Memorandum submitted by BBC World Service
The World Service's main aim is "to be
the world's best known and most respected voice in international
broadcasting, thereby bringing benefit to Britain." In 2000
the World Service strengthened further its leading international
position:
— It recorded its highest audience
figure ever, 151 million weekly listeners across the world.
— Access to the World Service's online
site almost doubled within a year to 28.5 million page impressions
per month by July.
— It extended its FM presence to 116
capital cities across the world by October.
— A Mori survey revealed that 98 per
cent of MP's believe the World Service beings significant benefit
to Britain; 92 per cent of all British Ambassadors/High Commissioners
agree the World Service enhances Britain's image overseas.
However, the World Service now faces greater
challenges than ever before: the online revolution is transforming
the way people and nations access information, do business and
communicate with each other. Audience behaviour is changing and
our competitors are investing and expanding.
The World Service's 3-Year Strategy, submitted
to government in advance of the 2000 Spending Review, identified
four main challenges:
TECHNOLOGY
The Internet is growing faster than expected:
some of the fastest growing areas are within Asia-Pacific and
Latin America.
Technologies to deliver streamed audio and video
on the Internet are developing rapidly, and multimedia content
is becoming the norm on major news sites.
Mobile telephones and other mobile devices are
also emerging as key future distribution platforms for news.
COMPETITION
Our major traditional international radio competitors
are focusing their efforts on a narrower range of politically
important regions where they will represent significant threats
to the World Service position.
New global commercial news players are increasingly
tailoring their content regionally, expanding into lucrative developing
markets, and introducing services in languages other than English.
New Internet media players such as Yahoo and
Microsoft are also expanding into many new markets, and are likely
to target World Service heartland's in the near future.
AUDIENCES
Enhanced research and analysis is helping up
to understand our target audiences much better than before.
In particular, we recognise that cosmopolitan
audiences across the world are heavier users of the Internet and
mobile devices, and that they place significant value on high
quality international news and analysis.
In major cities our audiences are now increasingly
listening on FM and able to choose from a growing number of stations.
GEO-POLITICS
In a fast changing geo-political landscape the
World Service offer must remain relevant in serving areas of the
world strategically important to Britain.
Its impartial and independent programming will
continue to give vital support not only in areas of conflict,
but also, importantly, in the rebuilding of countries and regions
such as the Balkans and Indonesia.
In its 3-Year Strategy 2001-04, the World Service
set out what it must do to retain its leading position in this
highly dynamic environment. The strategy outlined five developments
that are essential to the World Service's continued competitiveness:
ONLINE
The World Service must become the world's reference
point online as well as on radio and establish the world's leading-edge
and most visited online audio news site. By 2004, we aim to provide
full 24-hour news offerings on world-class Internet sites in Chinese,
Arabic, Russian, Spanish, Persian, Portuguese, Hindi/Urdu, Indonesian
as well as in English. We aim to enrich our online content with
greater depth of analysis and comprehensive audio provision and
video input. Creating the world's leading multilingual news site
will enable Britain to be the e-world's reference point for high
quality, objective news and information.
FM AND DISTRIBUTION
We aim to be present on FM in 135 world capitals
(70 per cent) by 2004. Following the recent developments in our
English programming, ie increasing the regional streams from three
to eight, we have an ambitious programme to acquire FM relays
in key international cities, promoting a more tailored offer.
In addition, we will pursue with vigour appropriate broadcasting
partners to transmit relevant language services and English output.
We will also work with new distribution platforms such as WorldSpace
on digital satellite, digital audio and mobile telephones in order
to reach our audiences via all new relevant distribution devices.
REGIONAL WINDOWS
We aim to build on the increased number of tailored
schedules in English and our new online language developments
to provide increasingly regionally targeted content. We will build
on our existing regional production hubs to develop more regional
tailored networks, providing co-ordinated multilingual offers
linked by high-quality digital systems.
CONTENT
We must increase and enhance our output in key
areas that need it most, eg the Balkans. We will develop our business
news programming to promote Britain as a world centre of excellence
for business expertise and, working in partnership with the British
Council, we will develop a pathway to English language learning,
with particular priority given to China.
