Media Ownership and Commercial Pressures. Final Report for the ERC-funded project Media and Democracy in Central and Eastern Europe

Václav  Štětka

This report summarizes the main outcomes of the research conducted within Pillar 1 of the MDCEE project, entitled Media Ownership and Commercial Pressures. The primary goal of the project’s first research area was to investigate the market structures underpinning the conditions of news media organizations in Central and Eastern Europe and consequently to analyse the influence of economic factors on the relationship between the media and democracy in this region. While the overall scope of Pillar 1 was broadened in the course of the MDCEE project (2009-2013), and also included explorations in the area of administrative and regulatory capacities of the state vis-à-vis the market in general and the telecommunications markets in particular (see Stetka 2012a), this report focuses specifically on the original core issues of Pillar 1. It attempts to present a systematic and comparative overview of media ownership structures, as well as other important features and tendencies shaping the character of news media markets in the ten Central and Eastern European countries studied by the MDCEE project, particularly with respect to the 2008/2009 financial crisis, which has had a profound and dramatic effect on ownership patterns and on the overall situation of the media in this region.

Media Ownership and Commercial Pressures Václav Štětka Senior research fellow Media a d De ocracy i Ce tral a d Easter Europe ERC funded project Pillar 1 - Final report September 2013 This report summarizes the main outcomes of the research conducted within Pillar 1 of the MDCEE project, entitled Media Ownership and Commercial Pressures. The primary goal of the project’s first research area was to investigate the market structures underpinning the conditions of news media organizations in Central and Eastern Europe and consequently to analyse the influence of economic factors on the relationship between the media and democracy in this region. While the overall scope of Pillar 1 was broadened in the course of the MDCEE project (2009-2013), and also included explorations in the area of administrative and regulatory capacities of the state vis-à-vis the market in general and the telecommunications markets in particular (see Stetka 2012a), this report focuses specifically on the original core issues of Pillar 1. It attempts to present a systematic and comparative overview of media ownership structures, as well as other important features and tendencies shaping the character of news media markets in the ten Central and Eastern European countries studied by the MDCEE project, particularly with respect to the 2008/2009 financial crisis, which has had a profound and dramatic effect on ownership patterns and on the overall situation of the media in this region. Media and Democracy in Central and Eastern Europe An ERC Project based at the Department of Politics and International Relations of the University of Oxford in collaboration with the Department of Media and Communications, The London School of Economics and Political Science http://mde.politics.ox.ac.uk/ MDCEE Final Reports 2013 1. Introduction: key trends in the transformation of CEE media markets The process of liberalization of media markets in Central and Eastern Europe, following the collapse of communist regimes in 1989 or after, has been subject to extensive analysis over the last two decades, both country-based and comparative (Downing 1996; Sparks 1998; Hrvatin and Petković 2004; Jakubowicz 2006; Stetka 2012b), revealing both similarities and Page | 2 differences in the course and outcomes of the transformation. The abolition of censorship, constitutional guarantees of free speech, the privatization of the formerly state- or partyowned (or controlled) media outlets, the rebuilding of state radio and television into public service broadcasting institutions and the establishment of a dual system of broadcasting (based on the co-existence of public and private broadcasters) have certainly been among the main common denominators of the process of transformation of the media system across the region. Yet there have also been notable differences in the particular privatization models and regulatory frameworks, as well as in the velocity and extent of foreign investment in the media sector. While countries like the Czech Republic, Hungary and the Baltic states opted for an early and “spontaneous” privatization of the print media, with the main outlets being quickly transferred into the hands of editorial teams and then often (more commonly in Central Europe than in the Baltic) sold to international investors, in Poland as well as in Slovenia privatization followed a slower path with greater state control, including the imposition of a cap on foreign ownership, resulting in more widespread domestic ownership and also in a greater involvement of the state in the newspaper publishing business. Finally, the two Balkan countries and to some extent also Slovakia experienced rapid privatization of the press, but a relatively slow inflow of foreign investment, which can be attributed particularly to the tumultuous political and economic situation in the first years of transformation. Regardless of the differences in privatization histories and ownership patterns stemming from them, all CEE media markets have benefited from the steady economic growth which the region experienced from around the turn of the century onwards. This “wonderful decade” (starting after the brief economic slowdown caused by the Russian financial crisis of 1998), during which the average GDP growth was between 7-8 per cent (Sagemann and Reese 2011: 29; Aslund 2010), was an era of relatively continuous prosperity for the majority of mainstream commercial media organizations in the region, fuelled by the burgeoning advertising industry. According to the statistics of the World Newsmedia Network, total advertising expenditure tripled between 1999 and 2008 in the countries of the former communist bloc,1 rising from US$ 7,997 million to 26,584 million, while the growth in Western Europe was less than 20 per cent in the same period (World Newsmedia Network 2012). Even though the medium primarily driving this trend was television, which has quickly established itself as the dominant medium in most countries of the region (with the exception of Estonia), newspaper advertising was also rising steadily in most CEE countries until 2008, despite signs of the declining circulation which had already been affecting some 1 This includes countries of the former Soviet Union as well as other Central and Eastern European countries. MDCEE Final Reports 2013 of the markets since the mid 2000s (particularly in the Czech Republic, Slovenia and Latvia, see WAN 2010). Lured by the vision of prosperity, and following the staggering overall rise in foreign direct investment (FDI) in the region in the 2000s,2 international companies further increased their already significant presence in the CEE media markets,3 especially in countries where Page | 3 privatization of the electronic media was being delayed or more tightly regulated (e.g. Bulgaria, Slovenia). At the same time, many of the CEE markets started showing tendencies towards concentration, both horizontal and diagonal. The former type has been particularly notable in the newspaper sector, where the number of outlets – after the initial period of blossoming of new titles – started to decline in most countries in the course of the 2000s,4 while pluralism of ownership, due to the aggressive market strategies of Western companies, has also been significantly reduced in some countries and segments, most notably in the local newspaper market in the Czech Republic, Slovakia and Poland (see Klimkiewicz 2009). The latter type of concentration has manifested itself through the formation of media conglomerates involved in the production of media content across different platforms (newspapers, magazines, radio & TV stations, online), e.g. Mafra (Czech Republic), Agora (Poland), Eesti Media and Ekspress Grupp (Estonia), Adevarul Holding (Romania) or later the New Bulgarian Media Group (Bulgaria), each of which has become a top player in its respective media market. Digitalization, in the sense of the growing importance of computer-based communication technologies and online media platforms, has been yet another process with profound markettransforming consequences for Central and Eastern Europe. Although the penetration of the internet and the subsequent rise of the online media has been notably slower in most CEE countries by comparison with Western Europe, this “digital gap” has gradually been bridged in the last several years, particularly in the Baltic countries. 5 Consequently, the online media business in the region has also picked up, as is reflected by its steadily increasing share of online advertising expenditure, from an average of 3.4 per cent in 2006 to 12.9 per cent in 2 According to PricewaterhouseCoopers, the level of FDI increased five-fold between 2003 and 2008, rising from US$ 30 billion to US$ 155 billion. During the period between 1997 and 2003, the increase was much more modest – from US$ 20 billion to US$ 30 billion. This change coincided with the 2004 EU accession, which stimulated FDI inflow, particularly in the Baltic countries and Slovenia (PwC 2010). 3 By 2001, foreign ownership of the Hungarian daily newspaper market had risen to 83 per cent (OSCE 2003: 44). 4 In Poland, for example, the number of daily newspapers dropped between 1998 and 2002 from 56 to 46 titles or by 8 per cent. (OSCE 2003: 34). 5 In 2007, the average percentage of households in the ten CEE countries with access to the internet was 35.4 per cent, nearly 20 per cent below the EU-27 average (58 per cent) (Lechner and Facht 2010). In 2012, the EU27 average was 76 per cent, only nine per cent higher than the CEE-10 average (67 per cent), with Estonia and Slovenia having higher broadband access than the EU-27 average (Eurostat 2012). However, several CEE countries occupy top positions when it comes to the percentage of internet users reading online news: Lithuania (92 per cent) and Estonia (91 per cent) are inn second and third place in the ranking (behind Iceland, 94 per cent), with Latvia (88 per cent), Hungary (86 per cent) and the Czech Republic (85 per cent) all among the Top Ten EU countries (Eurostat 2012). MDCEE Final Reports 2013 2012 (World Newsmedia Network 2012). Although still not as prominent as in Western Europe, this trend of advertisers leaving print papers for online media has put newspaper publishers under pressure, forcing them, much like their Western counterparts, to search for new business models (see Levy and Nielsen 2010). In the television market, the digital revolution has been represented mainly by the process of switchover from analogue to digital broadcasting, which started in the mid 2000s and which has by now been completed in most Page | 4 EU-27 countries, with several exceptions in the Central and Eastern European region (Hungary, Poland, Romania, Bulgaria). While the long-term effects of the digital transition are yet to be seen in most of the CEE countries, in some of them at least the transition has shaken up the situation of the market and brought a challenge to the dominant players. However, while privatization, internationalization and later ownership concentration as well as digitalization have arguably been the most important processes shaping the first two decades of the evolution of media markets in Central and Eastern Europe, the last four to five years have brought another structural challenge to both media business and journalism in this region, namely the sharp decline in advertising resources following the global financial crisis which hit CEE countries in 2008/2009. As the period of the crisis almost exactly coincided with the duration of the Media and Democracy in Central and Eastern Europe project, it is possible to argue that this was one of the most significant factors for the development of the CEE media markets during this time, and consequently also one of the most significant factors influencing the relationship between media and democracy in the region. Therefore, the analytical part of this report will start with a closer look at the course of the crisis and its impact on CEE media markets.6 6 Given the necessity of capturing the inherently dynamic nature of media markets in CEE, this report has deliberately refrained from a static perspective when analyzing media markets and their relationship with the qualities of the media, and adopted a diachronic view which enables us to better understand the character of the structural changes which the media systems went through during this period. MDCEE Final Reports 2013 2. The impact of the financial crisis on CEE media markets Central and Eastern Europe was struck harder than the rest of Europe, and indeed than the rest of the world, by the financial crisis. While Poland – an exception proving the rule – was the only country in the EU to avoid recession, a fact attributed, among other things, to its large domestic market and relatively low dependency on exports (Blažek and Netrdová Page | 5 2012),7 all other CEE countries have experienced a considerable growth reversal, with real GDP growth dropping by 8.4 per cent on average in 2009 (almost twice as much as in the rest of the EU). The worst situation was in the Baltic countries (see Kattel and Raudla 2013), particularly in Latvia, where GDP fell by 18 per cent in 2009 following a near full-scale banking sector collapse (Smith and Swain 2009), and the government had to ask for a loan of over one billion Euros from the International Monetary Fund.8 Graph 1: GDP growth in CEE countries (2008-2011) 10.0 2008 5.0 2009 1.6 0.0 2010 2011 -5.0 -5.5 -4.5 -15.0 -20.0 -6.6 -6.8 -10.0 -14.1 -4.9 -8.0 -14.7 -18.0 Source: World Bank (http://www.worldbank.org) While much discussion of the causes of the global crisis has focused on the poor regulation of financial institutions, especially of the banking sector, the reasons for its particularly strong impact on Central and Eastern Europe have been sought by a number of authors in the extent and nature of the region’s integration into international economic structures (Smith and Swain 2009) and in the specific character of its economic growth strategies, oriented mostly to Foreign Direct Investment, cross-border lending and exports (Myant and Drahokoupil 2012, Sagemann and Reese 2011, Vliegenthart 2010). According to some scholars, the high level of dependence on foreign savings (particularly prominent in the Baltic countries before 7 See also http://www.ft.com/cms/s/0/01529006-ab0a-11e1-b675-00144feabdc0.html#axzz2ShcXdG00 , last accessed 5 May 2013. 