According to the Milliyet daily, Ronald Lauder, who owns a 71% voting interest in CME, reportedly agreed to buy Turkish TV station TGRT for USD 200m via CME. No further details were released. CME’s D/E stood at 0.7 at the end of 1H2005 with net debt/equity of 0.47, which should enable the company to finance the deal without threatening its financial position. We would view the potential acquisition in Turkey as value creative given its high growth potential, subject to acquisition multiples.
Separately, the senate approved a bill to gradually ban ads on public TV channels from 2008. The legislation still needs to be signed by the president. The bill would benefit TV Nova and TV Prima (the two private channels), which would stand to share part of the USD 40m per year currently spent on state TV ads, thereby increasing their respective market shares. This would raise our fair value of CME by USD 2 per share.