CME shares see sharpest drop in thirteen years on uncertain financial outlook

Shares of Central Media Enterprises (CME), the mother company of Pro TV stations in Romania, have plummeted by 50 percent, after the company announced the financial indicators for the third quarter ended September 30, 2013.

CME has operations in six Central and Eastern European markets- Romania included- with an aggregate population of approximately 50 million people. In Romania, CME runs the stations PRO TV, PRO TV International, Acasa, Acasa Gold, PRO Cinema, Sport.ro, MTV Romania, PRO TV Chisinau and Acasa Moldova.

CME reported decreasing net revenues of USD 453.1 million for the nine months ended September 30, 2013, from USD 518.7 million for the nine months ended September 30, 2012.

Operating loss for the nine months ended September 30, 2013 soared to USD 85.6 million from USD 5.1 million for the nine months ended September 30, 2012.

Net loss for the nine months ended September 30, 2013 hiked to USD 173.3 million from USD 43.3 million for the nine months ended September 30, 2012.

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The OIBDA for the nine months ended September 30, 2013 decreased to USD 46.1 million compared to USD 64.7 million in the same period ended September 30, 2012.

“Our revised full year outlook is for revenue between USD 640 million and USD 650 million and OIBDA between USD 40 million and USD 30 million reflecting lower expectations for our operations in the Czech Republic and the Slovak Republic, as well as higher than expected restructuring charges, unanticipated severance costs, non-cash accelerated amortization of programming, and the timing of carriage fee increases primarily in Romania and the Czech Republic. Our current forecast of free cash flow for the full year of 2013 is now approximately USD 140 million. We now expect to end the year with a cash balance of approximately USD 60 million,” according to a press release of the company.

CME might be forced to require an additional capital infusion. In case discussions do not work out, the company said it might be unable to pay its debts or continue development.

“Due to the level of negative free cash flow anticipated for 2013, we will need additional capital and we are currently evaluating all options available to us, including debt and equity financings, asset sales and the renegotiation of payment obligations with a number of major suppliers. In this respect, we are in discussion with Time Warner Inc. regarding a possible capital transaction, including debt, to address our liquidity position. These discussions are preliminary and there are no assurances regarding the ultimate outcome. If we are unable to secure additional financing, we will be unable to meet our debt service obligations and generally fund our operations sometime within the next twelve months,” writes the press release.

 According to Bloomberg, “CME shares had their biggest drop in almost 13 years and bond yields surged to an 18-month high.”

“The stock plunged 55 percent to USD 2.76 by 12:40 p.m. in New York, the worst intraday retreat since December 2000, with share turnover at more than 20 times the three-month daily average,” says Bloomberg.

 Otilia Haraga