BBC reveals financial transformation results
February 3, 2021
By Colin Mann
The BBC has set out how it has transformed its finances over the past decade to ensure it continues to deliver exceptional value for all audiences.
The Corporation has faced an effective real-terms reduction in income of around 30 per cent since 2010/11 as a result of increased funding obligations, such as the World Service and S4C, and the freeze in licence fee income for five years from 2010.
At the same time, there has been an unprecedented increase in competition for audience time with the rise of streaming services, social media and gaming.
The BBC’s report, BBC Value for Audiences, looks at the effectiveness of the response to these changes, and how the BBC has saved, sold and spent sensibly to increase efficiencies, grow commercially and reprioritise to make the most of its licence fee funding.
Despite financial and market challenges, the report shows the BBC is:
- The most-used media brand in the UK
- At the heart of UK life – with the public choosing the BBC around 250 million times a day
- Used by an average of 5 million people every single minute of the day and night, across TV, radio, and online, and by a total of 45 million across all ages over 24 hours
The Corporation’s most recent savings programme is on course to deliver £951 million (€1.08bn) of savings by March 31st 2022; the commercial entities have grown their income by 50 per cent, consistently boosting returns to the BBC for investment in programme-making; and over 95 per cent of the BBC’s controllable spend is now on programmes, services and delivery – with more spending across the nations and regions of the UK, and greater investment in digital services.
However, given the BBC’s last ten years of work to deliver significant gains in productivity, the report identifies that further savings will involve difficult choices that will impact programmes and services.
“The BBC has made big changes to ensure we provide outstanding value. We are smarter spenders and savers and more efficient than ever before, but there is more to do,” admitted Tim Davie, BBC Director-General. “The financial challenges and competition we face continue to evolve and while we have demonstrated we can deliver, I want us to adapt and reform further to safeguard the outstanding programmes and services that our audiences love for the future.”
The report sets out that as a smart saver, the BBC has:
- Halved the number of senior managers
- Reduced the costs of managing the BBC’s property estate by 22 per cent
- Delivered 29 completed major projects since 2012/13 – on average 9 per cent below budget
- Saved 45 per cent on major strategic contracts costs, saving £300 million a year
- Cut the BBC’s overheads from 7.6 per cent to 4.8 per cent
As a smart seller, the BBC has:
- Grown BBC commercial income by 50 per cent to a record £1.6 billion
- Increased commercial returns back to the licence fee payer by 50 per cent to a record £276 million
- Increased the on-screen value for every £1 of licence fee spent from £1.35 to £1.47 within the last 12 months due to increased third-party investment
- Established BBC Studios as a world-leader – trading in over 200 territories, with 33 channel feeds across 120 markets, subscription video-on-demand services (including BritBox), and global formats and franchises
As a smart spender, the BBC has:
- Increased the proportion of BBC income spent on content and distribution from 92.7 per cent to 95.2 per cent
- Invested in key digital services such as BBC iPlayer, BBC Sounds, News and Sport Online
- Increased the proportion of TV spending outside of London from 40 per cent to 50 per cent, and from 13 per cent to 20 per cent in Scotland, Wales and Northern Ireland
- Increased its investment in key areas of output such as Children’s and across the Nations & Regions, including the BBC Scotland channel