The European Commission has unveiled a draft proposal to change the rules that govern State funding of public service broadcasters (PSBs). In the European Union, PSBs receive more than EUR 22 billion annually from licence fees or direct government aid—making them the third largest recipients of State aid after agriculture and transport.

The current rules concerning PSB funding were promulgated in 2001 and are viewed as outdated because media technologies have changed and advanced. PSBs, like commercial broadcasters, have started new ventures using new media distribution methods. But the commercial sector has increasingly complained that, for example, PSBs use State funds to cross-subsidise their new ventures, distorting competition in these new markets.

The Commission’s proposed rules would introduce increased flexibility, but also more stringent rules on how PSB funding can be used. As regards flexibility, Member States would have discretion to assess their own broadcasting needs, including the need for new services. PSBs would also be permitted to build reserves of 10 per cent to help them deliver on their public service mission and withstand cost fluctuations. At the same time, however, the Commission’s proposed rules would require reinforced control mechanisms to avoid overcompensation of PSBs or cross-subsidisation of commercial activities. The Commission’s proposal was reportedly welcomed by commercial broadcasters, but opposed by PSB organisations that do not want the current rules changed. Interested parties have until 15 January 2009 to submit comments.