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Nordic Entertainment listing on track as MTG posts strong growth

Modern Times Group (MTG) is on track to list its Nordic Entertainment arm as a separate company in March next year following a strong third quarter that saw the Nordic media outfit’s revenues and profits grow substantially.

Subject to shareholder approval, Nordic Entertainment, which encompasses MTG’s free and pay TV activities as well as its Viaplay streaming service, will be listed separately in March 2019.

Jørgen Lindemann

In a call with investors and analysts, CEO Jørgen Madsen Lindemann said that the two companies had been operating separately since the beginning of July and added that the process would accelerate towards the end of the year.

The entertainment unit delivered its eight consecutive quarter of higher sales and profits, driven by Viaplay. The group also saw growth from its Swedish Radio business and free streaming service Viafree. Free TV sales were down at constant currency, as were studio sales and profits. However, the group said it was continuing to invest in local original drama and premium sports to drive subscriptions.

Nordic Entertainment Group CEO Anders Jensen said that free TV had suffered from the impact of the FIFA World Cup, but said he was “quietly confident” that the business would pick up in Q4. He also said he was optimistic that advertising prices would rise next year.

Overall, MTG turned in net sales of SEK4.68 billion (€453 million) for the quarter, representing 3.2% organic growth. Operating income grew from SEK257 million to SEK340 million, while net income grew from SEK177 million to SEK192 million.

MTGx, the core of what will become the ‘new’ MTG following the split with Nordic Entertainment, delivered a profit on double-digit organic sales growth, with a strong performance from games unit InnoGames and eSports arm ESL. However, the company said it expected eSports sales to decline in the fourth quarter before growing again next year.

Lindemann said the company’s goal remained to make eSports EBITDA profitable next year. He said that while revenue would decline in Q4, the company expected eSports profitability to increase in Q4. He said that MTG was also looking to develop original eSports content with partners.

Lindemann said that distribution of eSports was growing, with companies such as Vodafone and Telefónica driving this, and that he expected sponsorship revenue to grow.

MTG is currently appealing the Bulgarian regulator’s decision to block the sale of its Nova business in that country, helping complete its exit from its non-Scandinavian operations. The first hearing on the appeal is due by March. The company said that Nova would stay with MTG if the sale is not completed by the time of its split with Nordic Entertainment.

Lindemann said that MTG would continue to “grow the business” and try to “find a home for it over time” if the deal was blocked.