CEETV’s Yako Molhov and Victoria Yarmoschuk, Director of Media Resiurces Management, discuss the challenges the Ukrainian TV market faces in the times of military conflict in the East. The organizers of Kiev Media Week promise absolute safety and lots of surprises to the attendees of market in mid-September.

ceetv: Miss Yarmoshchuk, the TV market in Ukraine is suffering from the conflict in the East, just as every other sphere of social and economic life. What has changed following the conflict, we saw Russian nets banned, Russian series disappearing more and more from Ukrainian small screens, what were the effects on the local market?

VY: War is a tragedy for any nation. Especially in a case where the war has been artificially provoked between close nations. Just that happened between Russians and Ukrainian who historically have been very close in mentality, culture, relative ties. And now all of these processes resulted into severe fights in the East of our country. Of course, this cannot be ignored by media and has affected the market in general.

Speaking about the TV and media market, political turbulence and conflict on the East has caused at least two big scopes of problems for the marker. The economic problems are pretty obvious – the advertising market that is traditionally considered to generate broadcasters’ principal incomes now decreases. This means less money for production and acquisitions. The most expensive and marketable product – local drama series – are the first to be affected by the funding shortage. It is important to understand that ‘local series’ mean both Russian and Ukrainian. Due to the mental proximity of Russian and Ukrainian people TV content produced in Russia or Ukraine is accepted as local in both countries.

Another big problem is genre challenges which are not less important than economic ones. Obviously, strained relations between Ukraine and Russia have ruled out the possibility of further placing into Ukrainian channels’ lineup content that promotes Russian security agencies, power and military forces (mostly fiction series). Just nine months ago there was much similar content aired in Ukraine. It is worth mentioning that Ukrainian channels having enough funding available for many years took fiction series – the most expensive TV products – as the basis to build their broadcasting schedules. Now these programming habits change.

ceetv: Has the conflict reflected also on local viewers' tastes? Is this positive for the development of local Ukrainian content, i.e. money planned for Russian series to be invested in local productions?

VY: As I mentioned above, of course Ukrainian viewers cannot consume the same product as before the conflict started mostly because of moral issues. The question that has to be answered is what will happen to Ukrainian television that made its viewers addicted to large doses of expensive product (mostly produced in Russia) but hasn’t enough money to provide audience with such a product now? From the point of view of media market analysts we can see several ways of further development of Ukrainian TV. By no means all of them are sad and depressive:

Return to scheduling the daytime and late prime slots with acquired foreign content. Perhaps, the time has come to look closely through the catalogs of foreign distributors. Even if the content they provide doesn’t fit local audience’s mentality perfectly, still it is often of a high quality performance.

Content previously produced to be aired in access prime slots may be moved to primetime. So the channels could reduce production expenditures and the viewers would have a chance to watch preferred local content.

Ukrainian television as well as the whole world economy lived through the economic crisis in 2008. Some of the measures undertaken six years ago may work out again. For instance, production of multi episode studio based format projects, which are shot in the same set-dressing has proved its efficiency. This is another way to reduce production costs of a large volume of content. And still the viewers would get the desired local product.

All the above mentioned solutions are supposed to trigger the development of local production companies. Providing appropriate quality product they would get a chance to produce more content to meet the channels’ demands. So they would fill the timeslots that become vacant when broadcasters face economic and genre challenges I mentioned in the beginning. It would yield a positive result.

ceetv: Recently the All-Ukrainian Ad Coalition revealed its latest forecast which predicts a 12% drop in TV advertising this year. What are your expectations for the development of the market this year?

VY: This year we can calculate the volume of any market in Ukraine only in the national currency – hryvnia. The advertising market is not an exception. The main reason of this “impossibility” of making any predictions and analysis of the market volume in foreign currency (USD or Euro, for instance) is the highly unstable hryvnia – in January-September 2014 depreciation of the Ukrainian national currency reached more than 60% and we still cannot be sure that this is really the end of the hryvnia collapse.

The Ukrainian TV advertising market grew annually not less than 10-15%. But this year there are several objective reasons preventing the stable growth of the market. First of all we cannot forget the temporary loss of a significant part of Ukrainian territory that led to the 5% decrease of the number of the households. Military conflict in the East of the country also influences the expectations of the advertisers, who are eager to cut and shorten their advertising budgets preferring to wait for better times.

In general, I agree with the statement of the All-Ukrainian Ad Coalition that this year the local TV ad market cannot expect growth or even staying flat. The burning question for the marketers is how much the adspend will finally drop. 10-12% decrease is even a rather optimistic forecast. Depending on the ways the current political and economic situation changes the total TV adspend can drop even 15-20%.

ceetv: You have conducted numerous research projects on the local and international markets in the past years. How has the Ukrainian TV market changed in recent years, save for the already discussed conflict with Russia? What are the specifics of the local market compared to other European markets?

VY: The major changes in the Ukrainian TV market in the recent years are caused by the rapid development of new technologies. Our country now is on the threshold of the analog terrestrial TV switch-off and is ready to enter the era of digital TV. Actually, the past several years were not the easiest ones for the broadcasters with terrestrial licenses from the financial point of view because they were obliged to cover expenses both for the analog and digital transmission. Plus traditional linear broadcasters faced tough competition with alternative content providers like OTT and VoD-platforms. Nevertheless, we cannot state that this competition influenced the market negatively. On the contrary, broadcasters became much more active online and entered into close cooperation with other platforms of content distribution.

From the programming point of view we can also see some significant changes. In 2009-2011 the Ukrainian TV channels showed the highest ever quantity of the local adaptations of foreign TV formats – Ukraine even entered the Top 3 countries in Europe by the number of TV formats adaptations leaving far behind all the others CIS markets. But now it seems that Ukrainian broadcasters are not so eager to go for experiments with format adaptations. We see the whole range of the successful “long-running” local formats adaptations aired already for 6-7 and even more seasons. And if the channel has succeeded to find a range of strong and popular format adaptations it is obvious that the number of the brand-new premiere programs decrease.

From the other hand Ukrainian broadcasters started to produce more shows based on their own original ideas and began exporting these shows not only as a ready-made content but also as formats. Ukrainian TV channels are already good in producing non-scripted TV programs, but they are not experienced enough in making good original scripted dramas. But the production market is developing fast, so I think that in 3-4 years the channels will have the whole range of their own originally produced series.

It is worth mentioning that Ukrainian broadcasters recently started to look for content from Europe, Turkey, Korea or Latin America, produce more content on their own and search for European co-producers to develop, for instance, new dramas.

One more specific feature of the Ukrainian TV market is the rather big quantity of nationwide TV broadcasters (analog terrestrial broadcasters) that have to share rather small (comparing with other European countries) TV advertising market.

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