Media Sustainability in Europe and Eurasia 2015: An IREX Report

IREX’s Media Sustainability Index (MSI) provides in-depth analyses of the conditions for independent media in 80 countries across the world.

Since the Europe and Eurasia MSI was first conceived in 2000, in cooperation with the United States Agency for International Development (USAID), the MSI has evolved into an important benchmark study to assess how media systems change over time and across borders. IREX added a study for the Middle East and North Africa in 2005, and in 2007 launched the Africa MSI.

Find more information or past years’ reports here.

Europe and Eurasia 2015: Executive Summary

Results of the 2015 MSI study for Europe & Eurasia (E&E) at first glance are encouraging: the average of 21 overall country scores increased by 0.04 compared with last year, representing the highest average of overall scores so far this decade. Out of 21 countries studied, seven increased by more than one-tenth of a point. Eleven country scores remained about the same and only three decreased by more than a tenth.

Journalists covering demonstrators for war veterans in Kyiv, Ukraine.

Indeed there are some encouraging developments, described in more detail below. However, in other cases what appear to be improvements in scores are likely to be only short-term blips on an otherwise downward or flat trend. Belarus (+0.16), Azerbaijan (+0.15), and Kazakhstan (+0.16) all showed small increases in overall score, but in all of these cases several factors indicate that this is not part of a new trend.

In Belarus all objective scores increased modestly except Objective 1, Freedom of Speech. Given the past year was not an election year, panelists gave better scores to indicators such as 2.3, self-censorship and 3.3, impartiality of state media content. With presidential elections scheduled for late 2015, it is likely that these indicators and others will receive less favorable scores next year. Likewise in Azerbaijan, Objective 1 did not increase and other objectives received only slight increases. Difficulties securing the participation of panelists from 2014, in part due to the ongoing crackdown on critical voices there, created some variation in score, but only marginally. Finally, in Kazakhstan Objective 1 did show modest improvement, mostly as a result of better scores for indicators 1.3, covering media licensing, and 1.5, which assesses legal protection of state media independence. Objective 3 also improved modestly. Indeed in Kazakhstan many new sources of media are available, both online and through digital broadcasting platforms. However, at this point it does not seem as though the ruling elite there are prepared to cede any time soon what amounts to overwhelming control of the most important media.

Below is a brief summary of notable findings:

  • From an E&E regional average high of 2.08 in the 2006/2007 study, Objective 4, which assesses media management, has fallen more than half a point, steadily losing ground each year. Even countries now in the EU, such as Romania, Bulgaria, and Croatia, are not immune from this trend. Overall the issue seems to be that media have been weakened by a poor economy and been preyed upon by political money, or political pressure has weakened the economic environment in which media operate, thus making it easier for political money to distort the market and put independent media at a strong disadvantage.
  • Market research and audience measurement, assessed by Objective 4’s indicators 6 and 7, are keys to a well-functioning media marketplace. Across the region, there are more countries than ever before reporting that serious attempts to study media’s audience are being undertaken. To date there are mixed results, with successes, failures, and a few who have never attempted it.
  • Ownership transparency, assessed by Objective 3, indicator 6, is important for the audience to evaluate the content of media and better recognize bias. Progress has been made in a number of countries over the years, notably in Georgia, to end offshore ownership and shed light on who owns the media. But new online media, often outside of stricter regulatory regimes covering traditional media, have the ability to operate with little ownership transparency. Further, social media give voice to personae who may or may not be who they claim to be. Panelists from several countries address how this has impacted the media landscape.
  • Many high-profile cases of regression in media freedom and democratic values generally, including in a number of countries covered by the E&E MSI such as Azerbaijan, have caused a certain amount of gloom among the international development community and democracy activists. However, there is good news, even if tempered by continued challenges, coming out of countries such as Albania, Armenia, and Moldova.

Scoring charts providing all scores for 2015 can be found at the end of this section. Further, the entire history of MSI scores for all regions is available on IREX’s website in Microsoft® Excel spreadsheets. See: www.irex.org/msi.


What is Behind Objective 4’s Slide?

