FREE-TO-AIR (RUSSIA) FREE-TO-AIR (CIS) CONTENT PRODUCTION CTC- INTERNATIONAL (PAY-TV) NEW MEDIA

Transcription

1 CTC Media, Inc. Investor Presentation Fourth Quarter 2010 and Full Year 2010 Results

2 A Leading Independent Media Company in Russia and the CIS CTC target audience All th most watched broadcaster in Russia with a national audience of 100 million people for CTC, the flagship channel FREE-TO-AIR (RUSSIA) Domashny target audience Women DTV target audience All One of the leading broadcasters in Kazakhstan (Channel 31) Entertainment focus appeals to dynamic, young and affluent audience FREE-TO-AIR (CIS) KAZAKHSTAN MOLDOVA Channel 31 CTC TV Dixi channel Well positioned portfolio of assets with in-house production capabilities Strong cash flow generation and balance sheet CONTENT PRODUCTION COSTAFILM SOHO MEDIA In-house and third party content production The only direct way to get exposure to Russia s television advertising market CTC- INTERNATIONAL (PAY-TV) International version of CTC channel NEW MEDIA Social TV Network 5 free-to-air channels in 3 countries, in-house production capabilities, international pay-tv and online presence 1

3 Group Highlights for the FY 2010 GROUP FINANCIAL HIGHLIGHTS Consolidated revenues up 19% to $601.3 million OIBDA of $220.9 million with margin of 36.7% Net income of $145.7 million, adjusted fully diluted EPS of $0.93 Net cash position of $177.0 million at Dec 31, 2010 CapEx amounted to $29.9 mln for FY 2010 Payment of $80.4 million of cash dividends for the full year Board of Directors intends to pay an aggregate cash dividend of $100 million in 2011 and approved a $0.16 per share cash dividend (or approximately $25 million in aggregate) to be paid on or about March 31, 2011 to stockholders of record as of March 1, 2011, with further dividends anticipated in the remaining quarters of 2011 GROUP OPERATIONAL HIGHLIGHTS Establishment of CTC Media s own internal advertising sales house, EvereST-S, in September 2010 Launch of online social television network Videomore.com in December 2010 Acquisition of 7 regional stations in 6 Russian cities Year-on-year increase in technical penetration of the networks in Russia: CTC % (2009: 90.7%), Domashny % (2009: 76.4%), DTV -72.5% (2009: 68.4%) Launch of the CTC-International channel in Israel on the Yes satellite platform and on the HOT cable network in June

4 Strategy Overview Voroniny prime-time sitcom, CTC Network (Everybody Loves Raymond format) 3

5 Markets of Free-to-Air Operations and Primary Strategic Interest Counties of current operations Countries of potential interest Belarus Population = 9.5 million 2010 TV Ad Market = US$ 64 million Russia Population = 142 million 2010 TV Ad Market = US$ 4.3 billion Ukraine Population = 45.9 million 2010 TV Ad Market = US$ 374 million Moldova Population = 3.6 million 2010 TV Ad Market = US$ 18 million Kazakhstan Population = 16.3 million 2010 TV Ad Market = US$ 115 million Potentially reaching 150 million viewers in three countries of current free-to-air operations Sources: Video International, Russian Association of Communications Agencies, ZenithOptimedia, CIA World Factbook, Rosstat, All-Ukrainian Advertising Coalition, Company s estimates 4

6 Key Strategic Objectives Strengthen CTC s target audience share Accelerate development of Domashny and DTV Grow target audience shares Increase technical penetration Improve efficiency of in-house sales function Further develop in-house content production Develop existing CIS operations and selectively expand into other CIS markets Develop online business and monetize content in online environment Expand presence in North American and European markets through CTC-international Clear and focused strategy 5

7 Increasing Technical Penetration Technical Penetration 1, % 87% 88% 91% 94% stable 65% 71% 76% 82% up to 85% 54% 61% 68% 73% >80% We continue to improve the signal distribution through regional stations acquisitions and expanding our affiliate network 50% of technical penetration is provided by CTC Media s owned-and-operated stations and repeater transmitters F F F Reaching more potential viewers through expanded technical penetration 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 6

