Rating action

Scope Ratings GmbH (Scope) has today affirmed the long-term issuer and senior unsecured debt ratings of Österreichischer Rundfunk Stiftung öffentlichen Rechts (ORF) at AA- in local and foreign currency with Stable Outlooks. The short-term issuer ratings have also been affirmed at S-1+ in both local and foreign currency, with Stable Outlooks.

The latest Rating Report can be downloaded here.

Summary

Scope assesses the ORF under the top-down approach of its government related entities rating methodology.

The ORF’s AA- rating reflects the following credit strengths: i) the public policy mandate as the national broadcaster in Austria, governed by the ORF law as well as a high strategic relevance for its public sponsor; ii) the financing model via ORF-levies since 2024; iii) its market-leading position in Austria; and iv) a conservative financial management with high equity and moderate indebtedness.

At the same time, the rating also considers some challenges: i) the frozen ORF-levy until the end of 2029 and declining advertisement revenues in the TV and radio segments; ii) the implementation of ambitious cost-saving programmes; and iii) a changing usage of media, especially among younger viewers, leading to a declining relevance of linear TV and radio channels. The ORF is reacting to these challenges with its updated strategy ORF 2030 and an updated financial strategy.

Key rating drivers

Integration with the federal government. The activities of ORF as a public service broadcaster in Austria are of strong public interest. The purpose and activities of ORF are regulated by federal law in the ORF-G and include the provision of broadcasting with TV and radio in Austria. The public-service nature of this mandate and legislative competence at the federal level have been anchored in the Austrian Federal Constitutional Law since 1974. To fulfil its public-service mandate, ORF operates four nationwide TV programmes and 12 radio programmes. The public-service mandate also includes the operation of a teletext service and online services.

Scope expects that ORF's activities will expand significantly into the online segment under the provisions of the amended ORF-G. The traditional TV and radio offering is expected to remain unchanged in coming years.

Financial interdependencies. The financing model via ORF-levies contributes to a stable revenue basis for the ORF. In addition, since 2024, there are direct financial flows from the federal government to the ORF via compensation payments related to losses the ORF would otherwise incur due to the switch from the previous financing model to ORF-levies from 2024, as the ORF can no longer offset payable VAT with VAT collected on the previously collected programme fees.

Influence of the federal government in the ORF’s governing and regulatory bodies. The ORF is independent in its activities within the remits of the ORF law. Financing via ORF-levies, raised from private households and businesses, ensures the ORF’s independent broadcasting. At the same time, the government has some influence over the appointments of members of the ORF’s governing bodies. After a recent reform took effect at the end of March 2025, the federal government directly appoints six (formerly nine) of the 35 members of the Foundation Council (“Stiftungsrat”), the ORF’s highest governing body. A further six are appointed by Austria’s national parliament. Each of the nine Austrian federal states appoints one member. The remaining members are appointed by the Public Council (“Publikumsrat”) (nine, formerly six) and works council (five). Decisions in the Stiftungsrat usually require a simple majority of 18 votes, while some decisions require a two-thirds majority. In the Publikumsrat, the federal government appoints 14 out of 28 members.

The ORF’s supervisory authority is KommAustria, with all its members appointed by the government. KommAustria’s competencies include the review and approval of new proposed programmes, the admissibility of proposed changes to the level of the ORF-levy, as well as financial oversight.

Financing model via ORF-levies. Scope views the financing model via ORF-levies as supportive of ORF’s ratings. These make up most annual revenues and ensure that ORF is sufficiently financially equipped to fulfil its public-service mandate.

The ORF-levy is paid by households, with some exceptions, and businesses in Austria. In contrast to the previous financing model via programme fees, ORF-levies are due regardless of the actual ownership or usage of broadcasting devices. The ORF-levy has recently been set at EUR 15.30 and a total of EUR 710m per year until the end of 2029. This is comparable to levels in the UK, with the BBC’s fee set at a monthly equivalent of EUR 15.25, and below the level in Germany at EUR 18.36. The financing model via ORF-levies will help stabilise revenues in the long term, as this eliminates previous risks that arose due to the deregistration of users and the associated loss of revenues. Another important aspect of the ORF-levy is that it does not include value added tax (VAT), in contrast to the programme fee. This means that ORF can no longer offset payable VAT with VAT collected on programme fees. However, the amended ORF-G contains provisions that ensure that ORF is compensated for this financial loss, subject to the fulfilment of certain conditions.

High strategic relevance. ORF and its programmes enjoy a high level of coverage and trust in Austria. Approximately 95% of Austrians (14+) use ORF programmes at least occasionally, and surveys confirm that Austrians trust ORF the most among all Austrian media. The ORF’s programmes enjoy consistently strong market shares in Austria. ORF also fulfils the purpose of representing regional interests for the federal states through regional studios that operate their own radio channels and contribute to nationwide programmes.

ORF fulfils a unique role in the TV and radio market in Austria. It does not operate on a profit-maximising basis and competes with private and other German-language public broadcasters such as ARD/ZDF. Specifications of § 4 ORF-G ensure that ORF’s programmes distinguish themselves from purely commercial ones, e.g. by providing cultural content and comprehensive informational services for the general public on all important political, social, economic, cultural and sporting issues.

Market leadership, high levels of trust, national representation for federal states, and established production and distribution structures make substitutability of ORF very difficult, and the continued existence and sufficient financial means of ORF are thus of high public interest. Scope deems the willingness to provide direct financial assistance in exceptional circumstances as ‘medium’, and, similarly, assesses a hypothetical default as having negative reputational consequences for the federal government which in turn increases the likelihood of support if ever needed, supporting the rating at AA-.

