Annual Reportand Accounts

2004/2005

Purpose, visionand values
PurposeOur purpose is to enrich people’s lives with programmes
and services that inform, educate and entertain
VisionOur vision is to be the most creative organisation in
the world
Values■ Trust is the foundation of the BBC: we are independent,

impartial and honest■ Audiences are at the heart of everything we do■ We take pride in delivering quality and value for money■ Creativity is the lifeblood of our organisation■ We respect each other and celebrate our diversity

so that everyone can give their best
■ We are one BBC: great things happen when we

work together

Contents
02

54

04

58

Chairman’s statement
Director-General’sreport06

How the BBC is run

Building public value
Being accountable
and responsible

66

08

Governors’ review ofcommercial activities

10

68

Board of Governors
Executive Board

12

Governors’ review
of objectives

20

The BBC at a glance

Performance against
Statements ofProgramme Policy
commitments
2004/2005

78

Compliance
Governors’ review
of services

22

Television

30

Radio

38

94

Financial review

96

Financial statements

136

New Media

Broadcasting facts
and figures

42

147

News

46

BBC World Service& Global News

Getting in touchwith the BBC

148

Other information

50

Nations & Regions

BBC Annual Report and Accounts 2004/2005

1

Chairman’sstatement

As we approach the end of the current
BBC Royal Charter at the end of 2006,
the plans to replace it are becoming
clearer.The Government’s Green Paper
set out the new framework and paved
the way for a White Paper later this year.
We put forward our own vision for the
future of the BBC in Building public value,
and we have also published a comprehensive
response to the Green Paper.
On behalf of the licence fee payers theBoard is pleased by the decision to
grant a new Charter for a further ten
years and to maintain funding via a licencefee – although we have made clear our
opposition to any suggestion that thelicence fee might be fragmented to fundother broadcasters. At a time whenGovernment – and we as Governors –are seeking greater accountability tolicence fee payers, ‘top slicing’ of the feeruns counter to this objective.
Our task now is to ensure a smoothtransition to the new governance systemannounced in the Green Paper, in which theBoard of Governors will be replaced by a
BBC Trust.
As BBC Governors, we had made it clearthat radical change to the governanceof the BBC was both necessary andoverdue. In particular we wanted muchclearer separation between Governors andmanagement.We set up a Governance Unit
to provide us with analysis and advice
independent from management (for moredetails, see How the BBC is run on page 7).
We also approved big changes to the BBC’s
accountability mechanisms – an area where
we plan further reform.
In an ideal world we would have liked tohave been given the time to demonstratethat our own reforms were effective. Buttime was against us. We were, however,2

BBC Annual Report and Accounts 2004/2005

clear about the principles underlying any
new governance arrangements:
independence; rigorous stewardship of
public money; accountability to licence fee
payers; clarity of roles; and practicality.The
Government’s plans for a BBC Trust meetthese five principles, and we accept them.
The key issue ahead is how to make theBBC more responsive and accountable
to the licence fee payers who own andfund it. Changes already in place include
a Governors’ website, and an annual general
meeting to discuss the issues raised in thisreport with licence fee payers.This is only
the beginning. Future plans include regular‘question times’ with Governors, regularresearch tracking of public attitudes to theBBC, and more consultation with the
Broadcasting Councils and the English
National Forum on our strategic plans.
We have also worked hard to ensure,
on behalf of licence fee payers, that the
BBC lives up to the highest standards, both
editorially and fiscally. Ensuring the BBC
delivers value for money is always a priority
and we asked the accountants Ernst & Young
to review the BBC’s system of financial
controls. As a result some areas were
strengthened. Our decision to ask an
independent panel of experts to examine
the impartiality of BBC coverage of theEuropean Union resulted in changes to theorganisation and training of BBC journalists.
Impartiality is the cornerstone of the BBC’s
editorial mission and we will conduct
further reviews of this crucial area. We
are pleased that the Director-Generalis responding to audience expectations
with his new Creative Future programme
strategy review to address a wide rangeof editorial issues. Our own researchwith audiences has highlighted concerns
about quality issues and we have taken
account of this in setting our objectives
for management in the coming year(see Governors’ objectives for 2005/2006,
page 19).This work is already bearing fruitin new investment in comedy and drama
and in moves to reduce the volume of
repeats in peak time on BBC One.

would carry little or no weight. As guardiansof the public interest we must be as
sensitive to the concerns raised by a single
complainant as to those raised by wellorganised campaigns.

The responsibility of representing licencefee payers’ interests also includes making
clear when we believe the BBC is getting
things right.The BBC remains one of themost successful creative institutions in theworld and it is a matter of great pride forevery Governor that we are able tocontribute to its creative success in an
increasingly competitive world.

The Freedom of Information (FOI) Act
came into force in January and theGovernors are fully committed to meeting
both the spirit and the letter of the Act.
We have made it clear that we want topublish the maximum amount of information
without, as the Act says, “prejudicing theeffective conduct of public affairs”.

Given the inevitable distractions of thisperiod of intense scrutiny, I’m happy toreport that the Corporation has continued
making many fine programmes. It is unfair
to pick out specific programmes but thecoverage of the Asian tsunami and of the
Olympics on radio, television and online
showed the scope and ambition the BBC
can bring to bear on the reporting ofmajor events.
The most contentious programme the BBC
broadcast was undoubtedly Jerry Springer –the Opera. BBC Governors are not, andnever should be, pre-transmission censors.
Before broadcast, I sought assurances fromthe Director-General that he had satisfied
himself that the programme complied withall the relevant codes of practice – I was
given those assurances. After broadcast,
the Governors’ Programmes Complaints
Committee dealt with the complaints.
The Committee was not unanimous – but
the clear majority agreed that, despite theoffence caused to some viewers, thearguments for broadcast were sound. Somesay we should have taken more note of the
exceptionally large number of complaints
received, but in my view the number ofcomplaints is not the central issue. If it
were, it would mean that a single complaint

The Board has approved importantchanges to the governance of the BBC’scommercial activities, to bring it intoline with the recommendations of the
Combined Code on good corporate
governance. A new board structure willbe created for BBC Worldwide.This willseparate the role of chief executive andchairman. An independent non-executive
chairman and non-executive directors will
be appointed.
This has been a period of great change
for the BBC. I would like to take thisopportunity to thank those Governors
who have helped steer the organisation
through a difficult period and have now
concluded their work for the BBC:
Richard Ryder, Pauline Neville-Jones andRobert Smith all performed valuable
service. I would like to welcome aboard
Jeremy Peat, the new National Governor
for Scotland, Richard Tait and Anthony Salz,
the new Vice-Chairman.

and therefore more money for content.
We approved these plans because we
concluded, after rigorous analysis anddebate, that they are in licence fee payers’interests. We will ensure that during thisdifficult time staff are treated sensitively
and fairly.
This has also been a year of great sadness.
Two BBC journalists were shot dead whileon duty. Simon Cumbers was killed in Saudi
Arabia. Kate Peyton was killed in Somalia.
Neither was known to the public – Simona cameraman, Kate a producer – but they
were widely respected among their peers
and their shocking deaths left a profoundmark on their colleagues in BBC News.
They remind us that the professional
commitment of BBC journalists to reflect
the world back to the UK can sometimes
carry a great human cost.
BBC listeners lost John Peel too. John was,
simply, a truly original broadcaster. Whether
you knew him as the drolly passionate
Radio 1 DJ always opening your ears to
new sounds, or as the tactful interviewer
on Radio 4’s Home Truths gently revealing
the extraordinary lives of ordinary people,
or simply as the mildly exasperated
contributor to BBC Television’s Grumpy Old
Men, you knew you were in the company
of a man of honesty, integrity and humanity.
His audiences felt he respected them, andas the thousands of tributes sent to the
BBC after his death showed, they loved
him for it.

We appointed Mark Thompson as
Director-General in June 2004 following
an open and competitive process.
The year ahead brings further change.
The Director-General’s plans to reshape
the BBC will create greater efficiency
BBC Annual Report and Accounts 2004/2005

Michael Grade
Chairman
16 June 20053

Director-General’sreport“From the heart – may it go to the heart!”
As I write this, we are celebrating
Beethoven week at the BBC. Radio 3 isplaying every work he composed. We arewatching his life unfold on BBC Two in all
its tragedy and heroism.There are special
features on BBC Four, BBCi and the web.
Beethoven’s spirit and his hope for art andhumanity seem alive across our networks.
So it seems fitting to begin this brief reviewof the past year with the words he wrote
over the Kyrie of the Missa Solemnis.
Our best programmes are the ones thatcome from the heart.Those are the ones
which our audiences remember andtreasure, whether it is Blackpool (BBC One),
Little Britain (BBC Three and BBC One),
Auschwitz (BBC Two) or The Odyssey(Radio 4). Conviction and integrity are thequalities the public look for in our
broadcasters too, demonstrated by theteam who made The Ten O’Clock News theBafta news programme of the year, and thebrilliant presenters and commentators whoturned Euro 2004 and the Athens Olympics
into such landmarks.They look for warmthand wit as well, welcoming Johnnie Walker
back to Radio 2, laughing along with
Colin & Edith on Radio 1 or joining in
the conversation with Jonathan Ross onRadio 2 and BBC One.
Behind the scenes it was a year oftransition and change at the BBC. Drama,
comedy and entertainment on BBC One
all continued to grow creatively. Strictly
Dance Fever and Dr Who conspired tomake Saturday nights a must-see, while
Supervolcano was just one of the great
factual programmes on the channel.
BBC Two rediscovered its ambition withsuccesses ranging from The Long Firm to
Who Do You Think You Are? and offered two
brilliant examples of how to join reality

4

BBC Annual Report and Accounts 2004/2005

television and format documentary to
generate real public value – The Apprenticeand Dragons’ Den. Producers from aroundthe UK played a key role in this creative
growth, with an increasingly exciting mix ofprogramming coming from Scotland, Walesand Northern Ireland.
But it was also the year when our digital
television channels came of age. Our
children’s channels and BBC Four found
new audiences and new admirers, but BBC
Three’s progress stands out.The public now
rate it as the best channel in the UK for
new comedy: like Radio 4, it has becomea creative laboratory for developing thetalent and ideas that can create hits for
BBC One and BBC Two.This was also
the year when Casanova and Bodies madeaudiences notice stand-out drama on
BBC Three.
BBC Radio, whether aimed at local
audiences, listeners in Scotland, Walesor Northern Ireland, or the whole UKcontinued to set standards and breakrecords. Radio 1 turned a corner witha new schedule and a new creative
confidence from Chris Moyles at breakfast
to Zane Lowe and beyond.The Beat
Bullying campaign was just one of many
ways in which Radio 1 stretched itself and
its audience beyond music. New voices –from Mark Radcliffe to Dermot O’Leary
to Lulu – joined the UK’s most successful
line-up of presenters on Radio 2, and there
were new ideas too, like the Going Digitalmonth. In some remote parts of the world
Terry Wogan is worshipped as a god: athome he had to be content with a record
audience of over 8 million listeners.
Radio 3’s range of music continued tobroaden in what was also an exceptionallystrong year for drama and documentary.

And from the adaptation of In Search of
Lost Time to In Our Time to an arresting set
of Reith Lectures by Wole Soyinka, Radio 4
continued to deepen its bond with its
uniquely demanding – and uniquelycommitted – audience. As in television,
our new digital radio networks saw theirprofile and their listeners increase.
The year began in the aftermath of the
Gilligan-Kelly-Hutton affair. Some doubted
whether BBC journalism would ever regain
its confidence. In the event, our news teams
covered a crowded and challenging yearwith authority and flair.The deaths ofSimon Cumbers and Kate Peyton andthe severe wounding of Frank Gardner
reminded both us and our audiences ofthe enormous risks our journalists haveto take to bring us the news. But aroundthe globe – from Iraq to the Asian tsunami
to Darfur – the BBC was there not just toreport but to explain events to the public
here and around the world. Our continuous
news services, Radio Five Live and BBC
News 24, both had strong years as did
our news website and our global news
services. Investigative journalism was strong
especially on BBC One and Radio 4, andthere were moments of real originality
too: Adam Curtis’s series The Power ofNightmares on BBC Two and China Week
across our services, including a remarkable
Question Time from Shanghai.
These achievements are recognised in the
BBC Governors’ very fair assessment ofour performance in this report. But theyear will probably be most remembered
as the turning-point when the digital
revolution became unstoppable.
Freeview grew by more than 50%.
More households have digital television
than do not. A majority of homes also
have the internet. Mobile phones in the
UK now exceed the population.

Within this expanding universe, we saw
spectacular growth in the BBC’s digital
services. Our website grew to reach overhalf of all UK internet users, with nearly
2.5 billion page impressions in March. Useof our Radio Player has grown to morethan 9 million requests to listen on demandeach month. Nearly 9 million people used
the red button to enjoy the richness andrange of sports and analysis available during
the Athens Olympics. Everywhere ourdigital services seemed to grow in depth
and quality. Audiences no longer regard
them as marginal or experimental but aspart of the core offering they expect fromthe BBC week in, week out.
The digital revolution poses enormous but
exciting challenges for us as an organisation.
We set out our vision for the BBC’s placein the digital future in Building public value.
In early 2004 many raised doubts about
whether Britain would need a strong andindependent BBC after the present charter
period. By year’s end, the clarity of theBBC’s vision and our manifest willingness
to grapple with the challenges of reformand change helped create the climate fora Green Paper which sees the BBC at theheart of British broadcasting until 2016 –not preserved in aspic for old time’s
sake but as a leader in the building ofdigital Britain.

partners. A BBC which is more agile
and ready to adapt to the amazing paceof technological and audience change.
That means difficult and sometimes painful
choices, but we know we will succeed if
we put creativity first.
The digital future will require newtechnologies, new skills and new strategies.
But it will also need those aspirations andvalues which the BBC has nurtured since
its early days. As the best programmesof the past year show, real success for
the BBC is never just about the head.
It’s about the heart as well.

Mark Thompson
Director-General
16 June 2005

The charter debate will continue through2005 and 2006. But in a sense the bigger
task is to turn the promises of Building
public value into reality. We want to createa BBC ready for the fully digital world.
A BBC which puts as much of the licence
fee as possible into services for the public
and as little as possible into other costs.
A BBC which is more open to the outside
world – to our audiences, to independent
programme makers, to all our other

BBC Annual Report and Accounts 2004/2005

5

How theBBC is run

Licence fee payers
Licence fee payers are the bedrock of
the BBC. Including concessions, there are
24.7 million and their licence fees provide
the vast majority of the money the BBC
spends.The BBC regularly consults licencefee payers to ensure their views are taken
into account.
Parliament
Parliament decides the legal framework inwhich the BBC operates and sets the levelof the licence fee. It scrutinises BBC affairs
through debates on the floors of bothHouses and through select committee
hearings, where Governors and membersof BBC management are called to accountfor the BBC’s performance.The BBC also
provides secretarial support for the
All-Party Parliamentary BBC Group which
encourages debate and discussion within
and outside Parliament about the futureof public service broadcasting, with special
emphasis on the BBC.
The Royal Charter
The BBC is constitutionally establishedby a Royal Charter. An accompanying
Agreement recognises its editorial
independence and sets out its public
obligations in detail.The current Royal
Charter and Agreement date from 1996
and run to 2006.The Government hasannounced plans to renew the Charterfor a further ten years after that andto continue licence fee funding forthat period.

of the BBC.They will also be responsible for
ensuring delivery of the public purposes of
the BBC, defining the performance criteria
and measures against which the deliveryof those objectives will be judged, andholding the Executive Board to account for
its performance.
Under the current Charter, there are 12
BBC Governors, appointed by the Queenon advice from ministers in accordance with
Nolan principles that public appointments
should be made on merit. All are part-time.
They bring a broad range of experienceand expertise to the BBC Board.

Executive Board
The Director-General is the BBC’s chief
executive and editor-in-chief, in chargeof all day-to-day operations. He is
appointed by the Board of Governors.
The day-to-day management of the BBC
is handled by the Executive Board andthree sub-boards – the Creative Board,
the Journalism Board and the Commercial
Board.The Executive Board is chairedby the Director-General, to whom all
the divisional directors report.The
Executive Board answers to the Boardof Governors.

The national Governors for Scotland,
Wales, and Northern Ireland each chair
Broadcasting Councils; and the Governor
with special responsibility for the English
Regions chairs the English National Forum.
The views of people in the nations andregions on BBC programmes and services
are made known through these bodies.
The World Service Consultative Group
gives the Governors an independent
review of the range and quality of theoutput of BBC World Service and
BBC World.

The performance of each division is assessedby the Director-General and reported to theBoard of Governors.The BBC performanceyear runs from April, with annual objectives
agreed in March. Performance against these isreported by the Governors in the following
year’s Annual Report in July.

The separation of Governors frommanagement implemented in recent years,
is now underpinned by the Governance
Unit (see box).

BBC
The BBC’s 14 divisions produce orcommission all BBC output.There are ninebroadcasting divisions.They manage the BBC
networks and their programme commissioning
and production.These divisions are:■ Television■ Radio & Music■ News■ Nations & Regions■ Sport■ Factual & Learning■ Drama, Entertainment & CBBC■ New Media & Technology■ Global News (including BBC World
Service and BBC World)

BBC Governors
The Government has announced plansto change the system of BBC governanceunder the new Charter.The Board ofGovernors will be replaced by a new body
called the BBC Trust. BBC Trustees will be
responsible for embodying the public
interest, reflecting the views of licence fee
payers, and safeguarding the independence

Ofcom, the communications regulator,
regulates some aspects of the BBC.
For example, the BBC follows Ofcom’s
standards and fairness codes (except fordue accuracy and impartiality which remain
the sole concern of the Governors). It mustcomply with Ofcom quotas for various typesof public service television content – forexample, that a proportion of programmes
must be made outside the M25. However,
Ofcom, unlike the Governors, plays no rolein the actual operations of the BBC.

6

BBC Annual Report and Accounts 2004/2005

Under the Government’s plans for the new
BBC Charter, the Executive Board will
be reconstituted and strengthened by theappointment of a significant minority of
non-executive directors.

In addition, there are five divisions providing
professional support:■ BBC People■ Finance■ Marketing, Communications & Audiences■ Policy, Strategy, Legal & Distribution■ Property & Business Affairs
The BBC’s commercial subsidiaries – whichsell goods and services around the world
to maximise licence fee investment – areheld under an umbrella company, BBC
Commercial Holdings Limited:■ BBC Worldwide Limited■ BBC Resources Limited■ BBC Broadcast Limited■ BBC World Limited
The profits they produce are returned to the
BBC for investment in programme making.
Television, radio, online
Across the UK, the BBC operates eight
television channels and ten radio networks,
46 local and national radio stations, and theonline site bbc.co.uk.
Internationally, BBC World Service
broadcasts on radio in 43 languages; BBCWorld delivers a global television news
service; and the online site bbcnews.com
offers international news and audio.
BBC Worldwide also operates commercial
television channels in international markets
including six BBC branded channels.These
services are not supported by the licencefee but are paid for either by Grant-in-Aid
from the Government or by advertising.

BBC Governance Unit
The Board of Governors is supported
in its more independent role by aGovernance Unit. Its director isappointed by the Board of Governors
and the Unit’s staff are outside theBBC management chain and reportto the Board.This ensures they cangive independent and objective advice
drawing on expert external assistance
where needed.The Governance Unit
underpins the clear separation
between the responsibilities of
the Governors and those of the
Executive Board.
The Unit is structured to provide
support for the Governors’ enhanced
roles in three key areas:■

Performance (setting and reviewing
objectives and statements ofprogramme policy, and developing
service licences and the public
value test)■

Value for money/compliance(financial, commercial andeconomic issues)■

Accountability (Governor
accountability work; support for
Broadcasting Councils and English
National Forum; complaints)

In addition the Unit calls on external
advisers for specific projects; forexample the market research company
MORI carried out focus-groupresearch for the European Union
impartiality study; PA Consulting andthe accountants Ernst & Young haveprovided financial consulting services;and past and present programme
makers gave expert insight during
the television current affairs review.
The Governance Unit formallycame into being on 10 January 2005.
It has a staff of 33 of which 14 posts
were newly created in addition to 19
transferred from the secretariat that
previously supported both theGovernors and the Director-Generaland his executive team. In 2004/2005,
the total cost of the Governance
Unit (including governance and othercentral costs associated with its
predecessor department, Governance& Accountability) was £8.4million.
This included the cost of the nationaland regional advisory councils(£1.2million).
The Governance Unit’s budget for
2005/2006 has been set at a similarlevel. Costs for 2005/2006 will
be reported in next year’s Annual
Report and Accounts.

In addition to broadcast and online
services, the BBC works in the community
in many different ways including through
BBC Children in Need which raises large
sums to help disadvantaged children in
the UK.

BBC Annual Report and Accounts 2004/2005

7

Board ofGovernors
The BBC Governors, led by the Chairman of the BBC, arethe trustees of the public interest.They hold management
to account and ensure the BBC’s independence.They areappointed by the Queen on advice from ministers inaccordance with Nolan principles that public appointments
are made on merit. The Governors are accountable tolicence fee payers and Parliament. Under the planned new
BBC Charter, in 2007 the Governors will be replaced bya new body called the BBC Trust.

8

BBC Annual Report and Accounts 2004/2005

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1 Michael Grade CBE
Chairman
BBC Chairman since May 2004. Chairmanof Pinewood Shepperton and Chairmanof Hemscott Group both since 2000,
Director of Charlton Athletic FC since1997. Former journalist and theatricalagent. At LWT from 1973 to 1981, latterlyas Director of Programmes; President,
Embassy Television in Hollywood from1981 to 1984; at the BBC from 1984
to 1987, latterly as Managing Directorof Television Designate; Chief Executive,
Channel 4 from 1988 to 1997; at First
Leisure Corporation from 1997 to 2000,
latterly as Chief Executive; Chairman,
Camelot from 2002 to 2004; Director,
SMG from 2003 to 2004; at The TelevisionCorporation, latterly as interim Chairman
from 2003 to 2004. Broadcasting Press
Guild Harvey Lee Award for outstanding
contribution to broadcasting 1997. Fellowof the RTS and BAFTA, and Vice-Presidentof BAFTA since June 2004. Born in 1943.
2 Anthony Salz
Vice-Chairman
Vice-Chairman since August 2004. Chairmanof the Fair Trading Compliance Committee;
Chairman of the Remuneration Committee
and member of the Finance and General
Purposes Committee. Co-senior partner ofthe law firm Freshfields Bruckhaus Deringer,
specialising in corporate law and specificallyin cross-border M&A and joint ventures.
Chairman of the Tate Gallery’s Corporate
Advisory Group from 1997 to 2002
(continuing as a member of that group)
and a trustee of the Tate Foundation.
Trustee of the Eden Project; a memberof Business in the Community’s Business
Action on Homelessness Executive Forumand its Education Leadership Team.
A director of Habitat for Humanity GB.
Trustee of the Paul Hamlyn Foundation.
Born in 1950.
3 Deborah Bull CBE
BBC Governor since August 2003. Memberof the Governors’ Programme Complaints
Committee and the Remuneration
Committee. Principal Dancer, Royal Balletfrom 1991 to 2001. Director, Artists’Development Initiative, Royal Opera House
from 1999 to 2001. Creative Director,
ROH2 since 2002. Member, Arts Council
England since 1998. Written and presented
programmes and series for BBC Television
and BBC Radio, including The Dancer’s Body
in 2002, and published books on the artsand nutrition. Born in 1963.
4 Dame Ruth Deech DBE
BBC Governor since October 2002.
Member of the Audit Committee andthe Fair Trading Compliance Committee.
Independent Adjudicator for Higher Education
since March 2004. Principal of St Anne’s
College, Oxford from 1991 to 2004, having
been a Fellow and Tutor in Law there since1970. Honorary Bencher of the Inner Temple,

a Mandela Rhodes Trustee, and Fellow of
the Royal Society of Medicine. Former
Chairman of the Human Fertilisation andEmbryology Authority. Born in 1943.

Vice-Chairman Scottish Higher Education
Funding Council. Appointed Director of the
Hume Institute in January 2005, taking up
this post from July. Born in 1945.

5 Dermot Gleeson
BBC Governor since November 2000
(appointed for a second four-year term inAugust 2004). Chairman of the Finance andGeneral Purposes Committee and memberof the Audit Committee. Deputy Chairmanof the BBC Pension Scheme Trustees.
Chairman of the M J Gleeson Group plc.
Chairman of Major Contractors Group
from 2003-2005. A director of the Housing
Corporation from 1990 to 1995 and of theConstruction Industry Training Board from1995 to 2002. Former Head of the Home
Affairs Section of the Conservative
Research Department and a member ofChristopher Tugendhat’s cabinet in theEuropean Commission from 1977 to 1979.
Born in 1949.

9 Angela Sarkis CBE
BBC Governor since October 2002. Memberof the Governors’ Programme Complaints
Committee. Independent consultant; nonexecutive director on the Correctional
Services Board at the Home Office; memberof the Interim House of Lords Appointments
Commission, and adviser to the Department
for Education and Skills on teacher workload
management. Chief Executive, Church Urban
Fund from 1996 to January 2002. Chairman,
NCVO Diversity Project and, until October
2004,Vice-President of the African Caribbean
Evangelical Alliance. A former trustee of
BBC Children in Need. Born in 1955.

6 Professor Merfyn Jones
The BBC’s National Governor for Wales since
January 2003. Member of the Fair Trading
Compliance Committee, the Governors’
Programme Complaints Committee and theCouncils and Advisory Bodies Committee.
Historian and broadcaster. Professor of
Welsh History at the University of Wales,
Bangor, specialising in the modern andcontemporary history of society and politics
in Wales. From 1998, Pro-Vice Chancellor of
the University and in August 2004 became
Vice-Chancellor. Author of a number ofbooks and articles. Born in 1948.
7 Professor Fabian Monds CBE
The BBC’s National Governor for Northern
Ireland since August 1999 (appointed fora second four-year term from July 2003).
Member of the Governors’ Programme
Complaints Committee, the Fair Trading
Compliance Committee and the Councils
and Advisory Bodies Committee. Chairmanof the trustees of BBC Children in Need.
Specialist in communications and information
systems. Chairman of Invest Northern
Ireland, the economic development agency,
and of the Northern Ireland Centre forTrauma and Transformation in Omagh.
Former Pro-Vice Chancellor of the University
of Ulster. Born in 1940.
8 Jeremy Peat
The BBC’s National Governor for Scotland
since January 2005. Chairman of the Audit
Committee, member of the Finance andGeneral Purposes Committee and of theCouncils and Advisory Bodies Committee.
Chairman of the BBC Pension Trustees. From1993 until March 2005 Group Chief
Economist at the Royal Bank of Scotland.
Former economic adviser to the Treasury
and the Scottish Office.Visiting Professor
Edinburgh University School of Management;
Honorary Professor Heriot Watt University;
member, CBI Economic Affairs Committee;
panel member of the Competition Commission;
BBC Annual Report and Accounts 2004/2005

10 Ranjit Sondhi CBE
BBC Governor since August 1998
(appointed for a second four-year termin July 2002) with special responsibility
for the English Regions. Chairman of the
English National Forum and the Councils
and Advisory Bodies Committee. SeniorLecturer at the University of Birmingham’s
Westhill College.Trustee of the National
Gallery and Chairman of the Heart ofBirmingham Primary Care Trust. Previous
positions include Deputy Chairman of theCommission for Racial Equality and memberof the Independent Broadcasting Authority
and the Radio Authority. Born in 1950.
11 Richard Tait CBE
BBC Governor since August 2004. Chairmanof the Governors’ Programme Complaints
Committee. Professor of Journalism andDirector of the Centre for Journalism
Studies, Cardiff University. Editor-in-Chiefof ITN from 1995 to 2002; Editor, Channel 4
News 1987 to 1995. At the BBC, edited
Newsnight, The Money Programme and the1987 General Election Results Programme.
Vice-Chairman, International Press Institute;
Fellow, Society of Editors and the Royal
Television Society. Born in 1947.
The vacancy of International Governor
will be filled by Sir Andrew Burns KCMG
in July 2005.
Rt Hon The Lord Ryder OBE served as
Vice-Chairman from January 2002 andActing Chairman from January to May 2004.
He resigned from the Board in June 2004.
Dame Pauline Neville-Jones DCMG served as
International Governor from January 1998. She
resigned from the Board in December 2004.
Sir Robert Smith served as the BBC’s National
Governor for Scotland from August 1999. He
resigned from the Board in December 2004.

9

Executive
Board
The Executive Board manages the day-to-day business of theBBC. It is chaired by the Director-General.The Executive
Board answers to the Board of Governors which appoints
the Director-General. Since June 2004 the Executive Board
has been supported by three sub-boards: the Creative Board,
the Journalism Board and the Commercial Board. Under
the Government’s plans for the new BBC Charter that takes
effect in January 2007, a significant minority of non-executive
directors will be appointed to the Executive Board.

1

2

3

4

5

6

7

8

9

10

10

BBC Annual Report and Accounts 2004/2005

1 Mark Thompson
Director-General since June 2004. Chairs
the Executive Board and the Creative
Board, made up of all the divisions thatdrive the BBC’s creative work. Previously
Chief Executive, Channel 4 since 2002.
Former BBC positions include Director of
Television; Director of National & Regional
Broadcasting; Controller BBC Two; Headof Factual; Head of Features; Editor,
Panorama, and Editor, Nine O’Clock News.
2 Mark Byford
Deputy Director-General since January
2004 (Acting Director-General January
to June 2004). Chair of the Journalism
Board which brings together all the BBC’sjournalism at an international, UK, national,
regional and local level.Trustee of the BBC
Pension Scheme. Former BBC positions
include Director, Global News and World
Service; Director of Regional Broadcasting;
Head of Centre, Leeds, and Home Editor,
Television News.
3 John Smith
BBC Chief Operating Officer sinceJune 2004, responsible for all the BBC’scommercial and resourcing subsidiaries,
as well as leading its property strategy.
From March 2005, also Chief Executive
Officer of BBC Worldwide Limited.Trusteeof the BBC Pension Scheme. Formerly BBC
Director of Finance, Property & Business
Affairs. AccountancyAge Financial Directorof the Year in 2001. Non-executive director
at Severn Trent Plc and Chairman of their
Audit Committee. Previously with British
Rail Group, overseeing demergers. Memberof the Accounting Standards Board until
November 2004.
4 Jenny Abramsky CBE
Director of Radio & Music since April
2000. Responsible for BBC Radios 1, 2, 3, 4,
Five Live, BBC Asian Network, BBC 6
Music,1Xtra, Five Live Sports Extra, BBC 7,
television classical music, Music Live, theBBC Proms and the three BBC orchestras
based in England. Previous BBC positions
include Director of Continuous News;
Director of Radio; Controller of BBC Radio
Five Live; Editor, Radio News & Current
Affairs, and Editor, Today.
5 Jana Bennett OBE
Director of Television since April 2002.
Responsible for the BBC’s television
channels: BBC One, BBC Two, BBC Threeand BBC Four; related interactive
programming, and for overseeing content on
the UKTV joint venture channels and BBC
America and BBC Prime. Previously General
Manager and Executive Vice-President at
Discovery Communications Inc. in the US;
Director of Production at the BBC; Headof BBC Science; Editor, Horizon, and Senior
Producer on Newsnight and Panorama.

6 Ashley Highfield
Director of New Media & Technology since
October 2000. Responsible for bbc.co.uk,
interactive television services, newplatforms (broadband, mobile etc), theBBC’s technology portfolio, technicalinnovation, and research and development.
Previously Managing Director of Flextech
Interactive, the pay television company’s
new media division. Former positions
include Head of IT and New Media for
NBC’s European Channels.
7 Caroline Thomson
Director Policy, Strategy, Legal andDistribution since April 2005, having been
Acting Director, Strategy and Distribution
since the resignation of Carolyn Fairbairn
in December 2004, and Director Policy
and Legal (formerly Public Policy) since
May 2000. Lead Director of the Charter
Renewal Task Force since June 2004.
Trustee of the BBC Pension Scheme.
Former positions include Director ofStrategy & Corporate Affairs, BBC World
Service; Commissioning Editor, Science andBusiness at Channel 4, and political assistantto Roy Jenkins.
8 Stephen Dando
Director, BBC People (formerly Human
Resources & Internal Communications)since June 2001. Responsible for all BBC
people and organisation issues, including
staff communications.Trustee of the BBC
Pension Scheme. Previously Global Human
Resources Director at Guinness Limited.
Former positions include GroupManagement Development Director,
Diageo, Europe HR Director, UDV, andspells with United Distillers, FerrantiInternational and Austin Rover.

Before the creation of the Executive
Board in June 2004, day-to-day managementof the BBC was the responsibility of the
Executive Committee. In addition to thosemembers who transferred to the Executive
Board, the Executive Committee included:
Pat Loughrey, Director of Nations & Regions,who joined the Journalism and Creative Boards.
Richard Sambrook, Director of News, whojoined the Journalism Board. Subsequently
appointed Director of Global News.
Alan Yentob, Director of Drama,
Entertainment & CBBC, who took on
additional responsibilities as Creative
Director and joined the Creative Board.
Peter Salmon, Director of Sport, who joined
the Creative Board. He has announced his
resignation and leaves the BBC at the endof June 2005.
John Willis, Director of Factual & Learning,
who joined the Creative Board.
Rupert Gavin, Chief Executive of BBC
Worldwide Limited, who left the BBC
in October 2004.
Andy Duncan, Director of Marketing,Communications & Audiences, who sat
on the Executive Board until his resignationfrom the BBC in July 2004.
Carolyn Fairbairn, Director of Strategy& Distribution, who sat on the Executive
Board until her resignation from the
BBC in December 2004.

9 Zarin PatelGroup Finance Director since January 2005.
Responsible for financial strategy, planning,
control, corporate reporting activities andlicence fee collection. Former BBC positions
include Head of Revenue Management
and Group Financial Controller.Trained
as a chartered accountant with KPMG,
where she spent 15 years before joining
the BBC in 1998. Governor, Universityof Arts London and member of their
Audit Committee.
10 Tim Davie
Director of Marketing, Communications& Audiences since April 2005. Responsible
for all the BBC’s marketing, publicity, press
and PR, audience services, and audience
research activities. At PepsiCo since 1993,
latterly as Vice-President, Marketing andFranchise, PepsiCo Europe. Joined Procter& Gamble’s marketing department
in 1991.

BBC Annual Report and Accounts 2004/2005

11

Governors’
review ofobjectives
Overview
As Governors we are responsible for ensuring that the
BBC operates in the interests of the public.To help us
do this, we set clear objectives for management each year
and monitor performance against them.These objectives
provide a strategic framework for the BBC.
We also have other tools to help us assess performance.
Each spring we publish the BBC Statements of Programme
Policy outlining plans and priorities for output in the year
ahead.We report on performance against these in thefollowing year’s Annual Report.
Soon we plan to introduce a new performance yardstick:service licences.These will set out the remit, budget, andperformance targets for each BBC channel and service.
They will give us – and licence fee payers – a new way totest whether or not the BBC is delivering the best possible
value and range of services.
In this section we report on performance against our
2004/2005 objectives. Our 2005/2006 objectives are setout on page 19.

12

BBC Annual Report and Accounts 2004/2005

Question TimeDavid Dimbleby bringing the Question Time studioaudience into the debate. Research shows the
public rates the BBC as the best broadcaster fornews and current affairs

Objective one
Journalism and impartiality
Ensure the BBC meetsthe highest standards of
independence, impartiality
and honesty in its
journalism and implements
recommendations on training,
editorial control andcomplaints handling.

We are pleased to report that significant
progress has been made. Reforms ofeditorial processes and complaints handlingwere implemented decisively by senior
management and supported by staff.
Research indicates that the public retains
a high opinion of the BBC’s journalism,
and opinion formers are also becoming
much more positive. However, there
is a declining trend among MPs.
The Hutton Inquiry which reported in
January 2004 exposed weaknesses in BBC
journalism and set the context for thisobjective. In Building public value the BBC
underlined its intention to recapture thepublic’s full trust in BBC journalism. Central
to the achievement of this was a promise
to implement in full the recommendationsof the Neil Report (see page 45 for more
information).
The Neil Report advocated improved
training and editorial controls. An
encouraging example of the successful
implementation of these recommendations
was an online training course, developed
to improve editorial best practice which
was completed by more than 10,000 BBC

Rolf on Art – The Big Event
Rolf Harris working on his panel of the giant
version of Constable’s Haywain created in frontof the National Gallery by 144 amateur painters

Objective twojournalists and factual programme makers
this year. Also workshops on issues raisedin the Neil Report were attended by morethan 8,000 staff.
Another highly visible step forward was
the launch of the BBC’s new system ofcomplaints handling which is now accessible
via the home page of bbc.co.uk as well
as by telephone and post. Work has also
been done to improve the way programme
makers handle audience complaints.
We continued our series of reviewsof BBC impartiality with an investigationof coverage of the European Union(see case study on EU impartiality on
page 14).
The public continues to believe that the
BBC is by far the best broadcaster fornews and current affairs. 77% rate the
BBC as independent and impartial;
80% trust BBC news; and 82% consider
it accurate.This year, there has beena marked improvement among opinion
formers who are regularly surveyed toassess their judgement on the BBC’s
independence and impartiality and theiroverall level of trust in the BBC.Their
view is now similar to that of the generalpublic, with more than 80% saying the
BBC is independent and impartial.
We are concerned, however, about
declining opinion trends among MPs.
More than 40% of Labour MPs andtwo-thirds of Conservative MPs do notbelieve that the BBC is free from influenceand bias. While this may be a symptomof a wider issue of the relations between
politicians and the media, further researchis being undertaken by the BBC tounderstand the reasons underlying thisparticular trend.

BBC Annual Report and Accounts 2004/2005

Creativity and ambition
Build on the recent Making
it Happen initiatives to makethe BBC a more creative,
collaborative and audiencefocused organisation thatis inclusive and reflects thediverse society it serves.

Progress towards this objective was affectedby the Director-General’s reviews, which
the Board of Governors approved.
Willingness to collaborate across the BBC
has been adversely affected by fears aboutjobs being cut or outsourced. Progress,
however, has continued in the areas ofcreativity and audience focus.
The context for this objective changed
radically during the year as the new DirectorGeneral launched a series of reviews aimed
at reshaping the BBC to prepare it for the
future. Inevitably, staff fears about job
reductions and outsourcing had a negative
impact on the drive towards greatercollaboration. According to the annual BBC
staff survey, less than half of BBC staff now
believe that their team, division, or the BBC
as a whole, behaves as part of ‘One BBC’.
Senior management will have to work hard
to rebuild a sense of unity across the BBC.

13

Governors’
review ofobjectives

Total broadcasting spend 2004/2005 (£million)

TelevisionRadio
bbc.co.uk (including
Digital Curriculum)
Local radio andregional television
Programme related spend
Overheads
Transmission andcollection costs
Total

2005

2004

1,473
221

1,400
212

78

71

356
339
332

345
337
326

309
3,108

303
2,994

For further explanation of these figures see Note 2b
on pages 106 to 107

EU impartiality
During 2004 we commissioned
an independent panel, chaired by
Lord Wilson of Dinton, to “assess
the impartiality of BBC coverageof the EU with particular regard
to the debate about Britain’s placein Europe, the activities of EU
institutions, and accessibility;
and to make recommendations for
improvement where necessary.”
This was the first such review to be
conducted outside the BBC
management chain, and the firstto be published in full.
The study included researchcommissioned from MORI, content
analysis carried out by an independent
consultant, written submissions frominterested parties and interviews
with witnesses by the panel.The
panel’s report was presented to theGovernors in January 2005.
Its main findings were:■ The BBC is not deliberately biased
for or against the EU■ However, there is a widespread
perception that it suffers from
cultural and unintentional bias
■ BBC coverage of EU news needs
to be improved and made moredemonstrably impartial■ The BBC aims to support informed
democracy by providing informationthat helps citizens make sense of theworld, but it is not succeeding inproviding basic accessible
information on Europe
The panel made a numberof recommendations including
appointing an EU editor; moving

14

reporting of the EU away fromthe prism of Westminster politics;
exercising more care in the selectionof interviewees; improving monitoring;and improving training.
We passed the report tomanagement, who responded byproposing wide-ranging changes,
which we approved. We publishedthe management response in May.
Management actions include:
Appointing a Europe editor andEurope Institutions reporter;
redefining roles in the BBC
bureaux in Brussels and Paris;
and implementing an improved
planning system■ Strengthening the BBC databaseof contacts to improve selectionof interviewees■ Strengthening monitoring systems■ Improving training■

We have welcomed management’s
comprehensive response to thereport, which recognised theBBC’s commitment to accuracy
and impartiality and demonstrated
a commitment to achieving it.
BBC News will report to us during
the coming year on progress in
implementing the agreed actions
and we will look for improvementin audience perceptions of BBC
reporting of the EU as a result.
The full report and evidence, plus
the responses from Governors
and management, can be foundon bbc.governors.co.uk.

BBC Annual Report and Accounts 2004/2005

We were, however, pleased to notethat nearly two-thirds of staff believethat ‘‘creativity is in the lifeblood of theorganisation’’. New techniques to stimulate
creativity, and new ways of working, are
now widely used by programme makers
in the BBC and they are being used tosupport the Creative Future programme
strategy review.
BBC programme makers and independent
producers now have access to acomprehensive online resource of audience
research and surveys. There has been
a positive response to this and three outof four staff believe that audiences areat the heart of what their team does –an encouraging indicator of progress inthis area.
Staff also believe that the quality ofleadership is improving at the BBC. Morethan 2,000 managers have now taken partin the BBC Leadership Programme.The
programme is currently being revised toensure it stays relevant and management
will carry out a full evaluation later this year.
The BBC continues to monitor the diversityof its staff and, in 2004, had more than 10%
of staff with ethnic minority backgrounds
and 2.7% of staff with disabilities. A newDiversity Strategy suggested that the BBC
should move on from being target-driven,to being more culturally supportive of staff
diversity, and using diversity to connect
better to diverse audiences.
The objectives of Making it Happen arebeing embraced by the new change
programme.

5p
cost per household per hour ofviewing/listening to the BBC

402,585
hours of BBC Television and Radio
in 2004/2005

Governor’s consultation
BBC Governor Dermot Gleeson (centre) withlicence fee payers in Guildford – one of a series
of workshops around the country to discuss
audience concerns

BBC 6 Music
Nicky Wire and James Dean Bradfield of Manic
Street Preachers.The band took over BBC 6 Musicfor a week in December

Objective three
Charter Review
Contribute effectively to the
public debate on Charter
Review ensuring it reflects
the interests of licencefee payers as a whole andbuilds on the concept of
public value.

The BBC has contributed to the debate on
Charter Review over the past year throughengagement with the formal process andthrough its own consultations with licencefee payers across the UK.We welcome theGreen Paper’s emphasis on the need toextend accountability to licence fee payers.
The BBC has a growing responsibility tolisten to licence fee payers and demonstratethat it is taking account of their views in
its decision making.
In June 2004 we launched Building public
value, which set out the BBC’s own vision
for its future, and played a central rolein initiating the public debate on Charter
Review. Engaging licence fee payers acrossthe UK in this debate has been a priority
for the BBC. We have been encouraged tonote that 140,000 copies of Building public
value have been downloaded from the
BBC website – more than any other BBC
policy document.

Objective four
The BBC has also contributed to theGovernment’s formal consultation process
and has actively encouraged licence fee
payers to participate too. Governors andmanagement attended all 13 of the seminars
held by Lord Burns and his independent
panel on behalf of the Government, andsupported the process with backgroundbriefing material. bbc.co.uk webcast theseseminars, making the discussions open toa wider audience.The website also directed
users to the Government’s own Charter
Review site.
We welcome the Government’s Green
Paper published in March, including the
proposal for a ten-year Charter, thecontinuation of the licence fee, and the
proposal to replace the Governors by
a Trust. But we recognise there is more
to do. Our research shows that we needto increase public understanding of therelationship between the licence fee andthe BBC. We also know that audiences
want to engage with the BBC – theorganisation as a whole must listen toa wider range of licence fee payers andensure it takes account of what it hears
in its decision making.To increase ourown accountability, we have launched a
Governors’ website (bbcgovernors.co.uk),
which enables the public to interact withus online and we will, this year, holdan annual general meeting following
publication of this report.
Governors’ accountability work has
identified audience priorities and we haveensured these are reflected in 2005/2006
objectives.The new complaints system
is also encouraging audience feedback.
Management has undertaken a
programme of major audience research
projects, seeking the public’s views on
issues including the BBC’s output, new
BBC services and the licence fee.

BBC Annual Report and Accounts 2004/2005

Driving digital
Drive the market for
free-to-air digital television,
digital radio and new media,
focusing on improvements
in awareness, availability
and take-up.

This year was a landmark year in the
UK’s digital transition, with digital television
penetration passing 62% of households,
the internet in 50% of homes, and acommitment from the Government todigital television switchover by 2012.TheBBC has played a key role in driving digitaltake-up, efforts which must continue inorder to complete the transition to a fully
digital UK.
Last year we identified extending theavailability of the BBC’s digital services
as a priority for 2004/2005. Freeview
continues to be a success with total sales
now over 6.6 million. With potential
coverage of digital terrestrial now at
its maximum (for technical reasons)of 73% of the UK population until digital
switchover, the BBC’s efforts this year
have been directed at investigating theviability of alternative free-to-air platforms,
including satellite, with a view to launch
in 2005/2006.

15

Governors’
review ofobjectives

North and South
Daniela Denby-Ashe (right) on the set of the BBC
One adaptation of Mrs Gaskell’s North and South.
Audience demand for high quality new drama
remains strong

Reporting the Asian tsunami
Jon Sopel in Sri Lanka for BBC News 24.The
Boxing Day tsunami triggered one of the largest
ever newsgathering operations by the BBC

Objective five
Digital Audio Broadcasting (DAB) coverage
has continued to increase and, while takeup of DAB lags behind digital television,
1.5 million receivers have now been sold.
Listening to the BBC’s digital radio services
via the internet and digital televisioncontinues to grow, enabling total weekly
reach of the five digital radio networks
to reach 2 million during the year.
We welcome the conclusion of Tim Gardam’s
independent review that the BBC’s digitalradio services have been a key driver of
DAB take-up.Thirty-two of the BBC’s
46 local and Nations’ stations are now
broadcast in digital, and we await Ofcom
making further multiplex capacity available
to complete the digital portfolio. All
46 radio stations are available online.
There is less evidence that BBC Threeand BBC Four have been instrumental
in driving the take up of digital television,
although they have established strong
creative track records. In our response toProfessor Barwise’s independent reviewof the BBC’s digital television services, we
agreed that the BBC needed to increaseaudiences for BBC Three and BBC Four,but emphasised that this should not risk
their distinctiveness. We have approved ameasured increase to BBC Four’s budget
in response to the review.

Following Philip Graf ’s independent review
of bbc.co.uk, we set a new remit for theservice emphasising distinctive and originalcontent. Reach of bbc.co.uk has continued
to increase, and averaged 46% of the UK
internet audience during 2004/2005.Thestrong take-up of broadband is increasing
access to our on-demand services, offering
additional value for money.The BBC Radio
Player is already established and increasingly
popular; during 2005/2006 the iMP(interactive Media Player), a new service
delivering television-based content, will betrialled.The BBC’s investment in interactive
television services has helped to promote
the take-up of digital television withhigh profile events such as the Olympics
proving successful.
The progress made over the past year
poses new challenges for the BBC. It must
focus on the benefits of digital to encourage
the transition from analogue to digital andfrom narrowband to broadband. Moresophisticated marketing and initiatives suchas the new technical support helpline for
Freeview installation will be critical.

Value for money
Ensure that the BBC isdelivering value for money
across the full rangeof its activities, including
production processes,
licence fee collection andits central functions.

The BBC is on track to exceed the target
agreed with the Government of making
an additional £3.3billion available throughself-help initiatives between 1999/2000
and 2006/2007 to invest in services.While
additional efficiency savings achievedin 2004/2005 have been limited, we areconfident that the value-for-money
programme which management has now
put in place will deliver significant
efficiencies over the next three years.
At the end of March 2005 the BBC had
made £2.1billion in self-help savings
towards the Government’s cumulative
target of making available an additional£3.3billion to spend on services by March
2007. In 2004/2005 self-help savings havelargely come from increased licence fee
income through reduced evasion andcollection costs, and from improved cash
flow from the commercial subsidiaries.
The cost of collecting the licence fee hascontinued to fall, from 5.4% of total revenue
in 2003/2004 to 5.2% in 2004/2005. Licence
fee evasion has fallen from 5.7% last year to
5% at March 2005; of the 0.7% reduction,some 0.3% is due to the downward revision
by BARB of the estimate of the number ofhouseholds with televisions.The BBC aims

16

BBC Annual Report and Accounts 2004/2005

48

Programme spend by genre 2004/2005(£million)

million audio or video requests via bbc.co.uk
in March 2005

Factual and learning
News and current affairs
Entertainment
SportChildren’s
DramaMusic and arts
Speech – local radio
Total

628

2005

2004

351
458
267
438
134
398
245
175
2,466

352
459
296
321
114
435
233
155
2,365

Education for children is included in Children’s;
Film is included in Drama; Religion is included in
Factual and learning

hours of current affairs and political programmingon BBC One and BBC Two in 2004/2005

Perceptions of quality of BBC Television
to reduce evasion further, but we
acknowledge that doing so cost-efficiently
when the evasion rate is already low willpose a significant challenge.
Headline cash flow from the commercial
subsidiaries has more than doubled from£134million to £301million, ahead of target,
reflecting strong performances by BBC
Worldwide and the exceptional receipts
from the sale of BBC Technology during theyear. We are particularly pleased to notethat operating profit from the commercial
subsidiaries has also increased from
£36million to £56million.
We are disappointed that additional
efficiencies achieved in 2004/2005 havebeen limited. Last year we highlighted thepotential for more stretching efficiency
targets. Management carried out an internal
review which resulted in the efficiency
programme announced by the DirectorGeneral.This is planned to deliver£105million savings in 2005/2006 and an
additional £355million of savings per yearby 2007/2008 for reinvestment inprogrammes and content. Before weapproved the plans we took steps to gain
assurance that they would deliver the best
outcome for licence fee payers and that
services would not be adversely affected.
We will review progress regularly.
The programme of independent
value-for-money reviews commissionedby the Governors’ Audit Committee has
progressed. Following the National Audit
Office’s (NAO) review of Freeview lastyear, further reviews have been conducted
in 2004/2005, and four will be laid before
Parliament in July.These include reviews by
the NAO of the White City 2 development
and measures of public service broadcasting.

In our last Annual Report we
expressed concern about a decline
in perceptions of quality of BBC
Television output over recent years.
As a result management commissioned
a programme of research to improve
the BBC’s understanding of this issue.
The report was presented to us
in February 2005.
The main findings were:
Although quality in broadcasting
is not easily definable and means
different things to different people,
some common attributes canbe identified. These include:■ Programmes featuring establishedhousehold names: ‘‘If you see X
in it, it’ll probably be good’’■ Original programmes: reality
television, makeover shows, andsome soaps were criticised forlack of originality. There was a big
demand for more new comedy■ Programmes with educationalor other ‘take-away’ value: news,
current affairs, specialist factual,high-quality drama■ Programmes which are notsensational or exploitative■ Programmes which deliver against
expectations: entertainment thatentertains, comedy that makes
people laughMultichannel television – which
has led to the perception thatschedules have been diluted.
This may be related to difficultyin navigating schedules and locating
quality programmes■ Derivative, heavily-formatted
programming (makeovers andreality television were often cited)■ Bad language, and sex and violenceon television, especially before
the watershed■

Perceptions of quality for BBC
Television, as measured by the BBC’s
own research, have declined overrecent years. However, theseperceptions have declined by lessthan those for other channels. The
BBC is still considered to be thebest quality broadcaster acrossvirtually all genres (exceptions are
reality programmes, cult television,
US imports and game shows).
The findings of this research haveprovided a central plank for the
Director-General’s Creative Future
programme strategy review currently
under way and have strongly
influenced the objective we have set
management for the coming year on
programme strategy (see Governors’
objectives for 2005/2006 page 19).

Factors associated with perceptionsof low quality on all broadcasters
include:■ Repeats (although some kind of
repeats: classic comedy and repeats
within a week – so-called ‘narrative
repeats’ – were welcomed)

BBC Annual Report and Accounts 2004/2005

17

Governors’
review ofobjectives

Audience approval of the BBC
6.5

6.8

6.8

6.7

6.5

96.2

2000/2001
2001/2002
2002/2003

2003/2004
2004/2005

Source: Pan-BBC Tracking Study age 15+
Note: Figures are a mean score out of ten

Objective six
The BBC’s global role
Enhance further the impactof the BBC’s global news
services, with a particularfocus on their reputation for
independence, impartiality
and honesty.

There has been a real improvement in
the reputation of the BBC’s global news
services during the year, together with animpressive growth in reach of the radio,
television and online services, which now
have a combined weekly audience ofaround 190 million. However, theachievements of this year should be seenin the context of some major challenges
ahead for the BBC’s Global News Division.

Combined monthly reach of
BBC Television, BBC Radioand bbc.co.uk (%)

Editorial collaboration within the Global
News Division resulted in strong tri-media
coverage of both planned and unplanned
events – notable examples of each include
the China Week initiative and coverageof the Asian tsunami.
There was an impressive increase in weekly
reach of the radio and television services
from 181 million to 188 million.Taking
online reach into account, total weekly
reach is now estimated to be more than
190 million, higher than any otherinternational news broadcaster. Some of
the biggest gains came from BBC World
Service’s short wave radio services. A
marketing initiative in Asia resulted in gainsof 4.8 million users in India, and 2.6 million
in Bangladesh. However, these gains must
be seen in the context of short wave’s
eventual replacement by FM in mostregions.The BBC must increase distribution
on FM in order to maintain its reach.
A key challenge facing the Global News
Division is the ongoing attempt to gain
24-hour distribution for BBC World in
North America. It is now extremely difficult
for a linear news channel to gain a place
on US cable networks, and a broadeningof the service to include on-demand orinteractive services may be necessary tosecure this.

The BBC has seen an improvementin ratings for both trust and objectivityof its international radio and television
services during the year. BBC World
Service is more trusted and seen to
be more objective than its international
competitors in virtually every market
surveyed. BBC World’s reputation for trustand objectivity has also improved. Someof these gains are attributable to the endof the Iraq war, which had a negative
impact on perceptions of the BBC, but
improvement also reflects strengthened
editorial output and presentation.

Finally, the Government’s Green Papersuggested a major reprioritisation of theWorld Service’s language service portfolio
in order to address changes in the markets
for vernacular services. Addressing thesechanges creates both a challenge and an
opportunity for the Global News Division.

