Local Media Confront Looming Privatization

President Medvedev visiting the set of Russia Today in 2010 with the channel’s editor-in-chief, Margarita Simonyan. Medvedev’s privatization initiative has some journalists concerned that media assets will fall into the hands of unscrupulous businessmen or criminal groups.

Every morning Lyudmila Beryozkina walks along Sovietskaya Ulitsa, the main street of small town Sandovo in the Tver region, to the two-story sky-blue building that houses the local Sandovskiye Vesti newspaper, where she’s the editor-in-chief.

The weekly publication recently moved to the new spacious office provided by the municipal administration from a location on the town’s outskirt.

“It’s very convenient, the building is in the center of the town,” said Beryozkina, who oversees a team of nine employees.

The municipal administration, which co-owns Sandovskiye Vesti with the Tver region administration and the non-government Upper Volga Periodicals Association, provides 40 percent of the editorial budget, but Beryozkina said the newspaper’s legal status as an autonomous noncommercial organization makes it economically and politically independent.

That legal status, based on the equality of members involved and allowing the newspaper to manage its own assets, ensures “normal business relations” with local authorities. It would be a good option for newspapers wholly owned by regional or municipal administrations, Beryozkina said.

“I support the idea of newspapers being independent,” she said by telephone.

Medvedev’s Initiative

It looks as though regional and municipal administrations in the near future will have to sell mass media they own as part of an overall drive for privatization by the Kremlin.

President Dmitry Medvedev set a deadline late last year for a decision on regional state assets to be privatized, so that regional authorities own only the property they need to exercise their power.

Authorities shouldn’t own “plants, newspapers, steamboats,” Medvedev said, quoting a Soviet-era poem by Samuil Marshak.

“Everyone should do his own business,” the president said in his annual state-of-the-nation address in November.

He ordered regional and municipal authorities to decide by July 1 which assets will be privatized.

Medvedev’s economic aide Arkady Dvorkovich said privatization of state property in the regions, which is expected to bring “tens of billions” rubles this year, would involve selling mass media owned by regional and municipal authorities. He added that financing this media was “a waste of money.”

He later explained, however, that regional and municipal authorities should make the decision themselves whether it makes sense to sell the media assets they own.

“A political signal on the federal level was given,” he said at an investment forum organized by Troika Dialog in February. “If there’s the understanding that privatization will improve quality and provide independence for mass media … it’s necessary to go that way.”

If authorities own several competing media outlets it makes sense to sell one of those assets, Dvorkovich said.

Communications and Press Minister Igor Shchyogolev told Rossiiskaya Gazeta in January that a working group would be created in the ministry in the near future to discuss privatization issues with regional administrations.

But federal media assets are not on the list of state property to be privatized by 2013 as part of the privatization plan approved late last year, which aims to raise as much as 1 trillion rubles from selling stakes in the 10 biggest state companies, including Rosneft, Sberbank and VTB.

Media companies owned by the federal government include three influential television channels — Channel One, Rossia and Russia Today — as well as the RIA-Novosti and Itar-Tass news agencies, Rossiiskaya Gazeta newspaper and Voice of Russia radio.

According to the Finance Ministry, a total of 174 billion rubles will be spent to support mass media outlets through 2013, Rossiiskaya Gazeta reported in November.

Almost 59 billion rubles has been set aside for this year, which is 4 percent less than in 2010, the report said.

The Governors Chime In

Governors’ opinions differ over the effectiveness of the upcoming privatization of state media assets.

While some officials contacted by The Moscow Times expressed concerns about newspapers’ ability to survive without state financing, others said privatization would allow those media to pursue an “independent information policy.”

“It doesn’t bother me at all,” said Kaluga region governor Anatoly Artamonov, who believes that state newspapers will benefit from being privatized.

“Any mass medium that gives up state financing only becomes better and more lively. I won’t have reason to criticize Vest newspaper … that it has no controversial stories and doesn’t find fault with the government,” he said in an interview, referring to the daily newspaper co-owned by the Kaluga region government and the regional Legislative Assembly.

According to Artamonov, up to 18 million rubles are appropriated for coverage of the government activities in the regional mass media this year, including partially financing Vest.

A number of newspapers, for which the government isn’t providing “a single budget ruble,” have recently appeared in the region, Artamonov said.

“That means the mass media can do well enough signing contracts with the government to publish information,” he said.