AUDIBILITY
We must ensure that we modernise our short wave
delivery in key markets, particularly key transmitters in Cyprus
and Singapore, to improve audibility in the Middle East and East
Asia respectively.
The strategy described the shift that will occur
over the next five years in the way the World Service reaches
its target audiences around the world. Distribution options take
into account how audience segments in different markets are adopting
new technologies at different speeds.
MARKETS
| Audiences | Least Developed
| Developing | Developed
|
| 1999 |
| |
|
| Cosmoplitans | FM, Shortwave, Online
| FM, Shortwave, Online |
FM, Shortwave, Online/Mobile devices
|
| Aspirants | FM/Shortwave
| FM/Shortwave | —
|
| Information Poor | Shortwave
| — | —
|
| Lifeline/Crisis | Shortwave
| (Shortwave) | —
|
| 2005 |
| |
|
| Cosmopolitans | FM, Shortwave, digital AM, Online
| Digital/Interactive, Online/Mobile devices, FM, DAB, digital AM
| Digital/Interactive, Online/Mobile devices, FM, DAB
|
| Aspirants | Shortwave, FM, digital AM
| FM, Online, DAB, digital AM, Shortwave
| — |
| Information Poor | Shortwave, FM, digital AM, satellite
| — | —
|
| Lifeline/Crisis | Shortwave, FM, digital AM, satellite
| (Shortwave, FM, digital AM, satellite)
| — |
THE SPENDING
REVIEW BID
To implement the five key developments identified, the World
Service sought a substantial uplift in the operating Grant-in-aid
and one-off significant increase in capital in years two and three.
Meanwhile, it committed itself to meet nearly all rising
costs with a rigorous programe of efficiency savings, so that
new funding would flow directly into new investments.
Details of the submission are set out in the table below.
(Figures expressed as increases over the 2000-01 baseline).
We requested:
| New investment plans | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| Online investment | 4.8
| 9.6 | 15.3
|
| Regional windows | 0.7
| 2.1 | 3.1
|
| Content: Geo-political developments | 0.8
| 1.6 | 2.3
|
| Content: Business Programming | 1.0
| 1.5 | 1.5
|
| Content: English Language Teaching | 0.5
| 1.0 | 1.0
|
| FM distribution | 1.0
| 2.4 | 3.4
|
| Total new investment proposals (rounded)
| 9 | 18
| 27 |
| Rising costs | 8
| 16 | 22
|
| Less: BBC efficiency savings and income growth
| (5) | (10)
| (16) |
| Less: Increase in 2001-02 baseline in 1998 CSR
| (5) | (5)
| (5) |
| New operating funds requested | 7
| 19 | 28
|
| New capital funds requested for audibility renewal
| — | 15
| 14 |
THE SPENDING
REVIEW SETTLEMENT
In July 2000 the Chancellor of the Exchequer announced the
new World Service funding settlement for 2001-04.
The additional funds made available in each of the three
years are shown below set against the original requests:
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| New operating funds requested | 7
| 19 | 28
|
| New operating funds made available | 5
| 10 | 20
|
| New Capital funds requested | —
| 15 | 14
|
| New capital funds made available | —
| 14 | 15
|
These increases amount to £35 million cumulatively for
operating (£5 million plus £10 million plus £20
million) over the three year period and £29 million for capital
(£14 million plus £15 million), giving an overall increase
of £64 million over the three years, as quoted by the Chancellor
in his statement. It represents a 3.8 per cent real-terms growth
on average for each of the three years.
The additional funds made available produce the following
total funding baselines for the period 2001-04:
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| 2001-02 baseline from 1998 CSR |
| |
|
| Operating | 159.9
| 159.9 | 159.9
|
| Captial | 17.7
| 16.0 | 16.0
|
| Total | 177.6
| 175.9 | 175.9
|
| 2000 Spending Review increases |
| | |
| Operating | 5.0
| 10.0 | 20.0
|
| Capital | | 14.0
| 15.0 |
| Total | 5.0
| 24.0 | 35.0
|
| New baselines | |
| |
| Operating | 164.9
| 169.9 | 179.9
|
| Capital | 17.7
| 30.0 | 31.0
|
| Total | 182.6
| 199.9 | 210.9
|
In essence, the World Service received 78 per cent of the
total bid. This was made up of:
— all the capital requested but re-phased; and
— 65 per cent of the operating bid, also re-phased
over the three year period.
