Flash Reports 5: Regional overview

Flash Reports 5: Regional overview
The reports show that contested practices and lack of regulations on advertising markets pose specific threats to media integrity in the region.
Media advertising in South-East Europe: burdened with unscrupulous promotion of business and political interests. 
The new, fifth series of flash reports produced within the SEE Media Observatory focuses on media advertising markets in five countries of South-East Europe. The reports show that contested practices and lack of regulations on advertising markets pose specific threats to media integrity in the region
Advertising markets in the region are small, with media outlets depending on a small number of major advertisers. Available data and estimations on the value of the advertising markets irrefutably point to a common trend – advertising revenues have decreased massively after 2008 as a result of the financial crisis1. Media outlets are thus operating under increased financial limitations, which expectedly limit both resources for production of quality media content, as well as editorial independence of media. 
Political instrumentalization and financial abuses 
Advertising practices in the region are believed to be highly politically instrumentalized. Both advertising by public institutions and advertising by public companies is believed to be heavily guided by particular political interests. Several cases of government advertising in Bosnia and Herzegovina were publicly contested over misuse of public money for the purpose of political promotion and/or over disrespect for public procurement procedures. Additionally, advertising by public telecommunication companies is believed to be primarily guided by the interests of affiliated political parties. But Macedonia is the most extreme example, given that the government has been a major advertiser for years, and the political instrumentalization is believed to be especially fierce since 2006 when the VMRO-DPMNE party came to power. Through different kinds of advertising by the government and the party itself, Prime Minister Gruevski “effectively controls around 15-20% of total media advertising…estimated at around 40-50 million Euro a year”, assesses flash report author Sašo Ordanoski (more in the flash report on Macedonia). Ordanoski points out that not only are funds used for assurance of pro-governmental media content, but also for financial gains of people affiliated with the governing party (as in the case of TV Alfa). 
Preferential treatment of media loyal to government structures in government advertising in Albania was documented by B. Likmeta who reported that 780,000 Euro was spend on government advertising between June 2012 and the end of 2013, and that TV stations and agencies owned by Aleksandër Frangaj received the vast majority of the funds – a total of 730,000 Euro for advertisements by state institutions over two years. 
In some countries doubts have been raised about unwarranted reduction of advertising prices. For example, a recent audit of the public service broadcaster RTVFBiH pointed out that two marketing agencies enjoyed huge discounts without proper justification. On the other hand, there are also speculations that unwarrantedly high prices of advertising are used for money laundering and flow of money from public companies into private pockets (see report on BiH). Speculations about financial abuses of advertising contracts involve reports about excessively high fees for marketing contracts, misused for money laundering, as reported by Slobodna Bosna magazine, implicating the telecommunication company HT Mostar and two advertising agencies from Zagreb and Sarajevo. Media reports on similar issues should not be taken for granted either, given that media outlets themselves have their own interests and agendas which might include discrediting certain media actors. 
Advertising agencies are also connected to the political elites, which is especially a characteristic feature of the advertising market in Serbia. A former mayor of Belgrade was the director of the most powerful agency Direct Media. Change of government in 2012 was followed by substantial changes in the advertising market, with a major role played by people close to the Serbian Progressive Party. Since between two thirds and three quarters of advertising revenues is channeled through advertising agencies, control over advertising agencies offers opportunities to guide the money by other-than-market criteria. 
Differences in quality, reliability and level of trust in audience measurements 
There are relevant differences in the region with regard to availability and reliability of data on advertising and audience. Audience measurements are quite expensive, which limits their scope primarily to the bigger media that can afford them. In Croatia there are no relevant doubts about the reliability of data, but for example in Serbia and BiH it has been questioned at some point. For example, the Informer and Kurir in Serbia accused the agency ABC Serbia of manipulating daily newspapers’ circulation numbers according to their proximity with the government. Similar doubts have been raised by some media in BiH concerning TV audience measurements. However, the public never got the final word on this and until today it remains questionable if this was merely a matter of mutual disputes and interests of individual media or if there was an actual basis for the doubts raised. TV audience measurement in Bosnia and Herzegovina has gone through major recent changes. The Association of the Media Industry, UMI, lost its role of owner of audience data, which opened ground for further uncertainties and doubts that the most powerful players on the market will be able to influence measurements. 
The Albanian media market is currently a black spot in audience measurements, with practically no systematic and encompassing audience data. This fact makes advertising-related decisions non-transparent and questionable. In the words of Ilda Londo: »Lack of information on media performance has been both an excuse and a reason to distribute advertising in a haphazard manner at best, or in a clientelistic way, at worst”. Similarly, print media in BiH never showed interest in engaging in measurements, with possible reasons being a wish to keep the low circulation numbers hidden, as well as a wish to avoid related expenses. 
