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Political umbrella for major media in return for support for possible early elections

07 August 2014 / 20:08:56  GRReporter
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Anastasia Balezdrova

After stormy debates and public reactions the second summer session of the Greek Parliament adopted with a majority an amendment to the law on the media and advertising market. Shortly before the vote, a second amendment was submitted that modified the control over the state radio and television broadcasters.

The legal text facilitates the consolidation in the Greek media market through the merger of media, but analysts say this does not seek its recovery but aims to save from bankruptcy mainstream media that are friendly to the government. Behind the changes in the billing cost of advertising they see the willingness of the government to direct to specific media the funds planned for advertising.

GRReporter turned for comment to Yiannis Triantafyllou, marketing director of "To atomo" consulting company who has over 20 years of experience as a member of the management of companies operating in the field of technology in Greece and other European countries. His connection with marketing is due to his mathematical education and the written communication that has evolved from a hobby into a profession. During his student years, he worked as a journalist and since 1994, he has been engaged in content engineering and marketing. The activity of his company is to provide to Greek and international companies specialised advice and services in areas such as inbound marketing, content engineering and business development.

Is there a need for consolidation of the Greek media market?

Yes, at the present time it is necessary for two big media groups to merge, as this may be the only option for them to avoid closure. The issue of course is not just the merger. In order for the merger to be functional, banks have to write off the biggest part of the loans of the two groups (about 2/3 of the total and we are talking about many millions of euro!), a process which cannot and should not be done without transparency, as the Greek banks have been operating under state control after the crisis and have been recapitalised with money of European citizens.

From then on, the option for two companies to merge operations cannot and should not be a legislative decision of a democratic government, as governments should simply check that the rules of fair competition are observed and that the merged company will not obtain a monopoly position in the market. That is exactly what the current Greek government is not willing to do...

What traps does this set for the other media? Do you think that the procedures will be completed in the right way?

If the merger takes place on business terms and under the proper monitoring by the Competition Commission, then there can be no traps. In our case however, all things indicate that the merger is based on political terms, with a mind on protection of the owners of the two groups in order for them to continue to support the same political interests with which they have been intertwined for decades. Therefore, the trap for them would be to have unpredictable reactions either from the European Commission or from the citizens, their audience.

What do you think the consequences of the creation of large media groups would be for society and freedom of speech?

When the media market is free and properly operating, it is healthy to have big media organizations (e.g. BBC, CNN etc.) that are subject to business rules, i.e. to be funded solely through their activity and not through political intertwining. At the same time, governments must ensure that there is no concentration of the market in the hands of persons or companies and, by law, they must give to all, even to smaller groups or companies, the chance to compete. Otherwise, we have monopolies or oligopolies that "guarantee" nothing but biased information in favour of the interests they serve.

Do you consider as correct the decision to cancel the obligation of public companies to publish their annual financial statements in the regional press?

The proposed amendment was in the right direction, regardless of the fact that the government finally yielded to pressure from local MPs and withdrew it. All public announcements and procurement calls have recently become public through the websites of the government, which is both more functional and more economical. Maintaining the mandatory publication in local or regional newspapers is intervention in the market and constitutes State Aid to private entrepreneurs, which is prohibited by EU law. Local media have to do real business to earn the capital they need to survive and profit, and they should not count on the government sharing citizens’ taxes!

Why has not the "aggeliosimo" tax been completely eliminated? Who benefits from its retention?

''Αggeliosimo'' is a special tax calculated as 20% of the invoice value of print, radio and television advertising and it has been in force for many years. Accrued amounts go to the insurance/pension fund of the members of the Journalists' Unions of Athens and Thessaloniki, in lieu of the employers' contribution for insurance and pension, which is not paid by the owners of media companies. It is therefore a tax in benefit of a third party, a kind of tax that the government has committed to repeal as of 01.01.2015 and is afraid to do so, as journalists and publishers threaten to oppose them - the former for ending up with a pension fund with no resources and the latter because they will be obliged to pay an employer's contribution as every regular employer. Note that the beneficiaries are only the journalists who are members of the two unions, i.e. a small part of all those working as journalists.

Would you compare the media markets in Greece and Bulgaria based on your experience in both countries?

Allow me not to try to. I would be wrong either to my country or to yours and I do not want to be so. It has been years since I was last active in Bulgaria (I had business activities in Bulgaria between 2004 and 2010) and I do not have an updated and complete picture, although I follow various notable Bulgarian internet sites on a regular basis.

How would you comment on the way in which the changes were introduced, namely with an amendment to a bill on a totally different topic, at the last moment and without any prior discussion? Do you think that some forethought lies behind this?

