Due to the Covid-19 crisis the Ministry of Digital Development, Communications and Mass Media of the Russian Federation offered radio and television broadcasters the opportunity to reduce the power of their transmitters and to turn them off at night (from 24.00 to 6.00) in order to save energy. This measure is in place from 24th April to 31st December, 2020. However, very few radio stations have taken this up. They are afraid that reducing power and coverage area could cause a drop in the numbers of listeners and commercials. Advertising is already going very badly. Advertising spots have dropped by 70% and 80% in many areas of the country and the ministry believes that broadcasters’ budgets will be more than halved this year (their revenues will be down by about 8 billion rubles)
Subsidies and cuts to rent and royalties
In order to compensate for financial losses, radio stations are asking for funding as well as a lowering of RTRS fees (Russian Television and Radio Broadcasting Network, the company that manages transmitters), which are considered two or three times higher than those of private companies. They would also appreciate a respite with a lowering of royalties for music rights. The Deputy Minister of Digital Development, Communications and Mass Media of the Russian Federation, Alexey Volin, declared that their request for subsidies was unrealistic and stated that the measures currently in place were sufficient. However, he was more open on the subject of lowering royalties which he declared was a more reasonable request.
IBA (Independent Broadcasters Association) is about to be set up in the United States. The aim is to increase the impact of thousands of member radio stations when communicating with record companies, selling airtime for advertisements (from the radio and social network to smart speakers like Alexa) and negotiating savings on services (from accountancy to putting programmes on air). We put three questions to Ron Stone, the promoter of the initiative.
RR:IBA not only offers its members the sale of commercials that will be broadcast on 3.000 radio stations, on as many apps and Facebook pages, but also to reduce the fees for music rights by negotiating royalties as a group of broadcasters. What difficulties did you encounter when explaining your proposal? Wasn’t getting 3.000 “heads” to agree a problem? Or has the prospect of earnings (and savings) made prospective members more willing to listen? RS: The goal is to represent the stations that become members as an unwired network, offering this network to clients that have a national presence. In addition, we will create a digital platform for all the members to participate in that will allow for the first time, a true digital sale opportunity by radio on a national scale to compete for digital spending.
RR:Could this model also work in other countries? Associations usually do lobbying or offer services, but none of them have thought of taking such an active role. RS: I really cannot answer this as I am not familiar with broadcasting in other countries. We will not be a lobbying group. We will leave that to the NAB, unless we find that there is a particular issue that we are being harmed by and not fairly represented.
RR:In order to sell advertising for 3.000 radio stations, are you going to create an independent advertising agency or rely on existing structures? RS: With an unwired network, it becomes fairly easy. It is an all or none sale. Clients cannot cherry pick stations.
The objectives of the Independent Broadcasters Association
Excerpt of the program of the association, from Radio IBA
The concept is to serve independent radio stations in ways we are NOT being served by existing organizations and provide independent operators with ways to drive revenue and achieve cost benefits from scale that cannot be achieved alone.
Below reflects my thoughts on what the organization would focus on right away and during the first two years.
Group employee benefits Better coverage and lower prices, and potentially add additional benefits for our employees.
Revenue generation An unwired network & digital platform supported by a national sales team to monetize for us.
Digital services group This would enable continuity across independent stations giving us the opportunity to accomplish double digit digital revenue through Web, Mobile, Alexa, & Streaming
Shared resources A system that allows sharing of that talent in non-competitive situations and reduces our dependence on national syndication that requires cash, barter and sometimes both.
Proprietary systems and services Under the umbrella of a member owned association, we can create proprietary systems that we control and eliminate some of the costly monthly per station fees for traffic, accounting, CRM, Yield Management, even automation and music scheduling.
This will of course take time, like eating an elephant, one bite at a time. But as independents, we are 7,000 stations strong, and multiply what each of us pay for any one service, it becomes crystal clear that through a membership owned organization, we would have the wherewithal to accomplish this, and the revenue growth and savings would be astronomical.
The ‘Relaunch Decree’, published late in the evening on May 19th, 2020, contained a wonderful surprise. The radio and TV stations, that have been broadcasting information on the pandemic, will be receiving € 50 million (in the first draft it was 20 million, which became 40 after protests made by the broadcasting associations). The allocation of the funds will be according to a points system, which is used by the fund that has the task to promote pluralism and innovation of the media. The only obligation for the broadcasters is to put government information campaigns on air during the Covid-19 health crisis. In addition, in order to relaunch advertising (that saw a fall of up to 80%) companies that buy radio and TV spots will be able to deduct 50% off their taxes (€ 20 million have been allocated, but considering that the deduction has been extended to national TV stations, the effectiveness of this measure will be largely diminished).
More advantages and simpler procedures
The decree includes other concessions for businesses which the broadcasting stations will be able to benefit from. For example, a tax credit of 60% on rents in March, April and May 2020 (for both studios and repeater stations) if revenues are not over € 5 million and there is a drop of 50% in turnover compared to the same period last year. There is also a postponement of tax deadlines from April 16th to May 16th, 2020, for companies with a fall in turnover of at least 33% in the months of March and April 2020 compared to the same period in 2019. Furthermore, companies will not be obliged to pay IRAP (Italian Regional Production Tax) in June 2020 (balance and advance payment for the following year) if turnover is not over € 250 million. The procedures for applying for furloughing of staff and for having a reduction in the electricity bills will be simplified. Some expenses (cost of energy transport, electricity meter management and general expenses) will be reduced for three months (May to July 2020), but this will not affect energy consumed, which would have been welcomed by the associations.