State aid No N 109/2010 Belgium Vlaamse Mediamaatschappij - Subsidie live ondertiteling "Het Nieuws" - Project iwatch

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1 EUROPEAN COMMISSION Brussels, 17/11/2010 C(2010) 7679 final PUBLIC VERSION WORKING LANGUAGE This document is made available for information purposes only. Subject: State aid No N 109/2010 Belgium Vlaamse Mediamaatschappij - Subsidie live ondertiteling "Het Nieuws" - Project iwatch Sir, The Commission wishes to inform the Kingdom of Belgium that, having examined the information supplied by its authorities on the measure referred to above, notified on the basis of Article 108(3) of the Treaty on the Functioning of the European Union (TFEU), it has decided not to raise objections. 1. PROCEDURE (1) On 17 March 2010 Belgium notified plans of the Flemish Government to grant aid for the subtitling of TV news of the Broadcasting channel VTM, operated by Vlaamse Mediamaatschappij (VMMa). Following requests for information of 7 June and 12 August 2010, Belgium submitted further information on 12 July and 22 September. 2. DESCRIPTION (2) In a message to the Flemish Parliament of 23 October 2008 the Flemish Government announced publicly its intention to support the efforts of VTM to provide live subtitling of its main evening news for the benefit of persons with a hearing disability. Article 151 of the decree on radio and television broadcasting of 27 March 2009 of the Flemish Government (Decreet van 27 maart 2009 Son Excellence Monsieur Steven VANACKERE Ministre des Affaires étrangères Rue des Petits Carmes, 15 B Bruxelles Commission européenne, B-1049 Bruxelles Belgique Europese Commissie, B-1049 Brussel België Téléphone: (0)

2 betreffende radio-omroep en televisie) obliges public broadcasters and private TV broadcasters to render an important part of their programme accessible for persons with a hearing disability. It obliges private TV broadcasters in particular to introduce subtitling of their principal daily news transmission. The decree also announces that the Flemish Government will grant subsidies forthe necessary costs, and that it will fix criteria for these subsidies. This has not yet happened. (3) VMMa's VTM is a Flemish TV broadcaster which is broadcasting its transmissions in the entirety of the Flemish region and Brussels. VTM's evening news is its daily main news transmission. VTM is the only commercial broadcaster of the Flemish Community which is producing and broadcasting daily news. (4) During 2009, all 365 editions of the 19:00 hour's news of on average 38 minutes duration have been subtitled for the benefit of persons with a hearing disability. During this period, the news subtitling required expenses of overall Euro , of which Euro represented labour cost. These costs, which concern specific technology and staff with particular skills, may be clearly distinguished from the other costs of running the TV station. These costs have been verified by external auditing. (5) The Government of the Flemish Community decided on 11 December 2009 to pay a direct and individual aid grant of EUR , outside an aid scheme, to VMMa for the subtitling of its hours evening news "Het Nieuws" on VTM during 2009, and also for an extension of the news subtitling to its video on demand services on the internet, called iwatch (Besluit van de Vlaamse Regering van 11 december 2009 houdende de toekenning van een subsidie van euro aan de Vlaamse Media Maatschappij voor de rechtstreekse ondertiteling van de dagelijkse nieuwsuitzending van VTM). The aid is intended to contribute to the necessary investment, labour and other costs incurred by VMMa during the year The decision requests VTM to specify the costs dedicated to the subtitling activity and to have the costs and their allocation verified by an external accountant. (6) This aid plan was notified to the Commission on 17 March Belgium made the grant under the condition that it needs the prior approval by the Commission. (7) There is no possibility of cumulating this aid with other state aids covering the same eligible costs. (8) The scope of the notification and of this decision is limited to a one-off subsidy granted in ASSESSMENT 3.1. State aid within the meaning of Article 107(1) TFEU (9) Article 107(1) TFEU declares as incompatible with the internal market any aid granted by a Member State which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods and affects trade between Member States. 2

3 (10) The support by the Flemish Government constitutes aid. The amount of Euro is paid as direct individual grant outside an aid scheme out of the budget of the Flemish Community to a single undertaking. It may distort competition. VTM is competing with other commercial and public TV channels in Belgium not benefiting from such support. (11) With regard to the effect on trade between Member States, in Belgium the beneficiary is in competition with TV broadcasters with a foreign or international company structure (e.g. the RTL group) and foreign public TV programmes (in particular of the Netherlands). This applies also with regard to advertising with cross-border effect, especially in areas near to the border in which the same language is spoken on both sides of the border. Finally, the beneficiaries participate in the international market of the purchase and sale of programme rights. 1 (12) Therefore, the measure constitutes State aid in the meaning of Article 107(1) TFEU Compatibility of the aid with the internal market (13) This aid for subtitling TV transmissions does not fall under any of the horizontal or sectoral guidelines of the Commission for the assessment of aid under Article 107(3) TFEU. As the major proportion of the aid constitutes operating expenses, and as the aid is granted for VTM to perform a specific activity which has been imposed on it by the State, it is appropriate to assess its compatibility not under Article 107(3) TFEU but under Article 106(2) TFEU. Belgium is of the view that the subtitling for persons with a hearing disability, as imposed on TV broadcasters by the decree of 27 March 2009, constitutes a service of general economic interest (SGEI), and may thus be funded in compliance with Article 106(2) TFEU, according to the Community framework for State aid in the form of public service compensation (the Community framework) 2. (14) The Broadcasting Communication 3 is not applicable to the aid to VTM as VTM is not a designated and entrusted public service broadcaster in Belgium. Live subtitling is not part of a public broadcasting service remit for VTM, in the way it is for the Flemish Public Service Broadcaster VRT. VRT is asked to offer this service in the framework contract detailing its public broadcasting service mission (Beheersovereenkomst tussen de VRT en de Vlaamse Gemeenschap 4 ). The additional costs involved for subtitling constitutes part of its net costs of offering public broadcasting services for which it will be compensated. (15) Live subtitling of TV transmissions for persons with a hearing disability may be considered a SGEI. It helps to better include persons with hearing disability by giving them access to media and information sources. The EU itself has described these services as desirable in the public interest. Article 7 of the Audiovisual Media 1 Cf. point 22 of the Communication from the Commission on the application of State aid rules to public service broadcasting, OJ C 257, , p Community Framework for State aid in the form of public service compensation, OJ C 297, Communication from the Commission on the application of State aid rules to public service broadcasting, OJ C 257, , p

