BBC Strategy Review Initial conclusions July 2010 BBC Strategy Review / Initial conclu Contents Foreword Summary 1 Getting the best from the BBC 5 The Trust’s role The Trust’s obligation to licence fee payers – setting a higher standard Current challenges Future challenges and transition The Trust’s vision for the future BBC Serving all audiences Value for Money 15 Financial responsibility and efficiency Setting an example on pay Increasing transparency External scrutiny The value of a strong BBC Distinctive Content 21 Putting quality first Doing fewer things better The immediate future for specific services An Open BBC 40 Next phase of work 42 Annex: BBC Executive proposals 43 Foreword The BBC Trust aims to get the best out of the BBC for licence fee payers. In reviewing the BBC’s strategy, we have used public consultation and audience research to add to our knowledge of what people think of the BBC and to listen to their reactions to the proposals that Mark Thompson, the Director-General, has made for future change. That work has confirmed that the vast majority of people support the maintenance of a strong BBC that provides something of value to all parts of the audience. It has also shown that while different people have different sorts of relationship with the BBC, the values they most commonly ascribe to it include trust, reliability, reassurance, quality and authority. But we know that, while most people think the BBC is doing a good job, they also want to see it do better – to keep the quality of programming at the highest possible level and to use its public funding to support innovative ideas wherever possible. I therefore support the vision, that the Director-General described in the proposals he put to the Trust earlier this year, of a BBC that would be confident in its public service mission, more focused on its own high-quality content, its own core values and not attempting to do absolutely everything. The public support it too. Your questions, reasonably enough, tend to be about its implementation: What next? What will it mean on screen? How and when will there be a noticeable change? Your concerns, given the current pressure on the nation’s finances, are often about how much of your licence fee is spent on the management of the BBC and whether that could be reduced. I believe there is further to go for the BBC to realise the ambition that Mark Thompson has set out and to prove it is taking shape: to drive a relentless effort to fill the whole BBC with a clear sense of a public service mission; and to make BBC output significantly different from what other broadcasters provide, across the full range of its existing programming. That requires the BBC to be ever-mindful of the obligations it has to licence fee payers. First, to provide the sort of distinctive content that fully justifies its public funding. Second, to show that it is always asking itself whether it is spending your money wisely and finding ways to reduce its overheads and put the money on screen. These public obligations are the starting point for our strategy for a future BBC. We are confident that the Director-General has already understood them and is acting on them but we will be looking for ways to move further, and faster, in the coming months. Sir Michael Lyons Chairman, BBC Trust Summary The BBC Trust is reviewing the BBC’s strategy to consider how we can get the very best out of the BBC for licence fee payers. We began by asking the Director-General for his proposals for the future direction of the BBC and we published his response, Putting Quality First1, in March this year. We have now analysed those proposals and subjected them to public consultation. This document sets out the Trust’s initial conclusions, focusing in particular on what audiences tell us matters most to them: BBC programmes and services and the way the BBC spends their money. The Trust believes in the core vision and principles behind the Director-General’s proposals and will pursue a strategy that focuses on the BBC’s core role as a provider of distinctive public service content: • it is a strategy that addresses current audience demand for more fresh and new ideas • it reflects the BBC’s obligations as a recipient of public money • in the longer term, technological change could well make the BBC’s role as a funder and provider of UK content more important and its role in funding the supporting infrastructure for the distribution of that content somewhat less important. We therefore agree that the principles set out by the BBC Executive to ‘put quality first’ and ‘do fewer things better’ point the BBC in the right direction. We also agree with the Director-General that the BBC can and should go further in concentrating a greater proportion of its funds on content and creativity. However, there remain big and immediate challenges if the BBC is to deliver this strategy. There are also tough questions about how to do fewer things better in the longer term – in particular how to re-structure the portfolio of BBC services to deal with the prospect of further progress towards a fully digital, on-demand world. We are in a transitional period so we need to start thinking about those questions now. The immediate challenges require changes in culture and behaviour: 1. Value for money. How to be as transparent as possible and how to show licence fee payers that all their money is being spent wisely. 2. Distinctive content. How to apply a new filter to commissioning and scheduling decisions that always puts quality first and concentrates on innovative public service content. How to turn the five new editorial priorities (journalism; knowledge, music and culture; drama and comedy; children’s content; events that bring communities and the nation together) into gold standards of BBC excellence. 3. Openness. How the BBC could be more straightforward and open about its plans and strategy and how it could work better with the rest of the industry, in particular by explaining where it will set the boundary of its activity. 1 http://www.bbc.co.uk/bbctrust/our_work/strategy_review/ To address concerns in the marketplace that the BBC seems too big, and disquiet among the public about whether the licence fee is always being spent as efficiently as possible, the first priority must be to tackle these questions about behaviour and prove that no resources are being wasted. A new approach to value for money is fundamental to public trust in the BBC We want to accelerate the changes we are making to increase transparency and value for money. The BBC’s obligations to licence fee payers should include: Financial responsibility and efficiency – the BBC must not take any more public money than it needs. The BBC is already conducting a long-term efficiency review with a view to finding further savings through more radical changes to the cost base from 2013 onwards – the Trust will now appoint external advisers to interrogate the assumptions and conclusions of that review. We will ask the National Audit Office to consider taking on this work for us. In the meantime, the BBC needs to scrutinise its budgets with as much rigour as the rest of the public sector to see what scope there may be for saving money. The Trust is asking the Director-General to conduct a rapid exercise of this sort and to report back immediately after the summer, so that we can assure ourselves that we are doing everything possible to remove slack in the organisation. Setting an example on pay – it is important that the top management of the BBC responds to public concern and shows leadership to the rest of the BBC in tough times. We will ask the Director-General to accelerate existing work to reduce the senior pay bill by 25% – so that it is completed within eighteen months, by which time we expect there to be a different, simpler management and pay structure in place. In the meantime the Director-General and all members of the BBC Executive Board have each volunteered that for this year and next they will forego a month’s salary. In parallel, Trustees will take an equivalent 8.3% pay cut for those two years. Transparency – licence fee payers have a right to know more about how their money is spent on management salaries and talent costs. We will ask the BBC to disclose more detail about how these costs are structured and have challenged them to provide greater transparency about who is at the top end of the talent pay scale. The Trust believes the BBC should release the names of the talent who receive the very highest incomes from the BBC, although this should not go to the level of divulging individual salaries. The transition to a fully digital world needs careful long-term planning: Online – to prepare for a future where the BBC will have two distinct online functions – iPlayer will have an important role providing on-demand radio and TV-like content while BBC Online should also remain a publisher of distinctive, original public service material for the web. We agree the first step should be to simplify the existing content on BBC Online and to strengthen editorial control of its future development. In television – to identify the future tipping points where reassessment will be needed of the range and structure of services. The first such point should be around the conclusion of switchover in 2012/13, by which point trends in on-demand viewing should also be clearer. For radio – to assess the likely shape of digital change and the BBC’s role in promoting that change on behalf of licence fee payers, both the services it provides and the contribution it makes to the transmission infrastructure. In each case, the BBC has already begun to do its thinking, but it needs to move more quickly. The immediate implications for existing services are: Television – the immediate focus should be on increasing the distinctiveness of existing services, with a particular focus on greater variety and ambition on BBC One in peak time, and making BBC Two stand out as a clearer alternative through greater depth and ambition in its factual programming, comedy and drama. Further action is needed to improve the quality and originality of the daytime schedules. Network Radio – for the time being, the central focus for radio strategy ought to be; to deliver greater distinctiveness on Radio 1 and Radio 2; and to put together a full strategy for the BBC’s contribution to future digital development, based on Government policy, detailed discussion with the commercial radio industry and an appraisal of the potential of DAB against alternatives, including Internet Protocol radio. We endorse the BBC Executive’s underlying ambition to do fewer things better and thereby focus the BBC more effectively on its core mission, ensure that it plays its full part in promoting the move from analogue to digital and have due regard for the BBC’s competitive impact. However, we do not think a convincing case has been made, as presented, for the closure of 6 Music. The Trust does not agree that there is a consistent strategic rationale for closure on grounds either of promoting digital development or market impact. Nonetheless, the proposal has been helpful in highlighting the need for a further review of the BBC’s digital strategy. If, as part of that review, the Executive wants to put together a different proposal for the overall shape of its music radio stations that they think could further increase the distinctiveness of the output, we would consider it. However, we would not expect to see a further proposal to make changes to 6 Music unless the Executive could provide: • a clear link between a new future strategy for music radio and the strategy for digital development • evidence that the changes we have already requested to Radio 1 and Radio 2 are under way • an explanation of how the distinctiveness of those stations could be further increased as part of a new music radio strategy • reassurance that there would be long-term protection for the type of distinctive content currently available uniquely on 6 Music We acknowledge the Asian Network is performing poorly and the case for closure could be consistent with the strategy we are setting; we would consider a formal proposal from the BBC to close it but would need to be convinced that any alternative proposed would be a clear improvement in terms of overall public value for British Asian audiences. Local radio – we welcome the commitment to a more distinctive role and mission for local radio. We now expect a proposal from the BBC Executive to trial the concept of sharing regional content in non-peak hours to fund improvements including higher quality speech programming in peak hours and a renewed focus on local political coverage. We would use the outcome of that trial as the starting point for further regulatory testing. We will postpone our service review of English local radio, which was originally scheduled to commence in the autumn, until we are able to assess any changes that may be made. Our review of national radio stations in the devolved nations (Radio Scotland, Radio Wales, Radio Ulster/Foyle, Radio Cymru and Radio nan Gàidheal) will continue as planned in the autumn. Online – we endorse the concept of a 25% reduction in the BBC Online budget although we will want to understand and approve the editorial changes involved. We would welcome a simpler and clearer focus, including core online publishing services such as news, sport and weather alongside iPlayer. We also acknowledge the continued potential of bbc.co.uk to add editorial value in other priority areas (in educational content for school students, for example) – it must not be reduced to the provision of background material in support of other services. But that reinforces our desire to see more effective editorial controls and leadership across the board, with effort and funding concentrated where the BBC has a clear and distinctive role and to remove BBC content where it does not have a clear public service rationale behind it. We will also want to see greater clarity as to the correct balance between audio-visual and text-based content. We are therefore requesting more detailed work from the BBC Executive on: • the Executive’s proposed strategy for the future development of digital radio • its final proposals for re-shaping BBC Online In the next phase of our work there will be more to do in particular on: • Measurement and reporting – we will set performance objectives and explain how we will assess whether the strategy is being delivered, in particular how we can best measure the distinctiveness of BBC content • how to deliver the behavioural change that this strategy will require • Distribution – what it should mean for BBC services to be universally available as technology changes. What the implications are for the different platforms the BBC is involved with, the way it shares its content with other platforms and the future deployment of archive and other material online • Boundaries – the BBC must not retreat from serving any particular audience groups. But we think that boundaries need to be clearer and better expressed for the outside world and will want to consider further how to achieve that • Value for money – we will accelerate our examination of how the BBC uses its own resources, to reassure the public it is not taking any more money than it needs • The BBC’s global strategy – where the BBC Executive continues to develop its proposals. Getting the best from the BBC The BBC Trust is conducting this strategy review to try to answer the question: what changes can we make to get the very best out of the BBC for everyone who pays the licence fee? This question is not straightforward. The BBC is a very big organisation doing a great many different things to different standards and in different ways. Everyone has their own individual view of what it does well and what it should stop doing. The BBC has a stable source of public funding but there remains a limit to the money that is available. The technology of broadcasting is changing, but the pace of that change remains uncertain. Nonetheless, we want to keep this review simple. Not least because the BBC already has a clear and constant mission – it must inform, educate and entertain and it