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. Last Updated: 07/27/2016

Jordan Ready to Turn NTV's Debt Into Profit

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After Gazprom became the owner of a 65 percent stake in NTV, having won control of the disputed 19 percent stake and after changing the management of the channel on April 3, the new management has become even more confident of its legitimacy. The new general director of NTV, Boris Jordan, is not intimidated by the company's multimillion dollar debts or depressing audit results. Over the past three months, NTV's average audience in Moscow grew by 5 percent according to Gallup data, and Jordan expects the company to turn a profit by the end of the year.

Q: Do you regret your decision to head a company that has more than $100 million in debts and shareholders who are literally fighting among themselves?
A: On the contrary, despite all of its problems, the company has great prospects. Since my appointment to NTV, my interest in this business has only grown. I enjoy building a media company, and I think we will have good results. I am certain that over the next three years, it will be possible to rebuild NTV in an entirely Western style as a national network that will produce very large earnings. It's simply necessary to understand that television is not only art but also a business. I hope we will be at NTV for a long time.

Q: How can you be so optimistic when Gazprom representatives and you yourself say NTV is on the verge of bankruptcy?
A: When we came to NTV that was the situation. The company's liabilities from the last year's results totaled $70 million. Ratings dropped. Why did the channel fall? Some time in the middle of last year, investment in the channel simply stopped. The same films and television series were re-broadcasted over the last eight months. As a result, in May we lost our rights to Western and Russian films. Since last year, the company has put minimal investments into quality broadcasting. Somehow news programs were still supported, but outside producers were not paid, satellites were not paid for, and rent was not paid. As a result, the company's standing debts amounted to $20 million at the moment of our arrival.

Q: You only just signed an auditor's report from PricewaterhouseCoopers. Did the results surprise you?
A: For two years, there were no confirmed audits of NTV. PricewaterhouseCoopers conducted Russian and Western audits of the company for 1999 and 2000. The Western audit for 2000 indicated NTV had liabilities of $70 million and losses of $22 million.

Take a look at how the previous management worked. They spent $6 million on Russian television series. That is a very large sum for a Russian television channel. But instead of buying broadcasting rights with that money, they gave the money to Media-Most in the capacity of their sponsor. NTV simply gave that money to Media-Most as a present and was not granted any rights whatsoever to broadcast television series. Those programs could be shown on any channel. Now programs made with NTV money are being shown on TV-6.

And for another example, from the information in the auditor's report for 2000, an offshore company called NTV-BV was established. It received a license from the Central Bank to invest $15 million in the company. I still do not have the slightest idea why. So far, we have discovered a transfer of only $1 million. That NTV money was invested in the offshore company through a promissory note and was then taken out of it through some shady contract. For NTV, the only outcome was the loss of $1 million. We are now beginning an audit for 2001. I hope we will find out what happened to the remaining $14 million. Such financial "operations" stripped the channel.

Just look at what happened to the ratings of NTV during recent weeks. For the first time in a year, they are rising. And why? Because a professional management team is working here. We've started to form the channel's video technology and invest in production. We built a more rational network. We compiled a 300-page business plan. Every program was analyzed: what is its audience share, what are its earnings. Now, 40 percent of our expenses are informational services. The time spent broadcasting news programs is 20 percent, and [these informational services] generate only 19 percent of our earnings.

Q: Does this mean you intend to reduce the number of news programs?
A: Of course not. James Rosenfield, the former president of CBS, recently visited me. He himself made news a profitable business. We will also make our news programs profitable.

Q: Certain programs based solely on image brought renown to NTV. Do you intend to broadcast only those programs that produce profits?
A: Why do you say image programs do not make money? Precisely because of that [belief] it does not occur to people that it is necessary to choose specific advertisements for every program. Look at what the NTV advertising department did before I came. They sold advertisements for the entire year all at once, and very cheaply. Now it is July and already all of my time is sold. … The ingenious management of NTV not only sold all of the advertising space at the beginning of the year for low prices but sold 30 percent more time than the channel has. And now I am forced to reach an agreement with advertisers.

Q: How do you evaluate the current condition of NTV?
A: The company has been stabilized. We've established control over finances. The large part of the present $20 million debt has been restructured.

Q: But there remains the debt of $90 million. What will be done with that?
A: That is our main problem. NTV owes that money directly to Gazprom and Media-Most. I want to resolve this problem by the end of the year.

Q: NTV has long been perceived as a stylish channel. Are you hoping to preserve that while minimizing expenses?
A: First of all, I want to clarify: it is not "a minimizing of expenses," but the establishment of elementary financial order. Secondly, we want to not only preserve [what existed before], but to improve it. The money we save will be used to improve our broadcasts. Life does not stand still. What was good yesterday, won't be enough to be the leader tomorrow. I hope we will do everything better than the way it was done in the past.