Presentation of Report on Ownership Structure and Control over Media in Serbia

February 26, 2015

The Anti-Corruption Council of the Serbian Government (hereinafter: Council) has analyzed the media ownership structure and the most significant models of control over media in the period 2011-2014. In comparison with the media scene in 2011, the political power balance in Serbia has dramatically changed, resulting in changes in personnel in almost all institutions of executive power, as well as in the majority of media in Serbia, triggering at the same time a redefinition of editorial policies of all leading media in the country, including replacements of editors. However, these changes did not have any significant impact on resolving systematic problems that the Council had referred to earlier. Analysing several hundreds of different media content of print and electronic media and comparing the available official data, the Council identified and singled out five systematic problems that have paralyzed the system of public information in Serbia for years:

  1. Non-transparency of media ownership
  2. Non-transparency of financing, economic influence through budget, tax reliefs and other indirect forms of public funding
  3. Problems in media privatisation and uncertain status of public services
  4. Censorship and self-censorship
  5. Tabloidisation

The Council has sent more than 70 requests for access to official data to more than 25 state institutions. The Council attempted to provide different examples based on official data obtained from state institutions in order to present in its report the different models of ownership and funding influences on the economic position of media and to point to the harmful consequences of media dependence on the political and economic elite. Concrete examples in the report support public perception about the shift in control role in a way that the Government controls media instead of media controlling Government. The influence of political elites on editorial policy of print and electronic media in Serbia is equally present in media with both transparent and non-transparent ownership structure.

In order to identify the level of media transparency in Serbia, the Council started with the media register run by the Serbian Business Registers Agency (SBRA). The Council analysed the content of the media register and found that as of 30 June 2014, 1319 media were registered: 711 print media, 237 radio stations, 208 internet media, 130 TV stations and 20 news service agencies, whereas 9 media and 4 electronic publications fit in other categories. 613 legal entities appear at the same time as founders of more than one media. The Council assessed that the media register run by SBRA in the period 2009-2014 did not fulfil basic needs for introducing order in the sphere of public information. Due to the poor legislative framework, the register did not mirror the real image of media scene in Serbia. The Council found that some media are not registered, while some media are still registered although they no longer exist. The relevant Ministry did not monitor the work of SBRA and the procedure of media re-registering. Publicly available data on media by the Regulatory Body for Electronic Media (RBEM) and data by SBRA are contradictory.

In 2011, the Council pointed to the problem of insufficient transparency of media ownership structure in Serbia. The Council analysed a sample of 50 media, comparing to 30 media which were included in the analysis of media ownership transparency in 2011 (30 media, 18 with non-transparent ownership). The sample encompassed also 9 internet portals and web sites dealing with public information. Complete transparency of ownership was found in 23 media, while 27 media have non-transparent ownership, partially transparent or disputable. Namely, 14 media have non-transparent or partially transparent ownership, whereas the ownership of at least 13 media is found to be formally transparent, while someone else is perceived as their real owner in public. The Council noticed that the real owner of the majority of media registered abroad is almost impossible to determine. The analysis of the ownership structure of individual media contains a mixture of most important publicly available information, data obtained by the Council and graph illustrations.

The Council deemed as unacceptable the fact that the State failed to inform the public on investigation results following more than two years since the then deputy prime minister had denounced the existence of media concentration and control over three important print media (Politika, Novosti, Dnevnik), based on apparent cartel agreement. The Council questions the assumption that Miroslav Bogicevic is the ultimate co-owner of Politika because there are no plausible facts that would confirm that ever since June 2012 till today OOO East Media Group Moscow has been under effective control of this businessman. The Council considers that in the public interest and property interests of Serbia authorized judiciary bodies within legal procedures are required to determine the origin of money, the instruments of money transfers and legality of contracts on selling shares and debts of Politika, Dnevnik and Novosti. The Council is of the opinion that it is the public interest to know which politicians, tycoons and media owners participated in this cartel agreement.

The Council found that contrary to public announcements, investigation on 24 disputable privatizations has never been finalised, especially in the case of privatization of Vecernje Novosti following the criminal charges filed by the Council in 2011. Upon Council’s request, the Prosecutor’s Office for Organized Crime confirmed (in its letter on 20 October 2014) that the case is still pending in the pre-investigation phase and that 130 persons were interviewed. The Prosecution stated that Milan Beko was not interviewed in the course of pre-investigation procedure, but the police and Prosecution plan to do that.

In addition to the ownership structure of 50 media, the Council also analysed ownership structure of another four subjects which have a significant role in public information, while not representing traditional media (internet providers SBB and IKOM, as well as investigation organizations CINS and BIRN).

