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. Last Updated: 07/27/2016

Berezovsky Steps Out Of Media Shadows




Boris Berezovsky is recasting himself from a media manipulator in the shadows into the full-fledged owner of a television and newspaper empire in the making.


Until recently, the politically connected tycoon had exercised much of his influence indirectly, particularly at ORT television. But recent moves point to his desire to build a structured and efficient media group that he controls openly.


Such steps include his purchase of a controlling share of TV 6, changes on ORT's board and personnel movements among ORT, TV 6 and his Nezavisimaya Gazeta newspaper, as well as his bid to buy a stake in the Kommersant newspaper.


Berezovsky controlled media all along. But his holdings were always unclear and the ownership of media companies which he influenced were not transparent.


Most notably that was at ORT, the Soviet-built television giant, 51 percent of which belongs to the government. Berezovsky's LogoVAZ company was always a minority shareholder, owning first 8 percent and then 11 percent, while Berezovsky-affiliated Obyedinyonny Bank was part of a consortium of banks holding 38 percent.


Berezovsky, however, was seen as controlling the channel financially and politically through appointment of key managers and newscasters, such as anchor Sergei Dorenko.


The recent changes in Berezovsky's position in the media market are taking place while he is losing ground elsewhere. The former secretary of the CIS no longer has government posts, and his reported business interests in the oil sector and air industry are under attacks.


He staged something of a comeback after then-Prime Minister Yevgeny Primakov's government launched a law-enforcement war against his interests earlier this year. Primakov was fired by President Boris Yeltsin on May 12, but Berezovsky remains under criminal investigation for his role in the offshore Andava company, which prosecutors say siphoned revenues from Aeroflot. Most importantly, political analysts say, he has lost clout in the Kremlin and Yeltsin's "family" no longer protects him.Speaking on June 6 on NTV's "Itogi" analytical program, which discussed Berezovsky's role in the formation of Prime Minister Sergei Stepashin's government, Reuters CIS bureau chief Richard Wallis raised a question: Who is Berezovsky after all - a politician without any government post and a businessman without clear ownership rights to any entity?


In this context, analysts see the changes on the media market as a resolution of Berezovsky's identity crisis.


Last Thursday, Berezovsky and his long-time partner, TV 6 president Eduard Sagalayev, announced after the company's general shareholders meeting that Berezovsky will purchase, directly and through affiliated entities, more than 51 percent of TV 6, whose financial difficulties in the wake of Russia's financial crisis have been greater than at other television channels.


Previously, Berezovsky and Sagalayev each owned 37.5 percent of the channel, while 10 percent belonged to the Moscow Committee for Science and Technology Inc., which is tied to the Moscow city government, and 15 percent were held by oil giant LUKoil.


Sagalayev did not announce the exact amount of stake that he sold to Berezovsky and its price tag, but he said that Berezovsky also obtained a $10 million, five-year loan from the Moscow branch of Reiffeisenbank Austria at a favorable rate. Berezovsky also pledged to invest in the company's weak news service. "It's an absolute fact, this area in the work of TV 6 will be radically strengthened," Berezovsky told reporters.


Control of news and public affairs programming is a crucial political weapon, especially with parliamentary elections approaching in December and presidential elections next summer.


It was "proposed" to Sergei Dorenko, who was previously in charge of political broadcasting at ORT, that he take the newly established post of deputy director general in charge of news and public affairs shows at TV 6. Kirill Ignatyev, ORT's financial director, will represent Berezovsky on the board of directors of TV 6.


Sagalayev, who had previously boasted about his channel's independence, obtained by not letting any one investor dominate, said the sale to Berezovsky was a "forced" move to raise needed cash. Two days earlier, Sagalayev, in turn, became deputy chairman of ORT's board of directors.


Berezovsky is also moving to consolidate his position at ORT, which now requires a 75 percent board vote to choose the director - enabling Berezovsky to block the government's 51 percent stake. He also secured the appointment of loyal Nezavisimaya Gazeta journalist Tatyana Koshkaryova as news director.


Berezovsky confirmed his desire to buy a stake in Kommersant newspaper, which has been plagued by lack of funds and has been searching for new investments.


In the past, Berezovsky has been elusive when speaking about his media holdings, often denying them altogether. Last week, however, he stressed his ownership of stakes in media companies.


ORT and TV 6 officials denied that a new holding company unifying the two channels' ownership was in the making. But it is also clear that more interaction between Berezovsky's media properties is envisioned.


A senior TV 6 manager said that the presence of ORT's financial director Ignatyev, on his channel's board of directors would result in greater cash flows and could allow the sharing of some overheads.


Media observers said Berezovsky moves in the direction of a full-fledged media holding similar to Vladimir Gusinsky's Media-MOST.


Andrei Richter, director of the Center for Law and Media at Moscow University's Journalism Department said that "Berezovsky is expanding his control of the media in a civilized way."


"What he did before, was behind the scenes. Now he does it openly and legally," Richter said. He added that it does not reduce the danger of media concentration and the consequent threat to journalistic freedom, but said such new openness "should be encouraged."


Richter also said that greater transparency could be motivated by the need for foreign investment. Russian press has reported that Berezovsky had raised funding for his new media acquisitions abroad. Berezovsky denied reports that controversial aluminum mogul Lev Chernoi, president of Trans World Group, helped finance his purchases.


Skeptics say the moves merely restructure what they call Berezovsky's real business, political lobbying. Political analyst Andrei Piontkovsky, a frequent Berezovsky critic, said Berezovsky was launching a "counterattack" to bolster a waning public role.


"In an election year, one television channel is much more valuable than several oil companies," Piontkovsky said. "Most likely, this is an extension of his political lobbying, rather than a change in business policy."