Just how well are CME and Liberty Global now faring in Central and Eastern Europe?
The question will to some degree be answered next week, when the two companies release their first quarter results within a day of each other. Both will undoubtedly report better performances than in the corresponding period last year, when the world economy looked on the brink of collapse. They will certainly also express cautious optimism about the future.
CME, in particular, has acted radically in recent months to overcome a huge slump in ad revenue in all its markets. Besides securing Time Warner as a 31% shareholder, it has jettisoned its operations in Ukraine and added significantly to those in Bulgaria. What is more, it still has up to $400 million (€299.8 million) left in its coffers for further acquisitions.
Much will nevertheless depend on the region’s TV ad markets starting to recover – as the company believes they will – later this year.
Liberty Global, too, has not shied away from making difficult decisions. Last July, for instance, it completed the sale of UPC Slovenia to Mid Europa Partners, whose interests in the region already included Serbia Broadband (SBB) and its DTH platform Total TV.
It has also taken the bull by the horns last year in what are still difficult market conditions by accelerating the rollout of digital cable TV and such additional services as HD, PVR, VOD and ultra-fast internet access.
The company has in addition finally begun to address another issue, namely the underperformance of its DTH operations. UPC Direct, in particular, has hardly progressed in terms of subscriber numbers since the appearance of Digi TV in 2006 and more recently (in the Czech Republic and Slovakia) Skylink. Romania’s Focus Sat, too, seems to have seriously lost its way in a market in which the two leading platforms Digi TV and Dolce have and continue to call the shots.
By switching its satellite operations to one degree West, running them out of Luxembourg and adding a large number of new channels (including, for the first time, HD services), Liberty Global hopes it can finally start reestablishing itself in four highly competitive DTH markets.
We will probably start seeing how successful the strategy has been later this year.
