Post-Soviet Media Law & Policy Newsletter
Issue 20 Benjamin
N. Cardozo School of Law July 27, 1995
Advertising on ORT Resumes; Kukly Puppets Attacked
As Pre-Election Jockeying for Control of Media
Unfolds
These are mildly convulsive and restless days in
Moscow, the independence of the Russian press bumping up against the December
parliamentary elections. Most of the world’s attention focused on
a tacky, rather old-fashioned criminal action against a satirical television
puppet show on NTV, which had mocked President Boris Yeltsin and others
in his entourage.
We’ll discuss the Kukly case, but that was not necessarily
the most important recent development in the relationship between government
and the press. This month, there was debate and action on renewed
subsidies for the press, particularly the local press. The Duma debates
on the subsidies are treated inside this issue. Subsidies sounded good
to many of the dying papers, but others attacked fresh support as yet another
method of strengthening government influence over journalism.
Fear of Firing
Paranoia, fear that the government might show its power
by throwing some of the existing press mandarins to the wolves, resulted
in Parliamentary debate and action. So worried was the Duma, that
on July 21 it called on President Boris Yeltsin not to overhaul the leadership
of the Russian media before December legislative elections.
The resolution, which does not specifically name those
thought to be threatened, was adopted by 242 deputies, according to ITAR-TASS,
adding that one legislator was opposed.
Mikhail Poltoranin, a proponent of the resolution (Poltoranin
had earlier joined the no-confidence vote in Yeltsin) said the media figures
to be protected included Oleg Poptsov, head of RTR, those at ITAR-TASS
and another news agency RIA-Novosti, and the government newspaper Rossiiskaya
Gazeta.
In reporting the story, ITAR-TASS pointed out that Yeltsin
in mid-July fired the managing editor at Rossiiskaya Gazeta, Natalia Polejayeva,
who was heavily criticized in press circles for an alleged lack of ethics.
Replacing her was the former managing editor at the daily Robochaya Tribuna,
Anatoly Yurkov.
Poptsov’s tenure has been under continuous question
since his presentation of political news events, especially following Chechnya,
has been said to displeased the government. Earlier this year, as PSMLPN
reported, some within the government had prepared termination papers, but
Poptsov was fiercely backed at the time by fellow journalists.
ORT, the Elections and Advertising
In a remarkable, witty and acerbic story in the New
York Times, July 26, 1995, Alessandra Stanley reported that Sergei Lisovsky,
head of Premier SV, a 34 year-old entertainment mogul, nightclub owner,
had been chosen to head ORT’s advertising division.
The article was important because of its probing suggestions
about Lisovsky, who would receive a salary and a percentage of advertising
revenue. Lisovsky, according to Stanley, “travels in a two-jeep caravan
with six armed bodyguards cradling rifles.” He was questioned after
the assassination of Vladislav Listyev, the man who had suspended advertising
on ORT in the first place.
But the article also quoted Boris Beresovsky, the deputy
chair of ORT and Sergei Blagovolin, the general director of ORT named after
Listyev was killed concerning the role of television in the upcoming elections.
Beresovsky said of the bankers and industrialists who
had taken effective control of ORT: “We have a so-called club of
bankers, and we proposed to cooperate in the management of the mass media.”
ORT would play “a dominating role in the coming election.” According
to Ms Stanley, he said that “he and his partners did not plan to allow
the ultra-nationalist Vladimir Zhirinovsky the same access to the airwaves
he wielded with such success in the 1993 elections.”
“We can’t be restrained against an aggressive power;
we too have to be aggressive.”
Blaogovolin hinted that ORT might ban all paid political
advertising, though small amounts of free time might be given to political
parties. It was Zhirinovksy’s mastery of the equal time and paid
time opportunities that some felt gave him a broad electoral return.
Alexei Pushkov, ORT”s director of public and international
relations, had announced on July 21, 1995, that ORT would resume advertising
on August 1 with “a streamlined system.” No more than two out of
every 15 minutes of program time would be allowed for commercials, and
“preferences would be given for Russian-produced ads.” According
to Mr. Blagovolin, the streamlined system will use, primarily, Premier
SV, Mr. Lisovsky’s company.
