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July 01, 2008

CETV Closes Ukraine

Yesterday, I noted that Zenith Optimedia raised its global ad forecast for 2008 due to strength in developing markets. Central and Eastern Europe was one of the regions with particularly good growth for 2008, with a forecast of 17%. With growth in CEE markets holding steady despite some initial impacts from the global credit and inflation issues, I remain quite bullish on Central European Media Enterprises (CETV), which I have been adding to on its current pullback.

CETV has had a positive tone in marketing presentations to investors in the US over the past few weeks. In addition, one of my best contacts recently visited company operations in several Central European countries and came away quite confident about the pace of business. I think 2Q results will be quite favorable and place the company on a trajectory to beat its full year guidance. However, I don’t expect guidance to be raised until the annual analyst meeting which takes place each fall. This year the meeting is in NY.

Also, of interest to CETV investors will be yesterday's announcement of the closing of the deal to up its stake in its Ukrainian operations from 60% to 90%, and importantly, gain full management control. The deal should close imminently and sometime in the next few months CETV will provide a detailed multiyear forecast for Ukraine. I expect the numbers to be impressive particularly after 2009 as the first year plus of management control will have heavy investment. If prior control acquisitions/strategies in Slovakia and the Czech Republic are any indication, the outlook in Ukraine will be bright and investor confidence in meeting the multiyear goals should be high.

Posted by Steve Birenberg at July 1, 2008 12:03 PM in CETV