Investor Presentation March 2014 We Fully Capture the Value Chain - - PowerPoint PPT Presentation

March 2014

CTC Media, Inc.

Investor Presentation

Transmedia CTC-INTERNATIONAL (PAY-TV) AD SALES FREE-TO-AIR (CIS)

We Fully Capture the Value Chain by Being Integrated Content Company

1 BROADCASTING ( RUSSIA) Free-to-air TV ad maket growth1 International version of CTC channel Ctc.ru, peretz.ru and various digital projects Online video portal Videomore.ru Women’s portal Domashniy.ru CTC – target audience All 10-45 Domashny – target audience Females 25-59 Peretz – target audience All 25-49 International version of PERETZ channel Kazakhstan Channel 31 Moldova СTС Mega Internal advertising sales house Everest CTC Love – target audience All 11-34

Key Operating Highlights

• CTC channel the only channel in the Top-6 delivered growth in 2013
• Combined Russian national inventory 100% sold-out for Q4 and 99% sold-out for FY 2013
• Year-on-year increases in technical penetration:

– CTC: from 95.1% to 95.3% – Domashny: from 88.5% to 90.1% – Peretz: from 83.8% to 85.5%

• CTC Love launch in early 2014
• Established in-house creative production center in December
• Partnered with KupiVIP.ru in December to introduce the first e-commerce project by a

Russian TV company; launch scheduled for April 2014

• Upgrades of the Domashniy.ru and CTC.ru websites and launch of channel apps

2

Delivering on Strategic Priorities

• Digital media advertising

revenue up 45% in RUB in 2013 and continues to grow

• Double of merchandising

revenue in 2013

• Launch of the first e-

commerce project by a TV company in Russia

• Channels' websites

became Full scale platforms

• New approach of

monetization throw partnerships

• Launched in-house

creative production center

• Centralized content

purchases to secure synergies, longer content life span and sharing among platforms

• Centralized programming

to avoid cannibalization

• Further steps towards

more local content

Prioritize content and synergies

STRATEGIC GOAL: To become a leader in creation, management and distribution of content

• n all potentially monetizable platforms

Grow combined audience share Expand digital

• fferings

Diversify revenue streams 1 2 3 4

• Launch of CTC Love to

cover a further, complementary audience segment

• New Head of Domashny

upgrades Channel’s content and programming 3

Content Strategy

– Consolidate acquisition and production in the In-House Creative Production Center – Increase buying power and negotiate better terms – Maximize control over rights for all platforms – Capitalize on management and monetization of rights

4 4

Centralized content acquisition and content production function Centralized programming and technical signal management – Create one library – Focus on inventory control – Manage content utilization for all channels – Avoid cannibalization between the channels

Driving Operating Efficiency

• Avoid multiple divisions and departments; consolidate under the top

management

• Strategy core to CEO responsibility
• Digital integrated with – and a continuation of – the TV business

– Take multiplatform approach to content creation and distribution – Consolidate all channels’ digital activities in one division

• Already centralized marketing, corporate communication, strategic programming

and content acquisitions

5

Create centralized structure with the potential to integrate more businesses, channels and platforms Keep the smart balance between the optimization and growth

• Focus on developing and retaining young talent
• Make all operations profitable
• Significant increase of efficiency: no growth of headcount while growing

business and launching new channel

25% 47% 67% 29% 25% 59% Opening Closing

Olympic Games 2014 Impact on Russian TV Viewing

Winter Olympic Games Opening and Closing Ceremonies Audience Shares 2006-2014 (all 10-45) Total TV Viewing Change in February vs. January

• 6%
• 7%

3%

• 5%
• 9%

1%

• 6%
• 9%

1% All 10-45 All 25-49 F 25-59

CTC Media audience share reduction was in line with other channels; Inventory partially compensated by viewership increase during Olympics which is monetized

Impact of Sochi Olympics on channels’ audience share*

6

* Top-6 channels in “All 10-45” demographic; Domashny and Peretz in their target demographic 11% 8% 12% 11% 10% 5% 3.0% 2.8% 16% 13% 10% 9% 8% 4% 3.2% 2.1% Channel 1 Russia 1 TNT CTC NTV Ren TV Domashny Peretz Four weeks prior 7-23 February

