Central European Media Enterprises Ltd. Q2 2008 Earnings Call

Jul.31.08 | About: Central European (CETV)

Central European Media Enterprises Ltd (NASDAQ:CETV)

Q2 FY08 Earnings Call

July 30, 2008, 10:00 AM ET

Executives

Romana Tomasova - Director of Corporate Communications

Michael N. Garin - CEO

Adrian Sarbu - COO

Wallace Macmillan - CFO

Analysts

David Kestenbaum - Morgan Joseph

Gregory Kolb - Janco Partners

Matthew Walker - Lehman Brothers

Robert Maj - KBC Securities

Operator

Good morning. My name is Pam and I will be your conference operator today. At this time I would like to welcome everyone to the Central European Media Enterprises Second Quarter 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer period. [Operator Instructions]. It is now my pleasure to turn the floor over to your host Romana Tomasova, Director of Corporate Communications. Madam, you may begin your conference.

Romana Tomasova - Director of Corporate Communications

Good morning or good afternoon to each of you and welcome to CME's second quarter investor conference call. During this call we will refer to presentation slides which you can download from our website www.cetv-net.com. You can find them on our homepage at the bottom left corner. We hope that you will find these slides useful.

The participants of today's call will be Michael Garin, Adrian Sarbu, and Wallace Macmillan, who will give you the formal presentation. We are also joined today by our General Counsel, Daniel Penn as well as Marina Williams who will be available for questions.

Before I turn to Michael, let me read the usual Safe Harbor statements. Our presentation today will contain forward-looking statements. Through these statements, we claim the protection of the Safe Harbor contained in the US Private Securities Litigation Reform Act of 1995 and refer you to the forward-looking statements section in our Form 10-Q filed with the Securities and Exchange Commission earlier today for a list of such statements and the factors which could cause future results to differ from those presented in this call.

During this call, we will refer to our segment financial information. These are non-U.S GAAP numbers. However, reconciliation to our U.S. GAAP numbers is provided in note 16 to our accounts on pages 34 to 38 of our 10-Q. In the course of this call, we will be also be referring to anticipated self and EBITDA for the year to December 31 2008, for certain of our segment.

Segment net revenues are equal to U.S. GAAP net revenues. We do not present a reconciliation of anticipated segment EBITDA for the year to December 31 2008, and to an equivalent U.S. GAAP measure because we have a significant amount of debt that is denominated in Euros and consequently our next earnings are subject to be inherently unpredictable and potential material foreign currency gain to investors.

It would therefore be unreasonable for us to attempt to determine an expected figure of consolidated net income before tax rates for the company on a projected basis for 2008, for purposes of reconciling to the EBITDA figure that we will be referring to in this call.

And now over to Michael.

Michael N. Garin - Chief Executive Officer

Thank you, Romana. Hello everyone and welcome to CME's second quarter earnings call. CME had another great quarter. At a time when the financial community seems to be living in mortal terror that the portfolio companies will stumble. Once again we've exceeded the very high expectations, investors, analyst and your Management have set for the company.

By any measure our second quarter results were stunning. CME has again proven that it is one of the few media companies in the world that can deliver significant growth in both revenue and margins. Our Q2 revenues were up 41% over 2007 and segment EBITDA was up 53%. At a time when investors feel the impact of economic slowdown, it has all come to score the power of CME's continuing growth potential.

The performance of the Czech and Romanian businesses was spectacular, driving our group segment EBITDA margin to 44%. These results reinforce our statements that the economies in all countries have not been hit by the credit crunch, or the Western Recession, and that economic growth remains strong and advertising growth even stronger.

As we promised, looking into second quarter, we completed the acquisition of the Ukrainian minority interest, and in a few moments, Adrian Sarbu will present our detailed financial plans for Ukraine, giving you guidance of up to 2013.

I don't believe there is any other media business or any business for that matter that would have the confidence and management experience to share with you this type of long term value creating plan. As you will all recall, this is what we did both the Czech Republic and for Croatia. This radical approach of sharing our long-term outlook, reflects the strength of our... CME's management and a regard for our investors. As I had... I have said this many times, but I will repeat it again. We believe that our best investors are best informed investors.

A good part of our confidence in the future of our Ukraine operations rest of the leadership of Adrian and the team he has assembled to realize our aggressive ambitions. Those of you who remember our purchase of or the minority stake in TV Markiza, that allowed us to take control of our network in Slovak Republic three years ago, should point confidence in our record there.

We do control an uncertain lines of authority. Markiza failed to realize this potential and competitive broadcasters both commercial and public were beginning to take advantage of this weakness. The year after assuming control, CME's new management team led by Backlolika [ph] saw a strong improvement in the network's ratings.

Last year, Markiza delivered remarkable financial results with revenues up 51%, EBITDA up over 100% and margins accelerating from 28% to 38%. Strong management, clear leadership and the ability to benefit from CME's broadcasting experience made the critical difference.

As your reaffirmation, we expect these same factors to be applied in Ukraine. I am sure you've all heard the expression that a camel is a horse designed by a committee and Slovakia and Ukraine CME had a paired camel. We now expect Ukraine to join those two stations and our stable of price volumes.

I'll say two words on Croatia, EBITDA positive. Beginning our plan three years ago and this quarter we delivered, two quarters ahead of our expectations. Earlier this weak we announced the acquisition of the Bulgarian network TV2 and its collective assets. This is an incredible opportunity for CME to further expand into another high growth and under developed markets.

Following extensive research, we decided that this was best route to enter the market and create the greatest value. Bulgaria is our first new market entry since 2005 and all the management team is committed to successfully delivering on the market's full potential.

We are prepared to deliver a detailed plan that we will present to you at our Investor Day in New York on October 23rd.

I'll just briefly touch on the highlights for our individual country since Adrian in a while will be speaking about that in more detail.

Let me touch to our broadcast results. Revenues in the Czech Republic were up 39% and segment EBITDA up 51, resulting in 64% segment EBITDA margin. We enjoyed strong audience share performance and on average, we finally won the EURO 2008 Audience Share Championship, while the Football Championship was aired on TV Prima.

In Romania, we enjoyed exceptional revenue growth of 52% and segment EBITDA growth of 69%, resulting in 48% broadcast segment EBITDA margins. These outstanding results were driven by strong advertising demand and our multi-channel strategy.

In Slovak Republic, revenues grew 25% and broadcast segment EBITDA 19%. It is worth mentioning that the Slovak government is now considering a proposal to reduce the amount of advertising on state television.

