The Czech Parliament has been discussing new digitalization law. According to proposal, new act would enable digital broadcasting for six new TV stations and compensation license for TV (1 799 CZK, -0,06%) and TV Prima. Also, Czech TV will be allowed to broadcast commercials of 0.5% of daily time, until analogue broadcasting will be terminated. If the bill would be authorized, six new TV stations might start broadcasting as early as spring 2008. Analogue broadcasting is scheduled to be terminated on 10/10/2010.
Our view: We expect a neutral impact of the news. We estimate that Czech TV would account for only 1-2% market share following the introduction of the new bill. Please note that the commercial station limit for advertising slots amounts to 12.0% of their airtime. Also, we believe that the threat of new entrants should not be overestimated, given the experience of limited growth of small TV players already present on cable and via satellite. We believe that digitalisation offers (1 799 CZK, -0,06%) new opportunity with regard to launching thematic channels and increasing its ads inventory after 2010.