The new boys in Europe

Why are the super-rich bankrolling the press?

Respected but bankrupt European newspaper titles such as Le Monde in France, El Pais in Spain and the Independent in the UK have recently been sold to business tycoons unconnected with the media. Their motives are debatable, but the ones to watch are the Russians says Irena Maryniak.

Are the print media in terminal decline? The shape of human communications has shifted, and as readers dab at iPads and Kindles or stay glued online what, if anything, are we losing? A tradition certainly: the daily paper on the doormat, the stop-off at the newsagent’s, a selective and private reading routine, a political loyalty tag […] But what else? Globalized, digitized reporting is out there on Google and in the blogosphere, with professional journalists, bloggers and interest groups competitively providing local, national and international news. In terms of information-flow the future looks good, although the range of material offered online also has a nebulous, fluctuating quality, modified as it is from one moment to the next. In an inaugural lecture given in March 2010, George Brock, head of journalism at London’s City University, argued that this has led to a loss of “authority, clarity and coherence” in journalism. What, after all, is the value of information that is not authoritative, verified, reliable or clear? As we abandon our dailies, are we leaving behind a sophisticated system of sustained and reflective daily reporting, an intermediary between advertisers and clients, an essential watchdog against corruption?

Over the past two years, major newspapers throughout the world have appeared to be folding, or cutting staff and salaries, at an accelerating rate. In the US, nervous reports have warned that US cities such as San Francisco or Miami could be in danger of losing their last daily paper. “Have we reached a tipping point where advertisers and readers are flocking so quickly to digital media that most of the nation’s 1,400 dailies may end up in the morgue?” USA Today asked in May 2009. Jeff Jarvis, who directs the City University of New York’s interactive journalism programme, evoked the prospect of a new “ecosystem, a network of different players involved in news for different reasons”, adding that traditional newspapers wouldn’t be part of the mix because of their reluctance “to cannibalize and disrupt themselves”.

“Fit for purpose”: Rethinking the old media model

Within the print media industry, the reinvention of business models is a top priority, and extraordinary measures including government bailouts have been advocated in some quarters. In France, the government has been subsiding newspapers for years: in 2008, 12 per cent of the sector’s revenue came from the state and in January 2009, 600 million euros was allocated in emergency aid to the French press, while all 18 year olds were offered a free subscription to the paper of their choice. President Nicolas Sarkozy denied that this could undermine journalistic freedom, saying that without a good business plan the free independent press would disappear.

As an alternative, it has been mooted that newspapers could more safely secure or maintain their financial and editorial integrity through help and investment from charitable foundations – a solution already developed in the USA, where funds have been set up to support a failing press. ProPublica, winners of the 2010 Pulitzer Prize for investigative reporting, for example, are an independent, non-profit newsroom that produces exclusive, probing stories in a climate where serious investigative journalism is increasingly at risk. On this side of the Atlantic, the owner of the London Evening Standard and the Independent, Alexander Lebedev, has expressed an enthusiastic interest in seeing a similar tradition develop in Europe.

In a mixed news economy that combines print, terrestrial and networked digital, competition is tough and the consumer is sceptical. Audiovisual may often seem more credible, as well as more directly accessible, than the mediating written word. But equally, the appetite for news is high, not only in terms of the quantity available, thanks to state of the art technology but, according to Jarvis, because of growing market demand for quality journalism and reporting. The evidence, he argues, is “based on democracy, based on the intelligence of the audience”. Politically and economically engaged communities expect to have access to more news, views and data.

Welcome to the new boys in the club

If journalism has become too thinly spread, and calls for quality and substantive, in-depth reporting are audible, there may be room yet for the print media to stage an impressive recovery. Certainly the great, the good and, above all, the spectacularly wealthy are showing no sign of losing interest in newspaper ownership, though their motives have often been the subject of intense speculation. In October 2010, billionaire art collector Nicolas Berggruen (said to enjoy a nomadic existence on yachts and jets) and UK triathlon enthusiast Martin Franklin injected 900 million euros into the debt-embattled Spanish media group Prisa, known particularly for its flagship newspaper El Pais. Berggruen and Franklin have rebuffed any suggestion of interest in editorial influence or traditional media-mogul prestige. Instead they have talked boldly of opportunistic investment in quality brands likely to succeed and stay dominant with the right governance and direction. “Over the next few years, there will be survivors, and they will survive at the expense of the smaller competitors,” Berggruen told the Guardian.