CTC Love Launch

7

Expansion of Offering…

• New channel complementary to the Group’s brands family

– Target audience: “All 11-34”; core audience: “Women 18-25”

• No overlap with existing CTC and Domashny Channels audiences
• Reinforces the overall CTC Media brand

… at Low Cost… …with High Impact

• Proportion of female audience is higher and continue growing

in advertiser budgets

Brand-new CTC Media channel aimed at girls and young women Part of the strategy to utilize Group-wide synergies

• Building extensively on the existing high-quality local and foreign

content library

• Promote the channel at CTC Media’s online offering

7

Digital & Transmedia Offerings

8

• Molodezhka has approximately 600,000 daily

views across platforms – Online – Dedicated app

• VKontakte group has almost 1 million members
• Second season to have a dedicated second-

screen offering

• Almost 40 million views in total
• TV Holding to become a Content company: Transmedia

and multi-platform content

• Build core loyal audience, inventory growth driven by

monetization requirements on brand-safe platforms

• Unified authorization: personalized content,

recommendation service

Case Study

• Create, distribute and monetize content on all platforms to reach
• ur audience

9

We Enter New Platforms to Be Wherever Our Viewers Are

Digitalization in Russia Is on Its Way

10 First multiplex Second multiplex Third multiplex

• Currently only Russian cities with more than 100,000 residents are measured by TNS (~50% of the total population
• f Russia)
• With full rollout of digital transition Russia will have 98% all-Russia penetration, which means almost double the

number of audience covered

• Governmental authorities indicate that estimated payments in 2014 will be approximately $25 million for the CTC

and Domashny channels in aggregate, depending on the actual rollout Terms of tender to be announced in 2014

Combination of Growth, Profitability and Dividend Yield

11

GROWTH EFFICIENCY / PROFITABILITY RETURN CASH TO SHAREHOLDERS

Operating in Europe’s third largest and fastest growing TV ad market1 Forecast for Russian TV advertising market to grow 5-8% in 2014, CTC Media advertising revenue in line with the market ~32% anticipated 2013 full-year OIBDA margin, well above European TV broadcasters average High Group power ratio of 1.5x compared to rivals due to attractive audience profiles2 Strong cash flow generation and net cash position Over 50% cash dividend payout More than 5% dividend yield in 2011, 2012 and 2013 Current dividend yield ~6%, the highest among European media companies

+ +

11

Source: (1) Zenith Optimedia, September 2013 estimates (2) Kommersant newspaper, 16 April 2013 (FY 2012 results). Power ratio = national TV ad revenue share / audience share in “all 4+” age group. Power ratio demonstrates relative effectiveness of audience monetization.

TV advertising market, Audience Shares and Financials

12

13

US $ bln

Russian TV Ad Market Has Significant Potential for Further Development…

Russian TV ad market was #8 in the world and #4 in Europe in 20111… Free-to-air TV ad market growth1

RUB bln

Sources: (1) Zenith Optimedia, as of September 2013, Company’s estimates Note: All TV Ad Markets figures are net of VAT

USA Japan China Brazil Indonesia Russia Germany UK

…and is expected to become # 1 in Europe in 20151

US $ bln

68.5 5.7 12.6 6.3 5.3 17.3 23.4 5.6 USA Japan China Brazil UK Germany Italy Russia France 58.0 21.6 14.4 9.8 5.2 5.1 4.5 4.4 4.7 42 117 95 109 129 140 152 96 257 186 219 263 298 328

2004 2008 2009 2010 2011 2012 2013

TV Ad Market Total Ad Market

13% 16% 18% 10% 17% 12% 16% 13% 8% 18% 1% 5% 9% 66% 63% 61% 66% 38% 42% 23% 20% 21% 7% 23% 16% 3% Consumer loans / GDP Mortgages / GDP 1.4 1.7 0.9 1.2 0.9 0.9 0.8 0.7 0.6 0.6 0.6 1.6 1.5 1.1 1.0 1.0 0.8 0.7 0.5 0.5 0.5 0.4 Slovenia Bulgaria Austria USA Belgium UK Germany CEE Average Russia Ukraine Poland 2008 2012

