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CTC Media Inc. (CTCM), which runs Russias sixth-biggest television station, fell in New York yesterday on concern the government will limit foreign ownership in media companies.

CTC, whose largest shareholder is Stockholm-based Modern Times Group AB (MTGB), dropped 3.1 percent to $9.20, the biggest retreat in four weeks, as Russian legislators began work on a law aimed at capping foreigners stakes in print, radio and TV media. CTC, the countrys only publicly-traded TV broadcaster, has lost 34 percent this year on the Nasdaq Stock Market, compared with an 18 percent drop in the Bloomberg index of the most-traded Russian stocks in the U.S.

The legislation seeks to cap foreign media ownership at 20 percent, from the current 50 percent, forcing international shareholders to lower their stakes by early 2017 or shut down their companies. The move forms part of a series of measures that President Vladimir Putins government has taken since the U.S. and Europe began imposing sanctions on Russia for its involvement in the Ukraine conflict. Other steps have included the barring of some imports, tighter control over the Internet and an appeal to the nations companies to delist shares from overseas bourses.

This draft law confirms yet again that the country is on a path to isolating itself, Kirill Yankovsky, director of equity sales at Otkritie Capital, said by phone from London yesterday. It wants to reduce foreign investors role and influence and is now focusing on the media sector. Some investors are asking now whether Internet companies, the markets darlings, are at risk of becoming the next target.

The average 12-month price estimate on CTCs stock plunged to $10.84 on Aug. 20, the lowest level since 2009, data compiled by Bloomberg show. Shares surged 79 percent last year.

CTC, which gets more than 96 percent of its revenue from ad sales, will post its first annual sales decline since at least 2010, according to the mean of 11 analyst estimates compiled by Bloomberg, as economic growth in the country slows. The companys billionaire shareholder Yury Kovalchuk was included on a U.S. sanctions list on March 20.

We are analyzing this draft law and monitoring its progress carefully, Yuliana Slashcheva, who took over CTC Media as Moscow-based chief executive officer in August last year, wrote in an e-mail yesterday. Given the early stage in the legislative process, we are not commenting on the potential timelines or outcomes.

Russias TV ad market grew 4 percent in January through June to about 79 billion rubles ($2.1 billion), according to data from the Association of Communication Agencies of Russia. The TV ad market expanded 9 percent in 2012 and 2013, the data show.

Gross domestic product will grow 0.5 percent this year, the slowest since a 2009 contraction, the Economy Ministry predicts, while the average of 38 economist forecasts compiled by Bloomberg indicates an expansion of just 0.25 percent.

Since June, the ruble has been the worlds worst-performing currency, driving up the price of imports and helping push annual inflation to 7.6 percent last month. A weaker ruble cuts CTC Medias dollar-denominated revenue, while higher inflation saps purchasing power.

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CTC Media Slumps on Plan to Cap Foreign Media Ownership