Viaplay Proposes “Comprehensive Recapitalization” of the Group

In its third-quarter results, Viaplay has reported operating income declining to SEK321 million ($31 million) while net income dropped to SEK693 million ($66 million).

Viaplay is planning to sell its Central and Eastern European production group Paprika Studios and is selling Premier Sports in the U.K. to SSBL, from which it bought the TV channel last year.

President and CEO Jørgen Madsen Lindemann announced the proposal of a comprehensive recapitalization, “in order to address our financial challenges and provide for the future development of the group. This follows our strategic review of the entire business and extensive discussions with our major shareholders and debt providers and includes the renegotiation of our credit arrangements and the proposed injection of new equity into the group.”

Lindemann added that the company’s core Nordic, Netherlands and Viaplay Select operations have stable subscriber volumes and rising ARPU levels, “a much-improved content mix and growing content sales to third-party platforms. We are well on track to reach our year-end revenue and profitability targets for these operations, as we set out in July.”

The operations in the Baltics, Poland and the U.K. have continued to perform “below expectations but better year-on-year due to the range of cost savings initiatives that we have implemented,” Lindemann said. “We now expect to report higher full-year losses for these operations than previously guided for due to the range of commercial initiatives that we have not been able to initiate now that we are exiting the markets. The route to profitability for these operations is not clear or realistic, which is why we have now reached an agreement to sell our U.K. operation, subject to regulatory approval, and we will exit the Baltic and Polish markets by summer 2025.”

Group organic sales growth of 7 percent in Q3 was driven by 17 percent organic sales growth in Viaplay, which now accounts for 52 percent of group net sales. Nordic organic sales growth was 3 percent, with Viaplay delivering 9 percent organic sales growth and accounting for 43 percent of total Nordic net sales.

The Nordic advertising markets continued to be under pressure in Q3, and combined advertising sales were down 10 percent on an organic basis, with the growth in digital AVOD sales not able to offset the fall in linear TV and radio sales.

The 5 percent organic sales growth in our Nordic linear subscription and other sales reflected growth in wholesale channel sales, sublicensing revenues and external sales by its studios operations.

“We continue to feel the pressure of higher previously committed original content costs, built-in sports rights inflation and adverse currency effects,” Lindemann said. “Our full-year 2023 sales expectations are unchanged, but we now expect full-year operating losses before ACI and IAC of approximately SEK1 billion to 1.15 billion due to the underperformance of the international non-core operations. Our sales and profitability expectations for our core operations in 2024 are unchanged, as is our expectation that margins will then gradually rise in the following years towards the long-term objective of double-digit EBIT margins.

“We understand the current state and future potential of the business, our products and our people. The energy, enthusiasm and enterprise of our teams, especially in these challenging times, is fantastic to see. We have much to achieve together, and the proposed recapitalization of the business is a necessary part of resetting the Group for a much more sustainable future, where our attention and resources are focused on those markets where we can compete for the long term and where our products are relevant, popular and generate healthy returns.”