MODERN TIMES GROUP
SHAPING THE FUTURE OF ENTERTAINMENT
JANUARY 2014

1
THE STORY
A SUCCESSFUL TRACK
RECORD (10Y)

A UNIQUE PLATFORM

A BRIGHT FUTURE

INTEGRATED &
DIVERSIFIED

RISING VIDEO
CONS...
LONG TERM VALUE CREATION
BASED ON CLEAR GROWTH STRATEGY
CONTENT

DIGITAL

GEO EXPANSION

Multi-platform & country content
...
CONTENT REMAINS KING
WE ARE THE BIGGEST BUYER IN TOWN
TOTAL NUMBER OF BROADCAST HOURS (2013)
1,000,000
900,000

879,470

8...
LONG TERM PARTNERSHIPS
WITH RELEVANT CONTENT PROVIDERS

5
OUR IN-HOUSE STUDIOS BUSINESS
HAS QUADRUPLED IN SIZE

TOP 5 TV PRODUCERS IN THE NORDICS
(BY SALES 2012)

TOP 10 CONTENT DI...
OFFICIAL BROADCASTER OF NEXT
MONTH’S WINTER OLYMPICS

7
VIDEO CONSUMPTION IS GROWING
VIDEO USAGE IN THE USA – MINUTES PER DAY PER USER (2+)
350

358

357

365

+18%
CAGR

337
NON...
VIAPLAY OPENS UP A NEW WORLD
AS OTT ENABLES UNIVERSAL REACH

9
DEVELOPING FAST

WITH A WIDE RANGE OF DIGITAL PRODUCTS
ViaPlay Premium VOD
TV, Movies and Sports

Free VOD TV Channels
Ad ...
MTGX - THE GROUP PLATFORM
TO ACCELERATE DIGITAL GROWTH

xPLAY

xVENTURES

xCREATIONS

xLABS

Viaplay
TV play
Sports

Music...
BUT EACH MARKET IS DIFFERENT
DIGITALISATION TIMELINE

TV AD MARKET SIZE (USD MN)
4,448
CZECH
RUSSIA
REPUBLIC

CZECH
REPUBL...
HUGE POTENTIAL

DIGITAL DECISION TIME FOR 150 MILLION RUSSIANS

38% OWNERSHIP IN CTCM
EUROPE'S BIGGEST TV AD
MARKET IN 201...
THE NEXT BIG THING

SSA = 7/10 FASTEST GROWING ECONOMIES 2011-15

#2 FREE-TV CHANNEL IN
GHANA & SOON TO LAUNCH IN
TANZANIA...
WE CAN CONTINUE TO INVEST

DUE TO OUR ASSET LIGHT & CASH GENERATIVE SET-UP
NET DEBT (SEK MN)

STRONG CASH FLOW GENERATION ...
SEGMENTAL HIGHLIGHTS
AND Q3 PERFORMANCE

16
Q3 2013 – HIGHLIGHTS
INVESTING IN MOMENTUM


Sales up 9% at constant FX - all 5 segments reported local currency sales gr...
Q3 IN FIGURES

GROWTH & INVESTMENTS
Sales up 9% y-o-y at constant FX


Q3 in brief

2012
Jul-Sep

2013
Jul-Sep

2,940

3,...
FREE-TV SCANDINAVIA

GROWTH BACK INTO POSITIVE TERRITORY
STABLE SALES (Y-O-Y) AT CONSTANT FX

EBIT (SEK MN) AND EBIT MARGI...
FREE-TV SCANDINAVIA

WEAK START BUT STRONG ENDING TO THE QUARTER
CSOV (15-49) – Q3 2013 VS Q3 2012
40.0
35.0
30.0
25.0
20....
FREE-TV EMERGING MARKETS
STRONG GROWTH – TOUGHER COMPS AHEAD
21% SALES GROWTH (Y-O-Y) AT CONSTANT FX

EBIT (SEK MN) AND EB...
FREE-TV EMERGING MARKETS

AUDIENCE SHARE GAINS IN ALMOST ALL MARKETS
CSOV (15-49) – (%)
60
50

TV AD MARKETS IN MTG TERRIT...
PAY-TV NORDIC

PROFITABILITY INLINE WITH EXPECTATIONS
7% SALES GROWTH (Y-O-Y) AT CONSTANT FX

EBIT (SEK MN) AND EBIT MARGI...
PAY-TV NORDIC

VIAPLAY VOLUME & VIASAT ARPU GROWTH
PREMIUM SUBSCRIBER DEVELOPMENT (‘000)

