TV Giant Swings Back To Profitability
Bermuda-based Central European Media Enterprises Ltd. (CETV), the owner of television stations across central and eastern Europe, returned to profitability at the operating income level, helped by currency swings and “mixed recovery” in advertising spending.
Operating income before appreciation and amortization for the three months ended September 30 was $8.9 million from a loss of $4.5 million a year ago, the Hamilton-headquartered company said in a regulatory filing today [Oct. 25]. Revenue rose 23.2 percent to $165.5 million.
Chief Executive Officer Adrian Sarbu reiterated full-year forecasts of approximately $850 million in revenue and operating income of $166 million for 2011. “Cash flow generation” and “audience leadership” remain the main priorities, Sarbu said in the statement.
Central European Media, or CME as the company is known, has been battling a slower-than-expected pick up in advertising spending in all its markets as the economies in the region emerge from recession. Overall television advertising spending across all six CME’s markets grew one percent in the third quarter.
“The summer programming season is seasonally the weakest quarter, however strong local currencies and mild recovery across ad markets improved the results,” analyst Vaclav Kminek wrote in a note to clients. “All in all CME performed well and we can expect a positive market reaction.” Mr. Kminek recommends investors “buy” the shares.
CME operates TV channels in the Czech Republic, Bulgaria, Romania, Croatia, Slovakia and Slovenia. After dropping unprofitable assets in Ukraine in 2010, it agreed to acquire a Bulgarian channel. It also bought Bontonfilm AS, a Czech distributor of movies, for $11 million.
CME, owned by Ronald Lauder, reported a net loss from continuing operations of $82.2 million, or $1.27 a share, compared with a net profit of $3.4 million for the third quarter of 2010 on a one-off loss of $45.9 million linked to a currency swings
