More media consolidation set for Poland as Polsat makes double swoop

Poland is one of the fastest emerging markets right now for the media sector, as pay TV, OTT and broadband services are yet to reach saturation point. DTH operator Cyfrowy Polsat has initiated a rapid and aggressive takeover of the country’s second largest fixed line operator Netia this week – to match pace with close rivals increasing investments in the Central and Eastern European markets.

Cyfrowy Polsat, Poland’s largest pay TV operator, struck an agreement to purchase 33% of Netia earlier this week for €151.9 million ($179.4 million), a deal which was swiftly followed by a bid for an additional 33% of the company for the same price. Cyfrowy Polsat didn’t stop there, buying a handful of thematic channels from ZPR Media to bulk up its content business, which is increasingly focused on multi-room and OTT strategies, as the operator saw strong growth of 9.2% in this sector last quarter to reach 1.07 million subscribers, from its total pay TV base of 4.88 million customers.

What’s most significant here is that Cyfrowy Polsat will inherit 20,000 km of backbone fiber network, plus municipal fiber in the country’s 48 largest cities and benefit from a reach of 2.5 million locations via a last-mile network. Cyfrowy Polsat says some of these network assets are based in entirely new regions therefore representing new market opportunities, but has not specified where.

The deal is a retaliation against Liberty Global, which picked up the cable business of third-placed cable operator Multimedia Polska for $760 million just two months ago, giving its Horizon TV service access to an extra 1.6 million homes passed by Multimedia Polska’s HFC cable network. Meanwhile, incumbent telco Orange has 2 million broadband lines in Poland.

A boost of 1 million B2C and 25,000 B2B clients from Netia will provide Cyfrowy Polsat with a decent platform for pushing its various offerings, including its OTT service Ipla Online TV, with 77 channels, a big library of feature films and Poland’s largest TV content database, comprising 50,000 video assets, including 180 TV series aired from its 30 TV channels, as well as around 200 hours of major sports events coverage a month. Ipla is used by the great bulk of Cyfrowy Polsat subscribers, around 4 million people.

Cyfrowy Polsat will also need the network infrastructure assets to roll out next generation services to keep up with the likes of its more traditional DTH rival NC+, which recently rolled out Poland’s first 4K set top from ADB, which also supplies set top hardware to Cyfrowy Polsat.

UPC held the largest market share in Poland for cable internet services last year, with 40.2%, followed by Vectra with 20.1%, Multimedia 14.7%, Toya 4% and Inea 3.9%. Orange had a 55.1% share of telco services subscribers in 2015, ahead of UPC in second with 10.4%. UPC Poland’s cable market share should increase to about 55% following its recent acquisition, so Cyfrowy Polsat is now playing catch up.

A survey out just last week found that more OTT content is viewed on TV sets in Poland than in the US, UK, Germany, France, Sweden and Italy, with 81% of adult internet users streaming content on TVs, according to a poll by S&P Global Market Intelligence. The majority of respondents in Poland stream content to the TV by connecting a PC or laptop, rather than watching on a smart TV, with 56% going the PC route. In the UK, 79% watch OTT video content on TV sets, followed by Sweden and Germany with 74%, the US with 73%, Italy with 72%, and France with 69%.

“To us Netia represents valuable infrastructure, attractive client base and entry point to an entirely new market. It is a potential amalgamation of two perfectly complementary businesses and a natural step in the development of our Group, one that will let us offer our existing and future clients new services and add attractive new elements to our package of integrated services available for all Poles” says Tobias Solorz, President of the Management Board of Cyfrowy Polsat.

Cyfrowy Polsat paid $28.8 million to acquire 100% of the TV channels Eska TV, Eska TV Extra, Eska Rock TV, Polo TV and Vox Music TV, plus 34% in Fokus TV and Nowa TV.

There is plenty of room in the Polish market for consolidation, as addressed by ZPR Media Chairman, Zbigniew Benbenek, who said, “On the media market, both Polish and global, the times of consolidation have come. The main competitor of Fokus TV channel, which we have managed to overtake in terms of viewership, Discovery Channel, was globally purchased by Scripps Networks Interactive and thus in Poland it bought TVN. We are aware that our channels need support from a strong player.”