State Aid and Public Service Broadcasting How Future-proof is the Remit of Public Broadcasting Organisations? IES WORKING PAPER 1/2009

The European Commission’s interference through state aid rules with the Member States’ support for public service broadcasting is not undisputed. Member States, public broadcasters and numerous academics fear that State aid control might limit the public service remit and, hence, the multi-platform and holistic role of public broadcasters in the converging media industries. This paper assesses to what extent the fear for Commission intervention is, indeed, justified. It starts with the assumption that the transformation from public service broadcasting to public service media is vital for the European democratic society. The paper leads to the observation that, in fact, European State aid policy might contribute to such a necessary and urgent transformation, instead of threatening it. The paper consists of three main parts. Firstly, the legal constraints and margins of the Community’s State aid framework are discussed. Secondly, the application of the rules to a selection of public broadcasting cases is analyzed. Finally, some conclusions are drawn from the analysis.

Mixed Public-Private Enterprises in Europe: Economic Theory and an Empirical Analysis of Italian Water Utilities. Bruges European Economic Research (BEER) Papers 4/July 2006

Mixed enterprises, which are entities jointly owned by the public and private sector, are spreading all over Europe in local utilities. Well aware that in the vast majority of cases the preference of local authorities towards such governance structure is determined by practical reasons rather than by the ambition to implement new regulatory designs (an alternative to the typical “external” regulation), our purpose is to confer some scientific value to this phenomenon which has not been sufficiently investigated in the economic literature. This paper aims at proposing an economic analysis of mixed enterprises, especially of the specific configuration in which the public partner acts as controller and the private one (or “industrial” partner) as service provider. We suggest that the public service concession to mixed enterprises could embody, under certain conditions, a noteworthy substitute to the traditional public provision and the concession to totally private enterprises, as it can push regulated operators to outperform and limit the risk of private opportunism. The starting point of the entire analysis is that ownership allows the (public) owner to gather more information about the actual management of the firm, according to property rights theory. Following this stream of research, we conclude that under certain conditions mixed enterprises could significantly reduce asymmetric information between regulators and regulated firms by implementing a sort of “internal” regulation. With more information, in effect, the public authority (as owner/controller of the regulated firm, but also as member of the regulatory agency) can stimulate the private operator to be more efficient and can monitor it more effectively with respect to the fulfilment of contractual obligations (i.e., public service obligations, quality standards, etc.). Moreover, concerning the latter function, the board of directors of the mixed enterprise can be the suitable place where public and private representatives (respectively, welfare and profit maximisers) can meet to solve all disputes arising from incomplete contracts, without recourse to third parties. Finally, taking into account that a disproportionate public intervention in the “private” administration (or an ineffective protection of the general interest) would imply too many drawbacks, we draw some policy implications that make an equitable debate on the board of the firm feasible. Some empirical evidence is taken from the Italian water sector.