The Public Service Broadcaster of Lithuania in the Era of Commercialization
One-year Master’s Thesis submitted to the Department of Informatics and Media, Uppsala University, May 2011, for obtaining the One-year Master’s Degree of Social Science in the field
of Media and Communication Studies
Candidate: Monika Tichonovaite
Abstract
The television industry in Lithuania is analyzed in this thesis with a focus on the impact of commercialization on the public service broadcaster. The purpose of the research paper is to describe the impact of the changing market on the public service broadcaster of Lithuania using as theoretical framework the approach of the political economy of the media and communication and quantitative methods. One part of the thesis is the theoretical research, which is done by analyzing and systematically presenting books and articles that relate to the thesis’s topic. In the second part of the work, the theoretical framework is applied to the Lithuanian television market. In addition, an empirical study is conducted in order to apply the theoretical discussion and answer the main research question.
The main results of the study suggest that the public service broadcaster of Lithuania managed to maintain its programmes’ diversity. However, the amount of entertainment, imported production and advertising has increased. Therefore, a certain concern about growing
commercialization is reasonable. These changes correspond to the tendencies in the European television industry. However, Lithuanian viewers seem to prefer the more heavily
Table of contents
Introduction 6
1.1 Background 6
1.2 Research Questions and Hypotheses 7
1.3 Purpose of the Study 10
1.4 Definition of Concepts 11
1.5 Significance of the Study 12
1.6 Methodology 12
2. A Theoretical Approach to Changes in the European Television Industry 14
2.1 Privatization 16
2.2 Concentration 18
2.3 Internationalization 20
2.4 Commercialization 24
2.4.1 The Impact of Competition 24
2.4.2 The Impact of Advertising 26
2.4.3 Consequences of Commercialization 27
2.4.4 Influence on Diversity 30
2.5 Summary 31
3. The Application of Theoretical Assumptions to the Television Market in Lithuania 33
3.1 Methodology 33
3.1.1 Limitations of the Empirical Research 36
3.2 Privatization 37
3.3 Concentration 40
3.4 Internationalization 43
3.5 Commercialization 47
3.5.1 The First Period: 1990-1996 48
3.5.2 The Second Period: 1996-2001 49
3.5.3 The Third Period: 2001-2009 50
3.5.4 Information vs. Entertainment 52
3.5.6 Model of Revenue 59 3.6 Summary 61 4. Conclusions 64 4.1 Discussion 69 4.2 Outlook 71 List of references 73
List of charts and tables
Table 1. The ownership and the audience share of television channels 41
Chart 1. Imported production on LTV in various years 44
Chart 2. Share of European productions on Lithuanian television 45 Table 2. The 5 most popular programmes on Lithuanian television 46 Chart 3. Share of News and Current affairs programmes in total programmes on LTV
in various years 53
Chart 4. Share of Light entertainment programmes in total programmes on LTV
in various years 54
Chart 5. The television industry's income from advertising 55
Chart 6. Diversity of progammes on LTV in various years (measured with the help of
Shannon's H) 56
Chart 7. Share of different progamme types on LTV in various years 57
Introduction
The television industry in Lithuania will be analyzed in this research paper with a focus on the impact of commercialization on the public service broadcaster. In order to do this, the political and historical context of the Lithuanian television industry is truly important therefore the background will be presented shortly.
1.1 Background
The historical and political context of the Lithuanian television industry is different when comparing it with the ones seen in Western Europe. While Public Service Broadcasting (PSB) was enjoying its exceptional monopolistic role in the rest of democratic Europe, Lithuania (a part of the Soviet Union then) had one television channel, which was owned, controlled and censored by the state. It was the government’s tool that combined communist propaganda and a cultural mission (Pečiulis 2010b, 84).
The first signs of changes in broadcasting were observed in the autumn of 1988 when the programming of Lithuanian television started to change gradually. Religion, which had been banned during the occupation of the Soviet Union, returned to television by broadcasting religious programmes. In addition, the commemoration of the independence of Lithuania was broadcast in 1989 (Buzanas and Štikelis 1997, 40). In this way, the PSB offered many
programmes about the development of Lithuania, its people and economic situation. Moreover, the ideas of statehood were actively advocated on television.
broadcaster (LTV) with a new mission and new goals. The period formally ended in 1996 with the adoption of the Law on the Provision of Information to the Public and the Law on the National Radio and Television (Lukošiūnas 2005, 1041).
Unfortunately, the process of the transformation of television was not so fluent since politicians in Lithuania had inherited a strong dose of the totalitarian mentality. That is why the broadcaster increasingly became a tool of the government and parliament (see Lukošiūnas and Bartasevičius 1993; Tapinas 1997). Changes in the sector were of crucial importance: it was necessary to shift from the Soviet to the Western concept of journalism by liberating television from censorship and political control and adapting a free market economy with all its
consequences (Balčytienė and Lauk 2005, 97). As a result, the standards of professionalism in LTV declined and the newly formed National Broadcaster started to lose its audience to
competitive Russian, Ostankino and Polish television companies (Lukošiūnas and Bartasevičius 1993, 258).
Furthermore, new commercial broadcasters were allowed to enter the market as it was assumed that the best way to arrange the industry was to warrant different sources of information. The first commercial broadcaster was introduced in 1992 (Tele-3 then and TV3 now) and two more national terrestrial commercial television companies followed in 1993 (BTV) and 1995 (LNK). All these processes coincided with global tendencies of change in the television
industries, which are going to be analyzed in this paper. However, it is important to point out that the Lithuanian television market has its own peculiarities, which are caused by its history and traditions; therefore, it cannot be assumed that global tendencies have had the same consequences here.
1.2 Research Questions and Hypotheses
The main research question of the study is how commercialization has influenced public television broadcasting in Lithuania.
The first sub-question is:
What are the main characteristics of television commercialization in general? When trying to answer this, the approaches of scholars who analyze commercialization, its main elements and its impact on television broadcasting in Europe will be examined. In addition, the possible consequences of this market trend will be determined.
The second sub-question is:
Which characteristics of television commercialization (according to the scholars) can be detected in public broadcasting in Lithuania? The literature concerning the changes in the Lithuanian television market and their implications on public service broadcasting will be analyzed here.
In the empirical part of the work the validity of theoretical assumptions will be tested by the examination of the public service broadcaster’s revenues and the changes in specific
programmes.
Following this, several assumptions are made to help analyze the literature concerning the changes influenced by the commercialization in the public service broadcaster of Lithuania. To start with, commercialization does not go alone; it is usually accompanied by privatization, concentration and internationalization. Therefore, all these trends in the television market should be taken into account when dealing with the commercialization of the industry. In addition, the main consequences of this process as described by the scholars are the trivialization of the content of programming, the growing amount of advertising in television and the decrease of the programmes’ diversity. Five main hypotheses are made, which will be tested in the paper in order to answer the main research question:
Hypothesis 1 – the number of news and current affairs programmes on LTV has continuously decreased in the years 1990-2009
2008). This hypothesis will be tested by analyzing the trend of commercialization as it is assumed that it may have the biggest influence to the content of television programming.
