Analysis for the week Jan. 10

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No. 122
friday edition
Uncensored insight and analysis from Prague. Only for subscribers to the Fleet Sheet.
Jan. 17, 2014
U.S. journalist accuses Putin of staging terrorism ... and gets banned from Russia
Imagine if a prominent Russian
journalist working for a statefunded media outlet claimed in a
book that the Bush administration
carried out the 9/11 attacks to justify invading Afghanistan and Iraq
and to ensure Bush's reelection.
Imagine if the journalist then wrote
that Obama and his Wall Street
friends preside over a system that is
so corrupt that without the monthly
injections from quantitative easing, Wall Street would face
imminent collapse. Would the journalist get a U.S. work visa?
David Satter, a U.S. journalist who was banned in recent
days from visiting Russia for five years, did the equivalent of
this in print with regard to Russia. In Darkness at Dawn in
2003, he accused the FSB of using the bombing of apartment
buildings in 1999, killing 300 people, as justification for start-
ing a second Chechen war and as a way to get Putin elected
as president. A new Russian-language version published last
year was entitled How Putin Became President and was a bestseller. Satter also wrote that Putin and his cronies preside
over a political and economic system that is so corrupt that it
would collapse if not for high oil and gas prices.
Every country has a right to set its visa policy, and it's possible that Russia is merely getting tired of being preached to
by the U.S. and other Western countries. It's not so well known,
but the U.S. denied a visa in 2010 to a Colombian journalist
under the "terrorist activities" section of the Patriot Act.
In the Wall Street Journal this week, Satter hinted at what
might be the real reason for his visa problems. As the Olympics approach, more unexplained terrorist attacks are taking
place in Russia. As I understood it, Satter thinks Putin might
have something planned for the Sochi Games, and he doesn't
want someone like Satter sticking his nose into it.
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Analysis for the week Jan. 10-17, 2014
The CR doesn't have to ban foreign
journalists, because they're leaving on
their own. Or at least the foreign owners
who employ some of them are. Everyone
knows by now that the biggest event in
the Czech media last year was the departure of three or four major foreign owners. Of daily publishers, the only foreigners still left are at the regional Deník
newspapers (unless the Fleet Sheet also
falls into the category of daily press).
Andrej Babi‰ bought Mafra from the
German owner, and that purchase has
already cleared the regulatory process.
Daniel Kfietínsk˘ and Patrik Tkáã of J&T
bought Ringier Axel Springer CZ, for the
announced price of Kã 4.7bn. The deal
has not yet cleared the regulatory hurdles, but this didn't stop Forbes CZ from
ranking Kfietínsk˘ and Tkáã as the No. 3
and No. 4 most-influential people in the
Czech media. No. 1 was Babi‰, followed
by CEO Petr Dvofiák of Czech TV at No.
2, Jaromír Soukup of Médea/Empresa at
No. 5, and Zdenûk Bakala of Economia at
No. 6. It's only one ranking, but it gives
an idea of how domestic media owners
are viewed. They influence content, according to the common perception. The
first truly foreign owner (or owner's representative) on the list is Christoph Mainusch of CME/Nova, at No. 11, and he is
there mainly because of Nova's advertising power, not his editorial influence.
Kfietínsk˘ and Tkáã announced the
price they paid, but Babi‰ did not. According to our sources, he paid �40m for
Mafra's headquarters and eight times
ebitda for the publishing company. This
puts the value at about the same Kã 4.7bn
paid by Kfietínsk˘ and Tkáã. These are
very high prices - almost as much as Jeff
Bezos paid for the Washington Post - and
have set a bar that will be hard to maintain in later deals. Vladimír Îelezn˘, who
took over as CEO of TV Barrandov last
year, told Forbes CZ that the 7-8 multiple
paid by Babi‰ is typical for the U.S. but far
above the average of 4-5 in Europe. He
predicted that Babi‰ will also nevertheless
buy TV Nova at a multiple of 7-8.
Babi‰ responded to this angrily, saying
that he's not buying anything, because
he's finished at Agrofert and almost isn't
even an employee there anymore. In another context, though, he said that he had
to reject 2014 budgets brought to him by
Agrofert employees. The message from
this is that Babi‰ is still very much in control of Agrofert, regardless of what he
says. The purchase in 2014 by him of
Nova, or to a lesser extent TV Prima,
would give him tremendous influence
over the media environment.
The question is what Babi‰ and the
other oligarchs want to do with their media outlets. It's too early to judge from
MFD and LN. MFD has fallen in quality
since Babi‰ took over, while LN has improved. In both cases, Babi‰ hired editorsin-chief with whom he had a personal
relationship. István Léko of LN took tens
of millions of crowns from Babi‰ to keep
âeská pozice afloat, while Sabina
Slonková of MFD is indebted to Babi‰ for
providing information to her that helped
make her the the best-known Czech investigative journalist. Babi‰ would likely
put someone similar in charge at Nova.
Jaroslav Plesl of T˘den wrote on Facebook that PPF's main motivation for installing Petr Dvofiák at Czech TV was so
that no one else could have his own man
there. Since Dvofiák took over, Czech TV
has concentrated its anti-corruption reports on the regional godfathers and has
left the big players alone. Dvofiák is also
in the process of using a reorganization to
eliminate dissent and to justify relying
more and more on a small group of dependable journalists and experts who
will not cause trouble. This is also the
strategy of the state-owned Russian media. The main media there serve the purpose of making sure that the criminal
activity of the major players are not given
a wide audience. If something like Novaya Gazeta or Radio Echo takes a critical
line, it doesn't matter much, because their
penetration and influence is minimal.
The Czech media took a big step toward this in 2013. The oligarchs will use
their media purchases to make sure that
minimal coverage is given to the bribery,
extortion and legal tricks they use to take
over businesses that they then receive a
stamp of approval from the EU to run.
After acquiring the businesses, they will
run them better than some of the previous foreign owners. This is how the oligarchs will use the media to go legit.
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