Even Spanish TV feels the pain

State broadcaster RTVE warns that a 20-percent reduction in funding means an end to big-budget original programming and more repeats.

As part of swingeing spending cuts being implemented at the behest of the European Central Bank, the Spanish government is to slash state broadcaster RTVEs budget this year by 200 million to 1.2 billion.

RTVEs board says the cuts will have a devastating impact on its programming, predicting that its audience figures for its two channels La 1 and La 2, will drop by 8 percent. La 1 frequently tops audience ratings thanks to hugely popular programs such as Cuntame como pas a long-running drama telling the story of a family from the Franco era up to the present day or fantasy saga guila roja, and post-Civil War soap opera Amar en tiempos revueltos. But the channel says that the cuts to its budget will prevent it from being able to commission these high-budget productions.

These cuts leave us with very little room for manoeuvre, we will not be able to buy content and so we will be forced to fill the airwaves with repeats. Whats more, we wont be able to broadcast programs for minority interests that the private channels avoid because they make no money on them, said RTVEs board in a statement after a meeting with Deputy Prime Minister Soraya Senz de Santamara to lay out their case. The board also asked for RTVE to be exempt from paying VAT.

But Senz de Santamara has made it clear that no exceptions will be made for RTVE in cutting government spending to meet the ECBs demand that the country reduce its budget deficit, which stands at more than 8 percent of GDP, to around half that figure by the end of the year in an effort to get the Spanish economy back on track.

RTVE faces an expensive year, and will have to pay out some 90 million for the London Olympic Games broadcasting rights and related costs.

RTVEs board has asked the government of Mariano Rajoy to limit the cuts for this year to 80 million, to allow it to meet its commitments to broadcast the Games.

Since television started in Spain in 1957, it has always operated following a free-to-air model, with a public sector funded partially by the government, but essentially through advertising. The introduction of commercial television in Spain in 1989 did not result in a change in this model, but the dual funding of RTVE has been subject to bitter criticism from its commercial rivals, who see it as unfair competition.

In 2006, the Socialist Party administration announced a series of reforms at RTVE aimed at addressing its long-running inability to turn a profit, as well as the widely held perception that it was subject to political interference. In 2009, a total ban on advertising at RTVE was announced, coming into effect in January 2010. The government justified the move saying that there had been a sharp fall in television-advertising revenue, and that this would make it difficult to forecast spending requirements for the broadcaster. In 2008 advertising brought in 557 million, or about 50 percent of TVEs total budget. The rest came from government subsidies, but were not enough to prevent a 72-million loss for the year.

At present, RTVE is funded by government subsidies, totalling around 45 percent of its budget; an already existing tax, paid to the government by businesses using the radio spectrum; a new tax, paid by commercial television broadcasters, amounting to 3 percent of their gross financial income this tax is estimated to be neutral, on the basis that advertising investment will move from the TVE to the commercial broadcasters; and an additional new tax, imposed upon telecommunications operators and fixed at 0.9 percent of their operational not financial income.

Privately owned commercial channels were initially in favour of this plan. Theyd have one competitor less in an era of eroding advertising revenues. On the other hand, they did not, and do not feel compelled to fund RTVEs budget with a percentage of their advertising income. This tax added to the already existing 5 percent they are required to earmark for the funding of European and Spanish films.

Telecommunications providers have reacted angrily. They are saying it is not fair to require them to fund a sector that has no direct connections with their own duties. They have declared they will charge users 0.9 percent more, with the charge itemised on all telephone bills.

Other critics include RTVEs commercial sponsors. They have proposed at least 12 minutes of advertising per hour. Their argument is that less advertising will mean less consumption, which has already been slashed by the countrys brutal recession.

RTVE says it is worried that the new restrictions on it will reduce its audience share, making it difficult to justify its large workforce.

For the moment, the government seems content to let RTVE stew, while failing to address the concerns of private broadcasters, who also face a decline in advertising revenue.