Advanced Television

MTG Q4 delivers despite new Russia laws

February 4, 2015

MTG, the free and pay-TV broadcast group, has posted Q4 revenues of SEK4.4 billion ($531 million) compared with SEK4.1 billion a year earlier. Full-year 2014 revenues of SEK15.8 billion compared with SEK14.1 billion a year earlier. EBIT profit was up in the most recent quarter to SEK468 million from SEK461 million a year earlier, but full-year 2014 EBIT profit of SEK1.27 billion was down on the 1.3 billion recorded in 2013.

Jørgen Madsen Lindemann, President & Chief Executive Officer at MTG, commented:

“Our fourth quarter results again delivered a combination of organic and acquisition-led growth to generate higher sales and profits. Our strong cash flow generation and overall financial position are reflected in the proposed 5 per cent higher annual dividend payment of SEK 11 per share, which is equivalent to a 57 per cent pay-out ratio.”

“We are delivering on our strategic plans and moving towards our objective of being the leading digital entertainment company in each of our major markets. Our 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. We have continued to enrich the content offering across all of our platforms with exclusive deals for premium sports and studio rights. Our commitment to show the best content on multiple devices reflects media consumption trends and has driven higher online and mobile subscriber volumes and viewing shares, and led to the even broader availability of our entertainment products on third party networks.”

“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 per cent Russian content is now pending Presidential signature. We are continuing to explore the options available to our Russian operations and holdings in order to comply with the amendments to the Russian law regarding foreign ownership of Russian mass media companies from the beginning of 2016. We are working with a range of potential solutions, in order to best protect the interests of the stakeholders in these entertainment businesses that we have built into some of the most popular in Russia.”

FX & Outlook
“We are being impacted by significant adverse FX movements and, especially, the impact of the appreciation of the US dollar on our group-wide programming costs, and the depreciation of the Russian ruble on our Russian pay-TV channel business. Based on these changes, our US dollar content costs would be inflated by approximately SEK 200m in 2015, net of forward currency hedges, and the profits for our pay-TV emerging markets business would be negatively impacted by approximately SEK 100m in 2015. We are accelerating and extending actions to balance costs and optimise investments across the Group. The operations continue to perform well independent of the currency effects.”

“We are both developing our existing businesses and acquiring complementary new companies. As a result, we already have established digital leadership positions in a number of fields and will add to these across our unique footprint. We are offsetting falling linear viewing with higher prices as linear TV continues to offer attractive return on investment for advertisers, and we are attracting larger and larger online audiences, while remaining well positioned to capitalise on media spend growth in the emerging markets. All of which is contributing to our positive operating performance.”

“The results for the quarter again demonstrate the progress that we are making towards our strategic goals. We do have substantial FX headwinds right now, but the operations continue to perform well.”

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