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
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