April 11, 2013. Moscow, Russia.JSC "Sistema Mass-media" ("SMM" or the "Company"), one of the largest media holdings in Russia, announces its unaudited consolidated financial results for the year ended December 31, 2012. SMM owns and manages CJSC "Stream" Television Company" ("STREAM TV Company"), CJSC "Russian World Studios" ("RWS"), JSC "Maxima Advertising" ("Maxima"), LLC "DTB " ("DTB"), and JSC "United Russian Studios" ("URS"), JSC "Lenfilm XXI" jointly with Federal State Unitary Enterprise "VGTRK".

FINANCIAL AND OPERATIONAL RESULTS

- Revenue of US$ 79.9 million versus US$ 100.7 million in 2011.

- OIBDA increased substantially to US$ 30.6 million with OIBDA margin of 38.3% compared to OIBDA loss of US$ 31,9 million in 2011.

- Net loss decreased more than 4 times to US$ 18.8 million compared to net loss of US$ 86.2 million in 2011.

- Selling, general and administrative expenses reduced by 40.1% compared to 2011, from US$ 34.1 million to US$ 20.4 million.

- Debt lowered by 4.1% to US$ 79.7 million versus 2011.

- The RWS content library grew to 1,600 hours. The company decreased production of long TV series and focused on short and more profitable TV series.  

- STREAM TV Company grew its subscriber base by 21% to 7.5 million subscribers. Growth in high-margin content distribution, expansion of subscriber base and cost optimisation program led to 62% increase in STREAM TV Company OIBDA to US$ 10.2 million and  312% increase in its profits from US$ 1.7 million in 2011 to US$ 7.0 million in 2012.

Advertising business reduced its OIBDA loss to almost zero versus loss of US$ 0.2 million in 2011. 

Commenting on the Company performance in 2012, Peter Gerwe, the President (CEO) of JSC "Sistema Mass-media", said:

"In 2012, we delivered on several key objectives - our efforts to focus on the core parts of the business, their optimization and cost control have resulted in solid profitability improvement. Restructuring of several divisions reduced costs by 40% and restored OIBDA margin to 38%.

In 2012, RWS continued to grow its content library. In addition, we took a strategic step to separate its production and studio businesses by spinning off the studio business into a new company called URS. The move was designed to allow each unit to focus on its core activity and develop it reasonably allocating their administrative, time and financial resources. The 21% expansion of STREAM TV Company subscriber base combined with our focus on high margin content distribution, resulted in substantial rise in OIBDA and net profit of STREAM TV Company.

We have also taken a number of steps to increase management efficiency at SMM: we optimized our organizational structure and hired professional managers with a proven market track record. With our new management team in place, in 2013, SMM will not only generate sustainable financials, but will also continue to execute on organic growth and growth through M&A opportunities currently under consideration. We expect these opportunities and business initiatives to ensure sustainable prospects for SMM."