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Russia: Media Empires Continue To Change Shape And Influence Politics

By Floriana Fossato and Anna Kachkaeva

Moscow, 19 May 1998 (RFE/RL) -- The picture of the "Russian Media Empires" RFE/RL outlined first in September, 1997, and updated in March, 1998, is rapidly evolving. Some of the business interests controlling media assets are transforming simple ownership of outlets into organized holding structures.

These structures aim to exert influence, in order to facilitate short-term and long-term financial gain. Their establishment also underlines political goals, as Russia approaches parliamentary elections (December 1999), and a presidential election (June 2000).

This article identifies some of the main business and political actors who are shaping current developments, on the basis of the print and electronic media they control, or, over which they have significant influence.

Yeltsin's Spring Government Re-Shuffle Could Influence Media

Russian President Boris Yeltsin's March 23 decision to sack the government led by Viktor Chernomyrdin came as a shock to almost everyone, including the former prime minister and the business magnates who, since the beginning of the year, had given the impression of rallying around a Chernomyrdin candidacy for the 2000 presidential election.

Yeltsin's decision, which he said was motivated by the need to inject fresh approaches and ideas to revive reform and improve Russia's fragile economic performance, was undoubtedly also designed to diminish Chernomyrdin. According to most analysts, Chernomyrdin, who, during his five-year tenure in office, had been content to remain in Yeltsin's shadow, had recently displayed growing independence, and had started building a bolder public image - clearly with an eye toward the year 2000.

A re-distribution of powers at the beginning of the year had also stripped the so-called "young reformers" in the cabinet of key responsibilities, transferring them to Chernomyrdin.

No Clear Heir

By the beginning of March, analysts had noted that the influential financial and political clans dominating Russia's economic, political and media scene were maneuvering to place their favored candidate in the Kremlin, while Yeltsin seemed to adopt the manner of a monarch, convinced that society would wait for him to name a successor.

Yeltsin seems to have become aware of this sentiment, making clear that he is also looking toward 2000. According to some observers, if his faltering health holds up, Yeltsin will likely try to take advantage of a loophole in the Russian Constitution and seek a third term. If this is not the case, all observers agree that Yeltsin will certainly assert his right to promote a successor of his liking - one who will continue his political line, and, who will not diminish Yeltsin's image of retired elder statesman.

At the moment, Yeltsin's range of choice seems rather narrow.

It could include Chernomyrdin, or Moscow Mayor Yuri Luzhkov - but it could also bypass both. The sudden and unceremonious way Yeltsin sacked Chernomyrdin and the entire government, indicates Yeltsin has his eye on younger politicians. As one Kremlin official tells RFE/RL, "Yeltsin decided that he is a young reformer himself."

And recent moves indicate that Yeltsin is well aware that no possible pro-reform candidate - himself, or, for example, Deputy Prime Minister Boris Nemtsov, will have a serious chance of election, if Russia's economy does not improve between now and June 2000, when the next presidential election is scheduled.

In this respect, as in 1996, support from media assets, particularly from nationwide television channels and regional electronic and print media, is seen as essential for a successful campaign. But the situation has changed significantly. Powerful business interests, which united to support Yeltsin against his Communist opponent in 1996, have battled since then over state assets, and are unlikely to unite again in support of one candidate, who could not guarantee stable development for their business interests.

Since the March reshuffle, Yeltsin has seemed to depart from his usual pattern of "divide and rule." He has blunted opposition from parliament and business tycoons, and has established a cabinet dominated by young managers, led by the new Prime Minister, Sergei Kiriyenko.

Considering Yeltsin's previous habits, no analyst would risk saying how long and deeply Yeltsin is likely to remain committed to Kiriyenko and the current cabinet, comprised mainly of young regional leaders, with few ties in the Russian capital, and no real power base, except Yeltsin's goodwill.

