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
hoursthe 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

6 C&AG's Report, paras 4, 11 Back
7
Qq 12, 14; C&AG's Report, paras 28-29, Figure 6 Back
8
The median is the middle number in any range of numbers and so
is not affected by atypically high or low programme costs Back
9
This analysis shows the inter-quartile range (the middle 50%)
of programmes in order to give an indication of how comparable
costs are for the core of programmes Back
10
One programme, The Archers, occupies the entire middle 50% of
the station's output Back
11
Qq 40, 50 Back
12
Qq 39, 41 Back
13
Qq 8, 40-41; C&AG's Report, para 55, Figure 16; BBC Trust
response to C&AG's Report Back
|