27th JAMCO Online International Symposium
December 2018 -
The Future of Television: Japan and Europe
Public Service Broadcasting in Europe:
Accelerated Funding Reforms and Opaque Future
This paper first compares the changes in the licence fee models in Denmark and Sweden and then examines the challenges facing public service broadcasting.
1. Denmark：scrapping the media licence fee to replace it with a state subsidy to fund public service broadcasting
In Denmark, DR provides television and radio services as public service broadcaster funded by the media licence fee. TV2 was launched 1988 as another public service broadcaster, but TV2 turned to a limited company owned by the government in 2003, on the condition that the broadcaster would be fully privatized in the future. Therefore、although TV2’s current status is a public service broadcaster but its operation is financed exclusively by advertising revenue. Danish TV broadcasters’ audience shares are 37% for DR and 38% for TV2, which means 75% is occupied by these two companies.
DR negotiates a public service contract with the government in compliance with the comprehensive media policy agreement approved by the government and the Parliament, which determines DR’s remit, scope of services, and budget. The roles and responsibilities of DR is the main focus of the media policy agreement, but it also stipulates support for other public service production such as films, cultural TV programs, and local news, and part of the media licence fee is allocated for them. The public service contract has been renewed every four years, and 2018 was the renewal year. In the beginning of 2015, the Ministry of Culture that is responsible for media policies set up the Public Service Committee consisting of experts to draw up the next media policy. The government assigned the Committee to examine what roles the public service media should play amidst the drastically changing media landscape. The Committee published a report “Public Service in the Next 10 Years” in November 2016.1) The Committee argued that even the media landscape is changing, democratic, social, and cultural contributions that had been the norm of the public service media are a universal value, and defined the roles of public service media as to ensure charge-free and equal access to diverse and wide-range of content, rightly give assistance for capacity-building of the citizens in a globalizing world, and enrich the Danish culture, language, and unity. Based on this, the Committee proposed five future scenarios including “Public service left to the market” (abolish), “Public service remains—but institutions perish” (downscale), and “Public service limited” (limit). These scenarios seem to be showing a way to make DR smaller but the Committee articulated that their stance is not to recommend possible choices to the government but to offer decision-makers a foundation for making informed choices, which means Denmark’s media policy including DR’s future was entrusted to the government.
Nevertheless, prior to the recommendation on the new media policy, the government announced that they had reached an agreement with its non-cabinet ally, the Danish People’s Party, on (1) scrapping the media licence fee to replace it with tax and (2) cutting 20% of the budget for DR over the next five years.2) This agreement was made in exchange for the government cooperation for tax reform. On the premise of this political agreement, a cooperative proposal on the new media policy was presented in April, the following month. Then the media policy agreement was officially signed between the government/the ruling party and the Danish People’s Party in June.3) The new media policy agreement will be valid for five years from 2019 through 2023, and it was decided that the media licence fee will be phased out over the period between 2019 and 2021 as shown in the table 1 below, and DR shall be operated exclusively by tax money.4)
Table 1. Budget for DR (2019 to 2023）
Unit: 1 million Danish krone
Source: DR’s PUBLIC SERVICE-KONTRAKT FOR 2019-2023
The new agreement stipulates that the number of DR channels shall be reduced from six up to four and DR must focus on the areas that can clearly serve a public purpose such as news, culture, content for children and young people, education, learning, and local community so that DR’s remit will not competing with that of commercial media. Besides, although the government has been allocating part of the media licence fee to “Public Service-Pulje” (public service fund) that supports public service production outside of DR, it was decided to increase the total amount of the fund by five-fold. Consequently, the government and DR signed the public service contract in September, following which DR shall reduce its TV channels from 6 to 3 and radio from 9 to 5, and DR announced to downsize 400 people including 25 in managerial positions.5)
2. Sweden: shift from the licence Fee to the “public service see”
Public service broadcasting in Sweden is operated by three public service broadcasters, SVT (television), SR (radio), and UR (educational broadcasting), which are funded by the licence fee (“radio and television fee”). The licence fee is collected from each household based on the possession of a conventional television set, a video recorder capable of receiving television programmes, or a fixed type receiver such as a desk top computer, and the definition of television receiver does not include smartphones and other portable digital receivers. The Swedish government reviewed the licence fee system in 2012 on the grounds that television viewing styles were diversifying and that the licence fee was rather expensive and planned to replace the licence fee to the public service fee based on individual taxable income. But the government failed to reach an internal consensus and had to shelve the plan.6) In 2016, The government newly established a cross-party committee consisting of parliament members to embark on a full-scale overhaul of public service broadcasting including the licence fee system. In November 2018, following the committee’s proposal, the Swedish government officially decided to abolish the current licence fee collected from all households with a television receiver to replace it with a tax called “public service fee,” which shall be paid by individuals regardless of the ownership of a TV set, and announced the new system will be introduced in January 2019.7) While the current licence fee is 2,400 Swedish kronor (SEK) per household annually, the planned public service fee will be 1% of taxable earned income with a ceiling of 1,300SEK and be collected from everyone aged 18 or over with a taxable income. If a person’s monthly income is less than SEK 13 600, the fee will be reduced, and students without income will be exempted.
