media governance, state subsidies and impacts on regional press and radio

Journalism and Mass Communication, ISSN 2160-6579

December 2013, Vol. 3, No. 12, 768-785

Media Governance, state Subsidies and Impacts on Regional

Press and Radio

Paulo Faustino

Nova University of Lisbon, Lisbon, Portugal

Similarly to what happens in other European countries, Portugal has been feeling the need to rethink its public state

subsidy scheme to media. In this context, this paper presents an analysis of the impacts arising from the provision

of such subventions in local and regional media, questioning if the state support system is adequate to the business

reality and contributing to improving it. Hence, this work reflects regional realities in the national context, being

also, in a greater scale, a mirror of the models prevalent in Europe, a continent marked by significant state

intervention. This study also establishes a diverse set of information, including an intensive collection of empirical

data on the impact of direct incentives on the companies performance, product quality, market competitiveness and

pluralism of voices in the regional and local information market, based on a case study on the Portuguese state

support system and the analysis of 21 local and regional media companies. In fact, the results of this research point

out that, although these incentives are considered by the affected media companies as very important, having

positive impacts regarding the improvement of journalistic products (such as online presence on the Internet),

maintaining human resources and promoting the pluralism of voices; they do not seem to be adequately efficient to

provide a sustainable growth in local and regional media.

Keywords: newspaper, radio, pluralism, competitiveness, subsidies, policies, consumer

Introduction

This paper aims to approach and summarily describe the transversal effects of public subsidies to local and

regional media in Portugal, especially the press and the radio, including at level of structure and market

competitiveness. Therefore, the main objective is to analyze the current context of subsidies attribution and

their impact in companies, markets, and consumers, in a wider perspective. The study is based on data collected

through a survey and interviewsa comparative analysis case study. In this sense, besides other less tangible

impacts, resulting from the social and cultural functions related to media, this works also aims to analyze in

what measure public subventions haveor nota consistent impact in the companies behavior, in competition

and in the efficiency of the information market in the local and regional level. Thus, this study raises the

question: In what measure state subventions generated positive or negative for the beneficiary companies,

readers or listeners, and the society, in general?

Until 1980 the regional press in Portugal held a minor status within the countrys media ecosystem. Today,

the growing recognition of the importance of regional and local information is based on the fact that issues of

Paulo Faustino, Ph.D., Center of Investigation on Media and Journalism, Faculty of Social Sciences and Humanities, Nova

University of Lisbon.

DAVID PUBLISHING

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MEDIA GOVERNMENT, STATE SUBSIDIES, AND IMPACTS

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regionalization, decentralization, and decision-making by local governments are becoming ever more important.

We must also emphasize:

A prominent role of regional media, and the regional press in particular, in preserving and fostering media pluralism

has been recognised in numerous scholarly works. Rich and well-developed regional media may compensate for a lack of

external diversity within highly concentrated national markets. (Valcke et al., 2010).

The geographic proximity to news plays an important role in the regional and local press, since it reduces

the asymmetries between news providers and digital information users.

Although this is a window of opportunity for anyone pursuing digital journalism, the printed regional and

local media deals with salient specificities: the absence of trade policies in distribution, the dependence on postal

delivery of products to the readers, and the structural disability to produce and manage the products in a market

perspective (Faustino, 2004). There are several challenges that, following the Portuguese author Jorge Pedro

Sousa (2003, p. 29), the Portuguese regional press has been facing since the beginning of the 21st century. Sousa

pointed out that the main challenge is the promotion of quality contents, reminding that this is a sub-sector

where the amount is significant, but the quality is reduced. On the one hand, the glocal can be considered the

new area of regional and local press due to its migration to cyberspace and by harnessing the potentials of the

online world (updating, interactivity, multimedia, the possibility of users personalization, among others).

As it stands, we shall investigate why the regional and local media in Portugal have structural problems

which become manifest when analyzing their managerial economics. Evidently, we identify dependence on

public government subsidies and other interventionist mechanisms, including those given by the GMCS

(Gabinete para os Meios de Comunicao Social), the Governments Office for the Media. On top, some

financial endowments also come from local authorities, churchesand other private entities which take

advantage of their potential sponsoring function for the media. We argue that the reputation and modernization

of editorial projects in regional and local media necessarily involve the safeguarding of its independence

towards the political and religious classesand especially the safeguarding of its impartiality towards local

power elites. What is more, assuming independence is also the best way to ensure that regional media sell and

grab readers and advertisers. However, this infers a main challenge: the ability to generate revenue and readers

in a sector where the market is limited, which implies the ability to communicate and sell the product, thus

encouraging reading habits.

To better understand this study, it is important to have in mind the Portuguese economical situation.

Similarly to what happens in most EU countries, especially those with Troika intervention programs, Portugal

(with a population of about 10,541,840 million) suffers since 2010 a significant recessionary environment visible

in the decrease of the GDP and in the increase of the unemployment rate. Thus, according to the National

Institute of Statistics (Instituto Nacional de EstatsticaINE), the Portuguese GDP in 2010 was 158,544 (million

euro) and in 2012 decreased to 151,135.3 (million euro). The INE predicts that the GDP for 2013 and 2014 is

147,594.1 (million euro) and 147,594.1 (million euro), respectively, meaning a decrease in 2013 of 2.3%,

comparing to 2012, and a growth of 0.6% in 2014, comparing to 2013. Regarding the unemployment rate,

according to reports published by TSF (11/02/2011) was 10.9% in 2010 and 16.5% in 2012.