…Due to Relatively Low Ad Spend as % of GDP and Underleveraged Consumer

14

Ad spend as % of GDP¹

Sources: (1) ZenithOptimedia, Company’s estimates (2) National Central Banks

Consumer and mortgage loans as % of GDP 2

15  TV is the only medium with truly national reach  Important social and cultural platform  More free-to-air networks than in other countries  High quality free-to-air content offering

TV Is the Most Attractive Advertising Medium in Russia

Ad spend in Russia by media segment1 (%) FY 2012 cost per thousand in Russia (US$)² FY 2012 TV cost per thousand (US$)²

Sources: (1) Russian Association of Communication Agencies, Video International (2) Initiative Media

2.0 4.1 16.4 19.8 29.1 Russia Central & Eastern Europe Asia Pacific Western Europe North America 2.0 3.9 5.8 5.6 6.3 TV Radio Internet Newspapers Magazines

43% 1% 31% 18% 6% 0.4% 48% 22% 11% 12% 5% 2% 46%

TV Internet Press Outdoor Radio Other 2004 2013 2020F

232 226 246 243 243 222 249 251 133 142 134 188 210 170 169 166 5 6 13 23 39 47 58 66 45 37 46 51 44 40 42 41

2006 2007 2008 2009 2010 2011 2012 2013 TV Radio Internet Other

Internet Is Growing Not at the Expense of TV Usage

Source: TNS Gallup Media, Russia * Change in TNS Measurement panel in 2012 increase proportion of 2+ Tv-sets per household

TV Usage (Minutes per day, All 16+) Minutes per day 16 *

But in “All 10-45” demographic TV viewership is down 4%

17

CTC Improves Its Target Audience Profile in Commercially Attractive Demographic

Sources: TNS Russia

CTC Grew Its Viewership Position in FY 2013

18

Note:(1) Audience share in CTC target demographic All 10-45 (2) Episodes 1-20 – 14.5% Episodes 21-40 – 18%

Audience share in all 10-45 demographic, %

Voroniny Thirteen season (26 November – 17 December) – 14.3% Molodezhka First season

1 (07 October - 12

December) – 16.2% 2 2 Fathers and 2 Sons First Season (21 October – 25 November) – 14.3% The 80-s Third Season (21 October – 25 November) – 14.5%

13.0 13.7 13.4 12.1 11.0 11.3 2008 2009 2010 2011 2012 2013

#2 #2 #2 #3 #3 #3 Ship First season (13 January – 24 February 2014) – 13.7% Survive after First season (18 – 26 November 2013) – 13.4%

Domashny Improves Affinity in Its Target Demographic

19

Sources: TNS Russia

Domashny Has Been Growing Audience Share Since Its Launch in 2005

20

Audience share in women 25-59 demographic, %

Foreign & Russian series DocuReality Comedy Reality & Lifestyle 3.7 3.8 3.6 3.1 3.0 3.5 3.9 3.5 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 1.5 1.7 2.4 2.8 2.8 3.2 3.2 3.6 3.5 2005 2006 2007 2008 2009 2010 2011 2012 2013

Peretz Improves Audience Profile In Commercially Attractive Young Adults Demographics

21

Sources: TNS Russia

Peretz Target Audience Share Dynamics

22

Note:(1) in Peretz target demographic All 25-49

Thrilling/investigation programes

Audience share in all 25-49 demographic, %

User-generated content Humor Road Wars 2.8 2.9 2.9 2.3 2.5 2.3 2.3 2.3 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 2.0 2.1 2.1 2.7 2.4 2009 2010 2011 2012 2013

Financial Highlights

23

804.9 832.1 256.4 270.7 31.9% 32.5% 0% 5% 10% 15% 20% 25% 30% 35% 200 400 600 800 1,000 1,200 2012 2013 Revenue

• Adj. OIBDA
• Adj. OIBDA Margin

Group Revenue and OIBDA

FY 2012 FY 2013

2013 Divisional Revenues ($m)

$m FY 2012 FY 2013 124.8 FY 2012 FY 2013 FY 2012 FY 2013 CTC channel Domashny channel Peretz channel Channel 31

