Post-Soviet Media Law & Policy Newsletter


Issue 32     Benjamin N. Cardozo School of Law     September 5, 1996 

RUSSIA

1.  There’s a heated up competition at the national network level and locally as new entities are created.

a.  REN-TV & Independent Broadcasting Systems Join.

    A new television channel will emerge in the CIS in the near future.  It will operate on channel seven in Moscow.  The channel will be set up by Independent Broadcasting Systems, IBS, which comprises over 100 TV studios throughout the Commonwealth, and by the well-known company REN-TV.  IBS held a meeting [on 28th July] to discuss details of the project.
    D. Lesnevskiy, producer-in-chief of REN-TV: The channel will form the basis of the project.  It will purchase programs from REN-TV and other TV companies.  They will be brought together on the channel and distributed to the regions via a Gorizont satellite.
    Correspondent: Work has started on 19 programs for the channel.  Among the well-known Russian presenters and journalists taking part are Sergey Korzun, founder of the Ekho Moskvy radio station, Dmitriy Dibrov and others.  Starting in September, the new channel will operate for seven hours a day, to be extended to 24 hours a day in January.  Members of IBS have shown interest in continuing to cooperate with the Russian President’s press service, which recently received a fully equipped television center.  The cooperation started during the [Presidential] election campaign when the press service and local TV studios arranged 10 interviews with the head of state.

Russian TV channel, Moscow, July 28, 1996

b.  2x2 TV joins battle for regional viewers.

    Another private channel, 2x2, has entered the battle for regional viewers in the wake of the TV-6 Moscow, NTV and St.  Petersburg private-sector TV companies.
    It has a controlling stake in the Satellite TV Association (AST) open joint-stock company, which recently won a licence for round-the-clock TV broadcasting on Russian territory as well as to all the CIS and Baltic countries.
    AST Director-General Andrey Gorbovskiy reported that the channel’s programmes (90 per cent of which are 2x2 programmes) are currently watched by more than 35m viewers in 60 cities in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan, Georgia and Azerbaijan.  By the year’s end AST expects to cover all of the biggest cities in Russia and the CIS and to have an audience of more than 60m.
    The project is based on a partnership between AST and regional stations.  AST provides a 16-hour daily broadcasting network, supplies the TV signal on a satellite channel and handles marketing and the legal side of the project.  The regional stations receive the signal, relay it and adapt their own broadcasting network to the AST network.
    Usually local TV companies have up to four hours a day within the 16-hour network, including up to 90 minutes for their own programmes and advertising in prime time.  Under an additional agreement they can place commercials in other areas on the network.
    According to A. Gorbovskiy, this cooperation plan suits the local stations, since most of them are unable to fill their air time with their own material.  In these circumstances they used to resort to video piracy.  But now that the copyright observance campaign is being stepped up, station leaders realize that they need to work seriously and honestly.  Cooperating with AST allows them to legitimately fill their air time with popular shows.  This cooperation also benefits AST, since the channel can not only be seen in the regions, but also has a prime time slot.  In Moscow 2x2 does not have this opportunity.
    AST is setting itself the task of ensuring that its ratings in major cities (including the 20 most attractive cities to advertisers) are no lower than those of 2x2 in Moscow.
    The AST director-general put the total cost of the project at 27-28m dollars and is looking to make a profit after three years.

‘Finansovyye Izvestiya,’ Moscow, August 15, 1996

c.  Radio Station for “Working Class.”

    Viktor Anpilov, the leader of the radical leftist grouping Working Russia, has announced plans to establish a so-called people’s television station.  He said it would be funded by voluntary donations .  The radical communist told Interfax that about five million roubles had already been contributed to the fund.
    He also said that Working Russia’s television station should be an independent, nationwide service, with independent news services, satellite communications systems, its own premises, personnel and equipment.  An organizing committee has already been set up to collect funds.

Radio Russia, Moscow, August 18, 1996

d.  Ekho Moskvy radio to start new FM service.

