Select Committee on BBC Charter Review Minutes of Evidence


Supplementary memorandum by the BBC World Service

WHAT ARE THE MAIN OBJECTIVES OF BBC WORLD

  The overall vision for the BBC's Global News Division is:

  To be the world's best known, most creative, and most respected voice in international news, thereby bringing benefit to the UK, the BBC and to audiences around the world.

    —  To provide the most trusted, relevant, and highest-quality international news in the world, and an indispensable service of independent analysis and explanation, with an international perspective which promotes greater understanding of complex issues;

    —  To connect and engage audiences by facilitating an informed and intelligent dialogue—a Global Conversation—which transcends international borders and cultural divides; and to give audiences opportunities to create, publish, and share their own views and stories;

    —  And by so doing, to enable people to make sense of their increasingly complex world and, thus empowered, lead more fulfilling lives.

  Within the context of this vision, BBC World's objectives are:

    —  To support the public purposes of the BBC by bringing high-quality international news coverage to a global audience through TV and new media;

    —  To provide the most trusted and authoritative television service of international news and analysis;

    —  To offer a showcase for the best of BBC journalism;

    —  To reflect the BBC's reputation for in-depth, factual and balanced reporting, specialist knowledge, impartiality and unrivalled newsgathering capability; and

    —  Principally to target influencers, opinion-formers and decision-makers across the globe, in the English language.

    —  By driving increased reach and improved reputation amongst target audiences in priority markets to build a growing audience and a successful self-financed operation

WHY WAS IT ESTABLISHED

  When the then Secretary of State gave his approval for BBC World in December 1994, it was done on the basis that the channel should "consist primarily of news and information"

  The BBC desired to set up an international news and information channel, sharing the same objectives and complementing and extending the reach of its existing international radio operations. At the time discussions were held with FCO, but government indicated that it was not willing to fund such a venture. The BBC therefore decided to launch BBC World as a commercial channel in combination with private sector partners.

  The BBC's role in BBC World was initially conceived to be as a global producer, supported by regional marketing, sales and distribution partnerships in the form of alliances and joint ventures. The partners paid the BBC a licence fee in return for rights to distribute and market the channel.

  However, the channel's partners were not sufficiently effective in raising the profile of BBC World to generate distribution and revenues and by the late 1990s, it was clear to management that the existing strategy was not maximising the potential to deliver significant growth.

  Following a strategic review, the BBC moved away from its historic reliance on partners and began to develop its own sales and marketing teams for BBC World globally, taking ownership of the complete value chain. This provided the opportunity to develop a forward looking and consistent global strategy for the channel as a whole and to adopt an integrated approach to the market.

WHO IS THE TARGET AUDIENCE FOR BBC WORLD

  As noted in BBC World's objectives, its target audiences are influencers, opinion-formers and decision-makers across the globe, primarily in the English language.

  The channel's audience tends to be highly-educated individuals, both men and women, who have an international attitude and an enthusiasm for news. This is a valuable demographic which is attractive to advertisers and distributors alike. Whilst BBC World's objectives are closely aligned to the BBC's public service remit, research has demonstrated that the values of authority, trust and impartiality are sought after by the channel's target audience and are therefore commercially valuable.

  Ex-patriot British are a constituent part of the BBC World audience. However, they are not the primary focus of the channel, and make up a very small proportion of the channel's total audience.

IN WHAT COUNTRIES IS IT BROADCAST

  BBC World is broadcast in more than 200 countries and territories worldwide. It is available on a 24-hour basis in 136 million households worldwide and including part time distribution can be accessed in nearly 280 million households.

  The only major countries in which BBC World has historically not been distributed on a 24-hour basis are the USA and the UK. In the USA, BBC World bulletins have, for some time, been broadcast on BBC America and also on public service television stations across the continent. Through the arrangements with public service television BBC World bulletins are available to more than 85 per cent of US households.

  However, the situation in the US is now changing and BBC World recently announced an agreement with Discovery Communications Inc to represent the channel in the US for 24-hour distribution. During January the channel was launched on a full time basis in a small cable network in Texas and discussions are taking place with a number of other U.S. cable and satellite operators.

  The terms of BBC World's consent do not permit the channel to actively market itself for distribution in the UK. However the consent does recognise that technical overspill may occur.

  The channel's full time household distribution has increased by at least 10 per cent per annum for every year since 1998 and shows a compound annual growth rate (CAGR) of 14 per cent over this period.

  BBC World is also available in more than one million hotel rooms, via 28 major international airlines (in-flight and lounges) and on 33 cruise lines.

  A summary of BBC World's full and part time households in December 2005 is shown in Figure 1.

Figure 1: BBC World Household Distribution by Region


Millions of Households
Full Time
Total

Europe
73.8
82.8
South Asia/Middle East
21.1
21.1
Asia Pacific
13.1
30.1
The Americas
7.4
111.5
Africa and E. med
21.0
34.0
136.4
279.5

WHAT SORT OF VIEWING FIGURES DOES BBC WORLD GET

  The BBC World weekly viewership figure is just under 60 million. This weekly audience reach is the largest of all the BBC's television channels. The figure is compiled from multiple surveys (specifically commissioned, syndicated and omnibus) across many countries. BBC World participates in a number of independent syndicated surveys used by pan regional broadcasters, and listed below, are the recent BBC World viewership statistics for weekly reach from these surveys:

Western Europe excluding UK/ Ireland = 12.1 per cent
  (EMS study—chief income earner from top 20 per cent of households—33 million).

