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


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