A European comparison of innovation
policies to trigger innovation in
journalism and news media

Prof. Dr. Hans van Kranenburg (editor)

1

A European comparison of innovation
policies to trigger innovation in
journalism and news media

Commissioned and funded by
Het Stimuleringsfonds voor de Journalistiek

Written & Edited by
Prof. dr. Hans van Kranenburg
Radboud University Nijmegen
Institute for Management Research
Nijmegen School of Management
The Netherlands

Issued
January 2015

© Radboud University & Het Stimuleringsfonds voor de Journalistiek

2

Content
Foreword

4

1. Introduction

6

2. Market Structure and Innovation Policies in Belgium

12

3. Market Structure and Innovation Policies in Finland

20

4. Market Structure and Innovation Policies in Germany

33

5. Market Structure and Innovation Policies in Italy

43

6. Market Structure and Innovation Policies in Portugal

54

7. Market Structure and Innovation Policies in Spain

65

8. Market Structure and Innovation Policies in Switzerland

80

9. Market Structure and Innovation Policies in the Netherlands

90

10. Market Structure and Innovation Policies in the

100

United Kingdom
11. Summary and Best Practices
Appendix Concentration Measures

107
117

3

Foreword
In the last decade, the Netherlands, like the rest of Europe, has witnessed a transformation in the
news media landscape. New techniques, new approaches, new technologies, and new
competitors have upset the old order and changed the rules of the game. Policies have been
established and implemented by governments, institutions and companies to cope with the
developments, the new demands and requirements. More and more countries have started to
formulate and implement policies that support innovation. The Dutch government has also
developed a policy to stimulate innovation in journalism and news media. Given the fact that
these policies are new, their effects on innovations are generally still unknown. An evaluation of
the innovation policies can increase insight into their efficacy and possibly reveal areas of
improvement so that the policies can be adapted to become more effective. Comparing the
formulation and implementation of policies in various countries is an established approach to
identifying best policy practices. Although emulating the success stories and practices of other
countries is not easy, such a comparison can help us determine what the best practices are to
support innovation in a rapidly changing news media landscape1.
The Dutch House of Representatives (Parliament in the Netherlands) requested this report. They
called for an evaluation and comparison of the Dutch innovation policies with those of other
countries in order to determine which practices best support innovation in Europe.
Het Stimuleringsfonds voor de Journalistiek -- the Innovation Fund for Journalism -commissioned and funded this project. The Fund focuses on supporting innovative activities of
news media firms, in particular for smaller firms and start-ups as these organizations generally
do not have the required expertise and resources for innovation development. Its focus is also
increasingly on giving advice and organising workshops and events that aim to inspire people
and bring different experts together.
Special thanks go to Rene van Zanten (General Director of Innovation Fund for Journalism) and
Rick van Dijk (Operational Director of Innovation Fund for Journalism) for this assignment.
The assignment was to gain knowledge of the best practices concerning (cross) ownership and
innovation policies on the success on innovations in journalism and news media. This research
focussed on nine social democratic countries in Europe.
This report was prepared by a team of media scholars across Europe under the leadership of
Hans van Kranenburg (Radboud University Nijmegen, the Netherlands). Contributors include
Cinzia Dal Zotto (University of Neuchatel, Switzerland), Mercedes Medina, Francisco Javier
Pérez-Latre, Alfonso Sánchez-Tabernero, Carolina Díaz-Espina (University of Navarra, Spain),
Mike Friedrichsen (Stuttgart Media University, Germany), Mikko Grönlund (University of
1

The World Bank (2010). Innovation Policy: A Guide for Developing Countries, Washington, D.C.

4

Turku, Finland), Paulo Faustino (Porto University and Centre of Investigation in Media &
Journalism - CIMJ, Portugal), Robert Picard (University of Oxford, United Kingdom), Tom
Björkroth (Finnish Competition and Consumer Authority) and Tom Evens (Ghent University,
Belgium). I am very grateful for their participation and contributions.
This report benefited from the comments of several reviewers. I would also like to thank Angela
Marberg for her excellent editing comments on an earlier version of this report. I am grateful for
their input and remarks which improved the quality of the report.
The main focus of this explorative report is on the evolution of structures of news media
markets, media (cross-) ownership and innovation policies and programs to promote innovation
in journalism and news media in various European countries, with an emphasis on the
Netherlands and neighboring countries, a group of Southern European countries, and Finland.
Given the limited time available, we were not able to include more countries into this project or
to give a complete overview of the efficacy of the innovation policies. Thus, the report presents
an overview of innovation policies in which governments support the innovative ideas and
activities of incumbent companies, entrepreneurs and initiators by providing financial and other
support; by removing regulatory, institutional, or competitive obstacles to innovation; and by
strengthening the knowledge base through investment in education and research.
A report on how innovation policies can stimulate breakthroughs, new technologies, and
discovery in journalism and news media is important and timely. This research will promote
discussion and foster critical thinking in business, government, society and, of course, the news
media industry about what needs to be done to stimulate innovation in the field. We hope that
this research will contribute to the successful transformation of the news media industry to one
that is enduring and sustainable.

Prof. dr. Hans van Kranenburg

27th of January 2015

Project leader
Radboud University Nijmegen, The Netherlands

5

Chapter 1
Introduction
1.1

Objective

Globalization, deregulation, technological innovation and the convergence of previously
separated industries such as media, entertainment, information, and consumer electronics
industries, have changed the media landscape into a turbulent environment. As a consequence of
these developments, many media firms are experiencing severe challenges as content
proliferates, audience behavior changes, advertising revenue declines, and new competitors
emerge. Digital technology is eroding the benefits of scale to media companies, in particular
traditional news media companies: as print circulation declines and cost savings generated from
centralized production and distribution decline.
Today, innovation is the buzzword in the news media industry. Strategies and initiatives are
formulated and implemented by institutions and companies to cope with the developments, the
new demands and requirements in the news media industry. Governments are also developing
policies to support innovation activities. In general, they are developing deregulation policies
(such as removing cross ownership restrictions) and innovation policies. Although government
policies to stimulate innovation in journalism and news media are not new, the policies and the
different types of support offered to the news media are changing, particularly in the socialdemocratic countries in Europe (Plessing, 2014)2. Their innovation policies and support systems
are going through a process of rethinking and transformation.
Given the fact that the present formulated and implemented innovation policies are relatively
new, the effects of these policies on innovative activities are generally still unknown. An
evaluation of these policies can increase the insights into the efficacy and possibly reveal areas
of improvement so that the policies can be adapted to become more effective. A comparison
between innovation policies formulated and implemented in various countries is an established
approach to learn from identifying best policy practices.

The objective of this research is to gain knowledge of the best practices of innovation
policies to trigger innovation in journalism and news media.

2

Plessing, J. (2014). Developing Media Diversity: Baseline Study of State Support for Independent Print Media in
West Africa, South America and Scandinavia, Association of Independent Publishers.

6

In order to understand the contemporary media mix and innovative activities in the different
European countries, it is important to have insight into the structure of the news media markets,
the different types of policies and the effects of these policies on the structure and innovative
activities. Therefore, the main focus of this research report is on the evolution of structures of
news media markets, and innovation policies and programs and their effect on innovation in
journalism and news media in various European countries, with an emphasis on the neighboring
countries of the Netherlands, a group of Southern European countries, Switzerland given its
multi-linguistic (German, Italian and French) regions, and Finland. Switzerland is selected
because it is linguistically connected to the group of Western-European and Southern European
countries. While Finland falls outside the geographic scope of this study, it was also included
because it is in the process of a societal shift from a ‘social contract’ towards a market-based
economy (Nieminen, Nordenstreng, Harjuniemi, 2013; Plessing, 2014).3
Given the limited time available, we were not able to include more countries into this project or
to give a complete overview of the efficacy of the innovation policies. This research is mainly
based on a literature review and desk research, with a limited number of supplementing
interviews, and does not claim to give a complete overview.
The media, in particular the news media, has a strong impact on public opinion and knowledge
creation and diffusion. The news media presents and analyzes issues and sets the public agenda.
Its ability to transfer issues of importance from its own agendas to the public agenda makes it
powerful and thus essential in assessing news media influence on the business community and on
opinion formation and knowledge diffusion. Sometimes entertainment and sports media also
place issues, in particular local news content, on the public agenda, but this is not part of their
main function. In this study, we therefore exclude entertainment and sports media.
The development of the news media landscape is not only exclusively based on economic
principles but also on social, cultural, political and democratic principles. Many companies
operating in the media industry provide news and information. However, ‘news and information
is not only a market-based good. It is also a public good and fundamental to ensuring that the
information needs of communities are met in democratic societies’ (Plessing, 2014: 9)4. Due to
the unique character of news and information, it is generally a challenge to sell news and
information as a profitable business activity. As Picard (2013: 49) pointed out, ‘The fundamental
problem for news providers is that news itself has never been financially viable as a marketbased good. It has always been primarily financed by arrangements based on income derived

3

Nieminen, H., Nordenstreng, K. Harjuniemi, T. (2013). Finland: The Rise and Fall of a Democratic Subsidy
Scheme, in Murschetz, P. (ed.), State Aid for Newspapers: Theories, Cases, Actions. Springer. Plessing, J. (2014).
Developing Media Diversity: Baseline Study of State Support for Independent Print Media in West Africa, South
America and Scandinavia, Association of Independent Publishers.
4
Plessing, J. (2014). Developing Media Diversity: Baseline Study of State Support for Independent Print Media in
West Africa, South America and Scandinavia, Association of Independent Publishers.

7

from sources other than selling news to consumers’5. This explains why governments intervene
in the news media industry to protect media diversity and societal access to news and
information. In the past, the development of the news media markets and the interventions of the
government in these markets have generally been based on normative motives such as failure of
the market mechanism (perceived threats to media plurality and diversity), protection of culture
or minority groups in the society. Due to changing habits, needs and expectations, digitalization,
a further increase in the number of new alternative media sources, and the reduction of budget
allocated to public organizations such as broadcasters, the role of the traditional news media has
changed and will change further in the future.

1.2

What is an Innovation?

Over the past 50 years, and especially in the last decade, media firms have been influenced by
and have struggled with technological innovations that changed and continue to change markets
by introducing new types of media which alter audience and advertiser behaviours as well as
internal organizational processes. Media rarely have in-house research and development (R&D)
departments or include these functions in their budgets. On the contrary, they have traditionally
relied upon suppliers of technology – such as press and studio equipment manufacturers, editing
system suppliers, telecommunications firms – to conduct R&D, and come up with new ideas to
stimulate the creation of adequate new media content. This behaviour partly results from the
nature of media products (Dal Zotto and Kranenburg, 2008: xvi-ii)6. Due to innovations, the
nature of media products is changing7. Not only is the nature of the products changing, but also
the processes of media production, distribution, ownership and financing are changing as well.
Even our ideas of media are changing. All these changes are related to innovation, because
innovation is about change.
However, what people understand by the term innovation varies and is often confused with
invention (Tidd, Bessant, and Pavitt, 2005)8. Formulating an innovation policy can therefore
become problematic. What do we understand by innovation? In its broadest sense, the term
comes from the Latin ‘innovare’, meaning ‘to make something new’. According to Freeman
(1982), innovation can be defined as a process of turning an opportunity into new ideas and of

5

Picard, R. (2013). State support for news. Why Subsidies? Why now? What kinds?, in Murschetz, P. (ed.) State aid
for newspapers: Theories, Cases, Actions. Springer.
6
Dal Zotto, C. and Kranenburg, van H. (2008). Introduction: Innovation and Innovation Management, in Dal Zotto,
C. and Kranenburg, van H. (ed.). Management and Innovation in the Media Industry. Edward Elgar Publishing.
7

Storsul, T. and Krumsvik, A.H. (2013). Media innovations: A multidisciplinary study of change. Publisher:
Nordicomm.
8

Tidd, J., Bessant, H. and Pavitt, K. (2005). Managing Innovation: Integrating Technological, Market and
Organizational Change, 3rd edition, Chichester: John Wiley and Sons.

8

putting these into widely used practice9. Or as the famous economist Schumpeter (1950) pointed
out, innovations emerge from a process of ‘creative destruction’ constituted by a constant search
to create something new which simultaneously destroys the old rules and establishes new ones,
all driven by the search for new sources of profits10. Innovation processes can therefore be
distinguished in three phases: invention, innovation and imitation. An invention is the original
discovery of technological or social improvements. Within the innovation phase an invention
develops into an economically valuable product (Warnecke, 2003)11. If the innovation turns out
to be successful during the diffusion phase, other firms will try to create and market different
and/or improved versions of that innovation, which can then be referred to as imitations (Dal
Zotto and Kranenburg, 2008: p. ix)12.
Furthermore, different forms of innovation can be defined. We can identify five main forms: (a)
product innovations; (b) market innovations; (c) process innovations; (d) structural innovations;
and (e) social innovations (Wahren, 2004)13. The first two forms are externally oriented, while
the other three primarily refer to the internal organization of a firm. Of course, these forms are all
related to each other: product and market innovations cannot be realized without process
innovations; process innovations on the other hand require the development of structural
innovations, while social innovations – by improving working conditions – might have external
effects such as an improved customer orientation or a higher flexibility. As innovations are
generated within a social process driven by economic interests (Schumpeter, 1950)14, this
interdependence between different innovation forms is evident as it is the complexity of
innovation as a phenomenon (Dal Zotto and Kranenburg, 2008) 15.

1.3

Innovation Policy

Innovation policy can be defined as a policy that comprises all combined actions that are
undertaken by government and public organizations that influence innovation processes (Borrás

9

Freeman, C. (1982). The Economics of Industrial Innovation, 2nd edition, London: Frances Pinter .

10

Schumpeter, J.A. (1950), Capitalism, Socialism, and Democracy, 3rd ed., New York: Harper.

11

Warnecke, H-J. (2003). Innovation in Technik und Gesellschaft, in: Warnecke H-J. und Bullinger, H-J. (eds),
Künststück Innovation: Praxisbeispiele aus der Fraunhofer-Gesellschaft, Berlin und Heidelberg: Springer Verlag,
pp. 1–10.

12

Dal Zotto, C. and Kranenburg, van H. (2008). Introduction: Innovation and Innovation Management, in Dal Zotto,
C. and Kranenburg, van H. (ed.). Management and Innovation in the Media Industry, Edward Elgar Publishing.
13
Wahren, H-K. (2004), Erfolgsfaktor Innovation, Berlin und Heidelberg: Springer Verlag.
14

Schumpeter, J.A. (1950), Capitalism, Socialism, and Democracy, 3rd ed., New York: Harper.

15

Dal Zotto, C. and Kranenburg, van H. (2008). Introduction: Innovation and Innovation Management, in Dal Zotto,
C. and Kranenburg, van H. (ed.). Management and Innovation in the Media Industry. Edward Elgar Publishing.

9

and Edquist, 2013)16. The formulation of an innovation policy includes specifying ultimate
objectives, translated into direct objectives, These objectives are specified on the basis of the
identified problems from a policy point of view that are not solved by companies. In general,
determining innovation policy objectives involves a complex political process (Borrás and
Edquist, 2013) 17. The choice of policy instruments is also part of the formulation of the
innovation policy. These instruments are used as tools to influence innovation processes and are
not intended to influence the ultimate objectives in an immediate sense. The instruments are
selected to achieve the direct innovation objectives which are derived from the ultimate
objectives. In general, the instruments can be grouped into three categories (Bemelmans-Videc,
Rist and Vedung, 2003)18.
1. Regulatory instruments;
2. Economic and financial instruments;
3. Soft instruments.
Regulatory instruments use legal tools for the regulation of social and market transaction. These
regulatory tools (laws, rules, directives etc.) are formal and obligatory in nature. In other words,
they set boundaries of what is allowed and what is not allowed. Examples of regulatory
instruments are the protection of intellectual property rights and the regulation of research and
higher education organizations. Competition policy regulations such as cross-ownership
constraints are also included in this category. For many years, cross-ownership was restricted in
the news media industry in many European countries. Because many media markets are
undergoing rapid technological and structural changes that are blurring boundaries, the crossownership restrictions are gradually diminishing or have already been abolished in European
countries. However, the relationship between media cross-ownership and anti-competitive
behavior of firms is not obvious. In the literature, we find no convincing evidence that group
ownership confers market power (see e.g. Kranenburg, 2001)19. If increased concentration or
group ownership have come about because of the superior efficiency of firms that have become
large, then an anti-competitive policy courts the danger of reducing efficiency. The reduction in
efficiency is caused either by discouraging innovative activities of firms or by shifting output to
smaller, less efficient firms (Demzetz, 1973)20. Hence, the removal of cross-ownership
constraints can foster innovative activities in the news media industry.

16

Borrás, S and Edquist, C. (2013). The Choice of Innovation Policy Instruments. Technological Forecasting and
Social Change, 80(8), p.1513-1522.
17
Borrás, S and Edquist, C. (2013). The Choice of Innovation Policy Instruments. Technological Forecasting and
Social Change, 80(8), p.1513-1522.
18
Bemelmans-Videc, M.L., Rist, R.C., and Vedung, E. (2003). Carrots, Sticks & Sermons: Policy Instruments &
Their Evaluation, Transaction, London.
19
Kranenburg, van H. (2001). Economic Effects of Consolidations of Publishers and Newspapers in the
Netherlands. Journal of Media Economics, 14(2), p.61-76.
20
Demsetz, H. (1973). Industry structure, market rivalry, and public policy. Journal of Law and Economics, 16, p.1–
9.

10

The second group of policy instruments, economic and financial, provide specific incentives or
disincentives and support specific social and economic activities. These instruments are used
extensively in traditional innovation policies. Examples of economic incentive instruments are
grants, subsidies, reduced interest loans and loan guarantees. Instruments that discourage and
restrain activities include taxes, charges and fees.
The third category is soft instruments. These instruments are characterized by being voluntary
and non-coercive. These instruments are diverse, but are generally based on persuasion, on the
mutual exchange of information among actors, and on less hierarchical forms of cooperation
between the public and the private actors (Borrás and Edquist, 2013: 1516) 21. Examples of these
instruments are codes of conduct, recommendations, and public and private partnerships.
In general, innovation policies contain a mixture of instruments from the three main categories.
The choice of instruments used to achieve particular goals can vary, even when governments and
public organizations define similar goals. When similar instruments are chosen to promote
innovation, there will still be substantial differences in how the instruments are applied, due in
part to the social, political, economic and organizational context in which the instruments are
implemented.

1.4

Report Structure

The structure of this report is as follows: each chapter presents an overview of the evolution of
structures of news media markets, the media (cross-) ownership policies and the formulated and
implemented innovation policies and programs to trigger innovation activities in the news media
industry. Each chapter concludes with a section about lessons learned. The final chapter of this
report presents a summary and the overall best practices.

21

Borrás, S and Edquist, C. (2013). The Choice of Innovation Policy Instruments. Technological Forecasting and
Social Change, 80(8), p.1513-1522.

11

Chapter 2
Market Structure and Innovation Policies in
Belgium
By
Tom Evens (Ghent University, Belgium)

2.1.

Market structure and media ownership

This chapter focuses on media (cross-)ownership structures, media innovation policies and their
impact on innovations in journalism and media products and services in Belgium. Thanks to
constitutional reform, Belgium hosts three regional communities responsible for, among other
things, media, culture and innovation. Being a federal state, media regulations and innovation
policies were transferred to the Flemish, French and German-speaking Community. As a result
of different languages and diverging media policies, both media landscapes are separated and
marked by different media groups, ownership structures, competitive dynamics and innovation
stimuli. Hence, it is difficult to speak about a single Belgian media market or a single
government approach to media ownership and innovation policy.
Although media markets both in the Flemish and French Community are characterised by a
relatively wide variety of different media products and services available to the public, control
and ownership of these media is concentrated into the hands of just a limited number of media
groups. Most media markets can be described as oligopolies, with only a small number of media
groups controlling the majority of the market either in terms of market shares or revenues.
Because media businesses are trying to diversify their revenue structure, they become
increasingly involved in the value chain of other media sectors. Driven by a strategy to spread
popular brands to media consumers via a multi-platform approach, Belgian media groups show
an increasing tendency towards media (cross-)ownership with single businesses controlling
activities in broadcast and cable television, radio, newspapers, magazines and/or online media.
The following sections attempt to provide an overview of the most important media markets and
an evolution of media (cross-)ownership in the Dutch-language and French-language media
market.

2.1.1. Newspapers
Both the markets of the Dutch-language and French-language newspapers are highly
concentrated. Over the years, independent newspapers were acquired by large publishers that
12

have become profitable businesses in the Dutch-language and French-language media markets,
not least thanks to their stakes in audiovisual media. Starting from the 1950s, this consolidation
wave is still going on these days. In June 2013, Corelio and Concentra announced that they will
bring their newspaper and digital activities together in a joint venture called Het Mediahuis,
which will bring the Flemish newspaper industry into a duopoly situation. According to Table
2.1, Het Mediahuis is now the biggest player in the Flemish newspaper industry with a 58.7%
market share. De Persgroep controls the rest of the Dutch-language newspaper market. In the
French-language market, Rossel is the market leader with 52.3% market share before IPM
(24.2%) and Vers l’Avenir (23.5%, recently sold by Corelio to cable operator Tecteo).

Table 2.1: Evolution market shares newspapers (source: http://www.cim.be)
Newspapers
Flemish Community
De Persgroep
Corelio
Concentra

French Community
Rossel
IPM
Tecteo

2007

2013

Het Laatste Nieuws, De Morgen, De Tijd
40.3% 41.3%
De Standaard, Het Nieuwsblad
38.1%
De Gazet van Antwerpen, Het Belang van 21.6% 58.7%
Limburg

Le Soir, Sud Presse, L’Echo
La Libre Belgique, La Dernière Heure
Vers l’Avenir

50.9% 52.3%
28.4% 24.2%
20.8% 23.5%

Such duopolistic market structure makes it virtually impossible to launch new titles; all new
ventures and initiatives failed since the 1950s, except for the success of financial newspaper De
Tijd (°1968) and the free daily Metro (°2000). Table 2 shows the impact of media concentration
on the newspaper markets in Belgium. Between 1950 and 2014, 27 newspapers ceased
operations and disappeared as a separate title and the number of newspaper publishers shrunk
from 34 to 5. The data tend to suggest that the enduring consolidation and corporate synergies
have decreased the availability of titles and, hence, negatively affected pluralism and stifled
entrepreneurship in the newspaper markets. The limited scale of the regional markets (6.5
million and 4.5 million Dutch and French speaker respectively) and the challenges posed by
digitisation (e.g., digital editions, free online substitutes) is often used as an explanation for the
on-going consolidation in the newspaper market. This may be true for the French-language
market which faced a large decline in sales figures between 1999 and 2013 (minus 32%), but the
Dutch-language market experienced a relative stagnation (minus 2.9%) in the same period.

13

Table 2.2: Evolution daily newspaper titles and groups
(based on De Bens & Raeymaeckers, 2010)

1950
1980
2000
2014

Flanders
Titles
18
12
10
9

Groups
14
7
4
2

Wallonia
Titles
30
22
14
12

Groups
20
10
5
3

Belgium
Titles
48
34
24
21

Groups
34
17
9
5

2.1.2. Television
At both sides of the language border, TV broadcasting is tightly controlled by a small number of
groups. The Dutch-language market is highly concentrated with the three biggest groups
controlling more than 80% of the market (see Table 2.3). Over the years, their dominance has
increased, even with the further fragmentation of the audience, thanks to the launch of digital
spin-off channels. Public service broadcaster VRT takes the lead, followed by commercial
broadcasters Medialaan (jointly owned by De Persgroep and Roularta) and SBS Belgium (jointly
owned by Corelio and Sanoma). In contrast, the French-language market is dominated by
commercial broadcasters RTL and TF1 – public service broadcaster RTBF is the second largest
operator in the market. Similar to the Dutch-language market, the French-language market
structure is overly complex characterised by a high level of industry concentration and media
cross-ownership. Newspaper publishers are highly involved in audiovisual media activities (e.g.,
RTL-TVi shareholder Audiopresse represents IPM, Rossel and Corelio) as part of a
diversification strategy. Furthermore, it is noteworthy to mention that the French-language
audiovisual market is dominated by large, international media groups (e.g., Bertelsmann, TF1)
whereas Dutch-language broadcasters are still controlled by domestic media groups.
With the on-going transition to digital TV services, TV distributors (cable, satellite, IPTV) have
obtained a gatekeeping position in the audiovisual market. Due to economies of scale and high
barriers to entry, the distribution infrastructure market is overly concentrated in Belgium. With a
penetration of 98%, Belgium is one of the most widely cabled countries in the European Union.
Cable operators Telenet and Tecteo control 70 to 80% of the TV distribution market in the
Flemish and French Community respectively. Although their dominance is challenged by other
operators, mainly telecom incumbent Belgacom, this does not prevent them to build considerable
market power vis-à-vis broadcasters and independent producers. In June 2014, Telenet, a
subsidiary of US cable giant Liberty Global, announced a 50% participation in De Vijver Media,
which controls commercial broadcasters Vier and Vijf, and successful producer Woestijnvis.
Hence, Telenet would control all activities in the audiovisual value chain, bringing a production
14

company, commercial broadcaster, pay-TV operator and cable distributor under the same roof. If
approved by the European antitrust regulators, this acquisition is likely to have far-reaching
consequences for the Flemish audiovisual market.

Table 2.3: Evolution market shares TV (source: http://www.cim.be)
Channels

2000

2013

Flemish Community
VRT
Medialaan
SBS Belgium
Other

één, Canvas, OP12
VTM, 2BE, Vitaya, Kanaal Z, VTM Kzoom
Vier, Vijf

31.7%
34.4%
7.9%
26.0%

40.4%
28.7%
11.0%
19.9%

French Community
RTL
RTBF
TF1
France Télévisions
Other

RTL-TVi, Club RTL, Plug RTL
La Une, La Deux, La Trois
TF1
France 2, France 3, France 5

23.7%
21.1%
16.9%
17.0%
21.3%

25.8%
20.9%
16.1%
13.1%
19.5%

2.1.3. Radio broadcasting
Mirroring the TV market, the Flemish radio market reflects the rivalry between public service
broadcaster VRT and its commercial competitor Medialaan. Despite the liberalisation in 2001
and the arrival of three commercial channels Q-Music, 4FM (now Joe fm) and Nostalgie, VRT
has retained its dominant position in the Dutch-language radio market accounting for more than
60% of the audience market. Radio 2 is the market leader with 28.8% market share. In contrast,
the radio market in the French Community is far more fragmented and is characterised by a
larger presence of commercial radio stations – Bel-RTL is the leading channel with 13.5%
market share. In terms of audience share, RTBF commands a 36% market share and is far less
dominant than its Flemish counterpart VRT. In analogy with the TV market, French radio
stations such as Fun Radio, Nostalgie and NRJ play an important role in the market – in contrast
to the Flemish market which is controlled by domestic media groups. Taken together at group
level, Table 2.4 indicates that market concentration in the radio industry is higher in the Flemish
Community than in the French Community.

15

Table 2.4: Evolution market shares radio (source: http://www.cim.be)
Channels
Flemish Community
VRT
Medialaan
Corelio
/Concentra/NRJ
Other
French Community
RTBF
RTL
Corelio/NRJ
Other

2.2.

Radio 1, Radio
MNM,Klara
Q-Music, JOE fm
Nostalgie

2,

Studio

2007

2013

Brussel, 63.4%

61.0%

23.3%
2.3%

22.1%
6.5%

11%

10.5%

27.6%
37.8%
15.5%
19.1%

36.3%
30.2%
20.1%
13.4%

La Première, VivaCité, Classic 21, Pure FM
Bel-RTL, Contact, Fun Radio
Nostalgie, NRJ

Media cross-ownership policy

In contrast to many other European countries, Belgium has hardly introduced media (cross-)
ownership regulation in order to reduce the level of media concentration. Apart from a few minor
ownership rules on the regional level, changes in ownership structures (e.g., mergers) are subject
to federal competition law and need to be approved by the Belgian Competition Authority, which
considers abuse of dominant position, market concentration, unfair trade agreements, price
control, etc. Hence, the media sector is subject to the same notification rules as any other sector
and is not marked for any special antitrust provisions. Concerning mergers and acquisitions in
the media sector, the regional media regulators Vlaamse Regulator voor de Media (VRM) and
the Conseil Supérieur de l’Audiovisuel (CSA) are asked to give (non-binding) advise on the
proposed acquisition. It is fair to say that in the past the Competition Authority has approved all
notified media mergers and acquisitions, including the acquisition of newspaper Het Volk by
Corelio, newspapers De Tijd and l’Echo by Mediafin (jointly owned by De Persgroep and
Rossel) and newspaper Vers l’Avenir by Tecteo. In October 2013, The Competition Authority
approved the establishment of Het Mediahuis, under the condition that all newspaper titles are
maintained for a period of five years.
Flemish media legislation is one of the sole West-European regulatory frameworks without
sector-specific ownership rules other than the general competition law. In order to safeguard
media pluralism in the radio broadcasting market, a single business was allowed to control only
one national and/or regional radio station. In 2007, the government, however, relaxed radio
ownership rules so as to allow the acquisition of financially distressed 4FM by De Persgroep (a
single group can now control two national and/or regional radio stations). Moreover, both Dutch16

language and French-language newspaper and magazine publishers became even obliged by
decree to participate in national commercial television in the late 1980s. Whereas the French
Community imposed publishers to participate in RTL-TVi for at least 31% via Audiopresse, the
Flemish Community prescribed a participation of at least 51%. The ownership obligation was
lifted in 1998 after being found in breach with the Television Without Frontiers Directive. Since
2008, the VRM has the responsibility to monitor media ownership and to provide a yearly
overview of market concentration in the Flemish media market (see http://
www.vlaamseregulatormedia.be/nl/mediaconcentratie.aspx), but this has not led to the
introduction of media (cross-)ownership rules yet. This lack of media (cross-) ownership
regulation is largely due to policymakers’ wish to keep the Flemish media firms in local hands.
In this context, strict ownership rules could stand in the way of creating synergies and in
sustaining the competitiveness of the Flemish media ecosystem in an increasingly globalised
industry.
In contrast to the Flemish Media Decree, policymakers in the French-speaking part of Belgium
have regulated existing ownership structures. Article 7 of the Broadcasting Act prescribes that
when a single business entity (or natural person) holds, directly or indirectly, more than 24% of
the capital in two different radio and/or TV broadcasters, or where the cumulated audience share
exceeds 20% in the French-language market, a significant market position is presumed on behalf
of that business. Following the finding of such significant market position, the CSA then
launches an investigation to the effect on pluralism in the radio and/or TV broadcasting market.
Based on the findings of the investigation, the regulator is entitled to impose additional measures
to enhance pluralism in the market, or apply sanctions including the suspension and withdrawal
of the license. The Act further prescribes that media businesses submit all changes in the
ownership structure to the CSA, which are then published on the regulator’s website (see
http://www.csa.be/pluralisme). These ownership rules have been enacted only recently, and must
prevent certain (foreign) media groups from expanding dominance in the French-speaking media
market. Government has also announced its plans to boost domestic TV productions in order to
sustain the local content business.

