Advanced Television

MTG Q2 operating income up 9%

July 18, 2017

Modern Times Group (MTG) has reported Q2 sales of SEK 4,246 million (444.15m) with 5 per cent organic growth. The Swedish broadcasting group operating income up 9 per cent to SEK 391 million.

President & CEO Jørgen Madsen Lindemann commented: “This was the fourth consecutive quarter of at least 5 per cent organic sales growth, and the first without the discontinued Czech, Baltic and African businesses. The 14 per cent reported growth for our continuing operations also included two months of InnoGames sales after we increased our shareholding to 51 per cent from May. Our organic sales growth was driven by another stand-out performance by our Nordic Entertainment business – up 8 per cent – with higher advertising and subscription prices, the further development of both Viaplay and Viafree, and the positive impact of partnership agreements with both content owners and distributors. We expect more than 40 per cent organic esports sales growth in the second half of the year, given the significant weighting of the esports events calendar to the coming six month period and the signing of new commercial agreements. MTGx’s organic growth in Q2 reflected the different events calendar this year.

The increase in profits was primarily driven by healthy incremental margins for our Nordic business – profits up 15 per cent – and the positive contribution from InnoGames. Our objective is to deliver profitable full year growth for the Nordic Entertainment segment and for the Group’s continuing operations, and we now expect to deliver a first quarterly profit for MTGx in the fourth quarter of this year.

The shift in consumer video consumption towards on demand and online entertainment products, such as streaming services, esports and gaming, has continued at a rapid pace. We remain very well positioned to benefit from this trend to digital and mobile consumption with our Nordic streaming services, such as Viaplay and Viafree, and our global esports and gaming operations, such as Turtle and InnoGames. At the same time, our linear TV and radio products continue to offer very attractive returns on investment for advertisers, and the unique consumer content offering provided by our linear pay-TV channels is more broadly available than ever. We are one of the few entertainment companies to have integrated on and offline, linear and on demand, fixed and mobile products.

We have also continued to execute on our strategic transformation by completing the divestment of our Czech operation, stepping up our shareholding in InnoGames, and announcing the acquisition of Kongregate, which will give even greater scale to our high growth and profitable online gaming vertical. We have also continued to invest into original drama production, key sports rights such as the Champions League and Ice Hockey World Championship, new virtual reality app Viareal, and as a founding shareholder in the World Boxing Super Series. In addition, our capital allocation  included paying out our highest ever cash dividend in Q2. Our markets are at the forefront of the industry transformation, and our products are better positioned than ever to shape the future of entertainment.

Another quarter of organic sales growth and higher profits. We are delivering on our strategic transformation and our products are better positioned than ever to benefit from the changes in consumer behaviour.”

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