must fulfil the public purposes that have been set for it by the Government and for which it receives public money: 1. Sustaining citizenship and civil society 2. Promoting education and learning 3. Stimulating creativity and cultural excellence 4. Representing the UK, its nations, regions and communities 5. Bringing the UK to the world and the world to the UK 6. In promoting its other purposes, helping to deliver to the public the benefit of emerging communications technologies and services and, in addition, taking a leading role in the switchover to digital television The point of this review is not, therefore, to question these purposes but to think again about how best to fulfil them in response to continuing change in both the technology and the economics of broadcasting, and to consider whether that means the BBC should change its way of doing things. The Trust’s role Under the BBC’s Royal Charter it is the responsibility of the BBC Trust to set the overall strategy for the BBC. We decided last year that the time was right to conduct a major review of that strategy: • to respond to continuing public debate about the BBC’s role and scale • to reassess the impact of digital change now that over 90% of the UK population have switched over • to look to create space for new future developments, including any proposed development of the BBC archive • to investigate the Trust’s concerns that the BBC might be spreading its resources too thinly, and putting editorial quality at risk We agreed with the Director-General that the first step should be for him to put proposals to the Trust that would answer five questions that we set: • How can the BBC best maintain quality and distinctiveness? • Where if necessary could the BBC’s focus be narrowed and its scale reduced? • What will a fully digital BBC look like? • Can the BBC better define the ‘public space’ it provides? • How can the BBC create most value from its scale? The Director-General’s proposals, Putting Quality First, were published in March this year (a summary is provided as an Annex here). The conclusions set out in this document are in part an analysis of that work, but they are also the continuation and extension of the work we have done since 2007: • to champion distinctive content, particularly through annual reports on BBC performance • to make editorial controls more effective • to improve value for money, for instance by driving down talent costs and the senior pay bill • to limit the BBC’s competitive impact, for instance through public value tests and the handling of fair trading appeals We therefore support the central components of the Director-General’s proposals. They represent a serious and coherent agenda that responds to and extends the Trust’s agenda, in particular through: • His vision of ‘a BBC focused on quality content and enduring values, keeping open a public space for all’ • His concepts of putting quality first, doing fewer things better, guaranteeing access, making the licence fee work harder, and setting new boundaries • His proposal for five clear content priorities: journalism; knowledge, music and culture; drama and comedy; children’s content; events that bring communities and the nation together • His aim to establish a minimum level for the percentage of the licence fee that should be spent on content 2 As well as giving the Trust responsibility for setting the BBC’s overall strategy, the Charter and the accompanying Framework Agreement with the Secretary of State for Culture, Media and Sport make the Trust responsible for supervising • His proposals to increase the distinctiveness of a range of services including Radio 2, BBC Two and BBC Online When we published those proposals, we also said we wanted to think further about the implications and about whether further steps were needed to fulfil the ambitions that had been set down. To help us do that, we opened the strategy review process up to public consultation. Our consultation generated 47,933 online responses, 44,714 email responses and 276 letters. We have used as evidence not only those responses but also all the information we have gathered in the course of our other work. In particular we have looked back to the regular reviews the Trust conducts of the performance of individual BBC services (every service must be reviewed at least once every five years) and the annual surveys we conduct to assess how far the public think the BBC is fulfilling each of its public purposes. Alongside the public consultation that we have held as part of the strategy review process, we have also taken soundings from the Trust’s Audience Councils across England, Northern Ireland, Scotland and Wales. We have organised seminars and discussions with a wide range of radio, television, music, internet and newspaper companies that are active in the same markets as the BBC as well as some independent thinkers, analysts and academics. We have received and analysed 78 responses to our consultation from a variety of organisations. We also commissioned independent qualitative research to explore key issues with a broad range of the audience. We are publishing all the formal organisational responses to our consultation and our qualitative research report alongside these initial conclusions. We have also completed our first phase of analysis of the consultation responses from the wider public. That analysis informs these initial conclusions and full and final reports will be published in due course. This document sets out initial conclusions about the overall strategy the BBC should be adopting but it is not yet a finished strategy. At this point, we are explaining in broad terms what the Trust thinks the BBC needs to do to implement the Director-General’s commitments to put quality first, to do fewer things better, to make the licence fee work harder and to set new boundaries. We have also identified where there is more detailed work to do in all these areas between now and the autumn. In that period we will review the BBC’s strategy for the distribution of its content and how best to deliver on the Director-General’s commitment to ‘guaranteeing access’. We will also continue to consider the full range of arguments put to us as part of the consultation – these initial conclusions do not pick up every individual point that has been made. Although there is more work to do, we are clear enough about our overall strategy, at this stage in the process, to be able to respond to most of the specific proposals that the BBC Executive has put forward for changes to individual services. We are not yet in a position to take a final decision about what specific regulatory processes would be required under the BBC’s Charter.2 Instead, we have set out our view in each case on whether the the BBC Executive at a greater level of detail, including in relation to individual services. The strategy review does not replace or override those other processes, where they are applicable. In particular, under the Framework Agreement, any change to a service licence needs to be approved by the Trust, and a Public Value Test must be carried out before a decision is taken to make “any significant change to the UK Public Services”. The question whether a change is a significant change for these purposes must be considered by the Trust on a case-by- case basis, having regard to four considerations set out in the Framework Agreement: (a) impact – the extent to which the change is likely to affect relevant users and others; (b) the financial implications of the change; (c) novelty – the extent to which the change would involve the BBC in a new area of activity for the BBC, as yet untested; (d) duration – how long the activity will last. change proposed would be consistent or not with the overall strategic direction we are setting, and whether or not we would be receptive to any further proposal from the BBC Executive. Later in the year, when we publish final conclusions and the Trust’s new strategy for the BBC, the Executive will need to decide what service changes they want to pursue and, where those need formal Trust approval, we will assess them in accordance with the BBC Charter and Agreement. The Trust’s obligation to licence fee payers – setting a higher standard The Trust’s clearest and most direct responsibility is to the public – to everyone who pays their licence fee and funds the BBC. In this first statement of conclusions, we are therefore focusing on the issues that are of most obvious and immediate interest to audiences: • First, the shape of the BBC’s broadcast and online services and the content within them • Second, the way in which the BBC controls its costs and how much it tells people about where the money is spent. The Trust’s central conclusion is that the direction set out in Putting Quality First is absolutely the right one, but that there is still more to be done in both these areas. That is not because the public think the BBC as a whole is under-performing. On the contrary, 82% of people say they are happy with the BBC and would only change a few things. 82% also say they would miss the BBC if it wasn’t there. They particularly value the BBC’s independence and the non-commercial environment it provides. However, the licence fee brings with it an obligation to strive to set the highest standards of public service in all areas and the responses to our consultation confirm previous research findings that the public think the BBC can set its standards higher – both in terms of the originality of some of its programming and the extent to which it can prove it is spending their money wisely. The Trust aims to get the best out of the BBC for licence fee payers. We therefore support the Director-General’s commitment to high-quality content, although we think there is further to go for the BBC to realise the ambition he has set out in this area: to drive a relentless effort to fill the whole BBC with a clear sense of a public service mission; and to make BBC output significantly different from what other broadcasters provide, across the full, broad range of its existing programming, so that it fully justifies its public funding. This was one of the strongest areas of agreement in submissions to our public consultation, both from individuals and organisations. The rest of this section sets out our view of the challenges we think the BBC faces, both now and in the future, and the changes it needs to make in response. Current challenges The BBC needs to keep asking itself whether it is being ambitious enough and making its output significantly different from what is available elsewhere. Since it was set up in 2007, the Trust has been asking licence fee payers what they think about the BBC. We know that: • television tends to drive people’s overall perceptions of the BBC • licence fee payers have extremely high expectations for the quality of BBC output • they have a clear and consistent desire for more programmes that feel new and different Every year we ask people how well they think the BBC is fulfilling each of its public purposes and we assess that against the level of importance they attach to the purpose. Every year, the most telling gap is within the creativity and cultural excellence purpose – in terms of the provision of ‘fresh and new ideas’ and ‘inventive and imaginative content’. This year, for instance, 75% said it was important that the BBC provided fresh and new ideas, but only 53% said that the BBC was successful in doing so. Many in the commercial sector argue that BBC content should be more distinctive, more ambitious, and more clearly focused on its public service mission rather than competing for audience share. Responses to our consultation identified particular concerns about how the BBC will measure its performance in this area and be held to account for its performance. BBC One, BBC Radio 1, BBC Radio 2 and BBC Radio 5 Live were all subject to specific criticism from organisations that do not believe them to be sufficiently distinctive. Organisations also identified specific areas of programming where they believe the BBC could improve as: arts coverage; challenging drama and factual programming on BBC One; contemporary drama on BBC Two; children’s programming across the board; music on television; and UK film. The quality and range of news coverage, particularly international news, was also a focus of external concern. Our programme of reviews of individual BBC services has also consistently highlighted areas where the BBC could do more to differentiate itself from the rest of the market through a clearer focus on its public service content. The review of online (2008) revealed that although BBC Online as a whole was thought to be strongly distinctive, other operators in online markets did not consider some individual parts of the site to be clearly distinguishable from what the commercial sector was providing. We concluded then that BBC Online required firmer editorial control and clarity of purpose. We conclude now, in line with the BBC Executive’s strategy proposals, that there is a bigger challenge for Online – to cut back on the current scale and scope of what is published and put the focus on those areas where the BBC has a clear and distinctive role to play. In radio, the BBC is already the only provider of many types of public service output – long-form news and current affairs, politics and consumer programmes, radio drama and comedy and large volumes of live music across all genres. The Trust’s service reviews of Radio 1, 1Xtra, Radio 2 and 6 Music have all emphasised the same challenge for the BBC – to ensure that its offer is distinctive from commercial stations and that stations have a clear editorial focus. The review of Radio 2 (2010) suggested the station could take more creative risks and be more distinctive, for example by refreshing comedy and arts programming and integrating some of its most distinctive content into the peak time schedule. The review of Radio 1 was clear that the service should focus on delivering public service content to a young audience who are less well served by other BBC offers. Today we are publishing the initial findings of our review of the BBC’s major television services, alongside this report. The report recognises the strong performance of BBC One, Two and Four, in terms of high quality of output and making strong contributions to delivering each of the BBC’s public purposes to large audiences. However, it concludes that there should be more creative risk-taking and ambition on BBC One, and that, as proposed by BBC management, there should be greater depth and ambition in factual programming and a clearer role for comedy and drama on BBC Two. We agree with management’s conclusion in Putting Quality First that daytime television could be higher quality and more distinctive and are asking the BBC Executive to explore further how daytime output can improve its quality and distinctiveness within current funding levels to serve the daytime audience better. Over time, the amount of competition to the BBC in the provision of high-quality public service television content is dwindling. In some areas, the BBC could find itself setting its own standards simply by being the only provider. In our view, that will not be enough to satisfy the extremely high expectations that audiences have. The BBC’s strategy needs to be to keep pushing programme-makers to develop new and better ideas and to promote the attitudes and behaviours that will further encourage competition for quality inside the organisation as much as outside. Future challenges and transition The pace of technological and market change is uncertain but its direction, and the risks and challenges for the BBC, are clear. The BBC’s strategy needs to address them head on. More than 90% of households already have digital TV and in 2012 the digital switchover process will end, at which point all the BBC’s UK network television services will be universally available to all viewers. Beyond switchover, it looks likely that among existing television broadcasters only the BBC and Channel 4 will remain as large-scale providers of many types of public service programming, although internet-connected television may open up the market