Gloalisation, restructuring and pulic roadcasting - Europe

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Gloalisation, restructuring and pulic roadcasting - Europeand,Pulic,pulic,PULIC




By Timo-Erkki Heino (

    International Federation of Journalists/ Finnish Broadcasting Company

SABC stocktaking conference 4.-5.11.2000

    The past 10-15 years have meant restructuring in practically taken each and everyone of the public service broadcasting companies world wide. According to the latest newspaper reports even the Swedish public service television, which has been doing very well ratingswise, is to sack 300 employees.

    Finnish Broadcasting Company, the company I work in, has at the moment plans that by year 2003 there should be 400 less employees than today. At the same time with digitalisation the programme output is going to be increased manifold. To us the equation seems impossible but obviously not to the management.

    The management of the public service broadcasting corporations world over have been well aware of the restructuring and downsizing measures which have been taken in other public service broadcasting companies. The management has been constantly comparing notes and following each other’s example. On the employees’ side we have not had enough international connections so that we on the basis of them could have been able to resist downsizing measures that have already been tried and have failed elsewhere.

    So the idea by the organisers of this conference that we also on the employees’ side should compare notes and exchange experiences is indeed very welcome.

Consultants at the service of public broadcasting

    When Gregg Dyke became the new Director General of the BBC he’s supposed to have said the corporation should get rid of three c’s, company cars, croissants and consultants. So the BBC’s longstanding relations with the consulting firm McKinsey & Co. were terminated.

    Prior to that McKinsey has established itself as a consulting company specialising in the media enterprises, both print and broadcasting, and especially in public service broadcasting companies. In the latter the McKinsey recommendations usually included different kinds of outsourcing and downsizing based free market ideology foreign to the very idea of the public service broadcasting. Consequently McKinsey succeeded in almost ruining many of the public service companies. The consulting company became to be seen as the arc enemy of public service broadcasting.

    To the outsiders the Canadian Broadcasting Corporation CBC has for the past 15 years seemed like a real laboratory of downsizing where every trick in the book of the consultants has been tried. However, one can estimate that the management of the CBC only put into practice something like 20 percentage of measures recommended by the McKinsey consulting company. With that as a background it can be understood what kind of havoc McKinsey played with the South African


    Broadcasting Corporation when the SABC is said to have accepted about 80 percentage of McKinsey’s recommendations.

    After that introduction I now going to speak at some length and very positively about the most recent McKinsey study. The study is Public Service Broadcasters Around the World by

    McKinsey & Co (1999). This study is really very good.

    In the report 20 public service broadcasting companies and their respective television markets are studied and compared. The SABC and South Africa are included, as well as all the Nordic countries, except Finland.

    And what are then the results by this consulting company which has been ruining, almost, many public service broadcasting companies? The study comes strongly in favour of public service broadcasting.

    The one big end result is of this international study is that the stronger public service broadcaster is on a given television market, the better is the overall quality of that whole television market. Actually the study does not use the word ”better in quality”, but ”more distinctive” which is defined

    as the share of factual, cultural and children’s programmes broadcast by the main public service and

    commercial channels weighted by their audience share. That ”more distinctive” equates with ”better quality” is not a too far reaching interpretation:

    A strong PSB [public service broadcaster] can play an important role in today’s competitive and complex broadcasting markets. In a world of many channels, we have found that a PSB is at its most effective when it not only broadcasts distinctive schedule, but also exerts pressure on its commercial competitors to do the same… it [PSB] combines creative and market pressures on

    broadcasters to achieve a society’s aims for it broadcasting market. It does so by setting off a ’virtuous circle’ with its commercial competitors… PSB can popularise new styles of programming, and thereby encourage commercial broadcasters to create their own distinctive programmes. In this way, the viewing standards of the entire market are raised. (pp. 3-4)

    According to McKinsey not only does public service broadcasters make good programmes but they also give a benchmark for the commercial channels to raise their standards, too. When public service broadcaster benefits with better overall programmes the whole of a given television market it also benefits even those viewers who never watch public service programmes.

