In lieu of an effective media market, Ukrainians will have to realize that they are deprived of the Fourth Power in yet another crisis period, something that the Yanukovych and the Kremlin regimes are using to their advantage
At first glance, the situation in the Ukrainian media does not differ significantly from that in many developed country: print runs shrink, the television is becoming debilitated and the pensive consumer is switching to the net. It too has restrictions, but apparently, the opportunity for people to express themselves does, after all, remain… careful! Things are not what they seem! Who said that? Doctor House, or was it one of the heroes in “Matrix”?
In fact, the difference between the media and the web is crucial, similar to that between live and fake flowers, freedom and imitation thereof. What is currently unfolding in the Ukrainian mass media sector is a large-scale simulation of market, competition, the free exchange of ideas and social responsibility. The outcome is completely satisfactory for the current government because it keeps the existing relations in society intact.
QUASI MARKET FLAWS
Huge disproportions are the first things that catch the eye in the media market: top places in the audience coverage ratings of the print media (and the chart of advertisement revenues respectively) go to niche glossies. The list of champions is a mix of daily newspapers, weeklies and monthlies. With informational publications removed from the mix, serious newspapers and magazines are beaten by tabloids – how can this be possible? Is something wrong with the readership?
Understanding the system for measuring a publication’s success in Ukraine clears things up. The success of a printed publication has nothing to do with its print run. Ukraine has no print run certification and every publisher reports numbers that are impossible to verify. Sometimes, there is an impression that the number is picked at random, reflecting desire rather than reality. Therefore, advertisers tend to rely on the regular sociological surveys of a single agency, TNS. It determines market “leaders” and assesses the delusive criteria of the “popularity” of a publication through selective polling in cities with a population of more than 50,000, on the basis of which, equally delusive “audience per issue” data is determined. Advertisers tend to choose the top five “leaders” from the TNS rating. As a result, publications relying on the agency’s rating, are more concerned about finding effective ways of spending money on promotion, so that as many Ukrainians as possible remember the title of their publication, than about improving their quality (content) and increasing the print run. Experts realize that this is not the right way to do it: one issue of a serious newspaper cannot be read by fifteen people – it would not survive. Even so, it is on the basis of this poll that ratings are determined, and according to which advertisers buy space.
Hence, the disproportions which neither experienced media experts nor average consumers notice. There is an excess of business publications with 50-80% of business content, such as Kontrakty (Contracts); Business; Kommersant (Businessman); Delovaya Stolitsa (Business Capital); Vlast Deneg (The Power of Money); Forbes. This comes from the stereotype thrust on advertisers that the readership most capable of paying for the magazines is the one reading these publications, but isn’t this too much for a country with such a weak business climate?
Tabloids are underdeveloped. Their function is clearly performed by equally underdeveloped publications. Good quality and influential daily press is hardly present. Discrimination against Ukrainian-language press is palpable in a country where two thirds of the population speak Ukrainian. And there is an abnormal number of publications that are franchises or simply branches of powerful foreign players, especially in the general readership segment. These include Komsomolskaya Pravda v Ukrayine (Komsomol Truth in Ukraine); Arguments and Facts in Ukraine; Kommerstant; Izvestia v Ukrayine (News in Ukraine) and others.
This raises a reasonable suspicion: clearly, the major players are perfectly happy with the status quo? This seems to be true as the Ukrainian “market” is perceptibly monopolized. On the one hand, the small circle of media owners allows control of the “market” in general, because it’s difficult to rid oneself of the suspicion of an agreement between them, and on the other, government control over media owners.
A closer look at each individual player reinforces the initial suspicion. UMH Group, better known in Ukraine as Ukrainian Media Holding, chaired by Borys Lozhkin is an example of the most successful publisher which, from a business perspective, looks perfectly transparent and is listed on the Frankfurt Stock Exchange. The company has been on the market for 12 years. Its Ukrainian portfolio includes nearly 30 print publications and several large online projects, most of which are mentioned above. It is presented as the “No. 1 publisher on the advertising market”. UMH’s total declared print run is over 200mn copies. The holding has been present in Russia for nearly ten years and its partners include Vladimir Potanin, one of Russia’s top oligarchs. On the whole, the company is profitable even though the annual EBIDTA worth USD 18mn in 2010 is hardly an outstanding success. However, it is no secret that some of its publications consistently incurr losses. No other option is possible in Ukrainian circumstances. In that case, what is the point of the business? Why does one portfolio contain publications that are directly competitive with each other, such as Korrespondent and Focus, for instance?
