The Board of Governors set ten objectives for 2003-4
Below we report on performance against these 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 assessment:
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 box below). 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.
CASE STUDY: 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.
Our assessment
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.
Our assessment
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
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.
Our assessment
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.
Our assessment
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.
Our assessment
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, 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."
Our assessment
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.
Our assessment
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.
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.
Our assessment
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. 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.
Our assessment
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.