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RCS Plan Estratégico 2011-13

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  • 1. 2011-2013 Strategic PlanPresentation to the Financial CommunityMilan, December 17, 2010
  • 2. Agenda • Executive Summary • Strategic Guidelines • Revenues / EBITDA targets 2010-2013 • Organization and HR • Economic and Financial Management’s key elements • Details by Business Unit 2 Milan, 17 December 2010
  • 3. Executive Summary (I) • The markets of reference for RCS are facing a process of radical transformation due to the following: – Technological innovation – Transformation of purchase behavior and consumption of readers and of advertisers – Entrance of new competitors • The change in the media sector shows: – Traditional media markets shrinking, with the exception of books – Growth in digital advertising, but still not sufficient to compensate the decrease in traditional businesses – Crisis in the traditional business model – Emerging opportunities to develop revenues from digital activities (e.g. digital pay models, video web and tv, direct marketing CRM, integrated advertising projects…) with still limited volumes but significant potential • Necessity to align strategies, organization and competencies for the new arising challenges, especially in these times of uncertainty • In the new scenario, RCS wants to be a Media Group leader in quality content, multimedia and international, and in the development of the Strategic Plan 2011-2013 the following objectives have been stated: – Consolidate the sustainability and guarantee the continuity of the Group – Be ready to exploit any emerging opportunities, despite the difficult predictability 3 Milan, 17 December 2010
  • 4. Executive Summary (II) • Strategic Plan 2011-2013 guidelines: – Strengthen quality editorial production, rethinking products and offers – Expand relations with clients and advertising investors to increase and consolidate loyalty – Develop the multimedia and digital publishing evolution of the Italian and Spanish Power Brands, Vertical Magazines and Books – Redesign the business model mainly regarding revenues, Group organization, new organization of work and above all company competencies – Focus the investments and the ambition to grow in Italy and abroad to defend traditional publishing and to develop multimedia and digital businesses, disinvesting from non core assets • Strategic Plan economic targets from 2010 to 2013 are: – Revenues: from 2.259 (1) to 2.453 million Euro – EBITDA: from 197 (1) to 296 million Euro – EBITDA margin: from 8,7% (1) to 12% – Net Financial Position: from - 979 to - 677 million Euro 4 1. Includes GE Fabbri in 2010, EBITDA ex non recurring items Milan, 17 december 2010
  • 5. Agenda • Executive Summary • Strategic Guidelines • Revenues / EBITDA targets 2010-2013 • Organization and HR • Economic and Financial Management’s key elements • Details by Business Unit 5 Milan, 17 December 2010
  • 6. Strategic Plan 2011-2013 - ObjectivesRevenues In this uncertain market, the Strategic Plan Transformation of the 2011-2013 propose two objectives: Rationalization business model for through the crisis the sustainability of the Group 1 Consolidate the sustainability and guarantee the continuity of the Group: – Efficient cost structure Business – Revenue mix with higher importance of digitale digital business – Sound balance sheet Business tradizionale 2 Be ready to exploit any emerging opportunity, despite the difficult predictability – Business model evolution 2008 - 2010 2011 - 2013 – Organizational alignment – Competencies to manage the new business model 6 Milan, 17 December 2010
  • 7. The mission of Group RCS remains unchanged International and Multimedia Publishing Group, leader in quality content 7 Milan, 17 December 2010
  • 8. Strategic Guidelines of the Group Focused investments and Focus on growth ambitions customer relationship Create quality publishing contents Be a multimedia and digital reality Re-design the business model 8 Milan, 17 December 2010
  • 9. Cross section projects Business Areas Newspapers Books Italy Advertising Unidad Italy Magazines and France House Editorial Others Publishing product Review CRM/ consumers Strategic Digital publishing working content pay model groups TV/Video Presence Organization & E-reading and Competencies e-books Adv House Model ReviewOrganization work Operations groups ICT Platforms 9 Milan, 17 December 2010
