CME Buys Back Czech Nova TV

Michael Hedges December 14, 2004

The largest and most profitable television operation in central and eastern Europe was returned to Ron Lauder for a mere $642m.
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Central European Media Enterprises (CME) announced December 13 that it had acquired controlling interest in TV Nova, the major Czech Republic television network, from PPN

CME is controlled by billionaire Ron Lauder and has interests in eight television networks in five other central and eastern European countries; Pro TV, Aska and Pro Cinema in Romania, Nova TV in Croatia, Pop TV and Kanal A in Slovenia, Markiza TV in Slovakia, Studio 1+1 in Ukraine. Croatia’s Nova TV was purchased in June 2004 for $29.5m. Lauder owns 25% of CME and 71% voting control.

TV Nova has been the biggest TV network in the Czech Republic since its launch in 1994. Today it reaches 10 million viewers. Estimated 2004 net income is $64m from $222m revenue.

Lauder financed TV Nova’s start up. In 1999 partner Vladimir Zelezny, after being fired as general manager, took TV Nova’s staff and programming and started broadcasting from his own facilities. Czech law at the time provided little protection for investors and Lauder sued. The International Chamber of Commerce Court of Arbitration awarded him $355m in 2001, payable by the Czech government. Zelzny was also sued for $27m for violating a non-competition agreement.

The arbitration award was a colossal embarrassment to the Czech government, which took the opportunity to fire the entire Council for Radio and Television Broadcasting.

 

Jana Bobosikova and Vlasimir Zelezny

Zelezny has not disappeared. When criminal charges were filed against him over the TV Nova affair, he found immunity as Czech Senator. He never paid the judgment against him, leaving that to PPN. When the Senate moved to strip his immunity in June, he was elected to the European Parliament. Then he formed his own political party with former TV anchorwoman Jana Bobosikova, herself controversial. She was also elected to the European Parliament but split with Zelezny when he accused her of unethical conduct.

CME’s acquisition of TV Nova is the largest transaction of any kind by a US company in the Czech Republic.

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MTG Deal for TV Prima Clears Czech Competition Office – November 1, 2005

The Czech Office for the Protection of Economic Competiton approved Modern Times Group’s (MTG) 50% purchase of free-to-air television channel TV Prima, according to a company statement (November 1).

The €96 million deal, announced September 30th, is MTG’s largest single transaction. The company effectively takes management control of TV Prima from today, appointing a CEO and holding three of the six board seats. Gross sales for TV Prima in 2004 was €48.3 million with €9.1 million cash flow.

TV Prima is the number two free-to-air commercial television channel. CME owned TV Nova is the market leader. The two public television channels will phase out ad sales by 2008. The total Czech ad market in 2004 was estimated at €536 million, with 49% going to television.

Also bidding on TV Prima were RTL Group and News Corp., according to a Reuters report.

CME Trades on Prague Stock Exchange - June 29, 2005

Class A Common Stock in Central European Media Enterprises (CME) began trading on the Prague Stock Exchange (PSE) Monday, June 27th.

“Securing a listing in Central Europe has been a key element of our strategy to expand and diversify our investor base,” said CEO Michael Garin in a company press release. The company also trades on the US Nasdaq exchange.

“CME’s profile brings a market segment that has not been represented at the PSE yet. That is why it will make an interesting alternative for investors", said PSE General Director Petr Koblic in the same release.