Description
The main commercial arm and a wholly owned subsidiary of the BBC. We exist to build the BBC brand around the world, support the BBC public service mission and maximise returns on its behalf while ensuring all activities are conducted in a way that is consistent with BBC standards and values.
WWW. BBCWORLDWI DE . COM
ANNUAL RE VI E W 2014 – 2015
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Building the BBC and UK creative
industries around the world
CONT E NT S
BUSI NESS OVERVI EW
Highlights 01
What we do 02
Where we operate 03
Chairman’s statement 04-05
STRATEGI C REPORT
Chief Executive’s review 06-09
Strategic progression 10-11
Supporting creativity 12-13
Business transformation 14-15
UK 16-17
North America 18-19
Australia and New Zealand 20-21
Global Markets 22-23
Chief Financial Offcer’s review 24-27
Our vision is to build the BBC’s brands, audiences, reputation
and commercial returns across the world, while championing
the wider UK creative industries.
HOW WE WORK
BBC Worldwide
Executive Committee 28-29
Risk management 30
Corporate responsibility 31
Corporate governance report 32-34
Report on Directors’ remuneration 35-39
ADDI TI ONAL I NFORMATI ON
Statement of Directors’ responsibilities 40
Independent auditor’s statement 41
Summary fnancial information 42-45
Looking ahead 46-47
Global offces 48
This Report is printed on Amadeus Primo Silk which
is made from100%virgin fibre and is sourced from
responsible forestry guaranteed for your peace of
mind via an internationally recognised FSC
®
chain
of custody certification.
Designed and produced by MerchantCantos
www.merchantcantos.com
BBC Worldwide Executive Committee photography
by Charles Shearn.
Printed by Pureprint Group.
Cover image: The Honourable Woman, Golden Globe award-winning
drama, which to date has been sold to 98 territories.
©Drama Republic
This Review sets out our performance over the
year and our contribution to the BBC, reports
progress on our three strategic priorities:
brands, content and digital, looks at how we
support the UK’s creative sector and sets out
the transformation that our company is
undergoing to remain effective in the future.
* Throughout this Review, headline sales refers to gross revenue including the Group’s share
of revenues from joint ventures. Headline proft refers to operating proft before specifc items
and including the Group’s share of operating profts from joint ventures and associates. Specifc
items are set out on page 27. A reconciliation between headline proft and proft before tax is
presented in the Chief Financial Offcer’s review on page 25.
Our geographical reportable segments refect management reporting lines. The Group’s headline
sales and proft remain consistent with the prior year’s Annual Review. The 2013/14 segment
comparatives for headline proft have been recalculated to refect the revised methodology
by which the cost of content is allocated across regions for management reporting to the
Worldwide Executive Committee (WEx) from 2014/15 onwards.
£1,001.8m
HEADLI NE SALES*
(2013/14: £1,042.3m) -3.9%
£138.6m
HEADLI NE PROFI T*
(2013/14: £157.4m) -11.9%
£226.5m
RETURNS TO THE BBC
(2013/14: £173.8m) +30.3%
£107.9m
PROFI T BEFORE TAX
EXCLUDI NG GAI NS AND
LOSSES ON DI SPOSALS
(2013/14: £122.1m) -11.6%
01
B US I NE S S OVE RVI E W
Top Gear – The Perfect Road Trip 2 ©Rod Fountain 2014 (top left), Orphan Black ©BBC Worldwide (top right),
Peaky Blinders ©Caryn Mandabach Productions Ltd and Tiger Aspect Productions Ltd. 2014 (bottomleft)
and Life Story ©TomHugh-Jones 2014 (bottomright).
WHE R E WE OP E R AT E WHAT WE DO
We are the main commercial arm and a wholly owned subsidiary of
the BBC. We exist to build the BBC brand around the world, support
the BBC public service mission and maximise returns on its behalf while
ensuring all activities are conducted in a way that is consistent with BBC
standards and values.
Our business is structured across four geographical regions: the UK; North
America; Australia and New Zealand; and the rest of the world, known
collectively as Global Markets. We have 18 offces around the world, plus
BBC Advertising sales representatives in a further three locations.
£361.8m
HEADLI NE SALES
£52.7m
HEADLI NE PROFI T
See more on pages 16-17
£81.9m
HEADLI NE SALES
£16.3m
HEADLI NE PROFI T
See more on pages 20-21
£299.9m
HEADLI NE SALES
£32.9m
HEADLI NE PROFI T
See more on pages 18-19
£276.3m
HEADLI NE SALES
£32.2m
HEADLI NE PROFI T
See more on pages 22-23
UK NORTH AMERI CA
AUSTRALI A AND NEW ZEALAND GLOBAL MARKETS
BBC COMMI SSI ONS
PRODUCED BY
BBC
RI GHTS HOLDERS
BBC WORLDWI DE
PRODUCTI ONS
OTHER CONTENT
PRODUCERS
§ BBC in-house production
§ UK independent sector
§ Wholly owned production
houses in the USA, India
and France
§ Production companies
§ Writers
§ Talent
WE I NVEST
§ Programme investment
§ Dividends
§ Other rights payment
§ Growing brand across
the globe
§ Building reach of BBC
programmes
§ Royalties
§ Profit share
§ Showcasing UK creativity
WE DELI VER RETURNS
WE COMMERCI ALI SE
THROUGH
§ Programme and
format sales
§ International co-funding
§ International formats and
channel commissions
§ BBC branded services
including websites
§ Ancillaries e.g. DVD
and live events
§ Other IP exploitation
WE COMMERCI ALI SE
BBC Worldwide is a company
with content at its heart.
We invest in, commercialise,
market and showcase content
from the BBC and the wider
UK television industry around
the world.
02 03
B US I NE S S OVE RVI E W ANNUAL R E VI E W 2 014 – 2 015
CHAI R MAN’ S S TAT E ME NT
I am pleased to report on a year of positive
progress at BBC Worldwide. Over the
12 months, and against a backdrop of market
transformation that presented some challenges,
the company took signifcant strides both
to bring its strategy to life and to re-shape
its business for the future.These moves –
investing in premium content, amplifying
the BBC brand overseas, and transforming
digitally – will underpin proft and shareholder
returns in the years ahead, and come at
a time when the BBC is more determined
than ever to ensure we extract the maximum
sustainable future contribution from all
our commercial subsidiaries.
BBC Worldwide delivered a very respectable
fnancial performance. As set out elsewhere
in this Annual Review, reported numbers are
complicated by a number of factors, principally
the part-disposal of BBC AMERICA – a
partnership with AMC Networks (AMCN),
which will be visible on UK screens through
co-developed programmes, as well as securing
the future of our independent channel in the
world’s largest media market. Overall, results
were in line with the Board’s expectations
and represent a good outcome.
Most importantly, 2014/15 saw a step-change
in fnancial fows to BBC Worldwide’s parent.
BBC Worldwide invested £94.4m in BBC
commissions (2013/14: £88.9m) from both BBC
Production and from UK independents. And at
£226.5m (2013/14: £173.8m), shareholder
returns were up by almost one-third, equivalent
to 12.6% of total BBC Television content spend,
up from 10.1% the previous year.
Vitally, as a result of this fnancial contribution,
audiences in the UK were able to enjoy
investment in programmes at a higher level than
the licence fee alone can provide. Among these
enhanced shows was Doctor Who, seen in the
UK by an average consolidated audience of 7.4m,
airing in over 70 other countries, and achieving
record ratings on BBC AMERICA and Space
channel in Canada. Meanwhile Life Story, from
the BBC Natural History Unit – which was over
70% funded through commercial investment
via BBC Worldwide – was seen by a domestic
consolidated audience of 6.5m, with rights to
broadcast the series acquired by international
broadcasters for 151 territories.
However, BBC Worldwide is not just signifcant
for the fnancial contribution it makes to the
Corporation. In ‘bringing the UK to the world’ –
one of our public purposes – it provides a route
to market for UK programme makers through
its sales force, on BBC branded channels
internationally, and via the successful UKTV
channels in the UK, part-owned by BBC
Worldwide. In total, its indie payments, covering
all commissions, rights acquisitions and royalties,
remained strong at £113.1m (2013/14: £116.4m).
BBC Worldwide champions the cause of UK
content and culture both in the UK and outside.
And research demonstrates that business
leaders who consume the BBC have increased
propensity to trade with UK frms, suggesting
economic dividends, beyond television, for
the UK as a whole.
We believe BBC Worldwide is the most
successful commercial subsidiary of any Public
Service Broadcaster in the world. Although
commercial returns are a small part of the BBC’s
funding mix, we are nonetheless determined to
maximise their impact.Therefore, looking ahead
to the next phase of the BBC’s development, and
a new Charter period, it is the Board’s aim to
sustain annual fnancial returns at around this
new level, even without the one-off beneft of
BBC AMERICA proceeds.This will not be easy,
but it is important that we utilise all the BBC’s
fnancial levers to their very maximum, and
BBC Worldwide has ambitious business plans
to support this. We are therefore looking to
BBC Worldwide to generate around £1bn in
returns for the Corporation in the fve years
starting from 2014/15 – an increase of almost
one quarter on the previous half-decade.
In support of that aim, the year ahead will see
further momentum from BBC Worldwide’s
strategy. A continued focus on premium content
will include War and Peace, natural history
landmark The Hunt, and the return of Sherlock
on the slate. Global BBC brands will remain
at the heart of BBC Worldwide, with results
coming through from the three new international
channel feeds launched in 2014/15, a further four
since year end, and others to follow. As well as
continued exploitation of world-class programme
brands from Dancing with the Stars to Doctor
Who. And digital developments will take the form
of BBC Store, enabling UK customers to buy and
keep the BBC programmes they love, as well as
plans for further digital BBC services in selected
markets outside the UK.
Finally, I would like to acknowledge BBC
Worldwide’s staff, in the UK and outside, its many
partners and clients around the world, and all
those who have played a role in helping BBC
Worldwide to support the BBC in the year.
Tony Hall
Chairman, BBC Worldwide
and Director-General, BBC
£226.5m
RETURNS TO THE BBC
(2013/14: £173.8m) +30.3%
£94.4m
I NVESTMENT I N BBC-
COMMI SSI ONED CONTENT
(2013/14: £88.9m) +6.2%
12.6%
RETURNS TO THE
BBC AS A % OF TOTAL
BBC TELEVI SI ON
CONTENT SPEND
(2013/14: 10.1%)
£113.1m
I NDI E PAYMENTS
(2013/14: £116.4m) -2.9%
Call the Midwife
©Neal Street Productions 2014
04 05
B US I NE S S OVE RVI E W ANNUAL R E VI E W 2 014 – 2 015
CHI E F E XE CUT I V E ’ S R E V I E W
Wallander ©Leftbank pictures
(television) limited/Yellowbird
rights AB 2015
2014/15 has been a signifcant year of
investment and transformation for BBC
Worldwide.We began to deliver our strategy,
frst set out in October 2013, of building our
supply of high quality content for clients and
our own services alike, developing stronger
global brands and accelerating digital innovation.
All this puts us in a better position to deliver
sustainable fnancial returns to the BBC and
generate even better value for UK licence
fee payers, both this year and in the future.
Overall, we have had a good year, balancing
the delivery of solid fnancial results – including
signifcant growth in returns to the BBC, our
primary fnancial priority – with investment to
transform the business for a more competitive
global marketplace. Notably, our new venture
with AMCN has signifcantly enhanced future
prospects for our BBC AMERICA channel while
also enabling us to boost shareholder returns
for the year.
Beyond the AMCN deal, we continued to
take steps to drive innovation and underpin
the sustainability of our operations.This is
essential work in the context of a global media
market undergoing structural and systemic
changes, some of which constrain our trading
and outlook in certain areas.This has led to
initiatives such as growing investment with
the independent sector, both in programming
and in selective equity investments to support
our long-term content supply. We launched our
new strengthened BBC genre channel brands
into lead markets during the year, and delivered
signifcant innovation, such as the BBC Earth
platform on BBC.com and BBC.co.uk. We also
accelerated partnership deals on core brands
such as CBeebies, with a successful launch of
CBeebies Land at Alton Towers as well as our
planned roll-out of CBeebies English language
learning centres in China.
Within the company, we have focused hard on
the culture of our business, encouraging new
ways of working.These are delivering world-class
processes with proprietary programmes such
as Adding Value across our sales function, which
maximises content revenues across all windows
and channels, Brand Labs, our marketing and
brands best practice hub, and new procurement
practices. We have also prioritised the attraction
and development of the best global talent
in our industry.
Finally, across every element of our business,
we have continued to focus on nurturing the
UK creative industries through initiatives like
BBC Worldwide Labs, our start-up programme,
showcasing UK creativity overseas and
supporting the independent production sector.
Returns to licence fee payers
Our commitment to a high level of content
investment, coupled with a solid operating
performance and the proceeds of our equity
partnership with AMCN, allowed us to increase
our returns to the BBC by 30.3% to a record
£226.5m. As detailed by Tony Hall on page 05, this
funding also refects BBC Worldwide’s increased
contribution to BBC commissioning spend, both
from in-house production teams and British
indies, which enhances the hours and creative
ambition from key titles that UK audiences can
enjoy.This year alone we have supported the
BBC in-house production team as well as over
250 independent producers in delivering a
number of notable titles such as The Honourable
Woman, Wolf Hall, Life Story and Human Universe.
The year’s results
While headline sales and proft both declined
due to the AMCN transaction and to currency
movements, adjusted for these effects, our
operating performance was broadly fat year
on year.
Headline sales of £1,001.8m were down 3.9%
(2013/14: £1,042.3m), refecting the absence
of BBC AMERICA revenue for most of the
second half of the year. However, our revenue
performance on ongoing operations was up
0.4% to £948.1m (2013/14: £944.5m), helped in
particular by continuing growth from digital sales,
channel advertising revenue and UKTV. In North
America, digital sales exceeded linear TV sales
for the frst time, while strategic partnerships
brought a sales uplift in Australia and New
Zealand. Digital investment in the UK supported
successes for our ecommerce offering, BBC
Shop, while careful management of our DVD
slate, coupled with targeted marketing support,
somewhat offset ongoing pressure from the
industry-wide decline in the category. Meanwhile,
diffcult trading conditions in Russia, coupled with
economic sanctions, impacted our performance
in that market. Currency movements reduced
sales by £19.5m in aggregate.
Headline proft of £138.6m (2013/14: £157.4m)
was 11.9% down on the previous year, again
including the impact of the AMCN venture.
Excluding this effect, headline proft on ongoing
operations recorded growth of 4.1%, at £127.2m
(2013/14: £122.2m), including the beneft of
just over fve months of BBC AMERICA’s
contribution as an associate. Foreign exchange
movements hit headline proft by £3.2m
in the year.
Overall, we have had
a good year, balancing
the delivery of solid
financial results with
investment to transform
the business for a more
competitive global
marketplace
£1,001.8m
HEADLI NE SALES
(2013/14: £1,042.3m) -3.9%
Our commitment to
a high level of content
investment, coupled
with a solid operating
performance and the
proceeds of our equity
partnership with
AMCN, allowed us to
increase our returns
to the BBC by 30.3%
to £226.5m
£138.6m
HEADLI NE PROFI T
(2013/14: £157.4m) -11.9%
06 07
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
CHI EF E XECUTI VE’ S RE VI E W
CONTI NUED
Strategic focus
We made signifcant progress in our core areas
of strategic focus: high quality content, delivering
stronger brands and increased digital capabilities.
Investing in the highest quality content
Investing in premium content continued to be
the cornerstone of the business, and we were
proud to deliver and represent a rich mix of
bold and inspiring titles from across drama –
accounting for almost half our total investment
– as well as natural history, factual entertainment,
comedy, music and children’s. Our top-selling
shows of the year included Doctor Who, Top Gear,
Orphan Black, Life Story,The Musketeers, Atlantis,
Call the Midwife, Ripper Street, Sherlock and The
Honourable Woman – a range of titles that speaks
to the breadth of appetite for British content
from global audiences. Doctor Who S8 was
licensed to 189 territories in the year.
Content investment of £180.5m (2013/14:
£200.6m) declined due to our venture with
AMCN, which means we no longer report
BBC AMERICA’s content spend – a material
element in our overall investment – as well
as some inevitable variability in the timing
of commissioning decisions for new content.
We still delivered an increase in investment
in BBC-commissioned content to £94.4m,
up 6.2% (2013/14: £88.9m).This contributed
to production of the much anticipated dramas
War and Peace, Dickensian and SS-GB, all
of which will air in 2016.
Partnerships such as that with AMCN for
BBC AMERICA are imperative for ensuring
we can sustain long-term investment in premium
content, and grow both the future reach and
profle of BBC AMERICA, the BBC and the titles
we represent.The partnership also enables us
jointly to increase the volume of intelligent drama,
loved by fans both of AMCN (which airs the US
record rating drama series, The Walking Dead)
and of the BBC, through a shared agreement to
co-develop future titles, which will complement
those we have already co-produced, including
Golden Globe winning series Top of the Lake
and The Honourable Woman.
In the coming year we intend to build on these
successes, keep investing in the highest quality
British programmes, deepen our relationships
with the UK creative sector and look forward to
distributing a wealth of exceptional programmes,
such as the fnal instalment of Wallander, as well
as forthcoming natural history landmark The
Hunt, and the much anticipated Sherlock special
and subsequent fourth series, to audiences
across the world.
Beyond programmes, this year we made
some strategic investments into developing
independent businesses such as Lookout Point
and Curve Media.This signals our desire to
partner with those producing and making the
highest quality UK content. Overseas, we are
focused on building our formats business and
growing our production capabilities in core
markets so that we can exploit outstanding
UK creative work.The strength of our French
production arm, for example, is set out
on page 23.
Strengthening our global brands
In 2013/14 we overhauled our channel brands
and began investing in pilot markets to support
the launch of new channel brands such as
BBC First, BBC Brit and BBC Earth.These
brands are concentrated on genres where
we have global strength, and the potential to
build strong consumer franchises in a more
competitive marketplace.
We have been encouraged by the initial
audience reaction to both the linear TV launches
of BBC Earth and BBC Brit in Poland and the
debut of BBC First on the Foxtel subscription
platform in Australia.
In the year ahead we will continue to roll-out
the BBC genre brands across multiple platforms.
Linear offerings of BBC Brit and BBC Earth
launched post year end in the Nordics in April
and BBC First’s linear debut outside Australia
came in the Netherlands in May. Beyond linear,
we will continue to build our suite of immersive
experiences for audiences of all ages, which this
year included a Top Gear Track Experience
at the show’s iconic track at Dunsfold.
Digital innovation
Within the year BBC.com celebrated reaching
100.8m unique browsers for the frst time
in January and generated 1.3bn page views
across all platforms for the month of March.
Our feature sections played a key role in this,
driving audiences to 8.3m, up 76.6% (2013/14:
4.7m). BBC Earth’s launches on BBC.com
and BBC.co.uk in September and October
respectively made it the frst of our genre brands
to debut online. It offers fans of the natural world
a rich mix of short-form content and editorial
insight and complements the linear transmission
of titles such as Life Story. It also offers fans an
opportunity to share inspiring content of the
natural world through the EarthCapture app,
launched in March in partnership with Seenit,
one of this year’s BBC Worldwide Labs start-up
companies. Within its frst few weeks, app users
had submitted over 1,200 pieces of content:
a mix of video and imagery. Our fnance and
science and technology sections, BBC Capital
and BBC Future, achieved record numbers
of unique browsers at year end, at 2.5m and
3.9m respectively, up on the previous year
(2013/14: Capital 1.6m, Future 2.5m). Our
YouTube network has continued to engage
fans of our content, with total views increasing
in the year by 53.5% to 809m (2013/14: 527m).
In 2014/15 we commenced our journey into the
transactional landscape, with the development
and initial testing of BBC Store as well as early
stage development of our international plans
for direct-to-consumer services. BBC Store will
be the frst of these ambitions to be realised, in
autumn 2015.The service will be available to UK
audiences, and will offer the option to buy and
keep a wealth of titles, including a number of
well-loved classics that to date have not been
available commercially.
Looking forward, our international digital plans
are focused on the roll-out of TV Everywhere
services in collaboration with our partners as
well as evaluating over the top pilots in one
or two lead markets.
Building a world-class media company
Last year we also tasked ourselves with building
on our strong company culture, ensuring all our
employees have access to the best training and
opportunities to develop their careers. We have
accomplished a great deal in this area, as you can
read on page 15.This work has led to strong staff
engagement scores, which place us at the upper
end of benchmarks, although we hope to keep
setting standards in this area.
Looking to the future
As we look to the year ahead, we remain
very focused on effective execution of our
strategy while remaining agile enough to
exploit opportunities as they arise. In the
rapidly changing market, this will require us
to balance the need to invest and innovate with
our desire to achieve consistent fnancial returns.
This will be challenging, as traditional markets
face upheaval, but our outstanding content, the
quality of our brands and the strength of our
team puts us in a good place to deliver success
and build a world-leading creative media business.
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
£948.1m
HEADLI NE SALES ON
ONGOI NG OPERATI ONS
(2013/14: £944.5m) +0.4%
£127.2m
HEADLI NE PROFI T ON
ONGOI NG OPERATI ONS
(2013/14: £122.2m) +4.1%
£180.5m
CONTENT I NVESTMENT
(2013/14: £200.6m) -10.0%
We made significant
progress in our core
areas of strategic focus:
high quality content,
delivering stronger
brands and increased
digital capabilities
Investing in premium
content continued to
be the cornerstone of
the business, and
we were proud to
deliver and represent
a rich mix of bold
and inspiring titles
Above: Dancing with the Stars South Africa ©Rapid Blue
Below: Wolf Hall ©Company Pictures/Playground Entertainment for BBC 2015
08 09
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
P R OG R E S S I ON
Life Story episode five included footage by cameraman Hugh Miller, who spent three
weeks designing and building bespoke equipment to capture the extraordinary
landscaping behaviour of a tiny Japanese pufferfish (Torquigener sp.) beneath the waves
©Kat Brown 2014
New genre brands
In 2013/14 we set out an ambitious plan to
launch three genre brands, BBC First, BBC Earth
and BBC Brit, offering audiences premium frst
runs outside the UK of the very best in drama,
premium factual and factual entertainment.
Within the year we successfully launched BBC
First in Australia on the Foxtel subscription TV
platform and BBC Brit and BBC Earth as linear
channels in Poland.That was marked with a
unique promotional stunt involving a giant
statue of Top Gear’s The Stig crossing Europe
to Warsaw. BBC Earth launched on BBC.com
and BBC.co.uk.The site has reached an average
of 3.1m unique browsers per month since
launching in September.
Stand-out achievements for our core brands
included Doctor Who: The World Tour. Building
on the success of the 50
th
anniversary we
embarked on a 12-day global promotional tour
for series eight. We visited South Korea, Australia,
USA, Mexico and Brazil introducing the Twelfth
Doctor, Peter Capaldi, and companion Clara,
Jenna Coleman, to international fans.This was
a frst for a British TV series and featured a
creative social media programme with activity
on Facebook generating 130m post impressions
and more than 2m video views across Facebook
and YouTube.
As part of the launch activity for Top Gear S22,
we produced an exclusive video with LEGO
®
that has to date been viewed 9.4m times on
YouTube and Facebook and held the exclusive
‘An Evening With’ Top Gear in London with
all three presenters.The event was watched
by 1.1m fans on BBC iPlayer.
Premium content
Content remained at the heart of our strategy
this year and the commitment to deliver
ambitious premium content from both BBC
in-house and indies reached new heights.Titles
included the Golden Globe-winning drama
The Honourable Woman with Maggie Gyllenhaal,
Wolf Hall with Damian Lewis and Mark Rylance,
the critically acclaimed Happy Valley with Sarah
Lancashire, writer Jimmy McGovern’s Banished,
natural history landmark Life Story, comedy
sequel The Wrong Mans S2, new children’s titles
Hey Duggee and Nelly & Nora, and the ground-
breaking music title Sonic Highways from The Foo
Fighters. We also welcomed back Doctor Who S8,
Orphan Black S2 and Top Gear S22. We also
announced new co-development, frst-look
and distribution partnerships with a variety
of independent production companies across
a range of genres including Curve Media for
factual entertainment, King Bert for comedy
and Red Planet, Cuba Pictures and Lookout
Point for drama.
Our formats business also delivered an impressive
slate with new BBC Worldwide commissions
launching within the year including Mud, Sweat
and Gears and You’re Back in the Room.
Digital innovation
We continued to embrace the opportunities of
an increasingly digital landscape. Growth of third
party streaming services continued to increase
demand for our programming, as compelling and
exclusive content became the key to winning
consumers’ attention.This year we continued to
supply content to leading international services
including Amazon Prime Instant Video and
Netfix. We also formed partnerships with
start-up services, such as Stan. in Australia.
In the UK, work commenced on our own digital
ownership service, BBC Store, which will launch
in autumn 2015, expanding BBC Worldwide’s
portfolio of direct-to-consumer digital services
and complementing BBC Shop, our ecommerce
platform in the UK, USA and Australia. We are
also developing new opportunities to launch
BBC branded digital video services that
complement our global brands.
BBC.com celebrated another year of growth,
reaching a monthly average of 85.5m unique
browsers, up 8.3% year on year and peaking
in January at 100.8m.Video views across all
platforms averaged 36.6m, up 48.7% year on year,
with a peak of 48.7m in January.There was also
strong growth from mobile and tablet browsers,
up 39.5% and 34.9% respectively within the year.
The feature sections also fourished, attracting
an average of 8.3m unique browsers up 76.6%
year on year (2013/14: 4.7m).
We successfully launched
BBC First in Australia on
the Foxtel subscription
TV platform and BBC
Brit and BBC Earth as
linear channels in Poland
Our commitment
to deliver ambitious
premium content reached
new heights, while
formats also delivered
an impressive slate
Video views across
BBC.com averaged
36.6m per month across
all platforms, up 48.7%
year on year
The Wrong Mans S2 ©BBC 2014
10 11
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
C R E AT I V I T Y
The Bake Off format has been licensed to 19 countries, including Turkey (top and middle), which debuted
this year. Junior Bake Off also launched for the first time outside the UK in Thailand this year (bottom).
Alongside formats we sell programmes across the globe including the forthcoming Terry and Mason’s
Food Trip (working title) fromCurve Media (far right)
This year, we had an increasingly important
role to play at the heart of the UK’s thriving
creative and digital eco-system, both at home
and overseas.
