FORMER ECON MINISTER RUSKO TO SELL TV SHARES

C O N F I D E N T I A L BRATISLAVA 000876 SIPDIS E.O. 12958: DECL: 10/31/2015 TAGS: ECON LO PGOV PINR SUBJECT: FORMER ECON MINISTER RUSKO TO SELL TV SHARES REF: A. BRATISLAVA 705 ¶B. BRATISLAVA 692 ¶C. BRATISLAVA 618 Classified By: Ambassador Rodolphe Vallee for reasons 1.4 b and d. ¶1. (C) Central European Media Enterprises (CME),an American Media firm, is finally poised to take control of TV Markiza by buying out the shares held by dismissed Economy Minister Pavol Rusko. Rusko, apparently badly in need of "clean" cash, finally agreed to sell all his shares -- and thus controlling interest -- in market-leading TV Markiza to CME. CME official Roby Burke (strictly protect) confirmed to us Oct. 28 that Rusko had signed the deal, and that Burke will formally sign papers Oct. 31 assuming 80 percent control of the station. Burke said CME will try to issue a public statement Nov. 2. ¶2. (C) CME plans to dismiss or move around Rusko cronies within the station, including the General Director and Program director. Rusko's wife, who as a news anchor is the real enforcer of Rusko's editorial line within the station, will be dismissed but will be given a soft landing with a six-month consulting contract for CME. CME must first obtain approval from the Protimonopolny Urad, the Slovak anti-trust authority, before making any changes to the management and personnel at Markiza. (Note: Anti-trust approval is separate from the process of renewing the station's frequency spectrum license. The Markiza license is valid until January 2007, but the owner must apply for renewal in January 2006, and the TV, Radio and Retransmission Council should decide on the license in March 2006.) ¶3. (C) Burke added that Rusko appeared a largely beaten man during the discussion over the shares sale, a move Rusko had long resisted in order to use the station as political leverage over fellow politicians. CME has sought to buy out Rusko and his partners for several years, fearing his political antics will lead to denial of the license renewal. His partners have been eager to sell, but have been barred through interlocking agreement from doing so. This time, however, the "negotiations" lasted only five minutes. From the start, CME was willing to offer Rusko a good price to get rid of him, so this was never an issue (CME paid Rusko USD 24 million, of which Rusko should see USD 16 million after taxes, according to Burke). Burke also noted that Rusko had been hospitalized recently for chronic high blood pressure. ¶4. (C) Comment: CME and Rusko have previously reached agreement on terms, conditions and price, only to have Rusko back away at the last minute. Markiza's pending frequency spectrum license renewal and Rusko's recent dismissal from his ministerial post (see reftels) provide sufficient motivation for him to follow-through on this latest offer and finally "cash out". The government coalition will be thrilled with this news. CME plans to be minimalist in its public remarks on the takeover, saying only that they reached a good deal with Rusko and will work to avoid any past problems regarding political neutrality of the station. They hope the need for the deal to be approved by the anti-trust authority will deter Rusko from lashing out in the media; although we expect the media to provoke him. Opposition SMER party leader Robert Fico, whom Rusko courted (the courting probably was mutual) after Rusko's dismissal from the cabinet, will be dismayed that his real or potential ally no longer has its prized media outlet. We cannot rule out that Fico may attack the deal, but CME is confident everything is above board and will stand up to scrutiny. VALLEE NNNN