If a newspaper publisher had its own newsstand, it could put its editions at the front and hide competing titles at the back.
The same would apply to the public media service in Serbia. If he were also involved in distribution, he could abuse his position as a distributor by favoring his own program.
It follows that the cable distributor/operator should not be allowed to produce the content.
However, on August 2, 2014, the National Assembly of Serbia adopted the Law on Electronic Media and the Law on Public Information and Media, which allow distributors/operators to produce content and favor their own channels over others.
As a result, the cable television station N1, CNN's partner in the Balkans, started broadcasting programs on October 30, 2014 through the largest operator in the region, SBB/Telemach Group, which is its owner, and which covers all countries of the former of Yugoslavia.
Here the question arises why the Serbian legislators made an exception only for cable distributors/operators.
In search of an answer, the Media Observatory uncovered another, even more disturbing dimension of the legislative changes that allowed N1 to start broadcasting. Namely, that dimension indicates that the people working in Brussels, in the Unit for Relations with Serbia at the European Commission's General Directorate for Enlargement, harmonized the draft laws of this country with the comments they received on the subject from the great powers, which threaten to undermine media pluralism in the country.
On the other hand, the Serbian authorities obeyed without question the opinion of Brussels on this issue, instead of protecting the public interest of their citizens.
WHEEL OF CHANGE: The search for those who made these changes possible begins with the Serbian working group tasked with drafting a set of media laws.
Drafting of the Law on Public Information and Media and the Law on Electronic Media has been going on for years. There were various draft versions that followed the changes among the members of the working groups, as well as personnel changes in the Ministry of Culture and Media itself.
The draft version of the Law on Electronic Media that was presented at the public hearing in October 2013 did not allow cable distributors/operators to have news programs, but it did allow everyone else to do so, so Telekom Srbije is therefore allowed to have its own sports program. At that time, Telekom was largely the owner of the four Arena Sport channels.
According to Article 109 of that draft law, "in order to prevent the violation of media pluralism or exerting too much influence on public opinion, it is not allowed to: 1) The operator provides general media services and media services specialized in informative program content." Therefore, it follows that, for example, sports news can be broadcast.
Dragiša Kovačević, the owner of the SOS channel, the first sports channel in Serbia and a rival of Arena Sport, said that this draft was tailored to suit Telekom.
START OF THE FALL: Jugoslav Ćosić, Director of TV N1's Program for Serbia, and Brent Sadler, Director of TV N1's Editorial Board
"They (the Government) will sell it (Telekom) better if, along with the mobile, fixed and cable network, it also owns TV channels," said Kovačević, who was among the loudest against this provision in the public debate.
Rade Veljanovski, a professor at the University of Belgrade and a member of one of the working groups tasked with drafting the law, said that Dragan Kolarević, at that time the assistant minister of culture in charge of the media, decided on this provision, considering it to be in the national interest. Serbia. However, the working group ultimately refused to include the provision in the draft law.
Media Observatory has learned that this provision was suddenly added in the Ministry, before a public hearing in the fall. According to seven people we spoke to who were involved in the drafting of the law at various stages, no one knew who actually wrote this article.
On the other hand, the country's leading cable operator, SBB, considered this provision too restrictive and insisted in a public debate on its withdrawal in order to allow operators to produce informational programming.
In the course of the public debate on the law, in the fall of 2013, the Government was restructured in Serbia, whereby Saša Mirković from the Association of Independent Electronic Media (ANEM) took the position of Assistant Minister of Culture and Media on October 14, 2013. the media.
"I remember very well that we had an absolutely incredible and chaotic situation with these draft law texts due to various influences. We had to respect those texts, which formed the basis for public discussion, but we also had to separate what belongs to which law," said Mirković.