ARPU FOR PREMIUM DTH (SEK) - ANN...
PAY-TV NORDIC

OTT OPENS UP A NEW WORLD

PC/MAC

SMART
PHONES

TABLETS

OVER THE TOP

9 MN
HOUSEHOLDS

+ VIRTUAL OPERATOR
...
PAY-TV EMERGING MARKETS
RUSSIA DRIVES GROWTH & INVESTMENTS
7% SALES GROWTH (Y-O-Y) AT CONSTANT FX

EBIT (SEK MN) AND EBIT ...
PAY-TV EMERGING MARKETS

CONTINUED STRONG SUBSCRIPTION GROWTH
SUBSCRIBERS / SUBSCRIPTIONS (‘000)

INVESTING INTO THE HD MA...
PAY-TV EMERGING MARKETS

MARKETS DRIVEN BY PENETRATION & DIGITALIZATION
DIGITAL PAY-TV HOUSEHOLDS (MILLIONS)
IN EASTERN EU...
MTG STUDIOS






PRODUCTION
HOUSE

Sweden
Norway
Denmark
Holland












Hungary
Bulgaria
Slovenia
Roma...
SUMMARY

SHAPING THE FUTURE OF ENTERTAINMENT
 Accelerated sales growth following investments in content, digital and geog...
THANK YOU!

