OREANDA-NEWS. June 17, 2010. The Federal Anti-Monopoly Service has released the results of its investigation of the advertising market shares of federal television channels at the national and regional levels. The investigation was mandated by legislation passed last December which limits any one sales house to 35% market share from YE10, reported the press-centre of OTKRITIE Financial Corporation.

View: As expected, any combination of the three biggest clients of the sales house Video International's -- Channel One (23.11% share at the national level), CTC Media (20.41%), and VGTRK (17.01%) -- would exceed the 35% threshold allowed by the new law. Based on the numbers CTC has the highest power ratio (ratio of ad market share to audience share), with 1.5, compared to 1.2 for Channel One and 0.8 VGTRK, which demonstrates the strength of its brand for advertisers. We anticipate that CTC will form its own sales house, but we expect solid growth in the TV ad market regardless of the future lineup of channels and sales houses. 

Valuation: CTC Media trades on a 2010 EV/EBITDA of 11.5x. 

Action: We reaffirm our BUY rating and target price of USD26/share on CTC Media. The stock has rebounded recently from a sharp sell-off in late April/early May, but still offers 66% upside to our target price.