The Russsian broadcaster CTC Media, which lists Modern Times Group (MTG) as its largest shareholder, has agreed to sell a 75% interest in its operating business to an affiliate of UTH Russia for $200 million in cash.
The deal is expected to close in late December, and MTG, which owns around 38% of CTC Media, has indicated its support, subject to the terms of the agreement with UTH Russia and the ability of the company to return value to stockholders.
Importantly, the deal, under the terms of which UTH Russia will eventually hold an 80% stake in CTC Media, will also ensure the broadcaster complies with amendments to the Russian law “On Mass Media” that come into effect at the beginning of 2016 and limit the level of foreign ownership in Russian media companies to 20%.
CTC Media is listed on NASDAQ and operates four TV channels in Russia ((CTC, Domashniy, Peretz and CTC Love) as well as Channel 31 in Kazakhstan).
It also operates international versions of CTC Channel and Peretz and has several digital entertainment media assets.
Meanwhile, UTH Russia operates U Channel, Disney Channel, and the cable channel MUZ-TV.
Commenting on the deal, Werner Klatten, an independent member of the board of directors of CTC Media and chairman of the special committee of the board, said: “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, CEO of CTC Media, added: “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.”
