Good morning and good afternoon, ladies and gentlemen, and welcome to CTC Media's Fourth Quarter 2013 Results Conference Call. [Operator Instructions] This call is being webcast and an audio version of the call will be available on the company's website. This call is also being recorded for replay purposes. I will now hand the call over to Irina Faritova, CTC Media's Head of Investor Relations, to begin. Please go ahead.
Thank you, operator. I would like to welcome everyone to CTC Media fourth quarter and full year 2013 results call. Joining me today to talk about the results are Yuliana Slashcheva, CEO of CTC Media; Lilia Omasheva, our Chief of Operations, Operational Efficiency and Organization Development; and Nikolay Surikov, our CFO. You will be able to follow the webcast with presentation slides, where Yuliana will go through strategic developments in the company and outlook for 2014, Nikolay will comment on our financial results, and Lilia will focus on operational efficiency in the company. Afterwards, we will move to the Q&A session as usual.
We trust that you have received our earnings release, which was issued earlier today. If you haven't received a copy of the press release, it is available on our website at ctcmedia.ru. Please refer to the earnings release for reconciliations of non-GAAP measures to the most comparable GAAP measures. I would also like to note that the live webcast with presentation of today's call is available on the Investor Relations section of our corporate website.
Before we begin, we would like to remind everyone today's call may concern -- contain forward-looking statements based on the environment that currently we see and, as such, does include risks and uncertainties. Please refer to our SEC filings for more information on the specific risk factors that could cause actual results to differ materially.
I would now like to hand the call over to our CEO, Yuliana Slashcheva.
Good afternoon. And we're actually afternoon in Moscow, probably from some of you, it's daytime or even morning. So hello, everybody. Today, if you noticed, we decided to change the format of our call from longer reading or telling the -- like results, which actually were repeated in the press release which you already received, into a presentation which is more, we think, is a more efficient way of our communications during the call. And I will start with the key operational highlights of CTC Media in 2013, where we're very happy about the combined Russian national inventory sellout in 2013, which actually was 100% in Q4 and 99% in the full year 2013. It is a very good result and we are very happy of achieving that sellout.
In 2013, CTC Channel, our main anchor channel, was the only 1 in top 6 delivering growth in the audience 10-45, which is the most commercially monetized audience. We also increased the technical penetration of all our 3 channels: CTC, from 95.1% to 95.3%; Domashny, from 88.5% to 90.1%; and Peretz, from 83.8% to 85.5%. For us, it's a very important figure because every percentage point of technical penetration is additional audience and additional monetization for us.
We're also, in the last 2013, we have centralized all main functions of the company, and we will talk about it later today, both in my part of the presentation and also in Lilia Omasheva's part, when she will talk about optimization process. We have launched -- technically launched the CTC Love, which is a new channel. It was launched in technical broadcasting on the 14th of February. So the Saint Valentine's Day will now become the date of birth of the channel, which we will celebrate every year, I hope. And it will be -- now we are actually testing the signal and testing the advertising blocks and general operations of the channel, and we plan to publicly launch the channel in the cable and satellite networks in the end of March, beginning of April. I will briefly remind you that CTC Love is the channel for the audience 11-34, with the core audience, female 18-25, which was actually not covered -- almost not covered by CTC's media channels, and which will bring us additional audience, additional revenues and more content delivered on different platforms.
We also have reorganized our Story First, internal production company, Story First, into a creative producing center. We finalized this reorganization in December of 2013. The main aim of this move was to add some new creative people on the team, which happened within the last 6 months, and for more creative ideas to be elaborated internally, because for us, creative idea is the main issue of the whole process, because the one who creates the idea, he holds the rights for the products afterwards. And production could be done under market conditions, on the competitive basis, by different production companies. So to enforce our internal creativity, we have done this reorganization into the creative producing center.
We have also -- we are very close to launching our first-ever done e-commerce project on the Russian TV, in partnership with KupiVip. We have created our own brand of women clothes, which will be integrated on all programs of Domashny Channel, already starting from April. We also are doing a lot in transmedia and digital. We have finalized the structuring of transmedia and digital division side of the company. And we have also upgraded Domashny.ru and ctc.ru websites and portals, and have launched general applications, which is also new and we also plan to monetize it this year.
