NIK about property and financial management by Polish Television (TVP S.A.)

The Polish system of public media comprises the Polish Television (which operates as a one-person State Treasury company) and its 16 regional branches, as well as the Polish Radio (Polskie Radio S.A.) along with regional radio broadcasters. The regional branches of TVP S.A. are separate units, in terms of their organisation and finance. An integral part of the branches are also off-site editorial offices and correspondent posts.

To-date audits of property management and task performance by the Polish Television as a public broadcaster and external production for TVP S.A. showed among other things that: TVP S.A. did not conduct rational financial management by adjusting the costs of operations to the company’s financial capacity, including adaptation of the structure and the headcount level to the company’s actual needs. That was partly because there were no strategic programmes in place and regular financing sources were not defined. There was a range of irregularities concerning external production: concentration of contracts in a group of external entities, cooperation with external producers was sporadically undertaken in competitive mode, the obligation to broadcast required programmes in the time designated for European programmes was not met, films and programmes were accepted for production without content-related assessment of proposals in the relevant system.

In this audit, NIK verified if TVP S.A. properly managed its property and finance in 2014–2020 (first half).

Licence fees

In 2014, TVP S.A. generated a net profit of nearly PLN 6.3 million. In two subsequent years, the company incurred losses – in 2015 it was PLN 36.6 million and PLN 176.7 million in 2016. That situation was driven mainly by lower licence fee revenue, lower proceeds from advertising and sponsoring, extra costs due to the voluntary separation programme, valuation of finished products and pending production, as well as the amended Act on Goods and Services Tax (change in calculating proportional VAT deduction rate – additional costs of PLN 66 million). In the following years, TVP S.A. already made profit. In 2017, the net profit totalled PLN 564 thousand, in 2018 it was nearly PLN 3.5 million and in 2019 it was as much as PLN 89 million. The company’s financial standing was improved largely due to compensation for licence fee revenue lost in the past years. In 2014–2020, the licence fee revenue reached nearly PLN 6 billion (in 2020, TVP S.A. received Treasury securities at nominal value of PLN 1.7 billion, which were compensation for the licence fee proceeds lost in 2018–2020).

The company’s revenue structure has changed throughout the years. Until the end of 2017, proceeds from advertising and sponsoring were the biggest revenue source, whereas from 2018 it was the licence fee revenue. In 2014, the licence fee revenue made up nearly 30% of the total revenue, and the proceeds from advertising and sponsoring represented slightly more than 32% of the total revenue. In 2019, the proceeds from advertising and sponsoring dropped by 3% against 2014. Reasons include the shrinking group of viewers of TVP S.A. programmes aged 16–59 (from over 27% in 2014 to more than 23% in 2019) and changes in the advertising time.

Economic data and producer’s services

Sales revenue in 2019 totalled PLN 2.7 billion (including e.g.: PLN 745 million from advertising, PLN 128.7 million from sponsoring, PLN 1.4 billion from licence fees) and were over 80% higher than in 2014 – nearly PLN 1.5 billion. At the same time, the company’s operating costs were 67% higher as compared with 2014. The costs of external services in 2019 were much higher against 2014 (by 82%), mainly due to a significant increase in the company's production volume.

Producer’s services were purchased and commissioned in line with internal regulations, to ensure an adequate and efficient purchasing process. In the audited period, external production made up 12.5% of the company’s operating costs, and its share in overheads in the audited period dropped from over 17% in 2015 to less than 11% in 2019.  

NIK auditors found that internal procedures of TVP S.A. were breached in the course of purchasing and commissioning producer’s services. For instance, production was made without prior consent of a management board member, series were made before signing the production agreement, cost shifts were accepted against the applicable procedure).

Property management

The net value of tangible fixed assets as of the end of 2019 was PLN 626.5 million, including among others:

  • land area of nearly 600 thousand m² (PLN 9.5 million);
  • 133 buildings and over 72 residential premises (more than PLN 225 million);
  • technical equipment and machines (PLN 288 million);
  • means of transport (over PLN 37 million).

