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Reproductions Supplied by EDRS Are the Best That Can Be Made DOCUMENT RESUME ED 459 506 CS 510 724 TITLE Proceedings of the Annual Meeting of the Associationfor Education in Journalism and Mass Communication (84th, Washington, DC, August 5-8, 2001). Media Management and Economics Division. INSTITUTION Association for Education in Journalism and Mass Communication. PUB DATE 2001-08-00 NOTE 206p.; For other sections of the 2001 proceedings, seeCS 510 704-723. PUB TYPE Collected Works - Proceedings (021)-- Reports Research (143) EDRS PRICE MF01/PC09 Plus Postage. DESCRIPTORS Advertising; Broadcast Industry; *Broadcast Television; Case Studies; Competition; Content Analysis; *ContextEffect; Higher Education; *Internet; *Journalism Education; Newspapers; Programming (Broadcast); *Radio IDENTIFIERS *Newsmagazines ABSTRACT The Media Management and Economics section ofthe proceedings contains the following 6 selected papers:"Audience Economics of European Union Public Service Broadcasters:Assessing Performance in Competitive Markets" (Robert GH. Picard); "Rememberingthe DuMont Network: A Business Case Study Approach" (Walter S. McDowell); "TheImpact of Competition on Weekly Newspaper Advertising Rates" (Stephen Lacy,David C. Coulson, and Hiromi Cho); "Managing Internet-DeliveredRadio: New Markets, New Revenue, New Operations Issues" (Cheryl L. Evansand J. Steven Smethers); "Different Voices, Same Script: How Newsmagazines CoverMedia Consolidation Issues" (Bryan Greenberg); "Content Differencesbetween Daily Newspapers with Strong and Weak Market Orientations" (Randal A.Beam); and "Impact of Context Effects on Evaluation of New Shows in Lead-In/Lead-OutContext" (Jack C. C. Li and Jaemin Jung). (RS) Reproductions supplied by EDRS are the best that canbe made from the original document. Proceedings of the Annual Meeting of the Association for Education in Journalism and Mass Communication (84th, Washington, DC, August 5-8, 2001): Media Management and Economics Division. U.S. DEPARTMENT OF EDUCATION Office of Educational Research and Improvement EDUCATIONAL RESOURCES INFORMATIOI CENTER (ERIC) O This document has been reproduced as received from the person or organization originating it. O Minor changes have been made to improve reproduction quality. Points of view or opinions stated in this document do not necessarily represent official OERI position or policy. PERMISSION TO REPRODUCE AND DISSEMINATE THIS MATERIAL HAS BEEN GRANTED BY BEST COPYAVAILABLE TO THE EDUCATIONAL RESOURCES INFORMATION CENTER (ERIC) 1 kr) C/) 2 Audience Economics of European Union Public Service Broadcasters: Assessing Performance in Competitive Markets Robert G. Picard Media Group, Business Research and Development Centre Turku School of Economics and Business Administration PL 110, 20521 Turku, Finland Telephone: +358 2 3393 502 E-mail: robert.picard @tukkk.fi 3 Abstract Audience Economics of European Union PublicService Broadcasters: Assessing Performance in Competitive Markets By Robert G. Picard Media Group, Business Research and DevelopmentCentre Turku School of Economics and BusinessAdministration PL 110, 20521 Turku, Finland Telephone: +358 2 3383 502 E-mail: robert.picard @tukkk.fi This paper explores the economics of audiencesand applies the approaches to public service broadcasters in the European Union. It suggestsand applies a method for analysing the contemporary performance of publicbroadcasters using market shares. The study finds that, as a whole, public service broadcasters areperforming better than statistical expectations, that public service broadcasting isgenerally maintaining market leadership, and that higher market share performance is associatedwith lower levels of government funding. 4 Audience Economics of European Union Public ServiceBroadcasters: Assessing Performance in Competitive Markets European public service broadcasters (PSBs) have a commonobligation to provide universal service to television audiences in their nations, providing materialthat serves the diverse social, political, cultural, and identity needs within the nations inwhich they are located. Despite the similar mission, the broadcasters operate in very differentenvironments and the means by which they are funded differ. Some relysolely on licence fees or government funds, whereas others obtain financingthrough advertising. Some are highly dependent upon advertising; others use it merely as supplementaryfunding (Mc Quail and Siune, 1986). Some public service broadcasters have stablefunding; some struggle with funding that can vary widely from year to year. A McKinsey & Co. study on public service broadcasting (1999)argued that these differences can be seen worldwide and that PSBs can be divided intothree groups based on market share and distinctiveness, that is, providing a mix of