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From: The Nixon Center
Subject: Program Brief -- Boris Jordan
Date: Wed, 23 May 2001

"NTV: Past, Present & Future"

A Conversation with Boris Jordan, General Director, NTV
May 22, 2001
The Nixon Center, Washington, DC

Russian oligarch Vladimir Gusinsky lost control of the television network NTV as a result of complete financial mismanagement, poor business decisions, and a dangerous financial dependency on the Russian gas monopoly Gazprom, said NTV's new General Director, Boris Jordan, at a recent Nixon Center luncheon. Jordan also acknowledged that Gazprom's seizure of management control of NTV from Gusinsky's Media-MOST holding was in part politically motivated -- the channel was fiercely opposed to the Kremlin -- and called Gusinsky's arrest last year "preposterous." Nixon Center Board member Lionel H. Olmer, a Partner at Paul, Weiss, Rifkind, Wharton & Garrison and a former Under Secretary of Commerce for International Trade, moderated the discussion.

NTV's Financial Condition

According to Jordan, NTV is in dire financial shape after years of mismanagement by its founder, Vladimir Gusinsky. Jordan explained that NTV had taken on some $1.5 billion in short-term debt from the state and state-related businesses (including Gazprom) despite the fact that the annual volume of Russia's advertising market is currently only $1 billion. As a result, he said, the network had no hope of repaying its debts. NTV used what Jordan termed "black advertising" -- payments from Russian companies to refrain from negative news coverage or guarantee positive coverage -- in an effort to make up the shortfall.

Jordan also argued that the previous NTV management made a variety of poor business decisions, such as spending $200 million to buy (rather than rent) satellites to launch a satellite television service that the Russian media market could not yet support. He expects to be able to cut operating costs by 30% -- from $94 million to about $70 million -- strictly through more efficient management of the firm. Still, Jordan admits that turning NTV around will be a major challenge: he said a PricewaterhouseCoopers audit he requested stated that the company is not an ongoing concern. According to Jordan, this language would usually force an immediate filing for bankruptcy in the United States.

Moving forward, Jordan expects to begin looking for a strategic foreign investor within 6-12 months, after reorganizing NTV and rationalizing its operations. He expressed resistance to seeking Russian investors in the network, arguing that it would again become a political tool of Russian business interests.

Gazprom, the Kremlin, and the Media

Jordan asserted that he exacted two commitments from Gazprom before agreeing to take his current position. First, he said, Gazprom must not interfere in the network's editorial policy. Second, he said, it must sell down its stake in the channel. Nevertheless, one participant questioned whether NTV had given sufficient and unbiased coverage to allegations of poor corporate governance, insider dealing, and other abuses within Gazprom. Jordan insisted that the channel was preparing a major report on Gazprom in anticipation of a management transition expected during the summer and promised other reporting on the gas monopoly.

More broadly, Jordan emphasized that he was much more concerned about threats to NTV's editorial independence from other Russian tycoons seeking to exploit the network's weakness than those from the Russian state. He argued that the NTV controversy has made the channel "radioactive" from the government's perspective and suggested that the Kremlin would be reluctant to create an impression that it was interfering in its editorial policy.

In fact, Jordan said, he considered NTV to have had an easy time compared to many regional media in Russia, which he suggested were dominated by provincial governors. Regional media are even more vulnerable financially than NTV, he said, and have become very heavily dependent on local government subsidies or, alternatively, unofficial subsidies in the form of "black advertising" by regional business leaders supporting various political factions.

Plans for the New NTV

Mr. Jordan argued that NTV was never an independent network under Vladimir Gusinsky's management because its reporting always reflected his personal agenda. Jordan outlined four measures he is implementing to protect the channel's editorial independence:

NTV's staff elected its new chief editor and top news anchor, Tatiana Mitkova, a highly respected television journalist known for resisting direction from Soviet television officials;
NTV's staff has also selected an eleven-member editorial boardcomposed solely of Russian journalists with no management participation -- the first of its kind in Russia;
NTV has prepared the first-ever "charter" for a Russian network outlining relations between the editorial board and management and the shareholders and management and establishing a code of conduct for journalists; and,
NTV will form an advisory board to include Russian, American, and European journalists who will monitor its independence.

Though he admitted that rebuilding NTV will be a major challenge, Jordan expressed optimism that he might be able to create Russia's first truly independent television network. He urged outside observers to monitor NTV's reporting and form their own judgments.

This Program Brief was prepared by Nixon Center Director Paul J. Saunders.

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