BUDAPEST — U.S.-backed Central European Media Enterprises (CME), one of the hottest broadcast players on the Euro scene, may be losing some of its sizzle. The company said late last week that it will write off part of its Hungary cable channel TV3, and will freeze financial support of its Polish network TVN.
Central European Media’s troubles with its Polish and Hungarian interests represent a serious setback for the Bermuda-based media investment company in Eastern Europe’s two most advanced broadcast markets.
In Hungary, the company will write off $5.9 million in asset value of TV3 and another $11 million for the station’s programming library.
In a bid to reduce TV3’s mounting losses — the network recorded a U.S. $1.45 million deficit for the first half of 1998 — CME announced that the station will become a niche channel and will discontinue its attempt to compete with the Magyar terrestrial networks TV2 and RTL Klub as a general-entertainment broadcaster.
In Poland, TVN — which CME minority owns after investing approximately $80 million in the network’s startup 10 months ago — had its licensed revoked by Poland’s Supreme Administrative Court (NSA) in May because of violations by the nation’s TV regulatory council (the KRRiTV) when it granted it a license two years before.
In addition, TVN, also owned by Warsaw-based entertainment conglomerate ITI Holdings, has failed to fulfill ratings expectations.
These announcements come on the heels of other financial setbacks for CME:
- Its share price has fallen 63% on the Nasdaq stock exchange; Standard & Poor’s recently downgraded CME’s corporate rating to negative due to its heavy losses and the difficulties it may experience in meeting interest payments. (The CME Group incurred losses of $53.6 million during the first half of 1998, compared to a loss of $41.8 million during the first six months of 1997.)
- In addition, CME’s Hungarian flagship, cable station TV3, has also failed to seize a sizable audience share despite the network’s competitive program schedule, largely made up of U.S.-made sitcoms and series such as “Melrose Place,” “Chicago Hope” and “Dynasty.” (TV3’s average share rarely surpassed 15%, and often hovered between 4% and 6% for viewers between the ages of 18 and 49.)