CTC expands reach
TV unit acquires DTV network
The seller is Sweden's Modern Times Group, which is also the main shareholder in CTC Media, with a stake of just under 40%.
CTC CEO Alexander Rodnyansky said the deal represented good value, given comparable purchases in the TV sector over the past year. The acquisition will be financed largely from existing cash reserves.
The move provides CTC Media with a third national station, complementing its flagship entertainment channel CTC, number four in Russia, and the more recently founded Domashny channel, which is targeted at a female 25-plus demographic.
DTV, which had an audience share of around 1.9% last year, will be aimed at a male audience in the 18-54 age group, Rodnyansky said. It will be entertainment-based, like the other two channels, without any news programs.
The group's spending on local production is expected to increase, though international programming will continue to dominate.
Rebranding, at which CTC Media has proven adept, is likely to include the change of the station's name and visual style. With the deal expected to take two months to conclude, that's likely to kick in toward the end of the second quarter this year.
DTV is seen as the last remaining independent niche player, placed at number 12 in the ratings. It owns 28 local stations around the country, and has a penetration in the territory of 60%. One of Rodnyansky's first priorities will be to increase its reach, and he hopes that ratings may increase to 3%-4% over the next two years.
DTV's revenue last year was $40 million, with an operating profit of $4 million.
The deal looks distinctly profitable for the Scandinavian media group, which acquired 75% of DTV in April 2001 and increased its shareholding to 100% in August 2004, for a total of $9 million.
Hans-Holger Albrecht, president and CEO of MTG, commented: "We were one of the first international companies to enter the Russian broadcasting market, and the development of DTV has demonstrated our commitment to investing in high growth emerging markets, as well as our successful track record of managing media assets in these markets. This transaction is intended to enable us to benefit from the synergies that exist in owning multiple broadcast channels across Russia and the CIS, in terms of content production and acquisition, distribution and sales.
"The Russian television industry is consolidating and CTC Media is the largest independent entertainment media house in Russia today. DTV's demographic reach complements that of the CTC and Domashny channels, and the integrated structure provides the ideal platform for the further development of both businesses.
"Our investments in both DTV and CTC Media have proved highly successful and generated substantial returns on the capital employed. We continue to benefit from our strategic long-term commitment to CTC Media, as well as to review opportunities to acquire and develop businesses in attractive, high-growth emerging markets in Europe and elsewhere."
