Analysts at Berenberg Bank have praised Nordic Entertainment Group’s (NENT) Q2 results, saying the broadcaster’s subscription numbers “which stole the show”.

While the company’s Q2/2021 sales of SEK3,072 million was in line with consensus, it was the subscriber numbers which impressed. Berenberg said: “The international subscriber outlook for 2021 increased to 500,000 from 250,000 as a result of an announced distribution agreement in Poland (Vectra) and more agreements likely to be announced soon. The domestic outlook was maintained as ‘at least’ 400,000 for the year, a figure NENT is on course to achieve, having added 240,000 new subscribers in H1.”

Berenberg looked at the overall picture saying: “After the announcement of the launch of Viaplay in the Netherlands in Q1/2022, we increased our content cost forecasts for the international segment, citing the increased ambition that NENT was displaying with regards to the international rollout. Since then, the company has acquired the rights to the Premier League across nine markets from 2022-28.”

“The targeted number of Viaplay originals for 2021 has also increased from 40 to 50 and other new sports rights have been acquired across international markets. As a result, we have increased our estimates for content costs, particularly in the international segment, where our cumulative loss at the EBIT level from 2021-24 now stands at SEK3.2 billion, before reaching positive operating profit in 2025; management guidance is currently for a SEK2.5 billion cumulative loss, although we expect this to be increased at the CMD on 22 September. This is partly offset by stronger margin expectations across the Nordic business, and we continue to believe that increased content spend is not negative insofar as the long-term ROI is justified – we view recent news-flow about sports rights and original content as positive in this regard,” states Berenberg.

The report says that Poland is leading the charge: “The doubling of the international subscriber outlook is driven by improved expectations in Poland, primarily as there are several B2B distribution agreements in the latter stages of negotiation and likely to be announced soon. With the Premier League (EPL) rights then coming into play in 2022, there is plenty of reason to be optimistic about the long-term prospects for Viaplay in Poland. Similarly, the rights now acquired for the Netherlands (F1, EPL and Bundesliga) reassure us that the platform can achieve good levels of market penetration soon after launching next year. We await more details about new markets, subscriber targets and cost guidance at the CMD; we reiterate our Buy rating and SEK590 price target for NENT.”

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Tags: berenberg, bundesliga, nent, netherlands, poland, viaplay