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Annual Report and Accounts

2003/2004

Purpose, vision and values

Purpose

Our purpose is to enrich people’s lives with programmes and services that inform, educate and entertain

Vision

Our vision is to be the most creative organisation in the world

Values

Trust is the foundation of the BBC: we are independent, impartial and honest

Audiences are at the heart of everything we do

We take pride in delivering quality and value for money

Creativity is the lifeblood of our organisation

We respect each other and celebrate our diversity so that everyone can give their best

We are one BBC: great things happen when we work together

Contents

2 Chairman’s statement

4 The Hutton Inquiry

6

How the BBC is run

8

Board of Governors

10

Executive Committee

12

Governors’ review of objectives

Governors’ review of services

24 Television

32 Radio

40

New media

42 News

46 Learning

48

Nations & Regions

54

BBC World Service & Global News

58

Performance against Statements of Programme Policy commitments 2003/2004

Governors’ review of commercial activities

68

BBC Worldwide Limited

70

BBC Ventures Group Limited

72

BBC people and talent

74

Being accountable and responsible

82

Compliance

97

Financial review

99

Financial statements

136

Broadcasting facts and figures

147

Getting in touch with the BBC

148

Other information

BBC Annual Report and Accounts 2003/2004

Chairman’s statement

This is a transitional document.

Traditionally the Annual Report and Accounts has been as much about marketing the BBC as holding it to account – and as much about management’s view of its own performance as about the Governors’ view of management’s performance.

This Annual Report is different. It is the first step in turning the BBC’s Annual Report into a document owned by the Governors, which evaluates the performance of BBC management against publicly stated objectives and commitments. We intend to take this process further in future years.

The reforms to the BBC’s system of governance outlined in our Building Public Value document make clear that we mean to move rapidly to strengthen the Governors’ clear independence from management. Governors will provide themselves with the resources to commission independent advice to enable us to carry out close and rigorous scrutiny of BBC programmes and services. Annual Reports will be explicitly Governors’ reports and primarily concerned with assessing performance and holding management to account.

This Annual Report is different in another way too. There is no Director-General’s report, because the new Director-General, Mark Thompson, did not work for the BBC in the period under review.

Neither, of course, did I. I watched the Hutton Inquiry and its aftermath unfold as just another licence payer. And well before I was appointed, the BBC had begun to learn the lessons and – as the

2

section on Hutton in this report makes clear – to make changes to some of the BBC’s editorial processes and to the way it handles complaints. I am confident that the implementation of these changes will allow us to draw a line.

But I do want to make one thing clear. The BBC is not worth having if it is not editorially independent. I and the other Governors will defend the BBC’s right to do difficult and courageous journalism about powerful people and powerful institutions. That kind of journalism – set within a strengthened editorial framework – must remain one of the hallmarks of the BBC.

The Hutton Inquiry made people reflect on the enduring value of a strong and independent BBC to Britain. When the BBC lost both its Chairman and Director-General in the space of 24 hours it did feel like a watershed. At that moment it is not surprising that some people began to contemplate the prospect of Britain without the BBC.

And the truth is that the BBC is not inevitable. It exists because it earns its place in the affections of our audiences by enriching lives through information, education and entertainment. The BBC has constantly to renew and refresh the bonds that link us to those audiences. We have to listen, learn and respond – and then go back and do it again. As Governors, effective engagement with the British public and responsiveness to their concerns must lie at the heart of our role as trustees of the public interest.

It is sometimes claimed that the BBC is unaccountable and largely self-regulating. But one of the surprising things I’ve discovered since I started as Chairman is the large number of regulations against which the BBC is already measured. Until recently the BBC had to deal with just three externally imposed quotas. As a result of the 2003 Communications Act we now have another 52 to deal with. And there are more to come next year.

It is right that we justify our privileged position. But it is important that we have the appropriate targets in place to ensure the BBC’s programmes and services reflect what really matters – the needs and interests of our funders, the licence payers.

In future, the Governors will assess performance against four key targets: reach, impact, value for money and quality. In judging the outcomes we will take an overall perspective.

The BBC delivers value well beyond its programmes and services. The case we are making in the Charter Review process is that the BBC is worth keeping because of the immense amount of public value it delivers. Public value means not just the BBC’s value to people as individuals, but also its value to people as citizens, and beyond that, its value to the broadcasting and creative industries as a whole.

For the individual, the BBC’s value is the information, education and entertainment it provides. For the citizen, the BBC’s value is its contribution to the wider social, democratic and cultural health of the UK. And for the broadcasting and creative industries, the BBC’s value

BBC Annual Report and Accounts 2003/2004

lies in its investment in training and creative production.

The aims of the BBC are to underpin citizenship, enrich cultural life, contribute to education for all, make the UK a more inclusive society, and to support the UK’s role in the world.

This is the case we will be making over the coming months as the debate over the renewal of the BBC’s Charter gathers pace.

The strength of the BBC is its people. And there are some people I want to pay tribute to here.

The first is my predecessor as Chairman, Gavyn Davies, who gave so much to support the ideals of the BBC and who showed great courage and dignity in the manner of his departure. It is one of the ironies of BBC history that a Chairman resigned having defended the independence of the BBC.

The next is Greg Dyke. As Director-General, Greg did a huge amount to restore and build staff morale. And his championship of Freeview was the crucial decision that has made the switch-over to a fully digital Britain a realistic prospect. Freeview showed Greg’s vision and leadership and the Governors were right to support him in this initiative.

On behalf of the Governors I would also like to thank Richard Ryder for stepping in as Acting Chairman at a particularly demanding moment. On behalf of the Governors, too, I want to put on record our thanks to Mark Byford. As Acting Director-General he played a key role

in steering the BBC through one of the most difficult periods in its history.

One final tribute – to Alistair Cooke who died earlier this year aged 95, only a few weeks after delivering his final Letter from America on BBC Radio 4 and BBC World Service. Cooke was a great reporter and a wonderful broadcaster – shrewd, thoughtful and humane. He wrote like an angel and he could write with equal insight and vibrant detail about an extraordinary range of topics: politics, history, space travel, jazz, golf. He respected his listeners, and his listeners loved him. The result was the world’s longest running speech radio programme. The BBC can learn from that.

Michael Grade

Chairman 17 June 2004

BBC Annual Report and Accounts 2003/2004 3

The Hutton Inquiry

Chronology

On 29 May 2003 Andrew Gilligan, Defence Correspondent for Today, broadcast a number of reports about the dossier published by the Government in September 2002 entitled Iraq’s Weapons of Mass Destruction.

At 6.07am he did a live ‘two-way’ (a report in the form of an interview with a presenter) which raised serious questions about the dossier, in particular its claim that Iraq had weapons of mass destruction ready for use in 45 minutes. Andrew Gilligan said “one of the senior officials in charge of drawing up that dossier” had told him “the government probably knew that the 45-minute figure was wrong even before it decided to put it in”.

Andrew Gilligan also reported his unnamed source as saying that “Downing Street … ordered it [the original draft of the dossier] to be sexed up, to be made more exciting and ordered more facts to be discovered”; and that the published dossier upset the Intelligence Services because “it didn’t reflect the considered view they were putting forward”.

That weekend, the Mail on Sunday published an article by Andrew Gilligan naming Alastair Campbell, the Government’s then Director of Communications, as the person identified by the source as responsible for including the 45-minute claim in the dossier.

The Government strongly denied these stories. The BBC stood by its decision to broadcast the Today item. There was a private exchange of correspondence between the Government and the BBC. In late June, Alastair Campbell called for an apology from the BBC during a televised

4

hearing of the House of Commons Foreign Affairs Committee, and released one of his letters of complaint to the press. The BBC in its reply again stood by its decision to broadcast the report.

At the end of June, Andrew Gilligan’s source, Dr David Kelly, a Ministry of Defence (MoD) scientist, told his manager that he had spoken to Andrew Gilligan and might be a source for the Today report.

While the MoD was investigating this (and before Dr Kelly’s identity became public) the BBC Chairman, Gavyn Davies, called a special meeting of Governors on 6 July. A statement afterwards said the Board was “satisfied that it was in the public interest to broadcast Mr Andrew Gilligan’s story”. The Governors criticised two aspects of Today’s handling of the story: they said the production team “should have kept a clearer account of its dealings with the MoD”; and “could also have asked the No 10 Press Office for a response prior to broadcasting the story”. The Governors also said they intended to look again at the rules for BBC reporters and presenters writing for newspapers.

On 9 July, Dr Kelly’s identity was made public by the MoD. On 18 July, he was found dead near his home in Oxfordshire. The BBC made a statement expressing deep regret for the death of Dr Kelly and confirming that he had been Andrew Gilligan’s source. The Government asked Lord Hutton to investigate the circumstances surrounding the death and he published his report in January 2004.

During the inquiry the BBC accepted it had made mistakes and Andrew Gilligan

BBC Annual Report and Accounts 2003/2004

accepted that some of his reporting had been inaccurate. The BBC admissions were: the 6.07 broadcast should have been scripted the 6.07 broadcast contained inaccuracies.

It did not distinguish sufficiently between what Dr Kelly had said and Andrew Gilligan’s interpretation of what he had said. The BBC accepted that Dr Kelly did not say the Government had put in the 45 minutes claim when they probably knew it was wrong; nor did he say that Downing Street ordered more facts to be discovered the BBC accepted that one of its replies to Alastair Campbell contained two factual errors the BBC accepted that Andrew Gilligan’s notes should have been examined earlier than they were the BBC accepted that, although Alastair Campbell had not taken up an invitation to refer his complaint to independent investigation, the BBC itself should have referred his letter of 26 June to the BBC Programme Complaints Unit for independent investigation

In his conclusions, Lord Hutton exonerated the Government of almost all blame for their handling of the events investigated. On the central issues, Lord Hutton’s view was: the wording of the dossier was consistent with the available intelligence; the allegation that the Government probably knew the 45-minute claim was wrong before it went into the dossier was unfounded; the allegation of ‘sexing-up’ was also unfounded.

Lord Hutton’s main findings on the BBC were: the editorial system which the BBC permitted was defective in that

Andrew Gilligan was allowed to broadcast his report without editors having seen a script and considered whether it should be approved BBC management was at fault for failing to investigate properly the Government’s complaints in that Andrew Gilligan’s notes should have been examined earlier, and that when they were, there was a failure to appreciate that they did not fully support the 6.07am broadcast allegations the BBC’s management system for considering complaints was defective in that an email critical of Andrew Gilligan’s reporting from Kevin Marsh, Editor of Today to Stephen Mitchell, his line manager, was not passed further up the chain the BBC Governors should have made more detailed investigations into the extent to which Andrew Gilligan’s notes supported his report

In the 24 hours following publication, Gavyn Davies resigned as Chairman and Greg Dyke, the Director-General, offered his resignation to the remaining Governors and it was agreed that he would leave the BBC. Lord Ryder agreed to become Acting Chairman while a permanent replacement was found, and the Governors appointed Mark Byford Acting Director-General.

In September 2003 the Governors had asked Greg Dyke to formulate proposals for reform of key areas including BBC complaints-handling, and the BBC Producers’ Guidelines covering the breaking of controversial stories and the use of anonymous sources. Mark Byford took this work forward and commissioned Ronald Neil, a former senior BBC editorial

executive, to lead a review on behalf of the Director-General.

Shortly after Lord Hutton published his report, Andrew Gilligan left the BBC of his own volition. An internal disciplinary process was conducted. No dismissals resulted. A statement at the end of the process in May 2004, made two points of clarification.

Firstly a core script had been properly prepared for the Today programme of 29 May 2003. This had been cleared in line with normal production practices in place at the time, but was then not followed by Andrew Gilligan. The BBC’s evidence to the Hutton Inquiry could have been clearer in this respect.

Secondly it had not been necessary for the email sent by the Editor of Today, Kevin Marsh, to the Head of Radio News, Stephen Mitchell, to have been passed further up the chain. The impression given by the BBC’s evidence to the Hutton Inquiry was that this email did not reflect the view of senior news management. In fact it did and those views had been the subject of recent discussion. Therefore the implied criticism of Stephen Mitchell and Kevin Marsh was unjustified.

Governors’ commentary

At the heart of this narrative lies the death of Dr David Kelly. Lord Hutton’s report made clear no one could have predicted he would take his life. The BBC has expressed its condolences to Dr Kelly’s family, and we wish to do so again here.

We have no doubt Dr Kelly’s allegations merited a place in BBC output as information on a matter of clear public interest from a credible source. But BBC journalism values accuracy and impartiality. The reporting here was neither sufficiently accurate nor sufficiently impartial since the Government was not asked to respond before broadcast.

We, and management, have apologised for the mistakes the BBC admitted before and during the Hutton Inquiry. We have taken steps to improve some BBC processes: BBC complaints-handling processes are being reformed to make them clearer, fairer and more responsive Management is implementing all the proposals from the Neil Review, including revised editorial guidelines and procedures, and improvements in the training of BBC journalists.

We have ensured that BBC staff, and regular freelance journalists whose main profile or income comes from the BBC, are no longer allowed to write newspaper or magazine columns on current affairs or other contentious issues

We are confident the right lessons have been learned and appropriate measures are being implemented. The BBC, under its new leadership, can now look to the future.

BBC Annual Report and Accounts 2003/2004 5

How the BBC is run

Licence payers

Licence payers are the bedrock of the BBC. Including concessions, there are 24.5 million, and their licence fees provide the vast majority of the money the BBC spends. The BBC regularly consults licence payers to ensure their views are taken into account.

Parliament

Parliament decides the legal framework in which the BBC operates and sets the level of the licence fee. It scrutinises BBC affairs through debates on the floors of both Houses and through select committee hearings, where Governors and members of BBC management are called to account for the BBC’s performance. The BBC also provides secretarial support for the All-Party Parliamentary BBC Group which encourages debate and discussion within and outside Parliament about the future of public service broadcasting, with special emphasis on the BBC.

BBC Governors

BBC Governors are the trustees of the public interest. They supervise the BBC and ensure its independence from political and commercial interference. There are twelve, appointed by the Queen on advice from ministers in accordance with Nolan principles that public appointments should be made on merit. All are part-time. They bring a broad range of experience and expertise to the BBC Board.

The Board of Governors differs from the board of a public company whose prime accountability is to its shareholders. The BBC Board is accountable to licence payers and Parliament.

The Board of Governors does not manage the day-to-day operations of the BBC (which is the role of the Executive Committee). Instead it ensures that the Executive Committee manages the BBC in the public interest by: approving strategy and policy setting objectives monitoring performance monitoring compliance with legal obligations and policy guidelines ensuring public accountability appointing the Director-General and other Executive Committee members determining the remuneration of the Executive Committee

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

The BBC recently proposed changes to its governance. These include measures to increase the separation of Governors from management. The proposals, outlined in Building Public Value, will be implemented over the coming year.

