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BBC Annual Report and Accounts 2007–08

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BBC Annual Report and Accounts 2007–08 House of Commons Culture, Media and Sport Committee BBC Annual Report and Accounts 2007–08 Fourth Report of Session 2008–09 Report, together with formal minutes, oral and written evidence Ordered by The House of Commons to be printed 20 January 2009 HC 190 [Incorporating HC 938, Session 2007–08] Published on 28 January 2009 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Culture, Media and Sport Committee The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Culture, Media and Sport and its associated public bodies. Current membership Mr John Whittingdale MP (Conservative, Maldon and East Chelmsford) [Chairman] Janet Anderson MP (Labour, Rossendale and Darwen) Mr Philip Davies MP (Conservative, Shipley) Mr Nigel Evans MP (Conservative, Ribble Valley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Mr Mike Hall MP (Labour, Weaver Vale) Alan Keen MP (Labour, Feltham and Heston) Rosemary McKenna MP (Labour, Cumbernauld, Kilsyth and Kirkintilloch East) Adam Price MP (Plaid Cymru, Carmarthen East and Dinefwr) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Helen Southworth MP (Labour, Warrington South) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at http://www.parliament.uk/parliamentary_committees/culture__media_and_sport. cfm Committee staff The current staff of the Committee are Tracey Garratty (Clerk), Martin Gaunt (Second Clerk), Elizabeth Bradshaw (Inquiry Manager), Anna Watkins/Lisa Wrobel (Senior Committee Assistants), Rowena Macdonald (Committee Assistant) and Laura Humble (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; fax 020 7219 2031; the Committee’s email address is [email protected] 1 Contents Report Page Introduction 3 BBC Three 4 Reach 5 Kangaroo (joint venture video on demand service) 5 Value of the BBC 7 Transparency of salaries 8 Ofcom fees 8 Summary 8 Editorial control over offensive content 8 Conclusions and recommendations 11 Formal Minutes 13 Witnesses 14 Written evidence 14 List of Reports from the Committee during the current Parliament 15 3 Introduction 1. On 8 July 2008, the Committee held an oral evidence session with the BBC on its Annual Report and Accounts for 2007–08. This was the second BBC Annual Report and Accounts to be published under the new Royal Charter (“the Charter”) and Agreement between the Secretary of State for Culture, Media and Sport and the BBC (“the Agreement”). The Charter and Agreement set out governance arrangements for the BBC, including the establishment of an independent BBC Trust, which has responsibility for setting the overall strategic direction of the BBC, and a separate Executive Board with responsibility for delivering the BBC's services in accordance with the priorities set by the BBC Trust. We took evidence from Sir Michael Lyons, Chairman of the BBC Trust, and from Mark Thompson, Director General, and Zarin Patel, Director of Finance, BBC Executive. 2. On 23 July 2008, we wrote to the BBC with further questions about its Annual Report and Accounts, and matters raised at the oral evidence session. On 29 September 2008, the BBC submitted its response to our follow-up questions.1 3. We carried out a similar scrutiny exercise on the previous BBC Annual Report and Accounts and published a short report on 22 January 2008.2 This raised concerns about the structure and content of the BBC’s response to the Committee’s written questions. For instance, while the BBC did indicate whether answers to individual questions were provided by the BBC Trust or by the BBC Executive, the rationale behind the allocation of questions between the two bodies was unclear. In some cases it would have been helpful to have included a view from both the BBC Trust and the Executive. We noted that it might also have been more helpful if the BBC Trust, as the body with ultimate responsibility for strategy, had identified whether it was not responding to certain questions because it believed those matters were entirely for the Executive, or because it simply had no opinion on the matters. We also outlined a number of specific concerns with the content of some of the BBC’s answers. 4. Overall, we expressed disappointment at the manner in which the BBC approached its response to our follow-up questions to its 2006–07 Annual Report and Accounts. We hoped for a more robust response from the BBC in future years which made clear where accountability lay for particular issues. We believed that the BBC needed to take advantage of its new governance arrangements to engage more constructively with Parliamentary scrutiny. 