The Portuguese Media Market Landscape, Regulation and Governance

As in many European countries, in Portugal the public policies for media focus mostly on the audiovisual


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area, namely on the public television, which is understandable due to its strong tradition and relevance, despite

its decrease in audience numbers during the last decades, caused by the emergence of private operators. In this

context, the Portuguese Public Broadcaster (RTP) has been focusing on public policies, especially in what

concerns the direct and indirect financial supports granted by the state. Besides RTP, the only sector that

receives media support from the state is the regional media, particularly the regional press, as will be explained

later on section 4.

Television in Portugal started with a significant delay when compared to other European countries,

considering that regular broadcasting only began in 1957. The RTP Groupwhose shareholder is the

Portuguese statehas an historic and important position in the Portuguese regulatory framework for

broadcasting. Created in 1957, RTP faced the competition of private networks such as SIC (1992) and TVI

(1993) and it has not always answered correctly to that new competitive scenery. As years went by, the state

television began to lose its competitiveness through the decrease in audience, and therefore of advertising

revenues, which led the company to chronic financial difficulties. According to Vasconcelos (2000,53),

Portugal was the last country in the European Union to authorize the establishment of private channels. Under

the circumstances in which it happened, the financial crisis and substantial loss of credit by the public station

was inevitable. The public channel still faces a very problematic financial situation (by the end of 2010, there

were negative shareholders funds of circa 554 million Euros; and non-current liabilities of circa 784 million

Euros). Partly of the RTPs current indebt situation is the overall result of an accumulation process over the

years, since its foundation. Still, RTPs high dependence on public funding (both through audiovisual tax and

compensatory indemnities) cannot be disregarded, representing near 78% of its annual income. The remaining

22% is dominated by advertising revenues (around 17% or 50 million euro). At this stage, the recent

restructuration of RTP is inevitably linked to substantial reductions of operational costs, as well as to the

discontinuation of services and products.

As it is common all over the developed world, Portugals media outlets have experienced major mergers

and business partnerships in recent years. These moves resulted in a small number of conglomerates that

control a significant part of the Portuguese media industry. Therefore, discussions about the concentration of

media in Portugal are increasingly urgent. In political, legal, and academic social spheres, and among the

general public, there are different opinions about the impact of this phenomenon. It is safe to say that all parties

believe that there is significant concentration in the industry. This discussion is not new and resembles debates

about the same topic being waged in other countries.

Nevertheless, it is also clear that the new media contributes to the debate regarding pluralism. In this

regard, Valcke et al. (2010) suggest that nowadays it becomes harder to define the media sector, due to the rise

of new players, as the search engines. These authors also argue that the high network capacity and the large

number of players in the converged space may generate a false sense of security, hiding dominant voices that

arise in an apparently pluralist media landscape.

Rather than entering a polarized debate on the financial and societal impacts of media concentration, it is

important to analyze this problem without dogmas and with the understanding and belief that media companies

can grow based on a free-market economy as long as certain rules that safeguard the public interest are

respected.

The issue of media concentration has frequently been debated by the Portuguese government over the past

few years. In 2009, the Socialist Party presented the Law of Pluralism and Non-concentration of the Media.


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According to the daily newspaper Pblico, the law intended to prevent the Government, the regional

governments and the autarchies from owning media companies, with the exception of radio and television

public service (Pblico, 23/01/2009). It was proposed by the government, but rejected by the Portuguese

Parliament in October 2008. This law intended to respond to the constitutional provision that it is the states

responsibility to assure the independence of the media towards political and economic powers, and to prevent

the concentration of media companies as well as to disclose media companies ownership and means of

financing1. The opposition Social Democratic Party stood against this bill and argued that it did not provide a

clear, broad, and strong response to the needs of pluralism in an emerging participatory and deliberative

democracy. They criticized this statute for being obsolete since the European Commission was already

promoting the establishment of reliable criteria and objective indicators about pluralism. The national President

raised this point to justify his veto of the law. Despite the rejection of the Law of Pluralism and

Non-Concentration of the Media, the media concentration debate continues.

According to Correia and Martins (2007,272), The Portuguese Media regulation, sector legislative reviews,

local and regional media, public grants and media concentration are majors concerns of political representatives

in the last two decades, expressed in public policies applied to media sector. In this field, the regulatory entities

involved in the sector stand out: the Authority for Competition (AdC) focuses on economic market regulation, the

National Authority for Communications (Anacom) focuses on the technical regulation of communications, and

the Portuguese Regulatory Authority for the Media (ERC) focuses on media content regulation. The later one is

particularly important; created in 2005 to substitute the High Authority for the Media (AACS), this body is

administrative and financial independent from the state, though protected by the Constitution. Its executive is

formed by five members, chosen by the Parliament, for a non-renewable mandate of five years. Its functions are

divided into several domains, namely the registration and licensing of broadcasting operators, the classification

of contents, surveillance and supervision over the performance and contents presented, the response to

complaints and queries, and the application of recommendations on sanctions, if that is the case, always having in

mind the protection of the citizens rights (Sousa, H., & Pinto, M., 2012). Additionally, the Media Companies

Ownership Transparency Initiative, promoted by the ERC, forces the industry to provide detailed information

about its finances and shareholder structures. This initiative promotes the accountability of media companies,

also avoiding situations of monopoly or media manipulation that may harm the citizens right to a plural

information system.

From the markets perspective, Portugal (with a population of 10 million people, approximately) is a

relatively small market in terms of media and advertising investment. According to data (see Table 1) provided

by Mediamonitor (owned by Marktest), advertising spending has been growing2, with television dominating

around 72% of the market.