The New Cabinet's Uphill Struggle

Kiriyenko handled himself skillfully during his month-long confirmation battle. He repeatedly and respectfully consulted with the parliamentary opposition, appeared frequently on television programs anchored by some of the most politically engaged Russian journalists, admitting that pressure was put on him while forming the cabinet, but warned that the attempts would not prove successful. In fact, most observers agree that, in the end, Kirienko, did not give too much away, and consistently turned for advice to those who are anathema to parliament and most business magnates: Nemtsov, former first deputy prime minister Anatoly Chubais, as well as to an architect of Russia's reform, former acting prime minister Yegor Gaidar.

Yeltsin, somewhat out of character, remained fully engaged in supporting Kiriyenko, and seemed satisfied to act as the main arbiter of disputes, in defense of the new, young government.

Taking Yeltsin's mandate to heart, Kiriyenko and his government immediately, after taking office, launched into their economic duties, and announced a plan to avert financial crisis and promote growth. Kiriyenko and the new cabinet seem to understand clearly that they face an uphill battle, and that Russia is unlikely to break through into rapid economic growth and prosperity soon, or, at least not before the year 2000.

Lacking a power base in parliament and virtually unknown to the majority of the public, the new government seems to realize that it does not have too much time before powerful political and financial forces will start opposing it.

Two of the main forces supporting Kiriyenko's difficult confirmation in the State Duma - Chairman Gennady Seleznev and the Our Home is Russia faction, have already said the new government's activity will need to be checked by Autumn, implying that a lack of tangible economic improvement will set the stage for a no-confidence vote.

Confronted with economic needs, but also with political ones, Yeltsin and his government are turning their attention on the state media assets, which will convey to the population, the image of the government's performance. Particularly in the case of the first channel of Russia's television, ORT, the risk exists that a channel owned by the state will convey to citizens a message in contrast to the Kremlin's interests.

Kremlin, Magnates Mobilize Media Assets

ORT is the country's most popular television network, reaching about 99 percent of Russians. Despite being state owned, ORT is effectively controlled by business magnate and new CIS (Commonwealth of Independent States) Executive Secretary Boris Berezovsky. He owns only a small stake in ORT, but maintains control over some top ORT managers, reports say, by paying their salaries directly. And car dealership LogoVaz, controlled by Berezovsky, is a member of a consortium that includes four banks that owns 38 percent of ORT.

Berezovsky, in January, scored an important victory over leading "young reformers" Chubais and Nemtsov for the control of ORT, with confirmation of a new eleven-member board of directors including state representatives. The board is viewed as loyal to Berezovsky.

ORT has consistently given favorable coverage to retired General Aleksandr Lebed, during the gubernatorial campaign in Krasnoyarsk. The Kremlin is concerned by Lebed's popularity. Some analysts say that ORT's previous, positive coverage of Lebed was a factor in Lebed's decision to seek office. And, that it was one of the factors contributing to a recent chill in relations between Yeltsin and Berezovsky, who boasts of influential ties to Kremlin officials, including Yeltsin's daughter and image adviser, Tatyana Dyachenko.

As Yeltsin announced that he and Kiriyenko had put the last touches on the new cabinet May 8, the Kremlin also announced that, among other things, the President had dismissed a number of officials and had signed a number of decrees. The low-key announcement is very important for the future of Russia's state-controlled media.

Yeltsin dismissed the long-time head of the Federal Broadcasting Commission, Valentin Lazutkin, a professional figure who had worked in the field for decades. Lazutkin, considered to owe his successful career also to his cautious approach, was, however, not known for being extremely close to the positions of the "young reformers," who favor the de-monopolization and privatization of state assets, including media assets. Rumors of Lazutkin's possible dismissal had circulated widely before the new government's confirmation. Mikhail Seslavinsky, Chairman of the Duma Culture Committee and a member of the Our Home Is Russia faction, replaced Lazutkin.

