CTC MEDIA REPORTS FIRST QUARTER 2008 RESULTS

29.04.2008
Moscow, Russia – April 29, 2008 – CTC Media, Inc. (NASDAQ: CTCM), a leading television broadcaster in Russia, today reported financial results for the three month period ended March 31, 2008.

- FIRST QUARTER -
- Consolidated Revenue Increases 31.3% to $136.7 Million-
- OIBDA* Increases 24.7% to $55.2 Million-
-Net Income of $41.7 Million, $0.26 Earnings Per Share-

US$ 000's, except per share data

Three Months Ended

March 31

 


 


 


 


2007

2008

 


Change

 


 


 


 


 


 


 


Total operating revenues

$104,121

$136,746

 


31.3%

 


Total operating expenses

(65,605)

(83,714)

 


27.6%

 


 


 


 


 


 


 


OIBDA*

44,288

55,236

 


24.7%

 


 


 


 


 


 


 


Net income

$28,123

$41,713

 


48.3%

 


Fully diluted earnings per share

$0.18

$0.26

 


44.4%

 


 

*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

• Consolidated revenue increased 31% to $136.7 million
• Advertising revenue in Russia increased by 38% to $134.4 million
• OIBDA increased 25% to $55.2 million, OIBDA margin of 40.4%
• Net income increased 48% to $41.7 million
• $0.26 fully diluted earnings per share, an increase of 46%

First Quarter Operational Highlights
 
• Entered into definitive agreement to acquire the DTV group, which operates a national free-to-air television network and a group of 24 owned-and-operated stations in Russia — closed the acquisition in April 2008;
• Re-launched Channel 31 in Kazakhstan with a new schedule, programming and brand image;
• Turned our CTC unmanned repeater in Petrozavodsk into an owned-and-operated station to gain access to local advertising market; and
• Received ‘BB-’ long-term corporate credit rating with stable outlook from Standard & Poor’s.

Alexander Rodnyansky, Chief Executive Officer, commented, “We are extremely satisfied with the first quarter financial results, which once again proves that CTC Media continues to strengthen its position as the leading independent media company in Russia. The increase in our total operating revenue in the first quarter by 31% and especially the increase in our advertising revenue in Russia by 38% in the same period represent the best example of CTC effectively capitalizing on the growth of the Russian advertising market. In the increasingly fragmented free-to-air environment, CTC Media continues to deliver quality programming to its target audience, while the high affinity of our channels in Russia allows us to deliver a premium, loyal audience to advertisers.

“We continued to successfully execute on our growth strategy. We started commercial broadcasting of CTC-Uzbekistan and re-launched Channel 31 in Kazakhstan in the CTC format. The first several weeks of broadcasting in Kazakhstan proved to be tremendously successful, and we believe we are well positioned to further strengthen our position with Kazakh viewers and in the overall market in the years ahead.

“Another important milestone was entering into the definitive agreement to acquire the DTV group, with the subsequent closing of the deal in April 2008. As a result, CTC Media currently operates three free-to-air national TV channels in Russia, allowing us to provide a unique offer to advertisers and audiences. We are focused on improving DTV’s programming line-up for the fall television season which we believe will make the channel even more attractive to its premium male audience.

“We are off to a terrific start in 2008. Our management team and employees are focused on executing our strategic plan, and we are positioned to continue to benefit from the strong growth of the Russian and CIS markets. We are prudently executing on a number of growth initiatives that will diversify our business, broaden our market exposure and seek to create additional value for shareholders.”

Results for the Three Months Ended March 31, 2008

CTC Network’s first quarter 2008 audience share was 8.8% as compared with 9.3% in the first quarter of 2007. CTC Network audience share in its target demographic (everyone aged 6-54) of 11.4% in the first quarter of 2008 compared to 11.5% in the first quarter of 2007 demonstrating CTC’s increased affinity. CTC remains the fourth most watched broadcaster in Russia overall. Domashny’s audience share demonstrated healthy growth from 1.9% in the first quarter of 2007 to 2.3% in the first quarter of 2008. Domashny Network audience share in its target demographic (females aged 25-60) of 2.9% was up from 2.3% in the first quarter of 2007.

 


Average Audience Shares

 


Q1 2007

 


Q1 2008

CTC Network

 


 


 


•  all 4+ demographic

9.3%

 


8.8%

•  target demographic (all aged 6-54)

11.5%

 


11.4%

Domashny Network

 


 


 


•  all 4+ demographic

1.9%

 


2.3%

•  target demographic (females aged 25-60)

2.3%

 


2.9%

 

CTC Media’s total operating revenue for the three months ended March 31, 2008 increased 31.3% to $136.7 million from $104.1 million for the three months ended March 31, 2007. CTC Media’s total operating revenue includes advertising revenue in Russia that increased 37.6% in the three months ended March 31, 2008 to $134.4 million from $97.7 million in the year ago period. The increase in revenues reflects the continued growth of the Russian television advertising market and higher advertising rates driven in part by a reduction of airtime available for advertising (i.e. reduction of inventory available for sale) in Russia starting January 1, 2008.

