Central European Media Enterprises Management Discusses Q2 2012 Results - Earnings Call Transcript

| About: Central European (CETV)

Central European Media Enterprises (NASDAQ:CETV)

Q2 2012 Earnings Call

August 01, 2012 9:00 am ET

Executives

Romana Wyllie - Vice President of Corporate Communications

Adrian Sarbu - Chief Executive Officer, President and Director

David Sach - Chief Financial Officer and Executive Vice President

Anthony Chhoy - Executive Vice President of Strategic Planning and Operations

Daniel Penn - Executive Vice President, Secretary and General Counsel

Analysts

William H. Smith - Jefferies & Company, Inc., Research Division

Tim Hamby - Janco Partners, Inc., Research Division

Vivek Khanna - Deutsche Bank AG, Research Division

Pavel Ryska - J & T Banka, A.S., Research Division

Daria Fomina - Goldman Sachs Group Inc., Research Division

Operator

Hello, my name is Zack. I will be your conference operator today. At this time, I would like to welcome everyone to the Central European Media Enterprises Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, August 1, 2012.

It is now my pleasure to turn the floor over to Romana Wyllie, Vice President of Corporate Communications. Ms. Wyllie, you may begin your conference.

Romana Wyllie

Thank you. Good morning, good afternoon or [Romanian] to each of you, and welcome to CME's Second Quarter 2012 Investor Conference Call. We are broadcasting our earnings call via a video webcast to enable you to see the management in action. You can join us via the link on our homepage, www.cme.net. There, you can also download the presentation slides, which we will refer to during this call. You can find them on our homepage on the left side.

The participants of today's call will be CME's President and Chief Executive Officer, Adrian Sarbu.

Adrian Sarbu

Good afternoon and [Romanian].

Romana Wyllie

Chief Financial Officer, David Sach.

David Sach

Good afternoon.

Romana Wyllie

Anthony Chhoy, Executive Vice President, Strategic Planning and Operations.

Anthony Chhoy

Good afternoon.

Romana Wyllie

And our General Counsel, Daniel Penn.

Daniel Penn

Good day.

Romana Wyllie

Before I turn to Adrian, let me read the usual Safe Harbor statement. Our presentation today will contain forward-looking statements. Actual results may vary materially from those expressed or implied due to various factors. These factors are discussed in detail in our SEC filings, including the Form 10-Q filed earlier today and posted on our website.

During this call, we will refer to certain financial information that is not in U.S. GAAP. Please see the appendix to the presentation and Note 16 to our financial statements in our Form 10-Q for a reconciliation to U.S. GAAP financial measures. And now please turn to Page 4 of our presentation, and I will pass you over to Adrian.

Adrian Sarbu

Thank you, Romana, and good morning and good afternoon, everyone. In the second quarter of 2012, we reduced our debt by $185 million, with support from our major shareholders, Time Warner and Ronald Lauder. Deleveraging was highly expected and demanded by our investors and the recent actions are a part of a process that will continue in the future. Time Warner now holds 49.9% of CME. This is a signal of confidence.

Advertising markets were tough in the first half of the year. Spending declined by 7% driven mostly by microeconomic fears. Although the amount of GRPs sold was close to the same period of last year, advertisers were tempted by low quality inventory provided by our competitors at significant discounts.

We do not believe that low quality GRPs can meet the communication needs of our clients. We are the only ones able to offer advertisers the reach and demographic quality needed to support their sales.

Despite the decline in advertising markets in the first half of the year, we maintained our undisputed audience and market share leadership in broadcasting. This was, and is, our priority. Our actual revenues were affected by affected depreciation but in constant currencies, they were flat year-on-year with growth in media entertainment and New Media.

We continue to expand our content offer with 3 new TV channels and 2 new linear internet channels and the growing number of TV and Cinema rating boosters. Voyo became a leader in the subscription video-on-demand segment in our region. CME is now better-positioned to face the challenges of the market with a simplified capital structure, stronger balance sheet, unique business model and potential for organic growth.

David will now walk you through the macroeconomic situation in our region.

David Sach

Thank you, Adrian. Please turn to Slide 5. Our overall real GDP growth in our markets was flat in the second quarter 2012, similar to the first quarter but lower than the full year of 1.8% in 2011. Private consumption was also flat, similar to the first quarter and the full year of 2011. GDP has been impacted by a slowdown in export growth since 2011 and private consumption continues to be affected by ongoing government austerity measures in our region.

