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Central European Media Enterprises Ltd (CETV) Q4 2018 Earnings Conference Call Transcript

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Central European Media Enterprises Ltd  (NASDAQ: CETV)
Q4 2018 Earnings Conference Call
Feb. 06, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, my name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Central European Media Enterprises Full Year and Fourth Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (Operator Instructions). As a reminder, this conference call is being recorded today, February 6, 2019.

It is now my pleasure to turn the floor over to Mark Kobal, Head of Investor Relations at CME, who will be our moderator today. Mr. Kobal, you may begin your conference.

Mark Kobal -- Head of Investor Relations

Thank you, Christa. Good afternoon and good morning, everyone and welcome to CME's full year and fourth quarter 2018 earnings conference call. We issued our earnings press release earlier today, a copy of which is available on our website at cme.net along with a brief presentation that we will refer to during this call.

On the call today are Michael Del Nin and Christoph Mainusch, Co-Chief Executive Officers at CME; David Sturgeon, Chief Financial Officer; and Daniel Penn, General Counsel.

Our presentation today will contain forward-looking statements. Actual results may vary materially from those expressed or implied due to various factors. Important factors that contribute to such risks include, but are not limited to, the risk factors and other cautionary statements in our SEC filings, including the Form 10-K filed earlier today. Forward-looking statements speak only as of the date, and we undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

During this call, we will also refer to certain financial information that is not in US GAAP. A description of these non-GAAP financial measures as well as reconciliations to the most comparable GAAP measures is available on our website in the appendix to the earnings call presentation. Additional information may also be found in Note 20 to our financial statements in the Form 10-K.

Lastly, we completed the sale of our Croatian operations in 2018 and that business is presented as discontinued operations for all periods. The agreement to sell our operations in Slovenia was terminated, so those are not presented as held for sale and our discussion today covers our continuing operations in all five operating segments.

And now I'll hand the call over to Michael and Christoph.

Michael Del Nin -- Co-Chief Executive Officer

Thanks, Mark and thanks to everyone joining us for this call. We have an outstanding set of operating results to discuss today. For the fifth consecutive year, we're able to announce OIBDA growth of more than 20%, continuing a lengthy streak of margin expansion that has resulted in 20 consecutive quarters of growth in trailing 12-month OIBDA. In fact, margins in our two largest segments topped 40% for the full year and the margin for the entire company reached 40% in the fourth quarter, an incredible improvement of more than 500 basis points compared to Q4 2017. And just as remarkable, cash flow generation surged by almost 30% for the year.

Before getting into the details of those results, we wanted to take a minute to recap the list of our accomplishments for the last year, which underscores the considerable progress that we have made during the course of 2018. Early in the year, we extended our debt maturities, de-risking our capital structure and providing us with the time needed to gradually retire a large portion of our debt. We also negotiated lower pricing grids for those maturities, locking in extremely attractive pricing before rates moved significantly upward.

We successfully completed the divestiture of our operations in Croatia, raising proceeds of more than $100 million in order to accelerate our deleveraging. This, together with cash generated by the business and proceeds from warrant exercises, provided the funds to reduce our gross debt by more than 25% during the year.

Additionally, the ongoing improvement in our operations, reduced our net leverage ratio by 2 turns to 3.5 times. And based on the revised pricing grids, this leverage means that our average cost of borrowing is now only about 3.5%, less than half of where we were just 18 months ago. And it should be noted, we've now generated positive net income for the last two years with diluted EPS from continuing operations more than doubling in 2018.

Much of this was made possible by the underlying strength of our business and the impressive finish to the year and even better result than we were expecting, just a few months ago. On a five country basis, our net revenues in 2018 increased 10% at actual rates and 5% at constant rates to $704 million. Costs this year were again broadly flat at constant rates. As a result, OIBDA grew 21% at constant rates, and with some FX tailwind, increased 24% at actual rates to $223 million.

Margins expanded in every segment, improving the consolidated OIBDA margin to 32%, an increase of around 400 basis points over last year. The inclusion of Slovenia in these results improved the growth rate of our operations. But even if you consider for a moment, just our four other businesses, there OIBDA growth of over 17% at constant rates, well exceeded the guidance that we raised back in October.

