Vedomosti (Moscow), August 29, 2003

The first Russian business television RBC TV will go on the air on September 2, 2003. In addition to its own programs, the new television will broadcast CNN and CNBC news programs. RBC invested $20m in this project and these investments are expected to be paid back in four years.

RBC TV was established in 2002 by the holding RBC Information Systems (RBC) . The company invested $20m in creating the television channel, including $6m in attracted credits. The share capital of RBC TV is $10m and it staffs about 500 people.

The holding owns 100-percent stakes in ZAO RBC TV and also in RBC Holding, RBC Soft, RBC Center and the publishing house RosBusinessConsulting. The company receives 48.1 percent of its revenues from its mass media division and 49.4 percent from software engineering and system integration services. The most famous project of RBC is its business news line on the Internet. On April 18, 2002, RBC had an IPO, for the first time in the history of the Russian market. It placed 16 percent of its shares on the RTS and MICEX exchanges for $13.28m. In 2002, the holding received $27.52m in revenues.

"The launch of RBC TV is a bold project because revenues from advertising will be the only source of its payback," RBC General Director Yury Rovensky announced in an interview with Vedomosti. He believes that the new television, targeted at the business community, is bound to attract a new layer of advertisers, such as auditing companies, investment banks and industrial groups. Rovensky promises there will be no camouflaged advertising. "It has become outdated as an efficient tool," he explained.

"Our experience of independent advertisement sales on the Internet enables us to forecast the break-even point in a two-year time and a complete payback of investments in four years," Rovensky says. He estimated the maintenance of RBC TV at $7m during the first year of broadcasting.

Rovensky sees the middle class as a potential audience for the new television channel, and he estimates the share of this class at up to 10 percent of the Russian population. RBC TV expects to attract up to 2 million people as its initial audience and this figure is forecasted to increase to 7 million over the following two years. According to Rovensky, at the first stage of this project, RBC TV will broadcast via the satellite systems of NTV-plus, Kosmos-TV, Divo-TV and Comcor-TV. In addition, negotiations with Mostelecom, the owner of the Moscow home antennas network, are close to their completion.

RBC TV will broadcast 24 hours a day seven days a week, offering live information broadcasting starting at 7 a.m. until 1 a.m. and replays of programs during early morning hours. Business news programs will open each hour and will be presented in the middle of each hour. The RBC TV programming also includes economic analytical programs and documentaries.

The management of the new television channel comes from RBC, i.e. Mikhail Yermolayev was appointed the RBC TV Editor in Chief and Artyom Inutin became the General Director.

In addition to its own programs, RBC TV will broadcast programs of the round-the-clock news television channel CNN and the pan-European business television CNBC Europe. President and Managing Director of CNBC Europe Rick Cotton says his company is set to help RBC TV in its development. In her turn, CNN Senior Vice President Maggie Eales noted, "We think we have chosen a promising partner on the rapidly developing Russian market".

Financial details of RBC's agreements with CNN and CNBC Europe have not been disclosed. Rovensky only noted that these agreements stipulated a two-way exchange of content and a similar broadcasting format along with a coordinated concept and information presentation.

Representatives of other television channels met the launch of RBC TV with interest. "There has been no similar experience in Russia. If the new TV channel has demand and does not suffer losses, it will mean that the class related to business life has grown large enough," NTV Senior Deputy General Director for Information Broadcasting Alexander Gerasimov said. He estimated the chances of RBC TV's survival at 50 percent. "Declared investments in the television channel seem to be true. Everything was done correctly and in accordance with the latest technologies. This is a conversational and not a picture television, therefore it will be cheaper," Gerasimov concluded.

Meanwhile, advertisers do not believe in perspectives of RBC TV. "Such television channel can work when the volume of an advertising market is tens of billions of dollars. RBC TV will be loss making. It will not attract new advertisers and existing ones will prefer to place their advertisements on central TV channels where advertising is very cheap," President of the Russian Association of Advertising Agencies Vladimir Yevstafyev said.

Roman Dorokhov, Anfisa Voronina