18

BBC Annual Report and Accounts 2004/2005

96.6

95.6

2002/2003
2003/2004
2004/2005
Source: Pan-BBC Tracking Study age 15+,
claimed usage

Governors’
objectives for2005/2006
The BBC Charter requires us to set andreport on annual objectives.The objectives
for 2005/2006 focus on major pan-BBC
priorities.They complement the Statementsof Programme Policy that the BBC publishes
each spring setting out specific promises
relating to output on individual BBC
channels and services.
For the first time we have based theseobjectives on our accountability work
during the year to ensure that they reflect
the interests of licence fee payers.
The Executive Board has taken collective
responsibility for the achievement of theseobjectives and we will report on theirperformance against them in next year’s
Annual Report.
1. Programme strategy
Ensure that BBC management develops
a five-year editorial strategy for BBC
programmes and services focused on
maximising public value. In 2005/2006
this will include:■

Beginning to reduce the volume of
repeats on BBC One in peak time■

Undertaking work to better understandaudience concerns regarding derivative
programming, and specifically, reducing
the volume of makeover and lifestyleprogrammes on BBC One in peak time

2. Driving digital
Ensure that BBC management drives themarket for free-to-air digital television,
digital radio and new media whilst
continuing to serve the needs of theanalogue-only audience by:■Raising awareness of how the BBC’s
digital services add value to theoverall portfolio■

Improving their availability■

Working in partnership with thecommercial sector to drive take-up

The BBC has been given a central role by
Government to help drive digital take-up.
Objective two reflects Governors’ researchshowing low levels of audience awarenessof the BBC’s digital services, and concernthat spending on these services is diluting
output on BBC One and BBC Two.
3.Value for money
Ensure that BBC management implements
the findings of the value-for-money
review by:■■

Beginning to increase overall investment
in original UK comedy and drama

Objectiveone reflects audience concerns
revealed during last year’s work on
perceptions of quality (see case study
on Perceptions of quality of BBC Television
on page 17).

■

Making savings of £105millon in 2005/2006
towards the target of annual savings of£355million by 2008
Developing a detailed, three-year plan
to transform the BBC’s processes andmake it more efficient and effective inproviding services that meet the needsof licence fee payers

4. Impartiality and independence
Ensure that the BBC meets the highest
standards of accuracy, fairness andimpartiality expected by audiences in all
its programmes. In particular, strengthen
editorial processes to deliver high-quality,
trusted journalism by implementing therecommendations of the Neil Report andacting on the Governors’ independent
reviews of impartiality.
Licence fee payers place a high value on
the BBC’s commitment to impartiality.
Objective four ensures continued management
focus on recent and future initiatives tostrengthen BBC journalism in this area.
5. Accountability to audiences
Deliver greater transparency andaccountability to licence fee payers in
2005/2006 by, in particular:■

Management ensuring that the changes tothe complaints handling process are being
implemented across the organisation■

Governors developing service licences
as the key tool for exercising effective
stewardship of the public’s money

We know that licence fee payers want their
voices heard and taken account of by theBBC. Objective five will ensure that the BBC
takes audience complaints seriously andhandles them appropriately. It also ensuresthat we as Governors will consult widely as wedraft the new service licences to ensure thatthe service remits reflect audience expectations.

Objective three reflects our determination as
Governors to deliver effective stewardshipof licence fee funds by ensuring the BBC
is run as efficiently as possible; a successful
outcome here will, for example, provide thefunds to pay for the new programmes thatwill enable the BBC to broadcast fewer
repeats as set out in Objectiveone.
BBC Annual Report and Accounts 2004/2005

19

The BBC at a glance
TelevisionRadio

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

BBC Radio 1 aims to offer a high-quality
service for young audiences combining thebest new music, a comprehensive range of live
studio sessions, concerts and festivals, andtailored speech output.

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

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

BBC Radio 2 aims to bring listeners a broad rangeof popular and specialist music focused on British
talent and live performances, complemented bya broad range of speech output.

BBC Five Live Sports Extra is a part-time network
providing additional sports coverage throughrights already owned by BBC Radio Five Liveto deliver greater value to licence fee payers.

1Xtra aims to play the best in contemporary
black music, with a strong emphasis on deliveringhigh-quality live music and supporting new
British artists.

BBC Radio 3 is centred on classical music,
and also aims to provide a broad spectrum ofjazz and world music, drama and arts, and includes
live and specially recorded performances.

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

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

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

BBC Radio Five Live broadcasts live news andsport 24 hours a day and aims to present eventsas they happen in an accessible style, with particularemphasis on targeting 25 to 44 year olds.

BBC Asian Network aims to offer challenging
debate, informed journalism, music, sport,
entertainment and drama to audiences of British
Asians from different generations.

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.

The CBBC Channel aims to offer a distinctive
mixed schedule for 6 to12 year olds, encouraging
the development of existing and new interests,
helping children to understand and embrace
the world around them.

CBeebies aims to offer a mix of high-quality,
UK-produced programmes designed to encouragelearning through play for children aged five andunder, in a consistently safe environment.
20

BBC Annual Report and Accounts 2004/2005

New MediaNews

Nations & Regions
BBC English Regions serves a wide range of urban
and rural communities on television, radio andonline and aims to be the most trusted andcreative local broadcaster in England.

bbc.co.uk aims to provide innovative anddistinctive online content, promoting internet use
to develop a deeper relationship with licence fee
payers and to strengthen BBC accountability.

BBC News seeks to provide the best journalism
in the world and aspires to be the world’s
most trusted news organisation: accurate,
impartial and independent.

BBCi offers digital television audiences
all-day, up-to-the-minute content including
news, weather, learning, entertainment andinteractive programming.
BBC News 24 aims to deliver news, analysis andinsight, supported by the BBC’s newsgathering
operations, all day, every day of the year.
The Digital Curriculum will be launched in2006. It will be a free online service, providing
high-quality interactive resources structured
around key elements of the school curriculum.

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 Scotland aims to produce a broad rangeof distinctive television and radio programmes
for all age groups that properly reflect thediverse nature of Scotland.

BBC Cymru Wales is committed to
producing services which reflect the uniqueculture and history of Wales, and its socialand political landscape.

BBC Northern Ireland aims to provide somethingof value for everyone in the community throughits broad portfolio of programmes and services
that reflect local interests and experiences.

BBC World Service provides international news,
analysis and information in English and 42 otherlanguages on radio and the internet.

BBC World is the BBC’s commercially-fundedinternational 24-hour television news andinformation channel.

BBC Annual Report and Accounts 2004/2005

21

Governors’ review
of services
Television
Overview
BBC Television absorbs the bulk of the licence fee and, formany licence fee payers, is the service by which they judge
the BBC as a whole. It is right, therefore, that it commands
a great deal of our attention as Governors.
On BBC One, there are encouraging signs that the work
done in recent years to understand viewers’ needs betteris bearing fruit. Our own review has found that, although
there is still work to be done, the channel has madesignificant progress towards finding a successful balance
between a high level of public service commitment andthe ability to attract large audiences.
On BBC Two the strategy we approved in 2003, which
restores a distinctive factual core to the channel, isdelivering new programming of quality and originality.
The challenge now is to stabilise reach while maintaining
the public service commitment.We look forward tohearing the new channel controller’s proposals forfurther evolution of the schedule.
The new digital channels are growing in confidence.
BBC Three has had real success with British comedy,
one of the most challenging genres. BBC Four is truly“a place to think”.The children’s channels,The CBBC
Channel and CBeebies, have achieved success both interms of their remit and their audiences.The challenge
here is to maintain this success through creative renewal.

22

BBC Annual Report and Accounts 2004/2005

Strictly Come Dancing
Ian Waite and Denise Lewis, finalists in Strictly Come
Dancing – high quality popular entertainment for
Saturday nights on BBC One

Remit
BBC One aims to be the UK’s mostvalued television channel, with thebroadest range of quality programmes of
any UK mainstream network.The channel
is committed to widening the appeal of all
genres by offering the greatest breadth anddepth within them. BBC One is committed
to covering national and international
sports events and issues, showcasing
landmark programmes and exploring new
ways of presenting specialist subjects.
BBC One remains the BBC’s flagshiptelevision service. Despite fierce competition
it continues to reach more viewers thanany other television channel in both
analogue and digital homes. In all homes,
average 15-minute weekly reach to viewers
aged 4+ slipped a little in 2004/2005 to
81.9% or 45.4 million people (from 83.7%/
46.2 million in 2003/2004). In multichannel
homes, where the choice of viewing is
by definition far wider, BBC One is stillwatched by nearly four out of five viewers.
As its remit makes clear, we have set
it the task of using its popularity, and theability given to it through its very significant
budget, to invest in high-quality output
designed to attract viewers to a broad
range of subjects, including those theymight otherwise not consider watching.
This is no easy task. It is becoming harderthan ever to make an impact on viewers,
particularly as television viewing becomes
more fragmented. But high-quality popular
programming across a broad range liesat the heart of our vision for BBC One,so we have been very encouraged to seesome striking successes across a range of

He Knew He Was Right
Laura Fraser and Bill Nighy in the adaptationof Anthony Trollope’s He Knew He Was Right.
High quality drama is a key part of the
BBC One schedule

Real Story – Nurseries Undercover
Reporter Lizz Brown and presenter Fiona Bruce.
Real Story’s investigation of care standards in private
nurseries brought changes in regulations

mainstream genres.These include Strictly
Come Dancing and Dr Who which havehelped to reinvigorate the Saturdaynight schedule.

on this will be made during the coming
year (for more on this, see our review
of BBC News, pages 43 to 44).

As we announced in last year’s Annual
Report, we asked our advisers to carryout an independent study to assess
whether or not BBC One had the bestbalance of output in peak time. We wanted
to ensure that the channel’s schedule, as
well as its programmes, best serves its
audiences’ needs. Our advisers examined
BBC One’s output and performance andalso commissioned specific audience
research to help us better understandviewers’ perceptions of the channel.
Our review found that, although there areareas needing improvement, BBC One has
successfully balanced a high level of public
service commitment with the ability to
attract large audiences.
For example, the public overwhelmingly
rates BBC One as the best channel for news
and its three daily news bulletins are all themost-watched of their type. Current affairs
on BBC One can still create a big impact.
Real Story – Nurseries Undercover was themost watched current affairs programmeof the year, and resulted in a change to
Ofsted’s approach to monitoring pre-schoolcare. The Secret Agent, an undercoverinvestigation carried out at some personalrisk to the reporter Jason Gwynne,
exposed the activities of some British
National Party members and led to arrests.
But there is more to do here. Our review
of BBC Television’s current affairs, which
we published in February, underlines the
key position of BBC One in this debate:
if we wish BBC current affairs to reachthe mainstream audience, this can only
be achieved by having more high-profile
output on BBC One in peak time. A start
BBC Annual Report and Accounts 2004/2005

The channel is now the home on British
television of high-impact factual landmark
output. Highlights this year included
Himalaya with Michael Palin, the latest in
his finely crafted and extremely populartravelogues; Child of Our Time, Professor
Robert Winston’s extraordinary tracking
study of the development of 25 young
children, now in its sixth year; Supervolcano,which ably blended scientific fact intoa disaster-movie format; and Pride, aninnovative drama about lions in Africa, whichmatched documentary footage with scripted
drama.These were notable successes.
However, our review of BBC One
found that the volume of serious factual
programming in peak time had fallen overthe previous ten years. Over that period
output of hobbies and lifestyleprogrammes had grown from almost
nothing to almost 10% of the peak-timeschedule in some weeks during 2003/2004.
One of our objectives for 2005/2006 is toensure that the volume of makeover, andlifestyle programmes on BBC One isreduced in peak time.
Our review also found that audiences are
critical of derivative programming across all
genres, particularly on the BBC, where their
expectations are very high.This was echoedby BBC management’s own research during
the year into audience perceptions of quality.
We have asked management to achieve aclearer understanding of what audiencesmean by ‘derivative’ and then to address
the underlying causes.

23Governors’
review of services
Television

Dr WhoBillie Piper and Christopher Eccleston in Dr Who –popular family drama reinventing the timelord fora new generation

Himalaya with Michael Palin
Michael Palin in Phobjika Valley in Bhutan. His epic
journey took him the 2,000 mile length of theHimalayas – which means abode of snow

Drama continues to be central to theappeal of BBC One and although viewers
still rate BBC One as the best channel fordrama, this is a genre that needs continual
revitalisation to meet licence fee payers’
expectations for originality and high quality
across the full range of audience tastes.
The channel had a number of strong
returning series in contemporary drama
which appeal to different audiences.
These included: Cutting It, Silent Witness,
Spooks, Hustle and Waking The Dead.
There was fine period drama, too, including
adaptations of Anthony Trollope’s He Knew
He Was Right and of Mrs Gaskell’s Northand South. Blackpool was a boldly innovative
peak-time production. EastEnders continues
to be an important part of the schedulealthough questions have been asked about
its quality, relevance and competitive
strength – problems that the programme’s
new management has begun to grapple
with.The Director-General has alreadycommitted extra investment to drama
and we look forward to seeing the results
as they come through on screen.

In last year’s Annual Report, we promiseda programme of work to understandaudience perceptions of quality better.
One of its key findings is that viewers
want fewer repeats in BBC One peak time.
We have responded to this by setting an
objective for the coming year to ensurethat the volume of repeats in peak timeis reduced further below its 10% ceiling.
The Director-General’s programme ofcost savings will release funds for the newprogramme investment necessary.

During the year, a range of programmes
on BBC One demonstrated how interactive
digital television can enrich the viewing
experience by allowing programme-makers
to offer additional content. Successful
examples included British Isles: A Natural
History, which offered opt-outs for eachregion; Child of Our Time, which enabledparents to test their parenting knowledge;
and Question Time, which invites viewers
to send in questions during the debates.

Another important genre prioritised for
additional investment is British comedy.
It is extremely risky, expensive to produce
and unpredictable in its results. When the
BBC gets British comedy right, the rewards
in terms of audience appreciation are high.
This is well illustrated by Little Britain, themost successful programme to transferfrom BBC Three to BBC One. However,
our review found some evidence of alegacy of dissatisfaction with BBC One
sitcoms seen as “too focused on middle
class suburbia” and which compared poorly
with sophisticated US imports.There isground to be made up here, but we areencouraged by the quality of the new BBC
comedy starting to come on stream.

In last year’s Annual Report we said that wewould review the performance of religious
programming on BBC One and Two andthe effectiveness of the strategy put inplace some years ago to deliver high-impact
religious programming alongside Songsof Praise and The Heaven and Earth Show.
Our review found that the so-called“landmark approach” had not succeeded
in delivering higher impact religious
programming on BBC One. Management
has now begun a programme of work toaddress this issue. On a related issue, theindependent Central Religious Advisory
Committee (CRAC) was concerned about
the irregular scheduling of Songs of Praisein recent years, and management has now
made a commitment to keep it in a regularslot (for more on the work of CRAC see
page 59).

24

BBC Annual Report and Accounts 2004/2005

The Athens Olympics were the major
sporting success of the year on BBC
Television, and these, too, were very
effectively enhanced through the innovativeuse of interactivity (for more on sport
see page 57). Other events that drew
Britain together through BBC One included
Comic Relief, and programming marking
the 60th anniversary of D-Day – marked
with a range of strongly evocative output,
including documentaries, drama, news
coverage and a special edition of Songsof Praise.

21
million watched Portugal v England, Euro 200429%of people in the UK saw Who Do You Think
You Are? on BBC Two

Remit
BBC Two sets out to be a mixed-genre
channel combining serious factual andspecialist subjects with inventive comedy
and distinctive drama to bring challenging,
intelligent television to a wide audience.
The strategy we approved for BBC Two
in 2003 is now fully reflected on screen.
Its aim was to underline the channel’s
distinctive public service role as a channel
offering a more challenging mix of output
than BBC One and, in particular, offeringa strong and distinctive factual core.
This was achieved by shifting funding awayfrom entertainment, reducing the volume
of lifestyle programmes and increasing
the amount of arts and current affairs
in peak time.
This shift has been achieved – but notwithout some cost in terms of audience
numbers. Average all-homes weekly
15-minute reach to viewers aged 4+
in 2004/2005 was 61.4% or 34 million
people (67%/37 million in 2003/2004).
This is a significant fall, although thefigures were undoubtedly affected by thechannel’s loss of The Simpsons.The newchannel controller is currently reviewing
the implementation of the strategy with aview to broadening its appeal. On behalf oflicence fee payers we look forward to him
sharing with us, in due course, his proposals
for further evolution of the schedule.

The Apprentice
Tim Campbell, chosen by Sir Alan Sugar as winnerof The Apprentice, which used reality television
techniques to shed new light on entrepreneurship

Auschwitz
The terrible history of mass murder at the deathcamp was examined in Auschwitz: the Nazis and the‘Final Solution’Memorable programmes included
Auschwitz: the Nazis and the ‘Final Solution’,
which used interviews – many of themnew – with perpetrators and survivors,
and made imaginative use of computer
graphics, to illuminate the issue of how
the Nazis came to do what they did.
Who Do You Think You Are? generated large
and enthusiastic audiences for family
genealogy and gave them the tools toinvestigate their own family histories. The
Long Firm was a sharply-written, stylish andevocative adaptation of Jake Arnott’s novelof the London underworld of the Sixties.

Current affairs is proving a challenge forthe channel. Despite more investment,
increased hours, evidence of real creative
innovation in strands such as Crisis
Command and If…, and reliably strong
and incisive foreign affairs journalism from
This World, reach of the genre has fallen.
This is an area to be kept under review.

There was notable success with output
dealing with business. Dragons’ Den
and The Apprentice brought vigour andoriginality to the understanding of businessand entrepreneurship – and demonstrated
that the techniques of reality television
can have a valid place in serious factual
television.These programmes were also
successful in attracting younger and ethnic
minority audiences.
Significant controversy surrounded thebroadcasting of Jerry Springer – the Opera.
Large numbers of people told us before
and after the broadcast that they foundthe programme blasphemous and indecent.
We considered the complaints in the
Governors’ Programme Complaints
Committee and decided by a majority offour to one not to uphold the complaints.
The majority view of the committee wasthat the outstanding artistic significance ofthe programme outweighed the offence it
caused to some viewers (for more on this,see Responding to Complaints on page 61).

BBC Annual Report and Accounts 2004/2005

One of the most significant developments
on BBC Two was the launch of the
topical arts magazine, The Culture Show,in November 2004. This was part ofmanagement’s response to our disquiet(reported in last year’s Annual Report)
at the diminution of arts broadcasting on
BBC Television. It is designed to fill a gap
in BBC Television’s arts portfolio between
highly accessible arts programming such as
Rolf on Art and more in-depth, single-subject
output such as Venice or Arena. The Culture
Show, produced in London and Glasgow
by a dedicated arts journalism unit, reports
from across the UK and is presented froma range of locations around the country.
The programme, scheduled at 7pm(ie, in peak time) with a repeat the samenight after Newsnight, has drawn larger than
expected audiences. Audiences for the two
showings each Thursday, taken together,average about 1 million.
Overall, we are content with the way
BBC Two is evolving, and with the energy
and commitment shown by management
in responding creatively to the newstrategy. BBC Two has significantly increased
its reputation for quality and originality.
The challenge now – and it is not an easy
one – is to find ways to improve thechannel’s reach, in particular to younger
audiences and in multichannel homes,
without endangering its distinctiveness.

25Governors’
review of services
Television

Remit
BBC Three aims to offer innovative
British content and talent aimed primarily
at young audiences.The channel iscommitted to a mixed schedule of news,
current affairs, education, music, arts,
science and coverage of international
issues, as well as to high-quality, distinctive
new drama, comedy and entertainment.
Audiences to BBC Three are on a rising
trend. Its average percentage weekly reachhas increased – and this translates into
a bigger increase in numbers of viewers
because the number of digital homes isitself rising. In 2004/2005 average weekly
15-minute reach to viewers aged 4+
in multichannel homes was 14.8% or
5.6 million people (12.6%/4.1 million
in 2003/2004).
The channel, launched in February 2003,
is still very new. It has an extremely
demanding remit – the conditions forapproval laid upon it by the Secretaryof State were much more detailed thanfor the other BBC digital television
channels. It has done well to get so far
in such a short time.The performanceof the channel was independently reviewed
by Professor Patrick Barwise in a reportcommissioned by the Department for
Culture, Media and Sport (DCMS), andwe were encouraged by his judgementthat “BBC Three has achieved or exceeded
virtually all of its many obligations on
programme mix and sourcing”.

26

Third Degree
A gang member in San Salvador.The documentary
18 With a Bullet presented a compelling close-up
study of Latin American gun cultureNighty Night
Julia Davis as Jill in Nighty Night – one of a seriesof hit comedies that have established BBC Threeas “best for British comedy”

Any enterprise committed to innovation
and risk-taking across a broad range of
output is bound to have an uneven recordof achievement, particularly in its earlyyears, and BBC Three is no exception.
But there have been some real successes.
Home-grown television comedy is oneof the most difficult genres to get right.
In Little Britain, BBC Three has taken an
idea originally launched on BBC Radioand developed it into a cult television
show that has now broken through into
the mainstream (helped by BBC One’scommitment to showcase the best of
BBC Three to a terrestrial audience).
There have been other innovative comedy
successes too – The Smoking Room,
The Mighty Boosh and Nighty Night are
examples. BBC audience research carriedout showed that, by the end of 2004/2005,
BBC Three was considered “best for British
comedy” by 20% of respondents, putting
it well ahead of any commercial channel.

Of course there is more to do. Not every
part of the schedule has been as successful.
The news at 7pm – although admirably
innovative (elements of its production style
have been copied by more conventionalbulletins) – has not yet succeeded in
attracting and maintaining the loyalty
of its target audience. We have asked
management to consider the future roleof news on BBC Three – an issue also
raised by Professor Barwise in his review.

Comedy is not the only genre where
the channel has shown real achievement.
Distinctive music output has included
Flashmob – The Opera (staged live amongcommuters in Paddington Station) andextensive coverage of the Glastonbury
Festival. Drama successes have included
Bodies, Outlaws and Casanova. There has
been innovative work in news andcurrent affairs with 60 Seconds and theThird Degree strand. Strong documentary
work included 18 With a Bullet, acompelling portrayal of gang culture
in San Salvador.
As one of six new talent initiatives, BBC
Three launched End of Story – in which
viewers were asked to complete stories
begun by eight established authors. It drew
more than 17,000 entries, making it the
UK’s biggest short story contest.

BBC Annual Report and Accounts 2004/2005

We are encouraging management to
explore ways to increase the channel’s
reach and share without putting at risk
its growing reputation for innovation anddistinctiveness.The process of drawing up
service licences will give us the opportunity
to review the remit for BBC Three anddetail how the service will deliver public
value in terms of the content it offers.

11.6

million watched the final show ofStrictly Come Dancing

17,380people entered BBC Three’s End of Story
writing competition

In Praise of Hardcore
Rob Brydon as the drama critic Kenneth Tynan –a touching portrait of the controversial andinfluential writer

Remit
BBC Four aims to serve audiences insearch of even greater depth and range
in their viewing. With an ambition to be
British television’s most intellectually andculturally enriching channel. BBC Foursets out to balance a distinctive mixof documentary, performance, music,
film and topical features to offera satisfying alternative to moremainstream programming.
Audiences to BBC Four are rising. Its
average percentage weekly reach has
increased – and this translates into a bigger
increase in numbers of viewers because
the number of digital homes is itself rising.
In 2004/2005 average weekly 15-minutereach to viewers aged 4+ in multichannel
homes was 4.8% or 1.8 million people(3.7%/1.2 million in 2003/2004).
BBC Four has successfully positioned
itself as “a place to think”. Its schedule
is unashamedly literate, intelligent, anddemanding.The extra investment in drama
and comedy is beginning to show results.
Examples of distinctive output include
Jonathan Miller’s provocative History ofDisbelief; a touching drama about Kenneth
Tynan, In Praise of Hardcore; an aptly
illuminating study of the science of light inLight Fantastic; an intelligently funny 25th
anniversary tribute to one of the highlightsof television comedy in Arena – Remember

Light Fantastic
Simon Schaffer presented BBC Four’s explorationof the phenomenon of light – reinforcing thechannel’s claim to be “a place to think”

the Secret Policeman’s Ball?; a succession offine documentaries in the Storyville strand
including a moving film from South Africa, theOrphans of Nkandla; and a well-researchedthree-part history of British jazz in Jazz
Britannia. Selections from BBC Four are
shown on BBC Two’s Four on Two zone.
We were encouraged by the independent
report on the channel, commissioned by
the DCMS from Professor Patrick Barwise,
which said that BBC Four “exemplifies
the BBC’s traditional, self-confident public
service values – meeting both the letterand the spirit of its remit – without undue
stuffiness or paternalism”.
Audiences to the channel have increased
significantly during 2004/2005, but froma low base. We acknowledge and support
the need to grow the channel’s reachand we support management’s efforts
to secure a more welcoming tone for thechannel. However, we do not support thesuggestion that the best way to achieve
wider reach is by making the channel moremainstream.This would threaten its valued
ability to take risks – and almost inevitably
mean that BBC Four would start toencroach on the territory of otherchannels, a reduction of choice thatwould benefit neither licence fee payers
nor the wider broadcasting market.
In drawing up the service licence forthe channel we will pay close attention
to any refining of the remit that could
increase its appeal within the termsof its original approval. In the meantime
we have approved a measured increasein the channel’s budget for 2005/2006.

BBC Annual Report and Accounts 2004/200527

Governors’
review of services
Television

Remit
The CBBC Channel aims to offera distinctive mixed schedule for children
from 6 to 12 years old, encouraging
them to find out more about existing
interests or inspiring them to develop
new ones, and helping them tounderstand and embrace the world
around them.The channel puts anemphasis on encouraging participation.
Audiences to The CBBC Channel are rising.
In 2004/2005 average weekly 15-minutereach to viewers aged 4+ in multichannel
homes was 5.6% or 2.1 million people(4.2%/1.4 million in 2003/2004).
The channel was launched in February
2002 as a dedicated children’s digitalchannel. Its distinctiveness rests on thequality of its output, the range of its
schedule (with clear commitments innews, education and drama), the low
repeat level, its freedom from adverts
and the high proportion of UK-originatedmaterial in a market where children’schannels mostly show acquired andoften imported programming. Originatedprogramming takes 91% of the budget
and there is a high level of originatedmaterial throughout the day.

28

Shoebox Zoo
Vivien Endicott-Douglas as Marnie.The CBBC
Channel’s Shoebox Zoo had the high production
values of adult dramas

Something Special
Justin Fletcher, presenter of Something Special – theprogramme designed to help pre-school children
with learning difficulties

The channel is a lively and energetic
offering demonstrably in tune with its
audience – which is hard to please, lives
increasingly in a multimedia world andexpects its television to do likewise.
The channel has enabled Blue Peterto expand from three to five editions a
week. Productions such as Shoebox Zoo(from CBBC Scotland), an adventure serial
mixing live action and realistic 3D animation,
demonstrate that children can be offeredsimilar production values to adult audiences– and a sophisticated website too. Serious
Arctic, which took eight children sledging
with huskies in a remote Canadian glacierin sub-zero temperatures to monitor
global warming (and, just as important,
to discover their own strengths andweaknesses) was knowledge-building,gripping and enlightening television.The
successful, largely black, sitcom, Kerching!,
returned for a second series. Dick andDom in Da Bungalow did what it set
out to do: made its Saturday morning,
end-of-school-week audience laugh, withjokes that may not be to adult tastes, but
are not designed to be.The programme
stands out for its refreshing lack ofon-screen reliance on celebrities, popmusic – or indeed, adults. It also has amuch-appreciated website. CBBC online
message boards are a fast-growing area
– all messages are checked for safety andsuitability, making these areas one of thesafest communities in the industry.

primarily for use in the classroom and arefocused on the school curriculum.

The CBBC Channel’s philosophy
is “learning through fun”.This means
introducing an element of learning andlife skills development across a large partof its output including drama and factual.
The schedule also includes Class TV,a four-hour block of schools programmes
transmitted every weekday during term
time.These programmes are designed

BBC Annual Report and Accounts 2004/2005

The channel’s performance wasindependently reviewed by Professor
Patrick Barwise in his report on the BBC’s
digital television channels commissionedby the DCMS. He described the channel
as “a distinctive service with high-quality
UK-produced content free fromadvertisements, covering a wide range
of genres, and with a high proportion oforiginal programming”. He did, however,raise some questions about the toneof voice of the channel. We have asked
management to consider these issues andrespond formally to us. Professor Barwise
also suggested rebranding the channel
to distinguish it from CBBC on BBC One
and BBC Two. Management, in its response
to us on this point, has indicated that BBC
research shows the current labelling is wellunderstood by its target audience, and thatan evolution of the brand and its visual
identities would probably deliver greater
value for money to licence fee payers thanan expensive rebranding exercise.
The creative challenge for the channel is
not to rest on its laurels, to continue toinnovate and to refresh its schedule, and,within the bounds of its remit, to develop
new ways of delighting a demanding andsometimes fickle audience.

50%

increase in reach of CBBC among children
since 2003/2004

912

hours of new factual programmingon BBC One

Remit
CBeebies aims to offer a mix of newand landmark, high-quality, UK-produced
programmes to educate and entertain
the BBC’s youngest audience.The service
provides a range of pre-school
programming designed to encouragelearning through play for children
aged five and under, in a consistently
safe environment.
Audiences to CBeebies are rising.
In 2004/2005 average weekly 15-minutereach to viewers aged 4+ in multichannel
homes was 9% or 3.4 million people(8.9%/2.9 million in 2003/2004). As someviewers are aged under four thisunderestimates the size of the audience.
CBeebies remains the market leader among
all children’s channels, although strengthened
competition from the commercial sector ismaking inroads into its market dominance.
The channel was launched in February
2002 as a dedicated pre-school digitalchannel based on the philosophy of“learning through play”. Almost all the
programming is linked to the Government’s
Foundation Stage Curriculum. It uses theeducational possibilities of online interactivity
in innovative ways: the Razzledazzle site
helps children develop language skills;
the Something Special website supports
pre-school children with learning difficulties.
Both sites are linked to television
programmes successfully launched in 2004.
The CBeebies website also has a Grown
Ups message board – much used byparents and carers to comment on the
output, discuss parenting issues, and to
exchange useful information.

Weekly reach of BBC Television services
2004/2005 (% individuals)
86.6(88.2) 81.9
(83.7)
61.4(67.0)

9.4
(7.0)

5.8
4.2
3.5
3.0
0.2
(2.1) (2.3) (5.0) (3.9) (0.2)*

BBC Television
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament

Source: BARB, TNS/Infosys, age 4+, average 15-minute weekly reach for the year. Note: Figures for 2003/2004
appear in brackets. *BBC Parliament has only been measured since September 2003

CBeebies has drawn high praise. Professor
Patrick Barwise, in his independent reporton the BBC’s digital television channels
commissioned by the DCMS, called it“a triumph, an exemplary PSB [public
service broadcaster] service for pre-school
children… It has a feeling of integrity andpublic service but has also been extremely
successful at reaching and engaging its
audience as well as developing newtechniques and formats and… exploiting
interactivity… CBeebies represents
excellent value for money.”
CBeebies has not yet been able to meetits original commitment to “invest directlyin animation co-production far more
frequently, thereby increasing the numberof UK-based projects”. This is because ofhigher than expected costs. As an alternative,
the channel ‘pre-buys’ programmes fromUK animation houses.This supports theearly stages of development and production
and increases the viability of the projects –and it enables the BBC to ensure thefinal programmes are appropriate for
its audiences. However, the commitment
to co-production remains, and we note
CBeebies’ stated aim in its 2005/2006
statement of programme policy to“co-produce a high-quality UK animation
during this period”.
The larger challenge for the channel is thatof maintaining its market leading position
with a portfolio of titles some of which arepossibly nearing the end of their creative
life, at a time when competition from otherproviders is strengthening.

BBC Annual Report and Accounts 2004/2005

29

Governors’ review
of services
Radio
Overview
The radio landscape in Britain continues to change very
rapidly, driven by intensifying competition and the continual
arrival of new technology, allowing people to listen
in new ways. In particular, audio on demand continues
to experience strong growth.
This year, for example, has seen the arrival of podcasting.
This allows audiences to download programmes fromthe internet to MP3 players and listen to them at amore convenient time – for example, while commuting,or at the gym. BBC experiments with downloads haverevealed extraordinary levels of demand: In Our Time,Radio 4’s weekly discussion on the history of ideas, wasthe first of the network’s regular programmes to bemade available – and received almost 380,000 requests
for downloads in the first six months.
It has been a strong year for BBC Radio. In particular,
the new strategy for Radio 1 is starting to bear fruit andRadio 2 goes from strength to strength. The new digitalstations are bedding down well – although we will continue
to monitor their performance.

30

BBC Annual Report and Accounts 2004/2005

337

hours of news, sport and current affairs
on Radio 1

61%of Radio 2’s audience is aged 45 or over

One Big Weekend
Big crowds turned out for One Big Weekend in
Londonderry – part of Radio 1’s commitment
to live music – to hear bands including Franz
Ferdinand and Keane

Remit
BBC Radio 1 aims to offer an exciting,high-quality service for young audiences.
It is committed to playing the best new
music and delivering a comprehensive
range of live studio sessions, concerts
and festival broadcasts.The network aims
to cover all the significant youth music
genres with a wide-ranging playlist anda diverse team of specialist DJs. It alsodelivers tailored speech output – including
news, documentaries and advice
campaigns, with integrated online andinteractive services.
Radio 1 remains critical to the BBC
commitment to reaching young audiences– and its health is central to the successof BBC Radio overall. We approved a
new strategy for the station in May 2003
that has revitalised the offer, and we areencouraged that audiences appear to havestabilised over the past year after a period
of decline. Radio 1 recorded an average
15-minute weekly reach to adults aged
15+ of 10 million people or 20.4% in
2004/2005 (9.8 million/20.2% in 2003/2004).
Over half of listeners to Radio 1 do notlisten to any other BBC radio station.

Beat Bullying
Radio 1 disc jockey Jo Whiley demonstrating her
support for the station’s Beat Bullying campaign
by wearing the campaign’s blue wristband

This has been achieved while maintaining
the station’s commitment to specialist
music, to UK music, to new music, andto live music – the key drivers of the
distinctiveness of its music offer. Researchcarried out in a sample week in May 2004
compared Radio 1 output with that of nine
key commercial competitors.The results
showed that Radio 1 played many moreindividual songs, more new songs – andmore new songs by UK artists in daytime –and repeated tracks less often. Only
13% of the music was pop (using theindustry-recognised definition of the genre).
No competitor began to match Radio 1’s
commitment to live music, which this year
included the well-received One Big Weekend
in Birmingham and Londonderry.

Radio 1 has maintained its strong online
presence.The station’s website attracts
the highest number of users of theBBC’s network radio stations and thereis particularly strong demand for live andon-demand listening.
We have noted the concerns raised during
the Charter Review process for us toremain vigilant that the distinctiveness of
the Radio 1 offer is not diminished overtime, and the particular reference to the
distinctiveness of some peak-time output.
While the research we have seen showsthat there is no current cause for concern,
we will remain aware and take accountof the concerns expressed when we draft
the service licence for Radio 1.

Alongside its music output, Radio 1
has a wide-ranging speech component
accounting for some 30% of output.This
includes the long-running Newsbeat, which
provides national and international news
and analysis specially tailored for a young
audience; a documentary strand within
Lamacq Live covering subjects ranging fromthe tenth anniversary of Britpop to an
examination of binge-drinking; and thesocial action strand Sunday Surgery andthe One Life website which have built astrong reputation for dealing frankly, instraightforward language with difficult issues
confronting young people. Radio 1’s Beat
Bullying campaign achieved a high profileand distributed a million blue wristbands
to listeners. Chris Moyles’ Red Nose Rally
travelled from John o’Groats to Land’s End,raising more than £600,000 in the courseof the week for Comic Relief.

BBC Annual Report and Accounts 2004/2005

31

Governors’
review of services
Radio

BBC Radio 2

Remit
BBC Radio 2 aims to bring listeners
a broad range of popular and specialist
music, with particular support for new
and established British artists; live music,
through concerts and studio sessions;and song-writing.The network also offers
news, current affairs, documentaries,
comedy, readings, religious output andsocial action, designed to appeal to abroad audience.
Radio 2’s remarkable grip on its audiencehas continued for another year. It remains
the UK’s most listened-to radio station
with average 15-minute weekly reach toadults aged 15+ of 13.3 million people
or 27.2% in 2004/2005 (up from
12.9 million/26.7% in 2003/2004).
A cornerstone of its enduring appeal is
its stable of familiar and highly regardedpresenters.Terry Wogan’s breakfast show
Wake Up to Wogan drew record audiencesof more than 8 million in the final quarterof 2004/2005. The show has madeimaginative use of email to build interaction
with its audience.The roster of Radio 2
presenters has been refreshed with newnames including Mark Radcliffe, Elaine Paige
and Mariella Frostrup.
Across the station, the music played
continues to cover an extremely broad
range. More than 20 genres of music are
carried, including rock, pop, soul, country, jazz,
folk, brass band and light opera. Radio 2
has maintained its commitment to live
music – the bulk of it British – throughout
the schedule. The distinctiveness of themusic output overall rests on the low levelof repeats of individual tracks, plus the32

criteria for selection, which include:
musical merit, not market performance;
an emphasis on album tracks as opposed
to singles; and prioritisation of new UK
artists. Research carried out during asample week in May 2004 showed that
two thirds of the Radio 2 tracks were
not played by any major competitor.
Although Radio 2 is primarily a music
network, more than one third of its output
is speech. Here too the range is broad.
The Jeremy Vine Show has now establisheditself at the heart of the lunchtime schedule.
Other notable speech output included themusic documentaries Lost Boy – In Searchof Nick Drake, narrated by Brad Pitt; andHugh Masekela’s series, Freedom Sounds,
on the development of South African music.
Over the summer the station broadcast
a wide-ranging series of programmes
encouraging its older audience to sample
the opportunities offered by digital
media, and demystifying some of thetechnical vocabulary.
We have noted the concerns raised
during the Charter Review process by
the commercial radio sector suggestingthat Radio 2’s success has been achieved
at a cost of a drop in commercial radio’s
share of the market. However, the research
we have seen has reassured us that thestation’s offer remains genuinely distinctive.
We are committed to ensuring that thisremains the case, and that necessary
evolution to keep up with changing
audience tastes does not mean avoiding
risk – or moving into areas alreadywell-served by other providers.These areconsiderations we shall take into accountwhen we draft the service licence forRadio 2.

BBC Annual Report and Accounts 2004/2005

Das Rheingold
Philip Langridge and Bryn Terfel in Wagner’s Das
Rheingold relayed from the Royal Opera Houseon Radio 3 – with subtitles for digital listeners

Remit
BBC Radio 3 is centred on classical music,
and also aims to provide a broad spectrumof jazz, world music, drama and arts
programmes. It focuses on presenting live
and specially recorded music from acrossthe UK and beyond, including contributions
from the BBC performing groups.
Radio 3’s audience figures recorded asmall dip, with average 15-minute weekly
reach to adults aged 15+ of 2 million
people or 4.2% in 2004/2005 (downfrom 2.2 million/4.5% in 2003/2004).
Notable output has included in-depth
coverage of composers (Janácek Day,for example) and of performers suchas Wilhelm Furtwängler and Jacqueline
du Pré. Listen Up! was an innovative
six-week celebration of British orchestral life,
including amateur musicians.There was awell-received experiment broadcasting
Wagner’s Das Rheingold from Covent
Garden with subtitles delivered via digital
television and the scrolling text facility
on DAB digital radios. Late Junction continues
to provide engagingly unpredictable listening.
^

Elaine Paige on Sunday
Sir Elton John talked about his work for stage
and screen in Elaine Paige’s weekly Radio 2 show
putting the spotlight on musicals

The distinctiveness of Radio 3’s output isunarguable. We have been encouraged tosee this recognised during the discussions
on Charter Review.

5orchestras are funded by Radio 3

787

hours of original drama and readingson Radio 4

Hitchhiker’s guide
Simon Jones (right) as Arthur Dent, plus the restof the cast of Radio 4’s adaptation of the final
books of The Hitchhiker’s Guide to the GalaxyWestern classical music remains at theheart of the schedule and will continue
to contribute the overwhelming majorityof the music played. However, Radio 3
has never played only classical music andthe remit we have agreed with Radio 3
requires this core to be complemented
with other music genres including jazz andworld music.
We have noted the desire of somelisteners for more classical music, but,having examined the output with thehelp of our advisers and taken into accountthe interests of the audience as a whole,
we feel that the current schedule offers
an appropriate balance of musical genres.
As with all BBC services audience
expectations will inform our judgements
as we draft Radio 3’s service licence.

Remit
BBC Radio 4’s remit is to use the powerof the spoken word to offer programmesof depth which are surprising, searching,revelatory and entertaining.The network
aims to offer in-depth and thoughtful
news and current affairs and seeks toengage and inspire its audience with aunique mix of factual programmes, drama,
readings and comedy.
Audiences to Radio 4 dipped slightly.
Average 15-minute weekly reach to adults
aged 15+ was 9.4 million or 19.3% in
2004/2005 (9.6 million/19.8% in 2003/
2004), but audience loyalty remains high –research shows that a typical listener tunes
in for almost 13 hours a week.
Journalism continues to provide the spine
for Radio 4.This includes high-profile
mainstream output such as the Today
programme – but the mix includes arich portfolio of specialist programmes
including In Touch – for the blind andpartially-sighted – Law in Action andFarming Today, as well as strong coverageof science and ideas. Arts coverage isa particular strength of Radio 4. During
our research on arts coverage on BBC
Television (see BBC Two page 25) wewere struck by the very high esteem inwhich BBC Radio arts journalism is heldby the arts community – with Radio 4
programmes such as Front Row andSaturday Review frequently being cited
as models of their kind.

BBC Annual Report and Accounts 2004/2005

Roots of Islam
Edward Stourton in the Hejaz desert outside
Mecca. His Radio 4 series, In the Footsteps ofMuhammad, traced the roots of Islam and ofits prophet Muhammad

Memorable documentary output included
In the Footsteps of Muhammad, assessing
the impact of the life and teachings of theProphet of Islam; and The Sound of Life,
exploring the natural history of wild soundon Earth.
The distinctiveness of Radio 4 is widely
accepted. During the Charter Review
consultations there has been generalagreement that if the BBC did not broadcast
the service, it would not exist – because
it would not be financially viable as acommercial operation. One reason forthis is the very large amount of speciallycommissioned new writing – including
drama, comedy and readings – which
help to give the network its unique voice.
Comedy is a particular strength, bothwith long-running titles such as I’m Sorry
I Haven’t a Clue and The News Quiz, andalso with successful new offerings suchas Clare in the Community.
Radio 4 carried memorable coverageof the 60th anniversary of D-Day acrossa range of genres. In addition to abroadcast of the commemorative service,
D-Day-related programming was included
in Book of the Week, Woman’s Hour and
Any Questions (an edition from France);in What If…? leading historians discussed
possible outcomes had the landings
not succeeded; Back Row and Loose
Ends celebrated the films and popular
entertainment of the time; andThe People’s D-Day, an ambitious oral
history documentary, vividly recalled the
preparations for Operation Overlord.

33

Governors’
review of services
Radio

Beslan massacre
A mother in tears for her murdered daughter –killed in the siege of a school in Beslan, North
Ossetia, by Chechen separatists

Radio 4 has an expanding and extremely
successful website. Audio on demand has
been notably popular. One million listeners
heard the dramatisation of the later booksin the Hitchhiker’s Guide to the Galaxy
sequence via the Radio Player; and theexperiment to offer mp3 downloads of
Melvyn Bragg’s In Our Time drew almost
380,000 downloads in the first six months.
Although it remains successful, Radio 4
must not be complacent.The challenge
is to continue to innovate and refresh
the network without losing authority
and without damaging the valuable senseof ownership that the Radio 4 audience
feels towards the station.

Remit
BBC Radio Five Live broadcasts live
news and sport 24 hours a day, aiming
to present events as they happen ina modern, dynamic and accessible style.
It sets out to cover national andinternational subjects in depth, using
wide-ranging analysis and debate to
inform, entertain and involve news andsports fans of all ages, with particularemphasis on 25 to 44 year olds.The
network also provides extensive live
events coverage, supported by the BBC’s
global newsgathering operations andportfolio of sports rights.
Audiences rose slightly. Average 15-minuteweekly reach to adults aged 15+ was
6.2 million or 12.7% in 2004/2005(6.1 million/12.5% in 2003/2004).
The network’s image as a sports station
is belied by the fact that the majorityof the output is news and current affairs.
The station was commended by Lord
Wilson’s panel assessing the BBC’s
coverage of Europe (see page 14) for its
success at explaining complicated issues
and finding ways to bring them alive.

34

BBC Annual Report and Accounts 2004/2005

Athens Olympics
Dame Kelly Holmes celebrating her second Athens
Olympic gold medal – in the 1500 metres

The network has done valuable public
service work in bringing a new andyounger audience to news through sport –70% of the sports audience listens to thenews output.This has been built over thecourse of the year by using Five Live’s
established news presenters as part of thecoverage of major sporting events. A good
example was Nicky Campbell’s live
presentation from the Olympic rowing
regatta introducing Alan Green’s memorablygripping commentary on Matthew Pinsent’s
fourth gold in the men’s coxless four.
Other memorable output included
Five Live’s extended coverage of the
Asian tsunami, and of the Beslan school
massacre. Weekend Business is a new strand
providing a platform for the considerable
business journalism of Jeff Randall. Fighting
Talk is a successful and entertaining format
for sports punditry. Breakfast continues
to be a lively and engaging alternative
to the Today programme. A new sports
investigative programme, Sport on Five Reportcovered subjects including national lottery
funding of Olympic hopefuls, and the lackof success of the England football team.

Weekly reach of BBC Radio services
2004/2005 (% adults age 15+)
66.6
(66.4)

27.2
20.4 (26.7)(20.2)
4.2
(4.5)

20.8
19.3
(19.8) 12.7 (21.1)(12.5)
2.6
1.0
0.9
0.8
0.6
0.5
(0.6)* (0.6)* (0.3)* (0.6)* (0.9) (2.9)

BBC Radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC National/Local RadioBBC Five Live Sports Extra
1Xtra
6 Music
BBC 7
BBC Asian Network
BBC World Service

Source: RAJAR, age 15+, average 15-minute weekly reach for the year. Note: Figures for 2003/2004 appear in brackets.
*BBC digital services have only been measured since quarter three, 2003. In quarter two 2003, RAJAR’s population
was adjusted in line with the latest Census figures

Trinidad Carnival
The annual carnival in Port of Spain – specialisingin calypso music and its offshoot, soca – showcasedby BBC 1Xtra

Remit
BBC Five Live Sports Extra is a part-time
extension of BBC Radio Five Live, aimed
at bringing a greater choice of action
to sports fans. It extracts more value
for licence fee payers from sports rights
already owned by the BBC by offering
alternative commentaries to those
provided on Five Live.
Since its launch in 2002, Five Live Sports
Extra has established itself as a valued
sister station to Five Live, delivering extra
value to licence fee payers from existing
BBC sports rights.The BBC does not
buy additional sports rights solely for use
on Sports Extra. Average 15-minute weekly
reach to adults aged 15+ was 0.41 million
or 0.8% in 2004/2005 (comparable data is
not available for the whole of 2003/2004).
The service has enabled the BBC towiden choice for listeners – for example,
by continuing to broadcast sportscommentaries when sports coverage on
Five Live is curtailed to enable full coverageof breaking news. It also enables the BBC
to offer sports fans a greater choice ofmatches and events, including coverage ofmajor UK athletics meetings and extended
cricket commentary.

Remit
1Xtra aims to play the best ofcontemporary black music, with a strongemphasis on delivering high-quality live
music and supporting new British artists.
1Xtra also brings listeners a bespokenews service, regular discussion
programmes and specially commissioned
documentaries, plus information andadvice relevant to the young target
audience, particularly – although not
exclusively – those from ethnic minorities.
Average 15-minute weekly reach toadults aged 15+ was 0.31 million or 0.6%
in 2004/2005 (comparable data is notavailable for the whole of 2003/2004).
Since its launch in 2002,1Xtra has built
a following among a young audiencethat had felt it got nothing from the BBC.
The broadcast service is extended byinnovative online material such as Taggerz,
an interactive animated drama abouta gang of graffiti artists.

We also agree with his view that it
is important for 1Xtra to maintain its
distinctiveness from competitors. 1Xtra
is already committed to deliver 40% UK
music and 65% new music (new is defined
as less than a month from UK release)overall. We will consider the need forsimilar targets for peak-time output andother factors such as live and specialist
music as we draw up the service licencefor 1Xtra.
Last year we drew attention to concern
over the quality of some of the speechprogramming on 1Xtra. Progress has beenmade. TX Unlimited has produced notablejournalism on the issue of the homophobic
lyrics of some Jamaican dancehall music.
But there is more to do.The station iscommitted to enhancing the depth andrange of speech throughout its schedule,
particularly during the weekday breakfast
show, something we will take into
consideration in drafting the station’s
service licence.

1Xtra was independently reviewed by
Tim Gardam as part of his report on the
BBC digital radio services commissionedby the DCMS. We were encouragedby his view that 1Xtra had “successfully
established credibility in a community that
initially had little connection with the BBC”
and that it had “well served the needsof its target audience”.

BBC Annual Report and Accounts 2004/2005

35

Governors’
review of services
Radio

Hub Session
Joel Pott of Athlete, playing live for one of
BBC 6 Music’s Hub Sessions, staged in a
BBC coffee bar

Remit
BBC 6 Music aims to engage withlovers of popular music, offering themcurrent releases outside the mainstream,
new concert and session tracks andmusic from the BBC sound archive.
It concentrates on music and artists thatare not well supported by other radio
stations, and is committed to providing
context for the music it plays, throughmusic news, documentaries, debate andstimulating interactive content.

We have accepted Tim Gardam’s
recommendation that the remit for 6 Musicshould be redrafted to reflect better thestation’s character, and its performance inits first two years.The new service licencefor 6 Music will take this into account, andit will include a quantitative commitment
to archive music. We have already ensured
that such a commitment is part of thestation’s statement of programme policy
for 2005/2006.
BBC 6 Music has also taken steps toensure a clearer definition of its speech
output. In 2005/2006 the station iscommitted to broadcasting more than
550 hours of rebroadcast and newlycommissioned documentaries and essays.

BBC 6 Music achieved an average
15-minute weekly reach to adults aged
15+ of 0.25 million or 0.5% in 2004/2005(comparable data is not available for thewhole of 2003/2004).

BBC 7 had an average 15-minute weekly
reach to adults aged 15+ of 0.44 million
or 0.9% in 2004/2005 (comparable data is
not available for the whole of 2003/2004).
Since its launch in 2002, the station has
found an appreciative audience, largely
by exploiting the resources of the BBC
speech archive to create a service thatis complementary to, but distinctive from,Radio 4.

Since its launch in 2002 it has establisheditself as a distinctive service highly valued
by its listeners. It continues to innovate,
for example inviting the Manic Street
Preachers to curate the station for a week;
and attracting influential bands to play liveat its Hub Sessions in the BBC’s coffee barin Broadcasting House.

New drama – including some from writers
discovered via the BBC New Writing
initiative – has been commissioned for adults
and children. BBC 7’s children’s programmes
have drawn particular praise.Tim Gardam,in his independent review of the BBC’s digitalradio services commissioned by the DCMS,
described BBC 7’s originated children’s
programming as “a genuine adornment
to British broadcasting and one that nocommercial station would do… The twochildren’s programmes Big Toe and Little Toehave successfully got rid of the perceptionthat radio children’s programmes would
be hideously old-fashioned. They havedeveloped a multimedia proposition where
many children come to radio through theonline sites.”BBC 6 Music was independently
reviewed by Tim Gardam as part of his
report on the BBC digital radio services
commissioned by the DCMS. We werepleased to note his view that “6 Music
represents the best of the BBC’s creative
enthusiasm… Its standing in relation to its
audience is similar to Radio 3’s relationshipto its listeners… It is a station that has
gained rapid respect in the music press
and among leading British artists for its
knowledge and authority.”

36

Remit
BBC 7 is a speech-based digital radio
service offering comedy, drama andreadings, mainly from the BBC archive.
The network is zoned around typesof programmes so people know thatat a certain time of day a particular
type of output will always be available.
BBC 7 also aims to be the home ofchildren’s speech radio, with regular
live programming for children.

BBC Annual Report and Accounts 2004/2005

70%
of output on Radio Five Live is news

15.5

million adults say they listen to the radio
via a digital television

Big Toe
Kirsten O’Brien and Jez Edwards, presenters of
BBC 7’s children’s show Big Toe.The station runs
four hours of programmes for children each day

Tim Gardam, however, raised concerns
over the impact of the station on its
nearest commercial competitor, Oneword.
Although we note Gardam’s conclusionthat the BBC did not deliberately set
out to harm Oneword, we recognise that
BBC 7 has been controversial because of
its alleged market impact.The public value
test that we will apply to any proposed
new services in future will include an
independent assessment of the potential
market impact.

Remit
BBC Asian Network aims to offer
challenging debate, informed journalism,music, sport, entertainment and drama
to audiences of British Asians fromdifferent generations. The network
broadcasts primarily in English but
also in a range of languages spoken
by UK Asians. It aims to be the main
broadcast forum for debating the issues
preoccupying British Asian communities.

Silver Street
Narinder Kaur (Tina) and Jay Kiyani (Jaggy) – in the
BBC Asian Network soap Silver Street.The showprovides many opportunities for new talent fromthe Asian community

The main challenge ahead is to develop
the network’s editorial ambition.This shouldbe helped by the formal relationship thatthe network now has with BBC Radio Newsand with BBC Radio Five Live – since thestart of 2005, the controller of Five Livehas been responsible for BBC Asian
Network’s strategic direction. We arelooking for an improved commitment
to current affairs, and we are encouragedby the network’s new focus on delivering
more original journalism.

BBC Asian Network had an average
15-minute weekly reach to adults aged
15+ of 0.5 million or 1% in 2004/2005(0.44 million/0.9% in 2003/2004). Almost
half of the listeners to Asian Network do
not listen to any other BBC radio station.
BBC Asian Network was launchednationally in 2002, based on the existing
AM station broadcasting from Leicester.
It is establishing itself as a valued service
for a previously under-served audience.
The Sonia Deol Show each weekday
morning is a lively forum for debate on
issues important to British Asians.The daily
10-minute soap, Silver Street, set in a west
Midlands community, has been well-received
since its launch in 2004 and is an importantresource for new writing, production andacting talent from the Asian community.
All major religious festivals have been
covered including Navrati, Ramadan, Diwali,
Christmas and Easter.
We were encouraged that Tim Gardam,in his independent report commissionedby the DCMS on the BBC’s digital services,
said “The superior quality and greater
editorial diversity of the network justifies the
Asian Network’s presence in the market.”
BBC Annual Report and Accounts 2004/2005

37

Governors’ review
of services
New Media
Overview
The internet is now a powerful third medium throughwhich the BBC can serve its licence fee payers alongside
television and radio. As well as supporting our televisionand radio services BBC sites have become destinationsin their own right for audiences seeking information,
education and entertainment. This year we have redrawn
the remit for bbc.co.uk to provide stronger direction
and tighter boundaries and to ensure a clearer focus
on delivering the BBC’s public purposes.
bbc.co.uk continues to do valuable work in opening up
the internet to new users, particularly older people, andin providing safe content and guidance for young users.
It is also contributing to opening up the BBC itself, throughthe development of accountability sites.
The BBC’s interactive services are an increasingly importantcomponent of its output and the BBC remains a leader inthis field.The very successful online, mobile and interactive
television services developed for the Olympics give an
indication of the enormous potential here.
The New Media & Technology division does important work
developing new platforms for BBC content, including new
ways of delivering high-quality video to mobile phones.
There have been successful technical trials of iMP, theinteractive Media Player, offering the prospect of video-ondemand and these will continue throughout 2005/2006.

