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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 5, 1999
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CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
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(Exact Name of Registrant as Specified in Charter)
Bermuda 0-24796 Not Applicable
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
Clarendon House, Church Street, Hamilton HM CX Bermuda
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (441) 296-1431
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report
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Item 5. Other Events.
Attached is a Press Release issued by Registrant on August 5, 1999 (the "Press
Release"). Subsequent to the issuance of the Press Release, the Registrant
received from CET 21, spol. sr.o. ("CET 21") a notice of termination of the
Service Agreement between the Registrant's 99%-owned Czech subsidiary, Ceska
nezavisla televizni spolecnost, spol. sr.o. ("CNTS") and CET 21 (the "Service
Agreement"). The Service Agreement is one of the documents under which CNTS has
been providing programming and advertising sales services to CET 21 for Nova TV.
The Registrant does not believe that the Service Agreement has been validly
terminated, and will continue to pursue its rights thereunder.
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Exhibits
99.1 Press Release of Central European Media Enterprises Ltd., dated August
5, 1999.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Central European Media Enterprises Ltd.
(Registrant)
Dated: August 5, 1999 By: /s/ Fred T. Klinkhammer
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Fred T. Klinkhammer
Title: President and Chief Executive Officer
(Duly Authorized Officer)
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INTERRUPTION IN OPERATIONS OF CNTS, CZECH SUBSIDIARY OF CENTRAL
EUROPEAN MEDIA ENTERPRISES LTD.
PRAGUE, Czech Republic, August 5, 1999 - Central European Media
Enterprises Ltd. (CME) (Nasdaq: CETV) announced today that broadcast operations
at its 99%-owned Czech subsidiary, Ceska nezavisla televizni spolecnost, spol.
sr.o. ("CNTS") have been interrupted by CET 21, spol. sr.o. ("CET 21"), which
pre-empted CNTS's transmission and began broadcasting a substitute signal for
Nova TV from a site other than CNTS studios this morning. CNTS and CME have
urgently requested the Czech Media Council to call an extraordinary meeting to
address breaches of the Czech media laws and destablization of the Czech media
market.
In a statement issued today, Fred Klinkhammer, President and Chief
Executive Officer of CME stated: "This action by CET 21 constitutes a massive
breach of our most basic agreements with CET 21, violates the Czech media laws,
the terms of the broadcast license and the Czech Media Council's recent
instruction to the parties to work together to resolve their disputes and not to
disrupt normal broadcasting of Nova TV. The time has come for the Czech Media
Council to recognize that CET 21 is flaunting its legal obligations and holding
the Czech public hostage to the ego of one man, Dr. Vladimir Zelezny. We have
worked to resolve any disputes with CET 21 and Dr. Zelezny within the legal
framework of our agreements and the Czech Media Council's requirements. Dr.
Zelezny has refused our offers to negotiate and CET 21 has now violated CNTS's
copyrights, trademarks and licenses by producing television programs registered
to CNTS and jeopardized the operations of CNTS, the largest commercial
television company in the Czech Republic. I urgently call upon the Czech Media
Council and other governmental authorities to take strong action to enforce
Czech media laws, and the terms of the broadcast license, and to protect the
Czech public from being held hostage by these actions. CNTS and CME will
continue to take all available steps to enforce their legal rights, including
rights arising under international treaties for the protection of foreign
investment."
CET 21, CNTS, CME and Dr. Vladimir Zelezny, the executive officer of
CET 21, are engaged in an ongoing dispute with respect to the operations of Nova
TV and the rights and obligations of each of CET 21 and CNTS. On April 19, 1999,
Dr. Zelezny was recalled as General Director and Executive of CNTS for breaching
his fiduciary duties and acting against the interests of CNTS.
