC Three is dedicated to innovative
British content and talent, providing a broad
mix of programmes aimed primarily at
younger audiences

BBC Four aims to be British television’s mostintellectually and culturally enriching channel,
offering a distinctive mix of documentaries,
performance, music, film and topical features

CBeebies offers a mix of high-quality, UKproduced programmes designed to encouragelearning through play for pre-school children in
a consistently safe environment

The CBBC channel offers a distinctive mixedschedule for 6–12 year olds, encouraging thedevelopment of existing and new interests andhelping children to understand and embrace
the world around them

BBC HD is a high-definition television
showcase for a range of programming fromacross the BBC’s portfolio

Future Media& Technology

BBCi offers digital television audiences all day,up-to-the-minute content and information,
including news, weather, learning,
entertainment and interactive programming

bbc.co.uk provides innovative anddistinctive online content, much of it linked
to programme output or building on existing
content, promoting deeper relationships
with licence fee payers

BBC iPlayer offers a post-broadcast catch­
up service for some TV and radio content,
literally making the unmissable, unmissable

BBC Annual Report and Accounts 2007/08

27

Audio & MusicBBC Radio 1 offers a high-quality service foryoung audiences combining the best new
music, a comprehensive range of live studiosessions, concerts and festivals, and tailored
speech output

BBC Radio 4 uses the power of the spoken
word to offer programming of depth whichseeks to engage and inspire with a unique
mix of factual programmes, drama, readings
and comedy

BBC Radio 2 brings listeners a broad range of
popular and specialist music focused on British
talent and live performances, complemented
by a broad range of speech output

BBC Radio 5 live broadcasts live news andsport 24 hours a day, presenting events asthey happen in an accessible style

BBC 6 Music engages with lovers of popular
music by offering the best music from the BBC
sound archive together with current releases
outside the mainstream, complemented bymusic news and documentaries

BBC Radio 3 is centred on classical music, andalso provides a broad spectrum of jazz andworld music, drama and arts, and includes live
and specially recorded performances

BBC 5 live Sports Extra is a part-time network
providing additional sports coverage throughrights already owned by BBC Radio 5 live todeliver greater value to licence fee payers

BBC 7 is a speech-based digital radio service
offering comedy, drama and readings mainly
from the BBC archive. It is also the home ofchildren’s speech radio

1Xtra plays the best in contemporary blackmusic, with a strong emphasis on deliveringhigh-quality live music and supporting new
British artists

BBC Asian Network offers challenging
debate, informed journalism, music, sport,
entertainment and drama to audiences ofBritish Asians from different generations

Journalism

BBC News aims to provide the best journalism
in the world and to maintain its position
as the world’s most trusted international
news organisation: accurate, impartial andindependent news content across a wide
range of BBC channels and services
The BBC News delivers news, analysis andinsight, supported by the BBC’s newsgathering
operations, all day, every day of the year

BBC World Service provides global news,
analysis and information in English and 32
other languages on radio and the internet
and also provides news on television in Arabic

Journalism – Nations & Regions

BBC World News is a commercially-funded
global 24-hour television news andinformation channel

BBC Parliament is the only UK channel
dedicated to the coverage of politics, featuring
debates, committees and the work of thedevolved chambers of the UK

BBC Sport provides network coverage of UK
sport, including big national sporting eventsand a wide range of specialist and Olympic
sports across television, radio and interactive
media. It also provides comprehensive
sports news

BBC English Regions serves a wide rangeof urban and rural communities and aims
to be the most trusted and creative local
broadcaster in England

BBC Northern Ireland provides somethingof value for everyone in the community
through its broad portfolio of programmes
and services that reflect local interests andexperiences

BBC Cymru Wales is committed to producing
services that reflect the unique culture andhistory of Wales, and its social and politicallandscape

BBC Scotland produces a broad range ofdistinctive television and radio programmes
for all age groups that properly reflect thediverse nature of Scotland, including the new
BBC ALBA Gaelic language service

28

Review ofservices

Future Media& Technology

29

Vision32

Audio & Music

38

Journalism

44

Commercial
activities

52

Engaging withaudiences54

BBC Annual Report and Accounts 2007/08

Future Media& Technology
This has been one of the most technologically
influential years in media ever – and the BBC
has been leading from the front. BBC iPlayer
is heralding a quantum change in how andwhen we all – from the Radio 3 aficionado
to the EastEnders groupie – can choose to
take our ‘radio’ and our ‘telly’. Creativity,
ingenuity and innovation don’t start andend with the content.
Ashley Highfield
Director of Future Media& Technology

29

R E V I E W O F S E RV I C E S ++ F U T U R E M E D I A & T E C H N O LO G Y

1130

MILLION

Much children’s output, like favourite Charlieand Lola, have popular interactive elements.

Once more we have seen continued
growth for our online, interactive andon-demand services:* Page impressions to bbc.co.uk average over
3.6 billion per month – with weekly uniqueusers averaging over 33 million globally.
* BBCi offers more content than ever before
with its average monthly reach growing to15.0 million this year.
* BBC Mobile remains the most accessedmobile news, sport and weather browser
in the UK – 45% of news, sport and weather
users access the service.
But the big story of our year is the launchof BBC iPlayer, which alongside our streamed
audio service Radio Player now offers
content online for those who missed it firsttime around on linear television or radio.
Viewers and listeners are benefiting froma seismic power shift in their favour in the
media landscape.

BBCi’s average weekly reach.

BBCi is very popular for big sporting events like
Wimbledon, and live music like Glastonbury.

improves as more people adopt and use
the services. New services safeguard ourcore mission to offer programmes andcontent that inform, educate and entertain,
and complement our purposes at a timeof rapid technological change.

for Celebrity Fame Academy. A similar number
sang along to the Eurovision Song Contest.
The Proms were a highlight for audiences,
particularly the one showcasing former
Eurovision hopeful Michael Ball.

The digital future seems likely to become
increasingly non-linear – and the BBC will
publicly test other non-linear services like
BBC iPlayer in the years to come.

BBCi, the BBC’s interactive television service,lets digital TV viewers access continuousand constantly updated news, information,
education and entertainment in the formof interactive video, audio, pictures and text.
With around two in five people in the UK
still not online, BBCi is an important service
to a large part of our audience, finishing theyear as the most popular interactive service
for audiences on all three platforms on which
it is available: Freeview, satellite and cable.

Audiences of all types – from teenager
siblings with different tastes in music to their
grandparents looking to pass half an hour
before going out to their mid-week tangoclass – are becoming progressively moredemanding as well as sophisticated in theircontent needs. It is also becoming morechallenging for broadcasters to be able toprovide that content to them how, when
and where they want to view or listen to it.
Markets and audience expectations are both
evolving at great pace.

BBCi is especially popular among committed
sports fans – events last year included
international Rugby, African Cup Football andWorld Darts – but also attracts occasional
sports fans – last year Wimbledon drew in an
audience of well over 3 million on digital satellite
alone. A priority for us is to evolve from an
event based service to an aggregated service
for audiences of interactive sport that offers
audiences a coherent one-stop-shop sports
offering. This is what the fans say they want.

BBC iPlayer and Radio Player offer top-quality
content for everyone, at a time and place
convenient to them. Innovative and highquality services like these have somethingfor everyone and help the BBC to deliver
genuine value to licence fee payers. This value

The appeal of BBCi extends beyond sports,
and the red button is increasingly being usedby audiences looking for interactive music andentertainment programming. Over 2.6 million
people used us to watch Glastonbury
interactive and over 1.5 million pressed red

BBCi also appeals to our younger viewers,
with CBeebies and CBBC Extra accounting
for nearly 10% of our audience. Charlie andLola has twice numbered amongst the BBC’s
top five interactive programmes on TV.
We brought BBC iPlayer into UK living rooms
by launching on Nintendo Wii, and will belaunching slightly later than expected on
Virgin Media in May. Plans are also under
way to make BBCi available on Freesat, andwe continue to explore the use of emerging
technologies like IPTV to extend the audiencevalue of our services.
BBCi’s average annual weekly reach was
11.0 million (30% of adults with digital TV),growing in line with digital penetration from
10.2 million (30%) in 2006/07.

bbc.co.uk reached its landmark tenth birthday
this year – and shows no sign of slowing down.
We are still the most popular content site in
the UK, offering something for everyone with
our unique range of high-quality content andservices including, for the first time this year,
a permanent range of podcasts. These
consistently prove popular with our audiences.
In the UK alone we saw 7.7 million people
successfully download our podcasts in Marchagainst a global BBC total for the month of
16.4 million. In the same month Radio Player
served a total of 12.5 million hours of live
listening to the UK, and 17.2 million hours
globally. UK audiences also listened toBBC Annual Report and Accounts 2007/08

44

%

31

Websites support a lot of BBC programmes,and offer a richer experience than viewing or
listening alone.

UK adult internet users who use bbc.co.uk

BBC iPlayer offers another chance to catch
programmes you’d otherwise miss.

4.3 million hours of on-demand radio content
that same month – with a further 3 million
hours picked up globally.

information), and /topics pages (which brings
together in one place a wealth of information
around major events like the Iraq conflict,or people like Gordon Brown, or subjects likeclimate change). The stories and personalities
that affect our audiences, interest them too.
News, sport and weather accounted foraround half of all page impressions over
the year.

drama programming are all popular. The moststreamed programme in the last financial year
was an episode of BBC One’s The Apprentice,
while Louis Theroux: Behind Bars for BBC Two,
in which the documentary maker investigated
America’s penal system, was second. Other
top titles include Gavin and Stacey, Ashes toAshes, EastEnders and Torchwood.

A large proportion of our sites support BBC
programmes. Highlights included Doctor Who;White, which expanded BBC Two’s season
on Britain’s white working class with archive
footage and provoked online debate; and LongWay Down, which allowed audiences to follow
Ewan McGregor and Charley Boorman’s
motorcycle adventure from Scotland to South
Africa ahead of broadcast through an online
diary, video clips and a route map. Over half(52%) of the audience for the TV programme
had watched online before transmission.
We complemented major events such as theElectric Proms and Glastonbury on bbc.co.uk
as well as official off-site BBC pages on social
networking sites. We used photographs andother visuals very effectively on our site for
The Making of Music, including an interactive
timeline that let users explore 1,000 yearsof classical music, read narratives and profiles,
and understand the music in its proper
historical context.
We used the benefits of digital technology toaddress the serious issue of body image in anaccessible way for Radio 1, attracting around
1.5 million unique users to a week-long campaignthat saw Kelly Osbourne and the Chris Moyles
team get the airbrush treatment to see just how
far images in the media can be manipulated.
For our younger users, we introduced My
CBBC (a one-stop shop for kids to aggregate
all their online activities), Adventure Rock(a downloadable world pioneering creative
gameplay) and child-friendly film-making
application Me and My Movie.
In response to audience demand, we havebeta-launched /programmes (which isa one-stop shop for all programme

In 2007/08 average weekly reach to bbc.co.uk
among adult internet users aged 16+ was
12.0 million/44% (up from 10.2 million/41%
in 2006/07). The highest reach figures wereseen in February, coinciding with the take-up
of BBC iPlayer and a strong month for theNews site.

Following approval by the BBC Trust, in
December the BBC launched BBC iPlayer
as an on-demand service that makes theunmissable truly unmissable by allowing
audiences to catch up on programmes
broadcast during the previous seven days.
We were in time for Christmas, and were an
instant hit and outperformed all expectations.
In March, after only three months, users made17.2m requests for downloads and streams of
BBC programmes, up from its initial monthly
figures for January of 11.2 million (around 25%monthly compound growth). Over the threemonths a total of 42 million programmes
were accessed.
By the end of 2007/08, we were reaching on
average 1.1 million users each week. At thesame time, we broke through the half a million
barrier, registering over 550,000 daily requests
to stream or download.
Big successes on BBC iPlayer come from all
genres: entertainment, comedy, factual andWe showed the Six Nations Tournament
in February to great success, and hope toincrease our sport content in the future(subject to rights). A wide range of news
programmes from News 24 and BBC
Parliament are already available along withhigh-profile current affairs programmes like
Newsnight and Panorama. And the main news
bulletins from BBC One. The time taken to
make broadcast material available on BBC
iPlayer is also reducing, which will allow thelatest news to be continuously available assoon as it has been shown on TV.
We aim to further develop BBC iPlayer asa download service by making it available toApple Mac and Linux users. We have alreadyprovided the streaming service on theseplatforms, as well as iPhone and touch devices.
We have an ambitious year planned. Our aim
is to make more of the broadcast TV schedule
available through BBC iPlayer, which will be fully
integrated with the more established radio
service, including simulcast streaming. We will
improve support for accessibility content andintroduce HD. We also plan to make it easier
to find content, giving audiences journeys fromone area of interest to another and allowing
them to personalise their on-demand content
from the BBC and build play lists as well as torecommend, share and discuss their favourite
BBC programmes with others.
Robust reach figures are not yet available
for BBC iPlayer – we will report these in the
2008/09 Annual Report and Accounts.

R E V I E W O F S E RV I C E S

32VisionAudiences deserve top-quality content –original, distinctive, memorable programmeswith great production values. But we haveto offer more than just the sum of theseparts. We should reflect their lives andexperiences, and build on them – showing
them images and exposing them to new
ideas they won’t have seen before.
Jana Bennett
Director of Vision

BBC Annual Report and Accounts 2007/08

44

33

MILLION

Cranford was just one of our drama jewels this year.

The number of people in the UK who watch
BBC One each week.

Landmark series covered areas as diverse as
natural history, science and architecture.

It has been a very strong year for BBC Vision,in terms of both range and quality – fromthe charm of Cranford on BBC One to thequintessentially BBC Two series Andrew Marr’s
History of Modern Britain, from the stellar
success of Gavin and Stacey on Three to the
Genius of Photography on Four. Across all sevenchannels, including our newest HD channel,
and in our multi-platform offering we havedelivered a wealth of fresh and exciting
experiences to our audiences. Viewers have
responded positively to the range of choices
across our portfolio.

BBC Three has achieved new heights withrange and quality. Following a highly successful
relaunch at the start of 2008, BBC Three now
combines high-quality television and the web
into a single integrated offer for young people.

availability of the full range of our output,
providing additional opportunities forviewers to find and watch programmes which
otherwise might have been missed in the linear
schedules (BBC Four and BBC Three shows
are consistently in the top 20 programmes).

It has been an outstanding year for drama,
with distinctive single dramas on both BBC
One and BBC Two, including Mark Haddon’sComing Down The Mountain and Stephen
Poliakoff’s Joe’s Palace. BBC One shone as the
top channel for drama with extremely highaudience appreciation levels. The enormous
popularity of Cranford spilled over to othersuccessful series including Oliver Twist and
Lark Rise to Candleford.
BBC Vision continues to be the biggest investor
in original British comedy, developing new
writers and new talent including James Corden
and Ruth Jones, the writing duo behind Gavinand Stacey. Other successes this year include
British-Iranian stand-up Omid Djalili, Mitchelland Webb, and Catherine Tate, part of a highly
appreciated Christmas season on BBC One.
This has been a rich and varied year for factual
programming. Landmark series have included
Sir David Attenborough’s Life in Cold Blood,
Dr Iain Stewart’s Earth: The Power of the Planet
and David Dimbleby’s How We Built Britain.
BBC Two has been courageous in forging
ahead with modernising its factual offering,
rejuvenating its portfolio and reaching out
to younger audiences with programmes suchas Top Gear, Louis Theroux, Long Way Down
and Everest: Doctors in the Death Zone.

New audiences are also finding BBC Four which
continues to be very inventive, from drama tostandout specialist factual programming suchas Atom and Medical Mavericks.
All four channels have acquired a judicious
mix of highly distinctive programmes which
complement each channel’s offer: for example,
Damages on BBC One, Heroes on BBC Two,
Family Guy on BBC Three and Mad Men on
BBC Four, which have all grown loyal audiences.
Our commitment to children and younger
audiences continues through the enormously
successful channels CBeebies and CBBC,and this year we have also launched our teenoffering BBC Switch.
BBC Vision is the largest integrated
commissioning and production house of its kindin the world, enabling producers to maximise
the creative potential of their content by
delivering audiences a total, complementary
experience across channels and platforms.
Highlights within our multi-platform offering
have included this year’s India and Pakistan
season, Sport Relief 2008, and The Apprentice,a real gem across BBC One, Two and on
the web.
This year we got permission to launch
our new High Definition service. This will
showcase some of the most ambitious,
innovative programmes from across
our portfolio, including sports, drama,
music and entertainment, as well as key
national events.
The BBC iPlayer has played an importantpart in increasing the prominence andIt was a strong year for programmes – but
it was also a year of some high-profile lapses
in editorial standards that affected all areas of
the BBC, including BBC Vision. We have beenworking hard to strengthen our editorial
processes, to ensure that BBC content remains
the most trusted and valued for our audiences.

BBC One is the nation’s most popular service– with over 44 million visitors each week.
Almost everyone in the UK has a direct
relationship with the channel, and so we offer
something for everyone.
BBC One is the home of high-quality,
high-impact drama. We had an outstanding
year, with the magnificent Cranford, written
by Heidi Thomas drawn vividly from Elizabeth
Gaskell’s books, and distinctive singles fromMark Haddon’s Coming Down the Mountainto Stephen Poliakoff’s Joe’s Palace. Further
highlights included The Passion, shown acrossthe Easter week, Lark Rise to Candleford andAshes to Ashes, the sequel to Life on Mars.
The No 1 Ladies Detective Agency by Anthony
Minghella and Richard Curtis, filmed entirely
on location in Botswana, proved popular withviewers. It was a fitting tribute to Anthony.
These series were part of many drama titles
with broad audience appeal. Others included
Waking the Dead, Hustle, Hotel Babylon, Spooks
and The Street. Younger viewers have beenequally well served this year with Doctor Who,R E V I E W O F S E RV I C E S ++ V I S I O N£134

MILLION

Andrew Marr took viewers on a journey
through modern Britain – winning awards inthe process.

Money raised for Children in Need by Strictly
Come Dancing phone votes.

A season of programmes explored the continuing
impact of 1947’s partition of India and Pakistan.

Robin Hood and Waterloo Road all returningand drawing in under 16s with their familiar
characters and engaging storylines. EastEnders
has been reinvigorated, and viewers have
responded positively to the programme’s
rich investment in new writing talent.

8.4 million tuning in each week to see whowill be waltzing into the sunset. The show
really has caught viewers’ imaginations, as wellas raising well over £1 million for Children in
Need. Everyone is looking forward to series
six later in the year.

in five years. In addition the channel produced
a number of high-impact current affairs
specials including Iraq: No Plan No Peace, The
Blair Years, Midwives Undercover and Taking on
the Taliban: The Soldiers’ Story.

We had an exceptional Christmas season, ourstrongest for several years, delivering a festive
assortment of programmes, from dramas suchas Ballet Shoes, a star-studded Doctor Who,
to comedy specials: Extras, My Family and awelcome return for To the Manor Born. All
these provided the audience with must-see
family moments.

We refreshed the line-up of comedy offerings
last year, with three new sketch shows making
promising debuts: The Armstrong and Miller
Show, The Omid Djalili Show and Ruddy Hell!
It’s Harry and Paul. The family sitcom
Outnumbered, with its charming use of
improvisation by the children, made a great
start and was highly praised. All will returnin 2008.

The ONE Show, launched last year, is an
important, continuing commitment toaudiences across the United Kingdom. The
programme now attracts nearly 5 million
viewers every day and it has given the channel’s
early evening weekday schedule improved
structure. Adrian Chiles, Christine Bleakley
and their colleagues are able to interest theirearly evening audience in subjects as diverse
as natural history, science and medicine.
Viewers have responded positively – and theaudience figures in the 7pm slot on BBC One
are considerably stronger than before.
Our schedule also delivered outstanding
comedy and entertainment. Programmes like
Have I Got News For You and Friday Night with
Jonathan Ross continued to shine. On Saturdaynights Doctor Who, Strictly Come Dancing and
Any Dream Will Do delivered great value anda really warm experience for the audience.
We also took the opportunity to establish
a more consistent, audience-focused scheduleon Sunday evenings last year. Antiques
Roadshow has now moved to its new
peaktime slot, and is regularly followedby popular drama. For the first time weexperimented with the Strictly Come Dancing
results show on Sundays, with an average of

Our daytime offer continues to perform well
despite the loss of Neighbours, with home­grown drama Doctors consistently attracting
around a quarter of the early afternoon
audience. There was also success with live
programming in the morning, in particular
Missing Live, a programme which wascommended in the House of Commons.
The BBC Ten O’Clock News continued toperform strongly in response to ITV moving
its own late evening programme to the same
slot. News is important to our audiences,which is why the channel offers it at consistenttimes in the schedule. We have now
expanded our offer with a new summary at
8pm designed to give a quick update on the
day’s main events. It has been particularly
useful in delivering the news agenda toyounger viewers and others who might nototherwise see any TV news. Scheduleconsistency also means that Question Timeand This Week have continued to build loyal
followings on Thursday nights.
This year Panorama established itself back on
Monday night, bringing challenging andimpactful stories such as Afghanistan topeaktime and achieving its highest audiences

Landmark series included Sir David
Attenborough’s Life in Cold Blood, Griff Rhys
Jones’ Mountain, David Dimbleby’s How We
Built Britain and Michael Palin’s New Europe.
We have also invested in high-quality science
with series such as Child of Our Time and Fight
for Life, and will continue to build our portfolioof high-impact factual and science ideas in the
coming year.
We are constantly refreshing the channel’soffer. Peaktime repeats are down again slightly
this year, to 8.3%, below the target of 8.4%
(2006/07: 8.4%).
BBC One’s average 15-minute weekly reach toviewers aged 4+ was 78.2% or around 44.1
million people in 2007/08 (in line with the 78.4%
or 43.9 million people in the previous year).

BBC Two had a great year in programmes
across the genres, which helped us to growour overall reach, and had real successreaching younger viewers (25– 44 year olds)
with titles such as QI, Top Gear, Heroes, LongWay Down and Dragons’ Den. We were theonly terrestrial channel to increase weekly
reach last year and increase share among
younger audiences (16–34s).
BBC Two has a reputation for making
complex ideas accessible and compelling forviewers. Highlights from our schedule which
did just this were Andrew Marr’s History ofModern Britain, an epic account of events that

BBC Annual Report and Accounts 2007/08

35

600,000
The hugely successful Gavin and Stacey was a
showcase of some of the best of new UK talent.

The number of extra viewers who watched BBC
Two last year, versus the year before.

Sacred Music, an ambitious look at the evolutionof European religious music in the Christiantradition.

have shaped our lives since the end of theSecond World War and, covering a longer
timescale, Dr Iain Stewart’s Earth: The Powerof the Planet told the story of our planet fromits birth 4.6 billion years ago. India & Pakistan
07 was an ambitious season marking the 60th
anniversary of independence for both nations,
including Michael Wood’s distinguishedlandmark series The Story of India as well more
personal series such as India With Sanjeev
Bhaskar. The season had great success with
Asian viewers, reaching over half of all UK
Indians and Pakistanis.

The Life and Times of Vivien Vyle did not
capture the audience’s imaginations, despite
quality writing, acting and production, we
remain committed to developing our own
comedy, as well as offering a terrestrial homefor some of the best from BBC Three.

In drama, there has been a similar focus
on new British talent. We transmitted
a season of drama pilots to showcase
a range of youthful acting and production
talent – and audiences were invited tofeed back on which of the programmes
they liked most. One of the dramas, Being
Human, triggered a petition running into
thousands demanding that a full series
be commissioned; and others such as
W10 LDN were felt to be particularly
significant for diverse audiences.

New documentary strand Wonderland
provided a showcase for exploring thediversity of life in today’s Britain, while theWhite Season was a provocative collectionof films that threw a spotlight on the white
working-class in Britain today: programmes
included Last Orders about the embattled
Wibsey Working Men’s Club in Bradford,
plus The Poles Are Coming, Rivers Of Blood,and All White in Barking.
The season also included White Girl, a play
written by Abi Morgan, featuring a remarkably
mature central performance from young Holly
Kenny. Other notable fiction on the channel
this year included single dramas Stuart: A Life
Backwards and Stephen Poliakoff’s CapturingMary, as well as popular series The Tudors andTorchwood. 10 Days to War was an innovative
sequence of short dramas marking the fifth
anniversary of a British presence in Iraq, withleading UK actors including Kenneth Branagh,
Juliet Stevenson and Art Malik taking part in
the first collaboration of its kind between
BBC Vision and BBC News.
In comedy Never Mind the Buzzcocks did wellwith younger viewers, as did other returning
comedy titles Lead Balloon and That Mitchell& Webb Look. Developing new comedy is atime-consuming business, and always carries
big risks, and although Roman’s Empire andWe created a number of new features andfactual entertainment formats for the key
8pm peaktime slot, including James May’s 20th
Century, Nigella Express and The Restaurant.
Masterchef moved to peak, and after years ofshowing us how to do things properly, Delia
finally relented and taught us how to cheatin the kitchen.
Last year BBC Two’s average 15-minuteweekly reach to viewers aged 4+ in all homes
was 57.6% or 32.5 million people, up slightly
on 2006/07 (57.0%/31.9 million).

This year brought a new look to BBC Threeand an exciting range of programmes that
helped us meet our remit as the UK’s mostinnovative and creative network for young
audiences – combining television and the web
into a single, integrated offering.
This was a particularly strong year for comedy.
Gavin and Stacey won a host of awards –including two BAFTAS – and delighted large
audiences with wonderful scripts andperformances from a new generation ofyoung British talent. The show will now moveacross to BBC One – confirming BBC Three’s
ability to develop and grow new comedy
titles while also acting as a ‘greenhouse’ forprogrammes that eventually migrate to theBBC’s terrestrial channels. Other comedy
highlights included The Mighty Boosh, which
was a particular favourite with the channel’s
16–34 target audience.

Current Affairs also grew in strength over
the year, as we looked to tackle tough subjects
in accessible ways for young viewers. Kizzy:
Mum At 14 provided an intimate look at teen
pregnancy, and formed part of the Born
Survivors season – a hard-hitting look at someof the problems bravely faced by younger
members of society. The season also included
documentaries on child poverty, self-harmand the young who care for unwell parents.
Alongside this work, we also received a
BAFTA Best Documentary nomination forour two-part investigation into honour killings,
Honour Kills. Other factual programming ofnote in this period included the education
experiment Leave Us Kids Alone, and Bizarre
ER, which found a popular way of exploring
medical problems and the sometimes
surprising solutions.
With an eye to diverse audiences, we also
substantially enriched our News offering, with
60Seconds News providing nightly world news
bulletins, alongside special editions on scienceand technology, and the environment.
Last year was also a big year for us in termsof our commitment to new media andtechnology. In February the channel was
revamped, with a focus on merging our
television and web elements into a unified
offering. All programmes are now simulcast

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%

36

Mr Tumble uses a simple sign language tocommunicate with his young viewers.

on the web at bbc.co.uk/bbcthree, and weoffer regular slots for user-generated
content in peaktime. Alongside this innovation,
BBC Three sought out content ideas thatdrew television and the web together, with
Lily Allen and Friends receiving particularly
positive feedback from young audiences.
All of this added up to a good year for
BBC Three in terms of audience reachand growth. The channel regularly has
the highest share of any non-terrestrial
channel in the hours that it transmits(2.2% for all individuals – and 3.5% for
the target 16–34s).
Average 15-minute weekly reach over theyear in all homes was 17.3% – up from 14.0%
the previous year (9.7 million in 2007/08, up
from 7.8 million).

BBC Four reached its sixth birthday, which
proved to be a breakthrough moment foraudiences to the channel – around one in tenof the population in digital homes now tunes
in to BBC Four each week.
Holding on to our original vision, we aimed
to increase the authority and impact of ourdocumentaries by moving towards more
short-run series and away from single
programmes. This resulted in a highlight of
the year, The Genius of Photography, our firstsix-hour series, which explored our 170-year
relationship with the craft of photography,
and shared the stories behind images takenby the most iconic practitioners. Also in Arts,
Masterpieces of the East and The Art of Spaineach looked at particular environments which
drove artistic creativity, and the art that grewout of them.

The growth in reach last year of BBC Four.

In the Night Garden is CBeebies’ most popular
programme ever.

In music, we brought our viewers Classical
Britannia, Brasil! Brasil! and Soul Britannia, anin-depth examination of the impact of Black
American and Caribbean sounds on British
music and society. The year drew to an end
with actor and former chorister Simon Russell
Beale exploring the evolution of westernreligious music in Sacred Music, our biggest
classical music series to date. He examinedthe developments from 12th century
plainsong to the pre-eminent composerof Christian church music, JS Bach. It wasvery well received.

Last year our forays into comedy – The Thick
Of It and Lead Balloon – and drama –Andrew
Davies’ adaptation of Fanny Hill – worked
extremely well and swiftly earned terrestrial
outings on BBC Two.

Our science offer was broad this year,
including Visions of the Future, Medical
Mavericks, Atom and Absolute Zero – as well
as Parallel Worlds, Parallel Lives which followedMark Everett, singer with rock band Eels, on
his journey across America to learn about thefather he never really knew, quantum physicist
Hugh Everett III. It won an RTS award for best
single documentary. In the year ahead we will
still make room in the schedule for notable
one-offs like this, but our plans are to continue
to extend some series to longer runs.
Our experiments with seasons and themednights have already proven successful.
Edwardians: The Birth of Now was a major
six-week collection of dramas, documentaries
and entertainment that celebrated
developments at the start of the 20th century
that were truly world-changing. Others thisyear included Children’s TV on Trial, British
Birds, Motorways and Viennese art. The Why
Democracy? season from Storyville was a huge
multimedia event that examined the state of
democracy in the world today. It involved over
40 broadcasters, in around 200 countries andterritories – potentially reaching 300 million
people. Our seasons have been appreciatedand valued by critics and viewers alike.
Factual programming is core to our offer –but we continue to experiment in fiction.

BBC Four’s average 15-minute weekly reach toviewers aged 4+ in all homes in 2007/08 was
7.0% or 4.0 million people (compared to 5.6%
or 3.2 million people in 2006/07).

Nearly half of the target audience (44.4% of
2–6 year olds) watches CBeebies each week.
And it is still growing.
New programmes like Mister Maker and Space
Pirates quickly became hits with our viewers.
But our biggest success story of the year was
In the Night Garden, which quickly became
our most popular programme ever. Thereis nothing like this imagined world for earlypre-schoolers. The immersive website
includes games and the Ninky Nonk webcam,
and played a big part in helping the CBeebies
website attract over three-quarters of amillion unique users each week.
Nina and the Neurons brought science to ourviewers in a fun way in 15-minute chunks. Nina
is a neuroscientist and the Neurons live in her
brain sending messages from her brain to theparts of her body which control her senses.
They comment on the world Nina inhabits
while ‘looking out’ on it from Nina’s brain.
We took our young viewers out andabout this year to a variety of interesting
places like farms, beaches and castles
with Something Special. The programmefollows a simple, fun and informative
format, focusing on aspects of the children’s
world about them. It uses Makaton

BBC Annual Report and Accounts 2007/08

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37

A large proportion of children’s output comesfrom outside London.

The number of years Newsround has brought news
and covered issues aimed at young viewers.

MI High: the first CBBC show filmed in HD,
bringing jaw-dropping stunts to life.

sign language to help children with special
communication needs connect, but also hasa broad appeal.

and Caroline Flack. RTS award-winning Serious
Andes took a group of adventurous children
to the top of Mount Cotopaxi and later thisyear we’ll pick up the natural history theme
again in Serious Ocean, which will take a groupof children around the South African Cape.

Following the channel’s relaunch with a brandnew line-up and new website, and despite
tough competition and our 7pm finish time
being increasingly out of line with children’sviewing times, 2007/08 was the CBBC
channel’s strongest year yet.

Dramas such as The Sarah Jane Adventures,
MI High and Tracy Beaker are popular with
our viewers, who also like to visit the
programme sites online to find out more
about their favourite characters, download
games, and chat with their friends. The online
space is increasingly important to our viewers,
and we’ll continue to offer interesting andentertaining content for them there. New
sites launched this year included a real-time
online event called Run!, a downloadable
virtual world called Adventure Rock anda personalised online space called Mycbbc.
All BBC websites for children are mediatedand are safe places for young people to be.

Weekends are still challenging for CBBC,
with strong competition from otherbroadcasters, particularly on Saturday
mornings, but it’s still a great place toshowcase talented presenters like Barney
Harwood, Sam and Mark, and Basil Brush.

This was the first full year of CBeebies on
the radio. Whilst reach was modest in thedaily afternoon slot on BBC 7 streaming
online and podcasting have been more
effective at reaching our listeners.
CBeebies average 15-minute weekly reachto viewers aged 4+ last year was 7.7% or
4.3 million people (versus 6.6% or 3.7 million
people the previous year). It was Bafta’sChildren’s Channel of the Year in 2007.

The CBBC Channel is now almost the only
source of new UK originated content for
6–12 year olds in news, factual, drama andentertainment. One of the key strengthsof the channel is its mixed genre offering,
without an over-reliance on animation.
This year our daily news service Newsroundcelebrated its 35th year – and it’s still the
only year-round news service specificallydesigned for children on television, witha complementary online news service giving
more background to the big stories. Its
investigation into child poverty, The Wrong
Trainers, won a Bafta. Just one of five thechannel won last year. Other Newsround
specials covered knife crime and divorce.
More are planned.
In factual, Extreme Animals featured thewackiest, smartest, most spectacular andthe most gross – naturally! – animals foundin the BBC Natural History Unit’s archive.
The series was narrated by Reggie Yates

Entertainment shows such as Trapped, The
Slammer and Raven remain immensely popularon the channel. This year saw Raven reachseries 7 – and still viewers want to pit theirwits and their skills against others, sure that it
won’t be them falling into the freezing watersof the Deep Loch. Stake Out is new to ourschedule, a hidden camera gameshow thattests how well you know your friends andplays inventive practical jokes.
Kids everywhere hound their parents to stopsmoking – so we made a programme called
Smokehouse where we supported thosechildren who wanted to encourage Mum or
Dad to kick the habit. Over 150,000 ‘giving
up smoking’ packs were downloaded fromthe website.

Average 15-minute weekly reach to viewers
aged 4+ was 5.6% or 3.1 million people(4.4% or 2.4 million people in 2006/07).

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Audio & MusicIn a world of multichannel, technologicalinnovation, increasing mobility and choice,the BBC still makes a difference. It supports
British talent in its broadest sense – writers,
musicians, performers of course, but also
journalists, engineers and others. It helped
make first terrestrial and now digital radio
possible in the UK. And it enables culturaland creative diversity to find its voiceand thrive.
Jenny Abramsky
Director of Audio & Music

BBC Annual Report and Accounts 2007/08

39

25 +
%

Record audiences tuned in to Chris Moyles
on Radio 1 this year.

Radio 1’s share of listening among 15 –29s
was over 25%, the best for seven years.

The Big Weekend in Preston was just oneof many live BBC events.

On average around two-thirds of the UK
population aged 15+ listened to BBC radio
stations each week last year for at least 15
minutes. This was broadly consistent withthe previous year, and a strong performancein an increasingly competitive market.

Radio 1 may have turned 40 in September,
but we are still one of the UK’s best known
and used youth brands.

current acts to cover 40 tracks from eachyear of our history, starting with Kaiser
Chiefs covering The Move’s Flowers In The
Rain, the first song ever played on the station.

A high proportion of this listening is to ouranalogue services – Radios 1, 2, 3, 4 and 5 live
– but awareness of and listening to our digitalchannels are both growing: they each haveover half a million weekly listeners and in Q1
2008 6 Music, 1Xtra and Asian Network allachieved record reach.
The big radio story for the year is the growthof digital radio listening – more than 10 million
people now listen to BBC radio digitally eachweek via DAB, DTV or internet.
Digital broadcasting offers tremendous
opportunities for users of audio and music
content. On-demand listening has continued
to grow and there is a real appetite forpodcasting. Some of our podcasts are more
successful than others, and we will continue
to work to improve and extend this offer
across our services.
Radio is an intimate medium – many listeners
have a strong relationship with their favourite
station. Presenters are key to this working.
We will develop talent or give newopportunities to established talent in orderto deliver the best mix of creativity and valuethat we can to our listeners.

Despite a highly competitive market(commercial radio has a 50% share of 15–29sradio listening) and the fact that the target age
group is increasingly tempted away from radioin favour of newer forms of media – social
networking sites and gaming, for example –Radio 1 reach topped 11 million in the quarter
January–March for the first time in over six
years and online, we have by far the highest
number of unique users among all BBC
stations – averaging 1 million during the year
(up 11% on the previous year).
Love him or not – and he does divide opinion– Chris Moyles played his part in this strong
performance. His breakfast show yet again
increased reach and share in the first quarterof 2008, with 7.7 million weekly listeners, up
by nearly 700,000 on a year ago (aged 15+)
– a new record high.
Daytime programming is complemented bya diverse range of specialist shows and we
simplified our schedule in 2007 to offer aclearer proposition: Friday night, for example,
now focuses on dance music, starting with theearly evening Friday Floor Fillers, and continuingwith Pete Tong and Annie Mac’s Mash-Up;
Saturday night is dedicated to urban music,
kicking off with Trevor Nelson (simulcast on
1Xtra), followed by Westwood and Reggae
Dancehall.
There is also a new focus on fewer, bigger,
better ideas: for example, we celebrated
our birthday with Established 1967. Eachweeknight for two weeks, some of the biggest
names in music past and present were invited
to host their own show playing the tunes
that inspired them. The line-up included
Paul McCartney, the Arctic Monkeys, Debbie
Harry and Paul Weller. We also asked 40

Live events coverage this year included
Radio 1’s Big Weekend in Preston, Download,
Global Gathering, T in the Park, and theElectric Proms. Together with the addition
of Jo Whiley’s Live Lounge Tour and Radio 1
Presents…, as well as over 300 new live
studio sessions, we again showed a significant
commitment to live music.
And emerging acts found a stage through BBC
Introducing, launched during the year across anumber of services as an important promoterof new and unsigned artists.
Speech programming has a key place in theschedule – last year we delivered 300+ hours
of news designed specifically for our young
audience, including the first-ever behind-the­scenes look at MI6’s headquarters. We will
also continue to offer social action campaigns
with impact – our 2007 Bare All safe-sex
campaign aimed to get listeners talking
responsibly about sex and its consequences
and was deliberately timed to coincide withthe summer holiday season. And on Sunday
evenings, Kelly Osbourne became the newpresenter of The Surgery, offering advice on
issues of concern to young people.
Overall, Radio 1 accounted for over 10% of
all radio listening in 2007/08 – and had an
average 15-minute weekly reach of 21.5%(around 10.8 million people) – up slightly fromthe previous year’s 21.4% and 10.5 million.

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MILLION

Russell Brand was an instant hit on radio,
and has one of our most popular podcasts.

Radio 2’s mix of music and speech makes us
the UK’s most popular radio station, with theaverage listener tuning in for around 12-and-a­
half hours each week; and Wake Up to Wogan
is still the most listened to breakfast show in
the UK, reaching a record 8.1 million listeners
in Q1 2008.
Weekday daytime programmes continue toperform well. Chris Evans further establishedhimself in the drivetime slot; his original andentertaining business news each hourdemystifying developments in the financial
world and providing consumer hints and tips.
This year he won two Sony Gold Awards –The Entertainment Award and Music Radio
Personality of the Year – part of a total forthe station that included three further Golds
plus others.
Russell Brand is evolving into a major radio
figure. His single late night weekend show
spawns an incredibly popular weekly podcast,
averaging over 540,000 UK monthly
downloads in the last quarter of the year.
Aled Jones has flourished presenting Good
Morning Sunday, with its lively mix of chatand inspirational music. Guests have included
the Archbishop of York, the Most Revd andRt Hon Dr John Sentamu at Easter andformer Home Secretary, David Blunkett.
Several popular performers have discussed
their faith with him, including Belinda Carlisle
and Engelbert Humperdinck.

The number of TOGs who listen to Wake Up
to Wogan.

The Proms are a vital part of Radio 3’scommitment to live music.

Live music is key to the Radio 2 mix, including
this year a concert from REM, a collaboration
between Annie Lennox and the BBC Concert
Orchestra, and Simply Red performing their
iconic Stars album in its entirety. Our festival
coverage included a continuing commitment
to the Cambridge Folk Festival and one-off
events such as Concert for Diana and Live Earth.

The revised Radio 3 schedule has now beeneffective for over a year and it has delivereda strengthened proposition of musicalperformance: music recorded at concerts
and other events now accounts for over 55%
of the music output, up from 52% in 2006/07.
We aim to attract a broad range of listeners,
but do not shy away from representing
challenging material alongside the morefamiliar – both Pavarotti and Stockhausen
were commemorated with special
programming. Audience appreciation
continues at a high level, with Composerof the Week and Classical Collection inparticular being rated very positively.

The Music Club hosted Music Club Live in
December, celebrating the success of new
artists it has championed and featuring James
Blunt, Newton Faulkner, Amy Macdonald,
Tom Baxter, The Hoosiers and KT Tunstall.
The show was recorded for television andexclusive backstage footage was available
online at The Music Club website.
To mark the 40th Anniversary of theBeatles’ definitive album, Sgt Pepper’s Lonely
Hearts Club Band, contemporary artists,
including Oasis and The Kaiser Chiefs, werecommissioned to re-record tracks. Behindthe scenes video footage was offered
via BBCi. A major season on the 60s
accompanied this musical initiative and was
one of our speech highlights of the year.
Jeremy Vine’s weekday show is wellestablished in our schedule, with 5.7 million
weekly listeners this year. His engaging
presentation of subjects as diverse as
examining ‘yob’ culture and quizzing theForeign Secretary on rendition flights,
offers listeners an accessible approach
to current affairs.
In 2007/08 Radio 2 had an average 15-minuteweekly reach to adults aged 15+ of 26.2% or
13.2 million people (in line with the previous
year’s 26.5% and 13.2 million).

In addition to the BBC Proms, many of our
500 concerts during the year were organised
directly by Radio 3 and the BBC performing
groups. Elgar’s anniversary, for example,
provided a welcome opportunity to re­examine this enigmatic composer, including his
seldom-heard Starlight Express. Another rarity
was heard for the first time in eight decadeson the evening of Remembrance Sunday, A
World Requiem by John Foulds. We dedicatedan entire weekend to concerts of music by
Judith Weir. Our world music output took
us round the globe, including visits to Cuba,
Jordan and Georgia to hear those musicaltraditions in their original settings.
Partnerships are vital to the station. We
continue to work closely with major festivals
like WOMAD and the London Jazz Festival,
with opera houses like the Metropolitan
Opera, and with performing groups – wehave an exciting new relationship with the
New York Philharmonic. For the first time,
we collaborated with Radio 4 in a major
history of western music, with Radio 3’s
weekday Afternoon on 3 offering performancesof music featured in James Naughtie’s Radio 4
series, The Making of Music.