Speaking about delivering on strategic priorities, I would repeat our strategic goal, which I was already talking about on the call when I gave some approaches and highlights of our strategy for the next 3 years. Our strategic goal is to become a leader in creation, management and distribution of content on all potentially monetized platforms. We're sort of changing the mindset regarding CTC Media, both inside the company and outside, and transforming the company as a group from a TV company to a content company, which means we will pay more attention to all platforms where we're present and all platforms where our video content could be present and monetized.
If to speak about 4 main issues which we are focused on, privatization of content and synergies within the group, grow combined audience share, expanding digital offerings and diversifying revenue streams, I will say a couple of words about each of them. As I already said, we've launched an in-house creative producing center. We have centralized all main functions. We centralized content purchases in order to be more cost-effective and in order to have more synergy in between channels when it comes to spending on programming expenses. We have also centralized marketing to increase the efficiency of this division, and it's already given very good results. I'll remind you that before, acquisition, marketing, corporate communications and programming and production also were separate divisions of each channel, as channels of CTC Media were existing and living as separate business units.
I started this centralization since I was appointed in August, and we already achieved very essential results in this process, and actually, almost finalized this in the end of 2013. We have just slight, additional centralization, initial steps that we need to undertake further. We have centralized programming in order to avoid cannibalization of 1 channel over others in their programming grids, and we are also moving more and more towards local content and exchange of the Hollywood or general international acquired content into the local one.
As I already mentioned, we have launched CTC Love technically and will very soon launch it publicly and gain the complementary audience segment. We have a new head of Domashny, new general producer of Domashny Channel, which already started -- who already started to upgrade the channel's content and programming. And we also, in the first 2 months of this year, we already see very essential result of these activities.
We were launching -- as I said, in April, we are launching the first e-commerce project. We are changing -- completely changing the channel's website into the video content portal, which will be -- actually ctc.ru will be sort of a gateway to Internet, to video -- gateway to video content in Internet for Internet users, and that's how we plan to position it further. We also are taking renewed approach to monetization of our video content in digital and mobile through a wide number of partnerships with the key players on the market.
We diversify revenue stream, and that's -- we have a very good proof for that already in 2013. Digital media advertising revenue was 45% up in ruble terms and it continues to grow. And we also doubled our merchandising revenues in 2013.
I will not talk very -- I will not be very detailed on the next slide, which is audience share performance, because I already mentioned that the CTC as the channel was the only 1 growing in top 6 in the audience 10-45. Domashny essentially strengthened its audience profile already, and we are seeing a lot of changes in the first 2 months of 2014, with more dynamic scheduling and content offering.
And Peretz, the audience share growth in the beginning of 2014 follows the channel restructuring and a little slight change -- slight renewal of the concept in 2013. We were doing it actually for the last 3 months in 2013 and 2 months in January and February in 2014, proof that our intentions and our work was -- has an input and has results.
And we do believe in the potential. As I was just speaking about it already, I was telling this already on my previous call, that we do believe in the potential of smaller channels, Peretz and Domashny. We believe in their growth and possibilities to grow their growth and further development.
We will get in a lot of questions about the impact of Olympics on the Russian TV viewing. That is why we made this slide with this data. CTC Media audience share reduction was in line with the other channels. Inventory, partially, was compensated by viewership increase during Olympics, which is monetized. So in financial terms, we didn't lose much because of the tremendous increase in viewership totally in Russia.
If you look on the impact of social index on the channels' -- on our channels' audience share, then we had a drop on CTC, which we expected. Domashny didn't drop more than this, Domashny increased during Olympics. We have an increase of the share compared to the 4 weeks prior to Olympics. And Peretz had a significant influence, but still, I think we managed successfully to keep it on a very good level, because their loss could have been much more dramatic if we didn't get prepared with our programming grid and with the content -- proper content for this period.
2 words -- 2 more words about CTC Love launch. The most important about this channel is that it is done at a very low cost compared to what we would have spent if we decided to buy a channel, even if we decided to buy not a free-to-air, but free cable channel. That would be much, much more expensive compared to what we're with [ph] . And we are building extensively on the -- building the grid extensively on the existing high-quality content, which was produced by CTC as a company, production companies of CTC in the last 5 years and which perfectly fits to CTC Love's target audience, plus it will be also supported by the foreign content library. We promote the channel at CTC Media's offline offerings, and we'll have a cross-promotion with the main channel, CTC.
