BBC Magazines performed well during 2006/07, bucking a flat market by growing its circulation figures and increasing its share of advertising revenues. Profits rose to £20.0m from £19.5m on revenues of £171.3m, which were flat year on year. The business achieved these results despite significant investment in its online and digital portfolio, and the sale of Origin Publishing's non-BBC titles. Radio Times and the Lifestyle titles both reported increased sales. Specialist magazines' revenues and profits declined due to the sale of the Origin business. Children's magazines had a particularly strong year due to the excellent performance of CBeebies Weekly and Doctor Who Adventures.

BUSINESS ACTIVITY AND DEVELOPMENTS

Overall, newsstand sales of BBC titles performed well against the competition. The year's best-performing magazines in terms of circulation growth were Top Gear, Good Food, Doctor Who Adventures, CBeebies Weekly and Olive. The flow of traffic and unique users to BBC Magazines websites also grew, boosted by the launch of bbcgoodfood.com in November 2006. Sales of gardening titles were lacklustre across the industry and the decision was taken to close one BBC monthly, Easy Gardening. However, Gardeners' World remains the UK's leading gardening title.

In line with the decisions of the 2004 Commercial Review, BBC Magazines sold its wholly owned specialist magazine company, Origin Publishing, and the non-BBC titles it published, retaining a minority stake. A new company was formed, still based in Bristol, which continues to publish the smaller circulation BBC titles and some customer magazines. Homes & Antiques magazine was relocated there to improve profitability.

BBC Magazines' international licensing activity increased steadily. The business currently has 33 licences in 57 territories, mainly for Teletubbies, Top Gear and the food titles. Worldwide Media, a joint venture with the Times of India, is one of India's largest consumer magazine publishers. Making an early move into India has given BBC Magazines a significant advantage in a rapidly emerging market, for example, by securing the licence to publish Hello! in 2007.

The business recognises that developing closer relationships with customers and communities is essential to sustaining longterm growth, including the development of digital revenues. Building subscriptions to BBC publications is an important part of this strategy. During 2006/07, BBC Magazines' subscription numbers rose by over 8%, compared to an industry average of 2%. By the end of the year, over 650,000 people were paying for their magazines by subscription, many of them by direct debit. This is good news for the business, helping to minimize fluctuations in sales and making it simple for people to renew. In the last two years, the number of people subscribing to Radio Times has more than doubled to over 75,000. Subscriptions fulfilment is handled by Dovetail, a joint venture with Dennis Publishing.

In advertising sales the business outperformed its competitors within its markets. Overall growth was 2% year on year against a decline for the rest of the consumer magazine market.

At the beginning of the year, Big Britain, a major piece of research commissioned by BBC Magazines, was published, which identified significant new trends in the large sector of consumers often called "Middle England". Phase two of this research was developed during the latter half of the year for publication in autumn 2007.

In December 2006, BBC Magazines took the decision to bring its online advertising in-house. Online advertising has a vital part to play in driving new revenues and therefore this aspect of its business will now be developed within the main sales team.

BBC Haymarket Exhibitions, a joint venture between BBC Worldwide and Haymarket Exhibitions, continues to build audiences' relationships with BBC brands through its programme of successful consumer shows. Notable highlights included the Good Food Show with 135,000 visitors and Gardeners' World Live with over 90,000 visitors. For maximum impact, the major summer exhibitions - the Good Food Show, Gardener's World Live and Good Homes Live - will combine to create a single home-interest festival scheduled to launch at Birmingham's NEC in June 2007.

BBC titles are distributed on the newsstand by Frontline, a joint venture between BBC Worldwide, Emap, Bauer and Haymarket. The future make-up of the magazine and newspaper supply chain in the UK remains under review by the Office of Fair Trading, and the consequences of this for the magazine industry may be significant.

OUTLOOK

BBC Magazines continues to invest for the future in subscriptions, in digital and in print launches. The business is focusing on one-to-one relationships, developing a 'club' feel in its core markets and making a significant investment in subscriptions growth, including further development of the CRM database.

The next 12 months will see the upgrading of its digital portfolio as it rolls out its websites for its core communities, starting with the full launch of gardenersworld.com The business also manages bbcshop.com.

A number of new titles are in the pipeline, including Countryfile magazine, a print companion to the popular Sunday morning BBC ONE series.

	07	06
Radio Times	56.5	56.0
Lifestyle	45.5	44.2
Specialist	27.0	34.8
Children's	28.9	25.2
Share of joint ventures	13.4	11.6
Magazines	171.3	171.8

	07	06
Radio Times, Lifestyle, Specialist	15.8	16.7
Children's	3.4	1.6
Share of joint ventures & associates	0.8	1.2
Total	20.0	19.5