Stations furious at delay in TV competion case

Date: 11/01/1996

By Fiona McHugh

COMMERCIAL television stations from around the EU are accusing the European Commission of foot-dragging and incompetence in its handling of a controversial competition case involving almost a billion ecu in yearly government grants.

The controversy surrounds a complaint lodged at the beginning of 1993 with the EU's competition Directorate-General IV, concerning the funding of two state-owned TV stations - France 2 and France 3 - from French government coffers.

TF1, a privately-owned French station, claims that the amount of money given to its government-owned rivals to help them fulfil their public service remit is excessive and causes a distortion of the television market.

The case, which when resolved could dramatically change the face of European television, has been on the Commission's table for over two and a half years, and is likely to languish there for some time.

According to several commercial TV stations which have been eagerly awaiting the verdict, the Commission has been employing inexcusable delaying tactics to avoid making a decision on this most politically sensitive of cases.

“The Commission has no wish to treat this complaint, because it causes a number of problems. So, they put it in a bottom drawer. They commission reports, revise those reports, consult this person and that person, and meanwhile we wait,” claimed one commercial TV representative who asked not to be named.

“Television is not like cars or phones. It falls into the cultural domain, and that is an area jealously guarded by national governments. The Commission simply does not want to get involved,” said another.

But the Commission rejects these charges, saying it needs the results of an independent report on public television in Europe before it can decide the case.

“This is one of the most complex cases involving big issues like media ownership to come before DGIV. We could not deal with it just like that. We needed an objective study of the situation before we could respond,” said a source close to Competition Commissioner Karel Van Miert.

That “objective study of the situation”, commissioned shortly after TF1 lodged its complaint, was, according to DGIV sources, supposed to establish how much public service obligations - such as the requirement to educate as well as entertain - cost public television stations.

Over two years later, the 141-page report finally landed on DGIV desks last month. But it left the key question it was asked to address unanswered, stating: “The proposition that public service obligations place additional operating costs upon public broadcasters is not testable in a meaningful way across or within the member states of the European Union.”

Commission sources refused to reveal how much the study had cost EU taxpayers, although one admitted “a lot of money” was involved.

This has prompted angry protests from TF1, which wants to know why the Commission spent so much time and money on a report which does not answer the question it was asked.

“If it does not put a figure on public service obligations, then it is no more than poetry,” said Alain Schmit-Delmas of TF1.

“Obviously the report was going to conclude that the situation is different in each country and that the budgetary norms between member states differ. I could have told them that in 1993 and for a lot less money,” he added.

Even DGIV officials, who claim nonetheless that the matter will be resolved before the end of the year, admit they “really are not happy with the report”, which has now been sent to member states for their comments.

France 2 and 3 make approximately 55&percent; of their money through licensing fees and government grants and the rest from advertising revenue. TF1 has only one source of income - advertising. It says public television stations, which have two sources of revenue, distort the market because they can afford to sell advertising space at below-market rates.

The Commission is dealing with similar complaints from commercial TV stations in Portugal and in Spain.

“We are going to keep up the pressure. We know it will be a long hard haul, but we are confident we will win in the end,” said Soune Wade of ACT, the Association of Commercial Television Companies.

Schmit-Delmas echoed this, saying: “We did not lodge this complaint to drop it. We know we are bothering a lot of people, but we will continue to bother them until we get an answer.”