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004 Irina Gofman Emerging Markets Pay-TV - The Matrioshka Effect
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004 Irina Gofman Emerging Markets Pay-TV - The Matrioshka Effect

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    004 Irina Gofman Emerging Markets Pay-TV - The Matrioshka Effect 004 Irina Gofman Emerging Markets Pay-TV - The Matrioshka Effect Presentation Transcript

    • 11MODERN TIMES GROUPCAPITAL MARKETS DAY 2013THE MATRIOSHKA EFFECTIrina GofmanEVP OF RUSSIAN AND CIS BROADCASTING
    • IRINA GOFMANJOINED MTG IN 2002 & 2008EVP of the Groups Russian & CIS broadcasting operations sinceOctober 2011. Member of CTC Media Board since 2008Has been CEO of MTG Russia & CIS since July 2008Responsible for the Group’s emerging markets mini-pay channelbusiness and satellite pay-TV platform in Ukraine from May 2011Previously CEO of Rambler Media Group, between 2004 and 2007Worked for MTG between 2002 and 2004 as Chief Operating Officerof the DTV Russian TV network and was instrumental in the launchof Viasat Broadcasting’s wholesale pay-TV business in RussiaFavourite app:Best lap: Stripping & reassembling an AK47 in less than 30 seconds2
    • 3ALWAYS EXPANDING FOOTPRINT AND OPERATIONSYear 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Countries 7 11 15 22 23 24 25 25 30 31 31Channels 2 3 5 6 7 8 10 15 19 32 34Satellite platforms Baltics Ukraine RussiaViaplay online platform Russia UkraineRussia#2 commercial FTA broadcaster58 million Mini-Pay subscriptions211 000 DTH subscribers#1 Pay TV broadcasting group2012Launched Premium HD package in Russiaand Ukraine (3 new movie channels)Entered the market of Mozambique with4 factual channelsLaunched Viaplay service in Russia2013Launched co-branded factual channelswith Polsat in PolandLaunched Viaplay for DTH subscribersof Viasat in UkraineBaltics218 000 subs - #1 DTH platformCEE22 million Mini-Pay subscriptionsAfricaUSAMini-Pay businessMini-Pay business and DTH platformUkraine3,8 million Mini-Pay subscriptions155 000 subs - #1 DTH platform
    • 4HIGH HISTORICAL GROWTH ACROSS BUSINESS AREASCTC MEDIA REVENUE AND OIBDA, MUSD16% TV Ad market CAGR 21% CTC Revenue CAGR 18% CTC OIBDA CAGRPAY TV EM HISTORICAL PERFORMANCE, MSEK54% Revenue CAGR 27% EBIT CAGR
    • 5MARKETS DRIVEN BY PAY-TV PENETRATIONAND DIGITALIZATION+15 milliondigital Pay TV households 2012-2017,Including +7 million in RussiaPAY–TV PENETRATION IN EASTERN EUROPE (%) DIGITAL PAY-TV HOUSEHOLDS (MILLIONS)IN EASTERN EUROPEPAY-TV PENETRATION (% OF TV HOUSEHOLDS) % OF HOUSEHOLDS DIGITALIZED (CABLE AND IPTV)Penetration to grow from55% to 63% in 2012- 2017* Russia without Tricolor Source: Screen Digest 2013
    • 6AS WELL AS PREMIUM SERVICESAND NEW TECHNOLOGIESSHARE OF PREMIUM SEGMENT OF PAY–TV TOTAL IS STILL VERYLOW (% OF REVENUES)RUSSIA & UKRAINE: THREEFOLD INCREASE IN PREMIUM PAYREVENUES (MILLIONS USD)HUGE ONLINE MARKETS WITH A POTENTIAL TO GROW (NUMBEROF INTERNET USERS, MILLION AND PENETRATION, %)INCREASE OF TIME SPENT ONLINE (HOURS PER DAY)Source: Screen Digest 2012, Internet World Stats 2013, ComScore, BostonConsulting Group, Mindshare Interaction, ITU
    • 7ALSO, NEXT YEAR RUSSIA IS TO BECOME THEBIGGEST ADVERTISING MARKET IN EUROPESIZE OF THE TV ADVERTISING MARKET BY 2014 TV TO CONTINUE TO BE THE LARGEST MEDIA SEGMENT IN RUSSIASource: Zenith Optimedia, Video International, Russian Association of Communication Agencies, Initiative Media, MTG dataRUSSIAN TV ADVERTISING MARKET IS STILL TO DOUBLE FROM2012 TO 2020WITH GOOD AD SPEND GROWTH POTENTIALUSD BILLION- AT CONSTANT EXCHANGE RATE FY 2012 TV COST PER THOUSAND, USD
