CTC Media, Inc. (CTCM) Q4 2014 Earnings Conference Call March 5, 2015 8:00 AM ET
Executives
Yuliana Slashcheva - President and Chief Executive Officer
Stanislav Ploschenko - Chief Financial Officer
Analysts
Boris Vilidnitsky - Barclays PLC
Alexander Vengranovich - Otkritie Investment Bank
Alexei Gogolev - JP Morgan
Mitch Mitchell - BCS Financial Group
Sergey Libin - Raiffeisen Bank
Maria Sukhanova - Sberbank Investment Research
Operator
Good morning and good afternoon, ladies and gentlemen. Welcome to CTC Media's Fourth Quarter and 12 Months 2014 Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast and an audio version of the call will be available on the company’s website. The call is also being recorded for replay purposes.
I will now hand the call over to Yuliana Slashcheva, CTC Media's Chief Executive Officer. Thank you.
Yuliana Slashcheva
Thank you very much. Good morning and good afternoon everyone. And thank you for joining CTC's Media’s Q4 and full-year 2014 financial results call. I'm Yuliana Slashcheva, CEO of CTC Media. Also here with me I have Stanislav Ploschenko, our Chief Financial Officer and my other colleagues from Operational Division and IR. We will go through our results presentation before taking your questions.
Before I start, let me remind you that today's call may contain forward-looking statements based on the environment as we currently see it. And as such, may 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.
Let me now start with the key operational highlights, and I will ask you to move to Slide 3. In 2014, despite of the challenging market economic environment including a related decline in sublicensing revenue due to the crisis in Ukraine. CTC Media delivered strong sales result with total revenue exceeding RUB 27 billion.
Advertising revenues were up 4% in 2014 year-on-year. CTC Media’s Russian channel TV advertising revenues increased by 3.4% year-on-year in 2014, outperforming the overall television ad market but 1.1 basis points, which grew 2.3 in 2014. We are fully sold our national inventory last year. Due to the effective walk of our sales house we increased our market share in 2014 from 17.1% to 17.4% and captured the share in the third quarter of 2015.
We have achieved the loss in 2014, and I really would like to share those achievements with you. We successfully launched the new channel called CTC Love. Our multimedia division which will reached OIBDA breakeven level in 2014 a year ahead of our initial timeline and first ever in CTC Media had a very strong performance throughout the whole year. We have launched our innovative second screen application for the second season of our famous and popular series Youth Hockey League called Molodezhka in Russian.
Our overall strong revenue and OIBDA performance was achieved despite overall market deterioration in the fourth quarter. We also continued to develop our Digital and Transmedia department including the e-commerce business and still our sales quite successful in those areas.
For Q4 of 2014 our revenues remained flat despite the weakening of the market overall. The Group’s power ratio was the highest ever reaching 1.86 in the fourth quarter. We significantly straightened our team with new appointment including the new Chief Financial Officer, Stanislav Ploschenko; Head of Strategic Communications, Oleg Kuzmin; Chief Legal Officer, Maxim Bobin; Head of CTC Channel, Elmira Makhmutova; and new Head of Peretz Channel, Ruben Oganesyan, who will also be responsible for the marketing function at CTC Media holding.
We successfully monetized our Youth Hockey League series through our digital platforms generating revenues of almost RUB 26 million in the fourth quarter of 2014 only. Molodezhka [indiscernible] mobile social network game based around TV shows has been downloaded by 0.5 million viewers in just over one-month. The free game was released in December and was developed in corporation with the game company GameInsight and is based around CTC Media’s popular ice hockey drama series.
In the first quarter, we completed an acquisition over majority stake in the production - video digital production company CarambaTV. It’s a very well known producer of Digital and Transmedia content. The acquisition aligns with our strategy for developing our Digital and Transmedia businesses. It provided us an opportunity for additional monetization of our existing channel through the traffic consolidation and content exchange.
Now, I will ask you move to our audience share developments on the Slide 4. In Q4, target audience shares for our Russian channels were impacted by overall audience fragmentation and increased competition. CTC channel inventory was fully sold out in Q4 2014 and the channel remains the third most-watched free-to-air channels that target viewers between the age of 10 to 45.
