Search Engine Rambler Sells 51% of Advertising Arm

Rambler Media, owner of the Internet's third-largest Russian-language search engine, said Tuesday that it had sold 51 percent of its advertising arm to Video International Group, thus strengthening its partnership with the largest player in the country's advertising sector.

The terms of the deal call for Rambler to transfer the majority stake in Index20 to IMHO VI, a Video International subsidiary.

The deal will reinforce ties between Rambler and the advertising giant, which were already strong, on the heels of a strategic partnership agreement signed by the two in October. That agreement allowed IMHO VI to sell interactive ads on Rambler web properties.

Mark Opzoomer, CEO of Rambler Media, said Tuesday that the deal would be mutually beneficial.

"We believe that by allowing Index20 some independence from Rambler and partnering with IMHO VI, we will attract more advertisers to Rambler and capture a larger share of the online advertising market, thus improving our sell-out and power ratios," Opzoomer said.

"In addition, through this strategic partnership, IMHO VI will absorb the corporate costs related to Index20, therefore enhancing Rambler's cost base," he added.

The terms of the deal guarantee Index20 a minimum of $40 million in advertising revenues for 2008. That figure would then rise to a minimum of $60 million for 2009 and $90 million for 2010.

The purchase price was not disclosed, but Rambler said the deal included a three-year call option to buy back the 51 percent stake.

Arsen Revazov, the President of IMHO VI, said Video International would leverage its majority stake in Index20 "to control the development of its business fully."

"We are very excited that this acquisition creates a basis for synergies between IMHO VI and Index20 and that it will strengthen Video International's share in the Russian advertising market on the Internet," Revazov said.

"We will put in place Video International's corporate standards and its unique advertising sales techniques so that Rambler reaches new heights and to better serve its advertisers."

Index20 is the sole vehicle for the fast-growing online advertising sales for Rambler web properties like Rambler.ru, Lenta.ru, Price.ru and Rambler ICQ.

While the deal will likely accelerate Index20's growth, Rambler is also hoping to benefit from the exposure to the broader range of advertisers Video International can offer.

No recent revenue figures were available for Index20.

Rambler, which also generates revenues through web site hosting, providing search functions, and other web advertising, has projected total 2008 receipts of $110 million

Russian online advertising revenues increased by 60 percent in 2007 to $160 million, according to the Video International research group.

Media Group to Buy Cable Network

National Media Group agreed Wednesday to buy National Telecommunications, one of the country's largest cable network operators, from billionaire Suleiman Kerimov's Nafta Co., Interfax reported.

The value of the deal was not disclosed, but a source close to the agreement said National Media Group, controlled by Bank Rossiya, whose largest shareholder is billionaire Yury Kovalchuk, would pay from $1.3 billion to $1.5 billion for National Telecommunications, the news agency said.

Yekaterina Golovkova said the media holding agreed to buy 100 percent of the television and Internet cable network and that the deal should be closed in two weeks to a month.

Kommersant said earlier Wednesday that the media holding was looking to buy 51 percent.

Kovalchuk, a close ally of President Vladimir Putin, created National Media Group in February when Bank Rossiya, Severstal, Surgutneftegaz and insurance group Sogaz pooled the 68 percent of Ren-TV and 72 percent of Channel 5 they controlled, the holding said at the time.