The Treasury White Paper specified for what purpose the additional
funding should be used:
"The BBCWS will be funded to become the world's reference
point not only on radio but on the Internet with expansion into
more languages. The World Service will continue to spread its
FM presence around the world and plans to broadcast in 135 world
capitals by 2004. The BBCWS will be increasing the amount of customised
and regionally focused material in its broadcasts. Increased investment
will also enable the BBCWS to maintain its traditional audience
on short and medium wave bands through the renewal of key transmitters."
The BBC welcomed the settlement. The BBC Chairman, Sir Christopher
Bland, in responding to the announcement said:
"The BBC had put forward a strong case for new investment
for the World Service and I am delighted this has been supported
by the Government. We are pleased with the outcome."
This document now outlines how the World Service will utilise
the new resources made available in the Spending Review 2000 and
the targets which it is committed to achieve. It gives a firm
budget framework for 2001-02 and business plans for the following
two years, to be reviewed annually.
The investment plan for the next three years reflects the
overwhelming importance of online development in the World Service's
strategy. In each of these years most of our new operating funding
will be deployed to extend the World Service's presence on the
Internet in eight key languages—Chinese, Arabic, Russian,
Spanish, Persian, Portuguese, Hindi/Urdu, Indonesian—as
well as in English, together with all our language services audio
being made available on the World Service online site.
New investments will also be made in the area of content
and FM distribution.
Although substantial investments are possible in Years one
and three, Year two represents a slowdown in the roll-out of our
strategic initiatives, with some new developments having to be
delayed until the third year.
The new capital investment will focus on renewing key transmitter
sites in Cyprus and Singapore for the Middle East and East Asia
respectively, with digitally capable short wave and medium wave
replacements, resulting in significantly enhanced audibility in
both regions.
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| Online | 3.5
| 5.0 | 11.5
|
| Content | 0.9
| 1.2 | 2.7
|
| Distribution: FM | 0.6
| 1.3 | 2.8
|
| Total new operating spend | 5.0
| 7.5 | 17.0
|
Total new operating spend is £3 million lower than the
new operating funds being made available by 2003-04 in order to
finance a small proportion of rising costs, as already indicated
in the original 3-Year Strategy document. If it is possible to
improve on the efficiency savings assumption, the benefit will
feed directly to increasing the funds available for new operating
investment.
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| Total new capital spend | —
| 14 | 15
|
A number of key developments in the global online market
have further informed our investment plan since the 3-Year Strategy
was submitted in January.
1. Global Internet growth is continuing to accelerate
to such a degree that industry analysts have revised their projections
radically. Internet penetration is increasing especially rapidly
in developing countries, with Asia-Pacific and Latin America seeing
some of the fastest growing areas.
2. Internet Languages: Over the next five years there
will be disproportionately faster growth in key non-English languages
on the Internet, although English will still be the main language
in terms of overall use:
— Currently 51 per cent of Internet users are speakers
of English as their main language.
— By 2005 57 per cent of Internet users will speak
a first language other than English.
3. World Service special reviews of key target regions
The World Service has conducted, over the summer, a series
of reviews of its services for a number of key target regions,
Russia, China, India, the Balkans and the new Europe. For online,
the following themes emerged:
— For all regions the World Service must strengthen
its business, science and sport output as well as providing news,
current affairs and analysis.
— Interactivity including discussion forums and
personalisation need to be developed across the major language
sites.
— China: the World Service must respond to the explosive
demand among Cosmopolitans and Aspirants by continuing to develop
its full multimedia online offer in both Chinese and English.
— Russia: Research shows that Russians object to
the "foreignness" of international radio stations, which
are seen as Western and remote. The World Service Internet site
offers the opportunity to give more room to the voices of Russian
opinion formers and aspirants.
