Russia appears poised for a clampdown on western involvement in its media with new legislation limiting foreign media ownership gaining momentum in the Duma.
Russian lawmakers on Tuesday overwhelmingly backed a bill that would restrict foreign ownership of the country’s media properties to 20 per cent. At present, foreign stakes in radio and television are capped at 50 per cent, but no such restrictions apply to print media.
If adopted into law, the proposed changes would uproot the Russia business of some of the world’s leading media groups and could force a reshuffle of the Russian media industry. One publication that would be affected is the country’s leading business daily Vedomosti, which is part owned by the Financial Times and the Wall Street Journal.
The planned legislation comes as Moscow is stepping up attempts to close itself off from the west and hit back against sanctions imposed over the Ukraine crisis. An aggressive propaganda campaign waged by state television has whipped up nationalist sentiment and left both the public and the political elite angry at foreign media’s contrasting version of the conflict.
The proposal was supported by president Vladimir Putin’s United Russia party and approved in first reading with only one opposing vote, suggesting that it has strong chances of being passed in final reading and signed into law by Mr Putin.
Dmitry Gudkov, a delegate of A Just Russia party who cast the only opposing vote on Tuesday, warned the bill would destroy Russia’s media business. “This law will hit the Russian media business. There will be an outflow of managers, investment and technology,” he said.
Foreign media groups including the FT and the Wall Street Journal declined to comment. But foreign and Russian media executives decried the plans as another attack on press freedom and on the country’s investment climate, which had taken its latest blow with the arrest last week of Vladimir Yevtushenkov, one of Russia’s wealthiest men, on charges of money laundering.
“In fact, this writes Russian raider attacks into law – it will mean a raft of forced sales,” said one foreign executive. “Kremlin conservatives are using anti-foreign sentiment created by Moscow’s stand-off with the west over Ukraine to consolidate the grip of select companions of Mr Putin on the media industry.”
The initiative comes on the heels of raids against foreign businesses such as McDonald’s and Ikea. It also goes hand in hand with Kremlin plans to control the internet more tightly. Next week, Russia’s Security Council is to discuss ways to separate the country’s internet from the world wide web, plans the Kremlin calls protection against US attacks on the Russian web but which Russian internet advocates criticise as a crackdown.
The ranks of foreign investors in the Russian media business include Condé Nast with publications such as Vogue Russia and the highly profitable Russian-language GQ, Disney, Bauer, Burda and Axel Springer of Germany as well as Dohan, the publisher of Turkey’s Hurriyet, and the Swedish Modern Times Group which has a stake in Nasdaq-listed CTC Media, the owner of Ren TV.
In the industry, some believe the draft legislation is being targeted specifically at Vedomosti. Finland’s Sanoma group is planning to sell its stake in the publication. According to two people familiar with the situation, the Kremlin wants to prevent a sale to other foreign investors.
While the FT and the Wall Street Journal have a say in who Sanoma sells to, the new rules would effectively bar them from opposing a new large Russian shareholder. Some executives believe the new rules may also be aimed at helping Gazprom Media, the country’s largest media holding, gain full control of radio station Ekho Moskvy, the lone liberal bastion on Russia’s airwaves.
The draft legislation also prevents foreigners from appointing top editors and otherwise exerting control by more formally separating the ownership and publisher roles. “With all these details, this is a piece of legislation that has not been written hastily but with careful consideration to close all potential loopholes,” said the foreign executive.
The bill was proposed by three lawmakers from the Communist party, the ultranationalist Liberal Democratic party and the Fair Russia party, but two people familiar with the drafting process said it had been created on the initiative of Alexei Gromov, the deputy head of the presidential administration, and Mikhail Lesin, the head of Gazprom Media. Mr Gromov advises the president on media policy, and Mr Lesin helped Mr Putin engineer a previous round of consolidation that brought the media to heel after he came to power.
(Published by Financial Times - September 23, 2014)