Radio Independ Supply BBC Trust Review Radio Independent Supply / BBC Contents Summary and recommendatiThe Trust’s considerationsThe view of the BBC ExecutiveThe view of the in About this revie The Trust is the governing body of the BBC. It safeguards its independworks to get the best out of the BBC for licence fee payers. It also has a numof regulatory responsibilities and these include a duty to impose on tBoard the requirements it considers appropriate for securing that a suiproportion producers external to the BBC and that these programmes are of a suitable rand diversity. When the Trust was established it inheri therefore appropria Context Independent radio supply makes an important contribution to the BBCdelivery of its radio services. As such, this review should be set in thiscontext of BBC radio’s performance overall. The BBC’s Annual Report 2009-10 shows that this has been a strong yeRadio, with two-thirds of radio listeners using the BBC’s services each BBC continues to make content that audiences love and this was recthe industry with 54 Radio Academy awards. The Trust’s service reviews of BBC Radio 1, BBC Radio 2 and BBC that audiences feel that these stations make a significant contribution to the creativity public purpose by playing a wide range of music, particularlive music. While radio appears to be meeting audiences’ expectationscreati The BBC’s radio stations for each of the devolved nations which includethat important contribution to the BBC’s aim to represent the differentthe UK. Our approach There is no formal process defined in the BBC Framework Agreement as to hshould reach a view on what constitutes a suitable proportion, range and dive approach that engaged with the BBC and industry in a number of ways: conducted last year, looked at the issue of independent supply. It submitted a paper to the Trust, published alongside this report a outlining its thinking and suggesting a number of changes thatimprove the way in which the BBC worked with independent• The Rad contribution to our review, which we are publishing today as suppor• To further inform the Trust’s considerations, we commissioned Granundertake an independent review of the radio and independesectors. As part of his review, Grant interviewed representaBBC and of publicly available data. He also took account of responses receivedTrust’s consultation. H Summary and Part 1 – An assessment of current performanc The BBC is currently complying fully with its Charter and Agreemenrequirements The BBC is currently meeting its obligation to commission at least 10% programm commencement of the latest Charter in 2007 to the present day, the BBcommissioned 13.5% from independents in 2006/07, 12.8% in 2007/0in 2008/09. Relatively recent changes, such as the inclusion of the BBC’s Nationsstations and sport as a genre, have expanded the range and level of popen to independent commissioners. The contribution made by independent producers to the BBC’s radio servibeen acknowledged by the BBC Executive, who recognise their stroin delivering innovative programming, and the accompanying induthis drives, through the Sony Awards for example. The Executive has been assessing what improvements might be m begun to implement some of the changes identified. We suppogeneral although we have some speci this, we are also keen to see a step change in the way in which the BBand below set out our conclusions on those areas requiring further att The independent radio industry remains underdeveloped and the relationship with the sector can b The BBC is the predominant purchaser of radio programmes from the inrad relationship with it can be strained, and that improvements are neededbe more open and transparent is in line with the Trust’s initial concluwider review of the BBC’s strategy. Part 2 – Dev future The BBC needs to be more open in the way it works with the radindependent sector to support the growth and profitability of theThe BBC Executive has set out plans to improve commissioning prtransparency to support the growth and sustainability of barea which the Trust believes requires urgent improvement and become more open and to work better as a partner develops, soprofessionalism and clarity of the day-to-day The BBC needs to be clearer with industry about its existingsupply strategy and how it will develop in the future We welcome the Executive’s clarification of the sources of valuare delivered through the independent supply arrangements. Welooking to the Executive to more clearly commu area to independent suppliers. As part of this exercise we expect • Demonstrate a clear focus on delivering high quality and dprogramming to licence fee payers, in particular through ens • Better define ambition around the range and diversity of to ensure a consistent • Set out how the independent radio supply strategy fits with ithe portrayal of the UK’s Nations, Regions and comm Both the BBC and the independent sector have current quota system The independent radio sector has called for the level of the independquota increased from 10% to 25%, and a further 25% openecompetition. The BBC Executive have proposed an increase in t12.5% and the mainte Competition for ideas will increase the value delivered to licenThe Trust has not been provided with a convincing case that increasing independent supply quota would deliver greater public value to listBBC’s radio services. We are concerned that the independent sector’s proposals to inindependent quota to 25% and also introduce a 25% WoCC on topthe current public value delivered by the BBC’s in-house operationsDecreasing the BBC’s in-house