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Week ending June 28, 2008

PRIX EUROPA 2008 - June 26, 2008
from Adele Seelmann/Prix Europa

From 18 - 25 October 2008 the most important European media trade competition for Television-, Radio- and Emerging Media - productions will be taking place in Berlin. For a week PRIX EUROPA will present the best nominations from Europe in eight categories.

Until Tuesday 1 July European broadcasters and producers are called upon to enter their productions online on www.prix-europa.de.

At the beginning of September the nominations for this year's competition will be announced.

The competition's main concern is to promote the trademark "Made in Europe", to reflect the complete spectrum of European productions, to show cross-border developments and to be a forum for quality programmes. The festival encourages a fruitful exchange on the international media market to draw the European nations closer together. At the end of the week 12 productions are each awarded a sum of 6,000 Euros and an official PRIX EUROPA Trophy.

AGORA ACQUIRED SHARES OF TRADER.COM (POLSKA) - June 26, 2008
from Urszula Szwed-Strych/Agora SA

In reference to the current report dated May 14, 2008 concerning the sale of 100% of shares of Trader.com (Polska) Sp. z o.o. (hereinafter referred to as “Trader.com (Polska)”), Agora informs that all the conditions, determined in the aforementioned current report and required to conclude the transaction, have been fulfilled. Due to the foregoing, on June 25, 2008 Agora purchased all the shares of Trader.com (Polska) from Pronto Invest B.V with its registered seat in Amsterdam, the Netherlands (hereinafter referred to as “Pronto Invest”) a group company of Trader Media East Limited with its registered seat on Jersey Island, Great Britain (hereinafter referred to as “TME”) controlled by the leading Turkish media group Hurriyet. The purchase concerns 35,637 shares of Trader.com (Polska) of PLN 1,00 nominal value each which constitutes a total nominal value of PLN 35,637,000,00. The purchase price was US$ 54,350,000 (PLN 116,852,500 according to the average exchange rate of the National Bank of Poland published on June 25, 2008). The book value of the shares purchased on the day of preparing this current report amounts to PLN 117,059,030. As a result of this transaction Pronto Invest disposed of all its shares of Trader.com (Polska).

The acquisition of Trader.com (Polska) constitutes a long-term investment and was financed by means of Agora’s own funds. Its implementation will allow Agora to develop in the fastest growing sectors of the advertising market and will also secure its basic revenue sources from classifieds in the most significant sectors. The investment decision was preceded by the precise analysis of the Polish classifieds market in the Internet and in press, competitiveness and also the world trends on the classifieds market and especially in the countries where Internet advertising seems most developed.

Recently a conspicuous trend of shifting advertising budgets, including classifieds, into the Internet is to be observed. One of the markets where this trend is most observable is the United States where the value of the classifieds market in the newspapers fell from the highest level of US$19.6 billion in 2000 to US$14.1 billion in 2007 (according to the Newspapers Association of America). The value of
real-estate advertisements in American newspapers fell to US$ 4 billion (from US$ 5.1 billion in 2006) and the automotive advertisements in turn fell to US$ 3.3 billion from US$ 5.2 billion in 2003. According to the Borrell Associates (the leading company dealing with the local advertising market analysis in the USA) in 2010 the expenditures for real-estate classifieds online will be higher than the level of the corresponding ones in newspapers and in 2012 will amount to US$ 3.4 billion.

Similar trends are to be observed in developed European countries. In Poland, due to the dynamic economic development, there is still income increase from classifieds in daily newspapers, yet Internet services revenue growth seems to be most dynamic. According to the Company’s estimation the total value of the Internet and newspapers classifieds market in Poland (excluding small ads) reached in 2007 the level of nearly PLN 1 million, where PLN 158 million derived from the Internet. According to the IAB report within next three years the aforementioned amount is to double. In the same period revenues of Agora’s dailies from classifieds amounted to over PLN 300 million (including PLN 50 million from small ads).