Hypothesis 2 – the number of entertainment programming on LTV has continuously increased in the years 1990-2009
This hypothesis is closely related to the first one and can help to answer the question where the strategy of programming in the PSB is moving. If the number of entertainment programmes is quite stable, the public service broadcaster cannot be blamed for seeking ratings and profit. However, if the number of entertainment programmes is increasing, it may mean that LTV is becoming more and more similar to commercial broadcasters and may abandon its mission to serve society. This hypothesis will be verified by analyzing the trend of
commercialization as well.
Hypothesis 3 – the amount of advertising on LTV has increased in the years 2001-2009
Hypothesis 4 – the quantity of imported TV production has increased on LTV in the years 1990-2009
The research to prove this hypothesis true will be focused on showing what amount of the public service broadcaster’s production is produced at home and how many of it is imported. The result will be significant since it will show the impact of the trend of internationalization on PSB’s programming – whether it counts on domestic production and information or on imported programming.
Hypothesis 5 – the diversity of programming has decreased on LTV in the years 1990-2009
The approval or disproval of this hypothesis will show if the diversity of opinions is warranted in LTV. It will be tested by analyzing the trend of commercialization since the public service broadcaster commits to making sure that plurality and diversity is a part of its mission to serve society and democracy (see McQuail 1998; Van der Wurff 2005).
1.3 Purpose of the Study
The purpose of the study is to describe the influence of the changing market on the public service broadcaster of Lithuania by using a theoretical framework and quantitative methods in order to show an economic picture and political context of the television industry in Lithuania. The public service broadcaster in this study will be defined as a public, nonprofit and
1.4 Definition of Concepts
Some of the concepts that are relevant for this study are:
Privatization – a process of transforming a company’s economic structures from government ownership to private ownership with the goal of making economic profit and work according to the rules of the market. In addition, it usually reduces a company’s accountability to the citizens. Internationalization – a dual process caused by deregulation, which gives the possibility to work beyond the boundaries of the state and export production to other markets. In addition, it
increases competition since the market is not limited within one country.
Concentration – a process of gathering different companies in the hands of one owner. The process causes the reduction of the players in the market but not necessarily reduces competition. In addition, big companies gain more power.
Trivialization of the content – a process, by which the content of programmes is simplified in order to reach more of the audience with the lower price of production. In this way, merit programming is replaced by lower quality entertainment programming.
Diversity of content – the heterogeneity of television content on one or more relevant dimensions (Van der Wurff 2005, 250). In this paper, vertical diversity is important. It refers to heterogeneity of content within a single network according to the number of different programme types (Litman 1979, 402).
Commercial broadcaster – a privately owned, profit-making and commercial television broadcasting company.
Merit programme – a television programme, whose content focuses on news, current political matters, economics, social affairs and educational elements. In addition, it includes
documentaries, practical and advisory programmes.
Entertainment programme – a television programme, whose main aim is to entertain the audience. This category includes talk shows, television games or lotteries, television plays and movies, series and serials, music and concerts and sport broadcasts, excluding sports news.
1.5 Significance of the Study
The topic is academically relevant and important as Lithuania is a young democratic country and its television industry developed differently from other Western European countries with a long history of democratic and independent governance. Furthermore, the National Broadcaster of Lithuania had been the one and only broadcaster in the country for more than 30 years under a strict control and censorship of the Soviet Union’s government before Lithuania became independent and consequentially, commercial broadcasters were allowed to enter the market. Therefore, it is significant to analyze the influence of market commercialization on the public service broadcaster and identify the main changes in its market share, revenue and programming. Likewise, a comparative approach will reveal the role of the public service
broadcaster in the changing industry from the first years of independence to nowadays, drawing a full picture of the situation as there have been no recent studies which do that.
1.6 Methodology
The largest part of the thesis is the theoretical research, which was done by analyzing books and articles written by scholars. First of all, the trends in the television industry are determined (privatization, concentration, internationalization and commercialization). Secondly, the research for literature is done by collecting books and articles that are the most relevant for the analysis. The most important works are those that describe and analyze the changes in the European television industry as the European context is more familiar than the American one with the Lithuanian television market. Furthermore, all trends, regulations and outcomes that have affected the television industry are analyzed.
In the second part of the work, a theoretical framework is applied to the Lithuanian television market and is analyzed according to the works of the scholars, although there are just a few publications about the changes in the Lithuanian television industry. Most of the articles describe changes in the media in general. The articles dealing only with the subject of television are related mainly to technology and not to qualitative studies of the television content.
Therefore, an empirical study was conducted in order to supplement the theoretical part and answer the main research question.
2. A Theoretical Approach to Changes in the European Television Industry
Changes concerning the field of television in Europe have been analyzed by many scholars (see Brants 1992; Siune 1992; 1998; Motta and Polo 1997; Meier and Trappel 1998; McQuail 1992; 1998; Bagdikian 2004; Van der Wurff 2005) from different perspectives. However, there is a consensus that the television industry is significantly different at the beginning of the 21st century in comparison with its roots in the 20th century (see Brants and Siune 1992; Siune 1998; Siune and Hultén 1998).
To begin with, public service broadcasters (PSB) had strong positions in media industries from the very beginning. Since they were assumed to be powerful tools in shaping public
opinion, they were strictly regulated by laws (Siune and Hultén 1998, 24). Thus, easy entrance to the television market was blocked and public service broadcasters formed strong monopolies. However, the situation changed during the last decade of the 20th century. Some scholars argue that the significant actor here was neoliberlism (see Brants and Siune 1992; McChesney 2001), which manifested through “a loosening of the grip”. Following this, a gradual retreat of the ruling state’s control could be observed as the television industry became more market oriented.
Thus, the neoliberal doctrine was deeply opposed to such state interventionist theories as those of Keynes, which was meaningful in the 1930s. This political economic theory referred to the liberation of “individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade” (Harvey 2005, 2). The state was important to such an extent that it could create and preserve an institutional framework for such practices. In this way, neoliberals believed that markets could solve social problems far better than any alternative course by using new technologies. Therefore, “the
centerpiece of neoliberal policies was invariably a call for commercial media and communication markets to be deregulated. However, what this really meant in practice was that they were re-regulated to serve corporate interests” (McChesney 2001, 2).
