CTC Media Announces Financial Results for the Second Quarter and Six Months Ended June 30, 2015

07.08.2015

Moscow, Russia – August 7, 2015 – CTC Media, Inc. (“CTC Media” or the “Company”) (NASDAQ: CTCM), Russia’s leading independent media company, today announced its unaudited consolidated financial results for the second quarter and six months ended June 30, 2015.

H1 2015 FINANCIAL HIGHLIGHTS

Third-party reports have estimated that the total Russian TV advertising market was down by 21% in ruble terms in the first half of 2015
Total CTC Media revenues of $171.4 million ( RUR 9.8 billion), down year-on-year by 54% in USD terms and 25% in ruble terms, reflecting the contraction of the overall Russian television advertising market
Advertising revenues of $167.3 million (RUR 9.5 billion), down year-on-year by 54% in USD terms and 26% in ruble terms
Significant cost cutting measures implemented in light of the current market environment:
- Programming expenses down 45% in USD terms and 11% in ruble terms year-on-year to $90 million(RUR 5.1 billion)
- Total operating expenses down 44% in USD terms and 8% in ruble terms year-on-year to $160 million (RUR 9.1 billion)
OIBDA¹ of $19.0 million (RUR 1.1 billion) with OIBDA margin² of 11.1%, despite the decline in the overall TV ad market and challenging macroeconomic environment
Net cash position of $103.0 million at the end of the period
Fully diluted earnings per share of $0.03 (Q2 2014: $0.17)

Q2 2015 FINANCIAL HIGHLIGHTS

Third-party reports have estimated that the total Russian TV advertising market was down by 21% in ruble terms in the second quarter of 2015
Total revenues up 17% quarter-on-quarter in USD terms and down 1% in ruble terms; total revenues down 50% year-on-year in USD terms and 25% in ruble terms, at $92.3 million (RUR 4.8 billion)
Advertising revenues up 16% quarter-on-quarter in USD terms and down 2% in ruble terms; advertising revenues down 51% year-on-year in USD terms and 26% in ruble terms, at $89.9 million (RUR 4.7 billion)
OIBDA¹ of $10.6 million (RUR 0.6 billion), with OIBDA margin² of 11.5%

CORPORATE UPDATE AND OUTLOOK

In the context of amendments to the Russian Mass Media Law that will impose further restrictions on non-Russian ownership of television broadcasters, the Company announced the receipt of a non-binding offer from UTH to acquire 75% of the Company’s operating businesses for $200 million in cash, the formation of Special Committee of the Board to consider the offer, and the Board’s intention to return value to the Company’s non-sanctioned stockholders if a transaction is successfully concluded
The Board has decided not to declare a dividend in the third quarter to preserve the financial and strategic flexibility of the Company in the current market, operational and corporate circumstances
In light of the continued limited visibility for 2015, the Company is not providing full year guidance at this time
Third-party reports have estimated that total Russian TV advertising spending may decline by 15-17% in the second half of 2015 and by 19-20% in ruble terms for the full year 2015

Yuliana Slashcheva, Chief Executive Officer of CTC Media: “The first half of 2015 has been a challenging period for CTC Media as a result of regulatory, macroeconomic and commercial developments. We are continuing to work towards an appropriate response to new restrictions on foreign ownership of television in Russia that will become effective in 2016, and as previously announced our Board of Directors and its Special Committee are currently considering a non-binding offer we have received from UTH for the acquisition of a controlling interest in our operating business.

Meanwhile, our management team continues to focus on the business. In the second quarter, CTC Media remained profitable thanks to the strict cost control measures that we have imposed. Programming expenses decreased by 18% in rubles and 45% in U.S. dollars compared with the prior year. Overall, CTC Media’s expenses declined by 12% in rubles and 41% in U.S. dollars compared to the second quarter of 2014. Results as reported in USD were materially affected by the significant decline in the value of the ruble in the reporting period.

Thanks to the effectiveness of Everest, our in-house advertising sales agency, we maximized sales on CTC Media’s channels, with a sell-out rate of about 95% in the second quarter, despite the decline in the overall market. At the same time we managed to keep our power ratio at last year’s high level. All our smaller channels outperformed the market thanks to the excellent performance of the teams. In the second quarter, we presented the new season of CTC to advertisers, and we aim to effectively monetize our programming grid in the third and fourth quarters of 2015. At this time all sponsorships have been sold for all of CTC channel’s new programs.

