Networks and Governance in Broadcasting Stephen Pratten Department - - PowerPoint PPT Presentation

CBR Summit: Innovation and Governance 29-30 March 2006

Networks and Governance in Broadcasting Stephen Pratten

Department of Management King’s College London

CBR Summit: Innovation and Governance 29-30 March 2006

Motivation

• Network forms of organisation have been identified within the

UKTV programme production sector since the early 1980’s

• These networks have been systematically promoted and

protected via a series of regulatory interventions

• The organisations that have traditionally dominated the

industry have had to respond to these developments and have done so in ways that have ensured that they themselves have become increasingly enmeshed within these network forms

• Aims here are to (i) provide context, (ii) briefly map out

relevant aspects of the changing organisational and institutional landscape of UKTV and (iii) consider three alternative interpretations of the transformations that have characterised the sector

CBR Summit: Innovation and Governance 29-30 March 2006

Context Prior to the 1980’s

• Public service broadcasting, however ill defined, was

accepted as the central reference point for broadcasting policy debates. At the inception of broadcasting in the UK the remit for the new public service provider, the BBC, was not only to ‘educate, inform and entertain’ but importantly also to act as a patron for creative workers

• The aim of providing programming that served to

educate, inform and entertain was believed to be at risk if creative workers were exposed to working environments and requirements driven solely by market forces

CBR Summit: Innovation and Governance 29-30 March 2006

Context Prior to the 1980’s

• The vertically integrated organisation - with controlled

entry, stable long term employment contracts, extensive internal training programmes, etc - was recognised as the form best able to deliver Public Service Broadcasting and foster an appropriate environment for creative workers

• The consensus regarding the goals and appropriate
• rganisational form for broadcasting survived the demise
• f the BBC monopoly. The highly regulated commercial

ITV companies that emerged in the early 1950’s mirrored the BBC in orientation and internal structures

CBR Summit: Innovation and Governance 29-30 March 2006

The Influence of the Market Critique on Broadcasting Policy in the 1980’s

• The consensus concerning the aims and structure of UK

broadcasting while broad and deep was not accepted

• universally. There always existed marginalised critics,

the most notable amongst them being Ronald Coase, who insisted that there was no good reason why broadcasting should not be organised along competitive lines

• By the 1980’s the neo-liberal critique was central to UK

policy debates not least in broadcasting. Thus for many the Peacock Report into the funding of the BBC of 1986 marked a turning point in broadcasting policy and signaled a decisive shift toward the construction of a market framework for the delivery of broadcast services

CBR Summit: Innovation and Governance 29-30 March 2006

The Peacock Report and its Consequences

• A market driven agenda can certainly be identified in parts of

the Peacock Report

• However the Peacock Report also found room for Public

Service Broadcasting suggesting that consumers were willing to fund television production ‘in their capacity as voting taxpayers’ in order to achieve greater diversity and quality

• Over the last twenty years we have witnessed the emergence

in UK broadcasting of a complex ‘quasi market system’ – which can be understood as one variant of the broader network form. This system is characterised by a higher degree of vertical disintegration than had previously obtained and a BBC that has itself been transformed via a series of internal reforms

CBR Summit: Innovation and Governance 29-30 March 2006

Organisational and Institutional Change in UKTV

• We have been studying the sector since the mid 1990’s,

we conducted a first round of interviews with industry participants between 1996 and 1998 and completed a second set between 2002 and 2004.

• We have been particularly concerned to track and

evaluate two aspects of the institutional changes that have characterised the development of the industry

– The Growth of the Independent Television Programme Production Sector – The internal market re-organisations of the BBC

CBR Summit: Innovation and Governance 29-30 March 2006

The Emergence of the Independent Sector

• Channel Four as a Publisher Broadcaster

– Channel 4 first transmitted in 1982 and introduced a new broadcasting model. It had no production capability itself but relied upon buying programmes in from independent production companies

• Compulsory Outsourcing - The 1990

Broadcasting Act and the 25% Independent Quota

– The independent sector was given a further boost by the 1990 Broadcasting Act which stipulated that all broadcasters had to source 25% of the volume of their

• utput from the independent sector

CBR Summit: Innovation and Governance 29-30 March 2006

Trajectory of the Independent Sector

• Cost plus contracting and the retention of rights by

broadcasters

– From the perspective of small independent producers cost plus contracting had some substantial advantages in terms of mitigating risks – From the perspective of larger more commercially ambitious independent firms the contracting regime represented a major constraint on growth and tended to discourage external finance – From the angle of Public Service Broadcasters the retention of rights had major advantages both in terms of expanded commercial opportunities but also in recent years for the imaginative public service use of the back catalogue of programmes on internet

CBR Summit: Innovation and Governance 29-30 March 2006

Trajectory of the Independent Sector

• Increasing use of output deals between Broadcasters

and key independent suppliers

• Debate on terms of trade

– By 2000 there was considerable variation in the contractual relations between independents and the different UK Broadcasters – Channel 4 and the BBC relying on a cost plus contract but the ITV system using a licensing model whereby it bought the right to first showing of programmes with the secondary rights retained by the independent production company – In 2002 the Independent Television Commission recommended that the adoption of the ITV model by other broadcasters would aid the development of an internationally competitive production sector – 2003 Communications Act incorporated the recommendations of the ITC report and empowered Ofcom to issue guidance notes for Codes of practice

CBR Summit: Innovation and Governance 29-30 March 2006

BBC Internal Re-organisations

• The problems with the traditional BBC hierarchy

‘‘the BBC developed an administrative – not a managerial – ethos of safety and solidarity and this, at its worst, brought waste and bureaucracy… [the BBC] became a vast command economy; a series of entangled, integrated baronies, each providing internally most of its needs; all the many faceted inputs to the complex business of programme making; programme departments, resource facilities and support services, all separately and directly funded. Within this highly complicated machine, bureaucrats … allocated resources and services to programme makers. Territorialism often stifled initiative. Nothing was transparent, everything opaque. It was Byzantine in many of its structures … Creative freedom was frustrated.’ (Birt, cited in Spangenberg, 1998: 108.)

