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Cyfrowy Polsat to Buy Shareholder’s TV Network for $1.3 Billion

Cyfrowy Polsat SA, Poland’s biggest satellite television broadcaster, agreed to buy Telewizja Polsat SA, also controlled by billionaire Zygmunt Solorz-Zak, for 3.75 billion zloty ($1.3 billion).

Cyfrowy will pay 2.6 billion zloty in cash and the rest in the form of 80 million new shares valued at 14.37 zloty each, the Warsaw-based company said in a regulatory statement today.

Telewizja Polsat and TVN, controlled by TVN SA, are rivals for the top position among private television networks in Poland. When the deal closes in March next year the new entity will be the biggest Polish media company, based on sales of 2.4 billion zloty as of June 2010, Cyfrowy Polsat said in an e-mailed statement.

The deal is conditional on Cyfrowy, which today reported 221.5 million zloty of net income for nine months ended Sept. 30, organizing as much as 2.6 billion zloty of debt financing.

“Solorz is putting his entire television business into Cyfrowy so he can concentrate on telecoms,” which could benefit the company by allowing it to offer better Internet services, Leszek Iwaszko, an analyst at KBC Securities, said by phone.

Solorz’s other investments include insulin producer Bioton SA, power generating company ZE PAK SA and telecommunications operator Sferia SA.

The sale gives Telewizja an enterprise value, or equity plus debt, of 11.8 times this year’s estimated earnings before interest, taxes, depreciation and amortization of 305 million zloty, Cyfrowy said in an e-mailed statement. Iwaszko said that valuation is “close to” TVN’s.

Cyfrowy gained as much as 3.6 percent to 14.6 zloty and traded at 14.52 zloty at 9:30 a.m. in the Polish capital, outperforming a 0.6 percent drop in the benchmark WIG20 index.

To help fund the transaction Cyfrowy won’t pay a dividend from 2010 profit, the PAP newswire quoted Cyfrowy Chief Executive Officer Dominik Libicki as saying.

-- Editors: Nathaniel Espino, Peter Branton

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