Bbc Trust Meeting

MINUTES OF THE BBC TRUST MEETING

Held on Wednesday 16 July 2008 in the Council Chamber, Broadcasting House, London

Present: Michael Lyons Chairman Chitra Bharucha Vice-Chairman Diane Coyle Trust Member Dermot Gleeson Trust Member Alison Hastings Trust Member for England Patricia Hodgson Trust Member Rotha Johnston Trust Member for Northern Ireland Janet Lewis Jones Trust Member for Wales David Liddiment Trust Member Mehmuda Mian Trust Member Jeremy Peat Trust Member for Scotland Richard Tait Trust Member

In attendance Nicholas Kroll Director, BBC Trust from the Trust Christopher Woolard Deputy Director (except 114.2) Unit: Sally Willson Head of Secretariat and Governance Phil Harrold Senior Adviser, Secretariat and Governance (except 114.2) Tina Stowell Head of Communications (except 114.2) Mark Wakefield Head of Performance (except 114.2) Penny Young Head of Audiences (except 114.2) Item 114, 115 Alison Edwards Adviser, Secretariat and Governance Items 116 – 118, Jon Cowdock Chief Strategy and Policy Adviser 121 – 124 Item 116 Len Murray Baker & McKenzie Item 116 Samantha Mobley Baker & McKenzie Item 116 Francesca Richmond Baker & McKenzie Item 118 David Elliott PricewaterhouseCoopers LLP Item 118 Andrew Stirling Larkhill Consultancy Limited Item 125 Alison Gold Chief Adviser, Performance

For items: 120 - 126 Mark Thompson Director-General 120 – 126 Mark Byford Deputy Director-General 120 – 126 Caroline Thomson Chief Operating Officer 120 – 126 Zarin Patel Group Finance Director 120 – 126 Jessica Cecil Head of Director-General’s Office 121 Helen Boaden Director, BBC News 122 – 124 Jana Bennett Director, BBC Vision 122 – 124 Bal Samra Director, Vision Operations and Rights 123 Pat Loughrey Director, Nations & Regions 123 – 125 Kerstin Mogull Deputy Director, Policy and Strategy 124 John Smith CEO, BBC Worldwide 124 John Tate Director, Policy and Strategy 124 Anna Tavares Strategy Manager, Public Policy 125 Shar Nebhrajani Business and Finance Director, FM&T 125 David Fawcett Head of Policy (Services) 126 John Turner Head of Financial and Commercial Strategy

AGENDA

113. Minutes of the Trust Meeting held on 19 June 2008 and Matters Arising

114. Committees and Audience Councils

115. Director’s Report

116. Sports Personality of the Year Appeals

117. Economic Impact of the BBC

118. Trust Biennial Review of the Window of Creative Competition

119. Mainstreaming Equality and Diversity

120. Director-General

121. BBC Management Response: Nations Impartiality Review

122. Initial Executive Response to the WOCC Review

123. Network Supply Review

124. Availability of Video Content after the Primary Window

125. bbc.co.uk

126. BBC’s Economic Outlook

127. Other Business

128. Items for Noting

129. Business Handling and Communications

130. Declaration of interests

113 MINUTES OF THE TRUST MEETING HELD ON 19 JUNE 2008 AND MATTERS ARISING

113.1 The Trust approved the minutes of the meeting held on 19 June as an accurate record of proceedings. Members agreed to publication of the minutes with the redactions as proposed.

113.2 The Trust noted the matters arising from previous minutes.

114 COMMITTEES AND AUDIENCE COUNCILS

114.1 The Trust noted the reports from committees and Audience Councils. In particular members noted the report from the Public Value and Fair Trading Committee regarding the Public Value Test on Local Video, and the report from the Audience Council Wales on the outcome of the Welsh Assembly’s Broadcasting Committee review.

114.2 [withheld from published minutes – commercially prejudicial / confidential discussion and advice]

115 DIRECTOR’S REPORT

115.1 The Director, BBC Trust presented his report, providing a review of recent activity undertaken by the Trust Unit. In particular he noted the variety of responses to the Ofcom review into public service broadcasting and the referral of ‘Kangaroo’, the commercial on-demand joint venture, to the Competition Commission.

