Market Insight

Audience declines underpin CME revenue fall in Croatia and Czech Republic; favourable economic environment boosts CME growth in Romania in Q2 2016

July 29, 2016  | Subscribers Only

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CME recorded a 2.8% growth in Q2 2016 and 3.4% growth in H1 from their six CEE operations, achieving H1 2016 revenue of $304.2m. Romania was the best performing market in Q2 with a 10.4% growth at constant FX rate whereas. Croatia and Czech Republic declined by 1.6% and 5.4% respectively. These three markets together accounted for 66% of CME’s Q2 ad revenues, with Czech Republic contributing the largest share to CME’s advertising revenue

Our Analysis

Audience declines and the economic environment were the key drivers of CME’s performance in Q2 2016.

  • The Czech TV ad market grew 2% in Q2 2016. The small growth was due to seasonal ad budget shifts. Many advertisers moved their marketing spend from Q2 2016 to Q1 2016 to take advantage of the lower TV ad prices offered by all Czech broadcasters in the first three months of the year. The shift was also a result of the Easter holiday, which in 2016 fell in Q1 (after falling in Q2 in 2015). CME is still the leader in the market with strong audience figures in the 15-54 age bracket, but it has seen a decline in their audience ratings (at 35% in Q2 2016 down from 37% in Q2 2015)  as competition from Prima’s (MTG-owned) new channels has increased. The launch of these new channels was also a key driver in the deflation of the total TV ad market prices in Q1.
  • The Croatian TV ad market increased at a modest rate of 1% in H1 2016. CME underperformed the total market, experiencing a fall in both its ad market share and also its audience ratings. Q2 2016 is historically the weakest quarter for CME audience ratings. The group lost 2% of its ad market share which was equally distributed between competitors RTL Group and public broadcaster HTV. However, the company is optimistic about the second half of the year. CME has built a strong news programming in Croatia and the national elections in Q3 will increase CME’s audience ratings and drive up the ad revenues from the Nova channel.
  • The Romanian TV ad market increased 7% in H1 2016. The private consumption increase in H1 2016 has generated a very positive climate for advertisers to invest in marketing campaigns, lifting all broadcasters’ Q2 2016 revenue. IHS forecasts private consumption to grow 4.7% by the end of 2016, continuing to boost advertising spend. Advertisers look to capitalise on private consumption growth so they increase their marketing budget to take advantage of higher consumer spending. In this favourable climate, the content strategy of CME in Romania has paid off leading the market, outperforming its competitors. The strong brand name of PRO TV lures advertisers to make the channel the cornerstone of their campaigns with popular local productions of international shows. In particular “Got Talent” “The Voice”, and the UEFA European football championship (peak of 71% of total audience share) have lifted CME’s audience ratings.

In the two markets that CME competes directly with the MTG group (Bulgaria and the Czech Republic) MTG has performed better in term of audience ratings in Q2, increasing competition between the two groups. Due to audience rating challenges resulting from strong competition (RTL and MTG-owned channels) two of the CME markets contracted in H1 2016. However, favourable economic conditions and investment in local content in the other four CEE markets accounted for growth in the CME operations. As a whole, CME advertising revenue in the CEE region was driven by the strong performance from Romanian and Slovak markets. Given the good macroeconomic conditions in the CEE region, the TV ad market is expected to grow due to investment both from international but also local advertisers. Additional ad revenue could potentially be unlocked by capturing more of the local advertisers especially in the faster growing markets of Romania and Slovakia, but also Bulgaria. 

Organization
Central European Media
Research by Market
Media & Advertising
Category
Advertising
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