Bye-Bye Government-Sponsored Media in Russia

It's time to try freeing Russia's press again.

Recently two of Russia's most respected media leaders have spoken out against increased domination of the media market by state-owned outlets. Pavel Gusev and Vladimir Sungorkin, editors-in chiefs of Moskovsky Komsomolets and Komsomolskaya Pravda respectively, minced no words. Speaking at the Council for the Mass Media, they made clear their alarm over state "monopolism in the mass media," reported Interfax on May 16.

According to Gusev, "monopolization today is not benefitting the media industry or the audience." Sungorkin agreed, pointing out that the state media outlets aren't actually helping anyone. They are "ineffective because they are unpopular," he said.

Sungorkin gave some insight into how deep the state media problem goes. His company owns 11 printing plants, and prints newspapers from Kaliningrad to Vladivostok. Those business relationships give him a glimpse at who actually finances newspapers. "Almost everywhere newspapers are financed from state coffers," he observes.

I can attest to that, too. As a business consultant, I've done intensive work with media companies in 17 different Russian cities. Through my workshops and seminars, I've also worked with hundreds of media managers, literally from Kaliningrad to Kamchatka. I've seen first-hand how enmeshed regional leaders are in media operations. Sometimes there is transparent ownership. But a lot of times the control is covert or circuitous.

Gusev and Sungorkin aren't the first to call attention to the problem. President Vladimir Putin was an early proponent. Writing in Sreda magazine in mid-2000, I quoted Putin when he said, "journalistic freedom has become an irresistible temptation for the politicians and the largest financial groups to use the media as an instrument in inter-clan struggles."

Putin promised action. He said he would remediate the problem "by creating in this country the legal and economic conditions that are needed for civilized information businesses to exist."

And he came through on his promise. Following recommendations by the Russian Media Fund, an American-Russian private sector initiative, the Putin administration actually cleaned up the collection of laws from the Yeltsin years that served to obstruct profitability and independence in the media business.

But somehow the government's presence in media control persisted.

In 2006, I presented this pervasive problem to the World Congress of the World Association of Newspapers. I talked about the negative consequences of money from mayors, governors and other politicians, and from natural resource monopolies controlled by the presidential administration. "They've conscripted newspapers," I reported.

Next, in 2010, then-president Dmitry Medvedev dipped his toes into the water. Buried in a litany of other priorities in his state-of-the-nation address came the line, "The government authorities
should not own factories, newspapers, or ships."

In my book, Medvedev's Media Affairs, I analyzed the media situation of that time, and offered Medvedev a two-step plan for success. It is, in short: first get the government out of the media business, and then clean up the corruption in the media sector. I also suggested that he lead by example by setting free the Gazprom-controlled media outlets.

But, once again, somehow the government's presence in media control persisted.

This media problem isn't just an abstract or theoretical issue. It has practical ramifications. Gusev said emphatically, "This is undermining the media market because such publications are taking over advertising budgets."

Presumably, if the state media outlets ceased to exist, there would be a redistribution of advertising revenues across the remaining independent media companies. To a certain extent that may be true. But all of the money won't redistribute itself. Some of the so-called advertising money is actually a form of patronage to political causes.

I've seen, for example, where large industrial companies, with no products to sell to a newspaper's readers, have spent a lot on advertising. It may seem pointless to advertise when you have nothing to sell to the readers. But the companies had an angle. Their so-called "advertising" was just a way of supporting the media outlet of a mayor or governor that they wanted to keep in office.

Just redistributing what's left of the money that went to the government outlets isn't the ultimate answer. In the long run, a more sustaining kind of advertising support must come from more growth and competition in the consumer sector of the economy. That will provide real money for real advertising. And that will be a real benefit to the independent media companies.

What stands in the way of that? A lot of people believe that this kind of growth will require increased foreign investment and participation in the Russian market. President Putin concurs that Russia could use greater foreign investment. Finding foreign markets for Russian products is part of the equation, too.

But, one obstacle to all that is Russia's international reputation. Think of the great challenge a Western multinational businessmen must confront in convincing his board and stockholders that the company should do business with Russia. If those people have followed Western media reports about Russia, they'll likely believe that the country is on the verge of insurrection and being run by a ruthless, murderous dictator who is also a pedophile. That's not an inviting situation for international commerce. But those specious stories have been mainstream in the Western press.

Russia's attractiveness for foreign investment is being muted by its bad reputation. As a magnet for foreign investment, the country is, to borrow a phrase from Sungorkin, ineffective because it is unpopular.

Fixing Russia's international image problem will go hand-in-hand with the development of an independent media sector. Reputation is worth money. Disrepute costs opportunity.

In the meantime, getting the government out of the media sector has now received the attention of Putin, Medvedev, and most recently, the media leaders. Perhaps this will be the magic troika that will get the job done. At last!