The creative industries are a major success
story for the UK, generating £76.9bn Gross
Value Added, the measure of direct contribution
to the economy, £17.3bn service exports and
1.71m jobs and growing faster than the rest of
the UK economy. Alongside the public service
BBC, we supported, partnered with and
showcased the best of British creativity.
In the UK, we buoyed the indie sector, working
with over 250 independent producers, selling
their shows internationally and returning £113.1m
to the sector, as set out on page 05.The minority
equity positions taken in Lookout Point and
Curve Media, referred to on page 08, enable
us to further enrich our content supply through
frst-look rights and offer development and
distribution opportunities to programme makers.
BBC Worldwide Labs, our digital media start-up
programme, supported a further six innovative
UK entrepreneurial teams looking to grow
this year. All beneftted from offce space,
mentoring and access to experts and, to date,
ten partnership deals have been signed with
BBC Worldwide Labs companies to work
on our own brands and projects.
We facilitated in bringing the UK’s creative
industries together to speak with one, more
impactful voice, with Tim Davie co-chairing
UK Trade & Investment’s Sector Advisory
Group and leading the Creative Industries
Council’s International work.This year we also
became a founder supporter of the Creative
Industries Federation.
Internationally, we acted as a spearhead for
the UK’s creative industries around the world,
offering a platform for the best of British
creativity as the UK’s top distributor, operator
of over 40 channel feeds in over 120 territories,
through our own BBC channels internationally,
our UK joint venture UKTV with Scripps
Networks Interactive, Inc., BBC AMERICA
with AMCN, BBC Kids with Knowledge Network
Corporation and BBC Canada with Shaw
Communications Inc. In total, our international
channels have 152.1m (excluding the BBC World
News channel) subscribers across the world. As
well as this, we have a global presence across
digital and social media platforms.
Exports were increasingly important to the
UK’s television industry, with TV trade body
PACT reporting total sales of UK television
to international markets up 5% to £1,284m
in 2013/14. We generated exports for the
BBC and the wider TV industry, with over 700
international delegates attending BBC Worldwide
Showcase 2015 in Liverpool and an increase
of 3.2% to £345.3m in TV and digital headline
sales this year. A survey of international business
leaders showed that over half agreed that the
BBC plays a direct role in infuencing their
business decisions in favour of the UK.
We supported a number of creative industries
export initiatives this year, including the
GREAT Festival of Creativity in Shanghai and
the Technology Innovators Forum in China
and Los Angeles. £150m of business deals,
plus further UK-China partnerships such as
the opening of our CBeebies English language
learning centre in Shanghai, were announced
as part of the GREAT Festival.
Over the year, we have used our presence to
act as a trailblazer for the wider UK creative
industries in new markets, with the BBC brand
and its association with premium content shining
a light on the talent and creativity coming from
the UK.
In the UK, we buoyed
the indie sector,
working with over
250 independent
producers, selling their
shows internationally
and returning £113.1m
to the sector
Internationally, we
acted as a spearhead
for the UK’s creative
industries around the
world, offering a
platform for the best
of British creativity
£345.3m
TV AND DI GI TAL
HEADLI NE SALES
(2013/14: £334.6m) +3.2%
12 13
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
Doctor Who S8 launched in August and welcomed Peter Capaldi
as the Twelfth Doctor. To date the series has aired in 70 countries.
©BBC/BBC Worldwide 2014
Katherine Mills: Mind Games
©UKTV 2014
T R A N S F OR MAT I ON
Market context
We operate in a fast-paced and ever-changing
media landscape. While the television industry
remains very signifcant globally – Deloitte
estimates that in an average month, over 360bn
hours of long-form video will be watched
globally – short-form content should account
for a further 10bn hours in aggregate of
monthly play-out in 2015, with estimates
of US households accessing subscription
VOD (SVOD) range from 40-57%.
The past year has witnessed a rise in hybrid
content service launches; further consolidation
of media organisations, with aggregate value
of European media deals in 2013 and 2014
worth three times more than in the three
preceding years combined; continued appetite
for drama globally; and increasing competition
in sales and distribution.
We pride ourselves on delivering the best of
British content and BBC branded services to
audiences across the world, as the number one
content distributor in Europe and the home of
premium content and innovative BBC branded
services.To maintain our position we need to
evolve in line with the market, and we took
active steps in the year to re-shape our
business to that end.
Strategic positioning
While BBC AMERICA’s ratings and critical
acclaim had continued to climb in recent years,
we concluded that joining forces with a company
which places a high value on premium, intelligent
and distinctive content, would better secure
the channel’s future growth in an increasingly
challenging environment for independent channel
operators.The partnership gives BBC AMERICA
opportunities to grow reach further, as part of
a compelling and unique channel portfolio and
a more potent force in the US market. Closer to
home, we took an equity stake in independent
production company Lookout Point, and in two
more UK independents since year end, intended
to support their growth and secure our
independent pipeline in a consolidating market.
We also started the transformation of our direct-
to-consumer portfolio, developing and launching
the new genre brands described on page 10,
rolling out three new channels by the year end,
and a further four by start of June, with more
to follow in 2015/16. Brand-building in the linear
TV world will give us an important foothold
in audiences’ hearts and minds as the transition
to digital continues.
Culture
It is well known that world-class organisations
strive for a high-performance culture by setting
a clear direction, providing development
opportunities and a creative working
environment to engage their people. BBC
Worldwide is no exception and in the year
we engaged the vast majority of our employees
in a series of workshops around the world to
identify those areas we could put more focus
on to achieve our aim of high performance.
A number of areas were identifed, including
leadership behaviours, recognition and
development. As a result, we have already
started work on this, developing a leadership
commitment made up of six high-performance
behaviours which all our employees can expect
of our leaders. We have put in place a number
of new development programmes – for senior
leaders, and emerging leaders – all aimed at
building leadership and management capability.
For the whole company, we also introduced
a new development intranet site and tools to
enhance virtual and face-to-face learning along
with a complete curriculum of new courses.
In the area of recognition, we have launched
a new global awards scheme to highlight and
recognise excellence.The coming year will see
further progress in all these areas.
Finally, we wanted to enhance the creativity
of our work space and the year saw a number
of offce moves, including the merging of our
two London sites into the refurbished iconic
Television Centre, as well as new offces in
Warsaw, Johannesburg and Singapore. By
removing assigned desks and putting teams
into more effcient, open-plan and creative
work spaces we aim to encourage a more
fexible way of working, both in situ and remotely,
and interaction between different teams.
Deloitte estimates that
in an average month,
over 360bn hours of
long-form video will
be watched globally
We pride ourselves on
delivering the best of
British content and
BBC branded services
to audiences across
the world
It is well known that
world-class organisations
strive for a high
performance culture by
setting a clear direction,
providing development
opportunities and
a creative working
environment.
BBC Worldwide
is no exception
14 15
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
UK
Our UK activities complement British
audiences’ enjoyment of well-loved BBC
content, primarily through our joint-ownership
of UKTV and our TV sales, consumer products
and live events businesses.This year we
announced a number of signifcant new
partnerships and events and developed our
digital offering through increased investment
in digital initiatives, most signifcantly BBC Store.
Overall the UK performed well. We reduced
our dependency on physical and focused on
key titles and brands. Headline sales were stable
at £361.8m (2013/14: £362.2m), while headline
proft was £52.7m (2013/14: £56.2m), with
eight out of the ten business areas recording
proft growth.
We secured a number of second window deals
for BBC content, beginning a new partnership
with Amazon Prime and continuing our
relationship with Netfix. UKTV, the award-winning
media company, of which BBC Worldwide owns
50% along with Scripps Networks Interactive, Inc.,
celebrated its 22
nd
year with another excellent
performance, growing its share of the commercial
TV market to an all-time high, up from 8.2% to
9.0% in 2014, achieving critical acclaim and ratings
success for original commissions and launching
new digital service UKTV Play.
BBC Store, a new digital service which will
allow consumers in the UK to buy and keep
BBC programmes, will launch autumn 2015
with up to 10,000 hours of content including
new programmes, titles from our catalogue
and previously unavailable gems from the
BBC’s archive. Revenue from our established
ecommerce business BBC Shop was up
15.4% to £4.6m.
In DVD from January 2014 to December 2014,
we fnished ahead of all other UK TV studios,
with 11 titles in the top 50 best-selling TV titles
of the year. Top Gear – The Perfect Road Trip 2
took the top spot, a second year running for
the brand, achieving more than double the sales
of the nearest competitor; meanwhile Miranda
Hart’s My, What I Call, Live Show, was the second
highest selling stand-up comedy title of the year.
We progressed two new live event ventures.
CBeebies Land, a partnership with Merlin
Entertainments, opened at Alton Towers in
May. In August we launched the Top Gear Track
Experience in partnership with Brandscape
Group, based at the Top Gear track in Dunsfold.
We also signed an agreement with London
Paramount Entertainment Resort, working
towards the inclusion of a range of BBC brands
in a major new entertainment park in Kent.
We secured some exciting new licensing deals
for core BBC brands including a Doctor Who
partnership with LEGO
®
. Master toy licensee
Golden Bear produced our new Hey Duggee
range for pre-school children and there have been
7.9m downloads of our Top Gear mobile games.
The Games business returned a £1.4m increase
in proft, despite a reduction in headline sales.
As BBC Good Food celebrated its 25
th
anniversary, bbcgoodfood.com increased its
unique reach by 37.0% to 16.0m (2013/14:
11.7m) unique browsers.TopGear.com reached
6.8m unique browsers per month, an increase
of 59.5% on last year.
Our Radio & Music business had a good year,
with the BBC Radio 1 Live Lounge album going
platinum and BBC Radio 2 Sounds of the 80s
and Dave Arch and the Strictly Come Dancing
Band releases both going silver. Demon Music
Group also had success with the box set release
for Donna Summer. BBC Worldwide Learning,
which licenses BBC content for educational
purposes outside the UK, completed deals
with the Ministries of Education in Singapore
and France and continued to work with
educational publishers from across the globe.
BBC Motion Gallery successfully established
our partnership with Getty Images, growing
online sales by 13.7% to £1.2m.
Top Gear – The Perfect Road Trip 2
©Rod Fountain 2014
Crackanory ©UKTV
Hey Duggee
©Studio AKA 2014
Significant investment
made in BBC Store,
which launches in the
UK in autumn 2015
New licensing deals
included Doctor Who
partnership with LEGO
®
To date there have been
7.9m downloads of our
Top Gear mobile games
HEADLI NE SALES
£m
2014/15 2013/14
362.2 361.8
HEADLI NE PROFI T
£m
2014/15 2013/14
56.2
52.7
17
S T R AT E GI C R E P ORT
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ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
NORT H AME R I C A
BBC Worldwide North America is our largest
business outside the UK. It includes content
sales and co-productions, consumer products,
BBC.com, and BBC Worldwide Productions.
2014/15 was a signifcant year, primarily due
to our entering into a long-term strategic
agreement with AMC Networks (AMCN),
which invested US$200.0m for a 49.9% stake in
BBC AMERICA. In a market that has witnessed
increased consolidation, this venture was
an important next step for the cable channel
and positioned it for future growth as one of a
slate of successful channels operated by AMCN.
Headline sales for the region declined by 12.5%
from £342.5m to £299.9m and headline proft saw
a year-on-year decline from £44.1m to £32.9m,
almost solely due to the reduced ownership stake
in BBC AMERICA under the venture in the last half
of the year. At constant currency these declines
were 10.7% and 16.9% respectively.
On BBC AMERICA, Doctor Who continued
to grow with the debut of the Twelfth Doctor,
Peter Capaldi, and launch of series eight
delivering the show’s highest ratings to date –
up 19.7% versus prior series, with an average
of 2.2m viewers each week – while licensing
sales on the title returned year-on-year growth
of 29.1%. Orphan Black, the original award-
winning BBC AMERICA series became the
frst drama on US ad-supported television to
double its series one audience in key advertising
demographics (Adults 18-49, Adults 25-54)
when it returned for a second series – establishing
itself as a core franchise for North America.
BBC AMERICA successfully achieved its 10
th
consecutive year of ratings growth in 2014/15 –
viewership grew 3.0% in the key primetime
viewing slot, while over half of US cable networks
experienced year-on-year declines.
Our focus on extending fan engagement with
premium titles such as Doctor Who, Orphan
Black and Top Gear reached new heights.
BBCAmerica.com visitors increased by 9.9%
and Facebook followers doubled to 2.4m.
Doctor Who remains the number one TV brand
on Tumblr and ranks among Twitter’s top fve
most-tweeted about original dramas.
Building on our suite of successful co-productions,
this year we secured a signifcant deal between
the BBC and PBS to create upwards of ten factual
programmes per year.
Digital content sales reported another successful
year, seeing gains of 54.1% and surpassing linear TV
sales for the frst time in the region, which highlights
the growing demand on digital platforms and
audiences’ appetite for greater choice in how
they consume our content. Core revenue drivers
included exclusive SVOD deals for Sherlock and
Happy Valley, delivery of over 3,000 episodes
licensed to Hulu since 2010, and a signifcant
multi-year Netfix catalogue deal spanning
multiple genres including BBC Earth titles.
While the DVD market in the territory has
seen severe declines in revenue across the board,
our consumer products division has seen only
a marginal decline and the success of digital
content sales has helped to balance this out.
The feature sections of BBC.com continued to
draw new users – an increase of 86.3% in the
USA and Canada – reaching over 5.1m unique
browsers each month.This growth is supported
by the introduction of more video rich content
and the launch of a BBC Earth section that
averaged 1.1m unique browsers per month across
the USA and Canada since launching in September.
Revenue from the production business in
Los Angeles declined slightly, driven by a shift
in scheduling of the hit show Da Vinci’s Demons
on Starz. However, the appetite for popular
UK show formats remained strong, seeing
commission renewals for the much-loved
programme Dancing with the Stars for ABC, which
celebrates its 10
th
year and 20
th
series in 2015, as
well as a fourth series of the US version of Top
Gear. Original unscripted commission renewals
included Life Below Zero and Ladies of London.
Digital content sales
reported another
successful year,
surpassing linear
TV sales for the first
time in the region
Series two of Orphan
Black, the original
award-winning
BBC AMERICA
programme, doubled
its series one ratings
BBC AMERICA
successfully achieved
its 10
th
consecutive year
of ratings growth in
2014/15 whilst over
half of US cable
networks experienced
year-on-year declines
HEADLI NE SALES
£m
2014/15 2013/14
342.5
299.9
HEADLI NE PROFI T
£m
2014/15 2013/14
44.1
32.9
Orphan Black ©BBC Worldwide
Doctor Who ©BBC/BBC Worldwide 2014
19
S T R AT E GI C R E P ORT
18
ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
AUS T R AL I A AND NE W ZE AL AND
In BBC Worldwide Australia and New Zealand,
we wholly own and operate six BBC branded
channels, distribute content to all the local
platform providers and focus on growth
across all our core business areas.We work
with partners to bring DVDs, live events,
entertainment formats and consumer products
to the market, as well as offering advertising
opportunities on BBC.com.
Our Australia and New Zealand business
delivered excellent growth in both revenue
and proft in local currency, up 11.8% and 13.2%
respectively, as the benefts of new strategic
priorities and partnerships fed into our fnancial
results.Translated into sterling, headline sales of
£81.9m (2013/14: £76.0m) were up 7.8% and
headline proft of £16.3m (2013/14: £13.3m)
increased 22.6%.This was largely attributable
to our channels and digital TV sales businesses,
with both lines showing double-digit growth,
well ahead of the Australian media market.
The principal drivers of growth were a number
of key partnerships formed in 2013 and 2014.
Our partnership with Foxtel saw the debut of
BBC First in August become the platform’s most
successful non-sport channel launch since 2006.
Stand-out ratings successes include launch titles
The Musketeers and Peaky Blinders, along with
series four of the long-running BBC series Call
the Midwife and critically acclaimed The Missing,
which was supported by a publicity visit from
lead actor James Nesbitt.
Meanwhile, BBC First’s maiden co-commission,
Jimmy McGovern’s Banished, with BBC Two, was
partly flmed in Sydney. BBC First advertising
sales were strong during the year as a result
of premium partnerships, and the renewed
key sponsorship deal with Audi.
The launch of BBC First saw general
entertainment channel BBC UKTV move onto
Foxtel’s entry level Entertainment tier, resulting
in an uplift to its audience, while this year BBC
Knowledge broadcast series 22 of Top Gear just
minutes after the UK. In New Zealand, UKTV
achieved Sky TV’s number two entertainment
channel ranking during the year. In February
our portfolio of Australian channels launched
on high-growth IPTV platform Fetch TV. We
anticipate future success from further growth
in BBC First, and are evaluating opportunities
for additional channel launches in the region.
The return of Doctor Who S8 on the ABC in
August, with more opportunities to view on
linear and digital, delivered an increased audience,
and Sydney was one of fve international stops
on the World Tour. A Doctor Who Symphonic
Spectacular tour visited Perth, Adelaide, Auckland
and Sydney in February. Other stand-out BBC
titles on the ABC included Call the Midwife, Silent
Witness and Death in Paradise, while our natural
history programming continued to do well with
Life rating highly on Channel Nine fve years after
its original broadcast.
TV format sales this year encompassed a range
of well-loved British factual and entertainment
titles appearing on a wide variety of channels.
This included a second series of Coast Australia
on The History Channel, and also available to UK
audiences on BBC Two; a 14
th
series of Dancing
with the Stars on Seven; and Living with the Enemy
on SBS. New format commissions, generated
since we entered into a general entertainment
production partnership with FremantleMedia
Australia, included The Great Australian Bake Off
on Lifestyle FOOD and Rachel Khoo’s Kitchen
Notebook Melbourne on SBS in Australia. In New
Zealand we sold Coast New Zealand to TV ONE
and Dancing with the Stars to TV3.
We achieved a record result across digital TV sales,
up fourfold in the year. Our digital reach was also
extended in the year with new deals including
OTT platforms Stan., Netfix and Lightbox,
meaning that our content is now available on over
15 digital platforms in the region.The strength of
our catalogue should underpin future sales activity,
both in fnished programmes and formats.
Banished ©RSJ Films 2014
An excellent
performance, with
headline sales up 11.8%
and headline profit up
13.2% in local currency,
and up 7.8% and 22.6%
after translation
into sterling
Strategic partnerships
delivering well across
sales, channels
and TV formats
Very strong global debut
for BBC First on the
Foxtel subscription
platform in Australia
and further benefits
from resulting re-tiering
of BBC UKTV
Peaky Blinders ©Caryn Mandabach Productions Ltd and Tiger Aspect Productions Ltd. 2014
Rachel Khoo’s Kitchen Notebook Melbourne ©Fremantle Media Australia
HEADLI NE SALES
£m
2014/15 2013/14
76.0
81.9
HEADLI NE PROFI T
£m
2014/15 2013/14
13.3
16.3
21
S T R AT E GI C R E P ORT
20
ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
Top Gear France ©Lionel Guericolas/Visual Press Agency
Life Story ©TomHugh-Jones 2014
Solid underlying
performance, despite
headwinds of adverse
currency movements
and economic downturn
in Russia, including
impact of sanctions
Good growth in
international versions
of British formats, with
a stand-out five UK
formats commissioned
from BBC Worldwide
Productions in France
Year of investment in
channels – BBC Brit
and BBC Earth debuted
in Poland in February
with encouraging early
performance – and in
strengthening our local
presence by upgrading
and opening new offices
HEADLI NE SALES
£m
2014/15 2013/14
279.1 276.3
HEADLI NE PROFI T
£m
2014/15 2013/14
44.1
32.2
GLOB AL MAR K E T S
Comprised predominantly of the non-English
speaking world, our Global Markets business
encompasses Western Europe, Central and
Eastern Europe, Middle East and Africa
(CEMA), Asia and Latin America. Business
activities range from TV sales and channel
operation to production and intellectual
property exploitation.
In a diffcult year, during which our business was
affected by adverse currency movements and
exceptional conditions in some markets, sales
were still broadly fat at £276.3m (2013/14:
£279.1m), a decline of 1.0%. Proft, however,
was down 27.0% at £32.2m (2013/14: £44.1m),
refecting both external headwinds and signifcant
investment in content and marketing for new
channel brands. Re-stating at constant currency,
revenue was up 1.5% while headline proft
decreased by 5.0%.The year saw real progress
made in Asia and Latin America, key channel
renewals in important territories and an
increased reach through wider distribution,
the roll-out of new brands and higher TV sales.
Western Europe
Western Europe delivered sales of £160.1m
(2013/14: £156.2m) and headline proft of
£27.0m (2013/14: £34.3m) due to euro
weakness and planned channels investment.
Restating at constant currency, revenue was
up 6.3% with headline proft down 2.8%.
Western Europe is a key sales market, with local
and international SVOD customers becoming
increasingly important. Stand-out titles included
The Musketeers, Orphan Black, Top Gear and
Misfts. We renewed a long-standing factual
content partnership with France Télévisions
and extended a BBC Earth branded block –
one of 19 BBC blocks globally – with Pro7Maxx
in Germany.
Our French production business increased
revenue by over 50%, with local versions of
fve much-loved BBC programmes – BBC
productions Dancing with the Stars, Antiques
Roadshow, The Weakest Link and Love
Production’s Sewing Bee and Bake Off – on
screen in the same month.These generated
a total primetime average audience of 18.4m.
Top Gear France also enjoyed good ratings and
our German joint venture,Tower Productions,
received a frst commission for original format
One in a Thousand from ZDF.
Rest of World
Challenges in the Russian market which impacted
the wider broadcast industry, alongside channels
investment and foreign exchange, affected CEMA.
This was offset by good revenue and headline
proft performance in Asia and Latin America.
As a result of the factors in CEMA, total RoW
revenue was down at £116.2m (2013/14:
£122.9m) and headline proft down at £5.2m
(2013/14: £9.8m).
CEMA
Poland became the debut market for our new
genre brands with BBC Brit and BBC Earth
launching as linear channels in February. Both
outperformed established rivals, breaking into
the top three in their competitive sets.
Advertising revenues on our African and
Polish channels continued to grow.
Format sales included Great Bake Off to Israel
and Turkey and Dancing with the Stars to Slovenia
and Romania.The latest series of Dancing with the
Stars in Poland achieved a 24.1% audience share,
up from 23.8% on 2013/14.
TV sales markets showing a strong uplift included
Israel, taking The Honourable Woman, Happy Valley,
The Musketeers and Sherlock;Turkey, buying
Intruders, Doctor Who and Frozen Planet; and Africa,
with Orphan Black S1 and S2 and Atlantis S1.
We also entered our frst VOD deals in Africa
and Poland and secured a number of digital
deals across the Middle East and Central &
Eastern Europe.
Asia
The year saw success across fnished
programmes and formats, BBC branded
channels and blocks as well as local production.
Sherlock S3 passed 90m views on Chinese
digital platform Youku.
Signifcant deals included programme sales and
VOD deals across multiple platforms to Taiwan,
while Japan’s NHK signed a co-production
agreement for the Natural History Unit’s Wild
Japan.Through a partnership with Singapore-
based Popular Education we entered the
Chinese English language learning market.
Audiences enjoyed local versions of formats, with
India adding a third version of Dancing with the
Stars produced by BBC Worldwide Productions
in Karnataka for ETV Kannada, and local versions
of Top Gear and Dancing with the Stars returned
to China.
Latin America
BBC Entertainment was named by milenio
newspaper as the Best Pay TV Channel in Mexico
for a third successive year. Digital sales growth
continued, including new deals with Enter Play
Brazil and Veo Mexico. Format sales remained
strong, earning free-to-air prime-time scheduling
for What Not to Wear in Brazil and for Dancing
with the Stars in Panama and Costa Rica. Doctor
Who and Sherlock were sold to Brazil’s TV
Cultura, while deals with major pan-regional TV
networks, including TNT, HBO, Fox, History and
A+E, helped BBC content reach new audiences
across the region. Natural history titles received
theatrical release as well as a programming block
on Ecuador’s Ecuavisa.
22 23
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
RECONCI LI ATI ON 2014/ 15
£m
Profit
before tax
Headline
profit
Net
finance
expense
Share of
interest and
taxof joint
ventures
and associates
Pension
deficit
reduction
payment
Other
specific
items
Gains and
losses on
disposals
Other
gains and
losses
115.9
(5.7) (2.7)
223.8
(9.4)
(8.1) (4.8)
138.6
CHI E F F I NANCI AL OF F I CE R ’ S R E V I E W
BBC Worldwide’s overall operating performance
for 2014/15 was positive, and our shareholder
return set a new record.
Headline results
The agreement reached in October with AMCN
for its purchase of 49.9% of BBC AMERICA has
had a signifcant effect on our year-on-year
performance. In order to demonstrate the
impact of this transaction on our results and
to provide a more meaningful year-on-year
comparison, we have analysed the income
statement and the related notes between
BBC AMERICA and the ongoing operations.
The strategic rationale for this transaction
is set out on page 15.
Headline sales of £1,001.8m were down by
3.9% (2013/14: £1,042.3m), and headline proft
of £138.6m was down by 11.9% (2013/14:
£157.4m) as detailed in tables 1 and 2. Adjusting
for the effect of the AMCN venture, ongoing
headline sales were broadly fat at £948.1m
(2013/14: £944.5m) with ongoing headline
proft of £127.2m (2013/14: £122.2m), showing
a 4.1% increase.These results were in spite of
movements in foreign exchange, which adversely
impacted headline sales by £19.5m and headline
proft by £3.2m, primarily driven by signifcant
fuctuations in our three main trading currencies,
the euro, US dollar and Australian dollar exchange
rates, to which we are materially exposed.
Regional segmental results are reported on
pages 16-23 in the Strategic Report and refect
the geographical way in which we manage our
business.To ensure that management has the
fullest information, we also track our global
performance in the major business areas where
we operate. In the year, we increased total TV
and digital headline sales by 3.2% to £345.3m
(2013/14: £334.6m), refecting our continuing
high levels of investment in premium content
along with an ever-increasing focus on global
sales activity and expertise. Headline sales across
our total channels business decreased by £42.4m
to £356.9m (2013/14: £399.3m). Of this
decrease, £44.1m relates to BBC AMERICA,
refecting underlying good performance at
UKTV and our channels activities elsewhere
in the world. Our total production business
grew 3.7% to £161.6m (2013/14: £155.9m),
with excellent growth in France more than
offsetting the deferral of a third series of
Da Vinci’s Demons into the next fnancial
period in our US production business.
