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New Bye bye to TVE's ads
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New Bye bye to TVE's ads - 11-May-2009, 11:30

Bye bye to TVE's ads

Iaki Ferreras

It seems Spain's television market will be upside down from September when national public broadcaster RTVE will delete all kinds of advertising from its schedules. Last Friday, May 8, the government presented the law defining RTVEs new business model based on content quality and public service, in theory away from the audience pressure that forces it to look for advertising income.

To compensate for the lack of advertisements, RTVE will charge Spains telcos 0.9% of their revenues, with the remainder coming from state money and from another new tax 3% of national private broadcasters' revenues.

The public broadcaster's budget for next year will be 1,200 million. A large part of that will come from the state subsidy of 550 million as has been the case over the last few years. Until now the rest came from the advertising market (500 million), nearly exclusively from La 1 TV channel (TVE's first channel) since La 2 and the thematic channels' advertising incomes have no importance at all.

So the government's plan contemplates financing 45% of RTVE's budget through direct subsidies while 20% will come from the new tax on national private broadcasters and the telcos. These last are most unhappy, arguing they have nothing to do with the audiovisual business so should not contribute to financing the state's broadcaster at all.

Another condition for TVE's situation is the obligation to increase by 20% its investments in Spanish cinema, which last year was static at 37.6 million. Association of national private broadcasters UTECA has already asked RTVE to limit its US cinema purchases. But regarding the investments the private broadcasters have to make in Spanish cinema (5% for each broadcaster) it's still to be decided if this percentage will be maintained.

This move comes at a time where there's a new law allowing national private broadcasters to merge. Mergers will mean fewer staff and concentration of the advertising market in the hands of two or three private broadcasters. Sogecable's Cuatro and Mediapro's laSexta seemingly are having "serious" talks for a future merger according to market sources. In this case the war over soccer rights would end and the resulting merged broadcaster would have the best soccer rights in Spain so would be able to monopolize this sport on television. The announcement of this merger will come soon according to some sources - perhaps before the end of this week.

On his side Italian audiovisual group Mediaset sees a triple merger: Cuatro, laSexta and Telecinco. Telecinco belongs to Mediaset. The departure of Sogecable's CEO Javier Dez de Polanco leaves the door open for mergers, as de Polanco was thought not to favour a merger of Cuatro with laSexta. But Sogecable's owner, media group Prisa, is not going through its best economic times: it has not yet reached an agreement to refinance its debt with the banks so it needs quick money in order to survive the deep crisis it's going through.

The new broadcaster resulting from this merger could exploit a total of eight DTT channels, or 13 should Telecinco join.

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