[Satellite TODAY Insider 11-17-10] Cyfrowy Polsat will acquire Polish TV broadcaster Telewizja Polsat in a deal valued at  $1.3 billion — a move that will see Cyfrowy Polsat become one of the largest media companies in Poland and Central Europe.
    Vaclav Kminek, a media equity analyst at Erste Group, told Satellite TODAY Insider that the deal makes sense for Cyfrowy Polsat, positioning the company as a major force in the regional media market to help stimulate advertizing revenue gains. “The Cyfrowy Polsat group will be among the three biggest media groups in Poland with TVP and TVN. The Cyfrowy Group will be highly comparable to TVN. The difference between TVN and Cyfrowy is that TVN is the leader in TV advertizing and Cyfrowy is the leader in DTH. Cyfrowy Polsat is the number three player in Poland in terms of advertizing revenues and is the leader in DTH services. TVN is the opposite. It leads in terms of generating advertizing revenues, and is the number three player in the market when it comes to DTH.”
    Kminek also believes the deal will change Cyfrowy Polsat’s role in the market from being a defensive player, where subscriber increases were not expected, to a more growth-oriented company. “It will definitely help the cost base, as Cyfrowy Polsat will be able to buy programming rights at lower prices and also could use Telewizja Polsat for other programming opportunities. It will also lower other costs such as in marketing, for example. The strategy to move to another media sector through the acquisition of Telewizja Polsat makes sense, as the original DTH operation doesn’t have significant upside potential.”
    Cyfrowy Polsat is the largest DTH operator in Poland with more than 3 million subscribers, and CEO Dominik Libicki said the acquisition would diversify his company’s revenue base, which primarily consists of subscription fees and TV advertizing. “The operations of Cyfrowy Polsat and Telewizja Polsat naturally complement one another and we will obtain a significant competitive edge in the market,” Libicki said in statement.
    Libicki told Satellite News in August that Polsat’s DTH operation had performed well despite tough economic conditions, thought he hinted at potential consolidation in the Polish media market. “I have repeatedly stressed that consolidation would certainly be healthier, both from the point of the interests of operators and viewers through cheaper rights, comprehensive offers and attractive prices,” he said.
    Cyfrowy Polsat’s move has received widespread praise from market analysts. Leszek Iwasxko, a media equity analyst at KBC Securities, hailed the acquisition for its ability to generate significant synergies. “These synergies are namely in marketing, content, transponders, supplies and back office. No quantification was given, but we believe content and marketing synergies will be immediate and easy to obtain.”
   Polsat expects EBITDA growth of 33 percent in 2010 due to a recovery in the Polish advertising market and expects earnings growth to be high enough by 2012 to compensate for EPS dilution resulting from issuing new shares.

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