120327 modern times group corporate presentation
TRANSCRIPT
1
Modern Times Group MTG AB
“A Modern Media Group
for Modern Times”
March 2012
0
500
1,000
1,500
2,000
2,500
3,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2
MTG = Made To Grow
+ Operationally Geared
Intr
oductio
n
Revenues (SEK million)* EBIT (SEK million)*
*Continuing operations excluding associated company income &
non-recurring items
3
Operating 28 free-TV channels in 10 countries &
38 pay-TV channels in 34 countries
Unrivalled Broadcast Footprint
Spanning 4 continents
Intr
oductio
n
Four Broadcasting Segments
Sweden
Norway
Denmark
Estonia
Latvia
Lithuania
Bulgaria
Czech
Hungary
Ghana
• 4 satellite platforms
• Virtual operator in 3rd
party networks
• 18 channels • 5 satellite platforms –
Baltics, Ukraine & Russia
• 20 channels on 3rd party
networks
• 9 channels
Free-TV
Scandinavia
Pay-TV
Nordic
Free-TV
Emerging Markets
Pay-TV
Emerging Markets
4 Intr
oductio
n
5
2011 revenue mix Segmental revenue mix
• Balanced revenue mix of cyclical advertising sales & linear subscription sales
• Unparalleled efficiency due to control of content, packaging, pricing & distribution
Balanced Revenue Mix
Integrated Operator Benefits
Intr
oductio
n
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011
Free-TV Scandinavia Pay-TV Nordic Emerging Markets
44%
47%
9%
Advertising Subscription B2B / B2C
6 Fre
e-T
V S
candin
avia
Market Position
Macro Profile
TV as % of total Ad market TV viewing minutes per day (3+)
TV Ad spend per capita (USD) GDP growth
7 Fre
e-T
V S
candin
avia
-10.00%
-5.00%
0.00%
5.00%
10.00%
2009 2010 2011
0
50
100
150
200
Sweden Norway Denmark UK US
2009 2010 2011
10.0%
20.0%
30.0%
40.0%
50.0%
Denmark Sweden Norway UK US
2009 2010 2011
110.0
160.0
210.0
260.0
310.0
Sweden Norway Denmark UK US
2009 2010 2011
8
Market Position
Digitalisation Complete
Sweden – 1 Feb 2008
Denmark – 1 Nov 2009
Norway – 1 Dec 2009
Fre
e-T
V S
candin
avia
Scandinavian TV landscape
(2010)
Cable; 52% Satellite;
19%
DTT; 19%
IPTV; 9%
Cable; 55%
Satellite; 19%
DTT; 7%
Analogue Terrestrial;
20%
Scandinavian TV landscape
(2005)
Sweden Norway Denmark
Position #2 #3 #2
National penetration
Combined commercial
audience share (15-49) 35.8 22.4 24.1
Catch-up services Yes Yes Yes
Sold on ’bundled’ basis Yes Yes Yes
9
Market Position
Primary Challenger
Fre
e-T
V S
candin
avia
The Opportunity
Breaking the Monopoly
10 Fre
e-T
V S
candin
avia
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003 2011
11
Seizing the Opportunity
The “Media House” Model (Sweden)
Fre
e-T
V S
candin
avia
Source: MMS
Complementary channel profiles Average weekly reach (15-49)
-1%
+22%
+8%
Old & Male Old & Female
Young & Male Young & Female
TV4; 87% MTG; 7%
Other; 6%
Print; 63% Direct advertising,
14%
Internet; 14%
Radio; 4% TV; 5%
The Next Phase
Untapped Potential
Regional share of total advertising
(NOK / DKK / SEK billion)
50% 40% 60%
Source: IRM Media, Regional market report, April 2011
0
5
10
15
12 Fre
e-T
V S
candin
avia
Total regional advertising
Regional TV advertising
SEK 14 bn
SEK 700 mn
• Expansion of number of regional broadcast zones from
6 to 19 in Q1 2012
• Bundled TV, Radio & Internet Ad sales package with
dedicated sales force of 120 people
• Local Ad prices as much as 2x national prices
13
Free-TV Scandinavia
Operating Results
• Overall shortage of inventory supply driving up
annual contract & spot prices
• Sales only down 1% at constant exchange rates in
2009 recession & up 16% again in 2010 recovery
• Sales up 6% at constant exchange rates in 2011,
with EBIT margin of 25%
Fre
e-T
V S
candin
avia
(SEK million)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2006 2007 2008 2009 2010 2011