Home / real-estate, automotive and recruitment belong to the biggest advertising segments both in press and in the Internet. Last year Polish advertisers donated on this purpose ca. PLN 360 million (excluding small ads) where nearly the half was put into automotive and real-estate sectors (PLN 123 million). In the comparable period the share of Agora’s Internet services and dailies in the aforementioned categories was 40% and 21% respectively, mostly because of the strong advertising position of Gazeta Wyborcza.

One of Agora’s strategic goals is to be among the leaders in each most significant sector of classifieds in Poland. In the respect of fast developing Internet market and of the trend to shift classifieds to the Internet , the Company cannot take the liberty of loosing the revenues from these strategic fields of activity and also of obstructing the possibility of further growth in this significant advertising sector. Acquisition of Trader.com (Polska) is a special transaction the implementation of which concerns the basic business activity of the Company, also in the dailies sector. Agora is aware of the fact that due to this the transaction price comprises substantial bonus which is paid by the Company for the control over the assets of Trader.com (Polska). The evaluation of the transaction as the separate item, excluding additional profits stemming from the close integration with the Agora Group, would be much lower. Significant value in terms of this transaction will be generated through retaining in the Group a vital part of current revenues of Agora from classifieds in press, which otherwise would be taken over by the Internet entities from beyond the Group. In the opinion of the Company combining Agora’s strong position in press classifieds with leading Internet advertising services of Trader.com (Polska), technology and wide data base of clients owned by the Company is crucial for the implementation of the long-term strategic goal.

Due to the cooperation in terms of sale and promotion between the brands and offers of both companies, incorporating Trader.com (Polska) into the structures of the Agora Group will contribute to the value increase of its assets. The Company estimates that in next three years EBITDA of Trader.com (Polska) will reach the level of ca. 20% and the revenue dynamics of the Company from the Internet activity will be equivalent to the dynamics of the Polish Internet market. The final margin EBITDA of the Company is to rise up to 30%.

BBC Romanian language service to close - June 25, 2008

BBC World Service is to close its Romanian language service. The news and current affairs service, which broadcasts for almost four hours a day on radio and also runs a complementary website, is proposing to cease broadcasting on August 1st 2008 after 68 years of broadcasting.

It is the last of the BBC’s non-English language services specifically aimed at countries that are EU member states.

The change follows a review of BBC World Service’s language service portfolio after its overall funding levels, for the three year funding period between 2008/09 and 2010/11, were agreed with the UK Government in October 2007.

This will be BBC World Service’s only language service closure during this current funding period.

This decision, which has been endorsed by the BBC Trust and the FCO, comes after consideration of audience need to continue broadcasts, the changing media landscape in Romania and the declining impact of the service.

The changes are also made within the context of the very tight financial framework in which BBC World Service operates.

BBC World Service’s funding settlement gave increased resources for new projects, such as television services for BBC Arabic and BBC Persian. But it also imposed a tough savings target of around three per cent per annum to meet rising costs of existing services. Over the past decade, BBC World Service has made continuing efficiency savings of, on average, 2.7 per cent annually which accumulates to £46 million pounds.

The scale of the competition in radio and all media has intensified since Romania acceded to the EU in 2007. In addition, mergers have meant that several major FM network partner stations which previously carried BBC Romanian output no longer do so. These FM partnerships are critical in a country where direct listening to the BBC via shortwave is neither popular nor cost effective. This has led to a significant drop in audience (currently under 3% of the local radio market in Romania), which could not be countered by the presence of the BBC’s limited number of FM relays.

Broadcasts in Romanian for the Republic of Moldova will also cease, as the Moldovan side of the operation cannot be sustained without the infrastructure of BBC Romanian.

Romania will continue to be served by other BBC Global News services in English such as BBC World Service radio, BBC World News television, and online through bbc.com/news. The BBC’s five local FM relays (four in Romania and one in the Republic of Moldova), which currently broadcast a mixture of Romanian and English programmes, will broadcast English programmes exclusively (plus Russian and Ukrainian in Moldova), subject to agreement with local regulators.