The Council has separately analysed the business operations of public service media RTS whose sustainability depends on budget funding (Law on Budget and Government Decree) and political control. This means that the autonomy of public service media still depends on political goals and promises instead of quality work and accountability to the public. The abolishment of subscription fee is the result of election campaign promises by the Prime Minister, although the data analysed by the Council demonstrate that until the adoption of the Law on Public Media Services and transition to temporary budget funding, the subscription fee was the primary source of income. The Council analysed the business operations of RTS and marketing agencies based on data obtained from RTS and found that in period 2011-2013 the changes in political power corresponded to the changes in the structure of media buyers on RTS. The Council analysed the business relations of RTS and concrete marketing agencies, the ownership structure of marketing agencies and the relations of their owners with political parties. The Council revealed the structure of the most significant media buyers. The Council analysed the influence of political parties on RTS managing bodies, RTS financial reports and irregularities in financial operations and reporting. The Council analysed the contracts between RTS and certain production companies and found irregularities that are harmful for RTS. The criteria for different production companies are completely unclear and non-transparent. The Council also analysed concrete contracts with production companies and found that some contracts stipulated remuneration in money, some in advertising time and some in both money and advertising time, while advertising rates were different for different clients.

The Council analysed the business operations of the public company in charge of broadcasting transmission, JP ETV, and identified strong political influence. The Council paid special attention to the debt structure, considering that 31 broadcasters owed 228.898.010,60 RSD to ETV, as of 30 June 2014. The Council concluded that ETV makes losses which are partially due to poor debt collection and delaying of debt payment by broadcasters, under the influence of representatives of big businesses and politicians. The Council analysed the circumstances that led to the situation where ETV had bad debt from broadcaster TV Avala in the amount of 133.118.559,12 RSD, as of 30 June 2014. The Council analysed the business relations between ETV and RTS/RTV and based on available data examined the circumstances of RTS’ failure to pay around 20 million EUR (the debt was written off by the Serbian Government) to ETV for the services of broadcasting. The ETV price list is not applied to RTS, while it is applied to commercial broadcasters. The Council concluded that the Government and ETV subsidise RTS in a hidden way, which puts other broadcasters who pay full prices in an unequal position.  Special focus of the report is on the control of state owned media that are directly controlled by political parties. Budgetary subsidies, appointment of editors, directors, members of managing or supervisory boards of publishers’ or broadcasters’ companies are decided by political parties after every election process, either through at the government or local self-government level. From that point of view, the Council has analysed the status of public companies Tanjug, Politika, Dnevnik and several local media. The Council tried to prove the political connections between the managing structures of such media and political parties, as well as other forms of editorial and managerial control such as budgetary loans, subsidies, tax proceedings and “re-structuring status”.

The Council has analysed in detail the circumstances leading to the blocking of the process of privatization of state/public media for years.

As there are 84 media outlets on the Agency for Privatization’s list, and the legal deadline for their privatization is July 1, 2015, the Council has also looked into the process of the upcoming privatization. The Council has pointed out the risks following this process and future owners (purchase of media’s immovable property, non-credible byers, origin of invested money). The Council has analysed the documents on the decision of Telekom Srbija to obtain 51% of shares in HD-WIN company through a capital increase of 7,7 million EUR, thus becoming the owner of all  4 “Arena Sport” TV channels. Such decision violated the Law on Public Information at the time, as the State was prohibited from owning media either directly or indirectly. Authorities at the time did not prevent the harmful purchase, as the Telekom’s takeover of Arena Sport was party decision of state authorities. This is a flagrant example why the State should not be media owner, as companies’ losses have quadrupled after the takeover.

According to the Council’s assessment, over the last three years political parties continued to misuse their influence and public resources to “discipline” media, editors and journalists. Hidden or direct media control is based on budgetary means and other public sources of financing, and is continuously done at all levels of the government. Key problems in relation to media financing from public sources are connected to four areas:

1) Financing of media services and advertising of state institutions, public and other state owned companies;

2) Subsidies and budgetary expenditures;

3) Financing of media projects and

4) Granting tax exemptions as a form of financing

Financing of media services and advertising of state institutions, public and other state owned companies was the focus of the Council’s 2011 report. In its new report, the Council underlines the phenomenon of drastic changes in the advertising and PR market, due to the political changes in Serbia after the 2012 elections, when one political option became much stronger while the other one weakened. Related to this issue, the Council has also used research publications by BIRN. The Council has also conducted its own monitoring of advertising in seven dailies and two weeklies. Nielsen Agency estimates that the advertising market in Serbia has dropped from 172 million EUR in 2011-12, to 155 million EUR in 2013. Having that in mind, it is not a surprise that the most common way of informal pressure over editorial policies of Serbian media is reflected in their commercial activities, namely through advertisers.   