Few policies with questionable implementation mechanisms
The position of commercial compared to public broadcasters is partly addressed on the policy level in most countries in the region. Namely, minimum fair competition between public and private broadcasters in four countries in the region (but not in Albania) is assured through a lower limit of advertising time for public media, with commercial media being allowed considerably more advertising. This limit seems to have worked well in Croatia, where advertising constitutes only around nine percent of the overall budget of public media. However, in Bosnia and Herzegovina advertising on public broadcasters was reviewed in 2013 in light of records that show that one public broadcaster had as much as 40 percent of revenues coming from advertisers in 2012. But the policy response that followed at the end of 2013 (which was nullified in 2014) was misplaced - it further jeopardized PSB and instead of fostering public interest was mostly believed to be favoring business interests of commercial media owners. However, the fact remains that commercialization is a major concern across the region. In Croatia public TV is not allowed to use subscription fee to buy commercial content, which has significantly contributed to balancing the market (more in the flash report on Croatia). Lack of transparency of data on advertising revenues in Albania hinders the execution of a limit of maximum 30% share of audio-visual media advertising for a national broadcaster posed by the Law on Audio-Visual Media.
Other relevant policy measures concerning the advertising market or indirectly contributing to the fair market position of media and their public service role are scarce and their implementation is flawed. 
Foremost, the authors of this series of flash reports point to the worryingly vague criteria of government advertising (and government funding in general). State institutions and public businesses are a major advertiser in Albania, Macedonia and to some extent in Bosnia and Herzegovina, while criteria for advertising-related decisions and selection of media are scarce, procedures are non-transparent, and there are serious doubts that public money is used for political promotion and for personal financial gains. In Croatia there is a small contribution to the sector of local commercial media in terms of a stipulation that at least 15% of the advertising budgets of public companies and government campaigns should go to local commercial media. This is a significant contribution to the maintenance of local media which have even fewer sources of revenues across the region. However, the transparency and the exactness of the criteria used in these advertising practices are believed to be insufficient. 
A rare attempt to support the print media sector, which has suffered major financial detriments, is a tax relaxation for print media in Croatia. However, some sources question its efficiency and/or suggest that it mainly signifies a triumph and influence of the commercial interests of a few publishers on media policies, while the actual results in terms of protection of public interest are considered questionable at best (more in the Media Integrity Report on Croatia). Also in Croatia, the Fund for Pluralization (total of EUR 5m, alimented from 3% of the subscription fee for the public TV service) is principally welcomed as an important contribution to production of content of public interest and to media pluralism, but as Glavaš said, “lack of criteria and arbitrary decisions in allocating the Fund’s financial support and lack of transparency in using it remain the biggest problem on the implementation level”. 
Bosnia and Herzegovina is currently facing the problem of loss of advertising revenues, due to redistribution of foreign media programs, and there are practically no policy measures to protect the domestic advertising market (more in the flash report on BiH). 
How do these issues play out in media content and how do they damage media integrity?
With the increasingly fierce fight for advertising shares among media, assuring profits for media often means accepting self-censorship and other violations of journalistic values. The authors of the reports from Albania and Croatia report for example that cases of hidden advertising are not rare. 
Scarce and reduced advertising revenues have put major domestic advertisers (including governments and commercial advertisers) progressively more in a position to assert influence on editorial policies of media. 
As Londo reports, major advertisers in Albania are in a position to practically regularly buy the silence and loyalty of virtually all media. Media content is politically instrumentalized, inter alia, through advertising contracts conditioned by support to the political elites. In one way or another, the governing party in Macedonia has “colonized” around 90 percent of media, as Ordanoski assesses, leaving little space for critical and investigative journalism. 
Davor Glavaš, however, points to the dominance of commercial interests in the advertising market in Croatia, which goes well beyond political instrumentalization. In his words: “The top ten advertisers (Agrokor Corporation, telecom operators, major national breweries, banks) are rarely exposed in mainstream media in terms of investigative journalism or in any context they would consider as ‘negative’.” This is why the main disputable business operations of these companies are rarely reported by media. Ilda Londo points to the most prominent cases in Albania: “When the competition regulatory body fined the country’s two biggest mobile operators for uncompetitive behavior in 2007, the story was reported only by a few media outlets… Similarly, when the same regulator started an investigation against Vodafone, it took many months for this story to be published in a few media”. 
1 Only in Albania the lack of continuous estimations does not allow us to conclude without doubt that advertising revenues are reduced. 
The flash reports from the five countries give an impression that the advertising markets in the region are structured in a way to conceal the truth on the most powerful advertisers and related political elites. There are many suspicions on the legitimacy of government funding, the criteria for advertising, the reliability of measurements and legitimacy of specific contracts, but they mostly remain in the sphere of speculations and the truth is hard to distinguish from spins aimed at discrediting opponents. The fact remains that advertising is a powerful instrument of control over media. At the same time, advertising revenues, although insufficient for proper functioning of the media markets, can abundantly serve the interests of a few actors controlling their course. 
Flash reports edited by Sanela Hodžić; 
Flash report on Bosnia and Herzegovina edited by: Ines Bamburać-Alibašić 
Media Integrity
Media Ownership and Finances