BBC Trust - The efficiency of radio production at the...

The efficiency of radio production at the BBC

Review by the Comptroller and Auditor General presented tothe BBC Trust’s Finance and Compliance Committee

Background to this studyAs part of its role under the Royal Charter 2006the BBC Trust acts as the guardian of the licencefee revenue and the public interest in the BBC.We commissionValue for Money investigationsinto specific areas of BBC activity to ensure thatlicence fee payers are getting the best possiblereturn on every pound of their licence fee.

Each year the Trust commissions a series ofValue for Money reviews after discussing itsprogramme with the Comptroller and AuditorGeneral – the Head of the National Audit Office(NAO).The reviews are undertaken by the NAOor other external agencies reporting to the Trust.

In general, the public judges the BBC very muchon its ‘output’, in the case of this study the radioprogrammes on the ten networks stations andsix Nations stations. It is part of the Trust’s jobto ensure that the BBC’s systems are such as towork towards the best output possible withinthe available budget.This study, commissionedby the Trust’s Finance & Strategy Committee onbehalf of the Trust and undertaken by the NAO,considers how the BBC identifies the scope forefficiency gains and how it assesses the impactof efficiency measures on service performanceacross these radio stations.

The Trust thanks the NAO for undertakingthis review and for the report’s conclusionsand recommendations.

Our views on theNAO’s findingsThe Trust welcomes the NAO’s findingsand recommendations.We note the NAO’srecognition of the savings already achieved, £18mof net cash releasing savings in the three yearsto March 2008, and the BBC’s plans for furthersavings in coming years in response to the 3%per annum net cash-releasing efficiency target setby the Trust for the BBC.

The main recommendation from this study isthat the BBC could be more systematic in itsapproach to assessing the potential for furtherefficiencies and for identifying any likely impactof these on performance.We support thesefindings.The Trust gives continuing priority tostrengthening the transparency of decisionmaking within the BBC.A systematic approach toreviewing the cost effectiveness of expenditure iskey both to this and to demonstrating value.

We recognise that this is not easy, with a rangeof performance measures to be considered andevaluated alongside the costs of production.Indeed, the Trust has been instrumental inensuring that achievement of the new savingstargets it set for the BBC is to be measured notonly in terms of cost savings but also in terms ofthe ongoing quality of service performance.Thisis to ensure that decisions over where to spendmoney – or cut costs – are taken alongsideconsideration of the potential impact on services.

The efficiency of radio production at the BBCBBC Trust response to the National Audit OfficeValue forMoney Study

This can mean that the least expensiveprogramming option is not necessarily thebest outcome for audiences. Nevertheless weagree that the BBC Executive could do moreto evidence how they reach their assessmentson what constitutes an appropriate cost forprogrammes, particularly for those genres wherecosts do vary significantly across the differentradio stations.There is more scope for carefuluse of comparative data.

The Trust has discussed the NAO’s findings andrecommendations with the BBC Executive andconsidered their response, which is publishedin this document.We note the comments ofthe BBC Executive on the need to balancethe costs of detailed benchmarking against thepotential benefits likely to accrue.While thisis a reasonable concern, we will still expectto see evidence that the BBC Executive istaking forward these recommendations. Itis not sufficient for the BBC to accept thatdifferent services and programmes cost differentamounts without attempting to understand andappropriately explain those differences in thecontext of the remit of those services.

As a means of overcoming some of thedifficulties in benchmarking with commercialcompanies, the Trust will engage withRadioCentre, asking them to participate in anongoing scheme moderated by the Trust. As partof the Trust’s own programme of service reviews,the Trust will also be reviewing the performanceof Radio 2 and 6 Music during 2009-10, lookingat a range of performance criteria as set out inthe relevant service licences.

The Trust will continue to strive to ensure thatthe BBC’s approach to ensuring efficient radioproduction delivers the best value to the licencefee payer. Following on from this report we shallbe asking the Executive to provide us with moredetail on the actions they propose to take, withsuggested timings, and shall be seeking a reportback on their progress in twelve months time. Inparticular we will require an update on:

■ the progress made with regard to enhanceduse of cost comparison data

■ the actions arising from the additional talentvaluation review which the Executive havepromised to undertake

■ the periodic reviews of key genre and howthese are being used to inform guide prices

■ the actions arising from the plannedcomparison of processes and costs ofproduction inputs.

January 2009

The BBC Executive welcomes this review,through which the National Audit Office (NAO)looked at the efficiency of radio productionat the BBC.We are pleased that the NAO hasrecognised the contribution that the radiostations have made to the value for moneyprogramme of the corporation. In recent years,the BBC has made great strides in achievingefficiencies in radio production, particularlythrough fully embracing digital ways of workingwhilst maintaining audience reach and deliveringstrong share of radio listening.Through its valuefor money programme, the national networksand nations stations delivered £18m cumulativesavings (net of implementation costs) from 2005to 2008.They are also committed to efficiencymeasures that will release £68.7m (net of costs)over the period to 2012-13. In addition, wewill continue to look for all opportunities tomaximise the value for money of radio output.

As we deliver our efficiency programme in theperiod to 2012-13, our approach will take intoconsideration specific factors unique to radio ingeneral, and to BBC radio in particular, that arenot fully set out in the NAO report:

1) Radio production is primarily a continuousprocess, producing output on a daily or weeklybasis, year round.While they can usefully beanalysed at programme level, radio productioncosts, unlike those within the TV economy, areless dependent on specific projects with discretebudgets. Even for primarily discrete productions,such as radio drama, because of the small size ofthe programme budgets and the resource mix,programmes are produced and managed on aportfolio basis. Enhancing efficiency, therefore,requires active management, not only of costs

allocated to individual programmes (as identifiedin the report) but also of the resources involvedacross the stations and departments. In theNations, where members of staff work atthe same time for television, radio or onlineprogramming, this is even more important.

2) BBC radio stations considered in this reportreach over 66% of the UK population and,through their range, serve different publicpurposes and different audiences. Across thoseservices are programmes as diverse as TheArchers,Terry Wogan’s breakfast show, GoodMorning Scotland and coverage of the LondonJazz Festival on Radio 3.Whilst working hard todeliver efficiencies, we need to ensure that thisspecial contribution to the creative economy,recognised for its cultural value around theworld, is nurtured and protected.Therefore anyefficiency targets must recognise the sensitivitiesof changes to output that is particularly highlyvalued by audiences, as assessed by the differentdimensions of reach, quality, impact and valuefor money.

3) The report acknowledges that drivingefficiency within a creative productionenvironment is not a simple equation but relieson the interplay of production process andeditorial ambition – the costs of a programmecan be driven as much by the underlyingaudience proposition and station remit as byproduction efficiency.The service licences foreach service create the framework which guidesspecific editorial decisions and any efficiencymeasures must remain within this. For instance,the Radio 2 service licence specifically asks“… and through commissioning documentariesthat provide an understanding of the context in

The efficiency of radio production at the BBCBBC Executive Response to the National Audit OfficeValue forMoney study

which music is created and its cultural impact”.This will increase the cost of Radio 2 relative toa commercial station that does not have suchan imperative.The service licence for Radio 3states that it should “commission new workfrom composers, musicians and playwrights anddraw on the best talent from across the world tocreate its output” This will increase the cost ofmusic programming on the network relative to astation that doesn’t have this requirement.

4) Finally, in many areas of radio production,costs are so low that a relevant considerationin efficiency initiatives is the cost of boththe efficiency project and ensuring accurateand detailed allocation of costs comparedwith the possible benefit that can be derived.Activity must be at a level where costs do notoutstrip benefits.

Response to NAOrecommendationsThe Executive accepts the broad principlesof the recommendations that we do more touse the information available to us to identifyopportunities to deliver efficiencies and to sharebest practice.We will take any actions that canfurther enhance value for money for licence feepayers while maintaining the high quality, rangeand distinctiveness of our radio output.

Comparisons between the costsof programmes to identify thescope for efficiency savingsThe Executive accepts the recommendationsmade in this area in principle.

As expressed above, the unparalleled range ofoutput and remit of the different services makeit very difficult to compare programme costsacross and within services. Such comparison,which does not allow for consideration of thebroad range of measures in the performanceframework, cannot easily identify wherereductions in cost would not be detrimental tothe audience value, whether in terms of reach,quality, impact or value for money.

Therefore, whilst comparing cost per hour ofdifferent types of output (on which the NAO’smethodology has focussed) is one reasonableconsideration in production efficiency, it isonly part of the equation.The most expensiveprogramming is not necessarily the least efficientand variations in costs need to be evaluated bythe full range of measures in the public valueframework before conclusions can be made.

Where programmes carried by differentnetworks or on the same service are broadlysimilar, comparing their costs can be useful toidentify areas where efficiency savings could bemade, and such work is already underway acrossthe in-house production community. Guideprices for commissioners have always beeninformed by the regular conversations betweenproducers and commissioners about productioncost and this will continue. Periodic reviewsfor key genre, as noted by the NAO for Radio4 drama, or that undertaken by Radio 2 forcomedy, also inform the guide prices.

Benchmarking costs requires careful selectionof the way categories are drawn up so as toensure comparisons are relevant. For examplein considering dramas, it is essential to makea distinction according to the size of thecast, which itself depends on the number ofcharacters in the play, or to the slot in which theprogramme is to be broadcast. In taking forwardour efficiency work and the recommendationsof the NAO, it is critical that we get to a moredetailed analysis than has been presented in thereport.The Audio & Music Board will thereforeconsider how to establish programme groupingswhich are as homogenous as possible so thatwe can usefully compare and review productioncosts and processes across networks.As wellas comparing costs in this way, we will alsocompare the processes and costs of the inputsto production (staff and studio resourcesfor example).

We are already undertaking the following actions:

■ Following the study of talent costcommissioned by the Trust and publishedin June 20081, we are also commissioning atalent valuation review, on the basis of whichwe will implement a new strategy for talentmanagement that should help us deliverfurther efficiencies.This review shouldreport by May 2009.

■ We are commissioning a new benchmarkingreview, similar in scope to the studyundertaken on our behalf by Magentum in2007, so that that we can track any changesand identify scope for more detailedconsideration of discrepancies betweencomparable programmes strands This reviewshould report June 2009.

Any cost benchmarking is only useful if theinformation that it provides gives actionableinsight.The best means of ensuring this willbe to engage programme-makers at all levelsand we will begin this process by sharing moreinformation at the Radio Network.

1 Independent review of talent costs conducted by Oliver and Ohlbaum Associates Ltd (O&O) for the BBC Trust, June 2008, available at http://www.bbc.co.uk/bbctrust/research/value_for_money/talent_review.html.

