France's Digital Tv Wars Will Rage Into New Year France's Digital Tv Wars Will Rage Into New...

In 1998, France tried -- and failed -- to retune its broadcast law for the digital age.

Throughout the year, the Socialist government made such a muddle of its television reform plans that it upset everyone concerned, from broadcasters and regulators to cinema professionals and politicians.

In the end, even Prime Minister Lionel Jospin and his Socialist officials, who initiated the bill, acknowledged that the measure was flawed and removed it from the parliamentary agenda.

If Culture Minister Catherine Trautmann keeps her job, she will face in 1999 the unenviable task of recrafting a bill that aims to reconcile the unreconcilable needs of broadcasters competing in the high-stakes digital arena with the Socialists' desire for increased regulation.

In addition, she must forge a fresh approach to preventing France's strong private channels -- leaders in European digital TV -- from crushing the public channels while satisfying the government's wish for kinder, gentler, less commercial public TV.

Above all, Trautmann must seek to avoid repeating the mistakes of 1998.

From January -- when she outlined plans for comprehensive reform of private and public TV -- to December -- when a truncated version of her bill was scheduled to come before the National Assembly -- political brawling raged unabated.

The fight began with Trautmann's first draft, which proposed greater government regulation of private broadcasting by requiring nonmedia companies with stakes in TV to create holding companies for their media interests. The measure was aimed primarily at TF1, France's leading channel, of which construction firm Bouygues holds 39%; youth-oriented M6, of which utility Suez-Lyonnaise des Eaux holds 35.76%; and pay TV Canal Plus, in which utility Vivendi holds a 34% share.

Under Trautmann's proposal, the holding companies would have reported to France's audiovisual watchdog, the Conseil Superieur de l'Audiovisuel, on everything from changes in shareholder structure to public works contracts signed by parent companies. The proposal brought howls of indignation from private TV executives, who warned that increasing state involvement as other nations are liberalizing their airwaves would cripple France's audiovisual industry.

Canal Plus president Pierre Lescure accused Trautmann of seeking to police the airwaves. "I thought the aim of the law was to coordinate or add dynamism to the sector, not to put it under surveillance," he said.

Even CSA chairman Herve Bourges acknowledges that commercial broadcasters have a point when arguing that they need to be free of government interference to compete internationally.

"It is certain that this question will be debated again next year," Bourges said. "There is a true problem. What can we do to ensure that the private channels won't be so strong that they eliminate the public channels and at the same time will be strong enough to compete internationally?"

In light of the uproar over the first draft, Trautmann organized a series of springtime roundtable discussions with industry professionals to refine and win support for her bill. Instead, she was criticized from all sides, and in June, she split the bill in two, announcing that private TV reform would wait as she concentrated first on the public sector.

That produced the year's first big irony: By sidelining private TV, including digital satellite broadcasting, Trautmann had removed the portion of the bill intended to modernize airwaves for the 21st century.

Things went no better with Trautmann's stab at reforming the public channels: generalist France 2, regional France 3, educational La Cinquieme and cultural La Sept/Arte. Trautmann proposed slashing advertising ceilings at those channels to five minutes per hour from 12.

That produced the second big irony: Although Trautmann began the year saying she wanted to buttress public TV, she ended it with a huge windfall for private television, which stood to recover a good part of the estimated $400 million in ad revenue lost by public channels.

Although Trautmann promised public channels that their budgets would not suffer from the ad losses, she has not devised a way to compensate them. Jospin's government is unwilling to put up the funds, and raising France's TV tax of about $140 per set per year is seen as politically unappealing.

Trautmann and her Socialist colleagues have suggested imposing new taxes on private channels to close the shortfall. Any such attempt would spark fierce opposition, private broadcasters warn.

"They're emerging from Round One bloodied and licking their wounds," said a senior private TV executive who declined to be named. "That's appetizers compared to what we're going to do to them."

As opposition to Trautmann's plans continued, Jospin in November appointed a Socialist politician, Frederique Bredin, to tackle ad-loss compensation. Jospin followed with a stronger disavowal of Trautmann on Dec. 1, when he informed her that he was removing the broadcast bill from the Assembly agenda. It had been due for debate Dec. 15.

The bill is now expected to be on hold for at least six months, pending Bredin's report on financing public TV reform.

Trautmann has said little since the bill was shelved and is undoubtedly enjoying a breather after months on the battlefield. She has indicated, however, that she would like to return quickly to reforming private TV next year, following what she calls the "disquieting" alliance concluded recently between Rupert Murdoch's News Corp. and TF1 for joint projects in Italy and France.

As for digital TV regulation, Bourges said France's dynamic satellite television market is operating in a legal vacuum.

The French are far ahead of the rest of Europe in digital TV, with more than 1.5 million subscribers -- two-thirds with pioneer CanalSatellite, operated by Canal Plus, and most of the rest with rival platform Television Par Satellite, owned by TF1, M6, public France Television and telecommunications giant France Telecom.

"We are currently operating in a zone of non-law, because the last broadcast law, which dates back to 1986, did not foresee the arrival of satellite television," Bourges said.

Unlike cable TV, where a channel needs approval to hit the air, satellite platforms can add channels without a government green light. This allows channels to circumvent regulations like France's quota system requiring 60% of programs to be European; in practice, since most over-the-air programs are also on cable, the rules are largely respected.

Still, Bourges wants the CSA to have increased regulatory powers over new digital platforms.

"It's not a matter of limiting rights but rather of ensuring their respect," he said. "We are concerned with respect of pluralism, protection of children, prevention of abuses that could occur if a racist or anti-Semitic channel went on the air."

Observers say that in the absence of French legislation, questions regarding satellite TV are being handled elsewhere -- by France's council on competition or the European Commission in Brussels, Belgium.

As newspaper Le Monde said when Trautmann made her abortive first stab at drafting a law this year, "The bill attempts to impose regulation in the satellite and digital domains. But isn't it too late?"