CME Net Loss Widens on Weaker TV Ad Market, Impairment

Central European Media Enterprises Ltd., the eastern European broadcaster co-owned by Time Warner Inc., said its fourth-quarter net loss widened as TV ad markets continued to weaken and the company’s impairment charge increased almost eightfold.

The net loss for the three months ended Dec. 30 was $503.1 million, compared with a loss of $77.2 million in the previous quarter, the Hamilton-Bermuda registered company said in a statement today. Revenue declined 8.5 percent to $253.3 million.

“Our performance this year reflected the tough market conditions in 2012,” Chief Executive Officer Adrian Sarbu said in the statement. With “no debt due until November 2015 and support from our major shareholders we’re looking into 2013 with confidence.” The company plans to cut costs and improve its capital structure and liquidity, Sarbu said.

The broadcaster incurred a non-cash impairment charge of $522.5 million in 2012, compared with $68.7 million a year earlier, it said. Full-year Oibda, or operating income before depreciation and amortization, was $125.4 million, missing its November forecast of $130 million to $140 million.

Its shares slumped 8.7 percent to 95 koruna, falling the most in four months.

Lower Forecasts

Central European Media Enterprises, or CME as the company is known, is facing a decline in TV ad spending in eastern Europe as big corporate clients tighten their advertising budgets on concerns over the weak macroeconomic developments in the region. The company cut its 2012 profit and free cash flow forecasts last year.

CME reiterated today it is taking steps to conserve cash and is considering new equity financing, asset sales and continues efforts to renegotiate payment obligations with suppliers. The company is in talks with Time Warner regarding its possible participation in a public, or private equity offering, it said.

Time Warner controls 49.9 percent of CME, CME said on Aug. 1. Last year, the broadcaster received financing, in exchange for the stock, from its major shareholders Time Warner and billionaire Ronald Lauder, which reduced its debt by $185 million.

CME plans to raise prime time prices in all markets, the company said in a presentation. In the Czech Republic, the broadcaster plans “double-digit” price increases. At the same time, the company will also invest more to increase its audience share in prime time, it said.