Kukly “Ban” and Other Follies
Let’s turn to Kukly. The show, a knockoff of Britain’s
Spitting Image, featured a puppet image of the President as a homeless
drunk, wondering why his mother had bothered to bring him into this world,
and in another segment as a beggar woman on the subway, cradling a baby
in her arms. The baby was said to be presidential security chief Gen. Alexander
Korzhakov.
The prosecutor general’s office, in a statement, accused
the show of “conscious and public humiliation of [government officials’]
honor and dignity, expressed in an indecent way.” Alexei Ilyushenko,
the head of the office, declined further comment.
Under Article 131 of the Russian criminal code, such
an offense is punishable by up to two years of “corrective labor.” Igor
Malashenko, the suave head of NTV, called the charge “an attempt to scare
off the mass media on the eve of the election campaign.” He considered
the action part of a plan “to frighten us and keep us under control.”
In a press conference on July 18, Malashenko coupled
the criminal action to a notification he received that the an investigation
had been opened into an interview that NTV ran in June with Chechen guerrilla
leader, Shamil Basayev, the commander of the raiding party that seized
more than 1,000 hostages in Budennovsk. Malashenko stated, according
to the Christian Science Monitor, that the prosecutor general’s office
demanded from the channel a copy of the tape of the interview and a list
of all NTV employees involved in conducting and broadcasting the story.
Malashenko also said the charges were “a revenge against
our coverage of the Chechen campaign which did not go down very well with
some government officials.”
At his press conference, which was raucously amusing,
with puppets applauding the speakers, Malashenko also said “One of my acquaintances
expressed the view that the bringing of the case by the criminal procuracy
was really a subtle move by Mr Ilyushenko [the prosecutor-general] with
just one aim in mind -to achieve the appearance of his own likeness on
the “Kukly” program. But this hypothesis is clearly too fantastical.”
The Financial Times suggested that “the incident reveals
a media and a public which have drawn very far away from the country’s
political leadership and which can barely muster even formal respect, let
alone the former servility of the Soviet press. Russians everywhere dismiss
President Boris Yeltsin as a has-been and an embarrassment, often with
a flick of the finger on the throat to denote heavy drinking.
“It is a tone which the daily Moscow press, liberal
or conservative, increasingly echoes. The nationalist Sovyetskaya Rossiya,
for example, was happy to echo NTV’s accusation that the charges against
the station were part of a general effort to cow the press, and to add
its own estimation of the Yeltsin administration as corrupt ‘bandits’.”
There is apparently only one other reported case under
Section 131: General Pavel Grachev, the defense minister, sued Moskovsky
Komsomolets for alleging his corrupt behavior. The case was brought
after Dmitri Kholodov, one of the paper’s reporters, was murdered, apparently
for investigating corruption in the military.
Yeltsin Photomontage
If attacks on puppets and the appointment of a fox to
guard the advertising chickens were not enough, July also saw the great
controversy over the accuracy of a photo showing Boris Yeltsin recovering.
On July 7 the Kremlin press office released a photo which allegedly showed
Yeltsin working in his room at Moscow’s Central Clinical Hospital (where
he was recovering from a heart condition problem). He
was wearing an elegant tennis shirt, seated at a desk, and smartly addressing
a bank of four telephones.
Some journalistic wag noticed, however, that an almost
exact representation of Yeltsin had been released last April 3 presumably
from a vacation spot in Kislovodsk. There was much huffing and puffing,
and there has been neither confirmation that the photo op was “real” or
that the press agency had been up to old-style Soviet games.
According to the Moscow Times, with Yeltsin himself
released from the hospital, the misrepresented photograph “seems
to have been more sloppy and arrogant than Machiavellian, but there will
be a price to pay. The president’s press office has lost substantial
credibility. Getting it back will take some doing.”
