Chris Dziadul looks at CME’s involvement in Ukraine
Those who follow the fortunes of the US investment company CME will have noticed that its Studio 1+1 operation and associated interests in Ukraine have been much in the news as of late.
CME’s presence in the country dates back to 1995, when it jointly formed Studio 1+1 with the film director Oleksandr Rodnyansky and Germany’s Innova Film, Two years later, the service began operating on a frequency also used by the public broadcaster’s second channel UT-2.
CME initially faced a rough ride in Ukraine, being sued to the tune of $750 million (€550.9 million) by a company named Perekhid Media Enterprises for allegedly using corrupt practices to secure airtime on UT-2’s frequency. However, it weathered the storm and in due course built Studio 1+1 into one of the country’s leading broadcasters, going head to head with the market leader Inter TV. More recently, it has also added an international and the thematic channels Kino (movies) and Citi (entertainment) to its Studio 1+1 portfolio.
Results published by CME last month nevertheless raised a few eyebrows, showing CME’s Q2 results being lower than expected year-on-year and segment EBITDA actually falling. This contrasted sharply with the company’s operations in all the other markets in CEE it is present in.
CME appears to have responded to this disappointment not only with words but also actions, effectively securing control of Studio 1+1’s licence earlier this week. It has also made up with Igor Kolomoisky, a Ukrainian businessman it was in dispute with only a matter of months ago, seeing him buy a stake in the company for $110 million.
Its next move will be to embark on the same “multi-channel strategy” it has already used so effectively in Slovakia “to buy out its minority interests.” Specifically, it is referring to Oleksandr Rodnyansky, now the head of Russia’s CTC Media, and still a partner in Studio 1+1.
These are certainly interesting times for CME in Ukraine, and the best may be yet to follow.
