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Russia: TV and Radio Broadcasting Network "Preparing for Company Flotation"

Posted on: Friday, 5 August 2005, 09:00 CDT

Text of report by Russian newspaper Nezavisimaya Gazeta on 3 August

Changes are brewing in the TV and radio market. The Russian TV and Radio Broadcasting Network [RTRS] is actively preparing for company flotation, even though this state enterprise is considered strategic. We discussed this with RTRS General Director Gennadiy Sklyar.

[Varshavchik] Gennadiy Ivanovich, a while ago you stated that RTRS does not have enough state-allocated money, and you raised the issue of flotation for the enterprise you run.

[Sklyar] I officially expressed my point of view for the first time at a meeting of the Rospechat [Russian Main Administration for the Distribution of Printed Materials] board this spring, and subsequently it was heard at a meeting of the board of the Ministry of Culture. I believe that the process of modernizing RTRS and transforming it into a modern market-based, competitive company is closely connected with the issue of flotation. Rospechat and the Ministry of Culture have supported us in this position, and right now they are drawing up the necessary documents for the government and presidential administration. Approval of the latter is essential because RTRS is considered a strategic enterprise.

[Varshavchik] Who is RTRS subordinated to right now?

[Sklyar] FGUP [federal state unitary enterprise] RTRS was created by a decree of the Russian president in 2001 and until recently did not have a departmental affiliation. In view of the law on state unitary enterprises, as of last year RTRS has been departmentally subordinate to Rospechat, a subdivision of the Ministry of Culture and Mass Communications. However, the general director is still appointed to and dismissed from his post by the head of state.

[Varshavchik] Why do you need flotation if, as it is, you're a monopolist in the telecommunications and TV and radio broadcasting market?

[Sklyar] Yes, we are a natural monopoly in TV and radio broadcasting, and I think that in the next few years this situation will continue to hold. But ahead of us lies the development of the information market in connection with the appearance of digital technologies. Conduits of information will include not only the airwaves but also fibre-optic, broadband, cable, and satellite networks. RTRS will be transformed, according to our plans, into a carrier company that will technically ensure the delivery of media products anywhere in the country. But the distribution of these media products to the consumers, to the television set - that will be the job of the numerous providers and cable operators. Right now we are operating very actively outside our own bailiwick for a very simple reason. If we don't provide the impetus for the creation of modern, inexpensive cable networks, then in the future RTRS will not have work as a carrier. At the present time there is stagnation in the cable networks, inasmuch as the array of channels and the programmes they offer is too narrow. The same holds true for satellite TV. Why isn't, say, NTV-Plus [Independent Television- Plus] developing? Because despite a good assortment of programmes, it's too expensive for the ordinary person. One other important factor is the system for monitoring the receipt of content. Tomorrow, piracy in the media sphere of the communications market is going to be an extremely serious problem.

[Varshavchik] Speaking of NTV-Plus, you also represent its competitor, Kosmos-TV. Don't you think you're ruining the competitors this way?

[Sklyar] First of all, we did not found this company, and the fact that we now own 50 per cent of the shares in Kosmos-TV represents the inertia of the past. We have virtually no real influence over that company's activities, and this is not our business. It's a stalemate situation there, when the two owners - AFK [joint-stock financial corporation] Sistema and us - while each owning 50 per cent of the shares, can't undertake anything from the purely legal standpoint. Therefore I have no conflict of interest in this regard. In the future, satellite companies like NTV-Plus and cable operators like Mostelekom should simply become clients whose information I deliver, broadcasting it throughout the country. Right now in the Russian provinces there are four or five channels, and in many just one or two. This is wretched. Inside the Garden Ring Road the capital scene clouds officials' vision, and everyone thinks that since we have 10-15 channels here, that means everything is hunky- dory everywhere else.

[Varshavchik] But this came about because all the oversight over television here has traditionally been concentrated in the hands of the state.

[Sklyar] Yes, but on the other hand, in the last few years, unbeknownst to the federal Centre, there has been stormy growth in regional television, and we are observing the phenomenon of small regional companies starting to operate. Plus one other not unimportant circumstance, which is that the existing network that is RTRC is capable, given digital modernization, of distributing a significantly larger number of channels than there are now.

[Varshavchik] As I understand it, you're asking for money for the network. How much would it take, according to your estimates, for RTRS's carrying capacity to grow?

[Varshavchik] In the Concept for TV and Radio Broadcasting for 2006-2015, which we recently drew up for the government in conjunction with the Ministry of Culture, we're talking about approximately 30bn roubles. You have to bear in mind that we lag seriously behind not just Western but neighbouring countries as well. The Baltic countries are discussing how to convert to digital starting next year, Belarus recently approved an official concept for converting to digital broadcasting, but we still don't have an officially approved document concerning this. And meanwhile I hear at government sessions that there is a lot of money in the Investment Fund, 70bn roubles, but no proposals. Either people don't know their own country and situation, or else they're being disingenuous.

[Varshavchik] Don't you think that we have too many state channels, given the absence of even one public one, and even if we convert to digital, this won't add to content, will it?

[Sklyar] Our objective is to launch the mechanism for the mass consumption of new media products and programmes so that the viewer can decided for himself what he's going to watch and what he's going to pay for. If we're talking about a public channel, I'm convinced that we should have one, and it's going to have to be advertising- free and exist on a subscription basis. Then the reader can have a real influence on its policy.

[Varshavchik] Boris Reznik and Mikhail Fedotov, who wrote the law on public TV, have informed me that they were told that "there is still not the political will" for it in the Kremlin.

