OPENING REMARKS AND PRESENTATION OF THE RUSSIAN ADVERTISING MARKET SERGEY VASILIEV, CEO – VIDEO INTERNATIONAL GROUP EGTA’S ANNUAL MARKETING & SALES MOSCOW, 5 OCTOBER 2006

VIDEO INTERNATIONAL GROUP

MEDIA-SELLING COMPANIES VIDEO INTERNATIONAL INCLUDES MEDIA-SELLING COMPANIES THAT OCCUPY LEADING POSITIONS IN THE MAJOR ADVERTISING MEDIA MARKET SEGMENTS RUSSIA AND THE CIS COUNTRIES WE ARE DOING BUSINESS IN RUSSIA AND THE CIS COUNTRIES 1987 FOUNDED IN 1987 PRIVATELY OWNED VIDEO INTERNATIONAL IS A PRIVATELY OWNED COMPANY 47 CITIES COVERING FIVE COUNTRIES ABOUT 3,000 STAFF IN 47 CITIES COVERING FIVE COUNTRIES $2 BILLION ANNUAL TRADE TURNOVER – MORE THAN $2 BILLION

MEDIA ADVERTISING MARKET IN RUSSIA MEDIA ADVERTISING MARKET IN RUSSIA

RUSSIAN ADVERTISING MARKET AT A GLANCE ADVERTISING MARKET WAS EMERGED IN 1992 FOR RELATIVELY SHORT PERIOD THE AD MARKET EXPERIENCED SEVERAL STAGES, BEGINNING EMBRYONIC TO WELL DEVELOPING IN TERMS OF VOLUME, PLAYERS, SERVICES ETC. ALMOST ALL MAJOR INTERNATIONAL ADVERTISERS AND LEADING AD MEDIA NETWORKS ARE OPERATED IN RUSSIA CURRENTLY FOR THE MOMENT RUSSIAN ADVERTISING MARKET IS ONE OF THE FAST GROWING AD MARKETS IN THE WORLD FOR THE LAST DECADE ADVERTISING HAS BECOME TRANSFORMED INTO A SUBSTANTIAL SECTOR OF RUSSIAN AND GLOBAL ECONOMY

DYNAMICS OF THE RUSSIAN MEDIA ADVERTISING MARKET, , $ MLN.

ADVERTISING MARKET AND ECONOMIC CRISES RUSSIAN ADVERTISING MARKET CRISIS, $ MLN TITANIC DROP - AD MARKET DECREASED MORE THAN TWICE

THE CURRENT MEDIA ADVERTISING MARKET IN RUSSIA

DYNAMICS OF THE RUSSIAN MEDIA ADVERTISING MARKET, , $ MLN.

DYNAMICS OF THE RUSSIAN TV ADVERTISING, , $ MLN.

MEDIA ADVERTISING SPENDING BY SEGMENTS IN , % 2000 TV 29% RADIO 6% PRINT 48% OUTDOOR ADS 18% 2006 TV 49% RADIO 6% PRINT 25% OUTDOOR ADS 18% INTERNET 2%

PRICE GAP ON WELL DEVELOPED WESTERN EUROPEAN MARKETS IS ABOUT 1.5 (50%). RUSSIA HAS MOVING STEADILY IN THAT DIRECTION. PRICE GAP ON WELL DEVELOPED WESTERN EUROPEAN MARKETS IS ABOUT 1.5 (50%). RUSSIA HAS MOVING STEADILY IN THAT DIRECTION. х5 х5 х2.5 х2.5 VARIATION IN TV PRICES FOR LARGE AND MODEST ADVERISERS LESSENING LARGEST ADVERTISERS BUYING PREVIOUSLY HIGHEST POSSIBLE AIRTIME VOLUMES ON LOW PRICES DO NOT WANT TO LOSE DOMINANT MARKET POSITION TOP 10 ADVERTISERS AVERAGE MARKET PRICE 50 ADVERTISERS BUYING AIRTIME ON MAXIMUM PRICE