to a broader range of small providers. In television in particular, therefore, the BBC will need to find ways to set its own standards and challenge its own performance in a way it has not always needed to in the past. At the same time, the further development of new television-type services on internet and mobile platforms may over the long term leave the BBC unable to maintain direct control over a completely integrated commissioner/producer/broadcaster/distributor model. In that world, it will need to make some hard choices about how to get its programming to viewers, including decisions on exactly what the licence fee buys in terms of the widespread availability of programmes on different platforms, what the relationship should be between the viewer and the BBC itself and what role is acceptable for intermediaries. That would fit well with a BBC strategy to focus attention and spending largely on content and programme production. At some stage it could also allow a very different approach to the packaging and branding of programmes, as traditional 24-hour live broadcast channels become less necessary or are put together in different ways. Although this sort of widespread change still looks to be some way off, the BBC needs to start anticipating and modelling some of these changes now in the strategy it adopts for its television services and content. It also needs to identify some future points for reassessment and review. The BBC Executive is right to start by focusing on the need for the BBC to focus above all on the production of high-quality content. We want to build on that start, to try to set out a clearer future path for the transition from today’s world to tomorrow’s. There are big challenges ahead for digital radio too, although the direction of future change is much less clear. The BBC’s newer stations were designed in part to drive digital take up. By 2010, we can see that take up of DAB radio has been slower than expected ten years ago and the BBC’s digital-only stations have not achieved the audiences or impact that was then expected, although the intention behind the Digital Economy Act was to provide new impetus. The BBC is already committed to playing a role in leading the UK radio industry to a fully digital future. A question remains about what that means in the longer term and what the potential is for internet-based radio platforms to evolve. If DAB is to be the future, the BBC can only be one player, alongside Government and the commercial industry, in deciding what the strategy should be for the future shape of investment in both infrastructure and services. The Trust’s vision for the future BBC The existing challenges posed by the audience and the future challenges brought by technology both point in one direction – towards a BBC that re-focuses on its central public service role as a creator of the highest-quality content above all else. The BBC Executive is right to propose a strategy where the clear priority is to push investment towards the highest-quality public service content, after a period of substantial investment in infrastructure (including digital switchover, moving departments to Salford and investing in technologies such as iPlayer and Freesat). This is the right strategy because that is what the public want and expect now, because it will always be the core justification for spending public money on the BBC and because it is what the BBC is best placed to do in the longer term. To make a success of this strategy, however, requires a shift in BBC culture and behaviour. One of the questions we have been thinking about in this review is ‘where if necessary could the BBC’s focus be narrowed and its scale reduced?’ The responses to our consultation suggest to us that the right answer is about changing patterns of behaviour. At present, the BBC seems big and encroaching to commercial media companies when it fails to offer a distinctive alternative or when it enters a new market unilaterally or without consultation. While audiences value the programmes the BBC provides, the Corporation itself risks looking wasteful to licence fee payers if or when it is unclear to them how their money is being spent. Tough choices to stop providing particular services may be necessary now and in the future, but they can only be justified to the public if it is clear that all other steps are first being taken to reduce the scale of the BBC in other ways. Our vision is for a BBC that behaves differently, and that means making faster progress in three important areas: 1. Value for money. We want a BBC that, above all else, builds a closer relationship of trust with the public by asking for no more money than it needs; by being as transparent as possible about how it is spending that money; and by taking all possible steps to find efficiency savings. 2. Distinctive content. We want a BBC dedicated to making its output significantly different from anything available elsewhere, including by setting the highest standards of innovation and quality in its popular programming. Creative ambition should be valued above all else, even if that means taking bigger risks and getting lower ratings. 3. An open BBC. We want a BBC that explicitly recognises the impact it has on the rest of the market, communicates more clearly and publicly what its future strategy will be and then sticks to it, so that it builds productive relationships with the rest of the media industry. The BBC has already made some major changes in each of these areas in recent years – for instance by saving over £468m, net of costs, through its efficiency programme over the last two years (value for money), by publishing senior salaries and expenses (transparency), by proposing to increase investment in BBC Two (distinctive content) and through partnerships such as Canvas (an open BBC). It now needs to go further, faster, to cement behavioural change across the organisation in the next few years – to address head-on concerns about how it uses its scale and to prove it is a lean and focused organisation. It must make these changes now to get ready for the point in the future where either financial pressures or changes in technology and audience behaviour may require it to make more dramatic changes to the number and structure of services. The later sections of this document explain in more detail how we think each of these changes can be achieved, with reference to the principles that were set out in the BBC’s strategy proposals and that the Trust endorses as headline concepts: • putting quality first • doing fewer things better • guaranteeing access • making the licence fee work harder • setting new boundaries In terms of the BBC’s output, ‘putting quality first’ should be the central priority in the short term, and should represent a strengthened commitment to distinctive public service content. ‘Doing fewer things better’ ought to be, for the time being, about extending the existing BBC strategy’s theme of ‘fewer, bigger, better’ – that is, focusing content investment and creative energy on those collections of programmes and projects which have the biggest impact. Both these principles are about combining editorial ambition with firm editorial control. ‘Setting new boundaries’, on the other hand, should be about external clarity and transparency around what the BBC plans to do next. At a later point, when changes to the BBC’s income, to technology or to audience behaviour demand it, ‘doing fewer things better’ is likely to take on a different meaning, and will call for consideration of structural changes of a greater scale. We want a BBC that is ready and able to respond by rebalancing its services in favour of distinctive, high- quality public service content. And while we think this point is still some way off, and that behavioural change in any case needs to come first, we will also want to start this longer range planning now. More detail on putting quality first and doing fewer things better – both our general approach and the implications for current services – is provided in the section below on distinctive content. The section on value for money explains the immediate action we will take to make the licence fee work harder and the further work we have in hand. The section on an open BBC addresses the question about how and when the BBC should set boundaries. We have not yet completed our analysis of how the BBC should distribute its services and guarantee access to them – that will form part of our final conclusions later this year. Serving all audiences One area of principle that has not been fully addressed by the review up to this point is the BBC’s responsibility to serve all audiences, in particular by ‘representing the UK, its Nations, regions and communities’ (the fourth of its public purposes). Aside from the perceived gap on providing ‘fresh and new ideas’, it is on this public purpose that our audience research regularly shows the greatest degree of public concern across the country. Our public consultation has also highlighted concerns in this area, particularly in the devolved Nations, where there was concern about a perceived lack of focus on Scotland, Wales and Northern Ireland within the BBC Executive’s strategy proposals. The Trust’s Audience Councils for Northern Ireland, Scotland and Wales all highlighted issues with the BBC’s coverage of the devolved Nations and the amount of dedicated airtime they were given. This message was echoed by the Scottish Government, the Welsh Assembly Government and a number of other organisations from those Nations. Portrayal of life in the Nations and regions on the BBC’s network output was also raised as an area where further progress needs to be made. The Trust has been active in the past three years in pursuing this agenda. The Trust has conducted a review into the impartiality of network news coverage, approved a new approach to local provision across the BBC’s services, and revised the BBC targets for out of London production. In May 2008, the Trust agreed that in future the BBC should adopt more challenging targets for measuring and meeting its targets for network production in the nations by using Ofcom's definition instead of the existing BBC one. This decision formed part of a renewed commitment by the BBC to move more network television production out of London to draw on the talent and skills of the whole UK. Including the impact of moving several departments to Salford in 2011, the Trust now expects the BBC to ensure that 50% of UK network production will be made outside London under the Ofcom definition by 2016. Recent research commissioned by the BBC Executive to look at approval in the UK's Nations and regions indicates that quality continues to be the primary driver of approval and reputation. Viewers expect the BBC's television channels to provide high quality programmes which inform, educate and entertain. There is, however, an opportunity to use such programmes to address the issue of authentic portrayal. High-quality programmes can be used to deliver UK wide appeal, while also authentically representing the diversity of the UK and delivering particular resonance for audience groups less well served by the BBC. Programmes such as Gavin and Stacey, Coast and Hairy Bikers: Mums Know Best are examples of high-quality, successful shows which have strong appeal outside London and which audiences consider represent their lives, regions and communities. Delivering authentic representation on the national networks provides an opportunity to address public concern about the extent to which the BBC is ’representing the UK's Nations, regions and communities’, as well as improving performance among some underserved audience groups. Even in areas when audiences have a higher expectation of portrayal, viewers would prefer a quality programme over and above tackling the issue of portrayal. However, there are opportunities to build on these successes and, therefore, improve representation of not only the geographic diversity of the UK, but also the different communities, demographics and ethnicities within it. Meanwhile, the Trust will continue to monitor closely the impact of recent changes, before testing whether they have had the desired impact, whether they have done anything to reduce the perceived gap in performance and whether anything more needs to be done to provide a clear vision for the BBC in each of the Nations of the UK. More broadly, we continue to believe it is the BBC’s responsibility to provide something of high quality that is valued by every community within the UK and everyone who pays the licence fee. Our audience research reveals considerable opposition to any suggestion that some parts of the community might be less important to the BBC than others. Although we think the BBC should be willing to see the reach of particular programmes and services fall in favour of higher quality and distinctiveness, it continues to be important that the BBC reaches the great majority (currently 97%) of the population across all its platforms and services with something that can be meaningful and valuable to each of them. 3 Source: BBC Trust Purpose Remit Survey 2009/10 Value for Money The way the BBC is funded, and the fact that there is a legal obligation to pay the licence fee, puts it in a unique position. It means the BBC has a direct responsibility to licence fee payers, who are effectively its shareholders, that goes beyond the obligations that commercial companies have towards investors and is different from the relationship that other parts of the public sector have with taxpayers. The BBC Executive must spend its money wisely and the Trust must hold it to account. Beyond that, the BBC must build and retain public confidence that it is spending wisely by being as open and transparent as possible. The Trust has been active in both areas over the three-and-a-half years of its existence. We have imposed a 3% year-on-year efficiency target that will realise cumulative savings of almost £2bn, to be reinvested in content and services. With the help of the National Audit Office (NAO) and other external advisers, we have undertaken eight specific value for money studies, each of which has identified a number of ways to improve financial processes, systems and decision-making within the organisation. We have agreed a target for the BBC to reduce its senior management costs by 25% over the next few years. We have pushed the Executive to reduce the amount it spends on top talent, and the latest Annual Report show that there has been a clear reduction in the past year. Under our leadership, the BBC has also moved to public disclosure of a large amount of information about the money being spent on pay, expenses and talent across the BBC. However, levels of public trust and confidence are still not as high as they ideally should be and both our consultation and our audience research reveal concerns about the way the BBC spends its money and whether it is sufficiently transparent about that. Audience research and the responses to our consultation show that while the licence fee overall tends to be considered to be good value for money in terms of the output it buys (by 58% of the population)3, there remains a consistent level of concern – from supporters of the BBC as much as from its commercial competitors – about whether the most effective possible use is being made of the licence fee. That concern is focused on talent costs and top management pay and expenses in particular. The economic context has also fundamentally changed since the Trust was created. The pressures that will be faced by taxpayers, by the public sector and by commercial media in the coming period increase the need for public concerns about BBC spending to be addressed, both by the Executive and by the Trust. Not least because if the BBC is to make tough choices in future about what it should stop doing, it needs first to be able to prove that it is as lean and efficient an organisation as it can be. The whole of the public sector is going to be challenged to become more efficient in the coming period, and the BBC ought to be at the forefront of that change. We will therefore seek to accelerate the work we have under way to improve