And this launching of this channel is happening in the frames of this strategy, which was announced in the end of last year, about the increasing of the number of platforms which we want to monetize and additional penetration to the audiences where we are not present significantly at the moment.
Regarding the content strategy, as I already mentioned, we have centralized content acquisition and content production function, which is, I think, is the key way for further optimization and cost control, very intensive -- extensive cost control. We consolidate acquisition and production in in-house creative production center. We increased buying power and negotiate better terms.
We, marketing-wise, control all the rights for all platforms and capitalize on management and monetization of those rights. We have changed our agreements, initial agreements with the production companies, regarding the amount of rights which we want to obtain, as I said, trying to maximize those rights, especially which counts to the digital, mobile and those alternative platforms rather than TV. We also have, I already mentioned, the centralized programming and technical signal management, which gives us an opportunity to better manage the library, which is already created. I think I was telling about it on a previous call that since I started in August, we have started to digitalize our library, which before that was in the paper form of -- 80% of this library was on the paper form. We spend these 6 months for the digitalizing of this library, and now, we have a very modern and sophisticated library in electronic form, which gives us an opportunity through the chief programming director to manage and control this library much better, and focus on inventory control and manage content utilization for all channels, which is very important.
In digital and transmedia, we create, distribute and monetize content on all platforms, as I already mentioned, because it's the part of our main strategic goal. And we try to reach maximum audience, the maximum audience possible. We are moving, I also mentioned it in the beginning, we're moving from TV holding to become a content company, transmedia and multiplatform content. We are building core loyal audience and trying to achieve as much inventory growth as possible, driven by monetization requirements on brand-safe platforms.
If you want, like, to hear a successful case study, we have one which shows that our abilities and our capacity and potential in this field is tremendous. And then as the case of Molodezhka, our youth -- our popular series about the youth hockey team, which was included in the top 5 best series in the Russian TV market in 2013, which is a huge success for CTC.
And this series about youth hockey team has approximately 600,000 daily viewers across platforms. It had almost 40 million views in total within 4 months of last year, in last year. The main -- the most popular social network, VKontakte, has a group which has a number of almost 1 million unique members in the group to support this Molodezhka series. And for the second season, which will start in September, we are now creating a dedicated second screen offering.
Now I pass the board to my colleague, Nikolay Surikov, who is the Chief Financial Officer of CTC Media, who will cover the financial highlights.
Thank you, Yuliana. Good afternoon, everyone. I will walk you through our financial highlights and numbers. Currency fluctuations again impacted our reported U.S. GAAP results during 2013 significantly, as the Russian ruble depreciated by 7% year-on-year against the dollar, 94% of our total revenue and roughly 70% of our total ruble denominated. Total revenues were up 7% year-on-year in ruble terms to $832 million. Advertising revenues were up same 7% year-on-year in ruble terms to $806 million.
This growth primarily reflected the effect of growth in the overall Russian television advertising market of 8.8%. The principal due to the overall growth in advertising demand, which was especially reflected in higher sales of Domashny and Peretz in entry point federal level and great sponsorship revenues, as well as the increased audience share of the CTC Channel, partially offset by the effect on CTC ratings of a decrease in overall television viewership among CTC's target audience.
Now speaking about the channel. CTC Channel's operating revenue rose 5% for the full year in ruble terms, driven by the TV advertising market build and growth in CTC audience share in 2013, which was partially offset, as I've said already, by the effect on ratings of a decrease in overall television viewership among 10-45 year-old viewers.
Domashny Channel's operating revenues were up 13% for the full year in ruble terms, due principally to the overall growth in advertising demand, which was reflected in higher sales of the channel's inventory on a federal level and greater sponsorship revenues. Despite the decline in Peretz Channel's target audience in 2013, its operating revenues were up 6% for the full year, reflecting greater sales of the channel's inventory on a federal level and increased sponsorship revenues.
Channel 31 in Kazakhstan reported a 14% year-on-year growth for the full year in dollar terms, higher than the overall television advertising market growth in Kazakhstan of 8%. This resulted primarily from greater sellout and increases in regional revenues despite decrease in channel's audience share. Our digital media revenue now represents approximately 0.7% of our total revenue and increased only 1% in ruble terms in 2013, primarily due to 45% increase in advertising digital revenue.
