Annual Report and
Accounts 2005/2006

Purpose, vision and values


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

The BBC’s 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

Page 2 Chairman’s statement 

Page 4 Director-General’s report

Page 6 The BBC now and in the future

Page 10 Board of Governors

Page 12 Executive Board


Page 14 Governors’ review of objectives


Page 22 The BBC at a glance


Governors’ review of services

Page 24 Television 
Page 32 Radio 
Page 40 New Media 
Page 46 News 
Page 50 BBC World Service & Global News
Page 54 Nations & Regions

Page 58 Governors’ review of commercial activities

Page 60 Being accountable and responsible

Page 68 Performance against Statements of Programme Policy commitments 2005/2006

Page 76 Compliance

Page 92 Financial review
Page 95 Financial statements 

Page 140 Broadcasting facts and figures
Page 151 Getting in touch with the BBC
Page 152 Other information 

Chairman’s statement

This is the last annual report from the BBC Board of Governors, which is to be replaced under the new draft Royal Charter by the BBC Trust.I would like to 
pay tribute to the work of all Governors over the last 80 years.The fact that the independence of the BBC endures is due in no small part to their robust 
stewardship – sometimes in the face of fierce onslaught from political and commercial vested interests. 

The pressing need for modernisation of the BBC’s governance arrangements was recognised by my predecessor as Chairman, Gavyn Davies, and the Board has been 
able to build on the work he and his fellow Governors began.This work will be completed by the Trust using the new tools at its disposal under the new Charter:
Purpose Remits, Service Licences and Public Value Tests (for the details of these, see The BBC now and in the future, page 9). 

At the heart of the new arrangements is an explicit recognition that the Trust exists to represent the interests of licence fee 
payers, not the narrow interests of the BBC as an institution. Although the new structures will not be in place until the new 
Charter takes effect, in January 2007, the present Board of Governors fully supports the changes and is already operating within 
the spirit of the new Charter. 

As a result, the relationship between the Board and the Executive – those charged with the day-to-day running of the BBC – 
has begun to change.There is now real separation between the two bodies, enabling the Board to exercise independent oversight 
of the work of the Executive.This will intensify in the future as the Trust uses its new powers to ensure rigorous, 
independent and fully transparent scrutiny of the work of the Executive. 

The main function of the Trust will be to ensure that licence fee payers’ expectations of the BBC are fulfilled in terms of the 
quality and value for money of its services, and that the BBC remains focused on fulfilling its six public purposes as set out 
in the new draft Charter. In representing the interests of licence fee payers, the Trust will recognise that these interests go 
beyond their direct interest in the BBC. Licence fee payers do not exist solely on a media diet provided by the BBC.They value 
the choice of services provided by others, and the Trust will ensure that the BBC operates in a way that fully recognises this. 

I have no doubt that the BBC Executive will sometimes be disappointed by the outcome of a Public Value Test – just as 
private sector interests will sometimes be disappointed. Our job as BBC Trustees will be to ensure that the widest interests 
of licence fee payers take precedence over either of those interests. 

The White Paper published earlier this year after two years of public debate, research and evidence-gathering represents a vote 
of public confidence in the BBC.The new ten-year Charter and the maintenance of licence fee funding offer the BBC an 
enviable degree of stability in a fast-changing media landscape.The missing piece in the jigsaw is the licence fee settlement. 

For the first time, the BBC has been completely open with the public about the licence fee bid. Its size was based on 
a fully costed business plan at the time of publication, reflecting the Government’s plan for the BBC set out in last year’s Green 
Paper. In the subsequent discussions with the Government, the BBC has made clear that its overriding concern is to be able to 
meet the needs and expectations of licence fee payers at the lowest possible cost. Achieving the highest possible settlement 
should not be regarded as a badge of honour for those representing the licence fee payers on the Board of the BBC. 

Much of our work as Governors this year has been focused on financial and organisational change in preparation for 
the new Charter.As a result I am confident that the BBC is in good shape structurally to begin the next stage of its development. 
The BBC will end the current Charter having met its commitment to achieve a broadly zero debt position.The self-help 
target of £3.3billion imposed by the Government for the period of the current Charter is on track and will be exceeded. 
And the Director-General’s additional value-for-money savings target for 2005/2006 has been exceeded, making 
more secure his overall target of achieving £355million of ongoing gross annual savings by 2007/2008. 

