European Journal of Communication http://ejc.sagepub.

com/

Supplying and Viewing Diversity: The Role of Competition and Viewer Choice in Dutch Broadcasting
Richard van der Wurff European Journal of Communication 2004 19: 215 DOI: 10.1177/0267323104042911 The online version of this article can be found at: http://ejc.sagepub.com/content/19/2/215

Published by:
http://www.sagepublications.com

Additional services and information for European Journal of Communication can be found at: Email Alerts: http://ejc.sagepub.com/cgi/alerts Subscriptions: http://ejc.sagepub.com/subscriptions Reprints: http://www.sagepub.com/journalsReprints.nav Permissions: http://www.sagepub.com/journalsPermissions.nav Citations: http://ejc.sagepub.com/content/19/2/215.refs.html

>> Version of Record - Jun 1, 2004 What is This?

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

Supplying and Viewing Diversity

The Role of Competition and Viewer Choice in Dutch Broadcasting
Richard van der Wurff

A B S T R A C T

From the late 1980s, the television market in the Netherlands

developed in a single decade from a public monopoly to one of the most competitive markets in Europe. As a result, diversity of television supply declined while the absolute number of programmes that viewers could choose from considerably increased. Viewers make use of this increase in viewing opportunities to actively select a diverse combination of programmes from a less diverse supply. Consequently, the Dutch audience views as much diversity in the late 1990s as in the late 1980s. Key Words competition, diversity-as-choice, diversity-as-sent, public television diversity-as-received,

Introduction The television market in the Netherlands has changed dramatically since its reluctant liberalization in the late 1980s. In one decade, it developed from a public monopoly to one of the most competitive television markets in Europe. Professionals and academics have argued that these changes, in the Netherlands as well as in other European countries, threaten the diversity of television programmes supplied on the market. Others, in contrast, argue that competition forces broadcasters to respond
Richard van der Wurff is lecturer in media management and communication policy at the Amsterdam School of Communications Research (ASCoR), Kloveniersburgwal 48, 1012 CX Amsterdam, The Netherlands. [email: R.J.W.vanderWurff@uva.nl]. European Journal of Communication Copyright 2004 SAGE Publications (London, Thousand Oaks, CA and New Delhi) www.sagepublications.com, Vol 19(2): 215237. [10.1177/0267323104042911]

215

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

more effectively to viewer demand and to increase the number of programmes that viewers can choose from. How competition inuences the amount and diversity of television programme supply is important, because it ultimately affects the types of programmes that viewers watch. A decline in the diversity of supply reduces opportunities for audiences to be confronted with different ideas, opinions and programme formats. This threatens the open, democratic and well-informed information exchanges that are necessary for long-term social, cultural and economic progress. However, an increase in the amount and diversity of supply may enable viewers to select and use only those types of content that they really like. Paradoxically, increases in diversity of supply may therefore reduce the consumption of diversity, too. So far, most studies have investigated the consequences of competition (or concentration) for diversity of supply, not for diversity of consumption. This study, in contrast, investigates how competition and concentration affect diversity of supply and consumption. The next section discusses diversity as media performance indicator and distinguishes between diversity-as-sent, diversity-as-choice and diversity-asreceived. The third section reviews how competition, concentration and new entry inuence these different types of diversity in different ways. The fourth section subsequently investigates these relationships for the Netherlands in the 1990s. The nal section presents conclusions and discusses policy implications. Diversity Diversity refers to the heterogeneity of media content on one or more relevant dimensions for example, the extent to which different political orientations or cultural traditions are expressed in the media (McQuail and van Cuilenburg, 1983; McQuail, 1992). This article restricts itself to diversity of programme types, for two reasons. First, television is an all-purpose medium (Souchon, 1994a). It serves many different needs of diverse audiences by providing different types of programmes (news, analysis, entertainment and advertisements). Programme-type diversity therefore is a common focus of scholarly and policy debates. Governments and regulators consider programme-type diversity an important policy indicator, and monitor whether (public) broadcasters provide minimum proportions of specic programme types. Broadcasters consider the choice for a specic combination of programme types the rst important step in the development of programming strategies (Souchon, 1994b). Critics of the commercialization of broad216

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

casting argue that competing broadcasters spend too much time on entertainment, sex and sports programmes, at the expense of serious news, information and cultural programmes. Anecdotal evidence suggests that viewers, too, describe and discuss television supply in terms of programme types. Programme-type diversity therefore is a valid interpretation of television diversity even though important trends in broadcasting, such as the potential tabloidization of news programmes, fall outside the scope of programme-type diversity assessments. Second, many academics, professionals and rating agencies have developed programme typologies and described and measured supply and consumption of programme types. Classications of programme types are therefore relatively reliable, and supply and consumption can be studied relatively easily over longer time periods. This offers advantages over other types of diversity studies. Both reasons explain why many broadcasting performance studies focus on programme-type diversity. This study is no exception.