Low-risk business and financial risk profiles. Finally, the ratings at AA- consider Scope’s assessment of the ORF’s business and financial risk profiles. Scope’s neutral assessment of the business and financial risk profiles is unchanged vis-à-vis the previous review and do not further change the rating derived under the top-down approach.

ORF's business profile benefits from its dominant position as market leader in TV and radio broadcasting, a growing presence of online offerings, a high reputation and adequate profitability and earnings, which are secured by the ORF-levy. Moderate risks exist due to declining advertisement revenues and two ambitious and overlapping efficiency programmes in response to revenue pressures on ORF-levies expected for 2027-29 due to recent legislation. In addition, dynamically changing usage of media, especially among younger viewers, leads to a decreasing relevance of linear TV and radio channels.

Scope considers the risks to ORF's financial profile as low. ORF has a high equity ratio of over 20% and its conservative financial management results in moderate debt levels with long maturities, fixed-rate coupons and no foreign-currency risks. The ORF’s debt, EUR 180m issued in 2015/16, was taken on to partially fund the development at its site at Küniglberg. Furthermore, ORF has comfortable liquidity buffers and benefits from predictable operating cash flow through income from the ORF levy. At the same time, Scope sees moderate risks in the investment portfolio, which ORF maintains to cover pension provisions, which is subject to valuation changes.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the coming 12 to 18 months.

Upside scenarios for the ratings and Outlooks are (individually or collectively):

1. The Republic of Austria’s ratings and/or Outlooks are upgraded;
    
2. There are legislative changes leading to significantly stronger financial and/or operational linkages with the federal government;
    
3. The business and/or financial risk profile improve significantly.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. The Republic of Austria’s ratings and/or Outlooks are downgraded;
    
2. There are legislative changes leading to significantly weaker financial and/or operational linkages with the federal government;
    
3. The business and/or financial risk profile deteriorates significantly.

Qualitative Scorecards QS1 and QS2

Scope applies a ‘Top-Down’ approach (QS1) in assessing the creditworthiness of ORF, which takes the public sponsor’s rating (Republic of Austria: AA+/Stable) as the starting point and then adjusts it downwards, based on the assessment of i) Control and regular support; and ii) Likelihood of exceptional support (QS2). The analysis also includes a supplementary analysis of the entity’s business and financial risk profiles.

The adoption of the top-down approach (QS1) reflects a strong level of integration between ORF and its public sponsor resulting from: i) a ‘High’ integration assessment for Legal status, ii) a ‘Medium’ integration assessment regarding ORF’s Purpose & activities; and iii) a ‘High’ integration assessment on Financial interdependencies. Given the independent special ownership structure, Scope does not assess Shareholder structure in line with its methodology.

Scope assesses Control and regular support for ORF as ‘Medium’ (QS2) as a result of: i) ‘Medium’ government control over Strategic and operational decision making; ii) ‘Medium’ control over its Key personnel, governing & oversight bodies; and iii) ‘Medium’ Ordinary financial support.

Scope assesses the Likelihood of exceptional support at ‘Medium’ (QS2), reflecting: i) a ‘Medium’ assessment for Strategic importance for the public sponsor; ii) ‘Medium’ Substitution difficulty; and iii) ‘Medium’ assessment on the political and reputational Default implications in the event of a hypothetical default.

The assessments under QS1 and QS2 result in an indicative rating of AA- for ORF. A supplementary analysis of standalone business and financial risks does not lead to any adjustment of the indicative AA- rating.

The results were discussed and confirmed by a rating committee.

Environmental, Social and Governance (ESG) factors

Scope considers the following ESG factors in the rating analysis.

First, Scope's AA+ rating for the Republic of Austria, ORF’s public sponsor, includes an appraisal of ESG factors per Scope's ‘Sovereign Ratings’ methodology.

Governance factors are relevant to ORF's rating and are included in the assessment of integration with the Federal Government of Austria and in the assessment of ORF’s stand-alone profile. These factors are supported by the high quality of management and governance structures, and sound and conservative liquidity and financial management.

Social factors are included in the assessment of ORF's strategic relevance. Since ORF, as a public service broadcaster in Austria, emphasises content on the promotion of democracy, European identity, information, culture and sport, equal rights and equality, in comparison to purely commercial programmes by competitors, Scope assesses social aspects as relevant and positive for ORF’s ratings.

In the rating process, Scope also analyses ORF's environmental management, which did not play a direct role in this rating action, however. In its broadcasting programme, a special programme called ‘Mother Earth’ offers content on the topic of sustainability and thus raises awareness among users. ORF's own sustainability programme includes sustainability goals, such as climate neutrality by 2040 and a commitment to reduce greenhouse gas emissions by at least 55% by 2030 compared to 2015-levels. The ORF has already met its climate targets for 2030 in 2023. ORF site at Küniglberg was renovated or newly built according to high energy efficiency standards. In its annual sustainability reports, ORF comprehensively reports on sustainability indicators. Finally, ORF’s recently updated asset management of provisions held for pension liabilities includes a comprehensive ESG strategy to monitor and minimise the CO2 emissions of the invested portfolio.

Rating Committee
The main points discussed during the rating committee were: i) integration with the public sponsor, ii) control and regular support assessments, iii) likelihood of exceptional support, and iv) factors under the supplementary analysis and business and financial risk profiles.

Methodology
The methodology used for these Credit Ratings and/or Outlooks, (Government Related Entities Rating Methodology, 10 December 2024), is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain and the Rated Entity.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlooks and the principal grounds on which the Credit Ratings and/or Outlooks are based. Following that review, the Credit Ratings and/or Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlooks are UK-endorsed.
Lead analyst: Julian Zimmermann, Director
Person responsible for approval of the Credit Ratings: Alvise Lennkh-Yunus, Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings on 9 September 2022. The Credit Ratings/Outlooks were last updated on 10 May 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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