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Measuring the Value of Japanese Public Broadcasting: an Application of Contingent Valuation Method

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Measuring the Value of Japanese Public Broadcasting: an Application of Contingent Valuation Method Measuring the Value of Japanese Public Broadcasting: An Application of Contingent Valuation Method Tsuji, M. 1, and S. Miyahara 2 1 Graduate School of Applied Informatics, University of Hyogo, Japan 2 Faculty of Economics, Aoyama Gakuin University, Japan Email: [email protected] Keywords: CVM, WTP, logit model, NHK, publicvalues EXTENDED ABSTRACT such as “age,” “satisfaction with NHK’s program,” and residents of “cities with 100-300 thousand In accordance with the convergence of population” (1% level). “Manager, professional broadcasting and telecommunications, media are occupations,” “income,” and “cities with less than becoming increasingly diversified and public 100 thousand population” are significant at the 5% broadcasting all over the world face new level. “Cities with more than 300 thousand challenges. In cope with this, BBC in UK and RTE population” is at the 10% level. “Viewing hours,” in Ireland, for instance, analyse their values as a on the other hand, does not affect their WTP, but public broadcasting and whether current fees are “satisfaction with NHK’s program” does WTP. appropriate from the viewers’ perspective in order to determine future strategies as a public In accordance with consecutive improprieties, broadcasting. This paper analyses the value of NHK announced “Promise” in order to restore its Japanese public broadcasting NHK (Nippon Hoso confidence. We asked how much viewers are Kyokai) by conducting questionnaire surveys in satisfied with NHK’s efforts to fulfil the duties. April 2006, which interviewed among 3,600 men “Promises” consist of six main promises and nine and women aged 16 and over throughout Japan, subsidiary items, and we take reviewers’ selected by stratified two-stage random sampling, satisfaction with these promises as variables. In and 2,018 valid replies were obtained. these estimations, few variables are extracted as Questionnaires were based on the three-stage significant, namely “creates better programs double bound model. According to our estimation, consistent with receiving fees paid” (1% level) in respondents were willing to pay 1,780 yen the full model, in addition to this, “establishes (approximately US$ 15.50) monthly per viewer for strong relationship with viewers and reflects their terrestrial services (NHK General, Educational, opinions in our operation” (5% level) and Radio 1, Radio 2, FM) and 1,245 yen (about US$ “broadcasts program contributing the benefit of 10.83) monthly per viewer for satellite services local society” (10% level) are found to be (BS-1, BS-2, Hi-vision). These amounts are higher significant in the selected model. One way to than current viewing fees (1,395 yen monthly for a restore viewers’ confidence is to broadcast high colour TV contract, plus an additional 945 yen quality programs. monthly for colour satellite broadcasts). Based on WTP of each respondent, we attempt to extract The last analysis is aimed to clarify NHK’s factors which affect their values by fully using positioning as a medium and serve as an important econometric method. Since there are so many element when considering NHK as a public factors which affect WTP, in order to simplify the broadcaster. NHK’s public nature was broken analysis, we divide them into three categories: (i) down into nineteen categories and viewers’ respondent characteristics; (ii) viewers’ expectations of and satisfactions with NHK were satisfaction with NHK’s “Promises” to restore questioned The estimation in the selected model viewers’ trust; and (iii) public value of NHK. At extracts the following three factors have positive first, the relationship between respondents’ relationship with WTP, namely, “ Takes up broad characteristics and their WTP is examined. As issues from the through Japanese society and characteristics, (i) age, (ii) occupation, (iii) number provides information that people can share and of family; (iv) income, and (v) regions and cities discuss,” “Passes on Japanese traditions and where they reside. For the actual estimation, two culture to the younger generations in audio and models are estimated: (i) full model and (ii) video format,” and “Products programs that are not selected model. The results of estimation show that influenced by advertisers or sponsors”. two models have the almost same significant variables. Variables which affect strongly WTP are 1082 1. INTRODUCTION NHK’s “Promises” announced in 2005 affect the values, in other words, how viewers respond to In accordance with the convergence of them and how WTP is affected. This is important broadcasting and telecommunications, media are issues when considering managerial strategy for a becoming increasingly diversified and public public broadcaster in the future. broadcasting all over the world face new challenges. Challenges come from severer The paper consists of four chapters, Chapter 1 competition in the broadcasting industry. The shows the framework of CVM in details