    • 88CTC MEDIA TARGETING SUCCESS
    • 9CTC MEDIA SHAREHOLDER STRUCTURENumber of common sharesoutstanding(as of March 31, 2013)CTC MEDIA, INC.38%Shareholder of CTC Mediasince 2002Modern Times GroupMTG AB158,160,719Shareholder of CTC Mediasince 2011Telcrest InvestmentsLimitedIPO on NASDAQ in June2006Free floatIrina GofmanDirectorLorenzo GrabauCo-ChairmanJørgen MadsenLindemannDirectorDmitry LebedevDirectorAngelo CodignoniCo-ChairmanWerner KlattenDirectorTamjid BasuniaDirectorTimur WeinsteinDirectorJean-Pierre MorelDirectorSource: CTC Media 2012Earnings PresentationBoard Director25% 37%
    • 10Total Cash Investment(DTV+CTC)USD 100 millionProceeds from DTV sale USD 395 millionCTC Dividends received USD 120 millionCurrent Value of MTG stake USD 708 million*Current ROI 1,105%WITH MTG TAKING KEY PART IN THE INVESTMENTSTORY…TO BE CONTINUEDMTG acquires 75% ofDarial TV (currentlyPeretz)MTG acquires 37% ofStoryFirst, owner ofCTC Media for 84MUSDIPO of CTC Media onNASDAQ$2,1 billionMTG sells DTV to CTCMedia for 395 MUSDTelcrest InvestmentsLimited acquired a 25%stake in СTС Mediafrom Alfa GroupCTC Media startspaying dividendsSource: MTG data; * at $11,79per share2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
    • 11… PROVIDING HEALTHY CONTRIBUTION TO MTGASSOCIATED COMPANY INCOME FOR MTG (EBIT) (MSEK) ANNUAL DIVIDENDS RECEIVED BY MTG (MSEK)
    • 10%20%30%40%50%60%2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 201312CTC MEDIA: RUSSIAN LEADING MEDIA GROUPCTC MEDIA IS #2 COMMERCIAL BROADCASTER IN RUSSIACOMBINED AUDIENCE SHARES, % (ALL 6-54 DEMOGRAPHIC), FY 2012WITH CHANNEL PORTFOLIO BENEFITING FROM MARKETFRAGMENTATION; AUDIENCE SHARES, ALL 10-45DEMOGRAPHICSAUDIENCE SHARE IN CHANNELS’ TARGET DEMOGRAPHICS, %Source: CTC Media 2012 Earnings PresentationTop 3 state-controlled channels1st tier channels2nd tier channelsNon-FTA and regional channels18% national TV ad marketrevenue share in FY 2012
    • 13ATTRACTIVE AUDIENCE PROFILE AND REACHACROSS COMPLIMENTARY DEMOGRAPHICSOLDER AND MALE OLDER AND MALEYOUNGER AND MALE YOUNGER AND FEMALECTCAUDIENCEPROFILEVS.ADVERTISINGDEMANDANDTVMARKETSource: CTC Media 2012 Earnings PresentationCTCAUDIENCE PROFILEVS.ADVERTISINGDEMANDAND TVMARKET
    • 1414WITH MEDIA HOUSE APPROACHCONTENTBROADCASTINGDIGITAL MEDIACTC MEDIA REVENUE SPLIT EVOLUTIONSource: CTC Media 2012 Earnings Presentation
    • 15RESULTING IN STRONG TOP ANDBOTTOM-LINE GROWTH…CTC MEDIA REVENUE, USD MILLIONTV AD MARKET CAGR – 16%CTC MEDIA REVENUE CAGR – 21%CTC MEDIA OIBDA, USD MILLIONOIBDA* CAGR – 18%Source: CTC Media 2012 Earnings Presentation
    • 16AS WELL AS STRONG BALANCE SHEET ANDHIGH LEVEL OF RETURN ON CAPITALUSD million As of December 31, 2012As ofMarch 31, 2012Cash and cash equivalents 55.2 15.4Short-term investment 131.4 128.6Total assets 985.6 947.5Including goodwill 178.0 173.9Including broadcasting licenses83.3 76.1Including programming rights255.3 242.4Working capital1 298.3 285.0Total debt (bank overdraft) 13.2 6.1Stockholders’ equity 762.9 750.1Net cash position2 173.4 137.9Source: CTC Media 2012 Earnings PresentationCONSOLIDATED BALANCE SHEET HIGHLIGHTS RETURN ON CAPITAL EMPLOYED2007-2012average ROCE: 30%
    • 1717CHANNEL BUSINESS REACHING NEW HEIGHTS
    • 18CHANNEL BUSINESS: BUILDING CONTENT OFFERINGSource:MTGdata15 CHANNELS 8 CHANNELS 8 CHANNELS 3 CHANNELSFactual Basic movie Sport Premium movieMarch2003 Nov2003 May2004 Oct2005 Nov2006 Sept 2008 Nov2010 May2010 May2011 Oct2012 March2013
