The National Broadcasting Council awarded broadcasting licences to Telewizja Polska and Lux Veritatis Foundation

25.09.2013
At its meeting held on 5 July 2013, the National Broadcasting Council adopted resolutions on awarding two broadcasting licences for the transmission of television programme services by digital terrestrial diffusion using the first multiplex signal (MUX-1).

The licence was awarded to Telewizja Polska for the transmission of a thematic programme under the name “TVP ABC”, earmarked for children aged 4-12 and for their parents.

Under the licencing procedure conducted in connection with socio-religious thematic programme services, the Council granted the right for extending the broadcasting licence to Lux Veritatis Foundation for broadcasting Telewizja TRWAM.

Both entities applied for spreading their broadcasting fee into instalments.

The transmission of the programmes will start once the said future broadcasters obtain frequency allocation, which is to be issued by the President of the Office of Electronic Communications. The frequency allocation will become valid not earlier than upon expiry of the frequency allocated to TVP S.A., yet, not later than on 28 April 2014.

During its work on supplementing the programme offer within MUX-1, the National Broadcasting Council conducted social consultations in 2012. The consultations were aimed at finding out the opinions of recipients and players of the electronic media market on the matter in question. The majority of opinions sent to the Council via e-mail and conventional mail expressed the need for including Telewizja TRWAM in the MUX-1 offer. The voices of the consulted parties advocated also for the need of extending the offer by programmes for children as well as sports and travel & nature programmes.

As a result of the media campaign conducted mainly by “Nasz Dziennik”, Telewizja TRWAM and Radio Maryja, the Council received 71 023 letters demanding a broadcasting licence be awarded to that applicant. Using the ‘freedom of speech’ slogan, marches of support for Telewizja TRWAM took place in many cities, holy masses were celebrated and other support forms were organized in favour of that applicant. A conference was organized in the European Parliament headquarters in Brussels on discriminating Telewizja TRWAM by the National Broadcasting Council and the freedom of speech being at risk in Poland. In its statement of 16 January 2012, the Standing Committee of the Polish Bishops’ Conference expressed its interest and concern about the participation of Telewizja TRWAM in the broadcasting licence awarding process, and so did the Polish Bishops’ Conference during its 361. plenary meeting held in 2013. Some of the bishops addressed their individual standpoints on this matter to the National Broadcasting Council.

When reaching the decision, the Council considered results of the consultations and conclusions drawn from the analysis of television programme services available on terrestrial multiplexes.

The Council evaluated the conclusions taking the following factors into account, in line with Art. 36 section 1 of the Broadcasting Act:

  • the degree of coherence of the intended programme activity with the tasks specified in Art. 1 Section 1 of the Broadcasting Act, taking into account the extent to which other broadcasters operating within the area covered by the broadcasting licence have been implementing those tasks;
  • the ability of the Applicant to make necessary investments and to finance the programme;
  • the expected share in the programme service of shows produced by the broadcaster or commissioned by that broadcaster or produced jointly with other broadcasters;
  • the expected share of shows listed in Art. 15 Sections 1 and 3 in the television programme service or works referred to in Art. 15 Section 2 in the radio or television programme service;
  • the applicant’s compliance so far with the radio communication and mass media regulations.

Thematic programme service for children aged 4-12

Applications for a broadcasting licence for the transmission of thematic television programme services for children aged 4-12 and their parents and guardians by digital terrestrial diffusion in the first multiplex were submitted by: Telewizja Polsat Sp. z o.o. and Telewizja Polska S.A.

Information about Applicants

Telewizja Polsat Sp. z o.o. with its registered office in Warsaw (in its new legal form) was entered in the National Court Register (KRS) on 16 June 2011. According to the excerpt from the KRS dated 25 February 2013, the Company’s share capital amounts to PLN 236,946,700. All shares are held by Cyfrowy POLSAT S.A. Cyfrowy POLSAT S.A. is quoted on the Warsaw Stock Exchange.

