Igor Kolomoisky walked away as the single biggest winner in the early February deal in which Central Media Enterprises gained 90 percent control of Studio 1+1. Group
Billionaire Igor Kolomoisky walked away as the single biggest winner in the early February deal in which Central Media Enterprises (CME) gained 90 percent control of Studio 1+1 Group, among Ukraine’s biggest television companies.
As part of the agreement to buy 30 percent of 1+1, CME will acquire minority interests from Alexander Rodnyansky and Boris Fuchsmann, who will get about $79.6 million, and Kolomoisky will gain about $140 million from CME, the holding company for Studio 1+1, for selling his option rights to several CME subsidiaries. He can accept cash or Class A CME shares.
Should Kolomoisky opt for the Class A stock, which offers privileged investors enhanced voting rights, he will gain significant influence in both CME and 1+1.
On the company’s board of directors since last fall, Kolomoisky is able to influence the channel’s top management and editorial policy, said Vadym Karasiov, a political analyst.
“It doesn’t depend on the management, but on the owner of a TV channel,” he said.
Ever since 2005, Kolomoisky has fought with Rodnyansky, the channel’s general producer, and his uncle, Fuchsmann, to gain control over 1+1.
As Ukraine’s third wealthiest businessman, Kolomoisky had no influence over any major media while his billionaire rivals, Rinat Akhmetov and Victor Pinchuk, own media empires.
In the Feb. 5 deal, Rodnyansky and Fuchsmann agreed to sell their 8 percent direct and indirect interest in Studio 1+1 to CME.
CME also gained the right to acquire Rodnyansky’s and Fuchsmann’s remaining 10 percent stake (5 percent each) in Studio 1+1 by exercising a call option, worth an estimated $109 million.
As part of the same deal, Kolomoisky sold his option rights to buy 22 percent direct and indirect interest in CME subsidiaries Studio 1+1, Innova Film, and International Media Services, worth an estimated $140 million.
The sale fulfilled a lengthy quest to gain influence over 1+1. After years of fruitless battling with Rodnyansky and Fuchsmann in courts, Kolomoisky opted for a different tactic last fall, acquiring a 3 percent stake in CME’s premium stock, publicly traded on the Nasdaq exchange, and consequently joined the board of directors.
If Kolomoisky decides to take shares in CME, his share of the company will increase by several percentage points. Analysts couldn’t determine precisely how much his share would increase, although he paid $110 million for 3 percent of the company’s Class A stock.
However, Ukrainian observers expressed different views on what influence Kolomoisky may gain over 1+1.
Though Karasiov said the influence will be significant, Andriy Shevchenko, first deputy head of the parliamentary committee on freedom of speech and information, said that “the times when an owner of a TV station could allow himself to do anything he wanted with television news on his channel are gone.”
The competitive environment of the media business does not allow a channel to drastically distort information, he said, and would not go unnoticed by competitors.
As for the role of television in political campaigns, “currently it does not matter whether you are friends with the owner of a TV channel or not,” Shevchenko said.
During the last parliamentary campaigns, any political player with available financial resources could buy television news segments on the networks, he said.
Kolomoisky’s interest in Studio 1+1, “is above all business for him, not a propaganda machine,” said Shevchenko, a member of the Yulia Tymoshenko Bloc.
In addition to being among the founders of Ukraine’s largest bank, Privat Bank, Kolomoisky and partner Gennady Bogolyubov hold interest in many other industrial spheres, including ferroalloys, manganese production, and energy.
