bne IntelliNews -

German publisher Axel Springer is leaving the Russian market because of the new law limiting foreign media ownership to 20%.

The publisher of Forbes, OK!, and Nat Geo in Russia sold 100% of its business in the country to Alexander Fedotov, owner of the Artcom Media publishing L'Officiel and SNC style magazines, Axel Springer said in a statement on September 17. The amount of the deal is undisclosed.

"We regret that we are forced to leave the Russian market," the publisher's president Ralph Buchi said.

The law limiting foreign ownership in Russian media companies to 20%, passed in the midst of the worst cooling between Russia and the West since the Cold War, will come into force on January 1, 2016, and will allow companies owned by foreigners another year to change ownership structure.

Before the eruption of what some termed a "hybrid" media war, foreigners could own up to 50% in Russian television and radio, while there were no restrictions for print media and online editions.

The penalties for breaching the law include closing down of the media outlet, while foreigners, as well as people with dual citizenship, will be banned from establishing new media outlets in Russia.

On September 9, the head of Swiss publisher Edipresse, Maxim Zimin, told the Moscow Times the company did not see a 20% stake as being worth maintaining a presence in the market. The publisher of lifestyle and family magazines sold 100% of its business to Zimin for an unspecified amount.

Some media groups are trying to bypass the regulation by means of restructuring: Discovery Communications has set up a joint venture with its Russian partner in the local media holding, National Media Group, receiving an 80% stake.

One of Russia's largest private media and entertainment holdings CTC Media, with a 75% stake held by foreign companies, is reportedly negotiating the sale of its assets to Russian TV holding UTV.

Other publishers that are affected include Sanoma Independent Media, Conde Nast, Hearst Shkulev Media, and Hubert Burda Media.