Telewizja Polsat Sp. z o.o. submitted an application for a broadcasting licence for the transmission of a programme “POLSAT KIDS”. The application submitted by Telewizja Polsat Sp. z o. o. is consistent with the Announcement of the Council’s Chairman of 20 December 2012. The Applicant declared that the main programme purpose of the children’s channel was:

to broadcast all kinds of programmes for children such as, amongst others, fairy tales, education programmes, theatre shows, feature movies, cartoons, documentaries, which are aimed to facilitate learning about the world, promote the versatile growth and development of this group of viewers as well as introduce role models and support the guardians in finding solutions to some child-raising problems. The programme will include practical advice and education shows (such as, amongst others, foreign language teaching shows). Polsat Kids will operate as an excellent supplement of the current programme offer of the digital terrestrial television by presenting a mix of education programmes with the flagship production “Kidsplay”, supported by favourite cartoons from the largest and most valued producers of content for children.”

The share of thematic programme services projected by the Applicant accounts for not less than 81% of the monthly transmission time between 6:00 am – 23:00 and it is by eleven percentage points higher than the required figure provided in Art. 4 section 13 of the Act. The Applicant proposed a diversified programme offer, which would mainly consist of cartoons - 63% followed by education programmes - 10%, programmes for children and the youth - 5%, feature movies - 2% and theatre shows and other drama formats - 1% of the weekly transmission time between 6:00 am – 23:00. The percentage share of programmes originally produced in the Polish language and European programmes would be in line with the requirements of Art. 15 sections 1 and 3 of the Act. Reruns account for 75% of the weekly transmission time.

Telewizja Polska S.A. appliedfor a broadcasting licence for the transmission of a programme called “TVP ABC”.

Telewizja Polska S.A. with its registered office in Warsaw was entered in the National Court Register on 20 March 2002. According to the excerpt from the KRS dated 9 January 2013, the Company’s share capital amounts to PLN 266,596,500. The Company’s sole shareholder is the State Treasury i.e. the Minister of the State Treasury.

The application submitted by Telewizja Polska Spółka Akcyjna is consistent with the Announcement of the Council’s Chairman of 20 December 2012. The Applicant declared that the main purpose of children’s channel “TVP ABC” would involve:(…)

“supporting children in their learning under the education system, in participating in the culture and the public space. (…) The TVP ABC’s tasks include, amongst others, to provide equal opportunities to the youngest viewers who do not always have the same access to knowledge sources and value-added media message, as well as to prevent any exclusion and discrimination. The possibility of contact with culture and art will constitute an essential element of the offer and also with value-added entertainment that means not only playing – so natural for a child – but also learning about how to spend time in a wise and useful way. The programme plan of TVP ABC fully implements the public broadcaster’s mission.”

At the same time, the Applicant defined its detailed substantive assumptions, which are to be implemented during the programme development process, i.e. knowledge at the target group’s age level for the 4 - 12 years old; learning to listen and observe the world; building positive relations with other people irrespective of cultural, social or material differences; prompting to pursue social activities; the culture around us - theatre, music, museums; the knowledge of man, nature, animals, the Space and the world; maths education and the art of perception; developing abstract thinking and imagination; learning through playing, but also active rest, spending free time in a useful way; building family and social ties; supporting parents in raising their children; supporting the core curriculum in the nursery and school education; savoir vivre; counselling addressed to parents and class tutors; promotion of Polish culture and tradition (displaying theatre shows or movies for children); propagation of reading and books written by Polish authors. “TVP ABC” wants to gain the parents’ trust by ensuring high quality of the programme and the attractive message, and to encourage parents to watch the programme together with their children.

