Ukrainian industrial magnate Igor Kolomoisky has upped his stake in Ron Lauder’s Central European Media Enterprises’ Kiev-based web Studio 1+1 in a $100 million deal.
Kolomoisky, who has interests in banking, oil and gas, will merge it with his local TET TV network.
Friday’s deal will “secure funding without jeopardizing liquidity,” according to execs at CME, in which Time Warner has a 31% share.
Kolomoisky, a CME board director who injected $110 million into the company some years ago, will own 49% of the merged entity.
The deal is expected to be closed by the end of the third quarter and includes a one-year option for CME to sell its 51% stake to Kolomoisky for $300 million.
CME acquired Studio 1+1, Ukraine’s second-highest-rating channel, for $109 million in October. It also operates another 21 channels in the Czech Republic, Bulgaria, Romania, Croatia, Slovakia and Slovenia.
Ukraine is CME’s biggest market in terms of population, and CME had high hopes of tapping into advertising there, predicting it would double revenue to $300 million by 2011. But the region has been hit hard by the global economic slump, and CME’s first-quarter revenue dived 37% to $145 million, compared with the previous year.
However, despite rumors that CME might exit Studio 1+1, corporate communications VP Romana Tomasova said CME intended to remain in Ukraine “and develop our business.
“However, due to current economic conditions, we needed to secure funding without jeopardizing our liquidity. That’s why we decided to partner with Igor Kolomoisky.”
CME president Adrian Sarbu added, “This investment confirms our view that Ukraine will be a powerful growth engine for CME in the future.”
Kolomoisky said the deal would allow Studio 1+1 to become the “fastest-growing business in the CME portfolio” once the Ukrainian economy begins to return to growth.
CME is registered in Hamilton, Bermuda, and is run from London.