Čtvrtek 28. března 2024, svátek má Soňa
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Lidovky.cz

Lagardere opts for online acquisitions

  16:40

The radio group plans to get into the top 10 players on the Czech online media market

Lagardere Active ČR, one of the two largest local radio station operators, plans to acquire several music portals in an attempt to boost its online market share. The company won’t disclose precise targets but admits that it can’t grow in the Czech online environment without strategic purchases.

“To start a new project in the FM band is quite hazardous today. People have already decided what they want to listen to. For us, if we want to grow, that is possible only through acquisitions,” Michael Fleishman, president of Lagardere Active ČR, told Czech Position. ‘To start a new project in the FM band is quite hazardous today’

“Our acquisitions will go in the direction of music portals. Our success with [the music portal] Koule.cz shows that this is the right direction. If [we decide to opt for] cooperation, synergies, acquisitions, everything will go in the direction of music activities. This is essential for our core business, and we want to build our strength around music,” he said.

The biggest trouble with acquisitions is that there are few relevant projects on the market to buy, and those that are available are too expensive. “The situation in 2009–11 isn’t rosy, and the value of many successful radio stations went down. However, station owners refuse to admit it,” Fleishman said. “If we want to grow, it must be meaningful and lucrative, otherwise it doesn’t make sense.”

Too big to ignore

Currently, Lagardere is the 18th largest Czech Internet player. Its goal is reach the top 10. “We can’t get there without acquisitions. Yet, that will be slow and difficult,” Fleishman said.

Moreover, getting in the top 10 still leaves a question mark whether money will return as soon as expected. “We’ll do everything to get in top 10 — we’ll invest into our products and we’ll focus on acquisitions. On the other hand being in 10th place doesn’t mean we’ll face a growth of 15 to 20 percent a year. That’s really not the case,” he said.

Growth and financial returns on online investments on the Czech media market are made difficult by a high degree of concentration of the major players. A handful of portals share almost the entire market; the three largest names — Seznam.cz, Mafra and Centrum.cz — have a combined market share of almost 70 percent.

The same concentration can be observed on the Czech commercial television market, where the leading two players, TV Nova and TV Prima, have roughly a 55 percent market share. This is why cooperation with the big market leaders may seem more meaningful than competition, Fleishman said.

Not switched off, just moved

In 2008 Lagardere launched the online streaming music project Lide.cz together with Seznam.cz. However, in September 2010 the media house announced the project was cancelled. “Seznam.cz estimated that Lide.cz wasn’t bringing them what they initially expected, and they want to focus more on their core business,” Fleishman said. ‘It would have required a lot of effort to make it profitable’

He noted that the problem wasn’t the number of visitors, but the difficult commercial possibilities for  the new product. “It would have required a lot of effort to make it profitable, so we decided that’s not the right path to take. There wasn’t any conflict involved regarding the end of this project,” he said.

Streaming music was moved in the meantime to the radio group’s Internet pages and now Lagardere is working to start a new cooperation for a similar project with Centrum.cz, the third-largest online portal in the Czech Republic. No details about the new endeavor were released.

Three power horses

With regards to new projects in the FM band, Fleishman said Lagardere has a low-risk approach. “We know this business very well and we’re able to tell what makes sense and what doesn’t,” he said. However, the current radio system will be in place in the Czech Republic for the next 10 years, so Lagardere will keep investing in it.

On top of acquisitions, Lagardere plans to use three more avenues to boost its market share. The investments will go primarily to internal activities — into people, new technology for better sound and coverage, and marketing research. “We want to be there where trends are created in order to maximize that information for a further professionalization of our activity. Marketing, marketing, marketing – this is my motto for the next year,” Fleishman said.

During the economic crisis Lagardere sailed quite smoothly. The media house saw its revenues sinking by 10 to 15 percent in 2009, but still remained in the black. This year the firm returned to growth and it plans to reach higher revenues than in 2008.

Fleishman said the fast return to pre-crisis revenue levels is the result of cost-cut measures made in 2008 and 2009 such as the postponement of several projects and a salary freeze for 2009. “In 2011 we don’t expect any major change. We expect growth in our sector by 3 to 4 percent, but the crisis didn’t end in Europe. The risks are still here,” Fleishman concluded.