From Leaps Of Faith To Escaping The Fog

Michael Hedges February 23, 2018 Follow on Twitter

Entering a transitional media market is always a leap of faith. Investors weigh opportunity with costs, always considering the learning curve. To thrive several conditions are helpful; from economic and political to social and cultural. When transition stagnates - or worse - the next leap is to the exits.

Bulgaria’s largest privately held television operation, Nova Broadcasting, is changing hands as Modern Times Group (MTG) exits another market. Czech investor Petr Kellner, through PPF Group, is acquiring MTG’s 95% stake in the company. PPF Group is also acquiring the 5% stake held by Eastern European Media Holdings, the Luxembourg company principally owned by Nova Broadcasting chief executive Didier Stoessel. MTG estimates the enterprise value of Nova Broadcasting at €185 million or SEK1.8 billion.

“This will bring to a close the disposal of our international entertainment operations and leaves MTG as a more focused group, which is in line with our previously stated strategy,” said MTG chief executive Jorgen Lindemann in a statement (February 19). He added that sale proceeds would go toward the company’s Nordic Entertainment and MTG Studios divisions. A week earlier (February 12) Danish telecom TDC withdrew its €1.955 billion bid for the aforementioned MTG assets because directors and shareholders found greater joy in selling TDC to a Macquarie-led consortium for €5.35 billion, all cash.

As a foreign-owned company, MTG was a relatively late arrival to the Bulgarian media market, acquiring Diema TV in 2007 in a joint venture with Apace Media, related to the aforementioned Eastern European Media Holdings. Greek broadcaster Antenna Group acquired Nova TV in 2000, selling to MTG in 2008 for €620 million, after which the Diema and Nova assets were combined and now include seven TV channels and 19 web portals.

Balkan News Corporation, subsidiary of News Corporation, acquired television broadcaster bTV in 2000, selling to Time Warner subsidiary Central European Media Enterprises (CME) in 2010. Several foreign-based companies held ownership of Bulgarian radio stations. With the acquisition of bTV Balkan News Corporation added five radio stations, which were transferred to CME. In 2004 Dublin-based Communicorp acquired radio assets in Bulgaria (plus Hungary, Estonia and Finland) from Metromedia International, which had acquired or launched stations in the 1990’s. Communicorp continues to hold the Bulgarian radio assets. US-based Emmis International, subsidiary of Emmis Communications, owned several Bulgarian stations, some acquired from GCap Media (now Global Radio). Emmis Communications chief executive Jeff Smulyan acquired the Bulgarian radio stations in a personal transaction in 2010.

When ProSiebenSat.1 Media acquired assets of SBS Broadcasting in 2007 several radio stations were involved, including one of the first privatized stations, Radio Vesselina. ProSiebenSat sold the radio assets in 2011 to Best Success Services Media, a company later acquired by colorful and controversial politician Delyan Peevski, owner of various media outlets as well as, allegedly, a major cigarette smuggling operation. He also controls, allegedly, much of the country’s newspaper distribution. His mother, Irena Krasteva, herself quite colorful, controls New Bulgarian Media Group.

WAZ Mediengruppe acquired several major Bulgarian newspapers - including Trud and 24 Hours - in 1996, exiting in 2010. Swedish publisher Bonnier acquired business newspaper Pari in 2010 and sold it to well-regarded Capital and Dnevnik publisher Economedia a year later. In December Bulgaria’s Commission for Confiscation Unlawfully Acquired Property (KONPI) froze assets of Ivo Prokopiev, principal owner Economedia, in a long simmering corruption charge unrelated to his media interests, widely considered retribution for unflattering reporting about the current Bulgarian gvernment.

Media ownership changes are not limited to foreign-owned media companies. Pavel and brother Rumen Vulney recently exited expat-oriented Bulgarian International Television (BiT), reported Dnevnik (February 8), selling to Interactive TV Systems Bulgaria, principally controlled by Miroslav Yanev. Shortly thereafter, programming changed radically; no shows, just live news. The BiT program director exited. Mr. Yanev was chief executive of MediaPro Entertainment, until 2015 a subsidiary of CME, owner of bTV.

Bulgarian politicians and people close to them have long been media active. In addition to the aforementioned Mr. Peevski, Deputy Prime Minister Valeri Simeonov started a cable TV company in the 1990’s, which now operates the nationally distributed SKAT TV. He was convicted by a Bulgarian court last October of hate speech against Roma people.

Bulgaria’s corruption perception and press freedom standings have fallen precipitously in the last decade. In the recently released Transparency International (TI) Corruption Perception Index (February 21) Bulgaria ranked 71st in the world, tied with South Africa. In a decade the perception of corruption ranking for Bulgaria, according to TI, has effectively remained unchanged. In the last three annual TI corruption perception indexes the country has placed worst among European Union member states, which Bulgaria joined in 2007. Bulgaria took the rotating European Council presidency in January.

The 2017 Reporters sans Frontieres (RSF) press freedom index placed Bulgaria 109th, down from 59th in 2008. “This is due to an environment dominated by corruption and collusion between media, politicians, and oligarchs,” said the RSF summary (April 2017). After Trud journalist Dilyana Gaytandzhieva wrote about weapons shipped from Bulgaria to Syria she was “interviewed” by security services about “leaks.” Then she was fired.

Economedia publisher Prokopiev and several other Bulgarian publishers and journalists met with European Newspaper Publishers Association (ENPA) representatives in Brussels last October to make their case that conditions for independent media outlets are terrible. On his return the asset seizure procedure moved forward.

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