In Ukraine, revenues were up 35%, reflecting strong market growth. Our restructuring plan as you will hear is now underway. In Slovenia, revenue growth was 31%, segment EBITDA grew 39% and the Q2 segment EBITDA margin of 45% was the highest we've ever achieved there.

Big Brother was again incredibly successful both on-air and online. In Croatia, we enjoyed 72% revenue growth and our first profitable quarter. Importantly, for the future we maintained the number one prime time position throughout the important spring season.

Our focus on new media continues to go well. We had 1 million daily unique visitors on CME Internet sites which is a 173% growth over the second quarter of last year. Our acquisition of blog.cz and the launch of tn.cz competing over Internet operations to the number four position measured by unique visitors in the Czech Republic.

Revenue was up by 114% in the quarter and we are on track to deliver our new media guidance.

Now let me hand over to Adrian to take you through the Ukraine's development plans.

Adrian Sarbu - Chief Operating Officer

Ukraine is number one priority for me. We promised to complete 30% buyout of the minority partner in the second quarter. We did. Also, permit to share with you our long-term plans. We keep our promises, so this is what I intend to discuss today.

We will continue to see significant growth in all our markets but Ukraine is our new growth opportunity. If you look at slide 9 the TV advertising market is expected to grow up 22% compounding annual growth rate over the next five years, reaching $1.5 billion in 2013, which is a huge opportunity and we plan to lead the market.

Please turn to slide 10. By 2011, we intend to be number one in audience share revenue and EBITDA. We shall produce the majority to our local fiction and non-fiction entertainment going forward, as a key element in our drive for a large audience. This strategy has worked for us in Romania, Czech, Slovakia and now in Croatia.

We will grow our new media assets in order to achieve leadership in the sector as well. We will integrate the management of operations... and operations as Studio 1+1 platform, and Kino, to deliver two free-to-air national entertainment channels.

By 2010 we will launch five new thematic channels, to take advantage of the increasing research, cable, and satellite in Ukraine and the increasing disposable income of our viewers. Our plan to deliver the number one performance station within Ukraine is on slide 11.

This is the summary of the extremely important strategy that we have been developing for the past six months. We've reportedly seen [ph] operation next belongs from several of our countries. It reflects all our operations in Ukraine including Studio 1+1, Kino platform, Kino, niche channels and internet development.

Our financial plan shows the development at the business generating revenue of $650 million and EBITDA of $245 million by 2015.

Following the period of development and cash outflow in 2008 and 2009, the business started to cash positive for 2010, with cash generation growing strongly thereafter.

The right hand table shows the timetable for our key tasks. Those of you who know the annual will recognize that we intend to follow exactly the same path that has led to successes in our other markets. The most important of this task is to strong local content. We have reset our programming strategy for the remainder of this year and establish an introduction unit to provide local entertainment programs for the show.

In the Fall, we will also re-launch our news. Next year we'll broadcast our first in-house local fiction and we intensely gain number two positioning on audience share.

I would like to emphasize that we'll execute this plan in the same discipline and efficient way that we ran all our operations. The more time I spend in Ukraine, the more confident I am of success. I would be looking forward to giving you a progress update at our Investor Day in October 23 in New York.

And now Wallace will talk to you... will take you through our station results for the quarter.

Wallace Macmillan - Chief Financial Officer

Thank you, Adrian. As Michael has outlined, we had a very strong second quarter. Many of our investors confronted by the daily virus depressing economic news headlines in U.S. and Western Europe offsets about the business prospects in our markets. Our operations confirmed that it is still a business as usual, at the charges in our region, the low card indications have been a slowdown. And this is reported by our excellent results in the first six months of 2008.

I want to start by taking you through our broadcast second quarter results market by market. These exclude the results of our new media or non-broadcast operations. Top in the slide 10 in the Czech Republic you will see the TV Nova putting a star performance despite having successfully encouraged a number of clients to move campaigns forward to the first quarter.

Broadcast revenues were up 39% to $112 million on the same period in 2007, and segment EBITDA increased 51% to $72 million. This generated an unprecedented segment EBITDA margin of 64%. Locally produced shows, Urukay [ph] and Avinachi [ph] recorded the highest in audience share, picking over 60% as a Finland audience demographics switched to TV Nova during the EURO 2008 Football Championships, which were aired by Prima.

In May, TV NOVA launched news website tn.cz and acquired internet services provider JPPSO [indiscernible]. In the acquisition of JPPSO, JPPSO's has talent and technology that will enable us to develop our new media strategy effectively in the market for this high demand, to date the unavailability of such resources.

Slide 11 shows our Romanian operations, which continued to shine in the second quarter. Revenues increased 52%, in the same period last year and broadcast segment EBITDA jumped 59%, to $38 million, due to the Romania's high segment EBITDA margin record to date of 48%, up from 43%, in the second quarter 2007.

In the second quarter, our Romanian network achieved a combined prime time audience share 32%, in the 18 to 49 urban target group, compared to 30.3% in the same period last year. [indiscernible] attracting an audience share of over 40% in the 15 to 49 inner private group. And that we followed in the quarter with a spin-up series called the Queen.

Our acquisition in the quarter RadioPro give us to manage channel to younger demographic, kept file on TV channel. The integration of RadioPro into our operation has already been completed. And as reported, we are number one in Romania in terms of unique visitors and video streaming, and would be the next of our market to launch a brand new website in early August.

Slide 12 shows our Slovakian operations, TV Markiza maintained its leadership position in the face of competition from latest sporting events. And training programs such as Elan is Elan and Let's Dance provided the audience with an alternative to football and men's hockey with audience shares of 46.9% and 26.8% respectively.

Markiza's prime time share for the quarter in this target 12+ group was 36.5%. Underlying the share performance is the fact that both on successful acceleration of some campaigns in the first quarter and also by a number of clients deferring campaigns into late in the year due to the announcement of the Slovak Republic will adopt the euro in 2009. Nonetheless dotted by the currency translates, broadcast revenues grew 25% in the same period in 2007. Broadcast segment EBITDA grew 19% in the quarter.

As Michael mentioned in July, the government proposed a state reduction in the level of advertisements on state television over the next four years, from the current 3% to 0.5% and also the broadcasters will contribute 2% of revenues from audio visual fund.

We believe as a matter of fact if these changes adopted, we will be positive.

