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. Last Updated: 07/27/2016

Swedes Snap Up 75% of Darial TV

As U.S. media magnate Ted Turner pushes ahead with a bid to buy a stake in embattled NTV television, one of his partners in a consortium of NTV investors announced Monday that it has snatched up 75 percent of Darial TV, a channel with miniscule ratings but a license for national broadcasting.

Sweden's Modern Times Group said it paid $5 million to $10 million to buy the stake from gas giant Gazprom, which has moved to take over NTV.

The purchase coincided with a motion in the State Duma on Monday to introduce legislation limiting foreign ownership in Russian media, a move that was inspired by reports that Turner has his sights set on acquiring a majority stake in NTV.

Until now, most media outlets have been firmly controlled by a small circle of tycoons like Boris Berezovsky and NTV founder Vladimir Gusinsky who had political clout in President Boris Yeltsin's Kremlin. But with the pull of those once-mighty multimillionaires disappearing under President Vladimir Putin, investment into their media is also drying up. The door appears to finally be opening to financing from abroad.

Igor Shabdurasulov, chairman of Berezovsky's second-tier TV6 channel, said last week that a foreign presence on the media market is a "normal phenomenon." "All the talk that we can manage it on our own was simply not serious after the 1998 economic crisis," Shabdurasulov said.

TV6 says it is winding up negotiations to sell a stake to German media conglomerate Kirsch Media Group.

Modern Times Group, which launched its TV3 entertainment television in 1987, broadcasts in three Scandinavian countries, the Baltics and Hungary. Earlier this year, the company was named among the parties to the Turner-led consortium negotiating with Gusinsky and NTV shareholder Gazprom-Media for a stake in NTV.

A source close to the talks said MTG and Kirsch also plan to bid independently for a 19 percent stake in NTV, which Gazprom-Media wants to sell at a tender.

But as talks drag on, Darial TV appears to be the first done deal. It will give MTG a foothold on the Russian market.

Darial TV made headlines in the Russian press in 1998 when it was the last channel to acquire a national license in an inside deal, prompting the government to enforce tenders for licenses. Darial began broadcasting in July 1999.

It was not clear at the time who stood behind the channel's founder and TV host Natalya Darialova.

Darialova, who will own the remaining 25 percent in the channel, is the daughter of detective writer Arkady Vainer, who emigrated to the United States, did a stint at ABC Television and then came back to Russia to work in television.

Most of the daytime programming on Darial TV is infomercials, while the evening schedule is filled with low-budget, inhouse-produced entertainment programs.

Darialova said that for lack of cash the channel currently broadcasts in 11 cities out of the 25 for which it has licenses. The channel's potential audience exceeds 20 million since its signal is uplinked to Gazprom's Yamal satellite.

The Gallup Media research company said that 0.02 percent of the adult television audience in Moscow watched Darial in January. The channel later broke off its contract with Gallup Media.

But MTG made it clear that it plans to create a radically new channel. "This is a groundbreaking step for MTG," company president and CEO Hans-Holger Algrecht said in a statement. "We have great faith in Russia. Its potential is massive, and we believe that Russia will become a major advertising market.

"We are entering the market with the aim to build the business with a long- term view, just as we did in the Baltic states and are doing in Hungary."

MTG spokesman Bert Willborg said the channel will be "transformed into a broad entertainment, nonpolitical channel similar to TV3." TV3 offers a mix of movies, series and local programming.

He said the company planned to increase Darial's reach.

The MTG statement made no mention of Gazprom. But Willborg said, "The 75 percent stake was bought from Gazprom."

He said the deal has been accepted by the Russian authorities, but declined to specify whether he was referring to the presidential administration or the Press Ministry.

Darialova denied that Gazprom had owned any shares in her company. She said the MTG spokesman was "confused" because one of her former partners "had the word 'gas' in the name of the company."

She declined to name her partners who sold their stakes but said that they were not from the television industry.

Gazprom-Media spokeswoman Aelita Yefimova said that her company had nothing to do with the Darial TV deal and referred the question to Gazprom's headquarters. Gazprom's press service could not be reached for comment Monday evening.

It was not clear Monday whether the purchase of Darial TV would have any impact on MTG's previous plans to invest in NTV. Willborg said only: "The purchase of Darial TV confirms our commitment to do business in Russia."

MTG's commitment to Russia may run into a wall if a group of lawmakers in the Duma gets its way. The deputies — from factions including the pro-Kremlin Unity, People's Deputy, Communists, Russia's Regions and Fatherland — introduced on Monday an amendment to the law on mass media that would set a 50 percent barrier on foreign ownership in all media, both electronic and print.

Alexander Chuyev, a Unity member and an author of the bill, said in a telephone interview that his prime goal was to block Turner from buying a controlling stake in NTV. Although the bill in its present form applies to all media and would work retroactively, Chuyev said its target is first and foremost television and national newspapers. The bill would affect a number of media holdings including Independent Media, the parent company of The Moscow Times.

No readings of the bill have been scheduled.

A source familiar with the drafting of the bill said it had been drawn up at the request of the Kremlin.

Chuyev denied this, saying the bill was the lawmakers' own initiative.

Press Minister Mikhail Lesin, whose position often differs from that of the Kremlin officials, criticized lawmakers late last week when talk of the bill to cap foreign ownership first surfaced.

"Our media market needs foreign investment," he said in televised remarks.

Andrei Richter, director of the Media Law and Policy Institute at Moscow State University, said that limiting foreigners on national media markets is an accepted international practice. In the United States, a law dating back to 1934 bans foreigners from holding U.S. broadcast licenses. In Britain, only EU companies are permitted to apply for broadcast television licenses, although others are allowed to work in satellite and cable television. Greece puts the cap on foreign ownership at 25 percent, France at 20 percent and Japan at 30 percent, Richter said.

But Richter said that a retroactive bill would affect established foreign-owned media companies and create "a legal scandal."

"Bills that damage anybody's position cannot apply retroactively," Richter said. "If we want to be a civilized country, we cannot adopt such a law."