A Marshall Plan for the Media?

Matteo Baccaglini // 29 July 2019

Media pluralism in Europe is under threat. Far from exhibiting a rich diversity of opinions, content, ownership and structures, Europe’s media sector faces considerable and rising risks to its market competition, editorial independence and social inclusiveness.

So concluded the 2017 annual report of the Centre for Media Pluralism and Media Freedom (CMPF), a research centre co-financed by the European Union.

No surprise, then, that industry heavyweights and regulators worry for the future of the sector. In late June 2019, at an event hosted by EURACTIV, speakers called for subsidies to media outlets – or in the words of Ricardo Gutiérrez, Secretary of the European Federation for Journalists, a ‘Marshall Plan’ for the press.

The rationale is that by stumping up a subsidy, the European Union can encourage new entrants and small players to compete against the powerful incumbents. By introducing voters to different ideas, highlighting conflicting opinions and encouraging debate between them, a media-plural Europe would better facilitate democratic decision-making, especially in the era of fake news.

But while nobody would question the benefits of a media-plural Europe, Europeans should worry that instead of encouraging media pluralism, any selective subsidy – that is, a payment to chosen media outlets – will only exacerbate the industry’s problems at the taxpayer’s expense.

Selective subsidies threaten the editorial independence of the media. If they are allowed to choose the media outlets which receive public money, politicians face an urge to fund outlets that share their political views and provide favourable courage. In turn, editors and journalists temper their articles in their bid to be chosen. Far from encouraging a diverse array of views, this political influence brings the media to heel.

This is what happened in Austria and Sweden when they introduced selective subsidies. Swedish subsidies were channelled to partisan newspapers supporting the incumbent coalition government, while Austrian editors complained that they felt silenced. Fiercely proud of their editorial independence, the Swiss press resists calls to introduce selective subsidies.

Nowhere is the effect of political influence more apparent than when it comes to public advertising. Virtually every member state already furnishes selective subsidies to the press by choosing the media outlets in which to advertise its schemes and notices. In many countries, this has severely compromised the editorial independence of the media.

In Greece, public advertising has led to local newspapers becoming mouthpieces of local politicians – a pattern echoed in Romania, Poland and Bulgaria – while Hungarian editors and journalists vying for public advertising practise a widespread culture of self-censorship. In Bulgaria, there are even written contracts between local authorities and media outlets during election periods.

Unsurprisingly, a report compiled for the European Parliament in 2016 recommended allowing tighter restrictions against state aid to media outlets, citing the political influence of selective subsidies.

As well as reducing editorial independence, selective subsidies often do little to support the underdogs and merely reward the market leaders. In 2015, eleven outlets accounted for half of all French press subsidies; these included well-known titles with large circulations like Libération (€5.1m), La Croix (€4.2m), Le Figaro (€2.4m) and Le Monde (€1.6m). Even in Sweden, where selective subsidies are administered by an apolitical council, the European Commission ruled in 2009 that its scheme privileged large metropolitan newspapers, breaching state aid rules.

In short, selective subsidies threaten the editorial independence of the media and are often counterproductive to market competition – though of course at least some of these effects might be remedied by carefully designing a transparent, apolitical framework for allocating funds.

An alternative option is general subsidies, which apply to all media outlets equally. These are already widespread: most member states reduce value added tax on media outlets – indeed, Belgium and the United Kingdom exempt newspapers altogether – and some, like France and Italy, grant newspapers subsidised postal tariffs, business rates or journalist training. Maybe this is what the speakers at EURACTIV’s event had in mind.

But the benefits of general subsidies are shared by small and large firms. As such, general subsidies are in principle less effective and more costly than selective subsidies at promoting market competition. Besides, why should the media be funded at the expense of other sectors? And by incentivising outlets to appeal to a wider audience in order to sell more copies, per-copy subsidies arguably deteriorate journalistic quality.

So other policies to promote media pluralism that eschew the grandiose idea of a ‘Marshall Plan’ altogether might be more effective. Existing antitrust regulations could limit the power of larger outlets, which could for example be compelled to share their mailing distribution with smaller outlets, or privately-funded access schemes and registers of ownership could allow pluralism-conscious readers to favour outlets that are transparent and publish more minority voices.

In any case, talk of a ‘Marshall Plan’ for the press should be prefaced with grave concern for editorial independence and market competition – and steer well clear of letting politicians decide which outlets get how much money.

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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