Bulgaria’s Commission for Protection of Competition (CPC) said on July 19 that it was denying approval to the proposed sale of Modern Times Group’s (MTG) majority stake in Bulgarian broadcaster Nova Broadcasting Group to Czech investment conglomerate PPF Group.
The deal, announced in February, valued Nova Broadcasting at 185 million euro, with PPF Group saying it would be acquiring full control of the company by purchasing 95 per cent from MTG and the remaining five per cent stake from Eastern European Media Holdings S.A.
In addition to Nova Broadcasting, the deal included the broadcaster’s online assets subsidiary Net Info, which operates a number of websites, including a video sharing portal and webmail service, and printed publications unit Agentsia Eva, the publisher of the Bulgarian editions of Esquire, Forbes, Grazia, OK! and Playboy magazines.
Given that PPF Group has no operations on the Bulgarian media market, it was widely expected to receive the necessary regulatory approval, with the company saying it planned to close the deal in the first half of the year.
PPF Group was only present in Bulgaria on the online trade market through its Hungarian subsidiary Online Comparison Shopping Kft., which had a market share below five per cent. Nova’s own market share on that market was also below five per cent.
But CPC ruled that Nova Broadcasting had “significant financial and organisational resources, the opportunity for economy of scale and reach and an established image,” while PPF Group had extensive investment experience, which meant that the participants in the merger would have “the stimulus and real possibility to change their commercial policy in different ways that would lead to reduced access, increased prices or changes to contracts already in place,” the regulator said.
At the same time, CPC had no objections to Nova’s acquisition of the merged assets of Bulgarian radio broadcaster Darik and Net Info in 2013, nor previous deals involving Bulgaria’s two main free-to-air broadcasters (MTG’s acquisition of Nova in 2008 or News Corporation’s sale of bTV to Central European Media Enterprises in 2010.)
This was the second major proposed deal blocked by CPC on July 19, with the regulator also refusing to approve the sale of all the assets owned by Czech energy group CEZ in Bulgaria to local company Inercom. Both decisions are subject to appeal within 14 days.