  • 10. Create quality publishing contents 1 “Quality” journalism Multimedia and information hierarchy between different 2 platforms/media and products 3 The importance of video in multimedia offering 4 Target readers/customers and engagement methods New product concept with a different format and content mix (local 5 information, reports, …) 6 Safeguard circulation and weekly purchase frequency 10 Milan, 17 December 2010
  • 11. Focus on customer relationship Objectives Description Improve publishing • Direct feedback system to better understand the readers product • Continuous monitoring of customer base Increase customer • Specific loyalty programs at both single Brand and Group level loyalty • Direct Marketing for the Group publishing products Higher support of the three main • Optimization of total offer through events, promotions, etc… revenue streams Creation and maintenance of a cross division database on country basis and development of competencies 11 Milan, 17 December 2010
  • 12. Be a multimedia and digital reality - Digital Free Digital Pay model Web (PC+Tablet) Smartphones Web (PC+Tablet) Smartphones Tablet application CdS DIGITAL EDITION GdS DIGITAL EDITION GAZZETTA.IT PREMIUM1 CORRIERE.IT PREMIUM1 GAZZETTA.IT CORRIERE.IT EL MUNDO DIGITAL EDITION MARCA DIGITAL EDITION EXPANSION DIGITAL EDITION ELMUNDO.ES MARCA.COM EXPANSION.COM 12 1. News selection / elaboration / opinions / video / website images, available exclusively for a fee Milan, 17 December 2010
  • 13. Be a multimedia and digital reality – Video Web Power Brands’ websites Italy Spain number of streaming (estimate) # streaming (Million) Brands 800 610 600 519 605 • Video news 437 413 • Sport rights 400 • Magazines 324 285 Format • Documentaries 202 • Talk show 200 Italy • Live event Spain • Video chat 0 2010 2011 2012 2013 Platforms 13 Milan, 17 December 2010 Source: RCS and BCG
  • 14. Be a multimedia and digital reality - E-reading Fiction/Non Fiction and Partworks Education “Traditional” eBook (2013, ~3000 titles): eBook: • All the new releases + selected back list • Conforming to the educational reform (from 2012 there is an obligation to provide “Native" eBook / Apps (2013 ~70 Apps) digital versions) • 6 Areas: Product Partworks Illustrated Famous Authors Comics (France) Children’s book Contents service eBook price ~30% lower than paper eBook school text price bounded by version governmental policies • Review of the pricing policies Pricing Evaluation of optimal pricing strategy for Apps price slightly lower than eBook complementary products 4 possible channels: Dedicated sales force • Direct (Libreriarizzoli.it) Distribution • Retailer Online / Offline • Pure player online • Devices developer 14 Milan, 17 December 2010
  • 15. Re-design the business model • Balance the revenue mix according to the new scenario, with higher focus on digital business • More flexible cost structure • Assure business sustainability through efficiency enhancement • Review Group’s organizational structure and alignment to strategic objectives • Provide the Group of the necessary resources to face the new challanges 15 Milan, 17 December 2010
  • 16. Focused investments and growth ambitions • Multimedia and multiplatform development of the Italian and Spanish newspapers Power Brands • Focus on Vertical Magazines in Italy and abroad • Consolidate the competitive position in the Italian and French books’ markets, also through acquisitions and innovations in the digital segment • Investment and strengthen the technological platforms (i.e. TV/Video on line, CRM, ...) • Portfolio management with potential disposals and, as a result, a reduction of capital invested in non core assets 16 Milan, 17 December 2010
  • 17. Agenda • Executive Summary • Strategic Guidelines • Revenues / EBITDA targets 2010-2013 • Organization and HR • Economic and Financial Management’s key elements • Details by Business Unit 17 Milan, 17 December 2010
  • 18. Strategic Plan 2011-2013 - Main Assumptions Cagr % Cagr % 2010-2013 2010-2013 MKT RCS MKT RCS Newpapers 0.0% 1,9% - - - 6.0% Add ons Magazines - 4.0% 1,8% - - - 12.0% Online 15,3% 30,1% Advertising - 0,8% 2,9% Newspapers 3,0% 3,4% Books - 1,3% 1,2% Online 18,9% 23% FTA TV 4,9% 53% Labour Cost - 3.7% (3) Newspapers - 3,2% - 3,9% (1) Newspaper 7,3% 7,3% Circulation Paper Cost Newspapers n.a. - 5,4% Magazine 3,1% 3.1%Digital Circulation Newspapers - 120 (2) as of 2013 (copies /000) Newspapers - 103 (2) (1) Corriere della Sera - 3.3% and Gazzetta dello Sport - 4.6%, includes the effects of cannibalization from digital editions (2) Tablets Forecast at 2013 amounted to 3.8 million in Italy and to 3.2 million in Spain, with a market share for RCS of 3.2% in both countries (3) Base salary Source: Internal estimate on Nielsen, Datamonitor, i2p, CPC, Zenith and PWC 18 Milan, 17 December 2010
