EXECUTIVE SUMMARY

  BBC World Service is the most respected voice in international broadcasting and enhances Britain's position in the world politically, economically and culturally. The Comprehensive Spending Review (July 1998) ended the decline in real terms in the operating Grant in Aid and restored the World Service's ability to plan over a three-year period. As a result, the World Service has been able to prepare a programme of evolutionary but ambitious change for the next three years, designed to sustain its global audiences, recognising their changing patterns of listening and the challenge and opportunities of the new technologies. This three-year plan is now being finalised with the Foreign and Commonwealth Office.

  The three-year plan concentrates on developments in three areas. Internet services will be extended, making full use of the World Service's expertise in English and in key languages. On radio, English programmes will be produced in two streams—continuous news and general programmes—giving much greater flexibility to meet changing audience needs. FM broadcasts in English and other languages will be expanded in major cities, recognising the inevitable decline of short wave listening where FM is available.

  The World Service intends to utilise the new investment framework, together with savings realised from its ongoing efficiency savings programme and some reprioritisation, to introduce these essential and exciting developments. It will aim to generate additional revenue to support and extend distribution where this is wholly consistent with the World Service's editorial independence. It is a forward-looking plan, aimed at securing the long-term future of the World Service.

1. INTRODUCTION

  As the Committee will be aware, the Government's Comprehensive Spending Review included details of a new three-year Grant in Aid settlement for the World Service as part of the FCO allocation. Additional operational funding of £30 million will be phased in over the three-year period. Fourteen million pounds extra in capital will allow for new transmitter investment in Oman. The World Service has produced a three-year plan explaining how it will use this new framework to secure and develop its long-term role, reputation and competitive position. The plan is based on a 10-year view of likely developments in audience needs, competition, markets, technological change and distribution opportunities. The plan is now being finalised with the Foreign and Commonwealth Office.

2. BACKGROUND

  To set the plan in context, the Committee may find it useful to have some background information about the World Service's current competitive position.

  2.1 The World Service continues to be the leading international broadcaster across the world, the most respected voice in international broadcasting and a unique and powerful British asset. In all types of markets, the World Service reaches more opinion formers than any of its international radio counterparts. At around 138 million radio listeners in 44 languages, its audience is almost twice the size of its nearest radio counterpart, the Voice of America.

  2.2 However, the World Service faces increasing pressure from new technologies, deregulation and greatly increased competition for audiences, both local and international. In the developed and developing world, audiences are migrating from short wave radio to FM radio or direct to television and online. This is particularly so among the educated urban populations and opinion formers which are a core part of the World Service's global audience. In 1997 the World Service's overall audience fell for the first time—by five million listeners—as a result of these factors. The impact of FM, offering higher sound quality than short wave, is a serious threat to traditional BBC World Service audiences.

  2.3 The World Service has increasingly recognised the importance of FM relays to reach key audience groups, particularly in major conurbations and developed markets. Moreover, in the past two years it has begun to grasp the opportunities of the Internet as a global medium for the future. It can only retain its leading position and continue to place Britain at the heart of global communications through an ambitious investment strategy and modernisation programme.

3. THE THREE YEARS

  3.1 The next three years will be a period of evolutionary change, forming a vital bridge to the future. The World Service will prepare for a world of advanced distribution technology, in which opinion formers in world markets will increasingly use the Internet with streamed audio as well as text online and audiences will increasingly expect programmes to be available on demand. However, it will also take into account the much slower pace of development that can be expected in less developed parts of the world.

  3.2 Moving into the digital age, the World Service will increasingly become a multimedia broadcaster and content provider. It will offer new programmes through new outlets, and capitalise on the growth of the Internet and its impact as an interactive global medium.

  3.3 The World Service has a clear set of aims:

—  To be the world's best known and most respected voice in international broadcasting.

—  To be the world's first choice among international broadcasters for authoritative and impartial news and information, trusted for its accuracy, editorial independence and expertise.

—  To be the world's reference point—a global hub for high quality information, communication and entertainment providing an essential and trusted guide to an ever more complex world:

  —  providing a forum for the exchange of ideas across cultural, linguistic and national boundaries;

  —  promoting the English language, learning and interest in modern, contemporary Britain;

  —  bringing benefit to Britain—projecting Britain's values of trustworthiness, openness, fair dealing and creativity, enterprise and community.

