Further letter from BBC Trust to Chair
Thank you for your letter of 4 March, which
I have discussed with Sir Michael Lyons.
At the hearing on 8 February, the NAO and the
Trust agreed to send you a note to clear up any misunderstanding
relating to the incremental cost of having a studio in central
Vienna for Euro 2008. I apologise for the delay in this, but I
am pleased now to be able to give you the details supplied to
me by the Executive, which you will find in annex 1 to this letter.
The NAO has had an opportunity to review the cost figures in the
annex and has confirmed that that additional cost outlined for
the Vienna studio is a reasonable estimate.
In my letter of 3 March, I offered to provide
a summary of the World Cup 2010 budget and forecast staff number
to the Committee in confidence once the ITV match split has been
agreed (likely to be in w/c 15 March). Following your letter of
4 March, we have considered the BBC's legal and commercial position
in relation to this. On the basis of what the Executive have explained
to me we have decided that, although there is a commercial risk
to the BBC arising from any publication of the data, we will be
able to provide you with the summary World Cup budget and forecast
staff number once the match split is agreed, without receiving
any assurance of confidentiality.
In my previous letter, I also provided details
of MPs' attendance at BBC events. Further to this, I understand
that you would like details of regulators' attendance as well.
I attach as annex 2 to this letter an updated list which includes
both MPs and regulators.
In my previous letter, I provided details of
the BBC's preferred suppliers for Outside Broadcasting. Further
to this, I understand that you would like some more information;
this has been provided by the Executive and I attach this in annex
3.
The BBC does, though, continue to have concerns
centred on the information requested at item 2 in the appendix,
unless we can be assured that it is not your intention that, once
supplied, it will be placed in the public domain.
Can I first mention the disclosure of the talent
spend in salary bands to which you refer? That disclosure was
specifically designed so that it would not be possible for any
individual's remuneration to be identified. It does not therefore
set a precedent for the disclosure you are requesting or undermine
the BBC's case that confidential treatment of certain information
is appropriate.
Although information was provided to the NAO
on a more detailed basis (to facilitate the conduct of the study),
subject to the NAO observing appropriate confidentiality requirements,
it was agreed with the NAO that the information set out in their
Report on Major Events for talent and other staff costs would
be aggregated in order to safeguard a number of issues which the
BBC believe it is reasonable and proper for us to seek to secure.
The BBC was concerned that certain legal obligations owed to the
individuals concerned should be respected. These are:
— publication of individual data (or of
information which enables this to be ascertained) will constitute
a breach of the relevant individuals' rights, under the Data Protection
Act 1998; and
— contractual arrangements vary between
different individuals, but in some cases involving key, high profile,
talent, the supply of the information leading to the publication
of payments to individuals (or of information which enables those
payments to be ascertained) will place the BBC in breach of contractual
obligations to the individuals concerned.
In addition to those legal issues, the BBC Executive
remain concerned about the following broader considerations:
— that the disclosure of payments will
tend to place inflationary pressure on costs, thus undermining
the objective of controlling expenditure and the key objective
of securing value for money for licence fee payers: what the BBC
pays could tend to be a benchmark; competitors may aim to outbid
the BBC for talent, having been provided information as to what
the BBC pays; and the BBC will have to raise fees again if they
wish to retain talent;
— that the publication of individual talent
fees (or data allowing such fees to be calculated) will place
the BBC at a competitive disadvantage in negotiating for talent
against other organisations, which do not have to make similar
disclosures;
— that it may well be difficult or impossible
to secure the services of some key talent at all, if confidentiality
cannot be assured; and
— that there is no public interest in any
publication of this information since the individuals do not set
the BBC strategy or policy, nor are they responsible for how large
amounts of public money are spent (the criteria used to determine
the disclosure of senior executive salaries). Further, other broadcasters
do not have to publish similar data and consequently the public
will be unable to compare BBC costs with those of other broadcasters.
I should also mention that the reasons set out
above, for not publishing data that is sufficiently detailed to
enable individuals' payments to be ascertained, have also been
accepted by the Information Commissioner in cases where similar
information has been requested from the BBC under the Freedom
of Information Act.
I hope you will therefore understand that the
BBC does have legitimate reasons for not wishing to see the relevant
data placed in the public domain. In particular, the Trust wishes
to respect the legal rights and legitimate interests of the individual
presenters in question. Having said that, we remain willing to
supply to your Committee the underlying more detailed information
previously supplied to the NAO in the interests of transparency
and in order to enable your Committee to consider the issue in
greater detail. However, for the reasons mentioned above, we remain
of the view that it would not be proper for us to supply that
information, unless it is accepted that it is supplied on a confidential
basis.