Slide 13 looks to Ukraine. Adrian already spoke at some length about Ukraine, so I'll keep my comments brief. On the 30th of June we closed the deal to acquire an additional 30% interest in Studio 1+1 taking up ownership 90% and we now have full operational control.

Studio 1+1 broadcast revenues for the quarter grew 33% compared to Q2 '07, the segment EBITDA of $1.7 million, $104 [ph] million dollar charge towards our programming but they do not have a place in the schedule. We're going to develop for the future.

In Slovenia, on slide 14, POP TV and Camel [ph] delivered broadcast segment revenue growth of 31% in the quarter, fuel adding to the price increases and growth of income from sponsorship and audience voting on television shows. A 39% increase in broadcast segment EBITDA gave rise to a margin of 45%, a 3% improvement over the second quarter last year.

On the new media side, our Slovenian web team delivered 7 major new projects across all of our markets in the second quarter

Croatia is discussed on slide 15, and for us NOVA TV in Croatia grew at the start of the quarter, becoming prime time market leader on average not just for the quarter but for the first half year in our target group.

Office prime time audience share in the second quarter was nearly 27%, in the 18-49 target. The broad based programming schedule has initiated this success, supported by the Markiza and don't forget the move, which achieved audience share 38% and 33% respectively in the target group and continue grow into the second quarter.

History is of course late as NOVA TV contributed a positive segment EBITDA for the first time. And we grew 2.2 million in the quarter, was due to an increase in broadcast revenues of 72%on the back of the programming success. But we do not look vertical adjustment in that also the balance of the year, as we're trying to continue to invest steadily in programming to grow the company further and to capitalize on these achievements.

Slide 16, which is a segment results for the quarter, and this reflects the total segment's performance including broadcast and non-broadcast to date. Total segment revenues grew by 41% and total segment EBITDA by 53% in the quarter in comparison with the same period last year. The resulting 44% segment EBITDA margin is a 4% improvement compared to same period last year. And this demonstrates the continuing developments of the approach and effectiveness of our stations.

This growth was resisted by dollar weakness in the period and our estimated excluding foreign exchange effects, the underlying total segment revenues grew by approximately 21% even though some constraints were moved to the first quarter. And segment EBITDA grew by approximately 27%, showing high underlying growth in the quarter.

On slide 17, our total segment results for the half year have grown rapidly, with our revenues increasing 35% against the same period last year. This refers to segment EBITDA at 64% to generate 39% margin, a margin improvement of 4% year-on-year.

Again U.S. dollar growth rates are supported by the weakening dollar. Excluding foreign exchange effects, our estimates that underlying total segment revenues grew by approximately 25% and segment EBITDA by approximately 36%, showing a very strong underlying growth in the first half year.

The Czech Republic and Romania were the powerhouses of this growth. But all other stations contributed strongly with the exception of Ukraine, where the two stations are quoted at about the same level of last year.

As in 2007, we did not get to Ukraine to drive the results, our other markets are handling that very well. As Adrian disclosed, the role of Ukraine in our portfolio was to be a new engine of our future growth.

Slide 18 describes our consolidated income statement. Operating income for the half year grew 79% against the same period last year to $143 million. Net income grew 130% to $82 million. Our net interest expense current $1 million of the $6.9 million charge we took in 2007 in connection of the new purchase of our floating rate notes despite the upset by approximately $5.1 million of interest in our convertible notes.

Foreign exchange movements and fair value of derivatives to revenue amounted to a charge of $34 million and adverse swing of $41 million year-on-year, cost and currency movements in the period.

We recognized our tax credits of $1.5 million in the half year compared to $18.5 million charge for the some period last year. This, as a result, as I reported a credit of $29 million we're looking to movements in foreign exchange rate in the company's laws, with the corresponding charge recognized in other comprehensive income.

Net of credits, FX charge would have been $28 million. We had an effective rate of approximately 19% in our segment operations compared to 27% in the same period of 2007.

Slide 19 looks to our consolidated balance sheets. Net assets at March 31 stood at $785 million compared to $476 million at the end of December 2007. Our debt includes $475 million, about 3.5% convertible notes issued on March 10. These are current... the currency float, traditional debt with an interest charge of 2.5%, profit charge for the amortization of the issuance cost.

A new US GAAP accounting standard issued in May will require us to amend our accounting treatments in 2009 to account separately for the liability and equity components of the convertible notes.

In addition to a new classification between debt and equity that, we will include in our reported interest expense in 2009 and does in comparison to this also for 2008 to reflect the accretion of those watching discount on the debt. This will of course to the mid cash impact and we will analyze our interest charge clearly for you to head in the battle.

Details of this are provided in June-July financial statements.

The summary cash flow schedule shows that our cash generated from operating activities during the first six months of 2008 was about $127.5 million compared to $21.6 million in the same period of 2007. Our investing cash outflows were $287 million compared to $88 million in the period of 2007. This reflects our expenditure of $220 million on the quarters of minority interest in Studio 1+1 in Ukraine as well as RadioPro and JPPSO acquisition.

Capital expenditure flows into mid number was $42 million compared to $25.5 million in the same period of 2007. Despite the increase in CapEx, our free cash flow by which I mean operating cash flows or CapEx was $35.5 million compared to $2.9 million out flow in the same period last year.

This trend is extremely encouraging, and it reflects the continued improvement in our operational performance across our stations. We still expect the capital expenditure to be approximately $140 million, which includes Ukraine CapEx from those reflected in Ukraine financial plan cash flow number that Adrian presented.

We now expect corporate costs excluding stock based compensation to be $45 million for the year. This includes costs in the expanded center of planning and development function, cost of development activities and high performance based various divisions.

Subsequent to the quarter end, last Monday we announced the acquisition of 80% of TV2 and other broadcasting assets in Bulgaria for $172 million through asset adjustments for debt and working capital. Considerations will be in cash and currently we expect to take place within the next two weeks. And now back to Michael.

Michael N. Garin - Chief Executive Officer

Thank you Wallace, thank you Adrian. On the first quarter earnings call we gave you our 2008 guidance. As a matter of policy we do not update our guidance on a quarterly basis. We are reaffirming our guidance of $1.1 billion of revenue and $425 million of segment EBITDA.

However this now includes all the costs of our development plans for Ukraine and Bulgaria. As Wallace mentioned, Adrian highlighted some FX movements so far this year, and if this continues, then we should see some upside.

As always we will provide country by country, full year guidance at our Investor Day on October 23rd in New York City. We hope many of you on this call will be there in person.

We've given you a great deal of information today. All of this points to many more years of high growth and profitability.

