Central European Media Ltd., the east European broadcaster partially owned by Time Warner Inc., posted an operating loss before depreciation and amortization and cut its 2013 forecasts on a weaker Czech outlook.
The operating loss before depreciation and amortization for the three months ended Sept. 30 was $32.4 million, after income of $3.5 million a year earlier, the Hamilton, Bermuda-registered company said in a regulatory filing. Net revenue fell 3 percent to $135.8 million, it said.
CME (CETV), which operates in the Czech Republic and five other eastern European states, raised ad prices and fees in most of its markets this year to reverse declining TV revenue and ad spending under the helm of former Chief Executive Officer Adrian Sarbu. It also began selling shares and cutting costs to reduce debt and improve its liquidity. Sarbu’s replacements, co-chiefs Michael Del Nin and Christoph Mainusch, warned CME needs more financing to meet debt service obligations.
“Christoph and I find this level of performance unacceptable and have directed all of our energy since starting with CME a few weeks ago to addressing the major reasons for these financial results and making changes to improve them going forward,” Del Nin said in the statement. “Improving the performance of our Czech operations is the top priority,” Mainusch added.
CME cut its full-year Oibda outlook to a loss of between $40 million and $30 million, reflecting lower expectations for operations in the Czech Republic and Slovakia and higher restructuring and severance costs, it said. It foresees 2013 revenue of between $640 and $650 million.
CME will need additional capital due to the level of negative free cash flow expected for 2013, it said. The company is evaluating all options, including debt and equity financing, asset sales and renegotiations of payments to suppliers, it said. It’s also in talks with Time Warner about a possible capital transaction, including debt, to improve its liquidity position.
In case CME doesn’t secure additional financing, it won’t be able to meet its debt service obligations and finance its operations sometime within the next 12 months, it said.
Sarbu stepped down on Aug. 21. Mainusch and Del Nin changed most of the top managers within the company, including Jan Andrusko, the head of Czech channel TV Nova.
CME expects negative free cash flow of approximately $140 million for 2013 and forecasts a cash balance of approximately $60 million.
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