Ofcom, the communications regulator which has been in operation since December 2003, regulates some aspects of the BBC. For example, the BBC has to abide by Ofcom’s standards and fairness codes (except for due accuracy and impartiality which remain the sole concern of the Governors). It must comply with Ofcom quotas for various types of public service television content – for example, that a proportion of programmes must be made outside the M25. However, Ofcom, unlike the Governors, plays no role in the actual operations of the BBC.

For details of individual Governors see pages 8 and 9.

For details of the objectives set for 2003/2004 and the Governors’ assessment of performance see pages 12 to 22, and for 2004/2005 see page 23.

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BBC Annual Report and Accounts 2003/2004

Executive Committee

Currently the Executive Committee is made up of the directors of the BBC’s 16 divisions. It is chaired by the Director-General, to whom all the divisional directors report. The Executive Committee answers to the Board of Governors.

The Director-General is the BBC’s chief executive and editor-in-chief, in charge of all day-to-day operations. The Director-General works with the Board of Governors to appoint the directors of the individual divisions.

The performance of each division is assessed regularly by the Board of Governors. The BBC performance year runs from April, with annual objectives agreed in March. Performance against these is reported in the following year’s annual report in July.

For more details about the members of the Executive Committee, see pages 10 and 11.

Television, Radio, Online

Across the UK, the BBC operates eight television channels and ten radio networks, 46 local and national radio stations, and the online site bbc.co.uk.

Internationally, BBC World Service broadcasts on radio in 43 languages; BBC World delivers a global television news service, and the online site bbcnews.com offers international news and audio. These services are not supported by the licence fee but are paid for either by Grant-in-Aid from the Government or by advertising.

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

BBC

The BBC’s 16 divisions produce or commission all BBC output. There are nine broadcasting divisions. They manage the BBC networks and their programme commissioning and production. These divisions are: Television Radio & Music News Nations & Regions Sport Factual & Learning Drama, Entertainment & CBBC

New Media & Technology

BBC World Service & Global News

In addition, there are five divisions providing professional support: BBC People Finance, Property & Business Affairs Marketing, Communications & Audiences Policy & Legal Strategy & Distribution

There are also two commercial divisions selling goods and services around the world: BBC Worldwide Limited BBC Ventures Group Limited

The profits they produce help to support the rest of the BBC.

BBC Annual Report and Accounts 2003/2004 7

Board of Governors

The BBC Governors, led by the Chairman of the BBC, are the trustees of the public interest. They supervise the BBC and ensure its independence from political and commercial interference. They are appointed by the Queen on advice from ministers in accordance with Nolan principles that public appointments are made on merit. The Board of Governors does not manage the day-to-day operations of the BBC (which is the role of the Executive Committee) but it ensures that the BBC is managed in the public interest. The Governors are accountable to licence payers and Parliament.

8

BBC Annual Report and Accounts 2003/2004

1 Michael Grade CBE

Chairman

BBC Chairman since May 2004. Chairman of Pinewood Shepperton and Chairman of Hemscott Group both since 2000, Director of Charlton Athletic FC since 1997. Former journalist and theatrical agent. At LWT from 1973 to 1981, latterly as Director of Programmes; President, Embassy Television in Hollywood from 1981 to 1984; at the BBC from 1984 to 1987, latterly as Managing Director of Television Designate; Chief Executive Channel 4 from 1988 to 1997; at First Leisure Corporation from 1997 to 2000, latterly as Chief Executive; Chairman Camelot from 2002 to 2004; Director SMG from 2003 to 2004; at The Television Corporation, latterly as interim Chairman from 2003 to 2004. Broadcasting Press Guild Harvey Lee Award for outstanding contribution to broadcasting 1997. Fellow of the RTS and BAFTA, and Vice-President of BAFTA since June 2004. Born in 1943.

2 Rt Hon The Lord Ryder OBE Vice-Chairman Vice-Chairman since January 2002 and Acting Chairman from January to May 2004. Chairman of the Fair Trading Compliance Committee and member of the Property Committee and the Remuneration Committee. Chairman of the BBC Pension Scheme Trustees. Privy Councillor since 1990. Created life peer in 1997. Conservative MP for mid-Norfolk from 1983 to 1997. Parliamentary Under Secretary at MAFF; Economic Secretary to the Treasury; Paymaster General then Government Chief Whip from 1988 to 1995. Political Secretary to Margaret Thatcher from 1975 to 1981. Director of Ipswich Town FC since 1999. Chairman of Eastern Counties Radio until his appointment to the BBC. Lord Ryder retires from the Board on 1 July 2004. Born in 1949.

3 Deborah Bull CBE

BBC Governor since August 2003. Principal Dancer, Royal Ballet from 1991 to 2001. Director, Artists’ Development Initiative, Royal Opera House from 1999 to 2001. Artistic Director, ROH2 since 2002. Member Arts Council England since 1998. She has written and presented programmes and series for BBC Television and BBC Radio, including The Dancer’s Body in 2002, and published books on the arts and nutrition. Born in 1963.

4 Dame Ruth Deech DBE

BBC Governor since October 2002. Member of the Fair Trading Compliance Committee. Independent Adjudicator for Higher Education since March 2004. Principal of St Anne’s College, Oxford from 1991 to 2004, having been a Fellow and Tutor in Law there since 1970. Honorary Bencher of the Inner Temple, a Mandela Rhodes Trustee, and Fellow of the Royal Society of Medicine. Former Chairman of the Human Fertilisation and Embryology Authority. Born in 1943.

5 Dermot Gleeson

BBC Governor since November 2000. Member of the Audit Committee and the Property Committee. Alternate Trustee of the BBC Pension Scheme. Chairman of the M J Gleeson Group plc. Chairman of Major Contractors Group from 2003. A director of the Housing Corporation from 1990 to 1995 and of the Construction Industry Training Board from 1995 to 2002. Former Head of the Home Affairs Section of the Conservative Research Department and a member of Christopher Tugendhat’s cabinet in the European Commission from 1977 to 1979. Born in 1949.

6 Professor Merfyn Jones

The BBC’s National Governor for Wales since January 2003. Member of the Councils and Advisory Bodies Committee. Historian and broadcaster. Professor of Welsh History at the University of Wales, Bangor, specialising in the modern and contemporary history of society and politics in Wales. From 1998 he was Pro-Vice Chancellor of the University. In June 2004 he was appointed Vice Chancellor and will take up this post in August. He is the author of a number of books and articles. Born in 1948.

7 Professor Fabian Monds CBE The BBC’s National Governor for Northern Ireland since August 1999 (appointed for a second four-year term from July 2003). Member of the Programme Complaints Committee, the Fair Trading Compliance Committee and the Councils and Advisory Bodies Committee. Specialist in communications and information systems. Chairman of Invest Northern Ireland, the economic development agency, and of the Northern Ireland Centre for Trauma and Transformation in Omagh. Former Pro-Vice Chancellor of the University of Ulster. Founding partner of Medical and Scientific Computer Services Limited and WesternConnect Limited. Born in 1940.

8 Dame Pauline Neville-Jones DCMG BBC International Governor since January 1998. Reappointed in January 2001 and December 2003 for a further two years. Chairs the Audit Committee and the Governors’ World Service Consultative Group. Member of the Programme Complaints Committee and the Remuneration Committee. Chairman of QinetiQ Group plc and Chairman of the Information Assurance Advisory Council. From 1996 to 2000 she worked for NatWest Markets and subsequently the NatWest corporate advisory arm, Hawkpoint Partners. A career member of the Diplomatic Service from 1963 to 1996, including a five-year secondment in Brussels, chairmanship of the Joint Intelligence Committee in the Cabinet Office and three years as Political Director in the Foreign and Commonwealth Office. Born in 1939.

9 Angela Sarkis CBE

BBC Governor since October 2002. Member of the Programme Complaints Committee. Independent consultant; non-executive director on the Correctional Services Board at the Home Office; a member of the Interim House of Lords Appointments Commission, and Adviser to the Department for Education and Skills on teacher workload management. Chief Executive of the Church Urban Fund from 1996 to January 2002. Chair of the NCVO Diversity Project and Vice-President of the African Caribbean Evangelical Alliance. A former trustee of BBC Children in Need. Born in 1955.

10 Sir Robert Smith

The BBC’s National Governor for Scotland since August 1999 (appointed for a second four-year term in July 2003). Chairman of the Programme Complaints Committee and member of the Audit Committee, Property Committee, Remuneration Committee, and Councils and Advisory Bodies Committee. Chairman of the Trustees of BBC Children in Need. Chairman of the Weir Group plc and Deputy Chairman of Scottish and Southern Energy plc. Member of the Judicial Appointments Board for Scotland and on the Board of Trustees of the British Council. Past President of the Institute of Chartered Accountants of Scotland. In January 2003 he published the Smith Report on Audit Committees on behalf of the Financial Reporting Council. Born in 1944.

11 Ranjit Sondhi CBE

BBC Governor since August 1998 (appointed for a second four-year term in July 2002) with special responsibility for the English Regions. Chairman of the English National Forum, the Councils and Advisory Bodies Committee and member of the Programme Complaints Committee. Senior Lecturer at the University of Birmingham’s Westhill College. Trustee of the National Gallery and Chairman of the Heart of Birmingham Primary Care Trust. Previous positions include Deputy Chairman of the Commission for Racial Equality and member of the Independent Broadcasting Authority and the Radio Authority. Born in 1950.

Gavyn Davies OBE

Served as Chairman from October 2001 until his resignation in January 2004.

Sir Richard Eyre CBE

Served as a BBC Governor from November 1995 until his resignation in May 2003.

Baroness Hogg

Served as a BBC Governor from February 2000 until the expiry of her term of office in February 2004.

BBC Annual Report and Accounts 2003/2004 9

Executive Committee

The Executive Committee manages the day-to-day business of the BBC. It is made up of the heads of the 16 BBC divisions, which produce or commission all BBC output, and it is chaired by the Director-General. The Executive Committee answers to the Board of Governors which appoints the Director-General and, in consultation with him, all the other members of the Executive Committee.

10

BBC Annual Report and Accounts 2003/2004

1 Mark Thompson

Director-General Designate from May 2004. Previously Chief Executive, Channel 4 from 2002. Former BBC positions include Director of Television; Director of National & Regional Broadcasting; Controller BBC Two; Head of Factual; Head of Features; Editor, Panorama, and Editor, Nine O’Clock News.

2 Mark Byford

Acting Director-General and Deputy Director-General since January 2004. Also leads the Global News Division, with overall responsibility for the BBC World Service and BBC World. Trustee of the BBC Pension Scheme. Former BBC positions include Director of Regional Broadcasting; Head of Centre, Leeds, and Home Editor, Television News.

3 Jenny Abramsky CBE

Director of Radio & Music since April 2000. Responsible for BBC Radios 1, 2, 3, 4, Five Live, BBC Asian Network, 6 Music,1Xtra, Five Live Sports Extra, BBC 7, television classical music, Music Live, the BBC Proms and the three BBC orchestras based in England. Previously at the BBC Director of Continuous News; Director of Radio; Controller of BBC Radio Five Live; Editor, Radio News & Current Affairs, and Editor, Today programme.

4 Jana Bennett OBE

Director of Television since April 2002. Responsible for the BBC’s television channels: BBC One, BBC Two, BBC Three and BBC Four; related interactive programming; and for overseeing content on the UKTV joint venture channels and BBC America and BBC Prime. Previously General Manager and Executive Vice-President at Discovery Communications Inc. in the US; Director of Production at BBC; Head of BBC Science; Editor, Horizon, and Senior Producer on

Newsnight and Panorama.

5 Stephen Dando

Director of BBC People (formerly Human Resources & Internal Communications) since June 2001. Responsible for all BBC people and organisation issues, including staff communications. Trustee of the BBC Pension Scheme. Previously Global Human Resources Director at Guinness Limited. Former positions include Group Management Development Director, Diageo, and spells with UDV Europe, United Distillers, Ferranti International and Austin Rover.

6 Andy Duncan

Director of Marketing, Communications and Audiences since June 2001.

Responsible for all the BBC’s marketing, publicity, press and PR, audience services, and audience research activities. Chairman of Freeview. Trustee of Children in Need. Chartered Institute of Marketing ‘Marketer of the Year’– 2003. Former positions include European General Manager, Global Board member and European Marketing Director – Unilever’s

13 John Smith

Director of Finance, Property & Business Affairs since April 2000. Responsible for all BBC finances including television licence collection, procurement and property strategy, and for oversight of BBC Ventures Group since the resignation of Roger Flynn. Trustee of the BBC Pension Scheme. AccountancyAge Financial Director of the Year in 2001. Non-executive director at Severn Trent Plc and Chair of their Audit Committee. Previously with British Rail Group, overseeing demergers. Member of the Accounting Standards Board.

14 Caroline Thomson

Director, Policy & Legal (formerly Public Policy) since May 2000. Responsible for Charter Review process, legal affairs, government relations and corporate social responsibility. Trustee of the BBC Pension Scheme. Former positions include Director of Strategy & Corporate Affairs, BBC World Service; Commissioning Editor, Science & Business at Channel 4, and political assistant to Roy Jenkins.

15 John Willis

Director of Factual & Learning since June 2003. Previously Vice-President in charge of national programming at WGBH Boston. Former positions include Managing Director, LWT and United Productions; Director of Programmes, Channel 4; Controller of Documentaries and Current Affairs, and Editor First Tuesday, Yorkshire Television.

16 Alan Yentob

Director of Drama, Entertainment & CBBC since April 2000. Responsible for all creative output in these areas, including BBC Films, and for talent management across the BBC. Presenter of the BBC One arts strand Imagine. Chairman of the Institute of Contemporary Arts. Previously Director of BBC Television; Controller of BBC One and BBC Two; Head of Music & Arts, and founder Editor, Arena.

Greg Dyke

Greg Dyke was Director-General from January 2000 until his resignation in January 2004.

Glenwyn Benson

Glenwyn Benson was Director of Factual & Learning until June 2003 when she was appointed to the new role of Controller, Factual Television.

Roger Flynn

Roger Flynn was Chief Executive of BBC Ventures Group Limited from June 2001 until his resignation in March 2004.

Food and Beverages division, UK Marketing Director – Unilever UK, and Chairman of UK Tea Council.

7 Carolyn Fairbairn

Director of Strategy & Distribution since April 2001. Responsible for strategic planning and the distribution of BBC services. Previously Director of Strategy. Former positions include Director of Strategy, BBC Worldwide Limited, working in the Downing Street Policy Unit and for McKinsey and Company.

