Rambler Media announced that it has sold a 51% interest in display ad sales agency Index20 to IMHO VI, a subsidiary of Video International (VI). The transaction price was not disclosed. Rambler still owns a 49% stake in the company.

Our view: The news indicates that Rambler Media’s management team has taken another step in restructuring the company. We see the decision to fully outsource the sales function as reasonable: it would allow the company to cut costs and focus on core operations such as upgrading its online search and redesigning its portal. At the same time the asset affiliation and existing partnership agreement with Video International (in October last year Index20 and IMHO VI signed an agreement on selling banner ads on Rambler Internet portals) should ensure sustainable ad revenue flows to Rambler.

As a minority shareholder going forward Rambler is set to benefit from the sales agency's improving delivery under VI’s control: Index20's ad sales capability has been relatively poor thus far, and we would expect ad sales growth to accelerate after Index20 switches to VI's ad sales technology.

Conclusion: As proof of management's progress in restructuring the company, the news should be positive for sentiment. We reiterate our Buy recommendation on Rambler Media and 12-month TP of $46.4.