0809 bbc radio production

8/7/2019 0809 BBC Radio Production

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The efficiency of radio production at the BBC

Review by the Comptroller and Auditor General presented tothe BBC Trusts Finance and Compliance Committee


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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 commission Value 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 Trusts jobto ensure that the BBCs systems are such as towork towards the best output possible withinthe available budget. This study, commissionedby the Trusts 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 reports conclusionsand recommendations.

Our views on theNAOs findingsThe Trust welcomes the NAOs findings

and recommendations. We note the NAOsrecognition of the savings already achieved, 18mof net cash releasing savings in the three yearsto March 2008, and the BBCs 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 further

efficiencies 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.


BBC Trust response to the National Audit Office Value for

Money Study


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This can mean that the least expensiveprogramming option is not necessarily thebest outcome for audiences. Nevertheless weagree that the BBC Executive could do more

to 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 NAOs findings andrecommendations with the BBC Executive andconsidered their response, which is publishedin this document. We note the comments of

the 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 Trusts 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 BBCs approach to ensuring efficient radioproduction delivers the best value to the licencefee payer. Following on from this report we shall

be 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:

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

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

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

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

January 2009


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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 2005

to 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 a

portfolio 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 Wogans breakfast show, GoodMorning Scotland and coverage of the LondonJazz Festival on Radio 3. Whilst working hard to

deliver 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 driving

efficiency 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


BBC Executive Response to the National Audit Office Value for

Money study


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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 3

states 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 doesnt 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 accurate

and 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 to

use 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 NAOsmethodology 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 by

the full range of measures in the public valueframework before conclusions can be made.


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Where programmes carried by differentnetworks or on the same service are broadlysimilar, comparing their costs can be useful toidentify areas where efficiency savings could be

made, 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 selection

of 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 therefore

consider 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:

n Following the study of talent costcommissioned by the Trust and publishedin June 20081, we are also commissioning a

talent 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.

n 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 detailed

consideration 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.


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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 continuous

improvement, 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 Scotlands radio

production 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.


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

n In some genres, e.g. drama, there are

no 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).

n The type of data we can share is limited by

competition law: the BBC and commercialradio use common suppliers for distribution;independent production and compete fortalent and staff.

n 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 consider

commercially 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


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The eiciency o radio production at the BBC

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


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

Tim Burr

Comptroller and Auditor GeneralNational Audit Ofce

6 January 2009

The National Audit Ofcestudy team consisted o:

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

This report can be ound on the National AuditOfce web site at www.nao.org.uk

For urther inormation about theNational Audit Ofce please contact:

National Audit OfcePress Ofce157-197 Buckingham Palace RoadVictoriaLondonSW1W 9SP

Tel: 020 7798 7400

Email: [email protected]

National Audit Ofce 2009


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SUMMARY 4

MAINREPORT 7

APPENdIcES

1 SvcLccsBBCss 27

2 Mlg 30

Photograph courtesy o Alamy.com

ContentS


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7theeiCienCyoradioproduCtionattheBBC

Mainreport Introduction

15 This review is part o a programme o value or

money work agreed with the BBC Trust by the Comptroller

and Auditor General, head o the National Audit Oice,

under an agreement between the Secretary o State or

Culture, Media and Sport and the BBC1. The review looks

at what the BBC is doing to maximise the eiciency o

radio production across its Network and Nations stations.

16 In 2007-08, the BBC spent 462 million

14 per cent o its licence ee income on its Network

radio stations or the United Kingdom and its Nations

stations or Northern Ireland, Scotland, and Wales.

This unding was or the 16 radio stations, both analogue

and digital (Figure 1).

17 The BBC is unded largely through the television

licence ee. The most recent licence ee settlement

covering the period 2007-08 to 2012-13 came into eect

rom 1 April 2007. In October 2007, ollowing the new

licence ee settlement, the BBC announced a ive year

eiciency programme with the explicit goal to reduce

costs whilst maintaining the quality o output. The BBC

intends to deliver three per cent eiciencies every year

rom 2008-09 to 2012-13. For Nations and Network radio

the BBC has set a target o 76 million (69 million net

o implementation costs).

n Network radio is required to deliver cumulativeeiciency savings o 63 million, or 57.4 million

net o implementation costs. Net eiciency savings

represent nearly 1.4 per cent per annum o the cost

o Network stations over the next ive years.2

n Nations radio stations have a target to deliver

cumulative savings o 13 million, or 11.3 million

net o implementation costs. Net eiciency savings

represent 3.2 per cent o the cost o Nations stations

over the same period.

18 The BBC also uses the licence ee to und 38 local

radio stations, such as Radio Merseyside and Radio

Lincolnshire, serving the geographical regions in

England and the Channel Islands. In 2007-08 the BBC

spent 136 million on English local radio. Because o

dierences in its purpose and output English local radio

is not the primary ocus o this examination, but is drawn

upon or illustrative purposes.

