Abstract

While in the past market failure - i.e. the underprovision of variety - was the main justification behind the presence of Public Service Broadcasting (PSB), such concerns are no longer relevant today. However, PSB operators continue to enjoy significant state funding and this may give them strong incentives to launch new services to retain market share and justify their level of funding. This may distort or reduce competition. This article examines a new test introduced by the British government, called "Market Impact Assessment". Under this assessment any new, or significant modification of an existing, service proposed by the BBC must not distort competition to such a degree to outweigh any potential benefits. The article examines under which circumstances this may be a concern and how to design a practical test to assess its potential market impact. The approach may be relevant in countries where PSB operators receive significant state funding.