131025 mtg corporate presentation new
TRANSCRIPT
1 1
MODERN TIMES GROUP
SHAPING THE FUTURE OF ENTERTAINMENT
OCTOBER 2013
2
32 FREE-TV CHANNELS
IN 10 COUNTRIES
SATELLITE PAY-TV PLATFORMS
IN 9 COUNTRIES
>90 MILLION WHOLESALE PAY-
TV CHANNEL SUBSCRIPTIONS
IN 36 COUNTRIES
A UNIQUE ENTERTAINMENT
FOOTPRINT
3 3
BUILT FROM SCRATCH IN 25 YEARS
1987 2013
Sales CAGR = 10%
4
GENERATING 10 YEARS OF
SUSTAINED GROWTH
SALES EBIT
SEK 13.3 BILLION
2012 2002
EBIT CAGR = 24%
SEK 2.1 BILLION
2012 2002
5
WITH A BALANCED REVENUE MIX
INTEGRATED & DIVERSIFIED
MTG REVENUE SPLIT – BY SOURCE (2012) REVENUE SPLIT – BY SEGMENT (2012)
25%
41%
34%
Emerging Markets Pay-TV Nordic Free-TV Scandinavia
42%
49%
9%
Advertising Subscription Other
34% OF PROFITS GENERATED IN EMERGING MARKETS
6
DELIVERING SHAREHOLDER VALUE
SIGNIFICANTLY OUTPERFORMING THE INDUSTRY AND
THE GENERAL MARKET
DRIVEN PRIMARILY BY STRONG GROWTH AND HIGH
RETURNS WHICH IS THE DNA OF MTG
15% TSR
CAGR (10Y)
Sales: +10% CAGR
EBIT: +24% CAGR
Average ROCE: 25%
Total distribution to
shareholders: SEK 8.1 bn
7
DRIVEN BY A TRACK RECORD
OF CONSTANT INNOVATION
1987 1991 2001 2005 2009 2011 2012
Launch of first
Scandinavian
free-TV channel
Viasat is first in
the Nordics to
launch satellite
pay–TV platform
Viasat 1st in Europe to
switch off analogue
distribution of premium
channels after switch to
digital satellite platform
Viasat launches
PVR recordable STB
Catch-up services
introduced in
Scandinavia
Viaplay launched
in the Nordics
Like.tv launched
in Sweden
1987
Sweden, Norway & Denmark
2000
Hungary
2006
Slovenia
1996
Estonia & Finland
2001
Russia
2008
Bulgaria, Ukraine & Ghana
1997
Lithuania
2003
CIS countries
1998
Latvia
2005
Czech Republic
8
OUR 60 CHANNELS ARE NOW AVAILABLE IN 36 COUNTRIES SPANNING 4
CONTINENTS & REACHING >100 MILLION PEOPLE
WE ARE PRESENT IN MARKETS WITH TOTAL COMBINED ANNUAL TV ADVERTISING SPEND OF 2.7 BILLION DOLLARS AND PAY–TV SUBSCRIPTION SPEND OF
ALMOST 12.5 BILLION DOLLARS
AND THE CONSTANT EXPORTING
OF A SUCCESSFUL OPERATING MODEL
2013
Tanzania
879,470
481,800
394,200
297,840 236,520 210,240
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
MTG RTL Bonnier Mediaset CME Pro7
9
CONTENT REMAINS KING
AND WE ARE THE BIGGEST BUYER IN TOWN
Source: MTG Research
TOTAL NUMBER OF BROADCAST HOURS (2013)
10
ENABLED BY A UNIQUE POSITION
AN INTEGRATED MODEL IS INCREASINGLY IMPORTANT
Pay-TV Free-TV Channel
distr. SVOD AVOD TVOD
60%
10%
30%
90%
6% 4%
20 YEARS AGO MTG TODAY
(NORDIC ONLY)
Sport OP
Acquisition
Growth used to come from acquisition, but has now changed to more premium and local
MTG has an edge over the competition with local content, sport and strong acquisitions
SPLIT OF CONTENT HOURS UNIQUE MARKET POSITION
11
AND OVERALL VIDEO CONSUMPTION
IS CONTINUING TO GROW
1 Data for Q1 2008 as of May 2008; Mobile video data referring to watching Video via phone; Historic data not fully comparable due to changes in the methodology 2 Data for all TV households (significantly higher for household that own a DVR)
