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CTC Adds Programs as Russians Use Smartphones to Watch TV

CTC Media Inc. (CTCM), Russia’s largest publicly traded television broadcaster, is transforming itself into a content provider as users switch to watching series online via smartphones, tablets and smart TVs.

“Our strategy is to evolve from a broadcasting company into a content company which distributes its product over different platforms,” Chief Executive Officer Yuliana Slashcheva said in a phone interview. “For instance, NBC Universal has both broadcasting and production.”

CTC, co-owned by Russian billionaire Yury Kovalchuk and Swedish media company Modern Times Group AB (MTGB), plans to generate as much as 10 percent of revenue outside of free-to-air broadcasting in five years, Slashcheva said. Viewers don’t want to depend on a programming schedule any more, she said.

Smartphone sales in Russia jumped 44 percent last year to 17.7 million devices, while tablet deliveries more than doubled to 8.5 million in 2013, according to research company IDC. Industry smart-TV sales in the country rose 54 percent to about 3.7 million units, producer Samsung Electronics Co. estimated.

Russia’s online TV-advertising market surged 67 percent last year to 3 billion rubles ($83 million), according to research by iKS-Consulting. That amounts to about 2 percent of the country’s industrywide television-advertising revenue.

CTC-created TV series such as The Ship, The Kitchen and Molodezhka, a fictional show about a youth hockey team, are also broadcast on its online-video platform Videomore.ru, a Russian clone of Hulu LLC, and via third-party websites that also offer free videos to online users in exchange for advertising breaks.

Luring Consumers

“We’re following the Hulu model since Russian viewers are traditionally reluctant to pay for content subscription,” Slashcheva said. “We expect this to change in one or two years, once global online-content distributors enter the Russian market.”

Sales last year rose 7 percent in ruble terms to the equivalent of $832 million, the Moscow-based broadcaster said today. This year, CTC plans to grow in line with Russia’s TV-advertising market which is set to expand 5 percent to 8 percent from last year’s 156 billion rubles, Slashcheva said.

CTC’s three TV channels have a combined free-to-air audience of about 40 million people. Its Internet audience jumped 40 percent last year to 10 million people as smartphone and tablet market penetration increased and mobile operators have added faster transmission networks.

The company will introduce the Love Channel systemwide later this month targeting young female viewers. CTC Media is also starting an online women’s clothing brand jointly with Russian Internet retailer KupiVIP, using product placements in its programming.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Tom Lavell, David Risser

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