Signing contracts to publishing government information would be the best way for a regional daily to survive after privatization, said Vest editor-in-chief Yury Rastorguyev, adding that a newspaper would be unlikely to survive without government support.

Other options could be diversifying business by publishing other products, like free advertising supplements, which would provide profit for the main newspapers, or changing the newspaper’s format to weekly or tabloid, he said by telephone from Kaluga.

Privatizing state media assets in the Nizhny Novgorod region is part of a three-year plan to implement Medvedev’s initiatives that was approved by the regional government in January.

Governor Valery Shantsev plans to merge state media assets into one media holding, which would be co-owned by private investors, the government press service said.

The regional Communications Ministry is currently holding consultations on the issue with regional journalists and the Public Chamber, so that all changes have “positive results and take into account the positions of all interested parties,” the press service said in e-mailed comments.

But not all regions are on board for the new initiative.

The Tver region administration has no intention of selling its newspaper Tverskaya Zhizn or small local newspapers co-owned by municipal administrations, said deputy governor Igor Yalyshev.

The amount of possible advertising in district centers is too small to provide sufficient funding for newspapers, so in most districts privatization could result in the closing of the only newspaper, he said in e-mailed comments.

“We have no right to leave residents of small and medium-size districts without their mass media,” Yalyshev said.

With Internet penetration standing at just 35 percent at the end of 2010, according to Shchyogolev, Russians largely rely on press and television in getting news.

Kirov region governor Nikita Belykh echoed these concerns, saying small municipal newspapers would be unlikely to survive without government support, due to the size of the local advertising market.

A total of 40 municipal newspapers are published in the Kirov region, and most of them are the only sources of information in their districts.

Belykh promised, however, to consider selling the newspapers because they “shouldn’t remain property of the regional administration forever.”

The Kirov region government owns two regional newspapers, Kirovskaya Pravda and Vesti.Kirov, as well as a city newspaper, Vesti.Vyatka.

Belykh also said that ensuring more independence for state newspapers by privatizing them wasn’t an issue in his region because the newspapers owned by the government were free to choose their own subject matter.

“We don’t work in the manual control regime and don’t issue instructions on what to write and what not to write. They are self-sufficient in determining the content of their stories,” he said in e-mailed comments.

But Alexei Simonov, president of Glasnost Defense Foundation, said the independence of regional media was very ambiguous because of journalists’ self-censorship.

“Regional newspapers can easily criticize the federal authorities, but they will think six times before saying something about the governor,” he said.

State media assets that should be privatized in line with Medvedev’s initiative include the TV-Center channel, owned by Moscow City Hall. But it remains unclear whether the Kremlin’s plans will result in city authorities selling the channel, which will get almost 3 billion rubles from the Moscow budget this year, according to the City Hall web site.

City Hall isn’t discussing the privatization of TV-Center, spokesman Boris Bulai told The Moscow Times without elaborating.

No Changes Expected

Despite the enthusiasm shown by some of the governors, analysts said that privatizing mass media is unlikely to make it more independent, since regional and municipal authorities could sell the outlets only formally, retaining leverage by various means.

There could be a number of circuitous ways to provide funds to a media outlet, making it dependent on a specific government official, thereby giving the official beneficial ownership, said William Dunkerley, a U.S.-based media business analyst specializing in Russia and the former Soviet Union.

Although agreeing that it is a positive move to sell the media assets, Dunkerley said it would not be the “cure-all to the present excessive government influence that President Medvedev seems to assume.”

Even after regional governments sell off their stakes in mass media outlets, they will remain under total control because authorities don’t really want to lose them, said Alexei Roshchin, lead expert with the Center for Political Technologies.

Authorities will likely give up their stakes formally and continue funding newspapers through so-called municipal orders, he told The Moscow Times.

Using that mechanism, authorities announce a tender to choose a media platform to place information about official activities or publish decrees and then facilitate their former newspapers’ victory in the tender, Roshchin said.

“At the same time, there’s a whip in [the authorities’] hands, [meaning that] if you act the wrong way we won’t give you this money,” he said. “And the situation turns out to be the same: The newspaper is financed from the budget, and its editorial [policy] is under control.”

Roshchin said that another loophole would be to sell the mass media outlet to a businessmen friendly to local authorities.