Group Adj. Net Income ($m)

157.8 182.2 2012 2013

Group Expenses

• Total adj. operating expenses up 7% in RUB
• Programming costs up 10%; however, recurring

programming costs up only 6% in RUB

• 2013 total multiplex costs $1.2m; 2014 expect

approximately $25m

• Impairment of $29.9m in 2013 due to restructuring
• f the in-house production unit
• Adjusted effective tax rate 24% net of recognition
• f foreign tax benefits – 31% in 2013 (2012: 33%)

577.0 586.4 113.3 81.2 84.3 22.6 25.8

Financial Highlights (cont’d)

24

Cash Conversion

157.7 186.6 62% 69% 2012 2013 Operating Cash Flow, mln USD % of OIBDA converted

Dividends & Share Buyback Free Cash Flow and Cash Position at YE($m)

• Distributed $98.8m in dividends in 2013 (2012: $82.2m), 63% payout
• March-2014 payment of $0.175 / share (~$27m total)
• Intend to pay $0.7 / share in 2014 (~$109m total), 60% payout
• 2.5m shares repurchased in 2013 (~$29.7m total)

142.1 180.3 173.4 207.5 2012 2013 Free Cash Flow Net Cash at Year-End

10.0 11.9 16.9 23.6 25.8 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Revenue OIBDA margin

Strong Market Positions in the Kazakhstan

25 Channel 31, Kazakhstan (all 6-54 demographics)* Significant growth in Kazakhstan revenue and OIBDA margin

US$ mln

Source: (*) TNS Central Asia

17.4% 21.8% 30.4% 16.2%

Power ratio up to 1.2x from 1.0x

31.0%

11.6% 11.2% 15.2% 14.7% 13.2% 11% 12% 14% 17% 18% FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Target audience share Market share

2014 Guidance

Russian total TV ad market Up 5-8% in RUB terms Russian TV ad revenues Growth broadly in line with the market Digital media revenues Up to 30% growth International broadcasting revenues Revenues for Channel 31 and the international versions of CTC Media channels to grow faster than Russian TV advertising revenues Programming expenses Less than total revenues growth and at lower pace than in 2013 Multiplex expenses Approximately $25 mln, depending on actual rollout and RUB/USD rate OIBDA margin Around 32% adjusted for multiplex costs Dividends $0.70 per share (~$109 million) in 2014, $0.175 per share (~ $27 million) to be paid in March Capital expenditure Up to $10 million Effective tax rate 30-35%

Commitment to creating long-term sustainable shareholder value

26

Appendix

From Private TV Network to Public Media Holding

28

1989 1994 2002 2005 2006 2008 2009 2010 201 1 2012 2013 2014

CTC Media was

founded as Story

First Communications Launch of CTC Network Modern Times Group became a shareholder

• f CTC Media

Launch of Domashny Network Initial Public Offering

• n NASDAQ

Acquisition of DTV (rebranded to Peretz in 2011) Acquisition of Channel 31 in Kazakhstan and a TV company in Moldova Launch of CTC- international in Kazakhstan, Kyrgyzstan, Armenia, Georgia, Azerbaijan, Thailand and uplink to HOT BIRD CTC and Domashny received digital licenses Launch of CTC- international in Germany, North America and the Baltics Telcrest Investments Limited acquired a 25% stake in СTС Media from Alfa Group Launch of Domashniy.ru women’s portal Launch of CTC- international in USA Launch of CTC- international in Israel Establishment of CTC Media’s internal advertising sales house ‘Everest Sales’ Launch of Videomore.ru

• nline content

portal Agreement with KupiVip on E-commerce project Development of in- house creative production center Launch of Peretz International in Belarus Launch of CTC Love Channel on cable and satellite Launch of Peretz International in Kyrgystan