Radio at the BBC

19 The BBCs radio stations are the responsibility o two

BBC Groups.

n Audio & Music is the BBC group responsible or the

Network stations Radios 1 to 5 Live and the Asian

Network, broadcast in both analogue and digital;

and the digital only stations 1Xtra, 5 Live Sports

Extra, 6 Music, and Radio 7. Each station has a

station controller.3

1 tBBCssvc

Source: National Audit Office

nwk(32mlls2007-08)

ns(100mll)

Sxssbcslggl(BBCr1,2,3,,Lvasnwk)l

gl(1X,Msc,r7,LvSsex).allbcswluKgm.

inil,rulsl;Scl,rSclGl;Wls,rWlsrCm.

1 A Framework Agreement under Article 49 o the BBC Royal Charter 2006 between the Secretary o State or Culture, Media and Sport and the BBC Command 6872, dated July 2006.

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

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


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Mainreport

8 theeiCienCyoradioproduCtionattheBBC

n BBC Nations services are the responsibility o the

BBCs Nations and Regions Division which is part

o the BBCs Journalism Group. BBC Northern

Ireland, BBC Scotland and BBC Wales each have

a Controller responsible or television, radio and

online output. Each stations Head o Radio isresponsible to the Controller.

Outside Audio & Music and Nations and Regions, two

other BBC divisions (BBC News and BBC Sport) and the

BBC Vision group contribute to the BBCs radio output,

most signiicantly to Radio 4 and Radio 5 Live.

20 Network and Nations station Controllers are

accountable to the Audio & Music and Journalism

boards respectively or devising and implementing

eiciency programmes. These boards are accountable

to the BBC Executive Board or delivery against thecorporate targets. The Executive Board is accountable

to the BBC Trust, which is responsible on behal o the

licence ee payer or holding the BBC accountable or

the delivery o high quality output and value or money

in spending licence ee income. Figure 2 shows these

accountability arrangements.

21 The Network and Nations stations are diverse in

the mix and type o programmes they are required to

broadcast and in the audience they aim to serve. The BBC

Trust issues a Service Licence to each radio station

which sets out how the station should deliver the BBCsobjectives and the Trusts expectations or each station.4

The Service Licence also sets out the baseline budget or

the station.

22 Within the requirements set out in the Service

Licences, Controllers and editors make decisions which

shape the distinct nature o each station. Between

them, the stations provide a range o outputs recorded

music, live events (such as the Proms and coverage

o Glastonbury), and commissioned works; news and

current aairs; sport; drama; readings; documentaries and

magazine style programmes; and religious programmes.Examples o the way Service Licence requirements vary

or music are shown in Box 1. Appendix 1 summarises the

Service Licences or each station.

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

2 accblBBCssvcs

BBcTrust

BBcExeutiveBoar

aMscB

BBCJlsmB

CllsnwkSs:

r1/1X/asnwk

r2/Msc

r3

r/r7

rLv/rLvSsex

dcnsrgs

CllsBBCWls,BBCScl,BBC

nil

hr:

rWlsCm

rulsl

rSclGl



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Mainreport

theeiCienCyoradioproduCtionattheBBC

Networkstations

Station

Raio1

Raio2

Raio3

1Xtra

6Musi

BOX1

Qualitativerequirements

r1slgwmsc,smggssscllsmuKvlmlvmsc.

r2slglmscgmms.

tmr3smxmsccllgmmgggsc.tcgmmsslbclssclmscwjzzwlmsclsgr3.

tm1XslbscmblckmscwsgmsslvmscsgwuKss.

tmBBCMscslvslmscwsvcgmscm10ss.isgmmsjxsclsssmsmwlcgs,clgmscmBBCSacv.islvcxmscls,slvmscwss.

Quantitativerequirements

r1sl:

n bcsls0ssclsmsccwk

n sls0cmscmsmuKcsc

n slscmscmswc

n bcsm2mjlvvssvlsuKbc

n bcsls20wssssc.

r2sl:

n sls0cmscmsmuKcsc

n sls20cmscmswc

n bcsls20slvmscc

n bcsbgmscmjuKs,wv1,100ssclsmscgmmsc.

r3sl:

n sls0cssmscwllcsslvscllcmscc

n bcsls00lvscllcmcsc

n cmmssls30wmsclwksc.

1Xsl:

n sls0cmsclsmsw

n sls3cllmsclm

smuKc

n bcsls0lvmscvsc.

BBCMscsl:

n slslllmsclcsmsl

n bcsls00scvccmcsc

n sls1cmscbcsscccksssssmBBCsmsccvc

n bcsls27wssssc.

tvBBCnwknsSvcLccqmsmscgmms.


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Mainreport


23 Service Licences also set out how the BBC Trust will

assess the perormance o the stations. Perormance is

measured at a station level against the BBCs perormancemeasurement ramework oreach, quality, impact and

value for money. The principal means o measuring

perormance surveys to establish who listens to

programmes and public perceptions o quality, impact

and value for money are carried out at a station level.

Perormance is not routinely measured or individual

programmes due to the high cost o collecting inormation

on audiences that are small relative to the total UK

population or where the programmes vary within the

standard quarterly reporting periods used by Radio Joint

Audio Research Limited, known as RAJAR5, to collect

details on listener numbers.

