Mass Media 1991-2000
This year, Russian mass media will earn nearly $2 billion from advertising. Both the mass media and the advertising market have recovered after a huge collapse in 1998, when volumes of TV and print advertising fell by four times according to the kindest estimates. In 2000, and especially this year, the media have restored their positions and their commercial advertising budgets are showing unprecedentedly high growth rates. According to the data of TNS/Gallup AdFact rating company, advertising revenues have increased by 55% for TV, 30% for newspapers, 43% for magazines, and 10% for radio.
Of course, the distribution of this money is very uneven. According to various estimates, 45- 55% of all advertising budgets go to television (mainly the central channels). However, $2 billion per year for the entire industry is enough to support already existing newspapers, magazines and TV channels and to stimulate the appearance of the new ones.
HISTORY: 1991-2000
In their first ten years of existence, private Russian mass media experienced more take-offs than landings, although this did not prevent them from ending up in the center of major scandals just as often as the heroes of their own publications and broadcasts.
1991
On January 1, Nezavisimaya gazeta (Independent Newspaper), founded by Mossoviet, began regular publication three times a week. The first issue of 150 000 copies was printed on December 22, 1990, at the Izvestiya Publishing House. Interest-free credit from Mossoviet was used to pay for its publication, and the paper came from Gosplan USSR stocks. Editor-in-Chief Vitaly Tret'yakov declared that he had "enough available funds to publish an absolutely independent newspaper."
In May, the All-Russian State Television and Radio Company (VGTRK), established in 1990, began full broadcasting.
In December, Sergey Lisovsky and Vladimir Zhechkov registered the Premier SV advertising association. Twelve advertising firms, including RO (Advertising Association) Aurora, LIS'S, and TISSA, joined the association as partners.
The law "On the Mass Media" was adopted on December 27. On the same day, by presidential decree, the government established the Ostankino State Radio and Television Company on the base of State Television and Radio USSR.
1992
The Video International production company was registered in May,. Its founders were Mikhail Lesin, Oganes Sobolev, Yury Zapol', Aleksandr Gurevich, and Vladimir Perepelkin.
In October, the Kommersant ("Ú") Publishing House began publishing the daily newspaper Kommersant-Daily (its history began with the cooperative Fact founded in 1988). The first issue contained stories on the trial of Riga OMON (riot squad) officer Sergei Parfenov and the sale of data from Russian spy satellites and brief instructions on "How to read Ú-Daily."
Dutchman Dirk Sauer began publishing The Moscow Times, the first independent English-language newspaper in Russia, thus laying the first stone in the foundation of the future Independent Media Publishing House.
1993
In January, there were six agencies that shared the TV advertising market. Premier SV, Video International, Lot, Contact, Blik Communications, and Aurora signed an agreement with Ostankino, which gave them substantial concessions on advertising in exchange for a commitment to buy fixed amounts of air time on Ostankino's first and fourth channels.
The first issue of the newspaper Segodnya (Today) was published in February. The core of the editorial staff was made up of journalists who had moved to the new paper from departments of politics and culture of Nezavisimaya gazeta. Segodnya was headed by Dmitry Ostal'sky, the former deputy editor-in-chief of Nezavisimaya gazeta. Publication of the newspaper was funded by Most Group.
In October, the independent commercial television company NTV made its debut with a broadcast of Itogi (Summary) on the fifth (St. Petersburg) channel. The creation of the TV company was financed by a consortium consisting of Most Group and the Stolichny and National Credit banks.
At the end of the year, the radio station Ekho Moskvy obtained a credit line from Most Bank in exchange for 51% of its shares. Ekho became famous in 1991 after reporting on events in Vilnius, i.e., the storming of the TV tower, and the August putsch in Moscow.
1994
In January, President Boris Yeltsin signed a decree allowing NTV to broadcast on the fourth channel. Shamil' Tarpishchev, the presidential adviser on sports, had lobbied for this decree at the request of his friend, banker Aleksandr Smolensky - one of the sponsors of the project.
