As Elections Loom, Independent Ukrainian TV Battles For Survival

Journalists at TVi are bracing for another court verdict in a tax-evasion case that's threatening to drive the television station, one of Ukraine's few remaining independent media outlets, into bankruptcy.

On September 12 TVi is due to further battle claims that it owes the government some $375,000 in back taxes at a court hearing in Kyiv.

The hearing was convened after tax authorities appealed an earlier decision deeming the fine unlawful.

The penalty slapped on TVi has sparked accusations that President Viktor Yanukovych is seeking to silence critical reporting ahead of parliamentary elections on October 28.

TVi's embattled director, Mykola Knyazhytskyy, doubts the station will succeed in overturning the fine. "We have absolutely no hope in court because a court stripped us of our broadcast frequency in 2010," he says. "After the so-called judicial reform, our courts are totally controlled by the presidential administration."

Known for its critical coverage of Yanukovych's government, TVi had been in the crosshairs of the Ukrainian authorities for some time.

Last year, it was denied a digital broadcasting license, forcing it to rely on cable networks instead. The penalty follows a raid on the station in July. A separate tax-evasion case against Knyazhytskyy has since been dropped.

The onslaught against TVi, right in the midst of the election campaign, has sparked an outcry. On September 8, thousands of people took to the streets across Ukraine in defense of the station.

Volodymyr Oliynyk, a former judge and deputy with the ruling Party of Regions, denies the case is politically motivated. "One should not interpret every case in the economic sphere, or other spheres, as political," he says. "I would like to hear all the participants, and not only the subjective opinion of one manager at this respectful TV channel."

Under Siege

Knyazhytskyy insists that TVi had not been paying its taxes in full because it had reached a deal with tax authorities under which it was offered temporary exemption in place of a tax refund on equipment purchased when the channel was founded four years ago.

He says cable companies have also come under pressure during the election campaign to either stop transmitting the station or move it to more expensive packages. As a result, he says, TVi has lost millions of dollars and the bulk of its viewer base over the past month.

"Since the start of the election campaign, more than 85 cable networks across the country have switched us off. We have lost some 20 million hryvnyas, about $2.5 million," Knyazhytskyy says. "That's advertising revenues that we didn't get due to the illegal disconnection by cable companies under pressure from Ukraine's National Television and Radio Broadcasting Council."

TVi's fate will largely hinge on its owner, Konstantin Kagalovsky, a Russian businessman and former shareholder of now-defunct Russian oil giant Yukos.

The station has yielded little return so far, and Kagalovsky may not be willing to disburse another $375,000 if the court upholds the penalty. According to Knyazhytskyy, Kagalovsky has already received several offers to sell the channel.

Media watchdogs have complained of shrinking media freedom in Ukraine since Yanukovych came to power in February 2010.

Unpopular tax and pension reforms ushered in by his government have severely dented his approval ratings, and his Party of Regions will have to battle to retain its parliamentary majority.

The jailing of former Prime Minister Yulia Tymoshenko for alleged abuse of power, widely criticized by the international community, has also united opposition forces against his party.

Opinion polls show that the Batkivshchyna (Fatherland) party led by Tymoshenko closely trails the Party of Regions in the run-up to the October 28 poll.