Cardozo law school Jacob burns institute for Advanced Legal studies Working Paper 010 April 2000 Privatization and Self-Regulation as Tropes of Global Media Restructuring Monroe Price This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection http://papers.ssrn.com/paper.taf?abstractid=222112
Cardozo Law School Jacob Burns Institute for Advanced Legal Studies Working Paper 010 April 2000 Privatization and Self-Regulation as Tropes of Global Media Restructuring Monroe Price This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection: http://papers.ssrn.com/paper.taf?abstract_id=222112
Privatization and self-Regulation as Tropes of Global Media Restructuring There is a power to language itself in affecting media reform around the world. The field of media regulation is filled with examples of strong ideas, encapsulated in words and phrases, that have an enormous impact on legislative transformation, and the export of which seems a characteristic of globalization. Just think of the ideology-laden tropes that form the vocabulary of reform: the marketplace of ideas, "free and independent media, ""public service broadcasting, " "communication and development, "" strengthening national identity, " assuring pluralism. The invocation of each of these phrases has, behind it, a freight train of implications. The adoption or embrace of one of these concepts virtually commands various media structures behind it. For that reason, there is a contest to instate in the public consciousness some first principles of media reform goals, and, further, to raise some concepts to a position of superiority. The very course or structure of reasoning can be determined by affecting which building block is to be the cornerstone. Because the modification of discourse alters the process of law making we must pay attention to the discourse itself Of course, there is much else in the combination of forces that influences the way legislation and media structuring take place. Economic forces, the ability of the International Monetary Fund or the World Bank to condition loans on conforming actions by receiving states, and the internal balance of power within states have significant impact on the restructuring process. But language and the ideas that language collects cannot be underestimated. All missionaries know the power of a concept, or a oncept joined with an image. In the struggle to shape media structures, this school of concepts is particularly important and is the subject of efforts by competing states to alter modes of thinking around the world. One of the highest of high concepts is the First Amendment of the U.S. Constitution. Accept he First Amendment, and so much else follows. Similarly, accept a model in which the state's role is to assure information, education, and entertainment, and another set of consequences ensues. These grand models have been much discussed I want to discuss two additional themes that are escalating as part of the central vocabulary of media reform. These themes are privatization and self-regulation. Once local to the developed countries as a category or mode of discourse, these terms are now found in the idealized toolkit of change everywhere. These concepts have advanced or are advancing from being a mere descriptor of a technique to something closer to a point of advocacy, a measure of satisfaction in terms of a Western template. Of course, privatization and self-regulation are specifically part of the armament to lessen dependence of the media on government. Greater privatization and an emphasis on self-regulation generally reduce the capacity of authoritarian entities to exercise control. Simultaneously, they are spects of a global discourse that is central to a specific restructuring process, one in which multinational corporations advance a model in which, in most destination states, terrestrial distribution is by autonomous private media entities I focus here on these concepts not only because of their timeliness and implications for shaping legislation, but also because of the differences between them. Privatization has already had a substantial operational history in the construction of media reform throughout the West including in the transition societies of Central and Eastern Europe and to a lesser extent the former Soviet Union. 2 Privatization is a doctrine with sharp edges; there is a clear process for implementing it, and a network of experts, from investment bankers to development specialists, who bring a methodology to bear in its implementation. Self-regulation is fuzzier; the bundle of motives behind it is sometimes more complex, and its formal introduction in transition societies is more doubtful. It has had however a more significant impact in advertising and content standards in the United States and in Europe and is extending itself to the Internet L. Privatization One of the hallmarks of the global restructuring of the media has been the shift in control of much of the sector from the public to the private. This is true for channels of distribution, and, as wel for the programming that streams through those channels. What makes public broadcasting public, is, in large part, a matter of ownership or control of the filter through which programming is selected for
Privatization and Self-Regulation as Tropes of Global Media Restructuring There is a power to language itself in affecting media reform around the world. The field of media regulation is filled with examples of strong ideas, encapsulated in words and phrases, that have an enormous impact on legislative transformation, and the export of which seems a characteristic of globalization. Just think of the ideology-laden tropes that form the vocabulary of reform: “the marketplace of ideas,” “free and independent media,” “public service broadcasting,” “communication and development,” “strengthening national identity,” “assuring pluralism.” The invocation of each of these phrases has, behind it, a freight train of implications. The adoption or embrace of one of these concepts virtually commands various media structures behind it. For that reason, there is a contest to instate in the public consciousness some first principles of media reform goals, and, further, to raise some concepts to a position of superiority. The very course or structure of reasoning can be determined by affecting which building block is to be the cornerstone. Because the modification of discourse alters the process of law making, we must pay attention to the discourse itself. Of course, there is much else in the combination of forces that influences the way legislation and media structuring take place. Economic forces, the ability of the International Monetary Fund or the World Bank to condition loans on conforming actions by receiving states, and the internal balance of power within states have significant impact on the restructuring process.1 But language and the ideas that language collects cannot be underestimated. All missionaries know the power of a concept, or a concept joined with an image. In the struggle to shape media structures, this school of concepts is particularly important and is the subject of efforts by competing states to alter modes of thinking around the world. One of the highest of high concepts is the First Amendment of the U.S. Constitution. Accept the First Amendment, and so much else follows. Similarly, accept a model in which the state’s role is to assure information, education, and entertainment, and another set of consequences ensues. These grand models have been much discussed. I want to discuss two additional themes that are escalating as part of the central vocabulary of media reform. These themes are privatization and self-regulation. Once local to the developed countries as a category or mode of discourse, these terms are now found in the idealized toolkit of change everywhere. These concepts have advanced or are advancing from being a mere descriptor of a technique to something closer to a point of advocacy, a measure of satisfaction in terms of a Western template. Of course, privatization and self-regulation are specifically part of the armament to lessen dependence of the media on government. Greater privatization and an emphasis on self-regulation generally reduce the capacity of authoritarian entities to exercise control. Simultaneously, they are aspects of a global discourse that is central to a specific restructuring process, one in which multinational corporations advance a model in which, in most destination states, terrestrial distribution is by autonomous private media entities. I focus here on these concepts not only because of their timeliness and implications for shaping legislation, but also because of the differences between them. Privatization has already had a substantial operational history in the construction of media reform throughout the West including in the transition societies of Central and Eastern Europe and, to a lesser extent, the former Soviet Union.2 Privatization is a doctrine with sharp edges; there is a clear process for implementing it, and a network of experts, from investment bankers to development specialists, who bring a methodology to bear in its implementation. Self-regulation is fuzzier; the bundle of motives behind it is sometimes more complex, and its formal introduction in transition societies is more doubtful. It has had, however, a more significant impact in advertising and content standards in the United States and in Europe and is extending itself to the Internet. I. Privatization One of the hallmarks of the global restructuring of the media has been the shift in control of much of the sector from the public to the private. This is true for channels of distribution, and, as well, for the programming that streams through those channels. What makes public broadcasting public, is, in large part, a matter of ownership or control of the filter through which programming is selected for
distribution. A related aspect of what renders public broadcasting categorically distinct is control of production of the programming itself. To be sure, there are still many societies where the media, as a whole, are in the hands or control of the government, but the tendency, fairly constant over regions of the world and even across forms of government, has been toward widely expanding the role of the private sector. What is commonly thought of as globalism is, automatically, one of the great contributors to this process. By turning toward audiences abroad, the great multinationals, world-straddling, many-homed and of diffuse allegiances, have massively reoriented the relative distribution of content around the world from the public to the private. This new and permanent cloud of private programming can find its profit only if it ties to distribution mechanisms that yield audiences. Its very existence, hovering omnipresence and accessibility inevitably alters information flow, inducing innovation in its redistribution. More than that, in many of the post-Soviet societies of Eastern and Central Europe, and many other places besides the partial or entire privatization of government channels was part of the landscape of democratisation In this Essay, I wish to put into context this remarkable shift from the public to the private in many parts of the world partly by exploring different meanings of moving toward the private and the implications of this move for accountability. Both advocates and opponents of privatization contend that it encourages investment, often foreign, and with new levels of investment come new program strategies, including, in many areas, increased non- indigenous programming. At least the opponents argue that all of this leads to the intensification of a tendency toward the culture of the modern, part of a cosmopolitan globalization, one that detracts from sovereignty of the state and the strength of civil society. On the other hand, proponents of privatization argue that the move in that direction can mean the opening to many more outlets of expression, much