BBC Worldwide is the principal commercial subsidiary of the BBC
and has a first-look agreement relating to BBC in-house production.
This gives BBC Worldwide the first opportunity to bid for
commercial rights in BBC programmes. All negotiations are held on
an arm's-length basis with the BBC's Commercial Agency which
represents the BBC's interests. The Commercial Agency is free to,
and often does, reject BBC Worldwide's purchase offer if better
terms can be secured elsewhere. In addition, a proportion of BBC
programme rights do not fall within the first look and are offered
on the open market, providing an external benchmark.
While BBC Worldwide operates as a separate company, we follow
the principles set out in the BBC Royal Charter and Agreement and
the Trust Protocol C4 - Commercial Services (May 2010) and the BBC
Trust's Commercial Review (November 2009).
In particular, BBC Worldwide must comply with the Four
Commercial Criteria (4CC), which stem from the BBC Royal Charter
and Agreement, requiring all the BBC's commercial activities
- Be commercially efficient.
- Fit with the BBC's Public Purposes.
- Not jeopardise the good reputation of the BBC or the value of
the BBC brand.
- Comply with BBC Fair Trading Guidelines and the requirement not
to distort the market.
The BBC Trust's Commercial Review proposed that the current
requirement for BBC Worldwide to "fit with the BBC's public
purposes" should be supplemented with an additional assessment
around being "consistent" with them. There are a number of formal
and informal arrangements that enable information to be cascaded to
both the BBC Trust and BBC Executive.
As a wholly owned subsidiary of the BBC, there is no requirement
for the Directors to seek annual re-election; nor do we hold a
formal annual general meeting. The company is required to present
an annual review of performance to both the BBC Trust and the BBC
4CC and Fair Trading framework
The 4CC approvals framework embedded within BBC Worldwide's
governance structure ensures that key projects and investments are
subject to rigorous evaluation, ensuring compliance with each of
the 4CC prior to completion or launch. In addition, a 4CC
Compliance Report is submitted annually to the BBC Executive Board
and the BBC Trust.
BBC Fair Trading arrangements have been accredited with the ISO
9001:2008 quality standard. In December 2010, the British Standards
Institute confirmed that these procedures were continuing to
operate effectively. The BBC Trust commissions independent
auditors, currently Deloitte, to undertake an annual Fair Trading
Audit. In its report published in June 2010, Deloitte did not
identify any specific Fair Trading audit risks in relation to BBC
Worldwide for the year ended 31 March 2010. Further details of the
audit and opinion can be found in the BBC Annual Report and
Accounts for 2010/11.
The Board is responsible for setting the strategic objectives
for the company and for monitoring progress against those
objectives. The Board reviews both business and financial
performance with a view to ensuring that the company has sufficient
resources to execute the strategy effectively. The Board is
accountable to the BBC in terms of delivering financial performance
and protecting the longer-term financial return in the form of
dividends. The Investment Guidelines (the company's policies for
approving investment and expenditure) provide the framework for
controlling the governance processes and providing clearly
delegated authorities and robust processes.
There is a clear separation of the roles of the Chairman and the
Chief Executive, which is set out in writing and has been adopted
by the Board. A copy can be found on the
BBC Worldwide website. The Chairman's principal role is to lead
the Board and to ensure that it works effectively and through its
various committees. The Chairman is also responsible for setting
the Board agenda and promoting a culture of healthy debate and
challenge. The Chairman is also required to sit on the BBC
Executive Board as a Non-executive Director.
Robert Webb, our Chairman, is thus a Non-executive Director on
the BBC Executive Board. The Chairman has a fixed term of
appointment until 31 December 2012 as Chairman of BBC Worldwide
which may be extended by mutual agreement subject to the consent of
the Director-General of the BBC. The terms of the employment
contracts for the Chief Executive and Chief Financial Officer are
set out in the Remuneration
The independent Non-executive Directors serve initially for a
term of two years which may be extended subject to satisfactory
performance and agreement from the shareholder. The two public
service Non-executive Directors, Nicholas Eldred and Zarin Patel,
are our shareholder's nominees on the BBC Worldwide Board. Neither
Nicholas Eldred nor Zarin Patel has a fixed term appointment;
however, both appointments may be replaced at any time by the
shareholder. The Board has not appointed a senior independent
The Board considers each of the Non-executive Directors to be
independent in character and judgment. Charlotte Hogg and Tim
Weller do not have any relationships or circumstances which are
likely to affect or could appear to affect their judgment and are
therefore considered to be totally independent. Nicholas Eldred and
Zarin Patel are employees of the ultimate parent; and, as
previously mentioned, the Chairman is also a Non-executive Director
on the BBC Executive Board.
