The struggle for control of Media-MOST, Russia's largest private media group, enters a new phase tomorrow (14 February). The Moscow Arbitration Court is due to begin a hearing to determine whether or not Media-MOST should hand over a critical package of stock to its long-time adversary and largest creditor, Gazprom. RFE/RL's Moscow correspondent Sophie Lambroschini brings us up to date with the latest developments in a nine-month-long tug-of-war.
Moscow, 13 February 2001 (RFE/RL) -- Russia's biggest private media holding, Media-MOST, is gearing up for a critical legal battle that begins tomorrow (13 February) in Moscow's Arbitration Court. The court is due to hear a complaint from Media-MOST's creditor and shareholder Gazprom Media, a part of the giant gas company Gazprom, which says that Media-MOST owes it a large stake in NTV as a debt settlement.
NTV, Russia's largest private television network, is the flagship of Media-MOST. The group owes hundreds of millions of dollars to the gas monopoly Gazprom -- in which the state is a major stockholder (38 percent) -- but says that the debts are being used by the Kremlin as a weapon to force it into political and economic submission.
The Moscow Arbitration Court case focuses on the control of 19 percent of NTV's stock -- and the voting rights that go with it. Media-MOST and Gazprom accuse each other of breaking a November debt-settlement agreement which set aside the shares for a foreign investor that was supposed to be selected by Germany's Deutsche Bank. Both parties acknowledge, however, that whoever gains control of the shares and their voting rights would have a majority at a NTV shareholders' meeting. Gazprom currently holds 46 percent of NTV's stock.
Media-MOST spokesman Dmitry Ostalsky accuses Gazprom of having tried to gain control over the shares through a later, unilateral agreement with Deutsche Bank. He tells our correspondent:
"While Deutsche Bank was supposed to be looking for an investor, for some reason the bilateral agreement between Deutsche Bank and Gazprom forbade us to vote with these shares. In fact, it is clear why [this was decided]. Gazprom wanted to take over NTV ahead of schedule."
Last month (24 January), Moscow bailiffs [that is, court-appointed officials] froze Media-MOST's voting rights over the 19 percent stake. At the time, Gazprom Media head Alfred Kokh said the freeze in effect gave his company a majority holding in NTV and that he would call a special stockholders' meeting to change the board of directors. Yesterday, Gazprom Media's press service told RFE/RL that Kokh's plans to hold the meeting had not changed, and that it would take place soon.
But Media-MOST said that Gazprom's claim was premature since the Moscow arbitration court decision was still pending. Media-MOST's Ostalsky says he is unsure of the hearing's outcome.
"What the court will decide on 14 February, I cannot say for sure. But it should begin to study the essence of the case: do we in fact have to hand over 19 percent of [our shares in NTV] to Gazprom Media or do we not? We are absolutely convinced of being in the right. But, unfortunately, we cannot always be sure of the independence of our courts."
Yesterday (12 February), Britain's "Financial Times" daily quoted Media-MOST's chief executive Vladimir Gusinskii as saying he intends to block Gazprom's efforts to change NTV's board of directors. He told the paper he had called an extraordinary general meeting of shareholders for next month (12 March) in Gibraltar.
Gusinskii is currently under house arrest in Spain pending a court decision on an extradition request by Moscow, where he is accused of embezzlement and fraud.
Over the past nine months, Media-MOST offices have been raided more than 30 times by Russian law-enforcement groups. One Media-MOST manager is currently in jail on charges of fraud.
Media-MOST has repeatedly accused Russia's Prosecutor-General's office of persecuting the group in order to destroy it. Today, at a Moscow press conference, Media-MOST lawyers announced that they are appealing to parliament to look into what they call "the unprecedented arbitrary nature" of the prosecutor's investigations.
Tomorrow's court hearing comes after three weeks of escalating tensions. In the latest incidents late last week (8-9 February), a bank serving NTV and other Media-MOST media outlets was raided by prosecutors who, according to the group, seized all financial information.
On Friday (9 February), U.S. State Department spokesman Richard Boucher characterized the raids on the bank as a part of what he called "continued attempts to use political and economic measures to intimidate the independent media."
Early this month (3 February), a meeting between NTV journalists and Russian President Vladimir Putin failed to resolve outstanding differences, although Putin did say he favored foreign investment in NTV. Kremlin officials said the meeting showed the government was not trying to clamp down on the free press, that the prosecutors' office was just doing its job and that Gazprom was simply trying to recover its money.
