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BBC Worldwide: Strong performance despite currency challenges

July 21, 2014

BBC Worldwide – the commercial arm of the Corporation – has published its 2013/14 Annual Review, revealing a year of solid underlying growth, and increased returns to the BBC.

Headline profit increased 0.7 per cent to £157.4 million (2012/13: £156.3m), and was up 11.6 per cent at constant currency. Headline profit margin increased from 14 per cent to 15.1 per cent, a record for the company. This was achieved on headline sales of £1,042.3 million (2012/13: 1,115.8m), down 6.6 per cent, or 5.2 per cent at constant currency, principally reflecting portfolio changes: the sale of Lonely Planet and a new revenue share agreement for Adjusting for these, trading revenue was broadly flat, with growth from non-English language markets, sales to digital platforms and advertising helping to offset pressure on US and UK affiliate fees and declining DVD markets.

These results were delivered despite the strengthening of sterling in the year. Movements in foreign exchange rates had a £17.1 million negative impact on the headline profit.

Tim Davie, CEO of BBC Worldwide, said that BBC Worldwide had performed well, reflecting the quality of its content and enabling reinvestment into the UK television industry. “Headline profit at constant currency, shareholder returns and returns to the indie sector all grew by double digits. This was achieved at the same time as a major re-shaping of the company along regional lines. We will continue to execute on our strategy – more premium content, dynamic global brands and digital innovation – in the course of the new financial year. While our results for 2014/15 will reflect the choices and investments we are making to do this – including BBC Store and the introduction of new brands – we nonetheless expect to deliver further returns to our shareholder over the course of the year,” he advised.

BBC Worldwide announced an increase of 11.4 per cent in returns to the company’s parent, the BBC, to £173.8 million (2012/13: £156.0m), equivalent to 10.1 per cent of the year’s content funding for BBC Television. This includes a significant increase in its investment in BBC commissioned content, up 19.5 per cent on the prior year to £88.9 million (2012/13: £74.4m), further supporting the BBC’s desire to air ambitious, high quality content to UK audiences. Stand-out titles supported by BBC Worldwide included award-winning Top of the Lake, a third series of Sherlock, the 50th anniversary of Doctor Who: The Day of the Doctor and landmark natural history series Hidden Kingdoms. Dividends of £58.5 million were up 2.1 per cent on the previous year (2012/13: £57.3m).

BBC Worldwide’s figures came as the Corporation reported it had achieved some notable successes in a challenging environment, both in its programming and in saving money.

Under the Delivering Quality First efficiency programme, the BBC has saved £374 million p.a. and is on track to achieve the £700 million p.a. savings required by 2016/17. This follows the BBC’s previous efficiency programme which concluded in 2012/13 and delivered £580 million of ongoing annual savings.

The BBC has continued to reduce the amount it spends on talent and total costs are down by 15 per cent since 2008, when the current strategy was first introduced.

Acting Chair Diane Coyle said: “This past year the BBC, led by its new Director-General, has got back on its feet after a very bruising period and there have been numerous programme highlights. The BBC Executive has made good progress on its priorities for the past 12 months, and we are expecting further progress in the next year on areas including further improvements in the variety and originality of programmes, value for money and serving an increasingly diverse UK.”

Director-General Tony Hall said: “It’s been a fantastic year for the BBC with 96 per cent of the UK choosing to watch, listen or use BBC services, quite an achievement for any public service organisation. But I think we can do better and this year we’ve announced how we are going to change the BBC to produce more distinctive programmes, ensure the BBC truly reflects all of our audiences and provide even better value for money for the licence fee payer.”
A separate assessment by the BBC Trust of BBC Television found that its performance remains very strong overall, but suggested there were challenges to be tackled.

The review, which launched last November and involved a public consultation and extensive audience research, has found that BBC Television is performing very strongly in terms of its quality, value for money and its effectiveness in delivering the BBC’s public purposes. On average 81 per cent of people watch each week and the review found BBC television’s performance was particularly impressive given the growth in choice of channels and on demand services for viewers, alongside the BBC’s budgetary pressures.

The Trust’s review has identified three main challenges to be addressed:

– BBC Television should seek to improve its appeal to younger and Black, Asian and Minority Ethnic (BAME) viewers
– BBC Television should further increase the distinctiveness of its offer
– The BBC should work more collaboratively to meet audience needs efficiently

David Liddiment, the BBC Trustee who jointly led the review, said: “The BBC is special and affection for its many excellent programmes shone through in our audience research and consultation, but viewers also highlighted the areas where they felt the BBC could do better.

The privilege of the licence fee gives the BBC uniquely the opportunity and the obligation to be daring and to take risks with programming that sets it apart. This report sets out a plan to help it do just this and we look forward to working with BBC Television to deliver it. For BBC One in particular, we share Tony Hall’s ambition that it has to be not only the nation’s favourite channel but also its bravest, building on the very best programmes in its schedules, that not only entertain and delight audiences, but also frequently challenge and surprise them.”

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