Putting the business back in media
By Timothy Sifert
Media industry business pros are stepping up lobbying efforts to convince the government to allow economic and investment principles more leeway in governing their industry, lest their business fortunes continue to fall prey to the power politics they say have strangled substantive progress over the past two years.
The Ministry of Culture plans to convene a conference with Polish media executives in the coming weeks, at which they would open to discussion a litany of pressing topics. These topics include rules of the market for publishing and electronic media, factors of new technologies, the law of administration and the relationship between culture and media and Polish archives.
Besides the need to incorporate European Union directives, the existing law needs changing because it dates back to 1992, when the industry and the technology that ran it, were quite different.
Much of the industry's future hangs in the balance.
"Now we want to discuss things in a very open way," says Wojciech Dziomdziora, a deputy director in the department of law and legislation in the Ministry of Culture. "Our aim is to back discussion away from the psychological and the emotional, and into a discussion about fact."
Over a month ago, the government scrapped its draft amendment to the radio and television law, a move especially affected by the Rywingate scandal, in which a $17.5 million bribe was allegedly solicited on behalf of Prime Minister Leszek Miller's SLD. Apparently the bribe was made in order to omit a part of the draft amendment that would prevent national dailies from owning television stations.
"The last amendment was very emotional, especially after the atmosphere from Rywingate," Dziomdziora says.
The scandal persists today, as the specially-formed Rywin commission continues to vet public officials for guilt in the affair, and is beginning to write a comprehensive report on the matter. And it's just this sort of media-sensitive quarreling that the private sector wants out of its market pursuits.
"The main issue is to have a bigger say in terms of business and market issues in the industry," says Marek Sowa, vice president of United Pan-Europe Communications (UPC) in Poland. "The debate over the past years has been dominated by the issues of the past."
One of the main concerns that executives have is the sheer economic importance of the media industry for the country, particularly as it creates jobs, lures investment into the country and will play an important role in ensuring that Poland is on more equal footing with existing EU members.
Sowa assures that business people, especially via associations such as the Polish Confederation of Private Employers, are doing their part so far to spread their view.
But he points out that not everything has been so fruitful: "My impression is that we are in a reactionary mode to the government proposals," he explains. "On the business side, the decision-makers' voices are being subdued."
This view, according to Dziomdziora, is something of a concern for the government. "We take into consideration their comments," he says. "I agree that we have to look at is as a market, and we deal with market issues here. We are talking about a quite specific market."
What's more, he adds, the Ministry of Culture is not divorced from the economic issues. "The Ministry of Culture is a member of the government," he says, noting that it works with the Ministry of Finance and the Ministry of Economy and Social Affairs. He adds, though, that there are balancing factors.
"But the level of income is not the only important thing," he says. "Media has a great influence on society, influence on public order, influence on pluralism of information and on many aspects of culture."
Dziomdziora declined to say which view in the debate of culture versus economy would take precedence, only allowing that everything was still open to debate.
Indeed, that view is not lost on industry decision makers, as some declined to comment specifically because legislation is still in early stages.
At a recent Business Journal conference, UPC's Sowa urged that the ongoing debate be governed by "business, economic, investment and return on investment."
And looking at the bigger picture, he noted that Poland cannot simply bank on the size of its population to draw foreign investment into the industry; it must render its tax system and infrastructure more efficient.
Those two concerns have long proven deciding factors for foreign investors in many industries - and in a number of cases these investors have opted to put their capital in neighboring countries, such as the Czech Republic and Hungary, owing to their comparably better business environments.
That is not to say, however, that Poland has been - or will be - left out to pasture by investors, even in the media market. In November, a consortium of Texas-based Hicks, Muse, Tate & Furst bought Aster City Cable and cable operations of Elektrim Telekomunikacja for €110 million. And there has reportedly been interest from other investors in shoring up the market.
There are also some business-minded movements in the market at present. On September 15, in a long-awaited deal, Polish media company ITI Holdings has entered into a share purchase agreement to acquire 's remaining 30.4 percent equity stake in TVN for €131.5 million in cash. ITI had tried to finance the purchase with an equity offering in the past, but failed. At present, company executives are deciding what avenue to capital, including debt or equity, it will take to conclude this deal.
If little else, in the present complex environment, the wheels of private media business and government seem to be turning. But the jury's still out on whether the two entities will prove to be vehicles for change and compromise, or if they will be stalled engines, engaged in conflict.
