Second Quarter Highlights
Half Year Highlights
Hans-Holger Albrecht, President and Chief Executive Officer, commented: “The second quarter results again demonstrate the benefit of our integrated business model, with the long term growth in our subscription funded pay-TV businesses offsetting the short term decline in our advertising funded free-TV businesses.
“We have further enhanced our content offering in 2012 with the addition or extension of key Hollywood studio and sports broadcast rights, and we have also launched a number of new SD and HD channels. Our satellite platforms in nine countries have continued to grow, as have our wholesale, virtual operator and online pay-TV businesses. At the same time, we have delivered margins of 18% and 21% for our Nordic and Emerging Market pay-TV businesses, respectively. We are investing in our channels and the Viaplay online pay-TV platform in both the Nordic region and the emerging markets to drive further growth. We have therefore slightly reduced our anticipated full year Nordic pay-TV margin from approximately 18% to approximately 17% and, while we continue to anticipate higher Emerging Market pay-TV profits in 2012 than 2011, the growth in profits for the second half of the year is expected to be significantly lower than the 217% increase for the first half of 2012.
“We did lose short term TV advertising market share in Sweden and Norway in the quarter, which was primarily due to the ratings impact of key sports events being shown on competing channels. However, we also reported lower cost growth to deliver a margin of 23% for our Scandinavian free-TV business, with higher profits in both Sweden and Denmark. The outlook for the remainder of 2012 is for continued TV advertising market growth in Sweden and Norway, with a less clear picture for Denmark. Our objective is to take back and increase our Scandinavian advertising market shares but this is more to do with execution than incremental investment. We therefore anticipate that full year operating expenditure for the Scandinavian free-TV business will grow at the normalised mid-single digit percentage point level, rather than the previously anticipated mid to high single digit percentage point level.”
“The position in the emerging markets is quite different as we have taken further TV advertising market shares in the majority of our territories in the second quarter, but we are yet to see a sustained return to growth in Central and East European advertising spending, which continues to be adversely affected by the macroeconomic environment. We have reduced overall costs and reported an increased margin of 16% for the emerging markets free-TV business in the quarter, which is the highest level for more than 3 years. We do not see the need to invest further ahead of the return to growth for these markets, but we are now integrating and restructuring the currently loss-making LNT operations in Latvia so the reduction in costs will be lower in the second half of the year than in the first half of 2012.
“Our financial position is as strong as ever, with low gearing and substantial available liquid funds. Our strong cash flows have enabled us to reduce our net debt by 55% or almost SEK 1 billion since Q2 last year, despite the payment of the SEK 600 million increased annual dividend this quarter. We have now disposed of the non-core betting operations, and acquired the complementary LNT free-TV business in Latvia and emerging market Paprika Latino content production studio. We are reviewing a number of other organic and M&A investment opportunities across the Group, in order to both consolidate our existing market positions and expand into new territories and complementary business areas moving forward.”
Conference CallThe company will host a conference call today at 15.00 Stockholm local time, 14.00 London local time and 09.00 New York local time. To participate in the conference call, please dial:
Sweden: +46(0)8 5853 6965UK: +44(0)20 7784 1036US: +1646 254 3360
The access pin code for the call is 6075849.To listen to the conference call online and for further information please visit www.mtg.se.
For further information, please visit www.mtg.se, or contact:
Hans-Holger Albrecht, President & Chief Executive OfficerMathias Hermansson, Chief Financial OfficerTel: +46 (0) 8 562 000 50
Modern Times Group MTG ABSkeppsbron 18P.O. Box 2094SE-103 13 Stockholm, SwedenRegistration number: 556309-9158
Modern Times Group (MTG) is an international entertainment broadcasting group with operations that span four continents and include free-TV, pay-TV, radio and content production businesses. MTG’s Viasat Broadcasting operates free-TV and pay-TV channels, which are available on Viasat’s own satellite platforms and third party networks, and also distributes TV content over the internet. MTG is also the largest shareholder in CTC Media, which is Russia’s leading independent television broadcaster.
Modern Times Group is a growth company and generated record net sales of SEK 13.5 billion in 2011. MTG’s Class A and B shares are listed on Nasdaq OMX Stockholm’s Large Cap index under the symbols ‘MTGA’ and ‘MTGB’.
The information in this quarterly and half year report is that which Modern Times Group MTG AB is required to disclose under the Securities Market Act and/or the Financial Instruments Trading Act. It was released for publication at 13.00 CET on 19 July 2012.