Sistema to Form No. 1 Film Studio

Services conglomerate Sistema said Thursday that it had formed a joint venture with Russian World Studios, or RWS, to create the country's largest television and film production company.

The move is part of Sistema's strategy to develop its nonpublic businesses, focused on the country's fast-growing consumer class. The bulk of Sistema's revenue comes from its listed telecoms units, MTS and Comstar.

Under the deal, Sistema will own 51 percent of the joint venture and RWS management 49 percent, the companies said in a statement. The joint venture will carry the name RWS.

"Sistema has contributed material and nonmaterial assets. It has not made any considerable cash contributions," Sistema first vice president Anton Abugov told a news conference.

The venture, which will retain senior RWS management, includes Sistema's film studio in St. Petersburg and Thema Production, both of which have been spun off from its media division, Sistema Mass Media.

RWS, created in 1998 but already one of the country's largest private production companies, has contributed all its business assets, including production and shooting facilities and equipment.

Abugov said the venture, worth an estimated $150 million, was expected to generate $200 million to $300 million in revenue per year.

He said the country's TV and film production market was worth "billions of dollars" and had huge potential, backed by rapid expansion in the television advertising market.

"This business won't be comparable to other nonpublic businesses of Sistema, but will be key for content production for its units," he said.