ISSN 1392-0561. INFORMACIJOS MOKSLAI. 2017 77 DOI: https://doi.org/10.15388/Im.2017.77.10705 Media Concentration in the Baltic States (2000–2014) Deimantas Jastramskis Journalism Institute, Communication Faculty, Vilnius University, Assoc. Professor E-mail: [email protected] Anda Rožukalne Department of Communication Studies, Communication Faculty, Riga Stradins University, Assoc. Professor E-mail: [email protected] Andres Jõesaar Baltic Film, Media, Arts and Communication School, Tallinn University, Assoc. Professor E-mail: [email protected] This article examines media concentration in the Baltic States between 2000 and 2014. The study em- ploys the Herfindahl-Hirschman Index to assess the volatility and the level of horizontal concentration in the media markets of radio, television, daily newspapers and internet of Lithuania, Latvia and Estonia. The analysis reveals that most of the Baltic States’ media markets are highly concentrated and tend to- wards the creation of oligopolistic competition. Only two markets (the Estonian television and Lithu- anian internet market) could be defined as moderately concentrated at the end of the research period. Keywords: Media concentration, media market, time share, Herfindahl-Hirschman Index, Baltic States. Introduction in Estonia, Latvia and Lithuania. Also, the media markets in the Baltic States expanded In the end of 1980s, the liberalization of the political regime in the Soviet Union and due to the foundation of new media outlets the establishment of alternative political and companies. The liberalization, priva- movements as opposed to the communist tization and establishment of new media parties in the Baltic countries paved the way titles resulted in the increasing diversifi- for the liberation of media and the creation cation and fragmentation of the media in of new media systems, which were mainly the 1990s (Lauristin and Vihalemm, 2002; based on private ownership. The privatiza- Balčytienė, 2006). tion of the majority of former soviet media Media industries, like most industries, outlets/organizations took place in the first develop in several stages: from the intro- half of the last decade of the 20th century duction, through the growth and shake-out 26 to the maturity and decline. The transition few people and the remaining minority of of the media industry from one stage to internet media draws increasing audience another leads to changes in sales, costs, attention. It means that the fragmentation consumers and competition (Van Kranen- of contemporary media does not neces- burg and Hogenbirk, 2006). The grow- sarily guarantee the reduction of media ing Baltic media industries experienced concentration. Also, some strong players in shake-outs (especially the press industries) the press or TV markets took advantages of several years later after they began to de- technological convergence and gained more velop in the end of the 1980s (press) and power in the new media field. the beginning of 1990s (radio, television). The aim of this paper is to analyze the Media companies that could not manage volatility and level of horizontal concen- the changes withdrew from the competi- tration in the media markets of television, tion field: mergers and acquisitions of radio, daily newspapers and internet of the companies took place and this caused Estonia, Latvia and Lithuania between 2000 some degree of media concentration in the and 2014. Baltic media markets. The second half of the 1990s in Estonia “is characterised by Factors and Outcomes of Media mergers of newspapers and the formation Concentration of two big media corporations” and “by Each business usually has an aim to maxi- the continuing concentration of the media” mize its market share. This can be achieved (Lauristin and Vihalemm, 2002, p. 40, 42). not only by smart business strategies of The period from 1997 to 2004 is character- some companies, but also by acquisitions ized by a concentration of ownership in of competitors and/or bankrupts in the Latvia (Harro-Loit, 2005). According to market. A significant market share of one Balčytienė (2002, p. 112), “the media has or few companies, i.e., a dominant position entered the concentration and stabilisation means less choice and higher prices for the period, which is characterised by a limited consumers. When we are analyzing the number of major media firms competing shares of media companies in the market, for audience attention” in Lithuania in the it is worth to assess not only the economic beginning of 2001. but also the social dimension related to audi- The 1990s period was marked by ence. Both the number of companies in the the birth of a new media industry – the market and the structure of the market (or internet (web sites/portals) in the Baltic the level of media concentration) may influ- States. The growth of internet and the ris- ence media diversity and political pluralism, ing media fragmentation gave some hopes which are important to the level of quality for the diminishing of concentration in the to be found both in the public sphere and media markets. The effects of horizontal democracy in general. concentration “may have been modified by Among the economic arguments in favor continuing intermedia choice and the rise of more concentrated media, one of the most of new media” (McQuail, 2005, p. 229), pronounced is the reasoning by Meier and but according to Van Dijk (2012), the Trappel (1998) that larger media companies overwhelming majority of small internet are not only in a better position to maintain media outlets reach the attention of only high media quality standards, but also that 27 they are more capable of protecting their regulatory framework for the control of independence from interest groups and media concentration and the safeguarding can systematically engage in investigative of media plurality does not exist at the EU journalism. However, such advantages that level”. Thus, the member states (Baltic media corporations possess and may use to States among them) have the freedom to create quality content often do not became apply individual media policy measures real practices. On the contrary, the economic to foster effective competition, diversity power of large media companies (and me- and plurality in the local media markets. dia moguls) turns into political biases that However, Lithuanian, Latvian and Estonian are distorting the public sphere. Therefore, policy makers in this respect tend to give much stronger argumentation exists against more power for the market than to use legal the concentration of media. According to regulatory tools. As defined by Balčytienė Meier and Trappel (1998), a high level of (2005, p. 54), “the ethos of liberalism in the media concentration reduces the number Baltic media market is manifested in liberal of different information sources and leads laws regarding media concentration.” to a greater uniformity in content. Also, There were and are no special legal acts competition between media companies in Lithuania that would restrict the ownership increases their accountability, the indepen- concentration of the media organizations or dence of editorial offices from governments the shares of the market that they occupy. and improves the overall quality of media. The dominant position in the media market, Certainly, all these macroconditions do not as well as other areas of economy (except for necessarily guarantee the content quality of an economic entity engaged in retail trade), a specific media outlet: it could depend on is defined when the market share of an eco- the editorial policy, management style and nomic entity is no less than 40 percent. Also, other situational variables. each group of three or a smaller number of Potential economic and social threats economic entities (except for the economic of high media concentration could be pre- entities engaged in retail trade) with the vented by legal regulation of the market largest shares of the relevant market, jointly shares of economic entities (media orga- holding 70 percent or more of the relevant nizations and its groups). The framework market, shall be considered as occupying legislation of the competition regulation in the dominant position (Republic of Lithu- the European Union (EU) permits effective ania Law on Competition, 2012). Besides, it control of all concentration types in terms of should be emphasized that one person may their effect on the structure of competition own 100 percent of a media organisation’s in the Community (Council of the Euro- shares (internal property concentration is not pean Union, 2004). As Just (2009, p. 100) restricted) and to concentrate up to 40 percent emphasized, it is concerned with the need of the market in Lithuania. Moreover, there to regulate the concentration in the common are no restrictions on the cross-media, verti- market and that “the protection of media cal (control over all aspects of media content pluralism is primarily a task for member production and distribution) and diagonal states”. Besides that, it is argued by Ungerer (when the same owner controls media and (2014, p. 409) that “in spite of a number of other business companies) ownership con- calls by European Parliament, a specific centration in Lithuania. 28 A slightly different situation regarding prehensive media regulation in place, the the regulation of media concentration oc- issue of media concentration was tackled curred in Latvia. The Radio and Television in the regulation of broadcast media. The Law, adopted