Jan Cienski in Warsaw -

The possible sale of TVN, Poland's largest private broadcaster, by its majority owner, the ITI Group, is largely due to differing visions among the controlling families following the 2009 death of one of ITI's founders, analysts say. Foreign media firms are circling an opportunity to enter Central Europe's largest market.

ITI said on July 7 that it is "reviewing its strategic options" with regards to its controlling stake in the broadcaster. TVN operates several entertainment channels, which broadcast popular fare such as Polish versions of "X Factor" and "Dancing with the Stars," as well as an all-news channel, a business channel and thematic channels devoted to fashion, sports and motoring.

In a statement, ITI, which owns 56% of TVN, said: "No decision has yet been taken on a potential sale." In its own statement, TVN said: "As no decision has yet been taken by ITI Group with regards to any potential sale of its shares in the company, there can be no certainty that a transaction will be forthcoming."

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The news came as a surprise, as TVN is doing well, but there have been reports of frictions among the founding families of ITI following the 2009 death of one of the group's founders, Jan Wejchert. The other founder is Mariusz Walter. Together they opened TVN in 1997, and both men's families play an important role in managing ITI. "I think that the decision on a possible sale of TVN could result from the problems of the main shareholders," Marek Zuber, chief economist with Dexus Partners, a Warsaw financial advisory, told the Polish news agency. "It could be that the heirs have taken such a decision, or that the future of the whole ITI Group is unclear."

The news had an immediate impact on TVN, which saw its shares rise by 9.6% in two days on the Warsaw Stock Exchange, closing Friday at PLN16.9, which would value broadcaster at more than PLN5.6bn ($2bn). The final price for TVN is likely to be 20 to 40 per cent higher than its stock market valuation, due to the premium paid for taking control of such a valuable media property. ITI also owns Multikino, a Polish cinema chain which has also been subject to sales rumours, as well as Onet, the country's leading internet portal, and "n", a satellite broadcaster. But both TVN and ITI are also labouring under debt. TVN owes PLN2.5bn, part of "n"'s launch cost; ITI also holds €260m in debt that must be repaid by 2017.

Reports in the Polish press say that ITI has asked several companies, including Time Warner, Fox Entertainment Group (a subsidiary of News Corp.), Vivendi, Discovery Communications, and Bertelsmann for initial expressions of interest in TVN.

It is significant that the investors contacted by ITI were those with a marginal presence in the Polish market except for Vivendi, which owns Canal+, one of Poland's leading satellite broadcasters. Polish competition authorities are unlikely to look with favour on more concentration on the Polish television market.

Analysts believe that a strong contender to buy TVN, if it does come up for sale, would be Time Warner, which has already invested in media properties in the region through Central European Media Enterprises, which has operations in the Czech Republic, Slovakia, Romania, Slovenia, Croatia and Bulgaria, but no presence in Poland, the region's largest market. Time Warner took a 31% stake in the regional broadcaster CME in 2009, increasing that to 34.4% earlier this year.

Polish regulators are also wary of media concentration following the recent PLN3.75bn sale of broadcaster Polsat to digital pay television platform Cyfrowy Polsat - although in that case the owner of both companies was Zygmunt Solorz-Zak, a Polish media magnate who was preparing himself for his recent successful PLN18.1bn acquisition of Polkomtel, Poland's second-largest mobile operator.

Analysts also feel that the potential sale of TVN may be a result of rapid changes in the Polish television market. On one hand Solorz-Zaak is planning to build Poland's first true multi-media company by combining his telephone, internet and television properties, while terrestrial broadcasters find it increasingly difficult to hang on to their share of the PLN3.8bn annual television advertising market thanks to the increasing proliferation of pay television and smaller thematic channels, which are fracturing the audience.