Dozens of organizations operating in Russia serve as advocates for free, independent, and high-quality media. A partial list includes:
Glasnost Defense Foundation (GDF). This group does some of everything: monitoring censorship, publishing a weekly report of censorship and repression, organizing protest letters, demonstrations and press conferences, publishing an annual account of censorship and repression throughout Russia, and providing legal and material aid to journalists and their families. (www.gdf.ru)
Foundation for Independent Radio Broadcasting. Set up by the BBC’s Moscow office in 1999, the Foundation for Independent Radio Broadcasting (FNR) produces and distributes free information and educational radio programs, broadcast nation-wide over the frequencies of the Radio Russia station in Moscow and through a network of partner radio stations. FNR also provides professional training to Russian radio broadcasters and journalists. (www.fnr.ru)
nternews Russia. Part of a world-wide program funded in part by USAID, this group focuses on improving independence and professionalism of regional television stations in Russia. Internews also serves as a useful clearinghouse for information on the Russian media. (www.internews.ru)
Media Viability Fund. Created by the Media Development Loan Fund and the Eurasia Foundation, the Media Viability Fund provides low-interest loans to establish independent printing presses and provides training to help nongovernmental newspapers become independent. (www.eurasia.org)
Moscow Media Law and Policy Center. This group, affiliated with the School of Journalism at Moscow State University, focuses on media law. Legal experts publish reports on new laws and provide legal aid to journalists. (www.medialaw.ru)
Press Development Institute. Activities include training regional journalists and providing legal aid. (www.pdi.ru)
Russian Union of Journalists (RUJ). This group is a trade union for journalists, but has expanded its scope to include organizing protests and connecting Russian journalists with their colleagues in other countries. (www.ruj.ru)
International Media Groups
A sampling of international media assistance organizations includes:
Committee to Protect Journalists. A ‘Human Rights Watch’ for journalists, the Committee identifies and publicizes abuses. They issue updates, protest letters, and annual reports, and an annual “Ten Worst Enemies of the Press” (which included Putin in 2000). (www.cpj.org)
International Center for Journalists. They focus on training, fellowships, and exchanges. In spring 2000 and spring 2001 they held a series of three-week training sessions for Russian newspaper managers. Based in Washington, DC. (www.icfj.org)
International Freedom of Expression Exchange. This is an association of media advocates and organizations. Most of the groups listed here are members. Based in Toronto. (www.ifex.org)
International Press Institute. Protests, investigates, reports abuses. Makes ‘confidential interventions’ with government leaders. Based in Vienna. Enjoys consultative status at the UN, UNESCO, Council of Europe, and Organization on Security and Cooperation in Europe (OSCE). (www.freemedia.at)
Reporters without Borders (Reporters sans Frontieres). An ‘Amnesty International’ for journalists. They focus on freeing journalists who are falsely imprisoned or harassed by authorities. Based in France. (www.rsf.fr)
World Association of Newspapers. Grouping together newspaper publishers’ associations in 50 countries, this organization provides training, channels legal and material aid to needy journalists, and represents the newspaper industry in international discussions on media issues. (www.wan-press.org)
What can be done from inside Russia?
Actions that have been proposed or are ongoing include:
Research Russian media. Provide facts to governments, organizations, companies, individuals.
Publicize abuses of freedom of press. Urge the Russian government to change repressive policies. Use the OSCE and Council of Europe.
Organize training for journalists, editors, and managers.
Invest in Russian media as a business venture.
Promote legal aid programs to help journalists defend themselves in court.
Advocate changes in Russian law to make media more profitable, independent, and accountable.
Sell satellite TV to Russian viewers who can afford it.
Sell cable TV to Russian viewers who can afford it.
Create a public TV station with a ‘TV tax’ (based loosely on the BBC’s model) with publicly accountable managers.
Improve independence of judiciary so that courts decide media cases fairly. Improve legal culture so that journalists seek redress in courts.
What can be done from outside Russia?
A list of proposals and ongoing efforts includes:
Research Russian media. Provide facts to governments, organizations, companies, individuals.
Publicize abuses of freedom of press. Urge the Russian government to change repressive policies. Urge Western governments to protest. Use the OSCE and Council of Europe.
Organize training, fellowships, and exchanges.
Invest in Russian media.
Create partnerships with Russian media (such as the Financial Times/Wall Street Journal partnership with Vedomosti or U.S.News & World Report’s partnership with Versiya).
Fund legal aid programs to help journalists defend themselves in court.
Sell satellite TV to Russian viewers who can afford it.
Sell cable TV to Russian viewers who can afford it.
Invest in Internet news startups.
Analysis of Russian politics by leading Russian specialists Section Editor: Emily Van Buskirk
Systemic Crisis in the Russian Media by Manana Aslamazyan
Manana Aslamazyan is the Director of Internews Russia.
