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CME shuns Top TV
August 31, 2007, Media Finance
Central European Media Enterprises (CME) will not acquire satellite and cable TV broadcaster Top TV after all. CME, which operates TV Nova in the Czech Republic, was due to acquire the broadcaster from KKCG Investments, but the deal fell through following the two failing to agree on price.
KKCG originally stated that talks were underway with another foreign investor, and expected completed by the end of August, but when MediaFinance spoke to KKCG, the situation had taken somewhat of a turn. Dan Plovajko, director of communications at KKCG, told MediaFinance that it has finished negotiations without coming to an agreement with any potential investors. KKCG has decided investment in Top TV will come to an end, and it will not broadcast anymore. Plovajko added that Top TV was initially a portfolio investment, made some years ago when that part of the market looked more profitable. With Poland now awaiting digitalization, the market looks very different. Plovajko added that KKCG will not make any more TV investments, and its future in media investments is unclear at the moment.
Ukrainian investor welcomed
More recently, CME announced that Ukrainian businessman Igor Kolomoisky has acquired 1,275,227 shares of the company's Class A common stock for a cash consideration of US$110m. The share acquisition represents some 3% of CME's total outstanding common stock. Kolomoisky has also been invited onto CME's board of directors. Non-executive chairman Ronald S.Lauder stated that he and Kolomoisky have known each other for some time, and that he understands the importance of independent TV in Ukraine and throughout Eastern Europe. The move is being seen as a vote of confidence in CME, and strengthens and proves CME's move to grow in Ukraine. Tomasova told MF the investment follows CME being present in Ukraine and realising that it needs a strong partner in the country to grow. Kolomoisky has a deep market knowledge, and according to Tomasova, will help define CME's future strategy.
The investment is not related to Lauder exiting the company, as Lauder has 61 % of the voting shares of the company, in B shares, and this investment gives Kolomoisky A shares.
Wider M&A strategy
On the subject of CME indulging in any further M&A within its CEE core market, Romana Tomasova, director of communications, stated that acquisitions are always possible and CME wants to stay focused on region. The company is currently operational in the Czech Republic, Romania, the Slovak Republic, Slovenia, Ukraine and Croatia, and according to Tomasova, is keen to expand its presence to Russia, Turkey, Hungary and Bulgaria. However, Tomasova said that rather than buy a small cable operator, any investments would have to bring scale as CME works on a multi channel strategy which requires an existing base on which to add additional channels at low cost.
Also, CME is currently working on a strategy of aiming to acquire 100% of the assets of all stations that it operates, and when asked where it is currently focusing on increasing its stakes, Ukraine came up as an immediate answer. CME controls 60% of its Ukrainian asset, and is keen to acquire the remaining 40%. Ukraine is also the country where it most expects to increase its presence, and according to Tomasova the largest market by far in which it will operate in some five years' time. The country has a large population of 47 million yet the lowest consumer disposable income of all the countries where CME is operational but CME believes the potential synergies it could create between Ukraine and a possible future Russian acquisition or launch, would be significant, with there being a high demand for Russian language programmes in the country Lastly, Tomasova told MF that CME is looking to increase its presence in new media and to build a strong position in all new media in the whole region, adding that CME aims to become amongst the top three in new media in all the countries in which it operates.
For additional information, please contact:
Romana Tomasova
Vice President of Corporate Communications
Central European Media Enterprises
Krizeneckeho nam. 1078/5
152 00 Praha 5
Czech Republic
+420 242 465 525
romana.tomasova@cme-net.com
