Ensuring the Mission of Public Service Broadcasters

Public Service Broadcasters (PSBs) are publicly organised and funded broadcasters, organised by each of the EU’s Member State with a great degree of discretion and under a unique legal framework. In brief, there is no single model for PSBs across the Union. They are an integral part of the democratic, social, and cultural life of the Member States, and provide (or can provide) an invaluable public service to the populace, including preserving media pluralism. Politicised interventions and the decline of PSBs’ independence threaten their ability to adequately perform their role and offer citizens a high-quality public service which meets the public’s democratic and cultural needs. Equally, their mission of preserving pluralism is made more difficult. The politicisation of PSBs by national authorities, coupled with the increasing concerns about media freedom, shows that some type of regulatory intervention is necessary.

Yet, PSBs find themselves in an increasingly precarious position, with their role being undermined by political parties across the EU. A 2016 Eurobarometer survey revealed European citizens’ concerns about media independence. The European Commission’s public consultation report highlighted instances from 16 Member States where legislative changes affected public service media governance, funding and staffing, often for political reasons. The 2022 Rule of Law Report by the European Commission acknowledged the link between the rule of law crisis and public broadcasters, explicitly mentioning how ruling parties in Poland and Hungary have used public broadcasters to influence citizens.

The implication of public money suggests that state aid control is a possible way to control if public broadcasters are being captured by the political class, and if public money is being used to distort citizens’ rights to be informed (rights of freedom of expression and information). The European Commission expressed its primary view on this issue with regard to a complaint it received on the anticompetitive mode of funding the public broadcaster in Hungary, explicitly stating that the violation of freedom of expression goes beyond State aid control; but it then left this issue out of the scope of its analysis.

In this blog post, we argue that the State aid compatibility regime, imbued with a substantive public value test, can, and should, help in reconciling this apparent lack of competence, and could thus be a useful tool for regulating the fulfilment of PSBs’ missions in the EU. We first outline the current legal framework, before briefly introducing the public value test. From there, we examine the relevant principles and elements of the State aid compatibility regime, and explain how, in the context of the preceding analysis, said regime can be used to close the identified competence gap.

The EU’s Limited Competence Regarding PSBs

Under EU law, PSBs fall within the category of Services of General Economic Interest (SGEIs) which play an important role recognised by EU Treaties. However, given that there is no definition for SGEIs, Member States can decide for themselves what counts as an SGEI as long as they follow EU law. PSBs are given additional flexibility thanks to the Amsterdam Protocol (hereinafter: the Protocol) which limits, inter alia, the application of the state aid prohibition found in Article 107(1) TFEU in relation to PSBs. This limitation means that state funding can be provided to PSBs if it conforms with the Amsterdam Protocol, the Public Service Broadcasting Communication or other instruments adopted to concretise Treaty provisions, and the principles underpinning them. As such, Member States possess not only broad discretion in defining the remit of the public service to be provided by the PSB but are also able to finance their PSBs through the public purse.

Because PSBs are considered SGEIs, when their state funding is classified as state aid, their legal status is a result of the combination of a limited EU competence to control PSBs and regulate their content under the Amsterdam Protocol and the general regime of Article 106(2) TFEU. However, as discussed in this blog, the Commission still has some authority to oversee them and monitor if PSBs remain independent and can continue to fulfil their paramount public mission.  Importantly, we are not arguing for the Commission or the Union to be handed control over PSBs. Rather, we suggest that the Commission is competent to supervise and verify whether the  public funding of PSBs actually aligns with their defined mission and the values that underpin it.

Before delving into the application of the regime and exploring how the State aid compatibility regime can be deployed to regulate, at least in part, PSBs, it is worth briefly exploring the public value test.

What Is the Public Value Test and Why Should It Be Applied

The PVT test, stemming from the Commission’s guidelines, counterbalances the public value provided by new services offered by PSBs with their impact on competition. New services can only be allowed if they conform with the public value test.

In effect, that test follows from the logic of the Protocol and the SGEI legal framework. The legal framework based on the notion that State aid (and other) rules can be sidestepped to the extent necessary for the PSBs to fulfil their public service mission, which becomes a centre of gravity. That mission is built around the provision of a service which is of public value – understood as a service which, per the Protocol, meets the democratic and cultural needs of society, and which preserves media pluralism.

