UPDATE 2-TV group CME's sales, core profit tumble

* Broadcaster says ad markets fall to 2007 levels

* Shares plunge 6.5 percent at Prague open

* Conference call due at 1300 GMT

(Adds shares, analyst)

By Jason Hovet

PRAGUE, July 29 (Reuters) - A slump in advertising pushed
television group Central European Media Enterprises' (CME)
revenue down by two fifths in the second quarter as the economic
downturn hit the broadcaster's main markets.

Second-quarter revenue dropped sharply for a second
consecutive quarter, falling 39 percent year-on-year to $186.2
million, short of analysts' estimates of $198 million, and the
broadcaster said on Wednesday that advertising markets had
dropped to a two-year low.

Core profit measured by earnings before interest, tax,
depreciation and amortisation (EBITDA) slumped 75 percent to
$29.7 million, below the average estimate of $44.3 million.

Shares in CME dropped as much as 6.5 percent at Prague's
open, and traded down 5.7 percent at 373 crowns by 0730 GMT,
underperforming a 1 percent drop in Prague's index .PX.

CME operates television stations in seven central and
eastern European markets where ad spending has fallen off as
economies contracted.

The two main markets, the Czech Republic and Romania, saw
revenue fall 36 percent and 39 percent, respectively.

"Advertising markets have reset to a level around that of
2007," CME's chief executive Adrian Sarbu said in a statement.
"This has been a painful process for us and our shareholders ...
We are now looking forward to recovery."

Quarterly net profit dropped 62 percent to $24.1 million but
beat analysts' average estimate for a loss of $1.6 million.

Bermuda-registered CME received a shot of confidence in May
when U.S. media group Time Warner (TWX.N) invested $241.5
million to take a 31 percent stake.

CME reported its "toughest quarter" ever in the first three
months of 2009 when revenue fell 37 percent and it warned the ad
slowdown would persist into next year. [ID:nLT90650]

The group usually targets revenue and core profit growth,
but declined to provide full-year guidance for 2009.

However, some analysts said advertisers had overdone the
spending cuts.

"We think that advertisers in core markets like the Czech
Republic exaggerated their ad budget cuts and we would not be
surprised to see a sudden rebound in their spending in the next
2-3 quarters," Ceska Sporitelna analyst Radim Kramule said.

"(A) short term negative reaction is likely, but we remain
optimistic about CME´s future and stick to Buy."

The company's shares, also traded on the Nasdaq, have lost
69 percent in the past year, underperforming the wider Prague
market's 31.7 percent loss.

The company holds a conference call at 1300 GMT to comment
on its figures.
(Editing by Will Waterman)