such as share of public broadcasting has been steadily methods, questionnaires, and detailed question decreasing by the entrance in new entrants such as survey of this paper is presented in Chapter 2. private broadcasting, cables and satellite. In cope Chapter 3 provides estimated WTP and presents with these, public broadcasting have to determine some applications by using WTP. Factors affecting long-term strategy for strengthen its finance and WTP are extensively analysed in the next chapter, managerial foundations. Coming digital broadcast two analyses are examined, namely, relationships (or digital television) is expected to increase these between WTP and respondents’ characteristics, transformations further. Other challenges are and WTP and NHK’s promises. Conclusions based deregulation or privatization since 1980s. on these analyses are briefly stated in the last Although public broadcasters were not privatized, chapter. they had to introduce reforms by aiming efficient management by focusing on problems such 2. FRAMEWORK OF NHK SURVEY finance, reduction of costs and the accountability and governance of management. The NHK promise survey adopted personal interviews on a nationwide basis, surveying as Facing these transformations, public broadcastings many respondents as possible and reflecting the reform themselves in such a way to strength their views of audience as accurately as possible in financial and managerial basis such as starting new terms region, age, gender, and other respondent services to distribute their contents via the Internet characteristics. and increasing transparency of the decision processes in management. In this context, they In CVM, many different formats—open-end, analyse their values as a public broadcasting and closed-end, double bound, etc.—have been whether current fees are appropriate from the developed for the WTP question format, and the viewers’ perspective. In so doing, Contingent characteristics of WTP obtained from these are Valuation Method (CVM) has been extensively also analysed. The method used depends on the utilized. This method is effective not only to aim of the analysis and the research accumulated calculate willingness to pay (WTP) for the by the researchers until then. To simply estimate Cost/Benefit Analysis but also to determine future the amount of WTP, the double bound model is strategies as a public broadcasting. As for the used, but in terms of evaluating NHK’s “ latter, by making use of suitable estimation Promises,” which is summarized by Tsuji (2007), methods, factors to promote WTP are identified, in in addition to WTP itself, we want to clarify other words, value drivers of strengthen nature and factors determining its WTP and show how characteristics of public broadcasting can be promises contribute to increase viewers’ WTP as derived. In addition, CVM can be applied for management strategies. Up to now, we have improving accountability of management and identified factors influencing WTP when analysing decision-making processes. economic ratings of health care and public transportations, using the three-stage double bound This paper aims to access public values of NHK model, and the Logit, Probit and Tobit methods (Nippon Houso Kyoukai: Japanese Association of (See, for example, Miyahara et al. (2006), (2007), Broadcasting) by applying CVM. Our work to Tsuji et al. [2004], and (2006).) Our most accessing NHK’s WTP is not first in this filed. important reason for choosing these methods were From 1975 to 76, Onoe and Sakamoto (1979) that we could apply this kind of accumulated past initiated earlier attempt to access NHK by CVM researches. even in a primitive way. It should be noted that it is also quite early in the world (see Ichikawa In April 2006, a questionnaire survey regarding (2007) in more detail). This paper is followed by CVM was conducted in the form of personal experiences of CVM conducted by various public interviews among 3,600 men and women aged 16 broadcasters such as BBC of UK, RTE of Ireland, and over throughout Japan, selected by stratified and CBC of Canada, and so on, and the exact two-stage random sampling. Respondents were amounts of public values are estimated. In addition divided into two groups, those asked about WTP to accessing values, this paper analyses how and those asked about WTA (willingness to 1083 accept). They were asked about WTP and WTA 2,000 yen (US$54.17). If they reply “yes” to 2,000 for terrestrial television services (NHK General, yen, then that is their WTP. If again their answer NHK Educational, NHK Radio 1, NHK Radio 2, is “no,” then we can determine their WTP is 1,500 NHK FM) and satellite services (NHK BS-1, NHK yen. If they reply “no” to 1,500 yen (US$12.5), we BS-2, NHK Hi-vision), with scores tabulated to repeat this process by lowering the amount in the calculate the monetary value of NHK broadcasting same manner until their WTP is determined. services. The valid response rate to this survey was 56.1 percent. The 2,018 respondents were 1,009 When calculating the WTP used in CVM, we WTP respondents and 1,009 WTA respondents, designated the number of respondents, including who were asked the questions below.
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