Penta's purchase of publisher VLP extends oligarch control of Czech media

By bne IntelliNews August 12, 2015

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Slovak financial group Penta announced on August 12 that it has agreed to buy Czech publisher Vltava-Labe-Press (VLP) from German group Verlagsgruppe Passau. The deal is the latest in a string of acquisitions that has seen international giants that moved in during privatisation in the 1990s selling out to powerful local business groups, and even politicians.

The last major Czech media company in German hands, VLP owns the Denik chain of regional daily papers and also a portfolio of magazines. The company publishes 71 regional dailies in the country.

The deal includes a 51% stake in Astrosat Media, which publishes magazines Kvety, Vlasta, Story, TV magazin and National Geographic Cesko, a 70% stake in Ceska Distribucni, 35% of PNS and 30% of AdActive, Penta spokesman Ivo Mravinac told CTK. No financial details of the deal were disclosed.

According to latest available financial results, VLP closed 2013 with a loss of CZK61mn (€2.3mn), following a CZK22mn loss the year before. Verlagsgruppe Passau CEO Simone Tucci-Diekmann said the company decided to sell VLP for strategic reasons, with plans to focus on the larger German and Polish markets. 

For Penta, the acquisition represents another opportunity for the closely-held group to extend its control over regional media. It made several large purchases in Slovakia last year, including that of leading publishing houses 7 Plus, Trend Holding and Petit Press, which produces the influential daily SME. The latter acquisition sparked a walkout by the editorial team.

The financial group had clashed with the newspaper in recent years, in particular over its reporting of the 'Gorila' scandal, which featured alleged corrupt deals involving Penta and senior government officials. The editorial team at SME insisted Penta was not a financial investor but seeking political influence, and that would put editorial independence at risk. In the meantime, Penta is looking to buy Zoznam, Slovakia’s second most viewed web portal, from Slovak Telekom.

Spit and polish

Penta’s acquisition of VLP is likely to resurrect concerns over the independence of the Czech media, which over the past couple of years has seen suspicions grow that domestic oligarchs are building media empires to support commercial and political interests.

Topping those concerns is the purchase in 2013 by Andrej Babis of Mafra, publisher of the best selling Czech broadsheet Mlada fronta DNES, the influential daily Lidove noviny and other titles. The Slovak-born owner of the country's largest private employer Agrofert became finance minister in January 2014, and is tipped as the next likely prime minister.

The combination of commercial, political and media power in one person makes Babis probably the most powerful person in the country. Despite the worries expressed by those in the industry – editorial teams at both major newspapers walked out following the deal – as well as his political rivals, the wider public appears less concerned by his numerous conflicts of interest. Opinion polls show Babis is the most trusted politician in the country.

Other, less liked, oligarchs are likely jealous of the apparent power of Babis' media to boost his image. Zdenek Bakala's 2008 purchase of the Economia publishing house – handing him control of economic daily Hospodarske noviny and the opinion magazine Respekt – has done little to help him overcome a reputation that sees him as one of the country's least popular people. 

Only weeks after Babis’ Mafra deal was announced, billionaires Daniel Kretinsky and Patrik Tkac – who earned their first millions with Penta's fellow Slovak investment group J&T – acquired the publishing activities of Ringier Axel Springer CZ with its popular tabloid dailies Blesk, Aha and Sport, and the popular weekly magazine Reflex. According to its new owners, the Czech News Center – as it is called today – is the largest media outlet with the most readers on the Czech market.

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