guarantee to 50% as proposed, a signifreduction of over 40% from the current position, would cause great instability. Given the fixed costs of studio provision and distribution technologyunlikely there would be a comparable reduction in BBC production cBBC radio more expensive in at least the short to medium term. However, we are of the vi Competition (WoCC) across radio production would open up the amouradio programming which independent producers could compete for, competition for the best ideas. introduce a further 10% WoCC, effectively doub guaranteed to be open to independents. As with the current target, viewed as a floor, not a ceiling. Management information systems need to be improved We hav The Trust’s considerati This section of the report sets out the Trust’s considerations in detail. The Trwas informed by input from the independent radio industry, the BBC Executindep report. Part 1 – An assessm The BBC is c Agreement requirements Overall performance The BBC is currently meeting its obligation to commission at least 10% of eliprogramming from independent suppliers as set ou period under review, from the commencement of the latest Charter in 20day, the BBC commissioned 13.5% from independents in 2006/07, 12.8% in13.7% in 2008/09. Grant G exhibit a range of costs and diversity of programme genres. Relatively recent changes, such as the inclusion of the BBC’s Nations stationsstations and sport as a genre, have expanded the range and level of programming opto independent commissioners The contribution made by independent producers to the BBC’s radio servicesacknowledged by the BBC Executive, who recognise their strong track record innovative programming, and the accompanying industry recognition this dthe Sony Awards for example. implement some have some specific observations to make on it below. Beyond this, wesee a step change in the way in which the BBC operates and below set ouconclusions on those areas requiring further attention. Range and diversity In addition to the 10% quota, the BBC must also ensure that the programcommissions from independent producers is of a suitable ran Radio 4 in particular commissions programming across more genres anrange of producers than the BBC’s other stations. This is due to Radio 4 beingnetwork with the most pre-recorded ‘built’ progr presents more opportunities for independent producers. As such, the Trust is satisfied that the Executive’s current approach hsuitable range and diversity of programming. There remain, however, a number of outstanding issues in this area. Ccommissioning processes, particularly the introduction of ‘batch’ commissioni4, appear to have the potential to reduce the range and diversity of progracommissioned as the process limits the range and diversity of the independsupplying the programming. The station’s ‘Registered Suppliers List’ and the criteria inclusions within it seem to further indicate that range and diversity from altsuppliers could be restricted. We do, however, recognise the Executive’s argusuch an approach could provide greater stability for the industry through laUltimately, the Charte be delivered and it is the responsibility of the Executive, on a day-to-daythis happens. This is an area we will return to when the Trust next looks radio independent supply. According to Grant Goddard’s report, the cost per hour of independent commiappears to be almost universally lower than the BBC’s in-house production, wexceptions being for Radio 4 and Radio 7. While this difference in costs, highlighted by previous reports and examined further by initial internal BBC benchmarking, unexp independently produced content is not what it could be, with independents predsupplying programming that is inherently cheaper to produce due to its contenthan simple price competition. It is also apparent that certain stations’ supply tends to be dominated by a relatively small number of suppliers, although the drivers of unclear. We note the concerns, raised by Grant Goddard in his report, about the BBwith its Diversity Pledge with regards to radio and look to the Executive to ra matter of urgency. Finally, the Trust London, although the BBC’s preferred supplier list in fact has a higher propothis. This concentration of London-based producers is a complicating factor iability to deliver programming from independents that reflects the Regions, but again we note that the current level of spend outside of London33% of total spend. remains the predominant purchaser of radio programmes, and no other mdevelop, the potential for the development of the sector looks limited. This doplaces an un is constructive. It is clear that there are differing views of what the BBC’s overall strategy is, in this area. This is, in part, due to the way in which the BBC has reached tsituation, with historical expectations appearing greater than the requirement implemented under the Charter and Agreement by which the BBC is bound. Inparticularly focussed on econom the provision of programming of quality and value for money. This disparcaused some tensions on both sides. Although recognising that in any purchaser-supplier relationship there will tension transparent is in line with the Trust’s initial conclusions on its wider review of the BBstrategy. Competition for the best ideas has n embraced by the BBC in radio The Trust is concerned that the BBC’s current approach to commissioningrange and diversity of those who supply content to the BBC. In particular the ‘catch 22’ issue – whereby the BBC’s preferred supplier critthat independents should have experience in network commissioning in ordeideas