Video International's founders started out producing and writing a Soviet-era comedy variety show. Now, Video International has holdings throughout the advertising and production business, a new venture with Saatchi & Saatchi and expected sales of more than $200 million this year.
Yury Zapol may be the president of one of Russia's largest advertising groups, but at heart he is a jolly quick-wit.
Ten years ago, Zapol was a scenario writer for "Klub Vesolykh i Nakhodchivykh," or "The Club of Jolly Quick-Wits," a program in which teams of university students competed in a battle of wits, the winners gaining national stardom and a long run on one of the most popular comedy and variety shows of the Soviet era.
Now that Zapol and his associates have moved beyond the show and into the leadership of Video International, they have an even tighter grip on Russia's television business.
Video International is one of Russia's two giant monopolist television advertising brokers and one of the biggest players in the country's emerging advertising business. The group cemented its position as a force to be reckoned with by merging earlier this year with the troubled Moscow arm of Britain's Bates/Saatchi & Saatchi, in a deal that helped it gain international cachet and some of Russia's biggest multinational advertisers.
Overall, the Video International group of companies employs 800 people in holdings that include a highly lucrative media sales branch, a media planning group, a television production center, several ad agencies and a marketing research company.
The group's expansion has followed the boom in the Russian ad market, which has grown from $30 million in billings four years ago to $1.2 billion today, said Adam Payne, marketing professor at the Moscow-based American Institute of Business and Economics.
Video International alone had $128 million in billings in 1996, and by the company's own measures those figures look set to double in 1997.
And according to Zapol, he and his colleagues aren't ready to rest any time soon: "No one here plans to retire yet."
In his office on Zubovsky Bulvar, Zapol reclines in his chair and recalls the early days working for "The Club of Jolly Quick-Wits," or KVN.
"The backbone of the company comes from that club," says Zapol, who began working on KVN in 1987. A number of his friends, now Video International executives, produced the program and the accompanying advertisements.
Zapol's office is bright and jolly, like the man himself. Arik, his immense, 7-year-old, rainbow-colored parrot, perches behind him. Nearby stands a slot machine he received from his colleagues for his recent 40th birthday.
Hanging high on the wall above Zapol's head is another odd relic -- a portrait of Mikhail Lesin, director of KVN and founder of Video International.
Lesin, who was recently appointed deputy director of the RTR Russian state television channel, left Video International in 1994 to head the official state news agency RIA Novosti, but some say he has never stopped running the company.
"Lesin left the company to increase its influence," said Yelena Konyeva, head of the Comcon 2 marketing company. "Still, today he's the company's No. 1 charismatic leader. ... Every time there's a problem, he's the first person the company calls for help."
Lesin's influence stretches to the government itself. Video International was asked to make television commercials for President Boris Yeltsin's re-election campaign, a connection that one analyst attributed to Lesin's maneuvering. As a result, Video International produced a set of Yeltsin commercials with the slogan "I believe, I hope, I love."
Two months after Yeltsin was re-elected, Lesin was appointed the head of the information bureau of the presidential administration.
When he left three weeks ago to become deputy head of RTR, Lesin was replaced by Video International's deputy director of advertising, Mikhail Margelov, said Konyeva.
The Club of Jolly Quick-Wits" was Video International's entr?e into the Russian television hall of fame, but Zapol and Lesin's clique went on to produce other popular programs.
These included a Miss U.S.S.R. beauty pageant in 1990 and the groundbreaking "sky-bridge" satellite links co-hosted by American Phil Donahue and Russian Vladimir Pozner. The company also produced the wildly popular Russian-language translation of the U.S. soap opera "Santa Barbara" as well as many ads aired during their shows.
With these successes to bolster them, Video International approached RTR in 1993 and negotiated a contract to buy a year's worth of ad time on the station. They would then portion the time out and sell it on to individual advertisers.
In exchange for buying the time, Video International became RTR's exclusive media broker, said Zapol. It was Video International's first step into media sales, which quickly became its most lucrative business.
"At the time, it was a free-for-all," said Payne. "Anyone who had the money could buy what they wanted."
According to a former director of operations at RTR, who asked not to be identified, Video International got the deal because RTR had little experience selling ads. "No one at the channel really knew how to sell our time professionally. We didn't even know how much we could sell it for," he said. "Video International seemed to have the experience."
Besides, he said, the payment provided a life raft for the cash-poor RTR.
A year after Video International signed its contract with RTR, the company went on to become the sole media broker for channels NTV and 2x2.
To finance its deals with the three channels, Video International took out a $5 million loan in 1993 from Bank Imperial, for whom it was producing "one of the company's biggest advertising campaigns," said Dmitry Abroschenko, director of Video International Advertising Group and its subsidiary, Video International Advertising.