— India: the rapid growth of the Indian Internet
sector (the fastest growing in the world at 154 per cent, albeit
from a low base) allows the BBC to translate the strengths of
its brand into this new medium. It must do so now in English and
the relevant Indian languages within a regional portal. A strong
South Asia site is vital to ensuring the BBC continues to make
an impact in this critical region.
— Europe: Using English as a European lingua franca,
the World Service must support the BBC's online news site in becoming
the authoritative source on European events and issues for EU
and non-EU countries alike and counter-act the increased development
of CNN.com in Europe.
4. Intensified online competition
A number of international competitors are now aggressively
marketing their regional online offers.
In addition, indigenous broadcasters and newspaper groups
are investing in extensive developments of online sites in our
key target areas.
We will pursue hard the opportunity for our own online audio
offer to be a key part of their own sites, thereby building reach.
In summary, these developments highlight the increasingly
urgent need to implement the World Service's online language strategy,
ie to offer:
— Nine world class language sites including English
with full 24-hour multimedia content using the new investment.
The South Asia site will include Hindi, Urdu and Tamil.
— 10 further languages with 24-hour updated audio
bulletins and associated text news.
— All remaining languages available in audio.
Consumer surveys and the World Service's in-depth service
reviews point to four areas where the World Service must enhance
its content:
Geo-political—The Balkans
The Balkans represent an enormous challenge to the World
Service. In this entire region the need for an independent voice
and a reliable reference point is as great as even, given the
huge task of reconstruction. The World Service will use all available
distribution methods, particularly FM, to help in the process
of building democratic institutions and in fostering a new climate
of tolerance between ethnic groups. Through the World Service
Trust, we will reap the opportunity to attract more external funding
for educational programming and we will also take an active part
in the training of journalists, an important step in the development
of a pluralistic media environment.
Business
Globalisation provides the context in which audiences are
looking for insight from the BBC. The top 10 global companies
by revenue each have resources that rival the GDP of medium-sized
developed countries. International businesses are increasingly
country-independent and are setting the international agenda in
a world where power is shirting from governments to a business
elite. Britain is the fifth most successful economy, attracting
many business head offices to its shores and maintaining London
as one of the major international financial centres. Britain's
international broadcaster must reflect this status with increased
global business reporting and analysis within English and key
language services.
English language teaching
The World Service review on China highlighted the continuing
demand for English language teaching (ELT) on the radio in key
markets. Given the difficulties with rebroadcasting of news and
current affair, ELT is an attractive proposition to increase our
presence and usage in China both for Chinese FM stations and online
users. The World Service will use this opportunity to pilot a
new co-operative project in partnership with the British Council
in China.
Landmark series
To reinforce the World Service's role as a global reference
point we will increasingly support landmark programming initiatives
on global themed issues across English and other languages, using
both radio and the Internet. This year major series on the international
drugs trade, aids and human rights have demonstrated ambition,
distinctiveness and impact.
The following plan sets out the proposed phasing-in of the
new investments:
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| Geo-political (Balkans) | 0.3
| 0.4 | 0.5
|
| Business | 0.4
| 0.4 | 1.0
|
| ELT | 0.1 |
0.2 | 0.5
|
| Landmark Series | 0.1
| 0.2 | 0.7
|
| Total New Content Spend | 0.9
| 1.2 | 2.7
|
Although the World Service will pursue FM partners in all
major cities, the main target is to be available on FM in 135
capital cities by 2004. The achievement of this target is vital
to our continued success as audiences increasingly switch away
from short wave to FM. But competition for FM frequencies and
FM rebroadcasting partners is fierce. The following investment
plan aims to ensure that 135 capitals will be reached on FM by
the end of the three-year period, and we plan to prioritise a
number of "prize" capitals such as Cairo and Delhi.
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| Total new FM Spend | 0.6
| 1.3 | 2.8
|
Our activity will be spread across three areas:
(1) FM deals: FM relays, capital and operational
costs, FM rebroadcasting costs.
(2) Rebroadcasting management: The appointment
of more locally based rebroadcasting development managers to create
and win opportunities and manage on going relationships.
