MTG: Record sales, but mixed pay-TV picture

Modern Times Group (MTG) ended the first quarter with 973,000 premium pay-TV subscribers in the Nordic region, down from the 982,000 and 978,000 posted three months and a year earlier respectively.

While the premium satellite figure continued to fall (514,000, versus 526,000 and 553,000 three months and a year respectively), those via third party networks increased to a total of 459,000 (from 456,000 and 425,000 respectively). Meanwhile, the basic satellite subscriber total continued to fall, with the number as of the end of Q1 at 31,000.

Premium satellite ARPU in Q1 was SEK5,220 (€560.1), compared to SEK5,044 in the corresponding quarter in 2014.

In emerging markets, the satellite subscriber total as of the end of Q1 was 290,000, compared to 358,000 a year earlier. This was in large part due to the closure of the DTH platform Raduga TV in Russia at the end of 2014. On the other hand, the number of mini-pay subscriptions rose from 94,837 to 136,969 in the year to March 31.

MTG notes that in the Nordics, sales growth at constant FX was driven by the expansion of Viaplay. In emerging markets, figures were boosted in the mini-pay channel business by the consolidation of Trace, which added 42 million subscriptions year-on-year and 6 million quarter-on-quarter.

MTG as a whole had net sales of SEK3,701 million in Q1, compared to SEK3,597 million in the corresponding quarter in 2014. Total EBIT was SEK415 million (SEK301 million) and net income SEK318 million (SEK159 million).

Commenting on the results, Jørgen Madsen Lindemann, president and CEO, said: “Record Q1 sales & stable underlying profits Sales were up in the quarter to record levels as enhanced efficiency levels in our traditional businesses continued to fuel the growth of our digital businesses, and even though last year’s performance was boosted by the Olympics. Profits were stable compared to last year when excluding the net positive effect of the restructuring in Sweden and a copyright settlement in Scandinavia, and this is despite significant FX headwinds and continued investments in our digital products. The growth in online viewing is more than compensating for lower linear channel viewing levels in the Nordic region, and our combined Nordic TV businesses grew their sales, and profits were stable despite the FX impacts and when excluding the abovementioned net positive effect. Our Emerging Market free-TV operations generated higher sales and improved profitability in seven out of eight markets as we took shares in generally stable or growing markets. Our Emerging Market pay-TV operations continue to be impacted by the geopolitical crisis and Russia’s ban on advertising on most pay-TV channels. Nice, MTG Radio and MTGx reported stable sales and lower losses on a combined basis”.

Looking to the future, he added: We have now almost finalized the annual upfront agreements for our free-TV businesses, with price increases in most markets reflecting TV’s unique reach and superior return on investment. Viaplay continues to grow its subscriber base and usage levels, while our channel packages are more broadly available than ever before. We have also added new programming content or extended valuable existing rights to ensure that we have the best possible entertainment offerings in each market. We continue to face adverse FX headwinds that are inflating our US dollar content costs in the Nordics particularly, and also reducing the results from our Russian ruble denominated operations. We are taking actions across the Group to offset these effects as much as possible”.

Russia still troubling MTG

MTG says it is continuing to explore its options after the introduction of a law, banning advertising on pay-TV channels, was brought in earlier this year.

In the last few days an amendment to the law, allowing ads on channels where there is 75% Russian content has been introduced, and is awaiting presidential signature.

“We are working with a range of potential solutions, in order to best protect the interests of stakeholders in these entertainment businesses that we have built into the most popular in Russia,” said CEO Jørgen Madsen Lindemann.

Sales across the Baltic markers were up as in line with the local markets the advertising market expanded in Estonia and Latvia, but was down in Lituania.

The pay business has seen its mini-pay channels decline by 3% year on year, when the contribution from Trace, acquired in June 2014, is excluded. 

Russia is excluded from the Baltic figure and its operation CTC Media reports after MTG.

MTG’s Nordic pay-TV business continues to be driven by the expansion of the On Demand Viaplay platform. In a market where the linear market is arguably in decline, premium subscribers remain stable at around 1 million – split 60/40 in favour of satellite homes – though premium satellite ARPU was up 2% at SEK 5,255 after recent price increases.

