Market Insight

Croatian pay TV operators battle public TV over carriage

September 23, 2012

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Croatian pay TV operators, including the largest cable TV provider on the market, Austria Telecom-owned B.Net, are refusing to carry newly launched HRT 3 in their basic packages after the public broadcaster demanded a carriage fee for the channel and higher fees for its two other channels, HRT 1 and HRT 2. Additionally, HRT demanded from the operators personal details of subscribers. As there are no must carry regulations in Croatia, the country's pay TV operators are not required to broadcast any channels, including public TV.

Currently Croatian operators are paying HRK0.4 (about €0.06) per subscriber a month for HRT 1 and HRK0.2 (€0.03) for HRT 2. Local sources are claiming that HRT now wants between two and ten times this fee. HRT is negotiating with the operators new carriage contracts and gearing up to launch a fourth channel, HTV 4. About 70 per cent of HTV's revenues are generated from the TV license fee, the rest coming primarily from advertising. In 2011 public broadcaster's revenues amounted to HRK1.17bn (about €165m). At the end of 2011 the company's tax debts amounted to HRK226m (about €30m), which it was recently allowed to pay in instalments.

Launch of new channels by heavily indebted HRT may appear strange, however, failing to do so would result in losing the licenses which HRT got for DTT mux B. Nevertheless, launching cultural HRT 3, surely doesn't improve the broadcaster's finances and with the pending debt HRT is making an effort to increase its revenues. Already doubling the carriage fees could give the public broadcaster additional €1m revenues, which would ease paying the instalments of its debt. On the other hand a list of subscribers' personal details would help it collecting the TV license fee. In 2011 the evasion of TV license fee payment in Croatia was about 20 per cent.

Croatia is one of the few countries in Europe without must carry rules. Currently, only Cyprus, Luxembourg and Spain do not have any must carry regulations. Must carry channels are broadcast throughout Europe on cable networks without financial obligations between the channels and operator, although Germany is an exception with must-carry channels paying the operators for rebroadcasting their channels.

Big commercial must carry channels often try to get out of the must carry list. Since pay TV operators cannot afford not to carry major national stations in their channel line-up, the channels typically succeed in getting remuneration for rebroadcasting on cable.

Generally, must carry regulations help pay TV operators to lower the price for their TV packages. But too high a number of must carry channels can cause problems. One key example is Ukraine where a recent decision of Ukrainian Broadcasting Council made all DTT channels must-carry. That means every cable TV operator in the country has to broadcast for free over 30 - mostly small - channels. For many operators, with capacity for only 50 analogue channels, it makes it difficult to make packages profitable as well as making digital upgrade more challenging.


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