2.3.

Media innovation policies

As discussed, news media markets in Belgium show a relatively high degree of concentration
since they are controlled by a small number of media groups that have spread their wings over
multiple media product markets. Hence, most media groups are not limited to one specific media
product, but focus on a portfolio of media products and services that allows them to spread
financial risks and diversify revenues. In order to launch new media products and services, one
common strategy is forming strategic alliances with other media groups (e.g., Medialaan as a
joint venture between De Persgroep and Roularta). In 2012, publishers De Persgroep and
Roularta, and mobile operator Base (KPN Belgium) announced to form the joint venture Mplus
for launching personalised media services. The goal was to bundle news services with mobile
data subscriptions, but the joint venture was lifted before the launch of the service. Often such
partnerships are encouraged by the regional government. In 1998, for example, the newspaper
17

and magazine publishers founded digital news archive Mediargus (recently rebranded Gopress),
which was supported by the Flemish government as part of the press subsidy program.
Apart from the subsidy programs for news publishers and TV broadcasters (ca. €350 million per
year), the Flemish government attempts to stimulate innovation in the media and ICT sector
through an ecosystem of institutes and funding instruments. Remark that all funding and
innovation instruments cover the whole media and ICT sector and that no single instrument
specifically targets innovation in journalism. The central institution in the Flemish innovation
policy is the Agency for Innovation by Science and Technology (IWT),which helps businesses in
addressing demand-driven challenges by funding collaborative research projects. In 2012, for
example, IWT awarded €1.4 million to the project ‘Publisher of the Future’ in which book
publishers develop multimedia books and search for new business models. In 2004, the Flemish
government founded iMinds (formerly IBBT), a digital research centre and business incubator.
The centre connects research partners with ICT businesses to convert digital knowhow into reallife products and services that are instrumental in positioning Flanders as one of Europe’s
leading digital regions. It does so by starting up national and European research projects where
researchers, ICT companies and organisations solve technological and societal challenges
together (see http://www.iminds.be).
Under the umbrella of iMinds, the Media Innovation Centre (MiX) was founded in 2012 to
specifically stimulate innovation in the media sector. Funded by the government, MiX has a
yearly budget of around €4 million to develop sector-wide media innovation projects. MiX is the
successor of the Programme Media Innovation of the Agency for Innovation by Science and
Technology (IWT). MiX is a centre of expertise for innovation in the Flemish media sector and
was established to tackle challenges faced as a result of the rapidly changing media landscape
and international developments. By means of collaborative projects bringing together media
businesses, technology providers and academic institutions, the goal of MiX is to launch shared
innovation projects intended to increase the competitiveness of the Flemish media sector in a
global ICT industry. Especially smaller online media initiatives have complained that MiX
would only support established media businesses and leave little room for real innovation and
entrepreneurship. Hence, MiX would become another subsidy mechanism for the large media
companies, opponents say. However, MiX has expressed its intentions to focus more on
innovation by start-ups, small and medium-sized businesses.
MiX focuses on 3 digital sectors (newspapers/magazines, audiovisual media and gaming) and
centres on challenges regarding audience measurement, personalised media and monetisation of
content. Since its inception in 2012, MiX has initiated 17 innovation projects that support new
media ventures, develop innovative media services and address strategic challenges for media
and technology businesses. One of the flagship projects is Media ID (http://www.media-id.be),
which has established an authentication system for end-users across the entire Flemish media
landscape based on which media businesses can develop new media services. Other running
projects address interactive and behavioural advertising, both for newspapers and TV
broadcasters, in order to target media consumers with more relevant advertisements. A new
bunch of projects focus on data visualisation, data crunching and big data so as to better
18

understand actual customer behaviour and interests. The Sunshine project is creating a virtual
data-analyst that helps journalists in retrieving the relevant data, presents it in a visually
appealing and understandable manner, and enables data-driven journalism (see for a complete
overview of projects).

2.4.

Summary and best practices

As the previous analysis of the market structure has illustrated, media cross-ownership is a
common feature of the Belgian media landscape. In general, the level of concentration is higher
in the Dutch-language media markets compared to the French-speaking markets. In Flanders, the
newspaper market is organised as a duopoly whereas the public service broadcaster VRT
dominates the radio market. In the TV market, competition between VRT and Medialaan is
fierce, and both are challenged by SBS Belgium. If approved, the acquisition of SBS Belgium by
cable operator Telenet, which has a quasi-monopoly as pay-TV operator and cable distributor,
would, however, turn the market upside down and possibly distort competition in the TV market.
This vertical merger would set an unseen precedent in European policymaking and kick off
further concentration in related media markets, both national and international. Media markets in
the French part of Belgium also show tendencies of concentration, but reflect higher levels of
rivalry between the different media groups. Especially in radio and TV, the higher number of
players and individual broadcast channels suggest a more equal playing field between the
different media groups.
As a small country, Belgian media businesses face structural constraints in the market in terms of
availability of resources (financial and personnel), economies of scale and scope (efficiency and
advantageous cost structures) and sunk costs (regardless of consumption). Hence, smaller
markets typically support less media businesses and account for higher concentration rates,
which legitimate higher levels of regulatory intervention. Rather than such interventionist
approach, however, regional communities in Belgium competent for media affairs have adopted
a market-based approach to the media industries. Instead of introducing effective media crossownership rules in such small markets, the Flemish government has set up various innovation
mechanisms that stimulate the innovativeness of domestic media groups which policymakers
believe enhances media companies’ competitiveness in an increasingly globalising industry.
Hence, the Flemish government is betting on innovation instruments rather than media crossownership to ensure competition and diversity in media and journalism. Based on the
contribution to entrepreneurship (between 2010 and 2012 twelve iMinds spinoffs in new media
were established), the amount of innovative research projects and the positive impact on the
Flemish media ecosystem iMinds and MiX prove best practices to ensure that media businesses
engage in a continuous innovation rat race and adapt themselves to the changing business
environment in terms of innovative media products and services, and business models. In that
context, media innovation is thought to be an effective response to possible industry game
changers like Apple, Netflix and Google.

19

Chapter 3
Market Structure and Innovation Policies in
Finland
By
Mikko Grönlund (University of Turku) and
Tom Björkroth (The Finnish Competition and Consumer Authority)

3.1.

Market structure and media ownership

Finland is a post-industrial, sparsely inhabited Nordic country with a population of
approximately 5.5 million. It has two official languages: Finnish, spoken by the vast majority of
the population, and Swedish, spoken by 5.4 per cent of Finnish citizens. The total value of the
Finnish mass media market was about EUR 4.3 billion in 2012. During the 2000s, the growth of
the mass media market hinged mostly on electronic media; the combined turnover of television,
radio, and online has doubled since the Millennium. Despite these developments the share of
printed media was still more than half (62 %) of the total mass media market in 2012. The strong
position of print media has also reflected in the breakdown of the advertising expenditure by
different media. The share of print media has since the Millennium (76 %) been clearly declining
and in 2013 the share of print media was approximately half (49 %) of the total media
advertising (Figure 3.1). Mass media’s share of the Finnish gross domestic product (GDP) has
since the Millennium declined from 2.5 per cent to approximately 2.2 per cent. According to
Statistics Finland the number of enterprises totalled over 7 000 including those in closely
connected sectors such as printing and advertising. Mass media enterprises and those operating
in closely connected sectors employed a total of 44 000 people.
On the demand side, one main driver of innovation is the actual and potential use of mobile data.
The mobile handset penetration is very high in Finland and in 2013 around 53 % of all handsets
were smartphones.22 According to Statistics Finland 61 per cent of population aged 16 to 74
used a smart phone. The policy goal to make mobile broadband available was achieved in
2012.23

22

Smartphone is defined here as a handset with possibility to install native 3 rd party applications.
In fall 2012 3G-network was available in all 336 municipalities, with 200 of them reaching full coverage. From
2009 to 2012
23

20

Figure 3.1: Shares of media advertising by sector (Source: TNS Gallup Group)
100 %

90 %
80 %
70 %
60 %

1

2

16 16 17 16 16 15 15

3

4

15 14 14

4

4

4

4

4

4

3

3

4

3

3

4

2
4

4

2
4

3
4

4
4

8 10
20
13 15 16 18
3
19 20
3
4 4 4
13
12
13
11
14
12
4 4
17 16 16 16
11 11
18
11 13
18
13
19
14 15 16 16 16 17 17 17 17 16
20 20
16 16
21 23
14 16

19 19 20 22 22 22 21 20 19 18

19 19 20

14
50 %

14

12

11 11

11 9

40 %
30 %

65 66 65 66 67

69 69 68 70 69 67 66

63 61

60 58 57

56 56 57 57 56 55 55 55 54 53

20 %

48 46

43 42 42 40 40

10 %

Newspapers & free sheets

Magazines & periodicals

Television

Radio

Internat advertising

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

1985

1984

1983

1982

1981

1980

0%

Other

Figure 3.2: Shares of time use by media (Source:TNS Gallup Oy)

29 %

80%

41 %

36 %

33 %

36 %

5%

6%

9%

9%

5%

5%

9%

9%
6%

11 %

9%

10 %

9%
4%

2002

12 %

37 %

7%

1998

5%

36 %

1996

6%

1992

11 %

11 %

1987

0%

8%

11 %
1979

10%

7%

23 %

26 %

28 %

21 %

19 %

31 %

30 %

7%
4%
4%

6%
6%
4%

27 %

41 %

1994

30%

38 %

2004

30 %

40%

10 %

30 %

61 %

50%

20%

11 %

37 %

5%

37 %

8%
4%

5%
7%
4%

2008

55 %

9%

29 %

70%
60%

6%

2012

4%

6%

2006

90%

6%

2010

100%

Magazines

Newspapers

Free sheets

Books

Radio

Video

Phonograms

Internet

Television

21

The coverage of 3,5G/4G networks has developed swiftly. In 2012 a total of 170 municipalities
had full coverage of 3.5/4G Mobile networks in contrast to none in year 2009. 24 These
developments have been reflected in an exponential increase in the volume of mobile data
transmission. According to FICORA, in the second half of year 2009 about 10.000 terabytes of
data were up- and downloaded in the mobile network. By the second half of year 2012 the
amount of this data transmission had increased to more than tenfold, to 115.000 terabytes. The
policy to enhance both broadband uptake and availability, and retain a competitive market,
seems to have been quite successful.

3.1.1. Newspapers
Finland has been considered to have a model of a successful newspaper industry which is built
upon a structure of strong national and provincial papers, supplemented by smaller, more local
papers (Picard & Grönlund, 2003). The regional level is the core of the Finnish newspaper
industry and even the largest daily newspaper, Helsingin Sanomat, is despite its national status
primarily regional, as the majority of its circulation comes from the capital city region and the
province of Uusimaa and the focus of the paper is mostly on the issues of the capital city region
(Lehtisaari & al., 2012). The characteristics of the Finnish newspaper landscape include the
strong subscription model, which was subsidized with a zero VAT rate until 201125. The
circulation decline is a fact acknowledged by the newspapers, and the advertisement market of
newspapers is somewhat volatile and dependent on global economic situations. And at the same
time, the revenues gathered from online functions – online advertising, digital subscriptions –
remain modest.

All major newspaper publishers in Finland have domestic owners and have their roots in the
newspaper business and they have been in the business for a long time. Several newspaper
publishers have chosen to meet the challenges of changes on the media market through
expansion, either into other media or into new territory, so as to strengthen their market position
and revenue base. Majority of expansion has been through mergers and acquisitions with other
media companies. Consequently, the regional ownership concentration levels in newspaper
circulation and especially in newspaper advertising are extremely high (Björkroth & Grönlund,
2014) (Figure 3.3). According to Lehtisaari et al., (2012) the strong development of media
concentration into large media groups has ensured that regional newspapers face very little
competition from other newspapers and leading regional papers have enjoyed strong regional
monopolies and clear market-area distributions between neighbouring newspaper companies.
There is also a clear trend towards closer editorial co-operation both within newspaper chains
and even between independent newspapers and newspaper houses. This kind of co-operation is
24

Ministry of Transport and Communications (2012). The availability of telecommunications services important to
households 2012.
25
In November 2011, the Finnish Parliament voted to increase the VAT rate on newspaper and magazine
subscriptions from the zero VAT rate to the reduced VAT rate of 9 per cent. The new 9 per cent VAT rate came into
effect on the 1st of January 2012. In the beginning of 2013 the reduced VAT rate was increased to 10 per cent

22

bound to lead to at least some convergence in terms of newspaper contents. The market leader is
Sanoma Oyj, one of the largest media groups in the Nordics. The second biggest Finnish player,
Alma Media Oyj focuses on newspaper publication and online content production (Table 3.1).

Figure 3.3: Major newspaper publishers’ share of total newspaper circulation
80

70
60
%

50

40
30
20

10

2012

Top 8

2010

2002

Top 4

2008

1998

Top 1

2004

1996

1994

1992

1988

1986

0

(Source: Media Audit Finland, Finnish Newspapers Association, Statistics Finland).

23

Table 3.1: Top 10 newspaper publishers according to circulation 2012
Publisher
Titles
Dailies
Circulation (1000)
Market Share
Sanoma Oyj**
5
5
543
21,3
Alma Media Oyj
23
10
497
19,5
Keskisuomalainen Oyj
20
4
232
9,1
TS-Yhtymä Oy
10
2
168
6,6
Ilkka-Yhtymä Oyj
7
2
97
3,8
Viestilehdet Oy
1
82
3,2
Länsi-Savo Oy
11
2
78
3,1
Pohjois-Karjalan
Kirjapaino
7
1
73
2,9
Oyj
Kaleva Oy
1
1
72
2,8
Suomen Lehtiyhtymä Oy*
6
4
70
2,8
Top 10
91
31
1 912
75,1
All newspapers
183
47
2 547
100
* Keskisuomalainen Oyj acquired Suomen Lehtiyhtymä in 2012
** In 2014 Sanoma Oyj sold its three regional 7-days a week newspapers in South-East Finland
to Länsi-Savo Oy. (Source: Media Audit Finland, Finnish Newspapers Association)
Table 3.2: Largest publishers of consumer magazine: mutual shares of yearly volume 2002-2012
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Titles
Publisher
Sanoma
29,3 30,7 32,3 34,4 35,4 38,0 39,0 39,1 39,5 40,7
48
Magazines Finland
Otavamedia
28,9 27,4 27,5 25,9 26,5 27,2 27,3 26,8 27,3 26,3
31
A-lehdet
20,5 19,8 18,8 14,9 15,1 14,6 14,3 14,4 14,7 17,9
17
Aller Media
13,6 13,4 13,4 16,3 14,4 11,4 11,0 10,7 10,3 9,6
6
Bonnier
1,4 1,6 1,8 1,9 2,1 2,6 2,5 2,6 2,4 2,4
10
Publications**
Forma Publishing* 2,7 2,6 2,5 2,9 2,6 2,4 2,3 2,5 2,5
Group
Valitut Palat – 2,0 2,0 2,0 2,0 2,1 2,1 2,0 2,0 2,0 1,8
2
Reader’s Digest
Egmont Kustannus 1,6 2,6 1,7 1,8 1,7 1,7 1,5 1,9 1,2 1,1
37
Total
100 100 100 100 100 100 100 100 100 100 151
* A-Lehdet acquired Forma Publishing Group in 2012.
** Aller Media acquired Finnish magazine titles of Bonnier Publications in 2013. Bonnier
Publications still published some international titles like National Geographic, in Finland.
Source: Media Audit Finland and Statistics Finland

24

In 2012, there was a total of 2 814 magazine titles26, of which 38 were published weekly, 418
were published once or twice per month, and 2 358 were published four to 11 times a year 27. In
2012 approximately 95 per cent of magazines were directly delivered to home or workplace (304
million issues) and only 5 per cent of magazines were sold as single copies (16.2 million issues).
The circulations and readership of several magazines with large distributions have fallen since
the Millennium. At the same time the share of magazine advertising has declined from almost 16
per cent to approximately 9 per cent in 2013. Sanoma Magazines Finland Oy (a subsidiary of
Sanoma Oyj), Otavamedia Oy, and A-lehdet Oy are the three leading magazine publishers in
Finland. They are followed by Aller Media Oy, Bonnier Publications Oy, and Forma Publishing
Group Oy (Table 3.2). These three companies all have foreign ownership.

3.1.2. Television
Digital terrestrial television broadcasting started in 2001, and television broadcasting shifted
completely to the digital era, when the analogue terrestrial broadcasting network was closed in
August 2007. The digitalization of terrestrial television network increased channel offerings.
Before that there had been only four channels, two public service channels (YLE TV1 and YLE
TV2), and two commercial channels (MTV3 and Nelonen) (Table 3.3). All in all, a total of some
30 channels are distributed terrestrially, 13 of which are free-on-air. Cable and satellite networks
obviously carry a significantly larger number of channels. In 2013 Finnish households had an
average of 15 channels. The reach of television has fallen slightly during the 2000s. In 2013, 73
per cent of Finnish people watched television on an average day, down from 78 per cent in 2001.
However, the reach statistics for the most popular channels have fallen much more clearly. The
reason for this lies in the increased number of channels and the growth of competition with
digitalisation.
There are three major operators in terrestrial and cable television broadcasting: YLE (Finnish
Broadcasting Company, public service broadcaster), MTV Media (first commercial television
company, owned by Bonnier Media) and Nelonen Media (a part of Sanoma Entertainment).
Terrestrial television network will in 2017 switch to a greater extent to the new (DVB-T2)
transmission technique, which enables the expansion of high-definition (HD) programming. At
the same time the amount DVB-T programming decreases.

26

According to the definition of the FPPA (Finnish Periodical Publishers Association), a magazine is a publication
that is published regularly at least four times per calendar year, features several articles or editorial material in every
issue, is publicly available for subscription or otherwise widely available, and does not primarily feature business
bulletins, price lists, announcements, or advertising; it can be anything in terms of size or print paper or it can be
exclusively an online publication. Magazines include consumer magazines, trade and organizational magazines, and
customer magazines.
27
The National Library of Finland, Bibliographical services

25

Table 3.3: Television channel shares in percentage
Company
2005 2006 2007 2008 2009 2010 2011
YLE
44,0 45,3 44,1 44,7 43,8 45,2 44,4
MTV/Bonnier
37,0 33,8 32,9 31,3 32,1 30,3 30,3
Nelonen Media /Sanoma 11,0 11,9 11,8 14,1 14,8 15,1 15,0
SBS
3,0
Fox (2012- )
Other channels
8,0
8,5
12,0 10,6 7,9
7,3
7,2
Total
100
100
100
100
100
100
100
Minutes per day
169
169
166
177
176
178
178
Source: Finnpanel and YLE

2012
42,4
30,7
15,1
4,2
2,2
5,6
100
183

2013
42,0
29,7
15,4
5,4
3,3
4,1
100
182

3.1.3. Radio Broadcasting
YLE is still Finland’s national public broadcasting company, and its channels continue to
dominate the radio market with market share of 51 per cent of radio listening. YLE has six
nationwide channels, 26 regional windows and two digital (DVB) radio channels. Private radio
broadcasting in Finland started in 1985 when the Council of State granted the first commercial
and non-commercial licenses in addition to the existing channels of Yleisradio. The first national
commercial radio, Radio Nova, was founded in 1997. It was accompanied by a group of seminational network radio stations. As a consequence of changes in the structure of radio
broadcasting, the investments started shifting from local radio stations to network radio stations.
Correspondingly the emphasis of advertising has moved from local radio markets to nationwide
markets controlled by chain radio stations. At the end of 2013, in addition to the YLE’s public
service channels, there were 80 private radio channels in the country. The competition is fiercest
in the major cities, where in addition to public-service radio channels, there are 15 to 20
commercially financed radio stations.

Table 3.4: Market shares in radio advertising in percentage
2005 2006
2007 2008
2009 2010
2011 201
2
MTV
33
32
33
29
24
26
26
25
SBS
28
30
27
25
27
27
27
24
Nelonen Media /Sanoma
7
8
10
11
12
22
Metroradio/Communicorp 5
4
5
7
8
9
9
NRJ Finland
11
11
8
9
9
8
8
10
Other channels
23
23
22
22
22
20
19
18
Total
100 100
100 100
100 100
100 100
Total, €M
47,2 46,8
47,0 50,5
49,6 52,0
57,2 55,4
Source: RadioMedia
Company

2013
21
26
23
9
21
100
52,7

26

A handful of bigger commercial companies—SBS Discovery Media (Discovery
Communications Inc.), MTV Oy (Bonnier AB), Nelonen Media (Sanoma Oyj), and NRJ Finland
OY (NRJ Group)—along with several other smaller companies, account for the remaining 49 per
cent market share. Oy Suomen Uutisradio Ab (MTV), the second largest company following
YLE, has an 8 per cent market share of radio listening.

3.2.

Media cross-ownership policy

In Finland, the Ministry of Transport and Communications is responsible for communications
policy—including matters relating to information security and data protection, mass media, and
postal services—while the Finnish Competition Authority monitors business deals and trade
practices. Finnish media legislation includes a wide range of regulations and rights, from those
embodied in the Constitution to the Communications Market Act of 2003, which in 2009 was
amended to enshrine universal Internet access for all Finnish citizens.28 The Finnish
Communications Regulatory Authority (FICORA) monitors and promotes communications
markets and services in the interests of the general public, business, and industry. Despite the
existence of 23 separate media laws, however, there has been no special legislation on media
competition, concentration, or ownership. Existing legislation is based on Finnish and EU
legislation on general concentration and ownership matters in the economy.
From a brief international comparison, it is evident, that that regulation of media ownership and
concentration is not particularly stringent in Finland. As for Germany and UK, foreign
ownership is not a critical issue in Finland. Italy has no restrictions for owners from EU, but nonEU ownership is subject to reciprocal arrangements, while France has the most restrictive
approach.
The Competition Law in Finland corresponds by large to the Competition Articles in the Treaty
of the Functioning of the European Union. It does not contain sections limiting concentration of
ownership or control in especially in media sectors. Nevertheless, the general competition law
applies to the media sectors. In contrast to some other European Countries there are no specific
provisions for the concentration on mergers in the media sector.29 Consequently, the most
relevant change with regard to (cross) media cross ownership policy is the amendment of
Competition law in line with the Government bill 88/2010, i.e. especially the principles for
assessing mergers, in 2011. The amendment meant that the old merger assessment based on the
so called dominance test was replaced with the SIEC-test, which is considered to be in line with
28

Communications Market Act. Ministry of Transport and Communications, 2011. 11 Jan. 2013.
<http://www.finlex.fi/en/laki/kaannokset/2003/en20030393.pdf>.
29
Germany too relies on general competition laws but has specific controls on press mergers, while France and Italy
have strict percentage limits on how large part of circulation can be under single control. Moreover, the regional
concentration is under strict control in Italy as in addition to the limits presented in Table 1, any merger challenging
the limit of 50% of titles in any of 21 micro regions is to be declared void in court. These limits may, however, be
exceeded as a result of organic growth. Cf. Björkroth, Tom & Grönlund, Mikko (2009) “Newspaper publishing in
four major European markets – current status and trends”. In accompanying CD of Albarran, A., Faustino, P. and R.
Santos (eds.) The Media as a Driver of the Information Society-Economics, Management, Policies and
Technologies. ISBN MediaXXI: 978-989-8143-18-1 ISBN UCEditora: 978-972-54-0236-8, 673 pages.

27

assessment under EU Competition Law.30 In the dominance test regime, the NCA could block a
merger or require remedies only if the merger was to create or strengthen the dominant position
of some of the firms involved or of the merged entity. The threshold for intervention when using
the SIEC-test is considered to be somewhat lower. The assessment now focuses on the decrease
of the competitive pressure in the affected market. For unilateral effects, the metrics in the
evaluation is the pressure of price increases which are based on tests well anchored in economic
theory.31 The likelihood of coordinated effects to occur is another reason for the NCA to
intervene in a proposed merger. The methodologies in the tests applied are recently extended to
two two-sided markets as well, which implies that the merger control is rather well equipped to
take on merger analysis in various platform industries.32 With the new test in place it is fair to
say that the threshold to intervene in the case of increasing market concentration as a result of
mergers and acquisitions has been lowered. The effects-based analysis can be interpreted so as to
reflect a more strict policy against media concentration, but on the other hand effects based
analysis is not constrained by structural features in the market and can put reasonable weight on
analysing the claimed efficiencies of each merger at hand.
Regulation of ownership and/or control across media is substantially stricter in the countries of
comparison than in Finland. Cross media regulation targets mainly ownership of both radio and
newspapers. There are restrictions on ownership across national, local and satellite television as
well.33
In 2013 the EU Commission launched a public consultation on suggested improvements of the
EU merger control. One of the aims was to extend the scope of EU Merger Regulation to the
acquisition of non-controlling minority shareholdings.34 Subsequently the EU Commission
published a White Paper on the development of merger control, restating the need to address the
question of minority shareholdings and exercise of control in competing undertakings. 35 These
lines of development are likely to influence the national legislation or guidelines regarding
assessment of cross-ownership, not least in the media sector (incl. newspapers, characterized by
heavily concentrated regional markets).
In many industries, including the newspaper publishing, the turnover of parties in mergers or
acquisitions may not at present exceed the threshold set by the merger control. Notwithstanding,
these may affect competition to a relevant extent by transfer of control or by affecting the
incentives to compete. The future amendments of Competition Act may address this issue. A
probable solution could be to allow for discretion to merger control to scrutinize mergers or
30

SIEC is an abbreviation of “significant impediment to effective competition”.
See for example, Shapiro, C. (1996). Mergers with Differentiated Products. Antitrust, Spring 1996 and Farrell, J.,
& Shapiro, C. (2010). Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition.
The B.E. Journal of Theoretical Economics 10(1).
32
Filistrucchi, L., Klein, T. J., & Michielsen, T. (2012). Assessing Unilateral Merger Effects in a Two-Sided
Market: An Application to the Dutch Daily Newspaper Market. Journal of Competition Law & Economics8 (2), pp.
297-329.
33
c.f. World Press Trends (2008), p. 396
34
For details see http://ec.europa.eu/competition/consultations/2013_merger_control/
35
European Commission (2014) WHITE PAPER-Towards more effective EU merger control. Brussels, 9.7.2014
COM(2014) 449 final.
31

28

acquisitions where the turnover of the parties do not exceed the thresholds set in the Competition
Act for merger notification.

3.3. Media innovation policies
Until 2012 the funding of public broadcasting was based on a Television license fee, which was
based on ownership of television apparatus and collected to a separate fund. Since 2013 the
funding is based on a tax (Yle-tax) levied on individuals (0.68 percent of taxable income, but
capped to 150 euro) and companies with a turnover exceeding 400.000 euro. The changes in the
funding principles were reflected in the amendments of Act on the functioning of Yle. One main
change was to extend the definition of public services to define that provision of services may
occur through all general or common communication networks. This enables Yle to maintain
and further develop its services in accordance with the uptake and diffusion of new
communication technologies.
According to the Ministry of Transportations and Communications, the Finnish media has not
benefited from state aid to the same extent as their counterparts in other Nordic countries. While
the aid amounts in Sweden, Norway and Denmark are around EUR 50 million, annual state aid
for media in Finland amounts to one per cent of this figure, or EUR 500,00036. The Finnish
media landscape has experienced some major changes in the years 2010-2012. Long-standing
policy according to which the newspapers were exempted from VAT (a 0-rate VAT) was
cancelled37 and the implementation of the EU Postal Directive, the Finnish Government decreed
that the previous policy of cross-subsidising the newspaper delivery costs from other postal
income was classified as illegal state aid according to the new EU regulation38
The current situation has warranted a need to investigate how and whether the press could be
supported during the transition of media and how such a support would affect the media market.
In a subsequent report by administrator Tuomas Harpf suggests that Finland adopt a similar
model to the media support system that is in use in Denmark39 in order to support production and
innovation40. The total amount of support given was suggested to amount to 30 million euros,
36

Ministry of Transports and Communications Press release 06.03.2014 12.45, Finnish original released on
05.03.2014 10.42.
37
In November 2011, the Finnish Parliament voted to increase the VAT rate on newspaper and magazine
subscriptions from the zero VAT rate to the reduced VAT rate of 9 per cent. The new 9 per cent VAT rate came into
effect on the 1st of January 2012. In the beginning of 2013 the reduced VAT rate was increased to 10 per cent.
38
See Pursiainen 2010
39
In the beginning of 2014 the Danish subsidy system that was based on distribution support was replaced with a
new subsidy model. The new subsidy system comprises of editorial production support, transitional support fund
for publication which in the past were given distribution support, innovation support, innovation support which is
divided into new products and solutions development aid as well as product development aid and adjustment
assistance to ailing publications. The focus of the news system is to support editorial production changes and it is a
practical aid to news media for the production of journalistic content. Online publications can also apply this
support. Support, total amount of € 54 Million, is requested from the Ministry of Culture and it’s distributed by
group of experts (Media Board) appointed by the Ministry. The system is initially for three years, after which it shall
be evaluated.
40
Harpf, T. (2014) Media in transition. Rapporteur’s action proposals. Publications of the Ministry of

29

of which production support (25 million euros) could be granted for example to cover up to 30
per cent of the production costs of journalistic content. However, this support should be granted
on a fixed-term basis and it should be as neutral as possible in terms of competition.
According to the report, innovation support should amount to 5 million euros and could be
granted to development projects in the media field, such as the production development of new
products and solutions. For the efficient utilisation of this support it is very important that
product development is carried out as joint projects.41
The Minister of Education and Communications has taken a positive view of the proposal on
direct state aid for media. In the budgetary framework, based on decision on central government
spending limits in April 2014, 30 Million euro was allocated for the innovation support during
years 2014 to 2016. The support represents temporary transition assistance, the goal of which is
that the media sector would be able to transition into the new digital age better than ever. The
support will be administered by the Finnish Funding Agency for Innovation Tekes. Minister of
Education and Communications Krista Kiuru has states that "Innovativeness will be the most
important criterion for the granting of support. Of course innovativeness is something that can in
itself be interpreted in numerous ways. However, the goal is not to set a strict framework, but
rather to enable different kinds of creative media sector services and solutions"42. The goal is not
to limit the use of the support to, for example, only certain types of media or a particular
technological solution. The support is technologically neutral, but still such that the project must
be implemented in a digital environment. The support can be granted to different kinds of
development projects, such as the development of new products, services, solutions or
production systems. The goal is to promote in particular the creation of media sector services and
solutions aimed at the Finnish public. Accordingly, in its budget proposition in August 2014, the
Ministry of Transport and Communications proposes an innovation support of 10 Million Euro
for year 2015, while the aid for printed media remains at 500.000 euro.43
Next Media research programme44 (planned for 2010-2013, ended 31.3.2014) aimed at
innovations in media experience, in new business models, concepts and technology. The main
objective of the programme was to renew the business environment of the media sector by
breaking the limits of media content and changing the way it is created, configured, serviced and
consumed. Strategic Research Agenda was made by companies and research institutes to form a
common basis for planning of the programme and case projects. The programme was a part of
the ICT cluster of the Finnish Strategic Centres for Science, Technology and Innovation (ICT
SHOK) coordinated by DIGILE Ltd. Next Media programme was financed by TEKES – the
Finnish Funding Agency for Technology and Innovation45 (Table 3.5).
Transport and Communications, 7/2014.
41
Administrator Harpf would give out media support and reduce the value-added tax for the press
Press release 06.03.2014 12.34 , Finnish original released on 05.03.2014 10.36
42
”Media support for new digital services”. Press release 08.10.2014 15.09
43
”Liikenne- ja viestintäministeriön budjettiehdotus 2,9 miljardia euroa”. Press release 7.8.2014 17.36
44
http://www.nextmedia.fi/
45
Tekes is the most important publicly funded expert organisation for financing research, development and
innovation in Finland. It boosts wide-ranging innovation activities in research communities, industry and service

30

Table 3.5: Key figures of the Next Media project
2010

2011

2012

2013

Companies

44

57

54

49

Research
organizations

8

8

8

6

Person years

58

82

84

76

Total costs

6,9 M€

9,0 M€

10 M€

8 M€

Tekes funding

3,8 M€

5,0 M€

5,5 M€

4,5 M€

3.4.

