Mouse finds hole into lucrative free-to-air market

MOSCOW — The Disney Channel will finally be available on free-to-air terrestrial TV in Russia, after the Mouse spent years trying to break into the lucrative market.

In a $300 million deal with Russia’s United Television Holding, the Walt Disney Co. will get a 49% stake in domestic Seven TV channel, which it will rebrand as the Disney Channel.

This gives the Mouse access to 40 million households, some 75% of the free-to-air audience in Russia.

The channel is expected to launch early 2012 after regulatory approval and contractual conditions are met.

Disney has been trying to buy a terrestrial channel since 2008 when regulators turned down its bid to buy Media One, which included 30 regional broadcasters.

After that failure, Disney bowed a web on pay TV platforms.

Ironically, Media One was taken over by Uzbek-born Russian billionaire Alisher Usmanov’s AF Media, which then formed UTH.

Disney boss Robert Iger flew to Moscow for a meeting with prime minister Vladimir Putin and Usmanov on Oct 27.

Iger told Putin — who is to run for president again next March in a race he is widely expected to win — that Disney considered the Seven TV purchase “a good investment,” according to Russian media reports.

“International expansion is a key strategic priority for our company and Disney Channel has proven to be invaluable in building the brand around the world,” Iger said in a statement issued after his meeting with Putin.

The new channel will reach viewers via stations in 54 towns and cities, including Moscow and St. Petersburg, as well as hundreds of more remote locations through regional distribution agreements.

Usmanov, who also has a major stake in London’s Arsenal soccer club, said the new channel would combine Disney’s family entertainment with original Russian programming.

UTH Russia CEO Ivan Tavrin said the deal would help grow and expand the reach of Seven TV, which last year was rebranded from sports to a general entertainment channel, with significantly improved ratings and financial results.

Analysts believe Disney will retain its cable channel as free to air and subscriber-based services cater to different audiences. Disney has not commented on the future of its cable operation.

Disney is the third foreign media company to gain access to Russia. Sweden’s Modern Times Group has a stake in top entertainment network CTC Media and Germany’s RTL Group has an investment in National Media Group, which runs Ren-TV and St. Petersburg’s Channel Five and owns a quarter of top-ranking national web Channel One.

Russia’s TV advertising is worth over $4 billion a year and although Internet and other advertising markets are developing, terrestrial TV remains the major broadcast market in the country.

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