We take enormous pride in the achievement of CME and in our 3400 employees. It takes real team work to consistently produce results we have delivered. All of us look forward to the future with enthusiasm, eagerness and anticipation. With full control on Ukraine and the addition of Bulgaria that future looks brighter than ever.

Now we will open the line for questions.

Question And Answer

Operator

Thank you. [Operator Instructions] Your first question is coming from David Kestenbaum of Morgan Joseph. Please go ahead.

David Kestenbaum - Morgan Joseph

Okay thank you. Solid quarter guys. Can you just Michael talk about Bulgaria? Can you compare and contrast that what you saw in Croatia when you went to that market and obviously very positive on this market and just, maybe talk about the broadcaster, the public broadcaster and how that's different?

Michael N. Garin - Chief Executive Officer

Yes, I'll just start and turn this over to Adrian. Bulgaria for us really, if we had to do a parallel to Bulgaria, it's more like Romania, quite frankly than Croatia. As you know Croatia just had one strong state television station, RTO [ph] and we launched our stations. The market was much less mature and developed and it's been very strong market both for Antenna, the Greek broadcaster and News Corp. But because it was really a country that required very little innovation from a programming point of view they... we feel that they are quite vulnerable in terms of our ability to gain market share rapidly through the same kind of process that has made CME so successful elsewhere.

Also, the other attractive thing about Bulgaria is that as you noticed, we acquired David, we've acquired a Ukrainian assets that allows us to instantly apply a multi-channel strategy that we feel will turn those things good stead. And just recently because of the geographic proximity of Bulgaria to Romania, is the market that we feel that we understand very well, we know every well. And the success of the Romanian team and their ability to share their experience and knowledge with their Bulgarian colleagues, just as the Marian units [ph] and the Slovenian team were able to do, and Ukraine... and Croatia gives us a great deal of confidence in our ability to rapidly grow this market. Adrian?

Adrian Sarbu - Chief Operating Officer

Yes, David, the first method we attempt to achieve we'll achieve much faster than in Croatia. Croatia seems I think deep too long, with some complications Bulgaria for us seems very clear. We know each other our friend, we will catch more channel with One. All these channels will be fed with strong local content and will be fed with people and expertise which we have in the group.

So we think in fact the team in Bulgaria will give a guidance about Bulgaria in the future after we grow and then you'll see how we imagine our execution of our strategy there. In fact, the key word, it will be much faster.

David Kestenbaum - Morgan Joseph

Okay. Wallace can you talk about how you're going to spend that $215 million of outflow in Ukraine? What's that... what exactly are you spending that money on in the next two years?

Wallace Macmillan - Chief Financial Officer

Sure it's going to be a combination of operation investment as we build up the programming solidity of the company but also a fair amount of that is going to be CapEx. As you know the operational disputes, number of premises, we have also built up our production capacity and we want to build a media center which will, we believe, be essential facility in the growth of the operation, both in terms of production development and of the coordination of the different aspects of the business.

That is a sizeable chunk of the CapEx alone and then the rest of it is going to be the technological development that goes with it. Basically, what we are doing is not only have control we are going to emulate the infrastructure at least world class in our other markets.

David Kestenbaum - Morgan Joseph

Okay. And then finally in the Czech Republic you grew only a 6% organically in local currency. Was that... how much of that was due to shifting? I mean what would the growth rate be if you did shift some of that revenue from Q1?

Wallace Macmillan - Chief Financial Officer

It's a very difficult thing to tell, because the way the divestures have been carried out. I think the clear thing to do is look at the local currency growth rate in the first half year, with the revenues of 17%, and of course the EBITDA is 22%, in the Czech Republic.

David Kestenbaum - Morgan Joseph

Okay.

Wallace Macmillan - Chief Financial Officer

We always say that it is two year's growth and too misleading to focus on the quarter's results, all we can do is continually up which will concentrate in the numbers that we said it's going to be developing for the full year.

David Kestenbaum - Morgan Joseph

Okay. Well you said you are going to raise prices 20% this year in the markets, so that's a type of number we're looking for so. Okay thanks.

Wallace Macmillan - Chief Financial Officer

Just coming back to that, we have... in fact, raised started in a like for like basis by more than 20%, clearly the overall impact on revenue depends on how the balance of product was taken during the year by seasonality, backlogs but our actual price movements or accretion has been on a piece by piece basis more than 20%.

Operator

Thank you. Your next question is coming from Greg Kolb with Janco. Please go ahead.

Gregory Kolb - Janco Partners

Hey good quarter, thanks for taking question. Something kind of similar in Slovakia, local currency it was in the world that we could have expected. Despite relatively stable ratings, are they... any competition have an impact or was it kind of that mix shift in the advertising spend? And also margins in the new Czech Republic were pretty astounding, 63% 64%. I was wondering if you give more color on what was going on there and what was the contributing factors?

Wallace Macmillan - Chief Financial Officer

Let me speak to that Greg. Hello it's Wallace and first of all on the Slovak Republic, the impact in the quarter, strategy Baltimore [ph], well, first of all, but of course some revenues were taken into the first quarter and while there is more of a catch up in the Czech Republic, there is much of the catch up through new advertising in the Slovak Republic in the second quarter.

The other impact that results from the particular quarter, was that leading up to and around the time of the announcement of the decision to join the Euro, the acceptance to join the Euro from the start of next year and a number advertisements holding up, with advertising because it is also unclear that government adverting is going to be developing during the course of the year, around that event.

Our understanding is that, it will be more due to the back half of the solid quarter of the year but these events are such customary in all of these markets. For the Slovak Republic, year-to-date, the underlying revenue growth of 7% and 8% is probably pretty much in line slightly ahead of underlying market growth and we look to the fourth quarter to see what the Euro has to bring to us there.

On the Czech Republic, yes our margins were tremendous in the quarter, and I would like to say as these margins contribute revenue in the future, the quarter is outstanding like that. You do get... and it refers revenue and cost historically in the quarter by quarter basis. What I can do is keep on saying to everybody please look to the full year, then you will see underlying performance days.

Gregory Kolb - Janco Partners

Great that's helpful. Thanks.

Operator

Thank you. Your next question is coming from Ben Mobile [ph] with Thomas

Weisel Partners. Please go ahead.

