Performance review

Details of our performance in 2010/11 by operating business are set out below.

Channels

Headline sales (£m)

Year 2011 2010
EMEA 192.7 173.4
Americas 77.7 56.0
Rest of World 41.6 33.2
Channels 312.0 262.2

Headline profit (£m)

Year 2011 2010
EMEA 25.5 31.8
Americas 11.6 6.0
Rest of World 3.0 1.4
Channels 40.1 39.2
Channels

Channels was a particularly strong revenue performer, with headline sales up 18.8%. Subscriber revenues showed 16.1% growth, notably in the UK, USA and Scandinavia. Revenue from ad sales grew by 26.9% with strong performances from BBC America, UKTV and our channels in South Africa, Latin America and Australia.

Headline profit of £40.1m was up 2.3%, the flow through from revenue growth being partially offset by the loss of our Animal Planet share of profits (results of which were not recorded as it was held for sale in the year) and investment in nine new channel launches. Excluding Animal Planet share of profits from the comparative period's results, Channels headline profit grew 49.6%.

Americas

Headline sales increased by 38.8% to £77.7m, and headline profits by 93.3%. This resulted from a significant improvement in BBC America subscriber revenues and improved ratings, our ad sales team driving value, and an underlying improvement in the ad market.

EMEA

This region constitutes over 60% of our Channels revenue base and was up 11.1% year on year. A strong ad-sales performance by UKTV was the main driver, up 15.6%. Ratings also improved noticeably across the region. Headline profit fell by £6.3m year on year to £25.5m, reflecting the absence of our Animal Planet share of profits.

Rest of World

Headline sales increased strongly, by 25.3%. Australia maintained market share, consolidating our position as the third largest international network in the Australian subscription TV market.

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Content & Production

Headline sales (£m)

Year 2011 2010
Content & Production 102.8 94.2

Headline profit (£m)

YEAR 2011 2010
Content & Production 7.9 17.6
Content & Production

Headline sales from Content & Production rose by 9.1% to £102.8m, mainly as a result of higher levels of commissions of BBC Worldwide formats in France and India. Our French production office delivered significant revenue growth and shared success with TF1 earlier this year when Dancing with the Stars launched to 4.8m  viewers.

Headline profit of £7.9m was down from £17.6m. This was due to increased investment and costs at Dancing with the Stars in the USA, which has just completed season 12 to record ratings, coupled with investment in our new production facility in Los Angeles, particularly in developing our scripted production capability. This was rewarded with our first scripted commission - Torchwood: Miracle Day, commissioned by US cable channel STARZ and BBC Cymru Wales.

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Digital Entertainment

Headline sales (£m)

Year 2011 2010
Digital Entertainment 27.1 14.5
Memo reporting of digital
81.9 62.3

Headline profit/(loss) (£m)

Year 2011 2010
Digital Entertainment (6.8) (17.0)
Digital Entertainment

Digital Entertainment encompasses: BBC.com, the Games Unit and the global BBC iPlayer.

Headline sales for Digital Entertainment were £27.1m, which represented year-on-year growth of £12.6m or 86.9%. The business reduced headline losses significantly to £(6.8)m from £(17.0)m in 2009/10, reflecting the significant move towards profitability of BBC.com offset by the investments in our Games Unit and the global BBC iPlayer.

We also have a range of digital activities embedded across all our businesses. The total revenue for these in the year was £54.8m, bringing our total digital revenues to £81.9m, an increase of 31.5%. BBC.com is a news and lifestyle site that only operates outside the UK, where it is funded by advertising. Its headline sales grew significantly year on year (113%), driven by the launch of a range of new services, and a good performance from our in-house advertising sales teams and improved inventory management. We continued to invest in new products for BBC.com, including a customised US edition, a travel section, and Apple iPhone and iPad apps.

Games is a fast-growing area of digital media and a key focus for us. We are building teams in Los Angeles and London who will be developing BBC-branded games for multiple platforms. We are also investing in the global BBC iPlayer - a pilot for the Apple iPad will start in summer 2011 in selected markets.

From 1 April 2011, the Games Unit will be reported within Brands, Consumers & New Ventures.

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Brands, Consumers & New Ventures

Headline sales (£m)

Year 2011 2010
Brands, Consumers
& New Ventures
86.0 82.5
Memo reporting of key brands
308.1 273.7

Headline profit/(loss) (£m)

Year 2011 2010
Brands, Consumers &
New Ventures
(10.3) (9.0)
Brands, Consumers & New Ventures

Brands, Consumers & New Ventures was established to maximise the revenue from our most valuable brands. Lonely Planet, Top Gear, Doctor Who, Torchwood, BBC Earth and Dancing with the Stars are all managed, driven and marketed on a Group-wide basis. Walking with Dinosaurs is the next brand to be managed in this way. The benefits of this brand focus are reported within each business's numbers, but on a memo-reported basis, headline sales from these brands were £308.1m, a rise of 12.6% year on year.