38

BBC Annual Report and Accounts 2004/2005

Monthly reach 2004/2005 of bbc.co.uk,
BBCi interactive television 24/7 service
and BBCi enhanced television services(millions)
10.6
8.9

5.3

6.1
3.5
2.2

bbc.co.uk 2003/2004*
bbc.co.uk 2004/2005*
BBCi interactive television
24/7 service 2003/2004**
BBCi interactive television
24/7 service 2004/2005**
BBCi enhanced television 2003/2004***
BBCi enhanced television 2004/2005***

Sources: * BMRB Access (monthly reach age 15+ in GB). **TNS/Interactive Television Tracking Study (monthly reachGB adults age 16+ in digital satellite homes). ***BARB, viewers age 4+ in digital satellite homes. Digital satellite
performance only of BBCi enhanced television programmes (eg Olympics, Chelsea Flower Show)Child friendly
The search engine for the popular CBBC website –specially designed to provide a safe way into the
web for young children

Remitbbc.co.uk aims to serve the BBC’s five
purposes, with an emphasis on democraticand educational value, through the provisionof innovative and distinctive content,
available to all.As a starting point on theinternet and guide to the medium, bbc.co.uk
promotes internet use to develop a
deeper relationship with licence fee payers
and to strengthen BBC accountability.
bbc.co.uk is the largest content-based UK
website and one of the top five UK sites
in terms of unique users. It has continued
to show strong growth. Average monthly
reach was 10.6 million or 45.8% of the
British online audience (8.9 million/42.5%
2003/2004).
The service is a leader in promoting takeup of the internet. A good example is the
Who Do You Think You Are? family history
website launched in conjunction with
the BBC Two series. A key objective
was to enable people to use the internet
to research their own histories. It was
remarkably successful. Record numbers
visited the BBC History website and many
people used the internet for the first time
to research their genealogy – and in doing
so discovered other, non-BBC, websites
such as the National Archives.
bbc.co.uk is developing and testing new
ways for audiences to find and enjoy BBC
content. A key initiative over the past 12
months has been the development of theCreative Archive Licence.This offers thepotential of opening up public access to
the BBC archive while protecting the rights

of intellectual property owners and is thefruit of collaboration with other broadcasters
and rights holders. It would enableaudiences to download BBC content for
personal use – including editing it andusing it to create new work.The projectcontinues to be trialled and if completed
successfully would be subject to a public
value test and require approval from theGovernors before a full launch.
Another move to increase access has been
the introduction of RSS (Really Simple
Syndication) in BBC news and sports sites.
RSS is software that automatically searches
the internet for material of particularinterest to a user. RSS makes it easier for
BBC audiences to receive news on chosen
topics – and also allows approved externalsites to carry BBC headlines.
One Minute Movies is an initiative of the
BBC films website that lets people publish
their own 60 second films on bbc.co.uk
and allows audiences to comment on themand rate them. Since the site launched in
2004, there have been more than 300
submissions and the site regularly receives
in excess of 80,000 users per month.
In addition, the BBC films site has partneredwith the UK Film Council to launch theFilm Network. This aims to foster acommunity of young British film makers
and encourages them to develop theirskills.The site includes a guide for would-be
film makers offering help and advice on
working in the film industry and on how
to secure funding and talent to get theirproject off the ground.These initiatives
formed part of the drive to enhance thedistinctiveness of the films site following
the Graf review (see box on page 40).
Taggerz is an animated drama, developed
specifically for the web, about a gang ofgraffiti artists and the ethical choices they
make. Its subject matter is controversial and
BBC Annual Report and Accounts 2004/2005

was commissioned specifically for audiencesthat the BBC traditionally finds hard toreach. Taggerz was launched with Radio
1Xtra and was supported with interactive
discussions about the issues raised in thedrama. In addition to the story, the Taggerz
site includes an animation tool whichenables users to create their own content
based on the characters in the story.
Taggerz was commissioned from anexternal web production company and isa good example of collaboration between
the BBC and the new media independent
production sector.
Valuable work has been done to extend
services to mobile phones.The GCSE
Bitsize Revision service, already a successful
website, is now available via mobiles. And
the popular Hitchhiker’s Guide to the Galaxy
site was developed into a WAP service.
During the Olympics, results could beaccessed via mobiles and it is estimatedthat 45,000 people used the service.
One of the BBC’s online aspirations isto act as a trusted guide to the internet
and bbc.co.uk has done worthwhile
work to develop safe ways for children
to explore the internet. CBBC Search is afamily-friendly search tool that lets children
search content from the CBBC website
and a selection of other BBC sites andexternal children’s websites pre-approvedby the BBC.
In the coming year further work will bedone to improve access to BBC websites
for people with disabilities.
In 2005 bbc.co.uk played a key role inlaunching the BBC complaints website,
providing an easily accessible way forour audiences to register complaints andreceive a quick response. We have also
launched our own Governors’ website.
This will enable us to give a more open
39

Governors’
review of services
New Media

Taggerz
The animated drama Taggerz, linked to BBC 1Xtra
and available on the internet, helps the BBC get tohard-to-reach audiences among young people

Finding the answer
h2g2, a BBC internet site dedicated to the
Hitchhiker’s Guide to the Galaxy, is available on
mobile devices such as PDAs and mobile phones

Response to the Graf Reportaccount of how we have acted in theinterests of licence fee payers and help
us engage directly with audiences in orderto take greater account of their views on
a wide range of topics and issues.
In 2003 the Department for Culture,
Media and Sport (DCMS) asked
Philip Graf to carry out an independent
review of the BBC’s online services.
The recommendations of his review,
published in 2004, included redefining
the remit, strengthening regulation andcreating further opportunities for external
suppliers.These findings were in tune
with our thinking and in the course of theyear, we refined the remit for bbc.co.uk
and approved other changes (see box).
Work has continued to develop theiCan concept, which provides a way forpeople to organise community campaigns
via the internet. The project has great
potential civic value, but also some risks –in particular the potential for confusion
between content generated by the BBC
and that generated by users. The site,
now relaunched under its new name
Action Network, includes design changes
to strengthen perceptions of the BBC
as impartial facilitator.

Philip Graf was asked by the DCMS
to review the operation of the BBC’s
online services. His recommendations
included drawing up a remit moreclearly defined around public purposes;
establishing a quota for external
suppliers; and reinforcing theregulatory regime.
These recommendations fitted wellwith our own thinking.We respondedin October 2004, welcoming thereport and setting out a series ofsignificant changes to bbc.co.uk andthe way it does business.
The most important change is a newremit (the remit is set out in full inthe opening paragraph of this section).
It puts a clearer and stronger
boundary around the BBC’s online
activities and explicitly aligns themwith the BBC’s five public purposes(for more on these, see Building public
value, page 54).
We also made it clear that investment
decisions should at all times balance
the potential to create public value
against the risk of negative impact
on the market.
In the light of this strategic refocusing,a number of BBC sites were closed
down, either because they were toosimilar to non-BBC sites, or because
their value to audiences did not
outweigh their risk of negative market
impact.These included some sites
dealing with sport, listings, games andsoaps. Significant cutbacks were madein BBC investment in some otherareas, and a number of sites – suchas the films site – were tasked withbecoming more clearly distinctive.

40

BBC Annual Report and Accounts 2004/2005

In all, about 10% of the online content
budget is being redirected towards
online projects more closely aligned
to the BBC’s public purposes.
We also felt it was important toimprove the BBC’s relationships withother online producers.To this end,
the BBC has now adopted a voluntary
quota of at least 25% of eligible
content to be supplied from outside
the BBC by 2006/2007. It is estimatedthat there will be new business worth
up to an additional £5million for
external suppliers.
Other initiatives include a newmodel for linking from BBC sites
to external sites which places moreemphasis on bbc.co.uk as a starting
point for the audience’s journey
into the wider web – part of theBBC’s role as a trusted guide to theinternet.The BBC has also committed
to a new approach to partnership in
the internet environment, positioning
the BBC as an open resource forother organisations, helping themto achieve their goals.
The full text of our response to
the Graf Report can be found at:bbc.co.uk/info/policies/pdf/bbc_graf.pdf.

2
million pages of information on bbc.co.uk

20,000personal stories sent to the
WW2 People’s War website

SpooksBBCi’s Spooks Interactive extends the enjoymentof the spy thriller series with a game based ona mission to stop illegal arms trading.

Interactive Olympics
The BBC’s interactive services during the Athens
Olympics added depth and breadth to the coverage.
Almost 9 million people pressed the red button

The BBC on demand

Remit
BBCi aims to offer all day up-to-theminute news, weather, education,entertainment and other information
content to all digital television audiences
via the red button on the remote control;
to enhance the value of the BBC’s
television proposition to digital audiences
through interactive video, audio, pictures
and text.
The BBC offers two kinds of interactive
television services: BBCi 24/7 and BBCieTV (enhanced television). BBCi 24/7
offers news, weather, sport, programme
information and so on.These are available
all the time. BBCi eTV offers services
related to specific television programmes
and events – for example, as explained
below, extra events coverage during
the Olympics.
Average monthly reach in digital satellite
homes for BBCi 24/7 in 2004/2005 was
6.1 million (5.3 million in 2003/2004); andfor BBCi eTV was 3.5 million (2.2 million
in 2003/2004).

In March 2005 BBCi launched Your Stories– an interactive television service dedicatedto short programmes made by membersof the public.
The BBCi service was improved thisyear in two ways. Page numbers wereintroduced – allowing audiences to accesstheir chosen areas of the service more
quickly.There were also technical changes
to improve the speed of the service.
The service was rebranded to reflect
the changes, and usage increased.
The Ten O’Clock News piloted an innovativeinteractive service to extend the amountof information available to news viewers.
In the event, it did not deliver acceptableaudience reach and the service waswithdrawn.This was a disappointment –but we have been assured by managementthat valuable lessons were learned that will
inform future interactive news output.
Work to improve the BBC’s 24/7 services
will continue in the year ahead, with acontinued focus on reducing access times
and improving accessibility.

The enhanced interactive service has had
some notable successes over the past year.
During the Olympics, for example, the BBC
was able to expand the number of events
it could offer at any one time – by pressing
the red button, viewers had the choice ofup to four extra sports.This was coveragealready paid for which, without interactive,
would have gone to waste. By using thepotential of interactivity the BBC was able
to broadcast five times the hours fromAthens than was achieved four years earlier
at Sydney. Figures from satellite homes(ie excluding Freeview and cable) show that
almost 9 million people used the service.

BBC Annual Report and Accounts 2004/2005

One of the great successes ofrecent years has been the BBCRadio Player, relaunched in an
improved version in 2004, whichallows people to listen to a wide
range of BBC content on theinternet, for up to a week after
the initial transmission. In the final
quarter of 2004/2005 a total of
34 million hours of BBC Network
Radio were listened to using the
BBC Radio Player. Radio 1 andRadio 4 are the most popular
networks with The Archers (Radio4) and The Essential Mix (Radio 1)
consistently among the programmes
requested most frequently.
A new development is podcasting –programmes that can be
downloaded to MP3 players.
The BBC’s so-far fairly limited
trials of podcasting have revealed
high levels of demand.
The BBC has also been
holding small-scale trials of iMP(interactive Media Player).This
allows television programmes
to be viewed for up to a week
after transmission. A larger
three-month trial will begin in
September involving 5,000 people.
The BBC plans to make available
around 190 hours of televisionand 310 hours of radio, as well
as local programming and somefeature films.We will review theresults of this trial in due course.

41

Governors’ review
of services
News
Overview
BBC News responded sure-footedly on television,
radio and online during 12 months of big breaking stories
and set-piece events. It also ensured that important but
frequently under-reported stories such as events in Sudan
and China were given proper prominence. BBC News
generated some strong investigations, the impact ofwhich was felt long after transmission. BBC News 24
consolidated its position.
Serious efforts were made by BBC management to learn
the lessons of the Hutton Inquiry. As a result, wide-ranging
changes have been made to the way BBC journalists aretrained, and a comprehensive reform of the way the BBC
handles complaints has been put in place.
We commissioned a report on television current affairs,
which has resulted in this genre being given a significantly
higher profile on BBC One.We also commissioned an
independent review on the impartiality of BBC coverageof the European Union (EU), which exposed someshortcomings. BBC News is making changes to the way
it covers the EU. See page 14 for more information.

42

BBC Annual Report and Accounts 2004/2005

Death of the Pope
BBC News mounted special programmes as it
became clear that Pope John Paul II was close
to death in the Vatican

Remit
BBC News aspires to be the world’s
most trusted news organisation: accurate,
impartial and independent. It aims to betruthful and fair, offering journalism that
explores multiple viewpoints and gives
voice to a wide range of opinions in order
to serve all audiences. BBC News seeks
to act in the public interest and to resist
pressure from political parties, lobby
groups or commercial interests.
Audiences to BBC News are broadly
stable, with strong underlying growth inusage of bbc.co.uk/news. Across television,
radio and online, BBC News recorded aclaimed weekly reach of 81% of the UK
adult population aged 15+ over the courseof 2004/2005 (81% 2003/2004 – data
available only from December). Claimed
weekly reach reflects the number of
respondents who recall having seen/heard/
used BBC News in the previous week.
81% represents 37.6 million people.
Within that overall performance there
are variations across media. Weekly reachamong adults aged 15+ for BBC News
(network services only – ie not nations
and regions services) was:■ Television – BBC One’s four main news
programmes: 58.5% (60.7% in 2003/2004).
58.5% is equivalent to 27.1 million people■ Television – BBC News 24: 4.8%
(4.5% in 2003/2004); 4.8% is equivalent
to 2.2 million people■ Radio: 47.5% (47.2% in 2003/2004);
47.5% represents 23.2 million people■ Online: (as a percentage of adults who
are online) 22% (17% in 2003/2004);
22% represents 5.2 million people

China Week
The gates of the Forbidden City in Beijing –the BBC’s China Week put the spotlight on thispowerful but often under-reported country

The Power of Nightmares
The intellectual background to the war on terror
was dissected in the thought-provoking BBC Two
documentary series The Power of NightmaresThis has been an exceptional year for news
and therefore a testing year for BBC News.
It responded sure-footedly to a seriesof major breaking stories at home andabroad: the Asian tsunami, the Beslanschool massacre, the closing weeks in
the life of Pope John Paul II, and the floods
in Boscastle and Carlisle. Meanwhile,
it continued to provide strong reportingof unfolding events in Iraq and Darfur,
comprehensive coverage of set-piece
events such as the US elections – and also
generated a series of significant investigations
that caused reverberations well beyond
their initial broadcast.

These achievements came at a real humancost. Simon Cumbers, a BBC cameraman,
was shot dead by gunmen in Saudi Arabia,
and his colleague Frank Gardner, the BBC’s
security correspondent, was seriously injured.
Kate Peyton, a BBC producer, was shot deadin Somalia.These incidents are a reminderthat world-class journalism in difficult places
sometimes involves dreadful risk.

Particularly memorable output included:
Hilary Andersson’s courageous Panorama
going behind rebel lines to expose
systematic killing by the Janjaweed militia
in Darfur, Southern Sudan; fine reactive
news reporting from Rachel Harvey andAndrew Harding of the Asian tsunami;
Adam Cur tis’s intelligent and original
documentary series for BBC Two, The
Power of Nightmares, investigating theintellectual background to the war on
terror; Real Story’s investigation of poor
childcare standards in Nurseries Undercoveron BBC One; and Extraordinary Renditions
from File on 4 revealing Western complicity
in the transfer of terrorist suspects tocountries where torture is routine.
There was also an illuminating week ofprogrammes about China – a noteworthy
example of the BBC committing resources
and airtime to an important story thatis often ignored in the day-to-day news
agenda. China Week programming included
a remarkable edition of Question Time from
Shanghai with a British and Chinese panel
and robust discussion of sensitive topics
including human rights abuses and thefuture of Hong Kong.

BBC Annual Report and Accounts 2004/2005

During the year we have continued towork to ensure BBC journalism isstrengthened in the wake of the findings ofthe Hutton Inquiry. A review commissioned
by management and led by Ronald Neilreported in June 2004 and we endorsed
its findings and recommendations(see page 45). Complaints handling has
been improved, (see Being accountable
and responsible page 61). BBC Newshas also launched NewsWatch on BBC
News 24, a weekly feedback programmeon BBC News coverage.The programme
is supported by a website that includes
details of formal rulings on complaints.
These developments amount to aconsiderable programme of reform.
We are content with progress so far,but will continue to keep these issues
under close review.
We are encouraged that management
has taken to heart the need to respondhonestly and openly when mistakes
are made. When From Our Own
Correspondent carried an inappropriately
personal remark from a BBC correspondent
about the death of Yasser Arafat, the first
response was to defend the output. But
when the Director of News, who had
not been consulted about the response,
discovered this, she made public her
own view that the remark was misjudged.
When, some months later, the BBC wastricked by hoaxers into broadcasting
an untrue story about compensation for
the victims of the Bhopal disaster, there43Governors’
review of servicesNews

was an immediate and unambiguous
correction and a high-level investigation
to learn the lessons. While it would havebeen better had neither mistake happened,
we are clear that audience trust will only
be maintained when mistakes are
acknowledged frankly.
During the course of the year wecommissioned a report on television
current affairs from our own advisers in the
Governance Unit.The report was publishedin February 2005. Current affairs is a core
BBC genre, central to the BBC’s identity
as a public service broadcaster and we arecommitted to restoring serious current
affairs to its proper place and prominence
across the BBC, including BBC One. Our
report established that, while enthusiasts
for current affairs are well-provided forby the BBC, more high-profile output inpeak time on BBC One is needed if themainstream audience is to be reached.
We have therefore approved a new
management strategy to increase theprominence and appeal of current affairs
on BBC One, including increased investment
and extra hours in peak time. As a result,the number of midweek hours of current
affairs and specials in peak time will be
doubled to 16 a year from next year.
Special editions of Panorama will accountfor at least half of these extra hours.The
Real Story strand will evolve into a singlesubject programme and be extended to 32
editions. We will monitor the performanceof this strategy over the coming year.
We also commissioned a report froman independent external panel on theimpartiality and accessibility of BBC News’
coverage of the European Union. Detailsof this, and management’s response, canbe found on page 14.

44

Asian tsunami
Lyse Doucet reporting from Tamil Nadu for News 24
on the damage caused there by the earthquake
and tidal wave in Indonesia

Boscastle floods
Torrential rain and flash floods caused devastation
to Boscastle in Cornwall. BBC national and regional
news teams worked together to cover the story

Remit

News 24 had notable success in its
response to the biggest breaking story of
the year – the Asian tsunami.The network
rolled continuously on the story from
Boxing Day, making good use of the BBC’s
network of knowledgeable foreign
correspondents already based in the area.
Its reporting was sober, sensitive, factualand comprehensive.

Remit
BBC News 24 aims to deliver news,
analysis and insight, supported by theBBC’s newsgathering operations, allday, every day of the year. It sets out toprovide fast, comprehensive coverage of
events as they unfold – locally, nationallyand internationally – and specialist analysis
to put the news in context.
This has been the first full year of output
since BBC News 24 was relaunched at theend of 2003. As we made clear in last year’s
Annual Report, we wanted to see thedistinctiveness of the channel reinforced
by offering an agenda that is more analytical,
more international and more diverse than its
competitors, and which gave a higher priority
to compelling and serious journalism.We areencouraged by the significant progress madetowards this aim, and by News 24’s increasein audience reach.
BBC News commissioned its own
independent comparative study of BBC
News 24 against other UK 24-hour news
providers. The report, from Cardiff
University, underlined News 24’s broad
agenda, its use of specialist reporters andcorrespondents, and the priority it gives
to international news, both in terms ofoverall quantity and in breadth of countries
covered. In language and style, wherecompetitors tended to focus on drama,News 24 tended to be more cautious, more
likely to quote the source of information,and less inclined towards sensationalism.

BBC Annual Report and Accounts 2004/2005

A number of breaking stories during theyear – including the Beslan school siege
and the kidnap and murder of the British
hostage Ken Bigley – posed difficult ethicalissues over what images were appropriate
to show.These were well handled.
News 24 has done good work using
themed days to bring extended depth
and analysis to important subjects.Threedays of coverage of global warming issues
was a good example of the network’s
praiseworthy editorial ambition.
There has been encouraging evidence ofbetter cooperation between BBC News 24
and BBC Nations & Regions in joint
deployments to cover breaking stories(for example, the Boscastle flood and thedevastating explosion in a Glasgow plastics
factory). But there is more to do here toensure that licence fee payers always get
the full value of the BBC’s considerable
investment in newsgathering capability
across the country.

51

Average audience for network news
bulletins 2004/2005 (millions)
4.8
(5.1)

years since the first BBC Television Newson 5 July 1954

2.7
(2.8)

4.3
(4.4)

1.4
(1.6)

4.8
(4.9)
2.8
(3.4)

BBC One O’Clock News
ITV1 lunchtime news
BBC Six O’Clock News
ITV1 early evening news
BBC Ten O’Clock News
ITV1 nightly news

5.5

Source: BARB, TNS/Infosys, age 4+, average
Note: Figures for 2003/2004 appear in brackets

million watched BBC News 24 during theweek following the Asian tsunami

US election
George W Bush addresses an election rally in
Wisconsin.The US Presidential election wasjust one of a succession of major news stories
in 2004/2005

The Neil Report
Following the Hutton Inquiry,
management set up an internal
review to consider the editorial
lessons to be learned. It was led by
Ronald Neil, a former Director of
BBC News and Current Affairs.
The Neil report established fivejournalistic values which should
drive BBC journalism at all times:■ Truth and accuracy■ Serving the public interest■ Impartiality and diversity of opinion■ Independence■ Accountability
The report also recommended
changes to BBC guidelines toensure that: subjects of serious andpotentially defamatory allegations
have time to respond before
transmission except in very rarecases; stories making serious
allegations are not normally broken
in live two-ways; and anonymity is
not granted to a source without
serious thought.
The report recommended thatthe BBC establishes a collegeof journalism to ensure lifelong
training of BBC journalists.
Finally, the report recommended
reform of the BBC complaints
handling system.
The report was presented to theGovernors and we fully endorsed
its findings and recommendations,which are now being put into effect.

Remit
BBC Parliament is the only UK channel
dedicated to the coverage of politics.
Selected debates and committeesof Westminster and the work of thedevolved chambers of the UK are
broadcast uninterrupted, complemented
by text services and programmes that
explore the politics behind the debates.
BBC Parliament continues to do valuable
work making available to the generalviewer the deliberations of the UK’s
parliamentary institutions and devolved
chambers. It has also broadcast in full key
committee hearings – for example BBC
Parliament showed all the sessions of the
Culture, Media and Sport committees on
BBC Charter Review. In addition it carries
selected coverage from the European
Parliament, and offers regular coverage
from the USA.This year’s US coverage
included full live coverage of the Democrat
and Republican national conventions andrecordings of the presidential and vicepresidential debates.
A recent innovation is the introductionof extended broadcasts of historic
programming from the BBC archive.
For example, the general election nightprogrammes from October 1974 andMay 1979 were rebroadcast on theiranniversaries. In January the archiveoutside broadcast of the state funeralof Sir Winston Churchill was shown infull on the event’s 40th anniversary.These
broadcasts have been greatly appreciatedby audiences.

BBC Annual Report and Accounts 2004/2005

The main issue continues to be thedisappointing quality of the viewing
experience on Freeview.The quarter-screen
view (and freezing of text on many receivers)
is unsatisfactory.We recognise that this is
not an easy issue to solve, involving as it
does the issue of bandwith and deciding
between competing priorities for its use.
We will continue to press for a solution
to be found to improve the viewing qualityof this important BBC service.
bbc.co.uk/news
The News site on bbc.co.uk has continued
to develop innovative ways to add
depth and context to stories. A seriesof quick guides were launched, providing
background and context to complex, longrunning stories such as Chechnya, Congo,
and al-Qaeda, and issues such as geneticallymodified (GM) food. Following the Asiantsunami, traffic to the BBC website wasmore than 50% above customary levels
for the Christmas/New Year period. An
online guide, The tsunami disaster explained,
using animation and satellite photographs
to trace the underlying geophysics of
the wave, was downloaded more than
2.5 million times in the four months after
the disaster.

45

Governors’ review
of services
BBC World Service& Global News
Overview
The BBC’s Global News division brings together
BBC World Service radio, BBC World television, theBBC’s international-facing online news services and
BBC Monitoring.
One of the BBC objectives set by the Board last year
put particular focus on the reputation for independence,
impartiality and honesty of the BBC’s global news services(see Governors’ review of objectives on page 18).We areencouraged to see evidence of a real improvement here.
However, there are many challenges ahead and the
Global News division will have to continue its processof re-prioritisation to ensure it is best-placed to meetthe needs of its many audiences.
The Governors are advised independently by the World
Service and Global News Consultative Group.Their reportis on page 60.

46

BBC Annual Report and Accounts 2004/2005

149

million estimated listeners each week to
BBC World Service

42
foreign language news websites, plus English

Afghanistan
An Afghan war widow supporting herself by
farming chickens. Her story was reported on
Afghan Woman’s Hour, produced by The World
Service Trust

Global News division
Overall this has been a strong year for the
Global News division. We were pleased tonote the increased collaboration between
the services which has enabled strong
integrated coverage of big stories resulting
in greater editorial impact across radio,
television and online.
We were particularly glad to see thataudience surveys of the BBC’s reputation in
major markets were on the whole positive.
Trust ratings for BBC World Service remain
higher than its leading international radio
competitor in virtually every market
surveyed.The decline in trust in somemarkets, particularly in the Islamic world,which followed Britain’s involvement in
the Iraq War, has now been reversed.
Reputation ratings for BBC World – theBBC’s international television news channel– are also strong, and have improved sincelast year. In a European survey by Media
Brand Values, BBC World was ranked firstamong news channels across Europe forbeing impartial, unbiased, stimulating andtrustworthy. It was identified as the mosttrusted global news or business channel
among international air travellers, a coresegment of its audience.
As we have reported elsewhere (seeGovernors’ review of News on page 44)
the BBC was the victim of an elaboratehoax on the 20th anniversary of the Dow
Chemicals disaster in Bhopal, India, andas a result broadcast a false story about
compensation for those affected.This story
originated on BBC World. It was a serious
error, but we were reassured by thechannel’s response once the hoax became
apparent. There was a prompt statementof clarification and correction, and, after
an investigation, the lessons learned
were incorporated into the training of
BBC journalists.

The Asian tsunami was a major editorial
test for the division. It responded extremely
well.The record shows that within twohours of the Indonesian earthquake, BBC
World Service’s English, Indonesian,Thaiand Tamil language services had mounted
extra programming. BBC Monitoring fed
pictures from local television stations to
BBC World and BBC News 24; and its
Nairobi unit forwarded a tsunami reportfrom a radio station in a remote region ofSomalia – the first indication to the worldthat the destruction had extended as far
as Africa. BBC World increased its coverageand has continued to give the story
priority.The BBC’s international-facing
online news sites created a valuable
channel of communication for displaced
people and their relatives.
The division faces many challenges ahead.
Technology is changing, audiences are
becoming more demanding, and there arelarge shifts in the global political and social
landscape. All these mean that the time isright for a searching review to ensure theBBC’s international services are structured
in such a way as to provide the optimum
response to audience need.
We therefore welcome the opportunity
presented by the Green Paper for
management to review the present
portfolio of language services with a viewto significant change.

BBC Annual Report and Accounts 2004/2005

BBCIndonesia.com
The website of the BBC World Service Indonesianservice. World Service websites are used by nearly
7 million people each week

BBC World Service
In the 2004 spending review, announced
in July, BBC World Service confirmed anincrease in funding of £27million overthe period 2005–2008.This amounts
to RPI+1.5% per year.
The additional funds will be invested instrategic initiatives including strengthening
the impact of BBC World Service in the
Middle East and the wider Islamic world;increasing interactivity; and improving
audibility by expanding local FM distribution
in key markets. We note that thisinvestment will be accompanied bya vigorous programme of efficiencies
to cover rising operational costs and areview of value for money of the current
support services.
We remain committed to the idea oflaunching a BBC television news service inArabic. Although no new funds were madeavailable in the spending review, it remains
an important strategic aim and discussions
continue with the Foreign andCommonwealth Office.
BBC World Service faces increasing
competition from local and national stations.
It has responded well by making its output
available on FM, and we note its continuing
success in this area. By the end of the year,
BBC World Service output was on FM in
144 capital cities, up from 139 in 2003.

47

Governors’
review of services
BBC World Service& Global News

BBC World Service is estimated to reach
149 million listeners each week (up from
146 million in 2004).This is more than 50%
higher than the audience to any otherinternational broadcaster.
BBC World Service is now the biggest
speech radio station in Iraq. Weekly
audiences have increased from 1.8 million(13% of the radio audience) to 3.3 million(22%).This follows the rapid deployment
of BBC FM relays in key parts of thecountry, including Baghdad, Mosul andIrbil, Kirkuk, Al-Nasirya, Basra, Al-Kut,
Salahuddin and Al-Amara.
Although surveying audiences in Afghanistan
is difficult due to safety considerations, thelimited work so far has uncovered around
2.8 million listeners – an increase of 2 million
on last year’s survey which was limited
to Kabul.The latest survey also showedthat BBC World Service programmes
in Pashto and Persian had a 60% reachin the Afghan capital.
In India, weekly audiences have risen
by 4.8 million to a total of 16.4 million.
The increase has followed improvements
in Hindi language programmes and a highprofile series of BBC Hindi road shows inrural areas of the country.This is the firstincrease in a number of years following
a significant drop in overall radio listening
in India and a ban by Indian regulators
on local FM stations carrying news fromforeign broadcasters.

After Beslan
The school gym destroyed in the Beslan massacre
in which more than 300 – many of them children –were killed

BBC World
Martine Dennis, one of the presenters of
BBC World, the BBC’s 24-hour international
news channel for a global audience

Following a drop in listeners in Bangladesh
last year, audiences to the BBC Bengali
Service returned to pre-Iraq-war levels.
Audiences rose by 2.6 million to an overall
total of 13 million.The growth of the BBC
World Service audience is mostly driven
by the increase in rural listening, andrepresents a strong recovery from theaudience drop in 2003 following the Iraq
war. This latest survey reveals that the vast
majority of those who have ever listened
to the BBC – more than 80% – consider
it to be trustworthy.

BBC World
We were encouraged to note that BBC
World, the commercially-funded English
language news and information channel,
has continued to show improvements, bothin the quality of its editorial output, and inaudience reach and household distribution.

During 2004, the Nigerian Government
banned local FM stations rebroadcasting news
programmes from foreign broadcasters.
This resulted in an overall drop of 1.5 million
listeners in the country.This was one of
the main factors for a drop in the global
audiences for English language programmes –down 6 million to 39 million.
Growing competition in many regions hada significant impact on BBC World Service
audiences. Pakistan, Kenya and Tanzania
were among the 22 countries whereaudiences fell.
BBC World Service publishes its own
annual review which is available onlineat www.bbc.co.uk/worldservice/us/
annual_review.

Its global audiences continue to increase
and BBC World is now estimated to reach
59 million viewers per week.There has been
particularly strong growth in Europe; thehigh viewing recorded in Asia during the Iraq
war has been maintained; and the channel
has increased its viewing share compared
to its major international competitors.
In India, ratings showed sharp increases –overtaking local news channels – during
coverage of major events of global
significance, such as the Asian tsunami,
the last days of Pope John Paul II andthe US Presidential election.

The USA now has 5 million weekly
listeners – its highest level ever, up from
4.7 million last year. One in five opinion
formers in New York and Washington listen
each week while the figure in Boston is one
in four.

48

Following an extensive research studyof international news viewers’ habits andopinions, the channel positioning has beenchanged to meet the expectations anddemands of a modern global audience.The
core proposition is Putting News First.This
has meant continued focus on impartial
and authoritative news and analysis, withmore live news and business coverage.
As a result the channel now has a more
fluent and consistent schedule.There havealso been improvements to BBC World’s
on-air presentation and studio set.

BBC Annual Report and Accounts 2004/2005

BBC World distribution to homes with
24-hour reception (millions)
127
101

102

112

80
52
38

41

1996
1997
1998
1999
2000

60
50

2001
2002
2003
2004
2005

Source: BBC World Distribution. Department, various

Globally, BBC World’s household
distribution figures have increased by 13%
in the past year, and it is now among thebest-distributed television channels in
Europe.The channel is available 24 hours
a day in 127 million homes, while a further
143 million households are able to see
BBC World on a part-time basis, bringing
total distribution to 270 million households.
The greatest challenge remains thesearch for 24-hour distribution in North
America – a market where it is now
difficult for a linear news channel to gaina place on cable networks. BBC Worldhas been in discussion with a numberof parties.
BBC World achieved strong underlying
revenue growth during the year and saw
revenues rise by 9% despite the continued
decline of the US dollar. Overall channel
results, which reported a loss after tax andinterest of £11.2million, were substantiallybetter than expected for the year.

Indian voices
Listeners air their views at a BBC Voice of thePeople road show in rural India.These have helped
build World Service audiences in the subcontinent

BBC Monitoring
BBC Monitoring at Caversham keeps trackof thousands of radio, television, online andpress sources. It can be the first to hear ofinternational events

BBC international-facing online news sites
We note good progress in the BBC’sinternational online news sites. Usagegrew to a record 324 million page
impressions in March 2005, up from 282
million a year earlier. Although the annual
increase was lower than expected, the risein the number of individual users washigher, growing by 29% to 21.5 million.
This corresponds to around 6.7 million
weekly unique users.

BBC Monitoring
BBC Monitoring continues to do valuable
work, supplying news, information andcomment gathered from the mass media
around the world. It operates aroundthe clock, monitoring more than 3,000
radio, television, press, internet and news
agency sources, and translating up to 100
languages, to provide an authoritative viewof world events.

The in-depth sites now bring together
information and analysis, including audio
and video, on major issues such as Islamand the West, the changing face of China,
and development in Africa.
The service is making good progress inusing interactivity. Fully-interactive multimedia
sites are being developed in key languages
including Arabic, Spanish, Russian and Urdu
in addition to English. Interactivity is also
being used to add an extra dimension
to coverage of major stories.The English
Have Your Say website received 25,000
emails in the first week after the Asiantsunami.These included reactions fromthose directly affected, and from thoseconcerned for the wellbeing of people
known to them. Some users also sent inphotos and videos of the tsunami-affectedareas. On 28 December 2004, special
pages were set up on people missing
in Indonesia,Thailand, Sri Lanka, India andthe Maldives. Several families were reunited
as a result.
Notable initiatives have included Voicesfrom Women, commissioned in conjunction
with BBCArabic.com, which has given a
voice to ordinary people inside Iraq.
BBCUrdu.com created great interest byproviding video conferencing technology
to enable families divided by the Line ofControl in Kashmir to see and speak toeach other.
BBC Annual Report and Accounts 2004/2005

BBC Monitoring is able to track news
sources from some of the world’s mostdifficult regions and this year it provided
valued source material for stakeholders
including the Foreign Office, the Cabinet
Office, the Ministry of Defence and the
BBC from areas such as the Middle East,
Darfur, Russia and Ukraine.
In Iraq the service kept track of the rapid
growth in the number of newspapers andradio and television stations since theoverthrow of Saddam Hussein’s regime.
In Ukraine, where BBC Monitoring has
its own bureau, the signs of a media
clampdown were evident to monitoring
staff long before the disputed elections
were held. Ukraine showed the value ofbeing able to track a story over a long
period of time and not just covering
it when it makes the news headlines.
In 2004 the Cabinet Office, on behalfof all stakeholders, began a review of
BBC Monitoring’s oversight and funding
arrangements.The review is consideringa new oversight and funding arrangementthat recognises BBC Monitoring’s position
as a national and international asset.

49

Governors’ review
of services
Nations & Regions
Overview
BBC Nations & Regions seeks to provide high-quality local,
regional and network programmes and services that arevalued by audiences throughout the UK, connecting themto their communities and contributing to their sense of
belonging.This approach will become increasingly importantas the market model for regional public service provision
is no longer proving viable.
This sense of connection between the BBC and its
audiences will be strengthened over the coming years
by increasing commissioning and production across the
UK and through the move of significant parts of the BBC
production base out of London.We hope that this will playa part in countering the perceived metropolitan dominanceof BBC output noted by some sections of BBC audiences.
BBC research has shown an increasing desire for local
television services. New technology now makes this possible,
and the BBC will pilot services in the West Midlands
this year.
The BBC remains fully committed to supporting the UK’s
indigenous minority languages:Welsh, Gaelic, Irish and Ulster
Scots both in terms of output, and with learning initiatives.

50

BBC Annual Report and Accounts 2004/2005

64p
per month per licence fee spent on BBC
local radio and radio broadcast in the Nations

257,000
people attended events across the UK
to mark Last Night of the Proms

British Isles: A Natural History
Alan Titchmarsh, presenter of British Isles:
A Natural History. Each episode had a section
dealing with viewers’ own part of the country

Remit
BBC English Regions aims to be the mosttrusted and creative local broadcaster inEngland, serving a widely diverse range ofurban and rural communities. It sets out
to provide an accessible yet authoritative
service of news, current affairs, politics,
arts and music, religion, sport andweather on regional television, local
radio and online.
The BBC’s network of 40 local radio
stations in the English Regions continues
to play a key role, enabling the BBC toreach very large numbers of listeners
who would otherwise be untouchedby its radio output.The BBC’s output ismade distinctive by its predominance ofspeech – its commercial competitors offer
a largely music-based service.There havebeen notable innovations such as Radio
Nottingham’s Groundswell project whichbroadcasts debates about local issues from
specially arranged public meetings with therelevant decision makers. Across the year,
the average weekly reach of BBC Local
Radio was broadly stable at 20.1% or
7.81 million people in 2004/2005(19.9%/7.82 million in 2003/2004) –a good performance in an increasinglycompetitive environment.
The English Regions’ television output
is largely concentrated on regional news
and current affairs. In 2004/2005,
average15-minute weekly reach for theBBC’s early evening news fell slightly to
21% or 9.75 million people (down from
21.9%/10.17 million in 2003/2004) but
remained well ahead of ITV. For the firsttime these programmes recorded higher
audience reach than ITV competition in
every region of England. Inside Out, theweekly current affairs strand, continues todeliver diverse and ambitious journalism:

memorable output included the London
region’s investigation of educational
under-achievement by some black boys.
British Isles: A Natural History, a series fromthe BBC’s Natural History Unit, provided
the setting for an innovative experiment inregionalising and localising nationally-shown
output. Each weekly part contained aten-minute regional opt-out offering local
insights into the themes of the main
programme. In addition, information about
local areas was featured on the Where I Livewebsites, and many listeners joined their
BBC Local Radio stations for well-received
guided ‘walks through time’ exploring thenatural history of their locality.
Local broadcasting comes into its own
at times of acute local stress when it can
provide a vital – and greatly appreciated –lifeline service. In August, the BBC SouthWest region provided strong coverageof the Boscastle floods across regional
television, Radio Cornwall and theassociated Where I Live website. In JanuaryRadio Cumbria stayed on air round theclock to report the flood disaster in
Carlisle – and managed to do so despite
the station being cut off by rising watersthat knocked out electricity supplies. In thefirst four days after the flood, the Cumbria
Where I Live website recorded nearly
2.5 million page impressions – compared to
66,000 for the same period a week earlier.
We are committed to respond to thedemand for more local (as opposed toregional) television news services and will
watch closely the forthcoming pilot of ahighly-local BBC television service on digitalsatellite and broadband in the West
Midlands. We have noted concerns about
the potential market impact of suchservices, and the pilot will enable us tomeasure the public value created and theimpact on other potential providers.
BBC Annual Report and Accounts 2004/2005

Carlisle floods
The devastating floods in the Carlisle area – BBCRadio Cumbria proved an invaluable lifeline for the
many thousands of people affected

Remit
BBC Scotland aims to produce a rich andbroad range of high-quality and distinctive
television and radio programmes for all
age groups, properly reflecting the diverse
nature of Scotland and celebrating all
aspects of Scottish culture and heritage foraudiences in Scotland and across the UK.
BBC Scotland’s news and current affairs
output continues to perform well overall.
On radio, average weekly reach of Good
Morning Scotland dropped slightly to 10%
or 0.42 million (from 10.9%/0.45 million
in 2003/2004). On television, average
15-minute weekly reach to the early
evening news Reporting Scotland was 24.4%
or 1.15 million people (24.6%/1.16 million
in 2003/2004) and was comfortably aheadof ITV. Notable television current affairs
included Security Wars, Frontline Scotland’s
investigation of Glasgow’s unregulated
security industry. We have noted thejudgement of the Broadcasting Council for
Scotland that there is scope to develop a
more imaginative and engaging approach tocovering politics.
There have been some notable drama
successes: the 26-part daytime radio drama
serial Lynton Bay won critical praise; andresearch carried out for the BBC suggeststhat River City, now in its third year, isestablishing itself and is now bracketed by
Scottish viewers with other major TV
soaps. It has gained recognition for its
strong Scottish identity and has also madea noticeable impact in supporting thebroadcasting craft and talent basein Scotland.

51

Governors’
review of services
Nations & Regions

River CityBBC Scotland’s River City – now in its third year
and establishing itself with viewers alongsideother major television soaps

BBC Scotland’s support for Gaelic
broadcasting has remained strong.
There is a regular Thursday evening slot
on BBC Two, and Radio nan Gaidheal andthe BBC Alba website are well-received.
The Colin and Cumberland languagelearning initiative has drawn praise.
Strong support has been expressedat BBC Scotland public meetings for Eòrpa,which reports on European social andpolitical issues. We were encouraged
to see the BBC’s history of commitment
to safeguarding Gaelic cultural heritage
recognised in the Charter Review Green
Paper, and we welcome the Government’s
recommendation that the BBC shouldplay a key role in the development ofa Gaelic channel.
BBC Scotland’s Island-Blogging pilot,
which provides an online platform forislanders in North Argyll, has proved
successful and is to be rolled out to allislands in Scotland.
In last year’s Annual Report we noted
the loss of some sports rights and thechallenge this posed. We are encouragedby the success of Radio Scotland insecuring rights to live coverage of Scottish
Premier League matches over four footballseasons.Television rights were secured for
the CIS Cup, Scotland’s away World Cup
fixtures, and for some UEFA Cup games.

52

Remit
BBC Cymru Wales aims to produce highquality, distinctive services which reflect
the unique culture and history of Wales,
and its social and political landscape. Its
key ambition is to foster an inclusive andparticipatory engagement with audiencesin Wales across its range of services.
News continues to be the cornerstone of
BBC Cymru Wales. Audiences to television
news are down a little, with 15-minuteweekly reach to the early evening news
Wales Today averaging 26% or 0.71 million
people (26.4%/0.73 million in 2003/2004)
but remain very substantially ahead of ITV.
Wales Today won particular praise for its
coverage of the Clywch inquiry into abuseof school pupils.There has been somestrong current affairs and documentary
output, including The Fix, looking at drug
addiction in Wales.
The reach of Radio Wales slippedsomewhat. Average weekly reach was
18.1% or 0.43 million people (down from
20.2%/0.48 million in 2003/2004). Radio
Cymru’s weekly reach also fell, to 6.8%
or 0.16 million people (7.6%/0.18 million
in 2003/2004).
BBC Cymru Wales has supplied the
network with successful programming
across a range of genres.These included
factual (A Year at Kew); drama (Dr Who);
arts (Painting Flowers), and music (The Little
Prince). Notable documentary output for
BBC Cymru Wales included Weston’s
Warriors marking the 60th anniversary of
the Allied landings in Normandy; and Breadof Heaven, Huw Edwards’ gripping anddeservedly popular account of the way
religion has shaped the culture and history
of Wales.

BBC Annual Report and Accounts 2004/2005

Weston’s Warriors
A World War Two veteran at Reichswald War
Cemetery. Weston’s Warriors from BBC Cymru
Wales marked the 60th anniversary of theNormandy landings

We were encouraged by the Department
for Culture, Media and Sport (DCMS)
public consultation and research, reported
in the Charter Review Green Paper,
showing the high value placed by Welsh
speakers on the BBC’s commitment to
the Welsh language.The BBC has a longstanding obligation to supply 520 hours oflicence-funded programming free of charge
to the Welsh-language television channel,
S4C, each year.This includes much of S4C’s
most significant output, including its news
services and the much-loved soap, Poboly Cwm, which marked its 30th birthday in
2004. We have noted the recommendations
from Ofcom about the BBC’s relationshipwith S4C.The BBC has proposed ways
to strengthen and deepen the relationship.
These include a new strategic partnership
between S4C and the BBC to cement therelationship.This will demonstrate, publicly
and transparently, the BBC’s creative,
operational and financial support for S4C.
The loss of sports rights that we notedin last year’s Annual Report continues topose problems in both football and rugby.
However, the BBC has negotiated a newcontract with the Celtic Rugby Unions,and BBC Wales has acquired secondary
television rights for coverage in Welsh
of Wales’ home international footballmatches along with radio coverage inboth languages.
We have noted the serious concern
expressed by the Broadcasting Council
for Wales over the unavailability of free-toair digital television services in large partsof Wales. FreeSat (the proposed free-to-air
digital satellite service) may supply
a solution and this is something being
actively pursued.

Average audience for regional news bulletins
across the UK 2004/2005 (millions)
5.4
(5.7)

4.9
(4.7)
3.9
(3.7)

2.9
(2.9)

2.9
(2.9)*
1.4(1.6)

BBC One lunchtime regional news
ITV1 lunchtime regional news
BBC One early evening regional news
ITV1 early evening regional news
BBC One late evening regional news
ITV1 late evening regional news

Source: BARB, TNS/Infosys, age 4+, average. * ITV late evening news figures are for the period
2 February 2004 to end March 2004. Note: Figures for 2003/2004 appear in brackets

Murphy’s Law
James Nesbit as the tough undercover cop in
Murphy’s Law – one of BBC Northern Ireland’s
successful network drama commissions

Remit
BBC Northern Ireland’s aim is to provide
something of value for everyone in thecommunity through a broad range ofprogrammes and services which informand stimulate debate, celebrate andsupport cultural and sporting life, andreflect local interests and experiences
for audiences within Northern Ireland
and across the rest of the UK.
We were encouraged by the DCMS
public consultation and research reported
in the Charter Review Green Paper showingthat “views about the BBC’s output
in Northern Ireland were particularly
positive”. During the year under review,My Name is Paul, a moving observational
documentary about a family’s struggle toeducate their autistic son, won particular
praise and a Royal Television Society (RTS)
award.The considerable broadcasting skillsof Stephen Nolan were recognised by
a RTS award for best national and regionalpresenter. Output effectively andsuccessfully reflects local culture acrossdifferent genres – from The Pipe Band
Championships to the comedy series
Give My Head Peace, which marked its
tenth anniversary.
The 15-minute reach of the early evening
Newsline averaged 19.8% or 0.31 million
people (20.3%/0.31 million in 2003/2004).
BBC Northern Ireland has traditionally
faced strong competition from UTV innews provision and it is the one area in
the Nations & Regions where the BBC
offering does not win larger audiences
than its commercial competition.

The reach of Radio Ulster and Radio Foyle
remained broadly stable.The two stations’combined average weekly reach was 37%
or 0.5 million (37.7%/0.51 million in
2003/2004).These are impressive figures:Radio Ulster remains the most listened-to
radio station in Northern Ireland, and Radio
Foyle has been recognised with its fourthSony Gold award as Station of the Year.
BBC Northern Ireland has produced
successful output for the network acrossa range of genres. Drama, in particular, has
had some notable successes.These include
Messiah III: The Promise, Murphy’s Law, andPulling Moves.
We have noted the anxiety expressedby the Broadcasting Council for
Northern Ireland over the commitment
to indigenous language programmingand services under the new Charter.
We remain committed to providing output
in Irish and Ulster Scots and recognise our
responsibility to reflect the richness anddiversity of the various languages andidentities of Northern Ireland.
Concern has been expressed to us
over the limited availability of DAB
digital radio services in Northern Ireland.
We were pleased to note that three new
DAB-enabled transmitters will become
operational later this year, but recognisethat there is more to do here.

BBC Annual Report and Accounts 2004/2005

53

Building public value

Overview
The idea of building public value is central to our visionof a BBC renewed for the 21st century. The BBC is morethan just the sum of its output: it seeks to contribute to
the quality of life in society as a whole. A year ago the BBC
defined its public purpose as the creation of public value
in five main ways:■ Democratic value■ Cultural and creative value■ Educational value■ Social and community value■ Global value

The Government has now asked the BBC to take ona sixth purpose for the next Charter – taking a leadingrole in building digital Britain, and we have agreed to this.
In this Annual Report there are many examples of the BBC
creating public value. Its news services, for example, create
democratic value by providing trusted and impartial news
and information which supports civic life; and its comedy
and drama create cultural and creative value by bringing
talent and audiences together to break new ground.
In this section we look in detail at three genres – learning,music, and sport – and report on how they helped the
BBC fulfil its public purposes last year.

54

BBC Annual Report and Accounts 2004/2005

295

new music sessions recorded for 6 Musicin 2004/2005

8.9

million people accessed the BBC’s Olympic
interactive services on satellite alone

Learning

WebwiseThe BBC’s beginner’s guide to the internet,
Webwise, is part of the BBC’s commitment
to help bridge the digital divide

Family tree
The television series Who Do You Think You Are?
introduced many people to family genealogy –the BBC website gave them the tools to research
their own roots

The BBC provides wide support forlearning.This includes formal learning suchas schools broadcasting; informal learning
such as gardening or history programmes;
and also social action campaigns such as
the anti-obesity Big Challenge begun in 2004.

profession and with other industry providers.
Half the content will come from private
sector suppliers.To maximise the learningbenefits of the Digital Curriculum it isessential that the BBC complements theprivate sector effort.We will monitor
this closely.

A key part of the BBC’s learning output
is tied directly to the school and furthereducation curriculum.The digital channel
CBeebies (see page 29) is specificallydesigned to support early learning forpre-school children.The CBBC Channel(see page 28) runs a four-hour block ofschools programmes each weekday during
term time. BBC Bitesize Revision is avery successful web-based revision service
used by around two-thirds of students andteachers. Its content is tailored for exams
in England, Scotland, Wales and Northern
Ireland, and users report that Bitsesize
makes revision more varied and enjoyable,
and helps to build confidence throughself-testing.
For adults, BBC Two hosts the Learning
Zone overnight, offering educational
programmes for recording to be watchedat a more convenient time. These include
output from the Open University, withwhich the BBC has had a long andproductive educational partnership.
Skillswise, based on the Adult and Literacy
and Numeracy Core Curriculums forEngland, Wales and Northern Ireland,helps adults improve their basic reading,writing and maths. Webwise is a popular
beginner’s guide to using the internet.
Next year the BBC will launch one of its
biggest formal learning initiatives: the Digital
Curriculum.This will deliver, via the internet,
high-quality video, sound and interactive
material linked to key areas of thecurriculum.The service is being developedin collaboration with the education

BBC Annual Report and Accounts 2004/2005

Alongside these formal learning initiatives,
the BBC also offers a wide range of
informal but targeted learning output.
This aims to provide relevant and engaging
learning opportunities not connected
to formal or course-related learning.
Who Do You Think You Are? introduced many
people to family genealogy – and thewebsite gave them the tools to track theirown family history. The WW2 People’s War
website, the biggest archive of its kind in
the world of personal memories of WorldWar Two, continues to grow – and also
provides a gateway into the internet for
older people.
The BBC regularly runs social action
campaigns. In 2004 a two-year campaign
was launched aimed at reducing obesity
under the title Big Challenge. It took theform of a television series, Fat Nation,
on BBC One and BBC Three, supported
by output on all BBC platforms includinginteractive television and text messages tomobile phones.There has also been a rangeof outreach activity including roadshows.
Although the television series did not
perform as well as had been hoped, thereis evidence that the associated output was
successful in reaching large numbers ofpeople.The website drew 360,000 uniqueusers per month, and 250,000 support
packs were sold in the first two months.
Future campaigns will include a major
initiative to increase literacy, to be launchedlater this year.

55

Building public value

Music

Last Night of the Proms
More than 250,000 people attended the UK-wide
Proms in the Park events to hear live music and see
a relay from the Last Night of the Proms in theAlbert Hall

Flashmob – The Opera
Live opera from the Meadowhall shopping centrein Sheffield – a follow-up to the original Flashmob,
staged among the commuters at Paddington Station

Highlights from BBC music in 2004/2005
included major festivals such as the Proms,
Glastonbury and Music Live, as well as
intimate Hub Sessions on BBC 6 Music andnew black urban music on BBC 1Xtra.

86.5% of capacity (84% in 2003). More
Proms were televised than ever before.
Outreach activity included Proms Out andAbout, with BBC orchestras playing in
Hackney and Hammersmith to families who
had never experienced an orchestral concert.
For the Last Night of the Proms the nations
and regions once again came together for
the Proms in the Park events, attended by
257,000 people (252,000 in 2003).

The BBC exists to inform, to educate, andto entertain. In its music output it seeks
to do all three – with an unparalleledambition of scope and scale that puts
the stress on new music, live or specially
recorded performance across manydifferent genres.There are now five BBC
radio stations devoted largely to music,a growing range of coverage on BBC
television, on-demand access via the BBCRadio Player, and a large archive of music
and background material on bbc.co.uk.
The BBC itself maintains five orchestras,
based in London, Manchester, Scotland
and Wales, and has a close partnershipwith the Ulster Orchestra.Together with
the BBC Singers, they deliver more than
400 performances a year.The BBC’s roleas catalyst and investor in the UK’s musicallife includes the commissioning of newmusic (Radio 3 is the biggest commissionerof new music in the world) and providing
platforms for new home-grown talent –Radio 1 and 1Xtra have a particularly
strong track record here.
The Proms are one of the largest and mostsuccessful classical music festivals in theworld.The 2004 season won high praisefor its diverse and varied programme, thewhole of which was broadcast on Radio 3.
Highlights included the cellist Yo-Yo Ma
and the Silk Road Ensemble working withchildren at the British Library and premiering
new commissions from Chinese-Americancomposers. Sir Simon Rattle performed
Wagner’s Das Rheingold for the first timeon period instruments at the start ofa four-year Proms Ring Cycle. Averageattendance at the main concerts rose to56

BBC Annual Report and Accounts 2004/2005

BBC Music Live 2004 staged a very
successful celebration of music in Northern
Ireland including Radio 1’s One Big Weekend
event in Londonderry, which bought local
communities together across the sectarian
divide for two days of live music broadcasts.
The Glastonbury Festival was covered
extensively on BBC Television and Radio.
Innovative approaches to presenting music
included BBC Three’s Flashmob – The Opera
performed live among the commuters of
Paddington Station.
The BBC’s commitment to supporting
those who wish to develop theirunderstanding of music and music-making
remained strong. On Radio 3 Discovering
Music did fine work deconstructing classics
to reveal their inner working. On Radio 2
Sold on Song encouraged the art and craftof popular songwriting. bbc.co.uk carries
hundreds of profiles of musicians and aseries of games that encourage budding
young composers to try their hand atmusic-making. Radio 3’s Making Tracks
concerts enabled more than 5,000 school
children to hear live orchestral and choral
music. The Fame Academy Bursaries, using
money raised from record sales andphone-voting connected with the original
programme, have provided funding tohelp young musicians with their musicaleducation and given hundreds of grants
to school children to help them buy
instruments and musical equipment.

