That Natural Attraction Of Money To Media

Michael Hedges October 1, 2014 Follow on Twitter

The media world attracts the most interesting people, often quite colorful, sometimes rather dark. Where that dark-side takes hold, cleansing is a long process accomplished by repeated hand-washing, hampered by hand-wringing. There is merit in feeling clean, more, perhaps than being clean.

Media outlets in Lithuania have changed owners frequently since the 1990s and not necessarily with great transparency. Newspaper and web portal publisher Diena Media News recently changed hands again with considerable notoriety. At the end of August Sunra Investments, principally owned by Eimuntas Silvestras Akromas, acquired 50.15% interest in the publisher, reported business daily Verslo Ziniu (September 11).

Regional daily Kauno Diena, once 3rd in national circulation, was acquired by Norway’s Orkla Media in 1998. In 2006, Mecom Group took the whole of Orkla Media in a leveraged-buyout, reportedly €800 million, and almost immediately spun-off Kauno Diena to Lithuanian private equity house Hermis Capital, which acquired regional daily Klaipeda and launched daily Vilniaus Diena putting them all together as Diena Media News. Separately, there was Diena Print printing plant.

In 2010 with the European financial crisis stinging Hermis Capital sold its 51.15% controlling stake in Diena Media News to Baltic Media Holdings, a tertiary investment of Ukio Bankas, principally owned by Lithuania’s richest person at the time Vladimir Romanov.

The Lithuanian Central Bank closed Ukio Bankas in 2013 after investigations into money laundering and embezzlement. The money was gone. To avoid prosecution Mr. Romanov fled to the Russian Federation. Lithuanian law prohibits banking institutions from controlling media outlets but lawmakers have yet to outlaw murky third-party deals.

Another bank forced into administration about the same time was Snoras Bank, which happened to own Snoras Media, a major stakeholder in daily newspaper Lietuvos Rytas, the Lietuvos Rytas television channel, a weekly TV guide magazine, news portal lyrtas.lt and a printing plant. Accused of fraud and other dodgy dealings, Snoras Bank principal Vladimir Antonov, a Russian national, skipped to the UK where he is appealing extradition to Lithuania. The bankruptcy administrator sold Snoras Media to Lithuanian cosmetics company owner Benas Gudelis for about €2 million in September 2013.

Lithuanian capital finance firm Achema Group sold struggling Baltijos TV (BTV) at the end of 2012 to commercial broadcaster LNK. Achema Group continues to own national daily newspaper Lietuvos Zinios, radio stations Radiocentras, Zip FM, Relax FM, Rock FM and Russkoje Radio Baltija. The Competition Council approved the transfer after lengthy deliberation saying it would “not create or strengthen a dominant position or significantly restrict competition in the relevant market.” LNK, principally owned by MG Baltic Media, added BTV to four existing television channels with an aggregate ad revenue share more than 30% but less than 40%, according to TNS Gallup. Television channels owned by Modern Times Group (MTG) in Lithuania take between 40% and 50% of the TV ad market.

On acquiring BTV, operations were folded into LNK by eliminating news production, reducing head-count by a third. “In recent years results from BTV’s activities have not been sparkling,” said LNK general director Zita Sarakiene, quoted by Verslo Zinios (June 13, 2013). “Without a doubt, it will fall in the people. Part of them will be laid-off, part integrated into LNK. We will seek to achieve a better audience, younger, more active.”

Television revenues, including those of public broadcaster LRT and Russian channel ad windows, increased 5.8% to LTL 170 million (€49 million) in 2013over 2012, reported the Lithuanian Radio and Television Association (LRTA). Radio ad revenues grew 0.5% to LTL 24.6 million (€7.1 million). Total ad volume in Lithuania – not necessarily spending - rose 3.8% in 2013 over 2012, reported TNS Gallup.

Negative public opinion is chasing advertisers away from Russian-language TV channels in Lithuania. In the first eight months this year both foreign and Lithuanian advertisers reduced spending on NTV Mir Lietuva and PBK, 48.9% and 34.2%, respectively, over the same period last year, said TNS ad monitoring manager Giedre Juroniene, quoted by business daily Verslo Zinios (September 16). The market for Russian-language advertising in Lithuania has dropped due to “the deteriorating state of public opinion,” said OMD media buyer Darius Gricius, who expects the trend to continue into 2015.