Evaluation of the effect ofproposed savings on theBBC performanceAs acknowledged by the NAO, radio stationcontrollers and the respective Boards haveconsidered the likely impact of the continuousimprovement savings initiatives on target reach,quality and impact.This was a core part ofthe iterative process by which we developedthe efficiency plans, ensuring that we achievegenuine efficiencies not just reduction in cost.In effect, our existing methodology, which isto drive efficiency savings through “continuousimprovement”, gives the opportunity to adjustplans throughout implementation in the lightof audience performance.We agree withthe NAO that, in order to build on progressmade and experience gathered across thenetworks, we need to assess and documentmore systematically the likely, and actual,overall impact of the initiatives on the publicvalue criteria throughout the course of theefficiency programme.

We will continue to develop the performanceframework so that further savings andreprioritisation can be visibly monitored againstagreed measures. Each station will also continueto drive their own efficiency measures to meetallocated targets, and will review these for theirimpact on audience performance

Spreading good practiceThe NAO recommends that the BBC shouldshare ideas and good practice more widelyacross the radio production community.Weagree with this.The BBC Radio Networkis one of a number of groups where suchpractices can be shared.The project groupsof the W1 and Salford change projects give usadditional opportunities to share lessons and toidentify more opportunities that the significanttechnology investments and opportunities forprocess changes afford in a digital environment.The A&M Board has recently consideredthe changes made by BBC Scotland’s radioproduction teams in the move to Pacific Quayand will consider which changes might beapplicable to the network radio stations.

Exploring with commercialradio stations how to establishbenchmarking arrangementsThe BBC works regularly with the commercialsector on topics of common interest, suchas on the development of DAB, and ontraining and development opportunities, andis keen to extend these partnerships as muchas appropriate.

However, opportunities for pursuingbenchmarking with commercial radio are verylimited for the following reasons:

■ In some genres, e.g. drama, there areno commercial radio stations providingthis output; in other genres, e.g. music,comparisons can only be limited as thescale and remit of the programmes are verydifferent. For example, the drivetime showson commercial music stations rarely includethe range of content featured in BBCdrivetime (e.g. in-depth business news andsports bulletins, live music performances).

■ The type of data we can share is limited bycompetition law: the BBC and commercialradio use common suppliers for distribution;independent production and compete fortalent and staff.

■ Such analysis will be expensive and time– consuming both for the BBC and forcommercial operators.The extent of thesebenchmarking studies will be restrictedby the willingness of other organisationsto share data that they may considercommercially sensitive, or to spendresources if they do not see a direct interestin doing so.

Despite these limitations, we fully recognisethe value of benchmarking and have startedto explore what can be done in the area ofbenchmarking talent costs with the commercialsector (following the independent review oftalent costs, already mentioned).

January 2009

The efficiency of radio production at the BBC

REVIEW BY THE COMPTROLLER AND AUDITOR GENERALPRESENTED TO THE BBC TRUST’S FINANCE AND COMPLIANCE COMMITTEE | 13 JANUARY 2009

This report has been prepared under clause 79(3)of the Agreement between the Secretary of Statefor Culture, Media and Sport and the BBC datedJuly 2006.

Tim BurrComptroller and Auditor GeneralNational Audit Office

6 January 2009

The National Audit Officestudy team consisted of:

Terry Caulfield, Iain Forrester, Roseanna Grundy,Keith Hawkswell, Ashley McDougall andRebecca Sheeran

This report can be found on the National AuditOffice web site at www.nao.org.uk

For further information about theNational Audit Office please contact:

National Audit OfficePress Office157-197 Buckingham Palace RoadVictoriaLondonSW1W 9SP

Tel: 020 7798 7400

Email: [email protected]

© National Audit Office 2009

SUMMARY 4

MAIN REPORT 7

APPENDICES

1 Service Licences for BBC radio stations 27

2 Methodology 30

Photograph courtesy of Alamy.com

CONTENTS

4 THE EFFICIENCY OF RADIO PRODUCTION AT THE BBC

SUMMARY1 In 2007-08 the BBC spent £462 million,14 per cent of its licence fee income, on 16 radio stations– ten Network stations (of which four are digital only)broadcasting to the whole United Kingdom (Networkstations) and two stations each for Northern Ireland,Scotland and Wales (Nations stations). Each stationbroadcasts a diverse mix of programmes and all areaccountable to the BBC Trust against the station goals setout in Service Licences issued by the Trust.

2 We looked at what the BBC is doing to maximise theefficiency of radio production across its different stations.Specifically, we reviewed whether the BBC has effectiveprocedures for delivering efficiency in radio production byfocusing on:

■ whether the BBC makes use of cost comparisons toidentify the scope for efficiency gains;

■ the efficiency gains the BBC is planning todeliver; and

■ whether the BBC assesses the impact of efficiencyinitiatives on performance.

3 Our review covers the ten Network stations andthe six Nations stations. We have not evaluated mattersrelating to content and target audiences, which are mattersof editorial judgement for the BBC.

4 BBC Nations and Network radio achievedsavings of £11.7 million by 2007-08 against a target of£11.6 million, and contributed cumulative cash releasingsavings of £18 million, net of implementation costs, tothe BBC’s efficiency programme for the three years toMarch 2008. Efficiency is a combination of cost andperformance but the BBC’s primary goal was to deliver

financial savings and divisions were not required tomeasure whether reductions in costs had been securedwithout a decrease in the quality of outputs. The BBC hasrecognised that, under the current efficiency programme,it will need to measure performance as well as savings todemonstrate that genuine efficiencies have been achieved.

5 The BBC’s target for Nations and Network radio,for its current efficiency programme for the five years toApril 2013, is to reduce expenditure on Network andNations radio through efficiency savings amounting to£21.1 million, generating cumulative cash releasingefficiency savings, net of implementation costs, of£68.7 million (£57.4 million from the ten Network stationsand £11.3 million from the six Nations stations). To meetthis target the BBC can make efficiencies by spending lessto secure the same quality of output, or by altering themix of programmes in the schedule as long as the stationcontinues to meet the BBC objectives set out in its RoyalCharter and in the Service Licences issued to each stationby the BBC Trust.

6 Managing the efficiency of radio productionrequires, as a first step, an understanding of the costs ofproduction before engaging in a process for identifyinghow costs can be reduced without an unacceptableimpact on performance. Each BBC radio station is differentand stations broadcast a diverse range of programmes.However, programmes can be grouped together by genre(for example, drama, music, or comedy), enabling costcomparisons within and between stations (recognisingthat a genre can include a wide range of outputs – forexample, music covers the Chart Show on Radio 1 andCeltic Heartbeat on Radio Wales).

SUMMARY

5THE EFFICIENCY OF RADIO PRODUCTION AT THE BBC

7 In 2006 the six Nations stations completed anexercise to compare their costs, to identify best practicein the way that they worked and to inform the settingof efficiency targets. In 2007 the Network stationscommissioned benchmarking of programmes acrossNetwork and Nations stations but the exercise has notyet been used to inform target setting or the identificationof savings initiatives. Using the data collected for thewider 2007 benchmarking exercise we examined thecost of comparable programmes and identified a widerange of cost variations. We used BBC classifications ofprogrammes, for example, drama and comedy, whilerecognising that the classifications themselves are oftenbroad. For example, the goals of music programmes onRadio 1, Radio 2 and Radio 3 are very different.

8 There is a range of cost variations for similarclassifications of programmes, from music, where theaverage cost per hour of music programmes on Radio 2is 54 per cent higher than the next highest Networkstation, Radio 1, and more than twice the cost forRadio 3. In-house dramas in London and in Manchesterand the North are over 50 per cent higher than the otherEnglish regions and Wales, and over three times thosein Scotland. Whilst Radio 3 pays almost 29 per centmore for an hour of in-house produced drama than forindependent productions, the cost of drama producedin-house by the BBC for Radio 4 is similar to the cost ofdrama Radio 4 commissions from independent productioncompanies. In addition, for most breakfast and eveningdrive-time programmes on Network stations, the BBC’scosts are significantly more expensive than commercialprogrammes in the same slots, largely because of the costsof presenters and other staff, reflecting an editorial choiceon the BBC’s part to take account of the nation-wide remitof its Network stations.

9 Such cost comparisons are a starting point forexamining radio production efficiency, but need to beconsidered in the context of the audience expectations,the remit of the service as determined by its ServiceLicence, and the audience targeted. These comparisonscan then help to identify those areas of the businesswhere there may be greatest scope to deliver efficiencysavings, subject to the BBC’s assessment of any impact onprogramme quality and service distinctiveness.

10 When the BBC commissions programmes it seeks topromote efficiency by setting guide prices. Guide pricesreflect BBC judgements about what programmes shouldcost and the value that they are intended to bring to theprogramme schedule. The BBC has undertaken exercisesto inform the revision of guide prices for 2009-10 forRadio 4’s drama and factual programmes and Radio 2’scomedy programmes, although these were based onbudgeted rather than actual costs, and such analysis is notundertaken routinely across all stations.

11 BBC radio stations are governed by the BBC’s publicvalue performance framework when evaluating theimpact of potential efficiency savings on performance.The framework is made up of four measures: reach,quality, impact, and value for money which the BBCGovernors and, subsequently, the BBC Trust has requiredthe BBC to use since 2004 when measuring performanceat station level. While the BBC confirmed that efficiencyinitiatives have been prioritised according to the likelyeffect on the four aspects of the performance measurementframework, there is a lack of supporting documentation onthat prioritisation exercise. The BBC’s use of the frameworkto assess progress against efficiency targets in radio is stillbeing developed, particularly for the impact indicator.

12 To provide a sound platform for planning andmonitoring its efficiency programme, the BBC needs tohave specific costed plans. The Nations and Network radiostations have set targets for how much they need to deliverand the implementation costs they expect to incur in eachof the five years of the efficiency programme. Each stationhas identified the broad areas in which they will seek tomake efficiencies and to develop detailed costed planswith reference to specific initiatives as part of the annualbudget setting process.

13 While BBC radio stations have diverse programmingand audience objectives they do have some similarprogramme types as well as some common elements ofthe production process. The BBC seeks to identify anddisseminate good practice in making efficiency savingsamongst the Network radio stations and amongst Nationsstations. While there is a pan-BBC group that bringstogether the Controllers and Heads of radio, there is noevidence of good practice being shared in a systematic way.

SUMMARY


Conclusion on value for money

14 The BBC is seeking to maximise the value formoney it achieves from the £462 million a year it spendson Nations and Network radio while maintaining orimproving the performance of those services for listeners.To achieve its aim the BBC needs to be able to identifywhere costs can best be reduced whilst maintainingoverall performance. The BBC has already achievedsavings and identified the scope for more. There islimited documentary evidence, however, that it hassystematically assessed the potential impact of savings onits radio output and it has done limited work to examinesignificant cost variations. The BBC is not thereforemaking full use of opportunities to increase the value formoney it is achieving. On the basis of variations in costsfor comparable programmes, it is likely that a systematicanalysis of the costs and performance of the mostexpensive programmes would help the BBC to identifyareas where it could make further efficiency savings.

