Putin Allies Said Angling to Wrest Paper From WSJ, FT

By Irina Reznik, Ilya Khrennikov and Henry Meyer

Businessmen close to President Vladimir Putin are preparing to acquire Vedomosti, the largest Russian newspaper outside the Kremlin’s control, three people familiar with the matter said.
Putin signed a law yesterday capping foreign holdings in media at 20 percent, meaning the owners of the Wall Street Journal and Financial Times, co-founders of the newspaper, must cut or sell their 33 percent stakes by the end of 2016. The third owner, Sanoma Oyj (SAA1V), is in talks to sell its Russian assets.
Under a plan backed by the presidential administration, an intermediary may be used to acquire all three stakes to make the deal more palatable politically
before a group loyal to Putin buys the whole newspaper, the people said, asking not to be identified because the information is private. The eventual owner will probably be either Gazprom-Media, an affiliate of the state-run gas exporter, or companies linked to longtime Putin ally Yury Kovalchuk, they said.
“The Kremlin sees Vedomosti’s shareholders as foreign governments,” the newspaper’s editor-in-chief, Tatiana Lysova, said in an interview. “The WSJ equals the U.S. and the FT the U.K. They want a Russian owner so they have someone to call.”

Photographer: Andrey Rudakov/Bloomberg

A customer purchases a copy of the Vedomosti daily newspaper from a street kiosk in... Read More

‘Market Process’

Since being first elected president in 2000, Putin has brought major television stations under state control, pushing opposition discourse onto the Internet. The biggest protests of Putin’s career in late 2011 and early 2012 triggered another media crackdown that intensified this year after geopolitical tensions flared over the conflict in Ukraine.
Putin’s spokesman, Dmitry Peskov, said “a market process” will determine Vedomosti’s fate. “We don’t know what will happen to Vedomosti, who will buy it,” he said by phone.
The press services of OAO Gazprombank, which controls Gazprom-Media, and Kovalchuk’s National Media Group both declined to comment, as did the Journal’s parent company, News Corp. (NWSA), and the FT Group, a division of Pearson Plc (PSON), as well as Helsinki-based Sanoma.
A leading contender for Sanoma’s Russian holdings, which include local editions of the Cosmopolitan and Esquire magazines, is Peter Gerwe, a Moscow-based American with Russian backing, two of the people said. Gerwe said by e-mail that while he’s interested in the assets, he isn’t acting on behalf of anyone. He declined to elaborate.

‘Intellectual Troublemakers’

Vedomosti, which frequently publishes editorials and opinions critical of the government, and Axel Springer SE’s Forbes Russia are among the most-influential independent media outlets in the country. They are prized among executives and senior officials for their critical reporting, according to Masha Lipman, an independent political analyst in Moscow.
Authorities in recent months forced out the top editor of popular news website Lenta.ru and have squeezed Dozhd, or TV Rain, a cable television station that once boasted 20 million viewers, to the financial brink, Lipman said. Cable operators abandoned Dozhd after pressure from authorities, and the company now must rely mainly on its 70,000 Internet subscribers to stay in business, she said.
“The Kremlin used to allow a few intellectual troublemakers to express themselves,” said Lipman, author of several studies on Putin and the media. “Now we are moving toward zero tolerance.”

‘Tricky Situation’

Derk Sauer, the Dutch investor who founded Vedomosti in 1999, said the FT and the Journal are in a “very tricky situation.” Sauer sold his Independent Media, which included the Moscow Times and several magazines, to Sanoma for 142 million euros ($182 million) in 2005.
“There are very few people in Russia who can buy Vedomosti and at the same time guarantee its editorial independence,” Sauer said by phone from Moscow. Sauer said the most likely buyer will be a “government-friendly” structure. “That is what I am worried about,” he said.
Gazprom-Media is run by Mikhail Lesin, who was minister in charge of the media in 2000 when Gazprom took over independent channel NTV and its owner, billionaire Vladimir Gusinsky, fled into self-imposed exile after a brief imprisonment.
Billionaire Mikhail Prokhorov’s RBC Group, a business-focused media consortium, decided against a possible bid for Sanoma’s Russian assets, including the Vedomosti stake, said Sauer, who is now chief executive officer of the RBC holding.

‘Critically Important’

“I have an emotional attachment as the founder of Vedomosti and the one who came up with the whole idea of the newspaper,” he said. “Of course you want to be associated with it. Now I am in a different role.”
Vedomosti’s influence among Russia’s elite is way out of proportion to its relatively small circulation of 75,000, said Dozhd TV founder Alexander Vinokurov, who also considered bidding for Sanoma’s Russian business before deciding it was too risky.
“The elite read Vedomosti every day, it’s exactly the readership you need to influence a country,” Vinokurov said. “It’s a critically important media outlet.”
At a meeting of Russian newspaper editors in Moscow in September 2013, Putin’s deputy chief of staff, Vyacheslav Volodin, accused Vedomosti of serving foreign interests, according to Lysova, the chief editor.
Peskov, Putin’s spokesman, said he didn’t know anything about that meeting. Volodin declined to comment, according to the presidential press service.

‘Nothing Personal’

Putin accused unnamed foreign countries of waging “fierce information wars” against Russia during an Oct. 9 video conference with Argentine President Cristina Fernandez de Kirchner to mark the start of the Spanish-language version of the state-run RT TV channel in the South American country.
With the rapid development of electronic media, the press “has become, perhaps, a menacing weapon” that can be used to manipulate public opinion, Putin said.
The law on foreign media ownership, although it affects entertainment TV channels and glossy magazines too, is clearly aimed squarely against Vedomosti, said Yevgeniya Albats, editor of the New Times, an independent publication.
“I doubt the Journal or FT will fight for Vedomosti,” she said. “Nothing personal, it’s just business.”
The disappearance of the newspaper as a source of unbiased coverage will mark a reverse for Russian society, said Maxim Trudolyubov, who’s run Vedomosti’s editorial page since 2003.
“It’s obvious what they are after -- they’re getting rid of autonomous institutions,” Trudolyubov said by e-mail from Washington, where he has a fellowship at the Woodrow Wilson International Center for Scholars. “If they succeed, it would be a big loss. Only a highly developed society can afford to have high-quality information.”