As a consequence, according to Siune (1998), starting in 1990, four main trends could be observed in the European broadcasting industry: privatization, concentration of these
broadcasters, internationalization and commercialization. As a result, “many new private
Thus, in this new competitive market, monopolies collapsed and public service broadcasters struggled for existence.
It is important to note that these trends necessitated changes to laws and regulations in order to adhere to the new commercial logic. In fact, according to scholars, deregulation is one of the factors, which is closely related to all four trends that are changing the nature of television broadcasting in Europe (see Pfetsch 1996; Meier and Trappel 1998; McChesney 2008). Also the “loosening of restrictions for private operators, combined with tightening of formative and balancing rules” (Brants and Siune 1992, 114), was a major factor. In addition, former monopolies – public service broadcasters – were also changed by deregulation. According to scholars, most public channels are partly financed by advertising nowadays, and earlier restrictions have often been eased (Siune and Hultén 1998, 24).
Moreover, the impact of the changes was not ended by deregulation. According to Siune (1998), the content of television has changed resulting in less educational programming and more entertainment programmes, which “seem to become more and more alike everywhere. The backbone of most media is still news, while the rest is more or less entertainment” (Siune, 1998, 2). However, according to McChesney, “the public sector has a cornerstone role in
communication, and fundamental interests to protect” (McChesney 2008, 424). Therefore, public service broadcasters should be protected from fundamental changes that have resulted from the growing commercialization.
It is assumed that all four trends of changes as described by scholars are closely related to each other and this overlapping has to some extent resulted in growing profit making. That is why they will be analyzed by employing the approach of the political economy of the media and communication in order to understand their influence to public service broadcasting.
Political economy refers to “the study of the social relations, particularly the power relations, that mutually constitutes the production, distribution, and consumption of resources” (Mosco 1996, 25). From this point of view, television programmes and audiences are the primary resources. Political economy also tends to concentrate on a specific set of social relations
The most important ideas of the political economy approach used in this paper are social change and history and the social totality. The first one refers to the examination of dynamic forces in capitalism, which are responsible for its growth and change (Mosco 1996, 27). In addition, the role of history is central here. The use of the concept of social totality means that political economy analyzes the range of problems, which tend to be situated in the compartments of several academic disciplines (Mosco 1996, 29). In this case, the connection between politics, judicial regulation, economy and social sphere is the most important.
2.1 Privatization
The trend, which is presented and analyzed in this sub-chapter, is privatization. Two main points will be clarified by analyzing the relevant literature: the impact of privatization on the entire industry of European television and the main differences between private and public service broadcasting. These questions will be examined in order to have a clear theoretical framework for further analysis of the Lithuanian television industry.
According to scholars, the trend of privatization began to reach the European Continent in the1980’s (see Wildman and Siwek 1987; Waterman 1988; McQuail, de Mateo and Tapper 1992). Its early manifestations were observed in Italy where “‘pirate’ cable systems began to emerge in a direct challenge to the states monopoly of broadcasters” (Wildman and Siwek 1987, 71). As a result, Italian courts decided to give them an opportunity to operate legally, and the first commercial, over-the-air broadcasters were legalized and proliferated rapidly (Wildman and Siwek 1987, 72). Although, according to Wildman and Siwek (1987), growth in private advertising-supported broadcasting had proceeded the most rapidly in Italy. New types of ownership were allowed to enter the market gradually, to traditionally conservative and highly restricted television industries, in the whole of Western Europe as well. As a result, they
supplemented or replaced the previously dominant public ownership model (McQuail, de Mateo and Tapper 1992, 20). However, a purely commercial national system can only be found in Luxembourg (Siune and Hultén 1998, 27). Other countries have chosen a dual system where public service and commercial broadcasters compete under market conditions.
McQuail 1998). Thus, according to McChesney, in large parts of the world, the PSB refers to “a nonprofit, noncommercial broadcasting service directed at the entire population and providing a full range of programming”. In theory it should be accountable to citizenry, have some distance from the dominant forces holding political power, and not rely upon the market to determine its programming” (McChesney 2008, 446). Following this logic, private ownership refers to commercial profit-making broadcasting, which is not necessarily accountable to citizens and determines its programming by the rules of the market.
Thus, it is important to identify the outcomes of this process, which has affected all the European television industries. First of all, the increased number of participants in the market leads to an increased level of competition. As a result, the communication of political information can potentially suffer since, according to scholars, “the media in the democracy is regarded as an essential linkage between the political system and the citizen” (Pfetsch 1996, 429). However, growing competition and privatization represent challenges to this element of the public service broadcasting obligation (Syvertsen 2003, 166), which is mandatory for providing materials benefiting a democracy (McChesney 2008, 457) and truly important to protect.
Furthermore, privatization is closely related to the deregulation of the market (Pfetsch 1996, 432). Therefore, the role of the state as a regulator declines (McQuail, de Mateo and Tapper 1992, 24). Consequently, the system of broadcasting is directed away from the normative towards commercial goals and from a political system towards a market principle (Pfetsch 1996, 432) where the best consumed production is entertainment and the role of the PSB, as the vehicle of democratic values and comprehensive and diversified political information, becomes
complicated. Moreover, public service broadcasters operate under the obligation of producing programmes that are socially and culturally valuable (Syvertsen 2003, 166), high-quality
children’s programming and experimental and high-quality entertainment material – the types of programming frowned upon by the market (McChesney 2008, 457). However, as private
commercial broadcasters are not obliged to do this, they can offer audience programming that is potentially the most attractive and profitable. Following this, competition for audiences between private and public broadcasting becomes unequal.
developed in the schedules of private commercial channels. The cheapest way to fill this blank space was to purchase productions from the US (De Bens, Kelly and Bakke 1992, 76). In contrast to the PSB, where production was traditionally made ‘in-house’, private terrestrial broadcasters became dependent entirely on commercial programme sources. As a consequence, competition among programme buyers increased as well (see Wildman and Siwek 1987; De Bens, Kelly and Bakke 1992, 76). And public service broadcasters could no longer behave as monopolists, which have exceptional rights to buy programmes for the price they considered to be appropriate. The result of all these changes was “a significant escalation in the prices of series and films for television” (Wildman and Siwek 1987, 73). Finally, privatization can be seen as a premise for commercialization, because new opportunities for advertising in television were created (Waterman 1988, 147).
2.2 Concentration
The trend of concentration will be analyzed in this sub-chapter in order to determine its impact on the performance of public service broadcasting. This will give a better understanding of the overall picture of changes to the television industry. In addition, the concentration’s relation to other trends will be clarified, since they are closely related and cannot be analyzed separately from each other.