more in the way of incentives to production, and a flowering of creativity. Privatization can be by degrees, and it is easy to imagine a society that undertakes a comprehensive system of privatization, but government, for reasons of power and identity. retains substantial control of the broadcasting sector But what is privatization? For those relatively remote from the process, implied in that drama is a uniformity of transformation. The term, however, has many meanings, but most simply it refers to the sale of a formerly government-operated enterprise to a buyer in the private sector, as in the denationalization in many sectors in the 1970s and 1980s. In broadcasting a core instance of privatization in Russia was the decision to turn one of the television channels over which the state had total control during the Soviet period into a stock company with substantial private ownership. A different form of privatization in broadcasting may take place when a"public service broadcaster, " like non- commercial channels in the United States, are turned over to private enterprise in whole or in part. This is not strictly a move from state control, not the wholesale recasting of a national system, but it shares important similarities from the point of view of the public sphere. The significant distinction is that privatization takes place when ownership patterns change to remove or substantially diminish state or public control of decisions concerning media space and increase that of private entities that are usually but not always, commercial Privatization, in this broad sense, also encompasses a government decision to make available to commercial broadcasting entities frequencies that were previously reserved for state purposes. Such privatization of frequencies occurred in Poland, Hungary, and the Czech Republic. The former monopoly state broadcaster remained in existence(though itself, transformed), but private national or regional channels were licensed to compete with it and rapidly attracted audiences. Privatization can be a matter of moving step-by-step, or be part of a systemic change, consciously undertaken, in which the relationship of the state or the public sector to information space is calibrated and consciously reduced Privatization was put forward as a goal, in most of the transition societies, as means of part of the shock treatment of the movement toward capitalism. Radically altering the ownership of the light bulb industry in Hungary or the automobile industry in East Germany had democratic implications, but the significant aspect was tied to a particular theory of efficiency and of reducing the power of the state Privatization of newspapers and broadcasting shared certain of these efficiency-related goals, but the mandate was fa pressing and seemingly far more central to the democratic project. Th for most privatizations are usually presented as economic, in terms of efficiency, and social, in terms of reducing the power of the state. Thus, the impetus to privatize broadcasting channels has a strong motivation in terms of its free speech implications. It is the singular step that superficially, but literally, removes the broadcasting or press entity from the direct control of government. The 1990s was a drama, acted out transition state by transition state, to determine whether the central engine of broadcasting would be altered in ownership or subjected to competition. One defining characteristic of
distribution. A related aspect of what renders public broadcasting categorically distinct is control of production of the programming itself. To be sure, there are still many societies where the media, as a whole, are in the hands or control of the government, but the tendency, fairly constant over regions of the world and even across forms of government, has been toward widely expanding the role of the private sector. What is commonly thought of as globalism is, automatically, one of the great contributors to this process. By turning toward audiences abroad, the great multinationals, world-straddling, many-homed and of diffuse allegiances, have massively reoriented the relative distribution of content around the world from the public to the private. This new and permanent cloud of private programming can find its profit only if it ties to distribution mechanisms that yield audiences. Its very existence, hovering omnipresence, and accessibility inevitably alters information flow, inducing innovation in its redistribution. More than that, in many of the post-Soviet societies of Eastern and Central Europe, and many other places besides, the partial or entire privatization of government channels was part of the landscape of democratisation. In this Essay, I wish to put into context this remarkable shift from the public to the private in many parts of the world partly by exploring different meanings of moving toward the private and the implications of this move for accountability. Both advocates and opponents of privatization contend that it encourages investment, often foreign, and with new levels of investment come new program strategies, including, in many areas, increased non-indigenous programming.3 At least the opponents argue that all of this leads to the intensification of a tendency toward the culture of the modern, part of a cosmopolitan globalization, one that detracts from sovereignty of the state and the strength of civil society. On the other hand, proponents of privatization argue that the move in that direction can mean the opening to many more outlets of expression, much more in the way of incentives to production, and a flowering of creativity. Privatization can be by degrees, and it is easy to imagine a society that undertakes a comprehensive system of privatization, but government, for reasons of power and identity, retains substantial control of the broadcasting sector. But what is privatization? For those relatively remote from the process, implied in that drama is a uniformity of transformation. The term, however, has many meanings, but most simply it refers to the sale of a formerly government-operated enterprise to a buyer in the private sector, as in the denationalizations in many sectors in the 1970s and 1980s. In broadcasting, a core instance of privatization in Russia was the decision to turn one of the television channels over which the state had total control during the Soviet period into a stock company with substantial private ownership. A different form of privatization in broadcasting may take place when a “public service broadcaster,” like noncommercial channels in the United States, are turned over to private enterprise in whole or in part. This is not strictly a move from state control, not the wholesale recasting of a national system, but it shares important similarities from the point of view of the public sphere. The significant distinction is that privatization takes place when ownership patterns change to remove or substantially diminish state or public control of decisions concerning media space and increase that of private entities that are usually, but not always, commercial. Privatization, in this broad sense, also encompasses a government decision to make available to commercial broadcasting entities frequencies that were previously reserved for state purposes. Such privatization of frequencies occurred in Poland, Hungary, and the Czech Republic.4 The former monopoly state broadcaster remained in existence (though itself, transformed), but private national or regional channels were licensed to compete with it and rapidly attracted audiences. Privatization can be a matter of moving step-by-step, or be part of a systemic change, consciously undertaken, in which the relationship of the state or the public sector to information space is calibrated and consciously reduced. Privatization was put forward as a goal, in most of the transition societies, as means of part of the shock treatment of the movement toward capitalism. Radically altering the ownership of the light bulb industry in Hungary or the automobile industry in East Germany had democratic implications, but the significant aspect was tied to a particular theory of efficiency and of reducing the power of the state. Privatization of newspapers and broadcasting shared certain of these efficiency-related goals, but the mandate was far more pressing and seemingly far more central to the democratic project. The reasons for most privatizations are usually presented as economic, in terms of efficiency, and social, in terms of reducing the power of the state. Thus, the impetus to privatize broadcasting channels has a strong motivation in terms of its free speech implications. It is the singular step that superficially, but literally, removes the broadcasting or press entity from the direct control of government. The 1990s was a drama, acted out transition state by transition state, to determine whether the central engine of broadcasting would be altered in ownership or subjected to competition. One defining characteristic of
these transition states was the dramatic though never total shift in the production of images from public to private hands. So much of change in the structure and delivery of information has been associated with the reordering of ownership in this particular sense Privatization of the media is advanced for reasons that mix efficiency with speech and discourse principles. Privatization not only increases the operating efficiency of companies currently managed by government institutions, but also makes the operator more sensitive, it is often said, to demands of the audience. As to media, it is less clear how efficiency ought to be measured especially if the media are supposed to serve information-related functions, pluralism and national identity. While profit maximization is usually the central goal of a private sector firm, the government, when it operates the media, often commits to other goals, such as helping to create an informed electorate, protecting the sanctity of the local language, and ensuring access for minority groups Privatization is an example of the use of conditionality. For example, Poland, on October 18 of meeting the requirements of European Union membership The draft law would allow foreig Arocess 1999, approved a bill to liberalize ownership of the country's television companies as part of the process investors to hold up to 49 percent of shares in television firms with terrestrial broadcast licences. Prior to the effort to comply with EU standards, investors were limited to owning stakes of no more than 33 rcent. " Full liberalisation(majority foreign ownership)will take place at the time of our entry to the European Union, Krzysztof Marcinkiewicz, chief adviser to the prime minister commented. Those EU officials who had monitored Poland's compliance, criticized the existing law and claimed that it permitted the two channels of public television and the domestically controlled private station, Polsat, to dominate ne market. Foreign firms were free to invest in cable and satellite television firms operating from abroad, but, as was true in so many places, terrestrial broadcast stations, still watched by the majority of Polish households, remained subject to ownership restrictions. Interestingly, liberalization had its limits Under the draft law, coded pay television services, such as French Canal Plus and Dutch-owned Wizja TV, could not buy exclusive rights for important social, cultural, and sporting events Too much can be made of the principled arguments for privatization, important as they are. The act of changing ownership patterns may merely be the occasion for shifts in terms of power and control and the opportunity for redistribution of wealth. In some instances, privatization meant the transfer of wnership from the state to the journalists(Izvestia), in some cases from the central government to the regions(or oblasti in Russia), and in other cases from a nomenklatura that had been in charge of government to one that now saw itself as