Vladimir Putin's New Policies Prompt U.S. Media Exodus From Russia
One new law bans advertising in cable TV starting next year, while the other limits foreign ownership of local media assets to 20 percent in 2016
This story first appeared in the Dec. 12 issue of The Hollywood Reporter magazine.
A rare piece of good news came out of Russia on Nov. 27, when President Vladimir Putin declared himself against the idea of movie quotas for foreign films. That essentially killed a proposed new law that would have been poison for Hollywood box office in the country.
But it was only a flicker of hope among what otherwise is an increasingly grim state of affairs in Moscow. Two new laws — one banning advertising on cable TV in Russia as of next year, the other limiting foreign ownership of local media assets to 20 percent in 2016 — have sparked an exodus of international companies. Turner Broadcasting is dropping distribution of CNN International in Russia, Disney reportedly is set to write off most, if not all, of its $300 million investment in Russian TV, and Discovery has warned that the changes in Russia will be a drag on its future earnings. Shares in CTC Media, Russia's only publicly traded broadcaster, fell a third when news broke that Scandinavian media group MTG was considering dumping half its stake in CTC to comply with the new rules.
Disney and Discovery declined comment, but for Western conglomerates that had been counting on Russian growth — which has been double digit for years — the new laws are a bitter pill to swallow. They come as the Russian economy is teetering on the edge of recession, hurt by the West's economic sanctions in response to the Ukraine crisis and the falling price of oil, Russia's main export. Analyst Chris Weafer of Moscow's Macro-Advisory Ltd. thinks Western broadcasters who rely on ads to fund their Russian operations have a simple choice: "Follow CNN and close or suffer a loss and wait until the ban is reversed."
Correction 12:59, 12.8.2014: An earlier version of this story incorrectly stated that Turner Broadcasting would be ending the distribution of all its channels in Russia, not just CNN. The Hollywood Reporter regrets the error.