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R 111321Z FEB 09
FM AMEMBASSY RIGA
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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 RIGA 000085 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SCUL KPAO PGOV ECON LG
SUBJECT:  Economic Crisis Hits Latvian Media:  Small and Regional 
Press Hardest Hit 
 
REF: 08 RIGA 000794 
 
¶1.  SUMMARY: The Economic recession in Latvia, the increase of value 
added tax for print media, and the decrease of advertising revenues 
over the past few months have had a dramatic effect on the Latvian 
media market.  Circulation and readership of newspapers and 
magazines is going down, as publications have become more expensive 
than a year ago.  Regional and small media companies are the hardest 
hit and may be forced to find new sources of funding - at the cost 
of their independence. End Summary. 
 
----------------------------- 
Newspapers:  Future Uncertain 
----------------------------- 
 
¶2.  Problems for the Latvian media began in 2008, when high 
inflation forced consumers and advertisers to cut back their 
purchases.  Difficulties increased at the end of the year, when the 
Latvian government increased value added tax for printed 
publications from 5 to 10 percent as part of the fiscal austerity 
measures.  The increase left newspaper owners with two options - 
raise prices for readers, or hope to cover the costs through 
advertisements.  Most publishers chose the latter option, but 
advertising revenue dropped 27 percentage points in January, and 
steeper drops are expected in the coming months. 
 
¶3. As a result of these challenges, larger publishing houses have 
made changes to their operations.  Some have delayed introducing new 
publications, cut back on existing ones, or reduced staff.  Despite 
this reality, most of the larger publishers report that the 
situation is better than they had expected.  Regional newspapers, 
however, have been hit harder by the crisis because of narrow profit 
margins.  Many have tried to save money by printing fewer pages, 
printing in black and white instead of color, reducing salaries, and 
cutting the number of employees. 
 
---------------------  -------------------------------------------- 
Radio and Television:  Regional and Public Broadcasters Hardest Hit 
---------------------  -------------------------------------------- 
 
¶4.  While not affected by the increase in value-added tax, Latvia's 
broadcasters, especially those that rely on state support, are 
struggling with decreased advertising revenue and funding cuts.  The 
state-supported Latvian National Radio  found itself on the verge of 
bankruptcy at the beginning of 2009 and facing major budget cuts. 
Critics accused management of mishandling the organization's budget. 
 A new director was hired to develop a plan to repay the radio's 
debt and bring operations back to normal.  He argues that the 
funding cuts are too severe and should be reconsidered.  To protest 
the proposed cuts, employees stopped broadcasts for one hour during 
prime time.  Employees and the public also demonstrated outside the 
parliament, covering their mouths with duct tape to symbolize the 
impact on the radio's freedom.  One proposal has been to merge 
National Radio with Latvian National Television (LTV), which faces 
challenges of its own. 
 
¶5.  Faced with reduced advertising and state revenues, LTV made 
several changes to their lineup including the cancellation of a 
number of programs.  The most notable was that of Latvia's most 
popular local TV soap opera, 'Neprata Cena' (The Price of Madness). 
The move prompted a loud public outcry and the Scandinavian-owned 
TV3 offered the production team, resources, and air time for the 
show to move to their channel.  The move highlights the fact that 
commercial broadcasters, especially those that are foreign owned, 
have managed to keep their heads above water, while public 
broadcasters and those who rely solely on funding from Latvia 
struggle. 
 
¶6.  Like the print media, regional broadcasters have been severely 
affected by decreased advertising revenues.   Latgale Radio (the 
only media outlet broadcasting in the Latgalean language - vitally 
important for regional identity) was recently sold because the 
station was deep in debt.  The new owners have replaced some 
Latgalean language programming with Latvian to increase 
listenership. 
 
------------------------------------------- 
Viewership:  More Viewers Turning To Moscow 
------------------------------------------- 
 
¶7.  With cuts in original programming on Latvian television, Russian 
television representatives in Latvia report more and more viewers 
are turning to Russian language channels which offer higher quality 
TV productions, especially non-news.  With very little local content 
produced in Russian, much of this programming comes from Moscow. 
 
¶8.  Over the past few months, the most popular local TV content has 
been news and current affairs.  Public debates on Latvian National 
Television such as 'Kas notiek Latvija?' (What's happening in 
Latvia) and similar shows focusing on the country's political and 
economic stability have become very popular.  Also, live broadcasts 
from political gatherings and reports on the riots in Riga, received 
 
RIGA 00000085  002 OF 002 
 
 
high ratings.  As a result, Latvian National Television has started 
a new news analysis program and re-arranged its current programming 
to allow more time for political, economic and social discussion and 
interview programs. 
 
------------------------------- 
Comment: Cautiously Pessimistic 
------------------------------- 
 
¶9.  A number of factors have made it more difficult for Latvian 
media outlets to survive.  The situation is better than some media 
observers expected, but all of Latvia's press companies have been 
affected.  Large publishing houses, which rely on corporate and 
political backers, have managed to stay afloat with some layoffs and 
cutbacks.  The future remains uncertain, and smaller organizations 
seem unlikely to be able to weather more cuts.  Regional newspapers 
and broadcasters, as well as smaller, independent media companies 
have been affected drastically.  Those entities which previously 
offered an independent voice may now be forced to find financial 
backing from other sources.  Regional media, likewise, are being 
forced to offer less regional content and run the risk of losing 
their regional identity and having to compete with larger national 
media.  Struggling media outlets in search of financial backing may 
find eager benefactors affiliated with political organizations or 
corporate interests looking for a platform for their views.  That 
would be an unfortunate loss for a country still struggling to 
develop objective and unbiased media. 
 
 
Rogers