private entrepreneurs. And while democracy-related goals may have been involved, government sale of frequencies or channels also had deep fiscal motivations, stemming from powerful pressures to reduce government expenditures and debt. As with other aspects of the economy, privatization had to be considered if the state wished to qualify for certain international money sources. An important impetus for privatization was the claim that it provided incentives for great investment. Privatization is said to be a condition for increased equity that will be a spur ogy, modernization and innovation both of which require, in a time of expensive and changing technol investment, and investment in a way that cannot, under then-existing circumstances, be otherwise obtained by government. The World Bank and the International Monetary Fund often conditioned economic aid to its government borrowers on the design and implementation of a privatization plan, and exerted great pressure on transition societies and developing countries to privatize, though this was much more the case with in the area of telecommunications than in the area of broadcasting have already suggested that privatization of the media has been radically different in different contexts. Insufficient attention has been paid to various types of transformation. If what we are concerned with are problems of democratization, problems of strengthening the public sphere, then movements to the private sphere must be analysed with that in mind. Some privatizations increase the number of voices, others do not. Some lead to an increase in critical coverage of the government, but others do not. Some privatizations, probably most, reduce the extent of state control of the media space To understand the relationship of privatization to these questions there needs to be something approximating a taxonomy, one that enables the analyst to distinguish among the various kinds of actions that might fall within that rubric Presl or example, one can speak of the partial privatization of central state television in Russia where Yeltsin decided to sell 49 per cent of the first channel to industrial groups he selected. This was a partial privatization, designed to strengthen, not weaken, the role of the president in his capacity to shape programming. Privatization includes the opening of the FM frequencies in India to commercial channels, originally on the condition that they broadcast anything but news and information. Each of
these transition states was the dramatic though never total shift in the production of images from public to private hands. So much of change in the structure and delivery of information has been associated with the reordering of ownership in this particular sense. Privatization of the media is advanced for reasons that mix efficiency with speech and discourse principles. Privatization not only increases the operating efficiency of companies currently managed by government institutions, but also makes the operator more sensitive, it is often said, to demands of the audience. As to media, it is less clear how efficiency ought to be measured, especially if the media are supposed to serve information-related functions, pluralism and national identity. While profit maximization is usually the central goal of a private sector firm, the government, when it operates the media, often commits to other goals, such as helping to create an informed electorate, protecting the sanctity of the local language, and ensuring access for minority groups. Privatization is an example of the use of conditionality. For example, Poland, on October 18, 1999, approved a bill to liberalize ownership of the country’s television companies as part of the process of meeting the requirements of European Union membership. The draft law would allow foreign investors to hold up to 49 percent of shares in television firms with terrestrial broadcast licences. Prior to the effort to comply with EU standards, investors were limited to owning stakes of no more than 33 percent. “Full liberalisation (majority foreign ownership) will take place at the time of our entry to the European Union,”' Krzysztof Marcinkiewicz, chief adviser to the prime minister commented. Those EU officials who had monitored Poland’s compliance, criticized the existing law and claimed that it permitted the two channels of public television and the domestically controlled private station, Polsat, to dominate the market. Foreign firms were free to invest in cable and satellite television firms operating from abroad, but, as was true in so many places, terrestrial broadcast stations, still watched by the majority of Polish households, remained subject to ownership restrictions. Interestingly, liberalization had its limits. Under the draft law, coded pay television services, such as French Canal Plus and Dutch-owned Wizja TV, could not buy exclusive rights for important social, cultural, and sporting events. Too much can be made of the principled arguments for privatization, important as they are. The act of changing ownership patterns may merely be the occasion for shifts in terms of power and control and the opportunity for redistribution of wealth. In some instances, privatization meant the transfer of ownership from the state to the journalists (Izvestia), in some cases from the central government to the regions (or oblasti in Russia), and in other cases from a nomenklatura that had been in charge of government to one that now saw itself as private entrepreneurs. And while democracy-related goals may have been involved, government sale of frequencies or channels also had deep fiscal motivations, stemming from powerful pressures to reduce government expenditures and debt. As with other aspects of the economy, privatization had to be considered if the state wished to qualify for certain international money sources.5 An important impetus for privatization was the claim that it provided incentives for modernization and innovation both of which require, in a time of expensive and changing technology, great investment. Privatization is said to be a condition for increased equity that will be a spur to investment, and investment in a way that cannot, under then-existing circumstances, be otherwise obtained by government. The World Bank and the International Monetary Fund often conditioned economic aid to its government borrowers on the design and implementation of a privatization plan, and exerted great pressure on transition societies and developing countries to privatize, though this was much more the case with in the area of telecommunications than in the area of broadcasting. I have already suggested that privatization of the media has been radically different in different contexts. Insufficient attention has been paid to various types of transformation. If what we are concerned with are problems of democratization, problems of strengthening the public sphere, then movements to the private sphere must be analysed with that in mind. Some privatizations increase the number of voices, others do not. Some lead to an increase in critical coverage of the government, but others do not. Some privatizations, probably most, reduce the extent of state control of the media space. To understand the relationship of privatization to these questions, there needs to be something approximating a taxonomy, one that enables the analyst to distinguish among the various kinds of actions that might fall within that rubric. For example, one can speak of the partial privatization of central state television in Russia where President Yeltsin decided to sell 49 per cent of the first channel to industrial groups he selected. This was a partial privatization, designed to strengthen, not weaken, the role of the president in his capacity to shape programming. Privatization includes the opening of the FM frequencies in India to commercial channels, originally on the condition that they broadcast anything but news and information. Each of
these kinds of private is vastly different from others. Privatization took place earlier in the Czech Republic than in Hungary, and that timing may have consequences for how television evolves and how the public broadcasters react. Neither in Hungary, nor Poland, nor elsewhere in Central and Eastern Europe did privatization mean a complete absence of public service television. The establishment of Tv Nova with the first channel remaining in public hands in the Czech Republic is more the norm than the exception. In Russia, in 1998, existing state broadcasting entities were regrouped and reorganized better to compete with the now strenuous private sector. Privatization in some transition states was a onsequence of auction, and, in some instances, foreign investors were free to invest up to full facilities remain in public hands. Similarly, while newspapers are generally free and private, theLon ownership of the broadcaster. In some states, the license to broadcast is private but the transmiss distribution facility(and, often, the equivalent of the news agencies Reuters or Associated Press)is still owned by the state Each form of privatization makes its own contribution to the public sphere. It matters whether the"private" is a mere surrogate or alter ego of the state-as is often the case-or whether it suggests independence of the state. The state is unlikely to shed voluntarily its control over information space in a manner that would lead to significant weakening of the government itself. Because President Yeltsin elected who would be the new private"owners"of central television, ORT, what percentage they would own, and what payment or liability they would have, the relationship between ownership and pluralism was significant. Corporate governance is also telling. In the case of ORT, the specific outcome meant that 51 percent of the ownership lay in state hands, though distributed among three agencies. Under the presidents direction, a mode for the voting of the disparate elements of state ownership was determined In Malaysia, MEASAT, the monopoly over satellite broadcasting and the cable industry, was lodged in the hands of industrial or financial entities with extremely close ties to the government. This form of rendering the information space into private hands allowed flexibility for complex financial transactions dering and relatively autonomous decisions concerning what program channels would be carried. It also assured that such decisions would be made in a manner consistent with mohammed mattathir's emphasis on"Asian values" and his approach to information space in Malaysia Because frequencies are made available for private television or radio use through a process of licensing, it is important to examine how the process operates. The institution that effectively licenses broadcasters, which is not always the agency nominally assigned this task, may be so arbitrary in its awards that the licensees become beholden to government in exchange for the benefit. The nature of the licensing process as maintaining a link to the state becomes even clearer if the license is subject to renewal and the process of renewal is problematic and subjective. The form of regulation may be such as to make the regulator and the licensee, in the final analysis, virtual partners. In Russia, NTV, the extraordinary channel and then network developed by igor Malashenko, received its start through the assignment of an unused portion of the Russian Educational Television Channel spectrum, not through the established licensing process. This complex birth meant that the channel, for many years, had a special tie to President Yeltsin because it was he personally who decided that private broadcasting should have its origins in this way. On the other hand, a regulator may be confined to a limited role or may have, as an operative mandate, the assurance of a pluralistic or objective and impartial broadcasting system. The Polish regulatory agency seemed to strive for this result. All of these elements are relevant in determining the quality of"privateness"that characterizes the licensee Even these few details suggest that it is useful to think of privatization as more than the conversion of a previously public or state entity into one that is in private ownership. If one thinks of the general problem more broadly and considers issues of public control over production and distribution of content and, within those issues, direct state control as compared to autonomous public then the the private can refer to the increasing reliance on advertising revenues of entities that remain pub/is ard circumstances and factors appropriate for analysis can be expanded. For example, the tendency to service broadcasting, without any private ownership. That tendency is characteristic of public broadcasting in the United States as non-commercial stations become increasingly reliant on sponsorship and underwriting, and even openly begin to accept direct advertising There are many state broadcasters for whom advertising is a major source of revenue. This kind of privatization has been an important factor in the transformation of Russian television, of Doordarshan in India, and the former state television in Hungary and the Czech Republic. In some transition societies. in fact, public service broadcasters used discounted access for advertisers as a way of competing against independent competitors and were accused of unfairness as a result. There were moments when
