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. Last Updated: 07/27/2016

Embattled NTV Seeks Foreign Partner




The Media-MOST empire, which is in the midst of a bitter election-season confrontation with the Kremlin, confirmed Tuesday it is negotiating the sale of a 15-percent stake in its flagship NTV television station with an unspecified foreign investor.


"Plain bargaining is under way," Media-MOST spokesman Dmitry Ostalsky said. "The seller wants to get a better price for its product, and the buyer wants to buy it cheaper."


He would not disclose the potential partner, saying only that several foreign investment funds, and not media companies, are bidding for a stake in Vladimir Gusinsky's empire. The negotiations have been under way for several months.


Media-MOST denied the stake was being sold to cover tens of millions of dollars in alleged debts to state-controlled banks.


In addition to the 15 percent share in NTV, Media-MOST is offering for sale unspecified shares in the NTV Plus satellite television company, the TNT second-tier television network, Ekho Moskvy radio station and the NTV Profit film production and distribution outlet, Ostalsky said.


He could not confirm reports that sales of Media-MOST's Segodnya newspaper and Itogi and Sem Dnei magazines are also being discussed.


NTV constitutes the bulk of Media-MOST's value. Last summer, before the economic meltdown that cut television advertising budgets by 70 percent to 80 percent, Media-MOST was preparing NTV for a public offering in New York and it was assessed at between $1.2 and $1.5 billion, Gusinsky's deputy, Andrei Tsimailo, said this week.


The current value of the company stands at between 50 percent and 75 percent of that price, he said.


Ostalsky said that unlike the situation in the Kommersant publishing house, which was bought earlier this year by an unknown U.S. company only to end up in the hands of Gusinsky's rival, Boris Berezovsky, a month later, Media-MOST is dealing with "well- known funds that have existed on the market for a long time."


Since this summer, Media-MOST, whose outlets are seen as siding with the Fatherland-All Russia bloc of former Prime Minister Yevgeny Primakov and Moscow Mayor Yury Luzhkov, has been harshly critical of Berezovsky and the presidential administration.


The company has accused the Kremlin of being behind state-controlled Vneshekonombank's demands that Media-MOST pay back more than $60 million in loans.


Berezovsky-controlled media reported that Media-MOST's total obligations exceeded $1 billion. Last week, ORT television reported that Media-MOST had large unpaid loans with Sberbank.


On Oct. 29, the Moscow arbitration court ruled in favor of Vneshekonombank, which demanded the repayment of $42.2 million, and some of the media company's bank accounts were arrested. But last week, the ruling was suspended by a federal arbitration court until it hears the appeal Dec. 3.


Media-MOST said it has repaid the loans and the accusations of huge debts are "a lie." The company promised to pursue the case in international courts if necessary.


"We know that pressure has been put on Russian judges," Tsimailo was quoted by Interfax as saying. If there is no fair trial in Russia, Media-MOST "will be forced to go to courts where the law stands above political expediency and where even an attempt to press independent judges is impossible."


In response, the Kremlin said it had nothing to do with the dispute between Media-MOST and Vneshekonombank.


Ostalsky said the potential sale is "absolutely not related" to Media-MOST's reported outstanding debts. He said the company announced it is negotiating with investors because, in the light of the accusations, "it became necessary to tell the public [about Media-MOST] in greater detail."


This is not the first time a major Russian television company has started talking about a foreign investor at a time when it has been under domestic pressure. Late last year, when Berezovsky was under severe attack from Primakov's government, ORT - which is 51-percent government owned and is Berezovsky-controlled - floated information that it was negotiating a deal with Australian-born media magnate Rupert Murdoch. The announcement, however, turned out to be little more than a public relations campaign, which helped the company fend off bankruptcy claims.


A U.S. expert on Russian television said Tuesday that Media-MOST is more likely than ORT to be talking seriously about foreign investment.


Professor Ellen Mickiewic, director of the DeWitt Wallace Center for Communications and Journalism at Duke University, said in a telephone interview that NTV would be looked upon more favorably by foreign investors because of its clear system of private ownership, tendency to keep apace of new technology, educated viewership and Western-style approach to branding.


Media-MOST this year became the first Russian media company to purchase a stake in a foreign media holding. It purchased a 17.3-percent stake in U.S. company Central European Media Enterprises Ltd., or CME, which operates a number of television stations in Eastern Europe and is controlled by Ronald Lauder, owner of cosmetics giant Estee Lauder and president of the World Jewish Congress. Gusinsky, who is president of the Russian Jewish Congress, has a holding in the Israeli newspaper Maariv and has expanded his NTV broadcasts for Russian-speaking audiences in the U.S. and Israel.


Ostalsky said CME is not bidding for a stake in Media-MOST.


Anna Kachkayeva, a Russian television analyst with Radio Liberty, said Tuesday that negotiations with a foreign investor are in line with Gusinsky's strategyof diversifying his media business and making it international.


"It is not as much a political step as it is a well-grounded approach to diversification," she said. And the extra cash raised by the stake would nonetheless help pay any debts.


Ostalsky said the Kremlin is likely to continue its campaign of pressure on Gusinsky and "having exhausted the economic theme, they may start raising the Jewish theme."


The formation of the Federation of Jewish Communities of Russia, which held its high-profile founding conference in Moscow this week, was seen by ORT's analytical "Vremya" program Saturday as a challenge to Gusinsky as a representative of Russian Jews.


Speaking at the conference, Gusinsky warned the Russian Jewish community not to get involved in "political games."