Advent invests in TV program production
Private global equity investor Advent International (AI) announced last week it would invest $12 million in Zone Vision (ZV), a producer and distributor of thematic TV channels in Central and Eastern Europe.
"We bought something around 12%," said AI's London-based general director, Zoltan Toth, but he declined to be more specific.
According to Marcin Duszynski, the general director of AI's Polish office, the deal is significant because until now AI had invested in cable TV operations rather than television channels. By investing in U.K.-based ZV, AI becomes the first equity investor in Poland to buy a stake in a producer of TV programs, Duszynski said.
"So far venture capital funds have invested in cable infrastructure and not in programming infrastructure," he said. "This investment will increase local program offerings, which is the future of cable TV."
ZV, launched in 1991 by chief executive officer Chris Wronski, is worth $100 million. "Poland was always our main market," said Mirek Grabiec, the company's director of operations. Among ZV's customers in Poland are Aster City, a cable TV network owned by Elektrim, Gdynia-based cable TV network Szelsat, and United Pan-Europe Communications (UPC), which owns the Wizja TV digital platform as well as UPC Telewizja Kablowa, one of Poland's top cable TV networks. Grabiec said ZV is present throughout Central and Eastern Europe apart from Albania. "We are also present in Western Europe, but our position there is not as strong," he said.
In Poland, ZV sells several thematic channels including Romantica, Reality TV, Le Cinema, E! Entertainment all of which are produced in association with UPC's UPCtv. ZV also produces the Polish version of the Discovery Channel and Animal Planet.
"This financial injection will help us to develop our own new channels and expand our distribution," Grabiec said.
ZV plans to launch four new channels, the first of which is scheduled to air in September.
Cable TV station Szelsat has a contract with ZV for four channels belonging to the Discovery package as well as Animal Planet, Romantica, Reality TV and Fantastic. "We should welcome the launch of the new channels but whether they will be interesting for us will depend on their content and of, course, on their price," said Andrzej Strelau, director of development for Szelsat. "The introduction of new channels on this very saturated (content) market is difficult."
Last year, ZV's sales reached $19 million and, according to Grabiec, turnover has grown 100% annually since 1997.
Toth predicts ZV will develop in one of two ways over the next few years. "One way is a sale to a strategic investor, something like a pan-European media conglomerate and there are a number of such companies," he said. "On the other hand, if the market improves in two or three years, ZV could also be a candidate for an IPO. Three years from now, we will determine which way ZV should take."
While Duszynski said AI would provide ZV with further financial support if ZV acquires other distributors or producers, Toth was not convinced this would be the best way to expand. "It could be rather a partnership and not an acquisition," he said. "This is the pattern other media companies follow and I think this is the pattern that ZV should look for in the future."
AI has been investing heavily in Polish media lately. Since it spent $65 million in 1996 to acquire pay channel @Entertainment, which it later sold for more than $1 billion to Amsterdam-based UPC in 1999, it bought a minority stake in Eurozet in 1999. Eurozet owns Radio Zet, one of the country's leading commercial radio stations. Last year, AI also purchased a 29% stake in the Warsaw-based station Radio Kolor. "And by the end of this year, we would like to conclude another three to four projects," Duszynski said.
Wizja TV, one of Poland's three digital platforms, is toying with the idea of launching an adult channel.
Dorota Zawadzka, PR director at Wizja TV, said last week that children would not have access to the channel thanks to a special encrypting system the station would be using. Amsterdam-based United Pan-Europe Communications (UPC), which owns Wizja TV, has already begun airing the erotic channel, called Private Gold, in the Czech Republic, Slovakia and Hungary. Private Gold is available through UPC's digital services (UPC Direct), for a fee of Kc 211 (zl. 24) a month. The channel is aired from midnight to 4 a.m.
MediArt, a Warsaw-based advertising sales office, is determined to find advertisers for locally produced television channels distributed through cable networks.
Last week, the company announced the results of market research conducted on cable networks in Poznan, Gdynia, Elblag and Lodz, all of which broadcast Twoja Telewizja Miejska (TTM), a thematic channel consisting of locally produced programs. Wroclaw-based Expert Monitor conducted the research for MediArt using the CATI (computer assisted telephone interviews) method. According to Ryszard Gajewski, president of MediArt, since there are more than 130 regional television channels produced in Poland, measuring their viewership should be an efficient way of informing advertisers that they exist. "This market is worth several million zlotys a year," he said. "We try to get through not only to smaller, local advertisers, but also to national advertisers and talk them into placing ads in those niche cable channels."
