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| Datum: | Wed, 10 Sep 1997 18:40:13 +0000
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Central European Media Enterprises: CME
Announces Results For 1997'S First Quarter
MAY 16, 1997, M2 Communications - Central
European Media Enterprises Ltd. (CME) (NASDAQ:
CETV) today announced financial results for
the first quarter ended March 31, 1997. CME's
results reflect strong revenue increases
across all of the Company's Central and
Eastern European stations, particularly the
Company's new stations, including PRO TV in
Romania, POP TV in Slovenia, Markiza TV in the
Slovak Republic, Studio 1+1 in Ukraine and TVN
in Poland. These stations continue to grow
rapidly having contributed $17,493,000 or 46%
of 1997 first quarter combined net revenues,
compared to only $2,635,000 or 11% in the
first quarter of 1996.
CME's combined first quarter net revenue rose
by $14,903,000, an increase of 64% over the
first quarter of 1996, on the strength of a
11% growth in revenues from advertising sales
at Nova TV and dramatic growth in CME's new
stations. On a US GAAP consolidated basis
which excludes the Markiza TV, Studio 1+1 and
TVN results, CME's not revenues rose 25% to
$29,165,000. During the first quarter, PRO and
POP TV's net revenue increased 219% and 146%,
respectively. Markiza TV recorded net revenues
of $5,628,000 In its initial first quarter and
Studio 1+1 recorded $3,085,000 in net revenues
in its first three months as part of the CME
station group.
During the 1997 first quarter, the Company
achieved combined station broadcast cash flow
of $3,819,000. In addition, during March 1997
POP TV and Markiza TV generated positive
broadcast cash flow of $197,000 and $846,000,
respectively, while PRO TV reached cash flow
break-even. Also during March 1997, POP TV and
Markiza TV posted positive EBITDA of $72,000
and $1,417,000, respectively. After only seven
months on the air, Markiza TV produced
profitable results in March 1997, the fastest
among all of CME's stations.
Commenting on the results, Leonard M. Fertig,
President and Chief Executive Officer said:
"We continue to deliver exceptional results
among virtually all of the operating and
financial categories used to measure our
progress. Most important, our 64 percent
increase in combined first quarter net revenue
reflects the dramatic growth of our new
television stations.
"Our new stations accounted for $17.5 million
of combined first quarter revenue. Even more
dramatic, PRO TV's first quarter net revenues
more than tripled and POP TV's net revenues
more than doubled, while Markiza TV, Studio
1+1 and TVN posted initial first quarter
results of close to $10 million. Clearly, we
are now driven by an exciting balance of
established and developing assets. This is a
trend that should continue as the year
progresses. During March 1997, our new
operations accounted for 44 percent of
combined net revenue, 22 percent of combined
positive EBITDA and 17 percent of combined
positive broadcast cash flow.
"PRO TV, POP TV and Markiza TV continue to
command in excess of 50 percent of their
respective advertising markets. Given that PRO
TV and POP TV were launched only 15 months ago
and Markiza TV was launched only seven months
ago, the advertising market share and revenue
growth of these stations is outstanding.
Furthermore, their progress toward break-even
Is well ahead of the norm for most markets.
"Nova TV continues to command the leading
market share of the Czech national audience.
Nova TV generated an 11 percent increase in
first quarter net revenues from advertising
sales, while decreasing total expenses by 2
percent. As a result of these drivers, Nova
TV's broadcast cash flow margin increased to
35 percent and net income ruse 28 percent.
Nova TV's overall first quarter results were
affected by a decrease in game show revenue,
as well as by the strengthening of the US
Dollar against the Czech Crown. Nova TV's
broadcast cash flow increase of 11 percent was
reduced to 3 percent, due to the effects of
currency fluctuations. likewise, Nova TV's
EBITDA increase of 10 percent was reduced to 5
percent, as a result of currency fluctuations.
"We recently announced that we discontinued
funding of PULS-TV, the regional station fox.
Berlin and Bradenburg. As a result, we
recorded a write, down of approximately $20.7
million against our German operations. We
believe CME's shareholders are better served
by using the company's financial and
management resources to focus on other
opportunities in Central and Eastern Europe."