Recommendationsa The BBC has explored its data on the costs ofradio production for some programme types but hasnot made full use of its data to identify the scope forpotential efficiency savings across its Network andNations stations.

The BBC should, in a rolling programme:

i compare the costs of comparable programmes tohighlight areas where there may be scope for furtherefficiency savings (paragraphs 38 to 45);

ii identify the reasons for cost variations betweenprogrammes, establish whether variations are dueto differences in editorial ambition or efficiencyand assess the scope for further efficiencies(paragraphs 38 to 45);

iii inform guide price ranges for programme genres byanalysis of actual cost data (paragraph 48).

b Without evaluating the effect of proposedsavings initiatives using its performance measurementframework the BBC will not be able to demonstrate it isdelivering efficiency gains.

The BBC should:

iv assess and document the likely and actual overallimpact of efficiency savings initiatives on each ofits public value criteria (reach, quality, impact, andvalue for money) (paragraph 73);

v complete the work it is now doing to establishindicators and baselines for measuring performanceagainst each of the public value criteria(paragraph 74).

c While each station has identified efficiencyinitiatives there is a need for a more systematic sharingof ideas and good practice.

The BBC should:

vi use the existing Radio Network to identify andspread good practice in radio production efficiency(paragraph 66).

d The BBC does not have arrangements withcommercial radio stations for assessing its radioproduction efficiency relative to them.

The BBC should:

vii explore with commercial radio stations how theymight establish benchmarking arrangements toidentify where and how savings can be made(paragraph 52 to 54).


MAIN REPORTIntroduction

15 This review is part of a programme of value formoney work agreed with the BBC Trust by the Comptrollerand Auditor General, head of the National Audit Office,under an agreement between the Secretary of State forCulture, Media and Sport and the BBC1. The review looksat what the BBC is doing to maximise the efficiency ofradio production across its Network and Nations stations.

16 In 2007-08, the BBC spent £462 million– 14 per cent of its licence fee income – on its Networkradio stations for the United Kingdom and its Nationsstations for Northern Ireland, Scotland, and Wales.This funding was for the 16 radio stations, both analogueand digital (Figure 1).

17 The BBC is funded largely through the televisionlicence fee. The most recent licence fee settlementcovering the period 2007-08 to 2012-13 came into effectfrom 1 April 2007. In October 2007, following the newlicence fee settlement, the BBC announced a five yearefficiency programme – with the explicit goal to reducecosts whilst maintaining the quality of output. The BBCintends to deliver three per cent efficiencies every yearfrom 2008-09 to 2012-13. For Nations and Network radiothe BBC has set a target of £76 million (£69 million netof implementation costs).

■ Network radio is required to deliver cumulativeefficiency savings of £63 million, or £57.4 millionnet of implementation costs. Net efficiency savingsrepresent nearly 1.4 per cent per annum of the costof Network stations over the next five years.2

■ Nations radio stations have a target to delivercumulative savings of £13 million, or £11.3 millionnet of implementation costs. Net efficiency savingsrepresent 3.2 per cent of the cost of Nations stationsover the same period.

18 The BBC also uses the licence fee to fund 38 localradio stations, such as Radio Merseyside and RadioLincolnshire, serving the geographical regions inEngland and the Channel Islands. In 2007-08 the BBCspent £136 million on English local radio. Because ofdifferences in its purpose and output English local radiois not the primary focus of this examination, but is drawnupon for illustrative purposes.

Radio at the BBC19 The BBC’s radio stations are the responsibility of twoBBC Groups.

■ Audio & Music is the BBC group responsible for theNetwork stations – Radios 1 to 5 Live and the AsianNetwork, broadcast in both analogue and digital;and the digital only stations – 1Xtra, 5 Live SportsExtra, 6 Music, and Radio 7. Each station has astation controller.3

1 The BBC’s radio service

Source: National Audit Office

Network radio(£362 millionspend in 2007-08)

Nations radio(£100 million)

Six stations broadcast in analogue andin digital (BBC Radio 1, 2, 3, 4, 5 Liveand the Asian Network) and four onlyin digital (1Xtra, 6 Music, Radio 7, 5Live Sports Extra). All ten broadcast tothe whole of the United Kingdom.

In Northern Ireland, Radio Ulster andFoyle; in Scotland, Radio Scotland andnan Gàidheal; and in Wales, RadioWales and Radio Cymru.

1 A ‘Framework Agreement’ under Article 49 of the BBC Royal Charter 2006 between the Secretary of State for Culture, Media and Sport and the BBC– Command 6872, dated July 2006.

2 The annual percentage saving is calculated with reference to controllable costs, described in paragraph 61.3 Responsibility for the BBC Network radio stations is organised as follows: Controller Radio 1, 1 Xtra, and the Asian Network; Controller Radio 2 and 6 Music;

Controller Radio 3, Proms, and performing groups; Controller Radio 4 and Radio 7; and Controller Five Live and Five Live Sports Extra.

MAIN REPORT


■ BBC Nations services are the responsibility of theBBC’s Nations and Regions Division which is partof the BBC’s Journalism Group. BBC NorthernIreland, BBC Scotland and BBCWales each havea Controller responsible for television, radio andonline output. Each station’s Head of Radio isresponsible to the Controller.

Outside Audio & Music and Nations and Regions, twoother BBC divisions (BBC News and BBC Sport) and theBBC Vision group contribute to the BBC’s radio output,most significantly to Radio 4 and Radio 5 Live.

20 Network and Nations station Controllers areaccountable to the Audio & Music and Journalismboards respectively for devising and implementingefficiency programmes. These boards are accountableto the BBC Executive Board for delivery against thecorporate targets. The Executive Board is accountableto the BBC Trust, which is responsible on behalf of thelicence fee payer for holding the BBC accountable forthe delivery of high quality output and value for moneyin spending licence fee income. Figure 2 shows theseaccountability arrangements.

21 The Network and Nations stations are diverse inthe mix and type of programmes they are required tobroadcast and in the audience they aim to serve. The BBCTrust issues a Service Licence to each radio stationwhich sets out how the station should deliver the BBC’sobjectives and the Trust’s expectations for each station.4

The Service Licence also sets out the baseline budget forthe station.

22 Within the requirements set out in the ServiceLicences, Controllers and editors make decisions whichshape the distinct nature of each station. Betweenthem, the stations provide a range of outputs – recordedmusic, live events (such as the Proms and coverageof Glastonbury), and commissioned works; news andcurrent affairs; sport; drama; readings; documentaries andmagazine style programmes; and religious programmes.Examples of the way Service Licence requirements varyfor music are shown in Box 1. Appendix 1 summarises theService Licences for each station.

4 The two stations in Northern Ireland are covered by one Service Licence.

2 Accountability for the BBC’s radio services

BBC Trust

BBC ExecutiveBoard

Audio MusicBoard

BBC JournalismBoard

Controllersof NetworkStations:

Radio 1/1Xtra/Asian Network

Radio 2/6 Music

Radio 3

Radio 4/Radio 7

Radio 5 Live/Radio 5 LiveSports Extra

Director ofNations andRegions

Controllers ofBBC Wales,

BBC Scotland,and BBC

Northern Ireland

Head of Radio:

Radio Walesand Cymru

Radio Ulsterand Foyle

Radio Scolandand nanGàidheal


MAIN REPORT


Network stations

Station

Radio 1

Radio 2

Radio 3

1Xtra

6 Music

BOX 1

Qualitative requirements

Radio 1 should offer a range of new music,support emerging artists – especially thosefrom the UK – and provide a platform forlive music.

Radio 2 should offer entertaining popularmusic programmes.

The remit of Radio 3 is to offer a mix ofmusic and cultural programming in order toengage and entertain its audience. The coreof programmes should be around classicalmusic with jazz and world music alsofeaturing in Radio 3 output.

The remit of 1Xtra is to play the best incontemporary black music with a strongemphasis on live music and supporting newUK artists.

The remit of BBC 6 Music is to entertainlovers of popular music with a serviceoffering music from the 1960s to the presentday. Its programmes juxtapose currentreleases outside the mainstream with earlierrecordings, including music from the BBCSound Archive. It should provide context forthe music it plays, and support live musicand new artists.

Quantitative requirements

Radio 1 should:

■ broadcast at least 60 hours of specialist music each week

■ ensure that at least 40 per cent of the music in daytime is fromUK acts each year

■ ensure that at least 45 per cent of the music in daytime is neweach year

■ broadcast from around 25 major live events and festivals inthe UK and abroad each year

■ broadcast at least 250 new sessions each year.

Radio 2 should:

■ ensure that at least 40 per cent of the music in daytime is fromUK acts each year

■ ensure that at least 20 per cent of the music in daytime is neweach year

■ broadcast at least 260 hours of live music each year

■ broadcast a broader range of music than any other majorUK radio station, with over 1,100 hours of specialist musicprogrammes each year.

Radio 3 should:

■ ensure that at least 50 per cent of the station’s music outputwill consist of live or specially recorded music each year

■ broadcast at least 500 live or specially recordedperformances each year

■ commission at least 30 new musical works each year.

1Xtra should:

■ ensure that at least 60 per cent of the music played on thestation in daytime is new

■ ensure that at least 35 per cent of all music played in daytimeis from the UK each year

■ broadcast at least 50 live music events each year.

BBC 6 Music should:

■ ensure that at least half of all music played each year is morethan four years old

■ broadcast at least 400 hours of archive concert performanceseach year

■ ensure that at least 15 per cent of music broadcast is concerttracks and sessions from the BBC’s music archive each year

■ broadcast at least 275 new sessions each year.

The variety in BBC Network and Nations Service Licence requirements for music programmes.

MAIN REPORT


23 Service Licences also set out how the BBC Trust willassess the performance of the stations. Performance ismeasured at a station level against the BBC’s performancemeasurement framework of reach, quality, impact andvalue for money. The principal means of measuringperformance – surveys to establish who listens toprogrammes and public perceptions of quality, impactand value for money – are carried out at a station level.Performance is not routinely measured for individualprogrammes due to the high cost of collecting informationon audiences that are small relative to the total UKpopulation or where the programmes vary within thestandard quarterly reporting periods used by Radio JointAudio Research Limited, known as RAJAR5, to collectdetails on listener numbers.

