Transparency of media ownership & funding
Transparency of media ownership and financing are crucial instruments of effective pluralism in a democratic society. A broad notion of media pluralism, among others, encompasses economic dimension that might have potential interference risk with the editorial and operational independence of the media outlets. Comprehensive picture of ownership and financial sources allows to evaluate the viability of the media market and understand to what extent political or commercial forces, including media owners and advertisers, influence editorial decision-making.
Council of Europe Recommendation CM/Rec(2017x)xx of the Committee of Ministers to member states on media pluralism and transparency of media ownership sets criteria for member states in order to ensure high levels of transparency with regard to the sources of financing of media editions and help increase media accountability. Council of Europe encourages member states to adopt and implement legislation that sets out enforceable disclosure of the following information:
- on the sources of income, including from State and other funding mechanisms and (State) advertising, of media outlets.
- Information on structural relationships or contractual cooperation with other media or advertising companies, political parties or the State, including in respect of State advertising.
Guidelines developed by the Council of Europe provides a set of recommendations to member states on how to guarantee access by the public to information about media by including relevant provisions in their domestic legislation:
- Guideline No. 1: Access by the public to information on the media: “It should be carried out in a way which respects the rights and legitimate interests of the persons or bodies subject to transparency requirements. Particular attention should be given to the need to reconcile the requirement of transparency with the principle of freedom of trade and industry as well as with the requirements of data protection, commercial secrecy, the confidentiality of the sources of information of the media and editorial secrecy”.
Due to the wide dissemination and impact of audiovisual programmes, audiovisual sector is a subject of a stronger regulations than other mediums. The Explanatory Report to the European Convention on Transfrontier Television Treaty emphasizes how important is to provide information about the broadcaster for everyone: “Because of the multiplication and diversification of programme services, on the one hand, and the transfrontier character of transmissions, on the other, it is important, both for States and viewers, to know who is responsible for what.”
Information disclosure requirements vary from country to country. This information basically includes details of shareholders and the size of their holdings in the media company, indirect or beneficial interests, political or other affiliations of the owners, interests held by the media organization in other companies, sources of revenue etc. Revenue figures are generally disclosed through annual reports, though not always identify specific revenue sources.
Requirements for the transparency is applicable to broadcast media alone in Georgia: amendments introduced to the Law on Broadcasting in 2011 bans offshore entities from owning holders of a broadcasting license or authorization; broadcasters are obliged to disclose their beneficial owners. Additional financial transparency requirements, introduced to the law in 2013, made compulsory for all broadcasters to file quarterly reports about their sources of financing, including a breakdown of revenues received from advertising, sponsorship, telemarketing and contributions from owners or any other person to Georgian National Communication Commission (GNCC). Quarterly financial reports are available at GNCC’s web-portal. Broadcasters also have to submit to the GNCC and publish on their official website annual report on the fulfillment of requirements of Georgian legislation, license conditions and Code of Conduct and sources of financing in the previous year. The report shall be enclosed with an auditor’s opinion. Broadcasters also have obligation to submit to the regulator information about their assets and liabilities as well amount of investments and the name of investors in the previous year.
Public Service Broadcaster funding models
In an increased competition media environment, caused by technological development, business models for commercial broadcasters, audiovisual content providers and the audiovisual advertising industry are changing. Against the background of media markets convergence, Council of Europe Parliamentary Assembly Recommendation 1878 (2009) on Funding of Public Service Broadcaster highlights importance to preserve Public service broadcasters as a valuable source of unbiased information and diverse political opinions, at the same time draws attention to the problem of declining public acceptance of funding public service broadcasting in light of increasing audiovisual content available through converging media.
There are five major models of funding of public service media, or combination of several stated models in the Western countries:
- equipment/receiving licence fees,
- universal household licence fees,
- income tax charges,
- parliamentary grants,
- hypothecated industry levies.
Actor transparency or revealing who stands behind the news is equally important in online and print editions. Certain countries have specific regulations for all types of media, in some countries it’s a matter of tradition and accountability without statutory preconditions.
