French President Nicolas Sarkozy has this week announced plans to scrap adverts on state funded broadcasters. The move, aimed at increasing the quality of programming, would be the most radical reform seen in the country's advertising market and give commercial broadcasters access to an estimated 800 million Euros of advertising spend. The flip side is that the state sector would have to make up the ad revenue shortfall by taxing ad revenues on commercial channels and possibly levying modest taxes on internet and mobile phone users.
The risk is that if commercial channels get taxed on ad revenue they will hike prices to offset the additional tax burden. This could also reduce competition in the market as broadcast ad spots are reduced.
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