115.2 The Trust discussed the reaction to publication of the Corporation’s Annual Report and Accounts. It was agreed that the stakeholder event that coincided with the publication of the report was successful and it was agreed to consider additional options for meeting with stakeholders and licence fee payers around the release of the report in future years. In discussing the Executive Board’s part of the report, the Trust agreed that in future years it would provide clearer guidance of its expectations for executive reporting of BBC performance.

115.3 Members also discussed the widespread public concern about executive remuneration arising from the salary and bonus information published in the Annual Report and Accounts. Members considered the Trust's duty to licence fee payers in setting the executive remuneration strategy and the framework within which the Executive Board Remuneration Committee must exercise its responsibility for decisions regarding individual salaries and bonuses. Members noted that they would want further discussion of these issues in due course.

116 SPORTS PERSONALITY OF THE YEAR APPEALS

116.1 The Deputy Director, BBC Trust, introduced the item, explaining that the Trust

had been considering appeals against separate complaints from the RadioCentre and ITV plc regarding the alleged sponsorship of the programme, Sports Personality of the Year 2007. He noted that the appeals alleged breaches of the fair trading guidelines, and the editorial guidelines, as well as breaches of the BBC’s Charter and Agreement.

116.2 The editorial and fair trading complaints had been considered by the Editorial Standards Committee, and the Public Value and Fair Trading Committee respectively. A variation to the normal appeals process had been agreed with the appellants so that the Trust would consider the committees' findings on the editorial and fair trading issues in a coordinated way and determine what remedies would be appropriate in respect of each appellants’ concerns and also whether any broader issues of policy or further investigation should be addressed in light of these findings.

116.3 The Trust noted that full and detailed written findings would be provided by each of the committees in respect of each separate appeal. The Chair of each committee made an oral report summarising their findings on the appeals made by each appellant. Broadly, the findings on editorial and fair trading issues were as follows: o Editorial – the Editorial Standards Committee found that although programme staff had clearly sought to comply with the letter of the guidelines, and had taken appropriate advice from editorial policy, a number of Editorial Guidelines along with the supporting guidance had been broken. It found that the programme, and associated website, had compromised the editorial integrity of the BBC by giving the impression that (via a programme) part of a BBC service had been sponsored. o Fair trading – the Public Value and Fair Trading Committee found that obtaining third party funding for events by the BBC did not distort the market for sponsorship, nor raise state aid or competition issues. The committee found that the BBC was not operating unfairly because it did not obtain such funding at below market rates. However the committee did find that Fair Trading Guidelines needed to be tightened to make clear that the competitive impact principle does apply to the sponsorship of events and did not accept the BBC Executive’s arguments to the contrary.

116.4 In addition the Trust noted that the Editorial Standards Committee had found that the BBC had been in technical breach of the BBC Agreement by not having the required statement of policy for the use of alternative finance in place with the Trust and the Secretary of State at the time of the programme. It was noted that a policy had subsequently been approved by the Trust and the Secretary of State. However, the Trust found that even if the policy had been in place at the time, Sports Personality of the Year 2007 would not have been compliant and therefore Sports Personality of the Year 2008 should not be broadcast unless brought into compliance.

116.5 The Trust discussed possible remedies in respect of each appeal, including an instruction to BBC management to ensure that future programmes are compliant with the applicable guidelines and policy on the use of alternative finance, and the provision of a written apology to the appellants. The Trust also discussed whether it

would be appropriate for the event to be sponsored in the future. In discussing the possible remedies the Trust agreed that the handling of the initial stages of the complaints could have been improved, and agreed to discuss these issues further with the Executive.

116.6 The Trust agreed to delegate the determination of final remedies, to be informed by the detailed findings on the appeals, to a sub-group of members, consisting of Michael Lyons, Chitra Bharucha, Diane Coyle, David Liddiment, Jeremy Peat and Richard Tait. It was agreed that the full findings would be published following consideration of the detailed written findings on the appeals and agreement on the appropriate remedies in respect of each by the sub-group.

117 ECONOMIC IMPACT OF THE BBC

117.1 The Deputy Director, BBC Trust, introduced the report, which consisted of an assessment commissioned from PricewaterhouseCoopers (PwC) and a draft conclusions document on behalf of the Trust.

