Wednesday, 6 March 2013

Funding and Ownership of the TV Industry

The television industry is made up of many different companies, some publicly owned and some privately owned. The BBC is privately owned and is funded by a license fee that is paid be every household that has a television. ‘The BBC used its income from the licence fee to pay for its TV, radio and online services, plus other costs’. This means it is guaranteed an income every year no matter the quality of the products it produces. It also means that it is not allowed to make any money from product placement like other TV channels can, as it says in its editorial guidelines, ‘the BBC must not commission, produce or co-produce output for its license fee funded services which contains product placement’. There have recently been concerns over how the money raised by the license fee is being spent with many people raising the issue of how much BBC stars’ salaries are. The BBC has come under pressure to reveal the salaries of their highest paid stars but have not done this, citing the right to privacy of the stars. Some have called for the license fee to be scrapped so the BBC will not be funded by the public and then it will only be funded by its profits. These ‘profits at BBC Worldwide, their commercial arm, rose by 10.3% to £160.2 million’ in 2010 so there is clearly a strong argument for this.
 The funding of the BBC through the license fee has many critics with people arguing it is just another tax people are forced to pay and anti-competitive. Historically the BBC had a monopoly over the television and radio industries in Britain, meaning it had absolutely no competition and dominated the industries, but this was broken with the ‘arrival, first of independent television in 1955, then commercial radio in 1973’. Further calls for the license fee to be scrapped were renewed with the introduction of cable and satellite TV and particularly the increasing popularity of Sky in the 1990s.

However the funding of the BBC through the license fee also has many supporters. Some argue ‘the BBC produces a lot of output that the commercial sector wouldn't even consider. It is vital to the cultural health of the nation’. The argument that the BBC has an obligation to provide a public service and therefore to educate as well as entertain means that it does not have to fight for ratings by bidding for the most popular American shows and can afford to cater for niche audiences as well as the mainstream.

On the other hand ‘Channel 4 is a publicly-owned, commercially-funded public service broadcaster’. This means that they do not make money from the license fee and instead are funded from advertising and sponsorship. They are also allowed to gain income from product placement which is where is where a company pays a TV channel or a programme-maker/production company to include its products or brands in a programme’. Channel 4 is a business not made for profit and can buy and sell programmes as it sees fit in order to be a successful enterprise. It was set up (with aid from the government) to be an alternative to the BBC and to feature more cultural and ethnic diversity. All its profits go back into the business and it is a rare example of a publicly owned business that does not sell shares in the business.

Other television companies such as British Sky Broadcasting are funded through subscription and pay-per-view means. BSkyB is also a publicly owned company so it has shareholders that own shares in the company and can be consulted in the decision making process and also share in the profits and losses of the company. Sky operates a range of services and subscriptions and these services start from above £20 per month. These services are increasingly multimedia so people can have Sky TV, Broadband and Mobile apps. Their Sky Box Office and internet TV services bring in further income by allowing viewers to watch certain programmes for an extra pay per view fee. For example a recent Rolling Stones concert could be watched live by paying a one off charge and now Premier League football matches are being offered on a pay per view basis whereas before only those who subscribed to Sky Sports could watch them.

Many have accused BSkyB of being too dominant in the TV market and having a monopoly that means there is less chance of competition being able to thrive. It has even been investigated by the Competition Commission for this reason but the commission found that there is little that can be done in the face of BSkyB’s market power. Competition has increased in the form of subscriber streaming services for film and television shows such Netflix and LoveFilm but these do not have the same market share as Sky.

Ownership and funding in the TV and film industries is complex and includes many different means of making income from the licence fee to shareholders to ploughing existing profits back into the business. Concerns over the dominance of a limited number of companies are justified with huge multimedia, multinational conglomerates controlling much of the market and making it hard for other companies to emerge and compete. This is a major issue for the media because TV, film, print and radio play such a huge part of many people’s lives and it is undesirable for so much of it to be controlled by so few.


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