OREANDA-NEWS. August 12, 2010. The ad market in Russia rose 10% YoY in 1H10, from about RUB95bn (including VAT) to approximately RUB105bn, according to a Russian Association of Communications Agencies (AKAR) report. The internet was the fastest-growing medium, posting 33% growth YoY, while the TV ad market grew 7%, reported the press-centre of OTKRITIE Financial Corporation.

View: The numbers show an acceleration of ad market growth in 2Q10 -- in Q1 both the overall ad market and the TV ad market segment were up only 5% YoY. The current underperformance of TV is unsurprising, as TV substantially outperformed most other forms of media in 2009. CTC, which grew Russian advertising revenue by 8.4% YoY in ruble terms in 2Q10, is slightly underperforming the market. This is also in line with our expectations, given the outperformance of CTC and other channels served by the ad seller Video International in 2009. On the whole, the figures underscore the continuing recovery of the ad market, and we expect the growth rate to strengthen in 2H10, particularly in Q4.

Valuation: CTC Media trades on a 2011 EV/EBITDA of 10.1x.

Action: We expect neutral market reaction for CTC, as the company released its own 1H10 numbers last week.