Unidentified Analyst

Hi guys good morning. So couple of questions first of all, on the Ukraine. If I look at sort of the plan you got basically EBITDA breakeven for this year. Can you talk Slovenia in the second half of the year, in that sort of coming inside numbers, do you have a certain number of non-recurring charges in anticipation in sort of some staffing changes and things like that or is that sort of the few operations that basically just show $5 million to $7 million of EBITDA positive in second half of the year?

Wallace Macmillan - Chief Financial Officer

Ben, we're changing everything. That needs to be changed, in order to move the operation forward. There are some changes in cost involved. But basically we are re-processing a lot of the operations going forward.

And I think that Adrian has spoken to a number of the areas that have changed, the primary areas have changed that we're going to get involved. And bear in mind also the number that we are giving is the combined number for all of our Ukraine operations. And we will be for example integrating Kino and 1+1 and there are some costs involved in certain run-off events like that.

But I think the best thing to do is to look simply to the, I think extremely clear guidance in terms of numbers that Adrian has given.

Unidentified Analyst

Just so certain, fair enough, I was just very curious within those numbers there was sort of any kind of non-recurring one time charges, that's what I was more curious about.

Wallace Macmillan - Chief Financial Officer

There will be elements that... those, but we aren't breaking those out.

Unidentified Analyst

Okay, fair enough. And maybe sort of more on the strategic side, I mean if look at say for example Bulgaria you've got, there were three networks up for sale. Now obviously one was taken off by you guys. I mean can you talk about why you're seeing everyone sort of go up for sale at the same time? You're seeing News Corp. exit the region and obviously you can't speak for News Corp.'s strategy, but sort of if you can speak a little bit about why you're seeing all these networks go up for sale at the same time and your thoughts on sort of if that means anything if you will?

Wallace Macmillan - Chief Financial Officer

Well I'll start and then turn it over to Adrian.

Unidentified Analyst

Sure, thanks.

Wallace Macmillan - Chief Financial Officer

News Corp. is really a strategic decision that's independent of Bulgaria. News Corp. as you know has had an incredibly successful strategy based on DTH in the United States and Italy and U.K. and in Asia and they've recently received a regulatory approval to pursue an acquisition of premiere in Germany. And so I think really this is a way of News Corp. being able to redeploy assets to pursue its core strategy of which, using the ability of New Corp., I don't think its more complicated than that. And Adrian could talk about Antenna, their focus has really been looking at alternatives, not necessarily including their sale orientation. I'll let Adrian speak to that.

Adrian Sarbu - Chief Operating Officer

Couple of words, our presence in the Bulgarian market created a little bit of emotion and this is the result. It's important also to take this into situation. They Bulgarian market will be dramatically restructured in the next... reshaped in the next year. And we plan to be in a way there... those ones will drive the reshaping of the market. The fact that our, the two... the two incumbents are willing to sell entirely or partially shows for us that our entrance there is taking into consideration.

Unidentified Analyst

Okay, great. Thank you. And then I think just last question, in terms of the changes in the upfront and slot night, so we understand it looking at it from our six month perspective that gives a better picture. By opening up some upfronts in Czech and Romania in particular were there any new ad categories which you saw come into the market that previously were under represented?

Wallace Macmillan - Chief Financial Officer

Can you repeat the question please?

Unidentified Analyst

For sure, by opening up some spot inventory in the second quarter compared to prior years, were there any new advertising categories like, for example auto or financial services that historically were under represented in market that were able to finally take advantage of the increased availability for advertising for them?

Adrian Sarbu - Chief Operating Officer

There is worries about dynamic in our market. In more mature markets with structure of the advertising is not changing and the new coming market the structure changes and as we said this several times we are slowly approaching the structure of western economies, western markets and where rich, cash rich advertisers are followed to pay very high CPP for advertising the television.

And the expense of cash rich advertisers which are especially C&G and as type of advertisers who are looking to allow CPP. This is the process we monitor and which we also drove very discrete in order to improve our CPP year-by-year. Which is one the main drivers of our revenue growth

Michael N. Garin - Chief Executive Officer

Adding to that, we are also seeing increased demand from local advertisers coming into some of the less expensive not prime part of the day.

Unidentified Analyst

Okay. And I mean if I'm writing historically local advertising space would be negligible for you guys, is that correct?

Wallace Macmillan - Chief Financial Officer

They have not been negligible but they have been much less important than the significant multinational.

Unidentified Analyst

Okay. Great I'll turn the queue over to someone else, thank again guys.

Operator

Thank you. Your next question is coming from Andrea Nasskau [ph] with ING. Please go ahead.

Unidentified Analyst

Hey good afternoon and congratulations on the fixed numbers, so a couple of questions. On your 2008 guidance, we've seen an increasing corporate overheads from 38 to 45. I think Michael mentioned that has to do with some operating expenses including Bulgaria, but if you can elaborate what drives that increase in corporate overhead for this year? And I will ask you the second question later on.

Wallace Macmillan - Chief Financial Officer

I'll answer this... will pick up the question of corporate overhead. At the start of the year when we gave guidance and before we have seen our viewers developing, we assumed at one level to go with, the bonus divisions are neutral and as we have done it, and we look at peer review how we are expanding out. Then [indiscernible] staff bonuses start to get accrued and that is one element of that piece.

Secondly, as you will appreciate, we have been... in the development work in the course of this half year, and we have been moving not just the elements of management but large teams from each of our station to Ukraine and also to other parts of the business and looking to example Bulgaria and other reviews that we have been doing. And so we have been investing a lot in research and development work.

And finally we have been building up internal resource team to enable us to handle these objectives in the future, something which I've seen in my time at CME and the question was asked earlier on about what is the difference for our efforts to Croatia by comparison to our approach to Bulgaria. And Ukraine to me is the biggest difference, gets me in my thought in the half history is good quality preparation.

We are now much better resourced and we have much better skills in place, both in terms of central skills and central coordination, but also in terms of teams cooperating from the stations. But putting this in place, our moving this resource around got about the central overhead. And so the largest part of that increase in the guidance comes from the level of activity that we are reporting during this quarterly call.

Unidentified Analyst

I see, fairly enough. On your long-term guidance for Ukraine can you maybe give a little breakdown of... in your revenue figure there, long-term $650 million in 2013, how much of that is our division advertising and how much is all the rest?

Michael N. Garin - Chief Executive Officer

And I think just it's interesting to say the vast majority of this is for advertising revenues as it is in the... as is the case today and is the case in all of our market. We're achieving with our primary revenue driver advertisers.

