The Slovenia Times

Biggest media takeover fails as CME opts against Pro Plus sale


The Prague-based US-owned fund said it decided to retain full ownership of Pro Plus, which operates POP TV and Kanal A channels in Slovenia.

It said it had terminated the agreement signed with United Group in July 2017.

United Group, which already owns telecommunications provider Telemach in Slovenia, has confirmed for the STA it has ended takeover activities, but would not comment further.

In Friday's press release CME did not blame its decision on drawn-out decision making procedures at the Competition Protection Agency (AVK) on concentration between Pro Plus and Slovenia Broadband, the company through which United Group planned to execute the takeover.

The fund said that since announcing its intention to sell its Slovenian business 18 months ago in order to accelerate deleveraging, it had repaid about US$ 370m in loans, reducing its gross debt by about 30%.

It also said that its Slovenia operations had grown revenues significantly and reached the highest level of profitability in a decade, generating US$20.8m in operating income before depreciation and amortization last year.

Michael Del Nin, CME co-chief executive officer, commented that "even without the proceeds from the planned divestiture, our net leverage ratio should approach 3x by the end of first quarter, a delay of just one quarter compared to our expectations if the sale had been completed".

The release also quotes co-CEO Christoph Mainusch in saying that CME "always said this transaction was not a reflection of our outlook for the business.

"Quite the contrary, we are strong believers in the value of television assets and the future of the Slovenian operations, which have been confirmed by its spectacular growth over the last year. We look forward to continuing to work with the team at POP TV in our longstanding tradition of providing objective news and the best entertainment for Slovenia."

In July 2017, United Group group signed a EUR 230m agreement to buy media operations in Slovenia and Croatia.

In Croatia it has been given the regulatory approval to take over the most popular commercial TV channel Nova TV after it transferred ownership of digital TV provider Total TV to a third unaffiliated legal entity.

In Slovenia the planned takeover raised controversy due to its size and the impact it would have on several markets.

In November, the Slovenian competition watchdog pinpointed several potential issues in a statement of objections, noting that the takeover could lead to horizontal concentration on the TV advertising market, the market for TV sports rights, and the wholesale of children's TV programmes.

It also raised the prospect of permanent concerted action with other operators on the market and the possibility of licenses for the distribution of Pro Plus channels increasing. Competitive programmes in the bundles of United Group's Slovenian cable operator Telemach could be sidelined as well.

The AVK also said that the takeover could have other effects since "the combined company would acquire sensitive business information about their competitors, would give it a significant competitive edge".

Former AVK director Andrej KraĊĦek commented that such statements were usually issued when the watchdog intended to reject a takeover.

Domestic media players and media experts have raised concerns that the takeover could lead to excessive concentration of power in the hands of a single, US-owned media group.

Pro Plus not only owns two of the most popular TV channels, POP TV and Kanal A, it also operates several cable-only channels, a pay-per-view service, and, one of the top news portals in the country.

In the meantime, United Group has changed hands as the Kohlberg Kravis Roberts (KKR) investment fund sold it in September to British company BC Partners LLP.


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