EC RULE PROMPTS SPAIN TV RATE HIKE

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MADRID-Spain's two private national channels are considering rate hikes to cope with the European Community directive on TV, designed to create uniformity throughout the region and finally about to be implemented by Spain.

The last country to act on the EC directive, known as Television without Frontiers, Spain delayed action because the two national private channels complained that the directive would seriously hurt their business.

Antena 3 de Television and Tele 5, competing against the government's TVE-1 and TVE-2, believe the new law could seriously affect their ad revenue in a competitive, and already uneven, playing field. They point out that state-owned TV channels get a double dose of revenue-from advertising and government subsidies.

To compensate, both private channels may raise rates to make up ad revenue they fear they will lose when the TV directive is enforced in Spain, but the stations are also concerned that higher rates may also scare away some advertisers. Neither has set new rates or effective dates for the hikes.

The most recent available rates show Antena 3 charging $22,680 for a standard 20-second spot and Tele 5, $30,240, compared to $46,800 for TVE-1 and $14,400 for TVE-2. TVE-1 is Spain's most watched national channel, holding a 33.1% share, followed by Tele 5 at 20.5%, TVE-2 at 14.5% and Antena 3 at 13%.

As in many European markets, advertisers embraced the private channels when they began providing an alternative to inflexible government stations several years ago, but that welcome was withdrawn when the plethora of time, accompanied by cut-rate prices, translated into commercial clutter.

Although advertisers approve of a reduction in clutter, they aren't keen on paying higher rates after enjoying such deep discounts. Advertisers also are concerned about losing flexibility to place ads during almost any program after the strict EC rules are introduced. For example, fewer spots would be available in highly rated movies since most films will be limited to one ad break.

Antena 3 Secretary General Luis Ezcurra said the directive will be fatal because the channel will have to fire almost 55% of its staff. "It's as if you develop your interests under one law, and then that all changes," he said.

Among the directive's provisions are rules on how frequently ads may be run during news and public affairs programs, kids shows, documentaries and religious programs.

For example, shows less than 30 minutes long, with some exceptions, cannot have ads in the middle; and for most other programs, ads can be placed only between or during natural breaks.

Under EC policy, individual countries are allowed to decide how closely they will follow any directive, and Spain's proposed version on TV complies with all the key elements.

A draft law by the Ministry of Public Works, Transportation & Environment (the agency responsible for communications, including TV) is expected to move through the Cabinet and reach the Parliament for debate next month. Passage is expected in May.

Current Spanish law limits ad time on private stations to 10% daily, but TV rules have often been ignored. Both private channels have received two Ministry warnings in the past two years, but no further action has been taken.

The proposed rules actually increase that to 15% daily, or up to 20%, including direct sales offers such as teleshopping.

Jorge Carbajosa contributed to this story

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