The real cost of political media ownership

It may have been drowned out by all the high-intensity political stories that have been hitting headlines recently… but a couple of weeks ago, Nationalist MP Chris Said raised a few eyebrows by suggesting that NET and One TV may soon become a thing of the past.

“Times are changing, and I believe the days of party-owned TV stations will come to an end in the not-so-distant future,” the one-time aspiring PN leader told our sister newspaper Illum in an interview. “Political parties must find other less costly means to get their message across, and there are a number of ways they can do this. It won’t be long before the parties agree to take this step…”

In years gone by, a statement like that – coming, as it does, from a former PN heavyweight - might have prompted an umpteenth discussion about the wisdom of allowing political parties to own TV stations in the first place: a situation that openly defies the Maltese Constitution (in particular, the obligation to maintain “due impartiality in respect of matters of political or industrial controversy”); but which would also be deemed anomalous in practically any other EU member state… if not across the entire democratic world.

But with so many other pressing matters to discuss, this opportunity for a much-needed debate seems to have once again fizzled away to nothing.

As things stand, the only discernible reaction to Said’s comment was something along the lines of: ‘Yeah, well, he would say that, wouldn’t he? Just look at the financial situation of the PN.  Of course they’d be eager to get rid of a television station that they clearly can’t afford to run…’ (attested, among other things, by reports that NET TV has been intermittently unable to pay its own staff salaries over the last 10 years) ‘… and which, in any case, clearly hasn’t helped the PN politically very much, either.’

And yes… to be fair, that is indeed what Chris Said most probably meant with his telling remark that: “political parties must find other less costly means to get their message across”.

If so, however, it would be a classic case of ‘saying the right thing for the wrong reason’…  for even if he didn’t quite intend it that way, he nonetheless correctly identifies the two major issues that make the concept of party-owned media so anomalous to begin with: ‘cost’, and ‘message’.

Let’s take them one at a time, starting with the cost. What are the actual expenses involved in running a television station in Malta, anyway? And how do they square up with the financial situation of the political party which owns it?

Immediately, we run into our first problem. Nobody in Malta (apart from the political parties themselves) can actually answer those questions with regard to politically-owned stations… because neither Labour nor the PN has filed any media company accounts since 2010 and 2003/4 respectively: despite a law which obliges all companies to do so each year.

Not only that, but in 2012, the Broadcasting Authority confirmed that both NET and One TV had also failed to pay their broadcasting licences ‘for years’… at a time when the annual fee for a terrestrial local television station stood at €13,976, while the fee for radio was €11,646.

Once again, it is not clear how long this situation was allowed to persist, or whether these dues have already been (or are still in the process of being) paid… because the BA does not release such information, on the grounds of ‘commercial sensitivity’.

What we do know, however, is that the BA did not resort to any of the draconian measures – extending to garnishee orders – permitted by law to collect its dues: or at least, not when it came to collecting dues from the two party-owned stations.

Already, then, (and please note we haven’t even got to the ‘message’ part yet) both NET and ONE TV can be seen to be in breach of their licence conditions on at least two counts, without having had to face any discernible consequences.

And granted, this will probably not come across as an earth-shattering surprise: considering that the same Labour and PN haven’t paid their utility bills in years, either… and to the best of my knowledge, neither party has ever had their water or electricity cut off by ARMS Ltd (as has been known to happen to lesser mortals in similar circumstances, including yours truly.)

But this only confirms what is so rotten about our media landscape to begin with. Political media ownership is objectionable, not only because of its effects on actual media output… but also because it distorts the entire broadcasting market, creating an automatic non-level playing field for all other private sector competitors.

Nowhere is this imbalance more evident than in advertising. Once again, the actual figures are not available to us: the BA only issues a detailed annual report on audience ratings… but without any filed accounts, we can only guess whether the ratio between TV viewership and advertising revenue – which tends to be contiguous, in undistorted markets -  is proportional or not.

Nonetheless, there are indicators. Admittedly it was a long time ago: but in 2004, a report commissioned by the Broadcasting Authority found “significant disparities” between audience shares and the corresponding shares of advertising revenues for radio and TV stations.

This is how it was reported in The Malta Independent: “A station with an audience share of around 16 per cent manages to earn around 30 per cent of advertising revenues, while another station with double the audience share obtains only around 29 per cent of advertising revenues.”

The same story goes on to add: “Most people in the broadcasting industry privately point their finger at the political stations for taking such a large advertising share, but few dare say so in public…”

Well, that was 16 years ago: and not vey much has changed since then. Except, perhaps, that the political party now reaping all the benefits of being in government – including, it would seem, disproportionate increases in advertising revenue – happens to be Labour instead of PN.

But the distortion itself remains… as does the private finger-pointing at party stations, and the corresponding reluctance to ever complain about it in public.

And this brings us to the ‘message’ part. The traditional argument against political media ownership – and I know, because I’ve used it so often myself - is that political parties are, by definition, too inherently biased to fulfil the necessary ‘impartiality’ obligations associated with public broadcasting.

This is, of course, entirely true… and very easily confirmable just by watching any news bulletin on either NET or One.

But the real problem with political bias is that it also sustains this massively unfair distortion of the playing field: translating into a situation whereby companies and private individuals tend to advertise with political party stations for a whole range of different reasons… none of which has anything to do with any of the usual advertising considerations (e.g., ‘how many people will my advert be expected to reach, if I place it on this station, at that time-slot?”)

The most obvious reason would be to financially assist the party itself: in other words, as a form of token ‘party donation’. But it could just as easily be a thinly-disguised form of ‘insurance policy’ (if not outright ‘investment opportunity’)… in the sense that some companies make it a policy to take out advertising with both party stations, on the basis that one of them will one day be in government: so it’s safer to keep a foot in both camps.

Leaving aside that both those approaches arguably fall foul of yet another law in this country – the Party Financing Act – what they also have in common is that they make it impossible for any other private media house to actually compete.

Anyone else who intends to start up a private television or radio station (or both, as is the case with political media) would have to factor in anywhere up to around E26,000 per annum in licence fees alone. That’s before investing in a studio, buying (or renting) all the necessary equipment, paying employees, buying television rights, etc. (Note: to give an indication of how much it might all add up to in the end: in 2010 alone, PBS posted an annual expenditure of E2.7 million… which obviously excludes start-up costs.)

And then, once all that has been duly paid, you will have to face all the Constitutional obligations that are routinely ignored by political stations – with, it must be said, the full blessing of the BA – just to be able to compete for the slice of a very small advertising pie…

… against two other companies which: a) don’t have to pay their licence fees on time; b) don’t file their accounts; c) can rely on a steady stream of advertising revenue, without actually having to work for an audience share to match… and, in some cases; d) don’t even pay their employees’ salaries for months on end…

…all without ever having to face the consequences that would inevitably befall a private company in the same situation.

That, to me, is the real reason why political stations have to go; and you’ll notice that, when all is said and done… it doesn’t really have very much to do with ‘politics’ at all.