BBC Annual Report and Accounts 2007/08

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41

Today is just one example of world- class radio
journalism in our schedules.

Years since the Falklands conflict – one of several
major anniversaries marked by Radio 4 this year.

The late Humphrey Lyttleton chaired
I’m Sorry I Haven’t a Clue from 1972.

Our speech and drama output offers bothclassic work and contemporary reflections.
WH Auden figured prominently in his
centenary year, and the 70th birthday of Tom
Stoppard was marked by a production of his
recent play, Rock ’n’ Roll. The Radio 3 festivalof ideas, Free Thinking, again held in Liverpool,
involved both the general public and thinkers
from the worlds of arts, science, philosophy
and technology. The theme of Freedomreflected the anniversary marking theabolition of the transatlantic slave trade.

Radio 4 is best known for the quality andrange of its journalism, with highlights this year
including two interviews with departing prime
minister Tony Blair – riveting radio delivered
by John Humphrys – and Baroness Thatcher’s
first interview for many years for Hong Kong
– A Decade of Change.

working closely with BBC Vision’s Springwatch
and Autumnwatch. The 40-week series oflive programmes is tracking the migrationof animal species great and small, on allcontinents, and inviting listeners to contribute
their own observations.

The emerging digital landscape offers great
opportunities, somewhat restricted byregulatory issues in the classical music area.
However, we were pleased to make aninnovative video of Carmen from English
National Opera available on-demand. Ourdeveloping range of podcasts, launched inearly 2008, is extending the reach of thestation and has performed well against otherarts and music offerings.
For the last year, average weekly 15-minuteweekly reach was 3.7% (1.9 million) – on a parwith 3.8% (1.9 million) in 2006/07. Average
listening hours were just over six hours per week.
Online live listening remained stable at 1.4 million
hours (quarterly average).

It was a year for strong documentary series,
including Gavin Esler’s The Clinton Years,
Evan Davis’s The Price of Property and Justin
Webb’s Death to America, which challenged
anti-Americanism. We responded tocurrent events with fast commissioning of
programmes on emerging issues such as
the summer floods, the US credit crunch,
Scotland’s first Scottish Nationalist
administration and events in Pakistan.
Major anniversaries were marked withseasons of drama, documentaries and debate:
the 60th anniversary of Indian and Pakistani
independence; The Falklands: 25 Years On,
including programming from an Argentine
perspective; and the six-day Arab-Israeli war,with Jeremy Bowen retelling the conflict day
by day; whilst The Sex Lives of Us exploredsexuality in Britain 50 years after the
Wolfenden report. Sue McGregor’s The
Reunion included a memorable edition on
1984’s Brighton bomb in which Lord Hurd,then Northern Ireland Secretary, met IRA
bomber Patrick Magee.
Narrative history series tackled big themes
on a scale unmatched elsewhere. In The
Making of Music James Naughtie followed
the development of western music from
Gregorian chant to Philip Glass. The 60-partseries was complemented by related music onRadio 3. A ten-part series presented by Anna
Chen told the story of The Chinese in Britain.
World on the Move, which began in early 2008,is the biggest natural history project ever onradio, with an extensive online dimension andRadio 4 remains the biggest commissioner ofradio drama and readings anywhere. Our aim
is to increase the impact of drama, with more
series rather than single plays, and sustainable
returning series. We are experimenting with
Writing the Century, an 18-month-long projectbased on family letters and diaries, some
contributed by listeners. We also broadcast
more drama illuminating current events:
When Greed Becomes Fear and Soul Motel
each took only six weeks from initial idea totransmission, and Avoid London was a weekof dramas marking the anniversary of the
7/7 London bombings.
New comedy included The Unbelievable Truth
and The Museum of Curiosity. Fags, Mags andBags was a new situation comedy set in an
Asian Glasgow corner shop, by Sanjeev Kohliand Donald McLeary.
The sound of Radio 4 continues to evolve
through new voices, or familiar voices doing
new things. Kirsty Young has built theaudience for Desert Island Discs; Sandi Toksvig
chairs The News Quiz brilliantly; Evan Davis’s
fresh approach to business, The Bottom Line,
has established itself in the schedule.
Our feature-making was recognised in the
success of Don’t Hang Up, the first radiofeature to win all three top international
awards – Prix Italia, Prix Europa and Third
Coast – in the same year.
Radio 4 had an average 15-minute weekly
reach to adults aged 15+ of 18.7% or 9.4 million
people, similar to the 2006/07 figures (18.7%
or 9.3 million people).

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We have an enviable range of sportscommentators across all disciplines,
from football to cricket.

5 live offers a daily mix of news and an
unrivalled coverage of UK and international
sports across a variety of platforms. The
service’s continued reliance on its terrestrial
AM frequency remains an issue, in terms ofcoverage and sound quality, although we are
increasingly drawing in listeners through digitalmeans – 31% of listeners now do so digitally(Q1 2008) – and we are putting out more
content via mobile phones, podcasts and on
digital TV with the red button (where 606
Interactive can now be found). Live online
listening reached a new high in Q1 2008 at
6.1 million total hours, up 25% on the same
period in 2007.
We increased the quantity of our sports
programming this year by about 80 hours, toover 2,100 hours in total. The quality remains
peerless, with an outstanding line-up of sportscommentators and journalists such as Alan
Green, Garry Richardson and Mark Pougatch.
In news, the creation of the core news
team to follow and develop news stories
throughout the day is leading to a more
coherent daily news offer, from Nicky
Campbell and Shelagh Fogarty in the mornings
to Richard Bacon at night. We have also run
a series of investigative Sport documentaries
presented by Brian Alexander.
We will develop further the Breakfast’s
reputation for taking the programme out
to surprising locations. Hendon Police College
and Eton were just two from the last 12
months. The show’s blog took audienceinteraction in a new direction.
Across the output we used material fromlisteners for special NHS and Education days
– just two examples of how the continued
growth of audience interactivity resulted in
more listener-originated, and original, stories
on air last year than ever before. We willcontinue to explore more opportunities
to do this.

3

Proportion of 1Xtra listeners aged 15 –29.

All BBC digital channels grew their audiences
this year.

Radio 5 live had an average 15-minute weekly
reach to adults aged 15+ of 11.7% or 5.9 million
people (versus 12.0% or 6 million people
in 2006/07).

commercial stations with its unrivalled
commitment to UK black music, including
many artists largely ignored by other (legal)radio stations. This allows 1Xtra to draw inaudiences often underserved elsewhere in the
BBC: two-thirds are young adults aged 15–29,
with nearly one in three from a minority
ethnic group. It’s a unique mix in the BBC.

5 live Sports Extra provides commentarybased coverage of a wide range of sports,
offering a greater choice of live action to fans.
We continue to build our reputation as thehome of live cricket with uninterrupted
coverage of International Test matches andthe World Twenty20 championship among
the highlights.
We also hosted nine matches in the Rugby
World Cup and some in the Six Nations
competition. The service continues to follow
Formula 1 practice and qualifying. Over thelast year we also covered tennis, swimming,
rugby league, boxing, athletics and golf.
Many sports are seasonal – and so weekly
broadcast hours, and therefore listening hours,
fluctuate across the year. On average across
2007/08, Radio 5 live Sports Extra had an
average 15-minute weekly reach to adults aged
15+ of 1.5% or 0.7 million individuals, slightly up
on 2006/07 levels (1.3% or 0.7 million people).
We achieved record reach – nearly 900,000
listeners – for 2007’s Cricket World Cup.

This year we revamped our schedule, making
it simpler and launching new flagship breakfast
and early evening shows in October. But there
was no change to the existing music policy,
which has little crossover with

Our wide range of live events coverage
from around the UK and beyond over the last
12 months included Notting Hill and Leeds
Carnivals, 1Xtra in New York (with DJ Semtex
live from the offices of the legendary Def Jam
records), and the Africa Cup of Nations. 1Xtra
Live, our first major live concert, was a success– and 4,000 people had a truly memorable
night in Coventry as a result. Our aim is tomake 1Xtra Live a regular showcase for blackmusic in the UK, and we’re already planninga follow-up.
1Xtra is home to some of the most passionate
and knowledgeable specialist DJs in the UK,
including MistaJam, Ras Kwame and Westwood.
Giving them all space to do their thing, 1Xtra’s
focus now is on fewer, but bigger and better
creative ideas. Dancehall After Dark, forexample, was an in-depth week ofprogramming and interviews with key artists
in the genre. It demonstrated the breadth of
our specialist output.
With younger people still not buying digitalradios to the same degree as older listeners,
we are using online to grow our audience.
We’ve increased interactive content andpodcasts. And we’re looking to reach out
into new media spaces through syndication,
mobiles, or games consoles.
1Xtra had record audiences last year. Over the
12 months to March, our average 15-minuteweekly reach to adults aged 15+ was 1.0% or
0.5 million people last year (0.8% or 0.4 million
2006/07).

BBC Annual Report and Accounts 2007/08

43853,000
A new variation on an old theme, Electric Proms
are now established across the BBC portfolio.

BBC7 is the most popular BBC digital station
with a peak reach of 853,000.

Specialist music programmes like Future Friction
are important to the diversity of the BBC’s
overall offer.

The year got off to a difficult start for 6 Music,
with some phone-in competitions revealed ashaving misled our audience. We apologised,and have since ensured that all relevant
programme staff have completed the
Safeguarding Trust course. We are confident
the situation will not be repeated.

2007/08 was business as usual for
BBC 7 – which means an eclectic mixof archive and new material aimed at
a discriminating audience.

BBC Asian Network is at the heart ofAsian entertainment in the UK – both asa broadcaster and as main partner at the
London Mela, through attendance at otherfestivals, and with our own University tour.

On a positive note, over the last 12 months
we’ve developed our presenter line-up to
now include Adam & Joe, Stephen Merchant,
George Lamb and Don Letts. Shaun Keavney
established himself in the Breakfast slot.
Our music news service was improved, andwe launched a Music Week podcast. Digital
media offers really exciting possibilities for
6 Music: we generated a vodcast of music
news reporting from the Electric Proms for the
rest of the BBC this year; and Tom Robinson’s
Introducing show became the first national
radio programme to wholly source unsigned
artists from the internet.
We are exploring further opportunities togrow The Hub’s links with live music frompredominantly new and UK artists, particularly
at festivals, and as a virtual space online.
Over the year, BBC 6 Music has continued
to attract in new listeners, with a new reachrecord of 520,000 in the first quarter of 2008
– meaning that over one in four of our listeners
then were new to the channel, and its particularmix of old and new. Average 15-minute weekly
reach to adults aged 15+ was 1.0% or 0.5
million people (0.9% or 0.4 million people in2006/07). We were delighted to win Stationof the Year in the Digital Music Awards.

Highlights this year included a series ofprogrammes in a Daphne du Maurier
centenary commemoration and a Stars andStripes season featuring American comedy
and drama. We also broadcast newly
commissioned comedy in the form of The
Penny Dreadfuls and Chain Gang, an interactive
drama developed from listeners’ suggestions.
CBeebies in the afternoon slot provided a
distinctive mix of stories, features and music
for pre-schoolers, including Charlie andLola, Doodle Doo and Wiggly Park. For older
children, every day at breakfast Big Toe Books
offered readings from the archive, with titles
this year including Oliver Twist and The
Chronicles of Narnia.
This year our daily 7th Dimension slot included
Blake’s 7 and a Doctor Who season. And we
broadcast a Heroes radio show, also available
as a podcast, to tie in with the cult BBC Two
series. Sci-fi remains our most popular typeof drama and we are keen to develop thisfurther, working with Radio 3 and Radio 4
on a joint season for later in 2008.
BBC 7 is the BBC’s most popular digital station,with a peak reach of 853,000 in Q4 2007.
Average listening hours were broadly stable over
the year and versus 2006/07 at 5 hours and 24
minutes a week. Our average 15-minute weekly
reach to adults aged 15+ for 2007/08 was
1.6% or 0.8 million people, up slightly on theprevious year (1.4% or 0.7 million people).

Music is important across all cultures within
Asian life. To reflect this, we added new musicprogrammes to the schedule this year: Adil
Ray in the weekday drivetime slot and Sonny Ji’s
The Bhangra Mixtape on Saturday nights. New
and emerging talent featured in Future Friction,with Bobby Friction going on to win a SonyGold award in the Specialist Music category.
We collaborated with BBC Two on Desi DNA,on subjects like art and music, and lessobvious areas ranging from bodybuilding todrag queens, covering football on the way.
Additional exclusive content was available
via the red button.
We worked hard to increase the impactof our journalism with powerful stories in
Asian Network Reports on forced conversion
and being gay in Asian communities, to namejust two. There was extensive coverageof Benazir Bhutto’s return to Pakistan andsubsequent assassination.
The 60th anniversary of Partition provided
food for thought, and much of ourprogramming reflected the variety ofexperiences and opinions within British
Asian communities. The Asian Nation
multimedia project gave a platform forour listeners to share their own stories.
BBC Asian Network had an average 15-minuteweekly reach to adults aged 15+ of 1.0% or
0.5 million people last year. This was consistent
with 2006/07 (0.9% or 0.5 million). AM listening
in the Midlands remains strong.

R E V I E W O F S E RV I C E S

44Journalism

It’s a big goal, to be the best. But BBC Newsis the UK’s most trusted local, national andinternational news provider, offering the best
journalism in the world. We’ll be under threat
if we don’t adapt to meet the changing needsof our audiences for greater convenience,
personalisation and participation. The digital
revolution defies us not to rest on our laurels.
Mark Byford
Deputy Director-General andChair of Journalism Board

BBC Annual Report and Accounts 2007/08

99%

A wide range of interviewees ensures our news
analysis offers a variety of views and remains
impartial.

45

Relevant staff who attended Safeguarding Trusttraining course.

Current Affairs in peaktime hours is
a commitment to our audiences.

* The transition of power from Tony Blair
to Gordon Brown was covered confidently
by our specialist correspondents.

In its first full year of operation, the College
of Journalism, the BBC’s first co-ordinatedjournalism learning service offering anddeveloping a wide range of courses andmodules, confirmed its importance to the BBC.
The College was lead partner in the BBC
Trust’s Safeguarding Trust online and face-to­
face training modules, which were completed
by 99% of all relevant staff within the financial
year (over 17,000 individuals).

JOURNALISM:
NEWSThe BBC provides the most watched, listened
to and used news service in the UK – over
80% of the UK population aged 15+ used ournews services in a typical week throughout
last year.
During the year we continued the radical
overhaul of BBC News – to better meetchanges in audience needs. For the first time,
radio, television and on line news have cometogether to minimise duplication and optimise
the impact of original BBC journalism bycreating a Multimedia Newsroom. The new
Newsroom works closely with the newMulti Media Programmes department whichbrings together key BBC investigative andlong-form programmes like Radio 4’s Today,
and television’s Newsnight and Panorama.
These changes will also help deliver efficiency
savings over the coming six years.
Journalistic accuracy, impartiality andindependence will remain the cornerstoneof the BBC’s ongoing news strategy. These key
values were seen across our news output thisyear on all platforms.
Leading domestic stories this year included:* On the economy and business, we broke
the story of the Northern Rock crisis, andthen covered its nationalisation, including
extensive coverage on local radio in the
North East, where most of the affectedstaff lived and worked, and the firstinterview with chief executive AdamApplegarth before his resignation. Thiswas just one element of the Sub Prime loan
problems in the USA hitting the UK androcking global financial markets, and which
was reported extensively across our local,
national and global services.

* Bomb attacks on London and Glasgow
included on-the-spot coverage andinterviews with key witnesses.
* Immigration has grown to be a key concern
for the British public. We ensured that we
dealt with the issues objectively as well as
providing a deeper level of analysis on, forexample, immigration statistics.
The international agenda also shaped what
we covered. Big stories from around theworld included:* The death of Benazir Bhutto at a politicalrally – covered extensively in our domestic
and international services.
* On the violence in Tibet, China’s internal
security laws meant that the BBC could notenter Tibet, so we took care to try to verify
on-the-ground ‘eyewitness’ accounts.
* Political unrest in Zimbabwe as the country
faced a pivotal election. We managed tocapture life in different parts of the country
despite a ban on entering the country,
including undercover reporting from inside
the border.
* During the ongoing unrest in Iraq and
Afghanistan, we continued to offer animpartial picture of what was happening
on the ground, from a variety of voices.
* The American presidential primaries – thepresidential elections will also be covered
in depth in the year ahead.

A bespoke modified version of the modules
has now been rolled out to supplierorganisations and individuals in the independent
production sector to ensure that factual
programmes in particular meet the BBC’svalues, and will be made available free of charge
to the wider UK population on bbc.co.uk in thesummer as part of the BBC’s wider media
literacy outreach effort.
The College also ensures that BBC journalists,
irrespective of where they are or the language
they report in, understand the BBC’sjournalistic values.
Over half of all UK adults aged 15+ (52.1%)
listened to radio news each week last year
(15 minutes) – around 26.2 million people.
This figure was up slightly on 2006/07(25.6 million /51.4% ). At the end of March
8.0 million people visited us online – up by
one-third on the year before (6.0 million).

R E V I E W O F S E RV I C E S ++ J O U R N A L I S M

46

233
Many BBC journalists, like Lyse Doucet, work
across radio and television, and increasingly
online too.

MILLION

BBC’s global news audience.

Afghan women use a child’s radio to listen to
World Service.

BBC GLOBAL
NEWS

We marked ten years of a rolling news service
in November. A big anniversary provides anopportunity to reflect and over the year we’ve
assessed the channel within the context of thewider news offer and concluded that the time
was right to refresh the brand and place it at
the heart of BBC News. However, the brandchange does not mean any fundamental shift
in the channel’s proposition – it retains its
hourly news headlines and emphasis onserious and trusted journalism, commentand analysis.
Earlier experiments with the use of studiospace and other resources had beenencouraging. For example, we co-presented
across News 24, BBC World and theterrestrial networks from two sites inPakistan within hours of the death of Benazir
Bhutto: Lyse Doucet from the Bhutto’s
ancestral home in Larkana and Mishal Husainfrom Islamabad.
Other developments have included Question
Time Extra, which responds to viewers
immediately after BBC One’s Question Time.
And Blue Peter’s Gethin Jones presented E24,
an entertainment news pilot which proved anearly success and had its initial run of nine
weeks extended.
Viewing figures are up 21% year-on-year and thechannel has a 15-minute weekly reach figure of
4.2 million (7.5% of all homes – versus 3.2 million
and 5.7% for 2006/07), and share up from
0.5% to 0.7% , ahead of all the other UK news
channels. It was presented with a prestigious
Golden Nymph during the year.

BBC Parliament is the only UK channel
dedicated to the coverage of politics, featuring
debates, committees and the work of thedevolved chambers of the UK. The
parliamentary story of the day is told in
The Record.

The BBC’s Global News division covers
English and 32 languages, and had a combinedreach on radio, television and online last yearof 233 million, in line with the year before, andmaintaining the BBC’s position as the world’s
leading international news service.

The channel is much more than a record ofdebates and hearings and is nimble enoughto experiment and innovate. Last year, forexample, we took a selection of programmes
from BBC Two’s Storyville strand and created acouple of themed evenings about democracyaround the world. One story – Taxi to the
Dark Side – went on to win the 2008 Oscar
for Feature Documentary, and promptly got
its UK post-victory airing on BBC Parliament.

We encompass BBC World Service radio,
BBC World News television, the BBC’sinternational-facing online news services, BBC
Monitoring and BBC World Service Trust.

Archive events included a showing –presented by Cliff Michelmore – of original
news programmes on the devaluation crisis of
1967. On Sundays, viewers watched coverageof the speeches and press conferences of the
US presidential candidates week by week.
2007/08 was the channel’s first complete
year with a full-screen on Freeview, which has
helped to make the channel a more attractive
destination. Over the year average monthly
reach has been over 1 million, with around
200,000 tuning in for Westminster’s debate
on the Lisbon Treaty in March.
Weekly 15-minute reach in all homes has grown
year-on-year from 0.2% to 0.3% – an increaseof over one-third from 260,000 to 360,000.

This year BBC World Service launched BBC
Arabic TV, the BBC’s first publicly funded
non-English language television service.
The Middle East has been an important regionin news terms for much of the last 50 years.
Although the BBC has been broadcastingArabic radio since 1938, and has offered ahighly acclaimed website since 2001 – bothof which have successfully attracted audiences
making the BBC a trusted voice in the region– television is undoubtedly the primary way
audiences in the Arab world currently
consume their news. It is key to reaching
new audiences.
Initially broadcasting 12 hours every day, BBC
Arabic TV will be extended to a 24-hourrolling service during 2008. This will help the
BBC to improve its reach and impact in theregion by offering its news and information
to 200 million people across the Arab world.
This year we also got permission to launch
BBC Persian TV, which will be available laterin 2008. Both new channels operate under
the auspices of BBC World Service.

BBC Annual Report and Accounts 2007/08

38%

Expert pundits offer audiences specialist
knowledge and expertise.

BBC Sport’s reach among UK adults in an
average week.

47

World- class snooker is just one of many regularsporting fixtures in the schedules.

JOURNALISM:
SPORTAcross all our services we have, this year,
reported the main international news stories
in depth. And we’ve offered analysis andopinion to support daily and breaking news.
Our award-winning Bangladesh Boat was one
key example of BBC Global News pulling
together as a whole and working with otherparts of the BBC, such as the Asian Network.
We spent a month travelling along the riversof Bangladesh as part of a major project totrack and debate climate change for real ina country severely threatened over the next
40 years due to rising sea levels. 17 language
services got involved and delivered a rangeof programmes covering the gamut of opinion
that the subject inspires.
BBC World Service’s weekly global audienceestimate, created from independent surveys,
was 182 million last year, in line with theprevious year’s record of 183 million.
BBC World News, the commercially funded
English-language news and information
channel, is available all day every day in
153 million homes. A further 118 million
homes can receive it at other times, giving
a combined total distribution of 271 million
households. Every week 78 million people
watch BBC World News, making it the BBC’s
most popular news channel.
Yet again, reach to our international-facing
news sites was at record levels during the year
– with a record 808 million page impressionsin March, up from last year’s peak of 763
million. We had 42.5 million unique online
users during March 2008, an increase of 10%
on 38.5 million a year ago.

BBC Monitoring systematically monitored
more than 3,000 radio, TV, press, internet andnews agency sources in around 100 languages,
to provide an authoritative view of world
events for stakeholders.
The BBC World Service Trust uses media
and communications to reduce poverty andpromote human rights. The Trust is funded bycharitable donations from a variety of sources,
including government aid programmes,
international charitable foundations andthe United Nations. It does not receive
any money from the licence fee. Last year
it worked alongside local and national media
in more than 40 countries in Africa, Asia,
the Middle East and Europe, with a diverse
range of stakeholders like Al Mirbad, an
independent local radio station in Basraand which is currently the only source of
information about basic services in thecity, and the Bill and Melinda Gates
Foundation in India.
The BBC World Service Annual Review
is available at bbc.co.uk/worldservice/us/
annual_review

BBC Sport gives audiences real choicein their sports action and news whenever
and wherever they want. 38% of the adultaudience used BBC Sport on television,
on radio or online in a week.
Digital and online are key drivers in this.
This year, bbc.co.uk/sport grew in popularity
with over 6 million UK unique users. And in
November, the 606 messageboards were kept
busy as England’s failure to qualify for Euro2008 drove a record 3.9 million different users
to its pages. We were also able to launchmajor sports events on BBC iPlayer, and withgreat success: nearly one in seven (13.5%)of all BBC iPlayer requests on one Sunday in
February 2008 alone were for the previous
evening’s France v England international inrugby’s Six Nations Championship.
The year also marked the rise of the blog.
Editors’ and contributors’ comments sparked
new levels of debate. For example, Tom
Fordyce’s and Ben Dir’s blog account of theircampervan journey though France during the
Rugby World Cup broke all records, witharound 10 million page views. Blogs are oneof the ways in which BBC Sport provides amore joined-up offering across all platforms in
our coverage of events like the Cricket World
Cup and the Rugby World Cup.

R E V I E W O F S E RV I C E S ++ J O U R N A L I S M

39

48

Match of the Day brings live football action
and analysis to fans.

Number of BBC local radio stations
in England.

Inside Out – regional investigations and heritage
with a twist in peaktime on BBC One
across England.

JOURNALISM:
NATIONS & REGIONSOn television we continued to consolidate
journalism within our sports coverage withfurther series of Inside Sport on BBC One
presented by Gabby Logan. The programme
gets behind the sporting headlines and brings
an insight into the key sporting debates,
and this year included a range of interviews
with big sporting names such as Sven-Goran
Eriksson, Dwain Chambers and Christine
Ohuruogo. There was also a special
programme from Beijing as the city preparedto host the Olympics.
We continued with our commitment to takeSports Personality of the Year outside London,
with a second year at Birmingham’s NEC. An
increased audience of 8,000 were at the live
show, with 9.3 million tuning in to see world
champion boxer Joe Calzaghe win the mainaward. This year the event moves to Liverpool.
Collaboration across the various services –on television, radio and online – has been
improved by the creation of a new multimedia
sports news hub, with journalists working on
stories for all platforms. This has also led tomore multimedia commissioning which hassignificantly increased the sharing of ideas,
resources and material between the different
BBC outlets for sport.

Acquiring broadcasting rights to major sports
events, and across all media, continues to be
one of the most delicate of balancing acts for
the BBC: we have to deliver a quality service,
but at an acceptable price. It is the nature of
the beast that sometimes we will be outbid
by other broadcasters or the asking price will
be just too great. However, this year we weredelighted to be able to add Formula One andthe Football League to our television portfolio
from 2009. There have also been successful
renewals of our contracts with the All-EnglandClub at Wimbledon, Six Nations rugby, The
Masters golf and the Rugby League Challenge
Cup. Our debut coverage of the Super Bowl
was well received by American Football fans,with around 400,000 of them still watching
live at 3am.
The average 15-minute weekly reach of BBC
Sport on TV to viewers aged 4+ in 2007/08
was 28.9% or 16.3 million people (down from
31.8% or 17.8 million people in 2006/07).
Average weekly reach via BBC Radio 5 live at
the end of the year was stable year-on-year at
3.8 million/7.5% (versus 3.7 million/7.4%). Online,
BBC Sport reached 6.3 million at the end of
March 2008, up 28% from 4.9 million last year.

The local radio market is highly competitive.
Yet within this environment, BBC Local Radioin England continues to reach nearly one infive of all adults. The total audience has fallenslightly over recent years and some larger
urban stations – Manchester and WM (WestMidlands) for example – are being refreshedin order to address the potential for reachingout to new audiences.
Our 39 stations offer speech-led local
programming plus music with a broad appeal
outside the all-talk breakfast programmes.
This year we have improved the quality andfrequency of our travel information, and we’re
now doing the same with weather forecasts.
Sport remains particularly important toour listeners although budgets for soccer
commentary rights remain under pressure.
Leeds United recently withdrew commentaryrights from BBC Radio Leeds after 40 years,
choosing instead to give them to a DAB-only
radio station owned by the club. Local
radio sports staff now publish their stories
online, which has enhanced the service inrecent months.

BBC Annual Report and Accounts 2007/08

50
Stephen Fry fronted a series on HIV and AIDS,
part of a BBC Learning awareness raising
campaign.

Number of years we’ve offered a national
television news bulletin in Scotland.

All the stations offer religious programmingon Sunday mornings. BBC Radio Solent gave
extensive coverage to a contemporary
Passion play and celebration witnessedby thousands of people in Winchester.

We’ve had mixed results on our podcasts,
but successes have included sport, news
round-ups and some presenter-led content.
The UK Black podcast, drawing together thebest of BBC Local Radio’s African and
Caribbean programmes, was particularly
welcomed by the communities it serves. We
are developing our podcast service further.

BBC Local Radio also has a particular roleto play at moments of civic crisis. We won
enormous praise from audiences and theemergency services for our response to lastsummer’s floods: BBC Radio Gloucestershire
gave essential information on finding fresh
water after the mains system failed; BBC
Hereford & Worcester helped people replace
flood-damaged goods.
Journalism remains the backbone of ourspeech content. BBC Radio Newcastle
secured the first broadcast interview with
Adam Applegarth, then chief executive ofNorthern Rock; Freedom of Information
responses from East Midlands police forces
revealed that they recorded crimes
committed by children as young as four andthat children who are too young to prosecuteare committing hundreds of offences every
year. This story was covered on all the region’s
BBC radio stations.
Radio Berkshire report about a Basingstoke
club which banned people with disabilities atweekends was followed up by the Disability
Rights Commission and the local council.

On television, we continue to provide themost watched local weekday evening news
bulletin (BBC One at 6.30pm with an average
3-minute weekly reach of 12.5 million lastyear) and explore stories of local significancein more depth in Inside Out.
The average weekly reach among adults 15+
to BBC Local Radio was 18.6% or 7.5 million
listeners (compared to 18.8% or 7.7 million
in 2006/07).

49

Science programmes like Parallel Worlds Parallel
Lives explore unusual stories, others look at
knowledge breakthroughs.

Last year, we delivered a rich mix of genres toboth network and Scottish audiences. On TV,
factual programmes as diverse as Stephen
Fry’s HIV and Me, an exploration of quantum
physics, Parallel Worlds, Parallel Lives, and acontroversial study of boys in care, Boys
Behind Bars, won awards. Our national news
programme, Reporting Scotland, celebrated
50 years on air, while the move to broadband
was reflected in new rights to cover The
Scottish Premier League football and inincreased audiences on the web for coverageof live events, such as T in the Park.
Investment in development paid off. The
popular comedy Still Game broadcast its
sixth series, and developed a successor,
Dear Green Place. The entertainment show,
Lottery Jet Set, resulted in the commissioningof a Saturday night quiz show. We delivered
innovative drama to BBC Three in Phoo Action,
while winning new commissions set in
Scotland. Primetime soap River City attracted
more than half the population of Scotland
over the year.
Scotland’s music was celebrated acrossTV, radio and online, in concerts by the
BBC Scottish Symphony Orchestra andin partnership projects with the National
Theatre, among others. The celebration
incorporated The Highland Year of Culture,with opportunities for the audience tocontribute their own films. Our Gaelic digital
service was approved for launch in 2008,
complementing our existing Radio nan
Gàidheal service.

R E V I E W O F S E RV I C E S ++ J O U R N A L I S M

30

th

50

Coal House mixed reality TV with history so
successfully a second series was commissioned.

Radio Scotland offered the biggest mix ofprogrammes and more live music than allother Scottish stations including, with TV andonline, Celtic Connections, the World Pipe
Band Championships and the National Mod.
This year Radio Scotland commissioned 12
new plays, and BBC Scotland delivered around75 hours more drama to other radio networks.
Comprehensive coverage of 2007’s Scottish
local and parliamentary elections included
three televised Big Debates, a Leaders’ Debate
and a Newsnight Scotland investigation in
BAFTA award-winning Does Your Vote Count?
There was overnight coverage of the resultson all platforms, with a camera at every
count. Political coverage was enhancedwith extended web coverage of the party
conferences in Scotland, including live
streaming of main speeches and debates.
Average weekly reach for Radio Scotland was
down year-on-year to 21.5% (equal to 915,000
individuals) from 23.1% (981,000). However,those who did tune in were inclined to stay for
longer this year than in the year before. A newschedule was launched in May, and there aresigns that listener numbers are now startingto build again. In TV news, Reporting Scotland
maintained its 3-minute weekly reach at
1.3 million.

Anniversary of popular Welsh language soap
Pobol y Cwm.

BBC Wales has continued to build on the
successes of recent years both in its local
programming and its contribution to the
UK networks – where, in drama alone,
Doctor Who and Torchwood returned, andwe launched The Sarah Jane Adventures whichquickly became one of the most popularchildren’s TV programmes on the BBC.
We began work on a ninth and final seriesof award-winning local TV drama Belonging,
and a key priority is to find a worthy
successor. A broad range of drama wasalso delivered to Radio 4 and Radio 3.
In factual programming, Tribe presented
by Bruce Parry returned to our screens,
as did The Trees That Made Britain and thedelightful observational series A Year At Kew.
A major local success for BBC Wales lastyear was Coal House, which took three families
back to experience the realities of mining life
in 1927. The series was complemented withradio discussions, websites, community eventsand additional television programming.
It provoked an overwhelmingly positive
audience response. A second series has
been commissioned.
The Welsh Assembly Election in May 2007
saw our news and current affairs programming
lead the debates in both languages and keep
the public informed of all the twists and turnsof the campaign. We also created a group of
voters, the Wales 60, to represent a balanced
range of views from across the nation to give
their reaction to the policies, politicians andcampaigns. Dragon’s Eye and the new politicaldebate programme for S4C CF99, maintained
the momentum after the creation of thecoalition government in Wales.

Doctor Who, Torchwood and The Sarah Jane
Adventures offer something for viewersof all ages.

Our music contribution once more included
coverage of BBC Cardiff Singer of the World.
We also provided continuous coverage of the
National Eisteddfod on S4C during August.
Soap Pobol y Cwm and Radio Cymru bothturned 30 this year.
The non-availability of both BBC Radio Walesand Radio Cymru on DAB digital radio acrosslarge parts of Wales continues to be a cause
for concern, as well as an inconvenience formany listeners.
The average weekly reach figures for Radio
Wales were down to 17.9% , from 18.3%(437,000 and 449,000 respectively). Radio
Cymru reach among the same age group – alladults aged 15+ in Wales – was also downslightly at 6.2%/151,000, versus 6.5%/160,000
in 2006/07. Wales Today remains the mostpopular Welsh news programme with 3-minuteweekly reach of 26% this year (713,000 viewers),
and Newyddion remains a cornerstone of
S4C’s schedule.

BBC Annual Report and Accounts 2007/08

51

6,000
Over 12% of Network Television’s eligible spend
will be in Scotland, Wales and Northern Irelandby 2012.

New technologies and delivery platforms are
creating an increasingly complex broadcasting
environment in Northern Ireland. Despite thiswe achieved record audience reach figures
for TV News, BBC Radio Ulster/Foyle, local
television programmes and our interactive
services last year. In a BBC first, we launched
an election results service via mobile phone –just one part of our extensive coverage ofelections to the Northern Ireland Assembly.
We had another good year for challenging
and original journalism. Four network
investigations for Panorama included a
disturbing and BAFTA-nominated film on
dog fighting. A Spotlight special ‘The Hunt for
Captain Nairac’ examined issues relating to
his kidnap and murder over 30 years ago.
Documentaries and popular factual seriescontinued to appeal to our television
audiences and help us to better reflect
the changing diversity of local society.
Ambitious history projects such as Blueprint(BBC One NI) and A Short History of Ireland(BBC Radio Ulster) brought their subjects
to life and enjoyed critical and popularsuccess. Proms in the Park had its largest-everattendance in Carrickfergus, whilst Vital,
ATL Rockschool and the Blackstaff Sessions
provided a showcase for local bands andemerging musical talent.

People who attended the Springwatch event in
Londonderry’s Guildhall Square.

Northern Ireland without rain? History series
Blueprint showed it was once true.

BBC Radio Foyle played host to the local
Springwatch campaign and attracted almost
6,000 people to its large-scale event in
Guildhall Square. BBC Radio Ulster undertook
its most ambitious programme of outside
broadcasts and provided a platform forlisteners’ stories and experiences on Days
Like This.

BBC Radio Ulster/Foyle had a combined
average 15-minute reach to adults aged
15+ of 38.6% or 533,000 people (versus
38.0% or 523,000 people in 2006/07). TV
News from BBC Newsline reached 833,000
across the day and had the highest average
audience appreciation across the year of theBBC’s regional programmes across the UK.

Once more this year we reflected important
aspects of the region’s cultural and linguistic
diversity through programmes in Irish andUlster Scots. These included Na Dódaí, Blas
and A Kist Ó Wurds. Our programming in thisarea will benefit from additional funding overthe next period as part of a new editorial
strategy for local minority languages.
Locally produced drama programmes included
the serialisation of David Parks’ The Truth
Commissioner for Radio 4’s Book at Bedtime.
Two drama series were delivered to network
television – a return for Messiah and Fairy
Tales with its contemporary retelling of familiar
stories. Although beautifully crafted, Fairy Tales
did not secure a large network audience andhas not been recommissioned. We remain
ambitious to build a portfolio of network
production across all platforms withsustainable creative, cultural and economic
benefits for the local community.
We refreshed our sports output with newcontracts for large-scale events and fixtures.
These will include dedicated coverage of local
and international soccer, GAA and the NorthWest 200.

R E V I E W O F S E RV I C E S

52Commercial
activities
BBC Worldwide’s activities around the world– from licensing programmes to developing
websites and magazines, or launching our own
BBC-branded TV channels – help to build theBBC’s reputation as a creator of wonderfulcontent. We’re completely focused on bringing
the most value back to the BBC brand andto licence fee payers by investing for growth.
John Smith
Chief Executive of
BBC Worldwide Limited

BBC Annual Report and Accounts 2007/08

53£117.7MILLION

Beautiful cinematography is just one element of
our first Chinese co-production, Wild China.

It was BBC Worldwide’s most profitable
year yet.

Programme, format and DVD sales combined
to give BBC Worldwide its most successful
year yet.

BBC WorLDWiDE

Gross turnover from international activity was
also up by 11%. We continued to roll out our
new BBC-branded TV channels in markets
including Singapore and Poland. In the USA,schedule changes to BBC America helped
primetime ratings double among the soughtafter demographic 18–49s. We also establishedproduction bases in New York and Mumbai,
to add to our stake in Australian independent,
The Freehand Group. These are all securinglocal commissions including the next series ofDancing with the Stars in India and a local seriesof Top Gear in Australia. Just after year end weestablished a joint venture with Australianmagazine publisher ACP and a local version of
Top Gear magazine is already in development.

However, in a year of unparalleled success,it is regrettable that a mistaken practicecame to light within our telephony services
business Audiocall. Over a two-year period
to August 2007, £106,000, which should havegone to charity from phone-in votes placed
after the voting period had closed, waswrongly retained by Audiocall. Following
an independent review, no evidence of any
impropriety or intention to defraud has cometo light. However, it was nonetheless a badoversight. This has now been rectified andall the money has been paid to the charities
involved, with sufficient extra to cover interest(£123,000 in total).

This was another record year of growth for
BBC Worldwide, the main commercial armof the BBC. Total sales were up 13.1% to£916.3million (from £810.4million), including
our share of joint ventures, and operating
profit was up 17.0% to £117.7million (from£100.6million before exceptional items).
In addition to delivering increased profit fromexisting activities, we also invested heavily in
new businesses during the year in order tosecure future growth. Profit was driven byhigh sales of television programmes and DVD,
especially Planet Earth.
Our mission is to “entertain the world andbring value to the BBC”. In June 2007 we setout our growth strategy, which was approvedby the BBC Executive Board and BBC Trust,and are making significant headway in meetingthese purposes and to:* Grow online revenues to more than 10%of all sales* Grow overseas revenues to two thirds ofthe total* Roll out a suite of TV channels aroundthe world* Build an international network of production
businesses* Undertake acquisitions.
Across our online businesses, revenues wereup 174% on 2006/07 (and share of Groupturnover from online business rose from 1.1%
to 2.7%). In November we launched bbc.com,
through which people from around the world
can access the BBC’s highly popular website
bbc.co.uk, but with the addition of advertisingthat is only visible to users outside the UK.
Plans are also well developed to establish aninternet-based commercial media player joint
venture with ITV and Channel 4, subject
to approvals.

Our major acquisition of the year was acontrolling stake in the number one travel
information group Lonely Planet. The
well-respected brand and its extensive
catalogue of books, TV programmes andonline services complement our existingcatalogue of 500 hours of travel and world
culture programming. Plans are under way to
improve the website www.lonelyplanet.com
and to develop ways of introducing BBC
content online to new audiences worldwide.
Other highlights of the year included placing
all 83 episodes of ’Allo ’Allo on Germany’s
ProSieben network. We sold the scripted
format of The Office to Chile, and of Life On
Mars to Spain, the setting being tweaked
to the post-Franco era of 1978. Adding toour reputation as distributor of the world’s
foremost natural history programming, we
had continued success with Planet Earth,rolled out Ganges and Earth – The Biography,
and unveiled the landmark Wild China, ourfirst-ever Chinese co-production. In the
UK our joint-venture channels business(with Virgin Media) unveiled Dave, a newentertainment channel that was an instant
hit with target audiences, as was the first
range of In The Night Garden DVDs and toys.

For more information about BBC Worldwide
check out www.bbcworldwide.com/
annualreview
BBC rEsourCEs

This year BBC Resources Limited made anoperating loss of £1.9million on turnover of£122.3million. The loss before interest and
tax was £3.2million. (2007: PBIT £5.2million,
turnover £126.2million.)
The fall in operating profitability reflects
a £5.5million increase in contribution to
the BBC Pension Scheme.
During the year the Company was offered
for sale in whole or in part, resulting in thesale of the Outside Broadcasts business to SIS
Outside Broadcasts Limited on 1 April 2008.
The results reflect £1.3million of costs relating
to this process, charged as an exceptional item.
The Costume and Wigs hire operation wasclosed in February 2008 and its stock was soldto other suppliers.
For more information on BBC Resources see
www.bbcresources.com

R E V I E W O F S E RV I C E S

54Engaging withaudiences
Whether someone is doing a tour, phoning foradvice or information, or making a complaint, we
put the audience first and ensure that the BBC
is open and accountable. We’re always keen to
improve the ways people can interact with us –we’ve recently built our online booking service
for free tickets to shows, for example – andconstantly strive to give them better services.
Tim Davie
Director of Marketing,Communications & Audiences

BBC Annual Report and Accounts 2007/08

11.

55

MILLION

Regulated use of premium phonelines lets
viewers take part in programmes, and canraise money for charity.

Calls, letters and emails to BBC Information
last year.

An eclectic mix of guests keeps Later with Jools as
TV ’s pre -eminent contemporary music show.