    • 19WITH A HIGH IMPACT BRAND PORTFOLIOOtherSource: MTG dataNUMBER OF SUBSCRIPTIONS SOLD PER CHANNEL, 2012 (MILLIONS)
    • 20RUSSIA – THE STRONGEST MARKET POSITIONWITH THE MOST POPULAR PAY CHANNELS IN THE COUNTRYSource: Source: TNS Russia, TV Index project, Peoplemeters, Russia (cities 100 000+), 01/02/2013-30/04/2013, Total day, Population aged 4+.TOP 15 CONTENT PROVIDERS CUMULATED REACH, %( ) – number of channelsTOP 20 PAY CHANNELS, AVERAGE MONTHLY REACH, %
    • 21TO DRIVE SUBS AND REVENUE GROWTH WITHRUSSIA AS THE LEADING MARKETMINI-PAY CHANNEL SUBSCRIPTIONS (MILLION) – 64% CAGR SUBSCRIPTIONS BY COUNTRY 2012REVENUE GROWTH (MSEK) – 47% CAGR REVENUE BY COUNTRY 2012Source: MTG data
    • 22STILL VOLUME OPPORTUNITY TO DRIVE FUTUREGROWTHEASTERN EUROPE: STRUCTURE OF THE PAY TV MARKET(MILLIONS HOUSEHOLDS)NUMBER OF PAY TV HOUSEHOLDS (MILLIONS)RUSSIA: CURRENT PENETRATION VS. CURRENT PAY TV MARKET CEE: CURRENT PENETRATION VS. CURRENT PAY TV MARKETSource: Screen Digest 2013, MTG data+15 million Pay TVhouseholds 2012-2017
    • RUSSIA – THEMATIC CHANNEL ADVERTISING MARKET(2012)23AS WELL AS ADVERTISING POTENTIALSHARE OF VIEWING – FREE TV AND VIASAT CHANNELS(RUSSIA, 25-54*)RUSSIAN CHANNEL BUSINESS REVENUE SPLIT, %Source: *TNS Russia, TV Index and TV Index Plus project, Peoplemeters Russia (cities 100 000+), 01/02/2013-30/04/2013, Total day,Population aged 25-54. Russian Association of Communication Agencies, MTG dataRUSSIA – THEMATIC CHANNEL ADVERTISING MARKETGROWTH (2012)
    • 24AND PREMIUM SERVICES IN RUSSIA AND UKRAINERUSSIA & UKRAINE: DIGITAL HHS TO DOUBLE IN 5 YEARS(MILLIONS HHS)PREMIUM PAY CHANNELS AT THE RUSSIAN MARKET – VERYFEW DIGITAL CONTENT DRIVERSRUSSIA & UKRAINE: LARGE PARK OF HD READY TVS (MILLIONS)RUSSIA & UKRAINE: STEEP GROWTH OF HD ENABLEDHOUSEHOLDSSource: Screen Digest 2013, Cableman magazine14 9183163467790 1011101 1361116192305101520250%5%10%15%20%25%30%35%2005200620072008200920102011201220132014201520162017Households, millions Penetration,%
    • 25NewChannelsExclusiveStudios DealsBefore FTA windowPackageSubscriptionvs B2B channels salesKey OperatorsAlready SignedFROM BASIC CHANNELS SALES TOPACKAGING PREMIUM CONTENTMonthly PremiumARPU $9,3 vs $ 0.5=395 RUB($13)Source: MTG data
    • 2626DTH TAKING ADVANTAGE OF GROWTH MARKETS
    • 27EASTERN EUROPEAN MARKETS ARE TOGROW FOR SATELLITEWESTERN EUROPE: STRUCTURE OF THE PAY TV MARKET(MILLIONS HOUSEHOLDS)RUSSIA, UKRAINE & BALTICS: STRUCTURE OF THEPAY TV MARKET (MILLIONS HOUSEHOLDS)TOTAL NON-CABLE HOUSEHOLDS (2012, MILLIONS) SATELLITE PAY-TV HOUSEHOLDS IN RUSSIA, UKRAINEAND BALTICS (MILLIONS)Source: Screen Digest 20132012-2017+7 million Pay TV households+3 million Pay DTH households2012-2017+11 million Pay TV households+5 million Pay DTH householdsTerritoryRussia 17 million km2Ukraine 604 thousand km2
    • 28OUR PLATFORMS & CONSUMER OFFERS DIFFERTO FIT VARIOUS MARKET DEVELOPMENT STAGESTV households 19,1 millionNon-cable households 15,5 millionCompetition in DTH ModerateOur market position #1Number of subscribers2012155,000MTG ownership 85%Offering tier Middle/PremiumBusiness model Partial box subsidyMonthly ARPU 11 USD(Mid-tier)TV households 50,7 millionNon-cable households 32,8 millionCompetition in DTH HighOur market position Emerging playerNumber ofSubscribers 2012211,000MTG ownership 50%Offering tier Middle/PremiumBusiness model No box subsidyMonthly ARPU 7 USD(Mid-tier)TV households 2,7 millionNon-cable households 1,7 millionCompetition in DTH HighOur market position #1Number of subscribers2012218,000MTG ownership 100%Offering tier PremiumBusiness model Full Box subsidyMonthly ARPU 16,9 USD (Premium)Package # ofchannelsMonthly feeGold >50 $31Silver >30 $16Start >10 $11Package #of PaychannelsMonthly fee,$Basic >90 $8Affordable >60 $6,3Package # of PaychannelsMonthly fee,$Prem HD 45 $25HD 43 $19Prestige 38 $12Family 20 $9BALTICS UKRAINE RUSSIA
