Even Spanish TV feels the pain

As part of swingeing spending cuts being implemented at the behest of the European Central Bank, the Spanish government is to slash state broadcaster RTVE’s budget this year by €200 million to €1.2 billion.

RTVE’s board says the cuts will have a “devastating impact” on its programming, predicting that its audience figures for its two channels La 1 and La 2, will drop by 8 percent. La 1 frequently tops audience ratings thanks to hugely popular programs such as Cuéntame como pasó — a long-running drama telling the story of a family from the Franco era up to the present day— or fantasy saga Águila roja, and post-Civil War soap opera Amar en tiempos revueltos. But the channel says that the cuts to its budget will prevent it from being able to commission these high-budget productions.

“These cuts leave us with very little room for manoeuvre, we will not be able to buy content and so we will be forced to fill the airwaves with repeats. What’s more, we won’t be able to broadcast programs for minority interests that the private channels avoid because they make no money on them,” said RTVE’s board in a statement after a meeting with Deputy Prime Minister Soraya Sáenz de Santamaría to lay out their case. The board also asked for RTVE to be exempt from paying VAT.

But Sáenz de Santamaría has made it clear that no exceptions will be made for RTVE in cutting government spending to meet the ECB’s demand that the country reduce its budget deficit, which stands at more than 8 percent of GDP, to around half that figure by the end of the year in an effort to get the Spanish economy back on track.

RTVE faces an expensive year, and will have to pay out some €90 million for the London Olympic Games broadcasting rights and related costs.

RTVE’s board has asked the government of Mariano Rajoy to limit the cuts for this year to €80 million, to allow it to meet its commitments to broadcast the Games.

Since television started in Spain in 1957, it has always operated following a free-to-air model, with a public sector funded partially by the government, but essentially through advertising. The introduction of commercial television in Spain in 1989 did not result in a change in this model, but the dual funding of RTVE has been subject to bitter criticism from its commercial rivals, who see it as unfair competition.

In 2006, the Socialist Party administration announced a series of reforms at RTVE aimed at addressing its long-running inability to turn a profit, as well as the widely held perception that it was subject to political interference. In 2009, a total ban on advertising at RTVE was announced, coming into effect in January 2010. The government justified the move saying that there had been a sharp fall in television-advertising revenue, and that this would make it difficult to forecast spending requirements for the broadcaster. In 2008 advertising brought in €557 million, or about 50 percent of TVE’s total budget. The rest came from government subsidies, but were not enough to prevent a €72-million loss for the year.

At present, RTVE is funded by government subsidies, totalling around 45 percent of its budget; an already existing tax, paid to the government by businesses using the radio spectrum; a new tax, paid by commercial television broadcasters, amounting to 3 percent of their gross financial income (this tax is estimated to be neutral, on the basis that advertising investment will move from the TVE to the commercial broadcasters); and an additional new tax, imposed upon telecommunications operators and fixed at 0.9 percent of their operational (not financial) income.

Privately owned commercial channels were initially in favour of this plan. They’d have one competitor less in an era of eroding advertising revenues. On the other hand, they did not, and do not feel compelled to fund RTVE’s budget with a percentage of their advertising income. This tax added to the already existing 5 percent they are required to earmark for the funding of European and Spanish films.

Telecommunications providers have reacted angrily. They are saying it is not fair to require them to fund a sector that has no direct connections with their own duties. They have declared they will charge users 0.9 percent more, with the charge itemised on all telephone bills.

Other critics include RTVE’s commercial sponsors. They have proposed at least 12 minutes of advertising per hour. Their argument is that less advertising will mean less consumption, which has already been slashed by the country’s brutal recession.

RTVE says it is worried that the new restrictions on it will reduce its audience share, making it difficult to justify its large workforce.

For the moment, the government seems content to let RTVE stew, while failing to address the concerns of private broadcasters, who also face a decline in advertising revenue.