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. Last Updated: 07/27/2016

Berezovsky Consolidates Hold on ORT

If there was any doubt about who controlled ORT television, Boris Berezovsky made it clear Tuesday when he put his daughter Yekaterina Berezovskaya and his favorite anchor, Sergei Dorenko, on the board of directors.

ORT, the country's largest television station, is 51 percent state owned, but its ownership structure has always been ambiguous.

After a general shareholders meeting Tuesday afternoon, general director Konstantin Ernst emerged to announce the changes in the 11-member board. He also said the new board would send a letter to the Cabinet challenging the government either to start funding ORT from the state budget or sell the controlling share to private shareholders.

"As you understand, her [Yekaterina's] patronymic is Borisovna; she is the daughter of Boris Abramovich [Berezovsky]," Ernst said. "As a deputy, he cannot be a member of the board of directors, but he carries out his rights of a shareholder." As a deputy in the State Duma, Berezovsky is prohibited from having business interests.

Ernst stressed that in putting his daughter on the board, Berezovsky has raised his personal profile at ORT. "It is not just the right of an owner, but a certain gesture, which demonstrates his participation as a private shareholder."

Neither Berezovsky nor his daughter, who is in her 20s, was present at the meeting Tuesday. She was introduced as a member of the board of Berezovsky's LogoVAZ company, which owns 11 percent of ORT. A 38 percent stake belongs to a consortium of private banks, the configuration of which is unclear, although it is reported to be controlled by Berezovsky too. Ruslan Fomichyov, chairman of the board of Obyedinyonny Kredit bank, will represent the consortium on the television channel's board.

Berezovsky, who has never personally sat on ORT's board, was seen as the person controlling the channel's news and public affairs programming through the appointment of loyal executives. Last year, he showed signs of moving out of the shadows when he bought full control of the second-tier TV 6 channel. Eduard Sagalayev, the founder of TV 6 who has since lost control over the channel, lost his seat on ORT's board Tuesday.

ORT managers have increased their representation on the board. Ernst has become a member as a representative of the government, replacing Deputy Prime Minister Valentina Matviyenko. His deputy Dorenko also got a seat.

Predictably, President Vladimir Putin's spokesman Alexei Gromov replaced Boris Yeltsin's spokesman Dmitry Yakushkin.

Ernst said ORT was in desperate need of investment. Its transmission system, both the state-owned Gorizont satellites and land-based transmitters, was falling apart and if nothing was done the network could collapse by 2003.

To avoid this, he said the government should either provide funding for ORT in the federal budget or let private shareholders invest in it in exchange for additional shares. A letter laying out the demand will be sent to the Cabinet within a week, Ernst said.

He confirmed that state-controlled Vneshekonombank extended a $100 million loan by the end of this year. The loan, which ORT is seen as unlikely ever to be able to pay back, was decreed by Yeltsin in late 1998. As collateral for the loan, the station put up 13 percent of its shares, to be split 50-50 among private shareholders and the government.

ORT was one of the key forces in the parliamentary and presidential campaigns with its shameless promotion of Putin and the pro-Kremlin Unity Party.

It stands as one of the biggest symbols of "oligarchic capitalism" in which chronically underfunded state properties were grabbed up by leading government- connected businessmen.

ORT was formed in December 1994 when the government realized it was unable to fund two state-owned channels f ORT's predecessor Ostankino and RTR. Berezovsky, whose LogoVAZ originally controlled 8 percent of ORT, soon emerged in press reports as the person pulling the strings f an allegation that ORT denied for years.

Putin's campaign promise to be "equally distant" from the powerful businessmen known as "oligarchs" generated expectations that the government would assert its control over companies like ORT. But so far, the Kremlin has put pressure only on media that criticize Putin and his policies, such as those of Berezovsky's rival Vladimir Gusinsky.

In a sign that ORT feels comfortable with the current political alignment, it agreed earlier this month to open its books to the Audit Chamber after two years of resistance. ORT said there was no longer a "political component" to the inspection, which had first been ordered by a Communist-dominated Duma.

Andrei Richter, director of the Center for Law and Media at Moscow State University, said in a telephone interview that the private shareholders' challenge to the government could make ORT's status clearer. "They should decide it one way or the other: Either ORT is state-owned or it is private," Richter said.

Alexei Pankin, editor of the Sreda media magazine, said that Berezovsky's increased profile at the helm of ORT could be interpreted in different ways. One possible explanation was that "Berezovsky is trying to improve the legal aspect of his control at ORT at a time when there are signs that the government is attempting to dismantle the oligarchs' empires," Pankin said.

He said that Berezovsky is a "master of the bluff" who often portrays himself as more influential than he really is.

Yabloko leader Grigory Yavlinsky said the results of ORT's shareholders meeting are yet another confirmation that Gusinsky's arrest last week was an attack on free press rather than an attempt to introduce order in the media.