these kinds of private is vastly different from others. Privatization took place earlier in the Czech Republic than in Hungary, and that timing may have consequences for how television evolves and how the public broadcasters react. Neither in Hungary, nor Poland, nor elsewhere in Central and Eastern Europe did privatization mean a complete absence of public service television. The establishment of TV Nova with the first channel remaining in public hands in the Czech Republic is more the norm than the exception. In Russia, in 1998, existing state broadcasting entities were regrouped and reorganized better to compete with the now strenuous private sector. Privatization in some transition states was a consequence of auction, and, in some instances, foreign investors were free to invest up to full ownership of the broadcaster. In some states, the license to broadcast is private, but the transmission facilities remain in public hands. Similarly, while newspapers are generally free and private, the distribution facility (and, often, the equivalent of the news agencies Reuters or Associated Press) is still owned by the state. Each form of privatization makes its own contribution to the public sphere. It matters whether the “private” is a mere surrogate or alter ego of the state—as is often the case—or whether it suggests independence of the state. The state is unlikely to shed voluntarily its control over information space in a manner that would lead to significant weakening of the government itself. Because President Yeltsin selected who would be the new private “owners” of central television, ORT, what percentage they would own, and what payment or liability they would have, the relationship between ownership and pluralism was significant. Corporate governance is also telling. In the case of ORT, the specific outcome meant that 51 percent of the ownership lay in state hands, though distributed among three agencies. Under the president’s direction, a mode for the voting of the disparate elements of state ownership was determined. In Malaysia, MEASAT, the monopoly over satellite broadcasting and the cable industry, was lodged in the hands of industrial or financial entities with extremely close ties to the government. This form of rendering the information space into private hands allowed flexibility for complex financial transactions and relatively autonomous decisions concerning what program channels would be carried. It also assured that such decisions would be made in a manner consistent with Mohammed Mattathir’s emphasis on “Asian values” and his approach to information space in Malaysia. Because frequencies are made available for private television or radio use through a process of licensing, it is important to examine how the process operates. The institution that effectively licenses broadcasters, which is not always the agency nominally assigned this task, may be so arbitrary in its awards that the licensees become beholden to government in exchange for the benefit. The nature of the licensing process as maintaining a link to the state becomes even clearer if the license is subject to renewal and the process of renewal is problematic and subjective.6 The form of regulation may be such as to make the regulator and the licensee, in the final analysis, virtual partners. In Russia, NTV, the extraordinary channel and then network developed by Igor Malashenko, received its start through the assignment of an unused portion of the Russian Educational Television Channel spectrum, not through the established licensing process. This complex birth meant that the channel, for many years, had a special tie to President Yeltsin because it was he personally who decided that private broadcasting should have its origins in this way. On the other hand, a regulator may be confined to a limited role or may have, as an operative mandate, the assurance of a pluralistic or objective and impartial broadcasting system. The Polish regulatory agency seemed to strive for this result. All of these elements are relevant in determining the quality of “privateness” that characterizes the licensee. Even these few details suggest that it is useful to think of privatization as more than the conversion of a previously public or state entity into one that is in private ownership. If one thinks of the general problem more broadly and considers issues of public control over production and distribution of content and, within those issues, direct state control as compared to autonomous public sway, then the circumstances and factors appropriate for analysis can be expanded. For example, the tendency toward the private can refer to the increasing reliance on advertising revenues of entities that remain public service broadcasting, without any private ownership. That tendency is characteristic of public broadcasting in the United States as non-commercial stations become increasingly reliant on sponsorship and underwriting, and even openly begin to accept direct advertising. There are many state broadcasters for whom advertising is a major source of revenue. This kind of privatization has been an important factor in the transformation of Russian television, of Doordarshan in India, and the former state television in Hungary and the Czech Republic. In some transition societies, in fact, public service broadcasters used discounted access for advertisers as a way of competing against independent competitors and were accused of unfairness as a result. There were moments when
legislation gave public service entities a monopoly, for example, on political advertising or on modes foreclosed to independent competitors, such as tobacco or liquor advertising. In Russia, there was a significant arrangement in which much of the fiscal control of the state broadcaster was hived off to a single advertising agency that prepurchased all or most of the slots and then resold them at a profit Foreign investors, precluded from buying the state broadcaster, were permitted to invest in the advertising firm. At one time in the 1990s, a reform-minded director of ORT, Listyev, announced that he intended to change the nature of the relationship between advertising and the broadcaster. He placed a moratorium on advertising. Shortly thereafter he was murdered, and rumors persist as to a link between his death and his policy initiative If the concern is the balance between the private and the public, the mix of voices in the society, then a broadened privatization might be thought to occur when there is an intensification of an already private sector, the rendering of it, as it were, more private. Consider the historic existence of public interest obligations on American broadcasters, obligations, for example, to cover controversial events of public importance, or act as a voice for the local community. The removal of these obligations through the process of deregulation could be said to be a form of rendering the private more private. Similarly, allowing home-shopping channels to be designated as meeting American licensing standards or relieving stations of an obligation not to indulge in"overcommercialization"expanded the private nature of the system. In the United Kingdom, it was certainly a change in the balance to allow a single private competitor to the BBC, and it might be said to be a further altering of the balance when additional national or regional licenses for independent television were offered In many societies, systems became more private simply by becoming more open to foreign competition. Moreover, this openness could be established not through the process of licensing or any affirmative government action, but by the opening by operators of slots on cable television systems to satellite-delivered channels, usually foreign-owned. Certainly this was true in India, where the arrival of satellite channels created a vast change in thinking both about the system as a whole and about the state broadcasting system itself. In Turkey, the reaction to the existence of foreign satellite channels coming into the country was to establish a liberalization for private broadcasting within, and thereby attempt to harness or regulate the processes of change. A measure of the changing balance between the public and the private is the conduct of the consumer. In almost every system where new and private domestic channels compete(often because of cable and satellite), the impact on state broadcasters, in terms of share of the audience, is dramatic, sometimes terrifyingly so. State broadcasters decline from their monopoly position of 100 percent of the audience to 90 percent, then 60 percent and then far lower Privatization leads to programming that almost always enmeshes the public service broadcaster, rendering it less capable of meeting the needs of a public sphere. Whenever there is competition between an entity that has an unencumbered right to satisfy consumer demands and an entity where obligation of managers is to government, to stay in power, or to meet restrictive requirements, the unencumbered competitor will, in the long run, gain audience share. That has been the experience in all the post-Soviet markets. Privatization sharply reduces the role of the public service broadcaster and its audience share. The essential quality of"private"in this reading, is the strategy to meet public demand, and managers whose tenure, or success with investors, depends on meeting that demand Privati How can one measure whether the tendency toward the private contributes to the public sphere? ation may be a necessary method of having control of media reflect changed constituencies or power groups in society. This might be especially true where there has been a monopoly provider and plural society. It is theoretically the case that a monopoly provider, like the pre-lTV BBC, can become an accurate reflector of diversity of society, seeking to carry out a responsibility to represent various viewpoints and groups. But diversity is more credible, and usually more likely and more permanent if it springs from different sources. One could have diversity without privatization. The complex and mechanical process in the hey-day of Dutch broadcasting of semi-public entities dedicated to pluralism in the Netherlands was once an example. In the effort to have a plural federal broadcasting authority in federal Bosnia-Herzegovina, the posts of chief and deputy are allocated among the national representatives. But in many places, a shared public space would be unthinkable, and the aura of autonomy that often goes with private ownership is essential In some transition societies, privatization, or the emergence of private entities, is essential as a means of breaking the stranglehold of the state broadcaster that, through staleness, might itself be weakening state sovereignty. The existing state-controlled system may be outmoded precisely because it bespeaks an old, surpassed, and ineffective perception of the nation. The broadcasting bureaucracy