Unidentified Analyst

Okay. Let me ask that question the other way around. I think Adrian has mentioned that you guys are in a focus of $1.5 billion for TV advertising spend in Ukraine in 2014. What are you targeting for your market share at TV spend?

Adrian Sarbu - Chief Operating Officer

I think that what we're going to do is simple meet with... we do have members that we put in the slide that you can on our website. And I think this is a lot of detailed level of guidance and I don't really want to go into one catch further down at this stage.

I know that everybody will want to be building up models down to large level of detail, but I think you will... I'll ask you to be generous with us and to allow us to stay with the data that we have given you already.

Unidentified Analyst

Okay. That's fair. And my final question is actually on this Moldo potential exit from the region, why not the buy full team? Means that they are going to Bulgaria with what is essentially a start up company, that seems to be dumpy road to grow it and or a more challenging way to grow business there. I think I might be wrong, you probably know better than myself, but Moldo seems to have number one commercial station there. You are selling that in the package of... finally considering selling anything the package was, I think Serbia, Lithuania potentially even Poland or will that run, lots to be very small, why not to buy package from him rather than buying sort of fourth largest station in Bulgaria.

Michael N. Garin - Chief Executive Officer

Well let me just say that we... as Wallace pointed out, and I tried too. We obviously did a very careful look at all of the options. And when you buy number one, you pay a retail price and the purpose of CME is to really create value, that's what you as investors look for.

And we made a very simple calculation that our entry in the market will change radically the structure as Adrian alluded to. The price expectations of the existing station based on past performance will be very different than their values in the future, because it's now going be a very competitive free station market. And we made it very clear and very easy in the end analysis that demonstrated to us and our Board that the greatest value creation in Bulgaria was the build versus buy strategy. And I endorse that completely, and I think that you'll see as Adrian pointed out very rapid evidence of calculated strategy for CME.

Unidentified Analyst

Right. And so in that case, would you not be looking to potentially second hand buy channels in Serbia or some of these other markets that in preparation of that --

Michael N. Garin - Chief Executive Officer

We look at everything that is available in our markets. To date, I'm sure, I will say this tomorrow, we'll pick the paper, and say Oh my God how did this happen? But to date in the 4.5 years that I have been here and for the almost 15 years of Adrian and Ronald have been around, I don't think we've ever seen an asset sold that we weren't involved in.

And our policy at CME is talk about what we have done and not talk about what we will do in terms of M&A. So that's really as some of you know, really the most competitive thoughts of our business. We find ourselves competing with other multinational broadcasters very aggressively every time new assets become available. So it's not in our shareholders' interest or Management's interest or the company's interest. So we'll talk about markets that we are not in.

Unidentified Analyst

All right thank you very much guys.

Operator

Thank you. Your next question is coming from Mathew Walker with Lehman Brothers, please go ahead.

Matthew Walker - Lehman Brothers

Thanks very much. Good afternoon, everyone. Two questions please, the first is on, are you rolling out the acquisitions with VTV now entirely? And the second question is what circumstances would you have to raise what it paid for you, what do you think your net debt to EBITDA can be again for the year? And under what circumstances you would do another convertible [ph] or equity offering? Is it buying the VTV, is it adding more frequency to the Ukrainian plan? And if you could also just say, confirm the numbers you've given for the plan in Ukraine is just for, I think you mentioned this before this, just the existing assets, you are going to require the acquisitions of it additional licenses in the Ukraine to give this number? Thank you very much.

Michael N. Garin - Chief Executive Officer

Okay Matt, I'll just begin briefly and then turn it over to Adrian and Wallace. I'll give you the same answer I gave... where it comes to future M&A it is just something I don't think is appropriate for us to comment on. And we live in a very competitive world, and if our competitors were put to this call, maybe I did more forthcoming but candidly we don't want to make anybody's job easier.

So, I'm just not going respond to that, the question although it's a very appropriate question for you. And don't infer anything into that, but we won't be... we aren't going to comment. We'll let our competitors worry about that.

Matthew Walker - Lehman Brothers

Okay.

Adrian Sarbu - Chief Operating Officer

But you asked about net debt to EBITDA at the end of the year we anticipate that we... probably the acquisitions be somewhere between 2.5 and 3 about midway between the two. And you asked about what are the cash plan included the purchase of additional minorities. And your answer is no, what we are looking at the development plan of what we currently own, this doesn't include for example the buyouts of the minorities... only 10% minority in Studio 1+1. We're still to begin, what the carrying value is going to be --

Matthew Walker - Lehman Brothers

Can I just... so it doesn't include... your debt to EBITDA calculation doesn't include the last 10 points of Ukraine. Can I ask one last question, which is --

Michael N. Garin - Chief Executive Officer

Carry on Matt.

Matthew Walker - Lehman Brothers

Sorry,the last question I think in your Ukrainian plant, when it got to the maturity around 2012 and 2013, that's still a substantial difference in your cash profile, that is your EBITDA and is that related to what exactly CapEx, because CapEx at that point shouldn't be particularly large. I'm just curious as to what destination for that is?

Michael N. Garin - Chief Executive Officer

It's quite straight forward. As we go through this period and our investment in Ukraine doesn't just stop in 2008 and 2009. As you can see in the development plan probably what we are able to be doing as we through this period is building up a multi channel operations. And the investments in that will continue even as our cash generation from our primary asset is growing. And so that is what is causing us that element of slowdown. But of course we're continuing to add to the overall cash generation going forward beyond this period and this is truly integrated plant not just for the development of 1+1 and 1+1 and Kino. It's a plan for the development of entire markets.

Matthew Walker - Lehman Brothers

Okay. Great. Very last question; could you just review on anything about the losses for '08 and 09 on Bulgaria. I mean what sort of --

Wallace Macmillan - Chief Financial Officer

Matt,we thought that we would be giving a presentation at the... we haven't closed this acquisition yet. So bear with us and we will be presenting additional information and giving a full presentation in the --

Adrian Sarbu - Chief Operating Officer

But like I said earlier, 2008 expected figures are included in the guidance that we've given.

Unidentified Analyst

Sure. So the half year that you are allowing the company for sure. Okay, thank you very much.

Michael N. Garin - Chief Executive Officer

Thanks Matt.

Operator

Thank you. You next question is coming from Lori Davidson [ph] with Goldman Sachs. Please go ahead.

Unidentified Analyst

Hi guys. All of my questions have been answered. So that's fine, thanks.

Operator

Thank you. Your next question is coming from Maria Levinskaya [ph] with Merrill Lynch. Please go ahead.

