Axel Springer Abandons Russia Before Media Rules Take Effect

  • Europe’s biggest newspaper publisher sells after 11 years
  • Putin’s media law will tighten controls over publishing

Axel Springer SE, Europe’s biggest newspaper publisher, became the latest foreign company to abandon Russia as President Vladimir Putin’s media law tightens control over broadcasting and publishing in the country.

Berlin-based Axel Springer agreed to sell its Russian businesses to publisher Alexander Fedotov’s Artcom Media after 11 years in the country. The portfolio consists of titles including Russia’s Forbes and OK! magazines.

Axel Springer declined to comment on the sales proceeds on Thursday, citing an agreement with the buyer.

Axel Springer, whose high-rise headquarters were opened next to the Berlin Wall in 1966 to challenge the leadership of Communist-led East Germany, had hopes to expand in Russia after buying Gruner + Jahr’s Russian magazines in 2009 and introducing online offerings including finanz.ru, a Russian-language financial news portal.

Those hopes have dimmed after Putin signed the media law last October, in what some politicians in the ruling United Russia party called a measure to counter an “information war” with the U.S. and Europe. Putin has also tightened his grip on the Internet amid geopolitical tensions over Ukraine.

Other foreign media companies have pulled out of Russia over the last few months or restructured their holdings to comply with the law. Even without the rules, media companies in Russia have been hurt by the country’s recession.

Fedotov will consolidate the acquired publications in a new company. Regina von Flemming, chief executive officer of Axel Springer Russia, may buy a 20 percent stake in the assets within the next few weeks, Artcom said in a separate statement. Founded in 2008, Artcom publishes fashion and design magazines. Its titles include L’Officiel, Numero, Port, Interni, Objekt Russia and Golf Digest.

“We regret that we now have to leave because of the new media law which is restricting foreign ownership to 20 percent,” Ralph Buechi, the president of Axel Springer’s international operations, said in an e-mailed statement. Buechi said Axel Springer couldn’t accept a limitation to holding a minority stake.

Expansion Hopes

The company doesn’t break down sales by country. While Axel Springer had hoped to expand its presence in Russia, the unit has been a small part of their global business, Sarah Simon, an analyst at Berenberg Bank, said Thursday by phone from London.

Russian businessmen are benefiting from the exodus of foreign media owners, snapping up assets built up over the last decade. Discovery Communications Inc. agreed last month to move its Russian business to a venture with Putin’s billionaire ally Yury Kovalchuk, while Sweden’s Modern Times Group AB may sell Russian broadcaster CTC Media Inc. to local billionaire Alisher Usmanov.

Finland’s Sanoma OYJ sold its stake in Russian Vedomosti daily to media entrepreneur Demyan Kudryavtsev in April. Switzerland’s Edipresse SA disposed of its Russian unit to local head Maxim Zimin earlier this year.

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