Ronald Lauder, the chairman of Central European Media Enterprises,
is an unlikely media magnate. The son of Estee Lauder, he was executive
vice-president of the family firm - the world’s largest privately owned
cosmetics company - until he decided on a change of career in 1983. A
spell at one of the company’s magazine outlets: Conde Nast or Hearst
Magazines perhaps? No - he joined the Pentagon as deputy assistant
secretary of defence for European and Nato policy. From there he moved
on to become US Ambassador to Austria.
Lauder was a political animal. He ran for the post of Mayor of New York
in 1989, is a leading light in America’s Jewish community - he is
chairman of the Jewish Heritage Council - and is a director of the
Museum of Modern Art.
Against all of this, the activities of CME must seem like an amusing
sideline; but the company is now the largest operator of commercial
television channels in Central and Eastern Europe, with channels in
Germany, the Czech Republic, Poland, Romania, Slovenia and the Slovak
Republic. It evolved out of a property development company set up by
Lauder in 1991 to take advantage of opportunities after the collapse of
the Iron Curtain.
Lauder certainly had the contacts to make it happen - and not just
because of his business and diplomatic backgrounds. His roots are
Hungarian: the Lauder family fled to the US in the 30s to escape the
The bandwagon began rolling in 1994, with the acquisition of two local
eastern German stations (in Berlin and Brandenburg) and the launch of
Nova in the Czech Republic. Nova was the first private national TV
channel to launch in a former Warsaw Pact country and has been the most
In November last year, it achieved a 64 per cent audience share and
takes dollars 100 million in ad revenue - 60 per cent of the country’s
TV advertising market.
As expansion plans evolved in 1995, Lauder realised he needed to bring
in top management talent. He found it in Leonard Fertig, a former ABC
executive and cable TV entrepreneur.
Fertig, CME’s president and chief executive, is the ideal hard-headed
foil to Lauder’s political figurehead role. Between December 1995 and
the summer of last year, CME launched channels in Romania, Slovenia and
the Slovak Republic; and along the way it picked up the contract to sell
airtime on the Ukraine’s leading state-owned channel.
Further expansion is planned for this year. The company has acquired
several local broadcasting licences in northern Poland and has forged an
alliance with TV Wisla, which has similar licences in the southern half
of the country. The launch of a national channel is planned for
And in Hungary, it is bidding for the two national state-owned channels
being sold off by the Hungarian government. CME is up against two other
strong contenders, CLT and Scandinavian Broadcast Service.
But the company has hit choppy waters for the first time. In its
recently announced 1996 financial results, CME reported a turnover of
dollars 136 million, a 37 per cent increase on the previous year.
However, it recorded an operational loss of dollars 30 million - largely
due to the heavy burden of development and start-up costs on all of its
operations. It has, after all, invested a total of dollars 250 million
and payback won’t come overnight.
In May, however, CME attempted to raise a further dollars 125 million
through a convertible bonds issue. But as it approached the big Wall
Street institutions, its share price began to plummet and it was forced
to call a halt to the plan.
At the end of May, CME decided to pull the plug on its loss-making
German operations, writing off dollars 20 million in the process. The
Berlin and Brandenburg stations (now branded as Puls TV), which have
been losing a total of dollars 1.2 million a month for the last year and
a half, are expected to file for bankruptcy unless investors can be
There have been equally worrying developments at Nova. CME was already
the channel’s dominant shareholder, but earlier this year it bought out
a local investor, CET-21, acquiring total control. This did not amuse
the Czech government, which prefers foreign media owners to act in
partnership with local companies.
But CME’s approach to programming is one of its strengths - it takes
international formats and develops them locally. It is not surprising to
find that Eastern European viewers have a taste for things like NYPD
Blue (even if their governments do not), but it has taken the arrival of
CME, with its professional management culture, to make commercial TV
Mel Varley, the London-based regional media director of Leo Burnett,
points out that CME is relatively small on a global scale of media
owners - but she is confident that it can continue growing. She adds:
’It is not yet at the stage where it is able to offer a regional sell,
but that could be interesting if it happens. The missing piece of the
jigsaw is Russia.
I think CME could emerge to dominate the TV scene in that part of the
Hungary. Coming home?
Television and radio interests in Eastern Europe. Turnover for the year
to 31 December 1996: dollars 135.99 million.
Nova TV: Launched 1994. Reaches 99 per cent of 10.3 million population.
1996 revenues of dollars 100 million (60 per cent of total TV
Radio: Nova Alpha.
Pro TV: Launched in 1995. Reaches 55 per cent of 22.7 million
1996 revenues of dollars 13.5 million (40 per cent of market).
Radio: Pro 102 FM.
Pop TV: Launched in 1995. Reaches 80 per cent of two million population.
1996 revenues of dollars 8.2 million (50 per cent of market).
Markiza: Launched in 1996. Reaches 80 per cent of 5.4 million
1996 revenues of dollars 7.3 million (47 per cent of market).
Has interests in four local TV stations - in Berlin, Brandenburg,
Leipzig and Dresden.
In May it stopped funding the Berlin and Brandenburg stations.
Has a 50 per cent stake in the airtime sales house for UT-2, the
country’s leading state-owned channel, reaching 93 per cent of the 52
million population. The Ukrainian TV advertising market is worth a total
of dollars 20 million but there are no figures available on the UT-2
Plans to launch TVN, which will reach a planned 50 per cent of the
country’s 39 million population, in October 1997. The Polish TV
advertising market, worth dollars 385 million in 1996, is the largest in
Is bidding to buy both state-owned channels, currently being privatised
by the government. Asking price for each ten-year franchise is dollars