Also, we are pleased that the Company, uniquely among our largest competitors, we believe, has remained profitable despite the significant market challenges we continue to face. In the second quarter, our OIBDA margin remained in the double digits at 11.5%. This is a slight increase from the first quarter of 2015, when the OIBDA margin stood at 10.6%. The first and second quarters were extremely difficult for the Company’s operating business. However, there were signs of stabilization of the CTC channel audience share in the second quarter, and we saw improvement at the beginning of the third quarter.

In the second quarter, the CTC channel's audience share declined quarter-on-quarter as was expected due to the decrease of program expenses in the first half of the year and transfer of the key premiers to the third and fourth quarters. The CTC audience share settled into the 7.3-7.7% range in its target audience aged 10 to 45. In July, when we started preparing for the new season by broadcasting the reruns of our popular series such as “Kukhnya” (Kitchen) and “Voroniny” the audience share rose to 8.1% and we expect it to go up further in Q3. The audience shares of the Domashny and Peretz channels also kept growing in July and reached 3.8% and 2.4%, respectively.

In September, we will begin a new season on CTC with a record line-up of 20 premieres, our highest season total to date. First, audience favorites such as “Molodezhka,” “Kukhnya,” “Voroniny” and “The Eighties” will continue. Results for previous quarters have shown that the season premieres of these series can generate an above-average share for the channel. Second, we will introduce promising new products, including “Londongrad,” “How I Became Russian,” “Top of the World” and “Mommies.” Finally, CTC will launch several shows aimed at strengthening its positions in the daytime and Sunday slots.

Our smaller channels also saw an increase in viewership in the second quarter, thanks to efficient management as well as our marketing and public relations efforts. The share of Domashny in its target audience increased in the second quarter from 3.3% in 2014 to 3.7% in 2015. At the same time, the share of younger women aged 25-50 among its viewers continued to increase. The success of the channel lies in efficient programming combined with the launch of a large number of programs produced specifically for the channel, as well as an extremely fast response to important social events and trends. Besides Domashny’s traditional shows and series aimed primarily at a female audience, the channel recently began broadcasting a new program called “Crisis Manager,” which is highly relevant in the current state of the economy and appeals to a much broader audience demographic. The program moderator gives practical advice to families on how to save money and manage their budgets. Documentaries dedicated to the hot topic of the day such as “Djuna” and “Zhanna,” as well as the new Turkish series “1001 Nights,” also gained higher audience shares than the channel’s average.

Peretz continues to make gradual changes in its programming concept that have had a positive impact on its audience share. The channel’s share stood at 2.2%, compared to 1.9% in the second quarter of 2014. In addition, we are pleased with a number of positive developments such as an increase of more than 10% in the average viewing time and a qualitative change in the audience. The channel also was able to reduce costs significantly.

CTC Love is still increasing its audience share. In the second quarter, the channel’s share in its target audience increased to 1.1% from 0.8% in the prior quarter. The channel has been very successful using content from the CTC library, which attracts a larger audience than foreign series. The channel has also introduced new programs. A casting call for the new program “One Day with MBand” drew more than 500 applicants per role. During an online chat with members of MBand to promote the program, more than 120,000 questions were received within an hour.

Our assets outside the Russian Federation remain a stable source of revenue. Channel 31 has secured the second place in the Kazakh market, despite increased competition from cable channels. The channel was able to maintain high margins by effectively procuring content. Our International channels’ operating revenue increased by 98% in ruble terms in the second quarter compared to the second quarter of last year, and by 116% in the first half of 2015, due to the effect of foreign exchange rates as well as expanding distribution.

Digital and transmedia revenue increased by 37% in ruble terms in the second quarter and by 23% in the first half of 2015. In June we launched advertising sales on web portals in Kazakhstan. To consolidate our leadership in digital and transmedia, we will unveil several breakthrough technological solutions as the new season starts on CTC.”