to Radio 4, when Radio 4 is in some instances the only commissioner of genres and so the only place a firm is likely to be able to gain such experiendifficult for there to be new entrants on the preferred suppliers list – needs addressingA further area for consideration is batch commissioning, which may also reprto the ability of the BBC to commission the best ideas; a risk acknowledgedThe current commissioning industry both suggest the BBC struggles, in its role as predominant purchasewith the volume of submissions and accompanying costs, although we recogExecutive believes co Part 2 future The BBC needs to be more open in the way itradio independent sector profitability of the industry The BBC Executive has set out plans to improve commissioning practices and transparency to support the growth and sustainability of businesses. This is athe Trust believes requires urgent improvement and our view is that these plans reprea positive as a partner develops, so the to keep pace. Specifically, the Trust recommends: •That the BBC improves its regular communication with industry, including the way in which it makes public information about its future strategy and splans. How this is done is a matter for the BBC Exec that recent changes proposed in the area of formal learning provide model from which to start. We are looking to the Executive to ensureplans are developed in discussion with independent suppliers. • That the Executive explores what information it collects now, and plain the future, that might be shared with in ability to conduct its business. Information on audience reaction to prfor instance, might help the independent sector understand the improgramming and • That the Executive examines the commissioning process to ensubecomes more streamlined for both the BBC and independent supensures that the best possible ideas are pursued to deliver greatfor licence fee payers. The BBC needs to be clearer with industry about itsindep future We welcome the Executive’s clarification of the sources of value they believe athrough the independent supply arrangements. In addition to this we are lo Executive to more clearly communicate its overall strategy in this area to indesuppliers. As part of this exercise we would expect to see clarificatio• Demonstrate a clear focus on to licence fee payers, in particular through ensuring the best ideas acommissioned regardless of sou • Better define ambition around the range and diversity of progr • Set out how the independent radio supply strategy fits with improvinportrayal of the UK’s Nations, Regions and communities on rAlthough the revenue generated by the industry is not the direct responsibility of the we are nonetheless concerned by the apparent lack of profitability acros independent suppliers could represent a threat to the BBC’s ability to deand distinctive programming to audiences. As support a profitable independent industry to ensure audience expecta Both the BBC and the independent sector have suggchanges to the current quota system We recognise that the independent radio sector would like to see the level ofindependent supply quota increased from 10% to 25%, and a further 25competition (a Window of Creative Competition, or WoCC). This would clearfinancial benefit to the sector and the individuals involved. We also note the Eproposal for a smaller increase, to 12.5%, to ensure tha In reaching a view on both the appropriate level of the quota and the pWoCC, the Trust is tas seen in this context, rather than as simple economic interventions, and shoulquality, distinctive programming that represents value for money. capacity is an important factor in this. The BBC provides a large amount olong-term career paths for people wanting to enter the industry. This is not sthat the majority of independent suppliers are able to deliver; indeed manindependent sector are BBC-trained. As such the Trust is clear that any chang diminishing the benefits of a strong and vibrant in-house capability. Due to the limited data available from both the BBC and not been provided with a convincing case that increasing the independent qdeliver greater public value to listeners of the BBC’s radio services. We are concerned that the independent sector’s proposals to increase thquota to 25% and also introduce a 25% WoCC on top of this could put value delivered by the BBC’s in-house operations at risk. Decreasing the BBCguarantee to 50% as proposed, a significant reduction of over 40% from theposition, would cause great instability. Given the fixed costs of studio provisiodistribution technology, it appears unlikely there would be a comparable reduprodu term. We have not been presented with a compelling case, backed by evia change would be likely to deliver an increase in the public value deliverpayers. However, the argument for the introduction of a WoCC for radio appear stroprinciple that the BBC whatever their source, is one already accepted for television. Whilst recognfundamental differences between television and radio, the potential for crbe delivered by the independent sector at competitive cost is already apparthe 10% indie guarantee. We believe that the BBC could introduce a 10% WoCC across radi detriment to the BBC’s own production capabilities and an accompanying reduction ipublic value. The industry itself has said it would welcome such a step and bealready investing sufficient resources that to enable it to win further work weavailable. The introduction of a 10% WoCC would therefore open up of BBC radio programming which independent pr Notwithstanding the desire to introduce greater competition