Post-Soviet Media Law & Policy Newsletter
Issue 27-28
Benjamin N. Cardozo School of Law March 31, 1996
Nova’s Success Spurs Attacks by Potential Competitors
1. CTK National News Wire, March 6, 1996:
Nova Television, Central Europe’s first nationwide
private television channel which in two years has gained a market share
of 68 percent, has, according to its director Vladimir Zelezny become the
object of an “unusually complicated conspiracy” in the last two months.
This “conspiracy” was “born on the soil of one important
company worth many tens of billion crowns,” Zelezny said yesterday. The
company decided to buy Nova because the television was “stepping on its
feet in a very unpleasant way,” he said, declining, however, to name it.
The unnamed company tried to achieve its aim by casting
doubt on the legal validity of Nova’s broadcasting, and strengthening the
importance of the holder of the broadcasting license, the CET 21 company,
in which it was allegedly trying to gain a majority. To this end it made
use of a former member of the Council for Radio and Television Broadcasting
and “one (present) employee,” who were to help mediate the deal.
The daily Pravo wrote recently that the Plzen group
Motoinvest together with the Skoda Plzen engineering giant helped put together
a group of Czech entrepreneurs who wanted to limit the American influence
on Nova Television.
Skoda Plzen spokesman Jaroslav Hudec and director of
Motoinvest Jan Dienstl, however, told CTK that their companies were not
trying to gain influence within Nova. Hudec said Skoda was not interested
in buying media and was merely a guarantor of the negotiations between
the CET 21 shareholders and those interested in buying CET 21’s share in
Nova.
Nova’s operator is the Czech Independent Television
Company (CNTS). Twelve percent of it is owned by the CET 21 company (Central
European Television for the 21st Century)—a group consisting of Zelezny,
sociologists Josef Alan and Fedor Gal, television directors Peter Krsak
and Vlastimil Venclik and psychologist Peter Huncik, which holds a 12-year
license to broadcast Nova. The Ceska sporitelna savings bank owns 22 percent,
while 66 percent is owned by the Central European Development Corporation—Central
European Media Enterprises (CEDC-CME). The control packet of shares is
owned by the Lauder family, Ronald Lauder being the chairman of CME.
CME and Ceska sporitelna each own 0.15 percent of CET
21.
A statement made at a recent plenary meeting of the
CET 21 company said that four members of CET 21 had begun to negotiate
with their two present partners on the sale of their shares in Nova’s operating
company CNTS but were “reacting entirely negatively to any sort of interest
from outside.” One of the members, however, had as yet not chosen the approach
of the others, the statement said.
Josef Alan told CTK on February 19 that Vladimir Zelezny
wanted a greater share in CET 21 and had proposed to buy some of the other
shareholders’ shares. The daily Pravo, citing an anonymous source, wrote
that Zelezny wanted to buy the shares with CME’s money on its behalf. Last
year Zelezny was made director of CME’s television group.
Zelezny, however, denied that he had made an offer for
the shares, saying “I didn’t offer anything to anybody.” He said, however,
that some CET 21 members had shown interest in selling their shares. The
law requires that they turn first to their co-shareholders.
The CET 21 plenary meeting on Friday distanced itself
from information provoked by speculations that there would be changes within
CET 21, and said it was considering taking sanctions against all members
violating statutes.
From the beginning Nova has been popular with audiences
but has been the target of much criticism, mostly from intellectuals. Its
news broadcasts and programs have been the source of frequent disputes,
which sometimes end in court.
The television is dominated by the controversial figure
of Zelezny, who has gained popularity from his regular audience talkback
program, “Call the Director,” and his frequent verbal disputes with head
of Czech Television Ivo Mathe.
Zelezny first appeared in the public eye in 1990, as
spokesman for the Civic Forum (OF) movement which was formed during the
toppling of communism and won the 1990 elections.
Later he became press spokesman for OH, OF’s successor,
and the pre-1992 Czech government.
