US billionaire Ronald Lauder and Ukrainian partner Igor Kolomoisky are attempting to gain complete control of 1+1
US billionaire Ronald Lauder and Ukrainian partner Igor Kolomoisky are attempting to gain complete control of 1+1, one of Ukraine’s top television channels, through a publicly-traded media company.
Central European Media Enterprises Ltd. (CME), which late last year increased its stake in Studio 1+1 LLC from 42 percent to 60 percent, is seeking to buy the remaining 40 percent stake, said Romana Tomasova, the company’s director of corporate communications.
Sources said that stake is currently held by the station’s longtime producer, Oleksandr Rodniansky, and his uncle, Borys Fuchsmann.
CME said the purchase is part of the company’s attempt to strengthen its position in Ukraine, launch more niche channels and improve local production capabilities, she said.
“Our shareholders want us to have full control in all our countries,” Tomasova said.
However, it’s well known in the Ukrainian business world that Kolomoisky has been attempting to buy Rodniansky’s and Fuchsmann’s 40 percent stake and that both groups have been caught up in complicated court battles since 2005 over a sale deal. Having failed on his own, Kolomoisky is now resorting to maneuvers through CME, in which he recently acquired a minority stake, to beef up his grip over 1+1.
The Post previously reported that Kolomoisky claimed that he concluded an informal deal for 40 percent in the television channel for $100 million with Rodniansky and Fuchsmann. The prices for media assets in Ukraine have skyrocketed since the 2004 Orange Revolution.
The acquisition would enhance the power of Kolomoisky, a billionaire and banking giant who is wrestling with other Ukrainian tycoons for political and business influence.
“I believe that 1+1, based on its influence on the country’s developments, is greater than having your own faction in parliament,” Gennady Korban, a close associate to Kolomoisky, told the influential Ukrayinska Pravda Web site last October.
Last fall, CME acquired an additional 42 percent in 1+1, increasing its total control to 60 percent of Studio 1+1 stock. At the time, Kolomoisky acquired about 3 percent of the publicly-traded CME’s premium stock for $110 million. He also joined the company’s board of directors.
Tomasova provided no further details about CME’s additional acquisition of shares in 1+1, but said it should be finalized this year. Rodniansky and Fuchsmann did not respond to the Post’s inquiries.
1+1 controls just under 20 percent of Ukraine’s television market, trailing just behind market leader Inter.
CME, a media group which specializes in television investments in Central and Eastern Europe, is traded on the Nasdaq and Prague exchanges.
Through Studio 1+1 LLC, CME also owns the smaller Kino and Citi channels in Ukraine.
Andriy Shevchenko, first deputy head of the parliamentary committee on freedom of speech and information, told the Post that a flurry of consolidation in Ukraine’s television media sector might be good for the channel owners, but “it is difficult to predict” whether viewers would benefit.
“1+1 has a very complicated reputation,” Shevchenko said, referring to pre-Orange Revolution days when the channel was used as a propaganda machine serving political and business interests of the elite.
Shevchenko, former journalist and chief editor of the 5 Kanal television news network, did not expect such abuses to resurface. It will only later be clear what the possible consequences are of recent ownership reshuffling key Ukrainian media outlets, he said.
He referred to recent reports that Ukrainian billionaire Valeriy Khoroshkovskiy added several new channels to his media assets portfolio.
Having years ago acquired Inter from the deceased Igor Pluzhnikov, Khoroshkovskiy reportedly struck deals recently to snap up K1, K2 and Megasport from gas tycoon Dmytro Firtash, and NTN from Eduard Prutnik.
“Currently we are seeing how a powerful media group is being created on the basis of Valeriy Khoroshkovskiy’s Inter TV channel,” he said.
Separately, billionaire Victor Pinchuk’s media group (channels ICTV, Novy Kanal and STB) recently created its own sales house, he added.
First and foremost, “it is in the interests of society that ownership structure (of media assets) is transparent and understandable,” Shevchenko said.
Shevchenko, a member of Prime Minister Yulia Tymoshenko’s Byut bloc, said his faction in parliament would push to change media ownership legislation by abolishing archaic laws that limit the share capital of Ukrainian television media that foreign entities can own.
Currently it is capped at 35 percent, but loopholes allow foreign entities to indirectly own larger stakes.
