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(Updates with outlook, new company comments)
PRAGUE, April 30 (Reuters) - Central European Media Enterprises (CME) lifted its guidance for 2019 core profit growth on Tuesday after reporting higher than expected first-quarter earnings despite a drop in revenue.
CME has been on an upswing in recent years thanks to growth in its five central and eastern European markets, of which the Czech Republic and Romania are the biggest, and has shrunk a debt pile that once stood above $1 billion.
It has hinted recently at chances of paying its first-ever dividend because of improving cash generation and last month announced a strategic review that could include majority shareholder AT&T selling part or all of the business.
CME's Prague-listed shares have gained 15 percent since that announcement and added as much as 1 percent on Tuesday after the company posted an 8 percent rise in operating income before depreciation and amortisation (OIBDA) to $38.1 million, beating expectations for a flat result. CME is also listed on the Nasdaq.
The company said its OIBDA margin reached the highest in more than a decade, rising 360 basis points to 26 percent, helped by lower content expenses and other cost controls.
Revenue fell 6.5 percent to $146.6 million, missing expectations and dented by lower television advertising spending as the Easter holiday fell into April, along with a stronger dollar against CME's local currencies.
But CME said ad revenue was up 3 percent at constant exchange rates in the January-April period.
"The year has gotten off to an outstanding start," co-Chief Executive Michael Del Nin said on a conference call.
On the back of that, CME raised its 2019 guidance, forecasting OIBDA to grow 12-14 percent at constant exchange rates, compared with 10-12 percent previously. It also said it expected higher free cash flow growth of around 10 percent.
That would see OIBDA coming in at around $240 million this year and unlevered cash generation at $170 million.
Net debt dropped to $765 million in 2018 and CME said it had repaid 60 million euros ($67 million) in debt in the first quarter, cutting its net leverage ratio to 3 times, from 3.5 times a year ago. It sees the ratio falling further this quarter.
Del Nin declined to comment further on the company's strategic review, reiterating only all options were being examined. AT&T holds 64 percent of CME after inheriting the stake when it acquired Time Warner.
($1 = 0.8918 euros) (Reporting by Jason Hovet; Editing by Mark Potter)