    On 5th August Ekho Moskvy radio began the process of preparing a new FM radio information station, which is to be launched in autumn 1996, the Ekho Moskvy news agency reported.  The station presently transmits only on mediumwave and the old Eastern European FM band of 66-73 MHz.
    The news report said that the station will broadcast news bulletins on Mondays every 15 minutes, interspersed with commentaries, background briefs, sport news, weather reports, motor vehicle news, reviews and other small format newscasts (up to three minutes).
    For the time being, the report added, the information channel will be on the air between 0600 and 2000 hours [local time] on Mondays.  On Tuesdays, Wednesdays, Thursdays and Fridays the information channel will be put out between 0600 and 1000 hours, 1400 to 1500 hours and between 1800 and 2000 hours with the first 15 minutes of each hour between 1000 hours and 1400 hours and between 1500 hours and 1800 given over to news bulletins.
    In a separate report with the same release time and also from the Ekho Moskvy news agency, it was reported that the radio station had encountered unforeseen difficulties when trying to start broadcasting on the 88-108 MHz FM band.
    It said that the station was granted rights to use an FM frequency by the decision of a commission of the Russian Federal Service for Television and Radio Broadcasting of 21st December 1995.
    The report ended by saying that the broadcasting authorization had still not been issued, because the two organizations under the Ministry of Communications—the Radio research institute and Main Directorate for the State Supervision on Communication in the Russian Federation—with which the station signed an agreement on using the frequency, had not progressed the work for seven months.

Ekho Moskvy news agency, Moscow, August 19, 1996

e.  TV3 Rossiya’s expansion plans.

    The ‘Argumenty i Fakty’ newspaper reports that the TV3 Rossiya channel will start operating from September.  Residents of St Petersburg can already watch this channel on cable television.   The channel was founded by the Mayor’s office of St Petersburg together with a US company [as heard—it is believed that the company is based in the UK].  Russian Television [Russia TV channel] pays for a third of its expenses.
    The channel can also be watched in Moscow but only in certain hotels equipped with special aerials.  A member of TV3 Rossiya’s board of directors, Viktor Pravdyuk [phonetic], the husband of Bella Kurkova and former deputy head of St Petersburg television, has recently revealed large-scale plans for TV3: As of this autumn it will be broadcasting to the whole of Moscow on channel 46 on UHF and to 50 other major towns via the Ekspress-2 satellite.  [TV3 already transmits on the 14 degree west Ekspress satellite].
    The channel can be described as conservative and Russian.  It will be showing exclusively Russian archive films, plays and new programmes and productions.  There are plans for the TV3 channel to expand into Europe; talks on the possibility of TV3 being broadcast to European hotels and on cable networks are under way.  Well-known jeweller Ananov [phonetic] said he would finance the TV3 office in Paris.

Ostankino Radio Mayak, Moscow, August 1, 1996

2.  Among the most important developments over the last months was the success of Igor Malashenko in gaining control over the Fourth Channel.  Prior to the Presidential election, NTV only had partial use of this “Universities” channel belonging to RTR, and as we have previously reported, the struggle between Malashenko and Oleg Poptsov, former head of RTR, over the Fourth Channel was often a bitter one.  Here are several accounts dealing with NTV’s future and its implication for RTR, headed by Eduard Sagalayev.

a.  Russian TV head confirms NTV to get fourth channel.

    Sagalayev confirmed the report that the fourth television channel would be completely given over to NTV [Nezavisimoye Televideniye—Independent Television].  In saying this, he remarked that this decision had been influenced by the active involvement of Igor Malashenko and Yevgeniy Kiselev in Boris Yeltsin’s election campaign.  [For an earlier report that the fourth TV channel had been allocated to NTV, see WM/32 1996, page 14.]
    Speaking about news programmes on television, Sagalayev remarked that in his view the level of truth was lower than in the 1989-1990 period, since, I quote, all journalists are either afraid or have been bought.
    By the way, Sagalayev confirmed that the staff of the company headed by him are earning considerably less than their colleagues in commercial TV stations.  Sagalayev sees a way out by halving the staff of Russian radio and TV.  It is possible that all staff will be offered a transfer to the contract system for their professional level to be confirmed during the subsequent year.
    Speaking of the company’s prospects, Sagalayev said that a project called RTR-Teleset [Russian Radio and TV network] is being prepared.  It is a question of launching two new channels of network television, one of which will be a sports channel and the other devoted to films.
    Sagalayev said that investors for this project had already been found .  Its implementation will make up for the losses incurred from the Russian Universities [TV—educational channel].
    [On 17th August the Russian newspaper ‘Nezavisimaya Gazeta’ added: “The resolute intention of the head of the state-run TV channel to lay off half the staff apparently indicates that, despite the rumours of his taking another government position, he firmly intends to remain chairman of VGTRK.  It has transpired that the decision to cut the VGTRK staff comes from Mr. Sagalayev’s desire to transfer the air time of the Russian Universities [educational TV] channel to the NTV television company but to leave intact within it a three-hour slot for general knowledge programmes.  At the same time, VGTRK’s budget funding, which covered two channels in the past, will remain the same and this will improve the standing of the company, which Eduard Sagalayev intends to turn into a ‘people’s channel’ by cutting the number of political programmes.”]