£226.5m
RETURNS TO THE BBC
(2013/14: £173.8m) +30.3%
1. HEADLI NE SALES
2014/15
£m
2013/14
£m
UK 361.8 362.2
North America 299.9 342.5
Australia and New Zealand 81.9 76.0
Western Europe 160.1 156.2
Rest of World 116.2 122.9
Eliminations (18.1) (17.5)
Total 1,001.8 1,042.3
2. HEADLI NE PROFI T
2014/15
£m
2013/14
£m
UK 52.7 56.2
North America 32.9 44.1
Australia and New Zealand 16.3 13.3
Western Europe 27.0 34.3
Rest of World 5.2 9.8
Eliminations 4.5 (0.3)
Total 138.6 157.4
24 25
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
CHI EF F I NANCI AL OF F I CER’ S RE VI E W
CONTI NUED
Our headline proft margin for the ongoing
business increased to 13.4% in the year (2013/14:
12.9%) despite organic revenue investment
on BBC Store and the frst year of rolling out
new channel brands, which requires additional
investment in both content and marketing.
Statutory results
We include our share of revenues from joint
ventures, principally those of UKTV, in headline
sales and the pre-tax and pre-interest results
of our joint ventures and associates in headline
proft because we view these operations as
a fundamental part of our ongoing activities.
Headline results are used by management to
measure fnancial performance, and are reported
to the Board.The segmental analysis of results for
2013/14 has been restated to refect the revised
methodology by which the cost of content is
allocated across the regions. Statutory revenue
of £851.3m (2013/14: £892.0m) excludes our
share of joint venture revenue, and operating
proft includes our headline proft as well as
specifc items, discussed below. A reconciliation
of headline proft to proft before tax has been
provided on page 25.
Specifc items
Specifc items are not defned under IFRS
and may not be comparable to similarly titled
measures used by other companies. Specifc
Items are material items which are highlighted
by virtue of their size or importance in
order to enable a full understanding of our
performance.These items are detailed in
table 3, and include our share of the interest
and tax of joint ventures and associates, and
additional defcit reduction payments to the
BBC pension scheme, of £9.4m and £8.1m
respectively (2013/14: £9.7m and £2.3m).
Other specifc items include £2.6m of
reorganisation costs, primarily associated
with the relocation of our head offce, as
well as £2.0m relating to impairments of
investments in associates.The presentation
of these items is consistent with previous years.
Corporate activity
On 23 October 2014, we sold a 49.9%
controlling stake in BBC AMERICA to the
US entertainment group, AMC Networks.
We retained a 50.1% non-controlling interest
in BBC AMERICA and received proceeds of
US$200.0m (£123.0m), recognising a disposal gain
of £115.9m, following the agreed settlement of
certain disposal-related liabilities and transaction
costs.The proceeds included US$160.0m of cash
received during the year, and US$40.0m of
deferred consideration, received in April 2015.
Employees
Average headcount in the year was 1,829, up
by fve on 2013/14.This movement represents
the transfer of New York-based employees
working on BBC AMERICA to AMCN in
October 2014, offset by hires to principally
support our new digital initiatives. Employee
costs are outlined in table 4.
Tax
Our total tax charge was £38.3m (2013/14:
£28.1m), including £26.6m (2013/14: £13.8m)
in respect of BBC AMERICA.The effect of the
BBC AMERICA disposal, including the impact
of non-taxable goodwill, offset the increase in
overall profts from the USA, a higher tax rate
jurisdiction than the UK.This, together with
high-end television tax relief of £7.8m (2013/14:
£5.1m), contributed to a reduction in the total
effective tax rate to 17.1% (2013/14: 22.3%)
as noted in table 5.
The total tax charge for the year includes
£19.1m (2013/14: £24.0m) current tax, and
net tax paid in the year amounted to £26.5m
(2013/14: £37.6m), due to timing differences
between tax accounting and settlement.
Cash and net debt
Operating cash fow of £191.0m (2013/14:
£150.5m) refects a reduction in tax paid of
£11.1m to £26.5m (2013/14: £37.6m) and an
increased focus on working capital management.
Our move to new London headquarters in TVC
during the fourth quarter resulted in a one-off
increase in cash expenditure on property of
£9.5m in the year.The increased capital and
operating investment in BBC Store and channels,
referred to above, also impacted the company’s
cash fow in the year.
The most signifcant movement in cash during
the year was an infow of £64.5m net proceeds
in relation to AMCN’s purchase of its interest
in BBC AMERICA.Together with our underlying
performance, this has allowed us to return a
total of £226.5m to our parent in the year, an
increase of 30.3%, of which £111.3m was paid
by way of dividends.
Average net debt throughout the year was
£32.4m (2013/14: £41.8m), and we ended the
year with net debt of £69.2m (2013/14: £54.3m).
Our debt facility with BBC Commercial Holdings
Limited provides us with a maximum facility
of £202.2m, of which the fnal £30.0m is
conditional on an equivalent holding in cash.
Balance sheet
The net asset increase from £314.7m to
£405.6m is for the most part explained by the
BBC AMERICA transaction, with the recognition
of an associate (initially at £119.9m) less the
BBC AMERICA assets sold (primarily £54.8m
of programme rights and other inventories).
In addition, we have furthered our investment
in premium content, with key acquisitions on
titles such as Doctor Who, Orphan Black and
The Musketeers, contributing to an increase
in distribution rights of £32.7m.
Going concern
The company ended the year, following a
creditable operating performance and the
AMCN transaction, with a robust balance sheet,
and able to declare a record return to our
shareholder. Looking ahead, with the focus on
delivery of our stated strategy, coupled with
fnancial discipline and careful management of
our cost base, we expect to drive continued
value for our shareholder.The Directors of
BBC Worldwide remain confdent in our ability
to operate with our existing fnancial resources,
and we therefore continue to adopt the going
concern basis in preparing the accounts.
3. SPECI FI C I TEMS
2014/15
£m
2013/14
£m
Share of interest and tax of joint ventures and associates (9.4) (9.7)
Pension defcit reduction payment (8.1) (2.3)
Other:
Reorganisation costs (2.6) (7.0)
Amounts written off from interests in joint ventures and associates (2.0) (2.2)
Transaction fees (0.2) (0.6)
(4.8) (9.8)
Total (22.3) (21.8)
4. EMPLOYEE COSTS
2014/15
£m
2013/14
£m
Salaries and wages (120.0) (121.4)
Social security costs (10.7) (10.6)
Other pension costs (18.2) (12.5)
Total (148.9) (144.5)
5. RECONCI LI ATI ON OF TAX RATE
2014/15 2013/14
UK corporate tax rate 21.0% 23.0%
Disallowable expenditure 1.5% 1.9%
Non-taxable income (5.1%) –
High-end television tax relief (3.5%) (4.0%)
Tax-exempt disposals – (1.0%)
Higher overseas tax rates 7.2% 3.3%
Tax effect of share of results of joint ventures and associates (2.7%) (1.7%)
Reduction in UK tax rate – 0.3%
Adjustments in respect of prior years (1.3%) 0.5%
Total 17.1% 22.3%
Andrew Bott
Chief Financial Offcer
26 27
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
B B C WOR L DWI DE
E XE CUT I V E COMMI T T E E
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
Marcus Arthur
President, UK & ANZ
Marcus moved into his current role in 2013. He
is responsible for BBC Worldwide’s businesses in
the UK and ANZ. Marcus joined BBC Worldwide
in 1991 and has held roles including MD of
Brands Consumers and New Ventures, Digital
Delivery and before that Managing Director,
BBC Magazines.
2.
Andrew Bott
Chief Financial Officer
Andrew was appointed to his current role
in 2014. Prior to this from 2007 to 2013 he
was CFO of BBC Worldwide North America.
He joined in 1998 and in 2000 moved to
New York. Previously, Andrew held positions
at PricewaterhouseCoopers and Pearson.
3.
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
Tim took up his current role in 2013. He is also
Chairman of Comic Relief and Vice-Chair of the
RTS. During his ten years at the BBC,Tim has
held the positions of Acting Director-General,
Director of Audio & Music and Director of
Marketing, Communications & Audiences.
4.
Paul Dempsey
President, Global Markets
Paul took up his current role in 2013. He is
responsible for building BBC Worldwide’s
portfolio across predominantly non-English
speaking territories, known collectively as Global
Markets. Paul joined BBC Worldwide in 1998.
His previous roles include Interim CEO and
MD Consumer Products.
5.
Charlotte Elston
Director of Communications
Charlotte joined BBC Worldwide as Director of
Communications in 2010. She oversees all areas
of communications globally including external
and internal communications, corporate affairs
and events. Charlotte has previously worked
at Aegis Group plc, Pearson, Brunswick and
Edelman PR.
6.
Martyn Freeman
General Counsel &
Company Secretary
Martyn was appointed to his current role in
2011. He has responsibility for all legal, business
affairs, policy and regulatory matters, and from
January 2015 became Company Secretary.
Previously, Martyn held a variety of roles across
the BBC, including Head of Business Affairs,
Radio & Music, Factual & Learning and News.
7.
Kirstin Furber
People Director
Kirstin is responsible for Human Resources
across BBC Worldwide. She was appointed to
this position in 2013, having previously been
SVP HR. Prior to joining BBC Worldwide, Kirstin
held roles at Twentieth Century Fox, Discovery
Channel, Ziff Davis, Warner Bros and Granada
Media Group.
8.
David Gibbons
Director of Global Operations
David oversees Consumer Digital Technology,
Global Technology, eCRM and Analytics, Property,
Procurement and the Global Content Supply
Chain. He joined BBC Worldwide in 2013. Prior
to this he held leadership positions in SEEK, GE
Capital, Gap and Nike.
9.
Amanda Hill
Chief Brands Officer
Amanda is responsible for developing the
overarching brand strategy for BBC Worldwide.
Amanda manages the current brand portfolio as
well as development and building of new brands.
She also oversees audience insight, trade and
content marketing.
10.
Helen Jackson
Chief Content Officer
Helen became Chief Content Offcer in 2013.
She oversees the creative and commercial vision
for BBC Worldwide’s Content strategy covering
commissioning, development and acquisition
activity, channels curation and editorial standards.
Helen previously established BBC Worldwide’s
Indie Unit.
11.
David Moody
Director of Strategy
David is responsible for all aspects of the
company’s direction and strategy. David joined
BBC Worldwide in 2004. He previously held
roles in BBC Ventures,The LEK Partnership,
Singapore Telecom International and United
News & Media and co-founded Dataroam.
12.
Herb Scannell
President, BBC Worldwide
North America
Herb is responsible for BBC Worldwide in
the USA and Canada. Prior to joining BBC
Worldwide in 2010, he was CEO of Next
New Networks, a digital media company he
co-founded in 2006. Herb was formerly Vice
Chairman of MTV Networks and President
of Nickelodeon Networks.
28 29
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
COR P OR AT E R E S P ONS I B I L I T Y R I S K MANAGE ME NT
We believe in being a responsible corporate
citizen by embedding best practices in the
way we work and continuously working
on improving them over time.
Ethical sourcing programme
Ethical sourcing is a core element of our
consumer products business. We encourage
long-term relationships with supplier factories
in order to build trust and a commitment to
continuous improvement. All our suppliers
and licensees are required to submit their
manufacturers for approval through our ethical
sourcing programme in advance of production.
We review detailed, independent audits for
factories in higher risk countries and work with
our suppliers and licensing partners to correct
any issues that may be highlighted. Factories that
do not meet our minimum standards are not
approved for manufacture until these standards
have been met.
In 2014 we joined the Ethical Trading Initiative
and will be working with them over the coming
year to report on our ethical sourcing activities.
Environmental issues
We are working on ensuring that a sustainable
way of operating becomes ‘business as usual’
at BBC Worldwide. We collect data from our
offces around the world to enable us to monitor
our energy and water consumption and our
waste management.
In March, our London headquarters moved into
TVC in West London. Reducing our environmental
impact was an important consideration in both
the move process and in setting up our new
offce. We reused most of our existing IT
equipment, workstations, chairs and storage
furniture; and environmental credentials were
a key consideration when we purchased new
fttings, furnishings and equipment.
Looking ahead, we intend to implement robust
monitoring at TVC and our offces globally to
build on the understanding of our environmental
impacts and put in place processes to reduce
them further.
Team Worldwide
Team Worldwide, our employee engagement
programme, was launched in February 2014.
Centred around the three pillars of Community,
Sustainability and Challenge, it has enabled our
employees to make contributions to increase
our positive impact on society and reduce our
negative impact on the environment, while
helping employees collaborate, expand their
horizons and have fun.Through the year, our
global offces undertook activities tailored to
their local areas.These ranged from physical
challenges such as sporting and endurance
events, to contributing to the local community by
donating time and goods in Cologne, Hong Kong,
London, Miami, Mumbai, New York, Singapore
and Sydney. As well as providing time and goods
through Team Worldwide, staff raised over
£20,000 for Comic Relief and BBC Children
in Need in the UK and partner charities
in our global offces.
Team Worldwide, our
employee engagement
programme, is centred
around the three pillars
of Community,
Sustainability and
Challenge
In 2014 we joined the
Ethical Trading
Initiative and will be
working with them to
report on our ethical
sourcing activities
We are working
on ensuring that
a sustainable way
of operating becomes
‘business as usual’
at BBC Worldwide
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
We are committed to supporting effective and
effcient risk management practices to safeguard
our people, reputation, assets and commercial
performance. Risk management protects the
reputation of the BBC brand as we showcase it
internationally, and ensures stability of commercial
returns to our parent, the BBC. Our risk
management approach is aligned to the BBC,
Risk Themes Strategic Impacts Mitigation
Reputation and standards
Risk that audiences lose confdence in the
integrity of our business or our content.
Risk we fail to represent the character
of the BBC to global audiences.
Harm to our reputation,
our relationship with
audiences and to the
credibility of the BBC brand.
Leadership and management behaviours that promote the BBC values
as a platform for the company’s culture. Emphasis on honest and open
communications. Policy framework, company communications and HR
processes requiring and demonstrating the appropriate behaviours.
JV & associate relationships
Risk we don’t maximise the potential
from our JV and associate relationships, the
principal ones being UKTV, BBC AMERICA
and Immediate Media.
Under-delivering against
audience expectations
and our ambitions for
the JV and associate
relationships.
JV formation is always backed by a detailed defnition of the JV benefts, purpose,
mechanics and governance, with appropriate safeguards over editorial control.
Approvals framework, encompassing BBC Public Service and alignment, ensure
that potential deals which beneft the UK licence fee payer are explored.
Content supply pipeline
Risk that ongoing acquisition and consolidation
across the independent sector restricts the
addressable market for rights in key genres.
Potential changes to BBC Production.
Reduced drama and factual
entertainment content,
impact the brand and
channel strategies.
Dedicated Content division with expertise in content acquisition and
relationship management. Output deals with a limited number of key
independent producers and minority investment stakes to increase the
pipeline of creative output. We are committed to maximising indie returns
notwithstanding the BBC Store and channels strategy.
Execution of company strategy
Risk that in-region we do not get the
most from our affliate relationships, or the
right brand visibility or the right premium
vs free-to-air channel mix. Risk that we
do not achieve suffcient scale in some
regional markets. Risk from launching new
direct-to-consumer service such as BBC Store.
Reduce our ability to
showcase BBC content.
More vulnerable to
disruptive digital services.
Risk operating with sub-
scale regional businesses.
International channel team who lead negotiations and manage channel launches.
Regions have extensive knowledge of the affliate landscape and the expertise
to get the right channel mix, platforms and relationships. Leadership experience
and insight into markets to ensure we secure the right partners, build the
right relationships and evolve the right propositions in the context of a global
ambition and strategy.
Information security
Risk that our information assets are
compromised. Risk that content assets
are disclosed or used maliciously. Risk
of content piracy.
Disclosed assets have
reduced editorial or
commercial value.
Disruption to business
operations.
New content path defned for high-value content, including dedicated
infrastructure and content handling team. New centralised global solution for
regional post-production activities (e.g. localisation and dubbing). Enhanced
information security roles and responsibilities, additional resources, and global
network convergence.
Trading performance and growth
Business performance is sensitive to UK
and international economic conditions,
especially the USA and Australia, and
exchange rate movements.
Adverse impact on cash
fows and reported
fnancial results.
Business is diversifed across both regions and revenue streams. Risk-averse
approach to foreign currency management. Central management of budgets
and performance, cash-fow forecasting, careful debtor management and
hedging policy.
Regulatory and compliance
Potential for non-compliance with
UK, and international laws, especially
regulatory changes and legislation
with extra-territorial reach.
Civil or criminal challenge.
Financial penalties.
Reputational damage.
Comprehensive and enforced policy framework including Executive
sponsorship, mandatory training programme, guidelines, regular reporting,
specialist committees and steering groups. Oversight by Board, Executive
and Risk Management Committee. Central Business and Legal Affairs resources
to support.
Business continuity and safety
Major incident with risk of disruption
to operations, infrastructure and loss
of revenue.
Potential for injury or
death. Disruption to
business operations.
Reputational damage.
Safety management arrangements supported by policy framework,
communications, forums and guides and specialist safety advice. Extensive
continuity plans encompassing all offces and business operations.Training
on international travel safety.
to its public purpose and values and its editorial
standards.This approach is used throughout our
businesses, projects and in the formation and
management of joint venture (JV) relationships.
Tim Davie, Chief Executive, BBC Worldwide
and Director, Global, along with the Worldwide
Executive (WEx), sponsor risk management.
Divisional and international boards take
ownership of local risk management processes,
supported by senior managers who have clearly
defned risk accountabilities.
A Risk Management and Internal Controls
Committee comprised of WEx members and
senior managers reviews and challenges the
corporate risk register as part of the formal
quarterly risk management process.
Tiny Giants 3D
©Randall Babb/BBC 2014
Human Universe ©BBC
30 31
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
COR P OR AT E GOV E R NANCE R E P ORT
In the Annual Review of 2013/14 we reported
that the number of directors of the statutory
Board of BBC Worldwide Limited had been
reduced in keeping with the policy to streamline
boards and committees across the BBC Group.
However, in view of the size and signifcance
of BBC Worldwide, the BBC Executive Board
decided that the composition of the BBC
Worldwide Board should be strengthened to
include two additional Non-executive Directors.
The BBC Executive Board and its board
committees have responsibility for the overall
assurance and supervision of BBC Worldwide.
However, during the coming months it is
proposed that the authority to consider
and approve the operational matters of
the company will be delegated to the BBC
Worldwide Board. For further detail on the
activities of the BBC Executive Board go to
www.bbc.co.uk/aboutthebbc.
As of 31 March 2015, the Board was composed
of Tony Hall (BBC Director-General) as
Chairman,Tim Davie (Chief Executive and
Director, Global), Andrew Bott (Chief Financial
Offcer), Anne Bulford (Managing Director,
Finance & Operations for the BBC) and
from 16 February 2015, Dharmash Mistry
and Sir Howard Stringer, both of whom are
also Non-executive Directors of the BBC
Executive Board.
Statutory matters, such as the approval of the
company’s statutory accounts, the payment of
a dividend and the appointment of a director
are already reserved to the Board of Directors.
The Worldwide Executive Committee (WEx)
has principal responsibility for the day-to-day
management of the company. WEx is chaired
by Tim Davie. WEx meets weekly to discuss
operational matters impacting the business.
Corporate governance is about the structure and relationships
which determine the corporate direction and performance. At BBC
Worldwide the board of directors is central to our governance as
is its relationship to the other key participants, BBC Public Service,
BBC Worldwide and staff.
During the year matters under review included
plans to launch the global genre brands BBC
First in Australia and New Zealand on Foxtel
and BBC Brit and BBC Earth in Poland; and
investments in The Musketeers S3 and Doctor
Who S10. Additionally, during the year WEx
reviewed people policies and development
opportunities across the company.
WEx approves expenditure of up to £5m,
beyond which the matter is reviewed by WEx
and referred to the BBC Worldwide Board
or to the BBC Executive Board as appropriate
for approval.This ensures greater scrutiny of
performance and highlights the needs of the
regional businesses to be addressed.These
quarterly performance reviews also serve to
strengthen connections between the regions
and Content, Brands and other central functions.
Content is central to our strategy and one
of our most signifcant areas of expenditure.
The Content Investment Group (CIG), chaired
by the Controller of Content Investment, is
responsible for approving investments of
distribution and certain broadcast rights. CIG
also monitors the content pipeline in the context
of performance and strategic development in
the business, and recommends changes in global
content strategy and execution when necessary.
CIG approves investments between £500,000
and £2m. For investments greater than £2m,
CIG reviews and recommends the investments
to WEx for approval.
WEx also delegates authority to the Investment
Review Group, which considers and approves
non-content fnancial investments between
£1m and £2m.
The BBC Executive
Board and its board
committees have
responsibility for
the overall assurance
and supervision of BBC
Worldwide. However,
during the coming
months it is proposed
that the authority to
consider and approve
the operational matters
of the company will be
delegated to the BBC
Worldwide Board
We take our legal and
regulatory obligations
seriously and we have
developed clear policies,
practices and training
and awareness
programmes to ensure
the protection of
personal information
The 4CC approvals
framework embedded
within our governance
structure ensures that
key projects and
investments are subject
to rigorous evaluation,
ensuring compliance
with each of the 4CC
prior to launch
Attenborough’s Birds of Paradise
©Alex Lanchester 2013
The Musketeers ©BBC 2013
33
HOW WE WOR K
32
ANNUAL R E VI E W 2 014 – 2 015
R E P ORT ON DI R E C TOR S ’ R E MUNE R AT I ON
YE AR ENDED 31 MARCH 2015
CORPOR ATE GOVERNANCE REPORT
CONTI NUED
Over the last three years, we have been
progressively simplifying our Reward offering.
2014/15 saw the fnal payments under the
Proft Share Plan and no matching payment
was due under the Deferred Bonus Plan. Both
plans are now closed and will not be replaced.
Directors, senior managers and all other
employees now have very simply structured
pay packages, with a basic salary and a
performance-related bonus that is at risk
if the required results are not achieved.
Wherever possible, we use salary survey
data to identify the pay range in the market
for a particular role in a particular location.
We continue to pay at or below the market
median in the UK and no more than 10%
above the local market median elsewhere.
As part of the focus on identifying career paths
across the whole BBC, we are working to design
a job grading structure that will help us ensure
that pay is correctly positioned at all levels in
BBC Worldwide.This work, along with greater
alignment between the BBC’s commercial
operations and public service broadcasting, forms
a key part of our vision to create ‘one BBC’.
The Sales Compensation Framework, developed
with the aim of consistently focusing our sales
teams on delivering the best possible return to
the BBC, was implemented in 2014/15, paying
a bonus to sales staff in proportion to targets
achieved. We will continue to monitor the
scheme, refning it as necessary, to ensure that
it is delivering maximum value for the BBC.
Governance
There were no signifcant changes to
remuneration governance arrangements in
2014/15, with decisions affecting members
of the WEx team and company-wide reward
being taken by the BBC Executive Remuneration
Committee. Salary decisions affecting other staff
earning more than £125,000 (or local equivalent)
per year, and severance payments in excess of
£75,000, continue to require approval by the
BBC Senior Management Remuneration
Committee.The BBC Worldwide Pay Forum,
comprising the Chief Executive, Chief Financial
Offcer and People Director, continues to review
other signifcant pay decisions.
BBC Worldwide is not funded by the licence fee, but we are
keenly aware that, as part of a publicly-funded organisation, it is
not appropriate or desirable to lead the market on pay, and that
our remuneration policy must be both moderate and justifable.
No individual is responsible for setting
his or her own remuneration.
Full details of all the above governance
matters can be found in the BBC Annual
Report and Accounts.
Executive Directors
This report summarises the remuneration of
the CEO and CFO of BBC Worldwide, who are
the sole Executive Directors of BBC Worldwide.
Tim Davie was CEO for the full year. Andrew
Bott was Interim CFO and Executive Director
of BBC Worldwide from the start of the year.
He was appointed to the role permanently
on 4 June 2014, moving from the USA to
the UK on 1 September 2014.
Base salary
Tim Davie’s annual base salary remained
unchanged throughout 2014/15. Andrew Bott’s
salary also remained unchanged during the year,
though it was paid in sterling rather than US
dollars (converted at GBP1 = US$ 1.50) after
his transfer to the UK on 1 September.
Annual incentives
Annual incentives are provided through the BBC
Worldwide Annual Bonus Plan, in which all staff
participate (other than those on sales schemes).
The Plan is a relatively simple design, with
a ‘Minimum Growth Hurdle’ (a threshold level
of performance), a Target Performance level
(set to be stretching but, with substantial effort,
achievable), at which Target Bonus is payable,
and a Maximum Bonus Performance level
(above which no further bonus is payable),
set signifcantly above Target.
Target Bonus for the CEO and the CFO
is 50% of base pay earnings. Bonus for both
Executive Directors is wholly dependent on
the performance of BBC Worldwide as this is
deemed to be the most appropriate indicator
of their performance.
Privacy and Information Security
Consumers, talent, partners and employees trust
us with their personal information and failure to
meet these expectations would lead to a serious
loss of trust in the BBC brand. Our global privacy
and information security programmes govern
how we collect, use and manage all forms of
personal information across our operating
territories; from collecting information in a fair
and transparent way to ensuring that this
information remains protected and secured at
all times.This extends to information that does
not directly identify an individual but which may
impact on an individual’s privacy and there has
been a signifcant amount of work in this area
in the last 12 months across the organisation.
We take our legal and regulatory obligations
seriously and we have developed clear
policies, practices and training and awareness
programmes to ensure the protection of
personal information.These are regularly
reviewed to ensure that we are transparent
to individuals and provide clear choice on
how we use their data. Our key focus over
the next year will be preparing for the incoming
EU General Data Protection Regulation which
is due to be fnalised in the next six months.
As part of our compliance programme, our
privacy and data protection function will be
audited this year.
In terms of broader information security,
we strive for continual improvement in the
protection of our business information assets,
especially in respect of content. Ensuring that
these assets are protected at all stages of their
lifecycle is vital to the success of our business,
and that of our content partners, and to
maintaining our reputation as a trusted
organisation with high standards of care.This
is especially important where we share content
with third parties around the world and we
have developed robust processes for evaluating
these risks and ensuring that these partners
have adequate security measures in place.
Our progress in this area is routinely scrutinised
by the BBC’s Internal Audit function to ensure
we are managing risk effectively.