117.2 He noted that the work from PwC had been commissioned to assist the Trust to understand in more detail the impact of the BBC’s publicly funded services on the UK broadcasting and creative sector. The research would provide a solid and factual base for input into Trust research and analysis.

117.3 He noted that the report provided the Trust with a qualitative assessment of both the positive and negative impacts generated by the BBC on the wider creative sector and attempted to quantify those benefits and costs. It also attempted to quantify the benefits and costs at the level of the nations and regions, as well as across the UK.

117.4 The draft Trust conclusions noted four primary points: o The BBC provided a vital source of stability for the UK broadcasting and creative industries. o The BBC provided high value-added impact, which was mainly additive to the commercial broadcasting sector. o There was limited evidence of negative impacts but these areas needed to watched carefully. o BBC investment provided strong potential for positive economic impact in the nations and regions of the UK.

117.5 The Trust accepted the report from PwC and approved the Trust conclusions as presented. Members noted that the report and conclusions document would be published in due course.

118 TRUST BIENNIAL REVIEW OF THE WINDOW OF CREATIVE COMPETITION

118.1 David Liddiment declared a potential conflict of interest for this item – see further detail at minute 130.1.

118.2 The Trust’s Chief Policy and Strategy Adviser introduced the item, which provided the findings from the Trust’s first biennial review of the Window of Creative Competition (WOCC). He noted that Dermot Gleeson and Rotha Johnston had been the lead members for this review and that a draft of the report had been discussed by the Trust’s Finance and Strategy Committee.

118.3 Members noted that the review was broadly positive, finding that the BBC had complied with its Charter and Agreement obligations with regard to the operation of the WOCC and the in-house guarantee. The review outcomes, and the detailed research from PricewaterhouseCoopers, agreed that the WOCC was in general being fairly operated without any obvious bias and creative ideas were being selected on their merits. The data for 2007/08 indicated that independents had successfully won three quarters of the opportunities available under the WOCC. It was noted that, while broadly positive about the operation of the WOCC, stakeholders needed more information to be made available about the way in which the WOCC processes work in practice, and also a better indication of the scale and scope of opportunities available at genre level.

118.4 With minor amendments, the Trust agreed the report and agreed that it could be published with any necessary redactions. It was agreed that the Chairman would write to the Director-General noting the positive outcomes of the report and outlining those specific points where the Trust would like the Executive to take action, setting a timetable for response.

118.5 The Trust agreed that, in the future, it would co-ordinate the statutory review of the operation of the WOCC and in-house guarantee with any other elements of commissioning arrangements requiring Trust review.

119 MAINSTREAMING EQUALITY AND DIVERSITY

119.1 The Trust’s Head of Audiences introduced the report, which provided recommendations on how the Trust could improve its work with a diverse range of audience groups. She noted that the recommendations had been developed following consideration by all the relevant Trust committees and work with an independent equalities consultant.

119.2 The Trust noted that in meeting its responsibility to ensure that the BBC complied with its public purposes and served all audiences, it needed to ensure that its own procedures were informed by, and gave due consideration to, an understanding of the diversity of audiences across the UK. Members agreed that in doing so the Trust must uphold the independence and freedoms of expression of the BBC, ensuring that content creators have creative freedom within the framework of the

BBC’s Editorial Guidelines.

119.3 The Trust agreed to the recommendations as presented by the Trust Unit.

119.4 [withheld from published minutes – confidential discussion and advice]

120 DIRECTOR-GENERAL

120.1 The Director-General introduced his report, noting the performance of recent programmes and services. In particular he noted the recent success of BBC Sport in its coverage of key sporting events, including Wimbledon and the European Football Championship. He noted the upcoming challenge for BBC Sport in covering the Beijing Olympics, which would be the largest single event of the year.

120.2 The Chief Operating Officer reported to the Trust on a loss of personal data by Objective Productions, a subsidiary of All3Media, who were working on a production for BBC Children’s. She reported on the actions that had been taken to address the data loss, to contact and protect the individuals involved and to mitigate against repeat occurrences. David Liddiment declared an interest and left the meeting for this part of the discussion (see minute 130.2).

120.3 [withheld from published minutes – commercially prejudicial / confidential discussion and advice]

120.4 The Director-General reported to the Trust that BBC Worldwide had decided to close the subsidiary company Audiocall, which provided audience participation services to the BBC and other media.

