Another wave of reform for Europe’s TV

Isabelle Birambaux. Correspondent, Dernières Nouvelles d'Alsace for IE Focus

25 April 2005

European television is on the verge of another revolution. Introduction of digital TV – able to compress eight channels in one bandwidth – will trigger demand for new programs and innovative interactive services.

Another wave of reform for Europe’s TV

Isabelle Birambaux

European television is on the verge of another revolution. Introduction of digital TV – able to compress eight channels in one bandwidth – will trigger demand for new programs and innovative interactive services.

European TV, including Spain, was hit by one tidal wave in the 1980s, with introduction of private channels. To face the new digital challenge, Spanish public television, RTVE, will be restructured and new legislation is expected to make the national network more competitive. The battle is already on between supporters of a strong public television and backers of a growing concentration in the multimedia sectors. The fight is significant, since private channels have considerable financial resources for acquiring the often exorbitant rights to broadcast popular football matches or films. How is public TV to compete?

Currently, RTVE is financed by public subsidies (€82 million - barely 5 percent of its total budget), income from advertising and sponsorship (€697.2 million) and sale of other products (€96.1 million). Most European nations have a TV licence fee. El País reported that the tax brings Italy an annual income of €1,432 million; France €1,910 million; the U.K. €3,965 million; and Germany €6,374 million. The licence represents over half the income for the U.K. and Germany: public TV in Germany (channels ARD and ZDF) generates €8,022 million, and the BBC €5,251 million. British viewers pay €14.50 a month for their television, while Germans pay €16.15. Of the four European countries, Spain is the only one where viewers don’t have to pay a licence fee. Carmen Carrafel, director of RTVE, says, “This country is not used to the idea. A TV licence would not be welcomed by Spanish society.”

Industry observers also recommend reducing finance from advertising, which currently stands at 25 percent. This would cut advertising time to a maximum nine minutes, down from 12 authorized at present. Advertising times were trimmed in France from 12 to eight minutes, but Spanish public television reform goes further, since it includes plans for channel TVE-2 to ban all ads gradually over the next four years. The channel will instead find financing from sponsorship by private enterprise and foundations. Other sources of cash will come from sale of programs and audiovisual rights (an estimated 10 to 15 percent of its income).

The reform also ushers in a new obligation to invest 7 percent of each year’s profits in TV productions and Spanish films. French television companies have financed Gallic movies for years, since legislation obliges them to invest between 5 and 12 percent of their turnover in productions and coproductions. This obligation prompted Canal Plus to inject €123 million in production of French films in 2002.

Keeping TV competitive

European governments believe that reform of public TV is essential if it is to remain competitive with the private sector, which has conquered an increasingly larger portion of the audiovisual market across Europe since the ‘80s. In Spain, RTVE maintained its monopoly until 1988, when private television was legalized. In France, 1981 and ’82 laws ended the state monopoly and opened the market to private players like Canal Plus, TF1 and M6 – all going strong.

Germany’s media sector has witnessed great change over the last 15 years, with appearance of large private groups like Kirch, Bertelsmann and CLT, which all started activity in the mid-‘80s. However, programs on the two national stations ARD and ZDF still hold strong positions on the market, thanks to the quality and variety of their fare. National and regional public stations have been able to broadcast varied shows for the last 10 years, after introduction of cable and satellite TV in the 1990s. Since 1997, the public sector has offered thematic channels such as Kinderkanal for children, the news channel PHOENIX and 3 SAT. The end of analogical terrestrial broadcasting is set for 2010.

Italy has likewise undergone a significant overhaul. Unlike other European countries, its public television, Radiotelevision Italia, (RAI), will see part of its capital privatized. The new Privatization Act approved by the former Berlusconi government has stirred up great controversy.

Spain however is preparing its public television for the second audiovisual revolution, in anticipation terrestrial digital television and the supply of new services adapted to mobile telephony, cable, satellite and the Internet. Digital technology, which is relatively simple to install, is successful in Great Britain: 5 million homes have made the change in the last two years. France will introduce it this year; viewers will enjoy a wider choice and eight public channels. French legislation also states that private operators may not own more than five digital channels. In Spain, a new company - RTVE Digital y Multimedia - will be responsible for digitalization of television. New thematic channels, such as Canal 24 Horas, will be devoted to continual information or will offer educational, children’s, culture and sports programs.

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