Modern Times Group has completed the sale of its Russian and international pay TV channel businesses for a total of US$45.5 million.
Russian company LLC Sinerdzhi has acquired the Russian channels business while Sabiero Holdings Limited, a subsidiary of private equity firm Baring Vostok, has acquired MTG’s international channels business.
The deal, which is a response to imminent changes to Russia’s media law, sees MTG offload its Russian assets – which include factual, movie and sports channels.
MTG’s international channel sale comprises pan-regional factual channels and the TV1000 movie channels – though not MTG’s other entertainment channels or platforms or the global Trace pay TV business.
MTG’s executive vice-president and CEO of the acquired businesses, Irina Gofman, will be responsible for these businesses under the new ownership.
The existing Russian and international channels’ management teams and employees will also stay the same under the new ownership.
Commenting on the deal, MTG president and CEO, Jørgen Madsen Lindemann (pictured), said that the sale “has been made necessary” by the new Russian legislation on foreign ownership of media firms.
“We have undertaken a thorough review of the options available to us in this context and to seek the best possible outcome for the stakeholders in the businesses and MTG as a whole,” said Lindemann.
“These transactions and the agreement announced by CTC Media aim to conclude our actions to comply with the new Russian laws. Our total cash income from our US$123 million of cash investments in Russia since 2001 would then be approximately US$770 million and equivalent to a cash return of more than five times our investment.”
In September, Russia’s CTC Media has entered a definitive agreement to sell a 75% stake in its operating businesses to UTH Russia-affiliated UTV Management for US$200 million in cash. MTG, which holds a 38% stake in CTC, indicated its support for the deal, which was again motivated by foreign ownership restrictions imposed by the Russian government.
Russian president Vladimir Putin signed an amendment to the Russian law on mass media at the end of last year that will limit foreign ownership of media companies in Russia to 20%, down from the current limit of 50%. This will apply to both existing and future foreign ownership and comes into effect on January 1, 2016.
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