Six Nations
Ireland versus Scotland in the Six Nations rugby.
The BBC holds exclusive broadcasting rights tothis event until 2010SportSport Academy
Master classes from the stars, hints, tips,
encouragement.The BBC Sport Academy website
is dedicated to persuading people to try sport
for themselves

Darts champion
Phil Taylor winning the World Darts Championship.
The BBC covers more than 40 sports

The Olympics and Paralympics, broadcast
exclusively on the BBC, were the highpoint of a remarkable year for BBC Sport.
The BBC is committed to covering a wide
range of sports – and to supporting sport
at the grassroots.

of the Paralympics. Peak-time audiences
reached well over 2 million – giving
disabled sport unprecedented exposure.

Sport is central to our audiences’
expectations of what the BBC should
provide, and to our public service mission.
It helps to build social and community
value by bringing people together in sharedcelebration of achievement and it also has
valuable educational and health benefits.
Over the last four years the BBC has put
in place a new sports strategy. At its heartis the ambition that the BBC should remain
the national sports broadcaster. Given theintense competition for sports rights inrecent years, this has meant prioritising
spending on sports rights to enable the
BBC to continue to offer coverage ofsporting events of great importance,
national and international, on television,
radio, and online.
This year that has meant, in particular,The
European Football Championships, and the
Olympics and Paralympics. But it has also
included the return of Premiership footballrights to Match of the Day, and memorable
coverage of the Six Nations Rugby
Championship, the FA Cup,The Openand Wimbledon.
The Athens Olympics and Paralympics
brought key moments, such as Kelly
Holmes’ double gold-medal performances,to very large audiences. But, just as
remarkable, was the following generated
for less high-profile events. The BBC
covered 28 Olympic sports and half ofthem attracted audiences of more than
4 million.This was also the first time theBBC has been able to offer live coverage

BBC Annual Report and Accounts 2004/2005

Audiences benefited from remarkableadvances in technology.The BBC’sinteractive television coverage, accessed bysome 9 million people, allowed viewers tochoose which of up to five events theywanted to watch.This was extra coverage
the licence fee had already paid for, butwhich, without the possibilities ofinteractive, would have gone to waste.
On broadband, users could access all the
live streams, including the interactive ones,
plus highlights and supporting text – andthey had the opportunity to discuss eventswith other broadband users.The service
attracted 1.2 million users.
Football remains a key way of connectingwith audiences and greater investment
has enabled the BBC to retain a significant
presence here.The centrepiece of the year
was the European Football Championship,covered live on Radio Five Live and Five
Live Sports Extra, with television coverage
being shared with ITV.The England against
Portugal match drew a record BBC
television football audience.
In addition to the major sports, the BBC
also supports minority sports. Altogether,more than 40 different sports were coveredby the BBC across television, radio andonline throughout the year.
The BBC also seeks to support sport
at grassroots level.The Sport Academy
website, which encourages participation in
sports and helps to build sporting skills, now
reaches well over 1 million people a week.
The second Sport Relief raised more than
£16million for charity.

57

Being accountable
and responsible
Overview
We accept that we must do more to increase accountability
and transparency in the BBC and this is a current andfuture priority. Governors’ accountability activities in
2004/2005 have included consultative meetings with licencefee payers; commissioning independent research to learn
from licence fee payers what they think about aspects of
BBC services; approving an overhaul of the BBC’s system
for handling complaints; and continuing to work closelywith the BBC’s advisory bodies.We have recently launched
our own website (bbcgovernors.co.uk) and this year we
will hold an annual general meeting.
In this section we also report on the BBC’s responsibilities
in supporting the wider UK broadcasting industry throughinitiatives to find and develop talent; to provide training
both for BBC staff and for people working in other partsof the industry; and to support diversity in its workforce.
The BBC has a responsibility to be a good corporate
citizen. Our report covers the way the BBC supports
charitable activity through fundraising and other activities;
and measures to reduce the BBC’s negative impact
on the environment.

58

BBC Annual Report and Accounts 2004/2005

BBC advisory bodies
Broadcasting Councils and theEnglish National ForumThe BBC draws on a network of morethan 500 licence fee payers – selected
through an independent process – aroundthe UK for advice on programmes andservices. Broadcasting Councils for
Scotland, Wales and Northern Ireland
represent the interests of people in thenations. In England, Regional Advisory
Councils advise the Governors throughthe English National Forum (ENF) andare informed in their turn by a networkof Local Advisory Councils.
The Councils’ primary responsibility is toadvise the Governors on programmeand service objectives for BBC Nations &Regions and to monitor delivery. Overall,they felt significant progress had been
made against the 2004/2005 objectives, andwere supportive of the BBC programming
provided for the nations and English
regions.There were, however, some areasof concern.
One concern was the limited availabilityof digital terrestrial television (DTT) andDAB digital radio.The Broadcasting Council
for Wales noted the very low coverageof DTT in Wales (56% compared with anaverage of 73% across the UK).They werealso concerned that neither Radio Wales
nor Radio Cymru were available on
DAB across large areas of Wales.The
Broadcasting Council for Northern Ireland
was equally concerned that Radio Foyle
was not yet available on DAB. They
noted that, following the Council’s earlier
concerns, three new DAB-enabledtransmitters would be operational in
Northern Ireland by summer 2005.They
did, however, note the poor DTT signal
in many areas of Northern Ireland.

Average monthly licence fee spend

BBC One
BBC Two
Digital television channels
BBC Radio 1, 2, 3, 4 and Five Live
Transmission and collection costs
Nations & English Regions television
Local and Nations’ radio
bbc.co.uk
Digital radio stations
Total

£3.60
£1.47
£1.02
£1.01
£1.00
£0.89
£0.64
£0.35
£0.10
£10.08

Note: Programme related costs such as marketing, andall overheads have been fully apportioned against
channels/networks to show the total cost of BBC output

Listening to audiences
BBC Governor Ranjit Sondhi (centre), Chairman of
the English National Forum, sits in on a discussion
between licence fee payers

The ENF also expressed concern about thelack of both DAB and DTT in key areas of
the English Regions, and noted that several
BBC local radio stations were not available
on DAB.The Broadcasting Council for
Scotland noted that, although digital
availability in Scotland was above the UK
average, there was a strong need to informaudiences of plans for digital switchover.
There was general concern that on-screen
representation still tended to havea metropolitan English bias. Much needed
to be done to represent modern lifein the nations and English regions andprogrammes made and transmitted in thenations could have a home on the wider
BBC network.
The Broadcasting Council for Wales notedthe continuing success of the strategy ofstronger, fewer brands, which had resulted
in an improved range of programming
across BBC One Wales, BBC Two Wales
and BBC2W.
The Broadcasting Council for Northern
Ireland welcomed BBC Northern Ireland’s
designation as a network centre of
excellence for current affairs and drama
output.The Council noted the importanceof indigenous language programming inNorthern Ireland as a core public service
function and felt that its inclusion in theCharter was vital.The Council had
undertaken a wide-ranging public
accountability programme throughout
Northern Ireland. It was very encouragedby the number of BBC Northern Irelandprogramme commissions that reflectedissues raised at these meetings.

The Broadcasting Council for Scotland
noted that many of the recommendationsof the 2003 review of BBC Scotland’s
journalism had been successfully
implemented. It believed, however, that
more needed to be done to engage
audiences in political issues.The Council
was pleased to note that BBC Scotland
had addressed the loss of televised Scottish
Premier League games by securing therights to many other football matches.
As a result there had been no reduction
in approval for the BBC in Scotland.
The ENF stressed the importance ofstrengthening local services in order toengage and connect more closely with theaudience.They noted the success of
initiatives such as the BBC buses and theWhere I Live websites. They welcomed
the local television pilot scheme in theWest Midlands.
All the Councils and the ENF emphasised
the need for the BBC to strengthen its
accountability to licence fee payers.They
also stressed the need for the BBC tomaintain the representative principle within
the BBC’s governance and accountability
structure as part of the new Charter.
The views of the Broadcasting Councils
and the ENF are published in more detailin their Annual Reviews.These are available
on the BBC’s website at bbcgovernors.co.uk
Central Religious Advisory Committee
The Central Religious Advisory Committee(CRAC) advises the BBC on religious policy
and programmes.

BBC Annual Report and Accounts 2004/2005

This year, the Committee continued towork on some of the key issues that it had
identified over the course of the previous
year. CRAC welcomed the then Controllerof BBC One, Lorraine Heggessey, to its
November meeting at which the schedulingand performance of religious output on
the channel was discussed.
The scheduling of Songs of Praise wasdiscussed. Independent work carried out
for the Governors had shown that its
audiences showed a marked decline theearlier it was broadcast in the afternoon.
Management has since made acommitment to keep it in a regular slot.
The relative lack of impact of religious
output on television has continued to bea concern of the Committee. Independent
analysis published by the Governors anddiscussed by CRAC showed that therevised religion strategy of 2002 had madelittle impact on BBC One, although theCommittee was pleased to note thestrong performance of output on BBC Two.
CRAC continued to note the excellent
quality of output on both network andlocal radio and on BBC World Service.
CRAC’s work, together with research andanalysis carried out for the Governors on
both impartiality in religious reporting andthe performance of religious television
output, was influential in the Governors’decision to hold a seminar to discuss how
well the BBC reflects the influence of faithin shaping the modern world.The outcomeof this seminar, attended by members ofmany different faiths and of none, andaddressed by a range of external experts,
will feed into the BBC’s Creative Future
programme strategy review.

59Being accountable
and responsible

Music LivePart of the BBC’s annual live music festival
Music Live, which stages big free concerts –and also sends musicians to street parties,
workplaces and even railway stations

Helping Africa
A school in Ghana supported by funds raised
through Comic Relief

CRAC continues to work on refining its
own role and remit.This will inform thethoroughgoing review of the BBC’s systemof advisory bodies being undertaken within
the context of Charter Review.

Some areas for improvement wereidentified.These included:■ English for Asia: taking account of thesensitivities of its diverse audience when
deciding the appropriate level of toughness
in interviews■ Arabic: providing better context forinterviews and making technicalimprovements to the website■ Russian: ensuring that the search foraccessibility does not impact negatively
on the service’s traditional BBC
editorial values■ Indonesian: ensuring its websites offer
a service that is distinctive from its
competitors while maintaining BBC
journalistic values■ French for Africa: striking the right balance
between international and national stories
and maximising relevance to audiencegroups in different language markets

Five Live in Umlazi
BBC Radio Five Live made contact
with the South African townshipof Umlazi during the station’s Shirt
Amnesty Appeal. Listeners donated
25,000 soccer shirts for African
children, and some went to Umlazi.
Umlazi has a serious HIV/Aids
problem – one in three people
is HIV positive – and Five Livedecided to highlight thisunreported crisis.They broadcast
stories of sadness, but also of
remarkable fortitude andresilience.The station installed
ISDN lines so the people ofUmlazi could send Five Live audio
diaries. Five Live linked an Umlazi
school with Durban City Council
health department who set upa ‘peer educator’ programme.
A health worker taught a small
group of children the facts about
HIV/Aids.They then passed theinformation on to their peers.
Five Live also encouraged its
listeners to buy medical kits –part of a project organised by the
Mayors of Durban and Leeds andsupported by Five Live. In
February 2005, Leeds United
footballer Lucas Radebe delivered
1,000 kits to Umlazi.
In March 2005, when theCommission for Africa reported,
Five Live brought one Umlazi
audio-diarist, HIV/Aids counsellor
Nompilo Xaba, to London as
the station’s guest reporter. Her
interviews with leading politicians
gave Five Live’s coverage a telling
extra dimension.

60

BBC World Service and Global News
Consultative Group
The BBC Governors’ World Service andGlobal News Consultative Group provides
the Governors with an independent
external assessment of the range andquality of BBC World Service and BBC
World output.
The BBC’s Global Reputation
In 2004/2005 the Group called for a special
study to be carried out into the BBC’s
global reputation for trust and objectivity,
which had declined in some markets
following the Iraq war in 2003.
The independent research showed that theWorld Service and Global News division’s
reputation for trust and objectivity is higher
than for other international broadcasters
in virtually all markets surveyed.The
evidence also showed that the BBC’s global
reputation for trust and objectivity has
improved in markets where it suffereda reverse during and immediately after
the Iraq war.
Review of BBC Output
The Consultative Group also reviewed
World Service output in English for Asia,
Arabic, Russian, Indonesian and French
for Africa. All these language services wererated highly for being reliable, accurate,
informative and impartial.

BBC Annual Report and Accounts 2004/2005

The bbcnews.com website attracted strong
praise for being an authoritative sourceof news and information.
The Group was pleased with theprogress made by the BBC World English
language television channel. It was felt tooffer wider coverage and better balance
than competitors.

101,584

job applications received by BBC Recruitment
in 2004/2005

18

hours of coverage of the 2004 Paralympics
on BBC One and BBC Two

Responding to complaints
The Governors’ Programme Complaints
Committee (GPCC) is responsible for
ensuring that complaints are properly
handled by the BBC.
This year saw the culmination of the
GPCC’s oversight of the reform of theBBC’s complaints handling processes, withthe launch of a new complaints systemon 1 February 2005.The Governors
welcomed this as a step change in the
BBC’s accountability to audiences.
Key features of the system are:
■ A code of practice, including thecommitment to answer initial complaints
within ten working days
■ A complaints website(bbc.co.uk/complaints) that tellsaudiences how to complain and aboutcomplaints received and action taken,
and publishes corrections■ Streamlined procedures, with two routes
for initial complaints (BBC Informationor the relevant BBC division)■ A centralised internal logging system tofacilitate the monitoring of complaints
and effective reporting■ The right of appeal to the Editorial
Complaints Unit (ECU), while the GPCC
remains the ultimate arbiter on editorial
complaints■ Removal of the requirement for the ECU(previously the Programme Complaints
Unit) to agree upheld findings with the
management of the programme division■ A Complaints Management Board,chaired by the Deputy Director-General,
to oversee complaints handling and sharelearning at a senior level

Audience access
BBC Information services deal with many hundredsof thousands of calls from viewers and listeners
each year

Athens Paralympics
Dame Tanni Grey-Thompson winning gold in the
100 metres. BBC coverage of the 2004 Paralympics
gave disabled sport unprecedented exposure

Alongside the new system, a major culturechange programme aims to createa culture that presumes that the licencefee payer is right not wrong, with a greater
willingness to admit mistakes and, whereappropriate, put things right.

than 125,000 complaints, comparedwith around 71,000 in the previous year.
Volumes rose considerably in January to
March 2005 because of the response toJerry Springer – the Opera (around 55,000
complaints were logged pre-transmission,
with a further 8,000 post-transmission)
and, to a lesser extent, the launch of the
new complaints website.

The GPCC undertook its annual reviewof the BBC’s complaints handling processes
including an initial assessment of the
new complaints system against bestpractice criteria.
The GPCC concluded the new system
was easy to access and well publicised,with 12,000 complaints received via the
new website in the first two months. It also
welcomed performance on turnaroundtimes, with divisions answering 93% ofcomplaints within ten working days. BBC
Information’s performance was good but
down slightly to 78% following a sharp
increase in volume.The Committee wasassured that steps were being taken toaddress this.
The Committee was satisfied by initial
indications that the system was effective
and informative, while the new ECU remit
improved the BBC’s capacity for the fulland impartial investigations of editorial
complaints. It noted that continued work
was needed to refine aspects of thestructure and processes to ensure theefficiency and fairness of the BBC systems;
also that management would undertakean interim review of the new complaints
system in September 2005, witha 12-month review in February 2006.
The GPCC also received reporting on
complaints handling by BBC Information
for the year. BBC Information continued
to operate 24 hours a day, seven days aweek, handling complaints via telephone,letter and email. This year it handled more

BBC Annual Report and Accounts 2004/2005

In 2004/2005, the ECU dealt with 1,333
complaints concerning 740 items (1,640
in 2003/2004). Of these, 345 (26%) were
upheld in full or in part. Upheld findings
were published quarterly, together witha note of the action taken in each case.
In the year prior to February, 48% ofcomplaints were responded to withintarget.The Committee noted thatmanagement was satisfied this would be
improved under the new processes, withacceptable performance being achieved
over the next six to nine months.
The GPCC considered appeals frompeople who had made a serious editorial
complaint to BBC management andwere not satisfied with the response.
The Committee considered 69 appeals
this year, and upheld six in full or in part.
In addition, the GPCC considered
complaints relating to Jerry Springer – theOpera transmitted on Saturday 8 January
2005.These complaints were referred
directly to the GPCC for investigation as
they were taken under the BBC complaints
process in place before 1 February 2005.
Under this process, the (then) Programme
Complaints Unit did not investigate matterson which the Director-General had alreadytaken a view (as in this instance). By
a majority of four to one, the Committee
did not uphold the complaints.The full
finding is available on: bbc.co.uk/complaints.

61

Being accountable
and responsible

The ECU also liaised with Ofcom oncomplaints about BBC programmes. In theyear to 31 March 2005, Ofcom found thatthe BBC was in breach of the regulatorycodes relating to programme standards innine instances, in whole or in part. It foundthat the BBC was in breach of regulatorycodes relating to unfair treatment or
unwarranted infringement of privacy inten instances, in whole or in part.
The GPCC is currently considering
proposals for further changes to its own
complaints handling processes to makethe appeal process to the Governors more
open and transparent. We will consult the
public on these proposals.
Training and talentIndustry training
As well as training its own staff, the BBC
continues to play an important role as a
trainer to the wider broadcasting industry.
This year the BBC has provided morethan 4,000 days of training for morethan 300 organisations. BBC Training &Development also offers a range of free
online courses covering aspects of
television, and radio production – including
editing, writing, interviewing and healthand safety advice. In addition the BBC
offers subsidised training to freelance andcontract workers on a range of camera,sound, lighting and new media training.
This year the BBC provided training for
more than 250 freelances – in addition
to the training it gives freelances working
on its own productions.
The BBC invested £48.6million in staff
training and development in 2004/2005. Its
objective is to remain in the upper quartileof all UK companies in terms of investment
in training and to be a clear leader in the
media industry.

62

BBC Training
A trainee camera-operator under instruction.The
BBC trains not only its own staff but also the wider
broadcasting industry

Supporting music
Edith Bowman winning Comic Relief Does Fame
Academy. Money raised by the original Fame
Academy funded bursaries for young musicians

BBC Talent
BBC Talent was launched in 2000 and it
continues to provide an important way
for the BBC to find and nurture new talentthroughout the UK. New schemes in
2004/2005 included finding local radio
presenters for the Asian Network andEnglish Regions, and drama producers for
Silver Street, the UK’s first Asian radio soap.

There are early indications that the
programme is having a positive effect.The
annual staff survey has shown an increasein positive responses on questions relating
to management skills. Management will
carry out a full evaluation of the
programme later this year.

Young Storytellers was a BBC Talent
competition to encourage writers under
the age of 16.The winners will bebroadcast in 2005 on BBC 7’s Big Toe andon Radio 4’s Go 4 It. More than 800 people
applied online.
AwardsIn 2004/2005 the BBC received over 250
programme-related awards across television,
radio and new media.These included 13
Baftas, two Golden Globes, 21 Sonys, 14
RTS awards, four Webbies and four Prix
Italia awards. Outside of programme
making the BBC has received awards for arange of other activities such as property
design, environment schemes and good
customer services.
LeadershipThis year has seen the first full year of the
BBC Leadership Programme, designed
to improve the quality of leadership andmanagement in the BBC.This followed
a widespread staff consultation in 2002
that revealed a strong desire by staff for“a better relationship with our managers
and… consistent leadership at all levelsof the BBC”.
The programme is currently being revised
to ensure it stays relevant. So far, morethan 2,000 managers have completed
the programme, with up to 4,000 more
expected to participate over the next
few years.

BBC Annual Report and Accounts 2004/2005

Feedback
A new feedback and development process,designed to increase the amount of regularfeedback BBC staff receive from managers,
was launched in 2004. A series of workshops
was held to help both staff and managers
improve their feedback and performancemanagement skills and techniques.
Diversity
Work has been done to improve therepresentation of disabled people in
BBC output, for example, via the Disabled
Actors Bursary Scheme launched in March
2005 in partnership with Channel 4, andthrough live television coverage of the2004 Paralympic Games.
Work also continues to increase thenumber of disabled people employedin programme making, creative andcommissioning roles. Around 30 disabled
people were recruited on to Extend,
the BBC’s award-winning disability
placement scheme.
Diversity issues are also being explicitly
considered in the change plans for thetransformation of the BBC.
For information on how the BBC reflects
the diverse society it serves, please see
the report on Objective two (on page 13).

£17

million was raised in a single night byChildren in Need in 2004

2.5

million contacts from the public to
BBC Information in 2004/2005

Oxford Road
Recording an episode of Oxford Road: The Story.
The BBC Radio Berkshire community-based
radio soap won a Sony award

Bread of Heaven
Huw Edwards, presenter of Bread of Heaven, BBC
Cymru Wales’ account of how religion shaped theculture and landscape of Wales

Oxford Road:The Story
Oxford Road in Reading is
notorious for its association
with drugs and prostitution –stereotyped locally as a place of
crack-houses and brothels. BBCRadio Berkshire wanted to reveala different version – a vibrantmulticultural community, notwithout its problems, but witha rich seam of stories of tell.The
station decided to create a radio
soap based on Oxford Road – andto involve the local community inevery aspect of the production.
Partnership funding was raised
from the Arts Council England andReading Borough Council. BBCRadio Berkshire worked with local
people to develop their creative,
artistic and broadcasting skills.
There were workshops with local
children to develop the theme
tune, using found objects – boxesof buttons, an oil drum, a traffic
cone – to create the rhythm
section.They ran drama andstorytelling workshops. Storylines
and characters emerged fromthese and were developed byprofessional writers. Local people
were trained as presenters.
In all, more than 850 people took
part in the project.
A 12-part radio soap, Oxford Road:
The Story, was recorded using
Oxford Road locations,with professional actors working
alongside local residents, andbroadcast in August 2004.
The production won a Silver
Sony Award.

Corporate social responsibility
The BBC sets out to deliver public value
primarily through its programmes andservices. But the BBC also extends its
public value through activities that reachout directly into society through acommitment to corporate social
responsibility (CSR).
This is how the BBC defines its ambitionsin this area: “The BBC’s core mission is toenrich people’s lives with programmes andservices that inform, educate and entertain.
In line with this, the BBC aims to bea responsible corporate citizen, acting
in the public interest to strengthen andenrich communities across the UK andinternationally. CSR means living our values
with integrity and ethical consistency
towards our own people, our audience,business suppliers and the communities
we operate in, to maintain their faith in the
BBC.The BBC’s social impact will be mostevident through fulfilling our public service
duties and through environmental, ethical,
charitable and community commitments.”
Business in the Community, theorganisation that works to improve thepositive impact of business in society,publishes a CSR index each year. It provides
a benchmark of how companies manage,
measure and report their impact onsociety. In 2005 the BBC’s score was
90% (87% in 2004) placing it 32nd in the
top 100 UK companies for CSR (up from42nd in 2004) and first in the media andentertainment sector.

Some of these activities in 2004/2005 arerecorded below.
Charitable work: fundraisingthrough appeals
Broadcast appeals are an important public
service.They provide BBC audiences with
an opportunity to support charities, while
offering charities the opportunity to raisemoney and awareness of their work.The
BBC tracks public attitudes to appeals, and
90% of people say television broadcast
appeals are a good way of raising money,
while 77% say they trust the BBC toensure the money raised is wisely spent.
The Governors are advised by the Appeals
Advisory Committee (AAC), which is madeup of 12 specialist external advisers who
represent a broad range of interests acrossthe charitable field.The AAC provides
advice on the BBC appeals policy andassists the Governors in their oversightof the major fundraising projects such as
Red Nose Day and BBC Children in Need.
It also advises on the allocation of theRadio 4 weekly appeals and BBC One
Lifeline appeals.
The year 2004/2005 featured a numberof major appeals. Sport Relief is a biennial
joint venture between BBC Sport andComic Relief. In July 2004 it raised morethan £16.5million (equivalent to a 25%
increase on 2002). Half the money goes tointernational charities working with children
and young people, and half to UK charities,
with a focus on young people in conflicted
or divided communities.

In 2004 the BBC published its first
CSR report (available online atbbc.co.uk/info/csr) which gives moredetail on the wide range of activities
through which the BBC puts into effectits CSR policies.

BBC Annual Report and Accounts 2004/2005

63

Being accountable
and responsible

In November 2004 Children in Needraised more than £17million on the night,
with the eventual total expected to be
double that.The money goes to a wide
range of projects working with children
in the UK. In the same month, Blue Peterlaunched its Welcome Home Appeal toraise money to help the British Red Cross
to trace and re-unite families in Angola,
and has raised £346,000 so far.
In December 2004, the BBC was a partnerin the Tsunami Earthquake Appeal, whichraised more than £300million.The appeal
was coordinated by the Disasters
Emergency Committee (DEC), an umbrellaorganisation representing the major
overseas aid agencies.
Since March 2005, Comic Relief ’s Red
Nose Day has raised more than £49.2million.
Reporting to the AAC, the charity said thatthe international grant-making programme
will continue to focus on long-term projects
in Africa. In the UK, its grants go to a wide
range of projects.

Red Nose Rally
Radio 1 DJ Chris Moyles on his Red Nose Rally
from John o’Groats to Land’s End.The week’s trip
raised more than £600,000 for Comic Relief

Going green
Radio Times is now printed on paper certified tocome from well-managed forests.The BBC tries toprocure goods from sustainable sources

Viewers of BBC One’s monthly Lifeline
programme donated more than £270,000
to the charities featured over the year.This
included £94,035 for the charity Action
for Brazil’s Street Children, with an appeal
fronted by Jeremy Irons, and £80,035 forthe charity Hope and Homes for Children.

Volunteering: Connecting with
Communities
Connecting with Communities waslaunched in 2003 to promote and facilitate
volunteering opportunities for BBC staff
in working time.The BBC is now partneredwith more than 35 charitable and voluntaryorganisations, and BBC Scotland has
arranged partnerships for its staff witha further eight organisations.They offera very wide range of volunteeringexperiences across many different sectors
including education, the arts, disability,
conservation, rescue services and social
housing. Since its launch some 2,500 staff
have volunteered.

Charitable work: BBC World Service Trust
The BBC World Service Trust is the BBC’sinternational development charity, whichaims to promote development throughinnovative use of the media in thedeveloping world.Trust projects reach thepoorest communities, promoting good
health and providing educational
programmes through radio and televisionin local languages.The Trust also helps local
and national broadcasters to develop bytraining journalists and production staff.
The Trust raises its funds not from theBBC but from governments, international
agencies, other partner organisations anddonations from individuals. In 2004/2005
more than £13.5million was raised.

Last year audiences also donated morethan £1million to individual charities
featured on weekly and monthly appeals.
Listeners donated more than £886,000
to charities featured on the weekly
Radio 4 Appeal, including more than
£600,000 to the annual Christmas appeal
for St. Martin-in-the-Fields.

The Trust works in partnership withnational and local broadcasters, othercharities and governments and now has
more than 400 staff working on projects
in 30 countries worldwide.

64

BBC Annual Report and Accounts 2004/2005

Community partnerships
The BBC operates a number ofcommunity partnerships, actively seeking
out opportunities to join with other localorganisations to improve conditions in
the communities in which they operate.
They include the Community Channel, afree-to-air digital channel wholly owned by
the Media Trust, the charity that provides
media expertise to other charities.
Through a strategic joint partnership, theCommunity Channel has access to BBC
social action programmes and, where
possible and appropriate, develops
connections with relevant themes andseasons in the BBC television schedules.
It also allows for the exchange of ideas
and skills across both organisations.

87.4%of BBC One output is subtitled231,532

hours of local radio were broadcast in Englandin 2004/2005

Africa 2015
Africa 2015 was a major conference at
the Guildhall, sponsored by the BBC in
partnership with the City of London. It
attracted more than 500 participants fromaround the world, including senior politicians,
international business leaders, journalists
and development experts, to discuss theMillennium Development Goals for Africa
in the week following the publication of
the Africa Commission Report.
Open Centres and BBC buses
The first BBC Open Centre was launchedin 2001 in Blackburn to strengthen andextend BBC Radio Lancashire’s connection
with its local audience by offering
opportunities to learn about the media,
acquire IT skills and become involved incommunity broadcasting.The project wasvery successful and there are now similarcentres across England and Wales.
A BBC bus was also piloted in 2001 to
take the local radio station out on theroad, to put listeners on air, and to create
opportunities for media and IT training. It
proved a success and there is now a fleetof buses operating throughout the nations
and regions.The Open Centres and the
BBC buses are wholly dependent on
partnerships to provide expertise, funds
and resources which the BBC does nothave on its own.
We have noted the questions raised in theCharter Review Green Paper about thelink between BBC services such as the
BBC buses and Open Centres and theBBC’s public service broadcasting remit.
We believe the activity is warranted since
the partnership element and the learning
delivered are core to the BBC’s purposes.

Working for healthCast members from Taste of Life, a medical
television soap for Cambodia.The World Service
Trust project promotes health issues such as
AIDS prevention

On the road
Inside one of the BBC buses that take media andIT training to hard-to-reach audiences – and put
listeners on air

They also markedly increase theaccessibility of the BBC’s core public
services to hard-to-reach audiences.They
help to bridge the digital divide, and they
are strongly linked to the BBC’s broadcastingand online services: Open Centres andBBC buses provide thousands of hours ofbroadcasting each year to BBC local radio.

The BBC has sustainability guidelines for
proposed new buildings.These coverdevelopments such as Pacific Quay, the new
broadcasting centre for BBC Scotland in
Glasgow, and the redevelopment of
Broadcasting House in London.The
Broadcasting House design has achieved an‘excellent’ environmental rating under the
BREEAM (Building Research Establishment
Environmental Assessment Method).This
assesses building performance against
a range of environmental criteria including
energy use, pollution, transport-related
CO2 emissions, and water consumption.

The BBC and the environment
The BBC works to ensure it complies withenvironmental legislation and it makes
positive efforts to reduce its environmental
impacts and to manage its business risks
responsibly. Action plans are in place,or in development, to cover such areas astransport, utilities, technology, sustainabilityof buildings, waste, and supply-chain
management. Environmental performanceis benchmarked against leading UK
companies and media companies.The
Business in the Environment Index 2004
places the BBC second in the media andentertainment sector (unchanged from2003) and 61st overall (up from 77th
in 2003).
On waste management, the BBC sets
recycling targets. In 2004 the target was
32%.This target was narrowly missed(the total recycled was 31%) and action
has been taken to improve performance.
The recycling target for 2005 has beenraised to 37%.
On transport, measures include stipulatingthat minicab firms used by the BBC must
operate a minimum of 40% alternativefuel or hybrid vehicles, tighter enforcementof cab-sharing rules for staff, encouraging
video-conferencing to reduce the needfor travel to meetings, and supporting theuse of bicycles.

BBC Annual Report and Accounts 2004/2005

The BBC attempts to procure goods fromsustainable sources and works to increase
the share of timber and paper products
obtained from certified, well-managed
forests, and from recycling. During 2004
Radio Times began to carry the FSC (Forest
Stewardship Council) logo, certifying thatthe timber used to make the paper forthe magazine comes from well-managed
forests. Radio Times is now the largestcirculation magazine in the world printed
on FSC-certified paper.
The BBC requires suppliers, as well as
their subcontractors, to observe best
employment practice, including worker
insurance, working environments, respect
for individuals and equal opportunities.
All new suppliers and, over time, allexisting suppliers, are expected to meetthese conditions as part of the processof tendering for business. Compliance ismonitored. In 2004, 1,027 tonnes of
paper were recycled in England andScotland according to data from theBBC’s service supplier.

65

Governors’ review ofcommercial activities
Overview
This has been a year of major restructuring of theBBC’s commercial activities. Management carried out
a comprehensive review and, having commissioned
independent analysis and advice, we approved its
main recommendations.
These were:■ the BBC should in future focus only on businesses
that exploit BBC content and the BBC brand■ ownership of BBC Worldwide should be retained■ the BBC does not need to own either BBC Resources
or BBC Broadcast
During the year, BBC Vecta (which commercially exploited
BBC technical innovations) was closed; and BBC
Technology (which provided technology, and IT equipment
and services) was sold.
The BBC’s commercial activities have been the subjectof considerable debate, with questions raised over issuesof scope, ownership and fair trading.We have set out clear
principles that must underpin BBC commercial activities
based on the values of serving the public interest, actingwith integrity, and ensuring fair trading.We are confident
that the new strategy embodies these principles.

66

BBC Annual Report and Accounts 2004/2005

BBC Worldwide cash flow to the BBC(£million)
145
141

123
96
75

81

106

82

42

1996/1997
1997/1998
1998/1999
1999/2000
2000/2001

2001/2002
2002/2003
2003/2004
2004/2005

Source: BBC Worldwide

BBC Japan
BBC Japan – one of BBC Worldwide’s international
television channels was launched in 2004

BBC Resources
An outside broadcast unit from BBC Resources.
Its customers include the BBC and independent
producers, other broadcasters and corporate clients

BBC Worldwide

BBC America aims to be in half the cable
homes in America by the end of 2005.

BBC Worldwide is the main commercial
subsidiary of the BBC. It exploits theBBC’s assets, brands and intellectual
property around the world for the
benefit of licence fee payers, in orderto reinvest the earnings into public
service broadcasting.
Previously BBC Worldwide was primarily
measured on the total financial contribution– or cash flow – it returned to theBBC. However profit is a more widely
understood benchmark of performanceand in future this will be the key measureof the company’s performance. Its financial
target is to double profits over two years
commencing April 2004.
In 2004/2005 BBC Worldwide increased
profit before interest and taxation (PBIT)
to £55million (up from £37million in
2003/2004 and halfway to its target of
doubled profits). Sales were up from£657million to £706million, and it returned£145million in cash flow – profits anddirect programme investment – to the BBC(up from £141million in 2003/2004).
BBC Worldwide is Europe’s leading
exporter of television programmes and is amarket leader in licensing television formats.
Its biggest success last year was Strictly
Come Dancing which has been sold aroundthe world and is expected to generate
income of £20million over five years.
BBC Worldwide is Britain’s only global
television channel operator. Its 19
commercial channels, earning around£140million per year in revenue, areavailable in nearly 324 million homesaround the world. UKTV, BBC Worldwide’s
joint venture with Flextech Television,
returned a dividend for the first time thisyear. BBC Prime entered the Asian market
for the first time. BBC Japan was launched.

BBC Magazines is the UK’s third-biggest
consumer magazine publisher, selling almost
100 million copies every year. Overall,circulation rose 8% year on year. In a changeof strategy instigated by the Governors,
BBC Magazines now concentrates on titles
directly related to core output areas of
the BBC or magazines based on specific
BBC programmes such as Top Gear.The
women’s magazine, eve, which was notdirectly related to BBC activity, was sold.
On-air BBC trails for magazines includingRadio Times have stopped.
The children’s market remains highly
competitive. Following restructuring, theChildren’s division reduced its losses to£6.6million (from £11million in 2003/2004).
Classic brands such as Tweenies andTeletubbies continue to thrive and there
were some key investments into newproperties, such as the animation series
Charlie and Lola. BBC Worldwide formed
a new global publishing venture, BBC
Children’s Books, with Penguin.
In line with its strategy of partnering to create
scale, BBC Worldwide formed a video/
DVD joint venture with Woolworths plc
creating 2|entertain Limited. BBC Worldwide
is now looking to establish partnerships for
its Book and Learning businesses.
BBC Books was restructured and reduced
its losses and met budget targets for the year.
It reduced its list to focus on strong BBC
television tie-in titles. A number of these soldoutstandingly well, including A Natural History
of Britain by Alan Titchmarsh, Who Do You
Think You Are? and Auschwitz.
BBC Worldwide publishes its own annual
review which is available online atwww.bbcworldwide.com.
BBC Annual Report and Accounts 2004/2005

BBC Resources
BBC Resources is a wholly owned subsidiaryof the BBC. It supplies production facilities:
outside broadcasts; post production; studios;and costumes and wigs. Its customers include
the BBC and independent producers, otherbroadcasters and corporate clients.
In 2004/2005 BBC Resources delivered
revenues of £135million and PBIT of£7million (£128million and £4million in
2003/2004); and a net cash inflow of£13million (£17million 2003/2004).The
individual businesses ended the year in profit.
Production highlights of the year included
the Olympic and Paralympic Games,
Euro 2004, Wimbledon and Match of the
Day for BBC Sport; and The World Rally
Championships and Grand Prix for
external customers.
In the UK, studios showcased Strictly
Come Dancing and the 25th anniversary
edition of BBC Children in Need. Outside
Broadcasts spent a single weekend in June
simultaneously covering six major national
and international events. Post Production
launched its new Mailbox facility andDrama Village in Birmingham.

BBC Broadcast
BBC Broadcast offers services to promote,play out and provide access to broadcast
content across all media, from television tomobile phones. In 2004/2005 BBC Broadcast
earned revenues of £109million and PBITof £4million (£109million and £7million
in 2003/2004); and a net cash inflow of£4million (£15million in 2003/2004).The
year-on-year decrease in cash generationreflects greater savings delivered back to the
BBC in the form of lower prices. Following
the commercial review, the business was
put up for sale and has attracted a significant
number of bidders. A sale is expected tobe finalised in the second half of 2005.
67

Governors’review
of services
Performanceagainst Statementsof Programme
Policy commitments
2004/2005
Overview
Under the Communications Act 2003 the BBC is required
to publish statements of programme policy each year,
setting out how the BBC will fulfil its public service
remit, and to report on performance against them in
the Annual Report.
In future, this assessment of performance will be enhanced
by service licences. These are being developed by theGovernance Unit. The service licences will include a
detailed set of conditions and performance targets, andbe underpinned by annual statements of programme
policy, based on the BBC’s purposes. Each year the Trust
will assess delivery against the service licences and holdmanagement to account.
The BBC published its statements of programme policy
covering 2005/2006 in March this year (available atbbc.co.uk/info/statements2005).We will report on
performance against them in the next Annual Report.

68

BBC Annual Report and Accounts 2004/2005

Commitment

Performance

BBC One:■1,380 hours of news programmes on a calendar
year basis, of which 275 will be in peak time*■

1,508 hours of news programmes, including 281
in peak time (excluding BBC News 24 overnight)■

Increased commitment to current affairs
programming to at least 90 hours, including a
regular weekly Sunday night slot for Panorama
and at least four specials in peak time■

160 hours of current affairs, including extended
series run of Real Story; regular slot for Panorama
plus four specials broadcast in peak time■

45 hours of arts and music■

53 hours of arts and music■

Science, natural history and educational
programmes will form part of commitment
to 650 hours of new factual programming■

912 hours of new factual programming■

80 hours of religious programming as partof commitment to 112 hours across BBC One
and BBC Two■

86 hours of religious programming as part of a
total of 119 hours broadcast across BBC One
and BBC Two■

400 hours of children’s programming■

675 hours of children’s programming■

260 hours of core sports programmes and event
coverage, in addition to Euro 2004, the Olympics
and the Paralympics■

594 hours of sport output (excluding Olympics,
Paralympics and Euro 2004)■

Hold repeats to below 10% of peak-time hours■

Repeats made up 9.7% of peak-time output■

Originations to make up 90% of peak time and
70% of all hours on a calendar year basis*■

Originations made up 98% of peak time, and
82% of all hours in 2004■

Offer three national and international news
bulletins on weekdays, with news at 10pm six
days a week, and regional news integrated within
all major network bulletins■

News bulletins at 1pm, 6pm and 10pm haveprovided coverage of national and international
issues, with regional news integrated into themain news bulletins

BBC Two:■

240 hours of current affairs■

267 hours of current affairs■

100 hours of news■

620 hours of news (including parliamentarybroadcasts, BBC News 24 and weather)■

200 hours of arts and music programming■

297 hours of arts and music programming■

500 hours of factual programming■

1,343 hours of factual programming■

20 hours of religious programming as partof commitment to 112 hours across BBC One
and BBC Two■

33 hours of religious programming, as part of a
total 119 hours broadcast across BBC One and
BBC Two■

100 hours of new children’s programming■

1,353 hours of children’s programming including
218 hours of new programming■

430 hours of sport■

853 hours of sport (excluding Olympics,
Paralympics and Euro 2004)■

80% of originations in peak time, and 70% acrossall hours on a calendar year basis*■

Originations made up 91% of peak time and81% of all hours in 2004

BBC Annual Report and Accounts 2004/2005

69

Governors’ review
of services

Commitment

Performance

BBC Three:■

At least 15 hours of new current affairs
programmes■

22 hours of new current affairs programmes■

At least 50 hours of new music and arts■

52 hours of new music and arts■

At least 30 hours of new educational
programmes■

50 hours of new educational programmes■

15 hours of new science, religion, ethics andbusiness programmes■

18 hours of new science, religion, ethics andbusiness programmes■

At least 20% of output will be supported
interactively■

The target was met using email, SMS andonline messaging■

At least 15% of broadcast hours will be news,
current affairs, education, music and arts■

News, current affairs, education, music and arts
made up 27% of broadcast hours■

At least 33% of new programming will be news,
current affairs, education, music and arts■

45% of new programming was news, current
affairs, education, music and arts■

Minimum of 25% of qualifying hours
will be commissioned from independent
sector, accounting for at least 25% of the
programme budget■

37% of qualifying hours were fromindependents, accounting for 45% ofprogramme budgets■

33% of eligible budget will be produced fromoutside the M25■

40% of eligible budget was spent outside
the M25■

On a calendar year basis at least 70% of
peak-time hours, and 80% of all hours, will be
original productions*■

75% of peak-time hours, and 85% of all
hours were original productions in 2004■

80% of output to be specially commissioned for
BBC Three■

83% of output was made specially for
BBC Three■

90% of programme hours and 90% of
expenditure must be allocated to programmes
made in the EU/EEA, for first showing in the UK■

91% of hours and 94% of expenditure wasallocated to programmes made in the EU/EEA

BBC Four:■Around 70% of production to be original,
including 50% in peak time on a calendar
year basis*■

72% of all output was new, including 64% of
output in peak time in the calendar year 2004■

Around 70% of output to be made in the
EU/EEA

■92% of output was made in the EU/EEA■

At least one landmark factual series each season■

Seven landmark series broadcast, including
Light Story and Jonathan Miller’s A Brief History
of Disbelief■

Sourcing at least one third of performance output
from outside London■

33.4% of spend on performance output wasoutside the M25■

Broadcast at least 30 new documentaries fromaround the world■

56 documentaries were shown from aroundthe world■

Premiere at least 20 new international
cinema titles■

30 international films were premiered■

Around 70% of all output to be speciallycommissioned for BBC Four■

71% of all output was specially commissioned
for BBC Four■

4,717 hours of mixed-genre output, includingmusic and movement, storytelling, make-and-do,
simple science, natural history, puzzle
programmes, animation and drama.

CBeebies:■

70

Deliver over 4,500 programme hours

BBC Annual Report and Accounts 2004/2005

Commitment

Performance■

Around 90% of output will be of UK/EU origin■

98% of output was UK/EU originated■Around 80% of output will be originally produced
on a calendar year basis*■

83.2% of output was originally produced
during the calendar year 2004■

75% of channel’s investment will be on new
British programming■

85% of investment has been on new British
programming■

Investigate new opportunities for co-productions
and third-party investment in suitable animation■

Charlie and Lola, a series using animation
to illustrate a range of personal relationshipmessages, has been commissioned for broadcast
in Autumn 2005

CBBC:
■

85 hours of news■

91 hours of news■

650 hours of drama■

766 hours of drama■

700 hours of entertainment■

1,062 hours of entertainment (including comedy)■

640 hours of schools content through the ClassTV strand■

A total of 600 hours of the Class TV strand was
broadcast (missed target due to two Easterweeks falling within current financial year)■

75% of output and investment will be made in
the EU/EEA■

86% of output and 96% of investment wasmade within EU/EEA■

Around 75% of programme budgets allocatedto originations■

91% of budget was allocated to originations■

70% of output will be original productions
on a calendar year basis*■

80% of output was original productions during
the calendar year 2004

BBC News:■

Increased commitment to current affairs■

Real Story (BBC One) was extended to 27
editions; This World (BBC Two), which examinesinternational current affairs, had a new midweek
peak-time slot; and Sweeney Investigates returned
on BBC Two. Regular programming wascomplemented by specials such as One Dayof War and the three-part documentary series
The Power of Nightmares■

BBC One and BBC Two will broadcast a
combined total of over 600 hours of current
affairs and political programmes■

628 hours of current affairs and politicalprogrammes were broadcast, including
Question Time, The Politics Show, This Week
and The Daily Politics

BBC News 24:■

At least 250 hours of business programming,
including hourly business news from 9am to
7pm weekdays■

255 hours of business programming, in addition
to the hourly bulletins■

Over 200 editions of HARDtalk featuring long-form
interviews with newsmakers and cultural figures■

249 editions of HARDtalk broadcast■

Over 35 hours of political debate throughprogrammes such as Straight Talk■

42 hours of political debate■

Over 50 editions of Dateline London, offering
perspective on the week’s events from foreign
correspondents based in London■

52 editions of Dateline London broadcast

BBC Annual Report and Accounts 2004/2005

71

Governors’ review
of services

Commitment

Performance■

Minimum of 100 hours of sports news, including
sports news each hour from 9am to 1am on
weekdays■

117 hours of sports news broadcast, excluding
sport covered in the news agenda eg Olympics
and Paralympics■

90% of all hours to be original productions
on a calendar year basis*■

95% of all hours were original productions in thecalendar year 2004

BBC Parliament:■

Over 100 hours of original programming ofrecord and analysis through programmes suchas The Record■

109 hours of original programming■

A minimum of 100 hours of proceedings fromboth the Scottish Parliament and the Welsh
Assembly (including repeats)■

111 hours of the Scottish Parliament and 108
hours of the Welsh Assembly: BBC Parliament
devotes eight hours of Saturday schedule tocoverage of Scottish Parliament, Welsh Assembly
and Committees reporting on Northern Irelandaffairs, when they are in session■

At least 100 hours of programming from Brussels
and Strasbourg (including repeats)■

153 hours of programming from Brussels andStrasbourg (including repeats)■

Minimum of 400 hours of Westminster’s SelectCommittees■

488 hours of Westminster’s Select Committees■

90% of all hours to be original productions
on a calendar year basis *■96% of all hours during the calendar year 2004
were original productions

Radio 1:■

At least 310 hours of hours of news, sport andcurrent affairs■

337 hours of news, sport and current affairs■

Schedule will be split approximately 40% specialist
and 60% mainstream music■

42% of the schedule was specialist and
58% mainstream■

In mainstream programming at least 40% of theoutput will be UK in origin and at least 40% willbe ‘new’ (either unreleased or less than one
month since release)■

47.5% of mainstream programming was
UK music■ 49% of mainstream programming was newmusic (either unreleased or less than one monthsince release)

Radio 2:72■

Schedule to be split 33% speech: 66% music■

The schedule was split 40% speech and
60% music■

Over 600 hours of news and current affairs,
including hourly news bulletins■

795 hours of news and current affairs, including
hourly news bulletins■

Increase core arts hours to more than
100 hours■

105 hours of core arts programming■

1,000 hours of specialist music programming■

1,222 hours of specialist music programming,
including Big Band Special, Bob Harris Country
and The BBC Jazz Awards■

Over 150 hours of religious output■

187 hours of religious output

BBC Annual Report and Accounts 2004/2005

Commitment

PerformanceRadio 3:■More than 50% of music output will consist oflive or specially recorded music, including at least
300 live or specially recorded concerts■

55% of music output was live or specially
recorded music including 675 live or specially
recorded concerts■

Broadcast over 150 concerts of chamber music■

261 chamber music concerts were broadcast■

Commission over 50 new pieces■

54 new pieces were commissioned■

Spend over 40% of budget outside the M25■

42% of budget was spent was outside the M25

Radio 4:■1,850 hours of daily news and current affairs■

2,453 hours of daily news and current affairs■

440 hours of weekly current affairs, business andpolitical programmes■

591 hours of weekly current affairs, business andpolitical programmes■

At least 760 hours of original drama and readings■

787 hours of original drama and readings■

260 hours of original comedy■

315 hours of original comedy■

At least 170 hours of religious programming■

289 hours of religious programmingRadio Five Live:■At least 6,000 hours of regional, national andinternational news■

6,423 hours of regional, national andinternational news■

Around 50 hours of documentaries that give
fresh perspective on current affairs, plus speciallycommissioned debates on major news events■

53 hours of documentaries were broadcast.
In addition specially commissioned debates on
major news events included three hour-longdebates from the General Election, simulcast on
Five Live and BBC Asian Network■

At least 2,000 hours of sport■

2,138 hours of sport

1Xtra:■

Over 65% of all music played will be new(less than one month from UK release)■

88% of all music was new (unreleased or lessthan one month from UK release)■

Around 10% of output will focus on news,
documentaries and social action programming■

11% of output was news, documentaries andsocial action■

Approximately 20% of output will be speech■

25% of the output was speech■

Broadcast over 50 live music events■

66 live music events were broadcast■

Over 40% of music played will originate
from UK■

46% of music was UK-originated

6 Music:■

Use large database of over 3,000 tracks including
live sessions■

A database of 3,189 tracks was used■

Offer access to the BBC sound archive with over
400 hours of concert performances■

416 hours of archive concerts were broadcast■

Record over 275 new sessions through the year■

295 new sessions were recorded■

At least 550 hours of rebroadcast and newly
commissioned documentaries and essays■

598 hours of documentaries and essays

BBC Annual Report and Accounts 2004/200573

Governors’ review
of services

Commitment

Performance

BBC 7:■

Over 8,000 hours of speech programming■

8,760 hours of speech programming■

Over 2,800 hours of books and drama■

3,640 hours of books and drama■

Over 2,800 hours of comedy■

3,649 hours of comedy■

Over 1,400 hours of children’s programming■

1,460 hours of children’s programming■

Over 40 hours of new readings for adults, plus
over ten hours of original drama■

48.5 hours of new readings for adults
11.2 hours of original drama■

Five Live Sports Extra:■

Extract more value for money for licence fee
payers from sports rights already owned by
the BBC■The station brought greater choice to sports
fans by providing additional commentaries tothose provided on Five LiveBBC Asian Network:■

Broadcast approximately 50% speech and
50% music■

The schedule was split 50% speech and
50% music■

Provide news bulletins in both English and themain South Asian languages, as relevant■News bulletins are provided in English on
Breakfast, Lunch and Drive. Two news bulletins arebroadcast in the main southern Asian languages,
as relevant, on the daily language programmes■

Offer sports coverage that appeals to
Asian fans■Sports coverage included reporting of thehistoric Indian cricket tour of Pakistan; coverageof Vijah Singh becoming the world’s top golfer;
East Bengal FC’s UK Tour and boxer Amir Khan’s
return to the ring in Liverpool in December 2004■

Improve coverage of entertainment and lifestyleissues with live reports from South Asia as partof the weekend language strand■

The planned weekend language strand providing
live reports from South Asia has not proved
practical due to time differences.The strand is
now an entertainment vehicle offering specialist
music from the regions of the subcontinent
which is often difficult to obtain in the UK

bbc.co.uk:

74■

Relaunch Newsround, the children’s news
service, giving greater prominence touser-generated content■

CBBC relaunched the Newsround website
in November 2004, incorporating greater use
of user-generated content■

Enhance the BBC Radio Player, extending thenumber of programmes available■

The Radio Player was successfully relaunched
in January 2005, approximately doubling thenumber of programmes available to around 1,000■

Improve the quality and efficiency of audio
streaming, while managing distribution costs■

Work to improve quality and efficiency forlive radio streams and downloads is ongoing;
distribution costs are being managed in a rangeof ways eg restricting the availability of thecore UK-wide radio networks in Windows
Media Player■

Build the audience input to lifestyle service witha daytime area, enabling viewers to interact withand contribute to programmes■

Viewers are able to contribute to an increased
number of daytime programmes■

Deliver compelling online elements to the BBC’s
cross-platform coverage of this year’s sporting
calendar, including the Olympics and Euro 2004■

BBC Sport’s unique broadband video Olympics
coverage offered five different live streams plus
numerous highlights packages.There were
73 million page impressions to the Olympic site
on bbc.co.uk

BBC Annual Report and Accounts 2004/2005

Commitment

Performance■

Deliver online propositions as an integrated partof all the major television factual landmark series■

Fat Nation – The Big Challenge was an
all-platform learning campaign; cross-platform
interactivity provided personalised content
geographically tailored to users on a platformof their choice■ The WW2 People’s War website underpinned
a season of landmark World War Two
history programming■

Launch Computers for the Terrified, a course forcomplete beginners and a precursor to a basic
skills campaign in 2005/2006■■

Expand the range of community and usergenerated content■■

Explore the possibility of issuing children withsecure digital identities for use within online
spaces (improving safety for children and peaceof mind for parents whilst acknowledging theBBC’s duty of care to our users and licencefee payers)■

Talks have begun with possible external partners

Three modules, each with three core elements
corresponding to an Information andCommunication Technology (ICT) Basic Skills
Curriculum learning objective, have been built.
Roll-out will now take place in the autumn tocoincide with launch of the new ICT curriculum

Where I Live user-generated content has been
expanded via Digital Storytelling and Video Nation
to a further seven locations across Englandand Wales■ Blast (for 13 to 19 year olds) young reporters
now have a dedicated section on 27 of the
Where I Live websites across the UK, allowing
them to provide weekly updates on the arts
in their area
■ There have been a number of individual Where I
Live initiatives including the Norfolk Animation
Project, in partnership with Norfolk School ofArt, which combined online, linear and off-line
elements to give students the opportunity todevelop and share creative content with aregional audience■ BBC Scotland’s Island-Blogging project was thefirst to bring blogging to BBC audiences. It has
spawned a series of spin-offs and is to beextended to all Scottish islands

BBCi:
■

New regionalised access points – direct links tolocal and regional news driven by geographicallocation of the user■

Restructuring work on BBCi infrastructure hastaken priority over creating regional accesspoints, which has now been rescheduled for
September 2005■

Ease of transition to digital for analogue Ceefax
users through Quick Codes that pinpoint theequivalent information on BBCi■

Increased ease and speed of use of the BBCi
service has helped drive conversion from
Ceefax towards richer digital content. Further
work with digital cable is required in 2005/2006■

Launch improved Bitesize interactive service,including video quiz element■

The enhanced television (eTV) Bitesize Revision
guide was relaunched in Spring 2004 including
a quiz element and daily revision updates

BBC Annual Report and Accounts 2004/2005

75

Governors’ review
of services

Commitment

Performance

BBC Nations & Regions:News and current affairs:■

BBC English Regions: over 3,200 hours of daily
television news programmes; at least 250 hoursof other programming including current affairs■

3,635 hours of daily television news
programmes■ 281 hours of further programming across othergenres, including current affairs■

BBC Scotland: over 500 hours of television news
and current affairs; at least 2,200 hours of radio
news and current affairs■■

BBC Cymru Wales: over 430 hours of English
language news, current affairs and politics on
television; over 1,500 hours of news and current
affairs on BBC Radio Wales; over 1,000 hoursof Welsh language news and current affairs on
BBC Radio Cymru■■

BBC Northern Ireland: BBC Radio Ulster will
broadcast over 2,000 hours of local, national andinternational news and current affairs (excluding
Assembly proceedings); BBC Radio Foyle will
broadcast over 380 hours of news and current
affairs; provide at least 295 hours of local news
and 70 hours of current affairs and factual
programming for BBC One■■

504 hours of television news and current affairs
2,217 hours of radio news and current affairs

458 hours of English language news, current
affairs and politics on television■ 1,572 hours of news and current affairs on BBC
Radio Wales■ 1,039 hours of Welsh language news and current
affairs on BBC Radio Cymru
Radio Ulster broadcast 2,242 hours of local,
national and international news and current
affairs (excluding Assembly proceedings)■ BBC Radio Foyle broadcast 380.5 hours of news
and current affairs■ 303 hours of local news and 85 hours ofcurrent affairs and factual programming were
provided for BBC One

BBC English Regions:■

Enriched local radio output of 225,600 hours
across a wider range of lifestyle passions, daily
concerns and cultural life than ever before■

231,532 hours of local radio across a richer
genre mix■

Broadcast over 1,300 arts stories from ethnic
minority communities on regional television, radio
and online■

1,205 arts stories were broadcast across radio,
TV and online, as part of Roots – a joint Arts
Council/BBC project which funds coverageof ethnic minority arts and events on BBC
Local Radio■

Commit an additional £500,000 to independent
production■

An additional £200,000 was committed. A
further £300,000 was committed with thetransfer of the London edition of The Politics
Show to an independent production team.This
fell just outside the accounting period

BBC Scotland:76■

184 hours of local television programmes across a
range of genres, excluding news, current affairs
and sport■

189 hours of local television programmes acrossa range of genres, excluding news, current affairs
and sport■

Over 9,200 hours of live or originated radio
programmes■

10,447 hours of live or originated radio
programmes■

58 hours of schools programming on televisionand radio■

66 hours of schools programming on televisionand radio■

Spend £2.1million on Gaelic output,
including online■

A total of £5.6million was spent on Gaelic
output including online

BBC Annual Report and Accounts 2004/2005

Commitment

Performance

BBC Cymru Wales:■

BBC Radio Cymru will broadcast over 6,000
hours of output, excluding news and current
affairs, and BBC Radio Wales will broadcast over
5,500 hours■

BBC Radio Cymru broadcast 7,070 hoursof output, excluding news and current affairs■ BBC Radio Wales broadcast 5,686 hours,
excluding news and current affairs■

600 hours of television across a range of genres,excluding news and current affairs■

686 hours of television across a range of genres,excluding news and current affairs■

BBC Cymru Wales will supply 520 hours of
Welsh language television programming to S4C■

BBC Cymru Wales supplied 533 hours of Welsh
language television to S4C, including 96 hoursof popular drama from the popular soap Poboly Cwm, which celebrated its 30th year in 2004■

Increase supply output to BBC television andradio networks by at least 70%, to £30million■

Supply increased by 76% to £34million in the
period to December 2004. Examples include
Doctor Who, A Year at Kew and Tribe■

Lead major project for BBC – The UK Speaks, across-platform project which will celebrate andexplore the diverse languages, dialects andaccents of the UK today■

This initiative, the biggest survey of spoken
English across the UK, will continue in 2005/2006.
The project has been renamed as Voices■

Supply around 500 hours (subject to Assembly
sessions) of television coverage of the National
Assembly on S4C2■

BBC Wales supplied 547 hours of television
coverage of the National Assembly on S4C2■BBC National Orchestra of Wales will make morethan 80 programmes across Radio 3, BBC Radio
Wales, BBC Radio Cymru, BBC Four and S4C
and hold over 60 public concerts■

87 programmes have been made by the
National Orchestra of Wales■ 67 public concerts were held across the year

BBC Northern Ireland:■

At least 645 hours of original local television andover 8,500 hours of local radio■

A total of 633 hours of original local television
was broadcast. A further 12 hours werecommissioned for broadcast early in the next
accounting period■ 8,740 hours were broadcast on BBC Radio
Ulster/Foyle■

Invest an additional £1million in local services■■

Make and broadcast at least 70 hours of factual
programming for BBC Northern Ireland
television and over 370 hours on BBC Radio
Ulster and BBC Radio Foyle – including at least
18.5 hours aimed directly at pre-school andschool students■

An additional £1million was invested in local
programmes

70.4 hours of factual output were achieved by
BBC Northern Ireland■ 832 hours of factual output was broadcast on
BBC Radio Ulster on its features and magazines,of which over 18.5 hours were targeted at
pre-school and school students* These commitments form part of the BBC’s Tier 2 quotas which are agreed by the Board of Governors with Ofcom eachcalendar year. For a complete list of the Tier 2 quotas see page 92.

