International Business Master Thesis No 2005:10 THE POLISH TV MEDIA INDUSTRY – EU IMPLICATIONS A CASE STUDY OF THE MTV MASTIFF GROUP, THE INDEPENDENT TELEVISION CONTENT PRODUCER Wouter Hendrikse Grazyna Maria Lukasik-Hallberg Graduate Business School School of Economics and Commercial Law Göteborg University ISSN 1403-851X Printed by: Elanders Novum AB ii Abstract The first of May 2004 was an important day for the European Union. On this day the Union grew larger with ten new member states. It is the most complex enlargement the EU has ever seen, both concerning the amount of countries entered and the cultural and economical diversities. Now when these countries are members of the Union, barriers to entry for western European companies have diminished. One of the industries that is especially internationally-oriented is the TV industry. It is one of the largest industries within the EU, not only in an economical sense, but also in social and cultural issues. Television is the most important source of information and entertainment in the EU, with the average EU citizen watching around three hours of television a day. Looking at the new member countries, Poland is the most important country in many ways, including economically and size. For this reason, Poland was quickly recognized by multinational companies who established businesses there relatively early. Recently the market has been discovered by a number of independent television producers, including our case company, the MTV Mastiff Group. This research examines the impact on the Polish television content producer market due to Poland’s recent accession to the European Union. Following this path, predictions regarding the entrance of new European competitors to the Polish market are given. In addition, a thorough description of the entire Polish TV market is given including future forecasts. In order to foresee the future we have used the scenario method, which provided different possible outcomes for the coming three-to-five year period. The most probable future market outcome within the frame of the selected variables is identified. After the in-depth analysis of the Polish TV market, European competitors and the EU environment and the most probable path of change, we have recommended a strategy for the case company to pursue in order to get a foothold into the Polish market. Key Words: Poland, European Union, TV Media, TV Production, Strategy, Scenario Planning, Relationships iii Acknowledgements This thesis marks the conclusion of our one and a half year Integrated Master Programme for International Business at the School of Economics and Commercial Law, Gothenburg University. During the time of writing this thesis, numerous persons have been supportive and contributed to the possibility for us to finalize our research within set time frames and with expected outcomes, and to them we would like to express our appreciation. We would like to express gratitude to our supervisors. First, Professor Jan-Erik Vahlne for all the time spent on the effective progress meetings with us. He gave us supportive ideas and distributed interesting reading material concerning our topic. In addition he was always there for us during times when we were struggling. We would also like to thank PhD student Roger Schweizer, who has helped us tremendously by having a critical view on the research and provided us with some great ideas. On the case study company’s side, we kindly thank the vice-president of MTV Produktion AB, Olle Langenius, for the possibility of writing our thesis about them. We really appreciated his openness in sharing ideas with us, his enthusiasm, curiosity and passion for his job. Additionally, we express our appreciation towards all people, who we directly interviewed both in Poland and other countries, representing individual companies and governmental institutions. Moreover, we would like to extend our warmest thanks to our families and friends for their support and encouragement during the sometimes difficult periods. Finally, we thank all the people who we did not mention by name in this thesis but who were very helpful in sending us materials for analysis as well as giving guidance where such information could be obtained. Wouter Hendrikse Grazyna Maria Lukasik-Hallberg January 7, 2005, Gothenburg iv Table of Contents 1. Introduction ............................................................................................................................ - 1 - 1.1 Background ...................................................................................................................... - 1 - 1.1.1 The Attractiveness of Poland’s TV Media Arena ..................................................... - 2 - 1.2 Problem Discussion.......................................................................................................... - 4 - 1.2.2 The Case Company Presentation – MTV Mastiff Group.......................................... - 6 - 1.3 Problem Formulation........................................................................................................ - 9 - 1.4 Purpose ........................................................................................................................... - 10 - 1.5 Delimitations of the Research ........................................................................................ - 11 - 1.6 The Outline of the Thesis ............................................................................................... - 12 - 2. Methodology ........................................................................................................................ - 13 - 2.1 Design of the Authors’ Research.................................................................................... - 13 - 2.1.1 Design of a Case Study ........................................................................................... - 14 - 2.1.2 Design of a Survey .................................................................................................. - 15 - 2.2 Conducting the Research................................................................................................ - 15 - 2.2.1 Research Approach.................................................................................................. - 15 - 2.2.2 Scientific Approach................................................................................................. - 16 - 2.3 Data Collection............................................................................................................... - 18 - 2.3.1 Secondary Data........................................................................................................ - 18 - 2.3.2 Primary Data............................................................................................................ - 19 - 2.4 Quality of the Research .................................................................................................. - 20 - 2.4.1 Validity.................................................................................................................... - 20 - 2.4.2 Reliability ................................................................................................................ - 22 - 2.5 Scenario Planning........................................................................................................... - 22 - 2.5.1 Future Perspectives.................................................................................................. - 23 - 2.6 Scenario Building........................................................................................................... - 24 - 3. Theoretical Framework ........................................................................................................ - 29 - 3.1 Industry Analysis............................................................................................................ - 29 - 3.1.1 External Environment.............................................................................................. - 30 - 3.1.2 Porter’s Five Forces................................................................................................. - 31 - 3.1.3 Generic Strategies.................................................................................................... - 34 - 3.2 Relationship Theories................................................................................................. - 35 - 4. Poland as a New Member of the European Union ............................................................... - 37 - 4.1 EU Audio-Visual Policy................................................................................................. - 37 - 4.1.1 Television Without Frontiers Directive................................................................... - 38 - 4.1.2 Digitization in the EU.............................................................................................. - 40 - 4.1.3 Future of Audio-Visual Policy ................................................................................ - 41 - 4.2 Polish TV Regulation System ........................................................................................ - 42 - 4.2.1 Present Outlook of Broadcasting Act and its Impact on the Future TV Market ..... - 51 - 4.2.2 Legal Groundwork for Digitization and its Impact on the Future TV Market........ - 51 - 4.3 EU Financial Support Programmes................................................................................ - 53 - 4.3.1 Introduction to Media Support ...............................................................................