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1 Market Structure and Media Ownership

This chapter focuses on media innovation policies and their impact on innovations in journalism and media products/services in Belgium. Thanks to constitutional reform, Belgium hosts three regional communities responsible for, among other things, media, culture and innovation. Being a federal state, media regulations and innovation policies were transferred to the Flemish, French and German-speaking Community. As a result of different languages and diverging media policies, their media landscapes are separated and marked by different media organisations, ownership structures, competitive dynamics and innovation stimuli (d’Haenens, Antoine, & Saeys, 2009). The public service broadcaster was split in 1960, only telecommunications incumbent Proximus provides pay-TV services in all parts of the country. Hence, it is difficult to speak about a single Belgian media market or a single legislative approach to media ownership and innovation policy. Market structures and innovation policies in the Flemish and French Community will therefore be analysed as separate ones in this chapter.

Although news media markets both in the Flemish and French Community are characterised by a relatively wide variety of different media products and services available to the public, ownership and control of these media is concentrated into the hands of just a limited number of media organisations. Smaller markets typically support less organisations and account for higher concentration rates as they face structural constraints in terms of availability of resources, economies of scope/scale and sunk costs (Trappel, 2011). Because media organisations are trying to diversify their revenue structure, they become increasingly involved in the value chain of other media sectors. Driven by a strategy to spread popular brands to media consumers via a multi-platform approach, Belgian media organisations show an increasing tendency towards media (cross-)ownership with single firms controlling activities in broadcast and cable television, radio, newspapers, magazines and/or online media. The following sections attempt to provide an overview of the most important news media markets and an evolution of media (cross-)ownership in the Dutch-language and French-language news media markets.

1.1 Newspapers

Both the markets of the Dutch-language and French-language newspapers are highly concentrated. Over the years, independent newspapers were acquired by large publishers that have become profitable businesses in the Dutch-language and French-language news media markets, not least thanks to their stakes in audiovisual media (cf. infra). Starting from the 1950s, this consolidation wave is still going on these days. In June 2013, Corelio Publishing and Concentra announced that they would bring their newspaper and digital news activities together in a joint venture called Mediahuis, which would bring the Flemish newspaper industry into a duopoly situation. The merger was cleared by the Belgian Competition Authority upon the condition that the regional newspaper titles involved would be maintained for at least 5 years (Belgian Competition Authority, 2013). According to Table 1, Mediahuis is now the biggest player in the Flemish newspaper market with a 58.9 % market share. De Persgroep controls the rest of the Dutch-language newspaper market. In the French-language market, Rossel is the market leader with 51.9 % market share before IPM (24.1 %) and Vers l’Avenir (24 %, recently sold by Corelio to cable operator Tecteo). Compared with 2007, market positions remained more or less stable.

Table 1 Evolution market shares newspapers (CIM, 2015c)
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Such duopolistic market structure makes it virtually impossible to launch new titles; all new ventures and initiatives failed since the 1950s, except for the success of financial newspaper De Tijd (in 1968) and the free daily Metro (in 2000). Table 2 shows the impact of media concentration on the newspaper markets in Belgium. Between 1950 and 2014, 27 newspapers ceased operations and disappeared as a separate title and the number of newspaper publishers shrunk from 34 to 5. The data tend to suggest that the enduring consolidation and corporate synergies have decreased the availability of titles and, hence, negatively affected pluralism and stifled entrepreneurship in the newspaper markets (De Bens & Raeymaeckers, 2010). The limited scale of the regional markets (6.5 million and 4.5 million Dutch and French speaker respectively) and the challenges posed by digitisation (e.g., digital editions, free online substitutes) is often used as an explanation for the on-going consolidation in the newspaper markets. This may be true for the French-language market, which faced a large decline in sales figures between 2000 and 2014 (minus 32.5 %), but the Dutch-language market experienced a relative stagnation (minus 9 %) in the same period (CIM, 2015c).

