CTC Acquires Russian Production Companies

MOSCOW, December 19: Russian broadcaster CTC Media has
acquired the production companies Costafilm and Soho Media for $50 million in
cash, payable over the next three years, as part of its efforts to establish an
in-house production-and-distribution business.

The deals are expected to close in the first quarter of next
year. CTC is acquiring Costafilm for approximately $40 million, of which $11
million will be payable to the owners upfront, and the remaining $29 million
structured as an earn-out payable in three installments through 2010, subject
to meeting annual performance criteria. The company has been producing
exclusively for CTC, delivering titles like the long-running series Cadets and the sitcom Daddy’s Girls.

Soho Media is being acquired for $10 million, which includes
a $6 million earn-out component payable in three installments through 2010,
subject to performance criteria. Among Soho’s owners is producer Sergey
Kalvarsky. The firm specializes in the production of entertainment TV shows,
such as Minute of Fame and The
Great Race for Channel One.

Alexander Rodnyansky, the CEO of CTC Media, said,
"Building a proprietary library of intellectual property rights provides
the potential for multiple monetization of our programming across different
markets and platforms, one of the cornerstones of our long-term growth
strategy. We have been opportunistically securing the rights to our recent
original programming, thus laying the foundation of our content library. The
next logical step for us in execution of our vertical integration strategy is
setting up a separate function responsible for program library management and
production. Costafilm and Soho Media will provide the talent and managerial
resources that will form the basis of this function. The immediate benefits
from the acquisitions will include streamlining of the production process and
better control over costs of Russian series and shows, which are the most
important part of our primetime schedule, and additional leverage in our
negotiations with independent production companies."

—By Mansha Daswani