For PSBs, give up advertising or give up the internet

Michael Hedges June 18, 2008 Follow on Twitter

Public broadcasters in Germany may be forced into a choice; either give up ad revenue or scale back Web services. Powerful publishers have joined the chorus of private sector broadcasters and the European Commission offering PSBs a classic Morton’s Fork dilemma…or Catch-22.

German State Ministers adopted a draft revision of the State Broadcasting Treaty (Rundfunkstaatsvertrag – RStV) (June 12) with tougher than expected rules for public service broadcasters (PSB) on-line activities. Commercial broadcasters have long fought the PSBs over a variety of anti-trust issues and the European Commission has occasionally joined that battle. But the heat was turned up significantly by one constituency German politicians cannot ignore – the powerful German publishers.

State Broadcasting Treaty (Rundfunkstaatsvertrag - RStV) governs much of Germany’s broadcast landscape. In 1987 it opened private broadcasting in competition with State broadcasters, furthering the prevailing European dual public/private broadcasting system. As a Treaty among the 16 Federal German States it codifies ownership, content and advertising rules as well as public broadcasting finance. German State Ministers have revised the RStV nine times and are moving toward the next.

The latest draft takes on the Web and contentious issues of public broadcasting in the internet century. Private sector broadcasters have been hammering politicians at home and in Brussels for limits on the public broadcasters expansion into new media and strict limits on the PSBs use of license fee money for that expansion. If approved the new RSvT would restrict German PSBs web development to supporting, primarily, news and information services for existing radio and TV channels. It also inserts into German media a new term: electronic publishing. Off limits - and subject to interpretation – would be on-line competition with newspapers.

“The German media landscape thrives on the balance between private and public offers. We will guarantee this balance in the future,” said Saxony-Anhalt State Minister Wolfgang Böhmer

“The current expansion of digital and online offerings of the (PSBs) must be stopped,” said German Private Broadcasters Association (VPRT) vice president Hans-Dieter Hillmoth. German PSBs are capped, according to the current RStV, at 65 radio channels. Web radio is, so far, not included in the current law so the PSBs have charged into new media. Hillmoth says it’s unfair competition, as the PSBs use public money. But he’s been saying that for years.

The European Commission investigated and threatened to punish the German government for failure to reign in its public broadcasters. The RStV was revised in 2007 to tighten rules on PSB finance transparency before further action was taken. EU Competition Commissioner Neelie Kroes spoke at the Cologne MedienForum (June 9), conveniently just as the German State Prime Ministers were meeting, and warned that the outcome of the next RSvT draft is in her sights. German taxpayers do not understand why they are paying for on-line dating services and video games from the PSBs. “There is no shortage of these offers in the private sector,” she said, “without subsidies.”

Commissioner Kroes has taken a clear (OK, reasonably clear) position on State aid for PSBs, mostly based on anti-trust concerns and proportionality rules. “Competition distortion against the public interest is not allowed,” she said in Cologne.

As if to reinforce the European Commission’s immediate concern about further clarification of PSB financing rules in any new RSvT draft Info Society and Media Commissioner Viviane Reding, in an interview with the Frankfurter Allgemeine Zeitung, published the day before Commissioner Kroes’ speech, said the EC would again take the German government to the dock if the next RSvt allows PSBs to compete with publishers.

After the State Ministers released their draft on the new RSvT, Axel Springer CEO Matthias Döphner jumped into the fight. Differing from other German publishers, Döphner made his own proposal: let the PSBs do what they like on the Web… if they give up advertising. “New media needs more creativity and innovation,” he said, “not restriction.”

“With a clear, liberal solution we could to take care of the real challenges,” Döphner said to der Spiegel (June 15). “These are not (the PSBs), but Google and Yahoo.”

There would be another benefit from this proposal, said Döphner, whose company is invested in all media. It would keep those pesky EU Commissioners off the politicians’ backs. Major German publisher and president of the Magazine Publishers Association (VDZ) Hubert Burda warned of “collision” between German law and European competition law if PSBs are granted “too great freedoms.”

“A clear separation between commercial activities, on the one hand, public service offerings exclusively fee funded, on the other, is an exciting idea,” said Marc Jan Eumann, media spokesman for the SPD party and member of the PSB Westdeutscher Rundfunk (WDR) council.

A political position paper was circulated in 2004 suggesting a gradual withdrawal from advertising by German PSBs. The illegal product placement scandal in 2005 changed the talking points… as did Commissioner Kroes’ investigation.

PSBs are universally - and rightly – concerned about delivering on their public service mandate without fully embracing the Web, particularly with young audiences. “We must not risk that public broadcasting cannot fully meet its education and information task especially with such an important target group as young people,” said Mecklenburg-Vorpommern State Minister Harald Ringstorff. The internet, too, has offered PSBs exciting opportunities to increase license fees.

“In five years no one will understand these discussions between publishers, private broadcasters, politicians and the public service broadcasters,” said ARD head Fritz Raff to tagesschau.de. ARD is the umbrella organization for the nine German public broadcasting organizations. When asked if the dispute between publishers and public broadcasters will stop after the State Broadcasting Treaty is adopted Raff said, “No, I don’t think so. We have found that the VPRT and the publishers associations never stop.”

In response to Matthias Döphner’s suggestion to give up advertising, Raff had his numbers ready. “This would necessitate a fee increase of €1.42 per month,” he said. He dismissed the proposal as “inappropriate.”

Either as a sharp rebuke Ministers or just bad PR, the largest German public broadcasting organization – WDR – announced (June 12) a commercial cooperative venture with another big German publisher with an international footprint Westdeutsche Allgemeine Zeitung (WAZ). When there’s money on the table, the real fight is over who has the biggest hands.