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. Last Updated: 07/27/2016

ORT, TV Center May Lose Licenses in Auction

The nation's No. 1 television channel, ORT, and TV Center, the channel controlled by Kremlin rival and Moscow Mayor Yury Luzhkov, will have to battle to keep their broadcasting licenses at an auction in May because the Press Ministry has refused an automatic rollover of their licenses.

Press Minister Mikhail Lesin said Tuesday there is "a real possibility" both companies will lose their transmission licenses to other bidders in the auction scheduled for May 24.

The decision has provoked outrage among the management of both structures.

"It really does seem that the head of the Press Ministry wants to become the first top official in the new Russia by allowing himself to openly blackmail the biggest television channel in the country," said Konstantin Ernst, ORT's general director.

"ORT views the move as openly making a mockery out of both the channel and tens of millions of viewers," Interfax quoted Ernst as saying Tuesday.

TV Center president Oleg Poptsov warned that if TV Center was refused the right to regain its license then a process of "destroying politically unsuitable media" had begun.

He said putting both companies' licenses up for auction would lead to "nervousness and political instability in society."

Press Ministry spokesman Yury Akinshin said Wednesday the two warnings it issued to ORT and TV Center for breaking electoral laws during the State Duma election campaign served as grounds for auctioning the licenses.

The Central Election Committee had complained to the ministry that the Moscow city government's TV Center had weighted its programming too heavily in favor of Luzhkov and Yevgeny Primakov, the leaders of the Fatherland-All Russia political bloc.

ORT, meanwhile, was censured for the at times outrageous reports targeted against Fatherland-All Russia run by the channel's leading anchormen, Sergei Dorenko and Pavel Sheremet.

Under new legislation passed last July, all channels that break broadcasting laws either have to forfeit their licenses immediately or have them put up for auction at a later date, Akinshin said.

But both ORT and TV Center representatives Wednesday accused the Press Ministry of making a political move against them.

ORT spokesman Grigory Simanovich said it was impossible to rule out media speculation that ORT's license might be being put under the hammer to bring it under greater state control. Local newspapers have suggested the auction could serve to squeeze out the channel's current commercial shareholders and offer the No. 1 frequencies up to fully state-owned channel RTR.

"Theoretically absolutely anything could happen at the auction. We may well be beaten by RTR," he said.

Oleg Dobrodeyev, the recently appointed head of the All Russia State Television and Radio Co., or VGTRK, refused to comment Wednesday on whether RTR, which is part of VGTRK, a state conglomerate of television and radio stations, intended to take part in the auction.

Simanovich said ORT is currently 51 percent owned by the state, while a consortium of commercial banks (Menatep, Alfa Bank, Obedinyonny Bank and SBS Agro) owns 38 percent. The remaining 11 percent is owned by the financial industrial group run by Boris Berezovsky's.

Simanovich said even though Menatep had been declared bankrupt and SBS Agro is now controlled by the Agency for Restructuring Credit Organizations, or ARKO, the share register had not been changed.

There has been no meeting of shareholders so far to discuss redistributing the company's shares, he said in answer to suggestions that the state might attempt to reduce its share before the auction and leave the commercial owners out in the cold.

Berezovsky said in remarks late Tuesday he had asked his lawyers to look into the Press Ministry's decision.

"I have already handed over my stake in ORT to another individual in accordance with Russian law. But all the same I am not indifferent to the channel's fate," he said in remarks reported by Interfax.

Analysts, however, said Wednesday that any threat to Berezovsky might in fact be minimal.

"The business is the advertising market and this belongs to Video International which has a monopoly on both RTR and ORT. Lesin himself comes from this company which is also connected to Berezovsky," said Boris Kagarlitsky of the Institute of Comparative Political Studies.

"Even if RTR were to take over it would still be the same gang," he said.

Simanovich said lawyers might make a case out of whether the Press Ministry's warnings were valid.

"The warnings are extremely arguable. We didn't take the Press Ministry to court over them when they were issued because we didn't think it was serious enough," he said.