BBC Annual Report and Accounts 2004/2005

77

Compliance

1 Fair trading
The Board of Governors has clear
Governors’ Fair Trading Compliance Committee (FTCC)
responsibilities under the BBC’s Charter
During the year the FTCC comprised exclusively of Governors
to ensure that the BBC behaves responsibly of the BBC: Anthony Salz (Chairman: joined September 2004),
Dame Ruth Deech, Professor Merfyn Jones, Professor Fabian Monds
and follows all applicable regulation andand Rt Hon The Lord Ryder (retired June 2004).
The key responsibilities of the FTCC are to:codes of practice.

agree and keep under review the BBC’s Fair Trading Commitment
agree and keep under review the BBC’s Fair Trading Guidelines■ through the Governance Unit, appoint independent auditors
to test the BBC’s compliance with its Fair Trading Commitment■ consider reports from the independent auditors or otherindependent experts as appropriate, the Head of Fair Trading,Head of Business Assurance and Senior Executives on mattersrelating to compliance with the BBC’s Fair Trading Commitment■ consider significant external challenges to the BBC’s Fair
Trading Commitment■ consider the Governors’ and independent auditors’ annual
report and independent auditors’ opinion on Fair Trading■ consider the Governors’ annual report and independent auditors’
opinion in respect of the World Service Trading Protocols■ report to the Board of Governors on the work of the Committee■■

The Governors must satisfy themselvesthat the BBC:■ complies with all legal obligations■ has an appropriate management structure■ maintains sensible controls to protect
its assets■ adheres to its own guidelines and codesof practiceOn the following pages the Board ofGovernors and, where appropriate, theindependent auditors report formallyon the BBC’s policies, procedures andcompliance as follows:
1 Fair trading
78
2 Financial statements
81
3 Risk and control processes
82
4 Other corporate governanceresponsibilities
86
5 Governors’ remuneration report88
6 Programmes, channels and promotions 90
7 Freedom of information
93
8 Cost of compliance93
9 Donations and acknowledgements
93

78

Governors’ statement on fair trading
Commercial activities and fair trading
The BBC’s core purpose is to provide public service broadcasting
funded by the licence fee. Licence fee payers’ investments, built
up over many years, have produced a critical mass of talent andproduction capability for the BBC, together with an unparalleledarchive of past programming.These assets have a secondary value,
over and above their use on public service channels and outlets.
The BBC has a responsibility to ensure that this value is properly
developed commercially, and used to the benefit of licencefee payers.
In pursuing commercial activities, the BBC is, like other organisations,fully subject to both domestic and European competition law.
In addition to ensuring compliance with European and UK
Competition Law and European Law on State Aid, and in recognitionof its special position as a publicly-funded organisation, the BBCvoluntarily embraces other requirements within its frameworkof Fair Trading.
Fair trading compliance procedures
The BBC’s fair trading obligations are embodied in its Fair Trading
Commitment, compliance with which is scrutinised throughout theyear by a standing committee of the Board of Governors, the
FTCC.This is underpinned by the Fair Trading Guidelines which
provide a detailed operational framework which build on theprinciples of the Fair Trading Commitment. Although the Fair
Trading Guidelines include guidance on competition law (and any
representations to the BBC in relation to this will be considered by
the Governors), the Governors are not a competition authority;
any allegations that the BBC has breached competition law may
also be made to the relevant competition authority.

BBC Annual Report and Accounts 2004/2005

The Committee is advised directly by independent auditorscommissioned and managed by the Governance Unit (formerly
the Governance and Accountability department). In addition, theCommittee is advised by the BBC’s Head of Fair Trading and Headof Business Assurance, if necessary without the mediation of BBC
management. All trading subsidiaries and commercial operations
report through the Head of Fair Trading to the Committee on theiractivities, and staff with commercial responsibilities are required by
the Committee to be trained in the BBC’s fair trading policies.
The management of the BBC’s fair trading arrangements is regularly
tested by the British Standards Institute and these arrangements
have been accredited with the ISO 9001:2000 quality standard.
The last assessment conducted in December 2004 confirmed thatthe procedures are continuing to operate effectively.
By their nature, fair trading judgements are complex, reflecting theconstantly developing environment in which the media industry
operates.Through the FTCC, the BBC’s Governors bring informed
scrutiny and balanced judgement to bear on the important issues ofpolicy that arise from the BBC’s engagement in commercial ventures.
In its response to the Richard Lambert Review of News 24,
against the terms of its approval, the BBC offered to consider
on fair trading grounds the relationship between BBC News and
BBC World every year.This would include annual verification by
external auditors that the marginal cost principle is appropriately
applied in dealings between BBC News and BBC World. Following
a report from external auditors, the Governors are satisfied thatthe marginal cost principle has been applied appropriately.
Annual Fair Trading Audit
The independent Fair Trading Auditors, commissioned by theGovernance Unit on behalf of the FTCC, monitor and scrutinise
compliance by the BBC with the Fair Trading Commitment.The
auditors conduct an annual Fair Trading Audit to determine whether
the BBC has established and applied a system of internal controls
which provide reasonable assurance that it has complied with the
Fair Trading Commitment. In conducting their audit, the auditors
undertake a number of activities, including the following:■ meeting with fair trading representatives and other individuals
with significant fair trading roles in each division■ evaluating the fair trading system of internal controls that eachdivision has implemented■ reviewing and testing a sample of commercial activities enteredinto during the course of the year
■ testing the adequacy of processes to record and track fairtrading issues through to resolution/completion■ assessing and testing the adequacy of fair trading training
programmes within each division■ reporting their findings and conclusions to the FTCC
The auditors’ opinion based on their audit for the year ended
31 March 2005 is included later on this page.
Fair trading complaints
Among the responsibilities of the Head of Fair Trading is toinvestigate fair trading complaints against the BBC on behalf ofthe Executive Board and report to the FTCC. In considering fairtrading complaints against the BBC, the FTCC may take the adviceof its Fair Trading Auditors or that of other independent advisers as
it considers appropriate.The Head of Fair Trading may be contacted
at BBC, Media Centre, Wood Lane, London W12 7TQ.

The FTCC publishes a quarterly bulletin of the BBC’s responseto any allegations of breaches of the Fair Trading Commitment.
The BBC received 11 external challenges during the year. Although
there was no breach of process in relation to these complaints,
two aspects of one complaint by the History Channel were upheld.
Details of all the complaints are available from the Head of Fair
Trading at BBC, Media Centre, Wood Lane, London W12 7TQ
or online at bbc.co.uk/info/policies/fairtrading_complaints.
The Governors have recently announced that they havecommissioned an independent consultant to review the fair trading
complaints process. In line with the new governance arrangements
being implemented to strengthen accountability, the Governors
have requested proposals that meet the following criteria: legal
compliance, fairness, objectivity, transparency, effectiveness andpracticality. The Governors’ conclusions will be published later
this year.
Events of the year
Green Paper
The Government’s Green Paper on Charter Review was publishedon 2 March 2005.The BBC published its response to the Green
Paper on 24 May 2005.This response can be found online atbbc.co.uk/thefuture.
Governors’ opinion
The Governors consider that the policies contained in the BBC’s
Fair Trading Commitment are consistent with the requirements of
the Royal Charter and the accompanying Agreement.Through the
FTCC, they have gained reasonable assurance that the frameworkof controls and procedures designed to ensure that these policies
are applied throughout the BBC has been operating effectively
throughout the year.
Independent Fair Trading Auditors’ report to the Governorsof the BBC for the year ended 31 March 2005
We have audited, in our role as the BBC’s Fair Trading Auditors,
the system of internal controls established within the BBC toprovide the Governors with reasonable assurance that the BBC
has complied with its published Fair Trading Commitment for theyear ended 31 March 2005.
Our instructions for this audit, which included the scope of work
to be undertaken, were agreed with the FTCC.These instructions
include agreement that our audit should be conducted inaccordance with relevant auditing standards, agreement on thelimit of our liability in respect of this work and agreement thatour duty of care in respect of this work is solely to the BBC.
We are satisfied that the agreed scope of our audit was sufficient
to enable us to express the opinion set out below.
Respective responsibilities of Governors, management and auditors
The Governors are responsible for ensuring that the BBC meets
all the requirements of competition law and trades fairly.They
have established its Fair Trading Commitment.They determine theobjectives of the system of internal controls designed to ensurecompliance with this Commitment and monitor the outcomesof those controls.They are also responsible for preparing theGovernors’ statement of fair trading compliance, as included in
the BBC’s Annual Report and Accounts, which includes a statement
on fair trading.

BBC Annual Report and Accounts 2004/2005

79Compliance

The BBC’s management is charged by the Governors with
operating a system of internal controls designed to ensurecompliance with the Fair Trading Commitment, including identifying
and assessing risks that could threaten fair trading and designingand implementing responses to such risks.
As the BBC’s Fair Trading Auditor, it is our responsibility to form
an independent view, based on our audit work, as to the extent
to which the BBC has established, and applied, a system of internal
controls which provide reasonable assurance that it has compliedwith its Fair Trading Commitment during the year. We havereviewed specific decisions reached by the BBC on fair trading
issues only in so far as this is necessary to form an opinion on thesystem of internal controls. Our audit was not designed to express
an opinion on the quality of the specific decisions taken by the
BBC with regards to fair trading. We have also reviewed whether
the Governors’ statement on fair trading reflects our findings ofthe BBC’s compliance with its system of internal controls, and wereport if it does not.
This opinion has been prepared for, and only for, the BBC and the
BBC Governors in accordance with our instructions which wereagreed with the Director of Governance on behalf of the FTCC.
We do not, in giving this opinion, accept or assume responsibility
for any other purpose or to any other person to whom thisreport is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Basis of audit opinion
We have carried out a programme of procedures and tests
designed to provide us with the assurance that we were seeking.
Our work consisted of enquiry and assessment to enable us toform a view as to whether an appropriate system of internal
controls was in place. We also reviewed the processing of asample of material transactions to provide us with reasonableassurance that the system of internal controls had been applied.
As with any system of control, however effective, it is notpracticable to ensure that no errors or irregularities have occurred
without being detected. Our audit work was therefore designed
to give the Governors reasonable assurance, but not certainty, as
to the adequacy of the system of internal controls which were inplace and being applied to deliver compliance with the Fair Trading
Commitment during the year. Further, because fair trading issues
require judgements which ultimately might be tested in a courtof law, competition authority or elsewhere, there is always a riskof challenge even where the system of internal controls has been
followed and decisions have been taken with the greatest care.
OpinionIn our opinion the BBC has established and has applied a system
of internal controls which provide reasonable assurance that it
has complied with its Fair Trading Commitment for the year ended
31 March 2005.
PricewaterhouseCoopers LLP
Chartered Accountants

80

Governors’ report on BBC World Service Trading Protocols
BBC World Service is responsible for commissioning andscheduling its own programmes and for making programmes for
its language services, but purchases English language programmemaking and technical and support services from other divisions of
the BBC (the Supplier Divisions). BBC World Service also receives
services from and supplies services to the BBC’s commercial
subsidiaries (the Subsidiaries).
It was agreed by a joint Foreign and Commonwealth Office(FCO)/BBC World Service Working Group that the BBC would
draw up guidelines to govern the trading relationship between
BBC World Service and other parts of the BBC, in order toensure that BBC World Service maintains its distinctive voice andto preserve the clear separation between Grant-in-Aid and licence
fee income.These Trading Protocols were approved by theGovernors’ Fair Trading Compliance Committee (FTCC) in 1997.
Each of the Supplier Divisions then drew up detailed agreementswith BBC World Service, specifying:■ the services to be provided■ criteria to ensure the quality of the services■ the cost of the services
The FTCC is responsible for monitoring and reviewing compliancewith the Trading Protocols.The FTCC receives reports frommanagement on the effectiveness of the systems and proceduresin place to ensure compliance with the Trading Protocols.
KPMG LLP (the external auditors) have reviewed a summary of
the value of transactions and the related cash flows which havetaken place during the year between BBC World Service and theSupplier Divisions and Subsidiaries. KPMG LLP have reported to
the Governors that, in their opinion, the information contained in
the summary of transactions for the year ended 31 March 2005
has been accurately extracted from the books and records of
BBC World Service and the Supplier Divisions and Subsidiaries,
and has been properly prepared on the bases of cost allocation
and apportionment methods set out in the agreements between
BBC World Service and the Supplier Divisions and Subsidiaries
and, on this basis, there has been no material cross-subsidy
between Grant-in-Aid and licence fee funds or between Grantin-Aid and the BBC’s commercial subsidiaries.
Governors’ statement on BBC World Service Trading Protocols
Following reports to the FTCC by the Head of Fair Trading, andinternal and external auditors, the Governors are satisfied that:■ the Trading Protocols reflect the requirements of the FCO/BBCWorld Service Working Group■ agreements are in place which are consistent with the
Trading Protocols■ there has been no material cross-subsidy between Grant-in-Aid
and licence fee funds or between Grant-in-Aid and the BBC’scommercial subsidiaries

London16 June 2005

BBC Annual Report and Accounts 2004/2005

2 Financial statements
Statement of Board of Governors’ and Executive Board’s
responsibilities for the preparation of the financial statements
The Governors and Executive Board are required by the BBC’s
Charter to prepare financial statements for each financial year
which give a true and fair view of the state of affairs of the BBC
and of its income and expenditure for that period. In preparing
those financial statements, the Governors and Executive Board
are required to:■ select suitable accounting policies and then apply them consistently■ make judgements and estimates that are reasonable and prudent■ state whether applicable accounting standards have been
followed and disclose and explain any material departures in
the financial statements■ prepare the financial statements on a going concern basis unless
it is inappropriate to do so
In addition, the Governors and Executive Board have voluntarily
decided to comply with the accounting and disclosure provisionsof the Companies Act 1985 and, where applicable, of the Financial
Services Authority Listing Rules. They are also responsible
for keeping adequate accounting records and have general
responsibility for taking such steps as are reasonably open
to them to safeguard the assets of the BBC and to preventand detect fraud and other irregularities.
Report of the independent auditors to the Governorsof the British Broadcasting Corporation (BBC)We have audited the financial statements on pages 96 to 135. In
addition to our audit of the financial statements, the Governors haveengaged us to audit the information in the Governors’ remuneration
report that is described as having been audited, which the Governors
have prepared as if the BBC were a listed company and which isthus compliant with Schedule 7A to the Companies Act 1985.
This report is made solely to the BBC’s Governors, as a body, in
accordance with the Royal Charter for the continuance of the
BBC which came into force on 1 May 1996 (the Charter) and inaccordance with the terms of our engagement. Our audit work has
been undertaken so that we might state to the BBC’s Governors
those matters we are required to state to them in an auditor’sreport and for no other purpose.To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone otherthan the BBC and the BBC’s Governors as a body, for our audit
work, for this report, or for the opinions we have formed.
Respective responsibilities of the Governors
and Executive Board and Auditors
The Governors and Executive Board are responsible for preparing
the BBC’s Annual Report and Accounts and the Governors’
remuneration report. As described earlier on this page, thisincludes responsibility for preparing the financial statements inaccordance with applicable United Kingdom law and accounting
standards. Our responsibilities as independent auditors are
established in the United Kingdom by statute, by the Auditing
Practices Board, our profession’s ethical guidance and, in
accordance with the terms of our appointment, the Companies
Act 1985 and the Charter.
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the part of the Governors’ remuneration report
to be audited have been properly prepared in accordance with theCompanies Act as if that Act had been applied to these financial
statements. We also report to you if, in our opinion, the BBC has
not kept proper accounting records, if we have not received all
the information and explanations we require for our audit, or if
information specified by law regarding Governors’ and Executive
Board remuneration and transactions with the BBC is not disclosed.
In addition to our audit of the financial statements, the Governors
have engaged us to review their 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 statement on pages 82 to 86 reflects
the BBC’s compliance with the nine provisions of the 2003
Financial Reporting Council (FRC) Code specified for our review
by the Listing Rules and we report if it does not. We are notrequired to consider whether the BBC’s statement on internal
control covers all risks and controls or form an opinion on theeffectiveness of the BBC’s corporate governance procedures or its
risk and controls procedures.
We read the other information contained in the BBC’s Annual
Report and Accounts, including the corporate governance statement
and the unaudited part of the Governors’ remuneration report,
and consider whether it is consistent with the audited financial
statements. We consider the implications for our report if webecome aware of any apparent misstatements or materialinconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards
issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts
and disclosures in the financial statements and the part of theGovernors’ remuneration report to be audited. It also includes
an assessment of the significant estimates and judgements madeby the Governors and Executive Board in the preparation of thefinancial statements, and of whether the accounting policies areappropriate to the BBC’s circumstances, consistently applied andadequately disclosed.
We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonableassurance that the financial statements and the part of theGovernors’ remuneration report to be audited are free from material
misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy ofthe presentation of information in the financial statements and thepart of the Governors’ remuneration report to be audited.
OpinionIn our opinion the financial statements give a true and fair view ofthe state of affairs of UK Public Service Broadcasting (the ‘Home
Services’ in the Charter) and the BBC as at 31 March 2005 andof the deficit of the BBC for the year then ended and the financial
statements and the part of the Governors’ remuneration report
to be audited have been properly prepared in accordance withthe provisions of the BBC’s Charter and the Companies Act 1985
as if that Act had applied to these financial statements.
KPMG LLP
Chartered Accountants
Registered Auditor

BBC Annual Report and Accounts 2004/2005

London16 June 2005
81

Compliance

3 Risk and control processes
BBC corporate governance framework
The Board of Governors are appointed as trustees for the
public interest to ensure that the BBC is properly accountable to
Parliament and licence fee payers. Part of this role requires theBoard of Governors to satisfy themselves that the BBC is applying
the highest standards of corporate governance.To this end the
BBC voluntarily complies with the 2003 FRC Code.

During 2004/2005, the Board initiated a formal evaluation of
its effectiveness, conducted by independent specialists in corporate
governance who compiled and analysed the results of individualquestionnaires and meetings with Governors and internal
stakeholders.The evaluation addressed key aspects of thefunctioning of the Board including its committees, relationships,
accountability, information flows and decision-making processes.
The findings were reported to the Chairman and presented toa meeting of the Board in May 2005.

During 2003 the Combined Code was revised to include therecommendations arising from two reviews which sought toimprove the effectiveness of boardrooms and strengthen thecorporate governance framework; the Higgs Report reviewed
the role and effectiveness of non-executive directors and theSmith Report, set up by the Financial Reporting Council (FRC),
developed the existing code provisions for audit committees.
The Combined Code was therefore superseded by the 2003 FRC
Code which sets out the principles of good governance.The BBC
has complied throughout the year ended 31 March 2005 with the2003 FRC Code except as noted below.

The evaluation highlighted the unique nature of the BBC andsignificant scale of the Board’s responsibilities. It concluded thatthe Board performed effectively with high levels of energy andcommitment but that continuing vigilance was needed to focus on
strategic priorities and to balance Governors’ workload with timecommitment; the Governance Unit had an important role to playhere and was proving effective.This greater prioritisation would
enable Governors to deliver their full range of commitments,
particularly greater connection with licence fee payers.The resultsof the evaluation will be formally reviewed after 12 months.

Overall, the requirements of the 2003 FRC Code apply to the
BBC with three exceptions. Firstly, those requirements relating to
the appointment of non-executive directors are inapplicable as
the Governors are appointed by the Queen in Council and theirremuneration is set by the Secretary of State for Culture, Mediaand Sport. Secondly, those requirements relating to shareholders
can only be applied to the licence fee paying public, rather thanshareholders through the stewardship of the Board of Governors.
Additionally the BBC has not complied with section 2.4 of theSmith Guidelines within the 2003 FRC Code which states that
the Chairman should not be a member of the Remuneration
Committee, on the basis that a chairman is not independent. All
BBC Governors are independent of management and therefore
the Governors determine that the Chairman is independent forthe purposes of setting the remuneration of the Executive Board.
The BBC does not have a standing nominations committee.
However, a nominations committee was established in 2004 to
assist in the appointment of a new Director-General. As noted
above, the Governors are appointed by the Queen in Council.
The BBC follows the seven principles of public life set out in the
Nolan Committee reports on Standards in Public Life.
How the BBC has applied the remuneration principles is detailed
within the remuneration report on pages 88 to 90.
Board structure
The Board of Governors are the members of the Corporation
and act as trustees for the public interest while the Executive Board
takes responsibility for day-to-day operations. More information
on how the BBC is run can be found on pages 6 to 7. Detailsof the Board of Governors, the Executive Board and changes
to the Boards are summarised on pages 8 to 11. A register ofinterests for both the Board of Governors and Executive Board
is maintained.The Board of Governors’ register is available online
at bbcgovernors.co.uk.The Executive Board’s register may beinspected by written application to the Director, BBC People,
MC2 B4, Media Centre, Wood Lane, London W12 7TQ.

82

The Board of Governors refer some matters to subcommittees.
The main responsibilities of these subcommittees are explained
elsewhere in this Annual Report and Accounts.
Governors’ Fair Trading Compliance Committee (page 78)
Governors’ Audit Committee (page 84)■ Governors’ Property Committee (page 85)■ Governors’ Finance and General Purposes Committee (page 86)■ Governors’ Remuneration Committee (page 88)■ Governors’ Programme Complaints Committee (page 90)■■

The terms of reference of these committees are available on
bbcgovernors.co.uk.
The attendance record of individual Governors at full Board andsubcommittee meetings is detailed below:
Board ofGovernors
Number ofmeetings in the year

11

10/10
Michael Grade1
7/7
Anthony Salz2
Deborah Bull
11
Dame Ruth Deech11
Dermot Gleeson
11
Professor Merfyn Jones
9
Professor Fabian Monds 11
3/3
Jeremy Peat3
Angela Sarkis
9Ranjit Sondhi
10
7/7
Richard Tait2
1/3
Richard Ryder4
Pauline Neville-Jones5 6/8
Robert Smith5
8/8

Programme Fair Trading
Complaints Compliance
Audit Remuneration
Property
Committee Committee Committee
Committee Committee

12

5

6

4/4
6/8
5
1/2
12

5

5

5
3/3
2/3

4/4

1/3
5

5

3/4
5
1/1

9
4/4
8/8
0/1
3/4
6/6

3/3
5/5

0/2
2/3
1/1

1
3

1

Started 17 May 2004
Started 1 August 2004
Started 1 January 2005
4
Retired 30 June 2004
5
Retired 31 December 2004
2
3

The BBC’s Governance Unit was created as a specialised unit
which provides discrete professional advice to support the workof the Board of Governors.The Governance Unit is separate fromthe management of the Executive Board both in terms ofreporting lines and management.

BBC Annual Report and Accounts 2004/2005

The Unit is structured around the key areas which support theGovernors’ roles on performance, compliance/value for money
work and accountability:■ the Performance team supports the Governors’ work witha focus on the performance of the BBC’s public services
including performance against the BBC’s objectives and theBBC’s Statements of Programme Policy■ the Compliance & Value for Money team supports theGovernors’ work in regulating the BBC, in particular on financial,commercial and economic issues■ the Accountability & Regions team is leading a strengthened
programme of Governors’ public accountability■ the Governors’ Business team manages all Board, subcommittee
and other Governor-led meetings, and coordinatescorrespondence handling. It liaises closely with the Executive
Board on business handling, and aims to provide an enhanced
briefing and action tracking service for the Governors■ the Communications team aims to ensure that Governors areseen and heard by licence fee payers and other stakeholders as
they fulfil their role, working closely with the Accountability &Regions team
The attendance record of individual Executive Board members is
detailed below.The Executive Board replaced the BBC’s Executive
Committee from July 2004. Attendance is therefore shown for the
new Executive Board Structure from July 2004 to March 2005.
Number of meetings
attended within the period
Number ofmeetings for the periodMark Thompson
Mark Byford
Jenny Abramsky
Jana Bennett
Stephen Dando
Ashley Highfield
Zarin Patel (started December 2004)
John Smith
Carolyn Fairbairn (resigned December 2004)
Caroline Thomson (started September 2004)

Such a system of controls is designed to manage rather thaneliminate the risk of failure to achieve business objectives andcan provide only reasonable, and not absolute, assurance againstmaterial misstatement or loss.
The Board of Governors and Executive Board have reviewed theprocess for identifying, evaluating and managing significant risks
faced by the BBC.The process has been in place for the year
ended 31 March 2005 and up to the date of approval of this BBC
Annual Report and Accounts and accords with the Turnbull guidance.
Financial reporting and going concern
A review of the financial position of the BBC is included on pages
94 to 95.This provides an assessment of the BBC’s performanceand current position.
The going concern basis has been adopted in the preparationof the financial statements as the Board of Governors and the
Executive Board believe that the BBC has adequate resources
to continue its operations for the foreseeable future.
Control environment
The key aspects of the control environment operating throughout
the year are described below:
Risk identification and management
The BBC’s framework for the management of risk is subject tocontinuous development as management assesses risks in relation
to the delivery of the BBC’s objectives.

■

19
19
19
19
19
19
18
10/10
18
10/10
16/17

Accountability and internal control
The responsibilities in relation to internal control are clearly
defined.The Board of Governors is ultimately responsible forthe proper use of public money whilst the Executive Board is
responsible for maintaining an adequate system of internal control
and for reviewing its effectiveness.The respective responsibilitiesof the Board of Governors and Executive Board and the external
auditors are set out on page 81. In addition to the review ofinternal controls carried out by the BBC’s internal audit function,
the BBC Governors appoint external specialists and advisers
to undertake any further work to provide assurance over theoperation of internal controls as required. During the year, theBoard of Governors commissioned independent accountants,
Ernst & Young, to carry out a review of certain aspects of theBBC’s financial controls. Ernst & Young concluded that the BBC’s
system of financial controls and procedures is fundamentally soundand made recommendations to strengthen processes further. The
Governors published Ernst & Young’s management letter in full.
This sets out the scope of their work and provides a summaryof their findings, and is available online at bbcgovernors.co.uk. BBC
management has since reported to the Audit Committee on theactions it is taking.

The Director of each division has a clear responsibility for theidentification and management of risks facing their business. Eachdivision identifies and assesses the key business risks which may
have an impact on the accomplishment of its strategic objectives.
The risks identified, and the actions planned in response, aremaintained in a risk register in each division and are reviewed
by each Divisional Board.
The overall management of risk within the BBC is considered
to be most effectively managed through the engagement of theentire Executive Board. For that reason, risk management is notdelegated to a subcommittee.The Executive Board receives reportson the significant risks identified, the controls and further actions
required to effectively manage those risks. During the year, the BBC
has announced a wide-ranging change programme.The complexity
and ambition of the change programme presents a significant
opportunity and risk to the BBC.The change risks are monitoredin accordance with the BBC’s over-arching risk management strategy
and are reviewed by the Executive Board each month.
The Board of Governors also has some oversight of the
management of risk. The risk registers are presented to the
Audit Committee during the year and were also presented
to the full Board of Governors in January 2005.
Internal Audit
The BBC has an Internal Audit department which is a core partof the Business Assurance function. Internal Audit’s authority, andits independence, is assured from its joint independent reporting
relationship to the Audit Committee, the Fair Trading andCompliance Committee and to the Director-General.The scopeof Internal Audit includes the examination and evaluation of theadequacy and effectiveness of the BBC’s systems of internal control.

■

BBC Annual Report and Accounts 2004/2005

83Compliance

The work programme of Internal Audit extends throughout all
activities of the BBC and includes the exercise of the BBC’s rightof audit over external parties including independent production
companies and other key suppliers of outsourced services.
Internal Audit undertakes regular testing of control systems andcore business processes under a plan agreed annually with the
Audit Committee.The audit plan is based on a continuing
assessment of key risks, monitoring compliance of key systems
and processes, and ensuring value for money to the licence fee
payer. The results of testing are reported at each meeting of the
Audit Committee which scrutinises the operation of the BBC’sinternal controls over these risks throughout the year.
Divisional controls
The divisions’ management have responsibility for ensuring thatexisting controls and procedures are followed. Key controls overmajor business risks include maintaining and regularly updating risk
registers, monthly management reporting, exercise of budgetarycontrols, performance review and exception reporting. Reviewsby Internal Audit monitor the operation of divisional and subsidiary
controls, to ensure that they are consistently applied and, asa minimum, meet the BBC-wide control policy.

■

Business and broadcast continuity
The BBC Business & Broadcast Continuity team work with the
BBC divisions and partnering companies to protect and to mitigate
risk to the various business areas in the BBC.This is achieved
through the implementation of a robust system of business
continuity planning, rehearsal and disaster recovery preparedness.
In some instances specific projects are initiated to improve
operational resilience where the risk is deemed high.The BBC’s
business demands that it is positioned to not only broadcast andinform in virtually any circumstance, but that other lines of business
continue with a minimum of disruption.This is particularly importantin light of current geopolitical events.The safety and security ofour people and assets remain the priority in contingency planningfor the BBC.

■The BBC has established controls and procedures over the securityof data held on computer systems. Arrangements are in place forcomputer processing to continue and data to be protected andretained in the event of the failure of the BBC’s own systems forwhatever reason.The Internal Audit function includes specialist
systems auditors who review the continuing integrity of key
systems within the BBC including computer and broadcast criticalsystems. During the year Internal Audit provided independent
assurance over the process of outsourcing of technology provision
to the BBC by Siemens Business Services Limited.
Controls over outsourced transaction processing
The majority of the BBC’s finance transaction processing is
outsourced to a service company, Media Accounting Services
Limited (Medas), a wholly-owned subsidiary of EDS which is
independent of the BBC.The collection of the licence fee isoutsourced to Capita Business Services Limited.The BBC monitors
the provisions that Capita Business Services Limited has put
in place to ensure the collection of the licence fee in the eventof business interruption. Safeguards are in place to ensure theintegrity of the BBC’s transaction processing and collection data
and to provide alternative methods in the event of a failureof the core processes.

■

84

Financial reporting and business performance
Individual divisions are responsible for ensuring compliance with
the BBC’s financial reporting system.The BBC has a comprehensive
system for reporting financial results and business performance.
During the year each division prepares monthly reports andaccounts.These results are reviewed locally and are scrutinised
by Group Financial Control.The consolidated results of the BBC
are reviewed at the Executive Board and Board of Governors’
meetings each month.

■

Each financial year the divisions prepare detailed budgets for thefollowing financial year and update long-term plans.The annual
budget of each division is reviewed by the Group Finance Director.
The overall BBC budget is submitted by the Director-General andthe Executive Board to the Board of Governors for approval.
The performance of each division is subject to continuous monthly
monitoring and at the end of every year each division is subject
to a rigorous performance review verifying how effectively they
had met their objectives.
Fraud awareness
The BBC takes its responsibilities to minimise the risk of fraud,
and the consequential loss to the licence fee payer, very seriously.
The BBC has implemented a clear fraud policy which clarifies
responsibilities for ensuring that the appropriate controls are inplace to minimise the risk of fraudulent activity and to ensure thatall suspected incidents of fraud are thoroughly investigated.The
policy is managed by the Anti-Fraud Group which reports to the
Audit Committee and to the Executive Board.

■

During the year, a series of anti-fraud workshops have been
undertaken across the BBC to identify key fraud risks and topromote fraud awareness.The programme of workshops isa continuing core element in the BBC’s anti-fraud strategy.
■ Whistle-blowing
The BBC has a ‘whistle-blowing’ or ‘protected disclosure’ policy.
The policy facilitates the anonymous communication to the BBCof any incident in which there is a suspicion that there has beena breach of the BBC’s codes.The process is administered by anindependent external company to ensure anonymity. Eachreported incident is notified to the Head of Business Assurance
who ensures that every incident is investigated, a response
communicated and action taken as appropriate.

Governors’ Audit Committee
During the year the Audit Committee comprised exclusively of
Governors: Jeremy Peat (Chairman: appointed 1 January 2005),
Dermot Gleeson, Dame Ruth Deech (from October 2004), Sir
Robert Smith (Chairman from October 2004 until his retirement
as a BBC Governor on 31 December 2004) and Dame Pauline
Neville-Jones (Chairman until September 2004).
The Audit Committee complies with the recommendations
within the Smith Report with at least one member of the Audit
Committee having significant, recent and relevant financial
experience. Jeremy Peat is the member with such experience.
Members of management attend meetings by request of the
Audit Committee.

BBC Annual Report and Accounts 2004/2005

The Audit Committee has written terms of reference. Its principalrole is to review:■ the effectiveness of the systems of internal control including
consideration of the reports from both management and internal
auditors on significant risks to the organisation and the controls
exercised over those risks■ the BBC’s financial statements, including accounting policies,
compliance with legal and regulatory requirements and thefindings of the external and internal auditors■ the BBC’s relationship with the external auditors, including their
engagement, the scope of and approach to their work, their fees,
effectiveness and their independence including the observanceof the policy relating to the engagement of the external auditors
in non-audit work
■ the activities and plan of work and the effectiveness ofinternal audit■ the programme of Value for Money reviews commissioned by
the Audit Committee from the National Audit Office (NAO)
and other external agencies with the objective of ensuring value
to the licence fee payer
The Audit Committee met six times during the year. The meetings
are usually attended by the Director-General, the Chief Operating
Officer, the Group Finance Director, the Head of Business
Assurance (also Head of Internal Audit) and representatives fromthe external auditors.The Committee meets regularly with theexternal auditors without any member of management present.
The Chairman of the Audit Committee meets routinely with theHead of Business Assurance, alone or with the external auditors,
but without management.The Audit Committee has access toindependent professional advice as required.
In addition to the review of the reports of the internal auditors
relating to the operation of the controls over risks to theorganisation, the Committee has reviewed reports from external
agencies, including the NAO, on Value for Money studies in
specific areas.The NAO reviews on Measures of Public Service
Broadcasting and the White City property development, andreviews by other external agencies on the BBC Property
Partnership arrangements with Land Securities Trillium Limited
and the BBC’s credit management operations, together withthe response by the BBC Governors, are laid before Parliament
with the BBC’s Annual Report and Accounts in July 2005.
In considering legal and regulatory requirements, the Audit
Committee has reviewed developments, including receiving
presentations from management, on the impact of International
Financial Reporting Standards on the BBC (see Financial review
on pages 94 to 95).
The Chairman of the Audit Committee reports to the full Boardof Governors after each meeting of the Committee.

The Audit Committee regularly reviews the independence of its
external auditors.The Audit Committee holds discussions with theexternal auditors without management being present.The Audit
Committee reviews the level of non-audit fees paid to KPMG LLP.
Any significant consulting work is put out to competitive tender.
Recruitment from KPMG LLP into any senior management positionin the BBC requires the prior approval of the Audit Committee.
The BBC’s policies in relation to services procured from theexternal auditors are:■ non-audit services, above a £50,000 threshold, proposed to becommissioned from the external auditors must be notified to,
and approved by, the Audit Committee■ above an established de minimis level the planned work mustbe submitted to competitive tender and, in the event that theexternal auditors are to be awarded the contract, the priorapproval of the Audit Committee must be obtained■ the external auditors are specifically excluded from being
considered for certain types of work where the effect could
be to prejudice their ability to express an independent andobjective opinion
Governors’ Property Committee
The Governors’ Property Committee was formally establishedin July 2003 to supervise management’s implementation of theBBC’s property strategy including monitoring the progress of theredevelopment of Broadcasting House in London. However, theAudit Committee remains the authority by which the Corporation
determines satisfactory compliance with internal and external
controls including for property projects.
During the year the Property Committee comprised exclusivelyof Governors: Dermot Gleeson (as Chairman), Michael Grade(from May 2004), Richard Ryder (retired 30 June 2004) and
Sir Robert Smith (retired 31 December 2004).The Property
Committee was disbanded in May 2005, and its responsibilities
assumed by the Governors’ Finance and General Purposes
Committee (FGPC), which will hold its first meeting in July 2005.
The key responsibilities of the Property Committee were to:satisfy itself that major property projects within the agreed
property strategy are progressing according to plan and budget■ be informed of any significant variances or changes in advanceof requests by management to the full Board of Governors forapproval of increased expenditure (in line with the investment
guidelines covering approval levels)■ be informed in advance of any proposal by management
to dispose of property assets■ be informed of any significant issues and ensure, where
necessary, these are referred to the Governors’ Audit
Committee for further scrutiny■

Independence of external auditors
The BBC complies with the guidance governing the conduct ofexternal audit set out in the 2003 FRC Code.The external auditors
appointed by the BBC are KPMG LLP as financial auditors, andPricewaterhouseCoopers LLP as the fair trading auditors (see pages
79 to 80).The Audit Committee, FTCC, PricewaterhouseCoopers
LLP and KPMG LLP themselves, all have safeguards in place to avoid
the possibility of the auditors’ objectivity and independence
being compromised.

BBC Annual Report and Accounts 2004/2005

85

Compliance

Governors’ Finance and General Purposes Committee (FGPC)The FGPC is in the process of being established. Its members
comprise exclusively of Governors: Dermot Gleeson (as Chairman),Michael Grade, Anthony Salz and Jeremy Peat.The key
responsibilities of the Committee will include:■ assisting and making recommendations to the main Boardof Governors on financial, strategic, investment and property
related matters■ scrutinising and making recommendations to the Boardof Governors on the BBC’s annual budget■ reviewing investment cases prior to them being consideredby the full Board■ reviewing progress against the BBC’s major projects and strategies
Governance arrangements for commercial subsidiaries
BBC Commercial Holdings Limited, a wholly-owned subsidiaryof the BBC, coordinates and manages the activity and financing
needs of the principal commercial subsidiaries.The BBC’s public
service aims are enshrined in the company’s Memorandum of
Association and many of its powers, including the power toappoint directors, are exercisable subject to prior approvalof the Board of Governors.
The Board of Commercial Holdings Limited Audit Committee(CHAC) has a responsibility to consider all Audit Committee
papers relating to the commercial subsidiaries.The CHAC
members are independent of the operational managementof the commercial businesses. Matters of significance will also betaken and discussed by the Governors’ Audit Committee, referralof which is determined by the Chairman of CHAC and overseenby the Head of Business Assurance.
The objective of the CHAC is to ensure that the BBC commercial
subsidiaries meet the highest standards of corporate governanceparticularly with respect to internal control and risk management
and operate within the framework of the Governors’ Audit
Committee.The Chairman of the CHAC reports to each
Governors’ Audit Committee on the activities of the CHAC.
Events of the year
The BBC’s system of controls, as stated above, is designed to
manage risks rather than eliminate them entirely. During the year
the BBC has reviewed lessons learnt from the following events,
updating controls and processes where considered appropriate.
Suspected fraud
During the year, a series of suspicious transactions, authorised bya member of staff, were identified.The member of staff has leftthe BBC and the matter has been referred to the police who are
conducting an investigation with the BBC’s full support.The incident
has been subject to a detailed internal review to identify and learn
the control lessons.The total value of transactions under examination
is below £300,000.

86

4 Other corporate governance responsibilities
Human resources
The BBC continues to hold the Investors in People (IiP)
accreditation across all divisions of the BBC, which is one of theprocesses for evaluating progress in people management anddevelopment. It is taking active steps to improve its performancein all areas by a programme of rigorous self-assessment every year.
The BBC invests a considerable amount of money and time intraining and developing its staff as detailed on page 62.
The BBC monitors staff views through an annual staff survey andalso has various consultation mechanisms. Regular meetings arealso held by management with the recognised unions: BECTU(Broadcasting Entertainment Cinematograph and Theatre Union),
NUJ (National Union of Journalists) and AMICUS (formerly
the AEEU).
Internal communication
Progress in improving internal communication is measured by anannual survey of staff opinion conducted by MORI.The latest ofthese, conducted in December 2004, showed that the BBC continues
to make further progress in the key areas of leadership and focusing
on audience needs.The BBC remains in MORI’s group of top tenorganisations in the UK for internal communications.
Occupational risk management
The BBC’s overall objective is to provide and maintain a safe,
healthy and secure environment for its employees, the people
it works with and those who visit the organisation. It is integral to
the BBC’s vision. In June 2003, the BBC’s Executive subcommittee(Corporate Health and Safety Committee) agreed the key goals
and objectives for the organisation designed to inform the workof the Occupational Risk Management team.These were:■ establish an integrated framework for the management of health,safety and security across the BBC■ establish management systems for the selection and control
of contractors to ensure health, safety and security risks to the
BBC are adequately addressed■ reduce the number and duration of lost time accidents andoccupational ill-health cases by 25% from 2004–2008
The BBC’s occupational risk policies are the keystone of the
Executive’s aim to encourage initiative and adopt best practicewhere employees and managers are aware of their responsibilities
and actively engaged in, and committed to, improving standards ofoccupational risk management.The Health and Safety, Security
and Environment Management policies aim to:■ enable continual and effective improvement of occupational
health, safety, security and environment performance■ confirm the organisation’s objective to achieve implementationand continued improvement of an occupational risk management
system that meets the requirements of the British Standards
Institute specification, OHSAS 18001:1999, for health and safety,
International Standards Organisation, ISO 14001:2004 forenvironmental management and industry best practice for security

BBC Annual Report and Accounts 2004/2005

A governance structure is in place to ensure the BBC’s day-to-day
activities are supported, comprising of both Executive andsubcommittees. It ensures compliance with statutory obligations,
implementation of BBC policy, standards and guidelines and thatoccupational risk management initiatives are championed onbehalf of the organisation.
As part of Occupational Risk governance and compliance, BBC
Business Assurance undertakes both reviews and internal audits.
These will continue and become more divisionally focused, as partof the BBC’s audit and assurance activities.The audit reports andactions arising from these audits are owned and dealt with directlyby the relevant BBC business, supported by the BBC’s
Occupational Risk Management department where required.
The plan to implement a corporate occupational risk management
system and an internal advice line, aimed at providing front line
advice and support to BBC operations, is the mainstay of theBBC’s strategy to improve occupational risk management acrossthe BBC.These plans, together with the initiatives discussed below,
are designed to aid the management of the key occupational risks
currently facing the BBC which management has assessed as:■ managing occupational risk during major organisational change■ the selection and competence of independent producers
working on behalf of the BBC■ adequacy of health and safety performance standards of partnerorganisations and contracted service providers■ risk from international terrorism and dissident groups potentiallytargeting the BBC
Several other major initiatives were implemented throughout theyear, including:■ work-related stress and post-traumatic stress initiatives■ child protection guidelines and procedures■ safe driving guidelines and procedures■ an Asbestos Working Group■ health and safety arrangements for events■ a Noise Working Group established in response to therequirements of the EU Physical Agents (Noise) directive■ a working group set up by the BBC’s Executive subcommittee
to look at the management of occupational risk relating tothird parties
The BBC continues to strengthen its portfolio and provisionof online training. Alongside this it has introduced a number offace-to-face courses for production staff aimed at improving themanagement of occupational risk. Over 6,300 staff completed one
or more of the online training modules during 2004/2005 and afurther 2,707 attended face-to-face occupational risk training courses.
The BBC initiated a number of improvement initiatives aimed atdeveloping greater effectiveness around communications on healthand safety issues with employees, third parties and trade unions.
Communication and reporting is carried out at divisional levelwithin the BBC through a network of safety forums in each division
to ensure full engagement with BBC businesses. Monthly andquarterly reports on occupational risk management performanceare delivered to key stakeholders at Executive level and also to thejoint Trade Union health and safety committee.The BBC also fully
contributes to the work of key industry sector groups, including the
Health and Safety Executive Joint Advisory Committee and Joint
Industry Grading Scheme. In October 2004 the BBC hosted a
Health and Safety conference for the broadcast industry in supportof European Week for Safety and Health, attended by both UK andforeign broadcasters, independent production companies, tradeunions and the enforcement agencies.The BBC continues to foster
constructive discussions and has become a significant contributor to
the HSE’s initiative CCG (Construction Client Group).
The BBC has delivered an improving statistical trend in health andsafety performance. In 2004/2005 the total number of injuries asa result of accidents reported reduced compared to 2003/2004
by 3.6% to 864.The BBC’s accident rate in 2004/2005 was 140
per 100,000 employees compared to 134 for 2003/2004. Sadly theorganisation suffered two fatalities during the year.These occurred
during newsgathering operations abroad. Lessons learnt from theseincidents have been applied to focused improvements, specificallyaround training and communication regarding working abroad andwithin hostile environments. In recognition of its efforts to provide
trauma training and support staff in the coverage of the Iraq
conflict the BBC was awarded the Distinguished Media LeadershipAward by the US Dart Centre for Journalism and Trauma.
During 2004/2005 RIDDOR reportable accidents to the HSE
reduced to 38 in comparison to 39 reported in 2003/2004.
The incidence rate for suspected work-related ill health of
employees referred and seen by the BBC’s occupational healthpractitioners was 16.3 for 2004/2005 compared to 17.5 per 1,000
employees for 2003/2004.
At present the main method of calculating the cost of accidents isthrough Employer’s Liability and Personal Accident claims.This does
not represent the full cost of accidents but provides an indicator of
cost. In 2004/2005 the BBC paid £3,000 combined for Employer’s
Liability and Personal Accident claims (2003/2004 £856,000)
with £1.3million of claims outstanding (2003/2004 £266,000).
This represents 17 cases in 2004/2005 (32 in 2003/2004).
As part of the development of the occupational risk management
system the BBC is reviewing its measuring and monitoring of
performance, including improvements to data collection andanalysis.The aim is to establish a comprehensive framework of
key performance indicators and report targets and objectives for
performance in the BBC Annual Report and Accounts 2005/2006.
Further work is required to link data from a variety of sources tocoordinate and assess the costs of absence from work due toaccident, injury or ill health. Over the forthcoming year the BBC
will look at solutions to achieve this aim.
There were no enforcement actions, notices or convictions against
the BBC for occupational risk management matters.

BBC Annual Report and Accounts 2004/2005

87

Compliance

5 Governors’ remuneration report
This report sets out the BBC’s policy on the remuneration of theBoard of Governors and of members of the Executive Board.
The BBC is exempt from the requirements of the Directors’
Remuneration Report Regulations 2002 and those of the Financial
Services Authority but this report has been prepared as if thoserequirements did apply wherever the disclosure provisions are
relevant and applicable.The sections on Remuneration received
and Governors and Executive Board pensions are audited.
Governors’ Remuneration Committee: constitution and operation
A subcommittee of the Board of Governors, the Remuneration
Committee sets the remuneration policy for members of the
Executive Board.The Committee deals with all matters relating
to the remuneration of members of the Executive Board and isaccountable to the Board of Governors for the determinationand maintenance of overall remuneration policy and review of
Executive Board basic salaries, bonus awards and benefits including
pensions arrangements.The Committee considers theperformance of the individual members of the Executive Boardand recommends their annual salary and bonus awards to thefull Board of Governors.
The members of the Committee during the year were Anthony
Salz (Chairman, appointed August 2004), Rt Hon The Lord Ryder(retired June 2004), Dame Pauline Neville-Jones (retired
December 2004), Sir Robert Smith (resigned from the Committee
August 2004), Deborah Bull (appointed July 2004). Michael Gradehas been a member of the Committee since his appointment as
BBC Chairman in May 2004. In addition, meetings are attended by
the Director-General, who advises on matters relating to the othermembers of the Executive Board and the overall performance of
the BBC, and the Director, BBC People. Neither is present whenmatters concerning their own remuneration are considered.
The Committee has access to internal expertise through the
HR Director, Reward and Commercial Businesses. Complying withthe 2003 FRC Code on Corporate Governance, the Committee
takes independent specialist advice from external professional
advisers on remuneration matters, particularly market practice.
During the year the Committee received independent advice fromthe Hay Group on comparative market data in the determinationof pay and benefits for the Executive Board.
Governors: remuneration policy
The members of the Board of Governors receive a fee
determined by the Secretary of State for Culture, Media andSport.They are additionally reimbursed for expenses incurred on
BBC business. Expenses regarded by the Inland Revenue as taxable
are settled in full by the BBC, including any related tax payments,
and reported as benefits in the table on page 89.The increase inannual remuneration notified for 2004/2005 was 2.0%.
Executive Board: remuneration policy
Following the reorganisation of the BBC committee structure inJune 2004 a new Executive Board was established. The Committee
determines the remuneration policy for Executive Board members
balancing the BBC’s status as a public corporation (with the
expectation that executive remuneration must deliver value tothe licence fee payer) with the fact that the BBC operates in an88

increasingly competitive environment and must offer remunerationthat attracts, motivates and retains the key talent required to leadthe BBC. In doing so, the remuneration policy seeks to:■ remunerate individuals fairly for individual responsibility andcontribution, while providing an element of performance-related
pay, reflecting the underlying performance of the BBC■ take into account salary policy within the rest of the BBC andthe relationship that should exist between the remuneration of
Executive Board members and that of other employees■ have regard to the market median levels of total cash reward(basic salary and bonus) of relevant comparator organisations
in both the public and private sector
The Committee’s approach to policy continues to reflect theseprinciples and the dual influences of public service and market
competitiveness underpinned by regular review and monitoringof remuneration policy in organisations outside the BBC.
This monitoring continues to show that salaries paid at mainboard level across the private sector as a whole, and in the media
industry in particular, are significantly higher than in the BBC fororganisations of comparable size and complexity. Also, annual
bonus opportunities and long-term incentives across the private
sector are much greater than in the BBC. Conversely the pay
levels for senior civil servants and other public sector managers
are generally lower.
Elements of remuneration
Basic salary
Basic salaries are reviewed in August each year, taking into accountexternal market levels and internal comparisons as well as theindividual’s responsibilities and performance.The basic salary is
paid as a fixed sum monthly in cash.
Annual bonus
The contracts of all Executive Board members provide for a
performance bonus of up to 30% of basic salary.The achievementof BBC-wide objectives account for up to 30% of the maximum
bonus for all members of the Executive Board, achievementof divisional objectives accounts for up to 40% and individual
performance for the remaining 30% of any award. For the year
under review the objectives were set by the Board of Governors
and published in the BBC Annual Report and Accounts for
2003/2004.
Bonuses are reflected in the financial statements on an accruals
basis for the performance period under review.The payments are
made in July each year.
The Remuneration Committee has reviewed the bonus designfor the Board seeking to achieve a better balance between theneed for public service value and market competitive reward.
A new plan is introduced for 2005/2006 which makes a substantial
reduction in the bonus potential from 30% of base salary to
10% and bases awards on the BBC drive for value for money andachievement of the five Governors’ Objectives for 2005/2006.
This results in some consolidation to base salary consistent withthe policy of having regard to the market median salaries.
Pension entitlement will be adjusted so that there is no increasein accrued entitlement.