  • 19. Economic targets – Revenues 1m€ = CAGR10-13 • ≈ 30 % Digital Advertising (Display, Video, Ipad/Tablet) 2,8% • ≈ 30% Development of the DTT in Spain 2,453 • ≈ 25% Digital circulation (Ipad/tablet, mobile), 2,259 e-book and e-commerce Digital and 20.8% 304 536 • ≈ 15% Other Multimedia CAGR 10-13 except of UK Partworks = +0.7% 1,955 1,917 • Circulation decrease in Italy and Spain partially offset by price increases Traditional - 0.7% • Advertising increase on traditional business in Business both Italy and Spain (CAGR 10-13 around 2%) • Disposal of UK partworks and decrease in add ons offset by Fiction/NonFiction and Educational books increase 2010 IIF 2013E • Exploitation of RCS Sport and other projects (Abroad) 2013 results improve due to the digital & multimedia business growth and to the consolidation of the traditional business 19 1. Includes GEF in 2010 Milan, 17 December 2010
  • 20. 1Economic targets - EBITDA Contribution of the following drivers: • Traditional advertising increasem€ = CAGR10-13 • Circulation decrease • Cover prices increase • Cost of paper increase ≈ 0% 14.5% • Increase of books and education • Decrease in add ons and disposal GEF 296 • Labour cost increase • Savings and efficiencies ≈ 33% 197 • Contribution to Power Brands from digital/multimedia expansion ≈ 40% (adv baseline, Ipad, freemium, web TV) • Development DTT in Spain ≈ 17% 2010 IIF 2013E • Other ≈ 10% EBITDA % 8,7% 12,0% 2013 results improve due to digital & multimedia business growth, to further efficiencies and to the consolidation of the traditional business 20 1. Includes GE Fabbri in 2010, EBITDA ex non recurring items Milan, 17 December 2010
  • 21. Italy vs other countries 1 1 Revenues1, Revenues1, % on total 2010 IIF (2.259m€) % on total 2013E (2.453m€) RoW RoW 41 39 61 59 Italy Italy 1 1 EBITDA1, EBITDA1, % on total 2010 IIF (197m€) % on total 2013E (296m€) RoW RoW 47 53 53 Italy 47 Italy 1. Includes GE Fabbri in 2010, EBITDA ex non recurring items 21 Milan, 17 December 2010
  • 22. Agenda • Executive Summary • Strategic Guidelines • Revenues / EBITDA targets 2010-2013 • Organization and HR • Economic and Financial Management’s key elements • Details by Business Unit 22 Milan, 17 December 2010
  • 23. Strategic Plan 2011-13 - Organizational priorities 1 • Align Group organization to the strategic objectives 2 • Continue the efficiency enhancement 3 • Provide the Group of the necessary competencies/resources to face the new challenges of the Strategic Plan (both through internal development and by bringing in skills from outside) • 4 Fostering a business environment oriented towards creativity, innovation/experimentation and organizational flexibility, in a trustful environment between employees and the company 23 Milan, 17 December 2010
  • 24. Agenda • Executive Summary • Strategic Guidelines • Revenues / EBITDA targets 2010-2013 • Organization and HR • Economic and Financial Management’s key elements • Details by Business Unit 24 Milan, 17 December 2010
  • 25. Economic targets CAGR 2007PF 2008 2009 2010 IIF 2 2013E m€ 10 – 13 Revenues 2 785 2 660 2 206 2 259 2 453 2.8% EBITDA1 373 271 133 197 296 14.5% % 13.4% 10.2% 6,0% 8.7% 12,0% EBIT n.a. 130 - 97 80 2013 n.s. % 4,9% 3,5% 8,2% 1. Ex non recurring items 2. Includes GEF and impairment test as of 30 June 2010 3. Excludes Impairment test 25 Milan, 17 December 2010
  • 26. Cash Flow Management Free Cash Flow • Cumulated Free Cash Flow (before CAPEX) of about €530 million Investments • Cumulated technical investments of approximately €160 million Portfolio • No disposals have been included in the NFP, although the Group & non core assets is strongly considering the valorization of not strategic assets Net Financial • Ratio NFP/EBITDA 2013E = 2.3x Position 26 Milan, 17 December 2010
  • 27. Cumulated CAPEX, net capital employed and ROI Investimenti cumulati 2011 – 2013 Net capital employed Cumulated CAPEX 2011 – 2013 100 % = 160 m€ m€ 2.364 2.141 Other 2.067 1.855 21 49 2008 2009 2010 IIF 2013E 10 ICTTechnical ROI 20 % 10,7% 5,5% 3,8% TV Rights - 4,3% 2008 2009 2010 IIF 2013E 27 Milan, 17 December 2010
  • 28. Net Financial Position As of 31/12 m€ - 677 - 966 - 979 - 1.057 - 1.147 2007PF 2008 2009 2010IIF 2013E PFN/ 4,2 7,9 5,0 2,3 2.6 EBITDA ex NR 28 Milan, 17 December 2010
