The Black Box of Media Funding in Austria

This article was originally published in March 2021. Following recent development, including charges of embezzlement and bribery against Chancellor Sebastian Kurz and allegations that ÖVP confidantes bought positive newspaper coverage and polls with taxpayer money, we decided to re-publish this article and make it available for the public.

Every time you see an animated baby elephant last year in your social media feed, it was probably paid for with taxpayers’ money. Or the front page of the U-Bahn tabloid graced with reminders to wear a mask… These and many others were part of the government campaign to inform citizens during a public health crisis.

And most went to just three places: In the third quarter of 2020, reports show that over €12 million went toward ads in the print tabloids Kronen ZeitungHeute and Österreich.

Since 1975, media in Austria have been supported by public funding, a subsidy program to maintain high quality and diversity in the industry. In addition, government institutions also advertise. In 2020, COVID-19 gave rise to massive increases in ad spending among the most-circulated print media, currently up 70% from 2019 to 2020 in the same three-month period.

However, the selection and extent of the support to certain outlets raises inescapable questions about partiality and possible back- room dealings with taxpayers’ money.

In the interest of transparency, the Austrian Chancellery (Bundeskanslzeramt) is legally obliged to report what the government spends on advertising. The regulation – only in place since 2012 – includes public advertising in the form of TV spots, radio advertisements, online and social media campaigns, product and service advertisements and print ads. But a lack of oversight threatens the very quality and diversity the program is intended to support, experts say, through conflicts of interest, self-censorship and undermining innovation in the sector.

Alarm bells went off with a report on media spending from the chancellery, released February 8 by the Austrian online platform ZackZack. The headline had people reeling:

“€10 Million a Month for Austrian Media” Government funding, in fact, increased in 2020 dramatically, as much as 70% in some cases, combined with a commitment of €180 million for media ad spending plus €30 million for “creative services” over the next four years.

So where’s the problem? Isn’t the Fourth Estate a pillar of any open and democratic society? Of course; no argument there. The problem, say critics, is how the money is being spent.

“You get the impression that the government doesn’t care how they spend their money,” said Rubina Möhring, president of Reporters Without Borders Austria. “We’re paying for it… creating a video for the moment.

But not in the interest of society.” According to Möhring, when more money is spent on “yellow” journalism – journalism with catchy headlines but little substance – it threatens both media pluralism and democracy.

Digital and online media received little-to-nothing during COVID-19, however. With the exception of the U-Bahn screen media, Infoscreen, none of the top 11 recipients in 2020 were digital-first outlets, despite the unprecedented amount of time spent online.

But exactly how these decisions are being made is unclear, leaving more questions than answers about the links between politics and public funding for media. At the same time, transparency initiatives consistently face challenges.

The Politics of Media Funding

To repeat: No one disagrees that government support for the media is essential, especially now that the industry is jeopardized by the huge cutbacks in commercial advertising and ever lower subscription rates. But while grant funding in Austria has clear selection criteria, publicly funded advertising does not.

The result: The largest recipients were daily tabloids – including those distributed for free on public transit – who have the highest circulation rates among print media.

But they weren’t the only ones. Falstaff, a high-end magazine on wine, gourmet food and lifestyle with a print circulation of 142,000 across the DACH region, received 438% more in government advertising in 2020, amounting to €250,782 over just three months.

A 2020 study by Dr. Andy Kaltenbrunner of the Medienhaus Wien found that ministries’ selection criteria are, at best, unclear. Worse, their media planning is out of line with the way Austrians consume print, broadcast and online outlets.

Under the People’s Party (ÖVP)-Freedom Party (FPÖ) coalition, the government withdrew advertising from Der Standard and Kurier, newspapers known for their center-left political positions. Equally political was the handling of support for the right-wing tabloid Kronenzeitung and, which received €1 million more during the ÖVP-FPÖ coalition than allocated by the interim government following the Ibiza affair.

“Some outlets – such as Kurier or Der Standard – were left out of the advertising strategies of the FPÖ-led departments, such as the Ministries of Internal and External Affairs as well as the Ministry of Transport entirely, even though they had considerable budgets at their disposal,” Kaltenbrunner explains in the study. “Others received inexplicably large amounts in ad revenue in comparison to their readership demographics. The media group Österreich fared especially well here. The ÖVP-led chancellery also disproportionately placed its campaigns in the Kronen Zeitung.

