Dr. Ivan Zassoursky

Such is the historical map of the development of the press in the context of post-Perestroika Russian politics. However, it is impossible to speak of a "general fate" of the Russian mass media under the new conditions. Of course, some events were so important that they affected a great many publications. But anyway in the end we can by and large confirm the impression that from a free yet chaotic information space the new Russian media had been reassembled into some kind of system that resembles the Soviet one to a large extent mostly due to its predictability. Yet as explored in the part 1 of this article, it is certainly totally different.

As can be seen in the end of the decade, it can be divided in two parts – the politicized and the commercial, although the division lines are blurred sometimes – but still most of the TV networks and quality newspapers are better treated as politicized media, while magazines, music channels and tabloids – as exclusively commercial. They both share the same media culture, but the politicized can be described as a media-political system, where various media holdings play the roles somewhat similar to that of the political parties. Whether this is a local or a global trend is for you to judge. What may (or may not) be branded as local specifics, however, is the special role enjoyed by the executive branch of the state. In Russia, as we shall see, the government and presidential administration not only have a number of extremely important media outlets at their disposal, but also exert the prevailing influence on agenda-setting. Every high official is a newsmaker by default and there is no problem indeed for the executive branch of power to pull onto the public scene issues it considers important. The control over what happened to them next was rather weak all through the decade excluding election times, but in the end of the nineties this has changed as well.

The ‘state’ has retained a significant part of its influence in Russia. From the federal and republican levels to those of the province, city or region, almost everywhere administrations still control media organs or have the ability to influence the press in one way or another. Of course, this participation by the authorities in the mass media is not to be compared in any way with the absolute power the Soviet state used to wield over the press, requiring it to carry out the propagandist tasks of the Communist Party of the Soviet Union. Nevertheless, the influence of the ‘state’ is extremely significant, as are the sums of taxpayers' money that go to support the ‘state’ media organs that in practice are controlled by the party of power.

The ‘state’ has a controlling packet of shares in the joint stock company Russian Public Television ORT (which is de-facto run by Berezovsky), and also has complete control of VGTRK (including recently founded Culture channel) - that is, it controls the first, second and fifth channels of ‘state’ television. The Moscow television channel has already been turned into a joint stock company, but here the city duma, the mayor's office, and also the provincial authorities have shares. On the federal level, the channels NTV and TV6 can be considered commercial and independent of the state in the full sense of the world, as can the private, joint-stock local and cable television channels. However, the role of ‘state’ television broadcasting in Russia remains paramount. The position of the ‘state’ in radio broadcasting is just as substantial. The ‘state’ has retained ownership of Russia's largest information agencies, Itar-Tass and RIA-Novosti. There is no longer a monopoly in the market for information; new organizations are subjecting the ‘state’-owned agencies to powerful competition. These new bodies include Interfax, which arose from within Gosteleradio; Postfactum; National News Service and also countless specialized information agencies and services. Although, there exist other forms of control except for ownership. For example, Interfax president Comissar did not hesitate to take a post in the presidential administration when offered to do so.

Finally, the federal authorities also have their enclave in the newspaper market, with the newspapers Rossiyskie Vesti and Rossiyskaya Gazeta – althought the former was closed down. The remaining one, Rossiyskaya Gazeta, was founded by the Supreme Soviet of Russia in 1992. At the time of the conflict which broke out in March 1993 between the Supreme Soviet and President Yeltsin, the newspaper was the mouthpiece of the parliament. According to figures from the European Media Institute, the cost of maintaining the newspaper in 1993 came to 2.6 billion rubles, at that time a more than significant sum.

Later, after the events of 3-4 October 1993 and the parliamentary elections, RG was placed under the control of the Russian government. In this capacity the newspaper also distinguished itself, publishing materials that unmasked the sinister scheme of the Most group aimed at seizing power under the patronage of the mayor of Moscow (the sensational article "Snow is Falling"). In political circles people spoke of an intrigue by presidential security service chief Alexander Korzhakov. This was confirmed in exquisite fashion after the famous operation carried out by the presidential security service against security guards of the Most group. The operation did not succeed in provoking the guards to fight back, but resulted in their being forced to lie in the snow next to the Moscow mayor's office, and to remain there under the muzzles of automatic rifles. After RG's chief editor Natal'ya Polezhaeva had been replaced by former Rabochaya Tribuna editor Yurkov, the newspaper ceased to participate in such excesses. But the direct subordination of a press organ to the government always carries the danger that the organ will be used in someone's narrow interests, particularly in moments of political crisis – or war.