The three months ended March 31, 1997 compared
to the three mouths ended March 31, 1996
The Company's net revenues increased by
$5,910,000, or 25.4%, to $29, 163,000, in the
three months ended March 31, 1997 from
$23,255,000 in the three months ended March
31, 1996. Of this increase, $4,983,000, or
84.3%, was attributable to PRO TV and POPTV.
PRO TV and POP TV achieved net revenues of
$4,947,000 and $2,671,000, respectively, for
the three months ended March 31, 1997,
reflecting increases of 219.0% and 146.4%,
respectively, over the same period in 1996.
This significant revenue growth is primarily
the result of the growth in audience market
sham and the fact that PRO TV find POP TV have
now been able to convert, their dominant
audience shares into larger shares of their
respective advertising markets.
The change in Nova TV's net revenues reflects
an increase in net revenues from advertising
sales of $1,963,000 or 10.8% (16,4% measured
in local currency) to $20,212,000, offset by a
decline in other revenues (principally game
show revenues). by $1,918,000. The higher
advertising sales revenues are principally
attributable to the growth in the advertising
market and Nova TV's ability to consistently
maintain a leading market share in a growing
market. The decline in game show revenues is
attributable to a current lack of suitably
attractive game show partners. As a result,
Nova TV's net revenues increased by $45,000,
to $20,665,000 in the three months ended March
31, 1997 from $20,620,000 in the three months
ended March 31, 1996. The depreciation of the
Czech koruna during the three months ended
March 31, 1997 compared with the same period
in 1996, reduced Nova TV's revenues in US
dollars by approximately 5%.
To a lesser extent, Videovox and Radio Alfa,
with net revenues of $600,000 and $282,000,
respectively, for the three months ended March
31, 1997, also contributed to the increase in
the Company's net revenues. Videovox and Radio
Alfa were not included in the Company's
operations during the three months ended March
31, 1996.
Total station operating costs and expenses
increased $2,750,000 or 13.9%, to $22,482,000
in the three months ended March 31, 1997 from
$19, 732,000 in the three months ended March
31, 1996. The increase in total station
operating costs and expenses is primarily
attributable to PRO TV's and POP TV's
achievement of full scale operations together
with the inclusion of operating expenses of
Videovox and Radio Alfa of $461, 000 and
$448,000, respectively. This increase was
partially offset by a decrease in Nova TV's
operating costs and expenses in the three
months ended March 31, 1997, compared to the
three months ended March 31, 1996.
Station selling, general and administrative
expenses increased $1,391, 000, or 47.3%, to
$4,329,000 in the three months ended March 31,
1997 from $2,938,000 in the three, months
ended March 31, 1996. This increase was
primarily attributable to the increase in PRO
TV's station selling, general and
administrative expenses due to higher
marketing expenses in order to maintain a
leading market share. To a lesser extent, the
increase was attributable to the fact that
Videovox and Radio Alfa were not included in
the Company's operations during the three
months ended March 31, 1996.
Corporate operating costs and development
expenses for the three months ended March 31,
1997 and the three months ended March 31, 1996
were $4,575,000 and $3,091,000, respectively,
an increase of $1,484,000, or 43.0%. As a
percentage of net revenues, corporate
operating costs and development expenses
increased by only 2.4%, from 13.3% in the
three months ended March 31, 1996 to 15.7% in
the three months ended March 31, 1997. The
increase was primarily attributable to the
Company's increased scope of operations, the
continued development of the Company's
infrastructure, the Company's, new operations
in Poland and Ukraine and development
activities in other countries.
Amortization of goodwill and allowance for
development costs was $1, 997,000 and $100,000
in the three months ended March 31, 1997 and
1996, respectively. This increase is primarily
attributable to amortization related to the,
Additional Nova TV Purchase and the 1997 Nova
TV Purchase and, to a lesser extent, the
amortization of goodwill and license
acquisition costs related to investments in
POP TV and Radio Alfa.
