Discovery to fight proposed Polish foreign ownership restrictions

Amid a takeover attempt of CNN owner WarnerMedia, U.S. media company Discovery has found itself in an escalating dispute with the Polish government over the future of independent broadcasting.

Earlier this week, Poland’s lower house of Parliament narrowly approved a bill that would prevent companies outside of Europe from owning Polish media. Observers say the proposed law is aimed squarely at Discovery, which owns Poland’s leading independent broadcasting group TVN, which includes the popular 24-hour news channel TVN24.

TVN24, unlike government-controlled outlets, has been critical of Poland’s nationalist ruling government.

At stake is Poland’s commitment to media freedom and democracy — as well as Discovery’s ambitions to become a global media giant.

Three months ago, Discovery unveiled an audacious $43-billion takeover of WarnerMedia, which owns CNN, HBO, TNT, Cartoon Network, Turner Classic Movies and the legendary Warner Bros. film and TV studio in Burbank. Swallowing the much bigger WarnerMedia, currently owned by AT&T, would transform the medium-size cable programming hub into one of the world’s most powerful media companies.

But the company’s global ambitions have hit a potential roadblock in Central Europe, where tensions have been intensifying.

Discovery has accused the Polish government of several attempts to interfere with its ability to accurately report the news. Discovery said Thursday the proposed law would further undermine press freedom.

In contrast, proponents of the measure say it would strengthen national security. On Thursday, Polish Prime Minister Mateusz Morawiecki disputed the notion that the bill was aimed at TVN or Discovery.

Morawiecki told reporters the effort was “tightening the regulations, so that there is no situation in which companies from outside the European Union would buy media in Poland,” according to Reuters.

Poland already bans non-European companies from owning a majority stake in media outlets. Discovery bypasses that rule by controlling TVN through a third entity, which is based in Amsterdam. The proposed legislation would end Discovery’s ability to have indirect control through the Dutch company.

As part of the tussle, Poland’s National Broadcasting Council has refused to process Discovery’s request for a renewal of TVN24’s broadcast license, typically a routine matter. Discovery said it submitted a renewal application 18 months ago. The license expires Sept. 26. Without it, Poland’s first all-news network could be forced off the air.

Discovery said Thursday that it would fight the government’s actions. The New York-based company, which owns HGTV, Food Network and Animal Planet, sent a letter to Poland’s President Andrzej Duda, warning legal action under a bilateral treaty designed to promote trade relations between the U.S. and the Republic of Poland. The notice triggers a six-month cooling-off period.

Discovery’s ownership of TVN, which is valued at about $3 billion, represents one of the largest U.S. investments in Poland. TVN employs 3,500 people, half of whom are permanent workers, and reaches about 17 million viewers.

“We do believe this legislation will have a chilling effect on U.S. and European investment into the Polish economy, and we will aggressively defend our rights,” Discovery International Chief Executive J.B. Perrette said in a statement Thursday.

U.S. Secretary of State Antony Blinken said this week the U.S. was “deeply troubled” by the draft legislation, which still must be approved by the upper chamber of Poland’s Parliament.

TVN24 is the leading source of independent broadcast news for many Poles. According to the Associated Press, large crowds in dozens of cities across Poland protested the proposed crackdown, chanting “Free Media!” There were clashes with police outside the legislature, the AP said.

The TVN broadcast group has 24 different channels, including four free over-the-air networks. Discovery inherited the operation as part of its $12-billion acquisition of Scripps Networks Interactive in 2018. Scripps picked up the majority stake three years earlier in a deal with ITI and French broadcaster Canal+ Group for about $600 million in cash. Scripps also absorbed more than $900 million in TVN debt.

At the time, Scripps said TVN networks drew more than 20% of the Polish audience, “a market leading” share.