The Swedish government says that there is a broad political consensus that public service broadcasting should be independent of the government and other economic, political spheres of power in society, explaining that these changes are aimed at creating a stable, long-term funding system for public service broadcasting and strengthening its operational independence. To guarantee this principle, the fee will be collected by the Swedish Tax Agency and the money collected will be administered separately from the rest of the central government budget.
3. Difference between Danish and Swedish approaches to the licence fee system
The reviews on licence fee systems in Denmark and Sweden are aimed at securing fairness in the payment of licence fees and reducing their burdens. This objective is also shared by Germany and Finland that have already been reformed their licence fee systems. The licence fee is built on the principle that services offered by public service broadcasters are accessible by anyone, wherever they live in that given country, and therefore the licence fee is mandatory for everyone. In Denmark, however, while the number of those who use YouTube and Facebook keeps increasing among young people who have an obligation to pay the licence fee, the use of DR services are decreasing. Besides, the number of licence fee evasion has been increasing due to the dissatisfaction especially among students and single-person households with the obligation because the licence fee is supposed to be paid per household regardless of the number of family members, but students sharing a flat have to pay it per person. Therefore, a large part of the 20% reduction from the DR budget is to be used for reducing burdens for young people, pensioners, and persons with disabilities. In Sweden, despite the recent increase of the number of households, the number of licence fee payments has not been increased. This is due to a rise in households that do not have television sets and use other platforms such as computers and smartphones for viewing television programmes. This led to the broad agreement that the operation of public service broadcasting will face a crisis unless overhauling the conventional licence fee system. The shift from the licence fee to the public service fee will almost halve the amount to pay, allow students to be exempt from payment, and reduce burden on low-income persons.
Nevertheless, there is a major difference in the reforms of these two that had decided to scrap their licence fees. In the first place, licence fees in Europe are part of their taxes and dues. The licence fee of the BBC of the United Kingdom is defined as a tax.8） Swedish public service fee is a “special tax,” which will be administered separately from the rest of the government budget and earmarked for the operation of public service broadcasters in the country, as public service broadcasting is recognized as synonymous with public service. On the contrary, Denmark’s reform is to change its funding models to finance public service broadcasting by a government subsidy. In other words, part of the national tax revenue will be used to finance its operation, which will dilute the relationship between public service broadcasters that provide services and their audiences—the people of Denmark. This poses a risk that public service broadcasting will be regarded as part of the political system.
4. Challenges suggested by the Denmark’s reform
The greatest challenge suggested by the Denmark’s reform is political impacts on public service broadcasting. The current Danish government is a right-wing coalition government of the Denmark’s Liberal Party, Conservative People’s Party, and the Liberal Alliance, and non-cabinet alliance is necessary for the ruling coalition to realise their policies. Under such political circumstances, public service broadcasters’ funding and scope of services will become more likely to be used as a tool for political negotiation. In proposing the new media policy agreement, the government showed how they perceived the present media situations: “new media are constantly emerging, the media are becoming more influential to people, and people are becoming more influential to the media through their consumption and practice” although such media situation is common in many European countries. In addition to this, since DR is the largest media organization in the country, commercial media organizations have been appealing to the government, claiming that “the public service broadcaster DR has become so powerful that it is distorting the free activities of commercial operators.” The outcry came especially from the press circle that is facing severe financial difficulties. Such criticism over “public service broadcasters’ undermining private sectors” has been seen in other countries. However, in Denmark, although the public had not clearly said “no” to DR, the government showed its stance to narrow DR’s scope of service and remit in the new media policy agreement, which suggests the existence of behind-the-scene political negotiations.