In this report we give an objective assessment of management performance during the year under review.Where more 
needs to be done we say so. But the general picture is encouraging.The overall reach of the BBC’s television and radio 
services is broadly stable at 92.7%, and the reach of the BBC’s online services continues to grow rapidly. In an increasingly 
competitive context, where audiences are presented with much increased choice, this is a real achievement. And the achievement 
is greater because it reflects no lessening of overall quality – indeed quite the contrary. The BBC can take justified pride in the 
growing high quality of its overall output this year – a judgement reflected in the many awards it has won. 

This performance has been delivered against a background of understandable staff concern over the job reductions and 
changes in working practices flowing from the Director-General’s value for money 

programme, which is designed to release money to invest in more and better output. It has also been delivered in the 
context of the exhaustive – and sometimes exhausting – process of Charter Review. 

This is not to say that the picture is completely positive. One issue repeatedly raised with us in our consultations with 
audiences around the UK this year is the problem of limited digital coverage.Those licence fee payers affected have expressed 
justified disquiet that while they contribute to the cost of the BBC’s digital output they are unable to receive the services.We have 
encouraged management to speed up their plans – working with commercial partners 

– to develop a satellite equivalent of Freeview that would solve these problems. I’m proud to be the last Chairman of 
Governors and to have been appointed as the first Chairman of the new Trust. At the heart of my vision for the BBC 
is the recognition that the survival of a licence-fee funded BBC depends not on economic theory or political dogma but 
on the ability of the BBC to retain the support of the overwhelming majority of the people of the UK through the 
content and services it offers. 

These can take many forms as the BBC delivers its historic public service remit to inform, to educate and to entertain. 
But they must all share the aspiration to set new standards of quality, whatever the genre or distribution mechanism. 

Earlier this year I took part in the memorial service for Ronnie Barker, whose long career with the BBC exemplifies what I 
mean.The list of his BBC hits is astonishing: 

The Navy Lark,The Frost Report,The Two Ronnies, Porridge, Open All Hours – these are among the greatest achievements of 
BBC comedy. Ronnie Barker was not just a brilliant comic actor, he was also an exceptionally talented writer. He was a 
modest man, and even as an established star he would sometimes submit scripts to the BBC under an assumed name – he 
said he wanted to make sure they were accepted because of their quality, not because of who had written them. 
Ronnie Barker’s contribution to the BBC proved beyond doubt that quality and popularity are not mutually exclusive. 
Maintaining support from licence fee payers over the ten years to come will depend on the BBC remembering that this is what 
distinguishes BBC output. 


Michael Grade 

Chairman 
14 June 2006 


Director-General’s report

The BBC is living between two worlds: the world of traditional radio and television broadcasting and the dizzying new world 
of digital media. Our challenge is to strike the right balance of resources and creative energy between these two worlds and to 
set the right pace of change. 

Move too quickly and we risk underserving the millions of licence fee payers who still rely on us first and foremost for 
outstanding television and radio. But move too slow and we may find ourselves falling behind and losing contact with some of 
our audiences altogether. 

2005/2006 was a year in which the digital revolution shifted up another gear. Month after month, the BBC’s website set new records for reach. Page impressions are 
now more than three billion a month. Live streaming, downloads, podcasts… the public seized on each new technology 
and each new trial – not for the sake of the technology itself, but as a new way of receiving outstanding BBC content. 

On 7 July 2005, the story of London’s agony and fortitude was told brilliantly across the BBC’s services, from BBC 
London 94.9 and Radio Five Live to BBC News 24 and the Ten O’Clock News. But 7 July marked a new high-water mark 
both for bbc.co.uk as a whole and for rich audio-visual content – sound and pictures streamed live to users across the internet. 
Interestingly, what the public most wanted to access that day was not the BBC’s own professional reports but shaky images of 
tube tunnels and a shattered bus captured on mobile phones. 

The BBC’s journalism used to be a largely one-way form of communication. Now eyewitnesses can uplink their testimony 
within seconds and bloggers can take any national or global debate far beyond the radio or television studio. BBC News 
remains the most popular and trusted provider of news in the UK and – through BBC World Service, bbc.co.uk and BBC 
World – around the globe. Its reach now exceeds 250 million people every week. But technology and audience expectations 
are changing the rules of the game by the week. 

That is why, despite the constant pressure of events – a General Election, the terrible earthquake in Pakistan, the ongoing drama 
in Iraq and more besides – many of our editors and journalists took time in 2005/2006 to think hard about what 
comes next for BBC News.Their conclusions formed part of what we called Creative Future, an attempt to scope the story of 
each of our major areas of content over the next five years or so. 

Creative Future has plenty to say about technology and its creative impact: the need, for instance, for commissioners 
to think about projects across television, radio and the web, to explore user- generated content, to think about how 
on-demand should affect what we make and how we make it. 