Our adjusted OIBDA is up 10% in ruble terms to $271 million, with an adjusted OIBDA margin of 32.5%. This means 0.6 percentage points higher year-on-year and above our 2013 guidance. This is very important. Our total operating expenses adjusted for impairments were up 7% in rubles. The major line, which is programming costs, were up 10% in ruble terms for the full year. In the fourth quarter, we have a planned content library review, which was driven by the company's strategic focusing on CTC Channel programming grid, fine-tune positioning of Domashny and Peretz, and which resulted in writeoff of low-performing content. Net of these writeoffs, our programming expenses increased by 6%. This means that this growth is lower than the ad revenue growth, which is again very important.
Direct operating costs were up 5% in rubles, due to increased transmission costs related to annual raises of prices, increased technical penetration of the company's channels. In 2013, approximately $1.2 million was paid for the additional transmission of CTC and Domashny Channels. The state authorities estimate these payments in 2014 to be approximately $25 million for the 2 channels together, depending on the extra rollout of digital transmission infrastructure.
Impairment loss of $29.9 million in 2013 related to goodwill allocated to company's in-house production unit, reflecting changes in the economic model of the unit as a result of infrastructure. Another important point for this year, is that our adjusted effective tax rate was down to 24% for the full year from 33% in 2012, mainly primarily due to the recognition of foreign tax benefits that were determined to offset against U.S. taxes based on a comprehensive examination of certain positions taken in the company's historical U.S. income tax filing. Net of this effect, our effective tax rate for 2013 would have been 31%.
We applied this approach for the recognition of such benefits for 2013 and we will apply them prospectively also. As a result, our full year 2013 adjusted net income was up 19% year-on-year in ruble terms, amounting to $2 million.
Now moving to our cash flow and balance sheet. Our net cash from operating activities was up by 18% year-on-year to $186 million and primarily reflected the net impact of increased advertising sales and higher cash spend on the acquisition of programming to support investments in content that will be used in 2014 and beyond. Our cash conversion ratio increased in 2013 to 69% from 62% last year. During 2013, we also repurchased 2.5 million shares of our stock for approximately $30 million for use in our stock incentive plan and distributed $99 million of dividends. Our Board of Directors currently intends to pay cash dividends of $0.7 per share or, in total, approximately $109 million in dividends.
This means 11% year-on-year increase. And also declared a cash dividend of $0.175 per share or approximately $27 million to be paid in March. We therefore generated $180 million of free cash flow in 2013, while in 2012, it was $142 million, and ended the period with net cash flow of $207 million compared to $173 million as of December last year.
And now a few words about digitalization multiplex. Currently, only Russians do this with more than 100,000 residents as measured by TNS panel. That represents approximately 50% of the total population of Russia. With full rollout of digital transition, we'll have 98% of penetration, which means almost double the number of audience covered now. The state authorities estimate that fees payable to RTRS for 2014 in respect to digital transmission services will be approximately $25 million for CTC and Domashny channels in aggregate.
Now I pass the word for the next slide to Lilia Omasheva.
Hello, everybody. I will cover in my speech and my slides the results of our operating efficiency, which is predominantly key priority for the company and will continue to be one of the main focuses. This started last year, as Yuliana Slashcheva mentioned, the process of restructuring and the process of optimization with the aim of creating a centralized structure with the potential to integrate more businesses than we have now, more channel and platforms and projects. This process consists of a few parts. One of them is a change of the structure. And on this part, we already centralized a few functions, as again Yuliana Slashcheva was mentioning, such as marketing, corporate communications, strategic programming, content acquisition. And we will continue this way this year. As a result of this centralization, we have increased efficiencies. And now, we have the ability to use the best practices and best people for all of our channels in closing [ph] .
Also, this process consists of change of process itself, where it includes also maximization of control over content acquisition, first of all, [ph] over programming in order to avoid cannibalization and maximize the use of the library.
One of the important part of this optimization is automation of the whole process I mentioned above and others, which will lead to increased efficiency. As a result of all mentioned above, we expect this year, no growth in headcount, while the company is growing and continue growing and more than that is launching a new channel, CTC Love. The idea of the whole process is continue growing and keep a smart balance between the optimization and the growth itself.
