Government vows funding slash amid debt
The new Portuguese center-right coalition government plans to slash costs at pubcaster RTP and privatize one of its two channels to cut the TV group’s $1.2 billion debt.
The move fits Prime Minister Pedro Passos Coelho’s overall goal of downsizing Portugal’s public sector and reducing debt that now stands at close to 100% of gross domestic product.
In early April, RTP’s credit rating was downgraded by Moody’s to junk status, rocked by the uncertainty created by Portugal’s economic meltdown.
Previous center-right governments have promised to privatize RTP but have always back-pedaled.
In 2003, the pubcaster’s red ink exceeded $1.63 billion. In that year — under a center-right coalition — RTP’s ad revenues were exclusively assigned to debt servicing, which enabled it to cut debts to $1.2 billion in 2010. At this rate it needs another 13 years to eliminate debt.
However, privatizing RTP1 is unlikely to generate enough money to claw back much debt, and it will seriously undermine the RTP’s capacity to service its debt.
A privatized RTP1 would also squeeze an already lackluster TV advertising market, and privatization plans have met with opposition from the TV sector. One of the recent critics has been Bernardo Bairrao, who on Monday ankled as managing director of Portugal’s Media Capital after being offered a post in the new government.
He then abruptly declined the offer, reportedly because he learned of the pledge to privatize RTP.
The government has said that RTP will be privatized at an “opportune moment.” Time will tell whether this happens over the next 4 years.