4 Services Directive asks Member States to "encourage media service providers under their jurisdiction to ensure that their services are gradually made accessible to people with a visual or hearing disability." 5 This is a service to a very small fraction of the potential TV audience. The relevance of this possible additional audience for TV advertisers is probably limited, to an extent that the additional costs of offering this service are unlikely to be recovered by increased revenues from TV advertising. Therefore the Flemish Government felt the need to impose a respective obligation on broadcasters. (16) The Community framework requires in its points 11 and 12 that the undertaking in question has been entrusted with the SGEI by an official act. Article 151 of the Flemish decree of 27 March 2009 on radio and television broadcasting may be considered as such an act of entrustment. It describes the nature of the obligation and the undertakings concerned. The nature and scope of this obligation are sufficiently defined, within the meaning of Article 12 (a) of the framework, by Article 151 of the Flemish decree of 27 March 2009, considering in particular that the aid only covers the subtitling of the news. (17) However, the initial act of entrustment does not fully describe the parameters for calculating, controlling and reviewing the compensation, as requested by point 12 (d) or specifies the arrangements for avoiding overcompensation, point 12 (e) of the framework. The criteria which the Flemish Government is obliged, under Article 151 of the Flemish decree of 27 March 2009 on radio and television broadcasting, to fix for subsidies for the introduction of subtitling, and which should cover these aspects, are not yet adopted. But the granting act of 11 December 2009, which refers to this Article 151, specifies in its Article 3 the parameters for calculating the aid, by limiting the eligible costs to those concerning specific technology and staff with particular skills. It also determines in Article 4 that a control and review of the compensation has to be made by external auditing, and it arranges in Article 6 that the Flemish authorities may at any time review the use of the subsidy and demand repayment in case of overcompensation or use of the funds for purposes not linked with the objective of the aid. The combination of these two official acts ensure that the conditions of point 12 (d) and (e) of the Community Framework are fulfilled. (18) Thereby the granting mechanism for the year 2009 excluded overcompensation. In fact, the amount of the compensation does not exceed what is necessary to offer the service in question, in line with point 14 of the framework. The eventual amount of aid is determined and granted only after the SGEI has been performed and its costs have been specified. It is evident from the information submitted by Belgium that the amount of compensation granted by Belgium is below the additional costs incurred by VTM to assure the live subtitling of the daily news. The costs, which concern specific technology and staff with particular skills and which may be clearly distinguished from the other costs of running the TV station, amount to Euro The subsidy of Euro covers only a part thereof. In the granting act, Belgium requests that before the payment of the grant VTM demonstrates and proves the specific costs linked to the service in question and that 5 Directive 2010/13/EC of the European Parliament and of the Council of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services (Audiovisual Media Services Directive), OJ L 95, , p. 1. 4

5 these costs are verified by external auditing, to ensure that the subsidy is only used for the intended purpose. It is thereby assured that this additional service is not generating any additional revenue for VTM. The costs of the SGEI are not even fully covered by the aid. 4. CONCLUSION (19) The Commission therefore concludes that VTM performs a service which is clearly in the public interest and receives compensation for this service which will be below its actual costs. Although the public service compensation arrangement is not fully complying with all conditions of the framework, as regards the content of the act of entrustment, the granting decision is fully ensuring what is intended by the framework. The aid is not affecting the development of trade to an extent as would be contrary to the interests of the Union. (20) The Commission takes note of Belgium's intention to clearly define in an official act the methods for determining the amount of the compensation and avoiding overcompensation for any future aid, in conformity with the SGEI Framework. 5. DECISION (21) The Commission has accordingly decided to consider the aid to be compatible with Article 106(2) of the Treaty on the Functioning of the European Union and not to raise objections to the notified measure. (22) If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to the disclosure to third parties and to the publication of the full text of the letter in the authentic language on the Internet site: Your request should be sent by encrypted to stateaidgreffe@ec.europa.eu or, alternatively, by registered letter or fax to: European Commission Directorate-General for Competition State Aid Greffe B-1049 Brussels Fax No: Yours faithfully, For the Commission Joaquín Almunia Vice-President 5