These questions are not superfluous, because in such a sensitive and socially important industry as the media, the presumption of guilt should be applied until the opposite is proven. Assuming that a monopoly agreement truly exists, this could explain the distortions. The warped system dictates its terms to a) competitors, b) advertising agencies, and c) consumers. This is not to say that these distortions satisfy all the players. In May 2012, Ukrayinsky Tyzhden/The Ukrainian Weekdiscontinued participation in TNS Ukraine’s marketing research, measuring print media readership, after its own analysis revealed discrepancies with TNS MMI 2011/4 data, which significantly distorted the real presence of the publication in some regions. Literally two months ago, another scandal broke, as several well-known publications, including Business, Delovaya Stolitsa (Business Capital), Vlast Deneg (The Power of Money) and Kontrakty (Contracts), publicly ended their cooperation with TNS Ukraine. They did so after Korrespondent and Focus, both part of Ukrainian Media Holding, were switched from the general to the business category, since in their view, they do not qualify as such. These publishers believe that the current situation in print media readership research does not reflect the actual popularity of publications, and the research cannot be used as a proper tool for planning an advertising budget “because some publishing holdings use it to manipulate advertising budgets.”
In fact, the measuring system prevents advertisers from spending their budgets efficiently. TNS Ukraine’s questionnaire is worded in such a manner, that it actually determines the number of people who know the brand rather than the actual readership. Therefore, publications that have small print run which sells well, but invest in advertising, get to the top of the TNS rating, while those offering content the readers are interested in and a large print run, most of which is sold, end up at the bottom. International practice is based on the fact that advertisers receive transparent information on the number of copies every publication sells on the one hand and the quality of its audience on the other. The first is based on certified print run data, the second – by means of the competition between research companies. In the reality of Ukraine, TNS Ukraine has a monopoly in conducting research on the printed mass media market, and since the certification of print runs does not exist in Ukraine, this company also determines the readership of publications from a monopolist standpoint. Therefore, advertisers, relying solely on the TNS rating, risk placing their ads in publications that people have heard of, but never read, thus overpaying for a non-existent readership. This suggests that “the situation is under control”...
The volume of the advertising market itself is overstated, since it is determined by guesswork. Those conducting the assessment multiply the number of advertising pages by the prices reported by the publication. However, everyone knows that the actual prices paid by advertisers are much lower than those indicated in price lists. What is worse is the fact that the unfair split of the already small advertisement pie and the resulting poverty of most newspapers and magazines facilitates something that should, in theory, ruin the reputation of any publication, yet is essentially routine for virtually all of them in Ukraine: the publication of specially ordered articles without the “advertisement” sign or in the vernacular “plugola”. Sometimes, prudent and democratically-oriented editors see no way out, other than printing a specially ordered article in their publication because they simply have no other sources of income. Some journalists get used to this practice and often write articles or programmes to order, thus confirming the general opinion that all journalists can be bought and sold.
The final consequence of this distortion of priorities, is public distrust of the press as a whole, a sharp decline in social capital and a crisis of values, making it easier for governments and oligarchs to manipulate society. Just look around – isn’t this what you see in the Ukraine of 2012? The problem with freedom of speech in Ukraine is that Yanukovych & Co are taking advantage of the lack of a mass media market in Ukraine and the rules dictated by major media holdings. Thus, the government is actually helping to implement Russian scenarios concerning Ukraine, particularly its inclusion in the so-called “Russian World”. For instance, the Ukrainian-language segment is disappearing from the newspaper and magazine market. According to the Book Chamber of Ukraine, the total print run of Ukrainian-language newspapers has halved over the years of independence, while the print run of Russian-language publications has grown by 150%. Over the past 20 years, the share of the annual print run of Ukrainian magazines has fallen from 70% to 10%, while that of Russian-language publications has skyrocketed from 18% to 90%. Only one third of all publications are in Ukrainian today. This is one of the consequences of the myth imposed on advertisers that the readers of Ukrainian-language publications are not well-off enough to buy the things they advertise. This is blatant manipulation. A notable example of this is “Kontrakty”, a Ukrainian-language business magazine, which earned the highest income from advertising of all other business publications. It lost its leadership after the introduction of its Russian-language version. However, such manipulation succeeded. Many Ukrainian-language publications have closed down over the past few years, since they could not survive without income from advertising, as revenues from substriptions and retail sales do not, as a rule, cover the cost of paper and presence in retail chains. The latter is also caused by the monopoly factor, which makes it ridiculously expensive to get onto the shelves. In the meantime, only one or two publications in Ukraine can sell at prices that cover their expenses without losing a significant amount of their readership.
Food for thought: the UMH Group portfolio does not include a single Ukrainian-language publication.
NO PICTURE, NO SOUND
Qualifying radio as mass media in Ukraine is hardly reasonable or even possible. An absolute majority of radio stations are purely for entertainment. Radio Era, the only socio-political radio channel in Kyiv, does not even try to hide its miserable state as it gives away its air-time to so-called “joint projects.” Today, Era has turned into a branch of the state-owned Radio Rossii (Russian Radio) with all relevant consequences.