BBC Annual Report and Accounts 2004/2005

Benefits
In addition to salary and bonus, the main contractual benefits
provided are a car allowance and fuel allowance, private healthinsurance, pension and life assurance. It has been policy for someyears that, with the exception of the Director of Nations &Regions, new appointees to the former Executive Committee
and now to the Executive Board, are not eligible for provision ofa chauffeur-driven car. The Director-General’s contract provides
for a chauffeur-driven car, but no entitlement to a personal car
allowance or fuel allowance.
Pensions
All members of the Executive Board are eligible to participate in
the BBC Pension Scheme which provides salary-related pension
benefits on a defined benefit basis, with an accrual rate of 1/60thof the final salary per year of service, subject to the Inland
Revenue cap where appropriate. Only basic salary is pensionable.
The Scheme provides for early retirement on medical grounds andlife assurance cover of four times salary to a prescribed limit.
A variety of arrangements have been made for those individuals
who have joined the BBC later in their careers whose earnings
exceed Inland Revenue limits, including funded and unfundedarrangements outside the BBC Pension Scheme.
Employment contracts
The policy of the Remuneration Committee is for the contracts of
employment of Executive Board members to contain a maximum
notice period of one year.
Each contract expires on the 60th birthday of the director whichis the normal BBC retirement age, but is subject to earlier
termination for cause or if notice is given under the contract.
There is no entitlement to any additional remuneration in theevent of early termination other than in the case of termination
on grounds of redundancy.
Outside interests
With the prior agreement of the Board of Governors and where
there is no potential for conflict of interest members of the Executive
Board may hold external directorships. In principle, no more than
two external directorships can be held at the same time of which
only one should be in a commercial organisation. Remuneration
which arises from directorships agreed since the introduction ofthis policy in 1997, or subsequent to appointment, is paid to theBBC. During the year only four Executive Board members held
appointments as executive directors of external organisations.
For information on how to obtain the Executive Board’s registerof interests see page 82.

Governors

Fees
£000

Benefits
£000

Total
2005
£000

Total
2004
£000

16
16
16
72
28
28
21
7
14
19
16
21
28
11

4
9
12
24
8
3
5
3
1
5
6
2
4
4

20
25
28
96
36
31
26
10
15
24
22
23
32
15

13*
21
18
–
34
30
34
–
39
–
25
29
25
–

313

90

403

268
110

313

90

403

378

Annualbonus£000

Taxablebenefits
£000

Total
2005
£000

Total
2004
£000

Deborah Bull
Dame Ruth Deech
Dermot Gleeson
Michael Grade (appointed 17 May 2004)
Professor Merfyn Jones
Professor Fabian Monds
Dame Pauline Neville-Jones (retired 31 December 2004)
Jeremy Peat (appointed 1 January 2005)
Rt Hon The Lord Ryder (retired 30 June 2004)
Antony Salz (appointed 1 August 2004)
Angela Sarkis
Sir Robert Smith (retired 31 December 2004)
Ranjit Sondhi
Richard Tait (appointed 1 August 2004)
Governors who retired during 2003/2004* Appointed Governor part-way through 2003/2004

Executive Board

Salary£000

Jenny Abramsky
233
Jana Bennett
255
Mark Byford
351
Stephen Dando
245
82
Andy Duncan (resigned 17 July 2004)
162
Carolyn Fairbairn (resigned 31 December 2004)
124
146
Rupert Gavin (left the Committee 22 June 2004)
Ashley Highfield
245
1
Pat Loughrey (left the Committee on 22 June 2004) 48
59
Zarin Patel (appointed 1 January 2005)
Peter Salmon (left the Committee on 22 June 2004)1 49
Richard Sambrook (left the Committee on
22 June 2004)1
54
John Smith
287
3
453
Mark Thompson (appointed 10 June 2004)
Caroline Thomson
210
1
51
John Willis (left the Committee on 22 June 2004)
1
Alan Yentob (left the Committee on 22 June 2004)
54

58
63
92
65
–
–
–
57
13
10
14

13
16
14
3
5
12
10
18
8
3
7

304
334
457
313
87
174
156
320
69
72
70

276
305
384
294
309
271
373
308
287
–
289

13
72
–
64
12
13

4
28
6
16
5
4

71
387
459
290
68
71

292
327
–
250
321
301

2,984

546

172

3,702
47
–

4,587
39
675

3,749

5,301

443

910

Payments under long-term incentive plans4
Members who resigned during 2003/2004

Payments to former directors
1

Following the reorganisation of the former Executive Committee and creation of
the new Executive Board
Rupert Gavin resigned from the BBC on 2 October 2004. Included within salaryin the table above is £80,778 relating to the period from 23 June to 2 Octoberwhen Rupert Gavin left the BBC. He was paid £443,000 in line with his contractual
entitlement, including £290,050 in lieu of notice3Mark Thompson has waived his right to be considered for an annual bonus award
for the year 2004/2005
4
The pro rata payment to Rupert Gavin under the rules of the plan for the BBC
Worldwide long-term incentive plan ended on 31 March 2005 for achievement
against three-year cashflow, profit and sales targets
2

Remuneration received
The remuneration of the Board of Governors, the Executive Board
members appointed or leaving during the year or former membersof the Executive Committee prior to the formation of the
Executive Board in June 2004 is included in respect of their periodof membership only.

BBC Annual Report and Accounts 2004/2005

89Compliance

6 Programmes, channels and promotions

Governors and Executive Board pensions
The BBC provides pension benefits to the Chairman of theGovernors and to Executive Board members. Details of defined
benefit entitlements to the Chairman and Executive Board
members who served during the year are shown in the first fivecolumns of the following table.The BBC makes contributions tomoney purchase schemes in respect of some members as shownin the last two columns.
Definedcontribution
schemesDefined benefit schemes
Annual values

Governor/Executive
Board member(age at
31 March 2005)

Accruedpensionat
31 March
2005£000paChairmanMichael Grade (62)
Executive Board
Jenny Abramsky (58)Jana Bennett (49)Mark Byford (46)
Stephen Dando (43)Andy Duncan (42)
Carolyn Fairbairn (44)
Rupert Gavin (50)Ashley Highfield (39)
Pat Loughrey (49)**
Zarin Patel (44)Peter Salmon (48)**
Richard Sambrook (48)**
John Smith (47)Mark Thompson (47)
Caroline Thomson (50)John Willis (58)**
Alan Yentob (58)**
Directors who resigned
in 2003/2004

Governors’ Programme Complaints Committee
During the year the Governors’ Programme Complaints
Committee (GPCC) comprised exclusively of Governors:
Sir Robert Smith (Chairman, stood down October 2004);
Richard Tait (Chairman, joined November 2004); Deborah Bull
(joined September 2004); Merfyn Jones (joined March 2005);
Fabian Monds; Dame Pauline Neville-Jones (stood down July2004); Angela Sarkis; Ranjit Sondhi (ended GPCC membership
July 2004).

Transfer values

Transfer Transfer
Increase value of value ofin accrued accrued
accrued pension pension
pensionat
atover 31 March 31 March
year
2005
2004
£000pa£0006£000

Increase intransfervalue lessdirectors’
contributions
over
year
£000

BBC
contributions
to moneypurchase
schemes
2005
£000

2004
£000

1

1

22

–

18

–

–

149
5
134
6
5
13
10
8
107
11
39
108
125
1
51
3
142

14
2
34
2
1
2
1
2
14
2
4
8
28
1
3
2
15

3,026
59
1,655
55
44
115
135
54
1,508
98
544
1,499
1,619
15
836
57
2,883

2,719
36
1,154
37
36
95
112
39
1,229
76
462
1,303
1,183
–
687
24
2,566

292
18
485
13
6
16
20
10
266
17
77
180
415
11
143
28
302

–
46
–
56
12
26
29
43
–
–
8
–
–
111
30
9
–

–
41
–
52
42
31
52
42
–
–
34
–
–
–
26
31
–

370

351

–

126

370

477

**Member of former Executive Committee, not on current Executive Board
1) Andy Duncan both resigned as a director and left the pension scheme on
17 July 2004.The accrued pension on leaving the scheme has been valued as
at 31 March 2005
2) Carolyn Fairbairn both resigned as a director and left the pension scheme on
31 December 2004.The accrued pension on leaving the scheme has been valued
as at 31 March 2005
3) Rupert Gavin resigned from the BBC and left the scheme on 2 October 2004.
The accrued pension on leaving the scheme has been valued as at 31 March 2005
4) Pat Loughrey, Peter Salmon, Richard Sambrook, John Willis and Alan Yentob all
resigned as directors on 22 June 2004, but are still active members of the scheme.
The accrued pension has been calculated and valued as at 31 March 2005
5) Zarin Patel was appointed a director on 1 January 2005, although she joined thescheme on 1 October 1998.The figures shown include the period before she wasa director. The figures at the beginning of the year exclude benefits from atransfer of £1,092 which was received during the year
6) Mark Thompson both joined the scheme and was appointed a director on
10 June 2004.The increase in transfer values and accrued pension is in respectof the period from this date7) The accrued benefits shown for Mark Thompson and John Willis assume that they
will complete the two-year service period required before benefits can be claimed
8) The transfer value of accrued pension benefits represents the estimated cost to
the pension scheme of providing the pension benefit accrued to date.The value isaffected by a number of factors, which include age of individual, pensionable salary,
years of pensionable service, and investment market conditions at the date ofcalculation (in accordance with Actuarial Guidance Note GN11). It is not a sum
paid or due to the individual and therefore cannot be meaningfully added toremuneration.The effect of the investment market conditions on the transfer value
varies according to the person’s age. For older members the calculation reflects
the yields on index-linked gilts, while for younger members the calculation reflects
the dividend yield on the FTSE All-Share Index

90

The GPCC is responsible for fulfilling the Charter requirementthat the Board of Governors ensures that complaints are properly
handled by the BBC.The GPCC undertakes a range of
responsibilities in fulfilling this requirement.These involve:■ ensuring that complaints are handled by the BBC promptly, areinvestigated rigorously and impartially, and that the process is
informed by good practice■ undertaking an annual review of the BBC’s complaints handlingprocesses and performance. As a result of issues raised in theannual reviews, undertaking a periodic review of the complaints
handling strategy, and making recommendations to the Boardof Governors concerning any changes it deems necessary arisingfrom these reviews■ reviewing the quarterly complaints report submitted to theBoard of Governors by the Complaints Management Board,chaired by the Deputy Director-General■ reviewing the quarterly Complaints Bulletin published by the
Editorial Complaints Unit (ECU)■ raising broader editorial issues arising from its consideration of
appeals with, as appropriate, the Director-General, or the Deputy
Director-General, through the Complaints Management Board■ considering certain appeals against the decisions of the ECU in
relation to complaints about programmes transmitted, or material
carried by services for which the BBC has editorial responsibility■ considering certain appeals against the decisions of a Director of
a BBC division in dealing with an editorial complaint where thatcomplaint falls outside the remit of the ECU and is accompaniedby evidence to suggest a serious breach of editorial standards
In taking appeals, the GPCC is advised by an independent Editorial
Adviser who informs the GPCC about the range of editorial issues
relating to complaints and the concerns and/or considerations
raised by complainants.
The GPCC’s decisions on appeals are communicated to theappellant and to the Complaints Management Board. The GPCC
also publishes a quarterly bulletin of its findings.
For further information on complaints handling during 2004/2005,
see pages 61 to 62.
Upholding editorial standards
The Governors ensure that the BBC maintains high editorial
standards, monitoring its compliance with the BBC Producers’
Guidelines and with the Code of Impartiality and Accuracy includedin them.

BBC Annual Report and Accounts 2004/2005

Undertaking an annual review of editorial issues in April this year,
the Governors were satisfied that in 2004/2005 overall the BBC met
the standards expected of it.They recognised the BBC’s continued
success in bringing challenging and risk-taking programmes to air,including: The Secret Agent, Real Story – Nurseries Undercover, Dirty
War, The Alan Clarke Diaries, Blackpool, Angela Canning, Broadwater
Farm and Bodies.
Religious sensitivity raised particular editorial issues this year.
The Governors noted that the decision on whether to broadcast
Popetown, an animation set in a fictitious Vatican City, was referredto the Director-General and the Director,Television.They jointly
concluded that the quality of the series did not justify thepossible offence and it was not shown.
Jerry Springer Night, including the transmission of Jerry Springer – theOpera, was the subject of around 63,000 complaints, many relating
to offence to religious feeling.The decision to broadcast the
programme was taken by the Director-General as Editor-in-Chief.
As a result, the complaints were referred directly to theGovernors’ Programme Complaints Committee (GPCC).The
GPCC held that the offence – particularly the offence to religious
beliefs – caused to sizeable numbers of people should not be
underestimated or taken lightly. But, by a majority of four to one,the GPCC decided the broadcast did not breach the Charterand Agreement and all the relevant codes and guidelines.
In their review of the year, the Governors noted the action taken
by management following a successful hoax perpetrated on
BBC World about Union Carbide’s response to the Bhopal
tragedy.This had caused considerable embarrassment, and an
investigation had identified how it had happened. As a result,procedures were tightened and a series of workshops
subsequently provided guidance on how to spot internet fakes.
The Governors highlighted the issues raised in ensuring editorial
compliance by independently produced programmes (around,for example, the right to reply and product placement).They
noted the responsibility of the independents to ensure there
was appropriate training to support editorial compliance.
The Governors noted the particular challenges surrounding
impartiality in genres other than News and Current Affairs.
They noted an example highlighted by management, the New
Year’s Day edition of The Vicar of Dibley, which contained a clear
Make Poverty History campaigning message.The Governors
recognised that they had not reviewed the programme itself but,given the issues raised by management, asked management toaddress any concerns before any future repeats of the programme.
Reviewing the overall editorial decision-making process, theGovernors were satisfied that there was a clear allocation ofcompliance responsibilities, leading ultimately to the DirectorGeneral as Editor-in-Chief, and that advice from the Editorial
Policy Unit was given sufficient weight in the compliance structure.

The Governors noted nevertheless that a robust editorial
framework did not guarantee against individual editorial errors.
They reviewed recent examples of good practice in handlingmistakes (for example, the Bhopal hoax).They also commented
on the policy for on-air apologies.They specified that the apology
should be given by the programme itself when mistakes were
made, or at a similar time in the schedule, and should not be given
only on the BBC’s website, as had happened on occasion throughthe year.
In 2004/2005, the Board also maintained its oversight of impartiality
across the BBC’s output. It received regular reports on the monthly
tracking survey which has been in operation since February 2004.
It commissioned reviews of editorial output on two separate issues
over the year.The report about religion provided the basis for aseminar held by the Board of Governors to discuss the BBC’s
religious programming and the way that religion is portrayed
across all genres.
The Board also commissioned an assessment of the BBC’s coverageof the European Union from an independent panel headed by
Lord Wilson (for further information see page 14).
In April 2005, the Governors also approved the revised BBC
Producers’ Guidelines, to be known as the BBC Editorial Guidelines.
They were satisfied, in particular, that amendments to the new
guidelines fully reflected the recommendations of the Neil Reportabout the BBC’s editorial processes published in June 2004. For
further information about the Neil Report see page 13 (Governors’
review of objectives) and 45 (Governors’ review of News).
New service approvals
All new BBC public services launched since 1 January 1997 require
the approval of the Secretary of State for Culture, Media and Sport.
The key terms of approval are also contained in the Statement of
Programme Policy for each of these services. The BBC Statementsof Programme Policy 2004/2005 included a large number ofmeasurable commitments.The table on pages 69 to 77 shows
how the BBC met these and details any exceptions.The Digital
Curriculum service is reported separately below as it is yet tobe launched. No new services were launched in 2004/2005.
During 2004/2005 the Secretary of State for Culture, Media andSport published three separate independent reviews of BBC
services launched since the start of the current Charter: bbc.co.uk
by Philip Graf; BBC Digital Television Services by Professor Patrick
Barwise; and BBC Digital Radio Networks by Tim Gardam.
The reports and the BBC’s responses to them are available in fullon bbc.co.uk/info. All reviewers found that the new BBC services
had met the conditions of their original DCMS consents. However
recommendations were made to enhance the services; how the
BBC is responding to these is reflected in the Governors’ review
of services earlier in this document.

BBC Annual Report and Accounts 2004/2005

91Compliance

Digital Curriculum
In approving the Digital Curriculum service in January 2003, theSecretary of State for Culture, Media and Sport set the BBC
a number of conditions, including meeting the undertakings givenby the BBC itself. Each year the BBC will report on its compliancewith those conditions that are relevant to activity during the year.
Work on developing the service began in 2003/2004 and has
continued during 2004/2005. During the year the BBC took thefollowing steps to comply with specific conditions of approvalor undertakings:■ launch plans: the BBC must publish an outline plan for five years
at least 15 months before the planned service launch and a listof learning outcomes for the first year at least 12 months before
the launch.The BBC met these targets, publishing the required
documents in July 2004 and January 2005 respectively■ content development: the BBC must consult with theGovernment’s Education Technology Agency, BECTA, as to whichareas (learning outcomes) are suitable for being taught by ICT.
The BBC may then only develop content for no more than 50%of these. By January 2005 the BBC had agreed with BECTA, andpublished, around 80 documents which cover 20 commissions
describing plans for content and their variations for each of thefour nations■ external content spend: the BBC must commission 50% of thecontent from external suppliers. A preferred supplier list wascompiled in accordance with EU regulations for new media
content. In January 2005 these suppliers were invited to tenderfor eight commissions and contracts are expected to be finalisedin the summer■ the BBC must work with the Government’s Curriculum Content
Online Advisory Board in developing the service.To this end the
BBC met with the Board four times during the year
The BBC has also met regularly with industry representatives andindividual companies and plans to continue these meetings.
UK programme quotas
Under the Communications Act 2003 the BBC has a duty toensure that not less than 25% of the amount of time allocatedto the broadcasting of qualifying television programmes is allocatedto the broadcasting of a range and diversity of independent
productions. Ofcom is required to report the extent to which the
BBC has performed that duty. In August 2004 Ofcom reported forthe period 1 April 2003 to 31 March 2004 and concluded that the
BBC exceeded the quota, achieving 28.8%, and that it delivered asatisfactory range and diversity of independent production.
From 1 January 2004 the BBC has been required to meeta number of programme production obligations, the so-called‘Tier 2’ quotas, for which Ofcom is required to monitor
compliance.These Tier 2 quotas include the independent
production quota. Ofcom is expected to formally report the BBC’s
performance in the calendar year 2004 against these quotas intheir 2005 Communications Market Review. However, the BBC
fully expects to exceed all of the quotas and its self-assessment
figures are provided here:

92

Independent production quota1
Hours of qualifying programmes
Regional programme making2
Spend on qualifying programmes
Hours of qualifying programmesNews and current affairs programmes3
Hours of News on BBC One
Hours of News on BBC One in peak time
Hours of current affairs on BBC One and BBC Two
Hours of current affairs on BBC One
and BBC Two in peak time
Levels of original production4
BBC OneBBC One in peak time
BBC Two
BBC Two in peak time
BBC Three
BBC Three in peak time
BBC Four
BBC Four in peak time
CBeebies
CBBC Channel
BBC News 24
BBC Parliament
Regional programming5
Hours of regional programming
Hours of programmes made in the relevant area
Hours of BBC One news
Hours of BBC One news in peak time
Hours of non-news programming in peak time
All non-news programmes adjacent to peak time

Quota

Achievement

25%

30.3%

30%
25%

34.0%
32.2%

1,380
275
365

1,508
281
434

105

117

70%
90%
70%
80%
80%
70%
70% approx
50%
80% approx
70%
90%
90%

82.3%
98.2%
80.7%
91.2%
84.5%
74.8%
71.6%
64.1%
83.2%
80.4%
95.0%
95.9%

6,580
95%
3,920
2,010
1,030
355

6,815
98.8%
4,400
2,156
1,069
379

1

The BBC is subject to a 25% independent production quota under the termsof the Broadcasting Act 1990 and the Communications Act 2003
2
The BBC quotas for regional production agreed with Ofcom are based on theexisting ‘Hatch’ definition
3
These quotas and performance figures are for network programming only.The
News quota specifically excludes overnight transmissions of News 24
4
Original productions include all BBC commissioned programmes including repeats.
For BBC Three and BBC Four they exclude repeats of programmes first shownon another channel
5
These figures represent regional programmes across BBC One and BBC Two

EU programme quotas in the calendar year 2004
European Community legislation requires member states toensure that broadcasters reserve for European works a majority
proportion of their television transmission time excluding the time
devoted to news, sports events, games, adverts, teletext services
and teleshopping.The legislation also requires broadcasters toreserve at least 10% of their transmission time for European
works (excluding works of the kind described above) made byindependent producers.
Ofcom is expected formally to report the BBC’s performancein the calendar year 2004 in their 2005 Communications Market
Review. However, the BBC’s self assessment is that it exceeded the
EU quotas. Of the relevant BBC One and BBC Two output, 79%
was of European origin (77% in 2003) and 21% was made by
European independent producers (18% in 2003). Of the relevant
output of all BBC channels (including BBC Three, BBC Four,
CBeebies,The CBBC Channel and BBC News 24), 86% was ofEuropean origin and 27% was made by European independent
producers (84% and 24% respectively in 2003).

BBC Annual Report and Accounts 2004/2005

European channel broadcasting regulation
The BBC broadcasts two television channels in Europe, BBC
Prime and BBC World. Both channels were originally operated by
European Channel Broadcasting Limited but on 1 December 2002
the Secretary of State approved the transfer of the business andassets of the BBC World channel to a new company, BBC World
Limited, which became a wholly-owned subsidiary of BBC
Commercial Holdings Limited. BBC Prime continues to be
operated by European Channel Broadcasting Limited, a whollyowned subsidiary of BBC Worldwide Limited. Both these channels
and BBC Food (a BBC Worldwide Limited channel) are now
licensed by Ofcom as television-licensable content services. BBCWorld and BBC Prime complied with the principles on which
the Secretary of State’s approval was originally granted.
On-air promotions: Office of Fair Trading undertaking
Following the 1992 report of the Monopolies and Mergers
Commission (on the publicising in the course of broadcasting, ofgoods supplied by the broadcaster), the BBC gave an undertaking
to the Office of Fair Trading (OFT) about trailing BBC magazines.
This included using only still trails to give information about BBC
magazines and a commitment not to exceed more than sevenminutes as an aggregate across a seven day period in relation to
on-air promotions of BBC magazines on its television services.
Although the legal obligation applies only to BBC magazines, theGovernors’ Fair Trading Commitment commits to apply the spiritof the undertaking to all on-air trails of commercial products.
From 1 April 2004 to 31 March 2005 the total on the BBC’s
television services for all BBC magazines (including Radio Times)
was 1 hour, 23 minutes and 40 seconds of transmission, which
averages out at 1 minute, 37 seconds in a seven day period.
The total for all commercial products (including BBC Worldwide
Limited and independent products) was 2 hours, 23 minutes and
20 seconds of transmission, which averages out at 2 minutes and
45 seconds in a seven day period.

8 Cost of compliance
As a result of operating in the UK broadcasting market place,and by virtue of being a public body, the BBC incurs substantial
costs in ensuring it complies with all relevant regulation. In lastyear’s Annual Report and Accounts we committed to providing
information on the costs of compliance for the BBC. In 2004/2005,
these costs of compliance are estimated to be £17million. Includedin this figure is a £4.7million subscription fee paid to Ofcom. It also
includes the cost of transmission licences, the fair trading audit, staff
employed to monitor compliance and report against commitments
including Ofcom requirements, DCMS consents and fair trading.
However, these costs are not complete since they do not include
any allocation of costs for staff (including relevant staff in the
Governance Unit) who do not solely work on compliance, but
who may provide information necessary to monitor or reportagainst the commitments.The cost of the Governance Unit isseparately disclosed on page 7.

9 Donations and acknowledgements
Political donations
The BBC does not make political donations.
Charity donations
UK Public Service Broadcasting does not make cash donations tocharities but provides services in kind. In addition to broadcast
appeals detailed on pages 63 to 64, donations to charities by BBC
Commercial Businesses amounted to approximately £61,000
during the year (2004 £1,000).
Financial grants
The BBC acknowledges financial grants from the European
Commission for various technical research projects.

Trails for non-BBC products have also been tracked. In the same
period as above, there was 11 minutes and 20 seconds ofpromotion for products not produced by BBC Worldwide but
associated with our programmes.This averages out to 13 seconds
per seven day period on the BBC’s television services.
Following the BBC’s commercial review (see page 66), the BBCvoluntarily ceased trailing magazines on its television services from17 December 2004.

7 Freedom of information
The BBC became subject to the Freedom of Information (FOI)
Act on 1 January 2005. In the first three months of operation the
Information Policy and Compliance (IPC) department received
410 requests for information and had completed 381 by
31 March 2005. During this period seven requests were replied
to beyond the 20 working day deadline laid down in the Act,and 18 were replied to after an extension of the deadline toconsider the Public Interest test. The BBC also provides a FOI
publication scheme on its website, as required by the Act.
The site had 124,936 hits during the three month period.

BBC Annual Report and Accounts 2004/2005

93Financial review

Overview
In the summer of 2000 the BBC set out a strategy for the period tothe end of the current Charter in December 2006.This involved asignificant boost to spending in order to launch new digital channels,
drive digital take-up and improve the performance of the analogue
channels.This strategy was to be financed by steady increases inlicence fee revenue and by efficiency savings from existing operations.
In the years before revenue caught up with the increased spending,the difference was to be funded by using the public service cash
balances built up prior to the licence fee settlement and temporarybank finance. By March 2007 it is the intention that the BBC PublicServices will have reached a broadly zero debt position under the
Department for Culture, Media and Sport (DCMS) definition ofborrowings.The BBC remains on target for this.

IncomeLicence fee
The licence fee remains the BBC’s most important funding source.
Licence fee revenues of £2,940million were £142million higher
than last year. Of this increase, £80million was due to inflation,£43million to the above inflation increase in the licence fee and£19million from collection improvements.
Despite this growth in income, collection costs increased by only
£1.2million (0.8%) on the previous year to £152million as thebenefits of past system improvements have been realised withthe continuation of an integrated approach to marketing andenforcement. Efforts were also made to increase the use of lesscostly electronic methods of payment. Almost 57% of licences arenow sold under direct debit and 2% were sold via the television
licence online payment service.
The evasion rate fell from 5.7% at March 2004 to 5% in March 2005.
Of the 0.7% reduction, 0.3% is due to the downward revision by
BARB of the estimate of the number of households with televisions.
This continuing success in reducing evasion and controlling collection
costs means that their combined cost has now fallen to 10.2% of
total licence fee income, from 18.9% in 1991/1992 when the BBC
took direct responsibility for licence fee collection from the Home
Office. Although we anticipate decreasing this further, the rate ofdecrease is slowing, as expected in a low evasion environment.
Commercial businesses’ contribution
The commercial businesses exist to exploit the BBC’s physicalassets, capabilities and intellectual properties for profit, to provide
a growing source of supplementary cash for UK Public Service
Broadcasting and to reduce the price of the support services they
provide to the UK Public Service Broadcasting services. In future
the BBC has decided to focus on those businesses which export
and exploit BBC content.
In 2004/2005 the commercial businesses generated a cash
contribution of £151million, £16million higher than the previous
year. In addition £150million of cash (before costs of £7.3million)
was received from the sale of BBC Technology.
BBC Worldwide Limited
BBC Worldwide is the largest of the BBC’s commercial businesses.
It had a successful year increasing profit before interest and taxation
by 50% to £55million.
It contributed £145million of cash to the BBC during 2004/2005(from profits and direct investment in BBC programmes), up from£141million in 2003/2004. Page 67 provides more detail on BBC
Worldwide’s performance.
94

The company has been restructured during the year to create a
simpler organisation, its principal divisions being Television channels,
Television sales, Magazines, Home entertainment, Children’s andNew media.
In line with its strategy of partnering to create scale, it formed aVideo/DVD joint venture with Woolworths plc, creating 2|entertain
Limited. BBC Worldwide is now looking to forge similar alliances
for its Book and Learning businesses.
In 2004 BBC Worldwide was set the challenge of doubling profitsto £74million over the two years to March 2006. It is on track tomeet this target.
BBC World Limited
BBC World has had a steady year in a slowly recovering global
advertising market. Despite the weak US dollar and the impact of
the Asian tsunami on the economy in the last quarter, it improved
its cash flow, reducing the outflow to £9million from £13million
in the previous year.
BBC Ventures Group Limited
BBC Ventures Group comprised four separate businesses at thestart of the year, BBC Resources, BBC Broadcast, BBC Technology
and BBC Vecta. During the year BBC Vecta was closed and
BBC Technology was sold to Siemens Business Services Limited.
The sale of BBC Technology contributed £150million in cash
(before sale costs). Ventures also contributed £16million in cashfrom operations, an increase of £10million on 2003/2004 anddelivered additional efficiency cost savings of £13million in the year.
The sale of BBC Technology followed a price benchmarking
operation covering the BBC’s public services technology
requirements undertaken in the previous year. As part of thesale the BBC has committed to a new ten year technology
services contract under which it expects to make future savingsof up to £30million a year.
In December 2004, the BBC announced that despite the importanceof their services to the BBC, it was no longer necessary for BBC
Broadcast and BBC Resources to be owned in full or part by the
BBC.The sale process for BBC Broadcast is under way. Ownership
options for BBC Resources remain under review.

Public service expenditure
Overall spending on programmes rose this year by £101millionof which £86million was additional analogue spend. The increase
mainly reflects higher sports spend in 2004/2005 due to coverageof the Olympics and Euro 2004 while 2003/2004 was low on
major sporting events. Digital spend increased by £13million but
again comprised 15% of transmitted programme spend. Information
on significant changes in individual channel spend is provided in
Note 2b to the financial statements on pages 106 to 107.
Expenditure on overheads in the year was £332million, up£6.5million from 2004, although this includes an increase in
UK Public Service Broadcasting restructuring spend of £34million.
Overheads therefore remain at 12% of spending, which is 3% better
than the target set in 2000 following the licence fee settlement.
During the year the BBC committed itself to further improving thevalue for money in its cost base.The BBC plans to radically reduce
its headcount in its support services and significantly improve efficiency
in production areas in order to achieve savings of £105million in
2005/2006 and annual savings of £355million a year by 2007/2008.
The expenditure for 2004/2005 includes a restructuring charge of

BBC Annual Report and Accounts 2004/2005

£62million for the Group, £39million higher than last year. The
increase is mainly due to the provision of costs associated with theBBC’s value for money programme.This provision reflects those costs
required to be recognised at 31 March 2005 under UK accounting
standards and not the full cost of the three year programme.

Results for the year
The BBC does not have shareholders and does not aim to makea profit.The result for 2004/2005 is a deficit of £188million whichis £61million better than the previous year. By the end of theCharter period, in accordance with its five year plan, the BBC
expects to have its income and expenditure broadly in balance
excluding non-cash pension charges which were £71million in2005 (2004 £140million). These non-cash pension costs wereintroduced by the pension accounting standard FRS 17, which
the BBC adopted in 2002.

Assets and liabilities
Property
Progress has continued to be made in the BBC's programme
to rationalise and regenerate its real estate portfolio.
The development of the BBC's new Scottish headquarters andbroadcasting centre at Pacific Quay in Glasgow was secured throughthe issue of a £129million bond in a similar arrangement to thatcompleted in the previous year for the Broadcasting House
redevelopment in London. The Pacific Quay building will becompleted in 2007.
Land Securities Trillium Limited (LST), with the agreement of theBBC, restructured the financing on the completed White City
development through the issue of a £366million bond. Although
this did not result in a cash outflow for the BBC, accounting rules
require the BBC to record a charge of £62.5million to its income
statement in this year (see Note 6 on page 110). When the BBC
first sold the White City site to the property partnership it took
part of the sale proceeds as a future discount on rental payments
due for the next 30 years.The cumulative amount of the discount
was held on the balance sheet (under prepayments) to be
gradually released against future rent payments. Under the
restructuring discussed here, the BBC will still pay lower rents
in the future. However because the lease structure has changed,
accounting rules require that the original amount held on thebalance sheet be released. So the ‘loss’ on disposal shown
here represents a timing difference, with the BBC gaining acorresponding amount in real terms from future reduced rental
payment. It does not represent a cash outflow for the BBC.
With the finance for major developments now all provided bythird parties, the BBC and LST reviewed the ongoing nature of
their partnership. LST offers facilities management services as
a component of its overall offer, but not as a principal service.
Therefore, in May 2005, both parties announced their agreement
to restructure the partnership concentrating in the future on
completion of the developments at Glasgow and Broadcasting
House in Central London. The partnership has, over the four years
to date, saved the BBC over £30million out of the £109million
cost savings projected over the 30-year life of the deal.

Cash and debt
At the end of 2004/2005 the public services had net borrowingsof £89million (2004 £106million) using the Department for
Culture, Media and Sport definition of borrowings, a reductionof £17million year on year. Within this, actual cash balanceswere £12million at the year end (2004 £3million). The BBC has
remained comfortably within the £200million Public Services
borrowing ceiling throughout the year.
The commercial businesses held £122million of net debt at theyear end (2004 £172million), a decrease of £50million on theprevious year. The gearing ratio of the Commercial HoldingsGroup is 52% (2004 48%), the increase reflecting the assets of
BBC Technology leaving the group.
Pensions
The BBC remains committed to keeping its defined benefit
pension scheme to which the majority of employees belong.
The net deficit of the pension scheme, based on market values on
31 March 2005 (as required by FRS 17), has remained similar tothat of the previous year at £422million (2004 deficit £432million).
This market-based valuation provides a snapshot position of thescheme at this date with changes in its value reflecting short-term
movements in equity values and interest rates. It does not accuratelyreflect the underlying long-term health of the scheme which
remains overfunded on an actuarial basis.
In order to give a broader picture of the health of the scheme,
we have voluntarily provided extra information about its assets
and liabilities in Note 8b (pages 111 to 114) over and above that
required by FRS 17.

Financial management
The BBC’s main financial risks to be managed are ensuring that the
BBC has sufficient liquid funds to meet its obligations as they falldue and that it is compliant with its borrowings limits imposed by
the Charter, by the DCMS and by external loan covenants (seeearlier section on cash and debt).The BBC is principally a domesticorganisation with the majority of transactions and assets being in
the UK and sterling based. However the BBC undertakes sometransactions in currencies other than sterling and enters into
forward currency contracts to manage this risk.The BBC also
enters into interest rate swaps to manage the interest rate risk
arising as a result of its borrowing needs (pages 130 to 133 provide
more detail).

International Financial Reporting Standards (IFRS)From December 2005 listed entities will be reporting under IFRS
while UK accounting standards are expected to move further
towards convergence with IFRS. The BBC voluntarily preparesits financial statements in line with applicable UK accounting
standards to the level required by listed entities. During the year
the BBC has continued to review the impact that adoption of IFRS
would have on the BBC and the BBC expects to review the timingof adoption of IFRS in September 2005.

As new developments have been completed, the BBC disposedof over 0.3 million sq ft of redundant space from its portfolio.
During the year the BBC entered into a sale and leasebackof 20 regional properties which realised a net profit of £19million.

Zarin PatelGroup Finance Director
16 June 2005

BBC Annual Report and Accounts 2004/2005

95

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

NoteGroup income
Operating expenditure

12Group operating deficit
Share of operating surplus of associates and joint ventures

2005
£m

2004
£m

3,835.3 3,705.9(4,072.9) (4,001.6)(237.6)19.7(295.7)2.0

3
5
6(217.9)28.2(43.1)(293.7)
–
41.8

7
8c ii

(232.8)(6.1)
65.4(251.9)(3.1)
21.0

Deficit before taxation and minority interest

1(173.5)(234.0)

Taxation
Minority interest

9(15.2)
0.5(15.2)
0.3

Deficit for the financial year

18

(188.2)(248.9)Operating deficit: Group and share of associates and joint ventures
Profit on sale and termination of operations(Loss)/profit on disposal of fixed assets
Deficit before interest and taxation
Net interest payable and other similar items
Other net finance income (from defined benefit pension scheme)

The BBC has entered into certain joint ventures with Flextech and Discovery Communications Inc.
but has no obligation to make good its share of their cumulative operating losses (see Note 13c ii).
During the year the Group disposed of some businesses, as explained in Note 5 and Note 19.
These do not materially impact on the Group’s continuing operations and so are not separately
disclosed above.
There is no difference between the results as disclosed above and the results on a historical cost basis.

96

BBC Annual Report and Accounts 2004/2005

Financial statements
Balance sheetsat 31 March

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

Note

Group
2005
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

10
11
12
13

20.3
721.6
97.3
40.6

19.9
791.5
107.5
16.1

–
488.1
–
285.4

–
519.0
–
286.6

879.8

935.0

773.5

805.6

Current assets
Stocks

14

458.8

433.0

439.5

400.4

Long-term debtors
Current debtors

15
15

106.1
674.8

142.0
672.7

84.3
547.4

118.1
537.7

Total debtors
Short-term investments
Cash at bank and in hand

21
21

780.9
41.9
38.3

814.7
12.6
39.3

631.7
22.6
7.6

655.8
12.6
8.2

1,319.9

1,299.6

1,101.4

1,077.0(918.3)(891.6)(775.2)(792.0)

401.6

408.0

326.2

285.0

1,281.4

1,343.0

1,099.7

1,090.6

Creditors – amounts falling due
within one year

16b

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

16c
17(187.6)(139.6)(216.3)(77.5)(34.7)(94.9)(39.3)(64.7)Net assets excluding pension liability
Pension liability

8c

954.2
(426.8)1,049.2(436.3)

970.1
–

986.6
–

527.4

612.9

970.1

986.6

Net assets
Represented byOperating reserve excluding pension liability
Pension reserve

18
18

188.7
(426.8)255.4(436.3)

204.3
–

193.0
–

Operating reserve
Capital reserve
Revaluation reserve

18
18
18

(238.1)761.8
4.0(180.9)
788.8
4.8

204.3
761.8
4.0

193.0
788.8
4.8

527.7
(0.3)

612.7
0.2

970.1
–

986.6
–

527.4

612.9

970.1

986.6

Minority interest

The BBC has entered into certain joint ventures with Flextech and Discovery Communications Inc.
but has no obligation to make good its share of the net liabilities which at 31 March 2005 amounted
to £46.7million (2004 £57.6million).These liabilities have not been included in the financial statements(see Note 13c ii).
The financial statements were approved by the Governors and Executive Board on 16 June 2005 andsigned on their behalf by:
Michael Grade
ChairmanMark Thompson Director-General
Zarin PatelGroup Finance Director

BBC Annual Report and Accounts 2004/2005

97

Financial statements
Consolidated statement of total recognised gains and losses
for the year ended 31 March

Group deficit for the financial year
Exchange differences on retranslation of overseas subsidiaries
Unrealised gain on disposal of business
Actuarial gain on defined benefit pension schemes

Note

2005
£m

2004
£m

13b i
8c iii(188.2)
(0.5)
22.8
80.9

(248.9)
(2.1)
–
778.5

(85.0)

527.5

Total recognised gains and losses relating to the year

Reconciliations of movement in reserves
for the year ended 31 March

98

Group
2005
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

Deficit for the financial year
Other recognised gains and losses relating to the year (net)(188.2)103.2(248.9)776.4(16.5)–(80.1)–(Decrease)/increase in reserves during the year
Opening reserves(85.0)
612.7

527.5
85.2

(16.5)
986.6(80.1)
1,066.7

Closing reserves

527.7

612.7

970.1

986.6

BBC Annual Report and Accounts 2004/2005

Financial statements
Consolidated cash flow statement
for the year ended 31 March

Reconciliation of Group operating deficit to net cash flow from operating activities
2005
£m

2004
£m

Group operating deficit
Depreciation and amortisation
Pension schemes operating costs (non-cash)
Loss on disposal of tangible fixed assets(Increase)/decrease in stocks
Increase in debtors
Increase/(decrease) in creditors
Increase in provisions
Cash outflow on termination of operations(237.6)
198.6
136.8
8.8
(38.2)(43.8)
24.4
32.9
(1.7)

(295.7)
229.0
161.3
2.4
35.9
(50.6)(17.2)
5.5–

Net cash inflow from operating activities

80.2

70.6

2005
£m

2004
£m

80.2

70.6

13.6

1.3

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

5.2(11.3)
–

5.0
(7.5)
(0.3)

Net cash outflow from return on investments and servicing of finance

(6.1)

(2.8)

Taxation
Taxation paid

(2.0)

(9.7)

Capital expenditure and financial investments
Purchase of tangible fixed assets
Investment in programmes for future sale
Investment in intangible fixed assets
Decrease in loan to associate undertaking
Capital repayment from joint ventures
Proceeds from the sale of tangible fixed assets(487.7)(75.5)
(0.5)
0.3
–
382.6

(243.9)(90.6)
(0.6)
0.2
1.0
143.8

Net cash outflow from capital expenditure and financial investments(180.8)(190.1)

Acquisitions and disposals
Purchase of a subsidiary
Cash acquired with subsidiary
Investments in joint ventures
Proceeds from sale of operations
Proceeds from disposal of interests in joint ventures and associates

–
–
(7.1)
144.1
21.0

(9.9)
0.6
–
–
–

Net cash inflow/(outflow) from acquisitions and disposals

158.0

(9.3)

Net cash inflow/(outflow) before use of liquid resources and financing

62.9(140.0)Cash flow statement
Note

Net cash inflow from operating activities
Dividends received from joint ventures and associates

13aManagement of liquid resources
Sale of other liquid resources20(29.3)

52.3

Net cash (outflow)/inflow from management of liquid resources20(29.3)

52.3

20.0(50.0)
(3.2)
(0.1)

135.0
(42.6)(1.8)(0.6)

20, 21(33.3)

90.0

20

0.3

2.3

Financing
Increase in loans
Repayment of loans
Repayment of finance leases
Repayment of loan notes
Net cash (outflow)/inflow from financing
Increase in cash in the year

BBC Annual Report and Accounts 2004/2005

99

Financial statements
Statement of accounting policies

This section explains the BBC’s main accounting policies, whichhave been applied consistently. A footnote in italics follows somepolicies to explain technical aspects of the accounting treatment
in plain English.
The financial statements have been prepared in accordance withthe provisions of the BBC’s Charter and Agreement. Although
not mandatory, the BBC has chosen to follow the accounting anddisclosure provisions of the Companies Act 1985, applicable UK
accounting standards and the Financial Services Authority Listing
Rules to ensure that its financial statements are prepared on abasis which is consistent with that of UK public limited companies.
In line with other companies, the BBC files with Companies House
audited financial statements for all its subsidiary companies.
Basis of accounting
The financial statements are presented under the historical costaccounting convention as modified by the revaluation of certain
plant, machinery, furniture and fittings.
Basis of consolidation
The Group comprises:■ UK Public Service Broadcasting and those subsidiaries
incorporated to act solely on its behalf, notably Centre House
Productions Limited, BBC Property Limited, BBC Property
Investments Limited and BBC Free to View Limited (UK PublicService Broadcasting Group)■ BBC World Service (and its subsidiaries)■ Commercial subsidiary companies comprising BBC Commercial
Holdings Limited and its various subsidiaries (notably BBC
Worldwide Group, BBC World Group and BBC Ventures Group)
Unless otherwise stated, the acquisition method of accounting
has been adopted. Under this method, the results of subsidiaries
acquired or disposed of in the year are included in the consolidated
statement of income and expenditure from the date of acquisition
or up to the date of disposal.
An associate is an undertaking in which the Group has along-term interest, usually between 20% and 50% of the equity
voting rights, and over which it exercises significant influence.
A joint venture is an undertaking in which the Group has along-term interest and over which it exercises joint control.
The Group’s share of profits less losses of associates and joint
ventures is included in the consolidated statement of income
and expenditure and its interest in their net assets is includedin the consolidated balance sheet.
A separate statement of income and expenditure reflecting
the results of UK Public Service Broadcasting has not beenpresented, as permitted by Section 230 of the Companies Act
1985 as if it were a company.
These accounts of the Group include the results of UK Public Service
Broadcasting, BBC World Service and all businesses controlled by
the BBC (subsidiaries) together with the BBC’s share of the resultsof businesses over which the BBC has influence but not control(associates) and those which the BBC jointly controls (joint ventures).

100

Investments
Investments are recorded on the balance sheet of UK PublicService Broadcasting at cost less provision for any impairment
in value. The funding of UK Public Service Broadcasting andof BBC World Service is legally separate and cross-subsidisation
is not permissible. Accordingly, for the purposes of preparing
UK Public Service Broadcasting’s balance sheet, UK Public Service
Broadcasting is considered to have an investment in BBC World
Service equal to the net assets of BBC World Service.
IncomeIncome, which excludes value added tax, trade discounts and sales
between Group companies, is comprised of the following keyclasses of revenue, which are recognised as follows:■ Television licences
Income derived from television licences is recognised when
receivable from the Department for Culture, Media and Sport.
This represents the value of licences issued in the year.The
amount which can be paid in cash to the BBC for any year
cannot exceed the total amount voted by Parliament for thatyear. Any difference between the value of licences issued andthe amount voted is adjusted in the amount of cash received
in the following year. Any amounts which have not been paid
to the BBC are included within debtors.
■

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

■

Provision of equipment, facilities and services
With the exception of long-term contracts, income isrecognised when the equipment, facilities and services areprovided to customers.
For long-term contracts, the amount of profit attributable
to the stage of completion is recognised when the outcomeof the contract can be foreseen with reasonable certainty.
Turnover for such contracts is stated at the cost appropriate
to their stage of completion plus attributable profits, lessamounts recognised in prior years. Provision is made for any
future losses as they are foreseen.

■

Provision of programme making facilities and services
Recognised on provision of service.

■

Distribution and advertising income
Recognised on provision of service.

■

Licence fees from international television programme sales
Recognised on the later of the delivery of rights or the startof the licence period.

■

Sales of promotional merchandise and income from publishing
Recognised on delivery or provision of service.

■

Disposal of intellectual property rights
Recognised on transfer of risks and rewards of ownership.

BBC Annual Report and Accounts 2004/2005

The distinction between the various income sources is important.
The BBC is careful not to cross-subsidise commercial, UK Public Service
Broadcasting or BBC World Service activities. More informationon these BBC fair trading requirements and policies can be foundon pages 78 to 80 of this report.
Foreign currency translation
Transactions in foreign currencies are translated into sterling at therates of exchange ruling at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies
are translated into sterling at the rates of exchange ruling at
31 March or at forward rates where related hedging contracts arein place. Surpluses and deficits arising from the translation of assets
and liabilities at these rates of exchange, together with exchange
differences arising from trading, are included in the statement ofincome and expenditure.
The profit and loss accounts and cash flows of overseas
subsidiaries are translated into sterling at average rates for theyear. Exchange differences arising on consolidation from theretranslation of the opening net assets of overseas subsidiaries
and any related long-term foreign currency borrowings are taken
directly to the operating reserve, together with the differences
arising when the profit and loss accounts are retranslated at therates ruling at the year end. Other exchange differences are taken
to the statement of income and expenditure.
As these financial statements are prepared in sterling, the BBC’s foreign
currency transactions and balances must be translated, at appropriate
exchange rates, into sterling.This policy states how those retranslations
are included in the financial statements and is consistent with themethods used by many companies.
Pension costs
The BBC operates both defined benefit and defined contribution
schemes for the benefit of employees.
The amounts charged as expenditure for the defined contribution
schemes represent the contributions payable by the BBC for theaccounting periods in respect of these schemes.
The defined benefit schemes, of which the majority of staff are
members, provide benefits based on final pensionable pay. Amounts
are charged to expenditure so as to spread the cost of pensions
over employees’ working lives with the BBC.The assets of theBBC’s main scheme are held separately from those of the Group.
UK Public Service Broadcasting and its subsidiary undertakings
have individually taken advantage of the provisions included within
FRS 17, Retirement benefits, and account for the scheme as if itwere a defined contribution scheme.This is because the pension
scheme is managed centrally across the Group and it is not possible
to allocate the underlying assets and liabilities of the scheme toeach individual group entity on a reasonable and consistent basis.
The expenditure charge under FRS 17 for UK Public Service
Broadcasting and its subsidiary undertakings therefore represents
the contributions payable in the year.
On retirement, members of the BBC’s main pension scheme are paid theirpensions from a fund which is kept separate from the Group.The BBC
makes cash contributions to that fund in advance of members’ retirement.

Research and development
Research and development expenditure is written off as incurred.
Intangible fixed assets
Goodwill
Purchased goodwill (representing the excess of the fair value ofthe purchase consideration plus any related costs of acquisition
over the fair value attributable to the separable net assets acquired)arising on acquisition of a subsidiary or business, is capitalised andamortised over its useful economic life. On the subsequent disposal
or termination of a business, the surplus or deficit is calculated after
charging the unamortised amount of any related goodwill. As ispermitted by FRS 10, Goodwill and intangible assets, goodwill arisingin periods up to 1 April 1998 remains offset against the operating
reserve. On disposal, goodwill previously written off against
reserves is transferred to the statement of income and expenditure
for the year.
Other intangibles
Other intangibles are capitalised and amortised on a straight line
basis over the expected useful life of the assets.
Tangible fixed assets
Expenditure on tangible fixed assets is capitalised together
with incremental and internal direct labour costs incurredon capital projects.
Depreciation is calculated so as to write off the cost or valuation,less estimated residual value, of fixed assets on a straight line basis
over their expected useful lives. Depreciation commences from thedate an asset is brought into service.
The BBC’s useful lives for depreciation purposes for the principal
categories of assets are:Land and buildings
Freehold land
Freehold and long-leasehold buildings
Short-leasehold land and buildings– not depreciated– 50 years– unexpired lease term

Plant and machinery
Computer equipment– three to five years
Electrical and mechanical infrastructure – ten to 25 years
Other– three to ten years
Furniture and fittings– three to ten years

UK Public Service Broadcasting’s plant and machinery is statedat the estimated current replacement cost of the assets, as at
31 March 1993, adjusted for remaining service potential, or cost
if acquired later, less accumulated depreciation.
BBC World Service’s plant and machinery and furniture and fittings
are stated at the estimated current replacement cost of the assets,
as at 1 April 1996, as adjusted for remaining service potential, or
cost if acquired later, less accumulated depreciation.
There is no material difference between the net book value ofthese tangible fixed assets and their value as determined on ahistorical cost basis.

BBC Annual Report and Accounts 2004/2005

101

Financial statements
Statement of accounting policies

The BBC has revalued its assets once, when the internal market was
introduced, but has chosen not to revalue them on an ongoing basis.
This reflects the fact that they are used within the BBC rather thanbeing held for resale or their investment potential. Assets are therefore
included at the amount they cost when purchased or constructed(in either case less subsequent depreciation).

Deferred tax is corporation tax which is not payable at a specific time
but which is expected to become payable in the future.

Investment in programmes for future sale
Investment in programmes for future sale is stated at cost,
after writing off the costs of programmes that are consideredirrecoverable, less accumulated amortisation. Amortisation of
investment in programmes for future sale is charged to the income
and expenditure account over the estimated average marketable
life of the programme genre which is generally between two andten years.The cost and accumulated amortisation of investmentin programmes for future sale are reduced by programmes which
are fully written off.

An operating lease is a lease in which the lessee has not taken on therisks and rewards of owning and operating the asset. The lessee – theBBC – has not acquired an asset but is hiring it, so the hire charge isincluded in the BBC’s costs.

The cost of programmes for sale is charged to the income andexpenditure account to match the expected timing of income fromfuture sales.
Originated programme stocks and work in progress
Originated programme stocks and work in progress, including
those commissioned from independent producers, are statedat the lower of cost and net realisable value. With the exceptionof 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 proportionof other attributable overheads.
Net realisable value is based upon arm’s length contract prices
negotiated between the channel controllers and programme makers.
Acquired programmes and film stocks
The costs of acquired programmes and film stocks are written
off on first transmission except to the extent that further showings
are likely in the foreseeable future, when they are written off
according to their expected transmission profile. Assets andliabilities relating to acquired programmes are recognised at the
point of payment or commencement of the licence period,
whichever is earlier. Agreements for the future purchase of
programmes whose licence period has not commenced andwhere there has been no payment by the balance sheet dateare disclosed as purchase commitments.
Other stocks
Raw materials and other physical stocks are stated at the lowerof cost and net realisable value.
Provisions
Provisions that are payable over a number of years are discounted
to net present value at the balance sheet date using a discountrate appropriate to the particular provision concerned.
Deferred tax
Deferred tax is computed under the liability method. Fullprovision, without discounting, is made in respect of timing
differences between certain items in the financial statements andtheir treatment for taxation purposes at the balance sheet date
except as otherwise required by FRS 19, Deferred tax. Deferred
tax assets are recognised to the extent that it is regarded as
more likely than not that they will be recovered.
102

Operating leases
Operating lease rentals are written off on a straight line basis over
the term of the lease.