The main media companies in Portugal are mostly owned by domestic groups and investors, except in

the case of Media Capital, which in 2005 was acquired by the Prisa Group (Spain) and the Bertelsmann

Group (Germany). The latter sold its participation in 2006. Below is a listing of media companies with

the greatest ownership turnover and whose assets are described throughout the report and market share

analysis:

1According to Article 38, paragraphs 3 and 4, and Article 39, paragraph 1, 2 and 3 of the Portuguese Republic Constitution. 2According to Marktest Report. The data is presented without commercial discounts that are usually above 50%.


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Table 1

Advertising Spending by Media 2002-2010 (M)

Media 2002 2003 2004 2005 2006 2007 2008 2009 2010 Variation

2010-2002

Print 449,815 592,549 675,473 700,606 733,912 813,891 835,223 741,717 721,939 272,124

Radio 169,880 172,080 189,031 187,322 184,883 183,455 178,760 196,229 200,128 30,248

TV 1,528,408 1,672,374 1,892,813 2,483,635 2,840,206 3,085,068 3,330,911 3,517,230 3,797,464 2,269,056

Cinema n/a 9,903 13,392 13,596 14,491 21,976 23,427 22,864 23,485 13,582

Outdoor 170,871 200,145 224,770 250,590 276,730 282,553 303,504 311,407 294,186 123,315

Total 2,318,974 2,647,051 2,995,479 3,635,749 4,050,222 4,386,943 4,671,825 4,789,447 5,037,202 2,718,228

Note. Source: Media Monitor/Marktest.

(1) ZON Multimedia. Predominantly owned by a group of domestic financial companies (banks like

CGD, BES and BPI, as well as other investors). It is the leading distributor of cable TV;

(2) Impresa. Predominantly owned by a group of domestic financial companies. Its main activity areas are

television, magazines, newspapers, and distribution;

(3) Media capital. Dominated by Prisa Group (Spain). Its main activities are television and radio;

(4) Cofina. Owned by domestic financial companies and focused on the print segment, particularly

newspapers and magazines;

(5) Controlinveste. Domestic company whose main assets rely on daily press and relevant stakes in sports

channels of pay TV;

(6) Renascena. Owned by the Catholic Church, it possesses three radio channels whose audiences are

relevant;

(7) Rdio e Televiso de Portugal, SGPS. Owned by the state. Its main asset is the public television, in

addition to a news agency and radio stations;

(8) Sonaecom. Sub-holding of a domestic firm that operates in mobile telecommunications and the daily

press;

(9) Ongoing. Owned by financial companies, it has a strong presence in the economic press, including a

TV channel that has also invested in the Brazilian market;

(10) Portugal Telecom/MEO. The main telecommunications company with participations from large

companies with a national presence. It focuses on pay TV.

As in other countries, Portugal has market dynamics that increasingly endanger the market position of the

companies that have historically ruled the industry. In the last decade, new players, such as Cofina,

Controlinveste, and Ongoing, have solidified their market positions. Besides, there is a new trend that illustrates

the increasing presence and importance of telecommunication operators, which are becoming more active in the

media sector. They have also caused media convergence through content distribution platforms, particularly in

pay TV content distribution. Both Portugal Telecom and Sonaecom have demonstrated interest in the content

industries, mainly through the development of platforms for paid content distribution. After the government

regulators forced it to divest and sell its cable business (particularly the TV Cabo company that now operates as

ZON), Portugal Telecom has shown a clear interest and investment in pay TV through the creation of the MEO

cable TV system in 2008, which holds, at the moment, a significant position in the pay TV market.

Considering that the main topic of this paper consists in the analysis of the state incentives to the regional

and local media, namely in the print support. It is noticeable that the paid postage has absorbed a significant


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part of the support assigned by the state to the regional and local press, although with an expressive diminishing

tendency. For example, in 2005 there were 900 regional titles registered in Portugal; 2009, the number had

fallen to 728. One of the reasons of this decrease is related with the cuts in the paid postage (according to data

from 2009, only 40% of the newspapers receive this instrument), currently designated by readership incentive.

Nevertheless, and in spite of the number of titles having apparently decreased, the truth is that the spending

with the paid postage has maintained a value that is too high, comparing with the remaining support and

incentives to regional mediaas it is possible to observe in the following table. But if until 2003 this value was

expressive, in 2007 it suffered a reasonable decrease. The value of the readership incentive then assigned

corresponded to more than seven million Euros for a total of 343 publications, while in 2009, the support was

of little more than four million Euros for a universe of 229 newspapers.

It is also important to mention the Regional Press Website (Retrieved from

http://www.imprensaregional.com.pt) launched in 2007 to reduce paid postage costs, keeping with the plan of

incentives. According to Aguado, Sanmart and Magalln (2009):

The Regional Press Web site, outlined in article 6 of decree-law no. 98/2007 from April 2, serves as a free space for

electronic editions of regional general information periodicals and publications of specialized information, as defined in

article 5 of the aforementioned decree-law. This Web site is the result of the new system of incentives for promoting

reading and access to information, normally known as Porte pago, and aims to stimulate technological innovation in the

sector and make it easier to access Portuguese periodicals from any part of the world. (p. 78)

Literature Review and Theory Framework

The regional/local press has demonstrated a clear concern to complement the national media, focusing on

the transmission and dissemination of regional/local information, in order to meet the information needs of its

target market (which is geographically delimited). In the Portuguese case, the regional press companies tend to

be very small, with an operation area limited to relatively small and static market segments.

