Discovery Braces for Fight to Protect Polish Business Against Government Crackdown on Foreign Ownership

Discovery is bracing for a bitter fight to keep its business in Poland amid an aggressive drive by the country’s ruling right-wing party to block foreign ownership of media.

On July 7, Poland’s Law and Justice party (PiS) sought amendments to the local Broadcasting Act specifying that TV and radio license holders can’t be directly or indirectly controlled by entities that aren’t in the European Economic Area.

The new media law puts a target squarely on Discovery, the U.S. owners of Poland’s TVN Group, which operates the country’s most prominent news channel, TVN24. Valued at around $1 billion, TVN is America’s largest investment in Poland.

JB Perrette, president and CEO of Discovery Networks International, tells Variety that the company is “watching very closely to defend our business interest against the regulatory overreach and anti-consumer behavior and other market uncertainty.”

Perrette underlines that the proposed changes not only undercut Discovery’s business interests in Poland, but “fundamentally goes to destabilize the country for all businesses. One of the core principles of investment is a sense of the rule of law and what that means for the security and certainty of your business investment.”

Time, however, could be running out for Discovery.

The company — which is set to merge with WarnerMedia in a mega-deal expected to close mid-2022 — applied to renew its current 10-year media license for TVN 18 months ago, but it’s still waiting on the National Broadcasting Council (KRRiT) for approval. The license is set to expire on Sept. 26.

“There is no legitimate reason for the delay. None,” declared Perrette. “The fact that we’ve had other licenses owned in the same way renewed in the same period is proof to the fact that the criteria being used for this news channel license renewal is political — not legitimate or regulatory.”

Discovery has so far operated in Poland by registering as a standalone business within the European Union, thereby fulfilling the requirements that prevent non-European firms from owning over 49% in domestic media outlets. Newly proposed rules, however, would crack down on any foreign ownership of Polish media.

Such a scenario would likely see Discovery forced to sell 51% of its stake in TVN.

A debate on the proposed amendments to the law was this week postponed to Aug. 13 amid disputes between the ruling PiS party and one of its factions, which is advocating for a softer approach that would broaden the geographic underpinning of the law and require foreign owners to be part of the Organisation for Economic Co-Operation and Development (OECD), which includes the U.S., rather than the exclusive European Economic Area.

Poland’s media disruption was recently noted in a 2021 Rule of Law report by the European Commission, which stated that the Polish media market risks “reducing media pluralism” due to the legislative changes in the works.

Meanwhile, the U.S. State Department is also getting involved with Counselor Derek Chollett recently telling TVN24 that Discovery’s stake in the company “is a very significant American investment here in Poland. And there will be knock-on effects perhaps, if the license is not renewed, to future U.S. investments.”

“Media freedom is absolutely critical,” said Chollett.

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