8 Programming Strategy Content split by hours and by % in amortization of programming rights expense Foreign Series & Animation 30% (6%) Russian Show 14% (17%) Russian Series 7% (15%) Optimal mix of programming Domashny Network 1 DTV Network 1 Russian & Foreign Movies 37% (44%) Foreign Series & Animation 44% (9%) Foreign Series & Animation 46% (5%) Russian Show 15% (18%) Russian Series & Scethcoms 13% (69%) Russian Sitcoms & Scetchcoms 12% (18%) Russian & Foreign Movies 28% (4%) Russian Shows 16% (39%) Russian Series & Sitcoms 16% (44%) Russian & Foreign Movies 22% (12%) CTC Network 1 Locally produced content is the key element of our strategic programming grids and drives the audience share in target demographics In-house produced series and sitcoms are top CTC Network prime-time performers and are the core of our content library About 20% CTC Media s programming and 50% of CTC Network prime time is produced in-house 2 Programming agreements with major Hollywood studios - Television International, Walt Disney, Paramount, Universal, Warner Bros and Sony Pictures. Notes: (1) Content split is given for 2010 in Rub (2) As a % in amortization of programming rights, 2010 Maximizing the audience share numbers in desirable demographics through well-balanced content acquisition and scheduling strategy 7

9 Market and Operational Update Go for it! sketch comedy show, CTC Network 8

10 Russian Ad Market Overview and Growth Potential Russia has high potential for development compared to other countries: ad spending per capita and as % of GDP are relatively low Russia is #12 in the world in advertising spending and #6 in Europe Russia is #9 in the world in TV ad spending and #5 in Europe Private sector loans penetration is lower than in other European countries and has significant room for expansion 151,519 Ad Spending in the World in (US$ mln) US$ North America 140% 120% UK Ad Spending per Capita and as % of GDP 1 Germany Czech Republic Western Europe Spain Italy Hungary Bulgaria Poland C.& E. Europe ad spending per capita 2009 ad spending as % of GDP 2010 Retail and Mortgage Loans as % of GDP 3 Brazil 45 Russia China Kazakh. Moldova Uzbek. 1.6% 1.2% 0.8% 0.4% 0.0% % 76% 80% 60% 55% USA Japan Germany China UK Brazil France Italy Australia Canada Spain Russia S. Korea 40% 20% 0% 63% 48% UK Germany 31% 34% 30% 30% 26% 20% 17% 16% 15% 13% 14% 11% 9% 5% 4% 3% Poland Retail loans, % of GDP Czech Rep. Hungary Bulgaria Ukraine Romania Mortgage loans,% of GDP Russian ad market has significant potential for further development Sources: (1) ZenithOptimedia, AKAR, Company s estimates, Ad Spending per Capita data for 2009, Ad Spending as % of GDP data for 2010 (2) ZenithOptimedia, Video International, Rosstat, The Russian Economic Development Ministry (2010 GDP forecasts) (3) Eurostat, National Central Banks, 2009 Kazakhstan Russia 9

11 Dynamics of Russian Ad Market and CTC Media Sales TV Ad Market Russian Advertising Market Size 1 (US$ billion) 11.9 Total Ad Market TV ad market in Russia historically grew ahead of the total ad market Growth, US$ 80% 60% 40% 20% 0% -20% -40% -60% F CTC Media's revenue growth TV Ad Market growth Ad Market growth In 2010 CTC Media total operating revenues grew by 15% in Ruble terms year-on-year (19% in US$ terms) Expected TV ad market CAGR 17% in US$ terms 2 CTC Media benefits from accelerating Russian TV ad market growth in 2010 Sources: (1) Russian Association of Communication Agencies (2) ZenithOptimedia, Video International, analyst and Company estimates (at current exchange rates) Note: (*) CAGR , all dynamics are provided in US$ terms (CTC Media s reporting currency), for 2010 Rub/US$ exchange rate of is applied (actual average exchange rate for 2010) (**) CAGR , all dynamics are provided in US$ terms (CTC Media s reporting currency) at current exchange rates 10