MTG INVESTOR RELATIONS
FOR FURTHER INFORMATION, PLEASE VISIT
WWW.MTG.SE, TEL: +46 (0) 73 699 2714 OR
EMAIL: IN...
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  1. 1. MODERN TIMES GROUP SHAPING THE FUTURE OF ENTERTAINMENT JANUARY 2014 1
  2. 2. THE STORY A SUCCESSFUL TRACK RECORD (10Y) A UNIQUE PLATFORM A BRIGHT FUTURE INTEGRATED & DIVERSIFIED RISING VIDEO CONSUMPTION 25% ROCE (AV) TV EVERYWHERE & FOR EVERYONE CONTENT RICH 15% TSR CAGR DECENTRALIZED 10% SALES CAGR 17% EBIT CAGR DIGITAL DELIVERY & ENGAGEMENT 2
  3. 3. LONG TERM VALUE CREATION BASED ON CLEAR GROWTH STRATEGY CONTENT DIGITAL GEO EXPANSION Multi-platform & country content acquisition & monetization strategy Leading content creator, producer & distributor First to market full service SVOD OTT operator & leading AVOD player + wide range of new products & services Focus on roll-out of new products to existing markets + expansion in CEE & Africa 3
  4. 4. CONTENT REMAINS KING WE ARE THE BIGGEST BUYER IN TOWN TOTAL NUMBER OF BROADCAST HOURS (2013) 1,000,000 900,000 879,470 800,000 700,000 600,000 481,800 500,000 394,200 400,000 297,840 300,000 236,520 210,240 CME Pro7 200,000 100,000 0 MTG RTL Bonnier Mediaset Source: MTG Research 4
  5. 5. LONG TERM PARTNERSHIPS WITH RELEVANT CONTENT PROVIDERS 5
  6. 6. OUR IN-HOUSE STUDIOS BUSINESS HAS QUADRUPLED IN SIZE TOP 5 TV PRODUCERS IN THE NORDICS (BY SALES 2012) TOP 10 CONTENT DISTRIBUTORS (RATED BY UK INDEPENDENT TV PRODUCERS) HIGHEST RATED 1 BBC WW 1 BBC WW 2 ITV Global 2 DRG 3 DRG 3 Zodiak Rights 3 Zodiak Rights 4 ITV Global 3 Shine 5 Fremantle Enterprises 6 Fremantle Enterprises 6 Endemol WW 6 Endemol WW 7 Electric Sky 6 DCD Media 8 Passion Distribution 6 + MOST USED All3Media 9 All3Media 10 Passion Distribution 9 Sky Vision Source: Televisual Distributor Poll, September 2013 #1 IN THE NORDICS…EXPANDING EMERGING MARKETS FOOTPRINT…GLOBAL DISTRIBUTION CAPABILITY 6
  7. 7. OFFICIAL BROADCASTER OF NEXT MONTH’S WINTER OLYMPICS 7
  8. 8. VIDEO CONSUMPTION IS GROWING VIDEO USAGE IN THE USA – MINUTES PER DAY PER USER (2+) 350 358 357 365 +18% CAGR 337 NON – LINEAR 323 NON-LINEAR ONLINE VIDEO MOBILE VIDEO 1 TIME SHIFTED 2 +1% CAGR LINEAR TRADITIONAL LINEAR TV Q1 ’08 Q1 ’09 Q1 ’10 Q1 ’11 Q1 ’12 Q1 ‘13 1 Data for Q1 2008 as of May 2008; Mobile video data referring to watching Video via phone 2 Data for all TV households (significantly higher for household that own a DVR) SOURCE: Nielsen Cross Platform reports 8
  9. 9. VIAPLAY OPENS UP A NEW WORLD AS OTT ENABLES UNIVERSAL REACH 9
  10. 10. DEVELOPING FAST WITH A WIDE RANGE OF DIGITAL PRODUCTS ViaPlay Premium VOD TV, Movies and Sports Free VOD TV Channels Ad Financed Services Free VOD Sport Clips Ad Financed Service Free Music Streaming Ad Financed Service Mobile TV Companion 2nd Screen Application Download Games Store Transaction Service Klipster Coupon Service Online to Store App Vertical video content sites style, family, food, cool etc. 10
  11. 11. MTGX - THE GROUP PLATFORM TO ACCELERATE DIGITAL GROWTH xPLAY xVENTURES xCREATIONS xLABS Viaplay TV play Sports Music Games Like.TV Mobisodes Webisodes TV extensions Web / Apps Social Sign-on (World class VOD) (Build portfolio of services) (Digital first productions) (Digital development) 11
  12. 12. BUT EACH MARKET IS DIFFERENT DIGITALISATION TIMELINE TV AD MARKET SIZE (USD MN) 4,448 CZECH RUSSIA REPUBLIC CZECH REPUBLIC 401 SWEDEN 2007 2012 2015 BROADBAND PENETRATION Czech 849 Sweden PAY–TV PENETRATION 87% 86% 63% 45% 40% Russia Russia 37% Czech Sweden Czech Russia Sweden 12
  13. 13. HUGE POTENTIAL DIGITAL DECISION TIME FOR 150 MILLION RUSSIANS 38% OWNERSHIP IN CTCM EUROPE'S BIGGEST TV AD MARKET IN 2015 OWN 5 OUT OF TOP 20 PAY CHANNELS INC. TOP 2 – MORE THAN 60 MN SUBSCRIPTIONS HD PREMIUM PACKAGE ROLL-OUT 13