But it also reminded us that what counts most of all for audiences is creative ambition and integrity.Technology is the 
means: for the BBC, the end should always be the quality of the content itself. 

There were plenty of programmes on BBC television this year which showed what we can achieve when we combine 
innovation with talent and conviction. Bleak House was a phenomenon, a Dickens adaptation with as much depth 
as any the BBC has ever made, but conceived as an edgy, contemporary- feeling serial earning its place in the 
midweek BBC One schedule next to EastEnders, itself in the midst of a creative revival. And those were only two highlights 
in the strongest year for BBC television drama in more than a decade, which included To The Ends of The Earth, Bodies, 
Life on Mars, ShakespeaRe-Told, and Dr Who with a brilliant new Doctor. 

Despite another heady series of Little Britain, BBC One comedy breakthroughs proved elusive, although across television 
there was a real sense of new talent and new ideas arriving on the scene: 
The Catherine Tate Show, Extras, BBC Scotland’s Still Game and The Thick Of It stood out in a strong year on BBC Two, 
Three and Four. From Jonathan Ross to Strictly Come Dancing, entertainment remained potent on BBC One, while BBC 
Two’s line-up of panel shows such as QI and factual entertainment formats such as The Apprentice continued to strengthen. 
Of our digital services, BBC Four in particular thrived during 2005/2006, discovering a broader, bolder mix of programmes with 
drama and comedy complementing its main diet of documentary and culture. 

Factual output was strong across the BBC. Planet Earth was another brilliant combination of technical innovation with 
visual artistry and storytelling of the highest order. Arena’s ravishing two-parter about the young Bob Dylan, No Direction 
Home, and Facing the Truth from BBC 
Northern Ireland, which brought together 
those thrown into confrontation by the 
troubles, were highlights from a powerful 
and diverse documentary offer. 

Of all of the BBC’s services, in some ways 
Radio 1 has the hardest mission: striving 
to offer a distinctive and valuable line-up 
in one of the most crowded parts of the 
broadcasting market – and to what in 
many ways is the UK’s most discerning 
and demanding audience.The station’s 

new strategy helped it to feel more 
confident and more relevant in 
2005/2006. Radio 2 consolidated its 
position as the country’s most popular 
radio station, while Radio 3 built on the 
success of The Beethoven Experience 
with A Bach Christmas.The story of the 
Brixton Angels – convicts inside one of 
Britain’s toughest jails coming together to 
sing Bach – was one of the most touching 
broadcast moments of the year. 

Meanwhile, Radio 4 experimented 
successfully with more topical debates 
and more distinctive and high-profile 
drama. In deciding to abandon its early 
morning medley of UK themes, the 
station also sparked off a classic BBC 
row as an apparently minor change at 
the schedule’s margins came to stand 
for something much larger and more 
important for listeners.After careful 
reflection, the Radio 4 team decided 
to stick to their original judgement, and 
in my view they were right to do so. 
But there was an important lesson here 
for the BBC: you cannot hope to please 
all of the people all of the time, but – 
especially at a time when they have so 
much choice – the BBC must never take 
its audience for granted. 

Our digital radio services continued to 
build their relationships with listeners, 
and there was strong, innovative content 
around our sports coverage and children’s 
offering, as well as from our national 
and regional services.There have been 
launches too: the first modules of the 
Digital Curriculum (now named BBC jam) 
are receiving a very positive response 
from students and teachers alike, and in 
the last two months we have begun a 
pilot BBC high-definition TV service – 
another broadcasting first, and another 
way of trying to improve the quality that 
the public receives from the BBC. 

It was also a year when the debate about 
the future of the BBC reached a climax 
with the publication of a Government 
White Paper.This presents a picture of 
a strong BBC, but not one which exists 
in isolation from the rest of the market. 
Despite the picture some of the BBC’s 
rivals like to paint, we see the future as 
increasingly dominated by partnerships – 
with other public bodies, with independent 
producers, with other public broadcasters 
and with our audiences.The transformed 
relationship with PACT and the memoranda 
of understanding signed with various 
bodies over the course of the past year 
are evidence of this new approach. 

Although the BBC has a good deal to be 
proud of in 2005/2006, we cannot afford 
to sit back and congratulate ourselves. 
Audiences are urging us on: rightly, they 
raise their standards all the time. We 
have Creative Future to implement, digital 
switchover to lead, and we have changes 
to make to our own management systems 
to respond to the introduction of the 
BBC Trust. 

We have just had one of the busiest years 
in our history. But in many ways the real 
challenge starts now. 


Mark Thompson 

Director-General 
14 June 2006