In November, AO Russian Public Television (ORT) was created by the presidential decree "On Improving Operations of the First Frequency Television Channel and its Distribution Network." A controlling block of shares (51%) was assigned to the state represented by the State Commission for the Management of State Property (GKI). Under the decree, the remaining shares were divided among four banks, MENATEP, Stolichny, Russian Credit, and Inkombank, and two other companies, AO Aeroflot-Russian International Airlines and AO AvtoVAZ.
1995
In January, Vladislav List'ev became general director of ORT and immediately began to make major changes in the company's economic policy. ORT's board of directors made the unprecedented decision to end advertising on the first channel as of April 1. This decision was mainly directed against the association of advertising agencies that controlled the placement of 100% of the advertising on the first channel. The association was dominated by Sergei Lisovsky's company Premier SV. Vladislav List'ev and Sergei Lisovsky held talks the day before the board of directors announced its decision to suspend advertising, but they were unsuccessful: experts at ORT had forecast that the total value of advertising on the first channel in 1995 should amount to $170 million, but Lisovsky had guaranteed only $120 million. ORT management began to look for a replacement for the alliance headed by Premier SV.
On March 1, Vladislav List'ev was shot on the landing of his own home. Neither the killers nor the people who ordered the killing have ever been found. A moratorium on advertising on ORT was introduced, but it lasted only until August 1.
In September, a group of journalists led by Mikhail Rogozhnikovy, Nikita Kirichenko, Aleksandr Privalov, and Andrei Shmarov left the Kommersant Publishing House to found the weekly business magazine Ekspert (Expert), with the financial participation of ONEKSIM Bank.
In October, the redistribution of ORT's financial flows from advertising continued. The company created the ORT Advertising sales center and became its founder. ORT Advertising's first step was accreditation of advertising agencies under the channel on the basis of a tender; the winners were the Oster, LogoVAZ-Press, Maksima, Video Art, and Premier SV agencies, which had committed to placing the maximum volume of advertising.
1996
As of January 1, all advertising of tobacco and alcohol products on television was forbidden.
In March, the head of Most Bank, Vladimir Gusinsky, began to publish the magazine Itogi (Summary), with Sergei Parkhomenko as editor-in-chief. The Ekho Moskvy radio station joined the Most Bank media holding soon after.
In April, the Aurora agency joined the group of five advertising agencies accredited under ORT.
In May, the campaign concept "Vote or lose!" was created as part of the preparations for the presidential elections to try and convince young people to come out and vote. On May 9, during a pre-election trip to Volgograd, Boris Yeltsin appeared at a rock concert before thousands of young people and even tried to dance. After Yeltsin's victory on the elections, the members of his team maintained that the real turning point of the campaign was the president's trip to Volgograd.
A month later, a political scandal broke out: first NTV and then ORT reported that Sergei Lisovsky and Anatoly Chubais' assistant Arkady Evstaf'ev, the creators of the "Vote of lose" program, had been arrested in Government House by members of the Federal Guard Service. The reason for the arrest was the discovery of a box "from under the Xerox" containing half a million dollars in cash in the possession of Lisovsky and Evstaf'ev. In actual fact, the box was not a Xerox box but a box for letterhead, but for a while Xerox was the most frequently mentioned trademark in the media. Both were released after several hours, and the next day, Boris Yeltsin announced the dismissal of First Vice-President of the Government Oleg Soskovets, head of the FSB Mikhail Barsukov, and head of the Presidential Security Service Aleksandr Korzhakov from their positions.
In mid-September, Boris Yeltsin signed a decree on the formation of a public relations department under the presidential administration. Mikhail Lesin was appointed head of the new department.
In mid-October, ORT began to air the weekly analytical program Vremya (Time) on Saturdays with Sergei Dorenko as a host. Observers noted the rise of a totally new phenomenon: the three weekend analytical programs, i.e., Itogi (NTV, host Evgeny Kiselev), Zerkalo (Mirror) (RTR, host Nikolai Svanidze), and Vremya, were being transformed from weekly surveys of country's life into independent political shows.
