Southeast heat wave coming

Michael Hedges September 29, 2008

Southeast Europe is vitamin-rich and may have the nourishment big media companies need. RTL Group just bought a majority of a Greek radio and TV company. Bulgaria, Romania, Turkey and the Balkans are enticing strategic and financial media investors as other markets brace for winters’ chill.

Alpha Media Group, Greece’s third biggest broadcasting company, sold two-thirds of itself to RTL Group (September 23) in the latest transaction focusing attention on Southeast Europe. RTL will name a CEO, COO and five of the nine board members of the new joint venture. Greek insurance tycoon Dimitris Kontominas will retain one-third of the company and will nominate the Board of Directors Chair.

Alpha Media Group operates national TV channel Alpha TV, regional TV channel Cosmos TV, Alpha 98.9 and Palmos 98.8 radio stations and TV production house Plus Productions. 

RTL Group CEO Gerhard Zeiler may be showing his strategic hand. At € 125.7 million cash, the deal values Alpha Group at a conspicuously low revenue multiple compared with recently completed transactions in South-east Europe. The RTL Group statement said Alpha Group’s revenue is about €100 million. RTL owns 90% of RTL Televizija in Croatia, a small slice of TV and radio in Romania and has been in and (currently) out in Serbia.

Until the RTL investment Greek media has been almost entirely owned and operated by Greek nationals. The significant exception is investment by Westdeutsche Allgemeine Zeitung (WAZ) in the print sector. Greece has been viewed as somewhat of a backwater for investment, media and otherwise.

With a rather hazy legal structure for media and historically low economic growth Greece just hasn’t been on the radar of the big pan-European media houses. But as investment opportunities in higher growth markets – Poland, Czech Republic and Hungary – slip from the grasp of those needing to fuel balance sheets with new cash flow South-east Europe becomes attractive.  Greece may not be showing the white-hot growth trends of the new EU Member States but, today, it’s considered stable by economists. And ‘stable’ right now is very attractive.

Bulgaria, which borders Greece, has become a hot spot for media transaction activity. Both Modern Times Group (MTG) and Central European Media Enterprises (CME) acquired broadcast channels in July. News Corporation has floated the sale of its top rated Bulgarian television channel bTV since summer, including the well-placed rumor that the asking price will be €1.1 billion. Friday (September 26) News Corp enlisted JP Morgan Chase to advise on the sale, according to Dnevnik. Lehman Brothers had been advising News Corp but, well, they’ve been having a bit of a problem. 

The biggest Greek media owner is Minos Kyriakou’s Antenna Group, known locally as ANT1. Mr. Kyriakou is, of course, a shipbuilder, financier and head of the Greek Olympic Committee.

Antenna Group was founded in 1988 on Athens radio station Antenna FM. Television followed, then satellite TV, publishing, internet and more. Both ANT1 TV and radio have been fixtures in Cyprus for more than a decade.

Antenna Group acquired Bulgaria Nova TV in 2000 as a first step outside Greece. For € 620 million Nova TV was sold to MTG in July. Kyriakou said he’d be investing the proceeds “in the region.” Most likely that means Greece itself. With RTL on the door-step a pile of cash could come in handy.

Teletypos is the number two broadcasting company in Greece, owning Mega TV and satellite channel Mega Cosmos. Teletypos is primarily owned by newspaper publishers Christos Lambrakis and George Bobolus. Like other Greek owned broadcasters the company has interests in broadcasting in Cyprus.

The Greek media – largely television – market got interesting (read:competitive) in 2004, and directly thereafter, with the Athens Olympics as public broadcaster ERT upgraded presentation, style and performance. That was followed in 2006 by hosting the Eurovision Song Contest. The result was a noticeable slicing of commercial channels’ audience shares. ERT remains a small player in the Greek broadcast landscape, which now is filled with channels and stations large and not so large.

If recent history is a guide, local incumbent media owners – particularly in television – will find competition with pan-European broadcasters uncomfortably expensive. The sunshine produced by that new competition will shed light and create heat…extending throughout the Southeast Europe region.