According to the head of CME Michael Garin TV ad prices will growth by double digit next year. Note that previously the TV Nova’s CEO Peter Dvorak stated that the average TV ad prices should growth by 15% y/y. The state TV will lower its ad time to half in 2007 and from 2008 will not broadcast ads at all.
The TV ad increase of TV as prices is favourably
Our view: Note that this is the average growth rate, which may have a different impact on the whole TV ad market as well as TV Nova’s top line given (i) various discount given to various clients and that (ii) the 15% y/y increase being an average increase suggests that some clients would be paying higher rate – in particular larger clients, who cannot afford not to be present at TV Nova. As a result, we expect, TV Nova's top line to growth by 20% y/y excluding the impact from reduced advertising at state TVs against our FY2006 revenues estimate of USD193m and 15% against CME's guidance for TV Nova's FY2006 sales of USD200m. The y/y increase in revenues is driven by increases in the TV ad market.