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MTG earns $120m from CTC sales

Scandinavian media outfit Modern Times Group (MTG) is poised to expand its digital entertainment interests after revealing it will recoup more than US$120m from the sale of its stake in Russian broadcaster CTC Media.

Jørgen Madsen Lindemann

Jørgen Madsen Lindemann

MTG held 38% of CTC and had been operating in Russia for nearly 15 years but the introduction of the country’s new mass-media law is forcing the deal.

The Scandi broadcaster holds more than 60 million shares in CTC, resulting in a US$123m payment that will see the firm sever all links to the Russian company.

“This marks the final step in our withdrawal from those entities impacted by the change in the Russian laws regarding foreign ownership of mass media,” said Jørgen Madsen Lindemann, MTG’s president and CEO.

The deal, expected to be closed by the middle of May, will see MTG reduce its borrowing and fund development of its digital video entertainment businesses.

The firm has been shifting its focus from linear to digital over the past 18 months, investing in multi-channel networks including Splay and Zoomin.TV and rolling out Viaplay across Eastern Europe.

Lindemann added that the firm had invested more than US$120m in its Russian businesses since 2001, adding that proceeds from the sale of CTC and related assets in the country, along with dividends, is expected to have amounted to US$768m over that time.

undressedCTC approved UTH Russia’s acquisition of a 75% stake in the company from firms including MTG last year.

UTH, backed by billionaire Alisher Usmanov, will take a majority stake in the broadcaster, which operates networks including CTC, Domashniy, Peretz and CTC Love in Russia, as well as Channel 31 in Kazakhstan.

Russia’s mass-media law prevents international companies from holding more than 20% of Russian media businesses, and will apply to all existing and future operations. The legislation came into force in January, with Russian owners holding through off-shore companies having until January 2017 to comply.

The previous law had limited foreign ownership to 50% of channels that broadcast to at least half of Russia’s population.

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