Trouble on the airwaves
The proverb that "misfortunes travel in pairs" falls way short of describing Telewizja Polska's current predicament. It's bad enough that the public broadcaster is at the centre of the Rywingate investigation, with the testimony of its president Robert Kwiatkowski to the parliamentary investigative committee raising many eyebrows. But now Juliusz Braun, the chairman of the National Radio and Television Council, the market regulatory body, has admitted to numerous "irregularities" and even "scheming" in the work done on the new Radio and TV Broadcasting Act.
Opposition parties are now boycotting the parliamentary committee working on the draft law. Even defence minister Jerzy Szmajdziński has been drawn in, going on record as saying that fortifying the public broadcaster's position against private-sector competition was the government's "hidden agenda" in the proposed amendment. Calls for both Kwiatkowski and Braun to resign have been pouring in from all quarters, including the President and the Sejm.
To add to the tumult, the European Commission has singled out the audiovisual law as one of the areas in which the delays in the process of alignment with the EU regulations are a cause for "grave concern."
All in all, it's been a long fortnight for TVP.
Untying the knots that are strangling the public broadcaster, in which business and politics have become so inseparable as to be easily confused by individuals such as film producer Lew Rywin, is a huge undertaking that will certainly take some time. At the heart of the problem is advertising, and the vast revenues TVP earns from it. A precondition for change appears to be the creation of a level playing field for all on the advertising market.
"TVP is waging a price war on the advertising market; this is public knowledge," said Waldemar Bojara, director of the consulting and analysis unit at BOŚ Brokerage House. "It is expanding its market share at the expense of other entities, especially the print media. I don't think it's healthy for the market."
It's a view shared by Agora, publisher of the country's largest daily Gazeta Wyborcza and a score of other newspapers and magazines.
"TVP's aggressive price policy is ruining the market," said Anna Borys-Karwacka, Agora's spokeswoman. "Television's share of the advertising market is somewhere between 30% and 40% in all the developed countries. With all our TV stations taking up 58% of advertising, we have a market structure similar to Romania and Bulgaria."
The current trend saw TVP's share of the entire advertising market rising to 29% in the last quarter of 2002 from 20% at the beginning of 2000. On a shrinking market, the news of an 8.7% fall in overall advertising spending in the last quarter of 2002 was welcomed by analysts, as the figure was "down to a single-digit number." Still, against this background TVP's strategy represents a growing threat to the very existence of some market entities, as the daily Życie discovered to its detriment, when it went bankrupt last December.
The government's reaction, as Minister Szmajdziński said, is to introduce even more legal safeguards serving to strengthen the public media against private competition. No wonder then that the European Commission has decided to "encourage" the government to address the issue of ensuring media independence. If no progress is made by the time of accession, the commission may decide to initiate procedures that would lead to the country's exclusion from the common audio-visual policy. Interestingly, this may not be such a bad thing for TVP.
The European Commission's decision to launch a probe into the excessive state support for Denmark's public broadcaster TV2 must have sent warning signals to this country's state broadcaster.
"We are eagerly awaiting the outcome of the Danish case," said Tomasz Bardziłowski, an analyst at BZ WBK brokerage. "It will be a precedent. They have been accused of the very practice that, in many experts' opinion, TVP is guilty of, that is selling advertising spots at dumping prices."
Andrzej Szymański, a market analyst at Millennium Bank, agreed: "The verdict is not out yet, but it is unlikely to go in the broadcaster's favour and once that happens, TVP will have to conform. If they don't, people will be falling over themselves to join the queue to bring complaints against them before the commission. It's bound to happen on the first day after accession."
"This case is being closely monitored," said Andrzej Siwek, head of TVP's press office. "But I can't see trouble coming for us. Our situation is different. We do not receive government support, only licence fee money. We do not anticipate the trouble that the Danish public broadcaster has got into."
This may be rather too complacent an attitude. The licence fee, as a public levy, is technically included under the heading of public aid, and this is what generates 30% of TVP's income. Moreover, while member states have considerable freedom in defining the level of public support given to their national broadcasters, the EC draws the line at using those funds to cross-subsidise their advertising business. This is what the Danes are accused of, and experts seem to have little doubt that it applies to TVP as well.
"They are using this money to drive prices down," Szymański said. "You cannot argue with that."
TVP, however, defends its actions. "TVP can account for every penny," countered Siwek. "It's all spent on our public service. We are obliged by law to carry it out, that is how we differ from the commercial broadcasters."