contentthat is distinct from commercial broadcasters. The three groups were defined asbroadcasters 1) focusing on distinctiveness over market share; 2) focusing on market share overdistinctiveness; and 3) those seeking an equilibrium. All three of the groups are evidentwithin the European Union. In terms of competition, European public servicebroadcasters operate in situations ranging from markets in which no national commercial competitorsexist to markets in which multiple commercial competitors serve the national market. Somehave only domestic competitors; some encounter foreign competitors as well. 1 5 Throughout Europe during the past two decades, however, two commonalties exist: the number of channels offered by public service broadcasters has increased, and liberalisation of broadcasting policy has permitted the introduction and expansion of commercial channels at the national and local levels (Silj, 1992; Council of Europe, 1998; Davis, 1999). In addition, cable and satellite services are widely available. These changes have introduced and increased competition for audience attention and lowered audience shares of existing channels. Observers of European public service broadcasting have noticed the changing market for public television and raised significant discussions about the change in PSBs and their role in the contemporary, commercialised multichannel environment (Blumer, 1992; "Genense et actualité du service public," 1995; Tracey, 1998). Stations that had 100 percent market shares one or two decades ago are today achieving market shares in the 20 to 40 percent range. Some interpret these declines as a failure of public service broadcasting to continue serving its purposes or a failure of PSB management to respond appropriately to changing market conditions. The prime time market share of the German regional channels ARD, for example, declined from 33.6 in 1990 to 15.4 in 1999. In the five-year period between 1994 and 1999, for example, the BBC 1 average primetime audience dropped from 33.7 to 28.6 and that of Portuguese Canal 1 declined from 38.5 to 31.4. Setting aside arguments of whether audience share is appropriately applied to public service broadcasters, it is clearly being used as evidence by policy makers, public service broadcasters themselves, and social observers to promote a variety of policy and strategic policies and models. The diminishing use of PSB channels is also feared to reduce their value to audiences and the political will to continue funding their operations. 2 6 Allan Brown notes that declining market shares create significant financialpressures on broadcasters because "arguments of public broadcasters for the maintenance of their levels of public subsidy will be weakened to the extent that the sizes of their audience diminishes....Moreover, at least a percentage of pay-TV subscribers will be less inclined to pay license fees and taxes to finance public broadcasting stations, which will account for a smaller proportion of available channels and less of their viewing time" (Brown, 1996,p. 13). Unfortunately, much discussion about the performance of PSBs is basedon a misunderstanding of the importance of market share and the reasons for change in shares. Ifa channel suffers a decline in market share in a stable market, there is immediatereason for concern. Such a decline is indicative of poorer service, less attractive programming, or losing touch with the audience When the market is changing because the number of competitors is increasing, however, a decline must be understood differently. It does not necessarily result from performance problems but from the inevitable result of more channels and hours of programming being offered to audiences. It has been difficult to compare the performance of public broadcasters across nations because the geography and population of each nation differs, because the number of public service channels differs, because the number of private channels varies, and because the political, social, and cultural requirements for public service differs. These issues have limited the number of cross-national studies on public broadcasting as a wholeor led to studies considering them in regional terms or other logical groups based on various factors. This paper, however, seeks to provide a method for overcoming those difficulties through national evaluations that are comparable. 3 7 The Economics of Market Share The primary factor in audience market share is the number of channelsavailable. Audience shares represent the portion of households or persons usingtelevision during a specific period. The total is 100 and the proportions that are accountedfor by each channel are reported as a percentage or ratio(Bevil le Jr., 1988.) Secondary factors are audience size and time expenditures.
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