Time Warner invests $241.5 million in European expansion
23 Mar 2009
Time Warner Inc. will invest $241.5 million in a European media company with an eye toward developing new television channels on the continent. The target company, Central European Media Enterprises Ltd (CME) has outlets in Bulgaria, Croatia, Czech Republic, Romania, Slovakia, Slovenia and Ukraine.
Time Warner, the world's largest media company, will take a stake in CME., which operates TV networks in seven Central and Eastern European countries that have a total population of about 97 million people. The two companies also formed a partnership to operate new television channels, some of which will carry the Warner Bros. brand, in CME territories. The channels will feature international films and TV series.
The US media giant has been taking steps to transform into a concern more focused on movies, TV programming and magazines, and will spin off its cable unit at week's end. (See: Time Warner spins off cable unit, gets $9.25 billion windfall)
CME has been present in Central and Eastern Europe since the early 1990s; its interests in the region include TV Nova, the leading broadcaster in the Czech Republic. The move should help stabilize the company in an increasingly difficult economic climate. It expects to post revenues of $135-145 million and total EBITDA of $18-22 million in Q1 2009, as opposed to $223 million and $75 million respectively in the corresponding period last year.
Time Warner will receive 19 million newly issued shares, which will be voted by CME founder and Chairman Ronald S Lauder for at least four years. Time Warner will also appoint two people to CME's board. The deal is expected to close by midyear.
Time Warner Chairman and CEO Jeff Bewkes said although the region has been hurt by the economic crisis, it sees the area returning to "significant growth" and the media sector continuing to evolve. Bewkes added the investment fits in with Time Warner's strategy of offering programming on multiple platforms around the world.
Time Warner last month posted a significant fourth-quarter loss on $25 billion in write-downs, but offered a more bullish forecast for this year than some were expecting. (See: Time Warner posts $16 billion fourth quarter loss)