The need of the authorities to usurp control over the ‘state’-owned mass media, a need that appeared so clearly in the political conflicts described above, has persisted since the events of October 1993. However, the most revealing element here has not been the fate of the newspapers published by the government and the presidential administration, but the scandalous process through which the first channel of Russian television was turned into a joint stock company. As a result of this process, the executive power won control over property belonging to the state as a whole. Though, as it turned out after the elections, the channel was privatized not by the authorities, but by Boris Berezovsky and his business partners, whose role earlier was regarded as purely instrumental.

The story of the creation of the closed joint stock company ORT began in the autumn of 1994. On 5 December 1994 a council of trustees of the shareholding company ORT was set up, with Boris Yeltsin as its chairperson. On 1 January 1995 a decree of the government of the Russian Federation was issued, containing a list of state representatives in ORT's organs of management. On 24 January a founding meeting of the shareholding company took place. Subsequent events developed just as rapidly and dramatically, with the most intense struggle evidently shifting to the sphere of influence of the large advertising firms. Almost nothing is known about this conflict, but it was crucial for deciding subsequent events.

Against a background of drawn-out intrigue among the advertisers, ORT was registered in Moscow on 28 February 1995. On 1 March the channel's chief executive, Vladislav List'ev, was murdered. A search was made of Boris Berezovsky's office. The murder of List'ev became the topic of abundant speculation. The television industry declared a period of mourning; entertainment programs were suspended, and portraits of the popular television personality were broadcasted for several days. List'ev was the pioneer entertainment celebrity on Russian TV: the programs he launched on Russian TV, various TV-games, TV-shows and news shows are still high in ratings. The sorrow over his death was a Russian equivalent of princess Diana's (or any Kennedy for American public) – another emotional outburst so characteristic for the TV galaxy, another indication of the extent to which these images are a part of people’s life. The murder still has not been solved, but the fact that such methods were used shows better than anything else how tense the struggle around the first television channel had become.

Back in 1995 the political motives underlying the changes that took place in the first channel before the elections to the State Duma (these took place some six months after the appointments were made), turned ORT into a target for numerous critical articles and caused uproar in the parliament. It seems, however, that the choice of founders for the television channel was correct - the political criticism did not hinder the work of the new channel in the lead-up to the 1995 elections. Nor was ORT troubled by the appearance in Pravda and Moskovskiy Komsomolets of convincing information concerning abuses in the channel on the eve of the presidential elections.

ORT represented the most notorious instance in which the authorities moved to exert control over ‘state’ television on the eve of the presidential elections, but it was far from being the only such case. For informed Moscow analysts, just as clear a move was the replacing of second channel head Oleg Poptsov with Eduard Sagalaev, director of TV6 and a shareholder in that body. In the view of an anonymous commentator, examining the state of affairs in the Russian media before the parliamentary elections, Poptsov managed to "put himself in the position of someone who had to be reckoned with, not only by V. Lazutkin or V. Ignatenko (government officials in charge of broadcasting committee and ‘state’-controlled press), but also by the top political leaders of the Russian Federation." In fact, Russian television was a highly reliable source of information, even while remaining loyal to the regime; this was especially evident in its reporting of events in Chechnya. Yeltsin stated that the reason for Poptsov's sacking was "excessively negative coverage".

In 1997, though, corruption scandal followed by a split among the mid-level management led to Sagalaev's resign, which he later attributed to the high politicization of the ‘state’ television. Svanidze, a notorious political commentator took his place. The party of power could hardly find a more convinced supporter among intellectuals. Svanidze is unique - the sincerity of his views combined with the boldness of his position that is dominated by "strong state" ideal, allowed him a fantastic career - the head of a second channel was a low-rank researcher less then 10 years ago.

