Court

Denmark, TV2 win case over EU84 million in state aid

Denmark and TV2 A/S have won a court bid to overturn a European Union order for the state-owned television station to repay the government 84.4 million euros ($108 million).

EU regulators hadn't properly stated reasons for ordering repayment of the aid, the European Court of First Instance in Luxembourg said today. The ruling helps to clear the way for the Danish government's planned sale of the Odense-based broadcaster, which it bailed out in June.

“It's very pleasing that the court states that sovereign countries can decide how to define public-service TV,” Carina Christensen, Denmark's minister for culture, said in an e-mailed statement. “It's still the government's plan to privatize TV2 and with today's EU rulings we've moved a step closer.”

In 2005, Denmark delayed its planned sale of as much as 66 percent of TV2, the country's second-largest broadcaster, pending this case and two others that are not yet settled. The European Commission, the EU regulator that checks whether state grants distort competition, decided in May 2004 the subsidy was illegal and had to be repaid.

The funds to the broadcaster “exceeded the cost of fulfilling its public-service mission,” the Brussels-based commission said at the time.

“The decision is vitiated by an inadequate statement of reasons, the cause of that inadequacy being the commission's breach of its own obligation to examine issues which nevertheless have a direct bearing on the question whether state aid was granted,” said the main court of appeal for EU antitrust decisions.

Accumulated Debt

TV2 has accumulated debt after investing in three new channels in three years to compete with international broadcasters and the country's biggest broadcaster, Danmarks Radio, ahead of the planned sale. The government gave TV2 a 500 million-krone ($86 million) loan in June after it couldn't secure financing on its own.

The case comes as the commission reviews rules for government aid to public broadcasters, which have been boosting revenue by expanding into Internet-related services. Newspaper publishers and other private content providers have complained that government aid may be used to fund the broadcasters' online activities, such as chat rooms and dating clubs.

Jonathan Todd, a commission spokesman, said the EU regulator will study today's court ruling.

(Published by Bloomberg- October 22, 2008)