Hence, the regional press sector is particularly vulnerable to the typical blocks created by the low demand

in the two markets where the media companies operate: circulation market and advertising market. In terms of

circulation, the maximum audience of these papers is, in general, limited to the set of people with a specific

interest in the region where the medium operates (the regions inhabitants, emigrants, privileged trade partners,

etc.). As to the advertising market, it is common to observe a positive correlation with the circulation markets

dimension: When companies decide to advertise their products in the press, they intend to send a message to

the readers. As such, the dynamics (or lack of them) of the circulation market create positive (or negative)

dynamics in the advertising market. In the case of the regional press, this type of feedback between circulation

and advertising tends to materialize in the geographical boundaries of the advertising markets. Once their

public is geographically restricted, the regional press titles are especially attractive for companies that have a

local/regional scope, or possibly national companies who see the media as a vehicle for regional targeting

advertising to a certain geographical segmentthe phenomena of targeted advertising.

The Portuguese state, through the GMCS (Office for Media Support), has a system of direct and indirect

incentives specifically destined to local and regional media, whose criteria, as well as additional information,

can be found at www.gmcs.pt. This support system is based on the following pillars: Paid Postage/readership

incentive, Technological modernization, Institutional advertising, Business initiative and development, and

Internet/press portal content creation. In the Portuguese case, local radios also receive support (in smaller


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amounts in comparison to local and regional newspapers). As Pinto and Sousa (2004) point out, local radios

play a specific role in the media landscape because, unlike national and regional ones, local radio stations are

numerousmore than three hundred. As the authors explain, the socialist government created subsidies for

these radio stations, given their lack of advertising revenues and their difficulty in finding other financing

sources.

However, concepts of media assistance are usually focused on the print segment, to the extent that the

justification for these incentives traditionally rests in upholding newspapers as the baseline for the development

of information pluralism. In this perspective, there is no expressive tradition in European States to grant aid to

the radio sector. Ever since print media enterprises sought their Governments for help in halting newspapers

disappearance caused by growing economic problems in the 50s, most western European States tended to agree

on implementing public aid (Smith, 1977; Smith, 1978; Hollstein, 1978; Murschetz, 1997; Picard, 1986;

Humphreys, 2006).

The interest in print media subventions began as a response to the growing extinction of newspapers in the

60s and 70s. Some countries carried out parliamentary inquiries and studies as they created new subsidy

policies. One of the first comparative studies of these aid mechanisms was conducted by Smith (1977) and a

series of studies describing and comparing national press subsidy policies were carried out since then (Santini,

1990; Murschetz, 1997). Portugal fits in this context, with state support (originally created in 1976) being

particularly expressive at the level of local and regional media. The European Union has been an important

stakeholder in the formulation of national policies for the media. There have been several attempts to

rationalize national policy measures into European standards but, in fact, this has been difficult to achieve. In

particular, the problem is mainly connected to contingencies related to cultural and political differences, as well

as with member States objectives. This means there is no single definition of public interest that can cover

all of them, which is why the European Union has resorted to regulations of economic dimension (Harcourt,

2005).

Therefore, when national Governments seek guidance from the European Union, the indication often

received goes, on the one hand, to emphasize competition laws and to avoid dominant positions at the property

level, and, on the other hand, to minimize or neglect the support rationale according to the cultural interests of

the media. Although there is no single European model for press support, one might say the incentives

assignment systems are directly related to the political, social, and cultural traditions of each country.

Murschetz and Faustino (2010) identified the minimalist approach of the Anglo-Saxon press regulation model,

which largely rejects the injection of the money that newspaper companies need, as the exception in Europe,

since most European countries implemented public policies for press subsidies in order to guarantee the citizens

access to information.

The differences that can be observed today between the existing models in several European countries are

the result of factors which lead to a more or less protectionist attitude: (1) Market size; (2) Economic

development; (3) Audience behavior; and (4) General political and social environment.

To analyze the incentives success or failure, it is advisable to identify potential effects of public

intervention, in particular the effectiveness of competition promotion, journalistic product quality improvement,

and democratic pluralism instrumentswhich is, in fact, the main objective. As pointed out by Ots (2013), ever

since newspapers were identified as an important part of pluralism promotion, defining public policies for the

support of this segment of journalistic activity has been a permanent concern. Models of state support to the


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media show similarities and differences depending on the country concerned. For example, in two Nordic

countries (Norway and Sweden), just as in Austria and France, direct selective subsidies are allocated to

secondary dailiesi.e., newspapers that are at a disadvantage vis--vis their competitor in the access to the

advertising market, especially those in inland regions. However, critics point out a set of faults in the allocation

of public subsidies, since these have no truly structuring impacts, and as, with the emergence of new media, the

press is losing influence. In fact, this is a topic that can generate controversies regarding journalistic projects

support assignment logics; the incentives received by newspapers can contribute to an artificial and even unfair

competition.

In the end, identifying such situations (market competition) can be vital to conduct studies aiming to

measure market performance and press efficiency, productivity, and social responsibility (Peterson, 1963) in

the proper use of state aid. In this context, an adequate assessment of the efficiency in distribution and

dissemination of the journalistic products, arising from the encouragement of competition, can benefit both

publishers and consumers since it can force product improvement (or even induce process innovation and

product design) which may become the key of sector growth and productivity. In general, it has been shown

that competition tends to be higher when subsidies fail. Critically analyzing the rational basis for the allowance,

it can be said that if the stronger financial projects with higher circulation figures are subsidized, the strongest

titles in the market will once again guarantee their competitive edge over the others.

