CTC Media, Inc. Investor Presentation
Fourth Quarter 2011 and Full Year 2011 Results
A Leading Independent Broadcaster in Russia
Doctor Zaytseva’s Diary – new sitcom, CTC Network (Doctor’s Dairy format)
2 We Fully Capture the Value Chain by Being a Vertically Integrated TV Broadcaster
CTC – target audience All 6-54 Domashny – target audience Females 25-59
FREE-TO-AIR (RUSSIA) Peretz* – target audience All 25-59
Kazakhstan Channel 31 FREE-TO-AIR (CIS) Moldova СTС/TV Dixi channel
CONTENT PRODUCTION Story First Production
AD-SALES Internal advertising sales house Everest
CTC-INTERNATIONAL (PAY-TV) International version of CTC channel
Various digital projects NEW MEDIA Social TV Network Videomore.ru Women’s portal
Note: (*) DTV Network operates under Peretz brand name & logo starting from October 2011
3 Group Highlights for the FY 2011
GROUP FINANCIAL HIGHLIGHTS
. Consolidated revenues up 13% to $766.4 million
. Adjusted OIBDA* of $246.7 million with margin of 32.2%
. Adjusted net income* of $152.6 million, adjusted fully diluted EPS of $0.97
. Payment of $130 million of cash dividends in 2011
. Board of Directors intends to pay an aggregate cash dividend of $80 million in 2012
. Net cash position of $112.6 million at Dec 31, 2011
GROUP OPERATIONAL HIGHLIGHTS
. Successful relauch of DTV Network under the “Peretz” brand name and logo in October . Significant increases in technical penetration of all Russian networks, acquisition of 14 regional TV stations in 12 Russian cities . Establishment of new unified content production company Story First Production (merge Costafilm and Soho Media platforms) . Launch of CTC-international in Germany, Baltics and North America . Channel 31 in Kazakhstan recorded an all-time high average annual audience share in 2011 . Launch of new digital broadcasting complex in Moscow . Rapid development of New Media business, launch of Domashniy.ru women’s portal
Note: (*) OIBDA , OIBDA margin and net income are adjusted to exclude a $106.4 million charge arising from the impairment of several regional broadcasting licenses and the Peretz Network goodwill
4 We Operate in Attractive Markets
Germany Russia Russian-speaking population = 5 million Population = 142 million Baltic States 2011; TV Ad Market = US$ 4.4 billion* Russian-speaking population = 2 million
Kazakhstan Population = 16.3 million 2011 TV Ad Market = US$ 120 million* Russian-speaking population= 16.5 million Moldova Population = 3.6 million 2011 TV Ad Market = US$ 16.6 million* Israel Russian-speaking population = 1 million
USA Russian-speaking population = 4.5 million
Since February 2012 CTC-International is available on the HOT BIRDTM 8 satellite (W/E Europe, North Africa, Middle East and Central Asia coverage)
Sources: Video International, Russian Association of Communications Agencies, ZenithOptimedia, CIA World Factbook, Rosstat, Russkiy Mir Foundation Note: (*) All TV Ad Markets figures are net of VAT
5 We Are the Largest Independent Broadcaster in Russia
Combined audience shares, % (all 6-54 demographic)
FY 2010 FY 2011 23.6 23.0
16.0 16.1 16.1 15.4 15.1 14.8
7.2 6.2 5.2 4.6 3.3 2.4
Gazprom-Media VGTRK Channel One CTC Media National Media Prof-Media UTV Russia (Rossiya) Group Holding
Source: TNS Gallup Media, demographic “all 6-54 year old”, CTC Media’s Research Department
6
Continued Growth in Revenue and Profit
Baby (Detka) – original musical comedy series, CTC Network
7 We Continue to Deliver Strong Top and Bottom-line Growth…
TV Ad Market CAGR – 17% CTC Media Revenue CAGR – 23% OIBDA* CAGR – 20% 900 50%
800 41.4% 766.4 39.0% 40.7% 729.6 38.1% 700 680.4 40% 32.5% 532.1 38.4% 574.1 32.2% 600 36.8% 30% 500 427.1
400 273.4 280.2 20% 300 246.7 180.6 220.4 211.3 220.9 174.0 200 104.1 10% 70.5 100 US$mln
0 0% ** ** 2004 2005 2006 2007 2008 ** 2009 2010 2011 Comparable-basis total operating revenues*** OIBDA* OIBDA margin*, %
