Government Subsidy for Small Ads Puts Newspapers at Disadvantage
If you want to sell your apartment, your car or an old television set, you probably think about placing a small advertisement in a newspaper or online to find an interested buyer. A project by the Georgian Public Registry encourages citizens to call or send the details of such private ads to them. The Public Registry then places the advertising free of charge in the daily newspaper 24 Hours (if necessary, up to three times) and publishes it on the websites www.eproperty.ge and www.elisting.ge, which are operated by the Public Registry. The service might be convenient - but the bill is paid with public funds.
In Georgia, companies spend very little on print advertising - between USD 3.5 and 4.5 million in 2010. Classified ads for real estate, cars and other goods are thus an important source of revenue for newspapers. With one newspaper offering free advertising space that is managed and financed by a government agency, it becomes more difficult for other newspapers and websites to attract advertising. The government agency’s project has put these media companies in a competitive disadvantage.
The Public Registry’s project has been broadly covered and promoted by the national TV channels Rustav2 and Imedi, and has also been advertised through SMS messages sent to mobile phone users and through promotion events in Tbilisi and Gori. 24 Hours not only benefits from guaranteed advertising revenues but also from the promotion campaign implemented by the Public Registry.
A flawed tender
In July 2011, the Public Registry announced a tender to buy classified real estate advertising in a national newspaper in the period from August 8 and December 31. Although the tendering procedures seemed technically to be in line with the Georgian procurement law, the tender itself seemed tailored to the 24 Hours newspaper. The paper has been described as government-leaning -- characterization that has been rejected by its publisher -- and for several years has had the exclusive contract to publish all government tender announcements.
The tender required applicant newspapers to be printed (partly) in color at least three times a week and be distributed in all regions of Georgia, and to also have an English language section (24 Hours publishes a weekly New York Times supplement).
The tender was first posted on the government’s electronic procurement platform, procurement.gov.ge, on Friday, 29 July 2011 at 17:02. Bids were accepted from Saturday, 30 July, 0:09 until Monday, August 1, 12:00. Two competitors submitted bids, in the end the LLC Bonto lost to LLC MVP, the owner of 24 Hours, which received the contract worth GEL 120,960.
Paata Veshapidze, the publisher of 24 Hours, has stated that the tendering process was competitive and legal, and that his newspaper could not be blamed for the conditions of the tender anouncement.
In December 2011, 24 Hours expanded the original range of classified ads and started publishing announcements for the sale of used cars. Moreover, 24 Hours launched the sale of a separate newspaper supplement that only consists of classified ads for the price of 20 Tetri. Residents can now also file requests with the text for an ad in drop boxes, located at government-owned newspaper kiosks in Tbilisi.
After the tendered project had ended at the end of December, 24 Hours continues selling the separate advertising newspaper. We have sent several requests to the Public Registry, asking whether and under what conditions the project was renewed and how much was spent by the government agency to promote the project. The Public Registry has failed to issue an official written response.
However, an official from the Public Registry told TI Georgia that the agreement with 24 Hours was renewed without a competitive tender, using a direct procurement agreement. A manager of 24 Hours did not return several calls asking for comment.
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