CORPORATE CLOSE-UP;IN CZECH, BONTON MEANS ENTERTAINMENT; STRENGTH KEEPS COMPETITORS OUT WHILE COMPANY LOOKS AT NEW MARKETS

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[prague] Just six years ago, four unseasoned entrepreneurs pooled their money-a few thousand dollars-and founded a record company here. Today, their creation, Bonton, is a market leader in nearly every area of the entertainment business in the Czech Republic-music, film, videos and broadcasting.

The entertainment company has built such a strong brand that it's kept global competitors out of the Czech market. And now Bonton is eyeing neighboring markets.

Observers say that much of the company's success can be traced to the company's visionary chairman, Martin Kratochvil.

`RICHARD BRANSON OF THE EAST'

Foreigners call him the "Richard Branson of the East," comparing him to the flamboyant owner of the U.K.'s Virgin conglomerate. Most Czechs know him as "Mr. Bonton." But Bonton chairman Mr. Kratochvil describes himself as a jazz composer who dabbles in business.

Mr. Kratochvil comes across as an eager schoolboy rather than a corporate mogul worth millions. But there is nothing childish about the company's success. The conglomerate has 600 employees in 15 companies. Last year, consolidated sales topped $32 million.

Mr. Kratochvil's ideas often go against the grain of conventional corporate strategies. In fact, some of his concepts-such as buying Prague's zoo and privatizing the public pay toilet network-were squelched by other shareholders.

But the innovative 50-year-old has succeeded in creating the strongest domestic brand in the Czech Republic.

Robert Leighton, HBO's Eastern European director, calls Bonton "the most tremendous success story yet out of [Eastern] Europe."

Mr. Kratochvil runs the company with co-founders, Ohio-born Mick Hawk and Czech native Zdenek Kozak, who are co-presidents and handle day-to-day management-as well as counterbalance the chairman's sometimes overly eager ideas. The 34-year-old Mr. Hawk says that one of his roles is "bringing Martin down to earth. There's practicality, and there's fantasy."

The keys to success have been bold ideas, Western marketing techniques and a narrow focus.

In 1993, Bonton bought Supra-phon, the former state recording giant whose domestic Czech and classical titles already were sold in 20 countries. Panton, a recording company that specializes in classical, jazz, folk and country music, was added a year later.

The first independent Czech record label, Bonton Music is now one of the nation's largest rock/pop musical recording companies. Bonton also owns Opus, the largest Slovak record label.

The company operates Radio Bonton, the leading rock/pop radio station for Prague's 14-to-39-year-olds and the city's first locally owned private FM station.

IN THE MOVIES

Bonton Film is one of the largest producers of feature films, documentaries, TV series and music videos, and a dubbing producer. It produced the first privately made Czech feature film, "The Tank Battalion," which set box office records in 1991.

Bonton Film is the exclusive Czech distributor of 20th Century Fox, Universal, Paramount and MGM products, as well as films from several local independent labels. The film unit is a minority investor in the first multiplex cinema in Eastern Europe, located in a Prague suburb. And Bonton Home Video is a leading distributor of Hollywood films. The latest jewel in the Bonton crown is the 27,000-square-foot BontonLand, a music and video megastore scheduled to open in August at a prime location-Prague's Wenceslas Square.

Even without BontonLand, the company is the nation's largest music retailer, operating 32 audio and video shops. But the flagship store is the first attempt to bring all 15 companies under one roof.

WESTERN WAYS

To boost its varied operations, the company has employed Western marketing strategies, such as sponsoring bands and concerts and cross-promoting with other brands, such as McDonald's. Bonton merchandises its logo heavily.

But foreign ideas alone don't sell products in Eastern Europe, so the company's marketing strategy has been a mixture of Western know-how and local Czech experience. The name BontonLand, for example, was disliked by both Mr. Hawk and Glenna Patton, an American and former marketing director. They yielded because the Czechs "really liked it. We were tired of the name, but they didn't have Musicland, Disneyland, all these other companies called `land' [when they were] growing up," Mr. Hawk said.

Today, the strength of the Bonton name is one of the company's greatest assets. "We really have an incredible brand name and an incredible image, and that is a very powerful tool," he said.

Management is considering opening more megastores in the Czech Republic and taking the brand elsewhere. "I like Eastern Europe," Mr. Hawk said. "Even in Vienna, I think we could do a cool store. Germany and the U.K. could be a little difficult; there's too much competition."

Bonton is also exploring other avenues. "The company is a mosaic with a few tiles missing," said Mr. Kratochvil, "especially TV."

Bonton has long been mentioned as a potential investor in Premiera TV, a regional Czech broadcaster that desperately needs cash, access to programming and marketing expertise-all of which Bonton could supply.

And, don't forget cyberspace. "We want to do a supermarket on the Internet, selling our products and other services, using Bonton's brand name and its media muscle," Mr. Kratochvil said.

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