Media firm interested in outdoor market only

Global media concern Clear Channel Communications (CCC) has rejected speculation that it plans to invest in Polish broadcasting firms, blaming government legislation for putting a stranglehold on the country's media companies.

"An investment in media would only pay off if we could gain control of the firm by acquiring a majority stake, but the current legislation doesn't allow it," said Kalina Janicka, president of Clear Channel Poland (CCP).

On Dec. 1, CCC renamed its local subsidiary Plakanda, Poland's fourth-largest outdoor advertising operator, CCP. The move completes Plakanda's integration into the parent company's international corporate structure.

But while CCC's core global operation is TV and radio broadcasting, Janicka said the company would focus more on outdoor advertising in Poland. She said that even if the law is amended to allow foreign capital to buy majority stakes in Polish media, CCP will not rush into acquisitions. "We would welcome a change in the law because it would provide a reasonable possibility to invest in Polish media," she said. "But then another question arises, namely, whether it makes business sense to do it."

Meanwhile, Hanna Kędziora, media analyst at brokerage Dom Inwestycyjny BRE Banku, said several Polish media firms are looking for foreign investors, but are hamstrung by the legislation.

"Foreign companies cannot buy Polish media firms because Polish law provides that more than 50% of a Polish media firm must be Polish-owned," she said. "Polish media companies would prefer to obtain funds from an investor rather than via an IPO."

Kędziora said the owners of Polish media often discourage potential foreign firms from investing by quoting unrealistic prices. "Polish media companies value themselves evidently higher than comparable firms in Western Europe," she said.

Despite its rejection of buying broadcast media, next year CCP plans to spend $6 million on acquisitions of small Polish outdoor operators and further expansion of its network of upscale advertising bearers - citylights and megasizes.

But these investment projects are only expected to maintain CCP's 15% share in the outdoor market in 2002, Janicka said. "My ambition is not a greater market share, but keeping the firm in the black," she said. However, she declined to disclose whether CCP would turn a profit in 2001.

CCP expects to generate zł. 50 million ($12.5 million) in revenue this year compared to zł. 78.1 million ($19.5 million) in 2000.

Amid a slump on the advertising market, analysts said media and outdoor firms offer increasingly deeper discounts to keep clients. "Most outdoor firms will record losses in 2001," Kędziora said.

Robert Wylot