into the system, conscious that, like the BBC, the independent sector requires a degree of to invest and fully take advantage of th we believe it appropriate to maintain an independent quota at 10%, setting acommissioning ‘floor’ below which the BBC will not drop. The Trust therefore intends to maintain the independent guarantee at 10% ana further 10% Window of Creative Competition, effectively doubling the amoprogramming guaranteed to be open to independents. As w We recognise that differences between radio and television might mean thflat yearly quota may have unintended consequences, such as excluding inproducers from long-running strands. We therefore expect the Executive todetailed plans for the adoption of a 10% WoCC to be published during 2011 to provide certainty to industry. We will revisit this decision in the independent sector, the BBC and, most importantly, the quality anthe content delivered to listeners. In implementing these changes, we are looking to the Executive to considerimprovements to the commissioning system might be made to ensure that thare chosen regardless of whether they are developed by the independent secin-house. The revised system should address Trust and industry concerns athe more restrictive commissioning practices currently in place, such as specrequirements fo that the BBC and the independent sector work together to consider h become more stable and profitable without diminishing the value for money delivlicence fee payers. Management information systems need to be improveWe have encountered difficulties in conducting this review due to the lack odetailed information being collected. While true of both the BBC and the indesector, we recognise the limitations of what independent producers are able tterms of accurate inform The view of the BBC Execut The BBC Executive, as part of a broader piece of work looking at the BBC’s r Performance against quota Performance against the Quota Requirement isported quarterly to Bowithin the BBe. I 20&M ced eligible hours from the independent sector and all Nations stations m(Scotland 17%, Wales 10% and Northern Ireland 10%). The Quota for network radio is not specific to ind from anywhere within the A&M portfolio. However, performance has hbeen guaranteed by asking each network to meet or exceed the targesecured within the annual Statements of Programme Policy. The Charter Agreement requires the B and diversity” of programmes provided by external suppliers. By virturequirements on each network, a level of diversity is guaranteed, wisupplying programmes as varied as Gardeners’ Question Time (R4), Foracing (5L) and the Westwood Rap Show (R1). The slight skew reflects the exp which require specialist skills and account foicant volumes of output, example, live performances of classical music. Effectiveness of supply There are three main potential sources of distinct value: developing talent fvariety of locations and industries, distinctive innovation driven by diffproduction model, and potential efficiency savings. Changes in commissioning processes are recommended to underpin these sources of value Independent supply has the potential to diversify the talent base workinradio industry and to represent a range of geographic locations beyondproduction bases. Independent companies can also sometimes prospecific talent, for example where producers hold specialist music knowl where the Nations stations provide additional business to the sectorcompanies may benefit from lower overheads, however they inattendi producers. Indies have established a strong track record in delivering innovative progrfor network and Nat Awards has demonstrated that indies are capable of competing efquality of in-house teams. Independent producers are keen to apply their skills in new areas of bwherever opportunities exist. In some areas, such as drama andigoutput, there are relatively low risks to the BBC involved, provided thestablished a track record in related t gap may be small enough that the BBC can offer assistance in nurturinadditional production skills required. To support this skill-building, Aopenly-competed development fund centrally. Radio 4’s registered supplier lists are specific to commissioning briea barrier to the growth of business who may be on one list but notwas identified as a particular issue in readings, where Radi for this particular genre of output and where experience cannot be elsewhere. Existing indies with an established track record in adjacent astrongly that they should not be prevented from building new arewhich have the potential to strengthen their overall portfolio of work. However, in some specialist areas, particularly investigative journalisedged news and current affairs strands, the editorial risks are largeof skills needed is very difficult to obtain. In instances where less expsuppliers have attempted to produce these types of output, extensivbeen sourced certain ‘hard edged’ television news and current affairs strands, such Question Time, from indies by investing in full time in-house executive support to provide ongoing advice to the production team. Such an invresources is not economically viable in radio, given the much smaller pbudgets. These competitive constraints are also evidenced by the pattern whicthe distribution of independent offers, with Radio 4’s commissiomusic documentaries and popular arts well over-subscribed, but proposals for Wednesday debates, politics and narrative histories antypically offered by ex-BBC staff. Business Efficiency Conducting business with independent companies incurs additional bunot only to administration