Wojciech Moskwa | Bloomberg

Poland’s parliament unexpectedly approved a media law that aims to force Discovery Inc. to sell a majority in its local unit, undermining business and political relations between Warsaw and Washington.

The fate of the contested legislation is now in the hands of President Andrzej Duda, an ally of the ruling party who on Friday said that he’ll analyze the draft law without specifying whether he will wield his veto as signaled earlier.

The U.S. and the European Union have both piled pressure on NATO-member Poland to halt the bill, which they say harms investor sentiment and media freedom. The highest-ranking U.S. diplomat in Warsaw said the development was extremely disappointing, while Discovery said it undermined the values binding the formerly communist nation to the West.

Without warning, the ruling party returned to the previously shelved bill and approved it on Friday, sending it to Duda. If ratified by the president, Discovery would have to sell more than 50% in TVN, the country’s most popular private television broadcaster. The government has long tried to reduce the U.S. media giant’s clout, blaming its unit’s often critical coverage on foreign ownership.

The law risks “uprooting the foundation of the Polish-American relationship,” Discovery said in an emailed statement. The development “should be deeply concerning to any enterprise investing in Poland and to anyone who cares about democracy and freedom of the press.”

While the Silver Spring, Maryland-based company called on Duda to veto the legislation, the Polish president said that he’s weighing all his options — including rejecting the law, passing it and sending it to the Constitutional Court for checks.

“Once the bill makes it to my desk, we will analyze it,” Duda told reporters in Warsaw. “I have already talked about the point of view from which I will evaluate this law and make my decision.”

Discovery’s shares were down 0.7% to $23.24 in New York.

‘Extremely Disappointed’

Poland’s nationalist government, which has been repeatedly accused by its western partners of undermining democratic values and undermining the rule of law, said the rules are needed to protect the country against potential media takeovers by companies from countries like Russia and China.

“The U.S. is extremely disappointed with today’s adoption of the media law,” Bix Aliu, the Charge d’Affaires at the U.S. Embassy in Warsaw, said on Twitter. “We expect President Duda to act in line with previous declarations to use his leadership to protect freedom of speech and business.”

Opposition lawmakers said the Law & Justice surprisingly returned to the legislation, which it shelved when Duda expressed his intention to veto it, to draw attention away from other domestic political issues, such as high inflation and sleaze allegations.

Just minutes before the vote, Poland announced that household power bills will increase 24% next year, and gas bills 54%, which economists said would further escalate inflation from a two-decade high of 7.8%.

The Discovery-owned news channel TVN24 had to wait nearly two years before Poland’s media regulator, which has been stacked with appointees from the ruling Law & Justice party, extended the network’s license just before it expired in September. The situation may be repeated in February, when TVN7’s 10-year broadcasting permit lapses.

Vera Jourova, a vice president of the EU’s executive arm, said on Friday that the commission “will not hesitate to take action in case of non-compliance” of Poland’s’ media law with the bloc’s rules.

“We expect all member states to respect, protect and promote media freedom,” she said. “Pluralism and diversity of opinions are what strong democracies welcome, not fight against. This new law sends yet another negative signal.”

— With assistance by Thomas Seal, Piotr Bujnicki, and Maciej Martewicz

(Updates with comments from President Duda and the EU, starting in paragraph two.)

Source: Bloomberg