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. Last Updated: 07/27/2016

Duma Vote Bars Foreigners From TV

The State Duma passed on Friday in two final readings a bill limiting foreign ownership in the country's most influential media — national television channels — while giving foreigners a free hand in press, radio stations and regional television channels.

The bill, approved on third reading by an overwhelming 343-37 vote, is a watered-down version of a draft that passed first reading in April and would have severely capped foreign ownership in all Russian media.

The amended version bans foreigners and Russians with dual citizenship from owning 50 percent or more in television stations that broadcast to more than half of Russia's territory or reach more than half its population, according to Pavel Kovalenko, a member of the information committee.

Yabloko Deputy Sergei Mitrokhin said the bill was aimed at Boris Berezovsky and Vladimir Gusinsky, both of whom reportedly carry Russian and Israeli passports.

Berezovsky controls 75 percent of TV6 television, one of the stations whose ownership would be affected by the bill. Gusinsky lost control of NTV television, another station affected by the bill, to Gazprom in April. Both men say they are under attack from the Kremlin and are living abroad.

The media bill also would cap ownership in the country's two largest television stations, ORT and RTR.

Although considered much less draconian than the initial draft, the bill passed Friday was still criticized by some lawmakers as unconstitutional and harmful to Russia's investment climate.

Boris Reznik, deputy head of the Duma information committee, said the bill breaks both the Constitution and a law on investments, which guarantees a level playing field for Russian and foreign investors.

"That's why it's harmful," Reznik said. "But besides, it's totally useless because it can be easily bypassed — all it would take is a few shell companies to mask the presence of a foreign investor."

The final version of the bill also orders foreign owners to sell shares taking their ownership over the 50 percent mark to a Russian partner within a year — making the bill de facto retroactive.

The bill's authors told the Duma in April — when CNN founder Ted Turner was considering buying a stake in NTV — that they were acting in accordance with the Constitution, which permits legislation aimed at defending state interests and security to work retroactively.

Reznik said the bill was "more of an emotional outburst than legislation." He added that it had the Kremlin's silent consent.

During the debate that took place during the first reading in April, some deputies claimed they were protecting Russia from a malevolent foreign influence. "Those who want to do business are welcome, [but] those who want to do politics in Russia won't be able to do so," Kovalenko said at the time.

But the bill would have in fact wrought havoc among foreign-owned Russian publishing houses and radio stations, many of which have been operating here for years. The largest among them is the parent company of The Moscow Times, Independent Media, which is completely foreign-owned and publishes newspapers and magazines such as Playboy, Cosmopolitan and the Russian-language newspaper Vedomosti, a joint venture with The Wall Street Journal and the Financial Times.

Other publishers are American Conde Nast, which publishes the Russian-language edition of Vogue, and French Hachette, which publishes Elle magazine. There are also several radio stations and entertainment television channels.

All of these companies would have had to search for a Russian partner to whom to offload shares — a move that, they have warned, would seriously shake investor confidence.

The heads of these companies applauded the revised bill Friday.

"It was pretty clear that the deputies did not immediately realize what they have passed in April — they started thinking about the consequences only later," said Derk Sauer, CEO of Independent Media. "But their latest move makes me happy, and it also gives more confidence to foreign investors."

Roman Petrenko, general director of CTC television, said the new bill "is much better that the one that was initially passed."

CTC is 75 percent owned by U.S. group StoryFirst Communication.

"Still this is to a large extent a populist move," Petrenko added.

Andrei Richter, head of the Moscow-based Media Law and Policy Institute, said he doesn't think that the bill is targeting any specific person but warned that it would be used as a weapon against political enemies.

"Right now it's pointless because none of the national television stations has any deciding foreign stake," said Andrei Richter, head of the Moscow-based Media Law and Policy Institute at Moscow State University. "But it can still be used in the future."

Mitrokhin said the bill is "full of juridical absurdities and there is no judicial organ that would allow it to exist," adding he hoped President Vladimir Putin will veto the legislation.

The bill still has to pass the Federation Council before it can go to Putin to be signed into law.