8 The loan has since been repaid, see http://www.baltic-course.com/eng/finances/?doc=67842 , last accessed 5 May 2013. MDCEE Final Reports 2013 the crisis, see Myant and Drahokoupil 2012) made these countries potentially vulnerable, leading to a situation where “financial and economic crisis in one or other form becomes an accident waiting to happen /.../ Thus, it should not come as a great surprise that Eastern European countries became the epicentre of the World Financial Crisis” (Sagemann and Reese 2011: 60). As Smith and Swain argue, the particular model of development and internationalization chosen by most CEE countries in the course of the “transition to Page | 6 capitalism” – that is, a model based on full integration into West European export markets – was “responsible for creating vulnerabilities across the region to an economic crisis” (Smith and Swain 2009: 21), further exacerbated by the inability of most CEE governments to create innovative policies for increasing productivity growth (Myant, Drahokoupil and Lesay 2013; Sagemann and Reese 2011). The sharp decline in economic output, as illustrated by the falling GDP figures, had immediate consequences for advertising expenditures, which plummeted all across the region (with the exception of Slovenia). Directly correlated with the GDP figures, the deepest plunge in terms of the entire advertising market (see Graph 2) was experienced in the Baltic countries; in Latvia, the market fell by 44 per cent in 2009 and by a further 49 per cent (compared to 2008 figures) in the following year, while expenditure in Lithuania, Estonia and Romania also declined by 40 per cent between 2009-2010. As is clear from Table 2, the newspaper segment was even more affected in most countries, with advertisers in Latvia and Romania cutting their expenditure by up to 70 per cent, followed by Lithuania (-55 per cent) and Estonia (-53 per cent). MDCEE Final Reports 2013 Graph 2: Advertising expenditure in CEE media (% change in 2008-2010) 20 Page | 7 10 0 -10 -20 -30 -40 -50 -60 -70 -80 Newspapers - change 2009/2008 All media - change 2009/2008 Newspapers - change 2010/2008 All media - change 2010/2008 Source: World Press Trends database (http://www.wptdatabase.org/) The last several years have also shaken up the patterns of distribution of advertising expenditure in many CEE countries, with the print media share diminishing significantly and online advertising doubling on average between 2008 and 2012 (see Table 1). Although this dynamic cannot be attributed solely to the effects of the crisis, since the shift of advertising from print to online media was already noticeable before 2008, along with the declining newspaper circulation figures (mainly in Poland, the Czech Republic and Hungary, see Appendix B), the economic downturn after 2008 arguably accelerated and intensified it, especially in the Baltic countries. Another medium which has managed to strengthen its relative position in the majority of CEE countries during this period is television, which currently dominates advertising markets across the region (with the exception of Estonia, where the combined shares of newspapers and magazines top that of television), although this is the case in some countries (Bulgaria, Romania, Slovenia) much more than in others (Hungary). MDCEE Final Reports 2013 Table 1: Change in shares of advertising expenditure from 2008 to 2012 Bulgaria Czech Rep Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia CEE W Europe Italy Sweden UK Television 2008 2012 65.6 66.6 43.1 47 27 30.8 36.4 32.2 35.7 46 42.6 47.9 51.8 52.6 64.7 63.7 60.5 49.6 56 68.9 48.3 50.5 30.1 30.8 54.3 57.2 21.6 22.6 26 26.7 Newspapers 2008 2012 7.5 7 13.9 11 36 27.3 17.8 16.3 18.2 10 24.9 15.9 9.7 5.9 7.2 3.3 7.1 10.1 20.4 12.6 16.3 11.9 28.8 23.7 17.9 15.5 38.1 31.5 28.5 21 Magazines 2008 2012 8.1 5.6 16.6 14.2 9.9 6.1 19.3 15.5 16 8.5 12.9 9.2 11.8 8.7 7.5 4 12.4 11.6 9.4 5.7 12.4 8.9 14.8 12 13.2 9.9 11.1 9.3 10.9 7 Radio 2008 5.8 6.9 8.5 4.5 10.9 7.2 6.8 6.1 7.1 3.8 6.8 5.6 6.6 3.2 3.9 2012 8.1 4.2 9.8 5 9 8.2 6.6 5.9 10.9 3.5 7.1 5.6 7.2 3.5 3.7 Online 2008 2.7 9.5 10.8 11.1 8.7 5.5 9.5 3.6 3.4 3.5 6.8 13.4 3.9 21.1 23.1 2012 4.8 17.8 16.5 19.4 16 11.1 17.3 10.3 5.6 5 12.4 20.8 7.2 27.2 34 Others 2008 10.3 10 7.8 10.9 10.5 6.9 10.4 10.9 9.5 6.9 9.4 7.3 4.1 4.9 7.6 2012 7.9 5.7 9.5 11.6 10.5 7.7 8.9 12.8 12.2 4.3 9.2 7.1 3 5.9 7.6 Data source: World Newsmedia Network 2012 (shares refer to net advertising expenditure) Comparing the distribution of advertising resources to the benchmark Western European countries, it can clearly be seen that the majority of CEE markets most closely resemble the market structure in Italy, with the strong position of television and significantly lower print media as well as online shares (see Table 2 and Appendix A). Only Estonia and Hungary display notably different patterns, relatively closer to those of Sweden and the UK (with a high online advertising share and still moderately significant print ads), while the online share of expenditure in Poland and in the Czech Republic is also close to the Western European average. Page | 8 MDCEE Final Reports 2013 Table 2: Typology of countries based on structure of advertising expenditure TV Print Online (newspapers & magazines) W Europe 30.8 35.7 20.8 H > 35.4* H > 41.1 H > 23.9 average M <26.2 – 35.3> M <30.3 – 41> M <17.7 – 23.8> L < 26.1 L < 30.3 L < 17.7 BG, CZ, LV, LT, SE, UK High PL, RO, SK, SI, IT EE, HU, UK EE, HU, SE CZ, EE, HU, PL Medium SE BG, CZ, LV, LT, BG, LV, LT, RO, Low PL, RO, SK, SI, SK, SI, IT IT, UK Data source: World Newsmedia Network 2012; own calculations *intervals calculated as mean average for Western Europe (+) (-) 15 per cent The dwindling revenues resulting from unprecedented advertising cuts had consequences for news media organizations’ operating budgets, resulting in significant staff redundancies (mostly 10-20 per cent, but often with even higher figures in the Baltic countries),9 salary cuts, reductions in investigative reporting and in the number of international correspondents, and in some cases in the closing down of entire media outlets (Rudusa 2010).10 In Romania, six thousand people are estimated to have lost their jobs in the media since the outbreak of the crisis,11 while the number of redundancies among Estonian journalists was estimated at between five and six hundred in 2009 alone (Sveningsson Past 2009); in Latvia around 40 per cent of journalists were reported to have been laid off between 2008 and2009, while the rest were retained on 50 per cent of their previous salaries.12 9 As a consequence of advertising revenues falling by 50 per cent, as well as a simultaneous 45 per cent increase in taxes, and facing the real possibility of bankruptcy, the highest-selling Lithuanian daily, Lietuvos rytas, had to let go about a quarter of its journalistic staff (interview with Rymvidas Valatka, Deputy Editor-in-Chief and Op-ed Editor at Lietuvos rytas, 29 September 2010). The biggest commercial TV channel, TV3 (owned by the Swedish-based MTG), dealt with a drop of 49 per cent in revenues by cutting 25 per cent of its staff and 10-15 per cent of the salaries of those remaining (interview with Laura Blazeviciute, CEO of TV3 Lithuania, 29 September 2010). The Latvian Russian-language daily Telegraf laid off about 30 per cent of its workforce, as did the TV3 channel (interviews with Alexander Krasnitsky, Editor-in-Chief of Telegraf, 16 September 2010, and with Arta Giga, producer at TV3, 15 September 2010). 10 This was the case, for example, of the Slovak weekly Zurnal, which closed at the end of 2009 because of financial problems caused by the drop in advertising revenue, and of the Bulgarian cable TV news channel Re: TV (Rudusa 2010). 11 An estimate by the Romanian trade union MediaSind (personal communication with Ioana Avadani, 29 January 2013). According to Cezar Ion, half of Romanian journalists were dismissed (interview with Cezar Ion, Chair of the Association of Romanian Journalists, 20 September 2010). 12 Interview with Juris Paiders, Chair of the Latvian Journalists’ Union, 15 September 2010. Page | 9 MDCEE Final Reports 2013 The crisis was also felt quite strongly by public service and state media organizations. Direct state subsidies, wherever these had been a source of funding for public radio or television, were significantly cut,13 while advertising revenues followed the general decline. In consequence, many public service media outlets also had to lay off staff; however, it should be noted that in some cases the pressure for downsizing has been viewed as an opportunity to Page | 10 increase the effectiveness of these organizations.14 2.1. Departure of foreign investors The crisis has significantly reshuffled existing structures of media ownership in many countries of Central and Eastern Europe, affecting most notably the balance between foreign and domestic owners. Seeing their profits fall and little prospect of change, several publishers decided to sell some or all of their assets in the Central and Eastern European markets. One of the first of these was the Swedish Bonnier, which left the Latvian print market in June 2009 after the advertising revenues of the country’s best-selling newspaper, Diena, plummeted by 75 per cent.15 In Slovakia, the second most circulated quality daily, Pravda, which had long been struggling with a declining readership, changed owners in 2010, when Northcliffe International, a subsidiary of the Daily Mail and General Trust (publisher of the Daily Mail, among other UK titles), sold its publisher to an investor allegedly backed by the Slovak financial group J&T; and at the beginning of 2013 this British publisher departed from Hungary as well, having sold the second biggest tabloid, Bors, and two leading regional dailies. The German WAZ, which was one of the first and certainly most prominent foreign investors in South Eastern Europe, pulled out of Romania, Serbia and Bulgaria in 2010, and out of Macedonia in 2012, having sold its publishing houses in all these countries to local businessmen. The Swiss-based Ringier decided also in 2010 to sell the two quality papers it was publishing in Romania (the daily Evenimentul zilei and the weekly Capital), while keeping the only still-profitable daily, the tabloid Libertatea. The following year, 2011, saw the departure from Hungary of the Swedish-based transnational company Metro International, publisher of the country’s number one daily, Metropol; following losses of about 900,000 Euros in 2008 and more than twice that in 2009, it sold the daily as a franchise for an alleged price of €700,000 to the local company Megalopolis Media, allegedly 13 Latvian Public Radio lost between 35 and 40 per cent of state funding between 2008 and 2009 (interview with Dzintris Kolats, Chairman of the Board of Latvian Public Radio, 14 September 2010). The Bulgarian public service broadcaster BNT received 25 per cent less from the state in 2009 than in 2008 (interview with Boyko Vassilev, senior news editor at BNT, 15 September 2010). 14 This was an opinion voiced, for example, by Boyko Vassilev of BNT. According to Audronis Braukyla, the Lithuanian broadcaster LRT had to lay off about 100 people as a consequence of the crisis; however, “most of the people that left were voluntary retirements” (interview with Audronis Braukyla, Head of Radio News at LRT, 30 September 2010). 