Diversity-as-sent, diversity-as-choice and diversity-as-received

In the introduction, we have already distinguished between diversity of supply and diversity of consumption. Following McQuail (1992: 157; see also Souchon, 1978), we use the term diversity-as-sent to refer to the heterogeneity of programme types that are made available by broadcasters in a market. Diversity-as-received, in contrast, refers to the heterogeneity of the programmes that audiences actually view. Both diversity-as-sent and diversity-as-received are relative measures. They inform us on the extent to which different programme types are represented in total supply or consumption. They do not, however, say much about the absolute availability (or use) of different programme types. For example, consider a market that provides a perfectly balanced combination of programmes. If a new channel enters this market with a very biased supply (e.g. only news), the heterogeneity of supply will decline. Nevertheless, viewers have at least the same and potentially more options to choose the programmes that they like. We therefore also assess diversity-as-choice, which expresses the absolute amount of different programme types that viewers can choose from. To assess whether television supply is sufciently diverse, this study adopts the well-known norms of open and reective diversity (McQuail and van Cuilenburg, 1983; van Cuilenburg, 1999). Open diversity exists when content is as heterogeneous as possible. This norm can be used to
217

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

assess both diversity-as-sent and diversity-as-received separately. Reective diversity rather signals a perfect match between diversity-as-sent and diversity-as-received. It exists when broadcasters provide the exact combination of programme types that audiences demand. We also distinguish between intra-channel and inter-channel diversity. Intra-channel diversity refers to the heterogeneity of programmes that are offered by an average channel. When audiences tend to watch channels rather than individual programmes, intra-channel diversity guarantees that viewers are confronted with a diverse supply. This is important from a societal perspective. Inter-channel diversity in contrast refers to differences in programming across channels (see Hellman, 2001). Inter-channel diversity guarantees that audiences can choose between different types of programmes. It is important from a user point of view. Intra-channel and inter-channel diversity, as well as open and reective diversity, are complementary, equally important and at the same time contradictory notions of diversity. For inter-channel diversity to increase, it is necessary (but not sufcient) that intra-channel diversity declines (and vice versa), while open and reective diversity can only coincide if audience preferences are uniformly distributed. This article adopts the position that broadcasting markets perform better when they offer a better balance between inter- and intra-channel diversity as well as between open and reective diversity. Competition, concentration and diversity An important tradition in the analysis of broadcasting market performance, especially in the US literature, is programme choice theory. Programme choice models explain, in a deductive way, why competition in broadcasting can result in programme duplication. Take, for example, a hypothetical market with three channels, in which 50 percent of the audience prefers entertainment programmes and ve groups of 10 percent each prefer their own specic programme type. Programme choice theory predicts that under those conditions all three channels provide entertainment programmes, because this choice gives them the largest possible market share (i.e. one-third of 50 percent). At the same time, these models suggest that minority audiences eventually are served when channel numbers become large enough. For example, when 10 channels operate in our hypothetical market, ve channels will still provide entertainment, but ve other channels will each provide one of the other preferred programme types. Underlying assumptions on which these
218

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

conclusions are based include the assumption that audiences distribute themselves relatively equally over channels that provide similar programmes, and that broadcasters aim to maximize audiences (Owen and Wildman, 1992). More sophisticated programme choice models include additional characteristics of broadcasting market structure, such as new entry, the availability of pay-TV channels and concentration. These models suggest, inter alia, that concentration contributes to diversity, because it does not make much sense for a multichannel broadcaster to replicate its programmes on different channels. Rather, a multichannel broadcaster is predicted to use different channels to reach different viewer groups in an attempt to maximize its overall audience share (Steiner, 1952). These programme choice models provide an insight into the basic mechanisms that relate competition and concentration to diversity. The downside of these models is that they rely on a number of fairly restrictive premises. It is presupposed that broadcasters and viewers behave rationally, that broadcasters have good knowledge of audience preferences (so they can select the most protable audience segment), and perhaps most importantly that broadcasters do not attempt to beat the competition in ways that are not described in the models. For example, broadcasters in our hypothetical market with three channels are not supposed to develop a new programme type that attracts all nonentertainment viewers. Many studies, however, suggest that this is exactly the kind of strategy that broadcasters attempt to adopt. Consequently, broadcasters in real markets do not necessarily behave as programme choice models predict.
Competitive strategies

An alternative approach to analyse the relationships between competition, concentration and diversity starts from Porters model of competitive strategy. Porter (1980; see also Bae, 2000) argues that under realistic conditions competitors can pursue two generic strategies. The rst strategy is the cost leadership strategy. Broadcasters adopting this strategy aim to acquire a structural cost advantage over their competitors. They can accomplish this goal by offering content to as many viewers as possible, and subsequently capitalizing upon learning effects, economies of scale and scope and opportunities to cross-subsidize expensive content (see also Doyle, 2002). The second strategy is the differentiation strategy. Broadcasters that adopt this strategy aim to attract as large an audience as possible, too. But they do so with a distinct type of content that
219

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

enables them to carve out their own market segment where they face little competition. Both cost leadership and differentiation strategies enable broadcasters to earn above-average prots (Porter, 1985: 11). These strategies are therefore very attractive for broadcasters. Importantly, they are also attractive from a diversity point of view. Differentiation strategies increase differences between channels and contribute to inter-channel diversity. They also contribute to open diversity, because differentiators must provide exclusive content that cannot be easily reproduced by other broadcasters. Cost leaders, in contrast, offer more heterogeneous combinations of programmes that are attractive to as many viewers as possible, thus contributing to intra-channel diversity and reective diversity (van der Wurff and van Cuilenburg, 2001). When different broadcasters in a television market adopt these different strategies, there is no direct, aggressive competition. Rather, the combination of cost leadership and differentiation strategies keeps competition moderate and contributes to a balance between intra- and inter-channel diversity, as well as between open and reective diversity. When different broadcasters in contrast do adopt similar strategies, competition will become ruinous. Broadcasters compete directly with each other, offering similar programmes to the same audience. This initiates a negative cycle of declining revenues, declining investments in programme diversity and quality, and declining audiences (van Cuilenburg, 1999; van der Wurff and van Cuilenburg, 2001; see also Souchon, 1992).
New entry and public broadcasting

