A Modern Media Group for Modern Times – Capital Markets Day

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Presentation from Modern Times Group's 2011 Capital Markets Day on 26 May 2011 at the Emirates Stadium in North London.

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A Modern Media Group for Modern Times – Capital Markets Day

  1. 1. 1
  2. 2. The largest broadcast footprintNow spanning 4 continents• 66 channels in 33 countries• Reaching 125 million viewers• 28 Free-TV channels in 11 countries• Satellite Pay-TV platforms in 9 countries• 38 Pay-TV channels sold over 3rd party cable & satellite networks in 32 countries2
  3. 3. Four Broadcasting Segments Free-TV Pay-TV Free-TV Pay-TV Scandinavia Nordic Emerging Markets Emerging Markets• 9 Free-TV channels • 4 satellite platforms • 19 Free-TV channels • 5 satellite platforms – • Virtual operator in 3rd Baltics, Ukraine3 & Russia2 party cable & IPTV • 19 channels included in 3rd Sweden networks Estonia party pay-TV packages Norway Latvia Lithuania Denmark Bulgaria¹ Czech² Hungary Slovenia Ghana 3 Ownership: ¹ 95%; ² 50%; 3 85%
  4. 4. Integrated structurePresent across the spectrum • Occupying the central Free-TV market position to which all modern Multi-channel Multi-channel broadcasters aspire media house media house Linear distribution Linear distribution • Owner, packager, on all platforms via terrestrial distributor & pricer of content across N Addition of catch- Addition of catch- E multiple markets o up services up services m M r e a d r r i g k • Aggregator of Free- c Own satellite i e TV & Pay-TV s Own satellite n t platforms platforms channels & content g s across all major Virtual operator in distribution platforms Pay channels 3rd party networks included in 3rd Newly launched party cable & OTT service satellite networks • Constantly leveraging content & channel Pay-TV offering to expand into new markets4
  5. 5. Unique profile Integrated broadcaster # of Catch-up /Company Free-TV Pay-TV Position Countries OTTAntena3 1 Yes No Yes IncumbentITV 1 Yes No Yes IncumbentM6 1 Yes No Yes ChallengerMediaset 2 Yes Yes Yes IncumbentProSiebenSat.1 8 Yes No Yes ChallengerRTL 10 Yes No Yes IncumbentTF1 1 Yes No Yes IncumbentCME 6 Yes No Yes IncumbentCTC Media 3 Yes No Yes ChallengerTVN Poland 1 Yes Yes Yes Challenger YesBSkyB 2 No No - DTH & Broadband Yes:Sky Deutschland 2 No No Incumbent DTH & 3’rd party networks Yes: 11 Yes: DTH & package Yes: Unique 33 supplier in 9 countries & range of content Challenger countries mini-pay in 32 countries & offering 5
  6. 6. Balanced revenue mixCreates competitive advantage Segmental revenue mix 100%• Balanced revenue mix of cyclical 80% advertising sales & linear 60% subscription sales 40% 20%• Unparalleled efficiency due to 0% control of content, packaging, 2006 2007 2008 2009 2010 pricing & distribution Free-TV Scandinavia Pay-TV Nordic Emerging Markets• Integrated operating structure yields 2010 revenue mix synergies & leverage 11%• Enables proven resilience to Advertising 43% economic downturns Subscription 46% B2B / B2C6
  7. 7. Delivering profitable growth MTG = Made To Grow Revenues (SEK million)* EBIT (SEK million)*14 000 2 50012 000 2 00010 000 8 000 1 500 6 000 1 000 4 000 500 2 000 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010 7 *Continuing operations excluding associated company income & non-recurring items
  8. 8. Ahead of western peersWith emerging market exposure Estimated Sales Growth - 2013 20% 18% 16% 14% MTG target of more than 10% annual organic sales 12% growth 10% 8% 6% 4% 2% 0%8 Source: BoAML sell-side research for peer group & sell-side consensus for MTG
  9. 9. In line with strategic objectives• Annual organic sales growth of more than 10% 12% y/y growth at constant exchange rates in 2010• Operating profit margin of more than 20% for Viasat Broadcasting (even excluding associated company income) 17% operating profit margin in 2010 excluding CTC Media & 21% including CTC Media (22% for combined Nordic operations)• Increasing proportion of Emerging Market sales & operating income 22% of Group revenues & 20% of Group operating income from Emerging Markets in 2010• Generation of healthy ROE & ROCE 30% ROE & 25% ROCE in 2010• Generation of healthy Total Shareholder Returns TSR of 34% for the full year 2010 & 27% for period 1 Jan 08 - 31 Mar 119
  10. 10. Set for continued profitablegrowth• Sales growth & resilient profitability through the cycle due to balanced revenue mix, geographical diversification & challenger status• High levels of operating leverage due to efficient integrated operating structure, with strict cost-control & cash management• Asset light model with low gearing levels enables re-investment in growth (organic & M&A) & rising TSR• Focused broadcasting group with consistent & independent long-term strategy10