To begin with, the development of private enterprises can be called the main precondition for this concentration. Since without private ownership, concentration would not have been possible. According to scholars, it began during the 1980s when the move towards economic integration had been first observed (Mazzoleni and Palmer 1992, 26). In addition to this,
“preferred business growth strategies, such as the formation of trusts and strategic alliances, and the search for economies of scale and scope, as well as attempts to spread risks, and the search for new fields of operation, have likewise furthered the concentration process” (Meier and Trappel 1998, 39).
flatter the politicians, and the politicians‘ circles favor the tycoon’s inroads into the media strongholds” (Mazzoleni and Palmer 1992, 41). On the other hand, according to scholars, much of the deregulation legislation has been written by “lobbyists and other representatives of the companies and industries to be deregulated” (Meehan 2007, 15). Therefore, deregulation has given stronger power to business to do whatever it wants, while its social accountability has been steadily reduced (Schiller 1991, 44).
Following this, four types of concentration can be identified as presented in the literature. First of all, concentration can be horizontal or mono-media (Doyle 2002, 13), when one company owns several media outlets in one sector (i.e. three TV stations). According to Doyle, this is the most common strategy, which allows organizations to expand their market share and rationalize resources (Doyle 2002, 45). The second type of concentration is vertical, when media enterprises own several companies in different sectors (i.e. editorial office, printing-house, a company that distributes the commodity etc.) (Meier and Trappel 1998, 41). The third type of cross-media concentration or multimedia concentration (Doyle 2002, 13) refers to the ownership of different media outlets in different media markets (i.e. a newspaper and TV station in Sweden and a TV and radio station in Norway). According to scholars, this strategy goes hand in hand with international expansion strategies (Mazzoleni and Palmer 1992, 34). That is why it is closely related to the following trend of internationalization. The fourth type of media concentration as described by scholars is called diagonal or conglomerate concentration, and it stands “not only for cross-media concentration but also for activities of an enterprise from another economic sector outside the media industries taking certain control in media markets” (Meier and Trappel 1998, 42).
To sum up, all forms of media concentration are similar from the perspective that the supply of media is dominated by a few rather than by many different owners (Doyle 2002, 13). Therefore, the question of the impact of such big enterprises on competition arises. It can be assumed that such big companies have huge economic power as well. That is why the PSB, with its limited resources, faces some difficulties if it wants to compete successfully. In addition, there is no common opinion as to whether the process of concentration has had good or bad
consequences overall. Therefore, this question will be discussed further.
2005, 255), the concern is expressed that concentration of ownership poses a threat to pluralism. However, “mega media groups often succeed – through their staying power, economic muscle, political connections and lobbying skills – in circumventing the legislative and regulatory barriers placed in their path” (Mazzoleni and Palmer 1992, 29). As a consequence, according to
McChesney, “more and more power in the market is shifted from the consumer to the producer” (McChesney, 2008, 422) and the participation of citizens suffers. In addition, a strong correlation between concentration and advertising revenues can be observed (Motta and Polo 1997, 303). This means that the more popular broadcasters get more money from advertising. As a result, if the market is highly concentrated, almost all commercial income is collected by the biggest participant in it.
Furthermore, high concentration in the market leads to several threats to the quality of information (see Doyle 2002; Bagdikian 2004). “The main perceived danger, is that excessive concentration of media ownership can lead to over representation of a certain political viewpoint, or values or certain forms of cultural output at the expense of others” (Doyle 2002, 13).
Similarly, big and highly concentrated enterprises tend to use material they own or the one that serves their economic purposes in order to have a ‘guaranteed audience’. However, according to Bagdikian, the ‘guaranteed audience’ can become a ‘captive audience’, which has no choice in media production (Bagdikian 2004, 5). Therefore, it can be assumed that a strong public service broadcaster could be a balance in such a situation and warrant a plurality necessary for
democracy and social cohesion of the audience.
The second way to deal with the concentration is through laws, rules and regulations. However, according to scholars, such actions have led to the breakthrough of internationalization since media empires were forced to expand outside their national markets (Mazzoleni and Palmer 1992, 31). Therefore, the trend of television internationalization will be discussed in the
following sub-chapter.
2.3 Internationalization
The trend of internationalization will be analyzed in this chapter in order to determine its influence on the work of the public service broadcaster. It is assumed that two types of
are the most important for further analysis. Thus, they will be discussed in order to have a clear theoretical framework.
To start with, although broadcasting systems across the world have historically developed as national domestic affairs (Negrine and Papathanassopoulos 1991, 9), the rise and
establishment of international television companies could be observed in the late 1980s
(Mazzoleni and Palmer 1992, 37). Some scholars argue that “the globalization of the institutions of television is an aspect of the dynamic logic of capitalism, which stems from the pursuit of profit as the primary goal. This requires the constant production of new commodities and new markets so that capitalism is inherently expansionist and dynamic” (Barker 1999, 45). Following this, the trend of internationalization can be called a consequence of privatization and
concentration since private commercial companies accumulate their power in order to become players of a global market (see McQuail, de Mateo and Tapper 1992; Barker 1999; McChesney 2001).
Another explanation of internationalization is the technological aspect – since such
developments as “the fiber-optic cable, satellite technology and digital switching technology have opened up commercial possibilities that have led telecommunications to be hailed by the
corporation and state alike as the industry of the future” (Barker 1999, 47; see also Negrine and Papathanassopoulos 1991, 9; McChesney 2001). In addition to this, although internationalization is accompanied by the process of synergy, both of them would not be possible without
deregulation (Barker 1999, 47). Therefore, these processes warrant further explanations. Synergy refers to the production of lower costs and higher profits (Barker 1999, 47). In the television industry, it means that various elements of television and other media production and distribution should be brought together in order to complement each other with lower input and higher output. However, according to scholars, this process would not be possible without the most visible sign of internationalization – regulatory activity at the supra-national level (Negrine and Papathanassopoulos 1991, 11) as “‘new’ technologies required not only structural change but also a liberal regulatory framework in order to guarantee commercial success” (Negrine and Papathanassopoulos 1991, 14). As a result, according to Barker (1999), the mid-1980s and early 1990s witnessed an important period of deregulation in European television. The monopolistic outlook of governments towards television broadcasting changed and new
international regulation was called ‘Television without Frontiers’, which permitted free circulation of television programmes across borders in 1989 (Hirsch and Petersen 1992, 42).
Internationalization suggests two phenomena, which are important in this study. Firstly, the process took place on an institutional level (see Negrine and Papathanassopoulos 1991; Barker 1999). This meant that international television channels owned by transnational
companies were created and supra-national regulations were adopted in the whole of Europe to regulate them at the international level. Secondly, internationalization can be analyzed at the content level, which in this case, refers to the trade of television programming and practice of co-productions within boundaries of nation-states. Both aspects of internationalization will be discussed in more detail in the following text.