12 TV in Russia More than Just TV TV is the only medium with national reach 2010 Cost per Thousand in Russia (US$) 2 Important social and cultural platform More free-to-air networks than in other countries High quality free-to-air content offering Over 3.5 hours of TV watching per day TV Radio Internet Newspapers % 50% 40% 30% Ad Spend in Russia by Media Segment 1 (%) 52% % % Magazines TV Cost per Thousand (US$)² Russia 2.0 Asia % 10% 0% 18% 18% 13% 11% 1% 6% 5% 0.4% 1% Western Europe Eastern Europe North America TV Press Outdoor Internet Radio Other TV is the major medium for advertisers in Russia and remains inexpensive relative to other media Sources: (1) Russian Association of Communication Agencies (2) Initiative Media 11

13 Sectors Advertised on CTC Media Channels FY Food 26% 2 Cosmetics 19% 3 Other goods 13% 4 Pharmaceuticals and vitamins 10% 5 Appliances 7% 6 Telecoms 5% 7 Detergents 5% 8 Personal care products 5% 9 Beverages 4% Vast majority of CTC Media s advertisers are basic consumer goods focused CTC Media s advertisers budgets split: 75% multinationals, 25% local companies 2 Ad revenue concentration is declining in 2010: 41% of budgets came from top 10 clients vs 48% in Beer 4% 11 Auto and finance 2% 100% Stable consumer goods client base with both large multi-national and local advertisers Russian TV ad market is still missing large advertisers from financial services and auto sectors Notes: (1) CTC Media sales data for CTC, Domashny and DTV Networks (2) FY

14 Russian TV Advertising Sales Structure in 2010 Advertisers Advertising Agencies Media Sales Houses: Video International Gazprom-Media / Alkasar Combined audience share of 62% 1 Combined audience share of 26% 2 Until the end of 2010 advertising on CTC Media channels in Russia was sold by a third-party sales house Sources: (1) Video International web site, as of December Source for audience share: TNS Gallup (all above 4 years old) in 2010 (2) Public information, as of December Source for audience share: TNS Gallup (all above 4 years old) in

15 Russian TV Advertising Sales Structure from 2011 Advertisers Advertising Agencies Media Sales Houses: CTC Media Sales House RTR-Media Video International Gazprom-Media / Alkasar Combined audience share of 13% 1 Combined audience share of 19% 1 Combined audience share of 30% 1 Combined audience share of 26% 2 From 2011 CTC Media is switching to in-house advertising inventory sales Sources: (1) Video International web site, as of February Source for audience share: TNS Gallup (all above 4 years old) in 2010 (2) Public information, as of December Source for audience share: TNS Gallup (all above 4 years old) in

16 CTC Media Sales Structure from 2011 CTC Media Internal Sales House (EvereST-S) Handles national advertising sales and regional sales for Moscow-based clients (up to 96% of CTC Media s Russian advertising sales) Continued strategic alliance with Video International Under the terms of the new 5-year agreement effective January 1, 2011, Video International: Licenses specialized advertising software Provides software related technical support and consulting services Provides market research and analysis including forecasts and surveys VI handles direct advertising sales to local or regional clients outside of Moscow (not more than 4% of CTC Media s Russian advertising sales) New sales structure is accretive for CTC Media in terms of reduced cost of sales 15

17 Free-to-Air TV Landscape in Russia Combined Audience Shares, % (all 4+ demographic) Channel One VGTRK (Rossiya) Gazprom-Media CTC Media National Media Group Prof-Media UTV Russia Holding CTC Media is the largest non-state controlled broadcasting company in Russia Source: TNS Gallup Media, demographic all above 4 years old, CTC Media s Research Department 16

18 CTC Media Audience Share Dynamics CTC Network Domashny Network DTV Network demographic Target demographic All all 4+ demographic Target demographic females all 4+ demographic Target demographic All Domashny Network gained target audience share in 2010 Source: TNS Gallup Media (audience shares, %) 17