Despite flat private consumption, we have seen the TV advertising markets decline by 5% in the first quarter and 8% in the second quarter. We think that uncertainty about the global economic outlook, exacerbated by the Greek and Spanish sovereign debt crises, made advertisers especially cautious towards the end of the second quarter. We believe that advertises, and mainly the large multinational companies, feared that the situation in Europe could deteriorate rapidly, forcing exports to contract shortly in our countries, impacting private consumption.

As Adrian stated, advertisers reacted by switching to lower quality GRPs, which we think is not sustainable. Consensus forecast of GDP and private consumption growth indicate that they will both stay relatively flat for the second half as exports and government austerity measures remain unchanged.

Since the macroeconomic situation in Europe and our region does not look to be severely deteriorating as previously feared, and many key clients have recently expressed their intention to honor their annual spending commitments, we believe that the trend of spending in the second half will improve compared to the first half. However, confidence in the recovery remains fragile and therefore, the TV advertising markets are still likely to decline in the second half.

Moving to Slide 6. On a constant currency basis, our consolidated net revenues decreased by 2% in the second quarter in the TV ad market that declined by 8%. We achieved significant growth in non-advertising revenues to offset the lower advertising revenues in the Forecast division.

Foreign currency has had a significant impact in our results. Our currencies have depreciated against the U.S. dollar, close to 13% year-on-year. Consequently, consolidated revenues decreased by 15% at actual exchange rates. At actual rates, our costs were lower by 12% compared to the second quarter last year.

On a constant currency basis, overall costs were slightly up as a result of higher Media Pro and New Media costs needed to drive the revenue growth in these divisions. OIBDA the second quarter decreased by 11% to constant currencies compared to the same period last year, representing a 25% decrease at actual rates.

Although we kept our broadcast constant, we were unable to fully offset the lower revenues. Adrian will now present the Q2 operational highlights for our Broadcast division.

Adrian Sarbu

I invite you to turn to Slide 7. In all our markets, we continue to be the undisputed audience leader and generated the majority of the advertising inventory.

In the second quarter, in certain markets such as the Czech Republic, our audience share was impacted by global sports events. In April, we launched a second female channel, Acasa Gold in Romania, and we added a male channel, Fanda in the Czech Republic, matching the expectations of the audience in these 2 countries.

We will continue to invest in local content, programs or channels in order to satisfy the increased demand of our viewers. Market shares were solid and stable at 63%, ranging from 49% in Croatia to 78% in Slovania. David?

David Sach

Turning to Slide 8. Our broadcast segment reported a decrease in net revenues of 8% in constant currencies. As Adrian just indicated, we maintained our overall market share leadership at 63%. This decrease in net revenues was attributable to the 8% drop in the TV advertising markets across the region. At actual rates, the decrease in our net revenues was 20%.

Broadcast costs were down by 14% at actual rates, which was a slight decrease at constant currencies. Despite rising industry costs, our broadcast expenses have now gone down for several consecutive years, reflecting the strong control we have over all our costs. Keeping costs relatively flat going forward will provide us with tremendous operating leverage when our markets recover.

Broadcast OIBDA for the quarter was $51 million, representing a decrease of 23% on a constant currency basis or 34% on a reported basis compared to the same period last year. And now back to Adrian.

Adrian Sarbu

Let's move to Slide 9 and let me point to a few highlights from our Content division, Media Pro Entertainment. The growth of Media Pro Entertainment has proven the validity of our business model, one content multiple distribution.

Every quarter, we have reported growth in third-party revenues. Media Pro Entertainment also delivered to our channels a number of blockbusters with outstanding performance. The new season of Rose Garden Medical in the Czech Republic, Home Wars in Bulgaria, Lara's Choice in Croatia, Helena in the Czech Republic, Las Fierbinti in Romania and Only Love in Slovakia.

Some of our reality entertainment shows delivered record prime time audience share such as the X Factor in Slovenia, The Farm in Slovakia, Wife Swap in the Czech and Slovak Republics, Got Talent and Master Chef in Romania. David?

David Sach

Please move to Slide 10. Media Pro Entertainment delivered a revenue increase of 23% to constant rates or 4% at actual rates. The acquisition of Bontonfilm helped expand our third-party revenues, which were up by 50% in the second quarter compared to the same period last year.

Third-party revenues now account for over 46% of total Media Pro segment revenues. Costs increased by 12% in constant currency terms mainly as a result of the Bontonfilm acquisition. At actual rates, costs fell by 5%.

