Turmoil over Penta's bid for Petit Press

AFTER weeks of negotiation, the Penta investment group is set to buy a 50-percent stock in the Petit Press publishing house, spurring resignations by editors at the daily newspaper Sme.

(Source: Sme )

AFTER weeks of negotiation, the Penta investment group is set to buy a 50-percent stock in the Petit Press publishing house, spurring resignations by editors at the daily newspaper Sme.

Matúš Kostolný, the editor-in-chief of Sme, Petit’s flagship publication, and his four deputies have submitted their resignation, arguing that the presence of Penta, a controversial financial group, will prevent them from doing their work freely. Meanwhile, Petit Press CEO Alexej Fulmek says the departure of the reporters is preliminary and he continues to fight for the best possible outcome which, according to him, includes Penta accepting a minority share in the publishing house so that Fulmek is able to guarantee editorial freedom.

While the Rheinisch–Bergische Verlagsgesellschaft (RBVG) announced on October 14 that it is selling its share package to a company represented by the SITA newswire because the Slovak shareholder Prvá slovenská investičná skupina (PSIS) did not exercise its pre-emptive right to buy shares in line with the Slovak law, PSIS announced it attempted to buy shares in what was a legitimate use of that right.

The board of PSIS warned RBVG that if it sells the shares to the company Namav, the company represented by SITA and financed by Penta, it violates the exercised pre-emptive right and PSIS will be forced to take all legal steps directed at remedying the situation.

Late on October 16, Fulmek and the outgoing management of Sme issued a joint statement which reads that the publishing house continues trying to prevent the departure of Sme’s editors and reporters by taking, along with PSIS, all necessary actions to exercise the pre-emptive right so that the shares cannot be transferred to Namav. In the case that the publishing house succeeds, the editors of Sme would stay, the statement reads.

PSIS, represented by Peter Vajda, a subsidiary of Czech investment holding Proxy-Finance and holder of the remaining half of the shares in the publishing house, initially offered to buy 10 percent of the shares, which the German shareholder considered insufficient and opted for continuing with the transaction, which is to result in the sale of shares to a firm financed by Penta.

“PSIS as the co-founder of the Sme daily, which emerged in 1993 as a response to the challenge of the government of Vladimír Mečiar to take over the Smena daily, feels responsible for the healthy development of the media environment and will do its best to keep the Sme daily and other newspapers respected and independent media in Petit Press, one of the most significant Slovak publishers of print media,” the statement reads.

The sale of the 50-percent package still has to be approved by the Antitrust Office, which, given Penta’s recent media shopping spree, is not necessarily a free pass.




However, the emerged situation is already impacting Petit Press in a number of ways. The staff of Sme, led by Kostolný and his deputies Tomáš Bella, Lukáš Fila, Konštantín Čikovský and Juraj Javorský, launched an action over the past week to persuade the departing German owner, RBVG, not to sell its shares to Penta. The news about Penta entering the publishing house prompted the daily’s editorial management, along with dozens of staffers, to submit their resignations.

They have announced and explained their decision on a blog, opentat.sk, and broke the news that they were ready to fund a new project of “a new independent daily”.

“Now that it seems almost irreversible that the Penta group will become a shareholder of the Sme’s publisher, we are losing two things that good journalism cannot be done without,” they wrote. “We no longer have the security that we will be able to publish freely and Penta as a co-owner will necessarily diminish the trust of our readers.”

They also called on their readers to support their new project by signing a form on the website. It received some 1,600 signatures within the first hour.

Kostolný and his team has clearly formulated their arguments against Penta’s entry to the publishing house in a letter that they sent to Johannes Werle, managing director of RBVG, earlier in October.

“Penta’s presence would be a threat to the independence of our journalistic work, and would inflict direct damage to the daily Sme,” the letter reads, adding that the foundation of the newspaper was an expression of a desire for freedom and the reporters’ work continues to prove that they will not be silenced. “The story of Penta is completely different. They do not act out of passion for liberty, they have only exploited liberty to gain money and influence.”

According to Kostolný, Penta is not only a business group. Since the Gorilla scandal, it has been a part of Slovak politics, in which it has come to symbolise corruption and the abuse of power.

Already on October 8 the SITA newswire used its own news portal to publish a statement by representatives of SITA and Penta, in which they claim that in case of the acquisition they would guarantee free and independent work for reporters of Petit Press.


Negotiations go on


Fulmek confirmed that Petit Press is still negotiating with Penta about the possibility of the group accepting a minority share in the company, while the Petit Press CEO said he also made it clear for Penta that he is staying in the firm “up to the moment until it is clear that Penta is withdrawing to a real minority, meaning it will have 49 percent or less”, according to Omediach.com.

Fulmek still sees room for negotiation over a minority share of SITA or even Penta backing out from the publishing house while he also assumes that it might take some time until the transaction is concluded.

Sme in its October 15 issue published a cover page column by Fulmek in which he restated that he understands steps taken by the editorial but “at the same time I have to say that Penta is not a shareholder at the moment and that the other shareholder is still PSIS, the same company which stood at the birth of Sme”.

“We should keep together now, because this is the heaviest crisis that has hit the daily over the past 22 years, heavier than the one in 2008 and comparable with the years of 1992 and 1993,” Fulmek wrote, adding that he is still trying to arrange the relations with Penta in a way that the independence of the daily could be still guaranteed.

Fulmek notes that he was at the founding of Sme as a 26-year old youngster and led the company for more than 20 years, adding that Petit Press is no longer a publishing house of a single publication.
Fulmek admits that it is a difficult decision for him, but he wants to defend what has been built over the past 20 years to the last possible moment.

“I still believe we can make it and thus I wish for cooler heads and time that we need,” Fulmek wrote. “There are many variations of the possible development. We have not lost definitely.”

The Slovak Spectator is partially owned by Petit Press as well, with the publishing house holding a 75 percent share.


Press freedom concerns


Concerns are 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.

Key Penta shareholder Jaroslav 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 developments in the neighbouring 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 politician popularity polls, now serves as the country’s finance minister, and is considered one of the most influential men in the country.

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