CTC Media Vertically Integrates into Program Rights Management and Production: Acquires Two Russian Production Companies
19 Dec 2007
MOSCOW – December 19, 2007 – CTC Media, Inc. (NASDAQ: CTCM), a leading television broadcaster in Russia, announced today that it is creating an in-house proprietary program rights management and production function, in conjunction with signing definitive agreements to acquire 100% ownership in Russian production companies COSTAFILM and SOHO MEDIA for an aggregate purchase price of approximately $50 million in cash payable over three years. These transactions are expected to close in the first quarter of 2008.
CTC Media will acquire COSTAFILM for approximately US $40 million, of which US $11 million will be payable to the owners upfront, and the remaining US $29 million structured as an earn-out payable in three installments through 2010 subject to meeting annual performance criteria. COSTAFILM is a private and management-owned Russian production company specializing exclusively on programming for CTC. Among its products are the long-running series Cadets and the original Russian sitcom Daddy’s Girls, both among CTC’s most successful recent programs.
CTC Media will acquire SOHO MEDIA for US $10 million, which includes a US $6 million earn-out component payable in three installments through 2010, subject to meeting annual performance criteria. SOHO MEDIA is a privately held Russian production company owned by its management, including prominent Russian television producer Sergey Kalvarsky. SOHO MEDIA specializes in the production of entertainment TV shows, such as the highly popular Minute of Fame and The Great Race for Channel One, the largest Russian TV channel in terms of market share.
Alexander Rodnyansky, Chief Executive Officer of CTC Media, said, “Building a proprietary library of intellectual property rights provides the potential for multiple monetization of our programming across different markets and platforms, one of the cornerstones of our long-term growth strategy. We have been opportunistically securing the rights to our recent original programming, thus laying the foundation of our content library. The next logical step for us in execution of our vertical integration strategy is setting up a separate function responsible for program library management and production. COSTAFILM and SOHO MEDIA will provide the talent and managerial resources that will form the basis of this function. The immediate benefits from the acquisitions will include streamlining of the production process and better control over costs of Russian series and shows, which are the most important part of our primetime schedule, and additional leverage in our negotiations with independent production companies.”
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