More than a year after launching its investigation into the alleged misuse of public funds earmarked for public service programmes at PBS, the European Commission has still not concluded the probe about the case.
Asked about the state of the inquiry about the matter, a Commission spokesperson told MaltaToday: “The Commission has received, in October 2006, a complaint concerning the financing of the Maltese public service broadcaster.
“The Commission has been assessing the complaint but has not adopted a formal position at this stage. Therefore, at present, we are not in a position to give further information on the issue,” the Commission spokesperson said.
In fact, sources close to both PBS and the Ministry for Culture, which forks out the Lm500,000 annual subsidy to PBS for public service programmes, confirmed that the Commission has not contacted them in connection with this case.
The EC investigation was launched following a story carried by this newspaper in September 2006 detailing how the state broadcaster failed to use a staggering 33% of the funds channelled by the government for quality programmes also known as Extended Public Service Obligation (EPSO) and instead used them for operations.
Confirmed by an internal KPMG audit report commissioned by the Culture Ministry and released to the public only in edited version, PBS’s failure to use the funds correctly is known to have infuriated the ministry as it compromised the station’s possibility to argue for further funding for quality programmes, at a time when the board of directors was under attack for totally ignoring the public service broadcaster’s ethos.
At the opening of the investigation, a spokesperson for the European Commission had explained that the guiding principles of the application of State aid rules to public service broadcasting are “clearly defined and properly entrusted public service mission, proportionality of the public funds made available to public service broadcasters (exclusion of overcompensation), including a clear separation of accounts between public service and purely commercial activities and the necessity for public broadcasters to respect market principles as regards their purely commercial activities.”
The spokesperson said State funding can also cover operational costs “if the funding is needed to perform the public service properly defined and entrusted”, but both PBS and the government have so far failed to give a clear indication on how one-third of the subvention was spent.
In fact, of the Lm500,000 government subvention passed onto PBS for the year 2004/2005, the station used only Lm331,252 on quality programmes, using the remaining Lm168,748 to finance its commercial operations.
A spokesperson for the Culture Ministry told MaltaToday the remaining money had remained unutilised mainly because of advertising revenue that made good for programme costs, according to a complex accounting formula set out in the national broadcasting policy that was meant not to penalise the station for attracting advertising.
Last Thursday week, the Commission launched a public consultation about the future of public service broadcasters in the new media environment, including a review of how they are financed.
Specifically, Brussels wants to investigate what it described as “overcompensation” and “cross-subsidies for commercial activities” by public broadcasters.
The Commission said in a statement it hoped the review would build on the fundamental principles of the financing of public service broadcasting as laid down in EU law, but will also be able to clearly define what a public service mission is and limit State aid “to what is necessary for the fulfillment of this mission”.

czahra@mediatoday.com.mt