Interview • October 27 2003

Time to bell the cat

In this tit for tat with Minister for Investments Austin Gatt, Kurt Sansone tries to unravel the reforms being contemplated at PBS

A week has elapsed since Minister Austin Gatt announced his hard-hitting plan to reform PBS and on entering his office the heavy words used then still linger in the air.
I find him tapping away at his laptop wearing the now-traditional braces. He drinks his seventh espresso for the day.
It has been 16 years since the Nationalist Party first came to power in 1987 but despite feeble attempts at reform in the early nineties, it is only now that drastic action is being contemplated at PBS. I ask why.
"PBS is in the state it is today as a result of a number of decisions taken over the years, not only by politicians, but also by the different boards and managers. The union’s attitude has also contributed to this state of affairs. It is useless trying to pin the blame on particular individuals," Dr Gatt says.
He argues that today the situation is worse than that of previous years.
"A political decision taken when Alfred Sant was Prime Minister, to allocate all TV licence money to PBS for the first time, continued to aggravate the situation. The Nationalist administration that came later did not change that decision, but confirmed it," he admits.
I suggest to Gatt that the reforms undertaken in the past primarily consisted of throwing money at the problem to buy industrial peace.
He does not agree and cites as an example the reduction of executives from around 26 to seven.
"The problem in the past was that attempts to reform the administrative and financial structures were conditioned by parallel reforms of broadcasting policy. Many times the reforms fell between two stools.
"If you kick off with the justified premise that PBS should remain the best station in terms of quality broadcasting and audience ratings, but the premise is not tied to financial control, then what happens is that everything is justified as a public service obligation."
The Labour Opposition argues that over recent years PBS has out sourced a number of programmes leaving station employees with nothing to do. The consequence is that this state of affairs is now being used as an excuse to say that PBS is overstaffed.
Dr Gatt is not convinced by the argument. He says: "PBS always has ‘extra’ employees even if it were to produce all of its programmes in-house."
He then questions the feasibility of PBS producing all of its programmes from A to Z.
"Arguing against out sourcing is wrong. Abroad the trend is to produce programmes on a co-production or sub-contracting basis while holding editorial policy. That is why programme formats differ and people change.
“The MLP is also making a fundamental mistake by not recognising the economic benefit of out sourcing.
"Out sourcing was started by the private stations, Super One and NET, because it did not make sense to employ people full time. PBS followed suit. It was beneficial to Malta because it created an audio-visual industry that is investing in a service that wasn’t available up to a few years ago. On the wider national political level it also benefits the country to have independent production houses.
"The main problem with PBS’ workforce is the total lack of flexibility, a management structure that doesn’t make sense and work practices that are totally outdated."
But Dr Gatt, the politician, might be missing one crucial link in the whole fiasco: political interference in the way PBS is run, which could have contributed to the company not running on a commercial basis.
He is not fazed by the argument.
"I assure you that this is not the case. I am not saying that there isn’t political scrutiny, but most of this is concentrated on the news.
"Let me speak for myself, when I became minister responsible for PBS, people were coming up to me with programme proposals, but I took a decision from day one and made it clear that I had nothing to do with programmes that went on air.
"Money was lost because of the wrong mentality. I can cite one example: the way UEFA games were contracted. It was deemed a public service obligation to show football at a total expense of around Lm30,000 and no effort was made to sell advertising to cover the expenses.
"The advertising department is composed of clerks who just receive adverts and there is only one person, who is not a PBS employee, who tries to chase adverts.
"We have a whole army to spend money but no army to gather it. There was no commercial outlook because PBS always looked at itself as a public service provider, which meant that government always footed the bill."
If PBS does close down, the obvious winners will be the political TV stations leading to a dangerous media set up in the hands of the two major political parties.
Dr Gatt prefers to talk of successful reforms before contemplating PBS’ closure.
"I am hopeful that the reforms will be successful. Ministry officials including myself have had discussions with the union since PBS came under my wing and there is general agreement on the need for a smaller management team, less employees, chasing advertisement revenue, a change of work practices and shift structures. But if things come to a head and no agreement is reached, decisions have to be taken.
