Indirect and Direct Subsidies for Media: The European Experience

"Media organisations themselves have often portrayed state subsidies as contentious, if not overtly dangerous to the functioning of the market, to media autonomy and to freedom of speech itself."

This research report presents four models of direct media subsidies in Europe - from Serbia, Croatia, Sweden, and the European Union (EU) - and offers an overview of indirect subsidy in the form of reduced value-added tax (VAT) rates for newspapers, digital publications, and periodicals in EU countries and Serbia. The focus is, however, mainly on the experiences and methods of allocating selective direct media subsidies in each of the case studies in an effort to identify strategies for creating more viable public interest media. The research paper was presented at the National Media Viability and Investment Conference in Sierra Leone, which was organised by BBC Media Action as part of the Protecting Independent Media for Effective Development (PRIMED) programme. The conference brought together government, media organisations, industry leaders, and other stakeholders to explore public funding and advertising models that have been used to support media viability around the world and to create a national action plan to strengthen public interest media in Sierra Leone. (See Related Summaries, below, for all papers presented at the conference.)

In the paper, the authors argue that indirect media subsidies, such as tax breaks, risk endangering media pluralism because they enable large outlets to strengthen their market position, potentially at the expense of smaller players. Conversely, direct subsidies, such as grants, are instrumental in ensuring the survival of smaller media outlets that might otherwise be forced to close down.

Nevertheless, the rationale for allocating subsidies needs to be carefully addressed. Should states prioritise efforts to help beneficiaries stay in business, save jobs, and weather economic crises, or should subsidies be value-related - with a view to improving diversity or "greening news deserts"? It is these issues that are addressed in the report and illustrated through the following four case studies.

Serbia: generous public support and the threat of political parallelism In 2014, the Serbian Government mooted the idea of co-financing public interest content as part of an attempt to regulate a chaotic media scene and ensure media integrity. Under the new Law on Public Information and Media, local governments were offered a mechanism for allocating funding on an annual basis to media projects that serve the public interest. In addition to presenting clear arguments for financial sustainability and innovation, applicants need to define which groups will benefit from their activities. Proposals are assessed by commissions appointed by the local authorities, which must include independent media experts. In general, media professionals share a positive view of this model, although certain shortcomings related to selection criteria and transparency have been noted.

Croatia: state aid as a last resort for media State media subsidies in Croatia are distributed by the Electronic Media Diversity and Pluralism Incentive Fund, which finances the production of audio-visual and electronic content in both non-profit and commercial media. Criteria used for evaluating projects include innovation, cultural development, and public interest goals. The Fund derives its income from the broadcast licence fee (representing 3% of the total amount collected).

In addition, the Council for Electronic Media offers financial aid to non-profit media (particularly online), while the Ministry of Finance and the Croatian Competition Agency contribute state aid to TV and radio programmes, both commercial and non-profit. Two types of subsidies are distributed, in accordance with EU competition rules, with specific allocations for non-profit media. However, since these funds are quite limited, the authors of the report suggest that a more targeted approach towards this sector would be advisable.

Sweden: public support for general news Of the five direct subsidies available to Swedish media, two (amounting to approximately half of the available budget) are limited to the production and distribution of newspaper content. They are aimed at supporting small outlets and at maintaining a pluralism of information and ideas.

Funds are allocated by a politically neutral Media Subsidies Board that "pays particular attention to the extent to which planned interventions can be expected to strengthen democracy by promoting public access to independent news coverage". Furthermore, the Institute for Media Studies in Stockholm tracks the "survival" of news media in local communities and, as a result, public subsidies are also aimed at addressing "blind spots" in news provision.

European Union: a commitment to transparency and details The European Commission's Education and Culture Executive Agency channels grants through Creative Europe, which operates highly structured and complex evaluation procedures. Key criteria include diversity, relevance, and innovation, as well as an analysis of already existing initiatives.

Nevertheless, while working towards an impression of "objective" evaluation, EU funding schemes retain sufficient flexibility to make reasonable adjustments that reflect the scale, focus, and strategy of the media outlets they support. The evaluation procedures were developed according to new principles of public management and associated ideals of efficiency "imported" from the business arena.

Editor's note: The above summary is based on the one-page summary document [PDF] submitted by the authors.

Click here for more information (including a video) on the Sierra Leone National Media Viability and Investment Conference.