Reports

October 9, 2017

Media Ownership in Ukraine: informal influence through murky business schemes

Screen capture from http://ukraine.mom-rsf.org

The influence of politicians over media in Ukraine has increased over the last year. Complex offshore structures that obscure levels of influence via media ownership remain popular business models. Two TV channels, 1+1 and Espreso.TV, experienced significant shifts in ownership structures over the summer. Meanwhile, no considerable changes in media law overlooking ownership took place. These are the results of the updated Media Ownership Monitor, a thorough study into media ownership in Ukraine that Reporters Without Borders and the Ukrainian Institute of Mass Information (IMI) conducted in 2016 as part of a global investigative research project. The updated results are now available in Ukrainian and in English on ukraine.mom-rsf.org.


“Private owners continue to dominate the media market in Ukraine, and if we are talking about owners of national audiovisual mass media, almost all of them are some of the richest people in this country. In spite of the names of media owners mostly being well-known, the corporate structures behind often remain hidden due to offshore holdings and murky business schemes. This lack of transparency contributes to a situation where Ukrainian mass media remain dependent on their owners’ interests in their editorial policy”, said IMI executive director Oksana Romaniuk.


MORE OWNERS MAKE LESS TRANSPARENCY


In July 2017, the 1+1 website reported that Ihor Kolomoyskyi’s share in the ownership structure of the TV channel 1+1 has significantly decreased, yet he remains the TV channel’s ultimate beneficial owner. The national TV channel 1+1 is one of the stations with the largest audience shares in Ukraine (10.6 percent[i]). It is part of the 1+1 media group owned by Ihor Kolomoyski, one of the richest businessmen in Ukraine. Kolomoyskyi is a key person at the financial-industrial group "Privat" that is active in the petroleum industry, metallurgy, mining, chemical industry, and finance (http://t1p.de/ilg1). In 2016 1+1 media group also purchased Viasat Ukraina, a distributor of cable and sattelite TV.


According to the National Television and Radio Broadcasting Council of Ukraine, as of June 30, 2017, the shares owned by Ihor Kolomoyskyi and his partner Ihor Surkis, president of the Football Federation and co-owner of the football club „Dynamo“ (http://t1p.de/nxf4), constitute 24.9 percent (April 2017: 57.5) and 24.7 (April: 24.6) percent respectively. Documents on change of ownership, that 1+1 filed to the National Council, showed an acquisition of shares by Oleksandr Tkachenko, general director of 1+1 media group, and other staff members. They became minority owners of the TV channel 1+1 and co-owners of the foreign enterprise 1+1 Production.


Roman Golovenko, media lawyer at IMI, explained that even though these changes have reduced the degree of Kolomoyskiy’s formal influence, his informal influence is still decisive for the TV company. According to Golovenko, what happened looks more like reduced transparency of the TV channel's ownership structure, rather than a change of the ultimate beneficial owner.


COMPLEX OFFSHORE STRUCTURES OBSCURE INFLUENTIAL OWNERS


Changes in the ownership structure of 1+1 happened mainly by transferring corporate rights of five offshore companies that control the foreign enterprise 1+1 Production from Kolomoyskyi to a group of individuals, each owning less than 10 percent of the TV and radio company. According to IMI lawyer Roman Golovenko, groups of individuals among whom corporate rights are dispersed in such a way are called „soccer teams“, as a group needs to comprise of at least 11 members for each to have less than 10 percent. Identities of individuals who own less than 10 percent of shares are not required to be disclosed in the reporting. The same group of individuals and enterprises nominally and indirectly controls the TV and radio company 1+1.


Another important change in media ownership became known in mid-August: According to the information of the State register of legal entities and individual entrepreneurs, former Prime Minister Arseniy Yatsenyuk (http://t1p.de/25wf) became the co-owner of the private TV channel Espreso TV. The channel started broadcasting during Euromaidan in 2013, when it transmitted the protests live to the screens. It has a relatively low audience share of 0.3 percent (audience data from 2016). Yatsenyuk and Inna Avakova, wife of the current interior minister, acquired shares of 30 and 40 percent respectively of LLC „Goldberry“, the owner of Espreso TV.


TV AND RADIO MARKET HIGHLY CONCENTRATED


The MOM research shows that political influence on Ukrainian channels, just as last year, remains very high. Ten out of twelve national TV channels that were selected for the research are directly and indirectly linked to political figures or individuals with strong political affiliations. Structures of media ownership in the sphere of audiovisual media remain very concentrated: More than three quarters of all TV viewers in Ukraine watch the channels of only the four largest owners: Viktor Pinchuk (StarLightMedia), Ihor Kolomoyskyi (1+1 Media), Dmytro Firtash (Inter Media) and Rinat Akhmetov (Media Group Ukraine). Respectively, over 92 percent of the audience of radio channels listens to the four largest groups of radio stations.


MEDIA LAW ENFORCEMENT STILL WEAK


Ukraine has adopted a number of elaborate pieces of legislation just as the „ amendment to some laws of Ukraine on securing transparency of mass media ownership, as well as implementation of state policy guidelines in the sphere of television and radio broadcasting”, approved by the Ukrainian parliament on September 3, 2015. This law binds the broadcasters and providers to publish information about the structure of ownership on their official websites, and annually, by March 31, to file to the National Council information about their ownership structure and scheme of ownership based on the procedure approved by the National Council. It aims to improve the media regulation and transparency provisions. Yet as in many other countries with weak institutions such as the National Council, and strong political influence which often has the backing of strong businesses, implementation of these laws lags behind. This contributes to a state of frustration, distrust and fatigue among the population.


Initiated by Reporters Without Borders (RSF), the Media Ownership Monitor project is a global research and advocacy effort to promote transparency and media pluralism at an international level. In Ukraine, it was conducted together with the Institute of Mass Information (IMI) from July to October 2016. The sample of media investigated included 41 media: 12 television outlets, 10 radio stations, 9 print editions and 10 online outlets.


The project is financed by the German government. Country studies were so far published in Colombia, Cambodia, Tunisia, Turkey, Ukraine, Peru, the Philippines, Mongolia, Serbia and Ghana. This year, MOM investigates media markets in, Brazil, Pakistan and Morocco. For more visit the MOM website: http://www.mom-rsf.org



Media Contact:


Reporters Without Borders Germany

Ulrike Gruska / Christoph Dreyer / Anne Renzenbrink, media relations officers

presse@reporter-ohne-grenzen.de

Tel.: +49 30 60 98 95 33-55


Institute of Mass Information

Maksym Ratushny

info@imi.org.ua

+380 50 44 77 063



[i] Audience data provided is from 2016 when the study was conducted. Source: http://ukraine.mom-rsf.org/en/ukraine/about/faq/