The move was unexpected and may yet be the shape of things to come. Welcome to the world of global financial crisis deals, 2009 style.
When CME launched its first commercial station – TV Nova in the Czech Republic – in 1994, few would have predicted the position it finds itself in today. Despite the huge changes that have taken place in the intervening years, the company owns highly successful broadcast operations in no fewer than seven CEE markets.
They include such prominent services as Pro TV (Romania), TV Markiza (Slovakia) and Studio 1+1 (Ukraine), not to mention the still extremely lucrative TV Nova, along with a growing portfolio of thematic channels.
However, CME has been unable to escape the effects of the global financial crisis and expects revenues to fall significantly in all its markets this year. Indeed, they are likely to amount to only around $135-145 million (€100-107.4 million) in the first quarter, as opposed to $223 million in Q1 2008. EBITDA will also be significantly reduced over the same period, from $75 million to between $18-22 million.
In this light, the deal with Time Warner, which has agreed to invest $241.5 million in CME for a 31%, makes perfect sense. It comes alongside an agreement by the two parties to form a partnership that will launch new thematic channels, some of which will be Warner Bros. branded, and automatically make CME one of the region’s leading content providers.
So, what next? There is a good possibility that similar deals, involving some of CEE’s other key industry players, could follow in the next few months.
Most are feeling the financial pinch, and in the case of Liberty Global have acted by restructuring their debts – quite literally “adding” an extra 2-3 years to a 2012 deadline.
Consolidation will certainly lead to a leaner and fitter industry, well placed to fully exploit the opportunities that will present themselves once the world moves out of the current economic nadir.