Slovenia was also accretive to unlevered free cash flow, which increased 29% over 2017 to $156 million. And even after the repayment of more than $27 million of guarantee fees, previously paid in kind, we saw a similar growth in free cash flow, which totaled $84 million. This, along with the improved 2018 results, allowed us to make another EUR60 million debt repayment last week. Following that payment, we have about EUR150 million outstanding on our nearest maturity, which comes due almost three years from now in November 2021.

When you consider the level of unlevered free cash flow generated in 2018, together with our new run rate debt service obligations of less than $27 million annually, we should have more than enough financial resources to retire that debt before it comes due, while still being able to evaluate alternatives to capital allocation to further improve shareholder returns.

I'll now hand the call over to Christoph.

Christoph Mainusch -- Co-Chief Executive Officer

Thank you, Michael. Good afternoon and good morning to everyone. As we reflect on the successes of 2018 and momentum entering 2019, we couldn't be happier with the results of our operations and strength of the business. Strong TV ad markets and significant growth in carriage fees and subscription revenues have improved both profitability and our financial position. And it is important to note that we have been successful doing this while investing more in the local content that drives our leading audience positions, while we celebrate this 25th anniversary of CME in CEE during 2019.

Given the reach of TV, increased competition for audience share in our markets continue. As a result, the production of original local content remains a key pillar of our strategy. It is an important factor in attracting large audiences, not just on television, but other non-linear sources of entertainment as well. In fact, in 2018, we broadcast more than 14,000 hours of fresh original local content spanning news, current affairs, fiction and entertainment programming.

The scale and expertise of our programming and scheduling teams was on full display, as our popular productions filled the vast majority of the top local titles in each country during this fall season. This programming success enabled us to grow our TV ad revenues in markets that we estimate to have increased by 3% overall in 2018. CME grew with the market for the full year, and our growth of 5% in Q4 outpaced the market.

In the Czech Republic, market growth of 3% in 2018 was driven by selling more GRPs, with more spending placed outside peak seasons as well as additional inventory available on competing channel. The market in Romania grew 4% from higher average prices. In Slovakia, the market also grew 4% due to higher average prices, which was partially offset by selling fewer GRPs. Prices were particularly strong in Q4 and our TV ad revenues grew by 10% compared to market growth of 5% in the period. The market in Bulgaria increased 5% as the volume of GRPs sold increased significantly, which was partially offset by lower average pricing. And in Slovenia, the market was broadly flat as the decline in GRPs sold was mostly offset by higher prices.

Looking ahead to 2019, we believe CME's TV ad revenues will continue to grow, as we have introduced higher list prices in our sales policies for all territories. We also anticipate, this will be supplemented by a higher proportion of income from other sources.

Carriage fees and subscription revenues increased 15% in 2018, which represents the second consecutive year of double-digit growth. With the recent growth in Slovenia, three of our five segments, now generate more than 20% of the revenues from carriage fees and subscription revenues. And on a consolidated basis, these high margin carriage fees and subscription revenues are now double way -- what they have -- were just been five years ago.

And now I'll turn things over to Dave to -- for the segment results.

David Lamac -- Fio Banka -- Analyst

Thanks, Christoph. Segment results begin on Slide 12 of our presentation.

TV ad revenues in the Czech Republic increased from selling more GRPs, reflecting higher demand for advertising in the market, particularly due to more spending being placed outside of the peak seasons of the spring and fall, when list prices are lower. Carriage fees and subscription revenues grew due to an increase in the number of subscribers, as well as higher prices. Costs charged in arriving at OIBDA increased due to investments in addition local content during this spring and fall seasons on the main channel with more episodes of returning series, as well as an additional local title in the fall. There were also higher salary and staff costs, including additional headcount to further on digital initiatives.

In Romania, TV ad revenues increased due to higher prices, which were partially offset by selling fewer GRPs due to lower ratings. During the spring season, we saw a shift in some spending due to the lower price competition, which generates more inventory to sell, but we grew faster than the market in the fourth quarter. Carriage fees and subscription revenues increased due to an increase in the number of subscribers. Costs decreased, largely due to savings on production costs for locally produced format in the spring season when compared to the schedule in 2017. There was also a reversal of the legal accrual and lower professional fees.

