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Economic differences among regional public service broadcasters in Spain according to their management model: An empirical analysis for period 2010-2013

Víctor Orive Serrano, María Pilar Latorre Martínez, Juan Pablo Artero Muñoz

Universidad de Zaragoza (Spain)

Received September, 2015

Accepted January, 2016

Versión en español

Abstract

Purpose: This piece of research quantifies and analyses empirically the given economic differences among public service television in Spain according to the adopted management model (classic or outsourced).

Design/methodology: In so doing, an average contrast of different economic variables studied in the literature is conducted (audience share, total assets, public subsidies, cost of personnel, suppliers spending and profit after taxes). In addition, these variables are related so as to calculate productivity obtained by each two groups of television operators. This analysis is conducted for period 2010-2013, featured by a crisis context in the Spanish economy.

Findings: Management model adopted by each regional broadcaster impacts on different economic variables as obtained share, total assets, public subsidies, cost of personnel, suppliers spending or profit after taxes. Moreover, those public corporations adopting an outsourced management model present better productivity values.

Research limitations/implications: Only one country has been analyzed for a 4 years period.

Practical implications: Regional public service broadcasters with an outsourced model present less economic losses and require less public subsidies by their corresponding regional governments.

Social implications: Outsourcing part of the value chain can be useful so as to guarantee sustainability of regional public service television.

Originality/value: It has been proven empirically that the management model of a regional public service television impacts its economic results.

Keywords: Outsourcing, Management model, Productivity, Public service television, Regional television

Jel Codes: M1

1. Introduction

Public-service television networks face many economic, technological and social challenges that put their future and continuity in doubt and require an empirical analysis of how these public bodies are managed (Collins, Finn, Mcfadyen & Hoskins, 2001; Bardoel & D'Haenens, 2008; Iosifidis, 2010; Campos-Freire, 2013).

In Spain, national and regional public-service broadcasters have been criticized for different reasons, such as the lack of pluralism in the content they broadcast, their dependence on their government, the audience they achieve, their management efficiency, and the excessive budgetary deficits resulting from their production activity (Muñoz, 2011; Fernández Alonso & Fernández Viso, 2012; Artero, Orive & Latorre, 2015).

Regarding the latter, production activity, there are two different models for managing regional television networks: the traditional model and the outsourced model (Bustamante, 2009). These models show considerable differences that have been addressed from a theoretical perspective in the literature (Bustamante, 2009; López-Vidales, Azurmendi & Órtiz, 2012; Sánchez & Sarabia, 2012; Miguel de Bustos & Casado, 2012). However, there are no empirical studies that analyze and compare these differences.

Under these circumstances, the main purpose of this paper is to analyze and quantify the economic differences that characterize the regional public-service television bodies in Spain according to the management model they use (traditional or outsourced), for the 2010-2013 period, when Spain was in the midst of an economic crisis.

The article is organized as follows. Section 2 reviews the literature on the management of the production activity of the regional broadcasters. Then we describe the variables analyzed and the characteristics of the sample. Section 4 presents the research results. Finally, Section 5 contains the conclusions, limitations and future lines of research.

2. Production management of regional broadcasters

The approval of the Third Channel Act (46/1983-26 December) led the Autonomous Communities of Spain to create and develop their own regional public-service televisions. These publicly-owned bodies were conceived to provide relevant local content to their citizens and foster local audio-visual industries (Accenture, 2012).

Over the last three decades, 13 of the 17 regional governments have created regional public-service television networks. The time when they were created, together with political reasons, determined their production management models. Therefore, the regional public-service television networks developed during the first phase (1982-1989) chose the traditional management model, while the regional public bodies created in the second phase (1998-2006) adopted an outsourced management model.

The traditional model, followed by public broadcasters in the Basque Country, Catalonia, Galicia, Madrid and Andalusia, is based on the television channel assuming and carrying out all the activities that make up the audio-visual production value chain. This model mimics, at a regional level, the production structure of the Spanish state’s public-service television (RTVE) and is linked with higher production costs and greater debt (Bustamante, 2009).

The outsourced model is based on subcontracting out to specialized suppliers one or more parts of the organization’s value-chain activities (Fernández Alonso, 2002). The aim is to reduce production costs and avoid excessive indebtedness of public-service television (Sánchez & Sarabia, 2012). This management model is used by the regional public television bodies of Asturias, Aragon, Castile-La Mancha, the Balearic Islands, Extremadura and Murcia.

The economic literature published by the media has discussed the suitability of outsourcing as a management model for television companies. From a pro-outsourcing perspective, considerable cost savings (Alm & Ferrell Lowe, 2003), greater flexibility and dynamism in the production structures (Cuesta, 2011) and a considerable growth and consolidation of the audio-visual industries in the autonomous communities where the television networks broadcast their contents are all noteworthy (Alm & Ferrell Lowe, 2003).

