Gazprom-Media acquired a 7.5% stake in the National Media Group for 11.2 billion rubles. Thus, the entire group was valued at almost 150 billion rubles. The size of the sold stake coincides with the share that Gennady Timchenko owned in NMG

Photo: Lori

Prospects in Pay TV

In March 2016, holding the Gazprom-M Media bought a 7.5% stake in the National Media Group (NMG). This follows from the disclosure of information by Gazprombank , which owns 100% of Gazprom-Media. The transaction amount was 11.2 billion rubles, the document says. Thus, the entire National Media Group was valued at 148.32 billion rubles. (more than €1.9 billion at the Central Bank exchange rate as of March 31, 2016, or $2.2 billion).

The parties do not disclose the name of the seller. At the same time, the volume of the sold stake coincides with the share of shares in NMG, which was owned by the founder of the Volga Group, Gennady Timchenko. In 2013, the businessman acquired just 7.5% of the shares of the media group from Luxembourg RTL, RBC wrote . The transaction amount then amounted to €81 million, and the entire NMG, it turns out, was valued at €1.08 billion. “I funded projects related to media assets, but they interested me exclusively from a commercial point of view, I did not consider them as an instrument of influence” , Timchenko said in August 2014 in an interview with the TASS agency about his investments in NMG. He then emphasized that he directly owned “a very small percentage” in NMG.

It has not yet been possible to immediately obtain a comment from Timchenko’s representative. An NMG representative confirmed the transaction, but did not disclose details or the name of the seller. NMG General Director Olga Paskina did not answer a call from an RBC correspondent.

A representative of Gazprom-Media told RBC that the holding is interested in diversifying its business through partnerships with media market players. The deal with the National Media Group is assessed there as investment participation, which will allow it to effectively respond to market changes.

“NMG’s business has significant potential, in particular in the promising segment of pay television,” said a representative of Gazprom-Media. “We also expect that our shareholding in the company will allow us to share expertise and collaborate on the creation of original content and distribution.”

The national media group appeared in 2008 as a result of the merger of the assets of Rossiya Bank Yuri Kovalchuk, SOGAZ, Surgutneftegaz and the chairman of the board of directors of Severstal Alexei Mordashov. NMG's ownership structure is completely unknown. The last time NMG disclosed its financial results for 2014: then the holding’s revenue according to RAS amounted to 3 billion rubles, net loss - 617 million rubles. According to IFRS for 2013, revenue amounted to 14.7 billion rubles, operating profit amounted to almost 2.4 billion rubles, net profit - 1.5 billion rubles.

At the end of March 2016, NMG changed its CEO: instead of Alexander Ordzhonikidze (who had led the group since 2009), was appointed Olga Paskina , who headed Discovery Networks in North-Eastern Europe, . The reasons for the personnel changes in the company are not disclosed. NMG includes Channel Five (the group owns 72.4%), Channel One (25%), REN TV (68%), Izvestia newspaper (73.2%) and the Russian News Service radio station ( 100%). The group also took over the management of the Metro-Petersburg newspaper in St. Petersburg and acquired a 25% stake in the founder of the Sport-Express newspaper. In March 2014, NMG purchased 50% of the authorized capital of Art Pictures Vision, part of the Art Pictures group of companies.

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In 2015, partnership agreements were reached with large foreign companies in the pay TV market: Discovery, Viasat and Turner groups. Discovery Networks, under the leadership of Paskina, was the first to agree to create a joint venture with NMG - now it manages the Russian-language versions of Discovery Channel, Animal Planet, TLC, Eurosport, etc. As a result of these transactions and partnerships, NMG now controls about 20% of the pay TV market in Russia. According to a source close to the holding, in the last quarter of 2015 alone, NMG’s revenue increased by 150 million rubles, including through a partnership with Discovery.

Non-market transaction

As a result of the deal with Gazprom-Media, the national media group was valued at more than eight times more expensive than the STS Media holding, which includes the TV channels STS, Domashny, Che and STS Love, as well as the online service "Videomore". Alisher Usmanov and Ivan Tavrin paid $193.1 million for 75% of the Russian business of CTC Media in February 2016. Thus, the entire business of the company was valued at $257.5 million (more than 20 billion rubles).

At the same time, the value of the company CTC Media, which is traded on NASDAQ, fell sharply due to foreign policy events, the depreciation of the ruble and especially the law limiting foreign ownership in the media. In September 2014, when amendments to the Law “On Mass Media” were just introduced to the State Duma, the capitalization of CTC Media on NASDAQ was almost $1.5 billion.

In the same 2014, Gazprom-Media, under the leadership of Mikhail Lesin, acquired the assets of the ProfMedia holding (TV3, Friday! and 2×2 television channels, Avtoradio, Romantika, Humor FM, radio stations Energy" and the film company "Central Partnership (CPS)") for $603 million (or 21.03 billion rubles at the exchange rate as of April 2015). In ruble equivalent, the National Media Group was valued at seven times more expensive than the assets of ProfMedia.

In the opinion of Raiffeisenbank analyst Sergei Libin, the valuation of the National Media Group at 148.32 billion rubles, that is, ten times more than the last disclosed revenue under IFRS or 50 times more than revenue for 2014 under RAS, is very high for the media industry, even despite the fact that the latest financial results of NMG do not yet take into account paid non-terrestrial channels. “We don’t have a public market for such companies, so an asset is worth as much as the buyer is willing to buy it for, and the seller is willing to sell it for,” Libin told RBC. — This is a private, non-market transaction. It seems to me that all this has an indirect relation to the market and the prospects of pay TV.”

At the end of 2015, Gazprom-Media’s revenue reached 73.6 billion rubles, which is 2% more than a year earlier, according to Gazprombank’s reporting. Advertising revenues increased by 3%, to RUB 57.3 billion. Gazprom-Media’s portfolio includes terrestrial television channels (NTV, TNT, “2x2”, TV3, “Friday!”, “Match!”), radio stations (“Echo of Moscow”, “Avtoradio”, “Humor FM”, etc. ), satellite television operator NTV-plus and its non-terrestrial channels, video services Rutube and Now.ru, advertising sellers and content producers.

Media company Kovalchuk and Mordashov is valued at 150 billion rubles.