Published by the British Broadcasting Corporation
Broadcasting House
London W1A 1AA
Website: www.bbc.co.uk© BBC 2001

Annual Report and Accounts 2000/2001

Annual Report and Accounts 2000/2001

Contents
The BBC in 2000/2001
Chairman’s Foreword
Running the BBC
Board of Governors
Executive Committee

1
2
4
6

Overview
Review of the Year: Public Services
TelevisionRadio
Nations and Regions
News
New Media
Education

8
10
14
17
20
22
23

Review of the Year: Commercial Services
BBC Worldwide Limited
BBC Resources Limited

24
26

Review of the Year: BBC World Service

27

Review of the Year: Performance against Objectives 28
Accountability
Reports from Advisory Bodies

32
37

Looking Ahead

40

Compliance and Regulatory Matters

44

Financial Review
Glossary of Terms
Statement of Accounting Policies
Financial Statements

56
58
59
62

Broadcasting Facts and Figures
Getting in Touch

80
85

This BBC Annual Report and Accounts is available in public
libraries throughout the UK and on the BBC’s website atwww.bbc.co.uk/info/bbc. It is also available in Welsh, on audio
cassette, and in Braille.
We also publish a BBC Review of the Year, based on the Annual
Report, specially designed to report to licence payers on BBC
performance and value for money.This is available in English
and Welsh – in print, as an audio cassette and in a version
tailored for people with learning difficulties. It is also available
in Braille.
Annual Reviews of BBC Scotland, BBC Wales, BBC Northern
Ireland and BBC English Regions are published simultaneouslywith this document, as is the Annual Review of the BBC
World Service, which is funded by a Grant-in-Aid from theForeign and Commonwealth Office.

100 Annual Report and Accounts 2000/2001

The BBC’s wholly-owned commercial subsidiaries,
BBC Worldwide Limited, BBC Resources Limited and
BBC Technology Holdings Limited trade at arm’s lengthfrom the BBC and their accounts are independently
audited.This Annual Report includes a summary of theiractivities in 2000/2001.
Copies of any of these reports may be obtained by writing to
The Secretary, BBC, Broadcasting House, London W1A 1AA.

The BBC in 2000/2001
2000/2001 was a year of transition and achievement. A year in which
the BBC . . .

● Created great award-winning
programmes on radio and television● Attracted more users than ever to
BBC Online● Achieved record radio audiences athome and abroad● Halted a decline in news viewing by
moving BBC One’s late news to 10pm

● Saw BBC One’s share of viewing fallyear on year. . .

● Spent more of its income on
programmes and services● . . . but also saw BBC Two’s
share rise

● Was more highly valued by its
audiences● Developed plans for new digital
television, radio and education services● Maintained its reputation for
independence and impartiality

This report gives a full account to licence payers and Parliament of ouractivities and services, and how far we achieved our objectives.
Annual Report and Accounts 2000/2001

1

Chairman’s Foreword

In 1951 no-one would have dreamt that the young Prince Charles,
just two at the time, would one day throw a party at Kensington
Palace celebrating the 50th anniversary of the BBC’s experimental
radio drama for farmers.Today The Archers is much more thanradio drama. It has won the affection not just of farmers, but of
the 4.5 million people from all walks of life who tune in every
week. In 2001, it is more relevant than ever, embracing with craft
and understanding real issues in rural Britain.
In the past year BBC programmes have been, like The Archers,
at the heart of British life, culture and public debate. BBC local
and regional services, to which so many turned in troubled
times in the last 12 months, were more highly valued and morewatched and listened to. BBC journalists showed bravery: fromJohn Ware and the Panorama team investigating the Omaghbombing to Joseph Winter and Kate Clark, thrown out of
Zimbabwe and Afghanistan respectively. BBC politicalcorrespondents showed insight and judgement in the sensitive
months before and during the general election.
A new three-year, above-inflation funding settlement wasannounced by the Government for BBC World Service during
the year – accompanied by stretching audience targets.
Achieving a record audience of 153 million by March this year
means the service is well on the way.
BBC programmes have also surprised and delighted. Who else
but the BBC would have broadcast an eight-hour reading ofHarry Potter? EastEnders scaled new dramatic heights during
the ‘Who Shot Phil?’ episodes this spring. Clocking Off,The Sins
and Down to Earth showed that innovation at the BBC is notjust about reality TV and new gameshow formats. Wonderful
factual series like A History of Britain, State of the Planet and Congo
have opened eyes and are helping people to learn. Comedy like
My Family, Marion and Geoff and Happiness made the nation
laugh. And through the BBC, everyone was able to celebrate
the unprecedented success of British sportsmen and womenat the Olympic Games.

2

Annual Report and Accounts 2000/2001

The year has demonstrated that through its programmes andservices the BBC remains the cornerstone of UK broadcasting.
Meanwhile, around us, commercial competitors are fighting
harder than ever to capture big audiences and the revenue
they bring through advertising and subscription. Big Brother,
Who Wants to be a Millionaire? and Popstars were programming
phenomena born from this commercial drive (they were also
terrific entertainment for millions of viewers). And everyone
is trying to second-guess the ever-changing technology on which
we all depend.
BBC service strategies have been reviewed to reflect changing
audience tastes and expectations – but the implementationof new strategies has been fragmented. Established services,like BBC One, BBC Online and national and regional services,
are beginning to see the benefits of increased investment.
We await approval for our planned new television and radio
services, which received strong public support in consultations
last autumn. Disappointingly, the new digital curriculum forschools is still not off the ground.
Much of the BBC’s planning activity has been properly subject
to external examination and probing, although we need torecognise that many of the BBC’s critics come with a desire
to rein in the BBC for their own commercial ends.
The BBC has not been standing idle. We showed decisivenessin the autumn in moving the late evening news on BBC One
to ten o’clock.The programme is, so far, performing well; mostimportantly, overall news audiences to BBC One and ITV areup significantly.
The new organisational structure, ‘One BBC’, has been
implemented, and the complexities of network commissioning
have been addressed. Management has started to streamline
divisions, cut overheads further, and move more money directly
into programmes. In the coming year, that process will

accelerate, and there will be a significant turnover in staff as thebalance of the workforce changes. A new commercial subsidiaryhas been established, BBC Technology Holdings Limited, whichshould make money for the BBC and help fund the full service
strategy.
These changes should ensure that we will continue to be
central to UK broadcasting in the digital age. Indeed, the thrustof the commercial competition over the last 12 months suggeststhat far from diminishing, our traditional role of providing quality
broadcasting for the benefit of all will become increasingly
important.
In December the Government published its plans for the
future regulation of communications in the UK, including
broadcasting and the BBC.The White Paper, A New Future forCommunications, recognised the unique role of the BBC, and,in particular, the special role of the Board of Governors insafeguarding the public interest. Despite strong lobbying frommany of the BBC’s competitors – principally those who also
lobbied last year against the BBC receiving increased funding –the Government decided that the Governors ought to retain
their core responsibilities for:
BBC strategy;• settingprotecting
independence;• assessing itsitsperformanceagainst objectives and promises;• appointing senior management.
•
Responses to the White Paper demonstrate that the BBC’s
critics will not give up their fight during the legislative battle
ahead.Their determination demonstrates their belief that a BBC
which is not independently supervised but regulated alongsidecommercial broadcasting will be more constrained than an
independent corporation responsible for its own programme
remit. A constrained BBC – one that, for instance, does not offer
advertising-free popular drama and entertainment for children,or free-to-air coverage of major sports events, or the largest

content website in Europe – would be a less competitive BBC.
More important, it would also be a much less valued part ofBritish life and mean much less to millions of people in the UK.
The Governors take their four core responsibilities seriously.The
BBC has strategies in place to take it to the end of this Charter.
Its independence from political and commercial pressure,though regularly tested, is secure.This report demonstrates that
Governors praise success, but do not cover up failure – andhave the power to encourage and accelerate change.
Accountability is always high on our agenda; this year it has beena key theme.The ways in which the BBC listens to and interacts
with the public are crucial in building the relationship of trustand openness which is due to licence payers.
Through the difficulties of the past year – among them thepotentially devastating terrorist bomb at BBC Television
Centre in West London in February – our staff have been
an inspiration.The task of modernising the organisation andfinding £1.1 billion through savings and increasing commercial
income by 2006 has been and will continue to be difficult. But
the BBC has the clout, creativity and determination to succeed.
I shall leave the BBC later this year with lasting affection
for my colleagues on the Board of Governors, the Executive
Committee and all the members of staff who make the BBC
what it is. I am very proud of the achievements of this highly
creative organisation and of its talent, ambition and fierce
independence. It has been a great privilege to be the BBC’s
Chairman for over five years. I am convinced that this sometimes
frustrating, often brilliant, always exhilarating organisation willremain at the heart of Britain’s cultural life for many years to come.

Sir Christopher Bland Chairman

Annual Report and Accounts 2000/2001

3

Board of Governors

The Board of Governors, from left, back row: Sir Robert Smith,
Roger Jones; middle row: Heather Rabbatts, Gavyn Davies,
Sir Christopher Bland, Dermot Gleeson, Baroness Hogg;
front row:Tony Young, Professor Fabian Monds, Dame Pauline
Neville-Jones, Ranjit Sondhi; inset right: Sir Richard Eyre.
Sir Christopher Bland Born 1938. Chairman of the BBC
since 1996. Chairman of the Governors’ Commercial
Committee. Deputy Chairman of the Independent Broadcasting
Authority 1972 to 1979 and Chairman of the London Weekend
Television Group from 1983 to 1994. Chairman of NFC plc from1994 to 2000. His initial term of five years was extended inJuly 1998 for a further two years to run to 2003. In May 2001,
he became Chairman of BT and announced his intention toleave the BBC as soon as his successor had been appointed.
Gavyn Davies Born 1950.Vice-Chairman from 1 January
2001*. Chairs the Fair Trading Compliance Committee andis a member of the Governors’ Commercial Committee.
A managing director and member of the Board of Directorsof Goldman Sachs International. At Goldman Sachs he is also
Chairman of the Global Investment Research Department,
and Chief International Economist. Member of the Policy
Unit at 10 Downing Street from 1974 to 1979. Chaired the
independent review into the future funding of the BBC in 1999.
* Replaced Baroness Young of Old Scone, Vice-Chairman August 1998 toNovember 2000.

Sir Richard Eyre CBE Born 1943. Governor since November
1995. Member of the Programme Complaints Committee.
Freelance theatre, film and television director and writer.
Producer of Play for Today for BBC TV from 1978 to 1981.
Director of the Royal National Theatre from 1988 to 1997.
Wrote and presented BBC Two’s Changing Stages in 2000.
Dermot Gleeson Born 1949. Appointed in November 2000*.
Member of the Audit Committee. Executive Chairmanof M J Gleeson Group plc and EEC Representative of theMidland Bank in Brussels from 1979 to 1981.
* Replaced Adrian White CBE, Governor November 1995 to November 2000.

Baroness Hogg Born 1946. Governor since February 2000.
Member of the Audit Committee and Governors’ Commercial
Committee. Non-executive Chairman of Frontier Economics
and Deputy Chairman of 3i. Director of GKN and P&O
Princess. Director of Martin Currie Portfolio Trust. She wasmade a life peer in 1995 and is a member of the House ofLords Monetary Policy Committee.
Roger Jones OBE Born 1943. Appointed National Governor
for Wales in December 1996. Member of the Audit Committee
and Fair Trading Compliance Committee. Chairman of BBC
Children in Need and the BBC’s pension fund. Founder of Penn
Pharmaceuticals in the early 1980s.

4Annual Report and Accounts 2000/2001

Running the BBC
The BBC is a corporation established bya Royal Charter which sets out its objectives.
The current Charter runs to December 2006.
BBC services are regulated by a separate
Agreement which recognises the BBC’s
editorial independence.The BBC receives
most of its income from the licence fee.
Twelve Governors are appointed by the Queen on advice fromministers to ensure that the BBC fulfils its obligations. Governors
are now appointed for a term of four years (previously five
years).They are men and women with a wide range ofexperience and interests.They include National Governors for
Scotland, Wales and Northern Ireland and a Governor withspecial responsibility for the English Regions.The interests ofaudiences in each part of the UK are represented by National
Broadcasting Councils in Scotland, Wales and Northern Ireland,and by the English National Forum, which is supported by a
network of Regional and Local Advisory Councils.
The Governors are the trustees for the public interest in the
BBC – ensuring that the organisation is properly accountable
while maintaining its independence.Their job is to make surethat the BBC is on the right strategic course, and is properly

regulated and effectively managed.They judge the performanceof the BBC’s public services against criteria for quality, editorial
values, distinctiveness, public service, value to licence payers anduniversal accessibility.
The Governors are committed to keeping in touch with theviews of the BBC’s audiences.They undertake a range ofactivities to help them do so, including public consultations
on changes to services funded by the licence fee, obtaining
independent specialist advice, audience research and public events.
The Governors also safeguard the independence of BBC World
Service, which is funded by Foreign and Commonwealth OfficeGrant-in-Aid. A World Service Consultative Group advises themon World Service output and audience perceptions of it.
Day-to-day management is the task of BBC executives.The
Director-General is the BBC’s chief executive and editor-in-chief.
The Governors appoint the Director-General and, with him, themost senior management.
BBC operations are run by the directors of nine programmingand broadcasting divisions and six professional services, and by
the chief executives of the BBC’s commercial businesses.They
report to the Director-General and, together, they make up the
Executive Committee. A less formal Leadership Group meets todiscuss and develop the vision for BBC programmes and services.

Professor Fabian Monds CBE Born 1940. Appointed
National Governor for Northern Ireland in August 1999.
Specialist in communications, information systems and innovation
studies. Emeritus Professor, University of Ulster. Chairman of theNorthern Ireland Industrial Research and Technology Unit, andof the Information Age Initiative, member of several economic
development bodies.

Sir Robert Smith Born 1944. Appointed National Governor
for Scotland in August 1999. Chairs the Programme Complaints
Committee and is a member of the Governors’ Commercial
Committee.Vice-Chairman of Deutsche Asset Management
Group Ltd. Chairman of the Board of Trustees of the National
Museums of Scotland and President of the British Associationof Friends of Museums.

Dame Pauline Neville-Jones DCMG Born 1939. Governor
since January 1998. Chairs the Audit Committee and Governors’
World Service Consultative Group. She is a member of theProgramme Complaints Committee. A career member of the
Diplomatic Service from 1963 to 1996, she was a politicaldirector of the Foreign and Commonwealth Office from 1994
until her retirement.

Ranjit Sondhi CBE Born 1950. Governor since 1998 withspecial responsibility for the English Regions. Chairman of the
English National Forum and a member of the Programme
Complaints Committee. Senior Lecturer at the University ofBirmingham, Westhill and also serves on various Government
Advisory Committees.Trustee of the National Gallery. Former
Deputy Chairman of the Commission for Racial Equality and has
also served on the Independent Broadcasting Authority and theRadio Authority.

Heather Rabbatts CBE Born 1955. Governor since March
1999. Member of the Fair Trading Compliance Committee.
A former Chief Executive of the London Borough of Lambeth,
she has had a substantial career in public services management.
A Governor of the LSE and an education enthusiast. Chief
Executive of Impower plc providing internet consultancy
and applications to the Government sector.

Tony Young Born 1942. Governor since August 1998. Memberof the Fair Trading Compliance Committee. Senior Deputy
General Secretary of the Communication Workers Union.
Member of the TUC General Council. European Co-Presidentof the Union Network International. Member of the
Employment Tribunal Steering Board.

Annual Report and Accounts 2000/2001

5

Executive Committee
Director-General’s overview
My first year at the BBC has been a year of change, a year
when we have begun to make real savings on the cost of theBBC’s overhead; a year when we have outlined radical plans
to alter our digital television services and to launch a series of
new digital radio services; and a year when we have developed
a new strategy for our role in new media.
But yet bigger changes will come over the next two years
when we increase spending on programmes and services bymore than £450 million a year, the largest increase in the
BBC’s history.
The BBC’s task is to make sure we spend our money well, toensure we improve the services we give to the people who
pay for the BBC – the licence fee payers. We are planninglarge increases in expenditure on BBC One – largely in dramaand sport – on programme making in the Nations and in the
English Regions and, in particular, in the area of education.

We have been able to make these changes, partly because of
the increase in the licence fee given to us by the Government;
partly because of savings we are making from the One BBC
restructure; and finally because of additional commercial income
we are receiving from BBC Worldwide, BBC Resources and
BBC Technology.
We are still waiting for the Government to give us the go-ahead
to launch our new television and radio services, and as soon
as they do we’ll move fast and make the new services available
as soon as possible.
In the meantime we have had some great programming
successes over the last year of which perhaps the mostimpressive was the BBC’s coverage of the Olympic Gamesin the autumn of 2000.The International Olympic Committee
gave the BBC its Gold Award, voting our coverage the bestof any broadcaster in the world and rightly so. It was public
service broadcasting at its very best.

Greg Dyke Director-General

Above, top: Greg Dyke Director-General. Joined the
BBC as Director-General designate in November
1999. Previously Chairman and Chief Executiveof Pearson Television and an executive directorof Pearson Plc.
Above: Alan Yentob Director, Drama,
Entertainment and Children. Director of Television
1997 to 2000. Director of Programmes 1996 to
1997. Former Controller of BBC One and BBC Two.

6

Annual Report and Accounts 2000/2001

Above, top: Jenny Abramsky Director, Radio andMusic. Former Director of BBC Continuous News.
Founding Controller of Radio Five Live. Editor,
News and Current Affairs Radio, 1987 to 1993.

Above, top: John Smith Director, Finance, Property
and Business Affairs. Director of Zurich Financial
Services; member of Accounting Standards Board
Public Sector and Not-for-Profit Committee.

Above: Mark Thompson Appointed Director,
Television, April 2000. Former Director of National
and Regional Broadcasting. Former Controller,
BBC Two. Following experience in News, was Headof Features and then Head of Factual Programmes.

Above: Carolyn Fairbairn Appointed Director,
Strategy, May 2000.Took on responsibility forDistribution April 2001. Controller of Corporate
Strategy from 1999 to 2000, and formerly Strategy
Director at BBC Worldwide Limited.

Above, top: Peter Salmon Appointed Director,
Sport, November 2000*. Controller, BBC One 1997
to 2000. Former Director of Programmes, Granada
Television. *Richard Sambrook was acting Director,
Sport, March to October 2000.

Above, top: Glenwyn Benson Appointed Joint
Director, Factual and Learning, March 2001*.
Former Head of BBC Science. *Replaced Lorraine
Heggessey, Joint Director, Factual and Learning,
April to September 2000.

Above: Pat Loughrey Appointed Director,
Nations and Regions, May 2000. Controller of BBC
Northern Ireland 1994 to 2000. Previously Headof Programmes, Northern Ireland.

Above: Philip Langsdale Appointed Director,
BBC Technology Holdings Limited, April 2001.
Former Director of Distribution and Technology,
from April 2000. Formerly IT Director, Cable &Wireless Communications Ltd.

Above, top: Richard Sambrook Appointed
Director, BBC News, March 2001*. Former Deputy
Director, News, Head of Newsgathering, Deputy
Editor 9 O’Clock News. *Replaced Tony Hall, Director,
BBC News to March 2001.

Above, top: Rupert Gavin Chief Executive, BBC
Worldwide Limited. Former Managing Director,
Consumer Division, BT. Previously Deputy Managing
Director, Dixons Stores group.

Above: Margaret Salmon (left April 2001)
Chief Executive of BBC Resources Limited.
Note: Sophie Turner-Laing was Acting Director,
Marketing and Communications, January to
May 2001, taking over from Matthew Bannister(Director, May to December 2000).

Above: Michael Stevenson Appointed Joint
Director, Factual and Learning, April 2000. Directorof BBC Education 1999 to 2000. Former Deputy
Director, National and Regional Broadcasting.
Secretary of the BBC 1992 to 1996.

Above, top: Ashley Highfield Appointed Director,
New Media, October 2000*. Executive
Vice-President and General Manager, Flextech
International 1996 to 2000. Head of IT & New
Media, NBC Europe, 1995 to 1996. *Mark Byford
took responsibility for New Media March to
September 2000.
Above: Mark Byford Director, BBC World Service.
Former Director of Regional Broadcasting. Previously
news journalist, documentary producer and editor.

Above, top: Caroline Thomson Appointed
Director, Public Policy, August 2000*. Deputy Chief
Executive, BBC World Service, 1997 to July 2000.
Strategy and Corporate Affairs Director, BBC World
Service, 1995 to 1997. Head of Corporate Affairs,
Channel 4, 1990 to 1995. *Replaced Patricia Hodgson,
Director, Public Policy, from April to August 2000.
Above: Gareth Jones (left June 2001) Director,
Human Resources and Internal Communications.

Annual Report and Accounts 2000/2001

7

Review of the Year: The BBC in 2000/2001
For the BBC, 2000/2001 was a year both of achievement and of transition.
Under the new Director-General, Greg Dyke, we introduced
a new structure and a new commissioning process. We
reduced the amount we spent on running the organisation by£45 million. We developed plans for new digital radio, televisionand online services and put £165 million more into programmes.
Overall, the BBC was better valued by its audiences and ourservices still reached 94% of the population every week, despite
the proliferation of competition. And, at 28.5p per day, the licencefee costs less than the average price of a daily newspaper (39.5p).
We achieved record radio audiences at home and abroad,and attracted more users than ever to BBC Online. BBC One’s

share of viewing fell year on year, but BBC Two’s share rose.
We made some great programmes and continued to take thelion’s share of awards. We met the editorial standards expectedof us, despite a number of controversial programmes, andsuccessfully maintained our independence from political andcommercial pressure.
Over the next two years, we are committed to the biggest
increase in spending on programmes in our history. And, subject
to Government approval, we will launch new digital services
which will enable us to focus on particular interests, such as
the arts, and on particular audiences, including the young, andpeople from ethnic minority backgrounds.

● We spent more of our income on
programmes and services● We created great award-winning
programmes on radio and television.
In 2000/2001 we increased the proportion of income thatFor 2000/2001 we collected:
we spent on programme content from 76% to 81%..
●●●

IncomeExpenditureTV£1,324m

Licence fee£2,371m

Nations and Regions
£365m

Radio
£290m
Digital£144m
Online £52m

Worldwide cash flow
£96m
World Service
£205m

8

Transmission andcollection costs£250m

World Service£195m

Annual Report and Accounts 2000/2001● BBC One £922m● BBC Two £402m● Nations’ and Regions’television £202m● Nations’ and Local
Radio £163m● BBC Radio 1 £42m
● BBC Radio 2 £40m
● BBC Radio 3 £54m
● BBC Radio 4 £85m
● BBC Radio Five
Live £69m● BBC Parliament £3m● BBC Choice £46m*● BBC News 24 £48m
● BBC Knowledge £19m
● BBC One and Two
Digital £10m
● Digital Text andInteractive £13m
● Digital radio £5m● BBC Online £52m
● Licence fee collection
costs £132m● Transmission costs £118m

●
●
●
●
●
●
●
●

The Golden Rose of Montreux
Two Silver Roses of Montreux
The International Olympic Committee ‘5 Gold Rings’
for Best Olympic Coverage in the WorldSix BAFTA Programme awards
Eight BAFTA Craft awards
Three BAFTA Film awards
Four BAFTA Interactive Entertainment awards
23 Sony Gold radio awards
14 Royal Television Society Programme awards
10 Royal Television Society Journalism awards
Two International Emmys

BBC spend by genre 2000/2001
News
Factual and Learning
Entertainment
Drama
Sport
Music and Arts
Speech – Local RadioChildren

Total £2,425m*Includes a block of children’s
programmes shown between
6am and 6pm each day.
World Service
World Service is funded separately by the Foreign and Commonwealth
Office through a Grant-in-Aid.This cannot be used to cross-subsidise
other parts of the BBC and is only used to fund the World Service.

Millions
342
308
294
268
256
133
101
60

● We halted a decline in news viewing
by moving BBC One’s late news
to 10pm.
Combined 15-minute weekly reach of BBC Television● Despite increasing competition, ourservices reached 94% of the population.
and Radio services 1999/2000 to 2000/2001
%
94.4
94.9

2000/2001
1999/2000

BBC One late news audiences 1996/1997 to
2000/2001
Averageaudience
Millions
5.1
5.0
5.2
5.7
6.0

Source: BARB, RAJAR, Age 4+, average reach for the year

2000/2001
1999/2000
1998/1999
1997/1998
1996/1997● The BBC was more highly valued by
its audiences.

Source: BARB weeks 42 to 13

Approval of both the BBC’s services and of the BBC asan organisation overall improved over the year, with bothmeasures higher than the same time last year.
Approval: BBC overall and BBC services 1999/2000
to 2000/2001● We achieved record radio audiences athome and abroad.
Total BBC Radio share, Quarter 1 2001

Mean score out of 10
7.5
6.9

7.0

BBC Ten O’Clock NewsBBC Nine O’Clock NewsBBC Nine O’Clock NewsBBC Nine O’Clock NewsBBC Nine O’Clock News

7.1

BBC services

Source: RAJAR, Age 15+

6.8

Listening to BBC World Service 2000 and 2001

6.5

Averageaudience
Millions
153
151

6.4
BBC overall

6.0

5.5
A M J

%
52.1
51.0

2001
2000

2001
2000
Source: BBC World Service

J A S O N D J F M A M J
1999/2000

J A S O N D J F
2000/2001

M

Source: Pan BBC Tracking Study. Note: exaggerated scale.

● We saw BBC One’s share of viewing fallyear on year – but also saw BBC Two’s
share rise.
BBC One and BBC Two change in share
1999/2000 to 2000/2001
BBC One
BBC Two

2000/2001
1999/2000
2000/2001
1999/2000

%
26.8
28.3
11.0
10.8

● We attracted more users than ever to
BBC Online.
BBC Online has the highest reach of any content sitein Europe.The total number of BBC Online users grewby 1.1 million over the year to a record 4.9 million in
March 2001.
BBC Online reach of UK internet users
April 1999 to March 2001
Millions
5

4.9

4

3.8

Source: BARB

3
2
1
0
A M J

J A S O N D J F M A M J
1999/2000

J A S O N D J F
2000/2001

M

Annual Report and Accounts 2000/2001

9

Source: Server logs

Review of the Year: Public Services
The BBC Governors indicated in the Annual Report last yearthat performance in 2000/2001 would be assessed against
six criteria. BBC services should:
●
●
●
●

●
●

provide high-quality programmes or content;
uphold the BBC’s editorial values;
offer a distinctive mix of programming or content;
contribute to the achievement of the BBC’s public
objectives;demonstrate public value or appeal to licence payers; andbe free at the point of use and universally accessible.

Total BBC Television share accounts for over 38% of all
viewing in the UK, slightly lower than in 1999/2000.
Total Television share 2000/2001
■
■
■
■
■
■

BBC One 26.8%
BBC Two 11.0%
ITV 28.9%
Channel 4 10.3%
Channel 5 5.7%
Other channels 17.3%

Source: BARB

This report was compiled after the Board of Governors
and the Executive Committee met in May 2001 to review
the BBC’s year. It tells the story of the year with thesecriteria in mind, and sets out the Governors’ assessment of
how well the BBC performed, what the weaknesses were,and how they should be addressed.

Note:Total BBC Television
share was 38.2% including
digital channels (0.4%).
1999/2000 39.1%.

Billy Elliot won three BAFTA
Film awards and three Oscar
nominations.

BBC Television introduced
viewers to Tate Modern, Britain’s
new museum of modern art.

Television
We have had many great moments on
BBC television over the year – from theshooting of Phil Mitchell in EastEnders,to Proms in the Park, from the death ofVictor Meldrew in One Foot in the Grave
to Denise Lewis draped in her Union Jackat the Sydney Olympics.
BBC Television has seen some new comedy working well,particularly Happiness and Coupling on BBC Two.There has
also been the astonishing success of The Weakest Link, brave
investigative documentaries, and powerful drama such as
Clocking Off. But did the BBC’s television programmes andchannels meet the standards that their viewers expect?
The BBC makes thousands of television programmes every year.
It experiments and it takes risks with programmes like Care andTinsel Town. Inevitably some programmes do not work as well asothers.The adaptation of Kingsley Amis’s Take a Girl Like You did
not draw the audiences the BBC would have liked, but it was ahighly commendable attempt to strike out in new directions forcostume drama. And there were encouraging signs, particularly
in popular drama, where programmes like Holby City, Monarch of
the Glen and the lunchtime serial, Doctors, did particularly well.

10 Annual Report and Accounts 2000/2001

When we do fall short, audiences usually let us know – as they
did when the Sports Review of the Year came from a studio setthat could not accommodate wheelchair athlete Tanni GreyThompson. But overall, the main networks – BBC One and
BBC Two – more than matched the expectations of viewers. A
History of Britain, Robert Winston’s Superhuman, and the landmark
arts series Changing Stages were seen for what they were –quality programmes in which we had invested time and money.
On the other hand, a quickly-made documentary about loneyachtswoman Ellen MacArthur and the latest adventures ofLouis Theroux showed that good programmes do not have to
be long in gestation.
New programmes often take time to bed in. Attachments,
an innovative internet-linked serial about a dot.com company,
did not engage first time around, but it will be returning.
Encouragingly, My Family was a first time hit, while thedisappointing Office Gossip was a reminder of how difficult
sitcom is to get right.The new quirky BBC Two comedy,
Marion and Geoff, was highly regarded, as were establishedfavourites like Tweenies (research suggests that this is oneof the best-appreciated programmes the BBC has ever made)and EastEnders, which has gone from strength to strength.
Of our digital-only channels, BBC Choice and BBC Knowledge
began to deliver high-quality programmes.These included Mel B:
The Players’ Club and Liquid News, a showbiz news programme, on
BBC Choice; and Kino, the best of world cinema, on BBC Knowledge.

TV chef Jamie Oliver supporting
BBC Children in Need.
In 2000 the BBC’s charity
distributed £18.5 million to
19,000 groups, charities andinstitutions for the benefit ofyoung people. In 2001 we
expect to share out morethan £20 million.

Olympic gold medallist
Denise Lewis, winner of theheptathlon in Sydney.

EastEnders went from strength
to strength: the Who Shot Phil?
episode attracted over
18 million viewers.

The BBC’s performance was underlined by the international
success of Billy Elliot, winner of three film BAFTAs and three
Oscar nominations, plus a string of Royal Television Society
awards, BAFTA prizes for a range of outstanding sport, drama
and factual programmes, and The Golden Rose of Montreux for
Lenny Henry in Pieces.They followed Emmy awards for Gloriana:
A Film about Elizabeth I’s relationship with the Earl of Essex, andthe children’s serial The Magician’s House.

core networks needed to be strengthened, and particularly themix on BBC One.

Overall the BBC’s editorial standards have been maintained –for example in Care, Kieran Prendiville’s film on abuse inchildren’s homes which, like the accompanying discussion
programmes on television and radio, handled a difficult issue
with great sensitivity.

The daytime schedules on the main channels have been
extraordinarily successful. Alongside Doctors, there were a
revived Ready, Steady, Cook, and BBC Two’s biggest hit of theyear, The Weakest Link.

The BBC demonstrated its independence on some challenging
programmes, including the Holocaust memorial coverage inJanuary this year, and Rebel Heart, a romance by Ronan Bennett,
set against the backdrop of the Easter Rising. Both touched raw
nerves, and drew considerable criticism prior to transmission.
Anne Robinson’s comments on Room 101 about Welsh people
became a cause célèbre.The BBC’s Programme Complaints Unit
and the Broadcasting Standards Commission did not uphold
subsequent complaints.The BBC considered that the remarks
fell within the bounds of acceptable banter, but recognised thesensitivity of questions of national identity.
Last year the Governors said the mix of programming on the

It takes time to develop fresh programmes for a network, andit will be 18 months before audiences feel the full benefit of
new investment on BBC One. But progress has been made.
There is less light factual programming, more drama, comedy,
entertainment and landmark factual content.

Strong seasons for Horizon,Timewatch (which had its biggest
audience for 19 years), and Everyman, and an excellent year
in natural history programmes (Natural World, Congo andState of the Planet) showed the BBC’s outstanding strengthin specialist factual content.
The BBC exists to inform, educate and entertain and, in broad
terms, our television programming met these purposes. It is also
the BBC’s role to reflect events of importance to the UK asa whole. So we brought the Tate Modern, a new nationaltreasure, to the attention of audiences, covering the opening of
the building on BBC One and BBC Two. Cameras were also atanniversaries of Dunkirk and the Battle of Britain, and a numberof programmes marked the Queen Mother’s 100th birthday.
Many people were disappointed, however, by the decision not

Annual Report and Accounts 2000/2001 11

Review of the Year: Public Services

The popularity of EastEnders continues, with the most popular episode,Mel and Steve’s wedding, and the shooting of Phil, drawing 18 million viewers.
Top ten programmes on BBC One 2000/2001
Audience
Millions
18.01
14.56
12.84
11.47
11.40
11.25
11.25
10.69
10.40
10.14

EastEnders
Euro 2000: England v Romania
One Foot in the Grave
Comic Relief 2001
The Weakest Link
I Don’t Believe It
Film: Deep Impact
Film: Men in Black
Casualty
Antiques Roadshow
Source: BARB. Note: For series, highest individual programme audience shown.

How Jesus may have looked.
An image from Son of God,
the acclaimed three-part series
for BBC One.

The man himself: Lenny Henryin Pieces won The Golden Roseof Montreux.

Robert Lindsay and Zoe
Wanamaker in the popular new
comedy, My Family.

to cover the birthday pageant, and we now recognise that thisdecision was a mistake.
Much is expected of the BBC as a public service broadcaster.
Last year the General Synod of the Church of Englandquestioned our commitment to religious broadcasting followingchanges to the television schedules. In fact there will be no
diminution in the BBC’s provision of religious programmes –either in budget or in hours.The recent Son of God, an expensive
and highly appreciated series for BBC One, is an example of this,and audiences can expect more high-profile, quality programmes.
BBC Two will have an Islam season this autumn.
Similarly, the BBC has reaffirmed its commitment to arts,
guaranteeing network hours and budget for arts programming.
During the year we have seen some remarkable arts output –including the innovative Travels with my Tutu (dance) and WalkOn By, the history of popular song.
BBC services have the difficult task of satisfying particularinterests while still, at key points in the schedule, appealing to
the audience in large numbers. It was good to see BBC Sport
doing both during the Euro 2000 football finals and the
Olympic Games. In a good year for BBC Sport, we alsocaught the emotion of Pete Sampras’s seventh Wimbledon title,
and Venus Williams’s first,Tiger Woods winning The Open,and Liverpool’s spectacular run in the UEFA Cup.

