Brussels, 20 April 2011
State aid: Commission approves aid for Danish public service broadcaster TV2
The European Commission has approved under EU state aid rules the funding mechanism that was in place for Danish broadcaster TV2 between 1995 and 2002. In particular, the Commission has concluded that the compensation granted under this mechanism was proportionate to the costs of its public service mission and so did not give rise to any disproportionate distortion of competition. Since 2004, TV2 is only financed by advertising revenues and by income from its commercial channels. Subject to conditions ensuring that TV2 becomes viable without continued state support, the Commission has also authorised restructuring aid for TV2.
Commission Vice-President in charge of competition policy Joaquín Almunia commented: "This is to a large extent an old case, which I hope we have now solved in a satisfactory way. The Commission acknowledges the importance of public service broadcasters for the cultural, democratic and public debate in Member States. I am satisfied that the Danish measures ensure an appropriate funding of public service TV without unduly distorting competition in the Internal Market."
TV2 Danmark is one of the main public service broadcasters in Denmark. It operates a public service channel and some commercial channels. Until 2004, it was financed by both license fees and advertisement income. Since 2004 it is only financed through advertising revenues and income from its commercial channels.
Compensation for public service obligations
Today, the Commission has adopted two decisions on the funding of TV2. The first decision concludes that state financing received during the period 1995-2002 to compensate for the public service obligations was necessary and proportionate, according to the then applicable EU rules on state funding for public broadcasters (see IP/01/1429). A previous decision of the Commission, in 2004, declaring the aid illegal and ordering recovery of DKK 628 million (around € 84 million), was annulled by the Court in 2008. A decision by the Commission authorising a recapitalisation of TV2 was set aside by the Court in 2009.
Today's second decision authorises restructuring aid for TV2, which was notified to the Commission and into which it opened an in-depth investigation in July 2009 (see IP/09/1073). The Commission considers that the plan notified to use the aid to restructure TV2 would restore the broadcaster's long term viability, in particular through a new business model enabling the company to levy subscription payments for its main public service channel as of 2012. To compensate for distortions of competition, the government proposed that TV2 would not open new channels. This should be valid, either until the end of the restructuring period on 31.12.2012, or at the very least until the start of the subscription payments. Denmark has also undertaken to ensure that the capital structure of TV2 is benchmarked to that of comparable media companies, once the new business model will be in place. As the restructuring is bearing fruit, all existing aid measures in place must be repealed with effect from the date of this decision and further aid that had been notified to the Commission must not be implemented. On the basis of these conditions, the Commission considers that the restructuring plan complies with the rescue and restructuring aid guidelines (see MEMO/04/172).
Financing of public broadcasters
The financing of public broadcasters has been a source of complaints and of difficult analyses and discussions for decades because of public service obligations and costs that are not always well defined.
In 2009 the Commission adopted revised guidelines on state aid for the funding of public service broadcasters which aimed to enhance legal certainty for investment by public and private media alike (see IP/09/1072). These revised rules include an increased focus on accountability and effective control at the national level, including a transparent evaluation of the overall impact of publicly-funded new media services. The normal rescue and restructuring aid guidelines are applicable for cases where a broadcaster is undergoing structural difficulties that require restructuring aid.
A number of cases concerning state aid to broadcasters are currently pending at the EU's Court of Justice, including France Television and Spain's RTVE, or are being assessed following an annulment by the Court (RTP of Portugal).
The non-confidential version of the decisions will be made available under the case numbers C 2/2003 and C 19/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.