  3.4 As it enters the 21st century, everything the World Service does will be based on the inherent values which have made it one of the greatest broadcasting achievements of the 20th century:

—  trust, reliability, independence;

—  quality, expertise, relevance;

—  truth, accuracy, impartiality;

—  creativity, innovation, competitiveness.

  It will be characterised by:

—  intelligence, internationalism, insight;

—  fairness, openness, ambition.

  It will aspire to be world-class in everything it does:

—  broadcasting, production, marketing, management, operational effectiveness.

  3.5 The World Service will increasingly concentrate on reaching key, identifiable target groups. Audiences and markets are being segmented to clarify priorities and provide a more sophisticated understanding of needs and behaviour. Detailed analysis also takes into account competition for audiences, patterns of media use and prioritisation of countries in which Britain has strong cultural, humanitarian, geo-political or economic interests, in order to plan services for each region of the world. Through appropriate marketing we will also concentrate on making the most effective use of the BBC World Service brand.

  3.6 By 2005, the World Service will have strengthened its leading position as the most trusted source of international news and information in both developed and developing markets. It will also remain an essential source of reliable, truthful and accurate information for the information-poor in the world's least developed regions. Short wave provision will remain a high priority in these areas. FM relays and partnerships and Internet services will become increasingly important in more developed markets, and to reach opinion formers and decision makers world-wide.

  3.7 A target of maintaining the current level of 138 million users each week has been set for 2005. Fewer will be listening on short wave but this decline will be compensated by increased access on FM and the Internet.

  3.8 This is how listening patterns are expected to change, complemented by the Internet delivery dimension:

	1998	2005
	Per cent	Per cent
Short wave	80	65-70
FM	10	20-25
Medium wave	10	10

  3.9 By providing a service to the world that no other country and no other international broadcaster have been able to match, the World Service brings credit to Britain and strengthens Britain's position abroad. This has been possible because it is an integral part of the BBC, independent of political pressure and commercial interests, operating under BBC editorial principles. The World Service is one of the main planks in the UK's cultural diplomacy, increasing respect for the democratic values of this country. It also acts as a conduit of goodwill for the UK in the countries around the world to which it broadcasts, creating a climate favourable to British business.

4. KEY DEVELOPMENTS

4.1 Online

  Use of the Internet is growing rapidly in every part of the world: by 2002, more than 300 million people are expected to be connected. The global capacity of the Internet, its power as an interactive, up to the minute service which can be adapted to individual users' specifications; its on-demand convenience; its ability to offer high quality stereo audio streams complemented by in-depth text; its increasing potential for carrying video clips and segments; and its current remarkable record of growth, make it a high priority for World Service involvement in the future.

  4.1.1 Online will increasingly become an important guarantee of global access to accurate, independent news and information, particularly for opinion formers and decision makers. We will expand online services in priority languages and increasingly offer the English version to regional markets of the world, offer enhanced content and audio streams, promote interactivity to support core programming and be a key contributor to the development of BBC News Online as the best online news site in the world.

  4.1.2 Over the long term we will capitalise on the ability of the Internet to act not only as an on-demand medium of news provision but also as an interactive reference point and guide, utilising our expertise and depth of knowledge. We will use online to promote communities of interest across the world linked to specific languages or passions. We will develop with BBC News the increased personalisation of our interactive offer.

  4.1.3 The World Service already produces "Newstalk", a discussion programme for both radio and the Internet. A simple video camera allows the online audiences to see the presenter, and a discussion takes place via phonelines and on the net, involving audiences from around the globe. The programme has attracted a great deal of participation from opinion formers. The World Service will exploit the Internet's two-way feedback to become a leading "World Debating Chamber" and to be a hub through which World Service audiences can communicate with each other.

  4.1.4 By 2005, we aim to offer fully interactive news sites in at least ten languages: English (regionally versioned), Arabic, Mandarin, Russian, Spanish, Persian, Hindi and Urdu are the top priorities.

  4.1.5. In terms of technological development, the Internet already provides audio sound of higher quality than short wave. Within three years increased bandwidth is likely to allow for FM quality stereo audio—both in audio clips and continuous streams.

  4.1.6 It is the World Service's objective to increase its audience reach and offset distribution costs through online partnerships wherever possible. Already, Internet users throughout the world can listen to the World Service's English output live through an arrangement with broadcast.com, an American Internet company specialising in live broadcast channels.

4.2 World Service English

  4.2.1 To prepare for a world in which we offer greater flexibility to FM rebroadcasters and in which audiences will increasingly expect to obtain programmes on demand, the World Service will realign its traditional approach to English scheduling with two streams, available on file servers, one providing continuous news, the other with general programming. Both will be available in all markets via the Internet or satellite.

