Several years ago a staff member of the Senate Foreign Relations committee warned me that the US Congress had a short memory.  Congress follows the news.  When an area is in crisis it is likely to get a lot of attention and money.  When the crisis ends that attention and money shift elsewhere.  One aid program administrator in Central Europe said that after the end of the NATO bombing campaign in Serbia he could hear a “great sucking sound” as money was being drawn to the Balkans and away from Central Europe.

Aid for countries in transition is not designed to be permanent.  There has to come a time when the institutions that aid programs foster stand on their own.  The problem is knowing when that time is.  If aid lasts too long it builds a culture of dependence that weakens local stations.  Stations become donor focused rather than viewer focused.  I have seen stations do programming that appeals to no one in order to please donors.  When aid ends too soon much of the work that aid agencies have done can go down the drain with its own “great sucking sound.”

Media assistance is driven by the public’s information needs and not the needs of media outlets.  Program implementers have struggled to find a measure to determine when public needs are met, both to give them a sign that it is proper to leave and, if there is a need to continue aid, to be able to sell that need to the ultimate donor, Congress or Parliament.  IREX has established a Media Sustainability Index to help determine when the donor’s work is over.  That index includes making sure that legal norms allow for independent media to function, journalists have an acceptable degree of professionalism, the public has multiple sources of information, media outlets are run as professional businesses and there are supporting institutions (including news agencies and professional associations to support an independent media.)

This index leaves out two important factors that are necessary to have sustainable independent media.  There has to be an advertising market and there has to be a capital market.

I ran the IREX media program in Slovakia for more than two years.  There media assistance ended too soon.  We accomplished many of the goals in the sustainability index.  We left behind a cadre of well-trained journalists and trainers, citizens had multiple sources of information available to them, a number of media outlets were run professionally and there were good support institutions, including a strong independent news agency.  However Slovakia did not meet the condition of legal reform, and was weak in the two areas not in the sustainability index, the existence of a strong advertising and especially a strong capital market.

There can be free no free media without laws that support free media.  At the very least there has to be a package of laws including licensing, an independent regulatory authority for broadcasters, freedom of information laws, the repeal of criminal libel laws and a package of contract laws.

When new governments take power they say that media law reform is at the top of their deck.  But if this is the case they are dealing from the bottom of the deck.  Governments seldom think it is in their interest to have a vigorous independent media so they stall media reform legislation.  Legal reform takes longer than anyone ever thinks it will, it took seven years in Albania.  Four years after Meciar’s defeat in Slovakia only about half the needed media laws were passed.  Two years after Milosevic’s departure there has not been significant legal reform.  It is really not a priority pious, words of politicians notwithstanding.

Foreign media assistance needs to continue in the legal area until a package of laws has been passed, tested, and media outlets have learned how to deal with them.   Media assistance program directors monitor the legal process and apply pressure to their embassies to apply pressure to the local government to pass reforms.  Four years after Meciar’s retirement Slovak media outlets still face intimidation through the threat or the outright misuse of criminal libel laws and a vague election law chills the free coverage of politics.  In Slovakia we closed the program before this process was complete.

The two issues of an advertising market and capital market are more troublesome.  In Serbia the Gross Domestic Product, including the gray as well as the legal economy, will not reach pre-bombing levels until 2006 and will not reach 1990 levels until well into the next decade.  While there will be an “introductory” advertising market in products like carbonated soft drinks and soap products, the advertisers for serious news, (banks, telecoms and airlines) generally enter the market later.  I have proposed that the media sustainability index build in a market component and that media assistance not be ended until a certain economic level is reached.  I am not sure donors will buy this because there is generally that force pulling resources to the next crisis area. 

I want to make one other point in this area.  Some media outlets use a poor market as an excuse for bad management.  Smart media outlets can do well in a poor market if they know how to sell and put enough resources into sales.   And donors, by supporting research, can help develop a market by giving ad agencies and media outlets ammunition to develop the market.  This is one of the successes of the Slovak program.  RadioNet used research that IREX helped develop to provide a solid income stream to local independent radio stations.  No matter how big the advertising market becomes, media outlets that survive will have to be efficient operations with aggressive sales arms.

Capital markets are a bigger problem, but one that donors can do more about than improving the Gross Domestic Product.  In Slovakia stations were beginning to meet operating expenses through the market when they needed to re-capitalize, either to replace obsolete SVHS equipment, because they had to move location, or because some regulatory requirement forced a new equipment purchase.  This is when they faced crisis. 

In many emerging countries there is no good bank from which to get a loan.  Therefore broadcasters are forced to take out loans at high interest rates that raise their operating costs beyond what they can sustain.   Sometimes they have to take in equity partners who turn out to be money launderers or have political agenda.   Sometimes they take on a legitimate investor who, for other reasons, is forced to sell his interest to someone less desirable.  Sometimes the investor says he wants to operate the local station but after a few months turns it into a repeater to extend coverage of one of his urban stations.  In Slovakia several very good independent broadcast outlets took in investors who later took over the stations and threw out the independent operators.  Some of these investors later, themselves, went broke and several stations, in which donors had invested, stopped doing significant local news or cultural programming or went dark.

The Media Development Loan Fund provides some capital to stations but there needs to be more.  Many of the enterprise funds set up by donors do not make loans to broadcasters because the licensing situation is not stable.   Some enterprise funds will not take on local stations because the investment is too small for their portfolios.  They like to invest in a few big projects rather than many small ones, which is where local stations fall.

Donors may be able to help in several ways.  Donors should begin to insist that stations set up capital reserve funds to give them a cushion against future capital crisis.  Local station owners need better training in how to attract equity partners, how to vet them, and how to set up contracts to ensure levels of local service.  And there needs to be some sort of investment program that will allow stations to recapitalize with reasonable interest rates.  Perhaps it should be a revolving loan fund.  Perhaps it will be guarantees for loans made through local banks, with the guarantee lowering the risk for the bank and enabling it to offer lower interest rates.  No matter what it is, it will have to be run on business principals, with tough requirements on stations.  On a recent trip to Serbia one manager said he wished the MDLF had been tougher with him in its loan conditions and forced him to operate using better business principals.  

Donors are beginning to talk about the capital problem, especially in Serbia with the coming need for capital to privatize municipal stations.  However, there is no comprehensive program yet and there may never be.  Looking at the Slovak example a comment made to me by President Kostunica’s media advisor Aleksandar Tijanic, although exaggerated, may not be too far off the mark.  If the situation does not change:  “One-third of the media will be controlled by politicians, one-third by foreign capital and one-third by the mafia. The rest of the media can be independent."

--Rich M^CClear

This article is from January 2003 "Link" a Serbian media trade magazine.