The acquisition of the iconic French newspaper, Le Monde, by three French businessmen linked with a combination of industries – high fashion, communications, sex-shops and banking – has prompted speculation about a more politically-centered kind of opportunism. Pierre Bergé and Matthieu Pigasse both have active, direct links with the French Socialist Party – Bergé helped to finance the presidential campaign of Socialist candidate Ségolène Royal in 2007 – and the third of the trio, Xavier Niel, finances two leftwing websites. The paper’s acceptance of their offer in July 2010 looked very much like a direct snub to President Sarkozy, who had opposed the bid. Journalists at Le Monde, who are stakeholders in the paper and help elect senior executives, were delighted with the outcome. The paper had lost nearly 5 per cent of its readership in 2009, after cutting 130 jobs a year earlier, and the new owners had promised to preserve the journalists’ independence, another reason why staff voted readily in their favour.

Earlier indications that Russian business tycoon and former senator Gleb Fetisov might be making a bid for the paper had raised questions about a different kind of political motivation. Le Monde could provide a good platform for Russian state and commercial advertising, Fetisov suggested. Gilles Van Kote, president of Le Monde‘s Society of Editors, declared himself “somewhat startled” by Fetisov’s interest, particularly in view of the fact that another Russian, Alexander Pugachev, had acquired an 85 per cent stake in the daily France Soir a year earlier. This had led to claims from competitors that the paper had been bought with a view to influencing voters ahead of the French presidential election in 2012. There were also suggestions that buying a paper on the verge of collapse was a way of currying favour with President Sarkozy.

Boys’ toys or instruments of power?

Alexander Pugachev himself has said that he does not belong to any political party, and the traditionally left-leaning daily Libération expressed scepticism about fears that he might be motivated by hopes of gaining influence “in an open society where the written word is dying”. Overall, the purchase of a paper that had lost 6.7 million euros the previous year by a young, multilingual and apparently shy entrepreneur didn’t cause much of a stir. In its heyday half a century ago, France Soir printed 1 million copies, but by 2009 sales had fallen to just over 20,000. The weekly Marianne 2 observed tartly that nobody gave a toss who owned the paper these days. At a time of crisis for the industry, where the biggest paper in France, Le Figaro, has a circulation of just 314,000, any political agenda reflected in print is unlikely to make much impact in terms of the big picture.

So why is Alexander Pugachev bothering? As the son of billionnaire oligarch Sergei Pugachev, he comes from a clan with interests in finance, shipyards, property, television and (most recently) in the French luxury foods chain Hédiard. Is this venture into the print media philanthropy or business? Is it an expensive toy? A way to gain trust? Withdraw assets? Improve Russia’s image abroad? Gain a springboard for new contracts? Novaya gazeta, Moscow’s last remaining independent paper, remarked that it could be merely “a matter of fashion”. After all, buying newspapers is what the super-rich do these days.

The only frailty so far noted in 24-year old Pugachev is a penchant for designer suits and classic sports cars. His father’s public image is more ambiguous, however. The high profile Russian journalist, Yulia Latynina, has talked about a “criminal past” with at least one conviction in the 1980s. In 2002, Sergei Pugachev reportedly benefited from an amnesty given by President Putin for the illegal export of capital, a day after Le Monde published an investigative report about his purchase of property worth 9 million euros on the Cote d’Azur. Once dubbed “Putin’s banker”, Pugachev has built up a reputation for discretion, power, nationalism and close links to the Russian Orthodox Church. He has been said to cultivate a resemblance to Tsar Alexander III. Today he is regarded as a reclusive figure, perhaps increasingly on the edge of Prime Minister Putin’s circle of siloviki (ex-security and military heavyweights). “In Soviet times, the secret services sent their agents to the West to bribe journalists. Today they prefer to buy papers to reflect the position of the Kremlin,” the political analyst Dmitry Ovechkin told the French financial newspaper Les Echos. None of which has moved the French public much. In any case, Alexander is now a French citizen. He has also emphasized that France Soir is his own, independent, personal investment, and one which he stands to lose on if the experiment fails.

