Broadcaster Banks on EU Benefit
Michael Hedges March 7, 2005
SBS Broadcasting re-takes its stake in Prima TV and acquires two radio stations in Romania, citing benefits expected from 2007 EU entry.
Luxembourg-based SBS Broadcasting announced the deal March 1st, essentially taking back control of Prima TV, buying out debt and equity of former partner Cristian Burci for €7.8 million. Kiss FM and Star FM were purchased from MG Media Group Holdings, controlled by Burci, for €22.5 million, about 9 times cash flow. Burci resigned as CEO of Prima TV.
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Burci, a Romanian with US citizenship, launched Prima TV in 1997. SBS bought 86% in 2000. Fifteen months later, in July 2001, SBS “de-consolidated” its Romanian holdings, handing over about 45% to Romanian Investment & Development, a company controlled by Burci, through a financial transaction involving money from the Romanian Ministry of Transportation. The “de-consolidation” period was to last three years, after which SBS could re-gain its shares. And it did.
Ad spending in Romania has more than doubled since 2000, from €522 million to €1,227 million in 2004, according to media monitor Alfa Cont. The strong economic growth of the last four years, nearly 8% GDP growth in 2004, is expected to slow to about 5% in 2005 as domestic demand and exports fall do to stagnant wages. The average monthly wage in Romania is less than €200, six times less than the European average and 16 times less than Switzerland.
Prima TV offers the standard fare of Romanian language versions of Big Brother and Who Wants To Be A Millionaire. In the SBS Broadcasting press statement announcing the transaction, Prima TV is ranked 4th among commercial TV channels. It reported a €2.4 million loss in 2004 on €9.8 million revenue.
Big companies – largely foreign – dominate Romanian media. Central European Media Enterprises (CME) owns three TV channels, Aska, Pro Cinema and Pro TV, as well as radio channel Pro FM. Swiss and German publishers are heavily invested in Romania. Edipresse and Axel Springer own Romanian Publishing Group, the leading publisher of consumer magazines.
Ringier owns Bucharest daily Evenimentul Zilei, purchased in April 2004. Six months later 35 members of the editorial staff walked out in support of fired editor Dan Turturica. The company cited “managerial shortcomings” for Turturica’s dismissal. In a January press conference, Tutturica said Ringier’s managers accused him of publishing “too many” articles critical of political leaders.
Romanian Defense Minister Ioan Mircea Pascu and US Defense Secretary Donald RumsfeldLargardére Active Radio International owns the only radio channel with national coverage, Europa FM, and a minority share of Radio XXI. The relationship between Lagardére and political Romania has raised eye-brows in recent years. The multi-national, multi-media company is also a major shareholder in EADS, the European Aeronautic Defense and Space Company. The major shareholder of Radio XXI is Romanian Defense Minister Ioan Mircea Pescu.
European Union Enlargement Commissioner Olli Rehn paid a visit to Romania two weeks ago (February 28) and said that EU accession has a “fair chance.” The priority for Romania, Commissioner Rehn pointed out, is to “turn words into deeds” in meeting reforms in the legal system and curtailing corruption. Accession for Romania, he said, might for an additional year.
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