RUSSIAN AD MARKET DYNAMIC GROWTH POST-CRISIS REVIVAL WAS INFLUENCED BY LOW STARTING LEVEL OF THE AD MARKET. IN 1999 AD EXPENDITURES PER PERSON WAS ABOUT $5 FURTHER DYNAMIC GROWTH WAS DEPENDENT ALSO ON HIGH POTENTIAL OF CONSUMER MARKET AS WELL AS POSITIVE PERSPECTIVES OF ECONOMY IN GENERAL MAJOR GLOBAL ADVERTISERS READILY REINFORCED ACTIVITIES USING AGGRESSIVE MARKETING STRATEGIES LEADING RUSSIAN COMPANIES WERE ABLE TO CONDUCT LARGE-SCALE AD CAMPAIGNS, ESPECIALLY ON TV RUSSIAN AD MARKET HAS BEEN WELL DEVELOPED IN TERMS OF PERSONNEL, ADVANCED CLIENT SERVICES, INTERNATIONALLY ADOPTED RESEARCH MEASUREMENT LIBERAL MARKET POLICY AND GRADUAL IMPROVEMENT OF MACRO-ECONOMIC INDICATORS INCREASE THE COUNTRY INVESTMENTS ATTRACTION IT BRINGS ANNUAL 30-50% INCREASE OF ADVERTISING EFFECTIVE DEMAND AND DYNAMIC GROWTH RATE OF THE MARKET

RUSSIAN ADVERTISING MEDIA MARKET IN INTERNATIONAL CONTEXT

RUSSIA AND THE EUROPEAN ADVERTISING MARKET RANKCOUNTRY ADVERTISING EXPENDITURE (BILLION US$ AT CURRENT PRICES) GERMANY14,318,220,819,018,018,519,0 2UNITED KINGDOM8,912,316,6 17,017,918,7 3FRANCE8,08,410,910,8 11,211,5 4ITALY5,05,88,88,58,89,410,0 5SPAIN5,34,16,26,16,36,66,9 6RUSSIA* …1,01,52,22,93,95,0 7NETHERLANDS2,33,24,34,23,93,83,9 8POLAND2,00,62,52,72,93,13,3 9BELGIUM1,01,32,02,22,42,83,1 10GREECE0,331,02,12,32,52,82,9 11SWITZERLAND2,42,53,12,82,7 2,8 12AUSTRIA1,01,42,1 2,2 2,3 13NORWAY0,461,31,81,9 2,02,1 SOURCE: ZENITHOPTIMEDIA - ADVERTISING EXPENDITURE FORECAST, * - THE RUSSIAN ASSOCIATION OF COMMUNICATION AGENCIES

RUSSIA AND THE WORLD ADVERTISING MARKET SOURCE: ZENITHOPTIMEDIA - ADVERTISING EXPENDITURE FORECAST, * - THE RUSSIAN ASSOCIATION OF COMMUNICATION AGENCIES RANKCOUNTRY ADVERTISING EXPENDITURE (BILLION US$ AT CURRENT PRICES) USA82,2104,9147,2149,8152,3161,5168,0 2JAPAN37,237,738,936,336,237,938,7 3GERMANY14,318,220,819,018,018,519,0 4UNITED KINGDOM8,912,316,6 17,017,918,7 5FRANCE8,08,410,910,8 11,211,5 6ITALY5,05,88,88,58,89,410,0 7CHINA0,32,55,16,37,78,79,7 8SOUTH KOREA2,04,55,36,36,67,17,6 9SPAIN5,34,16,26,16,36,66,9 10CANADA3,74,25,65,86,06,36,5 11AUSTRALIA3,03,94,95,05,45,86,1 12RUSSIA* …1,01,52,22,93,95,0 13BRAZIL2,56,04,03,33,73,94,2 14NETHERLANDS2,33,24,34,23,93,83,9 15MEXICO…1,83,6 3,43,53,6

ADVERTISING EXPENDITURE PER CAPITA 2005, (US $, EXCL VAT) RUSSIAEASTERN EUROPE WESTERN EUROPE JAPANUSA OF THE COUNTRY POPULATION OF THE URBAN POPULATION

