Ukraine TV Industry Shrinks as Advertisers Pull Out

Cash-strapped networks are relying more on in-house production to cut costs.

MOSCOW — As Ukraine's TV industry continues to be hit by the political and economic turmoil and armed clashes between government forces and separatists in the country's southeast region, networks are stepping up in-house production in a bid to save costs.

"Since the beginning of the year, [the Ukrainian TV industry's] ad revenues have declined by about 30 percent, compared with the corresponding period of 2013," Alexander Tkachenko, general director of 1+1 Media group, told The Hollywood Reporter.

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According to Yevgeny Bondarenko, COO of StarLightMedia, the beginning of the year was relatively good, but in February, advertisers began to cancel their requests and asked about revising their contracts as ad budgets were being curtailed.

"Among the reasons for the decline are the political crisis, which is ending only now, following the successful presidential election; the military aggression on the part of Russia; the devaluation of the national currency by more than 30 percent; and the fact that the majority of transnational corporations' Ukrainian offices are run from Moscow-based regional offices," Bondarenko said.

Tkachenko added that decisions about cancelling ad contracts mostly came from Russian headquarters but were also influenced by campaigns for boycotting Russian products run on social media.

Since the networks' shrinking budgets no longer allow them to spend much on acquiring content, they are stepping up production of their own content, both original and adapted from previously acquired foreign formats.

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StarLightMedia, which has made adaptations of international formats, such as X-Factor, So You Think You Can Dance, The Bachelor and The Biggest Loser, recently launched the TV series Skoraya Pomoshch, an adaptation of ER, on its flagship network, STB.

"At this point, showing Ukrainians when they are at their best is, probably, more important than ever," Bondarenko observed.

"We are stepping up in-house production of content," Tkachenko said. "We are mostly focused on news shows, which are at the moment the most watched shows of that kind in the country. In addition, we are launching production of TV series as we already have excellent expertise in the production of entertainment formats. We are collaborating with European partners in TV series production."

Meanwhile, looking into the future, network bosses are cautiously optimistic.

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"We believe that the high professionalism of Ukrainian personnel, the infrastructure, favorable climate and natural resources, coupled with the underestimation of the country's assets and markets have created a unique potential for development, which is to be realized thanks to the recent changes in the country," said Bondarenko of StarLightMedia. "But we realize that a hard and long road lies ahead. By the end of the year, if we reach stability, we'll be at a starting point for growth."

"If Ukraine successfully integrates in Europe, this is going to be a very promising market in the long term," said Tkachenko, adding that the Ukraine TV industry will have to shed some of its ambitions for the sake of becoming a "normal, civilized European TV market," which will still take years to develop.