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13.12.2011 22:09

Octopus

David Mchedlidze
Media Discusions

 “Small but closely interlinked network of friends and business partners control a large part of the Georgian advertising sector,” reads the recent report on the Georgian Advertising Market released by  Transparency International – Georgia.

“General Media has a de-facto monopoly and whoever wants to place a commercial on national TV has to work with this company.” As regards the major players of outdoor advertising Outdoor.ge has taken over a large part of the advertising sector in the country,” reads the report. The survey is a part of IREX G-MEDIA program funded by USAID. The presentation of the report was held on December 13 at Tbilisi Marriott Hotel.

The authors of the report Mathias Hutter, Lika Basilaia-Shavgulidze and Mamuka Anghuladze have been conducting a study into Georgian Ad Market from July to September 2011.

According to the report “Total television advertising expenditure thus reached GEL 61,793,225 (USD 34,974,965). The largest share of advertising spending in Georgia, an estimated 78%, went to television, most importantly the two national private channels Imedi TV and Rustavi 2.

“Until the end of 2010, two media sales houses dominated the Georgian television advertising market: Touch Media sold advertisement slots for Imedi TV and was part of the Georgian Media Production Group, Imedi’s holding company. The holding is run by Giorgi Arveladze, who before served as Minister of Economic Development and President Mikhail Saakashvili’s chief of staff;  its owners are hiding behind the RAAK Georgia Holding S.A., registered in Panama through local front men. The second major advertising sales house was Media House, owned by Irakli Chikovani, the Chairman of the Georgian National Communications Commission. In early 2011, a new company emerged: General Media. Although Touch Media and Media House both still exist as legal entities, General Media was the result of a de-facto merger of the two leading media houses’ activities,” reads the report.

 “General Media has the exclusive rights to sell slots on Imedi and Rustavi 2, as well as on Sakartvelo, Mze, Real TV and I Stereo. Because of its dominant position on the TV advertising market, General Media now controls about two-thirds of all advertising flows.”

General Media’s Director Irakli Burdzgla also owns Unimedia whose 50 percent share holders are Rustavi 2 and Georgian Media Production Group.

 “Before Irakli Chikovani became head of the GNCC in summer 2009, he was the director and co-owner of the Rustavi 2 channel. After he had taken over the leadership of the regulator, Chikovani for a year remained co-owner of MediaHouse, one of the country’s two major media sales houses, selling advertising time on Rustavi 2, Mze and several other channels, generated income of almost GEL one million for Chikovani, in a sector that he himself was overseeing as Chairman of the GNCC.”

Chikovani has remained a shareholder in the construction company Bedegi, of which he owns 10%. Among his business partners is Giorgi Gegeshidze (who owns 7% in Bedegi), who is also director of Rustavi 2, one of the two largest TV channels, which is subject to the GNCC’s regulation.39 Together with Gegeshidze, Chikovani also owns Magi Style, a construction company, which is involved in building the new Parliament in Kutasisi – Parliament is the institution that could dismiss Chikovani for violating conflict of interest rules.40 Chikovani also co-owns Magi Style Media, an advertising agency that, among other services, offers outdoor advertising, broadcast design and the production of TV ads.

Irakli Chikovani’s agency found no violations of advertising rules by Rustavi 2 and Imedi until Studio Monitor lodged a repeated complaint. In 2011 Levan Mikeladze Foundation and the Georgian Young Lawyers Association (GYLA) presented interim report of the survey into the conflict of interests within the Commission. According to Natia Kapanadze, co-author of the report the only tool to eradicate the conflict of interests is the Parliament, “the legislative body unfortunately keeps silent over the issue. At present Chikovani still keeps control over the ad market,” said Natia Kapanadze reporting to Media.ge.

Together with Irakli Chikovani and Giorgi Gegeshidze Dimitri Chikovani, Davit Kezerashvili’s brother-in-law, has become a key player in the advertising sector. His outdoor advertising company outdoor.ge has a right to place outdoor advertising and set up newspaper kiosks across Tbilisi.

20 percent of outdoor.ge is owned by Rustavi 2 Director General Giorgi Gegeshidze’s Samkutkhedi Ltd, and 70 percent is owned by JSC Adprojects Inc registered onBritishVirgin Islands. The latter also owns 36 percent of Media Port Ltd and the remaining 20 percent is owned by aforementioned Irakli Burdzgla. The 10 percent shareholder is Maya Metreveli of General Media. General Media collaborates with the TV channels either being associated with the authorities or providing no news coverage.

According to the co-author of the report Lika Basilaia-Shavgulidze this scheme, which looks rather intricate at first sight, works very well.

 “It was a real discovery to me having found out that through this witty scheme financial flows are being distributed in a way to avoid their accidental pouring into independent mediums,” Lika Basilaia told Media.ge and added that current situation first and foremost hinders freedom of speech, pluralism and competitiveness in the country.

Delivering a speech at the presentation of the report Mathias Hutter said this kind monopoly over the ad market is going to be further on next year too. Yet unequal environment, he said, is going to get worse during the pre-election period in 2012 unless opposition and ruling parties have equal access to political advertising, Mathias Hutter pointed out. Low ad prices, he added, are conducive to the monopolization of ad market. According to the findings made in the course of the survey, he said, advertising time on Rustavi  2 and Imedi is sold at artificially low price, therefore customers have almost no motivation to move ads from the aforementioned companies to smaller media outlets. Accordingly these two companies receive a greater part of ad revenue. 

Speaking at the presentation Givi Khachapuridze, Executive Director, the Terra Media marketing company said TV ratings are playing a significant role on the ad market. “A customer approaching advertising company is being shown Rustavi 2 and Imedi programming enjoying highest rating in terms of advertising no longer wishes to go anywhere else. While the reliance of the given ratings is to be investigated since strong doubts are being entertained in regard to them,” stressed Khachapuridze.

 “TI Georgia has seen advertising contracts that advertisers had signed with Kavkasia TV, an independent Tbilisi-based station, and the opposition-affiliated Maestro TV, that were canceled and withdrawn by the client a few days later – because of political pressure, representatives of these outlets say.”

According to journalist Zviad Koridze the questions being now in place in regard to TV ownership will be partially addressed from January 1, 2012 as soon as the new lawenters in to force.  According to the law media outlets shall be obliged to submit compliance declarations to the Commission.

 “We are going to witness a very interesting picture, media owners will be disclosed and the money they invest into their companies,” said Zviad Koridze.

TI Georgia recommends Georgian Government actors not interfere and distort the media and advertising market. TI Georgia calls upon the members of the Georgian National Communications Commission to respect existing conflict of interest rules and pro-actively release findings of advertising monitoring it is conducting on its website.

The full text of the report as well as the map of ownership structure and relations between selected players in the Georgian advertising sector is available athttp://transparency.ge/en/advertising

The report is also downloadable from Media.ge  

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