CME sacks TV Nova director, SBS buyout threatened

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PRAGUE--TV Nova station director and license holder Vladimir Zelezny has been dismissed by Nova's station operator, Central European Media Enterprises (CME), as executive and general director of CME's operating arm CNTS (Ceska Nezavisla Televizni Spolecnost).

Mr. Zelezny still maintains control of CET-21, which directly owns the broadcasting license operated by CME's CNTS. CME has placed John Schwallie and Martin Radvan in Mr. Zelezny's place at CNTS.

TV Nova was the first successful commercial TV station in Central Europe and its the flagship property of CME, the Nasdaq-listed company controlled by Ronald Lauder, one of the heirs to the Estee Lauder cosmetics business.

Mr. Zelezny says he will challenge CME in court over control of Nova "even if I have to transfer it to another company or take Nova off the air." Advertising Age has learned that CET-21's broadcasting license allows the station to be off the air for 30 days a year without putting the license in jeopardy. Mr. Zelezny is widely credited with making TV Nova into one of the most successful TV stations in Central Europe.

The struggle between Mr. Zelezny and CME over control of TV Nova puts Scandinavian Broadcasting System's buyout of CME in jeopardy. Earlier this month, CME announced SBS would buy all of CME's stations for $615 million in a deal that would make SBS the largest broadcaster in Europe in terms of viewership. But that announcement was tempered by references CME made to an ongoing conflict with Mr. Zelezny over Nova's ownership and programming structure that, it said, "could result in protracted litigation" with Mr. Zelezny. With uncertainty hovering over CME's control of its flagship station TV Nova--CME's only cash cow--SBS now has little incentive to buy CME's other five unprofitable stations at such a price.

The conflict escalated late last week when Mr. Zelezny admitted to having a "serious dispute" with SBS, which is said to have plans to make significant changes in TV Nova's management and programming and, according to one executive close to the situation, "wanted to re-invent the wheel."

CME's strong accusations against Mr. Zelezny include "taking actions that exceeded his authority" by transfering CNTS' programming functions -- and profits -- to AQS, a Czech company privately owned by TV Nova employees, which provides programming services for the station. CME President Fred Klinkhammer said this has "severely weakened" CME's operating arm CNTS "because it no longer performs one of the most basic functions of a television company -- acquiring television programs and movies."

It seems that Mr. Zelezny, however, has broken no laws by transferring the programming capabilities to AQS, but Klinkhammer calls Mr. Zelezny's actions "bad faith actions."

Mr. Zelezny has often been scolded by the media council for abusing his position as director of the largest station to further his own personal ends. He has even been suspected of aspiring to a political career. Mr. Zelezny has made himself into a high-profile public figure in the Czech Republic, has his own TV show, is one of the richest men in the country, and a man Czech society both loathes and admires.

On April 21, two different sets of security guards surrounded Nova TV's offices, some representing CME and others saying they were hired by Nova.

Copyright April 1999, Crain Communications Inc.

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