RTP set to win ruling on state aid

Date: 25/07/1996

By Fiona McHugh and Tim Jones

IN A landmark decision, the European Commission is set to rule that Portugal was justified in subsidising state-owned broadcaster RTP.

After scouring the company's accounts, DGIV (competition) has found that the subsidies compensated RTP for onerous public service obligations not imposed on commercial firms.

These private broadcasters are keenly awaiting the decision of the full Commission, due on 30 July, since it will be the first in a series of politically sensitive cases brought by commercial stations against state-owned rivals.

The private broadcasters complain that their rivals receive more cash than they need to fulfil public service remits and claim that this amounts to illegal state aid.

“We have been working on an unlevel playing-field for far too long. Now we want some fair competition,” says Souné Wade, secretary-general of the Association of Commercial Television in Europe (ACT).

The Commission, which has been accused of dragging its feet on this most sensitive of issues, has come under pressure to decide the matter once and for all.

French private station TF1 went to the European Court of Justice (ECJ) when, after two years, the Commission had still not ruled on a similar complaint against public stations France 2 and France 3.

The two state firms make about 55&percent; of their money through licensing fees and government grants and the rest from advertising revenue, whereas TF1 has only one source of income - advertising.

According to the latter, stations which have two sources of revenue distort the market because they sell advertising space at below-market rates.

The ECJ case no doubt helped jog DGIV into action regarding the complaint filed in 1993 by RTP's rival SIC.

However, the Commission would argue that a decision on the RTP case was much easier because the company publishes 'analytical accounts' which make it possible to cost public service obligations in cash terms. Moreover, these are not areas of programming in which commercial stations want to compete.

The subsidy paid to RTP amounted to less than 18&percent; of its annual budget, with the rest coming from advertising, sponsorship and internally generated revenues.

If the competition authority had found in favour of SIC, it would have come as a major blow to public stations, which have seen their market share steadily eroded in recent times.

Two years ago, DGIV asked an independent consultancy to establish how much it cost public stations to meet special obligations such as educating, running news for the blind and representing all strands of society. A report last year concluded that it was impossible to say.