While the public value test has been limited to new services, we argue that its logic ought to be extended to the legal assessment of PSBs as a whole, especially in cases of reconciling State aid with prima facie non-economic values. The inclusion of public value into the overall assessment of PSBs not only follows from the wording and reasoning of the Protocol, but also from the Commission’s decisional practice when assessing potential aid to PSBs. There, the Commission often mentions the importance of pluralism and democratic values as a core element of a PSB’s mission. When Member States define the public service mission of their respective PSBs, with all the discretion they are afforded, that mission also includes those values, even if paying lip service to them. However, there is no actual robust assessment of whether the service funded and provided is indeed used to support those values. Such a test is a rationale of the special regime in place for PSBs and could be a tool used to align with the principles encompassed in Article 2 TEU. Finally, such a test would also grant the Commission some competence to ensure that PSBs carry out their mission and that they are functioning per their definition.

Compatibility assessment and its principles

When assessing if a PSB can receive state aid under EU law, the aid must support the PSB’s public service mission as defined by its country. This assessment also follows general principles that apply to all state aid, including ensuring that it complies with EU law and is necessary for achieving the objectives of the service.

The process involves defining the public service mission and obligation, entrusting it to a broadcaster, and ensuring that aid is proportional to the public mission. It looks at how the broadcaster performs, manages, funds, and supervises this obligation, and whether it is accountable. The Commission checks if the public service mission aligns with societal needs, and if the broadcaster really does what it is supposed to do under that mission.

The Commission cannot dictate what the public service mission should be; that is up to each Member State, and they can define it broadly. But it does have a say in whether state aid follows EU laws and if it is necessary and proportional for the service (actually) provided. For this purpose, to assess if the aid is compatible with the internal market, the Commission analyses two pivotal aspects: legality and incentive effect. Legality means that any approved aid must not breach any EU laws, whereas a ‘severability’ approach is used to determine if parts of the aid that violate EU laws can be separated from the overall aid.

Amendments to authorised aid are also subject to a severability principle: minor changes might be allowed, while significant ones can constitute a new measure and thus may require a fresh assessment.

Incentive effect, or necessity, relates to the very notion of aid, and to the subject matter of the aid. It means that aid is deemed compatible with the internal market if and to the extent that it is necessary for the attainment of the objectives specified in the derogation invoked (in our case Article 106(2) and the Amsterdam Protocol). This incentive effect is closely linked to the proportionality of the aid, which forms part of the Commission’s assessment relating to SGEIs. Thus, incentive effect informs the limits of the financing of the aid measure and is organically linked to the purpose of the aid, as it relates the compensation to the public service defined, entrusted, and provided.

In practice, this means the Commission can oversee PSBs to some extent, especially when it comes to ensuring state aid does not violate EU laws and is needed for the broadcaster’s mission. If there are issues, parts of the aid could be adjusted or removed, but the overall aid can remain if it still serves the defined public service mission.

In brief, the Commission cannot itself define the public service mission of PSBs, but it can ensure that the service entrusted, funded, and provided under that mission actually reflects the mission and the principles that imbue it with public value. This in effect is the more substantive iteration of the public value test argued for above.

The How

The Commission is competent to monitor if a public service obligation execution contradicts with   democratic and pluralist values enshrined in Article 2 TEU, not only due to going against the wording and spirit of the Amsterdam Protocol, but also due to being contrary to provisions of EU law. Such elements could also then be removed from the authorised aid, due to their illegality – or taint the measure as a whole. Further, aspects of a PSB’s mission which do not have public value could be argued to lack incentive effect, as they depart from the subsidised mission. At the same time, changes to the mission or its entrustment (which includes the supervisory mechanism) could be seen as substantial changes necessitating a fresh assessment if they affect the public of the service provided. Finally, as one of us argued elsewhere, whereas it is for the Member State to ensure that there is independent supervision in place; but it is also for the Commission to verify if the supervision is indeed independent.

Conclusion

The full and coherent application of the existing regime, with a focus on the general principles of compatibility placed and analysed in the context of the public service and its public value, would allow for the supervisory oversight of PSBs by the Commission (which retains exclusive competence in the realm of State aid).

At the same time, the definition of the objectives and of the public service obligation, as well as their implementation and administration, within the public service remit, would remain squarely within the competences of the Member States. The Commission would only be able to examine the coherence of the overall measure with the public service mission and public value.

Breaches of media pluralism and the public value test, both in design and in implementation, could, by reference to the definition or entrustment made by the relevant Member State, be removed from the state aid measure, or lead to it losing its incentive to effect vis-à-vis its public service objective.