Beginning on November 11, NTV began full broadcasting on the fourth channel it had won from VGTRK. The NTV-Plus project, a pioneer in Russian satellite pay-TV, started in November. Initially, NTV-Plus broadcast on four channels: Our Movies, Movie World, Sports Channel, and Music Channel. Any resident of the European part of Russia who was prepared to pay $199 for equipment installation and 90 rubles a month in subscription fees could become a subscriber.
In December, following the example of other TV channels, the Moscow Independent Broadcasting Corporation (MIBC), operating under the sign TV-6, sold exclusive rights to place advertisements on its TV channel. Premier SV became MIBC's partner.
At a meeting of ORT shareholders held at the end of the year, the National Sports Foundation, the National Credit Bank, and the Mikrodin Company were separated from the group of founders of the TV company. In addition to Gazprom (3% of the shares) and LogoVAZ (8% of the shares), a new structure called ORT-Consortium of Banks (ORT-KB), which controlled a total of 38% of ORT's shares, entered a consortium of private owners of the TV station who controlled a total of 49% of its shares. The consortium was headed by Alexander Smolensky.
1997
On January 27, Vladimir Gusinsky stepped down as president of Most Bank and general director of Most Group in order to head ZAO Media-Most.
In March, the board of directors of AOZT Komsomosl'skaya Pravda, publisher of the newspaper of the same name, decided to sell a 20% block of the company's shares to ONEKSIM Bank for $20 million.
Soon after, ONEKSIM Bank acquired 22% of the shares of OAO Redaktsiya gazety "Izvestiya" (Editors of Izvestiya), and the SIDANCO oil company, which at the time controlled ONEKSIM Bank, acquired another 20% of the newspaper's shares. Meanwhile, LUKOIL controlled 50% of Izvestiya's shares.
In June, the shareholders of Izvestiya held an extraordinary meeting. Editor-in-Chief Igor' Golembiovsky and columnist Otto Latsis from Izvestiya were elected to the board of directors, along with deputy chairman of the governing board Mikhail Kozhokin and deputy department head Vadim Goryainov from ONEKSIM Bank. LUKOIL sent three representatives to the board: vice-president Leonid Fedun, head of the public relations department Aleksandr Vasilenko, and deputy general director of the LUKOIL-Garant pension fund Boris Tikhomirov. Mikhail Kozhokin was elected chairman of the board.
In July, Izvestiya's new board of directors discharged Igor' Golembiovsky ahead of term. Golembiovsky held talks with Vladimir Gusinsky and Boris Berezovksy on financing a new publication, Novye izveztiya (New "Izvestiya")
In the same month, ONEKSIM Bank founded the newspaper Russky telegraf (The Russian Telegraph), and the Interros holding created ZAO Prof-Media to manage media assets.
On November 1, the Culture Channel began broadcasting; its founders were the government, VGTRK, and the St. Petersburg administration.
1998
In January, the Premier SV advertising group bought exclusive rights to advertise on ORT for $180 million. Premier SV now had the exclusive right to sell advertising on ORT and TV-6, and Video International had the same rights on NTV and RTR.
The news holding Gazprom-Media was created. At the time the holding was set up, Gazprom owned the Prometei TV and radio company, a controlling block of shares in the newspaper Rabochaya tribuna (Worker's Tribune), 3% of the shares of ORT, 30% of the shares of NTV (they were held in trust management at Media-Most), and shares of a large number of regional media. Viktor Ilyushin, a former assistant to President Yeltsin, became head of the holding. The press regarded Ilyushin's appearance in the leadership of Gazprom-Media as a sign of the formation of a media holding to support Viktor Chernomyrdin in the presidential elections in 2000.
At the beginning of March, the mayor of Moscow issued a resolution on a tender among Moscow advertising agencies for the right to conclude direct rental agreements for advertising space with the Moscow government. It was expected that four winners would be announced in the tender summary. The remaining agencies involved in outdoor advertising (there were about 1000 of these in Moscow) would have to join the ranks of sublessees. Advertisers estimated that after the tender, outdoor advertising prices would increase by at least 40%. However, under pressure from advertising agencies that were not expecting success, the mayor cancelled the tender.
