Agora numbers down amid slide in adverts
Media giant Agora's disappointing third-quarter results, reflecting an overall slowdown on the advertising market, also indicate a flight of ad revenue from the press sector to TV.
In the first nine months, ad revenues of Gazeta Wyborcza daily, which generates the majority of Agora's revenue, sank 6.2% to zł. 419.5 million ($102.3 million) from zł. 447.1 ($109.05 million) million in the same period last year. Third-quarter revenue was particularly downbeat, plunging 16.4% to zł. 115.6 million ($28.2 million) from zł. 138.3 million ($33.73 million) compared to 2000.
"It's a difficult year for media companies because the general economic slowdown has impacted the ad market and resulted in a significant drop in ad revenue," said Krzysztof Misiak, chief analyst at Dom Maklerski WBK. "And Gazeta's revenue accounts for almost 95% of Agora's total consolidated revenue. On top of the general slowdown, TV broadcasters offered enormous discounts and therefore seriously affected the press market."
The daily newspaper advertising market dipped by 5.5% from January to September, while its share of the overall advertising pie eased by one percentage point to 20.9%, according to Agora Monitoring (estimates are adjusted according to the average discount rate but not for inflation). "Anyway Agora was in a far better position than other media because it holds a dominant position on the ad market and was able to offer smaller discounts," Misiak said.
On the other hand, Agora reported a net profit of zł. 181.5 million ($44.26 million) in the period, 44.9% higher than last year. However, this positive showing was based on the sale of zł. 101.9 million ($24.85 million) in shares in Telewizyjna Korporacja Partycypacyjna (TKP), Canal+ Polska's parent company.
"So you can't really compare (Agora's) net results with last year because if one doesn't include net profit generated on the sale of shares in TKP, the results reflect the downward trend," Misiak said. "I can't offer a detailed prognosis of the fourth quarter, but I think the results won't improve. Ad revenue will continue to drop."
To reduce its dependence on Gazeta Wyborcza for ad revenue, Agora is considering new areas for expansion. Last week local media reported that Agora may be talking to Polsat, the country's largest private television. "Agora keeps saying it's interested in television, but most broadcasters have a set ownership structure and it would be difficult to find an interesting acquisition," Misiak said. "So Agora might try to acquire, for instance, radio or outdoor ad companies outside of Poland, in Eastern or Central Europe."
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TV industry insiders held their breath last week as the Office for Competition and Consumer Protection (UOKiK) came closer to reaching a decision on the merger between digital platforms Wizja TV and Cyfra+.
"We are working on the final version of the decision, so it may be ready to be signed even tomorrow or Saturday (Nov. 10)," said Andrzej Graduszyński, director of the UOKiK's department evaluating the merger. Although at press time he remained tight-lipped about the outcome, sector specialists said the office would approve the deal.
The merger was inked in August between the owners of Wizja TV and Cyfra+ - Amsterdam-based United Pan-Europe Communications (UPC) and France's Vivendi Universal respectively. Since then, UPC and Canal+ have been growing impatient as reports surfaced that the UOKiK might delay its decision. Also, Graduszyński said his office had already responded to U.S. pay-TV channel HBO, which had asked for a guarantee that it would remain on the merged platform. "We sent them our answer explaining that we cannot possibly guarantee their position on the new platform as they have no legal grounds to demand that," he said. HBO was concerned that a merger between the two platforms could lead to a consolidation of the pay-TV market and threaten its position. "Really, an American company cannot demand from us to return to the times of the centrally planned economy," Graduszyński said.
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The National Radio and Television Council (KRRiTV) last week granted three terrestrial TV frequencies - one to TV4, a channel launched last year and controlled by TV station Polsat, and two went to TV Puls, a TV channel launched last spring.
Earlier this year, the council granted four terrestrial frequencies to TVN, a station owned by the ITI group. But all three channels, TVN, TV4 and TV Puls, are determined to bid for another nine frequencies that were given up last year by Canal+, arguing they do not have enough analog reach.
Anna Kocinska