Interacting directly with viewers, listeners
and online users is important to the BBC.
We regularly engage with audience groups
to find out what they like, what they don’t
like, and what they expect from the BBC.
And we use what they tell us to informon the programmes we make and theservices we offer.

activity from a number of Turkish websites
drove the highest volume of complaints
on a single issue – over 11,500 complaints
were answered on the topic of the BBC
not referring to the PKK as a ‘terrorist’organisation. Other notable issues were
the removal of the complementary medicine
section on bbc.co.uk, the cutting short oflive performances on Live Earth, and the
BBC losing the rights to broadcast Neighbours.
EastEnders was the programme attracting themost complaints over the course of the year:
5,500, more than double that of any otherprogramme. Production teams take feedbackof all kinds seriously.

at the National Group Travel Awards – Best
Company/Venue Offering Guided Tours 2007,
and Best Tourism Experience in London SilverAward 2007. 95% of visitors asked said thatthey would recommend the tour to a friend
and 70% regarded the BBC more favourably
as a result of coming on a tour. See
www.bbc.co.uk/tours

There are also other ways in which people
can participate in the BBC. They can vote in
our entertainment shows like I’d Do Anything,take part in competitions (the BBC adopted
new guidelines during the year following
editorial breaches across the industry), be
in a studio audience, attend an event – froman orchestral performance to World MusicAwards, get information or support after someof our programmes, tour a building or attend
our open centres. Millions of people have aface-to-face experience with us every year,
and millions more phone, text, write, email,send us their photos and videos, or poston one of our many blogs. We are committed
to doing our best to make each of thosecontacts a positive experience.
BBC inForMATion

BBC Information is the virtual front door for
our audience. Over the last 12 months we
handled over 1.1 million contacts from thepublic, around 70% – over 750,000 – of whichwere unsolicited. The balance was solicited,such as the action line set up for Sport Relief
Presents Surviving Suicide which provided
details of organisations offering help andsupport to anyone affected by depression.
Almost 60% of these contacts came throughby phone; 91% of all calls were answered in
30 seconds.
rEsponDinG To CoMpLAinTs

In 2007/08 we dealt with approximately
124,000 unsolicited complaints. 93% ofcomplaints were answered within ten working
days. There is evidence to suggest that lobby

BBC inForMATion: ACTion LinE

The Action Line provides further sources ofhelp and information on social action issues.
The campaign generating the biggest response
last year was Radio 1’s safe sex campaign, in
conjunction with 1Xtra. Almost 33,000 phoneand email requests were received.
sTuDio AuDiEnCEs

2007/08 was our busiest year yet for network
radio and television shows recorded live infront of audiences – 850 in total, up by 50 on
the previous year. We recruited the majorityof these 193,104 audience members ourselves,using a new random draw system. The mostsubscribed TV shows this year were Strictly
Come Dancing, I’d Do Anything, Later With
Jools and, for radio, Friday Night is Music Night.
Radio comedy shows are also very popular.
For news of what’s coming up see
www.bbc.co.uk/tickets
sTuDio Tours

Television Centre had 53,356 tour visitors
last year, of whom 57% were under 18.
The visitors most enjoyed the interactive
elements – such as a quiz (with prizes!) for
the grown-ups and a chance to play Raven for
the kids – and looking around working studios.
The tours picked up two awards: Runner-Up

oThEr ouTrEACh ACTiViTiEs

Other activities last year included Schools
Question Time, where school students helped
to produce an edition of the BBC One
programme, and BBC Stringers and Making It
where audience members made output andeven got to run some BBC operations fora day – BBC Berkshire and BBC South were2007’s host regions – under the gimlet eyeof Controller of English Regions Andy Griffee.
BBC News and Sport on Tour was present
once more at events around the UK in places
such as Swansea, Coventry, Nottingham andGlasgow. The Tour allowed visitors to havea go at reading the news on television or radioin our special studios. They could also try out
some of the technical roles involved in getting
programmes on air and check out some of
our interactive services. Some top nationaland regional TV and radio presenters were
there to give tips and advice. Participants
could write stories for online too and someof the best ‘rookie reporters’ made output
for local and national news outlets acrossall media.
The BBC offers a variety of experiences eachyear. No two years are the same.

R E V I E W O F S E RV I C E S ++ E N G AG I N G W I T H AU D I E N C E S

56

46,000We subtitled over 46,000 hours of programming.

proGrAMME FACTs & FiGurEs

Mostly, however, people connect with the
BBC through our programmes and services.
Charts 1– 4 show how we’ve performed withaudiences over the last year. (Sources: BARB
and Rajar)
BBC services combined are viewed, listened
to or used by 93% of the population – there
was no substantial change on the previous
year’s reach performance (92.5%) and thefigure is still ahead of the target set by the
BBC Trust (90%). BBC services in televisionand radio perform strongly against otherproviders. See the service reviews startingon page 29 for individual reach by service.
Last year the BBC had a 33.8% share of the
television market, and a 55.2% share of theradio market. Combined, we had an average
weekly share of 42.2% – around the sameas the previous year (42.6%). Our digital
television channels all showed growth, whichis to be expected as households migrate.
These charts show the share percentage
by service.

85.0
84.4

Classic FM
Talksport

BBC FourCBBC

All ITV

75.4
74.7
66.6
66.1

CBeebies

All Sky

42.8
42.2
32.5
33.5

21.9
22.7

BBC News

BBC
Parliament
BBC i

1.0
0.8
0.4
0.3
0.5
0.4
1.1
1.0
0.7
0.5
0.0
0.0
0.1
0.1

11.6
11.4
4.4
4.3

5 liveSports Extra

0.2
0.2

1Xtra

0.3
0.2
0.3
0.2
0.4
0.4
0.3
0.3

BBC 7

2006/07

8.3
8.6

1.1
1.2

Radio 5 live

49.8
50.8

BBC One

15.9
15.8

Radio 4Chart 3: BBC Vision share by service, %2007/08

10.5
10.1

Radio 2
Radio 3

4.9
4.8
11.3
11.8
4.8
4.7

2006/07

Radio 16 Music

70.6
64.8

All five

62.1
62.6

All Local
Commercial
Radio

Total otherchannels

All C4

66.3
66.4

All
Commercial
Radio
VirginAM/FMChart 4: BBC Audio & Music shareby service, %2007/08

2006/07

Total BBCRadio Reach

BBC Three

2006/07

All BBC
Vision2007/08

BBC Two

Chart 1: BBC Vision reach versus
main UK competitor groups, %2007/08

Chart 2: BBC Audio & Music reach versus
main UK competitors, %AsianNetwork

9.8
10.2

World Service(UK only)
BBC Local& Nations
Radio

0.7
0.7

BBC Annual Report and Accounts 2007/08

57

42.3

%

BBC’s combined share of television andradio audiences.

The BBC is committed to making its
programmes as accessible as possible to
all audience groups. In 2007/08 we exceeded
all our access targets. See charts 5–7.
We subtitled over 46,000 hours ofprogramming – up year-on-year, and on target
to meet our 100% target by 2008/09. BBC
Parliament and BBC HD are not subject toOfcom targets, but nonetheless added afurther combined 1,388 hours.
Our target for programming to be audio
described increased from 8% to 10% thisyear. This target does not apply to theNews Channel due to the nature of its rollingnews output, and does not apply to BBC
Parliament, BBCi and BBC HD due toaudience size.

Chart 7: Programmes Signed,by service, %*Chart 5: Programmes Subtitled,
by service, %*2007/08

2007/08

2006/07

BBC One97.6
96.8

BBC One

BBC Two

97.2
95.5
92.7
86.2

BBC Two

91.9
84.1

BBC Four

92.7
90.3
91.8
87.4

CBBC

BBC Three

BBC Four

CBBC
CBeebies
BBC News

91.1
80.8

The same exemptions apply to signing where,
in November, our target increased from 4%
to 5%. All relevant services exceeded theaverage for the year (4.4%).

2006/07

BBC Three

4.3
4.2

CBeebies
BBC News* Based on 52 weeks, not full year.

Chart 6: Programmes Audio Described,
by service, %*2007/08
BBC One

BBC Two

2006/07

13.6
11.2
12.4
9.5

BBC Three

21.4
24.5

BBC Four

14.8
CBBC
CBeebies

11.9
14.6
10.6
12.0

18.1

4.7
4.2
5.1
4.9
5.0
5.0

5.1
4.7
4.9
4.5
4.6
4.1

PERFORMANCE

58

BBC People

The BBC is a dynamic place to work, where
people never stop learning and can stretch theircreativity, imagination and expertise to create
content and services that our audiences loveand value.
Stephen Kelly
Director BBC peopleBBC Annual Report and Accounts 2007/08

59

30

MILLION

Number of hits to our employment website.

With over 24,000 people in 43 countries, inexcess of 100,000 job applications last year,
and in the region of 30 million hits to ouremployment website (www.bbc.co.uk/
recruitment), the BBC takes staff recruitment,
retention and training seriously.
The following map gives a snapshot of where
BBC UK staff working in our broadcast andsupport functions were located as at 31 March
2008. (See note 4a for average across the year.)
Map 1: Staff UK PSB staff by Nation(equivalent full-time), %England (excluding London)
London (regional only)
Scotland
Wales
Northern Ireland

07/08
24
57
8
8
4

06/07
24
56
8
8
4

A major consultation was concluded in
April 2007, which saw the launch of a new
People Strategy, ﬁve strategic themes aimed
at unlocking the local and corporate businesspriorities in each BBC business group –Vision, Audio & Music, Journalism, Future
Media & Technology, and central andcommercial services:* Collective leadership: We want to ensurethat managers have the skills to fostera culture of creativity, openness and rigour
around editorial standards and quality
wherever they happen to work. To develop
management capability, a new leadershiptraining programme, Leadership Essentials,
launched in October, and a new Staff Survey
was introduced in April 2008 to help us
to get authentic feedback from staff aswell as to understand their attitudes andaspirations, and so work together. The ﬁrst
results are due in June 2008.
* Getting the right skills and talent fora changing BBC: This year saw the BBC
undertake an extensive reprioritisation
programme. This involved more than 2,000
job closures and redundancies (to takeplace by 2010) – as well as the creationof 800 new roles, many in new media andmulti-platform areas as we conclude our
preparations for a digital UK. Around 400
individuals are being redeployed within thebusiness to gain new skills that will beneﬁt
the BBC and its audiences.

* Reward for performance: Get in the rightpeople, and then reward them appropriately– that’s the key to encouraging and achieving
great performance. One element in our
new approach to genuine performance
management is the Senior Management
Development, Potential and Performance
Reviews being carried out across the
BBC this year, and to be extended toall staff next year. We also launched a
new online service for Flexible Beneﬁts
called myReward which allows UK staff tochoose how to manage their own beneﬁts
such as holiday entitlement and pension
contributions.
Salary is the cornerstone of staff reward.
The following table shows BBC senior
managers’ headcount by full-time total salary
for the year to 31 March 2008. Where staff
are part-time, the full-time equivalent salaryis given. This ﬁgure is made up of staff inboth the public service and the commercial
areas, excluding staff on maternity or unpaid
leave at that date.
Table 1: Senior managers’ headcountby salary band
Salary band

Total

Under £70,000

72£70,000-£99,999

329£100,000-£129,999

171£130,000-£159,999

89£160,000-£189,999

44£190,000-£219,999

15£220,000-£249,999

11£250,000+

13

Total

744

(Note: 5 managers were excluded in error in the original
published table.)P E R F O R M A N C E ++ B B C P E O P L E

60

£43

MILLION

Investment in training this year.

* Getting the basics right: We arecommitted to constantly improving how
we do things, making our processes andsystems simple, clear and transparent tothose staff who do business with us. This
year we reinforced our joining processes(including right to work, Criminal Records
Bureau checks and editorial compliance),
and revisited some of our employment
policies (updating our Grievance,
Capability and Conduct, and Bullying
and Disciplinary policies).
As a function, BBC People also revised its
operating model to become more effective
for customers.
Our relationship with Capita, our HR
outsourcing partner, has been reviewed
and they are currently working on a Service
Improvement Plan to enhance their service
capability. Our joint ambition is to work
together to strengthen the services they
deliver to us.
* Changing how we work: BBC People istasked with delivering a new ‘Employee
Value Proposition’ for the BBC, embracing
Salford (mediacity:uk) and London (W1and W12 sites). We want to make the BBCa truly creative place to work, and that will
deliver real value to licence fee payers andbenefits to audiences by offering them thegreat programmes and content that emerge
as a result.

TrAininG AnD DEVELopMEnT

DiVErsiTy

Across the board, training is crucial to
our evolving people strategy. Whether it’sa week-long face-to-face experience onleadership or a 30-minute online refresher
course on health and safety, it is importantthat our staff have the right level of training
and training support to carry out their duties.

Variety of experience and outlook is vitalto creativity – opposite points of view
come together in a collaborative whole.
And so it is important that the BBC employs
people with different experiences, backgrounds
and opinions. It helps us to meet our
public purpose of reflecting the UK in its
diverse communities.

Last year we delivered the equivalent of
70,490 training days to 63,487 delegates,
many from the independent sector andwider media industry.
We are continuing to invest in a range
of initiatives aimed at supporting new
ways of working within digital multi-platform
environment, and our in-house training
facilitators go around the BBC encouraging
and facilitating ideas generation acrossthe organisation.
As noted elsewhere, Safeguarding Trust
was provided to 17,000 members of staff
in the space of six months and is now beingrolled out to the independent sector.
In total, we spent over £43million on training
this year.

This year we announced a three-year
programme of investment and activity tofurther diversify the BBC workforce at alllevels. Initiatives include a new journalism
trainee scheme, launched in January. In
addition, up to 50 places will be available
for the next three years on Extend, our work
placement scheme for people with disabilities,
now in its 11th year.
Around half the BBC’s workforce are women.
As at 31 March 2008, 10.9% of UK staff
were black and minority ethnic (BME) people(including 5.1% at senior manager level);and 4.7% had declared they have a disability.

BBC Annual Report and Accounts 2007/08

5.1

%

61

Proportion of black and minority ethnic
senior managers at BBC.

Chart 8: Black and Minority Ethnic staff,% of total

10.9
10.3
9.9

2008
2007
2006

Chart 9: Disabled staff, % of total

4.7

2008
2007
2006

2.8
2.8

Overall approval of the BBC among BME
adults is positive, and is very closely aligned
to the All UK adults’ level.

oCCupATionAL risk MAnAGEMEnTThe Director-General has responsibility
for ensuring that the organisation has ahealth and safety policy and complies with it.
The Executive Board approves strategy andmonitors performance. On a day-to-day basis,
local managers have responsibility for activities
under their control. Our goal is to provide
a safe and healthy working environment forour employees, the people we work withand those who visit us.
The Corporate Consultative Committee for
Health Safety and Welfare includes senior
managers and safety representatives. Staff are
consulted through regular team briefings andlocal safety forums.
On a daily basis, risks faced by staff include
stress, noise, manual handling and driving
as well as those associated with studio andlocation filming, and major outdoor events.
Journalists overseas often work in hostilesituations – just last year Alan Johnston
was held captive in Gaza for 114 days, andwe continually have journalists in hostileenvironments including Iraq and Afghanistan.
We provide specialist support to staff
working in areas of conflict and otherhigh-risk environments.
The BBC is committed to reducing (on 2000
levels and by 2010):* incidence rate of reportable accidents
by 60%* number of working days lost from workrelated injury and ill health by 30%* incidence rate of cases of work-related illhealth by 20%

And this year:* incidence rate for reportable accidents
down from 277 to 132 per 100,000 staff(down 53%)
* 101,700 reported absence days
* incidence rate of suspected cases of workrelated ill health was 23 per 1,000 in 2000
down to 2.72 per 1,000 last year, mainly due
to stress, upper limb disorders and othermusculoskeletal problems. A new reporting
system has been introduced and this will
give more consistent monitoring over time.
There were no fatalities.
Enforcement

No enforcement action has been taken.
The BBC received a report from the Healthand Safety Executive which drew attention
to shortcomings in management and practice.
The Executive Board has outlined a plan
to tackle these. Contact with enforcing
authorities is routinely monitored by the
Executive Board.
h&s Training

We recorded face-to-face safety training given
to 7,346 people; around 8,000 courses werealso completed online.
We are a member of the Joint Industry
Grading Scheme for UK-based Stunt andSpecial Effects professionals. We work withother broadcasters and Skillset to implementa safety passport scheme to deliver transferable
safety training to the media sector.

PERFORMANCE

62

Operations

The BBC – both as an organisation and in the
shape of the individuals who carry out countlesstasks every day in its name – recognises that it
has an obligation to behave in a proper manner.
We must take care that we do not use ourprivileged position deliberately or inadvertently
to unfairly disadvantage others with whom wecompete or do business.
Caroline Thomson
Chief Operating Officer

BBC Annual Report and Accounts 2007/08

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63

Over 90% of the BBC’s electricity comes fromlow carbon sources.

A lot of activity goes on behind the scenes tomake sure that the BBC is able to provide thegreat programmes and services that audiences
love, and which bring them back to us timeand again.
To do this we have to understand what’s
happening with technology in the
broadcasting environment, and make surethat the BBC is in a position to respond.
As we work out how best to do this, we haveto consider our stakeholders, the impact wehave on the market, and how we keep all our
activities – be they programmes or new
services – within the law and the regulatory
structure in which we operate. In making surethe BBC is ready for the future, we have tomanage the major infrastructure projects
which will transform the ways people use
television and radio content, as well as theway we work.
Digital switchover is key to what we are now
doing. It sets the timeframe for our actions
and decisions, as well as offers certain
expectations to our audiences.
And so we are in the process of transforming
our working environment to change to meetthe needs of the digital broadcasting age.
We have already completed a broadcast
centre at Pacific Quay in Glasgow, and work
is under way to rebuild part of our central
London premises and create a new centre at
Salford, where around 1,600 roles will movefrom London to join the 800 or so staff
currently based in Manchester.
We strive to support all our staff, wherever
they work, to enable them to do the best
they can for our audiences. We help the BBCfunction, from catering to construction, andcar parking to cleaning. And we do so in themost environmentally friendly and efficient
way we can. Over 90% of the BBC’selectricity comes from low carbon sources.

In this section, we will explain how we carryout our activities – the key trading andcompliance obligations and policies thatshape our actions and our decisions.
We then record some of the facts and figuresthat we’ve measured this year to show how
and where we have spent our money –audience figures in the Engaging with audiences
section (page 54) show the flip side of thecoin, how well it worked for our audiences.
Various comparatives from 2006/07 havebeen restated to comply with the revised
presentation requirements and definitions.
And finally we will report on our performanceagainst our promises to viewers, listeners andusers in last year’s Statements of Programme
Policy (SoPPs). New SoPPs for 2008/09 were
published in May, and can be found at www.
bbc.co.uk/info/statements2008/
Fair Trading POliCy & COmPlianCe

The BBC must work to ensure that we meet
our Fair Trading obligations as set out in theCharter, Agreement and the BBC Trust’s
Statement of Policy on Fair Trading. Theseare encapsulated in the BBC’s Fair Trading
Guidelines which provide a detailed
operational framework for our commercial
activities. These can be found at www.bbc.
co.uk/info/policies/commercial_guides/
Compliance with the Fair Trading Guidelines
was overseen during the year through formal
sub-committees of the BBC Trust (Public Valueand Fair Trading Committee from January 2008
and Fair Trading Policy and Appeals Committee
for the preceding period) and Executive Board(Executive Fair Trading Committee).

with by locally trained staff in the first
instance. During this period of transition
the BBC has applied a combination of bothprocedures. Having reviewed the situation
the BBC is satisfied that this approach has
worked effectively to ensure overall that its
Fair Trading obligations have been met for theperiod 1 July 2007 to 31 March 2008. The
BBC has now moved to fully implement the
updated procedures for the coming period.
Following a report by PricewaterhouseCoopers
LLP (PwC), commissioned by the BBC Trust,on the economic aspects of Premium Rate
Services (PRS) the BBC Trust concluded that
there were instances of lack of formal
contracts between the BBC’s public service
and one of its commercial subsidiaries for the
supply of PRS. Having reviewed the matterthe BBC Executive is satisfied that thesituation did not represent a material breachof the Fair Trading Guidelines and has taken
steps to ensure that contracts are now inplace in all such cases. Management is also
looking to further enhance existing processes
to ensure formal contracts are in place forany trading activities between the BBC’s
public service and its commercial subsidiaries.
annual Fair Trading audit

The BBC Trust commissions independent
auditors PwC to undertake an annual Fair
Trading audit to determine whether BBC
management has established and applieda system of internal controls which provide
reasonable assurance that it has compliedwith the Fair Trading Policy. Details of theaudit and opinion can be found at www.bbc.
co.uk/bbctrust/research/index.html
iSO accreditation

A revised Fair Trading regime came into
effect on 1 July 2007 and included updated
procedures requiring referral to the central
Fair Trading department for Fair Trading
advice. Previously such matters were dealt

The management of the BBC’s fair tradingarrangements have been accredited with the
ISO 9001:2000 quality standard. Performanceagainst this standard is regularly tested by the
British Standards Institute. The most recent

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64

%

The BBC’s online publication scheme had nearly
2.4 million hits during the year (up 80% from2006/07).

assessment in December 2007 confirmedthat the procedures are continuing tooperate effectively.

The BBC’s Fair Trading Guidelines provide
guidance on this trading relationship in orderto ensure separation between Grant-in-Aid
and licence fee income.

Four Commercial Criteria

The BBC Agreement requires the BBC
Executive to ensure that all its Commercial
Services meet four commercial criteria:(i) fit with the BBC’s Public Purpose activities(ii) exhibit commercial efficiency(iii) not jeopardise the good reputation of
the BBC or the value of the BBC brand(iv) comply with the Fair Trading Guidelines
and in particular avoid distorting the market
Having received reports from relevant senior
management, the BBC Executive is satisfied
that all its commercial services have met theabove criteria for the period 1 April 2007 to
31 March 2008.
Fair Trading complaints

The BBC operates a Fair Trading complaints
and appeals framework which separates thehandling of complaints, investigated by BBC
Executive, and appeals, which are to beundertaken by the BBC Trust. Public guidanceon the complaints and appeals process
can be found at www.bbc.co.uk/bbctrust/appeals/index.html
The BBC dealt with 11 Fair Trading complaints
during the year. One complaint was the
subject of an appeal to the BBC Trust. Detailsof these issues can be found in the BBC’s Fair
Trading Bulletin www.bbc.co.uk/info/policies/
fairtrading_complaints/ and on the Trust’s
appeals page www.bbc.co.uk/bbctrust/appeals/fair_trading_appeal_findings.html
executive report on BBC World Service
Trading Protocols

BBC World Service purchases programmes
and services from licence fee-funded areas of
the BBC as well as its commercial subsidiaries.

More information on these issues and other
BBC FOI activity can be found at www.bbc.
co.uk/foidata protection

As required by the Fair Trading Guidelines, theBBC Executive commissioned a report fromexternal auditors on the BBC’s compliance inthis area. The audit report found that theBBC’s behaviour was compliant. Further details
can be found at www.bbc.co.uk/worldservice/us/annual_review/2008
COmPlianCe

Freedom of information

The BBC’s online publication scheme had
nearly 2.4 million hits during the year (up
80% from 2006/07), with almost 1.7 million
documents downloaded (double theprevious year).
We received 1,066 requests for information
under the Freedom of Information Act. All orsome of the information was released in 651(61%) of requests. 88% of requests were
responded to within the 20 working days
statutory time frame, or extended legitimately
under the Act.
Over the year, the top six areas for requests
received were:* Money spent on taxis and flights* Costs expended in collecting the licence fee* Staff pay and expenses* Future Technology* Details of BBC properties and property
services* BBC staff demographics (gender andminority ethnic splits)
In addition, there were 37 requests forinternal reviews of BBC FOI decisions, and53 cases were referred to the Information
Commissioner’s Office.

The BBC received 34 formal Subject Access
Requests under the Data Protection Act.
27 were delivered within the 40-day statutory
timetable. None were referred to the ICO.
Costs of compliance

In order to ensure that we complied with all
relevant legislation, in 2007/08 we incurredcompliance costs estimated at £15.3million(£14.8million in 2006/07). This figure includes
the BBC’s annual £3.3million subscription
to Ofcom.
COrPOraTe SOCial reSPOnSiBiliTy

We strive to make Corporate Responsibility
integral to everything we do.
Like other companies, our operational
activities have both an environmental
impact and an impact on communities
where we work, and often where we live
too. In addition, the media’s huge reach andpotential to inform public opinion means thatalong with industry colleagues we also have a
responsibility to respond to changes in society
and to reflect its diversity.
We use our outreach work to connect withpeople who we may not engage with verymuch through our mainstream programming.
Breathing Places, for example, complemented
the BBC Two series of the same name thatcelebrated UK wildlife. Last year we ran
Breathing Places festivals in 15 cities acrossthe UK, offering a range of wildlife-themed
activities for families. Breathing Places also
launched The Big Wild Read, promoting literacy
among children and encouraging them to think
about nature and their impact on their wild
environment. For every book read, children

BBC Annual Report and Accounts 2007/08

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65

Hours of formal education across the four mixed
genre television channels.

received a tree token, which went towards
the planting of 20,000 trees.
BBC School Report helps Year 7 and 8 pupils
to produce their own news reports. School
Report day in March saw BBC news output
featuring reports made by students from 300
UK schools. The project aims to improveyoung people’s representation and stimulate
political interest in the next generation – aswell as producing engaging content for thewider audience.
A network of independent Appeals Advisory
Committees informs the BBC’s managementon its charity policy and practice. UK PublicService Broadcasting does not make cash
donations to charities but provides services
in kind. Last year we provided charities withservices with a cash equivalent of £296,000(£305,000 in 2006/07).

In addition to broadcast appeals, BBCcommercial businesses donated £180,000 tocharities during the year, mostly due tocommitments made by new acquisition Lonely
Planet (£12,000 in 2006/07).

legal deParTmenTThe Group General Counsel preparesa compliance report which is presented
quarterly to the Executive Board, and every
six months to the BBC Trust. It is designed tohighlight and capture the BBC’s compliancewith all principal laws and regulations which
affect the BBC group’s business.

This year we also agreed our first five year
environment strategy. This sets ambitious, butsustainable, targets for reductions in energy,transport, water and waste. A programme ofactivities to involve and engage staff is planned.
This is in addition to improved measuring andmonitoring of environment data and active
engagement with our supply chain. An
Environment Committee, chaired by the Chief
Operating Officer, has been set up to oversee
the implementation of the strategy.

The Group General Counsel provides acommentary on potential issues of non­compliance and establishes an action plan
designed to correct any issues as and when
they arise. Areas covered by the report range
from compliance with general laws such as
the Companies Acts and competition law, as
well as laws and regulations specific tobroadcasting and the media.

You can read more about these initiatives andhow we strive to be corporately responsibleat www.bbc.co.uk/outreach

The issues raised by the various editorial
breaches in 2007 and the actions taken by

Table 2: Hours of output by genre
BBC One

BBC Two

BBC Three

BBC Four

BBC HD*2007/08

2006/07

2007/08

2006/07

2007/08

2006/07

2007/08

2006/07

2007/08

2006/07

2,021

1,931

1,757

1,577

1,333

1,300

969

958

159

0

Education (formal)

6

5

785

1,374

0

0

2

10

0

0

News and weather

2,400

2,463

559

558

32

32

6

6

0

0

Current affairs

206

212

260

283

126

114

194

212

0

0

Entertainment

481

435

681

662

1,170

966

274

321

72

0

Sport

603

707

951

921

25

24

0

0

20

0

Children’s

496

479

1,619

1,462

0

0

0

0

10

0

Drama

1,114

1,088

322

226

329

390

340

358

213

0

Film

690

662

819

701

184

227

204

202

40

0

Music and arts

109

82

315

324

71

75

1,251

1,132

122

0

FactualReligion

105

116

30

27

5

2

15

36

8

0

Continuity

235

245

295

295

110

108

78

75

7

0

8,466

8,425

8,392

8,410

3,384

3,238

3,332

3,310

652

0

Total network hours (excluding opt outs)* BBC HD was launched 1 December 2007.

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367,478
Hours of original local and nations’ radio last year.

management to ensure that issues had beenlearned were one example of matters
covered this year.
The BBC does not publish the document inwhole or in part but it is used by management
as an active internal tool to gauge, and whereappropriate, improve the BBC’s system ofcompliance and controls. The BBC Trust in
turn uses the report as one of its mechanisms
to ensure that management takes compliancewith laws and regulations in as serious manneras the subject requires.
We also run a central legal library and arrange
legal and other training. Most of our in-housetalks and seminars are open to the wider
BBC community.

Where do we invest the licence fee?

There are 8,760 hours in the year (plus an
extra 24 in 2008 for the leap year) – and both
BBC One and BBC Two, our main mixed
genre television channels, are on air for mostof that time.

Map 3: BBC television spend by nation,£Ms

One of the BBC’s public purposes is to reflect
the diverse communities and places of the UK– and a key way to do this is to makeprogrammes in local communities, where welive and work.

Map 2: Source of first transmission
television hours

England
Scotland
Wales
Northern Ireland

A separate legal department works with BBC
Scotland, in recognition of the different legal
structure there.

07/08
339
97
60
38

06/07
325
80
61
32

The mix of programmes is also complex for
Audio & Music services.

FaCTS & FigureS

The BBC aims to ensure high ethical andeditorial standards in all our output by
requiring all production staff – in-house BBC
as well as independent producers – to adhere
to the BBC Editorial Guidelines, found atwww.bbc.co.uk/guidelines/editorialguidelines.
These incorporate the relevant sections of
the Ofcom Broadcasting Code. This year
we published new guidance for all audience
competitions, voting and awards – see
www.bbc.co.uk/guidelines/editorialguidelines/
advice/interactivity/
The Editorial Policy team is also consulted by,
and offers advice to, programme teams during
the production of potentially contentious
programming, including output that involves
secret filming. It is crucial we get this right,
given the quantity and variety of programmes
we make.

Map 4: Source of first transmission
radio hours

England (excluding London)
London (regional only)
Scotland
Wales
Northern Ireland

07/08
5,732
327
1,089
873
690

06/07
5,559
313
1,078
922
675

07/08
England (excluding London) 255,080
London (regional only)
72,910
Scotland
13,588Wales
16,572
Northern Ireland
9,328

06/07
251,733
72,261
13,79916,4738,954

BBC Annual Report and Accounts 2007/08

67£12,900
Average cost per hour of BBC news and weather

Table 3: network radio hours of output by genre

Map 5: BBC radio spend by nation,£Ms

England
Scotland
Wales
Northern Ireland

07/08
136
35
27
15

BBC Analogue Channels

06/07
126
27
23
13

During the year, the BBC also spent a further£27million on its online services in the nations.

BBC Digital Channels

BBC Total

2007/08

2006/07

2007/08

2006/07

2007/08

2006/07Music

23,27023,40917,454

17,63440,72441,043

News and weather

10,033

9,561

3,642

3,628

13,675

13,189

Sport

2,773

2,847

1,744

1,786

4,517

4,633

Factual

1,560

1,712

498

0

2,058

1,712

Current affairs

1,589

1,691

1,186

1,233

2,775

2,924

Drama

1,185

1,137

3,475

3,558

4,660

4,695

Arts

927

900

628

755

1,555

1,655

Entertainment

528

568

3,651

3,375

4,179

3,943

Religion

543

513

571

565

1,114

1,078

Schools

168

168

0

0

168

168

Children’s

24

42

1,349

1,460

1,373

1,502

Presentation

730

670

1,170

1,068

1,900

1,738

National Opts

258

220

0

0

258

220

Total hours

43,58843,43835,36835,062

78,95678,500

Where do we invest the licence fee?

The challenge, however, is not just to spend,
but to invest wisely. As the following tables
show, some programme genres cost morethan others – drama is most expensive, while
because of the quantity of hours we makeacross our portfolio, news and weather
appears cheapest. Both fulfil different aspectsof our mission to inform, educate andentertain – and both deliver a different kindof value to BBC licence fee payers.

Digital switchover is now here – we haverestated last year’s numbers to account for
the new way of presenting this information,
and Table 4 shows the average cost per hourby programme type across both our analogue
and digital television channels.

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68

With big audiences, it costs less than 1p per userhour to offer Radio 2.

Table 4: Cost per hour of television
programmes by genre

Table 5: Cost per hour of programmes and cost per user hour by service
Cost per hour, £000s
2007/08
2006/07

Cost per hour, £000s
2007/08

2006/07

Factual & Learning

111.1

103.1

Formal Education

130.0

70.2

News & Weather

12.9

12.7

Current Affairs

104.2

100.9

Entertainment

207.4

216.3

Sport

154.7

Childrens

99.2

Cost per user hour, £s
2007/08
2006/07

Television channels
BBC One

76.7

79.4

0.07

0.07
0.07

BBC Two

43.5

42.6

0.07

BBC Three

28.5

28.7

0.13

0.16

BBC Four

14.3

15.0

0.17

0.21

BBC HD

5.2

–

n/a*

–

CBBC Channel

8.2

9.0

0.10

0.15

161.7

CBeebies

3.5

3.0

0.02

0.02

82.5

BBC News

5.2

4.9

0.09

0.12

0.3

0.2

0.17

0.24

2.3

2.2

0.04

0.04

Drama

473.7

474.5

BBC Parliament

Film

129.3

199.8

BBCi

Music & Arts

98.1

99.9

Religion

102.6

111.9

It is also important that we target ourinvestment to where the audiences are.
BBC One is where the biggest audiences
can be found, and it is therefore the channel
that receives the biggest investment.

Radio stations
BBC Radio 1

3.5

3.4

0.01

0.01

BBC Radio 2

4.5

4.3

0.00

0.00

BBC Radio 3

4.3

3.9

0.06

0.05

BBC Radio 4

9.9

9.9

0.01

0.01

BBC Radio 5 live

6.3

6.4

0.02

0.02

BBC 5 live Sports Extra

1.7

1.7

0.02

0.03

1Xtra

0.8

0.7

0.05

0.06

BBC 6 Music

0.6

0.6

0.04

0.04

BBC 7

0.6

0.6

0.02

0.03

BBC Asian Network

1.3

1.2

0.07

0.05

BBC English Local Radio

0.4

0.4

0.03

0.02

BBC Radio Scotland

3.3

2.4

0.09

0.06

BBC Radio nan Gàidheal

1.2

0.8

0.12

0.09

BBC Radio Wales

1.8

1.6

0.05

0.04

BBC Radio Cymru

1.6

1.3

0.13

0.09

BBC Radio Ulster/BBC Radio Foyle

1.7

1.4

0.04

0.03

bbc.co.uk

13.0

9.5

0.18

0.16

BBC jam

n/a

3.8

n/a

2.56

FM&T

* BBC HD was accepted onto BARB measurement system in May 2008 – audience figures will be available from the end of 2008/09.

BBC Annual Report and Accounts 2007/08

39

%

69

Percentage of qualifying television hours fromindependent producers (minimum target: 25%).

As well as being regulated by the BBC Trust,the BBC is also answerable to Ofcom for anumber of programme production quotas,
outlined in Table 6, and we are further obliged
under European Community legislation to
make sure that the majority of our qualifying
programmes (which, for the BBC, excludes
mainly news, sport and events) are European
origin and that at least 10% of it is made byindependent producers.

Table 6: external programme production quotas
Quota

ActualHours of qualifying programmes across all channels

25%

39%

Hours of qualifying programmes on BBC One

25%

33%

Hours of qualifying programmes on BBC Two

25%

44%

Spend on qualifying programmes

30%

33%

Hours of qualifying programmes

25%

32%

Independent production quota

Regional programme-making

Network news and Current Affairs programmes

There can be a delicate balancing act between
delivering best value to the licence fee payer
while at the same time meeting a regulatory
requirement. Last year, however, the BBC
once more comfortably exceeded these
quotas – 87% of our output is of European
origin (primarily UK) and last year 39% wasmade by independent producers, for example.

Hours of News on BBC One

These figures are the BBC’s own
assessment. Ofcom will formally reporton our performance in its Communications
Market 2008 Review due to be publishedlater in the year. The most recent (2007)
review can be found at www.ofcom.org.uk/
research/cm/cmr07/

BBC Three

80%

81%

BBC Three in peak

70%

70%

70% approx

75%

1,380

1,606

Hours of News on BBC One in peak

275

279

Hours of Current Affairs on BBC One and BBC Two

365

461

Hours of Current Affairs on BBC One and BBC Two in peak

105

112

Levels of original production*
BBC One70%

85%

BBC One in peak

90%

99%

BBC Two

70%

83%

BBC Two in peak

80%

95%

BBC Four
BBC Four in peak

50%

64%

80% approx

79%

CBBC Channel

70%

75%

BBC News

90%

97%

BBC Parliament

90%

98%

CBeebies

Regional programming (BBC One and BBC Two only)
Hours of regional programming

6,580

7,226

Hours of programmes made in the relevant area

95%

99.5%

Hours of BBC One news

3,920

4,769

Hours of BBC One news in peak

2,010

2,290

Hours of non-news programming in peak

1,030

1,145

All non-news programmes adjacent to peak

355

403

* Original productions include all BBC-commissioned programmes including repeats. For BBC Three and BBC Four they exclude
repeats of programmes first shown on another channel.

PERFORMANCE

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Statements ofProgramme Policy
commitments
2007/08
Statements of Programme Policy (SoPPs) are
annual promises to licence fee payers from the
BBC which showcase some of the ways that eachof our services delivers high-quality, creative andmemorable content to them as viewers, listeners
and users. SoPPs are an Ofcom commitment,
approved by the BBC Trust, which then tracks
how the BBC meets them.
These pages summarise performance against
SoPPs 2007/08. Unless otherwise stated,all commitments are minimum hours orpercentages and include originations, repeats
and acquisitions. SoPPs for the year ahead canbe found at bbc.co.uk/info/statements 2008.

BBC Annual Report and Accounts 2007/08

71

BBC VISION
BBC Television services have a statutory regulatory requirement to meet Tier 2 quotas, agreed annually with Ofcom, for independent
production, regional programme-making, news and current affairs programmes, levels of original production, and regional programming.
For performance against these quotas, see page 69.
BBC OnePriorities
early evening peaktime schedule After a successful trial, The ONE Show launched in July. By March it had audiences of 4.9 million, with a high of

5.6 million in February 2008.
Saturday evening schedule Doctor Who and Robin Hood provided high-quality family drama that reinvigorated Saturday nights, and Strictly Come
Dancing and Any Dream Will Do each caught the audience’s imagination.
High-impact stripped events Celebrity Masterchef and Saving Planet Earth both broadcast in the slot immediately after the news hour to great
effect. Oliver Twist performed well.
uK mainstream comedy Three new sketch shows had promising debuts: Armstrong and Miller, Omid Djalili and Ruddy Hell It’s Harry and Paul.

After You’ve Gone established itself. All will return alongside the channel’s other successes My Family and The Green Green Grass.
reduce % peaktime repeats 8.3% peaktime repeats were broadcast in 2007/08, beating the target of 8.4%.
Commitment

actualHours of arts and music

45

109

Hours of current affairs programmes

90

206

… including in peaktime

48.5

50

Hours of new factual programmes

650

974

Hours of religious programming (as part of 112 hours with BBC Two)

80

105

Hours of sports programmes

260

603

Hours of children’s programmes (joint commitment with BBC Two)

500

2,115

BBC Two
Priorities
Programmes for viewers under 45 years Weekly reach among 25–44 year olds increased to 9.7 million. Heroes reached 30% of UK under 45s.

Factual programmes key: Top Gear, Long Way Down, Louis Theroux and Dragons’ Den all proved popular.
innovative comedy with mainstream potential New sitcoms included Roman’s Empire and The Life and Times of Vivien Vyle. Saxondale and Lead

Balloon both returned. Comedy formats attracting in younger viewers included Mock The Week, QI and The Graham Norton Show.
Commitment

actualNew hours of factual programmes

500

804

Hours of children’s programmes (joint commitment with BBC One)

500

2,115

Hours of hours of arts and music programming

200

315

Hours of news

100

559

Hours of current affairs

240

260

Hours of sport

430

951

Hours of religious programming (as part of 112 hours with BBC One)

2030

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BBC Three
Priorities
Peaktime offer The 7pm slot remains difficult with strong competition and no audience inheritance, although Doctor Who did well.
Later scheduled programmes like The Real Hustle and Dog Borstal fared better.
grow appeal and reach to 16–34s Reach amongst 16–34s was up 3.1 percentage points on last year. Notable successes include: Gavin and Stacey,
Last Man Standing, Filthy Rich and Homeless, Family Guy and Drop Dead Gorgeous.
new uK comedy and talent In addition to Touch Me, I’m Karen Taylor a number of successful comedies featured new and emerging talent.

Gavin and Stacey was written by new writers James Corden and Ruth Jones.
Support high-impact events, and use digital platforms Innovative coverage of Glastonbury helped deliver one of the best rating weeks everand Liverpool Nativity was hugely successful on and off screen.
Commitment

actualHours of new music and arts

50

54

% of output with interactive support

20%✓

Hours of new factual, knowledge-building programmes

50

94

Hours of new current affairs programmes

1518% of hours broadcast from news, current affairs, education, music and the arts

c.15%

26%

BBC FourPriorities
Broaden appeal within existing channel identity Two- to four-part documentary series have provided some of our most watched moments:

Atom, Bombay Railway and The Protestant Revolution, among others, matched audience figures with critical acclaim.
Seasons of high-impact programmes Edwardians: The Birth of Now took a novel approach to history. Theme weeks included Children’s TV on Trial,

Why Democracy, BBC radio @ 40, and Viennese art.
Commitment

actualNumber of new international film titles premiered

20

23

Number of new international documentaries

30

46

CBeebies
Priorities
maintain weekly reach to the service Weekly reach to CBeebies remains very high at 7.7% in 2007/08 (6.6% last year). In the Night Garden

performed very strongly, and Tommy Zoom has outperformed in almost every slot it has played in.
improve reach to 4–6 year olds Reach among 4–6 year olds was 42.4% compared to 39.0% last year – an increase of around 130,000.

