Flash report 6: Croatia

Flash report 6: Croatia
Local media in Croatia: Strategy of dependence
Surveys show that, in general, local media are the most trusted sources of information among local audiences. The phenomenon is relatively easy to explain – readership/audiences tend to trust information they can “personalize” and identify with in authors they know, in familiar faces (or voices). The other important element is, of course, local “color”: national media simply do not have time, interest or resources to present issues important to smaller communities in such detail as local media do. A recent survey conducted in Croatia showed that 69 percent of the people surveyed consider local news “more important” than national or international news (Ipsos Puls and Agency for Electronic Media, autumn 2013).
When it comes to local media, Croatia has a long and “rich” history. For example, a local daily newspaper in the region of Istria (Glas Istre) for decades had a circulation that made the paper reach almost two-thirds of households in the area of distribution, leaving every other major “national” newspaper behind. Nowadays, such loyalty of readership is rather unimaginable. This is due not only to new communication platforms that have transformed access to information (including local), but is primarily due to the crisis of the media and advertising market, which has affected local media the most. Although detailed data on the overall local media market are missing, existing data indicate that the radio advertising market dropped almost 80 percent in 2014 compared to 2009. “Local media advertising income is in decline, literary month after month. We have no other option but to reduce the number of employees or their salaries, or to become even more dependent on local government support”, says Marijan Beljan, president of the National Association of Local Media (November 2014).
Ownership structures affect local media performance
Among local radio stations in Croatia, 67 percent are privately owned, while local governments are major shareholders in 25.5 percent of them (out of which 12 percent, or five radio stations, are owned solely by local governments). On the surface of it, these statistics may look as reasonably acceptable – especially given the fact that many local radio stations were licensed in the early to mid 90's (when private ownership of media was not yet legally defined), but there are other important elements to be taken into equation. Careful reading of the Register of Owners with the Agency of Electronic Media shows that almost one third (32) out of 103 privately owned local radio stations in Croatia are owned by eight individuals only. Furthermore, most local radio stations are members of a number of “networks”, owned/controlled by a handful of individuals; chiefly from the same group of “the most frequent” owners. The rationale behind this is obvious: networks can, ideally, increase the advertising income of local radio and/or TV stations by offering a “national” audience to local media or lowering costs through jointly produced programming, etc. In reality, however, networks tend to reduce the proportion of locally produced and locally-oriented programming, thus intervening in the very essence of local media: locally produced and “colored” programming aimed at local audiences. Efficient implementation of the “network” model is one of the main reasons for lack of interest in the process of local media privatization: individual owners and their respective business lobbies have already penetrated the ownership structure of (commercially viable) local media of their choice; other media are being efficiently controlled with “networking” mechanisms. Networks supply (news and other) productions and a portion of networks’ advertising income to more than 50 percent of local commercial radio stations. Without networks, commercial radio stations would have to increase the number of employees (for substituting network productions) with lower advertising income, which is simply not realistic.
Croatia is just about to enter the seventh year of recession that has literary halved circulation figures and advertising income. An end to the crisis is not in sight: in 2015 even “zero” growth will be considered a “success”, while not even the most optimistic scenarios foresee reaching 2006/2007 figures in terms of income and employment before 2020.
It is disputable whether the media industry should have adopted its business models and “survival kits” in the early stages of the crisis, rather than passively waiting for “good times” to come back. The fact is that most local media have managed to weather the recession (unlike some of the nearly iconic national media), but with consequences that have seriously affected their reliability, integrity and even – as elaborated above under “networks” – their very raison d’être.
The ownership structure is merely one, although important, element that seriously compromises local media integrity. It is obvious and almost self-explanatory that media with a local government ownership structure (which usually includes benefits such as free or under-market prices for office/newsroom space) are generally not considered prone to criticism towards the authorities they live off; even though this type of criticism, along with providing local service information, should be their core activity. The same goes for most local media, including those that are 100 percent privately owned: most local broadcast media, regardless of the ownership structure, have contracts with local authorities that subsidize, or entirely finance, some of the local news and information production. The financial crisis has nearly devastated small and medium size businesses and service providers and consequently has dramatically affected the local advertising pool, as one of three “constitutive” financial pillars of local media. The second pillar – the above mentioned financial support from local authorities – is, as elaborated, not only utterly questionable when it comes to media integrity, but is gradually drying up. New tax regulation will take from 8 -12 percent from local government budgets and direct it to the central budget. This means that local governments will have barely enough to cover basic infrastructure maintenance and salaries and there will certainly be less money for media and culture. In times of crisis, local governments naturally collect less tax; in addition, recent fiscal regulations left less local income at their disposal, with a higher percentage flowing into the national budget. This means that less money can “buy” more minutes of programming and more influence than ever. Fewer owners of local media (especially radio stations) and high dependence on networks controlled by the same owners additionally strengthen editorial control, making local media more vulnerable to business lobbies and interests of their owners. It should not be forgotten that local governments control the advertising market generated by local public companies, which gives them additional leverage to control local media.
Such an environment, characterized by absolutely insecure job positions and financial dependence on local authorities, media owners and connected business lobbies, is by definition a fertile soil for self-censorship or, more often, avoiding any “disputable” issues in reporting. Local journalists and editors are especially exposed to this type of “soft” but very efficient pressure: the risk of losing one’s job is high, while any type of professional protection seems to be light years away. A cynic could say there is no need for brutal attacks on journalists; “internalization” of censorship does the job more efficiently.
This is why the third pillar – financial support from public sources – has become increasingly important. It would be safe to say that exactly thanks to this “pillar”, many local media still exist and/or leave at least a few traces of quality production. 
Policies on development of local media sector
Croatian legislation has some country-specific elements that are designed precisely to provide local media with financial resources needed for their public function. Three percent of the subscription fee for the national public radio/TV service goes to the so-called Fund for Promotion of Plurality and Diversity of Electronic Media, which supports “productions of public interest” on local commercial radio and TV stations. The Fund has an annual budget of four to five million euros, providing project support of up to 100,000 euros. The model was initially designed to promote quality production, employment and self-sustainability of local commercial radio and TV stations, but has since become a sort of lifeline for the major part of local broadcast media. For sure, there have been many occurrences of non-transparent usage of the Fund’s resources, but prevalent opinion is that the benefit (basically - keeping tens of local radio and TV stations alive) is more important than discussing shortcomings. The Fund is partly based on “positive discrimination”, giving advantage to media or specialized productions in minority languages, thanks to which it became an important supporting element to this media sector. Along with financial support from government sources and, in some cases, direct support from respective foreign governments, minority language media have managed to keep their role. Some of them are almost exemplary in their own kind, such as the daily paper in Italian La voce del popolo with a continuity of 70 years, or the weekly magazine Novosti (published by the Serbian National Council in Croatia), which has become a leading weekly paper in Croatia content-wise, well beyond its “minority” mandate. “Positive discrimination” within the Fund’s practice exists also in the advantage given to non-profit media in terms of project financing, although their number (and influence) is still largely marginal.
Another element introduced in order to allow higher advertising income to local media is a legal stipulation that says that “at least 15 percent of public companies' advertising spending” should be with local media. “This would be a much needed boost for local media, but unfortunately, this legal stipulation has not been respected and implemented”, says Denis Mikolic, president of the Association of Local TV Stations in Croatia.
However, the impression is that not even more efficient financial support from public sources would make a serious shift over the course of events. What is needed in order to make a change has much more to do with substantial elements (e.g. ownership structure and its integrity-related consequences) than with more stable or efficient financing.
Media Integrity
Media Ownership and Finances