Regional TV stations often not profitable

PRIVATE RADIO Regional TV stations in particular are struggling with considerable financial difficulties. The situation is somewhat better for private radio stations.Swiss regional television is not getting off the ground economically. Although on average 40% of licensed broadcasters' income comes from the licence fee pot, every second station is underfunded or even overindebted. The private radio sector is doing somewhat better: since 2010, its advertising and sponsorship revenue has grown by eight percent. This is the conclusion of a study conducted by Publicom on behalf of OFCOM. In 2013, the 33 commercial Swiss private radio stations with a licence achieved advertising and sponsorship revenue of CHF 165 million - eight percent more than in 2010. In particular, the radios were able to increase their revenue per listener, which indicates a better acceptance of radio advertising. The radio stations' equity ratios and profitability also improved slightly compared to the previous year.Half of the radios do not achieve sufficient profitabilityAlthough most private radio stations are in the black, not even every second one achieves sufficient profitability to make upcoming investments, amortize loans and build up reserves. However, the overall picture is very mixed. In addition to struggling radio stations, there are also some that are very successful. There is hardly any recognizable pattern: In all regions of Switzerland, there are radio stations that are successful overall and those that are less so. The structural conditions of the coverage area only play a role insofar as broadcasters in economically strong areas achieve higher absolute advertising revenues than radio stations in structurally weaker areas. However, radio can also be profitable in small and economically weak areas. With adapted cost structures, strong marketing services and attractive programs, such broadcasters are able to exploit the advertising and audience markets to an above-average extent and generate reasonable returns.Despite fee money, only three regional television stations are sufficiently profitableThe economic situation of the private regional television stations is more difficult. The advertising and sponsorship revenue of the 13 broadcasters has stagnated at CHF 40 million since 2011. Their share of the Swiss television advertising market is just five percent. Although the fee money has been flowing more generously since the change in the law in 2007, only three of the 13 stations are sufficiently profitable. Half of them are underfunded or overindebted. Without licence fees, which on average account for over two-fifths of total revenue, none of the 13 licensed regional television stations would be able to survive.Use of fee money not always in line with the concessionThe program performance of some licensed private radio and television stations is not beyond all doubt, taking into account media policy objectives. Under licensing law, broadcasters are obliged to produce regional information. However, they do this to very different extents: the radio station with the most regional information broadcasts more than 20 times as much regional information as the radio station with the lowest regional information output. Even if only fee-based radio stations are considered, the differences are striking: the most efficient broadcaster produces 12 minutes of regional information with a thousand francs in fees, while the radio station with the lowest conversion rate produces just under three minutes: One thousand francs in fees results in between six minutes of regional information for the strongest broadcaster and one minute for the weakest.The study on the economic situation of private broadcasting in Switzerland was conducted by Publicom on behalf of OFCOM. It is based on the 2013 financial reporting of licensed broadcasters to OFCOM as well as program analysis data. It can be downloaded at www.publicom.ch/news-publikationen/studien/ can be downloaded.