Our examination

24 Against the background o the eiciency savings

targets or BBC Radio, this report examines whether the

BBC is in a position to maximise the eiciency o radio

production by looking at:

n the costs o BBC radio production;

n whether the BBC makes use o cost comparisons to

identiy the scope or eiciency gains;

n the eiciency gains the BBC is planning to

deliver; and

n whether the BBC assesses the impact o eiciency

initiatives on perormance.

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

Source: National Audit Office summary of Service Licences

AsianNetwork

Nationsstations

RaioSotlan

Raionan

GihealRaioWales

Raiocymru

RaioUlster

&Foyle

BOX1

tmsclasnwkslclbg

Sas-lcmsc,wclmsswlvmscBsasss.

rSclslsScsmsc,clsslcmmsswkmwsblsl.BBCrSclslbcsslsmsc-mkglwScl.

rGlsls

ScsGlcmscs,slcmmsswkmwsblsl.

rWlsslsWlsmscs,slcmmsswkmwsblsl.islbcsmsc-mkgwWls.

rCmslsWlsmscs,slcmmsswkmwsblsl.islbcswgmsc.

ruls&lslv

smscsnilslcmmsswkmsblsmggl.

tasnwksl:

n scsxml0csc

0cmscc

n sls0cmscmsmuKssc.

tsccqvqmswscmscgmms.

tsccqvqmswsc

mscgmms.tsccqvqmswscmscgmms.

tsccqvqmswscmscgmms.

tsccqvqmswsc

mscgmms.

note

r,Lv,LvSsex,r7lssSvcLccssssclscfcqmswscmscgmms.

Continued


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Mainreport


The methods we used are set out in Appendix 2. We have

not sought to evaluate matters relating to content,

perormance and target audiences, which are matters o

editorial judgement or the BBC.

The costs o BBC Network and Nationsradio production

25 The BBC breaks down the costs o its radio stations

into those costs related directly to programme making and

running stations, those or transmitting programmes and

the share o overheads allocated to radio (Figure 3).

26 The cost o the BBCs Network and Nations radio

stations or 2007-08 is set out in Figure 4, which shows

that the majority o expenditure 76 per cent was on

programme making, described as the cost o content

in Figure 3.

3 tcsswcssccblBBCts


Spenin2007-0831mll

1mll

70mll

Typeofoststcsc

dsbcss

iscscss

desriptionallcssmkggmm.iclscssscsscsscsss,qmmclg;vlcss;gmmscmmssmcslclclcss.i,ccscvscsgs,clgcsscmmssgsclg,llccssclswBBC,xmlcgmswsgg.

tcssscllsmggmmsc.csssbsscllgcss.

ocssclgcssmkgcvs(.g.c)cssss.

Annual cost for 2007-08 (000)

Radio Station

Radio

1

Radio

2

Radio

3

Radio

4

Radio

5Liv

e

Radio

5Liv

eSpo

rtsEx

tra1X

tra

6Musi

c

Radio

7

Asian

Netw

ork

Radio

Scotland

Radio

nanG

aidhe

al

Radio

Wale

s

Radio

Cym

ru

Radio

Ulste

rand

Radio

Foyle

120

100

80

60

40

20

0

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

Content Distribution Infrastructure

Network Stations Nations Stations

The cost of Network and Nations stations in 2007-084


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21/39


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Mainreport


35 The cost data presented in Figures 7 to 14 include

all direct production cost components such as sta costs

(including presenters and producers), studios and outside

broadcasts, and inormation technology. Not all stations

eature in each igure or two reason. First, there are

variations in output between stations. Second there arediiculties in obtaining comparable data or Nations and

Network stations which manage their costs in dierent

ways because o the dierent nature o their operations,

delivering content to audiences through more integrated

television, radio and online services. Sta costs, including

artists, represent the most signiicant element o the costs o

producing programmes. O the 351 million cost o content

(Figure 3), artists ees represent 11 per cent and other sta

costs 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 reducing

cost will increase eiciency, but they show where there

may be scope or savings. We have not investigated the

reasons or the cost variations identiied as this is a matter

or the BBC, balancing editorial aspirations and a more

detailed review o the component costs o producing

individual programmes.

Programme cost by genre withinand across stations

Music

38 Figure 7 shows that the median cost per hour o musicprogrammes8 on Radio 2 is 1,486, 54 per cent higher than

the next highest, Radio 1, and more than twice the cost or

Radio 3. For Nations stations, similar analysis shows that

the median cost o producing an hour o music on Radio

Scotland is 65 per cent higher than that o Radio Ulster.

Theostanalysisgraphis(figures7to14)explaine

Wggmmscs,s

wclclclmeianaveragecsrangecss.

Wsmeianostperhourofprogrammes ,wcsmlmbgmbs,sscbcllglwgmmcss.igvsmsvvlsmlvgm,wcwlblcbxms.

Wsrangeofostsperhour .tsswsgcssclgmms.t-qlg(ml0c)gmmsssw,gvgcwcmblcsscgmms.


