Post-Soviet Media Law & Policy Newsletter

    Veto of broadcasting bill. President Boris Yeltsin, on June 9, vetoed the law on TV and radio broadcasting that has emerged from the Duma and the Federation Council. In a very brief letter to Duma speaker Ivan Rybkin accompanying the veto, Yeltsin stated that the law contradicts the constitution and does not conform to the law on mass information media and the federal law on communications. He did not provide details. It is not clear, in light of the current standoff between President and Parliament on no-confidence issues, whether an attempt to override the veto will take place.

    Veto of Parliamentary effort to block Ostankino’s privatization. President Yeltsin has vetoed the proposed federal law on the privatization of state television and radio broadcasting organizations, the law that would have blocked the conversion of Ostankino to ORT. This was reported by Russian Public TV [RPT] on June 9. In a document sent to the State Duma, the President said that the law “on special procedures for the privatization of state television and radio broadcasting organizations in the Russian Federation” dealt not with special privatization procedures, but only the possibility of the adoption of a federal law outlining the procedures.

    The vetoed law violated the law on the privatization of state and municipal enterprises, which outlines the privatization program, according to Yeltsin. It also, he claimed, violated the constitution, which guarantees freedom of economic activities and freedom of mass media. Yeltsin had previously harshly criticized the law as “hastily patched up, ill-thought-out juridically and at odds with common sense.”

    With these two vetoes, there is still pending Mikhail Poltoranin’s proposed law on state support of the mass media.  The Poltoranin law would have established a Foundation to provide financial assistance; as it is emerging, in a compromise fashion, from deliberations between the Duma and the Federation Council, the law will consist of technical support (favorable tax treatment, postal advantages, import exemptions, etc.).

    The only law that has survived the gauntlet of Duma, Federation Council and Presidential signature is the law regulating state-owned media, a law requiring that the state media carry certain official information and conduct themselves in specific ways at the time of elections. In addition to the vetoed laws on broadcasting and the privatization of Ostankino, there is a comprehensive advertising law pending in the Duma.

    According to reporter Yuri Bogomovolov, who covered the Duma’s deliberations on Ostankino's privatization, one Parliamentarian, Senator Kondratenko, said the following to the government representative, Igor Shabdurasulov: “Understand that this is only my personal view, but on Russian TV and in its leadership there are very few people of Russian origin.” Senator Titkin expressed his worries about ORT private shareholders having mostly Jewish surnames and patronymics. Bogomovolov also quoted another member, one Ivanchenko: “We should remember that, in accordance with the law on the status of deputies, any of us can have access to the air only on State TV. And private channels can act as they wish and forbid anybody from the air...”

    Ignatenko appointed Deputy Prime Minister. ITAR-TASS Director-General Vitaliy Ignatenko was appointed Deputy Russian Prime Minister on Mass Media Affairs June 1 by Russian President Boris Yeltsin. First Russian Deputy Prime Minister Anatoliy Chubays, who made the announcement, emphasized Ignatenko’s impeccable credentials, stating that all members of the Russian government held Ignatenko in the highest regard.

    Some observers have credited Prime Minister Chernomyrdin’s press success in the Chechnya hostage crisis—and the daring live-television negotiations—to Ignatenko’s professionalism in his new communications role.

    Ignatenko’s appointment produced an outpouring of praise in the Russian press from Chairman of the State Duma Committee for Information Policy and Communication Mikhail Poltoranin and Premier Viktor Chernomyrdin. Ignatenko stated in an ITAR-TASS dispatch that his priorities include the independence of the Russian media and nurturing “a new generation of journalists in the spirit of openness and glasnost.”

    Ignatenko seemed to be maintaining his post at the helm of ITAR-TASS along with his new position though whether he could do so, in the long term, has been in question.

    Aleksei Simonov, the head of the Glasnost Defence Foundation, is on the advisory board of the Post-Soviet Media Law and Policy Newsletter. He agreed to comment on the status and problems of the existing television and radio licensing commission, particularly in light of the pending legislation which would establish a more comprehensive licensing scheme.

    While I have been one of the vice-chairs of the Licensing Commission, I have been concerned with its legitimacy, a problem accentuated by the President’s veto of broadcasting legislation in early June. The foundation of the licensing commission is a ukase of the President that arose from a long-standing stalemate with the Duma over a new television licensing law. The President issued the decree establishing the Commission under his authority to construct a Federal Service for Radio and Television. On the surface, it was to cover the field that was not covered by any real legislation.