12 Annual Report and Accounts 2000/2001

In October we moved the late news bulletin to ten o’clockon BBC One to arrest the decline in news viewing.The movealso opened the way for a stronger, more distinctive schedule.
The Weakest Link became a fixture on BBC One as well as
on BBC Two. Scheduled back to back, One Foot in the Graveand The Royle Family drew the large audiences they deserve.
Similarly, popular drama shown in two parts enabled thechannel to give added impact to programmes like Silent Witness
and the new Crime Doubles. BBC One will soon be running
EastEnders, its most widely appreciated drama, four nights
a week.
But at some important times we did not connect with big
audiences as we would have wished. We won the traditional
Christmas ratings battle, but viewing was disappointing
considering the range of original drama, entertainment andfactual programming on offer, including Gentlemen’s Relish(comedy-drama with Billy Connolly), the award-winning Lenny
Henry in Pieces, and a Walking with Dinosaurs special on the lifeof a single allosaurus.
Across the year, BBC One’s all-hours share fell by 1.6%, andpeak share by 1.5%. We expected our overall television shareto fall with the spread of multi-channel television and ITV’s
all-hours share fell by almost the same amount as BBC One’s.
Nonetheless, strong programmes on BBC One remaina priority.

Entertainment and factual programmes featured
strongly in the top ten programmes on BBC Two during
2000/2001.
Top ten programmes on BBC Two 2000/2001
Audience
Millions
6.59
5.77
5.76
5.54
5.47
5.41
5.10
5.09
4.74
4.68

The Weakest Link Celebrity Special
Have I Got News For You
World Snooker Final (Williams v Stevens)
The Weakest Link
Have I Got Buzzcocks All OverThe Simpsons
Congo
HorizonThe Simpsons: America’s First Family
Journeys to the Bottom of the Sea
Source: BARB. Note: For series, highest individual programme audience shown.

Trouble in the sausage industry.
Blood on the Carpet offered
a new angle on business.
The end of the dream. England
lose to Romania, and areknocked out of Euro 2000.
The giant river otter ofBrazil, in Andes to Amazon,on BBC Two.

We know that the competitive challenge will grow. ITV has
declared its intention to target the BBC One audience further,and while BBC One will invest in more popular programmes,
it will also continue to offer the quality landmark programming– such as Superhuman and Son of God in prime time – that sets
the network apart.
Importantly, public perception of the channel (and of the BBC
overall) improved during the year, and news viewing on television
generally has increased as a result of the new schedule. We
want to reposition BBC One as the flagship of a suite of eight
proposed digital services (see pages 40 to 43), but it will taketime to complete the overhaul.This year a further £67 million
will go into drama, entertainment and factual programming for
BBC One, and viewers can expect to see the full benefit overthe next 18 months.
BBC Two had a very impressive year. It had good audiences for
A History of Britain, What the Romans Did for Us and the I Love...
(the 70s and 80s) nostalgia programmes.The digital channels
BBC Choice and BBC Knowledge (which, if our plans areapproved, will be replaced by BBCs Three and Four), aregradually building share and reach.

Licence payers are funding BBC digital services already, anddigital take-up has been rapid. But many people are put off
because they see digital as a pay-TV service. Access to BBC
services without charge is an underlying principle of public
service, and we will be promoting the message that viewers
who have the correct equipment do not have to pay
subscriptions in order to receive the BBC.
We must also be accessible in other ways. Everyone should
enjoy and value the BBC, which is why we have increased thenumber of hours that carry British Sign Language interpretationfrom just over two hours to more than eight hours a week. We
are also devising new programmes and services that will appeal
to young people and people from black and Asian backgrounds,
currently under-served by BBC Television.
We are also tackling a weakness in the way the BBC serves
and reflects the Midlands and North of England on television.
Clocking Off, the BAFTA-winning drama about a Northern
textile factory and its workers, is just one of a number ofcurrent and forthcoming programmes which aim to address
this.

Like BBC One, these channels will also benefit from newinvestment. In all, the BBC will put an additional £265 million
into its televison channels over the next two years – the biggest
financial boost for television in the BBC’s history.

Annual Report and Accounts 2000/2001 13

Review of the Year: Public Services

Chris Moyles hosts One Big
Sunday for Radio 1.

Sara Cox, Radio 1’s
Breakfast Show
presenter.

Prince Charles threw a party tocelebrate the 50th anniversaryof The Archers.

Radio
It was a remarkable year for BBC Radio,in which the appeal of the network, Nations’and local services has grown.

it sharpens its focus on 15 to 24 year-olds, has lost listeners.
Reach in the first quarter of 2001 was down by around 9%
on the same quarter last year. However it is hoped that changes
introduced in March will bring listeners back. Radio Five Livesaw average weekly reach fall by half a million in the first six
months of the year. Listening has, however, increased by 300,000
since the summer.

‘I thought the idea was ludicrous. But we switched on, andI am delighted to say that right at the very end the entire family
was still listening...’ One listener’s comment after Radio 4’seight-hour reading of an entire Harry Potter children’s novel
on Boxing Day. It broke all the rules of broadcasting – but some
3.4 million listeners tuned in, and around 385,000 stayed frombeginning to end.

The BBC’s radio services play an important part in fulfilling its
public service role. Radio 4 and Radio Five Live, for example,
provide high-quality news and debate at key times of day,and Radio 1 is an important link with young audiences, offering
information about careers and social and health issues, as well
as a distinctive and wide range of popular music.

All of the networks – from Radio 1 with its massive outdoor
concerts to Radio Five Live with its special travel service for UK
fans at Euro 2000 (broadcast on local frequencies in Belgium
and the Netherlands) – did fresh, inventive things, while keeping
faith with their audiences.

The networks also offer extra value through their websites.
Relaunched around Christmas, the sites now attract over
24 million page impressions a month (up from 10 million).
All the networks offer live streaming, webcams, and a catch-up
service for people who miss programmes in the regular schedule.

The latest research shows that in the first quarter of 2001 theBBC accounted for 52.1% of listening across the UK in the
average week, compared with 51% a year ago. Radio 2, named
Sony Radio Academy UK Station of the Year, increased its reachto a record 10.9 million over this period. Radio 4’s audienceshare and reach were up too, and Radio 3 held steady. Overthe past six months Radio 1, which is in a process of change as

There are still audiences the BBC does not serve adequately.
We await Government approval for a new digital radio station
offering black urban music (a genre attractive to young peopleof all ethnic backgrounds), and we plan to offer the Asian
Network, originally a radio service for the Midlands, across the
UK on digital radio.The Asian Network is already available
across the UK on digital satellite and the internet.

14 Annual Report and Accounts 2000/2001

Jan Ravens and Jon Culshaw
collect the Sony Comedy Award
from Sir Norman Wisdom forRadio 4’s Dead Ringers.

Jude Law recording ’Tis Pity
She’s a Whore for Radio 3.

BBC Radio achieved a record 52.1% share of all listening
during Quarter 1 2001.
Total BBC Radio share 2000/2001
1.1
Q1 2001
Q1 2000

12.2
11.1

Source: RAJAR 15+■ Nations’ and Local Radio■ Radio 1■ Radio 2

9.1
9.9

14.1
13.3

11.3
10.9

Total
BBC Radio
share
%
4.3
52.1
4.4
51.0

Proms in the Park concerts in
London, Birmingham andLiverpool drew an estimated
63,000 revellers.

1.4■ Radio 3■ Radio 4■ Radio Five LiveAt times the networks were let down by technology. Radio 4
experienced breaks in transmission, and a fire put Radio 2 off the
air recently. Steps are being taken to replace ageing equipment.
Radio 1
Radio 1 aims to be the number one youth music service in theUK, supporting a wide range of new artists and tracks. Despitesome recent audience loss, the station continues to reach over
50% of its 15 to 24 year-old target market, and it also increased
its reach among under 15 year-olds.
A significant innovation was a summer of live events, raising
the profile of the network and building audience ties. Most
notable was One Big Sunday, a series of events at urban
locations around the UK.They drew crowds of up to 80,000
people (compared with the average of 15,000 for the Radio 1
Roadshows, which they replaced).The Radio 1 Dance Parties
enjoyed similar success – but all were dwarfed by the Love
Parade in Leeds, which drew an estimated 250,000 people.
Radio 2
Radio 2 built on its extraordinary success of recent years. It is
the most listened-to station in the UK, accounting for 14.1%
of all radio listening (first quarter of 2001, age 15+). Awarenessof the station is as high as it has ever been among the coretarget group (35 to 54 year-olds). Terry Wogan’s Breakfast Showis stronger than ever, achieving a record audience of 6.3 million,
and Steve Wright in the Afternoon reached up to 5 million a week.

The emphasis moved towards live music, with concerts aroundthe UK through the year.The station also offered a broader
range of sounds with five new genres (including reggae andpunk) added to an already long list.
The network also provided topical discussion, documentary andother programming. On average, more than 2 million people –17% of listeners at that time of day – listened to Good Morning
Sunday, the religious magazine programme.
Radio 3
Radio 3 managed considerable change over the year without
losing its established audience. Reach remained steady at around2 million as the emphasis continued to move towards broader
cultural content at certain times of the week.
Key changes included the introduction of the award-winning
Late Junction four nights a week, offering an esoteric range ofmusic not traditionally associated with Radio 3.The network
also responded to listeners’ views about jazz, and two
new programmes, Jazz Legends and Jazz Line-Up, were wellreceived.
A composer has been attached to each of the six performing
groups (five BBC orchestras and the BBC Singers), reinforcing
Radio 3’s reputation as the world’s leading commissioner of
new classical music.

Annual Report and Accounts 2000/2001 15

Review of the Year: Public Services

Mark Lamarr, one of the voices
broadening the appeal of Radio2, the most listened-to stationin the UK.

Andy Kershaw in Haiti, inRadio 4’s international current
affairs programme, Crossing
Continents.

Commentator Alan Green,a voice of football onRadio Five Live.

Radio 4
The weekly reach of Radio 4 remains high at just over 9 million
in what has been a period of consolidation following two yearsof considerable change.
Investigative and other factual strands performed well alongwith the news programmes – from Today to The World Tonight –that are central to Radio 4. And the station’s coverage of thefoot and mouth crisis – through The Archers, Farming Today,
You and Yours and The Food Programme, was outstanding.
Radio comedy (an important breeding ground for television
talent) had new hits in Sunday Format, Dead Ringers and Little
Britain. Outstanding drama included 2000 Tales (modern-day
stories on the lines of the Canterbury Tales, aired across Radio 3
as well as 4) and Child of Our Time, a series of plays built aroundthe real experiences of children in troubled parts of the world.
Radio Five Live
Five Live, winner of two Sony Awards for sport, is an importantpart of the BBC’s sports service for licence payers, and during
the year key rights agreements were secured – notably Premier
League football (three years) and Formula One motor racing(four years) – ensuring continued access to top-flight live sport
for audiences across the UK.

16 Annual Report and Accounts 2000/2001

The news-and-sport mix was at its best at the year’s two big
set pieces, the Euro 2000 football finals and the Olympic
Games.The network also tackled serious topical issues, including
homelessness, race and, following the murder of Sarah Payne,
vigilante behaviour in Portsmouth.
Asian Network
This service of news, features, entertainment, music, religious
and cultural programming for people of Asian backgroundis expanding. It started life as a Midlands service in 1996, but
is now being offered in Peterborough, South Yorkshire, West
Yorkshire, Lancashire and Derbyshire and across the UK on
satellite and the internet. A nation-wide digital Asian Network is
one of the new services we are proposing (see pages 40 to 43).
BBC Proms
The BBC Proms had a record year. More than 115 works new
to The Proms were played in 72 Proms and eight lunchtime
concerts. Nearly 260,000 people attended. All the Prom
Concerts were broadcast on Radio 3, and selected concerts
were also shown on BBC Two and BBC One. Many werealso streamed online. Events on the Last Night included Promsin the Park (London) and outdoor concerts in Birmingham
and Liverpool.There were also links to live events in Hanoverand Paris.

Increases in approval can be seen across mostareas of the UK, especially in Northern Irelandand Scotland.
Approval of the BBC in the Nations and English
Regions 1999/2000 and 2000/2001
Mean score out of 10
6.7
6.6
6.6
6.6
6.4
6.2
6.6
6.5
6.4
6.1
6.6
6.5
6.2
5.9

South

2000/2001
1999/2000
Midlands
2000/2001
1999/2000
North
2000/2001
1999/2000
England total
2000/2001
1999/2000
Scotland
2000/2001
1999/2000
Wales
2000/2001
1999/2000
Northern Ireland 2000/2001
1999/2000
Source: Pan BBC tracking study

BBC Radio Foyle was named
Sony Station of the Year for thesecond consecutive year.

Karen Dunbar, the Poet Lady in
BBC Scotland’s Chewin’ the Fat.

Nations and Regions
One of the BBC’s prime responsibilities is toprovide high-quality news, information andprogrammes of relevance to local, regionaland national communities. In the past year
the BBC’s Nations and Regions division has
done that with remarkable success.
BBC Scotland, BBC Wales and BBC Northern Ireland benefitedin 1999 from a £21 million investment to meet the challengesof devolution, including coverage of the new Parliament andNational Assemblies.There was also a new emphasis on regional
news across the UK on television.This has borne fruit.Together,
the regional television news programmes at 6.30pm now attract
nearly 7 million viewers – more than any other news slot on
British television.
Viewers also benefit from a seven-minute bulletin of local
news after the 10pm national and international news. Other
programmes for viewers in Scotland, Wales and Northern
Ireland inherit a good audience at 10.35. Chewin’ the Fat(Scotland), The Exchange with Huw Edwards (Wales) andSpotlight (Northern Ireland) have done particularly well, drawing
audiences significantly above the network average for that timeof the evening.

Radio in the Nations and Regions broke current audience
records, achieving a 12.2% share of all radio listening at theend of the year (first quarter of 2001, age 15+).The numberof people listening weekly rose by three-quarters of a million
to 10.6 million.
BBC Scotland, Wales and Northern Ireland also offer
programmes to the UK-wide networks which reflect local
people, talent, culture and issues to a broader audience. When
we fail to do so, appreciation of the BBC falls – as we havediscovered in the North of England.
In the past year Scotland, Wales and Northern Ireland havedelivered some notable successes – including Ellen MacArthur:
Sailing through Heaven and Hell (from BBC Wales); Castaway
2000 (Scotland); and Patrick Kielty Almost Live (Northern
Ireland). Nonetheless, overall levels of network deliveries fromboth Northern Ireland and Wales were disappointing. From
now on, a new commissioning process with minimum output
guarantees will enable centres away from London to plan betterand build for future success.
Nations’ and regions’ online services have come into their own,with a sixfold increase in traffic to local sites. Developments
included the first local Where You Live sites in England.Thirteen
had opened by the end of the year, and 37 more will follow
in the next 18 months.

Annual Report and Accounts 2000/2001 17

Review of the Year: Public Services

BBC Local Radio won praise
for the service it provided
to communities hit by floods
last autumn.

BBC Scotland’s Castaway 2000
accounted for 14 hours of
television across the year,
drawing an average audienceof 6.2 million.

BBC Scotland
As well as responding to the demands of devolution at home,
BBC Scotland made a record contribution to the UK-wide
networks.
Network contributions included Monarch of the Glen, Two
Thousand Acres of Sky, Tinsel Town and, for children, Hubbub andBarmy Aunt Boomerang.
For the home audience, entertainment output on television
increased to balance the higher level of political coverage.
Popular successes were Chewin’ the Fat (which also had a
network airing), Hoots (a history of Scottish comedy), and
The Goalden Years (sport/nostalgia), while live football and golf
drew large audiences. Entertainment and drama in particular will
be further enhanced as a result of new investment in Scotland
in the current year. Plans include a bi-weekly television drama.
In news and current affairs, audiences for Holyrood Live increased
during the year. But in a highly competitive market Reporting
Scotland came under pressure, and its audience dipped at theend of the year.
By the year’s end, Radio Scotland was the most listened-to
station in Scotland. Radio nan Gaidheal broadened its schedulewith the first Gaelic radio drama to be produced for many years.

BBC Wales
It was a transitional year, with some memorable highlights,
for BBC Wales Television.The drama series Belonging, Owen
Money’s talent showcase Just Up Your Street and live Six Nations
rugby matches improved significantly on network share.The
BBC’s Welsh language programmes were among the mostpopular aired on S4C – notably Pobol y Cwm. Wales Today,
the evening TV news programme, continues to outperform its
ITV rival, and Dragon’s Eye has done well too. BBC Radio Wales
was particularly strong in the morning with Good Morning Walesand Roy Noble, and overall performance, though variable,
improved during the year. BBC Radio Cymru now reaches
42% of all fluent Welsh speakers – up from 36% last year.
Despite a disappointingly low level of network deliveries, there
were some outstanding network television contributions from
BBC Wales, including Panorama – The Power to Abuse; Care,a tough award-winning drama about abuse in children’s homes,
made in conjunction with BBC Drama, and This Land.
BBC Northern Ireland
BBC Northern Ireland provided authoritative and awardwinning coverage in news and current affairs, significantly
expanded its output in entertainment and documentaries, andprovided outstanding radio services.
Radio Ulster with its opt-out, Radio Foyle, continued to be oneof the highest performing stations in the UK, with a 37% weekly

18 Annual Report and Accounts 2000/2001

Yachtswoman Ellen MacArthur’ssolo voyage was the subjectof a BBC Wales documentaryfor BBC One.

Rebel Heart, made by
BBC Northern Ireland for
BBC One.
Jon Gaunt from BBC ThreeCounties Radio with his recordbreaking three Sony Goldawards.

Radio Wales organised a dayof music and events for a family
audience at Cardiff Bay,
marking Midsummer’s Day,
2000.

reach and a 28.8% share. Radio Foyle, broadcasting in the NorthWest of Northern Ireland, was named Sony Station of the Yearin its category for the second consecutive year.

population.The value of these services is recognised by theBBC’s promise to protect local radio budgets in the lifetimeof the current Charter.

For the Northern Ireland audience, the current affairs
programme Spotlight won Royal Television Society Awards for
two of its investigations, Life and Death of an IRA Quartermasterand Capitol Hill. BBC Northern Ireland’s Newsline succeeded in
narrowing the gap with its main UTV rival, and political output
expanded to cover the devolved Assembly and twists and turns
in the peace process.

The first of the Where You Live local online sites also proved
their worth in times of crisis. During the foot and mouth
epidemic weekly page impressions to the new Devon site
jumped by around 600% to well over 100,000.

Fiche La Ag Fas, a television series about students learning Irish
in Donegal, complemented Irish language radio output. A TV
documentary for Ulster-Scots speakers is being made, and there
are plans to pilot similar radio programming.
Network contributions included Patrick Kielty Almost Live andMcCready and Daughter (both of which return with new series),
Rebel Heart and Ballykissangel, in its final series.
English Regions
In a year marked by widespread domestic crises, the BBC’s local
and regional services in England performed particularly well.
The ten regional television news programmes at 6.30pm have
improved further on their position as the clear market leader
over ITV’s regional news, and audiences for the 39 local radio
stations hit a new peak of over 8 million – some 21% of the

In Blackburn, the pilot BBC Zone is opening doors to thecommunity, offering local people multi-media learning
opportunities in a relaxed setting. It is also the home ofRadio Lancashire.
A new television news opt-out for the Oxfordshire area (fromSouth Today) was launched last autumn, and opt-outs for viewers
in East Yorkshire and Lincolnshire and further opt-outs forviewers in the Channel Islands will follow later in the year.There
will also be two entire new daily television news services (forKent/East Sussex and London) starting this year, replacing
Newsroom South East.The new London television service will
join the BBC’s radio and online operations in Marylebone toform a unique tri-media service for Greater London. Strong
links between the three services should help boost audiences
for the radio station (relaunched last March), which were initiallydisappointing.

Annual Report and Accounts 2000/2001 19

Review of the Year: Public Services

BBC News continued to perform well during the 6pm to
7pm news hour.
Early evening news viewing share 1998 to 2001
BBC OneITVBBC OneITVBBC OneITV

2000/2001
2000/2001
1999/2000
1999/2000
1998/1999
1998/1999

%
32.7
28.3
33.5
28.5
32.6
32.7

Source: BARB (excludes Christmas period)

Andrew Marr has made politics
more accessible on radio andtelevision.
Moving BBC One’s late news
to 10pm has paid off. Overall
more people are now watching
the news.

People turned to BBC News forcoverage and analysis of events
such as the Selby rail disaster.

News
Across the year BBC journalism and newsbased programmes have been of the highest
quality, and the BBC has reinforced its
position as the UK’s leading provider ofbroadcast news.
Andrew Marr has made a big impact on political analysis, andthere has been significant investment in business and businessjournalism with the appointment of Jeff Randall, the BBC’s first
Business Editor. BBC programmes – notably Panorama’s
investigation of the Omagh bombing – and BBC journalists took
top news awards.
There were gripping reports from John Simpson and Jacky
Rowland on the fall of Slobodan Milosevic in Belgrade, and
Ben Brown won a Royal Television Society Award for hiscoverage of the Zimbabwe farm invasions.
Kenyon Confronts (a new investigative series which drew thehighest audience of any current affairs programme in the UK),
and Brits, the final part of Peter Taylor’s award-winning trilogy
on the Northern Ireland conflict, were well handled, as were
the sensitive months prior to the general election.

20 Annual Report and Accounts 2000/2001

There were some editorial shortcomings. Coverage of the fuelcrisis did not reflect the environmental dimension adequately
and, for many viewers and listeners, European issues still seem
impenetrable. But, overall, our programmes met the standards
audiences expect.
The role of BBC News 24 is still challenged by somecommercial news providers.The BBC believes it is essential
in the multi-channel age for the national broadcaster to offer
everyone in the United Kingdom a dedicated, valued and wellused news service on television. It was heartening therefore
to see News 24 coming into its own this year. It measures up interms of quality against any BBC service. BBC One now readily
hands over to News 24 when big stories break, and the twochannels have combined forces to deliver a single, enhanced
breakfast programme.The average weekly reach of News 24(excluding the breakfast programme shared with BBC One)rose to 8.4 million in March 2001, compared with 5.8 million
in March 2000.This growth should accelerate as more people
convert to digital.
The evening bulletins on BBC One, which now integrate news
from the Nations and English Regions (see pages 17 to 19) with
UK and international news, have been exceptionally strong.The
decision to offer a full half-hour of news at 10pm on BBC One
has stemmed the decline being witnessed in the earlier slot, andoverall more people are now watching.

The BBC remained committed
to covering international news
such as the Zimbabwe election.

BBC One moved its late news to 10pm in October 2000,
followed by ITV in January. Combined news viewing has
since increased significantly.
Combined audience to the BBC and ITV late news
1998/1999 to 2000/2001

2001
1999/2000
1998/1999

BBC/ITV Ten O’Clock News (22 Jan-30 Mar)BBC Ten/ITV late news (16 Oct-19 Jan)BBC Nine/ITV late news (16 Oct-30 Mar)

Averageaudience
Millions
10.2
8.4
8.1

The foot and mouth story
was broken by Farming Todayon Radio 4.

Source: BARBBBC news should appeal, in one form or another, to all of theadult population. However, gaps still remain – notably among
ethnic minority groups and the young. We plan to fill some ofthese with news on new digital radio and television services.
In the last year, however, Radio 1 has made headway with
15 to 24 year-olds by revamping Newsbeat, introducing moreentertainment news, and offering a fresh take on politics.
Elsewhere in radio the Today programme brought Radio 4
listeners new voices and perspectives – for example an
exclusive interview with disgraced gynaecologist Rodney
Ledward – and Radio Five Live reinforced its reputation
for strong news as well as sport.
In television current affairs, BBC Two’s Newsnight is getting
a better audience as a result of the new BBC One schedule(it follows the ten o’clock bulletin), but Panorama has lostviewers after its move from Monday to Sunday. However,the quality and impact of Panorama programmes over theyear were sustained, and the BBC has reaffirmed its
commitment to Panorama, increasing its budget by £500,000
in 2001/2002. Other strong current affairs programmes include
Correspondent on television, and File On 4, Analysis, Moneybox
and Crossing Continents on Radio 4.
With around 100 million page views a month, BBC News
Online remains the UK market leader.The year saw some
important successes, including interviews with Russian leader

Vladimir Putin and South Africa’s Thabo Mbeki. Audio content
has been enhanced with the introduction of a tailored news
bulletin, updated hourly, which visitors can listen to at theirconvenience.
Use of the service is growing with page impressions at an alltime high of 120.6 million in March 2001. However, as overall
internet use grows, it will be important to raise the profile of
BBC News Online which, unlike many rival services, does notappear on an internet portal (see page 22).
During the year there were tragic reminders of how perilous
some war zones can be for our journalists. Abed Takoush was
killed by an Israeli army tank while working with Jeremy Bowenin southern Lebanon, and World Service reporter Mayilvaganam
Nimalarajan was murdered in Sri Lanka.The BBC is working
with other broadcasters to minimise the risks facing reporters
working in war zones.
BBC World
The BBC’s commercially funded international television news
channel, BBC World, and BBC News 24 have forged closer ties
for the benefit of audiences at home and abroad. BBC World’s
presence across the globe facilitates access to stories.The
channel now reaches 178 million homes worldwide, of which
over 77 million have access 24 hours a day.

Annual Report and Accounts 2000/2001 21

Review of the Year: Public Services

The total number of page impressions to
our Online sites reached a new high inMarch 2001.
Monthly BBC Online page impressions
2000 to 2001
March 2001
March 2000

76.8

Source: Server logs

169.5
17.7
7.9

25.115.1

127.7

82.2

■ News and Sport■ Education

There were over 120 million
page impressions on
BBC Online’s News sitein March 2001.

Millions
337.4
184.6

■ World Service■ Other BBC Online

Page impressions for BBC News, Sport and Education
Online reached new heights in March 2001.
BBC Online page impressions for News, Sport and
Education 2000/2001
Millions
120

120.6
News

100
80
60
Sport sitelaunched

40

48.9
Sport

A choice of courts andplayers’ statistics in interactive
Wimbledon coverage.

New Media
The day when audiences can take themselves
on a trip around a virtual human body,
construct their own stories using video andaudio from the BBC’s archives, and playonline with ‘creatures’ that have artificial
intelligence, may not be far away.
The BBC’s New Media division is exploring a number ofinteractive possibilities for viewers and online users. It tested
new television techniques at the 2000 Wimbledon and Open
golf championships, and will offer full interactive coverage ofWimbledon 2001 to more than 6 million digital homes.
It has also developed and launched digital Text, bringing together
features of teletext and the internet.The service is now available
on most digital television platforms, and we expect that in time
it will be as widely used and valued as Ceefax and BBC Online.
The New Media division is also sustaining an established andwell-used information service in BBC Online, which has beenenhanced significantly. It now offers a dedicated sports site –a major hit, attracting nearly 49 million page impressions
a month in its first year – and a service of audio news,
updated hourly.

22 Annual Report and Accounts 2000/2001

25.1

Education

20
0
A

M

Source: Server logs

J

J

A

S
O
2000/2001

N

D

J

F

M

The History site, which recognises a growing interest in thesubject, complements and enhances series such as A History
of Britain, What the Romans Did for Us and Timewatch, while
relaunched sites for the radio networks are giving an extra
dimension to the programmes on air. And increasingly, BBC
Online is providing educational content for people of all ages
(see opposite).
After high start-up costs four years ago, BBC Online is
becoming better value for money as the editorial process
becomes more efficient and the number of users grows.The
number of people now visiting BBC Online has grown by 29%
over the year to 4.9 million a month.That is a remarkableachievement considering that BBC Online is not a portal (whichmeans most internet users get first sight of rival news andsports links offered on the home pages of their internet service
providers). We know from our research that this success is dueto the depth of information and user-friendliness of the BBC
sites. However, although BBC Online has the highest reach of
any content site in Europe, its share of the growing market hasremained static.The challenge is to ensure that BBC Online is asvisible as the portal-based services offered by rival providers.

The Battle of Hastings, circa
2000. A re-enactment for
A History of Britain.

Education online: AS Guru
helped pupils study for the
new post-GCSE exam.

Black Dog on BBC One, part of
the On the Edge season, dealt
with depression. BBC Online
offered information and advice
about mental health.

Education
One of the BBC’s most striking series in
2000/2001 was the award-winning History of
Britain, a landmark project which took five
years to bring to the screen.
The fact that it was largely funded from the BBC’s educationbudget reflects the emphasis the BBC places on the educative
potential of programmes of all kinds. A new internal structurein the Factual and Learning division places education specialists
close to the commissioners of news, entertainment, drama,
factual and children’s output. More and more programmes
are helping people to pursue, primarily through BBC Online,
interests that have been kindled in the schedules. Earlier thisyear, for example, there were more than 800,000 visits to
the Get Confident website after The Confidence Lab went out
on BBC Two, and more than 22.2 million to the Webwise(internet skills) site.
In the last 12 months BBC Education has targeted specificaudiences and needs. Radio 1’s Essentials campaign advised
16 to 24 year-olds on exams, drugs, sexual health andrelationships, while BBC One and Radios 1, 2 and 4 exploredmental health in the On the Edge season. Around 8% of On the
Edge viewers visited the BBC Online health site.

As the year closed, plans were in hand for ‘learning journeys’
to help people find out more about history (tied to A History
of Britain); first aid (999); and marine ecology (the forthcoming
Blue Planet).
The BBC continued to deliver structured learning in its schools
and revision material. AS Guru was created, enabling pupils to
study for the new post-GCSE exam, and in addition to GCSE
Bitesize, there are now revision facilities for 12 to 14 year-olds(Key Stage 3 Revision) and primary schoolchildren (Revisewise).
The BBC also hoped to achieve greater steps towards a
UK-wide digital schools curriculum this year but we still await
a decision on our proposals.The results of our consultation(see page 33) last autumn reflected strong support for a service
covering all main school subjects for children of all ages andabilities. We recently responded to the DfEE’s public consultation
on a comprehensive online curriculum service.The BBC iscommitted to working with others to ensure that this vision
is delivered.The Government has acknowledged the advantagesof the BBC playing a central role in the delivery of sucha service, and has endorsed the quality of the BBC’s digitalcurriculum materials in a separate competition for the provisionof resources in support of six GCSE subjects.

Annual Report and Accounts 2000/2001 23

Review of the Year: Commercial Services
We continued to generate additional income from
BBC Worldwide Limited.
BBC Worldwide Limited cash flow to the BBC
1998 to 2001
£m
96
82
81
75

2001
2000
1999
1998

Anne Robinson’s success in
The Weakest Link took the
programme from BBC Two
to BBC One and then acrossthe Atlantic.

BBC Worldwide Limited

S Club 7 were a strong
international hit for
BBC Worldwide.

BBC Worldwide Limited has achieved a sales
increase of 14%, outperforming the industry
sectors in which it operates, and beating thefinancial targets on sales, profit and cash flow
set by the BBC.

on a business-by-business basis. As a result, beeb Ventures
Limited was formed after US-based technology investor
TH Lee agreed to invest £32.5 million to acquire a minority
stake in BBC Worldwide’s internet operations. BBC Worldwide
and Canadian entertainment company Alliance Atlantis
Communications Inc. formed a joint venture and were awarded
licences to create two BBC-branded digital television channels
in Canada. A deal with US-registered company Knowledge
Chase saw the sale of BBC Worldwide’s BBC for Business unit
into a partnership structure.

Sales – that is group turnover, including joint ventures – wereup 14% (£73 million) on last year’s record results.Total sales
were £587 million, more than double the sales of six years ago.
Record profits stood at £23 million – up 170% on last year. The
company is performing ahead of plan and on track to deliver on
its targets.

BBC Worldwide also made its first significant acquisitions ina number of years, with the purchase of the audio business
Cover to Cover Cassettes Limited and the magazine Gardens
Illustrated, complementing existing businesses in these sectors.

Cash flow contribution to the BBC was £96 million, up£14 million from last year’s contribution of £82 million, itself
a record.
BBC Worldwide’s strategy focuses on exploiting brands
on a multimedia, multi-territory basis. Our global brands(eg Teletubbies,Tweenies,Top of the Pops, Walking with Dinosaurs)
now yield an increasing percentage of our business. Overseas
business now accounts for 42% of all our business.
New business
BBC Worldwide’s strategy is to seek private sector partnerships

24 Annual Report and Accounts 2000/2001

BBC Worldwide and Universal Music International entereda new licensing agreement to increase distribution andmarketing of the BBC’s children’s music properties.
Awareness
Awareness of the BBC brand around the world increased from78% in 1999 to 85% in 2000. In the US, awareness was up from
77% to 91% (source: Buckingham Research Associates 2000).
Video-on-demand and new media
BBC Worldwide has been an early mover in commercial videoon-demand services and we are also the UK’s leading non-film
DVD distributor.

We generated record profits from BBC Worldwide Limited
for 2000/2001 of £23 million – up 170% on last year.
BBC Worldwide Limited profit before interestand taxation
£m
23
9
20
14

2001
2000
1999
1998

Simon Schama’s A History
of Britain featured in thebest-seller lists.

The Tweenies’ successcontinued across a wide rangeof media including books andlive shows.

Business highlights
Television
UK TV export figures released for 2000 by the British Television
Distributors’ Association showed total exports of £378 million,
5% up on industry figures year on year. During the same period
BBC Worldwide’s exports increased by 21%, from £171 million
to £207 million – contributing 55% of the UK’s total TV exports.
The Weakest Link is an international success.The UK production
team is working with broadcasters in 40 countries to create local
versions of the show.
Other strong sellers included S Club 7,Top of the Pops and the
major new drama, The Lost World, a co-production with A&E.
The Lost World has been pre-sold to RTL Germany,TF1 France,
ABC Australia and TVNZ in New Zealand ahead of UK
transmission.
A major first was a commission to produce Ji Mantriji – anIndian version of Yes Minister and Yes Prime Minister – in Hindi,
made in India for broadcast on Star TV.
Children’s
It was another record year for the children’s portfolio, which
includes Teletubbies,Tweenies, Bob the Builder and Noddy.
Teletubbies has generated more than £116 million revenue sincelaunch. Tweenies has been successful across a wide range of
media from books to live shows.