  4.2.2 These two streams will provide much greater flexibility. Working together, they will allow schedules to be tailored for different markets or even individual FM rebroadcasters. The timing of the two streams will be built around regular clocked junctions. These will make it easier to serve different markets and to produce effective multilingual schedules in combination with the World Service language programmes.

  4.2.3 The two streams will be brought together in a mixed schedule to serve the core short wave audience. Alongside a spine of news and information from the World Service news stream, we will schedule sport, arts, science and entertainment programming drawn from the second, general programmes, stream. Each BBC World Service transmitter will be able to broadcast programmes from either stream to meet local audience needs throughout the day.

4.3 Expanding FM broadcasts

  4.3.1 Wherever audiences have the choice, they switch to FM in preference to short wave. FM signals are much more reliable and offer better audio quality, often in stereo. Sets cost less than short wave receivers. FM is covering an increasing number of the world's major cities. It is particularly good for reaching World Service target audiences, including opinion formers and decision makers in developed and developing countries.

  4.3.2 The World Service's strategy is, wherever possible, to be available on FM in all world capitals and to develop FM rebroadcasting partnerships in all major conurbations. In each region this will allow important audiences to be targeted more effectively.

4.4 Other priorities

  4.4.1 The World Service will also explore new digital radio delivery systems, both terrestrial and satellite-based, and invest accordingly for the long-term future.

  4.4.2 The quality of language programming will be improved in key markets, as will the overall quality of presentation and content. Landmark programming will be promoted in English and other languages, and increasingly supported by interactive developments.

5. FUNDING

  5.1 Following its Comprehensive Spending Review, the Government announced £44 million of additional funding for BBC World Service to be phased in over the next three years. The settlement ends a funding decline in real terms over recent years and, importantly, restores the ability to plan over a three-year period.

	1999-2000	2000-01	2001-02	Cumulative totals
	£ million	£ million	£ million	£ million
Baseline Grant in Aid	160.9	160.9	160.9
Operating Grant in Aid increase	5	10	15	30
Capital Grant in Aid increase	9.5	3	1.7	14.2
Overall increase	14.5	13	16.7	44.2
New Grant in Aid totals	175.4	173.9	177.6

  5.2 The increase in the operating Grant in Aid of £30 million, together with our ongoing programme of efficiency savings and some reprioritisation, will enable us to make the necessary investments over the next three years.

  5.3 While the Grant in Aid will continue to be the principal source of funding, guaranteeing the editorial independence which underpins the World Service's success, we will vigorously exploit new revenue streams to increase external income, either in cash or as benefit in kind where this is wholly consistent with the World Service's independence. In particular, we will seek to maximise external revenue to support distribution and delivery costs in rebroadcasting and online.

6. CAPITAL INVESTMENTS

  Following the Comprehensive Spending Review, additional capital funds were allocated for the new Oman transmitter site. The additional CSR total of £14.2 million over the next three years will contribute to the forecast total expenditure of £31.5 million. The remainder will come from other BBC World Service sources, such as the disposal of the Singapore bureau. Priority for additional capital investments over the three years is being given to other transmission improvements and digital production.

7. CONTRACTUAL RELATIONSHIP

  Following the CSR, the World Service and the FCO are entering into a new contractual arrangement. This will incorporate a new Broadcasting Agreement, Financial Memorandum and Tasking Document.

8. MEASURING SUCCESS

  As shown in the table below, BBC World Service brings overall value to the FCO where broadcasting objectives coincide with diplomatic objectives. Through better targeting of audiences, BBC World Service will improve its performance among key audience groups in priority markets, and thereby contribute to the FCO's overall objectives in all regions.

  A three-year programme of audience research has been developed to measure impact and effectiveness against targets. Discussion with the FCO about the most appropriate key performance indicators is taking place as part of the new Contractual Relationship.

9. BRINGING VALUE TO BRITAIN

  The World Service's plan focuses on the next three years, but positions itself at the start of a 10-year journey. It is a vision of where BBC World Service wants to be well into the next century. The World Service cannot stand still if it is to maintain its leading role as the world's most trusted and respected international broadcaster. Providing authoritative, impartial, trusted news and information to the world is its core proposition. It will also reflect the values of modern Britain, promote the best of British talent and creativity, and enhance Britain's international position. The World Service wil be a world reference point at the start of a new millennium and the dawn of the digital age.

February 1999