Written while I was the Soros foundation's radio specialist, for presentation at a 1996 symposium in Saalfelden, Austria, on "International Models of Free/Private Radios." While it might be outdated, it describes the situation in Eastern Europe when changes were still rapidly unfolding, when the innovations and problems were greater than today.

In 1996, Austria had no private broadcasting at all. The European Court of Human Rights found that unacceptable in a democracy, so they directed Austria to start issuing broadcast licenses. The Saalfelden symposium was designed to stimulate "new thinking" about principles and goals for the regulation of broadcasting.

My text was published in Jazz, Neue Musik und Medien: Dokmentation Saalfeldner Musiktage, edited by Gerhard Eder, Wolfgang Gratzer and Alfred Smudits, 1996 (ISBN 3-901690-001-8)

© 1996 by Robert Horvitz


The most important change since 1989 is that it is no longer possible to generalize about broadcasting in Eastern Europe.

Before the overthrow of communism, nearly all of the countries in the region had similar laws, structures, policies and practices in broadcasting. Albania, Yugoslavia and to a lesser degree Romania were exceptions. But even there, ideological monopolies were maintained as strictly as in the Soviet model.

However, as the Soviet Union's sphere of influence contracted, and then the Union itself dissolved, countries in the region started to evolve away from the Soviet model at different rates and in different directions.

At one (positive) extreme, one now finds countries committed to liberalization that have passed new laws to authorize and regulate private stations. Among these are the Czech and Slovak Republics, Poland and Bulgaria. (Romania passed a law allowing private broadcasting, but its details and implementation show that it is little more than a cover for giving business franchises to friends of the ruling party.)

Another group of countries is liberalizing but has not yet managed to pass a full-fledged broadcasting law. At the risk of oversimplifying, one can include in this group countries whose desire for liberalization is uncertain, but which are too chaotic or depressed to prevent new broadcasters from appearing. Russia, Ukraine, the three Baltic republics, Kyrgyzstan and Makedonia fit one or both of these descriptions.

Yet another group can be considered "reluctant liberalizers." They allow a token number of non-state broadcasters, but limit these stations' power and/or independence so they cannot challenge the pre-eminence of the state networks. Among these are Hungary and Kazakhstan.

Finally, at the negative extreme, we have countries which oppose liberalization, and which have done little to open their broadcasting systems. These include Albania, Belarus and Croatia. The situation in Croatia is particularly distressing, since it had been one of the more liberal areas prior to 1989. Ostensibly independent municipal and youth stations had existed for decades, but the Tudjman regime gradually took control of these stations and integrated them into its political apparatus.

Many of the new broadcasters have started operating with little knowledge about programming, management and business habits elsewhere. This has forced them to improvise, and so, as a group, they are rather more diverse and innovative than their counterparts in Western Europe. Of course, some of their innovations are proving to be bad ideas. But aside from those, there are many interesting strategies that new Western broadcasters might want to try out, particularly in the economic context of small-budget local radio stations.

In Central Asia and Siberia, one finds many stations that elsewhere would be called "community radios." However, they acquired this character involuntarily. That is to say, they would like to be commercial radios, but there are simply too few businesses who wish to advertise. Not only is there an inherited cultural hostility to advertising ("if people must be persuaded to buy a product, there must be something wrong with it"), but goods are so scarce that they are snapped up as soon as they are available. The traditional function of advertising - to stimulate demand - is irrelevant when demand so far exceeds supply. In addition, many local merchants want to avoid the notice of tax authorities and other government offices who might ask awkward questions about how their goods were acquired. Thus, the lack of retail advertisers and of government subsidies forces broadcasters to turn to their audiences for financial support. Many stations survive entirely on small fees charged for song dedications. The same is true for small-scale TV operations, where a station will play a music video (recorded off a satellite) and dedicate it to someone for the equivalent of a dollar.

A developing trend in the region is for a station to pay its DJs a trivially small salary, while the manager encourages them to act as salesmen for the advertisements in their show. Income from such advertising is shared with the station, but the DJ keeps a large portion to augment his salary. From the manager's viewpoint, this arrangement is ideal. Not only does it reduce the station's monthly operating costs, but it forces the DJs to make their show as popular as possible, to increase its value to advertisers. Disadvantages for the DJ include: the stress of an uncertain income and additional work, as well as the disincentive for airing material which the DJ may like but which appeals to few listeners.

In areas where advertising is limited, there still may be one or more large enterprises - a steel factory or a bank - willing to sponsor a station: to publicize itself or win praise for public service. Many large enterprises still play a paternalistic role in their locale, providing housing, shops, recreation and schools for workers and their families. Financing a radio or TV station is a logical complement to these activities. The privatization of large state enterprises also can inspire them to promote their new economic position or identity.

