France’s government plans to raise €450 million (£354 million) in taxes on ISPs, mobile operators and commercial broadcasters this year, to help plug a public TV funding gap caused after it banned advertising on publicly-funded channels. New rules championed by president Nicolas Sarkozy came into force this week, banning primetime advertising on France Télévisions’ five channels between 8pm and 6am - welcomed by rival commercial broadcasters but angering staff of those affected, worrying the channels’ independence is threatened. Daytime ads remain for now but only until 2011.

Many see the tax as counter-productive because ISPs will be forced to raise prices to consumers to stay profitable. France Télévisions makes 27 percent of its €3 billion (£2.36 billion) revenues from advertising, though nearly all the rest is raised from an annual TV license fee of €116 (£91.41) per household. So to help replace that money mobile operators and ISPs are to be charged 0.9 percent of their annual ad revenue while commercial broadcasters will have to give up three percent to the state.

The sources from which Sarkozy hopes to raise tax revenue are becoming increasingly shaky, so he must avoid strangling France’s burgeoning new media industries in the coming decade (More details at WSJ.com and Guardian.co.uk).

France has seen some grim advertising forecasts of late and although digital ad revenue continues to grow by most estimates, indeed according to eMarketer it’s the only sector that will see any growth at all in 2009, the rate has slowed dramatically. Though the sector grew by 35.7 percent in 2007, that growth rate slowed to 23.4 percent with total revenues of €914 million (£720 million). TV ad revenue is still large at €4.1 billion (£3.23 billion) but that figure shrank at a rate of 3.9 percent last year with an even bigger retraction expected in 2009. Maurice Levy, CEO of giant French advertising group Publicis says that “recession is not at the door, it’s already in the house”.

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