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. Last Updated: 07/27/2016

Lawmakers Vote to Bar Foreigners From Media

The State Duma on Thursday passed a bill in first reading that would limit foreign ownership of Russian media and potentially force foreign-owned television channels, radio stations and newspapers to sell out to Russian partners to remain legal.

The bill, which was criticized by the Press Ministry, passed with an overwhelming majority: 332 out of 450 Duma deputies voted for it; 22 against; and three abstained.

It stipulates that any media company registered in Russia must be less than 50 percent owned by foreign companies or citizens. The legislation is designed to be retroactive and gives foreign owners a year to sell their shares to Russian companies.

Earlier provisions of the bill also limited the percentage of foreigners working in editorial positions to less than half, but the authors withdrew this stipulation before Thursday's vote.

"Foreigners obtaining controlling packages of shares in weak Russian television and radio stations are endangering freedom of speech in the country," said one of the main authors, Alexander Chuyev of the pro-Kremlin Unity faction.

Pavel Kovalenko, a member of the Duma information committee, went a step further, saying the bill was necessary to protect "information security" and prevent foreigners from gaining political influence through media they control.

"One morning we might wake up and discover that our parliament or government will be elected for us by some Turner, who owns the main TV channels," Kovalenko said, referring to CNN founder Ted Turner's interest in buying a stake in NTV.

Click here to read our special report on the Struggle for Media-MOST.

The only opposition came from Yabloko and the Union of Right Forces.

The legislation was submitted during the battle for NTV, and all the deputies who participated in the debate Thursday seemed to have focused mainly on the electronic media.

"Our deputies seem to be unable to imagine that a TV owner could be politically neutral," said Roman Petrenko, general director of CTC, a youth-oriented entertainment channel, which is 75 percent owned by StoryFirst Communications. "So they make decisions based on their own, limited experience."

In addition to CTC, there are numerous other media outlets that are majority foreign-owned: Darial TV, which is 75 percent owned by Sweden's Modern Times Group, radio Maximum and a whole range of printed media — newspapers and glossy magazines.

Most of them were not formerly Russian companies that were "bought up" by foreigners, as Duma deputies seemed to believe, but were built from the ground up through foreign investment.

"If this bill becomes a law and retroactive, that would be the worst possible message to investors, Russian and foreign alike," said Derk Sauer, CEO of Independent Media, the parent company of The Moscow Times.

Independent Media, which is largely Dutch owned, also publishes numerous glossy magazines and, together with The Wall Street Journal and Financial Times, the business daily Vedomosti.

Sauer said the bill would not directly shut down existing foreign-owned media, but it would force the owners either to sell part of their property against their will or to try to circumvent the law by forming Russian shell companies.

"Either way it's bad for Russian business," he said. "It contradicts the promises of the Russian government to bring more transparency to business and its plans to attract foreign investors."

Critics say the provision making the bill retroactive is against the Russian Constitution. The Duma legal department, however, judged the new bill not in violation of the Constitution.

"The foreign owners would just have to find Russian partners and well … share some of their wealth with them," Kovalenko said.

He said other countries have similar limitations. But in most cases they affect only electronic media.

Chuyev allowed for the possibility that amendments could be submitted before the second reading to limit the legislation to electronic media, or even to electronic media with a license to broadcast nationally.

The bill was harshly criticized by Deputy Press Minister Mikhail Seslavinsky. Speaking on Ekho Moskvy radio, he warned that the very debate in the Duma could "diminish the number of people willing to invest in any business in Russia."

He said the bill also poses a danger for Russian media, whose position is weakened by the country's small advertising market.

"Many of the 2,000 existing electronic and 25,000 printed media simply can't find a strategic investor with Russian capital," he said.