MTG announces 4Q 2014 results

Modern Times Group MTG AB (publ.) (“MTG” or “the Group”) (Nasdaq OMX Stockholm Large Cap Market: MTGA, MTGB) today announced its financial results for the fourth quarter and full year ended 31 December 2014.

MTG’s Nordic broadcasting business again delivered higher sales and profits, as the growth in our online businesses more than compensated for lower linear viewing levels and declining advertising markets. The Emerging Markets businesses grew their sales on a combined basis but higher profits in the free-TV business were offset by negative pay-TV earnings impacts.

Pay-TV Nordic

The total premium subscriber base was up quarter-on-quarter (q-o-q) and y-o-y, as the growth in the third party network subscriber base more than offset the ongoing decline in the satellite base.

Pay-TV Emerging Markets

The wholesale mini-pay channel business has added 39 million subscriptions y-o-y, with an underlying decrease of 3 million when excluding the contribution from Trace. The combined satellite pay-TV subscriber base continued to decline, which was primarily due to the geopolitical situation in Ukraine.

MTG announced that the Russian digital satellite TV platform Raduga TV would stop its broadcasting services on 5 December 2014 as it had not been granted the required broadcasting license from the local media regulator. MTG also announced that it would launch five new High Definition pay-TV channels in Russia during 2015.

The law prohibiting the sale of advertising on pay-TV channels in Russia has taken effect from the beginning of 2015. An amendment to the law that would allow advertising on pay-TV channels with 75% Russian content is now pending Presidential signature.

Key performance indicators – Subscriber data (‘000s)

                                                          2013                                2014
                                ------------------------------  ----------------------------------
                                    Q1      Q2      Q3      Q4       Q1       Q2       Q3       Q4
                                ------  ------  ------  ------  -------  -------  -------  -------
Pay-TV Nordic

Premium subscribers              1,003     989     970     977      978      970      969      982
- of which, satellite              580     569     563     559      553      546      535      526
- of which, 3rd party networks     424     421     407     418      425      425      434      456
Basic satellite subscribers         45      44      42      40       37       36       35       33

Pay-TV Emerging Markets

Satellite subscribers(1)           366     360     360     364      358      344      326      306
Mini-pay subscriptions(2)       85,153  89,915  91,380  92,223   94,837   94,197  130,559  131,089

1. Have been restated following the closure of Raduga.
2. Includes Trace subscriptions from Q3 2014. MTG acquired 75% of Africa-centric pay-TV operator Trace Partners SAS in June 2014.

CTC looks to the future

Russia’s CTC Media has posted relatively encouraging results against the backdrop of uncertainty over its future ownership.

Q3 revenues were up 3% year-on-year in ruble terms to $158.6 million, while OIBDA rose by 9% in ruble terms to $50.6 million.

However, net income was down by 24% in ruble terms to $31.6 million.

In her comments on the results, Yuliana Slashcheva, CEO of CTC Media, said that the broadcaster is “evaluating a potential transformation” of its channel Peretz.

She also spoke positively about the new structure of Video International, the leading TV ad seller in Russia, despite the company having its own sales house (Everest).

CTC Media cooperates with the ‘new VI’ and will look to do so even further in the future.

Commenting on the new legislation that will place a 20% foreign ownership limit on Russian media companies, she said that CTC Media’s future actions “may include corporate restructuring, franchising and licensing structures, capital reorganisation or divestments”.

MTG considering Raduga TV sale

Modern Times Group (MTG) may sell its stake in the DTH platform Raduga TV now that President Putin has signed off controversial legislation limiting foreign ownership in Russian media companies to 20%.

Speaking to Broadband TV News, Per Lorenz, head of group public relations at MTG, said the company is exploring all options available to it.

Meanwhile, Interfax has reported that the Federal Antimonopoly Service (FAS) has given the green light for Digital Broadcasting, which is owned by Sistema Mass Media, to acquire 100% of DalGeoKom (Raduga TV). A source told the agency that Digital Broadcasting is considering the purchase of Raduga TV as part of the satellite broadcasting strategy of the AFK Sistema group of companies but that no decision has yet been made.

