Andrej Babiš
July 3, 2013

Babiš’s purchase of Mafra raises questions of motives

Agriculture mogul and politician moves farther into media

An aspiring politician, who is also the country’s second-richest man, buying the country’s second-biggest newspaper; Andrej Babiš’s purchase of Mladá fronta Dnes was bound to spark controversy.

Babiš has bought the daily’s parent company Mafra from German group Rheinisch-Bergische Verlagsgesellschaft two decades after he founded Agrofert, the fertilizer and chemical firm that made him his fortune.

The purchase also comes a little more than 18 months after the 58-year-old billionaire set up his own political party, Action of Dissatisfied Citizens (ANO 2011) to fight corruption and other ills in the country’s political system.

Babiš himself has been keen to insist he will not exert any editorial influence over the media outlets now included in a vast business portfolio that already included 200 companies employing 58,000 staff and consolidated revenue of 5.5 billion euros a year.

In comments to Czech media after the June 26 announcement of his purchase, he talked of synergies with the weekly he already owned, 5plus2, and said he would have no editorial input into Mladá fronta Dnes or any of his other publications, which now also include Lidové noviny and Metro.

“I will not sit on any statutory body, I will not talk with journalists at all, I will not give them an interview. … I will never and by no means intervene in the work of editors in Mafra. Let them write what they want,” he said.

Contrary to recent speculation, Babiš is not taking over the bestselling tabloid Blesk by buying the Czech branch of the Swiss-German group Ringier Axel Springer Media, as talks on that potential deal were halted.

Now that Babiš has a substantial presence in the Czech media scene, assuming anti-trust officials do not block the Mafra purchase, observers have been wondering whether he really will remain at arm’s length.

There are already signs he might struggle to resist the temptation to meddle. According to reports, after buying Mafra he complained to a reporter on Lidové noviny that the newspaper failed to cover a recent ANO 2011 press conference, although he is said to have since visited the newspaper to apologize. He is reportedly proposing a code of ethics to govern his relationship with his papers.

“Immediately, there’s no danger he will use his business activities for the support of his political aims, but in the long run there’s evidence Mr Babiš seeks … influence in the media world, and he himself has not only business aims and activities but also political proposals,” said Milan Znoj, a professor in the Institute of Political Studies at Charles University.

“In the long run, I’m afraid his purchase of this Mafra Media [Group] can be a dangerous step in the development of our democracy.”

Babiš, who was born in Bratislava, Slovakia, but who holds Czech nationality, launched ANO 2011 in November with the stated aim of cleaning up politics by, for example, curbing the influence of lobbyists. In interviews, Babiš has tried to portray himself as a man of the people, insisting his tastes are modest despite his vast wealth.

Purchase by local investor doesn’t surprise analysts

The movement has said it wants to improve the education system, lower unemployment and cut taxes and VAT while improving VAT collection rates.

Babiš has dismissed much of the current crop of politicians as low-grade individuals who would be unable to find gainful employment elsewhere and who should be replaced by those who, as he sees it, have made significant achievements outside public service.

But analysts have been doubtful as to whether his centrist platform can make electoral headway.

Listed by Forbes as the second-richest man in the Czech Republic with a fortune of $2 billion, the business mogul has come in for criticism in the past, notably over allegations, which he rejects, that he has kept food prices high.

Observers are unsurprised that a local investor has bought up Mafra, saying major multinationals are likely to want to focus on countries with larger media groups than those in the Czech Republic. Indeed, Rheinisch-Bergische Verlagsgesellschaft said it sold Mafra so it could “concentrate on other markets.”

“The Czech market is too small to be relevant for a global media portfolio, so it’s normal that local investors start to show interest in developing a media portfolio, because for them it becomes relevant,” said Cristina Muntean, a media adviser, trainer and coach with Media Education CEE.

Similarly, Khaled El Tohami, sector leader for consumer goods and media at the research company GfK, said it was “no wonder” Babiš and other Czech investors were looking at the country’s media sector. Print media were generally “not under pressure” he said, and circulation declines were very modest.

“If you take into account what’s happening in the economy, in general I don’t think they’re doing badly,” he said.

There might be a clear business rationale behind the purchase, but despite Babiš’s denials, questions remain about whether Mladá fronta Dnes or other parts of his media empire could be used to promote his political ambitions.

“It’s an open question whether a hidden political agenda stands behind the acquisition of Mafra or [whether it is simply] a strategic investment by a Czech local businessman,” Muntean said.

“He has never made a secret of his intention to develop a media portfolio … [but] if you tie it to his political ambitions, there are more questions than answers.”

“When you look at his political agenda, when you look at his efforts to build an image … there’s a lot of room for speculation behind the move.”

A representative for Babiš did not respond to a request from The Prague Post for comment.

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