Summary and best practices

Media consumption has changed over the last decades in Finland not least due to technological
change. Newspaper publishers have chosen to meet the challenges of changes on the media
market through expansion, either into other media or into new territory, so as to strengthen their
market position and revenue base. As a result of both consolidation and organic growth, the
regional ownership concentration levels in newspaper circulation and especially in newspaper
advertising are extremely high. Such a development has been accompanied by a trend towards
closer editorial co-operation both within newspaper chains and even between independent
newspapers and newspaper houses.
Despite the existence of numerous separate media laws, media competition and concentration of
ownership are scrutinized against general competition law, which has to a large extent been in
line with EU Competition Law.

sectors. Tekes promotes a broad-based view on innovation: besides funding technological breakthroughs, Tekes
emphasises the significance of service-related, design, business, and social innovations. Tekes works with the top
innovative companies and research units in Finland. Every year, Tekes finances some 1 500 business research and
development projects, and almost 600 public research projects at universities, research institutes and universities of
applied sciences. Research, development and innovation funding is targeted to projects that create in the long-term
the greatest benefits for the economy and society. Tekes does not derive any financial profit from its activities, nor
claim any intellectual proprietary rights.

31

Recent alterations in the Competition Act have strengthened this convergence, as the dominance
standard was replaced by the SIEC test in merger control. Consequently it is fair to say that the
threshold to intervene in the case of increasing market concentration as a result of mergers and
acquisitions has been lowered. The effects-based analysis can be interpreted so as to reflect a
more strict policy against media concentration, but effects based analysis is not constrained by
structural features only and can put reasonable weight on analysing the claimed efficiencies of
each merger at hand.
It remains to be seen to what extent the planned changes in EU Merger Regulation as to the
acquisition of non-controlling minority shareholdings will be found in the national Competition
Act. Hence the control of cross-ownership might become stricter.
Digitalisation and change in media consumption habits has put traditional media under pressure.
Hence the political process has taken an initiative to enhance the possibilities of the media to
adapt to the increasing degree of digitalisation
In the recent budgetary framework, based on decision on central government spending limits in
April 2014, 30 Million euro was allocated for the innovation support during years 2014 to 2016.
The support represents temporary transition assistance, which will be administered by the
Finnish Funding Agency for Innovation Tekes. The support is technologically neutral, but still
such that the project must be implemented in a digital environment. The goal is to promote in
particular the creation of media sector services and solutions aimed at the Finnish public.
However, at this moment much of the media innovation fund is going unclaimed because it
requires investment by the media companies as well and few apparently want to.

32

Chapter 4
Market Structure and Innovation Policies in
Germany
By
Mike Friedrichsen (Stuttgart Media University, Germany)

4.1.

Market structure and media ownership

4.1.1. Newspapers
Germany is a newspaper country. In 2013 the number of "independent editorial units" (meaning
full publishing entities that produce all parts of a newspaper) for daily newspapers in Germany
was 135, and the number of newspapers 354. If local editions of all papers are included, there are
1,512 different newspapers. Only a few number of national newspapers still appears in Germany:
BILD, Süddeutsche Zeitung (SZ), Frankfurter Allgemeine Zeitung (FAZ), Welt, Frankfurter
Rundschau (FR), Tageszeitung (Taz). They claim to be independent and "above parties", but
most cover a liberal and conservative spectrum. In terms of circulation figures, the national
newspapers account for 1.65 million. Another 4.47 million papers are sold on the street. The topselling German tabloid paper is BILD Zeitung, with a circulation of 2.8 million, it is also the best
selling paper of Europe. The German newspaper market is therefore the biggest in Europe and
the fifth-biggest world-wide in terms of circulation. What is of even greater importance,
however, is that newspapers are not only bought but they are read as well. Just under threefourths of the German population over the age of 14 (74.8 %) read a newspaper on a regular
basis, representing 48.5 million men and women.
Newspapers in Germany have a total circulation of 24.8 million sold copies per publication day
(German Audit Bureau of Circulations, 2013). This means there was an average decline in
circulation of 527,661 copies (-2.1 percent) compared to the same quarter the previous year. This
total circulation figure does not take into account the sales of 95,263 e-newspaper editions (+20.7
percent). Specific losses amounted to -2.2 percent for local/regional newspapers (western
Germany -1.9 percent / eastern Germany -3.3 percent), -2.8 percent for national newspapers, -3.6
percent for newspapers sold at newsstands, and -1.4 percent for Sunday newspapers. Only the
weekly newspapers registered a gain (1.7 percent).
The sold circulation of all categories of newspapers breaks down to 19.43 million copies for
daily newspapers, 3.38 million copies for Sunday newspapers, and 1.94 million copies for
33

weekly newspapers. Of the total figure for daily newspapers, 13.74 million copies are accounted
for by local and regional subscription newspapers, just under 1.6 million copies by national
newspapers, and over 1.4 million copies by newspapers sold at newsstands (BDZV 2013).
In 2009 revenues from newspaper sales in Germany were, for the first time, greater than
revenues from classified ads and other forms of advertising. The old rule of thumb that two
thirds of sales in the newspaper business stem from advertising and one third from distribution
lost its validity at the time of the first business and advertising downturn in the current decade
(from 2001 to 2003). The fact that this relationship is now being reversed is a clear reflection of
the structural changes taking place in our industry. Like all other traditional media, newspapers
are feeling the effects of the global and national economic situation which has had repercussions
in the newspaper advertising market as well as with regard to the amount of money average
households are able to spend on media products.
Nonetheless, the audience penetration levels recorded for German printed newspapers have
continued to be quite high. The overall audience penetration level for 2013 was 69.6 percent.
This means that more than 49 million Germans over the age of 14 pick up a newspaper every
day. Daily newspapers traditionally have their highest levels of audience penetration among
persons in the 40-69 age range, i.e. between well above 71 and just under 82 percent. Similarly,
more than 82 percent of persons over the age of 70 regularly read a daily newspaper and over 63
percent of those between the ages of 30 and 39. But younger age groups are also newspaper
readers; more than 42 percent of the 14-to-19-year-olds and well above 53 percent of the 20-to29-year olds show an interest in reading printed daily newspapers.
Since the early 1990s, the number and circulation of newspapers in Germany have shown signs
of decline. Newspapers also showed a significant decline in overall sales from advertising,
supplements, and distribution, falling from the previous year's figure of 9.09 billion euros to 8.46
billion, a decrease of 7.04 percent. Out of the total sales figure, daily newspapers accounted for
7.96 billion euros, a decrease of 6.84 percent (BDZV 2013). The economic situation in 2013 was
extremely unfavorable; gross domestic product (GDP) fell by price-adjusted 4.9 percent, in stark
contrast to the increase of 1.3 percent seen in 2012. The inflation rate, on the other hand, was
extraordinarily low. The percentage decline in business for the newspaper industry exceeded the
percentage decline in GDP. Advertising revenues showed a loss of 15.9 percent, considerably
greater than the loss seen in 2012 (4.1 percent); distribution sales, on the other hand, showed a
gain of 2.3 percent (BDZV 2013).
With advertising sales of 3.19 billion euros in 2013 (despite the fact that this constitutes a decline
of 15.5 percent) daily newspapers continue to be the most important advertising medium in
Germany. Advertising sales by weekly and Sunday newspapers fell from 266 to 208 million
euros (-21.6 percent). Newspaper supplements are no longer listed separately. Total advertising
sales for all newspaper categories amounted to 3.9 billion euros (-15.9 percent). Advertising
sector losses for Germany as a whole were considerable. The average decline in sales for all
advertising media in 2009 was 9.8 percent. The share the newspaper industry had in overall
34

advertising sales declined slightly to just under 22 percent. In the year 2000 it had been 29
percent (BDZV 2013).
Regional daily newspapers enjoy a great deal of popularity in Germany. The diversity is very
large in comparison to other countries. The fact is that circulation figures are falling and daily
newspapers are suffering most from the migration of advertising expenditure to the Internet.
Above all, it is the market for classified and job advertisements that is shrinking. For this reason,
regional newspapers will have to focus more on their regional competence in the future. They
will have to see themselves as local service providers who offer their customers not only news
but also service information – and who have reader loyalty as their utmost priority.
Hence, the press is characterized by a high but decreasing dependency on advertising income and
a significant degree of economic concentration. The German market for daily newspapers is
dominated by a small number of publishers. The largest market share is controlled by the Axel
Springer Group with around 22.1 percent of the market (BILD, Welt, Hamburger Abendblatt,
Berliner Morgenpost, etc.) The second position is taken by Verlagsgruppe Stuttgarter Zeitung,
which is more a regional publisher with nearly 8.5 percent of the market. The third place is
occupied by the WAZ Group (Westdeutsche Allgemeine Zeitung etc. - 6 percent) and DuMont
Schauberg in Cologne (4.2 percent). The Ippen Gruppe takes the fifth place with 4 percent. The
10 largest publishers of dailies together control 44.8 percent of the market. The four largest
magazine publishers Bauer, Springer, Burda, Gruner + Jahr (mainly Bertelsmann) cover about 60
percent of the market.

4.1.2. Television
Germans spend about 219 minutes per day on television, split about evenly between public and
commercial programmers. All regional public broadcasters commonly founded the ARD
(Arbeitsgemeinschaft der Rundfunkanstalten Deutschlands) regulatory body, and contribute
according to their size to the nation-wide TV channel “Das Erste” (the first and oldest TV
programme). In addition they each independently organize a regional programme (III
Programme) that offers regional content and more culturally and educationally oriented
programming.
The Second German Television ZDF (Zweites Deutsches Fernsehen) is based on an agreement
of all Länder (ZDF-Staatsvertrag) and is located in Mainz. ARD and ZDF jointly offer a number
of specialized programmes: Arte (together with France), 3Sat (together with Austria and
Switzerland), Kika (for children), and Phoenix (events and documentation).
Today, German commercial television is controlled by two media groups calling themselves
"Senderfamilien" (broadcaster families). One, formerly owned by Leo Kirch, is named
ProSiebenSAT.1Media AG and consists of Sat 1, Pro 7, N24, Kabel 1 and 9live and others
(market share 2008: 21.6 percent). In 2006 it was acquired by the Anglo-American investment
35

funds Permira and Kohlberg, Kravis & Co. (KKR) and took over the SBS activities of these
funds in ten other European countries.
The other family is controlled by the German giant Bertelsmann, the largest media company
outside of the US and a global player (largest bookseller in the world): RTL Group S.A. owns
TV channels in about a dozen European countries. In Germany the family includes RTL, RTL II,
Super RTL, VOX, n-tv. Many more programmes were offered in the last years, some of them
independently-owned special-interest channels, while others are subsidiaries of international
conglomerates such as Viacom, Disney, or NBC Universal. In large cities such as Berlin,
Hamburg etc. regional commercial TV has been established. Germany has an above-average
percentage of cable households; 18.66 of 34.99 million households, another 14.93 receive their
signal via satellite. leaving only a small share for terrestrial reception.
The market share of all public service broadcasters in television is at 43.6 percent, of which ARD
has a market share of 13,4 percent, ZDF 13.1 percent, the third channels 13.2 percent. Among
the private channels RTL (11.7 percent), SAT1 (10.3 percent) and ProSieben (6.6 percent) have
the biggest audience shares. The television advertising market participates in the whole
advertising market with a share of 43.7 percent; the radio advertising share is 6.2 percent. (print:
46 percent)
The only pay-TV company Premiere had been founded by Leo Kirch and went bankrupt. It was
recently taken over by Rupert Murdoch and in 2009 it was renamed Sky and integrated into
Murdoch´s European Sky empire. Compared to other European countries pay-TV is not very
successful, due to the many freely accessible channels. In 2013 over 3 million viewers
subscribed to Sky.
There are differences in the television structure on two levels, national and regional, and between
general and special interest channels. Germany has some of the largest public broadcasters (ARD
and ZDF), which are financed by license fees, and private, free stations (RTL, SAT.1,
ProSieben) in Europe and the world, as well as the pay-TV channel Sky. From news, films,
series, and shows, to sport the general channels offer the entire range of individual genres,
whereas the special interest channels feature news (n-tv, N24), music (VIVA, MTV) or sport
(DSF). Depending on the technical platform (terrestrial, satellite, cable, broadband, mobile), and
on analogue or digital mode, hundreds of German-language and international channels such as
CNN, BBC and TV5 and more than 20 different public TV channels can be received. These
include the two national channels ARD and ZDF, as well as regionally produced stations
broadcast nationwide, such as WDR, MDR, BR, and special-interest channels such as the
primarily political docu-station Phoenix and kids’ TV KIKA. Then there are three international
broadcasters: Deutsche Welle, Franco-German arte, and Austro-German-Swiss cultural channel
3sat.
According to the latest market research, cable-TV, historically the leading platform, is
continuously losing ground, as it is under pressure by satellite. Figure 4.1 presents the
36

development of the TV platform penetration. The figures from 2013 also show a slight decrease
of overall TV penetration. DTT (Digital Terrestrial Television) penetration decreased in
comparison with 2012 while IPTV (Internet Protocol Television) increased, but still remains far
behind other platforms with less than 5 percent market share.

Figure 4.1: TV platform penetration in Germany, 2006-2013, % of total TV households

The German TV landscape is undergoing important changes that are creating challenges for all
stakeholders. These developments can be grouped into technological developments, changes in
business models, and landscape evolutions resulting from regulatory changes.
The evolution towards HD (High Definition) broadcast enabled by the utilization of MPEG-4
encoding is an opportunity for the satellite platform to increase its penetration. Cable is still
primarily analogue in Germany with only 56 percent of households accessing cable on a digital
signal3. The introduction of interactive services for satellite and DTT represent a shift in the
classical features of TV platforms. Today, HbbTV (Hybrid Broadcast Broadband TV) enabled
DTT or Satellite TV offer VoD (Video on Demand) databases, interactive features and long tail
content, but only if a separate broadband connection is purchased by the household.
There is an increasing move from the free TV model towards paid access. Although German
households are only partly willing to pay for TV content, indicated by the Pay-TV penetration of
18 percent4, around half of all the households must pay a fee to access free TV content via cable
and IPTV. Leading German broadcasters and platform operators are looking for further
monetization opportunities from Pay-TV to HD fees (i.e. HD+ of Astra) for end-users and to the
much-criticized carriage fees for TV channels. As a result, Sky Deutschland is going to make an
annual profit this year for the second time since its launch in the early 1990s. Compared to its

37

Pay-TV peers, Sky Deutschland has historically struggled to reach critical mass and is still
relatively small.
The broadcasting groups, RTL and ProSiebenSat.1, have begun to focus on paid access and other
leading private broadcasters are increasingly providing only paid HD content. In the satellite TV
market, we see Astra HD+ as the first step in this direction.
Policy and regulatory decisions might soon shape the future of the German TV distribution
landscape. Several upcoming decisions, such as on a potential second digital dividend, the
broadband strategy of the Bund and the convergence of telecommunication and broadcasting
regulation, will be important landmarks determining the future of the German market. Bund and
Laender are openly discussing the future usage of spectrum currently used by DVB-T, and the
migration of viewers to Web-TV. Meanwhile, Web-TV is attracting a net neutrality discussion,
as network operators see their networks filled with OTT (Over-the-top) data, without any
resulting profit share. There are also considerable changes in the ownership structure of leading
players in the German market. In August 2013, KKR and Permira reduced their stakes in
ProSiebenSat.1 from 88 percent to 44 percent, and Bertelsmann has also indicated its interest in
reducing its share in the RTL group. In addition, Vodafone has recently acquired Kabel
Deutschland.

4.1.3. Radio broadcasting
Not only the television market, but also the radio market also reveal the richness of the media.
Having begun in the 1920s (radio) and the 1950s (television) as public network institutions, since
the 1980s the colorful spectrum of a dual system made up of public network channels and private
stations has emerged. Nowadays some 430 radio stations, for the most part local and regional in
character, compete with each other.
Radio is a popular medium in Germany, daily consumption is 176 minutes (2013), of which
slightly more than a half comes from public service broadcasters. They usually offer a number –
around six – of programmes on a regional basis, sometimes with local limitations, concentrating
on general audiences as well as special target groups (culture, news, youth etc.) In addition there
are two national radio programmes, based in Berlin (Deutschlandradio Kultur) and Cologne
(Deutschlandfunk, mainly news) with public funding, based on another Länder-level agreement.
Commercial radio is licensed in all Länder-states, therefore it follows mostly a regional pattern.
There are no national broadcasters, but some that are active in several Länder (NRJ for youth,
Klassik Radio). In two Southern Länder local commercial radio is the rule. In North RhineWestphalia, the largest state, 46 local stations work commercially but with local, noncommercial windows. Non-commercial radio exists but is regulated differently in each state.
Some states allow community stations, others prefer public access (also for television),
educational stations, campus stations etc. One Land has no activities at all. All in all, the
situation is extremely diverse.
38

In addition to their standard program the broadcasters also have considerable Internet activities.
The public network broadcasters, however, are always threatened with a conflict with the private
stations, who fear competition will be distorted by the strong influence in the market of the
“subsidized” stations. Further pressure on the public network channels is emerging through the
fact that more and more young people are taking advantage of their programs.

4.2.

Media cross ownership policy

Due to its salience for open and democratic societies, the Federal Constitutional Court has
declared that the expression and imparting of opinions and freedom of information are human
rights enshrined in the Constitution and that the exercise of these rights requires constitutional
protection. The German Basic Law, the interpretations of the Federal Constitutional Court and
the law of the European Union provide the legal framework in which media policy develops.
They describe and also confine the playing field of the actors involved in the formulation and
implementation of media policy.
Germany has a "dual system" of both public and commercial broadcasting (in fact, if you include
community media it is a trial system). In public broadcasting the Länder (states) have a strong
role. The German Federal Constitution stipulates that the sole responsibility for broadcasting
rests with the Länder of the Federal Republic as part of their "cultural sovereignty". Because of
this, the public service broadcasters are a creation of the Länder that act individually or jointly
(in agreements). The exception is the broadcaster Deutsche Welle, based on federal legislation,
designed to provide services (radio, TV, online) to foreign countries only.
Hence, media legislation in Germany is following the general principle of federalism and is in
the hand of the regions (Länder). This means, that all nationwide media laws have to be settled
by an agreement between the different Länder. The organizational and legal structure of
broadcasting corporations is defined in Länder laws and, if more than one state is involved, in
agreements between several or all Länder. A basic agreement of all Länder
(Rundfunkstaatsvertrag) defines the general broadcasting situation, as far as both, the public and
the commercial sectors are concerned.
The recent Rundfunkstaatsvertrag reflects the compromise which had been dealt with the EU
commission, concerning the complaints of commercial broadcasters with respect to Internet
activities of the public broadcasters. The obligation to scrutinize new digital services and online
offers to a so called Three Step Test – similar to the Public Value Test in the UK – is the core
element of the 12th interstate treaty.
In Germany 14 media authorities are in charge of licensing and controlling as well as structuring
and promoting commercial radio and television in Germany. The 14 media authorities cooperate
in different decision-taking councils and commissions coordinating and aligning matters on a
national level.
39

The overall arching influence on media legislation stems from the constitutional court
(Bundesverfassungsgericht) which played a strong role in elaborating the pillars of the
broadcasting system in Germany. While broadcasting legislation is oriented more to the common
good and the needs of the public sphere – although it has to comply more and more to the EU
requirements of competition laws – legislation for press and online media is orientated solely to
the market model of competition. Special legislation is made to protect individual rights of
privacy.
Press laws are made on the Länder-level as well. Although there had been several attempts to
pass a framing law for all regional press laws, this had never happened.

4.3.

Media innovation policies

In Germany, due to its federal political system, several policy levels act and interact closely with
regard to economic and innovation promotion. The most important are the federal government,
the federal states governments and the European Commission. One example in which these three
levels work closely together is the "Gemeinschaftsaufgabe Verbesserung der regionalen
Wirtschaftsstruktur" (common task for improving the regional economic structure). It is jointly
funded by the European Commission within its European Fund for Regional Development, the
federal and the federal states governments and promotes regional development in objective-1
regions (East Germany) and 5b regions (mainly regions in former West Germany closely located
to the former border between West and East Germany). Its major instruments are infrastructural
measures (involving transport, telecommunication and energy systems), regionally-differentiated
investment grants and tax reductions which should stimulate intraregional or external economic
potential and temporarily increase the mobility of production factors oriented towards the region.
Quite recently, a share of funds has also been allocated to innovation promotion. The major
objective is to reduce socio-economic disparities with reference to the national average and to
create and secure employment opportunities. Table 4.1 presents only measures of the federal
government directed towards the regional level.
The Länder offer different programmes for strengthening the innovation activities of companies.
Most of the programmes are technology open, only few Länder also support specific
technologies. The technology programmes of the Länder very much consider their economic and
innovative potential. In some Länder technology programmes focus on the same technology as
programmes offered by the federal government. This could imply a certain redundancy.
However, technology-specific programmes are normally quite broad so that the Länder
government can focus their own programmes further on the regional needs.
In all Länder technology-open programmes comprise the funding of single as well as joint
projects. This is similar to the practice in federal programmes. However, there are also
programmes complementary to the federal level. The so-called “innovation assistant”, a
programme aimed at employing young graduates from university in companies, is implemented
40

in most of the Länder, whereas there is no comparable programme at the federal level. The
supply of programmes of the Länder has increased in the years after 2007, not least because of
the possibility of co-financing programmes by the European Regional Development Fund
(ERDF) and the European Social Fund (ESF). In some East German
Länder, for example, the share of the volume of ERDF on the volume of funding is between 40
and 70%.

Table 4.1: Actors and implementation levels of technology and innovation policy in Germany

4.4.

Summary and best practices

The German media landscape is going through a period of unprecedented upheaval. The digital
and new media are growing in importance and social networks are catching on across large
sections of the population. Even though these developments, Germany still has one of the most
diverse and multi-faceted traditional media landscapes.
In Germany, the newspaper publishing is suffering a strategic crisis while in overall there is no
general media crisis although the economic crisis led to rapid fall of advertising revenues. The
well-established publishing houses are an essential part of relatively stable print media market.
However, the solid division of market can form a disadvantage in the long run since publishers
41

that are used to high profits may not be sufficiently under the pressure to appreciate the need for
future-oriented innovations. The newspaper readership in Germany has remained at a high level
despite the leading position of television watching and growing importance of internet, dailies
reaching over 70 per cent of population. Despite several attempts to pass a framing law for all
regional press laws, press laws are still made on the Länder-level. The legislation for press and
online media is orientated solely to the market model of competition.
The German TV and radio broadcasting market is well developed and intensely competitive. It is
set to become even more dynamic as a result of current technological, market, and regulatory
trends. Developments in the German broadcasting market have increased the interest of both
domestic stakeholders and global players looking for parallels in their own markets. In public
broadcasting the Länder (states) have a strong role. The German Federal Constitution stipulates
that the sole responsibility for broadcasting rests with the Länder of the Federal Republic as part
of their "cultural sovereignty". The commercial broadcasting ownership is highly concentrated in
the Germany.
For many years, the innovation policy of Germany was mainly focused on regional development
and infrastructure projects. This policy was established after the integration of former West and
East Germany in the late eighties. Recently, a share of funds has also been allocated to
innovation promotion. Next to the Federal government policy, all Länder offer also programmes
for strengthening the innovation activities of companies and areas. Most of the programmes are
technology open, only few Länder also support specific technologies. The technology
programmes of the Länder very much consider their economic and innovative potential. In
general, these programmes do not have a specific (multi-) media sector orientation.
A few large multimedia companies are operating in the German media landscape. Two wellknown companies are Axel Springer Group (strategic focus on becoming the leading digital
publisher), and the German giant Bertelsmann, the largest media company outside of the US and
a global player (largest bookseller in the world). These companies are controlling part of the
domestic media markets. These companies are also successful in the international markets. These
companies play an important role in the integration of new technologies and new media into the
traditional media activities and finding new opportunities to maintain of even improve their
competitive position.

42

Chapter 5
Market Structure and Innovation Policies in
Italy
By
Cinzia Dal Zotto (University of Neuchâtel, Switserland)

5.1.

Market structure and media ownership

In these last years, the Italian media industry faced structural changes and an increasing
fragmentation of the audience favored by technological developments. These changes have led
the industry to suffer a steady decline in total revenues since 2009, which is forecasted to
continue, albeit at a decelerated rate, between 2014 and 2018. During the last five years the
industry underwent a contraction of two billion Euros, its value going down to 14.8 billion from
16.6 billion in 2009. Only in 2013 the total industry decline was 7%. The downwards trend has
first reached the publishing market, which is in continuous recession since five years, and was
then extended – since 2011 – to the broadcasting system (TV & radio). This trend does not affect
digital media, which now represent the third source of information for more than 40% of the
population. Digital media though contribute with only 10% to the total revenue sources of the
industry. The shrinking traditional media not only still counts for 90% of the industry revenue
sources, but further represent the main source of information for the population. In particular,
television is the first information source for nearly 80% of the population, while only 43.7%
inform themselves through newspapers.
The fact that such a large majority of Italians inform themselves via the television raises media
pluralism concerns as ownership in the Italian television sector – both free and paid television –
is highly concentrated, both in terms of revenue and audience shares. According to the value of
the Herfindahl-Hirschman Index (HHI) the newspaper, magazine and radio sectors still represent
healthy competitive marketplaces. However, the HHI does not take into account the fact that
many media only serve regional or local market and do not compete on the national level. In
order for measurements of competition levels in media markets to be more realistic, further
indicators should be included in the analysis. Cross-media ownership is very much present in
Italy as media firms, like in many other countries, are trying to diversify their revenue structure.
Some firms follow brand extension strategies while others simply adopt a multi-platform
approach. An overview of the main media markets as well as their evolution is presented below.

43

5.1.1. Newspapers
Even though daily newspapers show a rather limited rate of penetration among the population,
they still represent the second source of information chosen by 43% of Italians. The gap with the
television – more than 30 points – is drastically reduced if we compare local television to the
local press. Furthermore, newspapers show a high level of customer loyalty. In fact, 68% of
individuals who chose newspapers as a source of daily information say that they would not
renounce to that source.
However, in the recent years the daily press has registered a considerable reduction in the
number of readers. This is particularly due to the raising importance of Internet as significant
source of national and international news. The most important elements emerging from this trend
are a decrease in the number of available newspaper titles, a decrease in volume of copies sold, a
further decline of the free press, as well as the disappearance of some newspapers, especially
those which were funded through government subsidies.
Table 1 illustrates the entire range of newspapers, both national and local, distinguishing
between topics (i.e. news, politic, sport, economy & finance and other specializations). The first
national Italian newspaper is Il Corriere della Sera (with an average daily circulation of 682 000
copies). It is followed by La Repubblica (620 000), La Stampa (382 000), Il Sole 24 ore (402
000), Il Messaggero (255 000), Il Resto del Carlino (181 000), Il Giornale (214 000), La
Nazione (146 000), Gazzettino (120 000), Il Secolo XIX (109 000), Il Mattino (94 000), Il Tirreno
(87 000), etc.
With regard to the division of revenues between print and digital newspaper products,
approximately 90% still stem from traditional products. In particular, while in terms of
advertising the web is now a significant source, having exceeded 10% of the total advertising
revenues in 2012, the direct sale of digital products still represents a marginal fraction (2% of
revenues in 2012 and 4% in 2013). The composition of revenues from digital services is,
therefore, largely biased in favor of the advertising components (85% vs. 15% of revenues from
sales of digital copies). Conversely, in the case of printed newspapers the breakdown of revenues
is more balanced, with a prevalence of revenues from sold copies (55%), partly because of the
recent price increases for these products and the contemporary drastic drop in the price of
advertising.
The competitive structure of the newspaper market appears in 2013 essentially unchanged from
that of 2012 (see Table 5.1). First, it should be noted that this market does not appear
concentrated, with a HHI below 1.000 points (.979) and stable over time. However, as many
newspapers have local orientation, the diffusion of newspapers may appear more polarized in
certain specific cases, thus determining a greater concentration level compared to the one
suggested by the analysis conducted at the national level. Furthermore, the market appears stable
over time also in terms of structure. The first two operators (Gruppo Editoriale L'Espresso and
RCS Mediagroup) hold a leadership position, jointly reaching a market share of about 39%. The
other operators follow with stable shares below 10%. Jointly the Top 4 players control slightly

44

more than 50% of the newspaper market, i.e. the threshold above which an undesirable degree of
concentration appears evident.