Media Pro's OIBDA reached $5.4 million, which was significantly higher than the $0.8 million in the comparative period last year. Adrian?

Adrian Sarbu

Thank you, David. Please turn to Slide 11. Voyo established a leading position in the subscription video-on-demand segment in our region. At the end of the second quarter, we had over 78,000 subscribers enjoying local content produced by us, as well as a acquired foreign titles and sporting content.

During the quarter, we launched a linear channel, Voyo cinema in all our countries. We will continue to enlarge Voyo library and add new products in subscription services. Voyo is currently available on PCs, tablets and Internet-connected TVs and is aiming to reach every TV set in the 20 million households in our region. Voyo remains the #1 growth priority of CME. You'll hear more good news in the next quarters.

Our website traffic grew 20% year-on-year and attracted 12.6 million visitors per month. We launched 2 linear internet channels, Pro TV News and Nova News, and new sites and portals in all our countries. These are steps on the road to expanding our new media leadership to all our markets. David?

David Sach

Thank you, Adrian. Please turn to Slide 12. Our New Media segment increased net revenues in the second quarter by 31% at constant currency or 13% at actual exchange rates. This result was achieved in an Internet advertising market that decreased by 1% during the quarter.

These results were driven by the successful introduction of Voyo, making New Media our fastest-growing segment. New Media costs grew in line with revenues. The increase was primarily due to the cost of expanding the subscription base of Voyo in all our territories.

We reported an OIBDA loss of $0.8 million similar now to that of the corresponding period last year. This was a period of investment in content and new products. We will see the benefits in the quarters to come.

Please move to Slide 13. We completed our deleveraging transaction with Time Warner and Ronald Lauder on July 3. As Adrian mentioned at the beginning, this transaction enabled us to reduce our debt by $185 million by repaying $109 million of our 2013 notes and $76 million of our 2014 notes.

This significantly improved our short term maturity profile, such that we have no major maturities until May in 2014. Upon completion of the transaction, we improved our net leverage ratio to 6.6x based on forecasted OIBDA and we reduced our annualized interest cost by $6 million. We continue to look at deleveraging opportunities and are still targeting a median term leverage ratio of 4x when our markets start to recover.

Our liquidity at the end of the second quarter was $140 million, which was impacted by our negative free cash flow of $59 million. The lower free cash flow compared to last year is mainly a result of the advance collection plan put in place in the first quarter of 2011, which was not repeated in 2012. As such, our negative free cash flow this year is more in line with the seasonal nature of our business.

We expect the negative working capital movement of $20 million to fully reverse by year-end, helping us to achieve our target of positive free cash flow to the full year. I now turn you over to Adrian for final remarks.

Adrian Sarbu

Let's move to Slide 14 and talk about our outlook for 2012. We have a powerful business model, which enables us to face adverse market conditions and exploit any growth opportunities. The main priority is expanding our sales from advertising to paid content.

We will focus on maintaining our audience and market share leadership with controlled costs. Leadership is a key component of our pricing model. Media Pro Entertainment will grow with an emphasis on third-party leverages. Voyo would expand its content library and distribution means in order to rapidly grow subscription.

We are targeting positive free cash flow for the full year and we will continue to look for the best options to deleverage and refinance our debt.

For the full year, our outlook in local currencies remains unchanged. Due to a depreciation of our currencies, our guidance for OIBDA in U.S. dollars is now between $150 million to $160 million, assuming current exchange rates do not change.

And now I will pass you back to Romana.

Romana Wyllie

Thank you, Adrian. That concludes the formal presentation. We are now going to move to the Q&A. So operator, please open the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And now I hand you back to Ms. Wyllie.

Romana Wyllie

Thank you, Zack. The first question comes from Will Smith from Jefferies. Will?

William H. Smith - Jefferies & Company, Inc., Research Division

Just a couple questions. Firstly, I was just looking through the press release, on the gross debt number that you've got in the balance sheet on that, indicates that the gross debt number has gone down $108 million. So I was just wondering about the discrepancy between the $108 million and the $185 million figure discussed on a headline basis?

David Sach

No, there shouldn't be any discrepancy. In the press release, you're going to get actual numbers, at actual exchange rates, which obviously affects the debt from 1 quarter to the next, whereas the $185 million is obviously done at constant rates.

William H. Smith - Jefferies & Company, Inc., Research Division

I guess, if I'm just looking at the current portion of long-term debt, that's moved from 1-0-8-5 (sic) [$185 million], to 1-1-5-8-3, and then the long-term portion, seeing a bit of a decline there as well, but I guess those 2 numbers don't seem to reconcile. What else do we need to be taking into consideration on the balance sheet then to make that add up?