Four Commercial Criteria
The BBC’s Royal Charter and Agreement requires
all of the BBC’s commercial activities to comply
with the four Commercial Criteria (4CC). Our
activities must:
• ft with the BBC’s Public Purposes;
• not jeopardise the good reputation of
the BBC or the value of the BBC brand;
• exhibit commercial effciency; and
• comply with the BBC Trust’s Fair Trading Policy,
the BBC’s Fair Trading Guidelines and, in
particular, avoid distorting the market.
The 4CC approvals framework embedded
within our governance structure ensures that key
projects and investments are subject to rigorous
evaluation, ensuring compliance with each of the
4CC prior to launch.
The BBC’s Fair Trading arrangements (which
include the 4CC approvals arrangements) have
been accredited with the ISO 9001:2008 quality
standard. BBC’s Fair Trading arrangements are
subject to scrutiny by independent auditors
commissioned by the BBC. Details of this year’s
independent Fair Trading audit, undertaken by
Deloitte, together with the audit opinion, are
available in the BBC Annual Report and Accounts
for 2014/15.
Editorial Standards
We are required to comply with the BBC
Editorial Guidelines and the Advertising and
Sponsorship Guidelines for BBC Commercial
Services. We have an editorial framework which
sets out clear editorial accountability for each
business area and a dedicated Editorial Standards
team that offers support and advice to our
businesses. During the year we continued to
deliver both online and face-to-face training
explaining the editorial, commercial and
advertising standards that we expect.
34 35
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
REPORT ON DI RECTORS’ REMUNER ATI ON
CONTI NUED
Long-term incentives
Proft Share Plan
The company’s Proft Share Plan (PSP), which
covered the fve-year period beginning in
2008/09, provided participants with a share
in profts above a set of absolute proft (PAIT,
proft after interest and tax) hurdles linked to
the fve-year strategic plan. Annual payments
commenced after three years of participation in
the plan, with balancing (i.e. deferred) payments
made after the end of the fve-year period.
For eligible participants, the payments shown on
page 36 will be made after year end in July 2015.
These are the second and fnal of two balancing
payments due under the PSP. Balancing payments
are equal to 50% of the fnal, full-year payments.
The annual cash PSP pay-out was capped
at 100% of base pay for each participant.
The PSP will not be replaced by any other
Long Term Incentive Plan.
Pension
Executive Directors who joined the BBC before
1 December 2010 are eligible to participate in
the BBC Pension Scheme (the Scheme), which
provides for pension benefts on a defned
beneft basis. Executive Directors who joined
the BBC on or after 1 December 2010 are
eligible to join LifePlan which is the BBC’s
defned contribution arrangement.The BBC pays
matching contributions to LifePlan for employee
contributions between 4% and 5%. Employee
contributions between 6% and 7% are matched
plus an additional 1%. Employee contributions
of 8% or more receive the maximum employer
contribution of 10%.There is no maximum
pensionable salary for contributions to LifePlan.
Executive Directors who decide not to join
LifePlan or are not already an existing member
of the Scheme are, subject to meeting the
relevant criteria, automatically enrolled into
the National Employment Savings Trust (NEST).
The BBC and employees currently pay 1% of
qualifying earnings to NEST. Individuals can
choose to opt out of this.
Executive Directors’ pension arrangements
may be reviewed and amended in response
to changes in legislation or similar developments.
Features of the BBC’s pension arrangements,
including normal pension age, are provided
in the table on page 38.
Details of the BBC Pension Scheme are
available at www.bbc.co.uk/mypension
and details of LifePlan can be found at
www.friendslife.co.uk/microsite/bbc
Tim Davie became an active member of
the CAB 2011 section as at 1 January 2012,
and retains a deferred pension in the New
Benefts section for service up to that date.
The information in the table on page 39 refects
his CAB 2011 benefts but includes the period
before he was appointed as a director.
Until 31 August 2014, Andrew Bott was
employed on a US contract and participated in
the BBC Worldwide Americas 401(k) Retirement
Plan, under the terms of which employees may,
immediately on joining the organisation,
contribute up to 70% of pay, to a maximum
of US$17,500 per annum. BBC Worldwide
Americas provides matching contributions
equal to 100% of the frst 5% of employee
contributions. Employee contributions are always
100% vested. 20% of matching contributions vest
each year, becoming fully vested after fve years.
Andrew joined LifePlan on his return to the UK
on 1 September 2014 and retains a deferred
pension in the New Benefts section for service
before his transfer to the USA in 2006.
Base pay Short-term incentives
Long-term incentives Benefits Pension
CHANGES TO CEO REMUNERATI ON
£000s
31Mar
2015
31Mar
2014
31Mar
2013
31Mar
2012
31Mar
2011
1,180
898
1,334
670 640
Base pay Short-term incentives
Long-term incentives Benefits Pension
CHANGES TO CEO REMUNERATI ON
£000s
31Mar
2015
31Mar
2014
31Mar
2013
31Mar
2012
31Mar
2011
1,180
898
1,334
670 640
John Smith was CEO from the start of this fve-year period
until 31 December 2012
Paul Dempsey was interim CEO from1December 2012
to 31 March 2013
Tim Davie has been CEO since 1April 2013
Figures do not include compensation for loss of offce
Components of reward
The following table summarises the current key fxed and variable components of reward (excluding sales incentives)
for Executives and employees:
ELEMENT
PURPOSE & LI NK
TO STRATEGY
PERFORMANCE
PERI OD OPERATI ON
Base Salary Maintain a competitive package,
at the agreed position for the
relevant local market, recognising
individual contribution and the
scope of the role.
Not applicable Reviewed annually, taking into account the industry
in which BBC Worldwide operates, location,
individual performance and responsibilities,
and affordability.
REWARD FROM CURRENT I NCENTI VE PLANS
Annual Incentives Reward achievement of
short-term strategic goals
and proft growth.
1 year Bonus, calculated as a percentage of base pay
earnings, is payable for achievement of proft
targets
1
and, other than for members of the
WEx, an agreed level of personal performance.
The percentage varies by grade (and, at lower
levels, by country, in some cases).
A reduced bonus is payable for achievement
below Target, subject to reaching a threshold
level of performance below which no bonus
is payable, with additional bonus available for
achievement above Target. For members of the
Executive, bonus is between 20% and 70% of base
pay earnings, with the top of that range payable
at a level of proft considered to be achievable
only in exceptional circumstances.
The levels of proft performance attracting
threshold, target and maximum bonus are set
by the BBC Executive Remuneration Committee.
REWARD FROM DI SCONTI NUED I NCENTI VE PLANS
Proft Share Plan Drive proft performance and
returns to BBC Worldwide’s
shareholder over the long-term
while promoting the retention
of key management.
5 years The scheme is now closed. Balancing payments
(earned during 2008-2013, but deferred for
two years) will be made in July 2015, after
which no further payments will be made.
The Plan will not be replaced by any other
Long Term Incentive Plan.
BENEFI TS
2
Pensions Pensions are offered in line
with normal market practice.
Ongoing Pensions are offered in accordance with
the all employee pension arrangements.
Life assurance Life assurance is offered in line
with normal market practice.
Ongoing 4x salary for those who join the pension plan;
2x salary for those who don’t.
Private healthcare Private healthcare is offered
in line with normal market
practice at middle management
level and above.
Ongoing Family cover for senior executives; single cover
for other eligible employees.
Car allowance With effect from 1 April 2014,
BBC Worldwide removed
the car allowance beneft for
all new Executive Directors
and senior managers, to align
with arrangements for all
BBC employees.
– Those who were already in receipt of a car
allowance have retained it. Neither of the
Executive Directors receives the allowance.
1 Based on headline proft.
2 Andrew Bott was employed on a US contract during the period 1 April to 31 August 2014, during which time he received standard US benefts – medical, dental, life,
accidental death and dismemberment, dependent life and short-term disability insurances.
36 37
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
REPORT ON DI RECTORS’ REMUNER ATI ON
CONTI NUED
Remuneration earned in the year ended 31 March 2015
£’000
Fee/base
pay
Annual
bonus PSP
Taxable
benefits
Pension-
Related
Single
Figure
Total
2014-15
Total
2013-14
(including
Pension-
Related
Single
Figure)
Total
2013-14
(excluding
Pension-
Related
Single
Figure)
Executive Directors
Tim Davie
1
400 201 – 2 37 640 670 633
Andrew Bott
2
288 145 29 4 23 489 124 121
688 346 29 6 60 1,129 794 754
Non-Executive Directors – – – – – – – –
Former Executive
Directors – – – – – – 252 224
Total 688 346 29 6 60 1,129 1,046 978
1 The BBC introduced a salary sacrifce arrangement on 1 June 2008 for Old and New Benefts members who joined the Pension Scheme before 1 November 2006
and for all Career Average Beneft members. From that date, terms and conditions of employment were changed for those employees opting for the salary sacrifce
arrangement and, as a result, employee pension contributions made via the salary sacrifce have been treated as employer contributions, with a corresponding reduction
in salary.Tim Davie’s base salary has not been adjusted to refect the impact of the salary sacrifce. His total salary sacrifce was £8,532 (2013/14: £8,280).
2 Andrew Bott was an Executive Director of BBCWorldwide throughout the year but was employed on a US contract until 31 August 2014.The fgures in the table
above include his remuneration up to and including that date, converted from US dollars at the rate prevailing at the time of payment, together with his remuneration
from 1 September 2014 onwards, in sterling.
Pension entitlements
£’000
Age as at
31 March
2015 Section
Accrued
pension
31 March
2015
Accrued
pension
1April
2014
Defined
benefit
contributions
(via salary
sacrifice)
Pension-
related
single
figure
Tim Davie 47 CAB 2011 8 5 9 37
Tim Davie became an active member of the CAB 2011 section as at 1 January 2012 and retains a deferred pension in the New Benefts section for service up to that date.
The pensions shown relate to CAB 2011 only but include the period before he was a director.
Until 31 August 2014, Andrew Bott participated in the BBCWorldwide Americas 401(k) Retirement Plan. He joined LifePlan on his return to the UK on 1 September.
The employer contributions to these two schemes were £6k and £17k respectively. He retains a deferred pension in the New Benefts section for service before his transfer
to the USA in 2006.
Scheme
‘Old’ Benefits
Defined Benefit
‘New’ Benefits
Defined Benefit
CAB 2006
Defined Benefit
CAB 2011
Defined Benefit
LifePlan
Defined
Contribution
National
Employment
Savings Trust
(Auto Enrolment
Arrangement)
Defined
Contribution
Date Closed 30 September
1996
31 October
2006
30 November
2010
1 January 2012 Open to
all eligible
employees
Open to
all eligible
employees
Accrual 60
ths
accrual 60
ths
accrual 1.67% accrual
Adjusted in line
with infation
1.67% accrual
Adjusted in line
with CPI
BBC will
contribute a
maximum of
10% of salary
if employee
contributes
8% with lower
sliding scale
BBC will
contribute 1%
of qualifying
earnings
Salary Final pensionable Final pensionable Career average
revalued earnings
Career average
revalued earnings
Normal
Pensionable Age
60 60 65 65 N/A N/A
Earnings Cap Date of joining
before 1 June
1989 uncapped,
capped
otherwise
Capped at
£145,800
Capped at
£145,800
Capped at
£142,200
Uncapped Minimum
Earnings
£5,668 p.a.
Maximum
Earnings
£41,450 p.a.
Pensionable salary
growth before
the Earnings cap
is applied
Limited at 1% p.a. Limited at 1% p.a. Limited at 1% p.a. No restriction N/A N/A
Employee
contribution
(% of pensionable
salary)
7.5% 7.5% 4% 6% Minimum
employee
contribution
is 4%
1% of qualifying
earnings
Employment contracts
Employment contracts of Executive Directors recently employed by BBC Worldwide in the UK have a maximum notice period
of six months. Contracts are subject to earlier termination for cause. In the UK, if termination arises through redundancy,
Executive Directors are entitled to one month’s pay for each year of continuing service, up to a maximum of 24 months’ base
pay (or 12 months’ base pay for Executive Directors employed on or after 1 January 2013).This is now subject to a cap of
£150,000 in total.
Outside interests
Where there is no potential for confict of interest, and with the prior agreement of the Chair of BBC Worldwide, Executive
Directors may hold one paid external directorship. Remuneration which arises from directorships may be retained by the
Executive.This policy is to encourage the take-up of external Non-executive appointments as part of the Executive Directors’
development as well as bringing broader business skills to BBC Worldwide.
During the year, no Executive Directors held paid external directorships.
Non-executive Directors
The Non-executive Directors of BBC Worldwide during the year were Tony Hall, Anne Bulford, Dharmash Mistry
(from 16 February 2015) and Sir Howard Stringer (from the same date), none of whom received any remuneration
in respect of their duties in this capacity from BBC Worldwide.
38 39
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
I NDE P E NDE NT AUDI TOR ’ S S TAT E ME NT
TO B B C WOR L DWI DE L I MI T E D
S TAT E ME NT OF DI R E C TOR S ’ R E S P ONS I B I L I T I E S I N
R E L AT I ON TO T HE S UMMARY F I NANCI AL I NF OR MAT I ON
The Summary fnancial information comprises the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated
balance sheet, Consolidated cash fow statement and Consolidated statement of changes in equity of BBC Worldwide Limited (‘the Company’).
The Summary fnancial information presented within the Annual Review does not constitute the statutory accounts of the Company for the fnancial
years ended 31 March 2015 and 31 March 2014 but represents extracts from them.These extracts do not provide as full an understanding of the
fnancial performance and position, or fnancial and investing activities, of the Company as the complete annual fnancial statements of the Company.
The statutory accounts for those years have been reported on by the Company’s auditor.The statutory accounts for 31 March 2014 have been
delivered to the registrar of companies, and those for 31 March 2015 will be delivered in due course.The reports of the auditor were:
(i) unqualifed;
(ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and;
(iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The Annual Report, including the auditor’s report, can be downloaded at www.bbcworldwide.com.
The Directors of the Company (‘the Directors’) have accepted responsibility for preparing the Annual Review and for preparing the Summary fnancial
information included therein by extracting the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated balance
sheet, Consolidated cash fow statement and Consolidated statement of changes in equity directly from the Company’s full annual fnancial statements.
The Summary fnancial information was approved by the Directors and signed on their behalf on 9 June 2015 by:
We have examined the Summary fnancial information for the year ended 31 March 2015, which comprises the Consolidated income statement,
Consolidated statement of comprehensive income, Consolidated balance sheet, Consolidated cash fow statement and Consolidated statement
of changes in equity on pages 42 to 45 of the Annual Review.
This Report is made solely to the Company in accordance with the terms of our engagement letter dated 4 June 2015.To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or the opinion we have formed.
Respective responsibilities of the Directors and the auditor
As explained more fully in the Statement of Directors’ Responsibilities on page 40, the Directors are responsible for preparing the Summary
fnancial information so that it is consistent with the full annual fnancial statements of the Company.
Our responsibility is to report to the Company our opinion on the consistency of the Summary fnancial information, with the full annual
fnancial statements.
We also read the other information contained in the Annual Review and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the summary fnancial information.
We conducted our work in accordance with Bulletin 2008/3 issued by the Auditing Practices Board. Our report on the Company’s full annual
fnancial statements describes the basis of our opinion on those fnancial statements.
Opinion
In our opinion the Summary fnancial information is consistent with the full fnancial statements of the Company for the year ended 31 March 2015.
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
Richard Wilson (Senior Statutory Auditor)
For and on behalf of Ernst & Young LLP,
Statutory Auditor
London
9 June 2015
40 41
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
CONS OL I DAT E D B AL ANCE S HE E T
AS AT 31 MARCH 2015
CONS OL I DAT E D I NCOME S TAT E ME NT
F OR THE YE AR ENDED 31 MARCH 2015
CONS OL I DAT E D S TAT E ME NT OF COMP R E HE NS I V E I NCOME
F OR THE YE AR ENDED 31 MARCH 2015
Ongoing
businesses
2015
£m
BBC
AMERICA*
2015
£m
Total
2015
£m
Ongoing
businesses
2014
£m
BBC
AMERICA*
2014
£m
Total
2014
£m
HEADLI NE SALES I NCLUDI NG J OI NT VENTURES 948.1 53.7 1,001.8 944.5 97.8 1,042.3
Less: Share of revenue of joint ventures (150.5) – (150.5) (150.3) – (150.3)
REVENUE 797.6 53.7 851.3 794.2 97.8 892.0
Total operating costs (728.5) (42.3) (770.8) (719.7) (62.6) (782.3)
Share of results of joint ventures and associates 35.8 – 35.8 25.9 – 25.9
OPERATI NG PROFI T 104.9 11.4 116.3 100.4 35.2 135.6
Analysed as:
Headline proft 127.2 11.4 138.6 122.2 35.2 157.4
Share of interest and tax of joint ventures and associates (9.4) – (9.4) (9.7) – (9.7)
Pension defcit reduction payment (8.1) – (8.1) (2.3) – (2.3)
Other specifc items (4.8) – (4.8) (9.8) – (9.8)
104.9 11.4 116.3 100.4 35.2 135.6
Gains on disposals – 115.9 115.9 4.1 – 4.1
Other gains and losses (5.7) – (5.7) (9.3) – (9.3)
Finance income 0.8 – 0.8 0.4 – 0.4
Finance expense (3.5) – (3.5) (4.6) – (4.6)
PROFI T BEFORE TAX 96.5 127.3 223.8 91.0 35.2 126.2
Proft before tax excluding gains and losses on disposals 96.5 11.4 107.9 86.9 35.2 122.1
Tax charge for the year (11.7) (26.6) (38.3) (14.3) (13.8) (28.1)
PROFI T FOR THE YEAR ATTRI BUTABLE TO EQUI TY
SHAREHOLDER OF THE PARENT COMPANY 84.8 100.7 185.5 76.7 21.4 98.1
Ongoing
businesses
2015
£m
BBC
AMERICA*
2015
£m
Total
2015
£m
Ongoing
businesses
2014
£m
BBC
AMERICA*
2014
£m
Total
2014
£m
PROFI T FOR THE YEAR 84.8 100.7 185.5 76.7 21.4 98.1
I TEMS THAT ARE OR MAY BE RECLASSI FI ED
TO PROFI T OR LOSS:
Recycling of translation reserves on disposal of business – 6.1 6.1 – – –
Recognition and transfer of cash fow hedges (10.9) – (10.9) 16.4 – 16.4
Tax on cash fow hedges taken directly to other comprehensive income 2.3 – 2.3 (3.7) – (3.7)
Exchange differences on translation of foreign operations 16.4 2.8 19.2 (1.5) (5.6) (7.1)
OTHER COMPREHENSI VE I NCOME FOR THE YEAR 7.8 8.9 16.7 11.2 (5.6) 5.6
TOTAL COMPREHENSI VE I NCOME FOR THE YEAR
ATTRI BUTABLE TO EQUI TY SHAREHOLDER OF
THE PARENT COMPANY 92.6 109.6 202.2 87.9 15.8 103.7
* BBCAMERICA: this comprises the results of NVCA up to the date of disposal, together with the Group’s gain on disposal. Whilst the transaction does not meet the criteria of a discontinued operation under
IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, it is considered to be of suffcient importance as to justify the presentation of a separate column for BBCAMERICA in order to provide a
better understanding of the proft and other comprehensive income for the current and the prior year.
2015
£m
2014
£m
NON- CURRENT ASSETS
Goodwill 33.4 34.1
Distribution rights 202.8 170.1
Other intangible assets 27.9 21.0
Property, plant and equipment 28.6 16.9
Interests in joint ventures and associates 148.8 12.8
Investments 13.1 8.5
Deferred tax assets 4.2 3.5
Derivative fnancial assets 2.9 3.4
461.7 270.3
CURRENT ASSETS
Programme rights and other inventories 67.3 102.6
Trade and other receivables 367.2 315.4
Current tax receivable 20.6 12.7
Derivative fnancial assets 8.4 9.5
Cash and cash equivalents 66.6 45.1
Assets classifed as held for sale 3.0 –
533.1 485.3
TOTAL ASSETS 994.8 755.6
CURRENT LI ABI LI TI ES
Interest-bearing loans and borrowings 0.3 0.7
Trade and other payables 405.2 327.6
Current tax liabilities 4.6 2.6
Provisions 5.3 4.7
Derivative fnancial liabilities 10.2 1.1
425.6 336.7
NON- CURRENT LI ABI LI TI ES
Interest-bearing loans and borrowings 135.5 98.7
Trade and other payables 0.8 0.8
Provisions 1.9 0.5
Derivative fnancial liabilities 6.2 2.0
Deferred tax liabilities 19.2 2.2
163.6 104.2
TOTAL LI ABI LI TI ES 589.2 440.9
NET ASSETS 405.6 314.7
EQUI TY
Share capital 0.2 0.2
Hedging reserve (3.0) 5.6
Translation reserve 12.1 (13.2)
Retained earnings 396.3 322.1
TOTAL EQUI TY 405.6 314.7
42 43
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
CONS OL I DAT E D C AS H F LOW S TAT E ME NT
F OR THE YE AR ENDED 31 MARCH 2015
CONS OL I DAT E D S TAT E ME NT OF CHANGE S I N E QUI T Y
F OR THE YE AR ENDED 31 MARCH 2015
2015
£m
2014
£m
CASH FLOWS FROM OPERATI NG ACTI VI TI ES
Cash generated from operations 217.5 188.1
Tax paid (26.5) (37.6)
191.0 150.5
CASH FLOWS FROM I NVESTI NG ACTI VI TI ES
Interest received 0.8 0.4
Dividends received from joint ventures and associates 26.5 18.2
Purchases of distribution rights (145.9) (142.2)
Purchases of other intangible assets (11.7) (7.7)
Purchases of property, plant and equipment (20.3) (1.9)
Proceeds on disposal of available-for-sale investments – 1.8
Disposal of operations net of cash disposed 64.5 25.7
Acquisition of interests in joint ventures and associates (3.6) (0.4)
Acquisition of investments (5.4) (2.6)
Amounts advanced to related parties (0.1) (0.4)
Repayment by related parties 0.3 2.0
(94.9) (107.1)
CASH FLOWS FROM FI NANCI NG ACTI VI TI ES
Interest paid (3.3) (4.6)
Drawdown of loans and borrowings 36.4 25.5
Equity dividends paid (111.3) (88.3)
(78.2) (67.4)
NET I NCREASE/ ( DECREASE) I N CASH AND CASH EQUI VALENTS 17.9 (24.0)
Cash and cash equivalents at the beginning of the year 45.1 74.7
Foreign exchange translation gains/(losses) 3.6 (5.6)
CASH AND CASH EQUI VALENTS AT END OF THE YEAR 66.6 45.1
Cash and cash equivalents is comprised entirely of cash at banks and on hand.
Share
capital
£m
Hedging
reserve
£m
Translation
reserve
£m
Retained
earnings
£m
Total
Equity
£m
BALANCE AT 1 APRI L 2013 0.2 (7.1) (6.1) 312.3 299.3
Proft for the year – – – 98.1 98.1
Recognition and transfer of cash fow hedges – 16.4 – – 16.4
Tax on items taken directly to equity – (3.7) – – (3.7)
Exchange differences on translation of foreign operations – – (7.1) – (7.1)
TOTAL COMPREHENSI VE I NCOME FOR THE YEAR – 12.7 (7.1) 98.1 103.7
Dividends paid – – – (88.3) (88.3)
BALANCE AT 31 MARCH 2014 0.2 5.6 (13.2) 322.1 314.7
Proft for the year – – – 185.5 185.5
Recycling of translation reserves on disposal – – 6.1 – 6.1
Recognition and transfer of cash fow hedges – (10.9) – – (10.9)
Tax on items taken directly to equity – 2.3 – – 2.3
Exchange differences on translation of foreign operations – – 19.2 – 19.2
TOTAL COMPREHENSI VE I NCOME FOR THE YEAR – (8.6) 25.3 185.5 202.2
Dividends paid – – – (111.3) (111.3)
BALANCE AT 31 MARCH 2015 0.2 (3.0) 12.1 396.3 405.6
44 45
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
A H E A D
In the coming year we are looking forward to bringing
audiences across the globe a plethora of new and
exciting programmes that will entertain, amaze and
inform, as well as offer a glimpse into other worlds.
From drama to entertainment or beautiful natural
history titles including The Hunt. This latest landmark
series from Silverback Films was flmed over three years
and across 35 countries and airs later this year.
It comprises seven episodes and celebrates nature’s
cleverest and most determined predators and their
elusive prey. In their world, the stakes are life or death
and outcome is never certain. This is the most exciting
animal behaviour on the planet.
The Hunt ©Ellen Husain/Silverback Films
46 47
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
GLOB AL OF F I CE S
Europe
London
BBC Worldwide
Television Centre
101 Wood Lane
London
W12 7FA
UK
Tel: +44 (0) 20 8433 2000
Cologne
BBC Worldwide Germany
Kaiser-Wilhelm-Ring 17-21
50672 Cologne
Germany
Tel: +49 221 790 790
Paris
BBC Worldwide France
4th Floor
18-20 Quai du Point du jour
92100 Boulogne-Billancourt
Paris
France
Tel : +33 1 44 95 84 00
Warsaw
BBC Worldwide Poland
Pl. Bankowy 1
00139 Warsaw
Poland
Tel: +48 22 749 12 00
Americas
New York
BBC Worldwide North America
1120 Avenue of the Americas
5th Floor
New York
NY 10036-6700
USA
Tel: +1 212 705 9300
Los Angeles
BBC Worldwide Productions,
Adjacent Productions and
BBC Worldwide North America
10351 Santa Monica Blvd
Suite 250
Los Angeles
CA 90025
USA
Tel: +1 310 228 1001
Miami
BBC Worldwide Channels,
Latin America & US Hispanic
255 Alhambra Circle
10th Floor, Coral Gables
Florida 33134
USA
Tel: +1 305 461 6999
Mexico City
BBC Worldwide Mexico
Paseo de la Reforma #115
Piso 4 Colonia Lomas de Chapultepec
1100
Mexico DF
Tel: +5255 8000 7201
Toronto
BBC Worldwide Canada
409 King Street West
5th Floor
Toronto, Ontario
M5V 1K1
Canada
Tel: +1 416 204 0500
Asia Pacifc
Hong Kong
BBC Worldwide Hong Kong
Rooms 2524-2536
25F Sun Hung Kai Centre
30 Harbour Road
Hong Kong
Tel: +852 2827 2218
Singapore
BBC Worldwide Asia
17-03 Springleaf Tower
3 Anson Road
Singapore 079909
Tel: +65 6849 5511
Beijing
Worldwide Knowledge,
Business Consulting Co
Unit 57-58, Level 14
China World Offce 1
No. 1 Jianguomenwai Avenue
Chaoyang District
Beijing 100004
Tel: +86 10 6535 0135
Tokyo
BBC Worldwide Japan
Tokyo Club Building, 10F
3-2-6 Kasumigaseki, Chiyoda-ku
Tokyo 100-0013
Japan
Tel: +81 3 5157 3580
Mumbai
BBC Worldwide India
4th & 5th foor, Construction House A,
24th road, Off Linking Road, Khar (West)
Mumbai 400 052
India
Tel: +91 22 6193 4100
Bangalore
BBC Worldwide India
415 Prestige Center Point
7 Edward Road
Bangalore 560052
India
Tel: +91 80 2235 1070
Sydney
BBC Worldwide Australia
Level 5, 6 Eden Park Drive
Macquarie Park
Sydney
NSW 2113
Australia
Tel: +61 2 9744 4500
Taipei
BBC Worldwide Taiwan
27th Floor, No. 9 Songgao Road
Xinyi District
Taipei
Taiwan
Tel: +886 2 7743 7110
Africa
South Africa
BBC Worldwide Africa
10 Melrose Boulevard, Ground Floor
Melrose Arch
Johannesburg 2196
South Africa
Tel: +27 10 020 2115
We also have advertising sales staff based
in Lausanne, Chicago and Dubai.
