Discovery Inc. said it has formally notified Poland’s government that it will take legal action to block a draft bill that would bar foreign ownership of media in that country, claiming the legislation violates the bilateral investment treaty between the U.S. and the Republic of Poland and is directly tied to its control of independent news channel TVN, which has been critical of Polish President Andrzej Duda’s administration. 

The draft legislation is just the latest in what the programmer claims is a history of attempts by the government to squelch TVN. Discovery, which in May said it would combine with AT&T’s WarnerMedia unit in a deal valued at $43 billion, said it applied for renewal of TVN’s broadcast license 18 months ago but has still not received approval. That broadcast license is set to expire on Sept. 26, according to reports.

Wednesday (Aug. 11), the lower house of Poland's parliament voted to pass the bill by a slim margin (226-216, with 10 abstentions). The draft legislation still must go before the country’s Senate, where the opposition holds a slim majority in the upper house and could make changes, but the lower house could pass the bill as is, according to the Associated Press. Once it passes the Senate, the bill would go before Duda for his signature. 

Although the draft bill would prevent any non-European country from owning media in Poland and was being promoted as a national security measure, it is largely believed to be targeted at Discovery, which in TVN has the largest independent foreign investment in media in Poland. TVN has been highly critical of the conservative Polish government and has uncovered wrongdoing by officials. 

“The legislation is the latest assault on independent media and freedom of the press, and takes direct aim at Discovery’s TVN, the country’s leading independent broadcasting group and news provider, as well as one of the largest U.S. investments in Poland,” Discovery said in a press release. “Over a number of years, the current Polish government has targeted TVN in an arbitrary and discriminatory manner as part of a broader crackdown on independent media and in direct violation of legal protections around freedom of expression.” 

According to the AP, some government critics fear the law is another step toward the restrictive policies of its European neighbor, Hungary, where Prime Minister Viktor Orban, who gained a fan in Fox News pundit Tucker Carlson earlier this month, has cracked down on that country’s media outlets, as well as silencing opposition to his right-wing policies by Hungary’s universities and judiciary. 

Discovery acquired the TVN interest through its purchase of Scripps Interactive Networks in 2018. Scripps paid about $2 billion for TVN in 2015. 

“We are deeply committed to safeguarding our investment in Poland and its people, defending the public’s interest in independent media and the rights of freedom of expression,” Discovery International president and CEO JB Perrette said in a press release. “Discovery, as a protected investor in Poland, is afforded important rights and freedoms under the US-Polish Treaty. We do believe this legislation will have a chilling effect on U.S. and European investment into the Polish economy, and we will aggressively defend our rights.”

The U.S. government also has expressed its displeasure with the legislation. In a statement Wednesday, U.S. Secretary of State Antony Blinken said he was “deeply troubled” by the bill.

“Poland has worked for decades to foster a vibrant and free media,” Blinken continued. “This draft legislation would significantly weaken the media environment the Polish people have worked so long to build.”  

Scripps Networks' international division chief Jim Samples will take over as president of Polish network group TVN, after the departure of current CEO Markus Tellenbach and while the company searches for a permanent replacement.

In a statement, Scripps Networks said Samples, already head of TVN’s supervisory board, will become president of TVN’s management board, based in its Warsaw offices and will lead the company until a new senior executive is named “in due course.”  

Tellenbach is stepping down almost a year after Scripps Networks purchased TVN in September. 

Recently, SNL Kagan singled out Poland as a growing market in Europe for digital entertainment. 

“TVN has been an incredibly valuable acquisition for Scripps Networks, and continues to break new ground in developing and monetizing compelling content for Polish audiences,” Scripps Networks chairman and CEO Ken Lowe said in a statement. “Markus Tellenbach is an accomplished media executive who has positioned TVN for sustained growth in both the linear and digital businesses. We thank him for his leadership and collaboration since the acquisition by Scripps Networks, and for his service to TVN over the last seven years.

“Jim Samples has been instrumental in the success of our international business over the last year, and his deeper involvement in Poland will enable continued integration between TVN and our wider global operations,” Lowe continued. “The outstanding management team at TVN has been integral to the company’s recent success, and will ensure that the business continues to go from strength to strength in the future.”

TVN broadcasts three free-to-air channels: TVN, TVN 7 and TTV; and 10 thematic pay channels: TVN 24, TVN Style, TVN Turbo, TVN24 Bis; TVN Meteo Active, iTVN, iTVN Extra, TVN Fabula, Mango 24 and local NTL Radomsko distributed via cable and satellite operators. TVN also has an advertising sales division, TVN Media, which sells advertising across TVN’s portfolio and to third party networks.