Notes: (*) OIBDA is defined as operating income before depreciation and amortization (exclusive of amortization of programming and sublicensing rights. OIBDA margin is defined as OIBDA divided by total operating revenues. Both OIBDA and OIBDA margin are non-GAAP financial measures (see reconciliations on page 45) (**) 2008 OIBDA and OIBDA margin are adjusted to exclude a $232.7 million charge arising from the impairment of the intangible assets of DTV Group in Russia, Channel 31 in Kazakhstan and a broadcasting group in Moldova; 2009 OIBDA and OIBDA margin are adjusted to exclude an $18.7 million charge arising from the impairment of the broadcasting licenses in Russia and a $28.6 million stock-based compensation expense recognized in conjunction with the previously announced settlement by CTC Media of litigation brought by it against its former CEO, 2011 OIBDA and OIBDA margin are adjusted to exclude a $106.4 million charge arising from the impairment of several regional broadcasting licenses and the Peretz Network goodwill; (see reconciliations on page 43-44) (***) Comparable-basis operating revenues are non-GAAP financial measures provided in order to facilitate period-to-period comparisons of CTC Media’s results following the implementation of the new model of advertising sales starting from 2011 (see reconciliations on page 45)
8 …Though Diverse Streams of Business
DTV FY 2010 CIS Group FY 2011 DTV CIS Group Channel 2% Channel 2% 8% 9%
Domashny Channel Domashny 13% Channel 14% Total Operating Total Operating Revenues¹ Revenues¹ $680.4 mln CTC $766.4 mln CTC Channel Channel 77% 75%
DTV DTV Channel CIS Group CIS Group Channel 2% 2% 1% 2% Eliminations Domashny Domashny and other Channel 1% 9% Channel 9% OIBDA** Adjusted $220.9 mln OIBDA** $246.7 mln CTC CTC Channel Channel 87% 87%
(**) FY2011 OIBDA is adjusted for non-recurring asset impairment charge of $106.4 mln related to the impairment of Notes: (1) Operating revenues by segment are shown from external customers only DTV goodwill, trade name and impairment of certain broadcasting licenses (*) Channel results = Network results + Television Station Group results Breakdown by segment is shown as % in operating segment OIBDA, which is a total OIBDA excluding corporate office OIBDA and including eliminations; operating segment OIBDA was $267.9 mln in FY 2010 and $277.9 mln in FY 2011
9 Operating in a Dynamic Market
The Eighties – a nostalgic original sitcom, CTC Network
10 Russian Ad Market Has Significant Potential for Further Development…
Russian TV ad market was #9 in the world Free-to-air TV ad market growth and #5 in Europe in 2011…
58.8
19.2 10.2 8.9
11.4 7.0
10.2 5.8
5.8 4.7
5.4 4.5 4.4 4.4 bln bln 3.6
3.3 3.0 US $ US US $ US 1.4
USA Japan China Brazil Italy Germany France Russia 2004 2008 2009 2010 2011
TV Ad Market Total Ad Market
…and is expected to become # 1 in Europe by 2013
Note: All TV Ad Markets figures are net of VAT Sources: ZenithOptimedia, Company’s estimates
11 …Due to Relatively Low Ad Spend as % of GDP and Underleveraged Consumer
Ad spend as % of GDP¹ Retail and mortgage loans as % of GDP2
1.8 1.7
1.4 1.4 76% 1.2 1.1 1.0 1.0 0.9 0.9 55% 0.9 0.8 0.8 0.8 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.5 0.5 0.5 31% 34% 63% 30% 30% 48% 26% 20% 14% 9% % 17% 16% 15%
13% 11% 5% 4% 3%
UK
UK
USA
Russia
Poland Austria
Russia
Poland
Ukraine
Ukraine
Belgium
Bulgaria
Bulgaria
Moldova
Slovenia
Hungary
Romania
Germany
Germany
CzechRep Kazakhstan
CEE Average CEE 2008 2011 Retail loans, % of GDP Mortgage loans, % of GDP
Sources: (1) ZenithOptimedia, Company’s estimates (2) Eurostat, National Central Banks, 2010
12 TV Is the Most Attractive Advertising Medium in Russia
2010 Cost per Thousand in Russia (US$)² TV is the only medium with truly national reach
Important social and cultural platform TV 2.0 More free-to-air networks than in other countries Radio 2.1 High quality free-to-air content offering 3.5 hours of TV watching per day Internet 3.9
Newspapers 5.5 Ad spend in Russia by media segment1 (%) Magazines 6.7
50% 43% 2010 TV Cost per Thousand (US$)²
Russia 2.0 31%