Table 5.1: Daily Publishers – Evolution of market shares (%)
Publishers
Gruppo Editoriale
L’Espresso
RCS Mediagroup

Caltagirone
Monrif
Il Sole 24 ore
Itedi
Amodei
Others
Total
Concentration
index (HHI)

Titles
La Repubblica, 15 local
newspapers
Corriere della Sera,
Gazzetta dello Sport, local
city editions
Il Gazzettino, Il Mattino, Il
Messaggero
Il Resto del Carlino, La
Nazione, Il Giorno
Il Sole 24 Ore
La Stampa
Corriere dello Sport,
TuttoSport

2009
19.4

2010
19.3

2011
20.1

2012
21.05

2013
21.45

18.9

17.3

17.5

18.35

17.72

8.0

7.9

7.5

7.29

7.21

6.4

6.6

6.5

6.63

6.54

6.3
5.4
3.7

5.9
5.6
3.9

6.3
5.7
3.7

6.12
5.33
3.9

5.81
5.23
4.27

31.9
100
.953

33.5
100
.892

32.7
100
.927

31.32
100
.989

31.77
100
.979

In terms of cross-media ownership the three following publishers are the most active:
The Gruppo Editoriale L'Espresso, founded in 1955 and based in Rome, owns the second largest
daily La Repubblica, 15 local newspapers, and publishes numerous magazines (including the
weekly L'Espresso). The group further owns three national radio stations, Radio Deejay, Radio
Capital and m2o and the broadcasters LaEFFE, Deejay Tv, Tv m2o, Radio Capital Tivù, Onda
Latina, and MyDeejay. The group operates in the new media segment and is present in the field
of training and professional services.
RCS Media Group operates daily newspapers, magazines and books, radio broadcasting, digital
and satellite television. The group has operations in Italy, Spain, Portugal, France, the US, and
China. Besides the national Corriere della Sera and La Gazzetta dello Sport, RCS publishes El
Mundo, the business daily Expansion and the sports publication Marca in Spain. The group
further has a magazine segment.

45

Il Sole 24 ore is the media group which publishes the national daily business newspaper which
holds the same name. The group is owned by Confindustria, the Italian employers’ federation.
The printed newspaper is presented as part of an integrated information system which includes:
Radio 24 (a news/talks fm/online radio channel), Il Sole 24 Ore Radiocor (a business and
financial news agency), ilsole24ore.com (the online newspaper) and Italianews (a News Web
syndication).

5.1.2. Television
Currently, 85% of Italians still access to television through a traditional TV set able to catch the
digital terrestrial signal. Besides digital terrestrial television, the satellite network represents the
second most important diffusion platform which reaches 35% of television viewers.
The sector is highly concentrated in terms of both audience and revenues. When considering the
yearly audience on an average day, independently from the diffusion platform, the two main
operators RAI and Mediaset catch 70% of the total audience. The third operator, 21st Century
Fox/Sky Italia lags well behind with an average audience of 6%. In terms of revenues, the
television sector continues to be characterized by a negative economic performance affecting
both the free and paid compartments. This negative trend is almost entirely attributed to the
advertising component. RAI, Mediaset and 21st Century/Sky Italia control 90% of the total
market. The remaining 10% is dispersed among a variety of operators among which Cairo
Communications and Discovery distinguish themselves with shares around 2%. Cairo
Communications, previously active only on the advertising market, entered the content
production and distribution market in 2013 by acquiring La7 from Telecom Italia Media. The
latter completely dismissed its TV operations by selling also its share in MTV Italia and MTV
Pubblicità to Viacom. Always in 2013, Discovery incremented its market share through the
acquisition of Switchover Media.
When looking only at free TV the revenue distribution among the operators resembles the
audience breakdown totalized through their channels. RAI is the first operator controlling nearly
50% of the market, while Mediaset follows with a 35% stake (see Table 5.2). Cairo
Communication is the third operator. The structure of the market is thus characterized by a very
high and durable level of concentration confirmed by a value of the HHI well above the
threshold of 2,500.

About 30% of the population has access to pay TV in Italy. Satellite is the diffusion platform
chosen by more than half of subscribers; the rest of them mainly use the digital terrestrial
platform. This market is controlled by 21st Century Fox/Sky Italia with a share of nearly 80%
(see Table 5.3). In July BSkyB announced the buyout of Sky Italia, the acquisition was approved
by the EU in September. The second pay TV operator is Mediaset with a share of only 19% that
has been though steadily increasing and nearly doubled since 2009. The structure of the market
for pay-tv, clearly affected by the magnitude of the fixed and sunk (endogenous) costs related to
46

the production and acquisition of premium content, is highly concentrated with a HHI that, stable
well above the 6,000 points, exceeds also the value shown by free TV.

Table 5.2: Free TV – Evolution of market shares (%)
Free TV
Broadcasters
RAI

Mediaset

Telecom Italia Media
Cairo Communication
Discovery

Channels

2009

2010

2011

2012

2013

Rai 1, Rai 2, Rai 3, Rai
4, Rai 5, Rai Sport, Rai
News, Rai Storia, Rai
Movie
Canale 5, Italia 1, Rete
4, Iris, La5, Boing, Italia
2, TgCom24
La 7, La 7 d, MTV,
MTV Music
La 7, La 7 d
Real Time, DMAX, K2,
Fresbee, Focus

45.9

45.8

45.9

47.2

49.4

41.1

42.3

41.2

37.8

35.1

2.6

2.6

2.9

2.9

-

0.4
-

0.4
-

0.7
0.4

0.7
1.0

2.9
2.4

10.0
100
3.809

8.9
100
3.903

8.8
100
3.819

10.4
100
3.669

10.2
100
3.682

Other TV broadcasters
Total
Concentration index
(HHI)

Table 5.3: Pay TV – Evolution of market shares (%)
Pay TV Broadcasters
21st Century Fox/ Sky
Italia
Mediaset
Other TV broadcasters
Total
Concentration index
(HHI)

2009
81.5

2010
79.2

2011
76.5

2012
79.1

2013
77.8

10.6
7.9
100
6.761

15.1
5.7
100
6.542

17.0
6.6
100
6.140

17.8
3.3
100
6.563

19.1
3.2
100
6.415

5.1.3. Radio broadcasting
On an average day 35 million Italians listen to the radio. The Italian radio market offers about
nine hundred radio stations and more than 1’100 radio channels which cover different national
47

and local areas, it is thus characterized by a large fragmentation. The national offer comes
predominantly from relatively big publishing groups – Gruppo Editoriale L'Espresso, RAI,
Mondadori, Il Sole 24 Ore – which are vertically integrated, advertising included, and active on
multiple media sectors. In addition to these commercial operators, there are some independent
players such as RTL, Radio Dimensione Suono, Radio Italia and Radio Kiss Kiss, as well as
some non-commercial broadcasters targeting a very particular segment of audience (e.g. Radio
Radicale and Associazione Radio Maria).
Since 2009 the radio industry is experiencing an economic downturn reaching a decline in total
revenues of 13.6%. The major contraction has been registered by the advertising revenues which
represent nearly 77% of the total revenues of the industry. This is due partly to the negative
economic cycle but mostly to the general progressive migration of investments from traditional
advertising products to more innovative web-based solutions. A trend towards consolidation can
be spotted when analyzing the market shares of the major players (see Table 5.4). In particular,
Mondadori has nearly doubled its market share by taking on the mandate to sell advertising
space for some other radio stations through its own advertising agency. The group now manages
the advertising business for Radio Italia, an independent national player which reached an
audience of 4.6 million Italians in 2013 (RTL 102.5 is the most listened Italian radio with an
audience of 6.9 million people).

Table 5.4: Radio – Evolution of market shares (%)
Radio Broadcasters
RAI

Finelco

RTL
Gruppo Editorial
L’Espresso
RDS
Mondadori
Il Sole 24 ore
Other radio
broadcasters
Total
Concentration index
(HHI)

Radio Stations
Radio1, Radio 2, Radio
3, Gr Parlamento,
Radio International
Radio 105, RMC Radio
Montecarlo, Virgin
Radio
RTL 102.5
Radio Capital, Radio
Deejay, M20
RDS
Radio 101
Radio 24

2009
22.9

2010
21.4

2011
21.8

2012
22.3

2013
24.4

10.3

10.4

10.2

10.7

12.2

7.7
10.1

7.6
13

7.2
12.7

7.6
10.9

8.8
8.7

7.1
3.6
2.1
36.3

7
3.8
2.2
34.6

6.8
4
2.4
34.9

6.9
3
2.5
36.1

6.1
6
2.6
31.4

100
.895

100
.894

100
.896

100
.887

1.004

48

Despite the very large offer of different radio stations the radio industry appears concentrated.
Looking at the position of the main operators in the radio market (see Table 4), RAI clearly
dominates with a market share of 24.4% which has been increasing since 2010 and is far higher
than the one of its competitors. Finelco holds the second position in the ranking with a market
share of 12.2%, followed by RTL and Gruppo Editoriale L’Espresso with 8.8% and 8.7%
respectively. If RTL has consolidated its position over the years, both Gruppo Editoriale
L’Espresso and RDS have been contracting. In sharp increase, as we already mentioned,
Mondadori owns 6% of the market and represents the sixth largest group. Finally, in a very slight
increase, Il Sole 24 Ore could reach a share of 2.6% with its “all news and talks” radio station.
The market share data reveal a significant increase in the HHI between 2012 and 2013, which
implies an increase in the level of market concentration. The structure appears to be still
substantially competitive and characterized by a discrete degree of competition between the
various players. However, considering the weakness of the HHI when applied to media serving
local markets, a Top 4 analysis seems to be necessary. Indeed, this analysis highlights that the
top 4 operators control more than 50% of the market and thus an undesirable degree of
concentration is present.

5.2.

Media cross-ownership policy

Articles 21 and 41 of the Italian Constitution of 1947 protect the freedom of expression and the
freedom of economic entrepreneurship respectively. The press received general (Law 47 of 8
February 1948) and antitrust (Law 67 of 25 February 1987) discipline before substantial
concentrations could be established in the market. Law 67 regulated the abuse of dominant
position, considering dominant the undertaker whose printed products reach a circulation that
exceed 20% of the total national circulation – or 50% of the total regional circulation. The law
stated further that when growing organically the undertaker exceeding the limit of one third of
the total national circulation would lose all public subsidies.
On the contrary, in the broadcasting sector a duopoly emerged due to the absence of any system
and competition law. Only in 1990 a national antitrust regulation as well as the first systematic
regulation for the broadcasting sector was introduced. The latter, known as the Mammì law,
regulated for the first time cross-ownership. It stated that (1) the owner of a national broadcasting
license was not allowed to control a newspaper publishing company with a circulation exceeding
16% of the total national circulation, (2) a company controlling a newspaper publishing company
realizing a circulation of more than 8% of the total national circulation was not allowed to own
more than one national broadcasting license, (3) the owner of a newspaper publishing company
was not allowed to own more than two national broadcasting licenses, (4) mergers or
acquisitions resulting in a company with revenues exceeding 20% of the total revenues of the
industry were considered void, and (5) the number of broadcasting licenses assigned to one
company could not exceed 25% of the total licenses available. This last antitrust limit was
considered as illegal because it violated the pluralism principle of art. 21 of the Constitution.
49

Thus, in 1997 the law Maccanico followed which lowered the limit of license ownership to 20%
of the total licenses available. It was established that the networks exceeding that limit at that
time would receive an exemption in order to move on cable or satellite. The Maccanico law
further prohibited to the owners of national broadcasting licenses to diffuse more than 20% of
the total programming and to achieve revenues exceeding 30% of the total revenues of the
national broadcasting industry. Finally, in 2005 the Gasparri law implemented some parts of the
European Directive and introduced the Testo Unico della Radiotelevisione. This law grouped all
media sectors within one single integrated system of communications (SIC) – including
newspapers, magazines, electronic publishing, radio, television, cinema and outdoor advertising
– and in art. 43 it established that companies operating within the SIC could not realize revenues
exceeding 20% of the total revenues of the system. Paradoxically this increased the limit
defining the dominant position as the value of the SIC is obviously higher than the value of the
sole broadcasting industry.
The same Testo Unico forbids national broadcasting operators with revenues above 8% of the
total SIC value or electronic communications operators with a revenue market share higher than
40% to acquire shares of newspaper publishing companies or participate to the founding of a
new newspaper publishing company, excluding online pure players. This prohibition was first set
until the end of 2010 and was then prolonged till the end of 2014.
The Authority entrusted with the dual task of ensuring proper competition of operators in the
market and to safeguard pluralism and fundamental freedoms of citizens in the field of
telecommunications, publishing, mass media and postal services is the Autorità per le Garanzie
nelle Comunicazioni (AGCOM), created with The Maccanico Law in 1997. If the authority
thinks that there is an abuse of dominant position and competition is at risk, it can intervene with
the necessary measures to eliminate or impede that abuse. The Authority refers annually to the
Parliament but acts also upon notifications coming from other actors. It works closely together
with the Autorità Garante della Concorrenza e del Mercato (AGCM), the Italian Antitrust
Authority established in 1990. The two Authorities signed a cooperation agreement in 2013 to
coordinate interventions within sectors of mutual interest, exchange notifications and advices,
collaborate in investigations and interventions. Within this framework, between April 2013 and
March 2014, the AGCOM has given three opinions concerning abuse of dominant position and
concentration operations to the Antitrust Authority. All three were favorable. During the summer
the AGCOM further approved the merger of multiplexes owned by Telecom Italia Media and
Gruppo Editoriale L’Espresso into a joint venture called Persidera, which has become the first
independent network operator in the digital terrestrial television market with five multiplexes and
a national infrastructure. 70% of shares of Persidera are however being sold to a new investor.
The action of the AGCOM is characterized also by its investment in research and innovation,
considered as fundamental to improve the quality of market regulation and to guarantee the
monitoring of relevant innovations. Within this framework the Authority regularly conducts
studies in the fields of electronic networks and communications services, communication
50

infrastructures as well as media content. Aim of those studies is to collect information on the
media and communications industry evolution focusing on the technological, economic and legal
aspects. After detecting structural problems, a lack of transparency in economic transactions
based on distorted mechanisms and altering allocation efficiency within the advertising sector,
the Authority initiated a study on the sector of advertising collection. Results highlighted the
concentration of the sector. Further studies for a deeper understanding thus followed in 2014,
such as the study concerning the Internet services and online advertising, another study
concerning web-based information media business models, consumption and professions in Italy,
as well as an investigation on market competition within the sector of media access. Aim of these
studies is to constantly monitor the rising and innovative online advertising market and ensure
competition by thoroughly analyzing costs and benefits of eventual interventions.

5.3.

Media innovation policies

Clearly media markets in Italy present a high degree of concentration being controlled by a
reduced number of media groups that have diversified and spread their activities across sectors,
thus becoming multimedia operators. If the newspaper sectors appears to be less concentrated
thanks to the presence of a substantial number of titles at local and national level – 143 daily
newspapers, i.e 2.6 newspapers per million inhabitants – the fact that the top four media groups
hold more than 50% of the market share confirms an undesired level of concentration. The same
holds true for the Radio broadcasting sector. There is on the contrary no doubt about the high
level of concentration of the TV broadcasting sector. A further distortion that increases concerns
about the TV sector concentration is the mismatch between the television and newspaper sector
in terms of acquisition of resources. Indeed, the Italian TV broadcasting operators collect around
60% of the total advertising revenues compared to a 15% share collected by the newspaper
publishing companies. This is not to be observed in other European countries where the amount
of resources allocated in the two sectors is reversed – newspaper publishers collect more
advertising revenues compared to TV broadcasters – and less unbalanced.
This is not an ideal situation for innovation to be enhanced. With regard to the newspapers
publishing sector we can recall that the current policy of public subvention does not stimulate
innovation but rather supports incumbent operators. In Italy the publishing sector receives both
direct and indirect public subventions. More precisely, publishers – those belonging to
journalists’ associations, foundations or representing linguistic minorities or political parties –
that have been operating in the market for at least 5 years receive a fixed contribution equal to
30% of their annual costs, with a limit of one million Euros, and a variable contribution
depending on the circulation of titles. Further, publishers have been enjoying reduced postal
tariffs for delivering their printed products to households, a 50% discount on phone bills as well
as an exemption from VAT on 80% of sales, the difference being reimbursed by the State to the
respective operator. The reduction on postal tariffs has been suspended in 2012 – as the postal
service announced it was missing 250 million Euros of reimbursement from the State.

51

Such subventions seem actually to support established publishers rather than stimulating starts
ups to enter the market. In fact, new publishers are not entitled to receive direct public support
for the first 5 years of their activity. On top of that, the fact that subventions are based on costs
does not stimulate firms to keep expenses low and be efficient. Last but not least, no temporal
limit was established for the subventions, so that with time publishers became dependent on that
source of financing. The aim of granting reduced postal tariffs was to stimulate the sale of
subscriptions, however this measure failed completely. Only about 10% of newspapers sales
happen through subscriptions in Italy, publishers say this depends on the inefficiency of the
Italian Postal service. For these reasons an attempt to improve the situation came in 2012 when a
modification to the law introduced (a) new criteria to assign the direct contributions, such as a
minimum percentage of sold copies and a minimum number of employees, as well as (b) support
for newspapers going digital and for small web-based titles. At the same time the total amount of
contributions was progressively reduced and in June 2014 a 120 million Euro fund was finally
created to support innovation within established and new publishing firms, stimulate the hiring of
qualified journalists within the new media sector and facilitate reorganization processes during
the next three years. An agreement, greeted as a success by the Government, has been reached
for a minimum of 20.8 euros as compensation for a 1600 characters long journalistic article.
Concerning the TV broadcasting sector, a controversial measure has been taken at the beginning
of October 2014 by the AGCOM. The Authority decided to change the criteria to establish the
fee that broadcasters are bound to pay to use the digital terrestrial television frequencies.
Previously operators had to pay 1% of their annual revenues, with the new rule the fee will
depend on the number and quality of frequencies used. This new rule favors the two major
operators, RAI and Mediaset, which have high revenues compared to the other operators such as
La7, Persidera and H3G that are younger, a lot smaller in terms of revenues but own the same
number of frequencies. As a result RAI and Mediaset will probably enjoy a discount of 50% on
the fee they paid until now while the new operators will have to face a 10 times higher fee.
Concerns expressed by both the European Union and the Italian Government, and the protests of
small operators did not prevent the AGCOM to introduce the new rule.
So far attempts to launch new media products or enhance innovation have come from the private
sector directly. We can recall here a few newspaper start-ups that have been launched during the
last decade: Il Post, L’Inkiesta and Lettera43 are digital only newspapers while Il Fatto
Quotidiano, launched in 2009, has also a printed version and has become the third national
newspaper in terms of digital readership. Inspired by the Global Investigative Journalism
Network and the Organization Crime and Corruption reporting Project, some journalists founded
the Investigative Reporting Project Italy: it is the first investigative journalism center in the
country, fully focused on international collaborations and financed through grants and
commissioned investigations. Established newspapers are starting to create internal Media Labs.
La Stampa for instance conceived a studio that is now acting as incubator for experimenting
innovative ways of digital storytelling, and further introduced an open-house strategy for social
media management: well-known social media editors, recognized by online communities, are
invited in rotation to bring in innovative approaches. Repubblica lanched Repubblica delle Idee,
a series of events organized by the newspaper with the aim of meeting the audience, discover its
52

needs and ideas. Another initiative worth mentioning is the International Journalism Festival
(IJF) of Perugia, launched in 2007 and gathering journalists, publishers, media professionals and
scholars from all over the world. The event was financed through sponsorships and public
contributions until last year, when public funding was cut and a crowdsourcing action, sustained
by global brands such as Amazon and Google, saved the 2013 edition. The IJF has become a real
annual think tank where media professionals and passionate exchange knowledge and ideas that
stimulate innovation.

5.4.

Summary and best practices

Besides a lack of specific innovation policies, until now the Italian media industry faced an
environment that was rather hampering more than stimulating innovation. If on one hand law
prohibits growth through acquisitions above certain limits, and organic growth is discouraged by
the subsequent loss of public subventions, on the other hand public contributions to the
publishing industry proved to be ineffective in stimulating new market entries and thus in
promoting pluralism and innovation. A revision of the public subvention policy has been recently
initiated. Even if it is more the result of a general public spending review, the direction has
changed channeling public contributions towards specific support actions for media firms going
digital and restructuring their business as well as for new web-based media.
Among the signs of change we can also recall the Italian Digital Agenda, which follows the
European directives with regard to digital growth and the development of digital infrastructures.
In particular, we can mention the support to web start-ups, the ICT vouchers to enhance the
introduction of new technologies within companies, and the public-private collaborations to
stimulate research and create innovation labs that have been set as priorities and could be
relevant for the digital media industry in the next future. Last but not least in 2012 the
Government passed the law 179, Decreto Crescita 2.0, to enhance the creation of innovative
start-ups. A register for the innovative start-ups was created and is kept constantly updated.
Registered start-ups enjoy reduction of start-up expenses, tax reductions, relaxation of regulation
in case of eventual losses, exemption from employment law, tax credits for employment of
skilled employees, disposal of equity crowdfunding platforms, tax incentives for investors, and
access to a fund that serves as guarantee for 80% of start-up loans. The Italia Start-up Visa is a
further program introduced in 2014 to make the release of a visa for foreigners that want to startup an innovative firm in Italy. Again, these are not media specific measures but media start-ups
could well profit from them.

53

Chapter 6
Market Structure and Innovation Policies in
Portugal
By
Paulo Faustino
(Porto University and Centre of Investigation in Media & Journalism - CIMJ, Portugal)

6.1

Market structure and media ownership

6.1.1. Newspapers
The media market in Portugal consists of companies with (i) exclusive activity in the traditional
media, (ii) with activities in new media, and (iii) with activities in the telecommunications
business. In addition, a new trend, especially in the last three years, the Angolan capital came to
change the profile of the media partners or shareholders and, in some cases, with some
repercussion in the news flow, paying more attention to economics, politics and African
Portuguese-speaking society. In general, the owners of these companies are domestic groups and
investors, except in the case of Media Capital, which in 2005 was acquired by the Prisa Group
(Spain) and the Bertelsmann Group (Germany). Given the market shares of these large
diversified media companies, it is clear that these companies are dominated the media markets.
In total, the two largest media companies in the newspaper market have a market share of almost
84 percent. Table 6.1 presents an overview of the market shares and concentration measures of
publishers in the daily newspaper market in Portugal. The two largest companies Contrilinveste
and Cofina have a market share of 18.44 and 65.47 percent respectively in 2013. Cofina focuses
mainly on the newspaper (Correio da Manha, Journal Destak, Journal de Negócios, Record,
Metro Portugal) and maginzine activities. The activities of Controlinveste are mainly focused on
the daily press (24 Horas, Diário de Noticias, Global Noticias, O Jogo, and Journal de Noticias)
and it has a relevant stake in pay TV, especially sport channels. The concentration measure (C4)
and HHI show a value of 96 percent and 4.710. These measures indicate that the market of
newspaper publishers is highly concentrated. The four largest newspaper publishers have
together a market share of almost 100 percent in Portugal.
In the last decade, the circulation of national daily newspapers reveals that the average
circulation of paid newspapers has stagnated or declined, as well as the total circulation
(including paid and free newspapers). Although free newspapers had a remarkably positive
54

performance in the last decade, it should be noted that in 2009 the free newspapers have also
experienced a reduction in circulation following the crisis in the advertising markets.
In Portugal, there also exists an established cultural tradition of reading local and regional
weekly newspapers (e.g. Expresso and SOL) and magazines (e.g. Visão and Sábado). These
newspapers compete with national daily newspapers for readers and advertisements. Therefore, it
can be concluded that the newspaper market is still competitive in Portugal. in the Portuguese
Newspaper market due to the competitive pressure in the national Daily Press market.

Table 6.1: Circulation (x1000), Market shares and concentration measures of publishers in the
daily newspaper market

Controlinvest
Cofina
Sonaecom
Megafin
Económico
SGPS
I Informação
Indices
CR4
HHI

2010
Circ.
%
147
22.3
427
64.8
35
5.3
23
3.5
16
2.4
10

1.6

96.00
4,745.1

2011
Circ.
%
122
20.6
391
66.0
34
5.7
21
3.5
16
2.6
9

1.5

95.87
4,832.07

2012
Circ.
104
343
32
16
15

%
20.2
66.4
6.2
3.2
2.8

6

95.97
4,876.72

1.2

2013
Circ.
%
89
18.4
318
65.5
30
6.2
30
6.2
13
2,7
5

1.1

96.22
4,710.73

Source: Elaborated by the author using data from APCT.

Recently, the publishers are also expanding abroad, although the international growth of media
operations of Portuguese media companies has been very slow and cautious, representing one of
the most passive economic sectors. In the last two years, due to several factors, including the
global economic crisis’ pressure, these companies have started to be more proactive. The market
for Portuguese communities abroad begins to regain more attention as a potential market for the
internationalization of Portuguese media companies and products. The companies have been
seeking business opportunities in African Portuguese-speaking countries (including Angola,
Mozambique and Cape Verde), and Brazil. For instance, Ongoing Group specialized in
economic news entered the Brazilian market. It launched the newspaper Brasil Econômico,
bought the newspapers Dia and Correio do Povo, and has been showing public interest in joining
the television market. This group has also created some partnerships in Angola. Cofina launched
the free daily newspaper Destak in Brazil about four years ago, and recently launched an
operation in Angola related to Correio da Manhã TV.

55

6.1.2. Television
The TV broadcasting market also is highly concentrated. It shows a high concentration in media
ownership. Only one public and two commercial media companies are operating on the
traditional free to air TV broadcasting market. Table 6.2 presents an overview of the free to air
market shares of the public and commercial media companies (excluding pay-TV companies) on
the TV broadcasting market.
Table 6.2: Distribution of free to air market shares of TV broadcasters
2009

2010

2011

2012

2013

RTP Group
Impresa
Media Capital

36
29
35

37
29
34

35
30
34

31
31
38

29
32
39

Indices
C3
HHI

100
3,362

100
3,366

100
3,346

100
3,365

100
3,390

Source: Elaborated by the author based on data obtained from Marktest.
.
The largest broadcaster is the Rádio e Televisão of Portugal, SGPS (RTP). This is the only
national public broadcaster in Portugal. The RTP group was established in 1957 and it runs two
free to air television channels RTP1 and RTP2 and two paid channels RTP Memória and RTPN.
Since the beginning of the 1990s, Portugal adopted the dual system of public and commercial
broadcasters for its television market. Due to the increase in competition, the public broadcaster
has lost substantial market share on the audience market as well as on the advertisement market.
As a consequent, RTP has structural financial problems for many years. Recently, the
broadcaster was reorganized with the aim to reduce the costs and to reduce the number of
products and services. RTP mainly competes with two large commercial broadcasters for the
audience in Portugal and less on commercial activities. This latter can be explained by the fact
that the public broadcaster is pre-dominately state-funded. The largest commercial broadcaster is
Media Capital with a market share of 39 percent in 201346. This commercial broadcaster is also
an important player in the daily newspaper market. It runs two channels TVI and TVI24. The
second largest commercial broadcaster is Impresa which runs operations on one free to air
television channel SIC and four paid channels SIC Noticias, SIC Mulher, SIC Comédia and SIC

46

Media Capital (2013), Annual Report.

56

Radical47. It has a market share of 32 percent in 2013. This diversified media company has
activities in television and radio broadcasting, newspapers, magazines markets. A group of
financial companies from Portuagal has a majority share in this company.
Table 6.3: Distribution of Advertising Revenues (x1000) and market shares in the TV
broadcasting market
GROUPS

2010

2011

2012

2013

€

%

€

%

€

%

€

%

Media Capital

1,862

49.2

1,869

50.1

1,712

50.4

1,884

48.0

Impresa

1,043

27.6

1,028

27.5

882

26.0

1,245

31.7

RTP

647

17.1

582

15.6

511

15.0

465

11.9

Others (paid TV)

232

6.1

253

6.8

291

8.6

329

8.4

Indices
CR3

93.87

93.20

91.43

91.61

HHI

3510.36

3555.52

3515.45

3524.58

Source: Elaborated by the author based on data obtained from Marktest.
Another emerging development is the digital terrestrial television (DTT) in Portugal. The digital
developement attracted companies from the cable and telecommunications industry. The
Portugal Telecom and Sonaecom have demonstrated interest in the content industries, mainly
through the development of Web platforms for paid content distribution. The development of the
pay TV provided Portugal Telecom with a new opportunity to invest in this business after the
mandatory divestment of its cable activities due to antitrust issues. Portugal Telecom invested in
pay TV through the creation of the MEO cable TV system in 2008. MEO holds a significant
position in the pay TV market. The cable company Zon has a market share of 50 percent in the
pay TV market.
Table 6.3 presents an overview of the revenues and market share of broadcasters in the
advertising market. It shows the dominance of traditional TV broadcasters in the advertiing
market. The total market share of the pay-TV was always lower than 9 percent, athough it shows
47

Impresa (2013), Annual Report.

57

a positive trend.

6.1.3. Radio broadcasting
The radio broadcasting market also shows a very high concentration level. Table 6.4 presents an
overview of the market shares of the broadcasters and concentration indices of the Portugese
radio broadcasting market. The National Radio broadcasting is dominated by one state-owned
media company and two private companies: RDP, Renascença, and Media Capital. In total, these
broadcasters have a market share of 94.2 percent in 2013. The state-owned broadcaster has the
smallest market share of 12.9 percent. The largest broadcaster Renascença is owned by the
Catholic Church. This broadcaster runs three radio stations. The forth radio broadcaster is TSF,
which is part of the diversified media company Controlinveste. It has a relatively stable market
share of around 5.8 percent.

