Exits and Strategies

Michael Hedges December 18, 2008

Big media is moving on. It’s the one constant even in times of turmoil. Broadcasters change, renew, adapt, fall flat, try again, win some, lose some. Executives take this change in stride. Recent corner office changes at big league broadcasters show just how much change is in the air.

Departing ProSiebenSat.1 CEO Guillaume de Posch will be taking on a part-time job with the Greek media giant Antenna Group (ANT1 TV). His mission is acquisitions. “Greece is new terrain for me,” he said to Handelsblatt (December 16). de Posch had announced his resignation from ProSiebenSat.1 during the summer.

That announcement was made a week after ProSiebenSat.1 named ex-Novartis executive Thomas Ebeling as de Posch’ successor. Ebeling’s appointment raised a few eyebrows because he is not a TV guy. Rumors have been rife over de Posch’ successor, several big time media guys named by the mill including former Bertelsmann executive Thomas Middelhoff and Modern Times Group (MTG) CEO Hans-Holger Albrecht. The mill also says all turned down the job. In the end, the head-hunters did what they do: please the board.

“We have enough TV managers at ProSiebenSat.1,” said Board Chairman Götz Mäuser to FAZ (December 9). Mr. Ebeling, who starts the job in March, will bring “an infusion of know-how and energy,” said Mr. Mäuser. These are wonderful qualities as ProSiebenSat.1 has lost 90% of its value this year and is “groaning,” says Handelsblatt, with over €1 billion debt to private equity masters KKR and Permira. Mr. Mäuser is the Permira representative on the ProSiebenSat.1 board. Private equity firms live for one moment: exit.

“I do not need a creative break,” said de Posch. Rather than conjuring up a new television program form, the reference here is to creative deal making. During the last five years de Posch worked the magic that created the even larger ProSiebenSat.1, adding the SBS Broadcasting stations in 7 countries and creatively getting more than €3 billion from KKR and Permira investors. Mr. de Posch also told interviewers he is hot to get out of Münich and back to Brussels. “I like companies with a clear growth path,” he added.

ANT1 TV Chairman Minos Kyriakou talked of expanding when he collected a cool €620 million from the sale of Bulgarian television station Nova Televisia to MTG in August. Naval gazing UK media wags seized on this when reporting de Posch’ new job in acquisitions for the Greek company as evidence that another bidder for suffering UK television had been found. The ANT1 TV chairman talked about expansion in Greece and the Balkans where growth for television is detectable.

Mr. Mäuser of Permira and ProSiebenSat.1 dismissed an interviewers suggestion that spin-offs or cashing-out might be on the agenda. The radio stations from the SBS Broadcasting portfolio have been rumored for sale at the right price. A figure of €1 billion was tossed around once or twice, but that was long before financial markets decided ‘tis the season to be holding on to their cash. Even Team Murdoch – News International – withdrew their eastern European television stations from the auction block when the minimum bids were beneath their minimum.

CME (Central European Media Enterprises) CEO Michael Garin has – almost – taken his final bow, retiring from January.  Though he’ll remain attached to CME as its Vice Chairman, Chief Operating Officer Adrian Sarbu has been elevated to company president. Garin led CME through expansive times with strategic acquisitions, interesting partnerships and impressive growth. Two years ago he signed a four year contract. Things change, sometimes quickly.

Mr. Sarbu arrived to CME as a partner in the Romanian acquisition. CME Chairman and principal owner Ronald Lauder has often referred to a strategy of making the company’s management reflective of its markets. Sarbu started his media career as a filmmaker. He’s known as a shrewd operator, in every respect.

CME’s expansion has – in all likelihood – taken a pause if not a halt. Digesting the challenging Ukraine market is a work in progress. At the same time CME operates market leaders in the Czech Republic, Croatia, Slovenia, Slovakia and Romania.

Mr. Sarbu was not – yet – named CME’s CEO. That title is on hold. Mr. Lauder is 64 years old and has wide ranging investment and political interests. Two years ago he sold equity in CME to private equity Apax Partners. At the time media wags suggested both Lauder and Apax would wait to exit until Garin retired. Private equity firms are not fond of being operators, particularly in the media sector.

Many financial analysts are on record saying 2009 will not be a big year for mergers and acquisition in the media sector. But, as the economists say, money never stops moving…even when you can’t see it. Several big broadcasters – ANT1 TV being one, RTL being another – see expansion through acquisition as necessary. Mr. de Posch will have competition for deals and many opportunities.