2. CTK National News Wire, March 2, 1996:
The Czech Independent Television Company (CNTS)
has been managing the private Nova television station for two years and
yet has no license for television broadcasting, the daily Pravo has written.
However, Nova Television general director Vladimir Zelezny told CTK that
the holder of the license was not CNTS but the CET 21 company.
Pravo writes that the CNTS’ registration as a company
dealing with television broadcasting was against the law, adding that the
Council for Radio and Television Broadcasting knew that the law was violated
in this case a year ago and did not interfere in any way. A source from
a regional commercial court at which the company registered two years ago
told Pravo that the Council showed interest in Nova’s broadcasting a year
ago. He said that the company was registered with the license number 001/1993
issued by the Czech Council for Radio and Television Broadcasting.
However, the license was issued by the council to the
CET 21 company and the relevant law from 1991 clearly says that the license
cannot be transferred.
Another source told Pravo that the registration was
valid and can only be abolished by court. By this illegal transfer of the
license the Central European Media Enterprises (CET) which owns 66 percent
of shares in CNTS obtained control over Nova television, Pavo says.
CME’s majority owner is American businessman Ronald
Lauder and Zelezny has been sitting on its administrative council since
last year, the paper says.
Zelezny said a few days ago that he wants to buy shares
from some investors in CET.
Pravo says the Council for Radio and Television Broadcasting
is considering to intervene against CNTS on the basis of a legal analysis
which had been drafted on its requestion.
However, under the law the council should have filed
proceeding immediately after it learnt that CET 21 did not start broadcasting
within 36 days since its request.
“It is the CET 21 company which is the holder of the
Nova Television broadcasting license and not CNTS,” Zelezny told CTK today,
reacting to Pravo’s report.
He said CNTS only ensured professional needs for Nova.
“We have arranged ownership relations so that the holders
of the license are at the same time CNTS’s owners,” Zelezny said, adding
that this system was standard in many developed countries.
“This structure was recommended to us by the Council
for Radio and Television Broadcasting,” Zelezny said. Asked by CTK who
could be interested in discrediting Nova television Zelezny said:
“We know the source and the reason of the current media
campaign against Nova Television but we will provide concrete information
only at a press conference scheduled for Tuesday.” Six individuals and
two companies have shares in CET 21. Beside Josef Alan, Fedor Gal, Vlastimil
Venclik and others the Ceska sporitelna insurance company and the Bermuda-based
CME companies are stock-holders.
CET 21 is not only the holder of a 12-year old license
for the broadcasting of the most-watched television channel in the Czech
Republic but also owns about 20-per cent shares in the CNTS company.
CME with 66 percent is the CNTS major owner and a further
22 percent of shares are owned by the Ceska sporitelna saving bank.
3. The Financial Times had a comprehensive article, on January
15, 1996, on Central European Media Enterprises. The article stated that
CME “has stolen a march in eastern Europe on most of the world’s established
media giants.”
“Its strategy—based on early market entry, investment
alliances with local partners and the use of satellite technology to plug
gaps in its terrestrial network—is directed at trying to repeat the spectacular
breakthrough it achieved with Nova TV in the Czech Republic, already regarded
as one of the most successful launches in television history. It will also
be hoping to avoid the pitfalls and losses it has suffered in regional
television in Berlin where it has discovered a more local approach is necessary.”
[Its chief executive, Leonard] Fertig likens CME to
the infantry of the television industry in central Europe, fighting country
by country for market share, in contrast to the aerial strike forces of
the big media groups. ‘They take more of a high-tech approach with satellite
technology delivered to people that can afford dishes, cable and pay TV.
They are fighting the air war picking up single digit market share across
the whole of Europe. We are the infantry with teams of people on the ground.
We want as much of the TV advertising market as possible in each country.
‘Building local partnerships and local businesses takes
time and resources. Our rivals are too large to focus on individual small
countries, so they are overlooking them. They got excited for a short time
after the Berlin Wall came down. But they decided that the same effort
needed for 5m to 10m people in a single country could be spent on 1bn people.
