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In TASS special project Top Officials, head of Russia’s Channel One Konstantin Ernst talks about television during crisis, Russia's most popular shows and relationship with other major TV bosses.
About the deflated market, Sochi afterglow, and a salary of one ruble
─ You are continuing to receive congratulations on the channel’s 25th anniversary?
─ Everyone who wanted to say something, managed to do it... I am very reserved when it comes to these dates and numbers. Even based on formal reasons, the real anniversary is a multiple of 25.
─ Then, these were the preliminary results. Did the crisis get in the way of examining them?
The media in general and television in particular, feel the approach of the problems before the Finance Ministry does
─ The crisis did not affect just us. All of us live in the same time frame, some are closer to the epicenter, some are further away. Those who are closer have a bit of a disadvantage, they get hit with the aftershock harder. But you see farther and deeper. The media in general and television in particular, feel the approach of the problems before the Finance Ministry does. The slowing down and then the decline in advertising begins 7-8 months before the actual crisis hits. The companies are seeing a decline in retail and they cut the budgets for advertising in the media. We were already preparing for the full-scale inevitable course of events last spring, and in April 2014, we completed the first round of meetings and talks about reducing the cost of content. Even before the end of the year, we reduced the staff by 10%. Now we minimize all kinds of spending, so that we no longer have to affect the staff.
─ How has it all affected the quality of what goes on air?
─ For now, it really hasn’t. That is how television works, that first you invest money into something, and then get the product. For now, we are running TV series that were financed a year or two ago. We’ll get hit for real in the second half of 2016 and later.
─ What about the programs?
─ That will happen sooner. Already this fall. In January, advertising on the channel dropped by 37%, year-on-year. Now the situation has somehow stabilized, but the figures are not encouraging. And our advertisers have nothing to say about the prospects for the second half. And I am not talking about the exchange rate of the dollar and the euro, I am talking about the fall of the ruble. Add to this the significantly change in the loan rates. Previously, the channels would take out short-term loans, because the money for advertising does not come in too evenly. With such a high interest rate on loans, we have to forget about it. As a result, I have thirty ready-to-launch projects with casting, with film crews gathered, but I cannot give these people a go-ahead, since I can’t see a schedule of how I will be able to equally fund all of them.
As soon as the cycle is broken, expenses rise. Hollywood movies, as you know, are expensive, but quickly filmed. Every lost day costs a huge amount. In the film industry uniformity and clarity of the financing are very important. Actors are signed on, most of them are employed by theaters, we have to make precise schedules for equipment lease, pavilions, other objects. People begin production, they have to withstand daily work. If you have a TV series, and you do not film twelve minutes of useful material per day, your budget is bursting at the seams …
It’s already clear that the crisis is for two years. At best. By the end of this year TV viewers will see no quality deterioration. We will continue running TV series made in the affluent years. The shows will be simpler but the difference will not be striking.
─ The audience will not spill over to its neighbors on the air?
─ The big crisis affects everyone about the same. Television will become poorer, but people will not stop watching it, quite the contrary - people will have less options of how to spend their free time. Now, they less often go to the shops, theaters, restaurants and concerts, they spend more time at home. No, the position of television will remain strong, even if we take into account that it will not be as expensive and as luxurious. I am almost certain that the audience of the major television channels will grow. Another thing is that it's hard to capitalize, there may be more rating points than advertising offers, but we're not working just for the money.
─ Do you remember previous similar recession?
─ We had 2008. And in 1998, when Channel One, was also called ORT, people were not paid salaries for months, all working against the word of honor. We re-edited and showed series Shadows Disappear at Noon and Eternal Call. Necessity is the mother of invention! The TV advertising market collapsed then to $100 million for all Russian television, it fell by seven times. Compare with nearly $5 billion, which all channels collected in recent years. There is a difference, you see.
