Broadcaster losses better than expected, dread remains

Michael Hedges February 18, 2010 Follow on Twitter

We are now accustomed to great cheering when a media company posts smaller than expected losses. Stock, however that’s viewed, generally rises. Mix in a contentious new media law and there’s no good news.

When Austria’s public broadcaster ORF (Österreichischer Rundfunk) published it’s 2009 financial report (February 16) the Board of Trustees could say, at least, it wasn’t as bad as expected. ORF lost €44.5 million in 2009, against the previously projected loss of €54 million. Still, the ORF Trustees had only budgeted €29 million to absorb the shortfall.

The ORF Trustees placed General Director Alexander Wrabetz in austerity mode in 2008. A balanced budget is required for 2010. Austerity measures have included pension cuts and reduced social benefits for terminated employees and many terminated employees.

The finance model for ORF is, not atypical of public service broadcasters, a mix  of license fee, advertising revenue and investment income. Advertising brought in €263.3 million in 2008. Times being well understood, budgeted revenue from advertising for 2009 was lower at €253.4 million. Reality was €222.8 million; more than €30 million under budget and €40 million less than the previous year. 

The sorry state of ORF’s budget underlies debate on a draft law governing the public broadcaster. The Austrian Council of Ministers has now twice delayed a vote on the revisions to the ORF Act, officially the Federal Act on the Austrian Broadcasting Corporation, first adopted in 1984 when Austrian State broadcasting migrated into public service broadcasting. Meanwhile ORF Trustees show signs of impending doom, politically at least.

Broadcasters in the private sector have been joined by newspaper publishers in voicing misgivings, complaints and fears. None of this is either new or a revelation; ORF has been the proverbial 900 pound gorilla in Austrian media for more than a generation. Austria was the last EU Member State to authorize private sector broadcasting, later indeed than several new Member States. ORF offers three national and nine radio channels, available on a variety of platforms. ORF ‘s main television channels are highly rated.

The rivalry between the publishers and private sector broadcasters, on one side, and ORF has been bitter and that continues. Advertising, not an insignificant part of ORF’s revenue stream, draws considerable fire. Each ORF television channel is allowed 42 minutes of ads per day. The proposed new law would raise that limit by 20%. Averaging, not specifically allowed, makes ORF “a notorious lawbreaker,” said newspaper publisher association (VÖZ) director Gerald Grünberger, quoted in der Standard (February 8).

The proposed new law continues to prohibit product placement money flowing into ORF’s coffers but an exemption for ‘light entertainment programs’ is ‘generous,’ say private sector broadcasters. And, too, opening up regional advertising for ORF is considered “a threat to the existence of regional broadcasters,” said private broadcasters association (VÖP) president Christian Stögmüller. Opening the possibility for regional ad windows on ORF channels has support from the Social Democrats (SPO). The idea is opposed by the Austrian People’s Party (OVP).

“I want to create with the VÖZ a win-win situation,” said Dr. Wrabetz to medianet (February 12). With VÖP an agreement is not possible because they want to destroy ORF to see better business opportunities.”

Dr. Wrabetz’ goals for the ORF Act are, as he explained to medianet, straightforward. “Firstly, it is conformity with the EU (Audiovisual Media Services Directive - AVMS). Second, ORF is preserved in its entirety and will not be cut up. Thirdly, (ORF) should be active in the fields of new media like the internet.” The European Commission has complained about slow AVMS compliance by several Member States.

ORF governance, however, is the primary “sticking point” between the two largest political parties, members of which compose the Board of Trustees. The politicians are keeping a watchful eye on where the money goes and who gets the important jobs. Der Standard (February 3) referred to the quest for broadcasting “booty” (beute). It doesn’t get much simpler.

The Austrian People’s Party undid the last vote on the ORF Act at the end of January, objecting to an SPO majority on the Board of Trustees. Two weeks later (February 9) the vote failed again. When the warring parties agreed to the basics in the ORF Act, last November, the principal issues were amounts of direct State aid over the next four years and a reduction in the ORF Executive Board. There are 35 members of the ORF Board of Trustees, 13 seats held by the SPO and 13 by OVP. Coalitions with smaller political parties could tip the balance from one side to the others. And 2010 is an election year in Austria.

“I see no fruitful outcome,” said Salzburg Festival president Helga Rabl-Stadler as she resigned from the ORF Board of Trustees. The main Austrian politically parties, represented by statute on the ORF Board of Trustees, promised (February 15) a vote on the ORF Act February 25, reported der Standard. 

Adding to the turmoil long serving ORF personnel director Wolfgang Buchner, a member of the ORF Executive Board, was sacked (February 15), escorted from the building by security guards. “I am going to retire,” he said to der Standard. “I do not want to be a burden on the ORF:” Other changes in the Executive Board are expected.

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Media in Austria and Switzerland

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