More Debate on State Support and Subsidy
of the Mass Media
In June and July, the long-languishing proposals for
state support of the mass media seemed to advance, at least somewhat. Mikhail
Poltoranin had backed away from the most controversial aspect of his measure,
namely the National Fund for Mass Media Development, which was perceived
as too massive and powerful a potential force. President Yeltsin made it
known that some form of state support would obtain his signature. And in
mid-July, a new measure, one that would provide state support for the regional
press, started galloping through the Duma. Here we present some of the
accounts and analyses of the measures that have appeared, primarily in
the MOSCOW NEWS.
1. For example, on June 9, 1995 Tatyana Skorobogatko
summarized the current status of the main proposals in an article in the
MOSCOW NEWS, here excerpted and slightly edited:
Over the last half year the State Duma twice proposed
a law on state support of the mass media and book publishing, only to have
it be declined by the Federation Council. In November, having overcome
the senate veto, the Duma had to face a potential presidential veto. Late
in May they agreed to some compromises and sent a representative to the
inter-chamber conciliatory commission. However, the conciliatory process
stands very little chance of being successful.
The first variation of the law met with sharp criticism,
not only from senators and the President, but also from many journalists.
The legislators’ intention to set up a national fund for mass media development
also sparked protests. The possibility of creating yet another monstrous
structure resembling Poltoranin’s Federal Information Center, claiming
powers over all the information space of the country, was frightening.
The current version of the law doesn’t even mention the national fund.
Having sacrificed this idea, those who developed the draft law hoped to
save two others: that introducing the registration of print industry enterprises
as joint-stock companies, and that setting up a soft currency, customs
credit and tax regimes for the mass media.
There were some grounds for hope. While criticizing
the first variant of the law, the President, the Federation Council and
the Russian Federation Committee for the Press stressed the anti-democratic
character of the national fund. “I cannot permit any infringement on the
freedom of speech and the press,” reasoned the President. “However, the
mechanism giving considerable privileges to the press, which was incidentally
worked out jointly by the government and the Journalists’ Union, merely
camouflages the obvious: they count on strict control over publications
with the help of the so-called National Fund for Mass Media Development.”
Such was the opinion of the Committee on the Press.
Meanwhile, the necessity of granting “considerable privileges
to the press” didn’t arouse any objections from either side. From time
to time governmental circles generated rumors about giving support to papers
that were experiencing difficulties. It was not until several months later,
when the stumbling block (i.e. the national fund) was removed from the
agenda that it became clear that there were many serious problems with
other provisions of the law. The government came to a conclusion that it
was impossible to give the press any tax privileges at present, since it
would strain the budget, and the manner of the registration of printing
industry enterprises as joint-stock companies as provided in the law contradicts
the state program of privatization.
Certainly, the law provoked some doubts in the Duma.
Thus, Mikhail Zadornov, chairman of the budgetary committee (and Igor Yakovenko’s
colleague in the Yabloko faction), objected to tax privileges for the mass
media, fearing they could be abused. Yakovenko managed to prove that, according
to the law, organizations as such would not be exempt from the taxes but
rather publishing activities. Thus, an organization selling oil could not
set up a mass media “front.” But he failed to persuade the senators who
feared that the law could be abused, and the Federation Council didn’t
bother to invite any representatives of the relevant Duma committee to
the session.
It seems as though the very idea of rational, civilized
aid to the mass media will be vetoed. Vitaly Zelenkin, chairman of the
Federation Council committee for economic reform, insists on deleting from
the law the chapter on registration of print industry enterprises as joint-stock
companies. He believes that there should be a single law regulating the
process of privatization in the country, containing specifications for
different branches. In general, according to Vitaly Zelenkin, state support
is due only to state-owned mass media; if they became joint-stock companies,
the state should have nothing to do with them.
Nikolai Gonchar, head of the senate budgetary committee,
in his turn, holds that privileges to the mass media should be granted
on certain grounds, taking into account certain circumstances. Moreover,
he stresses that he is not politically motivated. However, it is not clear
how, on the eve of elections, the absence of political motives can be ensured.
And what will be the difference between these well-thought-out
privileges and the state subsidies we remember so well?
