Ukrainian Media: United Media Holding

Publication Date	June 2008
Publisher	Concorde Capital
Product Type	Report
Pages	49
ISBN Number	not applicable
Product Code	CNC00016

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Summary

The advertising markets in both Ukraine and Russia are in a rapid growth stage, posting 49% and 31% CAGR respectively in 2004-07, compared to 6% on average for Western European countries. We expect both markets to double from their current sizes by 2010-11: per capita advertising expenditures in Ukraine last year were a mere 20% of the average in other Central and Eastern Europe countries, while Russia's was 50% lower.

United Media Holding, one of Ukraine's largest media groups with exposure to print, radio and Internet, raised USD 45 mln by placing a 15% stake with portfolio investors in May.

United Media Holding is diversified in terms of its media presence. It is Ukraine's largest publishing house, owns the second-largest FM radio network in the country, and is the leader on Kyiv's FM radio market. The company's Internet business is currently comprised of 23 websites.

We use DCF and peer valuation methods to derive the fair value of United Media Holding.

Content

1. Investment Case
2. Executive summary
- Media market boom in the CIS
- Exposure to the fast growing CIS media industry
- UMHs profile
- Expanding abroad
- Diversification into TV and Internet is a top priority
3. Valuation
- Valuation methods
- DCF
- Peer valuation
4. Media markets in Ukraine and Russia
- Advertising: fuelling media revenues
- Immense growth potential
- Reshuffling the media ad market structure
- Mid-term: threat to TV dominance in advertising
- Digitalization of TV & radio to increase competition in the longer term
- TV: the largest segment of ad market
- Radio: an alternative way to reach a large audience
- Internet: the fastest growing ad market segment
- Case study: the Internet as the last shelter for alcohol & tobacco ads
- Press advertising growing ahead of the market
- Copy sales: room for growth
- Ukraines market to double in the mid-term
- Retail development the major trigger for copy sales
5. Players and strategies
- Ukraine
- Russia
6. UMHs business
- Company business segments
- Business model
- Diversification into non-publishing businesses
- Investment plans for 2008
- New publishing projects in Ukraine: benefits ahead
- Expansion of UMH publications in the CIS markets
- Profitability outlook
- Legal structure
- Management team
- Risks
7. Financial Statements
8. Appendices
- Appendix: Main publication titles
CHARTS
- Share price performance, USD
- Revenue breakdown, 2007
- Per capita media ad spending, 2007
- 2007-10E CAGR in ad spending
- Per capita media ad expenditures vs. per capita GDP, CEE**
- Media ad market structure, Ukraine
- Media ad market structure, Russia
- Media ad market structure, World
- Cost per thousand contacts (CPT) by media, USD, 2007
- CPT in TV & magazines depending on size of target audience, USD, Ukraine
- Percentage of households with access to digital TV, 2006*
- TV advertising markets, USD mln
- Daily audience reach by FM radio, %*
- Internet advertising, USD mln
- Internet penetration & advertising, 2007
- Advertising expenditures by publication segment in Ukraine, USD mln
- Ukrainian and Russian copy sales markets, USD mln
- Press retail points per 1 ths of people
- Share of supermarkets in press distribution, 2006
- Print media market structure in Ukraine by publishers
- Audience by TV channel in 2006-2007, audience 18+
- Radio audience in Ukraine
- Radio audience in Kyiv
- TOP-4 internet resources in terms of advertising revenue
- Print media market structure in Russia by publishers
- UMH's business segments
- Sales dynamics by segment, USD mln
- Sales breakdown, 2007
- UMH business segments
- New title launches by publishing houses in 2006-07*
- Gross ad revenues of Ukraines Top-3 publishing houses, USD mln
- Circulation by magazine segment in Russia, mln copies
- Share of TV guide publishing houses in total ad revenues, Russia
- Ukrainian sports websites, top-5 in last 30 days (May 26-June 25), mln unique users
- Audience coverage by UMH radio stations, mln people
- Expansion plan for points of sale network
- UMH EBITDA by segment,
- EBITDA dynamics for new publications, USD mln
- Legal structure
TABLES
Market information*
- Stock ownership
- Key financials*, USD mln
- Market multiples*
- Media stocks with exposure to CIS markets
- Advertising market forecasts
- Revenue and EBITDA projections, USD mln
- DCF model forecasts
- DCF: Sensitivity analysis
- Peer valuation summary
- Time limitations of advertising legislation in Russia and Ukraine*
- Major limitations of advertising legislation in Russia and Ukraine*
- Ukraine: Main media players
- Russia: Main media holdings
- CapEx plans for 2008
- Mapping UMH in Ukraines press ad market
- Income Statement Summary, USD mln*
- Balance Sheet Summary, USD mln*
- Cash Flow Statement, USD mln*
- Exchange Rates, UAH/USD
- Appendix: Main publication titles