Bill collectors tighten screws on 4Media
By : Anna Kocinska
Saddled with the bill: 4Media President Wojciech Krefft is struggling to free his firm from debt.
Events turned ugly last week for 4Media, the tannery-turned-media group that in March acquired the financially troubled Internet company The Mother Ship Poland (TMSP) and its portal ahoj.pl.
While TMSP's creditors were banging on 4Media's doors, TMSP's new management said it would announce the company's bankruptcy and consider taking Jeffrey Grady, the former chief executive officer of TMSP, to court for "acting to the detriment of the company."
Three months ago 4Media then known as Chemiskor, a publicly listed leather goods maker said it would pay off TMSP's zl. 8.05 million ($2.01 million) debt.
In a communique released last week, TMSP's new management said that despite a motion it had submitted to court concerning settlement proceedings for the company's creditors, some of them had already started seizing the company's assets before the court's decision, leaving TMSP insolvent. "Due to their actions we completely lost our financial liquidity and we can't make any payments even to (ahoj.pl's) employees," said Monika Sarnecka, PR director for 4Media. "Now the court will decide the fate of the company; whether to consider the motion on the settlement with creditors or whether to bankrupt the company."
TMSP's liabilities, meanwhile, continue to mount. According to the communique, TMSP's debt is much higher today than when 4Media bought the company in March. "New creditors are emerging," the report stated.
Grady, the cofounder of TMSP and former chairman of the board of New World Publishing, publisher of the Warsaw Business Journal, said last week there was no legal basis for action against him. "Legally speaking they bought the company with liabilities because they signed the balance sheet, so they can bankrupt the company, but the debts won't disappear," he said. "The settlement that was prepared said that for smaller creditors payments were to be made within three months or so and for larger creditors in over one year after the settlement was agreed. The additional liability I am aware of that came after the transaction was completed was a legal firm bill."
One of TMSP's creditors, OMD Poland, a Warsaw-based media house, asked the court to secure its claim of zl. 1.55 million ($380,000) in unpaid bills after TMSP missed an April payment deadline. Meanwhile, on May 9 the Lodz Regional Court froze 4Media's bank accounts and seized some of its subsidiaries, including TMSP, TMS Auctions and Wolne Slowo, publisher of daily Zycie. In addition, the court assigned Dariusz Kaszubski, vice president of 4Media, to manage property belonging to 4Media.
Sarnecka said OMD Poland's actions came as a shock to the company and that it hadn't received any documents from the court. "We learned about all that only the day before yesterday (last Monday) from a legal firm working for OMD," she said. Sarnecka refused to say how 4Media would respond to the court's decision.
OMD Poland, however, isn't the only creditor banging on TMSP's door.
On June 6, the Czestochowa Regional Court ruled that 4Media should pay zl. 4 million ($1 million), plus interest, to Yawal, a construction materials company, for the purchase of shares in its subsidiaries, Y-Net and Y-Press. According to 4Media, the long registration procedure of the company's share issue is the reason for the delay in payments.
Drzewiecki, Tomaszek & Wspolnicy (DT&W), a Warsaw-based legal firm, in late May ordered the seizure of ahoj.pl's domain name. DT&W is looking to recover at least part of zl. 500,000 in debt owed by TMSP. But according to 4Media President Wojciech Krefft, a company subsidiary called Internet Operator (IO) owns the rights to ahoj.pl and IO submitted a motion to Naukowa i Akademicka Siec Komputerowa (NASK), the agency that registers Polish domains, to register the name. According to Igor Ostrowski, a partner at DT&W, NASK had refused to grant IO the rights to the ahoj.pl domain. "There are no dates on the agreement between IO and TMSP, which is why it's not valid in our opinion," he said. "I can't understand why 4Media has done nothing since March to settle the debts and now they are trying to bankrupt the company. (TMSP) looks like a debtor trying to prevent a creditor from vindicating his rights."
But Grady said he remained hopeful that 4Media would honor its promises. "We believe their intentions are good and they intend to pay the creditors," he said. "It is taking time to organize financing and during that delay everyone is putting pressure on everyone and everyone is blaming everyone because of delays.
"(4Media's) long-term strategy is a settlement with creditors. And 4Media has a good strategy for (ahoj.pl)."
For its part, the Securities and Exchange Committee (KPWiG) said last week that it was looking into a 4Media financial report submitted to the committee on June 4 to determine whether the company had fulfilled its information disclosure obligations.
Komitet Techniczny, a committee of nine radio broadcasters and media brokers that earlier this year established a national standard for radio market research, said it would penalize broadcasters whose promotional campaigns abuse or manipulate the results of listener surveys.
Stations found guilty of such practices may have their listener results thrown out, the committee said.
Komitet Techniczny's ruling, which went into effect on June 1, was prompted by a questionable promotional campaign run by Agora one of the committee's members. The media giant, which has stakes in 14 local radio stations and is looking to double or triple its position in those markets, ran a listener contest in its several radio stations that promised cash prizes to the stations' regular listeners. Competitors of the stations argued that the contest opened the door to non-listeners claiming to be regular listeners when questioned by official researchers.
Janusz Janiec, director of Agora's radio division, refused to comment on the committee's decision. "Under the rules (the members of the committee) agreed to, our debates at the committee's meetings are confidential," he said. Janiec was less reticent when describing the promotional campaign, "which made other radio broadcasters nervous" and which was run by Agora at several local stations, including Warsaw-based Radio Pogoda.
According to Anna Romaniuk of SMG/KRC, a market research institute that covers the radio sector, the current round of telephone interviews, which began in January, are done on a daily basis using the computer-assisted telephone interview (CATI) method.
Agora's campaign could have disturbed the SMG/KRC's telephone survey, said one of the Technical Committee's members, who wished to remain anonymous. "If all stations ran the same kind of campaigns, real market surveys would make no sense," he said. "The committee's members apart from Agora had no doubts that their campaign wasn't right," added Stanislaw Jedrzejewski, a representing public station Polskie Radio in the committee.
But according to Janiec, Agora's radio contest did not disrupt regular daily market research and its only goal was to make its stations more popular. However, Janiec said Agora would not run the campaign again. "We were surprised by the reaction of our competitors because you can't really take our promotional calls for SMG/KRC's researcher," he said. "All we did was create a base of regular listeners. Any other company does the same thing."