The number of our television series had a successful quarter notably the new season of Molodezhka of the Youth League reached an average audience share of 15.5% for the second season and the fourth season of Kitchen had an audience share of 15.2%. Both those products got a share much higher than the average share of the channel.
We also have a strong pipeline of new series premieres with the new season of both to series such as Kitchen for both and Molodezhka scheduled for the rest of the year. The Domashny channel successfully updated its visual format in October launching its new Forever for women motto, the series of Real Vanga and Life after Vanga secured above average audience share of 4.1% and 3.5% respectively.
Furthermore, the channel demonstrated growth of younger audience share in 2014 expanding its share of viewers age 25 to 50 from 91.5% to 93%. Those of you who remember our strategic goal more than a year ago you should also remember that I was mentioning that regeneration of the audience of Domashny is one of our targets for the next couple of years and we are going very straightly along with this targets achieving this - expecting this more younger audience to the channel.
To continue executing of the success of our channels in 2015 CTC Media Ruben Oganesyan as Head on the Peretz channel in Q4 of 2014. Ruben has a successful track record in working with gender-specific television channels, such as Peretz. I believe that Ruben will help Peretz to get to the next level of success. We expect the channel to those for significant changes in the coming six to eight months.
In 2014 we are also successfully launched our newest channel, CTC Love which outperformed our revenue growth expectations in 2014. CTC Love technical penetration now exceeds 55% of Russian house hold including 0.65% of viewers aged 11 to 34 meaning with [indiscernible]. TNS Russia started measuring the audience of CTC Love within international TV index in September of 2014.
Now I would like to share some of our results in Transmedia division performance and we will move to the next slide. The active developments and strong performance of our Transmedia division is fully aligned with our overall strategy for diversifying of our revenue stream, which was announced a year ago.
In 2014, the division demonstrated significant revenue growth of almost 50% to RUB 284 million. CTC Media reduced the evolutionary second screen application for the second season of the series Molodezhka. CTC Media is the first company in Russia to make its own second screen for a Russian series, straightening its position as a technological market leader. We launched - also launched a social network game based around the same TV show Molodezhka in December with half million users downloaded the mobile version just over one month.
We successfully monetized those series as I’ve already mentioned before. We will also continue to acquire this approach to other projects and popular series. 2014 confirm the CTC Media projects remain popular among FMCG advertisers. In 2014 we successfully completed 10 special digital media advertising project. Meaning Transmedia we call them Transmedia project. [indiscernible] generating additional almost RUB 130 million in revenue. Most notably we reached OBIDA breakeven in our digital and Transmedia business in 2014 as I already mentioned first ever in CTC Media’s history.
Now I suggest that we move to the Slide 6, which illustrates the challenges and the company’s response to them in 2014. In the third quarter of 2014 the company encountered significant sublicensing revenue slowdown due to the events in Ukraine. In response we continue to execute our strategy for revenue diversification mostly through the development of our Transmedia businesses as well as the total development of our Sweet Me e-commerce project.
Our Transmedia division revenue increased by almost 50% as I already mentioned while revenues from Sweet Me grew to more than RUB 9 million. As previously highlighted we aim to increase the revenue share of non-core businesses from around 2% in 2014 up to 10% by 2018. And other challenges were changes on Kazakhstan market.
Our business in Kazakhstan Channel 31 responded effectively to the new legislative requirement for local-language programming which now requires at least 50% of broadcasting time to be conducted in Kazakh language in each six hour time slot. But of course in the beginning [indiscernible] those problems, but now we are fully inline with the law keeping more than 50% of our content on the Kazakh language and keeping very strong positions of our channel in Kazakhstan.
In the first quarter Russian TV ad market started to decline after several years of substantial growth. The previous quarterly market weakening was in 2009 only. Despite the market deterioration in the first quarter, our revenues remained flat year-to-year in ruble terms, with total revenues reaching RUB 8.5 billion in the fourth quarter. To offset the operational changes the companies implemented its cost cutting initiative.
