CME sells loss-making Ukraine operations

Central and Eastern European broadcast group CME is offloading its Ukrainian TV channels for US$300m (€212m). The channels are being sold to Harley Trading, the company owned by Ukrainian entrepreneur Igor Kolomoisky. The agreement follows a February 2008 deal that saw CME increase its interest in 1+1 to 90% by buying a stake from investors including Kolomoisky for US$219m.

In the nine months to end-September 2009, revenue from CME’s Ukrainian channels was US$14.4m compared to US$75.5m in the same period a year earlier. The operating loss increased to US$43.9m in the same period compared to US$15.9m in the corresponding period in 2008.

CME said the deal is expected to close by end-April. Kolomoisky will pay US$30m of the total due at end-February and make a US$19m payment above the purchase price to fund the running of the TV stations until the deal is finalised.

Adrian Sarbu, president and CEO of CME, said the deal “will allow us to concentrate on our existing operations in the European Union and EU accession countries.” He added: “The sale will provide us with greater operational and strategic flexibility, increase our liquidity and sharpen our focus on developing our broadcasting, internet and content business.”

Kolomoisky, a CME shareholder, will take control of the 1+1 free-to-air channel and Kino, its pay-TV sibling. As well as his media interests, Kolomoisky is the majority shareholder of PrivatBank, one of the largest banks in Ukraine, and is also a major investor in Ukrnafta, the Ukrainian oil and natural gas company.

CME stock immediately jumped on reporting of the deal. The company is 31% owned by US media giant Time Warner.