THE MEDIA IN UKRAINE: Court battle to determine future of Ukrainian television (10/13/02)

THE MEDIA IN UKRAINE

Court battle to determine future of Ukrainian television

by Marta Dyczok
RFE/RL Media Matters

Ukraine's most popular independent TV station is fighting to stay on the air. 1+1 Television, which features a mix of entertainment and serious public affairs programming, is the country's only private national Ukrainian-language TV station. In September 1+1 TV asked the Supreme Economic Court to attempt to reverse a lower court ruling. Kyiv's Economic Appeals Court had ruled on July 16 that another TV company, AITI, is legally entitled to Studio 1+1's broadcast license, even though AITI lost its license a few years ago because it could not produce enough programming to fill its airtime.

This promises to be a lengthy legal battle with important implications for licensing procedures and foreign media ownership in Ukraine. Unlike similar struggles four years ago that took place behind closed doors, at least the Studio 1+1 battle is taking place before the courts and is being discussed in the media.

The current fight for 1+1 TV's license is part of a controversial relicensing of Ukraine's broadcast sector. The government regulatory agency, the National Council on Television and Radio Broadcasting, has been accused of numerous irregularities. Parliament passed a no-confidence vote on the outgoing council's activities on July 4, reported the daily Ukrainska Pravda on July 19. Many TV and radio stations' licenses expired as of 2000, and the council has revoked a number of licenses under dubious circumstances. One such still-contested case is Radio Kontinent, which lost its license in 2001. The station aired some foreign broadcasts, including BBC and Deutsche Welle. More recently, on June 20, the National Council ordered Kyiv's center to cut off the broadcast signal of Kyiv's oldest independent-minded local TV station, UTAR, which had just won a court case to keep its license, according to the European Media Institute.

The court ruling against 1+1 TV is particularly puzzling since it is a very successful private TV company. Since 1997 it has been broadcasting on Ukraine's Channel 2 (one of only four national TV channels). 1+1's popularity has grown steadily, because it provides Hollywood films, soap operas, sporting events, as well as objective and interesting news programs, commentary and information-talk shows. Up until the March parliamentary election campaign, 1+1 news and information programs were rated first or second in terms of quality and scope.

1+1 is one TV station that has major foreign non-Russian capital. Although media ownership is difficult to document, it is well-known that Russian companies now have effective control of most private TV stations in Ukraine, including, New Channel, Inter and STB. Since Central European Media Enterprises Ltd (CME) owns a significant portion of 1+1, it is an exception to this trend. This parent company, set up by American businessman Ronald Lauder, has shares in TV and radio stations throughout Eastern Europe.

Foreign ownership of media is controversial in Ukraine, since legislation limits foreign capital in any media outlet to 30 percent. This law was passed in the early 1990s when Ukraine was disengaging from the centralized Soviet information infrastructure and struggling to gain control of the airwaves on its territory.

Russia inherited the USSR-wide TV Channel 1 and continued to broadcast throughout the former Soviet Union until the new countries established ownership and control of that channel on their territories.

However, by the late 1990s most major new TV companies in Ukraine had managed to circumvent the legislation by registering shares to local partners. For example, STB was privatized in 1996, and soon afterwards 70 percent of the station's investment reportedly came from Russian sources. The highly respected New Channel (Novyi Kanal) is reported to be owned by Russian banks. Some reports claim that CME owns over 30 percent of 1+1, while on August 26, ukraine.ru reported that CME controls 30 percent of the shares, with the remaining 70 percent owned by 1+1 General Director Oleksander Rodniansky. In a surprising move in April Mr. Rodniansky assumed the position of general producer with the Russian television station STS, although he claims this new responsibility will not effect his commitment to 1+1.

How television stations obtain broadcast licenses is another controversial issue in Ukraine. From the outset, 1+1 TV has faced allegations of bribery and unethical political maneuvers. The controversy dates back to 1997 when Perekhid Media, a Ukrainian-American joint-venture TV company - which was a competitor for the Channel 2 license - accused 1+1 and CME of using illegal methods to obtain the broadcast license. After failing to get recourse in Ukrainian courts, in April 1997 Perekhid Media filed a complaint with the Supreme Court of New York County citing tortious interference by Lauder and CME, according to the CME 1997 Quarterly Report.

On June 12, 2001, The New York Times reported that Mr. Lauder and CME were under investigation in the U.S. for alleged violation of the Foreign Corrupt Practices Act for allegedly paying at least $1 million in bribes to Ukrainian officials to obtain the Channel 2 license.

Vadym Rabinovych is a mysterious figure in the 1+1 vs. AITI saga. He was one of the first partners of 1+1 and is widely believed to have eased the way for the station to obtain its license in 1996. After being declared persona non grata in Ukraine, Mr. Rabinovych emigrated to Israel. He returned to Ukraine - as owner of 1+1's rival, the AITI TV company. In fact, the two television stations have been clashing in the courts for several years over whether 1+1 obtained its license to broadcast on Channel 2 in a legal fashion. AITI first filed suit against 1+1 in 2000, but in April 2001 Ukraine's Supreme Arbitration Court dismissed the case. AITI then took the case to a lower court, the Arbitration Court of Kyiv, which ruled against 1+1 in February of this year, during the parliamentary election campaign.

Respected Ukrainian journalist Yulia Mostova outlined a number of possible behind-the-scenes scenarios for the 1+1 vs. AITI drama. Perhaps the battle between two TV companies is being manipulated by a third party who may want to buy 1+1 after its purchase price falls due to the scandal. (1+1 documents show that, although the company is still profitable, its overall revenues decreased by 10 percent last year). Perhaps the struggle for control of the popular 1+1 is part of the pre-presidential election jockeying among Ukraine's power brokers. (Ukraine's presidential elections are scheduled for 2004).

Should 1+1 go off the air, Ukrainians will look elsewhere for TV programs. In many parts of the country, 1+1 was the only source of high-quality Ukrainian-language programs, so viewers will have to switch to Russian or Russian-language stations. This would lead to a decline in advertising revenue for Ukrainian TV stations, further reduction of quality and greater dependence on Russian television, reported Dzerkalo Tyzhnia on July 26. Finally, this would contribute to further ownership concentration of Ukraine's television sector in Russian hands.

Dr. Marta Dyczok is associate professor of political science and history at the University of Western Ontario in Canada and a fellow at the Center for Russian and East European Studies, University of Toronto.

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