1 ²OIBDA is defined as operating income before depreciation and amortization. OIBDA margin is defined as OIBDA divided by total operating revenues. Both OIBDA and OIBDA margin are non-GAAP financial measures. Please see the accompanying financial tables at the end of this release for a reconciliation of OIBDA to operating income and OIBDA margin to operating income margin.

Operating Review

	Three Months			Three Months
	Ended June 30,		Change	Ended June 30,		Change
(RUB in million, US$ in million except per share data)	2014	2015		2014	2015
	Rubles			US Dollars

Total operating revenues	6,461.1	4,848.3	(25)%	$184.3	$92.3		(50)%
Including:
Advertising revenues	6,398.1	4,724.8	(26)%	182.5	89.9		(51)%
Total operating expenses	(5,103.3)	(4,506.6)	(12)%	(145.7)	(85.8)		(41)%
OIBDA¹	1,596.5	556.1	(65)%	45.4	10.6		(77)%
OIBDA margin²	24.7%	11.5%	(13.2)pp	24.7%	11.5%		(13.2)pp
Net income attributable to CTC Media, Inc. stockholders	940.9	241.5	(74)%	26.7	4.7		(82)%
Fully diluted earnings per share	nm	nm		$0.17	$0.03

	Six Months			Six Months
	Ended June 30,		Change	Ended June 30,		Change
(RUB in million, US$ in million except per share data)	2014	2015		2014	2015
	Rubles			US Dollars

Total operating revenues	13,007.3	9,766.1	(25)%	$370.6	$171.4		(54)%
Including:
Advertising revenues	12,885.3	9,532.0	(26)%	367.1	167.3		(54)%
Total operating expenses	(9,936.7)	(9,122.2)	(8)%	(283.8)	(160.1)		(44)%
OIBDA¹	3,582.4	1,077.8	(70)%	101.4	19.0		(81)%
OIBDA margin²	27.5%	11.0%	(16.5)pp	27.4%	11.1%		(16.3)pp
Net income attributable to CTC Media, Inc. stockholders	2,060.7	753.1	(63)%	57.9	13.1		(77)%
Fully diluted earnings per share	nm	nm		$0.37	$0.08

Share of Viewing
	Q2 2014	H1 2014	Q2 2015	H1 2015

CTC Channel (all 10-45)	10.2	10.5	7.4	7.9
Domashny Channel (females 25-59)	3.3	3.2	3.7	3.6
Peretz Channel(all 25-49)	1.9	2.1	2.2	2.0
Channel 31 (all 6-54)	13.7	12.6	12.5	13.8
CTC Love (all 11-34)	nm*	nm*	1.1	0.9

* CTC Love started to be measured by TNS Russia from September 2014

Our Russian channels’ target audience shares continued to be affected by overall audience fragmentation and increased competition in the period. All larger national free‑to‑air TV channels in Russia were negatively impacted by increased competition from smaller niche and non‑free‑to‑air channel viewership in the “All 4+” category, which increased from 17.2% in 2013 to 18.4% in 2014 and 20.6% in the first half of 2015.

CTC channel’s average target audience share among 10 to 45 year‑old viewers decreased year‑on‑year in the second quarter of 2015 from 10.2% to 7.4%. In the current market conditions, the channel’s high-quality premieres were shifted to the second half of 2015, when spending levels are expected to be appropriate for more effective monetization.

Domashny channel’s target audience share among 25‑59 year‑old female viewers increased year‑on‑year in the second quarter of 2015 from 3.3% to 3.7%, reflecting the qualitative structural changes in the programming grid following the channel’s restyling, and the success of content in daytime slots and weekends, partially offset by the effect of audience fragmentation. Domashny channel continues to grow its core female audience segment and enhance the commercial attractiveness of its demographic profile.

Peretz channel’s target audience share among 25 to 49 year‑old viewers increased year‑on‑year in the second quarter of 2015 from 1.9% to 2.2%, reflecting structural changes in the programming schedule and the success of content in primetime and daytime slots. Peretz channel is currently in the process of repositioning, including changing its content strategy and transforming the channel to be more attractive to its target audience and advertisers.

Channel 31’s target audience share among 6 to 54 year‑old viewers decreased year‑on‑year in the second quarter of 2015 from 13.7% to 12.5%, reflecting increased competition from Kazakh channels that broadcast mainly in the Kazakh language as well as increased audience fragmentation.

