Capital Markets Day 2011 Anton Kudryashov Key growth drivers

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Capital Markets Day 2011 Anton Kudryashov Key growth drivers

  1. 1. 2011 Capital Markets Day Key Growth Drivers Anton Kudryashov Chief Executive Officer
  2. 2. Russian TV Ad Market in a Global Context TV ad market CAGR 18.0% 8.0% 18% 18.0% Developing markets grow much faster than 14% 14% 6.0% 6 0% developed markets 12.0% 11% 11% 10% 8.0% 4.0% 3% Russian TV ad market growth outpaces 6.0% 3% 2.0% emerging markets g g g growth 0.2% 0.2% 0.0% 0.0% CAGRR 2005-2011 2005-2011 CAGR CAGR 2011-2013 CAGR 2011-2013 Developed markets Developed markets Emerging markets markets Emerging markets E Russia Russia Russia entered the top-9 TV ad markets in 2010 Russia will become the 5th largest TV ad market in 2013 USD billions USD billions 65 62.5 60 30 56.5 30 #1 in Europe 18.4 19.0 20 20 14.7 13.2 10.1 9.4 10 6.2 10 7.1 6.7 5.9 5.5 5.4 5.1 6 4.6 4.2 4.9 4.4 3.5 35 0 0 0 0 Japan Japan Italy Italy China Russia France Mexico China France Russia Mexico Brazil Brazil USA UK USA UK Germany Germany G G Sources: ZenithOptimedia, Company’s estimates 1
  3. 3. TV Ad Market Growth is Accelerating Ad spend as % of GDP Free-to-Air TV Ad Market Growth USD billions % 12 3.2 2 9 3.0 2.9 2.4 9 2.4 1.9 1.7 5.5 1.7 1.6 6 1.6 1.4 4.4 4.2 1.1 3.5 0 8 0.8 0.8 0.8 0.7 0.7 0 7 0 70.5 0 6 0.6 0.6 0.6 06 06 0.5 3 0.5 0.30.2 0.0 0 egovina Slovenia Moldova Serbia huania Georgia CEE Median Russia Poland Ukraine Belarus 2007 2008 2009 2010 … 2015F Bosn & nia R Lith M P U G B Herze 2008 (pre-crisis) 2010 Sources: ZenithOptimedia, Company’s estimates 2
  4. 4. CTC Growth Drivers Focus on ratings Audience share dynamics Proposed new target audience 14-44 in 2012 Audience share, % Stable 6-54 share 14.0% 13.0 – 14.0% 12.6% 14-44 share growth 11.9% ~ 12.0% 12.0% Investments in programming All All 10.0% 14-44 14-44 Power ratio will remain high All All 6-54 6-54 8.0% Better alignment with advertisers’ demand 2010 2015F Increase of technical penetration 3
  5. 5. Domashny Growth Drivers Audience share dynamics Crisp positioning and identity F25-60 Audience share, % Investments in programming 6.0% 4.0 - 5.0% 4.5% Increase of technical penetration 4.0% 3.1% Increase of power ratio driven by: 2.0% Audience share growth 0.0% Decrease of average viewers’ age from 48 to 43 2010 2015F 4
  6. 6. DTV Growth Drivers Audience share dynamics Optimal programming mix is identified 25-54 Audience share, % Investments in programming 4.0% 3.03.5% - 4.0% Intensified marketing efforts 2.1% Increase of technical penetration 2.0% 2 0% Increase of power ratio driven by: Audience share growth 0.0% 2010 2015F Decrease of average viewers’ age from 46 to 42 5
  7. 7. Further Footprint Expansion in Russia CTC Domashny DTV Technical penetration Technical penetration Technical penetration 86.1% ~ 86% 95.6% ~ 96% 80.1% ~ 80% 93.7% 81.6% 72.5% 72 5% 2010 2015 2010 2015 2010 2015 Plan to acquire 40 regional stations within the next 5 years for total amount of $90–100 mln 6
