Labyrinthine Media Deals in Eastern Europe

Michael Hedges June 22, 2009 Follow on Twitter

Some investors see complicated markets and ask ‘Why?’ Others, with a twinkle, say ‘Why not?’ Eastern Europe attracts the bold, the brave and, maybe, the crazy.

It was announced last week (June 16) that Austria-based Stevia Communications will acquire 50% of Bulgarian all-news TV channel TV Evropa. Current TV Evropa Chairman Emil Stoyanov will vacate that post as he’s taking up a new job as Member of the European Parliament (MEP) after recent election of the right-wing political party GERB (Citizens for the European Development of Bulgaria). Mr. Stoyanov’s wife, Margarite Ralcheva, will remain with the television station as a news presenter. His brother, Peter Stoyanov, is a former President of Bulgaria.

Stevia Communications is principally owned by Altelys, a media investment fund principally owned by Karl von Habsburg-Lothringen and Christo Grozev. For a little glamour in the deal, Karl von Habsburg, otherwise known as Archduke Karl, is the grandson of last Austrian emperor Charles I. He once hosted a TV game show of Austrian public TV ORF. He also served as MEP from the Austrian Peoples Party.

Within Bulgarian media circles Christo Grozev bears his own reputation. As an executive with Communicorp and, earlier, Metromedia International he’s credited with bringing BG Radio to the top ranks. He’s recently been a consultant to cable station RE:TV. Needless to say, media watchers in Bulgaria are tuned in.

Stoyanov, at a press conference, said the deal also includes 50% of the news website Ekipnews. A transaction price was not disclosed, likely to be based on future profits. As usual, the new partners are promising a 24 month turn-around in ratings, revenue and profits.

The new partnership will be expanding, said Grozev to Capital (June 19). That may include more frequencies for TV Evropa and perhaps a second TV channel or a radio channel. He also disclosed that discussions took place between von Hapsburg and other TV channel owners but those ended because of “interest by political-economic groups, which was not good for us.”

The Bulgarian media market has been rife through the last year with rumors and speculation, some controversial. Most of the big television and radio operators are foreign, the biggest being top rated bTV’s owner News Corporation. Modern Times Group (MTG) bought Nova TV last July for €620 million. A year before Central European Media Enterprises (CME) bought TV2 and Ring TV.

Looking to seize an opportunity, News Corporation attempted to sell bTV to the highest bidder in the €1 billion range. There were none and bTV continues to operate under Murdochian flair.

A new – and foreign – owner in the Bulgarian media scene invites the suggestion that non-Bulgarian private broadcasters see greater investment potential than Bulgarians. The scale of foreign owners and operators presence – and their willingness to dig in – illuminates an important dynamic. Still, the Bulgarian government looks favorably on homegrown media investors, particularly those with the right connections.

State-owned Bulgarian Telecommunications Company (BTC) signed a deal (December 2008) to sell its broadcast transmitter and tower business NURTS to Oesterreichische Rundfunksender (ORS), a subsidiary of Austrian public broadcasters ORF. As the incumbent infrastructure supplier, NURTS would benefit from digital television switchover, moving slowly in Bulgaria. In March BTC said the sale of NURTS to ORS would be delayed. Then, they said, it would be offered in a new auction, the six named bidders from Bulgaria. In April a law was passed requiring public television (BNT) and radio (BNR) to broadcast through State-owned facilities.

Earlier this month (June 12) telecoms regulator Communications Regulation Commission (CRC) awarded to Towercom Bulgaria, owned by Slovak Telecom, the contract to build two digital television multiplexes. At the same time rules were changed to allow multiplex owners to also be content providers.

Many Bulgarian owners of Bulgaria’s first private broadcast licenses have exited, certainly for the money offered but perhaps, more recently, to avoid those nasty public questions. When local media owner Irena Krasteva sold TV7 and a newspaper, prosecutors investigated. Krasteva is the former head of the State Lottery and continues to own several newspapers.

Earlier this year Darik Radio owner and General Director Radosvet Radev forecast ad revenues in the country to fall by half in 2009. But everything in Bulgaria changes, regularly.