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NEW YORK Flush with cash, Time Warner is taking advantage of the downturn in Central and Eastern Europe to step up its game in a region that many still see as having solid longer-term upside.
The conglomerate said Monday that it would spend $241.5 million to take a stake of about 31 percent in Central European Media Enterprises, a broadcaster focused on the Central and Eastern European markets.
The transaction comes after the media giant received $9.25 billion as part of a spin-off of TW Cable in the coming days that will allow it to focus on its content businesses.
It also comes at a time when parts of Central and Eastern Europe are reeling from the global recession. Analysts said TW looks set to buy into the company at a low to get into a market with a good longer-term growth profile.
In a separate deal, TW’s Warner Bros. and the European firm have agreed to form a partnership to launch and operate new thematic TV channels in current territories, some of which will be Warner Bros. branded. The channels will feature international films and TV series, including titles from Warner Bros.’ library.
“This transaction with is a unique opportunity for us to invest in — and partner with — one of the leading media companies in Central and Eastern Europe,” TW chairman and CEO Jeff Bewkes said. “While the region has been experiencing the impact of the global economic crisis, we believe [the European broadcaster] is ideally positioned over the long term as Central and Eastern Europe returns to significant growth and the media sector in these countries continues to evolve.”
The firm operations in Bulgaria, Croatia, the Czech Republic, Romania, Slovakia, Slovenia and Ukraine and predicts deterioration in television ad spending in all its markets this year thanks to macroeconomic factors. On Monday, the broadcaster projected Q1 revenue of $135-145 million, a year-over-year decline of about 35 percent.