    The study gives a few examples of the ”virtuous circle” via which a strong public service broadcaster has raised the overall standard of programmes.

    The BBC spend large sums of money… to make compelling natural history programmes such as Life on Earth. The competing commercial channels, rather than concede the genre to the BBC, have created their own popular natural history and science programmes e.g., ITV’s Survival and

    Channel 4’s Equinox. The competition among the three broadcasters raises quality and reinforces audience taste for the genre…(p. 18)

    In Canada, CBC’s improved coverage of Francophone news has raised local standards. Their principal competitor, TVA, was forced to improve the quality of their Francophone news, resulting in a locally competitive market with high overall standards.


    In Germany, ZDF’s early commitment to local production resulted in higher ratings. Their commercial competitors were forced to rethink their use of imports, and a vibrant local production community has emerged... (p. 19)

    [Sweden’s] SVT’s success in prestigious drama has prompted [the commercial] TV 3 to begin production of their own distinctive drama. SVT has been particularly effective in prompting its rivals to schedule rigorous programmes. (p. 23)

    The study also compares countries in relation to how distinctive, how many-sided their overall television output is. The best, most distinctive, is the television output in the United Kingdom and in Sweden. The worst, less distinctive, it is in the US. In can be clearly seen that the reason for this is the fact that the United Kingdom and Sweden public service broadcasting is strong and influential, in the US it is weak and marginal.

    The speciality channels in the US, e.g. Discovery, Learning, and History, have very little effect on the overall quality of the television market because their audience share is extremely low and accordingly they have little impact on the main commercial broadcasters.

    If and when a society has aims for its broadcasting market, e.g. many-sidedness, so, according to the study, these can be more efficiently achieved via a strong public service broadcaster than by regulating the market:

    While government regulation of commercial broadcasters can achieve some of these aims, our analysis shows that the PSB model is the preferable approach… (pp. 3-4)

    The McKinsey study also finds a very clear connection on how the public service broadcasting is financed and how distinctive the television market in question is. When public service broadcasting companies are financed by the licence fees, as is the case in the UK and Sweden, the stronger is the public service broadcasters’ influence on the overall quality of the market.

    The more public service broadcasters are financed by advertisement, the weaker is their influence on the television market as a whole, the poorer, less distinctive is the television market. When the public service broadcasting company is financed by advertisement, it is bound to imitate the commercial channels nit vice versa.

    This study comes very strongly against advertisement funded public service broadcasting:

    Those PSBs [not sufficiently funded by the government or licence fee and having to rely on advertising revenue] which have been forced to chase market share… in order to fill their funding

    gaps have had a very difficult time. The overall standards of the market have been affected and it has only taken a short while for audience tastes to descend to the lowest common denominator… Our analysis shows clearly that an increased dependence on advertising has led inexorably to a more populist and less distinctive schedule. (pp. 28-29)

    In the study there’s only one exception to the rule that advertising drives to a more populist, less distinctive television programmes, and that is the SABC. Of the companies studied the SABC relies most on the advertising revenue but its programmes are at the same as distinctive as those of the Australian Broadcasting Company ABC, the BBC and the public service broadcasters in the Nordic countries. However, this is no proof that even with advertising revenue one can get distinctive programming but more a result of the special features of the South African society and broadcasting.


    In the McKinsey study is described what happened in the 1990s to the advertisement funded public service broadcasters. It is more than probable that the same development will also happen in South Africa if the SABC remains in its present mode of advertising financing.

    Our analysis also shows that, between 1993 and 1996, advertising as a percentage of revenue declined across a sample of PSBs, yet the programming mix of the advertising supported channels remained broadly the same. This implies that even the least rigorous advertising-funded PSBs are seeing decreasing financial benefits from their relatively populist schedules. The principal cause appears to be increased competition for advertising. Accordingly, if advertising-funded PSBs are to increase their advertising revenue, they will have to become even less rigorous…thereby harming the entire market. (p. 29)

    It is worth pointing out that the Canadian CBC made this spring a very conscious move to lessen its dependence on advertisement funding. The measure was partly taken because the CBC anticipated that with more and more channels available the advertisement revenue to the CBC is in any case bound to diminish in the near future. But, and this is important, the move was also done because the CBC wanted to become more distinctive as a public service broadcaster.

