Reporting the blues

The severity of the problems faced by the TV industry in Central and Eastern Europe (CEE) is becoming ever more apparent as more first quarter results start to come in.

The latest, from one of its leading players, certainly make worrying reading. Everyone knew that CME was more exposed than most due to the heavy dependence its FTA stations have on ad revenue. However, its performance in some markets must now be giving real cause for concern.

Take the Czech Republic, CME’s undisputed jewel in the crown since it entered the region in the early 1990s. Its net revenues in Q1 amounted to $56,127,000 (€42,475,726), as opposed to $85,558,000 a year earlier but $105,816,000 – almost double the total – in Q4 2008.

Ukraine saw an even bigger slump, its net revenues of $4,901,000 in Q1 this year contrasting with $23,750,000 in the first quarter of 2008 and $24,006,000 in the last.

Even so, the fundamentals of CME’s businesses are still sound throughout the region. It is not as if its stations have suddenly experienced a huge fall in audience share; most remain market leaders and are indeed playing key roles in their respective countries’ transition to digital broadcasting.

What is more, CME has already acted in a decisive way to head off the possibility of a nightmare scenario by securing Time Warner as a major shareholder. The deal, worth $241.5 million and announced in late March, should ease its financial worries and will benefit viewers through the launch of a number of new thematic channels.

More difficulties undoubtedly lie ahead in the months to come, not only for CME but other players, both big and small. A number of M&As, some quite surprising, could well be in the pipeline.

The region’s TV industry will in due course emerge from the current financial crisis. It will be chastened, changed and hopefully also much more resilient than it is at present.