SOURCE: Nielsen Cross Platform reports
CAGR +19%
16 19 22 24 25 4
Q1 ’09
337
307
7 6
313
323
301 TRADITIONAL
LINEAR TV
Q1 ’08
NON – LINEAR
ONLINE VIDEO
MOBILE VIDEO 1
TIME SHIFTED 2
Q4 ’12
364
11 15
Q1 ’12
357
312
10 11
Q1 ’11
358
7
318
10 9
Q1 ’10
350
317
7
7 12
CAGR +1%
VIDEO USAGE IN THE USA – MINUTES PER DAY PER USER 2+
12 12
WE CAN CONTINUE TO INVEST
DUE TO OUR ASSET LIGHT & CASH GENERATIVE SET-UP
NET DEBT (SEK MN) STRONG CASH FLOW GENERATION (SEK MN)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2008 2009 2010 2011 2012 9m '13
0
500
1,000
1,500
2,000
2,500
2004 2005 2006 2007 2008 2009 2010 2011 2012
13
GEOGRAPHICAL
EXPANSION
DIGITAL CONTENT
IN LONG TERM VALUE CREATION
IN 3 CORE AREAS
MAJOR INVESTMENT INITIATIVES:
1. CONTENT – WE HAVE SIGNIFICANTLY STRENGTHENED
OUR CONTENT POSITION ACROSS OUR PLATFORMS
2. VIAPLAY – FURTHER ESTABLISHING OUR OTT SERVICE
AS THE LEADING PROVIDER
3. CIS – EXPANSION INTO THE PREMIUM PAY-TV MARKET
4. AFRICA – NEXT IN LINE IS TANZANIA
5. ONLINE – INCLUDING THE LAUNCH OF MTGx
14
COMBINED WITH M&A
A LOT OF VALUE SITS IN INTEGRATION
PRICE AT ACQUISITION
BASED ON LTM DELIVERY IN 2012 EXPECTATION FOR 2013
11.0x
COMPETITIVE PRICE
8.2x
DELIVERING THE PLAN
<5.5x
MOVING FORWARD
EV / EBITDA MULTIPLES OF KEY TRANSACTIONS IN 2012
MTGB CURRENTLY TRADES ON ~9.5X EV / 2013E EBITDA
15 15
SEGMENTAL HIGHLIGHTS AND Q3 PERFORMANCE
Sales up 9% at constant FX - all 5 segments reported local currency sales growth for first time since Q1 2011
FTV Scandi – growing again on a combined basis & positive traction to Fall schedules (new channel coming in Norway)
FTV EM – advertising market share gains in almost all territories in soft markets (new channel coming in Tanzania)
PTV Nordic – rising Viaplay volumes & Viasat ARPU driving sales growth & operating margin of 11.9%
PTV EM – healthy sales growth driven by mini-pay Russia & profitability in line with ongoing HD roll-out
Soon to complete acquisition of Nice Entertainment & establish scale international content production & distribution player +
MTGx digital accelerator established
Continued strong cash flow generation & low gearing enable ongoing investment in growth & shareholder returns
Coverage of the Winter Olympics will boost sales and adversely impact Q1 2014 profits for both the Nordic pay-TV and
Scandinavian free-TV businesses
Q3 2013 – HIGHLIGHTS
INVESTING IN MOMENTUM
16
17
Q3 IN FIGURES
GROWTH & INVESTMENTS
Sales up 9% y-o-y at constant FX
Organic growth at 5%
EBIT margin (excl. associates) of 5.0%
OpEx up 15% at constant FX and 11% organically
Significant investments in Nordic & Emerging Markets pay-TV
businesses to drive future growth
Continued strong cash conversion
Working capital change in the quarter reflecting the timing of
programming payments. Still under strict control
Dividend stream from CTC Media of SEK 62m (51)
Acquisition of DRG, Novemberfilm and Net info
Q3 in brief 2012 2013
