MTG Reports Record Sales for Q4 2015

STOCKHOLM: Modern Times Group (MTG) had a “record year” in 2015, with sales up 3 percent for the full year and 4 percent for Q4.

The sales increases reflected healthy underlying growth in the broadcasting businesses, as well as the contribution from the newly acquired digital businesses. Organic sales were stable in the quarter, with the 5 percent growth in the broadcasting businesses offset by lower sales in the content production businesses.

For free-TV Scandinavia, there were higher sales in Denmark and Norway, only partly offset by lower sales in Sweden. The Norwegian and Danish TV advertising markets are estimated to have grown, while the Swedish market is estimated to have declined. MTG advertising VOD revenues were up 28 percent. Operating costs were up—which partly reflected the appreciation of the U.S. dollar as well as the sales cooperation with Viacom—and profits were up.

In the pay-TV Nordic business, the increased sales were driven by the continued growth of the Viaplay subscriber base. Viaplay introduced price increases for its basic package from October 2015, and has raised prices for the premium packages from February 2016 in order to reflect the increased investments. Premium package prices have also now been raised for both satellite and third-party customers. Operating costs were up, following the addition of the rights to the Spanish and Italian football leagues, ongoing investments in the expansion of Viaplay, and the impact of the appreciation of the U.S. dollar. Profits were down.

MTG’s free-TV Emerging Markets business reported an increase in sales, with gains in Bulgaria, the Baltics and the Czech Republic. The Hungarian operations were deconsolidated from November. MTG advertising VOD revenues were up 27 percent. Operating costs increased a bit, partly reflecting the launch of two new channels in the Czech Republic during the quarter. Profits were up. In the pay-TV Emerging Markets business, sales were stable on an organic basis but down at a constant rate, due to the sale and deconsolidation of the Russian and international pay-TV channel businesses from November 2015.

With Nice Entertainment, MTGx and MTG Radio, sales and costs were up at constant rate and almost entirely driven by the new digital acquisitions and investments.

MTG’s 38 percent interest in CTC Media is classified as a ‘discontinued operation,’ as MTG’s shareholding in CTC Media is expected to be sold.

Jørgen Madsen Lindemann, the president and CEO of MTG, said: “2015 was another record year for us. We have better products, more customers and higher sales than ever before. The combination of this growth, our ongoing transformation and the optimization of our capital allocation has enabled us to deliver almost stable profits for the year despite the near SEK 400 million combined impact of FX headwinds and M&A costs. This clearly highlights that our products are performing very well, and that the transformation is working. We are proposing an increased dividend of SEK 11.50 per share, which is equivalent to an 86 percent pay-out ratio.”

He added: “Our aim is to accelerate our sales growth and increase our operating profits in 2016, due to the positive effects of the transformation process; the high level of operational gearing in our emerging market free-TV operations; and the positive sales impact of the content investments that we have made. These benefits will gradually compensate during the year for the anticipated SEK 250m of incremental adverse FX effects, and the additional costs for the new or extended sports rights that we have acquired.”