By Kai Steinecke, Tatiana Kondratenko & Jannis Carmesin


With a new media law the Russian government restricts foreign ownership on domestic media. It will strongly affect some of the country's leading quality journalism.

This time, Vladimir Esipovs welcoming words turn out to be a farewell. 41-year-old Esipov is presenting the last Russian issue of the GEO magazine whose editor-in-chief he has been for the past eight years. He is facing subscribers, freelancing authors and photographers. "Unfortunately, this is our last meeting", Esipov starts his speech when there are almost no free seats remaining in the conference venue. The event is taking place in the centre of Moscow, on Novy Arbat street where members of GEO editorial team used to meet with subscribers every month. This time there are many more visitors than usually.

Just a couple of weeks before, the German publishing group Axel Springer SE which had owned - amongst others - the Russian issues of Forbes, OK! and GEO sold all of its shares to Russian business man Alexander Fedotov. He decided to shut down the Russian GEO completely and fired the entire journalist team. In addition, he announced a change of Forbes' editorial focus from political towards economical issues. According to him, politics wasn't the most interesting thing to Forbes' readers. "We will simply try not to stray into political territory", Fedotov told RBC.
The deal was closed as a consequence of a political decision already made in October 2014. The "law on foreign ownership" limits investments of foreign publishers in Russian media to a maximum of 20 percent and will come into force on 1st of January 2016. Companies have time until February 2017 to implement the demanded restrictions. Previously, foreigners could own a stake of up to 50 percent of a Russian broadcaster while there were no restrictions for print and online media.

Russian officials argue that the law was necessary to protect the state's inner security but critics consider it as another attack on freedom of press in Russia. Furthermore, by pushing foreign competitors out of the market, Russia would strenghten the position of domestic media in terms of market and advertising shares. Money earned in Russia would stay in Russia.

Geo will be closed in January due to the new media law.
Thus, Sergey Smirnov, assistant of research in theory and economy of media at the Department of Journalism at Moscow State University, estimates strong effects on the Russian media landscape. "Foreign investment historically plays a very important role for Russian media, especially for magazines", he says. Many international publishers such as American Hearst Media, Condé Nast or Swedish Modern Times Group do or have done business in Russia. According to numbers of Russian federal media supervisor Roskomnadsor, about 150 broadcasting companies and more than one thousand print media issues will be affected by the law.

Critics like Stefan Meister, head of Berlin-based Robert-Bosch-Centre for Eastern and Central Europe and Russia, estimate an increasing influence of the state in private media. "The amount of investors on the Russian market is decreasing, so the money will need to come from the state", he told Russia Beyond the Headlines. According to the world wide operating media agency Zenith Optimedia the total spending on advertising will decrease by 14,1 percent in total and even 35 percent for magazines in 2015.

It's very difficult to find a reliable Russian investor who wouldn't compromise the editorial processes.

Maxim Vasiukov
Chief-Editor, Delovoy Petersburg newspaper, owned by Swedish publisher Bonnier
On the other hand, similar restrictions do exist in many other countries as well. "Russia only is catching up to what already is reality elsewhere", says Sergey Nikonov, an associate professor at International Journalism Department at St. Petersburg State University. Amongst others the USA, Great Britain, Malaysia or France restrict foreign ownership in media on a similar level as Russia is going to do it. Nikonov sees the law as a step of Russia towards international standards.

Whatever Russia's real reasons may be, foreign media owners have two options remaining: they can either sell their shares and leave Russia or keep a maximum of 20 percent and sell the rest to Russian partners. In both cases they are under heavy pressure. Due to a lack of time foreign publishers are in a bad position to negotiate with Russian partners. Moreover, the Rubel currently is relatively weak. In conclusion, publishers expect a bad deals in case of selling their shares now.
While Springer has already made the decision to leave the market, there still are open questions about the strategy of its German-based competitors in Russia. Neither Bauer Media Group nor Hubert Burda Media wanted to give any comments on their plans but at least for the latter there are some hints that Burda will stay in the market.

Burda has become an increasingly important player on the Russian market since it entered in 1987 and currently publishes around 60 titles in Russia, Ukraine and Kazakhstan, as for example the Women's magazine Lisa or Playboy. According to an insider Burda, plans to stay in the Russian market and is currently debating several options on how to ship around the new restrictions. Russian sources recently reported that Burda had sold 100 percent of its shares to the young Russian company Everest Kultura, mainly owned by Burda's accountant Alexander Efimow. However, Burda's press office says it could not confirm the rumours.

Since the law was passed last year publishers are looking for a way to keep their investments in Russia. The most popular option even was promoted by Elena Shitikova, executive director of Russia's press publishers lobby. She recommended to separate editorial units and pass control on to local managers just as Burda attempts, according to the rumours mentioned above. However, Alexander Zharov, head of Russian federal media supervisor Roskomnadsor announced that his department is critical towards this kind of solution as it contravenes national law.
"The law is very strict, it will be difficult to turn it aside", says advocate Ivan Pavlov, head of Team 29, a union of lawyers and journalists fighting for the free access to information in Russia. Nevertheless, there is one option for foreign companies to keep 100 percent of their shares and publish their stories: they need to put all their publishing efforts online but in this case the websites should not be registered as media.

The legislation doesn't only affect critical media but a brought range of media companies. According to Sergey Nikonov, an associate professor at International Journalism Department at Saint Petersburg State University, GEO and other non-political papers are not excluded from this law because they popularize non-Russian but European culture, lifestyle and foreign value system which isn't in favour of the current regime. In his view this strategy is not necessary but considering the current political framework understandable.

From the first sight, a travel magazine, GEO, for example, can be seen as a non-political media but I strongly disagree with it. Even though it is an educational monthly magazine, it is still part of European ideology.

Sergey Nikonov
Associate professor at International Journalism Department at Saint Petersburg State University
For Nikonov it is important that foreign media publishers still have their shares on the Russian market and are not completely banned. "It is obvious that media companies, especially big ones, are not satisfied — they do not want to lose money and would prefer to continue earning as much as they used to".

Right after the presentation of GEO in Moscow some of the present subscribers took the opportunity to ask their questions. Many hands were immediately raised: "What has happened to the magazine?", a middle-aged man called Sergey asked. "GEO has been published in Russia for 17 years, and it is the only one print magazine I tend to buy." It is probable that the new law will affect the Russian media landscape, for business men and journalists - as well as for the readers.

Photos: Kai Steinecke / Infographics: Jannis Carmesin / © 2015 All Rights Reserves

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