Our TV ad revenues in Slovakia grew due to higher average prices and we increased market share. There was also higher spending on sponsorship compared to last year as sellout rates remain elevated. Following our exit from DTT at the beginning of 2017, carriage fees and subscription revenues increased significantly. Certain contracts were signed in the first half of last year. Costs increased, due primarily to an increase in legal and professional fees, which were largely offset by lower staff cost and transmission fees. Content costs were broadly flat. High costs of local productions in the spring season were offset by savings in the fall season, in addition to lower expense from foreign content during the year.

In Bulgaria, TV ad revenues increased due to higher average prices and selling more GRPs, as significant growth in private consumption, encouraged advertisers to increase spending. There was also an increase in revenue from sponsorship and product placements. Carriage fees and subscription revenues grew due to an increase in the average costs per subscriber. Costs decreased due to lower bad debt charges, as well as decreases in professional fees and staff costs. These were partially offset by an increase in content costs during the spring and fall season from a new telenovela on our main channel in the access-prime time slot.

And in Slovenia, TV ad revenues were broadly flat, due to selling fewer GRPs, which was mostly offset by higher prices. Carriage fees and subscription revenues grew following our exit from DTT since prices increased and certain contracts took effect in the second quarter 2017. Costs were broadly flat, as content costs decreased slightly due to savings from fewer sports rights, which was offset primarily by higher staff cost.

And with that, I'll hand the call back to Michael.

Michael Del Nin -- Co-Chief Executive Officer

Thanks, Dave. With 2018 now behind us, let's discuss what we expect in the year ahead. As you'll recall, our primary motivation for pursuing a sale of our Slovenian business was to accelerate our deleveraging plans. That deal was not happening. But even without the sale of Slovenia, we have made remarkable progress on that front, where we have benefited from one-off events such as the receipt of proceeds from warrant exercises and the sale of our Croatian operations.

The deleveraging is fundamentally driven by the strong cash generation of our operations. We are converting around 70% of OIBDA to unlevered free cash flow, which allowed us to make a further EUR60 million debt repayment last week and has been the single largest driver of the nearly $440 million reduction in our gross debt over the last 18 months.

Even without the proceeds from the sale of our Slovenian operations, we believe our net leverage ratio will approach 3 times, as early as Q1; a delay of just one quarter compared to the expectations we had, if the sale had been completed. That improvement in our net leverage ratio reflects continued strong results that we also foresee in the year ahead. The economic growth in the countries in which we operate is forecast to remain strong and we believe that markets will continue to expand at a healthy rate.

With the contribution from other revenues and minimal cost inflation, we expect low double-digit OIBDA growth at constant rates in 2019, and this should translate into a similar rate of growth in unlevered free cash flow at actual rates.

While we anticipate our TV ad revenues will increase for the full year based on higher levels of committed spending compared to this time last year, keep in mind that we often see different phasing in that spending each year. In 2019, Easter is later than it was in 2018, which will likely weigh negatively on Q1's year-on-year comparisons. And the euro is currently much weaker versus the dollar than it was in the first half of 2018, creating translation headwinds for the next few quarters if that continues.

It's always difficult to predict how FX rates will develop over the course of the year and that is why we only guide at constant rates. So based on today's rates, it's worth noting that those guidance levels would result in more than $240 million of OIBDA and around $170 million of unlevered free cash flow. Given run rate interest costs are now under $27 million annually, this would mean free cash flow generation approaching a $145 million. In fact, if we hit those targets, it would mean that adjusting for FX, 2019 would be the most profitable year in the Company's history.

I'll now turn things back over to Mark, so that we can take your questions.

Mark Kobal -- Head of Investor Relations

Thank you, Michael. That concludes our prepared remarks. We will now move to the Q&A portion of the call. And Christa, please open the lines for questions.

