Back in early 2020, Netflix was deciding whether to go all-in on Russia. At the time, the streamer offered only a very limited product in the territory. But a proposed deal with the country’s National Media Group, the Kremlin-friendly media association, would potentially supercharge its effort, allowing for popular regional shows, payment options in rubles, and Russian subtitles.
Given its goal of becoming a truly global service, the Russia push made strategic business sense, despite the radioactive politics associated with the move. But three Netflix sources tell me that the NMG aspect of the move was very controversial internally, and was hotly debated. Several top executives, including Cindy Holland, then the company’s V.P. of original content, sounded alarm bells in multiple meetings about NMG’s especially close ties to Vladimir Putin. The topic was discussed generally among executives, including at V.P. level get-togethers, which included co-C.E.O.s Reed Hastings and Ted Sarandos.
Ultimately, Hastings and Sarandos decided to do the deal anyway. It was announced in September 2020, and Netflix has since generated less than 1 million members in Russia. So today, when the company announced that “we have decided to suspend our service in Russia” due to Putin’s invasion of Ukraine–on the heels of refusing to comply with a local propaganda law and pausing Russia-based productions–there was a bit of a told-you-so feeling coursing through some people internally. (Netflix declined to comment beyond its statement, and Holland, who left the company in September 2020, didn’t respond to a request for comment.)
Most major companies do business in Russia, of course—or did, until this week, when, one by one, global brands like Apple, Boeing, Ford and all of the Hollywood studios pulled their products and canceled joint ventures. For some at Netflix, the retreat was a long time coming. Foreign media companies must partner with a local outlet to comply with Russian law, and it’s hard to operate in that country without enduring some connection to Putin. Other U.S. media outlets, including Discovery, have run channels with NMG, which operates tons of media assets in Russia.
But NMG isn’t just any Russian company. Its founder, the oligarch Yuri Kovalchuk, is particularly close to Putin, who has publicly called Kovalchuk a personal friend. He’s been described as “Putin’s banker,” “Putin’s pal,” and even the second most powerful man in Russia. “He has never held any government position, but he’s obviously one of the most influential personalities in Russia and he is ideologically very close to Putin,” the journalist Mikhail Zygar, who wrote All the Kremlin’s Men, recently told Sky News.
Then there’s Alina Kabaeva, the former Olympic gymnast and “Russia’s most flexible woman,” who is said to be Putin’s longtime girlfriend. Kabaeva was appointed as chairman of NMG in 2014, and has been paid more than $10 million a year for her services, according to the Times of London. “Although Ms Kabaeva, who is often referred to as Russia’s ‘secret first lady,’ had previously hosted a television chat show entitled Steps to Success, she was not known to have had any experience in media management when she was appointed to the post,” the Times wrote in 2020. Just this weekend, Page Six reported that Kabaeva was living in Switzerland with four of Putin’s children.
The Putin links to NMG were all well known by Netflix executives, I’m told. But, hey, it’s Russia: the options are limited, and the deal is said to have been structured to avoid deep entanglements. Netflix provided the content and technology, but there was no local office or staff, and it wasn’t an official joint venture, whatever that means. The arrangement enabled Netflix to avoid some of the country’s censorship laws; content like the Oscar-nominated Ukrainian documentary Winter on Fire and LGBTQ-centric shows remained on the service there. It’s also how Netflix could avoid complying with a new regulation that required carriage of state-run broadcasters. But that’s all moot now, as Putin proved too hot for even Netflix to handle.