8 Rupert Gavin

Chief Executive of BBC Worldwide Limited since July 1998. Responsible for all the BBC’s commercial consumer activities in home markets and around the world. Previously Managing Director of BT’s Consumer Division. Former positions include Director of Information, Communications and Entertainment for BT and Deputy Managing Director of Dixons Stores Group.

9 Ashley Highfield

Director of New Media & Technology since October 2000. Responsible for bbc.co.uk, interactive television services, new platforms (broadband, mobile etc), the BBC’s technology portfolio, technical innovation, and research and development. Previously Managing Director of Flextech Interactive, the pay television company’s new media division. Former positions include Head of IT and New Media for NBC’s European Channels.

10 Pat Loughrey

Director of Nations & Regions since May 2000. Responsible for BBC programmes and services in Scotland, Wales, Northern Ireland and the English Regions. Previously Controller, BBC Northern Ireland. Former positions include Head of Programmes and Head of Educational Broadcasting for BBC Northern Ireland, and teaching and broadcasting in Ireland and Canada.

11 Peter Salmon

Director of Sport since November 2000. Responsible for all BBC Sport activity across television, radio and new media. Previously Controller, BBC One. Former positions include Director of Programmes at Granada TV, Controller of Factual Programmes at Channel 4, and Head of Features at BBC Bristol.

12 Richard Sambrook

Director of News since March 2001. Responsible for broadcast news operations and the provision of daily news and current affairs programming for all UK-wide BBC television, radio and online services. Previously Deputy Director, News. Former positions include Acting Director of Sport; Head of Newsgathering; News Editor, and Deputy Editor, Nine O’Clock News.

BBC Annual Report and Accounts 2003/2004 11

Governors’ review of objectives

Overview

As Governors we are responsible for ensuring that the BBC operates in the interests of viewers and listeners. On their behalf, we assess how effectively the BBC delivers its public purpose: to enrich people’s lives with programmes and services that inform, educate and entertain. To ensure that management focuses on delivering that public purpose, we set objectives each year and monitor performance against them.

These objectives provide a strategic framework for the BBC, but they are not the only measure we use to assess performance. Each spring we also publish the BBC Statements of Programme Policy which set out the remit for each service, and commit the BBC to providing a wide range of public service output. In the BBC Annual Report, as well as assessing performance against objectives, we also evaluate the BBC’s performance against these remits and in delivering output commitments (see pages 24 to 57 and 58 to 67).

In this section we report on performance against our 2003/2004 objectives. In order to inform our judgements, we regularly consult licence payers. This section includes two case studies to show the sort of work we have done. Our 2004/2005 objectives are set out on page 23.

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BBC Annual Report and Accounts 2003/2004

Objective 1

Underpin the BBC’s public service remit by extending the range and quality of its radio and television services, with a focus on broadcasting more high-impact, memorable programmes, particularly arts and current affairs.

The range of output has been extended on radio and television, particularly in our priority genres of arts and current affairs and the BBC has had success in broadcasting high-impact, memorable programmes. However, there has been a decline in audience perception of the BBC’s quality and work needs to be undertaken to understand this.

Radio continues to perform strongly, maintaining its commitment to a wide range of output unmatched by the commercial sector. This is reflected in the age 15+ reach of BBC Radio which has remained relatively stable, falling just 0.3 points to 66.4% in 2003/2004, despite increased competition. The five new digital radio networks have given listeners access to increased hours of drama, factual and religion. On analogue, we note the consistent quality and ambition of long-running strands such as Face the Facts, File on 4 and Beyond Belief.

There is evidence of an increased range of output on television in 2003/2004 with more hours and investment in key genres such as history, science, arts and current affairs. We are pleased to note that the increase in range appears to have been recognised by audiences, with a rise in

reach for BBC Television. Research also indicates that audiences rate BBC channels “best for range” in 17 out of 22 genres.

Television arts and current affairs have been priorities over recent years and the results of new strategies are now coming on screen (see page 14). We will continue to give these strategies high priority. We are encouraged that BBC One remains the best rated channel for news and current affairs, as does BBC Two for arts. We also welcome the peak scheduling of the new BBC Two arts strand, The Culture Show, to be launched later this year.

On television, there is strong evidence that the BBC has delivered a high number of memorable programmes across a range of genres. In 2003, 47% of the programmes that audiences recalled unprompted in research were on BBC Television, well ahead of any other channel. Some of this output has also had wider political or social impact, such as The Secret Policeman and The Big Read.

We are, however, concerned about a decline in perceptions of the quality of BBC output over recent years, with people marginally less inclined to agree with the statement that: “the BBC maintains high standards of quality” and that it: “sets the standard for programme making in the UK”. This finding contrasts with both the increased reach of BBC Television and audience agreement that the BBC offers the best quality in the majority of genres. Work will be undertaken over the coming year to understand audience perceptions of quality better and in particular to find out whether the perceived decline in quality relates to the BBC in particular or broadcasting in general.

BBC arts programming

Objective 1 resulted in part from our disquiet at the diminution of arts broadcasting on BBC Television. As a result a new strategy was put in place. Much of the resulting new output was first screened in 2003 and during the year we set out to assess its success.

Our review included workshop sessions in Bristol, Birmingham and Manchester where we met local arts professionals. We also commissioned an audience research project carried out in Colwyn Bay, Glasgow, Newcastle, Leicester, Gillingham and London.

We found a consensus that audiences expected more from the BBC than from other broadcasters. Audiences perceived arts were a low priority for the BBC, as reflected in its unpredictable and often late scheduling and output. Audiences felt that the BBC needed to signpost its arts programmes better. Event programming such as The Big Read made a high impact – but for a limited time. What was needed was a commitment to continuing series as well as one-off, high-impact programmes.

Most people agreed that BBC One had shown some highly successful mass audience art programmes such as Rolf On Art and Leonardo. The BBC was, however, perceived as being less cutting-edge than other broadcasters with a tendency to aim for the mainstream. Audiences wanted the BBC to have both entry level programmes and output that went beyond popular taste and set the agenda. In particular, BBC Two was thought to lack a challenging arts magazine programme.

The new BBC One programme Imagine was thought to be successful in dealing with a variety of subjects in an interesting and informative way. But it was too new a programme to have established itself in audiences’ minds. BBC Radio’s output was greatly valued by arts consumers. In particular the commitment to comment, expertise and arts news was appreciated.

We are pleased to note that following this consultation the Director of Television and the Controller, BBC Two announced a new topical arts journalism unit to produce programmes for both BBC Two and BBC Four. A new weekly BBC Two peak-time programme dedicated to UK arts and culture will be launched later this year.

BBC Annual Report and Accounts 2003/2004

13

Governors’ review of objectives

Objective 2

Strengthen the BBC’s digital services, with the aim of providing something of value for all digital audiences. In particular, provide a wide range of interactive learning opportunities and help to drive digital take-up by extending the availability of the services and focusing on cross-channel commissioning and scheduling.

Sound progress has been made in helping to drive digital take-up and there is evidence that the digital services’ output has been strengthened, but continued scrutiny will be necessary for us to ensure that the new services are offering good value for money.

The BBC has continued to play an important role in driving digital take-up over the past year. The range of services and content has been enhanced and marketing effort has been directed at raising awareness of digital platforms and how to access them. In March 2004, 18 months on from launch, Freeview sales reached 3.5 million, making it the UK’s fastest growing consumer electronic device. The success of Freeview and the BBC’s decision to broadcast unencrypted on satellite are key factors behind growing industry optimism that analogue switch-off by 2010 is possible. On radio, the BBC’s DAB transmission network has expanded coverage from 65% to 75% of the UK over the year. Research indicates that the BBC’s services have been critical for the take-up of digital radio receivers, with BBC 7 alone accounting for a significant proportion of purchases. bbc.co.uk has continued to play a significant role in driving online penetration.

Weekly reach data is now available for the digital radio networks, indicating that an average of 1.4 million listeners are tuning in. We note the particularly high approval for these networks.

Reach and awareness of all the BBC’s digital television services have increased during the past year, with particularly strong growth by CBBC. However, perception of the value of BBC Three and BBC Four remains too low. We have reviewed the digital channels over the past year and steps have been taken to strengthen them, including significant changes to BBC Three’s schedule during the year aimed at enhancing its distinctiveness. We also approved a measured increase in BBC Four’s budget for investment in originated drama and comedy to help widen its appeal.

An increase in co-commissions between the digital and analogue channels this year is helping to deliver value for money and enabling analogue viewers to benefit from the BBC’s digital investment. The best of BBC Three and BBC Four output is being showcased regularly on BBC One and BBC Two, with the BBC Four Zone on BBC Two proving particularly successful. The challenge now is to reduce the digital television channels’ reliance on analogue content, particularly on BBC Three.

There has been increased investment in interactive television-based services over the year. The strong performance of these services built around landmark factual output such as Human Senses and stand-alone offerings such as Bitesize, also available on bbc.co.uk, indicates their potential to deliver learning output to a new audience.

Scrutiny of the strategies and performance of all digital services will continue to be a priority for us. Over the next year we will commission our own qualitative and quantitative research to judge the effectiveness and distinctiveness of these new services and to inform judgements about the value for money they offer licence payers. Extending the availability of the BBC’s digital services continues to be a priority and is reflected in its inclusion as an objective for 2004/2005 (see page 23).

14 BBC Annual Report and Accounts 2003/2004

Objective 3

Bring younger audiences to BBC services by developing bold and innovative programmes and content, with a particular focus on making the BBC’s news and current affairs more relevant and engaging for this group without diminishing the BBC’s commitment to parliamentary reporting.

New services and programming are helping to increase the BBC’s reach among younger audiences but continued effort and experimentation is needed to engage this audience in a range of output.

The BBC was successful in attracting younger audiences in 2003/2004 with the BBC’s total reach increasing among the 16–34 age group by 1.5 points to 90.5%.

On television, drama and soaps were particularly successful at drawing younger audiences to both BBC One and BBC Three. We welcome continuing efforts to engage them in a wider range of output, such as factual and arts.

We are disappointed that the reach of BBC Radio has fallen among 15–34 year olds, mainly reflecting a fall in the reach of Radio 1. We approved a new strategy for BBC Radio1 in May 2003 to ensure that it continues to play an important role in reaching this audience (see page 33).

Efforts have continued to engage younger audiences with news and current affairs, with online proving particularly successful. More than 10% of 15–34 year olds use bbc.co.uk/news, up from 8% a year ago. BBC Three has had critical success with its current affairs output, and its short hourly bulletin, 60seconds, continues to perform well. Celebrity-focused Liquid News was replaced with a longer main evening news programme in May 2004 to capitalise on the evident interest in longer-form analytical current affairs among BBC Three viewers.

There have been renewed efforts to engage younger audiences in politics, particularly with the Saturday 9am slot on BBC Two. However, the two formats piloted delivered only modest audiences – and older than had been hoped for. Future strategy will focus on reaching younger audiences through mainstream bulletins and the web. There are encouraging early results from the iCan online and interactive television project launched as a pilot in November to engage people in political issues that matter to them. Use has grown rapidly, with the bulk of users under 45. The changes to political output introduced over the past two years have not diminished the BBC’s commitment to parliamentary reporting which continues to be supported by the BBC’s dedicated parliamentary unit at Millbank.

Engaging with younger audiences across television, radio and online remains a continuing priority for us. A pan-BBC project has been initiated over the past year to understand this audience’s needs better and how the BBC can meet them.

BBC Annual Report and Accounts 2003/2004 15

Governors’ review of objectives

Objective 4

Continue to seek new ways of attracting audiences from the UK’s ethnic minorities, through both mainstream and targeted services.

There is some evidence that the BBC is succeeding in attracting ethnic minority audiences to its output. Effort now needs to focus on ensuring that commissioning and development better reflects the needs of these audiences.

Research indicates that there has been an improvement in approval and in the performance of BBC services among ethnic minority audiences on all platforms. Approval of the BBC among ethnic minorities is now on a par with that of the population as a whole at 6.7 out of 10, and there is a growing perception that the BBC caters well for minority interests. However, reach of both television and radio among ethnic minorities still remains significantly lower than among the general population, and particularly so on the analogue radio networks.

The Connecting with Ethnic Minorities Project aimed to provide a deeper understanding of the interests and lifestyles of these audiences. It has now been communicated across the BBC and started to influence commissioning and production decisions. Notable successes include The Canterbury Tales series on BBC One which made extensive use of actors from ethnic minorities and Top Gear which is reflecting the particularly high interest in cars among Asian audiences.

There are early indications that 1Xtra and BBC Asian Network, which were launched to fill some gaps in the BBC’s offering, are driving the increased reach of BBC Radio among this audience. BBC Asian Network already reaches more ethnic minorities than any other BBC radio network with the exception of BBC Radio 1. 1Xtra has appeal to all fans of contemporary black music, and not just black listeners.

The BBC has had some limited success with writing initiatives to encourage ethnic minority writers. We welcome BBC Asian Network’s investment in fresh writing talent to support its new Asian soap. However, criticism of the African-Caribbean sitcom The Crouches has highlighted the importance of understanding the needs of ethnic minorities throughout all stages of the commissioning, development and creative process.

Overcoming the lower awareness among ethnic minorities of what the mainstream radio networks offer remains a key challenge. Despite efforts to bring more ethnic minority presenters to the airwaves and offering more speech-based output to appeal to ethnic minorities, the reach of the analogue radio networks, particularly local radio, has continued to fall, and at a greater rate than the population as a whole.

We recognise the progress being made towards this objective but note that more must be achieved if the BBC is to make programmes as relevant and appealing to Britain’s diverse ethnic minorities as to the population as a whole and so reflect today’s society. We will pay particular attention to this area of need when reviewing future plans for programmes and services.

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BBC Annual Report and Accounts 2003/2004

Objective 5

Ensure that the BBC is meeting the needs of audiences in all nations and regions of the UK.

Following consultation with the Broadcasting Councils of Scotland, Wales and Northern Ireland and the English National Forum, we are satisfied with the progress towards meeting audience needs with local output and services. But effort is needed to increase further the volume of BBC Nations’ production for the networks to reflect the diversity of audiences across the UK more fully.

The BBC is now in the final year of a three-year strategy to invest an additional £50million a year in a wider range of locally produced output, particularly on television across the nations, and online in England. Since the start of the initiative, research indicates a steady increase across all nations in approval – and in agreement with the statement: “the BBC plays an important part in the local community.”

The additional funding has enabled BBC Nations to invest in a wider range of genres alongside news and current affairs, including entertainment and sport, with the focus over the past year on factual output. A significant part of this output is programming that would not be available if the BBC did not provide or facilitate it, such as indigenous language output, or content from audiences developed through projects such as Digital Storytelling which began in Wales and is being rolled out in England.

