The End of the Highest Priced Media Mission in Bosnia-Herzegovina

Dossier: The Case of OBN

By Radenko Udovicic

            Although it has been emphasized on several occasions over the past months, in particular as an issue in the media, that the Sarajevo-based Television OBN (Open Broadcast Network) was facing major financial difficulties caused by the fact that the international community has stopped financing it, for most of its viewers, however, the real bomb was the announcement at the beginning of December last year that Gavrilo Bobar, a businessman from Bijeljina, Republika Srpska, would become OBN’s majority stockowner. News leaked out of OBN itself that negotiations on the sale of this television station were almost completed. It seemed that a spectacular sale to one of the wealthiest people in Bosnia-Herzegovina would end the agony that this influential TV house from Sarajevo has been going through since the day it was announced that foreign donors had definitely decided to stop providing financial support, maintaining that OBN had completed its mission. Bobar promised he would not change the concept and staffing at first, although informed experts believe this would have happened very soon because the commercial character of the station would have called for it.

            And then, although it seemed that talks on the sale of OBN television were almost completed, Gavrilo Bobar suddenly walked away from the deal, and one of the three most powerful TV organizations in the country entered a very difficult situation.

            Why are we giving so much attention at the beginning of the OBN story to an unrealized pre-contract? First, the sale of OBN, if it had taken place, would have been the first major financial transaction in Bosnia-Herzegovina’s broadcasting system since the end of the war. Bobar’s decision to walk away from the acquisition may, however, mark the beginning of the end of this media organization because its staff has already started leaving the station, and a small group of local journalists and managers have been trying to continue broadcasting to prevent a complete collapse of the system. Without money, which Bobar would have been able to invest instantly (for programming, and also probably for repaying debts), it will be hard to continue even minimal production. And finally, perhaps the most interesting issue is the speculation that Bobar was disqualified as a buyer by the political and business interests of part of the international community.

            What makes this even more serious and important is the fact that OBN was founded by the international community in Bosnia-Herzegovina on the eve of the first post-war elections in 1996 with the aim of breaking through information blockades inside the country and stimulating the creation of a plural, democratic environment. The station was financed by a group of donors from the world’s most developed countries. According to available estimates, in addition to advertising resources, around $20 million in donations was invested over five years in its financing. The biggest expense was leasing satellite links for sending signal to local affiliates’ terrestrial transmitters.

            OBN currently broadcasts from noon to midnight during the week, and starts in the morning during the weekend. Program produced by OBN is reduced, and foreign programming consists of educational, film and sports contents purchased during the time of stable business. The number of workers has been reduced from 150 to 60, who have been working for minimum wages in the past three and a half months. The management hopes to maintain program continuity until a solution is found for the station, i.e. until a new buyer is found. According to General Manager Gabrijel Vukadin, the management has been negotiating with several potential buyers, some of who are from other countries. Although he declined to say who they are, he says he believes negotiations will soon be completed successfully. In any case, time is not working for OBN and each new day in these conditions means sinking deeper into debt as marketing revenue for such a nationwide TV network is not sufficient.

The First True Bosnian-Herzegovinian Network

            OBN was the first television network in Bosnia-Herzegovina based on production and joint broadcasting of a number of TV stations. The first program was aired on September 7, 1996, seven days before the first post-war elections in the country. The then name TVIN (TV International Network) stood for a central studio which produced a primetime news program, consisting of items sent by independent local stations from Sarajevo, Tuzla, Mostar, Zenica and Banja Luka, as well as items from its own production. The television was completely financed by the international community with very big funds. The aim was to establish a strong media organization whose openness of program and coverage of the whole country would stimulate democratization in Bosnia-Herzegovina. TVIN did not have its own transmitters and frequencies. It broadcast its programming via the network member stations’ transmitters.

            Five local TV stations – Studio 99 and TV Hayat from Sarajevo, TV Tuzla, TV Mostar, TV Zetel Zenica, and a bureau in Banja Luka (which soon became today’s ATV Banja Luka) founded an association based in Zenica, which was supposed to provide the foundation for the new TV station. The state, that is the authorities of the two entities, at that time showed resistance to such a station and did not want to allocate frequencies for its program. Practically, TVIN’s survival on air depended on the good will of the local stations.

