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Russia: Media, Money And Power--An Analysis

Moscow, 26 September 1997 (RFE/RL) - Russian industrial and financial groups have begun acquiring and funding media assets. Virtually all have proclaimed the necessity, however, of the importance of a free-and-independent media. But observers of Russia's media are skeptical.

They say media investments by financial circles in Russia are aimed essentially at assuring important financial and political dividends outside the media market. Profits are certainly desirable, but not immediately expected.

According to Iosif Dzialoshinsky, a professor at Moscow University's Faculty of Journalism and an expert on the non-governmental Freedom of Information Commission, business in Russia is connected directly to politics. In an interview with RFE/RL, Dzialoshinsky said control over powerful media outlets is needed in order to gain political influence. He said this is true for Moscow-based, national media outlets, as well as for regional media throughout the country.

"The situation is sad," said Dzialoshinsky, "particularly taking into account the high level of professionalism attained by Russian journalists since the end of the Soviet era. It now appears that professional, Western-style journalism in Russia still has a very limited audience."

During last year's presidential elections, business circles pooled their financial support and favorable media coverage to back the successful re-election bid of President Boris Yeltsin. They coordinated their strategy with Anatoly Chubais, then heading the president's electoral team, who effectively marginalized the leftist opposition and other presidential candidates.

After the election, Yeltsin's main supporters obtained substantial influence. Some, like business tycoon Boris Berezovsky and Uneximbank President Vladimir Potanin, were appointed to government posts. And media magnate Vladimir Gusinsky's main media venture, NTV TV, was granted permission to start round-the-clock broadcasting and go nationwide. An observer tells RFE/RL that a number of businessmen who had bankrolled Yeltsin's re-election bid, felt they "were sitting right on the Kremlin wall."

Tatyana Malkina, a former political editor at the daily "Segodnya," controlled by Gusinsky's Media MOST, tells RFE/RL of an event at the end of last year. Malkina says Gusinsky, who had funded the creation of "Segodnya" in 1993 with the aim of having "a respectable, professional media outlet that everybody in the Kremlin and in government would read," informed editors that he now wanted to target the paper to a more popular audience and make it profitable. At the time, circulation of the paper was declining, with production costs estimated at more than $5 million per year. Former editors say that "Segodnya's" inability to make a profit through advertising in Russia's under-developed advertising sector also contributed to Gusinsky's decision.

In accordance with this new goal, several desks, including the cultural and the entertainment desks, were cut. According to Malkina, the majority of editors, feeling it would be "impossible to maintain previous levels of professionalism while trying to target the audience of sensationalist publications," decided they did not want to take part in the new "Segodnya" -- and they left.

At roughly the same time, re-organization processes began at other publications. One example is "Kommersant daily," one of "Segodnya's" main former competitors. Journalists say that, since "Kommersant's" traditional focus was business, rather than politics, re-organization took place more smoothly. "Kommersant daily" is part of a privately owned publishing concern, but has received, over the years, substantial credits from Stolichny Savings Bank. After Yeltsin's re-election, Stolichny acquired Russia's largest retail bank, Agroprombank, and became SBS-Agro, one of Russia's largest-and-most-influential banks.

Since the beginning of the year, projects concerning the creation of new media outlets have been under scrutiny from a number of major financial-and-industrial groups. So far, only one has been finalized. It is the daily "Russky Telegraf" financed by Uneximbank. It started publication two weeks ago, with an editorial staff formed mainly by journalists who had worked for "Kommersant" and Media MOST publications. With the launching of a new daily publication, Uneximbank is seen as expanding its media empire, that already includes stakes in two other dailies, "Izvestya" and "Komsomolskaya Pravda," and one weekly business magazine, "Expert."

An important political player, Moscow's populist mayor Yuri Luzhkov, is also seen as consolidating his media empire. A new television network, aiming at becoming nationwide, Center TV, started broadcasting a few months ago, with the financial backing of Moscow city authorities. Observers say Luzhkov created Center TV as a further step for the promotion of his image, as he is considered one of the possible candidates for the next presidential election. The city of Moscow already has stakes in a number of media outlets. One of the few Russian papers apparently making a profit and enjoying a circulation estimated in the millions, "Moskovsky Komsomolets," although considered independent, is reported to have received financial support from Moscow authorities, and has consistently projected a favorable image of Luzhkov.

Meanwhile, other projects, to be financed by the Menatep-Rosprom financial-industrial group; by Bank Imperial, associated with the Gazprom gas monopoly, and by National Reserve bank, have failed to appear. One reason for this, former "Segodnya" political editor Malkina says, might be that potential investors "realize it takes too much time and financial input to create the basis for an influential paper, while the political situation is constantly changing." She adds that investors "also have to take into account the already existing professional level of Russian journalism, making competition on the media market extremely stiff."