The requirement to post information on ownership on a media outlet’s website or provide data in a public register is an effective mechanism to inform public who is behind media content. In Austria, Croatia, Luxembourg and Turkey reporting requirements applicable across all three media sectors. Austria introduced amendment to the Media Law in 2011 and made it possible to disclose directly to the public information on ownership of all types of media. In Croatia regulation obliges foreign and domestic media posting annually details on ownership in the Official Gazette, available online. This information concerns the size of shareholdings, beneficial and indirect interests and general financial and audience related data.
Great Britain is good example where public information on company ownership is easily accessible. The largest media corporations Guardian Media Group, Independent News and Media, Trinity Mirror, News International and others publish not only information on owners but financial revenues and detailed financial summary including on digital revenues.
Digital-born media funding models varies across countries and mainly are:
- advertisement based,
- subscription based,
- or combination of all several models.
Some digital-born news media are developing subscription models that includes different forms such as reader payment, including hard paywalls, metered paywalls, and paywalls to read whole articles rather than excerpts, exclusive services - a mobile app, access to a behind-the-scenes area on the website.
A donation-based and crowdfunding-based models solely rely on voluntary donations from organizations or individuals who support certain editorial policies and make contribution for a public good. One of the first in the crowdfunding was the Dutch website De Correspondent. In 2013 it raised more than €1 million from over 15,000 people in eight days by crowdfunding and since then it expanded to a reported 47,000 paying members.
Transparency of circulation. Transparency requirement for print media is not common legal practice. Some countries impose obligation to publish data on print media circulation and printing company. Constitution of the Italian Republic states that “the law may introduce general provisions for the disclosure of financial sources of periodical publications”. The Law on the Press and Other mass media of Latvia contains provision for print press to publish “size of the publication print run, the price, the quantity (printed sheet statistics) of the publication”.
Despite legal requirement under Montenegro Media Law to publish data on circulation of print media, Media Pluralism Monitor Country Report 2016 indicates lack of reliable verifiable data on media circulation and sold copies, since sanctioning provisions for noncompliance with transparency obligations exist only for electronic media. The same trend is observed in Croatia where Croatian Media Act imposes duty for print media to publish data on printed copies at a visible place. Due to lack of penalties, this provision has no effect in practice since general readership data is not available in Croatia like in Montenegro.
State subsides in print media. Subsidy system for print press is common practice in Europe. Public funding to print press is justified by the aim to prevent disappearance of newspapers, media plurality and diversity. Article XIX differentiates two types of subsidies:
- indirect public support in a form of preferential tax rates or tax exemption when all industry benefits from this rule;
- and direct subsidy through loan or cash transfer by the state to the qualified newspapers either with limited subscription and advertisement revenue or minority newspapers.
The system was first introduced by French government after the World War II with the aim to promote pluralism and access to wider spectrum of information sources. Print media subsidy programs are common in social welfare states like Austria, Norway, Sweden and Finland. Though indirect subsidy system in a form of VAT relief was developed in a countries such as Germany and United Kingdom where combination of liberal economic policy and strong press companies is exist.
Distribution of direct subsidies in European countries is usually regulated by legislation and enforced by independent government body. Direct subsidies mainly cover operational cost such as printing, circulation, distribution etc.
Article XIX’s recommendations on the state aid to print media includes following criteria for development of state policies in relevant field:
- Provision of state subsidies to print media should be based on a law;
- The law should have such objectives as a media pluralism and preservation of cultural and linguistic diversity;
- Direct or indirect subsidies under the law should be allocated in fair and neutral way. The law should be explicit in prohibiting eligibility of subsidies based on political content or editorial policy of a newspaper;
- Indirect subsidies should be available for all newspapers and magazines;
- Direct subsidies should be distributed by an independent body on the basis of fair and neutral criteria;
- The body distributing public funds should be accountable to parliament submitting a public annual report on dissemination of public funds;
- Print media outlets receiving public funds, regardless their legal form, should be subject of annual audit and make public their audit accounts;
- A newspaper should be able to appeal to court decisions on refusal direct subsidies.