Jan Culik

On Thursday 9 September, CME-owned television "service provider" Ceska nezavisla televizni spolecnost (the Czech Independent Television Company, CNTS) terminated with immediate effect all its technical and production activities. It wound down its broadcasting of television news via the Internet and made 270 out of 350 of its employees redundant. All of them will receive redundancy payments, as stipulated by law. Some of the sacked employees have been offered jobs by Vladimir Zelezny and his new television station, CET 21.

Vladimir Zelezny, former head of CME-owned CNTS, who controls Nova TV's licence holder, CET 21, fell out with his American investors in the autumn of 1998, when it was found that he was trying to asset strip the company. CME sacked him from the post of chief executive and started proceedings against him at the International Chamber of Commerce in Paris in the spring of 1999. Zelezny retaliated by setting up a new "service provider," Ceska produkcni, with the help of a new bank loan of more than USD 30 million, which people around him managed to secure in spite of the fact that Zelezny's assets have been frozen by the courts.

On 5 August 1999, Zelezny pulled the plug on the CME-owned CNTS and switched over Nova TV broadcasting to his new set-up, housed at the Prague Barrandov Film Studios (See the author's article "Zelezny Pulls the Plug on Czech TV Nova"). The value of CME stock on NASDAQ has registered sharp falls.

Official apathy

The Czech authorities, including the Council for Radio and Television Broadcasting, have assumed a very laissez-faire attitude towards the problem, in spite of the fact that CME management and CME shareholders in the United States are accusing Zelezny, in effect, of stealing the television station from them. Nova TV used to be the most profitable of CME's East European television companies. CME is arguing that Zelezny was bound by strict loyalty agreements which he has reneged upon. Zelezny argues that it was not he personally who had pulled the plug on CNTS, the decision was made by CET 21 (of which he is the majority owner). CME shareholders and management have asked top American lawyer Lloyd Cutler to get involved in the matter. After having written to President Havel, asking him for help (Havel refused to get involved), CME shareholders are trying to persuade the American authorities to complain to the Czech government within the framework of an agreement which protects American investment abroad.

On 31 August 1999, the Council for Radio and Television Broadcasting invited both Vladimir Zelezny, representing CET 21, and Jan Vavra, representing CME, to its meeting. A group of this committee's members, represented by cameraman Stanislav Milota wanted to take away CET 21's licence for systematically breaking the law by broadcasting allegedly biased and unbalanced programming. However, in a secret ballot, only five out of thirteen councillors present supported this motion. The Council has proved to be uniquely ineffective throughout this whole saga, and it is possible that it will be recalled by Parliament in October.

The media commission of the Czech Parliament has asked the Council for Radio and Television Broadcasting for a statement on the current CME-Zelezny conflict. The Council refused to commit itself: "As long as the conflict remains on the business level, there is no legal reason for the Council to intercede. However, it is our duty to see that the media law is not being infringed."

Propaganda

But the law has been infringed: CME's CNTS has tried to continue broadcasting without a licence and Zelezny's CET 21 has been systematically misusing the weekly programme Call the Director, fronted by Zelezny himself, for spreading its own propaganda about the conflict, while denying the other side their right to reply.

Many believe that Zelezny has been breaking the law for years, but the members of the Council for Radio and Television Broadcasting are afraid to pull the plug on a highly popular downmarket TV station. "What? Should we close down a nationwide TV station just because of one of its programmes might be unsatisfactory," one member of the Council, historian Oldrich Tomek told the Prague-based weekly Respekt.

But there are other allegations raised by the Council regarding Nova's lack of financial transparency, biased news broadcasts and the decrease of programming quality as a result of irregular methods of obtaining programmes. Some seek to investigate the truth behind claims of former Nova staff, for example Martin Manak, who in his book My Mutiny against Nova wrote, "It was the utmost priority that I should damage the Sazka betting company by my television reports."

There is evidence that news reports broadcast on Nova TV were often paid for by interested businesses. But the Council for Radio and Television Broadcasting sees this evidence merely as mud-slinging by the hostile parties. According to Respekt, the Council is fully beholden to the political powers that be.

The Czech Republic is currently governed jointly by the Social Democrats and the Civic Democratic Party, bound together by the so-called "opposition agreement." Historian Tomek told Respekt: "According to my information, one of these two political parties wanted the Council to start proceedings against Zelezny, the other was against this. Thus no proceedings were initiated."

Dodgy maths

Zelezny and CET 21 have published their Letter to the CME Board of Directors on the Yahoo Internet pages where small CME investors debate the Nova TV problem. The text is based on manipulative half-truths. A number of laws and regulations are quoted by Zelezny inaccurately, in order to lend credence to his assertions. As usual, minute, laborious work is needed to disentangle the deception. Zelezny always assumes that most people will not be able to have such a close up view.

For instance, in the letter Zelezny maintains that "The Law abolished some of the licence conditions, thus making it impossible for the regulatory authority to control the service providers. The law also made it impossible that the licence holders should share any of their roles with the service providers."

What in fact happened was that the radio and TV broadcasters, especially CET 21 in tandem with CME, were developing enormous pressure on the regulatory authority to make it abolish all the original quality conditions of the TV licence. This included Condition No. 17, which had given the Council the right to veto any ownership changes in CNTS and which was abolished at the end of 1996. The law did not say anything at all about "making it impossible that the licence holders should share their roles with the service providers" as Zelezny's letter states.

Statistics were also falsified in the CET 21 letter, addressed to the CME Board of Management. For instance, the CET 21 letter maintained that CME had invested USD 65 million in the Czech Republic and gained property worth USD 200 million for this. Yet, on 25 January 1997, Vladimir Zelezny said in his programme Call the Director: "Mr Fertig (the then CEO of CME) and I were counting what the Czech Republic had given those evil American imperialists. CME has invested more than USD 40 million in the Czech Republic over the past three years. So far, they have recouped USD 10 million. CME is a very correct investor."

So, in January 1997 CME had invested USD 40 million and recouped USD 10 million, while now, two years later, it had invested USD 65 million and recouped USD 200 million. Is that realistic? Media analyst Milan Smid has looked at these sums for the Czech Internet daily Britske listy and has come to the conclusion that the real sums are rather different: CME has invested some USD 80 million in the Czech Republic and has recouped approximately USD 120 million to date.

Stay tuned...

Jan Culik, 11 September 1999

The author is the publisher of the Czech Internet daily Britske listy.

Other Articles by Jan Culik in CER:

UK: Central Europeans Keep Out!, 30 August 1999

Czech Public TV: The yellow-bellies, 23 August 1999

Zelezny Pulls the Plug on Czech TV Nova, 16 August 1999

Czech Media and Civil Society: A survey, 16 August 1999

Czech Revival: No Pulse 99, 9 August 1999

Princess Diana, Al Fayed, the CIA and a Czech Spook, 2 August 1999

Nova TV: Commercial success or embarrassing failure?, 2 August 1999

Book Review: Martin Fendrych's Jako ptak na drate, 26 July 1999

A Concrete Example of Muddy Thinking in the Czech Press , 19 July 1999

Press Freedom under Threat, 12 July 1999

Corruption at the Czech Law School, 5 July 1999

The Czech Malaise, 28 June 1999