The company maintains liability insurance for its Directors and
Officers which is renewed on an annual basis. The company has also
entered into deeds of indemnity with its Directors.
The Company Secretary reports directly to the Chairman. All
Directors have access to the advice and services of the Company
Secretary who acts as Secretary to the Board and its committees.
The Company Secretary is accountable to the Board for ensuring that
Board processes and corporate governance practices are followed.
Directors are also given access to independent professional advice
at the company's expense where they consider such advice is
necessary to enable them to fulfil their responsibilities.
During the current financial year Simon Clift and Thomas Geitner
retired from the Board both having served as independent
Non-executive Directors for four years. Sharon Baylay, who was one
of the BBC public service nominated Directors, retired from the BBC
on 26 November 2010. Neil Chugani, the CFO, resigned on 17 June
2010 to join the Shine Group. External headhunters were engaged to
undertake searches for replacements for each of these positions and
job descriptions for the new roles were agreed.
Charlotte Hogg joined the Board on 24 September 2010. As stated
in last year's report, Tim Weller joined the Board on 26 April
2010. In addition, Philip Vincent was appointed as CFO following a
selection exercise. Philip was previously Deputy CFO of BBC
Worldwide. His appointment commenced on 1 December 2010.
On joining the Board, each of the Directors undertook a formal
induction programme. This is designed to give them an understanding
of each of the strategic objectives and how these will be delivered
within the context of the governance structure.
Click here for the current members of the BBC Worldwide Board
together with details of their external commitments.
*The Board calendar had been set before these Directors
were appointed and they each notified in advance of their
non-availability for meetings.
The Board has a schedule of matters reserved for its attention
and the Company Secretary also maintains a forward agenda of
matters requiring discussion and/or approval.
The Board receives regular updates on the company's financial
position; agrees the budget; and monitors risk management and
financial controls. One issue that the Board examined in some
detail during the year was the impairment of the Lonely Planet
investment and financial instruments. The implementation of the new
Bribery Act was also discussed at Board level and the Board asked
management to engage auditors to test the adequacy of the
procedures in place. The restricted access to the debt market and
the limited availability of headroom was also monitored by the
Board during the year and the Board asked for greater visibility of
cash flow and hedging.
Various corporate transactions were presented to the Board
including the exercise by Tony and Maureen Wheeler of their put
option in respect of the outstanding equity in Lonely Planet not
then owned by BBC Worldwide. Following the exercise of the option,
Lonely Planet became a wholly owned subsidiary of BBC Worldwide.
The disposal of BBC Worldwide's interest in the Animal Planet and
People&Arts joint ventures was successfully completed. The
Board also received regular updates on the potential partnering of
the Magazines business. Special Board meetings are called where
necessary to review the specific detail of major transactions.
At each Board meeting the Chief Executive presents his report on
all aspects of the company's strategy and performance in the
presence of the BBC Worldwide Executive Committee (WEX). Each of
the Managing Directors has the opportunity to attend Board meetings
and to comment on their business performance. In addition, the
Board receives a report from each of the businesses. At regular
intervals the businesses make presentations to the Board on
At each Board meeting the Chief Operating Officer presents a
report on legal, editorial and fair-trading issues. The Board
approves each quarterly fair-trading return which is then submitted
to the BBC. Recognising the importance of editorial and
reputational issues, the Board members received a condensed version
of our Inspire Trust editorial standards training which is
mandatory for every employee.
The Board held a half-day session on people management and
succession planning. Three senior executives had resigned during
the year and the Board played an active part in supporting the
Chief Executive in filling these important business positions.
Health and safety updates are presented to the Board and a specific
update was provided to the Board in March following the earthquake
and tsunami in Japan relating to our employees in Tokyo.
The Board delegates to its committees as set out below.
The Nominations Committee is chaired by Robert Webb; Nicholas
Eldred and John Smith are members. The committee is responsible for
reviewing the composition of the BBC Worldwide Board and for
proposing new Directors to the Board, and to the BBC Executive
Board and the BBC Trust. No formal Board evaluation has taken place
during this year as a consequence of the number of new Directors
who have been appointed. During the year the committee recommended
changes to the membership of the Audit Committee and was directly
involved in the engagement of external headhunters and the
appointment of the new Directors.
terms of reference the appointment of the Chairman and the
Chief Executive are conditional upon the specific approval of the
Director-General of the BBC.
The Nominations Committee is not fully compliant with the UK
Corporate Governance Code. Given the company's status as a wholly
owned subsidiary of the BBC we believe, at the current time, the
members of the committee are appropriate. The Company Secretary
supports the activities of the committee.
Nominations Committee attendance during the financial year under
review was as follows:
The UK Corporate Governance Code recommends that the
Remuneration Committee should comprise three independent Directors.
