Prof-Media Buys Russia’s TV3

Michael Hedges December 4, 2006

In a deal that changes several dynamics of the Russian media market, Prof-Media announced its acquisition of Independent Network Television Holding (INTH), owner of the TV3 television network. The sale price is estimated at about €410 million.

TV3 was launched in 1998 as a local St. Petersburg television and grew into a national network of 28 owned stations in 26 cities and 290 affiliated stations in 250 cities. Act III Communications, an investment vehicle of legendary US television producer Norman Lear, is the principal shareholder in INTH. Act III represented and Renaissance Capital advised the sellers in the transaction.

“The TV3 acquisition is a key element of Prof-Media's strategic development as a unique privately owned media company in the region, commanding leading positions in the most promising sectors of the market including TV advertising and online-business,” said Prof-Media CEO Rafael Akopov in a statement announcing the acquisition. “TV3 is a high-growth, high-margin business and we are confident that the combination of TV3’s existing infrastructure with Prof-Media’s content and management expertise will enable us to significantly increase the company’s market share and reach as well as realize sizeable synergies for our group.”

Integrating TV3 into the Prof-Media organization will take most of the next year, according to spokesperson Konstantin Vorontsov. And it’s a media company expanding quickly in television and new media. Recent acquisitions include internet portal Rambler Media and animation channel 2x2. The company plans to create a pool of internet radio stations. Prof-Media’s sale of newspaper Komsomoloskaya Pravda appears to be inching toward a January completion, perhaps one means of raising funds for the TV3 deal. Last year CEO Akopov hinted broadly that television and new media would be the company’s direction, and not national newspapers.

“Content is still king,” said Vorontsov, pointing out that Rambler Media is not simply a search engine but a multi-media entertainment portal. And TV3 is an entertainment channel, fitting well with Prof-Media’s roots in the cinema business. The company holds major assets in television production, which he said would likely expand along with coverage distribution for TV3.

In the long term – and maybe not that long – Prof-Media has it’s eye on content and the web.

“One who possesses the content, including TV production as well, will be able to use new media such as internet portals to get additional value,” said Vorontsov. “Web advertising is growing 60-70% a year, the fastest growing sector of the market – so to be big and diversified you have to be in the online business. And yeah, we do expect, that web will become much more influential and popular media for broadcasting multimedia content.”

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