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Investing.com -- S&P Global Ratings has upgraded Central European broadcaster CME Media Enterprises B.V. (CME) to ’BB-’ from ’B+’ with a stable outlook, citing the company’s improved financial performance and reduced debt levels.
The ratings agency noted that CME posted strong results in 2024, driven by solid growth in TV advertising operations along with higher carriage fees and streaming revenue. This performance translated into improved free operating cash flows (FOCF) and reduced the S&P Global Ratings adjusted debt to EBITDA ratio to 3.3x.
S&P expects CME to achieve 10%-15% growth in subscription revenue from streaming services while maintaining sound performance from its linear TV business in 2025-2026. These factors are projected to boost the company’s overall revenue and earnings.
The broadcaster has lowered its long-term net leverage target to 2.75x from 3.25x, assuming no acquisitions, which corresponds to an S&P Global Ratings-adjusted debt to EBITDA ratio of approximately 3.25x. CME has demonstrated a positive track record of debt reduction, having repaid €55 million in 2024 and €60 million in 2023.
S&P anticipates that CME will continue to proactively repay debt, with adjusted leverage expected to decline toward 3.0x in 2025 from 3.3x in 2024, with further reductions projected for 2026. The company’s FOCF to debt ratio is forecast to improve toward 15% in 2026 from 13% in 2024.
The company operates in six Central European markets, with its largest revenue sources being the Czech Republic and Romania, which account for approximately 61% of total revenue. TV advertising contributed 70% of CME’s revenue in 2024.
CME plans to expand its digital TV offerings in 2025-2026 to adapt to changing content consumption preferences. The company will focus on widening its streaming service VOYO across five markets (Bulgaria, Romania, Slovakia, Slovenia, and Croatia) and has recently launched the OTT platform Oneplay in the Czech Republic, which will replace VOYO in that market.
S&P expects CME’s linear TV businesses to perform well in 2025-2026, despite the industry trend of declining viewership. The ratings agency notes that Central European markets show more resilience in linear TV consumption compared to Western Europe or the U.S., due to factors including a larger share of TV in total advertising, less disruption by digital platforms, and lower smart TV and SVOD penetration.
The stable outlook reflects S&P’s view that over the next 12 months, CME will achieve material growth in its subscription revenue while maintaining robust performance in its linear TV operations. Despite ongoing investments in streaming services, the company is expected to maintain EBITDA margins of approximately 25%, adjusted leverage below 3.5x, and FOCF to debt above 10%.
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