Est Media Holding on May 6 sold unit KV Barat Kft, 100% owner of the company that operates commercial FM radio station radiocafé 98.6, in a transaction that entailed an accounting-based loss of HUF 180 million but resulted a significant immediate reduction in operating costs, Est Media Holding reported on Friday evening.
Est Media, known as econet.hu until February, said that the sale represented another step in a shareholder-mandated restructuring of the company aimed at generating short-term operating profit in the loss-making media branch of its operations.
The company said that the current state of Hungary's radio advertising market and the uncertainties over new tenders for regional radio frequencies in 2012 would make it possible for radiocafé 98.6 to becoming profitable only on the long term, if its frequencies were renewed in 2012.
Est Media said that the sales price of radiocafé 98.6, which broadcasts in a 60 km radius from Budapest, was "under the threshold of substantiality." It noted that it has retained a limited sales and barter agreement with KV Barat Kft.
Sales revenues will be rechanneled into print and online business segment including market leading products, Est Media said.
The company also operates an event branch, which includes organization of the popular annual Sziget Festival in Budapest through its 51%-owned unit Sziget Kulturalis Menedzser Iroda.
Est Media's reorganization has already started; a slower but more stable growth can begin in 2011, Csaba Balázs, president of Est Media board said at the AGM. He blamed shrinking market for the losses of Est Media. Est Media shareholders mandated the board to devise an action plan to cut losses at the company's April 29 AGM mandating the board. Est Media had losses of HUF 1.48 billion in 2010, compared to losses of HUF 772 million in 2009.