The Moscow Times
October 30, 2006
Anna Smolchenko
Prof-Media Buying 100% Stake in TV-3
Billionaire Vladimir Potanin's Prof-Media holding is buying the entertainment channel TV-3 as it seeks to cash in on double-digit growth in television advertising.
Prof-Media, which acquired two other channels earlier this year, is buying 100 percent of TV-3, which broadcasts in more than 300 cities and towns with a combined population of more than 65.5 million, Prof-Media spokesman Konstantin Vorontsov said Friday.
"It was the last asset left on the Russian television market," Vorontsov said.
Prof-Media and TV-3 declined to put a price tag on the deal. Analysts valued it at $500 million to $550 million.
Prof-Media does not plan to change the TV-3 management, and the channel will keep its current format until at least next summer, Vorontsov said.
Prof-Media snapped up 2x2, a Moscow channel, earlier this year and announced the purchase of Rambler television last week. The holding publishes Komsomolskaya Pravda, Express Gazeta and the Sovetsky Sport newspaper, along with a handful of business publications.
TV-3 chief executive Tim McDonald declined to comment on the details of the deal, saying it had not yet been sealed.
Asked if he planned on remaining with TV-3, he said: "You never spend 10 years on a label like this and abandon it."
A U.S. television veteran, McDonald came to Russia in 1997 to set up the channel and build it on entertainment shows and movies.
TV-3 has 500 or 600 Russian employees and 28 stations from Vladivostok to St. Petersburg, McDonald said. Of the stations, 15 were bought this year, he said.
"They have already staked out a place under the sun," said Konstantin Belov, an equity analyst with UralSib.
He called the purchase logical because the market for television advertising is expected to double to $6 billion by 2010.
CTC television, an entertainment channel in which billionaire Mikhail Fridman's Alfa Group owns a stake, was looking to buy a smaller entertainment channel like TV-3 earlier this year, he said.
TV-3's revenue amounted to $25.4 million last year and could double this year, according to Renaissance Capital investment bank.
Prof-Media's 2005 revenue was $240 million, it said.
TV-3 is 100 percent owned by Independent Network Television Holding, or INTH, a foreign-registered vehicle.
Newly appointed TV-3 president Ivan Tavrin is the largest individual owner of the channel, McDonald said, without giving a figure.
Both he and Tavrin sit on INTH's board.
Vedomosti reported that McDonald and former TV-3 employee Marsha Seiner owned 64.8 percent of the company.
McDonald said his share was "more modest" and that Seiner did not own stock.
Patricia Cloherty, chairman and CEO of Delta Private Equity Partners, whose fund owns TV-3 shares, declined to comment before the completion of deal.
She said only that TV-3 was "in great shape."
Earlier this year, TV-3 planned an initial public offering but then decided against it.
"We are still preparing to go public," McDonald said, adding that the float could take place next year or in 2008.
A spokeswoman for the Federal Anti-Monopoly Service confirmed Friday that the agency had received a filing regarding the deal but declined further comment.
The deal is expected to be completed within six weeks, pending the approval of the antimonopoly service Prof-Media said.
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