Strong Management Team

Yuliana Slashcheva Chief Executive Officer

• Joined CTC Media in 2013
• 20 years in high growth media

related businesses

• Vast executive experience
• Experience

in creating and managing digital development projects

Nikolay Surikov Chief Financial Officer

• Joined CTC Media in 2012
• Almost 20 years experience in

finance

• Previously with Ernst & Young,

VTB and MTS

Julia Moskvitina Chief Commercial Officer

• Joined CTC Media in 1999
• 15 years experience in advertising

sales

Sergey Petrov Chief Broadcasting Officer

• Joined CTC Media in 1995
• 20 years experience in TV industry

Viacheslav Murugov Chief Content Officer

• Joined CTC Media in 2005
• Over 15 years in media industry
• Acclaimed producer of numerous

award winning TV shows

Lilia Omasheva Chief of Operational Efficiency and Organizational Development

• Joined CTC Media in 2013
• 10 years experience in advertising

industry

29

CTC Media Shareholder Structure

30

CTC Media, Inc.

Shareholder of CTC Media since 2002

Modern Times Group MTG AB

38%

Number of common shares outstanding (as of March 6, 2014) Shareholder of CTC Media since 2011

Telcrest Investments Limited

25%

IPO on NASDAQ in June 2006

Free float

37%

155,710,719 Lorenzo Grabau Co-Chairman Irina Gofman Director Jørgen Madsen Lindemann Director

Board of Directors Independent Directors

Angelo Codignoni Co-Chairman Alexander Pentya Director Timur Weinstein Director Tamjid Basunia Director Werner Klatten Director Jean-Pierre Morel Director

22.7 15.1 12.4 11.4 8.4 6.9 4.1 Gazprom-Media СTС Media VGTRK (Rossiya) Channel One National Media Group Prof Media UTV Russia Holding Q4 2013

We Are the Largest Independent FTA-Broadcaster in Russia with Premium Audiences

31

24.7 14.9 12.4 11.8 9.4 5.7 4.5 Gazprom-Media СTС Media VGTRK (Rossiya) Channel One National Media Group Prof Media UTV Russia Holding Q4 2012

Combined audience shares, % (all 10-45 demographic)

Maintained 2nd place

31

13.3 11.8 11.0 10.7 9.0 5.2 3.9 2.8 3.2 2.2 2.6 2.1 1.6 1.7 1.4 1.5 1.2 0.7 0.9 0.1 16.2 13.1 11.6 11.3 9.0 8.6 4.9 4.2 3.0 2.4 2.2 2.2 2.0 1.8 1.8 1.7 1.6 1.4 0.9 0.7 0.1 18.6 TNT Channel One CTC NTV Russia 1 Ren TV Channel 5 TV-3 Disney * Russia 2 Peretz DomashnyTV Centr U ** Pyatniza *** 2X2 Zvezda Russia 24 Russia K EURONEWS Other FY 2012 FY 2013

32

Growing Audience Shares In “All 10-45” Most Commercially Attractive Demographic

Audience shares1, %

(1) Source: TNS Russia, CTC Media’s Research Department (2) Includes audience shares of regional and non-FTA channels (*) Operated under Semerka brand before 31 December, 2011 (**) Operated under Muz-TV brand before 1 September, 2012

2

(***) Operated under MTV brand before 1 June, 20123

CTC is the only growing Channel in Top-6

13.9 13.4 14.3 7.7 6.9 5.2 5.2 2.5 2.5 2.6 2.3 1.8 2.1 2.3 1.7 0.9 0.8 1.0 0.8 0.1 15.9 14.0 12.9 12.8 7.2 6.7 5.7 5.1 2.9 2.6 2.5 2.3 2.1 2.0 1.8 1.7 1.1 1.0 0.9 0.8 0.1 17.3 Channel One Russia 1 NTV TNT CTC Channel 5 Ren TV TV Centr TV-3 Domashny Russia 2 Zvezda Peretz Disney * Russia K Russia 24Pyatniza *** U ** 2X2 EURONEWS Other FY 2012 FY 2013

Audience Shares In “All 4+” Demographic

(1) Source: TNS Russia, CTC Media’s Research Department (2) Includes audience shares of regional and non-FTA channels

Audience shares1, %

(*) Operated under Semerka brand before 31 December, 2011

33

(**) Operated under Muz-TV brand before 1 September, 2012

2

(***) Operated under MTV brand before 1 June, 20123

10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

34

Fragmentation of Russian TV Market Presents Opportunity for Niche Channels Growth