Asia-Pacific = 10.6 per cent
  (PAX study—affluent adults and business decision-makers in 12 cities—13.5 million)

Latin America = 1.0 per cent
  (TGI study—136 million people aged 12+ half continent)

Middle East = 7.9 per cent
  (5 country omnibus survey 2003—6 million)

International air travellers = 18.3 per cent
  (Interviewed in 26 airports globally—travellers on scheduled int'l flights)

HAVE ANY SURVEYS BEEN UNDERTAKEN OF WHAT AUDIENCES THINK OF BBC WORLD. IF SO WHAT WERE THE RESULTS

  Independent international surveys report that viewers believe BBC World News reporting is more international, more trustworthy and more in-depth than other international news and business channels.

  Amongst a survey of opinion formers in Europe (2005), BBC World was considered the most relevant, authoritative, impartial and unbiased and 'a source I quote or refer to*.

  The International Air Travellers Survey (2005) found BBC World is more trusted than any other channel—46 per cent of BBC World viewers described the channel as trustworthy vs. 29 per cent for Euronews and 27 per cent for CNN.

  A survey of the global financial elite (Global Capital Market Survey) found BBC World was described as `having a global perspective' by 54 per cent, compared to 33 per cent for CNN. In the same survey, 32 per cent viewed BBC as `influential' vs. 36 per cent for CNN*.

  In the Media Brand Values survey 2004, BBC World ranked No. 1 amongst news channels across Europe for being trustworthy and impartial as well as stimulating.[2]

HOW MUCH DOES BBC WORLD COST TO RUN

  In the 2004-05 financial year the total costs of running the BBC World channel were £44 million.

HOW MUCH OF A LOSS HAS BBC WORLD INCURRED IN EACH YEAR SINCE ITS CREATION

  Since developing its own sales teams, BBC World's revenues have grown strongly. However, airtime sales are primarily contracted in US dollars and distribution revenues are contracted in multiple currencies with a significant US dollar element. Between 2002-03 and 2004-05 the US dollar devalued by more than 30 per cent against sterling and this had a significant adverse impact on overall sterling revenues reported.

  A summary of the channel's revenues and loss before interest and tax from the time that the majority of partnership arrangements ceased, is shown in Figure 2. The analysis is at summary level only on the grounds of commercial confidentiality. It should be noted that BBC World Limited (the company that has operated the BBC World channel since 2003) prepares and files full statutory accounts for the channel business. BBC World's primary competitors do not provide this level of data as the channels form part of larger corporate entities.

Figure 2: Summary results from 1999-2000 to 2004-05


Summary Results (£m)
Turnover
Loss before
Interest and Tax

1999-00
17.6
19.7
2000-01
23.9
13.2
2001-02
23.8
15.3
2002-03
25.2
15.2
2003-04
26.0
16.5
2004-05
28.4
15.8


  In underlying currency, airtime sales have shown double-digit annual growth for every year since the team was set up, with the exception of 2001-02 when the events of 11 September had a devastating affect on global economic growth. The CAGR for the period since 1998 is over 30 per cent.

  Because distribution revenues are derived in multiple currencies, growth is monitored in sterling although this understates the underlying revenue growth. Since 1998 sterling distribution revenues, excluding the loss of remaining joint venture fees, show a CAGR of more than 10 per cent.

  These growth rates have been achieved despite the continued and significant levels of uncertainty that have existed in the global economy since the beginning of the decade. These were exacerbated, particularly in 2003-04 by specific events such as the Iraq war, the SARS epidemic and multiple corporate financial scandals. This uncertainty had a severe impact on the advertising market in the early years of this decade and in particular on the types of company that advertise on pan-regional news channels.

WHEN DOES BBC WORLD EXPECT TO BREAK-EVEN AND WHAT WORK IS BEING UNDERTAKEN TO REALISE THAT OBJECTIVE

  The BBC World operates to and is monitored against a challenging business plan. This forecasts break-even in 2010. The channel is currently operating in line with plan.

  Pan regional news channels carry a relatively large fixed cost base and key to the financial success of the business is the ability to spread that cost over a large and growing distribution base to deliver both increasing subscription and advertising revenues. BBC World has been successful in recent years in growing both household distribution and revenues and a major area of focus for management is to ensure continued growth in these key measures. A number of opportunities for revenue growth have been identified and are being implemented.

  Full time distribution in the US has been a priority target for the channel over a number of years and will significantly enhance the long-term commercial potential for BBC World. The US cable and satellite market is mature and highly competitive, but there is evidence that US audiences are demonstrating increased interest in international news and are sceptical about the impartiality and accuracy of some US domestic news broadcasting. The agreement with Discovery Communications Inc. provides a great opportunity for BBC World to gain full time distribution in the US.

January 2006




2   Base is all viewers of channels Back


 
previous page contents

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2006