Questions and Answers:

Operator

The floor is now open for questions. (Operator Instructions) Thank you. And I will hand you back to Mr. Kobal.

Mark Kobal -- Head of Investor Relations

Thank you. Our first question today is coming from Pavel Ryska, J&T Bank. Please go ahead, Pavel.

Pavel Ryska -- J&T Banka -- Analyst

Quickly congratulations for the fourth quarter and full last year. The improvement is really remarkable lately. And I have many questions for today, but I will start with the three most important ones. So first of all, obviously the growth rate of EBITDA or OIBDA last year was pretty quick and I don't assume that this can be maintained forever. But what would you list as the main factors that should stand behind the certain slowdown of the OIBDA growth of more than 20% last year to the mentioned (ph) 10% to 12% this year, is it more or less macroeconomic situation or is it the cost side of the business or if you could provide more color on this?

Secondly, there was a lot of talk about one step of the Romanian government toward the end of the last year, when they introduced sector taxes on certain sectors such as telecom companies, banks and oil and gas. And I was wondering if you noticed some effect on advertisers that you are in contact with, if there is some -- if there are some signs about, for example, slowdown of their spending or if it is exerting some effect.

And finally, I was thinking about what the current situation or the quick growth in EBITDA would this can have -- what implication this can have on the possible future payouts of profits to shareholders, if there is already enough information for you to, for example, say that you are expecting the first payout, let's say, from next year's profit or if they are conditional on achieving certain net leverage ratio? So if you could expand on this. Thank you.

Mark Kobal -- Head of Investor Relations

Thanks, Pavel. We'll start with Michael on OIBDA.

Michael Del Nin -- Co-Chief Executive Officer

Thanks, Pavel. Look on OIBDA, there's a couple of things there, right. I mean, I think that if you look at the guidance that we gave on our last earnings call, and how that turned out, right, the year absent Slovenia, grew at constant rates at about 17%, and with Slovenia back in the mix, that grew at 21%. So having Slovenia back in our continuing operations had a very positive effect on the growth rates this year and I think it would be fair to expect that Slovenia, which has seen a ramp up in profitability, built largely around the improvements in carriage fee revenue there, which was, as you'll recall, the result of the switch of the DTT signal a couple of years back that those step-ups in growth in carriage and subscription revenues in that country will not be replicated going forward, and so as a result, that will lead to -- contribute to some of the slow levels of growth.

I think generally speaking, what we're seeing is, as we said, continued strength in the macro environment, which we think based on the information that we have, will result in more solid growth on the overall television advertising market and our portion of it. And I think what we're also seeing, you referenced costs, I would expect that we could still see contained cost during the course of 2019. It's not an expectation that, that will increase significantly. So generally speaking, if you factor all those things, and generally the lower and big numbers as well as we start edging up well over $200 million of EBITDA at this point that -- I think that the outlook remains upbeat, but with growth rates as we said, more in that low double-digit range this coming year.

Mark Kobal -- Head of Investor Relations

On the sector taxes in Romania, Dave?

David Lamac -- Fio Banka -- Analyst

Hi, Pavel. Yeah, as you said, at just the full year end, the Romanian government issued an ordinance with certain sector taxes that the two most relevant to the advertising markets would be telecom companies and banks, there was a lot of noise around banks. And obviously, we are not a telecom company or a bank, so to be clear, it doesn't impact us per se. However, obviously, telecoms is a large portion of advertising. Banking, less though, we've seen a decline in bookings from financial services companies last year than in previous years, so that will be less of an impact. So, it's too early to say what actually will happen, but clearly, it's not a helpful development (inaudible) sector taxes and the general impact on their market sentiment et cetera. And obviously, there is always the possibility the ordinance can be rolled back because no one's quite sure exactly what that will do to the economy as a whole. But at the moment, we ourselves are sort of watching and seeing how things are going, we've got no indication that anything is actually changing at the moment, but we'll watch this space.

Christoph Mainusch -- Co-Chief Executive Officer

You know, to add on that, Dave, so far on the advertising market behavior and the bookings we see, we don't see any impact, which we could recognize connected to that at all, but we will further monitor the situation.

