Spain's next government could lean hard on local politicians to close or privatise loss-making television stations widely seen to be propaganda tools for local authorities, as the country slashes spending and battles the euro zone crisis.

In the run-up to Spain's November 20 parliamentary election, regional broadcasters are being cited as extravagances that proliferated under local authorities in the boom years, which are unsustainable in hard times.

The centre-right People's Party is expected to win the election by a landslide. It already controls most of Spain's 17 autonomous regions and has announced spending cuts for public broadcasting in some of those.

At one stage every autonomous region wanted to have an airport, even in places where that was completely pointless, and that was also the case with regional television broadcasters, said a source in the media sector who is watching developments ahead of the election.

That needs to be rationalised and corrected.

Spain's indebted regions and town halls -- some of which owe money to their own workers -- are seen as a risk to the country's commitment to cut its public deficit to 6 percent in 2011 from 9.3 percent last year.

As well as respected central broadcaster Television Espanola (TVE), there are 30 other state-funded channels in 13 of Spain's 17 autonomous regions, providing regional news and nurturing cultures and languages such as Basque, Catalan and Galician.

Regional broadcasters received 814 million euros (700 million) in subsidies in 2009 and had accrued debts of 1.5 billion euros, according to a Deloitte report, meaning they were costing every Spanish household 110 euros a year.

The Valencia region has three channels, that have accrued a pile of debt, employing more than 1,300 workers, but critics say their news programmes treated the former head of the regional government, Francisco Camps, with kid gloves when he faced charges of taking expensive suits as bribes.

How are the politicians going to convince citizens they need to cut costs from the pillars of the welfare state like health and education while maintaining deficit-making companies that are perfectly dispensable? wrote Manuel del Pozo in an editorial for right-of-centre financial daily Expansion, which has called for the broadcasters to be shut down.

On the political left, newspaper El Pais has criticised public broadcasters for mismanagement and even veteran Socialist lawmaker Jose Bono cited local television services as an example of superfluous spending.

In its election manifesto, Spain's conservative Popular Party, has said it will set limits on spending and debts in the state media and allow local authorities to seek private capital.

Most analysts think full privatisation is unlikely since there are few potential buyers given a shortage of credit and the falling advertising market.

Advertising in the nine-month period ending September fell 24.4 percent year-on-year at the regional broadcasters, compared to an overall 7.5 percent fall in TV ads, said a report by consultancy Infoadex.


While broadcasting licences are valuable assets, Spain has an already crowded television market.

The latest national channels to launch, Cuatro and La Sexta, have managed to grow audience share but Cuatro was bought by Mediaset Espana and Antena 3 is seen as a suitor for La Sexta as the market consolidates.

Some analysts think closing regional channels would make most economic sense to stem a flow of public funds that account for 1 percent to 3.5 percent of regional budgets.

JB Capital Markets expects finances at regional broadcasters to degenerate in the coming months as local authorities no longer have large subsidies to offer.

We believe that this should mean a likely major cut in not only content spending, but also in headcount, and in some cases it could actually mean closures, said JBCM in a note to clients.

Some regional governments have already reached for the hatchet. The new People's Party leadership in Castilla La Mancha has announced a budget cut of 20 percent for that region's public broadcaster next year followed by another of 30 percent.

But regional sensitivities could stand in the way of total closures, say analysts.

In Catalonia, the right-leaning nationalist parliamentary leader of CiU, Joan Duran i Lleida, told Reuters budget cuts at the region's six channels were necessary, but defended their existence.

We're not in favour of privatising the Catalan autonomous television, he said. They (the PP) can do it in the areas they govern. Let's see if they do, let's see if they want to do it in their fiefdoms.

The first regional broadcasters date back to Spain's transition to democracy in the early 1980s, but viewership has fallen in recent years. According to figures from Kantar Media the regional broadcasters' audience share fell to 11.3 percent in 2010 compared to 18 percent in 2005.

Closures or even budget cuts would give private channels a boost by easing competition, and releasing an advertising market share of about 10 percent.

(Additional reporting by Elisabeth O'Leary; Editing by Fiona Ortiz)