value for money at the BBC, building on the work we have already done and showing sensitivity to areas of public disquiet. Where there is immediate action to be taken, we will take it. Financial responsibility and efficiency The Trust's obligation is to ensure the BBC takes only what the BBC absolutely needs from licence fee payers and that what it does take is spent as wisely and efficiently as possible. Our approach to the next licence fee settlement We remain committed to the principle that the BBC should be funded through the licence fee by multi-year settlements that the Government does not re-open, which provides an important safeguard of the BBC’s independence. But in negotiating such settlements, we need to think on behalf of those paying for the BBC about what is in the public interest, not what is in the BBC’s own corporate interests. That is the approach we will take into discussions with Government about the next BBC funding deal in 2012/13. Further work on efficiency The BBC has a good track record on improving the efficiency of its operations and it has an efficiency programme in place (the Continuous Improvement Programme) that is delivering 3% year-on-year savings across the BBC in the five-year period to 2012/13, raising almost £2bn in cumulative savings for reinvestment in new projects and new content and delivering better value to licence fee payers. The Trust is satisfied that this programme remains on track to deliver the right level of financial savings, and we have asked the NAO to review progress in early 2011. Beyond the existing efficiency programme, the Executive’s strategy review proposals outline the work that is under way on a pan-BBC review to find further savings beyond 2013 – focused mainly on finding new structures and working cultures that can have a major effect on the cost base. In our consultation, some organisations expressed concern that further efficiency targets could prompt cuts to programme budgets, and an accompanying drop in quality. That remains an area of concern for the Trust, too. And while we think the BBC Executive’s approach is the right way of dealing with it, the timetable for producing firm recommendations appears to have stretched somewhat since we asked the BBC, at the start of the strategy review, to look again at its cost base. To avoid any delay at a later stage in the process, the Trust will now engage its own advisers to work alongside the Executive as they complete their work - to interrogate the assumptions being made and early conclusions reached and to make recommendations to the Trust about how and where it might be possible to go further. Mindful that there will be lessons to learn from work taking place across the public sector in the next few years, we will ask the NAO if they would be willing to take on this advisory function. From now on, the Trust will intensify its focus on the overall efficiency of the BBC’s operations by conducting regular reviews of the organisation’s performance that will help us to prevent any drift away from commitments to improve value for money. We will set the date of the first such review once we have concluded the current round of efficiency work. Immediate financial review In the next few years, the overall economic context in which the BBC operates is going to include increases in the personal tax burdens of individuals, a contraction of funding across the rest of the public sector and continuing financial pressure on commercial media companies, particularly those providing public service content. The BBC needs to be responsive to that environment. It needs to scrutinise its budgets with as much rigour as the rest of the public sector to see what scope there may be for saving money. The Trust is asking the Director-General to conduct a rapid exercise of this sort and to report back immediately after the summer, so that we can assure ourselves that we are doing everything possible to remove slack in the organisation. Setting an example on pay The Trust recognises that the scale of very senior pay within the BBC continues to be an issue of concern for the licence fee-paying public. We also recognise it is an issue within the BBC for many staff, who have had consecutive years of very limited pay increases and bonus freezes, and who will be affected by the pension reforms announced last month. In October last year, the Trust agreed an ambitious package of measures with the BBC Executive Board that will see the total pay bill for BBC senior management reduced by 25% over three years, with an 18% reduction in number over the same period, on top of continuing pay and bonus freezes for senior management. Progress against this target has already been made; by the end of May, the number of senior managers had been reduced by 24 leading to a £7.76m reduction in the pay bill. Having pursued this issue further with the Director-General, we now believe that it will be possible to make faster progress towards these targets, and we are setting the BBC Executive a new challenge to complete the same reductions in an eighteen-month time frame. We will monitor progress against the target extremely closely in the coming months. At the end of that period, we would expect the BBC to have a different, simpler structure for its senior management and pay. In the period of transition to a new structure, the Director-General and all members of the BBC Executive Board have each also volunteered that for this year and next they will forego a month’s salary, working twelve months for eleven months’ pay. The Trust welcomes this, and in parallel Trustees will take an equivalent 8.3% pay cut for those two years. It is right that the Trust and Executive Board show leadership at the very top of the organisation given both the current circumstances and the ambitious nature of the target we are setting for the rest of the management structure. Increasing transparency Licence fee payers need to be assured that money is being spent wisely. It is the Trust's responsibility to make sure of this on their behalf, and the Trust therefore publishes performance and financial information to explain the overall progress that is being made. But that is not enough. 4 The full report can be found at: http://www.bbc.co.uk/bbctrust/assets/files/pdf/review_report_research/strategic_review/transparency.pdf From our research, we know licence fee payers understand that the BBC operates in a commercial market for talent, and they expect the BBC to put the best possible presenters on air. But they are also sufficiently concerned about pay and expenses within the BBC that they want to reassure themselves directly that they can trust the management not to spend too much money on salaries. The BBC, led by the Trust, has been right at the leading edge of the trend towards greater public disclosure of this sort of information. But we want to think again about what the most appropriate, open and transparent package of information would look like. To guide our thinking, the Trust commissioned Deloitte to produce an independent report reviewing the approaches taken to transparency and accountability across the private and public sectors, and how the changes we have made to the BBC’s policies compare to examples set elsewhere. Some key findings from the report4 were: 1. Greater levels of transparency and disclosure can meet a variety of different objectives for different organisations, including assessing performance, meeting regulatory standards, ensuring good governance and delivering on wider social responsibilities. 2. There are limits to efficient disclosure of information: • it should not distort markets or competition • organisations should avoid incurring excessive costs through the publication process • disclosure should not encourage unwanted behaviours. 3. There is significant variation across both private and public sectors in terms of what information is disclosed and in what form. 4. Assessed against the framework provided by Deloitte, the Trust considers that the BBC is already among the most open and transparent organisations in the UK. However, our goal is not simply to stay ahead of others, but to provide the level of transparency that we think licence fee payers want and need in order to build their trust in how the organisation is being run. Action on this front is needed immediately. Therefore, we will now ask the BBC to go further than they have done previously by regular publication of: • Full and formal records of all public service senior managers’ pay, anonymised in bands, together with a clear, costed summary of the overall pay/grade structure. Much of this information has already been released in response to Freedom of Information requests. We now will ask for progress to be tracked and reported annually. 5 http://www.publications.parliament.uk/pa/cm200910/cmselect/cmcumeds/515/515.pdf • Aggregate costs of presenters’ and other talent salaries in the narrower bands recommended by the Culture, Media and Sport Select Committee5. We do not think the current bands are sufficiently transparent in explaining how talent pay is broken up. Equally, we remain convinced by the argument that publication of all individual talent payments at all levels would be likely to have an overall inflationary effect, reducing the value delivered to licence fee payers. While all the above information would be provided in aggregate, without individuals’ names attached, for on-air talent we also believe the BBC should be clearer about who the very highest paid individuals are. We recognise that this will not be simple. Terms of trade with independent producers do not currently allow for sight of talent salaries. Some existing BBC contracts contain confidentiality clauses that would prevent immediate publication. But given the BBC’s reliance on public funding, there is an over-riding public interest justification for greater transparency about who is at the top end of the talent pay scale, although this should not go to the level of disclosing individual salaries. We are therefore challenging the Director- General to work urgently on a plan to deliver this level of transparency. We welcome the fact that the BBC is already making progress in reducing the costs of talent, with this year’s Annual Report showing that £7.2m has been saved since 2008/9. We expect further transparency should help that trend to continue. External scrutiny The BBC’s Charter gives the Trust overall responsibility for maintaining value for money within the BBC. In discharging that function, we are mindful of the fact that the BBC must be able to prove that it lives by the same standards of probity and efficiency as the rest of the public sector – even while remaining independent of Government and Parliament. That is why we already employ the NAO as our value for money auditor, with full access to all BBC information, producing reports that we present to Parliament and are answerable for in front of the Public Accounts Committee (PAC). We are now asking the NAO to conduct further work for us on the overall efficiency of the whole BBC (as explained earlier in this section). We hope this process will further deepen the NAO’s understanding of the BBC and increase the impact of the value for money work it does for us. We will also consider appointing the NAO as our financial auditors, if they are willing to bid for the work as part of a competitive tender exercise when KPMG’s current contract expires. The value of a strong BBC The BBC needs to respond to changing economic conditions by providing maximum value for money. But the Trust also believes that the public service the BBC provides to the UK will be very important through this period – in terms of the news and information it provides and through its commitment to maintaining investment in original content, ideas and entertainment right across the UK. That requires a strong, confident BBC of significant scale. In a period where other forms of funding, and the economy as a whole, will be under a good deal of pressure, the BBC’s ability to deploy the licence fee in ways that benefit the creative economy as a whole should also be of value. The most recent research, from Deloitte, put the overall contribution of the BBC to the UK economy at £7.7bn in 2008/09. Our vision of an open BBC, which we return to later in this document, is in part about making sure the BBC does all it can to maintain that contribution by working collaboratively with other media companies and other cultural organisations in the interests of licence fee payers. Our agenda on value for money is not in any way about diminishing the BBC but about putting it in the best possible shape to maintain public trust in the organisation and allowing it to focus on producing the sort of distinctive content that licence fee payers want. Distinctive Content This section: • explains what we think the principles of ‘putting quality first’ and ‘doing fewer things better’ should mean for the BBC, both now and in the future; and • identifies the immediate implications for specific BBC services. Putting quality first What does quality mean for the BBC? The public have made it clear as part of the consultation that they welcome the BBC’s commitment to putting quality first. Many organisations, while also welcoming this commitment, have questioned what it means in practice, and how it can be measured. Quality means different things to different people. But licence fee funding places a particular obligation on the BBC to provide something different in pursuit of the public interest. The Trust’s view is that ‘quality’ should mean that all programmes aim to have a distinctive BBC quality that is recognisable to the audience in terms of: • High editorial standards • Creative and editorial ambition • Range and depth • UK-focused content and talent This does not mean a shift away from popular content – the BBC must continue to serve all audiences and to give them a full range of programming. Our audience research shows strong and consistent support for a BBC that provides high-quality entertainment programming with mass appeal. But audiences also identify the importance of the BBC using the stability and security brought by its public funding to champion and develop new ideas and new formats. In our view, that should mean applying a new filter of quality and distinctiveness for all content and for popular programming in particular, which must find ways to innovate and set standards. This follows the rationale behind work the Trust has done through its performance reviews of BBC services to map audience reactions to programmes against the concepts of distinctiveness (defined as ‘original and different’) and high quality. The chart below illustrates how this process can help us to categorise different programmes. While recognising that different types of programming play different roles, the aim should be for commissioners and producers to create content that audiences find both high quality and original and different. high qualityoriginal and different Some recent examples of programmes that fit in the top right corner of this chart include Small Island (BBC One), The Autistic Me (BBC Three), Wonders of the Solar System (BBC Two) and The Thick of It (BBC Four). What should it mean to put quality first? 