Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Severstal and RTL Take Over Ren-TV

The liberal-minded owners of Ren-TV, the last national television channel that offers critical news coverage, have sold a controlling stake to Kremlin-friendly steel giant Severstal, raising the specter of total state control over the country's television airwaves.

Unified Energy Systems, the electricity monopoly headed by liberal reformer Anatoly Chubais, said Friday that it had sold its 70 percent stake in Ren-TV for $100 million to a subsidiary of Severstal Group, which is controlled by Alexei Mordashov, a billionaire and open supporter of President Vladimir Putin.

Also Friday, Ren-TV founders and executives Irina and Dmitry Lesnevsky announced that they had sold their 30 percent stake in the channel to RTL Group, a Luxembourg-based media company controlled by Germany's Bertelsmann holding. Neither side would disclose the value of the deal.

RTL Group, which will oversee the channel's operations, said it would not curtail Ren-TV's coverage.

"We wanted a general interest channel that appeals to a lot of people, and that includes its editorial line," Andrew Buckhurst, RTL Group's senior vice president, said by telephone from Luxembourg. "Our policy is not to change anything in the current programming grid or style of Ren-TV."

Buckhurst would not say what RTL would do if it were to come under pressure from the Kremlin to mute political criticism. "We'll cross that bridge when we get there," he said.

A Severstal source confirmed the purchase but refused to say whether the Kremlin had played a role. "You can just write that Severstal is interested in the channel as an investment in our country's growing media market," said the source, who spoke on condition of anonymity because she was not authorized to speak about the matter before an official company statement expected Monday.

At face value, the deal means the government has completely privatized a major media group, invited a major foreign investors to take part, and allowed UES to unload a noncore asset that market players have long urged it to sell.

But in reality, said Igor Yakovenko, general secretary of the Russian Union of Journalists, Severstal is more vulnerable to Kremlin pressure than UES, which practiced a hands-off policy toward the channel.

"Severstal, as any business is, is extremely dependent on the Kremlin. This is just a continuation of the cleansing of the news field before the elections," he said, referring to the parliamentary vote in 2007 and the presidential poll in 2008.

Severstal is one of a handful of companies, including LUKoil and Gazprom, that the Kremlin sees as a standard-bearer for Russian industry. The government has encouraged its expansion abroad, including the purchases of smelting assets in the United States and Italy.

Last year, Mordashov signed up to campaign for Putin's re-election, noted Anna Kachkayeva, a media analyst with Radio Liberty.

Meanwhile, RTL might be more interested in making money than putting up a fight over news coverage, several media analysts and journalists said.

"For RTL, this is business. But for Russia, it is very sad," former Izvestia editor Raf Shakirov told Reuters. "The rumor is that Ren-TV will become an entertainment channel. If that happens, Russia will lose its last remaining independent television channel."

But Eduard Sagalayev, president of the National Association of Television and Radio Broadcasters, said that with RTL Group as a shareholder, "it will be difficult to introduce censorship of some kind."

"Nobody will play games with the new owner of the 30 percent stake -- a well-known media holding company in Europe," he said.

In a joint statement distributed by Ren-TV, Irina and Dmitry Lesnevsky said that "the presence of RTL Group among its shareholders is in sync with future interests of Ren-TV."

Reached in the Ren-TV newsroom on Friday night, news anchor Marianna Maximovskaya said the situation was not analogous to that in 2001, when she left NTV after the debt-ridden channel was taken over by state-controlled Gazprom, outspoken journalists were fired and critical coverage was curtailed.

"We have a large degree of concern, but we understand that things could have been much worse than they are now," she said. "[NTV] really did pile up huge debts, there were different personal relations between [former NTV owner Vladimir] Gusinsky and the government, and it was a different political situation."

Maximovskaya said she was not considering quitting.

She said the Lesnevskys had told a staff meeting that they would continue managing the channel pending a vote by the new shareholders and hoped to be kept on afterward.

UES bought the Ren-TV stake for $30 million in 2000 and has sought since February 2003 to unload the noncore business in order to concentrate on its restructuring.

Eric Kraus, the chief strategist at Sovlink Securities, noted that Ren-TV was a noncore asset for both UES and Severstal. The steel group has set up the Robos subsidiary to integrate the media company.

RTL, however, has found a rare opening into an advertising market that foreigners have long sought to enter, said Anton Charkin, public relations director at Video International, which sells commercials to channels, including Ren-TV.

Spending on television commercials soared by 37 percent last year to $1.7 billion and is expected to grow by 25 percent this year, according to the Russian Association of Communication Agencies. Commercials account for 44 percent of all money spent on advertising in the country.

Ren-TV, which has production and broadcasting facilities, began airing in 1997 and now reaches 97 million of the country's 143 million people. It had a 4.9 percent audience share as of the last full week of June, according to TNS Gallup Media.

"RTL is buying access to very elite viewers, the affluent New Russian intellectuals. So they won't have any problems selling ads," said Vladimir Yevstafyev, president of Ad Cartel, an advertising group that counts Ren-TV among its clients.