Central European Media Enterprises Ltd. (CME) has entered into agreements to acquire from Top Tone Media Holdings Limited an 80 percent interest in two Bulgarian television channels: the TV2 channel, a national terrestrial network launched in November 2007, and Ring TV, a sports cable channel.

 

Total consideration is expected to be about $172 million, before adjustment for debt and working capital as well as a holdback to cover potential undisclosed liabilities. Closing is expected to occur within two weeks.

 

TV2 is a start-up network with a 70 percent technical reach. TV2 was launched in November 2007 and is one of three private national free-to-air networks serving Bulgaria in addition to a single state-owned channel.

 

The Bulgarian net television advertising market was about $168 million in 2007 and is forecasted to experience a compound annual growth rate of 20 percent between 2008 and 2012. Bulgaria acceded to the European Union in 2007 and has a total population of 7.6 million, with 70 percent living in urban environments.

 

CME, in connection with this acquisition, would also enter into a consulting agreement with Krassimir Guergov, a well-known media entrepreneur in Bulgaria who will continue to provide his expertise and advice for the development of TV2, Ring TV and the other broadcasting properties of CME in Bulgaria.

 

"This acquisition is an important next step in the continuing expansion of our free-to-air broadcasting operations in Central and Eastern Europe. Our entrance into the Bulgarian market represents the first new CME territory in three years and demonstrates our ability to continue our growth strategy within the region. The TV2 Group, with a core free-to-air national network and supporting assets such as niche cable channels, is an exceptional fit with our multi-channel business model. We look forward to entering Bulgaria, which has a dynamic economy and a rapidly growing television advertising market," said Michael Garin, CME's chief executive officer, in a statement.

 

Adrian Sarbu, CME's Chief Operating Officer, commented, "Bulgaria represents an excellent opportunity for CME. The Bulgarian TV market is dominated by a few key players and I firmly believe in CME's ability to achieve market leadership within the next five years. This target is achievable through the development of local programming, use of synergies with our Romanian operations and leveraging our existing proven skills and knowledge base. This acquisition is another milestone in our strategy to expand throughout Central and Eastern Europe."

 

CME is a TV broadcasting company with networks in six Central and Eastern European countries reaching an aggregate of about 90 million people.