Television advertisers — usually in the position of pushing government to move faster on market changes, such as digital television licenses — are in the unlikely position of pleading with the government to delay reform.

Advertisers and their marketing experts are urging politicians to postpone a new law on TV advertising that would cut the number of commercials that run on Czech Television (ČTV) by 50 percent beginning Jan. 1.

The law, which passed through Parliament in June 2005, will prevent ČTV from airing commercials completely by 2008. The law will cause ČTV to lose more than 1 billion Kč ($45.8 million) per year in revenue, money that will be recouped by an increase in monthly service fees paid by households from the current 100 Kč to 135 Kč.

But advertisers and their marketing agents claim that dropping the share of ČTV on commercial broadcasting would put them at the mercy of the two most powerful commercial television stations, TV Nova and Prima TV.

"There is a real danger now that market competition could be replaced by a virtual monopoly situation on the TV advertisement market," said Jiří Mikeš, marketing expert and communication and advertising lecturer at the University of Economics in Prague.

Advertisers submitted an open letter to Chamber Deputy Chairman Miloslav Vlček in Parliament Oct. 31.

Vlček said the deputies should deal with the issue by the end of November.

Annually, local advertisers spend about 9 billion Kč on TV commercials. They are afraid that ČTV's absence from the advertising market will lead to heavy price inflation on TV spots. ČTV currently takes nearly 15 percent of the advertising pie.

They have reason for concern.

TV Nova, which is the country's biggest commercial television station and controls nearly two-thirds of TV advertising market, already announced that it would increase its advertising rates 15 percent as soon as the new law takes effect. Advertisers fear that rate growth will be even steeper.

"With regard to the current development, the actual prices of commercials will grow 15 to 25 percent throughout 2007," said Jan Levora, head of the Czech Association for Brand Products, an umbrella organization representing about 80 percent of TV advertisers.

Consequently, Levora said, advertisers will pass the price increase on to their customers.

Demonized issue

Levora said ČTV's lost ad space would be replaced by new digital TV channels, which are expected to launch in May 2007.

"Digital television should seize about 8 percent to 10 percent share of the TV advertising market," Mikeš predicted.

But two courts delayed that launch date in September, canceling the allocation of the first six digital TV licenses.

The stations that failed to get digital licenses, namely TV Nova and Prima TV, have successfully fought the decision.

Representatives of TV stations that received digital licenses said the current legal challenges would bring about significant delays in the launch of digital television. But Zdeněk Duspiva, national coordinator for digitalization, said that the current challenges of the tender should not result in major delays.

"Our principal timetable counts on the launch of digital television taking place in 2007, and the entire process of transformation from analog broadcasting to digital should be completed by 2010," Duspiva said.

The Association of Communications Agencies has called on the Chamber of Deputies to keep ČTV in the advertising market in order to maintain pricing competition on the market, at least until new digital stations are able to fill the gap.

Similarly, the Anti-Monopoly Office (ÚOHS) supported advertisers' efforts to keep more competition on the market.

"Until digital TV is launched here, we'll support the effort to keep ČTV advertising," said ÚOHS Chairman Martin Pecina.

ČTV spokesman Martin Krafl said the station would not get involved in any lobbying.

Meanwhile, prices for commercials will increase next year. ČTV plans to increase prices 15 percent, and Prima TV is expected to introduce a 25 percent hike, said media analyst Mikeš.

The cost of commercials has become 'demonized,' TV Nova Director Petr Dvořák told Hospodářské noviny.

"When prices increase, advertisers begin complaining," he said. "It's standard business behavior. There is no need to look for some other lofty explanation."

Parliament has considered ending ČTV ad revenue several times before, but it was only after former Prime Minister Jiří Paroubek's intervention in spring 2005 that the new bill received enough support among deputies.

Observers suggest Paroubek pushed the bill to get commercial TV stations on his side before the general election this past June.