"Government’s obligations arise from the Constitution, the broadcasting law and the Prague Convention, but how these obligations are satisfied is up to government. I can satisfy those obligations by issuing a public service contract and there could be another station that decides to take it up given government’s willingness to finance the obligations to the tune of Lm0.5 million."
The minister might ‘legally’ be right but closing PBS would still leave the country with no credible middle-of-the-road news bulletin.
"That is a hundred-thousand-dollar question," Dr Gatt answers with a smile on his face.
"Government does not have an obligation to produce news and current affairs, but in the circumstances prevailing in our country I think we need to have a news service that does not belong to the political parties. But does this mean this has to be produced by a government-owned station, which in any case produces news that is still labelled as unbalanced?"
I insist that neither Super One nor NET can produce politically unbiased news.
"It is not an easy problem to solve. If I manage to prevent people from attacking the PBS news for bias, I think I would have achieved something worthwile. But can you see The Times owning a television station, or MaltaToday owning a TV station and government funding the production of news and current affairs? Does government necessarily need a whole administrative set up to transmit news and current affairs?
"We need to explore new avenues. MTV was founded when there were no private TV stations. When the airwaves were liberalised in the 1990s, true liberalisation took place in radio. The current television set up is an oligarchy.
"Maybe the market is not ideal for wide ranging liberalisation but it does not mean that government has to be present by force. I am not saying that it shouldn’t, but it does not necessarily have to be so. Theoretically, it should not be government that offers balance but the independent media that is not tied to a political party."
Reality shows that the two parties have occupied the airwaves leaving little space for private TV stations.
Dr Gatt agrees. "In an ideal scenario it should not be government that broadcasts the news. The same situation as that prevailing in the newspaper and radio sectors should be repeated. Government feels PBS should continue to offer news. But back to your original question, I do not depart from the premise that reform is not possible."
It has been said that the tough talk on PBS is aimed to weaken the national broadcaster thus strengthening the political stations.
Dr Gatt explains that under the new structure PBS will benefit from at least Lm2 million per year. "This is calculated on the Lm0.5 million subsidy, the current advertising sales and marginal incomes from out sourcing and other miscellaneous things. Don’t tell me that with a revenue of Lm2 million you cannot run a proper television station in Malta. And this without an increase in air time sales, which with a reformed structure can easily contribute a further Lm300,000."
In the recent press conference the Minister had announced the intention to reduce PBS employees to around 50. The ‘extra’ employees have not yet been identified. I ask Dr Gatt how he reached that number and the answer was as short as it was quick.
"See what happens in the private TV stations in Malta and you can easily reach the conclusion that 50 is double the amount of full-time employees hired by private TV stations."
Dr Gatt says government is trying to offer an attractive package for employees to either leave or stay. He insists it is important for everybody to understand that either the reforms are carried out or everybody will end up in a worse situation.
"We will be showing solidarity by offering the early retirement and voluntary redundancy schemes and if things don’t go as planned we might also offer re-deployment, but everyone has to make the effort because otherwise there is no future."
Balance sheets clearly show that the private stations are either breaking even, or running at a loss. But Dr Gatt is confident that with the new budget proposals and a reduced work force, PBS can actually turn a profit.
"I’ve seen the numbers and we have worked them out with PBS’ management and directors. They are saying that the figures are achievable if we reduce the workforce. The current wage bill is Lm1.5 million. With tighter control on overheads, which currently amount to Lm0.5 million, and an increase in airtime sales of 10 to 15 per cent, the company should show a profit.
"But government will be doing its part. There is the pre-determined subsidy and government is taking on itself a loan that PBS has, which means another Lm70,000 interest a year. We are also pledging a capital investment of Lm450,000."
Before leaving the office I ask Dr Gatt whether he was too harsh with his words when he announced reforms at Malta’s national TV station. A smile appears on his face.
"This is the usual argument. This summer I celebrated my 50 birthday and if you think I will change at this age it is a bit too difficult. I tried to make things clear for everybody so that nobody would be under the illusion that there is a way out under the present system."