CTC Love, a new young entertainment channel in Russia with a core audience of ages 11-34, which we launched in April 2014 on cable and satellite networks and free-to-air in January 2015, has been part of the TNS ratings database since September 2014. The audience share of CTC Love among its all 11-34 target demographic was 1.1% in the second quarter of 2015. CTC Love technical penetration in 100+ cities is approximately 61.6%.

Revenues

Total operating revenues decreased by 25% in ruble terms in the second quarter of 2015. This was primarily driven by the estimated decrease of 21% in ruble terms year-on-year in the Russian television advertising market and a lower year‑on‑year target audience share of CTC channel, partially offset by higher target audience share of Domashny and Peretz channels, as well as increased revenues from Channel 31 and our other non-core businesses. In addition, our new channel CTC Love contributed approximately RUR 83 million to the group’s revenue in the second quarter of 2015. Revenues as reported in U.S. dollars were materially negatively affected by the depreciation of the ruble.

	Three Months Ended June 30,				Three Months Ended June 30,

				Change				Change
(RUB in million, US$ in million)	2014	2015			2014	2015
	Rubles				Dollars

Operating revenues by segment:
CTC Channel	4,636.1		3,055.1	(34)%	132.2		58.2	(56)%
Domashny Channel	976.8		816.5	(16)%	27.9		15.6	(44)%
Peretz Channel	592.1		496.1	(16)%	16.9		9.4	(44)%
Channel 31*	862.1		937.0	9%	4.7		5.0	7%
All Other	90.6		215.7	138%	2.6		4.1	59%
Total operating revenues	6,461.1		4,848.3	(25)%	184.3		92.3	(50)%

*in Kazakh tenge

	Six Months Ended June 30,				Six Months Ended June 30,

				Change				Change
(RUB in million, US$ in million)	2014	2015			2014	2015
	Rubles				Dollars

Operating revenues by segment:
CTC Channel	9,309.2		6,230.6	(33)%	265.1		109.2	(59)%
Domashny Channel	1,963.1		1,689.2	(14)%	56.0		29.6	(47)%
Peretz Channel	1,256.8		948.2	(25)%	35.9		16.7	(53)%
Channel 31*	1,521.0		1,609.6	6%	8.5		8.7	2%
All Other	178.3		408.6	129%	5.1		7.2	41%
Total operating revenues	13,007.0		9,766.0	(25)%	370.6		171.4	(54)%

*in Kazakh tenge

CTC channel’s revenues decreased by 34% and 33% in ruble terms when comparing the three‑ and six‑month periods under review, largely reflecting 27% and 25% decreases in the channel’s target audience share, respectively, and the estimated decrease in the overall Russian television advertising market of 21% in ruble terms in the periods under review, partially offset by our ability to command favorable advertising prices for our target audience.

Domashny channel’s revenues decreased by 16% and 14% in ruble terms when comparing the three‑ and six‑month periods under review, largely reflecting the estimated decrease in the overall Russian television advertising market of 21% in ruble terms in the periods under review and decreased sponsorship revenues, partially offset by 12% and 11% increases in the target audience share, respectively.

Peretz channel’s revenues decreased by 16% and 25% in ruble terms when comparing the three‑ and six‑month periods under review, largely reflecting the estimated decrease in the overall Russian television advertising market of 21% in ruble terms in the periods under review, partially offset by a 14% increase in the target audience share in the second quarter, reflecting structural changes in the programming schedule and the success of content in primetime and daytime slot.

Channel 31’s revenues increased by 9% in Kazakh tenge terms in the second quarter of 2015 principally due to a 6% increase in the estimated overall television advertising market in Kazakhstan in Kazakh tenge terms and increased sponsorship, partially offset by a 9% decrease in target audience share. Channel 31’s revenues increased by 6% in Kazakh tenge terms when comparing the six-month periods under review, primarily reflecting an increase in the estimated overall television advertising market in Kazakhstan by 3% in Kazakh tenge terms and a 10% increase in target audience share that was the result of successful changes in the programming grid focusing on local‑language programming and better performance of foreign content, partially offset by increased competition from smaller niche and non‑free‑ to‑air channels as the result of strengthening of the Kazakh law on local‑language programming.