These impacts seem to be already occurring. The new public service contract stipulates one of the objectives of DR as “to provide programmes and content that clearly show that Danish society has its roots in Christianity.” This objective was inserted during the few months before the signing of the public service contract although it had not been included in the government’s media policy agreement. Meanwhile, an objective stated in the public service contract for 2015 to 2018 that DR must contribute to “the promotion of integration in Danish society” was cut from the new contract. In addition to this, in terms of DR’s internet services, the agreement requires DR to reduce its output of news by stipulating “DR can provide bulletins with text but must refrain from providing long, in-depth articles.”9)
5. Opaque future ahead of public service broadcasting
In the Nordic area, Finland abolished its licence fee and introduced the public service broadcasting tax called the “Yle tax” in 2013, and Denmark and Sweden made a decision to change their funding systems in 2018, with Norway considering to scrap its current licence fee to replace it with the “media fee” which will be charged for everyone regardless of the possession of a television set. Fortunately, for the moment, it seems Norway will not make the same choice as Denmark did. The media market size in the Nordic area is small, and there are not many domestic commercial media companies that can compete with public service broadcasters. Besides, since broadcasts use each country’s own language(s), public service broadcasters enjoy relatively large audience shares in the television market. However, there is a large gap between the youth and the elderly regarding how to access news and information, with YouTube and Facebook used as a news and information source among young people. Behind the Danish government’s request for DR to focus on providing public services is the fact that DR is expected to play a role to protect young people from fake news on the internet by providing news and documentaries for young viewers on its online platform DRTV. Meanwhile, in the field of entertainment, new media players such as Netflix and Amazon as well as conventional content providers such and HBO and Disney offer paid-for VOD services online for global users, which are growing not only in the Nordic area but also across Europe. Backed by ample funds, these players are increasing the production of their own original content and expanding their scope of activities, ranging from co-productions with production companies around the world to acquisitions of such companies. In Denmark, DR’s Head of Drama section left the broadcaster and established a drama and film production company, venturing into co-productions and other businesses with overseas media partners.10) While these developments are underway in the media industry, the Danish government seems to be placing a heavy emphasis on the consideration to the domestic competition between DR and commercial media operators and not discussing the role of DR in the context of how to compete with international media players.
The consumption patterns of news and entertainment programs are assumingly common not only to the countries mentioned in this paper but to a number of countries in the world. A series of licence fee system reforms have been done based on an assumption that public service broadcasters will be maintained, but the funds at their disposition has been reduced, and public service broadcasters themselves have become inclined to downscale their services in pursuit of business efficiency. Along with the digitalization of broadcasting, European public service broadcasters have launched various speciality channels dedicated to certain genres or target viewers, such as news or young generation, but Finland spearheaded to abolish its 24-hour news channel, and Denmark is planning to terminate three channels for young people, culture, and children to cope with the 20% budget cut. The BBC of the UK sustains the current licence fee system, but it has also terminated a television channel for the youth under the pressure of fund reduction. In addition to this, a concern over how to cope with global media players is looming as a major challenge for public service broadcasters.11)
Over the past year, European public service broadcasters have been closely watching the discussion unfolded in Denmark over the reform of public service broadcasting. In January 2018, the Directors-General of the BBC and some other public service broadcasters in Europe including Sweden and the Netherlands issued a joint statement that “the ongoing attempts in Denmark to abolish the licence fee and cut budget will increase the risk of political control and become a setback for democracy”.12) And as soon as the new public service contract was announced, Top executives of Nordic public service broadcasters jointly voiced their deep concern,13） and the Executive Board of the European Broadcasting Union (EBU) followed suit、criticizing that “the restriction on the remit narrows not only the diversity of and access to programmes that are relevant to their lives but also the understanding of social cohesion and understanding at a time when this is more important than ever.”14） It is unusual for public service broadcasters to officially voice concern over political interference on public service broadcasting of other developed democracy. This simply shows that these broadcasters regard the Danish reform as a serious threat in terms that it quickly went beyond a licence fee reform, which were aimed at ensuring fairness in the payment of licence fees, into fund reduction and even to the extent of the role change of public service broadcasters.