Our examination24 Against the background of the efficiency savingstargets for BBC Radio, this report examines whether theBBC is in a position to maximise the efficiency of radioproduction by looking at:

■ the costs of BBC radio production;

■ whether the BBC makes use of cost comparisons toidentify the scope for efficiency gains;

■ the efficiency gains the BBC is planning todeliver; and

■ whether the BBC assesses the impact of efficiencyinitiatives on performance.

5 Radio Joint Audio Research Limited – RAJAR – is jointly owned by the BBC and the Radio Centre, the representative body for the commercial radio sector.

Source: National Audit Office summary of Service Licences

Asian Network

Nations stations

Radio Scotland

Radio nanGàidheal

Radio Wales

Radio Cymru

Radio Ulster& Foyle

BOX 1

The music played on the Asian Networkshould include a broad range ofSouth Asian-influenced music, with aparticular emphasis on new and live musicand British Asian artists.

Radio Scotland should support Scottishmusic, culture and arts and shouldcommission work from new and establishedtalent. BBC Radio Scotland shouldbroadcast styles of music-making found andpopular within Scotland.

Radio nan Gàidheal should supportScottish and Gaelic music and arts, andshould commission work from new andestablished talent.

Radio Wales should support Welshmusic and arts, and should commissionwork from new and established talent.It should broadcast music-making foundwithin Wales.

Radio Cymru should support Welsh musicand arts, and should commission workfrom new and established talent. It shouldbroadcast a wide range of music.

Radio Ulster & Foyle should providesupport for music and the arts in NorthernIreland and should commission work fromestablished and emerging talent.

The Asian Network should:

■ ensure that content is approximately 50 per cent speech and50 per cent music each year

■ ensure that at least 40 per cent of the music in daytime4 isfrom UK artists each year.

There are no specific quantitative requirements with respect tomusic programmes.





NOTE

Radio 4, 5 Live, 5 Live Sports Extra, and Radio 7 are not listed as the Service Licences for these stations do not include any specific requirements with respectto music programmes.

Continued

MAIN REPORT


The methods we used are set out in Appendix 2. We havenot sought to evaluate matters relating to content,performance and target audiences, which are matters ofeditorial judgement for the BBC.

The costs of BBC Network and Nationsradio production25 The BBC breaks down the costs of its radio stationsinto those costs related directly to programme making andrunning stations, those for transmitting programmes andthe share of overheads allocated to radio (Figure 3).

26 The cost of the BBC’s Network and Nations radiostations for 2007-08 is set out in Figure 4, which showsthat the majority of expenditure – 76 per cent – was onprogramme making, described as the cost of contentin Figure 3.

3 The costs for which radio stations are accountable to the BBC Trust


Spend in 2007-08

£351 million

£41 million

£70 million

Type of costs

The cost of content

Distribution costs

Infrastructure and support costs

Description

All costs of making a programme. Includes costs such as staff costs and the costof studios, equipment and information technology; travel costs; programmescommissioned from independent producers and local production related costs.In addition, content cost covers the cost of running the station, including costs forcommissioning and scheduling, and an allocation of costs incurred elsewhere inthe BBC, for example for copyright payments and news gathering.

The costs of physically transmitting programmes to their audience. For eachstation this is based on a share of centrally negotiated costs.

Other costs including costs of marketing and corporate overheads (e.g.finance) apportioned across stations.

Annual cost for 2007-08 (£’000)

Radio Station

Radio

1

Radio

2

Radio

3

Radio

4

Radio

5Live

Radio

5Live SportsExtra

1Xtra

6Music

Radio

7

Asian

Network

Radio

Scotland

Radio

nan G

aidheal

Radio

Wales

Radio

Cymru

Radio

Ulsterand R

adioFoyle

120

100

80

60

40

20

0

Source: National Audit Office analysis of data in the BBC’s annual report and accounts for 2007-08

Content Distribution Infrastructure

Network Stations Nations Stations

The cost of Network and Nations stations in 2007-084

MAIN REPORT


27 Details on listener numbers are collected byRAJAR. RAJAR collects and analyses, on a quarterly basis,information on listener numbers, known as ‘reach’. RAJARanalysis for the year to March 2008 shows that 35 millionpeople aged 15 and over in the United Kingdom – some68 per cent of this population – listened to at least oneof the BBC’s Network or Nations stations. Figure 5 setsout the reach information for each station. Stations in thecommercial sector reached over 31 million listeners for thesame period, 62 per cent of the population.

28 The BBC’s principal measure of value for moneyfor radio is the cost per listener hour. Cost per listenerhour provides the BBC with a picture of the costs ofprogramming relative to the size of audience reached.Cost per listener hour is a useful measure as it combinescost and audience size and allows the BBC to judge thevalue achieved from its spending on stations in termsof reach. However, a station could have a low cost perlistener hour without necessarily being efficient in thesense that it only incurs the minimal costs needed to meetthe required quality of output and to reach the desiredaudience. Cost per listener hour could encourage a focuson maximising value by expanding reach rather thanreducing costs. The BBC Trust has previously recognisedthe need for cost per listener hour to be treated with somecaution as it could skew decision making by focusing onattracting large audiences6.

29 As the BBC is seeking to make cash releasing savingscost per hour is the measure we have used throughout thisreport. By using cost per hour we can consider the wholecosts of delivering a programme, as the BBC needs to dowhen it considers altering the nature or mix of its outputto secure efficiency savings. The BBC’s consideration willalso, of course, have to take into account the effect ofchanges on service delivery.

30 Figure 6 illustrates how cost per hour and cost perlistener hour provide different pictures of station costs, asdescribed in paragraph 28 above. For example, Radio 4has the second lowest cost per listener hour (£0.01) buthas the highest cost per hour (£9,900). In contrast, Radionan Gàidheal has the second highest cost per listener hour(£0.12), but one of the lowest costs per hour (£1,200).

Comparing the costs of radioprogrammes to identify the scopefor efficiency gains31 Many factors impact upon production efficiency;it is not simply about minimising cost but involves editorialjudgements about factors such as audience needs andproduction quality. Fundamentally, however, managingthe efficiency of radio production requires as a first step anunderstanding of the costs of production before engaging ina process for identifying how costs can be reduced withoutan unacceptable impact on performance. The BBC thereforeneeds to collect and analyse its cost information and thatof organisations producing comparable output and relatethe resulting data to assessments of performance.

5 Listener numbers for the BBC – March 2008

Radio station Reach1 Reach percentage2

Network Stations

Radio 1 11,067,000 22

Radio 2 13,632,000 27

Radio 3 1,795,000 4

Radio 4 9,561,000 19

Radio 5 Live 6,022,000 12

Radio 5 Live Sport Extra 648,000 1

1Xtra 595,000 1

6 Music 520,000 1

Radio 7 813,000 2

Asian Network 535,000 1

Nations Stations

Radio Scotland3 1,008,000 24

Radio Ulster and Radio Foyle 539,000 39

Radio Wales 453,000 18

Radio Cymru4 139,000 6

NOTES

1 Reach is the number of people aged 15 and over who tune in to aradio station for at least one quarter hour over the course of a week.

2 Reach percentage is reach as a percentage of the population in thetransmission area covered by the radio station.

3 RAJAR does not measure reach for Radio nan Gàidheal, in Scotland.

4 The reach percentage for Radio Cymru is based on the population ofWales, and not the number of Welsh speakers.

Source: National Audit Office summary of RAJAR data, year toMarch 2008

6 On-screen and on-air talent, Oliver & Ohlbaum report to the BBC Trust, May 2008.

MAIN REPORT


32 In 2006 Nations radio conducted a benchmarkingexercise across its stations which helped to inform thesetting of efficiency targets. The exercise was used by Headsof Radio to identify areas where efficiency gains might bepossible without adversely affecting output, such as makingbetter use of weekend staff to focus on week-day output.

33 In 2007, in addition to commissioning specificanalysis of the costs of drama and factual programmes onRadio 4, the BBC commissioned consultants to considerthe cost of stations across Network and Nations radio.The exercise generated helpful data, although the BBChas not yet followed through on this work to identifysavings initiatives, and the timing was such that it did notinfluence the setting of efficiency targets. As BBC radiostations have diverse remits and audience targets, stationby station comparisons of total costs can be too broad tobe of use. Even within programme genre – such as dramaand music – variations can exist. Music for exampleencompasses programmes such as Chris Evans on Radio 2,which includes speech and features as well as music,the Early Music Show on Radio 3; and Celtic Heartbeaton Radio Wales. Comparisons can be made, however,between similar programmes.

34 To present the costs of making similar programmeswe analysed the sample data collected by the BBC for the2007 benchmarking exercise. We worked with the BBC tocheck data were comparable. This exercise has identifiedvariations in the cost of similar programmes as a startingpoint for further investigation by the BBC. We analysed theBBC’s data by comparing:

■ programme cost by genre, within and across stations;

■ the cost per hour of output across locations;

■ the cost of programmes made by independentproduction companies with those made in-house bythe BBC; and

■ the cost of BBC programmes against commercialradio programmes for breakfast and eveningdrive-time programmes.

Cost per listener hour (£) Cost per hour (£’000)

Source: National Audit Office analysis of the BBC’s data

0.14

0.12

0.1

0.08

0.06

0.04

0.02

0

12

10

8

6

4

2

0Radio1

Radio2

Radio3

Radio4

Radio5 Live

Cost per hour (£’000) Cost per listener hour (£)

5 LiveSportsExtra

1Xtra 6 Music Radio7

AsianNetwork

RadioScotland

Radionan

Gàidheal

RadioWales

RadioCymru

RadioUlster and

Foyle

Network stations Nations stations

Cost per listener hour and cost per hour of BBC Network and Nations radio stations6

MAIN REPORT


35 The cost data presented in Figures 7 to 14 includeall direct production cost components such as staff costs(including presenters and producers), studios and outsidebroadcasts, and information technology. Not all stationsfeature in each figure for two reason. First, there arevariations in output between stations. Second there aredifficulties in obtaining comparable data for Nations andNetwork stations which manage their costs in differentways because of the different nature of their operations,delivering content to audiences through more integratedtelevision, radio and online services. Staff costs, includingartists, represent the most significant element of the costs ofproducing programmes. Of the £351 million cost of content(Figure 3), artists fees represent 11 per cent and other staffcosts 32 per cent.7

36 We have used two measures – median and ranges– in the graphs below, as explained in Box 2.

37 The cost variations do not mean that simply reducingcost will increase efficiency, but they show where theremay be scope for savings. We have not investigated thereasons for the cost variations identified as this is a matterfor the BBC, balancing editorial aspirations and a moredetailed review of the component costs of producingindividual programmes.

Programme cost by genre withinand across stations

Music

38 Figure 7 shows that the median cost per hour of musicprogrammes8 on Radio 2 is £1,486, 54 per cent higher thanthe next highest, Radio 1, and more than twice the cost forRadio 3. For Nations stations, similar analysis shows thatthe median cost of producing an hour of music on RadioScotland is 65 per cent higher than that of Radio Ulster.

