OREANDA-NEWS. November 11, 2013. CTC Media, Inc. (“CTC Media” or the “Company”) (NASDAQ: CTCM), Russia’s leading independent media company, announced its unaudited consolidated financial results for the three and nine months ended September 30, 2013.

Q3 FINANCIAL HIGHLIGHTS

Total revenues up 9% year-on-year in ruble terms to USD171.1 million

Advertising revenues up 9% year-on-year in ruble terms to USD 166.9 million

OIBDA of USD 52.3 million, with an OIBDA margin of 30.6%

Fully diluted adjusted earnings per share of USD 0.30 (Q3 2012: USD 0.17)

Net cash position of USD 119.1 million at the end of the period

Payment of cash dividends of USD 0.16 per share

Board of Directors has declared a cash dividend of USD 0.16 per share (or approximately USD 25 million in the aggregate) to be paid on or about December 27, 2013 to shareholders of record as of December 2, 2013.

OPERATING HIGHLIGHTS

Appointment of Yuliana Slashcheva as Chief Executive Officer as of August 1

Appointment of Alexey Shchedrin as Chief Strategic Communications Officer as of November 1

Appointment of Alexey Pivovarov as Director, Television and Transmedia Projects as of November 5

Combined Russian national inventory was 97% sold-out for Q3 and is approximately 97% committed for the full year

CTC Media repurchased 2.5 million shares of common stock as of September 30, 2013 (from May through August), at an average price of USD 11.9 per share for a total of \\$29.7 million, the full amount of the previously announced share repurchase program for use under the Company’s 2013 Equity Incentive Plan

Yuliana Slashcheva, CTC Media’s Chief Executive Officer: “The Company’s overall revenues in the third quarter grew by 9% in ruble terms compared to last year, while our Russian television advertising revenues grew by 8%. This is in line with the growth dynamics of the overall Russian television advertising market. The softness in the advertising budgets growth rate in the third quarter compared with the first half of 2013 reflected a high base in the third quarter of 2012 and a slowdown in demand from advertisers.

“Two of our three Russian channels took market share in the third quarter. At the same time, we carefully managed our costs, which allowed us to significantly expand our OIBDA margin by almost 4 percentage points year-on-year to 30.6%, which is the highest third quarter profitability level since 2009. Our adjusted OIBDA was up 25% year-on-year in ruble terms.

“The CTC channel completed its shift to the older adult segment of the 10-45 audience, updated its programming strategy, and increased its core of loyal viewers. It also became the only media brand to enter the TOP-20 Most Valuable Russian Brands 2013 according to a rating by the international agency, Interbrand. Effective daytime programming significantly increased the CTC target audience share in the third quarter to 11.6%, which is 15% higher than last year’s figure. In the summer, CTC strengthened its position as the second most watched channel in Russia in its target audience. The main driver of ratings in September was the premiere of the series “Last of the Magikyans”, which aired with an average share of 13.5%. Today, CTC is justifiably the top family entertainment channel in the country and the only television channel from the Top-6 that continues to demonstrate consistent audience growth in 2013. In October, several big premieres took place on the channel: drama series “Molodezhka”(“Youth Hockey League”) (average share for the first week on-air was 14.2%), sitcom “Two Fathers, Two Sons” (average share for the first week on-air was 16.0%), and the new season of the popular comedy series “The 80s” (average share for the first week on-air was 14.1%). Furthermore, the Russian version of the world-acclaimed show, “MasterChef”, is premiering in November as the CTC team, led by Viacheslav Murugov, continues to unveil new hits. The audience share gains in the third quarter translated into market share gains for CTC as the channel’s ad revenues grew by 11% year-on-year in ruble terms, surpassing the market growth rate.

“The summer months are traditionally a successful time for our smaller Domashny channel. In the third quarter, its audience share was up year-on-year and quarter-on-quarter. The growth was driven by both acquired foreign series and locally produced shows, such as “Masha in Law” dramedy series and “Style or Exile” fashion competition show. These projects, by the way, drew a new young audience to the channel. As a result, the channel’s advertising sales in the quarter grew at rate outpacing the market: 11%.

“Channel 31 continued its strong performance in the third quarter and increased its revenues by 28% in dollar terms year-on-year, significantly higher than the estimated growth of the television advertising market. It has the highest sell-out rate across TV channels in Kazakhstan, which testifies to the channel’s popularity among advertisers.

“Revenue from digital businesses grew by 85% in ruble terms in the quarter compared to last year. It is also important to note that the reach of the Company’s projects among Russian Internet users grew two-fold in the past year, going from 9% to 18%.

“We paid out dividends in the amount of USD 74 million for the first 9 months of the year and ended the third quarter with a net cash position of USD 119 million. In the fourth quarter, we plan to pay out further dividends in the amount of USD 0.16 per share. Therefore, as previously announced, CTC Media will pay out aggregate dividends of USD 0.63 per share in 2013, which is more than a 20% year-on-year increase compared to 2012.

