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Week of January 27, 2014

Earthquakes and the digital ghetto
As policy makers look on

Private and public radio broadcasters in Germany are always in a cat-fight. The mere suggestion that Bavarian public broadcaster BR might be considering a platform shift set out the long knives.  

According to Süddeutschen Zeitung (January 28), BR is planning to announce that classical music and arts channel BR Klassik would exit the FM platform as part of its previously announced multimedia “video and event-oriented” programming concept. Dropping FM would require approval of the BR Broadcasting Council, scheduled to meet this week. BR Klassik and all other BR radio channels are available on the DAB+ multiplexes.

Also speculated is that BR would, then, move kids channel BR Puls to the vacated FM frequencies. German public radio broadcasters are limited to five FM channels under the current Broadcasting Treaty. BR Klassik is ad-free; BR Puls could be an ad opportunity. (See more on media in Germany here)

Hardly unexpected, German private radio broadcasters had a few choice words. “FM frequencies (at public radio) are shifted like a bazaar, back and forth, as policy makers look on,” said private broadcasters association VPRT radio director Klaus Schunk, in a statement. (See VPRT statement here – in German). “If true that BR will replace BR Klassik on FM with youth channel Puls it would mean an earthquake within the Bavarian broadcasting landscape,” offered Bavarian (private) Broadcasters Association chairman Felix Kovac. Antenne Bayern managing director Karlheinz Hörhammer called the suspected platform change for BR Klassik “dumping into the digital ghetto,” quoted by W&V (January 29).

On the other side, a BR statement following the private broadcaster’s complaint said “BR Puls is a complementary offering that clearly stands out from private mass media…BR’s statutory mandate to provide for a younger audience.”

Advertising and censorship explored
Have I got a deal for you

The nefarious allocation of government advertising is but another means to fill friendly pockets, punish enemies and, therefore, control media outlets. It’s an old story. It keeps coming back like a bad dictator.

Newspaper trade organization WAN-IFRA is publishing a series of reports on “soft censorship” and the deleterious impact on press freedom. The first two reports cover media in Hungary and Serbia and were prepared with support from the Open Society Foundations and related organizations. “Although it is less visible, soft censorship can be equally insidious, and must be recognized for the very serious threat to media independence and press freedom it is today… in Eastern and Central Europe and also around the world,” said WAN-IFRA CEO Vincent Peyrègne in a statement, (See WAN-IFRA presser with links to the reports here)

The near-collapse of Hungary’s media outlets as professional and independent under the rule of Prime Minister Viktor Orban’s Fidesz Party is a particularly gruesome story. Complaints and criticism, largely from international voices, have no impact as the government weaves its populist message through compliant publishers and broadcasters. “State capture is slowly but surely enveloping Hungarian media,” leads the key findings of the WAN-IFRA report: Capturing Them Softly: Soft Censorship and State Capture in the Hungarian Media. (See more on media in Hungary here)

As Hungary joined the European Union big multi-national publishers and broadcasters invested the market, bringing professional practice along with the cash. In time, they found themselves unwelcome, to put it gently. This month the Ringier Axel Springer joint venture sold its Hungarian assets to private equity fund Vienna Capital Partners. As part of a broader exit of non-German assets, ProSiebenSat.1 Media Group sold leading television broadcaster TV2, a management buyout the financing for which tied, by some, to Fidesz Party supporters. Last October Finish publisher Sanoma exited its educational unit in Hungary as laws restricting school textbook adoption to local publishers took effect.

Gresham’s Law, widely used in economics, holds that “bad money drives out good.” (JMH )

No restrictions or no games, say media outlets
And no compromise

Major media outlets in Finland are openly discussing the possibility of boycotting the Ice Hockey World Cup set for May in the Belarus capital Minsk. Newspapers Helsingin Sanomat and lta-Sanomat, both published by Sanoma and Finland’s two biggest, public broadcaster YLE and news agency STT aren’t willing to send reporters and news crews because of accreditation issues with the Foreign Ministry of Belarus. Finland has won two gold and six silver medals in the men’s Ice Hockey World Championships.

The International Ice Hockey Federation (IIHF), based in Switzerland, secured from the Belarus government when Minsk was selected in 2009 assurances that visas for media workers would be issued without restriction. As applications were made Finnish media organizations were told that reporting would be restricted to ice hockey, a separate visa required if journalists ventured into other territory. Belarus authoritarian president Alexander Lukashenko has a colorful reputation for locking up media workers and generally keeping the lid on press freedom and human rights. Last year the European Parliament adopted a resolution urging the IIHF to cancel the event.

“If consent is not forthcoming, we stay away,” said Helsingin Sanomat editor Kaius Niemi, quoted by Helsingin Sanomat (January 28). “The most important thing is that journalists have the freedom to do their work without any restrictions.”

Broadcast rights holder MTV3, owned by Bonnier, said it will broadcast the event as scheduled.

Lower tax rate popular with publishers
Slap at Brussels?

Everybody complains about taxes. The value added tax (VAT) is an inescapable part of business life. Publishers of printed media have, generally, enjoyed the price-point advantage of lower VAT on newspapers and magazines, sometimes none at all, all in the spirit of press freedom. The lower rates have not been extended to online publishers selling their subscriptions.

The French government last week changed its rules and now online publishers will collect the same VAT rate as print publishers, 2.1% down from 20%, the new VAT rate in effect from January 1st. Publishing trade associations were, understandably, delighted, mostly in hopes that the European Commission (EC) will notice and add an exemption to the EC VAT Directive, currently under review.

“Since there is no EU allowance for reduced VAT rates for digital press at the moment, the French Government is making a stand with this announcement and we publishers applaud it for taking a lead to end this discriminatory tax system that is holding back the EU digital economy,” said European Publishers Council president Francisco Pinto Balsemão in a statement. (See EPC presser here) “The future of publishing lies in developing innovative online business models so that consumers can enjoy our content online on tablets, PCs, mobile, whatever they want. If we are to encourage both innovation from our content providers and consumption of high quality, authoritative, reliable content from our consumers, there should be no discrimination between the modes of delivery.”

The change in the VAT rate from French online publishers stems from the decision last December by online publisher Mediapart founder and editor-in-chief Edwy Pleynel to collect the lower TVA levy allowed for print publishers, the company paying the difference. The new VAT rate for online publishers arrived (January 24) as a directive from the Budget Ministry.

Of course, EU Member States are required to clear changes in VAT rates with the EC under the VAT Directive. Then all 28 Members get to vote on it. It’s like herding cats.

Last November the European Commission referred France to the European Court of Justice (ECJ) for lowering the VAT rate for e-book sales to 5.5%, same as printed books. France is home to big book publisher Hachette Livre. (JMH)

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