RUSSIAN MEDIA NOT CONCERNED ABOUT BEING LABELED A

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 000804

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/24/2018
TAGS: PGOV KDEM PHUM KPAO RS
SUBJECT: RUSSIAN MEDIA NOT CONCERNED ABOUT BEING LABELED A
"STRATEGIC SECTOR"

REF: MOSCOW 499


1. (U) Classified by Deputy Chief of Mission Dan Russell for
reason 1.4(d)


2. (U) Summary: The Russian Duma approved the second reading
of the Strategic Sector draft law regulating foreign
investment in 42 so-called "strategic sectors" -- including
much of the media -- on March 21. If passed, the law would
review and regulate foreign control of Russian media outlets,
to include publishing houses and printing presses. It will
not be retroactively applied, and therefore will not impact
current holdings or foreign investments. Our media contacts
are unconcerned, citing near total state ownership and
influence of the major national broadcast media, as well as
the fact that no single national print publication dominates
the national market. The new legislation does not pertain to
the internet, although the Duma is rumored to be drafting
separate legislation for it. End Summary.


3. (U) On March 21, the Russian Duma approved draft
legislation to restrict future foreign investment in areas of
the economy deemed "strategic sectors" and defined as
critical to Russia's national interests. The legislation,
which after a third, perfunctory reading in the Duma, will
have to be passed by the Federation Council before the
president can sign it into law, includes some mass media:
Russian television and radio networks that cover more than
half of Russia, Russian print publications with circulations
in excess of one million, publishing facilities, and printing
presses. The new law requires foreign investors purchasing
more than 50 percent of a "strategic" media company to seek
permission from a goverment commission. If the investing
company has foreign-government backing, it can buy no more
than 25 percent without Russian government approval. The
commission would have three to six months to decide each
case. Current government legislation already restricts
foreigners from controlling television stations. The
original draft legislation included the internet, but it was
later removed. The Duma announced that it will formulate
separate legislation to address Russian cyberspace.


4. (U) In its current form, there are no provisions to apply
the legislation retroactively. A handful of foreign
companies currently have influential media holdings in
Russia: Sanoma publishing house of Finland has a stake in
iMedia (including The Moscow Times newspaper, Afisha
lifestyle magazine, Russian Cosmopolitan, Esquire and other
glossy magaizines),the Wall Street Journal and the Financial
Times own part of the business-oriented Vedomosti newspaper,
Germany's Axel Springer publishes Russian Newsweek magazine,
German-RTL group owns a blocking minority in Ren-TV's
national network, and the British Guardian shares content
with Gazeta newspaper.


5. (C) Media contacts with whom we've spoken about the law
appear unconcerned. Many newspaper journalists and managing
editors were unaware of the draft legislation, but when we
spoke with Petr Fadeyev, Editor-in-Chief of the liberal
Gazeta daily newspaper, he said that the Russian government
is less focused on controlling the print media because of its
limited and waning audience. Editor-in-Chief of the
English-language daily newspaper The Moscow Times Andrew
McChesney told us his staff had looked into the legislation,
and found it would have no impact on their operations.
Although McChesney speculated that the new law -- if passed
-- might eventually prevent Sonoma from expanding its
presence in the Russian media market, he characterized the
company as "unconcerned." Editor-in-Chief of BBC's Russian
Service Konstantin Eggert told us that because the law would
not be retroactive the BBC license for its Russian Service
could not be revoked, but he admitted that "in practice,
anything is possible."


6. (C) Glasnost Defense Fund's Head of Monitoring Boris
Timoshenko said that the inclusion of printing presses and
publishing companies may stem from the appearance --
apparently not infrequently -- of large quantities of
leaflets and specially-designed newspapers (some faux
editions of popular local newspapers) during the regional
elections. These publications of unknown origins often
contained content which violated election legislation and
often criticized candidates who had been endorsed by the
ruling party and local authorities. Timoshenko also stated
that whatever the immediate goal of the law, preventing
foreign control of publishing and printing would eliminate
potential obstacles should the Russian Government at the
federal or regional level wish to push critical publications
out of the market.


MOSCOW 00000804 002 OF 002



7. (C) TV-Center television network's News Editor Mikhail
Ponomarev, told us he does not anticipate a concerned
reaction from the Russian media community. With or without
the new strategic sectors legislation, he said everyone
realizes that the Russian Government is unlikely to allow
national media outlets to end up in private hands, be they
foreign or domestic. Likewise, Ponomarev claimed most large
Russian media outlets do not need to court international
investors, as actively as they once did, because "there is
enough cash available domestically."
BURNS