As for television, it is undergoing what appear to be confusing processes, which can be easily explained from the “presumption of guilt” perspective. After the change in the administration of Ukraine two years ago, several dozen hitherto unknown new channels joined the TV advertising market – already limited at that point, with an annual value of USD 400-425mn. Meanwhile, the state regulator kicked out the two most bothersome broadcasters: the Kyiv-based Channel 5 and TVi, which specialize in socio-political programmes and are known for their openly independent position. Notably, most Ukrainians still watch analogue television while cable is only available in big cities. Since these two unruly channels were kicked out by the regulator, they have been having problems with local operators who have started to delete them from their packages for obscure reasons, without any explanation.
A lot of questions are also raised regarding GfK, a company that measures TV ratings. In June, a small broadcaster complained about leaked information regarding the list of addresses where audience measuring devices, known as people meters, were installed. This opens the door for uncontrolled manipulation with supposedly objective popularity indicators, on the basis of which, TV companies determine the price for their advertising time. Mykola Kniazhytsky, Director General of the TVi channel, has noticed obscure changes in the measuring device, whereby several viewers who were particularly loyal to one button or another, were suddenly removed. Coupled with the tax police raid on TVi and resulting in the initiation of a criminal case for alleged tax evasion after this issue had been won by the TV channel in court, a picture emerges of undisguised administrative pressure.
After the two violators of the peace were removed from the widely accessible media pool, they found themselves on its sidelines with ratings ranging from 12th to 20th places. As for the leaders, comprised of a never-changing pool of six channels, they are full of confidence. They just have one little problem: they are all unprofitable, which doesn’t surprise anyone. According to reliable estimates by experts, revenues from advertising on television mounted to USD 400mn in 2011 while expenditures totaled USD 800mn.
Everything becomes clear when one remembers that all leading TV companies are owned by a handful of Ukrainian oligarchs, such as Dmytro Firtash, Viktor Pinchuk, Ihor Kolomoyskyi and Rinat Akhmetov. For them, television is a tool of political influence rather than business. Several media managers insist that they increase the capitalization of assets for their owners through operating expenses, but this explanation seems lame in view of the upcoming election.
Against the backdrop of the transformation that leading TV brands have undergone over the past few years, whereby fully-fleged media with their powerful informational blocks have turned into purely entertaining tabloid projects, this no longer matters that much. Ukrainian society will have to realize that it has been deprived of its fourth power in yet another crisis period of its history. There is nothing left other than to escape to the internet where the business component is still small, as online resources account for a mere 2% of the advertising market and the government’s ability to control it is limited. But even here, the government’s attempt to influence independent online resources was observed. LB.ua, one of the most visited websites in Ukraine, has recently been sued for violating the secret of correspondence and privacy, although the plaintiff renounced his claim against the internet publication. As long as Ukraine does not turn into another Belarus or China, at least in the internet, it can count on its territory of freedom. However, this does not guarantee good quality journalism.
ONCE MORE ABOUT FREEDOM OF SPEECH À LA UKRAINE
On 2-5 September, Kyiv will host the 64th World Newspaper Congress and the World Editors Forum. Despite the potential importance of the event for the development of the Ukrainian media market, increased interest in both the market and Ukraine in the world and the integration of Ukrainian journalism in the world professional community, in truth, this year’s forum is addressing a range of specific features, that raises doubts as to how useful it will be under the existing circumstances and format. In fact, the idea to hold the forum in Kyiv was initiated by the Yanukovych regime in the spring of last year. In May 2011, Viktor Yanukovych wrote a letter to Christoph Riess, the CEO of the World Association of Newspapers and News Publishers, proposing that the congress and forum be held in Kyiv. Obviously, the current Ukrainian government, under which Ukraine dropped to 130th place in Freedom House’s Freedom of Press index because of the growing control of the government over the mass media, is pursuing its own personal interests that have no bearing on those of Ukrainian journalism. Quite the contrary, they may pose a threat to freedom of speech.
There is a risk that the government will use the newspaper congress, just like it did the Euro 2012, to legitimize its regime in the eyes of the West, create a positive informational background to neutralize news about pressure on the freedom of speech and authoritarianism in Ukraine, and create the illusion that Ukraine still has democratic freedoms, it’s alleged democracy and European vector. Mr. Yanukovych’s press-service has already posted the expectations of the Presidential Administration from the congress on its website together with the announcement of his letter proposing that the forum be held in Kyiv, stating: “Ukraine is confidently moving ahead towards a democratic society and the development of an independent mass media”, “transparent and efficient rules for access to public information have been introduced in legislation and the investigation of the Georgiy Gongadze’s case has been significantly intensified”, “these measures are an important step for Ukraine in its European progress; they will once more confirm Ukraine’s choice as a state willing to strengthen democratic values to which freedom of speech and the press is integral”. Officials at Bankova expect that these theses will be confirmed in the world information space as a result of Kyiv hosting the congress.
