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Stations to boost ad rates next year

Timing of increases draws interest of Anti-Trust Office

By Michael Heitmann
Staff Writer, The Prague Post
October 24th, 2007 issue

Advertisers on all the country’s major television stations will have to swallow significant price rises next year, after all three stations announced rate hikes of up to 20 percent.
TV Nova, which sets the tone for the wider advertising market by capturing over 40 percent of viewers, began the wave of recent announcements, with the station’s director, Petr Dvořák, saying it would raise rates by 20 percent. The country’s other two large broadcasters, Prima TV and Czech Television (ČT), followed with similar announcements.
The close timing and size of the hikes has drawn the interest of the Anti-Monopoly Office (ÚOHS), which has begun to monitor television ad sales, said ÚOHS chairman Martin Pecina.
“It’s not acceptable to send these kinds of messages on pricing to the market,” he told the daily Hospodářské noviny Oct. 19.
“It’s too early to tell whether competition laws have been broken,” clarified agency spokesman Kristián Chalupa. “In the future, ÚOHS will pay special attention to public pronouncements on pricing strategy.”
The timing of the increase should not be seen as collusion. Nova’s business model was approved by the ÚOHS a year ago, said Nova spokeswoman Veronika Šmítková.
“Our main priority is to be in harmony with our market, following the law of supply and demand,” she said.
The public broadcaster Czech Television, which was at one point scheduled to drop advertising next year, will raise its standard advertising rates by up to 15 percent, said spokeswoman Anna Freimanová.
Thanks to a law passed two years ago, only 0.5 percent of the station’s current air time may go to advertising. This share will increase next year to 0.75 percent on the station’s largest channels, ČT1 and ČT2, thanks to the new broadcasting law currently awaiting Senate approval.
The current legislation puts Nova in an advantageous position, said Zoran Jovanovič, managing director of media agency MindShare.
“Public television, its long-time competitor, has been severely handicapped by the pronounced limit on advertising time,” he said.
But there are legitimate reasons for Nova’s success, he added. Nova is owned by Central European Media Enterprises and traded on the Nasdaq and Prague Stock Exchange.
“Right from the early 1990s, Nova has captured Czech viewers’ interest and has offered exactly what they wanted at any given time,” he said.
The price hike won’t drive advertisers to the Internet, he added.
“The Internet will remain the fastest growing communication medium for some time to come,” Jovanovič said. “But it’s questionable whether it will replace television in the communication mix for companies that sell fast-moving consumer goods or specialize in financial or telecommunications services.”

Michael Heitmann can be reached at mheitmann@praguepost.com


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