legislation gave public service entities a monopoly, for example, on political advertising or on modes foreclosed to independent competitors, such as tobacco or liquor advertising. In Russia, there was a significant arrangement in which much of the fiscal control of the state broadcaster was hived off to a single advertising agency that prepurchased all or most of the slots and then resold them at a profit. Foreign investors, precluded from buying the state broadcaster, were permitted to invest in the advertising firm. At one time in the 1990s, a reform-minded director of ORT, Listyev, announced that he intended to change the nature of the relationship between advertising and the broadcaster. He placed a moratorium on advertising. Shortly thereafter he was murdered, and rumors persist as to a link between his death and his policy initiative. If the concern is the balance between the private and the public, the mix of voices in the society, then a broadened privatization might be thought to occur when there is an intensification of an already private sector, the rendering of it, as it were, more private. Consider the historic existence of public interest obligations on American broadcasters, obligations, for example, to cover controversial events of public importance, or act as a voice for the local community.7 The removal of these obligations through the process of deregulation could be said to be a form of rendering the private more private. Similarly, allowing home-shopping channels to be designated as meeting American licensing standards or relieving stations of an obligation not to indulge in “overcommercialization” expanded the private nature of the system. In the United Kingdom, it was certainly a change in the balance to allow a single private competitor to the BBC, and it might be said to be a further altering of the balance when additional national or regional licenses for independent television were offered.8 In many societies, systems became more private simply by becoming more open to foreign competition. Moreover, this openness could be established not through the process of licensing or any affirmative government action, but by the opening by operators of slots on cable television systems to satellite-delivered channels, usually foreign-owned. Certainly this was true in India, where the arrival of satellite channels created a vast change in thinking both about the system as a whole and about the state broadcasting system itself.9 In Turkey, the reaction to the existence of foreign satellite channels coming into the country was to establish a liberalization for private broadcasting within, and thereby attempt to harness or regulate the processes of change. A measure of the changing balance between the public and the private is the conduct of the consumer. In almost every system where new and private domestic channels compete (often because of cable and satellite), the impact on state broadcasters, in terms of share of the audience, is dramatic, sometimes terrifyingly so. State broadcasters decline from their monopoly position of 100 percent of the audience to 90 percent, then 60 percent and then far lower. Privatization leads to programming that almost always enmeshes the public service broadcaster, rendering it less capable of meeting the needs of a public sphere. Whenever there is competition between an entity that has an unencumbered right to satisfy consumer demands and an entity where obligation of managers is to government, to stay in power, or to meet restrictive requirements, the unencumbered competitor will, in the long run, gain audience share. That has been the experience in all the post-Soviet markets. Privatization sharply reduces the role of the public service broadcaster and its audience share. The essential quality of “private” in this reading, is the strategy to meet public demand, and managers whose tenure, or success with investors, depends on meeting that demand. How can one measure whether the tendency toward the private contributes to the public sphere? Privatization may be a necessary method of having control of media reflect changed constituencies or power groups in society. This might be especially true where there has been a monopoly provider and a plural society. It is theoretically the case that a monopoly provider, like the pre-ITV BBC, can become an accurate reflector of diversity of society, seeking to carry out a responsibility to represent various viewpoints and groups. But diversity is more credible, and usually more likely and more permanent if it springs from different sources. One could have diversity without privatization. The complex and mechanical process in the hey-day of Dutch broadcasting of semi-public entities dedicated to pluralism in the Netherlands was once an example. In the effort to have a plural federal broadcasting authority in federal Bosnia-Herzegovina, the posts of chief and deputy are allocated among the national representatives. But in many places, a shared public space would be unthinkable, and the aura of autonomy that often goes with private ownership is essential. In some transition societies, privatization, or the emergence of private entities, is essential as a means of breaking the stranglehold of the state broadcaster that, through staleness, might itself be weakening state sovereignty. The existing state-controlled system may be outmoded precisely because it bespeaks an old, surpassed, and ineffective perception of the nation. The broadcasting bureaucracy
at the moment of transition has been weighed down by ingrained modes of thinking and the legacy of warehoused personnel, and inherited and inflexible attitudes toward society have squeezed out the voices of difference. No matter how much the leadership of a massive broadcasting bureaucracy of the ancien regime changes, it can be an albatross against the efforts for change. Without the competition of forces or tendencies in the society. In India it required the competition from cable television an the private, it may be difficult for the entirety of the enterprise to represent adequately new channels carrying satellite signals from abroad to force substantial changes in the programming strategies of Doordarshan. In Turkey, it was competition from new quasi-pirate stations-some unofficially supported by the government -that led to greater reflections of diversity in the information space. Only because of satellite-delivered private programming, pro-Islamic in nature, was the monolithic nature of a possibly outdated approach to information and culture ameliorated. In each of these contexts, changes in the state monopoly and challenges from the private sector affected political identities and, it could be argued, ultimately elections and their processes. For all these places, changes in media structure in terms of sovereignty may have increased the viability of the state. An increase in private stations can weaken the power of the incumbent, but in the process redefine and reinvigorate sovereignty in terms of pluralism. Many governments view this kind of potential as an attack on sovereignty when it is merely an attack on the status quo G, s.x In Russia, one misleading possibility would be to understand the transformation of ownership of the first network from a state monopoly to a mixed state and private ownership in this way. The private is invited in as a means of diversifying control and of altering or eliminating the total hold of prior political es. The media sphere is required to match the politico-economic sphere as major interests control segments of the economy. But in the Russian case, the opening was not necessarily to new and diverse voices: privatization, paradoxically, was used, but not always successfully, as a means of extending and reinforcing control by the administration. The private may, in this instance, be imported as a means of limiting a civil society that is inchoate within the public service broadcasting staff. Predominantly, though, the very presence of the private, newly independent stations fostered by Western aid or NTV, represent at some critical moments a separate and distinct voice. In Russia, during the key days of the 1993 coup attempt, and in Hungary, Poland, and the Czech Republic the consequence of privatization was to give breathing room and a voice for groups that might feel otherwise underrepresented Fostering the private also relates to the policies of USAId and others, often working through extraordinary non-government organizations like Internews, to foster"free and independent media in transition societies. Hundreds of millions of dollars have been expended to foster a public sphere by identifying potential entrepreneurs-often individuals who have not had media experience-and encouraging them to become fledgling broadcasters. Internews and similar organizations assist them by providing equipment, sometimes providing direct financing, training and providing legal assistance to shape a framework supportive of such initiatives. The goal is to create an abundance of voices, not just a single commercial alternative, to the state. In Armenia,s Shirak region, the Eurasia Foundation's Small Business Loan program helped finance the Tsayg television station, the first private television company in the country. By the fall of 1999, the station claimed a 60 percent market share in the gyumri and Shirak regions, attracting an audience through a more liberalized and flexible schedule of music, sports and politics, as well as its coverage of local and national news, and analysis of current events. The station is typical of post-Soviet transitions, first begun by individuals through their personal resources, and then turning to Western s,such as the Eurasia Foundation. The foundation not only provided loan funds, but also assisted in building expertise in running advertising and making commercials. The station then expanded, like so many of its private predecessors around the world, into such things as producing and distributing movies and music videos These are cases where additional voices bring a critique or alternative perspective to that of the government. But the move to the private can also be a shorthand for the commercial, and, in that sense, for an avoidance of controversy, pluralism, and involvement in the public sphere. It is possible that the e a means of reducing the possibility of dissent. in the case of the United States, during the Nixon an benefits to the public sphere from the move to the private are exaggerated privatising broadcasting Administration there was an explicit effort to weaken the impact of public broadcasting on the ground that it had hidden partisan tendencies or, at the least, promulgated views of society that were thought inconsistent with the Administration s goals. In that instance, the approach was not the rendering of the public broadcaster more private, but, rather, preventing measures that would lead it to become more centralized and stronger