            However, very soon after the first elections this concept of the TV network entered a crisis. There was a clash of interest between the local TV stations, members of the network, and the central studio in Sarajevo run by foreigners. The situation was especially alarming for TVIN in Sarajevo, where NTV 99 walked out of the project first, and then the management clashed with NTV Hayat. There was a danger that the Bosnian-Herzegovinian capital would be left without TVIN’s program. A newly-founded TV station took the role of covering Sarajevo. This station was TV X, which soon stopped broadcasting its own programming and became an OBN transmitter. The five local stations – the domestic founders of TVIN (later OBN) – advocated for a network of equal TV stations, while the OHR, at that time the main factor in positioning the station, was in favor of a strong and independent central production point, which would use local stations as bureaus or producers of a smaller part of programming and as re-broadcasters of signal from the central Sarajevo studio. Clearly, foreigners did not trust local stations, and local stations could not agree amongst themselves on the character of the network and “leadership” in it. The consequence of this was the decision to gradually abandon the initial concept and to establish a strong production center in Sarajevo, which was to use TV time in the programs of a number of local radio stations on a contractual basis and in return to air some of their programming within the network.

            A special board based outside of Bosnia-Herzegovina was formed to see that donor countries’ interests are fulfilled. The name of the station was changed (first to OTN – Open TV Network, and then to OBN), its own correspondent network was strengthened, and staffing reorganization was carried out. OBN’s director general was a foreigner, but other executive positions were given to local professionals, many of them former employees of RTV BiH. It was concluded that management should be composed of local experts with a “supervisory” function of foreigners. After several failed attempts to establish a stable local management team, this was finally done in 1998, but there was always a foreigner on the team whose task was to ensure foreign donors’ interest and character of programming that the international community could stand behind.

            Despite a lot of pressure from the authorities, in time TVIN (later OBN) managed to receive its own frequencies on Mts. Trebevic and Vlasic. OBN’s signal covers 70 to 80 percent of Bosnia-Herzegovina’s territory in both entities, which is an extraordinary success in the politically and nationally divided Bosnia. OBN also had its own satellite program. The stations participating in the network receive programming from the closest repeater, and those that cannot do that, from satellite. This was the price paid for the non-existence of a terrestrial network in the country.  Good coverage is accomplished primarily thanks to the Vlasic repeater whose strength is 10 KW, which receives programming from satellite and covers western Herzegovina, part of the Bosnian Krajina in the northwest, the entire central and northern Bosnia, and Posavina. The satellite that was used was Europe by Satellite in Brussels, which transmitted election program for the diaspora throughout Europe starting September 2, 1998. The only areas not covered by signal were the northwestern tip of the Bosnian Krajina with the exception of Cazin, southeast Bosnia, eastern Herzegovina with the exception of Rudo and Trebinje, and Capljina and Stolac. Around 1,500,000 people are able to watch OBN program.

            Judging by its programming character and structure of associates, OBN is the only Bosnian-Herzegovinian television station in the true meaning of the word. News programs cover events from all parts of the country and all three ethnic territories. Still, it is noticeable that events and issues in the Federation are better covered than those in the Republika Srpska. It is of particular note that correspondents from parts of Bosnia-Herzegovina which had been considered “black holes” are not reporters sent there from Sarajevo, but generally domicile journalists, who are very familiar with the situation on the ground. Journalists have managed to provide more or less balanced reporting. Still, such editorial policy has not made the program uninteresting or sterile. ONB journalists investigated and commented on current events in Bosnia-Herzegovina and took autonomous positions, which was particularly difficult in conditions of strong political tension, distrust and post-war frustration. The sting was often pointed at the political parties in power, so it is not surprising that the authorities sometimes had a distrustful and even hostile attitude towards the station.

            Seventy percent of OBN’s program is foreign production, mostly donated or purchased series, science programs and sports events. The remaining 30 percent are informative and political programs (news, interviews, debates) and entertainment and music programs usually produced by the network members themselves. The aim was to have a half-half ratio between foreign and domestic production, but this was not accomplished due to lack of innovative staff more than lack of money.