Table 2 Evolution daily newspaper titles and groups
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1.2 Television

At both sides of the language border, TV broadcasting is tightly controlled by a small number of groups. The Dutch-language market is highly concentrated with the three biggest groups controlling more than 80 % of the market (see Table 3). Over the years, their dominance has increased, even with the further fragmentation of the audience, thanks to the launch of digital spin-off channels. Public service broadcaster VRT takes the lead, followed by commercial broadcasters Medialaan (jointly owned by De Persgroep and Roularta) and SBS Belgium (owned by De Vijver Media). In contrast, the French-language market is dominated by commercial broadcasters RTL and TF1; public service broadcaster RTBF is the second largest operator in the market. Similar to the Dutch-language market, the French-language market structure is overly complex characterised by a high level of market concentration and media cross-ownership. Newspaper publishers are highly involved in audiovisual media activities (e.g., RTL-TVi shareholder Audiopresse represents IPM, Rossel and Corelio Publishing) as part of a diversification strategy. Furthermore, it is noteworthy to mention that the French-language audiovisual market is dominated by large, international media groups (e.g., Bertelsmann, TF1) whereas Dutch-language broadcasters are still controlled by domestic media groups.

Table 3 Evolution market shares TV (CIM, 2015b)
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With the on-going transition to digital TV services, TV distributors (cable, satellite, IPTV) have obtained a gatekeeping position in the audiovisual market. Due to economies of scale and high barriers to entry, the distribution infrastructure market is overly concentrated in Belgium (Evens & Donders, 2013). With a penetration of 98 %, Belgium is one of the most widely cabled countries in the European Union. Cable operators Telenet and Tecteo control 70–80 % of the TV distribution market in the Flemish and French Community respectively. Although their dominance is challenged by other operators, mainly telecommunications incumbent Belgacom, this does not prevent them to build considerable market power vis-à-vis broadcasters and independent producers. In June 2014, Telenet, a subsidiary of US cable giant Liberty Global, announced a 50 % participation in De Vijver Media, which controls commercial broadcasters Vier and Vijf, and successful producer Woestijnvis (other shareholders are Corelio Publishing and Waterman & Waterman). Hence, Telenet controls all activities in the audiovisual value chain, bringing a production company, commercial broadcaster, pay-TV operator and cable distributor under the same roof—a construction which is likely to have far-reaching consequences for the Flemish audiovisual market. The transaction was cleared by the European Commission (2015) upon the condition that Telenet ensure Vier and Vijf will be offered under fair, reasonable and non-discriminatory terms to any interested TV distributor in Belgium.

1.3 Radio Broadcasting

Mirroring the TV market, the Flemish radio market reflects the rivalry between public service broadcaster VRT and its commercial competitor Medialaan. Despite the liberalisation in 2001 and the arrival of three commercial channels Q-Music, 4FM (now JOE fm) and Nostalgie, VRT has retained its dominant position in the Dutch-language radio market accounting for more than 60 % of the audience market. Radio 2 is the market leader with 29.4 % market share. In contrast, the radio market in the French Community is far more fragmented and is characterised by a larger and stronger presence of commercial radio stations—Radio Contact is the leading channel with 16 % market share with Bel-RTL as runner-up (14.9 %). In terms of audience share, RTBF commands a 35 % market share and is far less dominant than its Flemish counterpart VRT. In analogy with the TV market, foreign-owned radio stations such as Radio Contact, Bel-RTL, Fun Radio, Nostalgie and NRJ play an important role in the market—in contrast to the Flemish market which is controlled by domestic media groups. Taken together at group level, Table 4 indicates that market concentration in the radio industry is higher in the Flemish Community than in the French Community.

Table 4 Evolution market shares radio (CIM, 2015a)
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2 Regulations

In contrast to many other European countries, Belgium has hardly introduced media (cross-) ownership regulation in order to reduce the level of media concentration. Apart from a few minor ownership rules on the regional level, changes in ownership structures (e.g., mergers) are subject to federal competition law and need to be approved by the Belgian Competition Authority, which considers abuse of dominant position, market concentration, unfair trade agreements, price control, etc. Hence, the media industry is subject to the same notification rules as any other sector and is not marked for any special antitrust provisions (Valcke & Lievens, 2011). Concerning mergers and acquisitions in the news media markets, the regional media regulators Vlaamse Regulator voor de Media (VRM) and the Conseil Supérieur de l’Audiovisuel (CSA) are asked to give (non-binding) advise on the proposed acquisition. It is fair to say that in the past the Belgian Competition Authority has approved all notified media mergers and acquisitions, including the acquisition of newspaper Het Volk by Corelio, newspapers De Tijd and l’Echo by Mediafin (jointly owned by De Persgroep and Rossel) and newspaper Vers l’Avenir by Tecteo. In October 2013, the Belgian Competition Authority approved the establishment of Mediahuis, under the condition that all newspaper titles will be maintained for a period of 5 years.