There is hardly a single politician in Russia who has
failed to underline his or her principled and selfless adherence to the
freedom of speech and to an independent press. But those newspapers that
could survive with the help of a law, but without favours from the authorities,
are obviously inimical to our Russian notion of freedom and independence.
2. One factor building support for the measure
was the closing of many newspapers, especially NEZAVISIMA GAZETA. On June
20, Tamara Ivanova, who generally covers the media, wrote the following
article for ITAR-TASS, here slightly edited,in which Poltoranin makes the
case for his approach.
The Russian market for media is about to collapse. As
many as 1,520 publications have recently been closed because of the shortage
of funds, Mikhail Poltoranin, chairman of the State Duma Committee for
Information Policy and Communications, told a news conference. This figure
is probably incomplete, Poltoranin suggested, as the survey refers to only
72 percent of Russia’s territory.
Laws that could prevent the disruption of the Russian
information zone are constantly blocked by branches of power, Poltoranin
said. The draft law on state support for the media and book printing was
turned down by the Federation Council once again. Meanwhile, tax and customs
privileges envisaged by the draft law would meet the interests of the press
and could economically ensure the political independence of the media.
Igor Yakovenko, deputy chairman of the Duma Committee,
believes that the government authorities probably have their own concept
of state information policy. He did not rule out that a sort of a “ministry
of truth” might emerge from it framework. Vsevolod Bogdanov, the chairman
of the Russian Union of Journalists, recalled the recent attempt to advance
a draft law to establish a state commission for periodicals of social importance.
Yakovenko said the Duma committee intends to exert every
effort to promote the adoption of the draft law on state support for the
media. He said that in order to achieve this, it may be necessary to drop
from the law some important provisions regarding tax privileges. These
provisions, however, may be registered in the tax code being drafted.
Poltoranin pins hopes for a constructive solution to
the problem on plans of forming a working group that were discussed during
a meeting with Deputy Premier Vitaly Ignatenko. The purpose of this working
group, which is to include representatives of all branches of power, is
jointly to work out a concept of state information policy and matters of
financing the media.
3. Support for the Regional Press. Sergei Chugaev
wrote on July 14 on the progress of legislation which would target subsidies
for the regional press and the concern that such laws would make the regional
press fully dependent on local authorities and the Duma.
The Duma committee for information policy and communication
has not given up on the idea of improving the system of state support for
the domestic mass media. Last time, as many people remember, such an attempt
(when the committee leaders tried to control the distribution of state
subsidies to newspapers and magazines) ended with the absolute majority
of central periodicals being deprived of any state support. But now the
regional press drew the attention of the committee headed by Deputy Poltoranin
who withdrew the other day from the faction of Russia’s Choice. Now it
is the turn of the regional press.
In the next few days the State Duma must examine in
the first reading the draft law “On Economic Support of the District (City)
Newspapers,” prepared under the guidance of Poltoranin.
It would be more correct to call this document a draft
law on the revival of the system of state subsidies to the mass media,
since it says nothing about any economic measures of support for the press
(as, for instance, the granting to newspapers and magazines of tax advantages
or the encouragement of investments for the development of their material
base). The draft law deals only with the allocation of funds from the federal
budget to local publications to cover part of the expenses of printing
services and paper. In other words, the Duma committee for information
policy and communication is trying to renew the idea of state subsidies
to the press, which was buried by the Duma (largely thanks to the efforts
of the same Poltoranin). However, to most editors and journalists of the
Russian district papers, who already have one foot in the grave, it does
not matter in what form aid comes from the state. Therefore, if legislators
have decided to revive the experience of the past year, two questions inevitably
arise: who will distribute subsidies and who will receive them (and for
what purpose?)
Naturally, the draft law does not envisage the distribution
of budget money to all the city and district newspapers in need of funds.
We simply don’t have enough money for all. Subsidies will be distributed
to those publications, as the authors of the draft suggest, that will be
included in a federal register of district (city) newspapers.