The total number of employees remained overall stable year-over-year, despite the active development of the company’s new channel CTC Love, as well as the growth of our Transmedia department and other new businesses development activities. We plan to further improve our efficiency.
We expect our programming expenses to decline due to more efficient content purchases, as well as potential Russian content share growth. Our efforts already in place and have allowed us to maintain high levels of profitability of the channel all over our Russian channels and our other businesses in 2014.
I would also like to mention that we manage to decrease our multiplex cost by more than RUB934 million negotiating amendments to the payments schedule that reflect the rollout of infrastructure schedule. I would once again like to highlight that we significantly straightened our management team in the first quarter with several key appointments including a new CFO and other team members.
And now I would ask you to move to the Slide 7. And I will talk about Mass Media, new Mass Media Law, which were always getting a lot of questions about. This new media law is one of the key company challenges already started in 2014 and continuing in 2015. The amendments as you noticed direct and indirect foreign ownership and control of Russian media companies to no more than 20% in aggregate starting in January 2016.
The Board of CTC Media has reacted proactively to these changes in the Russians inflation by establishing an advisory committee of non-executive directors and engaging international bank UBS as our financial advisor, as well, sorry, as international and Russian legal tax advisors.
We are continuing to work with external legal financial and tax advisors to identify, evaluate and implement an appropriate response to ensure compliance with the law while, at the same time, protecting the interests of our stockholders. We are considering all potential structures in that regard.
Our actions may include corporate restructuring, franchising and licensing structures, capital reorganization or divestments; and we have begun to evaluate a potential sale of all or a substantial portion of our Russian business or the shares of CTC Media. Our targets remains comply with the loss and [predating] the interest of our stockholders. We will keep you updated on our progress and key developments moving forward through attritional channels.
I’ll now, would like to hand over to Stanislav Ploschenko, who will take you through our financial highlights. Please, Ploschenko.
Stanislav Ploschenko
Good afternoon, everyone. Let me take you through the Groups financial highlights and our key segment performance, as well as provide you with an update on the company’s cash flow, financial position and dividends.
Now, moving on Slide 8 with the Group key financial highlights. As Yuliana mentioned Q4 revenue remained flat year-on-year despite the weakening markets. This was a product of changing dynamics across our channels. While we continue to see CTC growth across all segments, the decrease in audience share for CTC and Peretz had a negative impact on advertising revenue. A start from pulling sublicensing revenues due to the Ukrainian crisis these decrease have the most negative impact on overall revenue dynamics which also affected the performance of CTC.
Growth in other segments however help to offset some of these negative factors. Channel 31 in Kazakhstan for example contributed both audience share growth of 2.6% year-on-year and FX effects due to ruble depreciation. The channels overall revenue grew by an impressive 53% year-on-year in ruble terms, while revenues from our digital business were up 42% and those are the Domashny channel were up 3%.
For the full-year CTC continue to be remain contributed to top line growth, increasing revenues by 2%. Domashny was also up 7%, while Transmedia where the leader and with its 54% in sales growth among all the segments. In also of the two Channel 31, which grew – it’s top line by 10% and its contribution to the revenue dynamics in absolute terms.
Moving further to the Slide 9, you can see that the general market weakness and decrease in audience share rate led to a pronounced 21% reduction in OIBDA for CTC in the fourth quarter with Domashny down 83% and Peretz down 71% year-on-year. The impressive six times growth in Transmedia and 42% growth in Channel 31 OBIDA could not sufficiently compensate for the full in the three main segments which led to an overall 34% consolidated OBIDA decrease in Q4.
The fourth quarter dynamics reserves to the company’s previously positive trend in OBIDA and resulted in a 10% year-on-year on a full-year basis with CTC contributing almost 63% of this decrease. OBIDA for CTC Domashny and Peretz was down 8%, 10% and 31% respectively. Channel 31’s OBIDA grew by 5% while our digital business were the biggest contributor to the consolidated figure with the plus sign finishing the year virtually flat versus negative RUB 57 million a year ago.
