Russia Threatens Foreign Media Ownership With New Rules

President Vladimir Putin signed a law today curbing foreign ownership in Russian media, shrugging off criticism that the Kremlin is undermining the independent press in a swipe at global publishers and broadcasters.

The law requires Russian media with foreign owners to reduce non-Russian ownership to 20 percent by the end of 2016 after amending constituent documents by February of that year. The Vedomosti daily, published jointly by the Financial Times and the Wall Street Journal, and Axel Springer SE’s Forbes Russia are the biggest independent media outlets in the country.

Since becoming president in 2000, Putin has brought major television stations under state control, pushing opposition discourse toward the Internet. This year, as geopolitical tensions flared over the conflict in Ukraine, Putin has tightened control over the World Wide Web and media.

“This is another step toward closing Russia, isolating its information space and removing elites from criticism,” Nikolay Petrov, a political science professor at the Higher School of Economics School in Moscow, said by phone. “Vedomosti and Forbes have been the two remaining strongholds that could afford criticism toward Putin’s elite and haven’t agreed to compromise with the Kremlin.”

The law also threatens to squeeze owners of entertainment television in Russia, including operators CTC Media Inc. and Walt Disney Co., cable TV channels such as Discovery Communications Inc. and publishers of glossy magazines, including Sanoma OYJ, Hearst Corp. and Conde Nast.

Hearst, Discovery

Communications Minister Nikolay Nikiforov met with executives from media with foreign shareholders last week and agreed to form a working group on how to comply with the new law.

Hearst Shkulev Media, which publishes Elle and Maxim magazines in Russia, will need to amend its shareholder structure to bring its editorial group in compliance with the new requirements, co-owner Viktor Shkulev said. Still, the company is seeking to keep Hearst’s participation in other business areas, he said.

CTC Media may need to either delist shares in the U.S. or buy back shares to comply with the law, Vedomosti reported Sept. 26. The company said last week it’s studying options to defend its shareholders and comply with the legislation at the same time. The Russian unit of Discovery declined to comment last week. Disney’s local office couldn’t be reached for comment today.

“The law was drafted sloppily,” Petrov said, adding that glossy magazines and entertainment TV channels will probably be exempted. “The Kremlin was aiming to tighten control not over them, but over socio-political media.”

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