CTC Media Inc. Interim CEO Boris Podolsky
CTC Media Inc. (CTCM), a Nasdaq-listed
Russian television company, is zeroing in on its target audience
and bolstering local content production in a bid to avoid
repeating last quarter’s $25.5 million net loss.
Owner of Russia’s fourth-most watched television channel,
CTC fell for the first time in six days yesterday, trimming its
advance in the year to 24 percent. Futures (VEA) expiring today on
Moscow’s RTS Index fell 0.9 percent in U.S. trading to 173,605,
while the Bloomberg Russia-U.S. 14 Index (RUS14BN) of Russian companies
traded in the U.S. slipped 0.6 percent to 111.55, led by Polyus
Gold International Ltd. (PLGL), Russia’s largest producer of the metal.
CTC has struggled to compete on audience reach with
leading, state-linked channels NTV Television and Pervyi Kanal,
as viewer share slid to a five-week low at the start of March,
TNS-Global data show. The Moscow-based company, whose channel
broadcasts hits including ‘The Eighties’ and ‘Doctor Zaitseva’s
Diary,’ is moving to target 14 to 49-year-olds, a group that
makes up 80 percent of all advertising demand, according to
interim Chief Executive Officer Boris Podolsky.
“Our target is to gain market share in terms of money and
be a profitable channel with good potential, which is a
commercial target, not just an audience-share target,” Podolsky
said yesterday in an interview at Bloomberg’s headquarters in
New York. “The target audience is six to 54-years-old. One of
the strategic areas we’re looking at is whether we can shift
that audience to a more narrow target group which would be more
interesting to advertisers.”
CTC shares dropped 3.4 percent in New York yesterday to
$10.87. The stock is up 22 percent since Dec. 15, when former
CEO Anton Kudryashov stepped down and was replaced temporarily
by Podolsky. The Nasdaq Composite Index has gained 20 percent
since Dec. 15, while the Standard Poor’s 500 Index added 15
The company, which started trading on the Nasdaq in June
2006, may consider listing stock in London or Moscow to reduce
“volatility,” Podolsky said, adding that it wouldn’t happen
The Market Vectors Russia ETF (RSX), a U.S.-traded fund that
holds Russian shares, fell 1.4 percent to $32.67 yesterday. The
ETF has gained 23 percent this year, compared with a 5.4 percent
advance in the same period a year ago. The RTS Volatility Index (RTSVX),
which measures expected swings in the index futures, rose 1.5
percent to 34.14.
CTC reported a fourth-quarter net loss of $25.5 million on
Feb. 28, from a profit of $75.3 million a year earlier as it
paid a $17.9 million impairment charge.
‘Return to Profitability’
“The business will return to profitability at any
particular quarter before the year ends,” Podolsky, who was in
New York for investor meetings, said yesterday. The company has
no “immediate” acquisition targets, though it would buy a
free-to-air Russian TV channel should one come on the market and
may acquire shares in a Belarusian channel it currently provides
content to should the cooperation continue to be successful, he
CTC will concentrate on bolstering in-house production of
uniquely Russian programming to win a bigger share of its
targeted audience, said Podolsky, adding that in-house
production is also cheaper than purchasing U.S. shows to dub or
Podolsky reiterated that CTC had sold 80 percent of
advertising capacity for the year, back to pre-financial crisis
levels. Advertisers are again “comfortable” with signing
annual contracts whereas during the crisis they preferred
quarterly deals, he said.
TV advertising rose 18 percent in 2011 to 131 billion
rubles ($4.4 billion) from 110.8 billion rubles in 2010,
according to a report last month from the Association of
Communication Agencies of Russia.
CTC has assembled a team looking at Internet ventures and
ways to bolster the company’s videomore.ru Web portal, Podolsky
said. They are working on an online game, he said. The company
isn’t worried about competition from Walt Disney Co.’s new
channel in Russia as the world’s biggest theme-park operator and
owner of the ESPN sports network is targeting a younger audience
than they are focused on, Podolsky said.
Competition with Disney “creates some pressure,” he said.
“But it fortunately creates pressure on the lower end of the
CTC’s TV channel remained the fourth-largest in Russia in
the week to March 4. NTV, controlled by Russian gas export
monopoly OAO Gazprom, maintained the biggest average daily
audience share, while state-owned Pervyi Kanal had the second-
biggest audience. Rossiya-1 Television, also controlled by the
government, was number three, TNS-Global data showed.
Crude oil for April delivery added 0.3 percent to $105.74 a
barrel in electronic trading on the New York Mercantile Exchange
today. Futures declined 1.2 percent to settle at $105.43 a
barrel yesterday, while brent oil for April settlement fell 1
percent to $124.97 on the London-based ICE Futures Europe
exchange. Urals crude, Russia’s chief export blend, fell 1.1
percent to $123.28.
United Co. Rusal (486), the world’s largest aluminum producer,
slumped 6.8 percent to HK$5.47 in Hong Kong trading as of 11:45
a.m. local time as a shareholder feud drags on the stock.
Billionaire Victor Vekselberg quit as chairman on March 12,
citing divisions with Chief Executive Officer and controlling
shareholder Oleg Deripaska over dividends and divestments at the
Polyus Gold (PLGL) fell 4.7 percent to $3.25 in U.S. trading, the
lowest level since Jan. 30, as gold prices dropped to an eight-
week low on the Comex in New York. The mining company was the
worst performer on the Bloomberg Russia-US 14 (RUSN14BN) gauge yesterday.
EPAM Systems Inc. (EPAM), a U.S. software development company with
production offices in Belarus, Ukraine, Russia, Hungary,
Kazakhstan and Poland, had its initial public offering on Feb.
7. The stock gained 2.7 percent to $16.20 in New York yesterday,
up 16 percent from its first trading session on Feb. 8.
“EPAM is turning out to be a hidden gem in terms of
performance,” Luis Saenz, chief executive officer of the U.S.
unit of Moscow-based brokerage Otkritie Financial Corp., said by
e-mail to clients yesterday.
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