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EU nixes France, Spain telco tax

Levy earmarked for pubcasters outlawed

MADRID — The European Commission has nixed a telecom tax introduced in both France and Spain to substitute spot ad revs at pubcasters France Televisions and RTVE.

The move, announced Thursday, will deprive the state TV webs of substantial sums: Euros400 million ($546 million) for France’s FT, and $395.85 million for Spain’s RTVE, by the commission’s own estimates.

Introduced in France in March 2009 and in Spain the following September, the telco taxes imposed a levy of 0.9% of telcos’ annual revenues in order to make up the shortfall in pubcasters’ financing after their ad bans.

France prohibited primetime spot advertising in January 2009, Spain from January 2010.

The EC declared July 20 that the telco taxes did not contravene EU competition laws. It has now ruled, however, that the levies are incompatible with a 2002 EU directive restricting telco taxes to compensation for governmental administrative and regulation costs linked to the telco sector.

France’s finance minister Christine Lagarde said Thursday the French government would appeal the commission ruling. Spain is likely to follow suit.

Should they lose their appeals, both countries are likely to look for alternative financing sources for their pubcasters, rather than accept a hit to their already fiscally pressured budgets. The ruling is likely to spark alarmist articles in the national media of the two countries suggesting that public service broadcasting may be in jeopardy.

“I am sure the outcome of the changes will not be a decrease in the revenue of France Televisions. I’m pretty confident the government won’t allow that,” said Francois Godard, at Enders Analysis.

One potential door to alternative financing is already open in Spain, said one Madrid-based analyst.

Spain’s new General Audiovisual Law, approved this year, redirects 80% of a spectrum tax on telcos, in place for years, from the state budget to RTVE funding.

Worth about $409.5 million a year, and levied on telcos for use of Spain’s transmission spectrum, the spectrum tax could now be hiked, the analyst said.

“What I don’t contemplate whatsoever is that the removal of the telecom tax will result in a proportionate reduction of RTVE’s budget,” he added.

The Spanish government wants control of a strong, not a weak, public television, he said.

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