Players' perilous paradise in Central and Eastern Europe.

In the European business world, new opportunity seems to lie in the Central and Eastern Europe (CEE) mass media field, although accurate growth figures are hard to come by.

Take Russian television, for example. In 1995 it generated advertising revenues of between $650 million(*) and just under $1 billion(**), making it the largest TV market in the CEE region.

The Russian media sector's revenues, growing at a rate of between 20 percent and 30 percent, are largely produced by advertising from such multinational companies as IBM and Daimler Benz.

"The problem with economic statistics from Russia is that the advertising and media areas are especially unreliable," commented Christoph Westecker, a Berlin-based veteran media consultant for Central and Eastern Europe and a senior executive at Germany's SAT. 1 TV network. " In Russia, or anywhere else in Central and Eastern Europe, figures are at best guess estimated, put together by adding the presumed value of barter and third-party deals to the conditional commitments to pay, plus IOUs and a core of hard cash from the western multinational companies," he added.

Although sector statistics may be questionable, there's no doubt about the quick pace of TV growth or the high stakes involved.

Ask Sergei Blogovdin, Vladislav Listyev's successor. A well-positioned journalist before he was tragically assassinated, Listyev was in charge of implementing the commercialization of ORT (the former Ostankino) on a sound Western-style basis by eliminating Mafia-related deals. Blogovdin, who has been in office since last year, is now bravely continuing the work of his assassinated predecessor.

This quick pace of action stems from the sheer number of players in Eastern Europe. With more than 20 television stations and a population of 2.7 million, Latvia, for example, has probably set a new record for the number of TV channels per capita. In reality, however, many of these stations are nothing more than loose shifting groups of independent production companies that change programming and formats on a moment's notice. Even the so-called "established" stations are prone to a bewildering unreliability. Take Picca TV, for example. Picca recently completed its second year of broadcasting and is one of Latvia's more successful newcomers. The company's secret has been to split its broadcasters into several distinct areas by allowing for the simultaneous broadcasting of advertising.

This rampant profusion of TV channels extends to even Central Europe. According to a study conducted by the Publicitas Prague Media Agency in autumn 1995, the Czech Republic had five TV and 62 radio stations, 20 national and 120 regional newspapers and 410 magazines competing for just $250 million in advertising revenues.

The Czech Republic is also home to the most successful newcomer on the CEE media scene: Nova TV. Launched in 1994 by Central European Media Enterprises Ltd. (in which American businessman Ronald Lauder holds a major equity stake), Nova immediately grabbed 70 percent of the Czech TV market, introducing Western-style business practices and a lively programming mix.

Nova's success has spawned several copycats. In the Czech Republic, Stratton Investments, led by the American investor Michael Dingman, has announced plans to acquire a stake in Premiera, a regional TV broadcaster. Busy building the largest independent corporate empire in the country, Stratton intends to re-mold Premiera into a worthy competitor for Nova.

Nova's overnight success is an exception in CEE, since most outside investors have found it difficult to operate in the region. An example can be found in the Klenner group, which is centered around German-American businessman Peter Klenner. In late 1994, Klenner made what he thought was going to be a "passive investment" in A3, a Hungarian youth-oriented cable broadcaster reaching some 3.5 million viewers. "We soon realized we were going to have to run the station ourselves, handling everything from accounting to programming," said Imre Kovats, executive vp at the Klenner group's Hungarian Broadcasting Corporation. The group also began lengthy litigation to fight for adequate air time.

Armed with funds from a successful public offering in the U.S. and a relaunching as a general broadcaster, A3 now seems set for a period of steady growth. One of the new A3 programming staples will be locally produced dramas. "It's a matter of dollars and cents," said Kovats. "One legacy of the socialist past is our country's oversized film studios. They're very interested in keeping busy and delivering high quality programming at very reasonable prices, something we're happy to purchase and something Hungarians are interested in watching."

Rudolf Huber, the head of press at Leipziger Messe GmbH and a longtime expert on Eastern European media, commented that he wouldn't be surprised if Hungary or the Czech Republic or even Russia turns out to be the next Mexico, Brazil or Ireland. We'll probably see a flood of affordably priced soap operas, novelas and even sitcoms from the CEE region over the next few years. "If Mexican soap operas can be a big hit in Poland, why can't Polish soap operas be a big hit in Mexico?" Huber asked.

* Estimate compiled from figures released by the IP Group and Y&R Media

** According to Germany's IWD weekly business monitor.