19 Advertisers' Demand Distribution Curve 25% 20% 20% 84% of ad budgets, 63% of CTC audience 19% 15% 10% 5% 0% 19% 17% 15% 12% 13% 12% 10% 10% 9% 9% 9% 9% 9% 9% 7% 9% 8% 8% 8% 6% 2% 3% Advertisers' demand CTC audience demographic profile FY 2009 CTC audience demographic profile FY % 7% 7% 7% 7% 4% 5% 4% 0% % of total ad spending is concentrated in audience 63% is a share of audience in CTC channel total viewership in 2010 (up from 62% in FY 2009) We continue working on improving demographic profile of CTC s audience to better match advertiser demand CTC channel has a potential to grow its audience share in the most lucrative to advertisers demographic Sources: TNS Gallup Media, Video International 18

20 All Audience Share Dynamics Audience Shares, % (all demographic) Channel One CTC Media Combined NTV Rossiya 1 CTC TNT Ren-TV TV-3 TV Center Domashny Rossiya 2 DTV Zvezda Channel 5 MTV Rossiya K Muz-TV 2x2 7TV Rossiya 24 Other 2 CTC Media s combined audience share in the most demanded by advertisers demographic is stable (1) Source: TNS Gallup Media, CTC Media s Research Department (2) Includes audience shares of smaller national and regional channels 19

21 Free-to-Air Channels Split by Tier 2010 Audience Shares, (all 4+ demographic) 1 other 50% 21% 20% 20% 21% 9% Top state-controlled channels 1 st tier channels 2 nd tier and regional channels CTC Media channels are on leading positions within their tiers (1) Source: TNS Gallup Media, demographic all above 4 years old, CTC Media s Research Department (2) Power ratio = National TV advertising market share/all 4+ audience share (average). Combined Power Ratios include blended power ratios for CTC, Domashny and DTV (company s estimates) 20

22 Free-to-Air Fragmentation Leads to Growth Opportunities Audience Shares (all 4+ demographic/ all 6-54 demographic) Drivers of future growth 60% 50% 40% 30% 20% 10% 0% Top 3 state-controlled channels 4+ 1st Tier Channels 4+ 2nd Tier Channels 6-54 Top 3 state-controlled channels st Tier Channels nd Tier Channels Domashny and DTV are significant growth drivers within CTC Media portfolio 21

23 Financial Highlights Margosha prime-time drama series, CTC Network (LaLola format ) 22

24 Strong Track Record of Revenue and OIBDA Growth US$ mln % 43.8% 46.9% 46.7% % 41.7% % 50% 40% % % 10% Revenues OIBDA** OIBDA margin**, % Strong top line and OIBDA performance in a highly competitive market 0% Notes: (*) CAGR , all dynamics are provided in US$ terms (CTC Media s reporting currency) (**) Adjusted results exclude $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 in the 2008; an $18.7 million charge arising from the impairment of the broadcasting licenses in Russia in 2009; 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 in 2009 (see reconciliations on page 30) (1) OIBDA is defined as operating income before depreciation and amortization (exclusive of amortization of programming and sublicensing rights). See reconciliations of OIBDA and other non-gaap measures on page 31 23

25 Q4 and FY 2010 Group Total Operating Revenues US$ mln 19% 16% Total operating revenues up 23% in Q and up 19% in FY 2010 due to: 23% 17% Increasing demand from advertisers Full inventory sellout Increased advertising prices Q4 09 Q Higher sublicensing & own production revenue Favorable y-o-y currency exchange rate movements: 5pp positive impact on reported sales for FY 2010 Total Operating Revenues Advertising Revenues Total revenues up 19% year-on-year for FY

26 Q4 and FY 2010 Operating Expenses $96.5 mln $121.5 mln $306.3 mln $394.2 mln CTC Media s total operating expenses increased by 26% in Q and 29% for FY 2010 y-o-y in US dollar terms due to: Depreciation & amortization Stock-based compensarion Direct operating expenses SG&A expenses Programming rights amortization expences 3% 3% 4% 3% 8% 7% 6% 9% 10% 8% 10% 10% 17% 17% 19% 18% 61% 64% 60% 61% Increased investments in: programming network coverage marketing Higher programming impairment charges Higher stock-based compensation expense Foreign currency movements (in Q4) Q Q FY 2009 FY 2010 OpEx increases in line with CTC Media development strategy 25