Unidentified Analyst

Well, I have got three questions actually. The first one is on Bulgaria. I am just kind of coming to Adrian, looking at return on investment you had in mind when you had acquisition, I'm wondering how if you pay more than what your advertising market is worth today, probably you cannot make numbers stack up in terms of your market shape. Can you give us some more idea in terms of...

Michael N. Garin - Chief Executive Officer

Well I will comment on your last question and we'll answer all the others in New York in October, hopefully you will be there. Can you remember when we bought TV NOVA in the Czech Republic, we paid approximately $120 million. Can you tell us what the size of the advertising market in Czech Republic is? What is it? It's more than we paid for it.

So the fact is that we have a model that shows great value creation based on the growth of the market, based on our anticipated share of the market. And we'll be happy to provide forward guidance and explanation in New York in October.

Unidentified Analyst

Okay

Michael N. Garin - Chief Executive Officer

But I would say in virtually... I would just say that in most of our markets, the value of the station exceeds the price of the advertising market. So there is a disconnect between your question and the way valuations are done in the industry.

Unidentified Analyst

Okay. And second question on Ukraine, just to clarify that CapEx you're giving out. With the figures that you're showing 2009 is it fair to assume that CapEx would grow, it's going to pick up next year versus this year.

Wallace Macmillan - Chief Financial Officer

Yes Maria CapEx next year will be larger this year, as I stated on pervious calls, and the CapEx figure next year will include obviously a fair proportion of the cash outflows that we are showing in our Ukraine model that we've described. So these two numbers are not separate numbers, they are, in fact, combined. But Adrian explained on pervious calls, which not... but next year will be, the last year what we see as being a three year investment of developing, first the production infrastructure and premises around our station, as we move and want to buy facilities. And also in terms of completing this divestment of all of our markets. And so yes, I would expect the next years CapEx figure will be larger than this year's figure.

Unidentified Analyst

Okay. And third question on Slovakia, you made something, what happened to organic revenue growth in Slovakia this quarter, do you also shift revenues there?

Wallace Macmillan - Chief Financial Officer

Yes, as I think I have mentioned on earlier call, and the Slovak Republic is one of those markets where we have successfully endeavored to move some contracts forward into first quarter, in order to freed up some space. And so that is one of the impacts. And secondly, some of the advertising demands got deferred after the quarter, currently the timing and prospects of the timing of the Euro... joining the Euro in 2009. And so it's simply a mater of pattern with Slovak Republic. year-to-date growth in our operations has been... I'll give, they're ahead of the rest of the market, majority of them certainly high single digits.

And we look forward to some interest to the fourth quarter of this year. That again I must only emphasize it is very, very misleading to try and extract those from a single quarter data because in each of our market, we are introducing on the pattern of seasonality in growth term the consistent of detail and they can move percentages quite largely in a quarter by quarter basis. So please do look to the full year guidance that we gave.

Unidentified Analyst

Thank you very much, I appreciate it.

Wallace Macmillan - Chief Financial Officer

And it's okay.

Operator

Thank you. Your next question is coming from Fred Quirk [ph] with BlueBay. Please go ahead.

Unidentified Analyst

Hi guys. Thanks, just a few questions on Bulgaria again. The first one is what is TV2's current audience share and the second one is relating to the NOVA TV asset, did you consider buying NOVA TV and were you at all able to look at that asset?

Wallace Macmillan - Chief Financial Officer

Hello, this is Wallace. VTV's ordinary share runs around the mid 30% of this fund. And with regard to the NOVA assets, what they currently have on offer is minority. And simply as Michael stated publicly, we do not look to purchase minority interest. Unless we can acquire control, or a positive control, then we don't believe that we are able to affect those things which make stations perform well.

We have seen, in the past the impact of being able to take control in market sub-station in Slovak Republic has enough performance sub-station. And we believe that we'll be frustrated in that. And as we have been in previous periods in Slovak Republic as in Ukraine, they are not having control and so and that is why believe we wouldn't be pursuing the NOVA deal.

Unidentified Analyst

That's very clear, thank you.

Operator

Thank you. [Operator Instructions] Thank you. Your next question is coming Robert Maj with KBC Securities, please go ahead.

Robert Maj - KBC Securities

Sorry it's Robert Maj from KBC Securities. I was wondering corporate CapEx is forcing for Croatian upcoming years?

Michael N. Garin - Chief Executive Officer

I am sorry could you please repeat the question?

Robert Maj - KBC Securities

Yes since you achieved profitability there in Croatia this quarter, will the CapEx is forcing for upcoming years?

Wallace Macmillan - Chief Financial Officer

TheCapEx, we don't any of the CapEx guidance by market. And we have build new production facility which were handled by these some of our production needs in Croatia and that there Croatian development put in place, that I am certainly... we don't give specific guidance on Croatian CapEx or any market CapEx.

Robert Maj - KBC Securities

Okay and one more question on Bulgaria, I know that you will present... you will brief your presentation in New York in October but could you possibly say something on the breakdown in advertising revenues, would it be on the same level as in the other countries?

Wallace Macmillan - Chief Financial Officer

Absolutely, our primary source of revenue is advertising revenue. And that is the case in all markets. At some stage in the future we believe that the media revenues will become more relevant but that will take some time. The other non-advertising revenue that we have are in this market are very tiny proportion of our total revenue base. So we are stabilizing advertising.

Robert Maj - KBC Securities

And the last question. There were some talks on News Corp. exiting income Polish market, I mean are you anticipating purchasing TV post from him [ph]?

Michael N. Garin - Chief Executive Officer

Well, I will just respond the way that I have responded to the other questions. Maybe we are and maybe we are not. But this is not the place where we would discuss any of our plans to move in to new markets other than what we consider at this point.

As I just pointed out, this is the single most competitive aspect of our business and anything we tell you will be known by our competitors in 30 seconds. And it's not our job to make our competitors favored by us.

Robert Maj - KBC Securities

Okay, great thanks.

Operator

Thank you. Here's a follow up question coming from Andrea Nasskau [ph] with ING. Please go ahead.

Unidentified Analyst

Just a clarification Wallace, once again '08 guidance, revenue and segment EBITDA, that does not include Bulgaria, does it?

Wallace Macmillan - Chief Financial Officer

It does include Bulgaria Andreas --

Unidentified Analyst

It does include.

Wallace Macmillan - Chief Financial Officer

The guidance that we have given for revenue and EBITDA includes the second half year including our Bulgarian operations and including our station developments in Ukraine.

