CTC Media sees US GAAP net profits drop 10% to $22.8 mln in Q1
MOSCOW. May 4 (Interfax) - Net profits at media group CTC Media to US GAAP slipped 10% year-on-year to $22.8 million in the first quarter of this year, the company reported.
Sales revenues, however, were up 34% at $165.5 million, and OIBDA 1% at $39.9 million. The OIBDA margin dropped to 24.1% from 32.2%.
CTC Media, which is registered in the U.S. state of Delaware, operates the television channels CTC, Domashny, and DTV, and has assets in Moldavia and Kazakhstan.
The CTC television channel increased Q1 sales revenues 31% to $108.2 million, Domashny - 47% to $19.7 million, and DTV - 28% to $12.7 million. CTC television station group increased sales revenues 47% to $17.9 million. And CTC Media revenues in the Commonwealth of Independent States grew 39% to $3.08 million.
The media holding increased spending 49% to $129.6 million in q11. 'Selling, general and administrative expenses' increased 140% to $38 million. The company attributes the increase to greater spending on advertising and promotion, employee wages, higher rental payments, and expenses associated with moving to new offices in Moscow.
"Prior to 2011, advertising on CTC Media's television channels in Russia was not generally placed directly by advertisers. Video International, one of the largest sales houses in Russia, placed this advertising on an exclusive basis under agency agreements," the company said. "Compensation payable to Video International, which is included in selling, general and administrative expenses, was $18.1 million in the first quarter of 2011 compared to the agency commission fees of $16.3 million paid to Video International in respect of national and regional advertising revenues from Moscow-based clients in the first quarter of 2010."
'Amortization of programming rights expenses' increased 43% to $71 million. Programming impairment charges were $7.3 million ($1.5 million in Q1 last year) and were mainly related to the underperformance of certain Russian content in the first quarter, as well as to the second and third runs of certain Russian series that the company is no longer planning to air in prime-time slots, CTC said.
Advertising time at Russian stations was 99% sold in Q1 and has been roughly 85% for all of this year. "We reiterate our full year outlook for approximately 20% revenue growth in ruble terms on a comparable basis. Approximately 85% of our anticipated full year Russian national inventory is now already committed at significantly higher prices than in 2010 and demand levels remain strong," said CTC Media's General Director Anton Kudryashov, who is quoted in the report.
"We also continue to expect to deliver a full year OIBDA margin of between 34% and 36%, which is equivalent to between 38% and 40% under the terms of the pre-existing sales structure," he said.
The average CTC Network audience (all 6-54) fell to 11.2% from 12.6% in Q1 last year.
The 14-44 group, to which CTC plans to reorient itself this fall, slipped to 12% from 13.2%.
Domashny's audience (women 25-60) ticked down to 2.8% from 3%, that of DTV (all 25-54) to 2% from 2.1%. The Kazakh channel "31 Channel audience (all 6-54) increased to 14.8% from 10.5%.
"Our blended Russian power ratio was stable in the quarter and we have seen an improvement in our Russian ratings in April following lower audience shares during the first quarter. This recent improvement reflects the launch of our spring schedule, which includes premieres of new formats "Boarding School" and "Traffic Light", as well as new seasons of hit series "Daddy's Girls" and "Voroniny"," Kudryashov said.
In 2006, the company had an IPO on the NASDAQ. The holding's free float is 37%, the Swedish outfit Modern Times Group holds 38%, and Alfa Group 25%. The latter is currently negotiating the sale of its stake to National Media Group.
