OREANDA-NEWS. On May 07, 2009 CTC Media, Inc. (“CTC Media” or “the Company”) (NASDAQ: CTCM), the leading independent media company in Russia, announced its unaudited consolidated financial results for the first quarter ended March 31, 2009, reported the press-centre of CTC Media.

FINANCIAL & OPERATING H IGHLIGHTS
Total operating revenues down 23% year-on-year to US104.8 million

29% negative foreign exchange rate impact on ruble denominated advertising revenues

Consolidated organic operating expenses down 29% year-on-year to US 58.4 million

OIBDA of US 39.2 million (Q1 2008: US 55.2 million), with an OIBDA margin of 37.4% (Q1 2008: 40.4%)

Net income of US 23.3 million (Q1 2008: US 41.7 million)

Fully diluted earnings per share of US 0.15 (Q1 2008: US 0.26)

Anton Kudryashov, Chief Executive Officer of CTC Media, commented: “Our first quarter revenues included the consolidation of the broadcasting businesses acquired in 2008 and the year-on-year development reflected the deterioration of the advertising markets, as well as the substantial weakening of our operating currencies against the US dollar reporting currency. However, each of our networks increased its advertising market shares year-on-year in the first quarter. Our organic advertising revenues were down 10% year-on-year in ruble terms, which compares with an estimated 20% decline in the Russian television advertising market over the same period.”

“In addition, sublicensing and own production revenues now account for over 5% of total revenues following the growth in sales of in-house produced series and sitcoms to other broadcasters.”
 
“We have also managed to keep our underlying organic operating cost base flat year-on-year in ruble terms and to substantially reduce our programming expenses. The integration of our in-house content production businesses has enabled us to adopt a more flexible and cost-efficient approach to forward planning and scheduling.”
 
“We remain cautious in our outlook, given the adverse market conditions, but we are well-positioned to continue to outperform the Russian television advertising market in 2009. We are also continuing to work to optimize the cost bases of the organic and acquired businesses. We are generating cash with a healthy net debt free financial position and low capital investment levels.”

Operating Review
Total operating revenues were down 23% year-on-year in dollar terms and included a full quarterly contribution from Channel 31 in Kazakhstan , as well as contributions from DTV Group in Russia and the Company's operations in Moldova . The acquired operations added US 0.7 million of revenue in the first quarter of 2008 and US 11.7 million of revenue in the first quarter of 2009. The reported decline in revenues reflected the substantial year-on-year depreciation of the Company's ruble operating currency against the US dollar reporting currency, which had a negative impact of approximately 29% on the Company's ruble denominated advertising sales.

Organic revenue, when excluding the contribution of the acquired businesses in 2008 and 2009, was down 32% year-on-year in dollar terms. This reflected the year-on-year deterioration in the Russian television advertising market, and the regional television advertising markets in particular. However, each of the Company's networks increased its advertising market shares year-on-year.

Share of Viewing in Target Demographics
The CTC flagship channel maintained its target audience share year-on-year and its position as the fourth most watched free-to-air channel in Russia . The Daddy's Girls and Ranetki formats continued to drive CTC's prime time audience share, while comedy sketch shows 6 Frames and the newly launched Go for it! proved successful with their target audience and a wider family audience on weekends. Following the launch of Kremlin Guards and a new season of Ranetki , the average target audience share in March 2009 increased to 12.5%.

Domashny's audience share declined slightly year-on-year due to the adjustment of the channel's programming grid, in order to target a higher proportion of younger and more affluent viewers.

DTV has been refocused since January 2009 to target 25-54 year old viewers, rather than the previously wider group of viewers over 18 years old. DTV's audience share in the revised target group increased in the first quarter of 2009 and the programming schedule again featured the successful Marital Fiction and Silent Witness series, as well as other criminal investigation and action formats.

The Company estimates that the previously announced change in the audience measurement system in Russia from the beginning of 2009, following the finding in an updated census that the relative percentage of children in the overall population has decreased, adversely impacted CTC's target audience share by approximately 0.7 percentage points but did not significantly impact Domashny's or DTV's target audience shares. As stated above, CTC successfully offset the impact and maintained its target audience share.