Media outlets and the media sector as a whole have a number of vulnerabilities. Direct censorship, pressure to self-censor, violence against journalists, and reporters coming up against information blockades all undermine the ability of media to serve as the “Fourth Estate.” Over the past several years in Eastern Europe, it is the ability of media to sustain financially their operations that has most diminished their independence and reporting quality.

Objective 4 measures the business and management aspects of a media sector. It is designed to gauge practices employed by media managers to run their media outlets efficiently. It assesses the state of advertising, not only in terms of how robust the market is, but how fairly advertising is placed and if government subsidies or advertising skew the market. It also includes a measure of media market research and audience measurement (a separate analysis of how these are performing is included below).

Objective 4 scores have fallen since their highs in the 2006/2007 edition throughout Southeast Europe and much of the rest of the region. (However, in Moldova, Armenia, and Kazakhstan scores have actually risen as the overall economies have improved and, in Moldova’s case, the political situation in the country stabilized and saw a reform-minded government elected.) While each country’s individual case is unique, there are underlying causes that have affected media worldwide. First, the global financial crisis of 2008 tightened credit markets. The impact on media was multifold. Multinational media conglomerates pulled back from new markets in Eastern Europe to focus on their core investments in Western Europe. As consumer demand withered, so too did advertising. At the same time, online advertising finally took hold but at prices that are a fraction of what print and broadcast once commanded. While at first media in much of Eastern Europe were insulated to some degree due to the lack of development and use of online media, this quickly changed with the rise of cheaper Internet access and improvements (and also lower prices) in mobile networks and smart phones.

Media worldwide have adjusted but the media landscape is forever changed, and at least in the short run there is a sense that this revolution has damaged journalism quality even if at the same time opening up the media space to more voices.

In Eastern Europe, the Media Sustainability Index has chronicled over the past nine years how media throughout the region are impacted by these global shifts, and how media vulnerability as a result is being used by forces wishing to control information.

Croatia is an excellent case in point, being one of the most successful transition countries in terms of both overall achievements (e.g., it is a EU member) and media development. A quote from this year’s chapter summarizes how things have changed, even there.

‘Recently, I’ve met representatives of a group of local media. They told me that they were operating on a basis of three-month financial plans. No more strategic planning; now, it is about mere survival,’ said Berkovic. Indeed, there isn’t much left of the glory days of the late 1990s and early 2000s, when some of the ‘home-grown’ media companies, started in the late 1980s or early 1990s and based more on enthusiasm and vision than on financial investments, were rightfully considered as proud examples of the successful Croatian entrepreneurship, well beyond the media industry.

The chapter goes on to detail the woes in the business of media, including an estimate that newspaper circulation has dropped to one-third of the level seen in the late 1990s and that jobs in the print industry have been cut by 40 percent since 2007.

Another panelist from Croatia, Ante Gavranović, the founder and former president of the Croatian Associations of Publishers, pointed out during the panel discussion,

Such a persistent crisis in the media sector is a result of a combination of a contracted advertising market and media management incapable of coping with a new market environment. In the initial phase of the crisis, some print media managers had tried to fight the downward circulation trend by trivializing the content, which resulted in the loss of trust in media and a further drop in circulation.

And print is not the only media suffering: local radio and television stations report that they rely on funds from the government to support public interest programming, without which they would be forced to only show entertainment programming. Panelists also reported that, although not in the red, national broadcasters do not make as much as they once did.

If in Croatia so far the media have not been weakened to the point that they have come under control of political forces, in Bulgaria, another EU member, the situation has deteriorated to the point that quality of reporting has suffered greatly in the eyes of MSI panelists. The problems there are summarized thusly by this year’s chapter:

The most problematic areas include the unfair distribution of government funds for the media, the manipulative and unreliable data on broadcast ratings and circulation figures, as well as the overall lack of transparency in the advertising market.

One panelist, the sales manager for a big media conglomerate, said,

‘Most traditional media operate at a financial loss, which leads to compromises with editorial independence. With few exceptions, the big advertisers enjoy complete media support. As public institutions remain the biggest advertisers, any government regardless of its political affiliation receives media support.’