27 Q4 and FY 2010 Group OIBDA and Net Income Group OIBDA US$ mln 19% 5% OIBDA up y-o-y in Q4 and FY 2010 following revenue growth Q4 09 Q OIBDA Margin % 46.9% 41.7% 36.7% Group Net Income US$ mln 17% 1% Adjusted fully diluted EPS increased to $0.48 from $0.41 in Q4 and to $0.93 from $0.91 for FY 2010 Net Income Margin Q4 09 Q % 33.9% 28.4% 24.2% Investing in future growth with high margins by industry standards 26

28 FY 2010 Revenue and OIBDA Contribution by Segment FY % FY 2010 Total Operating Revenues¹ $506.1 mln DTV Channel 9% Domashny Channel 12% CIS Group CTC Channel* 77% Total Operating Revenues¹ $601.3 mln DTV Channel 8% Domashny Channel 13% CIS Group 2% CTC Channel 77% CIS Group -1% DTV Channel 8% Production Eliminations Group 3% and other -1% DTV Channel 2% Domashny Channel 9% Eliminations and other 1% Operating Segment OIBDA** $211.3mln Domashny Channel 8% CTC Channel 84% Operating Segment OIBDA** $220.9 mln CTC Channel 87% Domashny s contribution increases Note: (1) Operating revenues by segment are shown from external customers only (*) Channel results = Network results + Television Station Group results (**) Total OIBDA excluding corporate office and including eliminations 27

29 Balance Sheet and Cash Flow Highlights Consolidated Balance Sheet Highlights Consolidated Cash Flow Highlights (US$ mln) As of December 31, 2009 As of December 31, 2010 Cash and cash equivalents Short-term investments Total assets including goodwill including broadcasting licenses including progr. & sublic. rights Working capital Total debt Stockholders equity Net cash position (US$ mln) Year ended December 31, 2009 Year ended December 31, 2010 Cash at beginning of period Net cash provided by operating activities including acquisition of progr. and sublic. rights (209.3) (250.5) Net cash used in investing activities (81.7) (130.5) including investments in deposits (39.8) (78.9) Net cash used in financing activities (62.5) (79.8) Cash at end of period Cash used for acqusitions (M&A) (25.7) (23.8) CapEx (16.2) (29.9) CapEx as % of Total Revenue 3.2% 5.0% Free cash flow Strong cash flow generation and no debt 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 28

30 Group outlook for 2011 Revenue We expect total operating revenues to increase by approximately 20% in ruble terms year-on-year in 2011, when adjusting the 2010 revenues for the commission payable to Video International for direct sales of CTC Media s advertising inventory in Russia OIBDA Following the changes in the sales structure, the we expect to report an OIBDA margin of between 34% and 36% for the full year 2011 The anticipated full year 2011 OIBDA margin is equivalent to 38%- 40% under the terms of the pre-existing sales structure CAPEX Capital expenditures (excluding acquisitions) are expected to amount to up to $25 million in 2011 and primarily comprise maintenance capital expenditure, as well as investments in the play-out facility and new office space for our internal advertising sales house 20% y-o-y revenue growth, OIBDA margin improvement and lower CapEx requirements in

31 To conclude The largest independent and the only public broadcaster in Russia Unique play on Russian consumption boom Strong and solid strategy Control of the whole value chain due to vertical integration into content production and distribution Focus on long-term business development with strong cash flow generation and balance sheet 30

32 Appendix Daddy s Girls prime-time sitcom, CTC Network 31

33 CTC Media Shareholder Structure 37% free float IPO on NASDAQ in June 2006 In July 2007 CTC Media qualified for the premier NASDAQ Global Select Market as the result of meeting NASDAQ's most stringent listing standards Major shareholders: 38% stake in CTC Media Shareholder of CTC Media since 2002 Headquartered in Stockholm, Modern Times Group is a leading international entertainment broadcasting group with the second largest geographical broadcast footprint in Europe MTG s TV assets are broadcast in a total of 30 countries and have 125 million viewers The company s shares are listed on Nasdaq OMX Stockholm's Large Cap market Source: U.S. SEC filings, as of December % stake in CTC Media Shareholder of CTC Media since 2003 Founded in 1989 and headquartered in Moscow, Alfa Group Consortium is one of Russia s largest privately owned financial-industrial conglomerates Alfa Group is focused on value-oriented, longer-term opportunities, primarily in Russia and the CIS Backed by strong strategic shareholders 32

