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Public Service Broadcasting Pt I: How Do We Compare?

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About The Author

Chris Bridges (Executive Editor)

Chris is an IT and Data Protection solicitor at a top 20 full service firm and the founder of Keep Calm Talk Law. He also contributes to Computers and Law and other sector specific publications.

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Image © Stuart Pinfold

This article is part of the 'Public Service Broadcasting Reform 2015' series.

The BBC’s charter (the ‘Charter’) is reviewed every ten years, with the current expiring on 31 December 2016. In light of this, Chris Bridges explores how public service broadcasting is addressed in other countries, and considers alternative methods of funding British public broadcasting.

Other articles from this series are listed at the end of this article.

The BBC’s charter (the ‘Charter’) is reviewed every ten years, with the current expiring on 31 December 2016. On Thursday 16 July, the government published a green paper on the renewal of the Charter.

The future of the BBC has proved a contentious issue; since its last charter renewal, the broadcasting industry has changed almost beyond recognition. Many are asking: is there really a need for such a large BBC given viewers are no longer limited to just five terrestrial channels? Should we be paying a licence fee which is nearly as much as a basic premium TV package with Sky?

Given this, I felt a comparison to public service broadcasting in other western countries was in order. How do we compare in terms of structure & remit, finance, and public perception? I have selected the USA and Germany as my comparison points. The former has no licence fee with a very small public grant. The latter has a similar licence fee, at least on recent week’s unusually high exchange rates (€210 per annum, £147.89 [1.42 EUR to GBP]). Based on rates over the last few years, the German licence fee would comparatively have been a good deal more expensive.

For the sake of brevity, I shall focus mainly on television (and its online equivalent). In a second part, being published tomorrow (7 August 2015), I will explore alternative financing arrangements for the BBC.

The UK

Structure & Remit

Public service broadcasting in the UK is two-tiered.

The BBC

The primary public service broadcaster is the BBC (s264(12) Communications Act 2003), established by Royal Charter, which is renewed every 10 years. The Charter, along with an agreement with the Secretary of State, governs the BBC and ensures its independence from the government. Both documents can be found on the BBC website.

Article 4 of The Charter sets out the BBC’s purposes, which are:

  1. sustaining citizenship and civil society;
  2. promoting education and learning;
  3. stimulating creativity and cultural excellence;
  4. representing the UK, its nations, regions and communities;
  5. bringing the UK to the world and the world to the UK;
  6. in promoting its other purposes, helping to deliver to the public the benefit of emerging communications technologies and services and, in addition, taking a leading role in the switchover to digital television.

The Other Public Service Broadcasters

Section 264(11) Communications Act 2003 provides that, in addition to the BBC, all Channel 3, Channel 4 and Channel 5 services are ‘relevant television services’. The providers of these include the ITV Group (including regional ‘subsidiaries’ and STV), Channel 4, Channel 5 and S4C1 (Channel 4 Wales).

Each of these channels must under s264(4) Communications Act 2003 provide content which satisfy a number of quality (including balance) criteria.

It is worth noting that both S4C1 and Channel 4 are (and always have been) publically owned, although Channel 4 is a commercial organisation. Conversely, ITV and Channel 5 are privately owned.

Finance

The BBC

The BBC is largely financed by the licence fee, which is met with much controversy. Payable by anyone who watches or records programmes at the same time as they are shown on TV (thus excluding on-demand services), the licence fee is currently £145.50, frozen by the government until 2017.

In 2015, licence fee income was £3.735 billion (including the amount set aside for S4C1, see below), whilst its other income (mostly foreign licencing via BBC Worldwide) amounted to £1.07 billion. A combined total of £4.805 billon. Its operating costs amounted to £4.914 billion.

Per capita, the public element of funding (licence fee) in the UK is therefore £57.82 based on a population of 64.6 million.

BBC World (News 24, Radio, etc.) are not funded by the licence fee.

ITV, Channel 4 & Channel 5

Each of these channels is commercial in nature, drawing all of its income from commercial sales. However, over the years, there have been a few attempts to (temporarily) subsidise Channel 4 through the licence fee, each of which has failed.

For comparison’s sake, in 2014 ITV had a total income of £2.590 billion and Channel 4 had a total income of £938 million. It should however be noted that the BBC’s income also covers radio, although the best part is made up of video services. In ITV’s case, this is likely outweighed by the shareholders it must keep happy!

S4C1

S4C1 was originally funded by a fixed annual grant from the Department for Culture, Media & Sport. Since 2013, S4C1 has been predominantly funded by the BBC, with a small contribution from the Department for Culture, Media & Sport. In 2015, the split was £76 million from the BBC and £7 million from the Department.

