Russia’s influence in the world seems to get more powerful by the day, and while current international events might not do much for the nation’s reputation, the fact remains that Russia is a good market for TV. A report from investment bankers Morgan Stanley highlights the state of the ad market, and CTC Media in particular. CTC operates independent TV stations across Russia, CTC and Domashny, plus recent addition DTV which it acquired on April 16. The three networks give it a combined audience share of some 12.9% (2007).

CTC has recently issued fresh guidance which predicts $270m-$312m of EBITDA this year, fuelled by a Russian ad market that’s now expected to grow 35% (was 32%) in 2008 and another 20% next year. However, the bank warns (of CTC): “We expect momentum will slow markedly. After 40%pa growth 2001-08, we expect the TV ad mkt will mature to +12% pa 2008-12 and CTC’s share of total advertising plateau at 55% (43% in 04). Facing greater competition from state and small channels, we expect CTC’s share to stagnate at 11.5% of audience (ex DTV) limiting growth. We expect high programme cost and general opex inflation to lower group EBITDA margins from 47% to 41% by 2012, leaving EPS CAGR of 10% 2010-12.

There are other anxieties for CTC, which Morgan Stanley says are placing “growing risks” to their forecasts for CTC. First up is CTC’s management, which has seen changes at the top tier. Anton Kudryashov was appointed CEO effective August 4, 2008. Alexander Rodnyansky, outgoing CEO and President, stated, "In the past six years, CTC Media has grown from a private company, operating a single free-to-air channel, to a diversified vertically integrated public media holding with five channels in three countries and in-house production capabilities. We are proud of these achievements, and we are even more proud that the growth of CTC Media has continued. In fact, in the second quarter, we grew faster than the overall Russian advertising market. These results speak to the ability of our management teams to outperform the market and deliver outstanding financial results."

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