Jeremy Peat
Trustee for Scotland
BBC Trust
11 March 2010
Annex 1
COST COMPARISONS FOR THE CENTRAL VIENNA STUDIO
AND THE INTERNATIONAL BROADCASTING CENTRE FOR EURO 2008
The BBC, as part of its editorial approach to
coverage of major sporting events, wished to have a studio in
Austria for the Euro 2008 football competition. The BBC considered
some additional cost would be justified, on editorial grounds,
to have a studio in central Vienna with a view of the city and
the Fan Mile, at the heart of the tournament rather than one without
any windows at the International Broadcasting Centre. A studio
in the Vienna International Broadcasting Centre would have nothing
to distinguish it to the television audience as being in Vienna.
None of the major broadcasters covering Euro 2008 based their
main studio at the International Broadcasting Centre in Vienna.
The final budget for Euro 2008 included £250,000
as the cost of the central Vienna studio. This cost was in addition
to the cost of the space and facilities which the BBC occupied
at the International Broadcasting Centre. However, there was no
duplication of studio space between the Vienna studio and the
International Broadcasting Centre as the BBC did not pay for any
television studio space at the International Broadcasting Centre.
The equivalent cost of a studio at the International Broadcasting
Centre, calculated from rate cards for Euro 2008, was £237,000.
That was the basis for Mark Thompson's comment that the incremental
cost was below £50,000.
There were three principal cost elements for
the Vienna studio: rent, telecommunications and studio construction
and installation costs. The costs for these elements were:
— Rental expenditure on the central Vienna
studio of £349,000, an increase on the budget which in part
reflected the fact that in April 2008 the BBC was obliged to extend
the rental by nine additional days, because of access restrictions
to the Fan Mile, where the studio was located.
— The BBC estimates the additional costs
of telecommunications links between the central Vienna studio
and the International Broadcasting Centre to have been £72,000.
— Studio set build costs for the central
Vienna studio of £152,000. The BBC was able to build a simple
set because the windows of the studio, and the views of Vienna,
were such a feature. However, a studio in the International Broadcasting
Centre would have been provided to the BBC without windows, so
would have required a more elaborate and expensive set, comprising
screens and projectors which are commonly used in internal studios.
Based on previous studio construction and equipment hire costs,
the BBC estimates it would have cost approximately £240,000
to have constructed a studio and set at the International Broadcasting
Centre. This estimate would mean the Vienna studio cost some £88,000
less than constructing a functioning studio at the International
Broadcasting Centre.
The actual additional cost of having the central
Vienna studio rather than having a studio at the International
Broadcasting Centre is set out in the table below as approximately
£96,000.
|
Vienna studio
| Estimated cost for International
Broadcasting Centre
|
Difference |
| Rental cost for space | £349,000
| £237,0001 | £ 112,000
|
| Additional IT costs | £72,0002
| £0 | £72,000 |
| Studio and set | £152,000
| £240,0003 | (£88,000)
|
Total | £573,000
| £477,000 | £96,000
|
Note 1. Based on rate card for International Broadcasting Centre space, adjusted for lighting rig and telephone line costs to give a like-for-like comparison between the two sites.
| | | |
| Note 2. Additional costs for telecommunications connection from International Broadcasting Centre to Vienna studio.
| | | |
| Note 3. Based on generic costs incurred for Vienna studio that would also have been incurred for constructing a studio at the International Broadcasting Centre (£113,000) and BBC estimate of additional costs for screens and projection that would have been incurred to create acceptable studio space at the International Broadcasting Centre.
| | | |
| |
| |
The BBC believes having a studio in the centre of Vienna
allowed it to capture all the atmosphere of Vienna, and take viewers
to the heart of the tournament, not least on the evening of the
thunder storms when all broadcasters lost live pictures and the
BBC was able to reflect the exceptional circumstances and chaotic
scenes of that night.
The NAO has had an opportunity to review the cost figures
and has confirmed it is content that the additional cost for the
Vienna studio of £96,000 is a reasonable estimate.
Annex 2
MP AND REGULATOR ATTENDANCE AT BBC EVENTS REVIEWED IN
THE NAO REPORT AS GUESTS OF THE BBC
The BBC Executive advise us that they only hold centrally
records of attendees who are invited via the central Corporate
Affairs office. It is not unusual for Directors of BBC departments
to individually invite MPs to events (and, in theory, possible
for them to invite regulators) but this information is not recorded
centrally. This is particularly true for the Proms—the BBC
Corporate Affairs office arranges the first night of the Proms
which is hosted by the BBC Chairman and the Director General.
There are boxes available to the BBC throughout the Proms season
but these are hosted by individual departments and we therefore
do not have a record of who attended. Below, as explained above,
I copy the information held by the Corporate Affairs department—but
this is by no means exhaustive.
I have also included relevant guests of the BBC Trust. Details
of Trust hospitality are recorded and retained in full by the
Trust Unit, with summaries available on the Trust website.
