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Central European Media Enterprises' CEO Discusses Q3 2011 Results - Earnings Call Transcript

So we expect to generate revenues of $850 million and OIBDA of $166 million, assuming constant exchange rates. Audience leadership and free cash flow generation are and will be our priority this year.

David will now walk you through macroeconomic development and our consolidated financial results.

David Sach

Thank you, Adrian. Please turn to Slide 5. In the third quarter, the consensus forecast shows that GDP grew in all of our markets with aggregate growth of 2%, driven mainly by external demand. Concerns about European debt impacted consumer confidence. As a result, private consumption continued to trail GDP growth, and being flat across our markets.

TV ad spending grew in 4 out of our 6 markets. The Czech market experienced a sixth consecutive quarter of growth rising to 7%. In Slovenia, the market grew 5%, making this the fifth quarter of growth in the past 18 months. TV ad spending also increased in Bulgaria and Croatia by 2% each.

In Slovakia, high unemployment has continued to impact the recovery of private consumption, leading to a decline of 4% in the TV ad market. In Romania, public consumption is estimated to have returned to growth only in the third quarter, and the TV ad markets are still lagging this recovery.

Recently published estimates indicate that GDP and private consumption growth in all markets are expected to be similar in the fourth quarter to that in the third. Consequently, our current outlook for the fourth quarter is 2% growth in aggregate TV ad spending across all of our markets. As the growth in TV ad markets gradually catches up with the growth in GDP and private consumption.

Moving to Slide 6. Our consolidated net revenues in the quarter increased by 23% to $165 million, equating to a 12% increase in constant currencies. All 3 segments contributed to this increase. Total costs increased by 13% to $157 million. But this was almost completely due to the appreciation of our currencies against the U.S. dollar. In constant currency terms, the cost increase was 2%.

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