(3) Supporting infrastructure: As rebroadcasting
continues to grow, the World Service must invest in mechanisms
to improve our effectiveness and efficiency. These include the
use of the Internet to deliver programmes, systems to monitor
content usage and compliance, and to track rebroadcaster satisfaction
and audience impact.
The focus of our capital funding submission was the modernisation
of transmitters in Cyprus and Singapore, with the aim to improve
audibility significantly across the Middle East and East Asia,
and to make these transmitters digitally capable for long-term
sustainability.
Our capital submission broke down as follows:
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
| expected further funding
need for 2004-05
|
| Core capital baseline | 16.0
| 16.0 | 16.0
| |
| Audibility renewal cycle: |
| |
| |
| — Singapore |
| 7.0 | 5.0
| 5.0 |
| — Cyprus |
| 5.0 | |
|
| — Control Room |
| 3.0 | 2.0
| 3.0 |
| — UK stations |
| | 5.0
| |
| Ascension restructuring |
| | 2.0
| 3.0 |
| Additional funding required |
| 15.0 | 14.0
| |
| Total capital expenditure | 16.0
| 31.0 | 30.0
| |
The funding capital bid was wholly supported but the phasing
of the capital Grant in Aid was reversed between 2002-03 and 2003-04.
2002-03
£m
| 2003-04
£m
|
| 14 | 15
|
We will rephase the allocation to the Singapore refurbishment
project which will now receive £6 million in year 2002-03
and £6 million in year 2003-04.
The World Service is committed to achieving challenging efficiency
savings in order to cover nearly all rising costs as indicated
in the original submission and to ensure that the new funding
flows primarily into new investments.
The top line saving commitment is as follows:
2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| 5 | 10
| 16 |
This breaks down into a detailed savings plan as shown previously
in the three-year plan submission:
| | 2001-02
£m
| 2002-03
£m
| 2003-04
£m
|
| Efficiency savings | 3.5
| 6.2 | 9.0
|
| Additional income | 1.1
| 1.6 | 2.7
|
| Sub-total | 4.6
| 7.8 | 11.7
|
| Reduction in less efficient short wave |
0.5 | 1.5
| 2.5 |
Reprioritisation within existing
languages
| 0.5 | 1.5
| 3.0 |
| Sub-total | 5.6
| 10.8 | 17.2
|
| Less: growth in WS Trust activity* | (0.8)
| (1.0) | (1.5)
|
| World service self-help inititiatives offsetting rising costs
| 4.8 | 9.8
| 15.7 |
* Income from activities of the BBC World Service Trust,
a non-profit-making charitable trust, can only be used for the
Trust itself and must therefore be deducted from those self-help
initiatives that can be offset against overall rising costs.
Online investment will move from 3 per cent of our total
budget in 2000-01 to 9 per cent by 2003-04. Investment in FM broadcasting
increases from 1 per cent to 3 per cent of total budget as short
wave transmission costs reduce.
Overheads as a percentage of spend are reduced to 10 per
cent. Therefore 90 per cent of all our spend will be focused on
content/delivery.
On the basis of this investment plan, the World Service is
committed to an ambitious set of stretch targets.
A global World Service radio Audience of 153 million weekly
listeners by 2001, increasing over the period to 157 million by
2004, and all in the context of exploding competition.
A global online audience for the World Service of 15 million
monthly users by 2004.
The highest reach of all international broadcasters in priority
markets among target audience groups, in particular cosmopolitans
(opinion formers).
The highest ratings of all international broadcasters for
trust, esteem and authority of news content as proven through
a comprehensive series of qualitative surveys across the world.
FM distribution in 135 capital cities by 2004.
An increasing contribution from commercial revenues and partnerships
to help fund distribution, while protecting the World Service's
editorial independence by continuing to fund content from the
Grant in Aid.
An increase in the expenditure allocated to programming from
88 per cent to 90 per cent of total budget by 2003-04.
Delivery of a 3-year efficiency programme, enabling the World
Service to absorb nearly all rising costs and to invest new funds
directly into new developments.
| 
