EU Greets New Radio Audiences

Michael Hedges June 1, 2004

On 1 May 2004, in one giant stroke, 10 nations, 74 million people and more than 800 radio stations joined the European Union

Broadcasters and observers in the new member states voice the common belief that EU membership will benefit most broadcasters and listeners, but slowly.

“It’s a strong net positive,” says Paul Fiddick, President of Emmis International, which owns stations in Hungary and Belgium. Looking at big picture economics, Fiddick said he sees a benefit for broadcasters of lowering barriers and equalizing economies.

“All EU citizens benefit,“ said Dr. Kevin Aquilina Chief Executive of the Malta Broadcasting Authority, “ both owners of stations as well as consumers who are protected by the EU regulatory rules. Consumers can complain to the Broadcasting Authority and in certain cases even be granted a right of reply.”

According to Michal Zelenka of the Asociace Provozovatelu Soukromého Vysílání (APSV) private broadcasters association, EU expansion has little influence on radio broadcasters in the Czech Republic.

“The only problem we have is with Czech bureaucracy trying to put on more regulation like Brussels asks for, “ he said. “It’s a process we can work out, but it takes a lot of time and power.”

For governments and media regulators, joining the EU means adjusting to its directives. The process began a decade ago, but harmonizing national regulations with EU regulations could still take years.

Nine of the new member states experienced considerable upheaval in the last 15 years. Estonia, Latvia and Lithuania were part of the Soviet Union, gaining independence in the early 1990s.

Years of change

The Czech and Slovak Republics were one country, Czechoslovakia, until 1993. Poland and Hungary were within the Soviet orbit. Slovenia gained independence from Yugoslavia in 1991. Cyprus is still bitterly divided between Turkish and Greek cultures.

Only Malta has been free of social and political strife in recent years.

EU expansion also marks the integration of different cultures, 20 languages and vastly different media experiences.

Skeptical public

Commercial media arrived in the new member states more recently than in most of Europe, benefiting from foreign investment and grow ing more rapidly than in the west. State broadcasters making a transition to public service broadcasting had to win over a skeptical public.

With a population of 38 million, Poland is the largest new member States and the fifth largest of the new member states. It has 232 radio stations, with most broadcasting for local communities. Polskie Radio(PR), the public broadcaster, offers four national and 17 regional channels.

The Czech and Slovak Republics divorced  in 1993 along cultural and language lines after the fall of the Soviet block. The Czech Republic is home to 10 million people and 150 radio stations. Public broadcaster Cesky Rozhlas (CR) offers several regional channels and four national stations.

Slovakia has 5.5 million inhabitants with a sizeable Hungarian minority. Of the 93 stations and channels in Slovakia, Slovensky Rozhlas offers five national channels.

Hungary’s 10 million people listen to three public  and two commercial national channels, and 70 local stations. Foreign companies own both national commercial stations; Radio Danubius is part of Advent International, Slager Radio part of Emmis International.

Hungary also has the largest Roma minority in the European Union, with about 100,000 living in Budapest. Radio C, originally financed by George Soros, was established to their community.

Slovenia, with a population of 1.9 million, is an economic powerhouse among the accession countries. Per capita gross domestic product (GDP) is € 16,000, twice that of the next highest country.

Public broadcaster Radiotelevizija Slovenija (RTVS) produces three national and five regional channels. In addition, there are 44 commercial, 20 non-commercial and two student stations. 

A key provision of EU accession is respect for minority cultures and languages in education and media. Estonia, Latvia and Lithuania all declared independence from the Soviet Union in 1991, 50 years after forced incorporation, and sizable Russian speaking minorities remained.

About a quarter of the 1.3 million Estonians are native Russian speakers. There are 35 radio stations in Estonia, five public and 30 private. Public broadcaster Eesti Radio (ER) provides one dedicated Russian language channel and there are four private Russian language stations.

Latvia also has a large minority population and Latvian media struggles with how  to recognize the sizable Russian-speaking population.  While Latvian law restricts broadcasts of non-Latvian language to 33 percent, of the 2.3 million Latvians, about 40 percent speak other languages, mostly Russian.

Public broadcaster Latvijas Radio (LR) offers five channels including one multi-lingual station – Radio 4 Dana laukums. There are 31 commercial stations.

Far more tantalizing

The largest of the three new Baltic members is Lithuania, with a population of 3.5 million. Public broadcaster Lietuvos Radijas (Lithuanian Radio) offers three channels. There are six national commercial networks and 34 local/regional stations. Several stations target the significant Russian and Polish minorities, including Znad Wilii, a full-time Polish language station.

Cyprus has 48 privately owned and four public channels on the Greek side of the Green Line. The Cyprus Radio-Television Authority regulates only the private stations. Stations on the Turk-speaking part of the island generally re-broadcast popular stations from Turkey.

Malta is the smallest of the new members. There are 13 national and 25 community stations. Five of the national channels are commercial, three are public, three assigned to political parties, one to the Catholic Church and one to the university.

In the newly shaped European Union, bigger advertising and consumer markets are far more tantalizing than adding layers of EU directives to existing national rules. Advertising funds most broadcasting in the accession countries, certainly the privately owned commercial stations. Public broadcasters augment ad revenues with a mix of license fees and State aid. EU membership will shine a light a bit brighter down a path already taken, suggest broadcasters in the region, rather than creating fireworks.