Table 6.4: Market shares and concentration indices for the radio broadcasting market
RR Group (Church-owned)
Media Capital Group
RDP Group (Public)
TSF

2009
53.3
26.9
13.9
5.9

2010
49.2
32.1
13.0
5.7

2011
48.5
33.5
12.1
5.9

2012
46.4
37.5
11.0
5.1

2013
42.2
39.1
12.9
5.8

Indices
CR4
HHI

100
3,796

100
3,653

100
3,656

100
3,704

100
3,506

Source: Elaborated by the author based on data obtained from Marktest.

6.2.

Media cross-ownership policy

In Portugal, one of the fields not covered by specific sector regulation relates to media
ownership. As stated by Costa e Silva et al (2011: 85), restrictions on media ownership in
Portugal were gradually eliminated, “without any reflection, study or discussion on their possible
implications”. On the other hand, the concentration limits lie only in terms of the same sector of
activity and not in respect to ownership of various media. Thus, in the case of the press,
measures to combat monopolies in the sector that were patent in the legislation were replaced
“by the requirement of transparency of ownership and the submission of changes in ownership of
the publications to the general competition regime, upon binding opinion of the regulator, when
the free expression and confrontation of differing points of view is demonstrably concerned”.

58

This absence of stricter barriers shows that there was a path towards liberalization of media
ownership in Portugal. Ensuring transparency of ownership has become the most important
factor and is considered one way of guaranteeing pluralism and preventing concentration.
Therefore, the State, through its governments, has not considered the issue of media ownership
concentration as crucial; however, there have been some legislative proposals to limit the
concentration, which were rejected. In fact, the issue of the media concentration has been
frequently debated by the Portuguese government over the past few years. In 2008, the Socialist
Party presented the Law of Pluralism and Non-Concentration of the Media. According to the
daily newspaper Público, the law intended to “prevent the Government, the regional
governments and the autarchies from owning media organs, with the exception of radio and
television public service” (Público, 23/01/2009). It was proposed by the government, but rejected
by the Portuguese Parliament in October 2008.
The proposal law presented by Socialist Party intended to respond to the constitutional provision
that it is the State’s responsibility to assure the independence of the media towards political and
economic powers, and to prevent the concentration of media companies as well as to disclose
media companies’ ownership and means of financing48. The opposition Social Democratic Party
stood against this bill and argued that it did not provide a clear, broad, and strong response to the
needs of pluralism in an emerging participatory and deliberative democracy. They criticized this
statute for being obsolete since the European Commission was already promoting the
establishment of reliable criteria and objective indicators about pluralism. The national President
raised this point to justify his veto of the law. Despite the rejection of the Law of Pluralism and
Non-Concentration of the Media, the media concentration debate continues.
Regarding ownership concentration, the Communication Regulatory Authority may comment on
it, but the Competition Authority has the decision-making power and acts the same way for all
businesses and industries in the national scene. Not being specific to the media industry, this
economic regulation rests, then, to the Competition Authority.
Some authors (Cádima, 2007: 69)49 argue that media concentration requires specific regulation in
Portugal and that is why a sector regulation is necessary, considering that the media “are not a
sector subject to the pure and simple logic of markets” and, therefore, should not be ruled by the
economic regulator (Competition Authority), but rather by a specific regulator for this sector. “In
terms of concentration, the sector regulator would give priority, from the author’s point of view,
not only to economic issues, but also to the identity and ethical dimensions, pluralism and
editorial freedom of the media. ERC should “undertake the framework for economic regulation
of the media sector”.

48

According Article 38, paragraphs 3 and 4, and Article 39, paragraph 1, b) and c) of the Portuguese Republic
Constitution.
49

Cádima, Francisco Rui. (2007) “Bloqueios e desafios da regulação do audiovisual em Portugal” In Comunicação
e Sociedade, 11, 65-83.

59

Hence, the regulatory entities involved in the media markets stand out: the Authority for
Competition (AdC) focuses on economic market regulation, the National Authority for
Communications (Anacom) focuses on the technical regulation of communications, and the
Portuguese Regulatory Authority for the Media (ERC) focuses on media content regulation. ERC
is administrative and financial independent from the State, though protected by the Constitution.
Its executive is formed by five members, chosen by the Parliament, for a non-renewable mandate
of five years. Its functions are divided into several domains, namely the registration and licensing
of broadcasting operators, the classification of contents, surveillance and supervision over the
performance and contents presented, the response to complaints and queries, and the application
of recommendations or sanctions (Sousa et al, 2012)50. Additionally, the “Media Companies
Ownership Transparency Initiative”, promoted by the ERC, forces the markets to provide
transparent and detailed information about its finances and shareholder structures, also avoiding
situations of monopoly or media manipulation that can prejudice the citizen’s rights to a plural
and imparcial information system.
It is increasingly important to recognize the regulatory focus on the challenges resulting from
convergence, especially between free-to-air and pay TV and the transition from an analog to a
DTT model in January of 2012. It may be appropriate to rethink the regulation model by
examining the close relation between the audiovisual materials’ content regulation (ERC) and
technical regulation (Anacom). However, the proximity and cooperation of these entities may
lead to the materialization of a model that promotes the creation of a third regulatory mechanism,
which permits the integration of efforts and an intrinsic to the goal of focusing on the technical
and content regulation at the same time. These two aspects are not distinct and they need an
integrated response from the regulatory framework51.

6.3.

Media innovation policies

In the last decades, the government has not been sufficiently proactive in designing public
policies and strategic programs to stimulate innovation in the media sector in Portugal. However,
50

Sousa, H.; Pinto, M.; Lopes, F.; Fidalgo, J.; Jedrzejewski, S.; Silva, E. C.; Melo, A. & Lameiras, M. (2012),
Cronologia da Acttividade da ERC (2005-2011). Universidade do Minho.
51

Additional sources for this section:

Cádima, Francisco Rui. (2007) “Bloqueios e desafios da regulação do audiovisual em Portugal” In Comunicação e
Sociedade, 11, 65-83.
Costa e Silva, E., Fidalgo, J. e Sousa, H. (2011) “Regular para a liberdade: o caso português”. Derecho a Comunicar,
1, 80-97.
Feintuck, M. e Varney, M.(2006) “Media Regulation, Public Interest and the Law”. Edinburgh University Press
Faustino, Paulo (2013). “Media Governance, State Subsidies and Impacts on Regional Press and Radio”. Volume 3,
Number 4, December, Serial Number, 17.

60

it is still possible to identify some initiatives or programs created by the state that stimulate
innovation, particularly in regional and local media, through direct subsidies in various fields
(education, market research, innovation and technological modernization, among other possible
policy areas) and indirect subsidies (support for postal costs in newspapers delivery). In any case,
these supports have been progressively reduced and rethought in recent years, not only because
their impact fell short of expectations (Faustino, 2013)52, but also due to the economic pressures
brought the adverse situation that the country has gone through since 2010, culminating in the
intervention – rescue – from Troika. This circumstance has pushed the government to rationalize
the use of financial resources in several areas, including public supports. In this context, also the
state-owned media companies (RTP, and RDP) have been negatively affected in their
development ability, namely (i) because they have fewer resources to invest in innovation, (ii) a
certain degree of uncertainty about the media service model and (iii) concern in recovering the
accumulated debt of the public television broadcaster. Despite of the progressive reduction of the
assigned amount, the State, through the Government’s Office for the Media (GMCS), has been
creating support models (direct and indirect), which have potentiated innovation and dynamism
of the local and regional media markets. Direct support is given to Newspapers and local Radio
or to specific media projects, in the form of a loan to purchase new equipment or to innovate and
develop a journalism project. The subsidies of direct selection aim to encourage new entries
(companies) in the market, in order to reduce the barriers to the market access, or to enhance the
markets’ competition and structure. In exceptional cases, this assistance may also have opposite
effects, helping to make adjustments of market consolidation, promoting the companies
cooperation (even between competitors – coopetition – cooperation between competitors), in
such way that it helps the strengthening of the market as a whole, since the excessive number of
players operating in it, ultimately, can lead to a rejection of the companies without the minimum
critical elements to develop its business (Carvalho et al, 2010)53.
In the case of private media companies of national coverage, the State intervention to stimulate
innovation has been weak or even non-existent, especially with regard to the creation of specific
programs for these news organizations. However, there has been some dialogue in the last three
years, particularly between the Portuguese Media Confederation and the Government members
responsible for the media area, in order to create specific programs within Portugal 2020
(national application of funds from Horizon 2020) for the media industry, whose goal of the
program, approved by the government in September 2014, is to support the transition to digital,
new business models and internationalization of the domestic media industry.
In the past, media companies did not have direct access to economic support programs, unlike
other industries, which in many cases succeeded, innovated and developed with the help of

52

Faustino, P. (2013), Media Governance, state Subsidies and Impacts on Regional Press and Radio, Journalism
and Mass Communication, 3 (12), 768-785.
53

Carvalho, A.; Faustino, P. & Martins, M. (2010), Estudo de Impacto dos Incentivos Directos Concedidos pelo
Estado aos Órgãos de Comunicação Social. MediaXXI, Portugal.

61

public supports. There is no rational clear thinking about the reason of frequent exclusion of the
media from State support to the economy, but this can be explained partly by the fact that
politicians and governors have never perceived the media as an industry, and by the idea that the
government should have economic responsibilities only towards the public television service.
For its part, the media associative movement has been relatively fragmented – divided – and
poorly skilled in technical and structural terms (there are radio associations, press associations,
associations for regional newspapers, associations for private media, etc.), a circumstance that
has not favored the existence of a consistent, organized and strongly legitimated lobby, that
induces the creation of structured policies and encourages the development of this industry.
Obviously, the no existence of a public policy to support the development of the media industry
does not mean at all that this industry has not been able to innovate and evolve over the decades.
Actually, considering some structural and economic constraints of the domestic market (small
market size, low consumption power, weak economic growth, for example), the media industry
has made an effort over the decades to reinvent and innovate practices and business models. In
this context, it can be said that domestically the Portuguese media market structure is part of a
relatively dynamic and competitive market, although there are some structural weaknesses – lack
of dimension and financial capacity – to internationalize; at this level, there have been few
initiatives, although some are individual cases of success as, for example, some operations of
Portuguese companies (Cofina, Ongoing and Impresa) in Brazil and Angola. Therefore, the
development and innovation of private media companies have mainly resulted from the
entrepreneurial skills of its founders and employees, and have been leveraged by the revenue
generated by the business, as well as the investments of shareholders and other investors and
lenders, including Banks, which in some cases have minority stakes in media companies.
Another aspect that should be highlighted is the absence, in the media industry, of venture capital
firms, including companies that are directly affiliated or financed by State funds, which could
help stimulate innovation and creation of new business models. There are several possible
explanations for this, which have to do with (i) the low economic and financial profitability of
the media in Portugal, (ii) the policy guidelines for channeling funds for technology-based
companies, (iii) the idea that the media are a cultural industry without economic value; and (iv)
short-term and conservative logic of venture capital firms. However, this situation may change in
the coming years, especially as the relationship – and dependence – of media with technologybased companies, via convergence (business models, production models and distribution
models), particularly in telecommunications, is growing. And the economic value of this industry
is becoming more valued (in this relationship between technology-media-telecommunications),
because it is not only a cultural asset, but a "commodity" that meets or satisfies certain needs of
the market. So, in this context, public policies – and also venture capital firms supported by the
state – are expected to pay more attention to new business models for the media industry, facing
it as a creative industry capable of generating financial returns to investors.
Finally, it should be noted that, despite the media innovation policy in Portugal does not reflect
an explicit and proactive attitude from the State, its presence can be indirectly seen, particularly
through research and education. The State, through the funding for universities, professional
62

training and research, eventually makes an important contribution; however, at this level, it is
necessary to rethink the funding models in order to encourage more cooperation between
universities and companies, so the impacts on the economy will be more visible, particularly in
media companies. More concretely, three main types of indirect state interventions in the media
industry can be identified, through teaching and research system, for example:

i) The State, through the Institute of Employment and Vocational Training, has funded the
Professional Training Center for Journalists, an institution that has played an important role
in the preparation of human resources for media companies, especially in the area of
content production and journalism. One of the aspects that have to be improved is the lack
of offer in the area of corporate media management.
ii) The Science and Technology Foundation – State foundation to encourage research – it
has supported some projects, like the creation of research centers in the field of
communication sciences that help to think about the role of media in society and to
generate information on journalistic practices and market. However, the research centers
should be encouraged to cooperate with the industry to do more relevant research to the
industry, especially with empirical nature.
iii) The universities and institutes, particularly the public ones (because they receive more
State resources and have greater presence in the country), have played a key role in the
training of professionals to support the value chain of media companies, from editorial,
content production and multimedia technologies areas, to their management and marketing.
It will also be important to strengthen cooperation with the media industry.

6.4.

Summary and best practices

As the analysis of the market structure has illustrated, media cross-ownership is a common
feature of the media landscape in Portugal. In general, the level of concentration is high in all
media markets. Only a few diversified media companies are dominating the market. The
concentration movements of media companies in Portugal can be explained by the need of
companies to consolidate in the domestic market (which is very small), and to gain economies of
scale to grow in overseas markets. No particular cross ownership policy exists in Portugal.
Regarding ownership concentration, the Communication Regulatory Authority may comment on
it, but the Competition Authority has the decision-making power and acts the same way for all
businesses and industries in the national scene.
Similar to what is happening in other countries and media markets, the main challenge of the
media companies in Portugal is to innovate their business models, either through the
improvement of processes and products (incremental innovation) or through the introduction of
new products and new methods for the content distribution (radical innovation). Most innovative
strategies and best practices are related not only to the need to gather resources to streamline
processes, but also to invest in creating new products and to enhance internationalization. The
63

media industry in Portugal is hit by an economic recession and a structural crisis due to emerging
of new media and technologies. A circumstance which has limited resources to invest in
innovation and development, which is a strategic key for the competitiveness of companies and
pluralism of the media system. It is for this reason that the State should also have an active role
on public policies that foster media innovation. In the Portuguese case, as stated above, the
initiatives have been timid and restricted to local regional media and public service media. It is
therefore necessary to design a new generation of cross-over policies, extended to the private
media, which have an accelerating effect of media innovation policies in Portugal.
In conclusion, we may even consider that the future of media companies in Portugal is dependent
on the acceleration of international growth, because of the external market’s stagnation, a
circumstance that increasingly requires the adoption of good management practices and
innovation in contents’ formats, management and marketing. In this context, the Portuguese
regulatory system may have an important role to promote healthy competition in the information
market, and to stimulate innovation in media companies. On the other hand, as described by
Faustino (in Albornoz & García Leiva, 2013)54, the migration from analog to Digital Terrestrial
Television (DTT) enabled a more efficient use of radio-electric spectrum, releasing significant
resources – the digital dividend – which have been used for the development of mobile
broadband.
With the increasing evolution of media and social values, the regulation must be dynamic,
attentive, and adaptable to each new issue that comes out. It is necessary to get a balance
between healthy competition the foment of diversity and pluralism, competition and regulation,
in order to protect and guarantee the future of the public interest and the fundamental rights of
freedom of expression and freedom of information.

54

Albornoz, L. A. & García Leiva, M. T. (2013), A Internet e o Futuro da TV. MediaXXI, Portugal.

64

Chapter 7
Market Structure and Innovation Policies in
Spain
By

Mercedes Medina,
Francisco Javier Pérez-Latre,
Alfonso Sánchez-Tabernero,
Carolina Díaz-Espina
(Media Management Department, School of Communication,
University of Navarra, Spain)

7.1.

Market structure and media ownership

7.1.1. Newspapers
Table 7.1 shows how concentration in the newspaper market has increased from 1984 to 2012,
when C4 almost doubled and Herfindahl-Hirschman index tripled. Such trend can be explained
by two factors: firstly, the crisis in the industry that affected both readership and advertising
income and fostered mergers and acquisitions on newspapers; and secondly the lack of
regulatory obstacles.
Concentration in the magazine industry decreased slightly during the last decade. As Table 7.2
shows, indexes were down and the level of concentration is low. The main reason behind those
two facts is a lack of strong entry barriers: the magazine industry is not a very capital-intensive
business and the readers are not extremely attached to a particular title, in contrast with the daily
newspaper industry.

65

Table 7.1: Newspaper Publishers (Market Share by Circulation)
1984
1988
1992
1996
2000
2004
2008
2012
11.3
18.6
18.6
14.1
15.8
17.7
17.5
17.6
7.7
8.6
12.2
7.3
7.1
7.6
8.2
8.5
6.9
9.3
10.9
7.7
7.1

Company
Prisa
Godó
Prensa
Española
Vocento
5.8
Zeta
5.8
Diario 16 4.3
Recoletos 3.1
Unedisa
0
Prensa
Ibérica
Planeta
Voz
Joly
C4
32.0
HHI
330.9
Source: OJD/Introl

7.1
7.6
4.6
7
0

44.0
687.01

13.5
8.7
3.5
11.7
6.2

14
9.9

13.2
8.9

18.7
8.6

18.3
7.5

18.3
7.0

13.5
6.6
7.2

11.4
7.1
7.4

10.4
7.5
7.6

16.8
7.3

15.8
7.3

3.1
1.4
55.0
51.5
1,057.9 765

1.7
3.0
2.4
49.3
804

3.5
2.9
2.3
55
1,028

3.9
2.6
2.0
59
1,069

3.1
2.7
2.0
60.2
1,089.7

Table 7.2: Magazine Publishers (Market Share by Advertising Revenue)
Company
2000
2004
2008
2012
RBA
15.2
14.83
13.6
15.4
Hearst
14.4
13.99
12.3
17.94
(formerly
Hachette
Filipacchi)
Conde Nast
3.23
6.08
8.69
13.54
Motorpress
4.20
6.52
8.01
9.56
Zeta
10.03
8.17
7.06
10.9
G+J
8.57
6.84
6.20
7.74
Unedisa
4.20
4.43
4.72
7.08
Hola
5.50
4.69
4.34
5.68
Prisa
2.10
2.80
3.25
Axel Springer
2.39
2.23
2.79
2.80
Heres
2.58
2.87
2.29
C4
48.21
43.83
42.6
57.78
HHI
692.28
617.05
522.64
1,102.75
Source: Infoadex

66

7.1.2. Television
Spanish television industry follows the general path of the European market: there is one public
broadcaster (RTVE) that gets –through its two national channels- around one third of the
audience; three main commercial firms: Mediaset-Telecinco, Planeta-Antena 3 and Prisa
Television; one small national player: La Sexta, which recently has reached an agreement to be
part of Planeta; and a big variety of regional, local and niche channels. Table 7.3 shows that the
market has evolved from a public monopoly in the mid-eighties towards the present oligopoly.
2010 was a key year in the industry: it took place the analogue switch-off and new digital
channels were launched; the Government decided that the state-owned company RTVE would
not be financed by advertising (so far, it had 25 percent of the advertising television market); and
Gestevisión-Telecinco merged with the national channel Cuatro, which had 7 percent of the
audience. One year later, Antena 3 acquired La Sexta.
The strategy of Telecinco and Antena 3 is quite similar: they try to protect their market share in
spite of the fragmentation of the market; to do that, they look for internal or external growth.
During the late nineties they got between 20 to 25 percent of the market each with one channel;
now they need to accumulate several channels to keep such rates. Telecinco group, owned by the
Italian firm Mediaset, operates with brands like Telecinco, Cuatro, La Siete, FDF, Boing and
Divinity, among others. In 2012 reached 44 percent of the advertising television market.
Atresmedia, owned by the Spanish group Planeta, operates Antena 3, La Sexta, Nova, Neox and
Nitro, among others. In 2012 it got 41 percent of the advertising television market.

Table 7.3: Television Broadcasters (Market Share by Audience)
Company
1984
1988
1992
TVE
95.0
85.0
45.5
(RTVE)
FORTA
5.0
15.0
16.5
Antena 3
14.7
(Planeta)
Canal
1.7
Plus/Cuatro
(PRISA)
Telecinco
20.8
La Sexta
C4
100
100
97.5
HHI
9,050 7,450
2,994
Source: Ecotel and Taylor Nelson Sofres

1996
27.9

2000
32.4

2004
28.2

2008
22.0

2012
18.9

15.4
25.0

16.9
21.5

17.7
20.8

15.6
17.1

9.8
25.8

2.2

2.1

2.1

7.8

2.1

20.2

22.3

22.1

28.1

96.5
2,054

93.1
2,299

88.8
2,034

19.0
5.1
71.5
1,467

82.6
1,995

67

Regarding digital satellite offering, there is only one provider in the market, Canal Plus. The
multiplatform satellite provider started in 1997, merged in 2002 with its competitor, and became
the only player since then. In September 2013, the number of subscribers was 1.723.530, 5% less
than one year before. In October 2011, Canal Plus launched a service called Yomvi, to spread its
offer to Internet, allowing subscribers to access contents anytime from everywhere. Yomvi is
also available for Smart TV, being the only offer of digital pay services available for Smart TV
and other mobile devices.
In the case of cable television, the decrease is even higher as indicated in the Figure 7.1. There
are a total number of 1.176.382 subscribers in September 2013, 11% less than the year before.
Although there are more providers in the market, they do not compete among them. There are
three regional providers in specific regions and ONO, the market leader that operates in many
regions within Spain. ONO offers Tivo as an experience of smart TV, allowing subscribers to
enjoy apps and Internet contents from the television set thanks to a special fiber optic cable for
the service
IPTV services enjoy the smaller piece of the cake, and their decrease is steep. From September
2012 to September 2013, the number of subscribers decreased 24%, and now totals 673.482. The
main provider is Telefónica, since Vodafone left the provision of audiovisual services in
December 2012. The service is called Movistar TV, and in July 2013 Movistar TV GO was
launched for all Movistar TV subscribers (previously known as “Imagenio”). Movistar TV GO
follows the same idea than Yomvi, allowing subscribers to access contents from different devices
and at any time.

Figure 7.1: Number of Pay tv subscribers

Source: CMT

68

7.1.3. Radio Broadcasting
The Spanish radio broadcasting market is quite unique within the European context. The
dominant firm is a private company, Unión Radio –owned by PRISA group- with more than 50
percent of the audience market jointly with all their channels, such as Cadena Ser and Cadena 40,
both leading the talk and music radio segments (see Table 7.4). Such figures represent the
biggest concentration of a national radio broadcasting market in private hands in Europe.
The level of concentration in the radio broadcasting market is stable. C4 is similar in 2012 and
1988, and the Herfindahl-Hirschman index has barely changed. The high level of concentration
in the market is due to a lack of legal restrictions: the main private operators –Ser, Onda Cero
(owned by Planeta-Antena 3 group) and Cope (owned by the Spanish Catholic Church)- can use
their networks of local radio stations to provide national programs.
In such context, one of the main competitive advantages comes from distribution. Prisa uses its
more than 440 owned or affiliated local radio stations to offer six national programs: one “news
talk” format and five music formats. Cope and Onda Cero have over 200 owned or affiliated
local radio stations, and both of them have one news-talk and one music format. Next private
competitor –Kiss FM- only has 70 local stations. The public radio Radio Nacional (RNE) has 7.6
percent of the news-talk format audience but does not compete in the advertising market.

Table 7.4: Radio Broadcasters (Market Share by Audience)
Company
Unión
Radio
(PRISA)
Cope
RNE (RTVE)
Antena 3 (Godó)
Onda Cero (Planeta)
Kiss FM
Punto
Radio
(Vocento)
C4
HHI
Source: EGM

1988
36.8

1992
43

1996
50.1

2000
51.8

2004
49.1

2008
51.7

2012
39.6

15
23
10.7

14.9
19.3
13.1
11.6

21.2
15.6

16.7
16.8

12.6
0

13.9
8.7

10.5
7.6

12

11.1

10.8
6.2

12.9
5.6
2.2

13.7
3.6

85.5
90.3
98.9
96.4
78.7
87.2
71.4
2,222.3 2,749.67 3,346.81 3,367.58 2,686.1 3,113.4 1,936.9

Table 7.5 shows the level of concentration in the online news media market. This industry has
weak entry barriers: as a consequence, C4 and HHI indexes show a moderate level of
concentration. However, during the last years concentration has increased. In part, this trend can
be explained by strategies of external growth launched by the three main players of the market
69

(Prisa, Unedisa and Planeta), that have acquired offline media –mainly newspapers and TV
networks- which have popular online versions.

Company
Prisa
Unedisa
Planeta
Mediaset
Zeta
Godó
RTVE
Yell
Schibsted
Vocento
C4
HHI

Table 7.5: Online News Media
2008
17.5
7.8
3.6
3.5
3.4
3.4
1.8
4.6
1.8
4.3
34.2
461.3
Source: EGM

2012
26.1
18.1
14.6
5.2
5.4
5.7
5.3
3.2
3.3
4.7
64.5
1,381.6

The strength of Google in the Spanish search engine market (see Table 7.6) comes from its “first
mover advantage” and remarkable brand recognition: it is perceived by most users as the only
way to find what they look for. The virtuous circle for the dominant player is completed by the
lack of marketing investments of its rivals that do not know how to counter Google’s monopoly.

Table 7.6: Search Engines (Market Share by Traffic)
Company 2004
2008
2012
Google
92.10
95.70
96.20
Microsoft 2.40
2.10
0.90
Yahoo
1.60
1.70
1.70
Bing
0.50
Ask
0.50
C4
96.10
99.50
99.30
HHI
8,490.73 9.165.79 9,258.3
Source: StatCounter and Netsuus

70

Spanish government has showed concerns about concentration in the search engine market but it
will not interfere unless it can identify an abuse of dominant position. However, during the last
months traditional media companies are worried about Google’s ability to control the online
advertising market and they are asking for government intervention.

7.2.

Media cross-ownership policy

In dealing with concentration issues in media, entertainment and telecommunication industries
regulators deal with two main challenges (Llorens-Maluquer, 2001)55: on one hand, technology
changes the “rules of the game” very quickly and legal frameworks seem always outdated.
Secondly, they need to balance excessive levels of concentration (that will lead to less market
offerings, high prices for consumers, and lack of incentives for innovation) and excessive
fragmentation of the industry (that will produce small companies, unable to compete in
international markets).
Both concerns exist in Spanish media markets. The level of concentration is high in several
industries; but, at the same time, Spanish media groups achieve less synergy, economies of scale
and brand recognition than their US, German, British, French, Italian or Japanese counterparts.
As a matter of fact, in the last decade there has been a strong unbalance in the flows of capital
towards media and entertainment industries between Spain and the largest economies in the
world.
Large companies enjoy positions of greater independence and strength to criticize decisions
made by political institutions (Albarran, 2002; Baker, 2007)56. But in Spain the weakening of
national firms has produced a bargaining power’s shift: national and regional governments exert
a decisive influence in the content provided by Spanish news media groups.
Governments make decisions about tax and advertising budgets (Fernández & Blasco, 2014) 57.
They allocate new broadcasting licenses and can impose fines for companies that disobey laws.

55

Llorens-Maluquer, Carles (2001), Concentración de empresas de comunicación y el pluralismo: la acción de la
Unión
Europea,
Doctoral
Thesis.
Universitat
Autònoma
de
Barcelona.
http://www.tesisenred.net/handle/10803/4095.
56

Albarran, Alan (2002), Media Economics: Understanding Markets, Industries and Concepts, Iowa State Press.

Baker, C. Edwin (2007), Media Concentration and Democracy. Why Ownership Matters, Cambridge University
Press.
57

Fernández, Isabel; Blasco GIL, José Joaquín (2014), “Press Subsidy Policies in Spain in the Context of Financial
Crisis (2008-12). An Analysis of the Catalan Case”, European Journal of Communication, Londres, vol. 29, nº 2,
pp. 171-187.

71

Because of such power, governments’ action may be critical for the survival of some small and
medium size media companies58.
Among the owners of media companies are banks, finance entities, investment funds and
international media moguls such as Bertelsmann, Mediaset or Rizzoli Corriere della Sera.
European companies see Spain as an opportunity to enter Latin American markets. Since 2000,
most of the media companies participate in the stock market. Being listed in the stock markets
has improved transparency in the management of media companies. But the possibility that
economic pressures could eclipse the media companies’ broad social functions and
responsibilities could be a potential drawback.
Media and entertainment companies need to manage scarce resources, assess supply and
demand, apply new technologies and improve the quality of their services. Media firms’ growth,
vertical and horizontal integration, internationalization and diversification strategies,
specialization and segmentation of products targeted to different publics are appropriate tools for
enhancing innovation and profitability and help their survival in highly dynamic and competitive
markets.
Spanish media concentration regulation evolved since the late nineties from an “ownership
model” to a “market share model” or “total audience model”. During the age of scarcity of media
outlets, policy-makers settled limits for ownership of radio and television broadcasting. But the
launching of a variety of new audiovisual products made such legal framework old-fashioned.
The relevant issue was not to have a given percentage of a media company but to reach a given
market share, adding the audience of the different media products owned by the same firms.
The audiovisual sector has been one of the most regulated. However, following the trend of other
European countries, liberalization started at the end of the eighties. Private television came to
Spain in 1988, thanks to the Law 10/198859. The Government allowed the creation of three new
national television channels. In 2005 the Government granted new licenses for television
channels, allowing the entrance of new media groups in the television sector, such as Vocento
and Unidad Editorial.

58

Summary of the regulatory framework

Law 10/2005, June 14, of Urgent Measures to Foster Digital Terrestrial Television, Cable Television
Liberalization and Promotion of Pluralism.
Law 30/2005, December 29, of General Spanish State Budget for 2006.
Law 8/2009, August 28, of Funding for the Spanish Corporation of Radio and Television.
Law 7/2010, March 31, of Audiovisual Communication (LGCA).
59

Law 10/1988, May 3, of Commercial Television.

