At Entertainment Inc., Poland's largest pay TV
provider, joined the European consolidation trend last week by announcing that it was in
talks that could lead to "the sale of all or part of the company."
The news came as little surprise to market followers, who
said Hartford, Conn.-based At Entertainment has incurred considerable expenses building
out its cable system, launching a digital direct-to-home platform and investing heavily in
"They have the right plan," one analyst said.
"They're basically doing what [British Sky Broadcasting Group plc] did" in
aggressively pushing into distribution and programming.
However, the analyst noted, Poland's per-capita income
is a fraction of Britain's, and subscribers are paying considerably lower monthly
fees. And because it's exclusively operating in Poland, At Entertainment can't
spread its costs over other markets or cut more cost-effective, regional deals with
James Friedland, an analyst with Arnhold and S.
Bleichroeder Inc. in New York, said BSkyB and France's Canal Plus S.A. could emerge
as possible suitors. Both companies declined to comment.
After the disclosure last Monday, At Entertainment's
publicly traded share price rose 17 percent, to $9.50 from $8.13.
At Entertainment declined to elaborate on the announcement.
It owns Polska Telewizja Kablowa, Poland's biggest cable operator, with 948,000
subscribers; and Wizja TV, a digital DTH platform that launched last September, which has
about 130,000 subscribers.
Market observers noted that the company heavily subsidized
the rollout of Wizja, which competes directly with Canal Plus' 130,000-subscriber
Cyfra Plus digital-DTH platform.
A merger of some sort would fuel the development of
Poland's digital-TV market because it makes little sense for two platforms to compete
for just 12 million households, one source said.
At Entertainment had about $360 million of outstanding debt
as of the end of February, an external investor-relations spokesman said.
Of that, $50 million in preferred stock is paying 12
percent annual interest, and $100 million in bonds are paying 14.5 percent interest --
rates notably higher than issues from many of its peers.
Goldman, Sachs & Co., which owns 7.9 percent of the
company, is advising At Entertainment.
Its other major owners are founder David Chase's Chase
Enterprises, with 33.3 percent, and Advent International, a Boston-based
private-investment company, with 29.6 percent.