Channels
BBC Worldwide is the UK’s largest international channel
provider. Its channels now reach more than 365 million homes
globally, an increase of nearly 20% on 1999/2000. Channel
launches included Animal Planet in Japan. BBC World, anincreasingly valuable asset, increased airtime sales by 41% andreduced its losses substantially from £18.3 million in 1999/2000
to £11.4 million in 2000/2001.
Magazines
Three major titles were launched: BBC History Magazine (thebest-selling history magazine in the UK); the women’s title eve;and teen title star: the celebrity magazine.
Radio Times remains the UK’s most profitable magazine – andthis was its most profitable year ever.
Books, video, DVD
Four out of the Sunday Telegraph’s top ten best-sellers of 2000
were BBC Worldwide books – Delia’s How to Cook: Books One
and Two, Simon Schama’s A History of Britain and Terry Wogan’s
Is it me? Three out of the Sunday Times’ 2000 top ten bestsellers list – which excludes cookery books – also went to BBC
Worldwide books (Is it me?, A History of Britain and Steve
Redgrave: A Golden Age).
Audio
Eight out of the UK’s top ten spoken word titles for 2000 werefrom the BBC Spoken Word catalogue.

Annual Report and Accounts 2000/2001 25

Review of the Year: Commercial Services

BBC Resources createda stunning range of special
effects.

Footwear from the Costume
and Wigs store which holds
more than 500,000 costumes.

BBC Resources Limited
Supporting our production and broadcasting
operations effectively in a fast-changing
industry has proved particularly difficult ina year of change across the industry.
A downturn in the studio market has
resulted in an £11.5 million loss, after
restructuring costs.
BBC Resources Limited has been restructured into a smaller,
more focused business. A new commercial subsidiary, BBC
Technology Holdings Limited, has been created.
The changes will ensure that BBC Resources and BBC
Technology can operate profitably, helping the BBC meet toughfinancial targets (see pages 56 to 57) and bring in money
to fund programme making.
BBC Technology brings together the broadcast technology
services already successfully trading within BBC Resources,
with the IT and internet support provided to the BBC from theformer Distribution and Technology division. It will offer services
and expertise to external customers, as well as in-house
departments. BBC Technology began trading as a wholly owned
subsidiary on 31 March 2001.

26 Annual Report and Accounts 2000/2001

As of 1 April 2001 most resources in the Nations and English
Regions were transferred from BBC Resources to the Nations
and Regions division in the BBC, and a number of otherservices (such as facilities and property management) moved
into the BBC’s new professional divisions.The remaining
businesses in BBC Resources continue to support BBC
programme makers and serve external customers.
In December, design units in London, Bristol, Birmingham and
Belfast were brought together into one business and renamed
BBC MediaArc. As well as supporting BBC programmes, BBCMediaArc will build on existing on-screen branding and graphics
work for commercial clients, along with the corporate sector
interactive design contracts it has already won from clients suchas HSBC, Royal Britannia and OnDigital.
Changes in production requirements have led to significant
over-capacity in BBC and commercially-owned studios outside
London, and we were forced to close our studios at Pebble
Mill. In Manchester the BBC and Granada Media created3sixtymedia, a joint venture which merged the two companies’
studio and post-production businesses.This enabled us to close
our Manchester studio, while safeguarding facilities for locallymade BBC programmes such as A Question of Sport.

Review of the Year: BBC World Service

The earthquake in India was amajor story for the English andlanguage services.

Yugoslav police storm the homeof Slobodan Milosevic after hewas overthrown.

BBC World Service achieved its highest-ever audience
with 153 million listeners each week.
BBC World Service audience 2001
World Service
Top two competitors

91

45

Millions
153
136

Source: BBC World Service■ World Service

BBC World Service
In a year of outstanding performance, BBC
World Service achieved its highest-everaudience figure – 153 million weekly listeners.
All 43 language services are now present as
online audio services on the World Service
site, and use of the site has increased by 62%
compared with last year.
Gains across Africa and the Middle East were the foundationfor overall audience growth, more than offsetting losses in
Russia and Pakistan, where competition is growing.
World Service achieved its target of being present on FM in
120 capital cities of the world.This represents 62% of all capitalcities.The aim is to be present on FM in 70% by the end of
2003/2004.
Internet growth exceeded targets, with nearly 40 million page
impressions per month being achieved for the World
Service/World News sites. During the year, world-class sites in
Russian and Spanish were launched, joining Arabic and Chinese.
The Arabic site saw an explosion in growth to nearly 4 million
page impressions a month.The Chinese site also exceeded its
growth target.

■ Voice of America■ Radio France International

Creatively, it was also an impressive year, with outstanding
coverage of key news events such as the fall of President
Milosevic, the Middle East peace process, the US presidential
race and the Indian earthquake. English and the language
services combined to provide landmark programming on theinternational drugs trade, Aids in Africa, and human rights.
The English service was relaunched successfully in April,increasing the number of tailored streams across the worldfrom three to eight, and providing a 24-hour news andinformation stream of programmes for rebroadcasters whichis also accessible on the internet.
World Service achieved a positive outcome from theGovernment’s Spending Review for 2001–2004. An extra£64 million was awarded over the three years, representing
an average 3.8% real terms annual growth.The new money
will enable it to enhance eight major language online sites,
to expand its FM presence, and to improve audibility acrossthe Middle East, the Gulf and South Asia by upgrading thetransmitter sites at Cyprus and Singapore.
BBC Monitoring has expanded its electronic delivery and its
online services and products. It too will receive additional
funding of £5 million for 2001–2004.This will enable it todevelop its capability for key stakeholders – the Foreign andCommonwealth Office, the Ministry of Defence, World Service
and other customers.

Annual Report and Accounts 2000/2001 27

Review of the Year: Performance against Objectives
The Governors set 12 objectives for the BBC for 2000/2001

Develop proposals to deliver
our core purposes of creativity, citizenshipand learning in the digital age.

Make a major step forward in implementing
the new education strategy.

Strengthen BBC One, as well as its core TV
and radio services, with a particular focus
on offering a richer mix of content.

This objective was met.

This objective was met in part.

This objective was met in part.

Demonstrate improved services to thewhole of the UK as part of the BBC’s
ongoing response to devolution.

Make substantial progress ininteractive/online services, including
launching new online offerings for sport,
A-levels and the arts.

Deliver greater value for money for licencepayers year on year through increased
efficiency and more effective commercial
activities.

This objective was met in part.

This objective was met.

This objective was met.

Develop an effective policy for sports
coverage at an affordable cost.

Ensure we serve and are valued by currently
under-served audiences, particularly theyoung and minority ethnic audiences.

Improve our openness and accountability
to all stakeholders.

This objective was met.

This objective was met in part.

This objective was met.

Move towards our long-term goal ofincreasing the percentage of licence fee
income spent on content and services
from 76% to 85%.

Improve diversity internally to 10% of staff
from minority ethnic backgrounds by theend of 2003, with an increase from 2% to
4% at senior management levels.

Drive a change in BBC culture to generate
greater collaboration and creativity.

This objective was met.

This objective was met in part.

This objective was met.

Performance against Objectives
Every year the Governors are required to set
objectives for the BBC, publish promises
about BBC programmes, services and policy,
and report on subsequent performance.
In the Annual Report for 1999/2000, the Governors set 12
objectives, from which four promises to licence payers weredrawn (see panels above).The Governors are broadly satisfied
with the progress the BBC has made in a year of transition.
Seven objectives were met in full this year, and there is tangible
progress towards the BBC’s long-term goals. However there
are five areas where more progress should have been madeduring the year. Our performance against the objectives, setlast year, is summarised below.
Develop proposals to deliver our core purposes ofcreativity, citizenship and learning in the digital age
This objective has been achieved, but it is frustrating that
implementation of many of the proposals has been delayed.
As we report on pages 40 to 43, plans for new digital radio andtelevision services, allied closely to BBC Online and offeringinteractivity, are fully developed.The funding was agreed in thelicence fee settlement announced 18 months ago, and we havecarried out several public consultations about our plans – mostrecently in October.The results were overwhelmingly

28 Annual Report and Accounts 2000/2001

supportive. Progress has been slowed by objections to some
services from commercial interests, but we hope theGovernment will give the go-ahead very soon.
The experimental BBC Zone at BBC Radio Lancashire inBlackburn encourages citizens to create community radio
and online services, and pursue learning on the internet.
If it succeeds, we hope there will be many such centres acrossthe UK.
Make a major step forward in implementing the
new education strategy
This objective has been met in part.The strategy has two parts:
learning journeys for people of all ages and a digital curriculumfor school pupils.
The BBC has delivered its first ‘learning journeys’ for adults (seepage 23), and more such journeys are emerging. But plans fora full digital curriculum have not yet been realised, despite
strong public support (see page 33) in a BBC consultation
exercise in October.
Strengthen BBC One, as well as all core TV and radio
services, with a particular focus on offering a richer
mix of content
Good progress.This can be seen in the review of services(pages 10 to 23). Strengthening services and developing new
programmes takes time, so this is a long-term objective.

Promises to licence payers 2000/2001
The Governors drew four Promises from the objectives:
We promise to spend more of
the licence fee on programmes

We increased the percentage of licence fee income spent on programmes
from 76% to 81%, and are on course to achieve 85% by 2004.

This promise has been kept.

We promise a richer mix of TV and We have made progress. We have discovered new writers, performers andThis promise has been kept
radio programmes for everyonepresenters through BBC Talent; we experimented with new ideas in drama andin part.
entertainment; we are doing more to serve the different people and cultures of
the BBC; we have brought more programmes made by BBC Scotland, BBC Wales
and BBC Northern Ireland to a UK audience. We have offered new children’s
programmes on our mainstream television channels.

We promise you more on
BBC Online

We have launched new sites on sport, lifestyle, the arts, religion and A-levelstudies. We have created more opportunities for online learning linked toprogrammes, including health, work skills, history, science and leisure. And wehave launched new city and county sites offering local news, sport, travel andweather information.

This promise has been kept.

We promise to make the BBC
more open and accountable
to youWe have given clear and honest answers when questioned about ourprogrammes and policies. We have explained how decisions are made.
We have taken more account of audience concerns, on matters such as changes
to advertised schedules – a major cause of complaint to the BBC.

This promise has been kept.

An extra £89 million was spent on programming for BBC One
this year, including the Olympics. BBC Two has also beenstrengthened – for example the History Zone was moved to
Friday evenings, where it drew a bigger audience than the
Comedy Zone it replaced – as have the radio networks. Radio 2
and Radio 3, for example, have broadened the appeal of theirservices with new talent and greater variety.
The BBC has also experimented with new ideas, especially indrama and entertainment. Innovations included the ten-minutecomedy series, Marion and Geoff, on BBC One; The Wire, a
run of plays from new writers on Radio 3; and Jetset, a newformat for the National Lottery Draw. Children’s output has
been strengthened with the scheduling of Blue Peter before
Newsround and new programmes such as Exchange, encouraging
children to make good use of their time during holidays.
Radio 4 has brought back children’s radio after a ten-year
absence with the launch of Go 4 It!, which uses child reporters,
and Radio 3 has collaborated with Blue Peter on Making Tracks,
a music programme for children.
Demonstrate improved services to the whole of the UK
as part of the BBC’s ongoing response to devolution
This objective has been met in part, with significant progressin the Nations. BBC Scotland, BBC Wales, BBC Northern
Ireland and the English Regions provided a diverse andwell-received mix of programmes on BBC network television(see pages 17 to 19). Significant improvements are in thepipeline for the coming year.
BBC radio services for audiences in the Nations and BBC Local
Radio in England did well, with the highest share of audiences
recorded (12.2%), and a total of 10.6 million listeners.
The first 13 Where You Live sites (see page 19) were launchedacross England during the year.
Overall audience approval for the BBC’s services across the
Nations and English Regions has risen compared to last year.
However, in England the BBC continues to underperform in
the North.
Make substantial progress in interactive/online
services, including launching new online offerings
for sport,A-levels and the arts
This objective was met. Interactive coverage of tennis and golf
was piloted in 2000, enabling the BBC to offer digital viewers
comprehensive interactive coverage of Wimbledon 2001.
BBC Sport Online was launched in July, ahead of the Olympic
Games; the AS Guru site for A-level students was launched in
November; and an Arts site has been developed, including arts
news, reviews, a picture gallery and programme information.
There were also new Gardening and Food sites, enhancements
to the Health site (including the extremely popular Get
Confident site), and a redesigned History site.The new Webwise

Annual Report and Accounts 2000/2001 29

Review of the Year: Performance against Objectives

We continued to exceed our 8% minimum target forminority ethnic staff across the BBC.
Proportion of people from ethnic minorities
in the BBC workforce 2000/2001

Licence fee evasion fell to a new low of 5.2% (using
DCMS definition).
Licence fee evasion 1992 to 2001
%
10
8
6

5.2

4
2
0
92/93

All BBC
London Home Services†
World Service (UK)
Scotland*
Wales*
North*South*
Midlands and East*

Target
8

2
2
4
4.7
6

2001 2000%%
8.4 8.2
9.4 9.2
27.4 26.8
1.2 1.2
1.5 1.1
4.1 3.6
3.5 3.4
7.1 7.0

Source: BBC HR Management Information† Includes London-based Resources Limited staff.
* Includes Home Services staff and Resources Limited staff based in the Nations and Regions.

93/94

94/95

95/96

96/97

97/98

98/99

99/00

00/01

Care – an award-winning f ilm
about abuse in children’s homes,
made in a collaboration
between BBC Drama andBBC Wales.

learning journey offers new work skills, and the science site has
been enhanced with new Human Body and Tomorrow’s World
sections. For communities across England, 13 city and county
news and local information sites across England appeared.
Deliver greater value for money for licence payers
year on year through increased efficiency and more
effective commercial activities
This objective was met. Following the licence fee settlement
18 months ago, the BBC set a savings target of £166 million
per annum by the end of 2003/2004. It is on course to achievethis.The proportion of licence fee income now spent on
programmes has increased. In the year, the BBC made £45 millionof savings, for example by cutting its spending on consultantsfrom £19 million to £4 million.
BBC Worldwide Limited exceeded sales, profit and cash flow
targets (see pages 24 to 25).
Develop an effective policy for sports coverageat an affordable costThis objective has been met.The first steps were taken in thesecond half of this year, following the appointment of a new
Director of Sport, Peter Salmon. A new strategy was developed,
putting emphasis on live sport, main events, football, creativity
and collaboration with events organisers and the owners ofsports rights.The Governors will review the success of thisstrategy over the coming year.

30 Annual Report and Accounts 2000/2001

Over the year, the loss of the Premier League highlights on TV
was a major blow to our aspirations. However, rights to the
FA Cup Final and England football internationals were secured,along with the high-profile return of boxing to the BBC. BBCRadio retained some major rights, including securing the Premier
League rights for another three years.
Ensure we serve and are valued by currently underserved audiences, particularly the young and minority
ethnic audiences
Progress was made towards achieving this long-term objective.
The BBC Listens project (see pages 34 to 36) invited the viewsof young people and minority ethnic groups over the year, andthe BBC has worked to improve services to these audiences. For
example, Radio 1 is more focused on its target audience (15 to
24 year-olds) than previously; Radio 3 developed Making Tracks,a daily programme of music for children coming home fromschool; and the transmission area of the Leicester-based Asian
Network was expanded. It now covers more of the Midlands
and North and reaches nearly one million Asian adults. But plansto serve these audiences better include new programming on
new digital radio and television services.The BBC was unable tolaunch these services in 2000/2001 as it had hoped (see page 28).
In audience terms, approval amongst ethnic minorities
strengthened for BBC One and BBC Two in the second halfof the year. BBC One’s share of ethnic minority audiences
fell slightly (but it fell less than the all-audience average) while

BBC Two’s share increased. Among younger audiences, BBC
One’s share fell, although the drop was less significant than for
ITV. BBC Two increased its share slightly amongst 16 to 34 yearolds.
Improve openness and accountability to all stakeholders
This objective was met.The BBC has taken a number of steps
to improve openness and accountability (see pages 32 to 36).
It has done more to explain schedule changes (the biggest
single cause of complaints to the BBC), and where possible
the networks have immediately announced new slots for
programmes displaced by sport or breaking news.There wasalso a greater readiness to admit mistakes – for example overthe BBC’s decision not to cover the Queen Mother’s 100thbirthday pageant.
The BBC made more face-to-face contact with licence payers
than ever before.Thousands responded to the BBC Talentcampaign (see page 34) and many more visited the BBC’s
travelling FutureWorld exhibition, to learn how new technologies
such as digital and the internet will impact on people’s lives.

Drive a change in BBC culture to generate greatercollaboration and creativity
This objective has been met.The Director-General’s plan for‘One BBC’ aimed to foster a sense of common purpose indelivering outstanding programmes and services. A new
structure has brought commissioners and programme makers
closer together, and that is being further encouraged by a newcommissioning process, designed to bring out creative ideas anddeliver the best results.
The plan includes minimum output guarantees for in-house
departments, which should give them confidence and enable
them to plan and build their capability to supply existing andnew services.
It is still too early to see significant benefits in the schedules, but
the signs are encouraging. Internal surveys show improvements
in morale among staff and in internal communication, anddepartments have collaborated well – not least in deliveringa new 10pm news bulletin on BBC One at very short notice.

The Governors also conducted a number of public
consultations, sounding out particular audience groups, andseeking views about proposals for a digital curriculum from theBBC, and for new digital services (see pages 32 to 36).
The Governors see greater accountability, particularly against
the background of changes in the way the communicationsindustry is regulated, as an ongoing challenge for the BBC.
Move towards our long-term goal of increasing thepercentage of licence fee income spent on content
and services from 76% to 85%
This was met.The target date for achieving this objective is now
2004. In 2000/2001 the proportion of licence fee income spenton programmes rose from 76% to 81%, and we expect that torise to 83% in the current year. So this is excellent progress.
Improve diversity internally – to 10% of staff fromminority ethnic backgrounds by the end of 2003, withan increase from 2% to 4% at senior management levels
The BBC moved in the right direction on this objective, but
progress towards the targets is slow.The percentage of staff
from minority ethnic backgrounds rose from 8.2% in March
2000 to 8.4% in March 2001.The percentage of staff fromethnic minority backgrounds in senior management roles rosefrom 2.2% in March 2000 to 2.6% in March 2001.
Staff initiatives included Ascend, a unique development
opportunity for ethnic minority staff, and the Extend scheme
which is designed to open up the BBC as an employer for
people with disabilities.

Upholding editorial standards
The Governors ensure that the BBC maintains high editorial
standards.They monitor its compliance with the BBC
Producers’ Guidelines and with the Code on Impartiality
and Accuracy included in them.
Overall, they were satisfied that in 2000/2001 the BBC had
met the standards expected of it, despite a considerable
number of controversial programmes – ranging from Care,
Rebel Heart and Last Resort to Panorama on the Omaghbombing and Newsnight on family sexual abuse.The BBC
had also complied with its impartiality obligations under the
Code on Impartiality and Accuracy.
The Board highlighted two areas for attention in the year
ahead – the increase in surreptitious recording and the useof ‘real life’ stories and individuals in drama.They stressedthat surreptitious recording was an invasion of people’s
privacy; the BBC had to be sure its use was justifiable andthat increased use did not devalue it as a journalistic tool.
The use of real life situations and characters in drama also
required a high level of editorial supervision and care.

Annual Report and Accounts 2000/2001 31

Accountability
The BBC’s licence fee funding gives it a special responsibility to be accountable to its
audiences, to listen and respond to their views and concerns, and to keep them informed
about services and plans. We continually look for ways of doing this better, and one of our
objectives in 2000/2001 was to improve the BBC’s openness and accountability.
We have taken steps to improve the transparency ofGovernors’ activities. Last year’s Annual Report set out thecriteria by which BBC public services are assessed.This year’s
Annual Report is based on those criteria, which are listed on
page 9. Over the year, we also published the Board’s Standing
Orders online and a monthly summary of business taken atGovernors’ and Broadcasting Council meetings.The Governors
also strengthened their dialogue with the Broadcasting Councils
and the English National Forum (see pages 37 to 38) withmeetings to discuss the developing vision for Nations andRegions and consultative seminars on key strategic issues.
A review of existing accountability activities led to a new
approach to our reporting to licence payers – this year, as wellas the Annual Report and Accounts, we are publishing a separate
BBC Review of the Year which accounts to licence payers for
programme performance and value for money. We will pilot
other ways of reporting to licence payers over the coming year.
We took a new look at our understanding of accountability
and how to deliver it. A Governors’ seminar heard from a rangeof others with experience in accountability and customer
relations. A new approach to a public event was tried out with
the Governors’ seminar with young people (see page 36). Next
steps will include piloting new approaches to deliberation andconsultation.
These pages summarise the many activities we have undertakenover the year under the following headings:
accounting to Government, Parliaments and Assemblies;
formal public consultations;● listening to audiences;● complaints handling; and● accessibility.
●●

Getting maximum value from these activities remains a priority.
Accountability to Government, Parliaments andAssemblies
In line with established practice, the BBC Governors held two
formal meetings with the Secretary of State for Culture, MediaThe BBC Listens events (leftand right) allowed audiences to
let the BBC know what they
thought of our programmes.
The review with 16 to 24 yearolds used workshop sessions
and studio discussions chaired
by Jamie Theakston (right) tolearn what people in this age
group think of the BBC.

32 Annual Report and Accounts 2000/2001

and Sport last year – one in the spring, to discuss the BBC’s
performance over the preceding year, and one in the autumn
to discuss future strategy.
The BBC is accountable to the Westminster Parliament.The
Annual Report is laid before Parliament and since 1999 theCulture, Media and Sport Select Committee have taken up theBBC’s offer to appear before them to discuss the report shortly
after publication.The BBC also provides regular briefings to
Parliamentarians on a wide range of BBC issues.
Broadcasting regulation is a ‘reserved power’, in other words
it is not devolved to the Scottish Parliament, the National
Assembly for Wales or the Northern Ireland Assembly. We
recognise, though, that expectations of the BBC are high in
Scotland, Wales and Northern Ireland, particularly in the context
of devolution and political change.The BBC has therefore taken
active steps to keep members of the devolved institutions
informed about its policy, its services and future strategy.
In February and March 2001, the Controller BBC Scotland met
with MSPs from all parties to deliver information about thecontext in which the BBC is operating and the opportunities
afforded by digital technology. BBC Wales gave evidence twice
to the Post 16 Education Committee – in May 2000 during its
strategic policy review of Arts and Culture in Wales, and in June
as part of its process of debate on the findings of theCommons Select Committee Report into ‘Broadcasting in Walesand the National Assembly’.The BBC also gave evidence to the
Welsh Affairs Select Committee’s inquiry, ‘Wales and the World’.
Formal public consultations
Under its Charter, the BBC must undertake an appropriate
process of public consultation prior to making any materialchange to the nature of its public services and before seeking
approval for new services.
Digital curriculum consultation
The BBC consulted the public on its plans for a digitalcurriculum – an interactive online service for pupils andteachers across the UK.The proposed service, which requires
Government approval, is described in more detail on page 42.
The consultation ran between 11 September and 20 October2000 and was trailed on television.The consultation document
was available on the BBC’s public website and on request by
post. It was also sent to a range of organisations and individuals
with an interest in education and/or broadcasting.
1,336 responses were received, 40% of these replying on behalfof an organisation; 88% of respondents supported the BBC’splans.
In a separate development, in April, the Department for
Education and Employment launched its own consultation on
a comprehensive online curriculum service.This acknowledged
The BBC’s FutureWorld handson exhibition travelled to nine
locations round the UK giving
more than 750,000 visitors
free access to digital andonline technology.

Annual Report and Accounts 2000/2001 33

Accountability

Steady progress is being made towards minimum
2003/2004 targets for minority ethnic staff across all
grades including senior manager level.
Diversity: proportion of people from ethnic
minorities in the BBC workforce March 2000/2001
All BBC
Senior manager
grades

2001
2000
2001
2000

Target 2003/2004
10
4

%
8.4
8.2
2.6
2.2

Source: BBC HR Management Information

The BBC took part in the India
earthquake emergency appeal(see page 39).

In 2000/2001 the BBC
conducted its biggest-evertrawl for writers, performers andcomposers.Through BBC Talentsome 11,000 people had screen
tests to become televisionpresenters, and 16,000 applied
to become a Radio 1 DJ.
As a result there are many
new faces and voices on BBC
programmes, including David
Bromfield on Tomorrow’s World.

the central role which the BBC could play and sought viewson a range of options.The BBC was due to submit its response
before 1 July 2001.
New services consultation
This consultation ran from 3 October to 17 November 2000.
There were 6,768 responses, the highest ever for a formal BBC
consultation exercise.
The proposals for new digital television and radio services are
given on page 42.The public gave a strongly positive responseto them:●●

73% of respondents thought that the proposed television
services would be a valuable addition to the BBC’s range;
70% thought the same for radio.

Listening to audiences
The BBC Listens provides an ongoing review of BBC
programmes and services from the point of view of audiences.
Each year we invite their views on specific topics via The BBC
Listens online site (www.bbc.co.uk/info/bbclistens) and public
meetings. For each topic, the BBC also sets up a panel of
independent advisers to review relevant output. What welearn is reported to the Executive Committee and Board ofGovernors, along with a summary of relevant audience
research, and feeds into programme planning.
The Governors also hold regular seminars to debate current
broadcasting issues with people outside the BBC who havea particular interest or expertise in the topic. When appropriatethese seminars complement a BBC Listens review.
In the last year we tackled the following topics:

In parallel, we asked the British Market Research Bureau (BMRB)
to run the same survey using a representative sample of the UK
public, to make sure that the consultation gave a fair reflectionof the views of people around the country.The results of thesurvey were even more positive about BBC proposals.

Cultural diversity
We reviewed the BBC’s representation of and service for the
UK’s diverse ethnic cultures and communities.

After the BBC submitted plans to the Secretary of State forCulture, Media and Sport in January, the DCMS ran its own
consultation up to 28 February 2001. At the time of printing
the BBC was awaiting a response to the proposals.

At public meetings in Hackney and Bradford and in e-mailresponses, people expressed disappointment in the BBC’s
coverage of the experiences and contribution of minority
ethnic communities.They were critical, for example, of theportrayal of Islam and Muslim communities, particularly in news
programmes; the lack of credible minority ethnic characters in

34 Annual Report and Accounts 2000/2001

Blue Peter presenter
Konnie Huq.

Jonathan Overend, one of Radio
Five Live’s sports reporters.
Appealing more to young
people is a priority for the BBC.
BBC Choice’s youth interview
show, Pass the Mic, allowed
young people to seize the reins.

mainstream programmes; and the failure to include black andAsian contributors in factual and lifestyle programmes. Morepositively, the quality of the World Service and children’s
programmes was welcomed, particularly the presence of
Konnie Huq on Blue Peter.
Recommendations from the review included regular portrayal
monitoring and making diversity awareness a key competency
for all programme makers.
Building on The BBC Listens exercise, the Governors debatedthese issues with an audience of about 200 people. Again
points raised included the lack of contributors from minority
communities in news and factual programmes; praise forGoodness Gracious Me but criticism of the lack of representationof people from ethnic minorities in drama and entertainment
overall; calls for the BBC to improve the recruitment anddevelopment of staff from ethnic minorities; and the need for
us to build better links with minority ethnic communities.
Six months on, the BBC’s Head of Diversity, Linda Mitchell,reported to senior management and the BBC Governors on
progress in responding to these points. BBC News, for example,
is working on the need to diversify its pool of experts andcontributors while BBC Drama has invested more in writing
initiatives and acting workshops to attract new minority ethnic
talent. A trainee runners scheme in Drama Series is planned;
BBC Sport is to train 12 minority ethnic journalists; 20 new

community affairs posts have been created by the Nations andRegions division; extra funding has been allocated to support
diversity initiatives; and action plans have been drawn up acrossthe UK to achieve employment targets.
The independent advice panel members: Baroness Flather,
Mr Khurshid Drabu, Ms Rasheda Ashanti and Mr Alby James.
BBC Radio Five Live
This review built on a BBC Listens review of Radio Five Livein 1997.There was an enthusiastic e-mail response fromlisteners.This included 180 comments and questions to theController, Bob Shennan, who was interviewed on air andonline as part of the consultation. A public meeting was held at
the JJB Stadium in Wigan.
Radio Five Live’s overall style, tone and output were muchappreciated. Concerns included the dominance of football at
the expense of other sports coverage. Some felt the news
coverage was lightweight at times and there was regret atthe loss of the satirical programme The Treatment. Other issues
included complaints about the poor quality of Medium Wave
reception.
The independent advice panel was highly supportive of Radio
Five Live’s approach, though it, too, suggested that more could
be done to expand the range and scope of sports coverage.

Annual Report and Accounts 2000/2001 35

Accountability

In response, Radio Five Live has made a commitment toincrease the range of sports covered in Chiles on Saturday andSport on Five.

about how to achieve it.The seminar has informed thedevelopment of a more participative approach to accountability
which will be piloted over the coming year.

The independent advice panel members: former Scotland
football international Pat Nevin, Paralympics gold medallist
Tanni Grey-Thompson, economist Bridget Rosewell andjournalist Gary Younge.

Handling complaints
The Governors have a responsibility to ensure the BBC has
a proper system for handling programme complaints.

The BBC and 16 to 24 year-olds
This BBC Listens review provided an opportunity to hear from
16 to 24 year-olds about BBC Television – and what they would
like to change – while a Governors’ seminar took the debate
wider, hearing from people in this age group what public service
broadcasting meant to them.
There was an enthusiastic response to The BBC Listens online
invitation with over 600 e-mail comments.The independent
panel consisted of nine 16 to 24 year-olds who were selectedfrom across the UK and met for two half-day sessions.
Feedback highlighted the perception of BBC Television asconservative. Most felt the BBC must shed its ‘Auntie’ image
if it was to resonate with a younger audience – and theywanted a more diverse representation of ethnic minorities onscreen so that BBC Television reflected the world they lived in.
There was also a desire for the BBC to originate good British
comedy and entertainment programmes and criticism of lastminute schedule changes, particularly the perceived frequentscheduling changes to sci-fi and cult programmes on BBC Two.

To this end, the Programme Complaints Unit (PCU) investigatescomplaints which give reason to believe that a programme
broadcast by the BBC’s licence fee-funded services may havefallen seriously short of the standards set out in the BBC
Producers’ Guidelines. Complaints about other matters areforwarded to the appropriate areas of the BBC for attention.
In 2000/2001, the PCU dealt with 783 complaints, of which 124
were wholly or partly upheld.The findings on upheld complaints
are published in a quarterly bulletin, together with a noteof the action taken in each case. During the year, 62% ofcomplaints were answered within the target times (20 days,
or 35 days for more complicated cases), compared with 73%
in the previous year.This was due to technical difficulties witha new computer system.
A sub-committee of the Governors, the Programme
Complaints Committee, hears appeals against decisions of the
PCU. During the year, the Committee received 27 requests forappeal. Full consideration was given to 23 of these cases, four
were upheld in part and two in full.

The Governors’ seminar, entitled ‘Why have the BBC?’, sprang
from a recognition that 16 to 24 year-olds are the first to be
fully exposed to a wide choice in all aspects of media and areless likely than older groups to have an inherited understandingof the BBC’s public purposes.

The PCU also deals with the Broadcasting Standards
Commission (BSC) on complaints about BBC programmes.
In the year to 31 March 2001 the BBC received 34 notificationsof fairness and privacy complaints from the BSC. Sixteen fairness
and privacy complaints (some relating to earlier years) werewholly or partly upheld, one of which is currently subject to theCommission’s appeals process.The Commission notified the BBCof 1,144 complaints about standards, and complaints were partlyor wholly upheld about 19 broadcast items or series. Because ofaction already taken by the BBC, the Commission recorded
complaints about 12 items as ‘resolved’.The BBC complied withall directions given under the Commission’s statutory powers.

Sixty 16 to 24 year-olds were selected by professional
recruitment services to be representative across a broad
demographic profile, reflecting race, religion and social class.
Workshop sessions and open debate provided the opportunity
for lively discussion of participants’ views on BBC News; BBC
portrayal of issues affecting their lives; tastes in entertainment
and music; and what BBC Online could offer them.Their views
will contribute to the development of programmes and services.

Accessibility
BBC Information operates 24 hours a day, seven days a week
handling telephone and written comments and queries fromaudiences. Every comment is logged and reported daily acrossthe BBC.The number of calls dealt with by the call centre thisyear was 952,500, an increase of 12% on last year. Over 73,000
letters were handled this year and BBC Information received
over 116,000 e-mails – a 68% increase over last year.

Accountability
This working seminar was an important part of an ongoing
review of ways in which the BBC listens to and interacts withthe public. It explored what accountability means for the BBC
and provided an opportunity to learn from the experience ofa wide range of other organisations and look at new ideas

BBC Information achieved its target of answering 80% of letterswithin five days, acknowledging all e-mails within 24 hours andanswering 100% of all e-mails within three days. In every
quarterly Customer Satisfaction survey since July 2000 over
90% agreed that the service was good or excellent.

The outcomes of the review will help inform BBC Television
overall, and particularly the development of programming on
BBC Three, the proposed digital channel to be launched inautumn 2001, subject to Government approval (see page 42).

36 Annual Report and Accounts 2000/2001

Reports from Advisory Bodies
On behalf of licence payers, a network of more than 500 people around the UK advises theGovernors on programmes and services through a range of advisory bodies.Their annual
reports to Governors are summarised below.
Broadcasting Council for Scotland
Programmes such as Prison Officer and In Search of Scotland
helped to draw audiences to BBC Two Scotland whilst
underlining the commitment to public service broadcasting.
Amongst other output, Chewin’ the Fat, which also enjoyednetwork runs, the arts strand Ex-S and T in the Park attracted
large audiences and critical acclaim. Following a review of Radio
Scotland programmes, a number of changes were introduced
which resulted in an increase in hours of broadcasting from
Aberdeen and Inverness, and an enhanced hourly service ofnews, sport, weather and travel information.
The number of hours of network drama and readings produced
for Radio 3 and Radio 4 reached an all-time high. In television it
has been satisfying to see recommissions for Monarch of the Glen,
Castaway, Tinsel Town and Two Thousand Acres of Sky. Attracting
and retaining the key talent necessary to further network
ambitions provides a challenge for the current year.
News programming has delivered some powerful output
through Frontline Scotland, whilst parliamentary and politicalprocesses in Edinburgh, London and Brussels have been subject
to rigorous scrutiny on BBC Two Scotland in Holyrood andHolyrood Live. Politics Tonight on Radio Scotland made a valuableaddition to coverage. Reporting Scotland faced a toughcompetitive marketplace in the 6pm to 7pm hour; Newsnight
Scotland delivered strong analysis and debate.The daily andweekly programmes covered a range of major events andstories in depth, including the death of the First Minister, theLockerbie trial, the fuel and exams crises and the foot andmouth outbreak.
In relation to BBC Scotland objectives, work has been under
way to extend Radio nan Gaidheal (RnG) transmission tocomplete its reach across Scotland.Technical preparation is welladvanced for delivering BBC Two Scotland to the South West,in addition to launching BBC Two Scotland Digital across thecountry. Branding work remains to be completed, but Radio
Scotland and RnG have been streamed online to warm
appreciation from audiences.
In the year ahead, rebalancing the schedules post-devolution
will move forward as the benefits of extra funding devoted to
new drama and entertainment for audiences in Scotland begin
to impact.This investment will include the introduction of atelevision bi-weekly drama.
The Council looks forward to working closely with the Boardof Governors in tracking and assessing the impact of theGovernment’s Communications Review as it affects Scotland. Aspart of that, the future of Gaelic broadcasting will be a key issue.