Empirical Analysis and Impacts of State Subsidies to Regional Media

As already mentioned, several research methodologies were adopted in this study, including those of

empirical nature, to identify potential impacts arising from the allocation of direct support to regional and local

media. Among other impact assessment dimensions, the underlying intention was to identify whether or not

there were improvements in the net results of regional and local media companies after the allocation of such

incentives, based on information from financial reports of businesses supported by the GMCS between 2006

and 2009. The analysis not only approached the evolution of their economic and financial situation, but also the

variation in regional newspapers and local radios human resources. Thus, after receiving support, three types

of impacts have been identified regarding local radios: economic, financial performance, and ability to generate

jobs that have improved, worsened, or remained unchanged. In this regard, the analysis is performed by

observing changes in net profit, operating results, and human resources variation.

Keeping in mind the impact of other external variables, such as the economic environment, as well as

other political, economic, social, and technological factors (and the implementation of a better amortization

policy, bank interest negotiation, tax planning, etc.), one can conclude on the potential impacts of state support

under the following circumstances: (1) A radio improves its financial performance if its net results and

operational outcomes have increased; (2) If a decrease in net profit and operational results is found, such radio

has worsened its financial performance; and (3) If no change in these indicators is found, its performance is

considered under control.

The same rationale will be adopted for human resources analysis. Therefore, Figure 1 briefly shows that

in 2007 and 2009 there are more newspapers whose financial and economic performance worsened than those

whose performance improved; on the contrary, in 2008, more newspapers have improved their economic and

financial performance. With regards to the financial and economic performance of radios after receiving

subsidies, it turns out that in 2007 there are more radios whose performance has worsened than those who have


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improved it; in 2008 and 2009 a higher number of radios have improved their financial and economic

performance.

Figure 1. Impacts of states support in economic and financial performance. Source: Elaborated by the author, based

on companies financial reports and GMCS data.

In turn, Figure 2 summarizes the information concerning the evolution of human resources in regional and

local media companies between 2006 and 2009, after receiving state incentives. Regarding newspapers, it is

possible to conclude, overall, that during the four-year term companies tended to increase human resources

numbers. When it comes to radios, it turns out they tended to maintain or decrease their workforce after

receiving such incentives.

Figure 2. Variation of human resources in local and regional media. Source: Elaborated by the author, based on

companies financial reports and GMCS data.

Therefore, based on the analysis of economic and financial performance and human resources variation of

regional and local newspapers and radios, it cannot be concluded that there is a clear positive evolution

trajectory of these companies after receiving public incentives through GMCS. In part, and as would be

desirable both by those who assign support and those who benefit from it, no clear improvements in economic


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and financial performance were noted in these media. No significantly positive impact on job creation was

noted at the human resources level, either. However, taking into account the existence of other internal and

external variables that can affect the performance of businesses, the truth is one can assume such support has

not, on the one hand, contributed to generating significant improvements in business, but on the other hand,

considering the adverse context in which the local and regional media have been developing their activity, it

may have kept businesses from reaching even worse performance levels. This means direct state support to

local and regional media companies may have contributed to lessening their difficult situation in those years.

But considering a more longitudinal analysis (between 2006 and 2009), results are far from encouraging, from

the point of view of their positive impacts.

In another (qualitative) perspective for assessing the impacts of public incentives, regional newspapers

and radio stations websites, funded by GMCS, were analyzed and it was found that such support had a positive

impact by contributing to improving the product. Since there is an incentive for technological development and

renovation, this analysis was fundamental to understand the impact of the money allocated on the final product.

In the case of newspapers, a representative sample of companies funded between 2006 and 2009 was taken as

an additional object of analysis, amounting to a set of newspapers from several regions in the country. A choice

was made favoring the analysis of media websites funded after 2006, not only because this was the reference

period for the above-mentioned quantitative analysis, but also because widespread Internet access grew at a

faster rate in recent years. With regards to regional media websites (from radios and newspapers), the analysis

fell over the whole universe considered (59 radios, four of which submitted a joint project, and 34 newspapers)

since it was deemed important to know whether all are online or not, and how this resource is used. In the case

of printed newspapers, a sample of 14 titles was chosen from a total of 34 newspapers funded between 2006

and 2009, i.e., a representative sample of 47%.

As was the case with regional newspapers, access, existence of other content formats and the production of

own contents specifically for the online edition were also the main targets of our analysis on radio stations.

Therefore, both in newspapers and radios, selected analytical parameters dealt with access to content available

on the webpage since easy and intuitive access is fundamental for a product to be heard or viewed. In the case

of radios, the existence of an online transmission was also scrutinized, although since the creation of the Roli

Project3 most of the local/regional radios do, at least, present some kind of transmission. The presence of other

contents, in other formats, namely podcasts, videos, texts, and images, was also assessed. The existence of such

original content is illustrative of a larger informational wealth and an investment in the online presence of

radios, and that is why these parameters were analyzed. Of a total of 59 funded radios analyzed, only nine have

no kind of information about their online presence. Having completed the analysis, it was possible to conclude

that, in fact, radios and newspapers websites, as well as most printed newspapers, have improved their

quality.

Still in the context of qualitative research, semi-structured interviews, with key staff members of 21

regional and local media, were conducted12 from radios and nine from newspapers. We have chosen to

inquire more radio staff members since the incentives targeted at radios are much higher than those for

newspapersthus resulting in a greater number of radios cleared for funding. A sample of radios and

3The ROLI (Rdios OnLine na Internet) is an online portal (Retrieved from http://www.radios.pt) launched in 2007, developed by

the APR (Portuguese Association of Radio broadcasting) and co-financed by the Portuguese state and the European Union,

through FEDER.