72

Cross-media ownership rules were also liberalized in 2006. The law allowed participation in
more than one television channel, although establishing some limits: a shareholder may not
participate in more than two television licenses in the field of dissemination, and a company
cannot hold a significant stake (more than 5%) in more than one operator of equal coverage.
Four years later the law became more flexible, as the LGCA 7/2010 recognized the right to
participate in the ownership of television channels, provided they do not earn more than 27 % of
the audience share. This opened the door to new mergers: Mediaset and Sogecable and Antena 3
and La Sexta. However, a single company may not have significant interests in providers that
accumulate more than two multiplexes, and in any case at least three state private operators must
be guaranteed. In addition, owners from countries that are not members of the European Union
may not own more than 25 percent.
In 2010, the new Audiovisual Law extended the licensing period from ten to fifteen years.
Renewal is automatic by meeting certain requirements. The ability to lease or license any of the
channels that are part of a recognized DTT multiplexes was also granted. It is possible to rent
two, three or a full multiplex, provided they have passed at least two years from the award of the
license. The payment of conditional access is also a right for licensees, limiting it to 50% of the
channels allocated to each license to ensure that there is an extensive range of free TV offerings.
In summary, the Spanish market is now experiencing a second evolution. The government tries
to make compatible growth of national companies with protection of pluralism and free
competition. More transparency is now requested; more attention is paid to external growth
(M&A operations) than to launching of new offers in the market; vertical integrations carefully
watched, in order to prevent bottlenecks that may lead to abuse of dominant positions; practices
against free competition like blocking sales of products or pricing agreements between
competitors in oligopolistic markets are screened.

7.3.

Media innovation practices

Innovation in the media in Spain has not been led by regulation. To some extent, the need to
innovate has been spurred for the unprecedented industry crisis. Even Digital Terrestrial
Television with the analogue switch off and the accompanying increase in the number of
channels available for free, has arguably failed to give opportunities to new entrants (Fernández
& Díaz, 2010)60.
The wave that swept the media in Spain has taken managers, firms and even entire markets by
surprise. Internet’s development and free consumption have diminished content value. There is
an abundance of substitutes. Consumers find news and entertainment without any cost and
started “fleeing” some media outlets. Then, the industry was hit by the September 2008 financial
60

Fernández, Isabel; María-Jesús Díaz-González (2010), “Digital Terrestrial Television Rollout Policies in Spain
and the Changing Scene of Television in the Context of Analogue Switch-off”, International Journal of Digital
Television, Oxford, vol. 3, nº 3, pp. 289-307.

73

crisis that eroded growth, and advertising with it. It was the “crisis inside the crisis”. The need
for daring solutions was all the more pressing in a context with fewer resources to cope with
change.
However, most Spanish media companies, trapped by the conventional wisdom of their markets,
still offer a “menu” that seems a mere imitation and repetition of “glories” of the past. According
to the Reuters Digital News Report, the print media industry in Spain kept declining in 2013,
both in terms of market share and advertising income. One consequence was the replacement of
the editors at three big newspapers El País, El Mundo, and La Vanguardia. Nevertheless, the
print market enjoyed the launch of lifestyle magazines such as Forbes and Icon, as well as some
politically focused monthly periodicals. Mergers left the television market with just two
commercial operators that as of September 2014 account for an audience share of 57.8 (Mediaset
and Atresmedia). Closures affected media companies of all kinds, including a multimedia group
(Intereconomía), a commercial radio network (ABC Punto Radio) and a regional public service
broadcaster (Radiotelevisió Valenciana). Online-only news media continue growing (El
Confidencial.com, Eldiario.es, for example).
Technological improvements are beneficial: new products and services are developed from them,
and growth occurs. But some of the old players cannot cope with market transformations.
Companies need to increase their capabilities for innovation and creativity, find the best
management options available, and foster culture and leadership “revolutions” to get ready for
change. The digital transition has updated company learning. Traditional ways of production are
changed, and the workforce needs to be trained again. Some old and established players are
threatened, and only learning companies make progress. Best brands are able to innovate, have
initiative and accept risks. The more capable media companies “swim against the stream”. They
seem to have a capacity to nurture the best possible content to sustain their competitive
advantage. They resist temptations to be “lighter”, “cheaper” or look for the lowest common
denominator, and often defy conventional wisdom. Sometimes, they are old companies that have
been consistent with well-established identities.
Decisions to charge for online news content in Spain are adversely affected by memories of the
audience decline caused by the hard pay-wall erected by El País in November 2002 – withdrawn
three years later. Since 2010, most of them have adopted a strategy of open and free-to-read
websites, alongside e-replicas of print editions sold through digital newsstands. But inspired by
the example of foreign newspapers, El Mundo introduced a soft paywall in November 2013,
along with an evening app edition and a daily gossip tablet app. Some regional sites like
Lavanguardia.com now offer premium content via their websites while online-only sites such as
ElConfidencial.com, Eldiario.es and Infolibre (published from Madrid) and Vilaweb (a Catalan
online pioneer) have voluntary paid membership schemes, with previews and benefits for
subscribers.
A decade ago, online audiences started to engage with news in political blogs and forums, later
in comment threads on news sites, and that tradition has made its way to social networks (in
Spain, 40% share a news story via email o social media). Although TV current affairs shows

74

promote hash-tags relentlessly, Twitter comes third to more personal networks. Some media sites
are enabling direct WhatsApp sharing.
Innovation has also arrived to Spanish television companies. Traditional free to air television
channels started offering online premium contents for any device. The three main television
companies have created apps for their channels, smartphones and tablets (atresplayer and
atresmediaconecta for Antena 3; mitele for Mediaset content; and +24, rtve.es, clan and +tve for
TVE). In terms of business model innovation, Atresmedia seems to be more active,
differentiating users, registered users and subscribers, thus trying to maximize information for
advertisers. It is exploiting different revenue streams: advertising, premium and PPV. In this
context, it is relevant to take into consideration that the cost of online delivery is very low. In the
case of RTVE, its offering is rooted in its foundations as public service, and is available for free.
Probably, Mediaset Spain has not been as active as Atresmedia because of its leadership in the
traditional business.
In terms of Smart TV distribution, Atresmedia and RTVE are also the more active players.
Nubeox, an online video store owned by Atresmedia, can be accessed directly through Smart
TV, and the offering of Atresplayer in Smart TV sets is likely to be working very soon. RTVE
has also launched its Smart TV offering, called Botón Rojo [red point], which allows people with
connected television sets to enjoy all the contents available on the Internet.
In Spain the regulation and public policies to promote and foster innovation in the media
industry have focused in fostering DTT, increase competition in the audiovisual sector, foster
entrepreneurship and establishing intellectual property laws.
The Spanish Ministry of Industry coordinated the works of AETIC (Association of Spanish
Electronics, Information and Telephone Technology Companies) and the DTT IMPULSA plan
with the goals of favouring the digital transition. IMPULSA was the association that represented
national and regional broadcasters and the operator of the national broadcasting network. An
agreement was signed between the three parties in 2007 to facilitate the digital transition and
steer its development. Both AETIC and IMPULSA committed to develop actions to foster the
transition until the “analogue switch off” (2010). Campaigns of consumer information about
DTT were launched, DTT advanced services were developed and infrastructures of reception and
transmission were set in place.
AETIC represented around 1.000 members; 300 were individual firms and the rest entities and
business associations with activities related to Electronics, Information Technologies and
Telecommunications. The Spanish Government funds actions that can facilitate technological
innovations in media companies. Learning initiatives related to creation, production, distribution
or sales of digital content are also fostered, as it is the participation in seminars and events or the
work to elaborate industry reports. There is also funding for the production and distribution of
digital contents.
Red.es is a public entity that works on the development of Internet’s and new technologies’
potential. Its goal is to increase employment by supporting the companies that aspire to be part of
the new digital frontier, creating programs of learning and consulting for medium and small-size
75

companies and entrepreneurs. It also has the duty to improve savings and efficiency by
implementing new information and communication technologies in the public sector.
The Ministry of Industry, Energy and Tourism spends 500.000 € in public funds to access
learning programs about Digital Economy (October 2014). Public funding follows two goals that
are contemplated in the “Spanish Digital Agenda”. Among the lines of action some initiatives to
help digital capabilities and professional training stand out. One of them is specifically designed
to “foster an improvement of the university offerings geared to the formation of professionals in
the Technologies of Information and Communication”. It funds master programs that offer
technical and digital training.
The National Observatory of Telecommunications and Information Society (ONTSI) works as a
public initiative inside Red.es to research and analyse the telecommunications sector. It has
recently published the report “Technologies oriented to mobility: trends and evaluation”.
The Law of urgent measures for the development of DTT, liberalization of Cable Television and
promotion of pluralism was signed to help the growth of the broadcasting sector. It allowed a
merger of television channels as long as their audience wasn’t higher than 27%. A Law was also
approved for the funding of RTVE Corporation. It suppressed advertising in the public television
channels, leading a huge migration of advertising expenditures to the commercial channels
(around 500 million euro). In order to compensate their economic loss, commercial operators
were required to allot a 35% of their income to finance RTVE (the national public broadcaster).
Besides, pay TV channels and telecommunications companies were forced to use part of their
income to fund the public corporation.
In 2013 it was established that the National Commission for Markets and Competition (CNMC)
would also have a say in matters related to the media and it was created a General Direction for
Telecommunications and the Broadcasting Sector that replaced the State Commission for
Broadcasting Media (CEMA), created by the Law 17/2010. The General Direction deals with
matters such as evaluations of abuse of dominant market position, complaints about noncompliance of the Self-Regulation Code about children TV content, or compliance with legal
limits for advertising in television.
The General Law of Audiovisual Communication was signed to adopt the EU Directive 89/552.
It repeals all the previous laws related to broadcasting and promotes European and independent
production. A 51% of broadcasting time should be allotted to European film and broadcasting
works and at least a 10% of total broadcasting time should be dedicated to independent
production (half of them produced in the last 5 years). The Law also regulates subsides for the
film industry: broadcasting companies should devote a 5% of their previous year income to fund
films and TV series.
The recent Law 14/2013 (September 27) supports entrepreneurs and their internationalization.
Following the law, public and private entities have put in place initiatives to create and finance
new businesses. The Ministry of Industry, Energy and Tourism created CIRCE (Centre of
Information and Network for Business Creation). Its goal is to help with information activities of
innovation and entrepreneurship. A fund to help young entrepreneurs was also created.
76

Another key public initiative is the “Avanza” (Spanish for “move forward”) Plan for the
development of the Knowledge and Information Society. Between 2005 and 2008 the Plan has
received 5.000 million euros to fund projects to develop products, processes, applications,
contents and services related to ICT. Its basic priorities were promoting the use of Internet and
the creation of digital content.
The Ministry of Economy and Competitiveness also created CDTI, a fund to finance
technological innovation that helps innovation projects in large companies. Some city and
regional authorities have also fostered the creation of technology clusters around those lines.
Relevant examples are Barcelona Activa, Madrid Emprende, Tetuan Valley (Madrid), Moderna
(Navarra) and Crecer+ (Basque Country).
The measures to protect intellectual property are assigned to the Ministry of Education, Culture
and Sports. The online platform Filmotech, created under the initiative of Spanish producers by
EGEDA (Entity for the Management of Rights of Film and Broadcasting Producers) was
approved by the Spanish Government to fight piracy. Filmotech distributes legally Spanish,
European and American films. It has also fostered a number of information media campaigns
and police actions against piracy.
In the last months there is a debate about whether a “Google tax” should be approved as a part of
the controversial project of the Law of Intellectual Property. With this law, the Government
seems to be yielding to the pressure of AEDE (Association of Spanish Daily Newspaper
Publishers). However, according to a spokesperson of the Government in the Senate, “it is a very
controversial law, but it tries to avoid piracy and favour creative processes in the Net, so that the
efforts that are done in creative processes and elaboration of news receive their economic
compensation.”
As a conclusion, the Spanish Government regulatory and policy actions are favouring more
innovation in the Telecommunications sector than in the Media. Public action has been oriented
more to technologies than to contents. A confusing web of public initiatives and institutions
make the promotion of innovation and entrepreneurship less dynamic and efficient for the media
industry.

7.4.

Summary of best practices

An improvement in marketing and advertising could also be an answer to the crisis. Some
initiatives might include easier access and consumer transactions; better effectiveness for clients;
more personalization and emotional implication; loyalty rewards. New media experiences should
be created to increase levels of engagement. Contemporary audiences are fickle. But strong
brands create powerful experiences in which the point of sale plays a role: some brand
extensions could actually work for media brands that have solid relationships with its publics.
Advertisers will demand better target audience knowledge and ask for precise intelligence about
advertising and marketing campaign effectiveness; they will also want to use digital strategies

77

and offers for several media platforms. Selling aggressively “media spaces” will no longer be
enough: there will be a need to build sophisticated marketing machines to serve clients.
A related field for improvement in Spanish Media is consumer understanding. Markets will be
better served by listening more. Some companies still consider audience and clients reactions as
a curse. In reality, they are a blessing. The capacity for analysis of consumer feedback allows
companies to respond relevant questions such as: Who is the consumer? What is he or she
buying? How often? What kind of event does trigger a consumer response? Which product
version sells best? At which price? What is the most attractive package? What is the best seller
for every audience? What is the best performing postal code? Are consumers satisfied?
Spanish companies might also need to differentiate from one another not only by their content,
but also by its distribution. Content distribution improvement is related to access, multiple
distribution channels and easier transactions. As the music industry taught, added value is related
to content distribution. Content should be distributed in multiple platforms: visual, text,
podcasting, blogs, and so on. Consumers expect brands to be close to them: in this supply market
brands are actively looking for users and not the other way around. Downloads create new brand
relations: the amount of time people spend with media is increased and “word of mouth” and
recommendations are fostered.
The digital transition allows for increased levels of participation and interactivity, creating some
opportunities. Social media like Facebook or Twitter teach old media to be relevant and flexible,
engage consumers, listen to them, and use a conversational tone. Collaboration and a sense of
community are fostered. Media companies should think like consumers. Sometimes there is a
tendency to paralysis that comes from a lack of ability to stand back and understand new
conditions and choices for consumers, or to consider why the competition is growing.
Some lessons from the digital and mobile transition in Spanish media are related to management.
The digital transition brings with it flatter management structures, more flexibility, less
intermediaries, easier operations and the end of some physical distribution networks. Structures
are in need of restructuring. Second-generation Internet companies have organized their
management around openness and flat, horizontal structures. They have shown that the more
experienced managers are not necessarily the best innovators.
Spanish media outlets need to broadcast content that can reach audiences wherever they are.
Many people don’t have the time to read comfortably a piece of news at home, but could listen to
an in-depth report in their commutes, while preparing dinner, or cleaning up the garden. iPads
and tablets will bring new casualties with them. But the digital transition is good for consumers
and will be a force for the industry’s improvement. Initiative, innovation and risk are differential
factors for leading companies that look for solutions, avoiding the creative paralysis caused by
bureaucratic forces and the “status quo” in the media market. The Spanish regulatory
environment should be a better help to create the environment where those changes take place61.

61

References

78

Álvarez Monzoncillo, José María (2011) La televisión etiquetada: nuevas audiencias, nuevos negocios, Barcelona:
Ariel.
Artero, Juan Pablo (2008), El mercado de la televisión en España: oligopolio, Deusto, Barcelona.
Levy, D., & Newman, N. (2013). Reuters Institute Digital News Report 2013.
Medina, Mercedes y Ojer, Teresa (2009) “Estrategias online de las cadenas de televisión”, en el libro editado por
UTECA y CIEC, La televisión en España. Informe 2009, pp. 299 – 316.
Medina, Mercedes; Artero, Juan Pablo y Sánchez-Tabernero, Alfonso (2006) “Ventajas competitivas en el sector
audiovisual español”, Comunicación y Pluralismo, nº 5, UPSA, Salamanca, Enero, pp. 13-33.
Pérez-Latre, F. J., & Sánchez-Tabernero, A. (2012). Innovación en los medios: la ruta del cambio. Eunsa.
Picard, R. G. (2014). 12 Digital Media and the Roots of Marketing Strategy. Policy and Marketing Strategies for
Digital Media, 195. In Liu, Yu-li, Picard, R. G. (2014). Policy and Marketing Strategies for Digital Media.
Routledge.
Salaverría, Ramón; Negredo, Samuel (2008), Periodismo integrado. Convergencia de medios y reorganización de
redacciones, Editorial Sol90, Barcelona.
Sánchez-Tabernero, Alfonso & Juan Pablo Artero (2011) Conference “Media Concentration within the Spanish
Market”, Media Concentration around the world. Université Paris-Dauphine, Paris.
Wirtz, B. W., Nitzsche, P., & Mory, L. (2014). 14 Cross-Media Marketing Strategies. Policy and Marketing
Strategies for Digital Media, 218.

79

Chapter 8
Market Structure and Innovation Policies in
Switzerland
By
Cinzia Dal Zotto (University of Neuchâtel)

8.1.

Market structure and media ownership

Switzerland is a small country that has enjoyed a remarkably long and continuous tradition of
independence and political neutrality. The federal structure grants considerable autonomy to the
different cantons. With a population of about 8 million, Switzerland's ethnic and linguistic
diversity reflects its location relative to three major neighboring countries: Germany, France, and
Italy, respectively. Ethnically, the Swiss German-speaking population is in the majority
(approximately 65 percent), followed by the French-speaking (22 percent) and Italian-speaking
(8 percent) populations. This diversity, coupled with affluence, nearly universal literacy, and
direct civic engagement has been fertile ground for a highly competitive and largely independent
press. However, during the past two decades, the media industry has been experiencing an
increasing trend towards concentration of ownership mostly due to competition for decreasing
advertising revenues. In addition to mergers, cooperative ventures and the increasing use of
shared editorial, feature, and supplement sections effectively standardize the editorial image in
national and international news reporting.

8.1.1. Newspapers
At newspaper level the Swiss market is highly concentrated. In terms of advertising revenues, the
three major media players – Tamedia AG, Ringier AG and NZZ Group, all based in Zurich – are
controlling about 80% of the market. Tamedia alone collects 50% of the advertising revenues in
the German and French speaking part of the country. Based on circulation we can identify the
same situation as Tamedia AG, Ringier AG and NZZ Group control 78% of pre press market and
53% of what is offered online across Switzerland. Since 2001 these three dominant companies
have increased their market share by nearly 40% with a growth of 20% only in the online sector
that shows an even higher degree of concentration. Apparently only the biggest players in the
market are in a position to operate news sites with a significant reach and thus barriers to entry
are very high.
80

In the German speaking Switzerland the three main publishing houses control 83% of the press
and 57% of the online market. During the last 10 years about a dozen publishing houses lost their
status of news media outlets with wide circulation while the major media companies have been
increasing their market share considerably. The market share of Tamedia grew from 19% to
36%, the one of Ringier from 21% to 27% and NZZ Group reached 19%. In line with a regional
monopoly seeking strategy, in 2013 Tamedia AG has acquired Ziegler Druck und Verlags-AG,
the publisher of Der Landbote in Winthertur (Table 8.1). The dominance of Tamedia is evident
also when looking at the market share in terms of advertising revenues in the press market.
Despite a general fall in advertising revenues for the Swiss daily and Sunday press by 18%
during 2003 and 2011, Tamedia AG reached a 50% slice of the advertising pie in 2012, with
Ringier and NZZ controlling each a 16% share and the rest of companies sharing the remaining
18% of the pie.
Table 8.1: Newspaper Publishers – Evolution of market shares (%)
Publishers
German-speaking
part
Tamedia

Ringier
NZZ Gruppe

AZ Medien

Others

Titles

2001

2012

20 Minutes, Tages Anzeiger,
Berner Zeitung, Sonntags
Zeitung.
Blick, Blick am Abend,
SonntagsBlick.
Neue Zürcher Zeitung (NZZ),
NZZ am Sontag, Neue Luzerner
Zeitung, St-Galler Tagblatt.
Argauer Zeitung, BZ Basel, Der
Limmattaler,
Schweiz
am
Sonntag.

19%

36%

21%

27%

7%

19%

4%

8%

49%

10%

In the French speaking part of Switzerland, this year Ringier AG has been consolidating his
position with the purchase of Le Temps, the reference newspaper of the region, 92.5% of which
was previously owned by Ringier and Tamedia in equal parts (Table 8.2). Tamedia dominates by
controlling 68% of the press market – and 46% of the digital market. Between 2001 and 2012 six
publishing houses closed down or were taken over by other media companies contributing to a
shift of the ownership profile in favor of Hersant, who controls 11% of the market, and Tamedia.

81

In terms of advertising revenues Tamedia collected 57% of them in 2012, compared with the 6%
share of Ringier and the 19% share of Hersant.

Table 8.2: Newspaper Publishers – Evolution of market shares in French speaking Switzerland
(%)
Publishers
French-speaking
part
Edipresse
Tamedia

Editions Suisses
Holding
Ringier
Other

Titles

Le Matin, le Matin dimanche,
La Tribune de Genève, 24
Heures, La Broye, le Journal de
Morges, Le Régional.
Le Temps

2001

2012

56%
0%

0%62
68%

2%
5%

11%
4%

39%

28%

The three dominant publishing groups – Tamedia, Ringier and NZZ – are highly profitable,
however an increasing majority of profit comes from non-journalistic offerings. Ringier owns
dailies, weeklies and magazines but has progressively extended its business to digital and mobile
e-commerce platforms such as ticket selling, as well as job, housing and car classifieds. Further,
Ringier is a vertically integrated company and owns the largest printing plant of Switzerland as
well as a part of the group “Swiss Printers”, a joint venture in the graphics business which shares
are divided between Ringier (58.8%), NZZ (25.2%) and Edipresse (16%). Tamedia is a
multimedia group that owns newspapers and magazines but also local television networks as
well as e-commerce platforms. The group is pursuing a strategy of vertical integration, too. As
mentioned above, it jointly owns the Swiss Printers group as well as its own distribution and
logistic service.
Like its main competitor Ringier, Tamedia is also present in the ticketing business with the
platform “starticket.ch”. Revenues from the digital business, mainly internet-based and mobile ecommerce-services, now account for about a quarter of the sales for both Tamedia and Ringier.

62

In 2011, Tamedia acquired the Swiss activities of Edipresse, a Swiss media group based in the French speaking Switzerland that is still active
in Eastern Europe and in Asia.

82

The NZZ Group holds several daily newspapers in its portfolio as well as a dozen of magazines.
The group is also present at multimedia level with three radios and two local TV channels. AZ
Medien was born from the merger of "Der Aargauer Tagblatt AG" and "Badener Tagblatt AG" in
1996. The Group owns several dailies and a weekly newspaper, its own printing plant, and has a
diversified portfolio including a dozen of specialty magazines as well as four regional
televisions. Although mainly active in the regional press, the publishing group Editions Suisses
Holding further expanded its business with e-commerce services.

8.1.2. Television
The Swiss Television sector is highly concentrated, too. The main operator in the market is the
national public service broadcaster SRG SSR. The group is a non-profit organization, mainly
funded through radio and television license fees (70%) and making the remaining income from
advertising and sponsorship. The holders of the broadcasting licenses that enable SRG SSR to
operate are four regional associations: SRG idée Suisse Deutschschweiz (SRG.D), SRG idée
Suisse Romande (RTSR), Società cooperative per la radio televisione nella svizzera italiana
(CORSI), and SRG SSR idée Suisse Svizra Rumantscha (SRG.R). The group represents the
largest audiovisual media organization in Switzerland with an average market share of 30% for
the television market, 60% for the radio market and 11% for the online market (Table 8.3).
Apart from SRG SSR the Swiss media landscape includes various regional and local TV network
operators, which are far smaller in size and face a fierce competitive pressure. The total number
of operators in the TV sector declined from 27 in 1998 to 13 in 2012. Operators featuring news
services not only compete with SSR SRG but also with other smaller Swiss operators focused on
entertainment offerings as well as with the very powerful television networks from the
neighboring countries speaking the same language. AZ Medien dominates among the operators
featuring information-based journalism in the German speaking Switzerland.

Table 8.3: TV Broadcasters – Evolution of market shares in German speaking Switzerland (%)
TV Broadcasters
German-speaking
part
SRF (SRG SSR)
Private TV
German TV
Other

Channels

SRF1, SRF2, SRF info
RTL, ARD

2000

2013

33%
6%
n/a
58%

31%
7%
11.1%
50.9%

83

However, revenue levels for commercial broadcasters is very low and their survival depends on
an ongoing support from license fees. In 2012 only the advertising slots of foreign TV operators
managed to grow their revenues significantly. Further, among the commercial broadcasters,
providers with focus on entertainment are benefiting the most from advertising revenues. In the
German speaking Switzerland local and regional Swiss TV networks are able to reach the
considerable market share of 7%. In the other parts of the country the market share of these small
private operators is stable around 1% (Table 8.4).

Table 8.4: TV Broadcasters – Evolution of market shares in French and Italian speaking
Switzerland (%)
TV Broadcasters
French-speaking
part
RTS (SRG SSR)
Private TV
French TV
Other
Italian-speaking
part
RSI (SRG SSR)
Private TV
Italian TV
Other

Channels

RTS1, RTS2
TF1, M6

RSI LA 1, RSI LA 2
Canale 5, Rai Uno

2000

2013

35%
0%
n/a
65%

30%
1%
26%
43%

34%
1%
n/a
65%

38%
1%
13.6%
47.4%

Also the public operator SRG SSR is seeing a slight decline in advertising revenues and market
share. In the German speaking Switzerland the decline is due to and partly compensated by the
growth of local private TV networks. In the French part the loss of share has been catched by the
foreign operators, while in the Italian market SRG SSR has been maintaining if not reinforcing
its position over the last 25 years.
8.1.3. Radio Broadcasting
The Swiss Radio market is even more concentrated than the TV market and shows the
importance of public radio in comparison with private radios in the different linguistic regions.
In the German speaking Switzerland two thirds of the market are controlled by SRG SSR with its
different channels. Swiss local private radios control another 30% of the market, while foreign
radios have lost half of their market since 2001 and now only reach a share of 5% (Table 8.5).
84

SRG SSR dominates also in the French speaking Switzerland, where it controls 66% of the
market, a share that increased since 2001 but that showed a slight but steady decline since 2009
when the group controlled a maximum of 68% of the market. Private radios maintained a more
of less constant share of 24% since 2001, while foreign radios have seen their share diminish of 6
points during the same period.

Table 8.5: TV Broadcasters – Evolution of market shares (%)
Radio Broadcasters
German-speaking
part
SRF (SRG SSR)

Radio Stations

2001

2013

SRF1, SRF2 Kultur, SRF3,
SRF 4 News, SRF
Musikwelle, SRF Virus

63%

65%

27%
10%

30%
5%

59%

66%

25%
16%

24%
10%

80%

80%

6%
14%

12%
8%

Private radios
Foreign radios
French-speaking part
RTS (SRG SSR)

La Première, Espace 2,
Couleur 3, Option musique

Private radios
Foreign radios
Italian-speaking part
RSI (SRG SSR)

Rete Uno, Rete Due, Rete
Tre

Private radios
Foreign radios

In the Italian part of Switzerland the Swiss public broadcaster is even more dominant controlling
80% of the market. Local private radios are less important than in the rest of the country, they
however gained market share along the years compensating for the loss of market showed by
foreign radios.

8.2.

Media cross-ownership policy

It should first be noted that, unlike some countries, there are no laws in Switzerland governing
cross-ownership policy of media companies. The rules on competition and concentration are
85

defined in a general law called The Cartel Act. Unlike the print sector, the audiovisual sector
additionally has a specific law. Indeed, it is the Federal Act on Radio and Television (RTVA)
and the Ordinance on Radio and Television (made under this act) which regulates the activities
of the audiovisual media. According to section 1, “This Act regulates the broadcasting,
processing, transmission and reception of radio and television program services”. This law
includes also measures against media concentration. According to section 74 – Risks to diversity
of opinion and offerings – a risk to diversity of opinion and offerings exists if a TV or Radio
broadcaster abuses its dominant position in the relevant market. The Department consults the
Competition Commission (COMCO) to assess the dominant position as defined in Article 4
paragraph 2 of the Cartel Act of 6 October 1995. The latter, which is an independent authority,
may publish its comments. According to section 75 of the RTVA – the one concerning the
measures – if, after obtaining the Competition Commission's report, the Department ascertains
that a broadcaster or another undertaking active in the radio and television market has
jeopardized diversity of opinion and offerings as a result of its abuse of its dominant position, it
may take measures. As a rule, a decision is taken within three months from the receipt of the
report. Measures may require that the concerned broadcaster takes actions to ensure diversity,
issues editorial statutes to ensure editorial freedom, or even adapts the business and its
organizational structure in order to eliminate the abuse of dominant position.
As already mentioned, for the print media sector there is no specific law concerning
concentration and/or competition of companies active in the print media sector. As for any other
industry, also for print media it is the Swiss Federal Act on Cartels that sets the rules on that
matter. According to article 9 of the Act, all planned concentrations of undertakings must be
notified to the Competition Commission (COMCO) before their implementation if in the
financial year preceding the concentration (1) the concerned undertakings reported a turnover of
at least 2 billion Swiss francs, or a turnover in Switzerland of at least 500 million Swiss francs,
and (2) at least two of the concerned undertakings each reported a turnover in Switzerland of at
least 100 million Swiss francs. When receiving the notification of a planned concentration, on
the base of “clues that could lead to dominance” the Competition Commission decides if there
are sufficient reasons for conducting an investigation.
In 2013, the Infrastructure Division of the COMCO rendered various decisions involving
company mergers in the media sector. In line with the structural transformation of the industry
towards digital supports and distribution platforms, most decisions concerned mergers,
takeovers, transfers and joint ventures of web-based platforms. Swiss media companies appear to
have a growing interest in this expanding market. Indeed, Tamedia and Ringier planned to take
joint control of Jobsuchmaschine AG, an Internet portal for employment related classified
advertising. Tamedia and Schibsted classified Media NV, a Norwegian media group with
operations in 29 countries, planned to jointly own the company division piazza.ch and the
car4you Switzerland AG. The first is a small advertising website and the second is a portal for
used cars classifieds. Futhermore, Tamedia gave notice of its intention to take sole control of
Starticket AG. At present, the group based in Zurich owns a 75% share of the ticketing service.
The founder of Starticket AG, Peter Hürlimann, holds the balance. Following an assessment for a
86

provisional examination, all these mergers were given the green light by the Competition
Commission.
The most recent decision made by the Infrastructure Division of the COMCO concerns the
acquisition of the daily Le Temps by the group Ringier. Le Temps was jointly controlled by the
two main Swiss media groups, Tamedia and Ringier, that owned an equal share of 46.25%. The
newspaper was put up for sale in October 2013. Tamedia renounced to the acquisition fearing a
denial from the Competition Commission due to the already dominant position of the company
in the French speaking Swiss media market. Thus, despite the existence of other acquisition
offers, the two main owners agreed on the group Ringier acquiring the stake of Tamedia and
becoming the majority shareholder with 92.5% of shares. On 9 September of this year, the
Competition Commission cleared the acquisition by announcing to have abandoned the opening
of a full investigation.