Broadcasting Council for Northern Ireland
In the year under review, BBC Northern Ireland news andcurrent affairs teams have continued to cover the first full yearof work for the Northern Ireland Assembly as well as the everchanging security, political and socio-economic scene; with theongoing story of the implementation of the Patten proposals
on police reform, the loyalist feud, the release of republican andloyalist prisoners from the Maze, the visits of Bill Clinton andTony Blair, and in January, the resignation of Secretary of StatePeter Mandelson, followed by news of his replacement, Dr John
Reid. BCNI commends the continuing high quality of radio andtelevision news reporting and notes that almost all news andcurrent affairs strands add to the BBC One channel average.
The move of the Nine O’Clock News to ten o’clock in Octoberalso provided a Northern Ireland television bulletin on BBC
One at 10.25pm. We congratulate BBC Northern Ireland on its
decision to move the bulk of its television output to follow thislocal bulletin – an initiative which has added to the network
share on BBC One at that time.
Praise is also due to Radio Ulster which continues as themarket leader in Northern Ireland. However, this has beena disappointing year for network radio commissions, and webelieve that BBC Northern Ireland must redouble its efforts tosecure high-quality offers in the coming year. Strong efforts alsoneed to be made to improve the levels for factual, and music
and arts programming on network television.
There will be a considerable challenge in originating a digital‘zone’ on BBC Two Northern Ireland later this year. However,
we believe that the experience of BBC Choice Northern
Ireland and the creative pioneering spirit evident in its
development augurs well for a strong start.
Overall it has been a year of high-quality output and talentdevelopment for BBC Northern Ireland, with approval ratings
improving year on year. However, we would wish to see
increasing local relevance in all output, particularly sport. It has
also been a year of considerable change, with the appointmentof the new Controller, Anna Carragher, and a management
restructuring in line with the One BBC ethos. We would
wish to pay tribute to the professionalism of staff and to their
willingness to embrace new ways of working, using newtechnology in a highly cost-effective way.The Council is mindfulof the recent substantial programme investment in the Nations’‘New Vision’, and is confident that plans are in place to deliver it.
Broadcasting Council for Wales
BBC Wales saw huge changes during 2000/2001 including
comprehensive restructuring of management and programme
departments, the ending of the split between commissioning
and production, and preparation for the re-integration of BBC

Annual Report and Accounts 2000/2001 37

Reports from Advisory Bodies

Wales Resources. New programme strategies were also
prepared, and the Council warmly welcomed the resulting
commitment by the Board of Governors to increase future
annual funding to support programme-making. New
accountability relationships were also developed in the courseof the year, with the National Governor appearing with BBC
executives before formal committees of both the Westminster
Parliament and the National Assembly for Wales.
The BBC in Wales still outperforms the UK average, but
increasing commercial competition poses a tough challenge.
Against this background the Broadcasting Council for Wales has
been pleased to note substantial progress against objectives.
News and Current Affairs performed strongly, with audiencesin Wales continuing to appreciate both existing staples andsuccessful new offerings such as The Exchange, Dragon’s Eye andthe 10.25pm bulletin.The Council looked forward to seeing theBBC’s ongoing response to devolution extending to otherprogramme areas: the renewed emphasis on finding anddeveloping young talent and increasing the diversity of the staff
base was commended as a positive step towards the
production of programmes which would find a national platform
on the BBC networks, and provide a distinctive service for
Welsh audiences in both Welsh and English.The Council lookedin particular for more programme coverage of Welsh business.
BBC Wales programmes attracting critical acclaim during theyear included BAFTA-nominated Care, Panorama: the Powerto Abuse, Ellen MacArthur: Sailing through Heaven and Hell,This Land, the Voice of Music Theatre competition staged inpartnership with BBC Radio 2, and The Magician’s House, which
won an international Emmy. Network exposure for programmes
from Wales was still an issue however: although drama
productions such as Border Café and Dirty Work had been
disappointing, the Council hoped that promising current series
such as Belonging would win a wider audience. Members feltthat this was of particular importance given the concern
expressed by many viewers when Wales and the Welsh wereallowed to become the butt of jokes on network television:individual incidents, trivial in themselves, but taken together thesource of growing offence to many licence payers.
The BBC Wales radio networks made encouraging progress
during the year, with Radio Cymru performing particularly well.
Online was developing into a very important and distinctive
channel of communication with audiences, with the site BBC
Cymru’r Byd rapidly establishing itself as the leading Welshlanguage gateway to the internet. Education plans were
impressive, and the Council commended the care which had
been taken to tailor digital provision to the demands of the
Welsh curriculum.This was a core public service which the
BBC was well-placed to provide.
As BBC Choice Wales came to an end, the Council expressed
its appreciation of the creative contribution staff working on
it had made to BBC Wales’ portfolio of services, and looked
forward keenly to the development of a new digital ‘zone’
on BBC Two Wales.

38 Annual Report and Accounts 2000/2001

English National ForumIn a year of exceptional investment by the BBC in local andregional services, the 48 advisory councils in England,
represented by the English National Forum (ENF), have notedsignificant developments to the BBC’s 39 Local Radio stations,
the BBC Asian Network, and the ten regional television services(soon to be 11, with the launch of the service for the South East).
The extensions to the late evening regional news bulletins, partof the BBC News at 10pm, and the breakfast bulletins havebeen welcomed.
BBC Local Radio’s unparalleled service to local communities,
demonstrated most clearly at times of crises including floods,
fuel and rail emergencies, and the foot and mouth epidemic, isbeing supported with enhanced funding and the promise that
Local Radio budgets would be protected for the lifetime of thecurrent Charter.
The development of local online sites and the pilot BBC Zone
in Blackburn are seen as exciting opportunities to reach out toand connect with new audiences, and in particular those who
may feel under-served by local and regional BBC services, suchas the young. Greater localness is being achieved with theintroduction of separate services for London and for the South
East, the Radio Oxford/Radio Berkshire split, the launch of
television sub-opts for Oxfordshire and the Channel Islands,
and the augmented schedule of transmitter work to improve
local radio reception. However, the ENF is disappointed that
there are still parts of the country which suffer from poor or
non-existent reception.
On network services, the ENF has identified a failure to cherish
and reflect England’s diversity sufficiently; included in this is anunder-representation of life away from the capital, in particularin the northern regions and the Midlands.The ENF welcomesthe BBC’s recognition of these shortcomings and looks forward
to positive action stemming from current deliberations.The
principal concern is the absence of regional television services
on digital satellite, which the ENF sees as a priority in order toprovide a comprehensive service for audiences in the English
regions, and in the light of the recent White Paper oncommunications and ITV plans for regional services.Thereis also a desire to see improved scheduling of the many quality
regional television programmes, with a move to BBC One.
During the course of the year, the ENF has been heartened by
the increased involvement of the advisory councils in current
and future planning, and the improved communication andfeedback from both Governors and senior management.
World Service Consultative GroupThe Governors’ World Service Consultative Group wasestablished following the 1996 BBC restructuring to provide theGovernors with independent external advice on the range andquality of World Service output.The Group aims to review
World Service English and vernacular output over a threeyear cycle.

For 2000/2001 the Group decided to review services to Europe
and the EurAsia region, both on radio and online. Languages
selected this time were English, Albanian, Czech, Polish andSerbian for Europe, and English, Persian, Russian and Turkish for
EurAsia.
For each of these languages, between two and four assessors
were recruited by an independent consultant, using a number of
local market research agencies and other contacts.The assessors
were asked to listen to up to ten hours of highlighted output
with the focus on News and Current Affairs programmes, orto surf the BBC World Service Online sites. Altogether 36
individual assessors submitted reports.
The Consultative Group members note the higher quality of
the assessors’ reports this year. Whilst being aware of thelimitations of the research, they feel that the reports provide
valuable diagnostic tools and give detailed feedback whichshould be useful to programme makers.
The Consultative Group is pleased to note, as the single mostimportant finding of the review, that the quality, authority andtrustworthiness of World Service broadcasts continues to be
rated very highly.The Group is also impressed this year by theperception of relevance and added value displayed regularly inthe assessors’ reports.
In its discussions the Group identified, however, a numberof areas where the assessors’ reports indicate room for
improvement.These are:
●
●
●
●
●

●

●

the balance between world news and local news;
the order in which news items are presented;
presentation style;programme labelling and the clarity of output structures;
trailing and promotion of programmes across radio andonline output;
the opportunity for more interactivity with listeners,
particularly online; andthe ease of navigation on the World Service Online site.

The Consultative Group has also asked World Service
management for a report on how it plans to improve therelevance of the present output mix to its audience.
Central Religious Advisory Committee
The Central Religious Advisory Committee (CRAC) advises the
BBC on religious broadcasting policy and programmes.
In a fragmenting broadcasting environment, anxiety about themarginalisation of religion by broadcasters was a recurrent
theme for CRAC, although the Committee welcomed theBBC’s promptness in putting in place more effective channels
for debate with the Board of Governors and those responsible
for commissioning and scheduling programmes.

a shallower approach on television. Highlights on radio included
Where was God? (Radio 2, 18 October 2000), two series of
Prayer for the Day (January and March 2000) and Good Morning
Sunday (Radio 2).Television highlights were also identified,including Seeing Salvation (April 2000) and Easter Tales (April
2000).The Committee expressed serious disappointment over
The Veil (May 2000). Although it recognised that the programme
was made in the style of an arts programme, CRAC regretted
the offence it caused to members of the Muslim community.
Appeals Advisory Committee
Charitable appeals play an important part in the BBC’s role asa public service broadcaster. Responsibility for allocating regularappeals and advising on applications for others rests with the
BBC Governors, advised by the Appeals Advisory Committee(AAC).The AAC is made up of specialist external advisers who
represent a broad range of interests across the charitable field.
The AAC also advises on general policy matters relating to
BBC appeals.
Last year the BBC broadcast over 60 network appeals forindividual charities, and raised over £62 million via Children
in Need and Comic Relief. Listeners donated over £890,000
to charities featured on the weekly Radio 4 Appeal (excludingChildren in Need) while viewers of BBC One’s monthly Lifeline
programme donated over £303,000 to the 12 charities featured
over the year.The BBC also broadcasts appeals for causes
specific to Scotland, Wales, Northern Ireland and the English
regions.
In November 2000 Children in Need raised over £12.2 million
on the night for a wide range of projects working withdisadvantaged children in the UK. It is projected to raise over
£20 million in total.
In the same month, Blue Peter launched its Stamp Aid appeal on
behalf of Health Unlimited, which works to provide primary
health care in remote parts of the world. By the end of March
2001 over 130 million stamps had been sent in.These, together
with cash donations, raised over £160,000.
Broadcast in March 2001 Comic Relief has raised over
£50 million for projects working with people whose basic
human rights and needs are abused or neglected in the UK andin Africa.
In March 2001, the BBC also took part in an emergency appeal
following the India earthquake.The appeal was requested by
the Disasters Emergency Committee (DEC), an umbrellaorganisation which launches and co-ordinates the UK’s National
Appeal in response to major disasters overseas. Overall theappeal, including BBC appeals on television, radio and BBC
Online, raised over £20 million.

In reviewing programmes, CRAC contrasted the strength anddepth of religious output on radio with what was sometimes

Annual Report and Accounts 2000/2001 39

Looking Ahead
2000/2001was a year of transition for the BBC. Big steps were taken towards spending
substantially more income on programmes and services, towards a more diverse workforce,and towards delivering a more distinctive set of television and radio services.The work willcontinue in the year ahead.
Over the next two years the BBC is committed to the biggest
single increase in spending on programmes in its history.
The new level of spending which we will reach in 2002/2003
will then be sustained until 2006/2007. Delivering new services
and many thousands of hours of new programming will require
constant evolution of the BBC’s structure, workforce andworking practices.
The Governors recognise the importance of stable objectives
over this challenging period.They have therefore decided toretain seven of the 12 objectives they set out for the BBC
in last year’s Annual Report.This decision not only reflects thefact that these are long-term objectives but underlines that,
although the BBC is operating in a rapidly changing
environment, our core purposes and role remain unchanged.
This section of the Annual Report therefore sets out the sevenobjectives which have been retained, noting any issues which
management need to take into account, and five new or
modified objectives.

Continuing objectives
Strengthen BBC One, as well as all core TV and radio services,with a particular focus on offering a richer mix of content
The Governors recognise the tensions involved in trying tostrengthen BBC One in terms of improving reach, share andapproval, as well as maintaining its distinctiveness. Despite these,
they believe the BBC can continue to make programmes of
distinction which appeal to large audiences.
Deliver greater value for money for licence payers year
on year through increased efficiency and more effective
commercial activities
The Governors will pay particular attention to the first yearof business of the BBC’s new wholly-owned subsidiary, BBC
Technology Holdings Limited, and to developing plans toincrease commercial revenue over the next year.
Improve our openness and accountability to all stakeholders
There will be a number of opportunities to improve BBC
accountability over the coming year – particularly in the context
of the Communications Bill debate.The BBC will publish

Left and below: We have plans
to expand the Asian Network
service of news, features, music
and religious and cultural
programming.
Above:The BBC’s proposed newservices include two channels
for children (see page 42).

40 Annual Report and Accounts 2000/2001

Statements of Programme Policy which demonstrate its
distinctive public service ambitions. Equally, the BBC needs todemonstrate that it is more open and responsive to its viewers
and listeners.
Ensure we serve and are valued by currently under-served
audiences, particularly the young and minority ethnic audiences
The Governors’ seminar with 16 to 24 year-olds in March 2001
convinced them of the need for the BBC to continue raising
its game in serving this audience group.
Move towards our long-term goal of increasing thepercentage of licence fee income spent on content andservices from 76% to 85%
The BBC looks well on course to achieve this.
Improve diversity internally to 10% of staff from minority
ethnic backgrounds by the end of 2003, with an increase from
2% to 4% at senior management levels
These remain tough targets and will require determined action
from management at all levels.
Drive a change in BBC culture to generate greatercollaboration and creativity
The good signs of changes in culture over the last year need
to be reinforced across the organisation.

New or modified objectives
Launch the approved new digital TV and radio services, andmonitor their early performance
The Governors were pleased with the progress made last year
in developing new digital proposals, and with the demonstrable
public support shown for the plans in last autumn’s consultation.
But Governors and management recognise that this part of theprocess was relatively easy compared with the logistical, creativeand competitive challenge of launching approved new BBC
services into the marketplace.
The service plans are set out overleaf. Following the licencefee settlement 18 months ago, funding for them has been
earmarked in the BBC’s budget projections until 2006/2007,
and we have – as we are required to – sought Government
approval before going ahead. Subject to that approval, the BBC
will be able to offer an attractive set of free-to-air digital
services which will both serve different sections of our audience
more effectively, and help drive digital take-up.
The BBC must get two things right at the launch of the newservices: they must be branded appropriately and must be
effectively marketed.Thereafter the commissioning andscheduling of the new services, and the BBC’s ability to deliver
high-impact programming will be the key to their success.
In last year’s Annual Report, the Governors recognised that BBC
Choice and BBC Knowledge had not become well established

We plan to extend our arts,
culture and ideas coverage withBBC Four. Programmes might
include performances such as
the opera El Nino with Willard
White (below), or films like
When We Were Kings (right)
shown last year in BBC
Knowledge’s Storyville season.

Annual Report and Accounts 2000/2001 41

Looking Ahead

Proposed new digital television services
In addition to BBC One, BBC Two, BBC News 24 and
BBC Parliament, we propose to launch:
BBC ThreeOffering entertainment, news, new comedy and drama.
The service, mainly for younger viewers, will reflect thelifestyles and attitudes of modern multi-cultural Britain.
BBC Four
Offering culture, arts, ideas and serious debate.
We also propose two new children’s channels – one forpre-school children, the other for older children.These willoffer a distinctive and high-quality alternative to commercial
children’s television – with a strong UK identity and freefrom advertising.
The pre-school channel
Offering programmes that stimulate children to learn
through play.
The channel for older children
Providing interactive new drama, entertainment and factual
programmes.
Proposed new digital radio services
In addition to the existing networks, the BBC is planning five
new national radio services that will be available through allwith digital TV viewers.The Governors believe that BBC Three,
BBC Four and the two channels for children stand more chanceof success, since they are better conceived and more adequately
funded. But they also know that success is far from guaranteed
and will take time to achieve.
Demonstrate improved services to the whole of the UK
as part of the BBC’s ongoing response to devolution andregional diversity
A new strategy for BBC Nations and Regions was agreed
in the autumn.The BBC’s response to devolution and regional
diversity is moving beyond news and political reporting toentertainment and factual programming.Tackling underperformance in the North of England is a priority.
Reinvigorate the creativity and capabilities of the BBC’s
in-house production teams across the UK
The BBC’s services are only as good as the combined impactof the programmes in their schedules.The service plans for the
coming years involve spending millions more on in-house BBC
production – from drama and entertainment, specialist factualand sport, and from our production bases outside of London
across the UK.There are plenty of examples in broadcasting
history, including the BBC’s, of money not buying quality,
distinctiveness and audience appeal. Over the next few years,
although there are bound to be some new programmes which
prove unsuccessful, the BBC must provide a critical mass of new
programming which really resonates with audiences.

42 Annual Report and Accounts 2000/2001

digital outlets, including the internet, digital radio and digitalsatellite and cable.They are:
Network X (working title)
A black music, news and speech service aimed at a young
audience, with emphasis on UK-produced music with live
events.
Network Y (working title)
Focusing on the popular music over the past 30 years. It willdraw on the BBC’s unique archive of musical performance,
concerts, documentaries and interviews.
Network Z (working title)
A new speech-based service, which would include children’s
programming, built on BBC Radio’s tradition of offering
stimulating drama, comedy, readings and story telling for all
the family.
Five Live Sports Plus
Five Live Sports Plus – extending the sports coverage
currently offered on Radio 4 and Radio Five Live.
A national BBC Asian Network
Serving the whole of the UK, offering music and speech,
and building on the success of the Asian Network originallybroadcast only in the Midlands.

This presents a creative challenge to every BBC production
area, including those like the Natural History Unit in Bristol
which is rightly regarded as world-class.There is no blueprint
response to this challenge. For some production teams it will
require stronger leadership, for others better teamworking, forothers a new strategy for innovation. Above all, the BBC
must develop or buy in the capabilities required to sustain
or reinvigorate its production centres.
Make a compelling case for the BBC leading the developmentof a UK-wide digital curriculum and prepare the BBC to playthis role
It has been frustrating that over the last year the BBC has notbeen able to take more significant steps in the delivery of its
education strategy, which was agreed the previous year.This ispredominantly because the BBC is not in a position to act
unilaterally in education issues – we wish to work with otherorganisations and liaise with Government.This has slowed down
progress this year.
The BBC remains determined to realise its digital learningpotential, most importantly in delivering a UK-wide digitalschools curriculum. It is therefore a priority this year that the
BBC not only makes a compelling case for the BBC playing
a central role in the delivery of a comprehensive digitalcurriculum but also makes sure that when the time comes todeliver the curriculum to pupils, teachers and parents, it will
have been well worth waiting for.

Above:The BBC’s New Media
department is creatinginteractive TV for the future. For
instance, while watching a
programme (here EastEnders),
viewers will also be able to callup on their screen informationsuch as the latest news or
sports or financial results.

Achieve a step change in the impact on audiences of theBBC’s new media services, including interactive television
The BBC received praise from all quarters for its earlyrecognition of the potential of the internet, and the depth andquality of its website, bbc.co.uk. Although the hype around theinternet and dot.coms has been deflated over the last year, itremains clear that digital technologies will continue to converge
and use of the internet will grow. In the last year, the BBC hasreassessed its new media strategy in the recognition that theattractiveness and navigability of the BBC’s online service needs
improving and that BBC interactive TV developments need togather pace.The new strategy aims to make the BBC the UK’s
number one digital destination.

Above: Liquid News and left,
Players Club which go out on
BBC Choice – BBC Three willoffer more entertainment, news,
new comedy and drama foryoung audiences.

Promises to licence payers: 2001/2002
Every year, the BBC sums up its priorities and plans in
its promises to viewers and listeners. Our promises for
2001/2002 build on the commitments we made last year.
●

●

●
●

●

We will launch our package of digital services with
programmes that add value to BBC TV and Radio.
We will deliver an even stronger performance from
BBC One and our other main TV and radio services.
In particular we will give a better service to young
people and ethnic minorities.
We will put even more money into programmes.
We will provide learning materials on BBC Online
to support schools across the UK.
We will find better ways to be open and accountable.

Annual Report and Accounts 2000/2001 43

Report on Compliance and Regulatory Matters
The Governors have clear responsibilities under the BBC’s Charter to ensure that the BBC
behaves responsibly and follows all applicable regulations and codes of practice.They mustsatisfy themselves that the BBC complies with all legal obligations, has an appropriate
management structure, maintains sensible controls to protect its assets, and adheres to its
own guidelines and codes of practice.
On the following pages, the Governors and the auditors reportformally on the BBC’s policies, procedures and compliance asfollows:
1 Fair trading
2 Financial statements
3 Our risk and control processes
4 Governors’ remuneration report
5 Programmes from independent producers
6 Other rules
7 Environmental statement
8 Social statement

44-47
47
48-49
49-52
52
53
53-54
54-55

1 Fair trading
BBC commercial activities and fair trading
The BBC’s core purposes are those of public service: seeking tosatisfy audiences with services that inform, educate and entertain;
and that enrich their lives in ways the market alone will not.
Licence payers’ investments, built up over many years, haveproduced a critical mass of talent and production capability for theBBC, together with an unparalleled archive of past programming.
These assets have a substantial 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 the licence payer.
In pursuing commercial activities, the BBC is, like otherorganisations, fully subject to both domestic and European
competition law. However, unlike other organisations, the BBC’s
responsibility to trade fairly is reflected in further and moredemanding requirements arising from its Royal Charter.
In particular, the Charter requires the avoidance of cross-subsidy
between the BBC’s publicly funded and commercial activities.
Fair trading compliance procedures
The BBC’s fair trading obligations are embodied in its Fair
Trading Commitment, compliance with which is scrutinised
throughout the year by a standing committee of the Boardof Governors, the Fair Trading Compliance Committee.
The Fair Trading Compliance Committee is advised directly
and without the mediation of BBC management by the BBC’s
Controller, Fair Trading and through a significant programmeof internal and external audit, the latter conducted by anindependent firm of auditors. All subsidiaries and commercial
operations report to the Committee on their activities, andall staff with commercial responsibilities are required by theCommittee to be trained in the BBC’s fair trading policies.

44 Annual Report and Accounts 2000/2001

The BBC has a clear and explicit programme of fair trading
compliance, which is now accredited by the British Standards
Institute. By their nature, fair trading judgements are complex,
reflecting the changing environment in which the media
industries operate.Through the Fair Trading Compliance
Committee, the BBC’s Governors bring informed scrutiny
to bear on the important issues of policy which arise from theBBC’s engagement in commercial ventures.
Fair trading complaints
One of the responsibilities of the Controller, Fair Trading, is toadvise the Board on any fair trading complaints which havebeen laid against the BBC. He can be contacted at The BBC,Broadcasting House, London W1A 1AA. In accordance with
the Secretary of State’s recommendations, the Fair Trading
Compliance Committee publishes a quarterly bulletin of any
allegations of breaches of the Fair Trading Compliance
Commitment of which they have been advised, and will deal
with any such complaints swiftly and in confidence, wheneverthis is requested by a complainant.
Events of the year
Implementation of Government recommendations
As part of the licence fee settlement in February 2000, theSecretary of State recommended a number of specific measures
to be taken on fair trading issues.The BBC has taken thefollowing steps to implement these measures:
The required independent review of the BBC’s fair trading
policies has been conducted by Richard Whish, an eminent
competition law expert, who concluded that he was ‘satisfied
that the Fair Trading Commitment and the Commercial Policy
Guidelines are appropriate to ensure that the BBC does not
distort competition in commercial markets.’
The BBC met the requirement to appoint separate auditors
for the fair trading and finance functions. Ernst & Young havebeen appointed as auditors to assess fair trading compliance.
The BBC retains KPMG as its financial auditors.
The BBC published its first Fair Trading Complaints Bulletin in
September 2000 and continues to publish it on a quarterly
basis. Copies of the bulletin are available from the Controller,
Fair Trading, at Broadcasting House, London W1A 1AA or
online at www.bbc.co.uk/info/trading01a/index.shtml
The BBC has been awarded the ISO9001: 2000 quality
standard by the British Standards Institute for the
management of its fair trading procedures.

•

•
•
•

External challenges
During the year there were no successful challenges to externalbodies about the BBC’s commercial activities:
ITN has complained to the Office of Fair Trading (OFT)

•

•

•

that the supply of BBC News content to mobile telecoms
operators as a public service is a breach of the Competition
Act 1998.The BBC has defended its position and the OFT
is considering whether to conduct an investigation, under
the Competition Act.
ITN complained to the OFT alleging that a number ofcarriage agreements for BBC News Online with third party
portals were in breach of the Competition Act.The OFT
is conducting an investigation under the Competition Act
and has not yet completed its enquiries.The BBC does notbelieve that it is in breach.
The OFT rejected, on 6 December 2000, a complaint from
TalkSport, originally made in May 2000, that Radio Five Live
had acted anti-competitively in successfully acquiring live
rights to English Test Match cricket.

Complaints to the BBC
During the year a number of complaints were made to theBoard of Governors or to the Controller, Fair Trading, that the
BBC was in breach of its guidelines:
The following complaints were not upheld:
ITN complained to the Board of Governors on 19 June
2000 alleging that the agreement between the BBC and US
broadcaster WL1W21, for the supply of BBC World, was inbreach of the Fair Trading Commitment, suggesting that norevenue was being generated by the sale.The BBC explainedthat although the terms of the supply agreement would
remain confidential the sale did generate positive revenues
to BBC Worldwide.
On 15 January 2000, Glyn Ford MEP wrote to the BBC
referring to a letter he had received from Bristol-based
facilities supplier 4:2:2 alleging that BBC Resources Limited
was unfairly competing in the market for facilities.The BBC
has submitted a response denying the allegations.
On 23 November 2000, ITN wrote to the Controller, Fair
Trading, alleging that an on-air trail for BBC News unfairly
promoted the commercial supply of news content to mobile
phone operators.The Controller, Fair Trading, found that
although the trail did not promote the commercial service inany way, the trail should be edited to avoid future confusion,
but making it clear that the content visible on the mobile
device is recognisably of the BBC’s publicly funded News
Online site.

•••

The following complaint was upheld in part and action was
taken to remedy the concern:
IPC Media complained to the Board of Governors on
11 December 2000 alleging that BBC Worldwide Limited’s
publishing of eve, and the trailing of both eve and star, wasin breach of the BBC’s Commercial Policy Guidelines.The Fair
Trading Compliance Committee found that the publishing ofeve was a legitimate activity for BBC Worldwide, but felt thatthe trailing of eve and star invited challenge (although thetrails were technically consistent with the rules governing
trailing on the BBC).The Committee also found that thelaunch of star magazine, before the star programme strand
was fully established as part of Live & Kicking, invited challenge,•

even though it technically complied with BBC policy. As aresult of these findings, the name of the star programme
strand was changed (to remove the link with the magazine)
and on-air trails for eve or for star were stopped. Any future
requests for such trails will only be granted following theprior scrutiny of the BBC’s Controller, Fair Trading.
The following complaint is still being considered:
Independent record producer Robin Millar wrote to theController, Fair Trading, on 3 December 2000, alleging thatseveral Radio 1 disc-jockeys in the dance music genre
discriminate unfairly in favour of artists in whom they havea financial interest.

•

BBC restructuring
The new BBC structure was announced in April 2000 andhas been implemented during the course of the year.The
Controller, Fair Trading, has personally briefed all new divisional
directors, and day-to-day Fair Trading Representatives have been
appointed in all divisions.The Controller, Fair Trading, and thecommercial policy team have also provided training sessions forstaff in the new divisions to ensure that the fair trading risks
associated with restructuring are properly managed.
BBC Resources joint venture with Granada Media GroupThe OFT considered whether a proposed facilities joint
venture in Manchester, between BBC Resources Limited andGranada Media Group, should be referred to the Competition
Commission for a formal investigation under the Fair Trading
Act 1973. Following a lengthy investigation, the OFT foundthat the joint venture would pose no fair trading risk andtherefore declined to refer the matter to the Competition
Commission.
BBC Technology incorporation
Compliance with the Fair Trading Commitment requires thatpublic service divisions are allowed only to trade commerciallyusing demonstrably marginal capacity, and are not expected tomaintain dedicated capacity for commercial purposes. Moreover,both the Commitment and external competition law requirethat the BBC’s commercial activities do not use or place licencefee funds at risk.To enable the BBC to engage more actively inthe commercial supply of technology-related services while
maintaining compliance with the Commitment and the law, anarm’s length commercial subsidiary was established. BBC
Technology Holdings Limited received approval from theSecretary of State on 27 February 2001 and formally began
trading on 31 March 2001.
Competition Act 1998
As expected, the first full year of the Competition Act 1998
has seen an increase in the number of complaints of anticompetitive behaviour investigated by the OFT. No successful
challenges have been brought against the BBC under the newlegislation.
Governors’ opinion
The Governors consider that the policies contained in the

Annual Report and Accounts 2000/2001 45

Reports on Compliance and Regulatory Matters

BBC’s Fair Trading Commitment are consistent with therequirements of the Royal Charter and the accompanying
Agreement.Through the Fair Trading Compliance Committee,
they have gained reasonable assurance that the framework ofcontrols and procedures designed to ensure that these policies
are applied throughout the BBC has been operating effectively
throughout the year.
Report to the Governors by Ernst & YoungOur role as the BBC’s fair trading auditors is to carry out an
independent review of the framework of procedures andcontrols established within the BBC to give the Governors
reasonable assurance that the objectives of the BBC’s published
Fair Trading Commitment were achieved during the year ended
31 March 2001.The Governors are responsible for ensuring the
BBC meets all the requirements of competition law and trades
fairly.They approve its fair trading policies, determine theobjectives of the procedures and controls designed to ensurecompliance, and monitor outcomes.
Management is charged with identifying and assessing risks that
could threaten fair trading, and designing and operating theprocedures and controls to manage those risks.
Our detailed instructions and scope of work were agreed with
the Governors’ Fair Trading Compliance Committee. We aresatisfied that the agreed scope was sufficient to enable us toexpress the opinion set out below. We have also assisted the
Fair Trading Compliance Committee in its role of monitoring
fair trading compliance throughout the BBC, providing various
reports to it during the year.
Our approach
We have carried out a detailed programme of review designed
to provide reasonable assurance as to whether the different
divisions of the BBC were complying with the Fair Trading
Commitment.
Our work consisted mainly of enquiry and assessment toenable us to review whether appropriate procedures andcontrols were in place. We also tested a sample of materialtransactions to give reasonable assurance that the procedures
and controls had been applied.
As with any system of control, however effective, it is notpracticable to ensure that no errors or irregularities occur
without being detected. Our work was therefore designed togive the Governors reasonable assurance, but not certainty, as
to the adequacy of the procedures and controls which are inplace to ensure compliance with the Fair Trading Commitment.
Further, because fair trading issues require judgements which
ultimately might be tested in a court of law or elsewhere, there
is always a risk of challenge even where procedures have been
followed and decisions have been taken with the greatest care.
OpinionIn our opinion the BBC has established, and has applied,a framework of procedures and controls which provides

46 Annual Report and Accounts 2000/2001

reasonable assurance that the objectives of the BBC’s Fair
Trading Commitment have been achieved during the year
ended 31 March 2001. We also consider that the Governors’
statement of opinion on this page appropriately reflects theBBC’s compliance with its Fair Trading Commitment during theyear then ended.
Ernst & Young
Chartered Accountants

London22 May 2001

Governors’ report on BBC World Service Trading Protocols
The BBC World Service is responsible for commissioning andscheduling its own programmes and for making programmes
for its language services, but purchases English language
programme-making and technical and support services fromother Divisions in the BBC (the supplier Divisions). Thesearrangements were established in 1997 and were broadly
unaffected by the reorganisation of the Home Services in
April 2000.
It was agreed by a joint Foreign and Commonwealth Office(FCO)/BBC World Service Working Group that the BBC would
draw up new guidelines to govern the trading relationshipbetween the BBC World Service and the supplier Divisions, inorder to ensure that the World Service maintains its distinctive
voice and to preserve a clear separation between Grant-in-Aid
and licence fee income.These Trading Protocols wereapproved by the Governors’ Fair Trading Compliance
Committee in 1997.
Each of the supplier Divisions then drew up detailed
agreements with BBC World Service, specifying:services to be provided;• theto ensure the quality of the services; and• criteria• the cost of the services.
The Fair Trading Compliance Committee is responsible formonitoring and reviewing compliance with the Trading Protocols.
The Committee receives regular reports from management on
the effectiveness of the systems and procedures in place toensure compliance with the Trading Protocols.
KPMG has reviewed a summary of the value of transactions
and the related cash flows which have taken place during theyear between BBC World Service and the supplier Divisions.
KPMG has reported to the Governors that, in their opinion,
the information contained in the summary of transactions forthe year ended 31 March 2001 has been properly extracted
from the books and records of the supplier Divisions and has
been properly prepared on the bases of cost allocation andapportionment methods set out in the agreements between
BBC World Service and the supplier Divisions and that, on thisbasis, there has been no material cross-subsidy between Grantin-Aid and licence fee funds.
Governors’ statement on World Service Trading Protocols
Following regular reports to the Fair Trading ComplianceCommittee by the Controller, Fair Trading, and internal andexternal auditors, the Governors are satisfied that:
Trading Protocols reflect the requirements of the• the
FCO/BBC World Service Working Group;
are in place which are consistent with the• agreements
Trading Protocols; andhas been no material cross-subsidy between• thereGrant-in-Aid and licence fee funds.
2 Financial statements
Statement of Board of Governors’ and Executive Committee
responsibilities for the preparation of the financial statements
The Governors and Executive Committee are required by theBBC’s Charter and Agreement to prepare financial statements
for each financial year which give a true and fair view of thestate of affairs of the BBC and of its income and expenditure
for that period. In preparing those financial statements, theGovernors and Executive Committee are required to:suitable accounting policies and then apply them• selectconsistently;
judgements and estimates that are reasonable and• makeprudent;
whether applicable accounting standards have been
• statefollowed and disclose and explain any material departuresin the financial statements; andthe financial statements on a going concern basis• prepareunless it is inappropriate to do so.
In addition the Governors and Executive Committee havevoluntarily decided to comply with the accounting and disclosure
provisions of the Companies Act 1985 and, where applicable,of the Financial Services Authority Listing Rules.They are also
responsible for keeping adequate accounting records and taking
such steps as are reasonably open to them to safeguard theassets of the BBC and to prevent and detect fraud and otherirregularities.
Auditors’ report to the Governors of the British Broadcasting
Corporation (BBC)We have audited the financial statements on pages 59 to 79.
Respective responsibilities of the Governors and Executive
Committee and auditors
The Governors and Executive Committee are responsible forpreparing the Annual Report, including, as described earlier on
this page, the financial statements, in accordance 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 ourappointment, the Companies Act 1985.
We report to you our opinion as to whether the financial
statements give a true and fair view and are properly preparedin accordance with the Companies Act 1985. We also report toyou if, in our opinion, the financial review on pages 56 to 57 is
not consistent with the financial statements, if the BBC has not
kept proper accounting records, if we have not received all theinformation and explanations we require for our audit, or if
information specified by law regarding Governors’ and Executive
Committee remuneration and transactions with the BBC is
not disclosed.
We read the other information contained in the Annual Report,
including the corporate governance statement, and consider
whether it is consistent with the audited financial statements.
We consider the implications for our report if we becomeaware of any apparent misstatements or material inconsistencies
with the financial statements.
In addition to our audit of the financial statements, the Governors
and Executive Committee have instructed us to review theircorporate 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 thestatement on pages 48 to 49 reflects the BBC’s compliance withthe seven provisions of the Combined Code specified for audit
review by those rules and we report if it does not. We are notrequired to form an opinion on the effectiveness of the BBC’s
corporate governance procedures or its internal controls.
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. It also includes anassessment of the significant estimates and judgements made by
the Governors and Executive Committee in the preparation of
the financial statements, and of whether the accounting policies
are appropriate to the BBC’s circumstances, consistently appliedand adequately disclosed.
We planned and performed our audit so as to obtain all theinformation and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonableassurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity
or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial
statements.
OpinionIn our opinion the financial statements give a true and fair viewof the state of affairs of the Home Services and the BBC at
31 March 2001, and of the surplus of the BBC for the year thenended and have been properly prepared in accordance withthe provisions of the BBC’s Charter and Agreement and theprovisions of the Companies Act 1985 as if those provisions
had applied to these financial statements.
KPMG
Chartered Accountants
Registered Auditors

London11 June 2001

Annual Report and Accounts 2000/2001 47

Reports on Compliance and Regulatory Matters

3 Our risk and control processes
Governors’ review of corporate governance
The Governors are appointed as trustees for the public interest
to ensure that the BBC is properly accountable to Parliament,
licence payers and to viewers and listeners. Part of this rolerequires us to satisfy ourselves that the BBC is applying thehighest standards of corporate governance.
The BBC adheres to the seven principles of public life as set
out in the reports of the Nolan Committee on Standards in
Public Life.
The Combined Code, issued by the London Stock Exchange
in June 1998, sets out principles of good corporate governance.
The BBC voluntarily complies with the Combined Code to theextent it is applicable.The requirements of the Combined Codeare applied to the BBC with two exceptions. Firstly, thoserequirements relating to the appointment of non-executive
directors are inapplicable as the Governors are appointed by
the Queen in Council and their remuneration is set by the
Secretary of State for Culture, Media and Sport. Secondly, thoserequirements relating to shareholders can only be applied to the
BBC in so far as the BBC is accountable to the public, rather
than to shareholders, through the stewardship of the Governors.
How the BBC has applied the remuneration principles iscovered separately within the remuneration report on pages
49 to 52.
Board structure
The Governors are the members of the Corporation.They act
as trustees for the public interest while the Executive Committee
takes responsibility for the day-to-day operations.
Details of the Board of Governors and Executive Committee
are summarised on pages 4 and 5 and pages 6 and 7. A registerof interests for both the Governors and the Executive
Committee is maintained and may be inspected by written
application to the Secretary of the BBC.
The Board of Governors refers some matters to sub-committees.
The main responsibilities of these sub-committees are explained
elsewhere in the Annual Report as follows: Programme
Complaints Committee (page 36); Fair Trading Compliance
Committee (page 44); Audit Committee (page 49); Governors’Commercial Committee (page 49). Remuneration policy is
considered by the full Board of Governors.
Relationship with Parliament and licence holders
The BBC lays its Annual Report and Accounts before Parliament.
Governors or BBC executives may be, and frequently are, called
before parliamentary select committees to answer MPs’ questions
about the BBC’s activities and plans.
Approval for new channels and services, public or commercial,must be sought from the Secretary of State for Culture, Mediaand Sport.