15 In 2011, Bonnier also sold the small Bulgarian business daily Pari to the local publisher Economedia, thereby leaving the Bulgarian press market. MDCEE Final Reports 2013 controlled by Lajos Simicska, a businessman with close links to the ruling party, Fidesz.16 The British-based Mecom sold its shares in the Polish Presspublica (publisher of the third most circulated daily, Rzeczpospolita) in 2011, and the following year saw its departure from the rest of the Polish press market when it sold its local papers to the German Verlagsgruppe Passau (already a major player in the Polish press market). Page | 11 However, even with the economy starting to recover across Europe in 2013, the trend of foreign investors’ withdrawal does not seem yet to be over. In June 2013, the Czech media market was shattered by the unexpected sale of the country’s largest media house, MAFRA (publisher, among other titles, of the national dailies Mladá fronta DNES and Lidové noviny), which had belonged for nearly two decades to Rheinische Post, to Andrej Babiš, a local multi-billionaire with political ambitions.17 Similarly shocking news came in August 2013 from Estonia, with the reported departure of the Norwegian Schibsted Media Group, until then owner of the Eesti Media Group (publisher of the leading newspaper Postimees, as well as of various regional papers and magazines). The company was reported to have been bought by a group consisting of the management of Eesti Media, financially supported by local investors.18 Even the television markets, comparatively less affected by declining revenues than the newspaper segment, have experienced some ownership shake-up during the last few years, although in a much less prominent way. Between 2009 and 2010, News Corporation made its exit from the free-TV business in Poland, Latvia, Bulgaria and Serbia. In January 2012, the Swedish-based Modern Times Group closed down its TV3 channel in Slovenia, after failing to increase its share of the advertising market since it acquiring the channel in 2006.19 However, the end of 2012 also saw an exception to the overall trend, as the Polish broadcaster TVN sold 28 per cent of its shares to the French company Vivendi, marking the first-ever entrance of a foreign player to the Polish television market. It is notable that in most of the above-listed cases,20 the buyers – unlike in the past – were not other international companies, but local businessmen, often with major economic interests in 16 http://www.realdeal.hu/20110614/hungarys-most-valuable-newspaper-not-worth-the-paper-its-printed-on, last accessed 6 May 2013. 17 http://www.financninoviny.cz/zpravy/czech-billionaire-babis-acquires-publisher-mafra/955910 , last accessed 10 September 2013. 18 http://www.baltic-course.com/eng/markets_and_companies/?doc=80293 , last accessed 10 September 2013. 19 http://www.sloveniatimes.com/the-end-of-tv3 , last accessed 6 May 2013. However, at the same time MTG strengthened its position in Latvia, where it already owned four channels, since it had purchased the country’s second-largest free-TV operator, AS Latvijas Neatkarīgā Televīzija, the national broadcasting channel LNT, as well as two other channels (http://www.mtg.se/en/media/press-releases/mtg-signs-agreement-to-acquire-lnt-freetv-group-in-latvia/, last accessed 6 May 2013). 20 One notable exception was the selling of CME-owned BTN in Bulgaria to News Corporation in 2010. Also, the Hungarian company Lapcom, publisher of two regional dailies and a national tabloid newspaper, was sold by A&N International Media (a division of the Daily Mail and General Trust) to Radio Bridge Media Holdings, an offshore company registered in the Cayman Islands. MDCEE Final Reports 2013 other industries (see Stetka 2012b). Leaving aside for a moment the question of the motivations of these new owners, who were willing to undertake the risk of investment in tumultuous economic times and in a profit-losing market segment, it is apparent that this trend has significantly altered the existing patterns of media ownership in many CEE countries and in some cases even reversed the tendencies towards an ever-more intensive globalization which were a defining feature of the transformation of a substantial part of Page | 12 Central and Eastern European media markets after 1989. Apart from the ownership structures, this claim can be further supported by comparing the actual market strength and influence of Western-owned news media vis-à-vis those belonging to local actors. This comparison, albeit an imperfect one due to the nature of the data,21 reveals that foreign ownership can be said to truly dominate only in a handful of countries, while in most the situation is either balanced, or locally owned media prevail in market terms (see Table 3). Table 3: Market position of foreign-owned news media in Central and Eastern Europe Bulgaria Czech Rep. Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia No. of foreignowned daily newspapers in TOP 5 (September 2013) 0 1 1 4 0 0 1 1 2 1.5* % of circulation of foreign-owned newspapers in TOP 5a 0 52% 8% 89% 0 0 30% 26% 54% 6% No. of foreignowned national TV stations in TOP 3 (September 2013) 3 1.5* 3 3 2 1 0.5* 1 1 2 Sources: see Appendix D Legend: not including free/street and sports newspapers * 0.5 counted when foreign owner has a 25-50 per cent share a circulation data from 2011 (WAN 2011) Looking at the circulation figures of the five best-selling daily newspapers, the combined circulation of those which are owned by foreign companies’ amounts to over 50 per cent in just three countries – the Czech Republic, Hungary and Slovakia. In three countries, on the other hand, there is currently no foreign investor among the owners of the five largest dailies (Bulgaria, Latvia, Lithuania) and in another four countries – following the latest wave of departures in Summer 2013 – there is just one remaining (Czech Republic, Estonia, Poland, 21 Reliable data on media ownership, as well as circulation figures, are notoriously difficult to obtain for many countries of Central and Eastern Europe, because of the problem of low transparency concerning media ownership as well as the non-existence of an independent circulation audit body. Therefore the data presented in Table 1 should be regarded as approximate only, particularly with regard to circulation figures. MDCEE Final Reports 2013 Romania), albeit holding a significant market position in most cases (see Appendix D). In national television markets, the position of transnational companies is comparatively stronger, since four countries are fully dominated by TNCs and in four others they own the channel which is the market leader (Poland and Lithuania being exceptions from the pattern). In summary, it is possible to argue that, despite their continuing dominance in the audiovisual Page | 13 sector in some of these countries, the presence of international players in the CEE region as a whole has notably diminished over the course of the last four or five years, especially in the newspaper segment (see Appendix C).22 In other words, the outbreak of economic recession, coupled with and further intensifying the process of declining circulations already observed across the region for several years, has clearly marked an end to a long period of media internationalization, uninterrupted in most countries since the privatization of media markets in the early 1990s. 2.2 Media freedom and autonomy in changing economic conditions The crisis has had an impact not only on the organizational aspects of media production, the re-shuffling of ownership structures and the balance of local and foreign investment in CEE news media, but also, and arguably even more importantly, on media freedom and journalistic autonomy. Various authors and reports (Rudusa 2010, Salovaara and Juzefovics 2012) have argued that the thinning of financial resources has made the media more vulnerable to both political and economic pressures, with the latter authors referring particularly to pressures from advertisers, who have been able to exert more influence on the editorial content of newspapers. This tendency was confirmed in many interviews conducted as part of the MDCEE project with local media representatives and experts across the region, revealing that the otherwise much-emphasized “Chinese Wall” between advertising and editorial content is all too easily penetrated in times of crisis. According to a senior Lithuanian journalist, the practice of hidden advertising has become ever-more widespread and is having a contagious effect within the industry, since “some newspapers agree to do this for one advertiser, and then all their other advertisers come and expect the same treatment”.23 In Slovakia, attempts by companies to threaten the media with a withdrawal of their ads following a negative report have become more frequent, making it “more difficult to maintain objectivity” when reporting on advertisers, according to a senior editor of commercial television.24 And even in a case where there might be no explicit threat, the atmosphere 22 The obvious weak spot in this analysis is that it did not take into account the segment of news weeklies and monthlies, which are arguably just as important as daily newspapers from the point of view of the democratic role of the press; however, because of the need to limit the scope of the analysis, these segments had to be omitted. 23 Interview with Rymvidas Valatka, Deputy Editor-in-Chief and Op-ed Editor at Lietuvos rytas, 29 September 2010. 24 Interview with Lukas Diko, Editor-in-chief of Markíza TV, 27 July 2010. MDCEE Final Reports 2013 created by the economic instability and job insecurity has a chilling effect on journalists’ ability to produce critical reporting. As one senior editor of a Bulgarian newspaper pointed out, “in an environment where the advertising revenues are shrinking, there is kind of a selfrestraint; when you see the news is going to affect one of your major advertisers, and eventually he withdraws from the newspaper, several people might lose their job”.25 Making a connection between the crisis, advertising pressures and a general lowering of journalistic Page | 14 standards, the Chair of the Hungarian Journalists Association claimed that The crisis has enhanced further some unhealthy processes that had begun earlier. Dismissals, insecurity, the ignorance of professional virtues, a decline in the profession’s prestige are the most widespread features of this. [...] Newspapers are running after their money. They make more and more allowances for advertisers. Sponsorship is even worse than advertising. Many of the television programmes are sponsored, all to the detriment of professional quality.26 However, it is not just conventional commercial advertisers who have become bolder in pressuring for positive PR; the crisis has made the media more susceptible to political pressures, which are often exerted through the state-channelled advertising, distributed either via government agencies and ministries or via state-owned companies. While practices of preferential distribution of state advertising to “friendly” media were already commonplace in the region before the crisis, the radical cuts in advertising expenditure in the private sector have made the money channelled by the state a particularly valuable resource in the struggle for survival, giving the politicians in power more leverage in shaping news content. As the Chair of the Lithuanian Journalists’ Union succinctly encapsulated the situation, “Businesses did not have money. The state had money. The media, they need this money”.27 Empirical evidence of the political bias in state advertising distribution was recently brought from Hungary, where, according to a study by the Corruption Research Centre, the state advertising incomes of the left-wing print media significantly decreased following the formation of the right-wing government in 2010, while the income of the right-wing media from state advertising (by government institutions and state-controlled companies) more than doubled from 2010 to 2012.28 Also, research from Slovakia has shown that the change of government in 2012 immediately reversed the patterns of advertising distribution; despite the overall decline in the amount of advertising expenditure by comparison with the previous year (60 per cent), some of the media have received more than before, most notably the daily 25 Interview with Yuri Velev, Deputy Editor-in-chief of 24Chasa, 9 September 2010. 26 Interview with Pál Eötvös, Chair of the Hungarian Journalists’ Association, 21 May 2010. Interview with Dainius Radevicius, Chair of the Lithuanian Journalists’ Union, 28 September 2010. According to Radevicius, some Lithuanian newspapers have between 60 and 80 per cent of their content paid for by ministries. 