48
ANNUAL R E VI E W 2 014 – 2 015
doc_500443098.pdf
The main commercial arm and a wholly owned subsidiary of the BBC. We exist to build the BBC brand around the world, support the BBC public service mission and maximise returns on its behalf while ensuring all activities are conducted in a way that is consistent with BBC standards and values.
WWW. BBCWORLDWI DE . COM
ANNUAL RE VI E W 2014 – 2015
B
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Building the BBC and UK creative
industries around the world
CONT E NT S
BUSI NESS OVERVI EW
Highlights 01
What we do 02
Where we operate 03
Chairman’s statement 04-05
STRATEGI C REPORT
Chief Executive’s review 06-09
Strategic progression 10-11
Supporting creativity 12-13
Business transformation 14-15
UK 16-17
North America 18-19
Australia and New Zealand 20-21
Global Markets 22-23
Chief Financial Offcer’s review 24-27
Our vision is to build the BBC’s brands, audiences, reputation
and commercial returns across the world, while championing
the wider UK creative industries.
HOW WE WORK
BBC Worldwide
Executive Committee 28-29
Risk management 30
Corporate responsibility 31
Corporate governance report 32-34
Report on Directors’ remuneration 35-39
ADDI TI ONAL I NFORMATI ON
Statement of Directors’ responsibilities 40
Independent auditor’s statement 41
Summary fnancial information 42-45
Looking ahead 46-47
Global offces 48
This Report is printed on Amadeus Primo Silk which
is made from100%virgin fibre and is sourced from
responsible forestry guaranteed for your peace of
mind via an internationally recognised FSC
®
chain
of custody certification.
Designed and produced by MerchantCantos
www.merchantcantos.com
BBC Worldwide Executive Committee photography
by Charles Shearn.
Printed by Pureprint Group.
Cover image: The Honourable Woman, Golden Globe award-winning
drama, which to date has been sold to 98 territories.
©Drama Republic
This Review sets out our performance over the
year and our contribution to the BBC, reports
progress on our three strategic priorities:
brands, content and digital, looks at how we
support the UK’s creative sector and sets out
the transformation that our company is
undergoing to remain effective in the future.
* Throughout this Review, headline sales refers to gross revenue including the Group’s share
of revenues from joint ventures. Headline proft refers to operating proft before specifc items
and including the Group’s share of operating profts from joint ventures and associates. Specifc
items are set out on page 27. A reconciliation between headline proft and proft before tax is
presented in the Chief Financial Offcer’s review on page 25.
Our geographical reportable segments refect management reporting lines. The Group’s headline
sales and proft remain consistent with the prior year’s Annual Review. The 2013/14 segment
comparatives for headline proft have been recalculated to refect the revised methodology
by which the cost of content is allocated across regions for management reporting to the
Worldwide Executive Committee (WEx) from 2014/15 onwards.
£1,001.8m
HEADLI NE SALES*
(2013/14: £1,042.3m) -3.9%
£138.6m
HEADLI NE PROFI T*
(2013/14: £157.4m) -11.9%
£226.5m
RETURNS TO THE BBC
(2013/14: £173.8m) +30.3%
£107.9m
PROFI T BEFORE TAX
EXCLUDI NG GAI NS AND
LOSSES ON DI SPOSALS
(2013/14: £122.1m) -11.6%
01
B US I NE S S OVE RVI E W
Top Gear – The Perfect Road Trip 2 ©Rod Fountain 2014 (top left), Orphan Black ©BBC Worldwide (top right),
Peaky Blinders ©Caryn Mandabach Productions Ltd and Tiger Aspect Productions Ltd. 2014 (bottomleft)
and Life Story ©TomHugh-Jones 2014 (bottomright).
WHE R E WE OP E R AT E WHAT WE DO
We are the main commercial arm and a wholly owned subsidiary of
the BBC. We exist to build the BBC brand around the world, support
the BBC public service mission and maximise returns on its behalf while
ensuring all activities are conducted in a way that is consistent with BBC
standards and values.
Our business is structured across four geographical regions: the UK; North
America; Australia and New Zealand; and the rest of the world, known
collectively as Global Markets. We have 18 offces around the world, plus
BBC Advertising sales representatives in a further three locations.
£361.8m
HEADLI NE SALES
£52.7m
HEADLI NE PROFI T
See more on pages 16-17
£81.9m
HEADLI NE SALES
£16.3m
HEADLI NE PROFI T
See more on pages 20-21
£299.9m
HEADLI NE SALES
£32.9m
HEADLI NE PROFI T
See more on pages 18-19
£276.3m
HEADLI NE SALES
£32.2m
HEADLI NE PROFI T
See more on pages 22-23
UK NORTH AMERI CA
AUSTRALI A AND NEW ZEALAND GLOBAL MARKETS
BBC COMMI SSI ONS
PRODUCED BY
BBC
RI GHTS HOLDERS
BBC WORLDWI DE
PRODUCTI ONS
OTHER CONTENT
PRODUCERS
§ BBC in-house production
§ UK independent sector
§ Wholly owned production
houses in the USA, India
and France
§ Production companies
§ Writers
§ Talent
WE I NVEST
§ Programme investment
§ Dividends
§ Other rights payment
§ Growing brand across
the globe
§ Building reach of BBC
programmes
§ Royalties
§ Profit share
§ Showcasing UK creativity
WE DELI VER RETURNS
WE COMMERCI ALI SE
THROUGH
§ Programme and
format sales
§ International co-funding
§ International formats and
channel commissions
§ BBC branded services
including websites
§ Ancillaries e.g. DVD
and live events
§ Other IP exploitation
WE COMMERCI ALI SE
BBC Worldwide is a company
with content at its heart.
We invest in, commercialise,
market and showcase content
from the BBC and the wider
UK television industry around
the world.
02 03
B US I NE S S OVE RVI E W ANNUAL R E VI E W 2 014 – 2 015
CHAI R MAN’ S S TAT E ME NT
I am pleased to report on a year of positive
progress at BBC Worldwide. Over the
12 months, and against a backdrop of market
transformation that presented some challenges,
the company took signifcant strides both
to bring its strategy to life and to re-shape
its business for the future.These moves –
investing in premium content, amplifying
the BBC brand overseas, and transforming
digitally – will underpin proft and shareholder
returns in the years ahead, and come at
a time when the BBC is more determined
than ever to ensure we extract the maximum
sustainable future contribution from all
our commercial subsidiaries.
BBC Worldwide delivered a very respectable
fnancial performance. As set out elsewhere
in this Annual Review, reported numbers are
complicated by a number of factors, principally
the part-disposal of BBC AMERICA – a
partnership with AMC Networks (AMCN),
which will be visible on UK screens through
co-developed programmes, as well as securing
the future of our independent channel in the
world’s largest media market. Overall, results
were in line with the Board’s expectations
and represent a good outcome.
Most importantly, 2014/15 saw a step-change
in fnancial fows to BBC Worldwide’s parent.
BBC Worldwide invested £94.4m in BBC
commissions (2013/14: £88.9m) from both BBC
Production and from UK independents. And at
£226.5m (2013/14: £173.8m), shareholder
returns were up by almost one-third, equivalent
to 12.6% of total BBC Television content spend,
up from 10.1% the previous year.
Vitally, as a result of this fnancial contribution,
audiences in the UK were able to enjoy
investment in programmes at a higher level than
the licence fee alone can provide. Among these
enhanced shows was Doctor Who, seen in the
UK by an average consolidated audience of 7.4m,
airing in over 70 other countries, and achieving
record ratings on BBC AMERICA and Space
channel in Canada. Meanwhile Life Story, from
the BBC Natural History Unit – which was over
70% funded through commercial investment
via BBC Worldwide – was seen by a domestic
consolidated audience of 6.5m, with rights to
broadcast the series acquired by international
broadcasters for 151 territories.
However, BBC Worldwide is not just signifcant
for the fnancial contribution it makes to the
Corporation. In ‘bringing the UK to the world’ –
one of our public purposes – it provides a route
to market for UK programme makers through
its sales force, on BBC branded channels
internationally, and via the successful UKTV
channels in the UK, part-owned by BBC
Worldwide. In total, its indie payments, covering
all commissions, rights acquisitions and royalties,
remained strong at £113.1m (2013/14: £116.4m).
BBC Worldwide champions the cause of UK
content and culture both in the UK and outside.
And research demonstrates that business
leaders who consume the BBC have increased
propensity to trade with UK frms, suggesting
economic dividends, beyond television, for
the UK as a whole.
We believe BBC Worldwide is the most
successful commercial subsidiary of any Public
Service Broadcaster in the world. Although
commercial returns are a small part of the BBC’s
funding mix, we are nonetheless determined to
maximise their impact.Therefore, looking ahead
to the next phase of the BBC’s development, and
a new Charter period, it is the Board’s aim to
sustain annual fnancial returns at around this
new level, even without the one-off beneft of
BBC AMERICA proceeds.This will not be easy,
but it is important that we utilise all the BBC’s
fnancial levers to their very maximum, and
BBC Worldwide has ambitious business plans
to support this. We are therefore looking to
BBC Worldwide to generate around £1bn in
returns for the Corporation in the fve years
starting from 2014/15 – an increase of almost
one quarter on the previous half-decade.
In support of that aim, the year ahead will see
further momentum from BBC Worldwide’s
strategy. A continued focus on premium content
will include War and Peace, natural history
landmark The Hunt, and the return of Sherlock
on the slate. Global BBC brands will remain
at the heart of BBC Worldwide, with results
coming through from the three new international
channel feeds launched in 2014/15, a further four
since year end, and others to follow. As well as
continued exploitation of world-class programme
brands from Dancing with the Stars to Doctor
Who. And digital developments will take the form
of BBC Store, enabling UK customers to buy and
keep the BBC programmes they love, as well as
plans for further digital BBC services in selected
markets outside the UK.
Finally, I would like to acknowledge BBC
Worldwide’s staff, in the UK and outside, its many
partners and clients around the world, and all
those who have played a role in helping BBC
Worldwide to support the BBC in the year.
Tony Hall
Chairman, BBC Worldwide
and Director-General, BBC
£226.5m
RETURNS TO THE BBC
(2013/14: £173.8m) +30.3%
£94.4m
I NVESTMENT I N BBC-
COMMI SSI ONED CONTENT
(2013/14: £88.9m) +6.2%
12.6%
RETURNS TO THE
BBC AS A % OF TOTAL
BBC TELEVI SI ON
CONTENT SPEND
(2013/14: 10.1%)
£113.1m
I NDI E PAYMENTS
(2013/14: £116.4m) -2.9%
Call the Midwife
©Neal Street Productions 2014
04 05
B US I NE S S OVE RVI E W ANNUAL R E VI E W 2 014 – 2 015
CHI E F E XE CUT I V E ’ S R E V I E W
Wallander ©Leftbank pictures
(television) limited/Yellowbird
rights AB 2015
2014/15 has been a signifcant year of
investment and transformation for BBC
Worldwide.We began to deliver our strategy,
frst set out in October 2013, of building our
supply of high quality content for clients and
our own services alike, developing stronger
global brands and accelerating digital innovation.
All this puts us in a better position to deliver
sustainable fnancial returns to the BBC and
generate even better value for UK licence
fee payers, both this year and in the future.
Overall, we have had a good year, balancing
the delivery of solid fnancial results – including
signifcant growth in returns to the BBC, our
primary fnancial priority – with investment to
transform the business for a more competitive
global marketplace. Notably, our new venture
with AMCN has signifcantly enhanced future
prospects for our BBC AMERICA channel while
also enabling us to boost shareholder returns
for the year.
Beyond the AMCN deal, we continued to
take steps to drive innovation and underpin
the sustainability of our operations.This is
essential work in the context of a global media
market undergoing structural and systemic
changes, some of which constrain our trading
and outlook in certain areas.This has led to
initiatives such as growing investment with
the independent sector, both in programming
and in selective equity investments to support
our long-term content supply. We launched our
new strengthened BBC genre channel brands
into lead markets during the year, and delivered
signifcant innovation, such as the BBC Earth
platform on BBC.com and BBC.co.uk. We also
accelerated partnership deals on core brands
such as CBeebies, with a successful launch of
CBeebies Land at Alton Towers as well as our
planned roll-out of CBeebies English language
learning centres in China.
Within the company, we have focused hard on
the culture of our business, encouraging new
ways of working.These are delivering world-class
processes with proprietary programmes such
as Adding Value across our sales function, which
maximises content revenues across all windows
and channels, Brand Labs, our marketing and
brands best practice hub, and new procurement
practices. We have also prioritised the attraction
and development of the best global talent
in our industry.
Finally, across every element of our business,
we have continued to focus on nurturing the
UK creative industries through initiatives like
BBC Worldwide Labs, our start-up programme,
showcasing UK creativity overseas and
supporting the independent production sector.
Returns to licence fee payers
Our commitment to a high level of content
investment, coupled with a solid operating
performance and the proceeds of our equity
partnership with AMCN, allowed us to increase
our returns to the BBC by 30.3% to a record
£226.5m. As detailed by Tony Hall on page 05, this
funding also refects BBC Worldwide’s increased
contribution to BBC commissioning spend, both
from in-house production teams and British
indies, which enhances the hours and creative
ambition from key titles that UK audiences can
enjoy.This year alone we have supported the
BBC in-house production team as well as over
250 independent producers in delivering a
number of notable titles such as The Honourable
Woman, Wolf Hall, Life Story and Human Universe.
The year’s results
While headline sales and proft both declined
due to the AMCN transaction and to currency
movements, adjusted for these effects, our
operating performance was broadly fat year
on year.
Headline sales of £1,001.8m were down 3.9%
(2013/14: £1,042.3m), refecting the absence
of BBC AMERICA revenue for most of the
second half of the year. However, our revenue
performance on ongoing operations was up
0.4% to £948.1m (2013/14: £944.5m), helped in
particular by continuing growth from digital sales,
channel advertising revenue and UKTV. In North
America, digital sales exceeded linear TV sales
for the frst time, while strategic partnerships
brought a sales uplift in Australia and New
Zealand. Digital investment in the UK supported
successes for our ecommerce offering, BBC
Shop, while careful management of our DVD
slate, coupled with targeted marketing support,
somewhat offset ongoing pressure from the
industry-wide decline in the category. Meanwhile,
diffcult trading conditions in Russia, coupled with
economic sanctions, impacted our performance
in that market. Currency movements reduced
sales by £19.5m in aggregate.
Headline proft of £138.6m (2013/14: £157.4m)
was 11.9% down on the previous year, again
including the impact of the AMCN venture.
Excluding this effect, headline proft on ongoing
operations recorded growth of 4.1%, at £127.2m
(2013/14: £122.2m), including the beneft of
just over fve months of BBC AMERICA’s
contribution as an associate. Foreign exchange
movements hit headline proft by £3.2m
in the year.
Overall, we have had
a good year, balancing
the delivery of solid
financial results with
investment to transform
the business for a more
competitive global
marketplace
£1,001.8m
HEADLI NE SALES
(2013/14: £1,042.3m) -3.9%
Our commitment to
a high level of content
investment, coupled
with a solid operating
performance and the
proceeds of our equity
partnership with
AMCN, allowed us to
increase our returns
to the BBC by 30.3%
to £226.5m
£138.6m
HEADLI NE PROFI T
(2013/14: £157.4m) -11.9%
06 07
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
CHI EF E XECUTI VE’ S RE VI E W
CONTI NUED
Strategic focus
We made signifcant progress in our core areas
of strategic focus: high quality content, delivering
stronger brands and increased digital capabilities.
Investing in the highest quality content
Investing in premium content continued to be
the cornerstone of the business, and we were
proud to deliver and represent a rich mix of
bold and inspiring titles from across drama –
accounting for almost half our total investment
– as well as natural history, factual entertainment,
comedy, music and children’s. Our top-selling
shows of the year included Doctor Who, Top Gear,
Orphan Black, Life Story,The Musketeers, Atlantis,
Call the Midwife, Ripper Street, Sherlock and The
Honourable Woman – a range of titles that speaks
to the breadth of appetite for British content
from global audiences. Doctor Who S8 was
licensed to 189 territories in the year.
Content investment of £180.5m (2013/14:
£200.6m) declined due to our venture with
AMCN, which means we no longer report
BBC AMERICA’s content spend – a material
element in our overall investment – as well
as some inevitable variability in the timing
of commissioning decisions for new content.
We still delivered an increase in investment
in BBC-commissioned content to £94.4m,
up 6.2% (2013/14: £88.9m).This contributed
to production of the much anticipated dramas
War and Peace, Dickensian and SS-GB, all
of which will air in 2016.
Partnerships such as that with AMCN for
BBC AMERICA are imperative for ensuring
we can sustain long-term investment in premium
content, and grow both the future reach and
profle of BBC AMERICA, the BBC and the titles
we represent.The partnership also enables us
jointly to increase the volume of intelligent drama,
loved by fans both of AMCN (which airs the US
record rating drama series, The Walking Dead)
and of the BBC, through a shared agreement to
co-develop future titles, which will complement
those we have already co-produced, including
Golden Globe winning series Top of the Lake
and The Honourable Woman.
In the coming year we intend to build on these
successes, keep investing in the highest quality
British programmes, deepen our relationships
with the UK creative sector and look forward to
distributing a wealth of exceptional programmes,
such as the fnal instalment of Wallander, as well
as forthcoming natural history landmark The
Hunt, and the much anticipated Sherlock special
and subsequent fourth series, to audiences
across the world.
Beyond programmes, this year we made
some strategic investments into developing
independent businesses such as Lookout Point
and Curve Media.This signals our desire to
partner with those producing and making the
highest quality UK content. Overseas, we are
focused on building our formats business and
growing our production capabilities in core
markets so that we can exploit outstanding
UK creative work.The strength of our French
production arm, for example, is set out
on page 23.
Strengthening our global brands
In 2013/14 we overhauled our channel brands
and began investing in pilot markets to support
the launch of new channel brands such as
BBC First, BBC Brit and BBC Earth.These
brands are concentrated on genres where
we have global strength, and the potential to
build strong consumer franchises in a more
competitive marketplace.
We have been encouraged by the initial
audience reaction to both the linear TV launches
of BBC Earth and BBC Brit in Poland and the
debut of BBC First on the Foxtel subscription
platform in Australia.
In the year ahead we will continue to roll-out
the BBC genre brands across multiple platforms.
Linear offerings of BBC Brit and BBC Earth
launched post year end in the Nordics in April
and BBC First’s linear debut outside Australia
came in the Netherlands in May. Beyond linear,
we will continue to build our suite of immersive
experiences for audiences of all ages, which this
year included a Top Gear Track Experience
at the show’s iconic track at Dunsfold.
Digital innovation
Within the year BBC.com celebrated reaching
100.8m unique browsers for the frst time
in January and generated 1.3bn page views
across all platforms for the month of March.
Our feature sections played a key role in this,
driving audiences to 8.3m, up 76.6% (2013/14:
4.7m). BBC Earth’s launches on BBC.com
and BBC.co.uk in September and October
respectively made it the frst of our genre brands
to debut online. It offers fans of the natural world
a rich mix of short-form content and editorial
insight and complements the linear transmission
of titles such as Life Story. It also offers fans an
opportunity to share inspiring content of the
natural world through the EarthCapture app,
launched in March in partnership with Seenit,
one of this year’s BBC Worldwide Labs start-up
companies. Within its frst few weeks, app users
had submitted over 1,200 pieces of content:
a mix of video and imagery. Our fnance and
science and technology sections, BBC Capital
and BBC Future, achieved record numbers
of unique browsers at year end, at 2.5m and
3.9m respectively, up on the previous year
(2013/14: Capital 1.6m, Future 2.5m). Our
YouTube network has continued to engage
fans of our content, with total views increasing
in the year by 53.5% to 809m (2013/14: 527m).
In 2014/15 we commenced our journey into the
transactional landscape, with the development
and initial testing of BBC Store as well as early
stage development of our international plans
for direct-to-consumer services. BBC Store will
be the frst of these ambitions to be realised, in
autumn 2015.The service will be available to UK
audiences, and will offer the option to buy and
keep a wealth of titles, including a number of
well-loved classics that to date have not been
available commercially.
Looking forward, our international digital plans
are focused on the roll-out of TV Everywhere
services in collaboration with our partners as
well as evaluating over the top pilots in one
or two lead markets.
Building a world-class media company
Last year we also tasked ourselves with building
on our strong company culture, ensuring all our
employees have access to the best training and
opportunities to develop their careers. We have
accomplished a great deal in this area, as you can
read on page 15.This work has led to strong staff
engagement scores, which place us at the upper
end of benchmarks, although we hope to keep
setting standards in this area.
Looking to the future
As we look to the year ahead, we remain
very focused on effective execution of our
strategy while remaining agile enough to
exploit opportunities as they arise. In the
rapidly changing market, this will require us
to balance the need to invest and innovate with
our desire to achieve consistent fnancial returns.
This will be challenging, as traditional markets
face upheaval, but our outstanding content, the
quality of our brands and the strength of our
team puts us in a good place to deliver success
and build a world-leading creative media business.
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
£948.1m
HEADLI NE SALES ON
ONGOI NG OPERATI ONS
(2013/14: £944.5m) +0.4%
£127.2m
HEADLI NE PROFI T ON
ONGOI NG OPERATI ONS
(2013/14: £122.2m) +4.1%
£180.5m
CONTENT I NVESTMENT
(2013/14: £200.6m) -10.0%
We made significant
progress in our core
areas of strategic focus:
high quality content,
delivering stronger
brands and increased
digital capabilities
Investing in premium
content continued to
be the cornerstone of
the business, and
we were proud to
deliver and represent
a rich mix of bold
and inspiring titles
Above: Dancing with the Stars South Africa ©Rapid Blue
Below: Wolf Hall ©Company Pictures/Playground Entertainment for BBC 2015
08 09
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
P R OG R E S S I ON
Life Story episode five included footage by cameraman Hugh Miller, who spent three
weeks designing and building bespoke equipment to capture the extraordinary
landscaping behaviour of a tiny Japanese pufferfish (Torquigener sp.) beneath the waves
©Kat Brown 2014
New genre brands
In 2013/14 we set out an ambitious plan to
launch three genre brands, BBC First, BBC Earth
and BBC Brit, offering audiences premium frst
runs outside the UK of the very best in drama,
premium factual and factual entertainment.
Within the year we successfully launched BBC
First in Australia on the Foxtel subscription TV
platform and BBC Brit and BBC Earth as linear
channels in Poland.That was marked with a
unique promotional stunt involving a giant
statue of Top Gear’s The Stig crossing Europe
to Warsaw. BBC Earth launched on BBC.com
and BBC.co.uk.The site has reached an average
of 3.1m unique browsers per month since
launching in September.
Stand-out achievements for our core brands
included Doctor Who: The World Tour. Building
on the success of the 50
th
anniversary we
embarked on a 12-day global promotional tour
for series eight. We visited South Korea, Australia,
USA, Mexico and Brazil introducing the Twelfth
Doctor, Peter Capaldi, and companion Clara,
Jenna Coleman, to international fans.This was
a frst for a British TV series and featured a
creative social media programme with activity
on Facebook generating 130m post impressions
and more than 2m video views across Facebook
and YouTube.
As part of the launch activity for Top Gear S22,
we produced an exclusive video with LEGO
®
that has to date been viewed 9.4m times on
YouTube and Facebook and held the exclusive
‘An Evening With’ Top Gear in London with
all three presenters.The event was watched
by 1.1m fans on BBC iPlayer.
Premium content
Content remained at the heart of our strategy
this year and the commitment to deliver
ambitious premium content from both BBC
in-house and indies reached new heights.Titles
included the Golden Globe-winning drama
The Honourable Woman with Maggie Gyllenhaal,
Wolf Hall with Damian Lewis and Mark Rylance,
the critically acclaimed Happy Valley with Sarah
Lancashire, writer Jimmy McGovern’s Banished,
natural history landmark Life Story, comedy
sequel The Wrong Mans S2, new children’s titles
Hey Duggee and Nelly & Nora, and the ground-
breaking music title Sonic Highways from The Foo
Fighters. We also welcomed back Doctor Who S8,
Orphan Black S2 and Top Gear S22. We also
announced new co-development, frst-look
and distribution partnerships with a variety
of independent production companies across
a range of genres including Curve Media for
factual entertainment, King Bert for comedy
and Red Planet, Cuba Pictures and Lookout
Point for drama.
Our formats business also delivered an impressive
slate with new BBC Worldwide commissions
launching within the year including Mud, Sweat
and Gears and You’re Back in the Room.
Digital innovation
We continued to embrace the opportunities of
an increasingly digital landscape. Growth of third
party streaming services continued to increase
demand for our programming, as compelling and
exclusive content became the key to winning
consumers’ attention.This year we continued to
supply content to leading international services
including Amazon Prime Instant Video and
Netfix. We also formed partnerships with
start-up services, such as Stan. in Australia.
In the UK, work commenced on our own digital
ownership service, BBC Store, which will launch
in autumn 2015, expanding BBC Worldwide’s
portfolio of direct-to-consumer digital services
and complementing BBC Shop, our ecommerce
platform in the UK, USA and Australia. We are
also developing new opportunities to launch
BBC branded digital video services that
complement our global brands.
