Commercial activities: BBC Worldwide Limited 54 Annual Report and Accounts 2002/2003 Despite an economic downturn in the global advertising, television and magazine markets affecting many of its customers, BBC Worldwide Limited achieved record sales from continuing operations*, record profit and a record cash flow contribution to the BBC.The company returned £123million to the BBC, an increase of 16% on last year’s record contribution of £106million. Sales from continuing operations, including its share of joint ventures, rose to £640million with profit up to £44million. BBC Worldwide exists to maximise the value of the BBC’s content assets for the benefit of the licence payer, to reinvest its earnings into public service programming and to extend the enjoyment of BBC programming among UK audiences and around the world. In performing its commercial role, BBC Worldwide conforms to rigorous fair trading requirements under the BBC’s Royal Charter (see page 68). During the year, the company successfully implemented an additional series of corporate governance and risk management measures. More than 40,000 hours of television programming were sold in 2002/2003. According to British Television Distributors’ Association figures for 2002, BBC Worldwide accounted for 54% of the total UK television export market, its highest share to date. Some of the BBC’s most creative programmes, such as The Life of Mammals and The Blue Planet, were also the top export titles, supported in their development by BBC Worldwide investment.This year’s export success stories from independent production companies include Spooks, the BBC One series from Kudos, launched in the USA as MI5. Coverage of the Golden Jubilee concerts was sold to more than 80 countries. 160,000 DVDs were also sold. BBC Worldwide subsidiary Audiocall handled the global ticket * Continuing operations includes BBC Worldwide’s share of joint ventures but excludes BBC World and beeb.com £ millions 123 106 96 82 81 75 53 BBC Worldwide cash flow to the BBC 2002/2003 2001/2002 2000/2001 1999/2000 1998/1999 1997/1998 1996/1997 Source: BBC Finance Above: Known as MI5 in the USA, the BBC’s Spooks drama series has now also been sold to Russian television. Right: Radio Times sold its 15 billionth copy during the year. Annual Report and Accounts 2002/2003 55 ballot, with more than 3,000 phone lines in nine languages. Proceeds from all these activities went to charity (see Donations, page 81). The success of The Office demonstrated BBC Worldwide’s ability to support and market the most innovative of BBC programmes.The series sold to 25 territories; aired on BBC America to critical acclaim; became a best selling book of scripts, and sold more than 1 million videos and DVDs, becoming the UK’s best selling video/DVD television title. During the year, BBC World transferred to a new division (see page 51). With a reach of 550 million homes (including BBC World), BBC Worldwide is one of the world’s biggest international television channel operators. BBC America has achieved remarkable success, reaching 35 million homes across the USA, and becoming the USA’s second-fastest growing cable channel.The BBC, BBC Worldwide and Discovery Communications, Inc. agreed a landmark ten-year extension to their global co-production partnership. BBC Worldwide’s joint venture with Flextech Television, UKTV, was once again profitable, despite the advertising recession and closure of ITV Digital. It maintained its commitment to new channels with the launch of UK Bright Ideas and UK History. BBC Worldwide is the UK’s biggest hardback non-fiction publisher both by value and by volume. BBC Books became market leaders in gardening and history titles as well as in food and drink, and television tie-in titles. David Attenborough’s The Life of Mammals, and his autobiography Life on Air, were among the year’s most successful titles, selling a total of more than 368,000 copies and winning WHSmith People’s Choice Book Awards. BBC Audiobooks won a record 18 Spoken Word awards, including Publisher of the Year. Some of the best BBC radio talent was released on audio, such as BBC Radio 4’s Dead Ringers. BBC Magazines is the UK’s third-largest magazine publishing business, reaching almost one in five of all UK adults. BBC Magazines increased circulation by 2.2% year on year in the second half of 2002 and improved profitability. Radio Times sold its 15 billionth copy during the year and a new layout helped readers to make sense of the multichannel environment. With the top six pre-school titles, BBC magazines are clear favourites with younger readers. In a difficult year for children’s properties, Fimbles emerged as a major success. Its universal theme of children’s natural desire for discovery is proving popular with broadcasters around the world, and Fimbles has already sold in countries from France to Korea.The smallest Fimble was the UK’s top selling soft toy at Christmas. BBC Learning developed innovative partnerships with major educational institutions and publishers including the Open University.The Lifesign project, a partnership with four UK universities, is making BBC science programmes such as The Human Body available on broadband for all students in UK further and higher education. BBC Worldwide was again awarded the Worldwide Fund for Nature’s top rating (three-star) for its continued commitment to the environment, and was a National Gold Winner in the Green Apple Environmental Awards. In total, BBC Worldwide won a record 106 awards during the year, and a national poll voted the BBC Britain’s greatest export. Above: BBC America is the USA’s second fastest growing cable channel. Right:The Fimbles – a hit round the world from France to Korea. BBC Worldwide is Europe’s top exporter of television programmes. Global