#6
Wall Street Journal Europe
December 6, 2001
Editorial
Lesin's Laser
Since we have rounded the corner to December, there's little risk in making some year-end observations a bit early. Here's one: 2001 was an annus horribilis for press freedom in Russia. As the year ends, Russia's last bastion of independent (national) television, TV-6, is on its deathbed. TV-6's demise would leave the Kremlin in de facto control of all the major television stations.
On Sept. 27, a Moscow court ruled in favor of a minority shareholder, the pension fund arm of oil giant Lukoil, in its proceedings against TV-6. The court said that TV-6 had run afoul of a Russian law that prohibits a company from running a deficit for two years straight. It ordered MNVK, TV-6's parent company, to be liquidated. Last week a Moscow appellate court upheld the liquidation ruling.
The law used to pierce TV-6's heart makes little sense by Western standards. If routinely or consistently applied there would be so many Russian companies in liquidation proceedings they'd have to line up outside Russia's courthouses for their hearings.
As it is, the law has been brought out of the closet only rarely. It was applied by state-owned Gazprom in its campaign to take over independent television station NTV earlier this year. NTV was taken over -- literally, by armed guards -- from its owner, MediaMost chairman Vladimir Gusinsky, and brought under the control of Gazprom.
NTV, at least in its old, familiar form, died and many of its best journalists fled to TV-6, then a sleepy outpost of rival media magnate and Kremlin insider-turned-foe Boris Berezovsky. Mr. Berezovsky owns 75% of TV-6 and has reportedly offered to buy the remaining stake. Lukoil, however, seems more interested in stifling the station than seeing it rescued.
TV-6's ruin has been in some ways more surprising than NTV's. Its ratings have doubled since it took on NTV's journalists and advertising has been increasing. Nor does it have NTV's financial baggage. TV-6 officials claim that its debts outweigh its assets only under Russian accounting standards, not generally accepted international norms. But while the station's managers say they are about to break even and may be profitable next year, the court case will only consider the company's financial position as of January.
One more thing: The law used to shut down TV-6 was repealed by Russian legislators this summer. Only, the repeal doesn't take effect until Jan. 1.
Since neither the profitability of TV-6, nor the intention of Russian lawmakers count here, let us ask the obvious follow up: Qui bono? Lukoil is a publicly traded company, but the government still holds a 15% stake in the oil giant. More importantly, Lukoil depends on the Kremlin's good favors for licenses, export quotas and favorable tax treatment. In that sense, the Kremlin is the 800-pound gorilla in Lukoil's plush boardroom.
In most Western countries, the reading/viewing public could be counted upon to come to the defense of the free media. But in the battle of the Law-and-Order Kremlin vs. the Media Barons, the public mostly sympathizes with the former.
The man in the Kremlin's corner is Mikhail Yurievich Lesin. While other cabinet members are more senior to Mr. Lesin, and have closer relationships with the president, no one has done more to consolidate President Vladimir Putin's power at home or worked harder to burnish his image abroad.
But who is Mr. Lesin? Together with two friends, the 43-year-old spin doctor helped launch one of Russia's first ad agencies in 1993. Video International, as it is called, is now Russia's biggest ad agency; it handles the advertising for most of Russia's large media companies and is still run by one of Mr. Lesin's close friends.
Mr. Lesin went on to become an executive for the state-controlled news agency RIA Novosti. It wasn't long before his talents landed him in the Kremlin. He helped craft the TV blitzkrieg campaign that was key to President Yeltsin's 1996 re-election. In July 1999, he was appointed Mr. Putin's press minister and enforcer in media affairs.
The press czar has said that he disagrees "with the thesis that the state is more dangerous to the media than the media is to the state. I believe quite the opposite." But he routinely dismisses Western concern about press freedom in Russia, once mockingly announcing that his ministry was working on a report about freedom of speech and media in the United States. He has denied trying to bring independent television under state control, or intimidating journalists into reporting favorably on the Kremlin.
U.S. News and World Report magazine editor and publisher Mort Zuckerman has written that Mr. Lesin "threatened me directly in relation to a newspaper in which I am a financial partner, asserting he would shut it down if it did not cease its exposes of the financial shenanigans of the Yeltsin administration and the Yeltsin family." Mr. Lesin was a central figure in the dramatic battle between Gazprom and MediaMost. In a move that astounded Western observers, the minister guaranteed Mr. Gusinsky, who had been arrested on corruption charges, immunity from prosecution if he sold his media interests. Mr. Gusinsky first agreed to the deal and then, upon being released, reneged, saying he conceded to Mr. Lesin's deal under duress. When the deal became public, Mr. Lesin endured a dressing down by President Putin, who nonetheless let him stay on the job. Ever since, however, Mr. Lesin has been more careful. Certainly Mr. Lesin hasn't played the role in TV-6's demise that he did with NTV. But nor has Mr. Lesin lifted a finger in its defense. Despite its excellent ratings and its viable financial position the Kremlin has voiced no disapproval of TV-6's skewering by its minority shareholder.
The de facto nationalization of television in Russia has safeguarded the next election for President Putin. Now it remains to convince the West that there has been nothing deliberate about the demise of independent television. To that end, Mr. Lesin recently announced a major spending campaign to project "a positive image of Russia."
We have some advice for President Putin that has the merit of being a much cheaper solution. Nothing could serve as a better advertisement for the Kremlin's democratic intentions than ending the Lesin era in the Kremlin. But don't just get rid of Mikhail Lesin; get rid of the Press Ministry. The disbursement of licensing can be handled by other government ministries. A Press Ministry can serve no other purpose than to expand the state's role in the media to the detriment of democracy.
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