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On December 7, the state-run oil giant Orlen became the sole owner of one of the country’s largest media companies, gaining control over a majority of Polish regional daily newspapers, almost 120 local weeklies, and some 500 internet portals. While the exact details of the transaction remain shrouded in mystery, media reports suggest that acquiring Polska Press from Verlagsgruppe Passau Capital Group could have cost Orlen as much as PLN 120 million. Neither of the two companies denies the information.
Daniel Obajtek (Orlen’s CEO and a confidant to Jarosław Kaczyński) and the ruling Law and Justice party portray the takeover as the first step in the right-wing government’s plan to “repolonize” domestic media. Polska Press journalists are already preparing for a wave of politically-motivated layoffs, while independent NGOs concerned with media freedom warn that the ruling camp has just bought itself an instrument that will give it a leg up in future election campaigns.
The editorial line of some of the newly-acquired media outlets has already taken a more pro-government turn.
For several weeks, "Wyborcza" has been trying to find out the details of the transaction. What is it that Orlen actually purchased? Does the proudly-announced repolonization of regional media also include real estate such as the newspapers’ editorial offices and printing houses?
It is important to know this, considering that real estate has been a key asset when the Polish state was taking over regional newspapers in the early 1990s. Their editorial offices were often located in valuable places, usually in city centers, and their property value far exceeded the worth of the outlets themselves. It was the value of the “Express Wieczorny” headquarters that allowed Jarosław Kaczyński's first party, Porozumienie Centrum (Centre Agreement), to survive financially. Incapable of successfully managing the newspaper, the party sold the outlet to a Norwegian company but kept a valuable property in the center of Warsaw, which later became the ruling Law and Justice party’s economic lifeline.
„We cannot answer that question”
What was left of the vast assets that belonged to Polska Press? How much property did Orlen acquire together with the newspapers? To find out, we asked directly at the source. The answer we received from Polska Press headquarters was rather enigmatic: "The transaction includes press, internet, and printing businesses, as well as some real estate"- reads the message from the media group’s spokeswoman, Joanna Pazio. When asked about specific real estate, however, she did not respond.
Orlen's response was slightly more extensive: "We cannot provide any information on the media group’s assets, nor share specific details about our integration plans towards the company. Once the transaction is completed, PKN ORLEN will take over all the items listed in the company's balance sheet"- the company’s spokeswoman, Joanna Zakrzewska, told us.
Here, again, our question as to what property has been sold as part of the transaction was left unanswered. Orlen emphasized that "the purchase of Polska Press is still an ongoing process", and that: "all necessary corporate approvals required by generally applicable laws and internal regulations in terms of purchasing the company’s shares have been obtained, including the approval of the Supervisory Board. The transaction was thoroughly analyzed by both our company experts and external advisors and due diligence was conducted in the financial, legal and tax areas before the decision was made". Moreover, Ms. Zakrzewska also pointed out that “following regulatory requirements, the company asked the Office of Competition and Consumer Protection for permission to take over the Polska Press media group, and is currently awaiting the final decision".
Real estate controlled by spin-off companies
The editor-in-chief of one of the Polska Press dailies, who spoke to us on the condition of anonymity, says that his editorial team moved to a rented office several years ago and pays rent to VGP Real Estate company. It is a spin-off company of Polska Press that manages all the group’s buildings, including its headquarters at 45 Domaniewska Street in Warsaw (the property belongs to ASD Real Estate, another entity separated from the media enterprise). The company also owns a modern printing house (and the headquarters of “Dziennik Zachodni”) in the city of Sosnowiec. According to open data sources and officially available financial reports, even the media group’s headquarters (housing the "Polska Times" editorial office) are not owned by Polska Press. The media group pays rent to VGP, and the headquarters are formally owned by ASD Real Estate, a spin-off company. VGP and Polska Press are linked by Mr. Dariusz Świąder (deputy CEO of Polska Press, and the CEO of VGP) and the main owner, a German company HKM Beteiligungs GMBH based in Seefeld. Here, the family of the person who founded Neue Passauer Presse has the majority of shares. HKM has (or had, given that it is in the process of selling out) its newspapers mainly in Poland, the Czech Republic, and Slovakia. The least of them are in Germany (Bavaria).
VGP was founded in 2012 and has been in the real estate business since the very beginning of its activity. Editorial teams were being moved to external offices, and their former premises were then put on the market. The process accelerated after PiS came to power in 2015, and has reached its peak in 2017. At that time, VGP bought properties in Gdańsk, Kraków, Łódź, and Sosnowiec from Polska Press for PLN 92 million. The money went to HKM as a "refund of special surcharges", with which the German owner supplied Polska Press throughout the years. A total of PLN 221.427.000 was moved to Germany between 2017 and 2018. Selling the headquarters of a former printing house in the center of Kraków has been VGP's last major real estate deal. Until 2019, it housed the editorial offices of "Gazeta Krakowska" and "Dziennik Polski". Both were moved to rented offices, and the printing house was sold for PLN 46 million to Skanska company. Currently, it is a construction site for three office buildings.
What is more, in September 2020, Polska Press sold the headquarters of its Toruń-based "Nowości". The price remains unknown. Journalists were asked to work remotely and heard that they’ll soon be moved to a new editorial office.
Will Orlen have to pay rent to a German company?
Although Polska Press and VGP still haven’t published their financial reports for 2020, data from previous years show that none of the editorial offices purchased by Orlen own their premises anymore, and the money from their sale, together with the "refund of special surcharges", is either with the main owner (HKM) or VGP, which wasn’t part of Orlen’s purchase.
Polska Press decided to start a surcharge refund process in 2016. It is now clear that this was the beginning of the company’s plans to sell its entire media business. Sharp reductions in media investments and year-on-year savings started around that time as well. Today, the Polska Press media group is but a shadow of its former self. Its newspapers, once leading local outlets, now have sales of a few thousand copies. The most-widely circulated newspapers are "Gazeta Pomorska" (21.000 copies), "Dziennik Zachodni" and "Głos Wielkopolski" (both selling some 14.000 copies). The remaining papers have a circulation of less than 10.000. At the same time, the group completely neglected the project of providing paid online content, and subscription-based news portals constitute but a marginal part of its media business.
According to our sources, in the autumn of 2020, the media group's management asked the chief editors of Polska Press newspapers to prepare the process of reducing expenditures by 20%. Layoffs and reductions of already meager salaries were on the horizon. Editors were not informed about the plans to sell the company. Meanwhile, the transaction must have already been well underway.
We have asked Orlen whether the editorial offices of the newspapers it purchased would remain in their current locations after the transaction was completed. Should it be the case, the favorite scapegoat of the ruling Law and Justice party, the infamous "Germans", will continue to make money off of Polish media, and the state-owned oil giant will have to pay rent to a German company. We have not received an answer as to what Orlen plans to do about it.
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