Since the takeover, the passage has been a little rocky for the Pugachevs. Alexander has sacked the editor-in-chief of France Soir, Christian de Villeneuve, as well as the paper’s director general Christiane Vulvert. He reports losses of 2 million euros a month and plans a fresh tabloid format alongside a new website to be launched in January 2011. Meanwhile it has been reported that his father’s financial empire is collapsing. According to Le Figaro, Sergei Pugachev may have overestimated his political and financial influence, but perhaps above all misjudged the effect of promoting a strong public image (something Putin is said particularly to dislike). It may be that the more frequent presence of Pugachev père in France, and his extended absences from East Siberia’s Tuva Republic, which he represents in the Federation Council of Russia, are indications of difficulties at home, as much as profit hunting abroad.

And what of France Soir? Well-known journalists have been hired, many of them formerly associated with the popular daily Le Parisien, and staff numbers have been increased fivefold. More coverage of sport, celebrities and crime is on offer, enhanced by colourful graphics. A poster campaign in March advertised a new kind of populist tabloid with a mass market reach, and sales were up to 90,000 by August. Not quite the 150,000 originally predicted for the end of 2010, but still pretty creditable in the French context. Earlier, Alexander Pugachev had talked of aspiring to a French version of the conservative German tabloid Bild, with equivalent sensational stories and a print-run of over 3 million a day. “If we need to do a ‘trash’ paper to make money,” he reportedly told France Soir journalists, “I’ll do trash.” In a country with scarce advertising, a growing number of free dailies, an over-full market, just 30,000 news vendors – as opposed to 115,000 in Germany – and distribution tightly controlled by a single monopoly organisation Presstalis, could this ever work? Only three years ago Bild publishers Axel Springer withdrew from a similar project.

Pugachev also appears to have reviewed his original vision, admitting in August that Bild was not duplicable in France. Instead the brief given to newly-appointed editor Rémy Dessarts is greater originality, more scoops and better journalism from innovative, quirky angles. Pugachev admits an investment of 50 million euros and plans to add a further 20 million euros to cover losses and a new publicity campaign early in 2011. “We don’t limit ourselves to concrete figures,” he says. And the aim is no longer “trash” (if, indeed, ever it was) but a popular kind of seriousness, a strong investigative profile, exclusive reporting from correspondents in the field, and no smut.

Intriguingly, Bolloré Media, the publishers of free newspapers Direct Matin Plus and Direct Soir announced, in January 2010, that it, too, was planning to launch a paid, higher quality paper. So is there a new, more accessible gravitas waiting to find its way into the European press market? And (never mind the history) could the new Russian media magnates in western Europe be the catalysts for it?

Little talent, lots of money

“There are very few talented journalists,” the owner of the Evening Standard and the Independent, Alexander Lebedev, told an interviewer from the Russian top-selling daily Komsomolskaya pravda in June 2010. “They are akin to the greatest philosophers. I dream that all journalists should be like Mark Twain, Anton Chekhov, Arkady Averchenko [an early twentieth century Russian playwright and satirist], Hemingway and O. Henry […] I believe that real journalism is literature, philosophy, economics, morality, life values, the ability to change the world.”

Lebedev’s involvement in the media has been described by his friend Mikhail Gorbachev not as a business project but as a social “mission”. He likes to call himself a “capitalist idealist”, which may seem a little fanciful, and also begs the question whether he identifies, in traditionally Russian terms, with a thinking class that seeks social involvement and works for the development and dissemination of education and culture. So is he spearheading a new way forward for the “intelligentsia”, that publicly active intellectual elite whose perceived role in society was, historically, to bring literacy and enlightenment to the masses?