What is Russian television like today? Most people think it consists of a few big TV channels that broadcast all over Russia, from Kaliningrad to Vladivostok. However, millions and millions of Russians make up an audience of viewers of regional independent TV stations that have sprung up in the post-Soviet space over the past few years. The emergence of these companies was a truly revolutionary change. Over 700 private TV stations have been established in the ten years since private television obtained the right to exist. These stations provide first-hand information to people in Russia’s regions about what is going on around them.
Russia needs laws to ensure a level playing field for all Russian media.
Despite some successes, Russian television (like other Russian mass media) continues to face serious difficulties. The problems that Russian media have to deal with arise primarily from a systemic crisis. The transition from Soviet mass media, which were part of the Soviet state machine, to a free press governed by the free market has been rather chaotic and inconsistent. The breakup of the Soviet system put the mass media up against gigantic monopolies in the areas of communication, delivery and distribution of mass media; in addition, the mass media went up against government resistance to any display of independence on its part (local governments are especially resistant).
The August 1998 financial crisis only aggravated this systemic crisis. The advertising market collapsed to one fifth of its size. This had some grave implications for non-governmental media, whose livelihood depends on advertising sales and, consequently, on the condition of the economy in general. At the same time, growing political tensions at the local and federal level after the August crisis and serious changes in the policies of the federal government after Yeltsin’s resignation have shown just how fragile and unstable were the early achievements in the area of Russia’s free press.
Today—especially since the events around NTV—the threat to freedom of the press in Russia media is cause for serious anxiety. Why did this happen and what can be done to save democracy and freedom of speech in Russia? There are many reasons why freedom of the press in Russia is under threat, but three in particular stand out as fundamental.
First, economic independence of Russian media will be unattainable so long as annual spending on advertising in Russia remains about $2 per capita, compared to $200 in Europe and $500 in the U.S. Economic independence serves to guarantee journalists’ independence. Neither the media themselves nor the organizations that support them can change this situation. The Russian economy still has a long and difficult path ahead before independent media are able to subsist on advertising revenues.
Second, there are no laws to ensure a level playing field for all Russian media. Russian TV companies (both in Moscow and the regions) face tough pressure from government officials. Administrative pressure on local buyers of advertising is enormous in small towns. Every bureaucrat has a favorite station or paper and hates all the others. Therefore, local officials use their power to exert economic pressure on the media through local businesses, which are likewise dependent on the whims of these officials.
In the bigger cities, the mass media have to face not only government officials but also Video International, a giant advertising monopoly. Before the 1998 crisis, Video International showed little interest in the market of local advertisement, being content with the huge national market. Now Video International is opening an office in every city and sells advertising time on ORT and RTR (national channels) to local customers, pocketing the revenues that local media would otherwise receive.
How can this situation be changed? There should be laws that establish equal competition among all media and allow them to operate freely in the advertising market. Many of these painful problems must be dealt with through influencing external factors, such as lobbying for modern laws, improving the current laws, conducting serious analysis of Russia’s advertising market, researching the economic and political aspects of the media industry, and a number of other measures.
Every bureaucrat has a favorite station or paper and hates all others.
Third, many Russian media have a low level of professionalism. Here support of international organizations and training centers that provide their knowledge and experience to Russian journalists is especially important. In the nine years of its existence, Internews, a non-profit organization, has trained over 6,000 TV specialists. Given the size of the country and the rate of development of independent television, this figure is still relatively small, and the demand for job training remains unchanged. In the near future Internews intends to conduct job training programs and seminars in journalism, advertising, camera work, and most importantly, management for independent TV stations and journalists. Experts in television from Russia, the CIS countries, Western Europe, and the U.S. will participate.
Today independent Russian media are fighting for freedom from state control. Local journalists have to fight every day in the offices of their newspapers, TV and radio stations. They need all the support they can get.
The Origin of Gusinsky’s Media Empire by Chrystia Freeland
Chrystia Freeland is Deputy Editor of The Globe and Mail and former Moscow Bureau Chief for the Financial Times. These excerpts from her book, Sale of the Century: Russia’s Wild Ride from Communism to Capitalism (New York: Crown Publishers, 2000), are included in Russia Watch with the kind permission of the author.
Like so many of the oligarchs, in the beginning, Gusinsky was a corporate omnivore. In early 1992, when Mikhail Leontiev walked into his office, the latest enticement became the newspaper business. Not even Gusinsky, with his fondness for bold, self-flattering predictions, could have predicted then that by the end of the decade the humble proposal would grow into Russia’s dominant private media empire and the healthiest part of Gusinsky’s conglomerate, known as the Most group.
Leontiev was one of the new Russia’s most influential journalists. As a reporter, Leontiev took a special interest in the brash, slightly shady kooperators who were starting to emerge on the Moscow scene. By the time the Soviet Union collapsed, Leontiev had met, interviewed, and befriended most of the future oligarchs. He became closest to Gusinsky. Soon, Leontiev and Gusinsky were going out together with their wives and children, spending long Sunday afternoons in each other’s homes eating and scheming.
Gusinsky was the first to grasp how central a role the media would play in the advancement of business interests.