but also in the commissioning and deveand the impact on economi Commissioning & Development In a recent Radio 4 commissioning round, 1,666 pre-offers were receindie sector, of which a quarter were worked up into full pitches, and the original offers received commissions. In-house producers pitched more th1,000 pre-offers into the same round and achieved a higher success rdue to internal limits on the number of pitches. Producers are aware thof competition has been increasing over time with more companiesthan ever. However, they do not have access to data on the overall rejewhich would inform their business decisions on where to invest develoAlthough it is not possible to accurately measure the total industry-wiinvolved in this process, the BBC estimates that more than may have been used in developing ideas which were ultimately rejectcommissioning budget from the round would have provided funds of less for producer time. Much of the development time could be reduced by number of main pitches requested, following the pre-offers roPressure on commissioners has also intensified with the level of competition, since each offer needs to be assessed, and feedback is expected fo in th timeprogamm sustainable and the approach to feedback and programme evaluation sreviewed to ens Staffing 94% of A&M staff are on permanent contracts compared with 43% s hree main reaons: • Returning strands account for more than 90% of A&M’s ouin strands that have been running for at least 4 years. Perma more efficient. • A static labour pool: television has a more diverse employmen implementation cost associated with changes in the level of in Studio Utilisation Radio production is dependent on studios, with far fewer prograsignificant spend on on-location recordings, compared with televisiinternal studios and associated studio staff is affected by the use of extersuppli fixed cost of empty studios cannot be recovered until buildings are dire-fitted. Independent companies almost always use BBC studios ertheless, it may be possible to incrcapacity forecorded output, for example, in Appropriateness of the Quota Guaranteed level During this review, the BBC has critically assessed the role of in-housand the public value generated by BBC production. The uniqueness of output means that wor originatiwhich there is a limited, and decreasing, value Rteams are lean, with even the largest speech teams in A&M eplo even larger, with an average of more than 100 hours of origo 1 per production staff. e are three critical considerations which underpin the need to mae production at significant scale: 1. Editorial control: Each radio station requires a core hub of pto provide strategic control over the station’s sound, brand This also sets the standard for external productions. In-housealso critical for a small number of productions which are highly editorialsensitive, for example within news and hard-edged current af 2. Unique capability: Some output is rliant on a large inspecialist skills and equipment. There may be too little work avarea to support a competitive market. These are situatimonopoly in supply, and the skills should continue to be production skills are built up across the whole industry, are no alternative broadcasters to provide this. In addition, a mix of internal programmes internal development path. In addition, the extent to which independent productions can offe benefits to the BBC depends on the degree to which each station is iproduction model varies by station according to the type of output brWith integrated production, programmes are largely driven by centramaking and the sound across all of the station’s output is consistent. Tthe scheduling of music, setting promotional priorities, managing systeams for live music output. Central planning is also needed to ensure coordinated between programmes preventing inappropriate overlaexample, this is the case for planning archive use on 6 Music and Rclassical music on Radio 3. In these areas, the production of individudepends on the centrally determined inputs and cannot be easily production by non-integrated teams. Separating production is London team this year as a cost saving initiative. Scope is therefore liindependent producers to offer creative and efficiency benefits, givprogrammes rely so heavily on centralised functions. There are more possibilities for using independent supply in areas whnot integrated, or where the programme is not strongly linked with thenetwork team, but this represents a relatively small proportion of A&M’Whilst Radio 4 does not organisationally have any integrated proco-located with the General Factual team which is responsible for producing the station’s core live strands, such as Woman’s Hour. The General Factual not supply any other network, and its output accounts for around one-th4’s eligible output. In areas where independent production may example specialist music programming, there is a strong case for retaproporti Having reviewed A&M’s current schedules against these considatiofound limited scope to increase the current quota level beyond 10% BBC Executive recognises that the current level of independent productisustainable, and proposes that the present performance is lockguarantee. Setting an increased target for Radio 4 will have a real impact production staff as some additional output will be guaranteed, rather thanthrough the WoCC. To accommodate these shifts, the changes in Racommitments would need to be phased in over a 2 year period to aand provide sufficient implementation time to switch between in-hous The BBC highlighted the disparate structure