[Sklyar] That's why I'm pleased at the appearance from deep inside the Ministry of Culture of the Concept for the Development of TV and Radio Broadcasting in Russia for 2006-2015, which says that Russia should have 50 channels, including a public one. I'm saying that I will be among those people in our country who make every effort to see these intentions realized.

[Varshavchik] It's odd that one of the chief objectives of state television companies in this concept is "to shape a positive image of the country."

[Sklyar] When it comes to that type of definition, then as a citizen I can say that I'm an opponent of those kinds of formulations. I think we simply need to show the life of our country. If that's a good life, the image will be positive; if it's bad, the image will be bad.

[Varshavchik] So you're opposed to the image channel, Russia Today?

[Sklyar] No, I'm not opposed to that kind of channel. But you can make something pleasant or something the exact opposite out of any good thing. Unfortunately, we turn everything into a venture.

[Varshavchik] This spring you formally inaugurated official broadcasting of the Zvezda [Star] channel, which has declared itself a national-patriotic channel. Forgive me, but does this mean the other channels aren't national and patriotic?

[Sklyar] As someone who has learned from life and the past and who has had his fill of politics in its various forms at one time, I do not support these kinds of high-profile declarations and believe that any attempts to monopolize a trend can lead to nothing good. Experience shows that in a few years we're going to be looking for the people who made these high-profile declarations with a magnifying glass, as we say.

[Varshavchik] For a while you were talking about how all the channels should pay for signal reception, and you even stated that you would make them pay, otherwise you would cut off advertising to them. Apparently the situation has not changed since then.

[Sklyar] Yes, there were a few problems when Channel One and NTV failed to pay for distributing their signal in places with a population of less than 200,000. They felt the budget should do that, but the budget didn't allocate these funds in full. Right now there is an ongoing legal dispute between RTRS and these channels, but it is perfectly peaceful. As for the threat regarding the cessation of advertising, that was at the very beginning, when we were just starting out and we had to overcome inertia. Now the discussion has shifted to another plane - what the rates for services should be - and we are discussing these issues together with all the leading companies. We put our arguments on the table and they put theirs.

[Varshavchik] Channel One owed you 60m roubles. How much is their debt now?

[Sklyar] Altogether, based on the legal proceedings being heard now in Arbitration Court, Channel One owes us 630m roubles. We are trying to clear up who should pay RTRS - Channel One or the federal budget.

[Varshavchik] Minister of Culture Aleksandr Sokolov has stated the danger that satellite broadcasting of one or two channels to Siberia and the Far East might be cut off. The sum of 450m roubles was cited for modernizing it. Who, in your opinion, should pay for modernizing satellite broadcasting for the federal television channels, bearing in mind that, according to analysts' assessments, last year the total television advertising market budget was 46bn dollars?

[Sklyar] If the old Ekran [Screen] satellite isn't replaced with a new Express one, then indeed Siberia's population could lose reception of Channel One's programmes at any moment. However, since the satellites and reception networks belong to the state, I believe that this is a job for the state, not Channel One, even though it is a commercial organization. Since they could say, "The taiga villages of Siberia and the small cities aren't going to get us? That's just fine." Of course, the state may well say, "Our satellite has gone off line, the reception stations aren't operating, gentlemen of Channel One, quickly put together your own network using your own money." But I don't think anyone will win from this because Channel One is not going to find those funds quickly now. Ultimately, the population will suffer and will again be trying to figure out who in fact is to blame. I think that in this situation we're going to be the pointsmen.

[Varshavchik] Don't you think it's odd that there are still not any laws on television and radio broadcasting and that Russia has still not signed the European convention on trans-border broadcasting? As a result, all TV activities are regulated by presidential decrees.

[Sklyar] I'll tell you something else. We don't have a law on cable television. We were the initiators of the law "On the provision of a television and radio signal," in which we're trying to prescribe the rules of the game from studio to television set. In this entire sphere we really have not defined the rules of the game and on the regulatory level there's zero.

[Varshavchik] On the other hand, the nonregulatory nature of legislation in the sphere of TV and radio suits the state, which regards the electronic media as a kind of information cudgel it can use to brainwash its fellow citizens on a regular basis.

[Sklyar] This is a consequence of the trauma at the very beginning when the Gosteleradio system, under which it was felt that two television channels were more than enough for viewers, collapsed, and an extremely brutal power struggle ensued with the help of television. In this struggle, television has indeed been used as the main instrument. I think that this situation can be overcome only by creating a system in the country that lets all programmes through easily, just so they obey the law. A person should choose for himself what he's going to watch.

[Varshavchik] Considering the fact that the Kremlin is very worried about the "orange peril," will television in the future have to act yet again as a "security department," as Boris Yeltsin once designated it?

[Sklyar] Personally, as someone who has been through various elections as well as the demonstrations of the 1980s, I believe that today we have to solve current problems and give less thought to "orange" or "green" threats. If, for example, you give someone a sport channel, he's not going to be joining any orange crowds because the state is giving him something. But if the channels are taken away, then we'll be pushing that person towards those threats.

[Varshavchik] You have stated that in connection with the upcoming elections there are going to be quite a few who want to have a say in RTRS. Who did you have in mind?

[Sklyar] I had in mind the fact that there are many people who want to influence the decisions of the RTRS leadership, and in the last few months in general there has been a PR campaign conducted to discredit RTRS, and we have had to deal with extensive audits by law enforcement agencies. I look on this as their desire to obtain information of some kind that they can latch onto. So far all the audits have failed to turn up a single violation with respect to the spending of budgetary money. I realize that if we were working sloppily here we would be jeopardizing the reputation not only of RTRS but also of the person who created this structure and to whom I report - Russia's president. I keep that in mind at all times.

Source: BBC Monitoring Media

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