In those days, Gusinsky was still a lot closer to peddling copper bracelets and driving a gypsy cab than to advising the Kremlin and jetting around in a private Gulfstream jet, and it was he, as much as Leontiev, who stood to benefit professionally from the new friendship. Leontiev introduced Gusinsky into his intellectual circles and began to put his name forward when, for instance, a visiting World Bank official was in town and wanted to meet some of Russia’s budding capitalists.
In the middle of 1992, it was Leontiev’s turn to ask Gusinsky for a favor. By then, Leontiev was working for Nezavisimaya Gazeta, an independent newspaper founded in 1991, in the heat of the pro-democracy movement. Frustrated with their mercurial editor and their starvation wages, Nezavisimaya Gazeta’s top journalists decided to try to set up a publication of their own. They began to canvas Moscow’s moneymen to see if they could find a backer. But no one was interested.
inally, Leontiev was deputized to approach Gusinsky. After long consideration, Gusinsky decided to back the project. One reason was his friendship. Another was Gusinsky’s theatrical personality and love of the public stage. Most important of all, Gusinsky was the first of the future oligarchs to grasp how central a role the media would play in the advancement of business interests. All of them, of course, had already discovered that politics and commerce were intimately intertwined. Yet Gusinsky was the first to fully appreciate to what extent in Russia’s nascent democracy the political process was not confined to the corridors and saunas of the Kremlin, but extended to its newspapers and television programs.
The first issue of Gusinsky’s new paper, christened Segodnya (Today) rolled off the printing presses on February 23, 1993. It was an instant success. Gusinsky had the subtlety and his journalists had the professional integrity to save Segodnya from becoming the sort of blatant mouthpiece for its proprietor’s commercial and political interests that many of the newspapers later established by other oligarchs would become. Instead, Segodnya was allowed to become one of Russia’s freest, most honest liberal daily newspapers, rivaled only by Izvestia, the slightly mustier, but occasionally more authoritative Soviet-era dowager.
Even so, Gusinsky’s vested interests did not go unserved. For one thing, although most of Segodnya’s journalists were too proud to write zakaznye, or “ordered,” articles, they submitted to a milder form of censorship. Gusinsky’s own businesses were definitely out of bounds. As Gusinsky put it: “My own publications don’t write negatively about me. I am the publisher and there must be some limits.” Sometimes, the limits would go further than that. Periodically, Most executives would ask Segodnya not to criticize some politician or businessman with whom crucial deals, like the bid for the Aeroflot accounts, were being transacted. (As in the case of Aeroflot, the journalists sometimes ignored such requests.)
For Gusinsky, these measures were defensive; he was careful not to use the newspaper as his puppet. It’s not that Gusinsky was a champion of the free press, although he sometimes posed as one. But he had a keen interest in preserving Segodnya’s reputation. If this paper was credible and influential, Gusinsky thought, then maybe some of its luster would rub off on him.
Even by 1993, as Gusinsky began to become seriously rich, he was finding it hard to shake his image as a slightly shady small-timer. Founding and owning a high-brow newspaper, one committed to the democratic and capitalist values supported by Moscow’s liberal intelligentsia, magically transformed Gusinsky into a player, a man whose views counted. At the price of a few million dollars a year—Segodnya’s annual losses—it was a bargain.
Later on, as Gusinsky’s commercial appetites became more focused, his media interests would become a source not only of image and influence, but also of profit. But in the early, heady years of Russia’s capitalist transformation, there was so much of Leontiev called “stupid money” in Moscow, and so many ways to make a killing, that running a newspaper as a profitable business simply didn’t make sense. When the Segodnya team asked Gusinsky to send in some number crunchers to help make their newspaper more economical, he told them it would be a waste of resources. “Think about it,” Gusinsky exhorted. “Managing a newspaper is just as complicated as managing a bank, and requires a whole new language. Imagine I take a man, who is currently either making a profit for me or making savings for me of $100 million a year. I send him to work at the newspaper, which is currently costing me losses of $8 million a year. As a result of his work, the losses are cut from $8 million to $2 million. So, what did it cost me—$94 million! What do I need that for? You should all just do what you like. I know you don’t steal.”
Even after the “stupid money” had dried up, Segodnya failed to become a major money-spinner for the Most group. But establishing the newspaper was Gusinsky’s defining business move. As Segodnya swiftly gathered public kudos, frustrated journalists in other media began to see Gusinsky as a potential benefactor. Among them were two leading television figures: Evgeny Kiselev, Russia’s most popular anchorman, and Oleg Dobrodeev, a top producer.
Both worked for ORT, the state-owned television channel. As 1993 wore on, and the conflict between the hard-line parliament and the president began to escalate, the two men found their journalistic freedoms at ORT increasingly curtailed. They decided to look for a moneyman to help them go private: Gusinsky was the obvious choice.
Frustrated journalists began to see Gusinsky as a potential benefactor.
