BBC Annual Report and Accounts 2002/2003 Annual Report and Accounts 2002/2003 Our purpose is to enrich people’s lives with programmes and services that inform, educate and entertain Our vision is to be the most creative organisation in the world Our 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 Purpose, vision and values Contents 2 Chairman’s foreword An historic and successful year as the BBC delivered the full range of its digital services 4 Board of Governors The men and women who make sure the BBC puts the public interest first 5 Running the BBC How the BBC Governors, Director-General and Executive Committee work to ensure the BBC serves the public effectively 6 Summary of the year Key facts about the BBC’s finances and audiences in 2002/2003 8 Governors’ assessment of performance How well did the BBC meet the objectives set by the Governors for 2002/2003? 16 Director-General’s review A richer range of more distinctive programmes created a landmark year for the BBC 18 Executive Committee The directors responsible for the BBC’s output and operations Review of services About BBC programmes and services in 2002/2003 20 Television 28 Radio 36 Nations & Regions 42 News 46 Learning 48 New Media 50 BBC World Service & Global News Commercial activities How the BBC’s commercial subsidiaries performed 54 BBC Worldwide Limited 56 BBC Ventures Group Limited 58 Putting audiences first What audiences told the BBC on key issues and how the BBC was accountable to licence payers and Parliament 64 The BBC in the community What the BBC did to achieve high standards of corporate social responsibility 67 BBC people and talent Training, talent and how Making it Happen is developing creativity and values 68 Compliance Governors and auditors report on all aspects of the BBC’s legal, financial and management obligations 82 Financial review Overview of the BBC business and complete audited accounts 85 Financial statements 122 Broadcasting facts and figures 132 Getting in touch with the BBC 133 Glossary and other information Front cover:The Queen’s Golden Jubilee celebrations. Left: DJ Erick Morillo at BBC Radio 1’s Newquay Dance Party. Above, clockwise from the top: The Life of Mammals, Bitesize, 3 Non-Blondes, Jeremy Vine, The Lost Prince, listening-in in Baghdad, The Office. 1 Chairman’s foreword 2 Annual Report and Accounts 2002/2003 The BBC celebrated its 80th birthday with a concert at the Birmingham Symphony Hall last November. For an octogenarian, the organisation is in rude health.Audience approval ratings have climbed to new highs, and all the new digital television and radio services which were planned three years ago have been launched.A portfolio of services is now in place which is suited to the digital age, and which enables the BBC to bring more value than ever before to all of our licence payers. Overall, the Governors believe that the BBC has enjoyed a very strong year.A clear improvement in the range and ambition of programmes has been achieved, especially on BBC One, and audience numbers have been very robust in the face of increased competition. Two events have dominated the past year.The Queen’s Golden Jubilee celebrations, and particularly the magical weekend of parties across Britain last June, united the nation in a way which some had thought impossible in the modern age. Less happily, the war in Iraq challenged the unity of the nation and therefore put a spotlight on the accuracy and impartiality of BBC reporting. It is the view of the Governors that the BBC responded magnificently to both of these great events. Even our harshest critics recognised that the BBC brought something special to its coverage of the Jubilee. Without the universal reach of the BBC, and without its unparalleled skill in bringing such stirring events into every home in Britain, the sense of a truly national celebration, of an outpouring of patriotism, would have been much diminished. The onset of war in Iraq provided a different challenge. As ever, the BBC had an overriding responsibility to licence payers to reflect and analyse the debate that was happening in the country, and to report the war itself with a total commitment to impartiality and the truth.The troubled circumstances of war were no reason to compromise the editorial standards of the BBC’s news output. Despite periods of intense pressure from across the spectrum, BBC news continued to serve licence payers with its traditional attachment to the truth, and nothing but the truth, during the war. Of course there were some individual errors along the way, but our audiences recognised that the trust they have always placed in the BBC would not be betrayed. Not only did they turn to the BBC as a source of news in overwhelming numbers, but the evidence clearly shows that they trusted the BBC more than any other information source. BBC journalists and news professionals placed themselves in great jeopardy to serve audiences during the war. Six were injured and two were killed.We continue to mourn their loss. In other, more normal, arenas, the BBC enjoyed a year of considerable progress.The Governors expect it to be a public service broadcaster that can appeal to a mass audience.We reject the notion that the BBC should be marginalised into a small corner of the broadcasting landscape, or that it should overlook its historic mandate to serve all UK audiences with equal passion.The BBC must be allowed to respond to the opportunities created by new media technologies. And we doubt whether a better way can be found to fund the organisation than the licence fee. To retain public legitimacy, the licence fee must of course provide value for money to every household. So audience ratings, and particularly audience reach, must be a relevant indicator of the BBC’s success. Here the BBC has done well, with radio flourishing almost across the board, BBCi reaching new heights in page impressions and user reach, BBC One increasing its share in both analogue and multi-channel homes, and BBC Two remaining the only terrestrial channel to increase overall share in the face of vastly increased digital competition. But we do not need to be reminded that mass audiences are not enough to sustain the objectives set in the BBC’s Charter. Annual Report and Accounts 2002/2003 3 Nothing would be easier than to maximise audience share with populist and derivative programming. And nothing would be more pointless.The BBC’s mission is to provide a package which is richer and more ambitious than could be provided by the commercial sector alone. Again, the BBC has done well in this critical objective in the year under review. It has been a year of great programmes, like The Gathering Storm, The Life of Mammals, The Lost Prince, Great Britons and countless others. It has been a year in which BBC One and BBC Two have shown the benefit of greatly increased programme budgets, and in which the BBC’s digital television channels have greatly added to the daily choice available to viewers. It has been a year in which BBC national and local radio has managed, even against its own demanding standards, to attain new distinction. Remarkably, more new national BBC services were launched over the last 18 months than in the first eight decades of the BBC’s history. Some of these new services are already a success. Some will take time to build. All of them will be needed to fulfil the BBC’s public service remit in the years ahead. The launch of new services and the greater investment in programmes has meant that the long-planned reduction in the BBC’s positive cash balance has happened in the past year. The BBC is on target with all its medium-term financial objectives. The commercial businesses are thriving in difficult market conditions, and are returning funds to benefit our licence payers.The BBC has attained, and exceeded, all the Governors’ targets to reduce bureaucracy and waste inside the organisation.Three quarters of all the extra money that has been ploughed into programmes in recent years has come from self help, not from a higher licence fee. The Director-General, Greg Dyke, his senior management team and the staff they lead deserve to be rewarded adequately for what they have achieved.The BBC’s policy, over time, is to pay executives and staff at around the median for comparator groups in other public or private UK organisations.This year, because of the reduced competition for top staff from the private sector, the average bonus paid to the executive group has fallen despite the excellent performance of the organisation. Shortly after becoming Chairman, I announced reforms to the BBC’s system of governance, designed to sharpen the distinction between the Governors and the Executive, and to set more transparent objectives for the organisation to fulfil. This report gives a much fuller account by the Governors of the extent to which the objectives which we set a year ago have been attained. Progress has been made across the board, but further improvement is needed in many areas, and most of the objectives have therefore been left in place for the year ahead. One objective will never change. It is no accident that the organisation is named the British Broadcasting Corporation. As foreign influences threaten to become harder for the commercial sector to resist, it will be even more important for the BBC to uphold the standard of indigenous programming in the nation whose name we proudly bear. It is a challenge which we relish, and are ready to meet. Gavyn Davies Chairman