Business Leading Czech commercial tv company looks for rebound after testing times

04-04-2014 13:55 | Chris Johnstone

No longer the undisputed leader on the Czech commercial television market, TV Nova saw its revenues and profits drop sharply last year. But there are expectations both will rebound in spite of sharp cost cutting by the parent group.

Photo: Jiří SuchomelPhoto: Jiří Suchomel ‘Many a small thing has been made large by the right kind of advertising.’ That quote could well apply just now to the profits of the Czech Republic’s biggest commercial television group, centred on TV Nova, as it looks to bounce back from tough times.

The former cash cow of the multinational CME group has gone through lean times of late, partly due to a drawn out recession in which advertising spending appeared to be one of the first things to be sliced.

But experts say some of the damage was self-inflicted, with former bosses fanatically sticking to their ad rates and refusing to give discounts to the big international car, drugs, food, and phone companies that normally fill their coffers. The result was that some of these companies turned their backs on the commercial broadcaster and went elsewhere.

Czech net revenues for the CME group fell by almost a third last year, to 191 million dollars against 278.1 million dollars in 2012. The last quarter of the year, normally boosted by the pre-Christmas splurge on advertising, was not much better than the remainder of the year. Net revenues were down 22 percent to 70 million dollars.

Total Czech tv ad revenues were down by around 7.7 billion crowns at 27.8 billion crowns in 2013 compared with 2012, according to one survey. Internet advertising continued to surge ahead with a jump of just over 19 percent to 6.5 billion crowns and the print media appeared to have more or less stopped the sharp erosion of its ad revenues.

If a smart advertiser was to pick on the positive, perhaps the sole positive, then it might be that flagship channel TV Nova hung onto its Czech audience last year in spite of stepped up competition. It continued to claim 31.6 percent of viewers in 2013 against 31.9 percent in 2012. But rewind back to 2007 and TV Nova was way out ahead of its rivals and had 41 percent of viewers. From clear market leader, it now looks more like first among equals.

Second placed commercial tv group, Prima, in which Swedish-based Modern Times Group has a 50 percent stake, has become a serious rival both for ad revenues and viewers. A proliferation of small channels has also emerged to claim some of the audience.

Nova has, reportedly, reneged on its hardball tactics of the recent past with the big advertisers and ad agencies and some have come back to the fold thanks to the new price flexibility. Some significant spenders, such as L’Oreal and Danone, are still not back though.

Cautious economic recovery should feed through into advertising spending and some analysts say that the broadcaster’s ad revenues could rise by around 17 percent this year. In the meantime, a cost cutting campaign continues under the watchful eyes of CME’s new boss Christoph Mainusch. Many former top managers at the Czech broadcaster have walked or been pushed out in what some describe as a unprecedented bloodletting which might better fitted the nickname of the previous CME boss, Dracula.

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