Mark Kobal -- Head of Investor Relations

Okay. And the last question on capital allocation, Michael?

Michael Del Nin -- Co-Chief Executive Officer

Yeah. So let's talk about this a little bit in the context of what we said around guidance, right. So we finished the year with net debt -- finished '18 with net debt of around $765 million, right. That's down, as we said, roughly $440 million over the last 18 months, net leverage is down to 3.5 times, and we've said that it's approaching 3 times by end of Q1, right. You'll recall that when we did the repricing transaction in April of last year, built into that is our ability to make changes in capital allocation. Once our gross leverage is less than 2.75 times, right. So, that's gross leverage on a net basis, you would expect it to be a shade under that, right.

So we start the year with net debt of $765 million. We have -- based on guidance, based on current FX rates, we've said, an expectation to generate about $145 million of free cash during the course of the year, and with the same caveats around FX, an expectation of OIBDA close to $240 million for this year, right, that puts us, if you think about it a little north of 2.5 times levered at year end, right, which I would put more or less corresponding with that 2.75 times gross leverage ratio, right. So if you think about it, Pavel, that's kind of the point at which we can under the existing agreements on our financing, start doing stuff, right so that's year-end.

So I completely understand the interest in this and we have given a greater thought internally to what we might do when we approach that point. What we don't know right is what the world is like a year from now when that day comes. And so I think it would be, not particularly prudent to come out very specifically with either a leverage target or a decision around the various options we have on capital allocation and the magnitude of that program without having that information. So I think it would be (inaudible) if we see how the year goes on, see how, not just the macro environment develops, but how the financial markets develop as well and when we are closer to year-end, I think with more information at hand, I think we'll be able to come out with something a little more definitive.

But it certainly looks good. I think that the degree of deleveraging over the course of the last 12 to 18 months has certainly -- pleasantly surprised us, the cash flow generation that we've seen has been great and to see our leverage ratio come down by 2 turns over the course of the year, I think is a fantastic result. So we look forward to making an announcement on that in the not too distant future.

Pavel Ryska -- J&T Banka -- Analyst

Okay. Thank you.

Mark Kobal -- Head of Investor Relations

Thank you. Before we take our next question, Christa, could you just remind people how they can put themselves in the queue.

Operator

(Operator Instructions)

Mark Kobal -- Head of Investor Relations

Next question is coming from Piotr Raciborski from Wood & Company. Please go ahead, Piotr.

Piotr Raciborski -- Wood & Company Financial Services -- Analyst

Yes, hi. I have a couple of questions. The first question considers the Bulgaria segment. Could you please elaborate why the fourth quarter results in terms of OIBDA were weak there? Secondly, could you please remind me of what pricing policy have you published for your segments for 2019? You've already published the prices for -- price hikes for Czech Republic and for Slovakia. Have you published anything more than that? And the third question consider the regulations, do you see any regulatory risks apart, obviously, from the Romanian sector taxes that might harm your business?

Mark Kobal -- Head of Investor Relations

Okay. We'll start with Bulgaria, Michael?

Michael Del Nin -- Co-Chief Executive Officer

Thanks, Piotr. Look, Bulgaria, I would say, as I said in the past, you've got to look at things on an annual basis, phasing changes every year and it's driven by different things in different markets. I think generally speaking, if you look at the full year results, I think, we are very pleased with the way that Bulgaria has developed now over the last couple of years. We've got net revenues on a constant currency basis, increasing 5% this year, 9% at actual rates and we've got for the full year is up, I think a very impressive 33% and on the margin perspective, more than 540 basis points.

So full year, I think very good. What I think we saw in the market over the course of last year was in terms of phasing more growth in the top line in the early part of the year and I don't think that isn't reflective of what I would say the slowdown in the market, but just generally how revenues were allocated by advertisers over the course of the year and so that is, I think -- still, I think the expectation is that the market remains robust. And if you look at OIBDA, that was -- as you point out a little softer than the previous year, but that is the result of some phasing also in costs there. So, I think generally speaking, Bulgaria is certainly one of our greater performance this year.

Mark Kobal -- Head of Investor Relations

On TV ad pricing, Christoph.

