'No room for further growth'

The financial situation of existing television and radio stations will continue to deteriorate further if the Broadcasting Authority grants new licences, according to a report published yesterday.

A Business Study on the National Radio and Television Services, published with "confidential sections" omitted, showed that existing stations already incurring heavy losses are bound to be adversely affected if new stations open in Malta and Gozo.

The 143-page report, drawn up by Grant Thornton and published on the Broadcasting Authority's website, analysed national radio and television stations from a commercial perspective.

It said new entrants to the market are unlikely to generate enough revenues to sustain their operations. "The most likely scenario if new stations enter the scene will be more stations with more losses," the report says.

The survey concluded that the market is predominantly dominated by the state and political stations, which collectively have about 53 per cent of radio and 98 per cent of TV audiences and control 78 per cent of radio and TV advertising revenues, totalling about Lm4 million a year.

In the years following 1999, radio's and TV's share of the total advertising market remained relatively constant indicating that that there was little or no room for further growth.

A comparison between the published version and a full version of the report seen by The Times revealed that in 1995, when Super One was the only political station having both a radio and a TV station, it enjoyed 78 per cent of the political group's market. When Net TV was launched in 1998, the PN media increased its market share and balanced out the MLP station in advertising revenue.

"One Productions continued to experience a steady growth in turnover even while, with its new TV station, Media Link (the PN media organisation) was generating two to four times its previous revenues."

At the time, Net TV was tapping viewers that did not tune in to Super One TV when there was still room for another station. But more stations now would mean that existing stations, which operate with extremely low budgets, would be unable to meet the requirements for quality and diversity of scheduled programming, the report said.

It would be difficult for new stations to take away advertising from dominant stations. If advertising revenue was actually won over from existing stations "this would not be beneficial for the industry as a whole".

"All station operators describe the market as 'cut-throat' or extremely competitive. There is little differentiation in supply, particularly in radio, and most stations have resorted to competing purely on price, a strategy with very damaging implications for the industry."

The report said that dominant political and public stations will continue to enjoy strong advertising revenues even if they were to lose some audience shares to other stations since success was not entirely dependent on audience shares.

The advertising market available to non-political private stations is just Lm800,000, presently shared by some 10 players.

The report said that in 13 years of pluralism in broadcasting, despite the precarious financial situation of the industry, only two radio stations have closed down to cut their losses (Island Sound and Radju MAS). This indicates that exit barriers are quite high. As one interviewee pointed out, "after having invested huge sums of money you do not consider closing down a station".

The industry also lacked talent. "In the absence of professional training which, in any case, stations do not have the resources to finance, new stations will have to poach talent from existing stations or make do with personnel who lack the necessary skills and experience. In either case, the quality of programming is bound to suffer."

The view that the market cannot sustain new entrants was also confirmed by two main advertising agencies interviewed.

Respondents of a survey did not see the need for more stations. "Alternatively they pointed out a demand for certain programme genres (such as films, comedies and documentaries) that are unlikely to be within the financial reach of local stations that have to operate with very tight budgets," the report said.

An interesting finding was that stations enjoying a good audience did not necessarily attract more advertisers. Of the three main television stations - PBS, Net TV and Super One - Super One attracted 41 per cent of viewers in 2001 but had the lowest income from advertising.

The anomaly was also present when it came to radio stations. Bay Radio captured 10 per cent of the audiences in 2002 but its share of advertising was 25 per cent.