Meanwhile a second company, Premier SV, was carving out its own territory: The Moscow company bought up ad time on Russia's other major channels, ORT, Moscow's MTK, St. Petersburg's Channel 5 and Moscow's Channel 6.
MTK and 2x2 have now been superceded by another channel, Moscow's Center TV, launched earlier this month. In an interview with The Moscow Times, Center TV head Anatoly Lysenko said he had signed a temporary ad sales deal with Video International. But he said he regards the ad brokers' dominance of the industry as unhealthy and said he hopes to put the ad contracts up for tender in the fall of this year and choose from among foreign and Russian ad agencies to broker the station's ad time.
Media sales make up the bulk of Video International's revenues. Of its $128 million turnover last year, $101 million came from media sales, said financial director Anatoly Novikov.
Premier SV and Video International may continue to wrangle for larger shares of the market in TV production, media sales and advertising, but according to Zapol, the relationship between the two companies is good.
"We are direct competitors in all these spheres," he said. "But on a personal level, we're good friends."
Video International proved its friendship toward Premier SV when its director, Sergei Lissovsky, was arrested last June carrying $500,000 out of the White House.
According to one market source, it was Lesin who helped his competitor Lissovsky out of the bind. Lesin mobilized Yeltsin's daughter Tatyana Dyachenko, then-campaign adviser Anatoly Chubais and businessman Boris Berezovsky "and got Chubais to certify that the money was payment for [Lissovsky's] work during the campaign," said the media analyst.
"Lesin gave them to understand Yeltsin's victory would depend on their help to Lissovsky," she added. Lissovsky was released without charges.
Advertisers reckon the cartel between the two companies has given structure to the media market, but they also acknowledge the survival of their businesses is tied to these companies.
"Everybody is at the mercy of the system," said one Western advertiser.
Although Video International and Premier SV control the market, the State Antimonopoly Committee has never looked into the companies, said Olga Melnikova, head of the committee's advertising department. "We never paid attention to it," she said.
Video International's media sales empire expanded beyond the Russian border last year when it opened offices in Kiev, Minsk and Almaty. This year it opened an office in Jerusalem, where it holds the exclusive rights to broker air time for the NTV International station. In Russia, it is the exclusive broker of channels in Novosibirsk, St. Petersburg, Omsk and Kemerovo.
On the advertising side, this year the group is planning to open three offices in Russia's regions, including one in St. Petersburg, said Abroschenko.
On July 1, the company will enter into a joint venture with Business Link, St. Petersburg's largest advertising agency, to form a company called BL6.
Although one might expect Video International's clients to be mainly Russian, the majority are foreign, said Abroschenko. These include United Distillers, Levi's, Bosch and Hitachi. Banking giants Menatep and Most Bank are among the Russian entities that have used VI's services, Abroschenko said.
Another indicator of Video International's emerging role as king of the Russian advertising hill was its recent formation of a joint venture with British advertising giant Bates International/ Saatchi & Saatchi, called Bates VIAG Saatchi & Saatchi.
Their new partner has had a rough path of late. Last November, tax police raided Saatchi's Moscow offices saying they were looking for Zoom Media, a company they alleged was linked to Saatchi and owed $7 million in taxes. Bates/Saatchi & Saatchi subsequently suspended its Moscow operations.
The tax police never linked Saatchi and Zoom, but slapped Saatchi with a bill for $363,000 in unpaid taxes. The agency said earlier this month that it had paid that amount in full.
Saatchi & Saatchi representatives did not respond to repeated requests for comment, but Video International said the JV allows Saatchi to start fresh here.
"They were not very satisfied with how their business was going in Russia and they thought that working with us would allow them to develop themselves better," said Zapol.
"For them, it was a good way to re-establish themselves in the Russian market," said Abroschenko. "Through us, they knew they could get better access to local media opportunities."
The deal could pay off handsomely for Video International as well: Bates/Saatchi & Saatchi brings in client Procter & Gamble, which leads the Russian market in ad spending, as well as multinationals Johnson & Johnson, British American Tobacco and Cadbury.
For Video International, 1997 looks like it will be a big year of acquisitions and investments. On top of its merging with BL and Saatchi & Saatchi, the company created a market research company, Smart. According to Alexander Akopov, Video International's vice president and director of television production, the company has plans to set up a multimedia company this fall to run an Internet video news service.
Video International's empire also includes TV production, which was the company's main sphere of activity when it was founded in 1992. Today, Video International's television production center produces 12 television programs, including the popular "Good Morning," "You're the Director" and the new evening variety show "Good Evening."
Unfortunately, investors seeking a rapidly growing company may have to look beyond Video International.