A year later Svanidze stepped down and minister of culture Michael Shvydkoj became the CEO of the company, to be replaced by ex-director of NTV newscasts Oleg Dobrodeev last winter, during the war in Chechnya, in a move to strengthen the ‘state’ TV in time of the war effort.

As mentioned earlier in the article, by June 1996, that is, the time of the Russian presidential elections, only two politicized media groups existed alongside the ‘state’ media machine. These were the press group controlled by the Most financial group, and another formation consisting of several media enterprises partly managed and financed by the LogoVAZ company. Russian politicians and journalists had already dubbed these groups the "empires" respectively of Vladimir Gusinsky (Most group) and Boris Berezovsky (LogoVAZ and Sibneft).

In the way the Most group presents its participation in the media, it is possible to see the mark of the strategic investor who understands the inherent value of the information "empire" that is being assembled. The secretiveness of his main rival leaves no doubt that Berezovsky has not seen the need until quite recently to put his motives up for show, and that he is trying to avoid attracting attention to himself, even at the price of losing the benefits that would flow from a coordinated market strategy by the enterprises under his control.

Since Berezovsky himself is remaining silent, we can only guess at the real motives for his behavior. It is possible that as a political influence-broker, this media mogul - unlike Gusinsky - was not in the position to conduct any general advertising campaign for the media holding he built around himself. As a trader in influence, Berezovsky had a clear interest in ensuring that the media organs he controls retain their independent status. For him to advertise participation in the media meant to wave a red rag in the face of its political rivals, to arouse suspicion and mistrust among readers, and also to accept responsibility for all the material that appears in the publications or on the television channels that the company effectively controls.

Berezovsky's media group is thus unique not only because it

was put together primarily for reasons of political expediency, something that is itself remarkable in the late twentieth century, but because it was also built through political intrigue, on which the central node of his holding – the ORT - continues to depend. He could lose his share in the first channel (ORT) overnight if confronted with enough resoluteness. If this has not happened yet, it tells volumes about the new administration.

Berezovsky has concentrated in its hands a large proportion of the shares of two television channels (first channel Russian Public Television and the Moscow channel TV6, which is actively expanding its presence in the Russian television market), as well as the journal Ogonek. Berezovsky also controls Nezavisimaya Gazeta and, according to the rumors, Novye Izvestiya. He also made some investment in the FM radio market (“Nashe Radio”) and created one of the strong internet-providers (Cityline).

His latest acquisition – the Kommersant publishing house – is one of the most impressive, since that was a strong media holding by itself that used to set a standard of independent quality journalism against which the performance of business and quality publications could be judged.

The outlines of the "Berezovsky empire" are blurred, and details of Berezovsky's involvement in various enterprises are difficult to obtain, since they are publicized not because of the wishes of the empire's founder, but despite them. For example, the list of the founders of ORT was published for the first time in the Communist newspaper Sovetskaya Rossiya.

The media organs that are united beneath the control of the Most group might seem to amount to a civilized and flourishing media conglomerate, especially if we keep in mind the comparison with Berezovsky's empire, which is more like the stronghold of a powerful political faction than a media group of the late twentieth century. Especially since, in the beginning of 1997 Gusinsky separated his media-holding from the group, thus establishing a new company called Most-media. His empire stood rather firm until now May 2000, when it was attacked by a key shareholder Gazprom, a gas monopoly that, according to rumors, is acting on behalf of the new president, Mr. Putin. The reasons are clear, since so far it has been the only media holding to exert powerful and at times damaging criticism over the Second Chechen campaign.

While Most-Media’s future is somewhat unclear, we have to admit that Vladimir Gusinsky was almost set to become a Russian Murdoch after he became the first Russian media mogul to develop satellite broadcasting, an $170 million project promoted by NTV-Plus company. To finance the launch of the first Russian pay-TV network Gusinsky actually had to sell a 30% stake in NTV channel to Gazprom for $120 million. It is ironic that at the time the deal was struck it was considered a part of a pay-off package for supporting Boris Yeltsin through the elections (another part was widening a license for the 4^th channel, enabling uninterrupted broadcasting of NTV on the expense of the daytime educational channel).

