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[July 20, 2006]

Wildstein's Credo: TVP to Be Cheaper and Similar to BBC

(Polish News Bulletin Via Thomson Dialog NewsEdge) The CEO of the TVP public television Bronislaw Wildstein does not have an easy job to do. Political pressure is exerted on him, the company is over-staffed, while competition on the TV market has never been more intense. Below you will find solutions to all these problems presented by Wildstein himself in an interview for the Puls Biznesu daily.


Will you be able to make till the end of the Sejm's term?

Wildstein: "I agreed to take up this post and I am determined to stay till the end. TVP is a juggernaut, pervaded by huge disorder. That is why I need time to implement changes."

What kind of changes are you thinking of?

"I have already introduced some in TVP's structure. I have nominated a CFO, Piotr Dmochowski-Lipski. The company, in which a few hundred people work in accounting, did not have such a person before. We have set up a finance and restructuring bureau by combining a few organisational units. It is now working on the firm's financial integration, so that some of its departments are not doubled. The first proposals have already been presented to the supervisory board."

But it is you, not the new CFO, who is responsible for finances in the board. You have quite a lot of power in your hands.

"I am only one of the board members, but as the CEO I am also responsible for TVP's financial condition."

Will you sell advertisements as well?

"The range of responsibility is divided between all board members. Power in TVP has to be coherent. Otherwise, it would be an institution cut in five separate dominions, unable to function. We will constantly have to negotiate, which is an awkward situation."

Will we witness history revisited? Conflicts in the previous board led to a total war for public television.

"I am afraid of such a conflict. We want to change television so that such situations will not take place in the future."

And how do you assess the possibility of compromise regarding head of the TVP3 regional television?

"The compromise means that we are changing the structure of TVP3 and liquidating TAI (TV information agency). In the next two weeks I am planning to extend the idea to the management and the supervisory board. If the reform is introduced, there will be no problems with manning the post of TVP3 head."

You also want to reduce purviews of the supervisory board.

"It is not the matter of limiting the supervisory board's mantle, but making it work more efficiently. High qualifications of its member are not used effectively, because the organ has to take care of details, instead of strategic issues. We have already prepared an appropriate draft change in articles of association, which will make the supervisory board control management, and not stand in for it. I want to convince the professionals in the supervisory board to support the project."

It seems that you intend to gather the fullness of authority.

"Nothing of the sort. I am one out of five board members. I think that we will be able to cooperate and function normally."

TVP employs too many people. You cannot even dream of a reform without staff changes. Do you envisage any reductions?

"The TVP is to provide people with services, not give jobs to some groups of people. Is it supposed to be a public broadcaster or a charitable institution? If the former, then I should act like a normal boss and keep people who are competent, who are doing something. If someone is unnecessary, then we will have to say "thank you" to them."

Are you planning a complete verification of staff?

"Staff changes are already running."

But what will you do with trade unions? You can fight against many people, but not the unions, especially when Law and Justice (PiS) is in power.

"Trade unions are surely thinking about the well-being of the company, thus I am convinced that we will be able to reach an agreement. If not ? they can protest, but we will certainly eventually be on good terms."

Jan Dworak (previous TVP's CEO) also spoke about the television's reform but it did not come off.

"There are thousands of documents concerning TVP's reform. I tried to go through all of them, but it was too much for me. We are not discovering America, because it has long been discovered. Large broadcasters, like TVP, are functioning by following certain rules. It should be one integrated corporation, it should have editorial staff cooperating with the programme bureau. These are cliches. Problems begin, when you have to realise them."

TVP has a very complicated internal structure and is an owner of many assets not connected with the company's core business. Are you planning to do anything about it?

"Anything that is not linked with our core business must be sold. TVP is like a small town. We also need to simplify the administrational structure, but this is does not lie in my hands."

Are you going to privatise one of TVP's channels? Separating some parts of the business may lead to such actions.

"I have been nominated for my post to make the best of public television. If there is a decision concerning privatisation, then I will realise it."

Such rumours have appeared among some PiS politicians.

"I do not think it would be possible."

The production system is the problem of TVP. How are you planning to change it?

"The production system is bad, prodigal and encouraging corruption. I have not decided yet what kind of model to introduce instead. We want to turn to specialists so that they put forward suitable solutions. We have already launched talks on the subject with BBC. I hope it will be possible to introduce changes before the end of the year."

But are you only going to replace some companies with others, or really make a change in the system?

"The whole thing is not about replacing companies. We want to change the rules. Some part of production should stay within the TVP."

We are only days away from a shift to digital technology in broadcasting. This is a serious change on the market. Is TVP ready for it?

