Free and pay TV provider Nordic Entertainment (NENT) has unveiled plans to make annual savings of SEK250 million (€24 million) from cutting back staff and enable continued investment in its Viaplay streaming offering.
The group will also report a one-off charge of approximately SEK700 million for this quarter comprising redundancy costs and the write-down of free TV content and other assets.
The SEK250 million saving from reducing the NENT workforce will mostly be realised next year. The group said the savings would allow it to offset the negative impact of US dollar currency movements and enable it to continue to invest in Viaplay.
NENT has also written down the value of a number of free TV content and other assets, which it said reflected an ongoing change in the type of content that NENT Group shows, and the fact that historic free-TV output deals with long term series commitments have limited remaining value.
The one-off charge of SEK700 million for redundancy costs and impairment charges will have a negative impact on the company’s cash-flow of about SEK250 million.
The move follows NENT adopting a new operational model, whereby it has moved from atraditional country operating model to structure based on focused areas of responsibility working across markets, platforms and brands, with a reduced executive management team. NENT said the new structure was suited for a leading streaming player and content producer with multi-market strategy and significant growth ambitions.
The group’s executive management team was reduced from 15 to eight members at the beginning of October, with each member reporting to CEO Anders Jensen.
NENT has also established a US studio following its strategic investment in Picturesart.
NENT Group’s Q4 2019 results will also include approximately SEK15 million of advisory costs, which will be reported within central operations and relate to the proposed combination of the Viasat pay TV business and Telenor-owned Canal Digital.
The Telenor agreement will see the creation of a new JV to house their joint pay TV arms, will will see each party hold 50% of the shares of the new joint venture company, which has combined net sales of approximately SEK7.6 billion
Anders Jensen, NENT Group President and CEO: “Our new function-based organisation enables us to even better capture the significant growth opportunities that we see in the Nordic streaming market, while also preparing us for further expansion. It is always very hard when colleagues have to leave, but this is a necessary step for us to be able to work and invest even smarter. The savings achieved will offset currency headwinds and enable us to continue to invest in the expansion of Viaplay. The success of Viaplay is also fundamental in our decision to write off certain content elements that we consider to be of low or no value in our journey as a leading streaming company. There is no change to our outlook for profitable growth in 2020. We are building something quite unique in our industry, and these changes will keep us constantly ahead of the curve.”
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