In March, singer and Duma deputy Iosif Kobzon announced that he was creating his own media holding, Moskovit-Media. The plan was to include the Israeli newspaper Russky izrail'tyanin (Russian Israelite), the teen magazine Detki (Kids), and the cable radio station Radio-1 in the holding.
In April, under the aegis of the Moscow authorities there was created the Metropolis media holding. The holding included the Maksima advertising agency, the daily newspaper Rossiya, the free newspaper Metro, and Literaturnaya gazeta (Literary Gazette).
In April, it was learned that the round-the-clock TV music channel MTV-Russia would soon be launched. Boris Zosimov, the president of the BIZ Enterprises production company, became chairman of the TV channel's board of directors after signing a five-year licensing agreement with chairman of the board of MTV Networks Tom Freston. MTV-Russia became the eighth regional MTV channel after MTV-USA, MTV-Asia, MTV-Australia, MTV-Brazil, MTV-Europe, MTV-Japan, and MTV-Latin America.
The next round of reform connected with control over advertising billboards in the capital took place in August and resulted inthe creation of the department of outdoor advertising, information, and urban design. The department's primary task was to replenish the city treasury. The mayor ordered that outdoor advertising had to bring the city no less than $33 million per year (in 1997, the capital's outdoor advertising revenues were about $20 million). Vladislav Kotov, the former head of the territorial advertising agency of the Central District Prefecture, became head of the new department.
In September, Kseniya Ponomarova, ORT's general director, submitted her resignation. The reason for her resignation was the return of Sergei Dorenko to the channel without her approval. Igor' Shabdurasulov took up the post of general director.
Unable to bear the August economic crisis, the daily newspaper Russky telegraf wasclosed.
In November, a noisy scandal flared up at a State Duma session. Viktor Ilyukhin declared that in December 1994, President Boris Yeltsin had accepted a bribe in the form of the right to dispose of 26% of the shares of ORT by proxy over a three-year period. Igor' Shabdurasulov called Ilyukhin's statement "total delirium."
On November 22, a Delta-2 rocket launched from Cape Canaveral carried the Bonum-1 satellite built for the Media-Most holding into orbit. It was designed to transmit 48 NTV-Plus television channels to western regions of Russia and to Israel. The satellite cost $76 million, and the same amount was spent to launch it.
Mid-December witnessed the beginning of broadcasting of the FM radio station "Nashe radio" (Our Radio); this was a project of the LogoVAZ-News Corporation media holding owned by Boris Berezovsky and Australian media magnate Rupert Murdoch. A total of $20 thousand was spent on sociological research to calculate the potential audience for the future station. Based on the research results, it was decided to broadcast mainly Russian rock music and to a lesser extent dance music of the 80s and 90s. "We'll be a little bit too old for teenagers and a bit too stylishfor people over 35" is how director Mikhail Kozyrev defined the station's format.
1999
In mid-March, ORT received credit totaling $100 million on the security of its shares. Information had already leaked into the media that the president of MIBC TV-6, Eduard Sagalaev, had sold his 37.5% of MIBC's shares to Boris Berezovsky.
In the same month, a scandal erupted over a three-minute film clip shown on the program Vesti (News) that depicted "a person resembling Yury Skuratov" and two young women of easy virtue. The clip was shown shortly after a very public announcement by the Prosecutor General that he was personally taking control of the investigation in the case involving bribery of high-ranking Kremlin bureaucrats by the Swiss company Mabetex. At the beginning of April the president fired Skuratov.
In July, information appeared that a certain company called American Capital Group belonging to Iranian-American Kia Dzhurabchian had bought the controlling block of shares of Kommersant Publishing House from its founder, Vladimir Yakovlev. Yakovlev himself confirmed this in an interview with Kommersant. However, it was soon learned that Kommersant Publishing House had actually been sold to structures closely connected with Boris Berezovsky. This was officially announced on August 6. Right after the sale, almost the entire management of the publishing house was fired, including Raf Shakirov, managing editor of the joint editorial office and editor-in-chief of Kommersant-Daily. Andrei Vasil'ev was appointed in his place.