    When the same commercials could be seen on the public service channels and on the commercial channels, the Canadians were starting to wonder what’s the difference. To make this difference the CBC started to decrease the share of advertisement revenue in its financing. Another matter is that that the management of the CBC combined this and accompanying measures with yet again a new wave of workforce reductions.

    In the Finnish Broadcasting Company the financing is also partly carried out by advertising but in an indirect way which very effectively lessens the unwanted features of the advertising financing. Roughly 75 % of the Finnish Broadcasting Company’s financing comes from the licence fee. In addition to that the two terrestrial commercial channels pay a concession fee, ”public service fee”,

    to the extra-budgetary State Television and Radio Fund. This fee is almost entirely then transferred to finance the Finnish Broadcasting Company’s activities. This public service fee coves roughly 10 % of the public service broadcaster’s annual budget.

    It’s not uncommon that the commercial broadcasters pay a fee for the use of the broadcasting frequencies as a limited public resource. What is uncommon, however, in the Finnish model is that the fee does not end and vanish - to the bottomless state budget but is used directly to finance

    the public service broadcaster. At the moment the Finnish model is studied very closely in the European Union as an efficient way to finance public service broadcasters and at the same time lessen the direct reliance on advertising as well as also decrease the dependence on the whims of the government connected with the direct state budget funding.

    Perhaps even in South Africa this “Finnish model” could be applied. The SABC would commit itself to the decrease of advertisement revenue to a certain level in a period of 5 years thus creating more room advertising financing for the commercial channels and making its programming more distinctive. The commercial companies would direct part of their increased advertisement revenue via a television fund to the public broadcaster SABC.

    One thing is worth noting. While speaking of the public service broadcasters, as above, one is speaking of the ideal of the public service broadcaster. In concrete cases the management of the public service companies might and have been - running the companies in a way which is

    detrimental if not even outright contradictory to the public service ideal. However, to the public service companies the demand to be accountable to the public, the audience, can be presented. To


    the commercial television companies this demand of accountability cannot be placed. They are accountable only to their shareholders.

    There are several examples which show us that the public service mandate cannot be left only to the management nor the politicians to fulfil. Active involvement by the audience and the employees is often needed to keep the task of public service broadcasting on or back to the track.

Programme making not core business ?

    One of the standard recommendations by McKinsey and other consultants to the public service broadcasting companies has been outsourcing. Somehow the consultants got the companies’ management to believe that for a television company the making television programmes was not core business.

    The share of programmes made by outside independent companies - or small commercial companies as they can also be described - varies from country to country and from programme genre to programme genre. The possibilities and capabilities of small commercial companies vary also a lot. In South Africa with its particular apartheid-history both in the SABC broadcasting and in the independent companies’ productions, the role and significance of the independent producers is much stronger than in many other countries.

    I fully support and acknowledge the small commercial companies’ achievements. They tend to be much more flexible and sometimes even more innovative than the large and somewhat bureaucratic and static public service broadcasting institutions. What is needed is a good mix between the two and that varies from country to country.

    At the BBC Margaret Thathcer in her days made it even a law that 25 % of all the BBC output has to be outside productions. That is more or less the same level the outside productions for the recent years has been in Finnish Broadcasting Company and also at the other Nordic countries. In Finland outside productions are most common in documentaries, drama and entertainment. In drama and documentaries the outside productions is facilitated by the joint tripartite financing system by Finnish Broadcasting Company, the Finnish Film Foundation (state budget) and the AVEK Promotion Centre for Audiovisual Culture (copyright revenue).

    At the Canadian CBC news, current affairs, sport and documentaries are almost entirely produced in-house. In the genres of film and drama, variety and entertainment almost 80 % is produced outside the CBC. Even in Canada due to the tripartite financing system it’s possible to get public

    financing for a certain project if it’s carried out as an outside production but not as a public service production.

