TV Ad Sales Increased by 40% in 2014

TV Ad Sales Increased by 40% in 2014

The FINANCIAL -- The total profit of Georgian TV companies increased by USD 20,855,646, or more than 40%, during the first quarter of 2014 compared with the same period of last year. TV company Rustavi 2 attracts the largest share of advertisers, according to TV MR GE, Nielsen Television Audience Measurement.

Unfair advertising distribution has caused disputes to arise among media organizations recently. National TV channels occupy almost 80 percent of the total market due to the dubious links between them and their political sponsors, according to a report by IAGJ, the national association of journalists.

“If independent media is to be able to compete in a balanced and open market, then it is extremely important that all advertisements are distributed fairly to all media companies, not just those in which politicians or public figures are involved,” said IFJ General Secretary Beth Costa. “Monopolisation of the advertisement market is unfair and unethical.”

TV’s profit amounted to USD 51,824,847 in the first quarter of 2014, up from USD 30,969,201 in the same period of 2013. The figures are counted according to official price lists and do not take into consideration any discounts between TV companies and advertisers.

With USD 3,411,686, Procter and Gamble leads the list of the top ten companies with the largest ad expenditures on TV companies during the first quarter of 2014. The amounts of the top ten expenditures exceeded USD 1 million.

Procter and Gamble is followed by Geocell, which spends USD 2,163,239; Ludsakharshi Natakhtari - USD 1,841,449; Mondelez (Barni, Alpen Gold, Jacobs and other products) - USD 1,763,235; Bank of Georgia - USD 1,618,333; Berlin Khemie - USD 1,526,531; Mobitel - USD 1,465,886; Nestle - USD 1,298,575; Techno Boom - USD 1,171,386; and Magti GSM - USD 1,125,333.

Contrary to the first quarter of 2014, in the previous year only four companies spent more than USD 1 million, out of the top ten expenditures. The expenditure of the current year’s leader, Procter and Gamble, is twice more than last year’s leader - Magti GSM. One of the leading mobile operators spent USD 1,510,464 on TV ads during the first quarter of 2013. It was followed by Bank of Georgia - USD 1,356,613; Procter and Gamble - USD 1,164,984; Kraft - USD 1,044,706; Mobitel - USD 971,187; Lactalis International (brand products of President) - USD 960,969; Mars - USD 960,581; Nestle - USD 933,168; Geocell - USD 874,603; and GDS Bera’s Album - USD 835,416.

With 66%, or USD 2,246,702, Procter and Gamble has shown the largest growth of expenditure on TV ads during the 2014-2013 comparison period. Geocell spent 60% more in Q1 2014 than in Q1 2013. Mondelez, or Kraft, raised its ad budget by 41%. The expenditure of Mobitel brought 34% more profit to TV companies, while Bank of Georgia raised its TV ad budget by 17%. Magti GSM is the only company from the list of the top ten expenditures that reduced its TV ad expenditure this year - by 34% to be exact.

In terms of the revenues of broadcasters, two TV stations currently account for 75% of all revenues in the broadcasting sector. In the fourth quarter of 2013, Rustavi 2 reported revenues of GEL 15.2 million (49% of all broadcasters’ revenue), Imedi TV and Radio Imedi reported income of GEL 8.5 million (26% of all revenue). A total of 56 TV and radio stations reported revenues amounting to GEL 30.85 million in the last three months of 2013, according to financial reports submitted to the GNCC. Behind the two leading private nation-wide TV channels, Rustavi 2 and Imedi, Maestro (GEL 2.5 million) was the third largest broadcaster, followed by the Radio Sakartvelo group (GEL 1.3 million) and the pay TV provider Global Media Group - GMG (GEL 1 million).

According to the April 2014 report of Transparency International, after the political changes in Georgia in October 2012, political control over the media has changed for the better. “The ownership of Georgian media outlets is now largely transparent - a few smaller exceptions remain, where shareholders continue to hide their involvement behind offshore shell companies.”

While the owners of several media outlets have or used to have some links with either the ruling Georgian Dream coalition or the opposition United National Movement, no major outlet that covers news and current affairs appears to be owned, controlled or bankrolled by current political actors.

Both in the areas of ownership transparency and political control over the media, much has changed for the better, if comparing the current situation with 2010, when some of the country’s most influential media outlets were closely linked with the Government or other political groups and controlled through opaque shell entities.

However, there are several large businessmen who own media outlets in Georgia. Levan Karamanishvili, one of the owners of Rustavi 2, owns shares in mobile operator Beeline through offshore entities. He is also linked to the ownership of internet provider Caucasus Online, according to Transparency International. During the last seven years, Rustavi 2 was considered part of the National Movement due to its political support for the political majority and unclear financing.

The Patarkatsishvili family, which owns Imedi TV, holds several assets in Georgia. The list includes mobile operator Magticom, Borjomi mineral water and Mtatsminda amusement park. The family has an ongoing court dispute with Joseph Kay regarding the Rustavi steel factory.

Former Prime Minister Bidzina Ivanishvili, whose son Bera owns entertainment station GDS, controls a number of offshore companies through his relatives. Another channel owned by the billionaire - TV9, was shut down soon after the change of government. However, experts say that TV9’s license was not taken away.

Kakha Okruashvili, who recently got the broadcasting license of his TV company Mze back, is the founder of Omega Group. Omega Group includes cigarette production and distribution companies as well as a BMW dealership.

Kakha Bendukidze, one of the owners of Tabula TV and Tabula magazine, and Vasil Kobaidze, owner of the majority of shares in Pirveli Stereo, are also active in other business sectors.