27 28 For example, the conservative daily Magyar Nemzet received three times as much income from state advertising in 2012 as in 2009 (under the socialist government); on the other hand, the left-liberal Népszabadság lost 50 per cent of its state advertising during that time. See http://www.crc.unicorvinus.hu/download/media_ah_2012_riport1_130430.pdf , last accessed 10 June 2013. MDCEE Final Reports 2013 newspaper Pravda (+41 per cent) and the news channel TV3 (+32 per cent), both of which are known to be rather supportive of the current governing party, SMER, and of Prime Minister Robert Fico. On the other hand, the media which were most critical of Fico during his previous term in government (2006-2010) have had to face a significant loss of state advertising, particularly the daily SME (- 84 per cent) and Radio Express (- 68 per cent).29 Page | 15 In several CEE countries, at least, the general problem with state advertising distribution has paradoxically been made even worse because of the availability of EU structural funds, which have been flowing into these countries ever since their EU accession. Accounting for 1.7 to 3.5% of their annual GDP (KMPG 2011), this important EU policy instrument aimed at promoting regional development has been both praised for stimulating economic growth and, at the same time, criticized for feeding corruption. Given the fact that a number of countries (Bulgaria in 2008, Romania in 2011, Slovakia, Latvia, the Czech Republic and Poland in 2012) had their EU structural funds payments withheld by the European Commission at a certain stage of disbursement following reports of fraud and embezzlement by the government and local authorities, accounts of the use by CEE politicians of this particular financial aid as an instrument of pressure on media organizations do not come as a surprise. The impact of these practices has been reinforced by the economic crisis, as described by a Bulgarian media expert: The country has been severely hit by the economic crisis, so the only real money is with the government. And the government found a very sophisticated way to influence the media through this money [from EU structural funds], because /.../ it is often used for publicity and informing the public about certain activities. And of course, during the previous government [until July 2009] most of this money was channelled through a couple of big PR agencies, which were subsequently distributing the money to certain media; so if you wanted to get a chunk of these funds then of course you had to be careful what you are writing about...30 In Slovakia, politically motivated allocation of advertising linked to the EU money was reported in relation to the government’s information campaign to promote the adoption of the Euro in 2008. According to local observers, the television news channel TA3 (with ownership structures allegedly close to the ruling party) received a rather generous share of the advertising budget, amounting to some 15–20 per cent of the channel’s advertising revenues, while the media critical of the government at that time were deliberately excluded from the campaign.31 29 See http://blog.transparency.org/2013/05/28/abuse-of-state-advertising-for-political-ends-in-slovakia/ , last accessed 10 June 2013. 30 Interview with Ognian Zlatev, 16 September 2012. According to the online news portal novinite.com, the election year of 2013 was set to witness a record amount of money spent by the government on advertising in electronic media, namely 14 million BGN (approximately 7 million Euros), promoting several operational programmes. Unlike the print media, broadcasters are exempt from the Public Tenders Act in Bulgaria, which means they can seal advertising contracts with ministries without a formal bid (http://www.novinite.com/view_news.php?id=146839 , last accessed 7 May 2013). 31 Interview with Gabriel Šipoš, 19 July 2010. MDCEE Final Reports 2013 The increasing difficulty of the media, as a consequence of their economic situation, in withstanding attempts to breach their autonomy and put pressure on journalists’ independence has been considered one of the main reasons for the overall weakening of press freedom in Europe, as measured annually by Freedom House (see Appendix F). In its 2013 report, summarizing data from the previous year, the US-based organization explicitly pointed to “the ripple effects of the European economic crisis and longer-term challenges to Page | 16 the financial sustainability of print media” (Freedom House 2013: 1) as the causes of the decline in press freedom scores in many European countries, most notably in Southern Europe but also with similarities to some other parts of the continent. According to the report, “the problems that have emerged in Southern Europe come on top of financial pressures that are plaguing press outlets in the Baltic states and elsewhere in Europe” (Freedom House 2013: 3). 3. The rise of local moguls and the instrumentalization of the news media Apart from the dwindling revenues and growing advertising pressures, the autonomy of the media in Central and Eastern Europe is often further endangered by internal constraints, particularly in relation to ownership structures. Following the departure of foreign investors in the wake of the crisis, as described above, a significant part of the news media in the region has been transferred into the hands of local businessmen, many of whom have their main business activities – and thereby primary sources of profit – outside the media sector. Only in the Czech Republic are the majority of news media outlets currently in the hands of local businessmen. These include the “coal baron” Zdeněk Bakala, who controls the financial daily Hospodářské noviny, the influential weeklies Respekt and Ekonom and the news portal Aktualne.cz (purchased from the US-based investment fund Warburg Pincus in 2013), as well as Andrej Babiš, the agricultural tycoon, who publishes two national dailies (Mladá Fronta DNES and Lidové noviny) and a regional news weekly 5+ 2 Days, and Jaromír Soukup, owner of the largest media-buying agency in the country, whose media empire involves several news and lifestyle magazines as well as the fourth largest television channel, TV Barrandov, recently purchased from another Czech industrial tycoon, Tomáš Chrenek. In Slovakia, the investment giant J&T Group, co-founded by two of the richest Slovak financiers, Patrik Tkáč and Ivan Jakabovič, controls the second largest commercial network, TV JOJ, and since 2009 allegedly – through one of their clients – also the daily Pravda. Meanwhile the portfolio of Ivan Kmotrík, the owner of the largest printing press and distribution company in Slovakia, includes the influential television news channel TA3. In Hungary, the owner of the construction company Közgép as well as other business ventures, Lajos Simicska, in 2011 bought the street daily Metropol from the Swedish-based company Metro International, thereby joining another Hungarian business tycoon-turned-mediaproprietor, Gábor Széles, CEO of the Ikarus business group, who owns the daily Magyar Hírlap and the cable television station Echo TV. In both Latvia and Lithuania, there are a number of media owners with multiple business interests, many of whom, however, remain hidden behind a complex network of companies with non-transparent ownership structures, MDCEE Final Reports 2013 making it difficult to trace the actual links to the particular media outlets. This is particularly true for Latvia, where a large part of the print media scene is presumed to be indirectly controlled by a trio of some of the country’s most powerful oligarchs, Aivars Lembergs (long-term Mayor of the city of Ventspils and allegedly an owner of the oil production and distribution company Ventspils Group), Ainars Šlesers (one of Latvia’s wealthiest persons) and Andris Šķēle (former Prime Minister); however, only recently was the public given Page | 17 concrete proof of their control over Latvia’s top-selling newspapers like Neatkariga Rita Avize or Diena , when this information was revealed by leaked wiretaps from the investigation carried out by the Corruption Prevention Bureau (CPB) into businessman and politician Ainārs Šlesers.32 Similarly nebulous ownership relations also characterize the structure of the currently largest media conglomerate in the Bulgarian market, the New Bulgarian Media Group (see above). This conglomerate is officially in the hands of Irena Krasteva, former head of the Bulgarian State Lottery; however, all decisions regarding the company’s management, and allegedly also regarding editorial content, are made by her son, Delyan Peevski, an MP for the ethnic Turkish party (and since June 2013 also head of Bulgaria’s State Agency for National Security, appointed by Prime Minister Plamen Oresharski), while the “real owner“ is believed to be Tsvetan Vasilev, an influential businessman and majority owner of the Corporate Commercial Bank, which financed the establishment in 2007 of the New Bulgarian Media Group and its subsequent purchases and operation of all the media outlets.33 In terms of the presence of local media moguls, Romania leads CEE media markets and, while some of the most prominent figures of the last several years (like Dinu Patriciu, former owner of the Rompetrol Group and publisher of the leading daily Adevarul) have recently withdrawn from the media business or are currently serving prison terms for corruption (Sorin Ovidiu Vântu, owner of the Realitatea TV station), other businessmen have taken their place (e.g. Cristian Burci, who controls several national news media outlets, including Adevarul). The only countries in the region which do not share these ownership patterns – that is, a significant presence of business tycoons in one or more segments of the news media markets – seem to be Estonia (with predominantly foreign ownership, complemented by the locallyowned but almost entirely media-oriented company Ekspress Grupp), Slovenia (where most of the print media market is controlled by publishers with significant state ownership shares) and largely also Poland. The largest of the CEE countries has been relatively shy of this particular type of media ownership, at least on the national level – apart, of course, from the towering figure of Zygmunt Solorz-Żak, the second richest Pole, whose broadcasting and telecommunications empire Cyfrowy Polsat remains atthe centre of his multiple business 32 http://www.alausa.org/en/who-we-are/news/id/2/latvian-newspaper-andquot;dienaandquot;-reveals-itsowners/ , last accessed 8 May 2013. 33 Interview with Ognian Zlatev, Managing Director of the Media Development Center, Bulgaria (Sofia, 7 September 2011). Recently, there have been attempts to deal with the problem of ownership transparency. On 21 October 2010, the Bulgarian parliament adopted a new bill (in the form of an amendment to the Mandatory Deposit of Copies of Printed and Other Works Act), obliging the print media to disclose the names of their actual owners in the first issue published each year, (see http://www.novinite.com/view_news.php?id=121355, last accessed 14 February 2012). MDCEE Final Reports 2013 interests. Nevertheless, this picture had partially changed by the end of 2011, when 51 per cent of shares in Presspublica, the publisher of one of the leading national dailies, Rzeczpospolita, as well as of other titles, was purchased from the UK-based investment fund Mecom by Grzegorz Hajdarowicz, an entrepreneur with a history of investment in various branches of industry, including pharmaceuticals and film production. Page | 18 As pointed out earlier, this particular type of ownership has an impact not just on the structural autonomy of the media, which are becoming intertwined in local business and often also in the political networks that their owners are part of, but also on their editorial independence, since they are frequently used by the owners to advance their own business or political interests. This risk of instrumentalization is all the greater given the fact that most of the above-mentioned business elites can be safely ascribed distinct political affiliations, demonstrated either by their active membership of political parties and running for public office (e.g. Andrej Babiš, Aivars Lembergs, Andris Šķēle, Delyan Peevski; or Dan Voiculescu, the Chairman of the Conservative Party in Romania and owner of the country‘s largest TV network, Antenna) or through political sponsorship (Zdeněk Bakala, sponsor of the current governing parties ODS and TOP 09 in the Czech Republic; Gábor Széles, sponsor of Fidesz). The evidence gathered through interviews carried out for our project, as well as through secondary sources, suggests that practices of curtailing editorial independence are fairly widespread among many (even if not all) of these business elites, and range from “pure” business PR to direct and open attacks on political or business opponents. While numerous examples of the instrumentalization of the media in the hands of powerful oligarchs in countries like Bulgaria, Romania or Latvia may, regrettably, no longer raise many eyebrows, it comes perhaps as a more of a surprise that similar strategies of promoting and protecting political or business allies and, conversely, of suppressing opponents or competitors, are also used by media owners in Central Europe, especially by those closely affiliated with political parties or even personally involved in politics. In Slovakia, shortly before the 2010 general elections, a reporter on the J&T-owned TV JOJ was suspended