BBC.com celebrated another year of growth,
reaching a monthly average of 85.5m unique
browsers, up 8.3% year on year and peaking
in January at 100.8m.Video views across all
platforms averaged 36.6m, up 48.7% year on year,
with a peak of 48.7m in January.There was also
strong growth from mobile and tablet browsers,
up 39.5% and 34.9% respectively within the year.
The feature sections also fourished, attracting
an average of 8.3m unique browsers up 76.6%
year on year (2013/14: 4.7m).
We successfully launched
BBC First in Australia on
the Foxtel subscription
TV platform and BBC
Brit and BBC Earth as
linear channels in Poland
Our commitment
to deliver ambitious
premium content reached
new heights, while
formats also delivered
an impressive slate
Video views across
BBC.com averaged
36.6m per month across
all platforms, up 48.7%
year on year
The Wrong Mans S2 ©BBC 2014
10 11
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
C R E AT I V I T Y
The Bake Off format has been licensed to 19 countries, including Turkey (top and middle), which debuted
this year. Junior Bake Off also launched for the first time outside the UK in Thailand this year (bottom).
Alongside formats we sell programmes across the globe including the forthcoming Terry and Mason’s
Food Trip (working title) fromCurve Media (far right)
This year, we had an increasingly important
role to play at the heart of the UK’s thriving
creative and digital eco-system, both at home
and overseas.
The creative industries are a major success
story for the UK, generating £76.9bn Gross
Value Added, the measure of direct contribution
to the economy, £17.3bn service exports and
1.71m jobs and growing faster than the rest of
the UK economy. Alongside the public service
BBC, we supported, partnered with and
showcased the best of British creativity.
In the UK, we buoyed the indie sector, working
with over 250 independent producers, selling
their shows internationally and returning £113.1m
to the sector, as set out on page 05.The minority
equity positions taken in Lookout Point and
Curve Media, referred to on page 08, enable
us to further enrich our content supply through
frst-look rights and offer development and
distribution opportunities to programme makers.
BBC Worldwide Labs, our digital media start-up
programme, supported a further six innovative
UK entrepreneurial teams looking to grow
this year. All beneftted from offce space,
mentoring and access to experts and, to date,
ten partnership deals have been signed with
BBC Worldwide Labs companies to work
on our own brands and projects.
We facilitated in bringing the UK’s creative
industries together to speak with one, more
impactful voice, with Tim Davie co-chairing
UK Trade & Investment’s Sector Advisory
Group and leading the Creative Industries
Council’s International work.This year we also
became a founder supporter of the Creative
Industries Federation.
Internationally, we acted as a spearhead for
the UK’s creative industries around the world,
offering a platform for the best of British
creativity as the UK’s top distributor, operator
of over 40 channel feeds in over 120 territories,
through our own BBC channels internationally,
our UK joint venture UKTV with Scripps
Networks Interactive, Inc., BBC AMERICA
with AMCN, BBC Kids with Knowledge Network
Corporation and BBC Canada with Shaw
Communications Inc. In total, our international
channels have 152.1m (excluding the BBC World
News channel) subscribers across the world. As
well as this, we have a global presence across
digital and social media platforms.
Exports were increasingly important to the
UK’s television industry, with TV trade body
PACT reporting total sales of UK television
to international markets up 5% to £1,284m
in 2013/14. We generated exports for the
BBC and the wider TV industry, with over 700
international delegates attending BBC Worldwide
Showcase 2015 in Liverpool and an increase
of 3.2% to £345.3m in TV and digital headline
sales this year. A survey of international business
leaders showed that over half agreed that the
BBC plays a direct role in infuencing their
business decisions in favour of the UK.
We supported a number of creative industries
export initiatives this year, including the
GREAT Festival of Creativity in Shanghai and
the Technology Innovators Forum in China
and Los Angeles. £150m of business deals,
plus further UK-China partnerships such as
the opening of our CBeebies English language
learning centre in Shanghai, were announced
as part of the GREAT Festival.
Over the year, we have used our presence to
act as a trailblazer for the wider UK creative
industries in new markets, with the BBC brand
and its association with premium content shining
a light on the talent and creativity coming from
the UK.
In the UK, we buoyed
the indie sector,
working with over
250 independent
producers, selling their
shows internationally
and returning £113.1m
to the sector
Internationally, we
acted as a spearhead
for the UK’s creative
industries around the
world, offering a
platform for the best
of British creativity
£345.3m
TV AND DI GI TAL
HEADLI NE SALES
(2013/14: £334.6m) +3.2%
12 13
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
Doctor Who S8 launched in August and welcomed Peter Capaldi
as the Twelfth Doctor. To date the series has aired in 70 countries.
©BBC/BBC Worldwide 2014
Katherine Mills: Mind Games
©UKTV 2014
T R A N S F OR MAT I ON
Market context
We operate in a fast-paced and ever-changing
media landscape. While the television industry
remains very signifcant globally – Deloitte
estimates that in an average month, over 360bn
hours of long-form video will be watched
globally – short-form content should account
for a further 10bn hours in aggregate of
monthly play-out in 2015, with estimates
of US households accessing subscription
VOD (SVOD) range from 40-57%.
The past year has witnessed a rise in hybrid
content service launches; further consolidation
of media organisations, with aggregate value
of European media deals in 2013 and 2014
worth three times more than in the three
preceding years combined; continued appetite
for drama globally; and increasing competition
in sales and distribution.
We pride ourselves on delivering the best of
British content and BBC branded services to
audiences across the world, as the number one
content distributor in Europe and the home of
premium content and innovative BBC branded
services.To maintain our position we need to
evolve in line with the market, and we took
active steps in the year to re-shape our
business to that end.
Strategic positioning
While BBC AMERICA’s ratings and critical
acclaim had continued to climb in recent years,
we concluded that joining forces with a company
which places a high value on premium, intelligent
and distinctive content, would better secure
the channel’s future growth in an increasingly
challenging environment for independent channel
operators.The partnership gives BBC AMERICA
opportunities to grow reach further, as part of
a compelling and unique channel portfolio and
a more potent force in the US market. Closer to
home, we took an equity stake in independent
production company Lookout Point, and in two
more UK independents since year end, intended
to support their growth and secure our
independent pipeline in a consolidating market.
We also started the transformation of our direct-
to-consumer portfolio, developing and launching
the new genre brands described on page 10,
rolling out three new channels by the year end,
and a further four by start of June, with more
to follow in 2015/16. Brand-building in the linear
TV world will give us an important foothold
in audiences’ hearts and minds as the transition
to digital continues.
Culture
It is well known that world-class organisations
strive for a high-performance culture by setting
a clear direction, providing development
opportunities and a creative working
environment to engage their people. BBC
Worldwide is no exception and in the year
we engaged the vast majority of our employees
in a series of workshops around the world to
identify those areas we could put more focus
on to achieve our aim of high performance.
A number of areas were identifed, including
leadership behaviours, recognition and
development. As a result, we have already
started work on this, developing a leadership
commitment made up of six high-performance
behaviours which all our employees can expect
of our leaders. We have put in place a number
of new development programmes – for senior
leaders, and emerging leaders – all aimed at
building leadership and management capability.
For the whole company, we also introduced
a new development intranet site and tools to
enhance virtual and face-to-face learning along
with a complete curriculum of new courses.
In the area of recognition, we have launched
a new global awards scheme to highlight and
recognise excellence.The coming year will see
further progress in all these areas.
Finally, we wanted to enhance the creativity
of our work space and the year saw a number
of offce moves, including the merging of our
two London sites into the refurbished iconic
Television Centre, as well as new offces in
Warsaw, Johannesburg and Singapore. By
removing assigned desks and putting teams
into more effcient, open-plan and creative
work spaces we aim to encourage a more
fexible way of working, both in situ and remotely,
and interaction between different teams.
Deloitte estimates that
in an average month,
over 360bn hours of
long-form video will
be watched globally
We pride ourselves on
delivering the best of
British content and
BBC branded services
to audiences across
the world
It is well known that
world-class organisations
strive for a high
performance culture by
setting a clear direction,
providing development
opportunities and
a creative working
environment.
BBC Worldwide
is no exception
14 15
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
UK
Our UK activities complement British
audiences’ enjoyment of well-loved BBC
content, primarily through our joint-ownership
of UKTV and our TV sales, consumer products
and live events businesses.This year we
announced a number of signifcant new
partnerships and events and developed our
digital offering through increased investment
in digital initiatives, most signifcantly BBC Store.
Overall the UK performed well. We reduced
our dependency on physical and focused on
key titles and brands. Headline sales were stable
at £361.8m (2013/14: £362.2m), while headline
proft was £52.7m (2013/14: £56.2m), with
eight out of the ten business areas recording
proft growth.
We secured a number of second window deals
for BBC content, beginning a new partnership
with Amazon Prime and continuing our
relationship with Netfix. UKTV, the award-winning
media company, of which BBC Worldwide owns
50% along with Scripps Networks Interactive, Inc.,
celebrated its 22
nd
year with another excellent
performance, growing its share of the commercial
TV market to an all-time high, up from 8.2% to
9.0% in 2014, achieving critical acclaim and ratings
success for original commissions and launching
new digital service UKTV Play.
BBC Store, a new digital service which will
allow consumers in the UK to buy and keep
BBC programmes, will launch autumn 2015
with up to 10,000 hours of content including
new programmes, titles from our catalogue
and previously unavailable gems from the
BBC’s archive. Revenue from our established
ecommerce business BBC Shop was up
15.4% to £4.6m.
In DVD from January 2014 to December 2014,
we fnished ahead of all other UK TV studios,
with 11 titles in the top 50 best-selling TV titles
of the year. Top Gear – The Perfect Road Trip 2
took the top spot, a second year running for
the brand, achieving more than double the sales
of the nearest competitor; meanwhile Miranda
Hart’s My, What I Call, Live Show, was the second
highest selling stand-up comedy title of the year.
We progressed two new live event ventures.
CBeebies Land, a partnership with Merlin
Entertainments, opened at Alton Towers in
May. In August we launched the Top Gear Track
Experience in partnership with Brandscape
Group, based at the Top Gear track in Dunsfold.
We also signed an agreement with London
Paramount Entertainment Resort, working
towards the inclusion of a range of BBC brands
in a major new entertainment park in Kent.
We secured some exciting new licensing deals
for core BBC brands including a Doctor Who
partnership with LEGO
®
. Master toy licensee
Golden Bear produced our new Hey Duggee
range for pre-school children and there have been
7.9m downloads of our Top Gear mobile games.
The Games business returned a £1.4m increase
in proft, despite a reduction in headline sales.
As BBC Good Food celebrated its 25
th
anniversary, bbcgoodfood.com increased its
unique reach by 37.0% to 16.0m (2013/14:
11.7m) unique browsers.TopGear.com reached
6.8m unique browsers per month, an increase
of 59.5% on last year.
Our Radio & Music business had a good year,
with the BBC Radio 1 Live Lounge album going
platinum and BBC Radio 2 Sounds of the 80s
and Dave Arch and the Strictly Come Dancing
Band releases both going silver. Demon Music
Group also had success with the box set release
for Donna Summer. BBC Worldwide Learning,
which licenses BBC content for educational
purposes outside the UK, completed deals
with the Ministries of Education in Singapore
and France and continued to work with
educational publishers from across the globe.
BBC Motion Gallery successfully established
our partnership with Getty Images, growing
online sales by 13.7% to £1.2m.
Top Gear – The Perfect Road Trip 2
©Rod Fountain 2014
Crackanory ©UKTV
Hey Duggee
©Studio AKA 2014
Significant investment
made in BBC Store,
which launches in the
UK in autumn 2015
New licensing deals
included Doctor Who
partnership with LEGO
®
To date there have been
7.9m downloads of our
Top Gear mobile games
HEADLI NE SALES
£m
2014/15 2013/14
362.2 361.8
HEADLI NE PROFI T
£m
2014/15 2013/14
56.2
52.7
17
S T R AT E GI C R E P ORT
16
ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
NORT H AME R I C A
BBC Worldwide North America is our largest
business outside the UK. It includes content
sales and co-productions, consumer products,
BBC.com, and BBC Worldwide Productions.
2014/15 was a signifcant year, primarily due
to our entering into a long-term strategic
agreement with AMC Networks (AMCN),
which invested US$200.0m for a 49.9% stake in
BBC AMERICA. In a market that has witnessed
increased consolidation, this venture was
an important next step for the cable channel
and positioned it for future growth as one of a
slate of successful channels operated by AMCN.
Headline sales for the region declined by 12.5%
from £342.5m to £299.9m and headline proft saw
a year-on-year decline from £44.1m to £32.9m,
almost solely due to the reduced ownership stake
in BBC AMERICA under the venture in the last half
of the year. At constant currency these declines
were 10.7% and 16.9% respectively.
On BBC AMERICA, Doctor Who continued
to grow with the debut of the Twelfth Doctor,
Peter Capaldi, and launch of series eight
delivering the show’s highest ratings to date –
up 19.7% versus prior series, with an average
of 2.2m viewers each week – while licensing
sales on the title returned year-on-year growth
of 29.1%. Orphan Black, the original award-
winning BBC AMERICA series became the
frst drama on US ad-supported television to
double its series one audience in key advertising
demographics (Adults 18-49, Adults 25-54)
when it returned for a second series – establishing
itself as a core franchise for North America.
BBC AMERICA successfully achieved its 10
th
consecutive year of ratings growth in 2014/15 –
viewership grew 3.0% in the key primetime
viewing slot, while over half of US cable networks
experienced year-on-year declines.
Our focus on extending fan engagement with
premium titles such as Doctor Who, Orphan
Black and Top Gear reached new heights.
BBCAmerica.com visitors increased by 9.9%
and Facebook followers doubled to 2.4m.
Doctor Who remains the number one TV brand
on Tumblr and ranks among Twitter’s top fve
most-tweeted about original dramas.
Building on our suite of successful co-productions,
this year we secured a signifcant deal between
the BBC and PBS to create upwards of ten factual
programmes per year.
Digital content sales reported another successful
year, seeing gains of 54.1% and surpassing linear TV
sales for the frst time in the region, which highlights
the growing demand on digital platforms and
audiences’ appetite for greater choice in how
they consume our content. Core revenue drivers
included exclusive SVOD deals for Sherlock and
Happy Valley, delivery of over 3,000 episodes
licensed to Hulu since 2010, and a signifcant
multi-year Netfix catalogue deal spanning
multiple genres including BBC Earth titles.
While the DVD market in the territory has
seen severe declines in revenue across the board,
our consumer products division has seen only
a marginal decline and the success of digital
content sales has helped to balance this out.
The feature sections of BBC.com continued to
draw new users – an increase of 86.3% in the
USA and Canada – reaching over 5.1m unique
browsers each month.This growth is supported
by the introduction of more video rich content
and the launch of a BBC Earth section that
averaged 1.1m unique browsers per month across
the USA and Canada since launching in September.
Revenue from the production business in
Los Angeles declined slightly, driven by a shift
in scheduling of the hit show Da Vinci’s Demons
on Starz. However, the appetite for popular
UK show formats remained strong, seeing
commission renewals for the much-loved
programme Dancing with the Stars for ABC, which
celebrates its 10
th
year and 20
th
series in 2015, as
well as a fourth series of the US version of Top
Gear. Original unscripted commission renewals
included Life Below Zero and Ladies of London.
Digital content sales
reported another
successful year,
surpassing linear
TV sales for the first
time in the region
Series two of Orphan
Black, the original
award-winning
BBC AMERICA
programme, doubled
its series one ratings
BBC AMERICA
successfully achieved
its 10
th
consecutive year
of ratings growth in
2014/15 whilst over
half of US cable
networks experienced
year-on-year declines
HEADLI NE SALES
£m
2014/15 2013/14
342.5
299.9
HEADLI NE PROFI T
£m
2014/15 2013/14
44.1
32.9
Orphan Black ©BBC Worldwide
Doctor Who ©BBC/BBC Worldwide 2014
19
S T R AT E GI C R E P ORT
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ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
AUS T R AL I A AND NE W ZE AL AND
In BBC Worldwide Australia and New Zealand,
we wholly own and operate six BBC branded
channels, distribute content to all the local
platform providers and focus on growth
across all our core business areas.We work
with partners to bring DVDs, live events,
entertainment formats and consumer products
to the market, as well as offering advertising
opportunities on BBC.com.
Our Australia and New Zealand business
delivered excellent growth in both revenue
and proft in local currency, up 11.8% and 13.2%
respectively, as the benefts of new strategic
priorities and partnerships fed into our fnancial
results.Translated into sterling, headline sales of
£81.9m (2013/14: £76.0m) were up 7.8% and
headline proft of £16.3m (2013/14: £13.3m)
increased 22.6%.This was largely attributable
to our channels and digital TV sales businesses,
with both lines showing double-digit growth,
well ahead of the Australian media market.
The principal drivers of growth were a number
of key partnerships formed in 2013 and 2014.
Our partnership with Foxtel saw the debut of
BBC First in August become the platform’s most
successful non-sport channel launch since 2006.
Stand-out ratings successes include launch titles
The Musketeers and Peaky Blinders, along with
series four of the long-running BBC series Call
the Midwife and critically acclaimed The Missing,
which was supported by a publicity visit from
lead actor James Nesbitt.
Meanwhile, BBC First’s maiden co-commission,
Jimmy McGovern’s Banished, with BBC Two, was
partly flmed in Sydney. BBC First advertising
sales were strong during the year as a result
of premium partnerships, and the renewed
key sponsorship deal with Audi.
The launch of BBC First saw general
entertainment channel BBC UKTV move onto
Foxtel’s entry level Entertainment tier, resulting
in an uplift to its audience, while this year BBC
Knowledge broadcast series 22 of Top Gear just
minutes after the UK. In New Zealand, UKTV
achieved Sky TV’s number two entertainment
channel ranking during the year. In February
our portfolio of Australian channels launched
on high-growth IPTV platform Fetch TV. We
anticipate future success from further growth
in BBC First, and are evaluating opportunities
for additional channel launches in the region.
The return of Doctor Who S8 on the ABC in
August, with more opportunities to view on
linear and digital, delivered an increased audience,
and Sydney was one of fve international stops
on the World Tour. A Doctor Who Symphonic
Spectacular tour visited Perth, Adelaide, Auckland
and Sydney in February. Other stand-out BBC
titles on the ABC included Call the Midwife, Silent
Witness and Death in Paradise, while our natural
history programming continued to do well with
Life rating highly on Channel Nine fve years after
its original broadcast.
TV format sales this year encompassed a range
of well-loved British factual and entertainment
titles appearing on a wide variety of channels.
This included a second series of Coast Australia
on The History Channel, and also available to UK
audiences on BBC Two; a 14
th
series of Dancing
with the Stars on Seven; and Living with the Enemy
on SBS. New format commissions, generated
since we entered into a general entertainment
production partnership with FremantleMedia
Australia, included The Great Australian Bake Off
on Lifestyle FOOD and Rachel Khoo’s Kitchen
Notebook Melbourne on SBS in Australia. In New
Zealand we sold Coast New Zealand to TV ONE
and Dancing with the Stars to TV3.
We achieved a record result across digital TV sales,
up fourfold in the year. Our digital reach was also
extended in the year with new deals including
OTT platforms Stan., Netfix and Lightbox,
meaning that our content is now available on over
15 digital platforms in the region.The strength of
our catalogue should underpin future sales activity,
both in fnished programmes and formats.
Banished ©RSJ Films 2014
An excellent
performance, with
headline sales up 11.8%
and headline profit up
13.2% in local currency,
and up 7.8% and 22.6%
after translation
into sterling
Strategic partnerships
delivering well across
sales, channels
and TV formats
Very strong global debut
for BBC First on the
Foxtel subscription
platform in Australia
and further benefits
from resulting re-tiering
of BBC UKTV
Peaky Blinders ©Caryn Mandabach Productions Ltd and Tiger Aspect Productions Ltd. 2014
Rachel Khoo’s Kitchen Notebook Melbourne ©Fremantle Media Australia
HEADLI NE SALES
£m
2014/15 2013/14
76.0
81.9
HEADLI NE PROFI T
£m
2014/15 2013/14
13.3
16.3
21
S T R AT E GI C R E P ORT
20
ANNUAL R E VI E W 2 014 – 2 015
HI GHLI GHTS
Top Gear France ©Lionel Guericolas/Visual Press Agency
Life Story ©TomHugh-Jones 2014
Solid underlying
performance, despite
headwinds of adverse
currency movements
and economic downturn
in Russia, including
impact of sanctions
Good growth in
international versions
of British formats, with
a stand-out five UK
formats commissioned
from BBC Worldwide
Productions in France
Year of investment in
channels – BBC Brit
and BBC Earth debuted
in Poland in February
with encouraging early
performance – and in
strengthening our local
presence by upgrading
and opening new offices
HEADLI NE SALES
£m
2014/15 2013/14
279.1 276.3
HEADLI NE PROFI T
£m
2014/15 2013/14
44.1
32.2
GLOB AL MAR K E T S
Comprised predominantly of the non-English
speaking world, our Global Markets business
encompasses Western Europe, Central and
Eastern Europe, Middle East and Africa
(CEMA), Asia and Latin America. Business
activities range from TV sales and channel
operation to production and intellectual
property exploitation.
In a diffcult year, during which our business was
affected by adverse currency movements and
exceptional conditions in some markets, sales
were still broadly fat at £276.3m (2013/14:
£279.1m), a decline of 1.0%. Proft, however,
was down 27.0% at £32.2m (2013/14: £44.1m),
refecting both external headwinds and signifcant
investment in content and marketing for new
channel brands. Re-stating at constant currency,
revenue was up 1.5% while headline proft
decreased by 5.0%.The year saw real progress
made in Asia and Latin America, key channel
renewals in important territories and an
increased reach through wider distribution,
the roll-out of new brands and higher TV sales.
Western Europe
Western Europe delivered sales of £160.1m
(2013/14: £156.2m) and headline proft of
£27.0m (2013/14: £34.3m) due to euro
weakness and planned channels investment.
Restating at constant currency, revenue was
up 6.3% with headline proft down 2.8%.
Western Europe is a key sales market, with local
and international SVOD customers becoming
increasingly important. Stand-out titles included
The Musketeers, Orphan Black, Top Gear and
Misfts. We renewed a long-standing factual
content partnership with France Télévisions
and extended a BBC Earth branded block –
one of 19 BBC blocks globally – with Pro7Maxx
in Germany.
Our French production business increased
revenue by over 50%, with local versions of
fve much-loved BBC programmes – BBC
productions Dancing with the Stars, Antiques
Roadshow, The Weakest Link and Love
Production’s Sewing Bee and Bake Off – on
screen in the same month.These generated
a total primetime average audience of 18.4m.
Top Gear France also enjoyed good ratings and
our German joint venture,Tower Productions,
received a frst commission for original format
One in a Thousand from ZDF.
Rest of World
Challenges in the Russian market which impacted
the wider broadcast industry, alongside channels
investment and foreign exchange, affected CEMA.
This was offset by good revenue and headline
proft performance in Asia and Latin America.
As a result of the factors in CEMA, total RoW
revenue was down at £116.2m (2013/14:
£122.9m) and headline proft down at £5.2m
(2013/14: £9.8m).
CEMA
Poland became the debut market for our new
genre brands with BBC Brit and BBC Earth
launching as linear channels in February. Both
outperformed established rivals, breaking into
the top three in their competitive sets.
Advertising revenues on our African and
Polish channels continued to grow.
Format sales included Great Bake Off to Israel
and Turkey and Dancing with the Stars to Slovenia
and Romania.The latest series of Dancing with the
Stars in Poland achieved a 24.1% audience share,
up from 23.8% on 2013/14.
TV sales markets showing a strong uplift included
Israel, taking The Honourable Woman, Happy Valley,
The Musketeers and Sherlock;Turkey, buying
Intruders, Doctor Who and Frozen Planet; and Africa,
with Orphan Black S1 and S2 and Atlantis S1.
We also entered our frst VOD deals in Africa
and Poland and secured a number of digital
deals across the Middle East and Central &
Eastern Europe.
Asia
The year saw success across fnished
programmes and formats, BBC branded
channels and blocks as well as local production.
Sherlock S3 passed 90m views on Chinese
digital platform Youku.
Signifcant deals included programme sales and
VOD deals across multiple platforms to Taiwan,
while Japan’s NHK signed a co-production
agreement for the Natural History Unit’s Wild
Japan.Through a partnership with Singapore-
based Popular Education we entered the
Chinese English language learning market.
Audiences enjoyed local versions of formats, with
India adding a third version of Dancing with the
Stars produced by BBC Worldwide Productions
in Karnataka for ETV Kannada, and local versions
of Top Gear and Dancing with the Stars returned
to China.
Latin America
BBC Entertainment was named by milenio
newspaper as the Best Pay TV Channel in Mexico
for a third successive year. Digital sales growth
continued, including new deals with Enter Play
Brazil and Veo Mexico. Format sales remained
strong, earning free-to-air prime-time scheduling
for What Not to Wear in Brazil and for Dancing
with the Stars in Panama and Costa Rica. Doctor
Who and Sherlock were sold to Brazil’s TV
Cultura, while deals with major pan-regional TV
networks, including TNT, HBO, Fox, History and
A+E, helped BBC content reach new audiences
across the region. Natural history titles received
theatrical release as well as a programming block
on Ecuador’s Ecuavisa.
22 23
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
RECONCI LI ATI ON 2014/ 15
£m
Profit
before tax
Headline
profit
Net
finance
expense
Share of
interest and
taxof joint
ventures
and associates
Pension
deficit
reduction
payment
Other
specific
items
Gains and
losses on
disposals
Other
gains and
losses
115.9
(5.7) (2.7)
223.8
(9.4)
(8.1) (4.8)
138.6
CHI E F F I NANCI AL OF F I CE R ’ S R E V I E W
BBC Worldwide’s overall operating performance
for 2014/15 was positive, and our shareholder
return set a new record.
Headline results
The agreement reached in October with AMCN
for its purchase of 49.9% of BBC AMERICA has
had a signifcant effect on our year-on-year
performance. In order to demonstrate the
impact of this transaction on our results and
to provide a more meaningful year-on-year
comparison, we have analysed the income
statement and the related notes between
BBC AMERICA and the ongoing operations.
The strategic rationale for this transaction
is set out on page 15.