Flemish media legislation is one of the sole West-European regulatory frameworks without industry-specific ownership rules other than general competition law. In order to safeguard media pluralism in the radio broadcasting market, a single business was allowed to control only one national and/or regional radio station. In 2007, the government, however, relaxed radio ownership rules so as to allow the acquisition of financially distressed 4FM by De Persgroep (a single group can now control two national and/or regional radio stations). Moreover, both Dutch-language and French-language newspaper and magazine publishers became even obliged by decree to participate in national commercial television in the late 1980s. Whereas the French Community imposed publishers to participate in RTL-TVi for at least 31 % via Audiopresse, the Flemish Community prescribed a participation of at least 51 % by local publishers. The ownership obligation was lifted in 1998 after being found in breach with the Television Without Frontiers Directive. Since 2008, the Flemish Media Authority VRM has the responsibility to monitor media ownership and to provide a yearly overview of market concentration in the Flemish media market (Vlaamse Media Regulator, 2014), but this has not led to political intervention or the introduction of media (cross-) ownership rules yet. Contradictory perhaps, this lack of media (cross-) ownership regulation is largely due to policymakers’ wish to keep the Flemish media firms in local hands. In this context, strict ownership rules could stand in the way of creating synergies and in sustaining the competitiveness of the Flemish media ecosystem in an increasingly globalised industry.

In contrast to the Flemish Media Decree, policymakers in the French-speaking part of Belgium have regulated existing ownership structures. Article 7 of the Broadcasting Act prescribes that when a single business entity (or natural person) holds, directly or indirectly, more than 24 % of the capital in two different radio and/or TV broadcasters, or where the cumulated audience share exceeds 20 % in the French-language market, a significant market position is presumed on behalf of that business. Following the finding of such significant market position, the CSA then launches an investigation to the effect on pluralism in the radio and/or TV broadcasting market. Based on the findings of the investigation, the regulator is entitled to impose additional measures to enhance pluralism in the market, or apply sanctions including the suspension and withdrawal of the license. The Act further prescribes that media organisations have to submit all changes in the ownership structure to the CSA. These changes will be published by CSA on its website (Conseil Supérieur de l’Audiovisuel, 2015). These ownership rules have been enacted only recently, and must prevent certain (foreign) media groups from expanding dominance in the French-speaking news media markets. Government has also announced its plans to boost domestic TV productions in order to sustain the local content business.

3 Media Innovation Policies

As discussed, news media markets in Belgium show a relatively high degree of concentration since they are controlled by a small number of media groups that have spread their wings over multiple media product markets. Hence, most media groups are not limited to one specific media product, but focus on a portfolio of media products and services that allows them to spread financial risks and diversify revenues. In order to launch digital media products and services, one common strategy is forming strategic alliances with other media groups. In 2012, publishers De Persgroep and Roularta, and mobile operator Base (KPN Belgium) announced to form the joint venture Mplus for launching personalised media services. The goal was to bundle news services with mobile data subscriptions, but the joint venture was lifted before the launch of the service. One year later, mobile TV service Stievie, a partnership between Medialaan, VRT and SBS, was launched. Not only the service was innovative, the collaboration between three rivalling broadcasters was ground-breaking. Such partnerships are often encouraged by the regional government. In 1998, for example, the newspaper and magazine publishers founded digital news archive Mediargus (recently rebranded Gopress), which was supported by the Flemish government as part of the press subsidy program.

Apart from the federal subsidies for news publishers and TV broadcasters (ca. 360 million euros per year for, among others, the distribution of newspapers and 0 % VAT rate for newspapers), the Flemish government attempts to stimulate innovation in the media and ICT sector through an ecosystem of institutions and funding instruments. Remark that all funding and innovation instruments cover the whole media and ICT sector and that no single instrument specifically targets innovation in journalism—the Pascal Decroos Fund grant programme stimulates investigative journalism. The central institution in the Flemish innovation policy is the Agency for Innovation by Science and Technology (IWT), which helps businesses in addressing demand-driven challenges by funding collaborative research projects, often with research institutions. In 2012, for example, IWT awarded 1.4 million euros to the project ‘Publisher of the Future’ in which book publishers develop multimedia books and search for new business models. Another important innovation instrument is iMinds (formerly IBBT), a digital research centre and business incubator founded by the Flemish government in 2004. The centre connects research partners with ICT businesses to convert digital knowhow into real-life products and services that are instrumental in positioning Flanders as one of Europe’s leading digital regions. It does so by starting up national and European research projects where researchers, ICT companies and organisations solve technological and societal challenges together.

