UPDATE 2-Time Warner to invest $241.5 mln in broadcaster CME

* Time Warner taking 31 percent stake in CME media group

* Shares jump 40 percent in Prague, 30 percent on Nasdaq

* CME sees lower revenue in Q1

(Adds details, wraps release on outlook)

By Jason Hovet

PRAGUE, March 23 (Reuters) - U.S. media group Time Warner (TWX.N) is paying $241.5 million for a 31 percent stake in Central European Media Enterprises (CME) (CETV.O) (CETVsp.PR), giving CME cash to navigate an economic slowdown in its markets.

CME reaches an audience of 97 million people in Bulgaria, Croatia, Czech Republic, Romania, Slovenia, Slovakia and Ukraine, having expanded quickly in recent years in the once-booming region now being battered by the global downturn.

Separately, CME and Time Warner's Warner Bros unit will form a partnership to launch new stations in those seven central and eastern European markets, featuring international films and television series, including titles from Warner Bros's library.

Monday's news lifted CME shares 40 percent in Prague to trade at 260 crowns by 1340 GMT. On Nasdaq, where CME is also traded, its shares climbed 28 percent to $12.75.

Time Warner shares rose 2 percent to $8.02. The deal is expected to close by the end of the second quarter.

"CME is ideally positioned over the long term as central and eastern Europe returns to significant growth and the media sector in these countries continues to evolve," Time Warner chairman and chief executive Jeff Bewkes said in a statement.

Time Warner, which is set to receive up to $9.25 billion from the spinoff of its cable unit, has said it would consider international acquisitions. Under the deal, Time Warner will receive 19 million newly issued CME common shares, consisting of 14.5 million shares of class A stock at $12 apeice and 4.5 million shares of class B stock at $15.

Time Warner also agreed to allow CME founder and non-executive chairman Ronald S. Lauder to vote Time Warner's shares for at least four years, subject to certain exceptions.

Time Warner will get two seats on CME's board.

CME posted a weaker than expected finish to 2008 last month and said the next two years would be difficult, with revenue from advertising likely to be flat or in single-digit decline.

CME forecast first-quarter revenues of $135-$145 million, down from $223 million in the first three months of 2008. [ID:nWNAB6425]