34 All 4+ Audience Share Dynamics and Power Ratio Audience Shares, % (all 4+ demographic) 1 Combined Power Ratio of CTC Media s channels for FY Combined national market share for FY % Channel One Rossiya 1 NTV CTC Media Combined CTC TNT Ren-TV TV Center TV-3 Domashny Rossiya K DTV Channel 5 Rossiya 2 Zvezda MTV Rossiya 24 Muz-TV 2x2 7TV Other 3 CTC Media captures market share in access of combined audience share due to its high power ratio (1) Source: TNS Gallup Media, demographic all above 4 years old, CTC Media s Research Department (2) Power ratio = National TV advertising market share/all 4+ audience share (average). Combined Power Ratio includes blended power ratios for CTC, Domashny and DTV (company s estimates) (3) Includes audience shares of smaller national and regional channels 33

35 Reconciliation of Non-GAAP Measures Reconciliation of consolidated adjusted OIBDA and other adjusted financial measures to consolidated OIBDA and other corresponding GAAP financial measures (US$ 000 s except per share data) OIBDA Total Operating Expenses Operating income Net Income Before Tax Income Tax Expense Net Income EPS (fully diluted) Year ended December 31, 2008 Adjusted non-us GAAP results 280,241 (373,307) 266, ,077 (50,205) 176, Impact of non-cash asset impairment charge (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, (US$ 000 s except per share data) OIBDA Total operating expenses Operating income Income before income tax and noncontrolling interest Income tax expense Non-controlling interest Net income attributable to CTC Media, Inc. stockholders Fully diluted earnings per share Year ended December 31, 2009 Adjusted non-us GAAP results $ $ ( ) $ $ $ (49 374) $ (2 630) $ $ 0.91 Impact of non-cash intangible asset impairment charge (18 739) (18 739) (18 739) (18 739) (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) ( ) (45 626) (2 630)

36 Reconciliation of Non-GAAP Measures Reconciliation of consolidated OIBDA to consolidated operating income USD mln Q Q FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 Operating income Add: depreciation and amortization OIBDA Reconciliation of consolidated OIBDA margin to consolidated operating income margin USD mln Q Q FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 Operating margin 20.3% 45.3% 34.4% 30.1% 5.3% 40.9% 41.6% 38.0% 40.2% Add: depreciation and amortization as percentage of revenue 1.8% 1.6% 2.3% 2.3% 2.1% 5.8% 5.3% 5.8% 5.1% OIBDA margin 22.2% 46.9% 36.7% 32.4% 7.4% 46.7% 46.9% 43.8% 45.3% 35

37 Contact Information and Disclaimer For further information please visit or contact: Ekaterina Ostrova Director, Investor Relations Tel: +7 (495) Irina Klimova Investor Relations Manager Tel: +7 (495) 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 Such forward-looking statements include, among others, statements regarding developments in the volume and pricing of television advertising in the Company s target markets; the Company s anticipated advertising sellout in 2011; the development of the Company s internal advertising sales house and implementation of its agreements with Video International; the further development of the DTV and Domashny channels; and the Company s anticipated total operating revenues, OIBDA margin level and capital expenditures in 2011; the Company s intention to pay further dividends in future periods; and the amount of overall effective compensation payable to Video International. 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, the implementation of recent Russian legislation that will change the structure of the Russian television advertising sales market; resulting changes to the structure of the Company s sale of television advertising and its relationship with Video International; the Company s ability to successfully implement its own internal sales house function and to achieve advertising sales comparable to or greater than those historically achieved by Video International as the Company s sales house; developments in the value of the Russian ruble compared to the US dollar; changes in the size of the Russian television advertising market; 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" sections of CTC Media's quarterly report on Form 10-Q for the third quarter of 2010, filed with SEC on November 3, 2010, and its annual report on Form 10-K for 2010, filed on our about the day hereof. 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. 36