Warsaw court bans Metro; equity fund in radio talks

Agora, publisher of national daily Gazeta Wyborcza, has been prohibited from publishing its free newspaper, Metro, after a ruling by the Regional Court in Warsaw.

Last week's decision follows accusations by TPP, a subsidiary of Sweden's Metro International and publisher of the free daily Metropol, that Agora had mimicked Metropol's concept, distribution and title. A month ago, TPP asked the court for a temporary injunction to ban Metro from appearing. The court's decision protects TPP's claim against Agora, which will be filed next.

"So now we must submit within two weeks our claim against Agora, which we'll do as it's already prepared," said Rene Frey, managing director of TPP. "Agora is confusing the public, readers and advertisers. It's using part of our name and it's distributing its (free) newspaper in the same places. They copied it all. If this isn't unfair competition, what the hell is unfair competition?"

Agora's Metro was launched in mid-October to offset losses in ad revenue on the Warsaw market partially caused by the publication of Metropol. Meanwhile, Metropol was first published in 2000 and by September this year had captured 12.8% of the capital's newspaper advertising market, traditionally dominated by Agora. Metropol also has an exclusive 10-year contract with the city for distribution in subway stations, while Agora's Metro is handed out on streets.

Last week, Dorota Nowak, an Agora spokeswoman, said the company still hadn't heard from the court. "The decision was made at a closed session and Agora wasn't able to present its arguments," said Piotr Niemczycki, general director of Agora, in a statement.

For its part, Nowak said the title of Agora's free newspaper was registered in 1998. "And since September 2000, free supplements to our Gazeta Wyborcza, under the Metro title, have been published in the Warsaw districts of Ursynów and Mokotów," she said. "So our free publication appeared on the market before Metropol was launched (November 2000)." Nowak also said Agora's original concept was different from TPP's product. "Metro is published twice a week and is focused on local information, while Metropol uses news-agency content and is a daily," Nowak said. She added that Agora would appeal the court's decision. "I can't tell you though whether we will release Metro's next issue, first we need to see the court's decision," she said.

Nevertheless, Metropol's Frey is optimistic about the final outcome of the battle with Poland's largest media group. "Agora has the right to appeal to the High Court of Appeals," he said. "Most likely they will appeal, which will take another 30 days until we have the final decision whether they have to cease publication or not. But we have a pretty strong case; you have to win many battles to win a war, though," he said.

Frey said the claim filed against Agora might not be the last one. "We're considering suing 4Media," he said. In October, 4Media, a former tannery, launched AGB Metro, yet another free newspaper in Warsaw. The company already publishes free dailies in six cities, totaling 245,000 copies (including Warsaw). Also last week, Agora called on PPB, a subsidiary of 4Media and publisher of AGB Metro, to stop publishing its free newspaper claiming that (Agora) has held the rights to the brand since 1998. Meanwhile, Metropol's final September edition reached some 325,000 readers, making it the most widely read newspaper in Warsaw, according to the Polish Readership Monitor (PBC).

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Private equity group Dresdner Kleinwort Capital (DrKC) is in talks with cash-strapped broadcaster Radio Plus. The station, which broadcasts nationally through a network of 28 stations, has been looking for an investor for the past few months.

"Yes, we are talking to Radio Plus," said Roger de Bazelaire, regional director of Dresdner Kleinwort Capital's Central and Eastern European private equity unit. "It's been dragging on for a long time. We never comment on a deal until it's closed, but we're interested in media, and radio in particular."

Radio Plus was formed in 1998 when 15 local radio stations agreed to establish a network using feeds from Warsaw-based Spółka Producencka Plus, whose main owner is the Polish Episcopate. De Bazelaire said the Episcopate is an unusual partner, but that the station is attractive because of its established network and solid brand.

DrKC is already well established in Central and Eastern Europe (CEE). Last June, it raised and closed Dresdner Kleinwort Benson Emerging Europe (DKBEE), a private equity fund targeting the region. DKBEE, which has already committed $50 million in CEE countries, typically invests $3 million-$25 million per deal and looks for returns of at least 35-40%. Radio Plus had been negotiating with DrKC earlier this year, but the talks broke down in August when the Episcopate withdrew from Spółka Producencka Plus and gave its shares to a Katowice-based local radio station. Sources who wished to remain anonymous said internal wrangling within the Episcopate over the station's format led to its exit. Radio Plus features news, talk, music and a smattering of religious elements targeting 25-50 year-old professionals. In November, after several weeks of uncertainty, the Spółka Producencka Plus-produced programming was back on the air and the Episcopate revived the network.

"It was an internal problem within the church, how (Radio Plus as a media project) should be managed in the future as it had been an open-minded commercial media project with religious content," de Bazelaire said. "Over the past two weeks the situation has improved and we still hope it can be done. The Episcopate has to make up its mind."

Meanwhile, according to Janusz Heath, managing director of Central and Eastern European private equity at DrKC, the group is typically an active investor. "We always sit on the boards and work closely with the businesses we invest in," Heath said. "We always seek to have a very strong influence on the direction the company is taking."

Anna Kocinska