Other panelists described how the advertising market in Bulgaria has fallen by 45 percent since 2008. Now, one of the most important advertisers is national and local government that handle not only advertising from the national budget but also advertising on behalf of the EU. Panelists complained that the advertising is not handled transparently, that many recipient media support the government of the day, and perhaps most importantly, local media are often shut out of the equation. Exacerbating the availability of advertising revenue was a price war between two important national broadcasters who engaged in a price war, lowering advertising rates throughout the country.

Further, many media there have become mouthpieces for their owners, who head business conglomerates. One panelist noted that such media are not as interested in being run as a business, but funded by their owners and used to attack their competition. Another panelist noted how the quality of news in such cases unavoidably suffers.

‘Sustaining independent media only from advertising in the condition of a deep economic and social crisis is practically impossible. The dubious mechanisms for distribution of public funds for the media are being used to influence their editorial independence,’ one Bulgarian panelist concluded.

Ukraine in 2006/2007 scored an impressive 2.83 for Objective 4, its highest scoring individual objective in its MSI history and up from 1.51 in 2001’s initial study. In 2015, it scored a 1.39, remaining almost unchanged from 2014. While instability and conflict in the country have certainly depressed the advertising market, there is more underlying the problems facing media there: political pressure has forced the media into abandoning strong management in favor of simply acting as political cudgel.

Although often adding cautionary notes, the Ukraine 2006/2007 chapter nonetheless painted an optimistic picture:

More private media outlets are becoming more efficient and profitable due to the growth of advertising and other revenues, as well as professional competition.
Independent media do not receive state subsidies. Panelists mentioned another form of cooperation with local governments in which newspapers sign agreements with them to provide, for example, a separate, appropriately marked page for official information from the local authorities.
Revenue from various sources grows in both print and broadcast media, and professional managers are making more outlets able to diversify their revenues, panelists said.

This year panelists shared a gloomy reality that persists despite the departure of Yanukovych from power.

‘The majority of media in Ukraine are not businesses at all. Even the largest channels require subsidies from their owners, as they are losing revenue,’ said one panelist. ‘In the current market with up to 4,000 print editions and 300 television stations, many cannot survive. State-funded media distort the market,’ noted another.

The impact on independence was demonstrated by one example where a local newspaper silenced a car accident involving the son of large local advertiser.

The main underlying problem is government influence in the media market and politicized ownership. Panelists reported that government agencies at the national and local levels poured $43 million into various media outlets they control, compared with a total media advertising market of $345 million. State media in Ukraine are eligible to tap into that advertising market, competing with commercial outlets. Further, the previous government manipulated media licensing to replace more neutral ownership with political ownership at important broadcast outlets. Oligarchs now control the most important source of news for Ukrainians and are not as interested in the ability to make money from these assets (let alone provide quality journalism) as they are of making use of their messaging power for their own benefit.

Macedonia suffers from similar problems. One panelist remarked on the futility of good management practices:

Regardless of one’s managerial skills and the level of organization, it is not about the access to the market, but the access to the actual advertising budgets that decides the success. There are small television stations all over Macedonia that report huge earnings, in spite of having limited capacities, and there are well-organized national radio stations that report losses.

Another paragraph sums up the situation well:

A large majority of the media, including almost all of the largest privately owned national broadcasters and print media, are actually part of larger entities and cannot be considered the core business for their owners. The owners use them instead to promote their core activities, as a tool to use against competition, and as a bargaining chip in negotiations with authorities when core businesses are under pressure. Last year, there were reports that two national broadcasters were targeted for takeover, but ultimately nothing materialized. In at least one of those cases, the proverbial grapevine has it that the national television station was offered by the owner after his main business venture was the target of a hostile takeover attempt.

These four cases show how vulnerable media outlets are when secure sources of revenue dry up, and how political pressure can result in a marketplace unfriendly to all media. In the case of the former, Bulgaria is one example where a successful media sector has been damaged dramatically to the point that it is likely to take years for it to recover the success it once had. Despite what appeared to be a strong legal environment, weakened media were easy targets for those wielding political money. In Ukraine and Macedonia, media had been achieving success in developing financial sustainability, but government changes resulted in animosity toward critical media. Bending laws and taking advantage of underdeveloped economies, media there, particularly in Macedonia, struggle to find a safe place in the market. The most important media are dominated by those with money and with political agendas.

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