Revenue EBIT EBIT margin
14 Fre
e-T
V E
merg
ing M
ark
ets
Market Position
Macro Profile
TV viewing (minutes per day)
Fre
e-T
V E
merg
ing M
ark
ets
GDP growth
TV ad spend per capita (USD)
TV ad spend development
0
5
10
15
20
25
30
35
40
45
50
CzechRepublic
Hungary Estonia Lithuania Latvia Bulgaria
2009 2010 2011
-20%
-15%
-10%
-5%
0%
5%
10%
15%
Czech R
epu
blic
Hu
nga
ry
Esto
nia
Lithu
ania
La
tvia
Bulg
aria
2009 2010 2011-50%
-40%
-30%
-20%
-10%
0%
10%
20%
Czech R
epu
blic
Hu
nga
ry
Esto
nia
Lithu
ania
La
tvia
Bulg
aria
2009 2010 2011
0
50
100
150
200
250
300
350
CzechRepublic
Hungary Estonia Lithuania Latvia Bulgaria
2009 2010 2011
16
Market Position
Incumbent or Primary Challenger
Estonia Latvia Lithuania Czech
Republic Bulgaria Hungary Ghana Russia
Position #1 #1 #1 #2 #2 #3 - #4
Combined
commercial
audience share
(target
demographic)
42.0%
(15-49)
37.2
(15-49)
44.0%
(15-49)
27.7%
(15-54)
28.1%
(18-49)
8.1%
(18-49)
18.8%
(15-49)
16.1%
(6-54)
Catch-up services Yes Yes Yes No Yes No No Yes
Sold on ’bundled’
basis Yes Yes Yes Yes Yes Yes N/A N/A
Fre
e-T
V E
merg
ing M
ark
ets
Scale Operations in Key Markets
Baltics, Czech Republic, Bulgaria
17
Financial performance (SEK million) Commercial Audience Share
• Clear market leadership in Baltics with >43% pan-Baltic target group share of viewing as advertising
spending returned to growth in 2011
• Investments in schedule & new Prima Love channel boosted target audience share in Czech
Republic & enabled advertising market share gains in low growth environment in 2011
• Stable combined audience share in Bulgaria but no recovery in advertising spending in 2011
Fre
e-T
V E
merg
ing M
ark
ets
-5%
0%
5%
10%
15%
20%
25%
30%
0
400
800
1,200
1,600
2,000
2008 2009 2010 2011
Revenue EBIT EBIT margin
0%
10%
20%
30%
40%
50%
2006 2007 2008 2009 2010 2011
Czech Republic (15-54) Bulgaria (18-49)
Hungary (18-49) Pan-Baltic (15-49)
18
Free-TV Emerging Markets
Operating Results
• Sales up 8% at constant exchange rates in 2011 &
profits for the full year
• Ongoing investments in Hungary, Ghana &
Slovenia off-set profits in Baltics, Czech Republic
& Bulgaria
• Anticipated return to high growth & high margins
but recovery currently lagging W Europe
• Well-positioned overall in often duopolistic markets
Fre
e-T
V E
merg
ing M
ark
ets
(SEK million)
-500
0
500
1,000
1,500
2,000
2,500
2006 2007 2008 2009 2010 2011
Revenue EBIT
0%
5%
10%
15%
20%
25%
19
Participating in Russian Growth
CTC Media
Operating results (USD millions)
• 38.1% shareholding in Russia’s leading
independent TV broadcaster
• Equity stake acquired for USD 83 million -
equity market value of ~ USD 0.7 billion
• Co-Chairmanship & total of 4 Board seats
• 3 national Russian TV networks & 1.5x combined
power ratio = ~19% TV advertising market share
• Sales up 9% y/y in ruble terms to USD 766 million
in 2011 with OIBDA margin of 32.5%
• Cash dividend payments of USD 130 million in
2011 & USD 80 million in 2012
CTC Media Russian Ad sales growth
(RUB)
Audience share (4+)
Fre
e-T
V E
merg
ing M
ark
ets
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
2007 2008 2009 2010 2011
Ad sales EBIT
48%
19%
32%
-3%
16%
33%
2006 2007 2008 2009 2010 2011
20 Pay-T
V N
ord
ic
21
Market Position
Premium Content Provider of
Choice
• MTG & 3rd party Free-TV channels
• MTG thematic sports channels – Viasat Football, Viasat Hockey, Viasat Motor,
Viast Golf, Viasat Sport HD
• MTG thematic movie channels – Viasat Film, Viasat Film Action, Viasat Film Nordic, Viasat
Film Family, Viasat Film Drama & Viasat Film Classic
• MTG thematic documentary channels – Viasat History, Viasat Nature,
Viasat Explorer, Viasat Crime
• Leading 3rd party premium channels – music, news, documentaries, kids, nature etc