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newspapers from Northern, Central, and Southern regions of Portugal, including the autonomous ones, namely

Azores, was selected. Generally speaking, the aim was to know how the heads of regional media companies felt

about the existence of state aid, whether they would be in favor of liberalizing the sector or, on the contrary,

whether they felt that state support for regional media enterprises is vital.

The interviews were conducted during September and November, some in person, some by phone, while

others were submitted via e-mail. Scheduling personal interviews with those responsible for local radio stations

was difficult, since they do not spend much time on the spot, and they just assume management functions.

However, these were not too extensive interviews15 minutes was the average response time. The script of the

interview was composed by 15 open-response questions, covering specific aspects relating to the ownership of

the media in question, its turnover, knowledge of whether or not there were incentives for regional media and

opinion on this kind of state funding, justifying the response. The aim was to find out what the leaders of the

regional media think about the existence of state supports, whether they would be in favor of liberalization or,

conversely, whether they thought that the states support to regional media is fundamental.

We asked respondents if they had ever applied for incentives and if they had been endorsed by some of the

supports distributed by GMCS, the Office for the Media. The aim was to see whether the candidate members

identified any difficulty in the application process, and, in case they did, how they evaluated the support of the

GMCS. Other questions were related to the type of incentives they applied forin case they had done sohow

these funds were used and an assessment of the competitiveness of the companies affected by incentives. The

last set of questions concerned the barriers identified by the managers of the regional media that prevent the

development of these media, as well as the proposed measures to overcome them. In short, the aim of the

investigation was to draw a picture that would allow us to know the perspective of the responsibility for the

regional media and the current situation in the sector.

The inquired radio stations and newspapers are mostly associations which own only one medium. Most of

these media arose in the 1980s. All the respondents are aware of the state support for local and regional media,

and they totally agree with its existence. However, not everyone agrees with how the incentive system works.

The main reasons listed by the respondents to justify state intervention in the sector are associated with the

provision of a public service (essential to democracy) and the scarcity of resources for local and regional media.

Taken together, respondents highlight, on the one hand, the states obligation to support the local and regional

media, including in financial terms, as a way to invest in the development of democracy and, on the other hand,

the lack of support to the media.

The responses also suggest that without these support some regional and local media face the risk of

disappearing. The loss of subscribers and the lack of advertising revenues are the most common reasons

mentioned by respondents. The lack of support appears associated to the amount allocated, which should be

higher because it only allows for the purchase/replacement of any material damaged due to usage. When asked

about the type of support received from the state, respondents highlight the incentives for business innovation

and modernization: hardware and software. The support allowed, in some cases, the creation of new jobs, but

mostly just the maintenance of the existing staff and the investment in their training.

Regarding the impact of the incentives, the respondents emphasize the positive effect they have on their

business, making them more competitiveby providing them with greater professionalization of services and

with the possibility to invest on new items such as online editions. The major barriers the regional and local

media facecompetition and decrease of advertising revenuesare interrelated. Almost all respondents


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mention the competition of new media platforms, the growing aggressiveness of general televisions, the interest

of national newspapers for local issues, and the lack of advertising investors as important reasons for the

weakness of small media companies. Respondents think that institutional advertising is strongly conditioned by

the political agenda (unidentified newspaper) and concentrated in Lisbon (newspaper Expresso do Ave). The

concern of respondents about the qualification of human resources is also relevant.

From the set of answers, it can be highlighted, on the one hand, a state obligation to support local and

regional media, including in financial terms as a way of investing in the development of democracy; on the

other hand, the lack of support (inferior than others) to the media, in particular on a regional and local level.

Such are the difficulties particularly noted by the inquired professionals that manage media held by associations.

The answers suggest that, without this support, some regional and local media are at risk of disappearance. The

loss of subscribers (the older generations die and the next ones do not renew subscriptions) and the shortage of

advertisement (the main source of revenue) are the reasons most frequently mentioned by respondents, with an

emphasis on the latter, identified as the single biggest barrier they are facing nowadays.

Still in the context of the interviews, and in order to confirm or overturn the opinions of the heads of

regional and local media firms, key leaders (Presidents) of industry associations were also interviewed, namely

two associations related to the radio sectorthe Portuguese Association of Radio Broadcasters (APR) and the

Portuguese Association of Christian Radio Broadcasters (ARIC)and two related to the press sectorthe

Portuguese Association of Print Media (API) and the Portuguese Association of Christian Print Media (AIC).

Their opinions diverge in several aspects.

According to three associationsthe AIC presents a different opinion, defending that CENJOR has

played a positive role CENJOR, which was the entity responsible for the trainings funded by the incentives,

is not suitable for such task. The associations argue that CENJORs training does not work (APR), its

organization is not appropriate either (ARIC), and its training is limited and should be expanded (API).

According to Joo Palmeiro, president of API, to build partnerships, the existence of a third party to mediate

the process is crucial. For Jos Faustino, APRs President, it would be fundamental that the associations could

also apply for incentives, in order to receive funding. The ARIC argues that some of the items that were left out

in the new media support law should come back into force and become accessible to associations, so that, for

example, they were allowed to organize diagnostic studies and training. For its part, the AIC believes that the

existence of incentives to form strategic partnerships would be important for associations.

Application Process and Its Difficulties

Complaints about the application process restraints seem to be common to all the associations. The most

critical ones are the APR and the API. The APR felt great difficulties regarding the very restrictive access

conditions to the incentives. The APIs members mention the extent of the application process and the

associated paperwork as the main obstacles.