Radio Russia, Moscow, August 16, 1996

b.  Sophia Coudenhove reported on the same developments in The Moscow Times, August 17, 1996.

    Russian State Television and Radio, or RTR, is to halve its staff this fall as it hands most of Channel 4 to NTV Independent Television, a senior RTR official confirmed Friday.
    The move, which the source said would be implemented with the beginning of the new television season in September, ends a long struggle by NTV for a channel of its own.
    At present, RTR’s educational “Russian Universities” program has the channel from 9 a.m.  to 6 p.m., when it is replaced by NTV, which broadcasts late into the night.
    The official said under the new system RTR would have only three hours of airtime daily on Channel 4.  He said the company currently employs more than 4,000 people, a few hundred of whom work for “Russian Universities.”
    The source said he believed the handover to have been ordered by President Boris Yeltsin.
    NTV editor Stanislav Mormitko refused to confirm the report Friday, although Interfax had reported the company’s acquisition of Channel 4 as early as July.  At the time, RTR officials also refused to comment.
    While NTV has long sought to gain full-time access to Channel 4, the source attributed its recent success in part to NTV president Igor Malashenko’s participation in the recent election campaign, in which he served as an advisor on President Boris Yeltsin’s team.
    “There’s no doubt that this strengthened his position,” the source said.  “But it was also a chain reaction.  It was no coincidence that he got that job because he was a widely respected man—but then getting the job also opened a number of other doors, such as Channel 4.”
    While RTR chairman Eduard Sagalayev was initially a vehement opponent of NTV’s demands for Channel 4, he softened his position as Malashenko gained political clout, the source said, adding that financial pressures on his company were an additional factor.  “Finally, Sagalayev decided there was simply no point in continuing that fight,” he said.
    The source said that at present only 30 percent of the funds allocated to RTR by the federal budget actually reach the company.  He said advertisements bring in roughly the same amount, leaving the company unable to meet about 40 percent of its financial needs.
    “We simply did not have the resources to broadcast on two channels,” he said,” adding that employees were already afraid for their futures.”  Of course it’s a painful move,” he said.
    Channel 4 currently broadcasts as far as the Urals, although NTV reaches audiences as far east as Vladivostok by satellite.
 NTV will also broadcast five new satellite channels featuring foreign and domestic films, sports, news and music, the Russian daily Segodnya reported Friday.
    The new satellite project, NTV+, will be accessible in central Russia this fall.  Initially it will be free of charge, with subscription fees materializing at about $ 10 per month from early 1997.  The company expects about 100,000 to 200,000 subscriptions.

c.  A July 18 article provides an outsider’s view in Cable and Satellite magazine.