The Ministry of the Press, Television and Radio Broadcasting, and Mass Communications was created by presidential decree; Mikhail Lesin became Minister of the Press on August 19. He was entitled to issue and withdraw licenses from TV channels and thus became a person of great influence.
The first issue of the newspaper Vedomosti (Gazette) was published in September; the paper was founded by the Independent Media Publishing House jointly with the Financial Times Group and Dow Jones.
2000
In June, the Prosecutor General's Office arrested Vladimir Gusinsky, the head of Media-Most. Three days later, he was charged with embezzling more than $10 million during the privatization of the state company Russian Video.
In August, residents of Moscow and Moscow Region went for several days without television as a result of a fire at the Ostankino tower that raged for a whole day, destroying transmission equipment. Moscovites formed lines stretching for hundreds of meters at video rental outlets, while TV station owners feverishly searched for ways to restore broadcasting. The majority of Moscow residents received signals on their TV sets by cable from relay antennas situate placed on tall buildings. NTV-Plus offered to set up satellite dishes in place of the antennas on an emergency basis. The one flaw in the plan was the need to immediately find $1 million to install the NTV-Plus equipment. Plans to install transmitters on the radio tower at Shabolovka, on the top of the Gidroproekt building, and even on the roof of the main MGU (Moscow State University) building were put forward. However, instead of implementing these plans, VGTRK restored broadcasts of the main channels within a week from reserve antennas in Balashikha and the radio center in Oktyabr'skoe Pole District. The after-effects of the fire are still being eliminated.
In September, Boris Berezovsky announced his intentions to transfer management of his 49% block of ORT shares to a public agency consisting of representatives of the creative intelligentsia. According to Berezovsky's stated intentions, these people would manage his shares for a period of four years and, in case of successful management, would receive ownership of 20% of the shares. On October 16, a draft joint venture agreement for the creation of the TeleTrust company was signed at the Radisson Slavyanskaya Hotel. Vasily Aksenov, Nataliya Gevorkyan, Igor'Golembiovsky, Georgy Gulia, Sergei Dorenko, Tamara Zamyatina, Kirill Kleimenov, Otto Latsis, Yury Lyubimov, Vladimir Pozner, Vitaly Tret'yakov, Rustam Khamdamov, Igor' Shabdurasulov, and Egor Yakovlev signed the agreement. The idea of creating TeleTrust was short-lived: on December 7, Berezovsky announced that he was withdrawing his proposal.
At the beginning of October, RAO UES of Russia announced that one of its affiliates would take part in buying the Ren TV television company from LUKOIL.
by Andrei Knyazev
PRESENT
During the past year, the entire milieu of people and companies that defined the political positions of the central TV channels has completely changed. The first half of the year saw Vladimir Gusinsky's final loss of control over NTV, and the second half was a period of confrontation among shareholders of TV-6, which was where part of NTV's creative team had moved.
What Berezovsky Lost…
At the beginning of January, reports filtered into the media that Boris Berezovsky had failed in his attempt to form a public agency to manage the "private" shares of ORT and had sold these shares (49%) to structures controlled by Roman Abramovich.
The annual meeting of ORT shareholders for 2000 was conducted in two stages. At the regular meeting held at the end of June, it was discovered that the list of candidates for the new board of directors was made up exclusively of state bureaucrats, which, on the one hand, reflected the de facto transfer of the channel to state control, but on the other hand, was completely out of keeping with the government's desire to give the channel a "public" image. "A list consisting only of state bureaucrats doesn't reflect the essence of public television," Minister of the Press Mikhail Lesin (representing the 51% state shareholding) said at the meeting. At the second shareholders' meeting held on September 7, the president's press secretary Aleksei Gromov, First Deputy Minister of the Ministry of Property Aleksandr Braverman, president of North Ossetia Aleksandr Dzasokhov, first deputy general director of ORT Aleksandr Lyubimov, film director Nikita Mikhailov, director of the Hermitage Mikhail Piotrovsky, poet Il'ya Reznik, First Deputy Minister of the Press Mikhail Seslavinsky, general director of the Independent Publishers' Group Vitaly Tret'yakov, composer Aleksandr Chaikovsky, and general director of ORT Konstantin Ernst were elected members of the board of directors. A week later, the new board of directors elected Mikhail Piotrovsky as chairman.