            Public service programming (informative, educational and documentary programs) took up an imposing 42.5 per cent, entertainment programming took up 44.9 percent, and commercials 5.6 percent of overall programming. It is interesting that OBN, as a commercial station, had more public service programming than state-run (public) televisions – Television BiH and TV Republika Srpska, which had 34 and 30 percent of this type of programming respectively.[1] Basically, OBN was a public service implemented in the name of domestic public factors by the international community, although under the rules of the Independent Media Commission (IMC), which is the supreme regulatory body in Bosnia-Herzegovina for broadcasters, it does not fall in this category. Namely, the IMC rule on public broadcasting defines a public station as any broadcaster which receives 51 percent or more of its operating support from a government institution or agency at any level, or an organization which itself is 51 percent or more owned or financially supported by a government agency. Public stations are also stations financed by a political party, or donors from FR Yugoslavia, Croatia or other countries that are not donor-country members of the Peace Implementation Council (the members of the Council are western European countries and the United States). This latter characterization of a public broadcaster is very interesting and has a strong political motivation. It is clear that the IMC fears, not without ground, that financing coming from Croatia, Yugoslavia or, for example, Islamic countries may be politically motivated and contrary to the political aims of the western community, which bears the biggest burden in maintaining stability in Bosnia-Herzegovina. Hence, placing media outlets financed by the Bosnian state, or any other non-western state or agency, into the category of public media, which have a bigger obligation than private media, is a guarantee that their professional work will be easier to control. This rule practically put OBN in a privileged position, but it also gave it a task that local public media (actually at that time state-run media) objectively could not carry out.

            OBN currently operates as a public network with mixed domestic and foreign ownership rights, although practically its entire capital is in the hands of a board of foreign donors. Actually, its legality in Bosnia-Herzegovina is based on the international community’s exceptional powers. (We will talk about this in more detail later on.) The aim of the station’s management was for OBN to become gradually a commercial domestic network, which will make most of its revenues from marketing. This has not been accomplished even remotely, among other reasons because donor funds were coming continuously for a while, which obviously offered no incentive to management to fight for its position in the market.

            After the collapse of the initial five-member association of local TV stations, the following stations were or still are OBN’s members/participants as correspondents and program transmitters: TV Mostar, TV Oskar (Mostar), TV Zetel (Zenica), TV Tuzla, TV Cazin, ATV Banja Luka, TV Erotel, TV 3 (Prnjavor), TV Tesanj, TV Zavidovici, ATV Banovici, TV Kiss (Kiseljak), TV Travnik, TV Rudo, and TV X from Sarajevo.

The Political Aims of the International Community

            OBN was established and developed during a period of expansion of broadcasting networks – foreign or combined foreign and domestic – which was a new characteristic of the media environment in Bosnia-Herzegovina. The end of 1996, and all of 1997 and 1998 were marked by attempts of the international community, and to a lesser degree of local journalistic forces, to create alternative broadcasting networks and establish small independent TV stations in Bosnia-Herzegovina. Their independent programming was supposed to cover the whole country, i.e. both its entities, thus establishing an alternative programming offer, in particular in communities with a monopoly of state-run broadcasting networks or strong local stations controlled by local authorities.

            OBN’s characteristic, at least at the very beginning, was promotion of the Dayton Agreement and support to the mission of the international military and political forces in Bosnia-Herzegovina. This dimension was widely present in all its programming, because local media, regardless of whether under the influence of the authorities or relatively independent, were very critical, and even hostile towards some of the international community’s activities.

            An important achievement of the OBN network was more or less good informative coverage of all parts of the country (which is not the case with purely domestic broadcasters), and an attempt to present events and issues in all parts of the country in a neutral and balanced way. Finally, this project was also characterized by the fact that it was financed with huge resources given by foreign donors and that its management, more effectively than formally, was in the hands of foreigners. However, local staff edited the program and enjoyed a satisfactory degree of independence.

            There were three common motives for supporting this project. The first is the interest of Europe and the free world for Bosnia-Herzegovina to remain an integral and multiethnic state soon joining European and world civilizational trends, supported by a global media project. The second reason is an effort to stabilize the political and general social environment in the country and take part in democratic transition of local media and their overall environment. The third motive is based on the huge power of broadcasters. Bosnia-Herzegovina as a volatile country in a strategically very interesting part of Europe is an ideal place for wide engagement of political, military and humanitarian resources from relevant countries of the world. In Bosnia-Herzegovina, where more than 40,000 foreigners lived until recently, it was not unimportant how activities undertaken by international donors or the countries they come from are presented to the local population. Inflow in the media space enabled influence on profiling the views of the Bosnian-Herzegovinian citizens.

            There is no doubt that OBN played a big role in pluralization of the media space in Bosnia-Herzegovina. Still, many local factors have criticized its position, which was exclusive until recently, and even warned of the danger of media colonization if relations in the public and commercial sector were not legally regulated and applied without exception. OBN faced a particular problem of being seen as a western propaganda exercise without any other function but to proclaim the values of the Dayton Agreement.

