The report was commissioned by the Department of Culture, Media and Sport, looking at BBC Three, BBC Four, CBBC and pre-school chidren's channel Cbeebies as part of the on-going Charter Renewal process.
The report, led by marketing professor Patrick Barwise, revealed that although all the channels have largely met their remits they have had limited impact in the crowded digital marketplace.
It concludes that because of their low viewing figures, BBC Three and BBC Four are still providing poor value for money as well as doing little to connect the BBC with viewers or drive digital take-up. This is despite BBC Three hits including 'Little Britain' and 'Nighty Night'.
"What people want from the BBC is more good programmes with broad appeal, that cover a range of genres. I recommend the BBC to stop thinking of BBC Three and Four as niche channels and start treating them like mainstream channels, like BBC One and Two but smaller and more innovative," Barwise said.
The findings are likely to be damaging for the BBC's impending 2006 charter review, which determines whether the government will give it a new Royal Charter.
In its response the BBC said that board of governors would study the report carefully and respond to the Secretary of State by the end of November.
"The Barwise Review is an important contribution to our work in assessing and determining the future role of the BBC's services."
The report largely found CBeebies and CBBC as a success, although recommendations to improving CBBC's tone and style were made.
It follows research issued yesterday by the BBC, that painted a brighter picture with BBC's digital channels being positively received by the survey and in particular CBBC, Cbeebies and BBC Three.
The BBC said that the high value placed on the BBC's digital services was linked to trust and quality, even for those who did not have direct access to the channels.
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