Last june there were a few Rugby test matches taking place in Argentina between this country and France. It came as a surprise to many fans that it was not broadcast on French TV. A few months before that, the Sarkozy government banned advertising on French public TV after 8 pm. While advertising is far from the best way to finance television, it has the merit of at least generating a link between the channel’s income from a given program and its total consumer value (as pointed out by De Long and Froomkin, this is imperfect as what matters for advertising revenues is the total number of viewers rather than the total consumer surplus from the TV programme, which is the relevant signal that should be internalized by the producer). The ban on advertising was supposedly a demand from the cultural profession in France, based on the usual platitude that “culture is not a merchandise”, and so forth. Given the loss of revenue, it looks like they are having second thoughts on it.
In any case, absent advertising the incentive for the public TV channel to spend money to broadcast Argentina-France was nil, since it was now unable to cash in any benefits in the form of additional advertising revenues. One may argue that they should intrinsically care about “social welfare” or “quality” but in the absence of advertising revenues, a free public TV channel faces a pure crowding out logic. It has a fixed budget per year and any euro spend on one project is one euro less for anoher project. Privately efficient projects that generate more advertising revenues than their production cost need not be implemented. The relevant cost is the foregone value of the alternative projects that have to be abandoned, which presumably includes the rents to the insiders who benefit from those alternative projects.
Of course we may ask why a private channel (which is allowed to advertise after 8 pm) did not broadcast the match instead, but there is only one prominent such private channel in France. Therefore we need only one alternative broadcast that would be more profitable than Argentina-France that evening for the match to be out.