The Spanish government is to inject new public funds into broadcaster RTVE, operator of the public channels La 1 and La 2 among other channels, by freeing it from paying VAT (value-added tax).
The TV company will save €91.7 million which will mitigate its weak financial situation with a loss of €133 million in 2014. Public Regional TV stations, also burdened with debts, will also get the VAT exemption.
RTVE had been demanding a new financial injection from the Government to save the company from bankruptcy. The Government has been studying reintroduction TV ads on RTVE five years after the advertising ban. Currently, RTVE is financed by a mix of state subsidies and taxes imposed on telco operators, private TV channels and pay TV companies which have to pay 0.9 per cent, 3 per cent and 1.5 per cent, respectively of their revenues to finance RTVE.
Over the last few years, state subsidies have been significantly reduced by 45 per cent (around €250 million) and the taxes have not covered the annual budget of around €900 million. The result is a chaotic situation for the group which employs 6,500 workers and has over €700 million of accumulated losses.