Their first point of contact with the Most group was Sergei Zverev, an old friend and onetime fellow pro-democracy activist. At the end of May, Zverev invited Kiselev and Dobrodeev to his office in the Moscow city hall skyscraper overlooking the Moskva River. As the two men laid out their proposal to set up an independent production company, Zverev grew more and more excited. Segodnya had been up and running for just over three months, and recently he and Gusinsky had begun mulling over the idea of making a bolder foray into the media business by setting up their own television network. Now, he had two of Russia’s top television executives sitting before him.
Abruptly, Zverev called for a break in the meeting. He liked their idea, he told Kiselev and Dobrodeev, but maybe they should set their sights higher. Why not create not just a production company, but a whole television station? As the two visitors tried to absorb this escalation in their plan, Zverev rushed out of his office to Gusinsky’s far grander suite just around the corner. His eyes sparkling with excitement, he burst into Gusinsky’s private room and exclaimed: “You know how we were talking about creating our own television station? Well, I have two people in my office who can do it for us. There are no two better men for the job in all of Russia.”
Zverev fetched Kiselev and Dobrodeev, introduced them to Gusinsky, and the four men sat down to a two-hour discussion. By the end of it, what would become Russia’s first privately owned television station was born.
To be honest, when we walked into the building we had no idea about forming an entire television station,” Kiselev, a fair-haired, handsome man with a Walter Cronkite growl, told me. “But we left it with the thought, Why not?”
For the new station to work, Gusinsky knew it needed more than creative talent. It needed a progressive manager, someone hard-headed, politically savvy, and able to swim in the violent currents of Russian capitalism. For Dobrodeev and Kiselev, the right candidate immediately sprang to mind: Igor Malashenko, the thirty-eight-year-old Soviet army brat, Dante scholar, and former Central Committee ideologue who had worked with them at ORT before being sacked as part of the new, repressive climate at the station. Malashenko, desperate for revenge against the apparatchiks who had kicked him out, jumped at the offer.
Just a few days after that first May meeting, the group went to work. In contrast with Segodnya, creating a brand-new television station required serious investment. According to Malashenko, in its first fifteen months of existence the new television company, which was dubbed NTV, the Russian acronym for Independent Television, ate up more than $30 million. Almost all of the money came from Gusinsky (he had invited two other bankers to join him in the project, but they dropped out almost at once).
The biggest challenge was to find a way to get on the Russian airwaves. Initially, NTV struck a deal with a regional St. Petersburg channel and in October 1993 began to broadcast a few of its news programs there. But Gusinsky’s ambitions were much higher than that. He wanted to create Russia’s first, national private television station. To do that, he needed to be granted broadcasting rights to one of Russia’s main national VHF channels, at the time a state monopoly.
In most Western companies, the divvying up of precious VHF television channels is a formal, carefully regulated, competitive process. But in Russia, with its legacy of state ownership and central planning, there was no established system. One thing was clear, though. Only one man had the power to make a decision of such tremendous political, and potentially commercial, significance—Boris Yeltsin. To win the Kremlin’s approval, Most set its formidable lobbying and PR machine in motion—drawing on everything from intelligence gathered by the ex-KGB agents in its private security force to friends in parliament and good ties with Moscow journalists.
In Russia there was no system for divvying up precious VHF television channels.
First, they needed to find a soft target. Dobrodeev suggested Most focus its sights on taking over Channel 4, a mongrel jointly controlled by the two state-owned, national television companies, each with channels of its own. By day, the underfunded channel showed amateurish programs prepared by Russian universities and by night it broadcast cheap shows rejected by the two main state channels.
Next, they needed to refine their arguments. For Most, the battle between the Kremlin and the parliament, which erupted into open street fighting in October, just as the first NTV shows began to appear in St. Petersburg, provided a helpful backdrop. The Most group strongly supported the president throughout the conflict. State-owned television, never completely certain who would triumph and instinctively somewhat sympathetic to the Communist-dominated parliament, was more ambivalent. The contrast helped Gusinsky and Zverev make a powerful case that the Kremlin would benefit from giving Most a channel of its own.
But neither the weakness of Channel 4’s programming nor Most’s firm support of Yeltsin played a decisive role. What was really crucial, as with all government decisions, was steering the draft presidential decree through the corridors of power, until it landed on Yeltsin’s desk with all the signatures of his subordinates reassuringly saluting at the bottom of the page. As usual, Zverev, who served as a sort of foreign minister for the Most group, orchestrating its relations with all levels of government and with other private financial empires, led the campaign.
Zverev began his offensive by nudging the public debate in NTV’s favor. “We unveiled a whole campaign in the mass media on the theme that Russia needed independent commercial television,” he told me. “There were many articles written and published on that theme, various people spoke about it, leading television personalities and so forth.”
“The license, in practice, never cost us anything at all,” Malashenko admitted.
Once the public was softened up to the idea, Zverev began the laborious process of vizirovat, or getting signatures on, the draft presidential decree. For two months, he walked the corridors of the Kremlin, drank tea in waiting rooms, lobbied old friends, and persuaded the heads of two state-owned channels that controlled Channel 4 to back the plan.