The idea of creating such a register is the essence
of the legislative initiative. The authors of the draft suggest that the
right to decide which papers will be included in the register and which
will be left without support should be granted to “conciliatory commissions
of subjects of the Russian Federation,” which will be formed of representatives
from local branches of the executive and legislative powers, as well as
from the Union of Journalists of Russia.
It is easy to imagine what passions will flare in the
regions, what intrigues will be carried out, what struggles will be waged
for the right to get on that register which will guarantee a comfortable
and untroubled existence. It is also obvious which publications will be
so favored. It is most likely that the first candidates for membership
in this select group will be the “pocket” publications obedient to the
authorities. But truly independent papers, quite a number of which have
appeared of late in the Russian provinces, will be left to their own resources.
As always, when it concerns the distribution of budget subsidies, preference
will be given to those publications which are able to prove that they are
in the most disastrous situation, through no fault of their own, of course.
As a result, the worst papers will be able to continue their existence,
and the best will find themselves in a still more complicated situation.
According to government experts who studied the draft
law, its realization will inevitably lead to another rise in the price
of paper and printing services, which will deal a blow to the entire Russian
sphere of newspaper-magazine production and book publishing. However, it
appears that the authors of the draft law are not really concerned about
the economic consequences. The likely political results are much more important.
In a cover note to the draft law Poltoranin emphasizes
that the document submitted to the Duma is included in the packet of legislative
acts designed to regulate relations in the sphere of the mass media. In
fact, it is quite logical that on the eve of elections the first draft
law from this packet submitted for the consideration of deputies is devoted
to the regional press. Today, an absolute majority of politicians seems
to realize that at the forthcoming elections the greatest advantage will
be gained by anyone who manages to take the regional press and cable television
under his control. The best proof of this may be the stable (compared with
central publications) circulation of district and city newspapers. Regarding
the draft law from this viewpoint, its underlying political reason is obvious:
having failed in an attempt to take control of the central press, the Duma
committee for information policy and communication suggests that the regional
authorities conclude an alliance in order to form a controllable pool of
regional press, if not by destroying then by seriously weakening the independent
local mass media.
The permanent striving of the Duma committee for information
policy to use the economic problems of the Russian mass media to achieve
its own political aims has already cost many publications a pretty penny.
But while the country has no clear-cut state conception of economic support
to the press, such maneuvers will inevitably continue.
4. In the last issue, we reproduced Mr. Tretyakov’s
comments on the closing of NEZAVISIMAYA GAZETA. On June 21, 1995, he announced
the paper’s plans to establish a stock company called AO Publishing Group
Nezavisimaya and Others. Its organizing committee includes Igor Malashenko,
Boris Grushin, Viktor Geraschchenko and Oleg Yerfremov. Lev Veinberg,
who is General Counsel, is also vice-chair of the Committee.
Hungary Finally to Pass Media Law?
New Prospects for Commercial Broadcasting Analyzed
It’s the eve—almost everyone believes—that Hungary
will pass its first post-soviet media law. The draft law has been
a matter of endless debate, resulting in a proposed statute of consummate
complexity, as elaborate in its institutional framework as the Hungarian
Parliament building is in its late-Hapsburgian architecture. Here,
we provide several insights, mostly drawn from Heti Vilaggazdasag, on the
debate and commercial implications of the new media world dawning in Budapest.
1. On July 1, according to a Reuters Textline
pickup from Heti Vilaggazdasag, Hungarian Television (MTV), TV lobbies
and the Culture Ministry agreed to a nine-point list of desirable amendments
to the Radio and TV bill now before Parliament.
The chief points are that (1) the successful private operator
taking over Channel 2 (TV2) would begin broadcasting not three months but
six months after being awarded the contract; (2) a month before this, Hungarian
Television would launch its new satellite channel; (3) regulations concerning
advertising on the satellite channel would be less onerous than on Channel
1 (TV1), e.g. advertising would be allowed for nine minutes per broadcasting
hour, and fewer types of advertising would be banned; (4) the planned 5%
increase in the compulsory quota for Hungarian films (planned to be 20%)
would not apply; (5) a broader definition of what counts as a Hungarian
film would apply.