Expenses
Total operating expenses were reduced by 19% year-on-year in dollar terms. Organic expenses, when excluding the operations acquired since the beginning of 2008, were reduced by 29%. The acquired operations added US 1.0 million of expenses in the first quarter of 2008 and US 9.8 million of expenses in the first quarter of 2009.

The decrease in expenses reflected both the substantial year-on-year reduction in programming amortization expenses, as well as the depreciation of the Company's ruble operating currency against the US dollar reporting currency.

Organic direct operating expenses were down 35% year-on-year in dollar terms, while organic selling, general and administrative costs were down 15% due to the depreciation of the ruble against the US dollar, which was partially offset by a year-on-year increase in US dollar denominated stock-based compensation expenses from US 3.1 million to US 4.3 million. Organic programming expenses were down 37% year-on-year to represent 37% of revenues, compared to 40% in the first quarter of 2008.

This decrease in programming expenses reflected the above mentioned currency effects, lower impairment charges, a change in the programming mix resulting in the broadcasting of lower cost series and shows, and the effect of a change in the Company's amortization policy for certain types of Russian produced programming with effect from the beginning of 2009. The increase in sublicensing and own production costs was consistent with the increase in sublicensing and own production revenue, due to the growth in sales of internally produced series and sitcoms to broadcasters in Ukraine .

Consolidated OIBDA was US 39.2 million for the period (Q1 2008: US 55.2 million) and the Group OIBDA margin was 37.4% (Q1 2008: 40.4%). Group depreciation and amortization charges increased by 17% year-on-year and primarily reflected the consolidation of the businesses acquired since the beginning of 2008. Consolidated operating income therefore totaled US 36.6 million (Q1 2008: US 53.0 million).

The Company reported net interest expenses of US 1.1 million in the quarter (Q1 2008: net interest income of US 3.8 million). The year-on-year development reflected the increase in the Company's borrowing levels during 2008. All of the Company's long-term borrowings are US dollar-denominated, as is the majority of the Company's cash deposits.

The Company's pre-tax income amounted to US 31.3 million (Q1 2008: US 57.9 million) in the quarter. The effective tax rate increased slightly year-on-year to 27% (Q1 2008: 26%) due to an increase in non-deductible expenses at the corporate level as a percentage of consolidated income before tax and the one-off deduction for certain advertising expenses in the first quarter of 2008, partially offset by changes in statutory tax rates. The Company's effective tax rate has been positively impacted by the decrease in the statutory income tax rates in Russia (from 24% to 20%) and Kazakhstan (from 30% to 20%) from the beginning of 2009.

Consolidated net income attributable to CTC Media, Inc. stockholders therefore totaled US 23.3 million (Q1 2008: US 41.7 million) in the quarter and fully diluted earnings per share amounted to US0.15 (Q1 2008: US 0.26).

Cash Flow
The Company’s net cash flow from operations totaled US 27.8 million (Q1 2008: US 28.8 million) and reflected the net effect of lower advertising sales and lower programming investments in the first quarter of 2009.

Cash used in investing activities totaled US 13.0 million (Q1 2008: US 58.8 million) and included US 11.0 million paid in earnouts related to the acquisitions of the Costafilm and Soho Media production companies in April 2008. Cash used in investing activities in the first quarter of 2008 included US 55.0 million related to the acquisition of a 60% economic interest in the Channel 31 Group.

The Company’s cash and cash equivalents therefore increased to US 109.3 million at the end of the period, compared to US 98.1 million at the end of 2008.

Borrowings
The Company's total borrowings and accrued interest amounted to US 91.6 million (Q1 2008: US 0.2 million) at the end of the reporting period, compared to US 90.6 million at the end of 2008. The Company therefore had a net cash position, which is defined as cash and cash equivalents less interest bearing liabilities, of US 17.7 million (Q1 2008: US 287.5 million) at the end of the reporting period, compared to a net cash position of US 7.5 million at the end of 2008.