aaus-list @ ukrainianstudies.org -- [aaus-list] LAST UKRAINIAN PRIVATE TV STATION UNDER THREAT

[Taras Kuzio <t.kuzio@utoronto.ca>]

RFE/RL Media Matters Vol. 2, No. 33, 30 August 2002

THE COURT BATTLE FOR THE FUTURE OF UKRAINIAN TELEVISION

By Marta Dyczok

    Ukraine's most popular independent TV station is fighting
to stay on the air. 1+1 Television features a mix of entertainment
and serious public affairs programming. It is also the country's
only private national Ukrainian-language TV station. On 4 September,
1+1 TV will go to the Supreme Economic Court to attempt to reverse a
lower court ruling. Kyiv's Economic Appeals Court ruled on 16
July 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 which 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 4 July, reported the daily "Ukrayinska Pravda" on 19
July. 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 20
June, the National Council ordered Kyiv's transmitting 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 2002 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 is reported to be owned by Russian banks. Some reports claim
that CME owns over 30 percent of 1+1, while on 26 August, ukraine.ru
reported that CME controls 30 percent of the shares with the
remaining 70 percent owned by 1+1 General Director Oleksandr
Rodniansky. In a surprising move in April 2002, 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 achieve
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 12 June 2001, "The New York Times" reported that 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 versus
AITI saga. He was one of the first partners of 1+1 and is widely
believed to have eased the way to obtain its license in 1996. After
being declared persona non grata in Ukraine, 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 2002, during the parliamentary election campaign.
    Respected Ukrainian journalist Yuliya Mostova outlined a
number of possible behind-the-scenes scenarios for the 1+1 versus
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 26 July. 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, University of Western Ontario, Canada, and a fellow at the
Centre for Russian and East European Studies, University of
Toronto, Canada.