New content brands such as Tommy Zoom, Space Pirates, Numberjacks and Jackanory Junior proved popular.
refresh parenting websites Early March 2008 saw the repositioning of existing editorial content to fit with the new ‘brand-led’ format,

with embedded parenting messages within games and video content.
increase on-demand content CBeebies continues to seek opportunities to support its linear programme content like Jackanory Junior with otherchances to view, subject to licences.
Commitment

actualInvestment in new UK programming

75%

87%

Programme hours

4,500

4,696

New UK programming

25%

32%

BBC Annual Report and Accounts 2007/08

73

CBBC
Priorities
maintain reach Reach was 5.6% (up from 4.4%), helped by new content brands like Sorcerer’s Apprentice, Shaun the Sheep, Do Something Different

and Roman Mysteries.
encourage and support participation Adventure Rock and MyCBBC both encourage increased participation and user-generated content in amore personalised environment.
increase on-demand content CBBC Watch continues to serve a selection of short-form clips every day to promote current output andindividual programme sites include short-form content wherever possible.
Commitment

actualDaily live news bulletins

3✓

Hours of news

85

89

Hours of factual and schools programming

1,000

1,006

Hours of drama

650

1,213

Hours of live presentation

150

216

RADIO
BBC radio made a voluntary pledge that at least 10% of eligible hours on its national analogue and digital radio networks would bemade by independent producers. in 2007/08 it achieved 13.0% overall, on a spend of £17.0million.
BBC radio 1
Priorities
develop interactive content Radio 1’s podcast offering has been expanded and shows are increasingly incorporating mobile MMS technology

into programme features.
launch a new strand for younger listeners A teen zone launched on Sunday evenings in October, with Fearne and Reggie hosting a new chartshow, followed by Switch with Annie Mac and Nick Grimshaw and The Surgery with Kelly Osbourne.
unsigned and new talent BBC Introducing launched at Glastonbury and also visited Bestival and the Latitude Festival. On air, Radio 1’s nations opt

outs are now branded BBC Introducing, with Huw Stephens also presenting a new weekly show to champion unsigned and emerging talent.
Commitment

actualHours of news, sport and current affairs

310

332

% of schedule devoted to specialist music or speech-based programmes

40%

43%
52%

% of ‘new’ music in daytime output

45%% of music in daytime output from UK acts

40%

52%

Live events and festivals broadcast

c.25

29

1

New sessions and Live Lounge performances

250

368

New documentaries

40

42

Hours of original opt outs from Scotland, Wales and Northern Ireland

200

258

1 Pre-release or less than one month since release.

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BBC radio 2
Priorities
develop further radio 2 music Club Music Club Live celebrated the success of new artists championed by Radio 2’s Music Club with a major
concert in December, featuring exclusive backstage video available on the website.
new comedy talent Two Out To Lunch spin-off programmes were broadcast. Radio 2 remains in conversation with BBC Entertainment on how

best to develop both talent and formats.
live music Major events included the Concert for Diana and Live Earth, and festivals including Guilfest, Cambridge Folk Festival, and Cheltenham Jazz

Festival. Concerts/performances included Genesis, Elton John, Mick Hucknall, Beth Neilsen and Manic Street Preachers.
Commitment

actualHours of specialist music programmes

1,100

1,109

Hours of musical theatre and film music

60

76

Hours of arts programming

100

102

% of speech output

c.33%

51%

Hours of religious output

170

186

Hours of news and original current affairs programming, including regular news bulletins

800

866

BBC radio 3
Priorities
international daytime performances New afternoon programme used to increase coverage of international musical performance. The target of

100 events was achieved through broadcasts of symphonic and chamber music from many countries, festivals and venues, including the broadcastof around 40 operas.
new appointment for the appreciation of poetry Words and Music has an established weekly slot in the schedule, representing the juxtapositionof music and poetry.
musical recommendations as guides In addition to the long-running CD Review, Jazz Library is fulfilling a similar role for jazz; it covers a wide

range of performers and is also becoming popular in its podcast version.
Complement radio 4’s classical music history Radio 3 followed up each edition of Radio 4’s 60-part series The Making of Music with an hourof music related to that edition.
Commitment

actual% of live or specially recorded music

50%

55.4%

Live or specially recorded performances

500

518

New musical works

30

51

Documentaries on arts and cultural topics

30

41% of budget spent outside the M25

40%

41.1%

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75

BBC radio 4
Priorities
increase impact of drama A strong line-up included Number 10, a contemporary political drama series; Avoid London, a week of dramas

marking the anniversary of the 7/7 London bombings; Witness, a retelling of the life of Christ; and a dramatisation of Vikas Swarup’s novel Q & A.
Widen appeal through:* narrative history The Making of Music told the story of Western music from Gregorian Chant to Philip Glass in a 60-part series presented
by James Naughtie, with complementary programming on Radio 3.
* seasons Examples include: India & Pakistan, marking the 60th anniversary of Partition; The Falklands 25 Years On; The Six Day War; The Sex Livesof Us, exploring contemporary sexual attitudes 50 years after Wolfenden; and Uncovering Pakistan, going deeper into the contemporary reality ofPakistan in the weeks before the elections.
* current events We responded quickly with special programmes on issues of national or international importance such as Tony Blair’s
departure, the summer floods, the US credit crisis, Northern Rock, a Nick Robinson special on party funding, and the crisis in Pakistan.
Commitment

actualHours of news and current affairs

2,500

3,169

Hours of original drama and readings

730

732

% of new Afternoon Plays that are first or second commissions

25%

33%

Hours of original comedy

180

211

Hours of original documentaries

200

249

Hours of original religious programming

200

223

BBC radio 5 live
Priorities
migrate listeners to digital platforms 31% of 5 live’s audience listen digitally, the highest (with Radio 4) of any BBC network also available
on analogue transmissions. 5 live continues to expand its digital activities including sports bulletins and film recommendations sent to mobile.
expand use of user-generated Content The station’s Audience Team continues to get a high number of stories and guests to air.
The breakfast show blog provided material from listeners for special NHS and Education days.
Comprehensive rugby coverage 5 live offered extensive coverage of the Rugby World Cup and Six Nations on air and a lively presence online.
Commitment

actualHours of news coverage

6,000 (c.70%)

6,718 (76%)

Hours of documentaries

50

56

BBC radio 5 live Sports extra
Priorities
Test match Special We provided complete coverage of England’s internationals at home and abroad. The Test Match Special Blog is consistently

the most popular blog on bbc.co.uk
nurture new sport broadcasting talent A number of names new to radio sports commentary have been nurtured on the station,
including Matt Dawson (rugby) and Alison Mitchell (cricket).

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1Xtra
Priorities
refresh the schedule Highlights of a refreshed schedule include new flagship breakfast programme with Trevor Nelson & Zena,and Mistajam with a new evening show. A number of the incoming DJs were new to radio.
develop signature live event 1Xtra Live was successfully launched in front of 4,000 listeners in Coventry in March. The aim is it will become

an annual event.
Weekday news and discussion programming Work continues to ensure that news and speech output is more closely integrated into

daytime programming. A new weekday afternoon news and discussion programme hosted by Max was launched in October.
Commitment

actual% of new music

70%

72%

% of music from the UK

40%

44%

Live music events

50

66% of output dedicated to news, documentaries and social action

~10%

10%

% of speech-based output

~20%

21%

BBC 6 music
Priorities
live music, especially uK origin The Hub sessions continue to play a pivotal role in defining 6 Music. Live acts this year have included the Manic

Street Preachers, Kate Nash, Faithless, and an outstanding performance from PJ Harvey.
develop music news service The station now has a network of stringers in BBC local radio stations and East and West Coast reporters forimportant US stories. The podcast of The Music Week has started well.
Commitment

actualHours of archive concert performances

400

588

% music over four years old

50%

52%

% of music that is concert tracks and sessions from the BBC’s archive

15%

15%

New sessions

275

471

Hours of documentaries and essays

550

590

BBC 7
Priorities
reach new audiences Introducing Comedy Club has increased Sunday evening reach. Sci-Fi drama like Blake’s 7, The Scarifyers and Doctor Who
attracted new listeners.
Children’s programming, including pre-school CBeebies on BBC 7 has developed its offering with non-competitive quizzes for children andnew pre-school comedy programming.
innovative ways to listen and interact In conjunction with the EBU, writers from six countries were commissioned to write short dramas on

the subject of borders to coincide with European Radio Day in October.
Commitment

actualHours of comedy

2,800

3,500

Hours of drama

2,800

3,601

Hours of original new comedy

10

40

Hours of original new drama

20

30

Hours of children’s programming

1,400

1,464

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77

BBC asian network
Priorities
Broaden music offer New programmes include Love Bollywood at weekends, weekday music-led Drive programme, and a Bhangra programme

on Saturdays.
increase the impact of journalism Staff attachments to Journalism/5 live continue to build closer relationships. BBC-wide projects participatedin included a focus on climate and a special on MI5 recruitment.
increase independent production hours Independent production increased to 13 hours a week, with programmes such as Devotional Sounds

and Mic Check and commissions to work on Asian Nation, a major project linked to the 60th anniversary of Partition.
Commitment

actualProportion of speech : music

50:50

49:51

% music from UK artists

40%

50%

Hours of language programmes per day

3-5

3.6

BBC FUTURE MEDIA & TECHNOLOGYBBC Fm&T has a mandatory minimum external spend of 25% for its online services. This year it achieved 31% (up year-on-year from30%), worth £22.3million (up from £17.3million in 2006/07).
bbc.co.uk
Priorities
launch BBC iPlayer service launched on Christmas Day 2007, and quickly reached over 0.5 million daily downloads. Non-DRM downloads
launched in March 2008 with integrated Radio Player.
establish portfolio approach to content Prioritised roadmap and portfolio established for FM&T editorial services. Initial development
for 500 subject portals planned for Q2 2008.
Complete trial of BBC Open archive The trial completed successfully mid-December.

% (by value) of eligible content and services from external suppliers

Commitment

actual

25%

31%

BBCi
Priorities
navigation and signposting New user interfaces are being investigated as part of wider switchover plan with cable version likely to bede-scoped. Load times faster year-on-year.
Sport Integrated ‘red button’ sports portal on track to launch for Beijing Olympics in August.
launch on-demand service BBC iPlayer will launch as a full service on Virgin Media in April 2008. Slightly delayed on initial plans due

to rights issue around music and third party missing technical deadlines.
Ceefax Planning work in progress and on target to deliver in Autumn 2008. Complete content parity will not be achieved due tobandwidth constraints so Journalism has prioritised content needs.

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BBC NEWS
BBC news and BBC Parliament each has a statutory obligation for at least 90% of broadcast hours to be originations, and to spend
at least 30% of ‘relevant programme’* budgets (representing 25% of hours by volume) outside the m25. in 2006/07, both services
met their requirements.
BBC news
Priorities
Online and interactive 61124 MMS contact number improved user-generated interaction from audiences. News 24 now streamed online andis regularly among most viewed sites, particularly on big story days.
use of presenters Presenters deployed on many occasions, including: Portugal (McCann story), Westminster (Brown-Blair handover), aroundthe UK (floods, foot and mouth), party political conferences, Iraq, Afghanistan and the Scottish elections.
reach to underserved audiences Teen 24 (trial run of programmes) is making an impact, and the weekend Your News (utilising viewer
contributions) regularly watched by 200,000 people. Entertainment 24 offers latest showbiz news.
documentaries Our World: weekly half-hour programmes (with narrative repeats) expose and evaluate global issues; Panorama and The Best ofNewsnight: routinely rerun each week; Question Time Extra has started, and a Question Time cut-down runs every Saturday in peaktime.
* ‘relevant programme’ excludes news.

Commitment

actualHourly news service✓✓

News summary on the half-hour✓✓

Hourly business news from 9am to 7pm on weekdays✓✓

More international news than other main continuous news channel(s) in UK✓

Research outstanding

More local/regional news than other main continuous news channel(s) in UK✓

Research outstanding

Hours of sports news across the year

100

118

BBC Parliament
Priorities
examine the work of the Houses of Commons and lords using actuality and interviews, supplemented by new material on bbc.co.uk/
parliament Friday edition of The Record focuses on the work of Parliament and its relationship with the devolved institutions, including interviews

with parliamentarians and expert commentators.
use of broadband Three broadband streams on offer, plus over 30 hours each week on BBC iPlayer.
First minister’s Questions from Scotland and Wales A new late evening (Monday–Thursday) strand launched featuring First Ministers
Questions from Northern Ireland, Wales and Scotland, Deputy First Minister’s Questions from Northern Ireland and Prime Minister’s Questions.
Commitment

actual

Weekly hours of coverage of the Westminster Parliament (normal week)70

70

Weekly hours of Select Committees

10

13

Hours of proceedings of the Scottish Parliament

100

145

Hours of proceedings of the Welsh Assembly

100

81†

Hours of programming from Brussels and Strasbourg

100

101

† Elections held 3 May and delays in forming a new Welsh Assembly Government meant there were only six weeks of regular Assembly sessions in the five months between April and Aug 2007.

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79

BBC NATIONS & REGIONS
Services from BBC nations & regions have no statutory commitments but work with BBC television and radio networks and interactive
services to provide content for audiences throughout the uK. in 2006/07, radio Scotland, radio Wales, radio Cymru and radio ulster/Foyle
each made a voluntary commitment to commission at least 10% of eligible hours from independent producers. The levels achieved were:radio Scotland (17%), radio Wales (10%), radio Cymru (10%) and radio ulster/Foyle (9%*), with a combined value of around £3million.
*The Alan Simpson Show was taken over by in-house production in January 2008 due to concerns over editorial quality. A further eight hours per week have now been commissioned to replace
this and we expect to meet this commitment from 2008/09.

BBC local radio in england As at 1 April 2008 there are 39 local radio stations in England, plus five opt out services.
Priorities
maintain reach Weekly reach was 18.6% in 2007/08 compared to 18.8% for last year.
To better serve core audience Editorial work on bulletins, weather, sport and travel across Local Radio has taken place. Local Radio 2010
strategy to engage staff in debate over best practice and develop audience awareness now launched.
Commitment

actualHours of local radio output

230,000

250,742% of repeats

<2.5%

✓

Speech content of BBC Local Radio in core hours (6am–6pm)

60%

64%

Speech content of BBC Local Radio at breakfast peak

100%

100%

BBC radio Scotland
Priorities
maintain reach Weekly reach to Radio Scotland was down to 21.5% from 23.1% last year in a highly competitive broadcast environment.
Scottish Parliamentary and local election coverage Substantial reporting and analysis across the output during the campaign in existing

strands, plus special editions of Scotland Live. The Leaders’ Debate was simulcast and election results broadcast through the night.
Commitment

actualHours of mixed genre programming

7,000

7,228

Hours of radio news and current affairs

2,200

2,455

Hours of arts coverage on radio (including narrative repeats of daily arts show)

200

385

Weekly specialist music strand✓✓

BBC radio nan gàidheal
Priorities
maintain reach The average reach for 2007 for RnG is 68%, up slightly on the 66% for last year.
Scottish Parliamentary and local election coverage Coverage of parliamentary and local election campaigns offered within daily news
programming, together with reports on key national and local issues.
develop and commission cross-platform content Second series of Rapal TV, complementing existing radio and web-based content, completed.

Cuairtean website launched, offering virtual tours of the Highlands and incorporating archive radio interviews, visuals and related information.
BBC One Scotland
Priorities
2007 Scottish Parliamentary and local election coverage Extensive coverage of the Scottish elections on TV, radio and online, with a camera

at every count on election night. Coverage included a number of major TV debates, an extended Newsnight Scotland throughout the campaign
and a Bafta-winning special on subsequent voting problems.
new sitcoms Two new comedy series, Dear Green Place and Legit, transmitted in the autumn. Both featured new writing and performing talent

alongside more established cast members.

Hours of opt out content on BBC One Scotland

Commitment

actual450

517

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BBC Two Scotland
Priorities
Content around Scotland’s Highland year of Culture 2007 Programmes included documentary The Glencoe Massacre, a six-part run ofHighland Clans, MacMusical and Highland Empire. The year ended with Highland Lives, a series of short video diaries.
Series on indigenous music-making in Scotland Six-part series Scotland’s Music with Phil Cunningham charted Scotland’s musical heritage

to significant audience and critical acclaim.
develop and commission cross-platform content Examples include Scotland’s Music, local and parliamentary election coverage, T in the Park,and ‘mobisodes’ of River City. New five-year contract provides SPL football coverage, with every game live on radio and online, a televisionhighlights programme and broadband clips.
BBC radio Wales
Priorities
news, sport and information Good Evening Wales in the key evening drivetime slot extended by half an hour and regularly broadcasts news
specials or live coverage to reflect the Welsh agenda.
Welsh assembly election coverage The Radio Wales Phone in with Richard Evans featured interviews with leaders. Comprehensive coverage
included overnight election night programme and special news programmes broadcast after the election as the battle for the leadership for the
Welsh Assembly continued.
daytime speech content Enriched and improved, with new topics and guests. Roy Noble now broadcasts in the afternoon, and Jamie Owen
and Louise Elliott present from 9am to 12noon.
Commitment

actualHours of news and current affairs on BBC Radio Wales

1,500

1,661

Hours on BBC Radio Wales, excluding news and current affairs (excluding opt outs)

5,300

5,408

BBC radio Cymru
Priorities
Welsh assembly election coverage Extensive coverage on Post Cyntaf, Taro’r Post, Post Prynhawn, Dau o’r Bae and Manylu. Youth service C2 also
provided coverage in an attempt to engage new audiences.
Build reach on weekday afternoons Work continues on refreshing the weekday afternoon schedule. New programmes Stiwdio covering the arts
in Wales, and Blas, a weekly food and drink programme, target underserved 30–40 age range.
implement multi-platform strategy Improved commissioning structure to maximise multi-platform opportunities. More podcast pilots

approved as we try to reach new and younger audiences. Youth service C2 relaunched its website.
Commitment

actualHours of news and current affairs on BBC Radio Cymru

1,000

1,057

Hours on BBC Radio Cymru, excluding news and current affairs (excluding opt outs)

6,200

6,302

BBC One Wales
Priorities
increase reach to assembly election coverage Innovative ways to do this included enlisting 60 undecided voters and giving them a uniqueinsight into the issues throughout the election across all services.
Broaden reach to younger audiences Coal House was an unprecedented multi-platform success for BBC Wales, and its biggest gain in audienceshare was among our previously underserved 25–44 year olds.

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81

BBC Two Wales
Priorities
Widen audience appeal What’s in a Name?, an innovative multi-platform project on place names, proved popular; well-known faces

came together to celebrate the centenary of the National Museum of Wales in National Treasures; and BBC Cardiff Singer of the World got
a peaktime slot.
Sport analysis Sport Wales provides a dedicated outlet for sports journalism across the disciplines. Scrum V, live and highlights, continues toattract large audiences.
BBC Radio Ulster/Foyle
Priorities
News and current affairs Key events around devolution, the re-established executive at Stormont, the withdrawal of troops from Northern

Ireland and election, drove record numbers to our news and topical debate strands, including Talkback and The Stephen Nolan Show.
Maintain diversity in schedule Saturday mornings now include a sustained programme of outside broadcasts and event-led programme
activity that has put on air a wider range of voices, communities and diverse groups than before. Arts, music and culture are reflected in daily
entertainment and arts strands and coverage of special events like the Opening Night of the Belfast Festival.
Social action and adult learning initiatives A series focusing on adult learning Teabreak began its run on Radio Ulster MW in January.

There have been two campaigns in this year: RaW and Breathing Places.
Commitment

ActualOriginated hours of local radio

8,400

9,121

Hours of news and current affairs on BBC Radio Foyle

380

510

Hours of news and current affairs on BBC Radio Ulster

1,550

1,800

Hours of new comedy on BBC Radio Ulster

20

20

Hours of Ulster Scots radio programmes

40

40Nightly specialist music programme✓✓

BBC One Northern Ireland
Priorities
Maintain approval for news coverage BBC Newsline achieved an average appreciation score of 84 over the year, the highest of any of theearly evening BBC regional or national news programmes.

Hours of non-news opt out content on BBC One NI

Commitment

Actual100

165

BBC Two Northern Ireland
Priorities
Celebrate and explore life in NI The main areas of focus for local content are politics, sport, schools, specialist music, and minority languages.
Two examples included Hearts and Minds, which had another long run, and Blackstaff Sessions which showcased folk music. Programmes were
provided in Irish and Ulster Scots.
Reflect minority and specialist interests Blas Ceoil is a new ten-part music series. Imeall Geall started in January, and a second series of Danderwith Drennan, an Ulster Scots strand, was commissioned.

FINANCE

82

Financial
overview
We work across the BBC to deliver the best
possible value from every pound of licence fee
and commercial income. Creative risk does notmean financial recklessness and we aim to carryout our business of making great programmes
as simply and efficiently as possible, deliveringsomething of value to all of our audiences.
Zarin PatelGroup Finance Director

BBC Annual Report and Accounts 2007/08

Licence fee collection/evasion,
%

05/06
06/07
07/08

9.6
9.2
8.7

The combined cost of collection andevasion as a percentage of grosslicence fee income is down, driven
by savings on collection costs,
in particular over-the -counter
licence sales.

BBC Worldwide profit before
interest and tax, £Ms

05/06
06/07
07/08

89

The BBC has no shareholders, and does notseek to make a profit from its public service
activities. This means that our objectives arefocused on ensuring that our audiences get
value for money from the licence fee:
* Collecting the licence fee as efficiently as
possible. We are doing this by putting inplace more cost-effective payment methods
and keeping evasion as low as possible;* Getting maximum value for programmes
paid for by the licence fee. We do this via
our commercial business BBC Worldwide,
through which we sell a growing numberof programmes overseas, as well as
developing new online services;* Ensuring the BBC is run as efficiently as
possible. We do this by using newtechnology, simplifying the way weoperate, and by prioritising resources inareas which deliver most value to all of ourlicence fee payers;* Using the licence fee to benefit all areas of
the UK. We are doing this by establishing
new production bases outside London,such as Salford, and by making moreprogrammes in the nations and regions.

Licence fee spent across
UK nations/regions, £Ms

106
06/07
228

05/06

05/06

111
118

BBC Worldwide’s increase in profit,on turnover of £916million, wasdriven by strong sales of programmes
and formats, and sales of DVDs,
overseas.

Objectives anD strateGy

Efficiency savings, £Ms

07/08

06/07

347

Our three -year efficiency
programme ended in March 2008,
resulting in annual recurring savingsof £347million. From next year ourtarget is to make 3% annual
efficiencies.

The cost of collection is now 3.6% of grosslicence fee sales, the lowest ever achieved.
We have done this by setting up more
efficient payment methods, and by making
savings on contracts with collection agents.
In particular, this was the first full year of ourcontract with PayPoint for over-the-counter
licence sales – projected to save us around£100million over six years.
More people are paying for their TV licenceby direct debit – 66% in all – which compares
favourably with other utilities, particularly as
we are not able to incentivise people toswitch from other payment channels. With
direct debit take-up levelling out, however,
we are looking to other ways to reduce costs.
Online licence sales are one such opportunity.
Over 1.5 million licences were sold online lastyear – up 27% year-on-year. Next year we
will introduce e-licences to cut back on costs
associated with paper licences.
After a decade of falling evasion, we havereached a level where it is difficult to reach,and hold on to, people who do not want topay. Looking forward, digital switchover andthe growth in the number of ways to accessour content will represent fresh challenges,
although this will be mitigated in part by theforecast rise in the number of UK households.

07/08

835
864
960

We are continuing to invest heavily inprogrammes and services from rightacross the UK’s nations and regions.

Sales of BBC programmes and formats tooverseas broadcasters have risen again, as
have DVD sales both in the UK and abroad.
56% of BBC Worldwide’s sales (excluding
joint ventures) are now from outside the UK.
The consolidation of sales from Lonely Planet
following its acquisition also accounts for someof the increase.
These results come at a time when thebusiness is undergoing major development
through its digital strategy, with investment
in new online services such as a commercial
media player (subject to BBC Trust approval).
BBC Worldwide is forecasting that its profits
will be depressed by the size of thoseinvestments next year. Over the longer term,
however, this strategy means that BBC
Worldwide will deliver better value back to
the licence fee payer by developing new ways
to exploit BBC-owned content.
In October 2007 BBC Worldwide purchased
a 75% stake in the Australian travel
information company Lonely Planet. The
acquisition supports its strategy for overseas
and digital growth. Since acquisition, Lonely
Planet has contributed sales of £23million,
and its underlying trading business is
profitable (although it recorded a small lossof £2million due to goodwill amortisationand integration costs).

Financial perFOrmance

The charts at the top of this page show
our key financial performance indicators.
licence fee income

Minimising costs and controlling evasion levels
are the two key elements of our licence feecollection strategy. This year we made further
substantial reductions in collection costs, to£123million (2007: £134million), andmaintained evasion at 5.1%.

commercial businesses’ performance

BBC Worldwide’s strategy to grow overseas
and online revenues once more resulted inrecord sales – £916million this year (2007:£810million), and profit before interestand tax of £118million (2007: £111million).
Return on sales was therefore up to 12.8%(2007: 12.4%). Earnings (before interest,
tax, depreciation and amortisation) were£233million (2007: £222million), a marginof 25.5% (2007: 27.4%).

On 1 April 2008 we announced the saleof the Outside Broadcasts division of BBC
Resources Limited to Satellite Information
Services Limited. The sale follows on fromthe 2004 Commercial Review whichconcluded that the business did not need to
be owned by the BBC. The sale proceeds
reflect the greater growth potential of thebusiness under new ownership, free from the
BBC subsidiaries’ restrictions on raising capitalfor new investment.

83

F I N A N C E ++ F I N A N C I A L OV E RV I E W

84

efficiency and effectiveness

Digital switchover

Efficiency – doing more for less and spendingon the right things – is the BBC’s financial
bottom line. Over the last three years wehave made annual recurring savings now
totalling £347million across our UK PSB
business. This represents around 10% of ourcost base. The total one-off costs associatedwith the programme were £197million over
the three years.

Under the terms of the current licence fee
settlement, a proportion of licence fee income
is ring-fenced to help pay for wider industry
costs relating to digital switchover.

This figure falls slightly short of our£355million target. However, it excludes
further guaranteed savings of £10million,
which are sale proceeds from a property
disposal receivable in 2010. After taking
these in to account, we will have exceeded
the target.
The programme continues our long-term
focus on cutting costs, with efficiency savings
made every year since the early 1990s. This
includes over £2billion between 2000 and
2006, through smarter deals with suppliers,
centralisation of some support services,and changing working practices to improvestaff utilisation.
From next year, under a new Continuous
Improvement Programme, we have a target
to achieve 3% cash-releasing efficiencies(net of costs) each year up to the end of thecurrent licence fee settlement in 2012/13. We
must find sustainable cash savings equivalent
to 3% of our ongoing cost base, whilst
improving or maintaining the quality of our
output and containing inflation. These savings
will be reviewed each year by our auditors,
and in 2010 by the National Audit Office.
The efficiencies we make under thisprogramme will fall in to two types – either
productive (doing things at lower cost whilst
maintaining quality) or allocative (switching
resources to activities which provide better
value to licence fee payers). In other words,
it is not just about saving money but ensuringthat critical aspects of performance are
maintained or improved.
Given the ongoing context of rising inflationand energy costs, this annual target ischallenging. But at the same time the paceof technological change in broadcasting has
never been faster, creating opportunities toreduce production costs.
During the year the National Audit Officepublished three reports under the
programme of value for money studies
agreed with the BBC Trust. We welcome
the findings of these studies and are acting
on the recommendations. The reports canbe found at www.bbc.co.uk/bbctrust/This includes a marketing and awarenesscampaign run by Digital UK Limited, aseparate entity owned collectively by the BBC
and other UK broadcasters. This year Digital
UK Limited incurred costs of £21million, of
which the BBC contributed £19million (2007:£12million/£10million), and expenditure willrise again next year as more regions near theirswitchover date. A total of £201million up to
2012/13 has been set aside for this activity.
In addition, the BBC is also required to pay
for the Digital Switchover Help Scheme,
supporting up to seven million people (those
aged over 75, or on certain disability benefits,
or registered blind or partially sighted) toconvert one television set to digital. The
scheme is administered by DSHS Limited,
a wholly owned subsidiary, which this year
spent £6million (2007: £nil). During the year
it provided support to around 2,600 people
in Cumbria – in the first area to switch off theanalogue signal. In total, £603million has been
set aside for this activity.

important part of our overall remuneration
package to staff. Licence fee payers should
not, however, be asked to support it at any
price, which is why we launched a Career
Average Benefits section for new members
from November 2006, and why from April
2009 we will be asking our staff to help meetthe cost of longer life expectancy throughtwo phased increases to the employee
contribution rate.
resources

We have valuable resources to help us
achieve our financial and wider corporate
objectives. Creativity and innovation are
the lifeblood of the BBC, so we invest timeand effort in attracting, developing, andkeeping great people through effective
recruitment and extensive training anddevelopment programmes.
Guaranteed licence fee funding for theremainder of the Charter period also enables
us to plan with relative certainty, even if wecannot control rising costs. The BBC’s brandand reputation, both in the UK and overseas,
are also important assets. Despite theeditorial breaches last year there are signs
that audience trust has since been recovered.
risks and uncertainties

We are still in the early stages of digital
switchover, but on the basis of costs incurredso far we are expecting to remain within theamounts set aside.
service licences

The new service licence framework came into
effect from 1 January 2007 and this year is thefirst full year of its operation. During the year
our accounting for service licences has beenreviewed and enhanced, and updated service
licence baseline budgets have been agreed
with the BBC Trust.
During the year a number of service licencebudget tolerances were exceeded, whilst
several other services spent less than theirbudget. These were agreed with the BBC
Trust and are outlined in Note 28.

The key risks and uncertainties which we facein achieving our overall corporate objectives
are listed below:* Loss of relevance to audiences should
the quality and distinctiveness of ourprogrammes decline, or should we failto keep up with the industry in making
programmes easily available. To address
this risk we conduct extensive audience
research, and are exploring new ways
to enable audiences to access ourprogrammes whenever it suits them.
* Incidents which cause harm to our staff oraudiences. Safety and security are of criticalimportance, and we carry out detailed risk
assessments in advance of filming activities,
overseas assignments, and events involving
the public.

pension scheme valuation

The formal actuarial valuation of the BBC
final salary pension scheme as at 1 April 2007
was finalised just after the end of this year
and showed a surplus of £275million (1 April
2005: £13million surplus), with the increasereflecting two years of strong returns on thescheme’s assets.
As life expectancy increases, final salaryschemes are becoming increasingly expensive,
and this has driven the slight increase in
overall contribution rates to 25.35% (2007:
24.8%). Our final salary scheme forms an* Disruption to output due to loss oftransmission or industrial action. To guard
against this we regularly test business
continuity plans, and we also liaise closelywith unions over staffing issues.
* Loss of key talent and major rights,
particularly as competition intensifies
among broadcasters for star performers,
programmes, and sports rights. We havedeveloped co-ordinated strategies fordeveloping and paying for talent, and forbuilding a portfolio of programme andBBC Annual Report and Accounts 2007/08

85

sports rights which seeks to offer
something for everyone.
* Breach of editorial standards, damaging
the audience’s trust in us. In response to
the breaches identified this year, we have
set up a new Editorial Standards Board,chaired by the Deputy Director-General,
to oversee compliance with editorial policy.
* Sustained high inflation and energy pricerises reduce our spending power in realterms. To mitigate this we regularly review
our spending plans to see what we canafford and what represents best value formoney. BBC Worldwide is also exposedto the risk of a wider economic downturn,but is relatively well protected due to thediverse range of businesses and global
markets in which it operates; whilst a
decline in the advertising market would
impact on sales, other revenue streams
would provide protection.
Details of the BBC’s risk management
processes are included in the Governance andFinancial Statements section (see page 89).
statutOry results FOr the year enDeD
31 march 2008

income and expenditure

BBC Group income of £4,415million
represented a £238million (6%) increase on
the previous year. Licence fee income rose 4%
to £3,369million, reflecting the 3% increasein the cost of a TV licence, together with the
reductions in collection costs and growth innumber of UK households.
The main reason for the rise in income
exceeding the fixed licence fee increase
was the performance of the commercial
businesses, where income of £720million(2007: £636million) was 13% up on lastyear (excluding the BBC’s share of joint
ventures income).
Group operating expenditure did not increaseat the same rate (expenditure of £4,475million
was 2.8% higher), mainly due to a reductionin the FRS 17 accounting charge for the costof pension scheme benefits earned bymembers during the year. If these costs
are excluded, operating costs rose by 6%
in line with income.
balance sheet

Group net assets, excluding the pension
scheme, fell slightly to £996million (2007:£1,064million). Within this, working capitalremained broadly constant, with £359million
net current assets (2007: £377million).

During the year our borrowings increased
by a net £107million, primarily within thecommercial businesses in order to fundthe acquisition of Lonely Planet. Over thecourse of the current licence fee period,
we are forecasting to increase our level ofborrowings in order to pay for improvements
to programmes and services, whilst remaining
within the borrowing limits specified in
the Charter.
The other significant movement is in thelevel of provisions, which rose by £39million
largely due to the provision for future
redundancy costs.
cash flow statement

The Group cash balance fell by £67million
over the year, but it is important to note thatrather than seeking to generate more cash,
our main priority is ensuring that we remain
within the borrowing limits specified in
the Charter.

international Financial reporting
standards

Legislation requires UK quoted companies
to adopt International Financial ReportingStandards (‘IFRS’) in group financial
statements. Whilst the BBC ordinarily
prepares its financial statements on a basis
consistent with UK quoted companies, wehave decided not to adopt IFRS this year.
It remains our intention to prepare financial
statements on the same basis as that usedby Her Majesty’s Treasury in the preparationof the Whole of Government Accounts(‘WGA’). Based on the announcement in thisyear’s budget statement, regarding the firstyear of adoption of IFRS in WGA, we areplanning to prepare financial statements inaccordance with IFRS from 2009/10 onwards.
In the meantime, UK Generally Accepted
Accounting Principles apply, although we show
the impact of adoption of IFRS on the BBC’s
Group accounts on page 147.

treasury policies

We aim to ensure that we have sufficientliquid funds to meet financial obligations as
they fall due, and that we comply with all
borrowing limits (in particular those set
out in the Charter and any external loan
covenants – see Note 23).
critical accounting policies

Our accounting policies are described indetail in the financial statements (pages
101–104). The two areas which require thegreatest degree of judgement are pensions
and provisions:* Our valuation of the pension scheme
for FRS 17 accounting purposes includes
assumptions on life expectancy, future
investment returns, inflation and salary
growth, as stated in Note 8c viii. We
consult with the scheme actuaries toensure that they fall within an acceptable
range based on market practice, butdifferent assumptions would result ina change to the level of surplus.
* Provisions represent our best estimateof future liabilities, including those relating
to future redundancy costs. These, forexample, involve assumptions on thenumber of people involved and their levelof remuneration, and whilst we base theseon past experience the provision wouldchange if we used different assumptions.
This year we have also adopted anamendment to FRS 17 ‘Retirement Benefits’.
This change, and its impact on the financial
statements, is described on page 112.

Zarin patelGroup Finance Director
19 June 2008

FINANCE

86

Governance andfinancial statements
Effective governance – the system of directing
and controlling an organisation, including theprocesses by which limited resources are
efficiently targeted and monitored – is at thecore of the BBC’s ability to operate successfullyin the global business environment.
Zarin PatelGroup Finance Director

BBC Annual Report and Accounts 2007/08

87

bbc cOrpOrate GOvernance
FramewOrk

The composition, operations and functionsof the Executive Board are defined in theRoyal Charter (the Charter). In discharging its
functions the Charter requires the Executive
Board to have regard to generally accepted
principles of good corporate governance. So,
although the BBC is not a listed company, it
has opted to follow the relevant provisions of
the Financial Services Authority’s Listing Rules

and the 2006 Financial Reporting Council
Combined Code on Corporate Governance(the 2006 FRC Code), in order to beconsistent with companies quoted on an
EU regulated market.
The Executive Board has complied with therequirements of the Charter, creating
appropriate and effective governancearrangements for the BBC. This has also
secured substantial compliance with the 2006

FRC Code although in a number of areas
the 2006 FRC Code is not appropriate to
the circumstances of the BBC. Compliancewith the Charter has resulted in a small
number of areas where compliance withthe 2006 FRC Code has not been achieved,
although the Executive Board believes that
this does not compromise the quality of
the governance arrangements in place, as
shown here.

principle of the 2006 Frc code

bbc position

explanation

A.2 – There should be a clear division of
responsibilities at the head of the company
between the running of the board and theexecutive responsible for the running of thecompany’s business. No one individual shouldhave unfettered powers of decision.

The Chairman of the Executive Board is the
Director-General, the chief executive officerof the BBC.

The Charter specifies that the DirectorGeneral may be the Executive Chairmanof the Executive Board.

A.3 – The board should include a balance ofexecutive and non-executive directors (andin particular independent non-executive
directors) such that no individual or small
group of individuals can dominate the board’s
decision taking.

The Executive Board comprises 16 directors,of which ten are executive Directors andsix are non-executive Directors. All nonexecutive Directors are considered
independent for the purposes of the 2006
FRC Code.

The role of the BBC Trust in approving
high-level strategy means that no single
individual has unfettered powers.

As a result, the Executive Board does notcomply with the provision (A.3.2) that at least
half the board, excluding the Chairman, should
be independent.

The Charter specifies that non-executive
Directors must not be less than one-thirdand not equal to or more than one half ofthe members of the Executive Board.
The Executive Board includes a balance ofexecutive and non-executive Directors andno individual or small group of individuals
can dominate decision taking.

In addition, provisions in the 2006 FRC Code that relate to interaction with shareholders do not apply to the BBC, although in somecircumstances it is possible to consider, by analogy, the way in which the Trust engages with licence fee payers. This is set out in Part Oneof the Annual Report and Accounts.

F I N A N C E ++ G OV E R N A N C E A N D F I N A N C I A L S TAT E M E N T S

88role of the executive board* Appointing, and holding to account, themanagement of the BBC and its subsidiaries;

The Executive Board is responsible for all
aspects of operational management of the
BBC (except the BBC Trust Unit), including:* Conducting the BBC’s operational financial
affairs to ensure value for money;* Delivering the BBC’s services in accordancewith purpose remits, service licences andother strategies;* Accounting to the BBC Trust for its own
performance and the performance of the
BBC and its subsidiaries;* Directing the BBC’s editorial and creative
output;* Complying with any decision from the
BBC Trust in relation to the exercise
of its functions.

executive bOarD

In accordance with the requirements andprovisions of the Charter the following
Committees continued to operate last year:* Audit Committee (see pages 90–91)* Fair Trading Committee (see page 63)* Nominations Committee (see page 89)* Remuneration Committee (see pages 92–95)
information and professional development* Ensuring compliance with all legal andregulatory requirements (including initialhandling of complaints about the BBC),
except where these areas specifically relate
to the BBC Trust or the BBC Trust Unit;* Ensuring compliance with all therequirements which the BBC Trust placeson the Executive Board;* Making proposals to the BBC Trust foranything which the BBC Trust is required
to approve;

The Executive Board meets monthly (except
for August); summary minutes of meetings
are available online at www.bbc.co.uk/info/
running/executive/minutes.shtml.
In practice, the Executive Board delegatessome of its responsibility to other managerialgroups. Any delegation from the Executive
Board is stated in the relevant standing orders
for each group and a framework for reporting
and review is established.

Directors receive an induction programme
and a wide range of information about the
BBC on joining. This includes backgroundinformation on the BBC, its Directors,
details of Board procedures and Directors’
responsibilities.
All of the Directors have access to external
independent advice should they so wish.
performance evaluation

Assessment of the performance of the
Executive Board in delivering the BBC’s
services and activities is conducted by the
BBC Trust in accordance with the Charter.
The BBC Trust reviews progress on an
ongoing basis culminating in an annual

table 7: executive board and committee attendance
Executive Board

Audit Committee

Ordinary

Extra­
ordinary

MemberNumber of meetings for the period

11

4

5

Mark Thompson

114Mark Byford

114

Jenny Abramsky

11

4Jana Bennett

10

4

Tim Davie

11

3

Ashley Highfield

10

3

Stephen Kelly

11

3

Zarin Patel

11

3

John Smith

104Caroline Thomson

113

Marcus Agius
Chairman of the Remuneration Committee

11

2

Val Gooding

2***

1

Dr Mike Lynch

10

4

4

David Robbie
Chairman of the Executive Audit Committee

10

2

5

Dr Samir Shah

11

2

5

Robert Webb
Chairman of the Fair Trading Committee

10

0

*

Fair Trading
Committee

AttendeeNominations Committee*
Member4
5

Attendee1

Remuneration Committee
MemberAttendee

3

1

3**
1

1
5

3

4

3
1

4

1

3

1

2

3
4

2

Membership of the Committee differs depending on the appointment (non-executive or executive) being made. Marcus Agius, Mark Thompson and Dr Mike Lynch are members for all
appointments. Mark Byford is a member for executive appointments and a regular attendee for non-executive appointments. Mark Thompson is the Chairman for executive appointments
and Marcus Agius is the Chairman for non-executive appointments.
** Mark Thompson attended only part of one of the meetings.
*** Val Gooding was appointed as a non-executive Director from 1 January 2008; there were three ordinary meetings and one extraordinary meeting held during January to March 2008.

