The FINANCIAL — The budget of the Georgian Public Broadcaster for 2009 is becoming the main reason for contradictive statements and disagreement between private and public TV channels.
According to the statement released by the Georgian Parliament GPB will receive an additional GEL 5 million, bringing total funding in 2009 to GEL 25.5 million. GPB told The FINANCIAL the planned budget for 2009 decreased by GEL 5,441,795 in comparison with 2008’s budget. This gap is planned to be filled with additional financing that can be approved by the state for the restoration of the old TV channel 2. GPB representatives said that the possible estimated sum could be round GEL 7 million (USD 4,932,429).
From December 4, 2008 GPB is going to launch a renovated telecasting programme. According to the General Director of GPB this will change the situation dramatically and increase the ratings of the channel. According to Nino Jangirashvili, Director of oppositional TV station Cavcasia, which covers only the capital city, Tbilisi, today Cavcasia’s ratings are much higher than GPB’s.
“For this reason up to this date GPB has remained an unsuccessful object of an experiment, which causes large human and financial resource spending. Though GPB’s budget is almost as big as the budgets of all television companies in Georgia put together, it still has the lowest rating. Even with our minor budget; our ratings are much higher than GPB’s.”
Kakha Kukava, a co-leader of the opposition Conservatives Party, proposed on November 13 to hand over management of the public TV’s second channel to a council composed of members of the oppositional parties.
The second channel is a part of the Georgian Public Broadcaster, which has its own board of trustees.
“Hence, I consider it inappropriate to establish an additional structure,” General Director of GPB Levan Kubaneishvili told Rustavi 2 TV, the strong pro governmental TV channel, that has reportedly changed its owners twice since the Rose Revolution (2003).
“The opposition demands that the Government create a type of channel for debates that would be completely unbiased. For this reason government officials met with the representatives of GPB to discuss renovation of Channel 2, which belongs to GPB. At the meeting, after being asked how much would be needed, GPB representatives said that the possible estimated sum could be round GEL 7 million (USD 4,932,429),” Levan Gakheladze, Board of Director of the GPB Regulation Commission, told The FINANCIAL.
“The reform of Channel 2 will increase the level of competition among broadcasters and foster the development of the TV industry,” Elene Gelovani, Director of the Financial Department of Rustavi 2, told The FINANCIAL. “In 2008 Rustavi 2 spent the largest amount of money on salaries, studios, decorations, projects and technical reconstruction.”
“In my opinion increasing funding for GPB would be unjustified. Previous funding was used ineffectively and increasing it would just add to the problems. The main problem is that GPB’s previous and current management don’t have the proper concept and competence for realizing what a public broadcaster should be like. GPB lacks two main things: an independent editorial policy and level of objectivity,” said Nino Jangirashvili, Director of TV Company Cavcasia.
Cavcasia, which covers only the capital city, Tbilisi, is seen as a major platform for the opposition in Georgia. Speaking at a news conference before the August war Jangirashvili called on the authorities to stop “forcing” businesses to withdraw ads from Cavcasia news station.
“Our marketing department often has difficulties,” says Jangirashvili.
“When companies want to advertise their products on Cavcasia they have to reject even thinking about it because they will face big problems from the Government. The company was in a critical situation because of the August war. In August and September the amount of publicity decreased dramatically. But from the beginning of November the situation improved. We hope that our budget will increase in 2009 because we are going to launch new programmes,” commented Nino Jangirashvili.
“It’s very difficult to say who our main competitors are because there are no classical market formulas when we’re talking about media business in Georgia. Our main competitor is an ailing competitive environment, the government’s intervention in business and the fact that today most of the TV channels are controlled and owned by the Government. Publicity is influenced by the Government and independent TV channels are left with virtually no chance of being profitable,” told the Director of Cavcasia.
“The planned budget of GPB in 2009 is GEL 27,200,000 (USD 19,166,009). GEL 25,500,000 is going to be financed by the state budget, and GEL 1,700,000 will be provided from organizational income,” David Janelidze, First Deputy to the General Director, told The FINANCIAL.
“The planned budget of GPB in 2008 was GEL 32,641,795. GEL 20,676,000 was issued from the state budget for main activities. The remaining sum was covered by organizational income, which was GEL 7,739,403. A loan of GEL 4,226,392 was given from the state budget to GPB to cover the mortgage for EUTELSAT and this amount is to be covered till 2012. The main sources of financing besides the State Budget are rent income and ads.”
“Operating expenses in 2007 were GEL 25,685,205 (USD 18,098,635) and 9 month operating expenses in 2008 were GEL 23,455,993. In 2008 the biggest sum of money was spent on salaries, then equipment, construction, communications and lastly – movies,” said David Janelidze.
“The regulation board planned to create a U.S. and European style channel where the technical channel, in an online regime, would broadcast the parliament conference briefings of political parties and the executive Government. This technical channel foresees broadcasting online. Therefore the reconstruction of Channel 2 will be needed,” Levan Gakheladze, Board of Director of the GPB Regulation Commission, told The FINANCIAL.