  14. 14. THE NEXT BIG THING SSA = 7/10 FASTEST GROWING ECONOMIES 2011-15 #2 FREE-TV CHANNEL IN GHANA & SOON TO LAUNCH IN TANZANIA PAY-TV CHANNELS NOW AVAILABLE IN 6 COUNTRIES ESTABLISHED CONTENT PRODUCTION & DISTRIBUTION PLAYER 14
  15. 15. WE CAN CONTINUE TO INVEST DUE TO OUR ASSET LIGHT & CASH GENERATIVE SET-UP NET DEBT (SEK MN) STRONG CASH FLOW GENERATION (SEK MN) 2,500 4,000 3,500 2,000 3,000 2,500 1,500 2,000 1,000 1,500 1,000 500 500 0 2008 2009 2010 2011 2012 Sep-2013 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM 15
  16. 16. SEGMENTAL HIGHLIGHTS AND Q3 PERFORMANCE 16
  17. 17. Q3 2013 – HIGHLIGHTS INVESTING IN MOMENTUM  Sales up 9% at constant FX - all 5 segments reported local currency sales growth for first time since Q1 2011  FTV Scandi – growing again on a combined basis & positive traction to Fall schedules (new channel coming in Norway)  FTV EM – advertising market share gains in almost all territories in soft markets (new channel coming in Tanzania)  PTV Nordic – rising Viaplay volumes & Viasat ARPU driving sales growth & operating margin of 11.9%  PTV EM – healthy sales growth driven by mini-pay Russia & profitability in line with ongoing HD roll-out  Acquisition of Nice Entertainment establish MTG Studios as a scale international content production & distribution player + MTGx digital accelerator established  Continued strong cash flow generation & low gearing enable ongoing investment in growth & shareholder returns  Coverage of the Winter Olympics will boost sales and adversely impact Q1 2014 profits for both the Nordic pay-TV and Scandinavian free-TV businesses 17
  18. 18. Q3 IN FIGURES GROWTH & INVESTMENTS Sales up 9% y-o-y at constant FX  Q3 in brief 2012 Jul-Sep 2013 Jul-Sep 2,940 3,204 Growth (at constant FX) -1% 9% 288 162 9.8% 5.0% 422 289 14.4% 9.0% Organic growth at 5% Sales (SEKm) EBIT margin (excl. associates) of 5.0%  OpEx up 15% at constant FX and 11% organically EBIT excl. associates  Significant investments in Nordic & Emerging Markets pay-TV businesses to drive future growth EBIT margin excl. associates Continued strong cash conversion Total EBIT Total EBIT margin  Working capital change in the quarter reflecting the timing of programming payments. Still under strict control Cash flow from operations 237 210  Dividend stream from CTC Media of SEK 62m (51) Changes in working capital 65 -160  Acquisition of DRG, Novemberfilm and Net info Net cash flow from operations 302 49 18
  19. 19. FREE-TV SCANDINAVIA GROWTH BACK INTO POSITIVE TERRITORY STABLE SALES (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 250 25% 200 20% 15.4% 150 13.3% 15% Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 100 10% 50 5% 0 0% Q3 2012 EBIT Q3 2013 EBIT margin OPEX GROWTH (FY 13) STILL EXPECTED TO BE AT THE HIGHER END OF THE MID-SINGLE DIGIT PERCENTAGE RANGE 19
  20. 20. FREE-TV SCANDINAVIA WEAK START BUT STRONG ENDING TO THE QUARTER CSOV (15-49) – Q3 2013 VS Q3 2012 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 CSOV (15-49) – 2006 TO 2013 (YTD) 40 35.8 34.7 35 25.8 21.6 30 18.5 17.3 25 20 15 10 Sweden Q3 2012 Denmark Norway Q3 2013 2006 2007 Sweden 2008 2009 2010 2011 Denmark 2012 9m 2013 Norway WITH FURTHER OPPORTUNITIES – HOWEVER THERE IS A LAG BETWEEN AUDIENCE SHARES AND AD SHARES 20
  21. 21. FREE-TV EMERGING MARKETS STRONG GROWTH – TOUGHER COMPS AHEAD 21% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 30% 3.8% 50 20% 8% 6% 100 25% 4% 2% 15% 0 10% 0% -50 5% Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 0% -5% 7.9% 150 35% -2% -100 -4% Q3 2012 9m 2012 EBIT Q3 2103 9m 2013 EBIT margin IMPROVED PROFITABILITY BUT CONTINUED INVESTMENTS AT THE SAME TIME AS GROWTH IS EXPECTED TO MODERATE 21
