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MTG closing Russian net, launching HD services

Russian pay TV operator Raduga TV, in which Modern Times Group (MTG) holds a 50% stake, is to close down on December 5.

The operator has been forced to shut down following its failure to secure a required broadcasting licence from the local media regulator.

MTG said it would continue to enhance the content and technology of its Viasat pay TV business in Russia, and that it plans to launch five new HD channels in Russia in 2015.

In October the regulator, the Roskomnadzor, asked the Russian Interior Ministry to launch a criminal investigation into Raduga TV, which has been operating since 2009. The service is jointly owned by MTG and Russia’s Continental Media via holding company Dalgeokom.

MTG wrote off its stake in the company in February and recorded a SEK147 million (US$19.6 million) impairment change in its Q4 2013 operating income, based on the ongoing uncertainty surrounding the operator’s licensing requirements. The adjustment in satellite subscriber numbers for MTG’s pay-TV emerging markets unit will be accounted for in its 2014 Q4 results.

This has been a very difficult decision taken with the other shareholder, given the impact it will have on employees, customers, suppliers, and all of the other stakeholders of the business,” said Irina Gofman, EVP/CEO of Russia and CIS and pay-TV emerging markets at MTG.

“Over the past year Raduga has worked very hard exploring all options for obtaining the right licence, which despite their efforts has not been granted. We therefore have no choice but to close down the operations. We are working hard to move our subscribers to another satellite operator and will make an announcement by December 6.”

The decision does not affect our successful pay-TV channel business Viasat, were we will launch five new HD channels in 2015. Viasat offers 15 channels in Russia, five of which are among the country’s 20 most popular channels.