24 august 2011

Do we need to review subsidies for the media?

Newspapers from around the world on new- stand
Many newspapers benefit from tax breaks

Despite declining sales of newspapers and shrinking broadcast audiences for the largest channels, new research shows that public support for the media is still based on arrangements put in place 30 or more years ago - before the arrival of the internet.

The report by Oxford University shows that British newspapers benefit from indirect government support through tax relief like zero-rated VAT worth ten pounds a year per head of population (£594 million a year).

The report points out that print and broadcast media receive millions in direct and indirect public subsidies while online news and other new media ventures by entrepreneurs or existing organisations receive no or little support-despite their increasing popularity.

The researchers from Oxford's Reuters Institute for the Study of Journalism (RISJ) looked at the latest publicly available data from 2008 to compare levels of public funding for the media in the UK, Finland, France, Germany, Italy and the US. They examined both direct and indirect streams of public funding that were benefiting media organisations.

They found that public service broadcasters enjoyed the most government funding that came to them directly. Newspapers also enjoyed other publicly subsidised support through tax relief and, in some countries, direct subsidies and special discounts on postage charges.

Out of the six countries surveyed, the Finnish government was the most generous in the level of indirect support it provided to its press (through tax breaks and other benefits), which was worth the equivalent of £46 a year per head of population.However, France gave the highest level of direct government funding to its newspapers - the equivalent of £5 a year per head of population.

The French press also received indirect support through tax breaks and other benefits worth the equivalent of around £10 a year per head of population.

The lowest level of public funding for newspapers was in the United States where print publishers received the equivalent of around £2 a year per head of population through tax breaks and no direct government funding was available there either.

Meanwhile, in its support for public service broadcasting Germany came top of the six countries surveyed. In Germany, direct funding of around £70 a year per head of population is paid directly to public service broadcasters. Finland and the UK followed with the equivalent of £56 and £53 being paid each year per head of population. Again, the US scored the lowest with the level of public support given to public service broadcasters pegged at around £2 a year per head of population.

Report author Dr Rasmus Kleis Nielsen, RISJ Research Fellow, said: 'Indirect forms of public funding for newspapers, through tax breaks such as VAT exemptions, are far more significant than most people realise and worth hundreds of millions of Euros or pounds each year. While the media industry has changed dramatically over the last ten years, we found that the forms of public support offered to help public service and privately run forms of media have hardly changed at all.

'Our report asks whether current forms of support, which are tied to public service broadcasters and print journalism, are the best way to ensure a flourishing, diverse media industry in the future. As more and more people turn to new media and online news, we run the risk of supporting the past when we should be thinking ahead. Public funding arrangements that have been in place for decades do little to encourage innovation and are no longer as effective as they once were. Those who favour public support for the media will need to rethink the role of public policy and assess how governments can best support the kinds of accessible, high quality journalism that democracies benefit from.'

The report 'Public support for the media: a six-country overview of direct and indirect subsidies' is by RISJ Research Fellow, Dr Rasmus Kleis Nielsen, in collaboration with the former Editor-in-Chief of Reuters, Geert Linnebank. T

The report, based on a range of government and industry data sources, is published by Reuters Institute for the Study of Journalism.