    In fact, the government was not happy with any draft of the law. There were, therefore, two poles that existed. One pole was the Licensing Commission organized by the decree. The other pole—a would-be pole—was the Commission as it was proposed in the legislation that has been in process for the last several years.

    In my view, the problem is that the current Licensing Commission, because of its ukase-birth, because it is appended to the Federal Service, is a regulated Commission. This is not an independent Licensing Commission with its authority flowing directly from law, constructed with a strong footing in the theory of an independent media. Under the ukase, licensing is a by-product or adjacent auxiliary. Under the model that would have been established by the law, the licensing is the main aspect of the activity. The rules of the current Commission, its budgeting, all have the shape of subordination to a Ministry. The other pole is the way of a free media, with only one instrument which regulates the existing situation through licensing.

    The current commission exists and is organized as a beautiful fence which shows the audience—the citizenry—its front side and conceals what goes on behind it. It has 27 members, some of whom are already dead souls who have never appeared. We have had only two official meetings.

    A typical problem is that, under the rules of the Commission, it has authority to determine licensing only in “competitive” situations, when there are more than one applicant for a particular license. Naturally, this leads to the potential for collusion and compromise. If competitors can get together, then the application becomes “non-competitive” and the license can be given by the Federal Service itself, without the review of the Licensing Commission.

    Our early experience has already demonstrated that there are few or no competitive situations, virtually erasing the function of the Commission. How does it happen that there is no competition? I am not an investigative department, but take the license for the 27th channel in St. Petersburg. If it had been officially published, maybe there would be ten applicants. Nonetheless, there were interested parties. Some of the applicants, it has been said, were approached by so-called “racket people” and told not to compete for the license. I can’t blame the licensing department of the Federal Service for this visit. But a Licensing Commission has an obligation to make the opportunity public and truly encourage applications. The only way an application can be deemed “noncompetitive,” in my view, is if there is an official notice that discloses extensive information about the opportunity and, after that, there is only one application.

    In the absence of a new law, much more attention must be given to the internal rules of the Licensing Commission and to its relationship to the licensing department of the Federal Service. For example, people should have an opportunity to apply to the Commission and not to the Department if they think they were not given a fair opportunity to compete for a license. There are other problems: the head of the licensing department, Igor Ivanov, is the secretary of the Commission.
 The Commission is organized on a strange basis; there is no regulation that says how the chief of the federal service should pick members. It is a prestigious group, but tainted by the fact that it was picked just by the chief of the Service, not the President.

    At its first meeting at the end of April, I pointed out that we needed a much clearer regulatory basis, even in terms of the internal rules of the Commission and its relationship to the Federal Service. If the relations between the Commission and the department are not set forth with any specificity, the subordination of the Commission and its uselessness will be accentuated.
 I have seen an internal draft through which the Federal Service wants to organize similar licensing commissions in the regions. They say they are trying to make it better. But it is like a return to the Soviet times. The main goals are described in a manner which virtually implies censorship and control over radio and television stations in the region. Such a commission is already organized in Novosbirsk, even if they are not formally authorized.

    Vitaliy Tretyakov held this press conference on May 26, 1995, to explain the seeming end of his newspaper. The first issue of NEZAVISIMAYA GAZETA appeared in December 1990. It immediately became (and remained for another year and a half or two years) extremely popular not only in Moscow but also in many other Russian cities.

    “Though unusual, the phenomenon is clear to all those who lived in Russia at that time the time of the euphoria of a democratic upswing and the rout of the Communist putsch in 1991.

    “Tretyakov’s biggest blunder was his conviction that his newspaper’s independence was more than anything else his own independence from the external world. He believes that the newspaper must say whatever its chief editor wants to say, and nothing else. If the chief editor does not like it, it doesn’t get printed. If someone disagrees, he or she is free to go elsewhere. The proudly independent newspaper was still independent from the State; it was, however, no longer independent. Good journalists began quitting and very few were left at the end.”

Yegor Bykovsky

Vitaliy Tretyakov:

    I will tell you very briefly about what we consider important to us. In my view, to those who know the current political and financial situation in Russia, the suspension or even possible closure of the newspaper, should not be a sensation. Among all the capitals of the world, Moscow has many more daily publications than Paris, Tokyo or New York (which is not, of course, the capital, but rather a mass media center of the United States). Here in Moscow we have at least 16 daily newspapers operating in the same area, in the same field. In my view, the situation is somewhat artificial and the reason that it has existed since 1991-1992 is that the competing publications are supported either by the State or structures related very closely with the State. Since, for a number of reasons, NEZAVISIMAYA GAZETA has never, since its establishment in 1990, been a government paper or been subsidized by anyone, directly or indirectly, initially, objectively speaking, all the financial possibilities for the publication of the paper with its own resources have long been exhausted, and we have lasted this long only thanks to certain circumstances and one-time-only support. Of course, today there are many newspapers in Moscow which are as critical of the present government, the presidential staff and other structures in many respects as NEZAVISIMAYA GAZETA is. Nevertheless, these other newspapers managed to reach accommodations with the authorities in ways which secure governmental support.