The programme offer of “TVP ABC” will strongly feature a practical advice programme created jointly with experts, which is to support parents in raising their children. The projected share of thematic programme services in the overall programme service after the potential extension will account for at least 78% of both the monthly and weekly transmission time between 6:00 am – 23:00, i.e. higher by eight percentage points than provided in Art. 4 section 13 of the Act. The Applicant has planned to broadcast as many as fifteen different types of thematic programme services with over one quarter of education programmes (26%), cartoons at a similar level (24%), followed by feature movies (11%), entertainment shows (4.5%), documentaries and practical advice programmes (3% each), theatre shows and other drama formats as well as artistic & cultural programmes (2% each), commentaries and contemporary music programmes (1% each) of the weekly transmission time between 6:00 – 23:00. The programme offer contains also programmes of religious, news and sports nature, classical music programmes and shows featuring other types of music such as ethnic and folk music (0.1% each) of the time. According to the Applicant:

“Launch of the thematic programme service for children aged 4-12 and for their parents and guardians results from the implementation of the Programme Strategy of Telewizja Polska S.A. for the years 2012-2015, and is well in line with the tasks imposed on public broadcasters; in fulfilment of the requirements imposed under Art. 21 of the Broadcasting Act, TVP ABC will particularly contribute to the development of culture, science and education with particular focus on the Polish intellectual and artistic output, respect the Christian system of values while adopting universal ethical principles as its foundation, serve the reinforcement of the family, promote a health-oriented attitude, propagate and disseminate sport, fight social pathologies and serve media-related education.”

Reruns will account for 33% of the weekly programme transmission. The percentage share of programmes originally produced in the Polish language and European programmes will be consistent with Art. 15 Sections 1 and 3 of the Act.

The Applicant presented an interesting programme draft addressed to children and their parents and guardians, which has been based on substantive assumptions aimed at teaching through playing but also at creating safe and friendly ways of spending free time.

Socio-religious thematic programme service

Applications for awarding/extending a broadcasting licence for the transmission of socio-religious thematic television programme services by digital terrestrial diffusion on the first multiplex were submitted by: Fundacja Lux Veritatis, Wieczorna.pl Sp. z o.o. and Media Works S.A. Fundacja Lux Veritatis and Wieczorna.pl Sp. z. o.o. applied for spreading the broadcasting fee into instalments.

Media Works S.A. with its registered office in Warsaw withdrew its application in its letter of 5 March 2013. In consequence, acting under the Council’s Resolution No. 139/2013 of 12 March, the Council’s Chairman dismissed the licencing procedure by means of Decision No. DR-107/2013 dated 13 March 2013.

Following the Council’s Resolution No. 285/2013 of 13 June 2013, the application submitted by Wieczorna.pl Sp. z o.o. has not been considered, the reason being that the applicant failed to submit additional documents to the application as required under the Council’s Regulation within the time frame specified in the Administrative Procedure Code. The applicant failed to submit within the statutory deadline the copy from the KRS register of entrepreneurs stating that it was authorised to run the business activity provided in the application.

Information about Applicants

Wieczorna.pl Spółka z o.o. submitted a licence application for the transmission of a programme called ‘Radiotelewizja’, addressed to persons with secondary school and higher education and persons with primary education with aspirations. Wieczorna.pl with its registered office in Zielona Góra was entered in the National Court Register on 2 April 2012. According to the excerpt from the National Court Register of 15 April 2013, the Company share capital is PLN 10,000, and has one shareholder, Adam Fularz.

Having analysed the application from the formal & legal, programme-related, economic & financial and technical point of view, it was concluded that the applicant was planning to pursue only a small proportion of the programme plans set out in the Announcement of the Council’s Chairman, neither had nor documented sufficient funds to cover the planned investment project and the programme financing. As the applicant failed to meet the formal requirements, the application of Wieczorna.pl Sp. z o.o. was not considered.

Lux Veritatis Foundation with its registered office in Warsaw was registered on 22 November 2002 in the National Court Register in the Register of Associations, other Social and Professional Organisations, Foundations and Independent Public Healthcare Institutions. Lux Veritatis Foundation was established on 27 April 1998 (Notary Deed Rp. A No. 2988/98). It has three founders who are natural persons. The Foundation’s initial fund amounts to PLN 10,000, which the founders contributed in cash. According to the excerpt from the National Court Register of 1 July 2013, Lux Veritatis Foundation with its registered office in Warsaw has three field branches located in Toruń, Warsaw and Wrocław.

