It is a mark of the global shadow of the BBC and the energy of its director-general that Greg Dyke recently found himself holding a cup of coffee at eight o'clock in the morning making an after-dinner speech by satellite. His audience was a conference half a world and several time zones away, in Wellington, New Zealand, on the future of public broadcasting. Dyke's invitation, however, was not some piece of post-imperial deference.
More than a decade ago, New Zealand threw out its former model of public service broadcasting - (a mix of licence fee and advertising revenue) - and threw itself into a free market revolution. It is now facing up to what followed. What happened there is an interesting parable for the possible consequences for British television. New Zealand has been a laboratory for a funding model for public service television that the BBC will fight to the last ditch to prevent, but which the deregulatory instincts at the heart of Ofcom find increasingly intriguing.
With the concurrence of Ofcom's review of public service broadcasting, the BBC's charter review process and a discussion over ITV's public service obligations after the Carlton-Granada merger, the debate over the role of publicly-funded programming in a digital, multichannel future is at its most open for years.
Ironically, the reason for the Wellington conference was that, after 13 years of letting the market drive programming decisions, there is now some dissatisfaction at the uniform diet of derivative and acquired programmes being screened. The government is now making an extraordinarily bold attempt to turn the tide of global television and seed once again a public service culture into its broadcasting.
In 1989, when New Zealand broke open its tiny television market to unbridled competition, its BBC clone, the Broadcasting Corporation of New Zealand, was essentially abolished. In its place was created a "state-owned enterprise", TVNZ, with its two channels, TV1 and TV2. They were relieved of practically all their social and cultural remit. They had one objective: to maximise revenue and to pay an annual dividend to the government.
All restrictions on foreign ownership were abolished. In 1991 the commercial terrestrial channel, TV3, was bought by CanWest of Canada. Pay-TV expanded fast. The licence fee was eventually abolished. TVNZ had to compete in the market, funding itself from advertising revenue. However, a new agency, New Zealand On Air, was allocated public money in place of the licence fee, to fund those programmes across all the free to air channels that the market would not otherwise provide. It became the one remaining public institution in a commercial television economy. However, the broadcasters themselves were set no quotas for home produced programmes; New Zealand has one of the lowest proportions of home- grown content in the developed world - 24 per cent - and a lower level of public funding for television, relative to GDP, than Poland, Greece and Italy.
In many ways, despite this tough commercial climate, NZ On Air has proved a success. Its principle of "contestable funding", whereby there is open competition between broadcasters and producers for public money for public service programmes, is a working example of the Arts Council of the Air, the model first suggested by the Peacock Committee in Britain in the early 1980s.
"Contestable funding" is a phrase that we are likely to hear more here. In a recent speech to the Royal Television Society, Ed Richards, the Ofcom partner leading the PSB review, asked, "If we value competition between institutions delivering public service broadcasting today, how do we maintain that competition in the future?" The idea of top-slicing the BBC's licence fee and creating a separate fund again has a resonance as a possible means of preserving a diversity of programmes on ITV, Channel 4 and Five as the digital world erodes the old incentives for making them. So what are the lessons?
Without NZ On Air it is unlikely that any significant production base would have survived. Crucially, NZ On Air did not restrict its role to market failure, only funding minority and special interest programming. Its intervention secured documentary, children's drama and social action programming. It has funded new talent in drama and comedy script development. Its investment acted as a lure to the broadcaster - a source of co-production finance, the exact proportions to be negotiated according to the commercial risk of the project. It also allowed independent producers to bid direct for finance, a proposition which will have Pact, the British independent producers' association, dribbling with anticipation.
However, its weakness was also apparent; no programme could be funded unless the broadcaster had already agreed to show it. Even with the incentive of public investment, such has been the competitive pressure for ratings that the broadcasters have frequently preferred to turn down the money in order to play higher-rating programming, acquired from Britain and the US. NZ On Air has been accused of agreeing to put its money into clearly commercial programmes under pressure from broadcasters who were not prepared to widen their channels' editorial scope. Even so, documentaries, which would probably not have survived on the main channel, TV1, had it not been for NZ On Air money, have proved over time a commercial success. The public subsidy has been gradually reduced, as 29 hours of documentary in peaktime now stand in the schedule on their own merit, a real example of public service intervention acting as a market catalyst. Some of NZ On Air's most successful investments have been with the foreign-owned commercial channel TV3, including "The Strip", a 20-hour drama series set in a strip club, and "Wannabes 2003", a local variation on "Pop Idol". TV3 was prepared to invest in both a children's drama series and an open access strand, "Open Door", which the state-owned TVNZ turned down as insufficiently commercial. Some 25 per cent of NZ On Air money now goes, not to TVNZ, but to the private commercial station.
However, now the government has decided that it has to do something to reintroduce a social and cultural remit into the two TVNZ channels, the whole system is again under scrutiny. The truth is that the state-owned channels have done just what they were told; incredibly successful, they together have 65 per cent of the market. But they have got used to being carnivorous, commercial beasts and find the new herbivore diet now being imposed somewhat unpalatable. They have been saddled with a charter, with clear social and cultural obligations, and will no longer be required to deliver a dividend to government. They will, however, still be reliant for 75 per cent of their funding on advertising. TVNZ has managed to secure extra funding for its new responsibilities direct from government, but it is also arguing that contestable funding is abolished and they have again the monopoly of all public money. Otherwise, they say, their new obligations will make them unable to compete. The independent producers are deeply suspicious.
The lessons for Britain from this "Through the Looking Glass" experience are as instructive as they are ironic. The contestable funding model has undoubtedly ensured the continuation of some diversity that the market would have happily seen die. A NZ On Air model in Britain would most likely be a catalyst for fresh ideas and an inventive competition for quality. But NZ On Air was essentially a small remedial counterweight in a society that had lost its cultural nerve as to why television matters. Its overall funding for programmes with a cultural and social purpose was inadequate, and the market, when tested, showed no inclination to make up the difference. The government is now trying to revive the barren landscape it has created. Its broadcasting minister, Steve Maharey, a former academic socio-logist, has a knowledge and engagement with television that puts our politicians to shame. The greatest hope for his success comes from his vision of public broadcasting, not as some encrusted heritage industry, but as a modern, dynamic force, essential to the forging of a young and increasingly multicultural society, which needs to be funded accordingly.
Whatever funding model one chooses, what really matters are the convictions of those responsible for television, broadcasters and regulators alike. The health of television rests not in economic modelling but in a cultural confidence to make qualitative judgments on the worth of what is produced.
Tim Gardam is the former director of television at Channel 4.