David Sach

Sure. The transaction wasn't completed until July 3. So when we give you the $185 million, okay, that included us repaying the amount owed to Time Warner that's in short-term liabilities of $111 million, or whatever it was, which comprised $91 million to Time Warner and $20 million or so of the remaining 2013. So you have to take that $91 million into account.

William H. Smith - Jefferies & Company, Inc., Research Division

Okay. Makes sense. And then I guess one more question. You've obviously seen a decline in CapEx since year-on-year. Is that on a one-off basis or is that sustainable? Can you talk a little bit about what the initiatives you put in place to achieve that?

David Sach

Yes. As I mentioned in my speech, we are still targeting a working capital, positive working capital for the full year and if we can continue to keep CapEx on that lower trend than last year, then obviously, that will help us meet that full-year cash flow target, so hopefully, that trend will continue through efficient purchasing of our CapEx so on and so forth.

Romana Wyllie

Okay. Thank you, Will. Next question comes from Tim Hamby from Janco partners.

Tim Hamby - Janco Partners, Inc., Research Division

Got a couple questions on Media Pro and New Media. I wanted to see where you think the programming expenses are going to go for the Voyo platform as you continue to add content there. And also, I wanted to see if the strong OIBDA that you saw out of Media Pro in the quarter was something that's sustainable or if this is more of a onetime phenomenon here?

Romana Wyllie

Anthony Chhoy will answer.

Anthony Chhoy

Tim, just on the Voyo, in terms of the content costs there, we utilized a lot of our local contents, which is already owned and produced by Media Pro, so with that respect, the content cost increases from the local component is not going to be significant. The other area that we're looking at doing is to also expand our Voyo library, so we'll have some foreign or acquired content as well, so that would increase slightly but not to the substantial increase that we -- to drive the subscriber growth at all.

Adrian Sarbu

I want to add something, Tim. The model which we set for Voyo is quite disciplined in respect of assuming costs related to revenues. As we can drive the subscription with our content, we will add as much content from external providers, as we'll be sure will be covered by revenue. So generally, the model of Voyo is a little bit conservative in this time of -- in these times. And it starts from capacity of generating revenues and then we allocate a certain portion of costs, programming costs, which will be committed. So the cost of programming will not affect the bottom line of Voyo, if this was the question.

Tim Hamby - Janco Partners, Inc., Research Division

Okay. I got you. That's helpful. And then on the Media Pro, OIBDA in the quarter, is that something you think you're going to be able to maintain?

Romana Wyllie

Anthony?

Anthony Chhoy

What I think we've shown that in the second quarter, we've increased the OIBDA, I think it's to $5.4 million, so it's a big increase versus the prior year. And this was largely attributed to Bonton, which contributed almost $1 million in OIBDA. We'll also continue to focus our efforts on the third-party revenues which gives you a more, I guess, a larger, I think, OIBDA margin on that side. And with that, coupled with the continuing improvement in the efficiencies in MP, I think we expect that to be sustainable going forward.

Romana Wyllie

Thank you, Tim. Next question comes from Vivek Khanna from Deutsche Bank.

Vivek Khanna - Deutsche Bank AG, Research Division

Just 2 questions, if I may. First of all, on working capital. I just want to get an understanding, are we to expect positive -- I mean, clearly, H1 '12 is not comparable to H1 '11 and that's been very wide, very clearly flagged. I'm just wondering on a full year basis, should we expect it to be positive or should we expect it to be neutral? And then on the second question with regards to further initiatives to take down leverage. I mean, clearly, the intention was to use $300 million. You've used $180 million to date. Time Warner is already at 49.9%. I'm just wondering if there are any other initiatives which are in process to be executed potentially before July 2013 in order to take down leverage further to your target of 5, which is now clearly at 6.6 on a pro forma basis.

Romana Wyllie

So both questions left to David.

David Sach

Yes. So yes, assume working capital will be positive, it needs to be favorable to the change last year which was, if you go back to the full year presentation, you'll see we had a very small positive working capital change last year. So yes, we expect it to be better this year in order to hit that free cash flow target. And secondly, in terms of the leverage and the initiatives, yes, we were looking to get $300 million. So obviously, we've got the $180 million, we would consider all equity linked options to get that extra $120 million to reduce the leverage.

Romana Wyllie

And Adrian will comment.

