MOSCOW, August 2 (RIA Novosti political commentator Peter Lavelle). Speculation that media mogul Robert Murdoch is in negotiations to purchase a minority stake in Russia's Ren-TV network from steel giant Severstal has been greeted by some pundits as a move to challenge the Kremlin's control of its "single information space."
The same pundits overlook that Murdoch has a history of not irritating the political elite where News Corp has significant media assets, and his primary motive - making money.
During a meeting with foreign business leaders at the end of June, including News Corp head Robert Murdoch, President Vladimir Putin made it clear that state-run or controlled television channels would not be privatized. However, this does not apply to media resources owned by joint-stock companies such as the natural gas giant Gazprom and the utility grid RAO UES. Thus, the possible partial privatization of NTV, which is a state-proxy under the majority-control of Gazprom, has not been ruled out.
A lot has happened in Russia's media world since that meeting. Steel giant Severstal Group purchased 70% in Ren-TV from UES for $100 million in July. During the same month, the German media concern Bertelsmann announced its purchase of the remaining 30% in the network. It was reported on Monday that Murdoch's group is seeking a 35% stake in Ren-TV. Under Russian law, a foreign entity is barred from owning a majority share in a Russian media outlet.
Ren-TV is a very attractive and relatively inexpensive - by international standards - media asset, broadcasting in more than 700 cities and towns throughout Russia with a potential audience of 100 million viewers. The network also has a reputation for providing hard-hitting media coverage compared with the country's three state-controlled national channels.
Murdoch is no stranger to Russia's media market. News Corp is already a significant player in the street advertising sector, announcing last month that it would invest over $130 million in this very lucrative business. Two years ago News Corp was in negotiations to purchase a stake in NTV; eventually Gazprom took possession of the network.
It is not surprising that News Corp remains keen to expand its presence in Russia. Russia's total advertising market grew 33% in 2004, to $3.85 billion. Television advertising increased 37% during the same period, to $1.7 billion. According to market experts, Russia's total advertising market is expected to expand, with television advertising growing faster than the entire sector and valued in the area of $18 billion over the next few years. Murdoch has a proven track record around the world when it comes to investing in media assets, and Russia is his next logical target.
What of the speculation that Murdoch's interest in Ren-TV will preserve the network's editorial independence? Even if News Corp purchases a 35% stake in Ren-TV, it is doubtful Murdoch will have the power to preserve or change Ren-TV content dramatically. Additionally, given Murdoch's past business practices, News Corp will support content that generates advertising revenue. If political coverage with an edge is what sells, then it will probably be supported and even expanded. If entertainment is what will make money, more entertainment content will be added. What is obvious - and different from state-run networks - is that Murdoch will probably only want Ren-TV to be a money-maker and not an outlet particularly concerned with towing any set political line. Murdoch also has a history of not angering local political elites where News Corp has a presence.
If the Ren-TV purchase proceeds, it may or may not have an impact on Russia's media and political landscape - it depends on the network's business plan. What is positive about Murdoch's interest in Ren-TV is the sign the state will allow foreign investment in the Russian television sector and let television be run as a business, no different from many other countries in the world.
The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.
