Central European Media Slumps on Lowered Forecast: Prague Mover

Central European Media Ltd. fell the most in almost 15 months in Prague trading after the broadcaster co-owned by Time Warner Inc. cut its full-year profit forecast.

The operator of television channels in central and eastern Europe, known as CME, dropped 14 percent to close at 109.5 koruna, the lowest level since early August 2011.

The prospects for the full year “indicate” that advertising markets are not recovering, Chief Executive Officer Adrian Sarbu said in a regulatory filing today. Advertising spending in the second half of the year hasn’t matched expectations, he said.

Bermuda-based CME cut its full-year forecast for Oibda, or operating income before depreciation and amortization, to $130 million and $140 million, compared with a previous $150 million to $160 million.

CME is exploring options to improve liquidity including a share issue, asset sales and renegotiations of debt payments, Sarbu said on a conference call with analysts today. The company has been “in touch” with Time Warner on its possible participation in a share offering, Sarbu said.

CME is “seriously cautious” about the fourth-quarter, Ceska Sporitelna AS analyst Vaclav Kminek said in a note. The “significant” cut in its full-year forecast is “negative” news, said Kminek, who has a hold recommendation on the stock.

CME said its third-quarter net loss shrank to $32.6 million from $82.2 million a year earlier. Net revenue in the period declined 15 percent to $140.1 million.

The broadcaster expects its 2012 sales at $750 million to $800 million and it should retain “at least” $130 million of cash balance at the end of the year, the broadcaster said in a presentation published on its website.

Time Warner holds a 49.9 percent stake in CME, which operates TV channels in the Czech Republic, Bulgaria, Romania, Croatia, Slovakia and Slovenia.

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