Annual Review 2010/11

Entertaining the world

Case study:

Expanding in the USA

With our sights firmly set on international growth, we have sharpened our focus on the world's biggest media market - the USA.

For UK media companies, the USA has clear advantages in having a common language and an established appetite for some types of UK content and talent. However, it is also a highly consolidated and competitive market where foreign operators are in the minority. BBC Worldwide is one of the few non-US players to have built meaningful distribution in this market.

The BBC brand is recognised widely and we are the only UK company to have an owned and operated TV channel, BBC America.
BBC.com has 15.2m unique users in the USA (2010/11 monthly average).
BBC World News is distributed by BBC Worldwide in the USA. It provides in-depth coverage of global news from an impartial, objective perspective.

In June 2010, we appointed Herb Scannell (see BBC Worldwide Executive) to head up our North American businesses. Plans are now in place to grow our market share over the next five years.

The Stig with Top Gear's US hosts (left to right): Rutledge Wood, Tanner Foust and Adam Ferrara.

USA - the marketplace

The USA media market is worth $400bn (PwC Global Entertainment & Media Outlook). The TV market is dominated by the six major media conglomerates, which also own the most significant broadcast and cable channels - for example, ABC (Disney) and USA (NBCUniversal). Most shows are made by the major studios.

The overall advertising market has rebounded since its 2009 low and in 2010 topped $153bn (eMarketer), with online showing the fastest rate of growth. The number of TV hours viewed grew by 1% last year (fig 1), while online video viewers increased 11% (Nielsen). Those watching video via mobile devices rose by more than 40% year on year (eMarketer).

The US market is frequently a prime indicator for world trends so what we learn here we can often apply globally.

(fig 1)

US daily TV viewing

US daily TV viewing chart

^{Source: Eurodata's One TV Year in
the World/Nielsen Media Research}

BBC Worldwide in the USA in 2010/11

BBC America

A leading independent entertainment cable channel with 68.5m subscribers, BBC America is recognised as a home for smart entertainment and provides a strong platform for UK talent and content and a high-value audience for advertisers. In 2010/11 the channel had its best year ever, with primetime ratings among 25-54 year olds up 37% year on year. Its subscribers have the highest median income of any ad-supported US cable channel, excluding sports networks (Nielsen NHI/Media Research).

BBC Worldwide Productions

Based in Los Angeles, our production hub has delivered hugely popular US versions of the BBC formats Dancing with the Stars (12 seasons for ABC) and Top Gear, recommissioned for a second series by cable channel HISTORY^TM. It has also developed a strong slate of both scripted and unscripted UK formats, and made the new series of the BBC hit drama Torchwood, co-produced by BBC Worldwide, BBC Cymru Wales and, in the USA, the cable channel STARZ. The series has benefited from a higher production budget thanks to this co-production finance and has been added to our distribution catalogue.

Digital

The digital business is underpinned by BBC.com but also encompasses online, TV syndication, social media, games and apps. We have established a Games Unit in Los Angeles and London, which is developing games across all major platforms, including Sony, Microsoft and Nintendo consoles, mobile and tablet devices, and Facebook.

Our US growth Strategy

Next Steps

TV: BBC America is a major asset and we plan to focus our investment on acquiring and originating content, and on marketing spend. This strong cable channel provides a high-profile platform for UK content and brands, has a dual revenue stream (subscriptions and advertising), drives ancillary sales, such as DVD and content syndication, and commissions original programmes from our production arm.
Production: We will continue to develop scripted and unscripted shows aimed predominantly at the cable market - both new commissions and local versions of our own formats. This will grow revenues in the USA and also create shows that will have distribution value in other markets and will provide co-production opportunities.
BBC.com: Further investment will be made in both strengthening our video offer on the site and diversifying beyond news in areas that will build relevance to US users.
Other digital: There is significant opportunity to grow our TV content syndication in the burgeoning digital market, and we will also invest in games and apps linked to our key US properties.

TOP

Strategy
Our five strategic objectives

Kirstie Alley & Maksim Chmerkovskiy

Actress Kirstie Alley and dance
partner Maksim Chmerkovskiy
helped make US series 12 of
Dancing with the Stars its
most-watched US season.

Throughout this Review, headline sales refers to gross revenue including discontinued operations, and including the Group’s share of revenues from joint ventures. Headline profit refers to operating profit before specific items, and including profits generated by discontinued operations.

Specific items are not defined under IFRS and may not be comparable to similarly titled measures used by other companies.
Specific items are material or non-recurring items which are highlighted by virtue of their size or importance in order to enable a full understanding of the Group’s performance. A reconciliation between headline profit and profit before tax is presented in the Consolidated Income Statement on the Financials page.