Ads Off, Except For Beer; Reality Conditional

Michael Hedges August 4, 2014 Follow on Twitter

More often than not regulations affecting the media sector are put in place to either adjust behavior or raise revenues for state coffers and, maybe, both. Sometimes rule makers find it necessary to make changes when a large ox is about to be gored. We’d all enjoy a good debate if we could find one.

In early July the State Duma of the Russian Federation passed a ban on ads shown on pay-TV channels. President Vladimir Putin signed the measure into law shortly thereafter. The ad ban is likely to cripple the tiny Russian pay-TV market and benefit government-owned and government-friendly broadcasters. “Once (the advertising) possibility is gone, (pay-TV operators) may find it hard to survive,” said Association of Cable Television of Russia vice president Mikhail Silin, quoted by Bloomberg (July 22). Some observers suggest the ad ban is specifically intended to harm satellite news channel Dozhd (Rain) TV, which has been virtually eliminated from cable distribution over the last year.

“The new provisions will strip hundreds of privately owned television channels of a crucial source of income, forcing them to choose between raising the subscription price or shutting down,” Human Rights Watch Europe and Central Asia director Hugh Williamson in a statement (July 25). “The new law is likely to destroy regional television and independent broadcasting, cut off Russians from important sources of information and further shrink space for media freedom in Russia.” About 1,400 pay-TV channels are affected by the ad ban.

“If you don't have the guts to invest (in Russia) you better stay at home,” said outdoor advertising giant JCDecaux co-chairman Jean-François Decaux, quoted by CNBC (May 22), “but it is a big market.” The company reported lower first half 2014 profits on a “sharp decline in the profitability of our display business in Russia,” said a statement quoted by Les Echos (July 31). JCDecaux acquired Russ Outdoor, once owned by News Corporation, two years ago and has endured decade-long contract disputes with Moscow and St. Petersburg governments. A year ago, the company introduced the Veli’k bicycle sharing platform – yes, it’s an ad platform, too – in Kazan, which will be one of the 2018 FIFA World Cup host cities.

Alcoholic beverage advertising on all media has been banned in Russia since 2012, one of several booze ad bans over the last decade attempting to reduce consumption. The most recent ban was conditionally relaxed in July to allow beer ads on television, sports programs only, and in print media through the end of 2018, covering the duration of the World Cup in Russia and a bit of afterglow.  This has excited big brewers, including 2018 FIFA World Cup official beer sponsor AB InBev, who have suddenly signed sponsorship deals with Russian teams, reported Vedomosti (July 29).

AB InBev startled some observers with a two and a half minute internet-only ad for alcohol-free Siberian Crown beer that went viral after its YouTube release (July 25). Within a few days the ad, staring ex-X-Files star David Duchovny, had been streamed nearly 2 million times. With recently discovered Ukrainian and not Russian family roots, the actor has drawn criticism for the “ultra-patriotic” ad for a Russian beer, noted AFP (July 30). The fee was reportedly US$ 1 million.

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