The nation’s almighty TV and radio regulator says it doesn’t know who is behind the monopoly that is responsible for the digital switchover from analogue TV upon which 45 million people will rely to receive and 28 national channels will depend to send their television signals while paying millions of dollars yearly for the service.
In an Oct. 25
response to a Kyiv Post question posed a day earlier at a roundtable, the
National Television and Radio Broadcasting Council said that Zeonbud, the digital
TV monopoly for the next ten years, is owned by Cyprus-registered Planbridge
Limited.
The Kyiv Post had
asked the council’s chairman, Volodymyr Manzhosov, the name of the ultimate
owners of Zeonbud.
Manzhosov from
2005 to 2010 was vice president of Ukraina TV and Radio Company, which is a
part of Rinat Akhmetov’s media holding within System Capital Management.
Instead of
answering the question, Manzhosov requested an official written inquiry. When
told that journalists are allowed to submit verbal information requests,
Manzhosov cited the public access to information law to say he had five
business days to respond to the question.
The TV and radio regulator
had yet to respond to a list of follow-up questions the Kyiv Post e-mailed on
Nov. 2.
As it has
repeatedly done in the past, the regulator failed to mention that Zeonbud is
further concealed behind two Belize companies with an identical address and a
company registered in the British Virgin Islands that was incorporated by a
lawyer who Panama courts questioned in 2006 on suspicion of laundering money
for Chilean dictator Augusto Pinochet and his family.
The company
ownership trail thus far ends there. But there is strong suspicion among
industry players that a glaring conflict of interest lurks behind the company
with people close to power or in power being the end-owners of Zeonbud.
Zeonbud’s general
director Viktor Halych didn’t return Kyiv Post phone calls or respond to a Nov.
2 e-mailed inquiry.
Halych did tell
Forbes Ukraine on Oct. 8, however, that he only knows of Planbridge, and isn’t
aware of or interested in knowing who the beneficiary owner of Zeonbud is.
Media watchdogs
and industry players are concerned not only how the digital TV landscape will
look once the digital switchover is completed sometime next year, charging that
it lacks pluralism and broadcasting diversity to meet society’s needs, but also
which channels received digital licenses.
TVi general director
Mykola Kniazhytsky, who heads one of the nation’s last remaining independent
and investigative TV stations, said he was pessimistic about his chances to get
a digital license through the courts. If TVi loses the court battle, it will no
longer be available once the digital switchover takes place.
On Jan. 12, TVi
and TVi Kultura along with children’s TV channel Maliatko, TVinfo and Era lost
their court case against the TV regulator who didn’t award them digital
licenses.
TVi has appealed the
decision in higher courts, but litigation has dragged. On Nov. 7, the Higher
Administrative Court granted the TV regulator’s motion to appoint a new panel
of judges to hear the digital license case.
“We’re not going
to win this case,” said Kniazhytsky, who was recently elected to parliament on
the opposition Batkivshchyna Party ticket. “We offered cultural, historic and
thematic programs…we show lectures on TV that nobody else does…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
which 28 national channels from among 59 would receive national digital
licenses in August 2011.
The largest
financial industrial groups received a disproportionate amount of the digital
TV resources.
Deputy Prime
Minister Valeriy Khoroshkovsky’s U.A. Inter Media Group received eight licenses
for all his existing terrestrial and satellite channels. Rinat Akhmetov’s Media
Group Ukraine received three licenses. Viktor Pinchuk’s StarLight Media won
four spots. Ihor Kolomoisky’s 1+1 media won two spots and he bought Real Estate
TV which had won a digital 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 isn’t taking advantage
of using digital TV to add diversity and pluralism with the more channels that
digitalization allows.
There are
currently 16 terrestrial national channels. The regulator has required that all
28 national and four regional digital channels be carried free by Zeonbud and
any other carriers like cable and satellite TV companies.
“Results of the
digital license tender doesn’t provide grounds to believe that society’s
interests were taken into account, that pluralism of business interests were
ensured, and conclude that pluralism of thought and diversity of programming (was
the guiding principle),” said Zakusylo.
Viktoria Siumar,
executive director of media watchdog Institute of Mass Information, said that
many niches, including minority preferences, were discounted in the digital
license allocation process.
“Education,
debate, and culture were mostly ignored,” said Siumar. “The National Council
never has worked under this principle.”
Siumar complained
that the regulator didn’t make room for a public broadcasting channel, which
the nation still lacks more than 20 years into independence, and observed that other interests, such as
classical music were ignored.
