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MTG remains positive despite challenging economic conditions

Modern Times Group CEO Hans-Holger Albrecht said the company is well positioned to weather the financial crisis.

Albrecht made the comment during a conference call announcing the company’s first quarter results which saw its Viasat Broadcasting arm contributing sales of SEK2,599m (€236m), up 13% year-on-year.

Albrecht said the company was facing a “very challenging market environment” that he expects to continue until 2010. He said that the advertising market had been “going down fast” but noted that less than half of the group’s revenue comes from advertising.

Viasat’s Nordic pay-TV business added 6,000 premium subscribers in the first quarter of the year, giving it a total of 760,000 at the end of March, including 94,000 IPTV subs, up 16,000 on the previous quarter. However, the company lost 10,000 DTH subscribers during the quarter. ARPU was up 14% year-on-year to SEK4,325, which Albrecht said was down to previous price increases, a maturing subscriber base moving to higher ARPU contract periods and in increasing proportion of subscribers taking multiroom and HD services.

The number of ViasatPlus DVR subscribers increased by 82,000 year-on-year to 122,000, representing 18% of the premium DTH subscriber base. The number of multiroom subscriptions increased to 177,000.

Overall, the Nordic pay-TV business contributed operating profit of SEK174m, up 39% year-on-year. Total operating costs increased by 12% year-on-year to SEK 895m due to the addition of seven Viasat-branded channels and 11 new third party channels to the platform since the beginning of 2008, the extension of various sports rights agreements, ongoing investments in HDTV, and the subscriber acquisition campaigns being run in Denmark and Norway.

Albrecht said he was optimistic about the outlook for the Scandinavian pay-TV market, saying it was “less impacted by the economic downturn” and that subscriptions for new services like multiroom and DVR would continue to grow. He said ARPU would also show growth, albeit at a slower rate than in 2008.

In central and eastern Europe, the Baltic and Ukrainian premium DTH platforms lost 4,000 subscribers in the first three months of 2009, because of the weak economic environment in Baltic countries. However, mini-pay subscriptions increased by 1.3 million to 37.7 million at the end of March. Operating income for the first quarter was up SEK27m year-on-year to SEK40m. Albrecht commented: “The economic environment will have an impact on churn and new sales in the Baltics and to a lesser extent in Ukraine. But our mini-pay business continues to perform strongly, especially in Russia.”