Pearson and Dow Jones have agreed to sell their stakes in Russian newspaper Vedomosti, before legislation restricting foreign ownership in Russia comes into force in the New Year (1st January 2016).
The publishers are divesting their stakes to Damian Kudryavtsev, an entrepreneur who already owns a third of the paper and is the former publisher of rival publication Kommersant. The deal, the sum for which was not disclosed, is expected to close before the end of the year.
Pearson and Dow Jones, an American publisher and financial information company, cited “the newly passed law” as the reason for selling to the Kudryavtsev family as part of a joint statement. They said: “We are very proud of the work we have done with Vedomosti and our contribution to independent press in Russia for the past 15 years. Due to the newly passed law limiting foreign ownership of media organiSations in Russia, Dow Jones and Pearson have entered into an agreement to divest their stakes in Vedomosti. The transaction is expected to close before the end of the year, when the new law takes effect.
“The quality and integrity of the Vedomosti editorial team is outstanding and both the FT and The Wall Street Journal plan to continue licensing content to Vedomosti to provide high-quality, international news to readers in Russia."
The law places a cut-off on foreign investment in TV and radio at 50% and at 20% for all other media. While the law comes into force on 1st January 2016, media companies in Russia owned by foreigners have until 1st February 2017 to comply with the new legislation, the penalty for which is closure of the media outlet in question. The new legislation, passed last year in September, has been criticised by media industry leaders. According to the The Moscow Times, managers of foreign media companies sent a letter to Putin asking him to postpone application of the law until 2017 but were ignored.
A series of similar sell-offs have taken place as a consequence of the new law, according to the FT , including that of German company Axel Springer withdrawing a business magazine from Russia. The FT commented: “The changes are seen as further strengthening the Kremlin’s control over Russia’s media, which have lost most of their independence since President Vladimir Putin took power more than 15 years ago.” According to its report, a person “close to the deal” said it was “practically an expropriation of foreign media”.
Pearson agreed to sell the Financial Times after 60 years’ ownership to Nikkei for £844m in July and its 50% stake in The Economist for £469m in August. Its c.e.o John Fallon has made clear the company’s strategy is to focus “100%” on education going foward. The company share price recently took a tumble in October and further in November.