  11. 11. Free-TV growth driversStructural tail wind still blowing in Free-TV ScandinaviaScandinavia (SEK million) 5 000 50% • Principal challenger • Media house model & strategy 4 000 40% • Favourable macro environment 3 000 30% • TV viewing time increasing 2 000 20% • TV gaining advertising market 1 000 10% share 0 0% • AVOD, local & bundled sales add 2006 2007 2008 2009 2010 new dimension Revenue EBIT EBIT margin (SEK million)Well-positioned for recovery in emerging Free-TV Emerging Marketsmarkets 2 500 • Incumbent or challenger 2 000 • Media house model & strategy 1 500 • Typically incumbent +1 structure 1 000 • TV viewing time increasing 500 • TV has high share of media spend 0 • Low CPT vs. W European markets -500 2006 2007 2008 2009 201011 Revenue EBIT
  12. 12. Pay-TV growth drivers Pay-TV ScandinaviaPremium Content Provider of Choice in (SEK million)Nordics 5 000 50% • Solid satellite foundation with ARPU 4 000 40% growth from price increases and VAS penetration 3 000 30% • Platform agnostic as virtual operator 2 000 20% with growing subscriber base in 3rd 1 000 10% party cable & IPTV networks • Device agnostic following launch of 0 0% industry-first OTT offering 2006 2007 2008 2009 2010 Revenue EBIT EBIT marginReversing the model in Emerging Markets (SEK million) • Successful high growth mini-pay Pay-TV Emerging Markets 1 000 50% channel business across 28 countries • Growing mini-pay subscriber base with 800 40% low ARPU – just entered Africa 600 30% • Mini-pay channel business profits being reinvested in development of satellite 400 20% platforms 200 10% • Russia & Ukraine = ideal satellite markets due to large geographical area 0 0% & low levels of competition 2006 2007 2008 2009 201012 Revenue EBIT EBIT margin
  13. 13. Content is King Nordic satellite platform example Premium3rd party Viasat 13 Basic
  14. 14. Making it big in HollywoodAnd with independent studios14
  15. 15. Buying windows are changing Favouring integrated players US theatrical release DVD sales DVD Rentals TVOD Pay Per View Pay-TV 1st window, SVOD / Catch-up Pay-TV 2nd window, SVOD / Catch-up Free-TV 1st window SVOD/Catch-up SVOD Library H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 615
  16. 16. First ever cross-over dealFree-TV deal with Pay-TV rights CONTENT RIGHTS PLATFORMS Exclusive for Internet to PC & STB Free-TV channels Mobile Phones Catch-up Free-TV channels Satellite SVOD Terrestrial TVOD Cable & IPTV• 4 year deal with Fox Hollywood studio includes SVOD, Catch-Up and series renewals - approximately 1,600 hours of premium content• Includes Free-TV premiers of all Fox theatrical feature releases – Wall Street: Money Never Sleeps, Black Swan, Never Let Me Go, The Chronicles Of Narnia: The Voyage Of The Dawn Treader, Gullivers Travels, and X-Men: First Class• Includes all new Fox TV series from 2012 slate16
  17. 17. Unparalleled sports offeringLong term relationships17
  18. 18. Constant & consistent expansion The channel factory 2006 2007 2008 2009 2010 2011 Free-TV Pay-TV HD-TV18
  19. 19. CTC MediaA new long-term local partner• Follows positive discussions with Russian authorities & new local partner• New shareholders’ agreement signed with CTC Media and Telcrest with similar terms to existing Alfa agreement• Waived pre-emption right to purchase Alfa’s 25.2% shareholding for USD 27.097 per share or USD 1,072 million in total• Shares now being acquired by Telcrest – owned by Mediaset LLC, CJCS National Media Group, Abit Holdings Limited and OJSC Surgutneftegas, which are all affiliates of Bank Rossiya, and Itera Media Limited• Board of Directors to continue to have 9 members – 3 from MTG (including co-Chairmanship); 3 from Telcrest (including co-Chairmanship); & 3 non- executive Directors19
  20. 20. Established Management Team Average of >10 years at MTGHans-Holger Mathias Anders Laurence Martin Marc Albrecht Hermansson Nilsson Miall-d’Août Lewerth Zagar President & CFO COO Chief of Staff Chief of Staff COO Viasat CEO Free-TV Pay-TV BroadcastingEmployed 1997 Employed 1999 Employed 1992 Employed 2002 Employed 2001 Employed 2001 Manfred Hein Espen Jørgen Irina Petra Aronsson Hattestad Madsen Gofman Colleen Head of MTG CEO MTG CEO MTG CEO MTG Head of Sweden Norway Denmark Russia & CIS Administration20 Employed 1993- Employed 2001 Employed 1994 Employed 2002- Employed 2002 1995 & 2008 2004 & 2008
  21. 21. Today’s Agenda09.00 – 09.15 Welcome & Registration09.15 – 10.00 A Modern Media Group for Modern Times Hans-Holger Albrecht, CEO10.00 – 10.45 Investing in Growth Mathias Hermansson, CFO10.45 – 11.15 Coffee Break11.15 – 12.15 Entertainment At Your Command Martin Lewerth, Chief of Staff Pay-TV12.15 – 13.00 Pioneering New Frontiers Irina Gofman, CEO Russia & CIS13.00 – 14.30 Lunch14.30 – 15.15 Free-TV Scandinavia 3.0 Manfred Aronsson, CEO Sweden Hein-Espen Hattestad, CEO Norway15.15 – 16.00 Eastern Promises Anders Nilsson, COO16.00 – 16.30 Summary & Wrap-up Hans-Holger Albrecht, CEO16.30 – 19.30 Hospitality in Diamond Club Lounge18.00 – 19.30 Capital Markets Day Cup Final20.00 Dinner at Diamond Club Lounge21
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