of the radio independprevious sections, and the benefits to the health of the sector that greatconsolidation might bring. The BBC will make operational changes sustainability of business, helping the sector to improve the level of staffing, training and developmen growth of independ supply to BBC netw rdio is limited by importance of strong in-house capability. Separate assessments of each Nation’s radio station are needed, as eaoperates its own commitment to independent production. Differences composition of output suggest that the appropriate level of independenis likely to differ between Nations. F relatively strong local Open Competition Radio 4 is the only network with a formal commitment to open competitian official WoCC. This in effect limits the s network can offer, ensuring that at least 20 per cent of output is avaiindependent sector overall. We have assessed whether it is appropriatthe WoCC, either on Radio 4 or by application to other networks bwould have negative consequences for the sector. The WoCC creates additional unseen costs to the industry by envolume of development work and creating additional pressure on com assessing offers and providing feedback (see also section 4). The deveburden has a direct impact on the ability of companies to sustain growaddition, rigidity in the labour market means that a significant change to of Radio 4’s WoCC will have a direct impact on internal production efficrequiring both a reduction in the headcount and increased use of fixThe extension of a WoCC to other networks has also been considered, be widely implemented without incurring significant incremental cto cause undesirable effects. Output is typically concentrated in a smatitles with the top 25 programmes on a music network typically accouthan 80% of output, compar 36%). These large strands are typically in place for 2-4 years and cto the WoCC whilst they are contracted. Placing more content within a undermine in-house production and solicit wasted development effortindustry. It would require the programme contract perio It is worth noting that we found the integrated networks alreadopen competition wherever ad-hoc output is commissioned, for example idocumentaries, dramas and comedies. In these areas, the networks alrthe creative benefits offered by a formal WoCC with only minimal adadministration. The volumes of these hours are generally too small to regu c. 50%. Strategy BBC will nurture and support the development of the independenr to maximise the public value of external supply on three key objDeveloping Talent far wider range of potential locations than in-house productionsector’s effectiveness in finding also be supported. Distinctive innovation: independent producers shouaccess to div Efficiency: independent production can offer direct cost sBBC through competitive pricing, provided the impact on busiefficiency is also managed. radio production, an additional benefit of diversity in employment, particularly in locatioLondon, and thus greater fluidity in the labour market. Proposed changes An increase in the Quota Requirement for independent production from12.5% for A&M, f10/11. ate consideration should be giv Nations quotas, noting that each service has different programming needs and local market very different independent production capac The view of the independ The Radio Independent’s Group (RIG) submitted a Independent radio prod BBs national rdio networks since the early90s and their qualirecognised by the BBC itself, by the radio critics and by the dispropnumber of major awards won. Despite this, throughout these two decades the BBC's voluntary infor commissioning from independent radio producers has been hld commissioned has increased only slightly to around 13% of 'eligible (between 8% and 9% of total output). The reason for this low numBBC has reserved nearly all the rest of its output o inhouse produ RIG recognises that there is not precisely the same relationship band its main commercial rivals as exists in TV, nevertheless the princcompetition for the best ideas has been accepted in both BBC TV ancommissioning, and should be extended also to radio. The abandonment of plans for a series of Channel 4 Radio networks enormously disappointing to our members as it would have been a reto the BBC’s near-monopoly in commissioned radio. However that is alreason to look for other ways of bringing more independent producti into BBC Radio. In the context of the BBC’s remit, a significant failure on the part of the Corporation to engage with the independent rextended to working more closely We believe that a steady increase in the proportion of BBC Radio prosourced from the independen We believe the best way to maximise the potential for a healthyindepe measures: • Reduction over three years of the proportion of al for in-house production from 91.6% to no more than 5 competition between independent and in-house producers ( Creative Competition or ‘WoCC’ as it has become known) • Phasing in over three y be guaranteed to independent producers, in addition to whatas part of the WoCC • A stipulation that all commissioning percenta ed both in hours and in vlue, as is curentlye case in treporting of BBC out-of London TV production quotas • A commitment to a level playing field in terms of producer- relationship network commissioners should have no managerial respon An independent vie To enable the Trust to reach its own view on the questions under review, and theevidence and arguments put forward during the review, the Trust a provide an independent perspective on treport in full today alongside the Trust’s