TVP S.A. had four recreation facilities, three of which were in service. In the audited period, their running costs reached PLN 12.3 million, whereas losses generated by the facilities in 2014–2019 totalled PLN 4.5 million. As for the fourth recreation facility, which was out of service, only costs were incurred.

 TVP S.A. developed two strategic documents: “The strategy of TVP S.A. for 2012–2015” and “The strategy of TVP S.A. for 2017–2021”. Primary restructuring objectives defined in the first strategy included e.g.: liquidation of the company’s unnecessary property as well as modernisation and construction of new facilities. In the audited period, the company sold 16 of them in total, thus earning PLN 21.3 million as a whole. NIK auditors found that TVP S.A. improperly organised tender in one case when selling premises, among other things by significantly underestimating the property value (by PLN 78 thousand). In case of four properties, the company managed them without due diligence, because it failed to settle their legal status in 2014–2019. There was also a risk of losing five plots of land worth over half a million zloty. Also, the company did not properly discharge its duties as the facility administrator.

Launch of Poland In

In March 2018, TVP S.A. launched an internet portal Polandin.com and since November 2018 there has been an English-language channel “Poland In”. Poland In is broadcasted 24 hours a day for the whole month and is available in Europe, Asia, Africa and Australia. It was distributed via two channels: stream TVP and Youtube. Additionally, Poland In videocasts were placed on Facebook, Youtube and Twitter. Before the portal and channel Poland In were created, no analysis or business model of this project was made. In particular, the new concept, assumptions or a draft budget were not developed and the projected activity results were not estimated.

The costs of launching and running the channel in 2018-2019 exceeded PLN 18 million and the costs totalled a bit more than PLN 6.7 million.

Belsat TV

Belsat is a Polish television channel aimed at Belarus. The activity of Belsat TV is co-funded by TVP S.A. and the Minister of Foreign Affairs, with the support of international donors. The key source of the channel financing was the state subsidy granted in 2014–2019 (except for 2017). The channel budget in 2018–2019 exceeded PLN 71.6 million in total (including PLN 40 million from the Ministry of Foreign Affairs). The audit revealed that Belsat TV channel was not properly supervised. As a result, its planned budget was exceeded by nearly PLN 14 million. In that way, internal guidelines for the execution of the company’s economic and financial plan and its financial discipline were breached. In March 2020, a management board member responsible for the Belsat TV supervision was suspended. 

Sports programmes

In 2014-2020 (first half), the company concluded 133 sports broadcast rights agreements. Sports events were transmitted in nationwide programmes, in a specialised programme TVP Sport and on the website www.sport.tvp.pl.  The broadcast rights agreements were usually related to football matches – as much as 77 percent of all broadcast rights funds were spent on that purpose (Nordic and alpine skiing – nearly 20%,  tennis – 1.5%, ice hockey – 1%).

NIK examined eight agreements in detail. Until the middle of 2020, their cost totalled PLN 11.5 million. Agreements were concluded properly. Commercial revenue due to the broadcast of those sports events reached nearly PLN 3.9 million.

Improperly concluded sports event agreements

In case of the 2018/2019 New Year’s Eve organisation, the agreement on part of TVP S.A. was signed by one person (instead of two), which was against the representation principles set out in the charter. As regards the 2019/2020 New Year’s Eve organisation, TVP S.A. signed a written agreement 21 days after the event, which NIK found unreliable.

TVP S.A. commissioned various services related to the production and support of events. In 20 of 48 analysed cases, agreements were concluded in the course of events or after their completion. According to the Polish Television, those delays were caused by prolonging negotiations with contracting parties, lengthy agreement-related proceedings and organisational changes in the company. NIK is of the opinion that TVP S.A. knew the dates of organised events early enough and thus the company could properly perform all activities aimed at signing agreements and precede them with negotiations.   

