CME Enters Bulgarian Market

HAMILTON, July 29: Central
European Media Enterprises (CME) is acquiring an 80-percent interest in two
Bulgarian channels—one terrestrial, one cable—for about $172
million.

The deal with Top Tone
Media Holdings for TV2 and Ring TV expands CME’s Central and Eastern European
footprint, building on a portfolio of assets in Croatia, Czech Republic,
Romania, Slovakia, Slovenia and Ukraine.

As part of this agreement,
CME will also enter into a consulting agreement with Krassimir Guergov, a media
entrepreneur in Bulgaria who will continue to advise on the development of TV2,
Ring TV and other broadcast assets. Following the closing of the transaction,
Top Tone Media will have a put option to sell its 20-percent interest in the
business from the fifth anniversary of the closing at a price based on an
agreed valuation. CME has the right to call a 14-percent interest from the
fifth anniversary of the closing.

"This acquisition is
an important next step in the continuing expansion of our free-to-air
broadcasting operations in Central and Eastern Europe,” said CME’s CEO, Michael Garin. “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 multichannel business model. We look forward to entering Bulgaria,
which has a dynamic economy and a rapidly growing television advertising
market."

CME’s COO, Adrian Sarbu,
added: "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."

TV2 launched in November
2007 and is one of three private, national terrestrial broadcasting serving Bulgaria,
alongside a state broadcaster. The market generated $168 million in net TV
adspend last year, with a compound annual growth rate of 20 percent forecast
between 2008 and 2012.

—By Mansha Daswani