Another Big Broadcaster Buys Into Bulgaria

SBS recently hired away the highly regarded Antoaneta Arsova as managing director for the Bulgarian operations from the Association of Bulgarian Broadcasters. In addition to hit music station Vitosha FM, the company acquired Sofia station Radio Atlantik and Plovdiv station Radio Ritmo. Terms were not disclosed though a news item in Dnevnik suggested SBS plans to invest as much as BG Liva 5 million (€2.55 million), perhaps including another radio station and a television channel.

Big companies never like bidding wars but there are two obvious targets – Darik Radio and Vesselina Radio and TV. Darik Radio’s owner Radovsvet Radev said he’s definitely not selling the national channel, though there have been “talks” with Lagardère Active Radio International (LARI). SBS is said to be interested in Vesselina but, so far, there is no deal. Retro Radio is said to be in serious talks with LARI.

Broadcast licensing for Bulgaria’s 120 radio stations and 15 television channels will reach a milestone, of sorts, in July as the Communications Regulation Commission (CRC) and the Council for Electronic Media (CEM) requires each to apply for renewals, a first-time event. CRC and CEM jointly announced this week that no additional terrestrial frequencies are available for television and few for radio. They are also due to announce criteria for the renewal of existing licenses.

ftm background

Fox Television Joins Serb Channels in License Award
The Serbian Republic Broadcasting Agency (PPA) reshuffled national television and radio allocations, awarding most to existing broadcasters but adding everybody’s favorite media mogul to the scene. Five national TV licenses were granted to six broadcast companies. News Corporation, through its Netherlands subsidiary, will operate Fox Televizija with local Serb partners.

Big Media Rushes Into Next EU Accession Countries
Just being “in talks with the European Union” is good enough to send media investors cruising the streets looking for deals. As countries turn themselves up-side-down conforming to EU accession demands, big media companies bring cash and expertise intent on cornering the markets early…but not too early. So far, this strategy works. But, how far east can it go?

Ad Growth Moves East, But Not that Far Away
Widely reported and now taken as simple truth, ad spending world side – except in Asia and except for the internet - is shrinking. Aegis, a division of media buyer Carat, recently revised downward its ad spending forecasts for 2005. But you might have missed the part about Central and Eastern Europe.

Broadcaster Banks on EU Benefit
SBS Broadcasting re-takes its stake in Prima TV and acquires two radio stations in Romania, citing benefits expected from 2007 EU entry.

Communicorp Buys Metromedia International Stations
Metromedia International Group (MIG) announced in July the sale of substantially all its radio holding company, Metromedia International Inc. (MMI) in the Baltics and Eastern Europe to Communicorp Group.

EU accession for Bulgaria and Romania – maybe Croatia, possibly Turkey, conceivably others – is a notable benchmark for media companies. And there’s been great learning since the 2004 round. The strategy is to get in before accession – but not too early. Post-accession investments are difficult and expensive. The year - or so – before the welcome-to-the-EU party is best as governments turn media, advertising, banking, labor and commercial law up-side-down to meet the various accession treaties.

Nervous anxiety shook tables and chairs in Brussels, Strasbourg, Sofia and Bucharest when statements attributed to EC President Jose Manuel Barroso strongly suggested the possibility of a delay in granting Bulgaria and Romania membership in the club. Sr Barroso’s only clarification indicated that the next vote would take place May 16th. Corruption and press freedom questions – sometimes going hand-in-hand – are under the watchful eyes of EU Commissioners; one reason investments increase in the months ahead of accession. After the Big Day, Commissioners and their teams race back to the safety of Brussels.

Just over a month ago press freedom and its evil twin corruption literally exploded in Sofia. A 1 kg bomb damaged the apartment of Nova TV investigative journalist Vasil Ivanov. Unhurt in the blast, Ivanov has received police protection and promises to investigate the corruption he was looking into – illegal automobile sales.

The other obvious reason media companies are chasing deals in Central and Eastern Europe (CEE) are the phenomenal growth rates for gross domestic product (GDP), a country’s financial output. Morgan & Company, a financial analyst, published a report on Central European Media enterprises (CME) in April. Advertising and GDP growth rates are closely linked. Looking specifically at countries where CME owns or operates television stations, Morgan & Company forecast doubling of CEE GDP by 2010.

GDP and ad spending growth rates in Turkey and Ukraine are even higher, explaining investment interest by big media companies.

In the “old” EU countries investment is muted, limited to existing national companies shuffling the deck chairs and dabbling in new media. Media ownership in Scandinavia has consolidated to the point of stagnation. Regulatory moves to challenge barriers to entry might open investment interest in the old EU but governments have little incentive and resistance to opening borders is strong.

All this points to continued interest in moving East, and now south-east by traditional media companies. New media companies will find their opportunities in the more mature media markets where national consolidation confounds audience and revenue growth.

Another Big Broadcaster Buys Into Bulgaria

Barely one month after News Corporation expanded its broadcast holdings in Bulgaria, SBS Broadcasting bought national radio channel Vitosha FM and 2 local stations. Both follow Emmis International and Communicorp into the country, short-listed for European Union entry in 2007.