By Gabriela Baczynska
BRUSSELS (Reuters) -Polish news station TVN24 is in breach of foreign ownership rules for media firms, the head of the broadcasting regulator told Reuters, adding the watchdog was split over whether to renew the licence for the unit of U.S.-based Discovery Inc.
The remarks by Witold Kolodziejski raise the stakes in a case that has stoked concerns over media freedom in Poland under the ruling nationalist Law and Justice (PiS) party and led to a standoff between Warsaw and Washington.
TVN24 is Poland's most-watched news channel and its critical coverage has long been a thorn in PiS's side. Its broadcasting licence expires on Sept. 26.
TVN, the parent company of TVN24, has been owned by U.S. entities since 2015 via a firm registered in the European Union to meet Polish legal requirements that ban non-European firms from owning more than 49% of Polish media.
This has so far been enough for the National Broadcasting Council (KRRiT), which under Kolodziejski has extended licences for other TVN channels since 2016.
But in an interview, Kolodziejski said he now believed the application of media ownership rules had been too lax, posing a threat to national security should a foreign power such as Russia or China seek to buy assets in Poland.
"I believe that currently Art.35 (of the Polish media law) does not allow for the limit to be bypassed through a vehicle in the European Economic Area," he said, referring to 27 EU and three other European states.
In response to Kolodziejski's comments, TVN said: "There is no reason for not granting TVN24 the licence," noting KRRiT had not questioned TVN's U.S. ownership in awarding recent licences.
"Discovery, Inc. is proud of TVN and deeply committed to its position as Poland's leading independent broadcaster," the U.S. company said in a statement. "We are watching closely and will defend the business against growing regulatory overreach, anti-consumer behavior and other market uncertainty that would undercut Poland's business environment."
RISING U.S. CONCERN
PiS has long argued that foreign-owned media organisations distort public debate and do not serve Polish interests, but critics say the government aims to increase control over the media and curb free speech.
Since PiS came to power in 2015, Poland has dropped from 18th to 64th place in the World Media Freedom Index.
Kolodziejski, who used to be a PiS member, denied political pressure in the case.
Last week PiS lawmakers submitted legal amendments to Poland's Broadcasting Act that would strengthen the ban on non-European firms owning more than 49% of Polish media. If approved, the revised law would give TVN six months to adjust.
"The U.S. has been observing the TVN licensing process and the newly proposed legislation with rising concern," the top U.S. diplomat in Poland, Bix Aliu, said on Twitter on Thursday.
Kolodziejski said KRRiT's five-member council - where at least a 4:1 majority is needed to renew TVN24's licence for another 10 years - was divided over the case, with preliminary votes on the matter inconclusive.
Should the non-European ownership cap be asserted more strongly, he said TVN would be given time to adapt. That could require Discovery to divest 51% of its Polish business, he said.
Kolodziejski said KRRiT would look at ownership structure again after the merger between Discovery and AT&T's WarnerMedia is completed.
"This is not about TVN24 only. The matters we are analysing refer to the whole company's structure. It's a more serious matter. To my mind, a legal solution is needed here," he said, without elaborating.
TVN has more than a dozen TV channels, as well as an online video on-demand platform. Estimated to be worth more than $1 billion, it says it employs 4,200 people and posted a 2019 net profit of 540 million zlotys ($141 million).
($1 = 3.8351 zlotys)
(Reporting by Gabriela BaczynskaEditing by Michael Williams and Mark Potter)