Modern Times Group (MTG) reported record sales in the first quarter, with lower revenues in its Scandinavian free TV business offset by sales growth in Nordic pay TV and free TV in emerging markets.
Announcing the results, MTG said that enhanced efficiency in its traditional business helped to fuel growth in its digital businesses and that profits were stable compared to last year – despite “significant FX headwinds” and continued digital investment.
“The growth in online viewing is more than compensating for lower linear channel viewing levels in the Nordic region, and our combined Nordic TV businesses grew their sales,” said MTG president and CEO Jørgen Madsen Lindemann.
“Our emerging market free-TV operations generated higher sales and improved profitability in seven out of eight markets as we took shares in generally stable or growing markets. Our emerging market pay TV operations continue to be impacted by the geopolitical crisis and Russia’s ban on advertising on most pay TV channels.”
Overall MTG said that net sales were up 1% year-on-year at constant exchange rates to SEK3.7 billion, while net income was SEK318m compared to SEK159 million in the same quarter last year.
Sales for MTG’s free TV Scandinavia business were down 8% at constant FX, with the Swedish and Norwegian TV advertising markets estimated to have declined in Q1 while the Danish market is estimated to have been stable.
However, sales were up in MTG’s pay TV Nordic markets by 4% at constant rates, driven by the expansion of Viaplay. MTG reported Nordic growth in its third party network subscriber base and a decline in its satellite base. Overall Nordic pay TV subscriber numbers came to 973,000, down slightly from 978,000 a year earlier.
In MTG’s emerging markets, free TV sales were up by 9% and pay TV sales were up 22% at constant rates.
The free TV results were driven by sales gains in the Baltics, Czech Republic and Bulgaria, while the pay TV figures were helped by the consolidation of Trace from July 2014.
However, MTG did caution that its emerging markets subscriber base for satellite pay TV continued to decline “due to the effects of the geopolitical situation in Ukraine.”
“We have now almost finalised the annual upfront agreements for our free-TV businesses, with price increases in most markets reflecting TV’s unique reach and superior return on investment,” said Lindemann.
“Viaplay continues to grow its subscriber base and usage levels, while our channel packages are more broadly available than ever before. We have also added new programming content or extended valuable existing rights to ensure that we have the best possible entertainment offerings in each market.”