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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%),

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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%),

part of a public limited company running four commercial

subscription channels.


Privatisation decided in 2002 (Agreement on media policy 2002-2006)

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:

  • Investments (capital, know how)
  • Joint ventures
  • Market orientation (user friendliness, cost/benefit)
  • Efficiency
  • Reduction of state activities (ideology)

Privatisations are based on the assumption that the market is a better devise for allocation of resources than the state.


Traditional public service idea:

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.


Media policy agreement, 2002:

The privatisation of TV 2 depends upon fulfilling the same public service requirements as previously (“invisible” privatisation)


Privatisation as an exchange of

privileges (access to audiences, brand name, etc.) and

obligations (public service requirements, payment, concession fees, etc.)

Privatisations requires a balance between

privileges and obligations


Key questions to the privatisation of TV 2:

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


The value of TV 2 (in 2004):

Monopoly on nation wide television advertising,

must carry status,

brand value

Estimated selling price (2004): 130.000.000 – 400.000.000



Changing value of TV 2

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.


In 2009 digitalisation has lead to decline in viewing on

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.


2009-12: The restructuring plan including sale of

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 role of the EU trails on state aid:

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.


The decisions taken by the EU commission has been in favour

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 EU cases has delayed the privatisation of TV 2

The actual media development has demonstrated that

privatising TV 2 is less obvious now than it was ten

years ago.

TV 2 can not be sold without a guarantee for subscription

fees that basically is incompatible to the public service

remit (universality).

Public service without public money seems to be still more

unlikely to work!


Media policy

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


TV 2 development

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


2000 2002 2004 2004 2004 2005

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


2011 2011

EU com EU com.

approve approve

reconstruction state aid