MTG is weathering economic storm

Chris Forrester

Modern Times Group is best-known for its Viasat pay-TV platform over Scandinavia. CEO Hans-Holger Albrecht, in a discussion on MTG’s Q1 results, said the broadcaster is well positioned to weather the financial crisis. He had earlier unveiled sales revenues that were up an impressive 13% y-o-y, to €236m (SEK2.6bn).

Viasat’s pay-TV business saw 6,000 new subscribers added during Q1, giving it a total of 760,000 at the end of March, including a very useful 94,000 IPTV subs, with IPTV growth up 16,000 on the December 2008 period. However, as IPTV subscribers grew Albrecht said Viasat lost 10,000 DTH subscribers. ARPU was up 14% year-on-year to SEK4,325, which Albrecht said was helped by previous price increases, plus Multiroom and HDTV revenues also helping ARPU positively.

Albrecht said he was optimistic about Scandinavia’s TV prospects remaining robust despite the economic downturn. However, costs were also up (12%) as new channels were launched and the costs of tempting new digital viewers meant that Subscriber Acquisition Costs grew.

Albrecht added: “These results illustrate the benefits of operating a balanced broadcasting business, which combines content ownership and distribution, and generates an almost equal mix of subscription and advertising revenues from multiple channels in multiple territories. Despite the deterioration in the market environment, this successful model has delivered another quarter of double digit sales growth, a 15% increase in the Group’s underlying operating profitability and an operating margin of over 20%.”

“Our media house strategy and increased penetration levels in Scandinavia have enabled us to grow in declining markets, and we are selectively investing to take share in the emerging markets. We continue to adjust our operations to the challenging market conditions, but our position as the primary challenger in most of the markets where we operate provides opportunities to enhance our longer term potential and performance through the downturn. We have strong operating cash flows and our financial position is comfortable with low levels of borrowing and no debt maturities in 2009.”

MTG Quarter Highlights
• Group net sales up 10% year on year to SEK 3,336 (€3,042) million
• Group operating income up 15% year on year to SEK 688 (€596) million with an operating margin of 21% (20%) when excluding SEK -454 million participation in non-cash intangible asset impairment by associated company CTC Media
• Total Group operating income of SEK 233 (€596) million
• Total pre-tax profit of SEK 195 (€583) million, and SEK 649 (€583) million when excluding MTG’s SEK -454 million share in CTC Media’s asset impairment charge
• Net income of SEK 146 (€397) million