CTC Media, Russia’s leading independent media company, has entered into a definitive agreement to sell a 75 per cent interest in its operating businesses to UTV-Management LLC, an affiliate of UTH Russia (UTH), a leading private commercial television broadcaster in Russia, for $200 million in cash. The transaction is being undertaken to ensure compliance with the foreign ownership restrictions imposed by Russia’s new Mass Media Law, while maximising the potential return to the Company’s stockholders. The Company had previously announced its receipt of a formal, non-binding offer from UTH on July 6, 2015.
The Board of Directors of CTC Media will recommend that the Company’s stockholders approve the transaction at a special meeting to be convened as soon as possible. The transaction is expected to close in late December 2015. MTG Russia, the Company’s largest stockholder, holding approximately 38 per cent of the Company’s common stock, has indicated that it is prepared to support the transaction based on the terms of the agreement with UTH and the ability of the Company to return value to stockholders.
Werner Klatten, an independent member of the Board of Directors of CTC Media and Chairman of the Special Committee of the Board, commented: “We are pleased to have reached agreement with UTH on the proposed sale of a controlling interest in our operating businesses. This agreement represents a significant achievement in light of the extremely challenging environment in which the Company is operating in Russia and the pending effectiveness of the Mass Media Law. Although it is unfortunate that Russian law will require that we effect a sale of the operating businesses, we believe that UTH will be a good new owner of the business and will be well positioned to build on the historical success of CTC Media as the first and leading commercial broadcasting network in Russia.”
Yuliana Slashcheva, Chief Executive Officer of CTC Media, noted: “The sale agreement will enable the management team to focus on the business, with the issue of compliance with the Mass Media Law resolved. We operate in a very challenging market environment, but I am confident that as part of UTH our operating businesses will remain strongly positioned to build on our historical achievements as we continue to set new standards in media entertainment across Russia and Kazakhstan.”
International entertainment group MTG noted announcement of the deal by CTC Media, of which MTG owns 37.9 per cent. MTG accounts for its interest in CTC Media as a ‘discontinued operation’ and discloses this as a separate line item in its accounts.