Chaos Has Its Cost

Michael Hedges December 14, 2009 Follow on Twitter

Bankrupt public broadcaster spent millions on perks, bonuses and other fun as government cut revenue sources. Auditors looked down the rabbit hole and found too many consultants and outside lawyers. Meanwhile, there’s a new boss to be chosen.

A government auditors report showed the rapid worsening of Polish public television’s financial condition. “Chaotic staffing policies” and “irregularities” caused TVP to “improperly” spend about PLN 150 million (€36.5 million) over the 30 months ending August this year, said the Supreme Chamber of Control (NIK), the auditing arm of the Polish Treasury Ministry (December 9). The Polish Parliament had ordered the report. Under Polish law the Treasury Ministry is TVP’s legal owner.

The NIK report showed TVP profitable in 2006, revenues exceeding expenses by PLN 142 million. It’s all been downhill – in several respects – from there. In 2007 TVP’s accounts were still positive, PLN 94 million. In 2008 the loss was PLN 46 million. For the first half on 2009, the broadcaster lost PLN 84 million (about €20.5 million), which is expected to be PLN 200 million (about €49 million) for the entire year. TVP is “bankrupt,” said newspaper and competing TV channel headline writers.

TVP has had since 2006 three presidents, appointed amidst then shoved out by endless political wrangling. This is not a record; that goes to jointly to Hungarian public television (MTV) and Lithuanian public broadcasting (LRT) with 13 general directors since 1990. TVP’s funding – and spending – has attracted most of the local attention. Politicians intent on keeping the broadcaster under their thumb are negotiating a new president.

“The reason for the decline was a loss of revenue from license fees and investment spending,” said NIK spokesperson Pawel Biedziak to Gazeta Wyborcza (December 10). There is the new TVP headquarters, still under construction, plus the costs of digital transition and the launch of new channels. The auditors also mentioned salary increases for full time workers rising 14% even while reducing staff by over 1,000 between 2007 and 2009. Each of the last three TVP presidents “purged” the payrolls, mostly from offices outside Warsaw.

But reducing the payroll has its cost. Severance payments cost TVP over PLN 22 million. Early termination agreements for 65 executive-level employee cost PLN 10 million. Closing branch offices may have had savings in mind but the result in over-time and travel expenses was PLN 160 million. Outside legal costs added PLN 17 million and, of course, there were the consultants (PLN 7 million), several being political party operatives. Lawsuits arising from dismissals cost PLN 600,000. NIK auditors called it all bad management. The report has been turned over to the legal department.

The European Broadcasting Union (EBU) responded (December 11) to the news from Poland and the situation at TVP by reminding the Polish government of its obligation to provide stable funding.

“Urgent measures are required to stabilize the public funding of Poland’s public service media, and in particular through improvements to the system of license fee collection and compensation from the State budget for the shortfalls,” said in-coming EBU President Jean-Paul Philippot. “The EBU urges all decision-makers to provide appropriate, secure and transparent funding for Poland's public service broadcasters and to guarantee the means necessary for them to accomplish their mission.”

An EBU executive working paper distributed early in December faulted political will and the subsequent management instability for growing chaos among public broadcasters. “One common consequence of the absence or failure of a strong legislative framework for public service broadcasting is instability of management, which makes it impossible for any broadcaster to build a stronger future,” said the report. “The public service broadcasters in Hungary, Kosovo, Poland, Romania and Slovakia have all suffered from this phenomenon.”

License fee revenues for TVP have “melted,” said Gazeta Wyborcza, from PLN 500 million in 2007 to an estimated PLN 200 million this year. The NIK forecast license fee revenue for 2010 between PLN 90 million and PLN 120 million, saying the licensee fee will then cover only 7% of TVP’s operating cost. This year TVP’s advertising revenue has fallen 12% over 2008. The Treasury Ministry has proposed a cash injection of PLN 200 million.

Through the last three years, subsequent “decision-makers” have turned Poland’s public broadcasting into a scene of chaotic political and bureaucratic in-fighting. By appearances Polish politicians intend wholesale changes at TVP, moving away from license fee and advertising revenues for State budget funding. With that, both directly and indirectly, comes political control, most apparently placing political cronies on the payroll.

Interviews are being held in the process of selecting yet another president for TVP’s board of supervisors. The last TVP president was fired for “incompetence” after which he locked himself inside TVP headquarters refusing to leave or take the official letter. “At the interviews the best nominees had experience working in the media,” said board member Boguslaw Piwowar to Rzeczpospolitita (December 12). “Compared to them, those who previously dealt with large companies came out pale. For TVP it is not enough to know how to manage a large commercial company. What is needed is knowledge of the media market.” Former TVP Information Agency (TVP AI) head Jaroslaw Grzelak and current TVP news director Jacek Karnowski are the leading candidates, according to media watchers in Poland.

Regardless who becomes the new TVP boss, the broadcaster will not be allowed a new beginning. Old problems, many endemic to the debate-loving Polish culture, won’t be swept away by a fresh face. At best, TVP will be smaller – more job cuts, production cuts, regional operation cuts. At worst, the Polish media sector will continue to suffer from a lack of leadership.

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