Yet, for all Zverev’s contacts and cunning, somewhere, the decree was being blocked. Worse still, Zverev had no idea who was blocking it. His breakthrough was serendipitous. One autumn afternoon, Zverev and Kiselev were sitting in one of the white-walled mansions in the Kremlin complex waiting for a meeting with a presidential adviser. After they had been kept waiting for the obligatory twenty minutes, the adviser’s office door was pushed open and they were invited in. Zverev and Kiselev recognized the man he had been ensconced with—Shamil Tarpishchev, the tall, lean, Tatar athlete who had become Yeltsin’s tennis coach and member of his inner circle.
Nudging Kiselev, Zverev asked if the television anchorman knew Tarpishchev. He did. “I see that his office is just across the hallway,” Zverev told his colleague. “When we’re finished here, let’s drop by and talk to Tarpishchev about Channel 4.”
They did, and in the course of the conversation, Zverev realized it was none other than the infamous tennis coach who was blocking their deal. Zverev couldn’t believe his luck. Now that he knew what the problem was, he could try to solve it. Tarpishchev’s objection, it turned out, was that he had a plan of his own for Channel 4—he wanted to turn it into Russia’s first all-sports network. It was easy to convince him to drop that plan—“Where will you find the funding?” Zverev asked—and even easier to win him over to Most’s rival proposal by promising to devote a certain amount of airtime to sports. As ever, Zverev was relying on one important bit of ignorance: like everyone else in Russia apart from the Most group, Tarpishchev hadn’t yet figured out that television could actually make money.
With Tarpishchev neutralized, the signature-gathering process picked up speed. By the middle of January 1994, the decree had been signed and NTV was born, with airtime on Channel 4 every night from 6 p.m. to midnight. Like Tarpishchev, the Kremlin hadn’t yet twigged to the commercial value of television: Most got the channel almost for free.
“The license, in practice, never cost us anything at all,” Malashenko admitted. “The cost was just a few kopecks. It was such a small sum that it wasn’t even worth remembering. It was a purely political decision.”
As usual—the same was true of government bank accounts, export licenses, and natural resources—the Russian state seemed unable to appreciate that its assets had a market value. And, as usual, the smartest, best-connected businessmen were the beneficiaries of the government’s ignorance.
With NTV on air every day and Segodnya on the desk of every Russian opinion maker, Gusinsky had transformed himself into Russia’s first media baron. He began steadily to acquire new titles and expand into other media: before long his empire would include a newsmagazine, a trashy Russian version of People magazine, a radio station, and satellite TV. His real estate and banking deals with Moscow city hall had given him money; his media interests gave him influence. Gusinsky had become what no private Russian businessman had been since 1917—a significant, independent, political force.
Gusinsky Has Made “Freedom” a Bad Word by Alfred Kokh
Alfred Kokh is General Director of Gazprom-Media.
Recently Vladimir Gusinsky, the founder of NTV, proved to the world that under his leadership, the television channel never had real freedom. Gusinsky has filed a lawsuit to recover $11 million owed by the channel to Media-Most. A court arrested NTV’s accounts, including the one from which NTV pays salaries to its employees. As a result of this cunning revenge on the part of the former owner, NTV employees are at risk of being without money.
But Gusinsky does not care about journalists or camera crews. He does not care about NTV at all because he never invested a cent of his own money into the channel or its team. He built his business on the government’s money. Therefore, he is not concerned that NTV is in trouble. Moreover, I have good reason to maintain that NTV’s debt to Media-Most was created artificially by Gusinsky. He intentionally made NTV broke to create a TV channel dependent on him. He wanted to have journalists completely dependent on him. This dependence was the only way for him to use NTV as a weapon in the fight for his political interests. It is difficult to believe that this is what the Western public calls “freedom of speech.”
Gusinsky never invested a cent of his own money in NTV.
One cannot owe half a billion dollars and be free at the same time.
Gazprom invested almost a billion dollars in Gusinsky’s media business. In 1997, $130 million was paid to purchase OOO PRT-1, a company that owned a 14.7 percent stake in NTV. That same year Gazprom gave $40 million to NTV. In 1998, Gazprom loaned $260 million to Media-Most. Gazprom also guaranteed repayment on two loans for $211 million and $262 million made by Credit Suisse First Boston (CSFB) to Media-Most in 1998. (Incidentally, the $260 million loan was given in October 1998, two months after the August default—a time when Russia’s three-month moratorium on payment of international debts was still in force and no one dreamed of receiving loans. Evgeny Primakov, whom Media-Most later supported in the parliamentary elections, happened to be Prime Minister then.) Also in 1998, Gazprom loaned $68 million to New Television Technologies, a Gibraltar-based offshore company. The total of these investments is $971 million. Now, do we have the right to ask how this money was spent? Do we have the right to know how much of this money went to NTV?