Consolidated total operating expenses in the first quarter of 2008 increased by 27.6% and amounted to $83.7 million compared to $65.6 million in the first quarter of 2007. Total operating expenses decreased as a percentage of revenue by 1.8% period-on-period. In absolute terms, total operating expenses primarily went up due to increased programming amortization expense, which was driven by higher programming costs, particularly for foreign movies and Russian-produced content, and increase in impairment charges. Impairment charges increased from $0.7 million to $5.1 million, when comparing the three months ended March 31, 2007 and 2008, due to a one-off charge related to relative underperformance of two Russian series launched in the first quarter of 2008. The increase in operating expenses driven primarily from increased programming amortization expense was offset by a $3.6 million decrease in depreciation and amortization expense principally caused by a change in the way in which we account for our broadcasting licenses. As of January 1, 2008, we no longer amortize broadcasting licenses over a 5-year useful life but treat them as intangible assets with an indefinite life and test them annually for impairment.

OIBDA increased 24.7% to $55.2 million for the first quarter of 2008 compared to $44.3 million in the first quarter of 2007. The OIBDA margin for the quarter was 40.4%, compared to 42.5% for the corresponding quarter of 2007.

Net income for the quarter was $41.7 million compared to $28.1 million for the three months ended March 31, 2007. Fully diluted income per share was $0.26 for the three months ended March 31, 2008, compared to $0.18 for the three months ended March 31, 2007.

Guidance

For the full year ending December 31, 2008, the Company reconfirms its guidance for consolidated total operating revenue in the range of $600 to $650 million, with a consolidated OIBDA margin in the range of 45-48%. This guidance range does not include expected revenues and OIBDA contribution from our CIS operations in Kazakhstan and Uzbekistan. The Company expects CIS operations to generate 2-3% of the CTC Media Group consolidated 2008 revenue. This guidance range also does not include expected revenues and OIBDA contribution from the recently acquired DTV network.

Conference Call

The Company will host a conference call to discuss its first quarter 2008 financial results today, Tuesday, April 29, at 9 a.m. ET, corresponding to 5 p.m. Moscow time, 2 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 42562935. A live webcast of the conference call will also be available on the investor relations section of the Company's corporate Web site, located at www.ctcmedia.ru/investors. A replay of the conference call will be available through Tuesday, May 13, 2008, at midnight ET. The replay can be accessed by dialing +1 706 645 9291 or +1 800 642 1687. The pass code for the replay is 42562935. The webcast will also be archived on the Company’s Web site for two weeks.

About CTC Media, Inc.

CTC Media is a leading independent media company in Russia. It owns and operates the CTC television network, whose signal is carried by more than 350 affiliate stations, including 21 owned-and-operated stations; the Domashny television network, whose signal is carried by over 230 affiliate stations, including 13 owned-and-operated stations; and the DTV television network, whose signal is carried by a number of affiliate stations, including 24 owned-and-operated stations. The combined audience share for the CTC, Domashny and DTV networks in 2007 was 12.9% and for the first quarter of 2008 was 13.0%. CTC Media owns two TV content production companies: COSTAFILM and SOHO MEDIA, and operates Channel 31 in Kazakhstan and a TV company in Uzbekistan. The Company’s common stock is traded on The NASDAQ Global Sel ect Market under the symbol: “CTCM”. For more information on CTC Media, please visit: www.ctcmedia.ru.

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Contacts:

CTC Media, Inc.
Ivan Philippov (media)
Katya Ostrova (Investors)
+7 495 785 6333

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

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Certain statements in this press release that are not based on historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which include, among other things, guidance on CTC Media’s operating revenues and OIBDA margins for the year ending December 31, 2008, our ability to execute on our growth strategy and our ability to strengthen our positions with respect to the newly acquired DTV network in Russian and Channel 31 in Kazakhstan, reflect the Company's current expectations concerning future results and events. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CTC Media to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The potential risks and uncertainties that could cause actual future results to differ fr om those expressed by forward-looking statements include, among others, our ability to deliver audience share, particularly in primetime, to our advertisers ; changes in the size of the Russian television advertising market;; free-to-air television remaining a significant advertising forum in Russia; our reliance on a single television advertising sales house for substantially all of our revenues; and restrictions on foreign involvement in the Russian television business. These and other risks are described in the "Risk Factors" section of CTC Media's annual report on Form 10-K filed with the SEC on February 29, 2008. Other unknown or unpredictable factors could have material adverse effects on CTC Media's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed herein may not occur. You are cautioned not to place undue reliance on these forward-looking statements. CTC Media does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

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First Quarter 2008 Results Press Release (pdf, 65KB)