Market Watch

Slovakia to Scrap TV Licence Fee

August 25, 2011

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Slovakia's govrnment has drawn up a bill to abolish the TV licence fee from January 2013. Public broadcaster STV will be funded via a direct government subsidy instead. The bill, backed by coalition partner SaS, will go before Parliament in the autumn. The grant would amount to 0.142 per cent of country's GDP, with a minimum of €90m a year. The licence fee could be scrapped as early as next year, depending on the availability of funding in the 2012 government budget.

Last year, SaS petitioned successfully for a referendum on the abolition of the TV licence fee, currently just under €56 a year. Although a majority of votes were in favour, too few people participated for the result to be valid. SaS instead decided to pursue its policy by means of a direct change to media law.

In 2010, STV's revenues were €72m, including €53.3m generated from the licence fee. However, with advertising sales well below budget, STV made a €15m loss. STV's advertising revenues have been gardually reduced under previous legislation. This year, ad airtime has been reduced to one per cent from 1.5 per cent last year. In 2009 advertising revenues were €5.76m and in 2010 €5.39m. By 2013 STV may even be ad-free. Due to its poor financial situation, STV closed its sports channel, Trojka, in June. Currently it broadcasts two channels: Jednotka and Dvojka.

Analysis
Considering STV's financial results from previous years, a €90 million grant could even enable it to balance its books. STV has already received some government funds every year to make up for its losses; in 2010, 16.3 per cent of its total revenues (€11.7m) were from this source. Interestingly, with the increase of the amount of money assigned for the public broadcaster in the budget the government does not only want to cover the loss made by STV, but to make governmental funds the only source of its revenues.

Poland witnessed similar attempts to abolish the TV licence fee in 2008 and 2009 and replace it by governmental grants.

As in Poland, so in Slovakia these moves can be considered as part of political game in which the coalition is trying to tie the public media closely with the government and at the same time weakening the potential influence of the opposition stemming from members on management boards of public media.

If SaS gets backing from other coalition members, the bill is likely to be passed in the autumn. The bill could still be blocked by the President, in which case it would go back to Parliament for a second vote. Under Slovak legislation, a vetoed bill needs a majority of votes to come into force. 

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