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Cablegate: Croatia's Third Television Channel Privatized

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ZAGREB 002082

SIPDIS


STATE FOR EUR (ROSSIN); EUR/SCE; EUR/PPD (HORNBUCKLE)

E.O. 12958: N/A
TAGS: KPAO PREL HR
SUBJECT: CROATIA'S THIRD TELEVISION CHANNEL PRIVATIZED


1. Summary: At its September 16 session, the
Croatian Radio and Television Council selected the
German-Croatian group, "HRTL," for a 10-year
concession for national television broadcasting in
Croatia, thus privatizing Croatian Radio and
Television's (HRT) third TV channel. The
privatization had attracted interest not only within
Croatia, but also from major European broadcasters.
After the decision was announced, Croatian media
circles quickly began to speculate that the end result
will be too much German media influence in Croatia.
End summary.

2. In December 2002, the Croatian Government
announced a public tender process to lease the third
HRT channel. The privatization attracted interest not
only within Croatia, but also from major European
broadcasters, and seven companies filed bids with the
state Radio and Television Council. The winner, HRTL,
consists of the German RTL television company and a
group of Croatian companies, including "Agrokor,"
"Podravka," "Atlantic Group," "HVB/Splitska Banka,"
and "Pinta TV3." Overall, RTL has 23 television and
22 radio stations in eight European countries.
HRTL prevailed over, among others, the "Rovita"
company, whose backer was British media magnate Rupert
Murdoch.

3. HRTL has announced that it will start broadcasting
primarily entertainment programs, with a heavy dose of
locally-produced shows, within the next six months.
Given the money and talent behind HRTL, there is no
doubt that it will provide state-owned HRT with strong
competition, and it is generally hoped that the new
commercial channel will raise the standards of
Croatian journalism and of Croatian programming. HRT
will continue to broadcast on two nationwide channels,
HRT1 and HRT2.

4. HRTL will have to pay the equivalent of $50,000
for the annual broadcasting license, as well as large
amounts of money to use the distribution system and
satellite connections built years ago by HRT. Only
large international corporations had the resources to
make an investment of this size, and, in fact, HRTL
has already announced it will invest approximately $30
million in the first year. (Note: Foreign companies,
however, could not apply without support of their
domestic partners, since Croatian law prohibits 100
percent foreign ownership of a national TV channel.)
Before the decision was announced, there had been
speculation among media watchers that any losing
bidders would appeal the Radio and Television
Council's decision, but as things stand now, there are
no signs that they will do so.

5. The Mission of the Organisation for Security and
Cooperation in Europe (OSCE) to Croatia issued a
statement on September 17 stating that it hoped that
the decision to allocate the frequency of the third
national television channel to a private bidder would
promote the private broadcasting sector in Croatia and
introduce healthy competition to the national
television scene. Mission head Ambassador Peter
Semneby said in the statement that "... the bidding
procedure ... appeared to be transparent", and that,
"This will hopefully contribute to the pluralism of
the television market in Croatia and benefit the
Croatian public through a wider variety of views in
television news programming. We are satisfied with
the openness of the selection procedure, regardless of
who was eventually awarded the tender."

6. Comment: While there is general satisfaction with
the professional quality of RTL, Croatian media
observers have already started commenting that, with
this decision, Croatian media have, de facto, been
turned over to German ownership. Considering the fact
that the German company "WAZ"--a co-owner of the
German mega-group "Bertelsmann"--owns 50 percent of
strategic shares in the largest Croatian newspaper and
magazine publisher "Europa Press Holding" (EPH), some
Croatian voices in the media are speculating that
German strategic financial, media and political
interests have prevailed in Croatia. Unfortunately,
the HRTL-run channel will not be operational for the
parliamentary elections expected for November 23. The
private channel could have provided broader media
access for all political parties, which was an issue

for the last elections in 2000.
FRANK


NNNN

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