Audience shares, all 10-45 demographic

Top 3 state-controlled channels 1st tier channels 2nd tier channels

Notes: top 3 state-controlled channels: Channel One, Rossiya 1, NTV; 1st tier channels: CTC, TNT, Ren-TV; 2nd tier channels: TV-3, Domashny, Peretz, Rossiya K, Channel 5, Rossiya 2, Euronews, Zvezda, MTV, Rossiya 24, Ю, 2x2, TV Center, Disney, RU TV

Non-FTA and regional channels

35

Stable Consumer Goods Client Base with Large Multi-National and Local Advertisers

Ad spending on CTC Media’s Russian channels by category ■ Vast majority of CTC Media’s Russian advertisers are basic consumer goods focused ■ CTC Media’s advertisers’ budgets split:

• 80% multinationals, 20% local companies

■ 34% of ad revenue** came from top 10 clients in FY 2013

• Notes: (*) National advertising sales for CTC, Domashny and Peretz Networks

(**) Total Russian advertising sales for CTC, Domashny and Peretz Channels and Digital Media

*

FY 2012 FY 2013 1 Food and beverages 26% 26% 2 Cosmetics and personal care products 18% 19% 3 Pharmaceuticals and vitamins 13% 16% 4 Other goods 15% 14% 5 Telecoms 8% 7% 6 Appliances 4% 4% 7 Auto 4% 4% 8 Retail 4% 4% 9 Detergents 4% 4% 10 Finance 2% 2% 11 Beer 3% 0%

87% 65% 54% 88% 71% 61% 91% 76% 68% 94% 82% 73% 95% 85% 80% 95% 89% 84%

95% 90% 85%

36

Consistent Growth in Technical Penetration

Note: (1) Technical penetration means the percentage of the population that has the technical ability to receive a particular broadcast signal. Measured annually by TNS Gallup Media in cities with populations of more than 100,000

Technical Penetration1, % 36

2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

37

Plus We Continue to Expand Internationally...

Thailand July 2012 – Thai Media Export cable network Armenia Georgia Azerbaijan May 2012 – Caucasus cable networks

10.4 mln

Kyrgyzstan April 2012 – Europe-Asia cable and satellite network

2.5 mln

Europe North Africa Middle East Central Asia February 2012 – uplink service HOT BIRDTM Kazakhstan February 2012 – Digital TV; Icon TV

12.3 mln

Baltic States October 2011 – Viasat Broadcasting

4 mln

Germany March 2011 – Kartina TV IPTV

6 mln

Israel June 2011 – Hot; Yes

1.5 mln

North America

December 2009 – Dish May 2011 – Time Warner; RMG October 2011 – Cablevision 2013 - Comcast

3.5 mln

Increasing CTC Media’s international brand awareness & value through CTC-international and Peretz-International Total Russian-speaking population

40.2 mln

Russian-speaking population

…and Diversify Our Lines of Business

38

2004

Russian FTA Broadcasting

100%

FY 2013

Russian FTA Broadcasting

93% 68% 15% 10%

Sublicensing

2.3%

Channel 31

3.1%

Digital Media

0.7%

CTC- International

0.5%

(US$ mln) As of December 31, 2012 As of December 31, 2013 Cash and cash equivalents 55.2 30.6 Short-term investments 131.4 180.3 Total assets 985.6 971.0 including goodwill 178.0 135.3 including broadcasting licenses 82.3 59.7 including programming rights 255.3 294.0 Working capital1 298.3 311.9 Total debt (bank overdraft and loans) 13.2 3.4 Stockholders’ equity 762.9 734.1 Net cash position2 173.4 207.5 (US$ mln) Twelve months ended December 31, 2012 Twelve months ended December 31, 2013 Cash at beginning of period 12.3 55.2 Net cash provided by operating activities 157.7 186.6 including acquisition of progr. and sublic. rights (364.2) (378.0) Net cash used in investing activities (26.5) (63.4) including acquisition of businesses (4.0) (0.5) including CapEx (15.6) (6.3) including receipts from/(investments in) deposits (6.8) (56.6) Net cash used in financing activities (88.9) (143.9) Cash at end of period 55.2 30.6 CapEx (15.6) (6.3) CapEx as % of total revenue 1.9% 0.8% Free cash flow3 142.1 180.3

