CTC Media Inc. (CTCM) is getting Love.
The Russian operator of three nationwide television channels was granted a license yesterday for CTC Love, as the company targets an audience of younger women to boost its advertising revenue. The approval comes amid a 17 percent slump in the shares this year after the stock surged 79 percent in 2013. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in the U.S. declined 2.4 percent to a six-month low and RTS stock-index futures rose 0.4 percent in U.S. hours.
CTC Love will be the company’s second channel with content geared toward a female audience, Aleksey Shchedrin, chief strategic communications officer at CTC Media in Moscow, said by e-mail yesterday. The Domashniy station targets women ages 25 to 59 and broadcasts the British drama series Downton Abbey. Russian women spend an average 12 percent of their annual salaries on cosmetics and about half of them use as much as 20 percent on clothing, according to financial data website RosInvest.com.
“They are targeting one of the most sought-after segments in television advertising,” Anna Lepetukhina, a Moscow-based analyst at Sberbank CIB, the investment arm of OAO Sberbank, said by phone yesterday. “There are all these market sectors where women are almost the only buyers. Younger females is a very attractive audience for advertisers.”
Lepetukhina is rated first among the 18 analysts who cover CTC Media, based on total returns over the past year. She has a buy recommendation on the stock and expects CTC Love to focus on female viewers 18 to 35 years old.
CTC’s sales will rise to a record $917 million in 2014, up 7.4 percent from 2013, according to the mean of 12 analyst estimates compiled by Bloomberg.
“Our task is to increase the share of younger women in the audience,” Yuliana Slashcheva, who took over the company as chief executive officer in August, said via e-mail yesterday. “We saw that trend last year as the audience for Domashniy has expanded to women younger than 25.”
CTC Love is expected to compete against Yu Channel, which has a target audience of women 14 to 39, Luis Saenz, the head of equity sales and trading at BCS Financial Group in London, said in an e-mailed note yesterday. CTC is co-owned by Yury Kovalchuk, a billionaire ally of President Vladimir Putin. Yu Channel is owned by privately-held OOO YutTV Media.
CTC Media’s Shchedrin declined any further comment on CTC Love, including on the target audience.
“It’s a very good idea and we may see some results as soon as in the second half of the year,” Boris Vilidnitsky, an analyst at Barclays Plc in London who has a sell recommendation on CTC, said by phone yesterday.
CTC’s share of viewers at least four years old increased to 6.4 percent in the week to Jan. 19, from 6.3 percent in the previous week, according to TNS Gallup Media. CTC rose to fourth most-watched channel from fifth place the previous week, TNS data show.
“One of concerns about the new channel is that CTC has to make sure its female audience doesn’t overlap with Domashniy’s,” Sberbank’s Lepetukhina said. “Another potential concern is whether this is a good time for such expansion, as economic growth slows. However, CTC won’t have to spend a lot because it has enough content to fill the new channel in the near term.”
Shares of CTC slipped 1.9 percent to an almost four-month low of $11.50 in New York yesterday. The Bloomberg Russia-US gauge fell to 89.25, the lowest since July 11, while RTS stock-index futures increased to 131,330. The Micex Index lost 0.3 percent to 1,458.91 by 5:56 p.m. in Moscow today.
The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, slipped 2.4 percent to $25.25, also the lowest close since July. The RTS Volatility Index, which measures expected swings in the stock futures, tumbled 11 percent to 24.33.
Yandex NV (YNDX), Russia’s biggest Internet company, fell 6.2 percent to $35.34 yesterday, with trading volume more than double the 90-day average. Yandex, which doubled last year, has slumped 18 percent in 2014.
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