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Wednesday, July 12, 2006

Beeb Annual Treasure Hunt

The BBC has released its 2005/6 Annual Report. A few points that I found interesting:

Distribution Costs

Distribution Costs have increased year on year to £165m from £157m: all the increase in cost was accounted for by the BBC digital services which accounts for £89m vs analogue costs of £76m. Personally, I’m too suspicious of what is included in these costs and the way costs are allocated between analogue and digital to draw any conclusions.

An additional complication is that two companies own the UK transmission network (Crown Castle UK & Arqiva) and the BBC’s part ownership of DTV Limited which is the holding company for Freeview.

All I can say with certainty is that these costs are extremely small compared to an atypical cellular company, however the BBC has the big advantage of being given its’ spectrum for free, they have much more of it and it is in a much better bit of the spectrum for propagation and coverage.

New Media

The usage and reach statistics for bbc.co.uk is quite impressive with average weekly reach of UK users going up from 12.3 million to 8.7 million. Overseas users have also grown to 12 million from 8.6 million. This imformation is from the logs and is slightly less than the survey based usage of 13.7 million which is accounted for by people using bbc.co.uk from work where single IP addresses are shared across a company.

638.8 millions of pages were served up over the year with news & sport accounting for overall 42% of viewing.

The growth in streaming services is even more impressive with average weekly consumption of 4.6 million hours compared to last years 2.9 million. It is even better that Radio and Audio accounted for 78% of streaming.

Miraculously the BBC has managed to keep its’ spend in check with costs only increasing to £72m from £69m. I think these figures should be treated with a pinch of salt and guess that costs are hidden elsewhere in the BBC juggernaut. For instance, I can almost guarantee that bbc.co.uk is paying very little if anything for its’ content from BBC News 24 or the World Cup team. I also think bbc.co.uk will be paying nothing to the TV & Radio stations for the advertising services: seemingly every TV & Radio presenter relentlessly plug the bbc websites at every opportunity.

Overall, I would guess the management team is feeling pretty good about bbc.co.uk. However I would question the not only the need for bbc.co.uk, but whether it should be funded from the BBC licence fee and most importantly whether it is constraining the overall growth of the UK Internet Content industry. I would definitely be referring bbc.co.uk to OFCOM to decide whether an alternative business model should be deployed before any new funds are committed: for instance, an alternative in the realm of TV content, the BBC own 50% of ukTV which is funded by advertising revenue with the BBC providing a lot of content.


The biggest problem with a huge Public Sector Broadcasting monster is controlling its’ scope and the BBC is the world champion of scope creep. The new Jam BBC service is a really good example of this. I can just imagine the meeting where the Department of Education insisted that the children of the UK needed an online resource to support the National Curriculum and assist the youth of the UK to learn. Unfortunately, they wouldn’t have had any money to develop the service. So the good old BBC steps in and says they will develop the service out of the licence fee. It costs £36m this year up from £8m. Note, this is 50% of the overall New Media - somewhere these figures do not add up.

Of course, all over the service is BBC Branding and if the youth of the UK doesn’t watch TV anymore or watches evil channels like Cartoon Network rather than Cbeebies. The BBC now has the opportunity of lobotomising them from an earlier age, after all education is mandatory for all kids, on how great the BBC is and how much value the licence fee provides. Even better is that they get you to log-in and have a password, something that bbc.co.uk wouldn’t even dream of currently (ed – but how are they going to do personalisation and social networking in beeb 2.0?)


The BBC is up to its’ old tricks – scope creep and hiding costs. It will be interesting to see how much additional funding they get in the current round.