The Company’s key strategic priorities for 2011 are as follows:

·         monetizing the TV channel’s audience taking into account the current quantitative viewer ratings

·         raising the technical coverage of subscribers in the regions in an effort to boost quantitative viewer ratings

·         updating and developing television content in order to maintain and expand the existing viewership

·         conducting advertising measures in cities targeted in the plan for development of the broadcasting network and the largest cities where O2TV has a footprint, including Moscow

·         expanding the television channel’s activities in the area of state youth policy and participation in socially meaningful projects with state support

Implementation of the Company’s strategy

The Company’s plans for 2011 include boosting the technical coverage of O2TV television channel in Moscow and St. Petersburg.  One way to achieve this goal could be to connect the channel to cable television facilities in Moscow and St. Petersburg which are owned by OAO National Cable Networks (NCN), which was recently taken over by Rostelecom.

The Company plans in 2011 to dramatically update the existing programs and launch new projects which are of interest first and foremost to the channel’s core target audience (viewers aged 16-25 years of age). 

The main source of the Company’s future consolidated income will be from television-related activities (advertising income), as well as other revenue, including revenue from leasing filming equipment.  No change is anticipated in the core activity of parent company OAO O2TV or its main subsidiary (O2TV Channel).  The Company expects to dramatically raise the advertising revenue of O2TV Channel in 2011 compared to 2010, mainly due to an increase in the channel’s technical coverage in Moscow and St. Petersburg.  In addition, the Company expects to generate additional advertising revenue by virtue of the updating of O2TV television channel’s website and a rise in online traffic.