According to Gazprom Media head Kokh, Putin had previously told him "not to touch [NTV's] journalists and [editorial] management," calling them his "own prerogative."
But last week, Gazprom showed signs of being in a hurry to take over Media-MOST. In a full-page advertisement published Wednesday (3 February) in the U.S.-owned "Wall Street Journal Europe", Gazprom told shareholders that the gas monopoly would conduct no further negotiations with Gusinskii and that Media-MOST would go bankrupt if Gazprom failed to obtain control of NTV.
Analysts say the surest way for Media-MOST to remain independent would be to get investors either to buy up shares now owned by Gusinskii -- enabling him to pay off his debts -- or to buy out the group's debts directly. But while there have been a few tentative offers, the uncertainty of Russia's stock market make any such purchase a risky venture. In addition, according to spokesman Ostalsky, Media-MOST's unpredictable future may be scaring away some advertisers.
In a surprise move last week, former Kremlin insider Boris Berezovsky -- who now also lives abroad -- offered to lend Gusinsky $50 million to cover current operating costs. Berezovsky said he might also be willing to buy out Media-MOST's $262 million debt to Gazprom, which comes due in five months (July).
The head of the U.S. television network CNN, Ted Turner, could turn out to be Media-MOST's savior. Turner has set up a $300 million foreign consortium that is offering to buy up 25 percent of Media-MOST shares and may be joined by U.S. financier George Soros. But Turner wants Putin to guarantee personally that NTV would not be touched by Russian authorities. So far, Putin has not given any such guarantee, and Russian Information Minister Mikhail Lesin says he will not do so.
Yesterday, a White House spokesman (unnamed) confirmed that President George W. Bush's assistant for national security affairs, Condoleezza Rice, had hosted a visit from a senior Media-MOST official (First Deputy Chairman Igor Malashenko) early this month (1 February).
The spokesman declined to disclose what the two had discussed. But U.S. press reports say the Bush administration has intervened with Russian leaders on behalf of Turner's bid to buy a critical share of Media-MOST stock and thereby save NTV from falling under government control.
According to a report in the "Washington Post" (10 February), citing an unnamed senior U.S. official, both Secretary of State Colin Powell and U.S. Ambassador to Russia James Collins have recently had private conversations with Russian officials to emphasize the importance of maintaining NTV's independence.
Moscow, 13 February 2001 (RFE/RL) -- Russia's biggest private media holding, Media-MOST, is gearing up for a critical legal battle that begins tomorrow (13 February) in Moscow's Arbitration Court. The court is due to hear a complaint from Media-MOST's creditor and shareholder Gazprom Media, a part of the giant gas company Gazprom, which says that Media-MOST owes it a large stake in NTV as a debt settlement.
NTV, Russia's largest private television network, is the flagship of Media-MOST. The group owes hundreds of millions of dollars to the gas monopoly Gazprom -- in which the state is a major stockholder (38 percent) -- but says that the debts are being used by the Kremlin as a weapon to force it into political and economic submission.
The Moscow Arbitration Court case focuses on the control of 19 percent of NTV's stock -- and the voting rights that go with it. Media-MOST and Gazprom accuse each other of breaking a November debt-settlement agreement which set aside the shares for a foreign investor that was supposed to be selected by Germany's Deutsche Bank. Both parties acknowledge, however, that whoever gains control of the shares and their voting rights would have a majority at a NTV shareholders' meeting. Gazprom currently holds 46 percent of NTV's stock.
Media-MOST spokesman Dmitry Ostalsky accuses Gazprom of having tried to gain control over the shares through a later, unilateral agreement with Deutsche Bank. He tells our correspondent:
"While Deutsche Bank was supposed to be looking for an investor, for some reason the bilateral agreement between Deutsche Bank and Gazprom forbade us to vote with these shares. In fact, it is clear why [this was decided]. Gazprom wanted to take over NTV ahead of schedule."
Last month (24 January), Moscow bailiffs [that is, court-appointed officials] froze Media-MOST's voting rights over the 19 percent stake. At the time, Gazprom Media head Alfred Kokh said the freeze in effect gave his company a majority holding in NTV and that he would call a special stockholders' meeting to change the board of directors. Yesterday, Gazprom Media's press service told RFE/RL that Kokh's plans to hold the meeting had not changed, and that it would take place soon.
