Will a 200 million euro a year package of assistance to the French newspaper industry have any impact at all when the current level of state “aid” is already running at an estimated 280 million euros (more than A$500 million) a year?

That’s the question being asked after President Sarkozy revealed a mini-stimulus package worth €600 million over three years, to help “save” the French newspaper industry from a sharp fall in advertising revenues, rising production costs and the effects of its difficulty in adapting to the internet.

That will take total government assistance over the three year period to well over 1.5 billion euros, or well over $A3 billion, a mind boggling amount in Australian terms.

It’s a situation being felt by the established media the world over (see the story about job cuts across the Canadian media). It’s impacting TV and radio in many countries as well, from the US, to the UK and Australia.

The measures costing close to $A390 million a year for the next three years includes doubling the amount of government advertising in newspapers, reducing social charges for newspaper delivery workers, the delaying of a planned increase in postage costs, and more generous tax breaks for investment in digital services to speed to move to the net.

Media reports in London at the weekend estimated existing state aid, mainly in the form of tax breaks and subsidised postage, at some 1.5 billion euros a year in total.

The Financial Times said that only two national newspapers — L’Equipe, the sports daily, and Les Echos, the business daily — made a profit in 2007. Prestigious titles such as Le Monde, France’s paper of record, and Libération, the left-wing tabloid, have had financial problems in recent years which were before the recent slump in advertising.

Mr Sarkozy said it was the “duty of the state” to help support the press. The President is close to many media owners and recently changed the rules to allow himself to name the head of public television.

He revealed the changes in an annual address to the media, which he used a year ago, to complain about the coverage of his personal life and reveal plans to ban advertising on state owned TV.

Mr Sarkozy said it was necessary to reduce newspaper production costs by up 40%, but he gave no indication the government was prepared to take on the heavily unionised companies and their inefficient print monopolies.

Perhaps the most significant measure were the cuts in social charges for distribution staff, in effect an 80 million euros a year tax break for home delivery, in an attempt to extend France’s poor distribution system. Another scheme will enable all French 18-year-olds to receive a title of their choice for free for 12 months to encourage newspaper reading.

The French President has already forced major changes in broadcast media, banning commercials on the two state owned networks (France 2 and France 3), paying them a subsidy in compensation and forcing a Government supported Pay TV news channel to revert to French only broadcasts.

Privately-owned channels will also be allowed to air longer commercial breaks per hour, jumping up to nine minutes of ads per hour compared to the previous six. Some of these are controlled by rich and powerful business leaders, as are many of the country’s magazines and newspapers, so the deals effectively state aid to ‘mates’.

The state-owned channels, including three new cable channels, are presently funded by both advertising and a television licence fee similar to the one used in the UK. When the legislation is complete, the 450 million euros (nearly $A900 million) in lost prime-time advertising revenue will be covered by a levy on the commercials aired on privately-owned channels and a small mobile phone tax.

By 2012, President Sarkozy wants to ban all advertising from the state-owned channels, not just during primetime.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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