UPDATE 2-CTC Media beats Q3 forecasts, sees tough 2010

* Q3 net income rises 23 pct to $25.9 mln

* Broadcaster says 2010 to be challenging year

* Says Russia advertising revenue 4-6 pct lower this year

* Shares up 10 pct

(Recasts, adds analyst comment, detail, share price)

By John Bowker

MOSCOW, Nov 5 (Reuters) - Russian broadcaster CTC Media (CTCM.O) said it outperformed the overall market during a third quarter that beat analyst forecasts, although it warned the advertising market would remain challenging in 2010.

The company, which runs independent TV and production companies in Russia and other former Soviet states, said on Thursday it expected its advertising revenue in rouble terms to be 4-6 percent lower this year -- compared to a forecast 20 percent decline in the market as a whole.

It said net income rose 23 percent in the three months to end-June to $25.9 million, and while revenues fell the figures still beat forecasts, boosting its shares.

"The Q3 results came out strong -- beat our estimates and consensus -- the company continued to gain further advertising market share," Citi analyst Dmitry Zhuk said in a note.

Shares in CTC, which is 40 percent-owned by Swedish media group Modern Times (MTGb.ST) and listed in New York, were 10.2 percent higher by 1533 GMT at $17.73.

VISIBILITY LIMITED

CTC said it could not easily forecast conditions for 2010, but later told reporters it may pay a dividend in the current year. [ID:nL5451058]

"Visibility continues to be limited moving forward and we expect overall market conditions to remain challenging in 2010," Chief Executive Anton Kudryashov said in a statement.

He said the three months to the end of September had been particularly strong in terms of viewers and market share, though the TV group's performance was not hitting the same levels in the current quarter.