Market Insight

Greek government closes public service broadcaster ERT

June 12, 2013

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Associate Director, Service Providers & Platforms, IHS Markit

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The Greek government has ordered the closure of public broadcaster ERT as part of its programme to reduce debt. The day after ERT's shut-down on 11 June, the Minister responsible for the Press and Media announced that a new public service broadcaster (PSB) will be created in its place as the government intends to reform and not to abolish public service broadcasting. The new body, called NERIT (initials in Greek of the New Hellenic Radio Internet and Television Corporation), will be up and running by 29 August at the latest, according to the minister.

The new law establishing the new PSB has been published by the ministry and is open to public consultation. The Minister revealed that the new PSB's personnel will not exceed 1,200 people (1,400 fewer than the current ERT level of 2,600) and its hiring procedures will be reformed to bring them in line with other European PSBs.

The digital archive of ERT - characterised by the minister as a 'national treasure' - will be preserved and rendered fully accessible. The minister added that the new PSB will make better use of the satellite services so that the Greek diaspora worldwide can have access to the new ERT's programmes. During the three-month period in which the PSB will be closed, no licence fee will be paid by TV viewers. The current licence fee is €51 annually, one of the lowest among the European Union member states, but will be reduced further. While the minister did not specify what the new fee would be, he indicated that annual funding from the licence fee would be €100m less than ERT's current revenue.

The European Broadcasting Union (EBU) strongly protested against the closure of ERT. The President and the Director-General of EBU sent a letter to the Greek Prime Minister asking him and his government 'to use all powers to immediately reverse this decision'. Furthermore, the EBU declared its willingness to assist the Greek government in preserving ERT by providing advice and expertise.

The main reason behind the decision to suspend public service broadcasting was to fulfil the country's obligations under the bail-out memorandum Greece signed with the EU, the European Central Bank and the International Monetary Fund (the so-called 'troika'). One of the most basic and urgently-needed obligations for the Greek Government was to slim down the over-inflated public sector. Just two months ago, the Greek parliament voted in a bill which is expected to lay off 15,000 public sector employees by the end of 2014. Greece was facing the risk of jeopardising the whole lending programme and therefore not receiving a tranche of €8.8bn by the end of June 2013 should the country not pass the law. The country signed a first memorandum agreement on May 2010 (and a second memorandum on February 2012) but it was made obvious to everyone involved in the implementation of the austerity measures the memorandum dictated that the Greek Government was moving at a sluggish pace towards the goal of shrinking the public sector. Greek ministers were criticised at Eurozone meetings for not showing any decisive and conclusive action on the issue.

ERT is funded primarily from the licence which is collected as a levy on all electricity meters irrespective of whether the meter actually serves a TV set or not. That source constitutes roughly 90 per cent of its revenues, the rest coming from advertising, the hiring of frequencies and programme rights exploitation. ERT's total revenues over the last three years were around €300m a year, with roughly six per cent coming from advertising. But only half of the €300m was directly attributed to ERT's budget as the Government had decided that 25 per cent of the licence fee revenues would be directed to a Fund reimbursing the producers of alternative (mostly photovoltaic) energy, with another 25 per cent used to cover the country's deficit. ERT was broadcasting three channels (both in analogue and digital form) and one HD channel (ERT HD) only on digital terrestrial, five radio stations, 19 regional radio stations and a satellite service called ERT World aimed at the Greek diaspora. Although ERT's TV ratings dropped sharply in the early nineties following the launch of the first free-to-air commercial channels, going as low as five per cent, that gloomy picture started to change by the start of the decade when the PSB's three channels collectively attracted over 12 per cent of TV viewing till 2012 when the total TV viewing for all three channels rose to 15 per cent.

The EBU's reaction was to be expected as ERT has been a member since 1950. Over the last ten years, the Greek broadcaster failed to keep in pace with many developments happening within the EBU. A characteristic example is the fact that in 2011 EBU offered ERT the opportunity to pilot-test the implementation of the hybrid broadcast-broadband standard HbbTV for a very low cost, but the offer was declined. 

The move to shut down ERT, surprising only to those not familiar with the Greek political scene, was popular among some of the general public. For many Greeks, the inflated public sector was a privileged domain, and the most provocative demonstration of the clientelistic nature of the Greek political system.

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