  • 29. Agenda • Executive Summary • Strategic Guidelines • Revenues / EBITDA targets 2010-2013 • Organization and HR • Economic and Financial Management’s key elements • Details by Business Unit 29 Milan, 17 December 2010
  • 30. Newspapers Italy 2010 IIF 2013E • • Increase multimedia and multiplatform revenues of the Increase multimedia and multiplatform revenues of the EBITDA % 14.7% 16.1% Gazzetta and Corriere Power Brands: Gazzetta and Corriere Power Brands: ––Digital pay model development Digital pay model development ––On line video expansion On line video expansion ––Corriere editorial review (graphic, mixed themes, Corriere editorial review (graphic, mixed themes, young generation attraction, etc…) young generation attraction, etc…) ––Supplements editorial review and valorization Supplements editorial review and valorization ––Advertising collection development (brand exploitation, Advertising collection development (brand exploitation, new formats, special projects) new formats, special projects) ––Non-publishing revenues increase (Gazzetta on line Non-publishing revenues increase (Gazzetta on line Gaming, e-commerce) Gaming, e-commerce) ––Restore margins in the classified business Restore margins in the classified business ––Redefinition of the organization (editorial and Redefinition of the organization (editorial and advertising sales force) to make ititcoherent with the advertising sales force) to make coherent with the multimediality multimediality ––CRM CRM • • Strengthen the local editions and the online local editions Strengthen the local editions and the online local editions system system • • Focus on safeguarding the add-ons profitability Focus on safeguarding the add-ons profitability • • Free press at break-even Free press at break-even 30 Milan, 17 December 2010
  • 31. Unidad Editorial 2010 IIF 2013E • • Increase of multimedia and multiplatform publishing Increase of multimedia and multiplatform publishing revenues of the Power Brands: revenues of the Power Brands: ––Strengthen the positioning in the press business EBITDA % 8.3% 18.0% Strengthen the positioning in the press business ––Cover prices increase Cover prices increase ––Digital pay model for Orbyt Power Brands Digital pay model for Orbyt Power Brands ––Online video expansion Online video expansion ––CRM CRM ––DTT expansion (Veo7, Marca TV) DTT expansion (Veo7, Marca TV) • • Advertising collection development Advertising collection development –– Increasein TV and Internet advertising Increase in TV and Internet advertising ––Brand exploitation with multiplatform offer Brand exploitation with multiplatform offer ––New formats and special projects New formats and special projects ––Direct marketing Direct marketing • • Non-publishing revenues increase (e-commerce Non-publishing revenues increase (e-commerce and social network) and social network) • • Redefinition of the new organization (editorial and Redefinition of the new organization (editorial and advertising sales force) to make ititcoherent with the advertising sales force) to make coherent with the multimedia approach multimedia approach • • Focus on safeguarding the add-ons profitability Focus on safeguarding the add-ons profitability 31 Milan, 17 December 2010
  • 32. Magazines • • Focus on Women/Fashion multimedia system: : 2010 IIF 2013E Focus on Women/Fashion multimedia system –– Protection of traditional business and Amica restyling Protection of traditional business and Amica restyling –– Strengthen on web and TV EBITDA % 1.9% 6.3% Strengthen on web and TV –– Digital contents pay model for tablets Digital contents pay model for tablets • • Interior Design multimedia system development: : Interior Design multimedia system development –– BravaCasa restyling BravaCasa restyling –– Advertising offer format (integrated projects, direct Advertising offer format (integrated projects, direct marketing) marketing) –– Digital development (e-commerce, digital contents pay Digital development (e-commerce, digital contents pay model for tablets) model for tablets) • • Travel multimedia system development: : Travel multimedia system development –– Brand Dove empowerment (e-commerce, Brand Dove empowerment (e-commerce, contents/services for tablets, Dove TV) contents/services for tablets, Dove TV) • • Infancy multimedia system development: : Infancy multimedia system development –– Increase digital revenues (tablets, e-commerce) Increase digital revenues (tablets, e-commerce) –– International expansion (China, Brazil) International expansion (China, Brazil) • • Family segment : : Family segment –– Creation of Oggi system Creation of Oggi system • • Further cost-efficiency measures Further cost-efficiency measures • • Corporate structure simplification Corporate structure simplification 32 Milan, 17 December 2010
