Russia restricts int’l ownership

Russia’s president Vladimir Putin has signed off a bill restricting foreign investment in the country’s TV channels, posing a threat to ventures from global players such as Modern Times Group (MTG) and Viacom.

The new regulations will stop international companies holding more than a 20% stake in Russian mass-media businesses, and will apply to all existing and future operations.

The legislation will come into force from January 1, 2016, with Russian owners holding through off-shore companies having until January 2017 to comply.

The previous law had limited foreign ownership at 50% for channels that broadcast to at least half of Russia’s population.

Numerous international broadcasters operate in Russia, including Viasat Broadcasting, Viacom, NBCUniversal, Disney, Fox International Channels, Turner Broadcasting, Sony Pictures TV, A+E Networks and Discovery Networks International.

Several execs who currently operate in the country have told C21 that the laws – coupled with changes to pay TV advertising regulations – will result in a cutback in investment and a reduced focus on what had previously been seen as a growth area for many broadcasters.

Scandinavian giant MTG is likely to be one of the broadcasters most affected, because of its 38% stake in Russian channel operator CTC Media. The company also said it expected the regulatory changes would affect its cable and satellite entertainment channels, and its shareholding in the Raduga TV satellite platform.

“This is obviously a complex situation and we are working closely with local management and our advisers to review the various options available to us moving forward,” said Jørgen Madsen Lindemann, MTG’s president and CEO.

“It is too early to come up with a solution for each of the affected businesses, but we are looking at a range of potential outcomes. We have built up these entertainment businesses over 20 years and the channels are some of the most watched in Russia, so we will do all that we can to preserve the interests of all of our stakeholders.”

Many foreign broadcasters are already facing the prospect of having to drastically overhaul their business models after the country moved to ban advertising on pay TV channels in July.

Amendments to the current ad laws are waiting to be approved by President Putin and would effectively see all advertising on pay and cable channels banned from 2015.