All other revenues in the second quarter of 2015 represent revenues of RUR 82.8 million from CTC Love, revenues of RUR 73.0 million from CTC-International and revenues of RUR 59.8 million from our digital media businesses.

Expenses

	Three Months			Three Months
	Ended June 30,		Change	Ended June 30,		Change
(RUB in million, US$ in million except per share data)	2014	2015		2014	2015
	Rubles			US Dollars

Operating expenses:
Direct operating expenses	(452.3)	(471.5)	4%	(13.0)	(9.0)		(31)%
Selling, general & administrative expenses	(1,366.3)	(1,332.9)	(2)%	(39.0)	(25.3)		(35)%
Programming expenses	(3,002.1)	(2,469.6)	(18)%	(85.6)	(47.1)		(45)%
Stock-based compensation expense	(43.8)	(18.3)	(58)%	(1.3)	(0.3)		(73)%
Depreciation & amortization	(238.8)	(214.4)	(10)%	(6.8)	(4.1)		(40)%
Total operating expenses	(5,103.3)	(4,506.6)	(12)%	(145.7)	(85.8)		(41)%

	Six Months			Six Months
	Ended June 30,		Change	Ended June 30,		Change
(RUB in million, US$ in million except per share data)	2014	2015		2014	2015
	Rubles			US Dollars

Operating expenses:
Direct operating expenses	(860.7)	(938.3)	9%	(24.6)	(16.5)		(33)%
Selling, general & administrative expenses	(2,826.0)	(2,578.2)	(9)%	(80.6)	(45.4)		(44)%
Programming expenses	(5,747.1)	(5,115.9)	(11)%	(164.2)	(89.7)		(45)%
Stock-based compensation expense	8.9	(55.9)	(730)%	0.3	(0.9)		(471)%
Depreciation & amortization	(511.8)	(433.8)	(15)%	(14.7)	(7.6)		(48)%
Total operating expenses	(9,936.7)	(9,122.2)	(8)%	(283.8)	(160.1)		(44)%

Our total operating expenses decreased by 12% and 8% in ruble terms when comparing the three-and six- month periods under review, primarily due to decreases in programming expenses.

Direct operating expenses increased by 4% and 9% in ruble terms when comparing the three‑ and six‑month periods under review, largely reflecting increased payroll taxes starting from 2015 as the result of changes in Russian tax legislation, increased transmission costs for our new channel CTC Love launched in the second half of 2014 and annual increases in analog transmission costs.

Selling, general and administrative expenses were down 2% and 9% in ruble terms when comparing the three‑ and six‑month periods under review, primarily due to decreases in compensation payable to Vi, reflecting decreased national advertising revenues at our Russian channels, partially offset by increased legal and consulting expenses in connection with our response to the amendment to the Russian Mass Media Law.

Programming expenses were down 18% and 11% in ruble terms when comparing the three‑ and six‑month periods under review, reflecting a less expensive programming mix at our Russian channels to address current market conditions. We expect our programming expenses in ruble terms will be lower for the full year 2015 compared with the prior year.

Stock‑based compensation expenses increased by $1.2 million, reflecting re-measurement of the equity‑based cash incentive awards granted to employees under our 2009 Stock Incentive Plan at their fair value as of the reporting date done in Q1 2014.

CTC Media’s effective tax rate decreased from 31% to 29% and from 31% to 7% for the three and six months ended June 30, 2014 and 2015, respectively. Our effective income tax rate in the first half of 2015 was positively affected by a refund of income tax confirmed and reclaimed from Russian tax authorities based on our interpretation of certain positions taken in our historical income tax filings. Excluding this effect, our effective tax rate would have been 28% for the six months ended June 30, 2015.

Net income attributable to CTC Media, Inc. stockholders therefore was down 74% in ruble terms and 82% in USD terms, to RUB 241.5 million ($4.7 million) in the second quarter (Q2 2014: RUB 940.9 million or $26.7 million), and fully diluted earnings per share decreased to $0.03 (Q2 2014: $0.17).

Cash Flow

The Company’s net cash flows from operating activities decreased by $54.6 million, totaling ($4.7) million for the first half of 2015 (1H 2014: $50.0 million), primarily reflecting the lower cash receipts from advertising sales, and, to a lesser extent, the effect of the depreciation of the Russian ruble against the US dollar, partially offset by lower spending on the acquisition of programming.

