Ukrainian newspapers, magazines, radio stations and TV channels are anything but business. Their purpose is anything but the foundation of democracy in society
To an outsider, the Ukrainian mass media may seem to thrive in an environment of free speech. Indeed, opposition MPs appear on at least three TV talk shows every week. Numerous print and online publications criticize the government. The community is abuzz about intriguing new media projects, including The Capital, a Russian-language daily newspaper on pink paper. There is no public information about its owners, but the content gives the impression that it is loyal to Serhiy Arbuzov, First Vice Premier whom some describe as Yanukovych’s right-hand man. It is hard to see what is the product of prevailing market trends – or of resistance to them – and what is a misleading illusion.
This difference is crucial - similar to that between live and fake flowers, freedom and imitation thereof. Current processes in Ukraine are a simulation of the market, competition, the free exchange of ideas and social responsibility. The government finds the outcome satisfactory as it does not ruin the status quo in society.
The current structure of the local media market reveals surprising disproportions. The number of business publications is high, despite a sluggish business environment. Glossy magazines have a huge market share. Tabloids are weak, while good quality influential press is almost non-existent. Ukrainian-language publications face strong discrimination as almost 60% of the total print run is in Russian despite 2/3 of the population listing Ukrainian as their native language.
Television looks fairly diverse, but is dominated by six virtually identical entertainment TV channels owned by four oligarchs, including Dmytro Firtash, Rinat Akhmetov, Ihor Kolomoisky and Viktor Pinchuk. Seeking any useful information there is futile, especially at times of political turmoil or before elections. The top channels focus on “trash news”, manipulative political talk shows, comedy shows and criminal series produced in Russia – often sprinkled with a pinch of propaganda.
Qualifying radio as mass media in Ukraine is neither reasonable nor 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 “joint projects” with foreign broadcasters, mainly Radio Rossii (Russian Radio), a state-owned radio station, and their relevant impact.
What causes these fluctuations, which are hard to imagine in any modern country? Why are some key media functions, such as investigative journalism, almost completely absent in Ukraine? Why does it not offer any educational product? Why are the media, especially online ones, rapidly turning into tabloids for a primitive audience? Why is there no public outcry about the number of published wide-spread and accepted paid articles? They are not even marked as advertising.
There are several explanations. Firstly, a country that has no real market economy cannot have individual fields with a favourable environment for business. In fact, Ukrainian media are not business projects because all media projects, publish at a loss, save for a few women’s glossy magazines, sports and car publications. At year-end 2012, Valeriy Khoroshkovsky, ex-vice premier in Azarov’s Cabinet and former owner of Inter, one of Ukraine’s leading TV channels, was forced to sell it under pressure from the government after his demonstrative switch to the opposition. The deal was officially reported to cost over USD 2bn. It later emerged that Inter’s annual income was nearly USD 100mn compared to expenses of USD 170mn.
Secondly, opportunities for administrative pressure on any disobedient publication are limitless. It can face charges of failure to pay taxes. Someone mentioned in its article can sue it for libel. Authorities can withdraw its license to broadcast – in the case of television. All this is because courts, police, tax authorities and the television and radio regulator are all part of the government machine and obediently fulfill its orders.
Thirdly, there are no rules to protect ownership - this is true for any other sector in Ukraine. Ultimate owners hide behind numerous interim offshore companies to ensure personal security or evade taxes. In the end, this can do them more harm than good. A brand new scandal: at the end of April, TVi, an independent TV channel that had suffered significant government persecution, suddenly ended up in the hands of new unknown owners. After a week-long strike, virtually all of its journalists quit. Who plotted this, and why, is yet to be seen. The change of owners leaves the impression that all of this was in the interests of a pro-government group of influence.
Fourthly, direct foreign influence strongly affects the local market. In 2012, the official budget for the Russian Cooperation, an organization acting to support media and “NGOs” abroad, grew fivefold to USD 323mn. The amount may not look striking, but it equals over a quarter of what Ukraine’s advertising market is worth. This fuels the suspicion that some Russian-language – and pro-Russian publications are above market competition.
Overall, the media “market” in Ukraine is totally monopolized. For instance, UMH Group is a media holding that owns several dozen diverse print and online projects, almost all of them in Russian. The giant dictates its rules in the newspaper and magazine sector – and to advertisers, while its portfolio includes several publications that are direct competitors, such as Korrespondent and Focus, both news weeklies. Notably, most publications in UMH’s portfolio operate at a loss. Hence, the question: what is their purpose, other than propaganda? Still, monopolization continues: several weeks ago, UMH bought Petro Poroshenko’s stake in Korrespondent. As a result, UMH has taken over virtually all advertising on the market, thus squeezing out independent media since advertising is the only way to make profit in the Ukrainian media industry.
In addition, hardly anyone in the industry has an objective concept of its performance. Key players have been resisting the implementation of an independent print run and sale certification for a decade now, while advertisers have only dubious “popularity” ratings to rely on, measured by the local branch of TNS. This is despite a number of scandals revealing that its data does not always reflect the reality. For instance, TNS employees refuse to poll Ukrainian-speaking readers in telephone surveys, thus underestimating the readership of Ukrainian-language publications. Mechanisms to measure television popularity ratings are also far from perfect. Manipulations revealed last year pushed advertisers to stop using GfK Service. In 2014, it will be replaced by Nielsen to do the job. Still, the change of one player is not likely to change the overall process.
Given these factors, the mass media become tools to manipulate public opinion (only a few are actually commercially successful projects), an element of an oligarch’s or a politician’s influence, or an expensive toy such as a football club. As a result, Ukraine has no public broadcasting, while state-owned media work only to service top officials.
If the mass media are not a commercial business, they turn into a mouthpiece. In Ukraine, they cannot act as a business because the funding of advertisements is scarce on the monopolized market, and rules are distorted everywhere, regardless of the industry. This plays perfectly into the hands of the government that prefers to keep people starved of information and opinions, also foists its values that are far from democracy or humanism, on the electorate.
Ukrainian society realizes that it has been deprived of its fourth power in yet another crisis period of its history. People have no option other than to escape to the internet, which they do, at a rate of 5% annually in big cities. Today, over 50% of adult Ukrainians have access to the internet. So far, its commercial aspect is extremely underdeveloped, as online publications barely account for 2% of the total advertising market. But the government has limited ability to control it. As long as Ukraine does not turn into another Belarus or China, it can at least count on its territory of freedom – online. However, this does not guarantee good quality journalism.
The United States is committed to working with its Allies and partners to keep pressure on Russia to live up to its commitments and to begin the process of peacefully restoring Ukraine's full sovereignty over Donbas
During the 29th Economic Forum in Krynica-Zdrój (Poland) The Ukrainian Week talked with Ewa Konczal, Central and Eastern Europe Manager in the European Venture Philanthropy Association about impact investment and government role in that process