CME’s Garin

June 2006

By Anna Carugati

When Ronald Lauder
founded Central European Media Enterprises (CME) in 1994, he believed that
people living in former Soviet block countries, who had known nothing but
state-run television, were ready for TV stations that offered independent news
and compelling programming. His vision paid off. Today CME operates TV Nova in the Czech Republic; TV Markíza
in the Slovak Republic; Pop TV
and Kanal A in Slovenia; Studio 1+1 in Ukraine; Pro TV, Acasa TV and Pro Cinema
in Romania; Nova TV in Croatia
and the sports channel Galaxie in the Czech and Slovak Republics. Together
these stations reach some 90 million people and nearly every one is the market
leader in its country. CME’s CEO, Michael Garin, talks about the stations’
success.

WS: Over the past several years,
CME’s stations have consistently performed well. What has spurred their growth?

GARIN: Our stations continue to be
extremely successful in maintaining and expanding their positions as the
number-one stations in each of their markets, with the exception of Croatia. In
Romania, Slovakia and the Ukraine, the markets themselves are growing at an
incredibly rapid rate, in addition to the stations’ strong performances. And we
continue to be scrupulous about managing our costs. So our margins remain high
as well as our revenues.

But there is another thing about CME, which is really important to
emphasize. CME is a diversified portfolio. This year Ukraine and Romania are
performing very well, but three years ago Romania was losing money. It’s
fantastic to have such a broad [group of assets]. One station is always doing
well, and another is always doing a little less well. Fortunately, the ones
that are doing very well are gaining more than some of the ones that might be
doing less well.

WS: What are your plans for Nova TV in Croatia?

GARIN: It’s a classic broadcasting
challenge—we have to build our audience share to a level that will give
us an appropriate advertising share. Unlike any of our other stations, we’re
[still] building Nova TV. All
the CME stations once
looked like Nova TV does today.
It has shows that get 50-percent audience shares. Its news is highly respected
and gets very good ratings. We are demonstrating that as we build Nova TV’s schedule program by program.
Obviously, not every new program works, but most of our programs are getting
the shares we need. This gives us the confidence that we will reach the goal
that we set for ourselves and the expectations that were set for investors to
reach breakeven by December 2007. And we think we are on track to do that.

WS: News and current-affairs programs
are very important for all your stations.

GARIN: We have really distinguished
ourselves. One of the things I am most proud of is that during the recent
parliamentary elections in the Ukraine, our station was clearly the most
objective and most watched news source in the country. Every other news source
was in one way or another influenced or affiliated, either surreptitiously or
overtly, with political parties. So we were the only source of news that was
seen as independent and the most trustworthy. I always say—it’s not very
original but it’s an axiom of broadcasting—if you start the night with
viewers, you have a better chance of having them with you at the end of the night. That is why news is so critical.

WS: Does news drive prime-time
viewing at your other stations?

GARIN: At all of our stations it’s our
highest priority.

WS: Are there plans for launching
stations in other countries?

GARIN: More important than launching
other stations, our focus is on our multichannel strategy. This is exemplified
by Romania, where we currently have the number-one TV network and also cable
channels. Our leading cable channel, Acasa, is so successful that even though
it reaches a little under 60 percent of the homes—because that is the
cable penetration—it’s the number-three channel and sometimes the
number-two channel.

And that is our strategy everywhere. We have announced the purchase of
channels in the Ukraine. We have announced our intention to launch cable
channels in the Czech Republic. We already have the Galaxie sports channel in
the Czech and Slovak Republics. We have two terrestrial networks in Slovenia.
We are executing a multichannel strategy in every country but Croatia.

WS: How does that pay off with
advertisers?

GARIN: We are able to package our
stations. It’s a wonderful opportunity for advertisers because our main
stations are tent poles in their markets and they provide reach. Our cable
channels are more demographically focused and can provide targeted audiences.
So it’s the ideal marriage.