I am heading to NY Thursday morning to attend CETV’s annual analyst meeting which convenes at noon. CETV has long been my favorite stock (since 2001) offering a combination of growth, value, and superb management. However, over the last four months the stock has been an absolute disaster. First, investors lost confidence in advertising growth rates causing multiple contraction. Second, the dollar rallied leading to estimate issues in US dollars. Third, Russia invaded Georgia. Fourth, emerging markets stocks succumbed to the credit crisis. Fifth, and most worrisome, this week, emerging markets economies and currencies began/accelerated a downward spiral.
I have missed the sentiment shift and the risk of deteriorating fundamentals. I also did not anticipate how easily the credit crisis would spill over to emerging markets currencies and economies. I thought that emerging markets economies, which undeniably were in good shape, and not overleveraged would be able to hold up reasonably well. Yesterday, the market voted no. Now we will see if the reality gets as bad as the markets are assuming.
Against this backdrop, CETV will put up a brave front and strong defense….

….Local currency advertising growth has held up so far but visibility is clearly dropping by the day. Weak currencies will pressure results but some savings will accrue on the expense and capital spending side. The company is in a strong financial position. The great record of day-to-day execution by management means that the company will continue to invest and build its enviable position as the dominant TV company in Central and Eastern Europe.
There is really not much the company can do except keep its nose to the grindstone and weather the storm. This is still a dynamic growth business. P&G, Coca Cola, and Phillip Morris have all noted strength in emerging market when reporting on current business trends. These are the types of companies that buy the bulk of the advertising CETV’s stations sell.
A massive long-term disconnect exists between the current stock price and the prospects for local currency advertising growth in the company’s markets. This will be the message of the analyst meeting and the upcoming 3Q08 conference call. But until visibility for stability emerges the stock will be a tough go. CETV remains my favorite media stock. I know said that every $5-10 down since $100.
While in NY, I’ll also be appearing at TheStreet.com’s 2009 Money Making Strategies Investment Conference on Saturday.