The sixth of the big five is no longer a bear market.

Unlike in other territories, digital technologies do not represent the main challenge facing the TV industry in Russia today, as the country is several years behind Western Europe in that respect. Russia's six main terrestrial broadcasters still dominate, accounting for 88 percent of the audience. First Channel and Russia RTR battle it out for first place with 26 and 24 percent respectively; NTV and CTC compete for third and fourth places at 14 and 12 percent (although this can vary, with CTC leading in some time-periods); finally, TNT and Ren TV hold fifth and sixth places at seven and five percent respectively.

Cable and satellite TV are still at an embryonic stage in Russia, despite the fact that the leading pay-TV operator, NTV Plus, has been on the market for eight years. NTV Plus has 300,000 subscribers, out of 50 million total TV households. It features a bouquet of channels comparable to any other pay-TV service in the world, but the monthly fee of over-U.S.$30 is simply too expensive. But a change is underway: in two years, one million of Moscow's three million TV households will have access to high fiber-optic cable through a company called Comcor. Currently, Comcor passes through 200,000 homes and offers Internet access, telephony and television channels for approximately $20 per month.

Comcor's biggest competitor, Stream, reaches 150,000 homes through Asymmetric Digital Subscriber Line (ADSL) transmission--a more expensive alternative, which is used to transmit VoD services over regular phone lines. However, this market is expected to grow as well, and there are expected to be an additional 500,000 subscribers in St. Petersburg within the next two years.

The Russian television business is not safe from audience fragmentation, the bane of broadcasters' existence the world over. Fragmentation presents the biggest threat to those regions where two syndicated networks--National Television Syndicate and Regional Television Syndicate--have emerged in the past year.

Geography is another problem that plagues Russian TV. There are 11 time zones in Russia, and in some regions the local station can rank number two among the six networks.

Regional advertising is growing at a faster pace than national advertising, which is impressive given the fact that national advertising has been increasing at a rate of 25-30 percent annually. Just prior to the ruble (local currency) crisis in 1998, Russian television advertising was worth $480 million. This figure slumped to $180 million in the wake of the crisis. But, in 2005, the number has catapulted to $2 billion, moving Russia ahead of Spain, which was fifth place in Europe in terms of advertising revenue. Hollywood always refers to the "Big Five" in Europe; perhaps they should now call it the "Big Six."

When Russia first opened its doors to Western programming in the early '90s, the market became flooded with U.S. product. In those early years, U.S. series like ER, The X-Files and La Femme Nikita were scheduled in primetime. But when the U.S. majors stopped supplying product in the wake of the ruble crisis, the Russians, and Vladimir Gusinsky's NTV in particular, turned to producing their own series, such as Kamenskaya, Street of the Broken Lamps and Bandits of St. Petersburg, which not only took the place of American product but produced much higher ratings and had great re-run potential; these series still run today. Apart from fourth-place channel CTC, U.S. product is disappearing from the schedules of the top six networks; CTC still runs Friends, Smallville, Charmed and Sex and the City, and will launch Desperate Housewives shortly, but none air in primetime.

The only exceptions to this rule are movies: Hollywood movies still continue to be successful, with Harry Potter and Lord of the Rings each gaining an over 30 percent share in Russia; and action movies starring Arnold Schwarzenegger, Bruce Willis and Steven Seagal regularly drawing similar audiences on First Channel. CTC also runs U.S. movies at 9:00 pm, although Russian movies are beginning to rival U.S. movies in terms of ratings.

Recently, Lost made a huge impact, gaining a 35-40 percent share and 12-14 percent rating when it launched in the summer on First Channel at 7:15 p.m. on Sundays. The show was promoted as a scripted Survivor, and partly due to the immense success of Survivor, the drama did great. Generally speaking, however, reality shows do not work well on the main channels, as compared to dramas. However, TNT concentrates on this genre and recently launched Big Brother.

Currently, all series in Russia are stripped daily, as has been the historical practice. However, AMEDIA, one of the country's leading production companies, will shoot a pilot for a weekly Russian version of crime drama Law & Order, as the Ruskie market gradually follows the lead of other markets and introduces vertical programming.

AMEDIA was founded three years ago by Alexander Akopov, former general director of Russia RTR. He acted as producer of Brigade, a successful Russian series. AMEDIA currently employs over 200 people, and that number will increase to 1,000 with the five new productions for this fall season. By the end of 2005, Media City (AMEDIA's headquarters in Moscow) will be the largest and most modern production studio in Russia, with 14 sound stages--nine devoted to television production and five for feature films. AMEDIA produces over 600 hours of television programs annually and in 2006 will produce 10 to 12 Russian feature films in an effort to capitalize on the great success of local movies at the Russian box office. AMEDIA signed a co-production deal with Sony Pictures Television International (SPTI) almost three years ago, which has the two companies remaking popular sitcoms and telenovelas, as well as creating their own original novelas. The first original series, Poor Anastasia, was a Russian telenovela about a peasant girl growing up in the court of St. Petersburg in 1839. It was not only very successful on CTC (gaining an audience share of 18 percent), and on Ukraine's 1+1 (achieving a 50 percent share), but it has also been sold to over 20 countries. Poor Anastasia has been successful in Greece (rating number two on Mega Channel) and Bulgaria (rating number one on News Corp's BTV); and it recently launched with good ratings in the mornings on Nova TV in the Czech Republic. Poor Anastasia cost $100,000 per episode to produce on high definition. In comparison, achieving the same result in the U.S. would have cost more than $1 million per episode.

AMEDIA will co-produce three sitcoms this season: Russian versions of Carsey-Werner's Grace Under Fire and SPTI's Who's the Boss for CTC; and Warner Bros' Perfect Strangers for First Channel. The company hopes to follow the success of the local version of The Nanny, which was co-produced with SPTI for CTC and gained a 27 percent share on the network. It was so successful that CTC built their whole schedule around the show.

AMEDIA is now producing a telenovela for First Channel, called For Tsar and Country, set across Moscow, St. Petersburg, London and Paris in 1810, during the Napoleonic Wars. It is based on real life stories and features big battle scenes (like the Battle of Austerlitz) shot with CGI. There is international interest in the series from China, which also acquired Poor Anastasia. AMEDIA will also produce a Russian version of the telenovela Betty La Fea, for CTC, with SPTI.