at the moment of transition has been weighed down by ingrained modes of thinking and the legacy of warehoused personnel, and inherited and inflexible attitudes toward society have squeezed out the voices of difference. No matter how much the leadership of a massive broadcasting bureaucracy of the ancien regime changes, it can be an albatross against the efforts for change. Without the competition of the private, it may be difficult for the entirety of the enterprise to represent adequately new political forces or tendencies in the society. In India it required the competition from cable television and channels carrying satellite signals from abroad to force substantial changes in the programming strategies of Doordarshan. 10 In Turkey, it was competition from new quasi-pirate stations—some unofficially supported by the government—that led to greater reflections of diversity in the information space. Only because of satellite-delivered private programming, pro-Islamic in nature, was the monolithic nature of a possibly outdated approach to information and culture ameliorated. In each of these contexts, changes in the state monopoly and challenges from the private sector affected political identities and, it could be argued, ultimately elections and their processes. For all these places, changes in media structure in terms of sovereignty may have increased the viability of the state. An increase in private stations can weaken the power of the incumbent, but in the process redefine and reinvigorate sovereignty in terms of pluralism. Many governments view this kind of potential as an attack on sovereignty when it is merely an attack on the status quo. In Russia, one misleading possibility would be to understand the transformation of ownership of the first network from a state monopoly to a mixed state and private ownership in this way. The private is invited in as a means of diversifying control and of altering or eliminating the total hold of prior political voices. The media sphere is required to match the politico-economic sphere as major interests control segments of the economy. But in the Russian case, the opening was not necessarily to new and diverse voices; privatization, paradoxically, was used, but not always successfully, as a means of extending and reinforcing control by the administration. The private may, in this instance, be imported as a means of limiting a civil society that is inchoate within the public service broadcasting staff. Predominantly, though, the very presence of the private, newly independent stations fostered by Western aid or NTV, represent at some critical moments a separate and distinct voice. In Russia, during the key days of the 1993 coup attempt, and in Hungary, Poland, and the Czech Republic, the consequence of privatization was to give breathing room and a voice for groups that might feel otherwise underrepresented. Fostering the private also relates to the policies of USAID and others, often working through extraordinary non-government organizations like Internews, to foster “free and independent” media in transition societies. Hundreds of millions of dollars have been expended to foster a public sphere by identifying potential entrepreneurs—often individuals who have not had media experience—and encouraging them to become fledgling broadcasters. Internews and similar organizations assist them by providing equipment, sometimes providing direct financing, training, and providing legal assistance to shape a framework supportive of such initiatives. The goal is to create an abundance of voices, not just a single commercial alternative, to the state. In Armenia’s Shirak region, the Eurasia Foundation's Small Business Loan program helped finance the Tsayg television station, the first private television company in the country. By the fall of 1999, the station claimed a 60 percent market share in the Gyumri and Shirak regions, attracting an audience through a more liberalized and flexible schedule of music, sports, and politics, as well as its coverage of local and national news, and analysis of current events. The station is typical of post-Soviet transitions, first begun by individuals through their personal resources, and then turning to Western sources, such as the Eurasia Foundation. The foundation not only provided loan funds, but also assisted in building expertise in running advertising and making commercials. The station then expanded, like so many of its private predecessors around the world, into such things as producing and distributing movies and music videos. These are cases where additional voices bring a critique or alternative perspective to that of the government. But the move to the private can also be a shorthand for the commercial, and, in that sense, for an avoidance of controversy, pluralism, and involvement in the public sphere. It is possible that the benefits to the public sphere from the move to the private are exaggerated; privatising broadcasting can be a means of reducing the possibility of dissent. In the case of the United States, during the Nixon Administration there was an explicit effort to weaken the impact of public broadcasting on the ground that it had hidden partisan tendencies or, at the least, promulgated views of society that were thought inconsistent with the Administration’s goals. In that instance, the approach was not the rendering of the public broadcaster more private, but, rather, preventing measures that would lead it to become more centralized and stronger
A complex example of the move to the private involves TV Nova in Prague, the star in the crown of Ronald Lauder's Central European Media Enterprises (CEME )empire. It is an early example, in the post-Soviet period, of the introduction of an American-style private broadcaster into a formerly closed environment; it was wildly successful. As in so many countries, Czech law had imposed a limitation on the extent of foreign ownership of a broadcast license. The very concept of the station, the marketing of the idea to Czech officials, and the package of programming and engineering know-how that was needed, all depended on outside investment. These dual and conflicting imperatives, between the need for foreign capital and the desire to keep broadcasting in local hands, often yields a problematic structure of corporate governance and guarantees. That was the case with respect to TVNova The Czech license was granted to CE T21 a company that was controlled by Vladimir Zelezny, a Czech citizen. CET21 was formed jointly by Mr Zelezny and Ceska Nezavisla Televizni Spolecnost (CNTS or Czech Independent Television Company)in 1994. CNTS was wholly owned by Lauder's public company, CEME. CNTS had certain contractual rights with CET21, including the production of programs and rights concerning advertising revenues TV Nova was one of the most successful of the new television entities in Central Europe. In 1998, it earned $55 million, securing 75 percent of Czech advertising revenue. In 1999, CEME was acquired by a larger Scandinavian company, SBs (in which the American company ABC was a shareholder), for over $515 million. TV Nova was one of the treasures that made CEME attractive. For reasons that were disputed-but which certainly included the portion of the proceeds that would have gone to the Czech partners-Zelezny decided to part company with CEME and to operate the license without his joint venturer. In a sense, Zelezny exercised the right of the Czech citizen to have an independent use of the television license. By doing so, he pulled the rug out from under CEME and the entire SBS transaction. CEME stock slid from $30 per share to little more than $1.60; the arrangement with SBS collapsed. CEME and Lauder sought the assistance of the Czech government and the broadcast regulatory board. But the regulators found no actionable lapse in Zelezny s operation of the license that would require him to return to the Lauder fold. In a way, Zelezny was demonstrating that the condition of Czech ownership could not be violated All of this is interesting as an exercise in the hazards of broadcasting transactions in transforming societies. But more important, here, is what the story tells in terms of civil society, democratization, and policies toward privatization. TV Nova was a heavily commercial station. There were many complaints that it did not live up to the conditions imposed on the license at the time of grant. During the period of CEME's strong hold on the station, the American interests lobbied the Czech government to allow it to continue to broadcast primarily American programming even after the Czech accession to the European Union. TV Nova was a station that commanded a large audience and helped shape its opinions as any better than most commercial equivalents. The TV Nova case has, however, the additional complexy o station is supposed to do. Its success weakened the state public broadcaster. It was no worse and litti that Lauder sought to hold the Czech Republic accountable for losses to CEME. After CEME's falling out with Zelezny, Moody's Investors Service lowered the company' s debt rating to a speculative grade, Caa- 1, and warned investors that the rating might be reviewed again with the"direction uncertain. " Then, in April 1999, CEME filed a lawsuit with the International Chamber of Commerce's Court of Arbitration in Paris to prove it was the rightful license holder for TV Nova. It also sued in the Czech courts to get the license back In August, Fred Klinkhammer, CEME's executive director in the Czech Republic, unsuccessfully asked members of the standing parliamentary commission for the media to re-examine the granting of the broadcasting license to CET21 in the first half of the 1990s. The CEme also condemned the Czech Republic's Council for Radio and Television Broadcasting for not acting. The arbitration action was based on the Czechoslovak-US agreement on bilateral protection of investment, signed by President Vaclav Havel in 1991, and the ceme demanded compensation for the suffered loses and a renewal of the previously agreed on contracts. " What Mr. Lauder wants is restoration of his rights and ompensation for damages, said John Kiernan, a New York-based lawyer for Lauder and CEME. Lauder also launched a major campaign to convince the Czech Republic that there would be long-term adverse financial implications if his investment in Prague was allowed to diminish in this way The U.S. ambassador to Prague, John Shattuck, was quoted as saying "the U.S. Congress was closely
TV Nova A complex example of the move to the private involves TV Nova in Prague, the star in the crown of Ronald Lauder’s Central European Media Enterprises (“CEME”) empire. It is an early example, in the post-Soviet period, of the introduction of an American-style private broadcaster into a formerly closed environment; it was wildly successful. As in so many countries, Czech law had imposed a limitation on the extent of foreign ownership of a broadcast license. The very concept of the station, the marketing of the idea to Czech officials, and the package of programming and engineering know-how that was needed, all depended on outside investment. These dual and conflicting imperatives, between the need for foreign capital and the desire to keep broadcasting in local hands, often yields a problematic structure of corporate governance and guarantees. That was the case with respect to TV Nova. The Czech license was granted to CET21 a company that was controlled by Vladimir Zelezny, a Czech citizen. CET21 was formed jointly by Mr. Zelezny and Ceska Nezavisla Televizni Spolecnost (CNTS or Czech Independent Television Company) in 1994. CNTS was wholly owned by Lauder’s public company, CEME. CNTS had certain contractual rights with CET21, including the production of programs and rights concerning advertising revenues. TV Nova was one of the most successful of the new television entities in Central Europe. In 1998, it earned $55 million, securing 75 percent of Czech advertising revenue. In 1999, CEME was acquired by a larger Scandinavian company, SBS (in which the American company ABC was a shareholder), for over $515 million. TV Nova was one of the treasures that made CEME attractive. For reasons that were disputed—but which certainly included the portion of the proceeds that would have gone to the Czech partners—Zelezny decided to part company with CEME and to operate the license without his joint venturer. In a sense, Zelezny exercised the right of the Czech citizen to have an independent use of the television license. By doing so, he pulled the rug out from under CEME and the entire SBS transaction. CEME stock slid from $30 per share to little more than $1.60; the arrangement with SBS collapsed. CEME