2. A month earlier, June 3, Heti Vilaggazdasag
carried the following sstory on the future of advertising in Hungary.
One of the major questions for the advertising industry
in Hungary is whether growth can be expected, and if so what media are
likely to get most of the growth. Influencing the answer either way will
be the actual form of the Advertising Bill, if it actually reaches the
statute book. The advertising industry has grown exponentially since 1988:
in the latter year, turnover was 7bn forints. Billings have since then
grown by 10% above inflation, to 42bn forints last year. Optimists therefore
predict billings of 56bn forints this year, but realists question this.
Though the 80% of billings paid for by multinationals may continue to grow,
the domestically owned sector is hardly likely to follow suit. However,
the possibility of the ban on certain types of advertising being lifted
and of the Media Bill releasing more TV and radio advertising capacity
might just provide the necessary stimulus for growth. An advertising White
Paper has now been drafted and circulated for comment, and it provides
much greater degree of liberalisation than many had dared hope. This is
largely the result of the Treaty of Association with the EU, which enjoins
harmonisation on the lawmakers. Action of some sort is certainly necessary.
Over the last 18 months, the Competition Office has gone soft on advertisers
who disregard the long-standing ban on advertising alcoholic drinks, cigarettes
and medicaments. The Office feels that it can get nowhere with the law
as it stands. Thus it is not only posters which flaunt such ads, but also
state-run TV2, leading national daily Nepszabadsag and others such as Szines
RTV, Magyar Hirlap and Kurir. The White Paper proposes banning advertising
of tobacco products on TV and radio. Advertising in printed publications
and posters would be banned only if it promoted the habit of smoking, or
associated smoking with a positive lifestyle or children. Pictures of people
smoking would also be banned, as would pictures of well-known personalities.
Advertising of alcoholic drinks would also be much as in the EU, though
consideration is being given to maintaining the ban on the advertising
of spirits on radio and TV. A complete change proposed would be to lift
the ban on non-prescribed medicaments entirely. Justification for the changes
according to the White Paper is that the ban on advertising has not reduced
smoking, and advertising really promotes brands rather than smoking as
such. According to the Tobacco Federation, smoking increased continuously
to 1991, but has declined since then from 27bn cigarettes to 21.9bn p.a.
Nonetheless, the medical profession is throwing all its weight against
relaxing the ban on advertising, claiming that it serves to accustom the
young to the acceptability of the idea. However, the American trend could
be more relevant -there it is smoking which is banned, not the advertising.
In Hungary, smoking has not been banned even in hospitals. If the bans
are indeed lifted, it is predicted that advertising of tobacco, drinks
and medicaments could rise from the present 2bn forints to 12bn forints
p.a. As far as the Media Bill is concerned, the press fears that it will
lose ground to the electronic media, but outsiders consider that TV has
made such inroads because advertising time has been offered so cheaply,
being subsidised by the state. If state subsidies are withdrawn and truly
commercial TV stations are introduced, prices will have to rise. The other
side of the coin as far as press advertising is concerned is that, except
for business and computer magazines, there are few publications aimed at
specific sectors of the market that would attract advertisers.
SHARE OF MEDIA IN ADVERTISING EXPENDITURE IN 1994
| TV |
41.62% |
| Magazines |
17.45% |
| National Dailies |
19.18% |
| Provincial Dailies |
6.70% |
| Radio |
7.88% |
| Hoardings |
5.89% |
| Cinemas |
1.28% |
PRINCIPAL SPENDERS IN 1994 (in millions of forints):
| Unilever Hungary Kft |
2,048 |
| Procter & Gamble Kft |
1,430 |
| Henkel Budapest Kft |
1,028 |
| Postabank Rt |
721 |
3. Reuters Textline also picked up from Figyelo
in mid May an article on the prospects for commercial television, prospects
modified somewhat by the political agreement outlined above. Here’s
the text of the article:
The continued absence of a Media Act has produced an
interim situation in television and radio broadcasting in which a number
of unpredictable elements may change the future direction of the industry.