“Currently the news programme Moambe has the highest ratings at GPB,” added David Janelidze. According to him, “GPB does not have any important or interesting programmes, and still it’s only in third place.”
Ownership issues of Georgian broadcasters are becoming more and more problematic as new information is being released.
Founder and former owner of Rustavi 2, Erosi Kitsmarishvili, and Georgia’s ex-ambassador to Russia, said on November 26 that he wanted to regain control of the television station. Kitsmarishvili, who played a key role in the Rose Revolution claimed that the authorities seized Rustavi 2 from him in 2004, one year after Saakashvili came to power.
It was known that in 2004 Mr. Kitsmarishvili sold his shares of Rustavi 2 to Kibar Khalvashi,a businessman who was a close friend of the then Minister of Internal Affairs of Georgia, Irakli Okruashvili.
Okruashvili who is wanted by Georgian intelligence forces found political asylum in France this year.
Khalvashi was forced to give up his property including Rustavi 2. He told a local newspaper recently, that the Georgian Government forced him to sell his shares in certain companies. The main warehouse for Arti Group owned by Khalvashi burned down last year.
Kitsmarishvili only recently stated that he was forced to give up his shares. He made no such accusations in previous years.
Kitsmarishvili claimed that he would file a lawsuit against Saakashvili and regain ownership of the shares. He asserted that President Saakashvili was personally behind that offshore company that bought 55% of Rustavi 2.
It became known that in 2007 an offshore company GeoMedia Group owned 55% of the television station’s shares and that the rest was owned by GIG owned by Davit Bezhuashvili, a brother of Gela Bezhuashvili, who is now head of the Intelligence Department. Currently there is no information available about GeoMedia Group. The only thing known is that it is registered in the Marshall Islands.
This year General Director of Rustavi 2, Irakli Chikovani, has become owner of 30% of the channel’s shares, according to Georgian National Communications Commission (GNCC). GNCC reported that GeoMedia Group’s shares in Rustavi 2 had been decreased from 55% to 40% and GIG’s shares from 45% to 30%.
Rustavi, based in Tbilisi, was founded in 1994 in the town of Rustavi. It is a privately owned broadcaster that currently reaches around 85% of the country’s population. Many of the reporters working for Rustavi 2 left the station in 2007. Some of them joined oppositional parties.
As for Imedi, protests of the opposition demanding for the TV company to be returned to its legal owner continue. Imedi which was raided by police in November 2007 was owned by the late Georgian media tycoon Badri Patarkatsishvili, and Rupert Murdoch’s News Corporation.
Recently Ina Gudavadze, the widow of Badri Patarkatsishvili, asked President Saakashvili to confirm his pledge to democratic values by helping the Patarkatsishvili family in regaining its ownership rights over the TV and radio station.
There is an ongoing dispute happening between a distant relative of the late tycoon, Joseph Kay, and the Patarkatsishvili family. The opposition says that the Government is behind Joseph Kay on the matter.
The budget of Television Company Imedi in 2007-2008 was about GEL 17,000,000 and in 2009 according to company representatives the budget will increase. The most popular shows and programmes of Imedi are: Latin soap operas; Domestic sitcom (Shua Kalakshi); Domestic action series (Coffee and Beer, Hot Dog); Iumorina (concert); Foreign action series (Lost, Prison Break, and so on).
“The average monthly operating costs of the broadcasting of shows are different, 8-10 episodes of a sitcom per month are about USD 50,000. Each episode of an action series costs about USD 15,000, for Latin soap operas it’s about USD 300-400 (including dubbing), for the American action series more than USD 1,500-2,000,” said Bidzina Baratashvili, General Director of Imedi.
Till January of 2007 The Regulatory Commission was paid an amount equal to 1% of the revenue and from 2008 this rate decreased to 0.5%.
“The budget of TV Channel Cavcasia increased dramatically in 2008, but it was still very low in comparison with GPB’s, Imedi’s and Rustavi2’s budgets,” Nino Jangirashvili, Director of TV Company Cavcasia, told The FINANCIAL.
“We hope that by the end of the year our revenues will reach GEL 1 million. It’s quite hard to talk about our budget for 2009. Frankly speaking it would be reasonable for our revenues to increase in 2009, but the impact of political factors on the Georgian economy and media market is so high that nothing can be said for sure. At the end of June a lot of companies stopped their contracts with Cavcasia. The reason being that the Financial Police threatened to create problems for those companies that advertised on Cavcasia.”
“We are trying not to increase our prices. This year we spent considerable amounts on new equipment and studio reconstruction works,” stated Nino Jangirashvili.
The programme Studio Spectre has the highest rating at Cavcasia. Barrier and Week’s Reporting are the programmes that attracted the audience’s interest the most lately. The maximum price of one minute of advertising on Cavcasia is USD 270.
Written By Levan Lomtadze