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Russia: Regional TV Developments -- Intense Competition And Advertising Markets


By Floriana Fossato and Anna Kachkaeva



Moscow, 13 March 1998 (RFE/RL) -- About 600 television networks operate in Russia. More than 400 are independent and function on a commercial basis. And, the majority of the commercial television networks have network agreements with Moscow-based networks.

Russia's Public Television (ORT, in which the state has a 51 percent share) and Russian Television (RTR, fully state-controlled) have had, since the Soviet era, their own regional branches and do not have such agreements with regional stations.

Media observers say the regional television market is currently in flux, with intense competition among networks for market share in the Russian regions.

Since advertising is the financial basis of any commercial television venture, it is useful to take a closer look at developments taking place in this field. According to advertising specialists, a noticeable shift in advertising interests, from central to regional television networks, started at the end of 1997.

Advertising executives say in conversations with RFE/RL that the shift in advertisers' interest has led to the creation of regional advertising markets that are developing independently from Moscow.

Cities like Novosibirsk (Siberia), Vladivostok (Far East) and a number of centers in Southern Russia are increasingly becoming a priority for the advertising industry.

Does this imply that the development of regional advertising agencies will create competition to already established Moscow companies? Not precisely, it appears.

Two companies currently dominating the Moscow-based advertising market, "Premier SV" and "Video International," have been busy expanding to the Russian regions during the last two years. Both companies are politically well-connected. They played a major role during the 1996 presidential campaign, producing television materials and promoting a number of popular events that helped President Boris Yeltsin defeat his Communist opponent.

"Video International," has exclusive rights on the production of advertising materials for two nationwide networks, state-funded RTR television and the commercial network NTV. Until recently, it was also producing advertising for another Moscow-based network, "Center TV," funded by Moscow's city government. To break into the regional market, "Video International" has chosen to create joint ventures with regional companies. In Siberia, for instance, "Video International" provides exclusive advertising services to the television networks NTN-4 and to the Western-Siberian network of television channels NTSC, whose broadcasts cover the areas of Novosibirsk, Kemerovo, Tomsk Barnaul and Irkutsk.

Observers say that the majority of private, commercial television networks based in the regions are heavily influenced by local executive authorities. They say that staying in the good graces of local governors, or heads of local administrations, still plays a bigger role than the support of local financial elites.

Granting broadcasting licenses and regional telecommunication policies are regulated by regional television-and radio-broadcasting services.

For a regional, commercial television company, to become the partner of a major Moscow-based, media-holding does not necessarily mean that the network will acquire a guarantee of independence from the influence of local powers. However, it is common wisdom among specialists to say that some top regional officials are all too aware of the importance of enjoying the financial and political support of well-connected Moscow media-holdings.

The possible advantages for regional authorities, say specialists, are clear. Good relations with Moscow-based media help promote regional economic interests in the Russian capital, and ensure that the authorities will receive favorable media coverage.

In exchange for their support, say specialists, media-holdings pursue the purchase of local television stations, without having to confront major obstacles from local authorities. When such a goal seems out of reach, favorable conditions might be obtained for their local partners.

While commercial television networks are getting stronger at regional level, government financing of state television-and-radio broadcasting networks is being reduced.

For RTR, (including the second channel of Russian national television, the recently created television channel "Kultura" and Radio Rossiya) a direct consequence of state financial reductions is the increasing dependence on regional political and financial elites.

Some regional governors have proposed freeing the federal budget from operational expenses of a number of regional RTR branches, transferring their administrative control to regional authorities. The Federal Television and Radio Broadcasting Authority has received such requests from the governors of at least three regions: Sverdlovsk, Orenburg and Tver.

The regional expansion of Moscow-based media-holdings threatens stations already present in regional markets. For instance, more recently created companies are generating effective competition to "TV-6," a commercial television network successfully created in 1993 in Moscow, which has more than 100 regional partners.

Among them is the network, STS, created in 1996. According to several sources, shares in this project belong to Alfa-Bank, one of Russia's major banks, which is also part of a consortium of four banks owing 38 percent of the shares of Russia's Public Television ORT. Other sources say the recently created "Gazprom-Media" holding controls STS shares.

Another competitor is the network "REN-TV." Some of the stations that until last year were part of the independent broadcasting system NVS have merged with "REN-TV," with the financial support of oil giant LUKoil.

The regional network of "Center-TV" is financed by the Moscow city government. The populist Moscow Mayor Yuri Luzhkov is tipped to be a possible candidate in Russia's next presidential election and favorable regional coverage would certainly prove helpful.

A powerful competitor is "TNT-Telenetwork," created by "Media Most" and part of its "NTV-Holding." "TNT"'s strategy includes the conclusion of partnership agreements with regional stations, or, alternatively, the purchase of controlling stakes. More than 70 large regional stations, which have their own correspondent networks and are located in cities with more than a million inhabitants, have signed partnership agreements with "TNT-Telenetwork." The broadcasting range of those stations usually includes the regional capital and a number of other cities and towns -- and, at times reaching neighboring regions.

"Channel 4", one of the main commercial television networks in the Urals, for example, broadcasts to 12 cities in the Sverdlovsk region with a potential audience of 2.8-million people. The independent "Afontovo" station, located in the Siberian city of Krasnoyarsk, broadcasts to seven cities in the region with an audience of two-million people.

It is possible to argue that Federal authorities, de facto, have no influence on regional media, while the power in the regional information market is being re-distributed among local political and business elites and major central information holdings and advertising agencies. The concentration of capital in the regional information market is yet another important side of Russia's fast-changing information picture.
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