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Russia: Moscow Cable Radio Station Sold, Wins Bid for FM Frequency

Posted on: Thursday, 15 December 2005, 12:00 CST

Text of report by Russian newspaper Vedomosti on 30 November

The company Sistema Mass Media, the media subdivision of AFK Sistema, has sold the Radiotsentr concern, whose main asset is the cable radio station Govorit Moskva [Moscow Calling]. The new owner of Govorit Moskva is Bonaventura, a little-known company in the market. After buying the radio station for approximately 1 million dollars, Bonaventura paid a further sum of more than 7 million roubles [250,000 dollars] for the right to broadcast on the 92 FM frequency in Moscow and Moscow Oblast.

Vedomosti was told that Sistema Mass Media had sold the Radiotsentr concern to a player on the radio market. Aleksandr Leyviman, general director of Sistema Mass Media, confirmed this report, explaining that the deal took place about six weeks ago. Leyviman refused to disclose the identity of the buyer of Radiotsentr or the sum paid. According to him, Sistema Mass Media decided to sell the radio business because it was "very small".

"We decided to concentrate on our main business - internet provider services (Sistema controls MTU-Intel - Vedomosti ) and cable television (it is developing Stream TV and Kosmos TV - Vedomosti )," he stated.

Vedomosti 's source who is familiar with the details of the deal said that the buyer of Radiotsentr was Bonaventura OOO [limited liability company], one of whose founders is the entrepreneur Vasiliy Kichedzhi, who until the middle of last year held the post of deputy presidential plenipotentiary representative in the Central Federal District. We were unable to contact Kichedzhi yesterday. According to Vedomosti 's interlocutor the sum of the deal totalled around 1 million dollars. Leyviman described that figure as "close to the truth".

Immediately after buying the radio station, Radiotsentr's new owner started developing the radio business. In yesterday's tender of the Federal Tender Commission for Television and Radio Broadcasting (FKK), Radiotsentr received the 92 MHz frequency. "We took part in the tender because we want to broadcast not only on the third button of your radio receiver, but also on the FM band," Radiotsentr General Director Vyacheslav Drozditskiy explained to Vedomosti.

He said that Radiotsentr submitted applications for two frequencies: 92 MHz (with a social and political concept) and 98.4 MHz (with a free broadcasting concept), but after winning the 92 MHz frequency the company withdrew the second bid. According to Drozditskiy, Radiotsentr intends to invest "several hundred thousand dollars" in developing the FM band. "The transmitter capacity of all the existing Moscow radio stations amounts to 5 kW, while on the frequencies that were up for tender it is only 100-500 watts," he explains; "for the radio station to be able to broadcast, this will need major development."

Market players find the sale of Radiotsentr a perfectly logical step. "AFK Sistema is a commercial organization, and Radiotsentr was a loss-making enterprise," Sergey Kozhevnikov, general director of the Russian Mediagroup, says. Another player in the radio market who asked to be anonymous believes that Radiotsentr's buyers were pursuing "political interests": "The main listeners to cable radio are people over the age of 55, who are the main participants in elections, and by obtaining the right also to broadcast on the FM frequency, the new owners also gain access to a younger audience."

The results of the tender held by Federal Tender Commission for Television and Radio Broadcasting (FKK) for a further three frequencies in the lower FM band also became known yesterday. Each of the frequencies was offered for 7 million roubles, and the size of the tender fee was 142,250 roubles. The 94.4 MHz frequency, in the literature and drama format, was won by radio Lornet (Literaturnaya Kollektsiya [Literature Collection] OOO); Klassicheskoye Radio [Classical Radio] (Klassicheskoye Radio OOO) will broadcast in the educational format on the 95.2 MHz frequency; and on the 98.4 MHz frequency, for which a free format was specified, original songs will be heard - the frequency was won by radio Karavella (RTS-Inform OOO) with the programme "Original Song Club".

The Radiotsentr Concern OAO [open-type joint-stock company] includes the radio station Govorit Moskva, which broadcasts on the third button of the capital's radio receivers, and Public Russian Radio (which broadcasts on local frequencies in 36 regions of Russia). Until recently Radiotsentr belonged to Sistema Mass Media, which is part of AFK Sistema. Radiotsentr's financial data have not been divulged. The Govorit Moskva radio station's share of the Moscow audience, according to TNS Gallup figures, is 0.9 per cent. For comparison: the shares of the radio stations Rossiya and Mayak, which broadcast on the first and second buttons respectively, are equal to 6.9 per cent and 6.5 per cent.

Source: BBC Monitoring Media

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