Headline losses for the year have increased from £(9.0)m to £(10.3)m in 2010/11. The staff and marketing costs of the brand focus are included in the figures above alongside the revenue and profit from Lonely Planet, Licensed Products, Live Events, our brand-led websites and our book publishing partnerships.

In a difficult market in which guidebook sales were down 24.0% in key territories compared to 2007/08, Lonely Planet maintained revenues year on year and increased market share in key territories to achieve a five-year high of 21%.

Live Events is a nascent but high-potential business in which we are investing for growth. During 2010/11 we launched Doctor Who Live (a touring arena show), the Doctor Who Experience (an interactive exhibition), and continued to develop the very popular Top Gear Live international tour.

Since 1 April 2011, the Games Unit has been managed within this business, whilst Licensed Products and book publishing partnerships have transferred to the Consumer Products business.

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Sales & Distribution

Headline sales (£m)

Year 2011 2010
EMEA 165.8 145.5
Americas 52.0 67.5
Asia Pacific 42.8 36.6
Sales & Distribution (Gross)
260.6 249.6
Less internal trading of (30.1) (26.4)
Sales & Distribution (Net) 230.5 223.2

Headline profit (£m)

Year 2011 2010
EMEA 44.4 36.3
Americas 1.2 4.8
Asia Pacific 18.4 16.8
Sales & Distribution (Gross)
64.0 57.9
Less internal trading of (5.2) (6.3)
Sales & Distribution (Net) 58.8 51.6
Sales & Distribution

Sales & Distribution is our biggest profit centre, generating a headline profit of £58.8m on headline sales of £230.5m in the year.

Americas

Following the sale of our stake in Animal Planet and People&Arts, our co-production arrangements with Discovery in the USA have been renegotiated, resulting in lower reported revenues for the American business.

Excluding this impact, reported revenues increased by 12.0% in total through exploiting the strength of our catalogue, a more focused sales strategy for key brands and titles, and an upturn in the economic environment in most markets.

EMEA and Asia Pacific

Both saw good revenue growth, with EMEA benefiting from good sales on key brands including Top Gear, Doctor Who and BAFTA winner Sherlock.

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Consumer Products

Headline sales (£m)

Year 2011 2010
Video Physical 192.3 179.5
Video Digital 9.1 3.3
Others
33.4 49.3
Consumer Products
234.8 232.1

Headline profit (£m)

Year 2011 2010
Video Physical 43.3 42.3
Video Digital 2.5 1.5
Others
3.1 (0.8)
Consumer Products
48.9 43.0
Consumer Products

Consumer Products continues to generate strong profits for BBC Worldwide, up 13.7% year on year.

Video Physical

The business performed extremely well in the UK, despite a challenging domestic DVD market, finishing 2010 as the UK's fifth-largest distributor. In the USA our sales were up 3.8% in a tough market which saw total sales of DVD and Blu-ray down 3.8%.

Video Digital

£9.1m or 3.9% of the business's revenue is now accounted for by download to own. This revenue stream almost tripled versus last year, reflecting the growth in the market and the success of key brands including Doctor Who and Top Gear.

Others

Includes our BBC Audiobooks business, the majority of which was sold during the year, reducing revenue by £18m.

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Magazines

Headline sales (£m)

Year 2011 2010
Continuing 36.6 35.8
Discontinued 127.9 129.3
Magazines
164.5 165.1

Headline profit (£m)

Year 2011 2010
Continuing 4.9 5.0
Discontinued 16.7 14.8
Magazines
21.6 19.8
Magazines

In a difficult UK market Magazines performed well. Circulation revenue was up by 1%, compared with the overall market decrease of 6%, and subscription revenue rose by 10%. Overall, headline sales were marginally down, by £0.6m, reflecting the held-for-sale status of our joint ventures Dovetail Ltd (subscription management) and Worldwide Media Ltd (Indian publishing business). Headline profit increased by 9%, or £1.8m, with strong growth from specialist titles such as Good Food and olive. Margins increased from 12.0% to 13.1% as a result of the restructuring completed during the previous year designed to reduce the cost base and improve profitability.

Discontinued

As we are in exclusive negotiations with regard to finding a long-term partner for our Magazines business and hope to conclude a deal over the summer, this part of the business has been disclosed as a discontinued operation. Our continuing business relates to the titles Top Gear, Lonely Planet and Good Food, which we will retain but publish on a different basis.

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Driving returns from great content

 

Benedict Cumberbatch and Martin Freeman Sherlock

BBC One's Sherlock made by
Hartswood Films and starring Benedict
Cumberbatch and Martin Freeman has
now sold to over 180 territories.

 

 

Top Gear Merchandise

Innovation is essential in the mature DVD market. Gift packaging, such as Top Gear:Limited Edition Stig Helmet box set, and releasing titles in hybrid formats (a digital copy packaged with DVD and/or Blu-ray disc) has helped 2 entertain, our DVD/download-to-own business, maintain sales.