* CME buys Romanian production business for cash and stock
* Purchase from firms controlled by CME President Sarbu
* Sarbu appointed chief executive, as planned (Adds more details, CEO appointment)
PRAGUE, July 28 (Reuters) - Television group Central European Media Enterprises (CME) has agreed to buy the entertainment business from Romanian firms controlled by CME President Adrian Sarbu, the company said on Tuesday.
CME said it would buy media production and distribution business MediaPro Entertainment from MediaPro Management and Media Pro BV for $10 million in cash and 2.2 million CME shares.
"CME intends to integrate its existing fiction, reality and entertainment television production units with MediaPro Entertainment to create a dedicated content division consisting of production, services and distribution operations across all of CME's territories," the company said in a statement.
MediaPro Mangement and MediaPro BV will also get the right to buy up to 850,000 CME shares at $21.75 per share, and CME will take over $35.6 million in debt.
CME operates television stations in seven central and east European countries, including Romania and the Czech Republic.
MediaPro Entertainment produces and distributes television fiction programming and owns one of the largest studios in central and eastern Europe, CME said.
Sarbu, 52, who had been chief operating officer since 2007, was also appointed chief executive, the company said. The previously announced step filled the position empty since the retirement of Michael Garin last year. CME was due to report second-quarter earnings on Wednesday, and analysts expected a 63 percent drop in operating profit and 35 percent fall in revenues.
It reported its "toughest quarter" ever with a 37 percent revenue fall in the first three months of 2009, warning the ad slowdown would persist into next year due to the global economic downturn.
U.S. media group Time Warner completed a $241.5 million investment into the Bermuda-registered CME in May, taking a 31 percent stake. (Reporting by Jan Lopatka; Editing by Rupert Winchester)