Moscow, 30 December 1998 (RFE/RL) - In the aftermath of this year's near collapse of Russia's advertising markets, the country's fully and partially state-owned television channels are in desperate financial condition.
Several times in the last month, Russian Public Television ORT seemed to be on the brink of bankruptcy. In separate moves in recent days, first President Boris Yeltsin and then a partnership of Russian financier-turned-politician Boris Berezovsky and international media magnate Rupert Murdoch announced they were coming to the rescue.
At a Kremlin meeting last week (Dec. 24), Yeltsin compared the heads of Russia's main television networks to "power ministers," seemingly recognizing their political weight. He also promised financial assistance.
One day later Berezovsky, the man who reportedly has heavily influenced ORT in the last few years, finalized a deal with Murdoch to create a joint advertising company.
Apart from ORT, another television network in which Berezovsky has considerable interests, TV6, and the Russian tycoon's car dealership Logovaz will be part of the new company.
Unveiling the deal on Dec. 28, ORT General Director Igor Shabdurasulov said the new company will start operating in January and will have exclusive rights over the sale of ORT advertising, thus replacing "ORT Reklama," a structure led by Sergei Lisovsky, the founder of "Premier SV."
On Monday, announcing the advertising deal in an interview with "Vremya MN", Shabdurasulov also said that President Yeltsin had signed a decree that would allow ORT to obtain a $100 million line of credit from Vneshnekonombank.
Analysts forecast that the developments are likely to have important consequences for the future of the first channel of Russia's television, as well as for the country's advertising market.
Few details are available, as the initiatives were announced at the beginning of Russia's long Winter celebrations, and are surrounded by secrecy.
Since last month, ORT seemed to be on the brink of bankruptcy because of debt and political pressure. Shabdurasulov linked the latter to preparation for Russia's future parliamentary and presidential elections.
Several bankruptcy suits were filed -- and then revoked -- against the network for its inability to pay its debt. Shabdurasulov has said that ORT currently owes some $100 million to its creditors.
ORT and government officials said the presidential decree providing for the Vneshnekonombank line of credit was for internal use only and would not be published.
Shabdurasulov said that, according to the decree, a two-year loan will be given using part of ORT shares as collateral. He said that between 12 and 16 percent of the shares, evenly divided between the state and private shareholders, are to be transferred to the bank. He added that the bank would not have the right of transferring or selling them during this period.
According to Shabdurasulov, if the loan is not repaid, the state will lose nothing, as it will repossess its own stake, as well as the private one. He did not give details of the shareholders' distribution within the private stake.
Shabdurasulov, who called the loan a "tactical solution," acknowledged that it is unlikely to bring security to ORT's finances, since it equals simply the amount of the company's debt. He said ORT has submitted to Yeltsin a plan to sell an additional 25 percent of the company to private investors, preserving for the state a controlling 26 percent stake.
Future developments are at the moment unclear. Some Russian media have suggested that Murdoch may be interested in acquiring the stake.
The Vneshnekonombank loan, without solving long-term problems for ORT, raises a number of questions.
Igor Lukashev, a member of the liberal "Yabloko" faction who sits on the State Duma's committee on information policy, told RFE/RL that "there are doubts about the legality of the decree." He added that "There is a law on budget, where all incomes and expenses should be included. Therefore, it is not clear from where the $100 million [of the loan] not mentioned in the budget, would come from."
Another legislator, the former leader of the "Our Home Is Russia" faction, Aleksandr Shokhin, told RFE/RL that "the coincidence in timing raises questions." Shokhin said "It would be very interesting to know how the Vneshnekonombank credit line will function and details of its financial sources." He noted that "Vneshnekonombank is a state institution that does not have enough funds to pay [Russia's] foreign debt." He said he "cannot rule out that Vneshnekonombank could borrow this money, maybe from Murdoch himself, and then use it as a loan for ORT."
Shokin's words are interesting because, in a separate development, Deputy Finance Minister Mikhail Kasyanov recently said that Vneshnekonombank -- a state-owned institution that is the payment agent for managing Russia's debt -- could be on the brink of default.
Meanwhile, other Russian television networks are also seeking financial support from the state. The president of VGTRK, Mikhail Shvydkoi, met yesterday with Kremlin administration head Nikolai Bordyuzha, whom Yeltsin recently asked to handle television issues.
Following the meeting, Shvydkoi told RFE/RL that the second, fully state-owned channel "is looking for the possibility to obtain a credit, although a lesser one than ORT."
Shvydkoi added that television executives and government officials are meeting to draw up a plan for the future financing of VGTRK. The plan, he said, will be ready by January 15.