State aid for public service broadcasting

The Commission adopted a new communication on state aid for the funding of public service broadcasters. It provides a clear framework for the development of public broadcasting services and enhances legal certainty for investment by both public and private media. The main amendments from the 2001 communication include a greater focus on accountability and effective control at a national level.

ACT

Communication from the Commission on the application of State aid rules to public service broadcasting [Official Journal C 257 of 27.10.2009].

SUMMARY

Since the 2001 Communication from the Commission on the application of state aid rules to public broadcasting, technological changes have significantly changed the broadcasting and audiovisual markets, including an increase in competition with new players entering the market as well as the availability of new media services. In order to compete, both public and private broadcasters have had to diversify their activities, moving to new distribution platforms and expanding the range of their services. This diversification of the publicly funded activities of public service broadcasters has resulted in a number of complaints by other market players. There have also been significant legal developments since the 2001 Communication, with the introduction of the Audiovisual Media Services Directive which extends the scope of the European Union (EU) audiovisual regulation to emerging media services. Due to these technological, market and legal developments, an update to the 2001 Communication on state aid for public broadcasting is necessary.

The assessment of state aid in the EU is based on Articles 107 and 108 of the Treaty on the Functioning of the European Union (TFEU) (ex-Articles 87 and 88 of the Treaty establishing the European Community (TEC)). In accordance with Article 107 TFEU, state aid includes the following conditions:

• aid must be granted by an EU country, or by means of state resources;
• it must distort or threaten to distort competition by favouring the beneficiary;
• it must be liable to affect trade between EU countries.

Article 106(2) TFEU (ex-Article 86(2) TEC) provides a derogation from the ban on state aid for undertakings operating a service of general economic interest. To benefit from this exemption, the following conditions apply:

• the service in question is clearly defined as a service of general economic interest by the EU county concerned;
• the undertaking in question must be explicitly entrusted by the EU country with the provision of that service;
• the ban on state aid must obstruct the performance of the particular tasks assigned to the undertaking and the exemption from the ban must not affect the development of trade to an extent that would be contrary to EU interests.

For public broadcasting the above must be adapted in accordance with the Amsterdam Protocol which:

• states that the public service remit is conferred, defined and organised by each EU country;
• provides for a derogation for funding granted to broadcasting organisations for the fulfilment of the public service remit so long as it does not affect trading conditions and competition in the EU to an extent that would be contrary to EU interests.

The state aid assessment by the Commission requires transparency. This consists of a precise definition of the public service remit. The undertaking carrying out this service must be clearly entrusted with that task. The public service compensation should not exceed the net costs of the public service. EU countries should ensure regular supervision of the use of public funding and the carrying out of the public service mandate.

In relation to the diversification of public broadcasting services, the Commission considers that public service broadcasters should be able to take advantage of the opportunities offered by digitisation and internet-based services to benefit society by offering services on all platforms, provided that it does not distort competition or disproportionately affect the market. However, EU countries must consider whether significant new audiovisual services envisaged by public service broadcasters fulfil the conditions of the Amsterdam Protocol in serving the democratic, social and cultural needs of the society, without having disproportionate effects on trading conditions and competition. EU countries must determine what qualifies as a significant new service.

The rapid evolution of the broadcasting markets means that broadcasters are turning to new sources of financing, such as online advertising or the provision of services for payment. Whilst traditionally public broadcasting services are free-to-air, the Commission considers that a direct remuneration in such services does not necessarily mean that the services are not part of the public service remit. The communication states that as long as the pay element does not compromise the benefit to society which distinguishes public services from purely commercial activities.

Last updated: 15.07.2011