NPO unable to manage public broadcasting efficiently
Broadcasting companies provide NPO with too little information on television programme costs
The Dutch Public Broadcaster (NPO) is responsible for coordinating the programming of all public television, radio and online channels in the Netherlands and for the distribution of the broadcasting companies’ content. However, it cannot fulfil its statutory task of spending its budget efficiently. The NPO receives €850 million in public funds every year from the budget of the Ministry of Education, Culture and Science (OCW) but it has little insight into their efficient use.
In an audit report entitled Hilversum in View, The Efficiency of the Dutch Public Broadcaster published on 10 December 2019, the Netherlands Court of Audit looks at the value for money of public television in the Netherlands. The NPO allocates programming funds to the broadcasting companies (such as AVROTROS, EO, WNL and NTR), who are then free to redistribute the money to programme makers. Furthermore, the broadcasting companies’ independence is not fully recognised in the law. The NPO’s performance is compromised by doubts and divisions within the organisation about what its role should be. The Media Authority is too remote to assess the NPO’s efficiency.
Consideration for appreciation and quality, value for money not known
Viewing figures, ratings, the quality of programmes and target group reach are measured but no demonstrable relationship is established between the money and the programmes. For the NPO, however, value for money is an important metric to allocate funds to the broadcasting companies, yet it has no objective criteria to strike the right balance between the economic use of public funds and the required impact of the media output. Revenue and costs are systematically analysed only when the rights to broadcast major sporting events are acquired. The broadcasting companies are also uncooperative; they do not provide the NPO with information on how much their programmes cost. The NPO therefore does not have the financial information required under the law to manage efficiently.
Risks of contracting programmes out to external producers
The NPO is not systematically critical of the cost of successful long-running programmes such as Radar, Nieuwsuur, Boer zoekt vrouw, Studio Sport and Kassa. It is therefore not in a strong position to negotiate lower costs with the broadcasting companies. It did enquire why the cost of the talk shows Jinek and Pauw had risen but it was unable to negotiate lower costs.
The broadcasting companies spend 35% of their programming budgets on external productions: €193 million in 2018. They are in a weak position in negotiations with the external producers of successful programmes, as illustrated by the rising cost of Wie is de mol?. External productions can have advantages but also entail considerable efficiency risks. The cost of contracted programmes per broadcast hour is far higher than the cost of the broadcasting companies’ own productions, but it is not clear whether the programmes represent better value for money. The Court of Audit’s investigation found, for example, that the cost of the television programmes College Tour and Floortje naar het Einde van de Wereld had risen substantially when they were contracted out to external producers. The latter programme was contracted out to a company owned by the presenter herself. Contracting arrangements make it more difficult to determine the presenters’ fees. This, too, increases the risk of inefficiency.
The system conceals programming costs from parliament
The information the Minsiter for the Media and the House of Representatives receive on television programmes is divided into six general genres. They and the public are therefore not informed of changes in their cost. Three genres (expression, society and entertainment) have become less expensive in recent years but the cost of the news and opinion genre has risen. Neither the minister nor the House were informed that the increase was due solely to the opinion programmes. The figures are sometimes influenced when a programme is moved from one genre to another, as was the case when Heel Holland bakt was moved from entertainment to expression.
The Court of Audit’s report provides more multiyear information per genre on the absolute cost, cost per hour and cost per viewer. It also makes recommendations for the minister, the NPO and the Media Authority to improve accountability.
Response of the minister and the NPO
The Minister for the Media wrote that the NPO’s management would be facilitated by setting priorities in the public broadcasting goals. He would also receive detailed accounts of the costs involved. He did not think it was necessary to amend the Media Act. The broadcasting companies, he wrote, should provide the NPO with adequate financial information. The Court of Audit noted in its afterword that this would not remove the obstacles in the law. More attention should be paid to the risks to the efficiency of public broadcasting.