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Agora SA

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Yale School of Management
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When Adam Michnik and Helena Luczywo were toiling in Poland’s underground publishing world, little did they know that within a few years they would be heading up a multimedia conglomerate. During the 1970s and 80s writers in Poland were persecuted, and Michnik and Luczywo were an active part of the illegal samizdat publishing culture. But in spring 1989 everything changed. In April the Solidarity trade union was officially recognized, and in May Michnik and Luczywo began publishing Gazeta Wyborcza, the first legally independent newspaper in the Soviet communist world. Not long afterward the communist superstructure collapsed, and a new Poland was born. (See Exhibit 1 for a guide to the pronunciation of Polish names in this case study.)

The next decade was a time of intense growth for Gazeta Wyborcza. By 1993 it boasted the largest readership of any newspaper in Eastern Europe. In 1999 the newspaper’s parent company, Agora SA, began an initial public offering, and by 2000 Agora found itself with a war chest of $400 million. The company’s prosperity also brought new pressures. Gazeta Wyborcza was astonishingly successful, but it was also facing increasing competition for readers and advertising money, and the company could not be sure that its success would continue without an assertive strategy for growth. Even before going public, Agora had begun to diversify by investing in radio, television, and an internet portal. But in 2000 the company announced that with its new cash hoard, it would aggressively seek further acquisitions. Agora hired a new business development team to execute its growth, and it defined a detailed strategy for buying and assimilating other companies.

One of Agora’s prime targets of interest was Art Marketing Syndicate (AMS), a large billboard company in Poland. During spring 2001 Agora became involved in a hostile takeover attempt but soon withdrew because of a lack of shareholder interest. Shortly afterward, Agora began looking at Polsat, the second-largest television broadcasting company in the country.

Meanwhile, Poland began experiencing economic and political turmoil. The bursting of the dot-com bubble in 2000 resulted in a worldwide economic recession that had significant effects on the revenues of both Agora and AMS. Then a political challenge to Agora’s growth arose when the new socialist government proposed legislation that would prohibit Agora from buying the Polsat television channel. The coup de theatre came in July 2002, when a prominent movie director attempted to extort a bribe from Michnik. Agora refused, but the company was shaken by the thought of possible corruption in the Polish government.

In September of 2002 Agora was wondering how to proceed. Should the company attempt to buy AMS again? Would the takeover be a viable financial deal? What challenges would the company encounter in assimilating the billboard company? Or should it fight the legislation and attempt to go into television? The company was facing declining advertising revenues, an uncertain political environment, and shareholders who wanted results.

Published Date: 23/04/2007

Suggested Citation: Andrea Nagy, Stanley Garstka, and Douglas Rae, "Agora SA," Yale SOM Case 07-025, April 23,2007

Keywords: Publishing, Poland, Media, Women in Leadership