Asia 6.9 18% 16% 15% 13% Western Europe 8.4 6% 4% Eastern Europe 10.4 1% 0.4% 2%
TV Internet Press Outdoor Radio Other North America 15.9 2004 2011
Sources: (1) Russian Association of Communication Agencies (2) Initiative Media
13 The Most Attractive Audience for Advertisers
Voroniny – sitcom, CTC Network (Everybody loves Raymond format)
14 Positive Audience Share Momentum in 2012
CTC Network Domashny Network Peretz Network*
12.2 12.2 12.2 11.5 3.8 2.9 11.2 11.0 10.9 3.5 3.6 10.2 10.6 10.3 3.3 9.9 9.9 3.1 3.3 3.1 3.2 2.5 2.8 2.1 2.0 2.1 2.0 2.0 2.0 2.0
Q3 Oct Nov Dec Jan Feb Q1 Q2 Q3 Q4 Oct Nov Dec Jan Feb Q1 Q2 Q3 Q4 Oct Nov Dec Jan Feb 2011 All 14-44 All 6-54 2012 2011 All 25-59 2012 2011 All 25-59 2012
Boarding School S.U.P. 1 1st episode share 14.6% (16.8% in All 14-44) 1st episode share – 3.8%3 Average share 14.7% (16.0% in All 14-44) Average share – 3.2% Maximum share 19.8% (21.6% in All 14-44) Maximum share – 5.2%
Doctor Zaytseva’s Diary Gentlemen on the Countryside 1st episode share 13.4% (16.2% in All 14-44) 1st episode share – 3.6% Average share 15.3% (18.6% in All 14-44) Average share – 2.2% Maximum share 17.4% (21.2% in All 14-44)
KVN. Standup comedy game show! The 80’s 1st episode share – 3.4% 1st episode share 20.1% (23.8% in All 14-44) Average share 16.9% (20.7% in All 14-44) Premier episode of the second run– 4.2% Maximum share 20.1% (23.8% in All 14-44) Average share – 3.0%
Baby (Detka) How I traveled to Moscow 1st episode share 15.5% (18.1% in All 14-44) 1st episode share – 8.1%2 1st episode share – 3.4% Average share 13.1% (14.9% in All 14-44) Average share – 4.8% Average share – 2.6% Maximum share 15.5% (18.1% in All 14-44)
Note:(1) in CTC target demographic All 6-54 Note:(2) in Domashny target demographic All 25-59 Note:(3) in Peretz target demographic All 25-59 Note: * DTV Network operates under Peretz brand name & logo starting from October 2011
15 CTC Channel Improves Its Audience Profile in the Most Lucrative to Advertisers Demographic
25% 76% of advertisers’ budgets 21%
20% 19%
17% ■ 76% of total ad spending is concentrated 18% 15% in 14-44 audience 15% 15% ■ 55% is a share of 14-44 audience in CTC 12% channel total viewership in FY 2011 11% 11% 10% 10% 10% 10% 8% ■ We continue working on improving 8% 7% demographic profile of CTC’s audience to 7% 7% better match advertiser demand 7% 8% 8% 8% 6% 8% 7% 7% 7% 7% 5% 4% Advertisers' demand FY 2010 5% 5% 2% 3% CTC audience demographic profile FY 2011 CTC audience demographic profile FY 2008 0% 0% 4-13 14-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-65 66+
Sources: TNS Gallup Media, Video International
16 Opportunities Arising from Fragmentation of Russian TV Market
Audience shares, all 6-54 demographic
55% Top 3 state-controlled channels
45%
35% 1st tier channels
25% 2nd tier channels
15%
5% 2004 2005 2006 2007 2008 2009 2010 2011
Notes: top 3 state-controlled channels: Channel One, Rossiya 1, NTV; 1st tier channels: CTC, TNT, Ren-TV; 2nd tier channels: TV-3, Domashny, Peretz, Rossiya K, Channel 5, Rossiya 2, Euronews, Zvezda, MTV, Rossiya 24, Muz TV, 2x2, TV Center, 7TV
17 Stable Consumer Goods Client Base with Both Large Multi-National and Local Advertisers
Ad spending on CTC Media’s channels by category
* FY 2010 FY 2011 ■ Vast majority of CTC Media’s advertisers are Food and beverages 29% 23% basic consumer goods focused Cosmetics and personal care products 25% 18% Other goods 11% 15% ■ CTC Media’s advertisers’ budgets split: Pharmaceuticals and vitamins 10% 12% . 73% multinationals, 27% local companies Telecoms 5% 7% Appliances 5% 6% ■ Ad revenue concentration is declining: Retail 5% 5% Beer 5% 5% . 38% of budgets came from top 10 clients Detergents 4% 4% vs 43% in FY 2010 Auto 1% 3% Finance 1% 3% ■ Growth from discretionary categories in 2011
Notes: (*) National advertising sales for CTC, Domashny and Peretz Networks
18 Our Evolving Business Model…
Advertising sales structure since 2011
Advertisers
Advertising Agencies
Internal Sales Houses: External Sales Houses:
Everest Sales RTR-Media Gazprom-Media / Alkasar Video International
Consultancy services
19 …Enables Us to Capture Further Opportunities
More control over the sales process
Mastering Lower cost of internal expertise sales as % of in direct sales revenues
Bundling sales Individual with additional approach to options, each client and including non- customized FTA offerings
Working directly with advertisers and media agencies
20 Developing in Attractive CIS, International and New Media Markets
Traffic Light – sitcom, CTC Network (Ramzor format)
21 Developing a Market Leader in Kazakhstan
Impressive audience share (all 6-54) growth Significant growth in revenue and OIBDA margin since 2008
From #3 to #2 most watched TV channel in Kazakhstan
18 16.9 60% 15.9% 16 13.4% 14 11.9 30.4% 40% 11.6% 12 11.4% 10.5 10.0 10 21.8% 20%
8 10.2%
6 -4.3%
4 0% US$ mln US$ 2 mln US$ 0 -20% FY 2008 FY 2009 FY 2010 FY 2011 FY 2008 FY 2009 FY 2010 FY 2011 Revenue OIBDA margin
22 Plus We Continue to Expand Internationally…
Increasing CTC Media’s international brand awareness & value through CTC-international
December 2009 – Dish USA May 2011 – Time Warner; RMG October 2011 – Cablevision
Israel June 2011 – Hot; Yes
Germany March 2011 – Kartina TV IPTV
Baltic October 2011 – Viasat Broadcasting States
Kazakhstan February 2012 – Digital TV; Icon TV
Europe North Africa February 2012 – uplink service HOT BIRDTM Middle East Central Asia
23 …and Roll Out New Platforms to Be Wherever Our Viewers Are
Videomore Domashny portal Channels’ websites
Web + Partnership with social networks
Connected TV & IPTV
Mobile platforms
24 Growing Internet Consumption in Russia…
2011: Russia is #1 in Europe by number of Internet users Broadband penetration by country, 2010 ( Russia 2020F)
50.8 50.1 96% 42.3 79% 37.2 70% 70% 70%
23.7 49% 46% 40% 34% 30%
Russia Germany France UK Italy South Canada USA UK Russia Hungary Czech Turkey Poland Russia Korea 2020F Rep 2010 Internet users, mln
2011: Internet Ad market growth in Russia (USD, mln) Increase of time spend online (hours per day)
1,419 3.1 2.9 2.7 2.4 2.3 2.1 744 1.7 491 533 418 0.9 0.7 0.5 95 33 56
2004 2005 2006 2007 2008 2009 2010 2011 China Russia Brazil India USA Japan
Sources: ComScore, Boston Consulting Group, Zenith Optimedia, AKAR 2009 2015F
25 …Fueled by Quality Content: VideoMore.ru - The First Social Television Network in Russia
Already ■ Launched in December 2010 #2 video ■ Content from all CTC Media’s Russian TV channels portal in ■ Mobile applications for iOs and Android Russia by ■ Over 10,000 units of content audience ■ Over 270k unique daily visitors in Q4 ■ Friends, blogs, chats, playlists, ratings and recommendations ■ Unique “video quotes” functionality ■ Video export to other social networks ■ Advertising sales from Q2 2011 ■ Main contributor to $1.5 mln total New Media segment revenue in 2011
23.9 mln
6.2 mln 6.1 mln 5.8 mln 4.2 mln 3.0 mln 2.7 mln
2.2 mln 1.2 mln 0.3 mln Unique monthly visitors in Q4 2011 Q4 in2011 visitors monthly Unique
Sources: TNS, LiveInternet
26 Focused on Profitable Long-Term Growth & Shareholder Returns
Gentlemen on the Countryside – realty show engaging ex-prisoners, Peretz Network
27 We Have a Clear Action Plan
Strengthen CTC’s target audience share
Continue developing Domashny and Peretz
Enhance internal sales house capability & efficiency
Further develop in-house content production
Develop existing CIS operations and selectively expand into other markets
Develop New Media businesses and monetize content in online environment
Expand presence in North America and Europe through CTC- international
28 We Continue to Increase Our Technical Penetration
Technical Penetration1, %
■ We continue to improve the signal 94% 95% 91% 87% 88% 85% distribution through regional stations 82% 80% 76% acquisitions and expanding our affiliate 73% 71% 68% 65% network 61% 54%
■ 50% of technical penetration is provided by CTC Media’s owned-and-operated stations and repeater transmitters 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
