The nation’s almighty TV and radio regulator says it doesn’t know who is behind the monopoly responsible for the digital switchover from analog TV, upon which 45 million people and 28 national channels will depend.
In an Oct. 25 response to Kyiv Post, the National Television and Radio Broadcasting Council said Zeonbud, the digital TV monopoly for the next 10 years, is owned by Cyprus-registered Planbridge Limited. But Planbridge isn’t the ultimate owner of Zeonbud, which is what the Kyiv Post had asked the council’s chairman, Volodymyr Manzhosov. The TV and radio regulator had yet to respond to follow-up questions e-mailed on Nov. 2.
From 2005 to 2010, Manzhosov was vice president of Ukraina TRK, part of Rinat Akhmetov’s media holding within System Capital Management. Manzhosov failed to mention that Zeonbud’s ownership is further concealed behind two Belize companies with an identical address and a company registered in the British Virgin Islands.
Zeonbud general director Viktor Halych didn’t answer Kyiv Post questions, but earlier told Forbes Ukraine that he knows of Planbridge but isn’t aware of or interested in knowing the identities of the beneficiary owners of Zeonbud.
The opaque ownership structure has aroused suspicions of conflict of interest and what effect Zeonbud will have on Ukraine’s already highly concentrated media landscape.
Mykola Kniazhytsky, general director of one of the last TV stations that offers journalism critical of the government, said he is pessimistic about his chances to get a digital license through the courts. If TVi loses a pending court battle, it will no longer be available to viewers once the digital switchover is completed.
On Jan. 12, TVi and TVi Kultura along with children’s TV channel Maliatko, TVinfo and Era lost their court case challenging the government regulator’s denial of digital licenses. TVi has since appealed the decision in higher courts.
“We’re not going to win this case,” said Kniazhytsky, recently elected to parliament on the opposition Batkivshchyna Party ticket. “It’s obvious the National TV and Radio Broadcasting Council isn’t interested in diversity.”
Social and educational programs were supposed to be given preference when the regulator selected 28 channels from 59 applicants to receive national digital licenses in August 2011. However, most awards went to Ukraine’s largest financial industrial groups.
Deputy Prime Minister Valeriy Khoroshkovsky’s U.A. Inter Media Group received eight licenses for his existing terrestrial and satellite channels; Rinat Akhmetov’s Media Group Ukraine received three; Viktor Pinchuk’s StarLight Media won four; Ihor Kolomoisky’s 1+1 media won two (he then bought Real Estate TV which had won a license for his 2+2 channel); Economy and Trade Minister Petro Poroshenko’s Channel 5 won a spot, as did Deputy Prime Minister Borys Kolesnikov’s Hockey Channel.
The state got its central bank’s BTB channel, First National Channel, as well as local licenses for each of its regional channels in every oblast.
According to media watchdog Telekrytyka’s Mariana Zakusylo, the regulator is failing to take advantage of the new platform’s possibilities to add diversity and pluralism. “Results of the digital license tender don’t provide grounds to believe that society’s interests were taken into account, that pluralism of business interests was ensured,” said Zakusylo.
Viktoria Siumar, executive director of media watchdog Institute of Mass Information, agreed.
“Education, debate, and culture were mostly ignored,” said Siumar, including the failure to make room for a public broadcasting channel, which the nation lacks.
Siumar also said the regulator has excessive powers, including the ability to shut off a TV channel after two warnings. The body is also not independent, she said, since the president appoints four council members and parliament appoints the other four representatives.
In December 2010, the mysterious offshore Zeonbud won a bid to develop a digital TV network from scratch after its only competitor didn’t bother to attend. Prospective bidders had to show a $125 million bank guarantee, which Zeonbud secured from state-owned Ukreximbank.
The circumstances fuel suspicions that Zeonbud has high-level connections in government.
“This is a scheme of shifting money offshore, which is fully legal, but it’s someone taking money from one pocket and placing it in another pocket of the same jacket,” said Valentyn Koval, general director of M1, part of billionaire Pinchuk’s media holding.
When asked to explain why a state bank gave such a big guarantee to a little-known company, an Ukreximbank spokesperson said in an emailed message: “Due to a number of internal banking nuances, we are unable to provide you with a response.”
Zeonbud stands to make close to $2 billion as a provider to national TV broadcasters over the next decade, the duration of its four licenses, according to Oleksandr Pivnyuk, a technical consultant in the TV business and former vice president of the state-owned Broadcasting, Radio Communications and Television Concern.
At present, 20 TV channels belonging to three media groups rake in 90 percent of Ukraine’s annual $350 million terrestrial TV advertising market. Meanwhile, Zeonbud has set non-negotiable rates to TV broadcasters. The company has eschewed face-to-face contact with TV companies, opting instead to communicate via electronic and postal mail when concluding agreements or contracts.
“This is the first time in Ukraine that contract conditions and tariffs were dictated to TV companies on non-negotiable terms,” said Koval of M1.
Ukraine’s anti-trust body in August 2011 said that it was investigating whether Zeonbud’s tariffs are economically justified, but has been silent since then. “If we determine that tariffs for telecommunication services are economically unjustified, this operator will be brought to responsibility,” said Rafael Kuzmin, first deputy head of the Anti-Monopoly Committee, said last year.
The TV and radio regulator also forced digital TV bidders to sign legally binding agreements with Zeonbud before applying for digital broadcasting licenses. “This is strange that a state agency forces TV companies to sign a contract with a private company as a prerequisite to receive a broadcasting license,” said TVi’s Kniazhytsky.
Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].