Lux Veritatis Foundation submitted an application for extending its broadcasting licence No. 287/2003-T (No. 188/K/2012) for the transmission of a programme called “TRWAM”. The broadcasting licence No. 287/2003-T, under which Lux Veritatis Foundation broadcasted thematic programme services representing educational & practical advice as well as religious profile, expired on 12 March 2013. On 13 July 2012, the Council’s Chairman awarded the Applicant a broadcasting licence No. 188/K/2012 for another period, under the procedure provided in Art. 35a of the Broadcasting Act, subject to the existing terms and conditions.

According to the Announcement of the Council’s Chairman, a broadcasting licence extension could be applied for by entities who implement the thematic profile under the broadcasting licence in line with the Announcement. The obligatory programme profile and the broadcasting licence no. 188/K/2012 should be regarded as consistent with the Announcement. Moreover, Lux Veritatis Foundation declares that:

“should the broadcasting licence extension be granted, the programme that it transmits would have a socio-religious thematic profile meaning that it would contain transmissions and coverage from church services and religious ceremonies, events from the life of the Church and the society, provide education in history and on contemporary issues of Christianity in line with the Vatican’s spirit of teachings and unity with the Polish Episcopate. Its religious programmes will propagate tolerance and ecumenical messages as well as dialogue between religions. The thematic programme services are going to promote values, support development of individuals and family in a free, democratic society. We also declare that the programme broadcast by LUX VERITATIS Foundation has been executing and is going to execute, both at present and after the licence extension, the tasks referred to in Art. 1 Section 1 of the Broadcasting Act of 29 December 1992, and in particular such tasks as: providing news, access to the works of culture and art, facilitating the utilization of education and scientific output, dissemination of citizenship education, ensuring entertainment and promotion of the national audiovisual creation.

The Applicant declared that after the licence extension it did not intend to change the transmitted programme, which is structured as follows: the share of thematic programme services will account for at least 71% of the weekly and monthly transmission time between 6:00 am - 23:00 i.e. it would be slightly more that required under Art. 4 Section 13 of the Act. Lux Veritatis Foundation has proposed a diversified programme offer in terms of its thematic socio-religious profile, and it is going to implement it through ten diversified programme types: religious (26%), commentaries (12%), educational (8%), news (5%), documentaries (5%), artistic & cultural (5%), for children and the youth (4%), practical advice (3%), feature movies (2%) and cartoons (1%).

Comparing financial standing of Lux Veritatis Foundation in two licencing procedures concerning broadcasting licence for the transmission of a television programme by digital terrestrial broadcasting

The licence extension procedure, which was conducted in 2011, analysed the financial situation of Lux Veritatis Foundation using the results from the years 2009 – 2010, whereas the present procedure analysed the Foundation’s financial statements for the year 2011 and also for 2010 as well as the preliminary statements for 2012.

On the side of the Foundation’s liabilities as at the end of 2010, a long-term loan was shown of PLN 68,594,000 (debt ratio 78.6%). As at the end of 2011, its value was PLN 43,023,000 (debt ratio 45.4%), whereas at the end of 2012, the Foundation’ balance sheet did not report any long-term liabilities.

At the same time, in the years 2011-2012 the equity value increased. The Foundation’s financial statements do not contain any information about any debt conversion into equity or any other sources of the equity increase.

The preliminary financial statements of the Foundation for the year 2012 contain information saying that a novation agreement was recorded in the books on 1 December 2012 (an agreement between creditor and debtor) which had been concluded with Prowincja Warszawska Zgromadzenia Najświętszego Odkupiciela, under the terms of which a long-term loan granted by the creditor was settled against a long-term service to be provided by the debtor and involving transmission of television programmes in the USA, which focuses on the priority issues of the Province’s apostolic mission delivered to Polish communities living abroad. The 2012 balance sheet displayed PLN 17,715,000 in the long-term deferred income item.

