Billionaire Kellner to Buy East European TV Empire From AT&T

(Bloomberg) -- Czech billionaire Petr Kellner agreed to buy a dominant television broadcaster in his home country and four other ex-communist nations in Europe, expanding his footprint in the region’s information and communications industry.

Kellner’s investment company, PPF Group NV, signed a deal to acquire Central European Media Enterprises Ltd. in a transaction valued at $2.1 billion, including a $1.1 billion payment to its majority owner, AT&T Inc. That price is 1.5% below the current market valuation but 32% above the levels where the shares traded before a March announcement that the company might be for sale.

“We are pleased that the PPF Group, with a strong track record as operators of businesses across many industries, shares our perspective on the importance of local content and its ability to attract large audiences to television,” Central European Media, known as CME, said in a statement, adding that the transaction is subject to regulatory approvals.

The acquisition plan follows Kellner’s purchase of some of the region’s major phone and internet providers and fits into PPF’s increasing focus on providing paid television content as a way to offset dwindling revenue from calls and data.

Media Ownership

The deal underscores a trend of foreign media companies leaving the region where they have helped build Western-style news and entertainment outlets in the 30 years since the fall of communism. CME was founded by cosmetics heir Ronald Lauder in 1993.

Local tycoons, in some cases politically connected, have been taking control over newspapers, TV broadcasters and radio stations at a time when governments from Warsaw to Budapest are seeking to increase their control over information channels.

Czech President Milos Zeman has tried to defend PPF’s interests when the local cybersecurity agency warned against using products made by Huawei Technologies Co. Zeman said a potential retaliation from Beijing could hurt PPF’s consumer-lending business in China.

Last year, PPF bought Telenor ASA’s telecommunications companies in Hungary, Bulgaria, Montenegro and Serbia, following a 2013 acquisition of the largest Czech phone company from Spain’s Telefonica SA.

PPF valued its assets at more than 45 billion euros ($49.9 billion) at the end of last year, and the purchase of CME will bring into its portfolio channels attracting between 30% and 50% of the TV audience in the Czech Republic, Slovakia, Slovenia, Romania, and Bulgaria.

The agreement between PPF and AT&T has been approved unanimously by CME’s board of directors, and the U.S. conglomerate has pledged to vote in favor of the transaction. The acquisition is expected to be completed around the middle of 2020, according to the statement.

“We want to leverage the natural synergies between the creation of content and its distribution with the objective of further developing our telecommunications and media businesses,” Kellner, who’s worth about $12.5 billion, said in a statement. “CME is a healthy and well-run organization and we do not intend to make any significant changes to its operations.”

Political Influence

Media ownership has become a sensitive issue in the region where nationalist-populist leaders clash with the European Union over the erosion of democratic standards and use private outlets or public broadcasters to promote their political agendas.

In neighboring Poland, U.S.-based Discovery Inc. owns one of the country’s three major television groups, often presenting a more critical view of the government than its main peers -- public television and a media group owned by Polish billionaire Zygmunt Solorz.

The U.S. government and companies have protested what they say is unfair treatment of Discovery’s unit by Poland’s authorities, while journalists working there accused the government of intimidation.

Hungarian Prime Minister Viktor Orban and his allies have consolidated hundreds of media outlets -- including news channels, radio stations, tabloids, daily and regional newspapers and a political weekly -- under a non-profit organization led by a pro-government editor. That effectively created one of the biggest propaganda machines in Europe under one umbrella.

--With assistance from Wojciech Moskwa and Zoltan Simon.

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Peter Laca

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