Thank you, Lilia. I will have the final topic to cover, it's the guidance for 2014. And I will very quickly go through each. We expect the Russian total TV ad market to grow in the range up to 5% to 8% in ruble terms. We will -- CTC Media will grow its revenues broadly in line with the market. We expect our digital revenues grow up to 30%. We expect our revenues for Channel 31 and the international version of CTC Media Channels to grow faster than Russian TV advertising revenues, though we need to keep in mind the economic situation which is happening in Kazakhstan at the moment, and we will be monitoring and analyzing the Kazakhstan financial and economical situation and would possibly review this guidance during the year. We'll be updating you on this particular guidance during the year.
In programming expenses, we will grow -- they will grow less than total revenue growth and at lower rate than in 2013. As already mentioned, multiplex expenses, government anticipates to be around 25 -- approximately $25 million, which is the maximum -- should be the maximum level according to the authorities, depending on the actual rollout of their transmitters and the ruble and U.S. dollar rate. The OIBDA margin, we expect around 32% adjusted for multiplex costs. The dividends, we stick to the same dividend philosophy and expect to pay $0.70 per share in 2014 and $0.175 per share to be paid in March on the results of the first quarter. Our capital expenditure will not grow further than $10 million and the effective tax rate, we expect to be on the level of 30% to 35%. We are -- generally, the whole team is committed to creating long-term, sustainable shareholder value and sustainable growth and development of the company.
That's all we wanted to say, and we are ready for your questions. Thank you.
[Operator Instructions] Our first question is coming from the line of Alexander Vengranovich from OTKRITIE.
Alexander Vengranovich - OTKRITIE Securities Ltd., Research Division
My first question is about your...
I'm sorry, we can't hear you, Alexander. Can you please -- if you can speak a little...
Alexander Vengranovich - OTKRITIE Securities Ltd., Research Division
Can you hear me now?
Yes, we can hear you now. Thank you.
Alexander Vengranovich - OTKRITIE Securities Ltd., Research Division
So my question is about your guidance, actually. So you said that the viewership in 10-45 audience last year was decreasing. And given that it is happening, do you assume that your channels will be getting higher audience share this year, as that will be needed to compensate for the reduction of the viewership in this specific target audience, or you think you'll be able to increase the prices in order to compensate for that reduction to be in line with the market? And in connection to this, can you update us on how this allowed for this year and first quarter for TV progressing versus the previous year. Do you see that you have some more difficulties in selling advertising because of the macro uncertainties and whatever? Thank you.
Alexander, thank you for the question. Regarding your first question, we will do those mentioned activities. We will, of course, raise the prices, which we usually do every year, in order to compensate certain decrease in viewership. But we also see in the beginning of this year, due to the Olympics, of course we understand that, but we witnessed a significant increase in TV viewership, which probably now -- inertially continues still in February. We, of course, don't have any data yet for March, but we can speak about, like, first 2 months of the year, the viewership was on a very good level. But -- so we will, anyway, do every -- all possible to keep the revenues on the level which we planned and we budgeted for ourselves. We also plan to increase sponsorship, which we already did in 2013. We had a dramatic increase in sponsorship, and we plan to continue this growth for this year as well.
Coming to your second question, the sellout. We now -- everything is going pretty well with the commitments and contracts for 2014. At the moment, we have about 85% of our inventory, total inventory already committed or preliminary committed, as we call it. And currently, we are satisfied with how the advertisers take their commitments. Actually, we don't push with the, marketing-wise, the sellout now in the beginning of the year, because we want to be able to control this and to control all the prices and all the situation. And if the market will not be dramatically slowing down and will be developing well as we hope, then we will be able to slightly more increase the prices for this, like, 15% to 20% of inventory, which is not committed yet.
Alexander Vengranovich - OTKRITIE Securities Ltd., Research Division
Okay. And just a quick question probably for Nikolay, regarding your CapEx, because you don't have a guidance for your CapEx in your press release. I'm just wondering, there was substantial decrease in CapEx in '13. Do we need to expect that the CapEx, as a percentage of revenue, will continue to be stable this year versus the previous one?
As Yuliana already mentioned in her speech, for this year, for 2014, we gave the guidance up to $10 million. You're absolutely right that we don't have significant infrastructure and most of the expenses are related to automation of the processes, as Lilia said, to upgrade our software and some office equipment. So it's -- comparing to revenue...
On the level of 2013.
Yes, yes, so not any control [ph] .
Our next question is coming from the line of Bile Daar from Danske Bank.
