Siguler Guff subsidiary cashes in on MTV Russia

Russia Partners, a subsidiary of US firm Siguler Guff, has sold its stake in MTV Russia to local media group Prof-Media. The firm launched the channel nearly ten years ago under licence from MTV, and built an influential market share.

Private equity firm Russia Partners has realised its investment in MTV Russia, after selling the TV channel to Russian media group Prof-Media for $360 million (€266 million).

MTV Russia

Prof-Media has bought Wayfarer Media, the holding company behind MTV Russia and VH1 Russia, which was 53 percent-owned by MTV Networks International, part of the Viacom empire, and 5 percent-owned by the European Bank for Reconstruction and Development. The remaining 42 percent belonged to Russia Partners, a wholly-owned subsidiary of Siguler Guff.

The channel operates on a similar model to its counterparts in the west, featuring both local and international music videos, plus various lifestyle and entertainment programmes. Some of these are locally produced, including Alicia’s Dreams, a popular show that allows viewers to dictate the course of events via SMS.

Russia Partners launched MTV Russia in September 1998 under a license agreement from Viacom, which at the time was not ready to go into Russia by itself. Over the subsequent years MTV’s international arm has built up a  majority stake in the channel, although the two groups have continued to manage it jointly.

MTV Russia is now broadcast to 35 million households across the country, with over 90 million potential viewers, and has a market share of about 2.6 percent in its free-to-air target constituency of 11-34 year olds. VH1, which was launched in 2005, is broadcast to about 14 million people. These huge audiences make the channels an attractive proposition for Prof-Media, which is looking to boost its share of the lucrative TV advertising market.

Prof-Media owns a variety of media assets, including a cinema chain, a film production company, and various radio stations, as well as a number of other TV channels. Russia Partners’ managing partner Drew Guff said this made it an ideal partner for MTV Russia, since the channel’s additional growth was likely to come through alternative media platforms.

Guff could not comment on Russia Partners’ return from the deal, but described it as “very significant”. The EBRD is also in line for another sizeable return – the bank’s website reveals that it has enjoyed an internal rate of return of more than 25 percent from its fund investments in Russia and the surrounding countries.

Russia Partners is a subsidiary of Siguler Guff, a US-based private equity group with about $4 billion of funds under management. Launched in 1991 to target investments in Russia and the former Soviet republics, Russia Partners was co-founded by Drew Guff, also the founding partner of Siguler Guff, and now has about $600 million under management.

Renaissance Capital advised Russia Partners on the transaction.