In his from the public broadcasters’ point of view - very gloomy book The Decline and Fall of

    Public Service Broadcasting (Oxford University Press, 1998) Michael Tracey analyses very

    clearly this outsourcing:

    One possible shift in the model of broadcasting as a result of fiscal pressures leading to downsizing is from broadcaster-producers, which has traditionally been the dominant model, to broadcaster-publishers, of which Channel Four is one version… The principal theoretical arguments for this model lie in the possibility of offering a greater diversity of ’voices’ from an independent sector. The pragmatic arguments have much more to do with the economic of television, that this way of doing things is cheaper. (p. 266)


    Tracey predicts that too much outsourcing will lead or has led to ”cultural anorexia”, to the loss

    of the critical mass which has benefited greatly the audience:

    …one of the strengths of public broadcasting historically has been its ability to nurture talent, and to reflect on its own worth and purpose. More often than not that has not only been the function of particular departments but also has been a consequence of having the overall capacity to bring

     say a new writer or director or journalist at a pace which allows their natural someone along

    talent to mature. (p. 266)

    Tracey also reminds that the basic concern of an independent commercial company is its economic survival.

    In the recent years we have witnessed how this basic concern or just the eagerness to make (more) money has overridden artistic, journalistic and ethical considerations in the outside independent productions. So far the most (in)famous cases of faked or forged documentaries have been made by the independent productions.

In 1996 ”The Connection”, an award-winning documentary about the drug traffic from Columbia to

    the UK directed by Marc de Beaufort, was broadcast by the commercial channel Carlton/ ITV and after that by many stations, e.g. the commercial channel 4 in Finland. Two years later The Guardian newspaper was able to disclose that the documentary included several staged or faked incidents and inaccuracies and moreover that Carlton had been made aware of the suspicious features even before the broadcast.

    In Germany a couple of years earlier independent director Michael Born produced several astonishingly sensational pieces for instance on the German Klu Klux Klan and on cat hunting. The programmes were for the most part broadcast by the commercial Stern TV. Later these programmes were disclosed as faked and director Born was convicted in the court of law.

I’m not saying that the quest for sensationalism and ratings cannot even in the public broadcasting

    companies lead to miscalculations and mistakes. However, in a public service broadcasting company financed by licence fee the temptation and incentive for this kind of forged programmes is much smaller than in an independent production company fighting for its survival.

The study made for the World Radio and Television council titled Public Broadcasting Why?

    How? (2000) sums up the need for in-house production as well as the pitfalls of too much outsourcing:

    Public television cannot merely be a programmer. The particular ethics of public broadcasting demand that programs be designed with particular care. This requirement implies that the public broadcaster should also become involved in audiovisual production. While public broadcasters may buy or commission some programs, in-house production not only guarantees that programs will adequately meet the purpose of the broadcaster, but also ensures the perenniality of expertise

    some would say a ―culture‖ of creativity—particular to the public broadcaster. This is even truer of

    new public broadcasters, which must develop an identity, a ―signature,‖ distinguishing them from other stations.

    This approach, specific to public broadcasting, expresses itself partly in a concern for research, innovation and creativity. In-house production also makes it possible to establish the quality standards that public broadcasters must maintain and that will serve as a guide for other broadcasters… Many public broadcasting organizations adopt internal policies that define the


    standards in the areas of information and programming. Public broadcasting should also ensure that the programs they commission are produced to the same criteria. (pp. 15-16)

    At the CBC even more pragmatic grounds for in-house production has been noted. When the production is done outside the CBC cannot sell it abroad and get revenue. An outside production can usually be broadcast three times. With the coming of the digital multichannel age this is much too little.

    The consultants have also been keen to recommend bi-mediality as a way to by to downsize public service broadcasters.

    The SABC according to the annual report 98/99 seemed to be as eager to utilise this procedure:

    The bi-media initiative a merging of the formerly separate Radio News and TV News departments into one cohesive news divisions open up immense opportunities for the SABC. The bi-media

    approach is a global trend in the broadcasting industry… (p. 32)

    Latest news tells us that in the Nordic countries the public service broadcasters in Norway and Denmark, NRK and DR, are also putting bi-mediality in practice.

