No ceasefire on Swedish media battleground

There is a war raging in the Swedish media market between media empires and political factions. The struggle is about how much the state should be involved to guarantee diversity and quality to underpin democracy.

The European Commission has been called in to arbitrate on whether state subsidies should continue to flow to underdog newspapers or whether they breach EU state aid rules. The aim of the subsidies is to support diversity in news and opinions by dropping big lumps of money into the pockets of the second biggest newspaper in each city. The Commission is expected to demand changes in the aid.

Cynics have noted that the aid was introduced by social democratic governments when a string of social democratic newspapers were struggling. In recent years, however, political parties have radically reduced their direct ownership as market concentration has increased. In total, aid amounts to about €55 million annually.

Conservative and liberal politicians have complained loudly about the aid, along with the dominant media group Bonnier. Family-owned Bonnier controls nine daily newspapers, Sweden’s business daily, the main private channel TV4 and a host of magazines. Without state cash to the tune of €7m per year, Stockholm’s second morning newspaper Svenska Dagbladet would be in serious trouble. A ban on state aid would leave the Stockholm market open to Bonnier’s flagship Dagens Nyheter (circulation 345,000 copies).

The main Nordic media groups are becoming so big that nowadays, because of competition rules, they cannot grow any more on their domestic markets, only abroad. Svenska Dagbladet is owned by Norwegian media group Schibsted, which also owns Sweden’s biggest newspaper, the tabloid Aftonbladet (415,000).

Last year, a clash of visions over the state’s role in the media sector forced the resignation of a new culture minister. Only ten days into office in the fresh centre-right government, Cecilia Stegö Chilò had to step down. Her offence: non-payment of the TV licence fee for the past 16 years. A petty thing, one may think. But her act was considered to be a deliberate protest against the system of public service, founded on her neo-liberal beliefs that the market should have free rein to design the media landscape. But as culture minister, she would be in charge of media policy governing Swedish Television and Swedish Radio, currently similar in programming to the BBC.

The left-leaning cultural establishment worked itself into a wild frenzy, accusing Chilò of being the designated butcher of public service. Lena Adelsohn Liljeroth, her replacement as culture minister, also a conservative, adopted a much more conciliatory tone. But she indicated that public service TV and radio should expect cuts in funding in the future. And public service should stop competing with commercial channels in light entertainment programmes and big sports events. To cool tempers further, she did what politicians do: she commissioned an inquiry into the future of public service.

News and public affairs in Swedish Television has only Bonnier’s TV4 as a mainstream challenger. Swedish Radio, on the other hand, is unrivalled for transmissions of serious programmes.

Still, the media landscape continues to change fast with an increasing share of the younger audience watching on-demand programmes on the internet. For newspapers, advertising revenue from the internet has now grown to 9%. While nearly half the population reads newspapers online, 84% nonetheless read paper versions.

Innovation is likely to jolt the market, as it has done before. In 1995, the Swedish media empire Modern Times Group, owner of several commercial TV stations, shocked the Swedish market by starting to distribute a daily newspaper for free in the Stockholm public transport system. Metro was criticised for being a dumbed-down McNewspaper filled with cheap news agency material. Could it be profitable? Would it kill off more serious newspapers?

Today, Metro International publishes newspapers in 20 countries around the world in 100 cities, including Rome, Madrid, Paris, New York and Strasbourg. (But not Belgian Metro, which is owned by Concentra and Rossel.)

In future politicians may see even their best-laid plans ruined by innovation. As the late, legendary media mogul and bon vivant Jan Stebeck, founder of MTG, said after breaking the Swedish TV monopoly in 1987 with satellite broadcasts from London: "In this chess game, politics beats business. But technology beats politics."

• Bengt Ljung reports from Brussels for financial news agency Direkt and business weekly Affärsvärlden.

There is a war raging in the Swedish media market between media empires and political factions. The struggle is about how much the state should be involved to guarantee diversity and quality to underpin democracy.