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Central European Media Enterprises (CETV)
Q4 2010 Earnings Call
February 23, 2011 9:00 am ET
Adrian Sarbu - Chief Executive Officer, President and Director
David Sach - Chief Financial Officer and Executive Vice President
Romana Wyllie - Vice President of Corporate Communications
Anthony Chhoy - Senior Vice President of Strategic Planning & Operations
Vivek Khanna - Citi Global
Vijay Singh - Janco Partners, Inc.
Ajay Agrawal - Nomura Securities Co. Ltd.
David Kestenbaum - Morgan Joseph TriArtisan LLC
Previous Statements by CETV
» Central European Media Enterprises CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Central European Media Enterprises Ltd. Q2 2010 Earnings Call Transcript
» Central European Media Enterprises Ltd. Q4 2009 Earnings Call Transcript
Before I turn to Adrian, let me read the usual Safe Harbor Statement. Our presentation today will contain forward-looking statements. For these statements, we claim the protection of Safe Harbor contained in the U.S. Private Securities Litigation Reform Act of 1995, and refer you to the Forward-looking Statements section in our Form 10-K filed with the Securities and Exchange Commission earlier today for a list of such statements and the factors which could cause future results to differ from those presented in this call.
During this call, we will refer to certain financial information that is not in U.S. GAAP. Please see the appendix to the presentation for a reconciliation to U.S. GAAP financial measures. In addition our segment financial information that is presented in local currency is not in U.S. GAAP. We do not provide reconciliation to these numbers as the U.S. GAAP amounts are expressed in U.S. dollars in our financial statements. Additional information on our segment data is provided in Note 17 to our financial statements on page 120 of our 10-K. And now over to Adrian.
Good afternoon and good morning. 2010 was a difficult year, but the trend in our markets in the fourth quarter shows the end of the crisis in our region. From this perspective, 2011 looks today less challenging than the previous two years. In the very difficult year of 2010, when our TV advertising markets continued to decline, we did our best. CME full-year OIBDA for 2010 was $107 million. Let me remind you that in 2009, we reported OIBDA of $75 million. Our 2010 results reflect the benefits of restructuring our business, the sale of our Ukrainian operation and the acquisition of the bTV group in Bulgaria.
2010 was our first year of full operation of a vertically integrated media company. We now have leading broadcast operations in six countries, an integrated media division, Media Pro Entertainment; and the growing New Media division. We offer 23 channels to an audience of almost 50 million emerging market consumers.
In September, we successfully refinanced our term loan in the Czech Republic. At the beginning of this year we exchanged $206 million of our convertible notes due 2013, thus improving our maturity profile. We finished the year with a liquidity of almost $350 million. We see important that our fourth quarter results reflect the continued trend towards recovery in our markets. How do we see 2011? We expect growth across all our markets. We expect prices to return to 2008 levels over the next two years. As demonstrated in the past, we have high operating leverage and rigorous cost discipline, which will enable us to expand our margins as the recovery of TV ad spending progresses. And last but not least, our priority is to deliver positive free cash flow in 2011. And now over to David, who will give you an overview of the fourth quarter macroeconomic indicators and our consolidated performance.
Thank you, Adrian. Please turn to Slide 5. In the fourth quarter of 2010, we saw TV advertising market growth of 17% in Slovenia, 10% in the Czech Republic and 1% in Croatia. Overall, our markets were flat with these increases offset by declines in Bulgaria, Romania and Slovakia. We expect all of our markets to grow in 2011. During the period when our markets were in decline, we grew our overall market share, putting us in a strong competitive position for 2011. Overall, including bTV, we increased broadcast revenues by 6% for the full year on a constant currency basis compared to a market decline of 4%, and we grew our broadcast revenues by 14% for the fourth quarter in flat markets. We are confident of continuing to outperform the markets in 2011. Please turn to Slide 6.
As a reminder, our consolidated continuing operations exclude the results of our former Ukraine business sold in April 2010. The sale of this business eliminated $40 million of OIBDA losses incurred in 2009. The headline for the 2010 results is that costs were flat on a like-for-like basis. Consolidated revenues for 2010 increased by 8% at actual exchange rates, or 11% on a constant currency basis, to $737 million. All three segments increased revenues, driven by the bTV acquisition in April 2010 and the Media Pro Entertainment acquisition in December 2009. Total costs increased by 11% to the actual rates, or 15% on a constant currency basis, primarily driven by these acquisitions and investments in new channels. Excluding these investments, costs were flat.