MTG Reports Record Q3 Sales

STOCKHOLM: Modern Times Group (MTG) has posted healthy third-quarter sales, thanks in part to higher viewing levels, strong customer intake and rising market shares, as well as the addition of a number of new digital businesses.

Sales were up 5 percent at constant FX and up 3 percent on an organic basis. This primarily reflected the organic performance of the emerging markets free-TV operations, as well as the contribution from the newly acquired and consolidated digital businesses. Operating costs were up 5 percent at constant FX, and up 2 percent on an organic basis. This increase primarily reflected the ongoing adverse impact of the appreciation of the U.S. dollar on the Nordic content costs in particular, M&A activities in the period and the addition of the newly acquired and consolidated digital businesses.

For free-TV in Scandinavia, sales were up at constant FX, with higher sales in Denmark, slightly lower sales in Sweden and lower sales in Norway. 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 52 percent.

For pay-TV Nordic, sales were up at constant FX and driven by the continued growth of the Viaplay subscriber base. The lower sales growth in the period reflected the evolving mix in the subscriber base and ARPU levels, with the growth coming from Viaplay and third-party platforms and premium satellite ARPU now being stable at constant FX.

Free-TV emerging markets sales were up at constant FX and primarily reflected the performance in Bulgaria and the Baltics, while operating costs were down at constant FX and reflected lower costs in the Czech Republic and the Baltics. Segment losses were therefore substantially reduced. Pay-TV emerging markets sales were stable at constant FX as the growth in pay-TV channel subscription volumes and revenues offset the adverse impact of the lower Ukrainian satellite platform volumes and revenues, and the loss of advertising revenues in Russia following the change in local laws.

With Nice Entertainment, MTGx and MTG Radio, sales and costs were up at constant FX and almost entirely driven by the new digital acquisitions and investments. Radio sales were up in Sweden, Norway and the Baltics, while Nice Entertainment sales were slightly down at constant FX.

Also to note, MTG has reclassified its interest (38 percent) in CTC Media from an ‘equity participation’ to a ‘discontinued operation.’

Jørgen Madsen Lindemann, the president and CEO, said: “Our strategic transformation has now accelerated. We are implementing a large-scale restructuring program to bring our local operating businesses closer to the customer, and over time yield SEK 600 million of savings that we will mostly reinvest. We have made significant steps to resolve the position in Russia before the year-end deadline. CTC Media has signed a definitive agreement to sell 75 percent of its operations, and we are also working with our advisers on solutions for our Russian pay-TV channels business. We have then invested SEK 1.2 billion in three market-leading digital businesses in high growth online video categories, and we have also invested to secure key sports rights and studio deals for years to come. This will enable us to develop our brands and products to deliver even more premium content across even more screens and platforms.

“The performance of our Nordic businesses during this period of transition underlines the quality and popularity of our entertainment products, as our Scandinavian media houses delivered higher audience shares in each market for the first time in two years, and Viaplay continued to drive the growth in our subscriber bases. This has been complemented by very positive momentum in our CEE markets, and by the 42 percent organic growth in group-wide digital revenues.

“We will continue to execute on our transformation plan and review the portfolio, in order to ensure that we sharpen the focus on the products and businesses that offer the greatest potential for MTG. We are a more efficient and effective group today, and relevance and execution remain at the center of all that we do.”