Unidentified Analyst

Okay, all right. I see. Thank you.

Operator

Thank you. Your next question is coming from Rajen Caramelo [ph] with USA Bank. Please go ahead.

Unidentified Analyst

Good morning. Just one question on your interest expenses, I see that the indebtedness almost doubled while the net interest expense actually went slightly down in the year-on-year comparison. Can you little bit elaborate on your interest expenses for the next quarters? Thank you.

Wallace Macmillan - Chief Financial Officer

Yes the....in the current quarter, looking at the comparative, the comparison is influenced by the fact that last year we had in the same quarter, a $6.9 million charge, which was writing off... this was result of an redemption of certain rate notes were redeemed last year, we have to write off some capitalized fees, as we talk about, to be amortized over the last of those notes.

So that's added last year the charge of... an amount of $6.9 million. In the quarter this year, we had about $4.2 million of interest charge relating to the convertible issue earlier this year. And so that was the charge that would not have been in place last year, and I think that our interest charge for this year, assuming that we don't change our debt structure is a much better indicator of the expected interest cost going forward for the balance of the year.

Unidentified Analyst

All right, thank you.

Operator

Thank you. Your final question is coming from Matthew Walker with Lehman Brothers. Please go ahead.

Matthew Walker - Lehman Brothers

Hi if I could... thank you very much. Just a quick follow up. First of all, what kind of concessions that you had in approval about with your clients about 2009, I'm guessing you've been in due diligence in Ukraine, to support the growth estimates you've put in there, and also just to clear, similar questions that I asked on Ukraine, in terms of the difference between EBITDA and cash.

What is it going to like in the... I mean roughly, what about your likeliness in the mutual business out in Czech Republic. Is cash a lot placed to lead there in that territory?

Michael N. Garin - Chief Executive Officer

Let me kill two of that questions first, that is in our business, because it's a growing business, a time delay in all our markets between the generation of the EBITDA, and the generation of cash.

At a trading level, our cash conversion is actually little behind and coming from EBITDA to trading cash. But the reason for the time delay is because as the markets grow, our working capital has to grow as well. If our revenues go up by 30% then our receivables would grow up by 30% as well, and because the cost of growth programming grows at about the same rate and our programming will likely grow in value by about 30% even if we haven't changed the size of that library.

And that means that there is time lag between the generation of EBITDA and the generation of cash. And in particular, in addition to that, if we are investing in staff of our corporations, even if they are adjacent to our existing mature operations, net of sales we'll get on our multi-channel routes as we're investing in the initial expenditure to develop that. And there will be a time lag before that new market channel operation... that new channel starts to develop with revenues. So both of those aspects of growth lead to a time delay between the generation of EBITDA and the generation of cash.

But I think you can't see for example from the lucrative operating cash flow that we've we had for example in the first six month of this year, is that the trend in both cases is sharply upwards, is that there is a gap of a couple of years between the two.

Matthew Walker - Lehman Brothers

Okay, and on 2009?

Michael N. Garin - Chief Executive Officer

On 2009, we obviously we haven't given general guidance for 2009, a part of course, not for the Ukraine. And in terms of general comments from the compensations that we've had with advertising between the course of daily contacts [ph] and also from the general soundings that we had about the economy, we have not yet become a royal to any kind of change in normal behavior going forward. And obviously we will review this as we go forward, and if that changes then we're looking at all, but that would vary, we do not see any change in behavior.

Matthew Walker - Lehman Brothers

Okay. That's very clear. Thank you.

Operator

Thank you. We do have another question which is a follow up coming from Greg Kolb with Janco. Please go ahead.

Gregory Kolb - Janco Partners

Hey thanks for taking a follow up. I'm not quite sure if anybody really covered this, but in Romania obviously in constant currency everything was incredibly strong. And that was kind of seemed to put to rest some of the macro economic concerns. And I am just curious if you had discussion of advertising and how maybe the market, and just there was real strong growth, obviously I am guessing from pricing and GOP volume inventory, and just a little bit more color will be great.

Wallace Macmillan - Chief Financial Officer

Greg, I am very sorry, but the line was slightly misleading, could you please repeat the question?

Gregory Kolb - Janco Partners

Yeah I'm sorry. In Romania in kind of local currency that was very, very strong. And it would seem to somewhat put the rest the concern we've heard about the macroeconomic environment in Romania. I was just kind of curious if you had any discussions with advertisers, how maybe things and what's going on there and also just the growth was very strong. Was that just pricing increases or is that pricing and GOP increases but it looked very good. I'm just curious for more some color.

Wallace Macmillan - Chief Financial Officer

Greg,the growth is predominantly driven by price increase, as in the case of in all of our markets. The variation on GOP volume tends to be much lower. So this is very much a price-driven situation.

Certainly from the perspective of what we're sitting at the front end, consumer spending driven part of the market and it seems to us that these rumors have remind us in this economic collapse. It was a bit premature and you have seen very strong demand and certainly looking at the projections from various banks that we reviewed in some curiosity

The projections for not only GDP growth but also consumer spending growth in Romania specifically and in our other markets does remain high. And I think you are referring to some of the costs that came out earlier on this year about concerns of the context of Romania could lead to some form of economic uncertainties. But those... booming early in the year seemed to have receded now. There is not more recent economic referrals. All I can say is that from the perspective of where we are sitting, that with consumer spending driven growth which is what these advertisers the market is looking, not dramatic but assuming 48% as currency growth in the quarter. And that is great.

Gregory Kolb - Janco Partners

That's great. Thank you.

Operator

Thank you. There are no further questions. I would like to now turn the floor back over to Michael Garin for any closing comments.

Michael N. Garin - Chief Executive Officer

Thank you very much. And thank you very much everyone. This was a landmark call. Not only was just a record first half for the first quarter. It's also a record number of people dialing in and it's the longest call that we've had. As you know we stay on the call till all questions have been answered. And we appreciate your interest, those of you supporting us, we appreciate your support.

We have mentioned the date with us, that I would like one more time to invite everyone, encourage everyone to join us in New York on October 23. Adrian, the entire Management team will be there. I know we were unable to answer all your questions about Bulgaria and some more detail questions about Ukraine but I assure you as you come to New York we'll answer as many as we are able to do.

Thank you very much, and have a good day.

Operator

Thank you. And this concludes today's Central European Media Enterprises Second Quarter 2008 Earnings Conference Call. You may now disconnect your lines, and have a pleasant day.

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