Why Sony Formed a New Joint Venture for Its Russian Networks
National Media Group already has similar deals with Discovery and Turner.
Sony Corp.'s Sony Pictures Television unit is forming a joint venture with Russian TV company National Media Group (NMG) that will manage its Russian networks, namely Sony Entertainment Television, Sony Turbo and Sony Sci-Fi.
The Russian company, which already has similar agreements with Discovery Communications and Time Warner's Turner networks, made the announcement, saying it would get an 80 percent stake in the joint venture, with Sony holding the remaining 20 percent.
Financial terms weren't disclosed. Under a Russian law enacted in January 2016, foreign ownership of media companies is limited to 20 percent stakes.
The deal will also allow Sony to make extra cash from running TV commercials, as advertising is banned on pay TV in Russia, but companies that, like NMG, run both free-to-air and pay TV networks are exempt from that rule.
Sony networks air in Russia such shows as Stargate SG-1, Dark Matter and Under the Dome.
Sony declined to comment.
Back in 2016, Sony entered a partnership with media manager Vladimir Khanumyan to comply with the 20 percent requirement to form a company, in which he owned an 80 percent stake. Now Sony apparently went for a safer bet. The previous owner didn't have to sell his 80 percent, but he apparently did it as part of the deal as Sony wanted to partner with NMG. Also, under the previous deal, Sony wasn't able to make money from ad sales.
NMG is owned by Yuri Kovalchuk, a longtime ally of President Vladimir Putin. In recent years, oligarchs close to Putin are believed to have been able to negotiate preferential treatment for their companies.
NMG became the go-to place for U.S. media giants looking for a partner for their networks a few years ago.
In late 2015, NMG entered joint ventures with Discovery and Turner to distribute their channels, including CNN, Cartoon Network and Boomerang, and Discovery's Discovery Channel, Animal Planet, TLC, ID Xtra, DTX, Discovery Science, Eurosport 1, Eurosport 2 and Eurosportnews, in Russia.
"[The deal] will allow us to expand our pay TV offer and continue to provide access to high-quality content for Russian viewers," said Olga Paskina, CEO of NMG, at the time.