INTERVIEW Agora CEO says hopeful results could top 100 mln zlotys in 2007

WARSAW (Thomson Financial) - Polish media group Agora has a chance of breaking past 100 mln zlotys in profit this year, thanks to a 'promising' first three quarters, Chief Executive Marek Sowa said.

In an interview with Thomson Financial News, Mr. Sowa said the company's new strategy, to be published in February, would focus growth on new media businesses, involving electronic content and the internet.

He also said his strategy for any engagement in TV would be to seek niche channels and markets, running contrary to market speculation that the company could buy a stake in Poland's third largest broadcaster Polsat.

Asked if the company, which publishes Poland's leading heavyweight daily Gazeta Wyborcza, could reach 100 mln zlotys in net profit this year, Mr. Sowa said: 'The first three quarters are promising.'

After the first nine months the group earned almost 74 mln zlotys, more than double the company's earnings for full-year 2006, when Agora saw its net profit tumble fourfold, as the group spent heavily to ward off competition from Germany's Axel Springer.

Analysts say Sowa's background in internet and TV businesses have given Agora fresh impetus since his appointment in August, and hope the new strategy will point to new ways of cashing in on Central Europe's fast-growing ad market.

Around 70 pct of current company revenues are generated by Wyborcza, which has fought back strongly in the last year after wobbling in the face of Springer's best-selling tabloid daily Fakt and quality daily Dziennik.

Sowa said the company's main aim now would be to generate more of its revenue and income from other media channels.

'By the end of the decade I would like to see Agora as a modern multimedia company with the focus put on new media,' he said.

'We want to be less dependent on print.'

He said the company was involved in creating a Polish version of the Bebo social network, which he said was the world's third largest community service after Facebook and MySpace.

It is interested in TV, he said, but added growth of the sector is likely to focus now on niche services, rather than traditional 'flagship businesses'.

'The question of our engaging in TV is a natural one, only the fact is that the market has changed,' he said.

'It is possible that traditional TV may appear on the horizon, but it is not vital for us. Rather we are talking about niche special interest channels or products.'

Speculation that Agora could take a stake in Polsat grew among analysts last month after Germany's Axel Springer gave up on attempts to buy into the Polish private broadcaster. Sowa is known to have close ties with Polsat owner Zygmunt Solorz-Zak.

'Discussions about TV are often pared down to the category of traditional television,' Mr. Sowa said.

'Only that it certainly does not have to be just traditional terrestrial TV. More and more audiovisual content will be received through the internet or mobile networks rather than a TV aerial.'

To cash in on a growing internet ad market, Agora has invested in a new email service and a video platform in cooperation with Google (nasdaq: GOOG - news - people ), as well as Polish TV production group ATM Grupa.

Like Poland's sole listed TV broadcaster TVN, Agora expects the local ad market to grow 10-20 pct in 2008. Agora has upped its 2007 forecast for the market, valued at 6.0 bln zlotys in 2006, to an 11-12 pct expansion.

The group also plans to diversify its portfolio regionally, and has 700 mln zlotys to spend on acquisitions and new projects, and a share issue on the cards if something big occurs. It has just launched a subsidiary in Ukraine.

'We can say with a large amount of certainty that the first projects (in Ukraine) will be in the internet area in 2008, although in the future we do not rule out engaging in other sectors - press or publishing,' Sowa said.

He added that Agora expects to make a move on any one of the markets in central and eastern Europe, although Poland remains the group's core market.

'Our own funds and current credit line will be enough to support our current organic projects,' Sowa said.

'An issue of shares might be needed to finance large-scale, 'transformative projects' where we would be moving outside the current activities of the group ... should such an opportunity appear, we will consider a new issue.'

Source:By Adrian Krajewski, forbes.com