While other European countries support media with government-funded subsidies, the Austrian case is unique in its lack of transparency. As Christopher Buschow, juror on the Vienna Media Initiative (Wiener Medieninitiative) a professor of organization and network media at Bauhaus-Universität Weimer, noted: “The German constitutional court has set clear limits on this. It must be possible for governments to promote campaigns like public health. But if it is used as a tool to promote media or companies that produce content that is closer to the opinion of the ruling government, this is a problem.”

The Russian Doll

Austrian public financing for media is governed by the Federal Act on Transparency in Media Cooperation (Medientransparenzgesetz), passed in 2012. This mandates that the government, public bodies and state-owned corporations disclose their relations with the media, and must include all those who publish four or more times per year.

This stipulation breeds ingenious ways to side-step transparency requirements. According to the investigative outlet Dossier, media companies get around this by publishing supplements within supplements (Beilage einer Beilage), as the City of Vienna does in Preview, which appears only twice a year. This “Russian doll” concept means spending there won’t show up in transparency data surveys. Quantity discounts, too, are not recorded, according to Dossier editor-in-chief Florian Skrabal in an interview with Metropole.

For years, ministers have promised to reform media funding and transparency regulations. For example, former State Secretary to the Chancellery Thomas Drozda’s (SPÖ) 2016 call for taxes on technology platforms that would pay for media training and grants is still unaddressed.

Other Major Gaps to Fill…

Austria is one of only five members of the European Union without a Freedom of Information Act (FoI), mandating the release on request of data in the public interest.

Without FoI legislation, journalists must rely on whistleblowers, personal networks and lawsuits to get a hold of data and documents to reach the truth. A draft for a Freedom of Information Act has been on the parliamentary docket since 2016.

Editor’s note: Metropole applied for the annual federal press subsidies (Presseförderung) three times and was denied. Metropole did receive the special press subsidy (Sonder- presseförderung) for COVID-19 in 2020, which amounted to €14,314. The City of Vienna and the Federal Chancellery advertised in Metropole in 2020 for a total of €16,168.

Shaping the Media Market

Austria spends comparatively large sums on public advertising. In 2016, Austria spent €18.9 million, 10 times more than Germany per capita. According to Skrabal, this injection “leads to disturbances in the market and dependencies between public officials and media owners.”

Especially in a crisis, public funding for media can determine which outlets survive. According to Barbara Trionfi, executive director of the International Press Institute, excessive advertising paired with official media subsidies “end up saving newspapers that don’t fulfill the criteria of the Austrian Press Council.”

The council, a self-regulatory body of Austrian media outlets, sets standards for freedom of speech, independence from outside influence, protection of privacy, the rejection of discrimination and the unethical procurement of source material. The three media companies that receive the most amount of government ad spending are not members of this body – which experts suggest can hardly be a coincidence.

“At quality newspapers, there is a Chinese wall between advertising and editorial; in the yellow press, the Chinese wall is nonexistent,” explained Skrabal. Without clear guidelines, there is nothing stopping the yellow press from trading support for favorable coverage.

In 2019, an international delegation including IPI and Reporters Without Borders investigated press freedom in Austria. The delegation identified problematic links between politics and the public service broadcaster (ORF), saying “political influence on the ORF must be ended and prevented.” The report also states that publicly funded advertising threatens to become, “an instrument for informal media support, political favors, intimidation or media censorship.”

Digital Media Left Behind

Inequality in digital advertising is particularly conspicuous, especially as society spends more time online. According to a recent MindTake study, 68% of Austrians have been consuming much more news from the internet since the beginning of the pandemic.

In 2019, Kronen Zeitung and Österreich together received €1.6 million in digital advertising, of an available €2.4 million, while online outlets with higher reach received little or none of the government’s advertising budget, the study found.

Austria provides €34 million in grants for digital transformation, for which existing digital media don’t qualify – being punished, in a sense, for being ahead of the game. Experts have criticized this grant structure from the start. As Skrabal and Buschow noted: They’re funding print media that haven’t managed the digital transformation on their own.

Funding media holds multiple risks, said Buschow: “If you give out money based on who has [the most] readers or sold copies, you always support the largest players,” who usually need it the least. When government supports the digitalization of legacy print publications, as they are doing in both Germany and Austria, companies switch to classified, e-commerce or online-transaction-based products, which Buschow stresses are no longer connected to journalism.

The government announcement to spend €180 million on media over the next four years has critics sharpening their swords – and their pens. “Recently, I’m afraid we’ve been going backward in history,” regrets Andy Kaltenbrunner“More money is being spent, less transparently.”

Plus ça change