Lebedev, of course, is a different kind of socially-engaged intellectual. He has not only done the reading, been to the exhibitions, learned the languages and demonstrated public commitment. He is superbly rich. He wears sneakers. He hails from the elite foreign intelligence directorate of the KGB. He is a philanthropist. He has built a 12-storey cancer hospital in St Petersburg where sick children are treated for free and is currently building another. He is privileged. He is the owner of one of Russia’s leading private banks and has a stake in the energy giant Gazprom. Last year, he sold a 30 per cent share in Aeroflot in a deal worth 300 million euros shortly before buying the Independent in March 2010. But he is also, apparently, a media-friendly liberal who lobbies for international support for threatened and imprisoned journalists. Famously, he owns a 49 per cent share in Novaya gazeta, the crusading, pro-democracy paper for which the murdered Russian journalist Anna Politkovskaya once worked. He has offered $1 million (euros 753,574) reward for the capture of her killers.

“I lived in the USSR and very much loved my country,” Lebedev told Komsomolskaya pravda, “but I didn’t like the lying that surrounded us. I liked to tell political anecdotes, suffered for it more than once, and all the time dreamed that something would change. And it did change, but not in every way as I would have wished […] And, if you like, I go on offering education, enlightenment and advocacy.”

Lebedev’s high-mindedness has been exhibited through his media involvement and charitable work in Russia. But the question arises how appropriate it seems in a UK context. Would London commuters want to feel exposed to education, enlightenment and advocacy on the early morning Tube? Are they ever likely to be? Newspaper ownership does not mean editorial involvement and, boldly, the Independent front page now carries the claim “free from proprietorial influence” below the masthead. Other than a recent flurry surrounding a flattering article about the St Petersburg governor Valentina Matviyenko, which raised allegations (vehemently denied) that strings might have been pulled at a high level, there has been no indication of any interference or behind the scenes manipulation. And the fact is that, in 2009, the Standard would very likely have gone out of business without Lebedev. The Independent was also on the verge of bankruptcy when he bought it, having lost £12.4 million (euros 14.4 million) the previous year.

Since the Standard began to appear as a freebie (an audacious and innovative move for an established brand), the readership has risen from 250,000 to over 600,000. Competition has folded and there is talk of aiming at a circulation of 1 million. How things will go for the Independent is harder to predict. Its new, cheaper, trendy spinoff, i, is intended, according to Lebedev’s son Evgeny, who manages the London publishing operations for his father, “to attract lapsed and new readers to the quality market”. For the present, it is reported to have sales just around 95,000. Since 2008, £30 million (euros 35 million) has been ploughed into the two UK papers, and there has been no reported sign of profit yet. “If we leave things as they are at the Standard and the Independent we are definitely doomed in a few years time,” Lebedev told BusinessWeek in October 2010. “Every month I’m taking money out of my pocket and putting it into the papers.”

Changing images, going global

But if financial gain isn’t the motive what is? The aforesaid social mission? If so, what kind of mission is it exactly, and whose? Saving the UK newspaper industry? Preserving media diversity? Polishing the tarnished image of the home country? Exposing uncomfortable truths about the same? Or are the motives likely to be more banal and traditional: a family passport into western high society, amusement, vanity, influence, personal prestige, buying “respectability”, promoting business, an ego trip – perhaps not quite the sort old media magnates like Robert Maxwell once enjoyed, but still […] “Owning a paper gets you invited to all kinds of occasions,” George Brock comments. “For a man of his [Lebedev’s] wealth the investments he’s made in the newspapers are chump change for the political status that comes with owning two major UK dailies.”

There are other possibilities of course: concern about masked men with Kalashnikovs, for example. Lebedev’s National Reserve Bank in Moscow was raided and searched by armed police in balaclavas on 2 November 2010. A hotel he owned in the Crimea was also raided by tax police shortly afterwards. There may be anxiety about rival clans in the Kremlin and the treatment of fellow oligarchs: in December 2010, jailed former oil tycoon Mikhail Khodorkovsky was found guilty of embezzlement at a controversial second trial in Moscow. Any billionaire is a potential target for a range of conflicting forces in Russia – the question is whether influence abroad might offer any kind of protective shield?

