RPT-Czechs to open field to digital TV stations

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PRAGUE, July 18 (Reuters) - The Czech government approved a draft broadcasting act allowing the launch of new digital television stations to compete with units of Central European Media Enterprises (CME) and Sweden's MTG .

Interior Minister Ivan Langer told reporters the bill would also enable the public Czech Television (Czech TV) to keep broadcasting advertisements to raise funds for filmmaking and bolster its revenue derived from mandatory household fees.

Parliament raised the fees -- which all households must pay to receive the state TV signal -- as of this year to compensate for a gradual phasing out of advertising on Czech TV to boost its profile as a public service broadcaster, modelled on the British Broadcasting Corporation (BBC).

Analysts said that if approved by parliament, the law keeping ad time at 0.5 percent of air time on each of the four Czech TV channels would hit profits at TV Nova, owned by CME, and TV Prima, co-owned by MTG.

The Bermuda-based CME's TV Nova is the market leader, with more than a 40 percent audience share, making it advertisers' prime target.

It is the largest revenue earner among the group of six central European television stations run by CME, with a more than 60 percent share of the $350 million local advertising market.

Analysts at Wood & Company have estimated CME's TV Nova would lose up to 10 percent of earnings before interest, tax depreciation and amortisation (EBITDA) in 2008 if Czech TV kept broadcasting ads. Nova's core earnings totalled $100 million in 2006.

The bill also gives a green light to six stations to go on air next year and operate under temporary permits until the analogue television broadcasting switch-off in October 2010.

CME's TV Nova and MTG's TV Prima would each be awarded one extra licence for digital broadcasting to bridge the period until the analogue switch-off. After that the field would be open for any company to register and broadcast digitally.