The Russian broadcaster handling this year’s Russian participation, Channel One, has released a statement earlier today concerning their stance on the matter.
The Ukrainian Security Service has banned the artist Channel One has chosen, Julia Samoylova, from entering Ukraine because she has entered Crimea without doing so via Ukraine, which is considered illegal access by the Ukrainian government.
Channel One have released a statement, of which the translation below:

The First Channel has received a letter from the European Broadcasting Union with the message that the EBU could not resolve the question of participation in Eurovision 2017 for the participant from Russia, Yulia Samoylova. This EBU report makes reference to the decision of the Ukrainian Security Services.

The First Channel finds the Ukrainian refusal completely unreasonable. The reason for it, of course, is Ukraine’s attempt to politicize the contest, whose goal throughout its 62-year history has been to unite people.

The European Broadcasting Union still offers the option of remote participation from Yulia Samoylova or her replacement with another participant. But First Channel has said both options are unacceptable.

A remote performance discriminates against the Russian participant and is contrary to the rules and principles of competition. Yulia Samoylova’s replacement with another artist, in our opinion, cannot even be considered.

In this situation, the First Channel does not consider it possible to broadcast the Eurovision Song Contest 2017.

Technically, the other Russian EBU broadcaster, Russia 1, could take over the broadcasting duties, but that seems unlikely as they sided with Channel One on the matter.

No Russian broadcaster broadcasting the show in Russia would mean that Russia won’t be participating in Kyiv this year either, as broadcasting the show is a requirement to participate.