48 Annual Report and Accounts 2000/2001

BBC World Service is funded by Grant-in-Aid and is accountableto Parliament through the Foreign and Commonwealth Office(FCO). Although it is editorially independent, its aims andpriorities are agreed with the FCO.
The BBC seeks to keep the public fully informed about its
services and the way in which it operates, and to be open andcandid about both successes and failures.The BBC will withhold
information only where there is a genuine matter of copyrightor contractual or commercial confidentiality at stake, or wherelegitimate considerations of privacy apply.
Information is made available, and audience views obtained,
in a variety of ways, many of which are discussed elsewhere inthis Annual Report.These include the Statement of Promises,
The BBC Listens strategy, online services, public events andmany publications.
Accountability and internal control
Financial reporting and going concern
The respective responsibilities of the Governors and Executive
Committee and the external auditors are set out on page 47.
Detailed reviews of the financial position of the BBC are
included in the financial review by the Director of Finance,
Property and Business Affairs on pages 56 to 57.This, together
with the review of the year on pages 8 to 31, provides anassessment of the BBC’s activities and current position.The
going concern basis has been adopted in the preparation of thefinancial statements as the Governors and Executive Committee
believe that the BBC has adequate resources to continue its
operations for the foreseeable future.
Internal control
The responsibilities in relation to internal control are clearly
defined.The Governors are ultimately responsible for theproper use of public money, while the Executive Committee
is responsible for maintaining an adequate system of internal
control and for reviewing its effectiveness. Such a system isdesigned to manage, rather than eliminate, the risk offailure to achieve business objectives and can only provide
reasonable, and not absolute, assurance against material
misstatement or loss.
The Governors and Executive Committee consider that there isan ongoing process for identifying, evaluating and managing thesignificant risks faced by the BBC.The process has been in place
for the year ended 31 March 2001 and up to the date of approvalof this report and accounts. It has been regularly reviewed by
the Governors and Executive Committee and accords with theguidance set out in the ICAEW’s guidance for directors, Internal
Control: Guidance for directors on the Combined Code.
While an established system of risk management and control,
including procedures to monitor and evaluate key risks, hasbeen in existence throughout the year, further steps have beentaken during the course of the year to reflect more fully thesubstance of the guidance and to accommodate the restructuringof the BBC and the introduction of new financial processes andsystems.These initiatives included improved procedures for theidentification, evaluation and management of key risks.
The key control procedures operating during the year aredescribed under the following headings:
management•TheriskBBC’s
Top Risks and associated action plans have beenreviewed during the year and these risks have been effectively
managed throughout the year.These action plans were verified
by Internal Audit who reported on them to the Audit
Committee.The chief executive of each division had a clear
responsibility during the year for the identification andmanagement of risks facing their business. During the year
divisional management have undertaken a focused review of
the risks associated with the achievement of objectives andstrategies including health and safety, business continuity andsecurity. Reports on the management of the key risks facing thebusiness are taken by the Executive Committee and the Audit
Committee three times a year, with additional reports taken
on an ad hoc basis as necessary.
of controls•BBCmonitoring
Internal Audit undertake regular testing of control systems
under a plan agreed by the Audit Committee.This programmeof testing, which is updated every three months, is based on
assessment of key risks and issues.The results are reported to
the Audit Committee which monitors the operation of theBBC’s controls through the year.
controls•Thedivisional
divisions’ management have responsibility for ensuring thatexisting controls and procedures are followed. Key controls overmajor business risks include performance review and exception
reporting. Reviews by Internal Audit monitor the operation ofdivisional controls.
systems•Thecomputer
BBC has established controls and procedures over the
security of data held on computer systems. Arrangements arein place for computer processing to continue and data to beretained in the event of failure of the BBC’s own dataprocessing facility.
over outsourced transaction processing•Thecontrols
majority of the BBC’s finance transaction processing,excluding BBC Worldwide Limited, is outsourced to a service
company, Media Accounting Services Limited (MedAS), whichis independent of the BBC.The Director of Finance, Property
and Business Affairs has established monitoring procedures toreview the performance of MedAS on a regular basis.These
include regular visits to MedAS by Internal Audit.
reporting•Thefinancial
BBC has a comprehensive system for reporting financial
results. During the year the first stage of the Apollo project –to introduce new financial processes and SAP software – wascompleted.The second stage was implemented in April 2001.

During the year, each division continued to prepare regular
results with comparison against budget.These results, together
with those for the BBC as a whole, were reviewed by the
Executive Committee and Board of Governors each month.
Each financial year the divisions update their five-year plans andprepare detailed budgets for the following year.The annual
budget of each division is reviewed by the Director of Finance,
Property and Business Affairs.The overall BBC budget isapproved by the Director-General, the Executive Committee
and the Board of Governors.
Audit Committee
The Audit Committee meets four times a year and is charged
with reviewing the effectiveness of internal control; approving
and monitoring the Internal Audit work plan; considering issues
arising from Internal Audit work; reviewing management’s
response to internal control issues; approving the external audit
fee; considering the external audit strategy and plans; reviewing
the external auditors’ reports; and reviewing and approving thefinancial statements. Both internal and external auditors are
given the opportunity to meet privately with the Audit
Committee without any member of management present.
Governors’ Commercial Committee
This committee oversees the performance and effectivenessof the BBC’s commercial subsidiaries.The Governors aim toensure that the BBC maximises the opportunities to earn
additional income for re-investment in public services, but
without putting the licence fee at risk.
Statement of compliance with the Combined Codeof Best Practice
The BBC has complied throughout the year ended 31 March
2001 with the specific provisions in Section 1 of the Combined
Code with the exception of those provisions relating to
non-executive directors and shareholder requirements which,as discussed earlier, are not applicable to the BBC.
4 Governors’ remuneration report
The Board of Governors acts as a remuneration committee for
the BBC. It has responsibility for setting executive remuneration
policy, for salary levels and for the bonus awards of executive
management. It has no input into the remuneration of its own
members since this is determined by government.This report
explains the remuneration policy of the BBC for both Governors
and Executive Committee members and provides details of
their remuneration. In preparing this report the BBC compliedwith all the applicable provisions of the Combined Code.
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 51.
The increase in annual remuneration notified for 2000/2001

Annual Report and Accounts 2000/2001 49

Reports on Compliance and Regulatory Matterswas 2.9% for the Vice-Chairman and the national Governors,
and 3.6% for the Chairman and other Governors (1999/2000
4% for the Vice-Chairman and the national Governors, and 3.5%
for the Chairman and other Governors). During the year, theSecretary of State decided to increase the nominal number ofdays for which some members of the Board are paid, reflecting
the heavier workload of the Governors and to bring theirremuneration into line with other DCMS bodies.
Executive Committee: remuneration policy
Following appropriate consultation with the Director-General,
members of the Executive Committee are appointed by the
Board of Governors which determines their initial andsubsequent remuneration.The Board assesses the performanceof the Executive Committee members before determining theirannual remuneration and bonus awards.The BBC’s Directorof Human Resources and Internal Communications provides
technical support to the Board in this respect but has no input
into decisions affecting his own remuneration.
The Governors aim to ensure that the packages offered to
Executive Committee members:
enable the BBC to attract, retain and motivate high-calibre
executives;
are positioned at the median against a comparator group(which includes other broadcasting organisations, major listedcompanies and central government agencies) in terms of
total cash (basic salary plus annual bonus payment, if any);
remunerate individuals fairly for individual responsibility andcontribution, while providing an element of performancerelated pay, reflecting the underlying performance of theBBC; andtake into account salary policy within the rest of the BBC
and the relationship that should exist between the
remuneration of Executive Committee members and thatof other employees.

Annual bonus
The Director-General and other members of the Executive
Committee participate in a performance-based annual bonus
scheme under which payments may be awarded of up to 30%
of basic salary.The actual level of payment to individuals isdetermined following a review of performance against a mixtureof qualitative and quantitative objectives set at the beginningof the financial year.The achievement of divisional objectives
accounts for up to 50% of the bonus, achievement of Executive
Committee objectives for up to 20% of the bonus and there is adiscretionary element for individual/operational performance forup to 30% of the bonus.
For the year under review the targets related primarily toobjectives which were endorsed by the Governors andpublished in last year’s Annual Report and Accounts, andreflected in the Statement of Promises.
Bonuses are now reflected in the financial statements on an
accruals basis for the performance period under review.The
total remuneration for 2000 has been restated accordingly.

••

In addition, a long-term incentive plan is in place for the Chief
Executive of BBC Worldwide Limited.This is based on arequirement to meet a specific cash flow target over a threeyear period which ends in April 2002. At that point a paymentof up to 20% of salary could be made.

•Benefits
Executive Committee members are eligible for medical insurance
covering the executive and family and, where there is a business
need, digital reception equipment.

•

In determining appropriate levels, the Governors have accessto internal expertise in the remuneration area, annual surveys
conducted by external consulting firms and publishedremuneration information on comparable companies.The
remuneration arrangements for Executive Committee members
include the following components:
Basic salary
Basic salaries are reviewed in August each year, taking into
account external market levels and internal comparisons aswell as the individual’s responsibilities and performance.

50 Annual Report and Accounts 2000/2001

In the past, members of the Executive Committee were eligible
for a chauffeur-driven car for business use in addition to
a company car and fuel for private use.This benefit has been
reduced and new appointees to the Executive Committee are
now only eligible for a company car and fuel for private use,with the exception of: the Director of Nations and Regions,who in addition to the company car is provided with achauffeur-driven car because of the requirements of the role;and the Director-General, who is eligible for a chauffeur-driven
car but has no additional entitlement to a company car and fuelfor private use.
Pensions
All members of the Executive Committee are eligible toparticipate in the BBC Pension Scheme, which provides salaryrelated pension benefits on a defined benefit basis, with an
accrual rate of 1/60th of the final salary per year of service,subject to the Inland Revenue earnings cap where appropriate.
Only basic salary is pensionable.The Scheme provides for early
retirement on medical grounds and life insurance cover of fourtimes salary. A variety of special arrangements have been madefor those individuals who have joined the BBC late in theircareers whose earnings exceed Inland Revenue limits, including
funded and unfunded arrangements outside the BBC Pension
Scheme.

Service contracts
Service contracts for members of the Executive Committee
have been individually determined. All Executive Committee
members have continuing or fixed-term contracts with amaximum of one year’s notice of termination by the BBC or
the individual executive.

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

Sir Christopher Bland (Chairman)
Gavyn Davies (apptd 1.1.2001)
Sir Richard Eyre
Dermot Gleeson (apptd 1.11.2000)
Baroness Hogg
Roger Jones
Professor Fabian Monds
Dame Pauline Neville-Jones
Heather Rabbatts
Sir Robert Smith
Ranjit Sondhi
Tony Young
Adrian White (retd. 31.10.2000)
Baroness Young of
Old Scone (retd. 30.11.2000)

Restated
Total
2000
£000

91

16

454

173*

198

42

18

258

–

12
194

2
69

1
17

15
280

–
256

159
262

37
69

16
24

212
355

–
328

107
194

43
49

6
21

156
264

–
51*

(apptd 3.4.2000)
187
Pat Loughrey (apptd 19.5.2000) 151
Margaret Salmon
194
Peter Salmon (apptd 1.11.2000) 81
Richard Sambrook(apptd 16.3.2001)
9
John Smith
214
Michael Stevenson(apptd 3.4.2000)
172
Mark Thompson(apptd 3.4.2000)
203
Caroline Thomson(apptd 1.8.2000)
113
Alan Yentob
213
Colin Browne(retd 31.5.2000)
30
Matthew Bannister(retd 15.12.2000)
136
Tony Hall (retd 31.3.2001)
204
Lorraine Heggessey(apptd 3.4.2000, retd 30.9.2000)
85
Patricia Hodgson(retd 12.6.2000)
36

38
35
45
12

12
9
24
12

237
195
263
105

–
–
247
–

1
64

–
26

10
304

–
239

30

16

218

–

54

15

272

–

21
52

10
25

144
290

–
–

–

1

31

236

–
44

17
38

153
286

248
259

–

1

86

–

–

2

38

233

798

327

4,626

Salary£000

Greg Dyke
Jenny Abramsky

347(apptd 5.4.2000)

Executive Committee

Outside interests
With the agreement of the Board of Governors, members of
the Executive Committee may hold external directorships. It is
likely that not more than two external directorships of any sort(of which only one should be in a commercial organisation)
may be held at the same time. Governors assess such requests
against rigorous criteria to ensure that conflicts of interest do
not arise. Remuneration which arises from directorships agreed
since the introduction of this policy, or subsequent toappointment, is paid to the BBC.

Governors

Benefits
£000

Total
2001
£000

Annual
bonus
£000

Fees
£000

Benefits
£000

2001
£000

2000
£000

75
6
14
6
14
26
26
14
14
26
19
14
8

14
–
2
4
2
4
4
4
2
–
2
3
4

89
6
16
10
16
30
30
18
16
26
21
17
12

82
–
12
–
2
23
14
14
18
13
17
13
15

17

2

19

25

279

47

326

248

Glenwyn Benson(apptd 6.3.2001)

Mark Byford
Carolyn Fairbairn(apptd 11.5.2000)

Rupert Gavin
Ashley Highfield(apptd 2.10.2000)

Gareth Jones
Philip Langsdale

3,501
Termination payments (see below)

The fees relating to Sir Robert Smith are paid direct to Deutsche
Bank which releases him for the required time to the BBC.
In April 2000 the BBC announced a new structure (One BBC)which resulted in the removal of the Board of Management
and the enlargement of the Executive Committee.The total
remuneration cost of the Executive Committee is correspondingly
larger than in 1999/2000.

460
5,086

* Appointed part way through 2000.

The total remuneration for the Executive Committee reported
in 2000 was £3,306,000 (including annual bonuses paid of£427,000). Restatement of this figure to include bonuses on an
accruals basis (excluding members who retired prior to March
2000) increases the reported remuneration to £3,474,000.
Matthew Bannister received termination payments on leaving
the BBC of £140,960 and an additional contribution of £54,590
was made to his pension arrangements. Colin Browne received
termination payments (including benefits) of £288,954 on
leaving the BBC.Tony Hall received an additional contributionof £24,539 to his pension arrangements on leaving the BBC.

Annual Report and Accounts 2000/2001 51

Reports on Compliance and Regulatory Matterswhen they left the Executive Committee.The total accrued
pension for Patricia Hodgson has been calculated as at her dateof retirement which was 28 August 2000, rather than the dateon which she resigned as a director (12 June 2000).

Patricia Hodgson received a termination payment of £30,000
and an additional contribution to her pension arrangements of£40,489 in connection with her early retirement.
Chairman and Executive Committee pensions
The BBC provided pension benefits to Governors andExecutive Committee members during the period as follows:
Total
accruedIncrease in pension at
accrued 31 March
pension2001
per annum per annum
(a)
(b)
£000
£000

Chairman
Sir Christopher Bland
Executive Committee
Greg Dyke
Jenny Abramsky
Glenwyn Benson
Mark Byford
Carolyn Fairbairn
Rupert Gavin
Ashley Highfield
Gareth Jones
Philip Langsdale
Pat Loughrey
Margaret SalmonPeter Salmon
Richard Sambrook
John Smith
Michael Stevenson
Mark Thompson
Caroline Thomson
Alan Yentob
Colin Browne
Matthew Bannister
Tony Hall
Lorraine Heggessey
Patricia Hodgson

BBCcontributions
Transfer
to moneyvalue ofIndividual’spurchaseincrease contributions
scheme(c) (d)
(e)
(f)
£000
£000
£000

1

6

23

3

–

1
20
–
3
1
1
1
2
2
23
8
1
1
14
1
12
1
9
4
6
(9)
1
24

2
111
17
66
6
4
1
2
2
66
74
5
53
70
10
63
39
87
22
9
82
10
119

23
406
4
38
12
18
6
20
18
320
160
8
14
185
16
165
8
172
81
69
282
9
563

4
12
1
9
4
4
2
4
4
8
14
2
1
15
4
14
3
14
1
3
12
2
5

51
–
1
–
16
34
12
20
19
–
–
9
–
–
15
–
10
–
–
14
–
8
–

No additional voluntary contributions are included in the abovetable.
The total accrued pension at 31 March 2000 for Sir Christopher
Bland was £5,000. An amount of £20,000 was provided in both
years to meet the BBC’s pension contributions under theCharter to former chairmen and their surviving spouses.
The total accrued pension at 31 March 2000 for Greg Dyke
was £1,000.The BBC contribution to money purchase schemes
for the year ended 31 March 2000 was £21,000 for Greg Dykeand £134,000 for the other Executive Committee members
in aggregate.
The total accrued pensions for Colin Browne, Matthew
Bannister,Tony Hall and Lorraine Heggessey have been
calculated as at 31 May 2000, 15 December 2000, 31 March
2001 and 30 September 2000 respectively being the dates

52 Annual Report and Accounts 2000/2001

Notes to pension benefitsa) The increase in accrued pension during the year excludes
any increase for inflation.
b) The pension entitlement shown is that which would be paid
annually based on service to the end of the year.
c) The transfer value has been calculated on the basis of actuarial
advice in accordance with Actuarial Guidance Note GN11.
d) The transfer value represents the cost to the pension
scheme of the increase in annual pension but not a sum
paid or due to the individual and therefore cannot bemeaningfully added to remuneration.
e) These are contributions made by the Chairman andExecutive Committee members to the defined benefits
scheme during the 2000/2001 financial year.
f) This is the actual BBC contribution to a separate money
purchase (defined contribution) pension scheme.
5 Programmes from independent producers
UK programme quotas
Under the Broadcasting Act 1990 the BBC has a duty to ensurethat not less than 25% of the amount of time allocated to thebroadcasting of qualifying television programmes is allocatedto the broadcasting of a range and diversity of independent
productions.The Director-General of the Office of Fair Trading(OFT) is required to report to the Secretary of State
periodically on the extent to which the BBC has, in his opinion,
performed that duty. His report for the period 1 April 1999
to 31 March 2000 has not yet been published but current
indications are that the OFT will conclude that the BBC has
achieved the target.
EU programme quotas
European Community legislation requires Member States toensure that broadcasters reserve for European works a majority
proportion of their television transmission time excluding thetime devoted to news, sports events, games, adverts, teletext
services and teleshopping.The legislation also requires
broadcasters to reserve at least 10% of their transmission timefor European works (excluding works of the kind describedabove) made by independent producers.
The BBC exceeded EU quotas in the calendar year 2000.
Of the relevant BBC One and BBC Two output, 72% was ofEuropean origin (as against 65% in 1999) and 17% was madeby European independent producers (18% in 1999). Of therelevant output of all BBC channels (including BBC Choice and
BBC News 24), 88% was of European origin and 15% was madeby European independent producers.

6 Other rules
On-air trails
Following the 1992 report of the Monopolies and Mergers
Commission (on the publicising, in the course of broadcasting,of goods supplied by the broadcaster), the BBC gave an
undertaking to the Office of Fair Trading to use only still trails
to give information about BBC magazines.
The terms of the undertaking also commit the BBC not toexceed more than seven minutes as an aggregate across aseven-day period in relation to on-air promotions of BBCmagazines. During the period 1 April 2000 to 31 March 2001
the total for all BBC magazines (including Radio Times) was
1 hour 39 minutes of transmission (1999/2000 I hour
25 minutes 45 seconds), which averages out at 1 minute54 seconds in a seven-day period (1999/2000 1 minute
39 seconds).
The restriction only applies to BBC magazines.The BBC,however, voluntarily applies the spirit of the undertaking to all
BBC Worldwide products. During 2000/2001 the weekly total
for all BBC Worldwide products has averaged 4 minutes
11 seconds (1999/2000 3 minutes 12 seconds), well within
the seven-minute restriction.
European Channel Broadcasting
The Department of National Heritage Approval dated
11 December 1994 set out the main conditions on which
European Channel Broadcasting Limited should provide the
BBC World and the BBC Prime satellite services in continental
Europe.These were compliant with:
the European Convention of Transfrontier Television;Council Directive 89/552/EC (on broadcasting activities); andrelevant ITC codes.

•••

A further requirement was arm’s length trading relationships
with the BBC and BBC Worldwide Limited.The BBC’s Fair
Trading Policy was applied and the services were operated
on an arm’s length basis.
On 7 October 1999, the Independent Television Commission
granted satellite services licences to European Channel
Broadcasting Limited in respect of BBC World and BBC Prime
for a period of ten years from 10 October 1999.This supersedes
the Department of National Heritage Approval, which wasvaried accordingly.
In addition to compliance with the relevant ITC codes, theBBC-made programmes shown on the channels are producedin accordance with the BBC Producers’ Guidelines.
Donations and acknowledgements
In addition to broadcast appeals detailed on page 39, donations
to charities by BBC Worldwide Limited amounted toapproximately £19,000 during the year. No political donations
were given in the year.

The BBC acknowledges financial grants from the European
Commission for widescreen broadcast service funding underthe 1997 Action Plan for the introduction of advanced television
services in Europe.
7 Environmental statement
During 2000, the Board of Governors approved a new
Environmental Policy which took into consideration therecommendations of the Turnbull Report, the Company Law
Review, the Global Reporting Initiative (GRI) and also theviews of the BBC’s stakeholders, audiences, contributors, interest
groups and staff.The BBC is committed to meet its objectives
in an environmentally sound and sustainable manner and aims
to minimise any adverse impact on the environment fromits activities and to improve continuously its environmental
performance.
Organisation, management and structure
The Environmental Policy and management framework are now
in place. A pan-UK, cross-division steering group which reports
to the Board of Governors has been formed to own and sponsor
environmental objectives, and working groups are now meetingto help refine and deliver the strategy.The steering group is
supported by six working groups: communications, utilities,
waste, transport, supply chain and property.The BBC has also
appointed external advisers to support the steering group.
The BBC’s policy and programme has been reviewed byconsultants Environment Resources Management (ERM).
ERM stated that, ‘The BBC can make a significant contribution
to the environmental agenda and thereby enhance its reputationin the UK and overseas’.
The BBC will achieve improvement through setting and meetinga range of targets. Its targets are currently being reviewed andwill be published in the BBC’s first environmental review,
available before the end of 2001.The review will also include
baseline carbon dioxide emissions and impacts on waste, waterenergy efficiency and transport using Department of theEnvironment Transport and the Regions guidance.
Actions to date
The BBC has participated and adopted the recommendationsof a number of public projects including the ‘Greening’
Government Initiative (GGI). It has integrated the ‘Model
Improvement Programme for Greening Operations’ into our
key performance areas.We have also been involved in consultation
processes for the Advisory Committee on Business and theEnvironment (ACBE).
In addition, the BBC is integrating sustainable construction issues
into its planned new property developments at each stageof the construction process and throughout the life cycleof the building: architect selection, design, procurement andsite practices.The BBC aims to improve the quality of life of
local communities through implementing travel plans, improving
levels of employment and continuing with mentor projects.

Annual Report and Accounts 2000/2001 53

Reports on Compliance and Regulatory Matters

Achievements
While the BBC’s Environmental Policy is still in its infancy, anumber of projects have already been successfully implemented
including the following:
BBC Worldwide magazines use Forestry Stewardship
Commission (FSC) paper;
Energy efficiencies in London buildings have been formallyaccredited by the Institute of Energy;
The regional broadcasting centre in Southampton uses
geothermal cooling.

the BBC, to be achieved by 2003.The BBC has continued tomake progress towards achieving its workforce composition
targets as shown below:

The BBC took part in the 2000 Business in the Environment(BiE) survey for the FTSE 350 and other companies. BiE is a
non-profit-making organisation that promotes corporate
environmental responsibility.The BBC’s overall score was 72%
matching the FTSE 100 average. In the Cyclical Services sector
the BBC achieved a position of 15 out of the 51 participatingcompanies and second in the media and photography group.

Proportion of people from ethnic minorities in the workforce•••

The PEG survey benchmarked BBC properties’ environmental
engagement against similar-sized organisations.The survey
covered existing developments, new build and portfolio
management.The BBC overall ranked second out of the
19 companies which participated. It ranked first against
property-specific criteria and seventh against the BiE criteria for
corporate environmental engagement. Participating companies
include BT Property, British Land and Land Securities.
8 Social statement
The BBC has significant responsibilities to act as a socially
responsible employer and member of the community. Most
importantly, the BBC should comply with relevant legislation,
adopt best employment practice, develop a diverse workforce
with opportunities for all and develop strong and open
community relations which are underpinned by strong ethicalprinciples.
Employment and diversity
The BBC has a policy framework which aims to reflect bestpractice and ensure compliance with relevant legislation.The
BBC is committed to developing a diverse workforce, with
opportunities for all, irrespective of race, colour, creed, ethnicor national origin, marital status, gender, disability or age.
We aim to be an employer of choice for all people whatever
their cultural background or personal circumstances.This stems
from the BBC’s need not simply to comply with legislation –though we do that – but from the need to attract the mosttalented and creative people.The BBC recognises that if it wants
to broadcast successfully to all members of society it needs thecapacity to reflect all members of society on its screens andairwaves.The BBC recognises that its ability to do this will
increase as the diversity of its workforce increases.
The BBC has long had gender and ethnicity minimum targets
and the latter have recently been reviewed; ethnicity targets
now stand at 4% for senior managers and 10% for the rest of

54 Annual Report and Accounts 2000/2001

31 March
2001%

31 March
2000%

Minimumtarget
%

36.9
34.1
38.0

32.8
33.2
37.5

30
40
40

Proportion of women in management
Senior executives
Senior managers
Middle managers and senior professionals
BBC Group
London Home Services*
World Service
Scotland**
Wales**
North**South**
Midlands and East**

8.4
9.4
27.4
1.2
1.5
4.1
3.5
7.1

8.2
9.2
26.8
1.2
1.1
3.6
3.4
7.0

8
8
8
2
2
4
4.7
6

* Includes London-based BBC Resources Limited.
** Includes Home Services staff and BBC Resources Limited staff based in the regions.

The composition of the World Service workforce reflects themulti-lingual nature of its broadcasting and significantly exceeds
the BBC’s target of 8%.
People with disabilities are fully and fairly considered for training,career development and promotion.The BBC has recently
produced guidelines on employing disabled people.These aim
to ensure not only that we meet our legal responsibilities under
the Disability Discrimination Act, but also to increase thenumber of people with disabilities within our workforce.The
BBC’s policies and practices are in line with the Code ofPractice on Age Discrimination in Employment.
Employee participation
The BBC has a range of consultation forums at group anddivisional level – including the BBC Forum. Regular meetings
are held with the recognised unions: BECTU (Broadcasting
Entertainment Cinematograph and Theatre Union), NUJ(National Union of Journalists) and AEEU (AmalgamatedEngineering and Electrical Union).
We continue to monitor our employment and communications
practices, and we conducted staff and internal communications
surveys during the year.
Development and training
We invested more than £38 million in development during theyear, and we contributed to industry-wide training initiatives.
Staff in all areas have opportunities to develop their skills, suchas reskilling and new ways of working.
Health and safety
Work has continued on actions to maintain compliance andimprove the management of health and safety risks. In particular
this year, the BBC has strengthened its safety management

framework, launched a new Health Surveillance Policy and has
introduced a new interactive safety induction CD-Rom for new
employees along with additional training for line managers in
Production and Resources areas.
Against this background, there was an overall increase in thenumber of reportable accidents, none fatal. Efforts are being
stepped up to reduce the risk of accidents in the coming year.
BBC regional and London premises were subject to visits byhealth and safety enforcement agencies during the year. Where
any weaknesses or breaches were revealed action has alreadybeen taken to implement fully the enforcement agencies’
recommendations.
Community relations
The BBC has a strong and open relationship with local
communities through the following strategies and programmes:
Voluntary work
The BBC relies on communities for funding through the licencefee, for recruiting staff and also for its service delivery. It also
draws on those communities for the stories and contributors
in its programmes. A practical way in which the BBC can givesomething back to communities is to encourage its staff tovolunteer and share their skills with community groups.
The BBC has developed a Community Involvement Policy andestablished a BBC-wide Forum to share best practice internallyand externally. In addition, a Community Involvement intranetsite details case studies and identifies volunteering opportunities,
and the BBC has established links with employer networks andcommunity organisations committed to corporate social
responsibility and active citizenship.
Skills development
BBC Training and Development works in partnership withorganisations and networks across diverse communities,
providing learning and development opportunities in the areasof broadcast and media skills. An example of this is our workwith Youth Culture Television (YCTV), a charity providing TV
production training for disadvantaged 11 to 20 year-olds. We
are also involved in various government sector and education
initiatives which support people seeking employment andjob-related training.

Property development planning
As part of the implementation of its strategy, the BBC iscommitted to wide consultation with those most directly
affected by its proposed property developments.This process
has begun recently with a number of exhibitions and discussions
with the local communities surrounding the White City site
in west London. We have also produced a new staff travel plan
which launches a number of initiatives to encourage staff totravel to work by transport other than their private cars.
Improved public transport services and a better environment
for pedestrians and cyclists will be of equal benefit to local
residents, and support the BBC’s Environmental Policy.
Socially responsible investment
The BBC is committed to ensuring that at all times its businessis conducted in accordance with the principles enunciated by
Lord Nolan’s committee on standards in public life.The trusteesof the BBC Pension Scheme are committed to the same
standards. Consequently they have established policies on bothsocially responsible investment and corporate governance that
apply to companies in which they invest.
On socially responsible investment they have made clear their
desire not to encourage socially irresponsible behaviour throughthe Scheme’s investments.This includes environmental andethical considerations. In drawing up their policy on corporate
governance they took account of the recommendations of the
Combined Code on corporate governance and best practice inthis area of activity.
Ethical policy
The BBC conducts its business according to standards of good
ethical, employment and environmental practice.The BBC
expects its suppliers to operate on the same principles. In
particular, BBC Worldwide Limited has developed a code of
conduct applicable to its direct suppliers, who in turn are
required to supervise their subcontractors, to observe bestpractice in relation to general employment practices, theemployment of appropriate workers, worker insurance, working
environment, respect for the individual worker, environmental
standards, ethical standards, equal opportunities and freedom of
association.The BBC is introducing this code of conduct following
its successful implementation in BBC Worldwide Limited.

