Post-Soviet Media Law & Policy Newsletter
Issue 37 Benjamin
N. Cardozo School of Law June 13, 1997
Television and Politics: The ORT Crisis
Russia’s mass media system is still undergoing rapid
change and it has moved far away from the highly centralized structure
that characterized it under Soviet rule. In Russian broadcasting today
the main branches of the signal transmission industry remain under state
control, and the state controls a big share of the broadcasting industry.
It owns and operates about ninety regional television stations and two
national broadcasting companies, the Russian Radio and Television Company
(RTR, Channel 2), and the Federal Broadcasting Service “Russia” (St. Petersburg,
Channel 5). In addition Public Russian Television (ORT, Channel 1) is a
stock company in which the state owns a fifty-one percent share. However,
Russia has also developed a private broadcasting industry. It counts 625
well-established commercial companies, of which about 370 are included
in the National Directory of Television Companies in Russia, and two national
channels, NTV and TV-6 Moscow. The private sector in Russian television
is today powerful enough to influence the structure of mass media throughout
the country, and it has radically altered the relations between state bodies
and broadcasting.
Several factors guarantee that Russian television will not
revert to a vertically governed system: mixed forms of property in television;
competition between state and commercial companies; commercial supercompetition;
the opposition of professional journalists to censorship; and the personal
ambitions and political attitudes of key television figures.
Television in many cases is independent from the state, but
this impression will partially disappear with the detailed consideration
of its role in the political life of Russia. It is an expensive medium,
trying to survive with an underdeveloped advertising market. Advertising
revenues are sufficient to cover the production costs, but Russian television
needs to improve its technical base which has become antiquated and cannot
exist without support from the wealthy financial structures, which in one
turn is dependent on money from the state budget.
Upon examining the current financial position of structures
such as the financial group “MOST” of the “LOGOVAS” company, it appears
that they are investors trying to make money in a profitable business.
In reality, however, their striving for ownership in television is determined
not only by the common strategic goal with the “party in power”—to preserve
the existing type of state system which guarantees the market economy—but
also by a tactical scheme: to preserve the current regime, with which they
have worked hand-in-hand in the process of privatization. The tasks
are forcing banks and financial groups to unite resources with state bureaucrats,
with the objective of exerting influence over the electorate and investing
money in television— which while less profitable than the banking business,
is the only medium able to reach almost every voter in Russia.
In the context of the progressing press crisis which has made
many central publications inaccessible to readers (especially those living
in provinces), television remains a powerful tool for the “party in power.”
According to the “Izvestia” Analytical Center (1) that studies the motives
of the Russian voting public, about thirty-three to fifty percent of voters
are making their political choices under the pressure of the mass media.
The data presented in the report further shows that press, radio and television,
at both the local and national (“central”) level, can exert direct influence
over their respective audiences.
The notion “central television” is a remnant of the USSR,
when all national broadcasting came from Moscow. Even today the idea holds
that a national channel can be established only with a base in Moscow:
Moscow is the richest market, accumulating a large share of the country’s
financial potential. The struggle for radio and television frequencies
covering the Moscow region is intense, and it involves powerful political
and financial forces. The strength of such forces is exemplified well by
the case of REN-TV, which has well-known friendly relations with highly
ranked bureaucrats, and by its acquisition of control of Channel 49 last
year and its subsequent construction of a national network.
There are nine television channels available in Moscow today,
depending on the district of the city, but they do not all have equal influence.
Viewers of channels such as 49, 27 and 31 are not numerous, yet their owners
have ambitions to create national networks. Channel 3 is partially financed
by the Moscow government and is of regional character, although it sells
the programming product to local stations around the country. The Federal
Radio and Television Service “RUSSIA” (St. Petersburg, Channel 5) that
is produced in St. Petersburg has the status of a national broadcaster,
but due to the lack of state funding is not paying for the signal transmission
in all regions. Really only four channels—two state supported (ORT and
RTR) and two commercial channels (NTV (Channel 4) and TV-6, Moscow) can
now be called “central television.”
Two years ago, the Television and Radio Company “OSTANKINO”
(then ORT) and RTR were the expression of the state policy crisis in the
field of television, described by some specialists as the crisis of the
character of the system. The First Channel, the more powerful from the
point of view of its influence on the audience (its signal covers all territory
of the Russian Federation and it could cover all republics of the former
Soviet Union), was the most impressive example of the crisis. The crisis
was characterized by the absence of a precisely formulated political position,
the loss of control of the content of the company programming (different
production companies that were part of the Channel could follow their own
policy without taking heed of “OSTANKINO’s” political concerns), “OSTANKINO’s”
failure to collect all of the revenue created by advertising (several programs,
such as the morning show “UTRO,” had a large amount of hidden advertisement
and sponsor money which was transferred to the company budget), and the
loss of production company status and new projects.