“I don't think that there is any real change for the radio broadcasters.  There is optimism, but nothing concrete as yet,”said Mark West of Metromedia International, which owns stations in Hungary, Estonia, Latvia and the Czech Republic.

Andras Fischer, manager of Radio Danubius in Hungary, said he thinks EU expansion will have an effect for the media business in Hungary in mid term.

“Advertising is hot-wired to retail sales,” said Paul Fiddick of Emmis International. “Building a middle class in the EU (accession) countries is defined by purchasing power.”

“I think that this period is more stabilizing, “ said Zsolt Somloi of advertising agency Mindshare-Hungary,  “because, ten years ago, multinational companies bought into the market and invested in marketing. Now positive profit and loss is key.

“It would be nice,” he added “ if the Hungarian Media Law could change parallel to the EU regulations.”

The Polish radio advertising market has suffered along with much of Europe in recent years. Advertisers attracted to lower television prices pushed 2003 radio ad revenue down 1.6% over 2002, while the overall ad market grew nearly 5%.

EU accession and overall improvement in the Polish economy should benefit all advertising, according to a report by CR Media Consulting published in March. As competition increases, new products will enter the market and established companies will defend their market share.

The report forecasts 10% ad spending growth for 2004 though radio might not see much benefit until 2006.

Research and data on commercial activities is one sign of increased interest in business segments. Publicly released research on advertising and other market indicators raises awareness of business activities. The first comprehensive look at the Latvian advertising market was released this year. Radio advertising is about 12% of all advertising spending in Latvia, 10% in Estonia, 8% in Estonia and 7% in the Czech Republic.

Hotly debated in the European Parliament for a decade, media ownership continues to ignite passionate discussion but few concrete rules.

Member countries have the right to define and restrict media ownership through national legislation. However, the European Parliament retains the right to review national legislation to preserve the free-flow of commerce.

Media critics often raise ownership concentration as an onerous barrier to democratic reforms and call for more EU regulation. In the accession countries ownership rules generally allow more concentrated media ownership than those in the preceding countries. Foreign ownership is also far less restricted.

“I do not think that, just because of the accession, new investors will buy or buy out media from their recent owners, “ said Andras Fischer.  “Ninety-nine percent of Hungarian media is owned by a company with its headquarters a thousand miles away.”

As Poland’s media regulations were being changed to bring them in line with EU rules, the regulator and one of the countries largest media companies became mired in a bribery scandal. An editor for Gazeta Wyborcza was solicited for a bribe to influence the legislation favorably for the newspapers publisher, Agora, which intended to pursue television ownership. The legislation pending at the time would have placed restrictions on media concentration. In addition to the newspaper, one of the most influential in Poland, Agora owns stakes in 28 local radio stations and super-regional station TOK FM. A significant minority shareholder in Agora is the American media conglomerate Cox Enterprises. (edited from original)

Poland’s new media bill was passed in October 2003, effectively ending ownership limits on EU companies and raising to 49% the share limit for non-EU companies. The new bill does not cover the media concentration issue brought clearly into focus by the bribery scandal.

Several foreign companies operate media in the Czech Republic, which has liberal ownership rules. According to a report from Eurostat, the EU statistical office, the Czech Republic leads all accession countries in foreign investment.

French owned Lagardére Active Radio International operates Frekvance 1 and Europa 2. Irish Radio Investments owns the KISS radio network. German Eurocast Rundfunk owns Radio Impuls. The international arm of US radio giant Clear Channel owns Radio Bonton and Metromedia International owns Country Radio and Radio 1.

Stumbling block

The European Union aims to open markets, encourage competition and expand possibilities. Trade barriers to new technologies are meant to fall. Accession countries will benefit from EU structural funding, allowing faster growth in many technology sectors.

In a March report, technology research analyst Gartner forecasts near-term technology growth three times faster than Western Europe, mostly in basic software products. The report also said that Estonia and Slovenia are already on par with, if not ahead of, Western Europe.

As in most states, Lithuania began changing regulations to conform with EU directives in the 1990s. One stumbling block for digital technologies has been the reluctance of telecom regulators to give up their dominion over such technologies to the media regulators.

In the case of Lithuania, the telecom regulator has provenance over digital transmissions while the media regulator over-sees analogue broadcasting.

In Hungary, the first DAB experiments began in 1995. Today several programs from public broadcaster Hungarian Radio are broadcast on DAB.

While digital radio broadcasting in the accession countries seems likely to lag behind generally lagging European DAB. one technology is moving forward. In the Czech Republic, GfK Prague began measuring radio audiences with the Radiocontrol™ watch on April 1st. No joke.

EU Directives set several standards for public service broadcasting, mostly for television but also effecting radio. Two of the most challenging for regulators and broadcasters are independence and public funding. New members are expected to reign in public spending. EU accession formalities did not define a remit for public broadcasting nor endorse a funding mechanism.

Speaking to the Oxford Media Conference in January, Philip Lowe, the European Commission general director for competition, made clear that EU regulation has “shifted away from protection of some broadly defined public interest and from public utility management towards opening up markets, ensuring free and fair competition between producers and promoting the interests of consumers.”

Originally published in Radio World International, June 2004, in a slightly different form.

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