In England, the additional funding has been targeted at developing local online Where I Live sites offering local news, weather and information. Across the UK average monthly page impressions for the Where I Live sites have nearly doubled between 2002/2003 and 2003/2004, and hit 100 million in March 2004.

The BBC’s physical presence in cities and towns across the UK spreads economic benefit as well as enabling the BBC to engage directly with segments of the audience currently underserved by either network or local broadcast offerings. Through the connecting with communities strategy new buses were launched in 2003/2004, bringing the total to 14 buses, four Open Centres and four community studios. These have brought the BBC into contact with new audiences, such as the under-45s and ethnic minorities.

While significant progress has been made towards meeting the needs of audiences across the UK through this local output and activity, we are concerned that more needs to be achieved in terms of network output. UK network output produced in the BBC Nations & Regions has both the potential to reflect more accurately the diversity of audiences across the UK, and support a healthy, devolved production base. Despite notable successes such as children’s output in Scotland, factual in Wales and drama in Northern Ireland, network television spend in the BBC Nations is still too low as a proportion of total television network spend. Improved strategic collaboration and planning between network commissioners and the BBC Nations & Regions is the key to improving this and we will expect to see evidence of this in the coming year.

Objective 6

Implement the recommendations of Making it Happen, particularly around values and leadership, in order to make the BBC a more creative, collaborative and exciting organisation in which all staff fully understand its purpose and shared values.

Good progress is being made in implementing the recommendations of the Making it Happen change programme, and there are early indications of positive results. It remains a priority to realise the potential of the BBC staff as a creative resource, particularly by improving collaboration between divisions.

The Making it Happen initiative was launched in February 2002 to bring about cultural change in the BBC with the aim of making it the most creative organisation in the world. After two years, the programme is well established with a range of projects under way. The annual staff survey, carried out by MORI, provides the best evidence of its impact. Headline findings for 2003 were that Making it Happen was supported by nearly two-thirds of BBC staff (a very high level for this kind of initiative) and that the vast majority of BBC staff (85%) believed they understood the purpose of the BBC, with 60% claiming to live up to its values.

However, the survey also showed that the BBC’s values are not always demonstrated in the way staff actually behave. There were particular concerns about collaboration and trust between staff in different divisions. Over the last year the One BBC initiative, which is designed to tackle some of these problems, has had noteworthy successes such as the cross-divisional One BBC for One Million campaign during which staff raised nearly £1million for BBC Children in Need.

There was also widespread feeling that the creative potential of staff is not being fully realised. The commissioning process has been identified as a possible contributory factor. Work is currently under way to involve more people in the development of ideas and we will look for evidence over the coming year that this is producing the desired results.

An early finding of Making it Happen was that leadership needed to be improved at all levels. The BBC Leadership Programme was launched to address this in September 2003 (see page 72), and there are encouraging early signs that staff perceptions are changing for the better. Feedback remains a key area of weakness and this will get more attention over the coming year.

Given its potential to deliver benefits to the audience, we have agreed that Making it Happen should remain a focus of the BBC’s objectives in 2004/2005, with the wording changed to “Build on the recent Making it Happen initiatives to make the BBC a more creative, collaborative and audience-focused organisation that is inclusive and reflects the diverse society it serves.”

BBC Annual Report and Accounts 2003/2004 17

Governors’ review of objectives

Objective 7

Ensure that the BBC is more representative of the audiences it serves. In particular: achieve the target of 10% of its total workforce and 4% of senior management coming from ethnic minorities by December 2003 increase the proportion of people with disabilities working for the BBC

The BBC has met the targets for ethnic minority representation in its workforce, including representation within senior management. It has improved monitoring of disability among staff and is on a par with the rest of the media industry in the employment of disabled people.

The target of 10% of all staff coming from ethnic minorities was set in 2000. The target is higher than the ethnic minorities’ 7.9% representation among the UK population as a whole as it takes into account the BBC’s location in largely urban areas, such as London, where minority communities are concentrated.

During 2003, the recorded proportion of ethnic minority staff passed 10% for the first time and the proportion of senior staff remained above 4%. This was achieved through sustained recruitment efforts as well as improved monitoring. We have now established longer-term, more stretching targets of 12.5% across all staff and 7% for senior staff by the end of 2007.

The BBC has improved its monitoring of disability – previously many staff did not declare conditions which might count as disabilities. The proportion of staff with disabilities now stands at 2.7%, close to the 3% recorded for the media industry as a whole by Skillset, the industry training body. However, it must be the BBC’s ambition to exceed the industry-wide figure in future.

The BBC also aims to reflect the audiences it serves in terms of the age and gender of staff. Gender representation is a real success story. Around 50% of staff and 37% of senior management are women. This varies considerably by division, however, with women represented at much lower levels in Sport, New Media & Technology, and BBC Technology and BBC Resources (BBC Ventures).

The staff of the BBC have a younger age profile than the audience they serve and than the UK workforce as a whole: 79% of staff are aged under 45 and 96% under 55. In light of this the BBC has undertaken a research project over the past year to improve its understanding of older audiences. The insights from this are now being communicated to programme makers to help them serve the needs of this audience better. In pursuing the overall goal of a workforce that is more representative of the audience it serves, the BBC must aim to create a working environment that enables everyone to fulfil their potential and results in higher levels of staff retention.

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Objective 8

Continue to increase the amount of money available to spend on the BBC’s public services by enhancing the efficiency and effectiveness of the way the BBC operates.

The BBC is making steady progress towards the target of putting an additional £3.3billion into services through self-help initiatives between 1999/2000 and 2006/2007. However, we believe that much more can be achieved, particularly in terms of improved efficiency. Progress has also been made this year in creating a framework for understanding the effectiveness of the BBC’s investment in programmes and services.

The efficiency of licence fee collection has continued to show improvement this year. The evasion rate now stands at 5.7% compared to a revised figure of 6.7% last year. The previous estimate for evasion in March 2003 was 7.2% and has been revised to reflect newly published household estimates. The continued reduction in the evasion rate represents a considerable achievement.

Programme spend by genre 2003/2004 (£million)

Headline cash flow from the commercial subsidiaries was £135million, up from last year’s £124million. Commercial borrowing has increased significantly over the year from just over £31million to £172million. This reflects increased investment in BBC Worldwide to secure rights for future exploitation and BBC Broadcast’s new play-out systems which are forecast to generate £20million in savings by 2005/2006, as well as ongoing restructuring of the Company’s capital base so as to have a more appropriate mix of debt and equity.

Additional savings of £29.3million were made in support costs, building on a good performance in previous years. A new programme of efficiency savings has now been agreed which, together with the sale of BBC Technology and associated efficiencies, should enable the BBC to exceed its cumulative £3.3billion self-help target by 2006/2007. We believe the BBC must now set itself more stretching efficiency targets if it is to deliver licence payers the best possible value for money.

The key challenge lies in improving the efficiency of production processes, and progress here – particularly in terms of benchmarking production costs – has not been as rapid as we had expected. A new Head of Value for Money has recently been appointed who will lead a thorough review of these and other internal costs. In assessing the proposals that arise from this review we will be particularly concerned to ensure that quality is maintained or improved and that there is no change in the overall programme mix in favour of lower cost programming.

Solid progress has been made in developing ways in which the effectiveness of the BBC’s programmes and services can be judged. A comprehensive piece of consumer research has been carried out to assess the monetary value that consumers place on what the BBC provides. Results indicate that the value licence payers place on the BBC’s services comfortably exceeds their costs.

In addition to this, a new set of measures is now being put in place which reflects the BBC’s public purposes and which will attempt, for the first time, to describe the value that licence payers derive from the BBC as citizens and not just consumers. This ‘citizen value’ is difficult to assess, but the overall aim of this work will be to generate an easily understood public value test which can be applied to all the BBC’s services in order to demonstrate the value that the BBC delivers to viewers and listeners by virtue of its unique funding arrangements.

Governors’ review of objectives

Objective 9

Earn greater appreciation from UK audiences for the BBC as an open, creative and trusted public service organisation.

Public opinion of the BBC has remained broadly positive, despite events surrounding the Hutton Inquiry, but more work needs to be done to enhance perceptions of the BBC as both a creative and an open organisation. To ensure that the BBC retains a high level of public trust we have overseen reviews of the BBC’s editorial processes, impartiality and its system of governance.

The proportion of the public who believe that the BBC is trustworthy increased significantly over the year, rising from 59% to 72%. However, 18% of the general public said that their perception of the BBC had worsened as a result of the Hutton Inquiry, and among opinion formers, including MPs, this figure was 38%.

Given the importance of trust to the BBC’s reputation, we have focused on two key issues over the past year. Firstly, we have reviewed editorial processes and procedures as a result of the Hutton Inquiry and implemented changes (see pages 4 to 5). Secondly, we have enhanced our monitoring of impartiality by introducing two new mechanisms. One is a MORI tracking survey of public perceptions of impartiality – we will see the first results in 2004/2005. The other is a series of regular reviews of selected topics using panels of independent experts and focus groups. We will commission these reviews twice a year. The topics for 2004/2005 are religion, and European constitutional issues.

On the question of openness, the BBC has worked hard in recent years to improve its accessibility and accountability to the public, but more needs to be done. The system of dealing with complaints is being reformed and strengthened with a clear code of practice. We have also carried out a review of the BBC’s system of governance and proposed significant changes, as outlined in our Building Public Value document. These are designed to reinforce the openness and accountability of the BBC.

The BBC still has some way to go to convince audiences of its creativity. BBC research indicates that audiences are more likely to believe that BBC services are “safe and/or predictable” than “innovative with fresh ideas”. This may reflect a general criticism of television in general rather than the BBC specifically, but the BBC needs to find ways of changing perceptions here. We look to the Making it Happen programme of internal change to ensure that the BBC serves licence payers better with more innovative programming.

Impartiality in BBC reporting of rural affairs

About 25% of BBC audiences live in rural areas and there has been some criticism that their concerns are inadequately or inaccurately represented by the BBC. As a result, in June 2003 we commissioned a review of BBC coverage of rural affairs.

The review was in three parts: an independent expert panel; focus group research with audiences; and content analysis carried out by the BBC. The review reported in October 2003.

It found much that was good: the BBC takes rural issues seriously; coverage is often of high quality; and the appointment of a Rural Affairs Correspondent was welcomed. However, the great diversity of rural areas was not always understood properly by metropolitan-based broadcasters, and this could lead to glib generalisations and unintentional bias.

One example identified in the review was that the concerns of those who live in accessible rural areas are not always the same as those who live in remote areas, but they are sometimes treated as identical. Another is the fox-hunting debate, where it was misleading to represent the countryside as uniformly pro-hunting – or to depict everyone who hunts as belonging to the landed gentry.

To counter this, the review recommended that BBC News should tap into existing expertise to build authority. The review also recommended

that serious consideration should be given to creating a dedicated rural affairs site on bbc.co.uk/news.

The review also considered the representation of rural affairs in BBC drama. Some drama – particularly The Archers – was praised for pursuing strong and accurate rural storylines. But not all were so successful.

A degree of stereotyping was felt to be acceptable, particularly in comedy such as The Vicar of Dibley, but it was felt that there were missed opportunities. The review recommended that television drama should explore the possibilities inherent in the grittier side of contemporary rural life.

The findings of the review were presented to programme makers across the BBC and distributed to editors in BBC News. There has been progress in implementing its recommendations, although more remains to be done. The appointment of a new Rural Affairs Correspondent has had a positive effect in raising the profile of rural issues in BBC News programmes. BBC News 24 is working more closely with the BBC Nations & Regions to ensure that local expertise on rural issues finds a place in national output. And there is greater use made of the expertise of the Rural Affairs Unit in Birmingham. The possibility of a rural affairs website remains under review.

BBC Annual Report and Accounts 2003/2004 21

Governors’ review of objectives

Objective 10

Build on the impact made by the BBC’s global news services through a coordinated global news strategy across radio, television and new media.

BBC World Service & Global News was established at the end of 2002 to maximise the performance and impact of the BBC’s international radio, television and online services. Good progress has been made towards greater editorial coordination. Overall, research surveys suggest that the impact of the Hutton Report on the BBC’s international reputation has been limited.

In its first year of operation the Global News Division has facilitated some high-impact, cross-media editorial initiatives, including the Aids season in 2003 which generated a widespread positive response. Other highlights include the tri-media World Debate in Davos and a collaboration between the Global News Division and BBC News on the Islam and the West project. We look forward to further collaboration between the different areas of the Global News Division as well as with other parts of the BBC.

Despite increased competition around the world, the BBC’s services continue to perform strongly. Reach of the BBC World Service has fallen slightly this year from 150 million to 146 million listeners, but the decline is attributable to difficulties in obtaining FM transmission or partnerships to replace short-wave delivery. Efforts will continue in 2004/2005 to overcome this and extend FM reach wherever possible. On television, the reach of BBC World is growing in key markets such as the USA and Europe. The Global News Division’s online sites also continue to grow, recording a 99% increase in page impressions year-on-year in January 2004. We look forward to increased efforts to exploit the potential of interactivity to promote international dialogue and debate among different groups of audiences.

There is also good evidence that the Global News Division is effective in reaching opinion formers and decision makers. In the USA around 40% of this group use one of the three BBC services each week, while in Nigeria more than 60% of this group uses either the BBC’s television or radio services.

We are pleased to note that, while reaction to the Hutton Inquiry has been mixed across the world, overall impact on the BBC’s reputation appears to be limited. While trust ratings have fallen in some markets, BBC World Service continues to be more trusted than its leading competitors in every market. At present, BBC World remains less trusted than CNN in some markets, but its trust rating is higher in several Islamic countries and it scores well on objectivity.

The importance of the BBC’s international role is reflected in the inclusion of an objective for 2004/2005 for the BBC to enhance further the impact of its global news services, with a particular focus on their reputation for independence, impartiality and honesty.

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BBC Annual Report and Accounts 2003/2004

Governors’ objectives for 2004/2005

The BBC’s Charter requires us to set and report on annual objectives. Under the 2003 Communications Act and the revised BBC Agreement we are now also responsible for ensuring that the BBC meets its overall public service remit by evaluating performance against each of the channel and service remits published in the BBC Statements of Programme Policy.

To avoid duplication, annual objectives will in future be restricted to those areas not covered by the BBC Statements of Programme Policy which we publish each spring and which deal exclusively with content. The objectives for 2004/2005 focus either on major pan-BBC priorities; divisional issues with wider impact on the rest of the organisation or the BBC’s global and commercial interests. They should be seen within the context of our overriding priority – the provision of programmes and services that meet audience need.