…and What He had Kept
In May, right after a team of NTV employees led by Evgeny Kiselev had moved to TV-6, one of the shareholders of the Moscow independent broadcasting corporation (MIBC) TV-6 Moscow-the private pension fund LUKOIL-Garant-initiated an attempt to liquidate the company. LUKOIL-Garant controlled 15% of the shares of the TV company, AO Moscow Science and Technology Committee owned 10%, and Boris Berezovsky and companies affiliated with him owned 75%. LUKOIL-Garant demanded the liquidation of TV-6 based on the fact that the company had shown negative balances for the past two years; under Article 35 of the Russian Federation law "On Joint-Stock Companies," this was a cause for liquidation. On September 27, the Moscow Court of Arbitration made the decision to liquidate the company. On October 26, during consideration of TV-6's appeal, the court of arbitration left its previous decision in force, despite the fact that the arrival of new management had radically changed the company's current financial indicators: MIBC's profit in July exceeded $6 million; and the company's rating, and consequently its earnings from advertising sales, had increased. According to the decision of court of arbitration, the promoters of TV-6 were directed to liquidate the company within six months.
Now, on the basis of the decision of the court of arbitration, the Ministry of the Press could revoke the channel's broadcasting license at any time. However, there was another possible version of the course of events: conclusion of an amicable settlement between head of LUKOIL Vagit Alekperov and Boris Berezovsky (Vlast' examined this possibility in the previous issue). In exchange for concessions from Berezovsky, such as an increased share in the charter capital and influence over staffing policy at TV-6 for LUKOIL-Garant, LUKOIL, in theory, might withdraw its claims.
Besides TV-6, Berezovsky still controlled several media businesses. The radio holding Logovaz News Corporation (a joint venture of LogoVAZ and Rupert Murdoch's News Corp.) managed the Nashe Radio (Our Radio) and Radio Ultra radio stations. In addition, Berezovsky's structures owned Kommersant Publishing House, and AKB United Bank, which was under his control, had 80% of the shares of ZAO Editorial Office of Nezavisimaya gazeta (Independent Newspaper), whose permanent editor-in-chief, Vitaly Tret'yakov, quit his post in June.
Tret'yakov explained his resignation as a political decision by Berezovsky, who insisted that Tret'yakov had been dismissed for purely economic reasons: in the last several years, the paper had experienced constant financial problems. On June 8, the newspaper's shareholders elected a new editor-in-chief and general director; they were Tat'yana Koshkareva and Ruslan Narzikulov, who until 1999 had managed the newspaper's political and economic departments, respectively, and then had worked for a time at ORT's information service.
Media-Most in Pieces
The first half of this year was marked by Gazprom's tense struggle for control over mass media owned by Media-Most. At the beginning of the year, Gazprom's media division owned 46% of NTV's shares, of which 16% had been acquired in March 2000 in exchange for repayment of a Credit Suisse First Boston (CSFB) credit amounting to $211.6 million (Gazprom acted as guarantor for this credit) and 25% plus one share in another 23 Media-Most companies. Still another 19% of NTV's shares and 25% of the shares of the remaining Media-Most companies had been pledged as security for another CSFB credit of $262 million, with Gazprom again acting as guarantor. The repayment period for the second credit expired on July 19.
