Convergent Euro TV market puts pressure on Brussels regulators

Three years ago Vladimir Zelezny founded the Czech Republic’s first commercial television channel, TV Nova. Within a year it had 72 per cent of the audience – despite, as he points out, having half the airtime, one-fifth the budget, one-tenth the staff and one-27th of the studio facilities of its only rival, state TV.

Nova also accounts for three-quarters of the $160m (102m) a year spent on TV by Czech advertisers. His company has, in his own words, been “completely merciless” in its approach to commercial television, aided by demand for US films and TV series, which had been pent up for decades in the old communist-run Czechoslovakia.

Nova’s story is one of the most dramatic examples of the impact which the fall of communism and the arrival of Western-style capitalism has had on the former Eastern Bloc.

But in the peculiar industry that is broadcasting – where technological limitations like a shortage of frequencies and regulatory restrictions which favoured publicly-funded, public service TV have held sway for years – the Czech experience has been mirrored even in parts of Western Europe.

In Portugal, a former journalist and politician (who was briefly prime minister in the Eighties), Francisco Pinto-Balsemao, founded a commercial channel, SIC, in 1992.

The Catholic church had already founded Portugal’s first commercial channel, TVI, but it lacks the ruthless commercialism of SIC which, with the help of Brazilian soap operas (or Telenovelas) from Brazil’s TV Globo, plus entertainment programming from Northern European specialist producers like Endemol in the Netherlands, has cleaned up.

It has 50 per cent of the Portuguese TV audience, and more than 50 per cent of TV ad revenue. RTP, the state-run operator, and SIC cordially loathe each other, especially since SIC went to the European Commission to complain that RTP was competing unfairly because it benefits from both advertising revenue and state subsidy through a TV licence fee.

What’s happened in Czech and Portuguese TV in the past few years happened in Britain in the Fifties, when ITV was launched and, for a time, the BBC was sent reeling by the competition.

Since then the BBC has recovered, to the point where it still enjoys more than 40 per cent of the TV audience and a reasonably secure licence fee, despite the arrival of multichannel TV and the financially-powerful BSkyB.

Indeed, while Czech and Portuguese public service broadcasters are all over the place as they struggle to compete with brash newcomers which may not enjoy state subsidy but are lean, efficient and not burdened by onerous public service requirements and minority programmes, the BBC is busily branching out into the commercial market itself, with the launch this month of four subscription TV channels in a joint venture with Flextech, as well as a free online news service and a free 24-hour TV news service.

For their part, neither commercial nor public service broadcasters in the Czech Republic and Portugal (where pay-TV has yet to make much impression) are in any fit state to take advantage of the new technologies, struggling as they are to cope with competition with old-fashioned, general interest terrestrial channels.

Yet both Portugal and the UK are members of the European Union (and the Czech Republic may be soon), which has to devise a media policy that is appropriate in all three countries.

The task is made more difficult still by the phenomenon of “convergence” – as television converts to digital technology for both production and transmission, TV sets become indistinguishable from PCs, and TV networks increasingly use the same hardware and infrastructure as phone companies to reach their consumers.

Last week broadcasters and regulators from all over Europe met in Lisbon at the annual European Film & Television Forum. The talk was all about the difficulties the European Commission is having devising a policy which will encourage the development of European media industries, but not damage the public service broadcasters, which are seen as vital to preserving national culture and identity in the face of commercial broadcasting. This, it is alleged, sets out primarily to entertain – and to entertain with programmes not made in Europe.

The dilemma is illustrated by a row between two directorates of the European Commission: XIII, concerned with telecommunications, and X, concerned with culture.

Directorate XIII is about to publish a policy green paper recommending a single European regulator responsible for both telecoms and broadcasting – a European combination of the UK’s Oftel and ITC, a Euro-Ofcom. Directorate X is horrified by the proposal, because it thinks the big multinational broadcasters and telecoms companies would squeeze public service broadcasting still further.

The fear, to use Euro-jargon, is that Europe’s residents would be treated purely as consumers, whose interests would be protected by market forces, and not as citizens, who need guarantees of access to reliable news and to programming that represents their culture and society.

The interests of the advertiser, in all this, probably lie with Directorate XIII and those who advocate a free market. But advertisers are citizens too – so perhaps they should be rooting for those who say broadcasting is too important to be left to market forces alone.