Unfortunately, this has been a generic practice of our government in recent years. The only extremely urgent issue in these amendments (two were related to the Media) on the one hand was the pressure on the government to bail out with taxpayers’ money the two big, friendly media groups that are intertwined with politicians, even through dissolving the advertising market (the first amendment) and the government's decision to control the state radio-television network to the full extent and to the benefit of the ruling parties on the other (the second amendment). Now the Minister will appoint 7 of the 10 members of the supervisory board by a simple decision, whereas an independent panel did this before through CVs, interviews etc. There surely is expediency behind these changes and it is no other than the fact that the government is preparing for elections at some convenient time in between October 2014 and February 2015 since they cannot form a majority in parliament (180 votes) to elect the President of Democracy next March.

And since many will talk about the flow of "black" money between politicians, media groups and advertising companies, that has to be addressed, we all agree to this in principle, but the black money laundering can be addressed with more transparency and fewer intertwining points, aka less state regulation in the market and less "Soviet-style" laws. With a healthy market liberalization and not with overregulation of everything and exhaustive interference in everyday transactions, as this requires a huge bureaucratic control mechanism, completely useless for a modern society. With the sole exception that such a mechanism would justify sinecure positions for various civil servants loyal to the ruling parties and, of course, for the proportionate union bosses...

How would you comment on the changes in the advertising market?

What is provocative here is that the government intervenes in the market and prohibits something that applies worldwide, namely the functioning of media shops as the administrator of the ad spending of the advertisers that choose to take advantage of their services. Now, advertisers should enter only in direct negotiations and agreement with the media company and will only be invoiced directly, and not through any kind of intermediates. As for media shops, they can have only an advisory role to facilitate customer finding for the media as well as the collection of invoiced services, their remuneration not exceeding a total of 4%! Actually this means that they will become the employees that media would like to have but do not want to employ and pay of course!

Until recently, an advertiser in the Greek market could negotiate either directly with the medium (print, radio, television) or through a third party (advertising agency, media shop). Media shops emerged as a market need for advertisement options at a reasonable cost, at times when the media wanted to charge more and more to advertisers. Media shops always belonged to large advertising groups or partnerships of advertising groups and immediately opened the market to all companies that wanted their services.

This was actually a self-regulation of the market in order to avoid sharing the spending on advertising between 5-6 companies. Their job was to ensure greater discounts and favourable payment methods for customers of advertising agencies while increasing the volume and the number of companies that advertised in the media. To understand the size, to make a TV ad through direct negotiations with a nationwide television medium, an advertiser should have a budget of at least 250,000 euro whereas, through a media shop, even companies with a budget of 50,000 euro or less could have access to TV advertisements, even in prime time. So at the beginning of each year, media shops calculated the budget of all their customers and traded better prices for ads with the media. That was, by the way, the reason for which media shops were created. Now that the trading and pricing will be done directly between the media and the advertiser this facility will seize. So, for example, small advertisers will not have power and, of course, when we talk about government advertising, we talk about an increasing lack of transparency between media and advertisers...

As for the remuneration of media shops one part of it was always covered by the advertiser, as a total management fee for the promotional programme and the other part by the media through rebates in kind (advertising time) that did not exceed a value of 9.9% of the total invoiced budget. This maximum rebate was legislated and operative after 1995 (!) as well as the obligation of the media to have a copy of the invoice issued to the media shop and to the advertiser!

At the same time of course, media shops and advertising companies assumed the risk of paying (prepaying many times!) the media for the advertising time purchased and the risk of financing their client’s postponed payments, even regarding taxes! In this sense, one can say that the new law favours the advertising market, and this would have been so if the state simply did its job, i.e. if it checked that the rules on trade were respected by all. Here, however, the state simply intervenes and abolishes...

As I said before, if there was non-transparency somewhere it was in the way the state itself managed its money spent on advertising. The media shop was required to study a number of performance data for the media (e.g. circulation or viewership) and accordingly propose. However this was not the case when the state itself made the deal: we saw in the past that a newspaper with a circulation of less than 2,000 copies per day (which mainly went to the offices of public corporations and organizations, i.e. again the state) was rewarded with government advertising amounting to several million euro when, according to market rules, it should have been excluded from any spending!

What will be the next day for the market? It is still early to predict, however this law will surely lead to further job losses in the advertising industry, in disciplines that are now prohibited by the state. There is a transitional period of one year for the law enforcement but this will hardly change anything. It is now time, as stated by the president of the Association of Advertising Agencies in a letter to its members, for the advertising market to learn to live with this decision and for the advertising agencies to focus on their core business and shine through it.

Perhaps this law is also a golden opportunity for marketers to accelerate the shift of advertising budgets from traditional media, whose effectiveness is difficult to measure, to digital media (internet, social media, personalised advertising) which is cheaper for the advertisers, more efficient and, most importantly, directly measurable in terms of their results!


Tags: MediaLawMergerMedia groupsPolitical interestsEarly electionsAdvertisinng market
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