ccording to Gallup Media’s data, we see that NTV’s rating fell by almost 40 percent in 2000. We know that capable experts and journalists such as Oleg Dobrodeev, Vladimir Kulistikov, Yelena Masyuk, and Arkady Mamontov left NTV. We have information that the company has serious problems with the purchased stock of movies and TV series for the new season. We observe how the company is losing the game show that is one of the most popular shows on TV: O, schastlivchik! (You’ve Got Lucky, like Who Wants to Be a Millionaire). Also we find out that NTV is having difficulty attracting sponsors for many of its programs… It looks like the company will fold as all our money goes to waste before our eyes; in this situation, we cannot stand aside in indifference. Even if one agrees that NTV is freedom of speech, then this freedom of speech needs to be saved from Vladimir Gusinsky!
We requested financial statements only to find out that they did not exist. NTV, a joint-stock company, had no accounting office. All accounting was done at Media-Most, which belonged to one of the NTV minority shareholders. We had no access to financial information at NTV. No sooner had we posed these questions than the cries began, such as “The Hand of Kremlin” and “Help! They are suppressing freedom.” But what about private property rights, which are so cherished in democratic countries? Why should we, owners of the company, suffer from Gusinsky’s monopoly on freedom of speech in Russia?
Then, under the banner of the fight for freedom of speech, Gusinsky began to transfer assets from Media-Most subsidiaries to Gibraltar offshore firms. He removed from the company the right to show movies and TV series. It turns out that in 1998, the NTV brand name was sold to a certain company called “NTV-holding” and that Media-Most therefore no longer owns the brand. It turns out that at least 20 percent of advertising revenues are channeled through offshore firms and that NTV is by no means the recipient of this money. Up until now only $450 million has been traced out of $1.2 billion invested by the government into Media-Most. Today the total value of capital assets of NTV is a meager $30 million. In other words, the rest of the assets have vanished mysteriously.
Schematically, the whole story of the relationship between Gazprom and Media-Most looks like this: Vladimir Gusinsky came to Gazprom and asked for loans. Gazprom said, “No problem, what will you give us as collateral?” He said, “I have a chest of gold.” Gazprom answered, “Okay, that will be fine.” So, we took the chest of gold and gave him loans. When repayment of the loans was due we said, “Give us back our money”. His answer was that he had no money. Then we said, “Well, then we will take the chest of gold”. But when we looked into the chest, there was no gold there. “I sold it”, Gusinsky explained. “Then give us the money from the sale of the gold,” we said. “I sold the gold for one cent,” said Gusinsky, “to my own companies.” “Then give us your companies that have our gold,” we demanded. And he cried, “Hands off, freedom of speech!”
So, tell me, did we have any other choice except to do all we could to refill that chest?!
After the election of the new board of directors of NTV, I went there as a shareholder and asked, “Say, do shareholders have any rights?” “Yes,” I was told, “they can give money!” This kind of democracy is a one-way street…
Jokes aside, I should admit that I am not the most objective expert as far as freedom is concerned. I am an economist and I was taught about the existence of a basis and superstructure. I therefore believe that in the U.S. freedom of speech is based first and foremost on the economy, and not at all on rules or laws. Upon examination, if one looks at rules, it turns out that Russia has some of the most liberal laws in the sphere of free speech. Russia has a law on mass media, which in a gust of democracy separated creative activities of journalists from financial matters. Under Russian law journalists are independent, and shareholders cannot interfere with editorial policies. The legislation provides maximum protection for freedom of speech. In Russia journalists can refuse to disclose their sources of information, make public transcripts of private telephone conversations, and intimate pictures of famous persons, or pornography, etc. In other words, Russian legislation could not be more liberal. However, there are many more problems with freedom of speech in Russia than in the U.S.
The key to having a real polyphony of opinions is big money. Despite very liberal media laws, the money that goes into development of mass media in Russia is a tiny fraction of the amounts invested in mass media in the U.S. That is why in Russia we had freedom of speech Gusinsky-style.
In the U.S. there is no separation between the rights of shareholders and the rights of journalists. There are, however, hundreds of TV stations and tens of national TV channels. In the end each of these channels represents the views of their owners. Since there are many owners, these ten channels can say completely different things about the same events. This is the polyphony of opinions. Any free-thinking person has the right to choose what he likes best. He or she has a choice. As a result the coverage of events is likely to be truthful.
In Russia, where there are three national channels, of which two belong to the government and one belongs to Gusinsky, only two opinions exist. There is simply not much choice. Since there is only one independent national channel, the value of its opinion should be higher than that of any independent channel in the US. Therefore, we have to create a channel that will be truly independent of the state and the oligarchs, where anyone will be able to speak up, not only Mr. Gusinsky with Gazprom’s money.
One cannot owe half a billion dollars and be free at the same time.