It's a "very closed" joint venture, said Abroschenko. "Shares are only traded between existing shareholders."
--Andrei Zolotov contributed to this article.
Yury Zapol may be the president of one of Russia's largest advertising groups, but at heart he is a jolly quick-wit.
Ten years ago, Zapol was a scenario writer for "Klub Vesolykh i Nakhodchivykh," or "The Club of Jolly Quick-Wits," a program in which teams of university students competed in a battle of wits, the winners gaining national stardom and a long run on one of the most popular comedy and variety shows of the Soviet era.
Now that Zapol and his associates have moved beyond the show and into the leadership of Video International, they have an even tighter grip on Russia's television business.
Video International is one of Russia's two giant monopolist television advertising brokers and one of the biggest players in the country's emerging advertising business. The group cemented its position as a force to be reckoned with by merging earlier this year with the troubled Moscow arm of Britain's Bates/Saatchi & Saatchi, in a deal that helped it gain international cachet and some of Russia's biggest multinational advertisers.
Overall, the Video International group of companies employs 800 people in holdings that include a highly lucrative media sales branch, a media planning group, a television production center, several ad agencies and a marketing research company.
The group's expansion has followed the boom in the Russian ad market, which has grown from $30 million in billings four years ago to $1.2 billion today, said Adam Payne, marketing professor at the Moscow-based American Institute of Business and Economics.
Video International alone had $128 million in billings in 1996, and by the company's own measures those figures look set to double in 1997.
And according to Zapol, he and his colleagues aren't ready to rest any time soon: "No one here plans to retire yet."
In his office on Zubovsky Bulvar, Zapol reclines in his chair and recalls the early days working for "The Club of Jolly Quick-Wits," or KVN.
"The backbone of the company comes from that club," says Zapol, who began working on KVN in 1987. A number of his friends, now Video International executives, produced the program and the accompanying advertisements.
Zapol's office is bright and jolly, like the man himself. Arik, his immense, 7-year-old, rainbow-colored parrot, perches behind him. Nearby stands a slot machine he received from his colleagues for his recent 40th birthday.
Hanging high on the wall above Zapol's head is another odd relic -- a portrait of Mikhail Lesin, director of KVN and founder of Video International.
Lesin, who was recently appointed deputy director of the RTR Russian state television channel, left Video International in 1994 to head the official state news agency RIA Novosti, but some say he has never stopped running the company.
"Lesin left the company to increase its influence," said Yelena Konyeva, head of the Comcon 2 marketing company. "Still, today he's the company's No. 1 charismatic leader. ... Every time there's a problem, he's the first person the company calls for help."
Lesin's influence stretches to the government itself. Video International was asked to make television commercials for President Boris Yeltsin's re-election campaign, a connection that one analyst attributed to Lesin's maneuvering. As a result, Video International produced a set of Yeltsin commercials with the slogan "I believe, I hope, I love."
Two months after Yeltsin was re-elected, Lesin was appointed the head of the information bureau of the presidential administration.
When he left three weeks ago to become deputy head of RTR, Lesin was replaced by Video International's deputy director of advertising, Mikhail Margelov, said Konyeva.
The Club of Jolly Quick-Wits" was Video International's entr?e into the Russian television hall of fame, but Zapol and Lesin's clique went on to produce other popular programs.
These included a Miss U.S.S.R. beauty pageant in 1990 and the groundbreaking "sky-bridge" satellite links co-hosted by American Phil Donahue and Russian Vladimir Pozner. The company also produced the wildly popular Russian-language translation of the U.S. soap opera "Santa Barbara" as well as many ads aired during their shows.
With these successes to bolster them, Video International approached RTR in 1993 and negotiated a contract to buy a year's worth of ad time on the station. They would then portion the time out and sell it on to individual advertisers.
In exchange for buying the time, Video International became RTR's exclusive media broker, said Zapol. It was Video International's first step into media sales, which quickly became its most lucrative business.
"At the time, it was a free-for-all," said Payne. "Anyone who had the money could buy what they wanted."
According to a former director of operations at RTR, who asked not to be identified, Video International got the deal because RTR had little experience selling ads. "No one at the channel really knew how to sell our time professionally. We didn't even know how much we could sell it for," he said. "Video International seemed to have the experience."
Besides, he said, the payment provided a life raft for the cash-poor RTR.
A year after Video International signed its contract with RTR, the company went on to become the sole media broker for channels NTV and 2x2.
To finance its deals with the three channels, Video International took out a $5 million loan in 1993 from Bank Imperial, for whom it was producing "one of the company's biggest advertising campaigns," said Dmitry Abroschenko, director of Video International Advertising Group and its subsidiary, Video International Advertising.
