HOW ŠOLAK BECAME THE RICHEST SERB: 2014 as a watershed for United Group – passing media laws in Serbia (12)

Although he expanded his business in the field using the lasso business principles, Dragan Šolak endeavoured to package his company in a form resembling modern Western companies with the aim of reaching out to big investment funds. When he finally succeeded, United Group received considerable funds to start new media and produce media content.

Imposing legal solutions

Although the question of whether operators could own TV channels and television content was one of the central ones in preparing the law, the fact that the decision went in favour of the operators became apparent only upon close reading of the two media laws. The Law on Electronic Media reads that an operator is "an entity engaged in, or authorized to engage in, providing the electronic communication service of distributing media content," which may lead one to believe that this is their sole right and duty.

However, the Law on Public Information and Media states that founders of media companies can distribute content via an affiliated legal entity. Legally speaking, what matters is that these are two separate legal entities, i.e. two companies. And yet, more interesting than the legal solutions themselves was what the process of passing new laws. These laws opened up enough space for United Group to take the lead in the sports and entertainment industry (Sport Klub, Grand, and IDJ) and start news channels, which it quickly began to use for achieving its business goals.

In their investigation of the process of harmonizing the new legal solutions and operators being allowed to own TV channels and be content creators, the team of reporters at Media Observatory discovered that the controversial legal provision had been added to the draft law during the harmonization process at the Enlargement Unit of the European Commission's General Directorate. According to the findings of this group of investigative journalists, the October 2013 version of the Draft Law on Electronic Media prevented cable distributors from having news programmes, but not other sorts of content (e.g. sports, entertainment, film, etc.). Under Article 109 of the draft in question, "in order to prevent the disruption of media pluralism or the exercise of excessive influence on the public opinion," operators were not allowed to provide "media services specialized for news programme content."

This provision became the butt of criticism on the excuse that it favoured Telekom, which was allowed to have its own sports programming in this way (owned by the sports channel Arena), while its competitors were allegedly discriminated against by the ban on starting news channels. As a leading cable operator in the country at the time, SBB insisted that this provision be removed in order to allow operators to produce news programming. As a government reshuffle came amid the public hearing on the media laws, a new working group was set up. Its members included Saša Mirković of the ANEM, Siniša Isakov of the Vojvodina Province public service broadcaster RTV, Đorđe Vlajić of the public service broadcaster RTS, Prince Bishop Porfirije of the State Radio Broadcasting Agency (RRA), and Saša Gajin, a media law expert. The final versions of the draft media laws, which were sent to Brussels, did not allow distributors to offer own content (under Article 46 of the Law on Public Information and Media).

As an EU membership candidate, prior to adopting any law Serbia was obligated to send draft laws to the Brussels-based Enlargement Unit of the European Commission's General Directorate. Revised drafts could go back to the Serbian Government and the Parliament to be passed into laws only after comments on the legislative proposals were provided by Brussels.

Setting the scene for taking over Serbia's media sphere

On 16 September 2013, at the height of the public hearing, Adria News d.o.o. was registered in Serbia as a company and owner of TV N1 whose main line of business was production and broadcasting of television programming. Its founder and sole owner was Adria News S.a.r.l., a company based in Luxembourg. In October 2013, private investment fund KKR, based in New York, purchased a majority stake in United Group from another private fund – Mid Europa. Sometime earlier, in January 2013, former US Ambassador to Serbia Cameron Munter became a senior advisor to Telemach Group's SBB Board of Director.

Owing to the new legal solutions, cable TV channel N1, CNN's partner in the Balkans, started to broadcast programming via the biggest operator in the region – Telemach Group's SBB – on 30 October 2014. As they were owned by the same entity, TV N1 was granted the privilege to get number 1 in SBB's digital system. The key question regarding the passing of the set of media law that helped along Šolak's concept of expansion and further destruction of Telekom was: How did the controversial Serbian billionaire succeed in lobbying to ensure laws were passed that were obviously tailored to his needs?

COMING UP NEXT: Tailoring laws with the help of lobbyists in Brussels and Washington