CTC Media, Inc. (CTCM)

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CTC Media, Inc. (CTCM)

Q4 2008 Earnings Call

February 26, 2009 09:00 AM ET


Anton Kudryashov - Chief Executive Officer

Boris Podolsky - Chief Financial Officer


Alex Kuznetsov - ING

David Ferguson - Renaissance Capital

Edward Hill-Wood - Morgan Staley

Elena Tymchenko - Credit Suisse

Laurie Davison - Goldman Sachs

Sohail Ahmer - Lusight Research

Alexander Wisch - S&P Equity Research

Benjamin Shapiro - Thomas Weisel Partners



Good morning and good afternoon, ladies and gentlemen, and welcome to CTC Media's Fourth Quarter and Full Year 2008 Conference Call. Today's call will be hosted by Anton Kudryashov, Chief Executive Officer of CTC Media, and Boris Podolsky, Chief Financial Officer. At this time, all participants are in a listen-only mode.

We will be conducting a question-and-answer session towards the end of the call. This call is being webcast, and an audio version of the call will be available on the company's website for two weeks. As a reminder, this conference is being recorded for replay purposes.

You should all have received CTC Media's fourth quarter and full year earnings release that was issued earlier today. If you have not receive the copy of the press release, it is currently available on the company's website at www.ctcmedia.ru. Please refer to the earnings release for the reconciliation of non-GAAP measures to the most comparable GAAP measures. A results presentation and a live webcast to company today's call are also available on the website under the Investor Relations section.

Before we begin today's call, CTC Media would like to remind everyone that this conference call may contain certain forward-looking statements relating to future events, future financial performance, strategies, expectations, the competitive environments, regulations and availability of resources. Such forward-looking statements are based upon current expectations that involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statements, based on a number of factors and other risks which are more specifically identified in CTC Media's filings with the SEC.

And now, I would like to turn the call over to Mr. Anton Kudryashov. Please go ahead, sir.

Anton Kudryashov

Thank you, operator. Good morning and good afternoon, ladies and gentlemen, and thank you for joining us today. 2008 was a highly productive and successful year for CTC Media.

Both our revenues increased by 36% to $640 million, while adjusted OIBDA grew by 27% to $280 million with a 44% margin. Adjusted net income was up 30% to $176 million. These results have been adjusted for the non-cash impact of a $233 million impairment charge in the fourth quarter. This charge relates to the impairment of the intangible assets of DTV Group in Russia, Channel 31 in Kazakhstan, and our Growth Custom Group in Moldova. We will comments survey on these later in today's call.

Organic operation revenues which comprise the combined operation revenues of CTC Network and Station Group and Domashny Network and Station Group were up 25% year-on-year to $588 million in 2008. These growth was broadly in line with independent estimates for overall Russian TV advertising market growth.

2008 was a transformational year for CTC Media. We have grown into a truly international company with three complimentary networks in Russia and broadcasting operations in Kazakhstan, Uzbekistan and Moldova.

We also successfully integrated the two Russian production companies, Costafilm and Soho Media, which requires in the second quarter. This is enabling us to develop our in-house production capabilities and create a proprietary content library.

We have continued to invest in our programming schedules in order to maintain a well balanced mix penetration (ph) and foreign entertainment content. As well as to develop high quality, a regional programming with Russian producers.

Before directly reflected in increased ratings and audience share gains for each of our networks. Our combined 4+ audience share in Russia increased from 11% in 2007 to 13% in 2008. We also increased the technical penetration of our networks in Russia in 2008, with DTV up from 54% to 61% and Domashny from 65% to 71%.

The power ratios for each of our networks increased year-on-year in 2008 and the blended ratio for the Russian networks increased to 1.34.

The overall Russian advertising market and the activities in advertising market in particular grew strongly during the first half of the year with total price increases.

However, the global financial crisis and the wider economic slowdown negatively impacted the development of the advertising market due in the second half of the year. This both compounded by the substantial depreciation of our ruble operating currency against our U.S. dollar reporting currency.

Let me now provide you with some indication of how each of our key business divisions performed during the reporting period. Our flagship CTC Network achieved an average 11.8% share of June in its 6 to 64 year old target group into 2008 compared to 11.3% into 2007.

CTC consolidated its position of the fourth most watched channel in Russia and the premier of the Daddy's Girls sitcom and Ranetki series, is among the key prime-time audience share drivers on the CTC Network.

Both shows will produced in-house by Costafilm, and Ranetki, (inaudible) was actually the most searched name on Russian Google last year.

The Domashny Network also continue to grow its audience share during the year from 2.4% in 2007 to 2.8% for 2008.

The networks prime-time audience share was supported by re-runs of CTC's Born Not Pretty series, as well as Agatha Christie's mysteries at weekends.

The CTC Media house was service transcend by the acquisition of DTV Group in April 2008. The shows that we'll launched on DTV during the full season have successful increased the networks 11+ audience share to 1.9% in the fourth quarter.

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