The Hidden is Becoming More Evident

8 July 2013, 10:01

The huge deal to sell Boris Lozhkin’s UMH group, one of Ukraine’s biggest media holdings, to Serhiy Kurchenko, a new-coined 27-year old oligarch, stirred a tsunami of publications lamenting “the end to free press”. Volodymyr Ferodin, Chief Editor of Forbes Ukraine, which is part of the UMH holding, said openly that he is leaving the magazine because he is convinced that Kurchenko bought the holding for political purposes, such as to “Shut up journalists before the presidential election”, “whitewash his own reputation” and “use the publication to solve issues that have no bearing on the media business”, thus Fedorin sees the sale of Forbes Ukraine as “the end of the project in its present form.”

In fact, it is too late to shed tears over the freedom of press in Ukraine. It was stolen a long time ago, not least by the people linked to the biggest media holdings.

Until recently, UMH was an incarnation of the thriving Ukrainian media, at least print and online ones, as opposed to television. They all seemed to be independent, diverse in content and audience, some even competing among themselves. Boris Lozhkin and his UMH always managed to persuade everyone around that his business was actually business, and a profitable one, with undeniable success. He even maintained the illusion of success during the crisis period, when companies started cutting their advertising budgets and many publications closed down in 2008. How and at what expense he did this is still unknown.

Anyone who deals with the domestic media is well-aware that profitability is almost impossible in Ukraine. A simple calculation of the number of pages in a publication, the size of advertisement banners, discounts and barter advertisement reflects this. All this is a consequence of the lack of a media market in Ukraine.

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The biggest media holdings, primarily UMH, made every effort to build a system with rules that suit them but bear little relation to market conditions. UMH’s promotion strategy in Ukraine focused on the expansion and takeover of the advertising market. The first objective was a success: UMH now has 860 own points of sale and an extensive presence in all retail chains, from SoyuzDruk, a nationwide chain of press kiosks, to supermarkets. So was the second: UMH is now No. 1 in cumulative print advertising in Ukraine. This leadership comes largely from the distorted division of the advertisement market, while advertisers’ choice is based on misleading and subjective criteria. One is the brand recognition survey conducted regularly by TNS Ukraine. There are no specific facts to confirm the manipulation of monitoring results, but practical experience has often proved that domestic conditions distort the activities of the well-known international companies compiling media ratings (see Sleeping Beauty and Bread Crumbs). Numerous attempts to introduce a comprehensible, uniform and objective system of print run and sales certification (there have been two initiatives so far) have faced sabotage and resistance from key players.  

Obviously, segment leaders define the rules, support their homeboys and oust strangers. In other words, they act as masters. Among other things, they impose the notion that Ukrainian-language media are unpromising and unattractive in the country where 2/3 of the population list Ukrainian as their native language. “The Ukrainian readership can’t afford to pay,” an advertising agency once explained.

The key problem of the print media market in Ukraine is the lack of one. Instead, the segment is dominated by the “standards” imposed by the biggest holdings, such as UMH. Advertisers see these manipulations with ratings and overblown print run figures, so are reluctant to work with the press because they do not trust its effectiveness. This forces the print media to product placement masked as unpaid covers, interviews or Company News or Position sections, which is blatant PR. As a result, the Ukrainian mass media system created by the leaders of the present quasi market was corrupt from the very beginning. The overall system of relations in a segment with no transparent competition, the blocking of proper feedback from the readers and flirting with those in power, has in no way facilitated the freedom of speech. And the UMH management is not the only one responsible for this. Just recollect Borys Lozhkin’s proactive participation in the 2012 World Newspaper Congress and World Editors Forum held in Kyiv under the patronage of President Yanukovych and his Administration with its relevant content and messages.

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Therefore, the fact that a friend of the Family has acquired UMH does not change anything. The new owner bought the holding with all the manipulative instruments available in the Ukrainian mass media. No matter what Serhiy Kurchenko says, he clearly did not acquire UMH as a business because it is not one, but as an instrument of influence. How effective this influence will be is a different matter; the system that turned most Ukrainian print media into an advertisement board has deprived them of it. Indeed, a publication can hardly influence the readership without a sustainable and accountable editorial policy, its own opinion and stance. Meanwhile, only market conditions allow the profitable operation of publications, such as The Economist, that do indeed have their own editorial policy and intellectual platform.

Paradoxically, the acquisition of UMH by Kurchenko may be a good thing. As the talented illusionist Lozhkin walks away from the business and the Family’s friend enters the print media system, things may well become much more transparent. At least now it will be clear that the government is watching over most publications in Ukraine. 

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