US embassy cable - 03ZAGREB2082

UNCLAS  ZAGREB 002082 
 
SIPDIS 
 
 
STATE FOR EUR (ROSSIN); EUR/SCE; EUR/PPD (HORNBUCKLE) 
 
E.O. 12958: N/A 
TAGS: KPAO, PREL, HR, Econ/Privatization 
SUBJECT: CROATIA'S THIRD TELEVISION CHANNEL PRIVATIZED 
 
 
1.  Summary:  At its September 16 session, the 
Croatian Radio and Television Council selected the 
German-Croatian group, "HRTL," for a 10-year 
concession for national television broadcasting in 
Croatia, thus privatizing Croatian Radio and 
Television's (HRT) third TV channel.  The 
privatization had attracted interest not only within 
Croatia, but also from major European broadcasters. 
After the decision was announced, Croatian media 
circles quickly began to speculate that the end result 
will be too much German media influence in Croatia. 
End summary. 
 
2.  In December 2002, the Croatian Government 
announced a public tender process to lease the third 
HRT channel.  The privatization attracted interest not 
only within Croatia, but also from major European 
broadcasters, and seven companies filed bids with the 
state Radio and Television Council.  The winner, HRTL, 
consists of the German RTL television company and a 
group of Croatian companies, including "Agrokor," 
"Podravka," "Atlantic Group," "HVB/Splitska Banka," 
and "Pinta TV3."  Overall, RTL has 23 television and 
22 radio stations in eight European countries. 
HRTL prevailed over, among others, the "Rovita" 
company, whose backer was British media magnate Rupert 
Murdoch. 
 
3.  HRTL has announced that it will start broadcasting 
primarily entertainment programs, with a heavy dose of 
locally-produced shows, within the next six months. 
Given the money and talent behind HRTL, there is no 
doubt that it will provide state-owned HRT with strong 
competition, and it is generally hoped that the new 
commercial channel will raise the standards of 
Croatian journalism and of Croatian programming.  HRT 
will continue to broadcast on two nationwide channels, 
HRT1 and HRT2. 
 
4.  HRTL will have to pay the equivalent of $50,000 
for the annual broadcasting license, as well as large 
amounts of money to use the distribution system and 
satellite connections built years ago by HRT.  Only 
large international corporations had the resources to 
make an investment of this size, and, in fact, HRTL 
has already announced it will invest approximately $30 
million in the first year.  (Note: Foreign companies, 
however, could not apply without support of their 
domestic partners, since Croatian law prohibits 100 
percent foreign ownership of a national TV channel.) 
Before the decision was announced, there had been 
speculation among media watchers that any losing 
bidders would appeal the Radio and Television 
Council's decision, but as things stand now, there are 
no signs that they will do so. 
 
5. The Mission of the Organisation for Security and 
Cooperation in Europe (OSCE) to Croatia issued a 
statement on September 17 stating that it hoped that 
the decision to allocate the frequency of the third 
national television channel to a private bidder would 
promote the private broadcasting sector in Croatia and 
introduce healthy competition to the national 
television scene.  Mission head Ambassador Peter 
Semneby said in the statement that "... the bidding 
procedure ... appeared to be transparent", and that, 
"This will hopefully contribute to the pluralism of 
the television market in Croatia and benefit the 
Croatian public through a wider variety of views in 
television news programming.  We are satisfied with 
the openness of the selection procedure, regardless of 
who was eventually awarded the tender." 
 
6.  Comment:  While there is general satisfaction with 
the professional quality of RTL, Croatian media 
observers have already started commenting that, with 
this decision, Croatian media have, de facto, been 
turned over to German ownership.  Considering the fact 
that the German company "WAZ"--a co-owner of the 
German mega-group "Bertelsmann"--owns 50 percent of 
strategic shares in the largest Croatian newspaper and 
magazine publisher "Europa Press Holding" (EPH), some 
Croatian voices in the media are speculating that 
German strategic financial, media and political 
interests have prevailed in Croatia.  Unfortunately, 
the HRTL-run channel will not be operational for the 
parliamentary elections expected for November 23.  The 
private channel could have provided broader media 
access for all political parties, which was an issue 
 
for the last elections in 2000. 
FRANK 
 
 
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