and Lauder sought the assistance of the Czech government and the broadcast regulatory board. But the regulators found no actionable lapse in Zelezny’s operation of the license that would require him to return to the Lauder fold. In a way, Zelezny was demonstrating that the condition of Czech ownership could not be violated. All of this is interesting as an exercise in the hazards of broadcasting transactions in transforming societies. But more important, here, is what the story tells in terms of civil society, democratization, and policies toward privatization. TV Nova was a heavily commercial station. There were many complaints that it did not live up to the conditions imposed on the license at the time of grant. During the period of CEME’s strong hold on the station, the American interests lobbied the Czech government to allow it to continue to broadcast primarily American programming even after the Czech accession to the European Union. TV Nova was a station that commanded a large audience and helped shape its opinions as any station is supposed to do. Its success weakened the state public broadcaster. It was no worse and little better than most commercial equivalents. The TV Nova case has, however, the additional complexity that Lauder sought to hold the Czech Republic accountable for losses to CEME. After CEME’s falling out with Zelezny, Moody's Investors Service lowered the company’s debt rating to a speculative grade, Caa- 1, and warned investors that the rating might be reviewed again with the “direction uncertain.” Then, in April 1999, CEME filed a lawsuit with the International Chamber of Commerce’s Court of Arbitration in Paris to prove it was the rightful license holder for TV Nova. It also sued in the Czech courts to get the license back. In August, Fred Klinkhammer, CEME’s executive director in the Czech Republic, unsuccessfully asked members of the standing parliamentary commission for the media to re-examine the granting of the broadcasting license to CET21 in the first half of the 1990s. The CEME also condemned the Czech Republic’s Council for Radio and Television Broadcasting for not acting. The arbitration action was based on the Czechoslovak-U.S. agreement on bilateral protection of investment, signed by President Vaclav Havel in 1991, and the CEME demanded compensation for the suffered loses and a renewal of the previously agreed on contracts. “What Mr. Lauder wants is restoration of his rights and compensation for damages,” said John Kiernan, a New York-based lawyer for Lauder and CEME. Lauder also launched a major campaign to convince the Czech Republic that there would be long-term adverse financial implications if his investment in Prague was allowed to diminish in this way. The U.S. ambassador to Prague, John Shattuck, was quoted as saying “the U.S. Congress was closely
watching developments in the dispute. A September 1999 article in the Prague Post cited an American investment banker as saying that he would definitely take the TV Nova affair into consideration when and expertise and then let the locals strip us without recourse. l1 ot expect the U.s. to provide capital contemplating ng in the Czech Republic: " A country should The relationship between the private and public can also imply a more radical function, the very redefinition of the nature of the sovereign. From a perspective of the market for loyalties the line might be drawn between privatising in a way that can question the regime and stations that can question the state itself. Imbedded in some programming, and often quite threateningly so, is a question of whether borders ought to be altered and how power is to be redistributed. Noted cases involve Kurdish voices in Turkey and nationalist Bosnian Serb broadcasts in Republika Srpska. News may be maintained as a monopoly of the state broadcaster, as was the proposed case in India. It is one thing for non-state voices to favor a redistribution of power in a secure society, as from Westminster to Wales or Edinburgh. It is different when a state that is insecure about its boundaries or is facing conflict over them seeks to restrict the power of those not within its direct control. The tension is raised again when the state takes the position that the non-state voices are not only threats to the regime, but also proponents of views inconsistent with the very idea of the state. Independent or non-state voices in Central and Eastern Europe have not yet been perceived as having effective divisive or separatist roles, though undoubtedly, some may have editorial views that have a definition of the state and its role in coalitions different from that of the government Another aspect of privatization, one of the most complex and most important in its relationship to vereignty, is the extent to which, consciously or not, programming on new entrants weakens cultural bonds. There are contexts where sovereignty depends on habits of culture and attitudes, and on the centrality of religion and the preservation of language. State or publicly-controlled broadcasters are caretakers of these values. At their best and most expansive, these institutions are generating programming, making films, supporting orchestras, reinforcing language and setting a benchmark for news and public affairs. These practices can be undermined by long-term exposure to commercial programming and the inevitable erosion of audiences characteristic of global multichannel competition We may be asking this question: Is there something about advancing the privatization of the media that accelerates a phenomenon of cultural attrition of a sort that diminishes citizenship and loyalty? Of course, such programming could and does take place on state or public entities as well, but it is generally assumed that the incursion of private media, to the extent it exists, is most responsible for a corrosive effect. Left in a monopolistic, unchallenged environment, the public or state broadcaster would not reduce its output of state-reinforcing messages. And here, " state-reinforcing" is not a reference to control of news and information that supports the regime. It is a reference, rather, to a mix of imagery that a democratic state might legitimately wish to deploy as an element of strengthening national identity A variant on this complaint, one that demonstrates its censorial side arises in the critique of the private and the global in parts of the Middle East. There, television content represents modern culture and the dangers of exposure to private or uncontrolled media to ancient customs and the very bases, often, of the polity. Laws concerning"representation of women, which outlaw satellite-receive dishes and efforts to maintain an insular information space in other ways, are hallmarks of this view. But the antimodern is not restricted to the mullahs of iraq and Iran. In the United States, it is reflected in debates over indecency and violence on American television. The dangers of the "modern, "as depicted in the forceful images of broadcasting, was the major unstated argument delaying the introduction of television, and then color television, in South Africa. This cultural component is the justification for monopoly control over television imagery in Malaysia and Singapore This question of cultural bonds and loyalty is central to the definition of a civil society and the nature of a particular public sphere. But the acceleration of the private may not alone be responsible for the embrace of the modern. Competition by the public service broadcaster for public funds or increased licensing fees by changing the nature of the monopolists programming is possible, but there are not so many examples of this behavior. Competition between the Russian first and second television channels for example, did not necessarily create demand for Western programming To examine this question more closely, it is necessary to separate the privatization of entertainment programming"from the privatization of news and public information. Most of the public discussion of challenges to sovereignty, or at least to regime-stability, deals with the privatization of the news and information space, or the creation of competition in the arena of news and information. News and public affairs are asserted as the hallmarks of a democracy-spreading global medium. But in terms
watching developments in the dispute.” A September 1999 article in the Prague Post cited an American investment banker as saying that he would definitely take the TV Nova affair into consideration when contemplating investing in the Czech Republic: “A country should not expect the U.S. to provide capital and expertise and then let the locals strip us without recourse.”11 The relationship between the private and public can also imply a more radical function, the very redefinition of the nature of the sovereign. From a perspective of the market for loyalties the line might be drawn between privatising in a way that can question the regime and stations that can question the state itself. Imbedded in some programming, and often quite threateningly so, is a question of whether borders ought to be altered and how power is to be redistributed. Noted cases involve Kurdish voices in Turkey and nationalist Bosnian Serb broadcasts in Republika Srpska. News may be maintained as a monopoly of the state broadcaster, as was the proposed case in India. It is one thing for non-state voices to favor a redistribution of power in a secure society, as from Westminster to Wales or Edinburgh. It is different when a state that is insecure about its boundaries or is facing conflict over them seeks to restrict the power of those not within its direct control. The tension is raised again when the state takes the position that the non-state voices are not only threats to the regime, but also proponents of views inconsistent with the very idea of the state. Independent or non-state voices in Central and Eastern Europe have not yet been perceived as having effective divisive or separatist roles, though, undoubtedly, some may have editorial views that have a definition of the state and its role in coalitions different from that of the government. Another aspect of privatization, one of the most complex and most important in its relationship to sovereignty, is the extent to which, consciously or not, programming on new entrants weakens cultural bonds. There are contexts where sovereignty depends on habits of culture and attitudes, and on the centrality of religion and the preservation of language. State or publicly-controlled broadcasters are caretakers of these values. At their best and most expansive, these institutions are generating programming, making films, supporting orchestras, reinforcing language and setting a benchmark for news and public affairs. These practices can be undermined by long-term exposure to commercial programming and the inevitable erosion of audiences characteristic of global multichannel competition. We may be asking this question: Is there something about advancing the privatization of the media that accelerates a phenomenon of cultural attrition of a sort that diminishes citizenship and loyalty? Of course, such programming could and does take place on state or public entities as well, but it is generally assumed that the incursion of private media, to the extent it exists, is most responsible for a corrosive effect. Left in a monopolistic, unchallenged environment, the public or state broadcaster would not reduce its output of state-reinforcing messages. And here, “state-reinforcing” is not a reference to control of news and information that supports the regime. It is a reference, rather, to a mix of imagery that a democratic state might legitimately wish to deploy as an element of strengthening national identity. A variant on this complaint, one that demonstrates its censorial side, arises in the critique of the private and the global in parts of the Middle East. There, television content represents modern culture and the dangers of exposure to private or uncontrolled