November 29, 2023

DealBook: News. Corp Sells Russian Unit

MOSCOW – News Corporation, Rupert Murdoch’s media conglomerate embroiled in scandal, sold its billboard company in Russia to a consortium of investors led by a Kremlin-controlled bank, the bank announced on Friday.

The sale of News Outdoor Russia had been under negotiation for at least months. The timing was apparently unrelated to the turmoil around News Corp. in the United Kingdom, where Parliament is investigating a tabloid newspaper’s practice of hacking into cell phones to obtain information.

Still, the Russian asset had a troubled history of its own. News Corp. opened the company here in 1999 while maneuvering to gain a foothold in the former Soviet and Eastern European markets to compliment its media holdings in China.

While News Outdoor Group, which is based in Moscow, operates in the Czech Republic, Romania and Ukraine, Russia has been by far its most lucrative market. News Outdoor Russia billboards are frequently provided for pictures of Vladimir V. Putin, the former president and now prime minister, reportedly on a pro bono basis at times.

Despite these gestures that were reported in the Russian media, News Corp. had been in discussions to sell the billboard company since the fall of 2008 amid a general worsening of the investment climate in Russia at the time, and apparent inability to win backing from the government.

In a 2008 interview with the Financial Times, Mr. Murdoch expressed concern the billboard company would be “stolen.” He added that “better we sell it now.”

Mr. Murdoch had initially proposed to sell the Russia asset for $1.6 billion. But as regulators pressed a tax claim and the recession deepened, the price dropped.

The company this week sold its 79 percent stake for $270 million, according to Kommersant, a Russian business newspaper. The Russian bank that organized the buyout consortium, VTB, did not disclose its price in a statement confirming the deal issued on Friday.

News Outdoor Russia is the country’s largest outdoor advertising operator with boards, banners and other advertising surfaces in more than 90 cities, according to the company’s Web site.

The Russian asset has been important to News Corp. Advertising revenues are mostly flat in developed markets like the United States, where the company operates the Fox television channel. But revenues are growing in emerging markets. In China, News Corporation operates a satellite television company. In the former Soviet Union, the focus had been largely billboards managed through the Moscow-headquartered company.

In 2008, News Outdoor Russia came under pressure, culminating in a back tax claim that was resolved two years later. Still, that year the company provided pro bono a large banner showing Mr. Putin’s face on a central Moscow building near Red Square, the RBK business newspaper reported.

Company-owned space in St. Petersburg this month carried advertisements for the People’s Front, a new political group established by Mr. Putin ahead of Parliamentary elections later this year.

Jason E. Senior, chief operating officer of News Outdoor Group, wrote in an email that the company would not respond to inquiries about the report of pro bono advertising provided to Mr. Putin in 2008 or the current advertising for the People’s Front organization on News Outdoor surfaces in St. Petersburg. He also declined to respond to questions about the sale.

Article source:

Speak Your Mind