CTC Media is one of Russia’s largest broadcasters and a key player in the country’s evolving broadcast landscape. As Russian satellite operators, Russian Satellite Communications Company (RSCC) and Gazprom Satellite Systems (GSS), put up more capacity and more DTH players emerge, the Russian broadcast landscape is likely to be a hotbed of innovation during the next few years. Anton Kudryashov, CEO, CTC Media, talks about how broadcasting in Russia is entering a new era.
VIA SATELLITE: Has the global economic recession had an impact on advertising revenues in Russia?
Kudryashov: In 2010 we were already above our 2008 peak revenue levels by 14 percent, while the Russian television advertising market was still lagging behind its pre-crisis volume. Even in the crisis in 2009, when our total operating revenue was down 21 percent, we delivered high margins. That illustrates how effectively we can manage our costs. Currently, the Russian television advertising market is rapidly growing, and we expect that it will restore above pre-crisis levels of 2008 this year.
VIA SATELLITE: What are the major challenges for CTC Media during the next 12 months?
Kudryashov: We are going to maintain focus on our core business of pure entertainment programming and development of all three FTA CTC Media’s Russian channels — CTC, Domasny and DTV — which have been renewed and have operated under the new logo “Peretz” since October 2011.
We are planning to develop our business in the CIS segment and to expand our international pay-TV presence through CTC-international via cable and satellite platforms in the countries with considerable Russian-speaking populations.
As the Internet is growing at lightning speed, we are also focusing on expanding our online and new media presence. In December 2010, we launched an online social television network Videomore (www.videomore.ru), which is rapidly growing its user base, and we are actively working on developing CTC applications and widgets for different platforms. New media — including online, mobile and Connected TV — is a fast-growth market that needs exciting content to gain viewers, subscribers and advertising clients. In the on-demand world, providers with the strongest content benefit the most — meaning that major TV companies like CTC Media are well positioned to lead this market.
VIA SATELLITE: What do you see as the main growth drivers for CTC Media?
Kudryashov: Growth drivers of our business are closely connected with the high growth potential of the Russian TV ad market as a whole. First of all, the Russian TV advertising market is already quite sizeable: No. 9 in the world and No. 5 in Europe. It is expected to become No. 5 globally within just three years. Remarkably, this will also make us the biggest European market in 2013. In our view, in the long-run, ad market growth will be driven by growing GDP, household consumption and increasing consumer leverage. One of the metrics we look at when estimating the ad market growth potential is ad spends as a percentage of GDP. Private sector loans penetration in Russia is also lower than in other European countries and has significant room for expansion. An important feature of the Russian advertising market is that television plays a dominant role. TV accounts for more than 50 percent in the total ad spend, and according to market experts, the share of TV will not fall below 50 percent by 2015 (thus Internet will be growing at the expense of radio and print).
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