MOSCOW, Nov. 12, 2010 (GLOBE NEWSWIRE) -- CTC Media, Inc. ("CTC Media" or the "Company") (Nasdaq:CTCM), Russia's leading independent media company, today announced that its 100% owned in-house advertising sales agency Closed Joint Stock Company EvereST-S ("EvereST-S") has signed a five year agreement with Closed Joint Stock Company "Company TSV", a member of the Video International group ("Video International"). The agreement takes effect from January 1, 2011.
EvereST-S was established in September 2010 to serve as the exclusive advertising sales house for CTC Media's three Russian television networks – CTC, Domashny and DTV. Under the terms of the agreement with Video International, EvereST-S will receive a five year license to use Video International's proprietary software, including modules such as the Automated System for the Placement of Television Advertising, the Automated Document Management System, and the Media Calculator. In addition, Video International will provide EvereST-S with a number of supporting services, including technical support and consulting, software integration, as well as advertising market research and analysis including forecasts and surveys.
Under the terms of the agreement, EvereST-S will pay Video International a license fee for the use of the software, as well as service fees. The aggregate compensation payable will be calculated on the basis of CTC Media's channels' annual gross television advertising revenues excluding revenues from social advertising, some sponsorship options and cross promotions. CTC Media anticipates that the aggregate effective compensation payable to Video International under the terms of the agreement together with additional cost incurred in connection with EvereST-S operations will amount to a lower percentage of the Company's gross television advertising revenues than it has paid to date to Video International in its capacity as the Company's sole advertising sales agency. It has also been agreed between the parties that the compensation payable to Video International may be decreased on an annual basis by the mutual consent of the parties.
"EvereST-S will be responsible for national advertising sales, as well as regional advertising sales for Moscow-based clients. The Company has also reached an agreement in principle for Video International to act as CTC Media's agency for advertising sales to local or regional clients booking advertising outside of Moscow. This advertising segment accounts for approximately 4% of the Company's total Russian advertising sales. CTC Media understands that such cooperation, based on agency agreements for the direct placement of local advertising by Video International, will continue to be in compliance with the amended Advertising Law since the aggregate volume of the Company's local sales through Video International will not exceed 4% of its Russian advertising sales, and that accordingly Video International will not exceed the 35% market share limit established by the amended law.
Anton Kudryashov, Chief Executive Officer, commented, "The establishment of our own sales house in combination with signing of this new agreement with Video International reflects our strategy to increase effectiveness of the sales process as well as the changes in the Russian legislation at the end of 2009, which take effect from the beginning of 2011. Video International remains our long term strategic partner and their experience will enable us to make a smooth transition to the new sales structure. We have been preparing for this change throughout 2010 and putting in place the required infrastructure, processes and resources to ensure that we are well-placed to benefit from this new relationship. This agreement is not only economically beneficial for us, in terms of reducing our overall cost of sales, but will also improve our overall business efficiency levels as the growth in the Russian television advertising market accelerates further."
About CTC Media, Inc.
CTC Media is a leading independent media company in Russia, with operations throughout Russia and elsewhere in the CIS. It operates three free-to-air television networks in Russia -- CTC, Domashny and DTV -- as well as Channel 31 in Kazakhstan and TV company in Moldova, with a combined potential audience of over 150 million people. The international pay-TV version of the CTC channel is available in North America and Israel. CTC Media also owns two TV content production companies, Costafilm and Soho Media. The Company's common stock is traded on The NASDAQ Global Select Market under the symbol "CTCM". For more information on CTC Media, please visit www.ctcmedia.ru.
Certain statements in this press release that are not based on historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, among others, anticipated amount of compensation to Video International to be paid under the new contract, the amount of sales to local clients in the Russian regions made by 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 are described in the "Risk Factors" sections of CTC Media's quarterly report on Form 10-Q for the second quarter of 2010, filed with SEC on August 5, 2010, and its quarterly report on Form 10-Q for the third quarter of 2010, filed with SEC on November 3, 2010.
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.