    • 29TO DRIVE SUBSCRIBER GROWTH AND POSITION FORTHE INVESTMENT RETURNDTH SUBSCRIBERS, THOUSANDS 57% CAGR DTH REVENUES,TSEK 70% CAGRDTH SUBSCRIBERS 2012 DTH REVENUE 2012Source: MTG data
    • 30DTH 2012 DEVELOPMENTS HIGHLIGHTSSource: MTG dataGrowing subscriber base: net growth of 14%Strong content portfolio with more than90 channels, including Viasat portfolioVast geographical reach: signal availableall over the country, time zones channelsintroducedNew CEO hired in may 2013RussiaUkraineGrowing subscriber base: net growth of 16%New drivers of growth: full roll out of Premium,HD and Viaplay multiscreen serviceFurther DTH expansion to be driven by potentialencryption of DTH channelsRe-examining UA.TV positioningBalticsStabilised subscriber base;2% increase in 2012Premium content portfolio: the strongestsport content line-up in the territory
    • 3131ONLINE AWAKENING
    • 32ONLINE DEVELOPMENTINTERNET ADVERTISING MARKET, MILLION USDRUSSIA: MAIN REASONS FOR USING INTERNET (% OF AUDIENCE)PAY TV VIEWERS ARE INTERESTED IN MULTISCREEN ADD-ONSERVICES (% OF PAY TV AUDIENCE INTERESTED IN SERVICE)Source: ComScore Magna Global, GFK 2012, MASMI, IPSOS 2012, Pyramid 2012BROADBAND PENETRATION (% OF POPULATION)
    • 33Aggregated number ofunique users, millionsSource: MTG dataOTT AVOD portalfeaturingcatch- up and libraryfromall CTC Media channelsAvailable on PC. Mobileplatforms and Smart TVFemale website featuringshort lifestyle videosand articlesAvailable on PC, Mobileplatforms, Smart TVsand IPTV boxesChannel websites containingshort-form channels contentand promosAvailable on PC, Mobileplatforms, Smart TVsand IPTV boxes8,2Free ViewingSVOD service launched in 2012 in Russia and in 2013 in UkraineFeaturing premium content from major Hollywood studiosAvailable Anytime, Anywhere through PC and mobile devicesViaplay to be used as a complementary multiscreen solution for subscribersof the Viasat premium package in Russia and UkraineFacilitate new sales – targeting younger audiencePromote loyalty to Viasat Premium packages and decrease churnPay/Multiscreen ViewingMTG ONLINE PRESENCE
    • 3434THE MATRIOSHKA EFFECT…SO, WHAT WAS INSIDE?
    • Channel BusinessBenefiting from further 15 million Pay TV HH uptake in the next 5 yearsRussia is the main driver of growth via penetration growth and advertisingPremium market in Russia to increase threefold and be a source of relevanceand different proposition to drive digitalizationOnlineBuilding value for Premium Content (Viaplay Multiscreen) and Content extensions services (AVOD for CTCM)Preparing for the next step push for Viaplay (OTT, SVOD etc.)CTC MediaBuilding further value from the largest advertising market in Europe – 5,9 USD billion by 2014With much higher than industry margins and strong cash flow generationSatelliteTaking advantage of the market penetration growthtarget market to grow by 5 million DTH households in the next 5 yearsContinuing to develop content and functionality proposition to capture the market35
    • 36THANK YOU