CBR Summit: Innovation and Governance 29-30 March 2006

BBC Internal Re-organisations

• Producer Choice 1993

– Purchaser provider split between resources and programme production – The stated purpose was two-fold: to enable the BBC’s management to obtain information on the indirect, overhead costs of its programmes, in particular accommodation and capital depreciation, and to benchmark the costs of internal resource provision against those of external providers, so making it possible to carry out market testing. By these means, potential inefficiencies would be identified and costs brought under control. – Problems associated with the Producer Choice initiative

CBR Summit: Innovation and Governance 29-30 March 2006

BBC Internal Re-organisations

• The 1996 Reorganisation

– Introduction of a further purchaser provider split this time between Broadcast (Commissioning) and Programme Production – License fee income no longer went to production departments directly but was channelled via BBC Broadcast. – Commissioning was to be even handed. BBC Production had to fight for commissions with the independent sector and the share of output produced by BBC Production would be allowed to fluctuate without restriction – The 1996 reforms significantly undermined the position of BBC

• production. In particular the degree of creative autonomy enjoyed by

production units was very significantly reduced – The problematic impact of the reforms were quickly identified and in response BBC production was provided with an informal output guarantee of 60% of BBC output.

CBR Summit: Innovation and Governance 29-30 March 2006

BBC Internal Re-organisations

• Greg Dyke and the ‘One BBC’ reforms

– Reversing the Broadcast/ Production Split – Emphasis on collaboration across the organisation – Covert attempt to minimise outsourcing and build up in-house production – To view Dyke as carrying through a programme of reintegration would be too simplistic. During this period there was an expansion of wholly owned commercial businesses, joint ventures and partnership deals

CBR Summit: Innovation and Governance 29-30 March 2006

BBC Internal Re-organisations

• 2006 Charter Renewal

– The Window of Creative Competition

• In the face of criticisms from the independent sector and facing the

prospect that the independent quota might be very substantially increased the BBC itself put forward a proposal for an adjustment to present arrangements

• The Formal Quota will remain at 25 % the BBC will guarantee 50 %
• f output to its own production units with the remaining 25% now

being a zone of true competition

• The rationale here being that a 50 % production guarantee would

enable the BBC to maintain a sustainable production base

CBR Summit: Innovation and Governance 29-30 March 2006

Three Interpretations

• A market orientated view where the current quasi market structures

including network forms of organisation are simply a half way house

• n the path to full marketisation
• A traditionalist view where the quasi market structures now in place

are seen as fatally undermining the traditional organisational ethos, professional values and producer autonomy that had characterised the vertically integrated organisations of the 1950’s and 1960’s

• A ‘third way’ view that maintains that the current mixture of public

and private institutions represent a distinctive form of co-ordination which capture the best aspects of both production in-house within hierarchical organisations (i.e., the BBC) and the creative and innovative energy seen as characteristic of the Independent Sector

CBR Summit: Innovation and Governance 29-30 March 2006

Networks from a Traditionalist View

• For many proponents of the traditionalist position the old

vertically integrated forms of organisation had characteristics that made them like networks as currently conceptualised - shared values, high levels of commitment, structures that provided producers with a degree of autonomy and so sponsored innovation and creativity

• Moreover on this account while the old vertically

integrated structures were able to deliver such advantages the new network forms struggle, they are seen as undermining Public Service values, reducing commitment and generating ever more homogenous and predictable programme output

CBR Summit: Innovation and Governance 29-30 March 2006

No ‘Third Way’ for the organisation of broadcasting?

• Can a quasi market system both help promote an internationally

competitive media sector and ensure that public service broadcasting objectives are satisfactorily fulfilled?

• The terms of trade debate has been driven in large part by a

concern to ensure that the sector can move away from its traditional ‘cottage industry’ image. The expectation is that in circumstances where independent firms can assert control over secondary and tertiary rights they will be better placed to attract external capital and will thereby finally be released from the constraints that have held them back. However to the extent that these marginal cottage industry firms constituted an important source of innovative programming the danger is that as they become sidelined we will see the homogenisation of the sector and the loss of creative diversity.

• The internal BBC reforms illustrate just how difficult it is to design a

governance structure for internal trading which can reconcile the BBC’s public service remit and distinctive organisational culture with an ethos of market competition

CBR Summit: Innovation and Governance 29-30 March 2006

Concluding remarks

• The definition of networks: are networks best understood

as a discrete alternative to markets on the one hand and firms or hierarchies on the other? Or are they best conceived as an alternative to the conjunction of the integrated firm and mass consumer markets.

• Institutional changes aimed at further removing barriers

to entry, intensifying competition and strengthening the financial position and commercial orientation of the independent sector have the potential to weaken the BBC and to undermine the innovative capacity of the sector as a whole.