Apart from fall in revenues the most significant negative contributor to OBIDA in 2014 were the 7% growth in programming expenses in ruble terms. Increased program and expenses were entirely due to the revised - initiative management took late in the year in response to the decrease in audience share of our channels.
The management expects this one time expenses to better position the channels for the future growth. These expenses included a more expensive foreign content on the CTC Channel increased in the cost and volume of high rate in Russian series of Peretz channel as well as increased programming expense at Domashny in Q4 to support the launch of the restyling in October.
In a certain good challenges our business is facing in 2015 we also revised your library according to the new grid which resulted in non-cash write-offs of certain idle and outdated content with most of the effect following on Q4 and Domashny Channel following its restyling. This explains a sharp decline in Domashny OBIDA in Q4. Absent this one time effect on programming expense the fourth quarter consolidated OBIDA which have been down only 20% and 5% on an annual basis.
Now let’s move to the next slide. In 2014 the company generated $105 million of operating cash flow spending $8.6 million on CapEx and business acquisitions and paying $109 million in dividends to its shareholders. The free cash flow for the years to that healthy $100 million despite its reduction from last year. The combination of lower cash flow from operations as compared to 2013 and incrementally higher dividend let to a reduction of cash and deposits from $208 million as of the end of 2013 to $139 million as of December 31 of 2014.
Due to the unprecedented Ruble Dollar exchange rate volatility throughout the year and being mindful of the negative FX effects on the cost base from the depreciation ruble. The company adopted the policy of converting the cash placed on some deposit into dollars. This will also allow the company to secure future dividend distribution, thus 77% of the company’s cash and accounts and deposits were held in dollars as of the end of the reported period.
Taking into account the open-hedging position and foreign currency commitments for content purchase as of the end of the year our overall FX position was $57 million. The net income attributable to the company’s shareholders was 24% down a year-on-year to RUB 3.7 billion or $108 million. The Board of Directors announced the first quarter dividend of the $0.175 per share amounting to $27.25 million on March 31.
Now, please let me pass the call to Yuliana to continue with the company’s outlook.
Yuliana Slashcheva
Thank you, Stanislav. Please now turn to Slide 11, for our various limited outlook this year. Unfortunately due to their current market economic and geopolitical conditions in Russian, Ukraine and CIS and the substantial depreciation of the Russian ruble against the U.S. dollar, the Company currently has very limited visibility into the TV advertising market outlook for 2015 and its own U.S. dollar reported results.
This is why we are not providing our usual full-year revenue and profit outlook at this time, but we will review this position on a regular basis moving forward based on the market conditions and outlook at the time. Third-party reports have however estimated that total TV advertising spend could be down as much as 25% to 30% in ruble terms in the first quarter of 2015 compared with the first quarter of 2014 due to the adverse prevailing macro-economic and geopolitical conditions.
This creates a challenging operating environment and the year-on-year comparison is also reflected by the positive impact on the first quarter of 2014 because of the higher media spend this year around the Sochi Winter Olympics game. So the comparison, the direct comparison of the third quarter of 2015 and first quarter of 2014 did not really represented even now would not be I would - would not be fair enough.
Overall, we are confident that our strategy for diversification of revenue streams and expansion of digital offering and growth of the combined audience share positions us to continue to capture market opportunities in 2015 and beyond. As Stanislav mentioned, Board of Directors declared dividend of $0.175 per share for the first quarter of 2015, payables on or above as of March 31 of 2015 to stockholders a record as of March 16, 2015.
The Board will consider further quarterly dividends in light of market conditions, and Company’s cash requirements and the results of the Board’s efforts to ensure compliance with the Mass Media Law. The Company will comply with any applicable blocking requirements related to U.S. sanctions in connection with the payments of dividends.
That concludes a brief review of our full-year 2014 and fourth quarter 2014 results and now we are ready to take your questions. Thank you.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Boris Vilidnitsky from Barclays. Please go ahead with your question, Boris.
