Russia’s 11th largest TV station
Why are we interested in the prospects for DTV, Russia’s 11th largest “free” TV station (as distinct from government backed)? Read on.
CTC Media was founded in 1989 by a former US rock music promoter Peter Gerwe. CTC started broadcasting in Russia in 1994, initially from St Petersburg, and then using the Ted Turner “Superstation” model across the whole of Russia. During 1995 Gerwe expanded his reach across Russia. In 2005 he launched Domashny, the company’s second national network. CTC has as its largest shareholders Modern Times Group and Alfa Group.
CTC is said to be the leading quoted and independent free TV group in Russia, and with an ad-market that’s likely to expand 30% this year, and another 20% next year, and given that Russia’s free-to-view network TV is not under the sort of threat from audience fragmentation to the internet (low usage) or pay-TV (same), Russia is simply a sexy market. Bankers Morgan Stanley are forecasting a 17% CAGR in TV ad-revenues between 2007 and 2012.
This past few days, however, has seen a bit of a shares and asset merry-go-round with CTC buying another Russian network, DTV (the 11th largest TV station) from Modern Times Group (which owns 39.5% of CTC Media). CTC is paying $395m in cash for DTV.
DTV has a 1.9% audience share (4 yr+) and a very nice 2.5% share of the 6-54-yrs age group. A report from Morgan Stanley says that DTV transmits via 28 owned and operated local stations and now reaches 60% of Russia’s 53m measured TV households, rising to 71% in and around Moscow. “Last year it generated $40m of revenues, up 49% y-o-y (Domashny $39m). We estimate it accounted for 1.3% of the TV ad market, implying a power ratio of 68%. Like CTC, DTV has benefited from several years of very strong market growth. Revenues rose from $9m in 2004, $15m in 2005, $27m in 2006 to $40m last year.”
Which is not to suggest that Russia’s business case is without risk. The media, says the bank’s report, remains a sensitive political issue, especially TV broadcasting. CTC, as a foreign entity, is also subject to the whims of the local power-players and there could be a change in attitude to “foreign” broadcasters whenver the mood takes the country’s strong-armed politicians.
Why are we interested in the prospects for DTV, Russia’s 11th largest “free” TV station (as distinct from government backed)? Read on.
CTC Media was founded in 1989 by a former US rock music promoter Peter Gerwe. CTC started broadcasting in Russia in 1994, initially from St Petersburg, and then using the Ted Turner “Superstation” model across the whole of Russia. During 1995 Gerwe expanded his reach across Russia. In 2005 he launched Domashny, the company’s second national network. CTC has as its largest shareholders Modern Times Group and Alfa Group.
CTC is said to be the leading quoted and independent free TV group in Russia, and with an ad-market that’s likely to expand 30% this year, and another 20% next year, and given that Russia’s free-to-view network TV is not under the sort of threat from audience fragmentation to the internet (low usage) or pay-TV (same), Russia is simply a sexy market. Bankers Morgan Stanley are forecasting a 17% CAGR in TV ad-revenues between 2007 and 2012.
This past few days, however, has seen a bit of a shares and asset merry-go-round with CTC buying another Russian network, DTV (the 11th largest TV station) from Modern Times Group (which owns 39.5% of CTC Media). CTC is paying $395m in cash for DTV.
DTV has a 1.9% audience share (4 yr+) and a very nice 2.5% share of the 6-54-yrs age group. A report from Morgan Stanley says that DTV transmits via 28 owned and operated local stations and now reaches 60% of Russia’s 53m measured TV households, rising to 71% in and around Moscow. “Last year it generated $40m of revenues, up 49% y-o-y (Domashny $39m). We estimate it accounted for 1.3% of the TV ad market, implying a power ratio of 68%. Like CTC, DTV has benefited from several years of very strong market growth. Revenues rose from $9m in 2004, $15m in 2005, $27m in 2006 to $40m last year.”
Which is not to suggest that Russia’s business case is without risk. The media, says the bank’s report, remains a sensitive political issue, especially TV broadcasting. CTC, as a foreign entity, is also subject to the whims of the local power-players and there could be a change in attitude to “foreign” broadcasters whenver the mood takes the country’s strong-armed politicians.