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CME Aims to Lift 2010 Ebitda on Disposals, Recovery, CEO Says
March 8, 2010, Bloomberg
By Lenka Ponikelska
(Bloomberg) -- Central European Media Enterprises Ltd., the east European television broadcaster partly owned by Time Warner Inc., aims to report “better” earnings in 2010 as it sold its Ukrainian operations and relies on a regional recovery.
CME, which posted a net loss of $55 million in the fourth quarter, will strive this year to post higher earnings before interest, taxes, depreciation and amortization across its operations, said Chief Executive Officer Adrian Sarbu. The company on Feb. 24 reported fourth-quarter Ebitda fell to $44.1 million from $79.8 million in the same period a year earlier. After dropping Ukraine, it agreed to buy a Bulgarian station.
“Assuming that we’ll close the deals in Ukraine and Bulgaria, which we’re aiming to do, all our operations will post positive full-year Ebitda,” Sarbu said in a March 3 interview in the company’s headquarters in Prague. “It is also a target for us to deliver better Ebitda than last year; we will do our best but everything depends on the markets.”
Central European Media, or CME as the company is known, has been trying to offset a 30 percent decline in advertising spending in its markets during east Europe’s recession by
divesting the unprofitable Ukrainian unit, moving its main operations from London to Prague and adjusting programming costs. The broadcaster, which is registered in Hamilton, Bermuda, expects a market rebound in the second half of 2010, it said on Feb. 24.
Regional Recovery
The International Monetary Fund forecasts emerging Europe to crawl out of recession this year, posting a combined 1.8 percent growth rate. The Czech economy will advance 1.3 percent for 2010 and Slovakia’s gross domestic product will expand 3.7 percent, the IMF said in October.
Southeastern Europe, including Bulgaria and Romania, will lag with a combined contraction of 0.1 percent this year, following a 7.5 percent combined plunge in 2009.
Sarbu agreed that markets like Romania or Bulgaria, which were more deeply impacted by last year’s crisis, may start to recover later than the Czech Republic or Slovenia. CME’s Croatian unit broke even on the Ebitda level, the company said on Feb. 24.
CME plans to focus on “expanding its footprint” in the region by creating and distributing its own content and adding channels. U.S. programming generates a third of the audience share it generated five years ago, Sarbu said. The company will also expand its content distribution on mobile and fixed Internet by offering a mix of paid and ad-driven streams, Sarbu said.
3D Development
He is also keen to bring 3D broadcasting to viewers in the region. CME will continue to offer programming drawn from reality TV shows, “niche fiction” and cheaply produced novellas.
The shares rose 27 koruna, or 5.1 percent, to 558 koruna in Prague trading on March 5. The shares have advanced 25 percent this year. The company was established in 1993 by Ronald Lauder, an heir to the Estee Lauder Cos. cosmetics company.
The European entertainment market, which is “undeveloped” and “fragmented,” will see consolidation and stronger presence of U.S. studios in the next decade, said Sarbu.
Sarbu, 55, founded Media Pro, a content production company, and worked as a state secretary for mass media in the Romanian government in 1990. He took over the helm of CME as chief executive officer on July 28.
CME operates TV stations in the Czech Republic, Romania, Croatia, Slovenia, Slovakia and Bulgaria. The broadcaster said on Feb. 18 it purchased Bulgarian channel BTV for $400 million from News Corp. to strengthen its operations in the country. CME will update investors on Bulgarian operations once the purchase is completed, Sarbu said.
The company is not actively looking for acquisitions at the moment, Sarbu said. “If we talk about acquisitions they will definitely have to be accretive,” Sarbu said.
For additional information, please contact:
Romana Wyllie
Vice President of Corporate Communications
Central European Media Enterprises
Krizeneckeho nam. 1078/5
152 00 Praha 5
Czech Republic
+420 242 465 525
romana.wyllie@cme.net