One factor that may trigger ruinous competition is market entry of new channels (Souchon, 1992). Large increases in channel numbers, in particular, bring down the average number of viewers per channel signicantly. This forces broadcasters to reduce costs by offering cheaper programmes and rerunning programmes more frequently (Picard, 2001), which in turn may lead to ruinous competition. But smaller increases in channel numbers may also already contribute to ruinous competition. Studies of the US network broadcasting market, for example, show that networks enter the market with a combination of cheap and popular programmes, even when there are few competitors in the market. The main reason is that these new networks need to conquer a market share while their advertising revenues are still limited (Collette and Litman, 1997; Thomas and Litman, 1991).
220

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

Likewise, new channels in Europe aim to build up viewing without spending too much money. [This] means that cheap programmes are sought which still offer a good price-to-audience ratio (game shows and series bought on the international market) (Souchon, 1992: 50). We refer to these strategies of new entrants as lowest cost strategies.1 These lowest cost strategies intensify competition on the advertising and viewer markets. They also contribute to a decline in diversity. If incumbent channels, as a result, see their revenues dropping and nd it increasingly difcult to nance their cost leadership or differentiation strategies, new entry leads to ruinous competition. The more channels that operate in a market, the greater the likelihood of this happening. A factor that may prevent the emergence of ruinous competition, on the other hand, is the presence of public broadcasters. Public broadcasters have a specic obligation to provide minimum proportions of cultural and informative programmes (Brown, 1996). They also have the (moral) obligation to serve all audiences with high-quality programmes, especially at prime time (Souchon, 1994a). The Dutch public broadcasters, for example, are legally bound to offer a complete set of programmes, including 20 percent cultural and 30 percent educational and informative programmes. This diverse, comprehensive and high-quality offering by public broadcasters is expected to stimulate commercial broadcasters to offer a similarly comprehensive programme output of appropriate quality, but with a different emphasis on entertainment (or other programme types) (Noam, 1991; Souchon, 1994a; also Hellman and Sauri, 1994). Since the adoption of different strategies is one of the of the main conditions for moderate competition, the importance of the presence of public broadcasters becomes apparent.
Viewing behaviour and diversity of television consumption

Theories on competition, concentration and diversity ultimately concern the question whether audiences choose and view a diverse combination of programmes. The programme choice theories with which this section began, assume in this respect that viewers choose programmes rationally. Research shows that (in the US) some groups of viewers do indeed make deliberate choices, especially as the high number of available channels increases viewer options (Adams, 2000; Hawkins et al., 1991; Lin, 1994; Rust et al., 1992). On the other hand, broadcasters develop elaborate programme scheduling strategies to lock in viewers to their channels (Horen, 1980; Souchon, 1994b; Tavakoli and Cave, 1996). Consequently, a large group of viewers watches multiple programmes that are
221

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

sequentially broadcasted on one channel rather than selected programmes on different channels, once the decision is made to watch television (Cooper, 1996). This distinction between active viewers that choose their own programmes and passive viewers that enjoy the programming experience provided by channels is important for the relationship between diversityas-sent and diversity-as-received. When most viewers adopt the passive style of television viewing, diversity of television programmes as-received by the audience will strongly depend on the diversity as-sent by channels. Napoli (1997), for example, found that prime time market shares for programme types were almost perfectly correlated with their share of supply by the ve major US networks in 1995. Likewise, Souchon (1992) found that the viewing times that audiences spend per channel on different programme types show a close relationship with their broadcasting times. Nevertheless, even when diversity-as-received depends strongly on diversity-as-sent, diversity-as-received will be lower than diversity-as-sent as a result of audience selections in favour of more popular types, formats and items (McQuail, 1992: 157). When viewers, on the other hand, actively choose particular programmes, diversity-as-received will depend less on diversity-as-sent and more on viewers options and preferences. Research suggests in this respect that viewers tend to restrict their viewing to a limited number of frequently watched channels and to a limited set of programmes on these channels (Kim, 2002; Neuendorf et al., 2001; Youn, 1994). When increases in channel numbers and channel differentiation further stimulate this active style of television viewing (as some of the studies cited suggest), competition may increase diversity-as-sent but at the same time reduce diversity-as-received. The next section investigates how these developments operate in the Netherlands.

Competition, concentration and diversity in the Netherlands Like other European countries, the Netherlands had a public broadcasting system until the late 1980s. Public broadcasting was carried out by notfor-prot independent associations that represented the various socialreligious groups in Dutch society. Broadcasting time on two, and since 1988 three channels was allocated to these associations on the basis of membership numbers, but in a highly equitable manner. The objective of this system was to provide a combination of open and reective diversity in broadcasting (van Cuilenburg and McQuail, 1982: 144).
222