Partnerships
Where the BBC has major broadcasting facilities it continues
actively to participate in local partnerships between the public,
private and voluntary sectors to assist in promoting the socioeconomic development of the area. In Glasgow the BBC has
been heavily influential in a fresh approach to the Pacific Quaysite. In Hammersmith and Fulham in west London, the BBC isrepresented on the executive of a local regeneration
partnership and also the local environmental trust, Groundwork.
We also run various local radio projects including social action
projects which build on local partnerships to help to ensurethat regional output meets communities’ needs.

Annual Report and Accounts 2000/2001 55

Financial Review
ChangeWe are in the midst of substantial change:
The One BBC project has fundamentally reorganised theBBC. 190 business units have been reduced to 53. Largedivisions have been dismantled and a radically new approach
to non-programme activity has allowed us to aim at annual
savings in overheads of £166 million by the end of 2004.
The proportion of income being spent on programmes
has risen from 76% to 81% this year, and we are well on
track to meet the target of 85% by 2004.
Plans to transform the performance of our existing rangeof services have been approved.
Many new services await approval from the Secretary ofState for Culture, Media and Sport for launches in 2001.
Programme spending will rise by more than £450 million
within two years – a rise of more than 20% and the largest
increase in the BBC’s history.
The BBC has adopted the SAP platform to run its business.
This reduces the number of accounting systems from 11 toone, reduces by 75% the volume of internal trading, delivers
a single, outsourced, shared service centre and cuts the costto the BBC of financial management by 50%.This is one of
the largest SAP implementations in Europe and has over
5,000 system users within the BBC.
A radical new property strategy (over seven years) reduces
the number of key sites in London.The ending of the leaseat Bush House provides a more coherent purpose for theremaining sites: Broadcasting House, combining the World
Service, Network Radio and News, will become the world’s
biggest live broadcasting centre.TV Centre in Shepherds
Bush will be returned to its original purpose – a multi-genre
TV production centre.The 14-acre White City site will
become a media village designed to attract other companies
who work with the BBC into a regenerated series ofbuildings and streets built over the old greyhound stadium.
Some of the UK’s best architects have been engaged atsites across the UK as we begin to realise the vision of
opening up the BBC to the public. It is intended that all thisdevelopment will be financed by a private sector/BBC
Property joint venture which is being finalised now.

•

•
•
•
•

•

Licence fee
Licence fee income was £2,371 million, an increase of£85 million.This year was the first under the new settlement
reached with the Government after the report by theCommittee led by Gavyn Davies.The settlement provided anincrease of RPI +1.5% which will be the pattern each year until
Charter renewal.That supplement produced £35.1 million of
the increase in income.
During the year we learned of the wish of our main licencefee contractor, Envision, not to continue with the contract
and responded by agreeing new, temporary terms with the
Post Office. We have announced our intention to find a new
innovative approach to licensing and, via the European
competition process, we are part way through a tender round,
expecting to sign a longer-term contract later in the year.

56 Annual Report and Accounts 2000/2001

The year also saw the introduction of important new
concessions. From1 April 2000 a discount of 50% was available
for those registered as blind and, with effect from 1 November
2000, licence payers who are over 75 were able to receivea free licence once registered with TV licensing.The BBC
is compensated by HM Treasury for the revenue foregone bythis concession.
The level of recorded evasion (using the DCMS definition) fell
to a new low of 5.2%.
It is still our aim to make it as easy as possible for all households
to find a way of paying their licence. In recent years new weekly
and monthly cash-based schemes have been introduced andresearch suggests that very few (less than 0.3%) of households
cannot use one of the 13 schemes now on offer via 25,500
outlets. Although many households still like to pay their licence
directly in Post Offices or by post, 42% of households now pay
by direct debit.Take-up of web-based payment has been verylow (0.06%).
Commercial earnings
The licence fee dominates the BBC’s sources of funds (75%of total income), but commercial initiatives are growing.
BBC Worldwide Limited grew its turnover, including sharesof joint ventures, to £587 million (sales growth of 14%) andachieved an EBITDA margin of 20% – the key measure of
profitability for a business in this market.This included profits
on disposals of £18.2 million. Crucially for the BBC the net cash
benefit to the BBC reached a record £96 million. All this wasachieved in a year when many new ventures were either
finalised or launched.
BBC Resources Limited went through a major review and wasrestructured and slimmed down.The remaining business focuses
on studios, outside broadcasts, post-production and graphic
design. A heavy investment in restructuring costs resulted in a
pre-tax loss of £11.5 million, but the expectation is that this will
result in significant cost savings which will pay back in later years.
The loss-making studio in Birmingham was closed and a joint
venture signed with Granada for studio use in Manchester. We
also announced our intention to sell the Wood Norton Halland Conference Centre.
An entirely new business was created at the end of the year.
BBC Technology Holdings Limited brings together 943 staff fromaround the BBC who work in desktop support, web-hosting,network infrastructure, broadcasting control and technology
consulting.The company has had a considerable number ofpotential sales leads and partnering opportunities. We expect
this company to become a significant contributor of value
quite quickly.

Costs
The attack on overheads has been vigorous with around£45 million saved in the year which puts us well on track
to meet the overall savings target of £166 million within
three years.
These savings together with the rises in income allowed
us to start to increase our programming spend – up 10%(£165 million in the year), with the big increases to come overthe next two years. A full breakdown of the spend by service
is on page 68.
Spending on digital services reached £144 million (5.9%) and on
new media £51.9 million (2.1%). Since launch, the total spendingon all things digital has now reached £636 million; less than halfof this has come from above-RPI licence fee increases, and therest from our own self-help.
By genre the bulk of the BBC’s spend continued to be geared
towards the Factual and Information genres, but £256 million
was spent on Sport, £133 million on Music and Arts and£60 million on Children’s output.These figures will all rise overthe next two years.
Our investment in creative leadership continues. £203 million
was spent on programmes made by independent suppliers,£188 million on talent and contributors, £63 million on
copyright and music rights and £24 million on live classicalmusic from the BBC’s five in-house orchestras.
In the Regions, 38% of all Network TV spend and 31% of all
Network Radio spend was outside London and the South East.
In addition to this, £413 million was spent on national and local
output, making an overall investment in output from the
Nations and Regions of £666 million.
Operating result
The BBC does not have shareholders and therefore does not
aim to make a profit. Operating surpluses and deficits simply
represent timing differences between income and expenditure.
The operating deficit has been caused by increasing spend
on services by more than the increase in income.
Balance sheet and cash
The good financial health of the BBC continued with a yearend cash balance of £224.2 million (excluding £140.1 million
advance deposits under the TV licence savings stamps scheme).
The cash balance has stayed high in spite of the launch of digital
services and the creation of Europe’s largest online site.This
provides a very good platform from which to increase greatly
programming spend next year.

Explanation of decrease in BBC cash£m

Cash at the start of the year
Home Services income
Worldwide cash flow to the BBC
Spend on analogue services*
Spend on digital services
Licence fee collection costs
Transmission costs
Interest received, net of tax paid
Increase in fixed asset base (net of depreciation)
Increase in working capital
Other spend

259
2,406
96
(2,055)
(196)
(132)
(118)
9
(6)
(15)
(24)

Cash at the end of the year224

* Including BBC Worldwide Limited direct investment in BBC programmes.

Some other initiatives are likely to strengthen our financial
position even further – the property joint venture will produce
a cash inflow and reduce our property costs immediately on
signature.The commercial businesses will add to this.
The high cash balance produced interest income of £28 million
which also contributed to the healthy picture.
Spending on fixed assets increased to £128 million, broadly inline with historic levels and sufficient to ensure the asset basedoes not erode in real terms. Most of the investment went into
technology assets and into property, as implementation of theproperty strategy began in earnest.
Major projects included preparation work for the developmentof the 14-acre White City site and the redevelopment of
Broadcasting House.
We have also secured favourable long-term contracts for
sports rights and some acquired drama series.These deals
have increased our long-term contractual commitments byover £300 million.
Summary
The BBC is going through major changes.The increase in
spending will provide more good programmes and a better
range of services.That boost in spending is financed only partly
by above RPI licence fee increases. Most of it comes from selfhelp: reduced evasion/collection costs; higher commercial
earnings; reductions in overheads.
As the BBC steers through this change it is in good financial
shape: a high cash balance; an upgraded and simplified financial
system; and a good record of strong budgetary control.This
gives the BBC the best chance of success in meeting its aims.

John Smith Director of Finance, Property and Business Affairs

Annual Report and Accounts 2000/2001 57

Glossary of Terms
Associates

Businesses in which we exert influence overpolicies but do not have overall control.

BBC Group

Includes BBC Home Services, BBC World
Service and commercial companies, mainly
BBC Worldwide Limited, BBC Resources Limited
and BBC Technology Holdings Limited.

BBC Home
Services

Provides public service TV, radio and internet
broadcasts in the UK through licence fee
funding.

BBC Resources
LimitedThe commercial subsidiary engaged in theprovision of equipment, facilities and services
to the BBC and external customers.

BBC Technology
Holdings Limited

The commercial subsidiary engaged in theprovision of technology services to the BBC
and external customers.

BBC World
Service

Provides public service broadcasts overseas
and international media monitoring in the UK.

BBC Worldwide
LimitedThe commercial subsidiary engaged inlicensing,TV channels, publishing andmerchandising.

Commercial
businesses

The activities of BBC Worldwide Limited, BBC
Resources Limited and BBC Technology Holdings
Limited and their subsidiaries.

Consolidated
financialstatements

Includes the financial results in aggregate for
the BBC Group. Additionally the Group’s shareof profits and losses from associates and joint
ventures is included where appropriate.

Defeasancedeposits

Cash deposits that are linked to a matchingcreditor. We can only use these deposits tosettle the linked liability.

Goodwill

The difference between the value paid fora business and the value of its net assets,
representing the amount the purchaser isprepared to pay for the name and reputationof the business and its expected future profit
streams.

Grant-in-Aid

Amount granted by Parliament to be spentby BBC World Service in accordance withgoverning legislation.

Joint ventures

Businesses which we jointly control withother parties such that all parties have apower of veto over policies of which they
do not approve.

Public services

The activities of BBC Home Services and BBC
World Service.

Related parties

Includes Governors, executive management,
their immediate families and external entities
controlled by them.

Subsidiary
undertakings

Businesses which we control.

58 Annual Report and Accounts 2000/2001

As a public service broadcaster, the BBC strives to adopt
the highest standards of reporting and transparency of
information.
Although not mandatory, we comply with the Companies
Act 1985, UK Accounting Standards and the reporting
requirements of the UK Listing Authority so that we publish
financial information to the extent expected of publiccompanies in the UK.The pages that follow include that
information in detail.
We are also subject to a range of regulatory requirements,
and the Governors report on our compliance with these on
pages 44 to 55.
In line with other UK companies, we publish and file with
Companies House audited financial statements for all our
subsidiaries.
These financial statements are available online. Copies
may also be obtained by writing to The Secretary, BBC,Broadcasting House, Portland Place, London W1A 1AA.

Statement of Accounting Policies
This section explains the BBC’s main accounting policies,
which have been applied consistently throughout the year
and with the preceding year except where stated.A footnote
in italics follows some policies to explain in plain English thetechnical aspects of the accounting treatment.
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
and disclosure provisions of the Companies Act 1985, applicable
UK accounting standards and the rules of the UK Listing
Authority to ensure that its financial statements are preparedon a basis consistent with that of UK public limited 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.The BBC has adopted
early the following accounting standards:
FRS 17, Retirement Benefits. The BBC has adopted early
the first year transitional arrangements of FRS 17.These
require certain additional disclosures to be given which areincluded in note 4.There is no effect on the results orfinancial position of the BBC, as the transitional provisions
require only disclosures to be made. FRS 17 will be fully
adopted in the financial statements for the year ended
31 March 2002.
FRS 18, Accounting Policies. Adoption of this standard has
not had any material impact on the results of the BBC.
FRS 19, Deferred Taxation. There is no material impact on
the results of the BBC but additional disclosure is provided
in note 7.

•••

Basis of consolidation
The BBC Group comprises the Home Services, BBC World
Service and the BBC’s commercial subsidiary companies, mainly
BBC Worldwide Limited, BBC Resources Limited and BBC
Technology Holdings Limited. Unless otherwise stated, theacquisition method of accounting has been adopted. Under thismethod, 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 dateof disposal.
An associate is an undertaking in which the Group has a longterm interest, usually from 20–50% of the equity voting rights,
and over which it exercises significant influence. A joint venture
is an undertaking in which the Group has a long-term interest
and over which it exercises joint control.The Group’s share of
profits less losses of associates and joint ventures is includedin the consolidated statement of income and expenditure andits interest in their net assets is included in the consolidatedbalance sheet.
A separate income and expenditure account reflecting theresults of the Home Services has not been presented,
as permitted by Section 230 of the Companies Act 1985.

These accounts of the BBC Group include the results of all
businesses controlled by the BBC (subsidiaries) together with theBBC’s share of the results of businesses where we influence theirpolicies (associates) and those which we jointly control (joint ventures).
Investments
Investments are recorded on the balance sheet of the Home
Services at cost less provision for any impairment in value.
The funding of the Home Services and the BBC World Service
is legally separate and cross-subsidisation is not permissible.
Accordingly, for the purposes of preparing the Home Services’balance sheet, the Home Services are considered to have an
investment in BBC World Service equal to the net assets of theWorld Service.
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 and amortised over its useful economic life. On thesubsequent disposal or termination of a business, the surplus ordeficit is calculated after charging the unamortised amount of
any related goodwill. As is permitted by FRS 10, Goodwill andIntangible Assets, goodwill arising in periods up to 1 April 1998
remains offset against the operating reserve. On disposal,
goodwill previously written off against reserves is transferredto the statement of income and expenditure for the year.
IncomeIncome derived from television licences, receivable from the
Department of Culture, Media and Sport, represents the valueof licences issued in the year.The amount which can be paid in
cash to the BBC for any year cannot exceed the total amountvoted by Parliament for that year. Any difference between thevalue of licences issued and the amount voted is adjusted in
the amount of cash received in the following year. Any amounts
which have not been paid to the BBC are included within
debtors.
BBC Worldwide Limited income is shown net of value added
tax and trade discounts and predominantly represents: licencefees from the distribution of joint productions; agency income
and commission from the distribution of programmes on behalfof the BBC and other producers; income from joint venture TV
channels; and income from the sale of magazines, books, videos,compact discs, tapes and character merchandise.
BBC Resources Limited income is shown net of value added
tax and trade discounts and predominantly represents rental
income from the provision of equipment, facilities and services
to the BBC and external customers.
BBC World Service income, primarily derived from Grant-in-Aid
from the Foreign and Commonwealth Office, is intended tomeet estimated expenditure in the year but unexpended
receipts for the year, within predetermined limits, are not liable
to surrender.

Annual Report and Accounts 2000/2001 59

Statement of Accounting Policies

The distinction between the various income sources is important.
The BBC is careful not to cross-subsidise commercial and public
service activities or Home and World Service activities. Moreinformation on these BBC fair trading requirements and policies
can be found on pages 44 to 47 of this report.
Foreign currency translation
Transactions in foreign currencies are translated into sterlingat the rates of exchange ruling at the date of the transactions.

as the valuation must reflect market conditions at a particularpoint in time. For the BBC this is 31 March.
On retirement, members of the BBC’s main pension scheme arepaid their pensions from a fund which is kept separate from the
BBC Group.The BBC makes cash contributions to that fund inadvance of members’ retirement.The contributions are charged
to the income and expenditure account so as to spread the cost
as evenly as possible over the working lives of the members.

Assets and liabilities denominated in foreign currencies aretranslated into sterling at the rates of exchange ruling at
31 March or at forward rates where related hedging contracts
are in place. Surpluses and deficits arising from the translationof assets and liabilities at these rates of exchange, together withexchange differences arising from trading, are included in thestatement of income and expenditure.

Research and development
Research and development expenditure is written off as incurred.

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 aretaken directly to the operating reserve, together with thedifferences arising when the profit and loss accounts are retranslated at the rates ruling at the year end. Other exchange
differences are taken to the statement of income and expenditure.

Depreciation is calculated so as to write off the cost or
valuation, less estimated residual value, of fixed assets on astraight line basis over their expected useful lives. Depreciationcommences from the date an asset is brought into service.

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 andis consistent with the methods used by many companies.
Pension costs
The BBC operates both defined benefit and defined
contribution schemes for the benefit of employees.
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 costof pensions over employees’ working lives with the BBC. Any
difference between the charge to the income and expenditureaccount and the contributions paid is shown as a provision or
prepayment on the balance sheet.The assets of the BBC’s main
scheme are held separately from those of the Group.
The amounts charged as expenditure for the defined
contribution scheme represent the contributions payable by the
BBC for the accounting periods in respect of this scheme.
As noted above, the BBC has adopted early the first year
transitional arrangements of FRS 17, Retirement Benefits, and has
therefore disclosed the closing balance sheet position of thedefined benefit scheme.The main difference between the figures
provided under FRS 17 and SSAP 24 is that the valuation ofassets in the scheme is based on market valuation rather thanlonger-term actuarial valuation.The main impact of this is that
there will be greater volatility in the pension scheme surplus

60 Annual Report and Accounts 2000/2001

Tangible fixed assets
Expenditure on fixed assets is capitalised together withincremental and internal direct labour costs incurred on capitalprojects.

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
Plant and machinery
Computer equipment
Furniture and fittings– not depreciated– 50 years– unexpired lease term
– three to 25 years– three to five years– three to ten years

Home Services’ plant and machinery is stated at the estimatedcurrent replacement cost of the assets, adjusted for remaining
service potential, as at 31 March 1993, or cost if acquired later,
less accumulated depreciation.
BBC World Service’s plant and machinery and furniture andfittings are stated at the estimated current replacement cost of
the assets, as adjusted for remaining service potential, as at 1
April 1996, or cost if acquired later, less accumulated
depreciation.
The BBC has revalued its assets once, when the internal market
was introduced, but has chosen not to revalue its tangible assets on
an ongoing basis.This reflects the fact that they are used within the
BBC rather than being held for resale or their investment potential.
Assets are therefore included at the amount they cost whenpurchased or constructed (in either case less subsequent depreciation).
The asset lives are reviewed regularly to ensure that they remain
appropriate.
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 five and ten years.The cost and accumulated
amortisation of investment in programmes for future sale
are reduced by programmes which are fully written off.
The cost of programmes for sale is charged to the income andexpenditure account to match the expected timing of income fromfuture sales.
Originated programme stocks and work in progress
Originated programme stocks and work in progress, including
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 anda proportion of other attributable overheads.
Net realisable value is based upon arm’s length contract prices
negotiated between the channel controllers and programme
makers.
The cost of programmes developed or commissioned by the BBC ischarged to the income and expenditure account when transmitted.
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 and liabilities relating to acquired programmes arerecognised at the point of payment or commencement of thelicence period, whichever is earlier. Agreements for the futurepurchase of programmes whose licence period has notcommenced and where there has been no payment by thebalance sheet date are disclosed as purchase commitments.
The costs of programmes and films bought from external suppliers
are charged to the income and expenditure account in the periodof transmission. Where programmes are expected to be shown
more than once, an element of the cost is spread over the expected
subsequent periods of transmission.
Other stocks
Raw materials and other physical stocks are stated at the lowerof cost and net realisable value.
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 thelease discounted at the rate of interest inherent in the lease.
The same amount is included in creditors. Rental payments areapportioned between the finance element, which is charged
against the income and expenditure account, and the capitalelement which reduces the lease creditor.
A finance lease is a lease that transfers substantially all the risks
and rewards of owning and operating an asset to the lessee.
Effectively the lessee owns the asset and has financed it byborrowing, so the lease is treated as an asset in the balance sheet.
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
and their treatment for taxation purposes at the balance sheet
date. Deferred tax assets are recognised to the extent that it isregarded as more likely than not that they will be recovered.
Deferred tax is corporation tax which is not payable at a specifictime but which is expected to become payable in the future.
Reserves
The value of the capital reserve is equal to the combined net
book value of fixed assets of the Home Services and the BBC
World Service at historic cost.
The revaluation reserve reflects the difference between
the net book value of fixed assets of the Home Services 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 Home Services and BBC World
Service reserves. Hence BBC World Service reserves are shown
separately in the notes to the financial statements.
Cash and liquid resources
Cash, for the purposes of the cash flow statement, comprises
cash in 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 tradedin an active market. Liquid resources comprise bank deposits
not repayable on demand and other short-term investments
which include gilts, certificates of deposit and commercial paper.

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

Annual Report and Accounts 2000/2001 61

Consolidated Statement of Income and Expenditure
for the year ended 31 March

2001
£m

2000
£m

3,164.5(3,192.7)

3,003.2(3,023.9)(28.2)
0.9(20.7)
0.2

5(27.3)
18.2(20.5)
–

6

(9.1)
25.8

(20.5)
23.4

16.7

2.9

Note

IncomeOperating expenditure

12Group operating deficit
Share of operating surplus of associates and joint ventures*
Operating deficit
Profit on disposal of a business and shares in subsidiary
Deficit before interest and taxation
Net interest receivable

3

Surplus before taxation
Taxation
Minority interest

7

(9.6)
0.5

(14.8)–

Surplus/(deficit) for the financial year

17

7.6

(11.9)* The BBC has entered into certain joint ventures but has no obligation to make good its share of the operating losses for the year of £4.0 million(2000 £9.7 million), and as such these operating losses have not been included in these financial statements. See note 12c for further details.

The above results are derived from continuing operations in both the current and previous
financial periods.

62 Annual Report and Accounts 2000/2001

Balance Sheetsat 31 March

Note

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

Current assets
StocksCurrent debtors
Long-term debtors
Total debtors
Short-term investments
Cash at bank and in hand

Creditors – amounts falling due
within one year

8
10
11
12

13
14
14

19
19

15

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

15
16

Net assets
Represented byOperating reserve
Capital reserve
Revaluation reserve
Minority interest

17
17
17

Group
2001
£m

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000
£m

0.5
817.0
117.2
1.8

–
812.9
112.7
0.7

–
466.4
–
339.2

–
576.4
–
224.7

936.5

926.3

805.6

801.1

406.1
648.2
47.8

345.9
544.0
32.8

386.5
544.7
44.8

330.5
426.5
69.1

696.0
253.4
117.9

576.8
257.6
173.9

589.5
253.4
80.3

495.6
257.6
150.3

1,473.4

1,354.2

1,309.7

1,234.0(844.6)(796.5)(657.7)(648.0)

628.8

557.7

652.0

586.0

1,565.3

1,484.0

1,457.6

1,387.1(51.3)(108.9)(34.1)(54.3)(21.7)(91.3)(10.8)(40.7)

1,405.1

1,395.6

1,344.6

1,335.6

607.3
791.1
7.2

599.1
788.5
8.0

546.3
791.1
7.2

539.1
788.5
8.0

1,405.6(0.5)

1,395.6–

1,344.6–

1,335.6–

1,405.1

1,395.6

1,344.6

1,335.6* The BBC has entered into certain joint ventures but has no obligation to make good its share of the net liabilities at 31 March 2001 which amounted to£88.2 million (2000 £83.6 million) and as such these liabilities have not been included in these financial statements. See note 12d for further details.

The financial statements were approved by the Governors and Executive Committee on
11 June 2001 and signed on their behalf by:
Sir Christopher Bland Chairman
Greg Dyke Director-General
John Smith Director of Finance, Property and Business Affairs

Annual Report and Accounts 2000/2001 63

Statement of Total Recognised Gains and Losses
for the year ended 31 March

2001
£m

2000
£m

Surplus/(deficit) for the financial year
Exchange differences on retranslation of overseas subsidiaries

7.6
2.4

(11.9)
0.2

Total recognised gains and losses since the last annual report

10.0(11.7)

2001
£m

2000
£m

Surplus before taxation
Difference between historical cost depreciation charge and theactual depreciation charge for the year calculated on revalued assets

16.7

2.9

0.8

1.3

Historical cost surplus before taxation

17.5

4.2

Historical cost surplus/(deficit) for the financial year

8.4

(10.6)

Group Historical Cost Surplus and Deficit
for the year ended 31 March

Reconciliation of Movement in Reserves
for the year ended 31 March

Group
2001
£m

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000
£m

7.6
2.4

(11.9)
0.2

9.0
–

(7.4)
–

Increase/(decrease) in reserves during the year
Opening reserves

10.0
1,395.6(11.7)
1,407.3

9.0
1,335.6(7.4)
1,343.0

Closing reserves

1,405.6

1,395.6

1,344.6

1,335.6

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

64 Annual Report and Accounts 2000/2001

Consolidated Cash Flow Statement
for the year ended 31 March

Note

2001
£m

2000
£m

18

129.0

184.3

Return on investments and servicing of financeInterest received
Interest paid

26.3
(2.1)

29.0
(0.2)

Net cash inflow from returnon investments and servicing of finance

24.2

28.8

Taxation
Taxation paid

(14.8)(20.4)

Capital expenditure and financial investments
Purchase of tangible fixed assets
Investment in programmes for future sale
Proceeds from the sale of tangible fixed assets(140.8)(76.3)
2.3(114.4)(82.8)
1.5

Net cash outflow from capital expenditure(214.8)(195.7)

(0.6)
18.7

–
–

Net cash inflow from acquisitions and disposals

18.1

–

Net cash outflow before use of liquid resources(58.3)

(3.0)

2.5
4.2

68.5
97.7

6.7

166.2

–
–

18.9
(3.1)

–

15.8

(51.6)

179.0

Net cash inflow from operating activities

Acquisitions and disposals
Purchase of a subsidiary and a business net of cash acquired
Proceeds from sale of shares in a subsidiary and a business

Management of liquid resources
Net cash withdrawn from deposit
Sale of other liquid resources

9
5

19
19

Net cash inflow from management of liquid resources
Financing
Increase in loans
Repayment of loans

19
19

Net cash inflow from financing(Decrease)/increase in cash

19, 20

Annual Report and Accounts 2000/2001 65

Notes to the Financial Statements
for the year ended 31 March

1 Income, surplus/(deficit) and net assets

1c Licence fee
The licence fee is the main source of funding for the Home Services.

1a Analysis of income, surplus/(deficit) and net assets
by activity

2001
£m

Licence fee income

Public services
Commercial
Home
World
businesses
Services
Service Worldwide
Other
£m
£m
£m
£m

Colour
Monochrome
Total
Note
£m
Concessionary
Over 75s
2001
Total income
2,734.7 204.5 587.2 324.7 3,851.1 Quarterly payment scheme premium
Intra Group income(328.4)–– (290.6) (619.0) Other licence fee income and adjustments
Share of joint ventures–– (67.6)–(67.6)
Group external
income1b,d 2,406.3(Deficit)/surplus before
interest and taxation 1e,f,h(28.2)

204.5 519.6

34.1 3,164.5

9.7

23.2

(13.8)Net assets

1,128.4 124.2

92.0

60.5 1,405.1

2000
Total income
Intra Group income
Share of joint ventures

2,670.6 192.1(360.5)–––513.8 330.8 3,707.3– (293.6) (654.1)(50.0)–(50.0)

Group external income 1b,d 2,310.1

192.1

463.8

37.2

(9.1)

2,052.3 2,263.7
4.2
7.1
2.3
3.3
307.7
–
16.5
16.6
(12.2)(5.2)
2,370.8

2,285.5

Licences in force

2001
Numberm

2000
NumbermColour
Monochrome
Over 75s
Concessionary

19.7
0.1
3.1
0.5

22.4
0.2
–
0.7

23.4

23.3

Licences in force are those which are still valid as at 31 March.

3,003.2

2001
£

2000
£

104.0034.50
5.00

101.0033.50
5.00

Licence fees

(Deficit)/surplus before
interest and taxation 1e,f,h
Net assets(18.7)

(2.8)

8.6

(7.6)

(20.5)

1,112.5

114.0

73.5

95.6

1,395.6

Other commercial businesses include BBC Resources Limited and BBC
Technology Holdings Limited. On 31 March 2001, BBC Resources
Limited transferred £12.6 million of net assets to BBC Technology
Holdings Limited, which commenced trading on that date.
1b Analysis of public services’ income
Note

2001
Licence fee
Grant-in-Aid
Open University
Subscriptions
Other income

1cGroup external income
2000
Licence fee
Grant-in-Aid
Open University
Subscriptions
Other income
Group external income

Home BBC World Total publicServices
Serviceservices£m£m£m

2,370.8
–
9.1
–
26.4

– 2,370.8
181.8
181.8
–
9.1
15.3
15.3
7.4
33.8

2,406.3

204.5 2,610.8

2,285.5
–
11.3
–
13.3

–
170.0
–
15.1
7.0

2,285.5
170.0
11.3
15.1
20.3

2,310.1

192.1

2,502.2

Colour
Monochrome
Concessionary

From 1 April 2000 a discount for people who are registered blind isavailable at 50% of the full licence fee value. From 1 November 2000
households which have one or more persons over the age of 75 living
at the address as their primary place of residence are entitled to a freeover 75 licence, for which the BBC is reimbursed by the Department
of Social Security. From 1 April 2001 the colour and monochrome
licence fees were increased to £109 and £36.50 respectively.
The concessionary licence fee remained at £5.
Other licence fee income and adjustments include the year-on-year
impact of licences issued in the year but not in force at 31 Marcheither through late or early renewals or through refunds.
During the year 3.3 million (2000 3.3 million) colour licences were
issued under the quarterly payment scheme at a premium of £5 each(2000 £5).
1d Commercial businesses’ income by activity

1c

The broadcasting arm of BBC World Service is funded throughGrant-in-Aid received from the Foreign and Commonwealth Office.
The international media monitoring activities of BBC World Service
are funded through subscriptions from Government departments.
Other income includes the sale of concert tickets and the provisionof services to foreign broadcasters.
66 Annual Report and Accounts 2000/2001

2000
£m

Worldwide£m

Totalcommercial
Other businesses
£m
£m

2001
Publishing and new media
Programme distribution
Channels
Provision of facilities
Less intra Group income

302.3
150.0
67.3
–
–

–
302.3
–
150.0
–
67.3
324.7
324.7
(290.6) (290.6)

Group external income
Share of joint ventures

519.6
67.6

34.1
–

553.7
67.6

587.2

34.1

621.3

1d Commercial businesses’ income by activity continued
Worldwide
£m

Other
£m

Total
commercial
businesses£m

2000
Publishing and new media
Programme distribution
Channels
Provision of facilities
Less intra Group income

277.0
138.4
48.4
–
–

–
–
–
330.8
(293.6)

277.0
138.4
48.4
330.8
(293.6)

Group external income
Share of joint ventures

463.8
50.0

37.2
–

501.0
50.0

513.8

37.2

551.0

Other commercial businesses include:– BBC Resources Limited which has one principal activity, the provisionof equipment, facilities and services.

1f Analysis of commercial businesses’ surplus/(deficit)
before interest and taxation by activity continued
BBC Worldwide Limited’s operating surplus before interest and taxation
includes operating losses of £11.3 million (2000 nil) attributable to a
new subsidiary, beeb Ventures Limited.These operating losses are offset
by a gain of £17.1 million on the partial disposal of beeb Ventures
Limited (note 5).
1g Geographical analysis of activity of public services
The public services income and surplus arises in the UK.The net assets
used by the public services are located in the UK with the exceptionof net assets of £77.6 million (2000 £68.1 million) of BBC World
Service where transmission assets are located overseas.
1h Geographical analysis of activity of commercial
businesses
BBC Worldwide’s income originates within the UK. Income bydestination, surplus before interest and tax and net assets are analysed
geographically as follows:
UnitedKingdom£mAmericas£mRest ofthe world
£m

Total
£m

2001
Income by destination

301.4

84.3

133.9

519.6

Surplus before
interest and taxation

16.3

4.1

2.8

23.2

Net assets

54.0

38.0

–

92.0

2000
Income by destination

282.0

63.0

118.8

463.8

– BBC Technology Holdings Limited which also has one principal
activity, the provision of technology services.
1e Analysis of public services’ surplus/(deficit) before
interest and taxation by activity
The Home Services has one principal activity which is the provisionof public service broadcasting in the UK.
BBC World Service’s surplus/(deficit) before interest and taxation isanalysed as follows:
2001
£m

2000
£m

Broadcasting
Monitoring

8.6
1.1

(3.9)
1.1

Surplus/(deficit) before
interest and taxation

10.7

8.4

(10.5)

8.6

Total surplus/(deficit) before interest and taxation

9.7

(2.8)

Net assets

41.9

31.6

–

73.5

1f Analysis of commercial businesses’ surplus/(deficit)
before interest and taxation by activity
BBC Worldwide Limited’s surplus/(deficit) before interest and taxation
is analysed as follows:
Publishing Programme
and new
distribumedia
tion
£m
£m

Channels
£m

Total
£m

2001
Operating surplus/(deficit)
Profit on disposal of a businessand shares in subsidiary

0.2

16.4

(11.6)

5.0

18.2

–

–

18.2

Surplus/(deficit) before
interest and taxation

18.4

16.4

(11.6)

23.2

2000
Operating result and surplus/(deficit)
before interest and taxation
16.0

12.2

(19.6)

8.6

Other commercial businesses’ income originates within the UK.The net
assets used by them are located in the UK. Income by destination anddeficit before interest and taxation are analysed geographically as follows:
UnitedKingdom£mAmericas£mRest ofthe world
£m

Total
£m

Income by destination

28.9

1.4

3.8

34.1

Surplus/(deficit) before
interest and taxation(14.7)

0.7

0.2(13.8)

Materially, all turnover and loss before taxation in the preceding year
originated from within the UK and had a UK destination. All net assets
in the preceding year were located in the UK.