BOX2

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 BBCs data

The cost per hour of music output median7

1,486

966

650

466558

391

647

547

Network stations Nations stations

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


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Mainreport


39 Figure 8 shows that the music programmeswith

the widest range o costs are on Radio 2 (rom 937 to

2,222) and Radio 3 (rom 358 to 1,211); the cost per

hour o Radio Ulsters programmes ranges rom 302 to

1,113. Much less o a range exists or 1Xtra, 6 Music and

Radio Wales. Radio Scotland has the smallest range, rom647 to 826 per hour.

Drama

40 Our analysis o drama productions (Figure 9) shows

that the median cost per hour o drama on Radio 3 is

23,965, 60 per cent higher than that or Radio 4 (14,969,

the cost per hour oThe Archers). Figure 10 shows that thecost per hour o drama outputs on Radio 7 ranges rom

5,300 to 16,996. Similar analysis or Radio 4 shows

that there is no range, as The Archers occupies the entire

middle 50 per cent o this stations output (see Box 2 or an

explanation o 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

937743

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


24/39

Mainreport


41 Detailed benchmarking analysis commissioned by

Radio 4, in October 2007, based on budgeted costs, ound

that the main cost drivers o Radio 4 drama which aect

impact perormance quality and relect editorial aspiration

were artists and scripts. However, the analysis ound that

production cost is independent o these editorial actorsand that dramas on Radio 4 which are similar in terms o

budgeted costs o artists, scripts and copyright appear to

have signiicant dierences in production costs. Similar

analysis has not been carried out to investigate the range

o costs o drama on Radio 3 or on Radio 7, or the reasons

or variation in the costs o drama across stations.

Comedy

42 Figure 11 shows that the median cost per hour o

comedy programmes on Radio 2 is 24,212, 15 per cent

higher than those on Radio 4 (21,000) and almost50 per cent higher than on Radio Scotland. The range o

programme costs or comedy (Figure 12) also indicates

that Radio 2 and Radio 4 both have similarly large ranges

in comparison to Radio Scotland. In 2007, the BBC

compared the budgeted cost o a sample o independently

produced comedy programmes commissioned by Radio 2

with those commissioned by Radio 4. The exercise

identiied that while talent cost was a key cost driver it

was not the ull reason or variation in cost across the

networks and that urther investigation was required.

Cost o programmes made byindependent production companiesand those made in-house by the BBC

43 We analysed the cost o plays one aspect o

drama by source o production. Figure 13 shows that

the median cost per hour o in-house productions o

plays or Radio 3 and Radio 4 are 23,965 and 24,000

respectively. This is higher than plays commissioned

rom independent production companies (or Radio 3,

by 29 per cent; or Radio 4, by 8 per cent). The cost o

independently produced plays is 20 per cent higher onRadio 4 than it is on Radio 3.

The cost per hour of comedy output median11

Cost per hour ()

Radio station


21,000

16,411

24,212

0

5,000

10,000

15,000

20,000

25,00030,000

Radio 2 Radio 4 Radio Scotland


Cost per hour ()

Radio station

Radio 2

27,778

23,920

16,411

13,33313,426

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


25/39


26/39

Mainreport


Cost Templates

46 One way o reducing the range o costs or producing

similar programmes is to use a templating approach that

speciies cost levels based on the types o programmes

being produced. The BBC has adopted such an approachto resource allocation at station level to relect the similar

nature o the output across the 38 stations that cover the

English local regions, on which the BBC spent 136 million

in 2007-08. Such an approach is made possible by the

act that all the English stations are governed by the same

Service Licence and have the same remit. The budget

or each local station is built up using a template based

on the range and type o the station. On average, the

template accounts or around 95 per cent o the costs o

radio production that are within the control o the English

local radio stations (that is, excluding costs transerred

rom elsewhere in the BBC). Adjustments are made to takeaccount o speciic local circumstances such as the length

o time a station is on air. A large city station that runs

overnight (London, or instance) will receive additional

unding. The resulting unding o BBC local radio at

Figure 15 shows less variation between most stations than

between the costs o Network and Nations stations.

47 For Network and Nations radio a templating

approach to costs at station level would be problematic

given the diversity in remit and the scale and sector o

the audiences targeted. A templating approach could

be employed at a programme genre level, however.

Comparison o outturn costs across stations or similarprogrammes could be used to inorm the development

o a range o costs or particular programmes that

managers might expect to see, given the programmes

aims. At present in Network stations Controllers

issue commissioning guide prices when buying

programmes rom independent production companies

or commissioning in-house productions. In the past the

guide prices have been set based on individual stations

commissioners judgement o a reasonable price or a

programme at a speciic time in the schedule. The extent

to which these judgements have been inormed by data on

historic 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


LondonLive

Merseyside

Leeds

Lancashire

Solent

WestMidlands

SouthernCounties

Cumbria

Sheffield

ThreeCounties

Devon

Cleveland

Humberside

Bristol

Coventry&Warwickshire

Stoke

Nottingham

Leicester

Lincolnshire

Hereford&Worcester

Derby

Wiltshire

Shropshire

Kent

Norfolk

Newcastle

Cornwall

Essex

Manchester

Cambridgeshire

Oxford

Gloucester

Northhampton

Suffolk

Berkshire

York

Jersey

Guernsey

Somerset

The cost of English local radio for 2007-0815


27/39


28/39

Mainreport


54 Figure 16 and Figure 17 show that sta costs,

including presenters remuneration, represent the bulk

o programme expenditure, regardless o whether

programmes are broadcast by the BBC or the commercial

sector. To understand the cost drivers or the BBC stations

in Figure 16 and Figure 17 we asked the BBC or abreakdown o the costs or the sta and presenters

