Statement of the Association of Commercial Television on the “Big Media Amendment” introduced by Minister of Culture Baxa in September 2023
Joint statement by the Association of Commercial Television, the Association of Private Broadcasters, the Internet Development Association, the Union of Publishers, and the Association of Online Publishers
Media market appeals to the Minister of Culture: a discussion on the definition of public service is necessary before making any change in the funding of public service media
Media associations representing the most important media houses, television and radio broadcasters, online and press publishers have united forces in a joint appeal to Culture Minister Martin Baxa. He introduced the “major media amendment” regulating the financing of the public media, Česká televize (Czech Television) and Český rozhlas (Czech Radio). However, during the preparation of the draft, there was no discussion about the potential impact on the media market as a whole.
The planned changes have not been consulted with media representatives in any way, nor have any of the documents that the Ministry of Culture has put into the legislative process addressed the impact on the commercial market. We consider this to be a fundamental error. Public service media do not operate separately and apart from commercial entities but are part of the same ecosystem. It is therefore necessary to assess any possible intervention from the point of view of all the entities that are part of the media sector and contribute to maintaining media pluralism in the Czech Republic.
The proposal of the Ministry of Culture has also been much criticised by ministries and other institutions. The amendment is considered to be ill-conceived and does not fully reflect the current situation. In a situation where the state, companies and citizens of the Czech Republic are facing high inflation and are forced to adopt many austerity measures, Czech Television (ČT) and Czech Radio (ČRo) seem to be the only ones who do not have to save money and strive to operate more efficiently.
The argument that this will only make up the fair value of the budgets of ČT and ČRo for the period when the licence fee was not increased is not justified. The commercial media have been fundamentally affected by the economic crisis and the one-third drop in the advertising market in 2009 or the recent coronavirus crisis, while the public media have managed a stable budget throughout the whole period.
In our opinion, such a significant change in the financing of public service media should be preceded primarily by an expert discussion, which will open up the question of the form and scope of public service in the 21st century, and which will then reveal what budget public service media really need to fulfil their role. The procedure chosen by the Minister of Culture reverses this process and, on the contrary, writes a blank cheque for a service that nobody can define at the moment and that nobody can evaluate and control in the future.
We are therefore once again asking Culture Minister Martin Baxa to completely revise the draft of the major media amendment in the light of the wave of justified criticism the draft has provoked.
“The proposed amendment will fundamentally disrupt the commercial media market on several levels. For TV broadcasters, for example, there is a risk of depleting production capacity and making original content more expensive,” says Daniel Grunt, CEO of Nova Group.
“Czech Television has repeatedly said that it lacks CZK 300 to 500 million a year in its budget to maintain its current functioning. However, the proposal adds up to CZK 1.5 billion irrespective of the fact that there is still a question whether the current scope of ČT’s services continues to meet the definition of a public service,” adds Marek Singer, CEO of FTV Prima.
“The entire commercial radio market operates with half the budget of Czech Radio. Yet we operate twice as many radio stations and reach three times more audience than public radio. Increasing licence fees and introducing an across-the-board ‘mobile phone tax’ or unjustified fees for legal entities as proposed in the amendment by the Ministry of Culture is therefore out of place in our opinion. It rather seems that the Ministry of Culture has failed to take a comprehensive consideration of the proposal and has primarily tried to find as much money as possible, regardless of what it will be used for,” says Jiří Hrabák, Chairman of the Association of Private Broadcasters (APSV) and CEO of Rádio Impuls.
“The additional hundreds of millions of crowns for Czech Radio, while retaining advertising, will seriously shift the balance on the radio market and dramatically affect competition. In terms of the composition of their broadcasts and music, what Czech Radio stations offer licence fee payers for their money is content that is in fact no different from private stations for most of the day, and that private stations have to produce at a fraction of the cost of ČRo,” warns Daniel Sedláček, Chairman of the Board of Directors of Media Bohemia. “This amendment will only strengthen Czech Radio’s dominant position in terms of finance in direct competition with private operators for the same listeners without improving the public service in any way,” Sedláček adds.
“The public media have already been online competitors to our news projects. We are competing in the same field not only for readers but also for employees or advertising revenue. Increasing the budgets of ČT and ČRo without resolving the relationship between public and private media has unquestionable and significant consequences for economic competition. The submitted proposal does not specify for what purposes the increased funds are to be used, and furthermore, it extends the exemptions from the placement of online advertising,” said Michal Hanák, Chairman of the Executive Board of the Internet Development Association (SPIR) and Vice-Chairman of the Board of Directors of MAFRA.
