NENT Group reports “historically important” Q3
October 24, 2019
The Nordic Entertainment Group (NENT) has reported Q3 sales of SEK 3,799m (€355m) with 10 per cent organic growth. Viaplay subscribers were up 37,000 from Q2, and up 25 per cent year-on-year.
Operating income for combined business segments hit SEK 367 million whilst total operating income was at SEK 302 million costs related to the proposed Viasat Consumer and Canal Digital merger.
Anders Jensen, President & CEO, commented: “Q3 was a historically important quarter for NENT Group. We have not only delivered on our profitable growth commitment, but Viaplay has continued to add subscribers at a healthy rate and are now up 25 per cent in the twelve months. We have shifted to a functional operating model that will make us faster and more efficient, and we will launch Viaplay in Iceland in H1 2020. Furthermore, we yesterday announced an agreement to create a 50/50 joint venture between Viasat Consumer and Canal Digital, which is expected to yield substantial synergies and drive shareholder value.”The positive momentum seen in H1 continued into Q3 with higher sales and profits for both operating segments. Group sales were up 10 per cent on an organic basis and operating income for our combined business segments was up 3 per cent despite US dollar transactional headwinds of SEK 20 million. Our central operation costs were up following initial costs related to the Viasat Consumer / Canal Digital combination.
Our Broadcasting & Streaming operations delivered their 12th consecutive quarter of profitable growth, which demonstrates the positive effect of our investments into the streaming market. Subscription & Other sales, which accounted for 63 per cent of Group sales, were up 11 per cent. We added 37k Viaplay subscribers, compared to a loss of 13k last year, and the base has grown over 25 per cent in the last twelve months to 1,459k. The expansion to Iceland in the first half of next year is in line with our strategy, and reflects the strength of our content, the attraction of such a highly connected society, and the fact that our technology is built to be able to scale efficiently and effectively.
Advertising sales, which accounted for 22 per cent of Group sales, were up 2 per cent as higher prices offset the continuing fall in linear TV viewing levels. We are now entering the 2020 annual advertising contract negotiations and, while it’s far too early to indicate the outcome, it is clear that demand for TV advertising remains high even if there is a shortage of inventory supply. We do therefore expect prices to continue to rise.
NENT Studios, which accounted for 15 per cent of Group sales, generated 32 per cent growth, primarily on the back of exceptional performance in the scripted drama but also from double digit growth in non-scripted productions. Operating profits were also up despite the investments we have made into our US based operations.
We also announced a new organisation and operating model in September, which we are now implementing. We are moving from a country based model to a structure based on focused areas of responsibility working across markets, products and brands. The new structure will help us to take decisions faster, scale flexibly, and generate significant savings to enable our continuing investment into content and technology.
We have also acquired the exclusive rights to the Ice Hockey World Championship from 2024 to 2028. We already show the tournament in Sweden and will now expand the coverage to the entire Nordic region as part of our unrivalled winter sports offering.
Yesterday’s announcement of the combination of our satellite and broadband-TV business with Canal Digital is a very important milestone for us. I am convinced that this combination will not only create significant shareholder value, but also allow for continued investments into the business and its subscriber offering. This combination is perfectly in line with our strategy to prioritise the substantial opportunity that we see in the streaming market.”