ARBO media, independent media sales house, expects ad expenses in Czech Republic to reach CZK 19.3bn in 2007, up 5.7% y/y. The growth is expected to accelerate in comparison to current and last year, when expenses grew by 2.7% y/y. The amount spend on TV ads is expected to reach CZK 9.17bn and print media ads should reach CZK 6.39bn. The highest growth is expected in internet ads, which should reach CZK 724m, up 35% y/y.
Our view: Our current estimate for TV advertising spending at CZK 9.03bn for 2007 is close to ARBO estimate. However, we believe that we are on the conservative side, considering that the public television has already announced a plan for a 15% ad prices increase and CME guided for 10-20% increase of TV Nova ad prices for 2007. We expect the ads volume to remain broadly unchanged, despite higher prices, as TV advertising still offers relatively low cost of reaching the consumer. We reiterate our Buy rating for CME, anticipating TV Nova to outperform the overall advertising market growth, due to the shift of advertising buyers from public TV to the commercial channels.