120.5 In concluding, the Director-General noted the appointment of Tim Davie as the new Director, Audio and Music. He also noted the death of Sir Charles Wheeler, who was the Corporation’s longest serving foreign correspondent. The Trust noted the significant contribution of Charles Wheeler to British broadcasting and the public tribute which had been made by the Chairman.

121 BBC MANAGEMENT RESPONSE: NATIONS IMPARTIALITY REVIEW

121.1 The Deputy Director-General introduced the paper, which provided the Executive’s formal response and action plan in response to the Trust’s impartiality review on the BBC’s network news and current affairs coverage of the four UK nations.

121.2 He reported that whilst there had been improvements in the BBC’s performance in this area – and that the report had found that the BBC’s reporting of the UK was seen as consistently superior to that of other broadcast outlets – the Executive accepted that it could and must do better. The Deputy Director-General noted that he had been to, or planned to attend, meetings of each Audience Council to explain the management’s approach.

121.3 The management’s action plan proposed activity in the following areas: o Objective setting and strategic planning – ensuring that coverage of the whole of the UK was a priority across BBC News. o Newsgathering – improving the ability of BBC News to pick up important stories across England as well as within the devolved nations. o Services and output – improving precision and clarity in reporting. o Digital democracy – enhancing coverage of the UK’s political institutions. o Co-operation – improving collaboration between the BBC’s network news operation and Scotland, Wales and Northern Ireland through improved dialogue and planning.

121.4 Members discussed recent improvements in coverage and the proposed approach to be taken by BBC management. They agreed that whilst progress had been made, ongoing scrutiny was required and noted that the Trust Unit was working with Audience Councils to devise a way for Council members to be involved in monitoring progress.

121.5 The Trust accepted the response from the Executive Board and agreed to publish it in due course. Members noted that the Executive would report on progress against the action plan in January 2009.

122 INITIAL EXECUTIVE RESPONSE TO THE WOCC REVIEW

122.1 On behalf of the Executive, the Director, BBC Vision, provided an initial response to the Trust’s review of the WOCC. She was pleased that the review had found that BBC management had met the requirements of the WOCC. In her response she noted the importance of the WOCC in achieving the BBC’s commissioning objectives and ensuring that distinctive and innovative programming was provided to audiences.

122.2 She accepted the recommendations within the Trust’s report and noted that these had the potential to strengthen the commissioning system. She noted that whilst the WOCC provided benefits, it was inevitably a complex system to administer. She also noted that while she agreed with the intent behind the recommendation to provide additional information to independent producers, in some instances there were restrictions in providing commercially sensitive information to organisations outside the Corporation.

122.3 The Director, BBC Vision agreed to present a more fully developed response to the report’s recommendations in due course.

123 NETWORK SUPPLY REVIEW

123.1 The Chief Operating Officer introduced the item, which presented the Executive Board’s strategy for the supply of network television from across the United Kingdom. She noted that this strategy would meet the requirements set by the 9

Trust to increase significantly the levels of network television production across the English regions, Scotland, Wales and Northern Ireland.

123.2 The Executive noted that the objectives of the review were to ensure: o cultural representation of the whole UK; o appropriate economic investment in the nations and regions of the UK; and o sustainability of supply across the whole production base across the UK, including London.

123.3 The Executive’s strategy would meet the commitment to ensure that fifty per cent of network television production would be made outside London by 2016 and that by this time, seventeen per cent of network production will be from Scotland, Wales or Northern Ireland. The strategy would also deliver on the interim target of the three nations producing twelve per cent of network production by 2012.

123.4 [withheld from published minutes – commercially prejudicial / confidential discussion and advice]

123.5 The Trust acknowledged that due to the WOCC it would not be possible to be specific about the level of production in each nation, or throughout the English Regions. The Trust agreed that it would be necessary to supervise closely the impact of the proposed changes on production levels in London and across the English regions.

123.6 The Trust considered the Executive’s request to fund the strategy from the strategic reserve fund. It was agreed that this would be an appropriate use of the fund and the Trust authorised expenditure of up to [withheld from published minutes – commercially prejudicial information] from the strategic reserve for implementation of the network supply strategy. It was noted that the Executive Board’s Finance Committee would scrutinise the detailed business plans for use of the funding.