In Sarajevo, as the largest urban and consequently the largest media community, the station has been faced with a lot of criticism. Accusations have come from TVBiH, which was jealous of the resources spent on OBN, which it characterized as unfair competition; also from the former communication department in charge of licensing program channels, which claimed that OBN was operating illegally and refusing to pay taxes; and from the private stations Studio 99 and Hayat, which withdrew from the OBN program, justifying their move by insufficient broadcasting of their programming in the joint program and an attack on their own exclusive TV time. However, both these stations kept the equipment procured by OBN. The very author of these lines, while he was working at the Independent RTV Studio 99, attended the meeting right after the war where international factors, in charge of the media in BiH, suggested director Adil Kulenovic a formation of network independent TV stations that would jointly produce objective high-quality programming. The initial proposal was to broadcast the headlines at the time when Oko 22, Studio 99's prime time news programming, was normally broadcast, only with some production improvements. The news would have been composed of clips sent by the network's members from all over BiH and that would have been a major step forward in terms of information coverage. The international community however abandoned this plan that placed the decision-making authority in the hands of BiH local stations shortly after the meeting.

OBN’s bitter opponents were also independent media, which called it the “biggest money consumer” unable to impose itself with quality programming. Still, OBN program came in handy for certain less developed TV stations because it substituted their obligation to produce their own program, and hence some of these stations (such as NTV Zetel or TV X) became only OBN transmitters. The public reacted sharply to a report that most of OBN’s local staff did not sign any work contracts, and a group of journalists even sued the station. Finally, political parties in both entities considered OBN an intruder in their monopolistic positions established on state-run radio and television stations.

            Disinclination towards OBN of one part of the media community was justified only to some extent as it was based on jealousy over the invested money. Namely, a donor logic has been present in Bosnia since the end of the war, and the majority of media outlets have been waging a real battle for international donations more than they have been fighting for their position in the market.

Who Really Owns OBN?

            Although the issue of OBN ownership, at least according to statements made by its international and local employees, is not disputed at all, it is more than obvious that this television station was created in a legal vacuum, in which the international community used its exceptional powers to create a TV system covering the whole of Bosnia-Herzegovina. Basically, OBN never entirely became an integral part of the domestic broadcasting system.

            The initiative for forming this television station came from the Office of the High Representative in charge of civil implementation of the peace agreement. It strongly lobbied for the necessity of creating a television station cherishing the ideal of an objective Bosnian-Herzegovinian media organization for the whole country. Due to this, OBN (formerly TVIN) was called “Bildt’s television” (Carl Bildt, High Representative at that time). However, legally speaking, the Office of the High Representative did not own OBN. The office only had a special Media Department which liaised with OBN’s news section due to the significance of objective information in post-war Bosnian-Herzegovinian society. However, OBN says that, despite consultative support from this department, it never influenced its editorial policy.

            Initial resources for establishing OBN were given by the governments of the United States, Sweden, Japan, Canada, Spain and Italy, and the European Commission and Soros Fund. The money was given to a Trust, formed in 1996 and seated in London. The Trust was basically an informal gathering of donors and was primarily supposed to have an advisory role. However, essentially the Trust in time became OBN’s owner, because the donors gave it the right to dispose of money and plan the television’s future. All resources arriving for OBN from donors were usually used for the needs of the central newsroom and studio, as well as for paying for satellite links, which used up most of the money. Some equipment was given to OBN affiliates who were broadcasting its program or participating in it with their own contents. Still, in time this situation became unbearable, because it was incomprehensible to have a television station operating in Bosnia-Herzegovina without ground in the domestic legal system. This problem became particularly obvious when a group of journalists sued OBN for unjustified dismissal from work. Therefore, a local company was founded in Bosnia-Herzegovina called OBN d.o.o. (limited liability company), whose owners are four Bosnian-Herzegovinian citizens employed with this TV station. The ownership structure was established in such a way that they had 51 percent of ownership, and the Trust had 49 percent, which met the legal requirement for OBN to be a media organization with local majority capital. However, the Trust basically remained its owner and retained the right to dispose of the donated resources, because the founding rights of the local company were absolutely symbolic and played no role in factual ownership. Hence, OBN has two owners, a domestic/foreign one in Sarajevo and a foreign one in London. We have no insight into this complex ownership structure and their mutual legal relations, but it is obvious that this specific situation considerably complicated negotiations with potential buyers and befogged the answer to the question of responsibility for possible collapse or salvation of the TV station.

