Netflix Looking for Partner to Continue Operating in Russia

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The company has to comply with a law limiting foreign ownership of online video services to 20 percent, which takes effect on June 1.

Netflix is looking for a local partner to be able to continue operating in Russia once restrictions on foreign ownership of online video services take effect in June, Russian communications watchdog Roskomnadzor said Thursday.

"Netflix's actions are a sign that the company plans to continue to work in the Russian Federation," Alexander Zharov, head of Roskomnadzor, was quoted as saying by trade journal Exhibitor's Bulletin. "We are aware that Netflix is privately holding talks with various companies in Russia, apparently looking for a partner." He declined to name specific companies that Netflix was in talks with.

Netflix declined to comment.

Earlier this year, Russia passed legislation introducing restrictions on the foreign ownership of online video services — a move targeting the likes of Netflix and iTunes.

Under the new law, which is expected to come into effect June 1, foreign companies will be limited to owning a 20 percent stake in online video services operating in Russia. Companies that won't comply could be forced to shut down operations at any point after that date.

Netflix launched in Russia in early 2016, and its arrival is widely believed to have pushed local competitors to lobby for ownership restrictions. The company has not disclosed the number of its subscribers in Russia. Amazon Prime is available in Russia, but offers no localized video content and won't be affected by the law.

A similar law regarding foreign ownership of media companies was enacted in 2016, forcing Walt Disney and Discovery Communications to partner with local distributors to comply. Sweden's Modern Times Group, which owned a 38 percent stake in TV company CTC, decided to completely pull out of Russia.

Meanwhile, local online video services said they would be interested in partnering with Netflix.

"We are open to all kinds of partnerships, including [one] with Netflix," Ivan Grodetsky, general director of online video service Okko, told The Hollywood Reporter. "This is a very strong and well-known company on the international online video market, which also produces top-quality content."

Other Russian online video services that Netflix could partner with include Ivi, Megogo and TVzavr.

The total audience of Russia's online video services is estimated at 70 million people, and the market is worth about $100 million a year.