VGTRK, Channel One, Gazprom-Media and the National Media Group have again agreed to create a single seller. At the end of 2014, Mikhail Lesin proposed this idea, but then the seller never started working

Photo: Oleg Yakovlev / RBC

The largest Russian media holdings - VGTRK, Channel One, Gazprom-Media and the National Media Group have again agreed to create a single advertising seller. This is stated on the Gazprom-Media website .

The joint company will sell advertising on the television channels of these holdings. As noted in the holding’s statement, “the goal of the alliance is the emergence of a single trading platform that will take into account the interests of the television industry and will ensure a balance of interests of advertisers and television broadcasters in times of crisis.”

Each of the four holdings will own 25% in the new company. The STS Media holding may also join the alliance - the partners will discuss this possibility with it after the completion of its restructuring. At the end of 2015, CTC Media changed owners and jurisdiction - its parent company became Russian.

As noted in the Gazprom-Media report, the corporate and legal aspects of creating the seller are planned to be completed by the end of the second quarter of 2016.

The idea of creating a single seller was actively promoted in 2014 by Mikhail Lesin, who then headed the Gazprom-Media holding. Seller was created, but after Lesin left Gazprom-Media it actually collapsed. As Gazprom-Media notes in today’s report, the initiative “has been worked out in detail since 2014 and has been developed now, in the context of a recession in the advertising market and rising costs for television broadcasters.”

In Mikhail Lesin’s project, a single seller was to be created on the basis of the largest Russian advertising sales agency Vi. The company was to be headed by the head of Vi, Sergei Vasiliev. The legal structure of the seller was different: in it, four media holdings each owned 20% of the company, and another 20% belonged to the management of the new seller.

Vi then sold advertising on nine terrestrial channels (“Channel One”, REN TV, “Channel Five”, TV3, “Friday”, “2x2”, “U”, Disney and “Carousel”), and VGTRK (“Russia 1” , “Russia 2”, etc.) and the holding company “CTC Media” (STS, “Domashny”, “Pepper” and CTC Love) provided so-called consulting services. Advertising on Gazprom-Media channels was sold by the holding's internal sales house. After Lesin joined Gazprom-Media, competition between sellers virtually disappeared. The project to create a single seller implied that Vi would absorb the sales house Gazprom-Media.

Legally, a new seller was created and even began selling advertising on channels, including Gazprom-Media. However, after Lesin left, the new management of Gazprom-Media revived the sales house . Former leader Sergei Piskarev, who left Gazprom-Media under Lesin, also returned to it.

As the Vedomosti newspaper notes, now Vi will not absorb the sales house Gazprom-Media, we are talking about a merger. According to the publication, the new company will not be headed by either Sergei Vasiliev or Sergei Piskarev. The head of the seller, according to one of Vedomosti’s sources, could be Oganes Sobolev, one of the co-founders of Vi.

The new seller, Vedomosti notes, will control about 90% of television advertising in the country. According to the Association of Communication Agencies of Russia, TV channels’ advertising revenues decreased in 2015 by 14%, to RUB 136.7 billion.

History of the Vi group

Structure and clients

The Video International group (since 2013 - Vi) was created in 1987. The founders and main ideologists of the company were the future Minister of Press Mikhail Lesin and his partner Yuri Zapol. Vladimir Golubev and Oganes Sobolev also had large shares. At first the company was engaged in the production of television advertising, and in the mid-1990s it switched to selling advertising time to major television channels. After its largest competitor, Sergei Lisovsky’s Premier SV company, left the market due to the 1998 crisis, Video International became a de facto monopolist and remained so until the end of the 2000s.

In November 2009, Mikhail Lesin was fired from the administration of President Dmitry Medvedev “for non-compliance with the rules of the civil service and the ethics of behavior of civil servants,” Interfax wrote. The resignation occurred a month after the TV channels of Yuri Kovalchuk's National Media Group (NMG) - Channel Five and REN TV - switched to servicing Video International. The Kommersant newspaper wrote that the resignation was due to a conflict of interest: Lesin combined the post of presidential adviser with unofficial supervision of NMG television projects.

Attack of the monopolist

The transition of REN TV and Channel Five strengthened the monopoly of Video International - its main competitor, the Gazprom Media-Alcazar alliance, had only two large channels left - NTV and TNT. But just two months later, in December 2009, the State Duma hastily adopted amendments to the law “On Advertising.” From 2011, they provided for limiting the share of Video International “in the sphere of distribution of television advertising” to 35% of all attracted advertising budgets to federal television channels over the previous two years. This meant that for the next year Vi would be able to choose the main client from three options: Channel One, VGTRK channels Russia 1 and Russia 2, or STS, Domashny and DTV, which are part of the STS Media holding.

Such legislative restrictions left Video International virtually no opportunity to maintain its entire business. But in the spring of 2010, the group’s owner changed: from the founders and top managers, 100% of Video International was acquired by the structures of Rossiya Bank and its founders, who also control NMG. The largest seller of television advertising, which controlled at least 70% of all its sales, could then be valued at 5.77 billion rubles, or about $183 million, follows from the reports of SOGAZ, associated with Yuri Kovalchuk’s Rossiya Bank.

New compromise

After the deal, a solution that suited everyone was found: VGTRK and STS Media created their own sales services - RTR-Media and Everest-S, respectively, and Video International became their consultant. At the same time, the remuneration for such services turned out to be almost equal to the commission for a full-fledged service: 12% of advertising revenue minus a fixed fee for the provided software.

Over all these years, the channels served by Video International have never been able to meet the legally required 35% for national TV advertising, but the Federal Antimonopoly Service (FAS) did not see anything reprehensible in this. According to the department, the share of Vi itself was within the required 35%. As a result, in 2011–2013, the group freely extended expiring contracts with Pervy, as well as with the YuTV and ProfMedia channels.

As a result, in 2011–2013, the following structure of advertising sales developed on terrestrial TV: there is a Vi group that provides full-fledged services to eight federal channels and consults for another five. It is competed by the sales house Gazprom-Media and the Alcazar agency, which act together. By 2013, there was not a single federal channel left on the market that would sell a significant amount of advertising and do it independently. In September of the same year, the Video International group moved under the Vi brand.

Vi's clients included Channel One, REN TV and Pyatiy (both part of the National Media Group), TV3, Pyatnitsa and 2x2 (all three belonged to Vladimir Potanin's ProfMedia), Yu and Disney (two channel is formed by the YuTV holding of Alisher Usmanov and Ivan Tavrin). She advised Vi channels of VGTRK (“Russia 1” and “Russia 2”) and “STS Media” (STS, “Domashny”, “Peretz”). In turn, Gazprom-Media and Alcazar worked with NTV, TNT, TV Center and Zvezda.

Return of Lesin

In October 2013, Lesin returned to the media business, replacing Nikolai Senkevich at Gazprom-Media, and in November he agreed to purchase the main assets of ProfMedia, including its television channels, from Vladimir Potanin for $602 million (excluding debt). In the same month, Gazprom-Media bought Alcazar from the agency’s founders for approximately $5–7 million.

Since the spring of 2014, both the sales house Gazprom-Media and Alcazar, like VGTRK and STS Media earlier, switched to proprietary Vi software. From the reporting of CTC Media it is known that the holding had to pay 600 million rubles for the use of Vi software in 2011–2015. without VAT.

In the summer of 2014, the State Duma abolished the 35% limit for TV advertising sellers.

The largest media holdings have agreed to create a single advertising seller