Business Week International International Business: The Czech Republic
WHIPS, CHAINS, CAR CRASHES, AND BINGO (int'l. edition)
The 7:30 evening news covers car crashes in sensational detail--and breaks stories about grandmother-killers and other undesirables. The televised bingo game on Thursday night is a huge hit. And then there's Tabu, the Friday night call-in show that attracts a million viewers with guests such as the married mother of two who chats freely about her sadomasochism and her taste for whips and chains.
Such is the weekly fare of Prague-based Nova TV, the first private, national network in Eastern Europe. After just one year of broadcasting its decidedly low-brow fare, Nova commands on average a 63% share of the Czech television viewing audience, according to Aisa/GFK, the Czech equivalent of Nielsen Co. Nova's success is encouraging other private companies to seek media ventures in Eastern Europe--and prodding state-owned television to compete. As for Nova, its challenge now is to stay ahead in a developing market.
DEEP POCKETS. Nova has beaten the odds just by making it this far. Nova General Director Vladimir Zelezny, a veteran Czech producer of science fiction and other serials, outmaneuvered such media giants as Turner Broadcasting System Inc. and Italy's Fininvest for the station's valuable broadcast license in early 1993. Fortunately, he has some deep-pocketed backers of his own. Most of the $45 million in capital for Nova came from Central European Media Enterprises (CME), a consortium of U.S. and Canadian investors whose principals include Mark Palmer, a former U.S. Ambassador to Hungary, and Ronald Lauder, the American cosmetics heir.
Zelezny has quickly created a station with the kind of quirky coverage that he says appeals to the "ordinary man." "We call him Novak," said Zelezny, referring to the aost common Czech surname. "We like this guy. He is not stupid, but he's not an intellectual. He's slightly xenophobic and prefers everything Czech to foreign." To capture female viewers, Zelezny is also developing a magazine-style women's show.
Thus, while state-owned Czech TV emphasizes international news and symphony concerts, Nova broadcasts human-interest stories, talk shows, and domestic news that covers crime and accidents almost to the point of the absurd. "In the beginning, they had a lot of chain car crashes on the highways," observes Jan Jirak, a professor of media studies at Prague's Charles University. "Now they cover even minor accidents."
Masterpiece Theater it's not. But multinational consumer-products companies such as Procter & Gamble Co. and Unilever PLC have rushed to advertise on Nova. Last year, Nova attracted more than $50 million in ad revenues, out of about $85 million spent on Czech television advertising. CME's Palmer had hoped to break even four years into Nova's 12-year license, but the group is already close to meeting its target. Moreover, CME now hopes to launch networks in Slovenia, Romania, and Bulgaria. Other investor groups are sniffing around, too. One group plans to transmit American programming via satellite to Polish cable operators.
KING OF THE HILL. Yet Zelezny, a former dissident who during the 1968 Soviet invasion narrowly escaped execution, sounds a note of caution about Nova's success. "I know now what it feels like to be on top of Mt. Everest," he says. "And it's a bad feeling. All roads are heading down."
What worries Zelezny is the prospect of competition in the media-starved Czech market. Premiera, a local independent Prague station, recently obtained a license to expand its reach from 20% of the market to 60%. In a bid for fresh cash and new programming, Premiera is shopping for a foreign joint-venture partner. Possibilities include several European media companies, including Germany's VOX TV, Scandinavian Broadcasting, and Fininvest. In addition, Czech TV plans to fight back with aggressive programming in such areas as documentaries and foreign films.
Meanwhile, Nova is scrambling to steal a march on rivals by obtaining a satellite license that will extend its reach to the Slovak market and add 5 million viewers. Eastern Europe's would-be TV titans have headaches aplenty. But there are signs that a new media industry is coming to life.By Cynthia Durcanin in Prague