Investor Presentation March 2014 We Fully Capture the Value Chain - PowerPoint PPT Presentation

CTC Media, Inc. Investor Presentation March 2014

We Fully Capture the Value Chain by Being Integrated Content Company CTC – target audience All 10-45 Domashny – target audience Females 25-59 BROADCASTING ( RUSSIA) Peretz – target audience All 25-49 CTC Love – target audience All 11-34 Kazakhstan Channel 31 FREE-TO-AIR (CIS) С T С Mega Moldova Free-to-air AD SALES Internal advertising sales house Everest TV ad maket growth 1 International version of CTC channel CTC-INTERNATIONAL (PAY-TV) International version of PERETZ channel Ctc.ru, peretz.ru and various digital projects Online video portal Videomore.ru Transmedia Women’s portal Domashniy.ru 1

Key Operating Highlights  CTC channel the only channel in the Top-6 delivered growth in 2013  Combined Russian national inventory 100% sold-out for Q4 and 99% sold-out for FY 2013  Year-on-year increases in technical penetration: – CTC: from 95.1% to 95.3% – Domashny: from 88.5% to 90.1% – Peretz: from 83.8% to 85.5%  CTC Love launch in early 2014  Established in-house creative production center in December  Partnered with KupiVIP.ru in December to introduce the first e-commerce project by a Russian TV company; launch scheduled for April 2014  Upgrades of the Domashniy.ru and CTC.ru websites and launch of channel apps 2

Delivering on Strategic Priorities STRATEGIC GOAL: To become a leader in creation, management and distribution of content on all potentially monetizable platforms 1 2 3 4 Prioritize content Grow combined Expand digital Diversify revenue and synergies audience share offerings streams  Launched in-house  Launch of CTC Love to  Launch of the first e-  Digital media advertising creative production center cover a further, commerce project by a TV revenue up 45% in RUB in complementary audience company in Russia 2013 and continues to  Centralized content segment grow  Channels' websites purchases to secure  New Head of Domashny  Double of merchandising synergies, longer content became Full scale upgrades Channel’s life span and sharing platforms revenue in 2013 among platforms content and programming  New approach of  Centralized programming monetization throw to avoid cannibalization partnerships  Further steps towards more local content 3

Content Strategy Centralized content acquisition and content production function – Consolidate acquisition and production in the In-House Creative Production Center – Increase buying power and negotiate better terms – Maximize control over rights for all platforms – Capitalize on management and monetization of rights Centralized programming and technical signal management – Create one library – Focus on inventory control – Manage content utilization for all channels – Avoid cannibalization between the channels 4 4

Driving Operating Efficiency Create centralized structure with the potential to integrate more businesses, channels and platforms  Avoid multiple divisions and departments; consolidate under the top management  Strategy core to CEO responsibility  Digital integrated with – and a continuation of – the TV business – Take multiplatform approach to content creation and distribution – Consolidate all channels’ digital activities in one division  Already centralized marketing, corporate communication, strategic programming and content acquisitions Keep the smart balance between the optimization and growth  Focus on developing and retaining young talent  Make all operations profitable  Significant increase of efficiency: no growth of headcount while growing business and launching new channel 5

Olympic Games 2014 Impact on Russian TV Viewing CTC Media audience share reduction was in line with other channels; Inventory partially compensated by viewership increase during Olympics which is monetized Winter Olympic Games Opening and Closing Ceremonies Audience Shares 2006-2014 (all 10-45) Opening Closing 67% 59% 47% 29% 25% 25% Total TV Viewing Change in February vs. January All 10-45 All 25-49 F 25-59 3% 1% 1% -5% -6% -6% -7% -9% -9% Impact of Sochi Olympics on channels’ audience share* Four weeks prior 7-23 February 16% 13% 12% 11% 11% 10% 10% 9% 8% 8% 5% 4% 3.2% 3.0% 2.8% 2.1% Channel 1 Russia 1 TNT CTC NTV Ren TV Domashny Peretz 6 * Top- 6 channels in “All 10 - 45” demographic; Domashny and Peretz in their target demographic