BBC Annual Report and Accounts 2007/08

89

performance day attended by the Executive
Board and the BBC Trust. The Chairman of
the BBC Trust also meets separately with the
non-executive Directors annually.
The BBC’s current governance arrangements
were put in place from 1 January 2007, when
the present Charter became effective and will
be subject to a streamlining review now thatthey have been operational for a full reportingyear. In addition, as part of his role, the Senior
Independent Director has considered theeffectiveness of the operation of the Executive
Board (see below).
The performance review processes for the
Executive Board’s Committees is evolving
and each reviews its own performanceand effectiveness; no significant issues
were identified.
The Director-General reviews theperformance of each Executive Director
individually against personal and divisional
annual objectives. The results are reviewed
by the Remuneration Committee.

repOrt OF the seniOr inDepenDent
DirectOr

As Senior Independent Director, I havesought to provide a point of contact forvarious of the interested parties involved in
the governance of the BBC. From time totime during the year I have met separately
with the Director-General to ensure that
I am aware of any relevant issues that the
Executive team may wish to raise. I havealso met separately with the Chairman of
the BBC Trust to understand his views –and through him those of his fellow Trustees– on the relationship between the Executive
Board and the Trust and on the efficacy ofthe new BBC governance arrangements for
the BBC as a whole. Thirdly, I have held
individual meetings with each of the othernon-executive Directors for an exchangeof views on the effective operation of the
BBC Executive Board.
In addition to its ten Executive Directors,
the Executive Board of the BBC currently
has six non-executive Directors, five ofwhom were Directors for the whole ofthe 2007/08 financial year. The sixth, Val
Gooding, joined the Executive Board on
1 January 2008. While I can confirm that the
Executive Board acts as a unitary Board,
it now contains a mixture of Executive andnon-executive Directors, each of whombrings a different perspective to bearon the various agenda items which are
discussed around the board table. Each of
the non-executive Directors was chosenbecause of his or her independence fromnominations committee

The Nominations Committee oversees
the process of proposing, appointing anddismissing members of the Executive Board(with the exception of the Chairman, who isappointed by the BBC Trust). Membershipof the Nominations Committee is dependenton whether it is exercising its responsibilities
in relation to executive or non-executive
appointments.
During the year, one non-executive
appointment was made. The selection
process involved interviews with a selectionof candidates, with the appointment madeon merit and against objective criteria.
accOuntability anD internal
cOntrOlThe Executive Board is responsible for
ensuring there is a process for managing
significant risks to the BBC, and formaintaining an adequate system of internal
control and reviewing its effectiveness.

the BBC and also because each was thought
to possess skills and experience which would
be relevant and helpful to the Executive
Board’s deliberations.
2007/08 was a busy year for the Executive
Board which, in addition to a full agenda ofbusiness as usual, had to deal with the six-yearplan for Delivering Creative Future, resulting
from the lower than sought for licence fee
settlement and the consequences of thebreach of trust issue which substantially
impacted the BBC in the summer and autumn
of 2007. Both of these issues tested the abilityof the Directors to resolve them in ameasured and professional manner and I canattest to the quality of analysis and debate
which took place and to the contribution of
all Directors in ensuring that the Executive
Board’s response was timely and relevant.
To bring five, then six, new non-executive
Directors, most of who were unknown to
one another, on to a seasoned Executive
Board – effectively all at once – was always
going to be a challenge. My sense is that
all concerned have risen to this challenge.
The working relationships around the board
room are supportive and professional.
The debate is robust and transparent andthe overarching culture – which is now
establishing itself – is positive and in harmony
with the public purposes of the BBC.
marcus agius

Senior Independent Director
19 June 2008

risk identification, management andownership

An ongoing process for identifying, evaluating,managing, monitoring and reporting significant
risks to the BBC, which accords with the
Turnbull guidance, has been in place for theyear ended 31 March 2008 and up to thedate of approval of this BBC Annual Reportand Accounts. We consider the overallmanagement of risk within the BBC to be
most effectively achieved through theengagement of the entire Executive Board
and, for that reason, risk management is notdelegated to a sub-committee. Key elementsof the process include:* The Director of each BBC business group
has a clear responsibility for identificationand management of risks facing theirbusiness. Each business group maintains aregister of identified key business risks which
may have an impact on the accomplishmentof its strategic objectives or achievementof its core business purposes, together
with identified current controls and actions
planned in response. Risk registers are
subject to regular review and assessment
throughout the year, and feed into
consideration of risk exposure at both
local and BBC Executive Board level.
* The Executive Board receives regular
reports on the BBC’s risk exposure, focusing
particularly on the risk themes currently
deemed critical to the success of the BBC,including identification of controls currently
in place, further actions planned to manage
those risks effectively and highlighting any
issues for their attention.
* Specialist functions oversee the pan-BBC
management of certain major areas of risk,
ensuring appropriate frameworks andarrangements are in place to provide
for consistency across the business, andensuring appropriate executive sponsorshipand management ownership of these.
Such specialist functions include theBusiness Continuity Unit and Occupational
Risk Management.
* The responsibility to minimise the riskof fraud and the consequential loss to thelicence fee payer is taken very seriously.
A clear fraud policy clarifies responsibilities
for the controls in place to minimise the riskof fraudulent activity and all suspected
incidents of fraud are investigated.
* An internal risk management function,
led by the Head of Risk, works withmanagement and the Executive Board
to ensure the continued operation andappropriate development of processes to
identify, evaluate and manage the significant
risks facing the BBC, and to ensure there isF I N A N C E ++ G OV E R N A N C E A N D F I N A N C I A L S TAT E M E N T S

90

appropriate ownership of all risks. An annual
report on the process is submitted to the
Executive Audit Committee.
internal control

The Executive Board, supported by senior
management teams, is responsible forestablishing and maintaining the BBC’s system
of internal control, for reviewing its
effectiveness and for ensuring necessary actions
are taken to remedy significant failings or
weaknesses identified. Our system of control
is designed to manage rather than eliminate
the risk of failure to achieve business objectives:
although no system of internal control can
provide absolute assurance against material
misstatement or loss, the BBC’s controls aredesigned to provide reasonable assurance
that assets are safeguarded, transactions areappropriately authorised and material errors or
irregularities are either prevented or detected
on a timely basis. Key elements of our system
of internal control include:* Comprehensive financial and otherreporting processes, within businessgroups and up to the Executive Board,
including monthly management reporting,business reviews, an annual budget
cycle with regular interim forecasts,
long-term planning, performance review
and exception reporting.
* Formalised authorisation processes,with the maintenance of proper records
whenever these are necessary, covering
all financial transactions, all programmecommissioning and production, all major
project expenditure, and all contracts,with clearly defined criteria when Executive
Board approval is required.
* Processes to ensure compliance with allapplicable laws and regulations, including
Ofcom requirements.
* Processes to manage risks associated withthe outsourcing of key business services(eg licence fee collection, finance transaction
processing, HR services, technology systems
and support) and to ensure continuity ofongoing business operations.
* Formalised policies and procedures
concerning all material business processes,
to ensure the flow of timely, relevant andreliable information across the business.

Committee and by review and discussionof quarterly reports on both risk andcompliance, confirms that it has considered
the effectiveness of the system of internal
controls in operation throughout the financial
year and up to the date of approval of theAnnual Report and Accounts.
Over the course of the year a number ofbreaches of editorial guidelines relating tocompetitions, votes and honesty withaudiences were discovered. A number ofmeasures were taken designed to prevent
any further instances, including a new Codeof Conduct: Competitions and Voting, neweditorial guidance for votes, competitions andawards, and enhanced technical supervision ofinteractive votes and competitions. In additiona new face-to-face course, Safeguarding Trust,designed with the aim of ensuring programme
makers understand and comply with theBBC’s values and editorial standards andreinforce ways to be open with audiences
about production techniques, was delivered
to very nearly every programme maker (morethan 17,000) by the end of March 2008.
internal audit

Our Business Assurance function, whose
authority and independence is assured by
its independent and direct access to the
Director-General and to the Executive
Audit Committee, delivers the BBC’s internal
audit service. Business Assurance undertakes
regular testing of control systems andcore business processes, evaluating theiradequacy and effectiveness and ensuring
their consistent application across the BBC.
Its work programme is based on a continuing
assessment of key risks, with due consideration
to value for money to the licence fee payer,
and covers material financial, operational andcompliance controls. It is agreed annually with
the Executive Audit Committee and extends
throughout all activities of the BBC and covers
the exercise of the BBC’s right of audit overexternal parties, including independent
production companies and suppliers of key
outsourced business services. Any significant
control failings or weaknesses revealed by
testing are reported promptly to appropriate
levels of management. The results of testing
are reported at each meeting of the Executive
Audit Committee; follow-up reviews takeplace to monitor that management has
implemented recommendations.
executive audit committee* Processes to ensure the professionalism andcompetence of staff, including recruitment
policies, performance appraisal systems,
and training programmes to develop andmaintain required skills and knowledge.
The Executive Board, in reliance upon
the detailed work of the Executive Audit

The members of the Executive Audit
Committee, all appointed in January 2007,
are non-executive Directors David Robbie(Chairman), Dr Mike Lynch and Dr Samir
Shah. The Executive Board is satisfied thatDavid Robbie has significant, recent andrelevant financial experience. The committee
augments the broad range of skills of its

three members, gained from considerable
experience in senior roles with other majororganisations, with advice as necessary frominternal and external professionals, including
on relevant developments in financial
reporting and related company law.

repOrt OF the chairman OF theexecutive auDit cOmmittee

The report set out below describes insome detail the remit of the Executive
Audit Committee and how, over thecourse of the year, our meetings havefulfilled our key responsibilities. A main
focus at each of our meetings is the
major points coming out of Internal Audit
reviews completed during the quarterand a discussion regarding the status of
the implementation of significant actions
raised in those reviews. Throughout these
discussions, we challenge management
to make the needed changes with theminimum of delay. We also receive regular
updates from our external auditors; theseoutline their audit approach and any
issues they wish to bring to our attention
for discussion.
To gain a deeper understanding of the mostsignificant risks facing the BBC and a fuller
appreciation of the existing and proposed
mitigation of those risks, this year we haverequested that a paper on at least one
major risk theme be presented to eachof our meetings. Our interest is in theappropriateness and the adequacy of theactions taken to manage the risk and wechallenge those presenting the papers where
we feel there to be improvements thatcan be made. One such paper dealt withinformation security, to verify our approachto this on the back of problems encounteredby other organisations.
The scope of this committee covers thewhole BBC, therefore we also receiveand discuss updates from the other
Audit Committees which oversee ourcommercial businesses.
In addition to the quarterly meetings,
we held a separate meeting which wasdedicated to the appointment of ourexternal auditors which included
presentations from those short-listed.
The committee approved the appointment
of KPMG LLP as the external auditors andthis appointment has since been ratified
by the Secretary of State.
David robbie

Chairman of the Executive Audit
Committee
19 June 2008

BBC Annual Report and Accounts 2007/08

91

During the year, the Executive Audit
Committee has reviewed its Terms ofReference and has approved their continued
application, deeming them appropriate toensure the committee’s continued effectiveness.
The written terms of reference are available
at bbc.co.uk/info/running/executive/standing_orders.shtml. The committee’s core purpose
is to review and maintain oversight of theBBC’s corporate governance, particularly withrespect to financial reporting, internal control
and risk management.
The Executive Audit Committee has fulfilled
its responsibilities, and in particular has:
* Reviewed the effectiveness of the system ofinternal controls, in particular by considering
the findings of the internal and external
auditors and seeking assurance frommanagement that control issues highlighted
are being addressed, and by considering
reports from management on processes for
managing significant risks to the organisation,
including subsidiary companies* Reviewed the BBC’s financial statements,
including accounting policies, compliance withlegal and regulatory requirements, and thefindings of the external and internal auditors* Overseen the BBC’s relationship withthe external auditors, including their
engagement, the scope of and approach totheir work, their fees, their effectiveness andtheir independence, including the approvaland observance of the policy relating totheir engagement in non-audit work
* Approved the work plan of Internal Audit* Reviewed the processes in place for thedetection of fraud and for whistle-blowing.
The Executive Audit Committee met five times
during the financial year. The meetings wereattended by the Director-General, the Group
Finance Director (also Chief Risk Officer), theHead of Business Assurance, the Head of Risk(since appointment in October 2007) andrepresentatives from the external auditors.
The committee meets at least annually withthe external auditors without any memberof management present. The Chairman of the
Executive Audit Committee meets routinely
with the Head of Business Assurance, alone
or with the external auditors, but without
management, and also meets with the external
audit lead partner alone.
Minutes of each Executive Audit Committee
meeting, once approved, are available to
the Executive Board and to the BBC Trust.
Recommendations of the committee on
any area within its remit where action or
improvement is needed are reported backto the Executive Board by whatever route isdeemed most appropriate to the nature andcircumstances of the issue. The committee
Chairman formally reports to the Executive
Board at least once a year on all matters within
the committee’s duties and responsibilities.
independence of external auditors

We comply with the guidance relating tomaintaining an appropriate relationship withexternal auditors set out in the 2006 FRC
Code. The external auditors appointed by the
BBC are KPMG LLP as auditors of the financial
statements, and PricewaterhouseCoopers LLP(PwC) as the fair trading auditors. The
Executive Audit Committee, the Fair Trading
Committee, KPMG LLP and PwC themselves
all have safeguards in place to avoid thepossibility of the auditors’ objectivity andindependence being compromised. The
Executive Audit Committee regularly reviews
the independence of its external auditors, andrecruitment from KPMG LLP into any senior
management position in the BBC requires its
prior approval.
To ensure that the provision of non-audit andaccounting services from KPMG LLP does notcompromise their independence andrepOrt OF the chairman OF theexecutive remuneratiOn cOmmittee

Managing executive reward at the BBC
poses challenges that are perhaps unique inthe UK. In particular, the BBC has to balanceits value-for-money responsibilities as apublic sector corporation with its need torecruit and retain high-quality managers incompetition with private sector media andtechnology companies.
The BBC operates a remuneration strategy,
approved by the Trust, and designed to enable
the recruitment and retention of staff in themarkets in which it operates, that is, bothpublic service broadcasting and commercial
business. During the year the Executive Board
Remuneration Committee (ERC) and the
BBC Trust reviewed the strategy and decided
to continue with it for the coming year.
In recognition of the BBC’s unique funding
position we do not provide the level ofshort- and long-term incentives that are typicalin the wider media sector but, to attract andretain key creative talent, we focus insteadon providing competitive base salaries. An
exception to this is the Chief Executive Officer
of BBC Worldwide who participates in theannual bonus and long-term incentive plansof BBC Worldwide, our commercial business.
Whilst we have managed to attract our
Executive Directors, the ERC is nonethelessaware that the competitiveness of the BBC’s

objectivity, the Executive Audit Committee
has set a clear policy which defines thethreshold above which proposed work must
be approved in advance by the committee,
and also defines when the planned work mustbe submitted to competitive tender. This
policy has been reviewed and updated by thecommittee during the year. In all cases, KPMG
LLP are not considered for work which might
compromise their ability to independently
opine on the BBC’s financial statements.
whistle-blowing

We have a ‘whistle-blowing’ or ‘protecteddisclosure’ policy, to facilitate the anonymous
communication of any incident in which there
is a suspicion that the BBC’s codes have beenbreached. A ‘whistle-blowing’ hotline isadministered by an independent external
company to ensure anonymity. Each reported
incident is notified to the Head of Business
Assurance, who ensures that every incident
is investigated, a response communicated andaction taken as appropriate. The Executive
Audit Committee reviews both the process
to ensure the proportionate and independent
investigation of matters reported, and theappropriateness of follow-up action.

overall remuneration package in the externalmarketplace continues to decline, in part due
to the increasing levels of short- and long-term
incentive practice in the wider media sector.
We review this each year and consider
whether the remuneration strategy andunderlying policies remain appropriate.
Over the last 12 months the ERC has madea number of changes to remuneration ofsome Executive Directors to recognise asignificant increase to their responsibilities
such as the Deputy Director-General, theDirector, BBC Vision and the Chief Operating
Officer. In addition the remuneration of the
Director, Future Media and Technology
was changed in response to competitive
pressures in the technology sector. In thedetermination of bonus awards for the year,
the ERC has taken into consideration boththe achievements of Executive Directors andthe editorial and compliance issues that have
faced the BBC and the impact those issues
have had on public trust.
In summary, this has been a challenging year
for the BBC but my colleagues and I believethat we have applied a remuneration strategy
that is in the interests of our licence fee
payers and has enabled us to retain our
key executive talent.
marcus agius

Chairman of the Remuneration Committee
19 June 2008

F I N A N C E ++ G OV E R N A N C E A N D F I N A N C I A L S TAT E M E N T S

92executive bOarD remuneratiOn
repOrtThis report sets out the BBC’s remuneration
policy and details the remuneration received
by the members of the Executive Board.
Although the BBC is exempt from therequirements of the Directors’ Remuneration
Report Regulations 2002 and those of the
Financial Services Authority, this report has
been prepared as if those requirements apply
wherever the disclosure provisions are relevant
and applicable. The sections on pensions andremuneration received by the Executive Board
members are audited by KPMG LLP.
remuneration committees: constitution
and operation

The Remuneration and Appointments
Committee (RAC) of the BBC Trust sets
the remuneration strategy for the DirectorGeneral and Executive Directors as well as thefees of the non-executive Directors. See Part
One of the BBC Annual Report and Accounts
for more information on this, available onlineat www.bbc.co.uk/annualreport.
The Executive Remuneration Committee(ERC) is responsible for implementing the
remuneration strategy for executive membersof the Executive Board (excluding the
Director-General) this includes thedetermination of base pay and incentive
awards. The members of the ERC are
non-executive Directors. Committee
members are Marcus Agius (Chairman),
Dr Mike Lynch and Robert Webb.
Meetings of the ERC are also attended, on
invitation, by the Director-General and the
Director, BBC People, to advise on mattersrelating to other members of the Executive
Board and the overall performance of theBBC. The Director, BBC People, is notpresent when matters concerning his own
remuneration are considered. The ERC has
access to internal expertise through theBBC’s Reward Director who also attends
the meetings.
Complying with the 2006 FRC Combined
Code on Corporate Governance, the
ERC takes specialist advice from external
professional advisers on some matters,
particularly those relating to market practice.
During the year, independent advice wasreceived from Hay Group who wereappointed by the committee. (In addition
to its work for the committee, Hay Group
provides other areas in the BBC withcomparative market data.)
non-executive Directors:
remuneration policy

The non-executive Directors receive a fee,determined by the BBC Trust, reflecting thecomplexity of the role and the time required

to execute the role effectively. The fee levels
are set with reference to rates paid by otherUK corporations, but at a level such that the
non-executive Directors would not befinancially dependent on the BBC. The feelevels are reviewed every other year, the next
review being effective from 1 January 2009.
Each non-executive Director receives a basefee (currently £35,000 pa). An additional fee(currently £5,000 pa) is awarded to thechair of each Board committee for each role
performed. The Senior Independent Director
is awarded an additional fee of £10,000 pa for
performing this role which includes chairing theNominations Committee. The non-executive
Directors are additionally reimbursed for
expenses incurred on BBC business, and any
tax arising on those expenses is settled directlyby the BBC. Their fees and expenses arereported in Table 9.
executive Directors: remuneration policy

The Executive remuneration policy enables
the BBC to provide:* Base pay: In determining base pay the ERC
takes into account the base pay of theBBC’s principal competitors and the otherorganisations with which it competes fortalent; the affordability of the BBC to
reward executives; and the performance ofthe executive. Whilst it is accepted that the
BBC must be competitive the BBC should

table 8: Defined benefit schemes

Executive Directors1

Age as at
31 March
2008

not lead the market on executive pay in the
media sector and therefore base salaries will
typically be positioned around the median of
the market.
* Variable pay: A limited element of variablepay, linked to the achievement of key
objectives and overall contribution to BBC
performance, is provided. The policy
recognises that many competitor
organisations are able to offer significant
levels of variable pay, including higher cash
bonuses and share-based awards which
are not possible within the BBC. Executive
Directors (with the exception of the
Chief Executive Officer (CEO) of BBC
Worldwide) are eligible for an annual bonusof up to a maximum of 10% of base pay ofwhich up to 6% is for the achievement ofdivisional value-for-money targets, and up
to 4% is for the achievement of divisionaltransformational objectives. It is intended
that the bonus arrangements for 2008/09
will follow a similar structure to 2007/08.
The policy recognises that BBC Worldwide
is a commercially funded business andprovides that the CEO of BBC Worldwide
participates in the annual bonus and thelong term incentive plans of BBC
Worldwide. The design of the annual bonus
and long term incentive plans are approvedby the BBC Trust. Details of the plans areprovided under BBC Commercial
Businesses, page 94.

Annual values

Total
accruedpension at
31 March
2008
£000s

Transfer values2

Increasein accrued
pension£000s

Transfervalue ofaccruedpension at
31 March
2008
£000s

Transfervalue ofaccruedpension at
31 March
2007
£000s

Increase/(decrease)in transfer
value lessmembers’contributions
over year£000s

Jana Bennett

52

11

2

164

126

31

Mark Byford

49

193

21

2,763

2,489

246

Tim Davie

40

6

2

37

27

3

Ashley Highfield

42

14

2

99

96

(4)

Stephen Kelly3

42

3

2

20

7

6

Zarin Patel

47

18

2

170

159

4

John Smith

50

194

21

3,167

2,637

504

Mark Thompson

50

7

2

91

64

20

Caroline Thomson

53

62

4

1,308

1,130

170

1 Jenny Abramsky has not accrued any benefits under the Pension Scheme since October 2006 when she started to draw
benefits under the Scheme.
2 The transfer value of accrued pension benefits represents the estimated cost to the Pension Scheme of providing the pension
benefits accrued to date. The value is affected by many factors, including age, pensionable salary, pensionable service andinvestment market conditions at the date of calculation (in accordance with Actuarial Guidance Note GN 11). It is not a sum
paid or due to the individual and therefore cannot be meaningfully added to remuneration. The effect of the investment market
conditions on the transfer value varies according to the member’s age – for older members the calculation reflects the yields on
index-linked gilts, whilst for younger members the dividend yield on the FTSE All-Share Index is the more significant determinant.
3 Stephen Kelly is a New Benefits member with less than two years’ service, and so would not be entitled to a deferred pension on leaving
the Scheme on this date. However, to be consistent with the other members, his accrued benefits have been calculated and valued.

BBC Annual Report and Accounts 2007/08

93

table 9: remuneration received

The remuneration of the Trustees and the Executive Board members during the year is shown below:
Fee/base
pay£000

Annualbonus£000

Expenses/
benefits
£000

Other
remuneration5
£000

Total
remuneration
2007/08£000

Total
remuneration
2006/076£000

Jenny Abramsky

327

19

12

61

419

329

Jana Bennett

406

23

19

88

536

433

Mark Byford

459

41

13

–

513

437

–

–

–

–

–

25

314

17

17

65

413

406

Ashley Highfield

350

34

11

71

466

359

Stephen Kelly

320

33

16

62

431

268

Zarin Patel

329

31

15

65

440

386

380

88

18

–

486

460

647

–

9

160

816

788

Executive Directors

Stephen Dando1
Tim Davie

2

John Smith

3Mark Thompson

4

328

32

15

65

440

361

3,860

318

145

637

4,960

4,252

Marcus Agius

50

–

–

–

50

17

Val Gooding

9

–

–

–

9

–

Mike Lynch

35

–

–

–

35

9

David Robbie

40

–

–

–

40

10

Samir Shah

35

–

–

–

35

9

Robert Webb

40

–

–

–

40

10

Total Non-executive Directors

209

–

–

–

209

55

4,069

318

145

637

5,169

4,307

579

–

63

–

642

209

–

–

–

–

–

295

4,648

318

208

637

5,811

4,811

Caroline Thomson
Total Executive Directors
Non-executive Directors7

Total Executive Board
Total Trustees8
Total Governors
Total

9

1 Stephen Dando resigned 23 April 2006.
2 Stephen Kelly joined on 1 October 2006 and therefore 2007/08 is the first full year reporting.
3 John Smith’s base pay, bonus and benefits have been fully funded by BBC Commercial Businesses since 1 September 2006. In addition to the annual bonus an equal amount has been invested
in the Long Term Incentive Plan for BBC Worldwide which may vest in March 2011.
4 The BBC Trust has responsibility for setting Mark Thompson’s bonus award and has assessed his performance over the year. His maximum bonus potential was 10% of base pay; and the BBC
Trust determined that his performance merited an award in the upper quartile. However he indicated that he did not want to accept a bonus this year.
5 Other remuneration comprises the following:a. cash pensions supplements which replaced FURBS arrangementsb. Jenny Abramsky receives a cash supplement as she no longer accrues benefits under the Pension Scheme.
6 The Executive Directors who primarily focused on licence fee funded business waived their contractual rights to be considered for an annual bonus in 2006/07. John Smith waived his right to£18,000 of annual bonus awarded to him. This is reflected in the Total remuneration 2006/07.
7 Marcus Agius was appointed 1 December 2006. Val Gooding was appointed 1 January 2008. Mike Lynch, David Robbie, Samir Shah and Robert Webb were appointed 1 January 2007.
8 The comparator figure for 2006/07 for the Trustees is for the period 1 November 2006 – 31 March 2007.
9 The comparator figure for 2006/07 for the Governors is for the period 1 April 2006 – 31 December 2006. Trustees who were previously Governors are included in the figures as Governors until
31 December 2006 and as Trustees from 1 January 2007.

There were no payments in respect of termination or compensation for loss of office paid to or receivable by Executive Board members during
the year.

F I N A N C E ++ G OV E R N A N C E A N D F I N A N C I A L S TAT E M E N T S

94* Benefits: In addition to pension, the othermain contractual benefits are a car and fuelallowance, private health insurance, and life
assurance. It is policy that new appointees
to the Executive Board are not eligible forprovision of a chauffeur-driven car. The
Director-General’s contract provides fora chauffeur-driven car, but no entitlement
to a personal car or fuel allowance.
* Pension: Executive members of the Executive
Board are eligible to participate in the BBC
Pension Scheme, which provides for pension
benefits on a defined benefit basis.
For an employee joining the Pension Scheme
before 1 November 2006, the accrual rate is
1/60th of the final pensionable salary for eachyear of service with pensionable salary beingbase pay, including London Weighting, but
not including any bonuses or other payments.
For employees in this group the normal
pensionable age is 60. For an employee whojoined on or after 1 November 2006 theaccrual rate is 1.67% of their pensionable payfor each Scheme year, adjusted in line with
inflation. For employees in this group thenormal pensionable age is 65.
All current Executive Directors have anormal pensionable age of 60 but may
continue in employment to age 65. For those
who joined the Pension Scheme after 31 May
1989 earnings are subject to maximum annual
limit (£112,800 per annum for 2007/08). No
maximum annual limit is applied to those whojoined on or before 31 May 1989. The Pension
Scheme provides for early retirement on
medical grounds and life assurance of fourtimes pensionable pay up to a prescribed limit.
For an executive member of the Executive
Board who joined on or after 1 June 1989,
where their pensionable pay exceeds the
maximum annual limit, a variety ofarrangements were put in place, including
funded and unfunded arrangements outsideof the Pension Scheme. Since 1 April 2006
these arrangements were replaced by acash supplement paid to each Director
on pensionable salary above the maximum
annual limit. See Table 8.
With the pension tax regime effective from
April 2006, any participating employee who
reaches or exceeds the Lifetime Allowance(£1.6million for 2007/08) may opt out of
the Pension Scheme and instead receivea cash supplement.

payout under the LTIP is 20% of base pay,
and additionally a potential 100% match ofdeferred annual bonus. Awards, including thematching element, made under the scheme
are subject to two performance measures:
Profit Growth (75% weighting) and Returnon Sales growth (25% weighting), measured
over a three year period and relative to
a comparator group of at least 15 otherinternational media companies. The
companies are ranked according to theirperformance. The comparator group isselected for their mix of business, industry
and geographical representation*.

bbc’s commercial businesses

The CEO of BBC Worldwide (the commercial
subsidiary of the BBC) participates in theannual bonus plan and long term incentive
plan (LTIP) of BBC Worldwide which were
established by the Board of BBC Commercial
Holdings and approved by the BBC Trust.
These plans are not funded by the licence
fee and the full costs of base pay, annual
bonus and the LTIP are self-funded by thecommercial revenues of BBC Worldwide.
The CEO of BBC Worldwide is eligible fora maximum annual award of 50% of base
pay under the annual bonus plan, determinedprincipally by performance against profit targets.
The CEO is entitled to defer up to 75% of theprevious year’s annual bonus into the LTIP.

BBC Worldwide must be ranked at leastat the median of the comparator group for
any of the award to vest. Maximum vestingis achieved for a ranking at the upper quartileor above. There is a straight-line vesting scale
between these two points. The vestingschedule is shown in Table 10.

The LTIP is a cash incentive plan designed
to align the CEO’s remuneration with thestrategy of the business. The maximum

table 10: long term incentive plan (ltip)
10a performance ranking for bbc worldwide

ltip payment

Upper quartile or above

20% of base salary, and 100% matchof deferred bonus

Median

10% of base salary, and 50% matchof deferred bonus

Below median

Nothing vests

Notes
1 Straight line pro-ration applies between median and upper quartile.
2 50% of the amount of any deferred annual bonus is also forfeited if performance is below the lower quartile.

10b ltip vesting for ceO of bbc worldwide
Bonus
Deferred£000s

LTIP Award

End of
Performance
PeriodLTIPAward Vested£000

Deferred Bonus
MatchingAward Vested£000s

Total Vested
£000s

b

c

a+b+c

78

87

252

a

LTIP 2005 to 2008

87

March-08

10c ltip potential vesting in 2009 and 2010 for ceO of bbc worldwide

LTIP Award

Bonus
Deferred1£000s

End of
Performance
Perioda

LTIP 2006 to 2009
LTIP 2007 to 2010–80

March 09
March 10

Potential
Potential
DeferredDeferred
Bonus
Bonus
Matching
Matching
Award(at(at target)2 maximum)2
£000s
£000s

Potential
LTIP
vesting(at target)2£000s

Potential
LTIP
vesting(atmaximum)2
£000s

b

c

d

e

a+b+d

a+c+e

39
39

78
78

–
40

–
80

39
159

78
238

Total
Total
potential
potential(at(at target)2 maximum)2
£000s
£000s

1 LTIP 2007–2010 for performance below lower quartile 100% of deferred bonus is forfeited.
2 Potential LTIP vesting is based on current earnings and rounded to nearest 1,000.
* Aegis Group, British Sky Broadcasting Group, Emap, Informa, ITV, Pearson, Reuters Group, Taylor Nelson Sofres, WPP, YellGroup, Cablevision Systems Corp, Comcast A, Disney (Walt) Company, Eastman Kodak, Interpublic Group Cos, News Corp A,
SBS Broadcasting, Time Warner, Pro Sieben Sat1, Axel Springer (R), Havas Advertising, JC Decaux, M6-Metropole Television,
Publicis Groupe, TF1, Vivendi Universal, Arnoldo Mondadori, Mediaset, RCS Mediagroup, Jetix Europe, Dentsu Inc,
Fuji Television Network, Nippon Television Network Corp, SKY Perfect Communications.

BBC Annual Report and Accounts 2007/08

95

employment contracts

Employment contracts of Executive Directors
have a notice period of a maximum of twelve
months, and are subject to earlier termination
for cause. There is no contractual entitlement
to any additional remuneration in the eventof early termination other than in the case oftermination for reason of redundancy.
Outside interests

In 2007 the ERC revised its policy on external
directorships. Where there is no potential
for conflict of interest, and with the prioragreement of the Director-General and theNominations Committee, executive membersof the Executive Board may now hold one
external directorship with up to 15 days per
year permitted to fulfil these duties. From
1 April 2007 remuneration which arises
from directorships may be retained by the
executive member, prior to this any
remuneration arising from directorships wasreceivable by the BBC. The change in policy
is to encourage the take-up of external
non-executive appointments as part of the
Executive Directors’ development as well as
bringing broader business skills to the BBC.
During the year the Chief Operating Officer,
BBC served as non-executive Director of
The Pensions Regulator and the CEO of
BBC Worldwide served as a non-executive
Director of Severn Trent PLC up to 29
February 2008. Both directors retained thefees for these directorships and the amounts
received are set out in the table below. It is
recognised that non-executive Directors arelikely to have other directorships and therestrictions applying to Executive Directors
do not apply to them.
table 11: external directorship fees

CompanyCEO, BBCWorldwide
COO, BBC

Payment
received£000s

Severn Trent PLC
50
The Pensions Regulator 10

executive bOarD respOnsibility
statement

statement of executive board
responsibilities in respect of the annual
report and accounts

The Charter requires that an annual reportand statement of accounts is prepared inaccordance with UK Generally Accepted
Accounting Principles and audited. The Trustees’
responsibilities are detailed in Part One of theAnnual Report and Accounts. The Executive
Board is responsible for the preparation ofan operating and financial review, statementsof compliance with applicable codes andregulations and the statement of accounts.
As a result the Executive Board is required toprepare a statement of accounts (or ‘financial
statements’) for each year that gives a trueand fair view of the state of affairs of the
BBC and of the income and expenditure forthat period.

The Executive Board is responsible forthe maintenance and integrity of thecorporate and financial information included
on the BBC website. Legislation in the UK
governing the preparation and disseminationof financial statements may differ fromlegislation in other jurisdictions.
statement of disclosure of information
to auditors

The Executive Board members who held
office at the date of approval of the Annual
Report and Accounts confirm that, so far as
they are each aware, there is no relevant audit
information of which the BBC’s auditors areunaware; and each Executive Board member
has taken all the steps that they ought to havetaken as an Executive Board member to makethemselves aware of any relevant audit
information and to establish that the BBC’s
auditors are aware of that information.
Going concern

In preparing those financial statements the
Executive Board is responsible for:* Selecting suitable accounting policies andthen applying them consistently.

The going concern basis has been adopted in
the preparation of the financial statements as
the Executive Board believes that the BBC has
adequate resources to continue its operations
for the foreseeable future.

* Making judgements and estimates that arereasonable and prudent.

This statement was approved by the
Executive Board.

* Stating whether applicable UK accounting
standards have been followed, subject toany material departures disclosed andexplained in the financial statements.
mark thompson* Preparing the financial statements on thegoing concern basis, unless it is inappropriate
to presume that the BBC will continue inbusiness, in which case there should be
supporting assumptions or qualifications
as necessary.
In addition, the Executive Board has elected
to comply with the accounting and disclosure
provisions of the Companies Act 1985 and,
where applicable, the Financial Services
Authority Listing Rules which apply to acompany quoted on an EU regulated market
except that International Financial ReportingStandards have not been adopted.
The Executive Board is responsible forkeeping proper accounting records that
disclose with reasonable accuracy at any time
the financial position of the BBC and enable
them to ensure that the financial statementscomply with the Charter and the applicabledisclosure provisions of the Companies Act
1985. They also have a general responsibility
for taking such steps as are reasonably
open to them to safeguard the assets of the
BBC and to prevent and detect fraud andother irregularities.

Director-General
19 June 2008

F I N A N C E ++ G OV E R N A N C E A N D F I N A N C I A L S TAT E M E N T S

96inDepenDent auDitOr’s repOrt tO thetrustees OF the british brOaDcastinG
cOrpOratiOn (bbc)

We have audited the Group and UK PublicService Broadcasting financial statements(the ‘financial statements’) of the BBC for
the year ended 31 March 2008, which
comprise the Consolidated Income andExpenditure Account, the Consolidated
and UK Public Service Broadcasting Balance
Sheets, the Consolidated Cash Flow
Statement, the Consolidated Statementof Total Recognised Gains and Losses, theReconciliations of Movements in BBC
Reserves and the related notes (pages 97–146).These financial statements havebeen prepared under the accounting policies
set out therein.
In addition to our audit of the financial
statements, the Trustees have engaged us
to audit the information in the Trustees’
and Executive Board Remuneration Reports(together ‘the Remuneration Reports’) thatare described as having been audited, whichhave been prepared as if the BBC werea quoted company and hence required tocomply with part 3 of Schedule 7A to theCompanies Act 1985.
This report is made solely to the BBC’s
Trustees, as a body, in accordance with theRoyal Charter for the continuance of the
BBC which came into force on 1 January 2007(‘the Charter’) and in respect of the separate
opinion in relation to the Remuneration
Reports and reporting on Corporate
Governance on terms that have been agreed.
Our audit work has been undertaken so that
we might state to the BBC’s Trustees thosematters we are required to state to themin an auditor’s report and, in respect of
the separate opinion in relation to theRemuneration Reports and reporting on
Corporate Governance, those matters that
we have agreed to state to them in ourreport, and for no other purpose. To thefullest extent permitted by law, we do not
accept or assume responsibility to anyone
other than the BBC and the BBC’s Trustees
as a body, for our audit work, for this report,
or for the opinions we have formed.
respective responsibilities of the trustees
and executive board and auditors

The Trustees and Executive Board are
responsible for preparing the Annual
Report, the Remuneration Reports andthe financial statements in accordancewith applicable law and United Kingdom
Accounting Standards (United Kingdom
Generally Accepted Accounting Practice)as set out in the Statements of Trustees’
and Executive Board’s Responsibilities
on page 95.

Our responsibility, in accordance with theterms of our appointment, is to audit thefinancial statements and the parts of theRemuneration Reports to be audited inaccordance with relevant legal and regulatory
requirements and International Standards on
Auditing (UK and Ireland) and the Charter.
We report to you our opinion as to whether
the financial statements give a true and fairview and whether the financial statements
and the parts of the Remuneration Reports
to be audited have been properly preparedin accordance with the Companies Act 1985
as if that Act had been applied to these financial
statements and the Remuneration Reports.
We also report to you if, in our opinion, theBBC has not kept proper accounting records,
if we have not received all the informationand explanations we require for our audit,
or if information specified by law regarding
Trustees and Executive Board remunerationand other transactions is not disclosed.
In addition to our audit of the financial
statements, the Trustees have engaged us toreview the Corporate Governance statement
as if the BBC were required to comply with
the Listing Rules of the Financial Services
Authority in relation to these matters. We
review whether the Corporate GovernanceStatement on pages 86–95 reflects theBBC’s compliance with the nine provisionsof the 2006 Combined Code specified forour review by the Listing Rules of the Financial
Service Authority, and we report if it doesnot. We are not required to consider whether
the statements on internal control cover
all risks and controls, or form an opinion
on the effectiveness of the BBC’s corporate
governance procedures or its risk andcontrol procedures.
We read other information contained in the
Annual Report and Accounts, and consider
whether it is consistent with the audited
financial statements. This information includes
the Chairman’s statement in Part One of theAnnual Report and Accounts, the Director­
General’s report on page 1, the Trustees’
review of services in Part One of the Annual
Report and Accounts, the Executive Board’s
review of services on pages 29–57, theFinancial Overview on pages 82–85, theCorporate Governance Statement and theunaudited parts of the Remuneration Reports.
We consider the implications for our report
if we become aware of any apparent
misstatements or material inconsistencies withthe financial statements. Our responsibilities
do not extend to any other information.

basis of audit opinion

We conducted our audit in accordancewith International Standards on Auditing(UK and Ireland) issued by the Auditing
Practices Board. An audit includes
examination, on a test basis, of evidence
relevant to the amounts and disclosuresin the financial statements and the partsof the Remuneration Reports to be audited.
It also includes an assessment of the significant
estimates and judgements made by the
Executive Board in the preparation of thefinancial statements, and of whether theaccounting policies are appropriate to theGroup’s and UK Public Service Broadcasting’s
circumstances, consistently applied andadequately disclosed.
We planned and performed our audit so as
to obtain all the information and explanations
which we considered necessary in order toprovide us with sufficient evidence to givereasonable assurance that the financial
statements and the parts of the Remuneration
Reports to be audited are free from material
misstatement, whether caused by fraud orother irregularity or error. In forming our
opinion we also evaluated the overall
adequacy of the presentation of informationin the financial statements and the parts of
the Remuneration Reports to be audited.
OpinionIn our opinion:* The financial statements give a true and fairview, in accordance with United Kingdom
Generally Accepted Accounting Practice,of the state of the Group’s and UK PublicService Broadcasting’s affairs as at 31 March
2008 and of the Group’s surplus for the year
then ended; and* The financial statements and the parts of
the Remuneration Reports which we havebeen engaged to audit have been properly
prepared in accordance with the provisionsof the Charter and the Companies Act 1985
as if that Act had applied to these financial
statements and the Remuneration Reports.
kpmG llp

Chartered Accountants
Registered Auditor, London
19 June 2008

BBC Annual Report and Accounts 2007/08

Consolidated statement of income and expenditure
For the year ended 31 March 2008
97

Note

2008
£m

2007
£m

Income (including share of joint ventures)
Less: share of joint ventures

13c

4,689.4(274.6)

4,415.8(238.5)

Group income

1a4,414.8

4,177.3

Operating expenditure excluding exceptional costs
Exceptional distribution costs
Exceptional restructuring costs

2c4c(4,359.3)–(117.7)(4,262.9)(46.0)(44.5)

Total operating expenditure

2a(4,477.0)(4,353.4)(62.2)
60.3(176.1)
40.7

Group operating deficit
Share of operating surplus of associates and joint ventures
Operating deficit: Group and share of associates and joint ventures
Loss on sale and termination of operations
Profit on disposal of fixed assets

3a
5
6

(1.9)
(4.8)
2.0

(135.4)(5.2)
55.7

Deficit before interest and taxation
Interest receivable and similar items
Interest payable and similar items
Other net finance income (from defined benefit pension scheme)

7a
7b
8b ii

(4.7)
13.7
(18.3)
148.8(84.9)
14.4
(7.5)
162.6

1a
9a

139.5
(37.3)

84.6(23.9)

102.2
(0.5)

60.7
–

101.7

60.7

Surplus before taxation and minority interest
Taxation
Surplus after taxation and before minority interest
Minority interest
Surplus for the financial year18

All results arise from continuing operations.
There is no significant difference between the results as disclosed above and the results on an historical cost basis.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
Balance sheetsat 31 March 2008
98
UK PublicGroup
Serviceas restated* Broadcasting
2007
2008
£m
£m

UK Public
Service
Broadcasting
2007
£m

Note

Group
2008
£m

Fixed assets
Intangible assets
Tangible assets
Investment in programmes for future saleInterests in trade investments
Investment in subsidiaries

10
11
12
13a
13d

87.3
747.9
85.1
2.7
–

10.2
708.9
98.5
5.0
–

–
523.4
–
–
296.0

–
496.8
–
–
295.0

Interests in joint ventures– share of gross assets and goodwill– share of gross liabilities

13c
13c

217.4
(151.8)196.4(129.5)––––Interests in associates

13a
13a

65.6
3.8

66.9
1.0

–
–

–
–

992.4

890.5

819.4

791.8

Current assets
Stocks

14

500.1

476.9

470.2

463.5

Debtors due after more than one year
Debtors due within one year

15
15

50.1
794.9

74.4
696.9

21.1
655.3

38.9
569.8

Total debtors
Cash at bank and in hand

21

845.0
78.0

771.3
144.7

676.4
6.7

608.7
93.4

Creditors – amounts falling due within one year

16b1,423.1(1,064.7)

1,392.9(1,015.6)

1,153.3(761.6)

1,165.6(751.2)

358.4

377.3

391.7

414.4

1,350.8(172.6)(182.3)

1,267.8(60.4)(143.2)

1,211.1(21.9)(160.0)1,206.2(26.9)(115.7)995.9

1,064.2

1,029.2

1,063.6

528.4
(5.1)

329.3
(5.2)

–
–

–
–

1,519.2

1,388.3

1,029.2

1,063.6

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

16c
17

Net assets excluding pension asset/(liability)
Pension asset
Pension liability

8b i
8b i

Net assets
Represented byOperating reserve excluding pension reserve
Pension reserve

18
18

206.3
523.3

279.3
324.1

215.3
–

278.7
–

Total operating reserve
Capital reserve
Other reserves
Revaluation reserve

18
18
18
18

729.6
812.3
(31.0)
1.6

603.4
782.5
–
2.4

215.3
812.3
–
1.6

278.7
782.5
–
2.4

1,512.5
6.7

1,388.3–

1,029.2–

1,063.6–

1,519.2

1,388.3

1,029.2

1,063.6

BBC reserves
Minority interest* See statement of accounting policies.

The financial statements were approved by the Executive Board on 19 June 2008 and signed on its behalf by:

Mark Thompson Director-General

19 June 2008

Zarin Patel Group Finance Director
19 June 2008

BBC Annual Report and Accounts 2007/08

Consolidated statement of total recognised gains and losses
For the year ended 31 March 2008
99

Note

2008
£m

2007
as restated*
£m

18
8c v

101.7
(1.0)
52.3

60.7
(2.7)
136.1

Total recognised gains and losses relating to the year

153.0

194.1

Prior year adjustment for adoption of amendment to FRS 17(10.4)

Total recognised gains and losses since last annual report

142.6

Group surplus for the financial year
Exchange differences
Actuarial gain on defined benefit pension schemes* See statement of accounting policies.