    I dare say that no daily in Moscow today offsets losses from publication with revenue from advertising or some other receipts of their own—I stress, of their own—to the paper budget. This is a normal market situation, and I think that one or two well-established major newspapers may yet collapse if the Government does not take them under its wing—and it is likely to do that because the old State as a structure is being revived today. Although I am discussing government at length, I have no claims to it, and I am not going to take government money to bail out NEZAVISIMAYA GAZETA because, in my view, this is the worst kind of dependence that any media organ can have.

    What I am saying is that the reason for the crisis in which NEZAVISIMAYA GAZETA has found itself is that it has turned out to be sort of a dissident newspaper for this particular State. On these conditions I don’t think it is necessary to prosecute a newspaper in order to make it stop publication. The only thing that is needed is to stop supporting the newspaper; this would be sufficient to force a newspaper to stop publication. On the other hand, the State could support other publications. I know many politicians, economists and businessmen and I can say that the welfare of a commercial structure— whether a bank, a company operating here in Moscow or elsewhere in Russia — hinges on the fact that the more dependent they are on the State, the less they need such publications as NEZAVISIMAYA GAZETA.

    What are the prospects? I still think that our chances of resuming publication on a normal basis are 50-50. This is a good chance, but still a chance— the toss of a coin, so to speak. I still think that the more realistic, though very difficult, way of achieving a positive result is the incorporation of an open joint stock company but, of course, we should rely not on small investors — there are many letters and phone calls of this kind, who can give 10,000, 100,000 or 500,000 rubles each — but on those who represent the middle class, regrettably still not very numerous in our society, on those who are not as strong financially as to be absolutely independent from the State, but not as poor as to be unable to take some action of their own. At present we are working on a plan for implementing that idea.

    I cannot say the paper has been closed as a result of political pressure or political repression. So, perhaps, this discussion is not to my advantage, but this is a fact. Your questions are welcome.

[Q]     Mr. Tretyakov, you mentioned the possibility of establishing a joint-stock company. Do you believe that all the donations will be voluntary or that those who donate money to you will expect something in return?

[A]     If a joint-stock company is established, if we feel that we have enough strength to manage this, naturally, no one will make any donations — this is something different — and we will try to make the maximum use of OGONYOK’s experience, particularly its experience in dealing with Logovaz to renew publication in new conditions, and we will also take into account all the benefits and all the shortcuts that the magazine obtained from that deal.
 I estimate that the $10 million that we named as a base amount is enough to continue publishing the newspaper until the end of 1996. We also want to begin implementing additional journalist professional projects, such as the publication of various supplements, including a military supplement and a number of others. Considering that we have 18 months before the elections of which NEZAVISIMAYA GAZETA, as a political newspaper, will be a part, this sum will allow us to break even by the end of 1996. Whether or not we will have a net profit in 1997, that’s a different story.

[Q]     MAYAK. Have you acquainted yourself with the economic model of such a newspaper as ZAVTRA? It is also an independent newspaper, but it still exists.

[A]     I think that ZAVTRA could be listed among Party publications. NEZAVISIMAYA GAZETA, for reasons of principle, is a non-party publication. I do not know anything about the newspaper ZAVTRA in this respect, but I do think that some party fund helps that newspaper, even if unofficially. For us this is unacceptable because we would no longer be an independent newspaper.

[Q]     I don’t quite understand why we are all here today. You have no claims or complaints. The newspaper has died a natural death. The government treats you well and everything is OK with freedom of the press. But when you launched your business, didn’t you understand that any large publishing house is financially dependent? It took you 4 1/2 years. Now you are going to set up a joint-stock company. Couldn’t you have done this before, or was it necessary to bring the whole thing to this point? Are we here just to hear that you are closing the newspaper because you have no funds? I think you should have taken care of that before.