Christoph Mainusch -- Co-Chief Executive Officer

Hi, Piotr. So generally, we think that 2019, we continue with the momentum from '18, so it's a macroeconomic backdrop in the countries is positive. So therefore, we believe that the overall demand for advertising is strong and therefore, as well we have introduced higher list prices in our sales policy of all our operating countries in the -- for 2019. So the average realized prices for the year will ultimately depends on a number of factors like including of the timing of the commitments for spending or the portion of those commitments that is prepaid. The volume of those commitments relative to the previous year and of course, the seasonality of advertising actually placed. And then the result will be as well dependent on the client mix, how it turns out.

But to answer your question, we have increased our list prices and all of our operations and we think that the TV ad markets in each country will grow consistent that what we have seen in 2018, due primarily to stronger prices, partly maybe as well as we have seen this year in Bulgaria, the growth came from both price increase and more GRPs. But overall across our market and average we believe the growth will mainly come from price increases.

Mark Kobal -- Head of Investor Relations

Okay. And anything to flag on the regulatory front Dave.

David Lamac -- Fio Banka -- Analyst

Well, in short no, not really I mean the new EU, audio/visual media services directly came out at the end of December, which had very (inaudible) will have an impact on non-linear broadcasters about the content regulations et cetera, but there's nothing in any of our particular countries other than the Romanian sector tax, that we are concerned about or expecting to have a material impact at the moment.

Piotr Raciborski -- Wood & Company Financial Services -- Analyst

Okay. Thank you.

Mark Kobal -- Head of Investor Relations

Thank you. The next question is coming from David Lamac from Fio Banka. David, please go ahead.

David Lamac -- Fio Banka -- Analyst

Good afternoon, guys. Congratulations again for a strong quarter and overall year results. I just -- three questions. First one is relation to tax rate, what do you expect the efficient tax rate would be this year, if you think it stays around 22% in 2018? And second one, if you still think there is a room for EBITDA margin expansion or do you see it's already peaking, as we've seen quite a significant improvement again last year? And the third question, as a follow-up to capital allocation. I know it's a bit early now, but anyway could you also consider realizing share buyback reflected share price development or would you only focus on dividend pay to shareholders? Thanks.

Mark Kobal -- Head of Investor Relations

Great. Thank you. We'll start with Dave on the effective tax rate.

David Sturgeon -- Chief Financial Officer

Hi. Yeah No, as you say, the effective tax rate this year was a bit over 22% and you would generally expect the effective tax rate to be slightly higher than the individual country tax rates, which ranged between 10% in Bulgaria, and 21% in Slovakia, due to things like there is some corporate expenses and non-deductible interest. Our tax rates have gone down significantly over the last year, because we've used up all of our operating losses. We used to have a very sort of lumpy tax rate. But something along the lines of 22%, slightly lower for next year would be about what we've expected.

As you saw, we guided to cash taxes going up around $35 million next year from $28 million this year. That's more predictable number that is based upon historic profitability of the 2018 was more profitable significantly than that happened in the past, but we're not seeing a huge increase going forward this year the -- '18 was the year of significant increase.

Mark Kobal -- Head of Investor Relations

On OIBDA margins. Michael.

Michael Del Nin -- Co-Chief Executive Officer

Yeah. So Dave as you pointed out, the margins have been moving upward very steady pace, especially over the last two years both of last few years 400 basis point improvements on the previous year. And I think Q4 is the first year -- during our time of the company where the company overall hit a 40% margin in the quarter. Obviously, we've got two very strong performing businesses in Romania and the Czech Republic, they're already at 40% margins for the full year.

So what I would say is that the expectation is that revenues will continue to increase at a pace faster than costs and that we will see margin expansion, although, it's difficult to say at this point, what exactly that will be at further expansion in the year ahead. And on capital allocation, as I said previously, we do not anything to announce today as it is a little bit early. Certainly both buybacks and dividends are options that, we've been looking at. But I think we'll have to come back to you with something more definitive just out a little later in the year.

David Lamac -- Fio Banka -- Analyst

Okay. Brilliant, thank you. Thanks guys.