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

The Dutch government liberalized the public broadcasting system relatively late and reluctantly. The rst commercial broadcaster, RTLVeronique, later renamed RTL4, did not emerge onto the market until October 1989. Since then, the number of channels and broadcasters has increased rapidly. At the end of the 1990s, there were three public and six commercial general-interest channels. Three commercial channels (RTL4, RTL5 and Veronica, later Yorin) are owned by the Holland Media Group, a subsidiary of CLT-UFA. Two channels (NET5 and SBS6) are owned by SBS SA and De Telegraaf (a major Dutch newspaper publisher). The sixth commercial channel was rst known as TV10, and later operated under the name of its new owner, Fox. In 2001, it became the third channel of the SBS group, originally under the name V8 and since September 2003 under the name of Veronica (Bakker and Scholten, 1999; Rutten and Buijs, 1999: 714; Veronica Stapt . . ., 2000). The three public channels are operated by a cluster of eight major and numerous small public broadcasting associations. Faced with stronger competition from commercial broadcasters and decreasing understanding by policy-makers of their mutual rivalries, these public broadcasting associations have started to cooperate more closely. In response to the RTL and SBS groups, which target their channels at different audience segments, the public broadcasters have differentiated their channels as well. Nowadays, the rst Dutch channel (NL1) is presented as a family channel, the second (NL2) as a sports and entertainment channel, and the third (NL3) as a cultural, progressive informative channel (Ketelaar, 2001). In addition to these three public and six commercial general-interest channels, Dutch viewers receive a few pay-TV channels and a larger number of foreign-owned public and theme channels (such as BBC1 and 2, MTV and National Geographic). This study, however, focuses on the market for general-interest channels, because these channels attract by far the largest share of the television-viewing audience.
Competition and concentration

The increase in channel numbers in the Dutch market from two generalinterest channels in the beginning of 1988 to nine in 1999 is accompanied by a doubling of average broadcasting time, from 7.8 to 16.0 hours of programming per channel per day (for sources, see appendix). In combination, these changes resulted in an increase of average television supply from 23.4 to 143.8 hours of programming per day. Demand for television programmes, in contrast, has lagged behind.
223

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

Between 1988 and 1999, average viewing time devoted to generalinterest channels grew by only a third from 1.5 to 2 hours per day. The resulting growing gap between supply and demand is one of the most germane consequences of the liberalization of the market, and one of the most convincing indicators that competition has increased signicantly. Later, we analyse the consequences of competition (and concentration) for diversity both for the evening hours and for the entire day. The evening hours (6 p.m. to 12 midnight) are chosen as the best available approximation of prime time in the 1990s. A large part of viewing time devoted to general-interest channels continues to be spent during these hours (in 1988: 77 percent of viewing time; in 1998: 72 percent). However, the large-scale adoption of VCRs has made the extended supply of television programmes readily accessible to most users. It therefore makes sense to include programmes that are provided outside evening (or prime time) hours in the analysis, too. At prime time, as well as during the day, the increase in channel numbers resulted in more intense competition. Counting only generalinterest channels, the Competition Intensity Index (see Appendix) increased from .60 in 1988 to .85 in 1999 (on a scale from 0 to 1). If we include also theme, foreign-owned public and local channels, the Competition Intensity Index reached as high as 0.89 in June 1999. In the same period, the number of broadcasters increased from one (counting all public broadcasting associations as one broadcaster) to four. The average number of channels per broadcaster consequently declined from 2.8 (in 1988) to 2.2 (in 1999). Between these time points, it reached its lowest level of 2.0 between 1990 and 1993 and 1996 and 1998. Since multichannel broadcasters target their channels at different audiences, we expect this decline in concentration, in particular in combination with the increase in channel numbers and the intensication of competition, to result in lower levels of diversity. As we will see, this was indeed the case.
Diversity

The level of open diversity on the Dutch market (see Appendix) declined in the 1990s, both for programmes provided at prime time and during the day (see Figures 1 and 2). This decline is primarily caused by increases in the supply of light information and series formats, at the expense of youth and serious information programmes. Reective diversity increased until about 1995, signalling that the changes in supply were to some extent in line with audience preferences. Since 1995,
224

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

.95

.85

.75

.65

.55 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Year Open diversity-as-sent Open diversity-as-received Reflective diversity Competition intensity index

Figure 1 Competition and diversity at prime time

.95

.85

.75

.65

.55 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Year Open diversity-as-sent Open diversity-as-received Reflective diversity Competition intensity index

Figure 2 Competition and diversity during the day

225

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

however, prime time reective diversity started to decline as well, signalling that further changes in supply of prime time programmes were not in conformity with audience demands. Programmes provided during the day, in contrast, better tted audience preferences (though these programmes are not necessarily provided at the time slots that audiences would like to view them). This resulted in continuously high levels of reective diversity during the day. The major cause of the differences in levels of reective diversity at prime time and during the day was that youth programmes were relatively scarce at prime time, while series, movies and serious information were relatively abundant. At the level of channels, we nd similar trends. Until 1995, channels became, on average, more similar and provided less diverse programmes (that is, inter-channel diversity and intra-channel open diversity both declined). As on the market, this decline in open diversity was in accordance with audience preferences. Hence, the average level of reective diversity per channel increased; and individual channels, on average, served audience demand better. From 1996 onwards, however, trends changed. The average level of open diversity per channel declined more strongly, differences between channels became signicantly larger, and average levels of reective diversity per channel started to decline.