Berezovsky profited from his media interests mostly through gaining favors from the authorities for himself and his partners. But is there enough basis for us to conclude that the Most media group came into being as a result of a process of political concentration? In the case of the Most group, the picture is more complicated; because of politicized concentration, the group received dividends mostly in the field of the mass media. Who knows whether Vladimir Gusinsky would have won control of NTV had he not had the newspaper "Segodnya"? Or whether NTV would have obtained the fourth channel's full license had Igor Malashenko (the CEO of the company) not been involved in Yeltsin's election campaign?

By now, however, Gusinsky and Berezovsky are far from being the only collectors of press organs. Yuri Luzhkov, Moscow mayor and the founder of “Fatherland – All Russia” political block – the only serious rival of the party of power during both parliamentary and presidential elections, has build an impressing empire, financed by the Bank of Moscow - city budget operator. Today he controls two television channels, TV-center and Stolitsa, as well as a dozen of local city newspapers and an all-Russian Weekly “Literaturnaya Gazeta”. He also helped to finance a number of regional projects for Moscow-based publications on the eve of elections.

As a serious rival, he was under attack for the last year and a half from the Kremlin authorities and has become so far the most powerful of their victims. The limited success on the parliamentary elections and the decision of his candidate ex-prime minister Evgeny Primakov not to participate in the presidential elections led to the decline of his influence. There are threats that the license of the TV-center channel might be revoked. In case this happens, it will be the first major threat to his hold of Moscow.

Among other foci of concentration is former Oneximbank – or Rosbank (after default) which founded economics weekly magazine "Expert", intercepted Gazprom's 20% share in "Komsomolskaya Pravda" and bought a controlling stake in “Izvestiya” in a scandalous (although commonplace) power struggle back in 1997. “Komsomolskaya Pravda”-Segodnya” group is a large company itself - it controls a huge network of regional publications.

Within the print media there are numerous other foci of concentration, which are not so striking because the spheres of influence of the large companies involved do not encompass television as is the case of Berezovsky, the Most group and Luzhkov holding. Argumenty i Fakty, which has a strong position in the market for weekly newspapers; and so forth. A typical example of such concentration is provided by the Independent Media. Independent Media is a private company, founded by two editors from Netherlands and financed by private foreign capital. This company was a typical success story of foreign investment in Russia and certainly it conveyed a load of global media culture into the Russian market. To truly assess the value of this holding we might add that as a result of correct marketing strategy IM has managed to get in the first position as judged by the advertisement revenue in the print media market, leaving even Kommersant publishing house far behind. In 1997 their budget was $26,85 million, compared to 24,9 of Kommersant. Together these two groups controlled almost 40% of the whole print media market before the crisis. Reason for the success? IM is involved in publishing Russian language editions of Cosmopolitan, Playboy, Good Housekeeping, Harper’s Bazaar as well as English language newspapers in Moscow and St.Petersburg, a financial news agency and so on. Russian bank Menatep acquired 10% of the company.

There are other success stories considering foreign investment in the media. Even on television. For example, an American Peter Hervy created a large TV holding Story First comprising 8^th channel in Moscow (STS) as well as a number of regional stations – from scratch. He started from small-scale FM-radio project. However, Ted turner was not so lucky in Moscow. He was behind the project of the TV6 channel which he started with the above mentioned Eduard Sagalaev way back in the beginning of the nineties. Since the law did not restrict the ownership of major media by foreign investors, he made a gentleman’s agreement with Sagalaev to buy out his share when legally possible, granting in return the rights for the large TNT movie archives, which filled most of the stations airtime after its launch.

When the channeled achieved popularity, Sagalaev approached Turner for more investment, but he asked for the controlling interest in return. Sagalaev refused and broke the partnership, raising suspicions that this was his intention from the start. After the conflict the shares were distributed among local investors: the Moscow government, Berezovsky and Luk-Oil got 25% each.

In media during the nineties the less was the scale of the project, the farther from the “media of influence”, the more likely the success for the international investor. But this appears to be the case in many media systems, giving foreign investors only more reason to embrace new media and ‘new economy’ – in Russia as well as anywhere else.

