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. Last Updated: 07/27/2016

Knives Drawn In Fight For ORT

The fight for control over ORT heated up Friday and once again the threat of bankruptcy is looming over the television giant.

Despite a $100 million government loan extended this week on President Boris Yeltsin's orders in a bid to save ORT, the Moscow arbitration court appointed an outside manager to oversee ORT until a final decision on its fate is made in April.

The maneuvering is part of a general realignment of power and capital that is taking place at Russia's national television stations in anticipation of this year's electoral campaigns.

ORT general director Igor Shabdurasulov appeared on ORT's main news program Friday night with a dramatic statement accusing Prime Minister Yevgeny Primakov, Moscow Mayor Yury Luzhkov and the Communist majority in the State Duma of plotting against ORT in an attempt to limit Yeltsin's influence.

"I am profoundly convinced that today's decision of the Moscow arbitration court has the character of a premeditated action," he said. "There is a political game going on around ORT, or, to be more precise, under-the-carpet intrigues in the corridors of power."

Nicholas Pilyugin, publisher of the Russian television industry newsletter TV Monitor, said bankruptcy proceedings against ORT had political overtones from the very beginning. "Everything here seems to have politics behind it," he said Friday.

The ORT general director said that taking into account that Primakov, Luzhkov and the Communist leadership have "activized their political activities," the goal of the game was "obvious."

They are determined, "at any price, to limit the president's influence on television, first of all on ORT, before parliamentary and presidential elections," Shabdurasulov said.

ORT is loyal to Yeltsin and seen as controlled by Boris Berezovsky. Like other Russian television channels, it has been a major tool in elections campaigns and power struggles between major businesses.

Seen in 98 percent of Russian homes, ORT is the country's largest television station. But after the economic crisis hit last year, it has experienced gross financial difficulties as advertising revenues have plummeted 70 to 80 percent. The company's debt to producers and transmitters in the beginning of the year was more than $100 million, Shabdurasulov said.

Late last year, ORT already saw court marshals taking inventory of its property, which was later to be sold for debt. But the federal government stepped in to save the company.

In late December, Yeltsin signed a decree, which was never made public, offering ORT a loan, using its shares as collateral. The government owns 51 percent of ORT shares, while 11 percent belong to Berezovsky's LogoVAZ car dealership and 38 percent belong to a consortium of private banks, whose role in the channel is also largely coordinated by Berezovsky.

Shabdurasulov announced Friday that earlier this week he signed an agreement with government-owned Vnesheconombank for a $100 million credit line. The money was to be paid out in five unspecified trenches over three months.

ORT received some of the loan money Thursday and Friday, he said, Interfax reported.

In return for the loan, which is not expected to be repaid, the bank will receive ORT shares. The number of shares has not yet been determined.

Shabdurasulov sent a letter to the city arbitration court this week asking it to postpone actions on a suit against ORT that was brought by the gameshow production company Chto? Gde? Kogda? earlier this year. The company says it is owed $34 million by ORT.

But the court went ahead with the case, prompting Shabdurasulov to accuse it of "mocking" the president's decree.

The court ruled Friday to impose "temporary supervision" at ORT and appointed Pyotr Chernovalov as an outside manager, Prime-Tass reported. He is to oversee ORT's operations until bankruptcy hearings on April 20.

The choice of the Chernovalov signifies the serious intentions of the arbitration court. He is a lawyer who last year sued Inkombank, then one of Russia's biggest banks, for bankruptcy and won.

The gameshow production company's candidate was not considered Friday because she did not appear in the courtroom, while Federal Bankruptcy Service's appointee was declined by the court for incompetency, the business news wire said.

In December, it was the Federal Bankruptcy Service that saved ORT from its Moscow branch, which wanted to bankrupt ORT for failing to pay city taxes.

Chernovalov will meet with ORT management and creditors Monday, but it will take him at least a week to familiarize himself with the situation, Interfax said.

In the meantime, the value of ORT shares will be appraised by a company called Kvinto Consulting, which is to report to the government next week, Shabdurasulov said. Half of the shares being used as collateral will simply change hands within the government, going from the State Property Committee to Vnesheconombank. The other half is to be put in by ORT's private shareholders.

Shabdurasulov is also quoted by Interfax as saying that the first small revenues have started to arrive from the new advertising company, which was announced in late December as a joint venture of Berezovsky's LogoVAZ and Australian-born media magnate Rupert Murdoch's News Corp. The company replaced Sergei Lisovsky's Premier SV advertising and showbusiness giant as ORT's saleshouse. But no details about the new company have been available.

Media analysts have said recently that major shifts taking place in national television companies, such as ORT and RTR, are a result of not only financial difficulties, but of a major re-alignment of power in the face of the upcoming parliamentary elections and the possibility of early presidential campaign.

Vladimir Gusinsky's NTV, though also hit by the dramatic drop in advertising revenues, appears to be somewhat more stable. Luzhkov said earlier this month that the corporate status of city-controlled Center TV will change from a joint stock company into a city enterprise, which would make it easier to pump budget money into the channel and make it legally impossible to bankrupt it.

It was not clear Friday night how big the powers of the outside supervisor at ORT will be. "If ORT indeed started to repay its debt, in a normal society, that would be a major factor in favor of the current management," said Pilyugin, the newsletter publisher.

But the end of the game is still to come. "We are to sit back and watch the spectacle," he said.