New entry and ruinous competition

Closer inspection of the underlying data reveals that these changes in market and channel levels of diversity occurred primarily because three new channels and two new broadcasters came onto the market at the end of 1995 and the beginning of 1996: VOO, the third channel of the RTL group; SBS6, the rst channel of the SBS group; and TV10, an independent channel. Compared with the ve incumbent channels, these three new channels provided more series and movies, fewer information programmes, and consequently considerably less open diversity and slightly less reective diversity in the quarter in which they entered. These differences hold both for prime time and for the daytime output. In particular, these new channels provided more foreign-produced action, comedy and light drama series and movies, and fewer news, current affairs and current sports information programmes during prime time in the month that they came onto the market. These ndings are in line with the results of studies on entry into the US market (as discussed in the previous section), which demonstrate that new channels enter the market with a lowest cost strategy that emphasizes cheap and popular pro226

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

grammes. In other periods, when fewer new channels entered the market, similar but more limited effects could be found. The gradual increase in the number of channels and competitive pressures of new entrants caused four of the incumbent channels (NL1, NL2, RTL4, RTL5) to provide gradually less (open) diversity in the 1990s, while one incumbent (NL3) instead improved its levels of open diversity. At the same time, however, most incumbents increased their supply of informative programmes and reduced their supply of series in the 1990s, in particular at prime time. This suggests that incumbents did not yet revert to lowest cost strategies. Also, when we look in more detail at the programme types that new entrants tended to emphasize (foreign action, comedy and drama series and movies) or neglect (news, current affairs, current sports information), we cannot nd a general shift in the programming strategies of incumbents towards cheaper and popular programme types. We therefore conclude that the new entry did not (yet) trigger full-blown ruinous competition. It did reduce diversity in the market and it did have a negative impact on incumbents that started to offer lower diversity. Nevertheless, both the market and incumbent channels were to some extent able to recover from the impact of the new entrants and to restore levels of diversity albeit not to previous levels.
Public broadcasting and concentration

One factor that may have reduced the effect of new entry on diversity is that some of the incumbent channels are public channels. These public channels provide high levels of open diversity, both at prime time and during the day (see Table 1). Remarkably, these public channels, and in
Table 1 Average level of diversity per channel Prime time Channel NL1 NL2 NL3 NOS SBS6 NET5 SBS group ODs .71 .67 .69 .72 .51 .46 .55 RD .84 .80 .69 .81 .73 .68 .79 Daytime ODs .69 .65 .66 .72 .42 .50 .48 RD .78 .74 .64 .76 .70 .75 .75 Channel RTL4 RTL5 VOO RTL group TV10/FOX Prime time ODs .51 .43 .44 .53 .29 RD .79 .66 .72 .80 .45 Daytime ODs .54 .48 .44 .55 .33 RD .77 .68 .69 .81 .45

ODs = open diversity-as-sent; RD = reective diversity. 227

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

particular NL1 and NL2, provide high levels of reective diversity, too. These channels therefore succeeded relatively well in their public task of providing diverse combinations of programmes that are attractive to viewers. This diverse supply in turn contributed signicantly to overall levels of diversity in the market. That is to say, if public channels were to suddenly disappear from the market, open and to some extent also reective diversity would decline considerably. Another factor that may have reduced the negative effects of new entry is concentration. When we look at the commercial segment of the market, we nd that two commercial channels in particular, namely RTL4 and (more recently) SBS6, provided relatively high levels of open and reective diversity (see again Table 1). These channels can tentatively be described as cost leadership channels that provide diverse programmes to a large, mainstream audience. Their owners, the RTL and SBS groups, in addition provided one or two differentiated channels (respectively RTL5 and VOO, and NET5 and since 2001 (2003) V8 Veronica). These latter channels provided different and less diverse programmes than the cost leadership channels. Adding up the programmes that are provided by cost leadership and differentiated channels, both multichannel broadcasters by themselves provided moderate levels of open diversity and relatively high levels of reective diversity. The one channel that is owned by a single-channel broadcaster (TV10, later Fox), in contrast, provided the least diversity. These ndings suggest that concentration enables or stimulates broadcasters to adopt a combination of cost leadership and differentiation strategies, to reduce overlap and to maximize the overall audience. Single-channel broadcasters, in contrast, can sufce with a lowest cost strategy. Hence, concentration may have alleviated to some extent the negative impact of new entry on diversity.

Diversity-as-choice and diversity-as-received

Nevertheless, in spite of concentration and the benecial role of public channels, diversity-as-sent in the Dutch market declined in the 1990s. Initially, diversity-as-received in this market declined as well. Diversityas-sent and diversity-as-received were also considerably related, both at the level of the market and the level of individual channels.2 In addition, diversity-as-received was lower than diversity-as-sent in the early 1990s. These ndings all suggest that decreases in diversity-as-sent resulted in a decline of diversity-as-received.
228

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

Since 1994, however, diversity-as-received did not decline further, while diversity-as-sent continued to decline. Consequently, diversity-asreceived became higher than diversity-as-sent. This suggests that the audience at large continued to view a diverse combination of programmes, even though less diversity was provided. One major reason why the audience could continue to view a diverse combination of programmes in spite of the decline in diversity-as-sent, is that viewers had many more choices at the end of the 1990s than in the beginning. As indicated earlier, the entry of new channels in Dutch broadcasting caused a tremendous increase in the supply of television programmes, from 23.4 hours per day in 1998 to 143.8 hours in 1999. Analysis of broadcasting times of different programme types shows that most programme types proted from this expansion. For example, supply of performing arts (which, on average, was the least broadcast programme type category) increased by approximately 30 hours per year between 1988 and 2000 (if we count all programmes provided during the entire day). This adds up to an extra supply of one hour per day in 2000 compared to 1988. Supply of the other 10 programme types increased more rapidly. Using a more detailed list of 120 different programme-type categories, the increase in supply also meant that every 10 months one additional programme type became available for at least 30 minutes per month. Consequently, viewers acquired more opportunities to choose specic programme types. Findings suggest that viewers used these opportunities to maintain their preferred level of diversity (see Table 2). Total viewing time per programme type category in the 1990s, for example, strongly depended
Table 2 Relationship between preferences and viewing time at prime time. Standardized coefcients Viewing time per programme type = .778 * Viewer preferences + .204 * Supply of programme type. (n = 506; Adjusted R2 = .926) Viewing time per channel = .428 * Programming + .560 * Viewing time in previous quarter. (n = 414; Adjusted R2 = .813)
Viewing time and supply (= broadcasting time) are aggregated per quarter. Viewer preferences are average viewing times per programme type category in all quarters. Programming refers to the amount of viewing time a channel can expect on the basis of its share in supply of different programme types and viewers preferences for these programme types. All betas are signicant at p < .001. 229

