The Financial Times posted an interesting article on CETV and its role in consolidation of European TV stations. The article touched on CETV as a seller and buyer and included some surprisingly frank comments by Wallace Macmillan, the company’s CFO.
As a reminder, last year private equity firm Apax Partners bought control of half off Ronald Lauder’s controlling stake in CETV. Apax could easily drive CETV to be either a buyer or seller but in the first three years if CETV were a seller Apax has the right to reject anything short of $120. There are a little over two years left.
I think CETV shares can double again in the next few years based on growth in cash flow assuming the stock market cooperates. I also think a buyout in the near-term would probably be in the $140 range.
As for CETV buying more assets in the region including Poland and Russia, at the right price I’d be happy with most deals.
Click on the “Continue Reading” link below for the full FT article. It is beyond the jump due to copyright issues….

Central European Media Enterprises set to play leading role in broadcaster consolidation; RTL, Mediaset, and ProSieben could show interest
Published: July 19 2007 16:32 | Last updated: July 19 2007 16:32
Central European Media Enterprises (CME) is likely to play a central role in the consolidation of Central European broadcasters, with players such as RTL, Mediaset and ProSieben tipped by bankers in the sector as possible buyers.
CME’s finance director Wallace Macmillan, said Nasdaq-listed CME is in a very good position to pursue buys in Central Europe itself and would be interested in merging with listed Polish and Russian counterparts TVN and CTC Media. Two sector bankers, meanwhile, suggested that the Bermuda-based media group could come up for sale in the short to mid term.
A first banker said that, after Apax Partners’ acquisition of a 7.8% stake in CME last year, CME could be sold in the next 18 months. He cited German TV broadcaster RTL and listed Italian media group Mediaset as potential buyers.
A second banker said that CME’s model was similar to the one followed by SBS Broadcasting in the past. It is basically a vehicle to aggregate the sector by buying smaller businesses, he said. Last month, ProSiebenSat.1 Media announced the acquisition of SBS for EUR 3.3bn.
The first banker asserted that RTL should acquire CME as it would give it access to one of the largest broadcasters in the emerging markets where advertising is growing at a phenomenal rate.
According to him, Italy being a saturated market, Mediaset should acquire CME to find growth outside Italy. This banker considered it too late for Mediaset to acquire assets one by one in European emerging markets and said that it would make more sense to acquire CME and get “a huge coverage in one sweep.”
Macmillan said, however, that while players such as RTL or Mediaset could be interested in CME as it has very strong assets, Ronald S. Lauder, CME’s chairman and main shareholder, takes pride in his business and there is no sign he wants to exit. It’s a question you’ll have to ask him, he added. Lauder was not available for comment.
A TVN source agreed that RTL and Mediaset and to a lesser extent the new ProSieben – SBS entity could be natural buyers for CME.
“TVN and CTC could be natural alliance partners for us in the future but one has to find the right timing,” Macmillan said. “If there is an opportunity to come together with TVN, we would be very interested to talk to them, the same goes for CTC.”
Macmillan added that CME knows CTC very well. CTC’s CEO Alexander Rodnyansky is a minority shareholder in CME’s Ukrainian assets and both CTC and CME are listed on Nasdaq, which means both have to meet certain requirements, he explained. That would make a merger easier. Furthermore, it does not get involved in politics or current affairs coverage, Macmillan added. CTC declined comment.
The TVN source said that the company would need to look at synergies. Of course there would be synergies at a head office level, but the main costs are programming, the source said. It is quite a regional business and it is hard to generate significant synergies there, the source added.
“If the controlling shareholders of these companies are interested in selling, we would be interested (in talking with them),” Macmillan added. “However, there are no signals they wish to exit at the moment.”
“If an opportunity arises, given our history and geographic footprint, we would be in a very good position to pursue deals,” Macmillan said. CME has looked at about 20 deals over the last year, if it finds the right target, it would be keen to pursue a deal, he added.
CME would be interested in buying new channels in Romania and in a larger market like Ukraine where it could acquire new broadcasting activities if the right assets become available, he said.
CME could also make acquisitions in markets where it has no footprint yet.
Together with Russia, Turkey is another good example of a growing and exciting market and a country where CME could make acquisitions, Macmillan said. The Balkans, and more specifically Slovenia and Bulgaria, could also be a region of interest for buys. Together with Poland, and given the right opportunity, CME would also like to enter Hungary, he added.
The EUR 150m seven-year floating rate note issued in May this year will finance a potential increase of ownership in CME’s Romanian, Czech and Slovak assets, Macmillan explained.
Last week, CME acquired 20% in Slovak television channel TV Markiza for EUR 57.6m, taking its stake to 100%, it was reported. CME owns 60% of its Czech assets. In June, it bought an additional 5% in two Romanian companies for USD 49.8m to raise its holdings to 95%.
CME has a USD 4.1bn market capitalisation. TVN and CTC’s market capitalizations are PLN 8.04bn (USD 2,95bn) and USD 4.28bn, respectively.