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Penta mulls Petit Press purchase

FINANCIERS from the Penta investment group have apparently decided to go into the media business, and the Petit Press publishing house is reportedly their next potential catch. This has provoked concerns within the publishing house, but also among transparency watchdogs.

FINANCIERS from the Penta investment group have apparently decided to go into the media business, and the Petit Press publishing house is reportedly their next potential catch. This has provoked concerns within the publishing house, but also among transparency watchdogs.

After it was officially announced that Penta purchased two publishing houses, Trend and 7 Plus, and will thus control periodicals like the Trend business weekly, the Plus Jeden Deň tabloid daily and the Plus 7 Dní tabloid weekly, rumours surfaced that Penta is interested in buying a package of shares in the Petit Press publishing house, owners of The Slovak Spectator as well as Sme, a major daily, Új Szó, Slovakia’s only Hungarian-language daily, and the regional daily Korzár, among others.

The Petit Press general director, Alexej Fulmek, maintains that while Penta’s interest in buying the shares in Petit Press is legitimate, it would “harm the image of the publishing house”.

“Initially, it would not mean any change for the operations within the publishing house, but I cannot estimate what would happen later on,” Fulmek told The Slovak Spectator.

SITA steps in

The Czech media news portal Motejlek.com broke the story on September 9, claiming that the current German owner of 50-percent stock in Petit Press, the Rheinisch–Bergische Verlagsgesellschaft (RBVG), is looking to sell its share and that it has already closed an agreement with Penta over the price for the stock.

Penta’s spokesman Martin Danko refused to comment on any “speculative information” for The Slovak Spectator, adding that they are ready to inform the public only about concluded business transactions. However, one of the partners at Penta, Jaroslav Haščák, gave an interview to journalist Tom Nicholson, who published it on his blog. In the interview, Haščák admitted they had “four other media aims” they are working on.

Haščák indirectly admitted in the interview that Penta was looking into buying Petit Press shares, and that the transaction is planned to take place via the SITA newswire, a privately owned agency, first purchasing the shares, as he repeatedly stated that he could not comment on the transaction due to the confidentiality agreement between SITA and RBVG.

Petit Press hopes for pre-emption

The fact that RBVG was selling its shares in Petit Press was later confirmed by Petit Press general director Alexej Fulmek, who repeatedly claimed he assumes the owner of the remaining 50 percent of the shares, Prvá slovenská investičná skupina (PSIS), a subsidiary of Czech investment holding Proxy-Finance, will use its pre-emption right to purchase RBVG’s shares. PSIS already announced in the spring of 2014 that it wanted to use its pre-emption right, Fulmek told The Slovak Spectator.

In his reaction for the omediach.com media news portal, Fulmek also confirmed that SITA has made an offer to RBVG through its subsidiary company and did not hide that it surprised him.

“It is somewhat paradoxical and perhaps even laughable that Petit Press through myself started talks with the owner of SITA two months ago about Petit Press entering SITA by purchasing some part of its shares, but it seems that in the course of a couple of weeks the situation has turned around and now SITA is interested in entering Petit Press,” Fulmek told omediach.com.

Penta media acquisitions

On September 3 Penta announced it acquired the Trend Holding and Spoločnosť 7 Plus via cooperation with Dutch investment firm V-3 Media Holding, which officially bought both publishing houses.

“The economic model of operation of mostly print media faces fundamental challenges in the form of a drop in income from advertising,” Penta spokesman Martin Danko wrote in a statement. “It is obvious that in order for traditional media to adapt to this new reality and survive, they need a financially strong and stable investor.”

The financial group wants to offer the publishing houses financial stability, broad know-how and expertise over managing difficult restructuring processes. This should not be limited to Slovakia, as Penta also wants to invest in media in the Czech Republic and Poland, according to Danko.

Later in September, Penta took steps that suggest the media division is going to be in the group’s focus in the near future. On September 23, the group hired a new manager to oversee Penta’s media investments, an experienced executive Tobias Schulz-Isenbeck, who previously worked as CFO at the Swiss publishing house Ringier AG and an executive director at Verlagsgruppe Handelsblatt in Dusseldorf, Germany.

Press freedom concerns

“We are fully aware of the responsibility and the concerns that our entry in the media market provokes, particularly because our investment group belongs among the main players in the Slovak, but also the Czech and Polish markets,” Danko said.

Penta, which has been active since 1994, has seen its activities valued at €6.5 billion.

“I absolutely agree that newspapers should remain independent and they cannot be allowed to end up in the wrong hands,” Haščák said in the interview with Nicholson, adding that Penta has a strong sense of social responsibility. He also noted he considers the media market to be just like any other market and complained about journalists trying to make their position look somewhat special.

Transparency watchdogs and media professionals, however, continue to express concern.

“The purchase of media by the Penta company is not a regular investment, but [it is] mainly an attempt to influence the balance of power in Slovak politics in the broadest possible sense,” wrote Konštantín Čikovský, Sme’s deputy editor in chief.

Some of the concerns are also reinforced by the fact that Penta was mentioned extensively in the infamous Gorilla file, an unverified transcript purporting to originate from conversations covertly recorded by the country’s SIS intelligence service between 2005 and 2006.

Haščák’s name is featured in the Gorilla file in association with conversations he is alleged to have had with senior officials and politicians from the ruling coalition in 2005 and 2006, mainly about privatisation and the provisions from the sale of state property. Penta has denied Haščák’s involvement.

The Gorilla file also mentions the name of one of the owners of SITA, Igor Grošaft, who allegedly participated in representing Penta’s interests in talks with politicians.

Other concerns pertain to the development in the Czech Republic, where Slovak-born billionaire Andrej Babiš acquired a number of media outlets, including the influential daily Mladá fronta dnes. Babiš, who tops the politicians popularity rankings, now serves as the country’s finance minister, and is considered one of the most influential men in the country.

In Slovakia, Babiš owns the publisher of the Hospodárske Noviny daily. Another business tycoon, Ivan Kmotrík, controls the TA3 news-only TV channel, while another major investment group, J&T, owns the JOJ TV channel and has links to the Pravda daily.

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