However, there are also arguments against outsourcing. For example, McIvor, Humphreys and McAleer (1997) point out that it is difficult to properly measure and evaluate outsourcing because, when calculating cost savings, some qualitative aspects of subcontracting are omitted. Furthermore, outsourcing can decapitalize the channel since some of their potential production resources are dispensed with, possibly leading to an asymmetric relationship with suppliers (Cuesta, 2011).

Between 2010 and 2013, the 13 regional public-service networks received an annual public subsidy of over 3.033 billion euros. Moreover, they reached a share average of 7.92%, the fourth most watched television group in Spain (Kantar Media, 2014). Regarding that aspect, it is important to specify that each channel broadcast its content to its own territory. Consequently, they do not compete for the same audiences among themselves.

However, they incurred financial losses of over 2 billion euros and cost each inhabitant 46 euros (Campos, 2012). Considering the high level of public debt and the deficit of the Spanish economy, these economic figures require the analysis of the production management of the regional broadcasters. To do this, we propose to investigate whether the management model adopted by the regional public-service television can affect its economic performance.

3. Analysis variables and sample characteristics

The literature identifies three groups of variables that can be used to evaluate the economic performance of public television services: variables related to market share, financial variables and productivity variables (Picard, 2003). In this case, we have considered the following analytical variables: share of the main channel of the regional public service broadcaster within its own territory, total assets, public subsidies received, staff costs, materials costs and economic results. Tables 1 and 2 show the data on the 13 regional public-service television networks in Spain for the 2010-2013 period.

Table 1. Regional public services with traditional management model (financial statements)

Tabla 2. Regional public services with outsourced management model (financial statements)

4. Results

To analyze the economic differences of the regional televisions according to their management models, we first compared differences between the means of the two groups of broadcasters. Then, the productivity levels of the broadcasters were analyzed based on their management models. SPSS 20.0 statistics software was used to perform the analysis.

4.1. Comparison of means differences

As shown, public broadcasters using a traditional management model show far higher mean values than public bodies with an outsourced management model in most of the economic variables analyzed (see Table 3).

Therefore, overall, regional televisions with a traditional management model achieve a greater share and a greater volume of assets. Furthermore, they also receive a greater public subsidy from their regional government; likewise, these broadcasters spend more on staff and materials. However, corporations adopting a traditional model have twice the losses of those television networks that outsource their activities.

All these differences obtained in the mean values of the variables are statistically significant. Therefore, with a confidence level of 95%, the t-Student test for independent samples reveals that the management model adopted by regional public-service televisions affects the share obtained, the total amount of assets, the public subsidy received, staff costs, materials costs and the economic result.

Table 3. Analysis of the differences between means according to the management model (2010-2013)

4.2. Productivity analysis

Table 4 shows the productivity values obtained by regional channels based on the management model used. These values use different variables such as the volume of assets, capital received, labor or materials used (Picard, 2003) to indicate how effective a company is at obtaining products and services (Brinkerhoff & Dressler, 1990).

As shown, each share point obtained by the public networks with traditional management models requires a volume of assets 3 times higher than the networks with an outsourcing model.

Furthermore, over the 2010-2013 period, regional governments had to spend five times more for each share point on the group of regional broadcasters with traditional management models than on the group of broadcasters with an outsourced management model.

Regarding the relationship between staff costs and share, public bodies using outsourcing need 1 million euros more in staff costs per share point than traditional public networks. However, the regional public-service broadcasters with a traditional management model spent 1.5 million euros more in material costs for each share point than the regional broadcasters with an outsourced management model.

Tabla 4. Productivity according to the management model (2010-2013)

5. Conclusions

Public television services are currently affected by many threats of several kinds. Among these threats is the economic crisis that questions whether these public entities are sustainable given the income and expenses resulting from their activities and the economic deficits they generate.

In this context, this paper analyzes the influence of the management model adopted by public television networks to manage their production activities, using several economic variables.

The research results reveal that public television entities that use a management model based on outsourcing part of their production activities have lower economic losses and require less public subsidies. In addition, this management strategy achieves much better productivity levels than those obtained by the management model that opposes outsourcing. In this regard, public corporations that opt for outsourcing need lower levels of assets and financial subsidies for each share point gained.

However, outsourcing as a management strategy also has certain disadvantages which should be noted. For example, public-service television networks following an outsourcing strategy obtained much smaller absolute share, and require a greater outlay in staff expenses to obtain a share point. Furthermore, as literature highlights, outsourcing might imply important negative effects that have to be taken into account when considering that management model.

Finally, this work presents some limitations that must be taken into account. In this regard, it is noted that the investigation analyzed a single country over a period of 4 years and has just included regional public service broadcasters.

Therefore, future lines of research should be directed towards analyzing the economic management of public television services in other European countries over longer periods. In addition, it can be highly relevant to expand that analysis to national and local television channels.

References

Accenture (2012). Informe sobre el papel de la televisión pública autonómica en España. Madrid.

