UPC lays off staff; Polsat to launch 'Zostac Miss'
UPC Distribution, the largest division of Netherlands-based media group United Pan-Europe Communications (UPC), said last week that it would sack up to 1,500 employees from its Western and Eastern European operations.
The announcement follows the release of UPC's second-quarter report, in which the company posted negative earnings before interest, tax, depreciation and amortization (EBITDA) of E54 million compared to negative E61 million in the first quarter. As a result, UPC will cut 500 employees from its Eastern European subsidiaries and 1,000 from its Western European offices within three to six months.
To reduce the company's debt, two weeks ago UPC whose Polish operations include cable TV network UPC Telewizja Kablowa and digital platform Wizja TV, merged Wizja TV with France's Cyfra+, its main competitor. Under the deal, UPC will keep a 25% stake in the new platform in return for E150 million in cash and continued control over its Polish cable business. The transaction reduces UPC's funding gap "to E350 million-E850 million," according to a company press release.
Analysts were quick to praise the merger. "The benefit of that transaction is that they received cash," said Rene Verhoef of Fortis Bank Nederland. "And they will be able to save enormously on programming costs. It's a major gain for them. It makes a lot of economic sense and there will be less competition on the market, too. (They) will have a lot of benefits from economy of scale."
According to Charles Bracken, UPC's chief financial officer, the transaction was also intended to deconsolidate UPC's activities. "We are a core cable-business company (TV, Internet, telephony)," he said. "It is important that we really focus on that. The fact we reached a breakeven point in Poland reflects only synergies you can get from a cable and digital platform. But the problem is that taking things to the next level in Poland was going to be difficult, so we just felt it was a good deal."
Meanwhile, UPC's DTH (direct-to-home) platforms in Hungary, the Czech Republic and Slovakia will remain within the company. "I think we'll look at it and see what will happen, but for now the business is working as we expected," Bracken said. "Of course we are still losing money (in the three countries), but it's only less than a year from their launch."
Job cuts are not the only way UPC is reducing costs in Central and Eastern Europe. UPC also plans to eliminate high-cost television channels with limited viewership and to renegotiate existing contracts.
While just two years ago TV programming schedules were awash with new shows, this fall Polsat, the nation's largest private television station, appears to be the only one with plans to introduce a homespun sitcom or serial. On Sept. 1, Polsat will air "Zostac Miss," a 13-episode serial about the everyday life of girls participating in a beauty contest. Polsat will also continue to broadcast last year's lineup, including "Adam i Ewa," "Miodowe lata" (Honey Years) and "Swiat wedlug Kiepskich" (the World according to Kiepskis).
Meanwhile, private broadcaster TVN, which this month launched the country's first 24-hours news channel, said last week that it would not produce any serials this year, following the new trend among domestic broadcasters. While at the beginning of 2001 sitcoms routinely ranked among the top-10 programs, with some episodes attracting as many as 8 million viewers, by March the launch of reality shows "Big Brother" and "Dwa swiaty," (Two worlds) forced the audience share of sitcoms and serials to fall sharply. "There will be no homespun serials (this fall) because there will be a second edition of Big Brother," said Andrzej Soltysik, spokesman for TVN. The program is scheduled to air Sept. 2.
Financially troubled public broadcaster Telewizja Polska (TVP) isn't planning to introduce any new serials either. Instead it will produce fresh episodes of the 2-year-old hit show, "Klan" (Clan).