Mark Kobal -- Head of Investor Relations

Thank you. And a follow-up question from Pavel Ryska, J&T Banka. Please go ahead. Pavel.

Pavel Ryska -- J&T Banka -- Analyst

Thank you, again. Mark, so just a few questions regarding the operational level. I also noticed in your results that corporate costs, which are deducted from segment OIBDA to arrive at the overall OIBDA of the company, actually declined year-on-year in the fourth quarter. I wasn't expecting that. So if you could elaborate on this, so what was -- what were the main effects behind this? And then regarding the countries -- in the Czech Republic, the OIBDA margin in the fourth quarter was rather flat in comparison to the fourth quarter of the previous year. So was this because of some additional investment in local programming that you needed given the competition that you mentioned earlier today or were there some other reasons for this?

And finally, Romania, which did so well in terms of the OIBDA margin in the fourth quarter, you mentioned today that there was a drop in certain costs in Romania. So logically, I'm asking myself the question if that is sustainable for the next few quarters or if that should normalize somehow and the cost should go up again? Thank you.

Mark Kobal -- Head of Investor Relations

Okay. We'll start with corporate costs with Dave.

David Sturgeon -- Chief Financial Officer

Hi, Pavel. Yes, corporate costs, they can be quite lumpy from quarter-to-quarter depending on A, obviously the impact of FX, because we have more foreign currency dollar-denominated cost in corporate than we do in any of the other segments. So FX has an impact on that. Comparing Q4 ' 17 to Q4 '18, there are things we had in '17 like, we were in full swing in our GDPR projects that we're spending money on things like that last year that aren't there now. And there was other business development initiatives that we were doing at the end '17 that we completed in the first half' 18. So the base -- it's not apples to apples on that.

Mark Kobal -- Head of Investor Relations

And Czech margin in Q4, Michael?

Michael Del Nin -- Co-Chief Executive Officer

You're tough. I mean, they delivered like 46% margins and you're you like beating them up. It's look I mean, your at extremely high margin levels there. I think that -- I think that's a great result and then, it is not a result of any particular uptick in program investment in the fourth quarter related to additional competition there. I think we're very pleased with the way that the fall schedule played out in the Czech Republic I think that was exactly in line with expectations. And so I don't think that there is anything to be particularly to point out in those results, other than the fact that, obviously when you're at that $0.46, $0.47 EBITDA margin level, it's tough have to grow it.

Christoph Mainusch -- Co-Chief Executive Officer

And on Romania, Pavel. The Q4 you saw in Romania very strong growth in both on higher than initially expected revenues, the gross market was strong, as there was a high demand on pricing, so that we could, so as well in higher price increase and additionally expected. And then additionally too, as you have stated, with the lower cost base as content costs were flat and other costs decreased from lower professional fees so we had those factors.

And going forward, as you know, we always try to invest in our local productions on the expense of lower foreign fiction cost and keep other cost as the total cost always under strong and strict dispute under control. I believe that the cost base will slightly grow in Romania in comparison what we have seen in Q4, but you cannot define it from the fact that the revenue growth, actually will be done on a larger extent than how cost will grow.

Pavel Ryska -- J&T Banka -- Analyst

Okay. Thank you.

Mark Kobal -- Head of Investor Relations

Okay. Thank you, everyone for joining us today. As a quick reminder, you can keep up-to-date and follow our progress between earnings calls on our website cme.net, since we routinely posted important information about the company and its operations. We're also available for your feedback and additional questions at any time.

Operator

Thank you. This concludes the Central European Media Enterprises full year and fourth quarter 2018 earnings conference call. Please disconnect your lines at this time and have a wonderful day.

Duration: 42 minutes

Call participants:

Mark Kobal -- Head of Investor Relations

Michael Del Nin -- Co-Chief Executive Officer

Christoph Mainusch -- Co-Chief Executive Officer

David Lamac -- Fio Banka -- Analyst

Pavel Ryska -- J&T Banka -- Analyst

Piotr Raciborski -- Wood & Company Financial Services -- Analyst

David Sturgeon -- Chief Financial Officer

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