Broadcast group Central European Media Enterprises (CME) has seen first quarter revenues plummet and losses widen as the company’s moves to increase advertising rates in the Czech Republic met with resistance among media buyers and advertisers.
CME posted net revenues of US$137 million (€105 million) for the quarter, down from US$167.4 million for the same period last year. Operating income before depreciation and amortisation went into the red, with negative OIBDA of US$20.7 million compared with positive US$14.1 million for the same period last year. CME posted an operating loss of US$35 million, compared with US$10.3 million in 2012. Net losses widened to US$109 million from US$13.8 million last year.
Despite the negative results, president and CEO Adrian Sarbu said that CME would continue with its pricing decisions in the Czech Republic, as it attempts to stem the decline in the value of TV advertising across its markets.
“2013 is a year of bold actions to restore the value we receive for our products. We raised advertising prices and carriage fees. The first quarter results reflect the initial phase of implementing these actions,” said Sarbu. “While successful in most of our countries, we met some resistance from certain media agencies and advertisers in the Czech Republic where consumption of GRPs declined, impacting our revenues and OIBDA. Our pricing actions in the Czech Republic and across our region will continue as we are determined to reverse the trend of declining TV advertising spending. The proceeds we look to raise from the equity offerings announced today will enable us to further execute our strategy and deleverage. Post transaction we expect to have the resources in place to accomplish our main goal: growing CME.”