Years after the controversial Penta group bought Slovakia’s Petit Press, sparking an exodus of journalists, the saga is coming to an end. Media Development Investment Fund, a not-for-profit, mission-driven media investor, announced a deal to buy 34% of the publisher.

“Investing in Petit Press is an amazing and exciting opportunity,” said Harlan Mandel, CEO of MDIF, in a press release. He praised the potential of the publisher, Slovakia’s second-largest. He also singled out SME, a leading Petit Press digital player with 2.6 million monthly unique users (in a country of 5.4 million).

The MDIF acquisition (together with the purchase of a 5.5% stake by Petit Press management), carries a symbolic weight for the region’s media. Penta is often criticized for its involvement in scandals and dubious deal-making.

MDIF is purchasing a 34% stake in leading Slovak publishing house Petit Press, publisher of @denniksme (our first client 25 years ago!), from Penta Investments. “An amazing and exciting opportunity”, said our CEO @HarlanMandel https://t.co/kV6XLZln0f
— Media Dev Inv Fund (@mdiforg) April 22, 2021

The 2014 purchase by Penta of 50% of Petit Press led to SME journalists leaving due to concerns over editorial freedom. Outgoing editor-in-chief Matúš Kostolný then said: “Penta is trying to buy their reputation and I am not going to work for them”.

Kostolný, who then became editor-in-chief of Dennik N (created by former SME journalists), celebrated on social media. “Penta never cared about real journalism. On the contrary, they were destroying it. Now it’s a thing of the past,” he posted on Facebook.

Penta purchase: A watershed moment for Slovakia’s press landscape

The purchase of Petit Press scarred the Slovak media landscape. Mainly known for their private equity and real estate work, the group had previously been linked to the so-called Gorilla Scandal.

Named after a wiretap file named “Gorila”, leaked in 2011, the scandal alleged massive corruption at the highest levels. (The founding partner of Penta, Jaroslav Hascak, was charged with corruption in December 2020).

A few years later Penta, its public image tarnished, bought 50% of Petit Press from Rheinisch-Bergische Verlagsgesellschaft, a German publishing group. An article in The Economist, titled “How to buy a (good) reputation”, the UK magazine pointed to the significance of SME as a watchdog of Slovak democracy.

“It has always been something of a watchdog of democracy,” Pavol Múdry from the International Press Institute, then told the publication.

In a way, the move ended up backfiring. A large group of SME journalists left the publisher to set up Dennik N. The new publication, crowdfunded and subscription driven, ended up being one of the region’s top success stories.

Indeed, the MDIF move was celebrated by former colleagues. “I am glad that Alexei Fulmek managed to return the SME to where it belongs,” Kostolný noted. “It is great news for readers, journalists and, finally, for Slovakia. It is always better to have two truly independent newspapers than just one.”

More from The Fix: Slovak media sees profits more than double in 2019

A regionally significant move

The investment announcement comes at a time when press freedom in Central and Eastern Europe is in steep decline. Hungary is shutting independent voices one after the other, while Poland’s populists are tackling the sector overall. Slovenia, Austria and Serbia are marching to a similar tune.

In addition to local pressure, the sale of media holdings by German, Swiss investors are a constant risk. Many are selling off media outlets to wealthy local owners, many of them with political motives.

MDIF was first launched as a way to support the region’s budding media, providing credits to kickstart growth. Since then the fund has expanded globally. However, Southeast and Eastern Europe still accounts for close to 80% of assets under management (as of December 2019).

The main partners in the region are in Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, Kosovo (RTV21), North Macedonia, Montenegro (VIJESTI, TV VIJESTI), Poland (AGORA), Serbia (INSAJDER, OK RADIO) and Slovakia.

Launched in 1996, MDIF has invested almost $250 million. Initially loans were the main investment took, but this quickly expanded to equity holdings, as with Petit Press. “MDIF has made equity investments in independent media for more than 20 years, so this is entirely in line with our strategy,” MDIF head of communications Peter Whitehead told The Fix.

More from The Fix: Press Freedom in 2021: A freer Europe with a rotting core

Photo by AbsolutVision on Unsplash

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MDIF invests in Slovakia’s Petit Press, bringing closure to press freedom saga