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AER SUBMISSION TO THE PUBLIC CONSULTATION ON THE REVISION OF THE COMMUNICATION FROM THE COMMISSION ON THE APPLICATION OF STATE AID RULES TO PUBLIC SERVICE BROADCASTING The Association of European Radios (AER) is a Europe-wide trade body representing the interests of over 4,500 commercially-funded radio stations across the EU27 and in Switzerland. AER's main objective is to develop and improve the most suitable framework for private commercial radio activity. AER constantly follows EU actions in the fields of media, telecommunications and private radio transmission, in order to contribute, to enrich and develop the radio sector. AER took part in all European Commission’s consultations on questions alluding to Public Service Broadcasting funding in the past decade. Therefore, AER welcomes the opportunity provided by the European Commission to submit its views on this crucial matter. AER also welcomes the monitoring process the European Commission is running. AER would like once again to underline that it supports the European dual system based on a mix of public service and commercially funded radio broadcasting. However, unfair competition may hinder this model. So AER sees this public consultation as an example of the necessary dialogue with the EU institutions on the financing of public service broadcasting. 1. GENERAL 1.1. A number of significant legal developments have taken place in the public broadcasting area since 2001, namely the adoption of the Audiovisual Media Services Directive, the adoption of the Decision and Framework on compensation payments as well as Commission decision-making practice. Do you think that the Broadcasting Communication should be up-dated in light of these developments? Alternatively, do you consider that these developments do not justify the adoption of a new text? AER firmly believes that there should be a review of the Broadcasting Communication. However, AER does not think that this review should be based only on the abovementioned regulatory texts, but, also, inter alia, in the light of considerations explained further in this consultation. AER has indeed answered to the question mostly relevant to the radio market, even when only television was stated. Finally, AER would like to stress that, as an association representing the interests of commercially funded radio broadcasters at EU level, it responds on behalf of its Members, and provides thereafter as many national examples as possible. 1.2. How would you describe the current competitive situation of the various players in the audiovisual media sector? Where available, please provide the relevant data on for instance leading players, market shares, market share evolution in the broadcasting/advertising/other relevant markets. As mentioned in past consultations, public service broadcasters enjoy “historical” advantages in the radio sector: commercially funded radio has mostly appeared in Europe in the 1970’s or later. For a number of decades, public service broadcasters evolved in a monopolistic world. This is no longer the case, but, in the radio environment, a great part of the audience “stays tuned”, i.e. remains faithful to a “brand” (a radio format, a radio sound, etc.). This is also due to the fact that radio has been the first medium to go “mobile”, which is largely due to the intimate relationship which it forges with audiences, and the ease with which manufacturers have been able to make it available on portable devices. Moreover, for some years, public service broadcasters in Europe have developed models based on “dual funding”; an interesting example can be found in the Netherlands. THE NETHERLANDS: In the Netherlands, public radio has 5 national channels. The programming of the public channels is similar to that of commercial stations. This holds particularly true for Radio 2 and 3, the entertainment channels. There is no justification of why the formats of Radio 2 and 3 cannot be left to the commercial market. Indeed, Radio 2 and especially Radio 3 have, since the introduction of commercial radio in the Netherlands, adjusted their formats in such a way that they are no longer distinguishable from the commercial stations. This also can be deducted from the fact that the revenues from advertising of Radio 3 are by far the largest of all five public radio stations and almost sufficient to cover the complete exploitation of all public radio stations. It goes without saying that these revenues add up to the government financial grant. Public radio stations in the Netherlands carry advertising. Public broadcasters are “double funded”; as we mentioned earlier, experts know that the amount of advertising revenues they get is enough to cover at least the costs of the five public radio channels. These costs are not transparent and an insight of these costs is refused. The sales organisation of Dutch public radio (STER) is the most dominant agent in the market (on advertising). That market share and the fact that only public radio can offer national coverage to advertisers allow public radio to set the price for radio advertising in the market. Commercial radio can only follow the STER and ask for lower prices. Similar situations are observed in the rest of Europe; consequently, public service broadcasters have been able to foster their, already, strong brands. In many instances, commercially funded radio broadcasters find themselves unable to compete on sound grounds with public service broadcasters. The table on the following page should be seen as a summary of the main market players on the radio scene in a representative set of European States. 