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

on viewer preferences and much less on the amount that this programme type was broadcast. Likewise, the amount of viewing time that viewers spent on a particular channel depended about as much on the types of programmes that a channel provided in a specic period as on the time that viewers watched that channel in a previous period. Habitual viewing alone, therefore, does not explain what channels or what programme types are watched by viewers.

Conclusion, discussion and recommendations Following the liberalization of the Dutch broadcasting market at the end of the 1980s, the number of channels and the supply of television programmes increased, competition intensied and concentration declined. These developments resulted in a decline of open diversity and an increase in viewer choice. At rst, the decline of open diversity was in accordance with audience preferences. The entry of commercial channels and the increase in supply of light information and series resulted not only in a decline in open diversity but also in an increase in reective diversity. We can therefore describe this rst stage of competition in the Dutch broadcasting market as moderate competition. Halfway through the 1990s, however, three additional commercial channels came onto the market and shifted the market in the direction of ruinous competition. Even though incumbent channels were able to recover and competition did not become completely ruinous, diversity levels dropped signicantly and the market started to provide less diversity than the audience would have preferred. Fortunately, the absolute supply of television programmes had expanded at the same time, enabling the audience to choose and nd the types of programmes that it preferred. Consequently, diversity-as-received could be maintained at a relatively high level higher, anyway, than diversity-as-sent. In addition, we found that both concentration and public broadcasting contributed to diversity. They prevented the new entry in the mid-1990s shifting the market to full-blown ruinous competition a type of competition that would emerge if the market were dominated by commercial single-channel broadcasters like TV10 and later Fox. Finally, we also found that the Dutch television market tended to provide more diversity during daytime schedules than at prime time, although differences are not that great. The public channels are a remarkable exception in this respect. They provide more diversity at prime time than during the day.
230

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

Discussion

The results suggest that the Dutch audience at large is interested in diversity. Because of this interest in diversity and increases in viewer choice, diversity-as-received remained high even though the intensication of competition reduced diversity-as-sent. These ndings suggest that the Dutch broadcasting market performed well in the 1990s. Two qualications, however, need to be made. First, the increase in absolute supply of television programmes, in combination with the observed decline in diversity-as-sent, implies that more of the same programmes are provided. This causes a waste of resources, unless competition between similar programmes forces broadcasters to improve programme quality (Bourreau, 2003). There are some indications that this is indeed the case, for example in the area of news and current affairs programmes. In other areas, however, competition has increased programme prices excessively (e.g. of sports programmes) or resulted in excessive sameness (for example, of reality shows) (Huygen, 2002). More research on whether and under what conditions duplication of programmes results in quality increases seems warranted. Second, the Dutch audiences preference for diversity is an important but not sufcient condition for open and well-informed information exchanges. It is also important that individuals are willing to accept diverse ideas, viewpoints and programmes (van Cuilenburg, 2000). The decline in diversity that is offered per channel and the increasing opportunities for viewers to watch only what they prefer might in the long run reduce the diversity with which the audience is confronted. This, in turn, may reduce viewers interest in diversity. More research on how individual viewers respond to changes in supply is necessary to clarify this issue.
Policy recommendations

This study shows that public broadcasters, and to some extent concentration, alleviated the negative effects of competition on diversity in the market. In particular, concentration and public channels contributed to relatively high levels of intra-channel open diversity, without threatening intra-channel or market levels of reective diversity. The study also suggests that additional entry of new channels most likely will shift the Dutch television market further to ruinous competition and reduce diversity. On the other hand, a strong reduction in the number of commercial channels will overly reduce levels of reective diversity. Combined, these ndings suggest that (in this case) the Dutch
231

