According to figures published by Video International Analytical Center, the deceleration in printed advertising revenues growth seen in 3Q08 has produced its first nominal y-o-y drop in advertising revenues; data based on TNS Media Intelligence monitoring show that spending on press advertising remained flat y-o-y in November 2008 and dropped y-o-y in December 2008.  All in all in 4Q08, press advertising revenues grew 7.5% y-o-y in October 2008 to RUB 5.8 bn, followed by just a 0.4% y-o-y gain in November (to RUB 4.9 bn - a decrease of 15.5% m-o-m) and a decrease of 4.5% y-o-y in December (to RUB 4.5 bn - down 8.2% m-o-m).

1Q09 is certain to bring further decreases, with a 20-30% y-o-y drop expected across the entire spectrum of print advertising (specific segments of print advertising destined to be much harder hit).  To date, the decline in advertising revenues in Russia has particularly battered the print advertising segment, with informative publications witnessing the starkest drop (as early as October 2008 advertising on informative print publications had dropped 19% y-o-y).

Source:  Video International Analytical Center

Source:  Video International Analytical Center

Source:  Video International Analytical Center

The figures yet again emphasize the challenging business environment in which RBC Information Systems currently operates.  In light of the myriad uncertainties facing the company (including plummeting revenues, USD 93 mn in debt obligations maturing in March and July, and a USD 42 mn lawsuit filed by Alfa Bank) it's doubtful the company holds any equity value.  Despite these difficulties, the company's stock maintains some liquidity on the MICEX and has found price support at just above RUB 10 per share.  Investors unfortunate enough to still be holding RBC stock would be well advised to get out now while they still can.  We continue to view CTC Media as a far more attractive, liquid, and solvent investment vehicle in the midst of the crisis.