The Executive Committee has taken collective responsibility for the achievement of these objectives and we will report on their performance against them in next year’s BBC Annual Report and Accounts.

1. Journalism and impartiality

Ensure the BBC meets the highest standards of independence, impartiality and honesty in its journalism and implements recommendations on training, editorial control and complaints handling.

2. Creativity and ambition

Build on the recent Making it Happen initiatives to make the BBC a more creative, collaborative and audience-focused organisation that is inclusive and reflects the diverse society it serves.

3. Charter Review

Contribute effectively to the public debate on Charter Review ensuring it reflects the interests of licence payers as a whole and builds on the concept of public value.

4. Driving digital

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

5. Value for money

Ensure the BBC is delivering value for money across the full range of its activities, including production processes, licence fee collection and its central functions.

6. The BBC’s global role

Enhance further the impact of the BBC’s global news services, with a particular focus on their reputation for independence, impartiality and honesty.

BBC Annual Report and Accounts 2003/2004 23

Governors’ review of services Television

Overview

We have taken action over the past few years to clarify and strengthen the distinctive public service purposes of BBC Television. This action, the result of our consultation with licence payers, has led to a wider range of output, increased investment in distinctive public service genres such as arts, current affairs, history and science, and a corresponding decrease in less distinctive genres such as makeover and reporting celebrities. We note that the audience research informing Ofcom’s recent review of public service television supports this shift in emphasis.

This year was the first full year of the BBC’s digital television channels and we are encouraged by the progress so far. Both children’s channels are now solidly established; BBC Three’s risk-taking approach is helping to refresh genres such as comedy, factual and current affairs in a schedule refocused to enhance its distinctiveness, and we have supported BBC Four’s early success by approving a modest increase in funding for drama and comedy.

Against this background, we are concerned about a decline in perceptions of quality of BBC output in general, and that the perception of the value placed on BBC Three and Four remains low. Work will be done in the year ahead to understand these perceptions better.

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BBC Annual Report and Accounts 2003/2004

396

thousand hours of BBC TV and radio in 2003/2004

4.7p

cost per hour per home spent with the BBC

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

Remit

BBC One aims to be the UK’s most valued television channel, with the broadest range of quality programmes of any UK network. The channel is committed to widening the appeal of all genres by offering the greatest breadth and depth within them. BBC One is committed to covering national events and issues, showcasing landmark programmes and exploring new ways of presenting specialist subjects.

BBC One has a unique significance as it accounts for approximately one-third of BBC programme spending, has the widest reach of any BBC service, and many people use it as a measure of all BBC services. Its public service role is to deliver breadth and depth across all genres and, as we have set out in our review of objectives (pages 12 to 22), we have actively encouraged management to reshape the channel to make this public service purpose clearer.

There is evidence that the strategy is delivering results. This year BBC One reached more of its potential audience than last year and, in research, audiences judged it to be the channel offering the best quality output in 12 out of 22 genres, including key genres such as news, current affairs, comedy and period drama. However, audience perceptions that the quality of BBC Television is declining are worrying, and we need to do more to understand this better.

Over the past year there has been increased investment in serious factual output – including history, science, natural history and business. This has been visible on screen both as increased hours in these genres and in higher-profile output.

BBC One has also endeavoured to make serious subjects accessible to a wide range of audiences. This has been done through new technologies, for example, bringing ancient Rome to life in programmes such as Pompeii: The Last Day and Colosseum, Rome’s Arena of Death; and through complementary scheduling, for example, by broadcasting a documentary about Charles II in the same week as the period drama Charles II: The Power and the Passion.

As well as offering a range of genres, BBC One aims to offer a breadth of output within genres to cater for the audience’s differing levels of knowledge and interest. For example, a more challenging arts strand, Imagine, was launched in 2003 to complement Rolf Harris’s Sunday evening programme and one-offs such as The Divine Michelangelo. Our initial accountability work with audiences on arts output indicated that this had been well received (see page 14).

We are pleased to note that during 2003/2004 it has been BBC One’s more ambitious dramas, such as State of Play and

The Canterbury Tales that have made most impact. Audiences have scored these for memorability as highly as national sports events such as Wimbledon.

BBC Annual Report and Accounts 2003/2004 25

Governors’ review of services Television

In a year when BBC journalism has been under intense pressure, leading to fears that it would step back from tackling difficult subjects, it was particularly pleasing to note the impact made by The Secret Policeman. This undercover investigation of racism among police recruits from Greater Manchester, Cheshire and North Wales came under strong attack from the Home Secretary before it was broadcast. But after it had been shown he accepted that the BBC had been justified in its methods. As a result of the programme, police training methods were changed and a number of police officers resigned.

During the year the channel provided extended coverage and analysis of Iraq, the Conservative Party leadership result and the Hutton Inquiry. Four Panorama specials in peak time examined topical issues, and there were three ‘event days’ offering a range of output on the subjects of asylum, consumer debt and the NHS. In December, BBC One cleared its lunchtime schedule to cover the England rugby team’s victory parade through London.

In a relatively quiet year for sports output, memorable coverage included World Athletics, Six Nations Rugby and Wimbledon. Grandstand was relaunched with a modernised format at the start of 2004. This was a busy and largely successful year for television sports rights: Match of the Day will return on Saturday nights and long-term contracts for Six Nations Rugby, Wimbledon, horse racing and the FA Cup were signed. The loss of the Boat Race was disappointing however.

BBC One continued to create entertainment events that bring the UK together such as Children in Need and the interactive quiz Test the Nation. A notable new format was Born to Win which searched for the next generation of British sporting talent. The winners were awarded sports bursaries and the Department for Culture, Media and Sport (DCMS) was sufficiently impressed to add a bursary of its own. The project produced a valuable spin-off by encouraging participation in sport – more than 25,000 pupils took part in a Born to Win activity.

Despite these successes, entertainment continues to be a challenge for BBC One as it balances priorities between distinctiveness which implies innovation and risk-taking, and the necessity to meet the needs of a mainstream audience which suggests the familiar and trusted. Finding successful original formats for Saturday nights remains a particular challenge.

We particularly welcome BBC One’s launch of a range of new comedy titles in peak time this year. While the new commissions have had varying degrees of success they have made the channel the UK’s biggest investor in this notoriously risky genre, an investment which must continue if BBC One is to live up to its comedy heritage. Furthermore, to be successful, the channel needs the confidence to give its commissions time to develop when initially faced with disappointing ratings.

While BBC One met all the commitments outlined in the Statements of Programme Policy, we have a duty to ensure that the channel’s schedule, as well as its programmes, best serves audience needs. We have asked our team of advisers to undertake an independent study to assess whether or not the channel has the best balance of output in peak time. We will report on the outcome next year.

Consultation with our independent advisory body, the Central Religious Advisory Committee (see page 77), has already highlighted some disquiet over the place of religion in the BBC One schedule. Work will be undertaken over the next year to assess the effectiveness of the religion strategy we approved in 2002 which promised high-impact religious programming on BBC One alongside

Songs of Praise and The Heaven and Earth Show. While research indicates that the BBC remains the preferred channel for religion, we are concerned that there may not be enough landmark output in peak time to make a regular impact with viewers.

26

BBC Annual Report and Accounts 2003/2004

BBC Two

Remit

BBC Two sets out to be a mixed-genre channel combining serious factual subjects with comedy and drama to bring challenging, intelligent television to a wide audience. The channel identifies ambition and innovation as its key values. BBC Two aims to create programmes that inspire and excite audiences.

We approved a new strategy for BBC Two in March 2003 and the results have started to show on screen this year.

The new strategy aims to underline BBC Two’s distinctive public service role as a channel offering a more challenging mix of output than BBC One. BBC Two’s broad range of genres, with a strong, distinctive factual core, appeals to a wider audience than the digital networks BBC Three and BBC Four.

The strategy commits the channel to offering audiences greater variety across the analogue channels by reducing the volume of lifestyle programmes – especially makeover – between 8pm and 9pm, and to increasing the presence of genres such as arts and current affairs in peak time, with more serious documentary output at 9pm.

As a result of the strategy, funding has shifted away from entertainment, and there has been an increase in hours of factual programming on the channel, including history, science, business, current affairs, learning and intelligent entertainment such as Mastermind.

Despite increased competition, BBC Two has managed to hold its reach over the past year and approval of the channel is also marginally up on last year with a higher proportion of the audience perceiving the channel as “up to date”. Research also suggests that audiences perceive BBC Two as offering the best range in seven genres and quality in six.

However, the strategy is still in its infancy and we will continue to monitor its implementation and the success of the new strands in delivering a distinctive service that meets audience needs.

Effort has been put into attracting new audiences to non-entertainment output by developing new ways of presenting traditional genres. In history, for example,

Seven Wonders of the Industrial World looked at the Industrial Revolution through seven engineering achievements of the era; Restoration engaged the audience’s interest in local historic buildings through a national vote which, with the Heritage Lottery Fund, raised £3.5million to restore the winner, the Turkish baths in Manchester.

BBC Two has also found ways of reinventing aspects of its music, arts, and factual output through the use of drama. In arts output, the results have included memorable accounts of the lives of great artists including Beethoven and the poet Philip Larkin. In factual output, The Day Britain Stopped was an innovative ‘what if ?’ account of a day when Britain’s transport system came to a catastrophic halt.

Drama is also central to BBC Two’s new peak-time current affairs strand If… which was launched in March. We welcome BBC Two’s commitment to this new scenario-based analysis programme which is examining a wide range of issues and helping to generate and inform political debate.

The work we have done with audiences and with people working in the arts (see page 14) has highlighted a perception that the arts are of low priority to the BBC and that one factor in this has been the lack of a regular television arts strand. We therefore welcome the planned launch of a new weekly peak-time arts and culture programme on BBC Two.

BBC Annual Report and Accounts 2003/2004 27

Governors’ review of services Television

BBC Three

Remit

BBC Three aims to offer an intelligent, ambitious mix of programmes which reflect the things that matter to young British adults. The channel is committed to a mixed schedule of news, current affairs, education, music, arts, science and coverage of international issues, as well as to high-quality, innovative drama, comedy and entertainment.

BBC Three was launched in February 2003 as a mixed-genre digital channel aimed at young adults – a group relatively underserved by traditional public service broadcasting. It has had some early successes and now regularly reaches over a fifth of its core audience of 25–34 year olds each week. Genres that have made an early impact include current affairs (The Third Degree), comedy (3 Non-Blondes, Little Britain and Nighty Night), animation (Monkey Dust) and science (Body Hits). A selection of programming concerned with parenting (Little Angels and Who Rules the Roost?) also made a mark. Some of this innovative output has already successfully transferred to the analogue channels, benefiting their viewers.

The channel’s factual output has tended to be dominated by celebrity, relationship and lifestyle content that veered into competitor territory. This is being addressed – for example, the celebrity-focused Liquid News has been dropped from the schedule.

The channel set out to be innovative, experimental and risk-taking. It has attracted criticism because some of its output is controversial. But this is inevitable, given the channel’s ambition to present key aspects of public service broadcasting in new

28

ways that appeal to young adult audiences. We see the channel as a bold attempt to reconnect these viewers with public service broadcasting and, while it still has some way to go, we will continue to support it so that it is given the time it needs to prove itself.

The channel originates material but also repeats – and premieres – some programmes from BBC analogue channels. This allows audiences to catch up, or view at times that may be more convenient – and it also brings viewers to the channel who can then be introduced to originated programmes scheduled immediately after these shows. As the channel matures, one challenge is to reduce dependence on output from other channels, and the consequent audience perceptions that it is a place to catch up on programmes first shown on BBC One or BBC Two rather than for original programming.

The channel must also focus on building on its successes in comedy, current affairs and science, and reap the benefit of its investment in drama to bring a young mainstream audience to this genre.

But a key challenge remains news. The hourly 60seconds bulletins have proved popular and regularly receive audiences four or five times the channel average, but the main peak-time news has found it hard to craft a format that will capture and keep the attention of its target audience. The success of current affairs on BBC Three (through The Third Degree strand) suggests there may be an appetite for a longer bulletin allowing a more analytical approach. As a result, the original 15-minute evening news has been replaced with a 30-minute nightly news analysis programme.

BBC Annual Report and Accounts 2003/2004

1,556

hours of news on BBC One

82%

of BBC Three programmes were specially commissioned

BBC Four

Remit

BBC Four aims to serve audiences in search of greater depth and range in their viewing. Its ambition is to be British television’s most intellectually and culturally enriching channel. BBC Four offers a distinctive mix of documentary, performance, music, film and topical features as a satisfying alternative to more mainstream programming.

Since its launch in March 2002, BBC Four has become the most watched channel of its kind. The Alan Clark Diaries, co-commissioned with BBC Two, averaged 856,000 viewers during its first episode – one of the highest-ever recorded audiences for an original drama on a UK digital channel. The channel has found a distinct audience –which tends to be a little younger than that of the factual channels that are its closest competitors.The output generates very positive press reviews and focus group research underlines the value viewers place on it.

The channel has been a success and deserves more investment. We have approved a measured increase in BBC Four’s budget to enhance the channel’s output of event drama and intelligent comedy. There is good evidence that this will enable BBC Four to appeal to a wider audience.

The channel’s distinctively public service proposition lies partly in its international outlook and intellectual ambition, partly in the range of its schedule (competitor channels offer highly specialised niche programming) and partly in its high proportion of original commissions of UK-originated output.

42%

of BBC Four was music and arts

1,293

hours of factual programmes on BBC Two

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

In addition the channel takes seriously its vision of becoming strongly valued for its contribution to the UK’s cultural life, as well as to the landscape of broadcasting. To this end it has worked with major galleries to make exhibitions available to a national audience, actively supported the foreign-language film distribution sector in the UK, worked with theatre producers to bring both commercial and subsidised production to the screen, and maintained its sponsorship of the Samuel Johnson Prize for Non-Fiction. Building partnerships with other institutions is a productive way for the channel to increase its impact, promote its presence, and deliver public value to the wider arts community.

BBC Four has real potential for growth. Many people who would value its output have not yet made the transition to digital television. The channel needs to make further progress in appealing to that wider audience. The channel has made good use of the potential of interactivity to build awareness, for example the online Black Flash vote to find the greatest British black footballer prompted debate on BBC Radio Five Live and 1Xtra and gave the channel access to new and wider audiences.

But we are clear that maximising the channel’s potential for growth must be achieved without either diluting the key elements of its unique proposition – or by lessening the commitment to more thoughtful, challenging programming on the analogue channels, particularly BBC Two.

BBC Annual Report and Accounts 2003/2004 29

Governors’ review of services Television

The CBBC Channel

Remit

The CBBC Channel offers a distinctive mixed schedule for children aged 6–12, encouraging them to find out more about existing interests or inspiring them to develop new ones and helping them to understand and embrace the world around them. The channel puts an emphasis on encouraging participation.