For this reason, a new working group was formed in order, according to Mirković, to find a model to complete the unfinished business in a transparent manner. In addition to Mirković, the group included Siniša Isakov from the provincial public service RTV, Đorđe Vlajić from the public service RTS, Bishop Porfirije from the RRA Radiofusion Agency, as well as Saša Gajin, an expert in media law. The final versions of the draft media laws, which were sent to Brussels, did not allow distributors/operators to be content providers, according to Article 46 of the Law on Public Information and Media, while the controversial Article 109 was deleted.
After the public discussion, and before the adoption of any law, Serbia, as a candidate for EU membership, is obliged to send draft laws to the Brussels Unit for Enlargement at the General Directorate of the European Commission, through the Office for EU Integration of this country. After receiving comments on draft laws from Brussels, the revised draft can be adopted by the Government and the Assembly.
AMERICAN INVESTMENT: Sometime around that time, on September 16, 2013, the company Adria News doo was registered in Serbia, with headquarters in Bulevar Zoran Đinđić at number 8a. Its main activity is the production and broadcasting of television programs. The founder and sole shareholder is Adria News Sarl, headquartered in Luxembourg. This company is actually N1 TV, CNN's partner in the Balkans, behind which stands the United group (SBB/Telemach).
On October 15, 2013, private equity fund KKR, based in New York, bought United Group from another private fund, Mid Europa, which tripled its money with this sale. EBRD remained a minority shareholder. It was the first direct investment of KKR in Southeast Europe.
A few months earlier, in January 2013, the former American ambassador to Serbia, Cameron Manter, started working as a senior advisor to the Board of Directors of the SBB-Telemach Group.
As is always the case with foreign investments, this investment had to go through the embassy. David Krzywda, economic adviser at the American Embassy in Belgrade, said that the governments of the United States of America and Serbia have a common interest in encouraging the creation of an attractive business environment and the arrival of foreign investments in Serbia, including increased investment by American companies in this country.
"In the case of KKR, the embassy made sure that its position was in line with the American interest in supporting Serbia's progress towards the European Union, and especially that the climate for investing in Serbia was attractive and in accordance with the standards of the European Union in the area of media freedom and plurality" , Krzywda said.
There is no doubt that from a business perspective it seemed like a good investment. Operating under the name of SBB and Telemacha, United Group has approximately 1,89 million users of cable, satellite, broadband, fixed and mobile services in six markets of the former Yugoslavia (Serbia, Slovenia, Bosnia and Herzegovina, Montenegro, Croatia and Macedonia), which have a total of more than 20 million inhabitants. Statistical data show that around 60 percent of people in Serbia watch television exclusively via cable. The total number of cable TV users in Serbia is 1,44 million, and the market is still growing. According to data from RATEL (Agency for Electronic Communications) from 2013, more than half of users, almost 800.000, are clients of SBB.
Henrik Kraft, head of KKR's telecoms and technology investment team in Europe, described the investment to the Financial Times in October 2013, saying that "their operations are as modern and advanced as in Western markets, but the firm operates in a market that has low penetration of broadband and pay-TV services".
"We've seen that story unfold in Western markets." The potential for growth is great," Kraft added.
INTENSIVE LOBBYING: In order to meet its goals and launch N1, the firm had to ensure that media laws were changed to allow distributors/operators to be content providers.
The fight for these changes seems to have been fought on three main fronts. One involved David Petraeus, chairman of the KKR Global Institute, another related to public debate in Serbia, and the third to lobbying in Brussels.
The retired American general and former director of the CIA Petraeus visited Belgrade twice, where he met with all important people from the media at a large gathering at the residence of the American ambassador in Serbia, as well as with the Prime Minister of Serbia, Aleksandar Vučić. During his second visit, on April 15, 2014, Vučić, according to a statement from his cabinet, told Petraeus that KKR's first direct Balkan investment, the new cross-border TV station N1, is welcome in Serbia.
The statement added that Petraeus told Vučić that KKR wanted to increase its investments in Serbia and make Belgrade a center for digitization in the region. Attempts to contact Petraeus were unsuccessful.
Another form of pressure could be heard during the public hearing. SBB strongly advocated changes to the draft Law on Electronic Media, insisting that Article 109 of the Draft Law on Electronic Media is too restrictive and citing practices in other EU countries that allow distributors/operators to also be content providers of news programs.
