Advertising

For many public broadcasters, advertising is a viable method of independently sourcing additional funding while still fulfilling their public service remit. Advertising may also contribute to other benefits, such as reducing rates paid via licence fees or direct funding, as is the case with the BBC carrying advertising for international audiences.

PSM are well-placed to offer value to advertisers due to their reach, diversity, quality, and public trust. KBS in South Korea, for instance, provides global opportunities for its advertisers, with its KBS WORLD channel reaching 140 million households in 113 countries. Meanwhile, SBS in Australia, which is funded by both advertising and government funding, offers advertisers the chance to reach 99 percent of the country’s population.

But it also has its pitfalls. Advertising markets for traditional media in many countries have been crumbling, raising concerns about the viability of an advertising-led approach to PSM, with the loss of advertising revenue blamed for job losses at public media organisations in Canada, Channel 4 in Britain, as well as several broadcasters in Europe.

Advertising also comes with content challenges, mostly around the balance between upholding public values alongside commercial interests, as noted by participants at a PMA Unpacked roundtable on commercial funding. While advertising may support a public broadcaster’s public service remit, it should not fully sustain it, and it needs strong policies or regulation to ensure public interest outweighs purely commercial pursuits. Advertising limits for public media can be found in many countries, such as in Germany, the Netherlands, and Australia.

Alternative Tax

The alternative tax is a unique mechanism, raising funds for public media by taxing industries rather than levies on households or, though the expense is still likely to be passed onto consumers.

This is the form of funding used in Spain. A 2009 law saw the public broadcaster, RTVE, funded by a combination of government subsidies as well as a tax levied against private channels (3% of gross income), payment companies (1.5% of gross income), and telecommunications companies (0.9% of gross income). In total, this provides approximately €600 million for RTVE. In Thailand, they make similar use of an external tax, but instead this is directed towards the liquor and tobacco industries. The so-called ‘sin tax’ is a 1.5% levy on revenue and is capped at 2 billion baht, with additional funding sourced from elsewhere.

The external tax is not without its problems. The Spanish government had to fight the legality of the tax in the Supreme Court, although they did ultimately win. And RTVE has faced significant funding troubles for years. But it is a secure and independent funding route, which aids public media’s imperative to be free from high levels of government interference.

Big Tech Tax

In recent years, there have been growing calls for streaming giants or social media platforms to contribute to local media via tax, although it has yet to go beyond a proposal in many countries. While the UK has brought in a Digital Services Tax, which imposes a 2 percent levy, this does not fund public media.

Efforts to force Big Tech to fund public broadcasting has been led by successive governments in Australia: first, through the News Media Bargaining Code, which sought to compel Big Tech to strike up deals with news media as a way of compensating news companies for the news they produce. This directly funded Australia’s largest public broadcaster, the ABC, which used the income from both Google and Meta to fund 60 regional journalist positions.

However, after others explored introducing similar codes, such as Canada, Meta – the owner of Facebook and Instagram – pulled all news services from its platforms in Canada, as a way of avoiding having to pay, and then followed suit in Australia, and threatened the same in other countries exploring similar regulations, including New Zealand, which has put its plans on hold.

Australia’s government has subsequently continued to explore options to get Big Tech to fund news media, and the latest proposition involves a ‘big tech tax’. The News Bargaining Incentive (NBI), announced in December, would impose a tax on designated tech companies. But this tax would be offset if companies strike deals with publishing houses. If a platform refuses to negotiate or enter any deals, they will be forced to pay the levy. According to the government, it would be cheaper to enter deals with publishing companies than to pay the tax.

Direct Public Media Tax

Annual taxation is a direct method of public funding. It can take various forms and requires different criteria depending on the context. It can be income-dependent, like in Finland, where the annual ‘Yle tax’ (a Value Added Tax charge of 10 %, which is deducted from the gross amount and has a maximum payment of €163 a year), is collected alongside income tax into a fund that is excluded from the annual state budget.

Increasingly, specific public media taxes are becoming more device-independent, such as in Sweden, which adopted a public media fee in 2019 under the belief that public radio and television play a key public service role, and must therefore be funded collectively, regardless of individual use. The fee is collected via a ‘tax slip’ and, like in Finland, is income-dependent: it charges 1% of the taxable income of anyone over 18 years-old, with a limit of SEK 1,300 per person, per annum.

More public media organisations are adopting this funding model, including Denmark in 2022. It is future proof in that it does not rely on the ownership of a television or radio, for example. Such a model can also offer safeguards to editorial and financial independence so long as it remains separate from the national budget and direct government influence. This is partly achieved in some jurisdictions by keeping negotiations about the rate of tax separate from election periods.

Donations

Many public media organisations in the United States rely on donation models, with a significant portion of their income coming from private donations from companies and individuals, the sale of memberships, or other forms of philanthropy, with certain additional funding coming from various state and federal governments. 36 percent of NPR’s annual $279 million budget comes from corporate sponsors. The Public Broadcasting Service (PBS) receives donations via the PBS Foundation while National Public Radio (NPR) also receives charitable contributions and endowment support via the NPR Foundation. TVO in Canada also relies on charity donations to supplement its funding from the provincial government, as well as partnerships.

Relying on so much support from donors has inherent risks, including inconsistent funding patterns or the need to spend a lot of time and resource rallying donations. It also raises concerns about editorial influence, in a similar way to advertising, and it also creates perception issues if, say, a key sponsor becomes a significant news story, although NPR has editorial guidelines around this. PBS also explains in its Editorial and Funding Standards & Practices how they deal with this.