media to ancient customs and the very bases, often, of the polity. Laws concerning “representation of women,” which outlaw satellite-receive dishes and efforts to maintain an insular information space in other ways, are hallmarks of this view. But the antimodern is not restricted to the mullahs of Iraq and Iran. In the United States, it is reflected in debates over indecency and violence on American television.12 The dangers of the “modern,” as depicted in the forceful images of broadcasting, was the major unstated argument delaying the introduction of television, and then color television, in South Africa. This cultural component is the justification for monopoly control over television imagery in Malaysia and Singapore. This question of cultural bonds and loyalty is central to the definition of a civil society and the nature of a particular public sphere. But the acceleration of the private may not alone be responsible for the embrace of the modern. Competition by the public service broadcaster for public funds or increased licensing fees by changing the nature of the monopolist’s programming is possible, but there are not so many examples of this behavior. Competition between the Russian first and second television channels, for example, did not necessarily create demand for Western programming. To examine this question more closely, it is necessary to separate the privatization of “entertainment programming” from the privatization of news and public information. Most of the public discussion of challenges to sovereignty, or at least to regime-stability, deals with the privatization of the news and information space, or the creation of competition in the arena of news and information. News and public affairs are asserted as the hallmarks of a democracy-spreading global medium. But in terms
of the capacity of the state to survive as a cultural and political icon, sovereignty may be more a function of entertainment and leisure patterns than of news. The famous literature on the rush to bring down the Berlin Wall emphasized the subversive aspects of Western music, automobile advertising, and depictions of life on sitcoms as much as, if not more than, news accounts of citizen freedom. the surrogate radios, Radio Liberty and Radio Free Europe, had their effectiveness, but so did Coca-Cola and Michael Jordan. To be sure, a radical and critical set of voices undermining the posture of the state can be threatening, but privatization may produce news that is more various than critical, more soothing than damning, and more about the abundance of crime in the United States than about dissent at home The advertising and entertainment programming, on the other hand, that accompanies the rivate may be more subversive. It is more likely to contain the powerful images of the modern, of the virtues of consumption and the vices of a social structure in which consumption is doctrinally discouraged or rendered economically impossible. In 1999, the BjP government in India announced a plan to privatize some FM radio frequencies but precluded the new licensees from becoming producers or distributors of news Market for Loyalties I want to link this discussion of privatization and the tendency to the private to the thesis i have described, in the Yale Law Joumal, as "the market for loyalties. There, I contended that media regulation frequently constitutes a government-enforced cartel among competitors for loyalties. Changes in media regulation come about to reflect changes in the cartel itself. Some laws are designed to protect the cartel against competitors. Some reforms are fashioned so as to allow some new members to enter. but to protect a redefined cartel. Globalization suggests the incapacity of the state to maintain a cartel It is external forces that determine who are the suppliers of loyalties and how they enter the media and imagery market. States, in reaction, will try to maintain the cartel, either by regulating the new private broadcasters, or by barring additional messages. States use laws to require uplinking within national boundaries, to proscribe messages that are thought to be antithetical to national identity. The use of law falls within these two paradigms: regulation and prohibition. The test of globalization is whether either of these strategies can be effective at strengthening sovereign In the market for loyalties, as I have suggested, the major "sellers, or producers, are a wide range of manufacturers of identities such as states or governments, but also interest groups and businesses. They are those for whom myths and dreams and history can be converted into power and wealth. The " buyers" in this market are citizens, subjects, nationals, consumers, individuals, or their surrogates; they are receivers of the packages of information, propaganda, advertisements, drama, and that, together, we call"loyalty'or "citizenship. "But the price is not immediately in the ordinary coin of s news propounded by the media. The consumer"pays"for one or another set of identities in several way the realm, though undoubtedly there are those who can perform the necessary quantification. The charge for loyalties includes not only compliance with tax obligations, but also the obeying of laws readiness to fight in the military, or even remaining within the country. I have also argued that, at the global level, a newly shaped market for loyalties is developing, one that is the media counterpart to Samuel Huntingtons clash of civilizations competitors abroad. Thus, post-global reactions, not unlike their antecedents, are often tied to the nature of a political system, and to its organic responses of self-preservation. Everywhere there are such responses; the question is how to make a science out of them how to determine the relationship of response to ideology, to language durability, and to geographical location; how to understand motivation whether religious fervor, or a desire to maintain a level of economic growth. At present, in the transition societies of Central and Eastern Europe, the drama of globalization is being played out in what seems to be both the statically observable and fast forward. Both implicate the institutional transformations, the reduction in state control of the central broadcasting empire, the introduction of transient independent programmers, the formal opening up of the market to private competition, the moment of consolidation between domestic entrepreneurs and international investors and consortia, the coming of multi-channel transnational empires, and the flood of images of the global culture. What constitutes fast forward is the rapid remaking of the images on the screen almost from the beginning-what is vaunted, how people dress and the narratives that are told television and radio become the handmaidens of the radical
of the capacity of the state to survive as a cultural and political icon, sovereignty may be more a function of entertainment and leisure patterns than of news. The famous literature on the rush to bring down the Berlin Wall emphasized the subversive aspects of Western music, automobile advertising, and depictions of life on sitcoms as much as, if not more than, news accounts of citizen freedom. The surrogate radios, Radio Liberty and Radio Free Europe, had their effectiveness, but so did Coca-Cola and Michael Jordan. To be sure, a radical and critical set of voices undermining the posture of the state can be threatening, but privatization may produce news that is more various than critical, more soothing than damning, and more about the abundance of crime in the United States than about dissent at home. The advertising and entertainment programming, on the other hand, that accompanies the private may be more subversive. It is more likely to contain the powerful images of the modern, of the virtues of consumption and the vices of a social structure in which consumption is doctrinally discouraged or rendered economically impossible. In 1999, the BJP government in India announced a plan to privatize some FM radio frequencies but precluded the new licensees from becoming producers or distributors of news. Market for Loyalties I want to link this discussion of privatization and the tendency to the private to the thesis I have described, in the Yale Law Journal, as “the market for loyalties.”13 There, I contended that media regulation frequently constitutes a government-enforced cartel among competitors for loyalties. Changes in media regulation come about to reflect changes in the cartel itself. Some laws are designed to protect the cartel against competitors. Some reforms are fashioned so as to allow some new members to enter, but to protect a redefined cartel. Globalization suggests the incapacity of the state to maintain a cartel. It is external forces that determine who are the suppliers of loyalties and how they enter the media and imagery market. States, in reaction, will try to maintain the cartel, either by regulating the new private broadcasters, or by barring additional messages. States use laws to require uplinking within national boundaries, to proscribe messages that are thought to be antithetical to national identity. The use of law falls within these two paradigms: regulation and prohibition. The test of globalization is whether either of these strategies can be effective at strengthening sovereignty. In the market for loyalties, as I have suggested, the major “sellers,” or producers, are a wide range of manufacturers of identities such as states or governments, but also interest groups and businesses. They are those for whom myths and dreams and history can be converted into power and wealth. The “buyers” in this market are citizens, subjects, nationals, consumers, individuals, or their surrogates; they are receivers of the packages of information, propaganda, advertisements, drama, and news propounded by the media. The consumer “pays” for one or another set of identities in several ways that, together, we call “loyalty” or “citizenship.” But the price is not immediately in the ordinary coin of the realm, though undoubtedly there are those who can perform the necessary quantification. The charge for loyalties includes not only compliance with tax obligations, but also the obeying of laws, readiness to fight in the military, or even remaining within the country. I have also argued that, at the global level, a newly shaped market for loyalties is developing, one that is the media counterpart to Samuel Huntington’s clash of civilizations. Left out of this description, however, is the posture of national law as it responds to global developments. If law is a tool for cartelization of identities within, it must protect that cartel from competitors abroad. Thus, post-global reactions, not unlike their antecedents, are often tied to the nature of a political system, and to its organic responses of self-preservation. Everywhere there are such responses; the question is how to make a science out of them, how to determine the relationship of response to ideology, to language durability, and to geographical location; how to understand motivation, whether religious fervor, or a desire to maintain a level of economic growth. At present, in the transition societies of Central and Eastern Europe, the drama of globalization is being played out in what seems to be both the statically observable and fast forward. Both implicate the institutional transformations, the reduction in state control of the central broadcasting empire, the introduction of transient independent programmers, the formal opening up of the market to private competition, the moment of consolidation between domestic entrepreneurs and international investors and consortia, the coming of multi-channel transnational empires, and the flood of images of the global culture. What constitutes fast forward is the rapid remaking of the images on the screen almost from the beginning—what is vaunted, how people dress, and the narratives that are told. Television and radio become the handmaidens of the radical