The Council has also highlighted the influence of political parties on media, revealing the media advertising expenses during the 2014 elections campaign. The Council has also analysed the model of potential misuse of public funds in securing political influence and the promotion of certain political standpoints in media, through advertising of a political party that controls local public companies in Novi Sad.

Looking into the publically available data, the Council has also analysed the models of financing of the popular media internet portals and web-sites.

The Council has particularly analysed the political influence over media through direct financing from state budget, provincial budget and budgets of local self-governments. Certain data from Media Strategy suggest that 25 million EUR was allocated to media from all three levels of authority in 2011. However, there is no centralized database showing the exact amounts allocated to specific users during the fiscal year. The Council has analysed the direct budgetary financing, as well as models of financing and co-financing of projects/programs in the field of public informing in media from Kosovo and Metohija. The Council has pointed out certain problems and phenomenons in the financing of public companies “Mreza-Most”, “Panorama” and other outlets from Kosovo and Metohija that are covered by the Serbian budget. Around 200.000 EUR was granted to media outlets in Kosovo and Metohija through open public procurements of Ministry of Culture and Media in the period 2010-13, while Mreza-Most and Panorama have received 30 times more money in the same period, without any public procurement. 

The Council has reached the conclusion that local authorities had the practice of financing media through subsidies (Studio B), direct contracting (Narodne novine Nis) open calls for projects (Autonomous Province (AP) Vojvodina and Ministry of Culture and Media) and public procurement. All four models, in different ways, lead to discrimination of media, while at the same time giving politicians the opportunity of buying political influence with tax-payers money. Analysing the connection between ownership structure and model of financing, the Council has provided concrete examples of connections between politicians, media directly or indirectly owned by them and local budgets. In that respect, the Council has analysed the financing of: Radio Stari grad (Kragujevac), TV Plus and ADD Production (Krusevac), Surdulicka RTV (Surdulica), TV Skaj plus- Nasa televizija (Belgrade), TV Best and RTV F kanal (Zajecar).

The Council has also analysed the structure of funds annually distributed for project financing of media content, from the budget of Serbia (2014) and budget of AP Vojvodina (2013), as well as the way the money was allocated and who were the members of the commissions. The Council has assessed that the annual project co-financing of media content, reaching just above 90 million RSD from state budget and 45 million RSD from the Provincial budget is not sufficient to ensure sustainability and preserve independence and quality of media content. Those amounts are incompatible with means granted to selected media directly, without any kind of competition. It appears that the financing of 305 different media projects nationwide, and 80 on the level of Vojvodina, represents just the half of social importance given to TV Studio B, as the City of Belgrade is giving that station twice the money allocated for those projects. Public company Mreza-Most receives direct budgetary subsidies in the, more or less, same amount as allocated to all media projects in the country.  The Council has also pointed out to the disproportion in direct and project based financing of media in AP Vojvodina, where 80 projects were financed with 45 million RSD, while Dnevnik daily has received the direct subsidy of 58,9 million RSD. The Council has also highlighted the political dominancy of certain media owners, i.e. founders and representatives of outlets receiving money from AP Vojvodina budget.  

The Council analysed risks of political influence on decisions regarding which projects will be financed from the Republic’s budget and the budget of AP Vojvodina and found that crucial impact on such decisions lays with the composition of commissions created by decisions of the Minister of Culture and the Province Secretary. The Council analysed political and professional affiliation of commissions’ members.

The Council found that one of the means used by politicians to control media, publishers of public media and TV and radio broadcasters is privileged treatment regarding collection and delayed collection of tax revenue. This phenomenon is often interconnected with ownership structure and editorial policy of concrete media, and the closer media owners are to politicians, the broader is the spectrum of possible benefits and avoiding and postponing fulfilment of obligations towards the State. The Council used official data obtained from the Tax Administration of the Ministry of Finance, JP ‘Emisiona tehnika i veze’, RBA and RATEL. The Council established that, on 31/07/2014, 747 taxpayers owned 2.573.427.464 RSD (over 20 million EUR), while, on 10/10/2014, 377 taxpayers registered for ‘cable communication’ business owed 655.484.598 RSD. The Council grouped tax debtors from the media business based on the amount of debt. 

