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Media Ownership And Control In East-Central Europe, Vol. 6 - 1999, No. 2

CME And Broadcasting In The Former Communist Countries

, pages: 25-46

The development of commercial television in the former communist countires was closely associated with the activities of Central European Media Enterprises (CME) and particularly its successful Czech station, TV Nova. This article looks at the overall strategy of CME, and shows that while it had some important successes, its primary strength was its political connections rather than its grasp of the television business. As the market developed, so its weak business model became more and more apparent. Its failure to win national licenses in Poland and Hungary, and the failure of its attempts to force an entry into those markets, meant that its prospects for commercial success were very small indeed. Its share price collapsed, its operating losses mounted, and by early 1999 it was entirely dependent upon the bounty of its rich founder, Ronald Lauder. It faced a choice of collapse or take-over. In the event, it was taken over by SBS, a US-owned niche broadcaster active in peripheral western European markets. The overall lesson of this experience is that broadcasting in central and eastern European countries depends on “political capital.” In order successfully to enter the market, political connections are essential. Where these are absent, it is very difficult to develop a competitive position. On the other hand, once a company is broadcasting commercially, then the small size of the advertising market means that there is a bitter competitive struggle. Just as in western capitalism, those who cannot survive the competition are forced out of the business. CME was a casualty of the very logic that it introduced to the region.

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