  22. 22. FREE-TV EMERGING MARKETS AUDIENCE SHARE GAINS IN ALMOST ALL MARKETS CSOV (15-49) – (%) 60 50 TV AD MARKETS IN MTG TERRITORIES 47.0 50.0 40.4 40 28.4 30 32.8 36.0 20 10 0 Baltics Bulgaria Q3 2012 Czech Rep. 10 9 8 7 6 5 4 3 2 1 0 Q3 2013 SEK 8.6 bn 2008 SEK 5.4 bn 2012 SEK 3.2 BN OR 60% GROWTH POTENTIAL IF WE SEE A FULL RECOVERY IN THE TV AD MARKET 22
  23. 23. PAY-TV NORDIC PROFITABILITY INLINE WITH EXPECTATIONS 7% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 12% 300 10% 250 8% 200 6% 150 4% 100 2% 50 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 0% 20% 15.9% 15% 11.9% 10% 5% 0 0% Q3 2012 EBIT Q3 2013 EBIT margin LOOK FOR A MARGIN OF 11-12% FOR 2013 AND HIGHER MARGIN 2014 DESPITE THE WINTER OLYMPICS 23
  24. 24. PAY-TV NORDIC VIAPLAY VOLUME & VIASAT ARPU GROWTH PREMIUM SUBSCRIBER DEVELOPMENT (‘000) ARPU FOR PREMIUM DTH (SEK) - ANNUALIZED 1,200 5,200 1,000 5,000 800 4,800 600 400 4,600 200 4,400 Satellite subscribers 3'rd party network subscribers Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 0 4,200 4,000 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 OVERALL SUBSCRIBER BASE UP IF YOU INCLUDE VIAPLAY BUT PREMIUM DTH DOWN AS ANTICIPATED 24
  25. 25. PAY-TV NORDIC OTT OPENS UP A NEW WORLD PC/MAC SMART PHONES TABLETS OVER THE TOP 9 MN HOUSEHOLDS + VIRTUAL OPERATOR GAME CONSOLES SMART TVSETS 4.2 MN HOUSEHOLDS TV SET-TOP BOXES OTT STB DTH 1.6 MN HOUSEHOLDS FIRST TO MARKET DRIVEN BY AN EARLY DECISION TO HAVE A PLATFORM AGNOSTIC APPROACH 25
  26. 26. PAY-TV EMERGING MARKETS RUSSIA DRIVES GROWTH & INVESTMENTS 7% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%) 25% 80 25% 70 20% 60 50 15% 20% 17.9% 15% 40 10% 9.7% 30 20 5% 5% 10 0 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 0% 10% 0% Q3 2012 EBIT Q3 2013 EBIT margin EXPECT TO ACHIEVE A BETTER THAN BREAKEVEN EBIT RESULT FOR FY13 WITH RISING PROFITABILITY LEVELS IN 2014 26
  27. 27. PAY-TV EMERGING MARKETS CONTINUED STRONG SUBSCRIPTION GROWTH SUBSCRIBERS / SUBSCRIPTIONS (‘000) INVESTING INTO THE HD MARKET IN THE CIS 100 90 80 70 60 50 40 30 20 10 0 700 600 500 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 9m 2013 Mini-Pay subscriptions (million) DTH ('000) 395 RUB ($13) = ADDED ALMOST 16 MILLION MINI-PAY SUBSCRIPTIONS SINCE LAST YEAR TO A TOTAL OF 91 MILLION 27
  28. 28. PAY-TV EMERGING MARKETS MARKETS DRIVEN BY PENETRATION & DIGITALIZATION DIGITAL PAY-TV HOUSEHOLDS (MILLIONS) IN EASTERN EUROPE RUSSIA & UKRAINE: PREMIUM PAY REVENUES EXPECTED TO THREEFOLD (MILLIONS USD) 35 30 24 25 30 15 12 1 2 2006 2007 10 4 6 15 300 269 250 21 20 212 200 18 161 150 9 114 100 50 8 13 20 40 65 58 64 70 WE OWN 5 OUT OF THE TOP 20 PAY CHANNELS IN RUSSIA INCLUDING THE TOP TWO Note: Measured by Average Monthly Reach 28 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2005 0 0 2004 5 27 322 334 350
  29. 29. MTG STUDIOS     PRODUCTION HOUSE Sweden Norway Denmark Holland           Hungary Bulgaria Slovenia Romania Serbia Czech Rep. Costa Rica Latvia Estonia Lithuania SALES OF SEK1.7BN (2012 PROFORMA), PRODUCING >3,500H OF CONTENT SOLD TO >80 COUNTRIES 29
  30. 30. SUMMARY SHAPING THE FUTURE OF ENTERTAINMENT  Accelerated sales growth following investments in content, digital and geographical expansion  Established Nordic free & pay-TV operator with leading online positions  Expanding emerging market presence + largest shareholder in CTC Media  Scale content production & distribution arm + MTGx digital accelerator  Commitment to growth & shareholder returns supported by high cash conversion & low gearing 30
  31. 31. THANK YOU! MTG INVESTOR RELATIONS FOR FURTHER INFORMATION, PLEASE VISIT WWW.MTG.SE, TEL: +46 (0) 73 699 2714 OR EMAIL: INVESTOR.RELATIONS@MTG.SE 31
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