“The forecast national advertising inventory of the Company’s Russian television channels is currently approximately 97% contracted at higher year-on-year prices and we have started negotiations with advertisers regarding 2014 budgets. For the full year 2013, we expect the Russian television advertising market to post high single-digit growth in ruble terms compared to last year and, as before, we anticipate to grow our Russian television advertising revenues in line with the market. We also continue to expect to deliver an adjusted OIBDA margin of approximately 32% in 2013.”

The CTC channel was the second most-watched broadcaster in Russia in the third quarter of 2013 in its target audience, up from the third most watched in the second quarter of 2013 and the fourth most watched in the third quarter of 2012. Its audience share in the “all 10-45” demographic was up year-on-year from 10.1% to 11.6%. The year-on-year increase in the target audience share reflected the strong performance of the channel’s high-rating content, new premieres and the success of the programming schedule in daytime slots compared to the third quarter of 2012.

The Domashny channel’s target audience share increased year-on-year in the third quarter of 2013 from 3.6% to 3.9%, reflecting strong performance of our programming, primarily driven by the success of Turkish and locally produced series. In the first nine months of 2013, the core age segment “Women 25-35” in Domashny’s audience profile was up 10% compared to the first nine months of 2012.

The Peretz channel’s target audience share decreased year-on-year in the third quarter of 2013 from 2.9% to 2.3%, primarily due to increased competition from other channels and audience fragmentation, as well as relative underperformance of certain programming. Peretz is continuing to refresh its positioning and programming grid to be more focused on edgy, thrilling and action content, along with the expected launch of new premiers at the beginning of 2014.

CTC Media’s Russian channels were affected by continued audience fragmentation in the third quarter and the first nine months of 2013. National free-to-air TV channels in Russia were negatively impacted by increased competition from smaller non-free-to-air and local TV channels, whose combined audience share increased from 12.6% in 2010 to 14.5% in 2011, 15.3% in 2012 and 17.2% in the first nine months of 2013 among viewers above 4 years old.

Channel 31’s average target audience share was down year-on-year in the third quarter to 14.1% from 15.3% due to increased competition from other channels and viewership fragmentation in Kazakhstan. However, the audience share was up quarter-on-quarter. The channel, however, maintained its 3rd place in terms of viewers’ popularity in the quarter.

Effective January 1, 2013, the Company changed its reportable segments in the way it reorganized reporting financial information to make operating decisions. See “Changes in Reportable Segments”, below.

Total operating revenues were up 6% year-on-year in US dollar terms and up 9% year-on-year in ruble terms in the third quarter of 2013. This primarily reflected the net effect of estimated overall Russian television advertising market growth of approximately 8%, as well as growth of the CTC and Domashny channels’ target audience shares, partially offset by lower year-on-year target audience share of Peretz channel.

Advertising revenues accounted for approximately 98% of total operating revenues during the third quarter of 2013 (Q3 2012: 97%) and were up 6% year-on-year in US dollar terms and up 9% year-on-year in ruble terms. Russian television advertising revenues were up 8% year-on-year in ruble terms in the quarter, in line with the estimated TV ad market growth.

Sublicensing and other revenues were down 7% year-on-year in US dollar terms, primarily due to the lower sublicensing sales of Peretz and CTC Media’s digital media content, partially offset by an increase in sublicensing sales of CTC products, due to timing of content delivery.

CTC channel’s total operating revenues increased year-on-year in the third quarter by 8% in US dollar terms and by 11% in ruble terms mainly due to the overall increase in advertiser demand, as well as the year-on-year increase in audience share of 15%, partially offset by a decrease in the overall television viewership among 10-45 year-olds.

Domashny channel’s revenues increased year-on-year in the third quarter by 7% in US dollar terms and by 10% in ruble terms, principally due to the overall increase in advertiser demand which was reflected in increased sales of the channel’s inventory on a federal level, and increased sponsorship revenues, as well as the year-on-year increase in the target audience share of 8%.

Peretz channel’s revenues decreased year-on-year in the third quarter by 14% in US dollar terms and by 12% in ruble terms, principally due to decrease in audience share of 21%, reflecting underperformance of certain programming as well as increased competition from other channels and audience fragmentation, partially offset by the overall increase in advertiser demand.

Channel 31 in Kazakhstan reported a 28% year-on-year increase in revenues in US dollar terms, primarily due to growth in the Kazakh advertising market and demand for Channel 31’s inventory, which was reflected in increased sellout and regional sales, partially offset by lower audience share due to increased competition from other channels and viewership fragmentation.

All other revenues in the third quarter of 2013 primarily represent revenues of USD 0.8 million from CTC-International (Q3 2012: USD 1.0 million) and revenues of USD 1.1 million from digital media projects (Q3 2012: \\$0.6 million).

Please refer to CTC Media’s website for historical (2010-2012) comparable-basis segment financial information: http://www.ctcmedia.ru/investors/financial_results/.