It was a year of change in BBC Worldwide's Home Entertainment business as it restructured to better address the challenges of driving profits in a market where UK high street sales are weak and intense competition is reducing margins.

In January 2007, Home Entertainment took charge of BBC Worldwide's Children's business. With its knowledge and understanding of consumer markets, its publishing and brand development experience and its distributor and customer relationships, the business will provide Children's with an environment in which it can flourish.

In the same month, BBC Worldwide combined its spoken word audio, radio and music activities to create BBC Worldwide Audio & Music.

Other developments included the sale of a majority stake in BBC Books to Random House and the closure of the retail shops business.

Amid all the changes, Home Entertainment reported sales of £186.9m and profits of £24.4m. Sales are £22.0m lower than last year, due largely to the partial divestment of books and learning activities. Underlying sales, excluding the impact of these divestments, held steady at £179.1m (2006: £179.6m). Despite recognising a profit on the sale of the books business, in other parts of Home Entertainment there were closure costs, deal costs and significant investment in royalty systems that resulted in lower overall profits.

DVD/VIDEO

2 entertain Ltd, a joint venture with Woolworths plc, through which the majority of BBC Worldwide's DVD sales are made, consolidated its position as the leading UK-owned DVD/video publisher. BBC Worldwide's share of its DVD/ video sales was £101.5m. DVD profits were depressed by substantial investment in new royalty systems.

There were some strong sales from key brands on DVD. Worldwide, Planet Earth sold over 600,000 units, and Doctor Who sold over 1.9m units across individual releases and the boxed set. Little Britain became BBC Worldwide's best-selling DVD brand in Australia, chalking up 190,000 unit sales during the year.

AUDIO & MUSIC

Audiobooks

BBC Audiobooks maintained its market share despite the lack of as many hit new titles as in recent years. The BBC Radio broadcast of Alan Bennett's The History Boys was the star performer with around 22,000 units sold. Revenue fell by 12.3% from £22.7m to £19.9m, and profits fell from £0.5m to a loss of £(0.8)m as the market move to CD and digital sales failed to compensate for the decline in cassette sales. During 2007/08, the business will continue to expand its digital offering while raising its profile in the US market through BBC Audiobook America's new audiobook publishing programme.

Music

Music produced sales of £14.7m and profits of £0.7m. Last year's profit of £4.9m included the one-off sale of a package of music rights. In addition, deep price cutting and the boom in single-track downloads affected margins in Demon Music, 2 entertain's music arm.

BBC Music licensed a number of very successful records during the year, including two of the UK's top 20 compilations in December 2006 - Live Lounge and My CBeebies.

	07	06
DVD/Video	113.8	111.4
Audio & Music	34.6	38.7
Children's **	24.7	24.8
Audiocall	4.2	3.8
Learning	2.1	6.1
Books	3.4	20.4
Retail & direct marketing	4.1	3.7
Total	186.9	208.9

	07	06
DVD/Video	16.9	23.6
Audio & Music	(0.1)	5.4
Children's **	(1.6)	(0.6)
Audiocall	0.6	0.1
Learning	(0.9)	(1.7)
Books	11.7	1.0
Retail & direct marketing	(2.2)	(0.1)
Total	24.4	27.7