On November 17, 2000, Media-Most and Gazprom concluded an amicable settlement, according to which Media-Most had to transfer ownership of 19% of NTV's shares to Deutsche Bank for sale to foreign investors and for repaying its debt to Gazprom from earnings. In the end, Media-Most refused to transfer the shares to Deutsche Bank, and Leadville Investment, a subsidiary of Gazprom-Media, judicially demanded the return of this 19% as its ownership. On May 4, the Chereomushki court allowed the company's claim. The final point in the dispute between Media-Most and Gazprom-Media was raised exactly two months later on July 4, when the Moscow City Court rejected Media-Most's appeal and declared the decision of the Chereomushki court legal. The 19% of NTV's shares and 25% of the shares in another 23 Media-Most companies finally passed to Leadville Investment (i.e., Gazprom-Media). Gazprom now had a total of 65% of NTV's shares and 50% plus one share in NTV-Plus, the TV station TNT, Ekho Moskvy, NTV-Profit, Memonet, Kino-Most, and others. At the end of July, Alfred Kokh, the head of Gazprom-Media, announced that Gazprom had repaid the $262-million CSFB credit.
New Kids on the Block
At the end of September of this year, a new daily business newspaper, Gazeta, began its publication. Its editor-in-chief was Raf Shakirov, who had very nearly become vice-president of the TVC television company after leaving Kommersant in 1999 and had worked for three months at RTR as general director of the program Vesti (News). According to rumors, Vladimir Lisin, general director of the Novolipetsk Metallurgical Combine, had sponsored the launch of the new paper. Shakirov categorically denied this, although in an interview with Vlast' in September, he admitted that Lisin had "really done a lot for this project."
The first issue of Ezhenedel'ny zhurnal (Weekly Magazine) was to be published in December. It was established by a team of journalists who had left Itogi (Summary) magazine in April of this year, when Gazprom took over control of the Sem' dnei (Seven Days) Publishing House. However, its appearance was delayed indefinitely, like that of Delovoi zhurnal (Business Magazine), which former editor-in-chief of Segodnya (Today) Mikhail Berger was planning to publish. According to official information, Ezhenedel'ny zhurnal would be published by Ostrov (Island) Publishers. However, as the magazine's editor-in-chief Sergei Parkhomenko told Vlast', Vladimir Gusinsky was one of the investors in his new project.
Network Mass Media
This past year (2001), Internet media began to play a noticeable role in the information market, transforming from "toys for the elect" to independent players in information space. The ever more frequent citation of electronic editions in television surveys of the press confirms this.
One of the most influential Russian Internet media is Gazeta.ru, which was created at the end of 1998 with funds from the YUKOS oil company. There is also an Internet edition among the mass media controlled by Boris Berezovsky - the Internet magazine Grani.ru, founded in December of last year.
Until last week (the week of December 11, 2001), the main player in the Internet-edition market was Gleb Pavlovsky's Fund for Effective Policy (FEP), which managed resources such as Strana.ru, Lenta.ru, SMI.ru, Vesti.ru, and Russky zhurnal (Russian Magazine) (http://www.russ.ru/). However, on December 11, Mr. Pavlovsky announced he was surrendering his rights to mass media controlled by FEP, explaining this move as a desire to withdraw from the political struggles in the Internet.
by Andrei Knyazev
TRENDS
Events in recent months have shown that the redistribution of property on the Russian media market is far from over.
Preselling
On September 11, Gazprom head Aleksei Miller announced that the company was preparing to sell its non-industry assets. This was interpreted as a sign that the gas monopolist finally intended to get rid of its media business. Gazprom-Media controlled 65% of the shares of NTV and also owned controlling share blocks in Media-Most subsidiaries such as ZAO NTV-Plus, ZAO Bonum-1, a href="http://www.gazprom.ru/" target="_blank" title="RUS">Sem' Dnei Publishing House, the radio station Ekho Moskvy, and the TV channel TNT. At the end of November, the head of Gazprom's property management department, Aleksandr Krasnenkov, said in an interview with Kommersant that "There has been no firm decision on selling these assets at Gazprom yet, but there will most likely be one. First, Gazprom and the new management team plan to put things in order there and then we'll decide whether to get rid of all these assets or only some of them. A final decision will be made in January."
