Immaa msu presentation flew

Markets, Values and Governance: Economic Aspects of Public Service Media in Transition

Terry FlewDigital Media Research Centre, Queensland University of

Technology, Brisbane, Australia

Presentation to International Media Management Academic Associaition (IMMAA) Annual Conference, Moscow State

University, Moscow, Russia, 17-18 September, 2015

Digital Media Research Centre


Most public service media debates are about content

… and Politics


The 20th century public servive broadcasting settlement

“The rise of broadcasting in the 20th century established new relationships among states, publics, and the media. Alongside private media, some countries established broadcasters with closer links to the state and a nonmarket model of accountability to the public. Relationships between these institutions and governments as well as other centers of power became key challenges, with some countries adopting direct state administration of broadcasters and others favoring independent public-service broadcasting.”• Damian Tambini, “Five Theses on Public Media and Digitization: From a 56-

country study”, International Journal of Communication 9(2015): 1400-24.


The challenge of governance in the context of change

“A unique set of institutional arrangements for broadcasting evolved in each national setting. In some cases, the constitutional framework defined fundamental duties for all broadcasters. In others, ownership and operation remained in private hands, with duties left undefined. In some countries, the market share of publicly owned broadcasters was small, and in others they were—and in many cases, still are—dominant. In all countries, allocation of broadcasting frequencies was the responsibility of agencies of the state. Broadcasting institutions generate the meanings and narratives that frame reality for citizens. For this reason, governance of these institutions has been a source of conflict that resurfaces during times of change.”• Damian Tambini, “Five Theses on Public Media and Digitization: From a

56-country study”, International Journal of Communication 9(2015): 1400-24.


Context for PSM worldwide

1. Declining share of national audience (although highly variable between nations)

2. Declining public funding3. Need to develop new digital services in order

to maintain relevance4. Uncertain relationship to Charter/remit5. New regulatory questions (e.g. relevance of

competition policy)


New governance challenges for public service media

• Is the ‘scarcity’ rationale still relevant as a basis of support for PSB/PSM?

• How much expansion into new digital services should PSM be undertaking?

• Charter implications of PSB-to-PSM transition• Can PSM ‘crowd out’ commercial services in

new digital markets, or do they ‘crowd in’?• Should new services be taxpayer funded or

funded through other revenue streams?


Who decides?

• The Managing Director?• The Board?• The government of the day?• The Parliament?• The community? If so, how?


Configurations of ‘the public’ in PSM debates

1. As collective beneficiaries of public good aspects of PSM (e.g. national events, documentaries, disasters, international coverage, specialist programming)

2. As consumers of PSM services (how many watch/listen to/download XXX?)

3. As taxpayers funding PSM: how to ensure value-for-money in uses of funds?


Media economics and the governance question

• NEOCLASSICAL ECONOMICS (market failure, public goods, public value tests)

• CRITICAL POLITICAL ECONOMY (market vs. state, public interest, media citizenship)

• NEW APPROACHES– INSTITUTIONAL ECONOMICS– INNOVATION/EVOLUTIONARY ECONOMICS


Neoclassical media economics

• ‘Market failure’ rationale for PSM– Merit goods– Externalities– Public goods

• Spectrum scarcity case for PSB no longer plausible• Public good/merit good case (possibly) challenged in

multichannel environment• PSBs not the only providers of ‘quality’, ‘niche’ or

‘minority’ content• Diversity of PSB histories – no single template


Public Value Tests (PVT) and PSM innovation

• Public Value Tests being applied to digital expansion of PSBs in EU

• How is ‘public benefit’ to be assessed?• EU: media pluralism established in

broadcasting context (PSB) but role of PSM in digital environment is contested

• Ex ante tests as an inhibitor of PSM innovation• Innovation increasingly central to PSM remit


Political economy, PSM and citizenship

• PSM seen as central to nation building, media citizenship and the public sphere – market versus state rationale

• Not all PSM are non-commercial, and even ‘non-commercial’ PSM have commercial activities

• Normative definition of PSM: does not include, for instance, CCTV as world’s largest state-run broadcaster

• Challenges of PSM Charters – lead or follow ‘public taste’?

• Private providers can achieve public good e.g. Google Books case


Does the political economy case lead us to uncritically defend PSM management?

• Critical analyses of PSB have changed over time: earlier accounts (e.g. Schlesinger, Hall, Sparks) more critical

• Demand for greater institutional accountability exists across the board

• High profile governance failures e.g. failure of BBC Trust to deal with Jimmy Savile case adequately

• Peter Goodwin (2014, p. 84): ‘the friends of PSM … must adopt a more critical tone in addressing existing PSB operations’: problems of ‘bloated executive salaries, conservative programming policies, corporate arrogance, and lack of inclusiveness – to name but four in a list that is not short’ (Goodwin, 2014, p. 84).


Relational contracting in public sector media – how much is Tony Jones worth?

• ABC salary “leak” reminder that there is no longer a “base pay” for ABC presenters

• Differential salaries reflect various performance-based (relational) contracts within the organisation


New Institutional Economics (NIE)

• Institutions as ‘the humanly devised constraints that structure human interaction’ (North, 1994, p. 360)

• Institutional arrangements/governance structures (micro)

• Institutional environment/ ‘rules of the game’ (macro)– Formal institutions: rules, laws, policies etc.– Informal constraints: norms, conventions, cultural codes

etc. – links to history and culture


The firm as a nexus of contracts

• Origins with Ronald Coase (1937)• The firm is an institutional form that economises

on transaction costs• Implicit and relational contracting• Contracts rely upon trust, social networks,

reputation – importance of institutional cultures• Applicable across both private and public sector

institutions


Core NIE propositions relevant to PSM• Concepts applicable to both public and private sector

organisations• Firm as a ‘nexus of contracts’• Separation of ownership from management, and principal-agent

problem• Tendency to expand into conglomerates – risk of becoming too

big• Relational or incentive-based contracting – comparable

employment arrangements across public and commercial media• Governance issues arise in context of principal-agent problem:

how is the public interest safeguarded while also ensuring value-for-money in public provision?


Governance challenges for PSM

• Accountability of PSM managers to the public – via the government?

• Should a PSM be trusted to regulate itself?• Distinctiveness of PSM histories and

organisational cultures• Political problem: electoral politics increasing

a ‘battle for political property rights’ – loss of autonomy for public institutions


UK Debate on Future Governance of the BBC

• House of Commons, Culture, Media and Sport Committee, Fourth Report 2014-15

• Failure of BBC Trust: required to be both “regulator and cheerleader” of the BBC

• Three part structure proposed:– Board responsible for BBC performance– Ofcom responsible for content regulation– Public Service Broadcasting Commission

responsible for assessing value-for-money


Governance challenges

• Can PSM argue against external regulatory scrutiny across all aspects of their operations?

• Would better “arm’s length” relationships reduce scope for arbitrary political interference?

• How best to enable checks and balances on PSM management, and address principal-agent problem?


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