To start with, new regulations in Europe in the 1990s allowed many dominant television companies to maintain strong roots in nation-states and a significant presence in other national markets (Mazzoleni and Palmer 1992, 26). These media groups then adopted an international or global strategy of development and as a consequence, national PSB systems faced challenges of growing competition – not only from national private television but from transnational channels as well. “Those challenges influenced programme schedules, the mix and style of programme production and, according to many, also the quality of the programmes, although this is more difficult to define and measure” (Siune and Hultén 1998, 31). Therefore, the main task for public service broadcasting became to preserve and strengthen regional and national culture (De Bens, Kelly and Bakke 1992, 75).
Furthermore, “many European media owners were fascinated by America – the birth place of the information and entertainment industry and the richest media market in the world” (Mazzoleni and Palmer 1992, 27f). As a result “movies based on old television shows, television programmes based on movies, books based on both” (Meehan 2007, 25) were produced, which offered trans-industrial markets the hope of building a franchise that could span decades. Although, “this may make good business sense, it produces much that is uninspired and dull” (Meehan 2007, 26). However, it could be easily sold in the European market. On the other hand, television can be said to be global in its nature since similar forms of narrative can be detectible all over the world, for example, soap opera, news, sports, etc (Barker 1999, 54). Therefore, the main indicators of internationalization of its content are “the standardization of programmes and the degree to which programmes become shared between nations” (Negrine and
Papathanassopoulos 1991, 18).
Analyzing the outcomes of internationalization is significant. The most important
consequence is the shift from national regulation and policy-making to an international one since “the older order was very much a separate preserve of each nation-state” (Siune and McQuail 1992, 191). As a result, the power of national governments was weakened as the more important voice in transnational regulations belongs to European institutions. This is especially significant for small states, which are more vulnerable to larger and richer neighbors. In addition, “they are more likely to experience a loss of national and cultural autonomy and they are weaker voices in the struggle to arrive at a European consensus on standards” (Siune and McQuail 1992, 191f). Furthermore, the process of internationalization leads to the homogeneity of television since different countries and different channels start to share programmes, standards, owners and regulations (Negrine and Papathanassopoulos 1991, 11). Although, such programmes as news and current affairs tend to be produced for domestic audiences, the real issue here is “the
proportion of other programming, which will either be imported or, at the other extreme, crafted for the international marketplace” (Negrine and Papathanassopoulos 1991, 23).
Thus, all things considered, the three trends of changes discussed above lead to the most important one – commercialization – which is closely related and overlapped with them.
2.4 Commercialization
The trend of commercialization will be analyzed in this sub-chapter in order to identify its merits and drawbacks. In addition to this, the main characteristics of its influence to the content of television programming will be described in order to see if these features can be detected in the programming of PSB in Lithuania.
According to McQuail (1998), commercialization began together with the early press, however, it did not have a negative connotation at that time. In contrast, it was associated with ‘depolitization’ and meant an end of direct relations between the media and political powers. Though, in the late nineteenth and early twentieth centuries “commercialism became identified with the pursuit of profit above all else and was associated with large-scale, low-cost, low-taste production and distribution, especially aimed at the new industrial working class” (McQuail 1998, 108). Television then entered the media industry. However, neither the economic nor political climate was favorable to its commercial development since television was considered to have a great power on audiences. Therefore, it was safer to keep it under supervision of the government.
Nevertheless, the trend of commercialization reached television and became widely related to advertising and income received from advertisements. The first of its manifestation had been observed in America where public broadcasting was quickly accompanied by private
television financed through advertising. The result was a struggling existence for the PSB. That is why Western European countries assumed it as a bad practice and did not let in commercial broadcasters to the television industry until the end of the 20th century when the market was liberalized, deregulated and commercialized with a result of great competition (see Brants and Siune 1992; Siune and McQuail 1992). In this way, the competition and struggle for limited resources (income from consumers and advertisers) had become the central concepts of commercialization (Siune and McQuail 1992, 194). Therefore, they will be analyzed in more detail.
2.4.1 The Impact of Competition
addition, the conditions for competition leave no broadcaster unaffected (Hultén and Brants 1992, 121). Therefore, it is important to point out that license fee funds did not shield the PSB from competition. In contrast, they had to compete with commercial televisions in respect to their obligations, perform well and be cost-effective. That is why it can be concluded that the task of public service broadcasting became even more complicated. In order to analyze the process of competition better, Michael Porter introduces two perspectives of competition: direct competition and extended competition (Hultén and Brants 1992, 119). The first one refers to a narrow
relationship between the companies in one market where organizations are already established and involved in competition. The second perspective is more complex as it involves the analysis of “new entrants, substitute products (such as satellite and cable television channels), suppliers, customers and direct relationships between transnational competitors” (Hultén and Brants 1992, 119). The analysis can be divided into three phases: the entry phase, the battle phase and the consolidation phase (Hultén and Brants 1992, 120), which helps to describe the changes in the environment of the PSB.
The entry phase refers to the very beginning of the establishment of commercial televisions and does not offer a real threat to the existence of the PSB. However, the real
competition begins in the battle phase when commercial broadcasters grow stronger and are able to acquire strategic programmes or even outbid stars and personalities from public service
broadcasters. The costs of purchasable production increase in this phase as well. The last phase of consolidation is called the maturity of the market since uncertainty is reduced by agreements between television channels and the levels of production costs are normalized (Hultén and Brants 1992, 120f).
Although, according to Hultén and Brants (1992), the most common reaction to
truth, competition in the market forces them to “give the people what they want in the range of where they can make the most profits” (McChesney 2008, 421). He claims that “the market has clear limitations in the area of media since the media system is not simply an economic category. It is responsible for transmitting culture, journalism and politically relevant information”
(McChesney 2008, 421) and therefore, leaving everything for the control of the market can have disastrous political and moral implications (McChesney 2008, 234).
2.4.2 The Impact of Advertising
Another significant characteristic of commercialization is advertising and competition for income from it (Mazzoleni and Palmer 1992, 40). Although this source of money has been strictly regulated in the monopolistic structure of the market (McQuail 1998, 110), McChesney (2001) argues that commercialization as we know it could not exist without advertising since it is “part of the bone marrow of corporate capitalism” (McChesney and Foster 2003, 1). “We are rapidly moving to a whole new paradigm for media and commercialism, where traditional borders are disintegrating and conventional standards are being replaced with something significantly different. It is more than the balance of power shifting between media firms and advertisers; it is about the marriage of editorial/entertainment and commercialism to such an extent that they are becoming indistinguishable” (McChesney and Foster 2003, 7). So the question arises: to what extent is the PSB influenced by growing advertising? While some scholars argue that advertising should be banned on public service television in order to
concentrate on public service objectives instead of increasing its audience (Motta and Polo 1997, 323), others claim that “the changing business climate has gradually found its way into the public service television sector because most public channels are now partly financed by advertising, and earlier restrictions have often been eased” (Siune and Hultén 1998, 24). The admission of advertising as a main source of finance for the PSB is no longer a controversial political issue (McQuail 1998, 112).
