OREANDA-NEWS. May 12, 2011. CTC Media, Inc. (“CTC Media” or “the Company”) (NASDAQ: CTCM), Russia’s leading independent media company, announced its unaudited consolidated financial results for the first quarter ended March 31, 2011, reported the press-centre of CTC Media.

FINANCIAL HIGHLIGHTS
Total revenues up 16% year-on-year in ruble terms on a comparable basis to USD 165.5 million (total reported revenues up 32% in ruble terms)

Russian advertising revenues up 20% year-on-year in ruble terms on a comparable basis

OIBDA up 1% year-on-year in US dollar terms to USD 39.9 million, with an OIBDA margin of 24.1%

Fully diluted earnings per share of USD 0.14 (Q1 2010: USD 0.16)

Net cash position  of USD 163.7 million at the end of the period

Board of Directors currently intends to pay aggregate cash dividends of USD 130 million in 2011 (up fr om previously anticipated aggregate of USD 100 million) and have declared a cash dividend of USD 0.22 per share (or approximately USD 35 million in the aggregate) to be paid on or about June 30, 2011 to shareholders of record as of June 1, 2011, with further dividends anticipated in the remaining quarters of 2011

Company still on track to meet its full year outlook of an approximate 20% increase in total operating revenues in ruble terms for the full year, a full year OIBDA margin of between 34% and 36%, equivalent to 38-40% under the terms of the pre-existing sales structure. Full year capital expenditure (excluding acquisitions) are expected to amount to up to USD 25 million in 2011

OPERATING HIGHLIGHTS
Combined Russian national inventory 99% sold-out for Q1 and approximately 85% sold-out for the full year

Channel 31 in Kazakhstan recorded an all-time high Q1 target audience share of 14.8%

Launch of CTC-international channel in Germany in March 2011

Videomore.ru received an average of 100,000 unique visitors per day in March 2011

Dmitry Troitsky appointed Head of DTV channel

Anton Kudryashov, Chief Executive Officer of CTC Media, commented, “We continued to benefit from the growth in the Russian TV advertising market and rising prices during the first quarter, especially in the regions. We were almost completely sold out and our Russian advertising revenues were up 20% year-on-year in ruble terms on a comparable basis, as we reported our sales on a gross basis for the first time. Our blended Russian power ratio was stable in the quarter and we have seen an improvement in our Russian ratings in April following lower audience shares during the first quarter. This recent improvement reflects the launch of our spring schedule, which includes premieres of new formats “Boarding School” and “Traffic Light”, as well as new seasons of hit series “Daddy’s Girls” and “Voroniny”. Channel 31 in Kazakhstan recorded its highest ever first quarter audience share of 14.8% in its target group, and our CIS Group revenues were up 39% year-on-year in US dollar terms.

“The year-on-year increase in total operating expenses was primarily due to the accelerated amortization of certain programming, higher programming costs at CTC Network as we sought to correct the lower audience shares, and the investments that we have made in the development of our second-tier Russian networks. The changes to our advertising sales structure from the beginning of the year have, however, reduced our cost of sales as a percentage of gross revenues. We therefore reported a slight increase in OIBDA year-on-year but a lower OIBDA margin.

“We reiterate our full year outlook for approximately 20% revenue growth in ruble terms on a comparable basis. Approximately 85% of our anticipated full year Russian national inventory is now already committed at significantly higher prices than in 2010 and demand levels remain strong. We also continue to expect to deliver a full year OIBDA margin of between 34% and 36%, which is equivalent to between 38% and 40% under the terms of the pre-existing sales structure.

“We paid out a quarterly cash dividend of USD 25 million in the first quarter and now intend to increase the three remaining quarterly dividends in 2011 to USD 35 million per quarter. This reflects our high level of cash generation, low level of capital expenditure, and the increasingly favorable operating environment.”

Changes in the Advertising Sales Structure in 2011 and Related Changes in Accounting Treatment
Prior to 2011, advertising on CTC Media’s television channels in Russia was not generally placed directly by advertisers. Video International, one of the largest sales houses in Russia, placed this advertising on an exclusive basis under agency agreements. Advertising placed through Video International historically accounted for substantially all of CTC Media’s advertising revenues. Based on such relationships with advertisers and Video International in place prior to 2011, the Company recognized the commissions paid to Video International as a reduction to revenue as opposed to a cost incurred (i.e., on a net basis).

Effective from January 2011, the Company has terminated all of its agency agreements with Video International, and has developed a new structure for the sale of advertising on its channels going forward. The Company’s own sales house now serves as the exclusive advertising sales agent for all of its networks in Russia. At the same time, the Company agreed a new model of cooperation with Video International based on the licensing of specialized advertising software by Video International to CTC Media’s internal sales house, together with the provision by Video International of related software maintenance, analytical support and consulting services. CTC Media’s internal sales house is primarily responsible for all of its national and regional advertising sales, with the exception of advertising sales to local clients of its regional stations, which continue to be made through Video International.

Starting from January 1, 2011, following the change in the sales structure, as well as the change of CTC Media’s contractual terms with Video International, CTC Media reports its Russian advertising revenues, excluding regional advertising revenues from local clients, based on gross amounts billed by CTC Media to advertisers on a gross basis. Fees payable to Video International for the use of advertising software, related maintenance and analytical support and consulting services are included in selling, general and administrative expenses in CTC Media’s consolidated statement of income. Revenues from regional advertising sales to local clients continue to be recorded net of agency commissions payable under the agency agreements with Video International.

This press release presents comparable-basis, non-GAAP selected financial measures for the first quarter of 2010. CTC Media is presenting this comparable-basis historical financial information in order to assist analysts and investors by facilitating period-to-period comparisons of the Company’s results following the implementation of the Company’s new model of advertising sales. The reconciliation of comparable-basis, non-GAAP financial measures to the US GAAP financial measures is provided in the end of this press release.

Comparable-basis, unaudited non-GAAP summary financial information for the full-year 2009 and 2010 and all quarters of 2010 is available on the Company’s website at http://www.ctcmedia.ru/investors/Financial_Results/comparable_financials