Privatization of ‘Melodiya’ for a Mere Five Million US Dollars ‘a Blow to Russian Culture’

Paul Goble

            Staunton, February 29 – In an action that recalls the worst cases of insider dealing and privatization in the 1990s, a small company that has dealt mostly in elevator music in the past has been allowed to buy the Soviet-Russian music giant Melodiya studio, its archives and all its assets for the absurdly low price of five million US dollars.

            Formax almost certainly will value strip the company, selling off its assets for tens if not hundreds of millions of dollars and thus destroy one of the most important collections of recordings of Soviet and Russian musicians. As such, music historian Andrey Koryakovtsev says, it is “a blow to Russian culture.”

            “To assess the value of Melodiya in money is impossible,” the historian continues; it does not have a market price; and it is the property of society,” not of officials at the culture ministry or the Russian property administration.  But the way the sale was conducted – at an auction with only two bidders present, one of which deferred to the other – shows officials think otherwise. 

            Ruslan Gorevoy, a Versiya commentator, who cites Koryakovtsev’s observations, points out that last year, Melodiya marked its 55^th anniversary. During Soviet times, the recording monopolist created a unique archive.” Even small parts of it are worth millions (versia.ru/rosimushhestvo-prodalo-za-bescenok-nacionalnoe-dostoyanie-rossii).

            Why then was Formax able to purchase everything for only five million? And why did the second “bidder,” Soyuz, defer to it?  The answers he says arise from the fact that people in the culture ministry viewed the sale as a way for them to make money not only now but in the future. They arranged things because Formax alone was ready to play.

            That company, Vedomosti reports (vedomosti.ru/media/articles/2020/02/20/823569-gosudarstvo-melodiya), did not have the five milliion and so had to borrow to pay it. Obviously, those who expected to profit did not want the price to be so high that it would have had to borrow even more, despite the fact that they expect to make far more back. 

            Gorevoy details the background of Formax as well as the criminal charges that have been brought against the company and its owners in order to suggest that the priceless recordings of some of Russia’s greatest musicians that were made by Melodiya may now be lost to the highest foreign bidder.

            But those involved in this murky business, he suggests, don’t care about culture; they only care about cash.