Alm, A., & Ferrell Lowe, G. (2003). Outsourcing core competencies?. En G. Ferrel Lowe & T. Hujanen (eds.), Broadcasting and convergence: New articulations of the public service remit. Goterborg: Nordicom.

Artero, J.P., Orive, V., & Latorre, P. (2015). Efficiency and benchmarks of regional public service broadcasters in Spain. Communication & Society, 28(3), 13-30. http://dx.doi.org/10.15581/003.28.3.13-28

Bardoel, J., & D’Haenens, L. (2008). Reinventing public service broadcasting in Europe: Prospect, promises and problems. Media, Culture and Society, 30(3), 337-355.        http://dx.doi.org/10.1177/0163443708088791

Brinkerhoff, R., & Dressler, D. (1990). Productivity Measurement. A Guide for Managers and Evaluators. London: Sage.

Bustamante, E. (2009). El audiovisual digital: La televisión regional ante el reto de futuro. En E. Bustamante (Ed.), El audiovisual digital. Políticas y estrategias desde las Comunidades Autónomas. Tenerife: IDECO.

Campos, F.  (2012). Modelo de financiación de las televisiones autonómicas. En J.C. Miguel & M.A Casado (coords.), Televisiones autonómicas. Evolución y crisis del modelo público de proximidad. Gedisa: Barcelona.

Campos-Freire, F. (2013). El futuro de la TV europea es híbrido, convergente y cada vez menos público. Revista Latina de Comunicación Social, 68, 89-118. http://dx.doi.org/10.4185/RLCS-2013-970

Collins, R., Finn, R., Mcfadyen, S., & Hoskins, C. (2001). Public service broadcasting beyond 2000: Is there a future for public service broadcasting?. Canadian Journal of Communication, 26(1), 3-15.

Cuesta, U. (2011). Las televisiones autonómicas en el nuevo panorama audiovisual. Documento para el debate. Madrid: Fundación Ciudadanía y Valores.  Disponible online en:        http://www.funciva.org/uploads/ficheros_documentos/1304077495_ponencia_ii.pdf

Fernández Alonso, I. (2002). La externalización de la producción de los operadores públicos de televisión de ámbito autonómico en España. Los casos canario y extremeño. Revista Latina de Comunicación Social, 46.  Available online at:        http://www.ull.es/publicaciones/latina/2002/latina46enero/4604isabel.htm

Fernández Alonso, I., & Fernández Viso, A. (2012). Internal pluralism in the governance of public service broadcasters in Spain and the role of social groups and professionals. The case of RTVE. Communication & Society, 25(2), 203-230.

Kantar Media (2014). Informe anual de la audiencia de televisión. Madrid

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http://dx.doi.org/10.1108/00251749710160331

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Versión en español

Título: Diferencias económicas de las televisiones autonómicas en España según el modelo de gestión: Un análisis empírico para el periodo 2010‑2013

Resumen

Objeto: Este trabajo cuantifica y analiza empíricamente las diferencias económicas existentes entre las televisiones públicas en España según el modelo de gestión adoptado por el ente público (modelo clásico o modelo externalizado).

Diseño/metodología/enfoque: Para ello, se realiza un contraste de medias de diferentes variables económicas recogidas en la literatura (share, volumen total de activos, subvención pública recibida, gastos de personal, gastos en materiales y resultado económico) entre los dos grupos de entes públicos regionales según el modelo de gestión. Además, se relacionan dichas variables para calcular la productividad obtenida para cada grupo de televisiones. Todo ello para el periodo 2010-2013, caracterizado por el contexto de crisis de la economía española.

Aportaciones y resultados: El modelo de gestión adoptado por la cadena de televisión autonómica influye en diferentes variables económicas como el share obtenido, la cifra total de activos, la subvención pública recibida, los gastos en personal, los gastos desembolsados en materiales o el resultado económico. Además, los entes públicos que utilizan un modelo de gestión basado en la externalización de su actividad presentan mejores valores de productividad.

Limitaciones: Se ha analizado un único país para un periodo temporal de 4 años.

Implicaciones prácticas: Las televisiones autonómicas con un modelo de externalización presentan menores pérdidas económicas y requieren de una menor asignación pública de los Gobiernos correspondientes.

Implicaciones sociales: La externalización de parte de la actividad de la cadena de televisión autonómica puede ser útil para garantizar la sostenibilidad del servicio público regional de televisión.

Originalidad / Valor añadido: Se ha comprobado empíricamente que el modelo de gestión que adopta una televisión autonómica pública influye en el resultado económico.

Palabras clave: Outsourcing, Management model, Productivity, Public service television, Regional television

Códigos JEL: M1

This work is licensed under a Creative Commons Attribution 4.0 International License

Intangible Capital, 2004-2024

Online ISSN: 1697-9818; Print ISSN: 2014-3214; DL: B-33375-2004

Publisher: OmniaScience