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BBC Worldwide
Home Entertainment
Chris Weller, Managing Director
Home Entertainment comprises a range of businesses offering quality consumer products and services.
SALES* (£m)
| YEAR | 08 |
07 |
|---|
| 2 Entertain/DVD | 164.6 |
127.6 |
|---|
| Audio & Music | 26.7 |
23.3 |
|---|
| Audiocall | 3.2 |
4.2 |
|---|
| Children's | 30.9 |
24.7 |
|---|
| Books, Learning, Retail | 2.8 |
9.6 |
|---|
| Home Entertainment | 228.2 |
189.4 |
|---|
PROFIT* (£m)
| YEAR | 08 |
07 |
|---|
| 2 Entertain/DVD | 41.3 |
21.6 |
|---|
| Audio & Music | 6.0 |
(2.4) |
|---|
| Audiocall | 0.5 |
0.6 |
|---|
| Children's | (7.2) |
(1.6) |
|---|
| Books, Learning, Retail | (0.1) |
8.6 |
|---|
| Home Entertainment | 40.5 |
26.8 |
|---|
Home Entertainment achieved profits of £40.5m on sales of £228.2m. The 51.1% increase in profits year on year is largely due to
excellent DVD sales by 2 entertain, especially driven by the popularity of the Planet Earth DVD in the US. The Children’s business was impacted
by some significant write-downs, which contributed to losses of £(7.2)m.
2 entertain/DVD
The strongest performer in Home Entertainment’s stable continues to be the DVD format, sales of which are predominantly handled within
2
entertain, a 60:40 joint venture with Woolworths plc. In 2007/08 a slight decline in the UK market was more than compensated for by the
runaway success of Planet Earth in the US. Sales of the title across all configurations topped 3m units by year-end – it was the highest-grossing
American HD title of the year and one of the top-10 US DVD's of 2007.
Overall, BBC Worldwide’s DVD revenues, including its share of sales from 2 entertain, which also has a production business Banana Split and a music label Demon Music, were up 29.0% to £164.6m and its share of profits up 91.2% to £41.3m. Other notable hits
were Clarkson’s Supercar Showdown, Doctor Who complete series three and Richard Hammond’s Top Gear Interactive. Looking ahead, the confirmation of Blu-ray as the standard for high definition DVDs will consolidate this sector of the consumer market.
AUDIO & MUSIC
In 2006/07 BBC Worldwide’s audiobook and music businesses were brought together, both to reflect the BBC’s new structure and to facilitate the
development of a long-term growth strategy for audio content. A five-year plan was agreed in 2007, of which the main planks are to: unlock the BBC
archive and make more content available; develop live music events and extend investment in new output. This will be supported by continuing to deliver growth
in the traditional businesses.
During 2007/08 sales across Audio & Music rose by 14.6% to £26.7m, with underlying profits rising slightly as a result of improved trading and successful music
brand licensing deals. The overall profit increased to £6.0m, up from a loss of £(2.4)m in 2006/07, largely because of the release of a litigation provision which was no longer required.
The established BBC Worldwide music businesses had a strong year, with the licensing team celebrating a number of hit CDs including Live Lounge 1
and 2. In May 2008 a major agreement was reached with EMI to unlock the BBC archive of TV and radio material relating to the EMI stable of artists.
The audiobooks business, based in Bath, remains the UK’s leading audiobook publisher and delivered profits of £1.9m through tight cost control, including the renegotiation of a major distribution contract.
Digital sales of spoken word content are now climbing steadily with 312,000 downloads purchased in the year (up 47.5% year on year) via a
range of online outlets including Audible, Apple iTunes and bbcshop.com.
CHILDREN’S
The Children’s business had continuing success with Doctor Who and also saw the very successful launch at retail of In the Night Garden in the UK, which was the biggest toy property of 2007 (Toy Retailers’ Association).
Other core properties continue to perform well — for example, Teletubbies celebrated its 10th
anniversary with a world tour of the characters for the first time. The popularity of classic and new brands helped BBC Worldwide move up the league table of UK licensors to number two in the market.
However, alongside the hits there have been some properties that have failed to break into the retail market. Though sales in 2007/08 were £30.9m, up 25.1% on the previous year,
write-downs of investments contributed to a loss of £(7.2)m against £(1.6)m in 2006/07. A radical review of the Children’s rights portfolio in the
light of the crowded global market for children’s properties has been carried out and strategy consultants have been appointed to help determine the best way forward.
The joint venture struck in 2006 between renowned children’s indie Ragdoll Ltd and BBC Worldwide took delivery of 55 out of 100 episodes in HD of
In the Night Garden and is progressing a sophisticated gaming and TV-led property called Tronji.
2007/08 was a good year for the Live Entertainment team which develops theatre shows from media brands and properties.
The arena shows Walking with Dinosaurs in the US and Australia, Dancing with the Stars Live in the US, and CBeebies Live! and Strictly Come Dancing Live in the UK were highly popular.
In April 2008 the team transferred to the Content & Production business in order to dovetail operations more closely with its growing production network.
AUDIOCALL
Premium rate telephony services in the UK were heavily affected by the BBC’s decision in July 2007 to suspend all competitions linked to BBC programmes following various breaches of editorial
standards across the industry. Sales were down 23.8% year on year to £3.2m and profits were down to £0.5m.
Over a two-year period to August 2007, income of £106,000 from telephone votes placed outside the designated period on certain TV shows, and which
should have gone to charity, was wrongly retained by Audiocall. This practice came to light during an independent review commissioned by the BBC
Trust. In light of the findings the Trust commissioned a further investigation from its legal advisers which concluded that there was no evidence
of legal impropriety although the matters uncovered by the review were very serious. All the money owed to charity was subsequently paid, including
sufficient to cover interest, and the BBC has broadcast an on-air apology.
BOOKS, LEARNING AND RETAIL
Home Entertainment has largely divested itself of book, learning and retail activities. Minority shareholdings have been retained in BBC Books (Random House), BBC Children’s Books
(Penguin) and BBC Active (Pearson). It retains one shop for staff and visitors based in BBC TV Centre in west London.