Finance leases
Assets acquired under finance leases are included within fixed assets
at the total of the lease payments due over the life of the lease
discounted at the rate of interest inherent in the lease.The sameamount is included in creditors. Rental payments are apportioned
between the finance element, which is charged against the income
and expenditure account, and the capital element which reduces
the lease creditor.
A finance lease is a lease that transfers substantially all the risks andrewards of owning and operating an asset to the lessee. Effectively thelessee owns the asset and has financed it by borrowing, so the asset
and borrowing are included separately in the balance sheet.
Reserves
The value of the capital reserve is equal to the combined net
book value of fixed assets of UK Public Service Broadcasting(less the investment in BBC World Service) and BBC World
Service at historic cost less its dilapidations provision.
The revaluation reserve reflects the difference between the
net book value of fixed assets of UK Public Service Broadcasting
and BBC World Service at historic cost compared with theirrevalued amount.
The operating reserve is the accumulated surplus of the income
and expenditure account to date.
The BBC is careful not to mix UK Public Service Broadcasting and
BBC World Service reserves. Hence BBC World Service reserves areshown separately in the notes to the financial statements.
Cash and liquid resources
Cash, for the purposes of the cash flow statement, comprises cashin hand and deposits repayable on demand, less overdrafts payable
on demand. Liquid resources are current asset investments which
are either readily convertible into known amounts of cash at, or
close to, their carrying values or are traded in an active market.
Liquid resources comprise bank deposits not repayable on demandand other short-term investments which include gilts, certificatesof deposit and commercial paper.
Financial instruments
The Group does not enter into speculative derivative contracts.
Some hedging contracts are undertaken in order to limit theGroup’s exposure to foreign exchange fluctuations (the accounting
treatment for these contracts is explained in the foreign currencytranslation accounting policy).
Disclosure of the Group’s loans and other financial assets andliabilities is provided within Note 23 to the financial statements.

BBC Annual Report and Accounts 2004/2005

Financial statements
Notes to the financial statements

Note 1 provides analysis of thedifferent business areas within the BBC.

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

UK Public Service BroadcastingGroup (referred to as ‘Home
Services’ within the BBC Charter)
comprises the UK Public Service
Broadcasting operations and thosesubsidiary companies incorporated
to act solely on behalf of thosepublic service operations.
BBC World Service
comprises broadcasting andmedia monitoring activities.
Commercial Businesses comprisebusinesses which generate external
income from exploitation of theBBC’s programmes, other assets
and skill base.

2005
Total income
Less: Intra-Group income(Deficit)/surplus before interest, taxation andnon-cash pension costs
Defined benefit pension scheme– additional operating costs*†– other net finance income*Net interest payable

247.7 1,090.3 4,422.8(0.5) (305.1) (425.7)

2,964.7

247.2

785.2

3,997.1(0.9)–(160.9)(161.8)

1b,d,g,h2,963.8

247.2

624.3

3,835.3

1e,h(194.5)7.1

91.4(96.0)(136.8)65.4(6.1)

Deficit before taxation and minority interest
Net assets (excluding pension liability)

Total
£m

3,084.8(120.1)

Less: Share of joint ventures
Group external income

BBC
World Commercial
Service Businesses£m£m(173.5)
1f,h

689.2

160.1

104.9

954.2

Pension liability*†(426.8)

Net assets

527.4

2004
Total income
Less: Intra-Group income

2,940.0(121.5)243.7 1,150.5 4,334.2(0.6) (417.6) (539.7)

2,818.5

243.1

732.9

3,794.5(1.3)–(87.3)(88.6)

1b,d,g,h

2,817.2

243.1

645.6

3,705.91e,h(136.0)9.2

36.2(90.6)

Less: Share of joint ventures
Group external income(Deficit)/surplus before interest, taxationand non-cash pension costs
Defined benefit pension scheme– additional operating costs*†– other net finance income*Net interest payable(161.3)21.0(3.1)

Deficit before taxation and minority interest
Net assets (excluding pension liability)(234.0)
1f,h

710.3

152.5

186.4

1,049.2

Pension liability*†(436.3)

Net assets

612.9* As permitted by FRS 17 these items are not split between business classes because they are managed centrally acrossthe 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 (deficit)/surplus
before interest and tax of each entity.The additional operating cost is the cost to the Group over and above thesecash contributions

BBC Annual Report and Accounts 2004/2005

103

Financial statements
Notes to the financial statements

1b UK Public Service Broadcasting Group income
The income from licences represents
the value of all licences issued in
the year.
Other licence fee income andadjustments include the year-on-year
impact of licences issued in the year
but not in force at 31 March either
through late or early renewals or
through refunds.
Other income includes the provisionof content and services to overseas
broadcasters, concert ticket sales andexploitation of the programme archive.

2005
£m

2004
£m

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

2,489.6
2.0
0.9
432.3
15.9
(0.4)

2,364.2
2.5
0.9
407.8
15.7
7.0

Total licence fee income
Other income

2,940.3
23.5

2,798.1
19.1

Total external income

2,963.8

2,817.2

Licence fee income

During the year 3.2 million (2004 3.1 million) colour licences were issued under the quarterly
payment scheme at a premium of £5 each (2004 £5).
Households in which one or more persons over the age of 75 reside, as their primary residence, areentitled to a free licence.The BBC is reimbursed for these free licences by the Department for Workand Pensions.

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

Licence fees are set by the Department
for Culture, Media and Sport.

Licences in force

2005
Numberm

2004
NumbermColour
Monochrome
Over 75s
Concessionary

20.6
0.1
3.8
0.2

20.4
0.1
3.8
0.2

24.7

24.5

2005
£

2004
£

121.0040.50
5.00

116.0038.50
5.00

Licence fees

Colour
Monochrome
Concessionary

From 1 April 2005 the colour and monochrome licence fees were increased to £126.50 and £42
respectively.The concessionary licence remained at £5.
1c Geographical analysis of UK Public Service Broadcasting GroupUK Public Service Broadcasting Group income and deficit arise in the UK.The net assets used by these
operations are located in the UK.
1d BBC World Service income

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

2005
£m

2004
£m

Grant-in-Aid
Subscriptions
Other income

225.1
16.7
5.4

220.1
16.7
6.3

Total external income

247.2

243.1

2005
£m

2004
£m

Broadcasting
BBC Monitoring

7.7
(0.6)

9.7
(0.5)

Total surplus before interest and taxation

7.1

9.2

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

104

BBC Annual Report and Accounts 2004/2005

1f Geographical analysis of BBC World Service
BBC World Service income, operating expenditure and surplus arises primarily in the UK.

Location of BBC World Service net assets:

2005
£m

2004
Restated£m

UK
Overseas

66.2
93.9

58.2
94.3

Net assets

160.1

152.5

2004 comparatives have been restated to make them consistent with the current year reclassification.
1g Analysis of Commercial Businesses’ income by activity
2005
Discontinued£m

2005
Continuing
£m

2005
Total
£m

2004
Restated£mChildren’s, new media and home entertainment
Television sales
Magazines
Entertainment and news television channels
Provision of playout and channel management services
Provision of programme making facilities and services
Provision of technology services
Less intra-Group income

–
–
–
–
–
–
111.9
(98.1)

161.0
158.2
163.5
90.8
108.9
135.1
–
(207.0)

161.0
158.2
163.5
90.8
108.9
135.1
111.9
(305.1)

221.2
154.0
141.3
78.7
108.8
128.0
231.2
(417.6)

Total external income

13.8

610.5

624.3

645.6

On 19 January 2005, BBC Worldwide completed the sale of eve magazine to Haymarket Magazines
Limited. Sale proceeds of £6.5million have been included in the above income.
More information on the discontinued operations can be found in Note 5 and Note 19.
The comparative figures for the year ended 31 March 2004 have been restated to reflect therevised segmental disclosure adopted for the year ended 31 March 2005 for BBC Worldwide.
The revised disclosure reflects the current group business and reporting structure.
This table shows where the customers
of Commercial Businesses are based.

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

Total
£m

2005
External income by destination

358.9

115.6

149.8

624.3

Surplus before interest and taxation

69.7

4.1

17.6

91.4

Net assets

75.9

28.5

0.5

104.9

2004
External income by destination

375.2

121.9

148.5

645.6

Surplus before interest and taxation

20.0

2.0

14.2

36.2

Net assets

151.8

33.9

0.7

186.4

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

BBC Annual Report and Accounts 2004/2005

105

Financial statements
Notes to the financial statements

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

UK Public Service Broadcasting GroupBBC World Service1
Commercial Businesses
Non-cash pension scheme operating costs2

2b
2c
2d

Total
2005
£m

Total
2004
£m

3,107.7
240.1
588.3
136.8

2,993.6
233.9
612.8
161.3

4,072.9

4,001.6

BBC World Service expenditure of £240.1million (2004 £233.9million) excludes £0.5million (2004 £0.6million)of expenditure on the provision of services to other BBC Group companies
2
As permitted by FRS 17 the non-cash operating costs are not split between the business activities as it is not possible
to do this on a reasonable and consistent basis
1

2b UK Public Service Broadcasting Group expenditure
Note

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

Digital services
The CBBC Channel, CBeebies
BBC Three
BBC Four
BBC News 24
BBC ParliamentInteractive television (BBCi)
1Xtra
BBC Radio Five Live Sports Extra
6 Music
BBC 7
BBC Asian Network
bbc.co.uk
Digital Curriculum

Transmitted programme spend
Programme related spend
Newsgathering
Collecting societies
Orchestras and performing groupsMarketing, press and publicity
On-air trailsMarket research and consumer services
Libraries, helplines, development and one-off events

Total programme spend

(i)
(i)
(ii)

(i)

(iii)
(iv)
(v)

(vi)

(vii)
(viii)
(ix)

2005
£m

2004
£m

872.9
374.5
213.5
142.2
17.8
23.8
32.0
71.3
53.8

812.3
365.2
212.3
133.4
17.6
21.7
32.1
69.9
51.5

1,801.8

1,716.0

49.7
92.9
41.1
22.9
2.2
17.1
5.7
1.6
4.5
4.8
5.4
69.2
8.3

46.2
99.4
35.2
23.5
2.5
15.3
5.1
1.7
4.1
4.3
4.1
66.7
4.1

325.4

312.2

2,127.2

2,028.2

89.5
57.2
17.9
49.6
24.5
16.0
84.2

92.5
54.4
18.3
53.3
23.1
14.4
80.8

338.9

336.8

2,466.1

2,365.0

table continues

106

BBC Annual Report and Accounts 2004/2005

2b UK Public Service Broadcasting Group expenditure continued
Note

Total programme spend
Overheads excluding restructuring
Restructuring costs
Total overheads
Total output spend
Percentage of output spend on programmes
Licence fee collection costs
Transmission costs

Total broadcasting expenditure
(i)

(x)

2005
£m

2004
£m

2,466.1
281.6
50.7

2,365.0
309.1
16.7

332.3

325.8

2,798.4
88%

2,690.8
88%

152.0
157.3

150.8
152.0

309.3

302.8

3,107.7

2,993.6

Spend on BBC One, Two and BBC Radio Five Live was higher in 2005 due to coverage of major
sporting events including the Olympics and Euro 2004. In addition, Match of the Day returned
to BBC One in August 2004.

(ii) National, regional and local radio spend increased in 2005, in part due to the opening of new
radio facilities within English regions and increased spend on Sport in regional radio.
(iii) Spend on The CBBC Channel and CBeebies increased due to premiering more on the digitalchannels to drive digital take-up in line with Government objectives.
(iv) Decreased costs incurred by BBC Three related to a higher level of joint productions resulting inshared costs with BBC One, eg Casanova, Little Britain and Bodies. This enables analogue viewers
to benefit from the BBC’s digital investment.
(v) Spend on BBC Four increased in 2005, as per the BBC’s objective to widen the channel’s appeal
by additional investment in drama and comedy.
(vi) Interactive television spend increased to ensure a greater number of programmes with interactivefunctionality were available eg the Olympics.This is in line with the BBC’s stated objective to drive
digital take-up by extending the availability of these services.
(vii) Increased costs were incurred by BBC Asian Network in 2005, representing the first full yearof the daily Asian drama, Silver Street.
(viii) Spend on bbc.co.uk was higher in 2005 due to online content relating to the coverage of the
Olympics and Euro 2004. In addition, the range of community and audience-contributed content
increased in the year.
(ix) Spend on the Digital Curriculum increased following formal approval for the project in 2004,
therefore 2005 represents the first full year’s costs.The new service will be launched earlyin 2006.
(x) Of the transmission costs, £76.7million relates to analogue services (2004 £75.1million) and£80.6million to digital services (2004 £76.9million).

BBC Annual Report and Accounts 2004/2005

107

Financial statements
Notes to the financial statements

BBC World Service expenditureexcludes expenditure on
intra-Group activities.

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

2c BBC World Service expenditure
2005
£m

2004
£m

Radio
Monitoring
Transmission and distribution costs
Internet activity

159.1
25.2
42.3
13.5

153.9
25.3
41.7
13.0

Total

240.1

233.9

2d Commercial Businesses’ expenditure

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

2005
Discontinued
Note
£m

2005
Continuing
£m

2005
Total
£m

2004
Restated
£m

8.6
–
1.3
–

314.9
136.9
47.6
79.0

323.5
136.9
48.9
79.0

341.6
131.3
50.4
89.5

9.9

578.4

588.3

612.8

12

2004 comparators for cost of sales and administrative and other costs have been restated to makethem consistent with the current year classification.
Further information on the discontinued operations can be found in Note 5 and Note 19.
3 Operating deficit
The operating deficit is stated after charging the following items:

Payments under operating leases– land and buildings– plant and machinery– other
Research and development
Programme development
Depreciation– owned assets– leased assets
Loss on disposal of tangible fixed assets
Fixed asset impairment
Amortisation of investment in programmes for future sale
Amortisation of intangible fixed assets
Intangible fixed asset impairment
Auditors’ remuneration (KPMG LLP)
– financial audit – UK Public Service Broadcasting– other– further assurance services– tax advisory services– other non-audit services
Fair trading auditors’ remuneration (PricewaterhouseCoopers LLP)

2005
£m

2004
£m

59.5
13.2
10.2
18.8
29.2

43.6
9.8
9.5
20.9
29.7

113.9
1.7
8.8
–
79.0
4.0
–

125.5
5.2
2.4
2.9
89.5
5.1
0.8

0.6
0.5
0.4
0.4
0.3
0.4

0.6
0.5
0.6
0.3
0.3
0.3

In addition to the £0.4million (2004 £0.6million) of further assurance services charged to the income
and expenditure statement £nil (2004 £0.2million) was paid to the auditors for due diligence services.
Such costs are included within the cost of the related subsidiary, joint venture or associate investment.

108

BBC Annual Report and Accounts 2004/2005

4 Employees and remuneration
4a Persons employed
The average number of persons employed in the year was:Average for the year
2005
Number

2004
NumberUK Public Service Broadcasting
BBC World Service
Commercial Businesses

19,647
2,347
5,270

19,5792,224
5,829Group total

27,264

27,632

Within the averages above, 3,414 (2004 3,027) part-time employees have been included at theirfull-time equivalent of 1,593 (2004 1,470).
In addition to the above, the Group employed an average full-time equivalent of 785 (2004 857)
persons on a casual basis and the BBC Orchestra and BBC Singers, employed on programme
contracts, numbered 378 (2004 384) full-time equivalents.
On 30 September 2004 the equivalent of 1,447 full-time employees transferred to Siemens Business
Services Limited as part of the sale of BBC Technology Holdings Limited.This transfer is reflected in
the average for 2005.
4b Staff costs
£m

20041
Restated£m

1,038.6
95.1

1,029.0
94.9

176.8
1.6
61.5

196.5
1.0
22.5

1,373.6

1,343.9

909.9
84.3
242.6
136.8

844.4
77.5
260.7
161.3

1,373.6

1,343.9

2005
Note

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

Comprising:
UK Public Service Broadcasting
BBC World Service
Commercial Businesses
Main pension scheme additional operating cost (defined benefit)2

8c ii
8c ii

Following the application of a stricter definition of staff costs within BBC World Service, it was decided to exclude those
staff employed by external parties on BBC World Service activities.The 2004 figures have been restated accordingly

1

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

2

Redundancy costs include those costs relating to the change programme occurring within the BBC.
4c Remuneration of the Board of Governors and Executive Board
The emoluments of the Governors and of the Executive Board members are disclosed on pages 88
to 90 in the Governors’ remuneration report.

BBC Annual Report and Accounts 2004/2005

109

Financial statements
Notes to the financial statements

5 Profit/(loss) on sale and termination of operations
Note

Profit on sale of BBC Technology Holdings Limited
Profit on disposal of children’s book business
Loss on termination of operations
Profit on sale and termination of operations

19
19

2005
£m

2004
£m

32.4
0.4
(4.6)

–
–
–

28.2

–

On 30 September 2004, the Group sold BBC Technology Holdings Limited, a wholly owned subsidiary,for £150million consideration (see Note 19).The Group headed by BBC Technology Holdings Limited
provided technology and IT equipment and services.This disposal resulted in the BBC’s exit fromthese activities.
In April 2004 BBC Worldwide formed a new venture, Children’s Character Books Limited, which
is 75% owned by Penguin Books and 25% owned by BBC Worldwide. BBC Worldwide disposedof its children’s books business to the new venture in exchange for consideration of £2.3million(see Note 19).The Group’s 25% interest in Children’s Character Books Limited is being accounted
for as an associated undertaking.
During the year BBC Worldwide terminated its multimedia publishing business which developed andmarketed gaming titles for Playstation, Xbox and Gameboy platforms.This resulted in termination
costs of £2.7million of which £1.4million comprised the cash costs of exiting the business and£1.3million comprised the write-down of stocks held at 31 March 2004.
On 28 July 2004 the Group decided to terminate the operations of BBC Vecta Limited.This resulted ina loss on termination of business of £1.9million of which £0.3million comprised cash termination costs.
6 (Loss)/profit on disposal of fixed assets

When the BBC first sold the WhiteCity site to the property partnership
it took part of the sale proceeds asa future discount on rental payments
due for the next 30 years. The
cumulative amount of the discount
was held on the balance sheet(under prepayments) to be gradually
released against future rent payments.
Under the restructuring discussed
here, the BBC will still pay lower
rents in the future. However, because
the lease structure has changed,
accounting rules require that theoriginal amount held on the balance
sheet be released. So the ‘loss’
on disposal shown here represents
a timing difference, with the BBC
gaining a corresponding amountin real terms from future reduced
rental payments. It does not
represent a cash outflow for
the BBC.

110

2005
£m

2004
£m

White City site
Regional properties
Broadcasting House
Other tangible fixed assets(62.5)
19.4
–
–

–
–
40.4
1.4

(Loss)/profit on disposal of fixed assets(43.1)

41.8

During the year the BBC changed the terms on which it occupies the White City site.This involved
a number of discrete legal steps, including: purchase of the freehold of the White City site from theBBC’s joint venture with Land Securities Trillium Limited (LST); cancellation of the existing lease on
the White City site and the White City Development Partnership capital; and the sale and leasebackof the White City site with a new third party investment vehicle.
The BBC considers that the substance of these discrete steps is that they formed part of a single
property related transaction.This gave rise to a net charge to the income and expenditure accountin the year of £62.5million, comprising a £1.5million loss on disposal of the White City site, £8.5million
accelerated amortisation of goodwill in the property partnership and £52.5million from the accelerated
amortisation of balances previously shown in long-term prepayments.There was no cash effect fromthe accelerated amortisation.The BBC expects that the charge recorded this year will be more thancompensated in future years through reduced rental payments.
During the year the Group purchased the land of the Pacific Quay site. A 150 year head lease wasthen granted to Pacific Quay Trustees No. 1 Limited, and Pacific Quay Nominees No. 1 Limited,a special purpose vehicle (SPV).The BBC then entered into a 30 year operating lease with the SPV,with payments to commence in July 2007. No gain or loss was realised on this transaction.

BBC Annual Report and Accounts 2004/2005

During the year, the BBC entered into a sale and leaseback transaction of 20 regional properties.
A profit of £19.4million was recognised as a result of the transaction. After the year end a further
property has also been treated in this way realising a gain of £1.3million.
In July 2003 the Group granted a 150 year head lease on the Broadcasting House site to Daunus
Limited (see Note 13c) and Morgan Stanley Gamma Investments, resulting in a profit of £40.4million.
Daunus Limited will redevelop the site which the Group will lease back.
7 Net interest payable and other similar items
2005
£m

2004
£m

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

5.2(11.3)
–

5.0
(7.8)
(0.3)

Net interest payable

(6.1)

(3.1)

8 Pensions
8a Group pension schemes
The Group operates several pension schemes.The BBC Pension Scheme (the BBC’s most significant
scheme) and a small unfunded scheme (which is closed to new members) are contributory defined
benefit schemes. Additionally the Group Personal Pension Scheme and other small schemes aredefined contribution schemes. Note 8b describes the pension schemes and Note 8c explains thenumbers in the financial statements.
8b BBC Pension Scheme
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 maturity of a scheme provides
an indication of the cash requirementsof the scheme and the likely attitudeof the trustees to risk within theirinvestment policy.The more mature ascheme, the more likely that Trustees
will favour low risk investments.

8b i Scheme maturity profile
The number of active contributors exceeds the number of members receiving pensions:Contributors
Pensioners
Dependants
Deferred pensioners

2005
Number

2004
Number

2003
Number

21,093
16,567
3,622
16,241

21,426
16,302
3,555
14,864

20,361
16,116
3,498
14,5318b ii Scheme external cash flows (day-to-day liquidity)
External cash inflows to the pension scheme continue to exceed its external cash outgoings each year
and this is expected to remain the case for the foreseeable future.
2005
£m

2004
£m

2003
£m

Contributions (employer and employee)
Investment income

99
187

90
167

88
194

External cash inflows
Payments of pensions and transfers out
Expenses

286
(239)
(22)

257
(220)
(20)

282
(212)
(15)

25

17

55

Net external cash inflow

BBC Annual Report and Accounts 2004/2005

111

Financial statements
Notes to the financial statements

An actuarial valuation assumes
the scheme will continue for theforeseeable future and considers
whether the expected returns
on the scheme’s assets exceed
the future liabilities of the pension
scheme, smoothing the short-term
volatility brought about by market
valuations of assets.

8b iii Ability to meet long-term commitments
The pension scheme trustees manage the scheme in the short-, medium- and long-term.They agree
funding decisions based on valuations which take a longer-term view of the assets required to fundthe scheme’s liabilities (actuarial valuations).
The actuarial valuations of the scheme are performed by Watson Wyatt, consulting actuaries, using the
projected unit method.The most recent formal actuarial valuation (April 2002) shows a surplus of£441million with assets sufficient to cover 109% of the benefits due to members.The 2003 and 2004
figures are from interim updates of this 2002 valuation.
The next formal actuarial valuation of the scheme is being carried out with an effective date of 1 April
2005, and the results will not be known until after the date of publication of the BBC’s Annual Reportand Accounts 2004/2005. The figures shown below for 2005 therefore present a further interim
update of the 2002 valuation.The method and assumptions to be used for the 2005 valuation may
be different from those used in 2002, and the final results for 2005 are expected to be different fromthose shown below.
2005
£m

2004
£m

2003
£m

6,038
(5,764)

5,668(5,525)

5,496(5,229)Surplus

274

143

267

Percentage by which scheme assets cover scheme liabilities

105%

103%

105%

Actuarial valuation

Scheme assets (Note 8b v)
Scheme liabilities (Note 8b vi)

8b iv Funding the scheme
The scheme has shown an actuarial surplus for many years which has allowed both the BBC and themembers to pay contributions at a reduced rate (4.5%).
In 2003 it was agreed with the trustees that employer contributions will rise to 6% by 2006 with
employee contributions rising to 6% by 2007.The position will be reviewed again in 2005/2006,
once the results of the new actuarial valuation by Watson Wyatt are known.
Projections
Contribution rates

2007
%

2006
%

2005
%

2004
%

2003
%

Employer
Employee

6.0
6.0

6.0
5.5

5.5
5.0

5.0
4.5

4.5
4.5

19.0

19.5

20.4

Underlying cost of scheme to BBC
as % of pensionable salaries**Excludes the cost effectively paid for by the employee

112

BBC Annual Report and Accounts 2004/2005

Where market values are higher thanactuarial values it means the market isanticipating greater future investment
returns than are being assumed infunding the scheme’s liabilities.

8b v Scheme assets
The allocation of assets by the scheme trustees is governed by a need to manage risk against thedesire for high returns and any liquidity needs. A high percentage of assets are held in equities which
the trustees expect will produce higher returns in the long term.The target allocation, based on market
values, for equities is 60%, bonds and gilts 30% and property 10%.

Type of asset

Long-term
rate of return
expected at
31 March (usedfor market value)

£m

%

£m

%

7.7%
4.7%
6.2%
3.7%

4,333
1,050
737
222

68
17
12
3

4,294
909
668
167

71
15
11
3

2005
Equities
Bonds and gilts
Property
Cash
Total assets
2004
Equities
Bonds and gilts
Property
CashMarket value

Actuarial value*

6,342
7.9%
4.8%
6.3%
3.9%

Total assets

4,118
1,048
597
117

6,038
70
18
10
2

5,880

2003
Equities
Bonds and gilts
Property
Cash
Total assets

8.3%
4.5%
6.4%
4.0%

3,032
1,021
620
230

4,109
902
556
101

72
16
10
2

5,668
62
21
13
4

4,903

3,778
853
632
233

69
16
11
4

5,496

* The last formal actuarial valuation was undertaken in 2002.The 2003, 2004 and 2005 figures are from interim updatesof this valuation

8b vi Scheme liabilities
The calculation of the scheme liabilities requires a number of assumptions, both demographic andfinancial, to be made.The key financial assumptions made by the actuaries were:
Key financial assumptions

The discount rate used in theactuarial valuation of liabilities
is that of the expected returnon assets held by the scheme
and is considered to be a prudent
long-term average.
A higher discount rate meansa lower value for the liabilities.

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

Actuarial valuation
Rate of increase in salaries
Rate of increase in pension payments
Inflation assumption
Discount rate for actuarial valuation
Market valuation
Rate of increase in salaries
Rate of increase in pension payments
Inflation assumption
Discount rate for market valuation

Scheme liabilities at present value

Actuarial valuation
Market valuation

BBC Annual Report and Accounts 2004/2005

2005
%

2004
%

2003
%

4.5
2.5
2.5
6.25

4.5
2.5
2.5
6.25

4.5
2.5
2.5
6.25

4.7
2.7
2.7
5.5

4.7
2.7
2.7
5.6

4.5
2.5
2.5
5.4

2005
£m

2004
£m

2003
£m

5,764
6,764

5,525
6,312

5,229
5,973

113

Financial statements
Notes to the financial statements

8b vii Scheme financial position
Market valuation

The actuarial valuation provides
a long-term view and assumes
the scheme will continue for theforeseeable future.The market
valuation provides a snapshot
position of the status of thescheme at that time.

2005
2004
2003
2002

Actuarial valuation

Assets£m

Liabilities£mNet
position£m

Assets£m

Liabilities£mNet
position
£m

6,342
5,880
4,903
6,219

(6,764)(6,312)(5,973)(5,254)

(422)
(432)
(1,070)
965

6,038
5,668
5,496
5,392

(5,764)(5,525)(5,229)(4,951)

274
143
267
441

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.
8c Pension charges and balances within financial statements
8c i Movement in pension liability during year

The defined contribution schemes do
not give rise to balance sheet pension
assets/liabilities as there is no ongoing
liability to the employer from theseschemes once the contributions due
for the year have been settled.

BBC
Pensionscheme2005£mUnfundedscheme2005£m

Net pension liability at start of year
Contributions (from employer)*
Operating charge for year
Net finance income/(cost)
Net gain recognised in STRGL(431.6)40.0(176.8)
65.7
80.9

(4.7)
0.2
(0.2)
(0.3)
–

(436.3) (1,070.1)
40.2
35.3
(177.0) (196.5)
65.4
21.2
80.9
778.5

(4.4) (1,074.5)
n/a35.3(0.1) (196.6)
(0.2)
21.0
–
778.5

Closing net pension liability(421.8)(5.0)(426.8)

(4.7)

Total
2005
£m

BBC
Pensionscheme2004£m(431.6)

Unfundedscheme
2004
£m

Total
2004
£m

(436.3)* The contribution shown for the unfunded scheme represents the pensions paid to members during the year

8c ii Pension charges in income statement
Definedbenefit schemes
BBC Pension
Scheme£m

The current service cost is theunderlying cost to the BBC ofpension rights earned by employees
during the year.
The past service cost arises frommembers of the scheme becoming
entitled to improved defined
retirement benefits, resulting in acharge for years of service before
the award of the improvement.
The finance return comprises
estimates based on predictionsof future performance andeconomic conditions.

Allschemes£m

2005
Current service cost
Past service cost
Gain on settlements and curtailments(192.3)
(7.5)
23.0

(0.2)
–
–

(1.4)
–
–

(193.9)(7.5)
23.0

Operating cost(176.8)

(0.2)

(1.4)

(178.4)

Expected return on pension scheme assets
Interest on pension scheme liabilities

412.7(347.0)

–
(0.3)

n/a
n/a

412.7
(347.3)

65.7

(0.3)

–

65.4

Net cost in income statement(111.1)

(0.5)

(1.4)

(113.0)2004
Current service cost
Past service cost
Gain on settlements and curtailments(189.5)
(9.0)
2.0

(0.1)
–
–

(0.9)
–
–

(190.5)(9.0)
2.0

Operating cost

(196.5)

(0.1)

(0.9)

(197.5)

Expected return on pension scheme assets
Interest on pension scheme liabilities

338.4(317.2)

–
(0.2)

n/a
n/a

338.4
(317.4)

21.2

(0.2)

–

21.0

(175.3)

(0.3)

(0.9)

(176.5)

Net finance income/(cost)

Net finance income/(cost)
Net cost in income statement

114

DefinedUnfunded contribution
schemeschemes£m£m

BBC Annual Report and Accounts 2004/2005

These gains and losses arise from
actual performance being different
from that predicted – for example
changes in economic conditionsor the demographic profile of
BBC employees.

8c iii Pension costs in statement of total recognised gains and losses (STRGL)

Actual return less expected return on
pension scheme assets
Experience gains/(losses) arising on
scheme liabilities
Changes in assumptions underlying
present value of scheme liabilities
Net gain recognised in STRGL

2005
£m

2004
£m

198.7

778.4

(1.4)

0.1

(116.4)

–

80.9

778.5

2003

2002

Only defined benefit schemes give rise to gains and losses in the STRGL.
This note is designed to show trends
over several years. Only four years
are currently available since theadoption of FRS 17.

8c iv History of experience gains and losses
2005

2004

Amount by which the expected return on scheme assets
is (higher)/lower than the actual return:
Amount (£million)
Percentage of scheme assets

198.7
3.1%

778.4 (1,607.9)
13.2%
32.8%

(532.0)
8.6%

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

(1.4)
0.0%

0.1
0.0%

(12.4)
0.2%

26.6
0.5%

Total amount gain/(loss) recognised in STRGL:
Amount (£million)
Percentage of present value of scheme liabilities

80.9
1.2%

778.5 (2,013.4)
12.3%
33.7%

(725.4)13.8%

8d UK Public Service Broadcasting pension charge
UK Public Service Broadcasting has taken advantage of the provision within FRS 17 and accounts
for the scheme as if it were a defined contribution scheme.This is because it is not possible to identify
its share of the underlying assets and liabilities of the scheme on a reasonable and consistent basis.
The expenditure for UK Public Service Broadcasting therefore represents the contributions payable inthe year.These contributions are set based on the funding needs identified from the actuarial valuation
and benefit from the actuarial surplus (see Note 8b vii).They are therefore lower than the regular cost.
9 Taxation
9a Analysis of charges for the period
The charge for the year, based on the rate of corporation tax of 30% (2004 30%) comprised:
2005
£m

2004
£m

Current tax
UK corporation tax
Deduct: double tax relief

7.1
(2.7)

9.8
(2.9)

Adjustments in respect of prior years

4.4
(8.3)

6.9
(0.4)

Foreign tax
Share of joint venture/associated undertakings’ tax

(3.9)
3.8
5.5

6.5
9.2
0.5

5.4

16.2

5.3
4.5

(2.1)
1.1

9.8

(1.0)

15.2

15.2

Note

Total current tax

9b

Deferred tax
Origination and reversal of timing differences
Adjustments in respect of previous years
Total deferred tax
Total charge for the year

BBC Annual Report and Accounts 2004/2005

9d

115

Financial statements
Notes to the financial statements

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 andon 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

Deficit before tax
Deficit before tax multiplied by standard rateof corporation tax in the UK of 30% (2004 30%)
Effects of
Public services taxable external income
Non-taxable deficit in Public Services
FRS 17 element of net Group pension charge
Commercial activities
Non-taxable income
Disallowed expenditure
UK taxation on intra-Group overseas dividends
Depreciation (less than)/in excess of capital allowances
Tax differential re overseas earnings
Other
Adjustments in respect of previous periods
Current tax charge for the year

9a

2005
£m

2004
£m

(173.5)(234.0)(52.0)(70.2)

1.7
59.4
21.5

3.5
37.0
42.1

(17.2)
3.1
1.6
(3.5)
(0.7)
(0.2)
(8.3)

(0.4)
1.1
–
(0.5)
4.5
(0.5)
(0.4)

5.4

16.2

9c Factors that may affect future tax charges
The Group anticipates that the future tax charge will not alter materially since all licence fee income
is free of tax.
9d Deferred tax analysis
2005
£m

2004
£m

(1.9)
0.2
9.8
1.9

(1.5)
0.6
(1.0)
–

10.0

(1.9)

Accelerated capital allowances
Other timing differences

15.4
(0.1)

5.7
–

Deferred tax provision

15.3

5.7

US timing differences
Other timing differences

(5.3)
–

(7.5)
(0.1)

Deferred tax asset

(5.3)

(7.6)

Deferred tax provision/(asset) at year end

10.0

(1.9)

Movement on deferred tax provision/(asset) in the year

Asset at start of year
Exchange adjustment
Deferred tax charge/(credit)
Disposal of subsidiary
Deferred tax provision/(asset) at end of year

Note

9a

Analysis of deferred tax provision/(asset) at end of year

116

BBC Annual Report and Accounts 2004/2005

10 Intangible fixed assets

Goodwill is the difference between
the value paid for a business and thefair value of its net assets. It represents
the amount the purchaser is preparedto pay for the name and reputationof the business and its expected
future profit streams.

Goodwill£m

Otherintangibles
£m

Total
£m

Cost
At 1 April 2004
Additions
Disposal of subsidiary

17.7
5.1
–

14.0
0.5
(14.1)

31.7
5.6(14.1)At 31 March 2005

22.8

0.4

23.2

Amortisation
At 1 April 2004
Charge for the year
Disposal of subsidiary

1.2
1.3
–

10.6
2.7
(12.9)

11.8
4.0(12.9)At 31 March 2005

2.5

0.4

2.9

Net book value
At 31 March 2005

20.3

–

20.3

At 31 March 2004

16.5

3.4

19.9

On 20 February 2004 BBC Worldwide acquired 100% of the share capital of Origin Publishing
Limited for a total consideration of £10.2million which included a net cash consideration of£9.3million.This gave rise to goodwill of £9.5million which was recognised in the prior period
financial statements. Under the terms of the agreement, further contingent consideration of up
to £5.1million is payable based on the financial performance of the acquired business in the period
to 30 September 2005. No contingent consideration was estimated as payable at 31 March 2004.
At 31 March 2005, based on the current expectations of financial performance, contingent
consideration of £5.1million has been recognised as payable, increasing goodwill in relation to thisacquisition by this amount.
All goodwill that has been capitalised is amortised on a straight line basis over 20 years reflecting its
useful economic life, subject to reviews for impairment.
Included within other intangibles were software licences of £13.6million at 1 April 2004. An additional£0.5million was acquired during the year.These licences, which were being amortised over the lifeof the licences, were transferred out of the Group with the sale of BBC Technology Holdings Limited(see Note 19).
The remaining other intangibles comprise a customer list of names and transactional histories,
acquired in 2004, which were fully amortised during the year.

BBC Annual Report and Accounts 2004/2005

117

Financial statements
Notes to the financial statements

11 Tangible fixed assets
11a Group
Land andbuildings£mPlant andmachinery£m

Furniture
Assetsandunderfittings construction
£m
£m

Total
£m

Cost or valuation
At 1 April 2004
Additions
Brought into service
Disposals
Disposal of subsidiary

431.8 1,001.5
354.1
49.2
17.2
99.2
(371.6) (131.9)–(67.8)

126.2
8.7
23.6
(10.3)(1.7)

At 31 March 2005

431.5

950.2

146.5

87.2

1,615.4

Depreciation
At 1 April 2004
Charge for the year
Elimination in respect of disposals
Disposal of subsidiary

216.9
15.1
(6.8)
–

665.0
87.3
(125.8)(29.1)

66.2
13.2
(6.8)
(1.4)

2.9
–
(2.9)
–

951.0
115.6
(142.3)(30.5)At 31 March 2005

225.2

597.4

71.2

–

893.8

Net book value
At 31 March 2005

206.3

352.8

75.3

87.2

721.6

At 31 March 2004

214.9

336.5

60.0

180.1

791.5

183.0 1,742.5
78.7
490.7
(140.0)–(19.6) (533.4)(14.9)(84.4)

Additions and disposals of land and buildings include various transactions relating to the restructuringof the BBC’s property portfolio as described in Note 6.
Included within fixed assets is £28.0million at cost relating to a relay station in Thailand used by
BBC World Service. These assets are transferable to the Royal Thai Government in return forthe payment of a nominal sum. BBC World Service will retain the rights to repurchase the assets,should the operation cease, for a similar nominal sum.The use of these assets is not affected by thistransaction and therefore they will continue to be carried at cost less attributable depreciation in thebalance sheet.
11b UK Public Service Broadcasting

118

Land andbuildings£mPlant andmachinery£m

Cost or valuation
At 1 April 2004
Additions
Brought into service
Transfers from subsidiaries
Disposals

365.5
352.1
15.7
–
(371.2)

460.5
10.3
51.0
–
(11.8)

101.9
5.4
18.8
–
(5.2)

112.2
52.8
(85.5)
4.1(19.9)

1,040.1
420.6–
4.1(408.1)

At 31 March 2005

362.1

510.0

120.9

63.7

1,056.7

Depreciation
At 1 April 2004
Charge for the year
Elimination in respect of disposals

180.6
11.7
(6.4)

290.1
45.1
(7.4)

47.5
9.9
(2.5)

2.9
–
(2.9)

521.1
66.7
(19.2)At 31 March 2005

185.9

327.8

54.9

–

568.6

Net book value
At 31 March 2005

176.2

182.2

66.0

63.7

488.1

At 31 March 2004

184.9

170.4

54.4

109.3

519.0

BBC Annual Report and Accounts 2004/2005

Furniture Assets underand fittings construction
£m
£m

Total
£m

11c Land and building at net book value comprise:
Group
2005
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

Undepreciated land
Freehold buildings

21.7
121.4

25.4
139.7

21.6
110.1

25.1
128.4

Total freeholds
Long leaseholds
Short leaseholds

143.1
52.0
11.2

165.1
17.7
32.1

131.7
33.3
11.2

153.5
17.7
13.7

206.3

214.9

176.2

184.9

12 Investment in programmes for future sale
Group
£m

Cost
At 1 April 2004
Exchange adjustment
Additions
DisposalsElimination in respect of programmes fully amortised

330.4
(2.2)
75.5
(40.1)(134.9)At 31 March 2005

228.7

Amortisation
At 1 April 2004
Exchange adjustment
Charge for the year
DisposalsElimination in respect of programmes fully amortised

222.9
(1.0)
79.0
(34.6)(134.9)At 31 March 2005

131.4

Net book value
At 31 March 2005

97.3

At 31 March 2004

107.5

Investment by BBC Worldwide in programmes for future sale relates to programmes provided by
the BBC and external producers.The additions figure above includes £74.6million direct investment
in BBC programmes (2004 £88.6million).
Included in the net book value is £2.5million (2004 £3.5million) relating to investments held undera licence agreement.

BBC Annual Report and Accounts 2004/2005

119Financial statements
Notes to the financial statements

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

Interests inassociates
Note 13d
£m

Total
Group
£m

Cost
At 1 April 2004
Exchange adjustment
Additions
Disposals

2.1
0.1
8.5
–

4.6
(0.1)
0.1
(3.8)

6.7
–
8.6
(3.8)

At 31 March 2005

10.7

0.8

11.5

Share of post acquisition reserves
At 1 April 2004
Share of profits/(losses) after taxation
Dividends received
Adjustment to reflect effective obligations

0.4
22.9
(13.0)(8.6)

0.2(16.3)
(0.6)
17.2

0.6
6.6
(13.6)
8.6

At 31 March 2005

1.7

0.5

2.2

Goodwill
At 1 April 2004
Additions
Amortisation

8.8
27.8
(9.7)

–
–
–

8.8
27.8
(9.7)

At 31 March 2005

26.9

–

26.9

Net book value
At 31 March 2005

39.3

1.3

40.6

At 31 March 2004

11.3

4.8

16.1

13b Additions to joint ventures
13b i 2|entertain Limited
2005£m

Net assets contributed to joint venture by BBC Worldwide:
Investment in programmes for future sale
Net current assets

5.5
0.9
6.4

Cash contribution and transaction costs paid
Unrealised gain on disposal of business

1.6
22.8

Interest in joint venture undertaking at date of exchange (Note 13c)

30.8

Represented by:
Goodwill
Additions to investments in joint ventures

24.9
5.9
30.8

On 27 September 2004 BBC Worldwide, a subsidiary of the Group, entered into an agreement with
Woolworths plc (Woolworths) to form a joint venture comprising BBC Worldwide’s video/DVD
business (excluding children’s) and the video/DVD and music publishing business of Woolworths.This
principally non-cash transaction resulted in the formation of a joint venture company, 2|entertain Limited,which is 60% owned by BBC Worldwide. An unrealised gain arose in respect of this transaction whichis recognised in the statement of total recognised gains and losses.
The Group’s share of the joint venture’s turnover for the four month accounting period ended
31 January 2005 was £64.0million and of operating profit before goodwill and amortisation
was £16.7million.

120

BBC Annual Report and Accounts 2004/2005

13b ii Worldwide Media Limited
Total
2005
£m

Consideration paid

5.5

Represented by:
Goodwill
Additions to joint venture undertakings

2.9
2.6
5.5

In December 2004, BBC Worldwide completed the acquisition of a 50% equity interest in Worldwide
Media Limited, a magazine publishing joint venture based in India.Total consideration paid was £5.5million.
Contingent consideration of up to 211million rupees (£2.5million) may be payable, based on the financial
performance of the acquired business in the period to 31 July 2006. Based on the Group’s expectationof the financial performance during this period against the applicable targets, no contingent consideration
has been recognised in the calculation of goodwill at 31 March 2005. From December 2009 a put option
is exercisable by the Group’s joint venture partner. If exercised, this option would require the Groupto increase its shareholding from 50% to 74% through the purchase of 24% of its joint venture
partner’s shareholding.The consideration payable by the Group under this option is dependent on the
future profitability of the joint venture.The Group’s share of turnover for the three month accounting
period ended 31 March 2005 was £0.9million and of its operating profit was £0.2million.
The goodwill capitalised is amortised over 20 years on a straight line basis reflecting its useful economic
life, subject to reviews for impairment.
Joint ventures are businesses the BBC
jointly controls with other parties.

13c Interests in joint ventures
13c i 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 and registered in England and Wales, unless otherwise stated:
Name of entity

Activity

UK Channel Management Limited
UK Gold Holdings Limited
UKTV New Ventures Limited
UKTV Interactive Limited
JV Programmes LLC1
BBC Haymarket Exhibitions Limited

Channels
Channels
Channels
Channels
Channels
Publishing

Worldwide Media Limited
2|entertain Limited2
DTV Services Limited3
Insight Property Partnership
Daunus Limited4

Partner

Accounting date

Flextech
31 December 2004
Flextech
31 December 2004
Flextech
31 December 2004
Flextech
31 December 2004
Discovery
31 December 2004
Haymarket Exhibitions
31 December 2004
LimitedMagazines Bennett, Coleman and
31 July 2004
Company LimitedVideo/DVD Woolworths
28 January 2005
Marketing Crown Castle UK Limited,
31 March 2005
British Sky Broadcasting Limited
Property
Land Securities Trillium
31 March 2005
(Media Services) Limited
Property
Land Securities Trillium
30 June 2004
(BH) Limited,
Morgan Stanley Delta LLC,
Structured FinanceManagement Limited

Incorporated in the USA
60% equity interest
3
33% equity interest
4
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 held by the other partners.The BBC holds its investment in Daunus Limited through a subsidiary,
BBC Property Development Limited
1
2

BBC Annual Report and Accounts 2004/2005

121

Financial statements
Notes to the financial statements

For a number of years the BBC, through its subsidiary BBC Worldwide, has had major partnershipdeals with Flextech, the content division of Telewest Communications Plc, for the production andmarketing of subscription channels in the UK and with Discovery Communications Inc. for incorporating
new channels around the world and providing new co-production funding for programmes.The joint
ventures operated by these alliances are included in the list above.
The BBC is part of a joint venture, DTV Services Limited, to provide marketing services for
digital channels on a terrestrial platform in the UK.The BBC’s subsidiary BBC Free to View Limited(see Note 13f) holds the BBC’s digital terrestrial multiplex licence and its equity interest in the
joint venture to ensure the costs of this joint venture are managed separately from licencefee-funded activities.
The joint venture with LST, the Insight Property Partnership, provides a range of property anddevelopment services to the BBC. Related joint ventures and associate companies have been set up to
develop particular BBC properties. In May 2005 the BBC and LST agreed to restructure this partnership(see Note 26).
During 2004 the Group entered into arrangements with Daunus Limited, to redevelop the Broadcasting
House site. Under these arrangements the Group granted a 150 year head lease on Broadcasting
House to Daunus Limited and Morgan Stanley Gamma Investments in July 2003. LST has entered into
a contract with Daunus Limited to redevelop the site.The Group will lease back the redeveloped sitefrom Daunus Limited.
The following disclosures represent the Group’s equity shares of the assets and liabilities of its joint
ventures based on the results for the latest accounting periods, as shown above.
13c ii Group share of joint ventures results and net assets

Group share of:

UK Gold UK Channel
Holdings Management Other joint
Limited*Limited*ventures£m£m£m

Total joint
ventures£m2005
Turnover

64.0

36.8

31.6

29.4

161.8

Profit/(loss) before tax
Taxation

16.7
(5.1)

11.0
(2.8)

9.0
(2.7)

(3.1)
(0.1)

33.6
(10.7)

Profit/(loss) after tax

11.6

8.2

6.3

(3.2)

22.9

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

3.8
24.1
68.2
(65.0)
–
–

–
–
15.6
(6.6)
(28.1)
19.1

–
–
21.1
(2.9)
(30.4)
12.2

7.4
2.8
25.5
(5.1)
(37.8)
15.4

11.2
26.9
130.4
(79.6)(96.3)
46.7

Net book value

31.1

–

–

8.2

39.3

2004
Turnover

–

32.7

29.4

26.5

88.6

Profit/(loss) before tax
Taxation

–
–

9.5
(2.4)

6.2
(1.9)

(5.4)
(0.2)

10.3
(4.5)

Profit/(loss) after tax

–

7.1

4.3

(5.6)

5.8

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

–
–
–
–
–
–

–
–
14.7
(13.2)(28.9)
27.4

0.2
–
33.4
(6.6)
(45.5)
18.5

2.0
8.8
20.7
(18.3)(13.6)
11.7

2.2
8.8
68.8
(38.1)(88.0)
57.6

Net book value

–

–

–

11.3

11.3

* The figures are based on unaudited financial statements

122

2|entertain
Limited£m

BBC Annual Report and Accounts 2004/2005

Under the terms of the agreements with Flextech and Discovery, the Group has no obligation to fundlosses incurred by the entities nor to make good their net liabilities. As a result, the Group does notshare in losses/net liabilities of the relevant entities and accordingly no share of these is included in
the financial statements for the year ended 31 March 2005 (2004 £nil).The share of net liabilities
not recognised comprises the £46.7million shown in the table as ‘adjustment to reflect effective
obligations’. The Group is entitled to its share of any profits or net assets only once the ventures’
cumulative profits exceed cumulative losses since incorporation. During the year ended 31 March 2005
the Group received its first dividend of £2.1million from UK Gold Holdings Limited, one of the
Flextech joint ventures.
Associates are businesses over which
the BBC exerts significant influence
but does not have overall control.

13d Interests in associates
13d i Significant associates and their activities
The Group holds (directly and indirectly) significant interests in the associates listed below which,except where otherwise stated, are incorporated in Great Britain and registered in England and Wales.
A full list of associates is available on request from The Secretary, BBC, Room MC3C3, Media Centre,
201 Wood Lane, London W12 7TQ.
Holdingof issued
ordinaryshares%Activity

Parliamentary Broadcasting Unit Limited
33
Broadcasters Audience Research Board Limited (BARB)*The Commonwealth Broadcasting Association*
Radio Joint Audience Research Limited (RAJAR)
50
Frontline Limited
23
UKTV Pty Limited (incorporated in Australia)
20
People and Arts (Latin America) LLC (incorporated in the USA)** 50
Animal Planet LLC (incorporated in the USA)**20
The Animal Planet Europe Partnership**
50
Animal Planet Japan KK (incorporated in Japan)**33
Jasper Broadcasting Inc. (incorporated in Canada)
20
Jasper Junior Broadcasting Inc. (incorporated in Canada)
20
3sixtymedia Limited
10
White City Development Partnership***

Content provider
Audience research
Broadcasting forum
Audience research
Publishing
Channels
Channels
Channels
Channels
Channels
Channels
Channels
Production
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** Discovery associate*** 50% partnership share

13d ii Group share of associates’ turnover and net assets
The following additional disclosures are based on the results of the Discovery associates for the year
ended 31 December 2004 and the remaining associates’ disclosures are based on the results at thedate of their individual financial statements.These additional disclosures represent the Group’s equity
share of assets and liabilities of those entities.
Group interests in associates

2005
£m

2004
£m

Share of turnover

42.9

38.6

38.8
24.5
(19.3)(123.9)
81.2

43.1
12.6
(7.2)
(118.9)
75.2

1.3

4.8

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

BBC Annual Report and Accounts 2004/2005

123Financial statements
Notes to the financial statements

The results include the Group share of the operating profit/(loss) of UKTV Pty Limited of£0.5million (2004 £0.3million), Frontline Limited of £0.7million (2004 £1.1million), Children’s Character
Books Limited of £(0.1)million (2004 n/a) and BBC World (India) Private Limited of £0.1million(2004 £nil). The Group’s share of the remaining associates, including Jasper Broadcasting Inc. andJasper Junior Broadcasting Inc. operated in partnership with Alliance Atlantis, was £nil (2004 £nil).
Under the terms of the agreements with Discovery and Alliance Atlantis, the Group has no obligation
to fund losses incurred by the entities nor to make good their net liabilities. As a result, the Group
does not share in losses or net liabilities of the relevant entities and accordingly no share of these
are included in the financial statements for the year ended 31 March 2005 (2004 £nil).The Groupis entitled to its share of any profits or net assets once the ventures’ cumulative profits exceed
cumulative losses since incorporation, with the exception of JV Network LLC. JV Network LLC
was formed for the purpose of providing debt funding from Discovery to the other Discovery joint
ventures and BBC Worldwide is not entitled to any profits arising within this entity.
13e Movements in the year for UK Public Service Broadcasting

Subsidiary undertakings arebusinesses the BBC controls.

Interest in
BBC World
Service net
assets£m

Interests in
subsidiaries£mInterests
in joint
ventures
£m

Total
£m

At 1 April 2004
Accumulated surplus
Amortisation

152.5
7.6
–

125.3
–
–

8.8
–
(8.8)

286.6
7.6
(8.8)

At 31 March 2005

160.1

125.3

–

285.4

13f Subsidiary undertakings
The principal subsidiary undertakings of the BBC at 31 March 2005 are listed below. All are wholly
owned and incorporated in Great Britain and registered in England and Wales. A full list of subsidiaries
is available on request from The Secretary, BBC, Room MC3C3, Media Centre, 201 Wood Lane,
London W12 7TQ.
Name of entity

BBC Commercial Holdings Limited
BBC Worldwide Limited***

BBC World Limited
BBC Ventures Limited
BBC Broadcast Limited

**
**
**

BBC Resources Limited**

BBC Free to View Limited*

BBC Property Limited
BBC Property Development Limited
Centre House Productions Limited

**
**
*

* Directly owned** Indirectly owned

124

Activity

BBC Annual Report and Accounts 2004/2005

Holding company
Publishing, channels andprogramme distribution
Channels
Holding company
Playout and channel
management services
Programme making facilities
and services
Holding company
for digital licence
Property
Property
Production financing

14 Stocks
Group
2005
£m

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

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

2.9

5.1

0.7

0.7

281.0
2.4

273.1
6.0

280.7
0.1

272.7
0.2

88.1
69.9
14.5

82.3
44.5
22.0

88.1
69.9
–

82.3
44.5
–

458.8

433.0

439.5

400.4

Group
2005
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

119.5

135.7

12.9

18.1

285.8
–
10.2
35.5
102.3
121.5

275.4
–
3.1
40.3
21.9
196.3

285.8
28.0
5.8
32.6
78.6
103.7

275.4
30.6
3.1
35.9
4.8
169.8

674.8

672.7

547.4

537.7

6.1
100.0

5.7
136.3

–
84.3

–
118.1

106.1

142.0

84.3

118.1

780.9

814.7

631.7

655.8

15 Debtors

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

Receivable after more than one year
Other debtors
Prepayments

Total

Other debtors includes £56.6million in relation to the sale of the White City site, see Note 6
for details.
Prepayments have decreased from 2004 due to £52.5million in respect of the White City site being
fully amortised during the year as explained in Note 6.
16 Creditors
16a Prompt payment policy
It is the BBC’s policy to comply with the Better Payment Practice Code in relation to the paymentof suppliers, provided that the supplier is complying with the relevant terms and conditions of theircontracts. The BBC monitors compliance against the terms of this code. Payments for programmeacquisitions are made in accordance with contractual terms. The Group’s number of creditor days
outstanding in respect of other trade creditors at 31 March 2005 was 35 days (2004 39 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.

