WizjaTV, Cyfra+ in talks over merging Poland's digital TV platforms

Vivendi, a major shareholder in Canal+France, one of the owners of Cyfra+, and United Pan-Europe Communications (UPC), the direct owner of WizjaTV, have been discussing the possibility of joining the current platforms. "Both sides are trying to figure out how to grow the business in the best possible way and we have had discussions with Canal+ going on," Nimrod Kovacs, executive chairman of UPC's Central European operations told the Business Journal last week. "When you look at what is going on throughout Europe, every country is in a process of consolidation."
The new talks come roughly a year after the two platforms initially discussed teaming up. Before either platform launched, WizjaTV's founder @Entertainment, and Canal+ had negotiated a possible teaming, although those discussions ended bitterly.
Kovacs said negotiations on the digital platforms were also part of more in-depth talks on future cooperation between UPC and Canal+. He acknowledged that Poland might be too small for two digital platforms, a point that has been discussed since Canal+ and @Entertainment launched the platforms a year ago. "If both platforms can get up to the subscriber level, which is break-even, then it's a different story, but right now I think neither Wizja nor Canal+ is making money," he said.
Both platforms have offered aggressive pricing strategies and have spent heavily on promotion to attract subscribers to their digital offering, which oftentimes requires individuals to also purchase a satellite dish. Subscribers pay a monthly fee to receive the digital packages, primarily a variety of Polish language television stations, via cable television or satellite. Digital platforms are supposed to have virtually infinite capacity for new stations and higher transmission quality.
Wizja is slightly ahead in the subscriber game, Kovacs said, at about 250,000 customers right now. That compares to the more than 155,000 subscribers Cyfra+ is estimated to have.
Vivendi is an indirect owner of Cyfra+ through its 34% stake in Canal+France. Several Polish companies and Canal+Polska operate Cyfra+ here. Canal+France owns 33% of Canal+Polska, with the remaining shares held by Polkom Invest (49.1%) and publisher Agora (17.9%).
Krzysztof Surgowt, a marketing representative with satellite manufacturer Astra, which deals with both platforms, said that market watchers had been speculating on how much longer Canal+France would be willing to sink money into Canal+Polska and, more importantly, the digital platform.
Gaspard de Chavagnac, general manager of Canal+ Polska, said that any rumors about whether Canal+ France was willing to stay with the project are purely speculation. But he did say that Cyfra+ is going through a lot of money. "We are generating losses of million of dollars due to the launching of the platform, but it's not cash and financial problems," he said. "We have strong shareholders and we have a bank loan in place that has enabled us to completely finance our business plan." He said that the chairman of Canal+ France, Pierre Lescure, visited Poland twice this summer to see how the company was doing.
UPC built up a strong presence in Poland with its purchase of media company @Entertainment. In addition to the WizjaTV digital platform, @Entertainment also owned cable operations Polska Telewizja Kablowa (PTK), the country's largest cable television provider. That acquisition lent some strength to WizjaTV, which had seen Canal+ get a head start when it came to signing up Polish television stations it could broadcast. Both platforms have battled intensely to lure content providers, such as Telewizja Polska (TVP) and Polsat. TVP is aligned with Canal+, while Polsat had been expected to move into WizjaTV's camp.
But Polsat appears to have changed its mind. Owner Zygmunt Solorz said recently that he intended to create his own digital platform. Solorz, who is involved in several financial and media ventures, had intended to offer the new digital services free of charge to members of Polsat's pension fund. The Pension Fund Supervisory Office (UNFE), however, quashed that idea, saying the pension laws did not allow such a promotion.