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Brussels, 24th April 2007

State aid: Commission closes investigation regarding the financing regime for German public service broadcasters - frequently asked questions

(see also IP/07/543)

What will be the main changes in the future financing regime?

First of all, the future financing regime will contain the necessary provisions to ensure that the funding received by public service broadcasters is limited to what is necessary for the fulfilment of the public service remit and that commercial activities do not benefit from any state aid.

This means in particular that there will be regular controls as to whether the licence fee revenues exceed the actual public service costs. Furthermore, public service broadcasters' commercial activities will be subject to a set of principles which ensure that these activities are accounted for separately and carried out in a market conform way. In fact, in the future, commercial activities will be carried out by commercial subsidiaries and no longer by the public service broadcasters themselves. Furthermore, financial relations between public service broadcasters and their commercial subsidiaries need to be at arm's length, excluding any favourable treatment of subsidiaries, and investments of public service broadcasters in other companies need to be in line with the behaviour of a private investor.

The control competences of the KEF (Commission for the determination of the financial needs of public service broadcasters in Germany) and the Courts of Auditors will be strengthened in order to ensure compliance with these requirements. It is foreseen that the KEF ensures that the recognised financial needs of public service broadcasters are not unduly increased through non-market conform behaviour.

Secondly, the future financing regime will provide for a more precisely defined public service remit. Under the future legal framework, new media activities of public service broadcasters will be evaluated and entrusted by the Länder on the basis of a number of criteria designed to determine of the public service character of the service in question. These include the so-called "contribution to editorial competition"-test, which reflects the relevance of a given offer for opinion shaping in the light of other available offers on the market; there are also certain "functions" that new media activities shall have to fulfil, such as ensuring the participation of all groups of society in the information society. As regards the additional digital channels, ARD and ZDF will have to present a programme concept further specifying the required focus on "information, culture and education". For new services, third parties will be given the opportunity to submit their views on the possible impact of the new service on the market.

The package of measures agreed upon strikes a balance between the justified financing of public service broadcasters in the new media environment and adverse effects on competition, since it defines the public service mission in a clearer way and takes account of the potential impact of certain new media offers on the market.

What does the decision mean for plans of ARD and ZDF to further develop new media activities?

The Commission confirms that new media activities can be part of the public service remit. Plans of ARD and ZDF in this respect will be subject to a number of conditions and the requirement of a formal entrustment by the Länder. The purpose is not to set strict limits of what kind of activities ARD and ZDF are allowed to offer, but to ensure that new media offers are of a genuine public service nature, also taking into account other available offers. It is for the respective national bodies to carry out this evaluation.

Whereas ARD and ZDF remain free to come forward with proposals, it is ultimately for the Länder to verify that the conditions are fulfilled and that the proposed new offers can be regarded as part of the public service remit. New services can only be launched after such a formal entrustment by the Länder.

What is the Commission's view on the complainants' allegations regarding the "misuse" of public money for the acquisition of extensive sports rights packages?

The Commission considers that sports can be part of a broadly defined public service remit to offer a varied and balanced programme. The Commission has not found any "abuse", for instance in terms of "too much sports" on public TV channels, or public service broadcasters "emptying" the market for premium sports rights. Also, the fact that public service broadcasters acquire exclusive rights with public money is not in itself contrary to EU state aid rules.

On the other hand, unused sports rights which are not necessary for the fulfilment of the public service should normally be offered to third parties for sublicensing. Public service broadcasters will have to clarify which sports rights will be offered to third parties for sub-licensing, and subject to which conditions.

Is the closure of the procedure the end of the "state aid saga"?

The Commission has set the parameters for the funding regime in line with EU state aid rules and agreed with Germany on the measures necessary to ensure compliance with these conditions. Germany has been given two years from the date of the Commission decision (24th April 2007) to align its system with these conditions. As in other cases, the Commission will now monitor the implementation of the German commitments.

What is the relevance of today's decision concerning Germany for the financing regimes in other Member States?

Community law establishes a number of principles and general requirements which the national funding regimes need to respect:

  1. the public service remit must be clearly defined and entrusted upon the public service broadcasters through a formal act of entrustment
  2. the financing must be limited to the actual costs of the public service after having deducted revenues from the commercial exploitation of the public service and
  3. commercial activities must be carried out in a manner that corresponds to normal market criteria.

The respect of these conditions must be subject to regular control. Within these limits it is for each Member State to establish the legal framework governing public service broadcasters' activities as it sees fit.

This is also true for reforms of the legal framework to include new media activities. Provided that there is an evaluation of the public service character of the new media activities (i.e. that these services "address the same democratic, social and cultural needs of the Society", as required by the Commission's 2001 Broadcasting Communication – (see IP/01/1429), combined with an explicit entrustment, it remains for each Member State to design a system according to its preferences. The proposals submitted by Germany and accepted by the Commission in its 24th April 2007 decision constitute one possible, but not the only way to organise public broadcasting.

The situation in other Member States will be assessed by the Commission in line with the same principles, but each case will be treated on its own merits.

What is the state-of-play as regards the Dutch and Irish investigations which were initiated together with the German case?

In March 2005, the Commission initiated a similar review of the existing financing regimes in Germany, the Netherlands and Ireland (IP/05/250).The case regarding Germany is the first to be closed while discussions with Ireland and the Netherlands are still ongoing. The Commission hopes that these discussions will soon lead to an agreement on the necessary changes, which would allow the Commission to close these investigations as well.

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