The privatisation of a public service broadcaster. TV 2 – a nationwide public service channel established In 1986 (opening 1988) the most popular television channel in Denmark (30% audience share), since 2003 funded by advertising, before that time partly also by license fees (app.30%),
In 1986 (opening 1988)
the most popular television channel in Denmark
(30% audience share),
since 2003 funded by advertising, before that time partly
also by license fees (app.30%),
part of a public limited company running four commercial
TV 2 transformed into a limited company in 2003
The sale announced in 2004
The sale postponed in 2005 due to a number of state aid cases at the
EU commission and the EU court. The cases are not finalised yet.
A reconstruction plan including subscription fees approved by the EU
commission in 2011.
A trail awaits at the Danish court in 2011 regarding compensation to
Viasat for its losses due to TV 2’s misuse of its dominant position on
the advertising market.
Governmental changes in 2011 will likely result in abandoning the
privatisation of TV 2.
Privatisation: Public institutions sold to private companies in order to achieve:
Privatisations are based on the assumption that the market is a better devise for allocation of resources than the state.
Public service broadcasting is based on the assumption that the market can not provide the amount and quality in programming that a society needs, as commercial funding has a negative impact on programming quality, diversity and editorial independence.
New public service idea:
Public service broadcasting is (mainly) about specific programme output that could be delivered independently of legal status (public/private) and way of funding (license fee, advertising, user charges).
Public service is broadcasting is based on a “contract” between the state and the broadcaster.
The privatisation of TV 2 depends upon fulfilling the same public service requirements as previously (“invisible” privatisation)
privileges (access to audiences, brand name, etc.) and
obligations (public service requirements, payment, concession fees, etc.)
Privatisations requires a balance between
privileges and obligations
Selling prize (could include concession fees)
Amount of public service requirements
Requirements to buyers qualifications (nationality,
experiences, competences, market position, etc.)
Duration of broadcast permission and buy-back clause
Monopoly on nation wide television advertising,
must carry status,
Estimated selling price (2004): 130.000.000 – 400.000.000
In 2007 TV 2’s earning on the advertising market declined,
resulting in a loss at app. 24 million Euro or 10 % less than
and a number of investments (in a radio channel, a
magazine, etc.) didn’t pay.
In 2008 TV 2 received rescue aid from the state in
order to avoid bankruptcy.
mainstream channels (like TV 2/Denmark) and to the
abolishment of TV 2’s monopoly on nationwide television
In 2009 the value of TV 2’s public service channel has
totally disappeared as the operation of the channel created
losses in both 2007 and 2008.
distribution network and closing of other activities has
improved finances, as TV 2 has paid back its debt.
2012: The introduction of user charges will increase
TV 2’s income with app. 40 million Euro per year.
Estimated sales price: 400.000.000 Euro (Argo Securities)
The original complaint from 2000 regarding financing
TV 2 by license fees from 1995 to 2000 came from SBS.
In 2004 the commission decided that the funding of TV 2 was compatible with EU state aid rules except for app. 80 million Euro, by which TV 2 has been overcompensated for its public service activities.
In 2008 the EU court in First Instance annulled the commissions decision
In 2011 the commission decided that TV 2’s state aid from 1995 to 2002 was compatible with EU’s rules.
In 2004 the recapitalisation of TV 2 was notified at the EU commission (a consequence of the decision on state aid)
In 2008 rescue aid was notified to the EU commission
In 2009 a restructuring plan was investigated.
In 2011 the plan was approved.
of TV 2 and the Danish state.
The conclusion: The state aid, the recapitalisation and the
restructuring of TV 2 are all compatible with EU legislation.
State aid has, however, not been legal, as the financing of TV 2
wasn’t notified in 1986 as required.
This opens for a trail at a Danish court regarding compensation for
illegal, but compatible state aid.
The actual media development has demonstrated that
privatising TV 2 is less obvious now than it was ten
TV 2 can not be sold without a guarantee for subscription
fees that basically is incompatible to the public service
Public service without public money seems to be still more
unlikely to work!
2002 2003 2003 2004 2004 2005
Media policy Rapport Limited TV 2 put on Pre- The sale is
Agreement on selling company the market qualifi. cancelled
1986 2000 2003 2004 2005 2006 2007 2007 2008 2012
TV 2 Zulu Comm. Charlie TV 2 TV 2 TV 2 TV 2 Financial User
estab. funding Film News Sport Radio crisis charges
Complaint Procedure Decision: Recapita- Trail at Trail at
to EU Com. started overcompen- lisation EU court: EU court:
State aid sation state aid recapitalis.
1995-2000 1995-2002 1995-2002
2008 2008 2009 2009 2009 2009
EU Com. EU court Restruct. Trail at EU Com. EU court
accepts annulles: plan to EU court: investigation rejects cases
rescue aid overcomp. EU com. rescue aid on restructure
EU com EU com.
reconstruction state aid