Under the Radio and TV Broadcasting Act of 1992, TVP is obliged to "support artistic, literary and scientific creativity, as well as educational activity," and furthermore, "to conduct activities serving the development of culture, science and education."
"What has to be done prior to accession is bringing our legislation into line with EU regulations," Siwek said, "and certainly that is not something TVP needs be worried about."
Bardziłowski disagrees. "The removal of the limit on shares that a foreign investor may have in a TV station (currently set at 33%) is likely to be a problem for the public broadcaster. If TVN or Polsat decide to invite a strategic investor, it would mean big trouble for TVP. Not only will there be legal difficulties with their dumping strategies, global media corporations will be able to beat them at their own game."
TVP hopes to perpetuate the current situation in which licence fee money is used to supplement advertising income. In 2002, the public paid more than e103 million (zł. 450 million) to support TVP in providing a public service. According to Siwek, more than twice that amount was spent on producing programmes that fall under the heading of public service. Adding up the numbers for all the TVP channels produces a figure of around e150 million (zł. 662 million), well short of the supposed €230 million (zł. 1 billion), a discrepancy that TVP is incapable of explaining. But this is not, perhaps, the most serious worry.
"It's drivel," said Kazimierz Kutz, deputy speaker of the Senate, commenting on the figures. "They would be making more sense if they were speaking Chinese. What they count as public service is events that serve propaganda. The actual amount spent on promoting culture is an infinitesimal fraction of those sums. They have never condescended to say exactly where the money goes. And I for one have asked more than once to see the figures. This is the problem with TVP. This is what makes all this scheming that is going on possible. There is no transparency. Public TV? Don't make me laugh."
Kutz was one of the many illustrious signatories of an open letter to Kwiatkowski, which aimed to "draw society's attention to TVP's flagrant disregard of its legal obligation to carry out public service."
"What steps have we taken in connection with the letter?" asks Siwek, pausing for thought. "There was a meeting between Kwiatkowski and the signatories. Yes, that is as far as we have gone."
Has there been progress since?
"What progress?" Kutz said. "We said at the meeting we don't know the first thing about TV and public service, while Mr. Kwiatkowski knows all about it. They have just carried on regardless."
Janusz Bukowski, deputy president of the Polish Actors' Association, added: "If anything, it has got even worse. There is no desire on the part of TVP to do anything that would even resemble public service. It is not interested. You see more goodwill and desire to co-operate in commercial TV stations. This magnificent structure that is TVP has to fall down. Someone has to do something about it."
Opposition parties are now boycotting the parliamentary committee working on the draft law. Even defence minister Jerzy Szmajdziński has been drawn in, going on record as saying that fortifying the public broadcaster's position against private-sector competition was the government's "hidden agenda" in the proposed amendment. Calls for both Kwiatkowski and Braun to resign have been pouring in from all quarters, including the President and the Sejm.
To add to the tumult, the European Commission has singled out the audiovisual law as one of the areas in which the delays in the process of alignment with the EU regulations are a cause for "grave concern."
All in all, it's been a long fortnight for TVP.
Untying the knots that are strangling the public broadcaster, in which business and politics have become so inseparable as to be easily confused by individuals such as film producer Lew Rywin, is a huge undertaking that will certainly take some time. At the heart of the problem is advertising, and the vast revenues TVP earns from it. A precondition for change appears to be the creation of a level playing field for all on the advertising market.
"TVP is waging a price war on the advertising market; this is public knowledge," said Waldemar Bojara, director of the consulting and analysis unit at BOŚ Brokerage House. "It is expanding its market share at the expense of other entities, especially the print media. I don't think it's healthy for the market."
It's a view shared by Agora, publisher of the country's largest daily Gazeta Wyborcza and a score of other newspapers and magazines.
"TVP's aggressive price policy is ruining the market," said Anna Borys-Karwacka, Agora's spokeswoman. "Television's share of the advertising market is somewhere between 30% and 40% in all the developed countries. With all our TV stations taking up 58% of advertising, we have a market structure similar to Romania and Bulgaria."
The current trend saw TVP's share of the entire advertising market rising to 29% in the last quarter of 2002 from 20% at the beginning of 2000. On a shrinking market, the news of an 8.7% fall in overall advertising spending in the last quarter of 2002 was welcomed by analysts, as the figure was "down to a single-digit number." Still, against this background TVP's strategy represents a growing threat to the very existence of some market entities, as the daily Życie discovered to its detriment, when it went bankrupt last December.
