Central European Media Net Rises on Derivatives Reevaluation

Central European Media Ltd., a broadcaster operating in eastern Europe, said its second-quarter net income rose after the company re-evaluated the value of derivatives on its books.

Net income rose to $3.96 million from $968,000 a year ago, the Hamilton, Bermuda-based company said in a statement today. Revenue declined 15 percent to $211.2 million.

CME completed transactions with its shareholders Time Warner Inc. and Ronald Lauder by July 3, which reduced its debt by $185 million, Chief Executive Officer Adrian Sarbu said in a statement. In the second half of the year, the company will continue to focus on deleveraging, expanding non-advertising revenue and delivering “positive” cash flow, he said.

The company has been battling a 70 percent slump in advertising spending during the first half of this year, it said. Operating income before depreciation and amortization, or OIBDA, at its Media Pro Entertainment unit rose sixfold to $5.42 million in the second quarter, CME said.

The consolidated OIBDA declined 25 percent in the quarter to $47.1 million, it said. The full-year OIBDA will be between $150 million to $160 million, Sarbu said in a conference call today with analysts.

The company operates channels in the Czech Republic, Bulgaria, Romania, Croatia, Slovakia and Slovenia.

It issued about 875,000 Class A shares to Time Warner for $90.8 million, exercising a put option under an agreement dated April 30, the company said in a statement on July 3.

The funds will be used to repay a part of its debt, CME said. Time Warner holds stake of 49.9 percent in CME.

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