The CBBC Channel was launched in February 2002 as a dedicated children’s digital channel. Its distinctiveness rests on the quality of its output, the range of its schedule (with clear commitments in news, education and drama), the low repeat level, and the high proportion of UK-originated material in a market where children’s channels mostly show acquired and often imported programming.

The CBBC Channel’s philosophy is “learning through fun”. This means introducing an element of learning and life skills development across a large part of its output including drama and factual. The schedule also includes Class TV, a four-hour block of schools programmes transmitted every day during term time. These programmes are designed primarily for use in the classroom and are focused on the school curriculum.

The target age range is difficult to reach. Typically they are short of time and want a channel that delivers something just for them. The channel initially struggled to communicate its mixed-genre offering, but over the year it has improved its performance and now reaches nearly a million viewers a week.

Experimentation has indicated that more frequent but shorter news bulletins are most effective at reaching and engaging this audience in news output. While the number of bulletins has been increased from two in 2002/2003 to seven a day in 2003/2004, the channel has failed to meet its commitment to 85 hours of news in 2003/2004. The strategy is to gradually increase the overall volume of news in the schedule.

Interactivity has been promoted by placing live content at the core of the schedule and by connecting with the audience via mail, telephone, email, SMS and online.

The challenge going forward is to keep up with the channel’s demanding and sometimes fickle audience by developing innovative content across the entire range of genres.

One

million watched CBeebies each week

777

hours of children’s on BBC One

30

BBC Annual Report and Accounts 2003/2004

CBeebies

Remit

CBeebies offers new, high-quality, mainly UK-produced programmes to educate and entertain the BBC’s youngest audience. The service provides a range of pre-school programming designed to encourage learning through play for children aged five and under, in a consistently safe environment.

CBeebies was launched in February 2002 as a dedicated pre-school digital channel. Its philosophy is “learning through play”. All the programming is linked to the Government’s Foundation Stage Curriculum.

The channel has been a success from the start. It is now the most watched children’s channel. It has received very positive press comment and high praise from the viewing public which places a high value on its friendly, innocent and safe environment, its educational content, and its high element of UK programming. The CBeebies website has proved a particularly valued resource and has become one of the most popular BBC sites.

One challenge facing the channel is to develop new, high-quality, UK-originated animation suitable for the CBeebies audience. The original aspiration to invest directly in animation co-production has proved hard to meet because of higher than expected costs.

966

hours of drama on The CBBC Channel

Six

new talent initiatives from BBC Three

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

Weekly reach of BBC Television services 2003/2004 (% all homes)

However, an alternative model has been adopted where the channel pre-buys animated titles with third parties – the channel investment usually does not exceed 25%. The same model has been used for The CBBC Channel where similar problems have been encountered. It has proved a value-for-money way to buy the channel an early editorial stake in the content to ensure its suitability for the CBeebies audience.

BBC Annual Report and Accounts 2003/2004 31

Governors’ review of services Radio

Overview

The radio landscape in Britain is changing fundamentally. There are strong new national digital stations. People are listening in new ways – via television, the internet or mobile phones. Some young music-lovers are turning from radio to downloading music online.

Against the landscape of change, how does BBC Radio continue to make the case for its public service role? The answer is that the BBC can make a difference: to individuals by giving them unique access to things they value; to citizenship and democracy by providing independent information; and to society by investing in the cultural and creative life of the UK.This is as true of BBC Radio’s music output as its speech output.The BBC’s support for music at its roots and across the board has helped public taste to grow –delivering value to individual listeners and to the wider music industry, both popular and classical. Similarly, the speech component of our music stations helps to push boundaries by tackling difficult issues.

The BBC’s national radio services are holding up well. The BBC’s new digital services are establishing valued and distinctive niches. BBC Radios 2, 3, 4 and Five Live all consolidated their positions. A new strategy has been put in place to bolster BBC Radio 1’s long-term position.

32 BBC Annual Report and Accounts 2003/2004

BBC Radio 1

Remit

BBC Radio 1 aims to offer an exciting, high-quality service for a young UK audience. It is committed to playing the best new music and delivering a comprehensive range of live studio sessions, concerts and festival broadcasts. The network aims to cover all young music genres with a wide-ranging playlist and a strong line-up of specialist DJs. Music programming is augmented by tailored speech output – including news, documentaries and advice campaigns.

Radio 1 is critical to the BBC commitment to reaching young audiences – and its health is central to the success of BBC Radio overall. In December 2002 we requested a review of Radio 1’s strategy, recognising that although Radio 1 already operated in an intensely competitive market, technological and regulatory changes were likely to intensify this still further. A new strategy was developed and we approved this in May 2003.

Audience consultation played an important part. Research showed that some aspects of the Radio 1 offer were off-putting. For example, although nearly half of 25 to 30 year olds have children, the network was projecting a “relentlessly single” image. There was evidence that listeners wanted the network to be more relaxed and less intense about its music –and they also wanted some older music.

However there was much that was liked, and the BBC response has been evolutionary not revolutionary.

In its mainstream programming, the network is now focusing more clearly on its target audience of 10–30 year olds. This has meant making the daytime content more engaging without diminishing the network’s public service commitment to news and new music. In the specialist programming, the aim is to bring listeners new talent and genres that meet the demands of knowledgeable enthusiasts, but do it in a way that is welcoming to the network’s broader audience.

In 2003/2004, Radio 1 began to deliver the mainstream component of this strategy including changing some key presenters. Chris Moyles took over the weekday breakfast show in January 2004 when Sara Cox moved to weekday afternoons, and Colin & Edith took over the weekday 1–3pm slot. Work has also been done to ensure that DJs connect more widely. The demand for older music has been met.

It will take time to refresh the entire schedule and at present it is too early to make an informed assessment of its success. We recognise that increased competition is likely to impact on share but are anxious to ensure that Radio 1 continues to deliver its unique reach.

The distinctiveness of Radio 1 is sometimes challenged by critics. In response to this the BBC has set up an independent quantitative research programme to provide data on the distinctiveness of the music mix, including the amount of new music. The analysis carried out in 2003/2004 demonstrated that Radio 1 plays a greater number of different songs across the week than any of its nearest competitors. More than 460 tracks on Radio 1 were not heard on any competitor measured during a sample week in each of May and October 2003. Radio 1 also played more live music than its competitors. The network is now committed to devoting at least 40% of its mainstream programming to new music –defined as unreleased, or less than one month since release.

Across Radio 1 the commitment to a distinctive public service remit will continue, including bespoke news (through the Newsbeat strand), documentaries, social action programming and live music events.

BBC Annual Report and Accounts 2003/2004 33

Governors’ review of services Radio

BBC Radio 2

Remit

BBC Radio 2 aims to bring a broad range of popular and specialist music, with particular support for new and established British artists; live music, through concerts and studio sessions; and song-writing. The network also offers news, current affairs, documentaries, comedy, readings, religious output and social action, designed to appeal to a broad audience.

In a crowded marketplace, Radio 2 has held its audience, retaining its position as the UK’s most listened to radio station with an average weekly reach in 2003/2004 of 12.9 million (13.0 million in 2002/2003).

The music played – including live music –continues to cover an extremely broad range. As with Radio 1, the BBC now collects quantitative data to monitor the distinctiveness of the music content of the network. The analysis was conducted twice during 2003/2004 and shows that in each sample week well over 1,000 songs played on Radio 2 were not heard on any other competitor measured. In addition, Radio 2 played a broader range of genres and more live music than its competitors.

Radio 2’s commitment to encourage song-writing in the UK has been delivered through Sold on Song. This imaginative initiative aims to provide informed insight into the craft of the popular song through events including masterclasses with established songwriters such as Sir Paul McCartney and Elvis Costello, and a competition for new songwriters. Sold on Song is supported

BBC Radio 3

Remit

BBC Radio 3 aims to provide a broad spectrum of classical music, jazz, world music, drama and arts discussions. It focuses on presenting live and specially recorded music from across the UK and beyond, including contributions from the BBC’s own performing groups.

Radio 3’s audience has marginally increased, with an average weekly reach in 2003/2004 of 2.2 million (2.1 million in 2002/2003). The summer Proms season attracted a particularly strong audience and – following schedule changes in the autumn informed by audience consultation and research – the network achieved a record reach in the first quarter of 2004.

Notable output has included Berlioz day – a complete Radio 3 day devoted to the life and influences of the composer; coverage of the Radio 3 Awards for World Music, staged outside London for the first time; and an Arabian night, a special evening featuring the cultural and political life of the Arabian Peninsula.

We note that classical music remains at the heart of the schedule and the current remit requires that core to be complemented with other serious music genres including jazz and world music. We are aware some listeners are unhappy with the share of output given to non-classical music on Radio 3 and will remain mindful of this in continuing to assess the network’s performance.

by a website containing comprehensive information on topics ranging from the history of the key popular music genres to advice on how to get started as a songwriter.

The network has maintained its commitment to making news and current affairs a key part of the mix. The Jeremy Vine Show, launched in 2003, continues to develop well. The interactive second hour (1–2pm) on topical subjects has been successful in generating a large amount of listener interaction. Other notable speech output included the music documentary on Stevie Wonder, 40 Years of Wonder, and The JFK Generation, marking the 40th anniversary of President Kennedy’s assassination. The network’s arts programme has been relaunched as The Green Room and extended from 90 minutes to two hours.

34

BBC Annual Report and Accounts 2003/2004

BBC Radio 4

Remit

BBC Radio 4’s remit is to use the power of the spoken word to offer programmes of depth which are surprising, searching, revelatory and entertaining. The network aims to offer in-depth and thoughtful news and current affairs and seeks to engage and inspire its audience with a rich mix of factual programmes, drama, readings and comedy.

Audiences to Radio 4 are slightly down, with reach at 9.6 million in 2003/2004 (9.8 million in 2002/2003). In London, the most competitive radio marketplace, the network remains top for reach and share.

News and current affairs provide the spine for Radio 4 and the network has maintained its strong position in this genre. Audience research shows that six out of ten radio listeners consider BBC Radio to be the best source of radio news – and Radio 4 leads the other BBC radio stations in being considered the best provider of news. These figures were not significantly affected by the Hutton Inquiry, which stemmed from a report on Radio 4’s Today.

Notable pieces of journalism include the hour-long special marking the end of the Iraq war, Edward Stourton’s series on the history and future of the UN, and the interview with ‘Witness Bromley’, the 12 year old who was the main witness at the trial of the boys accused of killing Damilola Taylor.

45%

of Radio 1’s playlist was UK artists last year

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

The network continues to deliver across a broad range of genres, including drama, comedy and religion. The Archers has maintained its strong grip on its audience with storylines – sometimes controversial –that, as our recent study of impartiality (see page 21) indicates, fairly represent a range of contemporary rural issues.

BBC Annual Report and Accounts 2003/2004 35

Governors’ review of services Radio

BBC Radio Five Live

Remit

BBC Radio Five Live broadcasts live news and sport 24 hours a day, aiming to present events as they happen in a modern, dynamic and accessible style. It sets out to cover national and international subjects in depth, using wide-ranging analysis and debate to inform, entertain and involve news and sports fans of all ages, with particular emphasis on 25–44 year olds. The network also provides extensive live events coverage, supported by the BBC’s global newsgathering operations and portfolio of sports rights.

Five Live celebrated its tenth birthday in 2004. Audiences remain broadly stable, with a small drop in average reach to 6.1 million in 2003/2004 (from 6.3 million in 2002/2003 – which included the Football World Cup). It reached 6.5 million in quarter one of 2004, and audience approval scores remain well above the BBC average.

The network’s output in both its genres of news and sport has been strong. In November, vivid commentary on England’s victory over Australia in the Rugby World Cup in Sydney was matched by memorable coverage of the homecoming and the victory parade the following week when Five Live had exclusive access to the players’ bus. With news, good progress has been made in refreshing Breakfast, Morning, and Julian Worricker’s Sunday morning programme. The network did well in covering breaking stories such as the capture of Saddam Hussein.

We are pleased to note that Five Live has secured Premiership football rights until the end of the 2006/2007 season.

BBC Five Live Sports Extra

Remit

BBC Five Live Sports Extra is a part-time extension of BBC Radio Five Live, aimed at bringing a greater choice of action to sports fans. It extracts more value for licence payers from sports rights already owned by the BBC by offering alternative commentaries to those provided on Five Live.

Five Live Sports Extra was launched in February 2002 as part of the BBC’s portfolio of digital channels and it has rapidly established itself as a valued sister station to Five Live, delivering extra value to licence payers from existing BBC sports rights.

It has enabled the BBC to continue to broadcast radio sports commentaries when – as happened during the Iraq war –sports coverage on Five Live is curtailed to enable full coverage of big breaking news stories. It also enables the BBC to offer sports fans a greater choice of matches and events. A good example came in August when Five Live majored on football, while Five Live Sports Extra offered uninterrupted coverage of the World Athletics Championships in Paris.

38%

of Radio 2 was dedicated to speech

60

new classical music pieces commissioned for Radio 3

36

BBC Annual Report and Accounts 2003/2004

IXtra

Remit

1Xtra aims to play the best of contemporary black music, with a strong emphasis on delivering high-quality live music and supporting new British artists. 1Xtra also brings listeners a bespoke news service, regular discussion programmes and specially commissioned documentaries, plus information and advice relevant to the young target audience, particularly –although not exclusively – those from ethnic minorities.

1Xtra was launched in August 2002 as part of the BBC portfolio of digital channels. The station is building a following among a young audience that had felt it got nothing from the BBC. It offers a service unavailable elsewhere on UK network radio and gives strong backing to the contemporary black music industry in the UK across the full range of genres. It showcases important black music events such as the Notting Hill Carnival and Southport Weekender. It is also finding and developing new black African/Caribbean broadcasting talent on air and behind the scenes.

The main challenge ahead is engaging the target audience with speech programming. Listeners come for music and the station has to find innovative ways to capture their attention for quality speech. In 2003/2004 1Xtra missed its commitment that around 10% of its output should cover news, documentaries and social action programming. However this will be achieved next year.

We have underlined the importance we attach to the quality of the speech output, not just the quantity, and will pay particular attention to this in future assessments.

BBC 6 Music

Remit

BBC 6 Music offers lovers of popular music current releases outside the mainstream, new concert and session tracks, and unique access to the work of artists from the last 40 years through the BBC Sound Archive. It aims to provide a social and cultural context through music news, documentaries and debate, and is committed to providing interactive content.

BBC 6 Music was launched in March 2002 as part of the BBC’s portfolio of digital channels. It targets 25–44-year-old music-lovers, previously underserved by the BBC.

