By Iva Nenadić, Research Fellow at the Centre for Media Pluralism and Media Freedom
One of the four specific objectives around which the proposal for a European Media Freedom Act (EMFA) is articulated, is “ensuring transparent and fair allocation of economic resources in the internal media market by enhancing transparency and fairness in audience measurement and allocation of state advertising”.
State advertising emerged as one of the prime sources of risk for both fair competition and media independence in various countries across the European Union, as well as in the EU candidate states. Sometimes it is misunderstood or confused with political advertising. But state advertising does not need to be – and usually it is not – political in its content. Think of a state-owned railway or energy company promoting its services. This blog post is an attempt to unwrap this concept and to outline how state advertising is or may be misused to exercise undue influence over individual media organisations and the media market as a whole.
The EMFA proposal defines state advertising “as covering promotional or self-promotional activities undertaken by, for or on behalf of a wide range of public authorities or entities, including governments, regulatory authorities or bodies as well as state-owned enterprises or other state-controlled entities in different sectors, at the national or regional level, or local governments of territorial entities of more than 1 million inhabitants”, while explicitly excluding “emergency messages by public authorities which are necessary, for example, in cases of natural or sanitary disasters, accidents or other sudden incidents that can cause harm to individuals”. This definition is along the line of the definition used in the Media Pluralism Monitor (MPM), a research project that, among the set of issues pertinent to media pluralism and freedom, has also been evaluating the conditions for fair and transparent allocation of state advertising in the EU states and candidate countries. Unlike the EMFA proposal, the MPM’s definition of state advertising applies to all relevant public entities, including governments and state-owned or state-controlled companies, at any level, national, regional and local, without imposing a threshold of 1 million inhabitants because this would exclude some capitals in EU member states and even the whole EU countries that have a population under 1 million. It is not fully clear what the ground for this threshold used in EMFA is.
State advertising has been a part of the Media Pluralism Monitor’s assessment since the project’s beginning in 2013. The rationale behind the inclusion of this issue in the assessment is the fact that state advertising in some countries represents one of the key sources of revenue for the media. In a situation in which media organisations face economic difficulties and struggle with the sustainability of their business models, financial support from the state, in any form, can be crucial. This is especially the case for non-profit, community media and other less commercial forms of journalism. It is therefore of particular importance that fair and transparent rules on the distribution of state resources are in place, as well as that they are being effectively implemented. The lack of clear and transparent rules may be conducive to favouritism. The lack of available data on allocation, in practice, is also seen to be a potential risk, since the lack of transparency can conceal the practice of channelling money to specific media outlets in a biased manner. Further to the risk of political capture through opaque and unfair allocation of state advertising, it may also pose a risk to the media market by distorting competition as it may be used as a cover subsidy to the media.
Accordingly, the MPM examines (1) the existence of regulatory safeguards for fair and transparent distribution of state advertising that prevent preferential treatment and/or misconduct; and (2) the actual practice: whether the state advertising distribution is transparent and if the criteria for media buying are clear (be it conducted directly or via intermediaries, such as the media buying agencies).
For almost a decade, the MPM findings have been indicating that state advertising remains an area of high concern and related risk for most countries encompassed by the Monitor. For instance, as per the MPM2022 findings, 26 out of 32 countries have no legislation containing fair and transparent rules on the distribution of state advertising to media outlets (in most cases no rules at all applicable to state advertising); and the lack of transparency in its distribution has been reported in 29 countries.
The map indicates whether a country has a legislation that provides fair and transparent rules on the distribution of state advertising to media outlets (red: NO, green: YES)
The map shows the risk level associated with the actual practice of state advertising distribution in a country, and the extent to which it is used in an opaque and unfair way (red: HIGH risk, yellow: MEDIUM risk, green: LOW risk)
In our final report we mention some country cases as an illustration of where the problems are, but the lack of specific insights in other countries does not mean that the problem is not present and maybe even graver than in some of the named examples. As the MPM continuously shows, state advertising is or may be an issue in most of the EU states and candidate countries due to the lack of adequate regulation and almost no transparency around its distribution to the media. In particular considering the economic vulnerability of media organisations, state advertising may be used as a hidden subsidy and thus also as an instrument of political influence on the media. Even in countries where state advertising is subject to public tenders, it is clear that general public procurement laws do not cover all state advertising expenditure nor offer sufficient protection against preferential or biased distribution.
An increasing need for public support for the media may also increase the risk of the politicisation of its distribution. The member states should, thus, develop and implement rules requiring that ministries, state bodies, public institutions, and state-owned and state-controlled companies regularly report, in a transparent and accessible way, on the advertising that is carried out, publishing information on advertising spending on their websites or in a joint repository. Similarly, the media should be incentivised, or even legally bound, to regularly report in a transparent and accessible way on those revenues that are generated from state advertising.