Kremlin extends media grip through Gazprom deal


* Tycoon sells media interests to Gazprom Media

* Putin's banker has indirect interest

* Media experts see threat to diversity

By Denis Dyomkin and Douglas Busvine

MOSCOW, Nov 26 (Reuters) - The Kremlin extended its gripover radio and television broadcasting on Tuesday when the mediaarm of state-controlled Gazprom bought mining tycoonVladimir Potanin's Profmedia.

Through the deal, the former Soviet gas ministry that is nowRussia's largest company by revenue, will add TV and radiostations, cinemas and film production and distribution assets toa sprawling portfolio that it has built up around commercialtelevision channel NTV.

Gazprom Media and Interros, Potanin's investment company,said the deal should be completed at the start of 2014, subjectto regulatory approvals.

The terms were not disclosed. Itar Tass news agency quoted asource close to the deal as saying that it valued Profmedia at25 billion roubles ($760 million). After subtracting debt, thatwould give the company an equity value of 15 billion roubles.

"There is nothing good in the fact that we are seeing theconcentration of assets in one hand," said ElizavetaOsetinskaya, editor in chief of Forbes Russia, a magazine knownfor investigative journalism.

"Seven TV channels and sales of 70 billion roubles? It looksa lot like Mediaset," added Osetinskaya, drawing comparisonswith the media empire owned by former Italian Prime MinisterSilvio Berlusconi.

Who ultimately controls Gazprom Media is not entirely clear,but its board of directors is chaired by Gazprom's chiefexecutive, Alexei Miller. President Vladimir Putin hand-pickedMiller to run Russia's gas export monopoly in his first term.

Gazprom owns a 35 percent direct stake in Gazprombank, whichin turn owns 100 percent of Gazprom Media.

Its pension fund, Gazfond, owns another 47.4 percent inGazprombank. Most of this stake has been entrusted to an assetmanager called Leader. One of Leader's shareholders is a firmowned by banker Yuri Kovalchuk, a close friend of Putin.


Although the state gas giant operates at arm's length to theKremlin, Putin has repeatedly used its control over gas exportsto project Russia's power abroad.

Gazprom bought NTV in 2000 from Vladimir Gusinsky, an exiledmedia tycoon who became the first prominent victim of acrackdown on coverage critical of the Kremlin after Putin roseto the presidency.

That purchase marked a step towards entrenching the power ofthe former KGB spy, who served briefly as prime minister beforebeing designated by the ailing Boris Yeltsin as his presidentialheir.

Despite criticism from investors that it was straying fromits core business, Gazprom has expanded its media interests,which has kept broadcast, online and print outlets inpolitically safe hands.

Under Gazprom's ownership, NTV quickly shed its previousreputation for fierce independence. In the 2011-2012 electionseason, it ran a series of documentaries that sought todiscredit Putin's political opponents.

Gazprom Media also owns satellite TV company NTV-Plus, andits radio assets include all-talk station Ekho Moskvy. It hasinterests in magazines, newspapers, film-making, cinemas,advertising sales and online portals.

The media firm posted revenues of 52.3 billion roubles ($1.6billion) in 2012, roughly one hundredth of Gazprom's totalsales.

Putin's former minister for press and mass communications,Mikhail Lesin, was recently appointed to run Gazprom Media.

"With the arrival of Mikhail Lesin, the media landscape isstarting to be shut down," wrote Arina Borodina, a columnist forstate-owned news agency RIA Novosti.

Borodina also noted that Kovalchuk, in addition to hisindirect stake in Gazprombank, has extensive media interests ofhis own. His National Media Group owns three Russian TV channelsand national newspaper Izvestia.

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