Czech Mate

Cash Kings
Elijah Brown, Trevor Lebus, Jordan Egbejimba, Griffin Brocchini, Keli Santos
 The Players
What made TV Nova a successful television station?
1. Competition
a. First mover: gain a competitive advantage by being
the first commercial channel in the Czech Republic
2. Vladimir Zelezny
a. Brilliant ideas
i. Featured gruesome car crashes and crime
reports, and its news team sought out stories of
political chicanery
3. Timing
4. There were many American Programs and the Czech People
were very pro-America

Gained 70% audience share within a year and was described by

analysis as the most successful television station
TV Nova was the only profitable national station
Who was and is involved in TV Nova? What are their respective contributions to it?

They saw an opportunity

in media, as there was an
increase in demand for
consumer goods when
there is economic growth

Created a Czech television station

that focused on opportunities in Eastern
and Central Europe following the fall of
the communism in the region
Originate in 1991 with founder Ronald Lauder, a former
U.S. Ambassador to Austria and Mark Palmer who served
as U.S. ambassador to Hungary
 Who was and is involved in TV Nova? What are their respective contributions to it?

Spokesman and director of TV Nova

- Gave license for TV Nova
- Had a weekly program, “Call the
Dictator”
- The director of CNTS
- Majority owner of CET 21
Vladimir Zelezny
Journalist , producer and a former press When TV Nova faced licensing
issues, Zelezny was in a
official for the Czech government of
predominant part of the
Vaclav Havel
negotiations with the media
council.
What is their relationship to TV
Nova and with each other?

TV Nova had a lot of contributors to its

success with the help from their founder,
Ronald Lauder and the collaboration with
Vladimir Zelezny as part owner.

Ownership and structure of CNTS

CNTS’S Ownership Prior To 1996
Background of Previous Ownership Changes and Valuations

● February 1994 = Gained 70% audience share

● CME financed its ambitious growth strategy through two additional
public offerings in 1995 and 1996
○ Revenues grew to $136 million in 1996
● Ownership changed between 1994 and 1997
○ CME’s original stake in CNTS was 66%
○ Czech Savings Bank (CSB) owned 22%, and CET 21 had a 12%
stake
Past Ownership Changes
CNTS 1996:
● CME purchases CSB’s 22% share in CNTS for $36
million

CNTS 1997:
● Dr. Zelezny acquired a 5.8% of CET 21’s ownership
stake in CNTS through Nova Consulting
○ Accomplished through a $5.2 million loan made to Zelezny by
CME
● A transfer of 5.2% of CET 21’s ownership in CNTS to
CME
○ Part of the term’s laid out in CME’s loan to Zelezny
Valuation of CNTS

● 1996:
○ CME purchases 22% of CNTS for
$36M
○ Based on this transaction, CNTS’s
Equity was valued at $163,636,363
● 1997:
○ Dr. Zelezny acquires 5.8% for $5.2M
○ Based on this transaction, CNTS’s
Equity was valued at $89,655,172
CNTS’S Ownership Under Zelezny’s Proposal, ~1997
What to do with Zelezny’s stake?
Pros:
● Purchase of the shares will prevent
CME from being saddled by
potential third-party ownership.
Cons:
● CME owning 99% will provoke
controversy over foreign television.
● The Media Council’s immediate
response to CME’s purchasing of
the shares would be unpredictable,
as they had not formally rescinded
administrative proceedings against
CNTS.
● Zelezny not owning part of CNTS
may harm future relations between
CNTS and CET 21.
Valuation of Zelezny’s Stake
● Stake in question = 5.8% in CNTS that Zelezny held through his company (Nova Consulting)
● Fertig and CME board of Directors did not want to buy Zelezny’s shares and own 99% of CNTS
● CNTS 1997 Ownership Structure was as follows:
○ CME: 93.2%
○ Nova Consulting (Dr. Zelezny): 5.8%
○ CET 21: 1%
● Final Recommendation = Do Not Buy Zelezny’s Shares
○ Cons outweigh the pros
○ Foreign controversy, ownership of essentially all CNTS shares, and the uncertainty of the
Media Council’s immediate response pose too great of a risk
○ CME and Board of Directors should work with Zelezny to continue holding his shares, or
deal with the possibility of him selling to another party