Robert Webb chairs the committee and Charlotte Hogg and Zarin Patel
are members. Given the close relationship with the BBC we believe
the membership of the committee to be appropriate to the company in
its current evolution.
The duties of the committee include determining the framework
for the remuneration of the Chief Executive, CFO and WEX to ensure
that members of the Executive management are provided with
appropriate incentives to encourage enhanced performance in a fair
and responsible manner. The committee regularly reviews the
appropriateness and relevance of remuneration policies as well as
the individual packages of each WEX member.
The committee also approves the design of, and determines
targets for, performance-related pay schemes and any long-term
incentive programmes. It is responsible for establishing the
criteria for selecting, appointing and setting the terms of
reference for remuneration consultants who advise the committee.
The committee also is responsible for ensuring that members have
reliable and up-to-date information about remuneration in other
companies, particularly in the media environment. Click here for
terms of reference for the committee.
Click here for a full report of the
remuneration policies and activities of the committee, chaired
by Robert Webb.
The Company Secretary and the Group HR Director support the
activities of the committee and attend every meeting by
Charlotte Hogg was appointed to the committee on 1 April 2011.
Remuneration Committee attendance during the financial year under
review was as follows:
BBC Worldwide Executive Committee
The BBC Worldwide Executive Committee (WEX) meets weekly and is
chaired by John Smith. John Smith, Philip Vincent (CFO) and the BBC
Worldwide Executives comprise the core membership of WEX. The
Company Secretary also attends and supports the activities of the
WEX takes responsibility for all aspects of the company's
activities as delegated to it by the Board. WEX is also responsible
for devising and implementing the strategy which it proposes to the
Board for approval. Every week, WEX concentrates on market,
competitor and technology developments and these are supplemented
with detailed presentations and workshops on new and future
technology innovations such as the Apple iPad, connected TV and
smartphones which will all impact our businesses in the future. The
development of the global BBC iPlayer continues to be reviewed and
assessed. Business developments and relationships are monitored
including our relationships with existing and potential partners -
for example, UKTV and the independent production community.
Customer relationship management has also been a focus during the
To reflect the investment in the USA, WEX accompanied the Board
to New York in January 2011 and received presentations from the BBC
America channels and Los Angeles production teams together with
external US media experts.
Our employees are fundamental to our success and WEX devotes
significant time to reviewing: the framework for pay and reward;
succession planning; training and development; and how our Values
are embedded within the culture of the company. Following the
launch of the Aspire programme (which targets and offers
aspirational employees a year-long development programme with a WEX
member as mentor) each successful Aspire candidate presented their
business project at a WEX meeting.
WEX delegates to a Content Investment Committee, which is
responsible for approving programme and product investments of
between £0.5m and £2.0m, and to the Investment Review Group, which
approves other financial commitments between £1.0m and £2.0m. Both
these committees are chaired by the CFO. Each business has
authority for approving non-content budgeted spend up to £1m.
The Audit Committee is chaired by Tim Weller; Nicholas Eldred
and Charlotte Hogg are members. The committee is responsible for
monitoring the integrity of the financial statements including
critical accounting policies and estimates. The committee spends
time reviewing emerging issues and understanding the impact of
matters such as impairments and exchange-rate implications. The
committee also reviewed hedging and treasury policies together with
The Talent Accounting department at BBC Worldwide is responsible
for paying royalties to contributors, independent producers and
third-party profit participants, from sales of programmes and many
other activities such as live events and games. The committee
receives an annual report detailing the accuracy and timeliness of
payments to talent and producers.
The committee also reviews the effectiveness of systems for
internal control and reporting, together with those ensuring
adequate procedures are in place for staff to raise concerns. It
regularly reviews the risk profile of the company, focusing on key
risks as appropriate. The implementation of the Bribery Act 2010
has been considered closely during the year and, following a review
of the Whistle Blowing procedures, a campaign to increase awareness
was undertaken both in the UK and overseas. The enhanced powers of
the Information Commissioner also resulted in the committee asking
the management team to review data protection and information
The committee also undertook a review of the effectiveness of
the KPMG external audit. The committee was satisfied with the
performance of the audit team and welcomed changes in its key
members in line with KPMG's policy of regularly refreshing its
teams. The policy for non-audit services is reviewed on an annual
basis. The committee also reviews the independence of KPMG and
receives confirmation that such independence has not been
compromised in accordance with ISA(UK&I) 260 and the APB's
Ethical Standard 5. Representatives from KPMG attend each of the
audit committee meetings and the committee meets regularly with
them privately without the Chief Executive, CFO and management
representatives being present.
The committee reviewed the effectiveness of the internal audit
function. Internal audit resources are provided to BBC Worldwide
via the BBC and the members of the committee meet privately with
the BBC Director of Risk and Assurance without the CEO, CFO and
management representatives being present.