  • 33. Books 2010 IIF 2013E • • Fiction-non fiction Italy Fiction-non fiction Italy –– Portfolio optimization with strengthening of the Portfolio optimization with strengthening of the competitive position in the most attractive market EBITDA% 8.9% 9.7% competitive position in the most attractive market segments segments –– Commercial and promotional re-organization Commercial and promotional re-organization (promotional and advertising policies, commercial (promotional and advertising policies, commercial net, efficiency structure) net, efficiency structure) –– Launch special projects and e-books Launch special projects and e-books • • Fiction-non fiction France Fiction-non fiction France –– Strengthening in the most attractive segments Strengthening in the most attractive segments and development of new editorial areas (e-books) and development of new editorial areas (e-books) –– Distribution activities development Distribution activities development • • Education Education –– Strengthen market positioning Strengthen market positioning –– Commercial and distribution efficiency Commercial and distribution efficiency enhancement enhancement –– Multimedia and digital product range development Multimedia and digital product range development with complementary contents and services for with complementary contents and services for didactic activities and digital production didactic activities and digital production • • Illustrated Illustrated –– Launch of new editorial segments Launch of new editorial segments –– International network development International network development • • Partworks Partworks –– Maintain the current offer in Italy, with focus on Maintain the current offer in Italy, with focus on restoring profitability restoring profitability 33 Milan, 17 December 2010
  • 34. Italian Advertising House • • Redefinition of the organizational model to increase Redefinition of the organizational model to increase market presence and penetration market presence and penetration –– Marketing and commercial organization by clients (top, Marketing and commercial organization by clients (top, medium, new business) medium, new business) –– Sales forces dedicated to fashion and design segments Sales forces dedicated to fashion and design segments –– Creation of aaSport system (dedicated sales force and Creation of Sport system (dedicated sales force and marketing) marketing) –– Online specialized sales-men integrated within each Online specialized sales-men integrated within each client/system team client/system team –– Strengthening of the integrated projects area Strengthening of the integrated projects area • • Creation of aanew offer model Creation of new offer model –– Integrated projects (tailor made/catalogue) Integrated projects (tailor made/catalogue) –– Enhancement of Power Brands Enhancement of Power Brands –– New multimedia formats (video on line, iPad, etc.) New multimedia formats (video on line, iPad, etc.) –– Affiliation with external websites Affiliation with external websites 34 Milan, 17 December 2010
  • 35. Disclaimer This presentation contains management preliminary estimates and forward-looking statements, including information related to RCS MediaGroup projected financial performance and the expected development of the publishing industry, in particular in the newspaper, magazine, book and new media segments. These statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, as of this date, though by their nature future estimates are uncertain and subject to variations due to possible changes in the market. Actual results or experience could differ materially from the information contained herein. This communication does not constitute an offer or solicitation for the sale, purchase or acquisition of securities of any of the companies mentioned in any jurisdiction and is directed to professionals of the financial community. For further information, please contact our Investor Relations Department Federica De Medici Nicola Banco +39 02 2584 5508 +39 02 2584 4787 federica.demedici@rcs.it nicola.banco@guest.rcs.it 35 Milan, 17 December 2010