CTC MEDIA REPORTS THIRD QUARTER 2007 FINANCIAL RESULTS

29.10.2007
Moscow, Russia – October 29, 2007 – CTC Media, Inc. (NASDAQ: CTCM), a leading television broadcaster in Russia, today reported financial results for the three- and nine-month periods ended September 30, 2007.

- Consolidated Revenue Increases 33% to $94.1 Million -
- OIBDA Increases 68% to $32.0 Million-
- Net Income Increases 106% to $17.4 Million-
-$0.11 Earnings Per Share-

US$ 000’s, except per share data

Three months ended
September 30,




Nine months ended
September 30,



 

2006

2007


Change 


2006

2007


Change 

 
 
 
 
 
 
 
 
 
 

Total operating revenues

$70,919

$94,084

 

33%

 

$252,901

$310,352

 

23%

Total operating expenses

(57,223)

(69,674) 

 

23%

 

(156,928)

(202,132) 

 

29%

 
 
 
 
 
 
 
 
 
 

OIBDA*

19,022

31,960

 

68%

 

110,220

127,670

 

16%

 
 
 
 
 
 
 
 
 
 

Net income

$8,443

$17,399

 

106%

 

$65,210

$76,214

 

17%

Earnings per share

$0.05

$0.11

 

120%

 

$0.43

$0.48

 

12%

*OIBDA is defined as operating income before depreciation and amortization (exclusive of amortization of programming rights and sublicensing rights). OIBDA is a non-GAAP financial measure. Please refer to    Attachment A for a reconciliation of OIBDA to net income.

Financial Highlights

• Strong quarterly and nine-month results across all key financial metrics
• Consolidated revenue increased 33% to $94.1 million in the third quarter and 23% to $310.4 million in the first nine months of 2007
• OIBDA increased 68% to $32.0 million and 16% to $127.7 million in the three- and nine-month periods ended September 30, 2007
• Net income increased 106% to $17.4 million in the third quarter and 17% to $76.2 million in the first nine months of 2007
• $0.11 and $0.48 fully diluted earnings per share for the three- and nine-month periods ended September 30, 2007

Corporate Highlights
 
• CTC Media combined audience share was 10.6% in the third quarter of 2007 compared to 11.6% in the third quarter of 2006
• CTC Network audience share was 8.7% in the third quarter of 2007 compared to 10.1% in the third quarter of 2006
• Domashny Network audience share was 1.9% in the third quarter of 2007 compared to 1.5% in the third quarter of 2006
• Acquired a new station in Stavropol for Domashny Television Station Group
• Entered into a definitive agreement to acquire a majority financial interest in Channel 31 group, one of the leading broadcasters in Kazakhstan
• Set up a television company in Uzbekistan, which is expected to commence broadcasting in 2008
 
Alexander Rodnyansky, Chief Executive Officer, stated, “Our third quarter results continue to reflect the strength of the Russian television advertising market, our dedication to delivering premium audiences to advertisers and the quality of our CTC and Domashny brands. Considerable year-on-year growth in OIBDA and all other profitability metrics underscores efficiency of our business model and management’s focus on financial results.”
 
“We enjoyed a solid start to the fall programming season in an increasingly competitive landscape, with the new season of our Cadets weekday prime-time series, Daddy’s Girls sitcom and School #1 drama series among the leading premiers on our flagship CTC Network. We look forward to continue rolling out more premier shows and series as we progress into the fourth quarter.”

“As we look forward to 2008, we expect to continue to capitalize on the healthy growth of the Russian TV advertising market, among the highest in Europe, the strength of our CTC and Domashny brands and the resilience of our business model that allows us to deliver OIBDA profitability among the highest in the industry.”

“We also look forward to expanding our operations in Kazakhstan and Uzbekistan. In the third quarter, we laid the groundwork for this expansion, having secured the agreement to acquire a majority economic interest in Channel 31 in Kazakhstan and having set up a television company in Uzbekistan. We believe our expansion into these new markets, combined with continued growth in our core Russian market and our prudent approach to programming and cost management will result in continued value creation for our shareholders over the long term.”

Results for the Three Months Ended September 30, 2007

The third quarter is historically a low period in the broadcasting industry as a result of seasonality trends in viewing. While our direct operating costs are relatively evenly distributed throughout the year, selling, general and administrative costs in the third quarter include a significant portion of advertising and promotional expenses related to the launch of the new fall television season. As a result of these industry-wide trends, CTC Media’s revenues and profit margins are historically lowest in the third quarter.

CTC Media’s total operating revenue for the three months ended September 30, 2007, increased 33% to $94.1 million from $70.9 million for the three months ended September 30, 2006. The revenue growth primarily reflects the continued expansion of the Russian television advertising market, increased advertising rates and appreciation of the ruble against the dollar, offset by a decrease in CTC Network audience share. Because we record our advertising revenues net of commissions, revenues were also favorably impacted by the lower commission rate paid by our owned-and-operated stations to Video International pursuant to the variable commission rate negotiated through 2007.

