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NENT optimistic for Poland

May 21, 2021

Investment bank Berenberg is holding its annual Conference US series of company presentations, and one participant was Nordic Entertainment Group (NENT). The bank said that president and CEO Anders Jensen had reiterated the strength of NENT’s position in its domestic Nordic market, Jensen outlined the progress in the Baltics, which is in line with expectations, and answered all questions on the prospects for Poland with a very bullish tone.

The bank says it expects NENT to show strong subscriber growth acceleration next year with further sports launching on Viaplay. Since its Q1 results in April, NENT has announced a raft of sports rights agreements and extensions, including the Bundesliga rights across nine markets lasting until 2029, as well as a multi-market agreement with Matchroom and the acquisition of the Polish rights to Formula 1. These agreements are building a leading portfolio of sports for Viaplay across many markets, and there is an opportunity for NENT to revitalise the sports and attract younger audiences through a digital, engaging platform.

Asked whether NENT had now completed its sport portfolio, Jensen stressed ‘no’. The bank said that NENT’s focus now is on incremental sports that can generate a positive return, rather than acquiring volume for the sake of it. The key is Poland where there are further options that could generate significant returns through increased subscriber acquisition. Although Jensen did not give any insight into which sports are being targeted next in Poland, he was clear that NENT is in the hunt for more quality sports rights and that investors can expect further announcements down the line.

In the Baltics, the value is less incremental given the size of each constituent market, so it is the Polish market where we believe that new sports rights can move the needle at a group level.

Viaplay will be present in five international markets – Latvia, Lithuania, Estonia, Poland and the US – by the end of 2021, but there are 10 more markets in the five-year plan to 2025 that have yet to be announced. Announcements on the specific target markets for 2022 and beyond are imminent, with announcements scheduled for the summer or at the latest at NENT’s capital markets day later in the year. During the presentation, Jensen hinted that the plan moving forward will include a blend of full suite launches including sports rights, along with other more cost-light original content approaches such as that for the US later this year, reported Berenberg.

“The average SAC in the Nordics is €25 for a direct-to-consumer (D2C) subscription. This number is lower for subscriptions acquired through distribution agreements, but these are operated on a revenue share basis (roughly 75 per cent NENT, 25 per cent B2B partner on our estimates) so the net contribution of the two customer acquisition methods are actually similar. Thus, if NENT can strike distribution agreements in Poland then we believe market penetration could be significantly accelerated, with the ARPU dilution offset by the reduced SAC on NENT’s behalf. Mr Jensen remains optimistic that NENT will strike such agreements in Poland, but reiterated that the Polish launch will not depend on this happening. In fact, current guidance is based on the assumption of no further distribution agreements,” stated the bank.

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