* Revenue up in most markets, losses shrink
* Sees 2014 OIBDA of $80-90 million
* Winning back advertisers after scaling back price hikes
* Time Warner financing deals give CME breathing room
(Updates with OIBDA forecast, market outlook, shares, quotes)
By Jason Hovet
PRAGUE, May 7 CME, the central and
eastern European broadcaster controlled by Time Warner,
expects to return to profit this year as it slowly wins back
advertisers after scaling down an ill-fated rise in prices.
The company, whose full name is Central European Media
Enterprises, is being helped to recover from the
toughest period in its two-decade existence by a financial
lifeline from its main shareholder.
It said on Wednesday that financing deals with the U.S.
media group, which closed last week, would cut interest costs
and improve its cashflow beginning next year.
CME, started by U.S. billionaire Ronald Lauder, fell into
deep losses last year when many of its advertising customers in
its largest market, the Czech Republic, deserted it following a
hike in prices introduced by previous management that was meant
to regain income lost in a slumping TV advertising market.
The company was forced to scale down the increases and is
now getting back some customers, but said on Wednesday it would
take more than a year to regain lost market share.
Still, a rebound in advertising helped CME narrow its loss
in the first quarter and it forecast operating income before
depreciation and amortisation (OIBDA) to reach $80-90 million in
2014 after a $46.5 million loss in 2013.
"We continue to expect a significant improvement in net
revenues in the Czech Republic in 2014 when compared to 2013,
but do not expect to reach 2012 levels this year as it will take
more than one year for us to regain the market share lost during
2013," CME said in a regulatory filing.
"Given the significance of this segment to the company, we
expect a similar trend in the consolidated results."
First-quarter revenue was up in five of CME's six markets,
rising by 15.3 percent year-on-year to $153.1 million overall,
in line with the average estimate in a Reuters poll of analysts.
OIBDA showed a loss of $2.3 million, improving on the $20.7
million loss a year ago, while the firm's operating loss (EBIT)
also shrank to $14.4 million from $35.1 million.
"The first quarter of 2014 demonstrates tangible results
from our operating priorities, including increases in television
advertising revenue and carriage fees," co-Chief Executive
Officer Michael Del Nin said.
CME shares gained more than 4 percent, hitting a one-week
"It is the first quarter where the company is showing an
improvement, so the market is taking that positively," J&T Banka
analyst Pavel Ryska said.
CME last week completed a series of deals with Time Warner
that allowed it to use more than $400 million to redeem 11.625
percent senior notes due in 2016. The deals raised Time Warner's
shareholding to 75.1 percent.
"Having completed the rights offering and private placement
and used the proceeds to discharge the 2016 Fixed Rate Notes, we
can now focus our energy on operations to significantly improve
financial performance throughout this year," Del Nin said.
Time Warner has been strengthening its hold on CME since
buying into the company in 2009 and has injected cash into the
business at other times in the past.
CME also has new chief executives with Time Warner ties
since last year and a new chairman after Lauder stepped down in
(Additional reporting by Jan Strouhal; Editing by Miral Fahmy
and Mark Potter)