[A]     I do not rule out that I am a terribly bad businessman, a very bad editor-in-chief and a very bad journalist. This is quite possible. Unfortunately, for reasons already stated, I cannot cite examples from the life of other publications, other newspapers that would allow us to make comparisons, to see how the end results were obtained and determined, to understand why, as you claim, such and such results ought to have been accomplished in the course of the more than four years we existed and why, in my personal view, it was a tremendous achievement that we managed to exist for this period of time without being subordinated to anybody. In fact, this is a tremendous accomplishment. At least I think so, although, of course, I could be wrong. Oleg Poptsov and Anatoly Lysenko who, as far as I know, are superiors in your outfit— who for me are good old acquaintances, colleagues and friends— could have explained to you the skill it takes to run an outfit such as the Russian Radio and Television Company. They could have explained to you where to look for money, how to get it, how realistic these efforts are. But do not forget that that is a government-owned company. I could have explained everything to you, but what you are saying is “you have done a poor job” and my answer is “I agree.”

[Q]     I am not saying that you did a poor job. I am saying that you failed to do elementary things.

[A]     I agree with you that these are elementary things. But then I have a question for you: since you are so familiar with these, as you say, elementary things, why did you not organize some powerful publishing group yourself? But I will repeat what I have already said. I do not rule out the possibility that Tretyakov is a bad businessman, a bad financier, a bad editor-in-chief and a bad journalist. It’s quite possible. But I complain that the Kremlin put pressure on me at times, although not directly, and it has achieved its goal. Under this mammoth totalitarian regime I succumbed and — I am just telling you everything as it is. You do not like it, but it’s the truth. Yes, it is quite ordinary and not sensational. No one was trying to ambush Tretyakov with a submachine gun to make him stop publication of NEZAVISIMAYA GAZETA. No such thing happened and so there is nothing to talk about. Instead I am talking about real problems. By the way, I have a question for those who ask such questions. I am ready to discuss this topic, not here, of course, but only if I see that the person who asks such a question knows how things stand in other newspapers. Name me a publishing group which has been set up by the editor-in-chief in the manner you said that has achieved commercial success. There is only one thing that I want you to take into account. I want to be sure that you know where the money comes from—this commercial success or from somewhere else. I know that, but — that’s not the subject matter of our conversation..

[Q]     I want to ask you a specific question concerning the publication. Do you believe such forces exist in Russia? And then, if there is a foreign buyer for a significant portion of your shares, will you be ready to cooperate with such a buyer and, if so, how do you envision that structure?

[A]     This is a complicated question, a technical one. My contacts are with the managers or owners of the biggest Moscow banks, who are the potentially richest partners in such negotiations. I know almost all of them, and my contacts with them show that the variant of 40 percent, that is, anything short of a majority of shares, has never even been considered by them. Theoretically, yes. If there were such a person or a legal entity, this could be discussed. But I do not know if such a person can be found in Moscow although such a person must exist. I think he should be a representative not of the financial upper crust, but of the middle class. You see, those in the big league are too involved with the State and always demand that the newspaper not irritate the State, in any case not irritate certain government officials.

    USAID has announced a competition to find a Management Group to administer a $6 to $8 million media program for Central and Eastern Europe. The program follows the $10 million Russian-American Media Partnership Program launched earlier this year, a grant awarded to Internews as the prime contractor, and the Russian-American Press and Information Center.

    USAID’s model is based on the premise that “it is in the U.S. national interest—and the interest of the cause of world freedom and peace—to support the development of thriving independent media everywhere.”
 The RFA recognizes that the problem of encouraging an independent media has changed greatly. “At this critical moment in history, the progress achieved by media in the [region] is threatened by a troubling loss of momentum. There are gratifying success stories...[b]ut far greater numbers of independent media outlets have failed in the inhospitable new economic environment.”

    According to the USAID document, “even where the press has achieved political freedom, it too often languishes in a state of economic dependence and vulnerability.” The most pressing need, the document states, “is to help media entities develop the market strength they need to become and remain self-sufficient.”

    The USAID, through ENI, its Bureau for Europe and New Independent States, proposes a specific set of priorities, or more charmingly, “a list of ingredients” that might vary from country to country. There are six suggested activities: strengthening independent news agencies, improving alternative newspaper distribution, fostering cooperative broadcast efforts, sharpening media law reform and enhancing professional associations and university journalism education.

    The media law reform, association development and journalism education aspects are dubbed “top-down” projects, while the remaining efforts are characterized as bottom-up.

    The “vehicles” to accomplish this would include funding resident advisors, augmenting existing media centers, holding management workshops, establishing “practical projects,” and creating a fund pool for certain equipment purchases.

