New Communications Policy
2.3.4. Neo-liberal marketisation and programming diversity: risk of
‘ruinous competition’
In terms of programming diversity across the systems, empirical experience suggests that the expansion in broadcasting, facilitated mostly by an expansion in commercial broadcasting, and the resulting intensification in the competition for viewers may produce adverse effects on programme diversity. Empirical studies by van der Wurff and van Cuilenburg (2001), Aslama et al. (2005) and Hellman (2010) demonstrate that intensification of competition will eventually lead to commercial broadcasters adopting similar (rather than different) programming strategies, at least in fierce market competition situations where the tendency is to compete for audiences and advertisers by offering the majority’s preference (van der Wurff and van Cuilenburg 2001: 216-7; Aslama 2004: 8). The cost leadership strategy, favoured by commercial broadcasters, initially involves maximising profits by acquiring structural cost advantage by realising economics of scale and scope and serving maximum audiences, and by minimising costs by a continuous process focus on cost reduction and investments in technological and non-technological process innovations. In limited markets with moderate competition, such a strategy would contribute to reflective diversity that fits the demand of the largest possible audiences. However, intensification of competition, inter alia, in a market where many competitors of similar size compete, or when significant new competitors enter a market, will lead to ruinous competition. In such a situation:
…too many companies adopt a cost leadership strategy, [and] these cost leaders will start to compete on price. They will start undercutting each other’s prices until prices equal marginal costs. Given that marginal costs are very low and that fixed first copy costs are relatively high in broadcasting, price competition will easily push prices below average costs. When this happens, a negative cycle starts. Revenues will not be sufficient to recoup first copy costs.
Investments in content development or process innovation will become unfeasible. Broadcasters will start replacing cost leadership strategies with short-term price competitive strategies4 to minimize first copy costs. They will offer low quality content at low prices. Audiences will turn to other media markets and revenues will decline further. The end result will be that the remaining broadcasters all offer the same content.
(van der Wurff and van Cuilenburg 2001: 216) Such a scenario suggests that ruinous competition would also radically reduce commercial broadcasters’ willingness to provide minority interest programming, as low-cost mass audience programming is likely to produce higher commercial return.
While digital terrestrial television (DTT) has facilitated the introduction of thematic channels, they usually specialise in certain types of programming of popular interest, such as sports, entertainment and films, and have benefited minority interest provision only in a limited way.5 The study by Hellman (2010) demonstrates that the introduction of thematic channels in Finland has in long term only served to decrease the diversity across the system, especially among commercial operators. As Hellman notes, in trying to find content niches that serve increasingly fragmented target audiences, broadcasting executives produce variety rather than diversity of programming: viewers are provided with product differentiation, i.e. a wide choice between multiple shows of the same genre, while some minority interest genres remain under-represented.
4 The price competitive strategy involves broadcasters re-broadcasting content that has already been aired in the same or other markets. Alternatively, they will broadcast content that has already been proven successful in other markets and that can be replicated at low cost (van der Wurff and van Cuilenburg 2001: 215).
5 With children’s programmes being a notable exception.
2.4. Conclusion
Parallels between the models of PSB by the Broadcasting Research Unit (1985), Blumler (1992b) and the Council of Europe (1994) examined in the previous sections demonstrate that notwithstanding the differences in national PSB systems, certain characteristics of PSB are universal in European PSB systems. Catering for minority interests and tastes is considered one of these universal PSB duties. Originally stemming from the technological limitations set by spectrum scarcity, the obligation to cater for all interests and tastes, including those of audience minorities, universal service can be considered a natural outcome of the fact that the system is funded by the corpus of its users. The social and cultural objectives of the post-war PSB paradigm also backed catering for minority interests: the ultimate goal of the paradigm was to promote democracy through producing informed citizens. Thus, programming policies were based on a priori, normative knowledge on audience needs rather than their presumed ‘wants’, and audience size was a lesser factor in determining the output.
The prevailing public service orthodoxy was challenged in the 1980s for technological, ideological and economic reasons. However, Murdock and Golding (2001), argue that a direct consequence of the rise of the neo-liberal agenda in media and communication policies is a wide-reaching socio-political, economic and ideological process of marketisation, whose impact has penetrated broadcasting policies and institutional structures of broadcasting organisations. van Cuilenburg and McQuail (2003) argue that a shift has taken place in broadcasting policy focus, with the emerging policy paradigm driven by an economic and technological logic.
Concurrently, the public interest has been significantly redefined to encompass economic and consumerist values (van Cuilenburg and McQuail 2003: 200).
As one of its key legacies has been the liberalisation and re-regulation of commercial broadcasting, marketisation has created pressures for PSB institutions to modify their institutional behaviour. While Syvertsen (1992), Siune and Hultén (1998) and Bardoel and d’Haenens (2008: 340-44) note that most broadcasters have chosen to balance between the traditional public service values and commercialism, the previously
dominant tradition of paternalism that was based on a priori, normative knowledge on audience ‘needs’ has been replaced by increased awareness to the presumed ‘wants’
of the mass audience (Ang 1991: 103-4). However, Syvertsen (1992), Siune and Hultén (1998) and Bardoel and d’Haenens (2008: 340-44) argue that the vast majority of public broadcasters have adopted the compensation strategy, trying to balance between the traditional public service paradigm and commercialism. Siune and Hultén (1998: 29) and Brants and De Bens (2000: 18) argue that experiences from European PSBs point rather towards a divergence hypothesis: public service channels and their commercial rivals emphasise different content segments, with public service channels stressing their fortes of e.g. news, current affairs and domestic fiction. In order to better justify their privileges, public broadcasters have developed elaborate frameworks for public value measurement, that combine both social-cultural elements with economic and consumerist factors. Thus, these economic and consumerist objectives have been accepted as part of the emerging public service paradigm. van der Wurff and van Cuilenburg (2001) argue that intensifying competition between commercial channels will eventually lead to ruinous competition, in which broadcasters adopt similar types of mass-audience oriented programming policies that will lead to deterioration of programming diversity especially among commercial channels.