And then there is the unfinished business, that niggling link with the old security services, publicly acknowledged and dismissed in the West but never quite forgotten. “I don’t know Mr Lebedev personally,” says the London-based writer and broadcaster Zinovy Zinik, “but my friends in Moscow, on whose sober political judgement I can rely, insist that he is a good guy who fights for freedom of speech in Putin’s Russia. And I don’t believe that any newspaper in Britain can solely sway public opinion in favour of the Kremlin’s politics. But what worries me is the fact that people like Lebedev or Putin come to power in Russia and gain influence outside the country without any questions asked or regrets expressed about their past association with the criminal organization responsible for the extermination of millions of their compatriots. The total lack of any process of de-Sovietization of Russia – along the lines of the de-Nazification of Germany after the war – has a demoralizing effect both in Russia and in the West.”

The unresolved burden of the past is not easily shaken off, despite the dramas and dangers of the present. Questions about identity, loyalty, self-perception and motivation do not go away. Lebedev’s extraordinary balancing act between the competing interests of opposition and loyalty to the Kremlin remains pitched against a backcloth of questions about the “rebranding” of Russia, and of the old KGB: no longer murderous but cultured, with an interest in Italian art; no more flamboyantly crude and ruthless, but politely urbane; not ideologically totalitarian, but open minded and liberal. “There is more to promoting us abroad than matryoshka dolls and balalaika music,” Lebedev says. In a globalized world, however, identities and loyalties necessarily develop a different profile. New agents of connection have an essential part to play in re-shaping organizational and media structures still framed by national borders, in offering different and wider perspectives, a broader range of loyalties and values, greater openness and a touchstone for international business ethics.

“For me the world media are a global phenomenon,” Lebedev told Komsomolskaya pravda.

When politicians are weak the media can decide critical issues. The problem of international corruption for example which I like to compare to apartheid […]. All this must be investigated. Who apart from the newspapers has the capacity to do this? Who will make business in the world transparent? The media should play a large part not just in the battle against corruption but in altering the standards of corporate accountability.

Could this be a call for a global network of independent media watchdogs, a combination of local and international titles, global perspectives and a new kind of journalism? According to the Polish daily Gazeta Wyborcza, Lebedev admits that in better times he’d have tried to transform one of the UK papers into an international publication, also appearing in the USA and France. In March 2010, following the completion of the deal with the Independent, he announced plans to establish the Novaya Independent Media Foundation (NIMF), a non-profit organisation to finance global media projects and build a globally-linked collective of campaigning newspapers starting with Novaya gazeta in Russia, the Independent and the Evening Standard in the UK, to protect freedom of speech, encourage investigative reporting and promote international transparency.

With his contacts and newfound influence in Europe, Lebedev is well up to the task. He would like to see both Tony Blair and Mikhail Gorbachev on the Evening Standard‘s advisory board. He has talked of seeking support from people like Bono, Gorbachev and the Clintons to raise $80 million (euros 60.3 million) to start the proposed international centre for investigative journalism. In Russia he has been openly critical of corrupt bureaucrats and projects, and of the police, yet seems to have managed to steer clear of offending the regime as a whole. Speaking to the Society of Editors in Glasgow, he referred to the recent raid on his Moscow bank as a “misunderstanding”.

Back home in the Russian capital, he is acknowledged as the tycoon intellectual with a social conscience and commitment to more than the après-ski gatherings of expat oligarchs in Courchevel. “Lebedev is trying to do something so the country will be better,” Yulia Latynina told the Observer. “But he knows that if he does anything to offend people in power there will be punishment.” In the meantime, though, in the noble tradition of the Russian thinking class, he is rescuing great British democratic institutions and promoting international journalism in the public interest, while hobnobbing with celebrities, socialites, politicians and intellectuals. You can’t say fairer than that.

Published 31 December 2010
Original in English
First published by Eurozine

© Irena Maryniak / Eurozine



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