But Media-MOST said that Gazprom's claim was premature since the Moscow arbitration court decision was still pending. Media-MOST's Ostalsky says he is unsure of the hearing's outcome.
"What the court will decide on 14 February, I cannot say for sure. But it should begin to study the essence of the case: do we in fact have to hand over 19 percent of [our shares in NTV] to Gazprom Media or do we not? We are absolutely convinced of being in the right. But, unfortunately, we cannot always be sure of the independence of our courts."
Yesterday (12 February), Britain's "Financial Times" daily quoted Media-MOST's chief executive Vladimir Gusinskii as saying he intends to block Gazprom's efforts to change NTV's board of directors. He told the paper he had called an extraordinary general meeting of shareholders for next month (12 March) in Gibraltar.
Gusinskii is currently under house arrest in Spain pending a court decision on an extradition request by Moscow, where he is accused of embezzlement and fraud.
Over the past nine months, Media-MOST offices have been raided more than 30 times by Russian law-enforcement groups. One Media-MOST manager is currently in jail on charges of fraud.
Media-MOST has repeatedly accused Russia's Prosecutor-General's office of persecuting the group in order to destroy it. Today, at a Moscow press conference, Media-MOST lawyers announced that they are appealing to parliament to look into what they call "the unprecedented arbitrary nature" of the prosecutor's investigations.
Tomorrow's court hearing comes after three weeks of escalating tensions. In the latest incidents late last week (8-9 February), a bank serving NTV and other Media-MOST media outlets was raided by prosecutors who, according to the group, seized all financial information.
On Friday (9 February), U.S. State Department spokesman Richard Boucher characterized the raids on the bank as a part of what he called "continued attempts to use political and economic measures to intimidate the independent media."
Early this month (3 February), a meeting between NTV journalists and Russian President Vladimir Putin failed to resolve outstanding differences, although Putin did say he favored foreign investment in NTV. Kremlin officials said the meeting showed the government was not trying to clamp down on the free press, that the prosecutors' office was just doing its job and that Gazprom was simply trying to recover its money.
According to Gazprom Media head Kokh, Putin had previously told him "not to touch [NTV's] journalists and [editorial] management," calling them his "own prerogative."
But last week, Gazprom showed signs of being in a hurry to take over Media-MOST. In a full-page advertisement published Wednesday (3 February) in the U.S.-owned "Wall Street Journal Europe", Gazprom told shareholders that the gas monopoly would conduct no further negotiations with Gusinskii and that Media-MOST would go bankrupt if Gazprom failed to obtain control of NTV.
Analysts say the surest way for Media-MOST to remain independent would be to get investors either to buy up shares now owned by Gusinskii -- enabling him to pay off his debts -- or to buy out the group's debts directly. But while there have been a few tentative offers, the uncertainty of Russia's stock market make any such purchase a risky venture. In addition, according to spokesman Ostalsky, Media-MOST's unpredictable future may be scaring away some advertisers.
In a surprise move last week, former Kremlin insider Boris Berezovsky -- who now also lives abroad -- offered to lend Gusinsky $50 million to cover current operating costs. Berezovsky said he might also be willing to buy out Media-MOST's $262 million debt to Gazprom, which comes due in five months (July).
The head of the U.S. television network CNN, Ted Turner, could turn out to be Media-MOST's savior. Turner has set up a $300 million foreign consortium that is offering to buy up 25 percent of Media-MOST shares and may be joined by U.S. financier George Soros. But Turner wants Putin to guarantee personally that NTV would not be touched by Russian authorities. So far, Putin has not given any such guarantee, and Russian Information Minister Mikhail Lesin says he will not do so.
Yesterday, a White House spokesman (unnamed) confirmed that President George W. Bush's assistant for national security affairs, Condoleezza Rice, had hosted a visit from a senior Media-MOST official (First Deputy Chairman Igor Malashenko) early this month (1 February).
The spokesman declined to disclose what the two had discussed. But U.S. press reports say the Bush administration has intervened with Russian leaders on behalf of Turner's bid to buy a critical share of Media-MOST stock and thereby save NTV from falling under government control.
According to a report in the "Washington Post" (10 February), citing an unnamed senior U.S. official, both Secretary of State Colin Powell and U.S. Ambassador to Russia James Collins have recently had private conversations with Russian officials to emphasize the importance of maintaining NTV's independence.