1. Setting standards at the top end Putting maximum effort and funding into setting a gold standard across the five content priorities that the Director-General has identified and that we support: • the best journalism in the world • inspiring knowledge, music and culture • ambitious UK comedy and drama • outstanding children’s content • events that bring communities and the nation together These constitute the heart of the BBC’s public service mission and may not always be matched by other broadcasters. They were positively welcomed by participants in our audience research, who tended to feel this was the basis for a good content strategy. However, they also already constitute a very large majority of BBC output and it will not always be sufficient for a programme to fit under one of those broad headings to justify the investment of public money. The Trust’s Audience Councils, while broadly welcoming the concept and content of the content priorities, have also expressed reservations – for instance, Audience Council Northern Ireland asked for greater clarity about what this will mean in practice, while Audience Council England asked how the BBC intended to measure whether or not the priorities were having an impact. % agree strongly that programme is These are reasonable questions. To make these five headings meaningful as priorities, therefore, the BBC will need to find ways of maintaining momentum and ambition and will need a better filter to decide what content will and will not contribute to a gold standard. In the next phase of this strategy review, we will work with the BBC Executive to establish whether we might set effective standards and measure progress against them in these areas. Our hope is that this could be one way in which the BBC can be more transparent in publicly assessing its own performance. However, given that we already assess BBC performance against each of its six public purposes we will want to think carefully about this in order to ensure the regulatory burden on the BBC is not disproportionate. 2. Raising the bar at the lower end We recognise that audiences see no genre of programming as off-limits for the BBC. Nonetheless, our service reviews have identified some parts of the BBC radio and television schedules that could do more to fulfil the BBC’s public purposes – including some peak time output on Radios 1 and 2 and some daytime programming on television, particularly in the lifestyle and factual genres. While it remains in the schedule, the emphasis should be on ensuring this content is as distinctive as possible. This is as much about editorial creativity and ambition as it is about funding – innovation is not necessarily expensive. 3. A new filter for commissioning decisions The BBC should be striving to ensure every piece of content at least aims to be distinctive. The BBC’s commissioning process should include an assessment of how any particular programme is justified in terms of its distinctiveness, although we also acknowledge that creativity involves risk and that not every programme will always succeed. Our view, as stated above, is that the audience should be able to recognise what makes a BBC programme distinctive, in terms of; high editorial standards; creative and editorial ambition; range and depth; and UK-focused content and talent. We are now working with the BBC Executive to determine how these values should apply to television, radio and online. 4. Different incentives The BBC also needs to find a way of assessing and rewarding the success of individual programmes and programme-makers on grounds of quality rather than audience share and it needs to measure the performance of channels and services in terms of quality as well as the total number of people reached. How can we demonstrate that the BBC is putting quality first? When we publish a final strategy we will include clear commitments for how we will measure whether the BBC is fully committed to putting quality first. Annual planning and reporting will be an important mechanism for providing accountability against the published strategy. The Trust currently measures the performance of BBC services (and the potential of new services) against four criteria: • Reach • Quality • Impact • Value for Money That is still the right overall framework but, as highlighted above, we now think we need to re-work our approach to give measures of quality and impact more depth and more importance in overall judgements about particular services in future. In particular, we will consider how the distinctiveness of output on each platform could best be measured – although we are conscious of the need to do that without getting overly bureaucratic and trying to measure or spot-check on a programme-by-programme basis. What should it mean in monetary terms? Throughout this review process, the Trust has asked the BBC to not only explore what the guiding approach and principles for the BBC should be, but also to give a sense of the changes that are likely to happen as a result and their scale. In response, the BBC Executive provided a figure of £600m – defined as the amount of licence fee income to be reprioritised in different ways in pursuit of higher quality output. The Executive also made a future commitment to spend at least 90% of the licence fee on content and distribution, with a minimum of 80% being spent of content creation. Within the £600m figure, almost £100m of expenditure per annum is projected to be released through proposed closures of services and reductions to output. An average of £100m per year is projected to be released through a new BBC-wide efficiencies programme from 2013/14. Around £400m is estimated to represent those areas of content spend where individual budget areas remain constant but commissioning decisions are to be made with a new emphasis on distinctiveness and the five editorial priorities. As such there is no ‘new’ money involved. Rather than being used as a guide to the scale of change expected, as was the BBC Executive’s intention, the £600m figure has itself instead been challenged and debated in some detail. Some have supported the ambition it signals, particularly in terms of a focus on quality and distinctiveness. Others have called for the BBC to go further. Some commentators, concerned by suggestions that the £600m could represent an ‘additional’ programme budget, have called for the money to be returned to the public. The Trust does not find a focus on the £600m figure particularly helpful, primarily because its constituent parts are not directly comparable. In terms of a change in commissioning behaviours and attitudes, we recognise that a great majority of BBC content is already distinctive and of high quality. But we consider that the figure of £400m is still likely to underestimate the extent of the general cultural change that we want to see across the schedules if nearly £3bn in total is to be spent on content creation. We will work with the Executive to determine whether there is a more meaningful way of defining and measuring the scale of the changes we both want to see in pursuit of distinctive and high-quality programming. We will also look to the BBC to quantify more clearly the extent to which money will be actively moved around within services to fund new, specific projects as a result of the new strategy and we would expect that to represent a significant figure. The Trust welcomes the BBC Executive’s commitment to spend 80% of the licence fee on content and we are now analysing how we can best assess whether or not it has been fulfilled We support the principle of a minimum commitment on content spending that we might use as one measure of BBC performance. However, we want to be sure that the methodology behind this commitment is sound, and consistent with the way that costs are allocated and measured within the Trust’s existing system of service-specific budgets. We have therefore appointed independent advisers to examine the Executive’s proposals to spend at least 80% on content, no more than 10% on distribution and no more than 9% on ‘overheads’. We will use that work to consider further how to align these commitments with our existing year-to-year financial monitoring of the BBC. Doing fewer things better Why do fewer things? In part the idea of doing fewer things better is simply common sense – the BBC, like any well-run organisation, should have a clear focus on its priorities and should not be distracted by a lot of lower-value activity. There are further reasons for the BBC to be considering now how it might do fewer things in future: • The need to continue to pursue efficiencies and focus maximum investment on the highest quality content and services. • The fact that the existing efficiency programme within the BBC will have produced almost £2bn over five years, with some reasonable concern among programme-makers that there is now limited scope left for across-the-board efficiencies without risk to editorial quality. One way of guaranteeing overall levels of quality in the future might be to make deeper, more significant changes in a small number of areas. • The potential for further shifts in audience behaviours and broadcasting economics, if in the medium to long term there is a shift away from linear broadcasting to online/on-demand/non-linear consumption. In that world, which still appears some way off, the need to produce a set number of hours to fill a series of 24-hour schedules may no longer exist. This suggests that, over time, the BBC should indeed be trying to stop less valuable activity and put more of its resources into content of the highest quality. In fact, in the longer term the only way to truly ‘put quality first’ is likely to be to do fewer things, better. This general principle met with broad support both with organisations responding to our consultation and with participants in our audience research. However, in neither case was there a consensus about what it should mean in terms of specific changes to the BBC. How to do fewer things better? For the immediate future it is worth distinguishing between: • The need to act now to set priorities for content investment • The need to plan for more significant structural change over a longer period and to manage the transition to get us there Short-term content investment – ‘fewer, bigger, better’ The BBC’s existing content strategy is about focusing content investment and creative energy on those collections of programmes and projects which have the biggest impact (some examples might include, for instance, Lambing Live, Five Daughters or the recent Opera season). This continues to make sense and should help to deliver joined up editorial decision-making across the BBC, without needing any radical acceleration. It does also make sense, however, for this same approach to be extended to apply greater editorial rigour and control to what is published on BBC Online, as the BBC Executive proposes. The Trust accepts and agrees with the argument that parts of the online service have strayed too far away from the BBC’s core remit and core programming output and that there is a case for a reduction in both scope and scale. A new, clearer and coherent boundary should now be put around what the BBC is going to do online, and resources focused on making that content high quality and distinctive. We discuss the detail and implications of this idea in more detail towards the end of this section. In television and radio, there is no immediate requirement for a radical reduction in the number of services. Neither financial pressures nor changes in audience behaviour have undermined the basic shape of the BBC. The case for the immediate closure of any individual service therefore needs to be made on its own merits – in terms of serving audiences better in different ways. The transition – planning for longer-term changes Nonetheless, we are in a period of transition – to a tougher financial environment for public services and to a different form of broadcasting where individual consumers take even more control of their own viewing and listening. A sensible strategy, therefore, will be one that plots out key decision points over a longer period, setting criteria for assessing the options that protect the highest quality, most distinctive content as circumstances change. That way, if or when the BBC has to stop providing any service to any audience, it will have a clear and coherent rationale for doing so. This will require a continuing debate about where the boundaries of the BBC should be as technology changes and ‘doing fewer things better’ becomes a different sort of choice. Whatever future circumstances arise, the BBC cannot opt out of its obligation to serve all audiences. The Trust therefore rules out any suggestion that the BBC could do fewer things by ignoring or underserving particular audience groups. Some respondents to our consultation have raised some concern that the Executive proposals for the 30-50 age- group across music radio, for instance, or the teen audience across television, imply this sort of approach. The Executive states that it did not mean to give that impression. And even where targeted areas of programming (such as BBC Switch for teenagers) are to be discontinued, the Trust will expect the BBC to continue to serve all parts of the population through its mainstream programming and occasionally through more specific output. Our audience research and consultation responses demonstrate strong public support for this approach. The longer-term options are instead much more likely to be about adapting to new patterns of audience behaviour by reconfiguring the BBC’s existing linear services and/or by focusing investment on a smaller total amount of BBC output. These longer-term options need considering most directly for the BBC’s radio and television services rather than for bbc.co.uk – online publishing, as noted above, is instead a candidate for more immediate reductions in scale and scope. Very different approaches will have to be taken to television compared with radio, however, as change in each area is likely to happen at different speeds, even if both continue to converge with online in the longer term. For television, thinking needs to start now about the transition to a future world where catch-up, on-demand and the online availability of archive material are likely to be a much bigger part of people’s everyday lives. That said, such a world is not currently approaching so rapidly that immediate structural change to the television services is required. Traditional patterns of television viewing remain remarkably robust. So while we will continue to push the BBC to address areas of audience concern – for instance across the daytime schedule – it is difficult to see, as things stand, that the removal of a whole service or significant reductions in hours are proportionate at current levels of funding. The process of adjusting television to more widespread adoption of non-linear viewing is going to be something that will depend to some extent on consumer behaviour and will happen in stages over a longer time period than the current BBC Charter. The best approach is therefore to establish some key tipping points in that journey, which will prompt further thinking about the amount and structure of television output. The first of these is the completion of digital switchover in 2012/13. Switchover will be an opportunity for the BBC to re-examine the viewing habits of a fully digital population and decide whether the existing balance of channels needs re-thinking and whether the hours of broadcast of particular channels might be changed – decisions that should be influenced by the relative success and failure of different channels and schedules in delivering distinctive programming. It might make sense, for example, to review the structure and amount of daytime broadcasting if current audience concerns remain about the overall quality of daytime content across BBC One and BBC Two, and if viewers are accustomed to finding the sort of daytime public service content they want on the BBC’s news and children’s channels throughout the day. Much depends on the pace of change. That may be somewhat clearer by 2012. And if or when on-demand programming accounts for a majority of viewing, the BBC will also need to look again at the future of broadcast channels in their current form and at whether it could significantly reduce the number of new hours of content being scheduled and broadcast each day. For radio, it is less clear that any such widespread change in listening habits is on the horizon, and it may be that radio listeners will continue to value a 24-hour, largely non- repeated, linear experience rather than one that replicates the on-demand services that are already widely available elsewhere. The difficult questions about the future of BBC radio are how to make the most mainstream stations more distinctive and how to develop a clear strategy for investment in digital radio. The concept of ‘doing fewer things better’ is therefore relevant if it helps to resolve one of these questions – an issue discussed in more detail below. The immediate future