MTG makes progress as Viaplay compensates for linear declines

Jørgen Madsen Lindemann, MTG president and CEO.

Modern Times Group said it is making “significant progress,” with profits and revenues both up in Q3 as continued growth at Viaplay more than compensating for lower linear viewing.

Announcing its third quarter results, MTG reported a 10% sales growth for its Nordic pay TV operations to SEK1.44 billion (€157 million), driven by the continued expansion of its online Viaplay service.

However, the total premium subscriber base was down slightly quarter-on-quarter, as growth in the third party network subscriber base did not fully offset the ongoing decline in the satellite base.

MTG’s free TV Scandinavia division produced a 1% increase in sales year-on-year, coming in at SEK900 million. However, at constant foreign exchange (FX) rates, this was down 1%.

“The sales decline at constant FX reflected the combination of lower sales in Sweden and higher sales in Norway and Denmark. The Swedish TV advertising market is estimated to have declined, the Norwegian market is estimated to have been stable, while the Danish market is estimated to have increased,” said MTG.

The firm claimed that Danish and Norwegian audience shares were down slightly in Q3, compared to the same quarter last year, partly because the World Cup in Brazil was shown on rival commercial channels.

Free TV in emerging markets produced net sales of SEK463 million – again, up slightly year-on-year, but down slightly at constant FX. MTG said this reflected lower sales in the Czech Republic, which were only partly offset by growth in the Baltics and Bulgaria.

In pay TV emerging markets, a 25% sales increase year-on-year at constant FX to SEK333 million was attributed to growth in the mini-pay wholesale channel business, as well as the consolidation of Trace from July 2014.

“This was another quarter of profitable growth as our organic investments and acquisitions generated not only higher sales but also increased profits. We are making significant progress across the business and delivering on our strategic plans,” said MTG president and CEO Jorgen Madsen Lindemann.

Discussing new Russian media legislation that will restrict foreign ownership of Russian media firms to just 20% from 2016 – a measure that will impact MTG’s 37.9% stake in Russia’s CTC Media – Lindemann said: “We are exploring potential solutions for each of the affected businesses and a range of potential outcomes, in order to ensure that we comply with the changes to the law.”

Overall in the quarter, MTGs net sales were up 12% year-on-year, or 5% at constant FX, to SEK3.67 billion. Net income was up 20% to SEK236 million.