Player Avatar NetscribeMedia (69.63) Submitted: 3/19/2007 8:27:24 AM : Outperform Start Price: $19.43 CTCM Score: -95.72

CTC Media operates the CTC Network, a Russian television network offering entertainment programming targeted at 6-54 year old viewer, and the Domashny (Home) Network, a Russian television network principally targeted at 25-60 year-old female viewers. CTC Network’s average audience share is 10.4% and its average audience share in its target demographic is 12.9%, making CTC the fourth-most watched broadcaster in Russia and the third-most watched in its target demographic.
The Russian television business is highly competitive with broadcasters competing on the basis of audience share and time slots. This in turn influences their advertising revenue. The $3.2 billion Russian advertising market is one of the largest and fastest growing in Europe. Despite this rapid growth, the advertising spending in Russia, both on a per capita basis and as a percentage of GDP, remains low by international standards. This indicates that the Russian advertising market is still relatively in a nascent stage. This should help well-established companies like CTC to gain most of this favorable environment.
CTC’s top-line has seen a rise of 56.2% for fiscal 2006 on account of continued growth of the Russian television advertising market and their ability to leverage its television network in delivering their target audiences. Also they have been to improve its operating margin by 360 bps by controlling programming cost.
Historically, the company’s revenue growth has outpaced the growth of the Russian television market as a result of which they have been able to improve their audience share. CTC expects to carry on this momentum and expects fiscal 2007 revenues to be around $460-$500, an increase by at least 24%. The company’s continuing effort to multiply its market share makes the stock, a good buy.

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