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Classical music channel to shift platform
“The future (ta-boom) is digital (ta-boom)”
Bavarian public radio classical music channel BR Klassik will move from FM to digital platforms in 2018 allowing digital-only youth channel BR Puls FM coverage throughout the German Federal State. The Bayerischer Rundfunk (BR) Broadcasting Council gave final approval to the switch, first proposed last year, with a few caveats. German private sector broadcasters were, as they have been, not pleased.
“After a difficult and lengthy decision-making process, the Broadcasting Council approved the planned frequency swap of BR Klassik and BR Puls by a large majority,” said Council president Lorenz Wolf, quoted by kress.de (July 11). “Bayerischer Rundfunk is acting to thwart generational disruption and to meet its public service mission. This decision is a signal that digital broadcasting is the future.”
Public broadcasters – certainly not limited to Germany or Bavaria – have worried quite publicly about the aging audience of their radio channels. The average listener age of BR radio channels is over 50 years. The concern is not simply that public radio listeners will follow the aging population. Germans reaching retirement age are no longer obligated to pay the household license fee. Digital channel BR Puls targets listeners 14 to 29 years.
German private sector broadcaster association VPRT was “disappointed.” Private sector broadcasters in Bavaria – including RTL Group, owner of market leader Antenna Bayern – opposed the switch of BR Puls to the FM band and were joined by the German Culture Council and other classical music support organizations. “Above all, it hides the foreseeable development of DAB+,” the VPRT statement continued. “It is unrealistic that we will have DAB+ (distribution) equivalent to FM by 2018.” (See VPRT statement here - in German)
The original proposal by BR general director Ulrich Wilhelm to switch channels and platforms has gone through several iterations from the BR Broadcasting Council. The switch-over date moved from 2016 to 2018. The latest change focused on BR Puls, which will now be ad-free “with a high proportion of speech and musical color, not focusing on the charts.”
Public broadcaster escapes the padlock
thanks for the check
It was down to the last minute. Cyprus regulator Cyprus Telecommunications Authority (CYTA) was ready to “padlock” the stations of public broadcaster CyBC for renewal fees due by midnight June 30. CyBC has suffered from financial difficulties and recently brought in the consultants to sort it all out.
As the clock ticked, station representatives arrived with the check, €257,000. CYTA general manager Andreas Petrides expressed “joy and satisfaction,” reported philenews.com (July 7), and reiterated the agency “will continue to be on the side of broadcasters to help them survive the financial crisis.” (See more about media in Cyprus here)
CyBC is reportedly considering closing one of two television channels and one of four radio stations to cut costs. General manager Gregoris Maliotis resigned in April saying he questioned the broadcaster’s financial viability.
Telecom breakup a television opportunity
“famous”
After lawmakers in Mexico passed anti-trust legislation, dominant telecom America Movil indicated it would divest certain assets. America Movil is principally owned by Carlos Slim, number two on the most recent Forbes list of the world’s richest people, and operates fixed and mobile telecommunications throughout Latin America. The asset sale, details far from clear, could “fetch about US$8.6 billion,” reported Bloomberg (July 9).
Slimming down America Movil would, under the new legislation, allow the company to enter the pay-TV business. “We want to offer our clients that famous ‘Triple Play’ service,” said company spokesperson Arturo Elias, quoted by AFP (July 10). As noted below, telecom people really like TV.
Coincident with the announcement of an imminent sale of Mexican assets, America Movil placed its US$2 billion offer for controlling interest in Telekom Austria, which offers that famous ‘triple play’ in eight central and eastern European countries.
Telecoms are the new bankers
“very aggressive and ruthless”
No longer does the media world even nod when another huge telecom takes possession of a television broadcaster, almost always a pay-TV operator. In recent days Spain’s Telefonica spent €325 million for Mediaset’s 22% stake in Canal+ after paying Spanish broadcaster and publisher Prisa €750 million if June for its 56% stake. A bit more than a billion euros later, Telefonica – 2013 revenues €57 billion, profit €4.6 billion - owns it all, pending requisite regulatory approvals.
Canal+ is the biggest pay-TV operator in Spain with something over 2.5 million subs. The deal was initially reported in May but complex negotiations took a bit of time, Mediaset getting something of a bonus for Prisa selling to Telefonica. Prisa exits television in Spain, holding major newspapers El Pais and Cinco Dias as well as a huge part of national commercial radio. Prisa sold its interest in television channel Cuatro to Mediaset in 2010. (See more about media in Spain here)
Telefonica also acquired an 11% stake in Mediaset’s Italian pay-TV subsidiary Mediaset Premium for a cool €100 million. Mediaset competes in the Italian pay-TV business – some call it a war – with Sky Italia, owned by 21st Century Fox. A pile of cash – roughly a half billion euros – goes a long way for sports and movie rights. Plus an alliance with Telefonica is good for negotiations.
“We are dealing with global competitors, full of resources, which are very aggressive and ruthless,” said Mediaset deputy chairman Pier Silvio Berlusconi to Corriere della Sera (July 7).
