Within just two days, two large international companies paid a total of 731 million euro for two national and one cable Bulgarian broadcaster at the end of July 2008. Another television channel, which happens to be the biggest private broadcaster in the country, is reportedly preparing to be sold at a price that could reach 1.1 billion euro. Although it is far from European Union digitalisation standards, Bulgaria seems to have turned into a profitable media market.
On July 28, Central European Media Enterprises Ltd (CME) announced that it was buying 80 per cent of the broadcasters TV2, established in November 2007, and cable sports television station Ring TV.
The former owner of the broadcasters, Top Tone Media Holdings, would receive $172 million (about 111.27 million euro) cash. The adjustment for debt and working capital as well as a holdback to cover potential undisclosed liabilities would then be taken out of the amount. The deal will be completed within two weeks, CME media statement said.
TV2 is one of three private national free-to-air networks serving Bulgaria, except for the state-owned channel Bulgarian National Television. As to the buyer, CME possesses leading networks in six Central and Eastern European countries, Croatia, Czech Republic, Romania, Slovakia, Slovenia and Ukraine, reaching an aggregate of approximately 90 million people.
As its managing body said, the deal was CME’s avenue of approach towards expansion in Central and Eastern Europe.
CME’s website quoted the company’s CEO, Michael Garin, as saying that the acquisition was “the next important step in the continuing expansion of our free-to-air broadcasting operations in Central and Eastern Europe. Our entrance into the Bulgarian market represents the first new CME territory in three years and demonstrates our ability to continue our growth strategy within the region. […] We look forward to entering Bulgaria, which has a dynamic economy and a rapidly growing television advertising market.”
Another CME high-level official, the chief operating officer Adrian Sarbu also flattered Bulgaria, saying “Bulgaria represents an excellent opportunity for CME. A few key players dominate the Bulgarian TV market and I firmly believe in CME’s ability to achieve market leadership within the next five years. This target is achievable through the development of local programming, use of synergies with our Romanian operations and leveraging our existing proven skills and knowledge base. This acquisition is another milestone in our strategy to expand throughout Central and Eastern Europe.”
According to the TV2 and Ring TV’s consultant Krassimir Gergov, with the purchase by CME, TV2 would receive a real chance to compete against the leading national broadcasters bTV and Nova Television. CME would invest significant means in the broadcaster, Dnevnik daily quoted Gergov as saying.
According to Bulgarian-language media, however, it was not all a bed of roses. According to Dnevnik, the status of TV2’s licences was unclear. The broadcaster’s programme was aired in 27 towns but it uses the regional frequencies, instead of the national. The media had only temporary permits for operation and some of them would be terminated once the digitalisation is implemented in the country. CME spokesperson Romana Tomasova told The Sofia Echo that CME “expects to be fairly treated in the digitisation process and to be given alternative frequencies”. On the other hand, Dnevnik quoted Gergov as saying that “TV2 is stable and everything is in order with its frequencies”.
CME has also been considered a possible buyer of Bulgaria’s biggest private broadcaster bTV, competing with Warburg Pincus investment fund, Advent International, GMT Communications Partners and RTL Group, according to Dow Jones news agency. The broadcaster had already hired investment bank Lehman Brothers to consult the sale. The first bidders’ offers were to be expected in mid-August. US media group News Corp currently own bTV and according to Dow Jones, its price could reach 1.1 billion euro.
The potential of Bulgaria’s media market was again cited. Dow Jones quoted sources, close to the deal, that one of the reasons for the interest in the broadcaster was the significant potential of the market.
Foreign media also suggested Scandinavian Modern Times Group (MTG) as a possible bidder. The group already has the Diema cable channels in Bulgaria.
And while the news media branch in Bulgaria was still rationalising the TV2 deal and the possible bTV sale, another, even bigger news-bomb was thrown into the market. MTG changed course and announced that it was buying Bulgaria’s second largest private national free-to-air networks, Nova Television, for 620 million euro. Nova has an 18-per cent market share among people aged 18 to 49, nearly 32 per cent of the TV advertisement market, and revenue of 42 million euro for 2007.
In addition to the broadcaster, MTG received the cable reality channel Nova+ and 80 per cent of the local lifestyle magazine Eva, which Nova TV’s former owner, the Greek Antenna Group, purchased in March 2008. The deal would be closed within three months after it was signed, because the regulatory organs in Bulgaria had to decide whether there was risk of monopoly, Nova Television media statement said.
Vice chairman of Antenna Group Theodore Kyriakou said that the deal was an example of the successful work of Antenna in investment and development of leading media, if added, Nova Television had become one of the fastest growing TV channels in the region. Despite the sale, Antenna would continue investing in the region, the media statement said.
Keeping in mind that Antenna had already sold its other media in the country, Radio Express, the sale raised the question “is Antenna withdrawing from Bulgaria?” Antenna Bulgaria CEO Silva Zourleva, who is also head of the directors’ board of Nova Television, quickly said that a significant part of the money from the deal would be invested in various projects in Bulgaria and the region.
These developments prove that major foreign media groups see potential in Bulgaria’s media market. No wonder, as the net television advertising market was approximately $168 million in 2007 and is forecasted to experience a compound annual growth rate of 20 per cent between 2008 and 2012, an evaluation, made by CME. However, the Bulgarian market is not an isolated case. The trend affects the whole Eastern European market. News Corporation owner Rupert Murdoch himself considers the entire Eastern European media market a good investment opportunity because it is young and active, unlike the US one, Reuters quoted him as saying. The expectations of high profitability from the growing advertisement market overshadowed even the global financial sector crisis and media giants dashed after profitable broadcasters, with CEM, MTG and RTL the most outstanding pursuers.