Interestingly, another Sistema group member – MTS, a leading mobile company and pay-TV provider – is also eyeing Raduga TV. It was expected to launch its own DTH platform recently but it is has yet to make its debut.

Raduga TV is currently jointly (50%) owned by MTG and Continental Media.

The change in the law will also affect CTC Media, in which MTG owns a 37.9% stake.

In a statement on the company’s website, Jørgen Madsen Lindemann, MTG president and CEO, said: “This is obviously a complex situation and we are working closely with local management and our advisers to review the various options available to us moving forward. It is too early to come with a solution for each of the affected businesses, but we are looking at a range of potential outcomes. We have built up these entertainment businesses over 20 years and the channels are some of the most watched in Russia, so we will do all that we can to preserve the interests of all of our stakeholders.”

MTG and Viacom sign Scandinavian VOD deal

Modern Times Group has signed a partnership agreement with Viacom International Media Networks to include exclusive advertising-funded video on demand content.

Content from the MTV and Comedy Central channels will feature in MTG’s free-TV online ‘catch-up’ services in Sweden, Norway and Denmark from February 4. MTG will also handle advertising sales for Viacom’s online platforms, and sell the combined online reach of the MTG and Viacom online catch-up TV services to advertisers.

MTV and Comedy Central content will therefore be shown on TV3Play.se, TV6Play.se, TV8Play.se, and TV10Play.se in Sweden; and MTV content will be shown on TV3Play.no, Viasat4play.no and TV6Play.no in Norway, and on TV3Play.dk in Denmark.

The content includes MTV and Comedy Central hit formats such asCatfish, Geordie Shore, Teen Mom and The Daily Show, as well as an extensive library of TV series such as The Hills, Punked and Cribs. Kids TV series such as SpongeBob and Dora the Explorer from Viacom channel Nickelodeon are also already available through MTG’s Viaplay online pay-TV subscription service.

The online advertising sales agreement follows earlier agreements between MTG and Viacom, whereby MTG already sells airtime on Viacom’s linear channels MTV, Comedy Central and VH-1 as part of its free-TV advertising sales packages in Denmark, Norway and Sweden.

“This is a key new step in the development of our strong partnership with Viacom, and reflects our determination to be the leading online and offline provider of high quality and relevant entertainment products in all of our markets,” said Jørgen Madsen Lindemann, president and CEO of MTG.

“This exciting content and sales agreement will provide our online viewers with even richer and more varied content experiences through multiple screens and devices, and provide our advertising customers with increased reach and impact”.

MTG extends Nordic and Baltic Disney deals

Modern Times Group (MTG) has extended its content licensing agreements with Disney Nordic for first-run and library movie rights for pay-TV in Sweden, Norway, Denmark and Finland.

It has also extended the carriage agreement to include Disney Channel, Disney Junior and Disney XD on the Viasat platforms in the Nordic and Baltic regions.

MTG’s online Viaplay service will also have the subscription video on demand rights for Disney first-run features exclusively, and library titles across the Nordic region.

In the Baltics, MTG has a multi-year agreement in place to show Disney first-run movies and series, as well as classic Disney animation titles and library feature movies on the Group’s free-TV channels in Estonia, Latvia and Lithuania.

Commenting on the deal, Jørgen Madsen Lindemann, president and CEO of MTG, said: “Disney is one of the world’s leading entertainment brands and continues to release a number of the highest grossing box office titles every year. They also have a large back catalogue of some of the most loved movies from recent years. It is therefore fantastic that we have now extended our ability to bring these magical entertainment experiences to our Viasat and Viaplay subscribers and free-TV viewers across multiple countries. We have enjoyed a long and successful partnership with Disney and look forward to continuing this for years to come.”

Casper Bjørner, country manager, The Walt Disney Company Nordic added: “This agreement builds on our existing collaboration with MTG, allowing viewers to enjoy an even greater range of high quality entertainment, with greater flexibility in how and when they can access it, while continuing our successful free-TV association in the Baltics and distribution of Disney Channels across the Nordic and Baltic regions.”