CTC Seen Rebounding on Record Sales Estimates: Russia Overnight

CTC Media Inc. is set to rebound from its biggest monthly plunge since May on speculation the Russian television company will report record sales as its audience increases, according to UralSib Financial Corp.

American depositary receipts of CTC added 0.5 percent to $9.75 in New York yesterday, following a 9.4 percent tumble in February. The shares led gains on the Bloomberg Russia-US Equity Index of the most-traded Russian companies in New York. The measure dropped 0.8 percent to 99.22, led by OAO Mechel and OAO RusHydro. RTS stock index futures rose 0.7 percent to 150,480 in U.S. hours.

CTC will probably report tomorrow that fourth-quarter sales grew 8 percent to $256 million, according to the mean estimate of five analysts surveyed by Bloomberg. That would be the highest since at least 2006, when the Moscow-based company held its initial public offering in New York. CTC TV has regained its position as Russia’s fourth most-watched channel this year after debuting new shows aimed at younger viewers including ‘Boarding School,’ ‘The Eighties’ and ‘Kitchen.’

“CTC has shown a turnaround as audience increased,” Konstantin Belov, an analyst at UralSib Financial, said by phone from Moscow yesterday. “Their content was an answer to what the viewers really wanted.”

The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, fell 1.2 percent to $28.47 in New York yesterday, the lowest level since Dec. 6. The RTS Volatility Index, which measures expected swings in the stock futures, fell 4.6 percent to 22.56.

Audience Share

CTC TV, the source of 62 percent of the company’s revenue in 2011, increased its audience share of viewers aged 6 to 54 years to 9.4 percent in the fourth quarter, after two consecutive quarters of declines, the company said on its website, citing TNS Global data.

“Market participants expect the company to explain how it plans to increase its audience further,” Alexander Vengranovich, an analyst at Otkritie Capital, said by phone from Moscow yesterday. “They could win a much bigger audience share if they decide to go with digital broadcasts, but there is also a risk of higher spending as digital broadcasts cost more.”

CTC Media won digital TV licenses for its Domashny and CTC channels in December as Russia seeks to fully switch over to the technology by 2015.

Total spending on Russian TV ads is expected to increase about 10 percent in the ruble terms in 2013 from 2012, UralSib’s Belov and Otkritie’s Vengranovich said yesterday. Vengranovich rates CTC a hold, with a price target of $11.80 per share. UralSib rates the shares a buy, with a target price of $13 per share.

Market Growth

Proceeds from advertising accounted for more than 97 percent of company revenue in 2011, the highest level since 2005, data compiled by Bloomberg show.

The Russian TV ad market is expected to grow to $5.9 billion in 2014, making it the biggest in Europe, from $4.4 billion in 2011, CTC said on its website, citing estimates by industry think-tanks, including Zenith Optimedia and Video International.

Net income in the fourth quarter probably reached $62.8 million following a loss of $24.5 million in the last three months of 2011, according to analysts’ estimates compiled by Bloomberg.

RusHydro, Russia’s state-run hydropower producer, fell 3.8 percent to $2.15 in New York yesterday, the lowest level on record. Mechel, the nation’s biggest maker of steelmaking coal, decreased 3.5 percent to $5.24, the lowest level since April 2009, data compiled by Bloomberg show.

Crude Oil

Crude for April delivery fell 0.6 percent to $90.12 a barrel on the New York Mercantile Exchange yesterday, the lowest settlement since Dec. 24. It sank below $90 a barrel for the first time in 2013 yesterday.

Brent oil for February settlement decreased 0.3 percent to $110.09 a barrel on the London-based ICE Futures Europe exchange, while Urals crude, Russia’s chief export blend, fell

0.4 percent to $106.94, the highest level since Dec. 13.

The ruble weakened 0.1 percent against the dollar-euro basket to 34.9161. The currency lost 0.1 percent to 30.7340 per dollar after plunging 1.8 percent in Moscow last month, its worst performance since May. Ruble futures show the currency strengthening 0.2 percent to 30.804 per dollar.

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