Headline sales of £1,001.8m were down by
3.9% (2013/14: £1,042.3m), and headline proft
of £138.6m was down by 11.9% (2013/14:
£157.4m) as detailed in tables 1 and 2. Adjusting
for the effect of the AMCN venture, ongoing
headline sales were broadly fat at £948.1m
(2013/14: £944.5m) with ongoing headline
proft of £127.2m (2013/14: £122.2m), showing
a 4.1% increase.These results were in spite of
movements in foreign exchange, which adversely
impacted headline sales by £19.5m and headline
proft by £3.2m, primarily driven by signifcant
fuctuations in our three main trading currencies,
the euro, US dollar and Australian dollar exchange
rates, to which we are materially exposed.
Regional segmental results are reported on
pages 16-23 in the Strategic Report and refect
the geographical way in which we manage our
business.To ensure that management has the
fullest information, we also track our global
performance in the major business areas where
we operate. In the year, we increased total TV
and digital headline sales by 3.2% to £345.3m
(2013/14: £334.6m), refecting our continuing
high levels of investment in premium content
along with an ever-increasing focus on global
sales activity and expertise. Headline sales across
our total channels business decreased by £42.4m
to £356.9m (2013/14: £399.3m). Of this
decrease, £44.1m relates to BBC AMERICA,
refecting underlying good performance at
UKTV and our channels activities elsewhere
in the world. Our total production business
grew 3.7% to £161.6m (2013/14: £155.9m),
with excellent growth in France more than
offsetting the deferral of a third series of
Da Vinci’s Demons into the next fnancial
period in our US production business.
£226.5m
RETURNS TO THE BBC
(2013/14: £173.8m) +30.3%
1. HEADLI NE SALES
2014/15
£m
2013/14
£m
UK 361.8 362.2
North America 299.9 342.5
Australia and New Zealand 81.9 76.0
Western Europe 160.1 156.2
Rest of World 116.2 122.9
Eliminations (18.1) (17.5)
Total 1,001.8 1,042.3
2. HEADLI NE PROFI T
2014/15
£m
2013/14
£m
UK 52.7 56.2
North America 32.9 44.1
Australia and New Zealand 16.3 13.3
Western Europe 27.0 34.3
Rest of World 5.2 9.8
Eliminations 4.5 (0.3)
Total 138.6 157.4
24 25
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
CHI EF F I NANCI AL OF F I CER’ S RE VI E W
CONTI NUED
Our headline proft margin for the ongoing
business increased to 13.4% in the year (2013/14:
12.9%) despite organic revenue investment
on BBC Store and the frst year of rolling out
new channel brands, which requires additional
investment in both content and marketing.
Statutory results
We include our share of revenues from joint
ventures, principally those of UKTV, in headline
sales and the pre-tax and pre-interest results
of our joint ventures and associates in headline
proft because we view these operations as
a fundamental part of our ongoing activities.
Headline results are used by management to
measure fnancial performance, and are reported
to the Board.The segmental analysis of results for
2013/14 has been restated to refect the revised
methodology by which the cost of content is
allocated across the regions. Statutory revenue
of £851.3m (2013/14: £892.0m) excludes our
share of joint venture revenue, and operating
proft includes our headline proft as well as
specifc items, discussed below. A reconciliation
of headline proft to proft before tax has been
provided on page 25.
Specifc items
Specifc items are not defned under IFRS
and may not be comparable to similarly titled
measures used by other companies. Specifc
Items are material items which are highlighted
by virtue of their size or importance in
order to enable a full understanding of our
performance.These items are detailed in
table 3, and include our share of the interest
and tax of joint ventures and associates, and
additional defcit reduction payments to the
BBC pension scheme, of £9.4m and £8.1m
respectively (2013/14: £9.7m and £2.3m).
Other specifc items include £2.6m of
reorganisation costs, primarily associated
with the relocation of our head offce, as
well as £2.0m relating to impairments of
investments in associates.The presentation
of these items is consistent with previous years.
Corporate activity
On 23 October 2014, we sold a 49.9%
controlling stake in BBC AMERICA to the
US entertainment group, AMC Networks.
We retained a 50.1% non-controlling interest
in BBC AMERICA and received proceeds of
US$200.0m (£123.0m), recognising a disposal gain
of £115.9m, following the agreed settlement of
certain disposal-related liabilities and transaction
costs.The proceeds included US$160.0m of cash
received during the year, and US$40.0m of
deferred consideration, received in April 2015.
Employees
Average headcount in the year was 1,829, up
by fve on 2013/14.This movement represents
the transfer of New York-based employees
working on BBC AMERICA to AMCN in
October 2014, offset by hires to principally
support our new digital initiatives. Employee
costs are outlined in table 4.
Tax
Our total tax charge was £38.3m (2013/14:
£28.1m), including £26.6m (2013/14: £13.8m)
in respect of BBC AMERICA.The effect of the
BBC AMERICA disposal, including the impact
of non-taxable goodwill, offset the increase in
overall profts from the USA, a higher tax rate
jurisdiction than the UK.This, together with
high-end television tax relief of £7.8m (2013/14:
£5.1m), contributed to a reduction in the total
effective tax rate to 17.1% (2013/14: 22.3%)
as noted in table 5.
The total tax charge for the year includes
£19.1m (2013/14: £24.0m) current tax, and
net tax paid in the year amounted to £26.5m
(2013/14: £37.6m), due to timing differences
between tax accounting and settlement.
Cash and net debt
Operating cash fow of £191.0m (2013/14:
£150.5m) refects a reduction in tax paid of
£11.1m to £26.5m (2013/14: £37.6m) and an
increased focus on working capital management.
Our move to new London headquarters in TVC
during the fourth quarter resulted in a one-off
increase in cash expenditure on property of
£9.5m in the year.The increased capital and
operating investment in BBC Store and channels,
referred to above, also impacted the company’s
cash fow in the year.
The most signifcant movement in cash during
the year was an infow of £64.5m net proceeds
in relation to AMCN’s purchase of its interest
in BBC AMERICA.Together with our underlying
performance, this has allowed us to return a
total of £226.5m to our parent in the year, an
increase of 30.3%, of which £111.3m was paid
by way of dividends.
Average net debt throughout the year was
£32.4m (2013/14: £41.8m), and we ended the
year with net debt of £69.2m (2013/14: £54.3m).
Our debt facility with BBC Commercial Holdings
Limited provides us with a maximum facility
of £202.2m, of which the fnal £30.0m is
conditional on an equivalent holding in cash.
Balance sheet
The net asset increase from £314.7m to
£405.6m is for the most part explained by the
BBC AMERICA transaction, with the recognition
of an associate (initially at £119.9m) less the
BBC AMERICA assets sold (primarily £54.8m
of programme rights and other inventories).
In addition, we have furthered our investment
in premium content, with key acquisitions on
titles such as Doctor Who, Orphan Black and
The Musketeers, contributing to an increase
in distribution rights of £32.7m.
Going concern
The company ended the year, following a
creditable operating performance and the
AMCN transaction, with a robust balance sheet,
and able to declare a record return to our
shareholder. Looking ahead, with the focus on
delivery of our stated strategy, coupled with
fnancial discipline and careful management of
our cost base, we expect to drive continued
value for our shareholder.The Directors of
BBC Worldwide remain confdent in our ability
to operate with our existing fnancial resources,
and we therefore continue to adopt the going
concern basis in preparing the accounts.
3. SPECI FI C I TEMS
2014/15
£m
2013/14
£m
Share of interest and tax of joint ventures and associates (9.4) (9.7)
Pension defcit reduction payment (8.1) (2.3)
Other:
Reorganisation costs (2.6) (7.0)
Amounts written off from interests in joint ventures and associates (2.0) (2.2)
Transaction fees (0.2) (0.6)
(4.8) (9.8)
Total (22.3) (21.8)
4. EMPLOYEE COSTS
2014/15
£m
2013/14
£m
Salaries and wages (120.0) (121.4)
Social security costs (10.7) (10.6)
Other pension costs (18.2) (12.5)
Total (148.9) (144.5)
5. RECONCI LI ATI ON OF TAX RATE
2014/15 2013/14
UK corporate tax rate 21.0% 23.0%
Disallowable expenditure 1.5% 1.9%
Non-taxable income (5.1%) –
High-end television tax relief (3.5%) (4.0%)
Tax-exempt disposals – (1.0%)
Higher overseas tax rates 7.2% 3.3%
Tax effect of share of results of joint ventures and associates (2.7%) (1.7%)
Reduction in UK tax rate – 0.3%
Adjustments in respect of prior years (1.3%) 0.5%
Total 17.1% 22.3%
Andrew Bott
Chief Financial Offcer
26 27
S T R AT E GI C R E P ORT ANNUAL R E VI E W 2 014 – 2 015
B B C WOR L DWI DE
E XE CUT I V E COMMI T T E E
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
Marcus Arthur
President, UK & ANZ
Marcus moved into his current role in 2013. He
is responsible for BBC Worldwide’s businesses in
the UK and ANZ. Marcus joined BBC Worldwide
in 1991 and has held roles including MD of
Brands Consumers and New Ventures, Digital
Delivery and before that Managing Director,
BBC Magazines.
2.
Andrew Bott
Chief Financial Officer
Andrew was appointed to his current role
in 2014. Prior to this from 2007 to 2013 he
was CFO of BBC Worldwide North America.
He joined in 1998 and in 2000 moved to
New York. Previously, Andrew held positions
at PricewaterhouseCoopers and Pearson.
3.
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
Tim took up his current role in 2013. He is also
Chairman of Comic Relief and Vice-Chair of the
RTS. During his ten years at the BBC,Tim has
held the positions of Acting Director-General,
Director of Audio & Music and Director of
Marketing, Communications & Audiences.
4.
Paul Dempsey
President, Global Markets
Paul took up his current role in 2013. He is
responsible for building BBC Worldwide’s
portfolio across predominantly non-English
speaking territories, known collectively as Global
Markets. Paul joined BBC Worldwide in 1998.
His previous roles include Interim CEO and
MD Consumer Products.
5.
Charlotte Elston
Director of Communications
Charlotte joined BBC Worldwide as Director of
Communications in 2010. She oversees all areas
of communications globally including external
and internal communications, corporate affairs
and events. Charlotte has previously worked
at Aegis Group plc, Pearson, Brunswick and
Edelman PR.
6.
Martyn Freeman
General Counsel &
Company Secretary
Martyn was appointed to his current role in
2011. He has responsibility for all legal, business
affairs, policy and regulatory matters, and from
January 2015 became Company Secretary.
Previously, Martyn held a variety of roles across
the BBC, including Head of Business Affairs,
Radio & Music, Factual & Learning and News.
7.
Kirstin Furber
People Director
Kirstin is responsible for Human Resources
across BBC Worldwide. She was appointed to
this position in 2013, having previously been
SVP HR. Prior to joining BBC Worldwide, Kirstin
held roles at Twentieth Century Fox, Discovery
Channel, Ziff Davis, Warner Bros and Granada
Media Group.
8.
David Gibbons
Director of Global Operations
David oversees Consumer Digital Technology,
Global Technology, eCRM and Analytics, Property,
Procurement and the Global Content Supply
Chain. He joined BBC Worldwide in 2013. Prior
to this he held leadership positions in SEEK, GE
Capital, Gap and Nike.
9.
Amanda Hill
Chief Brands Officer
Amanda is responsible for developing the
overarching brand strategy for BBC Worldwide.
Amanda manages the current brand portfolio as
well as development and building of new brands.
She also oversees audience insight, trade and
content marketing.
10.
Helen Jackson
Chief Content Officer
Helen became Chief Content Offcer in 2013.
She oversees the creative and commercial vision
for BBC Worldwide’s Content strategy covering
commissioning, development and acquisition
activity, channels curation and editorial standards.
Helen previously established BBC Worldwide’s
Indie Unit.
11.
David Moody
Director of Strategy
David is responsible for all aspects of the
company’s direction and strategy. David joined
BBC Worldwide in 2004. He previously held
roles in BBC Ventures,The LEK Partnership,
Singapore Telecom International and United
News & Media and co-founded Dataroam.
12.
Herb Scannell
President, BBC Worldwide
North America
Herb is responsible for BBC Worldwide in
the USA and Canada. Prior to joining BBC
Worldwide in 2010, he was CEO of Next
New Networks, a digital media company he
co-founded in 2006. Herb was formerly Vice
Chairman of MTV Networks and President
of Nickelodeon Networks.
28 29
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
COR P OR AT E R E S P ONS I B I L I T Y R I S K MANAGE ME NT
We believe in being a responsible corporate
citizen by embedding best practices in the
way we work and continuously working
on improving them over time.
Ethical sourcing programme
Ethical sourcing is a core element of our
consumer products business. We encourage
long-term relationships with supplier factories
in order to build trust and a commitment to
continuous improvement. All our suppliers
and licensees are required to submit their
manufacturers for approval through our ethical
sourcing programme in advance of production.
We review detailed, independent audits for
factories in higher risk countries and work with
our suppliers and licensing partners to correct
any issues that may be highlighted. Factories that
do not meet our minimum standards are not
approved for manufacture until these standards
have been met.
In 2014 we joined the Ethical Trading Initiative
and will be working with them over the coming
year to report on our ethical sourcing activities.
Environmental issues
We are working on ensuring that a sustainable
way of operating becomes ‘business as usual’
at BBC Worldwide. We collect data from our
offces around the world to enable us to monitor
our energy and water consumption and our
waste management.
In March, our London headquarters moved into
TVC in West London. Reducing our environmental
impact was an important consideration in both
the move process and in setting up our new
offce. We reused most of our existing IT
equipment, workstations, chairs and storage
furniture; and environmental credentials were
a key consideration when we purchased new
fttings, furnishings and equipment.
Looking ahead, we intend to implement robust
monitoring at TVC and our offces globally to
build on the understanding of our environmental
impacts and put in place processes to reduce
them further.
Team Worldwide
Team Worldwide, our employee engagement
programme, was launched in February 2014.
Centred around the three pillars of Community,
Sustainability and Challenge, it has enabled our
employees to make contributions to increase
our positive impact on society and reduce our
negative impact on the environment, while
helping employees collaborate, expand their
horizons and have fun.Through the year, our
global offces undertook activities tailored to
their local areas.These ranged from physical
challenges such as sporting and endurance
events, to contributing to the local community by
donating time and goods in Cologne, Hong Kong,
London, Miami, Mumbai, New York, Singapore
and Sydney. As well as providing time and goods
through Team Worldwide, staff raised over
£20,000 for Comic Relief and BBC Children
in Need in the UK and partner charities
in our global offces.
Team Worldwide, our
employee engagement
programme, is centred
around the three pillars
of Community,
Sustainability and
Challenge
In 2014 we joined the
Ethical Trading
Initiative and will be
working with them to
report on our ethical
sourcing activities
We are working
on ensuring that
a sustainable way
of operating becomes
‘business as usual’
at BBC Worldwide
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
We are committed to supporting effective and
effcient risk management practices to safeguard
our people, reputation, assets and commercial
performance. Risk management protects the
reputation of the BBC brand as we showcase it
internationally, and ensures stability of commercial
returns to our parent, the BBC. Our risk
management approach is aligned to the BBC,
Risk Themes Strategic Impacts Mitigation
Reputation and standards
Risk that audiences lose confdence in the
integrity of our business or our content.
Risk we fail to represent the character
of the BBC to global audiences.
Harm to our reputation,
our relationship with
audiences and to the
credibility of the BBC brand.
Leadership and management behaviours that promote the BBC values
as a platform for the company’s culture. Emphasis on honest and open
communications. Policy framework, company communications and HR
processes requiring and demonstrating the appropriate behaviours.
JV & associate relationships
Risk we don’t maximise the potential
from our JV and associate relationships, the
principal ones being UKTV, BBC AMERICA
and Immediate Media.
Under-delivering against
audience expectations
and our ambitions for
the JV and associate
relationships.
JV formation is always backed by a detailed defnition of the JV benefts, purpose,
mechanics and governance, with appropriate safeguards over editorial control.
Approvals framework, encompassing BBC Public Service and alignment, ensure
that potential deals which beneft the UK licence fee payer are explored.
Content supply pipeline
Risk that ongoing acquisition and consolidation
across the independent sector restricts the
addressable market for rights in key genres.
Potential changes to BBC Production.
Reduced drama and factual
entertainment content,
impact the brand and
channel strategies.
Dedicated Content division with expertise in content acquisition and
relationship management. Output deals with a limited number of key
independent producers and minority investment stakes to increase the
pipeline of creative output. We are committed to maximising indie returns
notwithstanding the BBC Store and channels strategy.
Execution of company strategy
Risk that in-region we do not get the
most from our affliate relationships, or the
right brand visibility or the right premium
vs free-to-air channel mix. Risk that we
do not achieve suffcient scale in some
regional markets. Risk from launching new
direct-to-consumer service such as BBC Store.
Reduce our ability to
showcase BBC content.
More vulnerable to
disruptive digital services.
Risk operating with sub-
scale regional businesses.
International channel team who lead negotiations and manage channel launches.
Regions have extensive knowledge of the affliate landscape and the expertise
to get the right channel mix, platforms and relationships. Leadership experience
and insight into markets to ensure we secure the right partners, build the
right relationships and evolve the right propositions in the context of a global
ambition and strategy.
Information security
Risk that our information assets are
compromised. Risk that content assets
are disclosed or used maliciously. Risk
of content piracy.
Disclosed assets have
reduced editorial or
commercial value.
Disruption to business
operations.
New content path defned for high-value content, including dedicated
infrastructure and content handling team. New centralised global solution for
regional post-production activities (e.g. localisation and dubbing). Enhanced
information security roles and responsibilities, additional resources, and global
network convergence.
Trading performance and growth
Business performance is sensitive to UK
and international economic conditions,
especially the USA and Australia, and
exchange rate movements.
Adverse impact on cash
fows and reported
fnancial results.
Business is diversifed across both regions and revenue streams. Risk-averse
approach to foreign currency management. Central management of budgets
and performance, cash-fow forecasting, careful debtor management and
hedging policy.
Regulatory and compliance
Potential for non-compliance with
UK, and international laws, especially
regulatory changes and legislation
with extra-territorial reach.
Civil or criminal challenge.
Financial penalties.
Reputational damage.
Comprehensive and enforced policy framework including Executive
sponsorship, mandatory training programme, guidelines, regular reporting,
specialist committees and steering groups. Oversight by Board, Executive
and Risk Management Committee. Central Business and Legal Affairs resources
to support.
Business continuity and safety
Major incident with risk of disruption
to operations, infrastructure and loss
of revenue.
Potential for injury or
death. Disruption to
business operations.
Reputational damage.
Safety management arrangements supported by policy framework,
communications, forums and guides and specialist safety advice. Extensive
continuity plans encompassing all offces and business operations.Training
on international travel safety.
to its public purpose and values and its editorial
standards.This approach is used throughout our
businesses, projects and in the formation and
management of joint venture (JV) relationships.
Tim Davie, Chief Executive, BBC Worldwide
and Director, Global, along with the Worldwide
Executive (WEx), sponsor risk management.
Divisional and international boards take
ownership of local risk management processes,
supported by senior managers who have clearly
defned risk accountabilities.
A Risk Management and Internal Controls
Committee comprised of WEx members and
senior managers reviews and challenges the
corporate risk register as part of the formal
quarterly risk management process.
Tiny Giants 3D
©Randall Babb/BBC 2014
Human Universe ©BBC
30 31
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
COR P OR AT E GOV E R NANCE R E P ORT
In the Annual Review of 2013/14 we reported
that the number of directors of the statutory
Board of BBC Worldwide Limited had been
reduced in keeping with the policy to streamline
boards and committees across the BBC Group.
However, in view of the size and signifcance
of BBC Worldwide, the BBC Executive Board
decided that the composition of the BBC
Worldwide Board should be strengthened to
include two additional Non-executive Directors.
The BBC Executive Board and its board
committees have responsibility for the overall
assurance and supervision of BBC Worldwide.
However, during the coming months it is
proposed that the authority to consider
and approve the operational matters of
the company will be delegated to the BBC
Worldwide Board. For further detail on the
activities of the BBC Executive Board go to
www.bbc.co.uk/aboutthebbc.
As of 31 March 2015, the Board was composed
of Tony Hall (BBC Director-General) as
Chairman,Tim Davie (Chief Executive and
Director, Global), Andrew Bott (Chief Financial
Offcer), Anne Bulford (Managing Director,
Finance & Operations for the BBC) and
from 16 February 2015, Dharmash Mistry
and Sir Howard Stringer, both of whom are
also Non-executive Directors of the BBC
Executive Board.
Statutory matters, such as the approval of the
company’s statutory accounts, the payment of
a dividend and the appointment of a director
are already reserved to the Board of Directors.
The Worldwide Executive Committee (WEx)
has principal responsibility for the day-to-day
management of the company. WEx is chaired
by Tim Davie. WEx meets weekly to discuss
operational matters impacting the business.
Corporate governance is about the structure and relationships
which determine the corporate direction and performance. At BBC
Worldwide the board of directors is central to our governance as
is its relationship to the other key participants, BBC Public Service,
BBC Worldwide and staff.
During the year matters under review included
plans to launch the global genre brands BBC
First in Australia and New Zealand on Foxtel
and BBC Brit and BBC Earth in Poland; and
investments in The Musketeers S3 and Doctor
Who S10. Additionally, during the year WEx
reviewed people policies and development
opportunities across the company.
WEx approves expenditure of up to £5m,
beyond which the matter is reviewed by WEx
and referred to the BBC Worldwide Board
or to the BBC Executive Board as appropriate
for approval.This ensures greater scrutiny of
performance and highlights the needs of the
regional businesses to be addressed.These
quarterly performance reviews also serve to
strengthen connections between the regions
and Content, Brands and other central functions.
Content is central to our strategy and one
of our most signifcant areas of expenditure.
The Content Investment Group (CIG), chaired
by the Controller of Content Investment, is
responsible for approving investments of
distribution and certain broadcast rights. CIG
also monitors the content pipeline in the context
of performance and strategic development in
the business, and recommends changes in global
content strategy and execution when necessary.
CIG approves investments between £500,000
and £2m. For investments greater than £2m,
CIG reviews and recommends the investments
to WEx for approval.
WEx also delegates authority to the Investment
Review Group, which considers and approves
non-content fnancial investments between
£1m and £2m.
The BBC Executive
Board and its board
committees have
responsibility for
the overall assurance
and supervision of BBC
Worldwide. However,
during the coming
months it is proposed
that the authority to
consider and approve
the operational matters
of the company will be
delegated to the BBC
Worldwide Board
We take our legal and
regulatory obligations
seriously and we have
developed clear policies,
practices and training
and awareness
programmes to ensure
the protection of
personal information
The 4CC approvals
framework embedded
within our governance
structure ensures that
key projects and
investments are subject
to rigorous evaluation,
ensuring compliance
with each of the 4CC
prior to launch
Attenborough’s Birds of Paradise
©Alex Lanchester 2013
The Musketeers ©BBC 2013
33
HOW WE WOR K
32
ANNUAL R E VI E W 2 014 – 2 015
R E P ORT ON DI R E C TOR S ’ R E MUNE R AT I ON
YE AR ENDED 31 MARCH 2015
CORPOR ATE GOVERNANCE REPORT
CONTI NUED
Over the last three years, we have been
progressively simplifying our Reward offering.
2014/15 saw the fnal payments under the
Proft Share Plan and no matching payment
was due under the Deferred Bonus Plan. Both
plans are now closed and will not be replaced.
Directors, senior managers and all other
employees now have very simply structured
pay packages, with a basic salary and a
performance-related bonus that is at risk
if the required results are not achieved.
Wherever possible, we use salary survey
data to identify the pay range in the market
for a particular role in a particular location.
We continue to pay at or below the market
median in the UK and no more than 10%
above the local market median elsewhere.
As part of the focus on identifying career paths
across the whole BBC, we are working to design
a job grading structure that will help us ensure
that pay is correctly positioned at all levels in
BBC Worldwide.This work, along with greater
alignment between the BBC’s commercial
operations and public service broadcasting, forms
a key part of our vision to create ‘one BBC’.
The Sales Compensation Framework, developed
with the aim of consistently focusing our sales
teams on delivering the best possible return to
the BBC, was implemented in 2014/15, paying
a bonus to sales staff in proportion to targets
achieved. We will continue to monitor the
scheme, refning it as necessary, to ensure that
it is delivering maximum value for the BBC.
Governance
There were no signifcant changes to
remuneration governance arrangements in
2014/15, with decisions affecting members
of the WEx team and company-wide reward
being taken by the BBC Executive Remuneration
Committee. Salary decisions affecting other staff
earning more than £125,000 (or local equivalent)
per year, and severance payments in excess of
£75,000, continue to require approval by the
BBC Senior Management Remuneration
Committee.The BBC Worldwide Pay Forum,
comprising the Chief Executive, Chief Financial
Offcer and People Director, continues to review
other signifcant pay decisions.
BBC Worldwide is not funded by the licence fee, but we are
keenly aware that, as part of a publicly-funded organisation, it is
not appropriate or desirable to lead the market on pay, and that
our remuneration policy must be both moderate and justifable.
No individual is responsible for setting
his or her own remuneration.
Full details of all the above governance
matters can be found in the BBC Annual
Report and Accounts.
Executive Directors
This report summarises the remuneration of
the CEO and CFO of BBC Worldwide, who are
the sole Executive Directors of BBC Worldwide.
Tim Davie was CEO for the full year. Andrew
Bott was Interim CFO and Executive Director
of BBC Worldwide from the start of the year.
He was appointed to the role permanently
on 4 June 2014, moving from the USA to
the UK on 1 September 2014.
Base salary
Tim Davie’s annual base salary remained
unchanged throughout 2014/15. Andrew Bott’s
salary also remained unchanged during the year,
though it was paid in sterling rather than US
dollars (converted at GBP1 = US$ 1.50) after
his transfer to the UK on 1 September.
Annual incentives
Annual incentives are provided through the BBC
Worldwide Annual Bonus Plan, in which all staff
participate (other than those on sales schemes).
The Plan is a relatively simple design, with
a ‘Minimum Growth Hurdle’ (a threshold level
of performance), a Target Performance level
(set to be stretching but, with substantial effort,
achievable), at which Target Bonus is payable,
and a Maximum Bonus Performance level
(above which no further bonus is payable),
set signifcantly above Target.
Target Bonus for the CEO and the CFO
is 50% of base pay earnings. Bonus for both
Executive Directors is wholly dependent on
the performance of BBC Worldwide as this is
deemed to be the most appropriate indicator
of their performance.
