Central European Media Enterprises (CME), a leading media company in Central and Eastern Europe, and Time Warner Inc announced in a press release on Monday that Time Warner will invest US 241.5 million US dollars in CME. Time Warner will acquire 31% in CME, a group which in Romania controls major TV station Pro TV as well as other several channels.
According to the press release, "for this investment, Time Warner will receive 19 million newly issued CME common shares, consisting of 14.5 million shares of Class A Common Stock at a price of US$12.00 per share and 4.5 million shares of Class B Common Stock at a price of US$15.00 per share - approximately a 31% interest in CME. In connection with this transaction, Time Warner is agreeing to allow CME founder and Non-Executive Chairman Ronald S. Lauder to vote Time Warner’s shares of CME for at least four years, subject to certain exceptions. Also, Mr. Lauder has pledged to support Time Warner’s appointment of two of its designees to CME’s board of directors. The closing of the investment is subject to a vote of CME’s shareholders and certain regulatory approvals, and Mr. Lauder has committed to voting the shares he controls in favor of the transaction. The transaction is expected to close before the end of the second quarter of 2009".
The press release also quotes Adrian Sarbu, CME's President and Chief Operating Officer, according to whom “the success of CME is driven by our strong local management teams and their ability to create content that meets the expectations of the local audiences. Time Warner and Warner Bros. are recognized leaders in the content business and have the skills and experience necessary to enhance the quality of our local programming. We’re looking forward to strengthening our longstanding business relationship with Time Warner and working closely with their teams.”
Citigroup is serving as financial advisor to Time Warner.
CME operates in Bulgaria (TV2 and Ring TV), Croatia (Nova TV), Czech Republic (TV Nova, Nova Cinema and NovaSport), Romania (PRO TV, PRO TV International, Acasa, PRO Cinema, Sport.ro and MTV Romania), Slovakia (Markiza), Slovenia (POP TV, Kanal A) and Ukraine (Studio 1+1, Studio 1+1 International and Kino). CME is traded on the NASDAQ and the Prague Stock Exchange under the ticker symbol CETV.
Also on Monday, CME announced that it is providing an update on its expected operational performance for Q1 2009. "As CME previously indicated the macroeconomic environment has deteriorated and television advertising spending is now expected to decline in all its markets in 2009. CME expects to report revenues of US$ 135 million to US$ 145 million and Total Segment EBITDA between US$ 18 million and US$ 22 million for the quarter ended March 31, 2009 as compared to revenues of US$ 223 million and Total Segment EBITDA of US$ 75 million for the quarter ended March 31, 2008", the release says."
It quotes Adrian Sarbu, President and COO of CME, who said that “advertisers have been cautious with their expenditure in response to rapidly changing conditions and the strength of the US dollar. As a result the first quarter of 2009 has been extremely challenging.”