for preparing a critical report revealing controversial financing of the ruling party, SMER; the Editor of TV JOJ later admitted that he was given a direct order by one of J&T’s owners not to air the report. At another Slovak private television station, the news channel TA3, belonging to the advertising mogul Ivan Kmotrík, journalists have been instructed on which particular people and companies to give space to or to block in the news, depending on their personal or political alignments or on advertising on the channel. The richest Czech, and indeed Central European, businessman Petr Kellner, owner of the investment company PPF, is reported to have interfered on several occasions with the editorial policy of the business weekly Euro (before he sold it to his business partner, Milan Procházka, in 2011), ultimately leading to the departure of the Editor-in-Chief and a few other journalists, who later established their own online daily. A complete change of editorial line following the purchase of a newspaper is also not unheard of in this region, as was the case with the Magyar Hírlap documents, which was turned from a formerly liberal into a right-wing newspaper under its owner Gábor Széles. MDCEE Final Reports 2013 4. The role of foreign ownership The increasing concerns over the independence of the media in the hands of local business elites in many CEE countries have provided an opportunity for a re-assessment of the impact of foreign ownership on media freedom and journalistic cultures in Central and Eastern Europe. The penetration of foreign investment into CEE media markets after 1989 has been Page | 19 met with mixed reactions, from praise for transferring Western-style management know-how and elevating the technological standards of media production, to criticism for introducing and/or entrenching the processes of commercialization, tabloidization and market concentration (EFJ 2003, Klimkiewicz 2006). This is not to mention fears of an alleged “Germanification”, “Americanization” or “Westification” of CEE media and cultures through Western ownership, which have been raised by parts of the public as well as on the political scene in some countries, especially in the early stages of transformation (Fabris 1995). Opinions regarding the impact of Western ownership on journalistic cultures have also been rather divided, often reflecting different experiences with particular investors in different countries. The heterogeneity of Western media companies’ management styles and practices has already been explored by some scholars (e.g. Downey 2012), and this project has brought further evidence to support that thesis, questioning the unitary perspective on the presence and effect of foreign owners across the region which can sometimes be present in popular, as well as academic, discourses. Our interviews with editors and journalists make it possible to claim that, just as there was no single “Western media model” to be copied and implanted in the course of post-communist transformation, but rather several different models and systems (Jakubowicz 2006), there was no generic “Western media investor”, but rather a variety of companies with different organizational structures and often pursuing different business models and strategies. Apart from the geographical diversity of their countries of origin, the Western companies concerned have been divided by the form of ownership (publicly listed, like Schibsted, Orkla, Ringier, Axel Springer or CME, versus privately owned, like WAZ, Bonnier, Holtzbrinck Group or Bertelsmann), the scope of their operations (ranging from single-sector media players like Bonnier, MTG or CME to multimedia conglomerates like Bertelsmann or Schibsted, to cross-industrial companies like Orkla), as well as by their size and position on the global/domestic market (regional publishers like Verlagsgruppe Passau or Rheinische Post versus “first tier” global players like News Corp. or Bertelsmann). Although this research was not designed to systematically investigate the effect of all these different types of foreign company, some of the interviews linked the impact of foreign ownership to some of these variables, especially in terms of transferring corporate culture. In the opinion of one senior editor at the Czech TV Prima, which has been co-owned by the Swedish-based MTG since 2005, What has changed since the entry of the Swedish company is the fact that the Swedish have a relatively high corporate culture, so it has become a rule that the payrolls started to come on time [laughing] /.../ and apart from that, the Swedish pursue those kinds of things which are MDCEE Final Reports 2013 more widespread in Western Europe than here, which means social responsibility, corporate governance etc.34 Indirectly acknowledging the importance of the country that investors come from, a former CEO of the Czech publishing house Economia expressed his belief that greater pluralism of foreign ownership would have been beneficial to the evolution of the Czech print media Page | 20 market (which has been mainly influenced by German-based publishers): I don’t think it is good though that there is capital from [only] one country, because it is a cultural influence; for us it would have been better if we had an opportunity to compare different ways of making newspapers.35 The transfer not just of media production know-how, but also of professional journalistic values and standards, was expected especially from Scandinavian investors, who are known for cherishing these values in their home markets (OSCE 2003). However, these hopes were only partially fulfilled, clearly highlighting differences between the particular companies. The influence of Bonnier, the Swedish-based family-owned company with a history of more than 200 years, has been assessed overall very positively in the Baltic countries, which were the first targets of the company’s Eastern expansion after 1989. Observers in Latvia mainly agree that Bonnier “played a crucial role in nurturing the first truly independent media outlet [the daily Diena] and providing training for young journalists based in Western standards of journalism” (Rudusa 2010: 7). On the other hand, the Norwegian-based Schibsted, a media company with a similar history of family ownership, which however went public in 1989, has been criticized for failing to transfer journalistic practices from its home country to CEE markets; in the opinion of some scholars, “Schibsted has not invested either effort or resources in introducing the excellent journalistic standards that they so strictly follow in their home country to its overseas media outlets” (Lauk and Baltyciene 2005: 101). As one interviewee put it, “Schibsted is interested only in money; so as long as they get that they leave you alone”.36 Most foreign proprietors were indeed described in the interviews as interested primarily in profit and in keeping a rather low profile when it came to the actual production of news content, and the journalists and managers interviewed reported (and positively acknowledged) a relatively high level of autonomy. 37 In this respect, it has to be mentioned 34 Interview with senior editor at TV Prima, the Czech Republic (8 June 2010). 35 Interview with Michal Klíma, former CEO of Economia, Czech Republic, 10 June 2010. 36 Interview with Tiit Hennoste, media consultant, 14 May 2010. The following quotations from interviews can illustrate this claim: “As long as TV Prima [owned by MTG] remains profitable, they don’t really care what we are broadcasting” (senior editor of TV Prima, Czech Republic, 8 June 2010); “WAZ does not intervene in any way in the content of 24Chasa. The only thing they wanted was a good product that sells” (Juri Velev, Deputy Editor-in-Chief, 24Chasa [formerly WAZ], Bulgaria, 29 September 2010); “In terms of our editorial work, in terms of the topic we choose, we have a full backup” (Konstantin Kissimov, Deputy Editor-in-Chief, Nova TV [MTG], Bulgaria, 27 September 2010); “Our experience with the German publishers shows that they are not interested in engaging with politics and 37 MDCEE Final Reports 2013 that three companies – the Norwegian Orkla Group, WAZ, based in Essen, Germany, and Axel Springer Verlag – have signed a voluntary agreement with the Organization for Security and Co-operation in Europe, introducing internal rules to protect their writing staff from outside pressure and to separate managerial and editorial responsibilities (OSCE 2003: 47).38 Although, as Downey (2012) pointed out, this has guaranteed editorial autonomy only within certain ideological boundaries, broadly corresponding to basic democratic values39 – in other Page | 21 words, it does not safeguard complete editorial independence – it can be argued that it symbolized an attempt by the corporate headquarters to show that they do care about the professionalization of journalism in the CEE countries, especially in terms of safeguarding protection from political pressures. The relatively greater ability of Western proprietors to keep political pressures at bay – certainly greater than in the case of local owners – has been generally recognized as one of the main assets of foreign investment across the region, and particularly in countries plagued by the frequent interference of politicians and the state in media freedom and autonomy, like the Balkan or Baltic states. That being said, it certainly does not mean that the media controlled by Western owners – contrary to initial expectations and often also to these investors’ self-proclamations – have totally abstained from the world of politics. Especially in the earlier phases of transformation, some foreign investors learned to play “the game of political capitalism”, as Colin Sparks has called the interweaving of market and politics in countries in transformation (Sparks 1999: 42), and to compromise political independence in exchange for government protection and political favours.40 This has, at times, also included the strategy of de-politicization of news content, pursued especially by the publishers of tabloid newspapers, like Ringier (Downey 2012). Describing a case of politically-motivated editorial interference by Ringier in 2004, reportedly contrasting with the approach of the previous owner (Grüner&Jahr / Bertelsmann), which had been much more pro-independence influencing content. For them, it is primarily business” (Matus Kostolny, Editor-in-Chief, SME [formerly Verlagsgruppe Passau, since 2010 Rheinshe Post], Slovakia, 17 July 2010). Similar agreement, ensuring the editorial board’s professional autonomy, existed between Bertelsmann and the journalisitic staff of the Hungarian daily Népszabadság in the early 1990s. Then Editor-in-Chief Pál Eötvös explicitly praised the “good co-operation between the editorial board and Bertelsman,n which was a family venture at the time” (interview with Pál Eötvös, 21 May 2010). 38 39 According to the agreement, a common code of conduct between directors and journalists should contain at least the following principles: “standing up for human rights, standing up for the UN Charter, democratic rights, the parliamentary system, fighting totalitarian activities of left and right, and fighting ‘any nationalist or racial discrimination’” (Downey 2012: 129). 40 In the Czech Republic, one of the most (in)famous examples of such political favouritism concerned the behaviour of the CME-owned TV Nova, the first private national TV station in CEE, whose Director General, Vladimir Zelezny, provided then Prime Minister Vaclav Klaus with a generous gift right before the start of the election campaign in 1996, namely a weekly five-minute slot for his political PR, valued at around US$ 40, 000 (Baleanu 1996). Another example of undue editorial pressure from that time concerns Ringier, which, after its takeover of one of the leading quality dailies, Lidové noviny, in 1994 changed the editorial line to one of servility to ODS and Vaclav Klaus, which forced many journalists to leave the paper. The Editor-in-Chief of LN at the time, Jaromir Stetina, resigned after two months, giving as his reason editorial interferences by Ringier, and “sparked off a mass exodus of staff” (Kettle 1997: 58). MDCEE Final Reports 2013 and protective of staff, the former Editor of the Romanian daily Evenimentul Zilei implicitly confirmed this trait: Thomas Landolt, the CEO of Ringier Romania at that time, came one morning to the meeting room. It was just him, two other guys from Ringier Romania, me and my boss. And he smashed the table with his fist, and said, ‘From today, no more stories against the ruling Page | 22 party!’. 