Latin American public media search for successful funding models (Second article of the series)

By Heloisa Aruth Strum and Paola Nalvarte

A recent study by the European Broadcasting Union found that “well-funded and strong public service media goes hand in hand with signs of a healthy democracy.”

Historically, funding challenges and scarce resources have plagued public media in Latin America. They traditionally answered these problems by relying on the government, a relationship that has affected editorial lines. This has led media executives and journalists to search for alternative funding models.

In this second article of a series addressing public media in Latin America, researchers independently talked to the Knight Center about current and potential solutions to finding financial autonomy, what they consider to be one of the major challenges to the consolidation of an independent public media system.

The models mentioned by the experts utilize crowdfunding, TV license fees for citizens and taxes on telecommunications companies. Others use a combination.

Eugênio Bucci, a journalism professor at the School of Communications and Arts of the University of São Paulo, is adamant that “independence is a non-negotiable requirement for public broadcasting.”

In order to achieve this independence, Bucci contends it is necessary for the source of funding to either be from the public (directly from citizens) or public money (from the government).

According to Bucci, to make sure that political power does not interfere with the functioning of the public broadcaster, it is necessary to ensure that the financing of the broadcaster is not tied to discretionary actions of the authorities.

"It is important that financial support reaches the station without a politician being able to say: 'this year will not have money'," said Bucci, who is a former president of Radiobrás, which was incorporated by EBC in 2008.

Experts frequently mention the U.S. public broadcaster PBS, which often asks and receives voluntary contributions directly from the public, as a program with a successful financial model. Though it receives funding from the federal government, it has independent management.

According to Eugênio Bucci, this practice of crowdfunding, which recently has become popular among other media,  previously was used by public broadcasters, even before the current crisis with media business models.

The model of British public media outlet, the BBC, is highlighted as a successful example of financing through TV license fees paid by the citizens. The funds are guaranteed by law and received directly from citizens who pay an annual fee of £ 145.50 (about USD $188). In 2014, the BBC raised about £3.7 billion (USD $4.7 billion) from the British people, according to the broadcaster’s annual report.

Another form of financing would be the transfer of a portion of taxes or fees paid by telecommunications companies.

Décio Júnior, an expert in executive production and public television management, suggested that a percentage of tax paid by telecommunications companies for spectrum use be intended for the financing of public broadcasters.

"It's a model that could work, because you are not creating a new tax, it is a tax that companies already pay. I think this is the fair model,” said Júnior, a researcher from the Fundação Perseu Abramo.

In Argentina, for example, a 2009 law establishes that 20 percent of the tax paid by private radio and television networks be used for public broadcaster Radio y Televisión Argentina.

However, the law caused a profound institutional tension in the country, as several judges stalled its implementation for years. In 2013, it was declared valid by the Supreme Court of Argentina, according to the BBC.

In Colombia, private channels of broadcast television, such as Caracol and RCN, are required by law to allocate a percentage of their annual revenue to the Public Television Development Fund. Cable TV providers, such as Directv Colombia, also give resources for the financing of public broadcasters.

This year, about $ 7.2 billion Colombian pesos (about USD $2.45 million) of the aforementioned Fund were directed to financing educational and cultural content, according to the National Television Authority.

However, Pedro Vaca Villarreal, the director of the Foundation for Press Freedom (FLIP for its acronym in Spanish) of Colombia, told the Knight Center that the contributions from the state fund, from the only two private media companies with open signal and from the cable operators, are not sufficient to fund the content of the eleven public media in the country (eight regional and three national).

In addition to the limited resources that public media receive, Villarreal also noted that there is a problem of governance concentrated in the Executive and local levels that hinders editorial and financial autonomy of the Colombian public channels.

“Local authorities have the ability to increase or decrease the amount of resources from public channels. (...) There is content with much interference from the authorities,” Vaca Villarreal said.

He added that there are few public media financed by the State who have managed to institutionalize a space of independent opinion.