Bile Daar - Danske Bank Markets, Research Division
I've got 2 questions. In terms of the payment for the second multiplex, how should we think about that? Would that be a lump-sum payment or is that dependent on when it happens throughout the year, or just to get a sense if you would be paying that short, let's say, in the second half, would it still be $25 million immediately?
In accordance with the terms of the contract that we have with RTRS, the payments are made on a monthly basis, based on the actual rollout of the infrastructure. So depending on each month, we'll have the results of the development of the infrastructure, we will see the number of objects for which we are paying, and each month, actually, the number will be changing.
And what is important, if the infrastructure or if the transmitters are not actually rolled out, we will not pay for them. That will very much depend on the actual capacity of state authorities and RTRS to really roll out the transmitters.
Yes, before charging to us any amount, we need to accept this infrastructure and to agree that it's online and we can use it.
Bile Daar - Danske Bank Markets, Research Division
Okay. That's very helpful. And then finally on the FX situation and foreign content. Could you give us an update on the percentage of the programming spend which is spending in sort of a dollar-denominated currency?
Yes, of course. In my speech, I think I gave it already. We have around 70% of our costs are ruble denominated. Speaking about our content, it's around 40% of the programming expense. What we're doing from the hedging activities, we have forward contracts. So all liabilities which are in our balance sheet denominated in dollars or in euro are already hedged. So we're not expecting to have any significant foreign currency losses in our P&L. And this is our standard practice, to hedge all dollar- and euro-denominated liabilities.
But what is also important, all our local contracts for production are in rubles, and they are committed in rubles and signed in rubles. So no matter how serious the currency exchange rate at the moment, serious increase of the dollar and euro rate, we still have the same contracts already signed, most of them committed for spring and summer of this year. And we will continue signing and committing all the contracts in rubles.
Another important thing which is strategic for us is that we're going to decrease the volume of foreign content in our grid, especially for CTC, and to replace it by local-only produced content. This means that we'll have less risks related to ForEx.
Yes, and we have tried it already. It's not that it's our assumption or idea which is not being proved by experience. It was proved, we have tried already in the end of 2013 to replace their Hollywood movie, the slot which usually has a Hollywood movie at 10:00, it's late prime time, by the Russian locally-produced series called The Life After or we call it The Day After, and it gave the average share higher than the share of the standard Hollywood movie put on in the same slot, which is a very good result and we plan to intensify the local production for this concrete slot to substitute international content by Russian ones.
Our next question is coming from the line of Anastasia Obukhova, VTB Capital.
Anastasia Obukhova - VTB Capital, Research Division
Can I just ask 2 questions? Could we have a bit more on the hedging of the programming content contracts. What do you mean by that? Is it at fixed rate which is in preparation to the contract or you assume some instruments for that? And the second question is more fundamental. Which actions have you implemented over the past half a year as a means [ph] to capture Internet audience and what are the results? And thus, what next steps can we expect from the company in 2014 to follow the audience to Internet?
Okay. I'll take the first question. What we are doing from hedging activities, we're trying to make natural hedges, when we have hedges denominated in dollars or in euro versus liabilities for foreign content. So as an asset, we have, actually, cash denominated in dollars on our bank accounts, plus we have receivables denominated in U.S. dollars related to sublicensing of our content to Ukraine and other countries. Speaking about special instruments, we have forward contracts. We're using forward contracts with banks to hedge these fluctuations. So actually by signing the forward contract, we're actually fixing the rate and we don't have any risks from fluctuations. We'll fix it. So we actually know exact amount in rubles what we'll pay for separate contracts, denominated in dollars or in euro. And the second question I'll pass to Yuliana.
Yes. Regarding our audience in digital, we are increasing the digital audience, I would say, every month, with every new product which we'll launch on TV. We are now much more intensively marketing and promoting those products in digital, using SMM and other features, all our portals and platforms which we have. As a result, we have significantly increased the amount of unique users. We've got 10 million unique users at the end of 2013 compared -- versus 7 million in 2012. So 3 million additional unique users. For next year -- for this year, for 2014, as I already mentioned, we're also changing our approach to increasing the audience. I mean, we will spend less money on acquisition of traffic and will be investing more efforts into organic growth of our audience through partnership with the key gateways to Internet, such as mail.yandex.ru, vkontakte.ru, adnaklasniki.ru and other social networks and main gateways to Internet. We also, you probably knew about, absolutely fantastic results of our Molodezhka series, youth -- story about our youth hockey team, which got 40 million viewers only of this series, 40 million viewers in total, and gained the CTC Groups in social media and different social networks dramatically. Only in VKontakte, we have almost 1 million members in our group.