Privacy and Information Security
Consumers, talent, partners and employees trust
us with their personal information and failure to
meet these expectations would lead to a serious
loss of trust in the BBC brand. Our global privacy
and information security programmes govern
how we collect, use and manage all forms of
personal information across our operating
territories; from collecting information in a fair
and transparent way to ensuring that this
information remains protected and secured at
all times.This extends to information that does
not directly identify an individual but which may
impact on an individual’s privacy and there has
been a signifcant amount of work in this area
in the last 12 months across the organisation.
We take our legal and regulatory obligations
seriously and we have developed clear
policies, practices and training and awareness
programmes to ensure the protection of
personal information.These are regularly
reviewed to ensure that we are transparent
to individuals and provide clear choice on
how we use their data. Our key focus over
the next year will be preparing for the incoming
EU General Data Protection Regulation which
is due to be fnalised in the next six months.
As part of our compliance programme, our
privacy and data protection function will be
audited this year.
In terms of broader information security,
we strive for continual improvement in the
protection of our business information assets,
especially in respect of content. Ensuring that
these assets are protected at all stages of their
lifecycle is vital to the success of our business,
and that of our content partners, and to
maintaining our reputation as a trusted
organisation with high standards of care.This
is especially important where we share content
with third parties around the world and we
have developed robust processes for evaluating
these risks and ensuring that these partners
have adequate security measures in place.
Our progress in this area is routinely scrutinised
by the BBC’s Internal Audit function to ensure
we are managing risk effectively.
Four Commercial Criteria
The BBC’s Royal Charter and Agreement requires
all of the BBC’s commercial activities to comply
with the four Commercial Criteria (4CC). Our
activities must:
• ft with the BBC’s Public Purposes;
• not jeopardise the good reputation of
the BBC or the value of the BBC brand;
• exhibit commercial effciency; and
• comply with the BBC Trust’s Fair Trading Policy,
the BBC’s Fair Trading Guidelines and, in
particular, avoid distorting the market.
The 4CC approvals framework embedded
within our governance structure ensures that key
projects and investments are subject to rigorous
evaluation, ensuring compliance with each of the
4CC prior to launch.
The BBC’s Fair Trading arrangements (which
include the 4CC approvals arrangements) have
been accredited with the ISO 9001:2008 quality
standard. BBC’s Fair Trading arrangements are
subject to scrutiny by independent auditors
commissioned by the BBC. Details of this year’s
independent Fair Trading audit, undertaken by
Deloitte, together with the audit opinion, are
available in the BBC Annual Report and Accounts
for 2014/15.
Editorial Standards
We are required to comply with the BBC
Editorial Guidelines and the Advertising and
Sponsorship Guidelines for BBC Commercial
Services. We have an editorial framework which
sets out clear editorial accountability for each
business area and a dedicated Editorial Standards
team that offers support and advice to our
businesses. During the year we continued to
deliver both online and face-to-face training
explaining the editorial, commercial and
advertising standards that we expect.
34 35
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
REPORT ON DI RECTORS’ REMUNER ATI ON
CONTI NUED
Long-term incentives
Proft Share Plan
The company’s Proft Share Plan (PSP), which
covered the fve-year period beginning in
2008/09, provided participants with a share
in profts above a set of absolute proft (PAIT,
proft after interest and tax) hurdles linked to
the fve-year strategic plan. Annual payments
commenced after three years of participation in
the plan, with balancing (i.e. deferred) payments
made after the end of the fve-year period.
For eligible participants, the payments shown on
page 36 will be made after year end in July 2015.
These are the second and fnal of two balancing
payments due under the PSP. Balancing payments
are equal to 50% of the fnal, full-year payments.
The annual cash PSP pay-out was capped
at 100% of base pay for each participant.
The PSP will not be replaced by any other
Long Term Incentive Plan.
Pension
Executive Directors who joined the BBC before
1 December 2010 are eligible to participate in
the BBC Pension Scheme (the Scheme), which
provides for pension benefts on a defned
beneft basis. Executive Directors who joined
the BBC on or after 1 December 2010 are
eligible to join LifePlan which is the BBC’s
defned contribution arrangement.The BBC pays
matching contributions to LifePlan for employee
contributions between 4% and 5%. Employee
contributions between 6% and 7% are matched
plus an additional 1%. Employee contributions
of 8% or more receive the maximum employer
contribution of 10%.There is no maximum
pensionable salary for contributions to LifePlan.
Executive Directors who decide not to join
LifePlan or are not already an existing member
of the Scheme are, subject to meeting the
relevant criteria, automatically enrolled into
the National Employment Savings Trust (NEST).
The BBC and employees currently pay 1% of
qualifying earnings to NEST. Individuals can
choose to opt out of this.
Executive Directors’ pension arrangements
may be reviewed and amended in response
to changes in legislation or similar developments.
Features of the BBC’s pension arrangements,
including normal pension age, are provided
in the table on page 38.
Details of the BBC Pension Scheme are
available at www.bbc.co.uk/mypension
and details of LifePlan can be found at
www.friendslife.co.uk/microsite/bbc
Tim Davie became an active member of
the CAB 2011 section as at 1 January 2012,
and retains a deferred pension in the New
Benefts section for service up to that date.
The information in the table on page 39 refects
his CAB 2011 benefts but includes the period
before he was appointed as a director.
Until 31 August 2014, Andrew Bott was
employed on a US contract and participated in
the BBC Worldwide Americas 401(k) Retirement
Plan, under the terms of which employees may,
immediately on joining the organisation,
contribute up to 70% of pay, to a maximum
of US$17,500 per annum. BBC Worldwide
Americas provides matching contributions
equal to 100% of the frst 5% of employee
contributions. Employee contributions are always
100% vested. 20% of matching contributions vest
each year, becoming fully vested after fve years.
Andrew joined LifePlan on his return to the UK
on 1 September 2014 and retains a deferred
pension in the New Benefts section for service
before his transfer to the USA in 2006.
Base pay Short-term incentives
Long-term incentives Benefits Pension
CHANGES TO CEO REMUNERATI ON
£000s
31Mar
2015
31Mar
2014
31Mar
2013
31Mar
2012
31Mar
2011
1,180
898
1,334
670 640
Base pay Short-term incentives
Long-term incentives Benefits Pension
CHANGES TO CEO REMUNERATI ON
£000s
31Mar
2015
31Mar
2014
31Mar
2013
31Mar
2012
31Mar
2011
1,180
898
1,334
670 640
John Smith was CEO from the start of this fve-year period
until 31 December 2012
Paul Dempsey was interim CEO from1December 2012
to 31 March 2013
Tim Davie has been CEO since 1April 2013
Figures do not include compensation for loss of offce
Components of reward
The following table summarises the current key fxed and variable components of reward (excluding sales incentives)
for Executives and employees:
ELEMENT
PURPOSE & LI NK
TO STRATEGY
PERFORMANCE
PERI OD OPERATI ON
Base Salary Maintain a competitive package,
at the agreed position for the
relevant local market, recognising
individual contribution and the
scope of the role.
Not applicable Reviewed annually, taking into account the industry
in which BBC Worldwide operates, location,
individual performance and responsibilities,
and affordability.
REWARD FROM CURRENT I NCENTI VE PLANS
Annual Incentives Reward achievement of
short-term strategic goals
and proft growth.
1 year Bonus, calculated as a percentage of base pay
earnings, is payable for achievement of proft
targets
1
and, other than for members of the
WEx, an agreed level of personal performance.
The percentage varies by grade (and, at lower
levels, by country, in some cases).
A reduced bonus is payable for achievement
below Target, subject to reaching a threshold
level of performance below which no bonus
is payable, with additional bonus available for
achievement above Target. For members of the
Executive, bonus is between 20% and 70% of base
pay earnings, with the top of that range payable
at a level of proft considered to be achievable
only in exceptional circumstances.
The levels of proft performance attracting
threshold, target and maximum bonus are set
by the BBC Executive Remuneration Committee.
REWARD FROM DI SCONTI NUED I NCENTI VE PLANS
Proft Share Plan Drive proft performance and
returns to BBC Worldwide’s
shareholder over the long-term
while promoting the retention
of key management.
5 years The scheme is now closed. Balancing payments
(earned during 2008-2013, but deferred for
two years) will be made in July 2015, after
which no further payments will be made.
The Plan will not be replaced by any other
Long Term Incentive Plan.
BENEFI TS
2
Pensions Pensions are offered in line
with normal market practice.
Ongoing Pensions are offered in accordance with
the all employee pension arrangements.
Life assurance Life assurance is offered in line
with normal market practice.
Ongoing 4x salary for those who join the pension plan;
2x salary for those who don’t.
Private healthcare Private healthcare is offered
in line with normal market
practice at middle management
level and above.
Ongoing Family cover for senior executives; single cover
for other eligible employees.
Car allowance With effect from 1 April 2014,
BBC Worldwide removed
the car allowance beneft for
all new Executive Directors
and senior managers, to align
with arrangements for all
BBC employees.
– Those who were already in receipt of a car
allowance have retained it. Neither of the
Executive Directors receives the allowance.
1 Based on headline proft.
2 Andrew Bott was employed on a US contract during the period 1 April to 31 August 2014, during which time he received standard US benefts – medical, dental, life,
accidental death and dismemberment, dependent life and short-term disability insurances.
36 37
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
REPORT ON DI RECTORS’ REMUNER ATI ON
CONTI NUED
Remuneration earned in the year ended 31 March 2015
£’000
Fee/base
pay
Annual
bonus PSP
Taxable
benefits
Pension-
Related
Single
Figure
Total
2014-15
Total
2013-14
(including
Pension-
Related
Single
Figure)
Total
2013-14
(excluding
Pension-
Related
Single
Figure)
Executive Directors
Tim Davie
1
400 201 – 2 37 640 670 633
Andrew Bott
2
288 145 29 4 23 489 124 121
688 346 29 6 60 1,129 794 754
Non-Executive Directors – – – – – – – –
Former Executive
Directors – – – – – – 252 224
Total 688 346 29 6 60 1,129 1,046 978
1 The BBC introduced a salary sacrifce arrangement on 1 June 2008 for Old and New Benefts members who joined the Pension Scheme before 1 November 2006
and for all Career Average Beneft members. From that date, terms and conditions of employment were changed for those employees opting for the salary sacrifce
arrangement and, as a result, employee pension contributions made via the salary sacrifce have been treated as employer contributions, with a corresponding reduction
in salary.Tim Davie’s base salary has not been adjusted to refect the impact of the salary sacrifce. His total salary sacrifce was £8,532 (2013/14: £8,280).
2 Andrew Bott was an Executive Director of BBCWorldwide throughout the year but was employed on a US contract until 31 August 2014.The fgures in the table
above include his remuneration up to and including that date, converted from US dollars at the rate prevailing at the time of payment, together with his remuneration
from 1 September 2014 onwards, in sterling.
Pension entitlements
£’000
Age as at
31 March
2015 Section
Accrued
pension
31 March
2015
Accrued
pension
1April
2014
Defined
benefit
contributions
(via salary
sacrifice)
Pension-
related
single
figure
Tim Davie 47 CAB 2011 8 5 9 37
Tim Davie became an active member of the CAB 2011 section as at 1 January 2012 and retains a deferred pension in the New Benefts section for service up to that date.
The pensions shown relate to CAB 2011 only but include the period before he was a director.
Until 31 August 2014, Andrew Bott participated in the BBCWorldwide Americas 401(k) Retirement Plan. He joined LifePlan on his return to the UK on 1 September.
The employer contributions to these two schemes were £6k and £17k respectively. He retains a deferred pension in the New Benefts section for service before his transfer
to the USA in 2006.
Scheme
‘Old’ Benefits
Defined Benefit
‘New’ Benefits
Defined Benefit
CAB 2006
Defined Benefit
CAB 2011
Defined Benefit
LifePlan
Defined
Contribution
National
Employment
Savings Trust
(Auto Enrolment
Arrangement)
Defined
Contribution
Date Closed 30 September
1996
31 October
2006
30 November
2010
1 January 2012 Open to
all eligible
employees
Open to
all eligible
employees
Accrual 60
ths
accrual 60
ths
accrual 1.67% accrual
Adjusted in line
with infation
1.67% accrual
Adjusted in line
with CPI
BBC will
contribute a
maximum of
10% of salary
if employee
contributes
8% with lower
sliding scale
BBC will
contribute 1%
of qualifying
earnings
Salary Final pensionable Final pensionable Career average
revalued earnings
Career average
revalued earnings
Normal
Pensionable Age
60 60 65 65 N/A N/A
Earnings Cap Date of joining
before 1 June
1989 uncapped,
capped
otherwise
Capped at
£145,800
Capped at
£145,800
Capped at
£142,200
Uncapped Minimum
Earnings
£5,668 p.a.
Maximum
Earnings
£41,450 p.a.
Pensionable salary
growth before
the Earnings cap
is applied
Limited at 1% p.a. Limited at 1% p.a. Limited at 1% p.a. No restriction N/A N/A
Employee
contribution
(% of pensionable
salary)
7.5% 7.5% 4% 6% Minimum
employee
contribution
is 4%
1% of qualifying
earnings
Employment contracts
Employment contracts of Executive Directors recently employed by BBC Worldwide in the UK have a maximum notice period
of six months. Contracts are subject to earlier termination for cause. In the UK, if termination arises through redundancy,
Executive Directors are entitled to one month’s pay for each year of continuing service, up to a maximum of 24 months’ base
pay (or 12 months’ base pay for Executive Directors employed on or after 1 January 2013).This is now subject to a cap of
£150,000 in total.
Outside interests
Where there is no potential for confict of interest, and with the prior agreement of the Chair of BBC Worldwide, Executive
Directors may hold one paid external directorship. Remuneration which arises from directorships may be retained by the
Executive.This policy is to encourage the take-up of external Non-executive appointments as part of the Executive Directors’
development as well as bringing broader business skills to BBC Worldwide.
During the year, no Executive Directors held paid external directorships.
Non-executive Directors
The Non-executive Directors of BBC Worldwide during the year were Tony Hall, Anne Bulford, Dharmash Mistry
(from 16 February 2015) and Sir Howard Stringer (from the same date), none of whom received any remuneration
in respect of their duties in this capacity from BBC Worldwide.
38 39
HOW WE WOR K ANNUAL R E VI E W 2 014 – 2 015
I NDE P E NDE NT AUDI TOR ’ S S TAT E ME NT
TO B B C WOR L DWI DE L I MI T E D
S TAT E ME NT OF DI R E C TOR S ’ R E S P ONS I B I L I T I E S I N
R E L AT I ON TO T HE S UMMARY F I NANCI AL I NF OR MAT I ON
The Summary fnancial information comprises the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated
balance sheet, Consolidated cash fow statement and Consolidated statement of changes in equity of BBC Worldwide Limited (‘the Company’).
The Summary fnancial information presented within the Annual Review does not constitute the statutory accounts of the Company for the fnancial
years ended 31 March 2015 and 31 March 2014 but represents extracts from them.These extracts do not provide as full an understanding of the
fnancial performance and position, or fnancial and investing activities, of the Company as the complete annual fnancial statements of the Company.
The statutory accounts for those years have been reported on by the Company’s auditor.The statutory accounts for 31 March 2014 have been
delivered to the registrar of companies, and those for 31 March 2015 will be delivered in due course.The reports of the auditor were:
(i) unqualifed;
(ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and;
(iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The Annual Report, including the auditor’s report, can be downloaded at www.bbcworldwide.com.
The Directors of the Company (‘the Directors’) have accepted responsibility for preparing the Annual Review and for preparing the Summary fnancial
information included therein by extracting the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated balance
sheet, Consolidated cash fow statement and Consolidated statement of changes in equity directly from the Company’s full annual fnancial statements.
The Summary fnancial information was approved by the Directors and signed on their behalf on 9 June 2015 by:
We have examined the Summary fnancial information for the year ended 31 March 2015, which comprises the Consolidated income statement,
Consolidated statement of comprehensive income, Consolidated balance sheet, Consolidated cash fow statement and Consolidated statement
of changes in equity on pages 42 to 45 of the Annual Review.
This Report is made solely to the Company in accordance with the terms of our engagement letter dated 4 June 2015.To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or the opinion we have formed.
Respective responsibilities of the Directors and the auditor
As explained more fully in the Statement of Directors’ Responsibilities on page 40, the Directors are responsible for preparing the Summary
fnancial information so that it is consistent with the full annual fnancial statements of the Company.
Our responsibility is to report to the Company our opinion on the consistency of the Summary fnancial information, with the full annual
fnancial statements.
We also read the other information contained in the Annual Review and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the summary fnancial information.
We conducted our work in accordance with Bulletin 2008/3 issued by the Auditing Practices Board. Our report on the Company’s full annual
fnancial statements describes the basis of our opinion on those fnancial statements.
Opinion
In our opinion the Summary fnancial information is consistent with the full fnancial statements of the Company for the year ended 31 March 2015.
Tim Davie
Chief Executive, BBC Worldwide
and Director, Global
Richard Wilson (Senior Statutory Auditor)
For and on behalf of Ernst & Young LLP,
Statutory Auditor
London
9 June 2015
40 41
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
CONS OL I DAT E D B AL ANCE S HE E T
AS AT 31 MARCH 2015
CONS OL I DAT E D I NCOME S TAT E ME NT
F OR THE YE AR ENDED 31 MARCH 2015
CONS OL I DAT E D S TAT E ME NT OF COMP R E HE NS I V E I NCOME
F OR THE YE AR ENDED 31 MARCH 2015
Ongoing
businesses
2015
£m
BBC
AMERICA*
2015
£m
Total
2015
£m
Ongoing
businesses
2014
£m
BBC
AMERICA*
2014
£m
Total
2014
£m
HEADLI NE SALES I NCLUDI NG J OI NT VENTURES 948.1 53.7 1,001.8 944.5 97.8 1,042.3
Less: Share of revenue of joint ventures (150.5) – (150.5) (150.3) – (150.3)
REVENUE 797.6 53.7 851.3 794.2 97.8 892.0
Total operating costs (728.5) (42.3) (770.8) (719.7) (62.6) (782.3)
Share of results of joint ventures and associates 35.8 – 35.8 25.9 – 25.9
OPERATI NG PROFI T 104.9 11.4 116.3 100.4 35.2 135.6
Analysed as:
Headline proft 127.2 11.4 138.6 122.2 35.2 157.4
Share of interest and tax of joint ventures and associates (9.4) – (9.4) (9.7) – (9.7)
Pension defcit reduction payment (8.1) – (8.1) (2.3) – (2.3)
Other specifc items (4.8) – (4.8) (9.8) – (9.8)
104.9 11.4 116.3 100.4 35.2 135.6
Gains on disposals – 115.9 115.9 4.1 – 4.1
Other gains and losses (5.7) – (5.7) (9.3) – (9.3)
Finance income 0.8 – 0.8 0.4 – 0.4
Finance expense (3.5) – (3.5) (4.6) – (4.6)
PROFI T BEFORE TAX 96.5 127.3 223.8 91.0 35.2 126.2
Proft before tax excluding gains and losses on disposals 96.5 11.4 107.9 86.9 35.2 122.1
Tax charge for the year (11.7) (26.6) (38.3) (14.3) (13.8) (28.1)
PROFI T FOR THE YEAR ATTRI BUTABLE TO EQUI TY
SHAREHOLDER OF THE PARENT COMPANY 84.8 100.7 185.5 76.7 21.4 98.1
Ongoing
businesses
2015
£m
BBC
AMERICA*
2015
£m
Total
2015
£m
Ongoing
businesses
2014
£m
BBC
AMERICA*
2014
£m
Total
2014
£m
PROFI T FOR THE YEAR 84.8 100.7 185.5 76.7 21.4 98.1
I TEMS THAT ARE OR MAY BE RECLASSI FI ED
TO PROFI T OR LOSS:
Recycling of translation reserves on disposal of business – 6.1 6.1 – – –
Recognition and transfer of cash fow hedges (10.9) – (10.9) 16.4 – 16.4
Tax on cash fow hedges taken directly to other comprehensive income 2.3 – 2.3 (3.7) – (3.7)
Exchange differences on translation of foreign operations 16.4 2.8 19.2 (1.5) (5.6) (7.1)
OTHER COMPREHENSI VE I NCOME FOR THE YEAR 7.8 8.9 16.7 11.2 (5.6) 5.6
TOTAL COMPREHENSI VE I NCOME FOR THE YEAR
ATTRI BUTABLE TO EQUI TY SHAREHOLDER OF
THE PARENT COMPANY 92.6 109.6 202.2 87.9 15.8 103.7
* BBCAMERICA: this comprises the results of NVCA up to the date of disposal, together with the Group’s gain on disposal. Whilst the transaction does not meet the criteria of a discontinued operation under
IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, it is considered to be of suffcient importance as to justify the presentation of a separate column for BBCAMERICA in order to provide a
better understanding of the proft and other comprehensive income for the current and the prior year.
2015
£m
2014
£m
NON- CURRENT ASSETS
Goodwill 33.4 34.1
Distribution rights 202.8 170.1
Other intangible assets 27.9 21.0
Property, plant and equipment 28.6 16.9
Interests in joint ventures and associates 148.8 12.8
Investments 13.1 8.5
Deferred tax assets 4.2 3.5
Derivative fnancial assets 2.9 3.4
461.7 270.3
CURRENT ASSETS
Programme rights and other inventories 67.3 102.6
Trade and other receivables 367.2 315.4
Current tax receivable 20.6 12.7
Derivative fnancial assets 8.4 9.5
Cash and cash equivalents 66.6 45.1
Assets classifed as held for sale 3.0 –
533.1 485.3
TOTAL ASSETS 994.8 755.6
CURRENT LI ABI LI TI ES
Interest-bearing loans and borrowings 0.3 0.7
Trade and other payables 405.2 327.6
Current tax liabilities 4.6 2.6
Provisions 5.3 4.7
Derivative fnancial liabilities 10.2 1.1
425.6 336.7
NON- CURRENT LI ABI LI TI ES
Interest-bearing loans and borrowings 135.5 98.7
Trade and other payables 0.8 0.8
Provisions 1.9 0.5
Derivative fnancial liabilities 6.2 2.0
Deferred tax liabilities 19.2 2.2
163.6 104.2
TOTAL LI ABI LI TI ES 589.2 440.9
NET ASSETS 405.6 314.7
EQUI TY
Share capital 0.2 0.2
Hedging reserve (3.0) 5.6
Translation reserve 12.1 (13.2)
Retained earnings 396.3 322.1
TOTAL EQUI TY 405.6 314.7
42 43
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
CONS OL I DAT E D C AS H F LOW S TAT E ME NT
F OR THE YE AR ENDED 31 MARCH 2015
CONS OL I DAT E D S TAT E ME NT OF CHANGE S I N E QUI T Y
F OR THE YE AR ENDED 31 MARCH 2015
2015
£m
2014
£m
CASH FLOWS FROM OPERATI NG ACTI VI TI ES
Cash generated from operations 217.5 188.1
Tax paid (26.5) (37.6)
191.0 150.5
CASH FLOWS FROM I NVESTI NG ACTI VI TI ES
Interest received 0.8 0.4
Dividends received from joint ventures and associates 26.5 18.2
Purchases of distribution rights (145.9) (142.2)
Purchases of other intangible assets (11.7) (7.7)
Purchases of property, plant and equipment (20.3) (1.9)
Proceeds on disposal of available-for-sale investments – 1.8
Disposal of operations net of cash disposed 64.5 25.7
Acquisition of interests in joint ventures and associates (3.6) (0.4)
Acquisition of investments (5.4) (2.6)
Amounts advanced to related parties (0.1) (0.4)
Repayment by related parties 0.3 2.0
(94.9) (107.1)
CASH FLOWS FROM FI NANCI NG ACTI VI TI ES
Interest paid (3.3) (4.6)
Drawdown of loans and borrowings 36.4 25.5
Equity dividends paid (111.3) (88.3)
(78.2) (67.4)
NET I NCREASE/ ( DECREASE) I N CASH AND CASH EQUI VALENTS 17.9 (24.0)
Cash and cash equivalents at the beginning of the year 45.1 74.7
Foreign exchange translation gains/(losses) 3.6 (5.6)
CASH AND CASH EQUI VALENTS AT END OF THE YEAR 66.6 45.1
Cash and cash equivalents is comprised entirely of cash at banks and on hand.
Share
capital
£m
Hedging
reserve
£m
Translation
reserve
£m
Retained
earnings
£m
Total
Equity
£m
BALANCE AT 1 APRI L 2013 0.2 (7.1) (6.1) 312.3 299.3
Proft for the year – – – 98.1 98.1
Recognition and transfer of cash fow hedges – 16.4 – – 16.4
Tax on items taken directly to equity – (3.7) – – (3.7)
Exchange differences on translation of foreign operations – – (7.1) – (7.1)
TOTAL COMPREHENSI VE I NCOME FOR THE YEAR – 12.7 (7.1) 98.1 103.7
Dividends paid – – – (88.3) (88.3)
BALANCE AT 31 MARCH 2014 0.2 5.6 (13.2) 322.1 314.7
Proft for the year – – – 185.5 185.5
Recycling of translation reserves on disposal – – 6.1 – 6.1
Recognition and transfer of cash fow hedges – (10.9) – – (10.9)
Tax on items taken directly to equity – 2.3 – – 2.3
Exchange differences on translation of foreign operations – – 19.2 – 19.2
TOTAL COMPREHENSI VE I NCOME FOR THE YEAR – (8.6) 25.3 185.5 202.2
Dividends paid – – – (111.3) (111.3)
BALANCE AT 31 MARCH 2015 0.2 (3.0) 12.1 396.3 405.6
44 45
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
A H E A D
In the coming year we are looking forward to bringing
audiences across the globe a plethora of new and
exciting programmes that will entertain, amaze and
inform, as well as offer a glimpse into other worlds.
From drama to entertainment or beautiful natural
history titles including The Hunt. This latest landmark
series from Silverback Films was flmed over three years
and across 35 countries and airs later this year.
It comprises seven episodes and celebrates nature’s
cleverest and most determined predators and their
elusive prey. In their world, the stakes are life or death
and outcome is never certain. This is the most exciting
animal behaviour on the planet.
The Hunt ©Ellen Husain/Silverback Films
46 47
ADDI T I ONAL I NF OR MAT I ON ANNUAL R E VI E W 2 014 – 2 015
GLOB AL OF F I CE S
Europe
London
BBC Worldwide
Television Centre
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London
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Tel: +44 (0) 20 8433 2000
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We also have advertising sales staff based
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48
ANNUAL R E VI E W 2 014 – 2 015
doc_500443098.pdf