Brent Sadler, the director of N1 and a former award-winning CNN journalist, went even further than SBB in the fall of 2013 when he threatened to raise this case to the European level if Belgrade refused to budge.
That's exactly what happened. As Media Observatory has learned from multiple sources, United Group has hired Brussels law firm Gide Loyrette Nouel to lobby the European Commission for changes to the law that will allow content distributors/operators to also be content providers.
Media Observatory has obtained a copy of a letter sent to the European Commission in January 2014 by Benoît Le Bret, one of the partners at Gide, in which he says: "We remind you that there is no provision in EU broadcasting law that would impose mandatory unbundling producers and distributors of content. If such a restriction were adopted at the state level, it would most likely be considered restrictive and disproportionate."
Asked by Media Observatory to comment on the advice he gave to the European Commission on behalf of United Group, Le Bret said: "According to the rules of the bar, I cannot disclose or comment on relationships with any clients."
Numerous attempts to obtain appropriate comment from United Group on this matter were unsuccessful.
Media Observatory has learned from multiple sources that the EBRD, the minority owner of United Group, has also lobbied in Brussels for changes to the law, citing the same arguments as Gide.
When Media Observatory contacted Viktoria Melokhinova, communications adviser at the EBRD's Press Service, she said: "Unfortunately, we are unable to comment on this story."
WHAT HAPPENS IN BRUSSELS, HE REMAINS IN BRUSSELS: As a result of lobbying, the Extension Unit of the General Directorate returned the Law on Public Information and Media to Serbia, with the comment to revise Article 46 to allow distributors/operators to produce content through a related legal entity. Considering that it is on the way to European integration, the Government of Serbia accepted without question the proposal of Brussels to change the controversial provision.
This comment from Brussels on the revision of the mentioned article was a surprise, given that the Commission applied different standards for the public service of Serbia, RTS, as well as in the case of media laws in Croatia and Slovenia.
In 2009, RTS was forced to separate the activities of program production and distribution (now managed by ETV).
Neither Croatia nor Slovenia, as EU members, have this provision for cable operators in their laws.
When asked whether the law firm and the EBRD contacted the Commission regarding this issue, Myriam Ferran, head of the Unit for Serbia at the European Commission's General Directorate for Enlargement, answered in the affirmative.
"The Commission is open to hearing all the views of interested parties on the draft laws that candidate countries should adopt, as their views may draw the Commission's attention to possible discrepancies with the EU acquis," Ferran added.
The position of the Commission is that no EU legal provision in the field of broadcasting imposes a mandatory separation of content producers and distributors.
"In that context, as far as the EU acquis is concerned, Serbia has the right to allow the vertical integration of its content provider and distributor," concluded Ferran.
Regardless of the different policies on this issue among the EU member states, the current media practice in Serbia leaves no room for optimism.
If you are a user of SBB cable services, none of the four Arena Sport channels owned by Telekom Srbija are available. If you have Telekom Serbia's Open IPTV, you do not have SBB's Sport Club channel in your offer. Furthermore, B92 Info, a channel competing with N1, was removed from SBB's basic cable package.
POSSIBLE CONSEQUENCES: This problem raises concerns about how the Serbian media scene will look in the future if the United group abuses its position. Telecommunications companies in Serbia are financially stronger than the media, especially SBB, which is backed by KKR, one of the largest private equity firms in the world that manages assets worth more than 50 billion US dollars.
Media law expert Slobodan Kremenjak says that it is positive that it will be difficult to put pressure on someone who is financially powerful. "On the other hand, who can guarantee that this power will always be used in the interest of the public and not in the interest of KKR?" Kremenjak asked.
Đorđe Krivokapić, head of the legal department at the Share foundation, pointed out the conflict between two basic principles - the interest of the public in the field of information and free entrepreneurship. "As an operator with a significant market share, SBB has a very good negotiating position in relation to any media content distributor, and there is no equality in such discussions," Krivokapić said.
