2012 has got off to a flying start for Modern Times Group (MTG), but just how significant is its acquisition of Latvia’s LNT?
The first thing that has to be said – certainly if local reports are to be believed – is that it is still no done deal. Indeed, some are of the view that the Competition Council (CP) will reject it on the grounds that it will destabilise the market.
The CP, which is expected to make a decision within four months of receiving formal notice of the transaction – at this stage it has only been informed about the deal – will no doubt take into account the fact that a merged MTG/LNT operation would claim around 67% of the Latvian TV ad market. The local industry is of the view that this would lead to further increases in the cost of TV advertising and put even greater pressure on the public broadcaster LTV.
LNT has had a long a chequered history, being formed by the merger of Picca TV and NTV5, two of Latvia’s first independent TV stations, in 1996 and then experiencing a number of ownership changes. Not many broadcasters in Central and Eastern Europe (CEE) can claim to have been backed by both Rupert Murdoch’s News Corp and Poland’s Polsat.
MTG, on the other hand, has always seen the Baltic Republics as an extension of its home market in Scandinavia and one that it used as a springboard to expand to other parts of CEE.
The question now perhaps is will it attempt to do something similar acquisition-wise in Estonia, where it competes with Schibsted-owned Kanal 2, and Lithuania, where its main rival is LNK TV, backed by MG Baltic Media? Though unlikely at this stage, such deals cannot be ruled out at a future date.
Perhaps all this points to the start of growing M&A activity in the Baltic region, not only in free TV but other sectors such as cable.
