Eesti Meedia Buyout Confirmed, Observers Expect Maintaining of Status Quo (1)
Eesti Meedia yesterday sealed the deal for a 30-million-euro management buyout from its Norwegian parent company Schibsted.
The purchase includes Estonian, Lativan and Lithuanian media companies, among them Estonia's flagship newspaper Postimees and TV channel Kanal 2, ERR reported.
Half of the shares were bought by Eesti Meedia's current management members, with chairman Mart Kadastik holding the biggest part of that pie, and the other half went to pharmaceuticals businessman Margus Linnamäe, a new player in the media industry. Two-thirds of the buyout was financed with a loan.
Most media experts applauded that fact that the buyer is an Estonian firm, and that the deal's value and financiers were disclosed to the public. Insiders claimed that there had been no interest from other international investors. Ekspress Grupp, the other major media corporation in Estonia, had reportedly been interested, but the company feared the Competition Authority wouldn't have permitted such a deal. One media expert said buyout marks a trend of foreign investors pulling away from Eastern European media companies.
Some said the new owners may soon feel pressured to boost efficiency, as they won't have the financial clout of Schibsted, but the general consensus was that there wouldn't be any big immediate changes. Another issue that will become topical is the dynamics of the few companies that are co-owned with competitor Ekspress Grupp, including the tabloid Õhtuleht.
Schibsted has owned Eesti Meedia since 1998. It has been seeking to pull out of the Baltic market for 1.5 years, according to Kadastik, with plans to restructure and focus on classified advertising. Eesti Meedia's revenue has also been dramatically declining in recent years.
"This transaction is noteworthy not only in the media business, but for the Estonian economy as a whole," said Igor Rõtov, head of the business daily Äripäev.
Ainar Ruussaar, editor in chief of BNS, said: "We have had a public discussion and the public has been informed of the size of the transaction and the buyers behind it. If the media's owners are not known and media purchases are not public, it raises suspicions. With regard to Postimees, everything has so far been clean and transparent.“
Another issue that has drawn interest is Linnamäe's entrance into the media business. Hans H. Luik, publisher of news weekly Eesti Ekspress, said Linnamäe's connection with the other buyers is that "they are all well-known people from southern Estonia.“
Linnamäe has previously been a subject of criticism in the media. Rõtov from Äripäev praised a statement from Linnamäe yesterday in which the businessman gave support for continuing objective journalistic coverage of the pharmaceuticals industry.
"There is no doubt that Linnamäe's role through the years as the negative protagonist of quite a number of investigative stories raises questions. The only medicine here is that he should be accessible to both Postimees and other media publications," said Rõtov.
At the helm of Eesti Meedia, Kadastik said the deal concludes a one-year period of passivity at the company. At the same time, he concurred the presumption of others that there would be no major transformations.
"I think this is the moment where the passive existence that has lasted a year will come to an end; we can continue operating much more aggressively on the market. I think it allows us to just do better journalism, and thereby appeal more to our readers and viewers. Things will certainly not be turned upside down. We will strengthen our position in Latvia and Lithuania and in online media on the whole, so those strategic positions - a Baltic scale and online media as priorities - will be preserved,“ Kadastik said.