Vedomosti may crumple
“YOU work for a foreign state.” That is what Tatiana Lysova, the editor of Vedomosti, a respected daily business paper, says one of Vladimir Putin’s advisers told her in a meeting in the Kremlin last year. Vedomosti is jointly owned by three foreign media groups: News Corp of America, Pearson of Britain (part-owner of The Economist) and Sanoma of Finland. In the Kremlin’s reductionist and conspiratorial worldview, that practically makes the paper a branch office of the CIA and MI6.
This paranoid patriotism, intensified by Russia’s conflict with the West over Ukraine, helps to explain a law Mr Putin signed last month. It bans foreign firms and individuals from owning more than 20% of any media outlet based in the country. Vedomosti will be among its first victims.
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Sanoma, which was seeking a buyer for its 33% stake before the law was proposed, will now find a limited number of takers, and thus probably a lower price. News Corp and Pearson will also find it hard to sell or reduce their stakes. Axel Springer, a German firm which publishes the Russian edition of Forbes magazine—a courageous exposer of official scandals—will have to sell up, too.
A report by Bloomberg, an American news service, said Vedomosti may end up being bought by an affiliate of Gazprom, a state energy giant, or Yury Kovalchuk, an ally of Mr Putin. If so there would surely be fears over its ability to keep up its robust reporting. Ekho Moskvy, a liberal-oriented radio station already controlled by Gazprom’s media arm, has been tolerated in part because of its limited reach. But it has recently been threatened with official inspections and, on October 31st, was reprimanded for broadcasting “extremist” content in its coverage of the Ukraine conflict.
It is not just news outlets that are threatened by the media law. Foreign publishers of glossy magazines, such as Hearst and Condé Nast, will also have to shut them or sell to a local buyer at depressed prices. This amounts to a “blatant appropriation of property,” according to Derk Sauer, a Dutch investor who founded Vedomosti in 1999. Of course, Mr Putin will be able to point out that many countries, America included, restrict foreign ownership of some media. But in a sign of how rushed and emotive the passage of the law was, it will undo an investment the Russian leader celebrated with great fanfare not long ago: in 2011 Disney spent $300 million on a 49% stake in a Russian television channel, a deal that will now have to be undone.
Floriana Fossato, who worked in the media business in Moscow in the 2000s and now studies Russian television at University College London, wonders if the new law is ultimately rooted in a play among politically-connected insiders to control the country’s advertising market. She says those close to power think: let’s solve a political problem, but why not also make money at the same time?
Just as the paranoid politics of war can be costly for some, it can be profitable for others. There are few areas of the Russian economy that are not vulnerable to the arguments of national security and the need to stand up to the West. The education ministry has been striking many publishers’ schoolbooks off its list of approved texts, including some that used Western cartoon characters to illustrate maths problems. The New York Times noted on November 1st that Enlightenment, a publisher chaired by Arkady Rotenberg, another friend of Mr Putin, has seen its fortunes rise during the clampdown. A rash of closings of McDonald’s restaurants across the country, supposedly for “sanitary” reasons, is another sign of how even the most seemingly uncontroversial businesses can get caught up in the current mood.
Mr Putin distrusts what he does not control, and seeks constantly to bring any source of power and influence under the aegis of the state. As has happened with the big banks and energy companies, Vedomosti and other foreign-owned media outlets may soon fall under the sway of the Russian leader’s trusted friends. If that is the way things are headed, laments Mr Sauer, liquidating the paper may sadly be the best and most “elegant” solution.