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Viaplay reiterates 2024 guidance following reset

February 22, 2024

Viaplay, the troubled Sweden-based streaming company, posted a 3 per cent increase in Q4 organic sales despite a slight decline in the Nordic region, its key market.

Following a mass restructuring, sales stood at SEK4.3 billion (€0.39bn) in the quarter, compared with SEK4.67 billion in the same quarter last year, and the operating loss was at SEK230 million – an improvement on last year’s SEK284 million.

The group reported that its comprehensive recapitalisation programme was completed on February 9th.

In a lengthy press statement, Jørgen Madsen Lindemann, Viaplay Group President and CEO, said: “Our Q4 results were in line with the trading update that we provided in January, and we have reiterated our guidance for 2024. The recently completed recapitalisation is part of the retransformation of Viaplay Group, which is work in progress and will take time. The recapitalisation was a complex process, involving concessions and commitments by many stakeholders, to whom we are grateful for their support. Now, we can fully focus on the many operational improvements that need to be made to the business.   

We made further progress in Q4 to reset the business. We agreed the sale of our UK operation, are withdrawing from the Baltics and North America, and will exit Poland by the middle of next year. We have written off and provided for our content costs in these markets, which make up the majority of the IAC this quarter, but we are left with the cash costs for the content that we cannot sell back or sublicence. The exiting of these non-core markets enables us to focus on our core Nordic operations, in markets where we have delivered profitable growth with double digit margins and strong cash conversion in the past. And that, combined with our scale and soon to be profitable business in the Netherlands, is what we are aiming to do again.

In order to achieve these goals, we have reset our content strategy, moving away from large numbers of high-cost original dramas towards more popular and profitable local formats and Hollywood content. We have therefore sold rights to a number of our original productions to global media players, and also sold or closed our production businesses. We are also reducing our sports rights commitments, including sublicensing selected rights, so that we can focus on the rights that really move the needle for us.

We have adjusted our prices to reflect our unique entertainment value proposition, both for our customers and our partners. Viaplay and our TV channels provide fantastic value for money when compared to going to a live sports event, concert, or the movies. We want to grow both our subscriber base and our ARPU, which requires a very disciplined approach to subscriber acquisition costs, pricing, churn management and the lifetime value of our customers. We have ended any expensive and value-destructive hunt for customers and revenue, which was not creating long-term value.

We have become leaner after the measures that we have taken over the last nine months. Moving forward in the coming years, we will work to optimise in all areas, in order to open up new revenue streams and increase efficiency levels. We are beginning the journey now with commercially focused goals, clear operational accountability, and the ability to put the right teams in place now that we have secured the refinancing.

Our priority is to deliver relevant and attractive entertainment that engages audiences, generates meaningful return on investment, and creates long-term and sustainable value for all stakeholders.

Our Q4 organic sales growth of 3 per cent reflected continued growth in the total Viaplay sales, with a slight decline in Viaplay’s Nordic sales. The Nordic and international subscriber bases were down year on year following the discontinuation of unprofitable marketing campaigns in the summer, while prices were raised in almost all markets. We are also looking at measures to address account sharing, as well as working with industry peers to increase the fight against piracy. We gained advertising market shares with an organic sales decline of 3 per cent in markets that continue to be challenging. Our digital advertising sales are growing, and we are building our digital inventory as quickly as possible, as  well as looking at launching HVOD offerings. The 9 per cent organic sales growth in our linear subscription and other sales line was boosted by the sale of scripted content as we shifted to more popular and commercial genres, as well as the sublicensing of selected sports content. 

Our increased Nordic operating profits were offset by the losses in the international markets, which has been the pattern for the whole year and is why we are exiting all but one of these markets.

We are addressing the key sales and cost drivers in order to transform our core Nordic, Netherlands and Viaplay Select operations. We aim to be free cash flow positive for these businesses in 2025, before gradually increasing profitability levels to double-digit margins.

I would like to extend my gratitude again to all our stakeholders for their support and dedication throughout this challenging period. Our commitment to restore profitability and drive stakeholder value is unwavering. This will be done by prioritising commercially viable content, right pricing our entertainment offerings, exploring new revenue streams, nurturing strategic partnerships, and maintaining strict cost control in an accountable organisation.”

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