The Entrepreneur

Reported by Reese Erlich, Producer, the Russia Project

WALTER CRONKITE: While Russia's wild west capitalism slammed Anna Berkut to the ground, others have prospered. When producer Reese Erlich first met Yuri Kostin (coas'-tin) in 1990, Yuri was a young employee at Radio Moscow. This is Yuri's story: from radio reporter to FM millionaire.

YURI KOSTIN: My name is Yuri Kostin. I am the Editor-in-Chief and the President of the Rock Radio 101 and Russian Songs Channel.

This is one of the oldest radio buildings in Russia. It used to be called Radio Moscow. So, you see the door?

REESE ERLICH: (Chuckles) It's really... it looks like a meat locker. That's what it reminds me of.

KOSTIN: Yeah, it looks like some military installation.

[Door slams shut]

This is also a very historic place because we broadcasted from here during the coup attempt of 1993.

ERLICH: In 1993 President Boris Yeltsin was fighting for power with the Russian parliament, and he eventually ordered the shelling of the parliament building. Before that, opposition parliamentarians were on the offensive. Backed by some in the security forces, Yeltsin's opponents stopped most TV and radio broadcasts. Yuri Kostin's Radio 101, because its transmitter was away from the others, was one of the two stations that stayed on the air.

KOSTIN: It was a Sunday night and I was having a party with my friends and suddenly we heard the reports that the mayor's office had been seized by the opposition. There were casualties, et cetera, et cetera—it sounded like a real nightmare. And I had a choice—it was one of the hardest choices in my life. I had the choice to go and spend that day with my people who were working in the studio, several reporters, or should I stay here in a safe place in the suburban district of Moscow. And I decided to go and I was very scared because I heard reports of the snipers.

[Sounds of gunshots]

We were here at night in the studio broadcasting news—very little music—just news about what was going on in Russia. The militiaman came up to us and said, "we will not be able to defend you if they come over, so if you need, you can take the guns downstairs."

ERLICH: Was the station attacked?

KOSTIN: No, some elite troops were sent.

[Ukrainian singers]

ERLICH: I first met Yuri Kostin in 1990 when he was a twenty-five-year-old journalist at Radio Moscow. He met our group of traveling American public radio reporters in Kiev. In October of that year, students had occupied the city's central square to hold a hunger strike demanding Ukrainian independence.

[Ukrainian singers]

KOSTIN: I didn't understand why they needed independence. I felt that the empire would never collapse. At least it should last for 500 years, like the Rome Empire or something like that.

[Rally chants in Ukrainian]

We didn't want changes. We had a lot of things, which were good, of high standards, like medical care.

ERLICH: Yuri says contrary to was some Americans may think, the impetus to get rid of socialism and establish free markets came from the upper echelons of the old Soviet elite.

KOSTIN: It came from the top—it didn't come from the bottom—from the people. That's why many people didn't understand why they need this freedom. And, I was not an exception.

ERLICH: But Yuri quickly caught on. He typifies the young entrepreneurs who took advantage of the crumbling Soviet system to build a business empire. He quit his job at Radio Moscow and got a license to start one of the country's first rock radio stations.

[Russian rock music, Russian "2000" CD]

KOSTIN: It was all new. We didn't know how—we were blind like kittens.

ERLICH: Did it cost you anything to get their permission?

KOSTIN: Yes, something like $300, you know; now it's $300,000. And so, on the 16th of January 1992, we launched the radio station, having 16 CDs in our library, and really bright and nice, talented young DJ's and reporters.

[DJ at Radio 101]

ERLICH: Radio 101 experimented with a variety of formats. It eventually cut back on news to focus on adult contemporary music, closely following an American AM radio model.

KOSTIN: Yeah, the station was continuing to grow. There was a lot easy money earning in this country and the people were earning easy money like the investment funds, they were paying a lot of money for advertising and by 1993, we had 8 FM radio stations and a lot of AM stations, just in Moscow.

ERLICH: Yuri and his fellow owners worked hard and built Radio 101 into the top rock station in Moscow. But they weren't alone. Other stations, backed by former Soviet functionaries and international business people, provided stiff competition. They were forming large media conglomerates. There was little room for independents like Kostin. Yuri also made his share of mistakes.

KOSTIN: We were so hungry for new life, so we just spent a lot of money on ourselves. And that was a big mistake. But you can't avoid it. After being in a cage for so many years, now we have all those opportunities. We spent a lot of money on traveling all around the world and to nightclubs. We should have thought better. (laughs)

ERLICH: Yuri was planning to sell Radio 101 for big bucks in 1998, but that year's Russian financial crisis sank the deal. He sold the station for much less and set up radio Internet 101.

[Enter studio, music]

ERLICH: So, this is what's on the air now?

KOSTIN: Yes, it's Mike and the Mechanics.

ERLICH: In Russia, as in the US, Internet radio is still in its infancy. Many fewer people listen to the Internet and advertisers are reluctant to spend money. Yuri says he might get out of the Internet radio business, if he can.

[Synthecized music]

So, while Yuri is not the multi millionaire he was in the mid 1990s, he still has a nice home in Moscow and a chauffeur-driven Volvo. He says capitalism has been good for young people in Russia because it offers freedom of choice. But he feels sorry for the older Russians who have been unable to adapt.

KOSTIN: When I see old people in the streets, who doesn't have money to buy a piece of bread, those people who were fighting during the war, our grandmothers and grandfathers, I feel so ashamed that I can't stand this. And I don't understand why there are still people who are begging in the streets. There should be a government policy to stop this. And they've been talking about it since 1991. They didn't do anything.

ERLICH: Yuri blames the politicians for failing to alleviate poverty and curb the excesses of Russian-style capitalism. But what does he think about the big businessmen who back the politicians?

KOSTIN: They're not criminals. What they did would have been done in the same circumstances by Rockefeller, for example, or Morgan. Because this is natural—if you have a pie and it goes directly into your mouth, you bite, this is business.

ERLICH: For the Russia Project, I'm Reese Erlich, Moscow.

© 2001 by The Stanley Foundation
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