Preselling of Gazprom-Media was supposed to be completed by the middle of January. To assess its media companies, their financial records and audit data as well as the Russian media market, Gazprom applied to the German investment bank Dresdner Kleinwort Wasserstein, the investment banking division of Dresdner Bank.
The media named Interros, Mezhprombank, Alfa Group, and Kirsch Media as possible buyers of Gazprom-Media's assets. ZAO Russian Media Group was a potential buyer of the Ekho Moskvy radio station. Ekho Moskvy's general director, Aleksei Venediktov, announced that the station's employee collective was interested in buying part of Ekho's assets.
According to certain information, Boris Jordan, the head of Gazprom-Media, was preparing to launch his own weekly magazine with the working name of Bol'shoi gorod (Big City) in the first quarter of the coming year. There were rumors that the project would be headed by Sergei Mostovshchikov, a former editor-in-chief (1997-1998) of Stolitsa (Capital City) magazine published by Kommersant Publishing House.
Foreigners Shall Not Pass
At the beginning of June, the State Duma instantly accepted amendments to the law "On the Mass Media" its second and third readings; the amendments prohibited foreigners from owning controlling blocks of shares in Russian mass media. Work on the amendments had started in April at the height of the dispute over NTV, after American media magnate Ted Turner expressed a wish to buy up a controlling block of the company's shares. Of the three versions of the bill, which limited the share of foreigners in Russian mass media to 25, 30, and 50% of the stocks, respectively, the third was adopted. An important addition was introduced into the document: the amendments applied to all TV channels broadcasting in the area where lived no less than half the country's total population. As a result, both federal meter-wavelength channels (ORT, RTR, NTV, and TV-6) and decimeter-wavelength channels (STS, MTV, Ren-TV, and TNT) fell within the purview of the amendments, since 80% of Russia's population lives in its European part. The TV channels were given a year to bring the structure of their share packages into conformity with the law.
ORT Awaits the President's Orders
The repayment period for a $100-million credit issued to ORT by Vneshekonombank (Bank for Foreign Economic Affairs) in March 1999 expired at the end of January 2002 ORT's management announced more than once that loaning-up negotiations with several financial structures were under way. Definite hopes were pinned on the channel's shareholders. In an interview with Kommersant at the end of June, ORT's general director Konstanin Ernst stated, "Our present debt is about $180 million, of which $100 million to Vneshekonombank. The rest is debt to the Ministry of Communications for the services of the Television Engineering Center and for program production. If the shareholders, both state and private, find a way to pay this debt, ORT will become profitable in the nearest future."
However, to all appearances, ORT did not pin any special hopes on its private shareholders. At the first meeting of ORT's new board of directors under chairman Mikhail Piotrovsky held on December 3, it was decided to address Vladimir Putin directly concerning the fate of the Vneshekonombank credit (on the grounds that the state controlled 51% of ORT's shares) and request him to give the necessary orders to resolve the credit situation.
Radio Offensive
It is usually assumed that the media oligarchy in Russia consists of structures that control printed editions and TV channels. However, in recent years, the role of holdings operating on the market of FM-band radio stations has become more and more noticeable. This year, the Russian Media Group holding has been the clearest example of the potential of the radio oligarchs. Two weeks ago, it announced that it was ready to buy Ekho Moskvy from Gazprom-Media. This is essentially the first case when a company specializing in FM radio stations has made an attempt on a piece of property which figures in the political and property games played by "grown-up" media holdings.
Russian Media Group currently manages the Russian Radio, Monte Carlo, Tango, and Dynamite FM radio stations and has just launched a new project, Russian Radio-2, which is supposed to operate in a niche similar to that of Ekho Moskvy by devoting 70% of its air time to informational broadcasting. At the same time, Russian Media Group is fully capable of financially supporting its ambitions: according to independent estimates, the company's revenues from advertising last year were some $40 million.
by
Andrei Knyazev
All the Article in Russian as of Dec. 18, 2001
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