1.3. In your view, what are the likely developments and where do you see the major challenges for the sector in the future? Do you consider that the current rules will remain valid in the light of the developments or do you believe that adaptations will be necessary? As explained in the previous question, radio is the most intimate medium, and this is due to the ease with which it can be accessed: in the car, in the kitchen… The portability and ubiquity that this engenders are crucial to radio’s appeal. All radio broadcasters have therefore undertaken, in the past years, important investments in both distribution and content with a view to maintaining and expanding radio’s wide availability and appeal. Consequently, the Internet is key to commercial radio broadcasters’ future strategies, offering both a means of delivering radio (via webstreaming), and a platform for offering services which complement the core broadcast services with bespoke content such as music news, social networking and media players. However, across Europe, AER Members encounter situations where public service broadcasters seem to overrun their remit by encroaching into these online growth areas. For example, in Germany, public broadcasters expand into multimedia services such as webchannels or online archives (Mediatheken) without undertaking – as agreed in the compromise with the European Commission – an ex-ante test, to check if these services are part of their public service remit. 2007 The top 5 radio stations, ownership and audience share 1. Yle Radio 2. Radio 3. Yle Radio 4. Iskelmä, 5. YleX, Finland Suomi, Nova, 1, Public, 9% Private, 8% Public, 6% Public, 38% Private, 11% 1. RTL, 3. France 2. NRJ, 4. France Info, 5. Europe 1, France Private, Inter, Public, Public, 11.5% Public, 9.6% Private, 9% 12.9% 9.9% 1. Radio 2. Antenne 4. NRW, Bayern, 3.SWR3, 5. WDR4, Germany WDREinsLive, Private, Private, Public, 1.51% Public, 1.29% Public, 1.29% 2.27% 1.57% 1. Lampsi 2. Sfera FM, 3. Sky Radio, 4. Antenna 5. Village, Greece FM, Private, Private, Private, FM, Private, Private, 7.9% 14.4% 14.3% 12.7% 9.4% 2. Radio 3. Rai 1. Rai 5. RTL 102.5, Italy (2006 Deejay, Radiodue, 4. RDS, Radiouno, Private, annual data) Private, Public Private,13.07% Public, 17.2% 12.91% 15.15% 14.44% 1. Radio 538, 3. Sky Radio, 2. Radio 2, 4. Radio 3, 5. Q-Music, Netherlands Private, Private, Public, 10.6% Public, 7.9% Private, 7.1% 10.8% 10.5% 1. Radio 2. Radio 3. Radio Kiss 5. Radio Pro Romania Europa FM, 4. Radio 21, Romania FM, Private, FM, Private, Actualitati, Private, Private, 7.8% 12.3% 5.7% Public, 14.5% 13.1% 1. Union 3. Radio 2. Onda cero, Radio SER, Nacional 4. Cope, Spain Private, Private, Espana, Private, 14.5% 21.4% 39.5% Public, 17% 1. BBC Radio 2. BBC Radio 3. BBC Radio 4. BBC Radio 5. Classic UK 2, Public, 4, Public, 1, Public, Five Live, FM, Private, 15.7% 11.8% 10.3% Public, 4.6% 4.2% 2. COMPATIBILITY ASSESSMENT UNDER ARTICLE 86 (2) EC TREATY, IN COMBINATION WITH THE BROADCASTING COMMUNICATION 2.1. Coherence with the Commission Decision and Framework on public service Compensation 2.1.1. Do you consider that (at least some of) the requirements laid down in the Decision and Framework on public service compensation should be included in the revised Broadcasting Communication or not? Please explain why. We do, since these groups of requirements would allow better control of the public service broadcasters’ activities, providing greater clarity and enabling suitable conditions for healthy and competitive markets. AER would like to recall the following: it strives for better competition rules for commercially- funded radios, not to end public service broadcasting. The European dual system is indeed a fundamental element of the European media landscape. AER is nevertheless concerned by clear anticompetitive behaviours, which risk unacceptably endangering commercially funded radio broadcasters. 2.1.2. In the affirmative, please specify which requirements should be included and explain what adaptations, if any, would be appropriate for the broadcasting sector (see also the questions below, in particular those on overcompensation; point 2.6).

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