element in those igures. Although the BBC told us that

it was willing in principle to share any inormation

with the National Audit Oice, it was constrained by

its responsibilities under the Data Protection Act and

conidentiality clauses in some presenters contracts, such

that its legal advice was that it could only provide us

with data on individual presenters i the Comptroller and

Auditor General was party to a Data Transer Agreement

with the BBC. This agreement would limit his ability to

report on the inormation provided and the Comptroller

and Auditor General did not wish to accept constraints

on his discretion to report on his indings.

55 To provide some inormation on presenter costs,

the BBC told us that or the BBC programmes eatured

in Figure 16, the presenter element o the sta and

presenter costs or the BBC stations is 77 per cent and

the sta element 23 per cent; or Figure 17 the igures are

79 per cent and 21 per cent respectively. We have notexamined presenters remuneration urther as this area was

covered in a report in May 2008 commissioned by the BBC

Trust rom independent consultants. The BBC Trust, on the

basis o the report rom its consultants10, concluded that

the systems used by the BBC to challenge the costs o pay

packages or presenters could be improved with greater

use o independent inormation, through, benchmarking

against commercial competitors. The BBC has, as yet, not

carried out any such benchmarking or 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

250200

150

100

50

0

Source: National Audit Office analysis of the BBCs 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 BBCs 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.


29/39

Mainreport


The BBCs eiciency achievementsand targets

56 The current eiciency programme was preceded by

a three year eiciency programme, ending in March 2008.

BBC Nations and Network radio were required tocontribute annual savings o 11.6 million by 2007-08

(2.2 million rom Nations and 9.4 million rom Network

radio) to the BBCs overall target. Together Nations and

Network radio achieved annual savings o 11.7 million,

which were the subject o independent review by

KPMG, delivering cumulative savings o 18 million,

net o implementation costs, over the three years to

31 March 2008.

Eiciency targets or Network andNation stations57 Over the ive years April 2008 to March 2013 the

BBC is planning eiciency savings o 21.1 million rom

Network and Nations radio. As some o the initiatives will

contribute savings year on year, the total cash cumulative

releasing eiciency savings is 68.7 million, net o

implementation costs, rom Nations and Network Radio

(57.4 million rom Audio & Musics Network stations and

11.3 million rom Nations and Regions stations). The BBC

set these targets taking into account achievements under its

previous eiciency programme (paragraph 56); a corporate

assessment o each groups potential or savings over the

programmes lie; and external drivers o eiciency such as

technological change. The BBC has identiied a baseline

o 2007-08 costs so it can monitor achievement againstthe targets.

58 For Network radio BBC Corporate Finance set

Audio & Music an eiciency target which Audio & Music

allocated to each o the network stations and also set

a target or work across Audio & Music at group level.

O the 57.4 million o eiciency savings Audio & Music

has targeted over the next ive years, 15.6 million relates

to costs managed by the Director o Audio & Music

(rather than the individual station Controllers), such as

BBC perorming groups, Proms in the Park and costs

such as expenses and telephone costs. Audio & Music hasalso targeted a urther 6.8 million o eiciency savings

on its Radio Resources division.11 To identiy how much

each Network station could contribute to the remaining

35.0 million, stations participated in a series o joint

exercises to identiy cost saving initiatives, although

the process was not inormed 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 BBCs 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 BBCs drive-time shows compared with those of the commercial sector17

11 Radio Resources provides sta and an extensive range o studios, outside broadcast units and broadcasting equipment to the BBCs Network stations.


30/39

Mainreport


59 For the Nations BBC Corporate Finance set each o

the BBC Nations a target or eiciency savings across the

range o their outputs not only radio, but also television

and online services. The Controller o each Nations

station allocated an eiciency target to their radio stations,

based on their assessment o the scope or savings thatcould be achieved by each station. For example, the BBC

assessment was that there was less scope or Radio Ulster

and Foyle to make eiciency savings than the other

Nations stations. BBC Radio Scotland and nan Gidheal,

however, have a higher cumulative inancial savings target

to deliver, relecting the BBCs view that savings can be

delivered earlier through new ways o working introduced

as part o its move to Paciic Quay, a new purpose built

acility in Glasgow. The Nations stations drew on a

benchmarking exercise (paragraph 32) to inorm their

understanding o the level o savings that could be

achieved and how they might be delivered.

60 Figure 18 sets out the cash releasing eiciency

savings targets or each o the Network and Nations

radio stations.