Note: (1) Technical penetration means the percentage of the population that has the technical ability to receive a particular broadcast signal. Measured annually by TNS Gallup Media in cities with populations of more than 100,000 * as at January 2012 (updated annually)
29 And Invest in the Right Programming…
Content split by hours and by % in amortization of programming rights expense
Foreign Series & Russian Shows Animation 14% (15%) 28% (5%) Russian Series 11% (12%)
Russian & Foreign Russian Sitcoms & Movies 38% (48%) Sketchcoms 9% (20%)
Russian Russian Foreign Series Russian Shows Series & & Animation Shows 17% (36%) Skethcoms 24% (10%) 29% (68%) 18% (26%) Russian Series & Foreign Russian & Series & Russian & Sitcoms Foreign Foreign Animation 7% (7%) Movies Movies 23% (11%) 42% (27%) 40% (15%)
Notes: (1) Content split is given for FY 2011 (amortization split is in Rubles)
30 …with Clear Content Production Strategy
Long-term relationship with Discover new third big third party producers party partners In-house production
Amedia Karo Production
YBW
Good Story Media / Lean-M Sputnik Vostok Production
Stable and predictable pricing . Securing all rights to the own content Diversification of content suppliers Right of first look for new products . Full control over production costs & processes Discovering new creative talents & ideas Proven track record . 60 projects currently under development
31 Strong and Flexible Financial Position
One for All – sketchcom, Domashny Network
32 Balance Sheet and Cash Flow Highlights
Consolidated Balance Sheet Highlights Consolidated Cash Flow Highlights
Twelve months Twelve months As of December 31, As of December 31, ended ended 2010 2011 December 31, December 31, (US$ mln) (US$ mln) 2010 2011 (US$ mln) Cash at beginning of period 84.4 59.6 Cash and cash equivalents 59.6 12.3 Net cash provided by operating activities 185.6 115.8 Short-term investments 117.5 117.2 including acquisition of progr. and sublic. rights (250.5) (358.6) Total assets 997.7 893.1 Net cash used in investing activities (130.5) (54.6) including goodwill 244.8 164.4 including acquisition of busineses (23.8) (25.0) including broadcasting licenses 163.8 159.4 including CapEx (29.9) (19.8) including programming rights 170.7 199.1 Net cash used in financing activities (79.8) (115.0) Working capital1 218.9 197.1 Cash at end of period 59.6 12.3 Total debt - 17.0 Stockholders’ equity 794.6 697.2 CapEx (29.9) (19.8) CapEx as % of total revenue 4.4% 2.6% 3 Net cash position2 177.0 112.6 Free cash flow 155.6 96.0
Notes: (1) Working capital = current assets - current liabilities (2) Net cash position = cash and cash equivalents + short-term investments - total debt (3) Free cash flow = cash flow from operating activities - acquisitions of property and equipment and intangible assets
33 Latest Financials Summary– FY 2011
Twelve Months Twelve Months Ended December 31, Ended December 31, Change 2010 2011 comparable- comparable- as as (US$ 000’s except per share data) as reported basis, non- basis, non- reported reported GAAP GAAP
Total operating revenues $601,285 $680,418 $766,360 27% 13% Total operating expenses (before non- (394,167) (473,300) (537,293) 36% 14% recurring items) Total operating expenses (394,167) (473,300) (643,675) 63% 36% Adjusted OIBDA 220,854 220,854 246,715 12% 12% Adjusted OIBDA margin 36.7% 32.5% 32.2% OIBDA 220,854 220,854 140,334 -36% -36% OIBDA margin 36.7% 32.5% 18.3% Adjusted net income attributable to CTC 145,731 145,731 152,561 5% 5% Media, Inc. stockholders Adjusted diluted earnings per share $0.93 $0.93 $0.97 4% 4% Net income attributable to CTC Media, Inc. 145,731 145,731 53,118 -64% -64% stockholders Diluted earnings per share $0.93 $0.93 $0.34 -63% -63%
34 Investment Thesis
The largest independent and the only publicly listed broadcaster in Russia
Growth company offering unique play on rapidly evolving Russian & CIS advertising markets
Targeting audiences which are most attractive to advertisers