    However, at the same time the pioneers of the bi-mediality, the BBC and CBC, are quietly stepping out or substantially reducing bi-mediality in their newsrooms. As an indicator can be seen the recent decision by the BBC to move television news staff to and radio news staff back to the Broadcasting House in central London from television centre at White City. The management’s operation to move the radio news staff back and forth of is costing the BBC millions of pounds.

    It’s possible for the foreign correspondents to report for both radio and television but otherwise the skills needed proved to be so different that bi-mediality was not viable.

    The downsizing measure which has aroused most criticism by the employees was the creation of internal markets, at the BBC known as producer choice. The employees and their trade unions critisised the creation of a system where a large number of small units within the corporation looked after their own bottom line and nobody The managemnt was also warned of the vast and inefficient bureacracy connectedm with the producer choice. To no avail. The managemt went ahead with the plans.

    After only few months operating as the new Director General of the BBC Greg Dyke substantially diminished the scope of the producer choice in the corporation. Some parts of internal market will remain but with only 50 business units instead of the current 190.

    The press release by BECTU (Broadcasting Entertainment Cinematograph and Theatre Union) on May 11th 2000 on how internal market is dropped at the BBC film archives and libraries sums up very neatly both the inefficiencies of the producer choice system as well as trade unions’ oppositiuon to it:

    [The new Director General] Greg Dyke has announced that BBC producers will no longer have to pay directly for many library services.

    New arrangements… will allow producers and researchers free access to film clips, video recordings, and printed material.

    Under the previous system, introduced by ex-Director General John Birt, programme makers were charged for each individual item they borrowed, as part of his Producer choice internal market.


    Each year am average of 400,000 separate requests for material were individually billed to programme-makers, and Dyke expects significant savings on administration.

    Payment for these requests will now take the form of a one-off annual cash transfer from programme departments, instead of thousands of individual transactions…

    Dyke’s move away from the internal market at the BBC has been widely supported both by programme-makers and the union. BECTU led the storm of criticism as Producer Choice spread throughout the BBC in the early 90s, and condemned the now-defunct Library charging system as bureaucratic and unworkable.

    As the personnel’s representative I am at the board of the Finnish Broadcasting Company. Otherwise the board is mainly composed of MPs in proportion to the parliamentary strength of the political parties.

    At the end of 1999 a rather the board was able to decide raising of the licence fee rather modestly with 100 FIM (equals R100) from 900FIM to 1 000 FIM. It took the board over one year to get the decision made. The politician were afraid the raise would cause furore among the public. However, there was no public outcry. The public didn’t complain but seemed to understand that it was about time to adjust the licence fee when there had not been any real raise in almost a decade.

    The public seems to be much more in favour of the public service broadcasting than the politicians. I haven’t heard a single complain by the public against the full service programming offered by the Finnish Broadcasting Company. However, in almost all of the board meetings the politicians, especially conservatives, overtly or covertly hint that something less than full service is desired.

    It’s difficult to mobilise audience for the public service broadcaster. Let’s face it, it’s not among first causes to get people on the streets. Although, even that can happen. In Canada this spring opposing the proposal to close down the regional news programmes a series of spontaneous street demonstrations and meetings were held on a genuine grassroots level in favour of the regional news and public service broadcasting. And the demonstrations were succesful at least to a degree. The regional news were not closed down but cut in half.

    In Canada the organisation Friends of the Public Broadcasting was active in organising the meetings. The role of these kind of interests groups is important. But the case for the public service broadcasting can not be left to the NGOs alone. Speaking form the Finnish or Nordic perspective I think that the important thing is for NGOs and the employees and their trade unions get the issue of public service broadcasting high in priority on the agenda of the political parties. That will make the difference.

    At least in Finland one can ask what would be missing from the radios and television sets if the public service broadcaster’s programmes would not be there. The disastrous full impact would only be felt and realised if it would really happen. And then it would be difficult, if not outright impossible, the get it established back again.

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