Norwegian Telenor interested in competing in Finnish terrestrial TV distribution

TV channels and ministry want to see competition

print this

The Norwegian telecommunications company Telenor has indicated that it is interested in the terrestrial distribution of radio and television programmes in Finland. Currently the field is a monopoly held by Digita Oy.
      Network licences are up for renewal in 2010, and applications for the licences can be applied for already in the autumn of this year.
      “It is possible that we will join in this”, says Jyri Timonen, CEO of Canal Digital Finland. “It depends on the rules of the game.
     
Telenor owns the pay-TV company Canal Digital, which is part of the same division in the organisation of the telecommunications company as the company Norkring, which is owned by Telenor, and is responsible for the terrestrial broadcast of radio and television channels in Norway.
      “We have the desire to expand in the world”, says Torbjørn Teigen , who is in charge of broadcast activities.
      “We are interested in activities in Finland, if the conditions are such that we can compete with an existing player.”
     
Finnish TV broadcasters have expressed dissatisfaction with the pricing policies that Digita has been able to implement on the basis of its monopoly position. According to Timonen, this is a threat to the emergence of new television channels.
      “Digita’s pricing is slowing the arrival of high-definition broadcasts to Finland”, adds Mikael Jungner, Director-General of the Finnish Broadcasting Company (YLE), Finland’s public service broadcaster.
      Digita is the former broadcast network company of YLE. In December 2000, Télédiffusion de France (TDF) bought a 49% holding in the company, and in the spring of 2005 it bought out the rest.
      YLE collected EUR 316 million in the deal.
     
As Digita holds a monopoly position, the pricing exercised by the company is under control of officials. Digita can charge a so-called “cost-directed price” for the distribution of programming, comprising the costs plus a reasonable return for the capital invested.
      However, TV companies say that the fees are excessive. At the beginning of the year, they asked the Finnish Communications Regulatory Authority to investigate whether or not Digita is overcharging. In the key questions, the authority did not find any reason for criticism, although Digita’s massive profits stimulated considerable attention last year.
     
In the exceptionally long 15-month fiscal period which came to an end at the end of March 2007, the company made a profit of EUR 61 million on a turnover of EUR 129 million, registering a stunning 48% profit. By way of comparison, Nokia’s operating margin was just 16% of turnover.
      The closing of the accounts of Digita, which took place two months ago, has not yet been approved in the executive of the company, but sales declined to EUR 91 million, and the comparable business profit went down by more than 25%, the company said. The end of analogue TV broadcasting last autumn reduced the company’s turnover.
      The Ministry of Transport and Communications has taken the TV channels' complaints quite seriously. The ministry is currently ascertaining whether it could add more competition to the field.
      The opening of competition is nevertheless not easy, as Digita owns the only operational broadcast network in Finland. Operating licences could possibly require that Digita should lease its networks, or, for example, its broadcast antennas to competitors.
      “In other parts of the world, officials have demanded that the game be opened up”, says Canal Digital’s Jyri Timonen.


Links:
  Digita website:
  This is YLE
  About Telenor
  Canal digital

Helsingin Sanomat