Net cash provided by investing activities totaled $52.7 million for the first half of 2015 (1H 2014: $20.7 million) and mainly represented net receipts from cash deposits of $54.0 million.

Net cash used in financing activities amounted to $29.6 million for the first half of 2015 (1H 2014: $58.5 million) and primarily reflected the payment of $20.4 million in cash dividends to the Company’s stockholders and $6.9 million increase in other non‑current assets, which represent dividends payable to one of our stockholders that were blocked pursuant to US sanctions imposed on Bank Rossiya.

The Company’s cash and cash equivalents and short-term investments and loan balance amounted to $103.0 million as of June 30, 2015, compared to $139.4 million as of December 31, 2014.

Dividends

In light of current circumstances, the Board has decided not to declare a dividend to be paid in the third quarter of 2015. The Board believes that the interests of stockholders are best served by preserving the financial and strategic flexibility of the Company in the current market, operational and corporate circumstances.

Update on the Mass Media Law and Potential Asset Sale

As previously announced, an amendment to the Russian Mass Media Law adopted in October 2014 will generally limit the aggregate foreign (non-Russian) beneficial ownership or control, direct or indirect, of Russian mass media, including television broadcasters, to no more than 20%. No amendments to or waivers from the Mass Media Law have been approved to date and therefore all mass media, including CTC Media’s Russian broadcasting businesses, will be required to comply with these ownership and control limitations by January 1, 2016 (subject to a one-year grace period for offshore intermediate holding structures ultimately owned and controlled by Russian individuals or companies). The adoption of the Mass Media Law creates significant uncertainty for CTC Media and its stockholders.

The Board of Directors, its Special Committee and the Company’s management team are continuing to work with external legal, financial and tax advisors to evaluate and implement an appropriate response that achieves compliance with the new law while safeguarding the interest of all stockholders.

In the context of these legal developments in Russia, on July 6, 2015, the Company announced the receipt of a formal, non-binding offer from UTH, a privately held Russian commercial television broadcasting group, for the purchase of a 75% interest in the group’s Russian (and Kazakhstan) business operations. Although the Board of Directors has not approved a sale or divestment transaction at this time, the Board and its Special Committee of independent directors have each reviewed the UTH offer and believe that it is appropriate to seek to reach agreement on the final terms and definitive documentation in respect of the proposed transaction. The Special Committee has agreed to grant a period of exclusivity to UTH, during which the parties will seek to agree the definitive terms of the transaction. If ultimately recommended by the Special Committee and approved by the Board of Directors, the transaction would be submitted to the Company’s stockholders for approval.

Pursuant to the non-binding offer, UTH would acquire a 75% interest in CTC Media’s operating businesses, on a cash- and debt-free basis, for $200 million in cash. The Board and its Special Committee intend to return value to stockholders following any such transaction, and are continuing to evaluate the best means of doing so.

The discussions with UTH are at a relatively early stage and there can be no assurance that the Special Committee will be successful in agreeing definitive documentation with UTH, or that such transaction will ultimately close. Such transaction would be subject to customary closing conditions, including clearance from the Russian Federal Anti-monopoly Service. If a definitive agreement is reached and approved by our stockholders in respect of such transaction, this would have a material impact on our financial statements, including held-for-sale treatment of our operating assets and potentially additional material impairment charges.

If the Board and its Special Committee are not able to conclude a satisfactory transaction with UTH, or if the Company’s stockholders do not approve such transaction, the Company may not be able to consummate another sale transaction, or implement an alternative transaction, before the end of 2015, and may therefore not achieve compliance with the foreign ownership and control restrictions of the amended Russian Mass Media Law by the stated deadline. Such failure would materially adversely affect the group’s business and the market value of the Company’s common stock.

2015 Outlook

The Company continues to have limited visibility regarding 2015 and therefore is not providing full-year revenue and profit outlook at this time. The Company will review this position on a regular basis moving forward in the context of prevailing market conditions.

