* CEO says holding onto cash until recovery steady
* CME confident in outlook, guidance
* Focused on organic growth, home markets
By Jason Hovet
PRAGUE, May 7 (Reuters) - Television group Central European
Media Enterprises (CME) <CETV.O> <> will hold on to its
cash reserves and not look at acquisitions until it sees a
steady recovery in advertising markets, the company's chief
executive said.
In an interview at CME's Prague headquarters, Adrian Sarbu
said he was confident in the group's new, lowered outlook and
guidance, which was worse than the market had expected and sent
the stock 21.3 percent down on Wednesday. []
Sarbu said CME would hold its cash position, which was
reported at $494.4 million at the end of March.
"With the situation in our markets in the first and second
quarters, until we will see a steady recovery we will not touch
our cash reserves," Sarbu said late on Thursday. "We want to be
protected until we see the markets coming back."
"Today we plan to operate as efficiently as possible to get
out of the crisis, to grow organically because that does not
require high costs. And once things take off, we'll look around
and see what the opportunities are," he added.
The group is not in Poland, central Europe's largest economy
and the only one on the continent to stay out of recession last
year. Sarbu said the country was not a target because there was
too much established competition there.
CME, partly owned by Time Warner <TWX.N> and U.S. investor
Ronal Lauder, has battled declining spending on TV ads since the
financial crisis swept through its once booming markets at the
end of 2008 and pushed ad spending 30 percent lower last year.
That leaves a lot of ground to recover, and CME has said ad
spending would not return to pre-crisis levels until 2012. Sarbu
said the recovery just needed to gain some momentum.
"Once (ad) spending will take a little bit of speed, then it
will take off substantially, whether that will be in the fall or
next year," he said.
SEES H2 GROWTH
The company, which operates in six central and eastern
European markets, sees a second half rebound in advertising
spending to compensate for a continuing decline in the first
half, leaving markets flat overall for the whole year.
"The outlook and the guidance represent our strong view
today," Sarbu said. "Definitely we hope that we will see an
upside... We have the full potential to capture any upside on
the market."
The outlook for flat ad markets in the whole of 2010
surprised many analysts who had counted on guidance given in
October that expected 2 to 6 percent ad market growth.
CME also said on Wednesday it expected to earn $790 million
to $820 million in revenue in 2010, up from $714 million last
year but lower than many analyst forecasts.
CME exited loss-making Ukraine operations this year, and
last month closed a $413 million acquisition of Bulgaria's bTV.
Sarbu said would now focus on its home markets, where
Bulgaria could become the third largest behind the Czech
Republic and Romania.
(Editing by Karen Foster)