Seslavinsky, like Kiriyenko and Nemtsov and a number of new officials appointed to the new cabinet, is from Nizhny Novgorod, but is not know in professional Russian media circles. The Soviet habit of appointing loyalists to key positions seems to persist in Kiriyenko's cabinet. Nikolai Khvatkov, a former banker also from Nizhny Novgorod, was named to replace a powerful official, Vladimir Babichev, as government chief of staff with the rank of minister. Babichev was close to Chernomyrdin.

Also May 8, the Presidential press service made public the text of a decree, by which Yeltsin instructed the new government to form, by the end of 1998, a production/technical media holding company, including all state-owned electronic media on the basis of VGTRK, the second nationwide channel of Russian television, which also manages the channel "Kultura" and Radio Russia. With this decision, the state-owned VGTRK - commonly known as RTR - replaces ORT as the main channel of Russia's television.

Yeltsin's decree was preceded by several announcements the government plans to unite more than 100 state-owned firms, forming the infrastructure of the radio and television industry, into a single holding company to be privatized ultimately.

State Communication Committee chairman Aleksandr Krupnov said at a recent news conference that "for the first stage, it is expected that a holding 100 percent owned by the government will be formed. That could be a question of making it into a corporation, but that will be the next stage."

Nemtsov has repeatedly said state media organizations and the way they are governed needs reform. He has said, "one should learn from private businesses how to manage companies, so that their activities are supported without increasing government expenditure."

Choosing Between Two Evils

Media analysts have said the reformers in government had been mulling such a move for some time, particularly since the rift with powerful business tycoons, such as Berezovsky and the head of the private Media Most holding, Vladimir Gusinsky, intensified into a personal fight.

Yeltsin's decree is important, because the state is officially starting a bid to re-assert control over its vast media resources.

Nemtsov had said in 1997 that the government had vast media assets that it did not know how to use effectively, thus giving powerful financial groups a perfect opportunity to gain control over the Russian media. More recently, Nemtsov said that one of the mistakes committed by the previous government is that "it did not explain its moves to the population via the media." And in a comment clearly aimed at Berezovsky, Nemtsov said that "some electronic media organization are formally considered to be state enterprises, but, in fact, belong to financial industrial groups that are not interested in ensuring order in Russia's economy or in the government reasserting its independence from financial-industrial groups."

Considering the recent totalitarian past of the Soviet Union, with its strict and pervasive control of the media that transformed information into a pure propaganda machine, the decision of concentrating electronic media infrastructure under government control is certainly likely to raise concern.

But, independent Russian media observers seem to dismiss this apprehension. Andrei Richter, a professor of journalism at Moscow State University and head of the Media Law and Policy Center, said in a recent interview with the English-language daily "The Moscow Times" that an even bigger concern could lie ahead, when the holding company is privatized and made available to powerful media interests controlled by moguls such as Berezovsky, Gusinsky, or the recently established "Gazprom media holding." Richter tells RFE/RL that "the threat from the government to freedom of the press is far less that what it used to be a few years ago." He says privatization of state-owned media assets "is basically a choice between two evils: the government and private media companies."

Meanwhile, it is unlikely that media moguls will welcome Yeltsin's decree. And, the government's rush to replace Lazutkin with a more loyal figure, raised doubts about the new cabinet's understanding that, if effective reform is to be carried out in the sensitive area of the media, an official with skills as a manager and as a diplomat is needed. This person's goals would include implementing ways to raise much-needed cash, but also to conduct delicate negotiations with representatives of the businesses currently influencing Russia's state-owned media.

In an interview with RFE/RL's Moscow bureau May 8, NTV-holding Director-General Igor Malashenko characterized new federal broadcast chief Seslavinsky as a "professional" with a good reputation, despite a lack of experience working in the media. Malashenko added that Seslavinsky's appointment did not bear out the "worst fears" of journalists - namely, that Lazutkin would be replaced by someone with "political commissar" tendencies, who would blindly follow orders from above.