CTC Love Launch Brand-new CTC Media channel aimed at girls and young women Expansion of Offering…  New channel complementary to the Group’s brands family – Target audience: “ All 11-34 ” ; core audience: “ Women 18-25 ”  No overlap with existing CTC and Domashny Channels audiences  Reinforces the overall CTC Media brand … at Low Cost…  Building extensively on the existing high-quality local and foreign content library  Promote the channel at CTC Media’s online offering …with High Impact  Proportion of female audience is higher and continue growing in advertiser budgets Part of the strategy to utilize Group-wide synergies 7 7

Digital & Transmedia Offerings  Create, distribute and monetize content on all platforms to reach our audience  TV Holding to become a Content company: Transmedia and multi-platform content  Build core loyal audience, inventory growth driven by monetization requirements on brand-safe platforms  Unified authorization: personalized content, recommendation service Case Study  Molodezhka has approximately 600,000 daily views across platforms – Online – Dedicated app  VKontakte group has almost 1 million members  Second season to have a dedicated second- screen offering  Almost 40 million views in total 8

We Enter New Platforms to Be Wherever Our Viewers Are 9

Digitalization in Russia Is on Its Way First multiplex Second multiplex Third multiplex Terms of tender to be announced in 2014  Currently only Russian cities with more than 100,000 residents are measured by TNS (~50% of the total population of Russia)  With full rollout of digital transition Russia will have 98% all-Russia penetration, which means almost double the number of audience covered  Governmental authorities indicate that estimated payments in 2014 will be approximately $25 million for the CTC and Domashny channels in aggregate, depending on the actual rollout 10

Combination of Growth, Profitability and Dividend Yield + + EFFICIENCY / RETURN CASH GROWTH PROFITABILITY TO SHAREHOLDERS ~32% anticipated 2013 full-year Operating in Europe’s third Over 50% cash dividend payout OIBDA margin, well above largest and fastest growing TV European TV broadcasters average More than 5% dividend yield in ad market 1 2011, 2012 and 2013 High Group power ratio of 1.5x Forecast for Russian TV compared to rivals due to attractive Current dividend yield ~6%, the advertising market to grow audience profiles 2 highest among European media 5-8% in 2014, CTC Media companies advertising revenue in line with Strong cash flow generation and the market net cash position 11 11 Source: (1) Zenith Optimedia, September 2013 estimates (2) Kommersant newspaper, 16 April 2013 (FY 2012 results). Power ratio = national TV ad revenue share / audience share in “all 4+” age group . Power ratio demonstrates relative effectiveness of audience monetization.

TV advertising market, Audience Shares and Financials 12

Russian TV Ad Market Has Significant Potential for Further Development… Russian TV ad market was #8 in the world Free-to-air TV ad market growth 1 and #4 in Europe in 2011 1 … 58.0 328 21.6 298 263 257 RUB bln US $ bln 14.4 219 9.8 186 5.2 5.1 152 140 4.7 4.5 129 4.4 117 109 96 95 42 USA Japan China Brazil UK Germany Italy Russia France 2004 2008 2009 2010 2011 2012 2013 TV Ad Market Total Ad Market …and is expected to become # 1 in Europe in 2015 1 68.5 23.4 17.3 12.6 US $ bln 6.3 5.7 5.6 5.3 USA Japan China Brazil Indonesia Russia Germany UK Note: All TV Ad Markets figures are net of VAT 13 Sources: (1) Zenith Optimedia, as of September 2013, Company’s estimates

…Due to Relatively Low Ad Spend as % of GDP and Underleveraged Consumer Ad spend as % of GDP¹ Consumer and mortgage loans as % of GDP 2 1.7 1.6 1.5 1.4 1.2 61% 63% 66% 1.1 1.0 66% 1.0 0.9 0.9 0.9 38% 0.8 0.8 42% 0.7 0.7 0.6 0.6 23% 0.6 0.5 0.5 0.5 20% 7% 0.4 21% 23% 16% 3% 18% 18% 17% 16% 16% 13% 13% 12% 10% 9% 8% 5% 1% Slovenia Bulgaria Austria USA Belgium UK Germany CEE Average Russia Ukraine Poland 2008 2012 Consumer loans / GDP Mortgages / GDP Sources: (1) ZenithOptimedia, Company’s estimates 14 (2) National Central Banks