EST Media Group Asset Management (EMG), wholly owned by econet.hu, acquired 75% of FM1, the operator of NeoFM national commercial radio from its unit radiocafe Kft, and sold 100% of radiocafe to KV Barat Asset Management, econet.hu announced on Thursday. The sale was designed to eliminate a conflict of interest.
Econet.hu said the purchase price could be a maximum of HUF 200 million (€750,887) depending on future developments. Around half of the purchase price will have to be paid to the project company by 2011, while payment of the remaining part will depend on whether radiocafe will be able to renew its Budapest regional radio frequency license, which expires in 2012. The buyer is a project company owned by a Hungarian private individual
Econet.hu said EMG will continue to sell radiocafe's advertising time on a commercial basis, as a trading house, in exchange for a commission.
Econet.hu said the transaction was necessary because, in line with the effective media regulations, prior to conclusion of the broadcasting agreement with FM1 Zrt for the NeoFM national commercial radio frequency in November 2009, the National Radio and Television Board (ORTT) and radiocafe terminated the broadcasting agreement for radiocafe 98.6 as of May 3, 2010. The move was prompted by the media act which stipulates that the same owner may not simultaneously control more than 25% in a national and a regional radio broadcaster. However, the termination agreement also declared that if the conflict of interest ceases to exist before May 3, 2010, the termination will cease to have effect.
The conflict of interest ceased to exist through EMG's sale of radiocafe.
The sale came after radiocafe transferred its 75% stake in FM1 to EMG on the same day. EMG thereby acquired a direct 100% ownership in the national commercial radio operator as it earlier held 25% directly and 75% indirectly, through radiocafe, in FM1. (MTI-Econews)