report ummary, the key findings of his report are: Radio broadcasting remains a popular medium that has weathered rethe recent competition from newer technologies. Consumer usage remwith 91% of the adult population listening to radio for an average 22 hweek. Whereas the majority of listening to BBC radio is to its five natinetworks, the majority of listening to commercial radio is to the sestations. Funding for BBC radio from the commercial radio from advertising revenues, though the BBC operatefewer radio stations. The outcome is that programme budgets of BBCgenerally larger than those of commercial radio. Furthermore, the commercial radio sector has experienced lower leveland reduced revenues during the last decade which, combined with itinvestments in digital platforms, have reportedly reduced the senear zero. In aggregate, the independent radio production sector is a small part Kingdom radio industry, with a turnover of around £20m per annum (2funds for radio broadcasting). It independent television production sector and comprises betweenbusinesses that range in size from sole traders to companies with mupound turnovers. The sector’s outputs have won many awards, bothoverseas, and many of its programmes are household names. The Bmore than 90% of the sector’s outputs. Commercial radio’s current economic challenges make it very unlikely that its present, very limited use of programmes from external suppliers wfuture. Whilst a significant proportion of BBC radio output compproduced, pre-recorded progr ‘live’ and consists of commercially available music recordings. Consequentlyexternal suppliers of radio programmes to the BBC are largely reliant buyer for their productions, especially in several radio programme genrdrama and documentaries – where the BBC is the only broadcaster. Nesignificant secondary markets (overseas, online, sell-through) exist productions, as they do in television. The BBC commissions radio programmes f At present, the BBC is required to contract a minimum 10% of BBC routput’ to external suppliers. This level of quota was established in 199calculated with reference to broadcast hours. The BBC’s definition owas extended in 2006 to includthe Nations rao statn stations. Additionally, in 2007, Radio 4 adopted a ‘Window of Creative Competitcommissioning system for both independent and in-house productionsbeen implemented in BBC television. As an adjunct to the 10% quota, offers a furthe 10% of Radio 4 ‘eligible output result, independent productions contribute between 10% and 20% of R‘eligible output.’ According to data supplied by the BBC for this report, it is evident tcommissioned programmes exceed the current 10% quota and exhibitcosts and diversity of programme genres, as required by the BBC CharAgreement. However, a significant proportion of programmes are cofrom a relatively small number likely to increase further as a result of amendments to commissioningimplemented by the BBC. The data supplied by the BBC regarding itscommissions has lacked the granularity necessary to illuminate fuand other aspects of diversity. The BBC se prodctor and e value its outputs bringthe LicencFee payersame time, the BBC appears to find it an administrative burden to prothousands of creative proposals received annually from external suppparticularly as these are submitted individually to commissioners within radio networks. For its part, the independent radio sector has expressed concern ab necessary to submit so many progrmme proposals that are not commithe BBC, a result of the relatively small proportion of BBC radio outpuexternal suppliers. The sector trade association, the Radio Independwishes to see the 10% quota increased to 25%, the Window of CreativCompetition increased from 10% to 25% and expanded to other netwcommissions offered to a wider range of suppliers. Underlying these concer raduction sector which, after 18 years of BBC commissions, unable to transform itself from a ‘cottage industry’ into a profitable commedia sector. The sector’s dependency upon the BBC has offered it litnegotiations. Individual producers’ economic security is low because proposals seem unlikely to precipitate the increase in scale demanded bindependent radio production sector. Neither would they address the isslim gross profit margin assigned by the BBC to each commissio feels is restraining the ability of suppliers to cover their business The BBC’s present insistence upon negotiating the budgets of individucommissions on a line-by-line basis might seem to be indicative of the management that appears to be souring the relationship betwIn 40% of cases, external radio production contracts are valued at leand the time consumed by such detailed budget negotiations could ainappropriate. For many producers in the sec, their BBC commissions gener for the largest production companies, it appears that income from othehas been imperative for their continuing existence. Evidence suggests that there is still a serious question about the long-terfor profitability in the independent radio production sector, though tappeto bnsidered within Unless the BBC can improve and develop its systems for the externof radio programmes, the independent radio production sector is unlikeltransform into a prosperous media industry sub-sector. At present, it appears that the two parties – the BBC and the indepeproduction sector – exhibit a lack of understanding of other’s positionot having been in constructive dialogue about the most fundamental issdisappointing and, ultimately, is unproductive for the Licence Fbe offered the most creative and inspiring radio conten