MEDIA WATCH: Promote Ads, Not State Aid

It is accepted as axiomatic among politicians and even many media professionals that mass media here need state subsidies and benefits to survive. Liberal State Duma Deputy Irina Khakamada recently told the newspaper Delovoi Peterburg, "Underpresent conditions, in which the advertising market cannot provide normal financing for mass media, there can be only two paths: one - losing independence, or two - working competitively but with special privileges."

Other lawmakers maintain roughly the same thinking. There is not enough advertising, they say; therefore, the state must subsidize or provide direct benefits to mass media. While most everyone at least pays lip service to the notion that advertising is the most benign source of financing for media, no one seems to be making a serious effort to either significantly grow the advertising market or increase the share of that market that ends up supporting socially significant media. By the latter, I mean nonstate, social-political newspapers and broadcast media that devote a substantial portion of their content to news programming, as opposed to specialized advertising, entertainment publications or media such as billboards that do nothing to further social development or stability.

Instead, we have a system under which the Duma committee on economic policy is responsible for laws governing advertising, and the committee on information policy is responsible for mass media. So the economic policy committee writes laws that are designed primarily to limit advertising and to increase tax revenues generated by advertising, while the information policy committee continues to prop up media with subsidies and benefits that do nothing to develop independence or viability.

This week, the economic policy committee introduced a series of changes to the law on advertising, almost all of which would have the effect of even further restricting the benefits that socially significant media derive from advertising. These changes, for instance, severely restrict the amount of advertising that television stations can broadcast during weekends and holidays. They significantly expand the categories of products for which advertising is forbidden or restricted. Moreover, the committee has called for the creation of a national advertising council whose composition and functions will be determined by President Vladimir Putin. The effect of all of these changes will be to continue to stifle the advertising market generally and to encourage the widespread and corrupting practice of hidden advertising.

Advertising policy is a much-overlooked instrument of state control of information and media across the nation. In a nutshell, it works like this. Local governments maintain control of mass media throughout the regions in order to promote their political ends. This makes media such as newspapers an unattractive vehicle for advertisers and encourages them to advertise instead on billboards and in public transport. Local governments receive the lion's share of profits from these forms of advertising, often through shadowy, quasi-public "advertising agencies" that provide ample opportunities for skimming off the top - usually to provide off-budget funding for political campaigns.

Administrations are then able to use the revenues gained from municipal advertising to directly subsidize the newspapers and broadcast properties they control and promote their political ends. In this way, the relatively benign financing that advertising could be providing for media is transformed into direct state control of information.

As is usually the case in this country, the answer to this problem is relatively simple, if only the political will to implement it existed. Advertising law should be written to expand the advertising market as much as possible. Local producers and small businesses should be given incentives to advertise actively. And they should be given special incentives to advertise actively in nonstate, nonsubsidized, socially significant media.

What would be the result, for instance, if any local business employing 25 or fewer people were given a 100 percent tax write-off for advertising expenditures in local, nonstate newspapers? My guess is that there would be a significant increase in local advertising, a significant increase in direct revenues to the nonstate press that could be used to improve and strengthen it and a significant decrease in hidden advertising. I wonder if any Duma deputies would like to put this theory to the test.

Robert Coalson is a program director for the National Press Institute. The views expressed here are not necessarily those of NPI.