MTG bolsters Eastern European DTH presence

Swedish media firm Modern Times Group (MTG) has made several moves to strengthen its position in the Russian and Ukrainian DTH markets.
It has acquired a 50% stake in Raduga, the parent company of Russian satellite pay-TV platform Raduga TV, from…

Swedish media firm Modern Times Group (MTG) has made several moves to strengthen its position in the Russian and Ukrainian DTH markets.

It has acquired a 50% stake in Raduga, the parent company of Russian satellite pay-TV platform Raduga TV, from Continental Media for an undisclosed amount in cash. Continental Media, which is owned by the founders and management of Raduga, will retain the other 50%.

Raduga is the sole owner of LCC DaoGeoCom, which in turns operates and controls Russian nationwide DTH broadcaster Raduga TV. Local reports estimate the deal to carry a value of some US$10m.

Raduga TV was launched less than a year ago and reportedly had 70,000 subscribers at the end of 2009. Following the completion of the deal it will be integrated in MTG’s pay-TV platform Viasat Broadcasting. Viasat Broadcasting currently operates across the Nordics, the Baltics and Ukraine, as well as distributing its Viasat-branded channels via third party operators to 25 countries across the US and Central and Eastern Europe.

The two owners will share management control of Raduga, which will be proportionally consolidated by MTG and reported in MTG’s pay-TV emerging markets business segment within the Viasat Broadcasting business area.

MTG is already active in the Russian market through its minority 39.4% stake in free-to-air TV channel operator CTC Media. MTG has been active in the Russian market since 2001.

The Swedish group has also tightened its hold in Ukraine, where it bought a further 35% of ViaStrong Holding to raise its stake in the company to 85%. The price of the investment was not disclosed.

MTG acquired the shares from Strong Media, which previously held a 50% stake in ViaStrong, the entity that operates the Viasat Ukraine DTH platform. MTG and Strong Media launched Viasat Ukraine as a joint venture in March 2008.

MTG president and CEO Hans-Holger Albrecht said: “Viasat Ukraine has made a promising start and is continuing to grow its premium subscriber base in the second most populated market in the region. The demand for our range of high-quality local and international TV entertainment is clear, and we are committed to continuing to invest in the development of the platform in what is one of Europe’s most exciting pay-TV markets.

“Our successful partnership with Strong Media remains a key element in our plans to unlock and capitalise on the potential of this market, whilst the increase in shareholding further raises the upside for the Group from the ongoing investments that we are making. Coming hot on the heels of our acquisition of a 50% interest in the Raduga TV national satellite platform in Russia, the investment in the Ukrainian business again demonstrates our interest in emerging market pay-TV businesses.”

Separately, MTG has presented its Q4 and 2009 full year-performance results, which showed that the group’s Bulgarian operations are continuing to be a drain on the company.

MTG’s bottom line had a SKr3.4bn (E340.5m) impairment charge linked to the goodwill balance of its Bulgarian assets. MTG has a 95% stake in Bulgarian broadcaster Nova Televizia Group.

The Bulgarian media market has been severely affected by the economic downturn, with Central and Eastern European operator CME also reporting that its Bulgarian operations were performing markedly worse than its others markets.