Public service broadcasting

To the concern of the European Broadcasters’ Union (EBU), the alliance of European public TV stations which also organizes the Eurovision song contest, the European Commission on November 4 issued a review of how public broadcasters are funded. The new rules offer some cheer to public TV stations, allowing them to hold more money in reserve for instance, but the rules also make life more difficult with their restrictions on commercial activity by channels that accept public funds.

Viewers, listeners and a few politicians might be paying attention in the United Kingdom, where a recent scandal involving obscene phone calls on radio programmes broadcast by the British Broadcasting Corporation (BBC) has reignited a debate over nature and funding of public service broadcasting. The scandal drew the populist interventions of the prime minister and leader of the opposition.

As the United Kingdom’s main public service broadcaster, the BBC’s operations are funded through a licence levied on households owning televisions. This funding model, which means its broadcasts within the United Kingdom do not carry advertising, remove many of the commercial pressures other broadcasters make, meaning that it is able in theory to cater to minority groups, interests and tastes, and focus on the quality of broadcasting, rather than exclusively on ratings

These are strong arguments for continuing to fund public service broadcasting through licensing. Moreover, the case of the Japan Broadcasting Corporation, which was modelled on the BBC and also is funded through a ‘receiving fee’ on households, illustrates that this model can also provide scope for technical innovation.  For example, NHK developed the first high definition television technology in the world in 1964, and was a pioneer in launching high definition services in Japan in 1981.

Nonetheless, a licensing model can be problematic:

• Licenses face charges of being an unfair levy, since all households with television equipment have to pay for a license, even if they do not wish to avail themselves of public television services. Development of digital, satellite and cable services, which will increase the number and range of channels available may well intensity these complaints. Moreover, as people increasingly watch broadcasts using internet-enabled devices, it will become more difficult to determine who should require a licence at all, and collect revenues accordingly.

• Other broadcasters which are legally obliged to carry public service content, object to this imposition, while not receiving government revenues and while other channels exist to provide niche content.  Indeed, in some countries, such as the Netherlands and Ireland, funding for public broadcasting is allocated across a wider range of channels.

• The existence of licensing, which amounts to a form of taxation, makes public service broadcasters vulnerable to political pressure, in terms of levels of funding received, and also types of programming broadcast and operational issues. Even in the UK, where funding is collected separately and government only sets multiannual funding levels, the BBC comes under intense pressure.

Alternatives to licensing

Drawbacks to licensing raise the question of whether alternatives to licensing may be advantageous, particularly as public service broadcasting continues to adapt to technological, commercial, political and social changes:

• Advertising.  Advertising already is a feature of many public service broadcasters – for example, in Ireland, where it exists alongside a license, Italy, and the United States, where ‘underwriting spots’ or ‘sponsorship announcements’, which have come to resemble advertising, fund some public service broadcasting.  While this shifts the direct funding burden away from viewers, it exposes public service broadcasters to commercial pressures, thus eroding the difference between them and their private sector competitors.

• Direct state funding.  Other public service broadcasters receive direct state funding, without taxation being imposed directly on viewers.  While eliminating public opposition to licensing, this is a – potentially significant fiscal burden on governments, which can make broadcasters vulnerable when other priorities compete for resources.  For example, Canadian public broadcaster, the Canadian Broadcasting Corporation (BCB) has suffered significantly from budget cuts in recent years. In addition, it may expose public broadcasters more directly to political pressure on content, as has been the case in Latin America – in recent years, particularly Venezuela.

Nevertheless, despite these drawbacks another model of funding is likely to evolve as viewing and listening habits change. The best hope for the EBU and its equivalents is to be in on the discussions at an early stage.