Mikhail Seslavinsky is first deputy media minister and is mostly responsible for electronic media. He talked to The Russia Journal about the general situation in the sector and the ministry’s view of current problems and issues facing the media.

The Russia Journal: President Vladimir Putin said that real freedom of the press means freedom from the power of money. What’s your view?

Mikhail Seslavinsky: Over the past decade, TV and radio have become a huge industry, but we haven’t asked ourselves where the money is coming from. There are several sources – budget money, founders’ money, investment by companies and individuals, advertising revenues.

Obviously, receiving money from the budget or from founders creates certain obligations for a company. It’s impossible to imagine, for example, that ORT would oppose the state or Boris Berezovsky, or that NTV would oppose Vladimir Gusinsky or even hint that he’s not an angel and the fount of all virtues.

You can’t imagine REN-TV opposing RAO UES for cutting off power in this or that district. This is what Putin was talking about – freedom doesn’t just mean freedom to criticize the state; it also means freedom with regard to founders and sources of financing.

RJ: For this to happen, media would have to be profitable and make enough money from advertising. Is our advertising market big enough for this?

MS: Of course not. Our ad market can’t support more than 2,000 TV and radio broadcasting companies, or the more than 25,000 newspapers and magazines. And there’s no sign that there will be any change over the next two, three or four years.

RJ: It’s a case of there not being much advertising money to go round?

MS: Yes, volumes are small. There are some examples of a publication or publishing house successfully positioning itself on the market, making stable income from advertising and securing an independent existence. But most have too small a share of the advertising market to survive on income derived from that. TV and radio are even more expensive products, and this further complicates the situation.

This is true for large and small companies. Large companies have colossal expenses, but small companies don’t have any available advertising market. What kind of advertising market can you have in city of 50,000-100,000 people? But such places have their own TV companies.

RJ: How would you compare the ad market today to that of 1998?

MS: The TV and radio advertising market is about $200 million for the whole country today. The market is growing, but not anywhere near as fast as TV companies would like. The print advertising market is at around $300 million to $350 million. We haven’t yet reached 1998 levels.

RJ: These are the official figures. Aren’t the real figures higher if you count so-called "black" advertising?

MS: The share of under-the-table advertising is decreasing all the time. People have learned to work now. Also, there are constant checks and this makes such practices too dangerous, so there’s not much sense in it.

RJ: But doesn’t this make Putin’s dream of a free press a myth if the only source of independence is ad money and the market is too small today?

MS: It’s not like that. There is advertising out there; companies have sources of funding – founders’ money and advertising, but they’re not enough on their own.

RJ: But if founders’ money remains an important source of financing, isn’t it naive to imagine that companies would criticize their own founders?

MS: We’re talking about the same thing. Founders’ money is very present. In some companies, it accounts for 80 percent, with 20 percent from advertising. In other companies, the proportions are reversed. There are some print-media outlets with 100 percent revenue from advertising and subscriptions. The general trend is that, at the moment, most media outlets can’t free themselves from their financial obligations. This raises the issue of what we can do to help them get on their feet and become independent. This is a question of economic mechanisms, a general liberalization of the state’s economic policy.

RJ: But the problem in the ad sector isn’t just one of small volumes; isn’t it also that it doesn’t function quite according to free market laws?

MS: The situation here differs little from the general situation in the country. We’ve only had an advertising market for the last 10 years, and it’s naive to hope that after such a short time, everything will be the same here as in countries where the advertising market has been developing over the last 200 years.

Of course, there are various upheavals and cataclysms, and the situation today differs from that of two years ago, when there were only two rival companies.

After Premier-SV went bankrupt, Video International has obviously strengthened its position and has captured a considerable share of the market. But TV Center, for example, sells its own advertising and is a channel that broadcasts in 40 regions, if I’m correct. NTV and TNT sell their own advertising. The current situation can’t last forever – markets don’t allow monopolies to last for long. At the moment, though, we’re going through a period when Video International has very broad exclusive rights.

RJ: But when a market player becomes too strong, doesn’t it use market laws to stifle weaker competitors and give them no chance to grow?

MS: But how is this different from the oil business or the situation with aluminum? The situation is the same and can be regulated in the same way. There is a law on competition; there is the Anti-Monopoly Ministry. Probably, there’ll be some court cases and court decisions. This is not the Media Ministry’s work; it’s the sector of the market that follows the same laws as those that regulate other market sectors.

RJ: Are you placing your hopes entirely on natural processes and assuming that, if there are complaints, the injured parties will turn to the relevant state bodies for help?

MS: The advertising companies on the market today all want to further their own development. How this will happen, how their rivalries will take shape, is difficult to predict.

RJ: ORT isn’t getting state financing now. But it has plenty of problems. What should it do? Go to its founder?

MS: It’s a tricky situation. Some decisions will be required, it seems. In the long term, ORT will have to become a profitable company, generating enough revenue to finance itself. This is possible – ORT produces quality programs and broadcasts nationwide, so advertising agencies work with it willingly.

But the 1998 [financial] crisis and the difficulties in 1999, when the founders didn’t give it any money, mean that it now has huge debts. It can’t pay these debts from its own revenue sources. This is why the state helped ORT obtain a $100 million loan and helped it extend the loan through 2001.

The state also provides financing in the form of grants for socially important programs that air on ORT. These programs account for only a small share of ORT’s total programs, but they get support from these grants. We also give grants to programs on other channels, both national and regional. In this respect, we have an experts’ council, which includes not only ministry representatives but also prominent social and cultural figures.

RJ: Roman Abramovich said he could buy Berezovsky’s debts in ORT and save the channel. What do you think of that?

MS: It’s hard to say because the channel’s debts aren’t debts to Berezovsky. They’re debts to producers, for rent and equipment.

RJ: What’s their total debt?

MS: That’s a commercial secret.

RJ: Did Abramovich actually buy Berezovsky’s shares?

RJ: All I can say is the shares that were in private hands are still in private hands. Changes to the shareholders’ register are a commercial secret.

RJ: Concerning potential foreign participation in TV in Russia, is there a risk that laws regarding foreign participation will be changed?

MS: We’re not planning any changes to the present system. It’s not important whether an owner is foreign or local. In this respect, our legislation is among the most liberal in the world.

We’re tired of giving examples of how difficult it can be for foreign companies or individuals to open TV and radio companies in other countries. In some countries, in the United States, for example, it’s impossible. We have no plans to change the law but, at the same time, we can see that some attempts to promote foreign media outlets have political overtones. For example, Radio Liberty’s broadcasting in three Caucasian languages is clearly an attempt to influence the political climate in the north Caucasus.

I personally am often surprised by complaints about freedom of the press here that come from abroad. This is because, as a rule, people in these countries don’t realize the degree of protection of freedom of the press here for both foreign and Russian media outlets. Just look at a case from three weeks ago. After the screening of "Roads of the Basque Country," the director of Madrid television was dismissed from his job for "an impermissibly neutral attitude toward the issue of separatism." But was there a session of the Council of Europe on the problem? Did the U.S. State Department kick up a fuss about Spain’s attitude toward freedom of the press? This is the situation in all countries where there’s a problem with separatism. But as soon as there’s an opportunity to criticize the situation with freedom of the press in Russia, everyone starts criticizing.