Controlling the whole value chain by vertically integrating content production, distribution and advertising sales
High margins by industry standards & strong cash flow generation
Commitment to returning surplus cash to shareholders
35 Appendix
Magnificent Century – Turkish historical soap opera, Domashny Network
36 Revenue and OIBDA by Segment
Q4 2010 DTV CIS Group Q4 2011 DTV CIS Group Channel 2% Channel 3% 9% 9%
Domashny Domashny Channel Channel 12% 13% Total Operating Revenues¹ CTC $236.8 mln Channel* Total Operating 77% CTC Revenues¹ Channel $222.3 mln 75%
DTV Channel CIS Group DTV CIS Group 7% 2% Channel 3% -2% Domashny Channel Domashny 11% Channel 9%
CTC Channel CTC 80% Adjusted Channel OIBDA** 88% $104.4 mln OIBDA** $92.8 mln
Notes: (1) Operating revenues by segment are shown from external customers only (**) Q4 2011 OIBDA is adjusted for non-recurring asset impairment charge of $89.6 mln primarily related to the (*) Channel results = Network results + Television Station Group results impairment of DTV goodwill, trade name and impairment of certain broadcasting licenses Breakdown by segment is shown as % in operating segment OIBDA, which is a total OIBDA excluding corporate office OIBDA and including eliminations; operating segment OIBDA was $103.8 mln in Q42010 and $92.9 mln in Q4 2011
37 Benefiting from the Network Model in Russia
Time Shifted Time Shifted +0h,+2h +4h,+7h Two satellites covering all 9 time zones
Network CTC Network: about 100 mln viewers; 54 Signal Uplink owned and operated stations and unmanned repeaters Peretz Network: about 61 mln viewers; 49 Domashny Network: about 63 mln viewers; 46 owned and operated stations and unmanned owned and operated station sand unmanned repeaters repeaters
Network Network contributes programming and branding 75% Ad Time
Affiliate About 2,000 independent affiliates contribute TV broadcasting and promotion in their territory 25% Ad Time
38 Audience Shares In “All 14-44” Most Commercially Attractive Demographic
Audience shares1, %
16.1 15.8 15.4
13.5 12.8 12.8 12.6
11.7 11.8 11.3 11.0 10.5 FY 2010
FY 2011
4.7 4.6
2.7 2.4 2.2 2.2 2.3 2.2 2.0 2.0 1.9 1.9 1.9 1.8 1.6 1.7 1.4 1.4 1.4 1.3 1.3 1.0 1.1 1.2 1.2 0.9 0.8 0.8 0.1 0.1
Channel One TNT NTV CTC Rossiya 1 Ren-TV TV-3 Rossiya 2 Channel 5 TV Center Domashny Peretz Muz-TV Disney* MTV 2x2 Zvezda Rossiya K Rossiya 24 Euronews Other
(1) Source: TNS Gallup Media, CTC Media’s Research Department (2) Includes audience shares of regional and non-FTA channels (*) Operated under Semerka brand before 31 December, 2011
39 Audience Shares In “All 6-54 Demographic”
Audience shares1, %
16.1 16.2
15.1
13.9 13.8
12.5 12.1 11.9 11.5 FY 2010 10.7 10.6 FY 2011 9.6
4.5 4.6
2.7 2.8 2.8 2.5 2.4 2.3 2.2 2.0 1.8 1.9 1.9 1.8 1.7 1.5 1.6 1.4 1.3 1.4 1.2 1.3 1.0 1.1 1.1 1.1 0.7 0.8 0.1 0.1 2 Channel One NTV Rossiya 1 CTC TNT Ren-TV Channel 5 TV Center TV-3 Domashny Rossiya 2 Peretz Disney* Muz-TV Zvezda 2x2 Rossiya K MTV Rossiya 24 Euronews Other
(1) Source: TNS Gallup Media, CTC Media’s Research Department (2) Includes audience shares of regional and non-FTA channels (*) Operated under Semerka brand before 31 December, 2011
40 Audience Shares In “All 4+ Demographic”
Audience shares1, %
17.9
16.9 16.4 15.5 15.5
14.6 14.5
12.6
FY 2010 FY 2011
8.5 7.7 7.6 7.1
4.2 4.4
3.2 3.1 2.8 2.3 2.3 2.4 1.9 2.0 1.9 1.9 1.9 1.9 1.7 1.7 1.7 1.6 1.6 1.0 0.9 1.1 0.9 0.8 0.9 0.7 0.8 0.7 2 0.2 0.2
Channel One Rossiya 1 NTV CTC TNT Ren-Tv Channel 5 TV Center Domashny TV-3 Rossiya 2 Peretz Rossiya K Disney* Zvezda Muz-TV Rossiya 24 2x2 MTV Euronews Other
(1) Source: TNS Gallup Media, CTC Media’s Research Department (2) Includes audience shares of regional and non-FTA channels (*) Operated under Semerka brand before 31 December, 2011
41 Latest Financials Summary – Q4 2011
Three Months Three Months Ended December 31, Ended December 31, 2010 2011 Change comparable- comparable- as as as (US$ 000’s except per share data) basis, non- basis, non- reported reported reported GAAP GAAP