Annual Report and Accounts 2000/2001 67

Notes to the Financial Statements

2 Operating expenditure

2c Commercial businesses’ expenditure

2a Analysis of operating expenditure by activity
Note

Note

Public services:– BBC Home Services– BBC World Service
Commercial businesses:– BBC Worldwide Limited– BBC Resources Limited– BBC Technology
Holdings Limited

2b
2b

2c
2c

2c

Total
2001
£m

Total
2000
£m

2,434.5
194.8

2,328.8
194.9

515.5
45.6

455.4
44.8

2.3

–

3,192.7

3,023.9

BBC Technology Holdings Limited incurred set-up costs prior tocommencing trading on 31 March 2001.
2b Public services expenditure

Analogue services
BBC One
BBC Two
National and Regional television
National, Regionaland Local Radio
Radio 1
Radio 2
Radio 3
Radio 4
Radio Five Live
World Service radio

Home Services
Restated
2001
2000
£m
£m

World Service
Restated
2001
2000
£m
£m

922.0
402.2
201.9

832.8
414.0
205.9

–
–
–

–
–
–

163.0
41.6
39.7
53.9
85.3
69.6
–

156.6
41.2
42.6
62.9
85.4
67.2
–

–
–
–
–
–
–
138.2

–
–
–
–
–
–
141.5

1,979.2

1,908.6

138.2

141.5

10.2
46.0
48.1
3.3
18.8
13.2
4.5
51.9

20.4
45.0
47.7
3.0
18.5
4.7
8.1
38.1

–
–
–
–
–
–
–
5.1

–
–
–
–
–
–
–
2.6

196.0

185.5

5.1

2.6

131.9
118.3
–

113.9
109.5
–

–
30.2
21.3

–
30.2
20.6

2,425.4

2,317.5

194.8

194.9

Open University Production Centre 9.1

11.3

–

–

2,328.8

194.8

194.9

Digital services
BBC One and Two Digital
BBC Choice*
BBC News 24
BBC Parliament
BBC Knowledge
Digital text and Interactive
Digital radio
BBC Online

Licence fee collection costs
Transmission costs
Monitoring

Total

2,434.5*Includes a block of children’s programmes shown between 6am and 6pm each day.

Comparative figures for 1999/2000 have been restated to include theirshare of Corporate Centre and Restructuring costs.
68 Annual Report and Accounts 2000/2001

Cost of sales
Distribution costs
Administrative and other costs
Amortisation ofprogramme investment
11

Worldwide
2001
2000
£m
£m

Other
2001
£m

2000
£m

270.6
137.2
32.9

218.0
137.5
32.2

27.9
–
20.0

30.1
–
14.7

74.8

67.7

–

–

515.5

455.4

47.9

44.8

The expenditure shown for other commercial businesses relates only
to commercial income and excludes expenditure relating to sales
within the BBC.
Administrative and other costs include a restructuring charge of£13.7 million (2000 £8.9 million) for BBC Resources Limited.

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
Loss on disposal of tangible fixed assets
Amortisation of investment inprogrammes for future sale
Auditors’ remuneration:– financial audit– consultancy and advisory
Fair trading auditors’ remuneration

2001
£m

2000
£m

29.9
8.7
22.8
17.6
21.4
114.8
6.5

28.4
5.2
25.5
16.5
17.8
120.2
18.8

74.8

67.7

0.8
0.5
0.3

0.8
2.5
–

£0.4 million of the audit fee relates to the Home Services(2000 £0.4 million).

4 Employees and remuneration
4a Persons employed
The average number of persons (full-time equivalent) including the
Executive Committee members employed in the year was:Average for the year
2001
2000
NumberNumberHome Services
BBC World Service
BBC Worldwide Limited
BBC Resources Limited

16,808
1,696
1,958
3,667

16,401
1,652
1,773
3,814

Group total

24,12923,640

4a Persons employed continued
Within the averages above, 2,015 (2000 1,766) part-time employees
have been included at their full-time equivalent of 1,176 (2000 1,051).
In addition to the above, the Group employed an average full-time
equivalent of 1,113 (2000 999) persons on a casual basis and the BBC
Orchestra and Singers numbered 374 (2000 381) full-time equivalent
persons employed on programme contracts.
On 31 March 2001, a total of 943 (930 full-time equivalent) employeestransferred to BBC Technology Holdings Limited from the Home
Services (387 full-time equivalent) and from BBC Resources Limited(543 full-time equivalent).These transfers are not reflected in the
average figures above.
4b Staff costs

Salaries and wages
Social security costs
Other pension costs – principal scheme– other schemes
External staff costs
Redundancy costs

Comprising:Home Services
BBC World Service
BBC Worldwide Limited
BBC Resources Limited

2001
£m

Restated
2000
£m

823.4
73.2
52.9
2.8
40.4
34.6

785.3
69.8
50.5
1.3
43.0
36.2

1,027.3

986.1

737.4
63.0
84.8
142.1

704.3
60.4
73.4
148.0

1,027.3

986.1

The above numbers for 2000 have been restated to include external
staff costs for agency and freelance staff whose costs are not paid
through the BBC payroll.
4c Pensions
The Group operates several pension schemes.The BBC Pension
Scheme and a small unfunded pension scheme, which is closed to
new members, are contributory defined benefit schemes.The Group
Personal Pension Scheme provides staff with a defined contribution
scheme.The total pension charge for the year under all schemes is£55.7 million (2000 £51.8 million).
Principal scheme
The BBC Pension Scheme is the main pension scheme of the BBCGroup and covers the majority of employees.This scheme provides
salary-related pension benefits on a defined benefit basis from assets
held in separate, trustee-administered, funds.
The scheme is subject to independent valuation by a professionallyqualified actuary at least every three years, on the basis of which theactuary certifies the rate of employer’s contributions.These, together
with the specified contributions payable by employees and proceedsfrom the scheme’s assets, are expected to be sufficient to fund thebenefits payable under the scheme.The most recent full actuarial
valuation of the scheme was prepared as at 1 April 1999 by Watson
Wyatt, consulting actuaries, using the projected unit method.

4c Pensions continued
The pension charge for the year derives from this full actuarial
valuation following Statement of Standard Accounting Practice 24(SSAP 24).
At 1 April 1999, the market value of the assets of the scheme was£6,294 million and the actuarial value of the assets was sufficient
to cover 114% of the benefits due to members, after allowing for
expected future increases in earnings.
The scheme surplus is being amortised over 12 years: the expected
average remaining service life of the employees.
The pension charge for the year for this scheme is £52.9 million(2000 £50.5 million), which derives from an effective accounting
contribution rate of 10.4% of pensionable salaries.
Both the BBC and employees continue to contribute at a cash rateof 4.5% of pensionable earnings.The scheme continues to benefit fromfull tax relief under the Inland Revenue guidelines.
In the Group accounts an amount of £43.8 million is included
in provisions which represents the excess of the cumulative pension
cost over the cumulative contributions paid to the scheme(2000 £12.8 million net).
A new accounting standard, FRS 17 Retirement Benefits, is being
introduced which changes the method by which pension information is
calculated and presented in the financial statements. Below, we provide
additional information on the BBC Pension Scheme under the firstyear transitional rules of FRS 17.This information has been preparedfrom a valuation using the methodology prescribed by FRS 17 as at
31 March 2001. Under FRS 17 the scheme is assessed using market
value rather than the actuarial value used under SSAP 24.The main
assumptions used in the valuation were the same as those used in the
SSAP 24 valuation and are noted below:
Rate of increase in earnings – 4.5%.
Rate of increase in pension payments – 2.5%.
Inflation assumption – 2.5%.
The discount rate used in the FRS 17 valuation is different from thatused for SSAP 24 as the former is based on corporate bonds at
31 March 2001 – a discount rate of 6%.The discount rate used in the
SSAP 24 valuation is 6.25% and varies according to the actual assets
held which for the BBC Pension Scheme are primarily equities.
Using the FRS 17 basis, the surplus in the scheme was £1,708 million
at 31 March 2001 and the assets and liabilities in the scheme at
31 March 2001 were as follows:2001£mEquityBonds
Property

4,752
841
936

Total market value of assets
Present value of scheme liabilities

6,529(4,821)

Surplus in the scheme
Related deferred tax asset

1,708
–

Net pension asset

1,708

Annual Report and Accounts 2000/2001 69

Notes to the Financial Statements

4c Pensions continued
A deferred tax asset will not arise for the Group mainly due to thefact that most of the Group’s public service activity is not subject
to taxation.
In future years, when FRS 17 is fully implemented in the Group,
the Home Services will take advantage of the provisions included
within FRS 17 and account for the scheme as if it were a defined
contribution scheme.This is because it is unable to identify its shareof the underlying assets and liabilities of the scheme on a consistentand reliable basis.The expenditure charge under FRS 17 for the Home
Services will therefore represent the contributions payable in the year.
These contributions will benefit from the surplus in the scheme andaccordingly will be lower than the regular cost.
Other schemes
The small unfunded pension scheme is valued using assumptions which
are the same as those for the main scheme under SSAP 24 describedabove. At 31 March 2001 the obligation was £3.5 million, which had
been fully provided for in the BBC accounts (2000 £2.7 million).
The pension charge for the year for this scheme was £0.8 million(2000 £0.7 million).

5 Profit on disposal of a business and shares insubsidiary continued
The Group is expected to divest 13.5% of beeb Ventures Limitedon completion of a further partial disposal in the year ending 31 March
2002, the proceeds of which will be used to finance the business.
Profits on these partial disposals of beeb Ventures Limited are part ofa linked arrangement with a third party, under which profits on a partial
disposal are structured to offset start-up operating losses of thiscompany.
The Group also disposed of its education business, BBC for Business,for £2.0 million.This disposal gave rise to asset disposals of £0.5 million
and other expenses of £0.4 million.The Group will retain a minority
stake in the business and receive an ongoing royalty. Prior to disposal,
BBC for Business contributed turnover of £1.0 million and operating
surplus of £0.3 million to the results for the year ended 31 March 2001.
There is no impact on the tax charge for the year.

6 Net interest receivable
2001
£m

2000
£m

Interest receivable
Interest payable on bank and other loans

27.9
(2.1)

23.6
(0.2)

The charge for the Group Personal Pension Scheme and otherschemes totalled £2.0 million in the year (2000 £0.6 million).
At 31 March 2001, £0.6 million has been included within provisions(2000 nil).

Net interest receivable

25.8

23.4

4d Remuneration of the Board of Governors
and Executive Committee
The emoluments of the Governors and of the Executive Committee
members are disclosed on pages 50 to 52 in the remuneration report.

7a Analysis of charges for the period
The charge for the year, based on a rate of corporation tax of 30%(2000 30%), comprised:

Using the updated assumptions required for FRS 17 for this scheme(as for the main scheme), the obligation for the unfunded pension
scheme would be £3.7 million.

7 Taxation

5 Profit on disposal of a business and sharesin subsidiarybeeb Ventures Limited
BBC for Business

2001
£m

2000
£m

17.1
1.1

–
–

18.2

–

During 2001, the Group made a partial disposal of shares in beeb
Ventures Limited, the subsidiary owning its internet retail site beeb.com
and internet service provider beeb.net.The transaction gave riseto income totalling £20.2 million in the year, against which costs of£3.1 million were incurred.

70 Annual Report and Accounts 2000/2001

2001
£m

2000
£m

Current tax:
UK corporation tax
Adjustments in respect of previous years

9.2
(5.9)

11.7
(0.5)

Foreign tax
Share of associated undertakings’ tax

3.3
6.3
0.3

11.2
4.6
–

9.9

15.8

1.8
(2.1)

(0.5)
(0.5)

(0.3)

(1.0)

9.6

14.8

Note

Total current tax

7b

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

7d

7b Factors affecting the tax charge
The Group is only liable to taxation on those activities carried out witha view to making a profit and on rent, royalties and interest receivableand therefore the BBC does not receive relief for all its expenditure.
The tax assessed for the year therefore differs from the standard rateof corporation tax in the UK (30%).The differences are explained below:
Note

Surplus before tax

2001
£m

2000
£m

16.7

2.9

Surplus before tax multiplied by standard rateof corporation tax in the UK of 30% (2000 30%)
Effects of:
Non-taxable income
Taxable external income
Disallowed expenditure
Non-taxable profit on sale of shares
Tax losses not Group relieved
Tax differential re overseas earnings
Adjustments to tax charge in respect of prior periods
Depreciation in excess of capital allowances
Other
Minority interest

5.0

0.9

(4.5)
7.5
1.6
(1.5)
3.4
2.1
(5.9)
1.5
0.4
0.3

(0.5)
10.0
2.6
–
–
(0.2)
(0.5)
2.8
0.7
–

Current tax charge for the year

9.9

15.8

7a

8 Intangible fixed assets
Goodwill£m

Cost
At 1 April 2000
Additions–0.5

At 31 March 2001

0.5

Amortisation
At 1 April 2000 and at 31 March 2001–

Net book value
At 31 March 2001

0.5

At 31 March 2000–

Goodwill has arisen on the acquisition of Cover to Cover Cassettes
Limited of £0.3 million and the business of Gardens Illustrated magazineof £0.2 million. Goodwill will be amortised over 20 years reflecting theuseful economic life, subject to reviews for impairment.

9 Acquisitions
On 1 December 2000, the Group acquired 100% of the share capitalof Cover to Cover Cassettes Limited for £1.2 million.

7c Factors that may affect future tax charges
The Group anticipates that the future tax charge will not altermaterially since all licence fee income is free of tax.

Book andfair value£m

7d Deferred tax analysis
In accordance with FRS 19, Deferred tax, the Group provides for all
deferred tax liabilities in full.The deferred tax provision is analysed
as follows:
Note

Accelerated capital allowances
Pension accruals
US timing differences

Provision at start of year
Exchange adjustment
Deferred tax credit
Provision at end of year

7a

2001
£m

2000
£m

(0.2)
1.0
(0.8)

1.8
0.6
(1.9)

–

0.5

0.5
(0.2)
(0.3)

1.5
–
(1.0)

–

0.5

Current assets
Goodwill

0.9
0.3

Fair value of net assets acquired

1.2

Satisfied by:
Cash consideration
Deferred consideration

0.6
0.6

Total consideration

1.2

The net outflow of cash in respect of the purchaseof a subsidiary is as follows:
Cash consideration
Cash balances of subsidiary undertaking purchased

0.6
(0.2)
0.4

Cover to Cover Cassettes Limited contributed £0.4 million to thesurplus for the year relating to the period since acquisition.
Cover to Cover Cassettes Limited made a surplus of £0.6 million fromthe beginning of the financial year to the date of acquisition. In its
previous financial year the profit was £0.1 million.
There is no difference between the book value and the fair valueof the assets acquired.
The business and rights to the name Gardens Illustrated magazine
were acquired on 23 August 2000 for cash consideration of£0.2 million. No other assets were purchased.

Annual Report and Accounts 2000/2001 71

Notes to the Financial Statements

10 Tangible fixed assets

10b Home Services
Land andbuildings£m

10a The GroupLand andbuildings£mPlant andmachinery£m

Furniture Assets underand fittings construction£m£m

Cost or valuation
At 1 April 2000
Exchange adjustments
Additions
Brought into service
Disposals

533.0
0.1
3.6
1.1
(4.7)

775.2
–
28.6
30.9
(44.2)

102.9
0.1
11.9
5.8
(0.8)

At 31 March 2001

533.1

790.5

119.9

91.1 1,534.6

Assetsunderconstruction
£m

374.8
19.3
10.4
9.4
(80.6)(19.5)

74.9
10.4
5.0
–
(20.3)
(1.2)

27.4
949.6
41.9
75.2
(16.3)––
9.4(5.6) (194.3)(2.9) (26.0)

313.8

68.8

44.5

813.9

190.5
47.2
2.9
(47.7)

28.8
8.1–(17.9)

–
–
–
–

373.2
64.5
2.9
(72.0)Total£m

At 31 March 2001

386.8

Depreciation
153.9
647.9 At 1 April 2000
Charge
for
the
year
9.2
0.1
Transferfromsubsidiary–
114.8
Transfers to subsidiaries (6.4)(45.2) Elimination in respectof disposals
(1.3)
717.6
At 31 March 2001
155.4

(18.9)(0.9)–(21.1)

174.0

18.1

–

347.5

Net book value
At 31 March 2001

231.4

139.8

50.7

44.5

466.4

At 31 March 2000

318.6

184.3

46.1

27.4

576.4

182.1
–
12.7

417.4
–
90.8

48.4
0.1
11.3

–
–
–

(2.0)

(42.3)(0.9)–

At 31 March 2001

192.8

465.9

58.9

–

Net book value
At 31 March 2001

340.3

324.6

61.0

91.1

817.0

At 31 March 2000

350.9

357.8

54.5

49.7

812.9

Home Services’ plant and machinery was revalued at 31 March 1993,prior to the introduction of the internal market.The valuation was
based on the estimated current replacement cost of the assets,adjusted for service potential.

Historical cost basis
The net book value of tangible fixed assets included in the above table
determined on an historical cost basis is as follows:
2001
£m

2000
£m

Cost
Depreciation

294.6(154.8)355.6(171.3)

Net book value

139.8

184.3

Plant and machinery

BBC World Services’ plant and machinery and furniture and fittings
were revalued at 1 April 1996 on the same basis.
Following the introduction of FRS 15, Tangible Fixed Assets, the assets
were retained at their valuation as adjusted for depreciation.The Group
does not plan to revalue assets on an ongoing basis.
Historical cost basis
The net book value of tangible fixed assets included in the above table
determined on an historical cost basis is as follows:
Plant andmachinery
2001£mPlant andFurnituremachinery and fittings
2000
2001
£m
£m

Cost
Depreciation

825.9(508.5)810.9(461.1)

122.6(61.6)

105.5(51.0)Net book value

317.4

349.8

61.0

54.5

Furnitureand fittings
2000£mIncluded within fixed assets is £24.0 million at cost relating to a relay
station in Thailand used by BBC World Service.These assets aretransferable to the Royal Thai government in return for the paymentof a nominal sum. BBC World Service will retain the rights torepurchase the assets, should the operation cease, for a similar nominal
sum.The use of these assets is not affected by this transaction andtherefore they will continue to be carried at cost less attributabledepreciation in the balance sheet.

72 Annual Report and Accounts 2000/2001

Furnitureandfittings
£m

Total
£m

Cost or valuation
At 1 April 2000
472.5
Additions
3.6
49.7 1,460.8
Brought
intoservice
0.9–
0.2
Transferfromsubsidiary
–
83.5
127.6
Transfers
tosubsidiaries(87.8)(37.8)–(2.4)(4.3) (54.0) Disposals

Depreciation
At 1 April 2000
Exchange adjustments
Charge for the year
Elimination in respectof disposals

Plant andmachinery£m

10c Land and buildings at net book value comprise:

Freeholds
Long leaseholds
Short leaseholds

Group
2001
£m

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000
£m

307.9
2.9
29.5

314.1
2.9
33.9

211.8
2.9
16.7

298.1
2.9
17.6

340.3

350.9

231.4

318.6

There has been no impairment in the carrying values of freeholdproperties at the balance sheet date.
Land and buildings in the Group include freehold land at a costof £64.7 million (2000 £64.7 million) and in the Home Services£30.4 million (2000 £60.5 million), none of which is depreciated.

11 Investment in programmes for future sale
Group
£m

Cost
At 1 April 2000
Exchange adjustment
Additions †Financing benefit
Elimination of programmes fully amortised

242.2
12.4
76.8
(0.5)
(41.7)At 31 March 2001

289.2

Amortisation
At 1 April 2000
Exchange adjustment
Charge for the year
Elimination of programmes fully amortised

129.5
9.4
74.8
(41.7)At 31 March 2001

172.0

Net book value
At 31 March 2001

117.2

At 31 March 2000

112.7

† The additions include £76.2 million direct investment in BBC programmes.

Included in the net book value is £3.7 million relating to investments
held under a licence agreement (2000 £3.6 million).

12 Other investments(including BBC World Service net assets)
12a Movements in year for Home Services
Home
Services
2001
£m

Home
Services
2000£mInterest in BBC World Service net assets
At 1 April
Accumulated surplus/(deficit)

114.0
10.2

116.4
(2.4)

At 31 March

124.2

114.0

110.3
1.0
(19.0)

110.3––

At 31 March

92.3

110.3

Other investments
At 1 April
Additions

0.4
122.3

0.4
–

At 31 March

122.7

0.4

Total other investments

339.2

224.7

Shares in subsidiaries
At 1 April
Additions
Disposals

Additions to other investments in the year of £122.3 million represent
the loans due from subsidiary undertakings following the transfer of
fixed assets from the Home Services.
12b Subsidiaries
The Home Services own 100% of the issued ordinary share capitalof the following companies which are incorporated in Great Britain:
Cost

2001
£m

2000
£m

BBC Worldwide Limited
BBC Subscription Television Limited (dormant)
BBC Investments Limited (dormant)
BBC News Limited
BBC Property Limited
BBC Resources Limited
BBC Technology Holdings Limited
Centre House Productions Limited
BBC Digital Programming Services Limited

0.3
–
–
–
1.0
91.0
–
–
–

0.3
–
–
–
–
110.0
–
–
–

92.3

110.3

The activities of the principal subsidiaries of the Home Services are set
out in the glossary (see page 58). Centre House Productions Limited isa leasing company whose purpose is the financing of certain high-value
drama productions.These transactions reduce the overall net cost of
producing the programmes to the BBC. BBC Digital Programming
Services Limited holds the ITC digital programme service licence for
BBC Knowledge. BBC News Limited was incorporated in the year andwill provide BBC news content to mobile phones.

The financing benefit relates to monies received for tax credits on
investments in sale and leaseback programmes.

Note

12a Movements in year for Home Services continued
Disposals represent a share buy-back by BBC Resources Limitedof £19.0 million.

12b

OthersThe Group also holds the controlling interest in the following companies
which, except where otherwise stated, are incorporated in Great Britain:
Holding ofissued ordinary
shares%Held by BBC World Service:
BBC East Asia Relay Company Limited(incorporated in Hong Kong)
BBC Radiocom (Bulgaria) OLLC (incorporated in Bulgaria)
BBC Radiocom (Hungary) Limited (incorporated in Hungary)
BBC Radiocom (Romania) SRL (incorporated in Romania)
BBC Radiocom (Slovakia) Limited(incorporated in the Slovak Republic)
BBC Radiocom (Praha) Sro (incorporated in the Czech Republic)
BBC Polska SP Zoo (incorporated in Poland)
BBC do Brazil Limitada (incorporated in Brazil)
BBC Radiocom Deutschland GmbH (incorporated in Germany)
BBC World Service Trust
Held by BBC Technology Holdings Limited:
BBC Technology Limited
BBC Technology Services Limited
BBC Technology Supply Limited

100
100
100
100
100
100
100
100
100
*
100
100
100

Annual Report and Accounts 2000/2001 73

Notes to the Financial Statements

12b Subsidiary undertakings continued
Holding ofissued ordinary
shares%Held by BBC Worldwide Limited:
Publishing
BBC Magazines Inc. (incorporated in USA)
Galleon Limited
Broadcasting Dataservices Limited
Cover to Cover Cassettes Limited
Programme distribution
BBC Worldwide Americas Inc. (incorporated in USA)
BBC Worldwide Music Limited
UK Programme Distribution Limited
BBC Worldwide (Japan) Limited (incorporated in Japan)
BBC Worldwide (France) SARL (incorporated in France)
BBC Worldwide (Germany) GmbH (incorporated in Germany)
BBC Worldwide (India) Private Limited (incorporated in India)
BBC Worldwide (Singapore) Private Limited(incorporated in Singapore)
Channels
New Video Channel America LLC (incorporated in USA)
European Channel Broadcasting Limited
European Channel Management Limited
Investment companies
Worldwide Americas Investments Inc. (incorporated in USA)
BBC Worldwide Investments Limited
BBC World Service Television Limited
BBC Worldwide Channel Investments Limited
Worldwide Channel Investments (Europe) Limited
Worldwide Channel Investments(Australia) Limited (incorporated in Australia)
Worldwide Channel Investments (Ontario) Limited(incorporated in Canada)
Onlinebeeb Ventures Limited

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

12d Interests in joint ventures
The Group, through its subsidiary BBC Worldwide Limited, has major
partnership deals with Flextech for the production and marketing ofsubscription channels in the UK, and with Discovery Communications
Inc. (Discovery) for incorporating new channels around the world andproviding new co-production funding for programmes.These alliances
operate joint ventures, listed below:
Name of entity

Nature of entity

Partner

Date entered

UK Channel
Management Limited
Joint venture
UK Gold Holdings Limited Joint venture
JV Programmes LLC
Joint venture

Flextech
Flextech
Discovery

April 1997
April 1997
March 1998

In addition to the arrangements with Flextech and Discovery, BBC
Haymarket Exhibitions Limited (Haymarket) is included in the joint
venture total and is accounted for separately from the Flextech andDiscovery joint ventures.
The following disclosures are based on results for the year ended
31 December 2000 for the Flextech and Discovery joint ventures and
31 March 2001 for Haymarket.The amounts disclosed represent theGroup’s equity shares of the assets and liabilities of the entities.

BBC Worldwide share of:

100
100
100
100
100

100
91.2

Interests in joint ventures
At 1 April
Share of retained losses
Adjustment to reflect effective obligations

Interests in associates
At 1 April
AdditionsShare of retained profits and losses

Group
2000
£m

12d

At 31 March

31.7

20.6

15.3

67.6

Profit/(loss) before tax
Taxation

7.2
(2.4)

(8.8)
–

0.6
(0.2)

(1.0)
(2.6)

Profit/(loss) after tax

4.8

(8.8)

0.4

(3.6)

–
27.7
(9.5)
(71.5)

0.1
13.2
(7.7)
(40.1)

53.3

34.5

0.4

88.2

–

–

0.4

0.4

2000
Turnover

26.2

10.6

13.2

50.0

Profit/(loss) before tax
Taxation

4.0
(0.1)

(13.7)
–

0.1
–

(9.6)
(0.1)

Profit/(loss) after tax

3.9(13.7)

0.1

(9.7)

–
26.8
(16.5)(67.8)–
8.2(5.7)(28.3)

0.1
11.8
(4.8)
(7.4)

0.1
46.8
(27.0)(103.5)

57.5

25.8

0.3

83.6

–

–

–

–

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

–
(3.6)
4.0

–
(9.7)
9.7

0.4

–

0.3
0.4
0.3

0.2
0.2
(0.1)

1.0

0.3

12e

Fixed assets
Current assets
Liabilities less than one year
Liabilities more than one year
Adjustment to reflect
effective obligations
Net book value

At 31 March

Total
joint
ventures£m

2001
TurnoverNet book value
12c Movements in the year for the Group
Note

Other
joint
ventures£m

100* The BBC World Service Trust is a charitable company limited by guarantee, of which the BBC is thesole member.

Group
2001
£m

UK Gold UK Channel
Holdings Managem’t
Limited*Limited*
£m
£m

–
0.1
15.7
56.6
(5.2) (22.4)(10.5) (122.1)* The figures for 2001 are based on unaudited financial statements (2000 audited).

Other investments
At 1 April and at 31 March

0.4

0.4

Total other investments

1.8

0.7

74 Annual Report and Accounts 2000/2001

The Group share of turnover for Haymarket was £6.4 million(2000 £7.0 million) and operating surplus was £0.6 million (2000£0.1 million).

12d Interests in joint ventures continued
Under the terms of the agreements with Flextech and Discovery,
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 sharein losses of the relevant entities and accordingly no share of losses is
included in the financial statements for the year ended 31 March 2001
(2000 nil).The Group is entitled to its share of any profits or net assets
once the ventures’ cumulative profits exceed cumulative losses sinceincorporation.
12e Interests in associates
The Group holds the following significant interests in companies which,except where otherwise stated, are incorporated in Great Britain:
Holding ofissued ordinary
shares%Held by the Home Services:
Parliamentary Broadcasting Unit Limited
Broadcasters Audience Research Board Limited
RAJAR (Radio Joint Audience Research) Limited
Held by BBC World Service:
Caribbean Relay Company Limited (incorporated in Antigua)
Multimedia Ventures Limited
Ascension Island Commercial Services Limited
Held by BBC Worldwide Limited:
Publishing
Frontline Limited
Programme distribution
The Sales Consortium Limited
Tele Alliance Limited
Channels
UK TV Pty Limited (incorporated in Australia)
Animal Planet (Latin America) LLC (incorporated in USA)†
People and Arts (Latin America) LLC (incorporated in USA)†
Animal Planet LLC (incorporated in USA)†JV Network LLC (incorporated in USA)†
Animal Planet (Asia) LLC (incorporated in USA)†
Animal Planet (Europe) Partnership†
Animal Planet Japan KK (incorporated in Japan)†
Animal Planet Japan LLP (incorporated in Delaware, USA)†
Jasper Broadcasting Limited (incorporated in Canada)
Held by BBC Resources Limited:
3sixtymedia Limited

12e Interests in associates continued
The following additional disclosures are based on the results of the
Discovery associates for the year ended 31 December 2000 and theremaining associates’ disclosures are based on the results at the dateof their individual financial statements.These additional disclosures
represent the Group’s equity share of assets and liabilities of
those entities.
Group interests in associates

2001
£m

2000
£m

Share of turnover

32.5

19.8

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

45.6
28.6
(19.5)(85.7)
32.0

40.4
24.4
(14.4)(57.1)
7.0

1.0

0.3

Net interests in associates
33
*
25
45
50
33

23
25
25
20
50
50
20
50
50
50
33
50
20
20

* Broadcasters Audience Research Board Limited is a company limited by guarantee, of which the BBC
is a joint member with other broadcasters.

Under the terms of the agreements with Discovery, the Group has no
obligation to fund losses incurred by the entities nor to make goodtheir net liabilities. As a result, the Group does not share in losses of
the relevant entities and accordingly no share of losses is included in
the financial statements for the year ended 31 March 2001 (2000 £nil).
The Group is entitled to its share of any profits or net assets once theventures’ 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 Limited is not entitled toany profits arising within this entity.

13 Stocks
Group
2001
£m

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000£m

Raw materials
3.0Work in progress:– originated programmes
244.1– other
5.6
Finished programmes:– acquired programmes and films 92.5
– originated programmes
49.1
Other
11.8

3.7

–

–

203.5
1.8

244.0
–

203.4
–

87.4
38.8
10.7

92.5
49.1
0.9

87.4
38.8
0.9

345.9

386.5

330.5

Total

406.1

† Discovery associates.

Annual Report and Accounts 2000/2001 75

Notes to the Financial Statements

14 Debtors

15 Creditors continued
Group
2001
£m

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000
£m

163.7

141.2

22.3

27.7

272.9
–

235.7
–

272.9
98.5

235.7
10.5

5.8
28.1
31.8
3.6
142.3
–

5.1
24.5
26.6
–
109.7
1.2

–
26.3
21.3
1.2
102.2
–

–
21.9
30.8
–
99.9
–

648.2

544.0

544.7

426.5

Receivable after more than one year
Amounts owed by subsidiaries–
Prepayments
47.8

–
32.8

17.6
27.2

39.2
29.9

47.8

32.8

44.8

69.1

696.0

576.8

589.5

495.6

Receivable within one year
Trade debtors
Department of Culture, Mediaand Sport – licence fee debtors
Amounts owed by subsidiaries
Amounts owed by associates
and joint ventures
VAT recoverable
Other debtors
Corporation tax
Prepayments
Prepaid pension contributions

Total

The amount owed by subsidiaries receivable after more than one
year represents the drawn-down element of unsecured £30 million
interest bearing facilities provided to BBC Resources Limited.
The loan to BBC Resources Limited is repayable on 30 March 2004.
Interest on these facilities is charged at 0.8% over bank base rates andappropriate covenants exist to protect the Home Services fromfinancial risk.
BBC Worldwide Limited has an unsecured £150 million facility with
Home Services which is repayable on 30 March 2002 but will be
renegotiated with a view to extending the loan for further periods
as long as BBC Worldwide Limited remains within its covenants andsubstantially delivers the financial performance anticipated in its
approved budgets. Interest on these facilities is charged at 0.6% overbank base rates and appropriate covenants exist to protect the Home
Services from financial risk. At 31 March 2001, the drawn-downelement of the facility was nil.

15b Amounts falling due within one year

Bank overdrafts
Trade creditors
Programme creditors
Programme acquisitions
Salaries and wages
Residual copyright payments
Licence fee collection creditors
Other trade creditors

76 Annual Report and Accounts 2000/2001

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000
£m

7.0

8.9

–

–

91.1
39.7
18.5
53.3
5.4
161.1

99.5
43.2
22.2
40.4
1.7
183.5

90.9
39.7
17.6
–
5.4
90.4

99.3
43.2
21.5
–
1.7
114.3

369.1

390.5

244.0

280.0

28.8
1.6
27.7
–

13.8
–
23.8
34.2

15.3
4.2
20.7
33.2

1.6
2.9

0.1
–

–
2.3

62.6

71.9

75.7

170.9

201.7

128.7

163.6

140.1

163.6

417.0

334.5

341.8

292.3

844.6

796.5

657.7

648.0

Other creditors
Fixed asset creditors
15.6
Corporation tax–
Other taxation and social security 33.9
Amounts owed to subsidiaries–
Amounts owed to associates
and joint ventures
2.0
Other
–
51.5
Accruals and deferred income
Accruals and deferred income
276.9
Licence saving stamps deposits anddirect debit instalments
140.1

Total

15c Amounts falling due after more than one year
Group
2001
£m

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000£mBank and other loans

19.1

18.9

–

–

Trade creditors
Programme acquisitions
Other trade creditors

21.0
0.7

9.4
1.4

21.0
0.7

9.4
1.4

21.7

10.8

21.7

10.8

10.5

4.4

–

–

10.5

4.4

–

–

51.3

34.1

21.7

10.8

15 Creditors
15a Prompt payment policy
It is the BBC’s policy to comply with the CBI prompt payment codein relation to the payment of suppliers, provided that the supplier iscomplying with the relevant terms and conditions of their contracts.
The BBC monitors compliance against the terms of this code.The
BBC Group’s number of creditor days outstanding at 31 March 2001
was 52 days (2000 57 days).

Group
2001
£m

Other creditors
Obligations under finance leases(note 15d)

Total

Creditors falling due after more than one year are all repayable within
five years with the exception of the finance lease obligations (note 15d).

