Market Insight

Turkey likely to miss analogue switch-off target after court decision

April 16, 2014  | Subscribers Only

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Associate Director, Service Providers & Platforms

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Turkish broadcasting regulator, the Radio and Television Supreme Council (RTUK), has been forced to cancel the national digital terrestrial TV licences it awarded last year after the Supreme Court upheld a complaint against the process.

The final decision comes almost eight months after a first decision by the Supreme Council in late August last year to suspend the auction’s results for all national DTT licences (HD and SD, thematic and general). RTUK has clarified that the broadcasters not affected by the Court’s decision, the regional and local ones, are free to make their own decisions whether to carry on with the analogue to digital transition or, alternatively, wait for the results of the new auction. RTUK has not given any further information on the new auction process.

It seems certain that Turkey will miss its deadline on March 2015 analogue switch off in accordance with the internationally agreed ITU deadline. The new auction is unlikely to take place before the autumn  and may be further delayed if any of the TV companies awarded licences launch legal challenges against the Court.

Our take

There is a purely technical reason that Turkey will miss the deadline for digital transition. In order to provide DTT coverage to at least 90% of the Turkish population by June 2015, the DTT network operator Anten is required to switch off transmitters in 952 emission points around the country. Even if the DTT licence auction takes place in September and Anten starts the analogue shut off process immediately after the auction, the network operator will have to switch 106 towers per month or 26.5 towers per week from analogue to digital. This rate is simply unattainable and it is expected that Turkey will be the second European country after Russia to miss the ITU deadline of 17 June 2015 for shutting off all its analogue terrestrial transmissions. Furthermore, even the formation of the sole network operator, Anten, is in doubt. According to RTUK regulations, the national commercial broadcasters have to hold 70% of the company’s capital, while the state broadcaster TRT has to contribute 20% and the local and regional broadcasters the remaining 10%. It is very unlikely that the national commercial broadcasters will commit any money to Anten before being awarded DTT licences.

The DTT licence auction, held by RTUK in April 2013, generated 872 million lire ($436 million), an amount that surpassed by around 22% the minimum prices set by  RTUK. The auction’s results were heralded at the time as a vote of confidence in the Turkish television market. However, it is highly unlikely that an equal amount of money will be raised in the next auction due to the unpredictability of the legal and regulatory environment. Furthermore, Turkey has entered a phase of political turmoil where the stability of the current government in the next 18 months is uncertain. The country is facing presidential and parliamentary elections in the next 18 months which might further affect the current fragile business environment. Another factor which has the potential to affect the results of the new auction is the state of the Turkish economy. Turkey’s financial structure seems more weak now than a year ago and the Turkish Lira has lost 21% of its value against the Euro since the end of 2013, while between May 2013 and February 2014 it lost 31% of its value against the US dollar.

The cancellation could also deter investment by foreign TV operators. Fox International Channels is present in the Turkish market and paid $26 million in 2013 to obtain an HD DTT licence for general entertainment content. Al Jazeera has invested $60 million in Turkey in the last three years, first purchasing Cine5 back in 2011 for $40.5 million and rebranding the channel as Al Jazeera Turk and then paying $20 million in April 2013 for an HD DTT licence for thematic content. Other large foreign media conglomerates like Liberty Global and Vivendi have been linked with a possible acquisition of the country’s largest pay TV operator, Digiturk. 



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