CME: Conference call highlights

Advertising markets: CME (365 CZK, -0,54%) expects all of its TV advertising markets to grow in full-year 2011, although 1H11 is expected to be flat or just slightly in the black. All of the firm’s ad markets are expected to pick up in 2H11. Overall, CME expects its markets to grow at low single-digits in 2011. Guidance for 2011: CME declined to give exact guidance for revenues and EBITDA in full-year 2011. Instead, this information will be made available after the announcement of the 2Q11 numbers. However, the CEO said he feels comfortable with the current market consensus, which puts the firm’s top line at US$ 810m and EBITDA at US$ 165m for full-year 2011. The CFO said the firm targets double-digit growth in revenues on a constant currency basis in 2011.

Our view:
The conference call was held during yesterday’s trading hours and the information provided pushed up the stock price by 6.1%. We expect a neutral market reaction to the news today. Our full-year 2011 estimates are 1% above the consensus for the top line and 13% below for EBITDA. While we essentially agree with the top-line expectation, we believe the consensus estimate for EBITDA could be difficult to deliver given the investments in content that are likely to become necessary to maintain CME’s audience shares.