Published 2017-02-10

SVT profits from the rules and distorts competition

Aftonbladet’s Publisher, Sofia Olsson Olsén, and the Managing Director of TU (The Swedish Media Publishers’ Association), Jeanette Gustafsdotter, argues that the public service broadcaster SVT is stretching the terms of its broadcasting permit and distorting competition when providing Facebook with content. SVT receives SEK 8.1 billion annual in license funds.

The two are now challenging the minister responsible, Alice Bah Kuhnke, in a debate article published in Dagens Nyheter on Thursday, February 9th. 

Read the debate article in Swedish

Below is a translation of the article into English:

SVT profits from the rules and distort competition

Threats to Swedish media companies today derive from two sources: the global online giants – and public service.

As a result of technological developments, changing consumption patterns and new competition for audience and advertising funds from global online players, the structural transformation of the media market is far-reaching. New distribution formats have radically redrawn the media map compared when the Swedish public service monopolies were created. Today, almost all players do the same things to some extent: newspapers make television, radio and television companies produce text, and journalism can be consumed through a plethora of technical aids. But the new conditions have also changed the relative roles of the players.

Public funding totaling SEK 8.144 billion (2017) gives SVT, SR and UR a unique financial position. Today, we see how both SVT and SR use their resources to directly compete with the private media companies on what has become the newspapers’ new home playing field – online platforms for text and image-based journalism, television and interactivity with the audience. Increasingly, SVT and SR are transitioning from being distinct television and radio companies to general news distributors, whose range is similar to the newspaper companies’ online offerings.

In pace with television consumption partly having shifted over to the internet – 20 percent of television time is currently provided online – Sveriges Television has begun working like newspaper editors,  increasingly becoming a provider of online, text-based journalism. An example of the company’s ongoing transition is its ambition to establish itself as a supplier of Breaking news. In an article in the internal magazine “Vi på TV”, the company tells of its newly-started news project aimed at SVT seriously competing to be first with the news, which requires major editorial resources with many written-word journalists.

SVT is now severely stretching the regulations on which its broadcasting license and central government funding are based. The permit refers expressly to the broadcasting of television programs in the terrestrial network, that is, regular television broadcasts that are viewed on regular television sets. Today, this also includes the annually published conditions for the assignment from the central government to broadcast television online. The terms of financing are formulated as follows: “The funds are to be used for the company’s core business, that is, to produce and transmit television programs to the public.”

Our conclusion is that SVT is now, and to an increasing extent, acting far beyond the regulatory framework, which is a prerequisite for the government funding. Rather than supporting unique operations adding unique value, the Swedish people are, through their television licenses, financing operations that are acquiring the character of a state-sponsored competitor to the country’s media companies, in the midst of the toughest period the industry has experienced in financial terms. We can either see it as SVT having taken the liberty to reformulate its own mission. Or we can go all the way, simply stating that the company is violating the broadcasting license.

Just like the rest of the media industry, SVT operates today in a complex media landscape where media habits differ radically from when the public service companies were established half a century ago. According to Mediabarometern, 34 percent of the population makes us of traditional media (newspapers, tabloids, magazines, radio or television programs) digitally. Last year, the Internet overtook television as Swedes’ most important source of information.

The use of Facebook continues to increase. Just over half, 52 percent, of all Internet users are on Facebook every day and 71 percent are there occasionally. For the 16-25 age group, the Internet is a more important source of news than television, radio and newspapers. Alongside other global online giants, such as Google, the Internet represents a major threat to the media companies’ operations and existence. This particularly applies to the struggle for crucial advertising funds.

The most active provider of content to Facebook is SVT. At four locations in Sweden Online specialists have been recruited with the mission of helping SVT’s journalists make their news items go viral. SVT currently operates 60 official Facebook groups. A wide range of profiled program hosts also have their own official SVT pages.

The strategy is paying off. Digital traffic to increased by 92 percent over the past year. In the past month, SVT has broadcast live video on Facebook on at least five occasions: the US elections, the Melodifestivalen (Swedish song competition) starting field, the Junior World Cup in ice hockey, local news and the X Games.

These investments benefit not only SVT, but at least equally Facebook, whose weak point is precisely that it does not produce its own content. But now then, SVT is helping fill that particular hole, thus making Facebook an even stronger competitor for the media industry’s audiences.

SVT is going as far as paying Facebook to reach other media companies’ readers. One example is a Facebook ad aimed directly at Sportbladet’s followers.

Now SVT is taking the next step and also initiating cooperation with Google. With the new service AMP, Accelerated Mobile Pages, Google attracts – like Facebook – content producers to deliver to their platform. The intention is for consumers to never have to leave Google or Facebook to access other content. The fact that license fees for public service are being used to strengthen the global actors’ competitiveness against Swedish media companies can hardly be accommodated within the purposes of central government funding.

After the media study that was presented recently, the industry is now looking forward to commencement of the announced study of the role of public service broadcasting in the new media landscape. The results will form the basis for the new broadcasting licenses, which will come into force in 2020. But we are in the midst of an accelerating and dramatic reshaping of an industry that has already claimed its first victim, and could reap more over the coming years. The structural transformation is happening here and now, and for the sake of journalistic diversity, it is vital that there not be too many to follow in the demise of Dagbladet i Sundsvall and Folket i Eskilstuna. Many media companies are under threat in the near future. In this situation, the distortion of competition that SVT is contributing to, is the last thing the media industry needs.

We note that there are three years left of the current broadcasting license and therefore pose the following questions to the minister responsible, Alice Bah Kuhnke:

Should SVT continue to violate the rules of the current broadcasting license over the final two years? What requirements is the government imposing on its regulator?

Jeanette Gustafsdotter, Managing Director, TU – Media in Sweden

Sofia Olsson Olsén, Editor-in-Chief and CEO Aftonbladet