39

FY 2013 Balance Sheet and Cash Flow Highlights

39 Consolidated Balance Sheet Highlights Consolidated Cash Flow Highlights

Notes: (1) Working capital = current assets - current liabilities (2) Net cash position = cash and cash equivalents + short-term investments - total debt (3) Free cash flow = cash flow from operating activities - acquisitions of property and equipment and intangible assets

40

Reconciliation of Non-GAAP Measures

Reconciliation of consolidated adjusted OIBDA and other adjusted financial measures to consolidated OIBDA and other corresponding GAAP financial measures

(US$ 000’s except per share data) OIBDA Total operating expenses Operating income Income before income tax and noncontrolling interest Income tax expense Net income Fully diluted earnings per share Twelve Months Ended December 31, 2013 Adjusted non-US GAAP results $270,684 ($594,535) $237,568 $251,365 ($61,335) $152,340 $0.97 Impact of impairment loss (29,869) (29,869) (29,869) (29,869)

• Results as reported

(under US GAAP, except for OIBDA which is a non-US GAAP financial measure) 152,340 $0.97 $240,815 (624,404) 207,699 221,496 (61,335)

(US$ 000’s except per share data) OIBDA Total operating expenses Operating income Income before income tax and noncontrolling interest Income tax expense Net income Fully diluted earnings per share Three Months Ended December 31, 2013 Adjusted non-US GAAP results $109,945 (157,915) $101,802 $106,320 ($95,031) $45,504 $0.29 Impact of impairment loss (29,869) (29,869) (29,869) (29,869)

• Results as reported

(under US GAAP, except for OIBDA which is a non-US GAAP financial measure) 45,504 $0.97 $80,076 (187,784) 71,933 76,451 (95,031)

(US$ 000’s except per share data) OIBDA Total operating expenses Operating income Income before income tax and noncontrolling interest Income tax expense Net income Fully diluted earnings per share Twelve Months Ended December 31, 2012 Adjusted non-US GAAP results $256,408 ($572,556) $232,390 $247,192 ($48,373) $159,065 $1.01 Impact of impairment loss (82,503) (82,503) (82,503) (82,503) (16,500) (66,002) (0.43) Results as reported (under US GAAP, except for OIBDA which is a non-US GAAP financial measure) $173,905 ($655,059) $149,887 $164,689 ($64,873) $93,063 $0.59

41

Reconciliation of Non-GAAP Measures

Reconciliation of consolidated adjusted OIBDA and other adjusted financial measures to consolidated OIBDA and other corresponding GAAP financial measures

(US$ 000’s except per share data) OIBDA Total

• perating

expenses Operating income (loss) Income (loss) before income tax and noncontrolling interest Income tax expense Net income (loss) Fully diluted earnings per share

Twelve months ended December 31, 2011

Adjusted non-US GAAP results $246,716 ($537,293) $ 229,067 $ 243,301 ($83,342) $ 152,561 $ 0.97 Impact of impairment loss (106,382) (106,382) (106,382) (106,382) 6,939 (99,443) (0.63) Results as reported (under US GAAP, except for OIBDA which is a non-US GAAP financial measure) $ 0.34 $140,334 ($643,675) $ 122,685 $ 136,919 ($76,403) $ 53,118

Twelve months ended December 31, 2009

Adjusted non-US GAAP results $87,382 ($96,460) $84,047 $87,585 ($20,759) $64,466 $0.41 Impact of non-cash intangible asset impairment charge (18,739) (18,739) (18,739) (18,739) 3,748 (14,991) (0.10) Impact of Stock-based compensation expense related to settlement of litigation against former executive (28,588) (28,588) (28,588) (28,588)

• (28,588)

(0.18) Results as reported (under US GAAP, except for OIBDA, which is a non-GAAP financial measure) $163,929 ($353,638) $152,475 $148,645 ($45,626) $100,389 $0.64