for specific services This section sets out what we think are the implications of our strategy for the existing range of BBC services, and responds to some of the specific proposals that the BBC itself has put forward. Television We believe that “putting quality first” is the right defining principle for BBC television and that aspiring to greater distinctiveness is essential for the BBC. BBC television channels – and BBC One in particular – are vitally important for the BBC, driving audience perceptions of it more than any other service or platform and enabling it to deliver its public service remit to a very broad audience. The BBC’s last strategy review, Delivering Creative Future, focused on anticipating a digital and on-demand future. It was based on reducing spend on most linear broadcast services and reducing volumes of output in many genres in order to focus on ’fewer, bigger, better’ programmes. By the time the Trust was presented with Putting Quality First in early 2010, 91% of television households were digital, around 40% of UK households owned a personal video recorder and a third of UK adults reported using BBC iPlayer. Putting Quality First proposals for BBC television therefore are based on a market context where audiences already have digital choice and a variety of on-demand viewing options, but one where the amounts of viewing of linear television remains strong. While the Executive is not proposing any service closures in television, we think that the stated commitment to improve quality is important and that it fits closely with our belief that BBC output should be more distinctive. Our reviews of BBC One, Two and Four have led us to the conclusion that these services can do more to define their respective roles and enable the BBC to provide high-quality and distinctive programming for all viewers Our consideration of the Putting Quality First proposals has been conducted in parallel with a more detailed review against their service licences of BBC One, BBC Two and BBC Four. We are publishing our interim findings from this review alongside this report. Our overall conclusions are that: BBC One makes a very strong contribution to the delivery of the BBC’s public purposes to large audiences, although we would like to see the channel harnessing its scale and size by being more ambitious and distinctive, in particular by increasing the variety of programming in pre-watershed peak time and showing greater creative and editorial ambition at 9pm. BBC Two also makes a strong contribution to the delivery of the BBC’s public purposes as a second mainstream channel but it needs to provide a clearer alternative to BBC One, even at the risk of reaching fewer viewers. Audiences recognise the channel’s quality but they have also told us BBC Two should distinguish itself more clearly. We are encouraged by the changes that the BBC Executive has started to make to the channel in this regard. To build on these successes, it should now implement its plans to increase the range and depth of factual programming, increase the volume of signature drama and establish a more distinctive role in mainstream comedy. Much of BBC Four’s programming is seen as high quality and distinctive by its audience. Over the coming years the main challenge for the channel is to increase the impact it delivers, particularly in its core areas of specialism. BBC One and BBC Two in daytime make some contribution to the delivery of the BBC’s public purposes but the levels of quality and ambition of parts of the schedule are not meeting audience expectations. The BBC Executive has started the process of changing its programming mix, but we have asked it to explore further how daytime output can improve its quality and distinctiveness within current funding levels. News and Current Affairs are set to become even more important and must be capable of meeting some major challenges Audiences to BBC television news remain high (reaching around 60% of the UK population every week) and our audience research has found that BBC One and BBC Two are, in general, meeting audience expectations at delivering the BBC’s citizenship purpose. We are aware that we have set the Executive some challenging targets for making efficiencies across the board. However, the drive for efficiency must never be at the expense of quality and in this most vital of all genres we have sought to satisfy ourselves that the targets we have set are achievable in a way that is consistent with the BBC’s mission to provide the comprehensive and high-quality news service for which it is respected across the world. In doing so we particularly look for assurance that the right balance is being achieved between rolling, reactive news and the kind of original journalism that is essential to BBC News’ reputation. This is especially important given the significant changes in the global economic and political environment that have taken place in recent years. We welcome the BBC Executive’s commitment to strengthening international newsgathering and reportage in those parts of the world that are growing in geo-political importance and we will consider further the question of how well equipped the BBC is to meet the new challenges confronting it when we review the BBC News Channel next year. Changes in the global political and economic environments have important implications for the BBC’s current affairs output as well, particularly given reductions in current affairs elsewhere. We therefore look to the Executive to provide us with further assurance that it has robust plans to deliver sufficiently prominent and high-quality investigative and analytical current affairs to meet these changing circumstances. We endorse BBC Three’s role as an important part of the overall TV portfolio The Executive proposes no major changes to BBC Three in this strategy review but stresses the channel’s importance in engaging younger audiences with bold and challenging programming. We recently reviewed BBC Three in depth and endorse this view. Our review found that the channel has become an important part of the BBC’s television portfolio, both in terms of its reach to younger audiences with public service programming and its willingness to innovate and take creative risks across all genres. We also found that the channel should become less reliant on overseas acquisitions and on list shows, which the audience does not rate highly in terms of quality. We agree with the Executive that children’s content should be an editorial priority The amount of children’s content from sources other than the BBC has declined in recent years as commercial business models come under pressure. But at the same time the BBC competes for children’s attention with established overseas broadcasters like Disney and Nickelodeon as well as the expanding range of media available to children. When the Trust reviewed children’s services in 2009 we applauded their strong performance in this challenging environment but also suggested some changes to ensure that the BBC remains the cornerstone of high-quality UK children’s programming. This has led to more money being allocated to children’s services, an extra £25.5m over the next three years. We welcome the Executive’s ambition, set out in the Director-General’s strategy review proposals, to invest further in this genre, building on additional funds secured by the Trust in this licence fee period. We note calls from some stakeholders within the production community, including Equity, PACT and the Writers’ Guild, for even greater funding increases. The decision about the future of BBC Switch is one for the BBC Executive Putting Quality First has suggested that targeted offers for teens, Switch and Blast!, should be closed. The Trust’s approval for the closure of Switch is not anticipated to be needed, as this is not a BBC service but a branded zone of programming. We look at Blast! in greater detail on p.39 of this report. As stated above, however, we do not believe the BBC should define boundaries in terms of audience groups as it has a duty to promote the public purposes amongst all audience groups, and we will expect the BBC to continue to serve teenagers on television in different ways. National Radio networks The strategy review endorses the current direction of travel of the existing analogue radio portfolio and we support this The review concludes that Radio 1 must work hard to maintain its current level of distinctiveness and this is consistent with the comprehensive service review that we recently carried out on that service, which emphasised the need to focus on a young audience that may be less well served by other radio stations. Putting Quality First outlines changes to Radio 2 which are designed to enhance that station’s distinctiveness and these largely reflect the conclusions of our own review of that service which we published earlier this year. No major changes are proposed for Radios 3, 4, 7 or 5 Live. We are currently reviewing Radios 3, 4, and 7 and will report our findings in the winter – at which point we will respond to the Executive’s proposal to redefine Radio 7 as Radio 4 Extra. We will review both Radio 5 Live and Radio 5 Live Sports Extra in 2011. The Executive’s plans for radio focus on the digital radio portfolio The Executive concludes that the current strategy for promoting digital radio is inadequate and that action needs to be taken that will nurture rather than stifle the commercial market. This is particularly important given the BBC’s specific duties to encourage the development of digital radio as set out in its sixth public purpose. The Executive’s key recommendation is to close both the Asian Network and 6 Music with the intention of maintaining the overall level of investment in digital radio but targeting it on a more distinctive, better focused portfolio. The take-up of digital radio has been relatively disappointing As Putting Quality First notes, while listening to digital radio has grown and there is evidence to suggest that the BBC’s portfolio of services has contributed to this growth, overall digital listening remains low. It accounts for only around a quarter of total listening and the majority of digital listening is still to analogue stations. DAB remains the principal method of digital listening and its take-up is widely regarded as having been disappointing overall. This is attributed in part to the constraints it suffers in terms of mobility – for instance, its general non-availability in cars. Internet radio is seen by some as a potential successor technology to DAB, although it suffers from similar if not worse mobility constraints. Industry has expressed concern to us that Radio 1 and Radio 2 are not distinctive from services offered by the market, particularly in peak time. Radio 5 Live was the other station suggested to have moved away from distinctive programming in recent years. Industry responses to our consultation have called for the BBC to better support DAB and highlighted coverage issues with the technology – Digital Radio UK, Absolute, GMG and UTV have all called for an increased BBC role and highlighted the need to develop industry consensus on a way forward. It is against this background that the Executive proposes the closure of two digital services. Our foremost concern when considering the case for closing two digital services is whether this would be in the interests of licence fee payers The Executive’s case for the closure of both the Asian Network and 6 Music rests in part on the principle of doing fewer things better and in part on the ability of the revised digital radio portfolio to be more effective in driving digital take-up which remains an important goal for the BBC, despite the need for the greater clarity on overall policy that we have noted. As ever, we place particular importance, in considering any proposal from the Executive, on whether it is likely to enhance the BBC’s ability to meet the needs of audiences with high-quality, distinctive services and content that build public value. Although clearly of value to some audiences, Asian Network has had performance difficulties for some time We have noted in successive Annual Reports that the Asian Network’s performance has been a disappointing one. The service’s reach has declined from 18% of Asian adults to 12% in 2009, which amounts to around 300,000 a week. Consumption by younger listeners has declined the most and the most recent audience figures show reach continuing to decline. This performance contrasts with the relative success of commercial stations targeted at the Asian community, which have seen an increase in listening in recent years, and of community radio. We also note that the station’s management has undertaken a series of editorial changes over the last three years in an attempt to improve the station’s performance. All this is not to say, however, that Asian Network does not deliver some real value to its audience. For instance, 48% of Asian Network listeners do not listen to any other BBC radio station and of the rest of the portfolio only Radio 1 reaches the Asian community at all effectively. While it is true to say that awareness of the station has fallen to around 27% of Asian adults (down from 41% in 2005) awareness of all BBC radio stations has fallen over this time and Asian Network awareness remains comparable to that of other digital stations. As part of our consultation we received 1,572 online responses, 1,437 email responses and 42 letters about the Asian Network. A key theme that emerges is that of how Asian Network nurtures the idea of being a British Asian – rather than just a member of a local community – as well as recognising the diversity within British Asian communities. There is clearly a risk that this would be lost if it were to be closed as a national service. Asian Network also provides an important outlet for the Asian music industry and means of encouraging new writing and performing talent, all points which have been made in response to our public consultation. While the station is clearly a distinctive offering and thus consistent with the strategy we are setting for the BBC we nonetheless acknowledge that it has some long-running performance difficulties. If, therefore, the Executive has concluded that that station’s problems are such that they cannot be addressed effectively then we expect them to come forward with a different proposition for meeting the needs of this audience in more effective ways, although we stress the importance of any such proposal taking account of those aspects of Asian Network that are of undoubted value and that its closure would put at risk. Any new proposition would be likely to require a Public Value Test. This would allow us to assess formally the potential loss of public value that closure would entail, the public value that the new proposition would create and the market impact of any change. The Trust has not been convinced by the case for the closure of 6 Music The Executive’s proposal to close 6 Music derives from an underlying ambition to; do fewer things better and thereby focus the BBC more effectively on its core mission; ensure that it plays its full part in promoting the move from analogue to digital; and have due regard for the BBC’s competitive impact. While we endorse this ambition the Trust is not convinced by the case for closure, as presented. We agree the BBC has a role in promoting digital radio and we want to see further proposals for achieving this but note that 6 Music’s current performance is comparable with that of other digital services While the BBC has a clear duty to help drive digital take-up we acknowledge that it will be difficult for it to develop a coherent strategy for doing so without both greater clarity from government in terms of overall policy and the active involvement of both the BBC itself and the commercial sector in helping to determine what that overall policy should be. We believe it should be a priority for all stakeholders to work together to resolve the issues facing digital radio as soon as possible and to plot a clear way forward. In the meantime, 6 Music is making an overall contribution to digital radio listening similar to other BBC digital-only services. We are not convinced that removing the service, and reallocating its budget (around £9m per year) to spend on other aspects of digital radio, will make a decisive difference to digital take-up. The idea of moving 6 Music content into a new ‘2 Extra’ station, a concept raised in public debate since the publication of the Executive proposals, prompted consultation responses arguing that this would not constitute ‘doing fewer things better’ and could in fact have a negative market impact. We agree that BBC Radio needs to take its market impact seriously but that of 6 Music is currently minimal and likely to remain so In our review of this service earlier this year we concluded that it was both well-liked by its listeners, was highly distinctive and made an important contribution to the public purposes. At the time of review it had a reach of 600,000 listeners which was comparable with that of other BBC digital radio stations and we concluded that in terms of value for money it was also comparable with them. We concluded that there was scope to increase its reach whilst at the same time staying within the constraints of both its distinctive remit and current budget and we challenged the station’s management to do this. Since the publication of Putting Quality First in March and the announcement of the Executive’s plan to close the service there has been a significant show of public support for the service. 