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 2 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 3 113 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 4 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 5 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.