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 Academic advisor: Christian Fuchs 2 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 commercialized programmes since the leader of the market is a commercial television station, whose market share is almost twice bigger than LTV’s. Thus, LTV is facing a dilemma between preserving quality and diversity and commercializing its programmes in order to increase its audience share (dilemma between quality and audience share). 3 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 3.5.5 Diversity of the Content 55 4 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 Chart 8. Budget of LTV 60 5 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. Following this, there was a great transformation of the political and economic situation, which started in 1990 when Lithuania announced its independence from the Soviet Union and created its own framework of government. In Lithuania, the processes had to start from the very beginning since all the old structures proved inappropriate for the new situation. As the main goal of the country was to create a democratic republic, new political parties were created and new laws adopted. In addition, according to scholars (see Balčytienė 2002; Lukošiūnas 2005), this was the start of the first period of independent television broadcasting history during which the State television company was changed from a tool used to spread propaganda to a public service 6 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. Although, this question can be answered in a couple of different ways, this work is a combination of theoretical and empirical study. In order to answer the main question, two sub- questions are raised. 7 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