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ProKom’s Ryszard Krauze Spins Radio Assets…to HimselfFurther consolidating and restructuring his varied businesses, Polish millionaire Ryszard Krause moved Mediabank SA, owner of radio station PiN 102 FM, from Softbank SA – of which he is CEO – to Prokom Investments – of which he is CEO. Finishing that in late April, Krauze then moved to the bigger plan: merging Softbank with Asseco and creating Poland’s biggest IT company.
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Rumors abound of serious interest in Poland by the biggest European radio broadcasters. The problem, as they always say, is that the prices for stations are too high. Poland media rules allow cross-media ownership and pose only light restrictions on foreign ownership.
Ryszard Krauze clearly sees something attractive about media. In addition to PiN 102 FM, ProKom is a significant investor in Radio Plus and TV Puls. Radio Plus is a group of 11 local stations owned by regional Catholic Church Archdioceses. TV Puls is also owned by the Catholic Church, with minority investment from PolSat owner Zygmunt Solorz. The likelihood of Mr Krauze fattening up a radio and TV group for sale in the short or medium term does not fit his pattern.
Political Poland has shifted to the right, an alignment very comfortable to Mr Krauze. Conservative Poland is highly influenced by the Catholic Church, which he supports generously. Indeed it was Ryszard Krauze who bought the family home of the late Pope John Paul II and donated it to the Church.
Ideological media groups – particularly those with strong financial backing – are rarely sellers. Financial investors – particularly those from outside Poland – will just have to wait…and watch the prices go up and up.
Flush was cash from successful fund-raising and looking for media deals, Axel Springer CEO Matthias Doepfner went to Poland to buy into TV operator Polsat. Axel Springer would pay €250 million for 25.1%, more if the company performed well. Normal regulatory approvals would be sought.
But the Polish Office for Competition and Consumer Protection (UOKiK) suspended the approval process because, it says, the deal would grant Axel Springer too much control. Terms of the deal grant Axel Springer a board seat and all board decisions would require approval of the Axel Springer board member.
“This is not a general rejection of the transaction,” a UOKiK spokesperson told the German newspaper Handelsblatt. Indeed, it is not. UOKiK asked Axel Springer to resubmit its documents. A new Polish anti-monopoly law just took effect a day before UOKiK suspended its review of the Axel Springer / Polsat deal.
Mr Doepfner has likely had his fill of competition authorities. His plan to buy ProSiebenSat1 was scuppered by German authorities. That left the company fat with cash for investment no place to spend it inside Germany. (see saga of Axel Springer's dead ProSiebenSat1 deal)
Control issues always arise in cross-border media deals, except where laws have been sufficiently liberalized. Most countries have strict limits on foreign shareholders, typically relegating them to minority positions with little or no strategic impact. This, of course, keeps media in local – and controllable – hands. The UK and Australia have significantly relaxed ownership rules in recent months. The Czech Republic places few restrictions of foreign ownership.
For those with money – not to forget skill – investment without some level of influence is just silly. One well-regarded media CEO summed up reality quite nicely: “I don’t know if they’re good or if they’re bad. And I don’t have time to figure it out.”
An Axel Springer spokesperson said the company would “overcome” UOKiK’s objections.
Zygmunt Solorz-Zak, principal owner of Polsat Telewizja, finds himself in that enviable position of having people with lots of money calling everyday with offers. He has roughly valued Poland’s third most popular TV network at €1 billion.
Most recently Axel Springer made public its negotiation for 25% of Polsat for about €250 million. And it might pay more if Polsat’s profits continue to rise.
RTL backed out of recent negotiations because Mr. Solorz-Zak was not interested in sharing operational control, according to a DPA account. Speaking to shareholders two weeks ago (November 14) Mr. Murdoch casually hinted at interest in the Polish television business.
Polsat owns five TV channels; 2 general interest channels, a health channel and two sports channels. The other two major television broadcasters in Poland are TVN, affiliated with SBS Broadcasting, and public broadcaster Telewizja Polska (TVP).
Axel Springer is already the biggest publisher in Germany and Poland. The Fakt tabloid is already the biggest selling newspaper in Poland. The company is still seething over a failed bid to buy German commercial TV broadcaster ProSeibenSat, a deal scuttled by regulators. But, since it raised more than €4 billion for that deal, the money needs to go somewhere.
And TV outside Germany seems to be the target. Within the last month Axel Springer bought a 25% stake in Turkish broadcaster Dogan TV. In a fascinating double-take, Dogan Yayin Holdings, Dogan TV’s major shareholder, is bidding for ProSeibenSat.
But publishing still remains Axel Springer’s core business, even of expansion in Germany is no longer possible. The company has allocated development funds to launch a French version of Bild Zeitung, perhaps by the end of 2007.
German magazine publisher Bauer Media recently purchased Polish radio broadcaster Broker FM.
Not all of Mr. Solorz-Zak’s phone calls are pleasant, however. He’s been named in a lawsuit filed in the United States by Vivendi over the ownership status of Elektrim, a mobile phone company.
Broker FM announced (Friday, October 27) an agreement with Bauer Media Invest GmbH for the sale of the company for PNL 144.80 (€37.37) per share. The transaction would value the company at €123.3 million.
Bauer Media is a wholly owned subsidiary of Bauer Verlagsgruppe, Germany’s largest magazine publisher. Recently Bauer has launched or acquired several publications in Poland. Bauer has held 25% of Radio Hamburg in a joint venture with RTL since 1989 as well as an interest in RTL2.
Broker FM owns market leading radio station RMF FM, a production company, sales-house and other support companies.
Earlier in the week CR Media announced intention to spin off its radio station holdings after a planned merger with Internet Group SA.
Interest in the Polish broadcasting business by major companies has been very high for a very long time. To see Bauer expanding into Polish broadcasting with the highly successful Broker FM deal may begin a price-setting for other broadcasters willing to sell.
A television station operated by Franciscan monks in Poland found a new strategic investor this week in Rupert Murdoch’s News Corp. Financially struggling TV Puls “invited” a “strategic investor” in TV Inwestycje, which owns just under 49% of the TV channel.
“Both shareholders intent to retain the family and Christian character of the station,” said TV Puls CEO Father Zdzislaw Dido to Puls Biznesu.
News Corp purchased shares owned by PolSat which indicated an unwillingness to continue funding a company it did not control.
TVPuls attracts a tiny fraction of Polish television viewing. PolSat is the largest privately owned television operator.
News Corp is present in Poland with outdoor advertising company News Outdoor. The move is widely seen as News Corp positioning itself to receive soon to be allocated digital TV licenses.
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The Mediabank/PiN 102 FM deal was light (€1.15 million) compared to ProKom’s €6.68 million Q1 2006 operating profit. Softbank was carrying Mediabank on its books at the same figure as the purchase price, according to Softbank information which also stated that KPMG calculated, on behalf of Softbank, Mediabank’s fair market valuation between €1 and €1.3 million. Mediabank’s assets also include two financial publications. PiN 102 FM offers largely business news and one observer said it has only a “cult” following.