The CTC Network’s audience share was 8.7% for the third quarter of 2007, lower than the company’s expectations and down from 10.1% in the third quarter of 2006. CTC remains the fourth most watched broadcaster in Russia overall. Domashny’s audience share grew from 1.5% for the three months ended September 30, 2006, to 1.9% for the three months ended September 30, 2007. As a result, CTC Media’s combined audience share was 10.6% in the third quarter of 2007 as compared to 11.6% in the third quarter of 2006.

Consolidated total operating expenses in the third quarter of 2007 amounted to $69.7 million compared to $57.2 million in the third quarter of 2006, an increase of 22%. Total operating expenses grew more slowly than revenue, primarily reflecting sound cost control, including over programming rights, our largest and most important cost item. Amortization of programming and sublicensing rights increased 22%, and decreased as a percentage of revenue, from 44% in the third quarter of 2006, to 40%, primarily due to our cost-efficient approach to weekend programming in July-August. Third quarter costs included $3.5 million in stock-based compensation compared to $3.0 million in the third quarter of 2006, and $7.6 million in amortization and depreciation expense (an increase of $2.3 million over the third quarter of 2006 primarily due to acquisition of new television stations).

OIBDA increased 68% to $32.0 million for the third quarter of 2007 compared to $19.0 million in the third quarter of 2006. The OIBDA margin improved from 26.8% to 34.0% during this period. 

Operating income for the quarter was $24.4 million compared to $13.7 million for the three months ended September 30, 2006, an increase of 78%. Operating income as a percentage of total operating revenue grew from 19.3% in the third quarter of 2006 to 25.9% in the third quarter of 2007.

Net income for the quarter was $17.4 million compared to $8.4 million for the three months ended September 30, 2006. Fully diluted income per share was $0.11 for the three months ended September 30, 2007, compared to $0.05 for the three months ended September 30, 2006.
 

Results for the Nine Months Ended September 30, 2007

CTC Media’s total operating revenue for the nine months ended September 30, 2007, increased by 23% to $310.4 million from $252.9 million for the nine months ended September 30, 2006.

Consolidated total operating expenses for the first nine months of 2007 increased by 29% to $202.1 million compared to $156.9 million for the first nine months of 2006. The increase in total operating expenses in absolute terms was primarily due to increases in amortization of programming and sublicensing rights, and increases in selling, general and administrative costs that included $9.6 million in stock-based compensation expense and increased promotional costs. Total operating expenses as a percentage of revenues increased from 62.1% for the first nine months of 2006 to 65.1% for the first nine months of 2007 mainly due to increases, as a percentage of operating revenues, in amortization of programming and sublicensing rights, selling, general and administrative expenses and depreciation and amortization expense.

OIBDA increased 16% to $127.7 million for the first nine months of 2007 compared to $110.2 million for the first nine months of 2006. OIBDA margin for the nine-month period was 41.1% in 2007 compared to 43.6% for the same period in 2006.

Operating income for the first nine months of 2007 was $108.2 million compared with $96.0 million for the first nine months of 2006, an increase of 13%. Operating income as a percentage of total operating revenue was a strong 34.9% for the first nine months of 2007, although down from 37.9% for the first nine months of 2006.

Net income for the nine months ended September 30, 2007 was $76.2 million compared to $65.2 million for the nine months ended September 30, 2006. Fully diluted income per share was $0.48 for the nine months ended September 30, 2007, compared to $0.43 for the nine months ended September 30, 2006.

Guidance

For the full year ending December 31, 2007, the Company narrows its guidance for consolidated total operating revenue to the range of $460 to $480 million, with a consolidated OIBDA margin in the range of 45-47%.

Conference Call

The Company will also host a conference call to discuss its third quarter 2007 financial results today, Monday, October 29, at 9 a.m. ET, corresponding to 4 p.m. Moscow time, and 1 p.m. London time. To access the conference call, please dial +1 973 582 2741 (International) or 8108 002 531 1012 (Russia) and reference pass code 9333193. A live web cast of the conference call will also be available on the investor relations portion of the Company's corporate web site, located at www.ctcmedia.ru. A replay of the conference call will be available through Monday, November 12, 2007, at midnight EST. The replay can be accessed by dialing +1 973 341 3080. The pass code for the replay is 9333193. The web cast will also be archived on the Company’s web site for two weeks.

About CTC Media, Inc.

Based in Moscow, CTC Media, Inc. was formed in 1989 to pursue commercial media and advertising opportunities in Russia. The Company owns and operates the CTC television network, whose signal is carried by more than 350 affiliate stations, including 18 owned-and-operated stations; and the Domashny television network, whose signal is carried by over 220 affiliate stations, including 11 owned-and-operated stations. The Company is traded on the NASDAQ Global Select Market under the symbol: "CTCM". For more information on CTC Media, please visit: www.ctcmedia.ru.

# # #

Contacts:

CTC Media, Inc.
Dmitry Barsukov, Katya Ostrova (investors)
+ 7 495 783 3650
ir@ctcmedia.ru

Konstantin Vorontsov (media)
+ 7 495 785 6333

Brainerd Communicators, Inc.
Jenna Focarino (media)
Michael Smargiassi (investors)
+1 212 986 6667

# # #

Please use the following link to download the full text of the press release
Third Quarter 2007 Results Press Release (pdf, 74KB)