Russia anti-trust body rejects Disney venture
By Simon Shuster and Gina Keating
MOSCOW/LOS ANGELES, Feb 20 (Reuters) - Russia's anti-monopoly agency on Friday blocked Walt Disney Co's local television venture, derailing the media giant's plan to create a free, Disney-branded channel to expand in the high-growth market.
The agency, which also blocked Google Inc's bid for a Russian company in October, said it refused to allow the venture after receiving 'false' or inaccurate information from the companies applying to create Mo-Tv Holdings Ltd.
Disney said in December it was partnering with broadcaster Media-One Holdings Ltd to launch a nationwide, free TV channel to carry locally created and Disney content in 2009.
A spokeswoman at Disney's headquarters in Burbank, California had no comment on the government's statement.
The ruling is a setback to Disney's aggressive efforts since Chief Executive Robert Iger took over in 2005 to move into the Russian and Eastern European markets, which had been expected to buck the global economic downturn and offset slower growth in the company's more established markets.
Disney had been counting on the TV channel to raise brand awareness and support the local retail, theatrical distribution, licensing, mobile and Internet businesses it already operates in Russia -- a strategy it has employed with some success in China and India.
The venture would have given Disney access to roughly 100 million Russian viewers, who it said were already familiar with its stories and products.
Disney shares closed down about 1 percent at $17.53 on Friday on the New York Stock Exchange.
Under Russia's strict laws governing the airwaves, foreign investors must have a local partner, and Media-One was to hold a 51 percent stake in the nationwide venture.
The anti-monopoly agency's strongly worded statement on Friday did not mention the possibility of an appeal. Its press department was not available late on Friday to elaborate.
'The documents, presented to the Federal Anti-Monopoly Service of Russia, included false information,' the agency said in explanation of the move.
'The anti-monopoly body takes the decision to refuse applications if the relevant information they contain turns out to be false,' the agency said in a statement.
The agency has been stepping up its presence over recent months as part of a plan to build the service into one of the government's most powerful agencies.
Russia's anti-monopoly service has been under the spotlight since Vladimir Putin, Russia's Prime Minister, demanded the anti-trust service become more active.
Disney operates 30 Disney Channels worldwide, mainly on cable and other forms of pay TV, and sees them as crucial to familiarizing international consumers with its theme parks, movies and consumer products.
The company faces regulatory, language and infrastructure hurdles to rapid expansion in China and India, but had considered Russia a desirable market because those issues were viewed as less of a barrier to growth.
Disney had pledged to provide the Russian channel with an undisclosed investment in cash and programming, as well as marketing expertise.
Media-One brought 30 owned and operated TV stations and a knowledge of the Russian regulatory environment to the table.
(Editing by Edwin Chan, Bernard Orr) Keywords: DISNEY RUSSIA/
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