Investing in Growth
Third Quarter Highlights
Year to Date Highlights
Forward Expectations for Q4 2012 & Full Year 2013
MTG is increasing its investments in its pay-TV operations in the increasingly competitive Nordic markets and in the large scale emerging Russian and Ukrainian markets, in order to ensure that its channels and services have the most attractive consumer content offerings and capture subscriber market share in the future.
Comment from President & CEOJørgen Madsen Lindemann, President and Chief Executive Officer, commented: “Group sales in what is the seasonally smallest sales quarter of the year were up 2% year on year at constant exchange rates, when excluding the operations that we have discontinued or sold but including the newly acquired and consolidated businesses. All of our broadcasting segments continued to grow year on year in the quarter at constant exchange rates except our Scandinavian free-TV operations, which were impacted by a deterioration in the Danish advertising market and lower market shares in Sweden and Norway. Group operating expenses were up slightly year on year at constant exchange rates due to higher costs in our Nordic pay-TV business following investments in new channels, the further strengthening of our content offering, and the ongoing investments in our Viaplay service. Operating profits for the business as a whole were therefore down year on year.”
“The TV market is changing and the availability of video on demand services is accelerating rapidly in the Nordic region with ever increasing levels of online viewing also bringing in new consumers. We are at the forefront of this change with our well-established, market-leading and fast growing Viaplay online pay-TV offering, and our free-TV channels are already the most watched commercial channels online in Sweden and Denmark. Viaplay complements our premium satellite pay-TV platform and channels in the same way as our catch-up services complement our linear advertising funded channels.
“We have invested to substantially strengthen our Nordic pay-TV content offering by signing extended agreements with the Hollywood and independent studios and sports rights holders. Most of these deals are now in place so we will have the most attractive online and offline content offering at competitive prices for years to come. We also have an opportunity in the emerging markets to boost the penetration of our services, which is why we are launching new HD channels in Russia and the CIS, and the new pre-paid satellite service in Ukraine.”
“The increasing competition levels in the Nordic region are currently expected to result in the Nordic premium pay-TV subscriber base (excluding Viaplay) continuing to decline with a stable total Nordic pay-TV sales development in Q4 and 2013. The combination of this with the investments that we are making are therefore also currently expected to result in lower margins for our Nordic pay-TV business in Q4 and 2013 but will position us to grow our subscriber base, revenues and profits for the longer term. At the same time, the investments that we are making in the Emerging Markets pay-TV business are currently expected to boost our revenue growth but result in operating losses for the segment in Q4 and 2013.”
“Our ratings in Scandinavia are growing or have stabilised, following improved execution and with low levels of incremental investment. Our objective is to increase our advertising market shares on the back of these improvements. The outlook for the remainder of 2012 is for continued TV advertising market growth in Sweden and Norway but at lower levels than for the year to date, while the Danish TV advertising market is continuing to decline year on year in the fourth quarter. We have however reduced our full year outlook for year on year operating cost growth for the Scandinavian free-TV operations from mid to low single digit percentage points.”
“We have successfully grown our audience and advertising market shares in almost all of the emerging market territories while, at the same time, achieving cost savings and enhancing overall profitability levels. There is no change in the outlook for these markets but we are now even better positioned to benefit from the return to sustained growth when it comes.”
“Financially, we are stronger than ever, having used our healthy cash flows and the CTC Media dividend stream to further reduce our borrowing levels in the quarter. We have discontinued or disposed of under-performing or non-core assets and acquired complementary new businesses in the key areas of content, technology and new territories. We have added to our M&A and strategic development capabilities in order to review opportunities in growth markets, which sit side by side with our commitment to our dividend policy and ongoing shareholder returns.”
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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 5876 9445UK: +44(0)20 3140 8286US: +1646 254 3366
The access pin code for the call is 8449699.
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:
Jørgen Madsen Lindemann, President & Chief Executive OfficerMathias Hermansson, Chief Financial OfficerTel: +46 (0) 8 562 000 50
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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 nine month 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 18 October 2012.