In a crowded radio music market it has established itself as a distinctive service valued by listeners. The music output is supported by news bulletins from a dedicated team of journalists focusing on issues relevant to the target audience, and a music newsgathering team has been established.

The next step is to heighten the level of interactivity, develop use of the archive and strengthen the station’s relationship with its audience. Initiatives will include high-profile outside broadcasts and events.

2,123

hours of current affairs, business and politics on Radio 4

2,106

hours of sport on Five Live

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

BBC Annual Report and Accounts 2003/2004 37

Governors’ review of services Radio

BBC 7

Remit

BBC 7 is a speech-based service providing pure entertainment to attract a new audience to speech radio. The network offers comedy, drama and readings, mainly from the BBC archive. It also aims to be the home of children’s speech radio, with daily live programming for youngsters.

BBC 7 was launched in December 2002 as part of the BBC’s portfolio of digital services. It has delivered on its commitments and has found an appreciative audience, largely by exploiting the resources of the BBC speech archive. In December 2003, in response to many requests from listeners, BBC 7 began broadcasting 24 hours a day.

The network has also provided a valuable service by broadcasting four hours a day of speech programming for children of a kind unavailable for the past decade.

BBC 7 has played a significant role in developing the market for DAB Digital radio. Research in the latter part of 2003 showed that 68% of people who had bought a DAB Digital radio had done so to receive new services, and when asked if there was a particular service they wanted to receive, 26% – more than for any other service – mentioned BBC 7.

A condition of the DCMS consent was that the service must not be developed at the expense of programming on Radio 4. This has been met by appointing the Controller of Radio 4 as the Controller of BBC 7. Scheduling complements Radio 4 to avoid editorial clashes and, where possible, joint events are promoted on both stations. The two networks have entirely separate budgets.

The next step is to further refine the offering to make it more attractive to the target audience and to find more ways to provide information and context around the archive.

2,852

hours of comedy on BBC 7

73

Proms concerts on Radio 3

38

BBC Annual Report and Accounts 2003/2004

BBC Asian Network

Remit

BBC Asian Network offers music, news, sport, debate, entertainment and drama for British Asians. It broadcasts primarily in English but also in a range of languages spoken by UK Asians. It aims to be the main forum for debating issues concerning British Asian communities.

As part of the launch of its portfolio of digital services, BBC Asian Network was relaunched as a national network in October 2002. Research had shown that the Asian community was more likely to listen to speech radio than the rest of the population, yet there was no national speech-based service regularly addressing issues of specific interest to British Asians.

The BBC’s commitment to a previously underserved audience has proved justified. The network tripled its audience by going national and now reaches one in five British Asians.

The BBC’s continuing commitment has been demonstrated by the investment of more than £1million in a new daily drama for the network, Silver Street.

The needs of first-generation Asians are met through 2,730 hours of programming in Punjabi, Mirpuri, Bengali, Gujurati and Hindi-Urdu.

163

hours of religion on Radio 2 in peak time

66%

of BBC Asian Network’s output was speech-based

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

There has already been significant investment in a dedicated news service –the network has 45 journalists and its own staff of sports journalists. The network provided a valuable platform during the war in Iraq for Muslim communities to debate the issues. We note the intention to widen the network’s news agenda to give a better sense of the importance and involvement of the Asian community in, for example, business.

BBC Annual Report and Accounts 2003/2004 39

Governors’ review of services New media

Overview

The BBC is a tri-media organisation. Much of its television and radio output is supported and extended by online and interactive provision, and is reported on elsewhere in this document.

We are strongly committed to bringing the benefits of digital technologies to everyone in the UK, whether through the internet, radio, television or mobile devices.

The BBC’s role in developing a digital UK is both direct – by encouraging media literacy, and indirect

– by encouraging digital take-up through the provision of attractive content.

The BBC’s new media services complement and enrich our broadcast services, extend our educational reach, and deliver public value by enabling people to communicate with each other in communities built around shared passions, interests and localities. We are working to ensure that these communities – especially where they involve the young or the vulnerable – operate in a safe environment.

40 BBC Annual Report and Accounts 2003/2004

bbc.co.uk

Remit bbc.co.uk: to use the internet to complement the full range of the BBC’s broadcast output, extending the depth, interactivity and ease of access to the information, education and entertainment on offer; and to encourage participation in the digital world and to provide a safe home on the internet.

In March 2004, for the first time, half the British population aged over 15 used the internet. Some 45% of them – more than 10 million – visited bbc.co.uk. This statistic has added to the evidence that the rapid growth of the internet in the UK has been fuelled by the availability of BBC content and by the efforts made by the BBC to open up the digital world to new users. A good example is the People’s War World War Two site which has been designed in partnership with Age Concern to introduce over-60s to the internet. It is attracting up to 140,000 users a month. The overall growth in use has been achieved despite a change in investment priorities that shifted funding away from the internet towards interactive television.

In 2003, as part of our review of bbc.co.uk, we endorsed criteria which new bbc.co.uk sites have to meet. They include: contributing to the BBC’s purpose and embodying BBC values; demonstrating value for money; providing distinctive content; and an assessment of potential market impact. Existing sites were also assessed. Some sites, such as Legacies,

Spy Watch and Science and Nature were decommissioned or slimmed down over the year. Others, such as the BBC Films site, were charged with becoming more editorially distinctive.

BBCi

Remit

BBCi: to offer all-day up-to-the-minute news, weather, education, entertainment and other information to all digital television audiences via the red button on the remote control; to enhance the value of the BBC’s television proposition to all digital audiences through video, audio, pictures and text.

Audiences to BBC interactive services have grown strongly over the year and now reach half the digital population monthly. The BBC’s 24/7 interactive TV service was relaunched with a simpler user interface and the number of new enhanced television (eTV) services was nearly doubled, to 190. For example, the drama documentary

The Genius of Mozart was enhanced with an interactive application – an illustration of how eTV can deepen and enrich the experience for audiences.

However, we note that the growth in people using interactivity is not keeping up with the growth in its availability. The BBC needs to understand and change this trend if eTV is to reach its full potential.

Monthly reach 2003/2004 of bbc.co.uk and BBCi (millions)

The BBC has begun piloting iCan, which attempts to engage people who feel disconnected from current political processes but who want to make a difference in civic life. iCan puts people in touch with one another and gives them tools to enable them to maximise their influence by working and campaigning together. This is potentially a very significant community initiative but it does carry editorial risks and we are monitoring developments to ensure that robust systems are in place to prevent the BBC’s impartiality being compromised.

We are also keeping under review the question of moderation of the BBC’s community sites. The BBC has traditionally used pre-moderation (checking messages before publication), and post-moderation (checking messages shortly after publication). This year, in response to the rapid growth in use of message boards and chatrooms, reactive moderation was introduced. Here messages are checked only when the BBC is alerted by users. This increases response times for users and reduces cost but carries editorial risks and we have asked management to ensure robust risk-management systems are in place.

We are clear that BBC message boards for children or vulnerable groups should always be pre-moderated. The BBC is continuing to work closely with the Home Office Task Force drafting guidance on moderation for the industry. In 2003 the BBC launched Chatguide, which gives guidance on using chatrooms.

BBC Annual Report and Accounts 2003/2004 41

Governors’ review of services News

Overview

Each hour, each day, the BBC transmits some three hours of news on 14 of its national radio and television networks. bbc.co.uk/news also puts out several hundred stories each day.

On each medium, and for each outlet, the news is tailored for its particular audience: children watching Newsround on the CBBC Channel; British Asians listening to BBC Asian Network; bbc.co.uk users checking the latest sports stories on their PCs; drivetime listeners catching up with Radio 4’s PM on their car radio, or evening viewers watching the Ten O’Clock News or Newsnight.

Although this output of news is huge, and hugely diverse, what draws it together and makes it distinctively BBC, is that it shares the same underlying core values. These are independence, impartiality and honesty.

These values always come under intense scrutiny, but never more so than in the year under review with the Hutton Inquiry. Important lessons have been learnt to ensure that journalism remains a key strength of the BBC. And as this review shows, BBC News displayed many strengths, not least the way BBC journalists reported the Hutton Inquiry itself.

42 BBC Annual Report and Accounts 2003/2004

BBC News

Remit

BBC News aspires to be the world’s most trusted news organisation: independent, impartial and honest. It aims to be truthful and fair, offering journalism that explores multiple viewpoints and gives voice to a wide range of opinions. BBC News seeks to act in the public interest and to resist pressure from political parties, lobby groups or commercial interests.

The major domestic story of the year – the Hutton Inquiry – posed particular problems for the BBC. Day after day, BBC journalists had to report – independently, impartially and honestly – on the behaviour of other BBC journalists, their own managers, the Director-General, the Chairman of the BBC and indeed ourselves as Governors. An edition of Panorama was commissioned and to ensure it pulled no punches, the usual line of editorial management (through the Director of News to the Director-General) was changed to make the Deputy Director-General – who had played no part in the Hutton narrative – the ultimate arbiter of whether the programme complied with the BBC’s editorial guidelines.

It is clear – not least from widespread favourable press comment – that the potentially acute problems posed by the BBC reporting impartially on itself were dealt with effectively across all BBC platforms.

There was some concern that the Hutton Inquiry might weaken audience trust in the BBC, but survey evidence indicates that the public’s trust in the BBC actually increased post-Hutton. Public approval of BBC news and current affairs in particular dipped slightly during the summer and autumn of 2003 but recovered by the end of the year.

423

million page impressions for bbc.co.uk/news in March

44

foreign BBC news bureaux

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

The main international story of the year was the war in Iraq and its aftermath. The conspicuous lack of national consensus here meant that, once again, the BBC’s impartiality came under intense scrutiny. BBC News passed the test. An ICM poll in April 2003 indicated that it had sustained its position as the best and most trusted provider of news.

The coverage of the war itself did have some limitations. There were times when military sources (forecasting the imminent fall of Basra, for example) were not treated with enough scepticism; other organisations had made technological advances that sometimes provided more vivid television coverage, and current affairs special programmes did not make the expected impact. But there was much to be proud of too, both in the breadth and depth of the coverage. The BBC successfully broadened the angle of vision to include a good range of Arab and Muslim opinion, and there was outstanding defence analysis on Newsnight and The World at One from Mark Urban.

In the aftermath of the war, there has been strong coverage and analysis, with the BBC able to deploy its rich resource of foreign bureaux to respond to the developing international repercussions. John Simpson’s Panorama, In the Line of Fire, deservedly won an RTS award, and Peter Taylor’s series, Third World War: Al Qaeda, and Maurice Walsh’s Pipeline Politics on BBC Radio 4 valuably explored a broader geopolitical struggle.

BBC Annual Report and Accounts 2003/2004 43

Governors’ review of services News

Away from Hutton and Iraq, there have been some notable innovations. Drama has been strikingly used to support analysis (in If… on BBC Two) and to engage audiences in public policy issues (in, for example, The Day Britain Stopped, about a fictional UK transport crisis).

On BBC One, the popular current affairs strand, Real Story with Fiona Bruce, steadily increased its audience through each of its three runs and will extend its run this year; and This World on BBC Two drew a larger average audience for foreign affairs than its predecessor, Correspondent.

There were some strong pieces of investigative journalism including Panorama’s Seroxat: Emails from the Edge, a follow-up to its original investigation into possible side-effects from the widely used anti-depressant based on audience response to the earlier programme; File on 4 has had another strong run, and BBC Radio Five Live’s documentaries have established themselves as a muscular presence on the network.

BBC News 24

Work to improve the quality of BBC News 24 bore fruit with the channel’s relaunch in December 2003. We wanted to see the distinctiveness of the channel reinforced by offering an agenda that is more analytical, more international and more diverse than its competitors, and which gives compelling and serious journalism a higher priority than market leadership. It is too soon for us to make a definitive assessment of the success of the relaunch, but early signs are encouraging.

Analysis on the channel has been strengthened, partly through the introduction of a new feature, Fact File, supported by BBC News’ Analysis & Research team and presented by Nick Higham, and partly through giving BBC News 24 better access to senior BBC correspondents who now appear regularly on the channel to share their expertise.

Domestically, the breadth and diversity of coverage has been increased by building a closer relationship with BBC newsrooms outside London. This has brought to the national audience strong stories that previously had only been seen locally. A similar process to increase the breadth of international coverage is under way with the BBC’s network of 44 foreign bureaux – though there is more work to be done here. More time and prominence has been given to business news.

Breaking news continues to pose difficult challenges. An important aim of any 24-hour channel is to be first with the news, and BBC News 24, with access to the world’s largest newsgathering resource, cannot escape the obligation to improve its responsiveness to breaking stories over time. But we are clear that it has to do this without compromising its commitment to accuracy and we recognise that a more detailed checking process may sometimes mean that BBC News 24 is not always the first for breaking news. A new set of guidelines and editorial processes recognise this challenge and aim to support the channel in delivering its commitment to speed and accuracy.

Although market leadership is not the key priority for BBC News 24, there are early signs that audiences are responding well to the changes. In January 2004, the first full month since the changes were put into effect, BBC News 24 outperformed Sky News in both weekly and monthly reach in multichannel homes, and for the first time in two years BBC News 24 moved ahead of Sky News in being perceived as the channel best for news.

44

BBC Annual Report and Accounts 2003/2004

5.1

million watch BBC One’s

Ten O’Clock News

2,072

hours of news on BBC One and Two

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

BBC Parliament

BBC Parliament became a full-time service in June 2003, broadcasting 24 hours a day (previously the channel broadcast only exceptionally in parliamentary recesses and at night). The extra air time has enabled the channel to offer additional coverage of debates and committees, plus further opportunities to see analysis programmes. Awareness of the channel has been improved through trails on BBC One, BBC Two and BBC News 24, and these have been effective in directing viewers to live coverage of key debates – recent examples include the Budget, and debates on tuition fees and on the Hutton Inquiry.

We are disappointed that Freeview viewers do not receive the service in full screen and we will continue to make clear this is a priority while recognising the capacity constraints and the responsibilities of the Freeview Board.

bbc.co.uk/news

Usage of bbc.co.uk/news and of the news services on interactive television have continued to grow steadily. bbc.co.uk/news is consistently the most widely used area of bbc.co.uk (reaching 26% of the online population) and generates the largest share of page impressions.

BBC Annual Report and Accounts 2003/2004 45

Governors’ review of services Learning

Overview

The BBC was founded to inform, educate and entertain, and education remains central to the BBC’s public purpose.

Education itself is undergoing a revolution. Technology is transforming people’s ability to learn when and how they want. At the same time there is an increasing desire for achievement and self-fulfilment. The last licence fee settlement laid particular emphasis on the BBC’s commitment to education – in particular the provision of learning support for schools and for encouraging lifelong learning – and the exploitation of the new learning possibilities opened up by interactivity.