8.3.

Media innovation policies

According to OECD, “Switzerland is a small, prosperous, open economy, with outstanding
strengths in innovation. It is therefore not surprising to find the country at the top of the major
rankings on innovation and competitiveness. Indeed, Switzerland is the most competitive country
in the world (Global Competitiveness Index 2013-2014). Switzerland remains also the leader for
the fourth consecutive year of the Global Innovation Index 2014. However, apparently most of
the innovation activity comes from incumbent firms and not from start-ups. If Switzerland is
competitive in terms of offer of incubation and infrastructure facilities, as well as in terms of
education offering, the country is far less well off in terms of financial support offered to new
firms such as direct subventions, fiscal easing or risk capital enhancement. Politicians are quite
active in trying to change the situation and grant the possibility also for new firms to enter the
market. With reference to the media sector some measures have already been taken in order to
improve the situation of smaller companies and strengthen competition on the market. In 2007,
as a result of the revision of the broadcasting law (RTVA, art. 40), new criteria for the
distribution of the license fee have been established. A fixed amount is being distributed each
year to private broadcasters; since the revision of the law the amount went from 9 million Swiss
francs to 18.5 million for radio broadcasters and from 6.5 to 31.4 million for TV broadcasters.
Thus, the financial support that those private operators receive has increased quite substantially.
We must also say that that sum is now distributed also among fewer operators as, following
merger operations, the number of private TV companies diminished from 27 stations until 2008
to 21 in 2013. The revision of the law also introduced some more conditions for the public
broadcaster SRG SSR such as the obligation to diffuse regularly a certain amount of educational
programs as well as to notify the authority when engaging in activities other that their usual
programming (in particular concerning the online sector) that could damage other media firms.
Furthermore, local TV and radio stations can now advertise light alcohol drinks.

87

Print media are not receiving any direct contribution coming from the state. However, as in many
other countries, their are granted a reduced price of postal services for the distribution of print
newspapers. The difference is paid to the Post by the state. Considering the structural crisis that
the media industry is undergoing and the fact that print circulation is constantly diminishing, the
Governement took action and in 2012 constituted an independent Federal Commission for Media
(COFEM) giving it the task to analyse the situation and propose alternative ways to support the
media sector and thus ensure media pluralism. The commission submitted a report in September
this year which suggests several measures to support in particular the journalism sector,
considered as essential to the democratic debate. The proposition is based on the conversion of
the present indirect financial support in terms of reduced postal price for the newspaper delivery
into financial support for other actions. First of all, the COFEM proposed to support the national
press agency ATS, considered as an infrastructure for the whole industry. Then, financial support
should go to the training of journalists and to the development of innovative media projects,
ideally in collaboration with the programs of the Federal Commission for Innovation and
Technology. The latter finances applied research but does not have a dedicated media program
yet. Furthermore, the creation of media start-ups should be facilitated, while exceptional
journalistic achievements as well as media research should be awarded and further sustained.
The COFEM considers essential for granting independency to journalistic work that a foundation
is created to manage the financial support made available from the state. The same Commission
is now working also on alternative ways for the deployment of the broadcasting license fees. As
to now, the private media sector does not agree on this proposal and does not want to lose the
indirect support to the print media distribution.

8.4.

Summary and best practices

All in all we can say that the media sector in Switzerland is particularly concentrated. A high
level of concentration is normal and accepted in smaller countries. However, if before the
economic downturn started in 2008 the market could ensure sufficient resources to the big
players and thus grant existence to many small local and regional newspapers and private
broadcasters, now the situation has worsened. Both the number of newspaper titles and of
commercial broadcasting media outlets have been diminishing. Big media operators are in
particular investing more and more in the digital sector but not directly in the online media
sector, thus slowly changing the nature of their core business. The online advertising market
presents a certain level of competition, however this is due to the fact that online free news are
provided not only by national but also by international players and other players coming from
outside the sector (search engines, social media, telecommunications and software providers).
This global and extended competition is taking place in Switzerland as in most of other
countries. However, in a small country such as Switzerland the effects are more important
compared to a bigger country. Media companies with less power than the big three (Tamedia,
Ringier and NZZ) have little opportunity in the German and French speaking parts of the country
to gain a foothold within the online sector and thus to establish relevant news websites. A need
88

for high level investment, insufficient returns and strong competition from outside the sector are
restricting the news website offerings available on the market and reinforcing the position of the
big players. Indeed, most recently Tamedia and Ringier could increase their share in the national
market and more substantially within the German speaking market (Table 8.6).
In French speaking Switzerland Tamedia’s online market share reached 31%, followed by
Microsoft Advertising Schweiz with 26% and Swisscom with 21%. As we can see the main
competition in the online media sector does not mainly come from the public broadcaster SRG
SSR but mostly from players operating outside of the sector. The positive news is that the
Government is aware of the situation and is taking measures in order to change the situation.
And not only with reference to the print media sector but also to the broadcasting sector. The
work that the COFEM is doing right now and the suggestions that it will come up with
concerning the broadcasting media sector and the distribution of the license fee will be
influencing a lot the evolution of the whole media industry in Switzerland.

Table 8.6: Media players in the online advertising market – Evolution of market shares (%)
Media players in the online
advertising marketperators
German-speaking part
Tamedia
Swisscom
Ringier AG
Microsoft Advertising Schweiz
SRG SSR
United Internet
NZZ
Basler Zeitung Medien

2011

2012

19.3%
20.8%
14.4%
19.3%
12.2%
7.7%
4.8%
1.4%

22.2%
19.5%
18.5%
14.1%
11.3%
7.3%
5.8%
1.4%

89

Chapter 9
Market Structure and Innovation Policies in
the Netherlands
By
Hans van Kranenburg (Radboud University Nijmegen, the Netherlands)

9.1.

Market structure and media ownership

The news media in the Netherlands have a long tradition. Concerning media freedom, the
Netherlands ranked in the top 10 in the 2012 Reporters sans Frontiéres ranking. In 1848, the
Netherlands was among the first nations to guarantee fundamental rights and liberties such as
freedom of the press, freedom of opinion, and freedom of information. The country’s media
profile is one of an economically advanced, mature and stable democracy where traditional news
media is still relatively strong. Newspapers, television, magazines, and radio, respectively, reach
more than 70, 95, 93, and 70 percent of the population in any given week (Zenith Media,
2011)63. All of these news media sources also have their own publicly accessible websites.
Reading online dailies and magazines, listening to Web radio, watching Web television, and
participating in activities related to obtaining and sharing audiovisual content are popular
activities among Dutch citizens (MediaMonitor, 2011, 2014)64. Additionally, the Netherlands has
one of the highest percentages in the world of regular Internet users. More than 96 percent of
households in the Netherlands are connected to the internet (CBS Statline, 2014)65.

9.1.1. Newspapers
Print media is currently highly concentrated in the Netherlands. The number of daily newspaper
titles has declined from 55 to 25 in the last twenty years. Recently, the two freesheet newspapers
merged into one newspaper. Newspaper circulation declined from 1460 million in 2004 to 1080
million in 201366. Given the substantial population growth in these years, the ratio of newspaper
sales to total population shows an even more substantial decline. Both subscription and single63

Zenith Media (2011). Western European Market and Media Fact. ZenithOptimedia: London

64

MediaMonitor (2011). The Dutch Media in 2010. The Dutch Media Authority: Hilversum, Netherlands; Media
Monitor (2014). http://www.mediamonitor.nl/ retrieved on 6 Januray 2015.
65

CBS statline (2014) data about internet users http://statline.cbs.nl/Statweb/ retrieved on 15 October 2014

66

Media Monitor (2014). http://www.mediamonitor.nl/ retrieved on 6 Januray 2015.

90

copy sales have dropped in the last two decades. Today, the daily newspapers are published by
nine publishing companies, of which the largest three have an aggregate market share of 83
percent (Table 9.1). The market share of the Telegraaf Media Group (TMG), Mecom Group
(Wegener), and De Persgroep is 35.7, 23.9, and 23.8 percent respectively.

Table 9.1: An overview of the market share of the main newspaper publishers in the
Netherlands.
Market share in percentage
Publishing company
2011
2012
2013
Telegraaf Media Groep
37.0
36.9
35.7
Mecom Group
22.4
23.5
23.9
De Persgroep
20.9
22.8
23.8
Others
20.7
16.8
16.6
67
Sources: HOI online and Media Monitor (2014) .

TMG publishes the largest and most popular daily newspaper, De Telegraaf, with a market share
of around 15 percent. It is the only publisher with a free daily newspaper, Metro, which markets
mainly young professionals commuting by public transport to and from work. With its regional
newspapers, TMG has a relatively strong position in the provinces of North and South Holland68.
It is one of the most innovative and diversified traditional Dutch news media companies. The
company also owns a majority share in the Sky Radio Group. It is also active in the new media
and on the internet with websites and apps, and digital music stations. TMG’s main business
activities are concentrated on the markets in the Netherlands.
With the acquisition of Koninklijke Wegener N.V., The British Mecom Group became active in
the Dutch newspaper market. Today it is the largest publisher of regional daily newspapers and
free weekly door-to-door newspapers in the Netherlands. It has a dominant market position with
its mainly paid-for daily newspapers (e.g. De Gelderlander, De Twentsche Courant Tubantia,
Eindhovens Dagblad and PZC) in the east and south of the Netherlands, each daily with an
average of eight local editions (website Mecom). Daily circulation ranges from 45,000 to
120,00069. The company also publishes content in online, mobile and e-paper form such as the
real estate website Funda. Mecom Group has approximately 2 million unique monthly online
users in the Netherlands. Furthermore, the Mecom Group operates two printing plants in the
67

Commissariaat voor de Media (2014) Mediamonitor (2013), http://www.mediamonitor.nl/

68

Telegraaf Media Group (2014), company information retrieved from website, http://www.tmg.nl/, retrieved 1
November 2014
69

Mecom group (2014) company information retrieved from website http://www.mecom.com/ retrieved 1
November 2014

91

Netherlands, one in the city of Apeldoorn and one in Best, with capacity largely used to print the
Mecom Group's own daily and weekly publications. Despite their strong market position,
however, the Mecom Group has sustained losses in the last few years. The Mecom Group
intends to sell its Dutch operations to De Persgroep. However, based on a preliminary
investigation about the consequences of the acquisition for customers and competition, the Dutch
antitrust authority - ‘Autoriteit Consument & Markt’ (ACM) – has decided that it needs to
further investigate the ramifications of the acquisition. The publishers applied for the permission
on 8th October 2014, so that ACM could continue their investigation70.
The third largest publisher, De Persgroep Nederland, is part of the diversified media company De
Persgroep, headquartered in Belgium. It is active in the newspaper market and new media in the
Netherlands. Its largest paid-for daily newspapers are AD, De Volkskrant, Trouw and Het
Parool. The company owns Q-music radio station, and the parent company also has broadcasting
companies in its product portfolio71.

9.1.2. Television
The television landscape in the Netherlands has also changed significantly in the last decades.
Since the beginning of the 1990s, the Netherlands adopted the dual system of public and
commercial broadcasters for its television market. The national public broadcasters mainly
compete with two large national commercial broadcasters for the audience in the Netherlands
and less on commercial activities. This latter can be explained by the fact that the public
broadcasters in the Netherlands are predominately state-funded although the grant funding is
declining. The largest commercial broadcaster is RTL Netherlands which runs operations on four
television channels, RTL4, RTL5, RTL7 and RTL8. It is a subsidiary of the Luxembourg-based
RTL Group. The parent company is the leading European media and entertainment company,
Bertelsmann. The second largest commercial broadcaster SBS Nederland which operates the
channels SBS6, Net5 and Veronica, is also owned by a foreign company, Finland’s Sanoma
Group. In 2011, Sanoma Group became the owner of SBS Broadcasting. Talpa Media Group
also is a shareholder in SBS Nederland. At the national level, the three largest broadcasters
together hold on average three-quarters of the Dutch television market share. The Dutch public
broadcast associations organized in the Nederlandse Publieke Omroep (NPO) has about onethird of the audience share, RTL Netherlands one-quarter and SBS Nederland with somewhat
less than 20 percent. Regional television has a relatively small market share of around two
percent. In total, in 2011 there were 13 public broadcasters at the regional level and around 340
70

ACM
(2014),
decision
ACM
about
intended
acquisition
of
Wegener,
https://www.acm.nl/nl/publicaties/publicatie/13321/Nader-onderzoek-nodig-naar-overname-Mecom-door-DePersgroep/.
71

De Persgroup (2014), company information retrieved from website, http://www.persgroep.be/, retrieved 2
November 2014

92

at local level (Dutch Media Authority, 2011; OLON, 2015)72. Table 9.2 presents an overview of
the market share of the main broadcasters in the Netherlands.

Table 9.2: Market shares in the Dutch television market
Market share in percentage
TV Broadcasters
2011
2012
Nederlandse Publieke Omroep 32.0
34.6
(NPO)
Bertelsmann (RTL Netherlands)
26.2
24.4
Sanoma Group-Talpa Media 15.9
14.0
Group (SBS Nederland)
Others
25.9
27
Data sources: Stichting KijkOnderzoek (Dutch Audience
Mediamonitor (2014)

2013
31.9
24.6
14.0
29.5
Research Foundation)

&

The total viewing time of the Dutch population has shown a clear upward trend since 1989. For
instance, it increased from 167 minutes per day in 2001 to 191 minutes per day in 2011. The
viewers predominantly tune in to the national public broadcasters or to the commercial
broadcasters RTL or SBS.
Many people are connected to cable to watch television. The Netherlands has the highest density
of cable connections and the highest percentage of households that use cable for their television
reception in Europe (Mediamonitor, 2014). A fast-growing development in the market is digital
television. The three largest TV cable and digital operators have an aggregated market share of
79 percent. The market share of Ziggo, KPN, and UPC is 33.8, 28.6, and 16.6 percent
respectively. A further consolidation is expected in the cable and digital market. Liberty Global
announced in January 2014 its intention to acquire Ziggo. Liberty Global is the US parent
company of UPC. After an in-depth investigation, the European Commission approved the
proposed acquisition of Dutch cable TV operator Ziggo by Liberty Global, under the EU Merger
Regulation. The approval is conditional upon the implementation of a commitments package73.
The development of pay television is still in its infancy. It is likely that the development of pay
television will be stimulated by the entrance of Rupert Murdoch’s News Corporation to the
television broadcasters market in the Netherlands on 8th of August 2012. Fox International
Channels, a subsidiary of News Corporation, acquired a majority share of 51 percent in the pay
72

OLON (2015). Omroepen, http://www.olon.nl/pagina/1505727734, retrieved on 16 January 2015.
European Commission (2014), Mergers: Commission clears acquisition of Dutch cable TV operator Ziggo by
Liberty Global, subject to conditions. Press release retrieved 18 November 2014 http://europa.eu/rapid/pressrelease_IP-14-1123_en.htm.
73

93

television channel EredivisieLive for more than 1 billion Euros for 12 years (NRC Handelsblad,
2012)74.

9.1.3.

Radio Broadcasting

Many broadcasters also fully or partially own radio stations. The radio market also shows a high
concentration in media ownership. The majority of national radio stations are owned by the
public broadcasters or other Dutch media companies. Overall, public broadcasters, including
regional broadcasters, have a market share of 42.8 percent; commercial broadcasters have an
aggregate market share of 51.5 percent; and the rest category has a market share of 5.7 percent.
Broadcasters owned by foreign companies have less than 10 percent of the market of which De
Persgroep is the largest, with a share of 8.1 percent. Only a few companies dominate the market
of radio stations. The three largest companies have a combined market share of 65 percent. The
market share of national public broadcasters, Telegraaf Media Group (TMG), and Talpa Media
Group is 31.7, 17.2, and 15.4 percent respectively (Table 9.3). Talpa Media Group is the holding
firm that incorporates John de Mol's media activities, and the company has a minority share in
SBS Nederland. Radio stations Radio 538 and Slam FM are fully owned by Talpa Media Group.
In addition, Talpa, holds a minority share in the radio corporation 100% NL.

Table 9.3: An overview of the market share of the main suppliers of radio stations in the
Netherlands.
Market share in percentage
Radio Broadcasters
2011
2012
2013
Nederlandse Publieke Omroep 33.2
32.3
31.7
(NPO)
Telegraaf Media Groep (TMG)
15.2
16.9
17.2
Talpa Media Group
16.6
16.0
15.4
Others
35.0
34.8
35.7
Data sources: RAB/NLO/Infomart Gfk) & Mediamonitor (2014)

9.2.

Media cross-ownership policy

For many years, the Netherlands had different rules to constrain media cross ownership in the
news media market. It also posed restrictions in granting broadcasting licenses. These constraints
74

NRC Handelsblad (2012), Entree Murdock op Nederlandse tv-markt kan grote gevolgen hebben, jaargang 42
(263), p.1.

94

were initially laid down in the various Media Acts. From January 2011, specific legislation on
media concentration (such as media cross ownership) no longer exists in the Netherlands
(Mediamonitor, 2011). The ongoing increase of alternative news sources provide sufficient
counterweight against the larger media companies and provide enough opportunities to maintain
or even increase quality and diversity of information provision to the society. As for the
prevention of dominant positions of media companies, general competition law also applies to
the news media markets.
Nowadays, the Dutch Media Authority called Commissariaat voor de Media enforces the rules
formulated in the Dutch Media Act as well as in the regulations based on this act. Although the
Media Authority operates and takes decisions independently, it is accountable for its decisions
and actions to the Ministry of Education, Culture and Science. It is responsible for audiovisual
content and distribution matters. It grants licenses to broadcasters, registers VOD services and
systematically monitors compliance with the rules on quotas, advertising and protection of
minors. Furthermore, it can issue warnings, impose fines, reduce broadcasting time and suspend
or revoke a license. Penalties and corrective actions takes place after a breach of the regulations
has occurred; the broadcasting organizations are themselves responsible for the form and content
of their programs. Money from fines is transferred to the state budget but has to be used for
purposes of media policy (in the widest sense).
In the Dutch television system, there is no limitation on the number of national broadcasting
licenses a broadcaster may hold for commercial broadcasting, as long as a company complies
with the general competition law. However, a broadcaster can only hold one public national
broadcasting license which is granted by the Ministry of Education, Culture and Science. The
dominant position of the national public broadcasters has been phased out. Recently, a
consolidation has taken place among the public broadcasters due to pressure from the Dutch
government.
There are limitations on the number of licenses for regional and local public television
broadcasting. Only one person or legal entity can be licensed for local public television
broadcasting within the same geographical area (i.e. municipality). Similarly, only one person or
legal entity can be licensed for regional television broadcasting within the same geographical
area (i.e. counties). More than 50% of their broadcasting time should be focused on information,
cultural, and educational programs.

9.3.

Media innovation policies

To save pluralism of daily newspapers, the Dutch government intervened in the Dutch daily
newspaper market on several occasions. In 1962, the Dutch government imposed a rigid price
policy for daily newspapers through a tight link between subscription prices and advertising
tariffs. The newspapers had been required to annually increase subscription prices and
advertising tariffs by a minimum percentage agreed on by all publishers to guarantee the
95

plurality in the daily newspaper market. This price policy for the daily newspaper market
disappeared.
In reaction to the concentration tendency, in 1971 the Dutch government decided to install a
press relief fund to financially support newspapers that struggled for survival. This fund, known
as Het Bedrijfsfonds voor de Pers, became a foundation in 1974, and still exists today. It seems
that the exit barrier enhancing policies to maintain multiformity may have delayed the
concentration process in the newspaper market, but could not stop it (Kranenburg, 2002)75.
In the last decade, the Dutch support system to the news media has gone through a continual
process of rethinking and transformation. The choice of policy instruments has changed. The
policy now focuses more on stimulating publishers and editors to deliver news across diverse
media platforms (Lichtenberg and d’Haenens, 2013)76. The fund works at a distance from the
Dutch government and experiences no political interference. In 2008, a temporary innovation
commission Tijdelijke Commissie Innovatie en Toekomst Pers, also known as Commission
Brinkman, was established. This commission was assigned the task of discussing the future of
state support to the press and providing recommendations on innovation policies77. One
important recommendation was the establishment of a temporary fund to stimulate innovation of
the press and journalism – the Persinnovatieregeling. The Bedrijfsfonds voor de Pers (changed
its name to the Stimuleringsfonds voor de Pers in 2007) became responsible for the
implementation of the temporarily innovation fund.
As a result of these developments, the Dutch support fund recently changed its name to the
Stimuleringsfonds voor de Journalistiek, or innovation fund for journalism. The fund focuses on
supporting innovative activities of news media, in particular activities of smaller firms and startups, because they do have generally not the required expertise and resources for the development
of the activities. Its focus is also increasingly on giving advice and organising workshops and
events that aim to inspire people and bring different experts together.
Despite the relatively high number of successful projects78, the fund is endowed with relatively
little money. The fund works on the principle of matching funds, with projects having to match
at most 50 percent of the grant. The budget has significantly declined over the last 4 years.
Initially, the fund received once-off cash injection from the state of € 8 million for innovation in
2010. Nowadays, the fund works with a budget of around € 2 million. More than half of the

75

Kranenburg, van H., Palm, F.C. and Pfann, G.A. (2002). Exit and Survival in a Concentrating Industry: The Case
of Daily Newspapers in the Netherlands, Review of Industrial Organisation, 2002, 21(3), p.283-303.
76

Lichtenberg, L. d’Haenens, L. (2013). The Netherlands: Initiative to Subsidise Press Innovation in Murchetz, P.
(ed.), State Aid for Newspapers: Theories, Cases, Actions. Springer.
77

Regeling van het Stimuleringsfonds voor de Pers, 10 March 2014, 23952; Vaststelling van een tijdelijke
Subsidieregeling Persinnovatie 2014. https://zoek.officielebekendmakingen.nl/stcrt-2014-7350.html.
78

Wolfert, C. (2014). Evaluatie Persinnovatieregeling 2010-2014, Stimuleringsfonds voor de journalistiek.

96

budget is allocated to support innovative activities and the rest is allocated to research and
workshops and events.
In the same period, €4 million was temporarily earmarked to rejuvenate journalists’ workforce.
In particular, newsrooms could apply for funds to hire young journalist. After the end of the
funding period, more than half of the young journalists were still employed by the newspapers79.
Also the policy to support the public broadcasters is changing. Recently, the government in the
Netherlands decided to impose serious cuts on the budgets for culture and media for the
forthcoming years. This means that public broadcasters are being confronted with serious budget
cuts spread over the next few years. These reductions also influence the innovation activities of
organizations given the fact that they can invest less in research and development. No alternative
instrument has been designed to replace the budget cuts and promote the innovative activities of
broadcasters.
The formulation of the innovation policy in the Netherlands also includes ultimate objectives.
The government defined the creative industries as one of the leading industries for the Dutch
economy and society. In particular, the selected industries receive support from the government
and public organizations. The creative industries among the publishing, advertising,
entertainment, music, broadcasting, visual arts, new media and gaming industry contribute
substantially to the economic development of the Netherlands. The annual turnover of creative
industries in the Netherlands adds up to €7.1 billion in 201280. Government, knowledge
institutions and companies are collaborating to facilitate research and to develop R&D facilities,
new businesses and education. These collaborations are strong in particular regions in the
Netherlands. For instance, the High Tech campus in Eindhoven and Hilversum and the
Amsterdam Metropolitan Area are hotspots for broadcasting and the general creative industry
respectively. Among the many collaborative initiatives to strengthen the creative industries is
iMMovator Cross Media Network in Hilversum. It is a network organization that connects
government, knowledge institutions and business to share knowledge and encourage
collaborations to stimulate innovation in the media. Also the informal network organization
Federation Dutch Creative Industries (FDCI) aims to strengthen the creative industries in the
Netherlands.
The government has also developed various funding instruments and regulations for the creative
industries. These instruments and regulations are primarily aimed at Dutch knowledge
institutions and the Dutch creative small and medium sized enterprises (SMEs). For instance, the
government has developed tax related instruments for research and development to foster the
innovative power of SMEs. The goal of this innovation policy is to help the creative industries to
gain an international top position. In the government’s attempt to achieve this goal, the creative

79

Plessing, J. (2014). Developing Media Diversity: Baseline Study of State Support for Independent Print Media in
West Africa, South America and Scandinavia, Association of Independent Publishers.
80
Federation Dutch Creative Industries (2012). Topsector Creatieve Industrie lanceert CLICKNL. Retrieved on 6
December 2014.

97

industries knowledge and innovation network (CLICKNL) has been established81. Members of
CLICKNL are among others TNO (independent organization regulated by public law to enable
business and government to apply knowledge) and Dutch Science Foundation (NWO). Their task
is to develop and implement particular instruments and regulations for the creative industries.
For instance, the Dutch government and Dutch Science Foundation (NWO) have established the
creative industries program to facilitate research, to make knowledge accessible, and to
encourage collaboration among scientists and entrepreneurs in the creative industry. Researchers
can submit embedded or strategic research projects on behalf of consortia of companies and
researchers82. Also a similar program -Raak- has been established for the Applied Universities in
the Netherlands.
Although the government defined the ultimate objectives for the creative industries, the
translation into direct innovation objectives for the news media industry are not well-defined.
These innovation objectives cannot be derived because the identification of problems in the news
media industry from a policy point of view that are not solved by the industry itself has not yet
been completed.

9.4.

Summary and best practices

The evidence shows a tendency towards concentration in the traditional news media markets. It
is expected that the concentration will further increase in the next period. The long term increase
in concentration has been caused by changing commuting, advertising and reading habits, but
also the trigger for such concentration was the information and communication technology
developments. In the Netherlands, the newspaper market has reached a point in which
opportunities to successfully establish a new newspaper is very low. The Dutch government has
intervened several times in the newspaper market, yet these interventions could not stop the
concentration tendency. The level of concentration is even higher when we look at the owners of
the newspapers. The majority of newspapers are owned by three large diversified media
companies of which two are foreign owners. The few dominant media companies are active in
various domestic and/or international media markets. Media cross-ownership is allowed in the
Netherlands. It seems that the ongoing increase of alternative news sources provides sufficient
counterweight to the larger media companies and provides enough opportunities to maintain or
even increase quality and diversity of information provision to the society. As for the prevention
of dominant positions of media companies, general competition law also applies to the media
markets. The general competition law applies only in the case of abuse of market power or
intended mergers or acquisitions, but not for organic growth of the firms.

81

http://www.clicknl.nl/about-clicknl-the-creative-industries-knowledge-and-innovation-network/?lang=en
information retrieved on 16 January 2015.
82
NWO (2014). Creative Industry; information retrieved on 14 November 2014; http://www.nwo.nl/en/researchand-results/programmes/creative+industry.

98

Also the policy to support the public broadcasters is changing. The government continues to
support public broadcasting although it is implementing severe budget cuts for the public
broadcasters. This development influences the innovation activities of organizations given the
fact that they can invest less in research and development. No alternative instrument has been
designed to replace the budget cuts and promote the innovative activities of broadcasters.
In the last decade, the Netherlands has moved to more flexible temporary support (Plessing,
2014: 21)83. These models not only focus on traditional news media but also include new media
development initiatives such as digital media. Furthermore, the government decided that the
creative industry is one of the hotspots. It should be or become one of the leading industries in
the Netherlands. The news media industry is part of the general creative industry, although
underlying problems from a policy point of view and the innovation objectives of the news
media industry have not yet been well-defined. As a consequence, the formulation and
implementation of an effective innovation policy for the news media industry is difficult at this
point in time.
The new policies are open to a greater range of media initiatives than the previous policies.
Although the Netherlands invested much thought in revising its subsidy system, the main
question that arises is how effective and efficient are the new innovative policies, given the
relatively small financial commitment, the temporary character and unclear objectives of these
policies?

83

Plessing, J. (2014). Developing Media Diversity: Baseline Study of State Support for Independent Print Media in
West Africa, South America and Scandinavia, Association of Independent Publishers.

99

Chapter 10
Market Structure and Innovation Policies in
the United Kingdom
By
Robert G. Picard (University of Oxford, United Kingdom)

10.1. Market structure and media ownership
Media innovation in the UK is taking place as part of its broader industrial development
innovation and innovation policies. These policies have been developed within the context of a
country that relies strongly on markets for development and growth and has instituted significant
deregulation and reductions in government intervention in business in recent decades.
Consequently, innovation policies tend to rely heavily on creating an environment that supports
innovation and entrepreneurship, promoting commercial research and development, and the
production of government-industry innovation networks.
The political context is one of a United Kingdom made of four “nations”: England, Scotland
Wales, and Northern Ireland with significant devolution of governing authority to Scotland,
Wales and Northern Ireland—each of which have their own parliaments or national assemblies
and governing agencies. There is a division of responsibility for different governmental functions
between the UK government and the three devolved national governments. This has an effect on
where different innovation policies originate and are funded.
The media environment of the UK is highly commercialized, with large strong enterprises with
the resources and capacity to engage in innovation. Nevertheless, Europe’s best-funded public
broadcaster (the BBC) plays a significant role in radio and television and it is specifically
mandated to play central innovation and industrial development roles for broadcasting. Media in
many countries follow the lead of UK broadcasters, newspapers, magazines, and digital
enterprises that are noted for early innovation.
UK consumers have access to and use leading digital media technologies. 97% homes have
digital television service, 48% of homes have DAB radio receivers (99% have analogue/digital
radio receivers), 82% of homes use internet, and 93% of adults have mobile phones (with 73%
penetration of 4G services).84

84

Ofcom, The Communications Market Report 2014. London: Ofcom.

100

The United Kingdom has a strongly centralized market structure, with the majority of media
operating from the capital in London, augmented by regional media (including newspapers and
broadcasting specifically for the three non-English nations and local newspaper and radio
provision spread across the country).