            Most of the people we spoke to claim they know who owns OBN and there is nothing unclear about it, but the author of this article is more inclined to believe that lack of transparency, and even possible incorrectness in legal status, is the main reason why OBN met the fate of a project not run by a proper boss. If a “proper boss had always been in the right place,” probably the consequences of the turnabout made by international donors regarding development of broadcasting in Bosnia-Herzegovina would have been analyzed more seriously. Namely, the High Representative passed important decisions to establish the Public Broadcasting Service of Bosnia-Herzegovina, and international donors concluded that OBN had completed its mission. Someone who is responsible for the $20 million spent should also be responsible for the new market position of the organization or at least for making a proper analysis of its successes and failures.

The End of a Powerful Project

            Two years ago the OBN Board and Council of Donors made a business plan for financing the television station in the next five years. It was stipulated that donations for OBN would decrease by 20 percent each year and that the ensuing financial vacuum would be filled with commercial revenues. OBN says a development plan was made on the basis of financial promises. OBN undertook business commitments and created a development strategy for the next five years. However, the European Union, according to OBN executives, has not fulfilled the undertaken commitments to this day. All other donor countries carried out their commitments for 1999, and the United States also gave half of the funds for 2000. “However, when it saw that the European Union had not given a single mark, the United States also withdrew from financing the project,” says OBN General Manager Gabrijel Vukadin, denying speculation that America is to blame for OBN’s collapse, at least in this stage.

            The European Union, on the other hand, says reports that it did not fulfill its obligations are arbitrary and untrue. “We have given 4.7 million EURO for OBN so far. The last contribution was in April last year. Although the money came from our budget line for 1998, it was intended to be used for OBN’s expenses for the bigger part of 1999,” says European Commission spokesman in Sarajevo Frano Marojevic.

            It was clear already in the middle of 2000 that the powerful international OBN project, due to lack of financial and other forms of support from the international community, would be shut down or at best transformed. In June the same year a meeting was held, attended by Alan Shearer, an international agent in charge of restructuring RTV BiH into a single, modern public broadcasting service for all of Bosnia-Herzegovina, and Chris Riley, a media representative of the OHR, the organization with all powers in implementing the civil part of the peace agreement. They proposed to the Board to include OBN into the restructuring process of the public broadcasting service, both in the entities and at state level. The OBN management accepted the solution, but later different opinions appeared on how the OBN should be transformed into this system. Certain OBN managers said this TV station should maintain its independence and operate as a production center of the Public Broadcasting Service (PBS). On the other hand, local executives from RTV BiH who are involved in its restructuring maintained that this was out of the question and that OBN should simply drown its technical and journalistic capacities into PBS. Be it as it may, the process of restructuring the public broadcasting system has been slowed down, and serious analysis of a merger between OBN and the future PBS has not started yet.

            In the aforementioned meeting, European Union representatives gave full support to the Public Broadcasting Service and inclusion of OBN into the project. However, heavy criticism later came from the European Union regarding expenditure of its resources given earlier to OBN. EU’s internal auditors criticized the contract with OBN because financing was not specific enough. Under strict European Union rules, each tranche of money must be spent for a specific purpose and supported by a detailed report. This was not the case with OBN. Therefore, the EU sent a special audit team which went through expenditure of EU resources from August to September 2000. The results, as Frano Marojevic tells us, were quite negative.

            Most criticism referred to expenditure of resources appropriated for satellite broadcasting. However, OBN staff told us that, as EU funds were constantly late, management provided the necessary money from the Government of Sweden, which covered satellite costs. And then, when EU funds arrived, they were used for other purposes also essential for production. However, the EU audit team was unwilling to recognize these expenditures because a change in the funds’ appropriation had not been requested, which the donation beneficiary is obliged to do under the contract. This created an unpleasant situation, used by OBN-disinclined Bosnian-Herzegovinian press to write a series of articles on fraud and misappropriation of funds.

            “No one was putting money in their own pockets. Still, the money simply was not used for the specified purpose. OBN was obliged to request a change in what the money would be used for. Instead, they presented an incorrect situation to us,” says Marojevic.

            Audit showed lack of control over financial transactions. The general assessment was that there was no financial management or some other structure that would provide transparency. Although European Union resources were used to surmount financial difficulties, not for someone’s personal benefit, the rules of this organization are clear and have no understanding for excuses such as “we had to, because you were late.” As a result of this, a radical change in financial management was first requested. Second, the EU refused to recognize OBN’s large outstanding debts, and therefore the resources that it was planning to send in the future were supposed to be used strictly for production or technical capacities. And finally, OBN was asked to return the money given by the EU for satellite expenses, which were already paid for by the Government of Sweden. “We cannot pay for something that is already paid. These are our rules,” says Marojevic. He also told us that OBN failed to accept these conditions with the explanation that it lacked the time and opportunity to fulfil them because it was in a grave financia

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