But a troubling corrollary of sponsorship by large enterprises is that sponsors usually expect their support to earn them immunity from criticism by journalists who work at the station. This is true not only of sponsors who are enterprises, but of sponsors who are government agencies as well. It is unfortunately common for a city council, for example, to cut the budget of a municipal radio station after a reporter criticizes some policy or action by a council member.

While many countries have allowed or even encouraged the development of nonstate broadcasting, few directly subsidize it. An interesting (albeit temporary) exception was the Czech Republic. There the head of the association of broadcast applicants persuaded parliament to give all of the newly licensed private radio stations a share of the monthly fees collected from the owners of TV sets and radio receivers. This fee had been designed to support state broadcasting, even though the real operating cost of Czech Radio and Television was far higher than the amount collected. The representative of the applicants for private licenses said it was appropriate for all of the money collected to go to the state-run services when these were the only services that the audience received. But now that the same receivers tune in private stations, too, (and some receivers might not ever be tuned to the state services), giving all of the receiver fees to just one type of station was unfair, especially since the state services now had additional income from advertising.

Czech Radio and TV were shocked when parliament accepted this argument and gave part of the receiver fees to the private radios. As it happened, the amount given was about the same as the PTT was charging new broadcasters for the rental of transmitters. So in effect the treasury just moved money from one state account to another. The result, however, was that those who won radio licenses were able to get on the air much sooner (they didn't have to spend so much time looking for start-up loans), and they all survived the difficult first year, when their income from advertising was meager. At the same time, the state broadcasters were shocked out of complacency and began to clean house, firing redundant managers and improving their programming. In the next parliament they recaptured the monthly receiver fees, but by then, the private broadcasters no longer needed the subsidy so much.

It is worth noting as a general principle that when state broadcasters are allowed to sell advertisements in competition with private broadcasters, the competition is inherently unfair. Because of their financial support from the state budget, state broadcasters can set their "per capita" prices for ads far below the break-even costs of small private stations. That, coupled with the economic effects of scale (the state broadcasters' signal reaches many more people) can mean that many small stations will be unable to survive no matter how much advertising they sell. Their resulting "cash crunch" limits the amount of news and other expensive information services they can offer, and adds to the pressure for maximizing audience (i.e. reaching for the lowest common denominator). That will appear to confirm the notion that private broadcasters are not civic-minded, so they don't deserve a "level playing-field" with state broadcasters. Permitting a large amount of advertising on state channels thus starts a self-reinforcing cycle that stops private broadcasters from contributing more to civic culture.

For this reason, the Czech parliament recently reduced the amount of airtime that Czech Radio and Television can sell for advertising to just 1%, while private broadcasters can sell up to 20%. (In practice, no private Czech broadcasters devote more than 3-5% of their time to ads.)

The Czech Republic is almost unique in its commitment to the development of non-state broadcasting. More generally, it is striving to keep the state and private sectors separate and distinct, while many other post-communist countries, disappointed by a decline in living standards, are seeking a "third way" that combines elements of a free market with administrative planning and control.

Too often that "third way" yields the worst of both systems: an illusion of freedom with monopoly prices. The most flagrant examples are those countries that allow private stations, but only if they rent time on transmitters operated by the state-- e.g. Kazakhstan. In such cases, the PTT invariably uses its monopoly position to set prices far higher than the costs it incurs, while ignoring all complaints about poor quality of service.

In other countries, state agencies have founded commercial subsidiaries, ostensibly to expand the field of private broadcasting, but in reality to compete for advertising and listeners against stations that the ruling party does not control. In Romania and Russia, the state broadcasters are allowed to form joint ventures with private license-holders. In some cases, such partnerships have been presented as a pre-condition for getting a license. Obviously, such practices limit the development of truly independent mass media, which many people see as a necessary step in transforming totalitarian societies.

Because the concept of a "conflict of interests" is unfamiliar to people accustomed to monolithic socioeconomic structures and black-market arrangements, and because communist rhetoric equated many elsewhere-normal business activities with crime, too many bureaucrats in developing democracies engage in covert activities that undermine the independence of new media. These can range from simple corruption (e.g., demanding a secret share in the ownership of a station, in exchange for issuing a broadcast license) to petty harassment - as when a station airs a report embarassing to some official and the transmitter that the PTT operates for them suddenly develops a technical problem which degrades their signal. Sometimes such illegal actions are said to be justified by higher moral aims - like protecting society from too much discouraging news, or preventing an independent ethnic voice from evolving into a platform that could promote secession.

The whole picture is not so bleak, however. Everywhere in the region one finds pockets of amazing creativity and bravery, people making great radio with unbelievably bad equipment and no money. "Echo of Moscow" and Belgrade's "Radio B-92" are among the best news stations operating anywhere in the world, and they achieve this performance within very hostile environments.

Two years ago, we had to think of ways to bring expertise and professional training to the new broadcasters in the East. Now we are thinking about how to use the professionalism, efficiency and expertise of the stations in the East to improve broadcasting in the West.