Greece back in crisis mode on state TV shutdown, downgrade

Wednesday 12 June 2013 18.10
ERT closure and stock exchange downgrade sends Greece down crisis path once more
ERT closure and stock exchange downgrade sends Greece down crisis path once more

Greece's government faced an internal revolt and public outrage today over the sudden closure of state broadcaster ERT.

This came just hours after the humiliation of seeing its bourse downgraded to emerging market status.

The setbacks, coupled with the derailing of a troubled privatisation programme, reversed a rise in investor confidence that had prompted Prime Minister Antonis Samaras to say the risk of a "Grexit" from the euro was dead and a "Greekovery" was under way.

Yields on Greece's 10-year benchmark bond crept back above 10% after Athens failed to sell state gas firm DEPA on Monday, putting it at risk of missing bailout targets.

The stock market traded at two month lows after Greece became the first developed nation ever to be lowered to emerging market status by equity index provider MSCI.

Samaras's government declined comment on the market reclassification as it tried to fend off a growing backlash against ERT's dramatic closure that prompted outrage from journalists, unions and leaders across the political spectrum.

The public broadcaster was yanked off air just hours after the shutdown was announced in what the government said was a temporary measure to staunch an "incredible waste" of taxpayers' money prior to its relaunch as a slimmed-down station.

Labour unions called a 24-hour national work stoppage for tomorrow and journalists went on an open-ended strike, forcing a news blackout on privately owned television and newspapers.

Some ERT journalists occupied the broadcaster's building in defiance of government orders and broadcasted over the Internet, showing sombre newscasters deploring the shutdown and replaying images of thousands gathered outside to protest.

In Athens, the ERT crisis overshadowed MSCI's reclassification of the country, whose bourse it said had not met the developed market criteria for size for two years. But brokers said the move could trigger inflows to the exchange.

Analysts said the outcry over the state broadcaster posed a more immediate threat to the government, even though ERT's three statewide channels have a combined audience share of barely 13%. About 2,000 of its 2,600 employees are non-journalists.

The government promised to relaunch ERT within weeks, saying it was taken off air so suddenly only due to fears that workers would damage state equipment.

"Some people are saying that what you are doing is outrageous," Samaras said. "It's our duty to stop what has been happening so far, stop hiding our problems and finally start dealing with them".

A senior government official said Athens was under pressure to show visiting EU and IMF inspectors that it had a plan to fire 2,000 state workers as required under its bailout, and the ERT shutdown was the only option available to meet the target.

The European Commission said it did not seek ERT's closure under the bailout but did not question the decision either. France's Socialist government voiced outright condemnation, calling it "very worrying and regrettable".