“We are in a situation where a number of activities are moving online but where neither the limits nor the specific objectives of the public service are clear for public service media. At the same time, the implications for the online environment have not been assessed. It should go without saying that public service institutions do not seek to compete with commercial entities in the online market. Public service media should focus on fulfilling their public service mission and present concepts of how they want to achieve it,” adds Libuše Šmuclerová, Chairwoman of the Board of Directors of the Union of Publishers (UV) and Chairwoman of the Board of Directors of the Czech News Center.
“Our organisation represents smaller and medium-sized publishers operating mainly on the internet. We are very concerned about the expansion of public media into new platforms in the online space. Beyond that, public service media on new internet platforms are not just distributing content that originally appeared on TV or radio airwaves but are adding new content. Given that the new European Media Freedom Act, the final wording of which is expected to be approved in the coming months, will, among other things, establish a new right of citizens to pluralistic and independent news, it will be the duty of Member States to create the conditions for a pluralistic media market. To preserve plurality, it is essential that fair conditions of competition are set, especially in the online environment,” concludes Ondřej Neumann, Vice-Chairman of the Board of Directors of the Association of Online Publishers (AOV) and founder of HlídacíPes.org.
At a press conference on 5 September 2023, Culture Minister Martin Baxa together with representatives of the five-coalition government presented the Amendment to the Act on Czech Television and Czech Radio and the Act on Radio and Television Fees.
During the press conference, it was repeatedly stated that the Ministry is in regular contact with representatives of broadcasters, that the draft amendment has been discussed with them, and that during its preparation, emphasis was placed on avoiding distortion of the media market.
Members of Asociace komerčních televizí, z.s. (AKTV), and the Nova, Prima and Óčko TV groups have in recent days familiarised themselves with the announcement of the Minister of Culture and the content of the draft amendment. It is with great disappointment that we have to state that we were not informed about the text of the proposed amendment at all, let alone consulted on it.
It is true that we have been in intensive contact with representatives of the Ministry of Culture this year as we participated in the advisory group on the transformation of the State Cinematography Fund and the related amendment to the Audiovisual Act. Therefore, we were all the more surprised by the Minister’s words that the intended significant increase in funding for Česká televize (Czech Television) should be seen as a topic related to the transformation of the Fund. During the several months of work of the advisory group, not a single mention was made of any connection between this topic and the financing of public service media. In fact, there is no such substantive link, nor does it make sense.
The submitted draft Amendment to the Act on Czech Television and Czech Radio and the Act on Radio and Television Fees primarily aims to increase revenues from licence fees by increasing the fees and expanding the number of payers while the source of Czech Television’s funding from advertising, sponsorship and other commercial communication is maintained in full. In the current economic situation, we consider it to be completely wrong to start dealing with an increase in fee funding without defining and knowing exactly what the increased funds in Czech Television’s budget are needed for and in what amount. We strongly prefer discussing the role of the public service media and the content of the public service as the first step in the process. Only then will it be possible to determine the cost of the public service and set a budget to fulfil the role effectively. Only if this discussion reveals that the current budget is insufficient, does it make sense to have an expert debate on how to make up for missing funds in the budget.
Moreover, the additional revenues from the collection of licence fees as anticipated by the current draft amendment significantly exceed all the amounts previously disclosed by Czech Television’s CEO, Petr Dvořák, in connection with the need to rehabilitate Czech Television’s budget. This fact raises considerable doubts as to what the increased funds are to be used for.
The submitted draft amendment to the Act on Czech Television and Czech Radio and the Act on Radio and Television Fees is thus completely inappropriate, has not been discussed with the parties concerned, and would fundamentally undermine the stability of the media sector. We therefore categorically disagree with the proposed amendment and request that it be withdrawn from the legislative process and thoroughly revised.
We are ready and willing to provide full cooperation and our expert insight into the functioning of the media environment in the Czech Republic so that the impact and potential risks to the stability of the market can be properly assessed when such major interventions are made. The current proposal would undoubtedly have a destructive effect on the balance of the Czech media environment, media pluralism and, last but not least, would very likely constitute an illegitimate interference in competition. The documents of the Ministry of Culture submitted to the inter-ministerial comment procedure, including the impact study, completely omit this aspect.
The last important point to consider is the situation in which the government is coming up with this proposal. High inflation and rising prices make households, businesses and the state tighten their belts. We thus consider it very unfortunate to pull additional hundreds of millions of crowns out of the family budgets of virtually all Czech households without any expert discussion.