The future in digital vice
Long-term worries
A digital future for radio broadcasters is certainly a moving target. Industry forecasters, a mere decade ago, showed convincing PowerPoint charts of the digital trajectory eclipsing analogue platforms within days, hours, minutes. Like reading that Mayan calendar, it didn’t happen quite on schedule. The chant remains the same: “The future (ta-boom) is digital (ta-boom)”.
At a members-only conference hosted in London last week by commercial radio support group RadioCentre, UK Communications and Culture Minister Ed Vaizey – often referred to by UK tech portal The Register as Minister of Fun – offered plenty of goodwill and less immediate gratification. The UK government, he said, isn’t quite ready to announce a plan for digital radio switch-over. Maybe they’ll be ready by the end of this year.
But digital platform switch-over – more thoughtfully expected in the middle of the next decade – isn’t the big worry for UK commercial broadcasters. Analogue licenses – where the money is - will begin expiring toward the end of 2017 after being “rolled over” in 2010 as part of the UK Digital Economy Act, which will not be repeated. FM and AM/MW will be operating for another ten years. (See more about digital radio here)
“I am sympathetic to this issue and appreciate the long-term worries it is causing the sector,” said Minister Vaizey. “I can assure you that this is something that is very much on my radar.” As it stands now regulator OFCOM will be offering national licenses analogue to the highest bidder and local licenses based on a variety of criteria including content quality.
Coincident with the RadioCentre meeting, OFCOM announced the tender for a second national digital multiplex. Minister Vaizey mentioned a new government grant to OFCOM for testing “small scale DAB” multiplexes, which sounds suspiciously like the quite successful layer three DAB+ multiplexes operating in Switzerland.
“We are still working toward a digital future,” concluded the Minister of Fun.
Hard view on impairment
“Even if it takes years”
RTL Group’s chief executives Anke Schäferkordt and Guillaume de Posch are taking seriously the consequences for Hungarian subsidiary RTL Klub of the country’s new tax on advertising revenue. Investors have been informed the 40% tax rate will likely cause an impairment charge in 2014 interim financial reporting due in August. The company is not backing away from the fight.
“Since 1997, RTL Group has consistently built up a very valuable asset in Hungary, employing more than 350 people and investing in local entertainment and independent news reporting,” said the statement. “And we have paid significant amounts of taxes in Hungary. We are determined to pursue all options to protect our asset against this confiscatory tax.” (See RTL Group statement here)
Other foreign investors in Hungary’s media sector have butted heads with Prime Minister Viktor Orbán’s government, which has made no secret a desire to remove foreigners from “strategic industries.” Most have simply headed for the door, grumbling to international business press and sometimes to international mediators. The European Commission has remained largely silent. (See more about media in Hungary here)
Since the new advertising tax passed the Hungarian parliament, even with an amendment proposed to ease the burden on locally owned and government sympathetic TV2, newscasts on RTL Klub have, according to local media watchers, given significantly more attention to the foibles of the Orban government, including rampant corruption. In tit-for-tat form, the Hungarian tax authorities launched an audit of RTL Klub’s finances reaching back 17 years. Finding nothing untoward, the Orban government changed the tax law, as it has when certain problems arise.
Executives at RTL Group appear ready to fight this out. Last week company vice president Andreas Rudas, a Hungarian with executive responsibility with RTL Klub, said to hvg.hu (June 30) he “cannot imagine” RTL Group exiting Hungary. Taking the case to the International Court of Justice in The Hague is under consideration “taking into account the current situation… even if it takes years.”
Hardware business model attracts investors
Nothing beats cash flow
When European governments began licensing privately-owned radio stations, mostly completed twenty years ago, there was a big caveat. Transmission systems – towers and transmitters – would continue under State management, typically through State-owned telecoms. Private sector broadcasters received concessions from one State agency and a bill from another State agency for transmission systems.
In many countries this hasn’t changed much. Market liberalization in the last decade has brought new competition to State telecoms, including broadcast transmission services. In Germany, broadcaster Regiocast set-up tower and transmitter subsidary – Derutec - in 2005, mostly for new concessions it had received, becoming the first to challenge State monopoly on FM transmission systems. RTL Radio Deutschland has been a Derutec shareholder since 2009. (See more about media in Germany here)
As every observer of private-commercial broadcasting knows, there’s a lot of money in the transmitter and tower business. In purely financial terms, they are guaranteed cash flow businesses. This has propelled many of the State-owned telecoms across borders offering technology transfer in exchange for cash.
The business model – even with digital broadcasting slow to take hold – is quite attractive to investors. Under the German Telecommunications Act set to further liberalize transmission services competition in 2016 allowing broadcasters greater choice among providers. Deutsche Telecom got out of the broadcast transmission services business in 2008 when acquired by French telecom TDF, forming Media Broadcast GmbH, which has held a near-monopoly.
Last week Derutec was effectively acquired by an even newer transmission systems provider, Uplink Network, launched last year. “Bringing together the two companies brings a decisive contest to the German FM transmitter network and supply operation because virtually all private radio stations in Germany are still forced to broadcast through a single provider that emerged from the State,” said Regiocast executive Rainer Poelmann, in a statement. Regiocast, he said, “will still concentrate on analogue and digital content production as well as marketing our radio and audio content.” Regiocast’s ownership has shuffled somewhat over the last half year and with that greater emphasis on station management and marketing.
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