Total operating revenues $222,321 $251,013 $236,758 6% -6% Total operating expenses before non-recurring (121,545) (150,238) (148,725) 22% -1% items Total operating expenses (121,545) (150,238) (238,264) 96% 59% Adjusted OIBDA 104,358 104,358 92,757 -11% -11% Adjusted OIBDA margin 46.9% 41.6% 39.2% OIBDA 104,358 104,358 3,218 -97% -97% OIBDA margin 46.9% 41.6% 1.4% Adjusted net income attributable to CTC Media, 75,329 75,329 61,434 -18% -18% Inc. stockholders Adjusted diluted earnings per share $0.48 $0.48 $0.39 -19% -19% Net income attributable to CTC Media, Inc. 75,329 75,329 (24,535) -133% -133% stockholders Diluted earnings per share $0.48 $0.48 $(0.16) -133% -133%
42 Operating Expenses
$150.2 mln* $148.7 mln** $473.3 mln $537.3 mln***
(as % of total operating expenses) 2% 3% 3% 3% 6% 2% 4% 7% 7% Depreciation & amortization 8% 7% 8%
Stock-based compensation 33% 31% 33% 31%
Direct operating expenses
SG&A expenses
52% 55% 51% 54% Amortization of programming & sublicensing rights and own production cost
Q4 2010 Q4 2011 FY 2010 FY 2011
Note: *Comparable basis operating expenses (to facilitate historical comparisons following changes in the ad sales structure in 2011) ** Adjusted to exclude a $89.6 million charge arising from the impairment of several regional broadcasting licenses and the Peretz Network goodwil *** Adjusted to exclude a $106.4 million charge arising from the impairment of several regional broadcasting licenses and the Peretz Network goodwill
43 Reconciliation of Non-GAAP Measures
Reconciliation of consolidated adjusted OIBDA and other adjusted financial measures to consolidated OIBDA and other corresponding GAAP financial measures
Income before income tax Fully Total and diluted operating Operating noncontrolling Income tax Net earnings (US$ 000’s except per share data) OIBDA expenses income interest expense income per share
Three Months Ended December 31, 2011
Adjusted non-US GAAP results $ 92,757 $ (148,725) $ 88,033 $ 93,830 $ (28,604) $ 61,434 $ 0.39
Impact of impairment loss (89,539) (89,539) (89,539) (89,539) 3,570 (85,969) (0.55) Results as reported (under US GAAP, except for OIBDA which is a non-GAAP financial measure) $ 3,218 $ (238,264) $ (1,506) $ 4,291 $ (25,034) $ (24,535) $ (0.16)
Income before Fully Total income tax and diluted operating Operating noncontrolling Income tax Net earnings (US$ 000’s except per share data) OIBDA expenses income interest expense income per share
Twelve Months Ended December 31, 2011
Adjusted non-US GAAP results $246,716 $ (537,293) $ 229,067 $ 243,301 $ (83,342) $ 152,561 $ 0.97
Impact of impairment loss (106,382) (106,382) (106,382) (106,382) 6,939 (99,443) (0.63) Results as reported (under US GAAP, except for OIBDA which is a non-US GAAP financial measure) $140,334 $ (643,675) $ 122,685 $ 136,919 $ (76,403) $ 53,118 $ 0.34
44 Reconciliation of Non-GAAP Measures
Reconciliation of consolidated adjusted OIBDA and other adjusted financial measures to consolidated OIBDA and other corresponding GAAP financial measures
Total EPS Operating Operating Net Income Income Tax (fully (US$ 000’s except per share data) OIBDA Expenses income Before Tax Expense Net Income diluted)
Year ended December 31, 2008
Adjusted non-US GAAP results $ 280,241 $ (373,307) $ 266,864 $ 237,077 $ (50,205) $ 176,133 $ 1.11
Impact of non-cash impairment of intangible assets of DTV, Kz and Moldova (232,683) (232,683) (232,683) (232,683) 30,331 (153,679) (0.97)
Results as reported (under US GAAP, except for OIBDA) $ 47,558 $ (605,990) $ 34,181 $ 4,394 $ (19,874) $ 22,454 $ 0.14
Income Net income Fully Total before Income Non- attributable to diluted operating Operating income tax tax controlling CTC Media, Inc. earnings (US$ 000’s except per share data) OIBDA expenses income and non- expense interest stockholders per share
Year ended December 31, 2009
Adjusted non-US GAAP results $ 211,256 $ (306,311) $ 199,802 $ 195,972 $ (49,374) $ (2,630) $ 143,968 $ 0.91
