Media industry awaits Monti’s second coming

Date: 03/04/1997

By Chris Johnstone

LIKE the relatives of the prodigal son, Europe's media industry is watching the horizon to see how, when, and if Internal Market Commissioner Mario Monti's much-vaunted proposal on media ownership will return.

Will it ride out like Charlton Heston's El Cid - a cosmetically propped-up corpse which nevertheless drives its opponents into the sea? Or will it wear the mean, unchanged look of a Wild West gunfighter on his way to a cheap coffin? No one, especially in the industry, seems sure.

The proposal will be back, say Monti's aides, with all the conviction of believers in the second coming. But even they are being kept guessing how and when. Few are sure whether there are major problems with the text or whether this is the characteristic style of a Commissioner whose cautious approach means he will take every step possible to avoid stepping on any toes.

Part of the puzzle for both outsiders and insiders arises from the strange disappearance of a text which was confidently, perhaps over-confidently, scheduled for discussion by the full European Commission on 12 March and has failed to emerge since.

Monti pushed for media ownership to be included on that day's Commission agenda even though he was due to be arguing another difficult point on energy taxes and time was expected to be short.

Some of the haste stemmed from a desire to silence the deafening clamour from media companies voicing concern about how their industry was to be redrawn.

Monti had, apparently, lined up the Commissioners most concerned with the media ownership issue - Information Society Commissioner Martin Bangemann and Audio-visual Commissioner Marcelino Oreja - to support his proposal.

Yet after a desultory discussion, the issue has been delayed indefinitely.

In principle, say Monti's aides, most of the Commission supports the current text. However, he is now scheduled to hold face-to-face chats with all his colleagues to discuss any concerns they might have. “You cannot force such an issue, even with that majority,” said one official.

Others are not so generous. “The fact that Monti has taken the proposal off the table indicates that discussions are necessary before it can come back,” said another official who has been following the debate closely.

“I do not see the directive coming back in its current form,” commented Anja Bundschuh, who is responsible for European affairs at the VPRT, the German lobby for private television and radio stations.

She questioned just how far Bangemann and Oreja were prepared to back Monti on the detail of his proposed directive, and predicted: “It might come back in the form of some looser regulation, but it will not see the light of day as it is.”

With the media world in flux, the time was not ripe for a Monti-style directive, claimed Bundschuch, who added that the whole question of whether the Commission should be legislating about pluralism had excited deep debate in Germany. New media rules had recently been passed and competition authorities could fill in the gaps.

The turmoil in the media world is the exact argument Monti uses as justification for proposing a directive now. Without Commission action, individual countries will come up with their own rules on pluralism which would banish all hopes of a European media market where firms are free to expand out of their own domestic backyards.

“Several member states have begun to reflect on ways of modernising national media-ownership rules or establishing new ones. These rules will, in all probability, increase the fragmentation of the internal market, since the approaches being adopted vary considerably from one country to another,” warned an explanatory memorandum attached to Monti's proposal.

The Commissioner has already bowed to criticism by adding more flexibility, in the form of exemptions, to the latest texts while sticking to the overall framework of setting ceilings on the audiences which media moguls can capture.

Newspapers have been exempted from the 30&percent; audience limits applied to radio and television ownership, but would still be caught by the broader 10&percent; limit on the overall consumer share which could be held by one proprietor across the different sectors. (Percentage shares in the newspaper, radio and television markets would be totted up and divided by three to arrive at the final figure.)

An explanatory text attached to the proposed directive stated that there was no need to iron out differences in national treatment of newspapers because only two countries - France and Italy - had relevant pluralism rules, with all the rest leaving the issue to competition law.

It also suggested that television and radio broadcasters need not worry too much if the 30&percent; audience ceiling was only exceeded in one country.

According to one text, governments would be able to ask for a ten-year exemption from the limit when companies' licences were renewed or if expansion had taken them over the ceiling. It added that further exemptions could be considered at a later date, particularly for smaller countries.

Monti's officials argued this was necessary because otherwise these companies with dominant positions in one country would lose out by being imprisoned in their main market, unable to take advantage of the new freedom offered by the directive to invest heavily in other EU countries.

According to industry sources, in a later text put before Commissioners, the ten-year derogation and its possible extension was transformed into an altogether more generous offer of an open-ended exemption. “It made the whole thing absolutely meaningless,” said one.

Ordinary increases in a station's audience (so-called organic growth) which took its share above 30&percent; would not pose a problem at all if a firm's licence did not come up for renewal.

Local exemptions were also proposed for regional broadcasters or newspapers which exceeded the audience share, if there was a possibility of a media void if the plug was pulled on their services, and if the owner did not already have a dominant position in the market.

More controversially for the private sector, public service broadcasters would be excluded from the proposal if the activities in question were not essentially profit-oriented.

This raised the prospect of lawyers becoming seriously rich debating when services were aimed at profit and when they were not in a number of European countries where the line between public and private broadcasters is thinly drawn.

It is hard to see where Monti's proposal could go next if there are influential calls for it to be watered down further. It is hard to imagine the European Parliament, the original inspiration for a pluralism proposal, stomaching anything more anodyne than the latest versions on offer.

Seven years on, the ownership saga looks like keeping its audience on the edge of their seats, at least for a short time to come.