Consequently, information has become a commodity, which can be produced and sold for profit (see Schiller 1991; Mazzoleni and Palmer 1992). In this way, social information is
Commercial channels as well as PSB stations are in search of high audience ratings. Television in Europe thus becomes increasingly an entertainment medium” (De Bens, Kelly and Bakke 1992, 95). To illustrate this statement, several research projects have been conducted in different countries of Europe (Germany, Great Britain, Italy, Spain, Holland, Belgium, Norway and Finland) and all of them show that there is a pattern to move toward entertainment-like
programming. The concern that the amount of imported programming (especially from the US) is growing has also been confirmed (Hellman and Sauri 1994, 48f) and it is significant to determine the impact of commercialization on the PSB. According to scholars, there is no common picture of the situation; however, some common patterns can be observed (Siune and Hultén 1998, 28).
2.4.3 Consequences of Commercialization
Already in the 1980s, McQuail discussed increasing evidence of commercialism within public service broadcasting. He identified that the most popular programmes tended to be broadcast at peak time in order to maximize audiences and advertising revenues. Cost-consciousness and efficiency in the PSB’s activities increased and the signs of management practices’ adaptation from the commercial sector could be seen (Bardoel and d’Haenens 2008, 340). As a result, public service broadcasting clearly found itself stuck between its obligation to provide a full range of programming and the idea that the PSB should clearly differentiate itself from commercial television with providing quality of the content (O’Hagan and Jennings 2003, 39). Nevertheless, “debate on public broadcasting, especially in Western Europe, repeatedly claimed that as the competition got more fierce, thanks to dozens of new cable, satellite and other commercial channels and video, the programme supply of national public service became more commercial, entertaining or even transnational” (Hellman and Sauri 1994, 48).
Therefore, the hypothesis of convergence was created by scholars in order to explain the ‘phenomenon of going similar’. It says that “the competitors in the long run have no choice but to implement strategies, which result in convergent programming, that under the pressure of
also see Hellman and Sauri 1994). Therefore, it can be concluded that the convergence means the process, when programmes’ profiles, given by competitors, capture the optimum in terms of audience preference and in turn, become more and more similar. Yet, according to long-range German research, this hypothesis is not supported by empirical data. In contrast, the evidence from Western Europe shows that a hypothesis of divergence is more likely to be supported (Siune and Hultén 1998, 29). However, it does not mean that the PSB is not affected by competition.
The dilemma of programme quality versus popular reach is always present (Bardoel and d’Haenens. 2008, 351). Although, public service broadcasters have learned to adapt in
commercial media markets where they have become more the exception rather than the rule, the PSB still has problems in realizing sufficient public support. Moreover, as a result of fierce competition they tend to abandon the domain of infotainment and reality programmes by leaving it to the commercial side of the market, which according to some scholars, can potentially lead to the strategy of defeat (Bardoel and d’Haenens. 2008, 344). Nevertheless, other scholars argue that the PSB still can do ‘better’ in terms of cultural and informational content (McQuail, 1998, 120), although the tradition of aiming at the whole population of the country by all programmes is gone (Siune and Hultén 1998, 29).
The PSB experiences pressure from national political forces as they cut costs to these institutions with the notion to save money and rationalize the public broadcasters’ work (Brants and Siune 1992, 113). This forces PSB stations to adopt many of the strategies, which have historically been associated with commercial television in order to save money, sustain
legitimacy and obtain high ratings (Syvertsen 2003, 159). However, it is still difficult to compete with private television, which is controlled by the government minimally. Moreover, in order not to lose their money, the PSB tends to give priority to politicians rather than to viewers (see Hultén and Brants 1992; Bardoel and d’Haenens. 2008). As a consequence, viewers and their interests could be ignored since they have no financial influence on the PSB. In this way, “citizens are virtually excluded from having any say in public communication, because the increasing preoccupation of politicians and journalists with their own complex and fraught patterns of collusive conflict results in a public sphere inhabited by insiders, instead of citizens as the traditional outsiders in political discourse and decision-making” (Brants 1998, 319).
According to Blumler (1992), that is why news, current affair and political programmes have often been treated as the ones, which require protection. The PSB is further expected to “bear some sense of responsibility for the health of the political process and for the quality of the public discussion generated within it” (Brants 1998, 318). Public service organizations used to give free quotas of airtime to politicians during election campaigns. However, in the time of wide
commercialization it is not a precedent anymore as well as extensive and substantive news
coverage of political issues (Blumler 1992, 12f). Thus, it it is important to keep a strong nonprofit and noncommercial television sector, which can serve a variety of important needs to the public as citizens rather than consumers. Following this, certain response strategies, which could be employed by public service organizations in the face of competition and commercialization, will be analyzed further.
To start with, Hultén and Brants argue that there are three strategies: adaptation, purification and compensation (Hultén and Brants 1992, 117). Adaptation means that the PSB tries to follow the same commercial logic as private televisions do and in this way abandons its duty to serve the public interest. The second strategy – purification – is the extreme opposite and it refers to the absolute rejection of competition. If the PSB employs this strategy, it concentrates on such programming, which is completely uncommon to private televisions. The main goal then is to serve the public interest by offering its audience programmes, which it cannot get on other television stations. The strategy of compensation stands in the middle of the other two and indicates the way when the PSB takes all the best characteristics of public broadcasting while acting in the market driven by commercial forces (Hultén and Brants 1992, 118).
Although, public service broadcasters could use any one of these strategies, the
2.4.4 Influence on Diversity
Scholars and media practitioners have argued from different perspectives that fierce competition and commercialization lead to trivialization of the content and a reduction in the diversity, which is an important criterion for media performance (Van der Wurff 2005, 249f), and a special requirement for public service broadcasting (Hellman 2001, 181). Therefore, this
concept and its implication to the mission of the PSB will be discussed in more detail. As television is a universal medium, it serves the many different interests of diverse audiences by providing different types of programmes. However, concerning the PSB, diversity has been acknowledged as one of the ‘vulnerable values at stake’ jeopardized by market
pressures (Hellman 2001, 182). In addition to this, diversity is closely related to pluralism, which is important in the idea of programmes being made available, rather than actually consumed (Doyle 2002, 12), as through the diversity of programmes, society gets access to a range of voices and content. It is important that diversity is “a normative criterion of quality and a deliberately sought policy goal aiming at pluralism at several levels: in reflecting and giving equal access to the various sectors of society, serving the multiplicity of audience types as well as striving to achieve a wide range of choice in programme content” (Hellman 2001, 183).