Boris Vilidnitsky
Hi, thank you. Good afternoon, everyone. I had a couple of questions from me, first on top line and what you mentioned regarding the Russian TV market potentially declining 25% to 30% I was just curious is that the trend that you guys are seeing and if not then what is the difference?
Second question on the programming cost you mentioned that you had spend a little bit more during the fourth quarter because of - to protect your audience share, what is different than the first quarter why wouldn’t you spend that amount and could please remind us what percentage of your content is foreign content in terms of the revenues and air time? Thank you.
Yuliana Slashcheva
Thank you for your question. The first one regarding the first quarter drop in the revenues, I can’t guide you on the first quarter result, our revenues dropped yes, because we are still selling much and they are really don’t want to these guide you know the market in this respect that is why we will only be able to report you on the Q1 of its over I would say in April we’ll understand the figures really we are still selling March we are still doing deals for the first quarter.
Regarding to the content expenditure, we did support, we not only supported the programming in the Q4, but we also have gone through a series optimization of our library in the Q4. So not all that money spent on the programming budget in Q4 were used in [indiscernible]. From time-to-time the TV Holding companies needs to review its libraries and what we have done, they’ve reviewed and optimized our old library with their licenses which we had on board for several years.
And we have signed off some of those like some of this old library, improving - significantly improving the programming budget of 2015 making it lighter which result in 2015 and above the percentage of their foreign and Russian content in absolute figures of percentage.
Stanislav Ploschenko
It’s 50/50 for CTC overall during the year and Domashny and Peretz virtually overall Russian content.
Yuliana Slashcheva
Did you get an answer so 50/50 CTC Channel and Peretz and Domashny are like no foreign content.
Boris Vilidnitsky
Thank you so much.
Yuliana Slashcheva
Thank you. Next question please.
Operator
Thank you. Our next question comes from the line of Alexander Vengranovich from Otkritie Capital. Please go ahead with your question.
Alexander Vengranovich
Yes, hi a couple of question from my side also, so first on the sold-out - for the first quarter and full-year of 2015, usually you share that we show in the first quarter. So can please tell us a little bit more of how the progress of an entitled sales growth this quarter? And second question is a follow up question on foreign content spending.
So how do look at the share of the foreign content in 2015 they plan to decrease it due to ruble valuation or they expected to be stable. I mean in terms of the share of the content management probably in terms of the volume. And next question is what sort of the price inflation do you expect for the major content in 2015. Thank you.
Yuliana Slashcheva
Okay. So can I start from the last question and [indiscernible]. So we do seriously review the phase of our content deals including the international content deals with the majors. And we are already had a significant deal value we increased due to the efforts taken by the management on - 18 of those deals with the international majors.
And we also seriously, we negotiate the content prices and the volume of rights with the Russian, with the local companies. Regarding the amount of the foreign content 70 percentage reducing the foreign content will decline on the overall grid and then the balance will be in advantage of the Russian content laws. And we also - there is also an important thing regarding our international content acquisition. All the content that was acquired in the last year or the previous years generally all currency denominated liabilities were over fully hedged.
Alexander Vengranovich
And including the commitments for foreign content which is in 2015 and beyond, all this payments were fully hedged either through hedge operations or buying our current cash dollar denominated position.
Yuliana Slashcheva
Yes, and coming back to your first question, we can’t guide you on the full-year sellout unfortunately because as I told you the visibility is quite low. At the moment, we have more than 50% of our inventory contracted which considering the situation on the market we think is a very good result. Thank you. We can go to the next question.
Operator
Thank you. Our next question comes from the line of [indiscernible]. Please go ahead with your question.
Unidentified Analyst
Yuliana and Stanislav in fact all my questions have asked already and answered. Thank you.
Operator
Thank you. We have no further questions coming through. [Operator Instructions] We have a follow-up question coming from the line of Alexander Vengranovich. Please go ahead with your question, Alexander.
Alexander Vengranovich
Yes, just a quick follow-up, did I understand – that actually the amount of the purchase of the new contents in 2015 basically not exceeds 2014 purchases in ruble terms.