This is the reason why we have changed the management of NTV. The head of NTV, Boris Jordan, is an American citizen whom one can hardly suspect of having any secret ties to the Kremlin. No one can say that today NTV has less freedom of speech. On the contrary, some newspapers expressed their surprise: “What is the matter with Kokh and Jordan that they let Berezovsky speak up on NTV?” Jordan, by the way, called Berezovsky personally, inviting him to the TV show Geroi Dnya (Hero of the Day)… Later when Berezovsky himself fired Vitaly Tretyakov, editor-in-chief of Nezavisimaya Gazeta, nobody made any fuss about freedom of speech. The concept of freedom of speech has become hackneyed after Gusinsky and somewhat awkward to use.
The goal for the new management of NTV is completely non-political—increase capitalization of the company. Gusinsky seems to have taught everyone in Russia, including confirmed idealists, that real freedom costs a lot of money. We have yet to deal with the debts of NTV.
However, this whole story can be considered a positive experience. The conflict with Media-Most has shown that there is a conflict between freedom of speech and private property rights. Since the whole world is convinced that we have the responsibility for the future of free press in Russia we will be trying to resolve this conflict. We will try to develop a mechanism to settle the conflict without elimination of either freedom of speech or private property rights. We understand that this task was given by life itself.
The Demise of Gusinsky’s Media Empire by Masha Lipman
Masha Lipman is the former Deputy Editor of Itogi magazine.
In April 2001 Media-Most, the biggest privately owned media empire in Russia, ceased to exist after a fierce struggle with government agents and creditors that had lasted for over a year. The group included a national TV channel, NTV, a daily paper, Segodnya, a news magazine, Itogi—published in cooperation with Newsweek—and a radio station, Ekho Moskvy. This media group was created and owned by Vladimir Gusinsky, who was forced to leave Russia after a long campaign of personal harassment and persecution.
estern observers of Russia and a minority of the Russian public regard the squelching of Media-Most as a crackdown on freedom of the press. The Russian government, however, insists that the destruction of the media group was purely a business matter. The Kremlin claims that it was the result of complex business litigation, in which a bad debtor, Gusinsky, would not pay back what he owed to his creditors; his media assets were taken away from him as a compensation for his debts.
Both explanations, however, fail to present a comprehensive description of the complex relations between government, business and media in today’s Russia.
Vladimir Gusinsky, one of Russia’s richest and most influential business tycoons, created NTV, the first ever privately owned national TV channel in my country’s history. NTV, and especially its news coverage, was universally regarded as the best among TV organizations in Russia. When Russia started its first war in Chechnya in late 1994, young NTV reporters covered it bravely and honestly. They brought back the horrible scenes of the war, and their coverage played a key role in the formation of anti-war attitudes among the Russian public. It was this attitude that forced President Boris Yeltsin to stop the war and pull his troops out of Chechnya as he was running for reelection in 1996.
NTV and other Media-Most news organizations, as well as nearly all Russian media, supported Yeltsin for president against his Communist rival, Gennady Zyuganov. This support was driven by a strong belief that a Communist comeback would be fatal for Russia’s fledgling democracy and would put an end to liberal freedoms—first and foremost to freedom of speech. In 1996, this attitude was shared by the business and journalistic community, as well as parts of the political elite and general public.
After Yeltsin’s victory Vladimir Gusinsky got his reward. He was allowed to expand the operation of his media, thereby further increasing his political influence. The expansion required huge funds, and Gusinsky took credits that amounted to hundreds of millions of dollars. His biggest creditor was Credit Suisse First Boston, and the loan was guaranteed by the state-controlled Russian natural gas monopoly Gazprom.
There is persuasive evidence that Putin personally hated Gusinsky.
Gusinsky spent lavishly. He even bought his own communications satellite. He expected that this investment would pay off with the growth of the Russian economy, but the financial crisis of 1998 dealt a heavy blow to his plans. The advertising market shrank dramatically, as did the number of subscribers of his newly created cable network, NTV Plus. Gusinsky had huge debts and could hardly count on his business to make a profit in the foreseeable future.
In 1999 Vladimir Putin, then prime minister, started the second Chechen war. Unlike the first one, it was supported by the majority of the Russian public and by most media. The war propelled Putin to popularity, and the business and political elite gradually rallied round him. But Media-Most outlets took a critical stand toward the war and offered a dissenting view of Russian life and politics altogether. Even when it became clear that Putin had a good chance of winning the presidential election in 2000, Gusinsky’s media would not support him for president. This time, however, the attitude of Media-Most was different from other news organizations.
NTV had an audience of 100 million people, and the Kremlin knew how effective the influence of television could be. During the reelection of Yeltsin in 1996, as well as the election of Putin in 2000, the contribution of television was immense. The Kremlin would not put up with one of the three national TV channels being in full discord with government policy. There is also persuasive evidence that president Putin personally hated Gusinsky as a man who dared challenge the cause of the Chechen war and get in the way of his government operation.
ven though the desire to get rid of Gusinsky and his television was very strong, Putin’s government would not resort to rough, straightforward methods. It would not interfere with editorial policy or take away broadcasting licenses. After ten years of democratic reforms, the Russian government was concerned about Russia’s image as a modern and democratic society. The war against Gusinsky was disguised as a criminal prosecution of himself and his business associates and a business dispute with the state-controlled gas monopoly Gazprom.
