House of Commons - The efficiency of radio production at the BBC

The efficiency of radio production at the BBC - Public Accounts Committee Contents

2 The efficiency of radio production at the BBC

6. The BBC's efficiency target for radio is to achieve 3% in annual savings over the five years to March 2013, giving total planned savings of £69 million. This target was set without the benefit of cost comparisons across BBC Radio productions, or against commercial radio.

7. Efficiency is a combination of cost and performance. The BBC is seeking to reduce its costs without incurring an unacceptable impact on performance. The BBC's performance framework has four elements: reach, quality, impact and value for money. The BBC's assessments of the likely effect of savings initiatives on its performance measures have not been fully documented, but the BBC is continuing to develop the way it implements the framework.[6]

8. The BBC's main measure of the value for money of its radio broadcasts is cost per listener hour, which combines cost and audience size. Stations with a low cost per listener hour, however, are not necessarily incurring the minimum cost necessary to achieve the required quality of output and reach the intended audience. Figure 1 shows both the total cost for an hour of output and the cost divided by the number of listener hours—the cost per listener hour. Stations which have lower costs per listener hour because of higher listener numbers, can have markedly higher costs for an hour of output. For example, Radio 2 has the lowest cost per listener hour but the third highest cost per hour.[7]

Figure 1: Costs of BBC output

Source: C&AG's Report, Figure 6

9. As the BBC is aiming to make savings we focused directly on costs. It is possible to compare programme costs by grouping the programmes by genre. Figure 2 sets out the cost variations within and between stations for comparable programmes in the music, drama and comedy genres. From this we can see that:

the median cost per hour of music programmes on Radio 2 is 54% higher than Radio 1 and more than twice that of Radio 3;
the median cost per hour of drama programmes on Radio 3 is 38% higher than those on Radio 4, and
the cost per hour of Radio 2 comedy programmes is 15% higher than those on Radio 4 and almost 50% higher than on Radio Scotland.Figure 2: Cost variations within and between stations by broadcast genre

GENRE	STATION	COST PER HOUR (MEDIAN[8]) £	COST PER HOUR (RANGE[9]) £
MUSIC	Radio 1	966	743-1,204
	Radio 2	1,486	937-2,222
	Radio 3	650	338-1,211
	1 Xtra	466	383-563
	6 music	558	358-561
	Radio Ulster	391	302-1,113
	Radio Scotland	647	647-826
	Radio Wales	547	412-722
DRAMA	Radio 3	23,965	16,752-24,512
	Radio 4	14,969	No range[10]
	Radio 7	10,496	5,300-16,996
COMEDY	Radio 2	24,212	16,925-27,778
	Radio 4	21,000	13,426-23,920
	Radio Scotland	16,411	13,333-16,411

Source: C&AG's Report, paras 8, 38-42, Figures 7-12

10. The BBC explained that differences in the scope and editorial ambition of programmes contribute to the cost variations. For music, the costs vary according to the mix of news, speech and music content, as well as the amount of live performance. For example, Radio 2's Jeremy Vine show, while categorised as music output, has a wide range of spoken content and is, therefore, more expensive (about £2,000 an hour) to produce than Radio 1's late evening music output, much of which requires only one person to produce and present it. In drama and comedy, the costs are affected by how much the BBC decides to invest in developing new writing talent.[11]

11. There are, however, unexplained differences in the cost of similar BBC programmes. The BBC confirmed that it is investigating the significant cost variations, and explained that it was looking in more detail at sub-sets of programmes to establish areas of comparability and identify scope for efficiency savings. The BBC acknowledged the need to compare the costs of its programmes more systematically in future. Although it commissioned a cost comparison exercise in 2007, the results of that work were not used to identify savings or set the BBC's efficiency target for radio.[12]

12. Looking beyond internal cost comparisons, the costs of some BBC radio programmes are also significantly higher than those of comparable programmes broadcast by commercial stations. For example, the cost for an hour of Radio 2's breakfast show, Wake Up to Wogan, is double the cost of the most expensive commercial breakfast show (Figure 3). Although commercial stations provided the Comptroller and Auditor General with cost information, the BBC has, as yet, not carried out any benchmarking with commercial stations. The BBC has now contacted the Radio Centre, the representative body for the commercial radio sector, with a view to establishing benchmarking arrangements with commercial stations.[13]

Figure 3: Costs per hour of BBC and commercial radio broadcasts