Positive Impacts Identified

Despite all the difficulties and faults mentioned previously, the associations also recognized the positive

aspects of state supports. According to the ARIC, if there were not such incentives, it would be impossible for

radios to maintain their technological level. The API emphasizes the renewal of newspapers teams, which

are nowadays composed by younger professionals. The incentives allowed the acquisition of equipment and,

consequently, the quality has improved a lot because of the new equipment, and the training and renewal of the


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people. The AIC believes that these incentives main impact is the promotion of the modernization of

enterprises, stressing the importance of encouraging reading.

Improvements Needed in the Incentive System

The ARICs proposal is quite simple: It is necessary to invest in the bases, in the human reconversion. The

ARIC would prefer the state to support training. The APR defends the creation of a kind of prepaid system

applicable to the radio, while direct incentives should end. The APR considers that subsidies should continue to

focus on technological development, especially multimedia development, but through a central entity. The API

defends the recovery of the specific incentives destined to recruitment and the implementation of a model to

support mergers and acquisitions. The API also suggests, in terms of public policy, the implementation of a

foundation model similar to that of the Netherlands, including an entity that would analyze the market annually,

to understand its needs and difficulties. The AIC focuses on the importance of encouraging reading and the lack

of discretion in the distribution of institutional advertising. Improving the distribution of this type of

advertisements would be crucial for regional press. The AIC also considers necessary the increase of supports

to businesses and journalists, particularly with regards to training.

It is further noted that, from the pluralism of voices point of view, direct and indirect incentives have been

important in the sense that, over the years, they have fostered the emergence of a considerable diversity of

regional and local newspapers and local radio stations. For example, in 1999 there were 668 newspapers

benefiting from paid postage while in 2009 there were only 229which means a decrease of more than 50%. It

is clear that this indicator does not imply that all newspapers have ended their activity: Some no longer met the

(increasingly demanding) requirements to access paid postage or opted for other forms of unsupported

distribution. On the other hand, some regional newspapers did close their doors over the past decade, and while

others were created, that did not compensate the formers demise. Thus, regardless of the considerable diversity

of regional and local media still in place, it is noted, particularly in the newspapers sub-sector, a decrease in

titles which is, to some extent, proportional to the decrease in the amount allocated by the state through the paid

postage incentive (now designated Readership incentive), as shown in the blue row in Figure 3. However,

this conclusion should not also ignore the possible existence of other external factors that can concur to this

situation, particularly the digital migration trend.

Figure 3. Disaggregated evolution of direct and indirect subsidies (Thousands of Euros). Source: Elaborated by the

author, based on GMCS data.


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Conclusions and Recommendations

Conclusions

The role of the state in supporting the press is a matter that needs be discussed in light of these ideas and

of the new dynamics observed in the information market, including the perspective of the ICTs impact.

Although supporting print media diffusion can foster citizen participation in the public sphere, it can also be a

way of conditioning the exercise of individual freedom. Theories upholding this thesis fit into two distinct

perspectives: a more liberal one and other with a more protectionist stand. From the liberal point of view, the

current rule framing journalistic businesses (just like any others) is supply and demand, without entailing state

protection. Corporate management, be it successful or unsuccessful, will be the only liable for the survival or

the end of the businesses in the free market of information. In turn, the protectionist view assigns the state with

fundamental obligations in steering the companies, which, in certain cases, may condition their freedom of

speech and autonomy. This model allows for some companies to be permanently in deficit, even with

continuous financial support from the state. What is more, the standards applied in the EU tend to establish

fixed criteria on this matter, which may even stir tensions between these rules and those adopted by other

member States.

In Portugal, the state subventions amounts have been decreasing. In the social and cultural point of view,

one can say that those subventions help the preservation of pluralism and the quality of media, for the simple

reason that they contribute to some companies survival and for the development of their journalistic products,

being more competitive in the information market.

Nevertheless, it is necessary to recognize that public policies are not sufficiently efficient to raise a viable

economical modelthe only real guarantee of pluralism in mediaopen to the new competition factors, while

enhancing product innovation.

We can say that the current system, although with great improvements in the last decade, led some

companies to a dependence situation, not encouraging change but instead reinforcing their dependency on

subventions.

The effort made to help local and regional media to regain economical and financial stability was only

partially achieved. That happened probably because the public power encourages the use of subventions when

needed, and also because of the lack of management capacity and an entrepreneurship and risk attitude from the

beneficiaries, to use the existing support actions to rather make strategically and structuring investments of their

businesses.

Financial aid is not enough to solve fundamental economic and market problems of media companies.

Moreover, this reflects the situation of the 23 radio companies and 26 newspapers analyzed, since much of the

support was channeled to basic equipment and not to a strategic structuring investment that could enhance

business dynamics. Therefore, one can admit that incentives have little or no impact on improving the financial

and market situation of newspapers, and that they do not create any long-term sustainability, but rather a

dependence on the annual allocation of subventions. Incentives can only create long-term sustainability if they

change the beneficiarys financial and market conditions through the provision of assistance in its restructuring,

market expansion or in the acquisition of technology to cut costs. In this context, the efforts of the state to help

local and regional media regain financial and economic balance were only partially achieved, most likely due to:

(1) The fact that public authorities have encouraged access to subventions when necessary; (2) The lack of


782

entrepreneurial capacity; and (3) The absence of a risk and enterprising attitude in the recipients themselves.