123.7 The Trust approved the strategy and use of the strategic reserve, noting that a complementary strategy for network radio production would be presented to the Trust for consideration in early 2009.

124 AVAILABILITY OF VIDEO CONTENT AFTER THE PRIMARY WINDOW

124.1 The Chief Operating Officer and Director, BBC Vision, presented to the Trust on the challenges confronting the BBC in meeting audience needs due to the changing nature of television consumption and the increasing use of on-demand technologies. They noted that new technologies increasingly enabled licence fee payers to view video content beyond the period of initial broadcast.

124.2 The Executive outlined their early thinking on how to determine when video content should be provided through the BBC’s public services and when the same content should be made available for commercial exploitation. They noted that there were a number of options that could be pursued, each one providing different 10

opportunities and risks that would need to be carefully considered.

124.3 The Trust discussed the emerging market for the provision of commercial on- demand content and the potential impact on audience perceptions when viewing BBC content in a commercial environment.

124.4 [withheld from published minutes – commercially prejudicial information]

124.5 The Executive agreed to continue work on the proposition and return to the Trust in due course. The related issue of the archive strategy would be considered by the Trust’s Audience and Performance Committee after the summer.

125 BBC.CO.UK

125.1 The Director-General introduced the item, which outlined the Executive Board’s proposed approach for strengthening management controls for the bbc.co.uk service. It was noted that it was a requirement that the Executive Board presented revised management controls to the Trust in order to address management weaknesses highlighted by the Trust’s review of the service.

125.2 The revised controls, including the appointment of Group Controller for bbc.co.uk, were accepted by the Trust as being appropriate. Members noted that the Audience and Performance Committee had previously scrutinised the detail of the proposal and was recommending it to the Trust for approval.

125.3 The Director-General also presented an overview of the Executive’s strategy and approach to new investment within bbc.co.uk. The paper noted that the original plans, which proposed an increase in the service’s annual budget, would require reconsideration by the Executive and careful assessment of the market impact. The Trust noted this information and agreed to consider the detailed proposals for new investments in due course.

126 BBC’S ECONOMIC OUTLOOK

126.1 The Group Finance Director introduced the paper, which provided the Executive’s assessment of the potential adverse impact of the current economic environment on the BBC’s financial position. She noted that this paper had been discussed in detail by the Trust’s Finance and Strategy Committee.

126.2 She noted that the Executive were developing plans to reduce cash expenditure over the next two years in order to mitigate against potential adverse impacts of the general economic environment. She noted that a more detailed paper setting out the Executive’s proposed action plan and any trade-offs required, would be presented to the Trust in the early autumn.

127 OTHER BUSINESS

127.1 Trust Review of Licence Fee Collection Strategy The Trust agreed the terms of reference for the review of licence fee collection strategy, noting that it was being recommended for approval by the Finance and Strategy Committee.

127.2 BBC Trust and Ofcom Memorandum of Understanding The Trust approved an addendum to the memorandum of understanding between the BBC Trust and Ofcom. The addendum provided clarity over jurisdiction in standards cases involving both accuracy and impartiality, and harm and offence.

128 ITEMS FOR NOTING

(a) Trust Approach to Performance Assessment (b) Release of former BBC Jam material (c) Minutes of Trust Committees and Audience Councils (d) Note of offline approvals (e) Documents for Sealing

129 BUSINESS HANDLING AND COMMUNICATIONS

129.1 The Trust discussed the handling and communication of items considered at the meeting.

130 DECLARATION OF INTERESTS

130.1 David Liddiment declared his interest as a non-executive director of the independent production company All3Media. This activity is detailed in the Trust’s Register of Interests, which is published on the Trust website. The papers provided to Mr Liddiment for item 118 (Review of the WOCC) were reviewed by the Trust Unit and a number of small redactions were made. The Trust believed it was not necessary for Mr Liddiment to leave the meeting for discussion during items 118 or 122.

130.2 Mr Liddiment did leave the meeting for discussion on item 120.2. Objective Productions is owned by All3Media and in accordance with the Trust’s Standing Orders the Trust believed that it was appropriate for Mr Liddiment to leave during this item.