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Foreign participation in Russian mass media to be restricted to 20% in 2016

September 23, 2014, 18:32 UTC+3 Alexandrova Lyudmila
© ITAR-TASS/Sergei Bobylev

MOSCOW, September 23. /ITAR-TASS/. The decision to restrict the share of foreign participation in Russian mass media remains a great public controversy in Russia. Many support the legislators’ initiative because they see it as a measure to maintain Russia’s information security in the context of confrontation with the West. Others fear that it will ruin the media market altogether, because the restrictions imposed will affect more than half of Russian mass media.

The share of other countries, international organizations, foreign companies and foreigners and Russian citizens having the citizenship of another country in the charter capital of any Russian mass media as of January 1, 2016 will be restricted to 20%, as follows from a bill the State Duma has just adopted in the first reading. Currently, the foreign co-ownership of a mass medium shall not exceed 50%. This rule is effective for TV channels and radio stations, which broadcast to a territory accounting at least for half of Russia’s population, and also for dailies and magazines issued in one million copies or more.

The amendments to the law on mass media were proposed by deputies from three parliamentary factions - the Communists, A Just Russia and the Liberal Democrats and supported by the United Russia faction. The authors argue it is essential to ensure Russia’s information security in the context of confrontation with the West and media wars. Also they recall that many other countries live by the same rules, too. They hope that the amendments will allow for de-offshorization the Russian mass media and bring into the limelight the end beneficiary and client who ordered this or that publication.

These days a war of sanctions is on, which forces the Russian leadership to give thought to how best to protect the country’s space, including media space, quotes Konstantin Kostin, the chief of the Civil Society Development Foundation, as saying. “The proposed 20% restriction is a civilized rule. On the one hand, it will allow mass media to draw foreign investors, and on the other, to stay within the framework of Russian legislation.

If the amendments are adopted, they will affect more than half of Russian mass media, says the daily Vedomosti with reference to the heads of media companies. Indeed, many media in Russia are offshore-owned: Russian media companies very often register their assets in offshore zones for tax reasons.

Many media giants will have to reform the structure of ownership. The new requirements concern the publishing house Kommersant, the RBC (Afisha magazine, and online resources) and most cable networks and glamour magazines. Many Russian mass media have real foreign investors. The largest of them is STS Media (STS, Domashny and Peretz TV channels): 37.9% of it belongs to Sweden’s MTG Group, and the blocking package to Cyprus’s Telcrest, belonging to Yuri Kovalchuk and his partners.

Sweden’s Viasat is Russia’s second largest owner of cable networks after VGTRK as far as the size of audience is concerned. Other off-air TV channels are Discovery, Animal Planet and tens of others.

Foreigners own the largest publishers - Conde Nast, Hearst Shkulev Media and Burda. There are non-Russian owners of Forbes magazine (in Russia it is published by Germany’s Axel Springer), and the Ekho Moskvy radio station (Gazprom-media co-shares these assets with the United States’ EM Holding Company LLC). The daily Vedomosti belongs to Finland’s Sanoma, the Wall Street Journal, of the US, and Britain’s Financial Times. The daily Metro, distributed free of charge, belongs to a Swedish company of the same name.

Finland’s Sanoma Corp. owns The Moscow Times, National Geographic, Cosmopolitan, Domashny Ochag, Harper’s Bazaar, Grazia and Men’s Health.

The journalistic community is split over the legislators’ initiative. The State Duma’s member from the United Russia party, one of the secretaries of the Russian Journalists’ Union, Boris Reznik, has told Kommersant: “Foreign participation in the Russian mass media has long been under reliable control and any restrictions will hit the very best, respectable periodicals.” Most of media chiefs Vedomosti has polled are in dismay over the legislators’ initiative.

The president of the Moscow Journalists’ Union, editor-in-chief of the Moskovsky Komsomolets daily, Pavel Gusev, believes that the measure is adequate, given the situation Russia has found itself in these days. “It may be an effective means to ensure the country’s information security,” he told ITAR-TASS.

The chairman of the Russian Journalists’ Union, Vsevolod Bogdanov, has described the bill as quite sensible. In his opinion such a restriction will not let other countries control Russia’s media space.

The authors of the bill and their supporters have advised the media industry not to panic. First deputy chief of the State Duma’s information policies committee, Leonid Levin, believes that neither the Western capital nor the founders of Russian mass media should feel any worries at the news the bill is being fast-tracked. The law will take effect on January 1, 2016 and even after that the owners of all mass media will have another twelve months to bring their business in line with the new rules.

He explained that mandatory sale of foreign-owned Russian media assets was not on the agenda.

“They will be able to devise some legal format that will allow them not to contract the law and at the same time let them stay within the Russian media space to a certain extent,” he said.

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