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

government should allow some level of concentration and should continuously provide support for the public channels that aim to provide a diverse and attractive combination of programmes. It is not unlikely that similar conclusions will hold for other European broadcasting markets. Most importantly, however, this study shows that audiences themselves aim to view a diverse combination of programmes. This probably offers the best guarantee that commercial channels do not reduce overall diversity in the market too much, and that public channels receive continuous public support to maintain their contribution to diversity. Appendix: Measuring diversity and competition To measure diversity, all programmes must be classied according to their programme type. The programme-type categories used must be distinctive; they must encompass all possible programmes; and they must be equally important from an unbiased viewers point of view. The importance of selecting the appropriate categories can easily be illustrated with an example of an obviously inappropriate classication system. For example, if we apply a sports fanatics classication system that distinguishes between football, volleyball, skating, tennis, athletics, cycling and other programmes, results of our diversity assessment would hardly be valid. The starting point for our assessment is a classication system of 25 programme-type categories that is used by the Dutch ratings agency Intomart and the Dutch public broadcaster NOS. These 25 categories encompass both specic and more general categories (e.g. foreign adventure series and foreign entertainment). They are therefore aggregated into 11 new programme-type categories, that in our opinion enable a less biased and more valid assessment of diversity than assessments based on the original 25 categories (see Table A1). Using estimates of broadcasting and viewing time for these 11 programme-type categories, we calculate the level of reective diversity according to the formula provided in Table A2. The main advantage of this formula, also used in van der Wurff and van Cuilenburg (2001), is that it closely follows our theoretical denition of reective diversity. Using estimates of broadcasting time, we also calculate open diversity and channel distinctiveness, again according to the formulas provided in Table A2. The formula for channel distinctiveness that we use is similar to the deviation index used by Hellman (2001), but it compares the
232

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

Table A1 Programme-type categories Categories News Current affairs Serious information Underlying NOS categories News Current affairs Serious information; religion; broadcasts by small authorized broadcasting organizations (educational, religious and minority broadcasters) Nature and travel; light information; sports information; advertisements Arts magazines; serious music; modern art Dutch music; Dutch cabaret/satirical performances Dutch entertainment; foreign entertainment Soccer coverage; other sports coverage Dutch movies; foreign movies Dutch TV series; foreign adventure series; other foreign TV series Childrens programmes; teenage programmes

Light information Arts Performing arts Entertainment Sports Film Series Youth

programming of one channel with the programming of all channels in the market rather than with the programming of one other channel. The main advantage of our formula is that results per channel can be easily aggregated into a single market estimate, whereas application of the deviation index to nine channels results in (9 * 8 / 2 = ) 36 different estimates. The formula for open diversity that we use, nally, is mathematically similar to our formulas for reective diversity and channel distinctiveness, which is its main advantage. Besides, earlier calculations show that our open diversity formula provides almost identical results as the relative entropy index that is preferred in other diversity studies (see Hellman, 2001).

Sources

Original estimates of broadcasting and viewing times for prime time and the daytime are obtained from the Dutch ratings agency Intomart and the ratings department of the public broadcaster NOS. Data for prime time (or evening hours) encompass three-month periods from January 1988 until June 1999. Data for the day encompass the years 1988 until 2000. In addition, we use some estimates of broadcasting and viewing times that are subdivided into 120 (rather than 25) programme-type categories. These estimates again concern the evening (6 p.m. to 12 p.m.) hours.
233

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

Table A2 Denitions of diversity and competition Open diversity = 1 |si (1/n)|/2 Reective diversity = 1 |si di|/2 where si = relative supply of programme type i and n = the number of programme types in the market where si = relative supply and di = relative demand of programme type i in the market (dened as the average viewing time per programme type category in the period under investigation) where ODj = open diversity of channel j and n = the number of channels where Dj = distinctiveness of channel j and n = the number of channels where csi and si = relative supply of programme type i by channel j respectively all channels where HHI = mi2 and mi is the audience share of channel i

Intra-channel diversity = |ODj|/n Inter-channel diversity = |Dj|/n Channel distinctiveness = |csi si|/2

Competition Intensity Index = 1 HHI

They encompass individual months, from January 1993 until June 1999.
Competition

The level of competition in a market depends not only on the number of channels but also on the relative market share of channels. For example, a market with four channels, in which one channel has a 60 percent market share, is less competitive than a market in which all four channels have a 25 percent market share. The HerndahlHirschman Index is a frequently used index that expresses both the number of channels and their differences in market shares. It runs from 1 to (almost) 0, with a higher number indicating less competition (or more concentration). By subtracting the HHI from 1, we get a Competition Intensity Index, that runs from 0 to (almost) 1, with a higher number indicating more competition (see Table A2). Notes
The author gratefully acknowledges Lex van Meurs of Intomart and Jeroen Verspeek of the Dutch public broadcaster NOS for providing data on the Dutch
234

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

television market. Of course, these persons or organizations cannot be held responsible for any errors, omissions or conclusions presented here. 1. The term lowest cost strategy used in this study should not be mixed up with Porters term low cost strategy, which he uses as another label for the cost leadership strategy. 2. Pearson correlations between diversity-as-received and diversity-as-sent per three-month period in prime time for the market and individual channels vary between .56 and .95 (p < .01). Only diversity-as-received and diversityas-sent for NL1 are not related.