41 Even though this was far from a solitary incident in the history of Western ownership of CEE news media,42 the prevalent opinion among journalists and experts still seems to be that foreign investors have generally been better able than domestic proprietors to withstand the pressures from politicians as well as from advertisers, and to ensure relatively better working conditions for their staff. This cannot, of course, be understood as a summary of the overall impact of foreign ownership on CEE media markets and journalistic cultures, which is obviously a much broader issue reaching beyond the scope of this particular project. However, with respect to nurturing professional autonomy as one of the main indicators of the “success” of media system transformation, the presence of foreign ownership – especially by companies with a Scandinavian background and/or by family-owned legacy companies – appears to have played a positive role, particularly in smaller and economically weaker markets where media have been more susceptible to capture and instrumentalization by politicians and businessmen. This was only highlighted by the recent financial crisis, which caused the departure of many foreign investors and their replacement by local business tycoons with often dubious reputations and interests other than those of business behind their investment, as documented above. Encapsulating the concerns of a large part of the journalistic community, one Romanian observer claimed: After the political transformation, foreign investors brought along professional standards. Now that they are leaving and giving formerly leading broadsheets away to local investors, there are different influences [coming] from this mixture of business and political interests, and professional standards are no longer being maintained.43 41 Interview with Dan Turturica, Editor-in-Chief of Romania Libera, 28 September 2012. The conflict ended with many of the journalists leaving in protest and founding their own daily. 42 Another example of a Western proprietor changing the editorial line of a newspaper could be the case of MECOM, the UK-based investment fund which in 2006 bought 49 per cent of the Polish daily Rzecpospolita from the Norwegian corporation Orkla (which has been reported to have a very good reputation among journalists, mainly for not interfering with editorial affairs). Upon its entry, MECOM fired the Editor-in-Chief, who was perceived as too liberal, and replaced him with a right-wing columnist, in an alleged move to please the government, which they hoped would sell them the remaining 51 per cent of the stake in the publisher (interview with Vadim Makarenko, journalist at Gazeta Wyborcza, 24 February 2013). 43 Interview with Manuela Preoteasa, Romanian journalist and media expert, 22 September 2010. MDCEE Final Reports 2013 5. CEE news media markets in a comparative perspective: selected factors The last part of this report aims to summarize and systematize selected key factors and trends shaping the ten CEE news media markets under investigation, and to relate these, in a comparative way, to the state of media freedom and autonomy in these countries. In so doing, this report does not aspire to determine patterns of causal relationship, since such task would Page | 23 go beyond the scope and capacity of this research project. Rather, it attempts to identify and highlight similarities and differences between the ten media markets explored in the MDCEE project, and to offer some tentative explanations concerning the importance of particular market factors for the development of conditions nurturing democratic qualities of journalism. In terms of the ownership structures (Table 4),44 there is a clear parallel between a low presence of foreign ownership in the newspaper sector and a high occurrence of local business tycoons or oligarchs among media owners - a tendency which was reinforced as a consequence of the financial crisis, as described above. Unsurprisingly, the countries displaying these patterns (most notably Bulgaria, Latvia and Romania) are also those with the lowest media ownership transparency in the region. On the other hand, countries where the presence of oligarchs in media markets is not significant, if existing at all (Estonia, Poland, Slovenia), are not necessarily among those with the highest penetration by foreign investors, at least in the print media. The explanation for this seems to lie in the size of the economy, since the latter three countries have the highest GDP per capita in the region (while the former s group have the lowest), which indicates that the advertising market is affluent enough to sustain domestic media groups independent of other business structures. The particular type of newspaper privatization does not seem to have an influence on this relationship, given the difference between Poland and Slovenia (which went through a more regulated privatization process, also involving limits on foreign ownership) and Estonia (where newspapers were privatized before an appropriate regulatory framework was adopted); it is likely that the process of newspaper privatization, which took place over twenty years ago, has little effect on the shape of CEE media systems today, mainly because of the numerous ownership and regulatory changes that the media markets have been through since then. Looking at the character of the two particular market segments which the MDCEE project has specifically focused on because of the long-term scholarly interest in their democratic roles (newspapers and television), there is probably more heterogeneity than homogeneity, and patterns of commonality among countries seem to be difficult to find, especially when contrasting newspaper and television markets. Contrary to expectations, the position of television in the advertising market does not have a direct influence on newspaper circulation figures – even where television dominates the market, daily newspaper circulation can reach relatively high levels in countries like Slovenia or Bulgaria (although these figures are still more than twice as low as in Sweden). However, at least in the case of Bulgaria, the high 44 This particular comparative analysis does not take into account the very latest ownership changes in Estonia, since August 2013. MDCEE Final Reports 2013 circulation figures – which, unlike in any other CEE country, have actually been rising since 2006, notwithstanding the crisis (see Appendix B) – clearly do not reflect the situation in the advertising market (newspapers receive only 7 per cent of total advertising expenditure in Bulgaria), and are more likely a product of the distorted business environment within which newspapers are being published, since many titles are reported to be sold below production costs and kept on the market for reasons other than for profit. This also indicates that the Page | 24 seemingly high diversity of national dailies in Bulgaria, but also in Romania (see Table 4), does not come without a price, namely the low level of structural and professional autonomy - a fact repeatedly confirmed in our interviews with local journalists and experts, and ultimately also reflected in the low scores for media freedom in both countries. On the other hand, countries like Estonia or the Czech Republic are proof that relatively high levels of freedom and autonomy can be maintained despite limited market pluralism. Based on this, it can be argued that in smaller-sized markets, and under conditions of shrinking resources, a certain level of concentration is necessary in order for quality journalism to be sustained. In many Western countries, particularly in those where media markets are naturally limited by the country’s size, the state assumes an active role in enhancing media pluralism by providing direct or indirect subsidies to media organizations (Picard 1995, Nielsen 2011). Press subsidies are an established (though not entirely uncontroversial) part of media policies in countries like Austria, Belgium, Denmark, Finland, Luxembourg, Portugal or Sweden (Alonso et al. 2006). However, with the exception of Slovenia, none of the Central and Eastern European states has any system of direct press subsidies currently in place. 45 This has been mainly explained by the predominantly liberal orientation of media regulatory frameworks in most CEE countries, as well as by concerns about the possible misuse of this policy instrument in the hands of local political elites.46 Very much the only form of open economic intervention by the state in print media markets in CEE remains the system of reduced VAT (Value Added Tax) rates on newspapers, which is applied in most EU countries (see Appendix H). However, from a comparative overview it is clear that VAT rates on the sale of newspapers in most CEE countries are higher than the EU-27average, with three countries (Bulgaria, Slovakia and Lithuania) having currently no reduced rate for newspapers. In some countries, the level of VAT on print media can even become an instrument of political pressure, as apparently happened in the Czech Republic in relation to 45 Several countries have schemes financially supporting ethnic minority media, usually administered by the Ministry of Culture; however, apart from Slovakia, where the beneficiary of this scheme is the fifth largest national daily, Uj Szó, which belongs to the country’s biggest publisher, Petit Press, these subsidies do not have a significant effect on the overall media market. According to the former Editor-in-Chief of the Hungarian daily Népszabadság, “a subsidies system would not work in Hungary, as it would not fit into the cultural atmosphere and traditions of the country” (interview with Pál Eötvös, 21 May 2010). In the opinion of the former CEO of the Czech publishing house Economia, “if there was any form of state aid here, the politicians would misuse it” (interview with Michal Klíma, 10 June 2010). 46 MDCEE Final Reports 2013 the government proposal to introduce a single rate of VAT in 2011 (which would effectively mean raising the rate for newspapers from 14 to 20 per cent).47 However, while the established instruments of policies to promote pluralism are either not present or do not seem to play a significant role in most CEE media systems, in many countries the media are enjoying indirect state support by less-conventional and arguably Page | 25 more controversial means, namely through state advertising. As discussed earlier, the preferential placement of advertising by government institutions or state-owned companies is a widespread practice across the region, and accounts for one of the most “effective” strategies of political control, especially in times of financial crisis. Unfortunately, there are only limited empirical data on this issue, but the interviews conducted for this project suggest that Estonia may be the only CEE country exempt from this tendency. Looking at the overall market situation, as represented by the indicators featured in Table 4, what kinds of pattern can be detected when linking market characteristics with selected qualities of media outlets? There is a visible and, given the common trend around the world, arguably unsurprising correlation between economic prosperity and the level of media freedom (as measured by Freedom House): countries with the lowest GDP per capita (Bulgaria, Romania, Latvia) are at the same time displaying among the lowest scores in the region for media freedom, while countries with high GDP per capita have on average higher FH scores. However, this correlation is far from perfect, and nothing can illustrate this better than the contrast between Estonia and Hungary, which are nearly identical in terms of their economic output per capita, but which are currently at opposite ends of the FH scale. The troublesome situation of Hungarian media and journalism (see Bajomi-Lázár 2013) is therefore hardly explicable by economic factors (even though these may also play a role during the crisis), but rather by the political situation in the country and the curtailing of media freedom by the new regulatory framework adopted by the government after 2010. Still, it appears safe to argue (as did many journalists and media experts interviewed) that a prosperous economy generating adequate resources for the advertising market is a necessary condition for – rather than an ultimate determinant of – a structurally autonomous media system, enhancing (but certainly not guaranteeing) the chances for journalism to remain free of undue political or business interference. 