Post-Soviet Media Law & Policy Newsletter

Issue 38 Benjamin N. Cardozo School of Law July 15, 1997

The Founding of Moscow’s TV–Centre
By Anna Kachaeva and Irina Petrovskaya

All last week the staff of the defunct Moscow Television Company [MTK] have been saying goodbye to their viewers.

   MTK’s legacy is described in a report from the central regulatory inspectorate of the Moscow government “The results of an audit of the finances of MTK and RMTK Moscow” (March 28, 1997): “The audit showed that from the moment of registration in 1992 RMTK Moscow (the city’s share of declared capital is 60%) to the present time, the required fund was never established, while Moskomimushchestvo’s share [the Moscow privatization committee] of the mandated fund of MTK (the city’s share is 74%) in the amount of 18.5 million rubles was taken from the resources of RMTK Moscow. The register of stockholders is missing because stock was never issued. Both these companies are run by the same directors, A. P. Missan and A. O. Shepelev, and the accounting for both was done by one firm. The joint–stock company MTK was created in September 1994. As a result of these deeds a loss of half a billion rubles was incurred in 1995. As a result of the financial decisions of 1996, losses for that year surpassed 12 billion rubles...according to an agreement concluded June 6, 1996 between the directors of the companies, RTMK Moscow undertook full responsibility for all of MTK’s debts as well as an unused credit of $2.7 million. The entire sum owed to creditors on January 1, 1997 was 25 billion rubles.

    “This audit found a unfocused use of the city budget, an insufficient resource base, an irrational use of the station’s own resources distracting it from its commercial responsibilities, inflated production costs, irregular payment of workers, inadequate bookkeeping, excessive reliance on capital, and other violations.

    “Owing such tremendous debts to their creditors, the directors of the company not only failed to take measures to liquidate or reduce them, but they set aside 1.3 billion rubles for the construction and organization of 13 commercial enterprises on which they spent one billion rubles in 1996 without any kind of income in return.

    “An analysis of the financial state and structure of the company showed that in the very near future it will not be able to fulfill its obligations to both creditors and the city budget. . . .”

    Currently, by writing to magazines, several of the staff at Moscow Television Company are trying to protest the liquidation of MTK, the unceremonious firing of its old staff, who had become co–owners of the channel, with 15% of the company’s registered stock. But even the most zealous protesters admit: the company is going out of business submerged in debt. And furthermore, in comparison with other television companies, MTK was full of advertising logos and paid news. The word “sponsor” was crucial to the station’s operations, and practically all the shows were produced as if they were advertising. This was probably the means by which the staff regularly received their salaries (an average of approximately 200 thousand rubles a month), until they came to terms with the lack of dividends and extravagant management.

    This is explicable, as is the fact that the main owner, the government of Moscow, represented by Moskomimushchestvo, did not protest the state of affairs at the channel. The big Moscow bosses always received whatever quantity of air time they needed without having to ask twice.

    And all the same the composition of Center TV is perfectly normal. The era of incomplete, weak, and uncompetitive organization is over. The epoch of the concentration of the mass media and communications networks is upon us. Just as the branching of cable television networks has been taking place in Moscow for such a long time, it will be easy for the metropolitan Moscow channel, with its expected technical upgrade, to become national, and the channel 2x2 retains the capacity for satellite broadcasts. From this perspective, the Moscow government is not only reforming this divided channel it has seized, but is creating its own information empire, using the latest encryption and satellite technology.

MOSCOW AGAINST MOSKOVIYA

    Center TV received a license to broadcast on all of Channel 3, which until recently was occupied by MTK and 2x2. By law, both MTK and 2x2 had the right to renew their licenses and to continue to broadcast on the channel, but they gave up this right in favor of Center TV. It is still not clear what kind of agreement the Moscow government managed to strike with the previous broadcasters. It is unclear what was offered or threatened, but the redistribution took place to quiet surprise. When Anatoly Lysenko, at Luzhkov’s recommendation, became the head of the Moscow government’s committee on telecommunications and the mass media, before he received a separate office in the Mayor’s building, they installed a television security system for him and gave him permission to carry a personal firearm. On the threshhold of the opening of the new station, Lysenko admitted to one of the authors of this article that he himself was surprised at how calmly and professionally the situation with the previous owners had been resolved. “How can you explain it?” followed the question. “Apparently by the agreement of the owner.”

    The owner for the previous and current broadcasters is the same: the government of Moscow. Yuri Mikhailovich Luzhkov. The city owns a 67% share in Center TV. The chief founder is Moskomimushchestvo. If anything has changed, it is the Moscow authorities’ relation to television. Evidently, after the elections demonstrated the full propaganda value of broadcasting, Luzhkov, like a realistic politician taking the long view, decided to bring the city’s telecommunications into agreement with the demands that modern politics, economics, and technology make upon the informational infrastructure throughout the world. Apparently, Luzhkov’s desire to extend his influence beyond the Garden Ring road played a large role. Also important is the mayor’s favorite idea, that of the capital, a powerful region, on one side, and the collection of Russian cities on the other. In the government decree on the creation of Center TV it is written that the new Moscow television company “must play a role in the consolidation of Russian society, reinforce patriotism, and separate the image of Moscow from the image of the Kremlin and the federal government.

    It is not accidental that the directors of Center TV used the German national channel ZDF as an example in their explanation of the organization to foreign journalists of a federal channel. It also turned out that Center TV intends to consult with the older broadcaster BBC. Center TV has described itself in advertising literature as “Socially–oriented television for the whole family.”

    In any case, it won’t be worse than what came before. Anatoly Lysenko announced in his interview that the new channel will be decent and will never allow itself to exploit the public’s baser instincts or to show anything that would be shameful or frightening to watch when one is sitting in front of the television with one’s child, mother, or wife. Lysenko does not promise objectivity. In his opinion, there is no objectivity in the mass media. But it is always necessary to remember the caution from Evgeny Shvartz’s Dragon: one needn’t be the best pupil.

    By adhering to these conditions, Center TV has the chance to become a truly influential, competitive, and highly watched channel. Yuri Luzhkov will hardly want to use the news consortium as a primitive weapon in the struggle for the presidency. Lysenko and his staff will hardly agree to transform their channel into such a weapon.

    Nonetheless, it is already clear today that Center TV from its birth was bound to play a role in political conflict. Disturbed by Luzhkov’s potential power, the federal authorities, as Lysenko put it, “threw Luzhkov a curveball”: along with Center TV, the oblast’s television company Moskoviya also received a license to broadcast on Channel 3. The official line and the programming choices of Center TV seriously differ from that of the religious–conservative Moskoviya. There will not be a single unified broadcaster on Moscow’s third channel. The two previous broadcasters were compelled to exist together, a situation bound to create conflict and internal feuding. As a minimum, for the next three years.

Kommersant, June 10, 1997, translated by Internews