Building a Free Press in the Ex-USSR   

Newspapers there face lingering state control and the need for private capital.

Consider trying to run a newspaper in a business environment in which there is little advertising because there is little to sell, newsprint is scarce and expensive, printing and distribution are controlled by monopolies that charge exorbitant prices, and readers are too poor to pay more than a few cents per copy.

In brief, that describes the newspaper industry today in the Commonwealth of Independent States, which includes most of what used to be the Soviet Union. It also explains why commonwealth newspapers have been cutting publication frequency and circulation, or, as Pravda recently did, threatening to give up altogether.

I became immersed in the problems of commonwealth journalism recently as one of 20 U.S. delegates to Russia for a conference entitled "Free Economy and the Mass Media" with leading commonwealth media executives.

The conference covered a variety of topics, but the gist of five days of discussion was how best to create a free media in a society that has never had one.

A huge problem is that the commonwealth is not yet wholly free. Major institutions, including several that can control newsprint, printing and distribution, are still owned by the government or in the early stages of quasi-private control. There were many complaints at the conference from commonwealth journalists that the government, despite its announced devotion to a free press, is subtly distinguishing in dispensing newsprint and official information between "pure" media operations (those friendly toward the government) and "impure" ones (those that are critical).

Most of the U.S. delegates were appalled to learn that a recently formulated press law imposes some restrictions on who may launch media enterprises. The Americans' basic response to the press law was that the government, to paraphrase the First Amendment, should make no law abridging freedom of speech or the press.

The commonwealth delegates, though, did not seem especially sensitive on this point. To them the new press law is an important step toward freedom because it establishes for the first time, however imperfectly, the legal right to create independent media voices. They are concerned, though, that the law might empower the government to take away what it has given to selected "impure" publications.

The most pressing concern of the commonwealth delegates was how to stay in business, and clearly they were hoping that the conference would lead to investments in their operations by U.S. companies.

The New York Times Co. has already entered into a contract with Moscow News to print a Russian-language edition with articles reprinted from the Times, and the Hearst Corp. has formed a joint venture with Izvestia to publish what eventually will be a weekly newspaper in English and Russian.

These efforts no doubt will help, but what the commonwealth media executives seemed more interested in, based on conversations with several of them, were capital infusions in the form of loans or investments. I could not offer much hope, at least in the short run, because the possibility of a decent return on investment appears slim. Moreover, the unsettled currency and government restrictions on taking money out of the country mean that an investor would have a difficult time getting his hands on his share of any profits.

The fundamental problem is that in the awkward transition from full government control to press freedom, several structural elements crucial to a media supported by a free market are missing. For example, the financial director of Moscow News said that the government-monopolized printing plants charge prices equal to about 30 percent of a newspaper's cover price, whether the press run is 2,000 or 2 million – a basic contradiction of the tenets of economy of scale.

Because of this, Moscow News has already cut its press run from 2 million to 1.2 million and may have to cut more. Similarly, the monopoly distribution systems charge a set percentage of the cover price. These two burdens mean that if Moscow News raises its cover price to increase revenue (thereby threatening circulation volume), it automatically raises its printing and distribution costs by an equal percentage – obviously not a strategy that will improve profitability.

The simple solution to these structural problems is for Moscow News and other papers to break the monopolies by buying their own presses and forming their own distribution systems. That takes money, which explains the interest in capital infusions from the West.

Despite this bleak scenario, long-stifled entrepreneurs have sprung up throughout the commonwealth to produce hundreds of small newspapers, newsletters, faxed news services and magazines. They are struggling, but somehow they are getting it done.

If anything can, this spirit and fervent devotion to press freedom will keep the commonwealth republic committed to democracy. l