The cost analysis graphics (figures 7 to 14) explained

We arranged the programmes in order of cost per hour, so thatwe could calculate the median average cost per hour and therange of costs per hour.

We used the median cost per hour of programmes, which is themiddle number in any range of numbers, and so is not affectedby atypically high or low programme costs. It therefore givesa more representative value than a simple average or mean,which would be influenced by extremes.

We used the range of costs per hour. This shows the rangeof costs per hour for typical programmes. The inter-quartilerange (the middle 50 per cent) of programmes is shown,giving an indication of how comparable costs are for the coreof programmes.


BOX 2

Cost per hour (£)

Radio station

Radio 1 Radio 2 Radio 3 1 Xtra 6 Music Radio Scotland Radio WalesRadio Ulster

1,600

1,400

1,200

1,000

800

600

400

200

0

Source: National Audit Office, based on the BBC’s data

The cost per hour of music output – median7

£1,486

£966

£650

£466£558

£391

£647£547


7 These figures relate to in-house productions only.8 Disc based music only and disc based music plus guests and features.

MAIN REPORT


39 Figure 8 shows that the music programmes withthe widest range of costs are on Radio 2 (from £937 to£2,222) and Radio 3 (from £358 to £1,211); the cost perhour of Radio Ulster’s programmes ranges from £302 to£1,113. Much less of a range exists for 1Xtra, 6 Music andRadio Wales. Radio Scotland has the smallest range, from£647 to £826 per hour.

Drama

40 Our analysis of drama productions (Figure 9) showsthat the median cost per hour of drama on Radio 3 is£23,965, 60 per cent higher than that for Radio 4 (£14,969,the cost per hour of The Archers). Figure 10 shows that thecost per hour of drama outputs on Radio 7 ranges from£5,300 to £16,996. Similar analysis for Radio 4 showsthat there is no range, as The Archers occupies the entiremiddle 50 per cent of this station’s output (see Box 2 for anexplanation of the range calculation).

Cost per hour (£)

Radio station

Radio 1 Radio 2 Radio 3 1 Xtra 6 Music Radio Scotland Radio WalesRadio Ulster

2,500

2,000

1,500

1,000

500

0


The cost per hour of music output – range8

£1,204

£2,222

£937£743

£1,211

£338

£563

£383

£561

£358

£1,113

£302

£826

£647£722

£412

NOTE

The range covers the middle 50 per cent of programmes by cost (Box 2).


Cost per hour (£)

Radio station


The cost per hour of drama output – range10

NOTE


0

5,000

10,000

15,000

20,000

25,000

30,000

Radio 3 Radio 4 Radio 7

£24,512

£14,969

£16,996

£5,300

£16,752

Cost per hour (£)

Radio station


The cost per hour of drama output – median9

£10,496

£23,965

£14,969

0

5,000

10,000

15,000

20,000

25,000

30,000

Radio 3 Radio 4 Radio 7

MAIN REPORT


41 Detailed benchmarking analysis commissioned byRadio 4, in October 2007, based on budgeted costs, foundthat the main cost drivers of Radio 4 drama which affectimpact performance quality and reflect editorial aspirationwere artists and scripts. However, the analysis found thatproduction cost is independent of these editorial factorsand that dramas on Radio 4 which are similar in terms ofbudgeted costs of artists, scripts and copyright appear tohave significant differences in production costs. Similaranalysis has not been carried out to investigate the rangeof costs of drama on Radio 3 or on Radio 7, or the reasonsfor variation in the costs of drama across stations.

Comedy

42 Figure 11 shows that the median cost per hour ofcomedy programmes on Radio 2 is £24,212, 15 per centhigher than those on Radio 4 (£21,000) and almost50 per cent higher than on Radio Scotland. The range ofprogramme costs for comedy (Figure 12) also indicatesthat Radio 2 and Radio 4 both have similarly large rangesin comparison to Radio Scotland. In 2007, the BBCcompared the budgeted cost of a sample of independentlyproduced comedy programmes commissioned by Radio 2with those commissioned by Radio 4. The exerciseidentified that while talent cost was a key cost driver itwas not the full reason for variation in cost across thenetworks and that further investigation was required.

Cost of programmes made byindependent production companiesand those made in-house by the BBC43 We analysed the cost of plays – one aspect ofdrama – by source of production. Figure 13 shows thatthe median cost per hour of in-house productions ofplays for Radio 3 and Radio 4 are £23,965 and £24,000respectively. This is higher than plays commissionedfrom independent production companies (for Radio 3,by 29 per cent; for Radio 4, by 8 per cent). The cost ofindependently produced plays is 20 per cent higher onRadio 4 than it is on Radio 3.

The cost per hour of comedy output – median11Cost per hour (£)

Radio station


£21,000

£16,411

£24,212

0

5,000

10,000

15,000

20,000

25,000

30,000

Radio 2 Radio 4 Radio Scotland


Cost per hour (£)

Radio station

Radio 2

£27,778

£23,920

£16,411

£13,333£13,426

16,925

Radio 4 Radio Scotland

30,000

25,500

20,000

15,500

10,000

5,000

0


The cost per hour of comedy output – range12

NOTE


Nations stations

Network stations

MAIN REPORT


44 The analysis of Radio 4 drama budgeted costscommissioned by the BBC in 2007 (paragraph 41)showed that the independent production companies arecommissioned to produce a greater proportion of dramaswith lower artist and script costs than those commissionedfrom the BBC’s in-house production departments.The analysis did not fully explain the extent to whichthe variation in costs between in-house and independentdrama is due to producing different outputs or to differinglevels of efficiency.

Cost by programme type by location45 The BBC produces programmes at a number oflocations. Programmes are made locally for each of theNations stations and the Network stations commissionprogrammes to be made in the Nations and acrosslocations in England. Because of its high costs relativeto other genres we looked at the cost of producingdrama at different BBC locations, whilst recognisingthere are differences between the number and the typeof programmes produced in each location. Figure 14shows that the median cost per hour of drama is at least54 per cent higher in London and in Manchester and theNorth than it is in Birmingham, Bristol and Wales and is atleast three times more than Northern Ireland and Scotland.

Cost per hour (£’000s)

30

25

20

15

10

5

0


Location

WalesScotlandNorthern IrelandManchester& North

Bristol LondonBirmingham

£14,969 £15,925

£24,512 £24,943

£5,300 £7,900

£14,780

NOTE

The above analysis is based on relatively small sample sizes for some of the locations. For example, nine hours of programmes produced in-house inNorthern Ireland and ten each for Manchester and the North and Bristol.

The cost per hour of drama by location – median14

Cost per hour (£’000s)

30

25

20

15

10

5

0


Radio station

Radio 3 in-houseRadio 3 independentRadio 4 in-houseRadio 4 independent

£22,187 £24,000

£18,525

£23,965

The cost of plays, analysed by type of production (independent and in-house) – median13

MAIN REPORT


Cost Templates46 One way of reducing the range of costs for producingsimilar programmes is to use a ‘templating’ approach thatspecifies cost levels based on the types of programmesbeing produced. The BBC has adopted such an approachto resource allocation at station level to reflect the similarnature of the output across the 38 stations that cover theEnglish local regions, on which the BBC spent £136 millionin 2007-08. Such an approach is made possible by thefact that all the English stations are governed by the sameService Licence and have the same remit. The budgetfor each local station is built up using a template basedon the range and type of the station. On average, thetemplate accounts for around 95 per cent of the costs ofradio production that are within the control of the Englishlocal radio stations (that is, excluding costs transferredfrom elsewhere in the BBC). Adjustments are made to takeaccount of specific local circumstances such as the lengthof time a station is on air. A large city station that runsovernight (London, for instance) will receive additionalfunding. The resulting funding of BBC local radio atFigure 15 shows less variation between most stations thanbetween the costs of Network and Nations stations.

47 For Network and Nations radio a templatingapproach to costs at station level would be problematicgiven the diversity in remit and the scale and sector ofthe audiences targeted. A templating approach couldbe employed at a programme genre level, however.Comparison of outturn costs across stations for similarprogrammes could be used to inform the developmentof a range of costs for particular programmes thatmanagers might expect to see, given the programme’saims. At present in Network stations Controllersissue commissioning ‘guide prices’ when buyingprogrammes from independent production companiesor commissioning in-house productions. In the past theguide prices have been set based on individual stations’commissioners’ judgement of a reasonable price for aprogramme at a specific time in the schedule. The extentto which these judgements have been informed by data onhistoric or budgeted costs varies across stations.

Station cost in 2007-08 (£’000)

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0


Lond

onLiv

eMerseyside

Leed

sLanc

ashire

Solent

WestM

idland

sSo

uthe

rnCou

nties

Cum

bria

Sheffie

ldThreeCou

nties

Devon

Cleveland

Hum

berside

Bristol

Cov

entry

&W

arwickshire

Stok

eNottin

gham

Leicester

Linco

lnshire

Hereford&

Worceste

rDerby

Wiltshire

Shropshire

Kent

Norfolk

New

castle

Cornw

all

Essex

Man

chester

Cam

bridge

shire

Oxford

Gloucester

Northha

mpton

Suffo

lkBe

rkshire

York

Jersey

Gue

rnsey

Somerset

The cost of English local radio for 2007-0815

MAIN REPORT


48 Radio 4 recognised that its guide prices may notappropriately reflect production costs, the impact ofcertain programmes on audiences, and the strategicimportance of certain times in the schedule. In 2007,it commissioned work (paragraph 41) to understand thereasons for a divergence between the guide prices andthe actual prices paid, and inform where appropriate arevision in the guide prices from 2009-10 for the followingtypes of programmes: drama; factual documentaries andfactual magazine shows; one to one interviews; and studiodiscussions. This exercise, based on a review of budgetedcosts in 2007-08, gave more accurate information so thatControllers could make their commissioning decisionsfor 2009-10 based on better data, and the guide priceshave now been revised. However, comprehensive andsystematic analysis by programme type has not beencarried out across all Network and Nations radio.

The scope for efficiency savingshighlighted by benchmarking49 The analyses in Figures 7 to 14 above illustratevariations in the cost for comparable programme genreswithin and between the BBC’s radio stations. We have notset out to reach conclusions on the efficiency of individualradio stations or programmes, which would require furtheranalysis of performance and editorial intent, which arematters for the BBC. Instead we have used the data toillustrate the ranges of costs as a broad indicator of wherethe BBC could start to look for efficiency savings.

50 In considering where and how the BBC mightidentify efficiency savings, the most expensiveprogrammes by genre could be a reasonable place for theBBC to start, recognising that variations in cost may reflecteditorial judgments about content and audience needs.This is not to suggest that the most expensive programmesare produced inefficiently.