The government's reaction, as Minister Szmajdziński said, is to introduce even more legal safeguards serving to strengthen the public media against private competition. No wonder then that the European Commission has decided to "encourage" the government to address the issue of ensuring media independence. If no progress is made by the time of accession, the commission may decide to initiate procedures that would lead to the country's exclusion from the common audio-visual policy. Interestingly, this may not be such a bad thing for TVP.
The European Commission's decision to launch a probe into the excessive state support for Denmark's public broadcaster TV2 must have sent warning signals to this country's state broadcaster.
"We are eagerly awaiting the outcome of the Danish case," said Tomasz Bardziłowski, an analyst at BZ WBK brokerage. "It will be a precedent. They have been accused of the very practice that, in many experts' opinion, TVP is guilty of, that is selling advertising spots at dumping prices."
Andrzej Szymański, a market analyst at Millennium Bank, agreed: "The verdict is not out yet, but it is unlikely to go in the broadcaster's favour and once that happens, TVP will have to conform. If they don't, people will be falling over themselves to join the queue to bring complaints against them before the commission. It's bound to happen on the first day after accession."
"This case is being closely monitored," said Andrzej Siwek, head of TVP's press office. "But I can't see trouble coming for us. Our situation is different. We do not receive government support, only licence fee money. We do not anticipate the trouble that the Danish public broadcaster has got into."
This may be rather too complacent an attitude. The licence fee, as a public levy, is technically included under the heading of public aid, and this is what generates 30% of TVP's income. Moreover, while member states have considerable freedom in defining the level of public support given to their national broadcasters, the EC draws the line at using those funds to cross-subsidise their advertising business. This is what the Danes are accused of, and experts seem to have little doubt that it applies to TVP as well.
"They are using this money to drive prices down," Szymański said. "You cannot argue with that."
TVP, however, defends its actions. "TVP can account for every penny," countered Siwek. "It's all spent on our public service. We are obliged by law to carry it out, that is how we differ from the commercial broadcasters."
Under the Radio and TV Broadcasting Act of 1992, TVP is obliged to "support artistic, literary and scientific creativity, as well as educational activity," and furthermore, "to conduct activities serving the development of culture, science and education."
"What has to be done prior to accession is bringing our legislation into line with EU regulations," Siwek said, "and certainly that is not something TVP needs be worried about."
Bardziłowski disagrees. "The removal of the limit on shares that a foreign investor may have in a TV station (currently set at 33%) is likely to be a problem for the public broadcaster. If TVN or Polsat decide to invite a strategic investor, it would mean big trouble for TVP. Not only will there be legal difficulties with their dumping strategies, global media corporations will be able to beat them at their own game."
TVP hopes to perpetuate the current situation in which licence fee money is used to supplement advertising income. In 2002, the public paid more than e103 million (zł. 450 million) to support TVP in providing a public service. According to Siwek, more than twice that amount was spent on producing programmes that fall under the heading of public service. Adding up the numbers for all the TVP channels produces a figure of around e150 million (zł. 662 million), well short of the supposed €230 million (zł. 1 billion), a discrepancy that TVP is incapable of explaining. But this is not, perhaps, the most serious worry.
"It's drivel," said Kazimierz Kutz, deputy speaker of the Senate, commenting on the figures. "They would be making more sense if they were speaking Chinese. What they count as public service is events that serve propaganda. The actual amount spent on promoting culture is an infinitesimal fraction of those sums. They have never condescended to say exactly where the money goes. And I for one have asked more than once to see the figures. This is the problem with TVP. This is what makes all this scheming that is going on possible. There is no transparency. Public TV? Don't make me laugh."
Kutz was one of the many illustrious signatories of an open letter to Kwiatkowski, which aimed to "draw society's attention to TVP's flagrant disregard of its legal obligation to carry out public service."
"What steps have we taken in connection with the letter?" asks Siwek, pausing for thought. "There was a meeting between Kwiatkowski and the signatories. Yes, that is as far as we have gone."
Has there been progress since?
"What progress?" Kutz said. "We said at the meeting we don't know the first thing about TV and public service, while Mr. Kwiatkowski knows all about it. They have just carried on regardless."
Janusz Bukowski, deputy president of the Polish Actors' Association, added: "If anything, it has got even worse. There is no desire on the part of TVP to do anything that would even resemble public service. It is not interested. You see more goodwill and desire to co-operate in commercial TV stations. This magnificent structure that is TVP has to fall down. Someone has to do something about it."
