Doubts over Musk’s Twitter takeover recall corporate governance challenges faced by Europe’s media

Perhaps the biggest development in Europe’s media market in the past week took place in the United States, with Elon Musk’s takeover of social media giant Twitter for a reported $44 billion. Throughout the week, Musk has already dropped some hints about the major changes that he could bring to the platform. And there is much to be excited about, including greater efforts at ridding Twitter of bots and adding new features, such as the much-awaited edit button. More controversial, however, is the pledge to roll back some of the content guidelines to protect ‘free speech on the platform.

Musk’s stance on content moderation has, unsurprisingly, re-ignited the political debate in the US and Europe surrounding whether social media giants have a corporate responsibility to actively curb and tackle misinformation, fake news, and hate speech. But while concentrating on setting tighter rules on social media, Europe, in particular, should not forget the corporate governance challenges that are currently affecting more traditional forms of media, such as television and the press. Indeed, poor quality executives in the private sector and political interference in the public sector, risk undermining Europe’s overall media landscape just as much as lawless social media.

Preparing for a social media tug of war

Over in Europe, news of Musk’s acquisition of Twitter was greeted coolly by European officials. Thierry Breton, the European Union’s commissioner for the internal market and a key driving figure in regulatory efforts of the digital sector, told the Financial Times the morning after the acquisition “we welcome everyone. We are open but on our conditions”. Breton’s words represented a thinly concealed way of addressing Musk’s plans to roll-back content moderation, which are already placing him on a collision course with the EU. Just last week, the EU passed the Digital Services Act, which requires social media companies to disclose to EU regulators how they are tackling disinformation, prevents advertising for underage users, and bans the use of manipulative techniques to attract audiences to content.

Given the persistence of these issues despite repeated reassurances by social media giant executives, the new regulations represent a shift towards greater corporate governance accountability. And other countries look set to follow suit. The United Kingdom, for instance, is set to introduce its long-awaited ‘Online Harms Bill’ that mandates internet companies to remove illegal or harmful content from their platforms, and gives new powers to the media regulator Ofcom, including that of prosecuting executives that do not comply with the rules. With the US, Singapore and Canada also set to propose similar legislation in the following months, Musk – and other big tech executives – are facing an uphill regulatory battle.

European media’s governance troubles

While the EU is currently engaged in the battle to bring the big social media companies into toe, more traditional forms of European media are also dealing with their own corporate governance challenges. For private broadcast networks, a growing issue has concerned the quality of board appointments, with many top executives carrying less than unimpeachable reputations.

A case in point has been the appointment of Bert Habets, former CEO of RTL Group, as a member of ProSieben1’s supervisory board. The nomination has unsurprisingly ruffled the feathers of ProSieben’s top investor, Media for Europe, who appear to be less than impressed with Habets’ track record. During his time at RTL, Habets was seen as being too soft in investigating a case of embezzlement in one of the group’s subsidiaries, Stylehaul, which subsequently resulted in one of its executives being sentenced to six years in US prison and the company going bust in 2019. As a result, RTL Group made a point of refusing to follow standard discharge protocol when parting ways with Habets.

But the issue of big appointments that comes with baggage is not limited to ProSieben. At the end of last year, for example, Stéphane Richard was forced to step down from his role as CEO of Orange after being found guilty of complicity in the misuse of public funds during his time as chief of staff for the former French finance minister Christine Lagarde. It is an issue that can undermine the credibility of corporate governance among European broadcasters at a time when strong and innovative leadership is needed in their boardrooms to start competing with the big, mostly US-based streaming platforms.

Public sector is not exempt

Corporate governance issues in European media are also affecting public broadcasting and newspaper sectors, albeit in a different way. In countries such as Poland, Hungary, the Czech Republic and Slovakia opaque ownership laws and governance arrangements are fueling fears of the media’s independence from the government. Just last year, for instance, Poland’s state-controlled oil company PKN Orlen completed a deal to buy Polska Press, a group which included 20 regional newspapers and 120 local weeklies. Similarly, attempts by the Czech government to appoint friendly faces to the governing board of the country’s public broadcaster raised concerns last year over independence from political interference.  

While efforts to provide regulation that confronts the executives of social media giants with their social responsibilities, Europe should not forget the corporate governance challenges that beset traditional forms of television and print media. With private broadcasters appointing questionable individuals to their highest ranks and public media starting to buckle under the weight of political influence, the landscape of European media has never been filled with so many question marks. As new problems are grappled with, it is just as important to come up with answers to the old ones.    

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