Personnel issues

In 2014, TVP S.A. resolved to sign an employee outsourcing agreement with Leasing Team sp. z o.o., despite legal risks (indicated also by NIK) related to the employment restructuring concept. The employee outsourcing costs totalled PLN 133 million. Out of 411 employees undergoing the process of acquisition by Leasing Team sp. z o.o., 51 persons were re-employed in TVP S.A. (i.e. over 12%). Besides, TVP S.A. incurred additional costs (PLN 1.8 million) of court disputes related to the restructuring process. According to NIK, signing the employee outsourcing agreement did not bring about expected economic benefits for TVP S.A.

As of the end of 2019, the company’s headcount totalled 2825 persons, including up to 2121 employees in the headquarters and up to 704 in the regional branches. The headcount limit was not exceeded.

Besides, the audit findings show that advisors to the Management Board of TVP S.A. hired by the company did not receive a written scope of duties and the effects of their work were not documented.

NIK stands in a position that in view of diligence and reliability of TVP S.A., as a public television entity operating as a one-person joint stock company of the State Treasury, persons occupying relatively well paid posts of management board advisors, like all other employees of TVP S.A., should have written scope of tasks and duties. The lack of documentation on their work results makes it impossible to assess if their salary corresponded with the type of their work and required qualifications and also if it took account of the quantity and quality of their work.

Unnecessary purchases

NIK found that the purchase of TV studio equipment in 2015 for PLN 302.5 thousand was made against the principles of purpose and economy. By the time NIK audit ended in November 2020, that equipment was not used at all and lost the manufacturer's warranty. It was also uneconomical to finance (for nearly PLN 58 thousand) the technological project of a TV installation without having the legal title to the property where the installation under design was to be located. NIK auditors also had doubts about the purchase and installation of the electric car charging station in TVP S.A. headquarters in Warsaw, which cost PLN 100 thousand. This project was implemented in line with modern trends but without calculating the investment efficiency. The company has had only one electric car since 2018. Moreover, from August 2020, the station was out of service because obligatory technical inspections were not made.

Insufficient supervision over regional branches

According to NIK, supervision over regional branches of TVP S.A. was not fully effective. The key issue was the lack of smooth communication. That was the reason why the regional branches did not know and thus did not comply with some internal regulations defining individual areas of property and finance management (e.g. principles of allocating and using company cars and using private cars for business purposes, the instruction on agreement signing procedures in TVP S.A., development of schedules of works and expenditures related to business trips by regional branches, principles of using external services of law firms).

Post-audit activities

NIK made 99 audit recommendations. The total of 66 recommendations were implemented, efforts to implement 31 recommendations were taken and two recommendations have not been implemented to date (as of 13 May 2021).

Additionally, based on the audit findings, the following measures were taken:

  • four reports of possible misconduct were filed to the District Inspectorates of Construction Supervision (concerning inadequate discharge of the administrator’s duties);
  • one report of possible criminal activity was filed to the District Prosecutor’s Office in Szczecin (concerning a bidder’s false statement on their experience and false credentials to obtain a public contract – investigation was started under the Polish Penal Code);
  • one report of highly probable misconduct was filed to the District Police Commander;
  • one report of possible misconduct subject to financial penalty was filed to the President of the Public Procurement Office (concerning awarding a contract without applying the Public Procurement Law Act – the Public Procurement Office started its proceedings).

Recommendations

To the Management Board of TVP S.A. to:

  • strengthen supervision over the company’s financial management and the agreement signing procedures;
  • ensure effective supervision over regional branches of TVP S.A.in all audited areas of their activity;
  • develop and implement a precise business model (and stick to decisions taken in this area) before implementing new programme initiatives;
  • urgently make a complete and thorough analysis of the legal status of all properties (especially plots of land) owned by TVP S.A. and undertake essential measures to protect the company from the risk of losing them;
  • make sure all properties founded on plots of land owned by the company are revealed in general ledgers;
  • undertake effective measures to prevent the breach of applicable laws on property management.

Article informations

Date of creation:
03 November 2021 15:39
Date of publication:
03 November 2021 15:39
Published by:
Marta Połczyńska
Date of last change:
03 November 2021 15:42
Last modified by:
Marta Połczyńska
Photo collage: headquarters of TVP S.A. and flags with names of Polish Television programmes © Fotokon/Adobe Stock

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