Burnt Orange And Bright Lights

Michael Hedges February 8, 2010 Follow on Twitter

The candidate taking Ukraine’s presidency will face a changed country. Before the 2004 Orange Revolution Ukraine’s media reflected the country’s dull, post-Soviet persona. That has changed.

In the round of final television appearances before election day, candidate and former President Viktor Yanukovych telegraphed his rather retro attitude toward the media. “I think we should make a free and independent press,” he said on TV channel Inter’s program (February 5) to a question about freedom of speech. “We want the press to be fair, sharp and always reflect the views of the Ukrainian people, the views of our partners in the world. Free and independent media is always objective.” 

He confessed to be “always fighting” with journalists. Charges of vote rigging in the 2004 elections against Yanukovych campaign workers, played heavily in local media, helped set off the chain of events that eventually cast off Yanukovych, making Viktor Yushchenko Ukraine’s President. Early unofficial reporting (February 7) from Ukraine’s presidential election shows Viktor Yanukovych leading.

Rival presidential candidate Prime Minister Yulia Tymoshenko was part of that Orange Revolution, critical of perceived subservience to Russian interests and the wealth of Ukraine’s richest men. The two issues intertwined then and remain tangled. The current campaign has played out – often loudly – in Ukraine’s media, which itself has gone through considerable revolution over the last five years.

The four richest Ukrainians – Viktor Pinchuk, Igor Kolomoisky, Dmitry Firtash and Rinat Akhmetov – have varying influence in politics and media but they are certainly powerful. In the 2004 presidential elections all expressed some degree of support for one candidate or another. This year, however, the billionaires were a bit more circumspect.

Whether or not Viktor Pinchuk is Ukraine’s richest man, he has considerable wealth and spends it as he likes. His current media holdings include major television channel Inter, the tabloid Fakty I Kommentari and more. Pinchuk’s roots are in Ukraine’s industrial east, where most of the country’s rich got rich. He’s also the son-in-law of former Ukraine President Leonid Kuchma, bought the most expensive house in the world, collects art and gives away money to charitable causes. He is from, like PM Tymoshenko, the Dnipropetrovsk Oblast, also home to long-standing business rival Igor Kolomoisky.

Two years ago Central European Media Enterprises (CME) was struggling with ownership and management issues at its Ukraine television operation Studio 1+1. Igor Kolomoisky had once claimed ownership of the channel and settled amicably with CME’s principal shareholder Ronald Lauder. When another sticky financial dilemma needed local assistance for resolution, Lauder and then-CEO Michael Garin called on Kolomoisky. The crisis was averted and Kolomoisky became a CME shareholder and board member.

Two days after the first round in Ukraine’s presidential election (January 20), CME affected a put call on its 51% stake in Studio 1+1 and other assets, part of its agreement with Kolomoisky last year as he bought 49% of CME’s Ukraine assets. Kolomoisky will be paying US$300 million for the shares and CME will exit Ukraine. Mr. Kolomoisky owns PrivatBank, the country’s largest.

CME CEO Adrian Sarbu, in a statement, called the deal “the best strategic option in the current climate.”  Timing of CME’s announcement and Mr. Sarbu’s choice of words suggest a belief that climate change in Ukraine might bring more challenge than could face. When CME wrapped up its 100% ownership of Studio 1+1 and associated assets, then CEO Michael Garin said “Ukraine is the future.”

“Unfortunately, countries in the region have had governments push the economy to crises,” said Mr. Sarbu to a private meeting sponsored by Erste Group in Vienna (January 18) one day after Ukraine voters expressed frustration at the Orange Revolution, quoted in Ziarul Financiar (January 20). “Many companies have died and along with them the hope that entrepreneurship can be successful.” The Erste Group seminar for investors was headlined “The future of capitalism in Central and Eastern Europe.” Mr. Sarbu also said “the crisis will pass.” One day later CME agreed to exit Ukraine.

Returning to Ukraine, however, is Russian ad sales house Video International, announced the week before the CME announcement (January 13). Video International exited Ukraine in 2009 after being dropped in favor of in-house ad sales by CME.

Another of Ukraine’s billionaires, Dmitry Firtash, may (or may not) have shareholdings in two minor television channels – K1 and K2. Mr. Firtash appears a bit skittish about disclosing all his holdings. There’s Nadra Bank and, of course, gas giant RosUkrEnergo. He once sued Yulia Tymoshenko for making false statements.

Also holding media assets, Ukraine’s richest man Rinat Akhmetov finds himself at odds with media outlets. In Ukraine’s his System Capital Management (SCM) owns highly rated national channel TRK Ukrainia.  Mr. Akhmetov supported Viktor Yanukovych in the 2004 presidential elections.

Perhaps more than most Ukrainian billionaires, Mr. Akhmetov is quite touchy about perceived slights from journalists. The day after (January 18) the initial presidential election round in Ukraine French newspaper Le Figaro published an article using less than flattering adjectives when describing Mr. Akhmetov.  After contact with Mr. Akhmetov’s legal representative – the high-power Washington DC firm Akin Gump Strauss Hauer & Feld (Yes, everybody responds to their letters crying “Oh, my, Akin Gump”) – Le Figaro printed a hasty retraction (January 28) expressing “regrets that these claims were made” and otherwise apologizing profusely. In 2007 Mr. Akhmetov successfully sued editors for Ukrainian online publication Obozrevatel in UK courts for libel.

Election result notwithstanding, the Ukraine election campaign’s biggest winners are the television talk-show hosts. All major television channels have been offering political talk-shows, some with decent if not huge ratings. One of the most widely noted is Shuster Live on TRK Ukrania, hosted by Lithuanian-born, Russian-speaking Savik Shuster. Bearing down on candidates with pointed questions, Shuster has become a major personality in Ukraine. And, too, the candidates have spent lavishly on TV appearances and advertising.

“You can’t beat her on TV,” said Dmitry Vydrin, onceTymoshenko’s media advisor, to The New Republic (January 5). Less than poised on television and subject to verbal gaffs, Viktor Yanukovych opted not to debate Tymoshenko on the Shuster Live program. If, as posited by The Guardian (February 7 2010read here), comparisons can be drawn between Yanukovych and former US President George W. Bush, Yulia Tymoshenko is drawn to power and television like the new American populist icon Sarah Palin. 

Dour expectations oft expressed by media watchers in and outside Ukraine worry that era of improved media freedom may come to an abrupt end regardless who wins the presidential election. Subsequent parliamentary elections, which will choose a prime minister, will be more indicative. The optimistic view, however, is that the “genie is out of the bottle” and the billionaires like it that way.

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