Brazil already has a resource that could solve this problem, according to Décio Júnior: the Telecommunications Inspection Fund (Fistel), whose taxes collection between 1997 and 2014 reached R $ 67 billion reais (about USD $ 21 billion). In 2015, the amount was R $ 5.4 billion (about USD $1.7 billion).

The law that created EBC establishes that 75 percent of the funds to be raised annually for the Fistel should be directed to the development of public broadcasting. The problem is that the transfer was contested by telecommunications companies, and the value is being held in an escrow account until the court decides about the legality of the tax. The funds, which have remained inaccessible since 2009,  has already reached R $ 2 billion reais (about USD $630 million).

Public broadcasters in Brazil, Costa Rica and Uruguay, among others, use mixed financing models that combine public and private resources.

Among the mixed models for financing public broadcasting, TV Cultura of Brazil stands out.

TV Cultura already is a foundation managed by a trustee board with representatives from society and government, and it receives public funds. As the transferred amounts are not sufficient to ensure the maintenance of the station, the channel also uses advertising, according to Bucci.

Heloiza Matos e Nobre, senior professor of the graduate program in Communication Sciences at USP, defends the mixed model of financing with the participation of the State, private companies and citizens. Citizens, for example, could contribute by paying an amount to be included in bills charged for the use of utilities such as electricity.

"With this triple contribution, everyone would be in a position to demand accountability on what is being done," said Noble, who is also responsible for the research group Public Communication and Policy (Compol), started in 2009 in Casper Libero College.

The diversity of funding models also was the theme of the 7th International Forum of Public Media, held in June this year in Chile. Representatives of public media from Uruguay, Colombia and Costa Rica spoke on a panel about methods of obtaining resources to guarantee efficient use of resources and autonomy.

“We believe it is more convenient to diversify sources of funding and not centralize them in one group, because, when contributions are properly balanced, we can avoid pressure,” said Cesar Martínez, deputy director of the National System of Radio and Television of Costa Rica, according to the site Medio a Medio.

The National System of Radio and TV of Costa Rica receives advertising dollars and government contributions.

Martínez recognized that this is not a “perfect model,” but said it is showing positive signs and that it permits the channel to be focused “on issues that really add value in terms of production and to comply with its nature.”

In Uruguay, financial resources to maintain the operation of the Radiodifusión Nacional are derived both from advertising and the national budget, according to Medio a Medio.

TV Nacional of Chile is the only public television station in Latin America that is financed solely through advertising and other TV services offered to private companies, said Ricardo Solari, chairman of the board, to the Knight Center.

However, Solari explained that the funding model of TVN Chile is currently being discussed in that country.

“While it is true that it has guaranteed pluralism for us, it has not guarantees us all the investment required to enter the [digital] world of the multiplatform,” he said.

Solari, who is also former Minister of Labour and Social Welfare, said that as a niche channel that needs to compete with television stations owned by large transnational economic groups, TVN Chile needs a new investment funds from the State.

For this, added Solari, it has asked Parliament to approve funds to improve the corporate system, "without the loss of our autonomy," so that the channel can develop an important capacity in the digital television market.

Likewise, Valerio Fuenzalida, researcher at the Catholic University of Chile, said that public media require public resources.

In the book “Public Television: experiences from Germany and Latin America,” Fuenzalida highlighted the limitations of financing through advertising in the case of TVN Chile. This type of financing, he said, introduced limitations in programming by restricting programs “that are not interesting to advertising.”

As noted by Eugenio Bucci, the station can be considered independent of the government, but not of the market.

According to Pedro Ramela, director of Radiodifusión Nacional in Uruguay, financing models do not need to be the same for all countries. The important thing is to take into account local context.

“The real world has alternatives with which we have to live, we carry the reality of each of our countries,” Ramela said during the forum. “Financing should be in accordance with this reality.”

Note from the editor: This story was originally published by the Knight Center’s blog Journalism in the Americas, the predecessor of LatAm Journalism Review.