THE VALUE OF CME SHARES DROPS SHARPLY

6th June, 1997

The value of the shares of Central European Media Enterprises, whose sole profit-making TV company is the low-brow commercial station Nova TV in the Czech Republic, dropped sharply at the end of May 1997, possibly in connection with the political and economic difficulties in the Czech Republic.

CME shares dropped to its lowest value of $23,5 dollars on 30th May, 1997, from $37,12 achieved on 20th January 1997 (after the Czech radio and TV regulatory authority abolished the last of the 31 conditions, originally imposed on the commercial TV licence given in 1993 to CET 21, a group of Czech and Slovak intellectuals. The Bermuda-registered CME is using this licence to operate Nova TV in the Czech Republic.)

Since the end of January 1997, the value of CME shares has been slowly decreasing, but the sharpest falls were registered at the end of April and May 1997 respectively.

Since 30th May, CME shares have recovered slightly and reached the value of $24,58 at the end of the day' s trading on Friday, 6th June, 1997. The slight rise coincided with a reshuffle in the Czech government.

At the end of May, 1997, serious problems became apparent in the Czech economic policy. It transpired that the position of the country is not as good economically as Premier Vaclav Klaus was making out.

The Czech Republic suffers from a large trade deficit. Czech firms, most of which have not been restructured since the fall of communism and have practically no access to investment finance because many of them are heavily in debt, find it very difficult to compete on the world markets.

At the end of May 1997, the Czech currency, the crown, experience a direct assault on its value on the international money markets and it was forced to devalue. The Czech Central Bank spent some $ 3 bn trying to defend the local currency.