Oligarchs of Eastern Europe Scoop Up Stakes in Media Companies

BRATISLAVA, Slovakia — Across Eastern Europe, local oligarchs and investment groups — some directly connected to their countries’ political leadership — are snapping up newspapers and other media companies, prompting deep concerns among journalists and others about press freedom.

It is just one of an array of developments across the region raising questions, a quarter century after the fall of the Berlin Wall, about progress toward Western standards of democracy and free speech.

As in Russia, there are increasing worries about a potentially dangerous concentration of power in the hands of people who have managed to acquire both wealth and political influence and are increasingly extending their control to media outlets.

Here in Slovakia, a German media company sold a substantial stake in the nation’s last serious, independent newspaper to a well-connected investment group that had been among its investigative targets.

At a time of similar developments across the region, what stood out in the investment in Petit Press and its prominent SME flagship newspaper by the group, Penta Investments, was the reaction of the paper’s staff.

Matus Kostolny, 39, editor in chief for the last eight years, walked out the door. Four of his deputies followed. And 50 members of the paper’s 80-person staff submitted notice to leave by the end of the year.

“I think Penta intends to misuse the newspapers for their own purposes,” Mr. Kostolny said. “Their idea of free speech is entirely different from mine.”

But the situation in Slovakia is just the latest in which owners, often Western European or American, have chosen to sell Eastern European media properties and powerful local interests have stepped forward and snapped them up.

Andrej Babis, an agriculture and fertilizer tycoon, not only owns the Czech Republic’s largest publishing house and several important media outlets, he is the government’s minister of finance.

In Latvia, opaque disclosure laws obscured who controlled much of the country’s news media until a corruption investigation of one of the country’s richest businessmen revealed that he and two other oligarchs were the principal owners.

In Hungary, beyond outright state ownership of much of the news media, top associates of Prime Minister Viktor Orban control significant chunks. Chief among them is Lajos Simicska, who went to school with the prime minister and whose construction company has profited lavishly from state contracts, although the two are said to be feuding of late.

In Romania, the leading television news station, the right-wing Antena 3, is only part of the vast media empire owned by the billionaire Dan Voiculescu, the founder of the country’s Conservative Party. In August, Mr. Voiculescu was sentenced to 10 years in prison on money laundering charges.

Several oligarchs control the media companies in Bulgaria, regularly ranked in last place among European Union nations in the World Press Freedom Index. That includes a former lawmaker, Delyan Peevski, whose New Bulgarian Media Group — ostensibly controlled by his mother, though opponents charge that he holds the real power — has been closely linked to governments controlled by several parties.

In the 1990s, after the collapse of Communism, most media outlets were either owned outright by the state or utterly dependent on government advertising. When foreign owners — most notably from Germany, Sweden, Switzerland and the United States — subsequently bought up local newspapers, magazines and broadcast outlets, journalists found that the distant owners had no interest in local politics. That was a relief for a time.

“For us, it was perfect,” Mr. Kostolny said of the German conglomerate that owned SME. “We had very professional owners who never picked up the phone and tried to influence the newspaper. Not once.”

But when the economy sank in 2008, most of these foreign owners decided to retreat to their core businesses back home and put their media companies in Central and Eastern Europe on the block. At that point, the distance between their Western owners and the political realities in their countries began to seem like a drawback, especially as the owners began selling to local interests with a direct stake in the coverage.

“It turned out that as much as they didn’t care about Slovak politics, they also didn’t care about who they sold the papers to and the impact of the sale on Czech and Slovak society,” Mr. Kostolny said.

The end result, said Marian Lesko, a commentator for Trend Magazine, a Bratislava-based business journal also owned by Penta Investments, is that “in Slovakia, independent media is no more, basically.”

Alexej Fulmek, the chief executive of Petit Press and one of the founders of SME, said he was troubled by Penta’s stake in the company but decided to stay on to protect SME and the other Petit Press publications, including the most important network of regional papers in the country.

“I am not happy with the situation,” he said. “We don’t like Penta. They have too many economic interests with the government.”

For its part, Penta bristles at being compared to politically connected oligarchs in the region, instead presenting itself as a fairly standard, Western-style investment company with interests in hospitals, retail outlets, real estate and other industries that now happens to include media.

Officials of the company, led by its dominant principal, Jaroslav Hascak, said they were interested only in keeping their media investments profitable by consolidating them and had no intention of meddling in the newsrooms.

“We do not have any direct businesses with the state,” said Martin Danko, the group’s chief spokesman. “We are not providing any services, not participating in any state competitions to supply something. But we are definitely operating in regulated businesses.”

Penta got into the media business after other entities controlled by local oligarchs — Mr. Babis, the Czech finance minister, as well as Ivan Jakabovic and Patrik Tkac, who control the J&T Finance Group in Slovakia — had already started investing in the industry.

Penta’s 45 percent interest in Petit Press prevents it from dominating the newsroom, even if it wished to do so — which, Mr. Danko said, it does not, because it understands that the credibility of the news is the core of the company’s profitability.

Mr. Kostolny doesn’t buy it. “Penta’s real interest is in influence, in controlling their critics,” he said. “They will make back their investment with one state contract, and nobody will bother them by writing about it.”

Mr. Kostolny is now working on a plan under which his deputies and as many former SME staffers as he can afford to hire will produce Projekt N, a web portal and a print paper, perhaps weekly, perhaps daily. His plan is to offer breaking news for free online, but to charge for longer and investigative pieces.

For the moment, though, they have no office outside of the Next Apache cafe — the name, said aloud, sounds like “nech sa paci,” which means “here you are” in Slovak — where Mr. Kostolny and many former employees now hang out.

Bulgaria: NY Times: Several Oligarchs Control Media Companies in Bulgaria

“I still don’t have investors,” he said. “I don’t have computers. I don’t have printing machines. I don’t have anything.”

For his part, Mr. Fulmek said he intended to spend the next several weeks trying to talk some of those who put in their notice to stay at SME with him and fight the good fight there. He even hopes to persuade Mr. Kostolny and his deputies to return, but he is not optimistic.

“They are very pure,” Mr. Fulmek said. “And that’s good, because the country needs such people.”

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