51 The BBC currently plans to deliver efficiency savingsthat will reduce the expenditure on Network and Nationsstations by £21.1 million by 2013. These efficiencyplans already include savings from the most expensiveprogrammes. However a systematic analysis of the costs ofthe most expensive programmes could help to target areaswhere further efficiency savings may be possible.

Cost of BBC programmes againstcommercial radio programmes forbreakfast and evening drive-time slots52 In 2006, as part of the BBC’s corporate exercise toconsider the efficiency savings potentially available for theperiod from April 2008 to March 2013, the BBC engagedwith other public service broadcasters in a benchmarkingexercise for television programmes. The comparison,by an independent consultancy co-commissioned byall participating broadcasters, looked at the cost ofmaking programmes by genre across different channels.The BBC has not attempted a similar exercise for radio,as comparisons with the radio sector are more difficult,there being no commercial public service radio stations.As part of our review, we worked with the BBC and thecommercial sector to make cost comparisons, althoughthe different goals of commercial and public service radiostations mean the results of this exercise should be treatedwith caution9.

53 We sought to make comparisons at a programmelevel, as the value of comparisons at a station level islimited by the diverse remits and purposes of the BBC’sstations and the commercial stations. We identified twospecific types of programme – breakfast shows (0700 to1000) and drive-time (1600 to 1900) – that the BBC andthe commercial sector both broadcast. Both programmeslots are cornerstones of the radio schedules, attractinglisteners in the morning or in the evening as they gohome after work, although there may be differences inthe precise format of the programmes broadcast at thesetimes. We do not audit the commercial stations butwe analysed the data they provided to gain assurancethat the costs included all elements in the BBC’s costssuch as presenters, staff, and overhead costs suchas accommodation, recognising that there might bedifferences in the allocation of overheads which we couldnot analyse. The cost breakdowns are shown in Figure 16and Figure 17 overleaf.

9 The methodology annex to this report explains our approach to data from the commercial sector in detail.

MAIN REPORT


54 Figure 16 and Figure 17 show that staff costs,including presenters’ remuneration, represent the bulkof programme expenditure, regardless of whetherprogrammes are broadcast by the BBC or the commercialsector. To understand the cost drivers for the BBC stationsin Figure 16 and Figure 17 we asked the BBC for abreakdown of the costs for the ‘staff and presenters’element in those figures. Although the BBC told us thatit was willing in principle to share any informationwith the National Audit Office, it was constrained byits responsibilities under the Data Protection Act andconfidentiality clauses in some presenters’ contracts, suchthat its legal advice was that it could only provide uswith data on individual presenters if the Comptroller andAuditor General was party to a Data Transfer Agreementwith the BBC. This agreement would limit his ability toreport on the information provided and the Comptrollerand Auditor General did not wish to accept constraintson his discretion to report on his findings.

55 To provide some information on presenter costs,the BBC told us that for the BBC programmes featuredin Figure 16, the presenter element of the staff andpresenter costs for the BBC stations is 77 per cent andthe staff element 23 per cent; for Figure 17 the figures are79 per cent and 21 per cent respectively. We have notexamined presenters’ remuneration further as this area wascovered in a report in May 2008 commissioned by the BBCTrust from independent consultants. The BBC Trust, on thebasis of the report from its consultants10, concluded thatthe systems used by the BBC to challenge the costs of paypackages for presenters could be improved with greateruse of independent information, through, benchmarkingagainst commercial competitors. The BBC has, as yet, notcarried out any such benchmarking for radio.

Indexed cost per hour (median = 100)

Radio station

Commercial stations

Station 2(Major city)


Station 3(National)

Station 4(National)



Wakeup to

Wogan(Radio 2)

Morningon 3

(Radio 3)

Jason andLyare(1Xtra)

PhilJupitus

(6 Music)

The ChrisMoylesShow

(Radio 1)

400

350

300

250

200

150

100

50

0

Source: National Audit Office analysis of the BBC’s data and that supplied by the commercial sector

BBC stations

Indirect costs Staff costs (presenters and other staff)

NOTES

1 All costs have been indexed around the cost of the median station in the sample, which has the value 100.

2 Staff costs include presenter costs as well as production staff.

3 The presenters for the breakfast shows broadcast on 1Xtra and 6 Music have moved on since this analysis was completed, which might have acorresponding impact on the split of staff costs between the costs of presenters and the costs of other staff.

The cost per hour of the BBC’s breakfast shows compared with those of the commercial sector16

10 On screen and on air talent, Oliver and Ohlbaum report to the BBC Trust, May 2008.

MAIN REPORT


The BBC’s efficiency achievementsand targets56 The current efficiency programme was preceded bya three year efficiency programme, ending in March 2008.BBC Nations and Network radio were required tocontribute annual savings of £11.6 million by 2007-08(£2.2 million from Nations and £9.4 million from Networkradio) to the BBC’s overall target. Together Nations andNetwork radio achieved annual savings of £11.7 million,which were the subject of independent review byKPMG, delivering cumulative savings of £18 million,net of implementation costs, over the three years to31 March 2008.

Efficiency targets for Network andNation stations57 Over the five years April 2008 to March 2013 theBBC is planning efficiency savings of £21.1 million fromNetwork and Nations radio. As some of the initiatives willcontribute savings year on year, the total cash cumulativereleasing efficiency savings is £68.7 million, net ofimplementation costs, from Nations and Network Radio(£57.4 million from Audio & Music’s Network stations and£11.3 million from Nations and Regions stations). The BBC

set these targets taking into account achievements under itsprevious efficiency programme (paragraph 56); a corporateassessment of each group’s potential for savings over theprogramme’s life; and external drivers of efficiency such astechnological change. The BBC has identified a baselineof 2007-08 costs so it can monitor achievement againstthe targets.

58 For Network radio BBC Corporate Finance setAudio & Music an efficiency target which Audio & Musicallocated to each of the network stations and also seta target for work across Audio & Music at group level.Of the £57.4 million of efficiency savings Audio & Musichas targeted over the next five years, £15.6 million relatesto costs managed by the Director of Audio & Music(rather than the individual station Controllers), such asBBC performing groups, ‘Proms in the Park’ and costssuch as expenses and telephone costs. Audio & Music hasalso targeted a further £6.8 million of efficiency savingson its Radio Resources division.11 To identify how mucheach Network station could contribute to the remaining£35.0 million, stations participated in a series of jointexercises to identify cost saving initiatives, althoughthe process was not informed by cost benchmarking(paragraph 33).

Indexed cost per hour (median = 100)

Radio station

Commercial stations


Station 2(Regional)

Station 3(Regional)

Chris Evans(Radio 2)

Scott Mills(Radio 1)

Ace & Invisible(1Xtra)

Steve Lamacq(6 Music)

1,400

1,200

1,000

800

600

400

200

0

Source: National Audit Office analysis of the BBC’s data and that supplied by the commercial sector

BBC stations

Indirect costs Staff costs (presenters and other staff)

NOTES

1 All costs have been indexed around the cost of the median station in the sample, which has the value 100.

2 Staff costs include presenter costs as well as production staff.

The cost per hour of the BBC’s drive-time shows compared with those of the commercial sector17

11 Radio Resources provides staff and an extensive range of studios, outside broadcast units and broadcasting equipment to the BBC’s Network stations.

MAIN REPORT


59 For the Nations BBC Corporate Finance set each ofthe BBC Nations a target for efficiency savings across therange of their outputs – not only radio, but also televisionand online services. The Controller of each Nationsstation allocated an efficiency target to their radio stations,based on their assessment of the scope for savings thatcould be achieved by each station. For example, the BBCassessment was that there was less scope for Radio Ulsterand Foyle to make efficiency savings than the otherNations stations. BBC Radio Scotland and nan Gàidheal,however, have a higher cumulative financial savings targetto deliver, reflecting the BBC’s view that savings can bedelivered earlier through new ways of working introducedas part of its move to Pacific Quay, a new purpose builtfacility in Glasgow. The Nations stations drew on abenchmarking exercise (paragraph 32) to inform theirunderstanding of the level of savings that could beachieved and how they might be delivered.

60 Figure 18 sets out the cash releasing efficiencysavings targets for each of the Network and Nationsradio stations.

61 Figure 19 shows the cash releasing efficiency targetsfor the current efficiency programme as a percentage ofannual controllable costs. This presents a more accuratepicture of the scale of the task facing each station asit excludes areas of cost, such as newsgathering andaccommodation, which are the responsibility of otherareas of the BBC. Figure 19 shows that Radio Scotlandand nan Gàidheal has the highest proportionate targetof 4.1 per cent, reflecting the opportunity to reduce costsat the new Pacific Quay complex in Glasgow. The nexthighest targets are for Radio Wales and Radio Cymru(3.2 per cent), Radio 2 and 6 Music (2.5 per cent) andthe Asian Network (2.3 per cent). These targets reflectthe implementation of long term talent and programmestrategies as well as productivity. The BBC confirmed thatRadio 4 has the lowest target of 0.8 per cent to reflect itsview of the strategic importance of Radio 4 to the BBC.

Delivering efficiency targets62 To provide a sound platform for meeting its efficiencytargets the BBC needs to have specific costed plans.The Nations and Network radio stations have set targets forhow much they want to deliver and the implementationcosts they expect to incur in each of the five years of theefficiency programme. Each station has identified the broadareas in which they will seek to make efficiencies overthe five year period and has developed detailed costedplans with reference to specific initiatives as part of theannual budget setting process for the first two years ofthe programme. The BBC plans to develop detailed plansalongside the annual budget setting process for later yearsto allow flexibility in the efficiency programme.

63 Each station has identified a number of initiativesthat could be used to contribute towards efficiencysavings. The initiatives identified by the stations largelyfall into five broad areas covering two different types ofefficiency, summarised in Box 3 and Box 4 on page 24.

64 The current savings initiatives also includereductions in the scale of some output, examples of whichare shown in Box 4. These ‘allocative’ efficiencies allowthe BBC to reduce some specific services or programmesif it satisfies itself that overall BBC performance will not beimpaired. The BBC Trust requires that changes in the mixof output do not damage core station performance.

65 There may be scope for many of the efficiencyinitiatives considered by individual stations to be sharedand adopted by other stations within BBC Radio. Forexample, following a pilot by Radio 7 in 2001, the useof multi-skilled assistant producers to reduce the levelof programme production staff resources has beenintroduced for other Network and Nations stations.The introduction of assistant producers led to programmesand teams changing both their ways of working and theirteam structures, reducing the number of higher paidproducers working on programmes.

