Central European Media Falls on Share Sale, Loss: Prague Mover

Central European Media Enterprises Ltd. fell the most in six months after the broadcaster said it would issue new shares and its first-quarter loss widened.

The stock declined 11 percent to 77.10 koruna by close in Prague, its steepest decline since Oct. 31 and the worst performance today in the Czech Republic’s 14-member PX index.

“Some investors may be negatively surprised by the volume of the new offering, although some stock dilution was already priced in, as it was expected,” Cyrrus AS analyst Tomas Mencik said by phone. Mencik has his hold recommendation under review. “There were also some not very good news on the Czech market.”

CME, as the company is known, also said today it plans to raise as much as $174 million through a public offering of its Class A shares. CME said that Time Warner Inc affiliate Time Warner Media Holdings notified the company it intends to exercise its rights to buy 49.9 percent of the stock sold in the offering, Hamilton, Bermuda-based CME said today in a separate statement.

In addition, CME will sell $200 million in Class B shares in a private placement to Time Warner, it said. The company will use part of the proceeds to repurchase or redeem a portion of CME senior notes and use the rest for operation growth, it said.

CME reported today a first-quarter net loss of $109 million, compared with $13.8 million a year earlier, the company said in a separate statement. Net revenue declined 18.2 percent to $137 million.

“2013 is a year of bold actions to restore the value we receive for our products,” Chief Executive Officer Adrian Sarbu said in an earnings statement. “We raised advertising prices and carriage fees, and the first-quarter results reflect the initial phase of implementing these actions,” Sarbu said.

While the move was successful in most of CME’s countries, in the Czech Republic it hurt the broadcaster’s revenues and Oibda because of “resistance” from certain media agencies and advertisers, Sarbu said in the statement. CME will continue with its pricing policy in all countries because it is determined to reverse the trend of declining spending on TV advertisement, Sarbu said.

The company posted an operating loss before interest, depreciation and amortization of $20.7 million in the quarter, it said.

Before it's here, it's on the Bloomberg Terminal.