    Plans by the leading Russian independent broadcaster NTV to launch a five-channel DBS service have moved a step closer, following news that Pace is undertaking technical compatibility tests for the project.
    The company already has a strong presence in the country though St Petersburg-based General Satellite, and according to Rick Smith, its group general manager, sales and marketing, Pace will appoint a general manager resident in Moscow at the end of this month.  While it is in his view still hard to say whether Pace will eventually participate in the service (which is to be known as NTV Plus), its raised profile in Russia will largely be due to NTV and significant MPEG-2 cable projects which are likely to come about in the next few years.
    NTV is itself one of the great success stories of post-communist Russian broadcasting, having received official approval from President Boris Yeltsin in late 1993, and within two years become wholly self- supporting.  Available at the end of last year to around 102 million viewers in 168 towns and cities in Russia, Kazakhstan and Belarus, it has gained a reputation for strong and objective news reporting in the face of often fierce criticism.
    It is nevertheless also a service desperately in need of change, being currently forced to share a near-national frequency (Channel 4) with the Russian Universities programme.  On the financial front, however, it received a welcome boost last month when Gazprom, Russia’s leading industrial conglomerate, reportedly acquired a 30% stake in the channel from Most, which along with two other leading Moscow banks (Stolichny and Natsionalny Kredit) had previously owned the station.  Significantly, Gazprom is also a shareholder in the partly-privatised Russian Public Television (ORT).
    According to Grigory Libergal, the programming director of Internews (an international non-profit organisation which supports independent media in the former Soviet Union), NTV has been able to hold its own in the Russian marketplace and will be able to diversify into niche programming once its satellite service—which will be distributed by the Gals 1 and 2 satellites and include a free-to-air news channel—becomes operational.  This will undoubtedly help it compete more effectively with Nezavisimaya Veschatelnaya Sistema (NVS) and CTC, two other leading independent networks.  While the latter is backed by the US company Storeyfirst (which is owned by Peter Gerwe), cooperatively- run NVS receives support from Internews and has a potential audience of 80 million.
    Libergal believes NTV Plus has a far greater chance of becoming reality than the two-channel DBS service mooted by the Russian State Television and Radio Broadcasting Company (RTR) late last year.  This was reported to have the backing of Kevin and Ian Maxwell (the sons of the late media magnate Robert Maxwell) but has yet to make an appearance.

Cable and Satellite Express, July 18, 1996

3.  Matt Taibbi wrote in the Moscow Times about the media strategy of Menatep.

    Independent Media, parent company of The Moscow Times, has agreed to sell a small minority stake of its shares to the giant Russian financial conglomerate The Menatep Group, company officials said Monday.
    An agreement in principle was signed in Amsterdam by both parties July 23, but neither shares nor money have changed hands yet, Independent Media CEO Derk Sauer said.  The deal is expected to be finalized in the second week of August, he said, adding that neither side is prepared to disclose the dollar amount of the deal.
    Independent Media co-founder Annemarie van Gaal said the deal would also bring non-financial benefits to the group.  “This is a move that gives us some roots in Russia,” she said.
    Since its founding in 1992, Independent Media’s fast-growing family of publications has come to include the semi-weekly English-language newspaper The St.  Petersburg Times, the Russian-language business weekly Kapital and Russia Review, a twice-monthly magazine.  It also publishes the Russian editions of the magazines Playboy, Cosmopolitan, Good Housekeeping and Harper’s Bazaar and owns Skate, a financial information and Internet publishing company.
    Sauer said both sides were determined that the sale of shares to Menatep will not affect the editorial integrity of Independent Media’s publications.  “This is one of the key issues in the deal,” said Sauer.  “Menatep has agreed not in any way to interfere in any editorial decision.”
    Analysts, however, said the deal could infringe on the paper’s independence.  “You will be on a leash,” said Yasen Zasursky, dean of the journalism faculty at Moscow State University.  “I hope it will be a to the principle of editorial integrity.  “Independent Media is a successful company with an excellent track record.  We see a great future for Independent Media,” she said.
    The Menatep Group includes Menatep Bank, Russia’s 11th largest, and a wide range of holdings in Russian industrial companies.
    It also has close ties to the Russian government.
    During the controversial loans-for-shares privatization program late last year, Menatep won a controlling slice of Yukos, Russia’s second-largest oil company, in what most observers regarded as a rigged auction.
    Rivals have also charged that Menatep was a major beneficiary of flaws in Russia’s system of privatization tender auctions.  Rivals alleged that Menatep had received shares in many companies but failed to fulfill promises to make investments to the value of $ 1.1 billion.
    Sauer said Menatep was a good partner.  “Any large Russian company is going to be involved in things like loans-for-shares, and these types of transactions,” he said.  “But this isn’t a reason for us not to go forward.”
    The Menatep Group’s move to buy a stake in Independent Media is the first Russian shareholding in the company, but it marks a continuation of a trend toward growing integration between big business and media in Russia.
    Last month Gazprom, Russia’s gas monopolist, announced its plans to take a 30 percent stake in the NTV Independent Television broadcaster.  The other main shareholder in NTV, the MOST group, whose main activities are in banking and real estate, also controls the Segodnya newspaper as well as the Itogi and Syem Dnei publications.
    A spokesman for the Stolichny Savings Bank said the bank has a 5 percent stake in the ORT broadcaster, but added it has no interests in printed media.  Reports in the Russian press had earlier linked Stolichny to the Commersant Daily newspaper.