Provision of Television Broadcasting in the Modern
Age
PUBLIC SERVICE BROADCASTING1
Mark Armstrong University College London
March 2005: final version July 2005
Abstract
This essay discusses the merits of public intervention in the provision of television broadcasting services. I argue that intervention was justified in the past, when there were just a few channels and when advertising was the sole source of commercial funds. However, the advent of subscription television overcomes many of the market failures which once existed. Moreover, asymmetric treatment of broadcasters acts to distort the incentives of commercial broadcasters. Finally, viewers have an increasing ability to avoid unappealing, but perhaps socially desirable, content, which further weakens the case for public intervention in the market.
1. The Historical Context
In this essay I wish to discuss three questions about the provision of television broadcasting in the modern age:2
1. Will the broadcasting market deliver what people want to watch? 2. Should people be allowed to watch only what they want to watch? 3. If not, will people watch what we want them to watch?
I start with the second question and consider whether broadcasting policy should be directed to “give the public what it wants”? In the UK, the tone of the debate about public service broadcasting was set in the earlier radio era. John Reith, the first Director General of the BBC, wrote,3 “the preservation of a high moral tone is obviously of paramount importance.” And “[t]here is no harm in trivial things; in themselves they may even be unquestionably beneficial, for they may assist the more serious work by providing the measure of salt which seasons.” Coase (1950, page 177) remarked that
1 This is the edited text of an inaugural lecture given at University College London on March 10, 2005. It is based in
Mark Armstrong University College London
March 2005: final version July 2005
Abstract
This essay discusses the merits of public intervention in the provision of television broadcasting services. I argue that intervention was justified in the past, when there were just a few channels and when advertising was the sole source of commercial funds. However, the advent of subscription television overcomes many of the market failures which once existed. Moreover, asymmetric treatment of broadcasters acts to distort the incentives of commercial broadcasters. Finally, viewers have an increasing ability to avoid unappealing, but perhaps socially desirable, content, which further weakens the case for public intervention in the market.
1. The Historical Context
In this essay I wish to discuss three questions about the provision of television broadcasting in the modern age:2
1. Will the broadcasting market deliver what people want to watch? 2. Should people be allowed to watch only what they want to watch? 3. If not, will people watch what we want them to watch?
I start with the second question and consider whether broadcasting policy should be directed to “give the public what it wants”? In the UK, the tone of the debate about public service broadcasting was set in the earlier radio era. John Reith, the first Director General of the BBC, wrote,3 “the preservation of a high moral tone is obviously of paramount importance.” And “[t]here is no harm in trivial things; in themselves they may even be unquestionably beneficial, for they may assist the more serious work by providing the measure of salt which seasons.” Coase (1950, page 177) remarked that
1 This is the edited text of an inaugural lecture given at University College London on March 10, 2005. It is based in
References: Anderson, Simon and Stephen Coate (2005), “Market Provision of Broadcasting: a Welfare Analysis”, Review of Economic Studies, forthcoming. Coase, Ronald (1950), British Broadcasting: A Study in Monopoly, Longmans, Green and Co. Coase, Ronald (1966), “The Economics of Broadcasting and Government Policy”, American Economic Review, 56(2), pp Crampes, Claudes, Carole Haritchabalet and Bruno Jullien (2005), “Competing with Advertising Resources”, mimeo. Davies, Gavyn, et al. (1999), The Future Funding of the BBC, Report of the Independent Review Panel for the UK Government, London: HMSO. Graham, Andrew (2005), “It’s the Ecology, Stupid”, in Can the Market Deliver? Funding Public Service Television in the Digital Age, John Libby Publishing. Hamilton, James (1998), Channelling Violence: the Economic Market for Violent Television Programming, Princeton University Press. Kubey, Robert and Mihaly Csikszentmihalyi (1990), Television and the Quality of Life, Erlbaum. Kubey, Robert and Mihaly Csikszentmihalyi (2002), “Television Addiction is no Mere Metaphor”, Scientific American, 286, pp Oliver, Mark (2005), “The UK’s Public Service Broadcasting Ecology”, in Can the Market Deliver? Funding Public Service Television in the Digital Age, John Libby Publishing. Peacock, Alan, et al. (1986), Report on the Committee on Financing the BBC, London: HMSO. Peitz, Martin and Tommaso Valletti (2004), “Content and Advertising in the Media: Pay-TV versus Free-to-air”, mimeo. Putnam, Robert D. (2000), Bowling Alone: The Collapse and Revival of American Community, Simon & Schuster. Spence, Michael and Bruce Owen (1977), “Television Programming, Monopolistic Competition, and Welfare”, Quarterly Journal of Economics, 91(1), pp Steiner, Peter (1952), “Program Patterns and Preferences, and the Workability of Competition”, Quarterly Journal of Economics, 66(2), pp Terrington, Simon and Caroline Dollar (2005), “Measuring the Value Created by the BBC”, in Can the Market Deliver? Funding Public Service Television in the Digital Age, John Libby Publishing.