Russia Expected to Restrict Foreign Ownership of Media Companies

Vladimir Putin Meeting Russian Filmmakers 2013 H

Foreign companies would be limited to holding 20 percent stakes in Russian media firms as of 2016

A law limiting foreign ownership of Russian media companies to 20 percent stakes on Friday passed its second and third readings in the lower chamber of parliament and is expected to be passed shortly.

Swedish TV networks company Modern Times Group, which owns a 38 percent stake in Russian broadcaster CTC Media, said Friday that it was "carefully following" the progress of the planned legislation.

The company is likely to be the only major foreign media and entertainment company to be affected by the new law based on current holdings in Russia. "MTG is carefully following the progress of the proposed amendments and analyzing what potential actions may be taken in order to protect shareholders' interests in the event that the law is enacted," the company said.

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"CTC Media is closely monitoring these developments and evaluating their potential impact on the company and its stockholders," CTC Media similarly said. "At the same time, CTC Media is considering all potential actions that the company and its stockholders may take, both in order to comply with the law if enacted and to protect their interests."

Modern Times Group earlier this year already had to take a charge for its Ukrainian business amid political turmoil there.

Following RTL Group's sale of a 30 percent stake in Russian network Ren-TV to the National Media Group, owned by Yuri Kovalchuk, back in 2011, MTG is the main foreign media company with a substantial stake in the Russian TV industry.

To become law, the legislation needs to be approved by the Upper Chamber and signed by the president, but few in Russia expect any major changes or a rejection of the legislation at this stage.

The law would come into effect on Jan. 1, 2016. By then, foreign companies or private individuals won't be allowed to own more than 20 percent in Russian media companies, including broadcasters.

Russia has also been mulling a boycott of Hollywood movies.