Yuliana Slashcheva
Definitely. Yes, definitely.
Operator
Thank you. Our next question comes from the line of Alexei Gogolev from JP Morgan. Please go ahead with your question.
Alexei Gogolev
Hello, everyone. Yuliana, just a quick question, you obviously discussed the positive development of Molodezhka and Kitchen, but could you actually talk about some of the TV shows that probably have gone wrong in the fourth quarter and having done that well in the first quarter and what does the outlook look in terms of new shows for the September launch? Thank you.
Yuliana Slashcheva
Actually, it’s really hard to speak about the complete shows which didn’t work, because most of the shows which we had, we just didn’t have much because of certain efficiency and we are like trying to keep them financial efficiency of the first quarter, we didn’t so much of the new shows in this period.
However, most of the shows and series which we have in this period were quite successful, but we had to have big number of [indiscernible] our old projects popular, but quite also just in order to keep the OIBDA margin in the first quarter on the good level.
Speaking about this year, we have a various strong competition level in the market that is why I would avoid naming any particular shows which we have because it’s quite dangerous in our TV environment, but I can assure you that for bottom we have a very good selection of the continuation of the existing popular shows. But also a range of the new shows which we very much trust in.
What I can tell you about in this already Spring we have successfully launched the new show called name [indiscernible], it’s our original format which actually we can then make a format how to read and sell it outside and sell it to other companies, if the show [indiscernible] which was quite successful. We had already two episodes those over and higher with the audience share higher than the average audience of new channel at the moment.
And we are also launching a very good and very worldwide popular show called Biggest Losers which will start in April, but there was some read I would prefer not to disclose, but it will be a very good one.
Alexei Gogolev
Thank you.
Operator
Thank you. Our next question comes from the line Mitch Mitchell from BCS. Please go ahead with your question.
Mitch Mitchell
Hi, and thank you for the call. I just wonder if you could clarify when we talk about - when we look at your chart showing total Transmedia revenues and you talked about digital revenues those terms are the same in all of this projects are in that number that just want to clarify that.
And the second question is can you just give a little bit more detail on CTC Love I know the ratings you are doing well, can you breakout about how much revenue they generated this year and what kind of growth you might be expecting? Thanks.
Stanislav Ploschenko
The answer to the first question is yes. These names are identical throughout the presentation.
Yuliana Slashcheva
The second question regarding the CTC Love if you give us like a minute - answering my next question I will get back to you on the revenues of CTC Love. But I think it has generated something around $1 million in the ruble, but in the ruble rate of last year. I think it was something around RUB 30 million in December of last year. But you remember that we had, we didn’t do any special investments operating this channel. All our expenses were included into the CTC Channel programming budget. So it’s a very good result, but I will get back to you with the exact figure of answering my second question.
Stanislav Ploschenko
Thank you.
Yuliana Slashcheva
Thank you.
Mitch Mitchell
Thank you.
Operator
Thank you. Our next question comes from the line of Sergey Libin. Please go ahead with your question Sergey.
Sergey Libin
Yes, hello, thank you. I would like to ask about your operating cost dynamics because in the fourth quarter there was a significant acceleration in SG&A costs and direct operating expenses as well. So I was wondering whether it is related to ruble depreciation and should we expect it similar dynamics in 2015? Thank you.
Yuliana Slashcheva
It’s a view of forex effects and you should not expect in 2015, all these expenses would be declining in 2015 due to our cost cutting program, which already is planned for 10% reduction of all the costs. Thank you.
Sergey Libin
Okay, thank you.
Operator
Thank you. Our next question comes from the line of Maria Sukhanova from Sberbank. Please go ahead with your question Maria.
Maria Sukhanova
Yes, hello I just wanted to come back to this foreign content question. So could you please tell what share of increase in programming costs was driven by this foreign content because I saw that the content that you add in the first quarter was acquired previously in the previous quarters when the exchange rate was better? So I thought the effects from exchange ratio were significant on your EBITDA margin. So if you could elaborate on this would be...
