Russian Lawmakers Propose Rule That Would Restrict Foreign Ownership of Digital Media

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A new draft law proposed to Russian legislators aims to restrict foreign ownership of digital audio-visual services in Russia, potentially threatening the local operations of companies like Netflix.

The draft law, submitted by legislator Andrei Lugovoi, known for his security service background, and Shamsail Saraliyev, stipulates restricting foreign ownership of local online video services to 20 percent of a given company as of July 2017. (The US has similar rules governing, for example, foreign ownership of terrestrial radio stations.)

In the Russian language, the term ‘audio-visual’ is mostly applied to video content, and the legislation is primarily aimed at online video services. Audio streaming services are not specifically mentioned.

A similar move against media companies two years ago led to the exit from Russia by Sweden's Modern Times Group, which held a 39 percent stake in Russian TV company CTC Media and ownership changes throughout a number of companies, including the local subsidiaries of Turner and Discovery.

A spokesperson for the Media Communications Union, the organization which actually wrote the bill, tells Billboard that the draft doesn't target any specific company, and that foreign companies concerned about being affected by it should voice their concerns to Russia's investment agency, an organization dealing with attracting investment which operates under the auspices of Russia’s chamber for commerce and trade.

Netflix declined to comment.

The law will not only affect foreign companies but also Russia-based digital companies such as Yandex and Mail.Ru Group, which have foreign-own stakes exceeding 20 percent.

A spokesperson for the local online giant Yandex tells Billboard that the draft, if adopted in its present form, will have a negative impact on the competitive environment in Russia's digital media industry.

"It will restrict Russian audiences' access to licensed video content, pushing users to pirated web sites," she added.

Earlier this year, the Russian government said it planned to make specific regulations for foreign online video services. They would have to be locally registered and translate 80 percent of their content into Russian, a plan that hasn't  yet been executed.