Dark Oscar Night Sheds Light on Russian TV Woes

It was all a terrible accident that Oscar night came late to Russia this year. At least that’s the story from the hated government service monopoly known as the Administration of the Diplomatic Campus.

Among the thousands of subscribers to Kosmos cable television whose screens went dark just before the 69th annual Academy Awards live broadcast early Tuesday, there is strong suspicion that greed prompted the government holding to pull the plug.

The case of Kosmos TV versus UpDK--as the all-powerful agency providing services to foreigners is known by its captive clients--appears to be the latest instance of a powerful state-owned entity shaking down a private company for a bigger share of its profit.

And in a post-Communist economy still defined by corruption and unfair advantage, the tangle between Kosmos and UpDK provides an illuminating example of Russia’s incorrigible ways of doing business.

In the five years it has been in business, Kosmos has amassed an estimated 500,000 viewers in Moscow and a reputation for quality service by providing 22 foreign and Russian television channels, including CNN and the Cartoon Network. Its channels are the sole means of viewing timely Western news and entertainment in original language.

Like other vendors seeking to offer their products to the mostly foreign residents of buildings owned by UpDK, Kosmos pays a hefty percentage of its rate charged to UpDK as an “access fee.” On every $46-a-month billing, UpDK gets a $10 kickback.

“UpDK has been trying to squeeze more money out of Kosmos for months,” said a Western businessman who trades in media products. “Kosmos is scared to death, because what UpDK ultimately wants is to take over the whole operation.”

Kosmos’ feud with the state landlord became known when the cable firm recently posted notices in some UpDK buildings warning that the agency was trying to take over cable provision and might move to undermine Kosmos’ service.

“There has been a long-running dispute over the amount we have to pay UpDK to operate in its buildings, but it has absolutely nothing to do with the current service problems,” a nervous Oleg Y. Savich, Kosmos’ deputy director, insisted Wednesday after it became clear that UpDK buildings had lost the Academy Awards telecast while other subscribers were still tuned in. “It was just a computer error. Everything will be fine in the UpDK buildings in a day or two.”

Asked how a computer error could cause a loss of service in such widely scattered and selective buildings, Savich said the technical breakdown was “complex.”

“Right. It was so complex it caused them to take their phones off the hook for 24 hours and to forget to inform anybody about what was happening,” said incredulous subscriber Joseph Ritchey, an American executive living in the huge Dobrininskaya housing complex owned by UpDK.

Most Kosmos clients had simply assumed service throughout the city had failed.

“This is awful. Our nanny will threaten to quit,” said Roger Wilde, a New Zealander living in another of the disconnected buildings.

Did UpDK block the Oscar signal to pressure Kosmos into letting it take over some of the cable business? UpDK Deputy Director Nikolai Yefimov declined to comment.

“I would need to consult with one of our specialists before giving an answer, and I’m confident it would fall into the realm of commercial secrets,” said Yefimov, who failed to call back.

UpDK’s mission in the Soviet age was to oversee the provision of housing and services to diplomats, but it has evolved since its spinoff from the Foreign Ministry nine years ago into a virtually unregulated colossus.

Besides the nearly 11 million square feet of prime residential and office space it inherited from the Foreign Ministry, UpDK has acquired a lumber mill in Cambodia, a $70-million private office tower in southern Moscow, telecommunications and leisure businesses and Russia’s only golf and country club.

While Kosmos service remained off for many UpDK-housed customers, state-run ORT television rose--if a bit late--to the occasion by broadcasting highlights of the Oscars late Wednesday.