Meanwhile a second company, Premier SV, was carving out its own territory: The Moscow company bought up ad time on Russia's other major channels, ORT, Moscow's MTK, St. Petersburg's Channel 5 and Moscow's Channel 6.
MTK and 2x2 have now been superceded by another channel, Moscow's Center TV, launched earlier this month. In an interview with The Moscow Times, Center TV head Anatoly Lysenko said he had signed a temporary ad sales deal with Video International. But he said he regards the ad brokers' dominance of the industry as unhealthy and said he hopes to put the ad contracts up for tender in the fall of this year and choose from among foreign and Russian ad agencies to broker the station's ad time.
Media sales make up the bulk of Video International's revenues. Of its $128 million turnover last year, $101 million came from media sales, said financial director Anatoly Novikov.
Premier SV and Video International may continue to wrangle for larger shares of the market in TV production, media sales and advertising, but according to Zapol, the relationship between the two companies is good.
"We are direct competitors in all these spheres," he said. "But on a personal level, we're good friends."
Video International proved its friendship toward Premier SV when its director, Sergei Lissovsky, was arrested last June carrying $500,000 out of the White House.
According to one market source, it was Lesin who helped his competitor Lissovsky out of the bind. Lesin mobilized Yeltsin's daughter Tatyana Dyachenko, then-campaign adviser Anatoly Chubais and businessman Boris Berezovsky "and got Chubais to certify that the money was payment for [Lissovsky's] work during the campaign," said the media analyst.
"Lesin gave them to understand Yeltsin's victory would depend on their help to Lissovsky," she added. Lissovsky was released without charges.
Advertisers reckon the cartel between the two companies has given structure to the media market, but they also acknowledge the survival of their businesses is tied to these companies.
"Everybody is at the mercy of the system," said one Western advertiser.
Although Video International and Premier SV control the market, the State Antimonopoly Committee has never looked into the companies, said Olga Melnikova, head of the committee's advertising department. "We never paid attention to it," she said.
Video International's media sales empire expanded beyond the Russian border last year when it opened offices in Kiev, Minsk and Almaty. This year it opened an office in Jerusalem, where it holds the exclusive rights to broker air time for the NTV International station. In Russia, it is the exclusive broker of channels in Novosibirsk, St. Petersburg, Omsk and Kemerovo.
On the advertising side, this year the group is planning to open three offices in Russia's regions, including one in St. Petersburg, said Abroschenko.
On July 1, the company will enter into a joint venture with Business Link, St. Petersburg's largest advertising agency, to form a company called BL6.
Although one might expect Video International's clients to be mainly Russian, the majority are foreign, said Abroschenko. These include United Distillers, Levi's, Bosch and Hitachi. Banking giants Menatep and Most Bank are among the Russian entities that have used VI's services, Abroschenko said.
Another indicator of Video International's emerging role as king of the Russian advertising hill was its recent formation of a joint venture with British advertising giant Bates International/ Saatchi & Saatchi, called Bates VIAG Saatchi & Saatchi.
Their new partner has had a rough path of late. Last November, tax police raided Saatchi's Moscow offices saying they were looking for Zoom Media, a company they alleged was linked to Saatchi and owed $7 million in taxes. Bates/Saatchi & Saatchi subsequently suspended its Moscow operations.
The tax police never linked Saatchi and Zoom, but slapped Saatchi with a bill for $363,000 in unpaid taxes. The agency said earlier this month that it had paid that amount in full.
Saatchi & Saatchi representatives did not respond to repeated requests for comment, but Video International said the JV allows Saatchi to start fresh here.
"They were not very satisfied with how their business was going in Russia and they thought that working with us would allow them to develop themselves better," said Zapol.
"For them, it was a good way to re-establish themselves in the Russian market," said Abroschenko. "Through us, they knew they could get better access to local media opportunities."
The deal could pay off handsomely for Video International as well: Bates/Saatchi & Saatchi brings in client Procter & Gamble, which leads the Russian market in ad spending, as well as multinationals Johnson & Johnson, British American Tobacco and Cadbury.
For Video International, 1997 looks like it will be a big year of acquisitions and investments. On top of its merging with BL and Saatchi & Saatchi, the company created a market research company, Smart. According to Alexander Akopov, Video International's vice president and director of television production, the company has plans to set up a multimedia company this fall to run an Internet video news service.
Video International's empire also includes TV production, which was the company's main sphere of activity when it was founded in 1992. Today, Video International's television production center produces 12 television programs, including the popular "Good Morning," "You're the Director" and the new evening variety show "Good Evening."
Unfortunately, investors seeking a rapidly growing company may have to look beyond Video International.
It's a "very closed" joint venture, said Abroschenko. "Shares are only traded between existing shareholders."
--Andrei Zolotov contributed to this article.
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