Under the umbrella of iMinds, the Media Innovation Centre (MiX) was founded in 2012 to specifically stimulate innovation in the media sector. Funded by the government, MiX has a yearly budget of around 4 million euros to develop sector-wide media innovation projects. MiX is the successor of IWT’s Programme Media Innovation. MiX is a centre of expertise for innovation in the Flemish media sector and was established to tackle challenges faced as a result of the rapidly changing media landscape and international developments. By means of collaborative projects bringing together media businesses, technology providers and academic institutions, the goal of MiX is to launch shared innovation projects intended to increase the competitiveness of the Flemish media sector in a global ICT industry. Especially smaller online media initiatives have complained that MiX would only support established media businesses and leave little room for real innovation and entrepreneurship. Hence, MiX would become another subsidy mechanism for the large media companies, opponents say. However, MiX has expressed its intentions to focus more on innovation by start-ups, small and medium-sized businesses. Due to budget cuts in public spending, however, the future of the media innovation centre has become highly uncertain: ironically perhaps, it seems that MiX will need to reinvent itself.

MiX focuses on three digital sectors (newspapers/magazines, audiovisual media and gaming) and centres on challenges regarding audience measurement, personalised media and monetisation of content. Since its inception in 2012, MiX has initiated 21 innovation projects with over 50 partners that support digital media ventures, develop innovative media services and address strategic challenges for media and technology businesses. One of the flagship projects is Media ID, which has established an authentication system and registration module for end-users across the entire Flemish media landscape based on which media businesses can develop new media services. Other running projects address interactive and behavioural advertising, both for newspapers and TV broadcasters, in order to target media consumers with more relevant advertisements. A new bunch of projects focus on data visualisation, data crunching and big data so as to better understand actual customer behaviour and interests. The Sunshine project, for example, is creating a virtual data-analyst that helps journalists in retrieving the relevant data, presents it in a visually appealing and understandable manner, and enables data-driven journalism.

4 Summary and Best Practices

As the previous analysis of the news media market structure has illustrated, media cross-ownership is a common feature of the Belgian media landscape. In general, the level of concentration is higher in the Dutch-language news media markets compared to the French-speaking markets. In Flanders, the newspaper market is organised as a duopoly. The radio market is dominated by the public service broadcaster VRT. In the TV market, competition between VRT and Medialaan is fierce, and both are challenged by SBS Belgium. The acquisition of SBS Belgium by cable operator Telenet, which has a quasi-monopoly as pay-TV operator and cable distributor, will, however, turn the market upside down and possibly distort competition in the TV market. This vertical merger sets an unseen precedent in European policymaking and will kick off further concentration in related markets, both national and international. News media markets in the French part of Belgium also show tendencies of concentration, but reflect higher levels of rivalry between the different media groups, and, as a result, more diversity in the news media markets. Especially in radio and TV, the higher number of players and individual broadcast channels suggest a more equal playing field between the different media groups.

Belgian media organisations face structural constraints in the small news media markets in terms of availability of resources (financial and personnel), economies of scale and scope (efficiency and advantageous cost structures) and sunk costs (regardless of consumption). Hence, smaller markets typically support less media businesses and account for higher concentration rates, which legitimate higher levels of regulatory intervention. Rather than such interventionist approach, however, regional communities in Belgium competent for media affairs have adopted a market-based approach to the news media markets. Instead of introducing effective media (cross-)ownership rules in such small markets, the Flemish Community, in contrast to the French Community, has set up various innovation mechanisms that stimulate the innovativeness of domestic media groups. Policymakers believe these measures enhance domestic media companies’ competitiveness in an increasingly globalising industry, and give them more leverage vis-à-vis digital platforms. Hence, the Flemish government bets on innovation instruments rather than media (cross-) ownership regulation to ensure competition and diversity in media and journalism. Based on the contribution to entrepreneurship (between 2010 and 2014 numerous iMinds spinoffs in digital media were established), the amount of innovative research projects and the positive impact on the Flemish media ecosystem iMinds and MiX prove best practices to ensure that media businesses engage in a continuous innovation rat race and adapt themselves to the changing business environment in terms of innovative media products and services, and digital business models. In that context, digital media innovation is thought to be an effective response to possible industry game-changers like Apple, Netflix and Google.

