Public Broadcasting in Picture

• Financing
• Operational management
• Accountability and supervision

At the request of the House of Representatives, the Court of Audit has investigated the financing, operational management and supervision of public broadcasting in the Netherlands. We audited the television activities of all seven A-rated broadcasters and the B-rated broadcasters. We also investigated the roles played by the Netherlands Public Broadcasting (NPO), the Ministry of Education, Culture and Science (OCW), the Media Authority and the Commission for the Integrity of Public Broadcasting (CIPO). We published our report, Publieke omroep in beeld - financiering, bedrijfsvoering en toezicht(Public Broadcasting in Picture - financing, operational management and supervision), on 11 September 2008.

Financing

Public funding of public broadcasting was reduced between 2003 and 2007 from €630 million to €563 million. Advertising income declined in the same period from €221 million to €192 million. The report shows that public broadcasters were able to cope with the economy measures and lower advertising income, in part by using their own private income to make television programmes. More efficient use has been made of public funds since the major broadcasters have had to compete against each other for broadcasting time and related budgets. The broadcasters are now in better control of their costs. Between 2004 and 2006, the cost of one hour's television has fallen from €28,000 to €23,000.

We found that the financial information the Ministry of OCW provides to the House of Representatives did not agree with that provided by the Media Authority (as financial supervisor). Our audit also found that no public money was used in the broadcasters' private activities. The NPO, however, could take measures to further improve the efficient use of public money.

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Operational management

In general, the public broadcasters' operational management is adequate, although improvements are possible in some areas. The broadcasters, for example, inadequately document the agreement of contracts. This impedes supervision in certain areas. Accountability could also be significantly improved with little additional effort.

Two broadcasters have signed an agreement with a production company under which they are obliged to buy a certain number of programmes over several years (output deal). These broadcasters are exposed to significant financial risks because, under the 'Money on Schedule' procedure, there is no guarantee that they will have broadcasting time for the programmes. The Court of Audit thinks the NPO should only permit such contracts subject to strict conditions.

Improvements can also be made regarding the use of records of gifts, ancillary positions and financial ties. Some improvements could also be made in the agreement of fees and severance payments for the broadcasters' managers and of contracts for celebrity presenters. Special attention should be paid to contracts in which the services provided by a production company or a presenter's own company include the provision of a celebrity presenter. This harbours the risks of over-reliance and the inefficient use of public money.

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Accountability and supervision

We concluded that accountability for various aspects of the public broadcasters' operations generally satisfied our standards. One problem we found was that all but one of the broadcasters we audited had failed to include a statement of operational management in their annual reports for 2007. We recommend that the NPO and the broadcasters take measures to have statements of operational management included in the annual reports.

With regard to supervision, we concluded that virtually all broadcasters are expected to have operational supervisory boards by the beginning of 2009. Based on the draft regulations we studied, the position of supervisory board will differ significantly from one broadcaster to another. We recommend that the broadcasters carefully consider what persons or bodies should exercise the supervisory duties. The persons or bodies chosen should have appropriate powers. We recommend that the CIPO closely monitor developments in this area and encourage the exchange of experiences between the broadcasters.

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