France Televisions facing massive funding gap

PARIS — French president Nicolas Sarkozy has provoked strong reactions in many quarters — including the European Commission — after offering specifics about his government’s intentions to overhaul the French public broadcasting funding system on Wednesday.

“France needs a balance between public and private channels. We have to allow the private channels to develop, while also allowing France Televisions the means to offer quality programs,” Sarkozy said in a speech following the formal presentation of a parliamentary commission report on the future of funding for state-run TV.

Sarkozy announced that the two-part phasing out of advertising on state television would begin in January 2009 for broadcasts after 8pm, and would be cut entirely by January 1, 2012.

The restrictions will generate a massive funding gap for national pubcaster group France Televisions, which now raises almost a third of its total revenue from advertising and sponsorship. Some estimates put the projected deficit as high as Euros 800 million ($1.26 billion).

However, Sarkozy’s comments differed from the report’s recommendations in several areas.

The president said that French ISPs as well as fixed and mobile telecoms operators would be taxed at 0.9% of turnovers, as opposed to the 0.5% recommended by the commission.

The levy would raise up to Euros 380 million ($597 million) annually, according to the president.

Yves Le Mouel, director general of the French Federation of Telecoms (FFT) told the France 2 network that such a tax would be both “counter-productive” and “illegal” under current European Union directives.

“We are going to keep trying to convince members of parliament as long as the law isn’t passed,” he said. “After that, we’ll appeal at the European level.”

European media commissioner Viviane Reding expressed her concerns about the proposed tax and its likely effects on the growth of the French telecom sector on Tuesday.

She also said the proposal will be studied for its compatibility with current EC regulations.

The French government commission’s report also said that annual TV license fees, which currently make up almost two-thirds of public television revenue and which have not gone up in six years, should be raised, while being indexed to inflation.

Sarkozy did not mention the proposal in his speech.

One of the most unexpected announcements was the president’s call for the government to be regranted the power to appoint the director of France Televisions.

The Conseil Superieur de l’Audiovisuel. (CSA), an independent regulatory body, has appointed the director since 1982.

Former culture minister and Socialist member of parliament Jack Lang called the move “regressive”.

“It is not impossible that behind all of these reforms, there is the desire for double control: control of a public service, and control by friends (of Sarkozy) in the private channels,” Lang said.

Many senior executives at France’s biggest commercial net, TF1 — including its largest shareholder — have close personal links with the French president.

Under the commission’s proposals, French private broadcasters would pay a 3% levy on advertising revenues.

Sarkozy estimated that this would raise around Euros 80 million ($125.6 million), which would be used to offset the revenue losses.

Pascal Rogard, director of the Society of Dramatic Authors and Composers (SACD) which collects and distributes royalties for members in the performing arts and audiovisual sector, feels the private channels stand to gain a lot more.

Despite their recent objections to the proposed levy, “as much as Euros 400 million ($628 million) in advertising will move from the public to the private channels, at least initially” once the restrictions begin to take place, he said.

“We are very worried about financing of the state system, especially if the government will not be increasing license fees,” said Rogard.

“The government is not accepting the consequences of its actions. We don’t really know why Sarkozy is doing all this, but it’s a great deal for TF1.”

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