Yuliana Slashcheva
Yes, that’s right. Look all our - as we talk before, all our deals for the foreign acquisition, for the foreign content they were all hedged in the ruble rate of the last year. So, no matter like if it’s a deal for three years ahead. The deal was hedged on this rate however when it comes to the programming budget to amortization figures. It gets into the programming rate on the [indiscernible] by the existing rate of the dollar. So for example in the movie, the movie was placed into the grid, last year it would cost us RUB 32 for the movie and this year in the grid the same movie despite of the same cash [indiscernible] in the P&L it will look like RUB 62.
Maria Sukhanova
Okay.
Yuliana Slashcheva
So that is why it makes - unfortunately anyway our amortization cost in P&L despite of our cash which we actually have a very great good cash position in respect with the deals. Because all our - like our major Paramount deal which will last for another two and a half years is hedged by RUB 32 for a dollar all the other deals - all other liabilities were hedged in the same way. So that’s only the matter, like it’s between RUB 32 and maximum RUB 40 for dollar, but in P&L it will be anyway highlighted as of the current rate.
Maria Sukhanova
Okay, thanks for the guidance.
Stanislav Ploschenko
And going back to one of the previous question about the revenue of CTC Love the channel generated RUB 24 million of revenue last year of which RUB 17 million were generated only in Q4.
Yuliana Slashcheva
Yes, and I should remind you about CTC Love that was only launched in Q2 and in Q4 it already generated twice as much as for the whole period. Good result. We can go to the next question.
Operator
Thank you. [Operator Instructions] We have a question coming from the line of [indiscernible]. Please go ahead with your question, Evan.
Unidentified Analyst
Hi, thanks for the call. My question is you refer to the third-party reports about the market being down about 30% or so, and I was just wondering if you know whether that’s is due to price decline or just a volume of advertising?
Yuliana Slashcheva
Thank you, Evan. It’s actually a very good question. I should have provided myself, but its very good yours. It’s not because of the price decline, it’s because of the volumes that go down and it’s a very important message, we are now conveying to all our advertisers and to the market in general that CTC Media is not going to go down on the prices and then CPP and we will better reach – left allowed, but keep the CPP on the same level because going down those with volume and prices can completely heal our aid margin.
That is why we are going to use all the three inventories for developing of our own other projects such as e-commerce, gaming, merchandising, animation and others developing additional revenue sources for our company and for developing other businesses rather than going down on a cheaper prices for the advertising. Thank you.
Unidentified Analyst
Okay, that make sense and can I ask one more question?
Yuliana Slashcheva
Yes, sure.
Unidentified Analyst
Do you expect pricing it seems like given the decline in the ruble and pickup in inflation and in Russia that you might actually think in ruble terms prices would – with increase over the next few years, is that something that you guys expect?
Yuliana Slashcheva
It might be, we are actually it’s very hard forecast this scenarios at the movement, but it might be if the volume will somehow be diversified I would say between them the less amount of channel, because you know this good utilization will anyway take place and at the end of the process of good utilization there will be only 20 even by single in last free-to-air channel of this like you know covering the whole country including all the features even like 20,000 minus. So zero plus, we call them zero plus. Then there will be like that the price we are advertising on those channels might go up and we have two channels included into this utilization approaches.
Unidentified Analyst
Okay, great. And actually one more I don’t think there is anyone else in the queue. Is there any part of the Mass Media Laws that would make it - that would prohibit some Russian firms from being able to bid on the company if you guys say run an option process or would that be into all Russian firms to your knowledge?
Yuliana Slashcheva
No, we don’t know about any restriction of laws I think it will be open for all Russian firms.
Unidentified Analyst
Okay, thank you.
Yuliana Slashcheva
Thank you.
End of Q&A
Operator
Thank you. That was the last question. So I'll now hand you back to your host to conclude today’s conference call.
Yuliana Slashcheva
Okay. Thank you very much, everybody, who joined the call and we will talk to you in three months when we have the results of the Q1. Thank you. Bye.
Operator
Ladies and gentlemen thank you for joining today's conference call. You may now replace your handsets. Thank you.
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