NCPA - National Center for Policy Analysis

Public TV Is Highly Bureaucratic In U.K.

May 11, 2001

There are two government-owned, or public-sector, broadcasters in the United Kingdom: the British Broadcasting Company (BBC) and Channel 4. The BBC is financed by an annual license fee on consumers' television receivers, while Channel 4 is supported by advertising. Although it is losing audience share to private competitors, BCC's subsidies are increasing, and it is expanding via the Internet and by producing programming to sell to commercial broadcasters.

Critics often call for privatization of either or both broadcasters. For instance, private sector broadcasters argue that the BBC and Channel 4 abuse their privileges and unfairly compete. However, in order to win the public and political debate, says former broadcasting executive David Elstein, critics need to refute the arguments for public broadcasting.

There are only two valid arguments for public sector broadcasting: that it provides programming that would not otherwise be available for free, due to market failure; or that providing any particular quantity of programming is more cost-effective in the public sector than in a profit-seeking system.

While the desirability of particular kinds of programming is a matter of judgment, cost-effectiveness is exceptionally hard to find in public sector broadcasting. Lacking shareholders, and the pressures and accountability that accompany them, the public broadcasters tend to be overstaffed and inefficient. For example:

  • The BBC still employs over 24,000 people, almost as many as ever, although 25 percent of its productions now come from independent producers.
  • Channel 4 managed to increase its staff by 20 percent, and its overhead by 30 percent last year -- yet its prime function, running a single 24-hour channel, remains unchanged.

Source: David Elstein, "Competing With the Public Sector in Broadcasting," Economic Affairs, December 2000, Institute of Economic Affairs.


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