78% of the 47,933 online consultation responses place specific focus on 6 Music as do more than 25,054 separate emails and 242 letters – in each case the great majority of responses oppose any plans for closure. The service’s reach has also risen substantially since then to 1 million listeners a week. We think it is likely that the next quarter’s figures (April to June) which will be published in August will also show strong reach. This suggests that it may be possible to grow the audience without losing any distinctiveness, although we will need to look at longer-term trends before being absolutely sure of that. Arguments advanced by respondents to our consultation who oppose the service’s closure include the view that its programming is unavailable elsewhere and that the commercial sector would be unlikely to fill the space vacated by it; the difficulty of transferring its programming onto other BBC networks; the removal of an outlet for new and emerging artists to get their music heard; and the station’s potential role in driving digital, particularly given the recent increase in its reach. We recognise that any proposal to close a BBC service is unlikely to be popular with those who use it. However, we do need to consider the question of whether the future growth of the service would significantly impact the market. We note that throughout the period of our consultation we have received no evidence from the commercial radio sector to suggest that 6 Music presents any kind of threat either now or in the future so long as it remains true to its distinctive remit. We also note the strong view expressed by many in the music industry that 6 Music plays a very valuable role in the cultural life of the UK that would not be easily replaced and that would not be filled by the commercial sector. We do not think that the station is a threat to the commercial sector so long as it remains true to its remit, but we do acknowledge that the risk – identified by the BBC Executive – that in the absence of effective safeguards efforts to broaden the station’s appeal could cause it to drift closer to the mainstream. For this reason we set out a number of such safeguards in our review and as with all our recommendations, we will monitor them both for their implementation and effectiveness. Recent discussions with the Executive have focused on plans to further enhance the distinctiveness of the BBC’s popular music portfolio The Executive has suggested to the Trust, in discussions following the publication of the Strategy Review, that moving 6 Music’s distinctive programming on to Radio 1 and Radio 2 would be the best way of enhancing the overall distinctiveness of BBC music radio. The Executive also argues that the revised portfolio would be more efficient by virtue of the reduction in scale of the pop music portfolio. We note the RadioCentre’s support for this approach in their submission to the Trust’s consultation. The Trust itself strongly supports a push towards increasing the distinctiveness of Radio 1 and Radio 2, though we note there are a variety of ways to do that, and the importing of 6 Music content and presenters may not be the most effective. We recognise the argument that it could be possible to deliver greater public value than at present to larger audiences and in a more efficient manner, and would be willing to consider the idea that changes to 6 Music could be part of a transition in particular to a differently-constituted Radio 2. However, there are some clear risks that would need to be addressed. On the one hand, given how distinctive 6 Music’s content is, it might be marginalised and its audience value lost when subsumed into larger stations. On the other hand the incorporation of this content into Radios 1 and 2 could lead to a significant loss of value for the current audiences to those stations. Our audience research suggests that radio listeners’ loyalty is more to particular stations than to individual shows or presenters and so fundamental changes to three BBC stations may put at risk a good deal of audience goodwill. We would be prepared to consider a formal proposal for 6 Music closure only if the Executive could present a compelling case to explain how a re-casting of music radio would fit with a broader strategy for the future of BBC radio We would not expect to see any proposal for changes to 6 Music unless four criteria were met so that there was: • a clear link between a new strategy for music radio and the strategy for digital development • evidence that changes to increase the distinctiveness of Radio 1 and Radio 2 were already under way in line with our recent service reviews • a very clear explanation of the potential for further increases in the distinctiveness of Radio 1 and Radio 2 – in particular how 6 Music content could be put into those revised schedules and what the audience impact would be • reassurance that there would be long-term protection for the type of distinctive content currently available uniquely on 6 Music We want the BBC Executive to focus next on developing an overall digital strategy and delivering greater distinctiveness on Radio 1 and Radio 2 As things stand, we have not seen sufficient evidence to support the case for 6 Music’s closure, although it has been helpful in highlighting the need for further work on the BBC’s digital strategy. Although we recognise that it could make sense to reconfigure the portfolio of radio services over the longer term, for the time being the focus for radio strategy ought to be: • To deliver greater distinctiveness on Radio 1 and Radio 2 • To put together a plan for future digital development, based on Government policy and on detailed discussion with the commercial radio industry and Digital Radio UK Local Radio We welcome the aim to serve audiences to local radio better by improving the quality of output The Trust has previously commented on the gradual decline of listening to the BBC’s network of English local radio stations in its Annual Report. We welcome the Executive’s commitment to define a distinctive role and mission for local radio and to ensure that quality is maintained. The Executive’s strategy includes a new commitment to 100% speech at drive-time and a renewed emphasis on journalism that holds local political figures to account. The Executive has also suggested that editorial effort and resources should be focused on increasing the quality of key slots at breakfast, mid-morning and drive-time funded by sharing content between some local radio stations at other times of the day. We will be working with the Executive to ensure that the appropriate regulatory process for any changes to English local radio is followed. As a first step, we expect to receive an application to carry out a trial of the strategy in one or more local areas. We are now amending our previous commitment to carry out a service licence review of English local radio in 2010 as we think it may be more useful to carry out a review in 2011 when any changes have taken place. Online The Executive plans to reduce the scope and scale of BBC Online and to give it a clearer editorial focus The Executive’s plans for BBC Online include: • Tighter editorial focus and higher standards of distinctiveness (these are to be reflected in a new performance management system with clear criteria for both ceasing activity and commencing it) • Halving the number of top level ’domains’ • Spending less on the service by 2013 • Substantially increasing the number of external links Much of what the Executive proposes is consistent with the findings of our own review, particularly the need for clearer editorial focus We published our review of BBC Online in the spring of 2008. We found that the site was highly valued by a broad range of users, performed very well on quality measures and made a major contribution to the delivery of the public purposes. At the same time we were aware that there were many operators in the commercial sector for whom a lack of clarity over the scope of the BBC’s activities was a major concern. It was clear then, as it is now, that this is a highly contested area and one in which the BBC, as a publicly funded organisation, has to tread particularly carefully, mindful of the fact that at this still relatively early stage in the internet’s development, business models in the commercial sector are still nascent. Consultation responses from the industry in this space are somewhat mixed, with many opposed to the cuts, some believing the principle to be sound but the strategy lacking detail as to what the cuts would mean in practice, while others believe the proposed change would not go far enough. Some have observed that the strategy review does not give enough detailed consideration to how online services can deliver the public purposes, and that this will be an area of increasing importance in the future. Evidence from our recent public consultation and audience research suggests that licence fee payers hold a range of different opinions about the proposed changes to Online. Almost all respondents praise BBC Online’s content noting that it is the scale and breadth of its content which makes the BBC stand out from other providers. However, while some question whether the BBC should be making any cuts in this area given the growing importance of new media, others believe there has been some ‘creep’ in terms of content coverage and welcome the proposed alignment to the BBC’s content priorities. Our key conclusion in the service review was that the service needed more active management editorially, strategically and financially if it was to both continue to serve licence fee payers well and take proper and full account of the many markets in which it operates. In particular we required a new system of management controls to be put in place that would, both prospectively and retrospectively, consider the development of the site in the light of its public value, distinctiveness and potential market impact. While we are satisfied that some real progress has been made it is clear that the Executive believes that more can be done to more effectively define the scope of the site and to provide it with a clearer editorial rationale. This is a view echoed by industry respondents to our consultation. We endorse the concept of a reduction in funding for the site The Executive proposes to reduce the budget by 25% with a view to achieving both improved editorial focus and making clearer the scope of the site. Given the current scale of the site and the need to take account of commercial concerns in what is still a nascent market, we agree with the proposal for a clearer, more focused editorial proposition and believe that this is likely to be of benefit to both users of the site and commercial operators. We endorse the concept of a budget reduction that achieves this clearer focus. While we agree that the scope of the site should be reduced we will want more detail on how this will be achieved However, before we could approve the Executive’s plans for BBC Online we need to know much more about how the rescoping exercise will be implemented. In particular we will want to understand what proportion of the savings are to be made from changes in scope versus efficiency gains – the key strategic imperative, from the Trust’s point of view, is to address the issue of scope. Online is a key part of the BBC’s offer – both as a means of getting to programmes, through iPlayer, and as a home for other valued and distinctive public services (including, for example, the recent election coverage, regular archive collections, collaborations such as that with the Tate and the Democracy Live service that provides searchable access to debates in all the UK’s Parliaments and Assemblies). This reinforces our belief that strong editorial leadership is required, and means that cuts will need to be carefully targeted to allow room for future growth and creativity in areas the market will not support. Putting Quality First commits to only creating content for the web that fits one of the five content priorities and is high quality and distinctive. It further outlines some potentially useful criteria for justifying new activity. While this is helpful it is only a beginning and the goal must be some stringent criteria that will set clear boundaries around the site’s activities. We are strongly of the view that to achieve this BBC Online must develop an over-arching editorial rationale for the BBC’s online presence. The core BBC online offer could be much more clearly focused around the key products that deliver much of the public value of the site – including core services such as news, sport, weather and iPlayer that between them drive over 80% of the total traffic. We also look for greater clarity as to the correct balance between audio-visual content – which plays to the BBC’s core strengths – and text-based content. Alongside core services, there will remain many other areas of output that are distinctive and of high quality. We believe that every genre and area of activity should have its own rationale that clearly sets out the particular public value that the BBC adds above and beyond market provision. This will require a thoroughgoing review of the whole site and positive engagement with the wider industry. We therefore look to the Executive to present a plan and timetable for this work for our assessment. We will want to be able to: o Assess the level of audience demand in different genres and the level of public expectation of the BBC o Compare BBC provision against market provision o Identify gaps in market provision and the potential for the BBC to add value in those areas, with a view to maximising the delivery of the BBC’s public purposes This is a major piece of work that will need to take account of the dynamics in each of the markets considered and be capable of being updated on a regular basis. We accept that this will not be completed in short order but would be concerned if it took any longer than a year to complete. Within this context we endorse the Executive’s commitment to transforming BBC Online into a window on the web by substantially increasing the number of external links and partnering with external providers. Again, this is consistent with the recommendations of our own review. We believe that tighter editorial focus will require stronger editorial leadership As a result of our review the Executive implemented some wide-ranging changes to the management of BBC Online. While there has been real progress in putting more effective financial controls in place the Executive has concluded that there is a need to further revise its approach to the editorial leadership of the service. We endorse this aim and see this as especially important given the high priority we attach to