The most striking episode of the prosecutors’ anti-Gusinsky campaign was the raid of his administrative building in downtown Moscow. Masked men with submachine guns burst into the building and searched the offices. They left at the end of the day taking away many boxes of documents. Yet, it never became clear what they were looking for. Over the following months dozens of searches and interrogations were conducted. A number of criminal cases were opened, which later fell apart one after another. It was clear that the real goal of the campaign was intimidation, not criminal proceedings. But this technique did not work: Gusinsky’s media continued to function as before.
Meanwhile, Gazprom began to press Gusinsky, demanding that he pay back what he owed. Gusinsky was vulnerable to Gazprom pressure: he had failed to pay back his debt to Credit Suisse First Boston, and Gazprom, as a guarantor, paid it for him. Gazprom, a huge gas monopoly that accounts for 7 percent of Russia’s economy, is controlled by the state: the government is its biggest shareholder (it owns a 38 percent stake) and the Kremlin deputy chief of staff is the chairman of Gazprom’s board of directors. Relations between the government and the management of Gazprom have always been murky and based on secret arrangements rather than laws and legal contracts. There is good reason to believe that throughout its business conflict with Gusinsky Gazprom acted in close cooperation with the Kremlin.
As the business dispute between Gazprom and Gusinsky developed, the prosecutors’ operation never stopped. In June 2000 Gusinsky was arrested under a vague pretext, spent three days in jail and was released on the condition that he would not leave Moscow. At this moment the “criminal” and the “business” lines converged. Gusinsky was secretly approached by Gazprom agents and offered a deal that was later nicknamed “freedom for shares”: if he agreed to sell all his media assets, he would be granted freedom. Gusinsky signed the sale agreement, but he insisted that a concomitant protocol be annexed to the contract. The protocol stated that freedom was indeed guaranteed to Gusinsky in exchange for the sale of his media property. A cabinet minister, namely the minister of the press, signed this protocol. After that Gusinsky was allowed to leave Russia and immediately went to Spain, where he owned property.
The media understand the government’s unwritten rules without formal explanations and they comply readily.
Later, both the sale contract and the protocol were made public, and the sale never happened. Gazprom went on with its business litigation aimed at settling the debt by taking over Gusinsky’s property. The dispute lasted for many months, and during this time prosecutors conducted dozens of searches of Media-Most administrative offices and interrogations of its managerial staff. They opened a new case against Gusinsky and requested his extradition from Spain. After a long deliberation, a Spanish court denied the extradition request.
In April 2001 Gazprom finally won and formally took over Gusinsky’s media assets. The NTV team split as a group of journalists and anchors quit and went to work on another channel with a smaller audience. Within a few days Gusinsky’s daily paper Segodnya was closed. At the news magazine Itogi, of which I was deputy editor, the entire staff was fired and replaced with a new team. (Newsweek promptly withdrew from the partnership.) Over the past two months the new Itogi has drifted toward becoming a less political publication. Ekho Moskvy is currently struggling for independence from Gazprom.
NTV continues to operate, and its general director, American businessman Boris Jordan, pledges that he will not allow any government interference with his TV channel. The truth, however, is that the government does not need to interfere. The Kremlin does not seek to take Russia back to the Communist past, where all the media were under rigid ideological control and spoke in one voice, whatever the subject. There’s no question that in today’s Russia the media enjoy the sort of freedom unheard of in the USSR. The rulers of today are only concerned about “correct” coverage of a fairly limited number of sensitive subjects, such as Kremlin politics and military matters. Also, they want to be assured that president Putin will be treated by journalists with due respect. The Russian media are generally cooperative. They understand these unwritten rules without formal explanations and they comply readily.
Here’s a recent example. Three top-ranking officials— the minister of defense, the minister of the interior and the chief of state security service met with the press. The press on that occasion consisted of top editors of five big newspapers. After the meeting, the authorized transcript was given out to all five, and they dutifully printed it in their respective papers. Rumor has it that the editors’ questions had been given out to them prior to the meeting.
The vast majority of the Russian people see nothing wrong with this policy of caution and cooperation adopted by the Russian media. After the first post-Communist decade, when they felt abandoned and not taken care of by the government, they are largely in favor of more government control in all spheres of life. Only four percent of the public regarded what happened to NTV as a government attempt to limit the freedom of the press.
There are still a number of media that are less compliant. They continue to operate, but they find it harder to get access to the sources of information on sensitive subjects. After the Kremlin has gotten rid of its worst enemy—Vladimir Gusinsky and his powerful media empire—it remains to be seen whether the government will further crack down on freedom of the press. Maybe there at the top they will decide they may put up with a few inquisitive newspapers and web sites. But it is hardly likely that any time soon there will appear in Russia a national TV channel that will present a dissenting view of Russian life.