McKinsey and Co find advertising damages public broadcasters

In their 1999 Study, Public Service Broadcasters Around the World, commissioned by the BBC, the management consultants McKinsey and Company mount a strong case against advertising on public service broadcasters.  

Their review of 20 broadcasting markets on four continents focused on the issue of competition in those markets.  It found that competition in broadcasting markets was strongest when the public service broadcaster took no advertising, and weakest when the pubic service broadcaster received a substantial income from advertising. 

McKinsey argued against greater regulation of the media, but in favour of supporting advertising free public broadcasters, which would “combine creative and market pressures on broadcasters to achieve a society’s aims for its broadcasting market”

The McKinsey study finds “Our analysis shows clearly that an increased dependence on advertising has led inexorably to an more populist and less distinctive schedule.” It goes on to argue that the less distinctive a public broadcaster is the less impact it makes on the overall market, and the less competitive it is. 

On the other hand distinctiveness alone is not enough.  The public service broadcaster must be large enough, well funded enough, and mainstream enough to have a significant market share.  Without that, it has no real market power, and therefore no real competitive impact.