The committee is supported in its activities by the Company
Secretary, the BBC Director of Risk and Assurance, and the
company's Risk Advisory team. The committee submits quarterly
returns to the BBC Executive Audit Committee detailing the key
issues discussed by the committee. The terms of reference for the
committee can be found on the company's website. The committee is
not fully compliant with the UK Corporate Governance Code as not
all the members of the committee are independent. Given the
company's status as a wholly owned subsidiary of the BBC we believe
at the current time the members of the committee are
Audit Committee attendance during the financial year under
review was as follows:
Zarin Patel resigned as a member of the Audit Committee on 22
Magazines Annual Review
Editorial Advisory Boards (EABs) work alongside all BBC
magazines and websites and play a key role in ensuring that the
magazine portfolio reflects the BBC's public purposes and editorial
values. The EABs are overseen by an Annual Review Panel (ARP),
consisting of external experts and senior representatives from BBC
Magazines, BBC Vision and BBC Audio and Music. It is chaired by the
BBC's Chief Adviser, Editorial Policy.
The ARP conducted its sixth review of BBC magazine output during
the course of 2010/11 (the first was completed in May 2006) and
concluded that, overall, BBC magazines are quality publications,
which display originality and editorial integrity. The portfolio is
strong, with successful, varied titles which reflect a range of
viewpoints and interests.
The EAB system continues to be a considerable success, with
members offering invaluable advice and insights. Connectivity with
BBC output remains particularly strong in the pre-school and
pre-teen titles; it is good in Gardeners' World magazine, Good
Food, Lonely Planet, BBC Music, Countryfile magazine, BBC Wildlife
and Radio Times. For further details on the Editorial Framework see
BBC Worldwide's brand-protection team continues (together, where
appropriate, with local investigators and enforcement authorities,
including customs, trading standards and police) to investigate
infringements of the Group's and its partners' intellectual
property rights. It undertakes takedowns, seizures and prosecutions
around the world, to help control the market for pirate audiovisual
products, counterfeit goods and other infringements, with an
increasing emphasis on online infringements, notably on auction and
content-sharing sites. BBC Worldwide is a member of various
industry and enforcement bodies, including the Anti-counterfeiting
Group, Television Against Piracy and Internet Enforcement Group in
the UK, ABAC-BAAN in Belgium, and SNBREACT in the Netherlands. The
team also manages trade-mark protection across the BBC Worldwide
brands globally, including the clearance and registration of brands
and resolving conflicts with other brands.
Respecting the privacy of individuals
BBC Worldwide engages with millions of individuals on a daily
basis. This will continue to grow as the company creates more
direct relationships with consumers. The organisation is committed
to respecting and protecting the privacy of its customers and
audiences as well as that of employees, contributors and
BBC Worldwide and its subsidiaries are registered with the
Information Commissioner's Office as Data Controllers and are
regulated in the UK by the Data Protection Act 1998 and the EU Data
Protection Directive. As a global organisation with a significant
international following, BBC Worldwide also complies with local
data protection requirements in the territories in which it
BBC Worldwide strives for the best systems in data protection
and information security compliance. At the heart of this are the
eight principles of the Data Protection Act. With brands such as
Doctor Who and CBeebies, the organisation attracts a youthful
audience and BBC Worldwide adopts a strict approach when handling
any data provided in relation to minors.
How we work - Doctor Who Experience
The Doctor Who Experience is an interactive exhibition which
launched in February 2011 at London's Olympia Two. As a commercial
activity of BBC Worldwide, this project must comply with the Four Commercial
The BBC Worldwide Executive Committee approved the investment in
the Doctor Who Experience together with an assessment of 4CC
compliance in February 2010 prior to launch. Before seeking WEX
approval, the project and a 4CC assessment were reviewed and
approved by the Investment Review Group. While BBC Worldwide Board
approval was not required for an investment of this size, the Board
was kept notified of the project.
The relevant business area, Brands, Consumers & New
Ventures, addressed likely 4CC issues and actively engaged with the
relevant BBC Public Service teams.
- It was agreed that potential reputational risks would be
mitigated by BBC Worldwide closely working with the BBC public
service Doctor Who team throughout the project's development.
- The BBC public service team retained editorial oversight of the
project to ensure consistency with the Doctor Who programme
- To facilitate BBC's editorial input, BBC Worldwide co-funded a
full-time production role for one year.
- The company liaised with BBC Fair Trading on implementation,
reporting lines and funding arrangements of this role.
Before launch, both the venue and the contractor used for the
creative design of the exhibition were subject to full vetting in
accordance with applicable BBC guidelines. This included completion
of Health & Safety and ethical standards checks.