TVN has increased its advertising time-slots prices by 70% on average compared with last year, much more than its competitors, according to ‘Press’ monthly. Public television TVP increased its prices by only 30% y/y and Polsat by only 10-15% y/y. Some advertising buyers have described the jump in TVN ad prices as ‘shocking’. TVN has also increased subscription fees for cable operators transmitting TVN programming. Majority of cable operators agreed to higher prices. However, one of them, Aster City (270k subscribers) has refused and removed TVN Turbo and TVN Style from the list of its programs.
Our view: The scale of advertising time-slots price increase is higher than we anticipated. It reflects gains in TVN audience share in 1H06 and assumes equally high audience share in 2H06. But some ads buyers could switch to other TV channels, resulting in less impressive than 70% advertising revenues growth. Therefore, we leave unchanged our estimate of 25% increase in TVN advertising revenues for 2006. We reiterate our Hold rating for the stock.