Market Insight

Estonia and Latvia cut must carry list

December 20, 2012

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Private broadcasters have no more must carry status on pay TV networks in Estonia and Latvia. Only public broadcasters are now must carry - as has been the case in neighbouring Lithuania since last year.

In Estonia, ETV 1, ETV 2 and Tallina will be must carry. In Latvia, where the new rules come in force in April 2013, LTV 1 and LTV 7 will be the only must-carry channels. In Estonia TV3, owned by MTG, and Schibsted-owned Kanal2, will exit the must carry group, while in Latvia these will be TV3, and LNT, both owned by MTG (the latter since the beginning of 2012)

A group of Estonian cable operators, including the second largest operator, STV, refused to pay carriage fees to Kanal2 after the channel ceased to have must carry status. According to the operators, the fees demanded by the channel are too high and the agreement under the Kanal 2's conditions might force them to increase the prices for TV services.

The fees demanded by Estonian TV3 have been generally accepted by the country's pay TV operators. Also some of Estonia's large operators, like Starman and Elion, agreed to the offer from Kanal2, assuring they wouldn't increase their prices. 

Many countries - such as Denmark, France and the UK - already apply must carry regulations only to public channels. Currently there is a trend in European media regulations to reduce the number of must carry channels to public channels. Several countries decided to change the must-carry rules, some of them as a result of DTT roll out, which in many cases has considerably increased the number of channels in the must-carry group. Such decisions were made by the authorities in Sweden (2010), Czech Republic (2012), Lithuania (2011), and Slovakia (from 2013). In 2011 Hungary froze the must-carry regulations keeping only public channels in the must carry group. Ukraine is an exception here, as in 2012 the regulator made all free DTT channels (over 30) must-carry.

A situation similar to the Estonian discussion between pay TV players and the channels which exited the must-carry group happened in 2011 in Lithuania. The Lithuanian authorities decided at the time to apply must-carry rules to public channels only, decreasing the number of must-carry channels from 12 to two. Subsequently several cable TV players refused to pay carriage fees demanded by the ex-must-carry channels, including MTG's (Lithuanian) TV3 and TV6. Some of these operators decided to stop broadcasting the channels, which, however, caused a considerable outflow of subscribers (accelerated by other services which did not switch off those channels and immediately started advertising it). After few months, with the churn growing, the operators had to agree to the channels' conditions.

Big channels typically try to avoid having must-carry status. With their market shares they are very likely to get carriage fees from the cable operators which cannot take the risk of switching them off their networks. In 2011 in Lithuania, Viasat's formerly must carry channels held relatively high audience shares, reaching altogether well over 45 per cent. In Estonia Kanal 2 has about 15 per cent share. It is therefore not excluded that the channel will soon stop broadcasting on several networks in Estonia, unless the companies are able to sign an agreement.

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