Germans bow to EU on pubcaster funding

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BRUSSELS -- European Union Competition Commissioner Neelie Kroes on Friday forced the German authorities to end illegal government aid to public broadcasters ARD and ZDF.

The EC announced that the German state governors "will propose concrete measures to remove the concerns expressed by Commissioner Kroes on the funding arrangements for the public broadcasters."

Edmund Stoiber from Bavaria and Kurt Beck from Rhineland-Palatinate -- representing all 16 German Lander, or states -- agreed to draft a state treaty to implement the aid rules within two years.

The treaty will cover the public service remit as well as commercial principles, transparency and financial control. Kroes said the changes will be enough for her to formally end the Commission's three-year state-aid procedure against Germany.

The announcement comes after persistent clashes between the EC and German authorities, in particular, over whether ZDF and ARD could use license fees for commercial activities such as funding their Web sites.

The EC's investigation was originally prompted by complaints from German commercial broadcasters RTL and ProSiebenSat1, who argued that online services were not part of the public broadcasters' legal mandate and should not receive public money. The EC agreed, arguing that even free Internet content breaks antitrust rules because it destroys a potential new market.

EU treaty rules allow state financing of public broadcasters through subsidies or license fees, but only if the aid is strictly limited to clear public service activities, and there is no "overcompensation."

EU governments are entitled to decide for themselves how public service broadcasters should be organized and financed so long as they meet these conditions and do not undermine legitimate commercial competitors.

The EU closed similar probes into broadcasters in Spain, France and Italy and ordered Dutch public broadcaster NOS to pay back part of its subsidy.
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