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 Khoroshkovsky Was Forced to Leave Ukraine?

Former First Deputy Prime Minister Valerii Khoroshkovskyy decided to sell Inter - the largest media group in Ukraine - to businessman Dmytro Firtash.

According to Mr. Khoroshkovskyy maintaining this expensive media project is currently too much for him. But sources attribute the decision to the possible pressure on him after Inter started criticizing the work of government agencies. Khoroshkovskyy himself supposedly already left Ukraine, writes Kommersant Ukraine.

Group DF owner Dmytro Firtash exercised an option to purchase 100% of the UA Inter Media Group - the majority shareholder of all Inter assets, stated the Channel's press service on Friday. The seller was KH Media Limited owned by Valerii Khoroshkovskyy, and the buyer - GDF Media Limited. "Agreement on Sale of UA Inter Media Group was signed on the basis of assessed value - $ 2.5 billion," says the statement. The deal will be closed upon approval by the Antimonopoly Committee.

An option to buy a control stake of Inter was acquired by Firtash at the beginning of 2007, after he sold his Mega, K1 and K2 channels. "In times of economic crisis, it would be good to have a strong financial partner," said Khoroshkovskyy then. A source in Group DF said that the talks on purchasing had been active almost all the time, but Valerii Khoroshkovskyy was not satisfied with the offered price. "In the end Firtash did not raise the bod," said the source, who declined to give specific figures. The agreement was reached just days ago - Valerii Khoroshkovskyy told the Channel's managers on closing the deal on January 31, say the people at the Channel.

The main asset of the media group Inter is the same name TV channel. 61% of its shares were owned by the Ukrainian Media Project company - daughter company of UA Inter Media Group Ltd. Another 29% of Inter belonged to the Russian First Channel, 10% to Svetlana Pluzhnikova, the widow of the channel founder Ihor Pluzhnikov. In addition to Inter, the group includes seven small channels (NTN, Mega, K1 and others), one satellite channel (Inter), three sales houses and the Ukrainian News agency.

Valerii Khoroshkovskyy explained his decision by financial difficulties. "Under the circumstances, I have no opportunity to further develop the group, and these circumstances have been the main motive for sale," cites his words the press-service. The media was unable to obtain a comment from Khoroshkovskyy or Friday or yesterday. Beginning 2009, TV channel Inter was losing money, though its revenue grew - I half-year 2012 the channel finished with net income of 446.84 million UAH and a net loss of 95.34 million UAH. Financial performance of other assets of the group are not published.

Market participants as the primary reason for sale of the channel call the desire to protect the asset after the confrontation with Prime Minister Mykola Azarov. Valerii Khoroshkovskyy disagreed with the re-appointment of Mykola Azarov as Prime Minister and refused to join his government. In the press office statement Khoroshkovsky noted that he believed Azarov unable to pursue economic reforms. After this Inter started airing stories critical of the authorities. The Prime Minister said at the time that these stories "are false and deliberately opposed the government's policy."

"Actions of Valerii Khoroshkovskyy attracted attention of the President's Family, so it's possible that now with the help of selling the channel to its partner, he is trying to save this asset," said a source close to one of the parties to the negotiations. Khoroshkovskyy himself, according to the managers of Inter channel, was forced to leave the country - from the end of December, he was, according to various sources, in France or Monaco.

Khoroshkovsky always kept in touch with Dmytro Firtash. On receipt of an option to purchase shares of Inter, the businessman actively participated in the formation of the channel's information policy, Inter employees claim. And, for example, in 2009, working as the head of the State Customs, Valerii Khoroshkovskyy refused customs clearance of 11 billion cubic meters of gas owned by Dmitry Firtash's RosUkrEnergo, in favor of Naftogaz of Ukraine. For that then Prime Minister Yulia Tymoshenko dismissed him. But on the same day, President Viktor Yushchenko appointed Khoroshkovskyy first deputy of the Security Service of Ukraine, and he gave an indication to initiate a criminal investigation into the theft of gas. Throughout the gas dispute Firtash has participated in Inter programs where he explained and tried to prove his position.

This version is evidenced by the announced asset price that market participants call clearly excessive. For comparison, in 2010, Ihor Kolomoyskyy bought 100% of 1 +1 and Kino Channels for $ 400 million and in 2007, after the publication of the first financial statements of Inter it was assessed at $ 365 million. "In this case, there are more channels but the packages are not 100 percent. Fair price would be $ 700-900 million - less than $ 1 billion,"- said a top manager of one of the major TV channels. Hardly Firtash really paid that amount to Valerii Khoroshkovskyy - rather he said it for the safety net, adds a top manager of one of the media companies: "Now, if he will be demanded to sell the channel, he is entitled to demand $ 2.5 billion from potential buyers." One of the former managers of Inter notes that Firtash could act in the interests of other shareholders - members of the President's Family or one of the Russian media groups.

Change of owner has complicated the work already. "A number of projects have been frozen, as it is unclear who should sign the budget," said the manager of a production studio working with Inter. "On Monday it should become clear who will leave the channel. Now the ones preparing to leave are Alla Lipovetskaia (general producer of the channel) and Yaroslav Porokhniak (CEO of the group)," said the source. Both managers have not confirmed this information.

There are two candidates for the post of the head of the channel - two former managers Anna Bezliudnaia who was a general producer from 2007 to 2009, and Serhii Sozanovskyy - Chairman of the Board of Inter in 2006-2010, say participants of the market. "Both of them are now picking teams for Inter," says the head of one of the units of the group. However, the source did not rule out that the managers are only advising the new owners. "Anna Bezludnaia is unlikely to head the channel - her relationship with Dmytro Firtash severely deteriorated during the previous year and she practically stopped working with Group DF," said a source close to Firtash.

New managers will have to return to Inter to its leading positions and repurpose niche channels, says a source close to Khoroshkovskyy. "Among the channels of the group in the near future we should see youth, sports, and maybe news channels," added the source. Since 2005, the audience share of Inter (people older than 4 years old, living in cities of more than 50 thousand people) fell by 13.2 percentage points - from 27% to 13.8%. "In recent years, the fall was even more obvious - it was promoted by frequent changes of management and strategy," said general producer of Film.UA Group Viktor Mirskyy. According to him, the main audience of the channel are older people living in small towns. "But the niche channels are one of the group's few successful assets, their audience is not reducing," recognizes Mirskyy. According to him, the new management will succeed only if it remains in the channel for a long time - Inter was killed by the fact that every year there comes a new executive with his own strategy. Under these conditions, long-term planning does not work."

The new channel management will face a difficult challenge - a balanced information concept, said one of the former managers of Inter. "Until last September, channel programs were uninteresting, because they were not raising sensitive issues. Starting September they became too interesting - and ultimately changed the owner. Now the channel has to find a balance - to be interesting, but loyal to the current government," explains the source. However, the general producer of Channel 5, MP Yuriy Stets (Batkivschyna) notes that the final stage of negotiations for the sale probably lasted at least a month, and it is unlikely that in this month the information policy was contrary to the wishes of the future owner. "The changes have already begun, and the concept of the channel is likely to remain the same as it has been in recent months," he predicts.

 
 
 
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