61 Figure 19 shows the cash releasing eiciency targets

or the current eiciency programme as a percentage o

annual controllable costs. This presents a more accurate

picture o the scale o the task acing each station as

it excludes areas o cost, such as newsgathering and

accommodation, which are the responsibility o other

areas o the BBC. Figure 19 shows that Radio Scotlandand nan Gidheal has the highest proportionate target

o 4.1 per cent, relecting the opportunity to reduce costs

at the new Paciic Quay complex in Glasgow. The next

highest targets are or Radio Wales and Radio Cymru

(3.2 per cent), Radio 2 and 6 Music (2.5 per cent) and

the Asian Network (2.3 per cent). These targets relect

the implementation o long term talent and programme

strategies as well as productivity. The BBC conirmed that

Radio 4 has the lowest target o 0.8 per cent to relect its

view o the strategic importance o Radio 4 to the BBC.

Delivering eiciency targets

62 To provide a sound platorm or meeting its eiciency

targets the BBC needs to have speciic costed plans.

The Nations and Network radio stations have set targets or

how much they want to deliver and the implementationcosts they expect to incur in each o the ive years o the

eiciency programme. Each station has identiied the broad

areas in which they will seek to make eiciencies over

the ive year period and has developed detailed costed

plans with reerence to speciic initiatives as part o the

annual budget setting process or the irst two years o

the programme. The BBC plans to develop detailed plans

alongside the annual budget setting process or later years

to allow lexibility in the eiciency programme.

63 Each station has identiied a number o initiatives

that could be used to contribute towards eiciencysavings. The initiatives identiied by the stations largely

all into ive broad areas covering two dierent types o

eiciency, summarised in Box 3 and Box 4 on page 24.

64 The current savings initiatives also include

reductions in the scale o some output, examples o which

are shown in Box 4. These allocative eiciencies allow

the BBC to reduce some speciic services or programmes

i it satisies itsel that overall BBC perormance will not be

impaired. The BBC Trust requires that changes in the mix

o output do not damage core station perormance.

65 There may be scope or many o the eiciency

initiatives considered by individual stations to be shared

and adopted by other stations within BBC Radio. For

example, ollowing a pilot by Radio 7 in 2001, the use

o multi-skilled assistant producers to reduce the level

o programme production sta resources has been

introduced or other Network and Nations stations.

The introduction o assistant producers led to programmes

and teams changing both their ways o working and their

team structures, reducing the number o higher paid

producers working on programmes.


31/39


32/39

Mainreport


66 The introduction o the assistant producer role is an

example o eiciency ideas being shared across stations,

but the BBC does not have a ormal mechanism operating

to acilitate routine sharing o ideas and experiences. The

principal BBC orum which draws together representatives

rom all o the Network and Nations stations is the Radio

Network. The Radio Network meets six times a year to

discuss aspects o radio on a pan-BBC basis and as such

could provide a orum or sharing eiciency plans and ideas.There is no record, however, o any discussions at the Radio

Network o eiciency initiatives or how new practices or

ideas may be spread across other BBC radio stations.

Assessing the impact o eiciencyinitiatives on perormance67 The BBC Trust requires eiciency savings to be

perormance neutral. The BBC is thereore planning

to deliver inancial savings whilst, as a minimum,

maintaining 2007-08 levels o perormance. It thereore

needs to both evaluate the likely impact o savings

proposals on perormance at the stage o determining

which initiatives it will deliver, and then to measure the

actual impact on perormance. Measuring the impact

on perormance is particularly important with respect to

allocative eiciencies (see Box 4) as these involve making

changes to the programming schedule.

Examplesofproutivityinitiativestoelivertheeffiienytargets

Proutiveeffiieniessvgswcsmvgsmcvslwclwllgmccs.iBBCrcvccsvgswllbmb:

Mergingmanagementteamsansharingresouresforexample

n mvgcrLvwsbllssmmsmrnwsmrLvwsgmmsblclsgbwcmsswg/cgwsbllswllgsvgs00,000v2008-0200-10

Makingmoreeffiientuseofstaffbysimplifyingtheproutionproessanmakinguseofmulti-skillestaff

n rSclscwlCassswclcsvsls.tmbsvlvsbcssl,lgsvg200,000.twlslsblssclsmcmlcgmmgsbcss,svg130,000m.

Embrainganbenefitingfromnewtehnologyannewwaysofworking

n mggwsLbsgsllwmcvslscls,cgmbxlssq,svg100,000.

Source: National Audit Office summary of the BBCs efficiency plans

BOX3

Examplesofalloativeeffiienyinitiativestoelivertheeffiienytargets

Alloativeeffiienies(s)svgswcsmcgmxcvs,wcsqccss,bwcsllcvBBCsvllbjcvs.iBBCrllcvccswllbmb:

Reuingthevolumeoforiginateprogrammesanmakingeffetiveuseofrepeats

n cgmbmgsrlcgmwsmvssmsms.

Makingsheulinghangestoreuethevolumeofomplexprogrammingforexample

n cgcsszlgss

asnwkmsl,SlvS.tgwcvccsmkbssssgsmsswllgsvgs300,000v2008-0200-10;

n cmmssgcbgmsllmsvlsWmshm,svgxml10ccsllmsswcsmmbsq.

