MTG offloads Russian and international pay-TV channels businesses

Modern Times Group, the multi-territory commercial and pay-television broadcaster, has sold its Russian and international pay-television channel businesses as it seeks to comply with new media regulations being introduced in the country.

Sabiero Holdings Limited, a wholly-owned subsidiary of private equity firm Baring Vostok, has acquired MTG’s international channels business, and Russian company LLC Sinerdzhi has acquired the Russian channels business. MTG said the deals are worth a total consideration of $45.5m (€40m).

The Russian channel business comprises sports, factual and movie channels, while the international channel business comprises pan-regional factual channels and the TV1000 movie channels.

The transactions do not include MTG’s other entertainment channels or platforms, or the global Trace pay-television channels business. 

Russia’s new Mass Media Law comes into force on January 1 and prohibits international firms from holding a stake of more than 20 per cent in Russian mass media businesses. MTG sold its stake in Russian pay-television operator CTC Media to commercial broadcasting group UTH Russia in September.

Jørgen Madsen Lindemann, MTG president and chief executive, said: “The sale has been made necessary by the changes in the Russian laws regarding foreign ownership of mass media that were announced last year and come into effect from the beginning of next year. 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.”

He added: “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 $123m of cash investments in Russia since 2001 would then be approximately $770m and equivalent to a cash return of more than five times our investment.”

Irina Gofman, MTG executive vice-president and chief executive of the acquired businesses, will be responsible for these businesses under the new ownership, and the existing management teams and employees will also stay with the acquired businesses under the new regime.