CME, PEREKHID AND THE UKRAINE

Here is an interview with David Stewart, Chairman of the Perekhid Media Group, operating in the Ukraine. As it has been reported, Perekhid is suing CME in New York for alleged "tortious interference" in Perekhid's contract with Ukrainian state television, which, according to David Stewart has been broken, although it should have run for six and a half more years.

I would be very interested in comment from any independent observers in the Ukraine regarding this interview with David Stewart. Does anyone have any criticism of Perekhid? Do you feel their complaint against CME is justified?

In the interest of fairness, I telephoned Gerry Buckland, CME spokesperson in London, asking him for CME's reaction to Perekhid's accusations.

Gerry Buckland read out to me the official CME statement on the matter, which has already been published and which runs: "We believe the complaint is legally and factually meritless and we will vigorously contest it." Mr. Buckland refused to be drawn further on the matter.

I told Mr. Buckland that Vladimir Zelezny, Chief Executive of Nova TV, has accused me on television of "peddling lies" because I have translated into Czech and published in Czech newspapers publicly available information, included in CME's official English-language annual and quarterly reports, submitted to the US Security and Exchange Commission.

"Is this not an instance of disreputable behaviour?" I asked Gerry Buckland. Mr Buckland replied that he had no comment to make.

I also asked Mr. Buckland whether CME had any factual objections to the information I have published regarding their corporation. Again, Mr. Buckland replied he had no comment to make.

(Jan Culik

Glasgow University)


David Stewart, Chairman of the Perekhid Media Group: Our contract has been broken

(Perekhid Media Group has media interest in the Ukraine. David Stewart comes from the background of cable and satellite television in Great Britain and in the United States. According to Bloomberg, Perekhid is a closed company, registered in the Bahamas.)

  • How long has Perekhid been present in the Ukraine?

    We have been in the Ukraine since late November 1992, but we became really active in broadcasting in the spring of 1993. Since then, our business has grown in that medium. We have television interests which incorporate an advertising sales house, a small outdoor operation [billboards], an advertisingagency, a media buying company, an interest in a radio station a market research company and the Kiev Falcons ice hockey team.

  • On what basis are you involved in television broadcasting in the Ukraine?

    Back in February of 1993, we signed a ten-year agreement with the state television company to provide a minimum of 12 hours of prime time foreign programming for UT 2, the national channel.

  • Are you still doing that?

    No, we are not. Our contract was broken at the end of December 96 when the licence tobroadcast on UT2, the channel we operated on, was handed over to the 1+1 group of companies, which have as a 50 per cent shareholder, the American company CME.

  • Why do you think your contract was taken away? You say "broken". Can you prove this in any way?

    We certainly consider in all legal terms that the contract was broken. In that respect, I can't talk much about it because we have filed a suit against CME in New York for the tortious interference of our contract. But I can basically say that the ten-year contract had another six and a half years to run and any normal court of law I am led to believe would find it relatively easy to prove that that contract had been broken.

  • I understand, though that a new entity was set up and that CME was given a contract to this new entity.

    Yes, the way it happened was that the 1+1 group of companies that did have a license for a contract to broadcast on UT 1 in the course of 1996. They were moved to UT 2 where they were given a licence to broadcast on all the material hours of the day on that particular channel. I understand that the part of the CME involvement in the 1+1 companies was that 1+1 had to achieve that licence before CME invested in it by byuing 50 per cent of the stock.

  • Some people might say that you are a small, undercapitalised company, that you did not put your money where your mouth is while CME is quoted on the US Nasdaq, they are constantly raising new capital to invest into TV broadcasting stations in Eastern Europe. Surely it is much more interesting for the Ukraining authorities to team with with a company which is perhaps much more professional or puts much more money into its operations than you?

    That might be considered the case. But there are two things that I would say in response. The first is, irrespective of the capitalisation of both our company and CME, the fact is that there was an existing 10-year contract that needed to be honoured, and one has to consider the legality of contracts in Ukraine with state organisations. The other thing is that the state television company asked our company back in 1994 if we would raise between six and twelve million dollars to take over UT 2, which was going then to be called UT Inter. And we gave an undertaking that we would raise that capital and indeed we have that capital online, should we, under the guise of the project, called Euromedia, been given the licence to broadcast on UT 2. So we could have raised the money, we did have the money on call and it was not called on.

  • So why do you think, as a final question, is CME more interesting for the Ukrainian authorities for your company?

    It's a very difficult question to answer that. I have my own ideas that perhaps would not be best to pronouce to the world, but I can only presume that Studio 1+1 has worked closely with the current government and has worked itself into a position where they were able to achieve a licence even at the expense of our contract. I can't really say more than that because the basis of our complaint against CME in New York is this very business of interfering with our contract and I think it would be wrong for me at this stage to make any comments on how that case will go and the contents of it.