BEIJING 2008 (BBC RECEPTION
AT THE
BEGINNING OF
THE GAMES)
— Tessa Jowell (who was in Beijing representing the
Government).
EURO 2008
There were no centrally organised events.
WIMBLEDON 2009
There were no centrally organised events.
GLASTONBURY 2009
There were no centrally organised events.
BBC PROMS 2009 (BBC RECEPTION
PLUS TICKETS
TO THE
1ST NIGHT
OF THE
PROMS)
— Lord (Melvyn) Bragg (guest of BBC Trust).
— Eric Pickles (guest of BBC Trust).
— Tom Watson (guest of BBC Trust).
— Colette Bowe (guest of BBC Trust).
— Don Foster (guest of BBC Trust, at a later Prom).
— Philip Graf (guest of BBC Trust, at a later Prom).
RADIO 1'S
BIG WEEKEND
2009 (TICKETS PLUS
SHORT BEHIND
THE SCENES
BRIEFING—THESE
TICKETS ARE
PROVIDED AT
NO EXTRA
COST TO
THE BBC AND
ARE FREE
TO THE
GENERAL PUBLIC)
Annex 3
FURTHER INFORMATION ON COMPETITION FOR OB CONTRACTS
In my previous letter, I provided details of the BBC preferred
suppliers for Outside Broadcasting. Further to this, I understand
that you would some more information, which have requested from
the BBC Executive and provide below.
The BBC works with many leading providers of outside broadcast
services. The BBC's approved supplier list for outside broadcast
services includes eleven providers, details of each have been
provided previously.
— Arqiva Outside Broadcasts.
— CTV Outside Broadcasts Ltd.
— Neon Broadcast Services Ltd.
— SIS Outside Broadcasts Ltd.
SATELLITE INFORMATION
SERVICES (SIS)
In March 2008, BBC Outside Broadcasts, a part of BBC Resources,
was sold to SIS (Satellite Information Services) for a consideration
of £19.3 million.
Independent advisers Ernst & Young concluded that, considering
the competitive nature of the market, the high fixed costs of
BBC Resources' outside broadcasting, union agreements (relating
to staff employment conditions) and the comprehensive sales process,
the SIS offer was appropriate for the BBC.
The sale included a minimum volume guarantee within the contract
which gradually decreases each year until the contract comes to
an end in March 2013.
This deal ensured that the BBC retained the expertise of
staff and consistency of coverage during a transition period,
and enabled it to secure the best price for the business.
The BBC is still able to tender under this deal—indeed
we have done at Glastonbury in 2009, where SIS successfully bid
outside its contract with the BBC for one element of the broadcast,
and the Big Weekend which was awarded to Arena TV.
The BBC also receives a substantial discount against SIS'
standard service charges.
In addition, the contractual arrangement has:
— Delivered a consistently reducing price over the period.
— Allowed investment in new, High Definition trucks,
provided at a competitive market rate.
— Protected the BBC from inflation in the marketplace
leading to 2012, and provided access to experienced staff to ensure
robust delivery.
— Avoided additional costs of extra staff to manage
resource provision.
The BBC's outside broadcast expenditure with SIS and other
providers 2008-09 is:
Actual pan-BBC spend—other providers 16%.
Actual pan-BBC spend with SIS, over contractual minimum 19%.
Contractual minimum—SIS 65%.
Competitive tenders with other providers demonstrate that
their rates are competitive in the market place. For example,
SIS have successfully competitively tendered for elements of OB
provision at BBC events.
In terms of the specific events within the NAO's report,
SIS were unable to provide all outside broadcast facilities at
Glastonbury under the framework contract. The BBC competitively
tendered for OB facilities at three stages, which were awarded
to:
— Glastonbury Other Stage—Arena.
— The Jazz World Stage—Arena.
— The John Peel Stage—O21.
For reasons of commercial confidentiality, the BBC Executive
are unable to provide the specific value of individual contractual
elements or the bids of individual parties. Those contracting
with the BBC have a legitimate expectation that the value of their
contracts is not publicly disclosed by the BBC, and this would
damage the confidence that suppliers have in the BBC.
Such disclosure would:
— Prejudice the negotiating position of the BBC in future
contract negotiations; for example those for outside broadcast
services at 2010 events.
— Breach the BBC's contractual obligation to safeguard
confidential information of third parties.
— Weaken the position of third parties within a competitive
environment, by revealing market-sensitive information of potential
usefulness to competitors. This would prejudice the negotiating
position of SIS and other third-party suppliers in contractual
negotiations with other third parties. This could have a corresponding
detrimental impact on the commercial revenue of third parties
supplying goods and services to the BBC.
— Weaken the BBC's bargaining position with suppliers
of outside broadcast services, and all other services for which
the BBC negotiates, potentially reducing the BBC's ability to
drive value for money in purchasing such services.
— Harm the ability of the BBC or third party contractors
to obtain goods and services in the future.
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