As TV Pink was the biggest tax debtoramong media at the time of analysis and because it held national frequency for TV broadcasting, the Council analysed TV Pink’s debt, that is, the amount of its publicly stated debt and its real debt, structure of its debt and the way in which the re-programming of the debt was approved. The Council established that tax debtor TV Pink does not respect signed re-programs, that it is late with payment of determined instalments and interests, and that the State tolerated such lack of discipline. After the work on the draft of this Report was finished, TV Pink announced that it paid 500 million RSD of tax debt.

The Council analysed problems of tax debts of Company Borba, Printing house Borba and daily Vecernje Novosti. The Council concluded that there is political influence and direct control of printing house Borba and Vecernje Novosti, through privileged tax treatment, managing structures linked to political parties and mutual business relations of the two companies. The Council also pointed out to the content of the letter sent by director and editor of Vecernje Novosti to Tax Administration of the Ministry of Finance, where it is stated that that media outlet is not paying instalments determined by the re-program because that was the instruction received from the Prime Minister of Serbia.

The Council analysed problems, shortcomings and phenomenon of politicization that are present in current operations of RBA and RATEL (Regulatory Body for Electronic Media (REM) and Regulatory Agency for Electronic Communications and Postal Services). The Council, based on documents received from RBA and RATEL, concluded that a large number of broadcasters do not pay due sums to regulatory bodies timely leading to tens of millions dinars of debts. Broadcasters that stopped working due to licenses being revoked and national TV and radio stations are among biggest debtors. Over 400 broadcasters have unpaid obligations towards RBA on 30 June 2014, and 19 owe more than one billion dinars. 99 broadcasters have debts towards RATEL on 30 June 2014 and 17 broadcasters owe more than one billion dinars. RATEL and RBA also approved debt write-offs of millions of dinars for some broadcasters. The Council analysed the case of a TV broadcaster from Krusevac that was allowed debt write-off, as well as granted a new license through citizens’ association as its founder. The persons in the structure of this new broadcaster were part of the ownership structure of the previous broadcaster, including son of a Minister in the Government of the Republic of Serbia. The Council analysed the procedure of granting of frequency to TV Arena sport by RBA, as well as analysis of the annulled public call for allocation of national frequency to potential broadcasters Nova.rs and Kopernikus.

The Council analysed the work and limitations of the operations of Press Council- an independent self-regulatory body which gathers publishers, owners of print and online media and professional journalists. The Council underlined the phenomenon of tabloidization and relativisation of serious social and political issues, as well as phenomena of censorship and self-censorship.

The Council, in its report, highlighted that slow implementation of media reforms, not sufficiently developed regulation and media dependence on  public and private  sources of financing lead to them not fulfilling their role in a democratic society from  2011-2014. The Council emphasized that most commonly media content is not the result of free, objective and investigative reporting. Most media do not work for the benefit of better informing citizens due to their financial dependence and connections with political and economy elite and centres of power.

The Council presented to the Government of the Republic of Serbia more than 20 recommendations that aim at overcoming identified shortcomings and problems, preventive action and general improvement of the media sphere in the Republic of Serbia.

The Council is aware that due to time constraints, lack of resources and data, it did not manage to cover all problems that are present on the media scene of Serbia. The Council intends to continue with the analysis and monitoring of media scene in the Republic of Serbia in the future especially from the aspect of political and financial connections of state, that is, public sector as advertiser, marketing and PR agencies and media.

Recommendations

Based on the conclusions of the report analysis, Anti-corruption Council of the Government of the Republic of Serbia recommends that:

- The ministry in charge of information, in co-operation with SBRA and REM should take action to set up an efficient, comprehensive and transparent register of media ownership structures, with the obligation to publish ultimate (beneficial) media founders based in off-shore zones;

- The ministry in charge of information, in co-operation with the Regulatory Body for Electronic Media, should take action to set up an efficient, comprehensive and transparent register of media services and record of media service providers, under the competence of REM;

- The ministry in charge of information, in co-operation with SBRA and REM, should ensure continuous updating of all changes in data as well as legal oversight of registration and data entry in the registers related to media and media services;

-  The ministry in charge of information, in the procedure of oversight of implementation of set of media laws within its competence, consistently and uniformly, without favouritism, should treat all media in breach of ethical and professional standards and that commit offence or misdemeanour  in their work;

- REM, within its competence, should regularly monitor, research and foster media pluralism, diversity and quality of media content by adhering to the relevant EU standards in that area, and timely and efficiently take action aimed at sanctioning the behaviour of the provider who jeopardises public interest and acts against law;

- REM and the Regulatory Agency for Electronic Communications and Postal Services should take action within its competence to secure continuous debt collection from broadcasters without favouritism as well as arbitrary prolonging and debt write-off;

- The Commission for Protection of Competition should finally start to timely and ex-officio implement its legally based competencies to investigate unlawful media concentration and finalise current proceedings in an efficient and lawful manner.