Reconciliations of movements in BBC reserves
For the year ended 31 March 2008

Surplus/(deficit) for the financial year
Other recognised gains and losses relating to the year (net)Other reserves

UK PublicGroup
Serviceas restated Broadcasting
2007
2008
£m
£m

UK Public
Service
Broadcasting
2007
£m

Note

Group
2008
£m

18,19

101.7
51.3
(28.8)

60.7
133.4
–

(34.4)
–
–

52.1
–
–

Increase/(decrease) in reserves during the year
Opening reserves (originally £1,398.7million before deducting
prior year adjustment of £10.4million)

124.2

194.1

(34.4)

52.1

1,388.3

1,194.2

1,063.6

1,011.5

Closing BBC reserves

1,512 .5

1,388.3

1,029.2

1,063.6

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
Consolidated cash flow statement
For the year ended 31 March 2008
100

Reconciliation of Group operating deficit to net cash flow from operating activities

2008
£m

2007
£m

Group operating deficit
Depreciation, amortisation and impairment
Difference between pension charge and cash contribution
Profit on disposal of tangible fixed assets
Increase in stocks(Increase)/decrease in debtors
Increase in creditors
Increase/(decrease) in provisions(62.2)
216.7
1.9
–
(8.7)
(72.7)
26.4
57.3(176.1)
221.6
136.8
(1.1)
(16.7)
13.6
21.6(66.1)Net cash inflow from operating activities

158.7

133.6

2008
£m

2007
£m

Net cash inflow from operating activities

158.7

133.6

Dividends received from joint ventures and associates

45.7

22.4

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

11.3(12.3)
(0.7)

12.6
(7.0)
(0.5)

Cash flow statement
Note

Net cash (outflow)/inflow from return on investments and servicing of finance

(1.7)

5.1

Taxation
Taxation paid

(23.5)(21.1)

Capital expenditure and financial investments
Purchase of tangible fixed assets
Investment in programmes for future sale
Repayment of loan to associate undertaking
Drawdown of loan to joint venture
Proceeds from the sale of tangible fixed assets(158.0)(88.2)
–
(0.7)
15.1

(144.7)(109.5)
0.3
(0.8)
79.9

(231.8)(174.8)(90.3)
5.9–(6.3)(16.4)
–

–
–
(0.9)
(5.5)
–
26.6

Net cash (outflow)/inflow from acquisitions and disposals(107.1)

20.2

Net cash outflow before use of liquid resources and financing(159.7)(14.6)

Management of liquid resources
Sale of liquid resources
Purchase of liquid resources

28.7(28.7)––––

Financing
Increase in loans
Repayment of loans
Capital element of finance lease payments
Repayment of loan notes

178.9(72.1)
(9.7)
(4.1)

20.4
(7.0)
(9.5)
(4.8)

Net cash inflow/(outflow) from financing

93.0

(0.9)

(66.7)(15.5)

13a

Net cash outflow from capital expenditure and financial investments
Acquisitions and disposals
Purchase of a subsidiary
Cash acquired with subsidiary
Purchase of trade investment
Purchase of interest in joint ventures and associates
Paid on termination of operations
Proceeds from sale of operations

19
19
13a

Net cash inflow from management of liquid resources

Decrease in cash in the year20BBC Annual Report and Accounts 2007/08

Statement of accounting policies

101

This section explains the BBC’s main
accounting policies, which have been
applied consistently throughout the year
and in the preceding year except wherestated. A footnote in italics follows somepolicies to explain technical aspects of theaccounting treatment in plain English.

The financial statements have been preparedin accordance with the provisions of the BBC’s
Charter and Agreement, which require them
to be prepared in accordance with UK
Generally Accepted Accounting Principles(UK GAAP).
Although not mandatory, until 2005 the BBC
chose to follow the accounting and disclosure
provisions of the Companies Act 1985 and the
Financial Services Authority Listing Rules toensure that its financial statements wereprepared on a basis consistent with those of
UK companies quoted on an EU-regulated
market. Following changes in company law, if it
had continued to report in this way, the BBC
would have prepared its consolidated financial
statements in accordance with EU-adopted
International Financial Reporting Standards(IFRS) from 1 April 2005. However, reporting
under IFRS would be inconsistent with theBBC’s Charter and Agreement and with
Government reporting. Instead, the financial
statements continue to be prepared in fullaccordance with UK GAAP and applicableelements of the Listing Rules.
The BBC files financial statements for all its
UK registered subsidiary companies with
Companies House.

at current bid value (the price to bereceived on sale) rather than mid-market
value (the mid point between the purchaseand sale prices). The effect of this change
is that the value of the pension asset as at
31 March 2007 decreased by £10.4million;
comparatives have been restatedaccordingly.
* Amendment to FRS 3 ‘Reporting Financial
Performance’. This has had no impact on
the financial statements in the current or
prior year.
AdoPTion of nEw uRgEnT iSSuES TASk
foRCE ABSTRACT

The BBC has adopted UITF 42 (IFRIC 9)‘Reassessment of Embedded Derivatives’. Thishas had no impact on the financial statementsin the current or prior year.

Service licences are used by the BBC Trust to
monitor that each BBC service creates public
value by delivering the BBC’s public purposes.
Note 28 provides more detail on how costs
are allocated to individual services.
invESTMEnTS in gRouP undERTAkingS

The funding of UK Public Service
Broadcasting, BBC World Service and BBC
Monitoring is legally separate and cross­subsidisation is not permissible. Accordingly,
for the purposes of preparing UK PublicService Broadcasting’s balance sheet, theindividual assets and liabilities attributable
to BBC World Service and BBC Monitoring
must be excluded, and UK Public Service
Broadcasting is considered to haveinvestments in BBC World Service and
BBC Monitoring equal to the net assets ofthese entities.

BASiS of ConSolidATionThe Group acquired two subsidiaries during
the year, Lonely Planet Pty Limited and DSHS
Limited for which the acquisition method of
accounting has been adopted. Under thismethod, the results of subsidiaries acquiredor disposed of in the year are included in the
consolidated statement of income andexpenditure from the date of acquisition
or up to the date of disposal.
The Group accounts include the results ofall businesses controlled by the BBC(subsidiaries) together with the BBC’s share of
the results of businesses over which the BBC
has influence but not control (associates) andthose which the BBC jointly controls (joint
ventures). See Note 29 for more information.

BASiS of ACCounTing

The financial statements have been prepared
under the historical cost accounting
convention, as modified by the revaluationof certain plant, machinery, furniture andfittings, financial instruments, derivatives
and the investment in BBC World Service
and BBC Monitoring.

An associate is an undertaking in which theGroup has a long-term interest, usually between
20% and 50% of the equity voting rights, andover which it exercises significant influence.
A joint venture is an undertaking in which theGroup has a long-term interest and over which
it exercises joint control.

AdoPTion of AMEndMEnTS To
ACCounTing STAndARdS

uk PuBliC SERviCE BRoAdCASTing
inCoME And ExPEndiTuRE ACCounTThe BBC has adopted the following
amendments to applicable UK accounting
standards for the first time in these financial
statements:

A separate statement of income andexpenditure reflecting the results of UK PublicService Broadcasting has not been presented,
which is consistent with the option available
to companies under Section 230 of theCompanies Act 1985.

* Amendment to FRS 17 ‘Retirement Benefits’issued in December 2006. The main effectof this amendment is to replace the previous
disclosures with those of IAS 19 ‘Employee
Benefits’. The amended disclosures including
revised comparatives are shown in Note 8.
The only resulting measurement change isthat pension scheme assets are now valued

SERviCE liCEnCE REPoRTing

oThER invESTMEnTS

Other investments, being neither loans nor
necessarily held for maturity, are recordedon the balance sheet at cost less provision
for any impairment in value.
inCoME

Income, which excludes value added tax,
trade discounts and sales between Group
companies, is comprised of the following
key classes of revenue, which are recognised
as follows:* Television licences
The main income for the BBC is derived
from television licences. Licence fee income
is recognised in full when a licence is issued,
subject to deductions for actual andexpected refunds and cancellations.
* grants from government departments
Grants are recognised when receivablefrom the relevant Government department.
The BBC World Service receives Grant-inAid from the Foreign and Commonwealth
Office and BBC Monitoring receives a grantfrom the Cabinet Office. These grants areintended to meet estimated expenditure in
the year but unexpended receipts for theyear, within predetermined limits, are notliable to surrender.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
Statement of accounting policies
102* Provision of equipment, facilities andservices (including programme-making
facilities and services)

With the exception of long-term
contracts, income is recognised whenthe equipment, facilities and services areprovided to customers.
For long-term contracts, the amount of
profit attributable to the stage of completionis recognised when the outcome of thecontract can be foreseen with reasonablecertainty. Turnover for such contracts isstated at the cost appropriate to their stageof completion plus attributable profits,less amounts recognised in prior years.
Provision is made for any future losses
as they are foreseen.
* distribution and advertising income,licence fees from international television
programme sales and sale of promotionalmerchandise and income from publishinglong-term foreign currency borrowings
together with the differences arising when
the profit and loss accounts are retranslated
at the rates ruling at the year end, are taken to
the operating reserve through the statementof total recognised gains and losses.
As these financial statements are prepared insterling, the BBC’s foreign currency transactions
and balances must be translated, at appropriate
exchange rates, into sterling.
PEnSion CoSTSThe BBC operates both defined benefit anddefined contribution pension schemes for the
benefit of employees.
The amounts charged as expenditure forthe defined contribution schemes represent
the contributions payable by the BBC
for the accounting periods in respect ofthese schemes.

This income is recognised on provision ofservices, the start of the licence period ordelivery of merchandise respectively. Where
programme rights have not been deliveredby the start of the licence period, revenue
is recognised on delivery of the rights.

The defined benefit schemes, of which the
majority of staff are members, provide
benefits based on final, or career average,
pensionable pay. The assets of the BBC’s
main pension scheme are held separatelyfrom those of the Group.

Sales of merchandise are stated after
deduction of the sales value of actual andestimated returned goods.

Pension scheme assets are measured using
current market bid values. Pension scheme
liabilities are measured using a projected unit
credit method and discounted at the current
rate of return on a high-quality corporatebond of equivalent term and currency tothe liability.

The distinction between the various income
sources is important. The BBC is careful not tocross-subsidise commercial, UK Public Service
Broadcasting or Grant-in-Aid and grant-funded
activities. More information on these BBC fairtrading requirements and policies can be foundon page 63 of this report.
foREign CuRREnCy TRAnSlATion

Transactions in foreign currencies aretranslated into sterling at the rates of
exchange ruling at the date of the transactions.
Monetary assets and liabilities denominated inforeign currencies are translated into sterlingat the rates of exchange ruling at 31 March.
Surpluses and deficits arising from thetranslation of assets and liabilities at these
rates of exchange, together with exchange
differences arising from trading, are includedin the statement of income and expenditure.
The profit and loss accounts and cash flows
of overseas subsidiaries are translated into
sterling at average rates for the year, which
is a good approximation for the actual rate.
Exchange differences arising on consolidationfrom the retranslation of the opening net
assets of overseas subsidiaries and any related

The difference between the value of thepension scheme assets and pension scheme
liabilities is a surplus or a deficit. A pension
scheme surplus is recognised to the extent
that it is recoverable and a pension scheme
deficit is recognised in full. The movementin the scheme surplus/deficit is split between
operating charges, finance items and, in thestatement of total recognised gains and losses,
actuarial gains and losses. Generally, amounts
are charged to operating expenditure on thebasis of the current service cost of the present
employees that are members of the BBC
Pension Scheme.
The BBC Pension Scheme is a Group-wide
scheme and UK Public Service Broadcastingand its subsidiary undertakings are unable toidentify their shares of the underlying assets
and liabilities of the scheme on a reasonable
and consistent basis.

Therefore as required by FRS 17 ‘Retirement
benefits’, UK Public Service Broadcastingaccounts for the scheme as if it were adefined contribution scheme. As a result theexpenditure charged for UK Public Service
Broadcasting represents the contributions
payable in the year.
On retirement, members of the BBC’s main
pension scheme are paid their pensions froma fund which is kept separate from the Group.
The BBC makes cash contributions to that fundin advance of members’ retirement.
RESEARCh And dEvEloPMEnT

Research and development expenditureis written off as incurred.
inTAngiBlE fixEd ASS ETS

goodwill

Purchased goodwill (representing the excessof the fair value of the purchase consideration
plus any related costs of acquisition over thefair value attributable to the separable net
assets acquired) arising on acquisition of a
subsidiary or business, is capitalised andamortised on a straight line basis over its
useful economic life (usually 20 years), subject
to reviews for impairment. On the subsequentdisposal or termination of a business, thesurplus or deficit is calculated after charging
the unamortised amount of any related
goodwill. As is permitted by FRS 10 ‘Goodwill
and Intangible Assets’, goodwill arising inperiods up to 1 April 1998 remains offset
against the operating reserve. On disposal,
goodwill previously written off against
reserves is transferred to the statement ofincome and expenditure for the year.
Goodwill arises when the BBC pays more fora business than the sum of net assets of thebusiness acquired, representing the fact that theGroup places more value on the business entity
as a whole (usually due to expected synergies or
earning potential of that business). This premiumis treated as an asset in its own right and held on
the Group’s balance sheet, with an economic lifeof up to 20 years. As with any other asset, theprofit or loss on sale or disposal (in this casesale/disposal of the business) is calculated after
writing off the amount still held on the Group’sbalance sheet.
other intangibles

Other intangibles are capitalised andamortised on a straight line basis over theiruseful economic life subject to reviews for
impairment. The asset’s useful economic
lives are:
* List of customer names – 2 to 4 years* Brand names – 2 to 4 years

BBC Annual Report and Accounts 2007/08

103
TAngiBlE fixEd ASSETS

Expenditure on tangible fixed assets is
capitalised together with incremental internal
direct labour costs incurred on capitalprojects. Other than the following exception,
tangible fixed assets are stated in the balance
sheet at cost less accumulated depreciation
and any provision for impairment.
BBC World Service and BBC Monitoring
revalued their plant and machinery andfurniture and fittings as at 1 April 1996 on thebasis of their estimated current replacement
cost at that time. In accordance with thetransitional rules of FRS 15 ‘Tangible Fixed
Assets’, although the BBC did not adopt ageneral policy of revaluation, the book valuesof these assets (based on their revalued
amounts) were retained. The revaluation has
not been updated since, although appropriate
depreciation continues to be charged. Thereis no significant difference between the net
book value of these tangible fixed assets andtheir value as determined on an historical costbasis and as a result no statement of historicalcost surpluses and deficits is presented.
Depreciation is calculated so as to write off
the cost or valuation, less estimated residual
value, of fixed assets on a straight line basis
over their expected useful lives. Depreciationcommences from the date an asset is brought
into service. The useful lives for the principal
categories of assets are:* land and buildings
Freehold land – not depreciatedFreehold and long-leasehold buildings –50 years
Short-leasehold land and buildings –unexpired lease term
* Plant and machinery
Computer equipment – 3 to 5 years
Electrical and mechanical infrastructure –10 to 25 years
Other – 3 to 10 years* furniture and fittings – 3 to 10 years
In accordance with accounting standards
applicable at the time, parts of the BBC revalued
certain classes of assets once (in 1996), but havechosen not to revalue them on an ongoing basis.
This reflects the fact that they are used within
the BBC rather than being held for resale or theirinvestment potential. The majority of assets are
therefore included at the amount they cost whenpurchased or constructed (in either case lesssubsequent depreciation).

invESTMEnT in PRogRAMMES foR
fuTuRE SAlE

ACquiREd PRogRAMMES And
filM SToCkS

The BBC’s commercial subsidiaries makeinvestments in programmes for future sale.
These investments represent the right tofuture income from the sale, licensing orother exploitation of those programmes,
and are stated at cost, after writing off thecosts of programmes that are consideredirrecoverable, less accumulated amortisation.
Amortisation of investment in programmes
for future sale is charged to the statement ofincome and expenditure over the estimatedaverage marketable life of the programmegenre which is generally between two and ten
years. The cost and accumulated amortisationof investment in programmes for future sale
are reduced by programmes which are fully
written off.

Acquired programmes are those not initiallycommissioned by the BBC, usually foreignimports. The costs of acquired programmes
and film stocks are written off on firsttransmission except to the extent that further
showings are scheduled, in which case they
are written off according to their expectedtransmission profile. Assets and liabilities
relating to acquired programmes arerecognised at the point of payment orcommencement of the licence period,
whichever is earlier. Agreements for the
future purchase of programmes whose licence
period has not commenced and where there
has been no payment by the balance sheet
date are disclosed as purchase commitments.
oThER SToCkS

The cost of programmes for sale is charged to thestatement of income and expenditure to matchthe expected timing of income from future sales.

Raw materials and other physical stocks
are stated at the lower of cost and net
realisable value.

iMPAiRMEnT of fixEd ASSETS

PRoviSionS

The Group reviews the carrying amounts of
its fixed assets when there is an indicationthat those assets may have suffered an
impairment loss.

A provision is recognised in the balance sheet
when the Group has a present legal orconstructive obligation arising from past eventsand it is probable that an outflow of economic
benefits will be required to settle theobligation. Provisions, other than deferred tax,that are payable over a number of years are
discounted to net present value at the balance
sheet date using a discount rate appropriate to
the particular provision concerned.

If the recoverable amount of an asset (or cash
generating unit) is estimated to be less than its
carrying amount, the resulting impairment loss
is recognised in the statement of income andexpenditure immediately.
An impairment occurs when an asset would
otherwise be recorded in the financial
statements at an amount greater than isrecoverable from its use or sale.

TAxATion

The tax charge represents the sum of thetax currently payable and deferred tax.
In respect of the tax currently payable:oRiginATEd PRogRAMME SToCkS And
woRk in PRogRESS

Originated programme stocks and work inprogress, including those commissioned fromindependent producers, are stated at thelower of cost and net realisable value. With
the exception of the costs of prepaid repeats
of independent programmes, the full stock
value is written off on first transmission.
Cost includes all direct costs, production
overheads and a proportion of otherattributable overheads.
Programme development costs are expensed
to the statement of income and expenditure
until such time as there is a strong indicationthat they will result in a commissioned
programme, when any further costs arecapitalised as work in progress.
Net realisable value is based upon arm’s
length contract prices negotiated between
the channel controllers and programme
makers, both external and internal.

* The BBC (UK Public Service Broadcasting,
BBC World Service and BBC Monitoring)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 otherincome. Expenditure on capital assets is
not eligible for capital allowances.
* The BBC’s commercial subsidiaries are liablefor corporation tax based on taxable profit
for the year.
Taxable profit differs from net profit asreported in the statement of income andexpenditure because it excludes items ofincome and expenditure that are taxable ordeductible in other years and items that arenever taxable or deductible. The Group’s
liability for current tax is calculated using tax
rates that have been enacted or substantively
enacted by the balance sheet date.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
Statement of accounting policies
104

Deferred tax is computed under the liability
method. Full provision, without discounting, ismade in respect of timing differences between
certain items in the financial statements andtheir treatment for taxation purposes at thebalance sheet date except as otherwise
required by FRS 19 ‘Deferred Tax’. Deferred
tax assets are recognised to the extent that itis regarded as more likely than not that they
will be recovered.
Deferred tax is corporation tax which is notpayable at a specific time but which is expected
to become payable in the future.
oPERATing lEASESOperating lease rentals payable arerecognised on a straight line basis over
the term of the lease.
An operating lease is a lease in which the lessee
has not taken on the risks and rewards of owningand operating the asset. The lessee has notacquired an asset but is hiring it, so the hire
charge is included in the BBC’s costs.
finAnCE lEASES

Assets acquired under finance leases areincluded within fixed assets at the total of thelease payments due over the life of the lease
discounted at the rate of interest inherent in
the lease. The same amount is included in
creditors. Rental payments are apportioned
between the finance element, which is
charged in the statement of income andexpenditure, and the capital element,
which reduces the lease creditor.
A finance lease is a lease that transfers
substantially all the risks and rewards of owningand operating an asset to the lessee. Effectively
the lessee owns the asset and has financed itby borrowing, so the asset and borrowing are
included separately in the balance sheet.
RESERvES

Each year an amount equivalent to the costs
expended by UK Public Service Broadcasting,
BBC World Service and BBC Monitoring on
capital assets over and above depreciation,
adjusted for disposals, is transferred to thecapital reserve so that, at the balance sheet
date, the amount of the capital reserve isequivalent to the historical cost net bookvalue of UK Public Service Broadcasting,
BBC World Service and BBC Monitoring
fixed assets.

The revaluation reserve reflects the difference
between the net book value of the fixed
assets of BBC World Service and BBC
Monitoring at historic cost compared with
their revalued amount.
The operating reserve is the accumulated
surplus of income and expenditure accountto date.
The pension reserve represents the net
surplus or liability of the Group’s defined
benefit pension schemes.
The other reserves represent the value ofa put option exercisable by minority
shareholders.
CASh And liquid RESouRCES

Cash, for the purposes of the cash flow
statement, comprises cash in hand anddeposits repayable on demand, less overdrafts
payable on demand. Liquid resources are
current asset investments which are readily
convertible into known amounts of cash at,
or close to, their carrying values. They
comprise money market deposits andliquidity funds with a notice period inexcess of one working day.
finAnCiAl inSTRuMEnTS

The Group’s loans are stated at amortised
cost using the effective interest rate.
derivative financial instruments

The Group does not enter into speculative
derivative contracts. However somederivative financial instruments are usedwith a view to managing the BBC’s exposure
to fluctuations in interest rates (interest rate
swaps and interest rate caps) and foreign
currency exchange rates (foreign currency
forward contracts).
Derivative financial instruments are initiallyrecognised at cost and are subsequently
remeasured to fair value at the balance
sheet date with movements recorded in
the statement of income and expenditure.
The fair value of interest rate swaps, caps
and collars is the estimated amount that theGroup would receive or pay to terminate theswap, cap or collar at the balance sheet date,taking into account current interest rates andthe current creditworthiness of swap, cap or
collar counterparties.
The fair value of foreign currency forward
contract rates is determined by using
forward exchange market rates at thebalance sheet date.

hedge accounting

In general the Group does not apply hedge
accounting but instead allows movements infair values of hedging contracts to flow to thestatement of income and expenditure as theyarise. However, where a financial instrument isdesignated and effective as a net investment
hedge of a foreign operation any exchange
differences arising on the retranslation of
the financial instrument will be recognised
directly in the statement of total recognised
gains and losses. Any ineffective portion isrecognised immediately in the income andexpenditure account.
Financial instruments include all contractual
arrangements to deliver or receive cash.
Therefore they include trade debtors andcreditors and loans as well as more complex
instruments such as derivatives. Forward
exchange contracts provide certainty over thesterling amount of future expenses and income
denominated in a foreign currency by fixing theexchange rate rather than waiting for theprevailing exchange rate at the time of thetransaction or payment.
Interest rate swaps effectively swap a floating
rate loan into a fixed rate loan, or vice versa.
Interest rate caps protect against interest rates
rising, by setting an upper limit (cap) on the
floating interest rate, while still allowing thebenefit of falling interest rates. Interest rate
collars are the same as interest rate caps
except that there is also a lower limit set tothe floating interest rate.
Depending on how exchange rates and interest
rates move between the time the Group enters
into the transaction and the year end, thesederivatives can either be profitable (‘in themoney’) or loss-making in their own right.
However, the rationale in entering into thesederivatives is not to profit from currency markets
or interest rate fluctuations, but to provide
stability to the BBC’s cash flows. The movements
relating to these derivatives (ie where they are
either in profit or loss-making) are taken to theGroup’s statement of income and expenditure
for the year.

BBC Annual Report and Accounts 2007/08

notes to the financial statements

105
1 AnAlySiS of inCoME, SuRPluS/(dEfiCiT) And nET ASSETS

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

BBC
World
Serviceand BBC
Monitoring£m

Commercial
Businesses
£m

Total
£m

2008
Total income
Less: intra-Group income

3,628.2(217.9)

286.2
(1.3)

1,089.1(94.9)

5,003.5(314.1)

Total external income
Less: share of joint ventures

3,410.3
–

284.9
–

994.2
(274.6)

4,689.4(274.6)

Group income

3,410.3

284.9

719.6

4,414.8

3,368.8
4.0
–
37.5

–
279.6
–
5.3

–
–
719.6
–

3,368.8
283.6
719.6
42.8

Note

Of which:
Licence fee income
Government grants
Commercial
Other(Deficit)/surplus before interest, taxation and non-cash pension costs
Defined benefit pension scheme– additional operating costs*†– other net finance income*Net interest payable1b1c(108.0)

0.5

104.7

(1.9)
148.8
(4.6)

4b
8b ii

Surplus before taxation and minority interest

139.5

Of which, Group share of operating surplus of associates and joint ventures
Net assets (excluding pension asset)– UK– Rest of world
Net pension asset*

–

–

60.3

60.3

734.2
5.9

72.0
98.7

22.0
63.1

828.2
167.7
995.9
523.3

8b i

Net assets
Of which, Group share of net assets of associates and joint ventures(2.8)

1,519.2
13a

2.1

–

67.3

69.4

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

Note 1 provides analysis of thedifferent business areas
within the BBC. The businessareas have been chosen on thebasis of the services provided
and the separation of activities
financed by different income
sources.
UK Public Service BroadcastingGroup comprises the UK
Public Services (as definedin the Agreement) andthose subsidiary companies
incorporated to act solely
on behalf of those public
service operations.
BBC World Service and
BBC Monitoring comprise
broadcasting and media
monitoring activities.
Commercial Businesses
comprise businesses which
generate external income
from exploitation of the BBC’s
programmes, other assets
and skill base.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
106
UK Public
Service
Broadcasting
Group
£m

BBC World
Serviceand BBC
Monitoring£m

Commercial
Businesses
£m

Total
£m

2007
Total income
Less: intra-Group income

3,386.8(115.0)

271.1
(1.5)

974.2
(99.8)

4,632.1(216.3)

Total external income
Less: share of joint ventures

3,271.8
–

269.6
–

874.4
(238.5)

4,415.8(238.5)

Group income

3,271.8

269.6

635.9

4,177.3

3,242.9
2.1
–
26.8

–
264.1
–
5.5

–
–
635.9
–

3,242.9
266.2
635.9
32.3

(63.3)

10.8

104.4

51.9

Note

Of which:
Licence fee income
Government grants
Commercial
Other

1b
1c

(Deficit)/surplus before interest, taxation and non-cash pension costs
Defined benefit pension scheme– additional operating costs*†– other net finance income*Net interest receivable

4b
8b ii

(136.8)162.6
6.9

Surplus before taxation and minority interest

84.6

Of which, Group share of operating surplus of associates and joint ventures
Net assets (excluding pension asset)*– UK– Rest of world
Net pension asset

–

–

40.7

40.7

769.7
5.1

72.9
96.8

102.0
17.7

944.6
119.6
1,064.2
324.1

8b i

Net assets

1,388.3

Of which, Group share of net assets of associates and joint ventures

13a

2.1

–

65.8

67.9

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

1b licence fee income
Licencefee
2008£

Licencesin force
2008
Numberm

Total
income2008£m

Licencefee
2007£

Licencesin force
2007
Numberm

Total
income2007£m

135.50
45.50
7.50
–

21.1
–
0.2
4.0

2,840.1
1.4
1.4
508.4

131.50
44.00
5.00
–

20.9
–
0.2
4.0

2,737.1
1.5
0.9
486.6

25.3

3,351.3
17.5

25.1

Quarterly payment scheme premium

3,226.1
16.8

Total licence fee income
Other income**

3,368.8
41.5

3,242.9
28.9

Total external income

3,410.3

3,271.8

Colour
Monochrome*
Concessionary
Over 75s* There are 28,000 monochrome licences in force at 31 March 2008 (33,000 at 31 March 2007).
** Included within other income is £2.3million (2007: £1.4million) contributed by other broadcasters towards the costs of Digital UK Limited (see Note 2a).

During the year 3.5 million (2007: 3.4 million) colour licences were issued under the quarterly payment scheme ata premium of £5 each (2007: £5). Households in which one or more persons over the age of 75 reside, as theirprimary residence, are entitled to a free licence. The BBC is reimbursed for these free licences by the relevant
Government department.

BBC Annual Report and Accounts 2007/08

107

1c Analysis of Commercial Businesses’ income by activity
2008
£m

2007
£m

Television (channels, sales, content and production)
Magazines, Home Entertainment and Lonely Planet
Digital Media
Provision of programme-making facilities and services
Less: intra-Group income

405.0
266.4
21.9
121.2
(94.9)

367.5
230.3
13.9
124.0
(99.8)

Total income

719.6

635.9

2008
£m

2007
£m

United Kingdom
AmericasRest of the World

310.4
187.2
222.0

273.8
169.4
192.7

Total income

719.6

635.9

1d geographical analysis of Commercial Businesses’ income by destination

2 oPERATing ExPEndiTuRE

2a Analysis of operating expenditure by activity

UK Public Service Broadcasting activities are funded by the licence fee. The Charter and Agreement between the
BBC and Department for Culture, Media and Sport describes the BBC’s UK Public Services (including television,
radio and online services) and also sets certain obligations on the BBC in relation to digital switchover; bothactivities are funded by the licence fee. However, part of the licence fee income has been specified as being for the
purpose of digital switchover and as a result the total UK Public Service Broadcasting Group expenditure is shown
below allocated between these categories.
Note

Expenditure on licence fee funded activities
UK Public Services
Digital switchover (Digital UK Limited)*
Digital switchover (DSHS Limited)
Total UK Public Service Broadcasting GroupBBC World Service and BBC Monitoring**
Commercial Businesses
Non-cash pension scheme operating costs***

*

2b
2d

2c

2008
£m

2007
£m

3,487.1
21.2
5.9

3,315.7
11.6–

3,514.2
285.3
675.6
1.9

3,327.3
258.8
630.5
136.8

4,477.0

4,353.4

As set out in Note 29c the BBC controls 56% of the voting rights of the company Digital UK Limited (formerly Switchco Limited), and therefore
consolidates its results with those of the BBC. As a result, these costs represent the full expenditure by Digital UK Limited, which is financed bycontributions from the BBC and other broadcasters. The BBC contributed £18.9million (2007: £10.2million) being 100% of the communication
expenditure (which is ring-fenced, see Note 2d) and 56% of all other costs incurred by Digital UK Limited. £2.3million (2007: £1.4million) was
contributed by other broadcasters.
** BBC World Service and BBC Monitoring expenditure of £285.3million (2007: £258.8million) excludes £0.5million (2007: £1.5million)of expenditure on the provision of services to other BBC Group companies.
*** In accordance with FRS 17 the non-cash operating costs are not split between the business activities as it is not possible to do thison a reasonable and consistent basis.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
108

2b uk Public Services expenditure

A new framework of service licences, issued by the BBC Trust to the BBC’s management, came into effect from
1 January 2007. The table below sets out the total expenditure for each group of service licences. Details of
expenditure on each individual service can be found in Note 28.
2008

The BBC’s online service
was bbc.co.uk (including
BBC iPlayer).

Infrastructure/
Content Distribution
support
£m
£m
£m

Other
£m

Total
£m

416.2
91.3
52.7

–
–
–

2,355.3
598.4
182.0

167.4
18.3
–

560.2
14.8
–

–
123.2
117.6

3,135.7
233.8
117.6

2,485.6
–
–

185.7
–
–

575.0
–
–

240.8
21.2
5.9

3,487.1
21.2
5.9

2,485.6

185.7

575.0

267.9

3,514.2

Services

Note

Television
Radio
Online28
28
28

1,834.3
459.9
113.9

104.8
47.2
15.4

Regulated spend
Other*
Exceptional restructuring costs

28
28

2,408.1
77.5–

UK Public Services spend
Digital UK Limited expenditure
Digital switchover ring-fenced expenditure

2a
2d

Total

* Other spend is that not specifically regulated by the individual service licences and includes costs for licence fee collection, orchestras and performing
groups and business development.

2007
Television
Radio
Online28
28
28

1,836.9
432.6
115.0

99.1
42.6
8.8

383.1
88.4
29.9

–
–
–

2,319.1
563.6
153.7

Regulated spend
Other
Exceptional restructuring costs

28
28

2,384.5
71.6
–

150.5
14.2
–

501.4
15.1
–

–
134.1
44.3

3,036.4
235.0
44.3

UK Public Services spend
Digital UK Limited expenditure
Digital switchover ring-fenced expenditure

2a2d2,456.1
–
–

164.7
–
–

516.5
–
–

178.4
11.6
–

3,315.7
11.6–

2,456.1

164.7

516.5

190.0

3,327.3

Note

2008
£m

2007
£m

12
4c

351.0
179.1
–
40.2
101.8
3.5

300.4
136.3
46.0
37.5
107.1
3.2

675.6

630.5

Total
2c Commercial Businesses’ expenditure
The expenditure shown forCommercial Businesses relates
only to external income andexcludes expenditure relating
to sales within the BBC.

Cost of sales
Distribution costs
Exceptional distribution costs
Administrative and other costs
Amortisation of programme investment
Restructuring costs
Total

BBC Annual Report and Accounts 2007/08

109

2d uk Public Services ring-fenced expenditure

The Department for Culture, Media and Sport has ring-fenced the following amounts within the new Charter andsix-year licence fee settlement (2008–2013):

Digital switchover
Help for the elderly and disabled*
Digital UK Limited**

Amountspent inpreviousyears£mAmountspent in2007£m

Amountspent in2008
£m

Cumulative
Total
£m

Six-yearring-fenced
funding
£m

–
1.4

–
8.7

5.9
17.5

5.9
27.6

603.0
201.0

* The Secretary of State has agreed with the BBC that the £603million estimated cost of the Digital Switchover Help Scheme (operated by DSHS Limited)
will be ring-fenced and set aside from the licence fee for the purpose of funding the Scheme over the six-year life of the licence fee settlement. Thisagreement specifies that in the event that the costs of the project exceed this limit due to higher than anticipated demand, this will not be at theexpense of the BBC’s programmes, services or other resources.
** The Framework Agreement states that the BBC is committed to leading certain aspects of the digital switchover programme, through Digital UK Limited,
and the licence fee settlement includes a ring-fenced amount of up to £201million from the inception of Digital UK Limited until the end of the six-year
life of the licence fee settlement for communication activities. The ring-fenced amount is only part of the BBC’s annual contribution to Digital UK Limited(see Note 2a).

As at 31 March 2008, the BBC is on target to remain within the ring-fenced amounts at the end of the six-year period.

3 gRouP oPERATing dEfiCiT

3a group operating deficit excluding auditors’ remuneration

The operating deficit before interest and taxation is stated after charging/(crediting) the following items:

Payments under operating leases– land and buildings– plant and machinery– other
Depreciation– owned assets– leased assets
Profit on disposal of tangible fixed assets*
Amortisation of goodwill:– subsidiaries– joint ventures and associates
Amortisation of investment in programmes for future sale
Provision for trade investments
Programme development
Research and development
Fair trading auditors’ remuneration (PricewaterhouseCoopers LLP)Net exchange differences
Impairment of trade debtors
Fair value losses on embedded derivatives
Fair value gains on open forward foreign currency contracts

2008
£m

2007
£m

72.8
13.1
12.3

64.2
3.3
13.7

107.6
2.8
–

106.8
6.4
(1.1)

2.5
2.0
101.8
1.5
22.1
16.1
0.5
(2.8)
3.9
0.2
(6.2)

1.3
2.7
107.1
–
29.4
14.6
0.3
3.7
0.7
2.1
(0.3)

* The profit on disposal of tangible fixed assets represents adjustments to depreciation on disposals in the ordinary course of business. Exceptional profit
on disposals is disclosed separately in Note 6.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
110

3b Auditors’ remuneration

The BBC has reported its auditors’ remuneration in accordance with The Companies (Disclosure of Auditor
Remuneration) Regulations 2005.

Fees payable for the audit of the BBC’s annual accounts
Fees payable to the BBC’s auditor and its associates for other services– the audit of the BBC’s subsidiaries pursuant to legislation– other services relating to taxation– services relating to corporate finance transactions– all other services

2008
£m

2007
£m

0.6

1.0

0.6
0.3
–
0.5

0.5
0.1
0.1
0.6

2.0

2.3

4 EMPloyEES And REMunERATion

4a Persons employed

The average number of persons employed in the year was:Average for the year
2008
Number

2007
NumberUK Public Service Broadcasting
BBC World Service and BBC Monitoring
Commercial Businesses

17,677
2,219
3,205

17,9142,214
2,909Group total

23,101

23,037The decrease in Public Service Broadcasting headcount during 2008 is principally due to the Value for Money
programme initiatives. The increase in Commercial Businesses headcount during 2008 is mainly due to the Lonely
Planet acquisition.
Within the averages above, 2,845 (2007: 2,743) part-time employees have been included at their full-time equivalentof 1,595 (2007: 1,566).
In addition to the above, the Group employed an average full-time equivalent of 851 (2007: 872) persons on acasual basis and the BBC Orchestra and BBC Singers, employed on programme contracts, totalled 379 (2007: 380)
full-time equivalents.
4b Staff costs
Note

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

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

8b ii
8b ii
4c

1a

2008
£m

2007
£m

1,006.0
89.5

969.0
88.9

173.2
1.2
111.7

204.9
1.0
21.2

1,381.6

1,285.0

1,097.8
93.7
188.2
1.9

915.6
78.9
153.7
136.8

1,381.6

1,285.0* The actual employer cash contributions to the defined benefit pension scheme are borne by each business. The additional operating cost is the cost to theGroup over and above these contributions. It is not possible to allocate this to each business on a reasonable and consistent basis.

BBC Annual Report and Accounts 2007/08

111

4c Restructuring costs

Exceptional redundancy costs:– UK Public Service Broadcasting– BBC World Service and BBC Monitoring
Other exceptional restructuring costs– UK Public Service Broadcasting

4b
4bNon-exceptional redundancy costs:– UK Public Service Broadcasting– BBC World Service and BBC Monitoring– Commercial Businesses
4b

2008
£m

2007
£m

99.7
0.1

11.0
0.2

17.9

33.3

117.7

44.5

2.9
5.5
3.5

5.0
1.1
3.9

11.9

10.0

129.6

54.5

Exceptional restructuring costs relate to the Value for Money and Continuous Improvement programmes occurring
within UK Public Service Broadcasting and the strategic review of BBC World Service. During 2007/08 £99.7million
has been charged against the income and expenditure account, of which £99.3million has been provided for
redundancies relating to the Continuous Improvement programme. These redundancies will occur over the
five-year programme and have been discounted to reflect current prices; £0.4million has been paid during the year.
The cost of the majority of post closures resulting from the Value for Money programme were provided for inprevious years and £36.6million paid during 2008.
£20.0million of other exceptional restructuring costs were paid during 2008, representing one-off implementation
costs, of this £6.9million was held on the balance sheet in 2007.
4d Remuneration of the BBC Trust members and the Executive Board

The total emoluments of the members of the Executive Board are disclosed on page 93 in the Remuneration
Report. The details of emoluments of the members of the BBC Trust are disclosed in Part One of the Annual
Report and Accounts.

5 loSS on SAlE And TERMinATion of oPERATionS
2008
£m

2007
£m

Loss on the sale of Outside Broadcast
Profit on disposal of Books businessProfit on sale of Origin Publishing
BBC jam
Loss on termination of retail shops business
Loss on termination of business learning operations

(1.3)
–
–
(3.5)
–
–

–
13.3
0.2
(15.9)(1.9)(0.9)

Loss on sale and termination of operations

(4.8)

(5.2)

After the balance sheet date, on the 1 April 2008, BBC Resources Limited sold its Outside Broadcast business for£19.3million consideration to SIS Outside Broadcast Limited, part of the Satellite Information Services Group.
Outside Broadcast provides a range of mobile production units, communications and special camera solutions,based in Langley, Berkshire. The costs arising up to 31 March 2008 are recognised as an expense when incurred.
On 20 March 2007 the Executive Board, following a decision by the BBC Trust, suspended BBC jam, the BBC’s
online interactive learning service for 5–16 year olds. The BBC Trust’s decision followed extensive discussions with
Government and the European Commission about how to address allegations from some in the industry that BBC
jam was damaging their interests. A provision of £1.5million for the costs of redundancy and terminating contracts
with content suppliers remains at the end of the current year (see Note 17).

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
112
6 PRofiT on diSPoSAl of fixEd ASSETS
2008
£m

2007
£m

Disposal of Animal Planet LLC
Disposal of properties

–
2.0

45.8
9.9

Profit on disposal of fixed assets

2.0

55.7

Profits or losses on the disposal of tangible fixed assets in the ordinary course of business, that represent anadjustment to depreciation are recognised within operating deficit and disclosed in aggregate in Note 3a.

7 inTEREST

7a interest receivable and similar items
2008
£m

2007
£m

Interest receivable
Share of joint venture and associate interest receivable
Fair value gains on interest rate swaps and caps

11.6
2.0
0.1

11.8
0.8
1.8

Interest receivable and similar items

13.7

14.4

2008
£m

2007
£m

Interest payable on bank and other loans
Share of joint venture and associate interest payable
Finance charges payable in respect of finance leases
Fair value losses on interest rate swaps and caps

(12.4)
(1.6)
(0.7)
(3.6)

(6.4)
(0.6)
(0.5)
–

Interest payable and similar items(18.3)(7.5)

7b interest payable and similar items

8 PEnSionS

8a group pension schemes

The Group operates several pension schemes. The BBC Pension Scheme, to which most employees belong,
and a small unfunded scheme (which is closed to new members) are contributory defined benefit schemes.
Additionally the Group Personal Pension Scheme and several small schemes are defined contribution schemes.
Note 8b sets out the assets and liabilities and charges for each scheme. Note 8c provides further details on the
BBC Pension Scheme.
8b Pension charges and balances within the financial statements

The BBC has adopted the amendment to FRS 17 and restated the asset market values of quoted securities held
as defined benefit assets at bid prices as at 31 March 2007 as required by the FRS. The impact of the restatement
is a reduction in the closing net pension asset at 31 March 2007 of the BBC Pension Scheme of £10.4million.

