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.