Scholars argue that diversity of programmes is a necessary precondition for choice and exchange of different ideas and opinions. It is irreplaceable for democratic decision making and development (Van der Wurff 2005, 250). However, critics of the commercialization of
2.5 Summary
The industry of television is fundamentally different at the beginning of the 21st century in comparison with its roots in the 20th century. According to Siune (1998), four main trends, which define changes, can be observed starting from 1990. They are privatization, media concentration, internationalization of the field and commercialization. As a consequence, “many new private channels have been granted licenses to operate in a commercial mode” (Siune and Hultén 1998, 23f). Thus, monopolies collapsed and public service broadcasters were left to struggle for existence under the conditions of market competition.
In the first sub-chapter called Privatization, the impact of this trend on the television industry is identified. It is concluded that the television system in Europe changed from a monopoly to a dual system as a consequence of privatization. Following this, the realization of the PSB’s mission became complicated since the element of competition was introduced. Furthermore, as private television stations sought profits and gave the audience what they consumed the best, the PSB had to fulfill its obligations and therefore, it struggled for existence under these market conditions. In addition to this, privatization became a premise to spread American production in Europe as well as to commercialize the television industry. Thus, the main differences between private and public broadcasters are the pattern of ownership, profit-making and the level of accountability to citizens.
In the second sub-chapter called Concentration, the impact of concentration on the performance of the PSB in the television industry is analyzed. It is concluded that the supply of media is dominated by a few rather than by many different owners (Doyle 2002, 13). Therefore, the question of impact from such big enterprises on competition arises as it is difficult to compete when conglomerates have huge amounts of money and public service broadcasters have only limited resources. As a consequence, the concern is expressed that the concentration of ownership poses a threat to pluralism and to the quality of information. In addition to this, the relation of concentration to other trends is determined in this section. It is assumed that concentration is related to privatization and internationalization, since highly concentrated companies tend to expand their activities outside the boundaries of nations.
deregulation of the market and gives the possibility for international companies to enter the domestic market as well as a process, which is closely related to globalization and imported television production. However, both of them have their consequences on the work of public service broadcasting. Firstly, competition from both national and international television stations is growing. Therefore, the main task for public service broadcasting becomes the preservation and strengthening of regional and national culture (De Bens, Kelly and Bakke 1992, 75). Secondly, the process of internationalization leads to the homogeneity of television since different countries and different channels start to share programmes, standards, owners and regulations. This leads to the third consequence, which refers to the shift from national regulation and policy-making to international regulation. Finally, the European television industry was flooded with foreign production mainly from the US.
In the fourth sub-chapter called Commercialization, the main characteristics, merits and drawbacks of this trend are identified. The impact of competition on the PSB is analyzed, since competition leaves no broadcaster unaffected and license fee funds are not adequate enough to shield the PSB from it. In contrast, public service organizations have to compete with commercial televisions in respect to their obligations. Furthermore, the impact of advertising is determined in this sub-chapter concluding that the admission of advertising as a main source of financing for the PSB is no longer a controversial political issue. In addition, the consequences of
commercialization on the performance of the PSB are described. It is determined that public service televisions tend to employ a variety of strategies that have been historically attributed to commercial broadcasters. Moreover, the PSB’s role as the vehicle for the promotion of
3. The Application of Theoretical Assumptions to the Television Market in
Lithuania
Changes in the Lithuanian television industry had been analyzed from the 1990s when the country regained its independence mostly by scholars such as Tapinas (1997), Balčytienė (2002; 2005; 2009), Lukošiūnas (1993; 2005), Meškauskaitė (2006), Juraitė (2009), Pečiulis (2005; 2007; 2010). However, the development of the media industry in Lithuania cannot be understood or analyzed without the historical and political conditions, which make the country unique when compared to the Western European context.
When other European countries were changing their television industries from
monopolies to multiple players in the market, the Lithuanian television industry was experiencing a great transition from the politically-controlled media to a free one. According to scholars, this experience was quite new for the youthful democratic country; therefore, it looked towards the West for a model for media development (Balčytienė 2005, 40) and through trial and error, a national public service broadcaster was created. However, problems caused by both the new order and by specific problems of the post-communist state’s development continued to hamper development (Pečiulis 2010b, 81). There were no traditions of public service broadcasting in Lithuania. In addition, the changes in the television industry coincided with transformations in political and public life and LTV did not really know its role.
Global trends are important to analyze in such a fundamentally volatile situation of a young democratic country. Therefore, this chapter will be divided into five sub-chapters. The first is devoted to the description of the methodology of empirical data collection. The other analysis is divided into four sub-chapters following the logic of the theoretical framework of the previous chapter. All theoretical assumptions, as described by the scholars, will be applied to the
Lithuanian television market in order to confirm the hypotheses raised in this study.
3.1 Methodology
over one year on LTV for the period 1990-2009 is counted using the data from the press where the schedule of the programmes is announced. The newspaper ‘Kalba Vilnius’ is used to count programmes in 1990 and 1996. It is a single-purpose newspaper, which deals with issues of radio and television broadcasting. It was published during the period of 1956-1999. The second
newspaper that is used to count programmes of LTV in 2001 and 2009 is called ‘TV antena’. It is the Saturday supplement of the main Lithuanian newspaper Lietuvos rytas. ‘TV antena’ is
designed for television programmes and it started publishing in 1997. The newspapers are
collected from Martynas Mažvydas National Library of Lithuania. The programmes are separated into different categories throughout the year (from 1st of January to 31st of December – 52
weeks). All different titles are taken into account since according to Hellman, “the choice of media content, measured as the variety of different programme types, is widely accepted as a relevant measure of diversity. In addition, scholars consider that ‘programme types’ are
meaningful categories of diversity analysis. They assume that each broadcast can be assigned to one or another designed content category and that all broadcasts belonging to a given type are substitutes” (Hellman 2001, 184).
All the programmes are divided into sub-groups:
News
Current affairs
Features and documentaries Educational programmes Practical and advisory TV plays and movies Series and serials
Light entertainment (include TV shows) Music and concerts
Sports (sports news excluded) Children’s programmes Religious programmes Programmes for minorities
general entertainment) refers to commercial broadcasting (Williams 1990 2nd ed., 76f). However, Hellman and Sauri adapted this typology of programmes to contemporary television and added categories of Practical and advisory, Sports, Music and concerts, Religious programmes and Programmes for minorities (Hellman and Sauri 1994, 56). Recent typology is used in this paper since it is considered appropriate for the analysis of all programmes.