-  The ministry in charge of information should set up efficient mechanisms of monitoring and oversight over the system of co-financing of media projects from budgetary and public sources of financing in the Republic of Serbia, in line with new regulations on project-based financing of media;

- The ministry in charge of information should set up efficient mechanisms of monitoring and oversight over tax reliefs, donations, budgetary grants and other forms of direct or indirect state aid that can be the source of influence on media independence;

- TheCommittee in charge of information at National Assembly of the Republic of Serbia and committee in charge of information at Assembly of APVojvodina, in co-operation with the Ministry in charge of information, should take action to completely depoliticise the composition of the Managing boards and Programme boards of RTS and RTV;

- The Ministry in charge of finance should set up criteria for budgetary limitations for advertising and promotion of activities of all state authorities and institutions, that is, of direct and indirect budgetary beneficiaries in the system of consolidated treasury account, and establish sanctions for breach of set criteria;

- The ministry in charge of commerce sets criteria for budgetary limitations for advertising and promotion of activities of public companies, subsidiaries and other subjects where the Republic of Serbia or local self-governments own, directly or indirectly, more than 50% of available capital;

-  The ministry in charge of finance and Tax Administration should take action to equally treat all legal entities/media that have the status of  tax debtors; all media that are signing debt re-program agreements; all media that violate the signed agreements and tax regulation;

-   The Government of the Republic of Serbia should redefine current practices allowing for each ministry to separately conclude service agreements and to set criteria and centralize public procurement of filming and press clipping services for all ministries and offices in its composition;

-   The Government of the Republic of Serbia takes action to fully depoliticize composition of the Managing Board and director of Public Company in charge of broadcasting transmission “ Emisiona tehnika i veze” (JP ETV)  and to consolidate financial operations of JP ETV and regular debt collection from media without favoritism, arbitrary prolonging and debt write-off;

-  Managing boards of RTS and RTV should take action to secure complete transparency of their operations by publishing budget expenditure together with the list of the 50 biggest buyers and suppliers at the end of each month, by publishing all contracts with independent productions and marketing agencies concluded during fiscal year, by publishing official tender results for choosing radio television programmes, together with the criteria applied in selection process;

-  The ministry in charge of commerce and Privatization Agency should take action to ensure full transparency of the media privatization process in the Republic of Serbia, together with publication of all relevant documents accompanying privatization process in line with regulation on privatisation and access to information of public importance;

-  The ministry in charge of information and the ministry in charge of telecommunications should make public all activities related to the process of digitalization as well as planned and incurred digitalization costs;

-  The Anti-Corruption Agency should ex-officio investigate, on the basis of the Council’s report, if there are grounds for initiating proceedings and if all officials holding managerial posts in media with state capital respect conflict of interest regulation, including legal obligations of  officials that are, at the same time, owners of privately owned media;

- Organizations - founders of the Press Council redefine the current work of the Council and decision making process and widen the scope of entities that can ask for protection of their rights before the Council, should actively work on strengthening of professional integrity and  promotion of the Council;

-  The ministry in charge of information and ministry of interior, in order to protect public interest and assets of the Republic of Serbia, should initiate criminal pre-trial proceedings before the authorised public prosecutor in order to determine the origin of money, instruments of money transfers and legal nature of agreements which regulate transfer of shares and claims of Politika, Dnevnik and Novosti;

- The Government of the Republic of Serbia, Office for Kosovo and Metohija of the Serbian Government and ministry in charge of information should take all necessary actions in order to align operations of public company Mreza-most with provisions of the Law on Public Companies, Law on Business Companies, founding acts of public enterprise and media regulations, as well as to establish mechanism for justification and control of money allocated from public funds for media activities of commercial entities operating in Kosovo and Metohija.

- The Public company in charge of broadcasting transmission “Emisiona tehnika i veze” (JP ETV) and Public Broadcasting Institution RTS, with support of the ministry in charge of information and ministry in charge of Telecommunications and with the approval of the Government of the Republic of Serbia, should carry out legal proceedings of harmonization of property and obligations and to take action to eliminate consequences incurred by failure to create division balance when separating JP ETV from RTS;

-  The State Audit Institution should audit financial reports of political parties whose 2014 election campaign was financed from public funds (budget), with a special focus on the contracting and completion of advertising services.


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