MTG to sell Russian channel stake

UTH Russia has offered to buy a controlling interest in rival broadcaster CTC Media as Scandinavia’s Modern Times Group (MTG) prepares to sell its stake to comply with a new law restricting foreign ownership of Russia’s media.

The non-binding cash offer, believed to be around US$200m, is for 75% of CTC’s Russian and Kazakhstan operations.

The bid by the commercial broadcaster follows a law signed recently by Russian president Vladimir Putin requiring foreign companies to cut ownership in the country’s media organisations to no more than 20% by January 2016.

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

In a statement, Sweden’s MTG confirmed it was selling off its 37.9% stake in CTC.

The statement said: “MTG has decided to reclassify its interest in CTC Media from an ‘equity participation’ to a ‘discontinued operation.’ This reflects the fact that, following the change in the Russian mass media law regarding foreign ownership, and CTC Media’s consideration of the UTH offer, MTG’s shareholding in CTC Media is now for sale.”

CTC’s board has appointed a committee of independent directors to review and evaluate the offer as the deadline looms.

Werner Klatten, chairman of the committee, said: “We are disappointed that the change in Russian law regarding foreign ownership of television companies may require a sale transaction, but we are pleased that the efforts of the board have resulted in an offer for a potential transaction that would, if successful, allow us to secure value for our public stockholders and our largest stockholder.

“Although we cannot guarantee that we will be able to conclude this proposed transaction, or when it would be consummated, we believe this offer to be worth progressing further as a means of achieving compliance with the amended Russian Mass Media Law before year end.”

UTH is owned by billionaire Alisher Usmanov and partner Ivan Tavrin. Its main assets are U Channel, Disney Channel and cable channel Muz TV.