A television programme is considered to be News in this paper if it coincides with the general concept of News programming. Programmes are put into the category of Current affairs if they analyze current issues of politics, economics or social affairs. Programmes are classified as Light entertainment if they are talk shows, TV games or lotteries. In addition, broadcasted units are counted in the analysis of data. It means that the number of different programmes, but not the time devoted for each unit of the programme, is important here. This methodology is relevant in order to bring all programmes under different categories.
Statistical data of LTV programming will help to test all hypotheses. The first (the
number of news and current affairs programmes on LTV has continuously decreased in the years 1990-2009) and the second (the number of entertainment programming on LTV has continuously increased in the years 1990-2009) hypotheses will be checked by comparing the amount of particular programmes in different years. The third hypothesis (the amount of advertising on LTV has increased in the years 2001-2009) will be verified by comparing commercial income from different years. This data will be collected from the reports of the Council of Lithuanian Radio and Television. However, the period analyzed is different from other hypotheses (2001-2009) as there is no data available from the earlier years. The fourth hypothesis (the quantity of imported TV production has increased on LTV in the years 1990-2009) will be proved or disproved by comparing the number of homemade and imported productions in different years.
The fifth hypothesis (the diversity of programming has decreased on LTV in the years 1990-2009) will be tested by employing Shannon’s H tool in order to analyze if the diversity of public service broadcaster programming has increased or decreased. Such formula will be used H
= − ∑ pi ln pi, where pi is the proportion in theith category (McDonald and Dimmick 2003, 61).
This tool is assumed to be the best for this research as, according to McDonald and Dimmick, “if the researcher uses Shannon’s H for the diversity measure, variation in diversity can be
categories and the maximum proportions among categories when sample sizes are very small (less than 10)” (McDonald and Dimmick 2003, 76).
The years that are chosen to compare are:
1990 – Lithuania regained its independence in this year and the State television (used for
propaganda) was reformed to a public service broadcaster. This represents the very beginning of independent television in Lithuania;
1996 – The Law on the Provision of Information to the Public and the Law on the National Radio
and Television were adopted for the first time in independent Lithuania and the process of PSB formation was finished;
2001 – The market of television broadcasting stabilized and commercial broadcasters became
profitable for the first time since their introduction;
2009 – The most recent year where data to determine the tendencies of the public service
broadcaster’s response to growing commercialization is available. The year 2010 cannot be included in the analysis as the economical data of the PSB for this year will be announced in the middle of 2011.
The data collected in this research is interpreted using qualitative descriptive methods, when the results are analyzed in the context of political and social situation of Lithuania. The author examines what has affected the content of programmes on LTV: the processes associated with commercialization or other factors, which are more connected to particular historical context of the country.
Furthermore, the level of concentration of the Lithuanian television market is counted in the study by employing the concentration ratio. According to Meier and Trappel, the
concentration is said to be high when one company reaches a market share of 30-35% or when two or three companies reach a market share of 50% and more or when four or five companies reach a market share of 60% or more (Meier and Trappel 1998, 50).
3.1.1 Limitations of the Empirical Research
addition, programmes’ diversity can be analyzed from three perspectives: media structure, media content and media audience (McQuail 1992, 155-81). However, this study concentrates on diversity of media content or vertical diversity (see Litman 1979; Grant 1994) since the main issue here is the impact of commercialization on the public service broadcaster’s programming and it is considered that this perspective can reflect this impact in various years. Moreover, it is out of the scope of the study to examine all three perspectives.
The author is aware of the presence of the subjectivity factor in the process, when all programmes of LTV are divided into different categories. However, the author lived in Lithuania during the period analyzed in this study and was familiar with the content of the programmes of the public service broadcaster. That is why it is assumed that the research is as much objective as it is possible. In addition, the programmes are put into the categories according to their main genre or subject. For example, if the programme is movie it is put into the TV plays and movies category despite the fact that it may have political content. It is considered that the main purpose of the programme is important but not the additional aspects that it may contain. Otherwise, it would be impossible to divide all programmes into different categories.
Furthermore, the method of concentration ratio for measuring concentration in the
television market does not weigh each channel’s share by itself and reflects only the larger firms in the industry. In addition, it ignores smaller firms and does not incorporate each of them
separately and differently. A better tool for measuring concentration in this situation would be the Herfindahl index. However, it requires all firms’ market shares (Weinstock 1982, 286), which is impossible to know in the Lithuanian context. There is a section in statistics, which refers to “Other channels” and includes about 300 cable, digital, IPTV etc television channels. In this way, the whole share of “Other channels” composes 20.2% and shows a great loss if the Herfindahl index is counted without it. As a result, the Herfindahl index cannot be used to count
concentration in the Lithuanian television market.
3.2 Privatization
Lithuania and its regulation will be drawn in order to have a full picture of the context in which the PSB is operating.
Privatization in the Baltic countries had its own peculiarities. It began with the press, which was mostly privatized by its own workers. Such privatization was called “‘spontaneous privatization’, ‘closed privatization’ or a ‘privatization from within’” by the scholars (Balčytienė 2009b, 42). However, the process took much more time in the audiovisual sector as it required much more money and judicial regulation (Meškauskaitė 2006, 17). In addition, there were some scholars who argued that private ownership would not guarantee the political independence of the media (Lukošiūnas and Bartasevičius 1993, 261). Nevertheless, “the authoritarian concept of media-state relationship was gradually replaced by the concept of a completely free media” (Balčytienė 2002, 110). In this way, not only private ownership but also a fundamentally
different Lithuanian Radio and Television were created. However, scholars tend to call this time ‘a period of the shadow economy’ since the search for rapid gain, cooperative movement and liberal experimentation had become the prior goals (Balčytienė 2002, 105).
Furthermore, the newly established public service broadcaster received preferential rights to make use of the transmission equipment. Later, tenders for leasing radio and television
programmes’ broadcasting equipment to private editorial offices started to be organized. However, the LTV Board had the right to approve or disapprove the results of such tenders (Radijas ir televizija Lietuvoje 2000, 5). That is why it can be assumed that the PSB still had an exceptional position in the television market and the right to determine the possibility of any private broadcasters’ existence.
Nevertheless, the process of media capitalization began and the first commercial
broadcaster in Lithuania was introduced in 1992 (Tele-3 then and TV3 now). Two more national terrestrial commercial television companies followed in 1993 (BTV) and 1995 (LNK). Tele-3 was founded by American-Lithuanian Liucija Baškauskaitė and started its broadcasting in 1993. However, it went bankrupt in 1996 and was immediately bought by Kinnevik (Sweden) through its media holding Modern Times Group (MTG) (Lukošiūnas 2005, 1055). The name of the channel was changed to TV3 and it was transformed to resemble other television channels with the same name owned by MTG. Furthermore, American-Lithuanian Kęstutis Makaitis established the second private national channel called BTV in 1993. In 2002 it was sold to the Polish
