Czech TV row goes to court

Mr Zelezny is admired for his entrepreneurial success

By BBC media correspondent Nick Higham

The most popular programme on the most popular commercial television channel in the Czech Republic, you will not be surprised to learn, is the local version of Who Wants to be a Millionaire.

A dispute which started in broadcasting has become a test case not just for the Czech Republic but for all the post-Communist countries of Eastern Europe

Started in 1993, TV Nova rapidly made a millionaire out of its Czech founder, Vladimir Zelezny, and promised to make millions too for his American backer, Ronald Lauder, one of the heirs to the Estee Lauder cosmetics fortune.

Nova was meant to take four years to break even.

It actually took four months, thanks to a diet of nude weather forecasters and imported American programmes like Baywatch, and an audience share in excess of 70%.

But in 1999 Ronald Lauder and Vladimir Zelezny fell out.

Driving seat

Mr Zelezny still controls TV Nova. In the Czech Republic he is a nationally-known figure, politically extremely well-connected, admired for his entrepreneurial success, attacked for debasing the standards of broadcasting.

Vladimir Zelezny still controls TV Nova

Relations between Mr Zelezny and Mr Lauder finally broke down when Mr Lauder's company, CME, tried to fire Mr Zelezny amid allegations that he was lining his pocket at his shareholders' expense.

Instead, Mr Zelezny took advantage of a complex ownership structure which the Czech broadcasting regulator, the Media Council, had insisted on.

He ended up in the driving seat.

Since then CME has launched a series of lawsuits in the Czech courts and in international tribunals in an attempt to recover its investment.

Dispute

In the latest, which started in London this week, Mr Lauder is seeking $500m from the Czech Government.

His company claims to have evidence that the Czech Media Council was corrupt and says the Czech legal system is flawed.

The Americans allege not only bribery and corruption on the part of the Czechs but intimidation as well

The Czech Government maintain the case is purely a commercial dispute, and nothing to do with them.

The dispute between CME and Mr Zelezny has grown increasingly bitter.

The Americans allege not only bribery and corruption on the part of the Czechs, but intimidation as well.

They in turn are accused of recruiting an informer in the Czech Media Council - claims based on a computer disc full of the Americans' e-mails which somehow turned up in Prague.

Implications

But for the Czechs - desperate to attract more Western investment and to join the European Union - the implications of the case are extremely serious.

Fred Klinkhammer, CME's president, claims the Czech Republic is not a safe place for Western companies to invest.

It may nominally be a free market economy but in reality its legal system is inadequate, he says, and the society is riddled with corruption.

To others, CME is a classic example of a Western company which moved into Eastern Europe after the collapse of communism expecting to make big profits, only to meet its match in a home-grown businessman who understood local conditions.

Either way, a dispute which started in broadcasting has become a test case not just for the Czech Republic but for all the post-Communist countries of Eastern Europe.