Advertising sales at TV Nova, a Czech unit of CETV, fell almost 50% in January after the company increased prices, local media reported today citing Nova Managing Director Jan Andrusko. The company expects to sell less advertising this year.
TV nova is the most profitable unit for CETV and accounts for roughly one third of group’s revenues (37% of the broadcast segment revenues). In 9M12 TV Nova’s revenues fell 6.6% y/y in local currency and OIBDA margin has deteriorated from 44.8% last year to 38.9%. This trend is likely to continue this year. The news could be negative for the CETV’s stock and we reiterate our SELL recommendation and TP set at 5.3 USD a share.