Impact of non-cash intangible asset impairment charge (18,739) (18,739) (18,739) (18,739) 3,748 - (14,991) (0.10) Impact of Stock-based compensation expense related to settlement of litigation against former executive (28,588) (28,588) (28,588) (28,588) - - (28,588) (0.18)
Results as reported (under US GAAP, except for OIBDA, which is a non-GAAP financial measure) $ 163,929 $ (353,638) $ 152,475 $ 148,645 $ (45,626) $ (2,630) $ 100,389 $ 0.64
45 Reconciliation of Non-GAAP Measures (continued)
Reconciliation of consolidated OIBDA to consolidated operating income USD mln Q4 2011 Q4 2010 FY 2011 FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 Operating income -1,506 100,776 122,685 207,118 152,475 34,181 193,061 154,313 90,187 62,559 Add: depreciation and 4,724 3,582 17,649 13,736 11,454 13,379 27,361 19,651 13,920 7,962 amortization
OIBDA 3,218 104,358 140,334 220,854 163,929 47,560 220,422 173,964 104,107 70,521
Reconciliation of consolidated OIBDA margin to consolidated operating income margin USD mln Q4 2011 Q4 2010 FY 2011 FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 Operating margin -0.6% 45.3% 16.0% 34.4% 30.1% 5.3% 40.9% 41.6% 38.0% 40.2% Add: depreciation and amortization as 2.0% 1.6% 2.3% 2.3% 2.3% 2.1% 5.8% 5.3% 5.8% 5.1% percentage of revenue
OIBDA margin 1.4% 46.9% 18.3% 36.7% 32.4% 7.4% 46.7% 46.9% 43.8% 45.3%
Reconciliation of comparable-basis, non-GAAP total operating revenues to total operating revenues USD mln 2004 2005 2006 2007 2008 2009 2010 Comparable-basis total operating 180,639 273,352 427,091 532,143 729,629 574,107 680,418 revenues Agency commission fees payable to Video International in connection with Russian advertising sales (25,072) (35,875) (56,257) (60,087) (89,458) (67,994) (79,133) (excluding commissions for regional advertising sales to local clients) Total operating revenues 155,567 237,477 370,834 472,056 640,171 506,113 601,285
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Contact Information and Disclaimer
For further information please visit www.ctcmedia.ru or contact:
Ekaterina Ostrova Irina Klimova Director, Investor Relations Investor Relations Manager E-mail: [email protected] Tel: +7 (495) 783 3650 Tel: +7 (495) 981 0740
DISCLAIMER The information contained in this presentation, including market data that are attributed to specific sources and have not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.
The presentation is not an offer of securities for sale in the United States. Neither the presentation nor any copy of it may be taken or transmitted into or distributed in the United States of America or to any U.S. person within the meaning of Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”).
This presentation is not a public offer or advertisement of securities in the Russian Federation, and is not an offer, or an invitation to make offers, to purchase any securities in the Russian Federation.
Certain statements in this presentation 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 include, among others, statements regarding share trends in changing audience in 2012; developments in the volume and pricing of television advertising in the Company’s target markets; the Company’s anticipated advertising sellout; the Company’s anticipated operating expenses and capital expenditures and others. These statements 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 from those expressed by forward-looking statements include, among others, changes in the size of the Russian television advertising market; the continued successful operation of the Company’s own internal sales house structure; depreciation of the value of the Russian ruble compared to the US dollar; the Company’s ability to deliver audience share, particularly in primetime, to its advertisers; free-to-air television remaining a significant advertising forum in Russia; 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 annual report on Form 10-K filed with the SEC on February 28, 2012. 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.
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