In 2007, the year when the convergence of broadcasting and telecommunications infrastructure started in Europe, the Council of Europe defined the remit of European public service broadcasters as below, acknowledging that the ideal of individual public service broadcasting may vary within each member state according to each social, political, economic, and cultural backgrounds: (1) offer universal access for all members of the public in each country, (2) promote social integration, (3) provide impartial and independent information and comment, (4) provide a forum for pluralistic public discussion, and (5) contribute to audiovisual creation and production and dissemination of diversity of national and European cultural heritage.15) Now, a decade later, is the remit of public service broadcasters still regarded as a common one to all countries involved? If so, are there enough funds guaranteed for public service broadcasters so that they can pursue their roles? As long as looking at the Denmark model, the future of public service broadcasting in Europe that is going through licence fee reforms seems to be unprecedentedly unstable and opaque.
- Five future scenarios from the Danish Public Service Committee (15 November, 2016, Nordicom)
The Public Service Committee’s report is available from the following website.
https://kum.dk/fileadmin/KUM/Documents/Temaer/Public_service_udvalget/Rapport_Public_service-udvalget.pdf(Last access date: 5 December, 2018)
- Licensen skal afskaffes og DR slankes (March 16 2018, Finansministreit)
https://www.fm.dk/nyheder/pressemeddelelser/2018/03/licensen-skal-afskaffes-og-dr-slankes(Last access date: 5 December, 2018)
- Medieaftale for 2019–2023
https://kum.dk/fileadmin/KUM/Documents/Nyheder%20og%20Presse/Pressemeddelelser/2018/Medieaftale_2019-2023.pdf (Last access date: 5 December, 2018)
- The figures in Table 1 are from the Public Service Contract signed in September 2018. Minor modifications had been made for the breakdown of the DR budget through the process, from the Media Policy Agreement proposal, to the official Media Policy Agreement, and to the Public Service Contract with DR.
- What next for broadcaster DR after far-reaching cuts? (18 September, 2018, The Local).(Last access date: 5 December, 2018).
- Lars-Åke Engblom (2013), Public Service Financing in the Nordic Countries, pp.95-108, from Public Service Media from Nordic Horizon Politics, Markets, programming and users edited by Ulla Carlsson, Nordicom (Last access date: 6 December, 2018).
- New financing of public service adopted (16 November, 2018, Government Offices of Sweden)
https://www.government.se/articles/2018/11/new-financing-of-public-service-adopted/(Last access date: 5 December, 2018)
- The Office for National Statistics of the United Kingdom defined the licence fee as tax in 2006.
- Stipulated in Article 4.4. “Internetbaserede tjenester” (Internet-based services), DR’s PUBLIC SERVICE-KONTRAKT FOR 2019-2023.
- Piv Bernth – Confessions of a beautiful TV mind (9 November 2017, Nordisk Film & TV fond). (Last access date: 6 December, 2018).
- Public Service Broadcasters of the World: The 2018 Report on the Systems and Funding from The Annual Bulletin of NHK Broadcasting Culture Research Institute 2018 (No. 62) (January 2018, NHK Broadcasting Culture Research Institute).(Last access date: 5 December 2018).
- Public service broadcasting under threat (10 January 10, UR).
- Nordiska public service- chefer om DR: Djupt oroade (20 September 2018, SVT)
https://www.svt.se/omoss/post/nordiska-public-service-chefer-om-dr-djupt-oroade/(Last access date: 5 December, 2018).
- EBU Executive Board speaks out against restriction of public service media remit in Demark (20 September, 2018, EBU).
https://www.ebu.ch/news/2018/09/ebu-executive-board-speaks-out-against-restriction-of-public-service-media-remit-in-denmark(Last access date: 19 December 2018).
- Council of Europe (2007), Recommendation CM/REC(2007)3 of the Committee of Ministers to Member States on the Remit of Public Service Media in the Information Society https://search.coe.int/cm/Pages/result_details.aspx?ObjectId=09000016805d6bc5(Last access date: 6 December, 2018).
Executive Researcher, Media Research & Studies Division,
Broadcasting Culture Research Institute,
Japan Broadcasting Corporation (NHK)
Joined NHK in 1978. After working at Public Relations Division and NHK World Department, she started research activities at the NHK Broadcasting Culture Research Institute in 1992. Her main research subject is the systems, roles, and operations of public service broadcasting in the United Kingdom and the world. She is currently responsible for the research on the roles of broadcasting in the Paralympic Games.