References
Adams, W.J. (2000) How People Watch Television as Investigated Using Focus Group Techniques, Journal of Broadcasting and Electronic Media 44(1): 7893. Bae, H.S. (2000) Product Differentiation in National TV Newscasts: A Comparison of the Cable All-News Networks and the Broadcast Networks, Journal of Broadcasting and Electronic Media 44(1): 6277. Bakker, P. and O. Scholten (1999) Communicatiekaart van Nederland [Communication Map of the Netherlands]. Alphen aan den Rijn: Samsom. Bourreau, M. (2003) Mimicking vs Counter-Programming Strategies for Television Programmes, Information Economics and Policy 15(1): 3554. Brown, A. (1996) Economics, Public Service Broadcasting, and Social Values, Journal of Media Economics 9(1): 315. Collette, L. and B.R. Litman (1997) The Peculiar Economics of New Broadcast Network Entry: The Case of United Paramount and Warner Bros, Journal of Media Economics 10(4): 322. Cooper, R. (1996) The Status and Future of Audience Duplication Research: An Assessment of Ratings-Based Theories of Audience Behavior, Journal of Broadcasting and Electronic Media 40(1): 96111. Doyle, G. (2002) Understanding Media Economics. London: Sage. Hawkins, R.P., N. Reynolds and S. Pingree (1991) In Search of Television Viewing Style, Journal of Broadcasting and Electronic Media 35(3): 37583. Hellman, H. (2001) Diversity. An End in Itself? Developing a Multi-Measure Methodology of Television Programme Variety Studies, European Journal of Communication 16(2): 181208. Hellman, H. and T. Sauri (1994) Public Service Television and the Tendency Towards Convergence: Trends in Prime-Time Program Structure in Finland, 197092, Media, Culture and Society 16(1): 4769. Horen, J.H. (1980) Scheduling of Network Television Programs, Management Science 26(4): 35470.
235

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

EUROPEAN JOURNAL OF COMMUNICATION 19(2)

Huygen, M. (2002) Genoeg van de Ranzigheid [Fed up with Rancidness], NRC Handelsblad 6 April. Ketelaar, T. (2001) Met Man en Macht Vechten om de Vluchtige Kijker [Fighting All-Out for the Volatile Viewer], NRC Handelsblad 27 August. Kim, C.R. (2002) Identifying Viewer Segments for Television Programs, Journal of Advertising Research 42(1): 5166. Lin, C.A. (1994) Audience Fragmentation in a Competitive Video Marketplace, Journal of Advertising Research 34(6): 308. McQuail, D. (1992) Media Performance. London: Sage. McQuail, D. and J. van Cuilenburg (1983) Diversity as a Media Policy Goal, Gazette 31(3): 14562. Napoli, P.M. (1997) Rethinking Program Diversity Assessment: An AudienceCentered Approach, Journal of Media Economics 10(4): 5974. Neuendorf, K.A., D.J. Atkin and L.W. Jeffres (2001) Reconceptualizing Channel Repertoire in the Urban Cable Environment, Journal of Broadcasting and Electronic Media 45(3): 46482. Noam, E. (1991) Television in Europe. New York: Oxford University Press. Owen, B.M. and S.S. Wildman (1992) Video Economics. Cambridge, MA: Harvard University Press. Picard, R.G. (2001) Expansion and Limits in EU Television Markets: Audience, Advertising and Competition Issues, Discussion Paper. Turku: Turku School of Economics and Business Administration, Business Research and Development Centre; at: http://www.tukkk./media/Picard/Publication%20and %20Paper%20Files/EU%20TV percent20Limits.pdf. Porter, M. (1980) Competitive Strategy. New York: The Free Press. Porter, M. (1985) Competitive Advantage. New York: The Free Press. Rust, R.T., W.A. Kamakura and M.I. Alpert (1992) Viewer Preference Segmentation and Viewing Choice Models for Network Television, Journal of Advertising 21(1): 118. Rutten, P.W.M. and T.S.F. Buijs (1999) Concentratie in de Nederlandse Mediasector [Concentration in the Dutch Media Sector]. Delft: TNO. Souchon, M. (1978) La T el evision et son public (19741978). Paris: La Documentation Franaise. Souchon, M. (1992) Programmes, Programming and Television Viewers, pp. 4958 in A. Silj (ed.) The New Television in Europe. London: John Libbey. Souchon, M. (1994a) LAvenir de la t el evision publique, Communication et Langages 100101: 2739. Souchon, M. (1994b) Les Programmes audiovisuels: de la production a ` la diffusion, Les Cahiers Franais: Documents dActualit e 266: 2430. Steiner, P.O. (1952) Program Patterns and Preferences, and the Workability of Competition in Radio Broadcasting, The Quarterly Journal of Economics 66(2): 194223. Tavakoli, M. and M. Cave (1996) Modelling Television Viewing Patterns, Journal of Advertising 25(4): 7186.
236

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013

VAN DER WURFF: SUPPLYING AND VIEWING DIVERSITY

Thomas, L. and B.R. Litman (1991) Fox Broadcasting Company, Why Now? An Economic Study of the Rise of the Fourth Broadcast Network , Journal of Broadcasting and Electronic Media 35(2): 13957. Van Cuilenburg, J. (1999) On Competition, Access and Diversity in Media, Old and New, New Media and Society 1(2): 183207. Van Cuilenburg, J. (2000) Media for an Open and Receptive Society: On the Economic and Cultural Foundations of Open and Receptive Media Diversity, pp. 1323 in J. van Cuilenburg and R. van der Wurff (eds) Media and Open Societies. Amsterdam: Het Spinhuis. Van Cuilenburg, J. and D. McQuail (1982) Media en Pluriformiteit [Media and Pluriformity]. The Hague: Staatsdrukkerij. Van der Wurff, R. and J. van Cuilenburg (2001) Impact of Moderate and Ruinous Competition on Diversity: The Dutch Television Market, Journal of Media Economics 14(4): 21329. Veronica Stapt Denitief Uit HMG Groep [Veronica Leaves HMG Group] (2000) Financieele Dagblad, 14 March. Youn, S.M. (1994) Program Type Preference and Program Choice in a Multichannel Situation, Journal of Broadcasting and Electronic Media 38(4): 46575.

237

Downloaded from ejc.sagepub.com at Erasmus Univ Rotterdam on August 25, 2013