Telewizjia Wisla Essay Example

time. Under this legislation, the TV and Radio Council assumed responsibility for governing existing state-owned television and radio stations and granting new commercial licenses. The government planned to award an unspecified number of licenses throughout the country, subject to specific requirements outlined in the newly established media law.

Despite the licensing process being a source of confusion, the Council received over 80 applications for commercial television franchises. The majority of these applications were filed by Polish companies looking for local broadcast rights. TVW was the sole applicant for a supra-regional license, proposing that the Council start by granting TVW a wide regional mandate and a limited coverage area. As more transmission sites became accessible, TVW's geographic reach could be expanded to encompass the entire region.

Szczerba had a strong network of political and business contacts in Krakow and its neighboring area, which provided a good supply of ambitious and creative yet low cost workers. TVW obtained a regional license for southern Poland in 1994, and alongside Polsat, they were the only applicants to receive a land-based television license covering a population of over one million people. Both Polsat and TVW were allowed to use up to 15% of air time for advertising and could place ads within programs, making them more appealing to advertisers compared to TVP. However, both licenses had restrictions such as 33% foreign voting control and maintaining 51% ownership by their original owners. Foreign investors were subject to approval by the Council.

Due to technical limitations, TVW only served 20% of its 12.5 million-person area. In order to extend their coverage, the broadcasters could collaborate with local Polish ministries

and the Council to enhance the reach of their signals from their current sites, with the Council's authorization.

* Raising capital from foreign partners presents challenges, especially for start-up companies in developing countries like Poland. The business, legal, and regulatory environment in Poland is not yet fully adapted to a competitive free-market economy, making it difficult for large foreign companies to do business. Moreover, Polish managers and government bureaucrats are often unfamiliar with capitalist concepts and skeptical of foreign investors' motives. Many investors also lacked a comprehensive understanding of the state of the Polish economy. They insisted on applying Western pay scales to the venture, resulting in a significant decline in our projected profits, despite the fact that even having $100 in Poland was considered wealth at that time.

TVW, an unknown company in the broadcast industry in Poland, lacked the credentials that Western investors usually sought. To overcome this, TVW aimed to partner with Disney, a popular and highly skilled company in marketing and sales, which was rare to find in Poland. To secure the partnership, Disney agreed to fund most of TVW's remaining equity requirement and, in return, received a 30% voting equity interest and a larger share of the profit.

The agreement between Disney and TVW included special provisions that gave Disney more influence on TVW's economic performance while still maintaining legal control over the broadcasting license. The agreement also prevented foreign companies from gaining control. To keep the founders tied to TVW, Disney offered them employment agreements and non-resource loans so they could acquire up to 26% of the company's voting control. Realbud and Efekt would each

receive 22% of TVW, with the remaining 44% evenly divided between them. Both parties initially agreed to the deal and conducted thorough due diligence. However, the deal fell through because Disney couldn't allow Realbud and Efekt, who lacked expertise in the TV industry, to oversee day-to-day operations.

After the Disney debacle, the board decided that Bertelsmann AG, a German company, would make a suitable strategic partner for TVW. This was because of Bertelsmann's vast programming library and strong financial position. Moreover, the company was planning to merge its programming division with the television division of one of Europe's largest television operators. This merger would result in a formidable partner for TVW. Similar to Disney's proposal, Bertelsmann would also provide its own management team instead of working with TVW's founders. However, this arrangement could jeopardize TVW's ability to obtain approval from the Polish National Council for Radio and Television for additional sites required to adequately cover TVW's region. This is because the council previously expressed concerns about the increasing level of German influence in southern Polish media.

DBG, a venture capital firm from Eastern Europe, has shown interest in purchasing TVW. Their proposal includes providing expansion funds to buy out Efekt's stake and decrease Realbud's ownership to a small portion. Following this, DBG intends to rehire Szczerba and bring in more experienced senior management to aid the company's growth. If this plan progresses, Hurley and Szczerba would see their combined ownership in the company rise from 4% to around 25%. However, they will only pursue this deal actively if the Council gives their general approval and if both Realbud and Efekt agree to sell

their shares at a price that guarantees a minimum return on investment of 30%.

The current status of Telewizja Wisla involves its merger with TVN in 1997 for better coverage in southern Poland. This allowed TVN to gain permission from The National Council of Radio Broadcasting and Television to broadcast in the central and northern parts of Poland. As of 2004, TVN was available in 86% of Polish households, and it has been listed on the Warsaw Stock Exchange since then. On April 29, 2004, TVN launched TVN International, a channel dedicated to entertaining and providing news for Polish viewers residing abroad. Additionally, in 2005 TVN acquired rights to organize and broadcast the Sopot International Song Festival until 2010. Finally, in 2006 TVN debuted its high definition version, known as TVN HD, which marked the first HD programming broadcasted from Poland.

The network, TVN, has been recognized as one of the Polish Superbrands. They broadcast some of their programs using Dolby Surround and Dolby Digital 5.1. Additionally, TVN supports the Hybrid Broadcast Broadband TV (HbbTV) initiative, which aims to establish a European standard for hybrid set-top boxes that can receive both broadcast TV and broadband multimedia applications with a single user interface. They conducted the first tests of HbbTV services in Poland in March 2012.

Assignment Questions:

What is the true nature of the opportunity for Telewizjia Wisla? The opportunity is characterized by being one of the only two private broadcast companies in Poland. It has the permission to place ads within programs, which the public broadcast company did not have. Additionally, it has a high coverage of a 12.5 million-person region and

has modern management expertise, particularly in international finance, during the early age of the Polish economic revolution.

As for the growth scenario, Telewizjia Wisla can initially earn a majority market share in its domestic market through innovative programming. Subsequently, it can form partnerships with international broadcasting companies like Disney to explore the international market. There is also the possibility of going public in the U.S. or London to secure financing for further growth, or even being acquired by an industry giant.

2. Clair Hurley can achieve her goals by seeking additional funding from foreign investors in the form of a loan, despite problems with the company’s current majority owners. To ensure success, it is crucial for Hurley to have the right expertise in management. She should ask Szczerba to rejoin the board and assist in developing a business plan that provides insight into the business. This plan can then be presented to investors, ultimately securing the necessary funds.

3. I would prefer the venture capital firm out of the two potential investors, Bertelsmann Group and a venture capital firm. This firm would acquire Efekt, making Realbud a minority shareholder, and bring back Szczerba as president to introduce new management talent. Both Efekt and Realbud have stopped investing in the company and have left the management in disarray with inexperienced individuals. Despite their original agreement with the government to hold shares, they need to leave. The return of Szczerba is the company's hope to excel in its core competency of running captivating programs for the audience. His expertise could create value and opportunities for the company, ultimately generating revenue through advertisements.

4. Hurley should seek to raise $7.4 million under certain conditions. The company's current valuation is not more than $100 million, meaning Hurley needs to sell 7.4% of its share. One option is to bring in BCG venture capital firm and sell it once he and Szczerba increase their combined share to 25%. This arrangement would allow Efekt and Realbud to remain unaffected by the Council's requirement.