To analyze the impacts of incentives for local and regional media only on the basis of financial and

economic indicators would clearly represent a reductive vision. Among other analysis domains here presented,

it should also be highlighted how aid can contribute to job creation. In this context, for all of the 23 radio

companies and 26 newspapers, there is a trend for decreasing human resources. It is, thus, reasonable to

conclude the aid did not help generate more employment. Based on the analysis of the sample for this

sub-sector, in 2006 there were 488 staff members in the newspapers analyzed and, in 2009, 481. Radio had, in

2006, 121 employees and, in 2009, the number is 98. So, it can be concluded that the radio sector lost more

jobsa circumstance that can also be explained, as already mentioned, by the fact that the radio sub-sector

consists, in comparison to newspapers, of companies with a more intensive technological base, which allows

for some functions to be easily replaceable with the introduction of equipment and other technological

valences.

In a more holistic approach to regional and local media, the extent to which there is a relationship between

the incentives allocated and the improvement of products or journalistic contents and respective platforms

should also be analyzed. It should be noted that this analysis is important since any improvements will signal,

on the one hand, that there were visible results of the implementation of state resources (and its taxpayers), and

on the other hand, that consumers (taxpayers) benefit from that support by having access to a better product and,

eventually, to other contents and access platforms.

We only present data until the year 2009. This is due to, on one hand, the fact that it was a period in which

the economic crisis was not felt yet, and, therefore, it had no repercussions on the financial situation of the

companies. On the other hand, we intended to consider a triennial analysis to provide a continuous perspective

of evolution, beginning in the year 2006, given that it was the moment when the official registration of accounts

became mandatory. In any case, conclusions may be extrapolated to the subsequent years, given that there has

been no evidence of phenomena that could inflect this trendnot even the state support model, which remains

unchanged.

Recommendations

From the analysis of 13 newspapers, representing a sample of more than 50% of local and regional

newspapers supported in the 2006-2009 period (compared to a universe of 23 titles), it was noted, in most cases,

a visible impact on product improvement translated, essentially, into the following characteristics: a more

modern design and graphics, diversified journalistic contents, and expansion in the access platforms. In short, it

is important to present some ideas that can serve both as sources of reflection and as recommendations aimed at

inspiring public policies geared towards local and regional media, namely.

The importance of the role played by local and regional media. The authors of this study believe that

regional and local media play a key role in the formation of public opinion, so they still have great importance

and centrality in the national media system. Thus, it remains appropriate to devise support models applicable to

them, allowing them to continue to asserting their role as actors and partners in the promotion of information

pluralism, as well as cultural diversity, information quality, and the citizens right to information.

Support models and public policies to local and regional media. Facing a growing competition from

the digital advent, especially in the press segment, along with reading indexes and average newspaper

circulation stagnation/decline trends, regional media should benefit from public aid. Although one canand


783

shouldquestion the success and achievements of such grants, they contributed to the existence of a greater

diversity of voices and to the diminishingand dilutionof any potentially negative impacts resulting from

concentration processes by major media groups. In this perspective, public policies, in the state support sense

(within a framework of objective criteria and guarantees of implementation transparency and efficiency), can

build themselves as an important tool in helping to streamline and strengthen the role played by local and

regional media.

Grounding and model trends in other European states. There is no single European model for state

support to the media, namely the press. Public policies in this area are far from consensual, either by those who

grant support, or by those who receive it. Some defend its importance while others consider the new media

context to render the reasons for its original emergence inapplicable. Despite a trend for incentive volume

decrease over the past 10 years, in most European countriesincluding Portugal, state efforts aimed at

promoting information quality and diversity remain crucial, not only through direct aid to maximize the

development of the journalistic product, but also through indirect support for hiring journalists and other

professionals which are fundamental to this activity, as well as for vocational training and research programs on

the sector. Equally important is the creation of programs to promote readership, especially considering a more

holistic approach to the current reflection on the importance of reading among young people and society, in

general.

Potential critical factors of public policy success. The success of public policies stems, in part, from

the access conditions (to support), which must be met to justify the full democratic legitimacy of public

policies geared towards the media. Media companies independence vis-a-vis the Governments that grant

such incentives should be guaranteed, as should Government independence towards subsidized media. The

definition of a model with rigorous criteria and clear objectives is, thus, vital to ensure attribution processs

transparency and independence. What is more, the support must reconcile effectiveness and sustainability

concerns. The main argument against its existence has precisely been that they can distort business

competitiveness.

State incentive systems design and assessment. Designing and allocating aid models should, therefore,

avoid situations that lead to excessive dependency from the beneficiaries on the entities that support them.

Whatever the system of media incentives is, mechanisms should be examined to ensure their effectiveness and

appropriate indicators should be conceived to assure that, in the end, their objectives are being met. Among

these we may point out the following: (1) Pluralism promotion; (2) Company productivity improvement; (3)

Newsroom improvement and diversification; (4) Product development and dissemination; and (5) Skill

assimilation and empowerment.

Hence, support should be channeled mainly to more strategic intervention areas rather than, as has

happened until now, to the purchase of basic equipment or construction works, for example. These new

subsidies may be eligible and increased when accompanied by a real modernization project, more transversal to

strategic and operational business activities. Like has already been suggested, the main objective in terms of

economic impacts is to increase business figures, which, in turn, can result from more diffusion and advertising,

or from production cost cuts. The analysis presented here, a case study of the universe of regional and local

newspapers and local radio stations that received public support between 2006 and 2009, reveals that the

impact of investments in different components of business value is not visible, which allows predicting a need

to reorient state resources to other intervention domains that can be more structural to journalistic activity at


784

regional and local levels.

In summary, although no positive impact on local and regional media companies economic and financial

situation were observed, the current modelwhose merits and impacts have, in general, been positive from the

standpoint of qualitative analysisneeds to adapt itself to the new media context and to identify a coherent

system, from the various fields of potential interest on January 28, 2013.

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