• MTG & 3rd party HD channels
Pay-T
V N
ord
ic
22
The Evolving Opportunity
Technology Changes Consumer
Behaviour
Owned & Operated
Satellite Platform
Viasat Channels in
3rd Party Networks
Virtual Operator
in 3rd Party B’band Networks
Gatekeeper
Independent
Internet
Environment
Pay-T
V N
ord
ic
0
200
400
600
800
1,000
1,200
2006 2007 2008 2009 2010 2011
DTH Satellite 3'rd party network
23
Seizing the Opportunity
The “Platform Agnostic” Approach
Pay-T
V N
ord
ic
Premium subscriber development (000’s)
*IPTV subscribers only for 2006-2008; total 3’rd party network subscribers for 2009 and 2010
Jun 2008 Oct 2009 Mar 2010 Jun 2010 1991
24
Seizing the Opportunity
Growing Viasat...ellite
Pay-T
V N
ord
ic
Premium satellite ARPU (SEK)
Value-added services (000’s)
Premium satellite subscribers (000’s)
• Operating in Europe’s most competitive &
digitalised pay-TV market
• Satellite gradually losing share to other
distribution forms BUT Viasat gaining market
share in the satellite environment
• Clear premium pay-TV market leader
• Low churn levels following acquisition of key
sports rights + new channel launches
• Steadily rising premium satellite ARPU due to
price rises & increasing penetration of VAS
0
1,000
2,000
3,000
4,000
5,000
6,000
2006 2007 2008 2009 2010 2011
0
200
400
600
800
1,000
2006 2007 2008 2009 2010 2011
0
50
100
150
200
250
300
350
dec-11dec-10dec-09dec-08dec-07
Multi-room PVR HD
25
Seizing the Opportunity
Entertainment “at your Command”
First to Market with Full Service
‘Over-The-Top’ Solution
• Anytime Access all services ‘on demand’
• Anywhere Access subscription online
• Any Device Enjoy subscription on multiple
devices in and out of home
Pay-T
V N
ord
ic
Set -Top Box
PC/Mac
Mobile
Tablet Media
Players
OTT Set-Top box
Game consoles Embedded
TV Set
Applications
26
Pay-TV Nordic
Operating Results
• Top line growth driven by 3rd party subscriber
acquisition & rising satellite premium ARPU
• Margins stable due to combination of underlying
improvement with investments in sports rights,
new technologies & additional channels
• Highly cash generative & proven resilience to
economic cycle
• Revenues up 8% at constant exchange rates in
2011 with increased operating margin of 20%
Pay-T
V N
ord
ic
(SEK million)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2006 2007 2008 2009 2010 2011
Revenue EBIT EBIT margin
27 Pay-T
V E
merg
ing M
ark
ets
Market Position
Pioneering New Frontiers
28
2003 2004 2005 2006 2007 2008 2009 2010 2011
Countries 7 11 15 22 23 24 25 25 28
Channels 2 3 5 6 7 8 10 15 19
Satellite
platforms Baltics Ukraine Russia
29
Seizing the Opportunity
Growing the Subscriber Base
• Viasat is the only satellite Pay-TV operator in the
Baltics – premium offering with stable subscriber
base & ARPU
• Includes Ukrainian platform since Q1 2008 &
Russian platform since Q1 2010
Pay-T
V E
merg
ing M
ark
ets
Mini-pay subscriptions (millions) Satellite subscribers (000’s)
• Business launched in 2003 with sale of Viasat
movie & documentary channels to
3rd party networks in C&E Europe
• Nearly 65 million subscriptions to
19 Viasat movie, documentary and sports
channels to ~2,500 3rd party networks in
28 countries including US
• Launch of 4 pay-TV channels in Africa &
2 HD channels in CEE, Russia & CIS
0
100
200
300
400
500
600
2006 2007 2008 2009 2010 201110,000
20,000
30,000
40,000
50,000
60,000
70,000
2006 2007 2008 2009 2010 2011
30
Pay-TV Emerging Markets
Operating Results
• Top line growth currently driven by volume
(addition of satellite subscribers & mini-pay
subscriptions) rather than value (low prevailing
ARPU levels)
• Profitability of mini-pay channels business
supports ongoing investments in Ukrainian &