Main features of the present situation:
— There are two state-owned national TV channels, TV1 and TV2, which
are in effect monopolies. What happens to them will depend on the Media
Bill. Their programmes are broadcast by state-owned broadcasting company
Antenna Hungaria from 19 and 13 core transmitters and 91 and 75 relay stations
respectively. Good reception is available to 98.5% of the population. Antenna
is not an authority but a service company.
— Until the Media Bill is passed, there will only be two national channels.
These are supplemented by local stations, licences for which have been
issued in two rounds: in 1993, 147 stations were granted access to 104
radio and TV frequencies, and Antenna provides the broadcasting expertise
for 60% of these in various ways; in 1994, 75 further frequencies were
offered. So far 84 stations have been licensed, and seven radio stations
and 16 TV stations have begun planning their broadcasting systems.
— There is in principle room for a third ground-based TV channel (by international
agreement, Hungary is limited to three such channels). 16 sites are available
to transmit it, and given the necessary transmission equipment, 50-60%
of the population could be reached. However, before this could happen,
alternative options would have to be found for military and aviation systems
currently using the frequencies. Negotiations are now under way for the
frequencies to be vacated, but setting up a new air-defence system requires
billions of forints in investment. In addition, the third channel is sometimes
used to overcome poor reception of TV1 and TV2, and alternatives will also
have to be found for this function.
— The coverage of a third channel is important. If only 50% national coverage
is desired, three or more networks could be licensed on it.
— At present only one TV station, the pan-Hungarian Duna TV channel, is
broadcast by satellite. Because of the expense of western satellites, a
market has been perceived for a regional satellite providing services to
Hungary and neighbouring countries. The 50m-forint Magyar-Sat Kft, owned
50-50 by Antenna and Aircraft Industries of Israel, has been set up to
bring a 16-channel satellite into operation by 1998, as a twin of the Israeli
Amos satellite. Rentals will be well below the $ 4-6m per channel normal
in the west. Magyar-Sat has already received 16 letters of intent for the
16 channels, and the government recently guaranteed to rent four. Up to
1998, Magyar-Sat customers will be able to lease space on Amos.
— The Telecommunications Inspectorate feels that, long-term, the biggest
growth area will be cable services, not satellite broadcasting, because
of the plethora of other services the cables can provide.
— How many commercial stations can operate depends on the growth of broadcast
advertising. Contrary to the expectations of some, media experts think
that the potential advertising cake to be shared out is limited in size,
subject to economic fluctuations, and competition among the media is cutthroat.
In the Czech Republic, commercial station Nova has managed to attract a
large audience by providing good programmes, and has therefore been able
to up its advertising rates and still lure advertisers away from the state
channels. In Hungary, in contrast, advertisers have already felt the dampening
effect of the economic squeeze on demand.
— For commercial stations to function properly, credible audience ratings
need to be known, and Hungary is the only country so far in Central Eastern
Europe to have introduced the AGB audience-rating system. Gathering of
figures has already begun, and new commercial stations should have access
to them later this year.
— According to Gyorgy Such, marketing director of TV3, apart from Duna
TV and the HBO pay-TV channel three TV stations have audiences big enough
to attract advertising besides TV1 and TV2. They are A3, TV3 and Sziv TV.
The first two can be picked up without a decoder within 30-50 km of Budapest,
while Sziv dispatches its programme to regional stations in cassette form.
All three stations have AGB figures to back their advertising rates, but
there is no great rivalry between them as they serve different audiences:
A3 goes for the 4-17 year-olds, TV3 for the 18-34 year-olds and Sziv for
the older generation, according to Such. However, the three channels can
only be supplementary media compared with TV1 and TV2, because the latter
have a better cost-per-viewer ratio.
— Local stations are likely to survive only as long as more national commercial
channels are not available. TV3 for example would like to go national,
and thinks it could win 5-10% of total TV advertising. However, only one
or two such commercial channels could make a living alongside the two public-service
channels.
— Antenna is due to be privatised. At the end of the two-phase bidding,
the state will be left with a 25.01% stake. The broadcasting right for
TV1 and TV2 would then farmed out on a 15-year concession.