By Nuno Cintra Torres and Tatiana Chervyakova (Lusófona University)
The recent and ongoing saga of the Global Media Group (GMG) is a strong indicator of the need to continue improving regulation of media ownership transparency. GMG has exposed loopholes in the legal framework regulating media ownership. An ambitious investment idea and an anonymous tax-haven-based investor risked leading to the dismissal of 150 to 200 workers out of 530. It may also ultimately lead to the closure of some of the oldest Portuguese dailies. GMG is one the most important media groups in Portugal. It owns Açoriano Oriental, São Miguel (1835), Diário de Notícias, Lisbon (1864), Diário de Notícias, Funchal (1876), Jornal de Notícias, Porto (1888), sports daily O Jogo (1985), radio broadcaster TSF (1989), and online Dinheiro Vivo (2011).
A special law mandating the registration of media ownership and a public transparency portal maintained by the media regulator ERC has had a positive effect on the media landscape but could not prevent the development of a situation that imperils media plurality and hundreds of jobs.
The GMG saga was widely publicized in December 2023. At the Congress of Journalists, which took place in January 2024, the year of 50th anniversary of the Carnation Revolution that reestablished democracy and freedom of press, GMG was one of the major talking points as the crisis brought job insecurity and the low pay of media professionals into the heart of the debate. It raised the national conversation about how media unionization should be improved and brought the shortcomings of the media business into the public eye.
The crisis was triggered when World Opportunity Fund (WOF), an entity headquartered in Switzerland but based in the Bahamas, acquired in July 2023 a 51% controlling stake of Páginas Civilizadas, a firm that in turn controls, directly and indirectly, 50.25% of GMG and 22.35% of the LUSA news agency – the agency is a de facto monopoly. According to the online newspaper Página Um, Páginas Civilizadas was founded in September 2020 as a financial vehicle of a venture capitalist to control GMG and to buy a shareholding in Lusa. Over two years, with no known business activity, and with only two employees, the company revealed a sui generis financial performance. From almost zero turnover in 2020 and 2021, the provision of services (not clear to whom) in 2023 exceeded six million euros, but profits were residual. Liabilities were three times greater than the share capital. The firm’s incorporation act does not appear in the records of the Ministry of Finance.
In August 2023, Páginas Civilizadas attempted but failed to sell its stake in Lusa. The next month the group underwent a top management reshuffle to “create favourable conditions for the implementation of an ambitious strategic project with a view to growth”. The reshuffle was met with concern by employees, specifically those at TSF. Workers accused the board of not fulfilling several commitments and of delaying paying salaries. The Portuguese Constitution in Article 38 mandates the election of an internal Editorial Board in media organisations, but the appointment of a new editor was made by the management without hearing the TSF Editorial Board, while his predecessor was praised by the journalists. Later, TSF workers went on strike, the first in its 35 years of existence. At this stage, the conflict between journalists and media managers became apparent. Journalists were supported by the journalists’ union. The argument was: journalists produce news; if those responsible for the management of the business fail, it is their fault, not the journalists’.
Meanwhile, the State suspended its participation in a deal whereby it would buy the GMG’s stake in the Lusa agency. GMG attributed the failure to sell its Lusa shares to a “process of permanent political interference”. The conflict reached the highest echelons of the State. A new GMG CEO told the online ECO newspaper that the President of the Republic had interfered in the conflict regarding “the fund’s entry into the capital of Global Media”.
The conflict between journalists and management widened and among the interested parties, shareholders, and directors. Resignations ensued. The four main minority shareholders accused WOF of “manifest non-compliance with relevant contractual obligations” and threatened to go to court, while some 200 people were at risk of redundancy. Salaries and Christmas bonuses were not paid, amid rumours that managers had received their salaries.
Many state organisations were involved in the crisis, highlighting a perceived threat to pluralism and democracy, as well as the possible demise of some of the group’s historical brands. The Journalists union, the Public Prosecutor, the Competition Regulator, the President of the Republic, Parliament, the Minister of Culture, and of course ERC were all involved.
The Transparency Law (2015) requires the disclosure of ownership, management, and means of financing of entities that carry out social communication activities. ERC tasks include overseeing the compliance with the law by owners of media outlets thus ensuring transparency of media ownership, almost immediately after the information became public about the acquisition of the shareholding stake in Páginas Civilizadas (August, 2023) requested information about the shareholding change.
Five months later, while the crisis was still unfolding, ERC claimed that it was not satisfied with the information then provided by the fund and that it expected more. The president of the regulator told Parliament that “ERC has monitored and acted on this dossier within the limits of its legal powers” adding that “the Media Transparency Law guides our actions in this matter”.
Meanwhile, the situation seemed to be in the process of being solved. Journalists were owed back wages, and an offer was made for the purchase of some brands (including Jornal de Notícias, TSF, and O Jogo) by a group of businessmen, while the above-mentioned venture capitalist investor made known his interest in Diário de Notícias. The WOF is expected to withdraw from ownership of the group.
The Media Pluralism Monitor (2022, 2023) ranks the transparency risk of media ownership in Portugal as low. By law, all media outlets are obliged to publish their ownership composition, and shareholding percentage. If a lack of information or a threat to transparency is noticed, ERC has the right to publish a disclosing statement on its website as well as in two national newspapers (Article 14, Law no.78/2015 of 29 July). The Transparency Law also obliges ERC to maintain the Transparency portal, which compiles information about each medium and its owners. Consequently, most of the media in Portugal operate in what can be called an advanced transparency ecosystem, as the owners and their resources are disclosed, indicating the percentage of shares both on their websites and on the publicly accessible portal.
However, this information is often presented in a formal notarial way, mostly expressed by the legal name of the entity, which is opaque regarding who the actual shareholders of limited companies are. Further research in notaries is needed and even then, it may not be possible to identify who are the natural persons who own shares in those firms. In the case of corporations, it is only possible to know who the actual owners are when a single entity owns over 10% of the stock. Foreign capital may be involved but may not be easily recognisable on public resources (e.g. GMG). The Portal does not totally fulfil its original mission which is to inform the public about who are the end owners of all the media outlets. ERC is still trying to determine who the end owners of the GMG are.
The situation became a litmus test of the institutions and legislation that are supposed to protect and ensure media pluralism, transparency, and accountability. In this case, the regulatory framework worked reactively instead of proactively, paving the way for the development of a crisis. Proactive and pre-emptive checks, a routine procedure when a new owner takes over a stake in a media company, could have prevented this ugly crisis, that put in jeopardy well-known national and historical media brands as well as the welfare of their employees. Despite the expressed concerns of many public institutions, from the media regulator to the President of the Republic, the crisis reached a serious and unimaginable stage. Portuguese media legislation and regulation appear as progressive in the text but are reactive in action.
Repercussions of the GMG case continue on the media arena. The Journalists’ Union announced a national strike for March 14, 2024 “against low salaries, precariousness and the sharp deterioration of the conditions in which journalists work”.
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