47 In response to this plan, the editors-in-chief of all relevant Czech newspapers signed an open letter to the government and Parliament urging them not to increase the tax, and the plan was in the end scrapped. However, information leaked during the negotiations suggested that the Minister of Finance, Miroslav Kalousek, called various editors, making them aware that they were at his ministry’s mercy (http://aktualne.centrum.cz/domaci/zivot-v-cesku/clanek.phtml?id=693529). MDCEE Final Reports 2013 Table 4: Comparative overview of selected media market indicators in CEE BG CZ 25.283 GDP per capita 13.780 (PPP, thousands of USD, 2010) 10.525 Population (mil., 7.543 2010) Privatization & ownership S Type of newspaper S privatization M Presence of foreign L ownership: newspapers H Presence of foreign H ownership: television M Oligarchs / tycoons H as media owners L H Ownership transparency Main market figures (newspapers & television) 193 160 Newspaper circulation per 1,000 adult population (2011)a 8 National paid-for 31 h dailies (2010) a 47 Share of TV in 66.6 advertising market (2012) b 82.7 TV market 73.9 concentration (3 leading groups, 2011) c 28.3 Audience share of 10.3 PSB (2010) d 2014 2012 Digital switchover State intervention 20/14 VAT / VAT on 20/20 newspaper sales (%, 2012) e No No Press subsidies No Specific provisions No on media mergers / dominance Quality of media H Autonomy of L investigative journalism f 19 Media freedom 37 (PF) (F) (FH) (2012) g EE 20.615 HU 20.029 LV 16.312 LT 18.184 PL 19.783 RO 14.287 SI 27.063 SK 23.423 1.340 10.009 2.243 3.321 38.187 21.442 2.053 5.433 Page | 26 S S S S R S R S H (until Aug 2013) H H L L M L L H H H M L M H M L M H M L H L M H M L L H M M M 185 154 174 h 99 99 48 204 89 5 9 10 h 11 h 9 15 7h 7 30.8 32.2 46 47.9 52.6 63.7 68.9 49.6 55.7 >61.4 >45.6 51 80.9 47.6 71.4 70 17.4 13.2 13.6 12.1 39.8 7.1 30.9 17.5 2010 2014 2010 2012 2013 2015 2011 2012 20/9 27/5 22/12 21/21 23/8 24/9 20/8.5 20/20 No No No Yes No No No No No No No No Yes Yes (EM) i No H M M H H M n.a. H 16 (F) 36 (PF) 28 (F) 24 (F) 26 (F) 42 (PF) 24 (F) 22 (F) a World Press Trends (WAN 2011) World Newsmedia Network 2012 c Lange 2012 d European Audiovisual Observatory 2011 e European Commission 2012 f Stetka – Örnebring 2013; scores determined on the basis of a combination of expert survey and field interviews g Freedom House 2013; the bigger the number the lower the freedom of media (inverted scale) h Figure from 2009 i subsidies exist for ethnic minority press, which includes the fifth largest daily Uj Szó (published by Petit Press) Legend: L = low; M = medium/mixed ; H = high ; S = spontaneous privatization ; R = regulated privatization b MDCEE Final Reports 2013 The above-mentioned trio of countries (Bulgaria, Romania and Latvia) seem to be clustered around such indicators as a relatively weak economy, but also several others, namely a low presence of foreign investors (in the newspaper sector), a high level of involvement of oligarchs in media ownership structures, low ownership transparency, a relatively high Page | 27 fragmentation of both newspaper and television markets, as well as a very weak market position of the public service (or state) broadcaster. Even though none of these factors can be singled out as having the “crucial” effect, their co-occurrence seems to have a mutually reinforcing impact on the conditions for media freedom and journalistic autonomy - an impact which is clearly a negative one. While commonalities among countries apparently representing what has been termed in the scholarship on CEE media transformation a “media capture model” (see Mungiu-Pippidi 2008) are relatively easy to spot, shared traits among the other six post-communist media markets are scarcer. This, in a way, also indicates that there is probably no clear-cut cluster of countries which could be straightforwardly contrasted with the previous group as representative of a “successful media transformation model”, since they all – with the possible exception of Estonia – have their own internal problems and difficulties, often not reflected in the rather simplified scores of Freedom House. For example, the increasing media activity of local business tycoons in countries like the Czech Republic, Lithuania or Slovakia ought to be a matter of concern, especially if the process of foreign investors’ departure continues and the oligarchic model of media ownership further expands, since this tendency can not only weaken media autonomy, but potentially reverse the process of Westernization of media systems started in these countries over two decades ago. MDCEE Final Reports 2013 6. Conclusions Reviewing the evolution of Central and Eastern European media systems over the course of two decades, Karol Jakubowicz and Miklos Sükösd point out that “Taken literally, neither social, nor media transformation can ever be ‘over’, of course. Change never stops, though it may be faster or slower, depending on circumstances” (Jakubowicz and Sükösd 2008: 23). Page | 28 However, in the context of the CEE media markets’ turbulent development in the last several years, this statement may be more than just rhetorical hyperbole. While for most of the first decade of the 21st century, media systems have been undergoing intensifying consolidation as well as internationalization, the end of that decade and the beginning of the new one have been marked by processes of market fragmentation and de-Westernization of media ownership. In light of these tendencies, the “result” or even the medium-term course of which is nearly impossible to predict, one can argue that not only is the transformation of CEE media markets essentially an open-ended process depending on not just internal but also external conditions – the latter obviously much more difficult to control – but it is also a process whose path is by no means linear, and may even turn in a seemingly opposite direction than previously followed. Undoubtedly, these observations do not apply in exactly the same way to all the CEE markets; and indeed this project has brought plenty of evidence to support a differentiated analytical approach to the region, emphasizing intra-regional differences which sometimes seem to overshadow commonalities, as indicated above in the analysis of selected CEE market variables. Arguably, one of the most important systemic characteristics displaying variations within the region is the level of structural autonomy of media organizations from the constraining forces of other social subsystems, particularly politics and the economy, which have traditionally been considered among the main indicators of proximity to (an idealized version of) the “Western model”. This process of “structural differentiation”, to use the language of neo-functionalist sociology (Alexander 1981), has visibly been much more successful in countries like Estonia, Poland or (until only very recently) the Czech Republic, where media markets have evolved to resemble relatively closely their Western counterparts (of comparable size), with the first two markets not short of major (albeit recently weakened) domestic media companies involved in the publishing of quality news media outlets. At the other end of the spectrum, media markets in Bulgaria, Romania or Latvia are significantly distorted by the media being owned and run for reasons other than profit, by low ownership transparency, as well as by the uneven and politically biased distribution of state advertising. All these factors result in the fact that the Western-style media business model is rather an exception than a rule in these countries, and increasingly so following the crisis and the departure of foreign investors who had pursued this model. The experience of development, not just in these last three countries but in most of the CEE region, teaches us that, while an autonomous and pluralistic media system cannot be properly maintained without economic stability and a capacity of media organizations to generate profit in the long term, the market itself is unlikely to safeguard these qualities - not just because of its inherent vulnerability to fluctuations generated by economic crises, but MDCEE Final Reports 2013 especially given the fact that the performance of media markets in this region is frequently deformed by the lack of appropriate regulation and by undue intervention from the state or other business segments. Therefore, in order for quality journalism to thrive and fulfil its assumed democratic roles, it cannot rely solely on the market, but needs also to be nurtured in institutions operating mainly outside the scope and logic of the market economy. This means particularly in the public service media, but also in foundation- or community-based news Page | 29 organizations and investigative media outlets, and these are already active and increasingly popular in countries where a market-based funding model for quality journalism has largely failed and where mainstream media organizations are reported to have been captured by business and political actors and interests (see Stetka and Örnebring 2013). 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MDCEE Final Reports 2013 APPENDICES Page | 33 MDCEE Final Reports 2013 Appendix A: Shares of advertising expenditure 2008 vs. 2012 (data source: World Newsmedia Network 2012; shares based on net expenditure; own calculations) Bulgaria 2008 2.7 5.8 Bulgaria 2012 4.8 Television 10.3 Newspapers 65.6 Magazines 5.6 Radio 7.5 Newspapers 8.1 Magazines 8.1 Television 7.9 Radio 7 66.6 Internet Others Others Czech Republic 2012 Czech Republic 2008 Television 10 43.1 6.9 Internet 13.9 Newspapers 17.8 47 Magazines Radio 16.6 4.2 Internet 11 Estonia 2008 10.8 Radio 9.9 Television 9.5 Newspapers Magazines 8.5 Others Estonia 2012 Television 27 30.8 16.5 Others Newspapers Magazines Radio 9.8 Internet 36 Magazines Radio 14.2 Others 7.8 Television 5.7 Newspapers 9.5 Internet Internet 27.3 6.1 Others Page | 34 MDCEE Final Reports 2013 Appendix A: Shares of advertising expenditure 2008 vs. 2012 (data source: World Newsmedia Network 2012; shares based on net expenditure; own calculations) Hungary 2012 Hungary 2008 Page | 35 Television 10.9 11.1 36.4 4.5 Television 11.6 Newspapers Magazines 32.2 Magazines 19.4 Radio Radio 19.3 Internet 17.8 5 Television 35.7 Newspapers Magazines 10.9 Radio 18.2 Newspapers 16 46 Television 42.6 12.9 Magazines Radio Internet 24.9 Others 10 Lithuania 2012 Newspapers 7.2 Internet 8.5 Lithuania 2008 6.9 Magazines Radio 9 Others 5.5 Television 10.5 Internet 16 Others Latvia 2012 Latvia 2008 8.7 Internet 16.3 15.5 Others 10.5 Newspapers Others Television 7.7 11.1 47.9 8.2 Newspape rs Magazines 9.2 15.9 Radio MDCEE Final Reports 2013 Appendix A: Shares of advertising expenditure 2008 vs. 2012 (data source: World Newsmedia Network 2012; shares based on net expenditure; own calculations) Hungary 2012 Hungary 2008 Television 10.9 11.1 36.4 4.5 Television 11.6 Newspapers Magazines 32.2 Magazines 19.4 Radio Radio 19.3 Internet 17.8 5 Television 35.7 Newspapers Magazines 10.9 Radio 18.2 Newspapers 16 46 Television 42.6 12.9 Magazines Radio Internet 24.9 Others 10 Lithuania 2012 Newspapers 7.2 Internet 8.5 Lithuania 2008 6.9 Magazines Radio 9 Others 5.5 Television 10.5 Internet 16 Others Latvia 2012 Latvia 2008 8.7 Internet 16.3 15.5 Others 10.5 Newspapers Others Television 7.7 11.1 47.9 8.2 Newspape rs Magazines 9.2 15.9 Radio Page | 36 MDCEE Final Reports 2013 Appendix A: Shares of advertising expenditure 2008 vs. 2012 (data source: World Newsmedia Network 2012; shares based on net expenditure; own calculations) Poland 2012 Poland 2008 Page | 37 Television 10.4 Newspapers Newspapers 9.5 Magazines 6.8 51.8 11.8 Television 8.9 Radio 17.3 52.6 6.6 8.7 Internet 9.7 Magazines Radio Internet Others Others 5.9 Romania 2008 3.6 Romania 2012 Television 10.9 Television 12.8 Newspapers 6.1 Magazines 7.5 7.2 64.7 Radio Internet Others 63.7 4 3.3 Magazines 12.4 60.5 5.6 Television 12.2 Newspapers 49.6 10.9 Radio Internet 7.1 Internet Others Newspapers 7.1 Radio Slovakia 2012 Television 9.5 Magazines 5.9 Slovakia 2008 3.4 Newspapers 10.3 Others Magazines Radio 11.6 Internet 10.1 Others MDCEE Final Reports 2013 Appendix A: Shares of advertising expenditure 2008 vs. 2012 (data source: World Newsmedia Network 2012; shares based on net expenditure; own calculations) Slovenia 2012 Slovenia 2008 3.5 Page | 38 4.3 3.8 Television 6.9 Newspapers 9.4 Magazines 56 20.4 3.5 5.7 Television 5 Newspapers Magazines 12.6 Radio Radio 68.9 Internet Others Others CEE 2008 6.8 CEE 2012 Television 9.4 48.3 Magazines 7.1 Others 30.1 Television 7.1 Newspapers 20.8 Magazines 5.6 Others Western Europe 2012 Television 7.3 30.8 Internet 28.8 Others Newspapers Magazines Radio 14.8 Radio Internet 11.9 Western Europe 2008 13.4 50.5 8.9 Internet 16.3 Newspapers 12.4 Magazines Radio 12.4 Television 9.2 Newspapers 6.8 Internet Radio 5.6 12 Internet 23.7 Others MDCEE Final Reports 2013 Appendix A: Shares of advertising expenditure 2008 vs. 2012 (data source: World Newsmedia Network 2012; shares based on net expenditure; own calculations) Italy 2008 Italy 2012 3.9 4.1 Page | 39 6.6 Television Newspapers Magazines 13.2 54.3 17.9 Television 7.2 3 7.2 Newspapers Magazines 9.9 Radio 57.2 15.5 Internet Radio Internet Others Others Sweden 2008 Sweden 2012 4.9 Television 21.6 21.1 22.6 Newspapers Magazines 27.2 11.1 38.1 Radio Internet Others 3.5 31.5 9.3 UK 2012 Television 26 23.1 Magazines 28.5 Television 7.6 Newspapers Radio 10.9 Internet Others UK 2008 7.6 Newspapers Magazines Radio 3.2 3.9 Television 5.9 26.7 Newspapers Magazines 34 Radio Internet 21 Others 7 3.7 Internet Others MDCEE Final Reports 2013 Appendix B: Circulation of daily newspapers (World Press Trends 2011) 6000 Page | 40 5000 4000 3000 2000 1000 0 Bulgaria Czech Rep. 2006 2007 2008 2009 2010 2011 653 629 912 1,037 1,142 1,262 1,435 2,507 2,364 2,075 1,700 1,543 Estonia 334 368 333 227 218 211 Hungary 1,775 1,670 1,630 1,521 1,444 1,522 Lithuania 636 654 741 641 309 282 Poland 5,263 4,451 4,186 3,613 3,367 3,201 Romania 1,177 1,411 1,634 1,922 1,620 906 MDCEE Final Reports 2013 Print media (national & regional) WAZ GER ○ ● ○ Verlagsgruppe Passau GER ● ● ○ Rheinische Post GER ○ ● ● a Axel Springer GER ● ● Verlagsgruppe GER ○ ○ ○ Handelsblatt