French deputies agree to cut planned TV ad tax

By Emile Picy

PARIS, Nov 19 (Reuters) - French deputies from the ruling UMP party voted late on Wednesday to reduce by as much as half a proposed tax on private television advertising revenue intended to help fund public broadcasters.

In an amendment to a broadcasting bill due to be presented in parliament, the deputies from the centre-right UMP also backed a proposal to replace a planned 0.9 percent tax on telecom operators intended for the same purpose with a sliding levy of 0.5-0.9 percent.

The amendment said the private television tax, originally set at 3 percent of advertising revenues, would be set at no less than 1.5 percent.

The deputies also agreed the total amount from the proposed tax "could not exceed half the annual growth in revenues of a station".

Although the bill must still be voted in parliament, the UMP's majority means it will almost certainly be adopted.

The levies were agreed earlier this year after President Nicolas Sarkozy announced that publicly owned France Televisions would lose the right to carry advertising.

That decision was criticised by the opposition and by many press commentators who said it amounted to a present to private broadcasters like TF1, controlled by Sarkozy's close friend Martin Bouygues.

Advertising on public television will not be allowed after 8:00 p.m. from January, 2009, and is due to be banned entirely from December 2011.

The move will create a significant funding gap for the four main channels controlled by France Televisions, which raised 834 million euros ($1.05 billion) from advertising and sponsorship in 2006, almost one-third of its total revenue.

Jean-Francois Cope, head of the UMP parliamentary party said the cuts were necessary given the sharply worsening economic climate but any shortfall for public television would be made up by the government.

"Of course, private broadcasters will be taxed when they have more advertising revenue linked to the abolition of advertising on public television," he told reporters.

"But of course, in a depressed advertising market, they shouldn't have to pay a tax if they are not making any additional revenues," he said.

"Obviously the state will compensate public television broadcasters entirely," he said. "There will be no loss for public television."

The 3 percent tax on private broadcasters had been estimated to raise around 80 million euros, while revenues from the 0.9 percent levy on telecoms companies had been reckoned at up to 380 million euros.

As well as reforming the funding of public television, the bill would also give the government the power to appoint the head of France Televisions, who has previously been appointed by the CSA, an independent audiovisual supervisory body. (Writing by James Mackenzie; Editing by Matthew Jones)