As this review shows, progress has already been made in this area, and in 2005 a very significant further step will be taken with the piloting of the Digital Curriculum, a free online service covering the key elements of the school curriculum.

46 BBC Annual Report and Accounts 2003/2004

69%

of 15–16 year olds used

GCSE Bitesize

575%

increase in sales of

The Big Read top titles

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

The BBC continues to provide curriculum-based content and support to children, parents and teachers via radio, television and online. The big success has been the Bitesize revision service which reached 69% of its target audience of 15–16 year olds in 2003. Some 400,000 users accessed the service via interactive television in the 2003 exam period. BBC Two continues to host the BBC Learning Zone overnight, and the BBC’s long partnership with the Open University (OU) is evolving productively, with the OU now co-producing mainstream BBC factual output such as Leonardo.

The next big step will be the Digital Curriculum – a free online service providing high-quality interactive resources for use at school, at home or in the community, and covering key elements of the school curricula of England, Scotland, Wales and Northern Ireland for children aged four to 16. It will offer a variety of resources including video, animation, interactive games, printable worksheets, text pages and illustrations, allowing teachers to adapt the material to the needs of their pupils. All remaining regulatory hurdles have now been passed. The material will be piloted in schools in 2005, with a full launch planned for early 2006.

bbc.co.uk/skillswise provides a valued resource for people who want to improve their literacy and numeracy skills. The Skillswise newsletter reaches 9,000 basic skills tutors and the site drew 2.8 million page impressions in November 2003. As IT literacy becomes the third basic skill alongside numeracy and literacy, the service provided by bbc.co.uk/webwise will become

increasingly important. Webwise teaches basic internet skills and draws approximately 225,000 unique users monthly.

The BBC educational output goes much wider than the provision of formal learning materials. Much factual output is supported by online and interactive material that extends learning. The BBC also mounts a number of large cross-platform learning events during the year. The Big Read – a vote to find the UK’s best-loved novel –made a real impact in 2003 through programming on television and radio and through its website. But – just as importantly – it also generated enthusiasm for reading. The BBC worked with three partners: The Reading Agency, The National Literacy Trust and The Book Trust. Feedback was very positive: library loans of the top titles increased by 56%; sales of the top titles increased by 575%; more than 2,000 reading groups signed up, and many schools used the series to encourage reading.

A significant part of the BBC’s education output is its regular social action campaigns. This year’s main campaign was Taking Care. This aimed to raise awareness about children in care and those leaving care and to challenge perceptions about the issues. The campaign was on television (including interactive television), radio and online, and it did succeed in raising awareness and drew a good level of response. But in terms of changing perceptions it lacked the impact of the previous campaign, Hitting Home, which dealt with domestic violence. The next campaign will deal with obesity, and we will want to see evidence that it delivers enduring impact for this important initiative.

BBC Annual Report and Accounts 2003/2004 47

Governors’ review of services Nations & Regions

Overview

The strategy to invest an additional £50million a year over three years in a wider range of locally produced output has helped to raise audience approval in the nations. In 2003/2004 BBC Television reach grew everywhere except in Northern Ireland (where the figure is still higher than two years ago). The BBC Where I Live websites are meeting local needs, as evidenced by the very rapid growth in use. Other initiatives such as the Voices project are also helping to strengthen the sense that the BBC takes local concerns seriously.

We are concerned that not enough material from the BBC Nations is shown on network television. It is not clear if the problem is one of supply or demand. We wish to see greater strategic collaboration between network commissioners and the BBC Nations & Regions to produce more commissions that reflect the nation in which they have been made.

The loss of some sports rights will pose difficult challenges in the years ahead.

48

BBC Annual Report and Accounts 2003/2004

BBC English Regions

Remit

BBC English Regions’ aim is to be the most trusted and creative local broadcaster in England, serving a widely diverse range of urban and rural communities. It sets out to provide an accessible yet authoritative service of news, current affairs, politics, arts and music, religion, sport and weather on regional television, local radio and online.

The 40 BBC Local Radio stations play a key role in the English Regions, enabling the BBC to meet the needs of large audiences who would otherwise not be reached by our radio output. Three million BBC Local Radio listeners do not listen to any other BBC Radio and 1.7 million do not listen to any other radio at all.

The stations provide more than 228,000 hours of programmes each year, most of it original. The weighting of the programming towards speech (60% speech, 40% music, with speech at key times of the day such as breakfast and drivetime) makes their output distinctive in a highly competitive market where the majority of independent local radio stations offer a music-based service.

Average reach of BBC Local Radio across England was marginally down for the second year in a row to 20.9% in quarter one of 2004 (from 21.4% in quarter one of 2003) although time spent by listeners with BBC Local Radio was up. Programming caters predominantly for an older (age 50 plus) audience and we have encouraged management to attract a slightly younger audience. Services such as breakfast news and travel have the potential to act as entry points for younger listeners.

5.7

million people across the UK watch BBC regional early evening news

228

thousand hours of BBC Local Radio

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

In broad terms, BBC early evening regional television news maintained its significant lead over ITV across England in 2003/2004, ending the period with an average 4.8 million viewers per programme (ITV 3 million) and an average weekly reach of 21.4%. This overall picture, however, disguises large variations in different regions. Of the 12 BBC English Regions, the BBC early evening news drew larger audiences than ITV in ten regions, but in the relatively new South-East region, ITV drew a share of 30%, compared with the BBC’s 23%; and in the North East region, the performance of the BBC and ITV closely tracked one another, with ITV ending the year slightly ahead.

The BBC English Regions’ current affairs strand Inside Out performed well during the year. Each television region has its own edition and the combined audience averaged 3.1 million. Inside Out Extra showcased the best of the output for a national audience.

BBC English Regions’ local political coverage has continued to benefit from its move from BBC Two to BBC One. The local politics segment of The Politics Show, incorporating national and regional reporting, drew an average audience of 1 million over the year – more than double, and in some places treble, the audience that used to watch on BBC Two.

Output from the BBC English Regions, particularly television, continues to be heavily concentrated in news, current affairs and politics. Extending the range of genres offered – for example in sport, the arts and regional events – is an important issue for the future.

BBC Annual Report and Accounts 2003/2004 49

Governors’ review of services Nations & Regions

BBC Scotland

Remit

BBC Scotland aims to produce a rich and broad range of high-quality and distinctive television and radio programmes for all age groups, properly reflecting the diverse nature of Scotland and celebrating all aspects of Scottish culture and heritage.

BBC Scotland carried out an extensive review of its journalism in 2003, consulting licence payers, opinion formers, special interest groups, MSPs and MPs. The question of a ‘Scottish Six’ – an integrated hour of Scottish, UK and international news, produced in Scotland, on BBC One from 6–7pm – was explored. Although a sizeable minority was in favour, the balance of opinion did not want to change the current schedule – the Six O’Clock News, followed by Reporting Scotland. As a result BBC Scotland decided not to recommend any changes.

Reporting Scotland remains the most watched news programme in Scotland and increased its audience across the year. Its average weekly reach in 2003/2004 was 24.1%. The programme delivered strong coverage and analysis during the Scottish election campaign.

A key finding from the journalism review was a demand from some audiences for the BBC to provide richer coverage of local news, and some anxiety that the M8 corridor and the pull of Glasgow and Edinburgh is dominating the Scottish news agenda at the expense of other, distinctive parts of Scotland. BBC Scotland is examining ways of responding, possibly through a combination of radio and online.

BBC Radio Scotland’s reach fell slightly to 23.4% in quarter one of 2004 (from 23.8% in quarter one of 2003).The journalism review indicated low levels of awareness of BBC Radio Scotland, but very high levels of appreciation among those who did listen – suggesting that more listeners could be attracted by stronger promotion. This is a priority for the station.

The loss of television rights for Scottish Premier League football was a severe setback, although radio and online rights were retained. Football coverage has played a significant role in driving approval and BBC Scotland faces the testing challenge of developing appropriate replacement output.

The twice-weekly television drama River City, which had a slow start, has begun to bed down in its second year, with stronger storylines and characterisation. River City represents a significant investment in nurturing Scottish writing, performing and craft talent, and continued improvement in its performance remains a priority.

BBC Scotland delivered strong output for the network including Monarch of the Glen and Two Thousand Acres of Sky for BBC One, Restoration for BBC Two, plus Restoration Secrets for BBC Four. CBBC Scotland produced output for all CBBC, including key programming such as Balamory and Byker Grove.

Gaelic output from BBC Scotland has included Air Ais air an Ran Dan – the first Gaelic comedy to transmit for six years and the successful Voices project with Lews Castle College in Stornoway on BBC Radio nan Gaidheal.

50

BBC Annual Report and Accounts 2003/2004

Where I Live

Where I Live is the name of a series of local websites created by BBC Nations & Regions to provide a local dimension for bbc.co.uk. More than 50 sites are now live, with more planned, offering local news, religion, sport, weather, travel, webcams, events guides and interactive services. The Cymru’r Byd website offers a unique online news and information service in the Welsh language. Local portals also offer tailored news, information and interactivity to people in seven different Scottish regions.

BBC Cymru Wales

Remit

BBC Cymru Wales aims to produce high-quality, distinctive programming which reflects the unique culture and history of Wales, and its social and political landscape. Its key ambition is to foster an inclusive and participatory engagement with audiences in Wales across its range of services.

BBC Wales’s news output, especially Wales Today with an average weekly reach in 2003/2004 of 25.8%, continued to perform strongly. Political coverage included the regular political programmes Dragon’s Eye,

The Politics Show and Maniffesto; and there was comprehensive reporting and analysis of the National Assembly elections, as well as coverage of the National Assembly proceedings on S4C2.

BBC Wales’s strategy of developing fewer, stronger brands for local television bore fruit over the year as evidenced by the drama series Belonging; the observational documentary series, Hospital, on the work of the University of Wales Hospital in Cardiff; and the post-war history series, Wales in Our Time with John Humphrys.

BBC Wales provided network output across a range of genres, including Stalin: Inside the Terror and Carrie’s War. However, very few of these commissions reflected contemporary Wales. This is a priority for BBC Wales and the network to address together.

662

hours of Welsh language output made for S4C

976

hours of television exclusively for Scotland

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

One of the objectives set for BBC Wales last year was to increase awareness of BBC 2W and progress has been made. Viewing figures have increased and, significantly, research shows that more than 50% of viewers are under 45 – a much younger profile than for BBC One or BBC Two. A new schedule was launched in October, and output such as I Love Wales and Combat Pilot brought new viewers to the service. BBC 2W was a major broadcaster of events throughout the year, including BBC Singer of the World in Cardiff and Brecon Jazz.

BBC Wales continues to be a very significant provider of programming for S4C, the Welsh language television service. BBC contributions including sport, news and drama gained a 40% share, rather greater than their contribution in terms of hours, and Pobol y Cwm (drama) and Newyddion (news) are cornerstones of the S4C schedule.

Reach of BBC Radio Wales fell slightly to 20.8% in quarter one of 2004 (from 21.8% in quarter one of 2003), but reach of BBC Radio Cymru rose significantly to 8.9% in quarter one of 2004 (from 6.0% in quarter one of 2003).

Some challenges lie ahead for BBC Wales. In particular, the loss of rights to the Heineken Cup Rugby and to the Football Association of Wales’s fixtures is a setback.

BBC Annual Report and Accounts 2003/2004 51

Governors’ review of services Nations & Regions

BBC Northern Ireland

Remit

BBC Northern Ireland’s aim is to provide something of value for everyone in the community through a broad range of programmes and services which inform and stimulate debate, celebrate and support cultural and sporting life, and reflect local interests and experiences for audiences within Northern Ireland and across the rest of the UK.

Part of the distinctiveness of BBC

Northern Ireland lies in the range of genres across which, uniquely among competitor broadcasters, it operates. It is the only producer of television and radio drama in Northern Ireland, the only service that regularly broadcasts Irish language and Ulster Scots programmes, and the only provider of schools programming for the Northern Ireland curriculum. Its political coverage is more extensive and more diverse than the competition, and BBC Northern Ireland showcases arts and sports events of particular significance for its audiences.

100

million page impressions to Where I Live sites in March 2004

BBC Northern Ireland’s early evening news programme Newsline held its share steady at 24% in 2003/2004. Its average weekly reach was 19.8%. The programme has been enhanced during the year: additional reporters have been appointed to cover issues affecting communities in Armagh and South Down; and the interactive feature Newsline Listens has been developed. The current affairs programme Spotlight won its fourth RTS award in five years for its report Loyalists at War. BBC Northern Ireland’s political programmes also attracted strong audiences. BBC Northern Ireland’s election coverage was widely praised and drew large audiences.

One notable innovation was Would You Pass the 11 Plus? This was the BBC Nations & Regions’ first entirely interactive local programme in which the audience took part in an 11-plus style test. It delivered an audience share of 29%, and the results sections, which ran in the late evening, achieved a share of 38%.

The volume of drama produced for the networks was disappointing and improving this is a key priority for the coming year. That said, there was some memorable output. Holy Cross, which told the story of two fictional families caught up in the real events of 2001 on the Ardoyne Road in Belfast, made an impact, as did Murphy’s Law, Messiah, and Gunpowder Treason and Plot.

52

BBC Annual Report and Accounts 2003/2004

39%

of people in

Northern Ireland regularly listen to Radio Ulster

For more broadcasting facts and figures, see pages 58 to 67 and 136 to 146

Memorable network factual programmes included Dinner With Portillo and Charles II: The Boy Who Would be King.

In entertainment, Just for Laughs performed well in a difficult Saturday night slot, and the political satire, Folks on the Hill, an animation series which originated as a BBC Radio Ulster series, broke new ground. But some entertainment is formulaic and a new comedy unit is to be set up to develop distinctive and innovative comedy content.

In radio, BBC Radio Ulster remains the market leader by a significant margin with a reach of 39.6% in quarter one of 2004. Progress has been made in refreshing the schedules. BBC Radio Foyle continues to perform well, with a reach of 23.5%.

Voices

Voices is an attempt to give expression to those whose voices are seldom heard. Producers from BBC Nations & Regions worked with local communities across the UK in 2003/2004, many in disadvantaged or remote areas, giving people the tools and media skills to enable them to tell their stories – and to act as a catalyst for practical projects. In Burnley, an Imam and an Anglican vicar swapped jobs to try to increase understanding between faiths and recorded audio diaries about their experiences; in Jersey, BBC staff helped people with English as a second language to improve their language skills and give them basic computer training so that they could use the BBC Radio Jersey website as a tool for improving their English; in Kent, the Romany Gypsy community recorded their experience of prejudice.

BBC Annual Report and Accounts 2003/2004