15c Amounts falling due after more than one year continued
Bank and other loans include a US$5 million loan from Discovery
which is repayable in the following stages: $3 million due 31 March
2004; $2 million due 31 March 2005.The remainder of the loans
consist of multi-currency revolving facilities repayable in full in four
years. Interest is payable at LIBOR plus 1.0% for the US$5 million loan
and LIBOR plus 0.3% for the multi-currency facilities.
15d Obligations under finance leases
The maturity of obligations under finance leases is as follows:
Group
2001
£m

2000
£m

Within one year
In the second to fifth years
Over five years

9.7
43.9
125.4

4.6
21.0
63.2

Less future finance charges

179.0(52.9)

88.8(28.0)

Less: defeasance deposits

126.1(115.6)60.8(56.4)

10.5

4.4

The finance leases have been entered into by the subsidiary Centre
House Productions Limited.They are a means of financing drama
productions which result in a reduction in the production costs to
the BBC.
The finance leases are matched by defeasance deposits 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.
These deposits may only be used to settle the finance lease liabilities
and therefore these do not represent separate assets and liabilities.
Consequently, they have been netted off with the finance lease creditor
to show the net unmatched liability at the year end.

16 Provisions for liabilities and charges
At 1 April
2000£m

Utilisedduring theyear£mReleasedduring theyear£mCharge forthe year£m

At
31 March
2001
£m

Group
Restructuring
Litigation and insurance
Property
Pension
Other

1.6
12.8
13.2
16.7
10.0

(1.6)
(1.9)
–
(0.1)
(2.6)

–
(0.1)
(6.6)
–
(2.4)

16.4
3.5
5.3
31.3
13.4

16.4
14.3
11.9
47.9
18.4

Total

54.3

(6.2)

(9.1)

69.9

108.9

Property provisions include BBC World Service’s liability of £3.6 million(2000 £5.6 million) to restore Bush House to its original condition,
together with amounts relating to other dilapidations and relocations.
Other provisions comprise deferred tax (as noted in 7d) and a numberof individually insignificant balances arising across the BBC in the normal
course of business.

16 Provision for liabilities and charges continued
Further information on the pension provision is provided in note 4c.
At 1 April
2000£m

Utilisedduring theyear£mReleasedduring theyear£mCharge forthe year£m

At
31 March
2001£mHome Services
Restructuring
Litigation and insurance
Property
Pension
Other

0.5
12.8
7.6
10.3
9.5

(0.5)
(1.9)
–
(0.1)
(2.6)

–
(0.1)
(4.6)
–
(1.9)

15.8
3.5
5.3
24.3
13.4

15.8
14.3
8.3
34.5
18.4

Total

40.7

(5.1)

(6.6)

62.3

91.3

Operatingreserve£m

Capitalreserve£m

Revaluation
reserve
£m

Total
£m

Group
At 1 April 2000
Exchange adjustments
Surplus for the financial year
Revaluation reserve transfer
Capital reserve transfer

599.1
2.4
7.6
0.8
(2.6)

788.5
–
–
–
2.6

8.0 1,395.6
–
2.4
–
7.6
(0.8)
–
–
–

At 31 March 2001

607.3

791.1

7.2 1,405.6

Represented by:General Group reserves
BBC World Service reserves

600.0
7.3

681.4
109.7

– 1,281.4
7.2
124.2

607.3

791.1

7.2 1,405.6

17 Reserves

The Home Services and BBC World Service are funded from different
sources. As such, the reserves relating to BBC World Service are
maintained separately from the rest of the Group and are restricted
for use solely on BBC World Service activities.
Under the accounting standard FRS 10 Goodwill and intangible assets, any
newly arising goodwill must be capitalised and amortised over its usefullife. As is permitted by the standard, goodwill arising in periods prior to1999 of £6.8 million remains offset against the operating reserve.
Operatingreserve£m

Capitalreserve£m

Revaluation
reserve£mHome Services
At 1 April 2000
Surplus for the financial year
Revaluation reserve transfer
Capital reserve transfer

539.1
9.0
0.8
(2.6)

788.5
–
–
2.6

8.0 1,335.6
–
9.0
(0.8)
–
–
–

At 31 March 2001

546.3

791.1

7.2 1,344.6

Represented by:Home Services reserves
BBC World Service reserves

539.0
7.3

681.4
109.7

– 1,220.4
7.2
124.2

546.3

791.1

7.2 1,344.6

Total
£m

Annual Report and Accounts 2000/2001 77

Notes to the Financial Statements

18 Reconciliation of operating deficit to net cash
inflow from operating activities
2001
£m

2000
£m

Operating deficit
Depreciation and amortisation
Increase in interests in associates
Increase in interests in joint ventures
Loss on disposal of tangible fixed assets(Increase)/decrease in stocks(Increase)/decrease in debtors
Increase/(decrease) in creditors
Increase/(decrease) in provisions(27.3)
189.6
(0.7)
(0.4)
6.5
(60.7)(116.9)84.3
54.6(20.5)
187.9
(0.1)
–
18.8
10.2
3.0
(2.4)
(12.6)Net cash inflow from operating activities

129.0

184.3

20 Reconciliation of net cash flow to movement in
net funds
2001
£m

2000
£m

(Decrease)/increase in cash in the year
Net cash flow from management of liquid resources
Net cash flow from financing activities
Finance leases
Exchange adjustments(51.6)
(6.7)
–
(6.1)
(0.2)

179.0
(166.2)(15.8)(3.7)–

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

(64.6)
399.3

(6.7)
406.0

Net funds at the end of the year

334.7

399.3

21 Commitments
19 Analysis of changes in net funds

Net cash
Bank overdrafts
Cash at bank and in hand

21a Contracts placed for future expenditureAt
1 April
2000£m

Cash flows£m

Non-cash
movements
£m

(8.9)
156.4

1.9
(53.5)––

147.5(51.6)–

At
31 March
2001£mFixed asset additions(7.0) Programme acquisitions and102.9 sports rights
Independent programmes
95.9

Liquid resources
Deposits not repayable
on demand
Short-term investments

17.5
257.6

(2.5)
(4.2)

–
–

15.0
253.4

Gross funds*

422.6(58.3)–

364.3

Loans from third parties
Finance leases(18.9)
(4.4)

–
–

(0.2)
(6.1)

Net funds

399.3(58.3)

(6.3)

Group
2001
£m

Group
2000
£m

Home
Services
2001
£m

Home
Services
2000
£m

37.8

36.9

19.6

–

658.3
24.8

369.0
13.4

591.5
24.8

333.1
13.4

720.9

419.3

635.9

346.5

The increase in contractual commitments this year is due to thenegotiation of favourable long-term contracts for key programmes andfor the television and radio rights for major sporting events.

(19.1) 21b Operating leases(10.5) Operating lease commitments payable in the following year, analysed
according to the period in which the lease expires:
334.7

Bank overdrafts represent temporary timing differences on cash at bank.
The Group cash at bank and in hand shown on the balance sheet
comprises deposits not repayable on demand and cash at bank and in
hand.
The finance lease repayments falling due are offset directly by income
earned on matching deposits, such that there is no cash flow effect(see note 15d).The increase in finance lease liabilities represents theamount by which the interest accrued on the leases exceeds thatearned on the deposits together with new defeasance deposits for
new finance leases entered into during the year. Over the course of
the lease the interest earned on deposit together with the principal
is designed to meet the finance lease obligations.

Group
Within one year
In two to five years
After five years

Home Services
Within one year
In two to five years
After five years

Land andbuildings
2001£mLand andbuildings
2000
£m

Other
2001
£m

Other
2000
£m

2.3
18.6
8.8

2.2
18.4
8.7

11.5
12.3
3.2

8.7
8.6
5.9

29.7

29.3

27.0

23.2

2.1
10.5
7.6

1.8
10.2
7.3

7.2
6.4
–

6.0
2.1
–

20.2

19.3

13.6

8.1

*Analysis of gross funds
2001
£m

2000
£m

BBC funds
TV Licence savings stamps deposits

224.2
140.1

259.0
163.6

Gross funds

364.3

422.6

78 Annual Report and Accounts 2000/2001

21c Other financial commitments
In the ordinary course of business the BBC enters into a large numberof contracts with artists and writers and with providers of otherservices including licence fee collection and channel distribution.

22 Contingent liabilities
At 31 March 2001 the Group had unprovided contingent liabilities
estimated to be £2.8 million (2000 £4.5 million) in respect ofguarantees and indemnities.
A subscription-based funding arrangement for BBC World Service
Monitoring was introduced in April 1997. BBC World Service reservesof £7.0 million (2000 £5.1 million) include amounts arising as a resultof charging a return on capital employed to its customers, together
with other accumulated excesses of income over expenditure.There
are limitations placed upon the use that BBC Monitoring can make ofthese funds and the return of these funds at some point in the future
to HM Government remains a possibility.
BBC Resources Limited has a contract with 3sixtymedia Limited for theuse of studios. In the event that turnover earned by 3sixtymedia Limited
from the BBC falls below specified levels, BBC Resources Limited
is liable to pay a proportion of any redundancy costs which arise asa consequence, up to a maximum of 100%. It is not practicable toquantify the possible amount of any such liability, as it is dependent
upon both the level of redundancy costs and the level of turnoverprovided by BBC Resources Limited. In the event that this liability
crystallises, there will be a dilution in BBC Resources Limited’sshareholding in 3sixtymedia Limited.
The Group also has a number of contingent liabilities arising from
litigation.The BBC makes specific provision (note 16) against an
estimate of any damages and costs which may be awarded.

23 Related party transactions
The related party transactions of the Group have been presented inaccordance with FRS 8, Related Party Disclosures. Under the provisionsof FRS 8 the BBC has not disclosed transactions between Group
entities where more than 90% of those entities’ voting rights arecontrolled within the Group.The Home Services do not underwrite
any of the activities or liabilities of the subsidiaries.
23a Transactions with joint ventures and associatedundertakings
Included in the income and expenditure account is income fromUKTV of £24.7 million relating to the sale of programmes; and the
Discovery joint ventures of £23.4 million relating to the sale ofprogrammes. In addition, Frontline Limited charged £2.2 million for the
distribution of BBC Worldwide Limited’s magazines. Also included in
the income and expenditure account is expenditure with Parliamentary
Broadcast Unit Limited of £0.4 million relating to a licence to broadcast
from Parliament and television feeds. In all transactions, the terms oftrade were negotiated on an arm’s length basis.

23b Other transactions
Sir Christopher Bland, the Chairman of the BBC, was also Chairmanof Exel plc (formerly NFC plc) until May 2000. He was a minority
shareholder of Exel plc owning 1,126,500 shares, equating to 0.2%of the total equity, during his time as a chairman of Exel plc. Exel plc
owns Exel Logistics Limited which had a distribution contract with
BBC Worldwide Limited which concluded in May 2000 and was notrenewed.The contract was entered into before Sir Christopher Bland
became the Chairman of the BBC. In May 2001, he became Chairmanof British Telecommunications plc.
Sir Richard Eyre, Governor, is also Chairman and Managing Director of
Chestermead Limited. Chestermead Limited was commissioned by the
BBC to produce various arts programmes.The cost to the BBC ofthese programmes during the year was £115,500 and the amount
unpaid at 31 March 2001 was £96,400.
Baroness Hogg, Governor, is also the Chairman of Frontier Economics.
During the year, the BBC paid £39,000 to Frontier Economics fortwo projects related to market analysis and market research on
incorporation of BBC Technology Holdings Limited and in relation to
new service launches of which no amount was outstanding at theyear end.
Ranjit Sondhi, Governor, is married to Anita Bhalla, who has been
employed by the BBC since 1987 in various production andbroadcasting roles. Her current role is Social Affairs correspondent for
the West Midlands. Her remuneration is based on the BBC’s standard
terms and conditions applicable to other staff employed in this capacity.
In the normal course of business, there are a number of transactions
between the BBC and other parties which are related by virtue of thefact that senior employees of the BBC are married to or have family
relations with individuals who own or are employed at other media,
production and broadcasting companies.The BBC has set proceduresfor dealing with such situations to avoid any conflict of interest. Wheretransactions have arisen between connected parties, the BBC employee
is not a party to the approval process.
During the year, the transaction noted below occurred in the normal
course of business and is being disclosed as the BBC employee is alsoa director of the company which transacted with the BBC.
The BBC purchased the rights to NCS: Manhunt from Q.P. Productionsfor £50,000 in September 2000. Jane Tranter, who has since been
appointed Controller of Drama Commissioning, is also a director of
Q.P. Productions. In line with BBC policy, she was not party to theapproval process for this commission.There are no amounts unpaid
at the year end.

Amounts owed by/to joint ventures and associated undertakings at theyear end are disclosed within notes 14 and 15.

Annual Report and Accounts 2000/2001 79

Broadcasting Facts and Figures
Programmes and audiences

4 Combined BBC radio and television reach* by genre

1 15-minute weekly reach* by service (all homes)
2000/2001%

1999/2000%

Total BBC Television and Radio reach

94.4

94.9

BBC Television
BBC One
BBC Two

88.4
85.7
69.1

90.0
87.6
70.1

ITV
Channel 4
Channel 5
Other channels

82.6
67.3
38.5
33.0

85.4
68.5
37.5
29.3

BBC Radio
Radio 1
Radio 2
Radio 3
Radio 4
Radio Five LiveBBC Nations’ and Local Radio

60.9
23.5
19.5
3.6
16.8
10.6
19.1

60.7
24.1
18.6
3.7
16.7
11.5
19.2

VirginClassic
TalkSport
All local commercial radio

5.8
11.5
4.1
57.0

6.6
11.2
4.2
56.8

Source: BARB, RAJAR*, age 4+, average reach for the year

2 Share* by service (all homes)
Total BBC Television and Radio share

2000/2001%

1999/2000
%

43.1

43.1

BBC Television (including BBC digital channels)
BBC One
BBC Two

38.2
26.8
11.0

39.1
28.3
10.8

ITV
Channel 4
Channel 5
Other channels

28.9
10.3
5.7
17.3

30.4
10.4
5.6
14.5

BBC Radio
Radio 1
Radio 2
Radio 3
Radio 4
Radio Five LiveBBC Nations’ and Local Radio

49.7
10.6
12.6
1.2
10.4
3.9
11.0

48.7
10.9
12.0
1.2
10.2
4.1
10.3

VirginClassic FM
TalkSport
All local commercial radio

1.6
4.2
1.4
40.4

2.1
4.0
1.5
40.8

2000/2001%

1999/2000%

BBC Choice
BBC Knowledge
BBC News 24
Sky OneITV 2 (not available on satellite)
E4 (launched 18.1.2001)
Discovery
Sky News
ITN News (launched 1.8.2000)

18.4
3.0
7.7
46.0
2.5
18.2
22.9
13.7
5.2

17.4
2.0
5.0
49.6
1.0
–
14.6
11.9
–

BBC News 24 reach on BBC One/Two (all homes)

8.6

7.2

80 Annual Report and Accounts 2000/2001

50
22
78
59
49
25
50
69
53
41
36

49
21
80
61
51
25
58
68
53
38
34

Source: BARB* Audience Reaction Service
Note: Based on respondents giving opinion on programmes. Reach based on at least one programme
response in the course of a week. Excludes BBC Digital services.

5 Range of peak time UK-made programmes on network* television
Number of UK-produced genres shown for at least half an hour during peaktime in a typical week.This excludes all digital output.
Network
BBC TV

BBC
One

BBC
Two

ITV/
C4/C5

ITV

C4

C5

•

•
•
•

•
•
•

•

•

Drama series
UK originated serials
Long-running serials
Sitcom – UK originated
Other comedy
Variety
Quiz and panel games
Family/people shows
Sport
Network news
Nations and regions news
Current affairs
Consumer affairs
Arts
Hobbies and leisure
Natural history
Science and medical
Human interest
Music – classical– contemporary

•
•
•
•
•

•
•
•
•

•
•
•
•
•
•
•
•
•
•
•
•
•
•

•
•
•
•
•

Total 2000/2001

19

13

14

Total 1999/2000

19

13

13

•
•
•
•
•

•

•
•
•
•
•
•
•
•

•
•
•
•
•
•

•
•

•
•
•

•
•
•
•

•
•
•
•
•
•
•

•
•
•
•

•

•

•

•
•

•

16

10

7

6

18

10

9

6

•

•

Source: BARB*
Note: Peak time is 6pm–10.30pm.

6 Monthly BBC Online page impressions*
March 2001 March 2000
Millions
Millions

News and Sport
Education
Other BBC Online

169.5
25.1
127.7

76.8
17.7
82.2

Total BBC Online

322.3

176.7

World Service

15.1

7.9

Source: Server logs

7 Monthly BBC Online reach* (millions of users)
March 2001 March 2000
Millions
Millions

BBC Online
Source: Server logs

Source: BARB*, reach in digital homes

1999/2000%

Music and arts
Current affairs
Documentaries/features
Drama (non-soap)
Drama (soap)
Films
ComedyOther entertainment
Network news
Regional news
Sport

Source: BARB, RAJAR*, age 4+, average share for the year

3 Three-minute weekly reach* of BBC services and selectedcompetitors (in digital homes only)

2000/2001%* See glossary on page 84 for definition of terms.

4.9

3.8

8 Top ten programmes 2000/2001
Audience
Millions

BBC One

1
2
3
4
5
6
7
8
9
10

EastEnders
Euro 2000: England v Romania
One Foot in the Grave
Comic Relief 2001
The Weakest Link
I Don’t Believe It
Film: Deep Impact
Film: Men in Black
Casualty
Antiques Roadshow

Audience
Millions

BBC Two

18.01
14.56
12.84
11.47
11.40
11.25
11.25
10.69
10.40
10.14

1
2
3
4
5
6
7
8
9
10

The Weakest Link Celebrity Special
Have I Got News For You
World Snooker Final (Williams v Stevens)
The Weakest Link
Have I Got Buzzcocks All OverThe Simpsons
Congo
HorizonThe Simpsons: America’s First Family
Journeys to the Bottom of the Sea

6.59
5.77
5.76
5.54
5.47
5.41
5.10
5.09
4.74
4.68

Source: BARB*
Note: For series, highest individual programme audience shown.

Hours of output – Television
9 Television
Total network*
hours of output

Factual and Learning
Education for Children
News and Weather
Current Affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and Arts
Religionon all platforms
BBC One
BBC Two
2000/2001 1999/2000 2000/2001 1999/2000

BBC Choice
2000/2001 1999/2000

digital platforms only
BBC Knowledge
BBC News 24
2000/2001 1999/2000 2000/2001 1999/2000

BBC Parliament
2000/2001 1999/2000

1,240
–
2,675
99
31
755
761
593
528
27
107

1,294
–
2,858
94
39
776
543
502
395
35
107

966
892
371
183
152
645
831
378
112
220
14

1,202
843
353
183
157
483
916
428
95
208
17

495
–
225
–
–
1,185
156
3,275
352
57
–

1,078
–
1
–
–
820
312
1,116
369
49
4

4,620
–
4
–
–
1
–
63
31
1,102
27

1,632
–
11
–
–
–
–
337
–
1
–

–
–
8,760
–
–
–
–
–
–
–
–

–
–
8,784
–
–
–
–
–
–
–
–

–
–
–
–
5,265
–
–
–
–
–
–

–
–
–
–
5,180
–
–
–
–
–
–

–
–

–
–

766
494

780
618

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–
–

Acquired programmesContinuity

1,523
233

1,700
250

2,160
270

1,907
271

1,357
278

906
251

317
238

21
268

–
–

–
–

–
–

–
–

Total network

8,572

8,593

8,454

8,461

7,380

4,906

6,403

2,270

8,760

8,784

5,265

5,180

Open University
Learning Zone

Note:The genre classifications have been regrouped from last year’s annual report for consistency with financial data. Light entertainment is now Entertainment. News and Weather have been combined.
Parliamentary broadcasting has a wider definition to include such programmes as On The Record and Despatch Box.The Factual category includes 133 hours of originated education programming(155 in 1999/2000) which were previously listed separately.The other education categories have been renamed: Education for Children (instead of Schools); Open University (as before); and Night-time Education
becomes Learning Zone. BBC One and Two are broadcast on all platforms. Some programmes are broadcast on both News 24 and BBC One or BBC Two, eg Breakfast News, and special events, and these areincluded under both channels. Acquired programmes are programmes not made or commissioned by the BBC, eg feature films. Continuity is all other output that is not programmes.

Table 10 Subtitling output on BBC television
Hours of output

BBC One/Two
2000/2001 1999/2000

BBC Choice
2000/2001 1999/2000

BBC Knowledge
2000/2001 1999/2000

BBC News 24
2000/2001 1999/2000

Subtitled hours

15,916

13,346

2,800

1,326

3,762

184

1,380

657

Target for year end
Actual at year end

66%
72.4%

60%
64.7%

30%
48.5%

10%
23.4%

20%
55.6%

5%
9.0%

20%
20.3%

10%
10.9%

Note: Actual figures at year end show the final quarter percentage.

Table 11 Signing and audio description

Average hours per week

Signing (data from 29.5.2000)
Audio description (launched 15.5.2000)

2000/2001
Averagehours
per week

2000/2001
Actual atyear end

2000/2001
Target foryear end

9.6
18.5

1%
2%

1%
2%

* See glossary on page 84 for definition of terms.
Annual Report and Accounts 2000/2001 81

Broadcasting Facts and Figures

Table 13 Network* television hours of
output, repeats only

Table 12 Television hours of output by origin
Programmes made in

LondonEngland(excluding
London)

Northern
Ireland

Scotland

Wales

Total
2000/2001

Total
1999/2000

BBC One2000/2001 1999/2000

General programmes

Factual and Learning
Education for Children
News and Weather
Current Affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and Arts
Religion

206
–
–
20
–
255
96
151
193
3
2

153
–
–
16
–
291
49
128
118
2
3

–
–

–
–

Acquired programmesContinuity

1,031
–

1,128
–

Total

First transmission:
originated programmes
Network* BBC One and BBC Two
Factual and Learning
892
Education for Children
119News and Weather
3,044
Current Affairs
207
Parliamentary
181
Entertainment
655
Sport
1,471
Children’s
295
Drama
210
Music and Arts
178
Religion
7

667
2
–
52
–
180
–
96
117
6
109

5
1
–
1
–
7
–
–
12
1
–

66
3
1
–
–
14
–
86
29
14
4

12
2
1
–
–
–
–
3
13
13
–

1,642
127
3,046
260
181
856
1,471
480
381
212
120

1,842
93
3,211
260
194
763
1,378
497
326
210
120

Subtotal

7,259

1,229

27

217

44

8,776

8,894

Nations and Regions
Factual and Learning
Education for Children
News and Weather
Current Affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and Arts
Religion

–
–
–
–
–
–
–
–
–
–
–

19
–
2,812
95
145
–
–
–
–
–
–

58
14
330
51
30
56
119
–
–
4
–

60
10
371
38
131
15
219
11
1
23
8

39
6
315
36
87
22
175
–
7
16
–

176
30
3,828
220
393
93
513
11
8
43
8

207
30
3,683
256
317
87
457
5
8
57
4

Subtotal

–

3,071

662

887

703

5,323

5,111

Acquired programmes

935

18

–

–

–

953

1,098

Total first transmissions†

8,194

4,318

689

1,104

747

15,052

15,103

Repeats
Network*
Nations and Regions

4,906
–

547
–

10
81

37
135

34
15

5,534
231

5,142
122

Continuity
Open University
Learning Zone

504
766
475

20
–
3

99
–
–

104
–
16

119
–
1

846
766
495

837
780
619

14,845

4,888

879

1,396

916

22,92422,603

941
–

491
9

24
75

88
91

13
85

1,557
260

1,615
296

Radio 1

Radio 2

Radio 3

Radio 4Radio
Five Live

Total Nations andNetwork Local Radio

Programmes produced in London

8,324

5,759

7,079

6,077

8,512

35,751

Programmes produced outside London
England excluding London
Northern Ireland
Scotland
Wales

428
84
82
86

2,857
12
127
5

893
97
281
410

1,371
33
127
75

233
7
5
3

5,782
233
622
579

Subtotal

680

3,001

1,681

1,606

248

7,216

–
–

–
–

–
–

–
–

–
–

–
–

9,004

8,760

8,760

7,683

8,760

42,967

249,814 292,781

289,492

Total hours of broadcasting†of which independents
Network*
Nations and Regions

Open University
Learning Zone

1,957

1,888

Of which narrative repeats*

438

384

Repeats as a % of total output

23%

22%

BBC Two
2000/2001 1999/2000

General programmes

Factual and Learning
Education for Children
News and Weather
Current Affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and Arts
Religion

358
766
–
1
2
289
25
339
68
31
–

501
750
–
–
1
206
32
305
46
31
1

Open University
Learning Zone

691
435

744
517

Acquired programmesContinuity

1,698
–

1,381
–

Total

4,703

4,515

Of which narrative repeats*

303

282

Repeats as a % of total output

56%

54%

Total
2000/2001

Total
1999/2000–

35,75135,585

–
8,614
8,452
12,796

5,782
8,847
9,074
13,375

5,974
8,388
9,524
13,91029,862

37,07837,796

212,422 212,422
7,530
7,530
–
–

208,802
7,259
50

Hours of output – Radio
Table 14 Total radio hours of output by origin
Network* programmes

Local Radio
Asian Network
Open University
Total hours of broadcasting* See glossary on page 84 for definition of terms.

82 Annual Report and Accounts 2000/2001

Table 15 BBC Network radio hours of output
Radio 1
2000/2001 1999/2000

Radio 2
2000/2001 1999/2000

Radio 3
2000/2001 1999/2000

Radio 4
2000/2001 1999/2000

Radio Five Live
2000/2001 1999/2000

Total
2000/2001 1999/2000

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

8,437
276
33
15
25
–
–
6
–
47
16
149

8,406
297
35
3
25
–
–
–
–
50
24
157

7,434
427
–
85
184
13
96
105
189
–
46
181

7,389
457
–
85
187
14
123
90
188
–
46
205

8,112
19
–
10
–
112
180
–
64
197
–
66

8,150
19
–
24
–
114
169
–
58
176
–
74

–
2,701
453
1,598
528
1,103
457
406
179
46
147
65

1
2,620
423
1,460
691
1,173
424
423
189
46
100
131

–
5,957
2,161
–
480
–
–
33
–
15
–
114

–
5,812
2,218
30
501
–
–
97
–
22
–
104

23,983
9,380
2,647
1,708
1,217
1,228
733
550
432
305
209
575

23,946
9,205
2,676
1,602
1,404
1,301
716
610
435
294
170
671

Subtotal

9,004†

8,997†

8,760

8,784

8,760

8,784

7,683

7,681

8,760

8,784

42,96743,030

–

–

–

–

–

–

–

50

–

–

–

50

9,004†

8,997†

8,760

8,784

8,760

8,784

7,683

7,731

8,760

8,784

42,96743,080Open University
Total

Note: Digital radio – all networks are broadcast via DAB (Digital Audio Broadcasting), DSat (Digital Satellite) and are streamed online.

† Radio 1 operates Nations’ opt-outs from The Evening Session on weekday evenings.

Table 16 Nations’ and Local Radio hours of output
Population#
Total
Age 15+ (000s) 2000/2001

Nations’ Radio
Northern Ireland:Radio Ulster
Radio Foyle
Scotland:Radio Scotland(including Radios Orkney and Shetland)Radio nan Gaidheal
Wales:
Radio WalesRadio Cymru

1,306
114

5,948
2,666

5,566
2,622

4,176
4,176

6,596
1,856

6,973
1,891

2,383
2,383

6,358
6,438

6,475
6,824

29,86230,351

Subtotal

Radio Scotland
Radio nan Gaidheal

23
4
37

6
17

Radio Ulster
Radio Foyle

14
18
11 28
32 7 26 20

22

5

24
19
33
13 36 25 3
34
10 27
9
21
1
35
16
2
30 31
29

Radio WalesRadio Cymru

8

Population#
Total
Age 15+ (000s) 2000/2001

Total
1999/2000

Local Radio
1 Berkshire†
2 Bristol (including Somerset Sound)
3 Cambridgeshire
4 Cleveland
5 Cornwall
6 Cumbria
7 Derby
8 Devon
9 Essex
10 Gloucestershire
11 GMR
12 Guernsey
13 Hereford & Worcester
14 Humberside
15 Jersey
16 Kent
17 Lancashire
18 Leeds
19 Leicester
20 Lincolnshire
21 London Live 94.9
22 Merseyside
23 Newcastle
24 Norfolk
25 Northampton
26 Nottingham
27 Oxford†
28 Sheffield
29 Shropshire
30 Solent
31 Southern Counties Radio
32 Stoke
33 Suffolk
34 Three Counties Radio
35 Wiltshire Sound
36 WM (including Coventry & Warwickshire)
37 York
Local Radio

771
1,210
592
695
406
378
577
895
1,149
454
2,085
49
480
715
71
1,270
1,115
1,478
740
476
10,170
1,605
1,344
667
429
722
489
1,209
352
1,615
2,335
593
413
934
491
2,732
456

Total
1999/2000

3,290
7,402
5,437
4,973
5,686
5,283
5,150
5,834
5,023
5,231
6,779
4,007
5,341
5,347
4,212
5,542
5,970
6,188
5,060
5,118
8,736
5,792
5,845
6,208
5,112
5,676
5,389
5,564
5,292
7,376
6,327
5,095
5,107
6,303
7,964
8,607
5,156

–
7,460
5,435
5,189
5,740
5,304
5,152
5,761
5,117
5,269
6,698
3,459
5,091
5,246
4,200
5,283
6,080
6,204
5,154
5,328
7,243
5,840
5,854
6,197
5,826
5,687
7,640
5,478
5,312
7,699
6,493
5,171
5,110
6,042
6,178
8,791
5,071

212,422

208,802# Based on Total Survey Area (the area over which the radio stations’ audience is measured for research
purposes), aged 15+, for RAJAR reporting.
† Radio Berkshire and Radio Oxford were formerly combined as Thames Valley.The figures for 1999/2000
have been shown against Oxford.
Note: Details of BBC radio frequencies are available on www.bbc.co.uk/uk/radio or by calling 08700 100 112.

12

15

The number on the map indicates the local radio station listed above. The map is representative only and does notindicate coverage.

Annual Report and Accounts 2000/2001 83

Broadcasting Facts and Figures

Financial statistics

Table 19 Spend on creative talent
2000/2001£m

Table 17 Comparative cost per household ofviewing/listening per hour
2000/2001

BBC
Sky multichannels (family package)
All cable, satellite and digital terrestrial channels
Video hire

4.5p
22.8p
19.9p
63.6p

Artists and contributors
188
178
Copyright (including music copyright)
63
66
House
orchestras
24
22
4.4p
20.4p
17.4p Table 20 Cost per hour of originated programmes*
61.7p
2000/2001 1999/2000

1999/2000

Source: BARB, RAJAR*, BBC Strategy estimates.This table shows how the licence fee compares with otherforms of entertainment, for each hour of viewing or listening.

Table 18 Spend outside London
2000/2001£m

1999/2000
£m

62
29
23
23

64
32
23
23

Cost of Nations’ and Regions Television originations
England
Scotland
Wales
Northern Ireland

1999/2000
£m

137

142

Cost of regional BBC and independent
productions for Network* Television

212

180

Total cost of televison originations in the
Nations and Regions

349

322

Cost of Nations’ and Local Radio originations
England – Local Radio
Scotland
Wales
Northern Ireland

69
18
16
9

71
17
16
9

£000

£000

132.3
91.4
52.4
62.7
5.1
0.5

130.6
88.1
14.3
6.7
5.0
0.5

Television programme genres
Factual and Learning
Education for Children
News and Weather
Current Affairs
Parliamentary
Entertainment
SportChildren’s
DramaMusic and Arts
Religion

89
120
54
118
47
183
102
90
486
110
102

87
110
55
119
47
209
90
88
528
106
101

Radio stations
Radio 1
Radio 2
Radio 3
Radio 4
Radio Five Live

3.1
3.3
4.0
9.6
6.2

2.9
3.2
4.1
9.3
5.8

24.7
0.5

26.9
0.5

Originations
BBC One
BBC Two
BBC Choice†
BBC Knowledge
BBC News 24
BBC Parliament

112

113

Cost of regional BBC and independent productions
for Network* Radio

31

44

Total cost of radio originations in the Nations and Regions

143

157

Other programme costs incurred outside London
Other costs, including transmission

68
106

65
99

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

Total spend outside London

666

643

† BBC Choice includes a branded block of children’s programmes shown between 6am and 6pm.

* See glossary below.
Table 21 Creative spend sourced outside the BBC

Independent programme productions transmitted
External programme facilities and resources
Acquired programmes transmitted

2000/2001£m

1999/2000
£m

203
183
76

215
181
79

Glossary
Reach

The percentage of people viewing or listening to at least 15 minutes (or three minutes) consecutively.The standard TV definition (BARB)
is three minutes while that for radio (RAJAR) is 15 minutes. Usually measured daily or weekly. Online reach is based on claimed usage asadults that have used BBC Online at least once in a month.

Share

The amount of viewing/listening to a given station or service expressed as a percentage of all viewing/listening during a defined timeband.

Page Impressions

Page impressions (Pls) measure the total number of visits to our Online pages.

BARB

Broadcasters’ Audience Research Board.The joint industry committee, funded by television companies and advertising agencies, responsible
for producing audience measurement and audience reaction data for the industry.

RAJAR

Radio Joint Audience Research Ltd is jointly owned by the Association of Independent Radio Companies and the BBC. RAJAR operates
a single audience measurement system for the radio industry. RAJAR data is published quarterly.

Network

Network is used in the BBC to mean programmes transmitted to at least ten of our 13 regions or areas.

Narrative repeats

Narrative repeats are programmes appearing twice in a weekly schedule.

Originatedprogrammes

Originated programmes/originations are the first showing only of programmes directly produced or commissioned by the BBC.

84 Annual Report and Accounts 2000/2001

Getting in Touch
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The following photographs have been
reproduced courtesy of:Barry Boxall, page 4 (BBCGovernors); pages 6 and 7 (BBC
Executive Committee, except Pat
Loughrey); pages 31 and 32 (BBCListens).
Mike Notman, page 7 (Pat Loughrey).
stuarthollis.co.uk, page 40 (Asian
Network).
DAS Films Ltd., page 41 (When We
Were Kings).
Catherine Ashmore/RM Associates,
page 41 (El Nino).
Also:
PA News Ltd.
The Associated Press Ltd.
Designed and produced
by C&FD.
Printed in Englandby Litho-Tech.

Annual Report and Accounts 2000/2001 85

BBC Annual Report and Accounts 2000/2001

Auditors' supplementary notes to online accounts

1) The maintenance and integrity of the BBC website is the responsibility of
the Governors and Executive Committee; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, theauditors accept no responsibility for any changes that may have occurred to
the financial statements or audit report since they were initially presented
on the website.
2) Legislation in the United Kingdom governing the preparation anddissemination of financial statements may differ from legislation in otherjurisdictions.

KPMG
Chartered Accountants
Registered Auditors
LondonthJune 11 2001