Market Insight

Latvian regulator proposes TV licence fee

October 14, 2012

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Latvian broadcasting regulator, NRTP, is working on a project to start collecting a TV licence fee. The planned level is €50 per year.

Currently, NRTP is considering various models for collecting the fee, as well as the cost. The regulator hopes that TV licence fee collection would minimise the risk of political influence on the public broadcaster, as well as providing financial source for investments needed in the public broadcaster.

NRTP is planning to prepare the document by the end of the year to allow discussion and a vote in Parliament in 2013.
Latvian public broadcaster, LTV, is financed from the state budget, with about 70 per cent of its revenue from this source, and advertising covering the remaining 30 per cent. LTV has two channels in its portfolio: LTV and LTV 7.

TV licence fees are collected in most European countries, although it is much less prevalent in central and eastern Europe.

Currently two European countries, Finland and Slovakia, are planning to stop collecting TV licence fee from 2013. Poland, where revenues from TV licence fees have dramatically decreased during the last few years, is considering alternative models of financing public media.

Recently, Russian authorities considered using a TV licence fee to finance an Open Society channel (planned to launch in the country in the first half of 2013). Finally, however, Russian authorities have chosen other ways of funding.
With TV licence fee cost €50 per year the public broadcaster in Latvia could increase its annual income to €40m. In 2011, LTV's total revenues were about €12m. According to local sources, there is a growing demand among LTV's employees to make up for a 15 per cent decrease in salaries in 2009 (made due to the deep recession in the country).

It is debatable whether a TV licence fee system makes public broadcasters resistant to political influence. Examples from some countries collecting TV licence fees (like Poland or Slovakia) show, that public media still can be part of political game. In this context, the political neutrality of the decision makers in the broadcaster's management board, the supervisory board, as well as regulatory bodies seems more important than the source of financing. In many countries, including Latvia, those bodies are appointed primarily by Parliament.

If the NRTP project makes it through to the parliament, it is likely that it will replace the financing of LTV from the state budget with the TV licence fee. The authorities, especially during a hard economic period, will be interested in decreasing the expenses from state's budget. Nonetheless, the project will not see the daylight very soon. In June 2013 there are municipal elections in Latvia and the authorities are very unlikely to take the risk of introducing a new tax on Latvian households.


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