Former Kamchatka Governor Mikhail Mashkovtsev echoed Roshchin’s thoughts, saying a governor could find many ways to pressure the mass media even if there’s no formal ownership.

“Absolutely nothing will change,” said Mashkovtsev, who was in office from 2000 to 2007. “If a governor wants to, he can shut any mouth.”

Following his resignation, Mashkovtsev joined the Communists of St. Petersburg and the Leningrad region, which are known for their controversial statements, such as the demand last year that film director James Cameron be arrested, on the accusation of stealing the plot of his popular film “Avatar” from a Soviet science-fiction classic.

Mashkovtsev criticized the idea of privatizing state mass media, saying regional and local authorities need their own newspapers to stay in touch with people. He added that blogs, although being a good way to communicate, were insufficient.

A total of 41 governors have their own blogs, according to Governor.ru.

Mashkovtsev said he had tolerated regional journalists’ criticism of him when he was in office. Speaking in a telephone interview, he recalled that he had given an award to a journalist from one regional newspaper for drawing “a very evil cartoon” of him every week.

He added that, after his resignation, journalists complained that they could write only what the new governor’s press service allowed.

Journalists Concerned

As regional governments plan how to proceed with the privatization of their media assets, journalists are concerned about newspapers falling into the hands of unscrupulous businessmen or criminal groups that would misuse them, said Sofya Dubinskaya, managing director of the Regional Mass Media Heads Alliance.

To prevent this, the editorial staff should hold part of the equity, she said, adding that mass media should have several shareholders to provide for effective management.

Alliance members started pushing for privatization of state media assets in the regions about two years ago and are gratified that Medvedev has finally turned his attention to the issue.

“There’s every reason to believe that the president had been informed about the journalists’ opinion as he was preparing that part of the [state-of-the-nation] address. Otherwise how did he manage to hit the mark 100 percent?” the alliance said in a statement posted on its web site in January.

The government is gradually cutting financing for state newspapers, which should become financially independent from regional budgets, Dubinskaya said, adding that the alliance members had sent several letters to Medvedev proposing the privatization of state mass media in the regions.

Dubinskaya said regional newspapers could survive without government financing, since some of them have a stable subscriber base and work effectively with advertisers.

“There are many such newspapers,” she told The Moscow Times, declining to provide the newspapers’ names or the regions where they are published, because of concerns that regional authorities could punish them for their efforts to be independent.

Beryozkina of Sandovskiye Vesti, where a Moscow Times reporter started her journalism career at the age of 14, was confident that the newspaper could survive even without government support, adding that there are a number of encouraging examples in the Tver region.

The legal status of autonomous noncommercial organization, such as Sandovskiye Vesti has, was chosen for most of the municipal newspapers in the Tver region, because it “allows the editorial staff to be a fully legitimate owner” of a newspaper, the regional administration’s Yalyshev said.

Changes Needed

Even if regional authorities try to find unbiased investors to purchase their media assets, demand for state newspapers is unlikely to be high unless they completely change their image.

“We can’t count on local business investing in [these assets] because prospects of getting a stable profit from municipal newspapers with their traditional range of topics are close to zero,” Yalyshev said.

Most of the old regional and municipal newspapers still conform to Soviet methods of choosing news and presenting stories, devoting a huge share of their space to authorities’ activities, Roshchin said.

“It’s clear that no one reads them, except for the pensioners, for whom having a subscription is a habit, a tradition,” he said.

Roshchin said people would like to see more stories about “what’s happening on the next street,” instead of reading that “the mayor did this and that.”

Publishing a regional newspaper in Russia could be profitable, but success largely depends on the geography and scale of the publishing business, said Grigory Kunis, a board member of the International Regional Publishers Alliance, which includes 55 domestic publishing houses.

There are profitable regional newspapers in Russia with good management, which ensures prosperity, said Kunis, who is a founder of The St. Petersburg Times, a sister publication of The Moscow Times.

Kunis also said the government’s withdrawal from the regional mass media market would make it more transparent, encouraging investors.

The mass media will be more attractive if they become “more consumer centered” and “start serving the needs of readers rather than the needs of the people who are putting in money,” Dunkerley said.

“My experience is that almost any Russian can look at a newspaper and point to the stories that have been paid for. That means that the people who are paying for the stories are paying to lie to people who know they’re being lied to,” he said. “It’s sort of foolishness.”

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