UPDATE 1-CME buys Romanian production firm

* CME buys Romanian production business for cash and stock

* Purchase from firms controlled by CME President Sarbu

* Sarbu appointed chief executive, as planned

(Adds more details, CEO appointment)

PRAGUE, July 28 (Reuters) - Television group Central
European Media Enterprises (CME) has agreed to buy the
entertainment business from Romanian firms controlled by CME
President Adrian Sarbu, the company said on Tuesday.

CME said it would buy media production and distribution
business MediaPro Entertainment from MediaPro Management and
Media Pro BV for $10 million in cash and 2.2 million CME shares.

"CME intends to integrate its existing fiction, reality and
entertainment television production units with MediaPro
Entertainment to create a dedicated content division consisting
of production, services and distribution operations across all
of CME's territories," the company said in a statement.

MediaPro Mangement and MediaPro BV will also get the right
to buy up to 850,000 CME shares at $21.75 per share, and CME
will take over $35.6 million in debt.

CME operates television stations in seven central and east
European countries, including Romania and the Czech Republic.

MediaPro Entertainment produces and distributes television
fiction programming and owns one of the largest studios in
central and eastern Europe, CME said.

Sarbu, 52, who had been chief operating officer since 2007,
was also appointed chief executive, the company said. The
previously announced step filled the position empty since the
retirement of Michael Garin last year.
CME was due to report second-quarter earnings on Wednesday,
and analysts expected a 63 percent drop in operating profit and
35 percent fall in revenues. [ID:nLR248693]

It reported its "toughest quarter" ever with a 37 percent
revenue fall in the first three months of 2009, warning the ad
slowdown would persist into next year due to the global economic
downturn. [ID:nLT90650]

U.S. media group Time Warner (TWX.N) completed a $241.5
million investment into the Bermuda-registered CME in May,
taking a 31 percent stake.
(Reporting by Jan Lopatka; Editing by Rupert Winchester)