Source: National Audit Office summary of the BBCs efficiency plans

BOX4


33/39

Mainreport


68 The BBC has two rameworks or assessing the impact

o proposed eiciency initiatives Service Licences and

its public value performance measurement framework.

Each BBC radio station operates under a Service Licence

agreed with the BBC Trust. These Service Licences speciy

minimum conditions relating to the nature and mix oprogrammes each station should deliver. The perormance

measurement ramework sets out how the BBC should

measure the public value o its programmes.

69 We examined how the BBC applies these

rameworks to assess the impact o eiciency initiatives

on perormance.

Service Licences

70 BBC Radio is required to comply with the conditionsset out in each o the Service Licences issued by the

BBC Trust. We conirmed that all o the Network and

Nations stations considered the impact on perormance

requirements in the Service Licences as part o the process

o developing and considering risks associated with

currently proposed savings initiatives. Stations identiied

and eliminated initiatives which risked breaching Service

Licence conditions. None o the proposed initiatives

breach the current Service Licences.

71 The Service Licences are subject to review and

amendment by the BBC Trust to relect changingcircumstances or BBC priorities. Where changes are

considered to pose a substantial risk to perormance

the BBC Trust undertakes a ull public value test. In two

instances, revisions to the Services Licences in 2008 by

the BBC Trust were not considered suiciently substantial

to require a public value test, allowing Network radio

stations to make savings in ways that would have breached

the conditions in the Service Licences or 2007.

n Radio 4s 2007 Service Licence required the station

to broadcast at least 730 hours o original drama

and readings each year. Following a review by

the Trust the stations Licence or 2008 has beenamended and the station is now required to

broadcast at least 600 hours o original drama and

readings each year.

n Radio 4 has considered reducing the number o

drama originations by 125 hours, to achieve an

eiciency saving while meeting editorial priorities

but has decided not to do so, or editorial reasons,

though such a reduction would be possible within its

new Service Licence.

n Radio 7s Service Licence or 2007 required the

station to commission and broadcast at least

10 hours o original new comedy each year and

to commission and broadcast at least 20 hours o

original new drama each year. The stations 2008

Service Licence requires it to broadcast someoriginal new comedy and drama as the Trust did

not wish to regulate at the level o detail o the 2007

Service Licence. As one o its initiatives to deliver

eiciency savings, Radio 7 has considered reducing

its costs by reducing comedy and drama originations

by ity per cent. Such a reduction is now possible

under the 2008 Service Licence.

The BBCs application o its public value

perormance measurement ramework72 In addition to identiying whether initiatives impacton Service Licence conditions we looked to see how

the BBC went about evaluating the likely impact o

savings plans with respect to the BBCs perormance

measurement ramework. The our components o the

BBCs perormance measurement ramework, which it

introduced in 2004, are set out in Box 5.

TheBBcspublivalueperformanemeasurementframeworkforraio

Reah:sslcbwsmccmbBBCwklcv0cbmgmswweekly reach,cllmgsssgc.islcbws-mlsgxml,gmmsvlblblcvvbbcs.

Quality:capprovalscsshigh quality and innovative.als,originated programmescsslls.

Impat:ccsssengaging

and challenging.

Valueformoney:ss cost per listener hour.

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

BOX5


34/39

Mainreport


73 The BBC requires eiciency initiatives to be

prioritised using the our elements o the perormance

ramework in Box 5 reach, quality, impact and value

for money. The BBC told us that this had been done and

that Controllers judgements were subject to internal

challenge. As there is limited supporting documentation,there is not clear evidence that the public value

ramework has been applied in a systematic way.

74 The BBC recognises that to measure the eect on

perormance as savings initiatives are implemented,

perormance needs to be measured rom an agreed

baseline. All stations have been required to identiy

perormance baselines in Eiciency Technical Notes12,

against which they will be held to account or the delivery

o eiciency savings by the BBC Trust. The BBC has

concluded that, given the data sources available to the

BBC, it is neither cost eective nor easible to measurethe impact o speciic initiatives on perormance. The

BBC thereore seeks to monitor perormance at an overall

station level.

n Network stations are using industry accepted

measurements or measuring reach and quality

and have developed baselines with reerence to

prior year data or both. They have still to establish

measurements or impact, one o the our elements

o the BBCs public value perormance ramework.

n Nations stations have identiied perormance

indicators and baselines or reach, quality and

impact. The measures or quality and impact,

however, do not relect the ull range o stations

output. Quality will be measured as audience

perception o best or regional news and impact

as relects local interests.

12 Eiciency Technical Notes (ETNs) set out how eiciency gains will be measured in inancial and perormance terms. They enable the BBC to monitor progresstowards the eiciency targets.


35/39


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We carried out ieldwork or this report between June

and October 2008, using the methods set out below,

to examine what the BBC is doing to maximise theeiciency o radio production across its dierent stations.

Speciically, we reviewed whether the BBC has eective

procedures or delivering eiciency in radio production.

Semi-structured interviews withstation controllers and other key BBCradio personnel

We interviewed Jenny Abramsky (Director, Audio & Music,

until September 2008), Tim Davie (Director, Audio &

Music, rom September 2008), and Pat Loughrey (Director,Nations & Regions).