The financial straits mirrored those of the Russian economy
as a whole, and seemed at the outset to be the cause of the crisis. However
an analysis of the history of the company, created on the ruins of the
USSR’s “GOSTELERADIO,” reveals another cause of the crisis—that the Channel
became a victim of the political interest struggle, and only partially
reflected the Russian public interest.
In the Decree of December 12, 1991 the President formulated
a task force to reorganize the Channel. Soon after that, different groups
came forward with projects for creating a joint-stock company. The company
VID, which represents the production ventures interest, was among the first
to come forward. Aleksander Lubimov, the company director, proposed a project
of “the people’s television.” Although the idea to invite ordinary citizens
to hold shares in the company was attractive, the Russian Federal legislation
presented the possibility that someone might buy a controlling share.
As the possibility of losing control over the main channel became real,
the idea was opposed by all political forces and Russian television lost
a crucial opportunity to make the channel private.
By autumn 1992, the operative management of Channel 1, reflecting
the pressure of production companies, attempted to propose another project,
with the help of well-known Western firms. The project was waylaid by the
government’s unwillingness to pay the Western specialists. Soon after that,
the company’s managers came forward with their own project to form a stock
company, and to distribute shares among OSTANKINO personnel. Again the
project was stopped, this time by GOSKOMIMUSZHESTVO’s (the state agency
responsible for privatization) structural transformation of the company,
a transformation that proceeded from GOSKOMIMUSZHESTVO’s interests and
that were unknown to the public. Soon thereafter, a press secretary at
GOSKOMIMUSZHESTVO received a very important position in the company. At
the same time, the Ministry of Communication raised tariffs for signal
transmission with its own interests in mind. The company debts became enormous.
It appeared that the state bodies were attempting to make
the company work less effectively. Until the fall of 1994, the TV and Radio
Company OSTANKINO, using the First Channel, was absolutely demoralized
by incompetent operative management and by the chaotic restructuring conducted
by GOSKOMIMUSZHESTVO. At that time, it was impossible to speak about the
independent political line of the company. The best news journalists had
left OSTANKINO for new commercial companies such as NTV and TV-6, Moscow.
Under these conditions, the President signed the Decree about
assignation of the Channel to a commercial structure called the Public
Russian Television (ORT, to use the Russian abbreviation). The official
goal was to get the effective management of the Channel under state control
(different state bodies received 51% of the company’s shares). The Board
of Trustees was formed on December 4, 1994 with President Boris Yeltsin
as its chairman. Among participants at the staff founders meeting, which
took place on January 24, 1994, were stock companies—LOGOVAS got eight
percent of the PRT shares, GAZPROM got three percent, MIKRODIN—and several
banks—MENATEP, NATIONALNIY CREDIT, STOLICHNY and ALFA BANK each got five
percent, and OBYEDINENNIY BANK got eight percent of the PRT shares.
The last attempt to secure the production companies’ interests
(they were all founded by Ostankino journalists) was made by a famous anchorperson
Vlad Listyev who was appointed the General Director. After his assassination
on March 1, 1995, however, the Association of Independent Television and
Radio Companies with three percent of the ORT shares, left the staff of
founders. The state remained face-to-face with the oil-gas business and
with financial structures.
The five-year-old romance of power and journalists on
the First Channel was over. The control over the main channel in the country
was taken by the state bureaucratic machine supported by commercial structures
that formed industrial and political clans.
Two years later can we say that the ORT financial situation
has improved? ORT’s debts for signal transmission are still enormous as
long as the state does not support it financially; but it is very unclear
who is actually financing the company. Despite the company’s explanations
about the decisive role of Logovas in the process, it is clear that even
such a structure as Logovas cannot take on all of ORT’s expenses. Officially,
the state is not now supporting the company, but journalists are trying,
with some success, to trace money coming unofficially from the state. The
presidential election campaign has produced several scandals in connection
with campaign financing.
ORT has failed to stop the practice of using the company
programs for hidden advertisements and cannot stop the sponsor’s money
from flowing into the pockets of journalists. ORT cannot harmonize relations
with production companies and does not pay them on time. As a result, several
independent producers decided to leave ORT in 1997, among them -- the popular
show for children “Utrennyaya Zvezda” (The Morning Star), and a thirty-five
year old famous program for youth “The KVN,” which is still a hit.
On the other hand, ORT decided to discontinue the day
segment of the company programming by the International Television and
Radio Company (MIR) which covers news of the CIS. The ORT declared that
the company is not satisfied by MIR’s low-rating programs. At the same
time, MIR has not paid for the signal transmission. Taking into account
ORT’s debts, it is reasonable for ORT to omit MIR from its programming,
but there are rumors that ORT will give MIR time for State Duma coverage.
On the eve of 1997 RTR (Channel 2) rejected the State
Duma proposal to cover the Duma’s activity during prime time, three times
a week. The rejection contributed to the state’s decision to provide only
minimal funding to RTR. In 1996 RTR got only thirty percent of the promised
budget money, and the chairman of the company asked that about 1.8 billion
rubles be set aside in 1997. The question is, why did ORT decide to allocate
money for the Duma coverage?