─ And if lenders require that Channel One pay? The amount must have gotten pretty big by now, you owe content producers for 2014 about 7 billion rubles, a year ago there was 6 billion and a few pennies.
─ We are in dialogue with our producers. We have to size down, and slash prices in the contracts. For the sake of business, many are reduced to no profit at all. We have good stamina, and it is better to get through the tough times together. We’ll fall together, and we’ll rise together.
─ By the way, I wanted to ask is anyone chasing after you? Channel One keeps playing Not Gonna Get Us. Even the Olympic Games were opened with that song.
─ This slogan is out conscious hooliganism, and has long been our brand. And at the opening ceremony of the Games, we have chosen it as a healthy provocation to bring down the excessive pathos. But as a result, it was a prophecy - no one did get us. Life is a type of a race. Moving is necessary. Better, if it is moving forward. And if you started running, better follow the Not Gonna Get Us principle.
─ I heard that your salary for taking part in preparing the Olympic Games cost one ruble!
─ That’s true. But it wasn’t really work. It would be silly to assume that professing your love should have a price tag.
On an emotional level, the Olympic Games told the world that Russia is taking the world power status back
─ Let’s go back to the races. In your opinion, have we been running in the right direction this past year?
─ On an emotional level, the Olympic Games told the world that Russia is taking the world power status back. And it’s not just about the number of gold medals. I think well of conspiracy theories, and can’t help but note that heightened phase of the Maidan protests in Kiev coincided with the height of the Olympic Games in Sochi.
─ But as a result, Russia became a hostage of the situation in Ukraine?
─ You know, sometimes you face challenges, that you can’t avoid, otherwise, you have to throw up your hands and capitulate. But historically speaking, Russia doesn’t have a tendency to do that.
─ The question isn’t just about the country, but about you personally as well.
─ Do you want to hear that I feel bad that the external political events that took place during the Olympic Games and after, did not allow us to fully enjoy the triumphant afterglow? I would lie if I said no.
Could Russia have acted differently under the circumstances? I’m sure that it couldn’t have.
You see, it is an existential problem. We must admit that we live in an era of changes. The rules of the twentieth century expired, the old model of relations between the countries ─ political, economic – have worn out and new ones have not been outlined. We need to sit down and negotiate. Everything is happening before our eyes. Certainly, it is better to watch from the sidelines, from a distance, but sometimes, you don’t get to choose. God decides who and when gets to be born.
─ But for now, Ukraine has forbidden you to enter its territory, declaring you, in fact, the enemy of the state…
─ What has happened upsets me but doesn’t surprise me all that much. I love Ukraine, especially Kiev, and really dislike the current Kiev authorities... But with all the violations of all the moral and energy balances, they can’t last a long time. People are not prepared to live in a hassle like that for a long time. Even if they don’t think so now. Anyone strives internally towards a stable existence, and these authorities have one way of staying in power and that’s the continuation of hostilities. But this is a short-lived option. Or no option at all.
─ According to what the television is showing on both sides of the barricades, we are far from peace. But people are watching....How much has the political program aspect of Channel One gone up?
─ The news segment increased by 30%, and the number of socio-political programs doubled. The television meets the demands. If a topic becomes important, we have to talk about it.
─ Has it been recommended that you give more attention to Ukraine?
─ No, it is the initiative of the channel. People are afraid of the unknown, they want to understand what is happening in the world and with the nearest neighbors. During our day-time program “Time will Tell” we often touch upon the Ukrainian subject and it has record ratings for its time slot. In an anxious situation, it is necessary to talk through the difficult questions, explain them, remove the phantom fears.
─ Does the phone wake you up in the middle of the night much, with extraordinary matters?
─ Usually, it has to do with huge emergencies or high-profile crimes. When our cameraman Tolya Klyan was killed in Donbas. When Boris Nemtsov was shot dead. When the fire broke out in the Novodevichy Convent it was me who called first as I accidentally drove past, when everything was in flames. Our team sent a van out and made a live broadcast.