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Ukraine: TV Market Heats Up

By Mark Huntley

Kyiv, 27 February 1998 (RFE/RL) -- Eastern European television markets have been some of the fastest growing in the world in the 1990s, in terms of ad revenues, channel licensing, and viewership. Now Ukraine, where the economy may finally be emerging from the dark ages of state control, is joining the TV boom times.

Six years after the collapse of communism, private television still is taking root in the former USSR. Ukraine, with an ongoing conflict between reform-minded President Leonid Kuchma and the communist-dominated Parliament, has yet to go through the painful shock treatment of free-market economic reforms and privatization of state assets. Per capita GDP in Ukraine is still just over 700 U.S. dollars. One market that has been privatized at least partially is television.

Irina Polyakova, director of the Kyiv office of the European Institute for the Media, says the Ukrainian media market is a big one, serving a population of 52 million. She says that, with incomes set to rise, the market will only grow.

Already in the past two years, Polyakova says, television advertising revenues have more than doubled. In her words: "A national channel reaching all of Ukraine is naturally a very attractive business to international television companies and the number of national television channels is growing."

After an acrimonious licensing campaign, Central European Media Enterprises, or CME, the New York-based media company run by cosmetics magnate Ron Lauder, early last year secured the right to broadcast nationally. Over the past three years, CME has launched successful channels in several countries across Central and Eastern Europe. CME's Ukrainian affiliate is named Studio 1+1, and broadcasts 12 hours daily.

Olexsander Rodnyansky, Studio 1+1's managing director, says he believes that the television ad market in Ukraine has an extraordinary future. As he puts it: "Today we have less than one dollar spent per capita in the ad market, and we have a very competitive television market. And I'm sure that, as happened in Russia or Poland or Hungary -- in all other Eastern European countries -- the media market will grow up three or four times during two years."

Studio 1+1 is the most dynamic player on the Ukrainian market. Most entrenched is the state channel, UT1. The assault by new channels on UT1's traditional, some would say stale, programming has meant a significant loss of audience share in the past year. UT1 is now third, with an average share of 11 percent. That's well behind the 30-plus percent enjoyed by both Studio 1+1 and the third main player on the market, Inter -- a joint Russian-Ukrainian channel carrying Russian programs beamed in straight from Moscow's ORT.

The same slow pace of reform that has delayed market reforms in Ukraine has kept in place political attitudes more appropriate to Soviet times. While state television's news presentation is basically balanced, it is also dependent on state support, and oversight. Independent media like Inter and Studio 1+1 are prone to demands by those in political power in search of access to the media, or upset by the slant of coverage. But Studio 1+1's Olexsander Rodnyansky says that the pressures don't affect his station's editorial stance, or threaten its license renewal. As he puts it: "That's secured by the law."

Studio 1+1's right to broadcast is under private assault, however, from Perekhid Media Enterprises, a Bahamian media company which operates in Kiev. The company formerly owned the rights to broadcast on 1+1's frequency. It claims that CME bribed government officials to annul Perekhid's arrangement. Perekhid has filed a lawsuit in New York Supreme Court claiming 750 million dollars in damages from Ron Lauder and CME.

Perekhid officials declined to be interviewed. CME representatives call the lawsuit baseless. Irina Polyakova of the European Institute for the Media says that Perekhid Media didn't have an actual licensing agreement to broadcast, merely an agreement to air some programs.

She says that in the beginning of the licensing process, any player who wanted air time had to apply to the National Council for Radio and Television Broadcasting and participate in a competition for the license." In her words: "As far as I know, Perekhid Media did not participate in this competition."

Certainly CME's Studio 1+1 has jumped wholeheartedly into both producing and broadcasting local-oriented programming, while by most accounts, Perekhid merely imported Western programs and dubbed, then aired them.