Under the CNTS Memorandum of Association and a Services Agreement dated
as of May 21, 1997, CNTS has provided substantially all television and
advertising sales services to CET 21 for Nova TV. On June 10, 1999, Dr. Zelezny
announced that CET 21 has reached an agreement with another Czech company to
provide television services to CET 21 and that CNTS would no longer be the
exclusive provider of television services to CET 21 for Nova
-Continued-
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TV. CET 21 is now producing and broadcasting programs as to which CNTS has
registered with Czech trademark authorities production and other intellectual
property rights. CNTS has notified CET 21 that it is violating CNTS's rights to
such programs and will promptly file requests for preliminary injunctions
against CET 21's further production and broadcast of such programs.
Since the dismissal of Dr. Zelezny, CET 21 and CNTS have filed a number
of lawsuits with respect to their contractual relationship. CNTS intends to file
a preliminary injunction with the Czech courts to enforce its rights to be the
exclusive provider of such services to CET 21 for Nova TV under the Services
Agreement, and will seek a court injunction prohibiting CET 21 from entering
into agreements for the provision of similar services from third parties. CET 21
has filed a petition with the Regional Commercial Court in Prague to declare the
Services Agreement invalid, which is pending.
In June 1999, the Media Commission of the Czech Parliament requested
the Czech Media Council to provide its opinion regarding several issues related
to the dispute, including whether CNTS is entitled to be the exclusive provider
of television services to CET 21 for Nova TV. On July 26, 1999, the Czech Media
Council sent CNTS excerpts of its report to the Media Commission. In the
excerpts of its report, the Media Council stated its view that the dispute
between CET 21 and CME was essentially of a commercial nature and, as long as
Czech media laws were not violated, that the Media Council had no legal reason
or right to intervene. The report referred to several possible risks of breaches
of the Czech media laws arising from the dispute, including destablization of
the Czech media environment, and asked CET 21 and CNTS to immediately cease
their media campaigns and to inform the Media Council before August 15, 1999 of
the steps taken to minimize risks of media law violations and towards settlement
of the dispute. CNTS and CME responded to the Media Council that they will
comply with the Media Council's request and have offered to recommence
negotiations to resolve the disputes with Dr. Zelezny and CET 21. CNTS and CME,
however, expressed their disagreement with the Media Council's characterization
of the disputes as essentially commercial in nature, pointing out that the Media
Council has been intimately involved in approving the structure of the legal
relationships between CET 21 and CNTS, and, in fact, mandated many of the
contractual changes that gave rise to the current disputes. In response to CME's
offer to immediately commence negotiations to resolve the disputes, counsel to
CET 21 wrote that the disputes were currently in litigation and indicated no
interest in negotiation.
The Company believes that the recent actions by CET 21 violate the
Services Agreement and CET 21's obligations under the CNTS Memorandum of
Association, as well as Czech media laws. If CNTS's operations continue to be
interrupted, CNTS's advertising revenues could be disrupted or curtailed
entirely, and CNTS's business operations could be suspended. CNTS contributed
$47.5 million of the Company's combined broadcast cash flow of $25.3 million in
1998 and $3.4 million of the Company's combined broadcast cash flow of negative
$3.5 million for the three-month period ended March 31, 1999. Any significant
disruption of CNTS's cash flows would have a material adverse effect on the
Company and could result in its inability to meet its debt service and other
financial obligations.
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Forward-looking Statements
Statements made above regarding outcomes of legal disputes,
disruptions of television programming and effects on CNTS's and CME's operating
results and financial condition are forward-looking statements. Forward-looking
statements are inherently subject to risks and uncertainties, many of which
cannot be predicted with accuracy and some of which might not even be
anticipated. Future events and actual results, financial and otherwise, could
differ materially from those described in or contemplated by the forward-looking
statements.
CME is the leading broadcaster in Central and Eastern Europe, and
operates eight television stations in six countries, reaching an audience of 84
million people, and is traded on the Nasdaq National Market in the US under the
symbol "CETV."
# # #
For further information, contact:
Chris Plunkett or Michael Smargiassi
Brainerd Communicators, Inc.
Tel: 212 986 6667