“TVN is a vibrant and growing company that plays a key role in Scripps Networks’ international growth strategy,” Samples said in a statement. “This is a very exciting period for the company, and I’m looking forward to working even more closely with the management team and TVN’s employees over the coming months to continue to grow the business for the long term.”

Scripps Networks Interactive said it will purchase 100% of Polish cable network TVN, a deal that is part of an earlier transaction to purchase a stake in the programming company.

Scripps had said back in March that it would purchase 53% of TVN for about $1.5 billion in cash and assumed debt. Under Polish law, Scripps was obligated to make a tender offer to increase its ownership of the networks up to 66% within three months of the first offer. On June 9, Scripps said it decided to offer to purchase the remaining public ownership of TVN and delist it form the Warsaw Stock Exchange. No price for the offer has been set.

“Taking full ownership of TVN will enable Scripps Networks Interactive to fully realize the strategic and financial opportunities afforded by the TVN acquisition,” said SNI chairman and CEO Ken Lowe in a statement. “TVN is a strong and compelling business in one of Europe’s key media markets, and under Markus Tellenbach’s leadership, it will play an important role in our continued expansion in the region.”

TVN is one of the leading media companies in Poland with a portfolio of free-to-air and pay-TV lifestyle and entertainment channels including TVN, TVN 7, TVN Style, TTV, TVN Turbo as well as 24-hour news channel, TVN24, and business news channel TVN24 Biznes i Swiat.

Scripps Networks Interactive acquired what it hopes will be the lynchpin in its international strategy, buying a 53% interest in Polish broadcaster, satellite TV, online and pat TV content provider TVN from ITI Group and Canal Plus Group in a deal valued at about $1.5 billion, including assumed debt.

According to Scripps, the U.S. content company will pay about $613 million in cash and assume about $882 million in TVN debt. Based in Warsaw, TVN includes a portfolio of free-to-air and pay TV lifestyle and entertainment channels including TVN, TVN 7, TVN Style, TTV, TVN Turbo and Poland’s leading 24-hour news channel (TVN 24) and business news channel (TVN 24 Biznes i Swiat).

Scripps Networks expects to close the deal early in the second half of this year. As per Polish law, Scripps will be required to tender for an additional 13% of the company at closing, ending with a 66% interest in TVN.

In a  note to clients, Evercore ISI Group media analysts Vijay Jayant and David Joyce wrote that while the TVN purchase may be a little expensive, it gives Scripps an inroad in what could be a lucrative market. Poland is one of the more established TV markets in Eastern Europe – it has a population of about 39 million people, 12.9 million TV households, 89% multichannel penetration and 54% broadband penetration, according to SNL Kagan.

“Strategically, this could be an important platform for SNI to leverage its existing library, apply its current formats, and use as a springboard for further European channel expansion,” Jayant and Joyce wrote.  

In a conference call with analysts, Scripps chairman and CEO Ken Lowe said TVN represents a strong growth opportunity for the programmer – Poland is one of the fastest growing TV markets in Europe.

“This deal provides Scripps with a solid presence and will be a key pillar of our international operations,” Lowe said on the conference call.

While Scripps backed off on the notion of TVN being a vehicle to roll up broadcasters in the region, the company’s programming and distribution assets – it owns a 32% stake in Poland’s leading satellite TV company nc+ and over-the-top service, TVN Player. In addition, TVN also has an in-house production arm and TVN produces 2,300 hours of original content each year.

The addition of TVN will immediately boost Scripps international scale. TVN had about $403 million in revenue in 2014, up about 4%, while adjusted cash flow increased 5% to about 184 million.

Lowe said on the conference call that after the deal is closed, the contribution to total consolidated revenue from international sources will increase nearly six-fold from about 3% to 17%. On a pro forma basis, Lowe said international will make up about one-quarter of SNI’s total business.

“This is an important step,” Lowe said. “We have frequently said we seek to invest in areas in which we see a great potential for growth. This investment represents precisely that investment philosophy.”

The Scripps Networks purchase mirrors what other content companies have done in recent years to offset declines in the domestic advertising market, especially Discovery Communications, which derives more than half of its overall revenue from outside of the U.S. While Scripps has had an international presence prior to the TVN deal – in 2011 it formed a joint venture with BBC Worldwide in the United Kingdom and its seven lifestyle brands (Food, HGTV, DIY, Travel Channel, Cooking Channel, Fine Living and Asian Food Channel) reach about 200 million homes in 180 countries – this is its biggest push into Eastern Europe.

According to Scripps, TVN is an advertising powerhouse – it secured about 33% of the ad market in Poland for its portfolio of networks as well as selling advertising for a number of other commercial broadcasters in the country.