Russian satellite platforms
• Profitability impacted by full consolidation &
ongoing investments in Ukrainian platform from
July & inclusion of Russian platform from February
• Business highly geared to subscriber growth &
ARPU increases
• Revenues up 13% at constant exchange rates in
2011, with operating margin of 5%
Pay-T
V E
merg
ing M
ark
ets
(SEK million)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
100
200
300
400
500
600
700
800
900
1,000
2006 2007 2008 2009 2010 2011
Revenue EBIT EBIT margin
31
32
Financial Performance
Flexible Position
SEK millions FY 2010
Sales 13,473
EBIT (incl. Associates) 2,544
Pre-tax profit -727
Net income from
continuing operations -1,289
Total net incl
discontinued ops -1,289
SEK millions FY 2011
Net cash flow from
operations 1,797
Cash flow to investing -115
Cash flow to financing -1,737
Net change in cash &
cash equivalents -55
SEK millions FY 2011
Total debt 1,592
Cash & equivalents 795
Net debt 797
Net debt / LTM
underlying EBITDA 0.3x
Available liquid funds 5,528
Income Cash flow Financial position
• FY2011 results impacted by SEK -
3,182 million of non-recurring items
• Annual tax rate of 25-30%
• Cash flow from operations stable y/y in
2011
• Receipt of USD 49 mn (SEK 319 mn)
of dividends from CTC Media in 2011
& intention to pay USD 80 mn in 2012
• SEK 1.5 billion of SEK 6.5 billion
unsecured 5 year revolving multi-
currency credit facility drawn as at
31 December 2011
• CAPEX running at <1% of sales
33
Capital Allocation
Reinvesting in Growth
Cash flows from Scandinavia invested into
Emerging Markets
• 1997: Launch of Baltic Free-TV operations
• 2000: Acquisition of 95% of Hungarian operation
• 2001: Acquisition of 75% of DTV in Russia
• 2002: Acquisition of 36% of CTC Media in Russia
• 2003: Launch of Mini-Pay business
• 2004: Launch of Baltic Pay-TV platform
• 2005: Acquisition of 50% of Prima TV in Czech Republic
• 2006: Acquisition of 100% of Slovenian operation
• 2007: Acquisition of 50% of Diema channels in Bulgaria
• 2008: Acquisition of 50% of pay-TV platform in Ukraine
• 2008: Acquisition of 100% of Nova TV in Bulgaria
• 2008: Launch of channel in Ghana (W Africa)
• 2010: Acquisition of 50% of pay-TV platform in Russia
• 2010: Acquisition of additional 35% of Viasat Ukraine
- Combined with ongoing launch of Free-TV & Pay-TV
channels every year
Fin
ancia
l R
esourc
es
34
Capital Allocation
Shareholder Returns
• 29% Return On Capital Employed for 2011
• 30% Return On Equity for 2011
• Increased cash dividend of SEK 9.00 per
share proposed to AGM in May 2012
• Board of Directors has adopted dividend
policy to distribute at least 30% of recurring
net profit to shareholders as annual
ordinary dividend
Fin
ancia
l R
esourc
es
Annual Cash dividends (SEK)
0
2
4
6
8
10
12
14
16
2007 2008 2009 2010 2011
Ordinary Extraordinary Proposed
35
36
The Lean & Mean
Broadcasting Machine
• Operationally geared growth company with balanced & diversified revenue mix
• Driving growth primarily through organic expansion & start-ups
• Challenger to incumbents in structurally evolving markets
• Successful multi-channel, multi-platform, multi-territory media house model
• Efficient integrated operating structure yields competitive advantage & synergies
• Investing healthy cash flows from Nordic region into emerging markets
• Strict cost control, cash management & capital allocation
• Strong & flexible financial position
• Delivering enhanced shareholder returns
Sum
mary
37
For Further Information, please visit www.mtg.se or contact:
MTG Investor Relations
Tel: +44 7768 440 414 / +44 759 009 8188
Email: [email protected]
Nasdaq OMX: ‘MTGA’, ‘MTGB’
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