Background

Responsible for the global exploitation of some of the best known and loved classic children's brands in the UK and around the world, the Children's business also develops and licenses new intellectual property, particularly in pre-school where it remains a world leader.

Performance and strategy

The Children's business performed strongly in 2005/06, reducing its losses to £0.9m from £6.6m in the previous year. This was due to the strategy of building on its classic DVD portfolio and popular pre-school brands, such as Teletubbies (Ragdoll Ltd), Tweenies (Entertainment Rights), Fimbles (Novel Entertainment) and Balamory (BBC Scotland), whilst managing the launch of a major merchandising hit in the new Doctor Who series (BBC Wales). In addition investment into new properties is starting to bear fruit.

Over the last 18 months, Children's has developed a reputation for creating exciting business models that attract the world's foremost Independent producers. New partnerships and properties, which will form the bedrock for future success, include In the Night Garden and Tronji from Ragdoll Ltd; The Secret Show from Collingwood O'Hare Entertainment; Charlie & Lola from Tiger Aspect; Animalia from Burberry; Me Too! from Tattie Moon; and Tikkabilla and Balamory from the BBC.

In the last quarter, the children's business completed the sale of the Watch With Mother properties, which include Andy Pandy and Bill and Ben, back to Ben Productions, their original owner.

US

In the important US market, the team has built boldly on its relatively low profile of three years ago with key properties on major networks including Charlie & Lola (Disney Playhouse), Little Robots (Cartoon Network), Balamory (Discovery Kids), Wallace & Gromit (Sundance Channel) and Robbie the Reindeer (Nickelodeon). Doctor Who is performing well on the Sci Fi Channel, generating excellent merchandising potential.

Looking ahead, the team will continue to develop its TV successes, pursuing cross-media strategies for Charlie & Lola, Little Robots (Create TV & Film Ltd) and The Secret Show. Work with leading licensing and merchandising partners has already begun.

DVD

Together with sales and distribution partner 2 entertain, the Children's business has had another successful year as the leading publisher of TV tie-in pre-school DVDs in the UK.

In a crowded market, the huge seasonal success of the BBC Worldwide DVD portfolio demonstrated the strength of the catalogue across pre-school and family titles.

The business re-released Wallace & Gromit's first three cracking adventures (Aardman Animations Ltd) to coincide with the theatrical release of The Curse of the Were Rabbit. With the sleeve and menus redesigned and new additional material, the DVD sold in significant numbers.

Disney's new production of The Lion, the Witch and the Wardrobe provided another repositioning opportunity, this time for the classic 1988 BBC TV versions of The Lion, The Witch and The Wardrobe and The Chronicles of Narnia, both of which sold very well. Add to this new launches, such as Big Cook Little Cook (Top TV Productions Ltd) and Charlie & Lola, and the business sold more than a million DVD units.

Licensing and Books

Doctor Who was the star performing brand in terms of licensing activity this year. Niche merchandising and a concentration on those products that capture the popular appeal of the show have produced some strong results. Big Cook Little Cook has a successful range of children's cooking and baking products, Tamba, the puppet presenter of Tikkabilla, has sold well as a plush toy, and a Match of the Day range of sporting gifts has been a big hit in the UK.

In April 2004, BBC Worldwide formed a global publishing venture with Penguin for the imprint BBC Children's Books. In 2005/06, the joint venture sold 1.9 million books and will publish 70 new titles in 2006/07.

Magazines

BBC Children's magazines, managed within the Magazines business, launched CBeebies Weekly magazine in March 2006, and Doctor Who Adventures and Amy (for five-to-eight year old girls) in April 2006. Over a million magazines were sold, with marketleading titles in all sectors, from pre-school to teen.

Live shows

It was an incredibly busy year for Live Entertainment with three major UK touring productions: the first ever CBeebies Live! show; the Tweenies' No Sleep till Bedtime; and Balamory's Strike Up The Band. Between them they sold well over 300,000 tickets. More than 115,000 people enjoyed the CBeebies Live! production over the Christmas period and it will now be the business's flagship live show.

Teletubbies in China

In anticipation of their tenth anniversary, the multiaward- winning Teletubbies are attracting renewed interest from consumers in the UK, Europe, the US and especially China where over five million children regularly sit down to watch the show.

Following the launch of the Teletubbies Edutainment Play Centre in Dongguan, China, BBC Worldwide and Shenzhen Tianyuan Business Management (SZTY) have now opened the world's first-ever Teletubbies Play and Development Centre in Shenzhen. The Centre will offer supervised age-appropriate activities, enabling children to develop in a fun and safe environment. Related products continue to be developed and distributed.

Tronji and In the Night Garden

BBC Worldwide has continued its strategy of working closely with the BBC's digital children's channels, CBBC and CBeebies, and is very excited about its recent investments in two original and landmark productions - In the Night Garden for young children and Tronji for six-to-eight year olds.

These two properties have been devised by Anne Wood and Andrew Davenport of Ragdoll Ltd, the creative partnership responsible for Teletubbies, and promise to set new standards for children's entertainment.

Sales(£m)	06	05
TV Sales	12.9	11.5
DVD/Publishing	14.3	9.5
Merchandising & Other	10.5	9.0
Total	37.7	30.0
Magazines*	25.2	27.7
Total (inc. children's magazines)	62.9	57.7

Profits(£m)	06	05
TV, DVD, merchandising	(0.9)	(6.6)
Magazines*	1.5	2.9
Total (inc. children's magazines)	0.6	(3.7)

* also reported under Magazines

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