Nonetheless, as a result of steps taken to reduce the debt, at the end of 2012 the debt ratio reached a safe level, meaning that at that time the Foundation was financing its assets largely from its equity.

It should be noted that the debt reduction of the Foundation did not take place as a result of loan repayment but due to debt conversion by the lender into another settlement form. The notes to the Foundation’s financial statements are not explaining how the authorised capital increased and what part of the debt was concerned with the novation agreement and when the latter was concluded. The only known fact is that it was registered in the accounting books on 1 December 2012. The notes to the financial statements of the Foundation for the year 2012 explain also that the ‘credits and loans’ item decreased as a result of the decision issued by the Head of the Tax Office Warszawa-Wola (the reason not explained).

Summary of financial standing of Lux Veritatis Foundation

In the analysed years, the Foundation displayed a sound current financial standing, which enabled it to ensure the timely repayment of short-term liabilities; however, this does not reflect on the foundation’s capability to execute capital-intensive investment projects from its own resources.

End of 2010 (the first procedure regarding MUX-1):

- Despite its sound current financial standing, the Foundation had a very high level of indebtedness, and the Council had scarce information about it - in particular with regard to the repayment conditions (amounts and dates) of interest, which would amount to ca. PLN 3,500,000 per annum, assuming an average percentage rate, and would therefore constitute a significant burden for the Foundation’s result; the debt ratio: 78.60%;

- The Foundation’s financial statements for the year 2010 displayed PLN 3,700,000 worth of investment planned for the following year (not related to digital terrestrial television);

- The enclosed bank statement of Bank Pocztowy, dated 1 March 2011, displayed that on 31 January 2011 there were three term deposits which represented seven-digit figures. It means that their minimum value could have been PLN 1,000,000 and the maximum value - PLN 9,999,000. Therefore, not only was the submitted bank statement inaccurate as to the amount of the funds held but, first and foremost, it was displaying a balance of those funds as at 31 January 2011, whereas the statement was issued on 1 March 2011. The Foundation’s financial statements for the year 2010 show that on 28 February 2011 the Foundation paid off a liability in the total amount of PLN 5,415,000 following a decision of the Tax Chamber Director. The dates of the above described events and documents indicate that as at the day of submitting the application for the broadcasting licence modification, the Foundation did not have the deposit that was shown on the bank statement, the more so that the deposit amount and the tax liability were similar, and this can lead to the conclusion that the Foundation used that amount to pay off its tax liability;

- The specific nature of the Foundation’s revenues (mainly offerings and donations) was causing a high degree of uncertainty as to the projected inflow of revenues;

- The Foundation neither submitted nor documented other external financing sources.

End of 2012 (procedure pending on MUX-1):

- The ratios reflecting the Foundation’s current financial standing were sounder; they indicated a surplus of funds (in spite of repayment of PLN 7,241,000 worth of VAT tax, which had been the subject of a long-lasting dispute with the tax authorities);

- No long-term debt, i.e. no loan existing; in consequence - shift in the debt ratio down to a safe level (27.79%) compared to the year 2010 (78.60%);

- Additional security for the project involving the financing of digital terrestrial television, made available in the form of a loan promise issued by SKOK on 25 February 2013, which provided evidence that the Foundation was able to obtain a PLN 15,000,000 worth of investment loan. This documented option of the loan-based financing has reduced the risk associated with the revenues inflow from offerings and donations being so difficult to estimate.

As to the Certificates of Business Credibility obtained by the Foundation for the years 2011 - 2012, one should note that they were issued for a period when the debt ratio was significantly reduced. Furthermore, the reliability and stability evaluation of a company can be evaluated based on the analysis of its current financial standing, including its capability of repaying current liabilities; the Council has never questioned the Foundation’s capacity in that respect (economic opinions in both procedures, decision under the procedure conducted for licence extension by the possibility of transmitting the programme services by digital terrestrial broadcast). However, the certificate does not prove that the entity was analysed from the point of view of its capability to pursue capital-intensive investment projects from its own funds.

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