The closure of the Russian DTH platform Raduga TV is a surprising though not entirely unexpected development.
Jointly owned by Modern Times Group (MTG) and a local partner, it had been under pressure since November 2013, when Roskomnadzor announced that the service was operating without a licence and there were “substantial grounds” for initiating proceedings against it.
The local media then reported that MTG was in talks with Tricolor TV and Orion Express, the country’s number one and two DTH platforms, about a possible sale, but these were strongly denied by MTG.
Reports of a possible sale nevertheless continued for most of this year, the most recent being only last month, when the Federal Antimonopoly Service (FAS) apparently gave MTS, then preparing to launch its own DTH platform, permission to buy Raduga TV.
However, this seemed to come to nothing and in the end MTG decided to pull the plug on Raduga TV, which officially went off the air on Friday, December 5.
Although this is undoubtedly a blow to MTG, the company still has other interests in Russia that it is keen to retain. In the company’s Capital Markets Day, held in Stockholm on Tuesday, December 2, its president and CEO Jørgen Madsen Lindemann emphasised that it is focused on complying completely with the law in Russia.
The law, or more specifically amendments to the On Mass Media law, will reduce the permitted level of foreign ownership in Russian media entities to 20% from 2016. As the main shareholder in the national broadcaster CTC Media, MTG will be particularly hard hit.
Lindemann added that he couldn’t say any more at this stage as it would only be speculation.
MTG offset news of the closure of Raduga TV to some degree by announcing that it would enhance its channel business in Russia through the addition of five new HD services in 2015.
Yet while Russia remains key to MTG’s channel business, Irina Gofman, EVP of Russian & CIS Broadcasting and pay-TV emerging markets, said that recent growth has been from outside Russia. Indeed, while revenues increased by 6% in Russia, they were up by 52% in the rest of the world.
These are clearly challenging times for MTG in Russia, and indeed Ukraine, due to matters beyond its control. It will be interesting to see how it deals with them in the months to come.
