Interros grows with $550 mil TV3 purchase

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LONDON -- The media arm of Russian oligarch Vladimir Potanin's Interros group has agreed to buy Moscow-based entertainment network TV3 for $550 million, sources close to the deal said Monday.

TV3 -- which has a 3% market share in Russia and broadcasts across the country via a network of directly owned and affiliated stations -- had been planning to go public in an IPO slated for later this month.

News of the scheduled IPO is understood to have excited a spate of interest -- and some offers -- from international, regional and local media companies, including Potanin's Prof-Media.

International strategic companies including Disney and News Corp., regional companies like SBS and CME and Russian outfits including entertainment network CTC and Prof-Media all had expressed interest in the possibility of buying TV3 before it went public, sources close to the deal said Monday.

"TV3 had been planning to go public, shaking loose a lot of strategic interest to see if they could get a deal," one source said.

"Offers including one non-binding proposal for $400 million were made, but the company knew that even in writing that meant nothing, and accepting them would force it to reveal more information than it wished," the source said.

Senior management at the network, founded in 1998 and headed by CEO and general director Tim McDonald -- a veteran of U.S. TV development who, in the late 1970s, founded Norfolk, Va.'s TVX Broadcast Group, now part of Paramount -- are understood to have felt the offers were on the low side for a profitable company with a unique platform of 28 directly owned stations and dozens of affiliates in a rapidly growing market.

"Recent experience in Russia -- where several planned IPOs have been cancelled on fears that it currently is a buyers market -- suggested that now was not the right time to go public. An IPO now might not necessarily reflect the true value of the company," the source said, adding that early offers of between $400 million and $450 million were rebuffed.

Neither TV3 nor Prof-Media would comment on the deal Monday. Russian anti-monopoly laws mean that it is subject to government scrutiny but official approval is expected before the year's end.

Prof-Media, which has interests in all key Russia media markets, is understood to be planning no major changes for TV3 other than to expand and deepen its reach and ratings.

Media industry analysts in Russia say that Prof-Media was likely prepared to pay more for the station than others had valued it at because the TV3 sale represented a unique opportunity to buy an established network with a presence in 18 of 20 key television markets across the country.

"It may be preferable to sell to a strategic investor (than go public)," analyst Tatiana Kapoustina of Moscow financial research company ATON said earlier this month during intense Russian media speculation about a possible deal.
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