Twelve months ended December 31, 2008

Adjusted non-US GAAP results $280,241 ($94,636) $92,712 $74,266 ($1,653) $64,635 $1.11 Impact of non-cash impairment of intangible assets of DTV, Kz and Moldova (232,683) (232,683) (232,683) (232,683) 30,331 (153,679) (0.97) Results as reported (under US GAAP, except for OIBDA) $28,678 ($89,044) $0.14 $47,558 ($327,319) ($139,971) ($158,417)

42

Reconciliation of Non-GAAP Measures (continued)

Reconciliation of consolidated OIBDA margin to consolidated operating income margin USD mln 2004 2005 2006 2007 2008 2009 2010 Comparable-basis total operating revenues 180,639 273,352 427,091 532,143 729,629 574,107 680,418 Agency commission fees payable to Video International in connection with Russian advertising sales (excluding commissions for regional advertising sales to local clients) (25,072) (35,875) (56,257) (60,087) (89,458) (67,994) (79,133) Total operating revenues 155,567 237,477 370,834 472,056 640,171 506,113 601,285 Reconciliation of consolidated OIBDA to consolidated operating income Reconciliation of comparable-basis, non-GAAP total operating revenues to total operating revenues

USD mln Q4 2013 Q4 2012 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 Operating income (loss) 71,933 94,842 207,699 149,887 122,685 207,118 152,475 34,181 193,061 154,313 90,187 62,559 Add: depreciation and amortization 8,143 8,967 33,116 24,018 17,649 13,736 11,454 13,379 27,361 19,651 13,920 7,962 OIBDA 80,076 103,809 240,815 173,905 140,334 220,854 163,929 47,560 220,422 173,964 104,107 70,521 USD mln Q4 2013 Q4 2012 FY 2013 FY 2012 FY 2011 FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 Operating margin 27.7% 35.9% 24.9% 18.6% 16.0% 34.4% 30.1% 5.3% 40.9% 41.6% 38.0% 40.2% Add: depreciation and amortization as percentage of revenue 3.1% 3.4% 4.0% 3.0% 2.3% 2.3% 2.3% 2.1% 5.8% 5.3% 5.8% 5.1% OIBDA margin 30.8% 39.3% 28.9% 21.6% 18.3% 36.7% 32.4% 7.4% 46.7% 46.9% 43.8% 45.3%

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Contact Information and Disclaimer

For further information please visit www.ctcmedia.ru or contact: Irina Faritova Head of Investor Relations E-mail: ir@ctcmedia.ru Tel: +7 (495) 981 0740

DISCLAIMER

• The information contained in this presentation, including market data that are attributed to specific sources and have not been independently verified. No

representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.

• The presentation is not an offer of securities for sale in the United States. Neither the presentation nor any copy of it may be taken or transmitted into or distributed in

the United States of America or to any U.S. person within the meaning of Regulation S under the United States Securities Act of 1933, as amended (the “Securities Act”).

• This presentation is not a public offer or advertisement of securities in the Russian Federation, and is not an offer, or an invitation to make offers, to purchase any

securities in the Russian Federation.

• Certain statements in this presentation that are not based on historical information are "forward-looking statements" within the meaning of the Private Securities

Litigation Reform Act of 1995. Such forward-looking statements include, among others, statement regarding launch of CTC Love channel, Russian advertising market growth, roll-out of digital broadcasting in Russia by 2018, growth of Russian TV ad market by 2020 and etc. These statements reflect the Company's current expectations concerning future results and events. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CTC Media to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The potential risks and uncertainties that could cause actual future results to differ from those expressed by forward-looking statements include, among others, changes in the size of the Russian television advertising market; the roll-out of digital broadcasting in Russia; depreciation of the value of the Russian ruble compared to the US dollar; geopolitical events involving Russia and the other countries in which the Company operates, including any potential negative economic impact of such events; the Company’s ability to deliver audience share, particularly in primetime, to its advertisers; free-to-air television remaining a significant advertising forum in Russia; and restrictions on foreign involvement in the Russian television business. These and other risks are described in the "Risk Factors" section of CTC Media's annual report on Form 10-K filed with the SEC on March 6, 2014. Other unknown or unpredictable factors could have material adverse effects on CTC Media's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed herein may not occur. You are cautioned not to place undue reliance on these forward-looking statements. CTC Media does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.