As a result of the above factors, operating
loss increased by $1,612, 000, or 61.9% to
$4,218,000 in the three months ended March 31,
1997 from $2,606,000 in the three months ended
March 31, 1996. This increase in operating
loss was primarily attributable to increased
corporate operating costs and development
expenses and amortization of goodwill and
allowance for development costs, offset by the
increase in operating income of Nova TV and a
decrease in operating losses of PRO TV and POP
TV over the same period in 1996.
Equity in loss of unconsolidated affiliates
increased by $4,000,000 to $6,769,000 in the
three months ended March 31, 1997 from
$2,769,000 in the three months ended March 31,
1996. The increase reflects the addition of
Markiza TV, TVN and Studio 1+1 Group to the
Company's operations, in addition to the
Josses attributable to the Company's German
operations in the three months ended March 31,
1997.
Loss on impairment of investments in
unconsolidated affiliates of $20, 707,000 was
a result of the write-down of the Company's
investments in Germany. This one-time charges,
together with losses incurred by the German
operations during the three months ended March
31, 1997, has resulted in a total charge of
$24,281,000 in the Company's Consolidated
Statements of Operations.
Interest and other income increased
$1,463,000, or 229.7%, to $2,100, 000 for the
three months ended March 31, 1997 from
$637,000 for the three months ended March 31,
1996, The increase in interest income was
primarily attributable to the investment of
net cash proceeds from the Company's 1996
public offering of shares of Class A Common
Stock completed in November 1996 (the '1996
Offering").
Interest expense increased $1,167,000, or
115,9%, to $2,174,000 in the three months
ended March 31, 1997 from $1,007,000 in the
three months ended March 31, 1996. This is
primarily attributable to interest expense
incurred on the Czech koruna debt funding for
the Additional Nova TV Purchase, partially
effect by lower debt levels at Nova TV.
The net foreign currency exchange loss of
$2,071,000 in the three months ended March 31,
1997 is primarily attributable to the US
dollar denominated abilities of Nova TV, PROTV
and POP TV and the devaluation during this
period of the Czech koruna, Romanian Lei and
Slovenian tolar against the dollar. Movements
in these currencies during the three months
ended March 31, 1996 were significantly less
than in the corresponding, period for 1997.
These losses were partially offset by a gain
the Company realized on the Czech koruna debt
funding for the Additional Nova TV Purchase.
Provision for income taxes was $1,911,000 for
the three months ended March 31, 1997 and
$2,004,000 for the three months ended March
31, 1996.
Minority interest in loss of consolidated
subsidiaries was $762,000 in the three months
ended March 31, 1997 and $394,000 in the three
months ended March 31, 1996. This increase was
primarily the result of the Additional Nova TV
Purchase and the 1997 Nova TV Purchase,
together with losses from PRO TV and POP TV.
As a result of these factors, the net loss of
the Company was $34, 988.000 and $7,750,000
for the three months ended March 31, 1997 and
the three months ended March 31, 1996,
respectively.
Central European Media Enterprises Ltd. is
engaged in the development, ownership and
operation of national and regional private
commercial television and radio stations, in
the newly emerging markets of Central and
Eastern Europe and regional private commercial
television stations in Germany. CME has been a
pioneer in broadcast television with national
stations and station groups currently reaching
95.6 million people in seven countries.
Including the Company's operations under
development, CME has the potential to reach
over 140 million viewers. Central European
Media Enterprises Ltd. trades on the NASDAQ
stock market under the symbol CETV.
(C)1994-97 M2 COMMUNICATIONS LTDCONTACT:
Leconard M. Fertig, President
and Chief
Executive Officer
Tel: +44 (0)171-292-7900
John Schwallie, Vice President, Finance and
Chief
Financial Officer
Tel: +44 (0)171-292-7900
Diana Brainerd/Chris Plunkett, Brainerd
Communicators, Inc
Tel: +1 212-986-6667
*M2 COMMUNICATIONS DISCLAIMS ALL LIABILITY FOR
INFORMATION PROVIDED WITHIN M2 PRESSWIRE. DATA
SUPPLIED BY NAMED PARTY/PARTIES.*
Copyright c 1997, M2 Communications, all
rights reserved.