Ringier a SWI ● ● ● ● Metro International SWE ○ ○ Bonnier SWE ○ ● ○ ● ● Schibsted NOR ○ ● ○ ○ Mecom b GBR Northcliffe UK ○ ○ International Styria Verlag AUT Television (national) MTG SWE ● ● ● ● ● ● c CME USA ● ● ● ● News Corp. USA ○ ○ ○ RTL (Bertelsmann) GER ● ProSiebenSat1/ SBS d GER ● ● Schibsted NOR ● Legend: ● ownership by June 2013 ○ left between 2006 and2013 a Slovenia Slovakia Romania Poland Lithuania Latvia Hungary Estonia Czech Rep. Bulgaria Home base Appendix C: Transnational media corporations in Central and Eastern European news media markets 2006 – 2013 (companies with at least 50% ownership shares) ● ● ○ ● since 2010 operating in several CEE countries as Ringier Axel Springer Media b until 2006 Orkla Media (Norway) c officially the company is registered in Bermuda; however its founder and main shareholder is Ronald Lauder, US entrepreneur. d ProSiebenSat.1 acquired SBS Broadcasting in 2007; the company is majority-owned by private equity firms KKR and Permira Sources: corporate websites; own research Page | 41 MDCEE Final Reports 2013 Appendix D: ownership and market position of main newspapers and television channels in CEE Bulgaria Title Daily newspapers Telegraph Circulation (2011) 105 000 Trud 85 000 24 Hours 70 000 Standard 50 000 Monitor 15 000 Channel Audience share (2010) 38.2 % 14.5 % 9.7 % Television bTV Nova TV BNT 1 Publisher / Majority owner New Bulgarian Media Group (Delyan Peevski / Tsvetan Vasilev) Media Group Bulgaria (Ognyan Donev / Lyubomir Pavlov) Media Group Bulgaria (Ognyan Donev / Lyubomir Pavlov) Todor Batkov New Bulgarian Media Group (Delyan Peevski / Tsvetan Vasilev) Broadcaster / Majority owner CME (US-funded) MTG (Sweden) State television Media Development Center, Sofia; Capital (weekly); European Audiovisual Observatory (2011) Page | 42 MDCEE Final Reports 2013 Appendix D: ownership and market position of main newspapers and television channels in CEE Czech Republic Title Daily Newspapers Blesk Circulation [2012] 305 272 Mladá fronta DNES 206 098 Právo 111 636 Aha! 81 111 Lidové noviny 41 346 Channel Nova Prima Audience share (2011) 29 % 18 % CT1 16 % Television Media Projekt (www.median.cz) Publisher / Majority Page | 43 owner Ringier Axel Springer (SWI / GER) Rheinische Post (GER) [since June 2013 Andrej Babiš, local] Borgis / Zdenek Porybny (local) Ringier Axel Springer (SWI / GER) Rhenische Post (GER) [since June 2013 Andrej Babiš, local] Broadcaster / Majority owner CME (US-funded) MTG (Sweden) 50 % Ivan Zach (CZ) 50 % Public service TV MDCEE Final Reports 2013 Appendix D: ownership and market position of main newspapers and television channels in CEE Estonia Title Daily Newspapers Postimees Circulation (2011) 57 000 Õhtuleht 53 000 Eesti Päevaleht 29 000 Äripäev Pärnu Postimees 13 000 13 000 Channel Audience share (2010) 17.3 % 15.3 % 12.8 % Television Kanal 2 ETV TV3 Estonia Publisher / Majority Page | 44 owner Eesti Media / Schibsted (NOR) [since Aug 2013 local] Eesti Meedia (50%) /Schibsted (NOR) [since Aug 2013 local] Ekspress Grupp (50%) (Hans Luik) Ekspress Grupp (Hans Luik) Bonnier (SWE) Eesti Media / Schibsted (NOR) [since Aug 2013 local] Broadcaster / Majority owner Schibsted (NOR) Public service TV MTG (SWE) World Association of Newspapers (2011); European Audiovisual Observatory (2011) MDCEE Final Reports 2013 Appendix D: ownership and market position of main newspapers and television channels in CEE Hungary Title Daily Newspapers Blikk Bors Circulation (2011) 187 806 82 474 Népszabadság Kisalföld 80 849 70 302 Magyar Nemzet Channel 49 183 Audience share (2010) 23 % 17 % 8% Television RTL-Klub TV2 M1 Publisher / Majority owner Ringier (SWI) Page | 45 Lapcom / Radio Bridge Media Holdings (US-based investor) Ringier (SWI) Lapcom / Radio Bridge Media Holdings (US-based investor) Liszkay Gábor (local) Broadcaster / Majority owner Bertelsmann (GER) SBS Broadcasting (GER) State television Interviews for MDCEE project; Mapping Digital Media: Hungary (2011); MDCEE Hungary report (2011) Latvia Title Daily Newspapers Latvijas Avize Diena Television [Latvia] Vesti Segodna Neatkariga Rita Avize Chas Channel LNT TV3 LTV 1 Circulation (2011) 36 000 31 000 26 000 24 000 13 000 Audience share (2010) 16.8 % 9.7 % 9.1 % Publisher / Majority owner Local Dienas Medija / Rīga Trading Port Authority [> Latvian oligarchs] Local Mediju Nams / [-> Latvian oligarchs] Local Broadcaster / Majority owner MTG (SWE) MTG (SWE) State television Interviews for MDCEE project; WAN (2011); European Audiovisual Observatory (2011) MDCEE Final Reports 2013 Lithuania Title Daily Newspapers Lietuvos rytas Circulation (2011) 370 000 Vakaro žinios 324 000 Respublika 120 000 Kauno diena 91 000 Šiauliu kraštas 72 000 Channel Audience share (2010) 23.2 % 20.2 % 11.5 % Television TV3 LNK LTV Publisher / Majority owner Snoras Bank (now under government administration) Respublika Media Group Page | 46 (owned by Tomkus brothers) Respublika Media Group (owned by Tomkus brothers) Diena Media News (until 2012); now Baltic Media Holding; controlled by Nerius Gasparavicius and Ovidijus Lukosius Respublika Media Group (owned by Tomkus brothers) Broadcaster / Majority owner MTG (SWE) Andrejs Ekis (local) Public service television Interviews for MDCEE project; WAN (2011); European Audiovisual Observatory (2011) MDCEE Final Reports 2013 Appendix D: ownership and market position of main newspapers and television channels in CEE Poland Title Circulation Publisher / Majority (2011) owner Fakt Gazeta 536 000 Ringer Axel Springer Daily Newspapers Codzienna Polska (SWI/GER) Gazeta Wyborcza 416 000 Agora SA (local) Metro 391 600 Agora SA (local) Super Express 296 000 Murator SA (local) Rzeczpospolita 176 000 Presspublica sp. (Grzegorz Hajdarowicz 49 %) Television Channel Audience share Broadcaster / Majority (2010) owner TVP 1 19.4 % Public service television TVN 15.2 % ITI Group (local; but 28 % of shares held by Vivendi, FRA) Polsat 13.8 % Cyfrowy Polsat / Zygmunt Solorz-Zak WAN (2011); European Audiovisual Observatory (2011) Romania Title Daily Newspapers Click Circulation (2011) 174 000 Libertatea Adevarul 105 000 40 000 Romania Libera 40 000 Cancan 38 000 Publisher / Majority owner Adevarul (Dinu Patriciu > Cristian Burci) Ringier (SWI) Adevarul (Dinu Patriciu > Cristian Burci) Media Gamma Publishing (local) Cancan Media (local) Page | 47 MDCEE Final Reports 2013 Appendix D: ownership and market position of main newspapers and television channels in CEE Television [Romania] Channel ProTV Antenna 1 Realitatea TV Audience share (2010) 14.9 % 10.3 % 6.1 % Broadcaster / Majority owner CME (US-funded) Dan Voiculescu Sorin Vântu WAN (2011); European Audiovisual Observatory (2011) Slovakia Title Daily Newspapers Nový Čas Circulation (2011) 135 609 Plus 1 Deň SME 54 648 53 294 Pravda Új Szó 53 646 22 217 Channel TV Markíza TV JOJ Audience share (2011) 30.3 % 19.6 % Jednotka (STV 1) 9.6 % Television Publisher / Majority owner Ringier Axel Springer (SWI/GER) Spoločnost 7 Plus (local) Petit Press (Rhenische Post + Peter Vajda, 50:50) Perex (local -> J&T) Petit Press (Rhenische Post + Peter Vajda, 50:50) Broadcaster / Majority owner CME (US-funded) J&T (Patrik Tkáč / Ivan Jakabovič) Public service TV Slovak Audit Bureau of Circulation (http://abcsr.sk/index.php?menu= vysledky ); http://medialne.etrend.sk Page | 48 MDCEE Final Reports 2013 Appendix D: ownership and market position of main newspapers and television channels in CEE Slovenia Title Daily Newspapers Slovenske novice Circulation (2011) 89 000 Delo 56 000 Dnevnik Večer Finance Channel 46 000 39 000 15 000 Audience share (2010) 23.6 19.1 10.3 Television Pop TV TV SLO 1 Kanal A Publisher / Majority owner Delo, d.d.. / Pivovarna Lasko (local) Delo, d.d../ Pivovarna Lasko (local) DZS, d.d. / local Pivovarna Lasko (local) Bonnier (SWE) Broadcaster / Majority owner CME (US-funded) State television CME (US-funded) Slovenska Oglaševalska Zbornica – Slovenian Marketing Chamber; MDCEE Project; European Audiovisual Observatory (2011) Page | 49 MDCEE Final Reports 2013 Appendix E: Main CEE business tycoons involved in news media sector (2013) Country Name Bulgaria Tsvetan Vasilev / Delyan Peevski Sasho Donchev Czech Republic Main company Main area(s) of business (majority owner / CEO) Corporate banking Commercial media business Bank / New Bulgarian Media Group Overgas gas distribution Ivo Prokopiev Alfa Financing financs, investment / Theodor Zahov Zdeněk New World coal mining, coking plants, Bakala Resources energy production and distribution Andrej Babiš Agrofert food processing agriculture Jaromír Soukup advertising media buying Médea Empresa Médea Hungary Latvia Gábor Széles Videoton Ikarus Lajos Simicska Közgép Aivars Lembergs Ventspils Group TV sets & electronics production bus production construction oil production & distribution Aivars Rīga Trading transportation Lembergs, Port Authority Andris Šķēle, Ainārs Šlesers Lithuania Lyda Lubiene Achema Group chemical industry, hotel & family b management, financial operations Darius MG Baltic investments; Mockus beverage industry, clothing retail, real estate Nerius Gasparavicius, Ovidijus Lukosius Media ownership (main media outlets) Telegraf (national daily) Monitor (national daily) Express (national daily) Weekend (weekly) Politika (weekly) Borba (local daily) Maritsa (local daily) TV 7, Super 7, Sport 7 and BBT TV; (cable television channels) Rodina publishing house Sega (national daily) Capital (national daily) Dnevnik.bg (online news server) Hospodářské noviny (business daily) Ekonom (business weekly) Respekt (political weekly) Aktuálně.cz (news server) Several B2B magazines Mladá Fronta DNES (national daily) Lidové noviny (national daily) 5+ 2 days (free regional daily Týden (weekly) Instinkt (weekly) Sedmička (free weekly) TV Barrandov (national digital TV channel) Several magazines Magyar Hírlap (national daily) Echo TV (business channel) Metropol (free daily) a Neatkariga Rita Avize (national daily) a Diena (national daily) a Dienas Bizness (national daily) a Lieutvos zinios (national daily) Baltijos TV RC2 (radio station) LNK (national TV) Alfa.lt UPG Baltic (publishing) Baltic Media Holding / Kauno diena (local daily) Page | 50 MDCEE Final Reports 2013 Tomkus brothers Poland Zygmunt Solorz-Żak PTE Polsat Polisa Invest Bank Elektrim Polkomtel Grzegorz Hajdarowicz Romania Slovakia Dan Voiculescu GRIVCO group pension funds; insurance; banking; energy; telecommuni-cations Respublika Media Group: Vakaro žinios (national daily) Respublika (national daily) Šiauliu kraštas (local daily) TV Polsat (national free TV & 12 other channels) Cyfrowy Polsat (pay TV) investment, film production Rzeczpospolita (national daily) trade, media, energy, industry Antena (national TV) and services Jurnalul Naţional (national daily) Gazeta sporturilol (national daily) Cristian Burci Graffiti BBDO communications Adevǎrul (national daily) Group Click! (national daily) Romania Prima TV (national TV) Kiss FM (national radio station) Printing houses Sorin Vântu Realitateareal estate, media, insurance, Realitatea (national TV) Caţavencu banking several niche television channels Trust and FM radio stations Patrik Tkáč & J&T Group banking, real estate, corporate TV JOJ (national TV) Ivan investment, services JOJ Plus (cable TV) Pravda (national daily) a Jakabovič Ivan Kmotrík Grafobal advertising TA3 (national TV channel) media business Printing houses press distribution Page | 51 MDCEE Final Reports 2013 Appendix F: Development of media freedom in CEE (Freedom House) 50 45 Page | 52 40 35 30 25 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Bulgaria 35 34 34 33 36 34 35 36 37 Czech Republic 22 20 18 18 18 18 19 19 19 Estonia 17 16 16 16 15 17 18 18 16 Hungary 21 21 21 21 21 23 30 36 36 Latvia 17 19 19 22 23 26 26 27 28 Lithuania 18 18 18 18 18 21 22 23 24 Poland 20 21 22 24 24 24 25 25 26 Romania 47 44 42 44 44 43 42 41 42 Slovakia 21 20 20 22 23 23 22 21 22 Slovenia Avg. 19 20 21 23 24 25 25 25 24 23.7 23.3 23.1 24.1 24.6 25.4 26.4 27.1 27.4 MDCEE Final Reports 2013 Appendix H: Comparison of VAT rates across the EU VAT rates in EU-27 (2012) 30 Page | 53 25 VAT % 20 15 10 5 0 BE DK UK FR LU ES IT CY HUMT NL PT SE EL DE PL SI EE IE RO FI AT LV CZ BG SK LT Standard rate 21 25 20 20 15 18 21 15 27 18 19 23 25 23 19 23 20 20 23 24 23 20 22 20 20 20 21 Newspapers 0 0 0 2 3 4 4 5 5 5 6 6 6 7 7 8 9 9 9 9 9 10 12 14 20 20 21 Source: European Commission (2012) VAT Rates Applied in the Member States of the European Union. Brussels: European Commission, Taxation and Customs Union. MDCEE Final Reports 2013 Page | 54 About the author Václav Štětka, Ph.D. was Senior Research Fellow at the Department of Politics and International Relations, University of Oxford, for the duration of the MDCEE project from 2009 - 2013. Since then he has been working as Senior Research Fellow and Research Group Leader at the Institute of Communication Studies and Journalism, Charles University in Prague. His work has been recently published in the International Journal of Press/Politics, Journal of Popular Film and Television, or the International Journal of Communication. Contact: stetka@fsv.cuni.cz

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