THE BELL WEEKLY: Prigozhin’s Patriot Media Group closes up shop

The Bell

Hello! This week, our main story is about the end of Yevgeny Prigozhin’s media empire. We also look into Bacardi’s ongoing business presence in Russia despite the company’s promise to halt all exports to Russia and freeze investments and advertising. Finally, we talk with political scientist Grigory Golosov about the political implications of Wagner’s failed mutiny.

Prigozhin abandons media empire following failed mutiny

Wagner Group founder Yevgeny Prigozhin faces disgrace after his failed mutiny on June 23-24. As a result, he is rushing to dispose of his assets, including the Patriot media group — which encompasses the Internet Research Agency, widely known as a "troll factory.”

Hunt for trolls

Prigozhin owns multiple news outlets under Patriot’s umbrella, the largest of which is the RIA Federal News Agency (FAN). But following Prigozhin's mutiny, all of the publications associated with Patriot were blocked in Russia.

Employees at Prigozhin’s troll factory were hired to spread pro-government comments on social media. They also attempted to influence elections in the West by supporting candidates deemed favorable to Russia. For example, during the 2016 U.S. presidential election, Prigozhin’s trolls used Facebook to organize rallies in the U.S. and promoted "urgent social issues" on Twitter — interference that initially led to Prigozhin being sanctioned by the U.S. in 2018.

After Wagner fighters captured the city of Rostov-on-Don in southern Russia on June 24, most of Prigozhin's "trolls" and journalists failed to show up for work, according to a source from the Patriot holding who spoke to The Bell. The business center in St. Petersburg — where Prigozhin's media outlets and troll factory are located — was searched by law enforcement. The source said: "They broke down a door but didn't turn everything upside down. If we can retrieve the servers, we can resume work immediately."

At the time of Prigozhin's revolt, his media activities were overseen by Ilya Gorbunov. Prior to assuming this role, Gorbynov worked for other Russian propaganda outlets. "Nobody knows where he is now," a source at FAN told The Bell.

"If I can't have you, nobody can."

Gorbunov was supposedly in discussions with potential new owners of Patriot. Sources said the National Media Group — owned by Yury Kovalchuk — was a potential buyer. However, it appears that the deal won't go through. On June 30, the heads of departments at Patriot and Prigozhin's troll factories instructed staff to submit resignation letters as the media's operations were coming to an end, according to two sources at Patriot.

Employees who spoke to The Bell claimed that "Prigozhin himself" announced the termination of work at Patriot during a meeting in St. Petersburg. Editors were instructed to "eliminate everything," erasing "all traces of an online presence.” When asked about the meeting, one source said: "It was the same as usual — he berated everyone and said he didn't f*cking need any of us."

"If I can't have you, nobody can,” was how another source — who headed one of Patriot’s outlets — described Prigozhin's position during the meeting.

Why the world should care

It’s clear that Prigozhin can no longer pursue any business interests in Russia. This was confirmed when the Russian Defense Ministry terminated a food supply contract with Prigozhin's main company Concord. According to Russian propagandists, Prigozhin's companies had earned 2 trillion rubles ($23 billion) from state contracts.

Bacardi breaks its promise to end trade with Russia, sees profits triple

Following Russia's invasion of Ukraine in 2022, alcohol manufacturer Bacardi International announced that it would stop exporting its alcoholic beverages to Russia and freeze investment and promotion programs. However, over the past year, Bacardi's Russian subsidiary has experienced a threefold increase in profits.

  • In March of last year, Bacardi International issued a statement on its website condemning Russia's attack on Ukraine. The company pledged to donate $1 million to the Red Cross and Mercy Corps, as well as halt all exports to Russia and freeze investments and advertising. However, the pledge to stop sales and marketing disappeared from the statement shortly after it garnered international media attention.
  • Instead, Bacardi's Russian subsidiary, Bacardi Rus, has thrived financially over the past year. The company's revenue rose from $338 million to $367 million, and net profits nearly tripled to almost $53 million.
  • Bacardi continues to export its products to Russia through its subsidiary. Furthermore, Bacardi Rus has registered 37 new products in Russia since the invasion — these products have already cleared customs and are available in Russia.
  • In addition to its own brands, Bacardi profits in Russia through a contract for bottling William Lawson's whisky. The company reached an agreement with Beluga Group in 2016 to bottle Scotch whisky at Beluga's plant.
  • Despite the announcement to halt marketing and advertising in Russia, Bacardi Rus spent $75 million on commercial expenses last year, only slightly down from 2021. The company continues to invest in marketing in both drinking venues and retail settings, according to trade reports.

Why the world should care

Bacardi is not the only international alcohol company that continues to maintain trade with Russia. France's Pernod Ricard also ships its products to Russia and invests in advertising. The companies’ actions raise questions about the extent of Russia's isolation from the global consumer market.

“Prigozhin’s political ambitions were obvious – and he had to be eliminated.” Political scientist Grigory Golosov talks about Wagner’s mutiny and its consequences

Prigozhin’s mutiny has left many unanswered questions, leading The Bell to consult Russian political scientist Grigory Golosov for insight into its political implications.

  • Contrary to what many Western commentators say, Golosov argues that Wagner’s mutiny is not a "crushing blow" for Putin. Instead, Golosov suggests that Putin resolved a longstanding issue concerning Prigozhin. As head of the Wagner Group, Prigozhin had political aspirations and developed a populist political narrative — he claimed that the ruling class was ineffective, corrupt, and unconcerned about the people and the Russian state. Although Prigozhin was unlikely to run in next year’s presidential election, he had earned a reputation as an effective military leader and a political figure.
  • Golosov does not believe the mutiny was an attempted military coup. Prigozhin stated that he aimed to force change in the Russian Defense Ministry, which would have significantly increased his influence on the military establishment and Putin. While Putin may recognize the failings of defense minister Sergei Shoigu and general Valery Gerasimov, he values their loyalty. Golosov says that the mutiny could be considered a "split in the elite" only in a broad sense, as Prigozhin stood apart from the majority of Russia's ruling class.
  • According to Golosov, the mutiny will not hinder Putin's ability to rebuild his image in Russia. Only a small, politically motivated segment of Russian society criticizes the country’s political leadership, so there is little change in public opinion. Meanwhile, Golosov disagrees with the notion that it was humiliating for Putin to seek help from Lukashenko. He asserts that Putin views Lukashenko as a junior partner and sees it as normal within Russian business and political logic for the junior partner to assist the senior in resolving problems.
  • Prigozhin could not be dealt with earlier due to Wagner Group's significant role on the frontline in Ukraine. The outfit’s mercenaries played a decisive role in capturing Bakhmut, for example. However, Golosov believes that revenge may be taken against Prigozhin, as Putin famously "cannot forgive betrayal."

Why the world should care

Russian propaganda attempts to portray Prigozhin as a traitor who serves the interests of "Russia's enemies." However, it appears that initially, the mutiny played into Putin's hands, allowing him to rid himself of a political problem that had plagued him since the invasion of Ukraine.


Support The Bell!

The Bell's Newsletter

An inside look at the Russian economy and politics. Exclusively in your inbox every week.