RELATED-PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2011

RELATED-PARTY TRANSACTIONS

RELATED-PARTY TRANSACTIONS

17.   RELATED-PARTY TRANSACTIONS

Transactions with principal stockholders

        On June 1, 2011, Alfa Group sold 25.15% of the Company's common stock to Telcrest Investments Limited.

        Alfa Group—In the period from June 1, 2011 through December 15, 2011 Alfa Group participated in the Company's board of directors. The Company maintains certain of its cash balances with Alfa Bank. As of December 31, 2010, the Company held the cash balances of $21,655 and deposits with maturities ranging from three to six months of $28,668 with Alfa Bank. In the period from January 1, 2011 through December 15, 2011, the Company also maintained cash balances with Alfa Bank and placed deposits with maturities ranging from three to six months. As of December 31, 2011, the Company held the cash balances of $4,861 and deposits with maturities ranging from three to six months of $8,894 with Alfa Bank. The interest accrued on bank accounts with Alfa Bank was $1,434, $1,497and $1,629 in 2009, 2010 and in the period from January 1, 2011 through December 15, 2011, respectively. Alfa Bank charged commissions for banking services of $453, $256 and $109, respectively, in 2009, 2010 and in the period from January 1, 2011 through December 15, 2011. Alfa Bank commissions paid for banking services amounted to $443, $262 and $1,095 in 2009, 2010 and in the period from January 1, 2011 through December 15, 2011, respectively. In October 2011, the Company signed an overdraft agreement with Alfa Bank bearing interest at 7.2% per annum with a credit limit of approximately $34,000 (Note 12).

        In 2011, the Company declared and paid dividends to its stockholders (Note 16). Dividends declared and paid to Alfa group amounted to $6,328.

        The Company recognized aggregate advertising revenue from Alfa Group's companies of $2,698, $2,219 and $1,393, and received cash for these revenues in the amounts of $4,088, $2,619 and $1,550 in 2009, 2010 and in the period from January 1, 2011 through December 15, 2011, respectively.

        Telcrest—Telcrest Investments Limited, a Cypriot company ("Telcrest"), became one of our principal stockholders in June 2011. The beneficial owners of Telcrest, including Bank Rossiya (which is not affiliated with Rossiya television channel), have investments in Russian media businesses, including indirect ownership interests in Channel One, REN-TV and TRK 5 and also have indirect significant minority interests in Video International. See also Note 14—"Television advertising sales" for description of arrangements with Video International. Telcrest became one of our principal stockholders subsequent to the negotiation of our current principal agreements with Video International.

        In 2011, the Company declared and paid dividends to its stockholders (Note 16). Dividends declared and paid to Telcrest amounted to $26,102.

        Modern Times Group MTG AB ("MTG")—In 2009, 2010 and 2011, the Company sold programming to a subsidiary of Modern Times Group MTG AB in the amounts of $381, $104 and $265, respectively. As of December 31, 2010 and 2011, the accounts receivable related to these transactions amounted to $29 and $89, respectively. In addition, the Company acquired programming from this subsidiary in the amount of $484, $458 and $nil in 2009, 2010 and 2011, respectively. As of December 31, 2010 and 2011, accounts payable for such acquisitions amounted to $460 and $nil, respectively.

        In October 2011, the Company has signed a five year exclusive agreement with subsidiary of MTG to distribute the international version of the CTC channel ("CTC-International") through the satellite pay-TV platform, as well as on third party cable and IPTV networks in the Baltic territories. In 2011, the Company received revenue under this agreement of $94.

        In 2011, the Company declared and paid dividends to its stockholders (Note 16). Dividends declared and paid to MTG amounted to $49,207.

        Management—A former senior executive of the Company and former member of the Board of Directors (who resigned in December 2009) had an interest in several entities to which the Company sells programming, from which the Company acquired programming and which placed advertising on the Company's networks.

        In 2009, the Company sold programming to these entities and acquired programming from these entities in the amount $3,021 and $803, respectively. In 2009, the Company received advertising revenue from these entities of $1,335 and paid cash in the amount of $424.

        This former executive and director had also served as one of the producers of a number of cinema releases for which the Company has acquired rights to broadcast. He did not receive compensation for his services as a producer of such films.

        Other members of management of the Company have, or have had interests in entities from which the Company acquires programming, fixed assets, trademarks, and advertising services. In 2009, 2010 and 2011 the Company acquired programming from these entities in amounts of $782, $2,345 and $nil, respectively. As of December 31, 2010 and 2011, accounts payable for this programming amounted to $135 and $nil, respectively. Fixed assets and advertising services acquired from these entities amounted to $nil, $264 and $nil, for 2009, 2010 and 2011, respectively.