BBC Annual Report and Accounts 2007/08

113

8b i Pension asset/(liability) included in the balance sheet

Total
2008
£m

BBC Pension
Scheme2007
as restated£m

Unfundedscheme
2007
£m

Total
2007
as restated£m––

8,042.0–

8,128.3(10.4)––

8,128.3(10.4)

8,042.0(7,513.6)–(5.1)

8,042.0(7,518.7)

8,117.9(7,788.6)–(5.2)

8,117.9(7,793.8)

528.4

(5.1)

523.3

329.3

(5.2)

324.1

DefinedUnfunded contribution
schemescheme£m£mAllschemes£m

BBC Pension
Scheme2008£mUnfundedscheme2008£m

Fair value of scheme assets as previously reported
Restatement of asset values as required by FRS 17

8,042.0–

Restated fair value of scheme assets
Actuarial value of scheme liabilities
Closing net pension asset/(liability)

8b ii Pension (charges)/income in statement of income and expenditure
Defined benefit schemes
BBC Pension
Scheme£m

2008
Current service cost
Past service cost

(164.8)(21.5)

–
–

(1.2)
–

(166.0)(21.5)

Total operating charge*(186.3)–(1.2)(187.5)

Expected return on pension scheme assets
Interest on pension scheme liabilities

562.7(413.6)

–
(0.3)

–
–

562.7
(413.9)Net finance income/(cost)

149.1

(0.3)

–

148.8

Net cost in statement of income and expenditure(37.2)

(0.3)

(1.2)

(38.7)

2007
Current service cost
Past service cost
Gain on settlements and curtailments(192.7)(39.8)
1.6

–
–
–

(1.0)
–
–

(193.7)(39.8)
1.6

Total operating charge(230.9)–(1.0)(231.9)

Expected return on pension scheme assets
Interest on pension scheme liabilities

541.3(378.4)

–
(0.3)

–
–

541.3
(378.7)

Net finance income/(cost)

162.9

(0.3)

–

162.6

Net cost in statement of income and expenditure(68.0)

(0.3)

(1.0)

(69.3)* Of the total operating charge of £186.3million for 2007/08, £13.1million was recognised as an expense in 2006/07 as part of exceptional redundancy
costs in accordance with FRS 12. The remaining £173.2million was recognised in the current year.

The net cost in the statement of income and expenditure has decreased by £30.6million. This is primarily due
to a decrease in staff costs which is consistent with the decrease seen in staff numbers when eliminating thoseconnected with the acquisition of Lonely Planet.

The current service cost is
the underlying cost to the BBCof pension rights earned by
employees during the year.
The past service cost arises
from members of the scheme
becoming entitled to improved
defined retirement benefits,
resulting in a charge for yearsof service before the award of
the improvement.
The expected return on
pension scheme assets
comprises estimates basedon predictions of future
performance and economic
conditions.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
114

8b iii Movement in surplus/(deficit) during the year

The defined contribution
schemes do not give rise tobalance sheet pension assets/
liabilities as there is no ongoing
liability for the employer fromthese schemes once thecontributions due for the year
have been settled.

Total
2008
£m

BBC Pension
Scheme2007
as restated£m

Unfundedscheme
2007
£m

Total
2007
as restated
£m

(5.2)
–

334.5
(10.4)

170.2
(2.7)

(5.3)
–

164.9
(2.7)

329.3

(5.2)

324.1

167.5

(5.3)

162.2

(164.8)184.0(21.5)
–
149.1

–
0.4
–
–
(0.3)

(164.8)184.4(21.5)–
148.8(192.7)93.7(39.8)
1.6
162.9

–
0.4
–
–
(0.3)

(192.7)94.1(39.8)
1.6
162.6

52.3

–

52.3

136.1

–

136.1

528.4

(5.1)

523.3

329.3

(5.2)

324.1

BBC Pension
Scheme2008£mUnfundedscheme
2008
£m

339.7
(10.4)

Surplus/(deficit) in scheme at the start of the year
as originally stated
Restatement as required by FRS 17
Surplus/(deficit) in scheme at the start of theyear as restated
Movement in the year:
Current service cost
Contributions (from employer)*
Past service costs
Gain on settlements and curtailments
Net finance income/(cost)
Actuarial gain recognised in the statement of gains
and losses**
Surplus/(deficit) in scheme at the end of the year

* The contribution shown for the unfunded scheme represents the pensions paid to members during the year.
** In 2007 the actuarial gain recognised in the statement of gains and losses includes the £7.7million in respect of the adoption of the amendment to FRS 17.

The assumptions for pension scheme liabilities of the unfunded scheme are the same as the main scheme.
As the scheme is unfunded there are no assets and hence no expected return on assets.
8c BBC Pension Scheme

The FRS 17 valuation takes
assets at their market value
and discounts the accrued
liabilities by reference to thediscount rate of an AA rated
corporate bond.

The BBC Pension Scheme is the main pension scheme of the Group and covers the majority of employees.
This scheme provides salary related benefits on a defined benefit basis funded from assets held in separate
trustee-administered funds. The pension scheme trustees manage the scheme 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 fund thescheme’s liabilities. Valuations of the scheme are performed by Watson Wyatt, consulting actuaries. Formal
valuations are undertaken at least every three years.
8c i Scheme financial position
FRS 17 valuation

2008
£m

2007
as restated£m2006
as restated
£m

2005
£m

2004
£m

Scheme assets*
Scheme liabilities

8,042.0(7,513.6)

8,117.9(7,788.6)

7,843.4(7,675.9)

6,341.7(6,763.8)

5,880.0(6,311.6)

Surplus/(deficit)

528.4

329.3

167.5

(422.1)(431.6)Percentage by which scheme assets cover liabilities

107%

104%

102%

94%

93%

* Quoted equities included within the scheme assets have been valued using the current bid price except for 2005 and 2004 which have not been restatedand are valued using the mid-market price, as allowed under the Amendment to FRS 17. The impact of the restatement was to reduce scheme assets by£2.7million and £10.4million at 31 March 2006 and 2007 respectively.

Key movements in the year are shown in Note 8b iii.
A deferred tax asset or liability will not arise for the Group because most of the Group’s public service activity is
not subject to taxation.

BBC Annual Report and Accounts 2007/08

115

8c ii Changes in present value of scheme liabilities

The table below illustrates the movement on the scheme liabilities during the year. The key things which affect thisare the additional year of pension benefits earned (and employee contributions made), interest charged on existing
liabilities, any gains or losses relating to participants leaving the pension scheme, changes in assumptions made andbenefits paid out during the year.
2008
£m

2007
£m

Opening present value of scheme liabilities
Current service cost
Past service cost
Gains on curtailments
Gains on settlements
Interest on pension scheme liabilities
Experience losses arising on scheme liabilities
Changes in assumptions underlying scheme liabilities
Contributions by scheme participants
Benefits paid

7,788.6
164.8
21.5
–
–
413.6
149.1
(786.0)53.1(291.1)

7,675.9
192.7
39.8
(1.0)
(0.6)
378.4
164.6
(421.7)63.0(302.5)

Closing present value of scheme liabilities

7,513.6

7,788.68c iii Changes in the fair value of scheme assets

The BBC has adopted the amendment to FRS 17 and restated the asset market values of quoted securities held asdefined benefit assets at bid prices as at 31 March 2006 and 31 March 2007 as required by the FRS. The impactof the restatement is a reduction in the opening fair value of the scheme assets of the BBC Pension Scheme of£2.7million.
The table below illustrates the movement on the scheme assets during the year. The key things which affect thisare the additional year of contributions made, changes in the value of the pension scheme assets (including theinvestment return) and benefits paid during the year.
2008
£m

2007
as restated£m

Opening fair value of scheme assets as previously reported
Restatement of asset values as required by FRS 17

8,128.3(10.4)

7,846.1(2.7)

Opening fair value of scheme assets as restated
Expected rate of return on scheme assets
Actuarial losses on scheme assets
Contributions by employer
Contributions by scheme participants
Benefits paid

8,117.9
562.7(584.6)184.0
53.1(291.1)

7,843.4
541.3(121.0)93.7
63.0(302.5)

Closing fair value of scheme assets

8,042.0

8,117.9

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
116

8c iv Scheme assets

The allocation of assets by the Trustees is governed by a need to manage risk against the desire for high returns andany liquidity needs. A high percentage of assets are held in equities which the Trustees expect will produce higher
returns in the long term. The target allocation, based on market values, for equities is 50%, bonds and gilts 30%,
property 10% and alternatives 10%.
Type of asset£mEquities
Bonds and gilts
Property
Alternatives*
Cash

4,629
1,705
1,001
455
252

Total assets

8,042

2008

%

58
21
12
6
3

5,032
1,575
981
295
235

%

62
19
12
4
3

8,118

(22)**

Actual return on pension scheme assets

2007
as restated£m420* Alternatives include private equity, debt and currency.
** This constitutes realised gains from the receipt of investment income (e.g. dividends and rent), transactions where assets are sold and unrealised fairvalue changes.

8c v Pension gains/(losses) in statement of total recognised gains and losses

These gains and losses arise
from actual performance being
different from that predicted– for example, changes in
economic conditions or thedemographic profile of BBC
employees. Only defined
benefit schemes give rise
to gains and losses in thestatement of recognised
gains and losses.

Actual return less expected return on pension scheme assets
Experience losses arising on scheme liabilities
Changes in assumptions underlying the present value of scheme liabilities
Net gain recognised in statement of recognised gains and losses
Cumulative loss recognised in statement of recognised gains and losses

2008
£m

2007
as restated£m(584.6)(149.1)786.0(121.0)(164.6)
421.7

52.3

136.1

(1,740.8)(1,793.1)

The net actuarial gain is the sum of certain gains and losses arising because actual performance is different frompredictions or because assumptions have changed. This year the actual return less expected return on pension
scheme assets has been affected by falling market prices (particularly for equities). The net present value of thescheme liabilities has been impacted by the change in the discount rate which has risen from 5.4% to 6.9% (therate of an AA rated corporate bond). However, before the effect of discounting is applied, changes in longevity
assumptions had increased scheme liabilities.
8c vi history of experience gains and losses

Experience adjustments on scheme assets:
Amount (£million)
Percentage of scheme assets
Experience adjustments on scheme liabilities:
Amount (£million)
Percentage of scheme liabilities
Total actuarial gain recognised in statementof recognised gains and losses:
Amount (£million)
Percentage of scheme liabilities

2008

2007
as restated2006
as restated

2005

2004

(584.6)
7.3%(121.0)1.5%

1,246.5
15.9%

198.7
3.1%

778.4
13.2%

(149.1)2.0%(164.6)
2.1%

208.6
2.7%

(1.4)
0.0%

0.1
0.0%

52.3
0.7%

136.1
1.7%

658.4
8.6%

80.9
1.2%

778.5
12.3%

BBC Annual Report and Accounts 2007/08

117

8c vii funding the scheme

As a result of the 2007 actuarial valuation by Watson Wyatt, it has been agreed between the BBC and the pension
scheme Trustees that the employer contributions will increase to 19.35% from 1 July 2008. Employee contributions
will rise from 6% to 6.75% from 1 April 2009 and to 7.5% from 1 April 2010, with employer contributions
decreasing from 19.35% to 18.6% from 1 April 2009 and to 17.85% from 1 April 2010.
The next formal actuarial valuation is expected to be performed as at 1 April 2010.
Projections

Contribution rates

2010
%

2009
%

2008
%

2007
%

2006
%

Employer
Employee

18.6 18.8/19.35
6.75
6.0

18.8
6.0

7.5
5.5/6.0

6.0
5.5

Underlying cost of scheme to BBC as %of pensionable salaries*

18.6

18.8

19.3/18.8

19.3

18.8/17.3* Excludes the cost effectively paid for by the employee.

Contributions totalling £152million are expected to be paid in 2009.
8c viii Principal actuarial assumptions

The calculation of the scheme assets and liabilities, for FRS 17 purposes, requires a number of assumptions, bothfinancial and demographic, to be made. The principal assumptions made by the actuaries at the balance sheet
date were:Principal financial assumptions

2008
%

2007
%

2006
%

FRS 17 valuation
Rate of increase in salaries*
Rate of increase in pension payments
Inflation assumption
Discount rate

5.6
3.6
3.6
6.9

5.0
3.1
3.1
5.4

4.9
2.9
2.9
5.0

* This is the assumption from 1 April 2010. The assumption to 1 April 2010 is 4.6% per annum.

The average life expectancy assumptions, for members after retirement at 60 years of age, are as follows:
Principal demographic assumptions

2008
Number of
years

2007
Number of
years

2006
Number of
years

Male
FemaleFuture improvement every 10 years

26.6
29.1
1.0

23.5
25.7
1.0

23.5
25.7
1.0

The discount rate for the
FRS 17 valuation is taken
as the rate for an AA rated
corporate bond.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
118

The longevity assumptions have been selected to reflect the characteristics and experience of the membership of
the scheme. This has been done by adjusting standard mortality tables (PMAC07MC+0.5 and PFAC07MC+1)
which reflect recent research into mortality experience in the UK.
The demographic assumptions used during the prior year were consistent with those used for the actuarial
valuations of the scheme as at 1 April 2005. The current year assumptions are consistent with the actuarial
valuation of the scheme as at 1 April 2007. The resulting increase is therefore due to increases in life expectancy.
Expected long-term rate of return (per annum)*

2008
%

2007
%

Equities
Bonds and gilts
Property
Alternatives
Cash

9.3
4.5
6.9
9.3
5.1

7.8
4.8
6.3
7.8
4.6

Total expected rate of return

7.9

7.0

2008
Number

2007
Number

2006
Number

18,736
17,5693,798
18,286

19,974
17,372
3,744
17,723

19,864
16,803
3,676
16,890* As at the beginning of each financial year.

8c ix Scheme membership analysis and maturity profile

The maturity of a scheme
provides an indication of the
cash requirements of thescheme and the likely attitudeof the Trustees to risk within
their investment policy. The
more mature a scheme, themore likely that Trustees will
favour low risk investments.

Contributors
Pensioners
Dependants
Deferred pensioners
8c x Scheme cash flows (day-to-day liquidity)

In 2008 cash inflows of the pension scheme exceeded its cash outflows, largely as a result of the increase in theemployer’s contribution rate from 7.5% to 18.8% from 1 April 2007.
In 2007 cash inflows of the pension scheme exceeded its cash outflows, largely as a result of the increase in theemployer’s contribution rate from 6.0% to 7.5% from 1 April 2006 and the employee’s contribution rate from 5.5%
to 6.0% from 1 September 2006. Offset against this, was a £16.8million transfer to the Red Bee Media Pension Plan
on 30 June 2006.
In 2006 cash outflows of the pension scheme exceeded its cash inflows, however, this includes an outgoing of£29.8million due to transfers out relating to the sale of BBC Technology.
2008
£m

2007
£m

2006
£m

Contributions (employer and employee)
Investment income

242.9
225.1

163.6
206.4

112.0
189.0

Cash inflows
Payments of pensions and transfers out
Expenses

468.0(286.5)(42.0)

370.0(303.6)(33.5)

301.0(275.0)(29.0)Net cash inflow/(outflow)

139.5

32.9

(3.0)

BBC Annual Report and Accounts 2007/08

119

8d uk Public Service Broadcasting pension charge

UK Public Service Broadcasting, in accordance with the group pension provision in FRS 17, accounts for the BBC
Pension Scheme as if it were a defined contribution scheme. This is because it is not possible to identify the UK
Public Service Broadcasting’s share of the underlying assets and liabilities of the Scheme on a reasonable andconsistent basis. The expenditure for UK Public Service Broadcasting of £165.0million (2007: £87.5million) therefore
represents the contributions payable in the year. No contributions were prepaid or accrued as at 31 March 2008(2007: £20.1million prepaid). The contributions are set based on the funding needs identified from the actuarial
valuation and they may therefore vary from the underlying cost after taking into account factors such as theactuarial surplus.

9 TAxATion

9a Analysis of charges for the year

The charge for the year, based on the rate of corporation tax of 30% (2007: 30%) comprised:
2008
£m

2007
£m

Current tax
UK corporation tax
Deduct: double tax relief

16.8
(5.3)

20.7
(3.3)

Adjustments in respect of prior years

11.5
–

17.4
1.1

Foreign tax
Share of associates and joint ventures tax

11.5
8.4
14.3

18.5
6.1
11.1

34.2

35.7

6.4
(3.3)

(8.4)
(3.4)

3.1

(11.8)

37.3

23.9

Note

Total current tax

9b

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

9dTotal charge for the year
9b factors affecting the tax charge

The Group is only liable to taxation on those activities carried out with a view to making a profit and on rent,
royalties and interest receivable. The BBC does not therefore receive relief for all its expenditure, and the tax
assessed for the year consequently differs from the standard rate of corporation tax in the UK. The differences
are explained below:
Note

Surplus before tax
Surplus before tax multiplied by standard rate of corporation tax
in the UK of 30% (2007: 30%)
Effects of
Public services taxable external income
Disallowable costs of public services
Non-cash element of net Group pension charge
Commercial activities
Non-taxable income
Disallowed expenditure
UK taxation on intra-Group overseas dividends
Capital allowances in excess of depreciation
Tax differential regarding overseas earnings
Utilisation of losses brought forward
Other timing differences
Adjustments in respect of prior years
Current tax charge for the year

9a

2008
£m

2007
£m

139.5

84.6

41.9

25.4

4.5
30.7
(44.1)

5.1
11.4
(7.7)

(2.9)
6.7
1.0
(1.4)
2.8
–
(5.0)
–

(1.4)
6.4
–
(1.2)
(2.7)
(0.7)
–
1.1

34.2

35.7

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
120

9c factors that may affect future tax charges

The Group anticipates that the future tax charge will not alter significantly since all licence fee income is free of tax.
9d deferred tax analysis

In accordance with FRS 19 ‘Deferred Tax’, the company provides for all deferred tax liabilities in full less available
deferred tax assets at 28% (2007: 30%).
2008
£m

2007
£m

(9.6)
1.8
3.1
(1.4)

3.1
(0.9)
(11.8)
–

(6.1)

(9.6)

8.8
(0.1)

11.1
(0.1)

8.7
(14.8)

11.0(20.6)

(6.1)

(9.6)

Goodwill£m

Otherintangibles
£m

Group
Total
£m

Cost
At 1 April 2007
Additions*Exchange adjustment

14.2
73.7
5.9

0.7
–
–

14.9
73.7
5.9

At 31 March 2008

93.8

0.7

94.5

Amortisation
At 1 April 2007
Charge for the year

4.0
2.5

0.7
–

4.7
2.5

At 31 March 2008

6.5

0.7

7.2

Net book value
At 31 March 2008

87.3

–

87.3

At 31 March 2007

10.2

–

10.2

Movement in deferred tax (asset)/provision in the year
Net (asset)/provision at start of year
Exchange adjustment
Deferred tax charge/(credit)
Acquired on investment acquisition

Note

9a

Net asset at end of year
Analysis of deferred tax (asset)/provision
Accelerated capital allowances
Other timing differences
Deferred tax provision
Deferred tax asset

17
15

Net deferred tax asset at end of year

10 inTAngiBlE fixEd ASSETS

Goodwill is the difference
between the value paid for abusiness and the fair value of
its net assets. It represents
the premium the purchaser
is prepared to pay for thebusiness.

* Included in additions is £73.2million relating to the acquisition of Lonely Planet (see Note 19).

BBC Annual Report and Accounts 2007/08

121
11 TAngiBlE fixEd ASSETS

11a group
Land andbuildings£mPlant andmachinery£m

Furnitureand fittings£m

Assets underconstruction
£m

Total
£m

Cost or valuation
At 1 April 2007
Additions*
Brought into service
Disposals

427.3
8.2
4.9
(1.1)

1,022.5
87.8
68.2(91.8)

161.7
17.6
6.9
(23.7)

105.4
48.9(80.0)(3.1)

1,716.9
162.5–(119.7)

At 31 March 2008

439.3

1,086.7

162.5

71.2

1,759.7

Depreciation
At 1 April 2007
Charge for the year
Disposals

248.1
13.5
(0.8)

675.8
81.8
(83.0)

84.1
15.1(22.8)–––

1,008.0
110.4(106.6)

At 31 March 2008

260.8

674.6

76.4

–

1,011.8

Net book value
At 31 March 2008

178.5

412.1

86.1

71.2

747.9

At 31 March 2007

179.2

346.7

77.6

105.4

708.9

* Additions include £4.5million recognised on the acquisition of Lonely Planet (see Note 19).

BBC World Service’s and BBC Monitoring’s plant and machinery and furniture and fittings are stated at theestimated current replacement cost of the assets, as at 1 April 1996, as adjusted for remaining service potential,
or cost if acquired later, less accumulated depreciation.
There is no significant difference (£1.6million) between the net book value of these tangible fixed assets and theirvalue as determined on an historical cost basis. The assets revalued in 1996 have a useful life remaining of two years.
11b uk Public Service Broadcasting
Land andbuildings£mPlant andmachinery£m

Furnitureand fittings£m

Assets underconstruction
£m

Total
£m

Cost
At 1 April 2007
Additions
Brought into service
Disposals

354.1
7.5
4.6
(0.4)

616.1
60.3
53.0
(81.9)

137.6
12.2
4.4
(22.1)

81.3
24.9(62.0)
2.2

1,189.1
104.9–(102.2)

At 31 March 2008

365.8

647.5

132.1

46.4

1,191.8

Depreciation
At 1 April 2007
Charge for the year
Disposals

203.1
10.4
(0.4)

417.3
49.6
(73.7)

71.9
11.8(21.6)

–
–
–

692.3
71.8
(95.7)At 31 March 2008

213.1

393.2

62.1

–

668.4

Net book value
At 31 March 2008

152.7

254.3

70.0

46.4

523.4

At 31 March 2007

151.0

198.8

65.7

81.3

496.8

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
122

11c land and buildings at net book value

Group
2008
£m

UK Public
Service
Group Broadcasting
2007
2008
£m
£m

UK Public
Service
Broadcasting
2007£mUndepreciated land
Freehold buildings

16.5
98.5

16.8
96.6

16.5
88.7

16.5
87.8

Total freeholds
Long leaseholds
Short leaseholds

115.0
27.3
36.2

113.4
25.5
40.3

105.2
24.6
22.9

104.3
22.5
24.2

Total

178.5

179.2

152.7

151.0

11d finance leases

Assets held under finance leases, capitalised and included in tangible fixed assets:
UK Public
Service
Group Broadcasting
2008
2008
£m
£m

Cost
Disposals
Acquired as part of acquisition

22.5
(0.7)
2.6

20.4
(0.5)
–

At 31 March 2008

24.4

19.9

Depreciation
Disposals
Charge for the year

12.9
(0.7)
2.8

11.7
(0.5)
1.9

At 31 March 2008

15.0

13.1

Net book value
At 31 March 2008

9.4

6.8

At 31 March 2007

9.6

8.7

The finance leases relate to IT equipment, with the exception of those acquired during the year which relate to
Plant and Machinery and Furniture and Fixtures.

12 invESTMEnT in PRogRAMMES foR fuTuRE SAlE
Group
£m

Cost
At 1 April 2007
Exchange adjustment
AdditionsElimination in respect of programmes fully amortised

239.9
(0.6)
88. 2
(153.6)

At 31 March 2008

173.9

Amortisation
At 1 April 2007
Exchange adjustment
Charge for the year
Elimination in respect of programmes fully amortised

141.4
(0.8)
101.8
(153.6)

At 31 March 2008

88.8

Net book value
At 31 March 2008

85.1

At 31 March 2007

98.5

Investment by BBC Worldwide in programmes for future sale relates to programmes provided by the BBC andexternal producers. Additions include £75.1million direct investment in BBC programmes (2007: £96.3million).

BBC Annual Report and Accounts 2007/08

123
13 oThER invESTMEnTS (inCluding BBC woRld SERviCE And BBC MoniToRing nET ASSETS)

Details of significant joint ventures and associates along with principal subsidiary undertakings, including theiractivities, are provided in Note 29.
13a Movements in the year for the group
Interests
in joint
ventures£mInterests inassociates
£m

Trade
investments
£m

Group
Total
£m

25.6
3.9
–
–

(3.2)
0.5
–
–

5.0
–
(0.8)
(1.5)

27.4
4.4
(0.8)
(1.5)

29.5

(2.7)

2.7

29.5

20.9
0.6
(1.9)

2.8
1.3
(0.1)

–
–
–

23.7
1.9
(2.0)

At 31 March 2008

19.6

4.0

–

23.6

Share of post acquisition reserves
At 1 April 2007
Exchange adjustment
Share of profits/(losses) after taxation
Provision for unrealised profit
Dividends received
Adjustment to reflect effective obligation

19.6
–
43.0
(0.9)
(49.0)
3.8

1.4
(0.1)
(6.3)
–
(0.2)
7.7

–
–
–
–
–
–

21.0
(0.1)
36.7
(0.9)
(49.2)
11.5

At 31 March 2008

16.5

2.5

–

19.0

Loans receivable from joint ventures and associates
At 1 April 2007
Additions
Provision

0.8
0.7
(1.5)

–
–
–

–
–
–

0.8
0.7
(1.5)

At 31 March 2008

–

–

–

–

Net book value
At 31 March 2008

65.6

3.8

2.7

72.1

At 31 March 2007

66.9

1.0

5.0

72.9

Note

Cost
At 1 April 2007
Additions
Transfer to debtors
Provision

13b

At 31 March 2008
Goodwill
At 1 April 2007
Additions
Amortisation

13b

Under the terms of the agreements with the other investors in certain of the Group’s joint ventures andassociates the Group has no obligation to fund losses incurred by those entities or to make good their net liabilities.
As a result no share of any relevant losses is included in the financial statements. The share of net liabilities notrecognised comprised:– Joint ventures:– Associates:£25.3million (2007: £32.3million)£107.9million (2007: £95.7million).

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
124

13b Additions to joint ventures, associates and trade investments

The additions in joint ventures during the year relate to the acquisition of shareholdings in independent production
company, Freehand Productions Pty Limited, and the set up of UK VoD LLP, a joint venture between BBC Worldwide
Limited, Channel Four Television Corporation and ITV plc. The additions in associates during the year relate to theacquisition of minority shareholdings in Left Bank Pictures Limited and Cliffhanger Productions Limited.
13c group share of joint ventures’ and associates’ assets and surplus
Group share ofjoint ventures
2008
2007
£m
£m

Group shareof associates
2008
2007
£m
£m

Current assets
Non-current assets

178.1
39.3

161.0
35.4

46.7
12.9

36.6
14.0

Total assets

217.4

196.4

59.6

50.6

Current liabilities
Non-current liabilities(110.0)(41.8)(79.5)(50.0)(41.5)(14.3)(20.1)(29.5)

Total liabilities(151.8)(129.5)(55.8)(49.6)

65.6

66.9

3.8

1.0

274.6
(229.7)238.5(209.6)48.8(47.5)

41.9(41.0)

44.9

28.9

1.3

0.9

Interest in
BBC World
Serviceand BBC
Monitoring
net assets£mInterests in
subsidiaries
£m

Total
£m

At 1 April 2007
Surplus for the year

169.7
1.0

125.3
–

295.0
1.0

At 31 March 2008

170.7

125.3

296.0

UK Public
Service
Group Broadcasting
2007
2008
£m
£m

UK Public
Service
Broadcasting
2007£mTotal net book value
IncomeExpenditure
Surplus for the year
13d Movements in the year for uk Public Service Broadcasting

14 SToCkS

Group
2008
£m

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

2.0

1.7

0.2

0.1

281.5
5.9

305.3
1.5

281.5
–

305.3
–

108.7
79.8
22.2

94.5
63.5
10.4

108.7
79.8
–

94.6
63.5
–

500.1

476.9

470.2

463.5

BBC Annual Report and Accounts 2007/08

125
15 dEBToRS

Group
2008
£m

UK Public
Service
Group Broadcasting
2007
2008
£m
£m

UK Public
Service
Broadcasting
2007
£m

138.7
368.4
–
33.1
26.2
3.0
13.1
209.8

124.8
353.9
–
22.1
22.1
3.0
17.8
148.0

17.2
368.4
71.7
0.2
23.6
–
10.2
164.0

17.5
353.9
47.5
2.3
20.2
–
10.0
118.4

792.3
2.6

691.7
5.2

655.3
–

569.8
–

794.9

696.9

655.3

569.8

11.8
6.2
29.5

17.6
6.3
49.5

–
0.2
20.9

–
–
38.9

47.5
2.6

73.4
1.0

21.1
–

38.9
–

Total long-term debtors

50.1

74.4

21.1

38.9

Total

845.0

771.3

676.4

608.7

Note

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

9d

23c

Total current debtors
Receivable after more than one year
Deferred tax asset
Other debtors
Prepayments
Derivative financial assets

9d

23c

16 CREdiToRS

16a Prompt payment policy

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 is complying with the relevant terms and conditions of their contracts. The BBC
monitors compliance against the terms of this code. Payments for programme acquisitions are made in accordancewith contractual terms. The Group’s number of creditor days outstanding in respect of other trade creditors at
31 March 2008 was 39 days (2007: 38 days).
Residual creditors and associated costs have been excluded for the purpose of this calculation, as they relate to
payments to artists and contributors other than trade creditors.

Licence fee debtors
are amounts due from the
Department for Culture,
Media and Sport. Althoughlicence fee income represents
the value of licences issued(recognised when a licence isissued to the licence fee payer),
the cash in relation to theselicences is paid to the BBC by
the Department for Culture,
Media and Sport, rather thanbeing received directly from thelicence fee payer. As a result
the debtor at the year end
represents licences issued forwhich cash has not yet been
paid over to the BBC.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
126

16b Amounts falling due within one year

Bank and other loans
Bank loan
Unsecured loan notes

Note

Group
2008
£m

UK Public
Service
Group Broadcasting
2007
2008
£m
£m

21,23
21,23

58.6
0.7

65.4
0.5

–
–

–
–

59.3

65.9

–

–

68.4
47.3
68.9
35.1
211.3

70.9
27.8
65.0
27.9
198.8

68.0
47.1
42.3
–
135.7

70.9
27.5
38.4
–
137.0

431.0

390.4

293.1

273.8

–
12.7
28.1
5.8
46.4

–
16.6
28.2
5.2
16.6

37.2
4.3
25.8
4.3
12.1

36.6
6.0
25.8
4.8
7.9

93.0

66.6

83.7

81.1

405.6
73.5

416.8
72.2

311.3
73.5

324.1
72.2

479.1

489.0

384.8

396.3

2.3

3.7

–

–

1,064.7

1,015.6

761.6

751.2

UK Public
Service
Broadcasting2007£mTrade creditors
Programme creditors
Programme acquisitions
Salaries and wages
Residual copyright payments
Other trade creditors

Other creditors
Amounts owed to subsidiaries
Corporation tax
Other taxation and social security
Obligations under finance leases
Other

23b

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

Derivative financial liabilities

23c

Total

UK Public
Service
Broadcasting2007£m

16c Amounts falling due after more than one year

Bank and other loans
Other creditors
Amounts owed to subsidiaries
Obligations under finance leases
Other

Derivative financial liabilities
Total

Note

Group
2008
£m

UK Public
Service
Group Broadcasting
2007
2008
£m
£m

21,23

140.1

20.0

–

–

23b

–
22.3
9.6

–
25.5
11.3

9.5
2.7
9.7

11.5
4.1
11.3

31.9

36.8

21.9

26.9

0.6

3.6

–

–

172.6

60.4

21.9

26.9

23c

BBC Annual Report and Accounts 2007/08

127
17 PRoviSionS foR liABiliTiES

Group
Licence fee
Restructuring
Litigation and insurance
Property
Deferred tax
BBC jam suspension
Other

Note

9d
5

Total

At
1 April
2007£m

Charge forthe year£m

Utilisedduringthe year£m

Releasedduringthe year£m

At
31 March
2008
£m

19.9
57.5
17.2
14.1
11.0
14.4
9.1

20.7
118.1
2.9
3.6
1.5
3.5
–

(18.8)(49.2)
(1.5)
(1.0)
–
(16.4)
(7.0)

(1.2)
(6.4)
(4.8)
(0.3)
(3.8)
–
(0.8)

20.6
120.0
13.8
16.4
8.7
1.5
1.3

143.2

150.3

(93.9)(17.3)

182.3

Licence fee provisions are made for the expected level of refunds (money repayable on the unexpired portionof a licence where the licence is no longer required) and revocations (where no money is received in relation toa licence sold).
The restructuring provision includes a net charge (charge for the year less released) for the year of £99.8million(2007: £11.2million) of exceptional redundancy costs relating to the change programme occurring within the BBC
and non-exceptional redundancy costs of £11.9million (2007: £10.0million) as per Note 4c.
Property provisions relate to the cost of returning leasehold properties to their original condition at the end of
the lease.
Other provisions consist of a number of balances arising across the BBC in the normal course of business.

UK Public Service Broadcasting
Licence fee
Restructuring
Litigation and insurance
Property
BBC jam suspension
Other
Total

Note

5

At
1 April
2007£m

Charge forthe year£m

Utilisedduringthe year£m

Releasedduringthe year£m

At
31 March
2008
£m

19.9
52.5
11.7
10.6
14.4
6.6

20.7
108.5
2.3
2.7
3.5
–

(18.8)(42.4)(0.6)(1.0)(16.4)
(5.6)

(1.2)
(5.9)
(1.2)
(0.3)
–
–

20.6
112.7
12.2
12.0
1.5
1.0

115.7

137.7

(84.8)

(8.6)

160.0

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
128
18 RESERvES
Operatingreserveexcludingpensionreserveas restated£m

Pensionreserveas restated
£m

Total
operatingreserveas restated£m

Capitalreserve£m

Otherreserves*£m

Revaluation
reserve
£m

Total
£m

At 1 April 2007 as previously statedPrior year adjustment**

279.3
–

334.5
(10.4)

613.8(10.4)

782.5
–

–
–

2.4
–

1,398.7(10.4)

At 1 April 2007 as restatedExchange differences
Surplus for the financial year
Actuarial gain on defined benefit
pension schemes
Revaluation reserve transfer
Pension reserve transfer
Recognised on acquisition
Foreign exchange movement
Capital reserve transfer

279.3
(1.0)
101.7

324.1
–
–

603.4
(1.0)
101.7

782.5
–
–

–
–
–

2.4
–
–

1,388.3
(1.0)
101.7

–
0.8
(146.9)–2.2(29.8)

52.3
–
146.9
–
–
–

52.3
0.8
–
–
2.2
(29.8)

–
–
–
–
–
29.8

–
–
–
(28.8)
(2.2)
–

–
(0.8)
–
–
–
–

52.3
–
–
(28.8)––At 31 March 2008

206.3

523.3

729.6

812.3

(31.0)

1.6

1,512.5

200.9

523.3

724.2

648.5

(31.0)–

1,341.7

5.4

–

5.4

163.8

–

1.6

170.8

206.3

523.3

729.6

812.3

(31.0)

1.6

1,512.5

Group

Represented by:General Group reserves
BBC World Service and
BBC Monitoring reserves
Total* Other reserves comprise a put option of up to 25% of the issued share capital of Lonely Planet, which is exercisable by the minority shareholders fora period of up to 25 months from the acquisition date (see Note 19).
** The 2007 figures have been restated for the adoption of the Amendment to FRS 17 (see Statement of accounting policies).
Operatingreserve£m

Capitalreserve£m

Revaluation
reserve£m

At 1 April 2007
Deficit for the financial year
Revaluation reserve transfer
Capital reserve transfer

278.7(34.4)
0.8(29.8)

782.5
–
–
29.8

2.4
–
(0.8)
–

1,063.6(34.4)–At 31 March 2008

215.3

812.3

1.6

1,029.2

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

209.9
5.4

648.5
163.8

–
1.6

858.4
170.8

Total

215.3

812.3

1.6

1,029.2

UK Public Service Broadcasting
UK Public Service Broadcasting,
BBC World Service and BBC
Monitoring are fundedfrom different sources. As
such, the reserves relating to
BBC World Service and BBC
Monitoring are maintained
separately from the rest of
the Group and are restricted
for use solely on BBC World
Service or BBC Monitoring
activities.

Total
£m

–

Under FRS 10 ‘Goodwill and Intangible Assets’ any newly arising goodwill must be capitalised and amortisedover its useful life. As is permitted by the standard, goodwill arising in periods prior to 1999 of £6.8million(2007: £6.8million) remains offset against the operating reserve.
The cumulative exchange differences at 31 March 2008 were £(1.8)million (2007: £(0.8)million), of which£(1.0)million arose during the year (2007: £(2.7)million). In accordance with FRS 23 ‘The Effects of Changes in
Foreign Exchange Rates’, any differences relating to years prior to 2006 have not been separated out and remain
within the operating reserve.

BBC Annual Report and Accounts 2007/08

129
19 ACquiSiTion of BuSinESS

On 1 October 2007 the Group acquired 75% of the issued share capital of Lonely Planet Publications Pty Limited
and Lonely Planet Publications Inc. (together, ‘Lonely Planet’), registered in Australia and the USA respectively fora total cash consideration of £89.9million. Together with £0.4million paid for another subsidiary business acquired,
the total cash paid in the year for the purchase of subsidiaries was £90.3million.
The total adjustments required to the book values of the assets and liabilities of Lonely Planet to present the net
assets of those companies at fair values were £0.7million. These are set out below:

Bookvalue*£m

Fixed assets
Tangible fixed assets

Fair value
andaccounting
policyalignments**£m

Fair value***
£m

4.5

–

4.5

14.8
8.5
5.9

(0.8)
–
–

14.0
8.5
5.9

1.0
1.7

–
(0.3)

1.0
1.4

Total assets

36.4

(1.1)

35.3

Liabilities
Creditors(14.8)

1.8(13.0)

21.6

0.7

22.3
(5.6)

Current assets
Stock
Debtors
Cash
Taxation– Current– Deferred

Net assets
Minority interest (25%)
Net assets acquired

16.7

Goodwill

73.2

Purchase consideration and costs of acquisition

89.9

*

The book values of the assets and liabilities have been taken from the management accounts of Lonely Planet at 1 October 2007 (the date ofacquisition) at the actual exchange rates used to settle the consideration on that date.
** The adjustments between book value and fair value reflect the restatement of assets and liabilities from Lonely Planet’s AIFRS-based accounting
policies and estimates to the Group’s UK GAAP-based accounting policies.
*** Certain fair values calculated have been deemed provisional at the balance sheet date.

Goodwill is amortised over its estimated useful economic life of 20 years.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
130

In its last financial year to 30 June 2007, Lonely Planet made a profit after tax of £1.1million. For the period since thatdate to the date of acquisition, Lonely Planet’s Australian IFRS-based management accounts show:
1 July 2007 –30 September 2007£m

Turnover

10.6

Operating loss

(0.6)

Loss before taxation
Taxation

(0.6)
(0.2)

Loss attributable to shareholders
Exchange adjustments
Cash flow hedges
Income tax recognised directly in equity

(0.8)
(0.1)
0.3
0.1

Total recognised losses for the period(0.5)

Included within the group consolidated results for the year ended 31 March 2008 for Lonely Planet, is a loss of£2.1million.
In accordance with FRS 25 ‘Financial Instruments: Disclosure and Presentation’, an AUS$67.3million (£28.8million)
liability was recognised on the date of acquisition in respect of a put option of up to 25% of the share capitalof Lonely Planet, which is exercisable by the minority shareholders for a period of up to 25 months from theacquisition date. This amount was recognised within reserves (see Note 18) and not as part of the cost ofinvestment as the minority shareholders are deemed to have retained the risks and rewards of ownership for this
25% shareholding. As a result, 100% of Lonely Planet’s results are consolidated and the minority interests of 25%
are deducted from the Group’s results and net assets position.
Changes to the fair value of the put option liability in the remaining 19 months’ exercise period, other than inrelation to foreign exchange rates, will be recorded in the Income and Expenditure account within interest.

20 REConCiliATion of nET CASh flow To MovEMEnT in nET (dEBT)/fundS
2008
£m

2007
£m

Decrease in cash in year
Net cash (outflow)/inflow from financing(66.7)(93.0)(15.5)
0.9

Change in net debt resulting from cash flows
Exchange differences
Non-cash increase in loan notes
Non-cash increase in finance leases(159.7)
(6.7)
(4.3)
(6.9)

(14.6)––(6.9)

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

(177.6)28.1(21.5)
49.6

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

(149.5)28.1

BBC Annual Report and Accounts 2007/08

131
21 AnAlySiS of ChAngES in nET fundS/(dEBT)

Cash flows£m

Acquisition(excluding
cash)
£m

Non-cashchanges£m

Exchange£m

At 31 March
2008
£m

144.7

(66.7)

–

–

–

78.0

Gross funds

144.7(66.7)

–

–

–

78.0

Debt
Loans from third parties
Unsecured loan notes
Finance leases(85.4)(0.5)(30.7)(106.8)
4.1
9.7

–
(4.3)
(2.5)

–
–
(4.4)

(6.5)
–
(0.2)

(198.7)(0.7)(28.1)Net funds/(debt)

28.1(159.7)

(6.8)

(4.4)

(6.7)

(149.5)

Made up of:
Public Service (including BBC World Service
and BBC Monitoring)
Commercial Businesses
Centre House Productions Limited

102.0(54.6)(19.3)(80.9)(81.8)
3.0

–
(6.8)
–

(4.4)
–
–

–
(6.7)
–

16.7
(149.9)(16.3)Net funds/(debt)

28.1(159.7)

(6.8)

(4.4)

(6.7)

(149.5)

At 1 April
2007£m

Net cashCash at bank and in hand

The debt and repayments on finance leases held by Centre House Productions Limited are offset directly by cash
held on matching deposits, and the income from them, such that there is no long-term cash effect.

22 REConCiliATion of nET fundS/(dEBT) To ThE dEPARTMEnT of CulTuRE, MEdiA And SPoRT (dCMS)
BoRRowing CEilingS
Commercial
Businesses

Public Services

2008
Net funds/(debt)

Public Service
Broadcasting(excluding
DSHS Limited)
Note
£m

21

Borrowing ceiling

DigitalSwitchover
Help Scheme*
£m

£m

16.7

–

(149.9)(200.0)(25.0)(350.0)* £25million may only be used in respect of borrowing to fund current expenditure on meeting the responsibilities placed on the BBC by any scheme agreed
under clause 39 of the Framework Agreement (targeted help schemes), including costs incurred by the BBC for the scheme’s overheads and financing costs.

The Public Service borrowing ceiling is set by the Secretary of State in accordance with the Framework Agreement
between the BBC and DCMS.
The £350million borrowing ceiling for BBC Commercial Holdings Limited has three financial covenants which arerequired to be met at 31 March each year. As at 31 March 2008 and 31 March 2007 BBC Commercial HoldingsGroup was in compliance with each of these covenants.
As at 31 March 2008, and throughout the financial year, the BBC was in compliance with the borrowing ceilings.
2007
Net funds/(debt)
Borrowing ceiling

As at 31 March 2007 the BBC was in compliance with the borrowing ceilings.

