CTC MEDIA REPORTS 2007 FOURTH QUARTER AND FULL YEAR RESULTS

28.02.2008
Moscow, Russia – February 28, 2008 – CTC Media, Inc. (NASDAQ: CTCM), a leading television broadcaster in Russia, today reported financial results for the full year and three month period ended December 31, 2007.

- FOURTH QUARTER -
- Consolidated Revenue Increases 37% to $162 Million-
- OIBDA* Increases 46% to $93 Million-
-Net Income of $60 Million, $0.38 Earnings Per Share-

- FULL YEAR -
- Consolidated Revenue Increases 27% to $472 Million-
- OIBDA* Increases 27% to $220 Million-
-Net Income of $136 Million, $0.86 Earnings Per Share-

US$ 000’s, except per share data

Three months ended
December 31,




Year Ended
December 31,



 

2006

2007


Change 


2006

2007


Change 

 
 
 
 
 
 
 
 
 
 

Total operating revenues

$117,933

$161,704

 

37%

 

$370,834

$472,056

 

27%

Total operating expenses

(59,593)

(76,863) 

 

29%

 

(216,521)

(278,995) 

 

29%

 
 
 
 
 
 
 
 
 
 

OIBDA*

64,744

92,752

 

46%

 

173,964

220,422

 

27%

 
 
 
 
 
 
 
 
 
 

Net income

$41,118

$59,699

 

45%

 

$106,325

$135,913

 

28%

Fully diluted earnings per share

$0.26

$0.38

 

46%

 

$0.69

$0.86

 

25%

*OIBDA is defined as operating income before depreciation and amortization (exclusive of amortization of programming rights and sublicensing rights). OIBDA is a non-GAAP financial measure. Please refer to    Attachment A for a reconciliation of OIBDA to net income.

Financial Highlights

• Consolidated revenue increased 27% to $472 million
• OIBDA increased 27% to $220 million
• OIBDA margin of 46.7%
• Net income increased 28% to $136 million
• $0.86 fully diluted earnings per share, an increase of 25%

Full-Year Operational Highlights
 
• Combined audience share for the CTC and Domashny networks of 11.0%
• CTC Media’s advertising market share exceeded its audience share, reflecting the Company’s success in delivering premium demographics
• In 2007, CTC Media executed on key strategic objectives:
- Vertically integrated into production capabilities by acquiring two Russian production companies– COSTAFILM and SOHO MEDIA
- Expanded into the CIS markets by entering into a definitive agreement to acquire a majority economic interest in Channel 31 Group in Kazakhstan, and setting up a TV company in Uzbekistan
- Strengthened presence in regional markets by acquiring two stations for CTC and five stations for Domashny in a number of larger Russian cities
- Grew technical penetration of the CTC Network and Domashny Network to 87.4% and 64.8%, respectively
 
Alexander Rodnyansky, Chief Executive Officer, commented, “In 2007 we delivered on our financial guidance and made significant progress in the execution of our strategic plan. Our results were driven by the robust growth of the Russian television advertising market and the strong position of our CTC and Domashny brands, which continue to deliver the premium younger audiences preferred by advertisers. We also expanded our strategic footprint by entering two new CIS markets, added content rights management and production capabilities, and increased the reach of our existing networks.”
 
“CTC and Domashny are both off to a solid start in the new year, and, as always, we look forward to the launch of our spring programming schedule in March. Our schedule includes hits like the new season of Daddy’s Girls, as well as a significant number of series and show premieres. We expect to benefit from an increasing amount of content from our newly acquired production companies, which already produce some of our most popular series. Channel 31 in Kazakhstan and our newly established station in Uzbekistan are expected to start broadcasting in CTC format at the end of the first quarter of 2008 and beginning of the second quarter of 2008, respectively, and will provide us with a valuable presence in these developing markets. With our disciplined operating focus and strategic progress, we are well positioned to capitalize on the continued expansion of the Russian market and the CIS region in the years ahead.”

Results for the Three Months Ended December 31, 2007

Overall results reflect the continued growth in revenues of CTC Media’s two channels CTC and Domashny, and management’s cost-conscious approach to programming.

CTC Network’s fourth quarter 2007 audience share was 8.9% as compared with 9.0% in fourth quarter 2006. Domashny’s audience share demonstrated healthy growth from 1.5% in the fourth quarter of 2006 to 2.0% in the fourth quarter of 2007.

CTC Media’s total operating revenue for the three months ended December 31, 2007 increased 37% to $161.7 million from $117.9 million for the three months ended December 31, 2006. The revenue growth primarily reflects the continued growth of the Russian television advertising market. Given that our advertising revenues are recorded net of commissions, our fourth quarter revenues were also favorably impacted by the lower commission rate paid by our owned-and-operated stations to Video International in connection with the variable commission rate negotiated through 2007.

Consolidated total operating expenses in the fourth quarter of 2007 amounted to $76.9 million compared to $59.6 million in the fourth quarter of 2006. Total operating expenses decreased as a percentage of revenue by 3% period-on-period. In absolute terms, total operating expenses increased as higher programming costs drove increased programming amortization expense. Fourth quarter costs included $3.6 million in stock-based compensation compared to $3.0 million in the fourth quarter of 2006.

OIBDA increased 45.5% to $92.8 million for the fourth quarter of 2007 compared to $63.7 million in the fourth quarter of 2006. The OIBDA margin for the quarter was 57.4%, compared to 54.1% for the corresponding quarter of 2006, reflecting sound cost management.