RUSSIAEASTERNEUROPEWESTERNEUROPELATINAMERICA CPT ON THE NATIONAL TELEVISION IN 2005, $ (EXCL VAT) 1,3 7,0-9,0 2,5-3,0 2-2,5 RUSSIA AND LATIN AMERICA - THE URBAN POPULATION, WESTERN AND EASTERN EUROPE - THE COUNTRY POPULATION

RUSSIAEASTERNEUROPEUSALATINAMERICA RATIO OF ADVERTISING BUDGETS TO RETAIL SALES VOLUME IN 2005, % 2,62,62,62,

FORECAST OF THE RUSSIAN MEDIA ADVERTISING MARKET DEVELOPMENT TO 2010

THE FORECAST OF THE RETAIL SALES TURNOVER IN RUSSIA IN , $ BLN. SOURCE: ‘RENAISSANCE CAPITAL’ IC 126% BY 2010, THE RETAIL SALES TURNOVER WILL INCREASE BY 126% DOUBLE BY 2010, THE FOOD COMMODITY SALES VOLUME WILL DOUBLE

VARIATION OF ROUBLE / US DOLLAR EXCHANE RATE

FORECAST OF THE RUSSIAN MEDIA ADVERTISING MARKET DEVELOPMENT TO 2010, $ MLN. +28% +15% +28% +21%+17%+13% ANNUAL GROWTH

FORECAST OF THE RUSSIAN MEDIA ADVERTISING MARKET BY SEGMENTS TO 2010, $ MLN. MEDIA2005 fact fact TELEVISION RADIO PRINT OUTDOOR INTERNET OTHERS TOTAL

MEDIA ADVERTISING SPENDING BY SEGMENTS IN , % 2010 FORECAST 2005 FACT TV 47% RADIO 6% PRINT 28% OUTDOOR ADS 18% INTERNET 1% TV 57% RADIO 5% PRINT 19% OUTDOOR ADS 14% INTERNET 5%

FORECAST OF THE TELEVISION ADVERTISING EFFECTIVE DEMAND GROWTH TO 2010, $ MLN. (INCL VAT), % +37% +19% +35% +25%+23%+16% ANNUAL GROWTH

RUSSIAN BROADCASTING STRUCTURE

STRUCTURE OF AD BLOCKS ON FEDERAL TV CHANNELS BROADCASTING IS DISTRIBUTED BY TIME ZONES BROADCASTING IN EACH CITY IS CARRIED OUT THROUGH A CITY’S TELEVISION RELAY TV CHANNEL BROADCASTING IN DIFFERENT CITIES INCLUDES ‘REGIONAL WINDOWS’ TO BROADCAST LOCAL PROGRAMS AND ADS MOSCOW CITY N A BLOCK OF ADS PROGRAM FILM, SHOW, ETC. NATIONAL AD SPOTS MOSCOW AD SPOTS COMMERCIAL CUTOFF PROGRAM FILM, SHOW, ETC.. NATIONAL AD SPOTS REGIONAL AD SPOTS COMMERCIAL CUTOFF

MAJOR TRENDS IN DRAMATIC INCREASE IN PRICES FOR TELEVISION ADVERTISING ADVERTISERS WILL OPTIMIZE THEIR EXPENDITURE TO GET THE BEST RETURN OF INVESTMENT. ADS PURCHASE SCHEMES WILL BECOME MORE COMPLICATED THROUGH THE USE OF MORE IMPACTFUL CREATIVE MESSAGES AND SELECTIVE TARGETTING ADVERTISERS WILL ATTEMPT TO BE MORE COMPETITIVE INTERNET ADVERTISING WILL SKYROCKET TV AD MARKET BECOMES MORE COMPLICATED. ADVERTISERS STRIVE TO ENHANCE IMPACT THROUGH THE OPTIMISATION OF NATIONAL AND REGIONAL TV CAMPAIGN TARGETTING

THANK YOU FOR ATTENTION! 25, AKADEMIKA PAVLOVA ST., MOSCOW, RUSSIA TEL.: +7 (495) , FAX: +7 (495) ,