Government or Federal Funding

This model sees funding come directly from the state as part of overall public spending. Rather than a specifically earmarked funding stream (such as the licence fee), this model can imply a more direct link between the government and media.

This type of funding can sometimes lead to media organisations being construed as state media, rather than public media. In some instances, this holds true. For example, the China Media Group (CMG) sits within the Publicity Department, from which it receives its funding. The CMG lacks independence. It is just an extension of the government itself, with its international arm used as a tool of soft power.

However, many public media organisations which also receive their money directly from the government are equipped with other mechanisms – legislative and regulatory – that help to ensure their independence. For example, Radio New Zealand (RNZ) receives its money through NZ On Air, an autonomous Crown entity. Because of this, RNZ and the government are kept at “arm’s length.” One of the largest public broadcasters, the Australian Broadcasting Corporation (ABC), also receives direct public funding, with the Parliament guaranteeing the independence of the ABC on programming matters. Estonia’s public broadcaster, ERR, is also funded out of the state budget, but maintains its independence through its Press Ethics Adviser. The Seychelles Broadcasting Corporation is funded over a three year period, which “does not make it dependent on the politicians of the day for approval of its funding for the coming year.”

Household Levy

A household levy applies universally to all residents: rather than being income or device dependent, the levy is applied at the same cost to each household, regardless of how many people live there or whether they use public broadcasting. The household levy is a relatively new model, taking account of new technologies like smartphones and tablets, and their capacity to access public media content beyond traditional media.

Germany and Switzerland both have well-known examples of the household levy. In Germany, the monthly household levy – which also applies to companies, institutions and public welfare organisations — has few exemptions. However, in 2024, the future of the household levy in Germany was increasingly debated, with some parties calling for it to be scrapped altogether. Before the household levy was introduced in 2013, households were required to pay for each device.  In 2019, Switzerland also introduced a household, device-independent charge for public broadcasting, and more recently, Austria adopted the household levy in 2024.

The move away from a device-dependent fee has also been linked to the recognition of a public broadcaster’s role as a public service. In Germany, this is known as the “solidarity model”, where the public is expected to fund an “independent, high-quality, and diverse” public media system so that everyone can benefit. Meanwhile, South Africa is considering the implementation of a household levy. The move away from a licence fee has been touted as a solution to public broadcaster SABC’s financial challenges and low licence fee collection rates.

Licence Fee

The licence fee is considered the traditional funding model for public media and is nearly as old as public media itself. It was first levied in the UK in 1923, one year after the BBC was founded, and cost 10 shillings a year. The licence fee charges people who own a certain type of device a flat rate – traditionally this has been the television, but more recently, it has been expanded to include any device that is used to receive or stream programmes live via an online TV service.

Numerous other public media organisations have adopted the licence fee: South Africa’s SABC, South Korea’s KBS, and Ghana’s GBC are some. It is widespread across Europe, providing 60% of funding for public media across the continent according to the EBU. However, few public media organisations rely on it as heavily as the BBC, or Japan’s NHK, where it makes up nearly 100% of funding. Most organisations operate mixed models, such as Ireland’s RTÉ where the licence fee provides roughly 60% of its budget, with the remainder coming from commercial sources.

But the licence fee has been facing problems. While more secure from government interference than other forms of funding, licence fee negotiations often become a political football. Meanwhile, tying the licence fee to one device, such as a TV, can lead to confusion as to the breadth of services that public media provides. One of the biggest challenges for broadcasters like the BBC is therefore ensuring that licence fee payers are aware of the array of services that the fee pays for and its sheer value for money compared to other services. In the current climate, with the emergence of subscription services, the licence fee’s sustainability is being questioned. The licence fee is also criticised for its high evasion rates and the fact other funding models can be more equitable if they are tied to property values or income. The UK government in its charter review of the BBC, will also review the licence fee and whether it may ultimately be scrapped, a decision France recently adopted, opting instead for direct funding from the government.

Crucially, however, the licence fee offers the most direct link between a public broadcaster and a nation’s public, which is imperative to maintain trust and accountability.

Subscription Service

To date, no public media organisations have adopted a subscription model in the mould of a Netflix or Spotify, where audiences need to be paying monthly to access the content. However, some broadcasters – typically those who rely on advertising – do offer a bonus subscription package, as a way of watching content without ads.

CBC Gem Premium, for example, charges $5.99 per month. Channel 4 Plus offers early access to shows and ad-free viewing for £3.99 per month.

Paywalls – such as that used by the New York Times or Financial Times – have also been avoided by public broadcasters. But debates around the future funding of public media are considering it as an option.

The closest example of a ringfenced public media subscription model would be Britbox, an online video streaming subscription service operated by UK public broadcasters BBC and ITV, specialising in British programming. Launched in the UK in 2019 as a Netflix-style TV service, Britbox costs £5.99 per month, and is now also available for international audiences.

While some believe a subscription model would work out cheaper for citizens, in practice, it could lead to more financial instability for public media organisations, especially if citizens are not required to pay for content that they don’t consume. Its other main weakness would be the severance of the tie between the public broadcaster and the broader public, which trust ultimately depends on. Some, such as the BBC’s Director-Genral, Tim Davie, are also concerned a subscription service would lead public media to service its subscribers rather than the public, with less obligation to provide critical public services like local radio.