    For the purposes of obtaining assistance under the USAID program, media must be non-governmental. Media entities that receive a government subsidy are said not to be eligible, although staff members from a broad array of media can attend workshops and other similar projects.

    The grant occurs just at the time the International Media Fund is going out of business, suggesting that USAID is creating a new umbrella for media-related assistance in the Region. Indeed, one of the functions of the winning Management Group, together with USAID, is to review existing programs supported, in part, through the International Media Fund and determine whether such assistance should continue.

    Under the grant guidelines, the function of the Management Group is to decide, with USAID, on which practical media-assistance projects to fund, to recruit people to serve as resident advisors and to hold workshops in the Region and to make recommendations on levels of continuing support for media centers and journalism programs.

    In a budget clarification to the funding application, USAID said that each proposal should contain a Fiscal Year 1995 program for $1.615 million, broken down as follows: Albania $100,000; Croatia $100,000; Hungary $300,000; Lithuania $15,000; Slovakia $500,000; Romania $600,000. USAID offices in Poland, Bulgaria, Bosnia and Macedonia may later choose to participate.

    As a proposal for a cooperative agreement, the RFA calls for an arrangement between the United States and the Management Group that provides “for significant involvement in the design and implementation of the Program, both by USAID/Washington...and the respective in-country offices of the USAID Representatives.”

    USAID will have to approve of key personnel, including the program director, assistant director and resident advisors whose tours exceed nine months.

    A full copy of the application can be obtained by a fax request to Steve Bouser at 202-647-9367. Under the schedule, all applications must be submitted by August 1, 1995.

    According to BUSINESS EASTERN EUROPE, television advertising in Ukraine is still in its infancy; rates are relatively low, but presentation is poor. A 30-second spot costs as little as $16 on regional stations and up to $1,750 on national TV, according to Alla Vyrichek, media director of Provid Advertising, a leading Ukrainian agency. (Moscow rates average around $20,000 per 30 seconds of prime-time viewing.)

    Because Russia’s Ostankino, the most watched channel in Ukraine, recently banned all advertising, prices on Ukrainian State TV have been driven up by 20% over the past two months. UT-1, UT-2 and UT-3, which divide time on two stations, are nationwide channels carrying advertisements. Youth-oriented UT-3 airs in the evenings; it carries CNN and other Western shows dubbed in Ukrainian, and is the most popular national channel for advertising. Perekhid Media Enterprises (PME), a TV advertising sales firm and American-British-Ukrainian joint venture, has the rights to most UT-3 slots.

    Individual channels have their own advertising sales departments, which account for about 70% of airtime sold. But slots are often not guaranteed even after payment, and scheduling problems are a headache for advertisers. Popular sales organisations are UkrTeleradioreklama and the Tet-a-Tet advertising department, which also sells time on other channels. TV production studios, such as SIT-TV, Megapol and Forum, buy airtime and also sell advertising space.

    For the time being, most advertisements remain Western or, more rarely, Russian versions that have been “adapted” (basically dubbed) for the Ukrainian audience. Consumer goods and electronics firms are the biggest spenders, and major Western advertisers include Stimorol (Denmark), Ferraro (Italy), Unilever (UK/Netherlands) and Sony (Japan). But no company budgets more than $1 million for advertising in Ukraine.

    Major Western advertising agencies have yet to move in to fill the gap. BBDO Worldwide (USA) has done some programming from Moscow and Leo Burnett (USA) is opening an office in Kiev. Some Ukrainian firms, especially banks, have had professional-quality advertisements produced by local firms such as Consulting Ukraine.

    By law, all TV advertising must be in the Ukrainian language. Enforcement is patchy, however, and advertisements run on local east Ukrainian and Kiev channels, such as Tet-a-Tet (a popular Kiev channel which airs pirated movies often just released in the West), are usually in Russian.

    Firms can reach a wider audience by advertising in Ukrainian on State TV; indeed, in stark contrast to Belarus, where Russian looks likely to remain the dominant language, companies will increasingly need to pitch products in Ukrainian. The language is spoken in 92% of households in western Ukraine and 70% in central Ukraine, according to a market research report by PME.

    Even in largely Russian-speaking eastern Ukraine, the Ukrainian language seems to be slowly catching on, at least in some fields. The Ukrainian version of Apple computers far outsells Russian programs in the east, according to Steve Minsky, director of CDV Apple Computer IMC, an Apple Computer (USA) distributor.

TV Advertising Costs in Ukraine