There is some evidence, though, that things are changing. The newspaper “Vedomosti” was started last year as a joint venture between “Independent Media”, “Financial Times” and “The Wall-Street Journal” where each of them have equal stakes. As soon as it was launched it was recognized as obviously the best newspaper in Moscow. The advertisement on billboards with the newspaper logo said: “Every oligarch can buy this newspaper. In kiosk”. One of the reasons for the success of this venture might be precisely the fact that “Kommersant” – a leading business daily – now belongs to Berezovsky and thus lost the credibility necessary for the business newspaper. Unfortunately, this small and elitist market of business publications is the only one where independence can be considered a big advantage, and corporate concentration (after all, every member in this joint venture is a heavyweight) is not seen as a threat.

Let us recall our findings.

As we have seen, the media system was the first sector to experience privatization and one with the hottest competition. The effects of globalization could be described as the adoption of the global media culture – a set of formats, genres and styles characteristic for the commercial media world-wide.

While Soviet media system was based on newspapers, the freshly born Russian media system is dominated by television, making it a part of McLuhan Galaxy as defined by Manuel Castells. One of the principal features of this system is the existence of a fine-tuned industry that manufactures public opinion operating in the symbolic space of the media and appealing more to the emotions and subconscious of the audience according to the laws of public spectacle. Instead of public sphere there is public scene.

As it appears from our analysis, the privatization process went under the primitive, yet highly efficient and globally-oriented strategy on the part of the freshly-born economic agents, who secured natural resources for the global markets. While the access to this resources was determined by the ‘state’ (the executive branch, or ‘the party of power’), according to the rules of the game, it was exchanged for favors. Since the party of power was primarily interested in staying in power, i.e. controlling the elections, the access to resources was often traded for the political influence that in the de-institutionalized public space was exerted primarily by the media, which led to the construction of the media-political system that took place of the underdeveloped system of political parties.

This explains the influx of politicized capital in the media and the concentration of media ownership for political ends. It is interesting that one such holding is run by Boris Berezovsky who seems to model himself after Berlusconi, and another one – by Vladimir Gusinsky, who is trying to become Rupert Murdoch.

The influence of foreign capital on the new media system was limited to the spheres with little or no political meaning – such as magazines-publishing business or TV-entertainment. The efforts to penetrate important TV networks were blocked and discouraged. However, the good management and sound financial base have turned enterprises financed by foreign investment into the leaders of the advertisement markets, securing a base for further expansion.

In general my believe is that we have found the answers to the central questions of this study in the article, so we now turn to the main hypothesis of this research project.

The hypothesis of this research project was that traditional political institutions and power arrangements, state in particular, become less and less effective, and give way to something else.

On the basis of our inquiry we can claim that this holds true for the history of Russian media in the nineties. Indeed, all through the article the words state and ‘state’ (in single quote marks) were used with different meanings. The state stood for the state ‘in general’, as it is traditionally used to describe the totality of administrative units that control and represent a given geographical territory, i.e. the idea of the state. While the ‘state’ in single quote marks was used as a description of one of the relevant groups, in particular the executive branch on the federal level. Probably the most important and influential group, but only one of them, acting in the framework of multiplying structural limitations imposed by the state debt, international markets, local business climate, pressure groups and even individual actors with political (or media) clout.

But to simply agree with this would mean to ignore the efforts of the new administration that is desperately trying to reverse this trend and impose a new order – a different pattern of normalization - in reaction to this state of affairs. The Chechen war and the administrative reform, the construction of the new patriotic ideology and the attempt to convert the media-political system into a number of party structures that were the first steps of the new administration all aim in this direction – they try to build a solid state and institutionalize the patchwork into some kind of stable arrangement.

While there is little doubt that the ‘state’ can exert profound influence on every sector of local political and economic activity (and the media sector in particular), it is also clear that the global financial markets cannot be overpowered. Well, they can be – but only if the renaissance of the state became a worldwide phenomenon that would somehow channel the destructive energy of the markets – and this is rather unlikely. It is easier to predict that the gap between the actual power arrangements and popular beliefs will continue to increase. But there is nothing new in this, is there?

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