Germany's Very Public Battle Over Public TV

Private rivals complain that tax-financed networks are competing unfairly

It's Saturday night and millions of German couch potatoes are huddled around the warm glow of their television sets. For viewers tuning into one of Germany's top channels during prime time the menu includes: The Big Partnership Test, an advice show for couples; Under Suspicion, a detective show; the popular game show Who Will Be a Millionaire?; and The 100 Most Annoying German Hits, a weekly roast of pop music.

But where's the highbrow fare Germans are paying for? Under a decades old system, Germany levies a fee of $21 a month on every household with a TV. The resulting $7 billion a year funds the largest public broadcasting system in Europe, encompassing film production, 22 TV channels, and more than 50 radio stations. The British Broadcasting Corp., by comparison, got $5.2 billion from taxpayers in the latest fiscal year. But Germans increasingly wonder whether they're getting their money's worth. "In terms of substance there is hardly a difference anymore between the public and private stations," says Ursula Rogg, a Berlin school teacher.

It's an oft-heard complaint -- and one that highlights the failure of Germany's dual public and commercial TV system. When commercial stations first took to the airwaves in 1984, the hope was that advertising-driven TV would thrive side by side with publicly financed broadcasting. Instead, Germany's cash-rich public TV networks have been luring viewers from commercial stations by copying their lowbrow fare -- just as advertising revenues are emerging from years of decline. "ARD and ZDF increasingly show commercial programming in prime time and their cultural programs are shoved into slots late at night," says Georg Kofler, CEO of pay-TV channel Premiere, referring to the leading public broadcasters.

In fact, there is mounting concern inside and outside Germany that public broadcasters are being illegally subsidized in activities in which they directly compete with private players. A spokeswoman for the European Union competition watchdog con- firmed that Brussels is looking into the matter. Miriam Meckel, deputy minister for media affairs in the state of North Rhine-Westphalia, says the problem could be avoided if Germany's public networks followed the lead of the BBC and split into two divisions, one for public service programming and one for commercial. "The only reason they could have in refusing to do so must be that they have something to hide," Meckel says. That's a charge the public networks strenuously deny. "There is no activity that we are involved in that falls outside of our public service mission," says Carl-Eugen Eberle, head of the legal department at ZDF.


The stakes in this battle are ever higher. TV ad revenues fell 3.7% last year, to just under $5 billion, forcing commercial stations to cut costs and seek other sources of income. But there has been less belt-tightening at the public networks, which rely very little on advertising and sponsorship. A $1.15 hike has even been authorized in the monthly fees Germans must pay for 2005.

With their coffers brimming, the public networks can splurge on top talent. In November, ARD signed Harald Schmidt, Germany's David Letterman clone, who ditched commercial channel SAT.1 last year over a contract dispute. Industry insiders say ARD is paying Schmidt as much as $11.7 million a year to host a twice-a-week talk show.

The public networks are also pouring huge sums into sports programming. ARD and ZDF paid close to $326 million for the right to broadcast live up to 49 matches in the 2006 World Cup soccer championship, which Germany is hosting. That's three times the ad revenue that can be made in the three weeks of the games, says Guillaume de Posch, CEO of ProSiebenSat.1 Media. Premiere has filed a complaint with Brussels alleging that ARD and ZDF's use of the public-TV fees to purchase sporting rights constitutes an illegal subsidy under EU competition rules. It's now up to Brussels to level the playing field. zz

By William Boston in Berlin

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