Note

Public Services£mCommercial
Businesses
£m

21

102.0

(54.6)(200.0)(350.0)Public Services in thiscontext represent the UK
Public Service BroadcastingGroup (excluding Centre House
Productions Limited – see Note23b), BBC World Service and
BBC Monitoring.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
132
23 finAnCiAl inSTRuMEnTS

23a financial risk management

The Group’s financial risk management operations are carried out by a Group Treasury function, within parameters
defined formally within the policies and procedures manual agreed by the Executive Board. Group Treasury’s
activity is routinely reported and is subject to review by internal and external auditors.
Group Treasury uses financial instruments to raise finance and to manage financial risk arising from the BBC’s
operations in accordance with its objectives which are:
* To ensure the business of the BBC, both Public Services and Commercial, is funded in the most efficient mannerand remains compliant with borrowing ceilings* To protect the value of the BBC’s assets, liabilities and cash flows from the effects of adverse interest rates andforeign exchange fluctuations* To maximise the return on surplus funds, whilst ensuring sufficient cash is retained to meet foreseeable liquidity
requirements.
The Group’s financial instruments, other than those used for treasury risk management purposes, comprise cash
and liquid resources, borrowings and various items such as trade debtors and creditors that arise directly from its
operations. The Group finances its operations from these financial instruments. The Group does not undertake
speculative treasury transactions.
Market risk
Market risk comprises
currency risk, interest rate risk
and other price risks.

A forward currency
contract is a contract
to buy or sell foreign
currency in exchange forsterling at a specific rate
on a specific date. Bylocking into a particularexchange rate, thecurrency risk that may be
associated with a futurepurchase or saleis eliminated.

An interest rate swap is acontract between two parties
to change the basis of theirinterest rate payment or
receipt either from fixed tofloating rates or vice versa. By
fixing a floating interest ratecertainty about the level offuture interest payments canbe achieved.

Other price risk is any pricechange other than those arisingfrom changes in currency orinterest rates.

Currency risk
The Group is principally a domestic organisation with the majority of transactions, assets and liabilities arising in the
UK and is sterling based. However, the Group undertakes some transactions in currencies other than sterling. Due
to movements in exchange rates over time, the amount the Group expects to receive or pay when it enters into atransaction may differ from the amount that it actually receives or pays when it settles the transaction.
The Group enters into forward currency contracts, for all significant contracts, to manage this currency risk. These
allow the Group to settle transactions at known exchange rates, thereby eliminating much of this uncertainty. As aresult of this certainty in exchange rates the Group has no significant underlying sensitivity to currency fluctuations
and hence no sensitivity analysis is presented.
The Group’s largest overseas operation is BBC Worldwide America, which operates in the USA and whose
revenues and expenses are denominated exclusively in US dollars. However, due to the relative size of BBC
Worldwide America and the stability of the US dollar, the BBC does not consider this to be a significant exposure
to currency fluctuations for the Group.
Interest rate risk
The Group’s main exposure to interest rate fluctuations arises on external borrowings. Since March 2003 theGroup has been borrowing at floating rates of interest and then using interest rate swaps, caps and collars togenerate the desired interest profile and to manage the Group’s exposure to interest rate fluctuations. Interest rate
swaps, caps and collars are taken out based on projected borrowing requirements, therefore differences will occur
between the notional amount of the swaps, caps and collars and the actual borrowing requirements. As a result of
this management of interest rates the Group has no significant underlying sensitivity to interest rate fluctuations andhence no sensitivity analysis is presented.
Other price risk of financial assets
The Group invests surplus cash in money market funds and money market deposits, therefore it is not subject toother price risks, such as market price risk.

BBC Annual Report and Accounts 2007/08

133

Credit risk

Trade receivables
The majority of the Group’s financial assets are trade receivables (£507.1million). The largest element is the licencefee debtor (£368.4million) which is received directly from DCMS (not directly from the licence fee payer) andtherefore no significant credit risk attaches to this debtor. The amount of income that the BBC receives from DCMS
is directly related to the amount of licence fee collected from households in the UK.

Credit risk is the risk offinancial loss to the Group if
a customer or counterparty toa financial instrument fails tomeet its contractual obligation.

Of the remaining £138.7million receivables, £34.1million is past due and not impaired. £5.2million has been provided
for during the year against the £7.8million trade receivables which are considered impaired. However, the Group
does not consider this to be a significant impairment of financial assets.
Investments
The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties
that have a minimum credit rating of A-, with a higher minimum rating up to AA- required depending upon the
duration and amount. Given these high credit ratings, the BBC does not expect any counterparty to fail to meetits obligations.
Guarantees
The Group enters into financial guarantees for intra-group purposes only, therefore the credit risk exposure,as a result of this, is not considered significant.
Liquidity risk
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 22). The BBC’s Group Treasury manages the Group’s borrowings in order
to comply with these ceilings together with the terms of any individual debt instruments. The BBC holds its surplus
liquidity in readily convertible financial instruments with highly rated financial institutions.
23b fair values of financial instruments

The following table shows the fair value and carrying value of the Group’s financial instruments, in categories
according to how the financial instrument is measured. It also shows the maturity profile for each category offinancial asset and liability.
Amounts
Amounts due between
due in lesstwo andthan one year
five years£m£m

Amounts
due after
more than
five years
£m

Total
£m

2008 – Carrying value and fair value
Financial assets at fair value through income and expenditure
Derivative financial instruments

2.6

2.6

–

5.2

Loans and receivables
Trade debtors
Other debtors

504.6
0.3

–
–

–
–

504.6
0.3

Cash at bank and in hand

78.0

–

–

78.0

–

–

2.7

2.7

(2.3)

(0.5)

(0.1)

(2.9)

(59.3)(327.6)(31.0)(47.3)(5.8)(140.1)
–
–
–
(3.0)

–
–
–
–
(19.3)(199.4)(327.6)(31.0)(47.3)(28.1)

Available-for-sale financial assets
Other investments (non-current)
Financial liabilities at fair value through income and expenditure
Derivative financial instruments
Financial liabilities measured at amortised cost
Loans
Trade creditors
Other creditors
Programme acquisitions
Obligations under finance leases

Liquidity risk is the risk that
the Group will not be able tomeet its financial obligations
as they fall due.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
134
Amounts
Amounts due between
due in lesstwo andthan one year
five years£m£m

Amounts
due after
more than
five years
£m

Total
£m

2007 – Carrying value and fair value
Financial assets at fair value through income and expenditure
Derivative financial instruments

5.2

1.0

–

6.2

Loans and receivables
Trade debtors
Other debtors

474.4
0.2

–
–

–
–

474.4
0.2

Cash at bank and in hand

144.7

–

–

144.7

–

–

5.0

5.0

(3.7)

(3.6)

–

(7.3)

(65.9)(294.3)(27.8)(5.2)(20.0)
–
–
(4.5)

–
–
–
(21.0)(85.9)(294.3)(27.8)(30.7)

Available-for-sale financial assets
Other investments (non-current)
Financial liabilities at fair value through income and expenditure
Derivative financial instruments
Financial liabilities measured at amortised cost
Loans
Trade creditors
Programme acquisitions
Obligations under finance leases

As at 31 March 2008 there are no differences (2007: no differences) between the fair value and carrying value of
any of the Group’s financial instruments. The fair value of forward currency contracts, interest rate swaps, caps andcollars and embedded derivatives are based on market prices and exchange rates at the balance sheet date. These
are recorded in the statement of income and expenditure (see Notes 3 and 7). The remaining financial instruments
are carried at cost or amortised cost in accordance with FRS 26 ‘Financial Instruments: Recognition andMeasurement’, which approximates to fair value.

Defeasance deposits areamounts deposited with banks
which earn the exact amountof interest needed to cover
the capital repayment andinterest element of each of thefinance leases. The defeasancedeposits are ring-fenced andtherefore cannot be used forany transactions apart fromthe agreed capital and interest
payments.

The finance leases include £18.0million (2007: £21.0million) relating to Centre House Productions Limited. Centre
House Productions Limited enters into finance leases as a means of financing drama productions which result in
lower production costs for the BBC. These finance leases are matched by defeasance deposits which may only be
used to settle the finance lease liabilities and therefore do not represent separate assets and liabilities. Consequently
they are netted off the finance lease creditor to show the net unmatched liability at the year end. These defeasancedeposits, £219.0million at 31 March 2008 (2007: £235.8million), are structured such that the principal on deposit
and interest earned will be sufficient to cover the rental obligations on the finance leases until the end of the lease.
Accordingly it is not included as borrowing for the purposes of compliance with the BBC’s borrowing ceilings.
BBC Worldwide Limited has guaranteed bank loans in respect of its joint venture, Worldwide Media Limited, whichwere rupees 155million (£2.0million) on 31 March 2008 (2007: rupees 366 million, £4.3million). The fair value has
been assessed as not significant.

BBC Annual Report and Accounts 2007/08

135

23c derivative financial instruments
Assets£m

Liabilities£m

2008
Greater than one year
Forward foreign currency contracts
Interest rate swaps, caps and collars
Embedded derivatives

2.2
0.3
0.1

(0.2)
(0.1)
(0.3)

Total

2.6

(0.6)

Less than one year
Forward foreign currency contracts
Embedded derivatives

2.6
–

(2.2)
(0.1)

Total

2.6

(2.3)

2007
Greater than one year
Forward foreign currency contracts
Embedded derivatives

1.0
–

(3.5)
(0.1)

Total

1.0

(3.6)

Less than one year
Forward foreign currency contracts
Interest rate swaps, caps and collars

2.5
2.7

(3.7)
–

Total

5.2

(3.7)

At 31 March 2008 the Group had entered into a net commitment to purchase foreign currencies amounting to£17.9million (2007: £65.8million) that mature in the period through to 2013 in order to fix the sterling cost ofcommitments through this period (mainly euros and US dollars). After taking into account the effects of theseforward foreign exchange contracts, the Group had no significant currency exposure.
Interest rate risk is managed by the use of interest rate swaps, caps and collars. Sterling fixed rate borrowings areachieved by entering into interest rate swap transactions; all outstanding swaps mature by March 2014. The impactof a change in interest rates can also be limited by entering into interest rate cap and collar transactions; alloutstanding caps and collars mature by April 2012. In total, £80.0million (2007: £246.0million) of swaps and£128.2million (2007: £nil) of caps and collars were entered. This is £8.8million (2007: £161.0million) higher thanthe current level of borrowings of £199.4million (2007: £85.0million).
In accordance with FRS 26, the Group has reviewed contracts for embedded derivatives that are required to be
separately accounted for if they do not meet certain requirements set out in the standard. Any such embedded
derivatives have been recognised at fair value.
23d hedges of net investments in foreign operations

The Group has Australian dollar (AUS$) denominated borrowings which it has designated as a hedge of a net
investment in foreign operations (Lonely Planet), in order to hedge against the risks associated with exchange
rate movements between sterling and the AUS$. The fair value of the AUS$ borrowings at 31 March 2008 was£90.3million (2007: £nil) and the fair value of the investment at 31 March 2008 was £93.7million (2007: £nil).
There is an immaterial amount of hedge ineffectiveness related to this hedge.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
136

23e Borrowing facilities

Facility

UK Public Service Broadcasting
LIBOR-based loan or overdraft
LIBOR-based loan or overdraft
Uncommitted money market
lines (short-term borrowings)
Overdraft

US Dollar overdraft
Currency overdraft

Total
available
31 March2008£mAmountdrawn
down at
31 March
2008
£m

Total
available
31 March
2007£mLoan – margin of 0.175%
Overdraft – bank base rates plus 1%
Loan – margin of 0.2%
Overdraft – bank base rates plus 1%
Margin of between 0.125% and0.5% over LIBOR
Overdraft – bank base rates plus 1%

50

–

–

–

–

100

–

24

–

24

–

5

–

–

Overdraft – bank’s short-termoffered rate for US Dollars plus 1%
Overdraft – bank’s short-termoffered rate for the relevant
currency plus 1%

3

–

–

– June 2008
andJanuary
2009*
–

5

–

–

–

145

–

–

June 2012

–

350

40

expiredJune 2007

–

25

25

expiredJune 2007

4

20

–

January
2009

50

50

20

£20m
December
2011 and£30 m May
2012

Interest rate

BBC Commercial Holdings Limited
Multicurrency, revolving credit
LIBOR** plus 0.275% rising to
350***
facility agreement for loans and
LIBOR** plus 0.325% when theletters of credit
facility is more than 50% utilised.
Letter of credit fee is the same as thebank lending margin, but doe notinclude LIBOR
Multicurrency, revolving credit
LIBOR plus 0.375% rising to LIBOR–
facility agreement for loans andplus 0.45% when the facility is moreletters of credit
than 50% utilised.
Letter of credit fee is the same as
the bank lending margin, but does
not include LIBOR
Loan with European Investment European Investment Bank’s own–
Bank (secured by lettersfunding costof credit)***Overdraft or money market lines Money market line – margin of 0.45%
20
Overdraft – bank base rates plus 1%
BBC Worldwide Limited
Loan with European Investment
Bank (50% secured by lettersof credit)***European Investment Bank’s own
funding cost plus a margin of
0.09% on unsecured loans

50

Amountdrawn
down at
31 March
2007£mExpiry orreviewdate– June 2008
expiredMay 2007* The BBC overdraft facility has a temporary limit of £45million until 30 June 2008, thereafter reverting to £5million.
** The base rate used will vary according to the currency drawn. At 31 March 2008 £90.3million was drawn down in AUS$ and consequently linked to
BBSW rather than LIBOR. All other amounts drawn are in sterling and consequently linked to LIBOR.
*** Of this amount, up to £100million is available to issue letters of credit in favour of the European Investment Bank to support its lending under facilities
to the Group. At 31 March 2008, in addition to the drawings of £146million (2007: £40.0million), £25.6million (2007: £35.9million) was utilised by wayof letters of credit issued.

There have been no defaults or breaches of loan covenants during the year (2007: none).

BBC Annual Report and Accounts 2007/08

137
24 CoMMiTMEnTS

24a Contracts placed for future expenditure

Group
2008
£m

Fixed asset additions
Programme acquisitions and sports rights
Independent programmes

UK Public
Service
Group Broadcasting
2007
2008
£m
£m

UK Public
Service
Broadcasting
2007
£m

65.2
1,333.7
112.3

50.0
994.1
112.1

44.0
1,272.8
97.8

40.4
939.0
101.5

1,511.2

1,156.2

1,414.6

1,080.924b operating leases

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

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

Land andbuildings
2008£mLand andbuildings
2007
£m

Other
2008
£m

Other
2007*
£m

2.1
21.4
92.2

3.0
15.5
58.6

1.2
9.0
7.8

2.4
13.0
3.8

115.7

77.1

18.0

19.2

1.6
11.9
91.3

2.1
12.6
57.5

0.4
3.3
7.8

0.8
7.4
3.8

104.8

72.2

11.5

12.0

* The comparative data for other operating lease commitments has been revised from £57.5million to £19.2million as a result of a review of leasingarrangements.

24c other financial commitments

In the ordinary course of business the BBC enters into a large number of contracts with artists and writers and with
providers of other services including licence fee collection, IT maintenance and support and channel distribution.

25 ConTingEnT ASSETS And liABiliTiESAt 31 March 2008 the Group had contingent liabilities estimated to be £1.3million (2007: £1.3million) in respect ofguarantees and indemnities.
The Group has a number of contingent liabilities arising from litigation. The BBC makes specific provision (see Note17) for its best estimate of any damages and costs which may be awarded. Provision is only made to the extent
that the Group considers it probable that there will be an outflow of economic benefits and the amount can bereliably estimated.

26 PoST BAlAnCE S hEET E vEnTS

On 1 April 2008, a property which had a net book value of £2.1million was sold for £18million.
Also on 1 April 2008, BBC Resources Limited sold its Outside Broadcasts business to SIS Outside Broadcasts
Limited, part of the SIS Group for a consideration of £19.3million.

An operating lease is alease where the lessee has nottaken on the risks and rewardsof owning and operating theasset. The lessee (the BBC)is hiring rather than buying
an asset.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
138
27 RElATEd PARTy TRAnSACTionS

The related party transactions of the Group have been presented in accordance with FRS 8 ‘Related party
disclosures’. In accordance with FRS 8 the BBC has not disclosed transactions between Group entities thathave been eliminated on consolidation.
In all transactions, the terms of trade were negotiated on an arm’s length basis.
27a Transactions with joint ventures and associated undertakings
Income from joint ventures
and associated undertakings

Nature of services provided

2008
£m

2007
£m

UKTV
JV Programmes LLC
2 entertain Limited
Daunus Limited
BBC Haymarket Exhibitions Limited
Frontline Limited
Other

Sale of programmes and management fees
Sale of programmes
Licensing of programmes and other commissions
Reimbursement of Broadcasting House development costs
Management fees
Management fees
Various

41.3
31.9
17.9
5.1
0.2
0.3
5.7

38.1
38.9
9.2
9.9
0.2
–
6.3

Dividends from joint ventures
and associated undertakings

2008
£m

2007
£m

UKTV
2 entertain Limited
Frontline Limited

6.7
42.3
0.2

4.5
17.6
0.3

Charges payable to joint ventures
and associated undertakings

Nature of services received

2008
£m

2007
£m

Insight Property Partnership and theWhite City Development Partnership
Daunus Limited
Frontline Limited
Woodlane Partnership
JV Programmes LLC
2 entertain Limited
DTV Services Limited
Parliamentary Broadcast Unit Limited
Freesat UK Limited
Other

Property services
Rent
Distribution of BBC Worldwide’s magazines
Property services
Marketing services
Commissions on distribution of children’s DVDs
Marketing services
Purchase of broadcast licences
Written off in respect of funding contribution
Various

–
17.3
2.2
0.3
1.4
1.1
1.4
0.4
3.4
4.0

22.9
16.6
2.1
0.3
1.7
0.1
1.2
0.4
–
–

Note 29 provides details of the other partners in the BBC’s joint ventures.
Amounts owed by/to joint ventures and associated undertakings at the year end are disclosed within Notes 15
and 16.

BBC Annual Report and Accounts 2007/08

139

27b other transactions

The BBC’s related parties, as defined by FRS 8, the nature of the relationship and the extent of the transactions
with them are summarised below. In the normal course of business the BBC transacts with other parties which
are related to it by virtue of its senior employees being married or closely related to employees of the BBC or
individuals who own or are employed at other media, production and broadcasting companies. The BBC has set
procedures for dealing with situations to avoid any conflict of interest. Where transactions have arisen between
connected parties, the BBC Trustee or employee is not a party to the approval process.
27b i Trustees

During the year, Diane Coyle and Richard Tait had close family members who were employed by the BBC.
Their remuneration was based on the BBC’s standard terms and conditions applicable to other staff employedin similar capacities.
27b ii Members of the Executive Board and other senior management

Menna Richards is Controller of BBC Wales. Her sister has a controlling interest in Torpedo Limited. The BBC
made payments on contracts to the value of £320,774 (2007: £360,551) with Torpedo Limited for the provisionof independent radio and television programmes in the year. These amounts had been paid in full by 31 March 2008(2007: paid in full). Also the BBC entered into artists’ contracts worth £53,263 (2007: £54,867) with her husband
Patrick Hannan, with £1,032 outstanding at 31 March 2008 (2007: paid in full).
Juniper Communications Limited is co-owned by BBC non-executive Director Samir Shah (70%), his wife Belkis
Shah (20%) and the husband of Jana Bennett (Director, BBC Vision) Richard Clemmow (10%). During the year
Juniper Communications Limited had transactions with the BBC to the value of £946,693 (2007: £623,881).
These amounts had been paid in full by 31 March 2008 (2007: £68,000 outstanding at 31 March 2007).
During the year, Jenny Abramsky (Director, Audio & Music), Anne Gilchrist (Creative Director, CBBC), Jane Tranter(Controller, Fiction), Janice Hadlow (Controller BBC Four) and Mark Tugwell (Director of Outside Broadcasts) had
close family members who were employed by the BBC. Their remuneration was based on the BBC’s standard
terms and conditions applicable to other staff employed in similar capacities.
27b iii governors

Under the Royal Charter which came into force on 1 January 2007, the Board of Governors was replaced by the
BBC Trust. Therefore there are no transactions in the current year relating to Governors. Prior year comparatives
are as follows:
Deborah Bull is sole Director of Deborah Bull Limited. Deborah Bull Limited received payments totalling £5,258
for the period to 31 December 2006 for contributions to various BBC programmes. No amounts were outstandingat 31 March 2007.
Michael Grade was non-executive Chairman of Pinewood Shepperton up to 27 November 2006 and during thisperiod the BBC paid £2,217,956 to Pinewood Shepperton for the use of studios and related facilities. No amounts
were outstanding at 31 March 2007.

Related parties include BBC
Trust members, the Executive
Board and other senior
managers, their immediatefamilies and external entities
controlled by them.
Transactions between the BBC
and those related parties are
explained in this note.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
140
28 uk PuBliC SERviCES E xPEndiTuRE By SERviCE

The following tables show the BBC’s Public Service Broadcasting expenditure analysed both by service licence andby type of expenditure.
Service licences are used by the BBC Trust to monitor that each BBC service creates public value by delivering theBBC’s Public Purposes. In the year there were 27 service licences in operation, including the BBC High Definition(HDTV) licence which is new for 2008. BBC jam, which had its own licence, was suspended in March 2007.
The new service licence framework came into effect from 1 January 2007 and this year has marked the first full yearof its operation. During the year the accounting for service licences has been reviewed and enhanced, and updated
service licence baseline budgets have been agreed with the BBC Trust.
Our financial reporting includes analysis of the cost of each of the BBC’s service licences, defined as direct
programme costs and other programme related expenditure. Each licence has a 10% tolerance either way fromthe funding level agreed with the BBC Trust to allow the BBC flexibility in its commissioning decisions.
In the course of 2007/08, ten service licences have exceeded this tolerance level, as follows:* bbc.co.uk, reflecting additional investment in the creation of online content as a result of the initial implementationof the Delivering Creative Future strategy and the move to commissioning of more non-linear content,* HDTV, where significant savings have been achieved in contractual negotiations,* Radio 5 live, due to significant savings from refining the allocation of newsgathering costs and the relatively low
level of significant sporting events in the year, and* Seven further services (Radio 1Xtra, BBC 6 Music and the five Nations’ radio licences) where the licence budgets
were exceeded due to the refinement of the methodology for accounting for central production costs resulting inchanged allocations.

BBC Annual Report and Accounts 2007/08

141

2008 Service

Note

Content(i)£m

Distribution Infrastructure/(ii)
support
£m
£m

Other
items
£m

Total
£m

1,126.2
439.7
96.5
47.7
3.4
36.0
16.3
45.7
2.4
20.4

45.4
29.5
3.1
2.0
2.6
2.4
2.3
4.4
2.9
10.2

246.6
98.7
25.6
15.1
0.7
10.3
4.7
7.9
0.5
6.1

–
–
–
–
–
–
–
–
–
–

1,418.2
567.9
125.2
64.8
6.7
48.7
23.3
58.0
5.8
36.7

1,834.3

104.8

416.2

–

2,355.3

31.5
39.5
37.4
81.2
55.2
2.5
6.7
5.6
5.5
10.1
109.0
29.5
4.7
13.6
12.7
15.2

4.2
4.5
4.7
10.0
6.6
0.3
0.6
0.5
0.4
0.8
6.0
2.9
1.2
1.3
1.7
1.5

7.4
7.3
7.3
14.3
10.5
0.5
2.0
1.4
1.4
2.1
21.5
6.1
1.0
2.6
2.4
3.5

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

43.1
51.3
49.4
105.5
72.3
3.3
9.3
7.5
7.3
13.0
136.5
38.5
6.9
17.5
16.8
20.2

Radio

459.9

47.2

91.3

–

598.4

bbc.co.uk

113.9

15.4

52.7

–

182.0

BBC One
BBC Two
BBC Three
BBC Four
BBC HDTV
CBBC
CBeebies
BBC News
BBC Parliament
BBCi

iv

Television
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 5 live
BBC Radio 5 live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foylev

vi

OnlineSpend regulated by service
Licence fee collection costs
Orchestras and performing groups
S4C
BBC jamDevelopment spend
DAB digital radio
Digital text

v
vii
viii

Other
Exceptional restructuring costsix

Total UK Public Services expenditure
Digital UK Limited expenditure
Digital switchover ring-fenced expenditure
Total

x
x

113.9

15.4

52.7

–

182.0

2,408.1

167.4

560.2

–

3,135.7

–
16.2
27.5
2.5
31.3
–
–

–
–
–
–
–
9.6
8.7

–
3.1
5.2
0.5
6.0
–
–

123.2
–
–
–
–
–
–

123.2
19.3
32.7
3.0
37.3
9.6
8.7

77.5

18.3

14.8

123.2

233.8

–

–

–

117.6

117.6

2,485.6

185.7

575.0

240.8

3,487.1

–
–

–
–

–
–

21.2
5.9

21.2
5.9

2,485.6

185.7

575.0

267.9

3,514.2

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
142

2007 Service

Content£m

Distribution£m

Infrastructure/
support
£m

Other
items
£m

Total
£m

BBC One
BBC Two
BBC Three
BBC Four
CBBC
CBeebies
BBC News
BBC ParliamentBBCi

1,143.4
433.1
92.9
49.8
39.1
14.0
42.9
2.1
19.6

45.0
26.2
2.4
2.0
2.2
2.1
4.2
3.4
11.6

223.3
92.7
23.7
15.2
11.0
4.4
7.9
0.4
4.5

–
–
–
–
–
–
–
–
–

1,411.7
552.0
119.0
67.0
52.3
20.5
55.0
5.9
35.7

Television

1,836.9

99.1

383.1

–

2,319.1

BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio 5 live
BBC Radio 5 live Sports Extra
1Xtra
BBC 6 MusicBBC 7
BBC Asian Network
BBC Local RadioBBC Radio Scotland
BBC Radio nan Gàidheal
BBC Radio Wales
BBC Radio Cymru
BBC Radio Ulster/BBC Radio Foyle

30.8
38.1
33.9
81.0
56.3
2.4
6.4
5.4
5.1
8.9
103.5
22.6
3.2
11.7
10.7
12.6

3.9
4.2
4.2
9.3
6.0
0.3
0.5
0.5
0.5
0.7
4.7
2.8
1.1
1.2
1.6
1.1

8.1
7.8
6.6
14.7
10.9
0.5
2.1
1.4
1.4
2.0
21.1
4.3
0.6
2.4
2.3
2.2

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

42.8
50.1
44.7
105.0
73.2
3.2
9.0
7.3
7.0
11.6
129.3
29.7
4.9
15.3
14.6
15.9

Radio

432.6

42.6

88.4

–

563.6

bbc.co.uk
BBC jam

83.2
31.8

8.8
–

24.0
5.9

–
–

116.0
37.7

Online

115.0

8.8

29.9

–

153.7

Spend regulated by service licence

2,384.5

150.5

501.4

–

3,036.4

Licence fee collection costs
Orchestras and performing groups
S4C
Development spend
DAB digital radio
Digital text

–
18.8
20.8
32.0
–
–

–
–
–
–
8.7
5.5

–
3.3
3.8
5.6
0.2
2.2

134.1
–
–
–
–
–

134.1
22.1
24.6
37.6
8.9
7.7

Other

71.6

14.2

15.1

134.1

235.0

–

–

–

44.3

44.3

2,456.1

164.7

516.5

178.4

3,315.7

–
–

–
–

–
–

11.6
–

11.6
–

2,456.1

164.7

516.5

190.0

3,327.3

Exceptional restructuring costs
Total UK Public Services expenditure
Digital UK Limited expenditure
Digital switchover ring-fenced expenditure
Total

BBC Annual Report and Accounts 2007/08

143

Infrastructure/support costs
Marketing, press and publicity
On-air trailsMarket research and consumer services
Libraries, learning support and community events
Additional pension payment
Overheads (excluding restructuring)
Other change costs

Note

xi
iii

2008
£m

2007
£m

41.6
22.1
14.6
55.5
20.0
421.2
–

45.4
22.2
14.3
49.9
–
367.6
17.1

575.0

516.5

(i) Content costs are made up of the direct costs of making programmes. These include newsgathering costsof £98.9million (2007: £86.9million) which are allocated across all relevant services.
(ii) The cost of distribution represents the transmission and carriage of the BBC’s UK Public Services (television,
radio and interactive) on digital and analogue broadcast platforms – this includes analogue television, Digital
Terrestrial Television (DTT), satellite, cable, broadband, analogue radio and DAB digital radio. Of the distribution
costs, £81.8million relates to analogue services (2007: £74.8million) and £103.9million to digital services (2007:£89.9million).
(iii) Overheads represent expenditure on the BBC’s central non-content functions, for example the Director­
General’s office, BBC People, BBC Finance, Policy and Legal departments. Spend incorporates accommodation andstaff costs relating to those functions. The proportion of these costs which are directly attributable to programmemaking are included within total programme spend, whilst costs of services provided across the BBC as a whole ormanaged at a corporate level (for example marketing, press and publicity) are shown as overhead spend.
(iv) Included within BBC News (formerly known as BBC News 24), content costs are production costs of£25.7million, newsgathering costs of £19.5million and other costs of £0.5million (2007: production costs of£24.3million, newsgathering costs of £18.1million and other costs of £0.5million).
(v) The cost of transmission of the Proms is now included in Radio 3 whereas last year it was included in the costs
for Orchestras and Performing Groups.
(vi) The service licence for BBC Local Radio covers all of the individual stations in England.
(vii) The BBC is required to provide Welsh language programming to S4C (the Welsh language channel). The
increased spend on S4C is additional funding for the S4C strategic partnership agreement as part of the 2007
licence fee settlement.
(viii) Development spend is not regulated by service licences and as such is separately identified. 2008 numbers
include costs on the development of new on-demand technology applications and investment in digital
media systems.
(ix) Exceptional restructuring costs relate to the Value for Money and Continuous Improvement programmes
occurring within UK Public Service Broadcasting (see Note 4c).
(x) Under the terms of the current licence fee settlement, a proportion of licence fee income is set aside to help
pay for wider industry costs relating to digital switchover. This includes a marketing and awareness campaign run by
Digital UK Limited and the Digital Switchover Help Scheme administered by DSHS Limited. See Notes 2b and 2d
for details of this expenditure.
(xi) See Note 8 for a full explanation of pension costs.

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
144
29 inTERESTS in joinT vEnTuRES, ASSoCiATES And SuBSidiARiES

29a Significant joint ventures and their activities

The Group has a 50% equity interest in the following joint ventures which are all incorporated in Great Britain andregistered in England and Wales, unless otherwise stated:
Name of entity

Joint ventures are businesses
the BBC jointly controls withother parties.

Commercial joint ventures:
2 entertain Limited*
UK Gold Holdings Limited
UK Gold Services Limited
UK Channel Management Limited
UKTV New Ventures Limited
UKTV Interactive Limited
JV Programmes LLC**
BBC Haymarket Exhibitions Limited
Worldwide Media Limited***
Dovetail Services (UK) Holdings Limited
Ragdoll Worldwide Holdings Limited
Ragdoll Developments Limited
UK VoD LLP****
Freehand International Pty Limited^

Activity

Accounting dateVideo/DVD
Channels
Channels
Channels
Channels
Channels
Channels
Publishing
Magazines
MagazinesIntellectual property rights
Intellectual property rights
Development
Independent Production

31 January 2008
31 March 2008
31 March 2008
31 March 2008
31 March 2008
31 March 2008
31 December 2007
31 December 2007
31 July 2007
31 March 2008
31 March 2008
31 March 2008

Joint ventures incorporated to act on behalf of UK Public Service Broadcasting:
DTV Services Limited^^Marketing
Insight Property Partnership
Property
Daunus Limited^^^
Property
Freesat (UK) Limited
Provision of free-to-air satellite
television service

31 March 2008

31 August 2007
31 March 2008
30 November 2007
31 March 2008*
60% equity interest.
** Incorporated in the USA.
*** Incorporated in India.
**** 33% equity interest. UK VoD LLP has a December year end, since it was set up in February 2008, results were equity accounted for the year
to 31 March 2008.
^
Incorporated in Australia and 25% equity interest.
^^ 20% equity holding.
^^^ 100% holding of ‘A’ class shares, representing 10% of the total issued shares of Daunus Limited. The rest of the shares in Daunus Limited are heldby the other partners. The BBC holds its investment in Daunus Limited through a subsidiary, BBC Property Development Limited.

BBC Annual Report and Accounts 2007/08

145

29b Significant associates and their activities

The Group holds (directly and indirectly) interests in the significant associates listed below which, except whereotherwise stated, are incorporated in Great Britain and registered in England and Wales. A full list of associates isavailable on request from the General Counsel and Secretary, BBC, Media Centre, 201 Wood Lane, London W12 7TQ.
Holding ofissuedordinaryshares%Activity

50
50
50
50
33
50
50
23

Channels
Channels
Channels
Channels
Channels
Channels
Channels
ChannelsCommercial associates:
Discovery associates:
People and Arts (Latin America) LLC (incorporated in the USA)
Animal Planet (Asia) LLC (incorporated in the USA)
The Animal Planet Europe Partnership
Animal Planet (Latin America) LLC (incorporated in the USA)
Animal Planet Japan KK (incorporated in Japan)
JV Network LLC (incorporated in the USA)
Animal Planet Japan LLP (incorporated in the USA)
Animal Planet Canada Company ULC (incorporated in Canada)
Other commercial associates:
Frontline Limited
OPL Holdings Limited
Origin Publishing Limited
UKTV Pty Limited (incorporated in Australia)
Jasper Broadcasting Inc (incorporated in Canada)
Jasper Junior Broadcasting Inc (incorporated in Canada)Children’s Character Books Limited
Woodlands Books Limited
Educational Publishers LLP
3sixtymedia Limited
Left Bank Pictures Limited
Cliffhanger Productions Limited

23
Publishing
39
Publishing
39
Publishing
20
Channels
20
Channels
20
Channels
25
Books
15
Books
15
Education
10
Production
25 Content & Production
25 Content & Production

Associates incorporated to act on behalf of UK Public Service Broadcasting:Parliamentary Broadcasting Unit Limited
Broadcasters Audience Research Board Limited (BARB)The Commonwealth Broadcasting Association
Radio Joint Audience Research Limited (RAJAR)
White City Development Partnership

50
*
*
50
**

Content provider
Audience research
Broadcasting forum
Audience research
Property* Broadcasters Audience Research Board Limited and The Commonwealth Broadcasting Association are companies limited by guarantee, of which the
BBC is a joint member with other broadcasters.
** 50% partnership share.

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

F I N A N C E ++ F I N A N C I A L S TAT E M E N T S
notes to the financial statements
146

29c Subsidiary undertakings
Subsidiary undertakings
are businesses the BBC
controls.

The principal subsidiary undertakings of the BBC at 31 March 2008 are listed below. All are wholly owned
and incorporated in Great Britain and registered in England and Wales, unless otherwise stated. A full list of
subsidiaries is available on request from the General Counsel and Secretary, BBC, Media Centre, 201 Wood Lane,
London W12 7TQ.
Name of entity

Commercial Subsidiaries:
BBC Commercial Holdings Limited
BBC Worldwide Limited
BBC World Limited
BBC Ventures Group Limited
BBC Resources Limited
Lonely Planet Pty Limited(incorporated in Australia)

Activity

*
**
**
**
**
**

Subsidiaries incorporated to act on behalf of UK Public Service Broadcasting:
BBC Free to View Limited*
BBC Property Limited*
BBC Property Development Limited*
BBC Property Investments Limited*
Centre House Productions Limited*
Digital UK Limited****DSHS Limited*
BBC Free to View (Satellite) Limited*

Holding company
Publishing, channels and programme distribution
Channels
Holding company
Programme making facilities and services
Travel guides publisher

Holding company for digital licence
Property
Property
Property
Production financing
Digital switchover
Digital switchover
Provision of a free to air satellite television service* Directly owned.
** Indirectly owned.
*** The BBC controls 56% of the voting rights of Digital UK Limited (previously known as Switchco Limited). Its results have been consolidated into theGroup accounts. Digital UK Limited is a company limited by guarantee of which the BBC is a joint member. The other members and their shareholdings
in Digital UK Limited are: ITV plc 11% , Channel Four Television Corporation 11% , Channel Five Broadcasting Limited 8.75% , National Grid Wireless
6.25% , SON Limited 3.5% , S4C 2.25% and Teletext Limited 1.25% .

BBC Annual Report and Accounts 2007/08

147
inTERnATionAl finAnCiAl REPoRTing STAndARdS REConCiliATion(this page does not form part of the financial statements)
The BBC’s Charter and Agreement requires the BBC to prepare its audited statement of accounts in accordancewith UK Generally Accepted Accounting Principles (UK GAAP).
Although not mandatory, until 2005 the BBC chose to follow the accounting and disclosure provisions of theCompanies Act 1985 and the Financial Services Authority Listing Rules to ensure that its financial statements wereprepared on a basis consistent with those of UK companies quoted on an EU-regulated market. Following changes
in company law, if it had continued to report in this way, the BBC would have prepared its consolidated financial
statements in accordance with EU-adopted International Financial Reporting Standards (IFRS) from 1 April 2005.
However, reporting under IFRS would be inconsistent with the BBC’s Charter and Agreement. Nevertheless,the BBC has continued to review the impact that adoption of IFRS would have on the Group accounts and haspresented a summary of the impact that adopting IFRS would have had on the financial statements, including an
adjustment of £18.5million to bring the prior year into line with developing interpretations of IFRS.
As at 31 March 2008 the BBC calculated that if it had adopted IFRS its net assets would be reduced by £198million
to £1,322million (2007: net assets would have reduced by £181million to £1,207million).
2008
£m

2007
as restated£m

Net assets as reported under UK accounting standards
Lease reclassification
Goodwill adjustments
Employee benefits
Deferred tax
Other1,519.2(196.5)
10.9(16.5)
0.3
4.3

1,388.3(175.9)6.7(11.9)(0.7)
0.4

Net assets as they would be reported under IFRS

1,321.7

1,206.9

Some of the IFRS accounting changes, principally the reclassification of certain operating leases as finance leases,
would have an effect on the calculation of Public Service Broadcasting borrowings as defined by the DCMS
borrowing ceiling. The Public Service Borrowing ceiling of £200million is set by the Secretary of State in accordancewith the Agreement between the BBC and DCMS and is determined by reference to UK GAAP not IFRS. PublicService borrowings under IFRS would have been £761million, compared with net funds of £17million under UK
GAAP (2007: Public Service borrowings under IFRS would have been £640million, compared with net funds of£102million under UK GAAP). The Agreement definition of borrowings is based on UK accounting standards
effective in July 2006.
For the year ended 31 March 2008 the BBC calculated that if it had adopted IFRS the surplus for the year would be
reduced by £21million to a surplus of £81million (2007: the surplus for the year would have been reduced by£46million to a surplus of £15million).
2008
£m

2007
as restated£mSurplus as reported under UK accounting standards
Lease reclassification
Goodwill adjustments
Other

101.7
(20.7)
(0.1)
0.3

60.7
(50.2)
3.6
0.4

Surplus as it would be reported under IFRS

81.2

14.5

A more detailed reconciliation between the BBC’s results and financial position under UK accounting standards andwhat would have been reported if IFRS had been adopted, along with further details of the adjustments, including
the IFRS accounting policies and significant assumptions made in implementing those policies (such as the date oftransition to the IFRS accounting policies) are available on the BBC’s website at bbc.co.uk/annualreport/executive.

G E T T I N G I N TO U C H W I T H T H E B B C

148

BBC Information
If you have a question or comment
about BBC programmes or services,
you can contact BBC Information.
Write to:
BBC Information
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Telephone: 03700 100 222*
(24 hours a day, seven days a week)
Textphone: 03700 100 212
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Or you can contact the Office ofCommunications (Ofcom), an
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Write to:
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help the BBC Trust to understand theneeds, interests and concerns ofaudiences throughout the UK, andto identify ways in which the BBC
can better serve its audiences.
If you want to contact the Audience
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the addresses below:
Head of Governance andAccountability Scotland
BBC Audience Council Scotland
Zone G.11
40 Pacific Quay
Glasgow G51 1DA
Head of Governance andAccountability Wales
BBC Audience Council Wales
Room E5108
BBC Broadcasting House
Llandaff
Cardiff CF5 2YQHead of Governance andAccountability Northern Ireland
BBC Audience Council
Northern Ireland
BBC Broadcasting House
Ormeau Avenue
Belfast BT2 8HQHead of Governance andAccountability England
BBC Audience Council England
BBC Birmingham
The Mailbox
Birmingham B1 1RF

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The BBC runs tours of BBC Television
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Telephone: 0370 603 0304*
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Email: bbctours@bbc.co.uk
Website: bbc.co.uk/tours
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For products and sales information
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Write to:
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Media Village
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Email: work.experience@bbc.co.uk
Website:bbc.co.uk/jobs/workexperience
To find out about job vacancies
at the BBC
Write to:
BBC Recruitment
PO Box 48305
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Telephone: 0370 333 1330*(9.30am–5.30pm Monday–Friday)
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Telephone: 0844 800 5870
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This BBC Annual Report andAccounts is available in public
libraries throughout the UK andonline at www.bbc.co.uk/annualreport
It is also available in Welsh, in an audio
version and in Braille. Annual Reviews
for BBC Scotland, BBC Wales, BBC
Northern Ireland, BBC English Regions
and the BBC World Service arealso published.
The BBC also publishes online its
Statements of Programme Policy
which sets out the BBC’scommitments and plans for the year
ahead. This is available on the BBC’s
website at bbc.co.uk/info/
statements2008.
* Calls to this number may be monitoredor recorded for training purposes.
0370 numbers are called ‘UK wide’
and cost no more than calls to 01 or
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OT H E R I N F O R M AT I O NCover photographs and those on pages 4–23,
28 and pages 55–67 were taken by Mike Abrahams.
The photograph on page 11 was taken by Leila
Angus © BBC.
The cover illustrates just some of the people
and activities that help deliver great programmes
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Row 1 L-R:
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Andrew Hawes gives a live football commentaryon BBC Southern Counties Radio
Chris Evans staging his daily Radio 2 drivetime
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Row 2 L-R:
Political Editor Nick Robinson watches Prime
Minister’s Question Time as he prepares fora live broadcast
Principal Cello Susan Monks rehearses withthe rest of the BBC Symphony Orchestra andthe Symphony Chorus.

Designed and produced by Sheppard Day
Corporate (part of the 35 Group)

Gabby Logan presents Inside Sport, a weeklyround-up of sports news on BBC One and
BBC World News, and which is also distributed
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Row 3 L-R:
Julia Bradbury runs through her script for
BBC One’s Watchdog
Trevor Nelson with Zena kickstart the day for
their 1Xtra audience with a mix of music, celebrity
gossip and interviews
EastEnders 1st Assistant Director Philip Lewis
considers the options for a scene in Walford’s
Albert SquareRow 4:
Adrian Chiles, hot foot from The One Show on
BBC One, rehearses for The Apprentice: You’re Fired!
on BBC Two

The BBC is required under the terms of its
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and responsibilities of the two bodies. Together
the two parts make up the BBC’s review andassessment of its year.

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