BBC Annual Report and Accounts 2004/2005

125

Financial statements
Notes to the financial statements

16b Amounts falling due within one year

Bank overdrafts and other loans
Bank overdrafts
Unsecured loan notes

Note

Group
2005
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

21
23c

36.9
1.5

38.2
1.6

31.2
–

31.3
–

38.4

39.8

31.2

31.3

60.1
26.5
59.0
21.5
167.0

78.7
24.6
50.5
34.2
162.9

58.9
26.3
36.0
–
107.2

77.2
23.9
30.6
–
111.1

334.1

350.9

228.4

242.8

–
8.5
5.8
28.6
59.9

–
1.2
8.5
32.8
–

51.7
–
2.3
26.6
59.9

92.6
–
6.4
28.2
–

102.8

42.5

140.5

127.2

342.6
100.4

349.3
109.1

274.7
100.4

281.6
109.1

443.0

458.4

375.1

390.7

918.3

891.6

775.2

792.0

Trade creditors
Programme creditors
Programme acquisitions
Salaries and wages
Residual copyright payments
Other trade creditors

Other creditors
Amounts owed to subsidiaries
Amounts owed to associates and joint ventures
Corporation tax
Other taxation and social security
Other

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

Total

Other creditors includes £59.9million in relation to the sale of the White City site, see Note 6
for details.
16c Amounts falling due after more than one year

Bank and other loans

Note

Group
2005
£m

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

23c

150.0

180.0

–

–

7.1

6.0

7.1

6.0

27.1
–
3.4

30.3
–
–

–
27.6
–

–
33.3
–

30.5

30.3

27.6

33.3

187.6

216.3

34.7

39.3

Trade creditors
Programme acquisitions
Other creditors
Obligations under finance leases
Amounts owed to subsidiaries
Other

Total

126

BBC Annual Report and Accounts 2004/2005

23c

17 Provisions for liabilities and charges
At 1 April
2004£m

Utilisedduringthe year£m

Releasedduringthe year£m

Charge forthe year£m

At
31 March
2005£mLicence fee
Restructuring
Litigation and insurance
Property
PensionDeferred tax
Other

22.1
15.7
11.2
11.9
–
5.7
10.9

(14.9)(10.6)
(0.6)
(2.4)
–
–
(11.1)

(7.7)
(3.3)
(1.2)
(1.9)
–
–
(9.3)

17.7
45.6
4.4
4.2
21.1
9.6
22.5

17.2
47.4
13.8
11.8
21.1
15.3
13.0

Total

77.5

(39.6)(23.4)

125.1

139.6

Group

Restructuring includes those costs relating to the change programme occurring within the BBC.
Property provisions include BBC World Service’s liability of £3.3million (2004 £3.6million) to restore
Bush House to its original condition, together with amounts relating to other dilapidations and relocations.
The Bush House provision has been discounted on a pre-tax basis to reflect the time value to
BBC World Service of this amount.
Pension provisions comprise an amount of £21.1million which crystallised on the sale of BBC Technology
Holdings Limited.This amount is payable over ten years. It is estimated pending a final valuation but
will not exceed £21.1million in net present value terms (although it could be less than this amount).
In determining the provision, the anticipated cash flows have been discounted on a pre-tax basis toreflect the time value to the BBC of this amount.
Other provisions consist of a number of balances arising across the BBC in the normal courseof business.

UK Public Service Broadcasting
and BBC World Service are fundedfrom different sources. As such,the reserves relating to BBC World
Service are maintained separatelyfrom the rest of the Group and are
restricted for use solely on BBC
World Service activities.

At 1 April
2004£m

Utilisedduringthe year£m

Releasedduringthe year£m

Charge forthe year£m

At
31 March
2005£mLicence fee
Restructuring
Litigation and insurance
Property
Other

22.1
12.4
11.2
8.3
10.7

(14.9)
(9.3)
(0.6)
(2.4)
(10.7)

(7.7)
(1.5)
(1.2)
(1.5)
(9.9)

17.7
44.0
2.6
3.4
22.2

17.2
45.6
12.0
7.8
12.3

Total

64.7

(37.9)(21.8)

89.9

94.9

UK Public Service Broadcasting

BBC Annual Report and Accounts 2004/2005

127

Financial statements
Notes to the financial statements

18 Reserves
Operatingreserveexcludingpensionreserve£m

Pensionreserve£m

Total
operatingreserve£m

Capital Revaluation
reserve
reserve£m£m

At 1 April 2004
Exchange adjustments
Deficit for financial year
Actuarial gain on defined
benefit pension schemes
Unrealised gain on disposal of business
Revaluation reserve transfer
Pension reserve transfer
Capital reserve transfer

255.4
(0.5)
(188.2)(436.3)––(180.9)(0.5)(188.2)

788.8
–
–

4.8
–
–

612.7
(0.5)
(188.2)

–
22.8
0.8
71.4
27.0

80.9
–
–
(71.4)
–

80.9
22.8
0.8
–
27.0

–
–
–
–
(27.0)

–
–
(0.8)
–
–

80.9
22.8
–
–
–

At 31 March 2005

188.7

(426.8)(238.1)

761.8

4.0

527.7

Represented by:General Group reserves
BBC World Service reserves

181.1
7.6

(426.8)–(245.7)
7.6

613.3
148.5

–
4.0

367.6
160.1

188.7

(426.8)(238.1)

761.8

4.0

527.7

Group

Total
£m

Under the accounting standard FRS 10, Goodwill and intangible assets, any newly arising goodwill must
be capitalised and amortised over its useful life. As is permitted by the standard, goodwill arising inperiods prior to 1999 of £6.8million (2004 £6.8million) remains offset against the operating reserve.

UK Public Service Broadcasting

Operatingreserve£m

Capital Revaluation
reserve
reserve
£m
£m

Total
£m

At 1 April 2004
Deficit for financial year
Revaluation reserve transfer
Capital reserve transfer

193.0(16.5)
0.8
27.0

788.8
–
–
(27.0)

4.8
–
(0.8)
–

986.6
(16.5)––At 31 March 2005

204.3

761.8

4.0

970.1

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

196.7
7.6

613.3
148.5

–
4.0

810.0
160.1

204.3

761.8

4.0

970.1

Children’sbook business
2005
£m

BBC
Technology
Holdings
Limited
2005
£m

Total
2005
£m

1.1
–
0.4

85.5
24.8
32.4

86.6
24.8
32.8

1.5

142.7

144.2

Of which:
Cash consideration received
Less transaction costs

2.3
(0.9)

150.0
(7.3)

152.3
(8.2)

Net cash proceeds from sale of businesses

1.4

142.7

144.1

Interest in new associated undertaking

0.1

–

0.1

19 Sale of businesses

Net assets disposed
Pension liability crystallised
Profit on disposal

The businesses sold during the year contributed £10million of the cash flow used to purchasetangible fixed assets.

128

BBC Annual Report and Accounts 2004/2005

20 Reconciliation of net cash flow to movement in net debt
2005
£m

2004
£m

Increase in cash in year
Net cash outflow/(inflow) from management of liquid resources
Net cash outflow/(inflow) from increase in loans and finance leases

0.3
29.3
33.3

2.3
(52.3)(90.0)

Change in net debt resulting from cash flows
Non-cash decrease in finance leases

62.9–(140.0)15.8

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

62.9
(198.2)(124.2)(74.0)Net debt at the end of the year

(135.3)(198.2)At
1 April2004£mCash flows£mAt
31 March2005£m(38.2)
39.3

1.3
(1.0)

(36.9)
38.3

1.1

0.3

1.4

Liquid resources
Short-term investments

12.6

29.3

41.9

Gross funds

13.7

29.6

43.3

Debt
Loans from third parties
Unsecured loan notes
Finance leases(180.0)(1.6)(30.3)

30.0
0.1
3.2

(150.0)(1.5)(27.1)Net debt(198.2)62.9(135.3)Public Service Broadcasting
Commercial Businesses
Centre House Productions Limited

2.7(172.4)(28.5)

8.9
50.7
3.3

11.6
(121.7)(25.2)Net debt(198.2)62.9(135.3)21 Analysis of changes in net debt

Net cash
Bank overdrafts
Cash at bank and in hand

Liquid resources are current asset
investments that are readily disposable
without disrupting the BBC, and areeither readily convertible into known
amounts of cash at, or close to, theircarrying amount, or are traded in an
active market. In relation to the BBC,liquid resources are sterling amounts
on deposit.

Made up of:

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 longterm cash flow effect.

BBC Annual Report and Accounts 2004/2005

129

Financial statements
Notes to the financial statements

Public Services in this context
represent the UK Public Service
Broadcasting Group and
BBC World Service.

22 Reconciliation of net funds/(debt) to the Department for Culture, Media and Sport (DCMS)
borrowing ceilings

Note

PublicServices
2005
£m

21

11.6

2.7

(121.7)(172.4)16b(100.4)(109.1)––

Borrowings as defined by DCMS borrowing ceiling(88.8)(106.4)(121.7)(172.4)

Borrowing ceiling(200.0)(200.0)(350.0)(350.0)Net funds/(debt)
Licence savings stamps deposits anddirect debit instalments*

Public Commercial Commercial
Services Businesses Businesses
2004
2005
2004
£m
£m
£m

* The BBC must be able to repay the licence savings stamps deposits and direct debit instalments on demand and they
are therefore included in the public service borrowings

The Public Service Borrowing limit of £200million is set within the BBC Charter. As at 31 March 2005
and 31 March 2004, and throughout the financial year, the BBC was in compliance with thisborrowing ceiling.
When the Department for Culture, Media and Sport granted a £350million borrowing limit for
BBC Commercial Holdings Limited in July 2002, three financial covenants were defined which
are required to be met as at 31 March each year. As at 31 March 2005 and 31 March 2004
BBC Commercial Holdings Group was in compliance with each of these covenants. Compliancewith the borrowing ceiling is detailed in the table above.
A forward currency contract isa contract to buy or sell foreign
currency in exchange for sterlingat a specific date. Companies typicallyenter into forward contracts to lock
into a particular exchange rate, thereby
eliminating cash flow risk that may
be associated with a future purchaseor sale.
An interest rate swap is a contract
between two parties to change thebasis of their interest rate payment
or receipts either from fixed
to floating rates or vice versa.
Companies typically enter into
these arrangements to reduce theexposure to interest rate risk by
fixing a floating interest rate thereby
giving certainty to the level of futureinterest payments. Alternatively, acompany may believe that interest
rates may fall and wish to convert
a fixed rate loan to a floating rate.

23 Financial instruments
23a Treasury management and financial instruments
The Group’s treasury operations are managed 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 fromthe BBC’s operations in accordance with its objectives which are:■ to ensure the business of the BBC, both Public Services and Commercial, is fully funded in the mostefficient manner and remains compliant with borrowing limits■ to protect the value of the BBC’s assets, liabilities and cash flows from the effects of adverse interest
rates and foreign exchange fluctuations■ to maximise the return on surplus funds, whilst ensuring sufficient cash is retained to meet foreseeableliquidity 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 andcreditors that arise directly from its operations.The Group finances its operations from these financial
instruments.The main risks to be managed are ensuring that the Group has sufficient liquid funds
to meet its obligations as they fall due and that it is compliant with its borrowing limits imposedby the Charter, by the Department for Culture, Media and Sport and by external loan covenants.
The Group is principally a domestic organisation with the majority of transactions and assets being
in the UK and sterling based. However, the Group undertakes some transactions in currencies otherthan sterling and enters into forward currency contracts to manage this currency risk.The Group has
also entered into interest rate swaps to manage the interest rate risk arising as a result of its
borrowing needs.The Group does not undertake speculative treasury transactions.
23b Cash and borrowing facilities
The Group invests short-term surplus cash in fixed rate investment products. Funds are invested only
in organisations which have a minimum long-term rating of AA.
As at 31 March 2005 the UK Public Service Broadcasting had available a £100million loan facility
which is available as either a revolving LIBOR-based loan or an overdraft to May 2005 with an option
to extend the facility to May 2006.The loan facility bears interest at a margin of 0.2% and theoverdraft facility bears interest at bank base rates plus 1%.

130

BBC Annual Report and Accounts 2004/2005

Money market lines are shortterm borrowings.

In addition to this loan facility UK Public Service Broadcasting has access to uncommitted money
market lines, from individual banks, totalling £24million (2004 £25million) with interest payable ata margin of between 0.125% and 0.5% over LIBOR.
BBC Commercial Holdings Limited’s loans comprise a £350million multicurrency revolving credit
facility agreement repayable in full in March 2008. At 31 March 2005 £125million (2004 £105million)
was drawn down by way of advances. Interest is payable at LIBOR plus 0.375%, rising to LIBOR plus
0.45% once the facility is more than 50% utilised. Of the total amount £100million is available in theform of letters of credit to be issued in favour of the European Investment Bank to support theirlending under the facilities detailed immediately below. As at 31 March 2005 a further £41million(2004 £76.9million) was utilised by way of letters of credit issued to support the borrowing underthese facilities.
The European Investment Bank has made a loan facility available to BBC Commercial Holdings
Limited for an amount of £25million. This loan is repayable in one single instalment by November
2007. £25million was drawn under this facility at 31 March 2005 (2004 £25million). The interest
rate applicable on the facility is determined with reference to the European Investment Bank’s own
funding cost and carries no margin above this funding rate.The lending under the facility is supported
by a letter of credit issued by the commercial banks under the £350million revolving credit facility
referred to above.
As at 31 March 2004 BBC Commercial Holdings Limited had a loan of £50million outstanding
with the European Investment Bank (total facility amount £66million).This loan was repaid in fullin March 2005 and the facility cancelled.
In addition BBC Commercial Holdings Limited had a facility of £20million which was available as an
overdraft at 1% over the Bank’s base rate, or a money market line, with a margin of 0.3%.The facility
is due for review in January 2006.
23c Maturity of financial liabilities
The Group arranges its borrowings to meet forecast cash flows such that UK Public Service
Broadcasting has access to sufficient funds to meet its commitments. Short-term flexibility is achievedby overdraft facilities. The maturity profile of the Group’s financial liabilities, other than short-term
creditors, at 31 March was:

2005
Within one year
Between one and two years
Between two and five years
Greater than five years

2004
Within one year
Between one and two years
Between two and five years
Greater than five years

Overdraft£m

Bank loans£mUnsecuredloan notes£mFinanceleases£m

Creditors£mProvisions
£m

Total
2005
£m

36.9
–
–
–

–
–
150.0
–

1.5
–
–
–

–
–
–
27.1

–
7.5
1.3
1.7

2.7
2.5
6.8
12.4

41.1
10.0
158.1
41.2

36.9

150.0

1.5

27.1

10.5

24.4

250.4

38.2
–
–
–

–
–
130.0
50.0

1.6
–
–
–

–
–
–
30.3

–
4.6
1.4
–

–
–
–
–

39.8
4.6
131.4
80.3

38.2

180.0

1.6

30.3

6.0

–

256.1

The above includes all contractual liabilities, including those held within provisions.
Defeasance deposits are amounts
deposited with banks by Centre
House Productions Limited whichearn the exact amount of interest
needed to cover the capital
repayment and interest elementof each of the finance leases.
The defeasance deposits are‘ring-fenced’ and therefore cannot
be used for any transactions apartfrom the agreed capital andinterest payments.

The finance leases relate 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 against the finance lease creditor to show thenet unmatched liability at the year end.These defeasance deposits, £263.0million at 31 March 2005
(2004 £273.5million), are structured such that the principal on deposit and the interest earned
will be sufficient to cover the rental obligations on the finance leases until the end of the lease.

BBC Annual Report and Accounts 2004/2005

131

Financial statements
Notes to the financial statements

Accordingly it is not included as borrowing for the purposes of compliance with the BBC’s
borrowing limits.
The maturity profile of UK Public Service Broadcasting’s financial liabilities, other than short-term
creditors, at 31 March was:

2005
Within one year
Between one and two years
Between two and five years
Greater than five years

2004
Within one year
Between one and two years
Between two and five years
Greater than five years

Overdraft£m

Tradecreditors£mIntercompany
creditors
£m

Total
2005
£m

31.2
–
–
–

–
7.0
0.1
–

–
6.2
10.0
11.4

31.2
13.2
10.1
11.4

31.2

7.1

27.6

65.9

31.3
–
–
–

–
4.6
1.4
–

–
5.9
13.7
13.7

31.3
10.5
15.1
13.7

31.3

6.0

33.3

70.6

23d Interest rates
The Group’s main exposure to interest rate fluctuations arises on external borrowings. Since March
2003 the Group has been borrowing at floating rates of interest and then used interest rate swaps togenerate the desired interest profile and to manage the Group’s exposure to interest rate fluctuations.
The Group’s financial assets, excluding short-term debtors, amount to £80.2million at 31 March 2005
(2004 £51.9million) all of which are subject to floating rate interest.
After taking account of the various interest rate swaps and forward foreign currency contracts
entered into by the Group, the interest rate profile of the Group’s financial liabilities at 31 March
2005 and 2004 was:Fixed rate liabilities

Total
£m

Financialliabilities
on whichno interestis paid£m

Floating
rate
financialliabilities£m

Amount£m

Weighted
averageinterest
rate%

Weighted
averageperioduntil
maturity
Years

2005
Sterling

250.4

34.2

–

216.2

4.6

3

Total

250.4

34.2

–

216.2

2004
Sterling

256.1

36.3

10.8

209.0

4.5

4

Total

256.1

36.3

10.8

209.0

Sterling fixed-rate borrowings are achieved by entering into interest rate swap transactions; alloutstanding swaps mature in March 2008. In addition to the £188million (2004 £209million) of swaps
included in the fixed rate liabilities of £216million (2004 £209million) shown above, there wereeffective at the year end an additional £58million of swaps which had been transacted to coverprojected borrowings.
23e Currency exposure
The majority of the Group’s operations are UK-based.The Group has one significant overseas
operation, BBC Worldwide America, which operates in the USA and whose revenues and expenses
are denoted exclusively in US dollars.
The Group has a number of transactions involving overseas parties and priced in the currenciesof those parties.The Group’s policy is to eliminate currency exposure at the time of the transaction
through the use of forward contracts.
132

BBC Annual Report and Accounts 2004/2005

As at 31 March 2005, after taking into account the effects of forward foreign exchange contracts, theGroup had no significant currency exposures.
23f Gains and losses on hedging contracts
The Group undertakes some transactions in international markets. Due to movements in exchange
rates over time, the amount the Group expects to receive or pay when it enters into a transaction
may differ from the amount that it actually receives or pays when it settles the transaction.The Groupmanages its exposure to movements in exchange rates by entering into forward exchange hedging
contracts.These allow the Group to settle transactions at known exchange rates, thereby eliminatingmuch of this uncertainty.
At 31 March 2005 the Group had entered into a net commitment to purchase foreign currencies
amounting to £95million (2004 £71million) that mature in the period through to 2012 in order
to fix the sterling cost of commitments through this period.
Unrealised gains and losses on forward exchange hedging contracts amounted to an unrealised gainof £7.8million (2004 £6.7million loss) at the balance sheet date, of which £2.7million is expected
to be recognised in the next financial year.
From March 2003 the Group started using interest rate swaps to manage its interest rate profile.
Significant unrealised gains or losses on these contracts amounted to an unrealised gain of £3.3million(2004 £3.9million) at the balance sheet date, of which £1.2million is expected to be recognised in thenext financial year.
23g Fair values of financial assets and liabilities
There are no significant differences in value between the book and market value of the Group’s financial
instruments other than as disclosed in Note 23f.
24 Commitments
24a Contracts placed for future expenditure
Group
2005
£m

Fixed asset additions
Programme acquisitions and sports rights
Independent programmes

An operating lease is a lease where
the lessee has not taken on the risks
and rewards of owning and operating
the asset.The lessee (the BBC) ishiring rather than buying an asset.

UK Public
UK Public
Service
Service
Group Broadcasting Broadcasting
2004
2005
2004
£m
£m
£m

27.7
987.7
85.3

78.4
1,073.6
73.9

21.5
945.1
76.2

52.9
1,073.5
70.2

1,100.7

1,225.9

1,042.8

1,196.6

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

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

BBC Annual Report and Accounts 2004/2005

Land andbuildings
2005£mLand andbuildings
2004
£m

Other
2005
£m

Other
2004
£m

2.9
6.3
35.9

11.0
9.2
54.9

3.3
5.9
2.6

3.2
14.8
1.9

45.1

75.1

11.8

19.9

1.8
3.8
35.7

9.9
7.7
54.1

1.7
2.8
0.8

0.6
2.4
0.1

41.3

71.7

5.3

3.1

133

Financial statements
Notes to the financial statements

24c Other financial commitments
At 31 March 2005 the BBC had commitments for technology support totalling £10.4million of which,£5.9million is expected to be paid within one year. The UK Public Service Broadcasting commitment
was £8.9million, of which £5.1million is payable within one year.
In the ordinary course of business the BBC enters into a large number of contracts with artists andwriters and with providers of other services including licence fee collection and channel distribution.
25 Contingent liabilities
At 31 March 2005 the Group had unprovided contingent liabilities estimated to be £5.4million(2004 £0.9million) in respect of guarantees and indemnities. Of this, £0.9million relates to UK PublicServices Broadcasting.The remainder relates to BBC Worldwide’s joint venture, Worldwide Media
Limited. BBC Worldwide has guaranteed bank loans in respect of this joint venture which were
366million rupees (£4.5million) on 31 March 2005. This debt may rise to 400million rupees(£5.0million) over the next two years.
The Group also has a number of contingent liabilities arising from litigation.The BBC makes specificprovision (see Note 17) against an estimate of any damages and costs which may be awarded.
26 Post balance sheet events
On 12 April 2005 BBC Worldwide announced that it had entered into an agreement with Dennis
Publishing Limited to form a joint venture comprising the magazine subscription fulfilment business ofeach company. BBC Worldwide contributed the assets and business of its Galleon Limited subsidiaryin exchange for a 50% stake in the new joint venture company, Galleon CI Limited.
On 12 May 2005 the BBC and LST announced they were to review the ongoing nature of their Insight
Property Partnership. In future the partnership aims to concentrate on the completion of developmentsof Pacific Quay in Glasgow and Broadcasting House in London.The BBC will look for a new partner
to provide facilities management and other property services. Goodwill balances relating to thepartnership were fully amortised at 31 March 2005.
On 13 May 2005, BBC Worldwide completed the sale of certain music rights for a total considerationof £10.3million.
27 Related party transactions
The related party transactions of the Group have been presented in accordance with FRS 8, Related party
disclosures. Under the provisions of FRS 8 the BBC has not disclosed transactions between Group entities
where more than 90% of those entities’ voting rights are controlled within the Group. UK Public Service
Broadcasting does not underwrite any of the activities or liabilities of the subsidiaries.
In all transactions, the terms of trade were negotiated on an arm’s length basis.
27a Transactions with joint ventures and associated undertakings
Included in the income and expenditure account is income from UKTV of £51.8million (2004 £46.0million)
relating to the sale of programmes and dividends and income from JV Programmes LLC of £30.5million(2004 £28.4million) relating to the sale of programmes. Net income from 2|entertain Limitedof £15.6million (2004 £nil) was received for licensing of programmes, other commissions anddividends.There is also £6.3million (2004 £7.3million) of income made up of various other associates
relating to the sale of programmes. Included in the income and expenditure is income of £0.8million(2004 £0.4million) from BBC Haymarket Exhibitions Limited relating to dividends and management
fees. In addition, Frontline Limited charged £3.1million (2004 £2.9million) for the distribution of
BBC Worldwide Limited’s magazines and paid a dividend of £0.6million (2004 £nil). Also included is acharge for £0.4million (2004 £0.4million) from Parliamentary Broadcast Unit Limited, for the purchaseof broadcast licences.
The BBC, Crown Castle UK Limited and British Sky Broadcasting Limited are partners in DTV Services
Limited. In the year the BBC paid DTV Services Limited £0.9million (2004 £1.4million) for marketing
services. In addition the BBC received £0.3million (2004 £0.3million) from DTV Services Limited foradministrative services.
During the year £0.3million (2004 £0.3million) of funding for restructuring was provided to
3sixtymedia Limited in line with contractual obligations.

134

BBC Annual Report and Accounts 2004/2005

The BBC and LST are partners in the Insight Property Partnership and the White City Development
Partnership. The BBC’s capital in the White City Development Partnership was returned during theyear (see Note 6). The partnership charged the BBC £153.2million for property services during the year
(2004 £145.0million). Since the year end the BBC and LST have announced a restructuring of thepartnership (see Note 26).
In July 2003, the BBC granted a head lease on Broadcasting House to Daunus Limited (a company
in which the BBC holds a 10% interest (see Note 13c)) and Morgan Stanley Gamma Investments,
for a premium of £92.0million in cash plus the value of works to date, £47.8million, realisinga profit of £40.4million. A further £14.9million has been invoiced in 2005 (2004 £12.4million) for
reimbursement of Broadcasting House development costs. Daunus Limited has appointed LST
to redevelop the site.
BBC World Service and the Caribbean Relay Company (CRC) run a transmission site in Antigua,
where a contribution of £0.9million was made towards the expenditure of CRC. However, in 2004
it was announced that CRC would close and World Service paid £0.4million as its share of theredundancy costs.
Amounts owed by/to joint ventures and associated undertakings at the year end are disclosed within
Notes 15 and 16. In all transactions the terms of trade were negotiated on an arm’s length basis.
Related parties also include
Governors, the Executive Boardand other senior managers, their
immediate families and external
entities controlled by them.

27b Other transactions
In the normal course of business the BBC transacts with other parties which are related to it byvirtue 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.

Transactions between the BBC
and these related parties are
explained in this note.

The BBC has set procedures for dealing with situations to avoid any potential conflict of interest.
Where transactions or any policy issues arise between connected parties, the BBC Governor or
employee is not a party to the approval or discussion process.
Ranjit Sondhi, Governor, is married to Anita Bhalla, who has been employed by the BBC since 1987
in various production and broadcasting roles. Her current role is Head of Political & Community Affairs
for the English Regions. Her remuneration is based on the BBC’s standard terms and conditions
applicable to other staff employed in this capacity.
Dame Ruth Deech, Governor, has a daughter who is a journalist in BBC News. Her remuneration isbased on the BBC’s standard terms and conditions applicable to other staff employed in this capacity.
Deborah Bull, Governor, is sole Director of Deborah Bull Limited. Subsequent to her appointment,
Deborah received, through Deborah Bull Limited, payments totalling £8,650 (2004 £13,320) for
contributions to various BBC programmes. No amounts were outstanding at the year end (2004 £nil).
Michael Grade was appointed BBC Chairman on 2 April 2004 and took up his appointment on
17 May 2004. At the date of his appointment, Michael Grade held directorships and/or interests
in several companies that have relationships with the BBC. Since his appointment, Michael Gradehas resigned from these positions and/or disposed of these interests, except for his positions as
non-executive Chairman of Pinewood Shepperton and non-executive Chairman of Hemscott plc.
In the year ended 31 March 2005, the BBC paid £2,524,797 (2004 £1,461,643) to Pinewood
Shepperton for the use of studios and related facilities. At the year end, £6,526 was outstanding(2004 £72,864).The figures for 2004 have been restated because, following a further detailed
review, it became apparent that the amounts previously voluntarily disclosed had not recognised
all relevant transactions.

BBC Annual Report and Accounts 2004/2005

135

Broadcasting facts and figures

01

15-minute weekly
reach by service andplatform: BBC andcompetitors

02

Share by service
and platform:
BBC and competitors

03

Comparative cost
per householdof viewing/listening
per hour04

Subtitling on
BBC Television

05

Audio description
on BBC Television06

Signing on
BBC Television

07

BBC Network
Television hoursof output

08

BBC Network Television
hours of repeats

09

BBC Television hoursof output by origin

10

Range of peak-time
UK-made programmeson UK network
television

136

BBC Annual Report and Accounts 2004/2005

11

BBC Network Radio
hours of output

12

BBC News 24 costs

13

BBC distribution costs

14

BBC Network Radio
hours of output by
origin15

Average monthly
bbc.co.uk page
impressions

16

Average monthly reachof BBC New Media

17

Cost per hour of BBCoriginated programmes

18

Cost per hour of BBCoriginated programmes
by genre

19

BBC spend outside
London20

Creative spend outside
the BBC

21

Top ten external
producers for BBC
Television by spendTable 1: 15-minute weekly reach by service and platform: BBC and competitors
All homes

All multichannel homes

Analogueterrestrial homes

Digital homes

2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004(55.2m1)(37.5m1)(32.6m1)(17.9m1)(22.6m1)(35.9m1)(30.3m1)(55.4m1)
%
%
%
%
%
%
%
%

Total BBC Television and Radio reach

92.9

92.9

–

–

–

–

–

–

BBC Television
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament

86.6
81.9
61.4
9.4
3.0
3.5
5.8
4.2
0.2

88.2
83.7
67.0
7.0
2.1
2.3
5.0
3.9
0.2

84.5
78.7
53.3
14.8
4.8
5.6
9.0
6.7
0.3

85.5
79.8
57.3
12.6
3.7
4.2
8.9
6.9
0.2

90.2
87.2
75.3
–
–
–
–
–
–

91.6
88.5
78.8
–
–
–
–
–
–

84.4
78.5
52.8
15.7
5.0
5.9
9.5
6.5
0.3

85.4
79.4
56.5
13.9
4.0
4.6
9.9
6.6
0.3

ITV1
ITV2
ITV32
Channel 4
E4
five
All Sky channels
Sky OneSky News
Discovery3
Nickelodeon3
Nick Jr.
UK Gold
UKTV
Other channels (total)4

76.0
13.9
7.9
61.7
6.9
43.9
30.7
14.8
4.0
5.1
4.4
2.6
11.0
20.4
52.0

78.9
11.3
–
62.1
6.6
43.2
29.0
15.4
4.2
4.7
4.4
2.1
10.2
18.4
45.6

72.7
21.4
11.9
55.8
10.6
42.9
48.4
22.8
6.3
8.0
7.0
4.1
17.2
32.0
81.4

75.3
20.2
–
54.8
12.3
41.8
53.0
28.0
7.7
8.5
7.9
3.8
19.1
33.3
81.7

81.3
–
–
71.4
–
44.5
–
–
–
–
–
–
–
–
–

83.3
–
–
71.3
–
44.4
–
–
–
–
–
–
–
–
–

72.4
21.4
12.7
55.6
10.5
42.6
49.1
22.7
6.3
7.7
7.0
4.3
17.3
32.4
81.8

75.1
20.6
–
54.3
12.4
41.4
55.0
28.3
7.9
8.3
8.2
4.2
19.7
34.5
83.2

BBC Radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Five Live Sports Extra5
1Xtra5
BBC 6 Music5
BBC 75
BBC Asian Network5
BBC Local Radio (including Nations)
BBC World Service6

66.6
20.4
27.2
4.2
19.3
12.7
0.8
0.6
0.5
0.9
1.0
20.8
2.6

66.4
20.2
26.7
4.5
19.8
12.5
0.6
0.6
0.3
0.6
0.9
21.1
2.9

Virgin (AM/FM)Classic FM
talkSPORT
All local commercial radio

5.1
12.6
4.6
52.5

5.5
12.5
4.2
54.8

Source: Television: BARB,TNS/Infosys, age 4+; Radio: RAJAR, age 15+, both average for the year. Combined BBC Television and Radio reach is age 4+
1
People age 4+ as at March, source: BARB
2
ITV3 data covers the period from November 2004 to March 2005
3
Includes the first transmission and +1 hour time-shifted channels
4
Excludes BBC One, BBC Two, ITV1, Channel 4 and five5
BBC digital radio services have been measured since July 2003
6
UK only

BBC Annual Report and Accounts 2004/2005

137

Broadcasting facts and figures

Table 2: Share by service and platform: BBC and competitors
All homes

All multichannel homes

Analogueterrestrial homes

Digital homes

2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004(55.2m1)(37.5m1)(32.6m1)(17.9m1)(22.6m1)(35.9m1)(30.3m1)(55.4m1)
%
%
%
%
%
%
%
%

Total BBC Television and Radio share

43.1

43.4

–

–

–

–

–

–

BBC Television
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament

36.2
24.4
9.6
0.5
0.2
0.3
0.8
0.4
0.0

37.8
25.2
10.9
0.3
0.1
0.2
0.7
0.4
0.0

29.7
19.7
6.7
0.8
0.3
0.5
1.3
0.6
0.0

29.2
19.2
7.0
0.6
0.2
0.4
1.2
0.6
0.0

47.9
32.9
15.0
–
–
–
–
–
–

48.7
32.8
15.9
–
–
–
–
–
–

29.4
19.4
6.4
0.8
0.3
0.5
1.4
0.6
0.0

28.9
18.9
6.8
0.7
0.2
0.4
1.4
0.6
0.0

ITV1
ITV2
ITV32
Channel 4
E4
five
All Sky channels
Sky OneSky News
Discovery3
Nickelodeon3
Nick Jr.
UK Gold
UKTV
Other channels (total)4

22.3
1.2
0.7
9.8
0.6
6.5
6.5
1.5
0.4
0.4
0.4
0.3
1.2
2.6
27.3

23.7
1.0
–
9.7
0.6
6.5
6.3
1.5
0.5
0.4
0.4
0.3
1.2
2.4
24.0

18.5
1.8
1.1
7.6
1.0
5.2
10.2
2.2
0.6
0.7
0.6
0.5
1.8
4.0
42.5

19.3
1.7
–
7.1
1.1
4.8
11.5
2.7
0.8
0.7
0.7
0.5
1.9
4.2
42.6

29.2
–
–
13.8
–
8.8
–
–
–
–
–
–
–
–
–

29.2
–
–
13.2
–
8.6
–
–
–
–
–
–
–
–
–

18.2
1.9
1.2
7.5
1.0
5.1
10.4
2.2
0.6
0.7
0.6
0.6
1.8
4.1
43.4

18.8
1.7
–
6.9
1.1
4.7
11.8
2.7
0.9
0.7
0.7
0.5
1.9
4.3
44.1

BBC Radio
BBC Radio 1
BBC Radio 2
BBC Radio 3
BBC Radio 4
BBC Radio Five LiveBBC Radio Five Live Sports Extra5
1Xtra5
BBC 6 Music5
BBC 75
BBC Asian Network5
BBC Local Radio (including Nations)
BBC World Service6

54.0
8.5
16.3
1.2
11.3
4.6
0.1
0.1
0.1
0.2
0.3
10.9
0.6

52.8
7.8
15.7
1.2
11.4
4.6
0.1
0.1
0.1
0.1
0.3
11.1
0.7

Virgin (AM/FM)Classic FM
talkSPORT
All local commercial radio

1.5
4.2
1.7
34.3

1.5
4.2
1.6
36.2

Source: Television: BARB TNS/Infosys, age 4+; Radio: RAJAR, age 15+, both average for the year. Combined BBC television and radio share of viewing/listening
is age 4+
1
People age 4+ as at March, source: BARB
2
ITV3 data covers the period from November 2004 to March 2005
3
Includes the first transmission and +1 hour time-shifted channels
4
Excludes BBC One, BBC Two, ITV1, Channel 4 and five5
BBC digital radio services have been measured since July 2003
6
UK only

138

BBC Annual Report and Accounts 2004/2005

Table 3: Comparative cost per household of viewing/listening per hour

BBC1
Sky2
All pay television3
Video hire4

2004/2005
Pence

2003/2004
Pence

5.0
44.0
21.3
81.5

4.7
38.5
21.9
76.4

Source: BARB, RAJAR, BBC Strategy estimates
1
Based on cost of licence fee (£121 per annum in 2004/2005), total hours of viewing/listening to BBC output, and average 2.33 people in household
2
Based on cost of family package subscription (£234 per annum in 2004/2005), total hours of viewing to Sky channels and average 2.75 people in household
3
Based on total UK subscription revenue to pay TV (Sky, Telewest, ntl, Top-Up TV)
4
Based on average cost per video hire (£3.02)

Table 4: Subtitling on BBC Television
Subtitled hours

BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24

Actual for year

Target for year

2004/2005

2003/2004

2004/2005%

2003/2004%

2004/2005%

2003/2004%

12,643
9,355
2,293
2,162
2,912
3,768
5,382

11,432
8,924
1,977
1,771
2,892
3,459
4,708

87.4
88.5
69.0
65.4
65.8
78.6
60.4

81.2
87.2
60.6
61.4
66.7
73.5
52.9

85.0
85.0
60.0
60.0
60.0
60.0
60.0

80.0
80.0
50.0
50.0
50.0
50.0
50.0

Table 5: Audio description on BBC Television
Audio described hours

BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies

Actual for year

Target for year

2004/2005

2003/2004

2004/2005%

2003/2004%

2004/2005%

2003/2004
%

599
540
452
251
271
384

441
429
227
176
227
276

6.7
6.1
13.6
7.6
6.1
8.0

5.2
5.0
7.0
6.1
5.2
5.9

6.0
6.0
6.0
6.0
6.0
6.0

4.8
4.8
4.8
4.8
4.8
4.8

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

Table 6: Signing on BBC Television
Sign interpreted hours

BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24

Actual for year

Target for year

2004/2005

2003/2004

2004/2005%

2003/2004%

2004/2005%

2003/2004
%

269
269
104
112
146
200
276

222
213
90
79
119
114
212

3.0
3.0
3.1
3.4
3.3
4.2
3.1

2.6
2.5
2.8
2.7
2.7
2.4
2.4

3.0
3.0
3.0
3.0
3.0
3.0
3.0

2.4
2.4
2.4
2.4
2.4
2.4
2.4

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

BBC Annual Report and Accounts 2004/2005

139

Broadcasting facts and figures

Table 7: BBC Network Television hours of output
On all platforms
BBC OneOn digital platforms only
BBC Two

BBC Three

BBC Four

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

1,748
–
2,446
160
559
787
675
880
839
53
86

1,686
–
2,500
134
650
496
777
923
911
66
87

1,343
675
620
267
781
946
1,353
173
964
297
33

1,293
664
516
311
872
863
1,261
328
818
289
37

1,321
–
143
87
882
4
–
368
191
145
10

876
–
369
109
1,155
65
–
239
172
168
13

997
–
120
134
187
–
–
190
258
1,261
26

774
–
126
163
107
–
–
167
254
1,213
30

–
–

–
–

365
527

455
577

2
–

–
–

1
–

5
–

234

253

320

292

118

116

80

71

Total network

8,467

8,483

8,664

8,576

3,271

3,282

3,254

2,910

Included in total network are acquired programmes of

1,471

1,590

1,919

1,843

299

206

623

542

51

54

145

147

–

–

–

–

Factual and learning
Education for children
News and weather
Current affairs
Entertainment
SportChildren’s
Drama
Film
Music and arts
ReligionOpen University
BBC Learning Zone
Continuity

Included in total network are parliamentary programmes of

On digital platforms only
The CBBC Channel

CBeebies

BBC News 24

BBC Parliament

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

562
–
3,468

637
–
3,423

77
–
4,110

182
–
4,043

–
8,468
–

–
8,491
–

–
8,760
–

–
8,290
–

320

294

530

492

292

293

–

14

4,350

4,354

4,717

4,717

8,760

8,784

8,760

8,304

Included in total network are acquired programmes of

762

866

700

799

–

–

327

128

Included in total network are parliamentary programmes of

–

–

–

–

–

–

8,760

8,290

Education for children
News and weather
Children’sContinuity
Total network

Note: Network television hours of output includes originations, acquired programmes and repeats

Table 8: BBC Network Television hours of repeats
BBC One

BBC Two

2004/2005

2003/2004

2004/2005

2003/2004

All hoursof which narrative repeatsof which showcased from digital channels

2,683
457
175

2,595
458
149

4,771
175
379

4,803
172
308

In peak time (6pm–10.30pm)
of which narrative repeatsof which showcased from digital channels

159
2
5

165
1
2

533
38
99

664
5
78

Note: BBC One has a commitment to keep repeats below 10% of peak-time hours. In 2004/2005 repeats were 9.7% of peak-time hours (2003/2004 9.99%)
Narrative repeats are transmitted within seven days of the first transmission
Showcased programmes are first transmissions on BBC One and BBC Two of programmes from the digital channels

140

BBC Annual Report and Accounts 2004/2005

Table 9: BBC Television hours of output by origin
Programmes made in:England(excluding London)

London

Northern Ireland

Scotland

Wales

Total

2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004

First Transmission: Originatedprogrammes Network
BBC One and BBC Two
Factual and learning
859
Education for children
16News and weather
3,062
Current affairs
343
Entertainment
630
Sport
1,496
Children’s
332
Drama
255
Film
2
Music and arts
157
Religion
7

834
44
3,012
357
644
1,241
313
267
5
142
4

688
3
–
55
112
–
22
157
–
5
101

768
3
–
58
105
–
37
174
–
17
108

2
1
–
1
1
–
–
9
–
–
1

1
1
–
1
12
–
–
12
–
–
1

71
7
–
2
6
–
47
23
–
32
3

48
7
–
2
13
–
84
27
–
29
2

23
2
–
–
2
–
–
9
–
10
1

16
1
–
8
–
–
4
18
–
13
1

1,643
29
3,062
401
751
1,496
401
453
2
204
113

1,667
56
3,012
426
774
1,241
438
498
5
201
116

Subtotal

7,159

6,863

1,143

1,270

15

28

191

212

47

61

8,555

8,434

Digital channels
Factual and learning
Education for children
News and weather
Current affairs
Entertainment
SportChildren’s
Drama
Film
Music and arts
Religion

149
112
11
5
12,225 12,626
46
42
140
247
2
58
766
715
2
13
–
–
214
194
3
3

60
–
–
12
30
–
23
23
–
18
5

61
8
–
7
30
–
28
13
–
39
4

1
–
–
5
–
–
–
1
–
–
–

3
–
–
3
–
–
–
4
–
1
–

14
1
112
–
5
–
33
–
–
68
–

20
–
123
–
7
–
78
–
–
66
–

5
–
109
–
–
–
5
10
–
23
–

–
229
196
–
12
13
123 12,446 12,872
1
63
53
–
175
284
–
2
58
–
827
821
2
36
32
–
–
–
36
323
336
–
8
7

Subtotal

13,558 14,015

171

190

7

11

233

294

152

162 14,121 14,672

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

3
–
297
9
–
–
–
–
–

1
–
291
10
–
–
–
–
–

21
–
3,365
96
2
38
–
–
2

11
–
3,218
103
–
28
–
–
2

70
2
336
36
70
108
–
5
6

87
2
347
35
91
93
–
–
3

64
9
438
66
17
154
15
53
31

89
10
448
56
26
256
21
53
17

88
4
418
40
17
258
–
6
33

86
4
418
45
27
264
1
11
27

246
15
4,854
247
106
558
15
64
72

274
16
4,722
249
144
641
22
64
49

Subtotal

309

302

3,524

3,362

633

658

847

976

864

883

6,177

6,181

Acquired programmes

1,188

992

5

6

4

1

–

6

11

3

1,208

1,008

Total first transmissions*

22,214 22,172

4,843

4,828

659

698

1,271

1,488

1,074

BBC Annual Report and Accounts 2004/2005

1,109 30,061 30,295141

Broadcasting facts and figures

Table 9: BBC Television hours of output by origin continued
Programmes made in:England(excluding London)

London

Northern Ireland

Scotland

Wales

Total

2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004

Repeats
Network
Nations and Regions

19,689 19,488––

Continuity
Open University
BBC Learning Zone

1,605
364
518

3,118
2

2,052
3

33
146

45
109

859
199

994
196

184
278

166 23,883 22,745
277
625
585

1,519
448
577

31
4
–

19
3
–

255
–
–

196
3
–

188
–
–

185
3
–

169
–
–

171
3
–

Total hours of broadcasting

44,390 44,204

7,998

6,905

1,093

1,051

2,517

2,866

1,705

*Of which independents
Network
Nations and Regions

1,716
–

1,637
2

342
57

415
38

12
84

26
78

112
148

134
145

26
124

39
118

2,208
413

2,251
381

*Of which parliamentary
programming

4,317

4,803

–

–

–

–

112

123

109

125

4,538

5,051

2,248
368
518

2,090
460
577

1,726 57,703 56,752

Table 10: Range of peak-time UK-made programmes on UK network television
Number of UK-produced genres averaging a half-hour slot during peak time in a typical week. This excludes all digital output.
Network
BBCTV

BBC
One

Arts
Contemporary music
Consumer affairs

*
*
*

*
*

Factual entertainment
History
Human interest
Natural history
Science/medical

*
*
*
*
*

*

UK-originated drama serials
UK drama series
Long-running drama serials
UK single plays/films

*
*
*
*

*
*
*

Family/people shows
Quiz shows/panel games
Sitcom UK originated
Other comedy

*
*
*
*

*
*
*

Cookery
DIY
Gardening
Other hobbies/leisure

*
*
*
*

*
*
*

Network news
Current affairs
Regional news
Sport

*
*
*
*

*
*
*
*

Total 2004/2005

24

Total 2003/2004

24

*
*

ITV1/
C4/five

*
*

*

*
*
*
*
*

*
*
*
*
*

*
*

*
*
*

*
*
*
*

*
*
*

*
*

*
*
*
*

*
*

*
*
*

ITV1

C4

five

*

*
*
*
*

*

*

*

*
*
*

*

*

*

*
*

*

*

*

*
*
*
*

18

15

19

11

9

8

17

13

19

12

8

6

Source: BARB, TNS/Infosys
Note: Peak time is 6pm–10.30pm

142

BBC
Two

BBC Annual Report and Accounts 2004/2005***

Table 11: BBC Network Radio hours of output
Analogue stations
BBC Radio 1

BBC Radio 2

BBC Radio 3

BBC Radio 4

BBC Radio Five Live

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

Music
News and weather
Sport
FactualCurrent affairs
Drama
Arts
Entertainment
Religion
Schools
Children’sPresentation

8,451
307
30
63
–
–
14
–
–
–
–
148

8,509
305
30
60
–
–
9
–
–
–
–
148

7,375
455
–
10
340
13
105
78
187
–
–
197

7,402
455
–
26
340
14
88
71
192
–
–
196

8,068
80
–
–
–
93
315
–
67
–
86
51

8,075
79
–
–
–
103
298
–
60
64
50
55

–
2,380
502
1,283
1,210
1,074
448
486
289
208
26
54

–
2,404
542
1,254
1,199
1,079
464
511
289
160
26
56

–
6,423
2,138
–
53
–
–
–
–
–
–
146

–
6,486
2,106
–
46
–
–
–
–
–
–
146

Total

9,013

9,061

8,760

8,784

8,760

8,784

7,960

7,984

8,760

8,784

Digital stations
BBC Five LiveSports Extra

1Xtra

BBC 6 MusicBBC 7

BBC Asian Network Total network radio

2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004

Music
News and weather
Sport
FactualCurrent affairs
Drama
Arts
Entertainment
Religion
Schools
Children’sPresentation

–
–
1,001
–
–
–
–
–
–
–
–
–

–
–
1,089
–
–
–
–
–
–
–
–
–

7,726
306
77
–
505
–
–
–
–
–
–
146

7,840
292
76
–
430
–
–
–
–
–
–
146

8,203
326
–
5
–
–
–
–
–
–
–
226

8,147
370
–
9
–
–
–
–
–
–
–
266

–
–
–
–
–
3,495
–
3,805
–
–
1,460
–

–
–
–
–
–
3,328
–
2,852
–
–
1,464
–

2,746
1,246
390
6
1,704
122
–
–
643
–
–
235

2,741 42,569 42,714
1,344 11,523 11,735
351 4,138 4,194
8 1,367 1,357
1,690 3,812 3,705– 4,797 4,524
–
882
859
65 4,369 3,499
639 1,186 1,180
–
208
224
– 1,572 1,540
208 1,203 1,221

Total

1,001

1,089

8,760

8,784

8,760

8,792

8,760

7,644

7,092

7,046 77,626 76,752

Note: Digital radio – all networks are broadcast via DAB (Digital Audio Broadcasting), DCable (digital cable), DSat (digital satellite), DTT (digital terrestrial television)and are streamed online
Note: BBC Radio 1 operates nations’ opt-outs
Network radio has a voluntary commitment to commission 10% of eligible hours from independent producers. In 2004/2005, the five analogue radio networks
commissioned 13.4% of eligible hours from independent producers

Table 12: BBC News 24 costs
Note 2b (pages 106 to 107) sets out the cost of BBC services andchannels. Certain categories of expenditure, including newsgathering,are not allocated to individual services and channels. Had part ofthis expenditure been allocated to BBC News 24, its costs would
have been as follows:

Total production costs1
Newsgathering allocation2
Central costs allocation

2004/2005£m

2003/2004
£m

23.0
18.4
6.7

23.5
19.7
7.2

Table 13: BBC distribution costs
2004/2005£m

2003/2004£m

Analogue
Digital

77
80

75
77

Total distribution costs

157

152

Total costs as set out in Note 2b
Included in newsgathering allocation is £3.2million of regional spend(2003/2004 £3.4million)
Note: 928 hours of BBC News 24 programming were shown on BBC One
and 225 hours on BBC Two (2003/2004 1,014 hours on BBC One and
196 hours on BBC Two)

1
2

BBC Annual Report and Accounts 2004/2005

143

Broadcasting facts and figures

Table 14: BBC Network Radio hours of output by origin
Analogue stations
BBC Radio 1

BBC Radio 2

BBC Radio 3

BBC Radio 4

BBC Radio Five Live

2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004

Programmes produced in London

8,755

8,359

5,561

5,831

6,572

6,496

6,080

6,140

8,529

8,547

Programmes produced outside London
England excluding London
Northern Ireland
Scotland
Wales

3
81
91
83

422
90
97
93

3,115
2
80
2

2,825
9
119
–

1,050
70
327
741

1,112
115
371
690

1,602
47
161
70

1,572
44
157
71

228
3
–
–

234
3
–
–

Subtotal

258

702

3,199

2,953

2,188

2,288

1,880

1,844

231

237

9,013

9,061

8,760

8,784

8,760

8,784

7,960

7,984

8,760

8,784

Total hours of broadcasting

Digital stations
BBC Five LiveSports Extra

1Xtra

BBC 6 MusicBBC 7

BBC Asian Network

2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004 2004/2005 2003/2004

Programmes produced in London

1,001

1,089

8,758

8,779

8,500

7,948

8,730

7,598

780

780

Programmes produced outside London
England excluding London
Northern Ireland
Scotland
Wales

–
–
–
–

–
–
–
–

2
–
–
–

4
–
1
–

260
–
–
–

844
–
–
–

3
17
10
–

14
24
8
–

6,312
–
–
–

6,266
–
–
–

Subtotal

–

–

2

5

260

844

30

46

6,312

6,266

1,001

1,089

8,760

8,784

8,760

8,792

8,760

7,644

7,092

7,046

Total hours of broadcasting

Total network
radio

Nations andlocal radio

Total radio

2004/2005

2003/2004

2004/2005

2003/2004

2004/2005

2003/2004

Programmes produced in London

63,266

61,567

8,760

8,784

72,02670,351

Programmes produced outside London
England excluding London
Northern Ireland
ScotlandWales

12,575220
669
896

13,293 222,772
285
8,740
753 11,617
854 15,367

219,249 235,347
8,758
8,960
11,333 12,286
14,731 16,263

232,542
9,043
12,086
15,585

Subtotal

14,36015,185 258,496

254,071 272,856

269,256

Total hours of broadcasting

77,62676,752 267,256

262,855 344,882

339,607

2004/2005
Millions

2003/2004
Millions

813.4
93.8
968.6

535.1
54.5
704.6

1,875.8

1,294.2

BBC World Service, accessed via bbc.co.uk sites
BBC World Service, accessed via key partners3

83.7
5.4

55.0
3.4

Total BBC World Service

89.1

58.4

Table 15: Average monthly bbc.co.uk page impressions
UK and international page impressions1

News and sport
Education2
Other bbc.co.uk
Total bbc.co.uk (excluding beeb.com)

Source: BBC server logs, BBC World Service
1
Includes page impressions from international-facing site (average monthly figure for 2004/2005 was 194.6 million), funded by Grant-in-Aid
2
Education comprises all schools and lifeskills sites
3
Key partner websites host BBC World Service text and audio

144

BBC Annual Report and Accounts 2004/2005

Table 16: Average monthly reach of BBC New Media (millions of users)
Unique users (server log based)1

bbc.co.uk unique users (UK and international)
bbc.co.uk unique users (UK only)

Claimed usage (survey based)

bbc.co.uk2
BBCi (interactive television – 24/7)3
Combined bbc.co.uk and BBCi (24/7)4BBCi (interactive television – enhanced TV programmes)5

2004/2005
Millions

2003/2004
Millions

48.1
22.8

33.8
n/a

2004/2005
Millions

2003/2004
Millions

10.6
6.1
14.5

8.9
5.3
13.2

2004/2005
Millions

2003/2004
Millions

3.5

2.2

Source: BBC server logs, based on cookie data
Source: BMRB Access, Monthly Omnibus Survey, GB adults age 15+
3
Digital satellite performance only of BBCi 24/7 ‘always on’ digital text services (no reliable figures available for other platforms). Source: TNS/Interactive TV tracking
study, GB adults age 16+ in digital satellite homes4This total counts an individual once for using BBC services on both the internet and interactive television (digital satellite usage only,
no reliable figures are available for other platforms)
5
Digital satellite performance only of BBCi interactive-enhanced TV programmes (eg Olympics, Chelsea Flower Show). Please note the number and size of services
available each month fluctuates and therefore so does the number of viewers interacting. Source: BARB, viewers age 4+ in digital satellite homes
1
2

Table 18: Cost per hour of BBC-originated programmes by genre

Table 17: Cost per hour of BBC-originated programmes
2004/2005£000

2003/2004£000

Television channels
BBC One
BBC Two
BBC Three
BBC Four
The CBBC Channel
CBeebies
BBC News 24
BBC Parliament

174.4
97.7
157.5
62.6
42.2
63.3
5.3
0.5

155.6
100.2
124.1
56.4
37.7
60.5
5.6
0.5

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

3.1
3.9
4.3
11.4
7.3
1.6
0.7
0.5
3.8
0.8

3.1
3.6
4.2
11.5
7.0
1.5
0.6
0.5
4.4
0.7

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

31.2
0.6

31.9
0.6

2004/2005£000

2003/2004£000

Analogue television programmes
Factual and learning
Education for children
News and weather
Current affairs
Entertainment
SportChildren’s
DramaMusic and arts
Film
Religion

110.6
93.0
42.8
116.8
196.1
199.8
93.3
505.4
151.0
280.3
108.3

110.9
83.1
40.6
117.6
200.6
162.4
81.6
518.3
145.6
280.0
106.6

Digital television programmes
Factual and learning
News and weather
Current affairs
Entertainment
SportChildren’s
DramaMusic and arts
Religion

132.8
4.0
123.6
190.8
73.9
44.3
582.8
74.6
102.1

127.3
4.5
96.9
171.9
16.0
40.4
316.3
70.1
154.9

BBC Annual Report and Accounts 2004/2005

145

Broadcasting facts and figures

Table 19: BBC spend outside London
2004/2005£m

2003/2004
£m

270
41
114
59

274
46
106
50

484

476

Cost of television originationsin the nations and regions
England
Northern Ireland
Scotland
Wales

Cost of radio originationsin the nations and regions
England – local radio
Northern Ireland
Scotland
Wales

129
16
27
23

121
14
25
22

195

182

Other programme costs incurred outside London
Other costs, including transmission

51
125

57
116

Total spend in the nations and regions

855

831

2004/2005£m

2003/2004
£m

291

277

49

45

2004/2005£m

2003/2004£m

Included within television originations
is network spend of
Included within radio originations
is network spend of

Table 21: Top ten external producers for BBC Television by spend
1 Tiger Aspect Productions
2 Endemol UK
3 Hat Trick Productions
4 Kudos Film and Television
5 Wall to Wall
6 Talkback Thames
7 Ecosse Films
8 Baby Cow Productions
9 Brighter Pictures
10 12 Yard Productions
Notes: Activity with external producers is monitored on a calendar year basis
in line with Ofcom requirements
The BBC spent £329million on external programme production in the year
ended 31 December 2004 (2003 £308million)

Table 20: Creative spend outside the BBC

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

146

328
245
84
305
28

323
252
90
290
27

990

982

BBC Annual Report and Accounts 2004/2005

Getting in touch with the BBC

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If you have a question or comment
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