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Publishers applaud state move to grab PNS

Publishers of Slovak print media have applauded the government's decision to wrest back control of the nation's largest print media distribution company, Prvá Novinová Spoločnosť (PNS). The publishers, embittered by the PNS's failure to pay them over 200 million Slovak crowns in revenues, say they hope the new PNS management installed by the state will move quickly to settle the debts accumulated under the former management.
The FNM state privatisation agency acquired 23.42% of PNS shares from a bankrupt former owner on May 21 to assume 100% ownership of the distributor. On the same day, the FNM recalled the PNS's former board of directors and appointed a new board - something they had been unable to do previously, since the management installed under the previous government of Vladimír Mečiar had changed the statutes of the company to require an 80% majority of shareholders to make changes to the firm's leadership.

Publishers of Slovak print media have applauded the government's decision to wrest back control of the nation's largest print media distribution company, Prvá Novinová Spoločnosť (PNS). The publishers, embittered by the PNS's failure to pay them over 200 million Slovak crowns in revenues, say they hope the new PNS management installed by the state will move quickly to settle the debts accumulated under the former management.

The FNM state privatisation agency acquired 23.42% of PNS shares from a bankrupt former owner on May 21 to assume 100% ownership of the distributor. On the same day, the FNM recalled the PNS's former board of directors and appointed a new board - something they had been unable to do previously, since the management installed under the previous government of Vladimír Mečiar had changed the statutes of the company to require an 80% majority of shareholders to make changes to the firm's leadership.

"I really feel that this time the company [PNS] will be rescued," said Alexei Fulmek, the head of the VMV publishing house which produces the daily paper Sme. "It is vital to the country's print media that this has finally happened."

But other publishers expressed doubt that the FNM move had come in time to save many of the country's newspapers. "This measure was taken at five minutes past midnight," said Miloš Nemeček, chairman of the Association of Slovak Publishers of Print Media. "It came later than we expected, because the internal situation at PNS was dangerous for us even last November or December."

Unpaid debts

FNM officials have not yet said how they plan to settle the 200 million crowns in debt owed by the PNS to newspaper publishers. The PNS made a loss of 185 million crowns in 1998 after posting a profit of 20.4 million in 1997, and some media professionals doubt the firm's ability to settle its arrears, even with the most tractable of managements.

"It's simply too late to do anything," said Ján Fule, head of the Slovak Syndicate of Jounalists. Fule said the FNM had delayed acting in the PNS case for so long that the PNS was now more likely to go bankrupt than turn itself around. "Some of the kiosks that used to belong to the PNS are no longer owned by the company," he said.

But Igor Ďurič, chairman of the PNS Board of Directors since the May 21 management shuffle, said that the firm had a good chance of survival as long as publishers were willing to be patient and cut the distributor some slack. "If they don't take legal action against the PNS, the firm will not be brought to its knees," he said. "Their debts will be repaid on a slower time schedule. But if publishers are not patient, they will lose their distributor."

The PNS controls some 60% of the print media distribution market.

Ďurič said that the new PNS leadership had its own notions of how to solve the firm's crisis, but that they still needed to study the full situation - including performing an audit - before proceeding. "We have to find out where the money went, and recover it," he said. "Then we have to revive financial flows and find sources to cover our obligations."

Nemeček, for his part, said that the FNM had to sell the PNS as soon as possible. "The only possible way to stabilise the situation at PNS is increase cashflow, and that means an investor," he said. "It's not realistic to expect the government to bail out the company, because it doesn't have sufficient sources or political will to do this."

Nemeček said that any investor would have to fulfill certain criteria, including solvency, professionalism and objectivity.

Peter Mačinga, sales director of the Perex publishing house which produces Pravda, Slovakia's second-largest daily paper, said that the PNS faced three options - creating a new two-year installment plan for the repayment of its debt, increasing its share capital, and privatisation.

Fulmek agreed with Mačinga, proposing that publishers might be allowed to buy shares in PNS and thus be sure of recovering their money. "Privatisation and the entrance of a strong investor who is able to pay the debts and restructure the PNS - this is what no PNS general director has done so far because the job was too difficult," Fulmek said.

A meeting was held between the new PNS management and publishers on June 2 to inform the creditors of the financial situation at the PNS. Fulmek said he was expecting the meeting to announce that the firm was beginning to pay its debts again.

Past history

The privatisation of a 97% stake in PNS by massive printing house Danubiaprint on February 28 last year sparked accusations of an unhealthy concentration on the Slovak print media market. Danubiaprint had an over 70% share of the printing market, and its management was reputed to be close to the former Mečiar government.

On November 3, 1998, Danubiaprint shifted a 20.42% stake in the PNS to the Distripress company. 17 days later, the Anti Monopoly Office ruled that the earlier privatisation had been illegal, prompting the FNM to cancel the sale on February 2, 1999. The Danubiaprint stake, minus the transferred 20.42% of shares, was returned to the FNM on March 31.

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