Net income for the quarter was $59.7 million compared to $41.1 million for the three months ended December 31, 2006. Fully diluted income per share was $0.38 for the three months ended December 31, 2007, compared to $0.26 for the three months ended December 31, 2006.

Results for the Year Ended December 31, 2007

2007 was another strong year for CTC Media. The Company has demonstrated its ability to sustain high profit margins in an increasingly competitive media environment. This was particularly challenging when compared to 2006 which benefited from CTC’s all-time hit Born Not Pretty.

In 2007, CTC Network maintained its position as the fourth-most watched broadcaster in Russia with average audience share of 9.0%, down from 10.4% in 2006. CTC Network’s average audience share in its target demographic (everyone aged 6-54) was 11.3%, compared to 12.9% in 2006. Domashny’s average audience share for 2007 was 2.0%, compared to 1.4% in 2006, and its average audience share in its target demographic (women aged 25-60) was 2.4%, compared to 1.7% in 2006.

CTC Media’s total operating revenue for the year ended December 31, 2007 increased by 27.3% to $472.1 million from $370.8 million for the year ended December 31, 2006. The revenue growth primarily reflects the continued growth of the Russian television advertising market partially offset by a decline in CTC Network’s audience share. Because we record our advertising revenues net of commissions, revenues were also favorably impacted by the lower commission rate paid by our owned-and-operated stations to Video International in connection with the variable commission rate negotiated through 2007.

Consolidated total operating expenses for 2007 increased by 28.8% to $279.0 million compared to $216.5 million for 2006.

Total operating expenses as a percentage of revenues increased from 58.4% in 2006 to 59.1% in 2007 mainly due to a slight increase, as a percentage of operating revenues, in amortization of programming and sublicensing rights, and depreciation and amortization expense. In 2007, total operating expenses included $13.7 million of stock-based compensation expense compared to $7.2 million in 2006.

OIBDA increased 26.7% to $220.4 million for 2007 compared to $174.0 million for 2006. In 2007, OIBDA margin of 46.7% was in-line with the provided guidance and the prior year’s OIBDA margin of 46.9%. The performance of the Domashny Network and owned-and-operated stations contributed to the overall increase in consolidated 2007 OIBDA. 2007 was the first full year when Domashny Network was OIBDA positive since its launch in 2005.

Net income for the year ended December 31, 2007 was $135.9 million compared to $106.3 million for 2006, an increase of 27.8%. Fully diluted income per share was $0.86 for 2007 compared to $0.69 for 2006.

Guidance

For the full year ending December 31, 2008, the Company currently expects to generate consolidated total operating revenue in the range of $600 to $650 million, with a consolidated OIBDA margin in the range of 45-48%. This guidance range does not include expected revenues from its CIS operations in Kazakhstan and Uzbekistan.

Conference Call

The Company will host a conference call to discuss its fourth quarter and full year 2007 financial results today, Thursday, February 28, at 9 a.m. ET, corresponding to 5 p.m. Moscow time, 2 p.m. London time. To access the conference call, please dial +1 973 582 2741 (International) or 8108 002 531 1012 (Russia) and reference pass code 32890805. A live webcast of the conference call will also be available on the investor relations section of the Company's corporate Web site, located at www.ctcmedia.ru/investors. A replay of the conference call will be available through Thursday, March 13, 2008, at midnight ET. The replay can be accessed by dialing +1 706 645 9291. The pass code for the replay is 32890805. The webcast will also be archived on the Company’s Web site for two weeks.

About CTC Media, Inc.

Based in Moscow, CTC Media, Inc. was formed in 1989 to pursue commercial media and advertising opportunities in Russia. The Company owns and operates the CTC television network, whose signal is carried by more than 350 affiliate stations, including 19 owned-and-operated stations; and the Domashny television network, whose signal is carried by over 230 affiliate stations, including 13 owned-and-operated stations. The Company’s common stock is traded on The NASDAQ Global Sel ect Market under the symbol: “CTCM”. For more information on CTC Media, please visit: www.ctcmedia.ru.

# # #

Contacts:

CTC Media, Inc.
Katya Ostrova (Investor Relations)
+ 7 495 783 3650
+7 495 785 6333
ir@ctcmedia.ru

Brainerd Communicators, Inc.
Jenna Focarino (media)
Michael Smargiassi (investors)
+1 212 986 6667

# # #

Certain statements in this press release that are not based on historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which include, among other things, guidance on CTC Media’s operating revenues and OIBDA margins for the year ending December 31, 2008 and our ability to execute on our growth strategy, reflect the Company's current expectations concerning future results and events. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CTC Media to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The potential risks and uncertainties that could cause actual future results to differ fr om those expressed by forward-looking statements include, among others, risks related to changes in Russian advertising laws, that will further reduce the amount of advertising time; changes in the size of the Russian television advertising market; our ability to deliver audience share, particularly in primetime, to our advertisers; free-to-air television remaining a significant advertising forum in Russia; our reliance on a single television advertising sales house for substantially all of our revenues; and restrictions on foreign involvement in the Russian television business. These and other risks are described in the "Risk Factors" section of CTC Media's quarterly report on Form 10-Q filed with the SEC on October 30, 2007. Other unknown or unpredictable factors could have material adverse effects on CTC Media's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed herein may not occur. You are cautioned not to place undue reliance on these forward-looking statements. CTC Media does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

# # #

Please use the following link to download the full text of the press release
2007 FOURTH QUARTER AND FULL YEAR RESULTS Press Release (pdf, 74KB)