5 Innovation Policy Recommendations

These days media organisations face disruptive competition from digital platforms, which are far ahead of legacy content providers with advanced technology strategies and analytical know-how. More often than not, digital platforms have global presence and invest heavily in innovative products/services and business models. Hence, local media organisations need to develop new capabilities and invest in value-creating activities to catch up with these digital platforms. But in the news media industries, traditionally a conservative sector and long protected by government control and high entry barriers (e.g., licenses), innovation is easier said than done and possibly even more problematic in smaller media markets, where absence of scale limits the resources needed to explore digital products/services and business models. Though resources may be limited, there are no limitations to creative thinking and developing new ideas. Governments therefore should bet on promoting research and developments, creating innovation and knowledge sharing networks, fostering entrepreneurship, incentivising investments, enhancing training and education facilities etc. All these measures could help in maintaining local media ecosystems and preserving local production and creativity, protecting content diversity, stimulating economic growth and job creation etc.

In Belgium, the Flemish and French Community government have developed different approaches to innovation in the media industries. The Flemish government has adopted a market-based policy approach and believed that strong local media organisations guarantee diversity and pluralism in the media landscape. The French Community has always been characterised by a more interventionist approach that included ownership thresholds in order to preserve a local and diverse supply of information and entertainment outlets. Significant differences in policy approach have, however, produced relatively similar outcomes in both parts of the country. Although news media markets in the French Community are slightly more competitive than in the Flemish Community, both are characterised by increasing concentration of ownership and decreasing diversity of news and information sources. Ironically perhaps, lack of media (cross-) ownership rules has allowed Flemish media organisations to build scale whereas ownership limits drove Walloon media outlets in the hands of foreign owners. This equivocal outcome of media (cross-) ownership may suggest this kind of regulation no longer forms an adequate remedy to ensure media diversity, especially not in times where powerful digital platforms are shaking up legacy media organisations.

Rather than media (cross-) ownership regulation that becomes increasingly difficult to enforce in the globalised digital economy, we believe that the combination of an effective competition law framework, supportive media legislation and (media) innovation programme will eventually help local media organisations in keeping up with transforming media consumption patterns, providing high-quality information and entertainment, and sustain competition from digital platforms. First, an effective competition law framework ensures competitive rivalry and incentivises media organisations to bet on innovation as source of competitive advantage. For example, media businesses will need to develop a digital, mobile-first strategy and establish digital platforms to respond to transforming media consumption patterns. Second, media legislation could include measures to support small-scale and innovative news media initiatives that bring fresh dynamics in the industry. Moreover, policymakers have to revise (and/or reallocate) existing media subsidies and direct support mechanisms that maintain established press baronies at the expense of new media initiatives and digital innovation. Third, governments have to develop a coherent, long-term vision on the role of innovation in the (news) media industries and set up mechanisms that are widely shared and supported by local media organisations themselves.

With IWT and DGO 6 respectively, the Flemish and French Community government have developed their own policy instruments that provides (innovation) subsidies to innovating businesses. In contrast to the French Community, which has no specific instrument to support media innovation, the Flemish Community government decided to boost innovation in the media sector with the establishment of MiX, whose future is seriously under pressure following budget cuts in public spending. The fact that MiX’ existence is threatened may suggest that policymakers consider a media innovation instrument as a nice-to-have, rather than must-have, element in the media policy mix. Hence, we would like to recommend that Flemish policymakers develop a long-term vision and find adequate funding to continue the efforts in media innovation as part of the government’s industrial policy. An effective media innovation policy demands that the Flemish responsibilities for ‘media’ and ‘innovation’ are coordinated, and ideally brought under the auspices of a single minister. The fact that this is currently (2014–2019) the case in the French Community nourishes hope that this region will be able to develop its own media innovation mechanism in the near future.

Colliding borders between media industries and the rapid expansion of the digital economy imply that policymakers in both regions have to revise existing institutional structures, subsidy programs and policy instruments. Until now, public support predominantly targets legacy media businesses and leaves little opportunities for start-ups and new initiatives to bring change in a traditionally conservative sector. MiX’ steering committee is controlled by established news publishers and broadcasting organisations, which also benefit from millions of indirect support. We would like to recommend that the regional governments reshuffle their focus and include high-tech and telecommunications operators to sustain innovation in the digital economy, and, hence, incentivising legacy media organisations to launch innovative products/services and challenge existing business models. In this context, media innovation and public support should be media-agnostic, rather than focusing on specific branches of the (news) media industry. Moreover, innovation comes with high risks and failure, but the Flemish government is keen on implementing key performance indicators on organisations that were granted innovation support. Such an instrumental approach kills all the creativity needed to generate disruptive innovation that comes with experimenting, failing and learning.