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June 30, 2005

Potential Boost for CETV in Czech Republic

There is some potentially positive news out of the Czech Republic for Central European Media Enterprises (CETV). Yesterday, the Czech parliament passed a law that will gradually phase out TV advertising on the two government-owned stations. It is not certain that this law will ultimately go into effect. However, if it does it is a nice positive as it will likely redirect tens of millions in annual advertising to CETV-owned TV Nova, which has market-leading viewing share in the low 40s....

According to a research report out of the Czech Republic, the two government stations had about $44 million in advertising in 2004. The law would lead to a gradual phase out of this advertising beginning next year and extending through 2008. CETV's TV Nova seems like to gain about 2/3rds of this advertising based on its relative ratings to the other private broadcaster in the country. This is a signficant amount given that Nova has 2004 revenues of $208 million.

All the recent hoopla at CETV over 1Q05 earnings and 2005 guidance overshadowed better-than-expected 2005 guidance for Nova, which is half of CETV. This law likely extends the double-digit growth at Nova though full implementation in 2008 if it goes into effect.

Posted by Steve Birenberg at June 30, 2005 02:08 PM