According to Oleksandr Kurdynovych, the Head of the State Committee for Television and Radio Broadcasting of Ukraine, the authorities are going to allocate less than USD 0.8mn, which is no more than 15% of the cost of the forum and the congress, from the state budget, with the rest being covered by major private sponsors. One of the initiators of the event being held in Kyiv is a media holding with an ambition to monopolize the print media segment in Ukraine. It has recently showed signs of a merger with the media assets of influential Ukrainian oligarchs – Rinat Akhmetov and Petro Poroshenko. The official communications partner is the Ukrainian Media Development Institute, chaired by Olena Hromnytska, the former press secretary of Leonid Kuchma, who then worked at Rinat Akhmetov’s media holding. The journalists there claimed that she published specially ordered articles flattering the government. The general partner of the congress is the DF Group, a group of companies owned by another oligarch, Dmytro Firtash. This appears symptomatic.
Obviously, the purpose of such measures is the symbolic establishment of the dominant positions of monopolist media holdings, securing their roles as “legislators of fashion”, and the marginalization of other participants on the Ukrainian media market that are not incorporated in the existing government-oligarch conglomerate, continue to demonstrate the independence of their own position and avoid the pursuit of maximum commercial effect at all costs. Oleh Nalyvaiko, President of UNIAN, one of the biggest news agencies in Ukraine controlled by the government, made an expressive comment: “The congress will be attended by managers who are used to resolving specific issues: how to increase a print run; earn more money; attract advertisers; minimize costs, etc. I think this tone will prevail. This is what Ukraine needs right now. If we politicize all of this and begin to discuss other things, we will talk the congress to death.”
At the same time, congress participants should realize that their position will define whether they approve the political course of the current president (who is both an initiator and a VIP-speaker at the forum) with their participation and especially potential silent consent, thus facilitating the regime’s legitimization, or on the contrary, use the forum to show Yanukovych & Co the inadmissibility of the situation regarding the intensified attack on freedom of speech under the cover of ever more cynical declarations about the creation of an environment for the development of free press in Ukraine.
The forum will be attended by such renowned journalists as Gwen Lister, Executive Director of “The Namibian”, a newspapaer founded during the South African occupation of Namibia as the “voice for the voiceless”, promoting the idea of its independence and recognized as a world press freedom hero by the International Press Institute in 2000; Erik Bjerager, President of the World Editors Forum, who is also Editor-in-Chief and Managing Director of the Danish newspaper Kristeligt Dagblad, a determined advocate of freedom of speech and the press; well-known US investigative journalist David Boardman, Executive Editor and Senior Vice President at The Seattle Times, and member of the Board of Directors at the Center for Investigative Reporting, the Steering Committee of the Reporters Committee for Freedom of the Press; Caroline H. Little, President and CEO of the Newspaper Association of America and President of the American Press Institute; and Greg Hywood, Chief Executive and Managing Director at Fairfax Media Limited, who opposed state regulation of the press market in Australia. Surely after Mr. Yanukovych’s speech, they will not be silent and ignore the obvious facts of the current government’s ever more aggressive attacks on the freedom of speech, which has been attested to by reputable international organizations?
The problems with freedom of speech in Ukraine are not limited to pressure on independent media. A series of successful media projects sponsored by Ukrainian oligarchs have been reformatted in cases where sharp criticism of the government was an unwanted irritant for the regime.
Instructions from above on how to cover or not cover certain events or issues, forbidding any positive information about opposition forces have been reinstated at state-owned media. The scope of self-censorship has intensified in the leading media. Managers loyal to the government have been appointed to top positions in several influential media together with a relevant change in editorial policy. UNIAN, one of the most long-standing news agencies in Ukraine, is an example of this. Some journalists left their TV channels in protest against the unacceptable censorship of their materials. Access to socially important information has been restricted for journalists, in spite of the passing of a relevant law. There has been gross interference on the part of government representatives in the work of journalists without any administrative or criminal punishment. All these facts have accompanied the development of the Ukrainian media market over the past two years. Meanwhile, they did not stand in the way of the dynamic growth of business empires owned by media tycoons loyal to the government, which had an adequate level of self-censorship.
All told, the important task of congress participants will be to avoid blessing and mothballing all the abovementioned problems of the Ukrainian media market and showing Yanukovych and all other Ukrainian participants, that the freedom of speech situation in Ukraine is not satisfactory and that it is moving in the wrong direction. It is crucial to show that international events, such as the congress, - significant as they are - cannot be used as a rehabilitation tool for the authoritarian policy of the current Ukrainian regime.
 Bankova Street is the location of the Presidential Administration