Recent developments indicate that Menatep-Rosprom group may have chosen a different media strategy. A former Rosprom top executive, Leonid Nevzlin, was recently appointed deputy head of the state-run ITAR-TASS news agency. However, Nevzlin said after his appointment that he remains on the board of directors of Menatep and Rosprom

Some analysts, like Sergei Markov, an associate at Moscow's Carnegie Center, say that the picture concerning the business-power relationship has dramatically changed since post-presidential election time.

Markov says the government, previously aiming at making economic reforms irreversible through the creation of a new class of owners and a market infrastructure, has a new goal. It is, says Markov, to achieve economic growth through the establishment of new "rules of the game." The plan has been met with stiff opposition by many top business players.

Behind-the-scenes discussions, among members of the financial elite having varied and competing business interests, started soon after Yeltsin re-emerged from months of heart trouble and appointed a new cabinet to boost economic reform. But, since the public battle sparked by the August auctions of shares in the telecommunication monopoly Svyazinvest and of the mineral company Norilsk Nikel -- both won by Uneximbank -- divisions within business circles have sharpened.

As a result of the dispute over the "rules," Russian media now increasingly reflect their own political biases and the battles of the business concerns controlling them. The president of the Journalists Union of Russia, Vsevolod Bogdanov, said recently that one can immediately see whose money is behind the news reported in the majority of Moscow's newspapers -- just by reading their headlines.

Economic elites are now bitterly divided over the redistribution of property, through the on-going privatization of lucrative chunk of state assets. Those proclaimed as Russia's two leading economic reformers, Chubais and his colleague who also carries the rank of First Deputy Prime Minister, Boris Nemtsov, became daily targets of a mudslinging campaign, as media mainly controlled by the losers of the Svyazinvest bid, Berezovsky and Gusinsky, accused them of fixing the auctions in favor of Uneximbank.

The dispute reached its peak last week when Yeltsin invited to the Kremlin six of Russia's biggest financial and media magnates, including Gusinsky, Potanin and Smolensky, and later said he had obtained the pledge they would stop fighting among themselves and with members of the government. Berezovsky, who has been heavily involved in the media dispute through media outlets he controls (in particular ORT television and the daily "Nezavisimaya Gazeta") was not at the meeting, presumably as he says he has given up business activities since his Kremlin appointment as Security Council Deputy Secretary.

By telling business tycoons that they should stop "slinging mud" at each other and particularly at cabinet members through the media, Yeltsin indirectly acknowledged that financial interests control the editorial line of Russia's main media outlets.

Yeltsin declared that "the state is above corporate interests," and assured the financiers that he will personally oversee future privatization deals, including the oil company Rosneft, a second tranche of Svyazinvest, three international airports and other important assets. However, most observers agree that the truce he imposed on clashing tycoons is fragile at best. Last week's coverage of the meeting itself was highly biased.

Analysts believe that the financial disputes are aggravated by a still behind-the-scenes dispute over which candidate should win the Kremlin support to become Russia's new president in the year 2000. Reported candidates include Nemtsov, Luzhkov and Prime Minister Viktor Chernomyrdin.

Berezovsky told journalists last month that "if Nemtsov continues failing to listen to the concerns of the business community...he risks losing its support," essential for a successful presidential campaign.

Where are the journalists in all this? In private conversations the majority of Russian print journalists interviewed by our Moscow correspondent say that, until the appearance of real media managers cooperating with journalistic teams, not much can limit the power of corporate owners. They also see the formation of a developed advertising sector that could provide an important source of income for the print media's independent existence as a key factor. Otherwise, says Malkina, the situation will remain "hopeless" for both professional journalists and audience.

Andrei Richter, director of the Media Law and Policy Center at Moscow University, said during the "Izvestya" takeover that people such as the paper's former editor-in-chief, Igor Golembiovsky, made a crucial mistake, thinking that an editor can also be a business manager.

Former "Segodnya" political editor Malkina says "experience proved that Golembiovsky and others, including "Nezavisimaya Gazeta's" Vitaly Tretyakov, or "Obshaya Gazeta's" Yegor Yakovlev, failed as managers and had to resort to the more-or-less-open contribution of corporate investors to stay afloat." Later complaints that the investors do not comply with oral agreements not to meddle in editorial decisions "only show that many editors don't realize that 'payoff' is unavoidable."

Moscow University journalism professor Dzialoshinsky said "1997 was the year when Russian journalists had to understand that they are not 'missionaries.' They are no more than companies' employees." As for the audience, he said, readers and viewers are "generally fed up and indifferent over insider Kremlin fights." Opinion polls suggest televised news and analytical programs, and so-called 'respectable' publications have a very limited audience throughout Russia.