Anastasia Obukhova - VTB Capital, Research Division
Can I have one last question regarding these programming contracts? Does it mean that those ones which you acquire in 2014 will actually have a higher fixed rate when you post them to the balance sheet, that means there are higher amortization costs for, say, for the second half of 2014 or '15? And also a question to Yuliana. You're seeing a lot of success from Molodezhka, however, what are the key reasons for soft audience in the fourth quarter overall at your flagship CTC?
Yes. Economically speaking, financially speaking, you're right that the new contracts that we will sign in dollars in ruble terms will be more costly for us. What we're doing with this respect, we are trying to increase efficiency from the contracts we are signing. So we're more focused on the titles with good numbers. So we're trying to maximize the outcome from the contract. Plus as I told already, we have on our balance sheet dollar-denominated assets. This means that from a cash flow perspective, we are hedged. So this increase or growth potential in amortization expense will be offset by profits from having these dollar-denominated assets if the dollar rate will grow. Another thing that we're doing, as I said already, we are trying to decrease the volume of content acquisition denominated in dollars. I think that's it. Yes.
Okay, in answering your second question about softening of the share, especially of CTC share, in the fourth quarter, as the CEO, I -- my main task in 2013 was to control and to meet the budget -- different budget financial KPIs set by the shareholders and budgeted by CTC Media for 2013. And in order to meet most of those KPIs and control the expenses, I had to put a very tough control over programming expenses in the fourth quarter. Due to these, some of the key projects which were ready and planned to be on air in the fourth quarter of 2013 will move to the first quarter of 2014, and the company met its most important OIBDA in that process plan according to the budget.
Our next question is coming from the line of Daria Fomina, Goldman Sachs.
Daria Fomina - Goldman Sachs Group Inc., Research Division
I have a couple of questions. The first one is probably the most simple one. On your DTT cost that the authorities indicated to you, are they set in U.S. dollars, this $25 million, or are there some RUB amount that you translate in. If there is, the FX rate will be very helpful if you could share that. Second question, you said that you have 85% of inventory as preliminary committed and you are not pushing for higher sellout, hoping for some upside in pricing. So that we can assess the downside scenario, what is the percentage of your hard commitments for the inventory this year? And my last question -- sorry for that many questions. In terms of your first quarter, the Olympics ad revenues that were in Russia in that period, I assume there was a significant shift in advertising towards the bigger channels. Do you think there is a risk that the overall revenues that you would deliver for the quarter would be below the market? And also, were you taking that into account in your programming expenses? That's it.
Yes, Nikolay will take the first one.
Yes, I will take the first one. As you probably know, RTRS is a state company. So all contracts that we are signing with this company are ruble denominated. So we don't have any risks of ForEx, foreign exchange. For the second question...
Daria Fomina - Goldman Sachs Group Inc., Research Division
Sorry, what is actually used to get the $25 million?
Excuse me, it was $33 million -- or 33 rubles per dollar.
Regarding the sellout, actually, we don't have such a term as the hard sellout. When I say 85% preliminary commitment are committed, it means for us, committed. When I say preliminary committed, it means that we always have a chance of advertisers, for example, change the scheduling of their advertising campaigns, moving some budgets from 1 quarter to another, sometimes decreasing or increasing their budgets. That's what I mean when I say preliminary committed. But actually, we don't have soft or hard commitment. 85% commitment for us means 85% is committed and signed in one or another form with the clients.
Can you repeat please the final question?
Olympic revenues, yes, sorry, we can repeat -- we can answer you about Olympic revenues. We actually don't disclose our forecast for the first quarter, as always, but I can shortly answer your question, that no, we don't expect any serious decrease.
Ladies and gentlemen, that was the end of our question-and-answer session. I will hand you back to Irina Faritova for any closing comments.
Okay. I think I will do it instead of Irina. I want to thank everybody for your attention and for the questions, and I really would appreciate your feedback to our IR department about the format we have suggested to you during this conference call, whether it was convenient or not compared to what was done by CTC Media before. And we're always open to any of your questions and communications and feedback. Thank you very much and goodbye.
Ladies and gentlemen, thank you for joining. You may now disconnect your lines.
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