Viewer Reception

BBC

How does the BBC compare annually with the other most popular channels, also at the top of the guide?

Each of the figures below is a percentage share of viewership, including the +1 channel where applicable (ITV, C4, C5).

 

BBC1

BBC2

ITV

C4

C5

Others

2014

21.7

6.1

15.5

5.6

4.4

46.8

2013

21

5.7

16.3

5.8

4.5

46.8

Figures from BARB.

With a 27.8% share between its two most popular channels the BBC is the market leader. Although, is this s surprise given its spending ability; The BBC has superior income and no pressure from shareholders wanting dividends.

In a 2014 YouGov/The Times poll, 42% of respondents said they believed ‘the licence fee and the services the BBC offers’ are good value for money, 48% not, and 10% were not sure. Whilst given the 2015 general election result you might be inclined to doubt these figures, a similar (slightly worse) poll in 2011 presented similar results.

Germany

Structure & Remit

The ‘Arbeitsgemeinschaft der öffentlich-rechtlichen Rundfunkanstalten der Bundesrepublik Deutschland’, or ARD for short, is the umbrella organisation for nine autonomous regional broadcasting corporations, and one international broadcasting corporation ‘Deutsche Welle’. ARD operates Channel 1 ‘Das Erste’ (national) and regional members Channel 3 ‘Third Programmes’.

There is also ‘ZDF’, another national public broadcaster, who operates Channel 2, simply called ZDF.

ARD’s members are mandated to provide ‘information, educational, advisory and entertainment programmes’ which is embodied in the constitutions of each broadcaster and in the ‘Rundfunkstaatsvertrag’ which is actually an inter-region treaty agreed on between the various regional legislatures to avoid state interference with the media.

Therefore, much like the BBC, the public service broadcasters are in theory there to fill a gap that would otherwise be left. By the sound of the ARD’s English information leaflet, they stay more in line with this mandate than the BBC.

ZDF was also set up by an interstate agreement between the federal states of West Germany in 1961. It shares a similar remit.

Finance

Public service broadcasting in Germany is predominantly funded by a licence fee payable by anyone who owns a TV, radio, computer or mobile device, regardless of whether they actually use it to access broadcasting services. This fee is shared between ARD, ZDF and Deutchlandradio.

Thus, a licence fee of €17.50 per month (cut this year) or €210 per year is payable by the vast majority of the German population. Whilst this is more-or-less the same as the UK licence fee on the rate-of-the-day, over the last few years this would be comparatively more (by £20 or so). This equates to between £60.60 and £65.46 per capita (+£2.78 and +£7.64 respectively on the UK). This is likely made a tougher pill to swallow given the licence is payable regardless of whether you use your devices to access broadcast services.

The total revenue from the licence fee (taking separated television and radio figures together) is projected to be €7.1 billion in 2015. That is ~£5 billion on today’s rate, when the GBP is at its highest since 2008. This is often cited as one of the biggest publically funded public broadcasting budgets in the world. This budget does not include the revenue taken from commercial advertising, which is negligible.

The non-commercial revenue of German public service broadcasting is therefore between £1.25 and £1.65 billion more than that of the BBC, depending on the exchange rate.  

Viewer Reception

In 2014 ZDF (with Channel 2) took the lead with 13.3% market share. In the same year, ARD’s Channel 1 ‘Das Erste’ had a 12.5% share and ARD’s regional Channel 3 12.4%. This made a total market share of 38.2%. BBC One & BBC Two’s share in 2014 was a combined 27.8%. This of course does not include the comparatively negligible shares of the BBC’s and German broadcasters’ other channels.

However, in a YouGov survey (2013), only 7% of German citizens ‘absolutely agreed’ that public broadcasting in Germany was worth its price tag; 51% said they ‘absolutely did not agree’.

Therefore, Germany’s bigger budget buys a bigger market share, but not public opinion.

The USA

Structure & Remit

The structure of American public broadcasting is vastly different from those systems discussed above. Typically, public broadcasters are private not-for-profits, state governments or universities. There are hundreds of broadcasters across the states, reflecting both huge geographical and cultural differences between them.

There is an Umbrella organisation called the Public Broadcasting Service (‘PBS’), which may initially seem similar to the ARD in Germany, a union of broadcasters.

PBS’ primary purpose is to distribute television programmes to its network of over 350 member stations. The television programmes it distributes are produced by commercial studios, foreign broadcasters/studios and member stations.

The local stations will produce and televise programs specific to their given region, which they supplement with PBS sourced programming.

Whilst a trend rather than a rule, PBS’ and its member stations’ content is typically educational. Programming includes children’s TV, drama, arts, chat shows, politics, news, history and documentaries. Drama seems to stretch educational at times, but not as much so as the BBC.