MAIN REPORT


Source: National Audit Office analysis of the BBC’s plans and cost information

Annual cash releasing savings target as a percentage of controllable cost for 2007-200819

1.9%

2.5%

0.8%

2.1%

3.2%

4.1%

1.6%1.4%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Annual savings as a percentage of a station's controllable costs (%)

1.9%

Radio 7Radio1/1Xtra

Radio 2/6Music

Radio 3 Radio 4 Radio 5 Liveand 5 LiveSports Extra

2.3%

AsianNetwork

Radio Walesand RadioCymru

RadioScotlandand nanGàidheal


Radio station


Source: National Audit Office summary of the BBC’s efficiency targets

Savings targets for April 2008 to March 201318

£3.9

£9.7

£4.4 £4.3

£9.3

£4.8£5.3

£1.3

0

2

4

6

8

10

12

£0.9

Radio 7

Net efficiency saving (£ million) – 2008-09 to 2012-13

Radio1/1Xtra

Radio 2/6Music

Radio 3 Radio 4 Radio 5 Liveand 5 LiveSports Extra

£2.4

AsianNetwork

Radio Walesand RadioCymru

RadioScotlandand nanGàidheal


Radio station


MAIN REPORT


66 The introduction of the assistant producer role is anexample of efficiency ideas being shared across stations,but the BBC does not have a formal mechanism operatingto facilitate routine sharing of ideas and experiences. Theprincipal BBC forum which draws together representativesfrom all of the Network and Nations stations is the RadioNetwork. The Radio Network meets six times a year todiscuss aspects of radio on a pan-BBC basis and as suchcould provide a forum for sharing efficiency plans and ideas.There is no record, however, of any discussions at the RadioNetwork of efficiency initiatives or how new practices orideas may be spread across other BBC radio stations.

Assessing the impact of efficiencyinitiatives on performance67 The BBC Trust requires efficiency savings to beperformance neutral. The BBC is therefore planningto deliver financial savings whilst, as a minimum,maintaining 2007-08 levels of performance. It thereforeneeds to both evaluate the likely impact of savingsproposals on performance at the stage of determiningwhich initiatives it will deliver, and then to measure theactual impact on performance. Measuring the impacton performance is particularly important with respect toallocative efficiencies (see Box 4) as these involve makingchanges to the programming schedule.

Examples of productivity initiatives to deliver theefficiency targets

Productive efficiencies are savings which arise from providingthe same activities for a lower financial input while holdingperformance constant. In BBC Radio productivity efficiencysavings will be made by:

Merging management teams and sharing resources– for example

■ moving the production of Radio 5 Live news bulletins andsummaries from the Radio Newsroom into Radio 5 Livenews programmes to enable closer integration between theproduction teams and those writing/producing the newsbulletins will generate savings of £400,000 over 2008-09and 2009-10

Making more efficient use of staff by simplifying the productionprocess and making use of multi-skilled staff

■ Radio Scotland has introduced a new role – a ContentAssistant – which replaces four previous roles. The numberof staff involved has been reduced as a result, leading to asaving of £200,000. The new role has also enabled othersto specialise in more complicated programming and outsidebroadcasts, saving £130,000 per annum.

Embracing and benefiting from new technology and new waysof working

■ merging two separate London based reading units to allowmore effective use of internal studio facilities, reducing thenumber of external studios required, saving £100,000.

Source: National Audit Office summary of the BBC’s efficiency plans

BOX 3

Examples of allocative efficiency initiatives to deliver theefficiency targets

Allocative efficiencies (reprioritisation) are savings which arisefrom a change in the mix of activities, with a consequentreduction in input costs, but which still achieve the BBC’s overallobjectives. In BBC Radio allocative efficiencies will be made by:

Reducing the volume of originated programmes and makingeffective use of repeats

■ reducing the number of drama originations on Radio 4 andreplacing them with some of the narrative histories from thesame station.

Making scheduling changes to reduce the volume of complexprogramming – for example

■ reducing the cast size and the length of episodes of theAsian Network drama serial, Silver Street. Together withproductivity efficiencies to make better use of studios andstaffing these measures will generate savings of £300,000over 2008-09 and 2009-10; and

■ commissioning enhanced abridgements rather than fulldramatisation of novels for Women’s Hour drama, savingapproximately 10 per cent of the cost of a full dramatisationas fewer cast members are required.

Source: National Audit Office summary of the BBC’s efficiency plans

BOX 4

MAIN REPORT


68 The BBC has two frameworks for assessing the impactof proposed efficiency initiatives – Service Licences andits public value performance measurement framework.Each BBC radio station operates under a Service Licenceagreed with the BBC Trust. These Service Licences specifyminimum conditions relating to the nature and mix ofprogrammes each station should deliver. The performancemeasurement framework sets out how the BBC shouldmeasure the public value of its programmes.

69 We examined how the BBC applies theseframeworks to assess the impact of efficiency initiativeson performance.

Service Licences70 BBC Radio is required to comply with the conditionsset out in each of the Service Licences issued by theBBC Trust. We confirmed that all of the Network andNations stations considered the impact on performancerequirements in the Service Licences as part of the processof developing and considering risks associated withcurrently proposed savings initiatives. Stations identifiedand eliminated initiatives which risked breaching ServiceLicence conditions. None of the proposed initiativesbreach the current Service Licences.

71 The Service Licences are subject to review andamendment by the BBC Trust to reflect changingcircumstances or BBC priorities. Where changes areconsidered to pose a substantial risk to performancethe BBC Trust undertakes a full public value test. In twoinstances, revisions to the Services Licences in 2008 bythe BBC Trust were not considered sufficiently substantialto require a public value test, allowing Network radiostations to make savings in ways that would have breachedthe conditions in the Service Licences for 2007.

■ Radio 4’s 2007 Service Licence required the stationto ‘broadcast at least 730 hours of original dramaand readings each year’. Following a review bythe Trust the station’s Licence for 2008 has beenamended and the station is now required to‘broadcast at least 600 hours of original drama andreadings each year.’

■ Radio 4 has considered reducing the number ofdrama originations by 125 hours, to achieve anefficiency saving while meeting editorial prioritiesbut has decided not to do so, for editorial reasons,though such a reduction would be possible within itsnew Service Licence.

■ Radio 7’s Service Licence for 2007 required thestation to ‘commission and broadcast at least10 hours of original new comedy each year’ andto ‘commission and broadcast at least 20 hours oforiginal new drama each year’. The station’s 2008Service Licence requires it to ‘…broadcast someoriginal new comedy and drama’ as the Trust didnot wish to regulate at the level of detail of the 2007Service Licence. As one of its initiatives to deliverefficiency savings, Radio 7 has considered reducingits costs by reducing comedy and drama originationsby fifty per cent. Such a reduction is now possibleunder the 2008 Service Licence.

The BBC’s application of its public valueperformance measurement framework72 In addition to identifying whether initiatives impacton Service Licence conditions we looked to see howthe BBC went about evaluating the likely impact ofsavings plans with respect to the BBC’s performancemeasurement framework. The four components of theBBC’s performance measurement framework, which itintroduced in 2004, are set out in Box 5.

The BBC’s public value performance measurementframework for radio

Reach: the radio station should contribute towards themaintenance of combined BBC weekly reach at over90 per cent by aiming to maintain its own weekly reach,particularly amongst its stated target audience. It shouldcontribute towards ‘on-demand’ listening – for example,programmes that are available to the public via the internetafter they have been broadcast.

Quality: audience approval of the radio station and perceptionsof it as high quality and innovative. Also, the proportion oforiginated programmes across all hours.

Impact: audience perceptions of the radio station as engagingand challenging.

Value for money: the radio station’s cost per listener hour.

Source: National Audit Office, adapted from BBC Trust Service Licences

BOX 5

MAIN REPORT


73 The BBC requires efficiency initiatives to beprioritised using the four elements of the performanceframework in Box 5 – reach, quality, impact and valuefor money. The BBC told us that this had been done andthat Controllers’ judgements were subject to internalchallenge. As there is limited supporting documentation,there is not clear evidence that the public valueframework has been applied in a systematic way.

74 The BBC recognises that to measure the effect onperformance as savings initiatives are implemented,performance needs to be measured from an agreedbaseline. All stations have been required to identifyperformance baselines in Efficiency Technical Notes12,against which they will be held to account for the deliveryof efficiency savings by the BBC Trust. The BBC hasconcluded that, given the data sources available to theBBC, it is neither cost effective nor feasible to measurethe impact of specific initiatives on performance. TheBBC therefore seeks to monitor performance at an overallstation level.

■ Network stations are using industry acceptedmeasurements for measuring reach and qualityand have developed baselines with reference toprior year data for both. They have still to establishmeasurements for impact, one of the four elementsof the BBC’s public value performance framework.

■ Nations stations have identified performanceindicators and baselines for reach, quality andimpact. The measures for quality and impact,however, do not reflect the full range of stations’output. Quality will be measured as audienceperception of “best for regional news” and impactas “reflects local interests”.

12 Efficiency Technical Notes (ETNs) set out how efficiency gains will be measured in financial and performance terms. They enable the BBC to monitor progresstowards the efficiency targets.


APPENDIX XXXAPPENDIX ONE

Service Licence remit

The remit of Radio 1 is to entertain and engage abroad range of young listeners with a distinctive mix ofcontemporary music and speech. It should reflect the livesand interests of 15 to 29 year olds but also embraceothers who share similar tastes. It should offer a range ofnew music, support emerging artists – especially thosefrom the UK – and provide a platform for live music.News, documentaries and advice campaigns shouldcover areas of relevance to young adults.

The remit of Radio 2 is to be a distinctive mixed musicand speech service, targeted at a broad audience,appealing to all age groups over 35. It shouldoffer entertaining popular music programmes andspeech-based content including news, current affairs,documentaries, religion, arts, comedy, readings andsocial action output.

The remit of Radio 3 is to offer a mix of music andcultural programming in order to engage and entertainits audience. Around its core proposition of classicalmusic, its speech-based programming should inform andeducate the audience about music and culture. Jazz,world music, drama, the arts and ideas and religiousprogramming should feature in its output.

The service should appeal to listeners of any ageseeking to expand their cultural horizons throughengagement with the world of music and the arts.

The remit of Radio 4 is to be a mixed speech service,offering in-depth news and current affairs and awide range of other speech output including drama,readings, comedy, factual and magazine programmes.The service should appeal to listeners seeking intelligentprogrammes in many genres which inform, educateand entertain.

The remit of BBC Radio 5 Live is to be BBC Radio’shome of continuous news and live sports coverage. Itshould aim to bring its audience major news storiesand sports events as they happen, and providecontext through wide-ranging analysis and discussion.Programming should be designed to inform, entertainand involve. The service should appeal to news andsports fans of all ages and from all ethnic backgroundsand areas across the UK.

