State TV new media ventures under EU scrutiny

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Public sector broadcasters will have to prove they are not distorting the media market before launching mobile phone or internet services, according to revamped EU rules on broadcasting unveiled by the European Commission yesterday (2 July).

The EU executive will now insist that new media ventures funded by state broadcasters are subject to an “ex-ante test” to examine whether the service strikes a fair balance between competition in the marketplace and the social and cultural needs catered to by public media outlets. 

However, it will be left to each EU member state to work out precisely how the test will operate. Similar tests have already been used in Germany, the UK and the Belgian Flemish governments, and Ireland is set to introduce one shortly. 

In the UK, for example, the BBC Trust assesses the public value of new media ventures while Ofcom, the media regulator, measures the impact on the market. 

The revised rules are built on principles laid down in 2001 but have been updated to take account of new media and in response to claims by private sector media firms that public broadcasters were using public money to encroach on their turf. State broadcasters have consistently held that new media are fair game, just as expanding from radio to colour television was once seen as the next frontier.

A spokesperson for the European Commission said transparency would be at the core of the new rules and that independent national bodies will be required to ensure full accountability. Financial transparency will be essential in order “to verify there is no excessive cross-subsidisation” of services with public money, the Commission said.

Further battles ahead

The new rules are the result of a lengthy battle between the EU, member states, and lobbyists for the public and private sectors. 

The next battle will be over how the ex-ante tests will be applied. Private sector media groups will seek a significant role for external bodies in weighing the public value against market impact. 

The Commission has said that interested stakeholders should have an opportunity to participate in a consultation process as part of the ex-ante test, but there are concerns that this could hold up innovation in the public media sector. 

Competition Commissioner Neelie Kroes said: "The new Communication strikes the right balance between the interests of public and private media to ensure healthy competition in the very rapidly evolving media environment, to the benefit of Europe's citizens. Public broadcasters will be able to take advantage of the development of digital technology and Internet-based services to offer high quality services on all platforms, without unduly distorting competition at the expense of other media operators."

Information Society and Media Commissioner Viviane Reding said new rules offer additional legal certainty to the media sector in Europe and ensure a fair competition between public broadcasting and private media. 

"One of the Commission's main objectives is to preserve a vibrant media landscape in the online environment, notably by ensuring that online offers of public broadcasters do not distort competition to the detriment of offers from online services and print media. The Communication adopted today responds to this objective in a clear and efficient way. The European Broadcasting Union welcomed the recognition that defining the remit of public service broadcasters is a national matter, as well as their importance in the new media environment." 

Mr Jean-Paul Philippot, President of the European Broadcasting Union, said: "Public service media must remain a cornerstone of democracy in Europe and must be able to develop in the digital environment for the benefit of their respective societies. There is a real risk that the unique, dynamic function of public service media will be endangered by unduly restrictive regulation - nationally and on the EU level." He said he hopes the Commission will leave member states sufficient flexibility when they introduce ex-ante tests.

Ross Biggam, Director General the Association of Commercial Television (ACT), said there had been strong resistance to the text from national cultural ministries, but the Commission had come up with "a balanced and workable text". 

"It would have been helpful if further details had been maintained, but we understand that in line with the Brussels policy-making process a compromise had to be found. However, the real work will now begin with the implementation of the new obligations contained in this text by the Member States.” 

Angela Mills Wade, Executive Director of the European Publishers Council said: "The ongoing economic crisis puts into stark relief the ever greater need to provide rules for fair competition between commercial and publicly-funded players in the media business. For the private media companies the introduction of ex-ante scrutiny for new ventures which can play havoc with our online and mobile services and the need for an independent control body are the most important milestones, which will help to prevent future distortion of competition in the market. To be truly effective though, and in line with the Amsterdam Protocol control bodies should be independent from the management of the public service broadcaster."

The European Commission is currently in the process of updating its 2001 Communication on the application of state aid rules to public service broadcasters. The rationale for revising the text is based on dramatic changes in the media landscape, which has evolved since its publication. 

The Commission's competition department is taking the lead in updating the document and has come under intense pressure from member states and publicly-funded broadcasters after publishing a new, detailed draft communication in November 2008. 

EU Information Society and Media Commissioner Viviane Reding was heavily involved in drawing up the original 2001 communication, but is believed to have had less direct input in reviewing the document thus far. 

A vigorous debate has played out between private media groups, which say public broadcasters are using state funding to enter new media markets, and state media organisations, which want minimal interference from Brussels in national media policy.

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