We interviewed station Controllers and heads o

departments or:

n Radio 1/1Xtra Asian Network

n Radio 2/6 Music

n Radio 3/Proms

n Radio 4/7

n Radio 5 Live Sports Extra

n Radio Resources

n Radio Speech Production

n BBC News

In addition, we interviewed senior sta or each o the

three Nations in Nations and Regions, including in each

case the overall Controller or the Nation and heads o

individual radio stations or BBC Northern Ireland, BBC

Scotland, and BBC Wales.

These interviews covered the BBCs approach to

establishing the scope or eiciency savings, the useo cost comparisons, the application o the BBCs

perormance measurement ramework and the approach

to identiying, prioritising and developing possible

eiciency initiatives.

Interviews with third parties

We interviewed stakeholders not examined in the study

to gain wider views on radio production eiciency and

the BBC:

n Head o BBC English Local Radio

n BBC World Service

n BBC Corporate Finance

n OFCOM

n Radio Centre

n Radio Academy

n Radio Independents Group

Review o BBC documents

We analysed relevant BBC documents including:

n Eiciency Technical Notes setting out targets and

broad delivery plans or each radio station

n papers relating to the process o identiying thescope or eiciency savings and the setting o

eiciency targets

n BBC Audio & Music and Nations board papers

n BBC Trust and Corporate Finance guidelines on

planning, delivery and measurement o eiciency

savings plans

n BBC Radio Service Licences and Statements o

Programming Policy

n papers relating to potential eiciency initiatives

under consideration

Methodology


39/39

Collection and analysis o data on costso producing BBC radio programmes

We perormed cost analysis work based on a sample o

programme data rom the BBCs Proteus system, as used

in the Magentum consultancy report Programme PriceBenchmarking within the BBC (November, 2007), with

the aim o illustrating how benchmarking could be used to

identiy areas where there is scope or eiciency savings to

be made.

The data sample contained cost and timing inormation or

programmes on the BBCs analogue and digital Network

stations and Nations stations. In addition, a number o

other variables or each programme (e.g. genre, location

o production, number o presenters/actors involved)

were included. Some o the additional inormation was

rom Proteus and some was added by Magentum. Thesample was o programmes over a three-month period in

2006-07, though where programmes were part o a long

series the costs or the whole year were included. The

sample used or this analysis covers 58 per cent o the

BBCs radio broadcast hours in 2006-07; the majority o

programmes outside o the sample constituted short series

or one-o programmes that are not repeated.

We removed obvious data errors such as duplicate

programmes and misclassiications. The BBCs outlier

analysis was used to urther identiy and correct errors.

For the purposes o comparability, programmes whichhave common elements have been analysed together.

The majority o analysis has been within individual genres

(e.g. drama, comedy, music).

Within genres we looked at all stations or which ive or

more distinct programmes o the genre were included in

the sample, to provide a suicient basis or comparisons.

For each station, programmes were placed into order

o cost per hour. We calculated the average programme

cost (median) on the basis o the cost o a median hour

o programming, with programmes weighted according

to the number o hours or which they were broadcast, aswell as the inter-quartile range o costs.

The medians and ranges or dierent stations or each

particular genre o programming were used to illustrate

both the dierences in costs between stations and the

ranges o costs within each station.

We also illustrated how programmes could be compared

within genres using other dierentiating actors to identiy

more speciic cost dierences. We determined the range

and median cost o an hour o drama or each station,

independent productions. We also calculated the median

cost o an hour o drama or each dierent location where

the BBC produces drama (e.g. Birmingham, Scotland).

Commercial radio benchmarkingWe discussed with a number o commercial radio stations

whether they might provide inormation on the costs o

producing programmes or their stations. Speciically

we invited them to provide breakdowns o costs or

breakast and drive-time programmes on national and

large regional stations, with the aim o comparing costs

to equivalent programmes on BBC Radio. We do not

audit the commercial stations but we analysed the data

they provided to gain assurance that the costs included

all elements in the BBCs costs such as presenters, sta,

and overhead costs such as accommodation. For theinormation provided, we sought supporting calculations

to allow us to determine i costs could be compared on

a like-or-like basis with BBC programmes (e.g. whether

depreciation o buildings was included). We obtained up

to date inormation rom the BBC on the sta and other

costs o their programmes or these timeslots. We spoke

with the ollowing commercial organisations.

n Bauer Media

n GCAP Global Media Group

n Guardian Media Group

n TIML Radio

We used the two sets o inormation to illustrate the

similarities and dierences between the costs, and types o

costs, o programmes on BBC and commercial radio.

Review o best practice indelivering, measuring and reportingeiciency savings

We drew upon existing guidance on the management

o eiciency programmes to inorm our understanding

o good practice in delivering eiciency savings

against which to compare the approach in BBC Radio.

This included:

n Her Majestys Treasury: Measurement o SR04

eiciencies guidance on eiciency methodologies;

n National Audit Oice Eiciency Toolkit (available at

http://www.nao.org.uk/eiciency/toolkit/index.htm);

and

n The Efficiency Programme: A second review of

appendiXtWo

0809 bbc radio production

Documents