“The principle of
allowing audiences to seek and receive more information and ideas is absent,”
said Siumar who added that TV in Ukraine is mostly filled with entertainment
programming.
Initially, when the
children’s channel Maliatko wasn’t chosen, there would’ve been no children’s
TV. But Inter later reformatted its Enter Music channel to Pixel, a children’s channel.
“The National
Council gave Enter Music permission to reformat less than a year after awarding
the digital licenses, meaning that any license winner can at any moment change
its conception,” said Telekritika’s Zakusylo. “And it’s possible that we’ll be
left without the only digital sports channel Hockey and only digital
information channel 5. (What if) suddenly their owners want to develop
entertainment TV instead of sports and information?”
Another concern is
the regulator itself. Siumar said that for all the power it has – it can shut
off a TV channel after issuing two warnings, for example – it’s not an
independent body because the president appoints four council members and
parliament appoints the other four.
“And the
opposition isn’t represented on the council and there are no credible members
from civil society,” said Siumar.
Yet Zeonbud lies
at the heart of the digital TV debate.
Ukraine is a signatory of Geneva
2006, which compels it to upgrade to digital broadcasting along with 103 other
countries by 2015. According to Zeonbud’s latest plans, the upgrade should be
completed by mid-2013, but their schedule keeps
changing.
The countries that have already finished or are upgrading usually have done so
through multiple public-private partnerships or by hiring a company to make the
switchover under transparent conditions.
In December 2010,
Zeonbud was chosen over another unknown company to obtain four licenses to
develop a digital TV network from scratch.
The other bidding company didn’t bother to attend the Dec. 8, 2010 winning bid
announcement by the National Television and Radio Broadcasting Council.
Moreover, bidders had to provide proof they received a Hr 1 billion ($125
million) bank guarantee to build the digital network. Zeonbud secured its loan
from state-owned Ukreximbank and paid nearly Hr 8 million – or Hr 1.9 million
each – for the four licenses.
This has only fueled suspicions that Zeonbud has high-level connections in
government.
“This is a way for people with heavy political influence to convert this
project to money once the digital network is launched,” Valentyn Koval told the
Kyiv Post in July 2011, general director of M1 channel, part of billionaire Viktor Pinchuk’s media holding, son-in-law to former Ukrainian
President Leonid Kuchma.
When asked to explain why a state bank gave such a big loan 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.”
When digital
arrives, up to 16 million TV households will rely on Zeonbud as the sole
operator and provider of 32 channels, 28 of them national. This comes despite
the firm’s lack of any track record in the business.
Zeonbud’s monopoly
position, including the way it received licenses to build a digital TV network
from scratch, has raised more questions than answers.
Zeonbud stands to make close to $2 billion as a provider to national TV
broadcasters over the next decade, the duration of its licenses, according to
Oleksandr Pivnyuk, a technical consultant in the TV business.
Until March, Pivnyuk was vice president of the state-owned Broadcasting, Radio
Communications and Television Concern.
At present, 20 TV channels belonging to three media groups rake in
approximately 90 percent of Ukraine’s annual $350 million terrestrial TV
advertising market. This market will be further diluted once additional
channels are made available, since digital TV compresses to make room for more
frequencies.
In Zeonbud’s case,
it has a 10-year concession before its licenses expire. The company has set
non-negotiable rates to TV broadcasters regardless of their channels’ audience
size.
And Zeonbud has eschewed face-to-face contact with TV companies, opting instead
to communicate via electronic and postal mail through a post office box 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
StarLightMedia, Viktor Pinchuk’s media holding.
Koval added that neither he nor anybody in the TV broadcasting industry have
ever heard of Zeonbud prior to it winning the digital upgrade bid.
Ukraine’s
anti-trust body in August 2011 said that it was investigating whether Zeonbud’s
tariffs are economically justified.
“If we determine
that tariffs for telecommunication services are economically unjustified, this
operator will be brought to responsibility,” said Rafael Kuzmin in August 2011,
first deputy head of the Anti-Monopoly Committee.
The Anti-Monopoly
hasn’t responded to a Nov. 2 Kyiv Post inquiry.
Moreover, broadcasters with existing nationwide analogue TV networks had to
competitively reapply for digital licenses with Ukraine’s broadcasting
regulatory body, another practice that contradicts European practice.
“This contradicts recommendations of the OSCE-led guidebook,” said Andrey
Rikhter, who co-authored OSCE’s Guide to the Digital Switchover.
Mysteriously, the government’s broadcasting regulatory body forced digital TV
bidders to sign legally binding agreements with Zeonbud as a precondition
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]
