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TVN Drops to 2-Month Low as Erste Cuts Polish Broadcaster

Feb. 5 (Bloomberg) -- TVN SA, Poland’s second-biggest television group, fell to the lowest level in almost two months as Erste Group Bank AG downgraded the stock to reduce from hold, citing worsening prospects for advertising.

The stock declined 2.3 percent to 8.99 zloty at 5:30 p.m. in Warsaw, its lowest level since Jan. 9. Shares traded were 46 percent of the three-month daily average, data compiled by Bloomberg show.

As the broadcaster sold its majority stake in Web portal Onet.pl last year, it is “now a pure free-to-air player, highly dependent on the TV advertising market,” Vaclav Kminek, a Prague-based analyst at Erste, said in a research note today.

TVN trades at a 15 to 21 percent premium to peers that is not justifiable, according to Erste.

The Polish advertising market will shrink 4.8 percent this year “with risks on the downside,” while the cost cutting program started by the company in the third quarter of 2012 “is already priced in,” Kminek said.

Erste increased its share-price estimate for the stock to 9 zloty from 7.5 zloty.

To contact the reporters on this story: Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net; Marta Waldoch in Warsaw at mwaldoch@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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