It is necessary to emphasize that “the party in power”
has changed during the last half of 1996, and it is safe to say that the
Duma communists are very close to that party now. As Gleb Pavlovksy
has mentioned, “journalism is a service in Russia: maybe the only well
developed sphere of service. It serves the central power.” (2) All
transformations of the ORT were designed to create the best servant. The
ORT has proved its ability to work spectacularly for the “party in power”
during the presidential campaign, and is very proud of it. In the last
news show of 1996, the head of the ORT information service, Ksenia Ponomareva,
emphasized that all forces of the company were devoted to the active forming
of a positive image of the president, and that she could not understand
the western journalists’ criticisms of the company for this practice.
At the same time, it seems that it is the intention
of the current government to create a new version of the “national idea,”
and to use it as a base for the influence of national ideology over ORT’s
attitudes about coverage of the former USSR. On the other hand, however,
the government of the Russian Federation, being engaged in a political
struggle, paid less attention to relations with former Soviet republics
at the beginning of the nineties when the republics formed actively national
states. Unfortunately, as a result, the Channel has almost lost the market
of the former USSR.
The last example is connected with Ukraine where ORT
broadcasting was stopped on October 20, 1996. The company still has an
audience in Belarus but President Lukashenko threatens to follow the path
that Ukraine took in the beginning of 1997. Even now a sort of censorship
has been established in Belarus and political and news programs are cut.
It looks like efforts to organize the informational
space of the former USSR with the help of “MIR” have failed, and the money
problem was used as a simple explanation for a complex problem. Most likely,
the company will again lose its chance.
It is impossible to avoid the problem of television
management when speaking about the system of the state television crisis.
As mentioned above, the First Channel did not have skilled managers during
difficult years as a result of the Soviet tradition of solving complicated
tasks by dismissing highly ranked managers. From 1991 to 1996 the Channel
had five Chairmen.
During the same period another state-owned and operated
channel—the RTR (Channel 2) was headed by Oleg Poptzov. Despite several
attempts to dismiss him, Poptzov survived by being supported by journalists
who were working in the company and which represented a certain type of
collective property. On the eve of presidential elections, however, he
was fired, marking the end of a period in the development of Russian television—a
period of revolutionary transformation, which was in many cases inspired
by journalists. It is important to note, however, that after obtaining
freedom of speech for themselves, many journalists resolved to secure this
same freedom for all.
Oleg Poptzov represented the Cruschev-thaw generation
and had a rare chance to be rewarded for the many years of political difficulties
in the Brezhnev era. As a part of the intellectual elite of Russian representatives
in the sixties, he absolutized the possibilities of the mass media and
took too literally the thesis about the fourth power. They were not satisfied
with the role of mediators and therefore tried to become a part of the
political process as deputies of the Supreme Soviet or the State Duma.
In other words, they did not want to be reporters, they wanted to be newsmakers.
Poptzov was not the most active representative of this group but, of course,
he served the power structures that adhered to his own ideals. As a result,
the position of the RTR Chairman was given to Edward Sagalyev who represented
the generation of reporters and businessmen that preferred to be in the
middle of the road.
Sagalayev came to RTR as a founder, one of the main
stockholders and the director of the private company TV-6, MOSCOW. Founded
on the principles adopted from American networks, the company is an economically
effective venture that has now successfully achieved the status of national
broadcaster.
The head of “LOGOVAS,” Mr. Boris Berezovskiy, is also
one of TV-6’s stockholders. Mr. Sagalayev’s appointment created rumors
about the possibility of creating a stock company based on RTR and with
the help of ORT’s experience, but this cannot be seen as the best example.
Despite the fact that ORT management has failed to solve
many problems in the company effectively, it has proved the company’s loyalty
to the president. And during the meeting of the staff of founders in December
of 1996 the General Director, Sergey Blagovokin, was able to retain his
position. This meeting was marked by the creation of a new structure—“ORT
-- the BANKS CONSORTIUM,” which is headed by Aleksandr Smolenskiy, the
“STOLICHNIY BANK SBEREZHENIY.”
The CONSORTIUM has united the “ALFA-BANK,” the “MENATEP,”
the “UNITED BANK” and the “STOLICHIY BANK SBEREZHENIY” and has 38% of ORT’s
stock now.
So, the banks decided to remove the “LOGOVAS” label
from ORT and to unite efforts to finance the Channel. It means that the
reorganization of the company has entered into a new stage and the Russian
public will have a chance to see if the creation of a financial pool normalizes
the ORT situation that was created and directed mainly by political factors.
Svetlana Kolesnik
Notes:
1. The “Sreda”, 3, 1995, p.13.
2. The “Sreda”, 9-10, 1996, p.43.