CME Loss Narrows, Revenue Down; Cuts Annual View; Says Needs Additional Capital

(RTTNews) - Central European Media Enterprises Ltd. (CETV) Wednesday reported a narrower loss for the third quarter, amid a 3 percent fall in revenues. Further, the company lowered its annual outlook and said it would need additional capital.

Net loss for the quarter was 23.3 million or $0.16 per share, narrower than $32.6 million or $0.36 per share reported last year.

Net revenues fell 3 percent to $135.84 million from $140.1 million for the third quarter of 2012. On a like-for-like basis, the drop was 7.5 percent.

Operating loss before depreciation and amortization was $32.4 million compared to income of $3.5 million last year. OIBDA margin was negative 23.9 percent compared to 2.5 percent last year.

CME attributed the decrease in OIBDA to an increase in content costs of $15.1 million, including $9.0 million of accelerated amortization of program rights, $4.2 million of restructuring charges, $6.4 million of severance costs, and $5.0 million of operating and other costs, as well as a weaker dollar.

The company had previously expected that the consumption of GRPs by advertisers in the Czech Republic during the fall season would return to levels similar to 2012. However, amid the continued weakness in demand for GRPs from advertisers during October as the fall season rolls out, and on-going feedback received from advertisers and agencies, the firm no longer believes so.

The company's revised full year outlook is for revenue between $640 million and $650 million and OIBDA between $40 million and $30 million.

The forecast reflects lower expectations for operations in the Czech Republic and the Slovak Republic, as well as higher than expected restructuring charges, unexpected severance costs, non-cash accelerated amortization of programming, and the timing of carriage fee increases primarily in Romania and the Czech Republic.

The previous outlook was for revenues of $700 million to $720 million and OIBDA of $50 million to $70 million.

Further, CME said that due to the level of negative free cash flow expected this year, it will need additional capital. The company is currently evaluating all options available to us, including debt and equity financings, asset sales and the renegotiation of payment obligations with several major suppliers.

CME is in discussion with Time Warner Inc. regarding a possible capital transaction, including debt, to address the liquidity position.

CETV closed down 3.8 percent on Tuesday at $6.11.