The closure will affect 46 staff (30 in Bucharest in Romania; four in Chisinau in Moldova and 12 in London) and will save £1.3 million per annum.

BBC World Service Director Nigel Chapman said: “Like the other European services we closed three years ago, BBC Romanian had its roots in the Second World War. It has served its audiences with distinction through the Communist era to the present day.

“The contribution of all BBC Romanian staff has been immense: serving Romanians with innovation and commitment for 68 years. The quality of the current output is of the highest standard. But Europe has changed, fundamentally, since the early nineties; and with the rapidly declining audiences in Romania we can no longer justify continuing the service. It is widely acknowledged that BBC Romanian’s presence has contributed to the building of freedoms now enjoyed by Romania’s citizens. We believe this will be a lasting legacy.”

He added: “This was a tough decision but one that is right to ensure BBC World Service continues to put its limited resources where it is most needed. I know that BBC Romanian is full of talented broadcasters and we will do all we can to ensure that the staff in it are treated fairly and sensitively in terms of financial compensation both in and outside the UK. We will strongly support their efforts to find alternative employment.”

This change has been approved by the BBC Trust. The Secretary of State for Foreign and Commonwealth Affairs, David Miliband, has also given his approval as he is required to do under the terms of the BBC’s Charter and BBC World Service’s agreement with the Foreign and Commonwealth Office.

Informa - Eastern Europe Delivers on its Promise - June 23, 2008
from Adam Thomas/Informa

New research from Informa Telecoms & Media has found that the long-held potential of central and eastern European TV markets is now being realized with significant revenue growth. Eastern European TV (12th edition) has discovered that the region’s pay TV sector was worth an impressive $5.6 billion in 2007, but is expected to more than double to $12 billion by 2013. When advertising revenues are added, the market will be worth more than $23 billion in 2013.

Adam Thomas, Informa’s media research manager, and author of the report, said: “The countries of central and eastern Europe already offer a wide range of attractive opportunities for international TV players and investors. And this positive environment will only get better, with a period of extensive merger and acquisition activity expected over the next few years.”

Eastern Europe: Pay TV revenues ($ million)

	2007	2013
Czech Republic	468	1,165
Hungary	313	735
Poland	1,800	3,616
Romania	454	815
Russia	910	2,655
Rest of Region	1,702	3,004
Total	5,647	11,990

Source: Informa Telecoms & Media

The region is also making good progress in upgrading networks to digital TV. The research has found that the 22 million digital homes at present will grow to 35.7 million by 2013. According to Thomas. “Digital satellite has led the way so far, with cable slower off the marks towards digital conversion. But with IPTV making some inroads in the region, there is evidence of cable now looking to upgrade with greater urgency.”

Eastern Europe: Digital TV homes (000)

	2007	2013
Czech Republic	1,184	4,968
Hungary	767	3,342
Poland	3,962	11,903
Romania	1,036	4,525
Russia	4,376	17,741
Rest of Region	10,254	27,575
Total	21,579	70,054

Source: Informa Telecoms & Media

Prof-Media - June 23, 2008
from Marina Dralova/Prof-Media

Prof-Media, the leading diversified media holding in Russia, made advanced redemption of inaugural issue of CLN on 23 June 2008. The overall loan volume without interest was $250 mln.

”The anticipated redemption is determined by the speedy growth of Prof-Media, and advanced opportunities of new fund rising”, says CFO of Prof-Media Vladimir Pravdivy. “During the whole term CLN of the company were highly liquidable securities of steady quotes”.

CLN were underwritten in December 2006 predominantly through external funds of Asia, Great Britain, USA and Switzerland. Some Russian investors also took part in the bargain. According to the terms of underwriting the CLN were issued for two years period with fixed annual coupon rate of 10,75%, and the company had an option of advanced redemption of CLN on the 15th, 18th and 21st month of the issue period.