Free-Media Fund Buys Into Polish Publisher and Government Critic

  • Fund says Agora is undervalued, likes Polish media prospects
  • Agora’s flagship newspaper is leading critic of Law & Justice

A U.S. fund that invests in media companies operating in countries where the free press is threatened bought 8.3 percent in Agora SA, Poland’s largest publicly-traded publisher and a fierce critic of the country’s government.

Shares in Agora advanced 1.6 percent to 12.84 zloty at 1:01 p.m. in Warsaw after not-for-profit Media Development Investment Fund Inc., or MDIF, acquired the stake, worth 51 million zloty ($13 million) at current valuations. Agora, which lost 80 percent of its market capitalization since 2007 amid a demise of print media worldwide, is “undervalued” and operates in a market with “significant scope” for longer-term growth, MDIF said.

Agora’s flagship newspaper, Gazeta Wyborcza, is a harsh critic of the ruling Law & Justice party, which during six months in power fell out with Poland’s partners in Brussels and the U.S. amid accusations it’s backsliding on democratic values. The government, meanwhile, has questioned the need for state-controlled insurer PZU SA to hold a leading stake in Agora and has changed regulations regarding public-sector advertisements and subscriptions, adding to a drop off in Wyborcza’s circulation.

“MDIF helps mitigate an overhang on Agora’s shares, as government-controlled entities including PZU’s pension fund may be inclined to sell,” Andrzej Knigawka, head of equity analysis at ING Securities SA in Warsaw with a “buy” recommendation on the company’s shares, said by e-mail. The fund’s move is “unexpected political support for its business from a U.S. fund that supports media integrity,” he said.

Media Freedom

Treasury Minister Dawid Jackiewicz said in January that he has “serious doubts” whether it makes sense for PZU’s pension fund to keep “such a large” stake in Agora. PZU Zlota Jesien fund is the company’s second-biggest owner with 11.7 percent of voting rights. Agora’s shares, supported by income from the company’s cinema business, have gained 15 percent since Law & Justice won power in October’s election, while Warsaw’s benchmark WIG20 Index has dropped 13 percent.

New York-based MDIF states its “mission” as investing in “independent media around the world providing the news, information and debate that people need to build free, thriving societies” in countries where “access to free and independent media is under threat.” The fund had $39 million in assets under management in December.

Agora has “a long record of journalistic excellence,” MDIF spokesman Peter Whitehead said by e-mail. “We view strong independent news and information providers as important for countries at all stages of development.”

Bill Clinton said last month that Poland, long regarded as a model for its embrace of democracy following communism, was sliding toward an “authoritarian dictatorship” under Law & Justice, prompting party leader Jaroslaw Kaczynski to tell the former U.S. president to go see a doctor. The European Union’s executive arm is investigating whether Poland is upholding rule-of-law, its first probe into a member country’s democracy.

Agora is “very happy” that MDIF found it to be an “interesting target,” according to Nina Grabos, head of investor relations at the Warsaw-based company.

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