Conference Call

The Company will host a conference call to discuss its second quarter and six months ended June 30, 2015 financial results today, Friday, August 7, 2015 at 8:00 a.m. EDT / 1:00 p.m. UK / 3:00 p.m. Moscow time. To access the conference call, please dial:

US/International: + 1 212 444 0412

UK/International: +44 (0) 20 3427 1909

Russia: +7 (8) 495 705 9450

Confirmation Code: 4915292

A live webcast of the conference call will also be available via the investor relations section of the Company's corporate web site - www.ctcmedia.ru/investors. The webcast will also be archived on the Company’s web site for two weeks.

About CTC Media, Inc.

CTC Media is a leading Russian independent media company, with operations throughout Russia and elsewhere in the CIS. It operates three free-to-air television networks in Russia – CTC, Domashny and Peretz – as well as CTC-Love in Russia and Channel 31 in Kazakhstan, with a combined potential audience of over 150 million people. The international pay-TV version of the CTC channel is available in North America, Europe, Central Asia, Armenia, Georgia, Azerbaijan, the Middle East and Kyrgyzstan. Peretz is also available in Belarus and Kyrgyzstan. CTC Media also has a number of digital entertainment media assets: videomore.ru, domashniy.ru, ctc.ru, peretz.ru. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol “CTCM”. For more information on CTC Media, please visit www.ctcmedia.ru.

***

For further information, please visit www.ctcmedia.ru or contact:

CTC Media, Inc.

Investor Relations

+7 495 981 0740
ir@ctcmedia.ru

Media Relations

+7 (495) 785 63 47 ext. 4352

+ 7 (985) 763 00 85

pr@ctcmedia.ru

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with US GAAP, the Company uses the following non-GAAP financial measures: OIBDA (on a consolidated and segment basis) and OIBDA margin. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the accompanying financial tables included at the end of this release.

The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain expenses that may not be indicative of its recurring core business operating results. These metrics are used by management to further its understanding of the Company’s operating performance in the ordinary, ongoing and customary course of operations. The Company also believes that these metrics provide investors and equity analysts with a useful basis for analyzing operating performance against historical data and the results of comparable companies.

OIBDA and OIBDA margin. OIBDA is defined as operating income before depreciation and amortization (exclusive of amortization of programming rights and sublicensing rights). OIBDA margin is defined as OIBDA divided by total operating revenues. The most directly comparable GAAP measures to OIBDA and OIBDA margin are operating income and operating income margin, respectively. Unlike operating income, OIBDA excludes depreciation and amortization, other than amortization of programming rights and sublicensing rights. The purchase of programming rights is the Company’s most significant expenditure that enables it to generate revenues, and OIBDA includes the impact of the amortization of these rights. Expenditures for capital items such as property, plant and equipment have a materially less significant impact on the Company’s ability to generate revenues. For this reason, the Company excludes the related depreciation expense for these items from OIBDA. Moreover, a significant portion of the Company’s intangible assets were acquired in business acquisitions. The amortization of intangible assets is therefore also excluded from OIBDA.

Caution Concerning Forward Looking Statements

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 include, among others, statements regarding the Company’s potential sale of a controlling interest in its operating companies to UTH; the impact of amendments to the Russian law “On Mass Media” and the Company’s potential actions in response to this change in law; developments in the macroeconomic environment, including the impact of international economic sanctions; changes in the value of the ruble; developments in the Company’s market; and the Company’s estimates for the development of the overall Russian TV advertising market and of its revenues, expenses and audience shares in 2015. These statements 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 from those expressed or implied by forward-looking statements include, among others, risks associated with the Company’s ability to negotiate an acceptable transaction with UTH and the regulatory and other approvals required for such transaction; the impact of amendments to the Russian law “On Mass Media” and the success of the Company’s efforts to respond to this law; geopolitical events involving Russia and the other countries in which the Company operates, including any potential negative economic impact of such events; depreciation of the value of the Russian ruble compared to the US dollar; the effect of international economic sanctions; changes in the size of the Russian television advertising market compared with current estimates of anticipated market; the Company’s ability to deliver audience share, particularly in primetime, to its advertisers; the continued successful operation of the Company’s own internal sales house structure; and free-to-air television remaining a significant advertising forum in Russia. 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 March 5, 2015, and its quarterly report on Form 10-Q to be filed with the SEC on or about the date hereof.

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.