Experts agree that the key question now is how strong and capable the regulatory bodies in Serbia are to face these risks.
In all likelihood, the public will eventually pay the price for such laws. University professor Stanko Crnobrnja recalled that SBB, as the largest cable operator in the country, first bought the largest entertainment production company in Serbia, Grand Production, in February 2014, and then introduced an information program that works in partnership with CNN .
"It seems that the production of the most watched entertainment program and highly influential news, and the simultaneous control of the distribution of all other content, brings a sure victory," says Crnobrnja.
According to him, there are not many actors on the Serbian scene who will be able to oppose this newly established powerful media house.
This text was originally written for SEE Media Observatory
2002. - Dragan Šolak founds SBB.
2007. – Mid Europe acquires a controlling stake in SBB. The European Bank for Reconstruction and Development (EBRD) is a co-investor.
2009. – Mid Europe buys Telemach Slovenia (the leading cable operator in Slovenia), and Telemach then expands to Bosnia and Herzegovina.
January 2013. - Cameron Munter starts working as a senior advisor to the Board of Directors of the SBB-Telemach Group.
September 2013. - the company Adria News doo is registered in Belgrade. Its main activity is the production and broadcasting of television programs. The founder and sole shareholder is Adria News Sarl, headquartered in Luxembourg.
October 2013. - KKR buys the United group (SBB, Telemach, Total TV). The European Bank for Reconstruction and Development (EBRD) is a co-investor.
February 2014. - United group buys a majority share in Grand production (turbo-folk production company).
August 2014. - Serbia adopts media laws that allow operators (distributors) to also be content providers.
October 2014 - Television N1 starts broadcasting.
BiH
Distributors/operators are allowed to be content providers as well. Rule 56/2011 defines the criteria for licenses for the distribution of audiovisual media services and radio media services, while Rule 55/2011 specifies the criteria for the provision of audiovisual media services.
Croatia
According to Article 79 of the Croatian Law on Electronic Media, an operator that distributes audiovisual and/or radio programs cannot be the owner of television and/or radio, nor a media service provider.
Macedonia
Article 39, paragraph 1, of the Law on Audio and Audio-Visual Media Services prohibits cable distributors/operators from establishing media.
Montenegro
It is allowed, because the Law on Electronic Media does not contain an article or provision that prevents distributors/operators from also being content providers.
Slovenija
Article 61 of the Act on Mass Media (2006) provides for the incompatibility of performing telecommunications activities and radio and television activities "except in the case of obtaining a license to perform radio or television activities as specified in Article 105 of the current Law." According to Article 105, a license is issued to an operator under conditions and according to the criteria that the Agency for Communication Networks and Services of the Republic of Slovenia is obliged to establish.
Al jazeera balkans, which began broadcasting in the main languages of the former Yugoslavia in November 2011, was the first regional news TV service after the XNUMXs, when Yugoslavia broke up.
The headquarters of the station is located in Sarajevo, in Bosnia and Herzegovina, but it also covers Croatia, Serbia, Slovenia, Macedonia, Montenegro and Kosovo. Al Jazeera is an independent station owned by the State of Qatar through the Qatar Media Corporation and headquartered in Doha.
N1 TV has a similar concept. Its partner is CNN and it covers all former Yugoslav states, except Kosovo, with studios in Belgrade, Zagreb and Sarajevo.
Boro Kontić, director Sarajevo Media Center, believes that none of these two TV stations came because of a perceived need or an exhaustive analysis of the need for regional television.
Both stations have the same target group, so mutual competition is expected. Kontić, however, does not expect drastic changes in the regional media scene in the next period.
"There will be a silent and hidden conflict, in which Al Jazeera has an advantage because it is available to everyone (via cable TV) and has a bigger budget." On the N1 side, there is a better team and a huge desire to succeed, but his biggest limitation is the employer who considers him a short-distance horse, and not an actor capable of forming an information channel available to everyone."
