Another government charged with broadcasting rules violations

Michael Hedges February 4, 2008

Governments love public broadcasters that dutifully toe the line. The reward is ample financing and legal structures sufficiently opaque to hold off private sector competition. Some might call this synergy.

The Austrian government is the most recent in the sights of the European Commission Competition Commissioner Neelie Kroes. It seems her office has looked into the financing and control of the public broadcaster Osterreichischen Rundfunks (ORF) and found it “no longer in line” with EU rules. A letter to the Austrian government, significantly not to ORF, was sent last week (Thursday January 31). The government has four weeks to reply.

ORF is one of the richest per capita public service broadcasters (PSB) in Europe. It’s annual revenue this year, according to der Standard, is just under €800 million, about €100 per Austrian. ORF’s radio and television market shares are the highest in the European Union for a public broadcaster. The Austrian Association of Private Broadcasters (VOEP) says that’s because ORF doesn’t play fair and it has taken its case to the European Commission.

Specifically, DG Competition says it has seen ample evidence that Austria does not now comply with the EU Treaty on State Aid. Public money, the license tax, is being used to finance ventures competing with the private sector. In its statement (Thursday January 31) DG Competition went out of its way to make clear that its “assessment does not question Member States' competence to organize and finance public service broadcasting, as laid down in the Amsterdam Treaty Protocol on public service broadcasting.”

DG Competition also wants from Austria, as it has demanded from other EU Member States, a more precise definition of public service broadcasting. Precisely, Commissioner Kroes wants to hear how the Austrian government fits online and sports activities, for-profit ventures, into the hopelessly vague notion of public service broadcasting. ORF owns and operates, for example, a separate commercial television sports channel TW1.

Commissioner Kroes would also like to know more about the rules governing ORF, in the interest of transparency. Since 2004 the Austrian government has strengthened its authority over ORF’s supervisory boards. The European Commission likes PSBs with more than merely a ‘Chinese-firewall’ of independence from the politicians. Governments like their PSBs compliant, at least, or docile, at best, and big enough to fend off critics with funny ideas. ORF has been richly rewarded with no significant broadcast competitors.

The European Commission soundly and robustly defends Europe’s dual public-private broadcasting system. Private sector broadcasters, individually or through national associations, freely challenge the PSBs, who are equally free to bark back. The system, where it works well, provides listeners and viewers with a diverse and meaningful media offering. The EC, whether through Competition Commissioner Kroes or Info Society/Media Commissioner Viviane Reding, are determined to make it work well for those listeners and viewers.

As it would happen, the ORF Foundation (ORF Stiftungsrat – management board) awarded itself (February 2) a 9.4% license fee increase, effective from June. That decision, said ORF General Director Alexander Wrabetz, has “nothing to do” with Commissioner Kroes letter, which did just mention “overcompensation.”

Mr. Wrabetz, in the der Standard interview, made clear, rather defensively, that DG Competition is not questioning the organization, operation or financing of ORF’s main radio and television channels. They are “not an issue,” he said. 

The European Commission has examined the relationship between State Aid and public broadcasting in France, Germany, Belgium and the Netherlands in recent years. Recently an investigation has been opened seeking ‘clarification’ of State Aid rules violations in Italy, where the major media mogul Silvio Berlusconi may return as head of state. In every case governments have been forced to revise procedures on public broadcasting management.

Friday (February 1) DG Competition cleared Greece of failing to implement the Electronic Communications Directive, essentially failing to liberalize broadcast transmission services. The Greek government changed its law and dismantled the State monopoly on analogue and digital transmission. Austria’s ORF also holds a monopoly on broadcast transmission services, which the current DG Competition investigation does not mention.

It would seem Commissioner Kroes is quite willing to demand an end to “abuse of dominant position” by public broadcasting organizations just as much as she would with Microsoft or Intel.