Time Warner Buys CME Stake

HAMILTON/NEW YORK: Time Warner is investing $241.5 million for a 31-percent interest in Central European Media Enterprises (CME), while Warner Bros. has inked a separate deal with the company to launch thematic TV channels in Central and Eastern Europe.

Time Warner will receive 19 million newly issued CME common shares, consisting of 14.5 million shares of Class A common stock, at a price of $12.00 per share and 4.5 million shares of Class B common stock at a price of $15.00 per share. CME’s founder and non-executive chairman, Ronald S. Lauder, will be allowed to vote Time Warner’s shares of CME for at least four years, subject to certain exceptions. Lauder has also pledged to support Time Warner’s appointment of two of its designees to CME’s board of directors. The closing of the investment is subject to a vote of CME’s shareholders—Lauder has already committed to voting his shares in favor of the deal—and certain regulatory approvals. The deal is expected to close before the end of the second quarter.

“I’m confident that this alliance with Time Warner will accelerate CME’s future development and take it to levels I could only dream of fifteen years ago," Lauder said. "The combination of CME’s market-leading positions and Time Warner’s brands will enhance the prospects of both companies as we work together.”

Time Warner’s chairman and CEO, Jeff Bewkes, noted: “This transaction with CME is a unique opportunity for us to invest in—and partner with—one of the leading media companies in Central and Eastern Europe. While the region has been experiencing the impact of the global economic crisis, we believe CME is ideally positioned over the long term as Central and Eastern Europe returns to significant growth and the media sector in these countries continues to evolve. The investment advances our strategy to create, package and deliver high-quality programming on multiple platforms globally, while also meeting the financial requirements we use to assess possible investments. We believe this transaction will create value for the shareholders of both companies as we work with CME’s talented management team to achieve their business’s full potential over time.”

Separately, Warner Bros. and CME are partnering to launch and operate new thematic television channels in current CME territories. These channels, some of which will be Warner Bros. branded, will feature international films and television series, including titles from Warner Bros.’ library.