Is public service broadcasting a battlefield

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Is public service broadcasting a battlefield?

• An analysis of European State aid rules and the
  public service remit of public service
  broadcasting in the digital age.

Karen Donders Vrije Universiteit
Brussel Caroline Pauwels
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Introduction (1)

• Liberalisation of European media markets
• gt mixed media environments
• Strong attachment to economic values can be
  observed,
• to the detriment of the social and democratic
  values underlying media policy
• Pressure on public service broadcasting (PSB)
• Private undertakings
• European Commission, DG Competition different
  decisions with regard to State aid (SA) and PSB
• Questioning of the digital public service remit
  (PSR) of PSB
• Questioning of the financing of public
  broadcasting organisations (PBOs)
• gt SA is no longer taken for granted

Public service broadcasting a battlefield?
11 October 2007
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Introduction (2)

• Overall negative evaluation of the Commissions
  activities in this field of media policy gt The
  Commission is narrowing down the remit of PSB in
  a digital age
• RQ
• How (if) does the ECs State aid (SA) framework
  challenge the public service remit of public
  service broadcasting in the digital age?
• Can we empirically validate the overall
  impression of the Commission narrowing down the
  digital remit of PSB?
• Structure
• Relevant SA documents and rules
• Case analysis
• Conclusion

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Legal constraints and political margins (1)

• The rule SA prohibited by the EC Treaty (Art.
  87(1) EC)
• Save as otherwise provided in this Treaty, any
  aid granted by a Member State or through State
  resources in any form whatsoever which distorts
  or threatens to distort competition by favouring
  certain undertakings or the production of certain
  goods shall, insofar as it affects trade between
  Member States, be incompatible with the common
  market
• The exception Overall, for PSB and State aid
  funding of PBOs can be compatible with the EC
  Treaty if
• Clear definition of the PSR and PBOs mandate
• Entrustment of the PSR by means of an official
  act and monitoring performance PBO
• Proportionality of the aid vis à vis the netto
  costs of the public service delivery
  (Broadcasting Communication, 2001)

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Legal constraints and political margins (2)

• Definition
• The PSR and mandate of the PBO should be
  clearly defined
• Subsidiarity MS define the PSR of PSB
• Commission manifest error gt with regard to
  new media services some tensions might arise
• Entrustment and monitoring
• Entrustment of the mandate to the PBO by means of
  an official act or law
• Evaluation on the basis of in advance identified
  quality standards (by external monitoring body)
• Proportionality
• PBOs should be compensated for the public costs
  they occur
• Public compensation should never exceed the netto
  cost of the public service delivery
• Overcompensation gt cross-subsidising and market
  distortion

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Case analysis (1)

• EC Treaty
• Bias against public service delivery The
  Community framework indeed challenges the PSR of
  PSB, of SGEI in general
• Case selection
• digital cases thematic channels,
  online/digital activities
• Netherlands, Germany, UK, Denmark
• Analysis lt inspired by Broadcasting Communication
  criteria
• Proportionality
• Entrustment and monitoring
• Definition

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Case analysis (2)

• Proportionality
• Setting the scene
• PBOs are not efficient, get more money than they
  need, distort competition, etc.
• Outcome
• Separation of accounts (commercial and public
  revenues and costs should be found in different
  accounting systems) (Dutch German case, 2006 1
  2007)
• Overcompensation found in Dutch and Danish case
  (2006 2004) reimbursement of the aid
• Flawed empirical evidence overcompensation
  taken as evidence for market distortion
• Lack of figures and facts
• gt Balancing PSR with market distortion will stay
  fundamentally difficult

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Case analysis (3)

• Entrustment and monitoring
• Whenever the scope of the PSR is extended to
  cover new services the definition and entrustment
  act should be modified accordingly (BC, 40)
• Expansion of PSR to digital age does not fit
  already existing entrustment acts
• Assumes implicitly that new media services are
  not necessarily public in nature (a.o. German and
  Dutch case, 2007/ 2004)

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Case analysis (4)

• Definition
• Technology-neutrality regulation that is based
  on specific technology ... Is destined to become
  quickly outdated (Reding, 2006)
• PSB two problems
• LPF PBOs expansion to new media markets is
  looked upon as being market distortive simply
  because of their intervention in other
  technological markets ltgt idea of technology
  neutrality
• Commission fear for mission creap ( abuse of
  the exceptions in the EC Treaty) to enter new
  (commercial) media markets ltgt idea of technology
  neutrality

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Case analysis (5)

• How to define digital remit Commission is
  still in doubt
• Closely associated(UK, 2003)
• New media services should be closely associated
  to the old ones
• Implies (again) a difference on the basis of
  technology ltgt technology neutrality
• Intervenes with definitional freedoms MS
• Broadcast services and information society
  services (Dutch case, 2004)
• This difference has never been mentioned in the
  BC Communication gt stretching of competences
• Technology-neutrality gtadded public value
  (German case, 2007)
• A concept that can work
• Goes the the core problem the difference between
  commercial and public services, a difference to
  be defined by MS ltgt definitional freedoms of MS

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Conclusion

• Is the Commission narrowing down the digital
  remit of PSB?
• YES
• closely associated
• Intervention with MS definitional freedom
• Stretching of competences
• gt Commission should have an eye for both the
  innovative capacities of PBOs and the
  contribution digital media services can represent
  for the better fulfillment of the PSR
• No
• No negative definition on the basis of definition
  / new media services yet
• (Dutch and Danish case overcompensation through
  reserve assets)

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Contact

• Karen Donders
• IES and IBBT-SMIT
• kdonders_at_vub.ac.be
• Prof. Dr. C. Pauwels
• IBBT-SMIT
• cpauwels_at_vub.ac.be