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Georgia: Tbilisi Prepares Ban on Offshore Media Ownership

After years of sidestepping criticism on the topic, Georgia’s governing United National Movement is preparing to tighten media ownership regulations. Tbilisi’s chief intent is to ban “offshore” ownership of Georgian media outlets. But media analysts warn that the draft law under consideration stops short of real measures to make broadcast media operations more transparent and accountable to the public.

The proposed changes would have the most immediate impact on the country’s most influential national broadcaster, the privately owned, pro-government Rustavi2. Seventy percent of Rustavi2 is held by the offshore company Degson Limited, registered in the British Virgin Islands.

The planned changes could also raise further questions about the ownership of another pro-government station, Imedi TV, formerly partnered with the News Corporation media empire. Ninety percent of the station’s shares are now owned by RAAK Georgia Holding, a company registered in Georgia, but about which close to nothing is known.

The two stations together are estimated to have over 60 percent of Georgia’s urban television audience of 1.6 million viewers, according to data cited in a 2009 report on media ownership by Transparency International Georgia, an anti-corruption watchdog.

But knowing who, in turn, controls the stations has long been a guessing game.
The United National Movement says it now wants to clarify that information. In an October 26 statement, Parliamentary Speaker Davit Bakradze promised to push through legislation that would give society “full and comprehensive information about media owners, who are behind [media companies] and how they are financed.”

Initially, the party proposed a 10-percent cap on offshore ownership of Georgian broadcast media companies. That has since evolved to a complete ban.
Parliament could pass the law before the end of the year; television stations would then have until June 1, 2011 to comply with the legislation.

But some media analysts and development specialists argue that the ban addresses only one part of the problem in clarifying the identities of who runs Georgia’s broadcast media.

While a media company’s shareowners may change, on paper, to companies registered in Georgia, the draft law contains no provisions to make the financing or structure of those companies more transparent; enforcement is left to the Georgian National Communications Commission, the country’s broadcast licensing authority, which is headed by a former general director of Rustavi2, Irakli Chikovani.

Tamuna Kakulia, the development director at Internews Georgia, an international media assistance non-governmental organization, argues that the proposed legislation will not lead to greater clarity about who owns Georgia’s leading private broadcasters.

“[E]ven if this issue [of offshore ownership] is resolved … I don’t think we will really know who is standing behind the national broadcast[er]s like Imedi and Rustavi 2,” said Kakulia, who took part in a discussion between the United National Movement and media organizations on the draft law. “The suspicion is that they are trying to focus the attention on a small thing and to avoid discussion around other aspects of the law,” she added, in reference to the United National Movement.

The Georgian government has come under steady pressure from the European Union, the United States, the Council of Europe and various media rights organizations to improve the transparency of media organizations, particularly Rustavi2. But United National Movement MP Aleko Minashvili, one of the draft law’s authors, denies that any one request prompted the party to address the issue of offshore media ownership. “[T]here was a concern that the companies that were offshore … there was no access to those companies,” said Minashvili. “We understood this is a problem, so we agreed to [address it].”

Yet the acting director of Transparency International Georgia, Mathias Hunter, the author of Transparency International’s report on Georgian media ownership, notes that questions remain about how effective the offshore ban would prove in practice. “I think we will only see once it is in power and we will see how it is enforced,” Hunter said. “I am still not sure how practically they will be able to force companies to reregister in Georgia, or change ownership.”

The Georgian National Communications Commission is charged with collecting data on station financing, but “these provisions seem to be weakly enforced,” said Karin Deutsch Karlekar, senior researcher and managing editor of the annual Freedom of the Press Index published by the Washington, DC-based international civil rights watchdog Freedom House. (The 2009 Index gave Georgia a ranking of “partly free.”)

“I would urge that the draft [law] also reflect some changes along these lines so that reporting requirements by media companies to the GNCC be made more complete, and are also made more public,” Karlekar said.

A group of journalists, media owners and analysts, sponsored by the Open Society Georgia Foundation, created an alternative proposal to the current draft law. That alternative called for public disclosure of station financing, greater public access to information about media ownership and clearer rules for advertising. The measures were not incorporated into the bill now before parliament. [The Open Society Georgia Foundation is part of the Soros Foundations Network. EurasiaNet.org operates under the auspices of the New York-based Open Society Institute, which is also part of the Soros network].

Lawmakers on December 9 met with television station owners and “media school representatives” to discuss the draft law.

Transparency International Georgia’s Hunter noted that without strengthening the GNCC and addressing concerns over financing and advertising revenues, the law runs the risk of “treating a symptom, but not the problem.”

“Even if you can’t have an offshore company controlling the television stations anymore,” he said, “you will have a lot of other challenges that prevent the development of a truly pluralistic, independent, and professional broadcasting sector in Georgia.”

Molly Corso is a freelance reporter based in Tbilisi.

Georgia: Tbilisi Prepares Ban on Offshore Media Ownership

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