The BBC Annual Report and Accounts provide endless insights into how the licence fee income of £3.5 billion a year is spent. The commercial arm, BBC Worldwide has also published its annual accounts. Strikingly, while commercial revenues are up nearly 15% at £1.16 billion, BBC Worldwide only contributes £182 million back to the BBC, which is under 10% of the combined cost of BBC One and BBC Two and less than the cost of BBC Online. The international web site BBC.com has only just broken into profit.
Despite criticism of the licence fee as a way of raising revenue for the BBC, it represents remarkably good value in terms of the services it delivers for just over £12 a month per household, around £8 of which is spent on television.
The main justification for the commercial operations of the BBC is that they contribute money back to the public service corporation. Yet they return only 60 pence a month for each licence paying household in the United Kingdom.
Some 80% of the total licence fee income of around £3.5 billion a year is spent on programming. For every pound spent, 3.4 pence is spent in collecting the licence fee, at an annual cost of £125 million.
In total, some £202 million, or 6 pence in every pound, is spent on programme delivery, on satellite, terrestrial and online distribution.
BBC One, the main network television channel, has a weekly reach of 78.8% of the United Kingdom population, watching for an average of 7 hours and 25 minutes, at a cost of 6.4 pence per user hour or 47.5 pence a week. With a total annual budget of £1.4 billion, £1.13 billion is spent on programming, with £50.8 million on distribution and £221.1 million on infrastructure and support.
BBC Radio 2, the most popular national radio network, reaches 27.2% of the population, listening for an average 11 hours 54 minutes at a cost of 0.5 pence per user hour or 5.7 pence a week. The total cost of £59.2 million a year, of which £4.9 million is spent on distribution and £7.6 million goes on infrastructure and support.
BBC Online reaches 41.0% of the population, at an average weekly cost of 8.5 pence per user. The total annual budget is £194.2 million, of which £125.8 million is spent on content, £21.1 million is spent on distribution and £47.3 million on infrastructure and support. The cost of the iPlayer is £2.9 million a year, excluding programming, distribution, infrastructure and support.
BBC Red Button interactive television services reach 31.0% of the population at a cost of 2.3 pence per user per week, at a total cost of £39.5 million a year, of which £14.9 million is spent on content, £19.5 million is spent on distribution and £5.1 million on infrastructure and support.
BBC Worldwide produced a headline profit of £160 million on a turnover of £1.16 billion. The main commercial arm of the BBC contributed a return to the corporation of £76.4 million in cash and investments of £78.5 million in programming. That is under 10% of the combined cost of BBC One and Two, and less than the budget of BBC Three and Four. Interestingly, it is also less than the £196.8 million cost of employing nearly 2,700 BBC Worldwide staff.
BBC Worldwide generated £58.8 million profit from programme distribution, £48.9 million from consumer products, and £40.1 million from its channels business. Its digital entertainment division, which includes BBC.com, made a loss of £6.8 million on a turnover of just £ 27.1 million.
Luke Bradley-Jones, the managing director of BBC.com and Global iPlayer, reported that it has “as a standalone business, reached profitability — two whole years ahead of target”. Which suggests that until the now the commercial online services of the BBC have been losing money.
It will be interesting to see what contribution the Global iPlayer will make to the bottom line at BBC Worldwide and to the finances of the public service broadcaster. It is far from clear that it will be a television licence to print money.