exports The BBC Ventures Group of companies was launched in 2002 to realise the commercial value of the BBC’s media services and facilities both within the BBC and externally in order to return cash and cost savings of £300million back to the BBC over a five-year period. BBC Ventures Group faced difficult market conditions with many international media businesses’ investment decisions affected by a volatile stock market. Despite those uncertainties, the Group had a strong sales year, producing an overall trading consolidated profit. BBC Ventures Group comprises four commercial businesses: BBC Broadcast, BBC Resources, BBC Technology and BBC Vecta.Together the businesses have almost 3,600 staff, sales of £440million (of which £40million is from sources external to the BBC) and are leading providers of creative and technical broadcast services, production and facilities, both in the UK and internationally.The four businesses together are involved in all areas of the modern media lifecycle from the converging media, broadcast, technology and telecoms industries to content origination, management and distribution. BBC Ventures Group’s strategic approach in the past year has been to drive efficiencies within the businesses, expand internationally, develop innovations and grow external revenues.The year saw an important turning point when, for the first time, all the Group’s businesses exceeded financial targets and returned real value to the BBC.The Group turned a profit before interest and tax of £14.5million, having delivered price reductions back to the BBC of £23million. BBC Resources BBC Resources had a remarkable summer of sport and national celebration. It provided the BBC and other clients with extensive outside broadcast facilities for major events including the Golden Jubilee celebrations, the Commonwealth 56 Annual Report and Accounts 2002/2003 Commercial activities: BBC Ventures Group Limited Above: Party at the Palace was a huge operation for BBC Resources. Far left: Wireless technology from BBC Vecta with new digital radio camera. Left: Colledia, BBC Technology’s media lifecycle management software, was launched. Games and World Rally Championships.The company also developed initiatives to attract more independent production companies to take advantage of the BBC’s facilities and studios. In addition, the post-production side of the business worked closely with production customers to find new and innovative ways of keeping pace with evolving technologies. BBC Resources, with a staff of 1,400, has evolved into the largest production facilities business in Europe and supplies services in the outside broadcast, studios, post-production, design and costumes and wigs market. All areas of the business have exceeded profit expectations for the year. BBC Technology BBC Technology was created in 2001 to draw on the BBC’s expertise in the design, build and operation of systems for creating, managing and distributing content across all broadcast, digital media and interactive platforms. Customers today range from BSkyB to the South African Broadcasting Corporation.The successful acquisition of IXL’s digital media solutions business based in San Francisco and Atlanta accelerated the development of the business in North America. During the year, BBC Technology played a pioneering role in managing the production of audio-visual content for the UK’s first 3G service, delivered by 3; services include the processing and editing of football highlights so that fans can see their favourite goals on a mobile handset’s small screen. The financial year ended with a major deal with US company ESPN, a new contract with satellite broadcaster DirecTV and the launch of Colledia, an award-winning, innovative product portfolio for broadcasters that is set to transform news, sport and production environments. BBC Broadcast Launched in April 2002, BBC Broadcast offers the complete range of services required to launch, promote, play out and manage channels and services across television, the internet and mobile devices. It currently plays out 25 television channel streams and 12 interactive television streams for public service, commercial and international broadcasters and publishes bbc.co.uk. During a busy year the company worked with the BBC to launch and promote its new digital television, interactive television and radio services; with UKTV to launch extensions to its existing channels and two new digital channels as well as delivering creative projects for Discovery Networks Europe, Emirates Media, HSBC, Central Office of Information and a number of leading advertising agencies. BBC Broadcast received industry recognition from the RTS, British Interactive Multimedia Association (BIMA) and Promax for the effectiveness of its channel and programme identity and image campaigns. BBC Vecta Created from Kingswood Warren Ventures and renamed in 2003, BBC Vecta’s task is to bring the very latest developments in media technology products to a wider marketplace and return revenues to the BBC.Working closely with the BBC’s award-winning Research & Development team and other outside partners, its first new product innovation is the revolutionary Digital Wireless Camera which eliminates the need for the cabling required by outside broadcasts, resulting in greater flexibility and savings. BBC Vecta’s wireless broadcast division, BBC WiScape, has an extensive network of partners across Europe committed to extending the reach of the new camera to broadcasters around the world. BBC Ventures Group’s cutting-edge technology and resources made 2002’s summer of sport and celebrations unforgettable. Big picture 57 Left: UK History channel was launched and promoted by BBC Broadcast. Right: BBC Technology and BBC Broadcast provide instant replay for 3G phones.