The international giant, Time Warner, has entered the Czech media market. The third biggest media company in the world, Time Warner is buying 31% of the shares of CME, the owner of TV Nova for USD 242 million (CZK 4.7 billion).
The strong investor should help the debt-ridden CME. Much of the company’s expansion was funded through loans, and the company suffered great losses last year in Ukraine and Bulgaria. Its shares over the course of last year lost around 90% of their value. “Joining Time Warner will help CME expand further and bring us to a level that we could have only dreamed about 15 years ago,” said CME owner Ronald Lauder.
Time Warner is a media giant that owns, for instance, New Line Cinema film studios and Warner Bros. Entertainment (Batman, Superman, Harry Potter), HBO cable TV and the news network CNN. It will gain significant rights in CME. “Ronald Lauder and the company APAX Partners have 40% of the voting rights. Time Warner has 38% of the voting rights. The rest of the rights are divided among publicly tradable shares,” CME spokeswoman Romana Tomasová told E15. Lauder will retain influence in CME. For a period of four years, he will be entrusted as executive decision maker for Time Warner’s share.
Time Warner’s acquisition of the shares could have a big impact on the Czech media market. Warner Bros. And CME decided that in the Czech Republic after digitalisation is complete, they will launch a specialised TV network that would broadcast foreign films and TV shows. “For now the plans are still undefined,” said Tomasová. CME’s shares went up 8% to CZK 255 per share after the announcement Monday about the deal.
Nova’s owner gains strong partner
For the investors of the Bermuda company CME, which in the Czech Republic owns TV Nova, this is good news.
Time Warner will gain 19 million newly-issued CME shares – 14.5 million publicly tradable type A shares and 4.5 million B shares. B-type shares are important because up until now, they only constituted 15% of the company, but 65% of the voting rights.
According to Tomasová, Lauder and the company APAX Partners own 6.3 million B shares, and Time Warner has 4.5 million B’s. “That means Ronald Lauder and APAX Partners have 40% of the voting rights, and Time Warner has 38% of the voting rights,” said Tomasová.
CME has had to deal with a number of problems recently. This began last year, when the shares started falling. The company’s losses in some regions at the beginning of last year frightened investors. In Ukraine the company lost USD 35 million (CZK 692 million); in Bulgaria it lost USD 10 million (CZK 197 million). According to information available to E15, a number of shareholders in the last few weeks pushed on CME president Adrian Sarba to sell the company’s Ukrainian operations. The most important component of CME is Nova, which last year attained a gross profit of USD 208 million (CZK 4.1 billion).
CME also had to adjust its projected results for the first quarter of this year from the original USD 223 million (CZK 4.4 billion) to USD 135-145 million (up to CZK 2.87 billion). The company’s projected gross profit also fell – from USD 75 million (CZK 1.48 billion) to USD 18-22 million (up to CZK 435 million).