10.1.1. Newspapers

Table 10.1. Paid national daily newspaper circulation by owner
Owner

Newspaper

Circulation

Trinity Mirror
Daily Mirror
958,674
Daily Mail and General Trust
Daily Mail
1,673,579
Express Newspapers
Daily Express
479,704
Daily Star
466,935
Telegraph Media Group
Daily
514,592
Telegraph
News UK
The Sun
2,033,606
The Times
393,530
Pearson PLC
Financial
220,532
Times
Guardian Media Group
The Guardian
185,313
Independent Print Ltd.
The
63,505
Independent
I
286,356

% of national Total
%
national
circulation
circulation by owner
13.2%

13.2%

23.0%

23.0%

6.6%
6.4%

13.0%

7.1%

7.1%

27.9%
5.4%

33.4%

3.0%

3.0%

2.5%

2.5%

0.9%

4.8%

3.9%

101

11 major national newspapers, owned by 8 companies, share 7.3 million nationwide paid daily
circulation.85 News UK accounts for one-third of the total circulation, the Daily Mail and
General Trust for 23 percent, ad Trinity Mirror and Express Newspapers for about 13% each (see
Table 10.1).
Leading innovators in the digital environment have been The Guardian, The Mail, and The Times
and these are owed by three different owners serving different market segments. Both The
Guardian and The Times serve educated and affluent audiences, but The Guardian has a left-ofcenter perspective and The Times a right-of-center perspective. The Mail is a tabloid paper with a
right-of-center perspective. These three papers have been recognized for leadership in
development of web-, tablet-, and smartphone-based news provision by the newspaper industry
worldwide. The Guardian and The Mail are also for their expansion to offer global expansion
and The Times for its implementation of paid digital services.
About 1,100 regional/local newspapers exist, most being small by comparison to national papers.
Ownership of the local press is diffused by large group owners include Newsquest (300 titles),
Johnson Press (248 titles), and Trinity Mirror (155 titles). Nevertheless, these papers have been
active in digital innovation and now operate more than 1,700 local news websites.

10.1.2. Television
There are four main public service free-to-air broadcasters operating in the television market.
The main public service broadcasters are the BBC, Independent Television (ITV), Channel 4 and
5. The latter three carry advertising. The BBC is the public broadcaster and it is funded through
the collection of a universal license fee. The BBC has a total TV audience market share of
around 33.3 percent. It attracts about a third of the total TV audience. The main free-to-air
commercial public service broadcaster, ITV, has about a market share of 25 percent, and the rest
is shared across many channels86.
More than 90 percent of UK households have multi-channel television, mainly subscription
based.. Nearly 500 channels are available. BSkyB, controlled by NewsCorp, is the major satellite
provider. Sky operates 26 channels of its own, including nine movie channels and five sports
channels.
The UK television market produced £12.9 billion (€10 billion) in 2013, 45% of which was
accumulated as subscriptions by platform operators, 21% by public service broadcasters, 18% by
commercial public service channels, and 16% by commercial multichannel broadcasters.87

85

Audit Bureau of Circulation, June 2014.
th
http://ejc.net/media_landscapes/united-kingdom, retrieved on 6 of January 2015.
87
Ofcom, The Communications Market Report 2014. London: Ofcom.
86

102

Significant public involvement accompanied the rollout of digital TV, with the BBC heavily
involved in developing technology and systems in cooperation with commercial firms. The
cooperation has also extended to the development and provision of catch-up television and other
streaming services for PCs, tablets, and smartphones. Consequently, the UK is one of most
advanced nations in Europe in terms of contemporary television and connected television
services.
The BBC also received a specific mandate and special funding to development its online
operations, bbc.co.uk, which has grown into one of the most successful news and information
sites online.
Television broadcasting produced £3.7 billion in net advertising revenues in 2013.88 With the
largest amount 74.8 going to advertising funded public service operators) and 26.2% to private
commercial channels (see Table 10.2).

Table 10.2. Percentage of net advertising revenue by broadcaster
Channel

ITV
Commercial
channels
PSB portfolio
channels
Channel 4
Channel 5
ITV Breakfast
S4C

% of
advertising
revenue
33%
26.2%
18.1%
13.8%
8.2%
1.3%
0.05%

10.1.3. Radio broadcasting
Radio remains an important media in the UK, producing £1.2 billion in revenue in 2013. Two
thirds of the revenues are for BBC radio operations and the remainder for commercial radio
broadcasters.89 There are 25 national radio stations, 345 local radio stations, and 215 community
radio stations. Radio is the strongest local medium in many communities.

88
89

Ofcom, The Communications Market Report 2014. London: Ofcom.
Ofcom, The Communications Market Report 2014. London: Ofcom.

103

The BBC operates ten national radio stations; the World Service; regional stations in Scotland,
Wales and Northern Ireland (including stations broadcasting in Welsh and Scots), and 30 local
stations. In mid-2009, the BBC’s overall share of the radio audience was 54.6 percent:
commercial radio had 42.7 percent. However, the reach of local commercial radio is greater than
that of local BBC services. The largest commercial radio group, Global Radio, with 33 stations,
claims about 40 percent of all commercial radio listening (19m listeners)90.
The UK has been a technical and provision leader in digital audio broadcasting (DAB), in great
part due to the BBC development and operation of DAB services. Today, 48% of radio listeners
do so with a DAB radio in their household 48%.

10.2. Media cross-ownership policy
Ownership and cross-media ownership of media are regulated by competition and media law,
including the Communications Act and The Media Ownership Order. These effectively limit
newspaper ownership about one-third of the newspaper market and limit each private TV owner
to no more than 15 percent of total television audience share. Private radio ownership is not
limited per se. Cross-media ownership provide additional restrictions. Newspapers with more
than 20 percent of national circulation cannot own TV licenses and local radio ownership is not
permitted where the owner also has a local newspaper with 20% audience coverage of the
broadcast area.
These restrictions have not prohibited the development of large commercial operators, but induce
them to make choices about the mix of media in which they will engage and to carefully consider
effects of acquisitions and mergers. Many of the commercial media firms affected by these
regulations are in the forefront of innovation, however, so the regulation alone cannot be seen as
a significant impediment in the UK.

10.3. Media innovation policies
The UK has made significant effort to develop and implement comprehensive innovation
policies in the past decade,91 emphasizing creation of a supportive environment for innovation
and increasing the capacity and support for innovation through innovation networks, skills
90

th

http://ejc.net/media_landscapes/united-kingdom, retrieved on 6 of January 2015.
These are laid out and documented in publications such as: Department for Trade and Industry and Department
for Education and Skills, Science and innovation investment framework 2004–14 (HM Treasury, 2004); National
Endowment for Science, Technology and the Arts, “The Innovation Gap: Why policy needs to reflect the reality of
innovation in the UK” (2006), p. 1, available at www.nesta.org.uk/assets/Uploads/pdf/PolicyBriefing/innovation_gap_policy_brief.pdf; Lord Sainsbury of Turville, The Race to the Top: A Review of
Government’s Science and Innovation Policies (London: The Stationary Office, 2007); Department for Innovation,
Universities and Skills, Innovation Nation (2008).
91

104

training, access to private financing and an innovation investment fund, incentives for research
and development, public support through research councils and regional development agencies,
improvements to the intellectual property regime, and academic funding to improve innovation
and knowledge transfer.
Specific activities supporting innovation are diffused through various relevant ministerial
departments and agencies at both the UK and nations levels. A UK government-supported
National Endowment for Science, Technology and the Arts (NESTA) is a leading player in
encouraging and shaping innovation through public-private partnerships and addressing issues
affecting innovation.92
The greatest support has been given to areas including science, technology, and engineering.
Innovation policy has been specifically coordinated with national economic and employment
policies to support areas where greatest growth is perceived possible.
The number of media-specific innovation policies are limited, but media are regularly included
within information economy, digital, and creative industries policies.93 The most enduring media
policy is that the British Broadcasting Corp. (BBC) has been directed to research and advance
broadcast technology since it was established nearly a century ago. In recent years, regional
development agencies have promoted media innovation and development by establishing a
number of important media-related clusters, most notably in London, Salford (Manchester) and
Glasgow.
UK industrial, trade, and innovation policies recognize the economic importance of the UK
television programming and films industries (separate from their cultural roles) for their
contributions to the domestic economy and exports and the policies encourage growth in those
areas. Digital media and advertising industries are also seen as significant and given attention in
such policies. These policies provide a range of advantages to media firms in pursuing new
initiatives in terms of production and distribution innovation.
The country has also established and funded initiatives to make high capacity broadband
available throughout the country and implement policies that assisted the transformation from
analogue to digital broadcasting. These supported specific media innovations in products and
services.
Government agencies have invested significant support in skills training in digital media systems
and production, entrepreneurship for small media, support for media innovation networks,
special funding for public service media, supporting cultural industries (dance, theatre, etc.)

92

www.nesta.org.uk
Department for Business, Innovation and Skills. Information economy strategy, BIS/13/901, 2013; Department
for Culture Media & Sport, Making it easier for the media and creative industries to grow, while protecting the
interests of citizens, 2013, https://www.gov.uk/government/policies/making-it-easier-for-the-media-and-creativeindustries-to-grow-while-protecting-the-interests-of-citizens
93

105

beginning media production and distribution, and providing export support for audiovisual
products.
Academic research and education related to media innovation has been funded by the arts and
humanities and economic and social research councils at leading universities. Most of the grants
have been related to digital transformation and improving knowledge and development of
systems, products, and strategies, and understanding consumption of digital media.
Direct support for commercial media innovation projects has tended to be limited to R&D
incentives and support for exporting successful innovations.

10.4. Summary and best practices
Developments in the UK experience also reveal the value of systemic thinking about innovation
and the underlying conditions and needs for achieving it, such as developing the capabilities for
innovation by improving training and education, addressing financial costs of innovation, and
developing long-term technological expertise in public firms. In the case of UK, it is difficult to
separate out the money coming from media innovation funds or general innovation funds in the
budgets of the various departments and agencies.
The performance of the UK in media innovation indicates that innovation policies do not
necessary conflict with media ownership policies, as long as there is an impetus for innovation,
incentives are in place for public and private owners to engage in innovation, and both public
and private firms have sufficient scale and resources to engage in innovation.
The UK experience indicates that public/private partnerships in developing and implementing
innovation can be effective for both types of media operators and that cooperation reduces
resources and risk required of both.

106

Chapter 11
Summary and Best Practices
The European news media landscape is in transition. As a result of globalization, deregulation,
innovations and digitalization, new media sources are developing, and content is becoming more
and more mobile. The development of new media have even sped up the blurring of boundaries
and the convergence of different traditional media industries into one (Kranenburg and Ziggers,
2013)94. Most technologies described as “new media” are digital and are often networkable,
dense, compressible, and interactive. Various kinds of websites are examples of new media.
Considering the importance of innovations, in general and for the news media industry in
particular, the main objective of the report is to promote discussions on how innovation policies
are currently supporting innovative activities, the levels at which they are doing so, and how
innovation policies can help the news media industry to meet development needs in the future.
These innovation policies are structural conditions for media innovations. In general, these
policies contain a mixture of regulatory, economic and financial, and soft instruments. These
instruments are tools to influence innovation processes and are used to achieve innovation
objectives.
Although innovation policies to stimulate innovation in journalism and news media are not new,
the policies and the different types of support offered to the news media are changing,
particularly in social-democratic countries in Europe. Given the fact that the present innovation
policies (including cross-ownership) are relatively new, the effects of these policies on
innovative activities are generally still unknown. A comparison of these policies can increase our
insight into their efficacy and possibly reveal areas of improvement so that the policies can be
adapted to become more effective. Therefore,

the objective of this research is to gain knowledge of best practices of innovation policies to
trigger innovation in journalism and news media.

94

Kranenburg, H. van, and Ziggers, G. (2013). How Media Companies Should Create Value: Innovation Centered
Business Models and Dynamic Capabilities, p. 239-252, chapter in Media Management and Social Media Business:
Value Chain and Business Models in Changing Media Markets, editors M. Friedrichsen, W. Mühl-Benninghaus, R.
Picard and E. Vartanova, in the book series Media Management and Media Economics, Springer,.

107

According to its objective, the report explores the importance and the types of media innovation
policies formulated and implemented in nine social-democratic countries in Europe and helps
identify and evaluate how they are stimulating innovation in journalism and news media. Each
country analysis presented an overview of the evolution of structure of news media markets in
the recent years, the formulated and implemented innovation policies to promote innovative
activities in journalism and news media. Each chapter concluded with lessons learned.
In this explorative study, we investigated the structure of the news media markets (newspaper,
television and radio broadcasting) and the policies in the following European countries: Belgium,
Finland, Germany, Italy, the Netherlands, Portugal, Spain, Switzerland, United Kingdom. These
countries are neighbors of the Netherlands, or formed the Southern European group of countries.
Switzerland was selected because it is linguistically connected to both groups. While Finland
falls outside the geographic scope of this study, it was included because it is in the process of a
societal shift from a ‘social contract’ towards a market-based economy. Given limited time
available, we were not able to include more countries in this explorative study.
The comparison approach is a well-known approach to learn from the experiences and good
policy practices. Although emulating the success stories and practices of various countries is not
easy, the evidence shows that the type of policies and their (direct and indirect) effects on
innovation do not exclusively depend on economic principles but also on social, cultural, and
political principles. An overview of these policies can help us to determine what the best
practices are to support innovation in a rapidly changing news media industry.
In most news media markets, it is now recognized that the current changes have to be seen as
part of a larger structural change. For instance, many traditional news media companies are
trying to combat a massive migration of advertising expenditure to the Internet. For this reason,
newspapers and magazines need a high-quality Internet and new media presence in order to
compensate at least partly for falling advertising and subscription revenues in the print markets.
The news media companies will have to command a multiplatform strategy – accessible to users
wherever they are and presenting the contents in such a way that they can be called up with any
device95. This represents real added-value. Nevertheless, the news media markets are still in the
middle of an experimental phase. Companies need to react fast now, but may have to make
adjustments to their course at a later date. Hence, media companies, governments, regulators,
network operators and investors are facing important decisions now and in the near future. The
related uncertainty in the news media market makes economic and social forecasts for
companies, governments, policy makers and investors difficult.

Concentration
95

Friedrichsen, and Mühl-Benninghaus (2013). Handbook of Social Media Management: Value Chain and Business
Models in Changing Media Markets, Springer.

108

We continue to see increasing digitalization and media convergence as the main developments in
the media market in the nine European countries: Belgium, Finland, Germany, Italy, the
Netherlands, Portugal, Spain, Switzerland, United Kingdom. The strict separation of different
media products and services have started to disappear. Furthermore, firms from other related and
unrelated industries and unknown new entrants are coming up with drastic innovations that can
(potentially) cause the collapse of demand for traditional news media companies’ products to
collapse. Hence, new techniques, new approaches, new technologies, new competitors are
changing the rules of the game. Consequently, all news media markets in the nine countries are
subject to radical innovations, new requirements and demands, new competitors, and increasing
complexity. To deal with these developments and opportunities, media companies have
responded to these developments. Their ability to adapt and respond depends on the competitive
situation of the firm, the commitment and leadership within the company, and the ability to
develop essential capabilities, but also on the institutional environment.
We see a clear trend of consolidation of media firms in all traditional news media markets. These
markets have experienced mergers, acquisitions and business partnerships in recent years.
Traditional media companies are trying to diversify their revenue structure, spread financial risks
but also to increase their opportunities and innovative activities and become increasingly
involved in the value chain of other media markets. This has led to a major command of the
industry by a small group of diversified media companies. We even see a few large news media
companies operating in different European countries. Table 11.1 presents an overview of the
concentration ratio of the three largest companies in the newspaper, television, and radio
broadcasting markets in the nine European countries.

Table 11.1: Overview of concentration ratios C3 for newspaper publishers, television and Radio
broadcasters in 2013a
Country
Belgium
-Flanders
-Wallonia
Finland
Germany
Italy
Portugal
Spain
Switzerland
-German part
-French part
-Italian part
The Netherlands
United Kingdom

Newspaper publishers

Television

Radio broadcasters

100
100
49.9
36.6b
46.4
90.1
51.7

80.1
62.8
87.1
38.2
87.4
100
72.8

89.5
86.6
70.0
n.a.
45.4
94.2
63.8

82.0
83.0
n.a.
83.4
69.6

49.1
57.0
52.6
70.5
58.3d

65.0c
66.0
80.0
64.3
73.2

109

Notes:

a. See appendix for the definition of concentration measures.
b. Source: http://ejc.net/media_landscapes/germany retrieved on 6th of January 2015
c. The radio broadcasting market is dominated by the public radio broadcasters in the
different linguistic regions.
d. The UK concentration ratios for the television and radio broadcasting are based on C2.

Our findings show a high level of concentration in the traditional news media industry. Most
newspapers, magazines, TV and radio broadcasting, cable markets are characterized by a
relatively wide variety of different media products and services available to the public; control
and ownership of these media is limited to a handful of companies. Most traditional news media
markets can be described as oligopolies, with only a small number of media companies
controlling the majority of the market either in terms of market share or revenue.
We see a gradual decline in the number of newspapers in all European countries. The
newspapers are owned by private (commercial) companies, while we see a dual ownership
structure in the TV and radio broadcasting markets. Each country has public and private
(commercial) broadcasters. These broadcasters operate on a national and/or regional level. We
see a difference between the broadcasting markets between countries. For instance, many TV
and radio broadcasters operate on the regional level (Länders) in Germany, while in the
Netherlands and Belgium the broadcasters mainly operate on the national level. In Germany, the
broadcasting market is primarily controlled at the regional level, while in other countries the
broadcasting market is more controlled at the national level.
Furthermore, these broadcasters need a license. The license is granted by the national or regional
government or a media authority. In general, restrictions in granting licenses are still dictated by
specific legislation in the countries.
A recent upcoming development in all nine countries is digital television and pay TV, although
the speed of development differs. For instance, pay TV is still in its infancy in the Netherlands,
while the penetration ratio is much higher in Italy.

Regulation Policies
For many years, all European countries had different rules to limit cross media ownership and to
control concentration and competition. However, specific legislation about cross-ownership and
concentration and competition has gradually disappeared and no longer exists in most countries.
As for the prevention of dominant positions of media companies, the general competition law
also currently applies to the media markets. We also see another trend: the existence of
internationally diversified media companies. These companies are operating in different
countries and, in general, the European competition law will apply to these companies when they
are involved in issues related to concentration and competition in Europe.
110

Another recent development is the internationalization of Portuguese media companies. As a
result of several factors, including economic crisis, they are looking for new market and business
opportunities in African Portuguese-speaking countries and Brazil.
Considering the internationalization tendency, a debate on media concentration and competition
in all countries is more welcome than ever. In the political, legal and academic social spheres, as
well as among the general public, there are different opinions about the phenomenon of
concentration. Rather than entering a polarized debate on the financial and societal impacts of
the concentration in the media, it is important to analyze this question without prejudices, so that
it is possible to understand the relation between the concentration processes and its impacts on
the media market in the spectrum of a free competition based economy and, at the same time, in
a way that protects the interests of the public.
Today, the Internet and new media allow new market models and pose challenges to media
policy. To manage the partly antagonistic interests and forces in the media market, media policy
must produce effective regulatory tools. The main tasks of media policy are to balance the
various interests involved, create a functioning free and independent public sphere and to ensure
viable and sustainable markets.
All countries agree on the fact that free and independent news media are intrinsic to a democratic
society. This intrinsic character applies to traditional forms of press and broadcasting as well as
electronic and new media. All countries require a state with a free, comprehensive and an
objective news media system, in which no single group predominates and free and independent
public discourse can take place. In many cases a legal control for the industry will continue to be
necessary, so it is important to keep in mind the balance between competition and regulatory
control for news media.

Innovation Policies
The role of the government in developing policies that directly or indirectly stimulate innovation
has become increasingly important, since the news markets in all countries are going through a
time of great uncertainty and disruption of business models, and this requires more investment in
innovation. However, the changes in the news media industry– which are deep in terms of
production, distribution, consumption and commercialization of content – coincide with a global
economic recession. The economic and structural crises have weakened the financial position of
many media companies and states. Consequently, this development has limited the investment
capacity of media companies and government expenditures in the countries, in particular in the
southern European group of countries.
In the past decades, different intervention policies existed and support was offered to the news
media. In general, the form and implementation of these policies and the selected instruments
depended on the economic, political and social context of the countries. In general, we can
categorize the economic and financial instruments into direct support (e.g. grant and loans) and
indirect support (tax reductions or mandatory price increases) and general (applying to the whole
market) and specific support (to support a specific media entity). These policy instruments help
111

to slow down the consolidation process in the different media markets and also to maintain
media diversity and accessibility to information and news, although it is difficult to show how
effective these policies and support have been in changing markets.
Furthermore, in all countries, the state still controls at least one public TV and radio broadcaster.
It is also difficult to obtain information whether the public broadcasting companies are more
innovative than their commercial counterparts. One exception is the BBC in the United
Kingdom. Significant public involvement accompanied the rollout of digital TV, with the BBC
heavily involved in developing technology and systems in cooperation with commercial firms.
They also extended this cooperation to the development and provision of catch-up television and
other streaming services for PCs, tablets, and smartphones. Furthermore, the BBC received a
specific mandate and special funding to develop its online operations, bbc.co.uk, which has
grown into one of the most successful news and information sites online.
The intensity of competition for both audience and advertisements in the broadcasting markets
has increased substantially in recent years. It is expected that the competition will further
increase as a result of digitalization and pay TV. We also see a trend that governments are
reducing the budgets of public broadcasters. As a consequence, the activities of these public
broadcasters are more focused on restructuring their organizations than on innovative activities
in a fast-changing environment. It can thus be concluded that policies and support were not made
on the basis of effectiveness, but rather as a response to changing markets and for social and
political reasons. Today, many of the existing policies and support mechanisms are considered to
be outdated and less effective in the current media landscape and have to be reformed or even
discontinued. In the last few years, decisions have already made to terminate various support
programs, primarily the permanent and large-scale ones in all nine countries.
Our findings show that the governments in all countries are struggling with the question as to
what degree the government can and should aid the news media industry and trigger innovation.
Evidence shows that countries differ in their innovation policies. Table 11.2 presents an
overview of the main innovation policies in the nine countries. For instance, media innovation in
the United Kingdom is taking place as part of its broader industrial development of innovation
and innovation policies. The innovation policies tend to rely heavily on creating an environment
that supports innovation and entrepreneurship, promoting commercial research and development,
and the production of government-industry innovation networks. In addition to the subsidy
programs for news publishers and TV broadcasters (ca. €350 million per year), the Belgian
government, in particular the Flemish government, is attempting to stimulate innovation in the
media and ICT sector through an ecosystem of institutes and funding instruments. All funding
and innovation policy instruments cover the entire media and ICT sector and no single
instrument specifically targets innovation in journalism or news media. However, the innovation
policies in Germany have mainly been focused on regional development and infrastructure
projects. These policies were established after the integration of former West and East Germany
in the late eighties. Recently, a share of funds has also been allocated to promoting innovation. In
addition to the Federal government policy, all Länders are also offering programs to strengthen
112

the innovation activities of companies and areas. In general, these programs do not have a
specific media orientation. Hence, the objectives were well-defined in Germany in the past.
However, the objectives for the new policy are less clear. For many years, the media industry in
Italy faced an environment that hampered rather than stimulated innovation. Recently, a revision
of the public subvention policy has been initiated. Even if it is more the result of a general public
spending review, the direction has changed channeling public contributions towards specific
support actions for media firms going digital and restructuring their business as well as for new
web-based media. Italy also adopted the Italian Digital Agenda, which follows the European
directives with regard to digital growth and the development of digital infrastructures. Media
companies in Portugal did not have direct access to economic support programs, unlike other
industries, which in many cases succeeded, innovated and developed with the help of public
support. Although direct media innovation policy does not reflect an explicit and proactive
attitude from the state, its presence can be indirectly seen, particularly through research and
education. The Spanish government policies favor more innovation in the telecommunications
sector than in the media. Public support and policy has been oriented more toward technologies
than content. Furthermore, a confusing web of public initiatives and institutions make the
promotion of innovation and entrepreneurship less dynamic and efficient for the media industry.
Switzerland is a small open economy with outstanding strengths in innovation. It offers excellent
incubation and infrastructure facilities as well as educational support, however it is less
supportive of firms and industries in terms of financial support to new firms in the form of direct
subventions, fiscal easing or risk capital enhancement. Politicians are quite active in trying to
change the situation. Some measures have already been taken for the media industry. Recently, a
commission suggested several measures to support the journalism sector in particular. Finland is
already in the process of transforming its innovation policy. Recently, the Finnish government
introduced a temporary support scheme for temporary transition assistance. The support is
technologically neutral, although the project must be implemented in a digital environment. In
the last decade, the Netherlands has adopted instruments with a more flexible temporary support
focus. The support no longer only focuses on traditional news media but also includes new media
development initiatives. In particular, the government continues to support public broadcasting
although it is implementing severe budget cuts. In the last decade, the government decided that
the creative industry, including the news media industry, should be or become one of the leading
industries for the Dutch economy and society. Actually, the ultimate objective is that the Dutch
creative industry should become one of the leading industries in the world. Hence, the
formulation of the innovation policy for the creative industry includes ultimate objectives. The
innovation policy contains a mixture of instruments from regulatory, financial and economic and
soft instruments. In general, the financial and economic instruments have a temporary character.
Consequently, the actual availability of funding, and the temporary character of the funding may
put the overall effectiveness of the support into question. Furthermore, although the government
defined the ultimate objectives for the creative industry, the ultimate objectives for the news
media industry and the translation into direct innovation objectives are not well-defined.
However, the Netherlands is the only country that has established a fund for journalism,
Stimuleringsfonds voor de Journalistiek, to stimulate innovation in the news media industry. This
fund not only focuses on supporting innovative activities of news media, in particular activities
113

of smaller firms and start-ups, but also on giving advice and organising workshops and events
that aim to inspire people and bring different experts together.

Table 11.2: Overview of the main innovation policies

Country

Belgium

Levels of
Government in
charge of
policies
National and
Regional

Type of innovation
policy



General
innovation
policy
Industrial policy

remarks




Finland

National




General
innovation
policy
Industrial policy





Germany

National and
Regional




General
innovation
policy
Industrial policy




Italy

National




General
innovation
policy
Industrial policy




Focus on the entire media
and ICT sector;
Promotion of ecosystem of
institutes and funding
instruments.

The support is
technologically neutral,
although the projects must
be implemented in a digital
environment;
A temporary support
scheme for temporary
transition assistance.

Programs to strengthen the
innovation activities of
companies and areas;
Specific focus on regional
development and
infrastructure projects.

Focus on digital growth and
the development of digital
infrastructures;
Specific support for media
firms going digital and
114

Portugal

National



General
innovation
policy




Spain

National




General
innovation
policy
Industrial policy




Switzerland National and
Regional



General
innovation
policy






the
National
Netherlands




General
innovation
policy
Industrial policy






United
Kingdom

National



General
innovation



restructuring their business
as well as for new webbased media.
Media industry does not
have economic support
programs, unlike other
industries;
No explicit and proactive
attitude of the state.

Focus more on technologies
than content;
Focus more on innovation
in the telecommunications
sector than in the media.
Focus on incubation and
infrastructure facilities;
Less supportive of firms
and industries in terms of
financial support to new
firms in the form of direct
subventions, fiscal easing
or risk capital enhancement;
Consider to develop some
measures to support the
news media.

The creative industry is
defined as one of the
leading industries;
Various instruments to
stimulate innovation in the
creative industry;
Focus on traditional news
media and new media
initiatives;
Specific fund to stimulate
innovation in the news
media industry.
Focus on creating an
environment that supports
115

policy



innovation and
entrepreneurship, and
promoting commercial
research and development;
Focus on production of
government-industry
innovation networks.

This study has shown that there are no one-size-fits-all solutions. Our findings are in line with
the findings of other studies, for instance, Borrás and Edquist (2013) and Plessing (2014).
Policies are formulated and implemented at different levels of government and public
organizations. The division of powers across different levels of government and public
organizations influences the extent to which the levels are in charge of specific policy
instruments. The development and implementation of innovation policies depend on political
will, commitment, conditions and on the entrepreneurial attitude of companies. Another
interesting finding is that many innovation policy instruments are largely based on a continuation
of previous schemes, or on lobby activity of specific interest groups, rather than on the welldefined ultimate objective or a critical assessment of the actual problems that need action. For
instance, the innovation policies, including the Dutch policy, are mainly based on supply-side
instruments. It would be interesting to explore the possibility to design and implement
instruments by which a government or public organization place an order for a product or system
that does not exist. The demand-side innovation policy instruments can be used to stimulate
innovation. Examples of demand-side innovation policy instruments are public procurement,
consumer policies and ‘lead market’ initiatives to address market and system failures in areas in
which social needs are pressing96. The nine countries have recently started to rethink and
transform their policies and support systems. Adapted or new innovation policy instruments and
practices have just been implemented or are still in the design phase. At this moment, it is
therefore too early to recognize the best policy instruments and practices to promote innovation.

96

OECD (2011). Demand-side Innovation Policies, OECD Publishing.

116

Appendix
Concentration Measures
Market structure is generally measured by concentration. The most commonly used
concentration measures are Concentration ratio (CR) en Herfindahl-Hirschman index (HHI).
The concentration ratio (CR) - calculated as the percentage of output accounted for by a small
number, generally 4 or 5, of the largest firms in an industry (CR4 or CR5).
Concentration ratios range from 0 to 100 percent. The levels reach from no, low or medium to
high to "total" concentration.
No concentration
0% means perfect competition or at the very least monopolistic competition.
Low concentration
0% to 50%. This category ranges from perfect competition to oligopoly.
Medium concentration
50% to 80%. An industry in this range is likely an oligopoly.
High concentration
80% to 100%. This category ranges from oligopoly to monopoly.
The Herfindahl-Hischmann index (HHI) is a function of the number of firms and their market
shares respectively.
No concentration
HHI below 100 indicates very low concentration.
Low concentration
HHI below 1,500 indicates low concentration.
Medium concentration
A HHI between 1,500 to 2,500 indicates moderate concentration.
High concentration
A HHI above 2,500 indicates high concentration
In general, the Herfindahl index emerged as a better tool to measure market concentration than
the concentration ratios (CR) because it takes all the market players into consideration and not
just a few large ones.

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About the author / editor

Prof. Dr. H.L. (Hans) van Kranenburg is full professor of Corporate Strategy at Radboud
University Nijmegen, Nijmegen School of Management, the Netherlands. He also is chair of
Strategy department at Business Administration. He has been a visiting scholar at Media
Management and Transformation Center at Jönköping International Business School (Sweden),
University of Navarra (Spain) and the University of Chicago (USA). He published on strategic
behavior of companies, industry dynamics, alliances and networks, foreign direct investments, and
non-market strategies. He also is an expert in media management and economics. Furthermore, he
advised companies such as publishing and chemical companies on strategic and anti-trust issues.

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