Public Broadcasting, Market Failure, and the Case for Intervention

Introduction: Public Service Broadcasting and the Market

The British Broadcasting Corporation (BBC) is the key player in public service broadcasting in the UK. The organisation was established in 1926 as a public corporation and is funded by revenue generated from television licences, which all TV owners are required to purchase. The corporation is prohibited from running advertisements on any of its channels. Britain's public broadcasting became free of state control in the 1960s. The relinquishing of the state monopoly gave rise to many other broadcasting stations with a commercial bias, though these were still strictly regulated. The new entities were run on revenue generated from advertising and also sold licences that allowed viewers to access their programmes. This arrangement still broadly holds in the British broadcasting environment, despite recent evolutions and the development of digital transmission stations across the country. A similar trend is replicated in other European countries and elsewhere.

The USA, however, operates on a different model (Keat, 2011). Public broadcasting organisations were initially established as monopolies, a number of which were under direct state oversight. These corporations evolved their operations in the mid-1990s when they adopted a dual approach, embracing both commercial and public broadcasting. The UK is noted to have started commercial broadcasting earlier than other European states, which typically fund their public broadcasting through a combination of licence fees and advertising revenue (Hesmondhalgh, 2007).

Two broad arguments support the provision of public services in general. First, there is the distributive justice argument: that such services are a public right irrespective of people's socio-economic status, and cannot be guaranteed if left entirely to market forces (Keat, 2011). Second, the character of a required service may be unpredictable and may not serve its intended purpose if commercially delivered. In some cases only the first argument applies; in others only the second; and in some — education being a notable example — both apply. The health sector is generally anchored in the first argument (Keat, 2011).

The second premise is more directly relevant to broadcasting as a public service. Critics argue that if broadcasting is left entirely to commercial forces, the public will be deprived of essential programming. Accordingly, an effective public broadcasting rationale must identify the purposes of broadcasting and justify them, while demonstrating that a purely commercial model would undermine those purposes. Rejecting the commercial model also requires showing that an alternative, institutionalised approach can achieve — or come closer to achieving — those desired objectives (Keat, 2011).

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