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Saturday, September 02, 2006

Is Kommersant in the Kremlin's Gunsights?

RIA Novosti reported on Wednesday that "the director general of the Kommersant publishing house confirmed that negotiations on the sale of the company to a Russian businessman are underway. 'I do not want to make any comments,' Demyan Kudryavtsev said. 'But the deal is underway.' He said the publishing house is being sold to Alisher Usmanov, the owner of Metalloinvest holding, and that the deal satisfied both parties. The company's previous owner, businessman Badri Patarkatsishvili, earlier said he planned to sell 100% of his publishing business for no less than its market value, estimated at $200 million. Speculation is already rife that this is a move by the Kremlin against one of the last major bastions of critical media in the country. La Russophobe would just like to say for the record that if Kommersant is coopted by the Kremlin she will lose a significant source of insight about Russia and will consider it the beginning of the end for Russia, the first nail in Russia's Neo-Soviet coffin. It hasn't happened yet and now is the time to act to prevent it. The Moscow Times reports:

Senior Kommersant editors Thursday cast doubt on Alisher Usmanov's claim that he would not tamper with the newspaper's editorial policy after he acquired it.

"It would be too early to say now whether I believe promises that the editorial policy of Kommersant will be left unchanged," chief editor Vladislav Borodulin told RIA-Novosti while attending a Beijing forum of editors of Chinese and Russian media.

Another senior Kommersant staffer was more blunt. "All this talk of this being some kind of private investment -- give me a break," he said. Several senior staff members may soon leave, he added.

A senior writer at the paper confirmed that deputy editor Alexander Shadrin, responsible for business coverage, resigned Wednesday.

Tatyana Lysova, the top editor at Vedomosti, Kommersant's main rival, expressed deep reservations about the change in ownership. "We like to see a strong competitor," she said. "In the immediate period after the sale, business readers' trust in Kommersant is likely to drop."

Alluding to Usmanov's senior role at state-controlled Gazprom and his metals assets, Lysova added: "Everyone knows about Usmanov and his range of businesses. At first, readers will be skeptical, looking to spot his influence in the coverage of certain topics."

On Wednesday, Usmanov said he had no plans to change Kommersant's editorial policy. Usmanov is expected to acquire the paper formally within days.

Analysts, meanwhile, buttressed Lysova, saying the newspaper could indeed be facing a drop in readership and other staff departures.

Since Usmanov is a well-connected steel magnate, it is unlikely the paper will retain its objective, often anti-Kremlin perspective, said Boris Timoshenko, head of monitoring at the Glasnost Defense Foundation.

"Practice shows that Kommersant may well lose its face, its influence and its readership," Timoshenko said, referring to Gazeta, Izvestia and Nezavisimaya Gazeta. All these papers have been snapped up by Kremlin-friendly owners and have shifted their reporting away from serious, often probing journalism to more tabloid-style coverage.

Timoshenko noted that Gazeta, also bought by a steel magnate, Vladimir Lisin, had "joined the row of those colorful, superficially successful but bland publications."

Kommersant has a circulation of nearly 123,000 and is distributed in 16 cities in Russia. Since July, there has been a Kommersant Ukraine edition.

In an interview late Wednesday, Usmanov said of the paper: "I've been a kommersant for, what, 20 years, and a fan of Kommersant for 15. I'd have been a fool to pass up this opportunity."

The paper is the flagship publication of Kommersant Publishing House, which is expected to earn $70.4 million this year, with a net profit of $15 million.

The publishing house also owns the magazines Dengi, Vlast, Avtopilot and Molotok, among others. Molotok, a weekly glossy for teenagers, was recently attacked by authorities for publishing obscene photographs and sex advice.

Usmanov, with no known experience or assets in media, will complete the purchase of the publishing house using a recently registered offshore firm, Mediaholding, which has no other assets. Usmanov said the deal was worth about $200 million, while Kommersant reported Thursday that it was more than $300 million, citing sources close to the deal.

Borodulin, the chief editor, said Usmanov would meet the newspaper's staff after Sept. 15. On Thursday, members of Usmanov's business team paid a visit to Kommersant's offices in a former school building northwest of the city center.

Usmanov is also the president of Gazprominvestholding, a 100 percent subsidiary of Gazprom. In that capacity, he is charged with keeping Gazprom's debt in check and handling some of the gas monopoly's assets.

Prior to the collapse of the Soviet Union, he spent some time behind bars on fraud charges. Following his release, he built a fortune in the iron-ore market. With partners Vasily Anisimov and State Duma Deputy Andrei Skoch, Usmanov cobbled together a 45 percent share of the market. The holding company controlling these assets is Metalloinvest; all three have equal shares. Forbes magazine estimates Usmanov's fortune to be $3.1 billion.

A third senior Kommersant source suggested that Chukotka governor and former oil and aluminum magnate Roman Abramovich had acted as a middleman in the Kommersant sale. There was speculation Thursday that Abramovich might have bought the paper from its former owner, Boris Berezovsky ally Badri Patarkatsishvili, before turning it over to Usmanov.

A spokesman for Millhouse, Abramovich's holding company, dubbed the speculation "just another rumor of the day."

Berezovsky, the owner of Kommersant until he sold it to Patarkatsishvili earlier this year, said late Thursday that he had no detailed knowledge about the transaction.

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