  8. 8. In-In-house Production: An Important Part of Our Channels’ Success We are focusing on developing own production… Tailor-made content is the cornerstone of CTC’s programming i No market for ready-to-use content CTC average Critical competitive factors prime time Secured access to branded content (prime time) audience share in-house Maintain control over programming costs & produced content processes 13.1% Margosha series (adaptation of LaLola format) Branded content monetized via different media segments and territories vs. … and long-term relationship with 3rd party producers CTC average prime time Stable and predictable pricing audience share Options for further episodes 12.6% Right of first look for new p g products Ensure high ratings of acquired content (bonus-rating system) Acquisition of full rights Daddy’s Girls (original sitcom) 7
  9. 9. Successful Performance of Channel 31 in Kazakhstan Positive P iti revenue and market share dynamics d k t h d i Significant i Si ifi t improvement of OIBDA margin since 2008 t f i i USD millions USD millions 12.2% 13.5% 3.0 10.4% 14.0% 20.0 15.0% 10 8% 10.8% 2.0 9.0% 15.0 10.0% 1.0 6.2% 1.0 1.5 4.0% 10.0 0.0 5.0% -0.5 -1.0% 5.0 50 10 -1.0 10.5 9.3 11.9 0.0 0.0% -2.0 -4.3% -6.0% 2008 2009 2010 2008 2009 2010 Revenue Market share OIBDA OIBDA margin Growing market shares & profitability due to strengthening programming grid & cost optimization 8
  10. 10. Opportunities for CIS Expansion Promising TV advertising market 2nd largest in the CIS ($374 mln in 2010) 15-20% CAGR expected in 2010-2015 Ukraine Cultural fit Promising TV advertising market $64 mln in 2010 Expected to double during next 5 years Belarus Reasonable asset prices Cultural fit 9
  11. 11. CTC-CTC-International: Increasing CTC Media’s International Brand Awareness & Value Present Number of subscribers Subscribers, thousands 1,200 200 1,200 1,100 2011 150 900 900 100 600 50 300 33 33 00 2010 2010 … 2015F 2012 10
  12. 12. New Media: We Are Wherever Our Viewers Are Up to 80 mln Internet users by 2014 More time with our viewers 100 30% 30:00 79 23:43 80 69 25% 26:00 60 20:51 60 51 20% 18:59 22:00 46 20:26 40 15% 18:59 18:00 20 10% 14:00 0 5% 10:00 10 00 2010 2011 2012 2013 2014 0% 6:00 15-24 25-34 35-44 45-54 55+ Internet households in Russia Internet household penetration in Russia Reach,% Time spent, hours Increasing adoption of connected TV Mobile internet penetration growth 4000 3500 120 3500 100 3000 3000 100 2500 2500 80 71 2000 1600 60 1500 43 40 31 1000 22 500 20 0 0 2010 2011 2012 2013 2010 2011 2012 2013 2014 IPTV households in Russia, thousands Mobile Internet monthly audience mln people audience, Smart TVs in Russia, thousands Sources: PwC Global Media Outlook, GFK, FOM, J’son Partners, ComScore Digital Europe 2010, Company’s estimates 11
  13. 13. Digitalization – We are Preparing to Enter the Second Multiplex in 2017-2019 2017- First multiplex Second multiplex Third multiplex Launch in 2015-2016 Launch estimated after 2017 Launch estimated after 2020 Includes 8 federal channels 9 channel slots are available DTV is likely to participate and 1 regional channel 18 channels applied CTC Media channels are not CTC and Domashny are included likely to participate Preparing for digitalization by modernizing broadcasting equipment & digitalizing content library 12
  14. 14. Fully-Fully-Integrated Broadcaster with Clear Strategic Objectives CTC Channel Domashny New media N di and DTV Channels In-house CIS content operations production CTC- In-house International sales function 13

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