"The technological shift will give the viewers an enormous variety of possibilities. It imposes changes ? we will now have to concentrate on thematic channels. We already have TVP Kultura (culture channel) and we will soon launch sports and history channels. We are also thinking about the cinema, entertainment, science and other channels."

Are you going to cooperate with TVN and Polsat in constructing digital television?

"I still do not know whether it will be ground or satellite TV."

So TVP will have its own satellite platform, the market's fourth, after Polsat, Cyfra Plus and ITI?

"We are still analysing this decision."

How much will TVP spend on investment and where is it going to take money for it from?

"We are still checking various investment projects. We must spend at least ZL100m on equipment modernisation until the end of the year. We have the necessary funds for it."

Is that all?

"We also need to finish the construction of one of our buildings, which will absorb a further ZL100m. If we want to make news properly, we will need another property as well. It is already being designed. First we need to invest some money and then earn. It will repay, but in some time."

What kind of savings will limiting employment and structural changes at TVP bring?

"All actions leading towards tidying up infrastructure will bring savings, which will allow allocating more funds into our programmes. These are large amounts, but I am not able to tell you how large. The company must develop, be a match for its competitors, so it must invest."

Do you support the idea of changes in subscription fee collection?

"People are no longer paying it. I will opt for a change ? we could make the subscription a normal tax."

Have you found any skeletons in the closet?

"Some strange agreements were signed. I am surprised about the fact that the board headed by Robert Kwiatkowski in 2001 signed an annex to the agreement with TP Emitel, which makes us lose ZL30m annually and unfoundedly ties us with the monopolist. I cannot find the reason why it was signed. I am going to investigate the matter more closely."

Is there more such agreements?

"There are some of them, but this case is exceptional. I do not want to judge the previous boards and investigate the sensibility of every agreement."

And what is Wildstein's TVP going to be like?

"Cheaper, more efficient and ? most of all ? our programme will be different. From August we will have better news programmes, we will create the best information channel in Poland, serious commentary journalism, more culture, new TV series showing a different reality, which has so far been hidden."

A second BBC?

"In some fields we will certainly follow its exemplars."

- Solorz-Zak to Sell Part of Polsat?

Polsat has launched talks with large media groups on a minority share in the company and potential mutual programme and technological enterprises. It is an element of the broadcaster's preparations to its stock exchange debut. "The negotiations are confidential," announced Aleksander Myszka, the firm's CEO, in a communique.

They really are a well-protected mystery. "We have a special system of transmitting information, we are using codes," told Gazeta Wyborcza a person from a consulting company. According to Wyborcza's sources, top-shelf media giants are trying to buy part of Polsat, including Germany's Bertelsmann and News Corp., controlled by Rupert Murdoch, which has already take over a minority shareholding in TV Puls in June. "We are not commenting on such information," said Oliver Herrgesell, head of RTL Group's communication and marketing department. The company is a TV branch of Bertelsmann, which has numerously announced that it is interested in investment in the CEE region. Ewan Mireelys, deputy CEO at News Corp. Europe, also denied that her company is running talks with Posat.

"Solorz-Zak has on one hand been looking for an investor, and on the other, considering a stock market entry for over five years. I am not sure whether something will work out this time," told the daily one of its interlocutors.

But it seems that the talks may enter a more advanced stage, because Polsat is just finishing the implementation of international accounting standards, which is regarded by finance market experts as a proof that the company is expecting a foreign investor. At the same time, Polsat is getting prepared for its debut on the stock market. Last year, Solorz-Zak said that a 20-25 percent stock in the broadcaster, worth EUR200-300m, could be floated.

"It all depends on what Polsat wants to achieve. It can get money from financial investors, while a sector investor can bring in know-how. TVN's history proves that support of a foreign investor is not always efficient," said Andrzej Szymanski, BZWBK analyst.

How much is Polsat worth? It is worth looking at TVN for a start. The listed broadcaster is currently valued at ZL6.4bn and ? according to analysts ? it is overpriced. "Polsat's financial performance is similar to TVN's, but the latter is more aggressive and characterises in more dynamic income growth," said Szymanski.

Talks with foreign investors are conducted in a very difficult moment for Polsat ? it has just lost the position of Poland's largest commercial television ? to the benefit of TVN. The broadcaster belonging to ITI group has outperformed Polsat, taking into account turnover ? Polsat's consolidated income amounted to ZL810m and was by ZL50m smaller than TVN's. Furthermore, in Q1 TVN was better than Polsat in viewing figures. Bout Solorz-Zak's television still remains the most profitable broadcaster in Poland, with last year's net profits amounting to ZL273.57m.

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