Availability

Radio 1 should be available every day for generalreception in the UK on FM, DAB digital radio anddigital television platforms, and it may be simulcast onthe internet.



Radio 4 should be available every day for generalreception in the UK on FM, Long Wave, MediumWave in some parts of the UK, DAB digital radio anddigital television platforms, and it may be simulcast onthe internet.

BBC Radio 5 Live should be available every day forgeneral reception in the UK on AM, DAB digital radioand digital television platforms, and it may be simulcaston the internet.

Radio Station

BBC Radio 1

BBC Radio 2

BBC Radio 3

BBC Radio 4

BBC Radio 5 Live

Service Licences forBBC radio stations


Radio Station

BBC Radio 6 Music

BBC Radio 7

BBC 1Xtra

BBC Asian Network

BBC Radio Ulster/Foyle

BBC Radio Wales

Service Licence remit

The remit of BBC 6 Music is to entertain lovers ofpopular music with a service offering music from the1960s to the present day. Its programmes juxtaposecurrent releases outside the mainstream with earlierrecordings, including music from the BBC SoundArchive. It should provide context for the music it plays,and support live music and new artists.

The remit of BBC 7 is to provide speech-basedentertainment. Its schedule should include comedy,drama, stories, features, readings and programmesfor children. Most output should come from the BBCarchive, but the station should commission some originalcontent, particularly of types of output rarely found onBBC Radio. The station should also be the home ofchildren’s speech radio from the BBC.

The remit of 1Xtra is to play the best in contemporaryblack music with a strong emphasis on live musicand supporting new UK artists. The schedule shouldalso offer a bespoke news service, regular discussionprogrammes and specially commissioned documentariesrelevant to the young target audience (15 to 24 yearolds), particularly – although not exclusively – thosefrom ethnic minorities.

The remit of BBC Asian Network is to provide speechand music output appealing to British Asians, with astrong focus on news and current affairs. It should beprimarily in English, but some programming should beprovided in a range of South Asian languages. Theprimary target audience is British Asians under 35 butthe station should also appeal to anyone with an interestin British Asian issues, music and culture.

The remit of BBC Radio Ulster/Foyle is to be aspeech-led service, covering a wide range of genresand reflecting all aspects of life and culture within theregion. Its programming should combine extensivecoverage of local issues, interests and events withcoverage of national and international developments.

The remit of BBC Radio Wales is to be a speech-ledservice for adults, covering a wide range of genres andreflecting the issues, events, culture and interests of thepeople of Wales. Programmes should focus on localand national concerns but also address matters of UKand international significance.

Availability

BBC 6 Music should be available every day forgeneral reception in the UK on DAB digital radio anddigital television platforms, and it may be simulcast onthe internet.

BBC 7 should be available every day for generalreception in the UK on DAB digital radio and digitaltelevision platforms, and it may be simulcast onthe internet.

BBC1Xtra should be available every day for generalreception in the UK on DAB digital radio and digitaltelevision platforms and it may be simulcast onthe internet.

BBC Asian Network should be available everyday for general reception in the UK on DAB digitalradio, Medium Wave in parts of the country (variousfrequencies), digital television platforms and it may besimulcast on the internet.

BBC Radio Ulster/Foyle should be available everyday for reception across Northern Ireland on FM andmore widely on DAB digital radio and digital televisionplatforms, and it may be simulcast on the internet.

BBC Radio Wales should be available every day forreception across Wales on Medium Wave and FM andmore widely on DAB digital radio and digital televisionplatforms, and it may be simulcast on the internet.

APPENDIX ONE


Service Licence Remit

The remit of BBC Radio Cymru is to be a comprehensivespeech and music radio service for Welsh speakers,covering a wide range of genres and reflecting theissues, events, culture and interests of the peopleof Wales. Programmes should focus on local andnational concerns but also address matters of UK andinternational significance.

The remit of BBC Radio Scotland is to be a speech-ledservice for all adults covering a wide range of genresand reflecting the issues, events, culture and interestsof the people of Scotland. In addition to local andnational concerns, output should also address mattersof UK and international significance from a Scottishperspective. BBC Radio Scotland should offer somehighly targeted local programming, and support forBBC community stations.

The remit of BBC Radio nan Gàidheal is to deliver acomprehensive speech and music service for Gaelicspeakers covering a wide range of genres andreflecting the issues, events, cultures and interests ofthe people of Scotland from a Gaelic perspective, andthrough the medium of the Gaelic language.

Availability

BBC Radio Cymru should be available every day forreception across Wales on FM and more widely onDAB digital radio and digital television platforms, and itmay be simulcast on the internet.

BBC Radio Scotland should be available every dayfor general reception in Scotland on FM, MediumWave and more widely on DAB digital radio anddigital television platforms, and it may be simulcast onthe internet.

BBC Radio nan Gàidheal should be available everyday for general reception across Scotland on FM andmore widely on DAB digital radio and digital televisionplatforms, and it may be simulcast on the internet.

Radio Station

BBC Radio Cymru

BBC RadioScotland

BBC Radio nanGàidheal

APPENDIX ONE

APPENDIX XXX


APPENDIX TWO

We carried out fieldwork for this report between Juneand October 2008, using the methods set out below,to examine what the BBC is doing to maximise theefficiency of radio production across its different stations.Specifically, we reviewed whether the BBC has effectiveprocedures for delivering efficiency in radio production.

Semi-structured interviews withstation controllers and other key BBCradio personnelWe interviewed Jenny Abramsky (Director, Audio & Music,until September 2008), Tim Davie (Director, Audio &Music, from September 2008), and Pat Loughrey (Director,Nations & Regions).

We interviewed station Controllers and heads ofdepartments for:

■ Radio 1/1Xtra Asian Network

■ Radio 2/6 Music

■ Radio 3/Proms

■ Radio 4/7

■ Radio 5 Live Sports Extra

■ Radio Resources

■ Radio Speech Production

■ BBC News

In addition, we interviewed senior staff for each of thethree Nations in Nations and Regions, including in eachcase the overall Controller for the Nation and heads ofindividual radio stations for BBC Northern Ireland, BBCScotland, and BBCWales.

These interviews covered the BBC’s approach toestablishing the scope for efficiency savings, the useof cost comparisons, the application of the BBC’s

performance measurement framework and the approachto identifying, prioritising and developing possibleefficiency initiatives.

Interviews with third partiesWe interviewed stakeholders not examined in the studyto gain wider views on radio production efficiency andthe BBC:

■ Head of BBC English Local Radio

■ BBCWorld Service

■ BBC Corporate Finance

■ OFCOM

■ Radio Centre

■ Radio Academy

■ Radio Independents Group

Review of BBC documentsWe analysed relevant BBC documents including:

■ Efficiency Technical Notes setting out targets andbroad delivery plans for each radio station

■ papers relating to the process of identifying thescope for efficiency savings and the setting ofefficiency targets

■ BBC Audio & Music and Nations board papers

■ BBC Trust and Corporate Finance guidelines onplanning, delivery and measurement of efficiencysavings plans

■ BBC Radio Service Licences and Statements ofProgramming Policy

■ papers relating to potential efficiency initiativesunder consideration

Methodology


Collection and analysis of data on costsof producing BBC radio programmesWe performed cost analysis work based on a sample ofprogramme data from the BBC’s Proteus system, as usedin the Magentum consultancy report ‘Programme PriceBenchmarking within the BBC’ (November, 2007), withthe aim of illustrating how benchmarking could be used toidentify areas where there is scope for efficiency savings tobe made.

The data sample contained cost and timing information forprogrammes on the BBC’s analogue and digital Networkstations and Nations stations. In addition, a number ofother variables for each programme (e.g. genre, locationof production, number of presenters/actors involved)were included. Some of the additional information wasfrom Proteus and some was added by Magentum. Thesample was of programmes over a three-month period in2006-07, though where programmes were part of a longseries the costs for the whole year were included. Thesample used for this analysis covers 58 per cent of theBBC’s radio broadcast hours in 2006-07; the majority ofprogrammes outside of the sample constituted short seriesor one-off programmes that are not repeated.

We removed obvious data errors such as duplicateprogrammes and misclassifications. The BBC’s outlieranalysis was used to further identify and correct errors.For the purposes of comparability, programmes whichhave common elements have been analysed together.The majority of analysis has been within individual genres(e.g. drama, comedy, music).

Within genres we looked at all stations for which five ormore distinct programmes of the genre were included inthe sample, to provide a sufficient basis for comparisons.For each station, programmes were placed into orderof cost per hour. We calculated the average programmecost (median) on the basis of the cost of a median hourof programming, with programmes weighted accordingto the number of hours for which they were broadcast, aswell as the inter-quartile range of costs.

The medians and ranges for different stations for eachparticular genre of programming were used to illustrateboth the differences in costs between stations and theranges of costs within each station.

We also illustrated how programmes could be comparedwithin genres using other differentiating factors to identifymore specific cost differences. We determined the rangeand median cost of an hour of drama for each station,as above, separately for in-house productions and for

independent productions. We also calculated the mediancost of an hour of drama for each different location wherethe BBC produces drama (e.g. Birmingham, Scotland).

Commercial radio benchmarkingWe discussed with a number of commercial radio stationswhether they might provide information on the costs ofproducing programmes for their stations. Specificallywe invited them to provide breakdowns of costs forbreakfast and drive-time programmes on national andlarge regional stations, with the aim of comparing coststo equivalent programmes on BBC Radio. We do notaudit the commercial stations but we analysed the datathey provided to gain assurance that the costs includedall elements in the BBC’s costs such as presenters, staff,and overhead costs such as accommodation. For theinformation provided, we sought supporting calculationsto allow us to determine if costs could be compared ona like-for-like basis with BBC programmes (e.g. whetherdepreciation of buildings was included). We obtained upto date information from the BBC on the staff and othercosts of their programmes for these timeslots. We spokewith the following commercial organisations.

■ Bauer Media

■ GCAP – Global Media Group

■ Guardian Media Group

■ TIML Radio

We used the two sets of information to illustrate thesimilarities and differences between the costs, and types ofcosts, of programmes on BBC and commercial radio.

Review of best practice indelivering, measuring and reportingefficiency savingsWe drew upon existing guidance on the managementof efficiency programmes to inform our understandingof good practice in delivering efficiency savingsagainst which to compare the approach in BBC Radio.This included:

■ Her Majesty’s Treasury: Measurement of SR04efficiencies – guidance on efficiency methodologies;

■ National Audit Office Efficiency Toolkit (available athttp://www.nao.org.uk/efficiency/toolkit/index.htm);and

■ The Efficiency Programme: A second review ofprogress, Volumes I and II, HC 156 I & II, Session2006-2007.

APPENDIX TWO

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