02 June 2011, 13:00 Business

On CTC they put Telcrest

Alfa sold its stake in STS

Vladislav Novy National Media Group and the Itera gas holding bought a blocking stake in STS Media for $1 billion. NMG owns the Video International advertising group, and after the deal, the risks of losing clients for STS became minimal, analysts note.

The Alfa investment group has closed a deal to sell a 25.2% stake in the CTC Media holding, which manages three TV channels with an entertainment concept. Securities and Exchange The buyer was Telcrest Investments Ltd, CTC reported to the US Commission. Telcrest Investments bought the entire package of Alpha, 39.548 million, at $27.097 per share. Thus, the purchase amount was $1.07 billion, the deal was closed on June 1.

National Media Group Bank Rossiya owns a controlling stake in one of the largest Russian media holdings, National Media Group (54.96%). The group's assets include 25% of Channel One, 68% of the REN TV channel, 72% of the Petersburg Channel Five TV channel, 51% of the Izvestia newspaper and, according to unofficial information, 49% of the News Media Publishing House (the newspaper Life for the Whole Week "and portal LifeNews.Ru). NMG shareholders also include Severstal Group (19.49%), Surgutneftegaz (19.49%) and Sogaz (6.06%). In the summer of 2010, structures of Bank Rossiya bought 100% of the country's largest TV advertising seller, the Video International group. Bank Rossiya also controls the Sogaz group, which includes Leader, the management company of the Gazfond pension fund. Through it, Management Company Leader manages a controlling stake in Gazprombank. The bank controls the Gazprom-Media company, which unites the television companies NTV, NTV-plus, TNT, the Ekho Moskvy radio station, the 7 Days publishing house, the Tribuna newspaper, the RuTube.ru resource and the Oktyabr cinema. The main beneficiaries of “Russia” are Yuri Kovalchuk, Nikolai Shamalov, Dmitry Gorelov and Gennady Timchenko.

Gazeta.Ru reported at the end of May that Telcrest Investments could buy shares in CTC. Shares in Telcrest are owned by Itera Media, controlled by the Itera gas group, as well as companies affiliated with Rossiya Bank - Mediaset, National Media Group, Abit Holdings and Surgutneftegaz. Representatives of the National Media Group, MTG and CTC Media did not provide immediate comments. Itera did not answer the question about the size of its stake in Telcrest.

At the close of trading on the Nasdaq stock exchange, CTC shares fell by 3.5%, the company's capitalization amounted to $3 billion.

The official announcement that the shareholders of Channel One from the National Media Group are negotiating the purchase of a blocking stake in STS Media for $1.07 billion appeared at the end of April. An offer for the right to buy out the securities was received by MTG, which owns 38.2% of CTC Media, but the co-owners of the Russian holding were not interested in the deal, as reported in CTC materials.

“Russia limits the share of foreign investors in television channels. Foreign co-owners cannot own a controlling stake (more than 50%),” said analysts at the Russian office of UniCredit, who named the National Media Group as the most likely buyers.

On May 20, Modern Times Group renounced its rights to buy out Alpha’s share in CTC and signed a new shareholders’ agreement with Telcrest. The shareholders agreed to retain 9 members on the board of directors of CTC Media, and Telcrest and MTG will each be able to nominate 3 candidates to the board. By agreement, candidates from Telcrest will not include employees of Channel One, Channel Five and REN TV . The co-chairs of the board of directors of CTC Media will be the head of Alfa Bank, Petr Aven , and the CEO of MTG, Hans-Holger Albrecht. The shareholders also agreed on a lower threshold for dividends in the holding at 50% of net profit, Interfax reports. A similar agreement existed between Alpha and MTG. The new shareholders agreement is valid until June 6, 2015.

Hans-Holger Albrecht stated at the end of May that he “had positive negotiations with the shareholders of Rossiya Bank about the prospects for partnership and development of the CTC Media holding.” Chairman of Rossiya Bank Yuri Kovalchuk and member of the bank’s board of directors Alexey Mordashov called the investment in CTC a “positive event,” and MTG was recognized as a “long-term strategic partner.”

Having purchased the CTC Media package, National Media Group added entertainment channels STS, Domashny, and DTV to its portfolio of assets (in the future it may be renamed Perets-TV). NMG already owns a blocking stake in Channel One, 70% of REN TV, the Petersburg-Channel Five television and radio company, the Izvestia newspaper, as well as the largest seller of television advertising, the Video International agency. In the near future, NMG may increase its stake in REN TV to 100% by purchasing from the RTL corporation in exchange for 7.5% of its own securities. the remaining 30% of REN TV

In addition to managing television channels, CTC Media owns two television production companies, Costafilm and Soho Media. In 2010, CTC Media's revenue amounted to $601.3 million (an increase of 19%), net profit increased by 45%, to $145.7 million. But the channel is losing audience .

“The strategy of purchasing a stake in CTC Media is very correct, it allowed us to minimize the risks of losing Video International clients,” says Otkritie Bank analyst Tibor Bokor.

“Synergy for NMG can consist not only in advertising sales (STS and Channel One cooperate with Video International), but also in production, programming, cost optimization, positioning, distribution, launching new channels, broadband content, and most importantly for strategic investor – a large market share,” said an informed source at NMG earlier.

This is an “interesting, profitable” deal, adds Bokor, who suggested that the Itera group is participating in the project as a financial investor.

The head of STS Media, Anton Kudryashov, in a February interview with Gazeta.Ru, announced the possibility of abandoning the classic concept of a purely entertainment channel and called the company’s goal “to remain the largest independent media holding, unrelated to the state form of ownership.”