They have focused on Asia instead.’
“In the meantime the CME infantry is setting up bases
from Berlin, Dresden and Leipzig to Bratislava, Kiev, Prague, Budapest,
Ljubljana and Bucharest. Each launch may initially appear chaotic, but
the CME footprint is growing, and Fertig is confident the group can emerge
as a powerful new player on the European media board.”
Hungary's Media Law: First Steps
The following is information on the implementation
of the Hungarian Media Law:
The Media Law approved by parliament late last year
came into effect on February 1.
The government were required to submit the founding
charters of the public trusts which will own the electronic media to parliament
by February 5. Separate public trusts will own Hungarian Television (MTV),
Duna TV and Hungarian Radio.
The current heads of MTV, Duna TV and Hungarian Radio
can only take routine operational decisions once the law is published.
This means that they cannot sell real estate or sign major or long-term
contracts.
The seven-member National Radio and Television Board
(ORTT) will be the highest broadcasting authority. Boards of trustees to
supervise the three public trusts should already be established. The boards
have invited applications for the positions of president of MTV, Duna TV
and Hungarian Radio and the applications will be evaluated by May 25.
MTV and Hungarian Radio will be converted into limited
companies after August 1 once asset valuation is completed.
By May 1, ORTT will invite bids for the frequency currently
used by Radio Danubius and a new frequency for a national commercial radio
channel. The bids will be evaluated by October 1. ORTT will invite bids
for the TV2 channel frequency and the frequency for a new national TV channel
by June 1 and a decision will be taken by November 1.
The new national commercial TV and radio channels may
start broadcasting at the start of 1997.
Local radio and TV stations allocated frequencies for
an unspecified period during the so-called moratorium on frequencies can
remain in operation until November 1, by which date ORTT will have invited
bids for these frequencies.
Bids for the frequencies currently used by Radio Bridge
and Radio Juventus, which were allocated frequencies before the moratorium
came into effect in 1990, will be invited by August 1.
The media law requires that parliament will have to
amend three existing laws and this year’s central budget by June.
In its Tuesday February 27 session, the Hungarian parliament
elected the president and six members of the National Radio and Television
Body (NRTB) Hungarian: Orszagos Radio es Televizio Testuelet, ORTT and
the eight-member boards of state-owned Hungarian Television, Hungarian
Radio and Duna Television. All members were delegated by the parliamentary
parties.
The NRTB president was nominated jointly by the president
of the republic and the prime minister.
The body was elected for four years; neither the president
nor the members can be recalled.
The presidents of the three boards were also elected
for four years. The presidents were delegated by the governing parties
and the deputy presidents by the opposition parties.
The NRTB president is Mihaly Tamas Revesz, lawyer and
government adviser (HSP) Hungarian Socialist Party.
Members: Lajos Kardos, an expert in frequency management
(HSP), Janos Timar, pollster (AFD) Alliance of Free Democrats, SZDSZ ,
Janos Weber, lawyer (HDF) Hungarian Democratic Forum, MDF , Jozsef Zelnik,
President of the Hungarian Cultural Federation (CDPP) Christian Democratic
People’s Party, KDNP , Gabor Nahlik, former Hungarian Television president
(ISP) Independent Smallholders’ Party, FKGP , Judit Koermendy-Ekes, lawyer
(FYD-HCP) Federation of Young Democrats-Hungarian Civic Party, Fidesz-MPP.
President of the Hungarian Radio Board: Gabor Gyoergy,
former director of Radio Danubius (HSP).
Deputy president: Laszlo Juhasz, former news director
of Hungarian Television (HDF).
President of the Hungarian Television Board: Andras
Kovacs, film director (HSP).
Deputy president: Mihaly L. Kocsis, former news director
of Hungarian Television (ISP).
President of the Duna Television Board: Sandor Biro,
deputy rector of the Goedoelloe Agricultural University (HSP).
Deputy president: Zoltan K. Kovacs, journalist (CDPP).
MTI news agency, Budapest, February 27, 1996