Budding broadcasters fear <i>status quo</i> syndrome

Most of those hoping to obtain a television licence believe that the Broadcasting Authority's study on national radio and TV services was a convenient excuse to retain the status quo.

The study, conducted by Grant Thornton and released on Monday, concluded that it was not viable for the authority to issue additional radio or television licences because, in a nutshell, the market had reached saturation point.

This news dealt a discouraging blow to the 19 individuals or organisations that had expressed an interest in opening a new radio station and seven others who were interested in obtaining a licence for a new TV station.

However, not all is concluded yet and the authority's chief executive officer, Kevin Aquilina, said the possibility of a licence being issued had not been ruled out but prior to deciding it would be handing an abridged version of the study to all parties concerned and awaiting their reaction.

The Times caught up with those who had in July last year replied to the authority's call for an expression of interest in a television licence.

They were Allied Newspapers Limited, Alternattiva Demokratika, Grima Communications Co. Limited, Fr John Baptist Farrugia, Front Maltin Inqumu, Techinvest Limited and Where's Everybody?

Allied Newspapers director Adrian Hillman said his biggest concern was that the study would lead the authority to accept the current scenario.

"I believe the study failed to look at what a new station could bring to the present broadcasting situation," he said. "I am not in the business of crystal ball gazing but I guess if you ask the public whether they want more of the same channels then their reaction will be to say no. However, I find it hard to believe that people would refuse the chance for a new channel with a difference," he added.

Mr Hillman said that the company's expression of interest still stood. If the time came to take any future step it would make its decisions based on its own calculations.

"At this point my guess is that the real jump in media pluralism, as far as TV is concerned, will happen with the advent of digital broadcasting."

Alternattiva Demokratika chairman Harry Vassallo said the study came as no surprise. It documented the present distortion in the media where political parties had direct ownership.

"It is shocking that the authority seems to be accepting the status quo, which blatantly goes against the Constitution. It is an insane situation where the two political parties are supposed to balance one another but the authority is unable to address an unfair situation and uphold the Constitution and balance," he said.

Dr Vassallo said Malta now faced the "anorexic condition" of a state broadcaster which was unable to fulfil its function and two political party stations which spewed biased reporting.

Joe Grima, on behalf of Grima Communication Co. Ltd, said the study was a convenient way of protecting the status quo.

"The study is a total indictment of the failure of the broadcasting system at a time when the authority should be helping private stations to emerge," he added.

Mr Grima said the authority should be praised for commissioning this report because in the past it had completely washed its hands of commercial matters.

"This past attitude was a major contribution towards the disaster we are presently in. In a democratic society political stations should have no relevance whatsoever in broadcasting," he said. Mr Grima said the decision to issue political parties with radio and television licences was the beginning of a disaster in the industry.

"Private organisations should be the ones owning the airwaves to serve as a watchdog on political parties in the public interest," he said.

Fr John Baptist Farrugia, though disappointed by the results, took a more cautious approach towards the study and said he would be delving deeper into it before taking a stand.

Techinvest chairman Tony Mejlaq said the authority had a right to study the situation but nobody had a right to interfere in an entrepreneur's projects.

"We will consider the report and decide on the situation. However, I feel that at this point the government is in duty bound to give out the frequencies," Mr Mejlaq said.

Lou Bondì, on behalf of Where's Everybody?, also expressed disappointment at the study and said the questions failed to address a number of issues.

"I think the study takes the status quo - of one national television station and two political party stations - as immutable," he said.

Although Malta experienced pluralism in broadcasting for a decade, he said, this only existed on paper and the island was still waiting for its first independent private television station.

"I think the authority must start to shoulder the responsibility of skewing the television market by treating the two political stations as if in this country there were two broadcasting laws - one for political parties and another for the rest of us," he said.

Mr Bondì pointed out that it was not clear whether the authority was going to issue any licence before Malta switched to digital broadcasting in about three years' time.

"We may be looking at a situation where until 2008 Malta will still not have a private television station - this is a very scary idea!" Mr Bondì said.

Conclusions of business study on national radio and TV services

On the basis of its findings Grant Thornton concluded that the issue of additional licences for nationwide radio and terrestrial television stations would not be viable for three main reasons:

1. Impact on new entrants
New entrants are unlikely to succeed in generating enough revenue to sustain their operations. The most likely scenario if new stations enter the scene will be more stations with more losses. Alternatively, in an attempt to survive, stations will try to operate on extremely low budgets and will be unable to meet the requirement for quality and diversity of scheduled programming.

2. Impact on existing stations
The financial performance of existing stations, many of which are already incurring heavy losses, is bound to be adversely impacted by new entrants and will, as a result, continue to deteriorate even further.

3. Impact on audiences
It is doubtful whether audiences will benefit from the introduction of more radio and television stations, in terms of their listening and viewing experience. Most respondents in the survey did not see the need for more stations. Alternatively, they pointed out a demand for certain programmes, such as documentaries and films, that were unlikely to be within the financial reach of local stations that have to operate with very tight budgets.

Some Key Findings

¤ With radio and television advertising revenues in the region of Lm4 million, Malta's broadcasting industry is the smallest among the new EU member states. There are already 13 radio stations and four terrestrial television stations competing in this limited market.

¤ The market is predominantly dominated by the state and political stations, which collectively capture about 53 per cent of radio and 98 per cent of television audiences and control 78 per cent of all advertising revenues.

¤ There are clear indications that the market has reached maturity and offers little growth prospects beyond that spurred on by normal economic growth. Following a period of stable growth up to 1999, the advertising share remained relatively constant.

¤ All station operators describe the market as "cutthroat" or extremely competitive.

¤ The share of advertising revenues captured by the public and political stations has not changed much during the past eight years so it was doubtful whether new stations would be able to attract revenues away from these dominant stations.

¤ The advertising market available to non-political private stations is just Lm800,000, presently shared by some 10 players.

¤ On the basis of the survey, there does not seem to be sufficient demand by audiences for more local radio and TV stations. In the case of radio, 82 per cent said they do not see the need for new stations, with 63 per cent not seeing the need for another television station.

¤ There is a severe shortage of talent in the industry. In the absence of professional training which, in any case, stations do not have the resources to finance, new stations will have to poach talent from existing stations or make do with personnel who lack the necessary skills and experience. In either case, the quality of programming is bound to suffer.

¤ The view that the market can hardly sustain existing stations, let alone new entrants, is strongly supported by existing stations and also the two main advertising agencies interviewed.