CME Takes Full Control of Kino

HAMILTON, December 18: Restructuring
its Ukrainian operations, Central European Media Enterprises (CME) has reached
a deal to exchange its interest in the Citi entertainment and culture network
in Kiev in order to take full control of the Kino channel.

CME currently owns 60.4 percent
in each of the Kino and Citi channels in Ukraine. The remaining 39.6 percent is
held by Glavred Media Holding and another minority partner. With the deal, CME
takes 100-percent control of Kino, which reaches 55 percent of the country, in
exchange for its majority interest in Citi and $10 million in cash. CME is also
taking a 10-percent stake in Glavred from one of its shareholders for $12
million. The transactions are expected to close in February 2009, upon
completion of due diligence of Glavred, the negotiation and execution of
definitive transfer agreements and the re-issuance of Kino's broadcasting
licenses to reflect the change of ownership.

Also in the Ukraine, CME
is establishing an in-house sales department at Studio 1+1 to sell advertising
on its channels. As such, Studio 1+1 is ending its agreement with the sales
house Video International. These moves are expected to incur a $10 million
restructuring cost.

Adrian Sarbu, CME's
president and COO, noted: "The opportunity to gain 100-percent ownership
in the Kino channel is crucial to the delivery of our strategy in Ukraine and
our ability to compete through a multichannel model. One-hundred-percent
ownership of the Kino channel will give us full control and allow us to
integrate Kino into the Studio 1+1 operations. We will be able to exploit the
common programming and operating synergies of the two channels, which will
strengthen our position in the Ukrainian market. Launching an in-house sales
team at Studio 1+1 brings our Ukraine operations into line with our other
markets."

—By Mansha Daswani