Baltic Tigers in Turmoil

Michael Hedges January 19, 2009 Follow on Twitter

Little more than a decade since joining the European Union and a rising tide of commercial growth Estonia, Latvia and Lithuania – once referred to as the Baltic Tigers – are groaning. Media companies that launched or snapped up key radio and television channels to ride that tiger may have been ahead of the curve but a sharp drop in growth is causing a rethink. Shrinking economics threatens broader stability, old wounds kept open, clouding a once-bright present.

Estonia has escaped the civil turmoil that rocked the Latvian capital Riga and spread to Vilnius, Lithuania over the last two weeks. Tension, however, is palpable. Estonian consumers cut their domestic spending noticeably in middle of 2008 as unemployment rose and confidence fell. The Estonian economy is expected to see negative growth (-1.2% GDP) in 2009, according to Eurostat data. Suffering more may be Latvia (-2.7 GDP growth rate). In Lithuania 2009 GDP growth is expected to be zero. Lower growth rates mean lower consumer spending, lower business spending (advertising often first cut), lower tax income for governments and a generally dark cloud over everything. Those dark clouds bring out more dark clouds and simmering tensions.

Cable operators Starman and STV pulled the plug on First Baltic Channel (Pervõi Baltiiski Kanal PBK) (January 12) inviting complaints from Estonia’s Russian speaking minority. The cable providers began dropping Russian channels at the New Year (January 2), returning them to air (January 4) and taking them off again. Fee negotiations, say all parties, broke down. Ten Russian language channels were taken down at first, some returned and some – including PBK – did not. The cable operators, at first, offered alternatives from Belarus, Ukraine, Georgia and other Russian channels.

Finally, Starman replaced PBK with a ‘hunting and fishing’ channel. STV added NTV Mir. Neither channel gave customers notice of the change. PBK is a localized version of Russian State TV ORT’s First Channel.

“We try to change channels as rarely as possible,” said Starman sales manager Indrek Ild, “but present conditions make us do it.” Those conditions, he said, include a 60% fee increase from the rights holder, Baltic Media Alliance (BALL). “Such a price raise may be realized only at our customers expense,” Iid added. BALL is asking 5 euro centimes per subscriber per month, reported Postimes.ee (January 13).

BALL markets ORT channels, radio and TV, in Estonia, Latvia and Lithuania, sells advertising in local windows and produces local news programs. PBK and certain other Russian TV channels were offered free, for awhile, to Estonian cable operators. Viasat/MTG negotiated a separate agreement with BALL.

Roughly one-third of Estonia’s population are ethnic Russians and, until recently, Russian has been the dominant foreign language spoken. As demographics have changed, English and German are now widespread, preferred by younger people more than a generation separated from Estonia’s former-Soviet past.

But the Russian minority population has the attention of the Estonian government. At the end of November the Minister for Population and Ethnic Affairs proposed producing 12 half-hour inserts on PBK for an “Estonian-minded, Russian speaking TV channel.” Estonian public broadcasting (ERR) offers Russian language subtitles on some television programs and a full-time minority language radio channel Raadio 4 includes Russian language content. Estonian media watchers note that the Russian speaking population overwhelmingly prefers radio and television direct from Russia rather than Russian language media produced in Estonia.

More than a decade ago the Estonian government set language mandates for free-to-air and cable TV channels. Estonian language over-dubbing and subtitles were required for foreign language programs and films. Cable operators dropped PBK once before, in January 2006, complaining of fee hikes. And then came the crippling distributed denial of service (DDOS) attacks on Estonian internet service in April 2007. Estonian officials pointed to Russia as the culprit, payback for the removal of a Soviet war memorial from the center of Tallinn.

The most watched television channels in Estonia are Kanal 2 (Schibsted), TV3 (Modern Times Group - MTG) and public channel ETV. Russian language channels PBK, 3+ (MTG), RTR Planeta and NTV Mir had a combined 22.7% market share in 2007, up from 19.6% in 2006, according to TNS Emor. Both Kanal 2 and TV3 launched more cable channels in recent years. Local publisher and cable operator Kalev Meedia is reportedly attempting to exit its Kalev Sport channel to local investors, according to Postimes.ee (January 16). 

Independent intelligence analyst Stratfor, looking at strains between the Baltic States and Russia, sees old wounds rising. “Russia also has the ability to use propaganda and cyberattacks, as it has done in the past, to destabilize the countries further and fuel the current social unrest,” wrote Stratfor (January 16). That Russian speaking populations in the Baltic States feel marginalized and seek a reflexive narrative from Russian media fuels suspicions and complications where economic tensions are rising.

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