EU okays funding mechanism for France Télévisions
The European Commission has approved the annual funding mechanism for France Télévisions, which is deemed to comply with the European Union's state aid rules.
Under this mechanism, France Télévisions receives a share of the revenue from the public service broadcasting contribution (previously the television licence, approved by the Commission in 2005) plus a subsidy from the national budget. This annual subsidy is based on the legislation on the new public broadcasting service, under which advertising on public channels will be reduced and ultimately abolished altogether by the end of 2011. After a detailed investigation, the Commission has concluded that the measure complies with the rules on state aid for public broadcasting services, particularly as regards the mechanisms for preventing over-compensation for the costs of the public service mission.
Commenting on this, Commission Vice-President for Competition Joaquín Almunia said: "State compensation of the costs of a public service mission is allowed, provided that the mission is clearly defined and there has been no over-compensation. I am satisfied that the French legislation includes the requisite mechanisms to preserve fair competition between the public and private sectors."
France Télévisions is the largest French broadcasting group and comprises the following channels: France 2, France 3, France 4, France 5, France Ô and Radio France Outremer. The French authorities launched an overhaul of public broadcasting in 2008 aimed at sharpening its focus and raising standards, which resulted in the Law of 5 March 2009 on audiovisual communication and the new public broadcasting service.
The reform involves the gradual elimination of advertising on public channels and the introduction of two taxes, one on advertisements and the other on electronic communications. It also entails a new set of specifications unique to France Télévisions which further consolidates its general-interest mission and its specific place in French broadcasting. The Law provides financial compensation for the removal of advertising, which accounted for 25% to 30% of France Télévisions' annual income before the reform.
In a decision of 1 September 2009, the Commission had already approved the award of an annual subsidy of up to €450 million for 2009 and launched a formal procedure to investigate certain aspects of the annual subsidy for subsequent years, which could add up to over €1.5 billion by 2012. The Commission was concerned about the possible use of the revenue from the new taxes to finance the annual subsidy and the danger of over-compensation for public service costs up to 2011-2012. The procedure also enabled the Commission to take account of the comments by interested third parties and competitors before reaching a final decision, thereby enhancing legal certainty.
The Commission concluded that the definition of the public broadcasting mission vested in France Télévisions and the checks to which it is subject comply with the state aid rules and, in particular, with the Commission Communication on state aid for the funding of public service broadcasters. The application of these rules in no way implies Commission monitoring of France Télévisions' programmes. Public service channels can thus continue to broadcast a wide range of programmes for the general public or for a more targeted audience, as in the past. The Commission is satisfied with the undertaking given by the French authorities that the annual subsidy will be calculated according to the public service costs incurred by France Télévisions and that the revenue from the taxes introduced by the reform will not be used for this aid measure and will not affect its amount, unless the scheme is amended, in which case the amendment would have to be notified and approved by the Commission.
The advertising tax will be paid by the television channels, and the tax on electronic communications by service providers, such as Internet portals and cable or satellite operators. The revenue from these taxes will go to State funds, without being formally earmarked.
The Commission has therefore approved the annual subsidy mechanism for an unlimited period. This should enable France Télévisions to continue the ongoing reforms with greater legal certainty about the funding of its public service mission and compatibility with the EU's state aid rules. To date the General Court of the European Union has rejected appeals by competitors against the Commission decisions of 2003, 2005 and 2008 approving various public funding measures for France Télévisions. An appeal has also been lodged by TF1, M6 and Canal + against the decision approving the subsidy for 2009 (Case T-520/09, pending).