Annual Review 2007/2008

BBC World Service launched its first Grant-in-Aid funded television channel in the financial year with BBC Arabic going live in March 2008. This strategic development followed a significant realignment of spend within BBC World Service over recent years and represented a major achievement delivered on time and on budget. Although 2007/08 was marked by a number of other financial challenges, BBC World Service ended the year on target.

In terms of its funding arrangements, 2007/08 formed the final year of the 2004 Spending Review period. BBC World Service received £6.5 million of new baseline Grant-in-Aid as part of that settlement. When combined with additional income to help create the planned Persian television service, to be launched in 2008/09, funding from the Foreign and Commonwealth Office totalled £255 million for the year.

BBC World Service ended 2007/08 with a surplus of £0.1 million. This result comprises a deficit of £2.8 million on operating activity offset by a surplus of £2.9 million on capital funding.

The operating deficit includes £5.6 million of restructuring costs. These reflect the need to incur expenditure in order to achieve the savings required in future years. The savings resulting from this restructuring will begin to take effect in 2008/09. A number of other financial challenges were addressed in the year. These included funding increases in pension costs and meeting additional programme coverage costs as a response to the international news agenda. These additional costs were dealt with through the implementation of previously announced savings plans, through reductions in programme distribution costs and via a range of smaller measures across the business, whilst maintaining radio and online output in 33 languages.

Over £30 million was invested in capital projects in the year. The primary focus was on the completion of key components of the Content Delivery Programme, a series of projects designed to replace and enhance existing distribution systems, and on the launch of Arabic television. This included significant infrastructure spend at the Egton Wing of the new News Centre in central London to enable television to be produced there. Outside the UK, major capital projects included the re-engineering of the Ascension Island transmitter station - a programme of work that will run for several years and save significant costs.

Looking ahead, the 2007 Comprehensive Spending Review settlement has set the financial framework for BBC World Service for the period from April 2008 to March 2011. In addition to securing new funding to create Persian television and to take Arabic television from 12 to 24 hours per day, the settlement sets tough savings targets in order to meet rising costs. Against that background, 2008/09 promises to be another dynamic but challenging year.

Richard Thomas
Chief Operating Officer and Director of Finance