CTC Media, Inc. (CTCM)

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CTC Media Inc. (CTCM)

Quarter Year Q1 2008 Earnings Call

April 29, 2008 9:00 a.m. EST


Alexander Rodnyansky - CEO

Boris Podolsky - CFO

Vladimir Khanumyan - COO


Sohail Ahmer - Lusight Research

Julia Gordeyeva - Ing

Ben Mogil - Thomas Weisel Partners

William Kirby - Novesti Capital

Alexander Wisch - S&P Equity Research

Anna Kurbatova - Unicredit Aton

David Ferguson - Renaissance Capital



Good day ladies and gentlemen, and welcome to CTC Media’s First Quarter 2008 conference call. At this time all participants are on a listen only mode. We will be conducting a question and answer session toward the end of the conference. This conference 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 earnings release that was issued today. If you have not received the release, please visit the company’s website at www.ctcmedia.ru. Please refer to the earnings release for reconciliation of non-GAAP measures to the most comparable GAAP measures.

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, 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 will like to turn the call over to Mr. Alexander Rodnyansky, Chief Executive Officer of CTC Media. Please go ahead, sir. 

Alexander Rodnyansky

Thank you Operator. Good day everyone and welcome to the CTC Media First Quarter Earnings conference call. I’m joined here by Boris Podolsky our Chief Financial Officer, and Vladimir Khanumyan our Chief Operating Officer.

In the first quarter of 2008 CTC Media continues to achieve solid financial growth, and has certainly taken advantage of Russia’s robusted market by making continuous tries in the execution of our growth strategy. For the first quarter of 2008, we posted the year over year earnings growth of 31.3% or if that increase 24.7% year over year to 55.2 million. And that income grew 48.3% to 41.7 million over the first quarter of 2007.

In March, CTC announced the definitive agreement to acquire DTV Group from MTG AB for a total cash consideration of approximately 395 million and completed the acquisition on April 16th. We have made an initial cash payment of 190 million and expect to make the final payment by the end of the second quarter after securing financing.

The acquisition of DTV Group’s national [inaudible] television network and the group of 28 owned and operated stations in Russia will allow CTC to further capitalize on Russia’s booming advertising markets while giving [inaudible] to our broadcasting capabilities and audience reach.

DTV’s primarily male audience aligns itself nicely with our established CTC [inaudible] brands. That attract young and dynamic audiences. DTV reaches currently around 54% of the urban households and our near term goal is to reach approximately 70%, which is where Domashny our second network is now.

In addition, it permits CTC to enhance advertiser value by offering a multi-channel package that captures audiences in various demographics across Russia. We believe our core strength in the developing reach viewer content, maintaining loyal audiences across our stations and building efficient programming structures make the integration of DTV into the CTC family valuable and accretive in the near to mid term.

We’re going to be working to relaunch the new DTV in the fall to take advantage of the traditionally strong fall viewing period. At the end of March CTC [inaudible] casting on channel 31 group in Kazakhstan with a programming schedule consisting of CTC’s content, approximately 60% the first time as well as local Kazakhstan programming and foreign [inaudible] specifically for channel 31.

CTC’s proven format has driven initial ratings up to almost 10% in April of 2008 from 7% in 2007. The channel currently broadcasts several CTC most popular sitcoms such as My First Nanny, and Daddy’s Girls, as well as CTC’s original hit series Cadets.

A number of well established and newly launched CTC shows will also air on Channel 31 including The Brainiest, Good Jokes, and Just Kidding me with a significant amount of the air time devoted to programming in the Kazakh language.

The combination of both CTC’s proven Russian language programming and local productions permits us to enhance the channels appeal to both viewers and advertisers alike. In April, we began commercial broadcasting of CTC’s Uzbekistan. And it is off to a good start with all proven of well-know CTC formats that are yet new for the viewers such as Cadets, My First Nanny, Mothers and Daughters, and Story in Detail [ph]. While the Uzbek television advertising market is in it’s infancy, we believe the long-term growth opportunity in Uzbek is highly attractive. With our early more advantage programming and regional expertise, we will remain in a unique position to how it is shaped and developed the Uzbek TV landscape.

We also recently announced we have extended our relationship with the Walt Disney Company with a multi-year licensing agreement. This agreement highlights our commitment to providing our viewers with the best entertainment programming and will be a terrific compliment to our local productions.

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