The Role and Remit of Public Service Communicators in the Digital Age: Beyond Market Failure? Friday 28 th February 2003, 3:30 – 5:30pm

Public Service Broadcasting: Too much of a good thing? Richard Collins. Professor of Media Studies. The Open University.

Market Failure? Yes. But, how much does the broadcasting market fail? McKinsey – UK worlds highest level of public expenditure per head on broadcasting. Director General of Fair Trading –BBC funding close to one days UK GDP. Prima facie – the market fails a lot.

The Problem of Proportionality How much PSB is enough? UK PSB fills the gap where the market fails. But whats missing? Why is Five (Channel 5) PSB and not ArtsChannel, History Channel, Discovery? "Too often the BBC in effect behaves as if public service broadcasting is everything the BBC chooses to put out" (Davies 1999 p 139).

The Problem of Definition Is everything public service broadcasters do public service broadcasting? 10 years ago. BBC defined itself as: a complement [to] the enlarged commercial sector (BBC 1992 p 19). 15 years ago – BBC facing break up (majority of Peacock Committee recommended spinning off Radios 1 and 2 and 40% independent production quota.

The Problem of Definition Now: Licence fee rising by RPI + 1.5% to 2006 DTT franchise. Successful refusal of Ofcoms embrace.

Defining PSB? More than merely a complement but what is PSB? We couldnt "offer a tight new definition of PSB but members were confident they "knew it when we saw it" (Davies 1999 p 10). at such a general level that it is impossible to assess sensibly what Parliament could expect each to contribute (ITC: 2002b p 8). The Financial Times ( p 14) claimed that the biggest threat to diversity is the BBC, which is moving into all sorts of new sectors.

The Goldilocks Question How do we know whats too much, too little or just right for PSB? We need clearer objectives - so we can know how much support is proportionate to PSBs tasks.

QUID Quality Universality Independence Diversity

Examples Diversity – how many separate sources of news in each TV home? How much representation of different groups and interests to each other? How far is PSB contributing to overall programme diversity? FCC Herfindahl-Hirschman Index Relative Entropy and Deviation indices – Swedish and Finnish research. Can set targets. (see Hellman 2001).

Examples Quality – consumer driven assessment. Share and viewer appreciation targets. Clear distinctions between commercial and PSB are important if Government objectives are to be achieved.

Competition BBC caught particularly uncomfortably between two mandates - to be commercial and to be PSB. £1.1bn commercial earnings required as part of last licence fee settlement. Better that sleeping assets used and current assets sweated. But - Danger of unfair competition.

Competition For example: predatory pricing; abuse of power as a purchaser; transfer pricing between public and commercial sides; refusal to supply and crowding out. Wrong balance between PSB and commercial. Clarity of commercial objectives v fuzzy PSB objectives. How can BBC Governors both ensure BBCs success and ensure BBCs role in whole broadcasting ecology is positive?

Crowding Out Davies Panel foresaw BBC crowding out competition by using Licence fee money… to make programmes of a type which could perfectly well be left to the private sector (Davies 1999 p 92). Geoff Metzger, MD The History Channel: anyone entering the market now does so with knowledge of much greater risk.

Regulation PSB and commercial sides under BBC roof will make Ofcoms (the concurrent competition regulator with sectoral expertise) task difficult. To regulate effectively Ofcom needs information and expertise. Cant be confident Ofcom will be able to function effectively when has jurisdiction over only one side of BBC house. Effective competition regulation is necessary if potential entrants are to be confident they wont be exposed to anti-competitive exercise of SMP by incumbent PSBs.

Remedies Competition regulation? Enough? Structural separation? David Liddiment :Cut the umbilical cord between the BBC and its production arm (Liddiment 2002, 5).

Remedies - Ex Ante Regulation Prohibition of cross subsidy. Prohibition of undue preference for own subsidiaries. Provide information. Advance notification of commercial plans. No more umbrella authorisations.

New Services - New Remit Size, Role and Remit of Public Service Broadcasting in the Digital Age Nanne Priebs

New Services - New Remit Public Provision in the Broadcasting Market: 3 Policy Environments –UK, Germany, Japan Public Provision in the Online Market: Approval Process for New Services New Services- New Remit: Compulsory Elements

3 Policy Environments

Approval of New Services UK: Ancilliary Services, DCMS, Secretary of State Germany: legal loophole, KEF Japan: Governmental Guideline: In the light of the contribution to the development of the IT society, NHKs internet use is, in general, socially valuable.

Modus Operandi of the German Auditing Body KEF General information –Est. 1975, current constitution since 1994 –16 Members –purpose: to evaluate the financial need of PSBs –mathematical basis, no interference with PSBs programme autonomy NB:examination of PSBs expenditure strictly according to whether PSBs decisions are covered by the remit and principle of economicalness

KEFs 3 Step evaluation system 1st step: calculation of current costs –programme, staff, materials, investments 2nd step: calculation of development costs –on the basis of application for projects –projects to date: multimedia/online, DAB, DVB 3rd step: verification of economicalness

Remit Elements

Nanne Priebs

The Role and Remit of Public Service Communicators in the Digital Age: Beyond Market Failure? Friday 28 th February 2003, 3:30 – 5:30pm