the establishment of a clear editorial rationale. Given recent changes to online management, we are delaying our planned review of the effectiveness of management controls until the new system has had an opportunity to establish its effectiveness. We will give details of our plans for this review when we publish our 2011/12 workplan next spring. We also think that this provides an opportunity to achieve greater clarity about the correct balance between expenditure on content on the one hand and technology and development on the other and we will expect the BBC Executive’s ongoing work to address the question about what that balance should be, before we are asked to approve a new, reduced, service licence budget. We approve the Executive’s proposal to close Blast! Blast! is a part of the BBC Online service that uses outreach to encourage teenagers’ skills development and particularly targets those in deprived areas and other hard to reach audiences. A relatively high percentage of users (around 40%) are from ethnic minorities. The Executive has proposed the closure of Blast! on the grounds that it is failing to reach its target audience effectively. The proposal requires our approval because a change to the service licence is needed. We have considered the case for closure within the context of a thorough strategic review of the BBC’s formal learning portfolio for under-19s, carried out by the management over the past year. The case for closure rests on the service’s relatively high cost per user and the conclusion of the formal learning review that there is a case for concentrating resources on a core portfolio of offerings that are either of proven value or clear potential. We have considered these arguments carefully, particularly mindful of the target audience for Blast! On balance we have concluded that the Executive has made a convincing case given high cost and low usage, and that the proposal is consistent with the general principle of doing fewer things better. Given the low usage numbers for Blast! it is unsurprising that we received few consultation responses regarding its closure. That said, those who did make submissions – including teachers and young people who had taken part in Blast! projects – consider the service very valuable and will regret its closure. In approving the Executive proposal, we have sought assurances that the lessons learned from Blast! about how to appeal to hard to reach teenagers will be applied to other parts of the portfolio and reflected in the evolving strategy. In approving its proposal, we sought assurances that as the formal learning strategy develops, the Executive will conduct Competitive Impact Assessments as appropriate and will provide information in good time to the wider educational supply industry, in line with new procedures agreed by the Trust earlier this year. An Open BBC Putting Quality First includes a section on ‘setting new boundaries’ that seeks to address concerns about the impact of the BBC on other companies, including proposals to: • Leave a ‘lead role’ in serving particular audiences and age groups to other broadcasters • Place limits on spending on sports rights and acquisitions • Rule out a move into areas such as web search or social networking • Establish clearer BBC behaviours, for instance around partnership, market impact and transparency We agree with the concept of setting new and clearer boundaries to what the BBC will and will not do and we welcome the Executive’s proposals as a recognition that the BBC can do more to understand and limit the impact it has on the market. For instance, complete clarity that the BBC is going to focus its online activities on its key role as a content provider, rather than an aggregator, search engine or social network, is helpful (the Trust would not in all likelihood anyway support a BBC move into this sort of online territory where there are already established companies providing effective services). However, we are not convinced that boundaries are best articulated through specific and unchanging limits on particular audiences or particular types of programming – a criticism that has been levelled at some of the BBC Executive’s proposals. In particular: • The Trust does not accept the idea that the BBC should retreat from particular audience groups – it will always retain a responsibility to provide something for all audiences. Responses to our consultation reinforced this view. Channel 4, for instance, states that it does not want to be left alone in providing television for younger teenagers, but wants the BBC to play a role too. The Trust welcomes recent clarification from the BBC Executive that it intends to continue playing that role. • We will consider further the proposal for a cap on sports rights spending when we undertake a review of the value for money of BBC sports rights bidding processes later this year. But for overseas acquisitions, while we are content for the Executive to impose a financial limit we do not intend to formally incorporate it into the Trust’s measurement governance framework while acquisitions remain at roughly the current level – a minor part of the schedule but with some definite benefits in terms of quality, distinctiveness and value for money. Our principal concern is to make sure that acquisitions of the right sort are made – in order to drive quality and distinctiveness and not as a replacement for investment in UK content. 6 Details of these plans for future engagement can be found at http://www.bbc.co.uk/bbctrust/our_work/complaints_appeals/fair_trading/besa.shtml We think one of the most productive ideas in the Executive’s strategy proposals was the suggestion that new BBC behaviours could contribute to the setting of clearer boundaries, and that is a concept we want to develop further. Our starting point is that boundaries should not only be about the BBC trying to say what it will not do in future. They should also be about the BBC telling the rest of the industry as straightforwardly as possible what it will do – what is in its future plans – in every area of activity. Industry responses to our consultation suggest that there is a real desire for that level of openness from the companies that operate in the same markets as the BBC. This new approach would mean that even if the boundary of BBC activity is changing, everyone gets fair warning of that and a chance to register any complaint or concern. The key behaviours would be: • Clarity • Transparency • A willingness to listen to and debate alternative viewpoints A potential model for this approach now exists in the area of formal learning where, following a Trust fair trading investigation, the Executive has put in place extensive plans to keep other educational suppliers informed of its future plans6. Areas for further consideration could include: • any future development of online and mobile technologies • further development of BBC Statements of Programme Policy to include more detailed and/or more regular statements of intended commissioning/scheduling strategy on the major television channels • putting a wider range of BBC performance information into the public domain – for instance the AI (Appreciation Index) scores that illustrate audience reaction to particular programmes. We want to continue thinking about how we could help develop a more open BBC, and how we might measure that development, in the next few months before we reach our final conclusions. This thinking forms part of our desire to see the BBC Executive taking greater responsibility upon itself for actively considering and managing its market impact. We will also think again about the issue of partnership, which was the focus of a good number of consultation responses from the broadcasting industry. Some are sceptical about whether the BBC will ever be a natural partner. Others retain an appetite for genuine partnerships that can deliver benefits both to the BBC and others, in the ultimate interests of licence fee payers. This is particularly true for other cultural organisations that see the opening up of the BBC archive as a key area for future development. It is an area that we will return to in our final conclusions. Next phase of work This strategy review is an iterative process, and we will continue to work on it, together with the BBC Executive, between now and an announcement of final conclusions in the autumn. We recognise that it will not be straightforward to bring about cultural change inside the BBC on a major scale and we will do further work before we complete this strategy review on how the Trust can help create the right incentives and promote the right behaviours within the BBC. We will also do more thinking, in particular, about: • the strategy for the distribution of BBC content and how we should pursue the principle of universal access to BBC services • future reporting and measurement of the BBC’s progress against the objectives we set (in particular how to develop better measures of quality and distinctiveness) • what specific steps the Trust could take to promote greater BBC openness and clarity about boundaries • what further steps are necessary to increase efficiency, account for different areas of cost and make sure licence fee payers are asked for no more money than the BBC needs. We will finalise our conclusions on our reviews of BBC One, BBC Two and BBC Four and our final report will include specific actions for the BBC Executive to implement to provide the more distinctive offering that audiences expect from BBC television. We will review the further work we have asked the BBC Executive to pursue to implement our immediate requests for increased financial transparency and action on senior pay, as well as the proposals it is putting together on a strategy for the BBC’s global activities (through its commercial activities and through the World Service). By the autumn, at the end of this process, we will be in a position to set out a final strategy for the BBC for the rest of this Charter period up to 2016, incorporating: • The commitments, changes and further work we will require from the BBC • The measures we will use to determine whether those changes are being made The result should be a clear Trust agenda for what we will do to get the best out of the BBC. We will want to be as transparent as possible about that so that our progress can be judged by the people we are working for – licence fee payers. Annex: BBC Executive proposals Putting Quality First The BBC’s mission is to inform, educate and entertain audiences with programmes and services of high quality, originality and value. Its constitutional and financial independence, its heritage and its relationship with audiences give it a unique opportunity to enrich and sustain public space here and around the world. The public expect the BBC to be a wholly reliable source of accurate and impartial news; a tireless supporter of originality and excellence; a guaranteed investor in British talent; and an upholder of the highest values and standards. In uncertain times, they want it to remain central to their own lives and to the life of the UK—a constant companion in moments of crisis and celebration. But media is changing profoundly, and the BBC must change too. It must articulate its public service mission more clearly than ever before. It must explore new ways of delivering that mission—and of ensuring that the benefits of digital can be enjoyed by all. But it must also recognise the challenges facing other media, and address legitimate concerns about its scope and ambitions. This strategy directs the BBC to put quality first; do fewer things better; guarantee access to all; make the licence fee work harder; and set new boundaries for itself.— • The best journalism in the world • Inspiring knowledge, music and culture • Ambitious UK drama and comedy • Outstanding children’s content • Events that bring communities and the nation together Putting quality first means, on this strategy, delivering these five clear content priorities at higher quality across all of the BBC’s services—including by: • Reprioritising nearly £600m a year, around a fifth of the BBC’s cost base, to higher quality content by 2013 and, on a continuing programme, across everything the BBC does • Investing £50m a year from within this total to raise quality and originality including across BBC Two, children’s output and journalism • Committing from 2013 not to spend less than 90p in every licence fee pound on high-quality content and getting it to audiences. DOING FEWER THINGS BETTER—making tough choices to improve our services Doing fewer things better means, on this strategy, significant changes to the BBC’s service portfolio: • Focusing the BBC’s website on the five content priorities • Halving the number of sections on the site and improving its quality by closing lower performing sites and consolidating the rest • Spending 25% less on the site per year by 2013 • Turning the site into a window on the web by providing at least one external link on every page and doubling monthly ‘click-throughs’ to external sites • Increasing the quality of local radio: boosting investment in local news at breakfast, mid-morning and drivetime using resources released by sharing content at other times • Recommending the closure of Radio 6 Music: focusing popular music output on Radio 1 and an increasingly distinctive Radio 2, using the resources released to drive digital radio in other ways • Recommending the closure of Asian Network as a national service, and using the resources released to serve Asian audiences better in other ways • Recommending the closure of teen offerings BBC Switch and Blast! GUARANTEEING ACCESS Working to ensure that UK audiences can always: • Get BBC services free at the point of use, in ways and on devices that suit them • Catch up on programmes for free on the BBC’s website, at home and on the move • Access the best of the BBC’s current and future library of programmes Guaranteeing access means, on this strategy: • Making internet-connected television a reality and a success, and continuing to support other partnerships for free-to-air platforms • Guaranteeing free access to independent, impartial news including online • Opening the BBC’s current and future programme library, as well as working with partners like the British Library, BFI and Arts Council England to bring other public archives to wider audiences. MAKING THE LICENCE FEE WORK HARDER—reducing the cost of running the BBC Making the licence fee work harder means, on this strategy, focusing the BBC’s spending on what matters most to the public by: • Reducing the cost of running the BBC by a quarter: from 12p in a licence fee pound today to under 9p by the end of the Charter in 2016 • Reducing senior management numbers, freezing pay and suspending bonuses • Reinvesting savings in new UK programmes serving the five content priorities • Striving to make every licence fee pound benefit the wider UK economy by at least £2, and spreading that value across the UK. SETTING NEW BOUNDARIES—accepting clearer limits and new behaviours for the BBC Setting new boundaries means, on this strategy: • Reducing spending on imported programmes and films by 20%, capping it thereafter at no more than 2.5p in every licence fee pound • Capping sports rights spending at 9p in every licence fee pound • Recognising the lead role commercial radio plays in serving popular music to 30- 50 year-olds • Recognising the lead role other broadcasters play in serving younger teenagers on TV • Never more local: undertaking not to launch services more local than at present in England • Defining publicly which areas of activity BBC Online will not undertake. Clearer BBC behaviour means, on this strategy: • Prioritising quality over quantity whenever a choice is required • Making the BBC the most open and responsive public institution in the UK • Making explicit the BBC’s commitment to consider the market impact of major decisions • Making partnership the BBC’s ‘default setting’ for most new activities • Ensuring the tough limits set by the BBC Trust’s recent review of BBC Worldwide are fully implemented, with new limits on acquisitions and a drive towards non- UK activities.