5. We are therefore pleased to note a marked improvement in the BBC’s approach to our questions this time around. The BBC Trust has: made it clear that it has coordinated the overall response; indicated which responses were provided by the BBC Executive and which were provided by the BBC Trust; and given its views in addition to that of the BBC Executive more often than in the previous year. Overall, the quality and thoroughness of the BBC’s responses are substantially improved. 1 Ev 24 2 Culture, Media and Sport Committee, Fourth Report from Session 2007–08, BBC Annual Report and Accounts, HC 235 4 6. Nonetheless, the BBC has not addressed some of our follow-up questions as fully as we would have liked. We briefly outline these below. The final section of this report, concerning editorial control over offensive content, does not relate specifically to the BBC’s Annual Report, but rather to the subsequent controversial broadcast of an edition of The Russell Brand Show. BBC Three 7. In its oral evidence the BBC claimed that BBC Three was an important instrument “to encourage [young] people to move more actively to digital take-up”.3 We asked the BBC for evidence that BBC Three had indeed encouraged digital take-up amongst young people, and how many had done so. Neither the replies of the BBC Executive nor the BBC Trust were able to substantiate this claim. 8. The BBC Executive, for instance, noted: an increase in reach for BBC Three from 14% (7.8 million viewers) to 17.3% (9.7 million) in 2007–08; that the channel had the highest share of any non-terrestrial channel in the hours that it transmits; and increased digital take-up amongst 16–34-year-olds from 83% to 87% between 2007 and 2008, “a higher percentage increase than in the population as a whole”.4 9. However, neither the reach or share references constitute evidence that the increase in digital take-up amongst 16–34-year-olds is due to BBC Three. No actual share figure was provided for BBC Three or its peers—just the claim that it has “the highest share of any non-terrestrial channel in the hours that it transmits”.5 The channel’s availability and content may or may not be a factor in this. A large number and variety of other digital multi-channels are also targeted at younger audiences, and no evidence has been presented to us that any particular channel has had more or less influence on digital take-up itself. We also note that Channel 4, during the Committee’s recent session on its 2007 Annual Report, stated that a lot of the BBC’s share of younger audiences “comes from the repeats of EastEnders that they run on BBC Three” (i.e. as opposed to original content on the channel).6 We also note that the reach figures for BBC Three indicate that, nearly six years after the channel’s launch, it is still the case that fewer than 2 in 10 viewers watch BBC Three, a service which cost £125m in 2007–08. 10. The BBC Trust told us that it would be reviewing BBC Three in-depth as part of the review of service and content for younger audiences, a review which has now begun.7 Despite this, we would have expected the Trust to have addressed our question more directly, or noted the deficiency in the BBC Executive’s response. 3 Q 3 4 Ev 24 5 Ev 24 6 Culture, Media and Sport Committee, Third Report of Session 2008–09, Channel 4 Annual Report, HC 189 7 Ev 25 5 Reach 11. We asked the BBC what reach targets were set for each BBC television service in 2007– 08 and what reach was achieved in that year. The Director General had stated that the BBC sets a reach target for each of its television services and that “we can lay them out for you. I think we have met or exceeded our reach targets this year for pretty much every channel across BBC television”.8 12. However, in its written reply, the BBC Executive did not provide the reach target for any individual BBC television service. Instead, it referred to the “Trust’s target[…]that all BBC services work towards the BBC maintaining overall 90% reach” and the Trust’s overall objective for the Executive “to maintain the maximum reach consistent with its purposes and values”.9 While figures were given for actual reach of each BBC television service in 2007–08 (along with comparative figures for 2006–07), it has been impossible to verify the BBC’s claims that reach targets do exist for each of its television services, or that these targets were “met or exceeded” in 2007–08.
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