Vivendi rethink on Polish TV investment sparks sale speculation
By Adrian Krajewski and Gwénaëlle Barzic WARSAW/PARIS (Reuters) - American media giants have been touted as potential buyers for Polish broadcaster TVN after France's Vivendi and Poland-based holding company ITI signalled that they could sell their joint 51 per cent stake. ITI and Vivendi announced late on Thursday that they will conduct a review of their options for TVN, lifting shares in the broadcaster by as much as 7 poercent in early trading on Friday. A sale would open an opportunity for another big media player to enter Poland's rebounding market of 38 million people, with analysts naming Time Warner and Rupert Murdoch's 21st Century Fox as prospective buyers. Vivendi's Canal Plus agreed to buy into TVN, one of Poland's two largest private broadcasters, three years ago. A wider deal also included a merger of the two sides' pay-TV platforms into nc+, which made Poland Vivendi's second-largest market. Canal Plus said it would rather focus on nc+, Poland's second-largest pay TV platform with 2.2 million users, as part of a broader strategy of moving away from free-to-air television, where advertising revenues are threatened by the Internet and on-demand TV viewing. "The timing is not bad," Espirito Santo analyst Konrad Ksiezopolski said. "The advertising market in Poland is gaining steam, TV ads are rising and despite the Internet's growing popularity it is still the strongest advertising channel." "Per capita spending on TV advertising is still low in Poland, even in comparison with the Czech Republic or Hungary, which indicates a chance for growth." TVN and Canal Plus originally expected their tie-up to bring in annual savings of more than 250 million zlotys ($76 million) in its third year, with core profit of 550 million zlotys in 2015. Instead, the third year could bring an ownership overhaul. "No timetable has been set. Every option is open," a source familiar with the matter said, adding that Bank of America Merrill Lynch and JP Morgan have the mandate for the option review. The source added that the Polish TV market is becoming increasingly competitive, with a possible launch by U.S. video-streaming company Netflix next year. SELLING SPREE Canal Plus is losing customers in its domestic market to widely available free channels, prompting the move to expand internationally by focusing on businesses in Poland, Vietnam, French-speaking Africa and more recently in Canada. Under a two-year strategic overhaul, Vivendi sold its French telecoms operator SFR and video games maker Activision Blizzard. After the SFR sale, Canal Plus will be Vivendi's largest results driver, bringing in about 40 percent of operating profit, compared with 33 percent for Vivendi's Universal Music Group and 27 percent for its Brazilian telecoms business GVT, which is also for sale. ITI, which has moved into multimedia from such disparate businesses as electronics imports and potato chips, is finishing its own clearout to cut debt costs, with TVN the last of its most-prized assets. Analysts told Reuters that Time Warner - owner of movie studio Warner Bros, cable network Turner Broadcasting and pay-TV channel HBO - could merge TVN with its Czech broadcaster CME. Time Warner rival Discovery Communications and Germany's Bertelsmann and RTL Group could also join the race. "If the transaction happens, it will be with a market premium," Raiffeisen analyst Dominik Niszcz said. "Vivendi paid over 20 zlotys per share for its TVN stake and it can be assumed that it would want to book over 20 zlotys now." After their initial jump, TVN shares were trading at 14.45 zlotys at 1435 GMT, up 0.3 percent on the day, valuing the company at about 5 billion zlotys. (Additional reporting by Jakub Iglewski in Warsaw; Editing by David Goodman)
