In Boris Yeltsin's post-communist Russia, there is nothing that is not for sale, but the most valuable commodity of all is influence. Boris Berezovsky, Russia's uber-oligarch, has always known that better than most. Now, just one year from the next presidential election, he is trying to ensure that his influence extends beyond the Yeltsin era. "Let's not be hypocritical," Berezovsky said in a newspaper interview on June 11. "Information is about politics; and politics is a huge part of today's Russian reality."
Three days after the interview there was a reality shift. The country's best and most influential print-media property, Kommersant Publishing--whose flagship daily newspaper is a must-read for Russia's elite--changed hands. The question of the moment in Moscow: who bought it? The answer is surrounded by controversy, and is anything but trivial. Who controls Russia's media will help determine the outcome of December's parliamentary elections and next year's presidential race.
In Russia's raw political culture, nearly every institution is discredited, but the press still retains some credibility. Polls indicate it is trusted far more than the president, the government--even the Russian Orthodox Church. Competition for control of the media is intense among the country's so-called "oligarchs," a half dozen or so superwealthy tycoons who, before last year's crash, dominated the economy. Some have unabashedly used their media properties to undercut rivals and further their own political influence. The increasing concentration of media ownership made the Kommersant, with its classy newspaper and slick magazines, a jewel.
Its independence was its greatest asset. Until its sale in June--which was publicly announced just last week--it was owned neither by the central government, which remains the biggest media owner, nor by an oligarch. Its founder was Vladimir Yakovlev, a 40-year-old practicing Buddhist who last year left Moscow for Los Angeles. He entrusted the flagship newspaper to its talented editor, Raf Shakirov, and it continued to flourish. A Russian hybrid of The Wall Street Journal and The New York Times aimed squarely at the emerging professional class, it covered Yeltsin's Russia with unrivaled vigor.
But last year's economic crash put Kommersant's cherished independence at risk. Yakovlev and his company came under serious financial pressure. He prepared to sell, and in so doing triggered a fierce--and ultimately surreal--ownership struggle. Fierce, because everyone from Berezovsky to Anatoly Chubais (Yeltsin's former economic czar) and Moscow Mayor Yuri Luzhkov (a likely presidential contender) sought control. Surreal, because the ostensible winners were two young investors, Iranian-born and British-educated, who run an unknown fund-management firm called American Capital (USA), LLC. Kia Joorabchian, 27, and Reza Irani-Kermani, 31, said last week that their emerging-market fund, registered in the tax haven of the British Virgin Islands, took an 85 percent stake in the prestigious but money-losing Kommersant.
On the eve of the election season, was it possible that two unknown outsiders had trumped some of the most powerful political and business interests in Moscow? And if so, how, exactly, had they managed to pull that off? High-level sources in Moscow's business and journalism communities insist that they hadn't, claiming that American Capital was simply a front for Berezovsky. "Whoever is named [as owner], the face is all the same--Boris Berezovsky," says Leonid Miloslavsky, the former general director of Kommersant, who, before the sale, was the company's third largest shareholder. NEWSWEEK's sources believe it was Yakovlev, not Berezovsky, who may have wanted the true nature of the deal concealed, because he knows his former colleagues at Kommersant would feel betrayed if he sold to the controversial media baron. Many are already nervous about American Capital's lack of footprints; the company shows up in virtually no business databases or press archives, and records show that it registered in New York only on May 27, just as one of Berezovsky's deputies was trying to conclude a deal with Yakovlev.
Last week Berezovsky admitted that he had purchased Miloslavsky's 15 percent stake in the company. He said he wanted a presence on Kommersant's board--but denied in an interview with NEWSWEEK that he's behind American Capital: "I have no idea who stands behind them." The two young investors backed him up. "We are not a front for anybody," says Joorabchian.
Even before the Kommersant sale, Berezovsky was one of Russia's most powerful media barons. (Another media oligarch, Vladimir Gusinsky, publishes the magazine Itogi in cooperation with NEWSWEEK.) Berezovsky has a large stake in ORT, the most popular national TV channel, and other properties, including a Moscow daily newspaper. He is now finalizing the purchase of Russia's third biggest national TV network. Adding Kommersant to his mix--even at 15 percent--would make him the largest private media owner in the country.
Yakovlev, who did not return six phone calls from NEWSWEEK last week, said in an interview with Kommersant that he simply did a deal with American Capital, a company that he insisted has no links to Berezovsky or anyone else. He chose American Capital, he said, because he wanted Kommersant's shares to "disappear from the market of political influence." But have they? At an economic forum in Salzburg less than a month ago, Berezovsky is said to have openly boasted about his newly won control of Kommersant. Several sources present, Russian and Western, say they heard him. If Kommersant retains its editorial integrity in the next few months, the storm over who controls it may eventually fade away--even if Berezovsky doesn't.
A Blend of Fact and Opinion
Russia's news media have a heritage of Soviet-style government control and no-holds-barred free enterprise. Key players:
ORT: The only TV network that can reach every Russian village. The government owns 51 percent, and oligarch Boris Berezovsky owns the rest. Critics say it has become his mouthpiece.
Argumenty i Fakty: An independent weekly tabloid owned mostly by its staff. It is Russia's most widely circulated national paper (about 3 million copies). Moscow's elites shun it, but ordinary readers love its mix of news, sex and gossip.
NTV: The first TV network not owned by the Russian government. It belongs to MOST Media, the empire of communications oligarch Vladimir Gusinsky (MOST publishes the magazine Itogi in cooperation with NEWSWEEK.). It is widely regarded as the country's most professional network. Mikhail Osokin and Tatyana Mitkova, the news anchors at 7 p.m., are national celebrities; their photos grace the NTV Web site.
Ekho Moskvy: A popular national radio station owned by MOST. It emphasizes news, political commentary and a bit of music.
Izvestia: Formerly the government's daily paper. Now owned by a failed bank, its influence is declining.
Kommepcaht
Media bosses
The government
Berezovsky
MOST Media
Gazprom (gas)
Moscow's mayor
LUKOIL (oil)
Alfa Bank
July 1998
State 39%
MOST 22
Berezovsky 13
LUKOIL 10
Luzhkov 8
Alfa 3
Other 3
July 1999
State 44%
Berezovsky 24
MOST 14
Gazprom 6
Luzhkov 5
LUKOIL 4
Other 4
NUMBERS DO NOT ADD TO 100 DUE TO ROUNDING.
CHARTS: July 1998, July 1999