Adrian Sarbu

Now a short answer to this question, second question, Vivek, is yes.

Romana Wyllie

Thanks, Vivek. Next question comes from J&T, Pavel Ryska.

Pavel Ryska - J & T Banka, A.S., Research Division

My first question is related to your mention in your slides of the paid content that you want to expand these possibilities. Is this related only to the Internet? Or is it also a possible allowance of paid TV? So this is first question. The second question is, I remember a few quarters ago, you said on one call that the threshold of 40% prime time audience share is crucial for you to maintain your market share, but we've seen it drove below this threshold of 40% in the Czech Republic. Can you say whether, as a result, the market share is sustainable in the Czech Republic of this 66%?

Romana Wyllie

Okay. So Adrian then will answer the first question regarding the paid content revenue.

Adrian Sarbu

Yes. We are contemplating also paid channels, and we announced this in several discussions with investors and presentations in conferences. Respective of the idea of 40% audience, this is a target. This is not in every market a minimum threshold. We still believe that in Czech Republic, the healthy minimum threshold is 40%. So therefore, we are looking for the fall to restore our audience in the minimum range of 40%. You're right. In other markets, there is a different number. You could see that in Romania, with a little bit more than 30%, we have a very, very strong power ratio. Croatia is also similar. So generally, it's the first market by market. But for Czech Republic, we think 40%, it's a critical, it's a critical threshold.

Romana Wyllie

Pavel, have we responded to both of your questions?

Pavel Ryska - J & T Banka, A.S., Research Division

Yes.

Romana Wyllie

Okay. Thank you.

Operator

[Operator Instructions]

Romana Wyllie

Vivek Khanna, again. Yes?

Vivek Khanna - Deutsche Bank AG, Research Division

Just a very quick question, just on the costs side. I mean, clearly, we've seen central costs which have come down -- which have come down more in Q2 relative to Q1. And I'm just sort of wondering what we should think or how we should think of that on a full year basis, considering all the various cost-cutting initiatives which you've done. Just wondering if you could give us some sort of flavor as to how down you think those numbers could be over the course of the full year, please.

David Sach

Yes. There were some one-off costs in Q2 last year, in 2011, so I wouldn't extrapolate that whole savings there. But if you take the first half run rate of central costs, I think that should give you a decent guidance just for the full year.

Romana Wyllie

Thank you, Vivek. Next one is Oliver Harper Smith [ph] from Baxton Capital [ph].

Unknown Analyst

Just 2 quick questions, I guess, for me. In previous quarters you had mentioned, specifically in the Czech Republic market, that you had kind of held fast in your pricing sort of going into the peak seasons. I was wondering if you could comment on that just around, obviously, what you've seen given the market being down sort of 7%. And your comments around ad buyers moving to sort of cheaper GRPs and maybe comment about what that kind of reads through for the rest of the year. And then my second question was just around, again, the Czech Republic business. On the cost, it looks like they were the only business that were up. Should I think of that being related to the, I guess, the new channel launch that you mentioned in that region? And I think you said there was a new Internet launch in that region as well. Should I be thinking around those as the additional costs?

Romana Wyllie

Adrian?

Adrian Sarbu

Can you repeat the first question? I didn't understand.

Unknown Analyst

Sure. Yes. I guess on previous calls and sort of presentations, you had mentioned that in the Czech Republic, moving into the key peak seasons, you guys sort of held fast on your pricing versus competitors. I just wondered if you could maybe comment about that just sort of relative to what you had said about the market and kind of the buyers moving towards cheaper GRPs. And maybe comment on how that sort of plays through for the rest of the year and your outlook on kind of pricing versus competitors and whether you think you can still hold it at a premium or whether you've had to sort of match to some degree?

Adrian Sarbu

To give you an answer in full detail will mean that we'll disclose our pricing strategy for the second part of the year. So excuse me for giving you a general answer. We think the market will grow if we will be able to get the right price for the value, which we generate in the market, that's why we look not to discount in the second half of the year, and we'll continue to pursue this strategy. In respect of the behavior of the other -- of our competitors, it's up to them. But it's, I think, also clear that as long as our competitors will be sold out, the advertisers will look to spend more on our channels. It was not the case in the first quarter and some of the months of the second quarter. Anthony, do you want to add something?

