MTG Offloads Russian Network DTV

MOSCOW/STOCKHOLM,
March 11: Modern Times Group has reached a deal to sell DTV Group, its Russian
free-to-air network, to CTC Media for $395 million.

MTG owns 39.5
percent of CTC, which is Russia’s largest independent television broadcaster.
The transaction is subject to approval by the relevant regulatory authorities,
and is expected to closing during the second quarter.

MTG acquired 75
percent of DTV in April 2001 and upped the stake to 100 percent in August 2004.
The channel reaches 71 percent of the homes in Moscow and 60 percent of the TNS
Gallup-measured 52.7 million homes nationwide.

Announcing the
deal, Hans-Holger Albrecht, the president and CEO of MTG, said:
"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. The business has also begun to expand into a number of
CIS countries. 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.”

He continued:
“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.”

Alexander
Rodnyansky, the CEO of CTC Media, added: "This is a fundamental
breakthrough in the execution of our strategy to expand our broadcasting
footprint and audience reach, and to capitalize on our growth potential. DTV is
a well-run, profitable and established network that will increase our exposure
to the fast-growing Russian TV advertising market. Given its primary focus on
male audience, DTV perfectly complements our existing brands: CTC with its
young, dynamic audience and Domashny that targets female viewers. With the
Russian television business facing continued fragmentation of the viewing
audience by topical preferences, this transaction presents us with an excellent
opportunity to offer our advertisers a broad multi-channel proposal and to
capture a larger advertising market share as Russian media holdings continue to
consolidate attractive media assets. We believe that major synergies from this
transaction will come from content procurement optimization, efficient
programming rights management, our value added expertise in TV brands
management, and better leverage in advertising sales and distribution."

—By
Mansha Daswani