Norwegian daily Aftenposten send a shockwave across Lithuanian media, publishing in 2011 an investigation aided by Wikileaks of dodgy revenue-enhancement practices. Divulged cables from the United States Embassy in Vilnius revealed editors and journalists setting a price for positive reporting as well as a price to kill a negative exposé. It’s a practice well-known in the post-Soviet zone – elsewhere, too – but Lithuania’s political and business elite seem to accept it as simply the way things are.

The publisher/owner of tabloid Respublika, named in the cable leaks and Aftenposten report, promptly sued the Norwegian newspaper and Lithuanian outlets that mentioned the story. A Lithuanian court threw them out.

Lithuanian journalists spoke out about Vilnuis prosecutors demanding reporters for news agency Baltic News Service (BNS) reveal sources of a leaked classified file about Russian agents trying to destabilize the Lithuanian government, duly reported by BNS in October 2013. Several reporters were questioned by police, their homes searched, personal computers seized. During legal proceedings instigated by one reporter the Special Investigative Service (SIS) admitted wiretapping 17 BNS employees.

The Vilnius regional court ruled in August that the SIS illegally monitored reporter’s telephone conversations on behalf of organized crime and corruption prosecutors. “By taking such disproportionate and illegal measures, investigating officers and prosecutors did not only violate individual journalists and BNS worker’s rights,” said a Lithuanian Journalists Union (LZS) statement, quoted by public broadcaster LRT (August 18). “Undermining confidence in the sources of journalist’s information can ruin any of the media, especially a news agency.” The LZS pressed for damage payments from the State, as provided in Lithuanian law.

In the midst of wide media coverage of the scandal, newly re-elected President Dalia Grybauskaite issued a statement saying journalists must be protected from “Soviet era methods,” reported delfi.lt (June 18). Legislation to strengthen protection of journalist’s sources remains under discussion.

Press freedom watchers have rated Lithuania’s media as rather stable since the 2010/2010 scandals. The country ranked 32nd globally in the 2014 Reporters sans Frontieres (RSF) Press Freedom Index, lower than Estonia (11th) and higher than Latvia (37th). US-based Freedom House 2014 press freedom rankings were slightly less generous; Lithuania at 39th, Estonia at 15th and Latvia at 49th. Transparency International’s Corruption Perceptions index ranked Lithuania 43rd globally in 2013, up from 48th in 2012.

Lithuania’s forthcoming press freedom rankings may – or may not – suffer from media regulator LRTK’s decision to temporarily suspend retransmission of certain Russian Federation television channels. First Baltic Channel (PBK), rebroadcasting Russia’s State-owned First Channel, was first suspended in October 2013 from the Lithuanian TV space for broadcasting a veracity-challenged documentary about events surrounding the fall of the Soviet Union. “Any restriction and suppression of controversial and differing views on historical events, even if based on law, could eventually affect freedom of the media,” posted OSCE media freedom representative  Dunja Mijatovic in a statement. The LRTK again temporarily suspended rebroadcasting Russian Federation TV channels in April.

The LRTK approved for rebroadcast Russian channel TV Dozhd from October 1st. The independent news and talk channel – which calls itself The Optimistic Channel – has been booted from almost all distribution within the Russian Federation for defying the prevalent censorship. Lithuanian telecom TEO will carry TV Dozhd on cable and IPTV.

“Responding to our new challenges, lies and propaganda campaigns directed against Lithuania and its people, we must strengthen our country’s information security,” said President Grybauskaite, quoted by Verslo Zinios (May 13). “Public broadcasting plays a special mission: it not only has to deal with hostile forces disseminating propaganda and misinformation but to provide objective, impartial information to the population, to develop their citizenship and patriotism. This is why the LRT funding must be transparent and fair.”

2015 will bring a major funding challenge for public broadcaster LRT as it augments minority language programming. Advertising revenue is being phased out, largely to distance the public broadcaster from tawdry commerce, and the LRT budgets will be based on previous year personal income tax collections, 1.5%, and 1.3% from value added tax (VAT) collections. The funding measure was part of amendments to Lithuania’s basic media law passed in May. LTR television channels will continue on-air sponsorships for cultural and sports programs.

“Viewers, of course, will appreciate (ad-free TV),” said LRT deputy director general Rimvydas Paleckis, quoted by Kauno diena (September 8). “I believe this will increase our audience because it’s nice to watch movies or shows without breaks.”

See also in ftm Knowledge

Media in the Baltics - New World Order

By the time Estonia, Latvia and Lithuania joined the European Union they were known as the Baltic Tigers. The media sector grew spectacularly with big multi-nationals investing. Times have changed. This ftm Knowledge file reports the changes, new opportunities and lingering ghosts. 63 pages PDF (October 2014)

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