Anthony Chhoy

Just to reiterate that in the second quarter, we know our competitors did discount heavily on that, but despite that, and also despite some of the advertisers, I think, being tempted for the lower quality GRPs, we did maintain our market share at 66%. So I think that's very important to emphasize that. And secondly, the second question on the cost in the Czech Republic, in the second quarter, our cost, our program costs were down year-on-year. However, I think it's, overall, it was up slightly, and that's as a result of the contribution to the film fund, which is 2% of our revenue.

Romana Wyllie

Oliver [ph], have we answered your questions?

Unknown Analyst

That's good.

Romana Wyllie

Okay. Thank you. Next question comes from Goldman Sachs, Daria Fomina.

Daria Fomina - Goldman Sachs Group Inc., Research Division

I have 2 questions. First one is on your debt. I acknowledge the fact that you're looking at, as you said, you're looking at various methods to decrease the leverage. But could you please perhaps narrow it down? Would you, for example, look at something, like disposing some of the minor operations in terms of the contribution to your revenue or EBITDA? Or what exactly the options you are looking at? And my second question would be on the competitive situation in Czech Republic. Do you see some -- given the pressure on earnings that you saw, and the fact that you say that you have to invest in programming the second half, do you see some structural pressure on profitability that would prevent your margins coming back to the high levels that you experienced in '08, '09?

Romana Wyllie

So the first question regarding the debt and what are the options that we are contemplating, David?

David Sach

Yes. Most of our operations are core businesses in all of the countries, as you know, either in Broadcast, New Media, or in MPE. So yes, there are some small operations that we could sell, but that's not going to reduce that debt significantly. So it will be mainly aimed at equity-type investments to reduce the debt. And obviously, and when the markets recover, OIBDA will help us delever significantly as well.

Adrian Sarbu

In respect to the second question, Daria, we cannot give you a guidance country by country, especially on our bottom line. Anthony can give you a couple of ideas about the second half of the year.

Anthony Chhoy

I mean, in the second quarter, the audience share was impacted because of the global sporting events that happened, like the Ice Hockey World Championship and also the European Football Championship, so I think the Czech team did very well. So that impacted on us. But we don't expect that I think for the 2nd half to impact the audience too drastically on that. I think our margin, OIBDA margin in the second quarter was a still very healthy 47% there, Daria. So I think Adrian already mentioned in his speech that advertisers were tempted with the low quality inventory, but we don't think this is sustainable, I think, to meet the communication needs of our clients. So we expect the behavior to change in the coming quarters and that's going to benefit us. So I think in terms of the margin deterioration, we're quite confident that we'll be able to I think sustain it at a very healthy level as we have achieved in recent quarters.

Adrian Sarbu

And in respect of maintaining our shares, I mean audience shares, we have means to stay on 40% in the second half of the year with control costs. And this includes a certain range of actions from new programs to new channels. You just saw Fanda, which was launched 1 month ago and which will show its potential in the fall.

Romana Wyllie

Okay. Thank you. Then we have Pavel Ryska, again.

Pavel Ryska - J & T Banka, A.S., Research Division

I'd I like to come back once again to the deleveraging process. My first question is, you said that you like to continue in the deleveraging process. However, we've seen that you didn't use all of the $300 million proposed from Time Warner. So can you go more into detail on your motivations for postponing the process or I mean for going piece by piece in this process? Or what are your motivations for not deleveraging more now and for waiting until maybe better conditions? And the second question is, there was this possible total of $300 million. It is it now like still a maximum, total maximum for your deleveraging efforts? Or in other words, does it mean that the maximum that you could deleverage now is the remaining $120 million?

Romana Wyllie

David?

David Sach

As we stated on the first quarter call, we were looking to get the full $300 million. So unfortunately, we weren't able to get it when the share price fell. We're, obviously, with the transaction that we did at the $180 million, that greatly improved our maturity profile, so that's given us plenty of time to think through the next steps. So think of it as a step in the process of deleveraging further, which we still would like to get to that $300 million target.

Romana Wyllie

Pavel, have we responded?

Pavel Ryska - J & T Banka, A.S., Research Division

Yes.

Romana Wyllie

Okay. Thank you. So there are no more questions in the queue. So let me thank you for joining us today. We hope that you enjoyed our video webcast [ph] and we welcome your feedback and comments.

I'd also like to remind you that you can keep up-to-date and follow our progress between the earnings call on our website, www.cme.net, or as always, I'm available for any additional questions anytime. We look forward to seeing you shortly. Goodbye.

Operator

This does conclude today's Central European Media Second Quarter 2012 Earnings Conference Call. Please disconnect your lines at this time, and have a wonderful day.

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