Clearly, PBS and its member stations fulfil a public function, completing an incomplete market. However, this is more of a self-set requirement – there are no statutory requirements as in the UK or Germany. There is however a very modest financial incentive.

Finance & Remit

There is no licence fee in the USA. Both PBS and local stations rely on commercial advertising and/or pledge drives from the community. However, the Corporation for Public Broadcasting (CPB) receives an annual appropriation from Congress which it is responsible for distributing. This is CPB’s sole function.

The CPB obtains an annual appropriation from Congress. This is not a fixed amount. The CPB must make requests to Congress with justification, and the amount awarded is discretionary. The request for 2018 is a mere $445 million USD, the same as it was for 2014. This equates to around $1.40 USD per capita, or £0.90 (£1 = $1.55 USD), £56.92 less per capita than the UK.

Only a small portion of this sum goes to PBS. At least 70% of the appropriation must go directly to local stations.

The Public Broadcasting Act of 1967 [47 U.S.C. 396] governs the Corporation for Public Broadcasting. Public broadcasters are considered ‘a source of alternative telecommunications’ ((a) 5), and should create programming ‘that involves creative risks and that addresses the needs of unserved and underserved audiences, particularly children and minorities’ ((a) 6). Organisations receive grants from programming that meets this remit. The CPB has translated this into three core aims: ‘digital, diversity and dialogue’.

The recipient must also fulfil a number of criteria set out in the same act, including structure, non-profit status and transparency/accountability.

Viewer Reception

As programming differs nationally, it is difficult to compare these small public broadcasters with the major networks with any degree of conciseness. However, as most PBS member stations share prime-time programming (PBS distributed content, as discussed above), these ratings can be compared.

In 2014, PBS prime-time television finished just behind the major commercial networks (5th), those being CBS, NBC, ABC and FOX. Much of this success is attributed to Downton Abbey, which has dramatically (no pun intended) brought PBS up the prime-time rankings since it began airing.

Public perception is the true game changer; the USA provides a stark contrast to the UK and Germany.

For twelve years in a row, PBS has been ranked the most trusted public institution in the USA. It was also dubbed an ‘excellent’ use of tax dollars, which equated to 81% of those asked saying that money was well spent, which was only outranked by military defence.

Commentary

Structure

I do not believe there is a great deal to learn in terms of structure. Both Germany’s and the USA’s local-centric approach make sense given the pronounced differences in local culture.

You could argue for a similar approach given the increasing rifts between the UK’s constituent parts, however when the primary criticisms of the BBC appear to be financial in nature, it makes little sense to fragment the BBC. Doing so would likely create expense and inefficiencies.

Germany’s increased per capita spend is perhaps indicative of this. Whilst there is a corresponding increase in market share, this does not mean positive reception, given the results of the German YouGov poll.

Remit

The purpose of public broadcasting is roughly the same on paper through the UK, Germany and USA. Education, diversity and culture are common themes running throughout.

Interestingly, it is the German public networks that appear to stick most strictly to the letter of these confines, yet seem to poll the worst in public perception.

This lends support to my gut instinct that public perception of the BBC would drop even further if the most loved programmes that do not stick strictly to the brief were dropped. I have no doubt that programmes such as EastEnders, Strictly, and The Voice are some of the only programmes many viewers watch. EastEnders is a stretch on quality drama, and Strictly/The Voice a stretch on ‘arts’. We know full well the controversy Jeremy Clarkson’s exit from the BBC has caused; many announced Top Gear was the only program worth the licence fee, yet it nearly stretches ‘educational’ to the limit.

Ultimately, criticism of the BBC not sticking to its remit is a criticism of competitors, not service users. Service users like the programming; they just want it for less.

Finance

The American population is apparently very happy with PBS’ value for money (81% positive), so is this something the BBC can aspire to?

The American figures should be taken with a pinch of salt. First, PBS receive only a small portion of the annual CPB appropriation, making the tax dollar they use really rather negligible. Second, people are more likely to think something is poor value for money when they are paying it directly (i.e. via a licence fee), which Americans do not.

Nevertheless, a very near majority of the British public do not feel the BBC provides value for money (48%). Whilst marginally better than German perception, it leaves much to be desired.

So how might the BBC present greater value for money without cutting the programs the British public clearly enjoy? Check back tomorrow (Friday 7 August 2015) for the second part, comprising of an analysis of how the BBC might cut down its spend, or find another source of funding. What can we learn, if anything, from public broadcasters abroad?

Update: Part II now available: Public Service Broadcasting Pt II: Cutting The Licence Fee.

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