Jul-Sep Jul-Sep
Sales (SEKm) 2,940 3,204
Growth (at constant FX) -1% 9%
EBIT excl. associates 288 162
EBIT margin excl. associates 9.8% 5.0%
Total EBIT 422 289
Total EBIT margin 14.4% 9.0%
Cash flow from operations 237 210
Changes in working capital 65 -160
Net cash flow from operations 302 49
18
FREE-TV SCANDINAVIA
GROWTH BACK INTO POSITIVE TERRITORY
STABLE SALES (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%)
OPEX GROWTH (FY 13) STILL EXPECTED TO BE AT THE HIGHER END
OF THE MID-SINGLE DIGIT PERCENTAGE RANGE
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
15.4% 13.3%
0%
5%
10%
15%
20%
25%
0
50
100
150
200
250
Q3 2012 Q3 2013
EBIT EBIT margin
19
FREE-TV SCANDINAVIA
WEAK START BUT STRONG ENDING TO THE QUARTER
CSOV (15-49) – Q3 2013 VS Q3 2012
WITH FURTHER OPPORTUNITIES – HOWEVER THERE IS A
LAG BETWEEN AUDIENCE SHARES AND AD SHARES
CSOV (15-49) – 2006 TO 2013 (YTD)
35.8
21.6 18.5
34.7
25.8
17.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Sweden Denmark Norway
Q3 2012 Q3 2013
10
15
20
25
30
35
40
2006 2007 2008 2009 2010 2011 2012 9m 2013
Sweden Denmark Norway
20
FREE-TV EMERGING MARKETS
STRONG GROWTH – TOUGHER COMPS AHEAD
21% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%)
IMPROVED PROFITABILITY BUT CONTINUED INVESTMENTS
AT THE SAME TIME AS GROWTH IS EXPECTED TO MODERATE
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
3.8%
7.9%
-4%
-2%
0%
2%
4%
6%
8%
-100
-50
0
50
100
150
Q3 2012 9m 2012 Q3 2103 9m 2013
EBIT EBIT margin
21
FREE-TV EMERGING MARKETS
AUDIENCE SHARE GAINS IN ALMOST ALL MARKETS
CSOV (15-49) – (%) TV AD MARKETS IN MTG TERRITORIES
SEK 3.2 BN OR 60% GROWTH POTENTIAL IF WE
SEE A FULL RECOVERY IN THE TV AD MARKET
SEK 8.6 bn
SEK 5.4 bn
0
1
2
3
4
5
6
7
8
9
10
2008 2012
47.0
28.4
40.4
50.0
32.8 36.0
0
10
20
30
40
50
60
Baltics Bulgaria Czech Rep.
Q3 2012 Q3 2013
22
PAY-TV NORDIC
PROFITABILITY INLINE WITH EXPECTATIONS
7% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%)
LOOK FOR A MARGIN OF 11-12% FOR 2013 AND
HIGHER MARGIN 2014 DESPITE THE WINTER OLYMPICS
0%
2%
4%
6%
8%
10%
12%
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
15.9%
11.9%
0%
5%
10%
15%
20%
0
50
100
150
200
250
300
Q3 2012 Q3 2013
EBIT EBIT margin
23
PAY-TV NORDIC
VIAPLAY VOLUME & VIASAT ARPU GROWTH
PREMIUM SUBSCRIBER DEVELOPMENT (‘000) ARPU FOR PREMIUM DTH (SEK) - ANNUALIZED
OVERALL SUBSCRIBER BASE UP IF YOU INCLUDE
VIAPLAY BUT PREMIUM DTH DOWN AS ANTICIPATED
0
200
400
600
800
1,000
1,200
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Satellite subscribers 3'rd party network subscribers
4,000
4,200
4,400
4,600
4,800
5,000
5,200
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
24
DTH 1.6 MN
HOUSEHOLDS
+ VIRTUAL OPERATOR 4.2 MN
HOUSEHOLDS
OVER THE TOP 9 MN
HOUSEHOLDS
PAY-TV NORDIC
OTT OPENS UP A NEW WORLD
FIRST TO MARKET DRIVEN BY AN EARLY DECISION TO HAVE A
PLATFORM AGNOSTIC APPROACH
SMART TV-
SETS
TABLETS
TV SET-TOP
BOXES
GAME
CONSOLES
OTT STB
PC/MAC
SMART
PHONES
PAY-TV NORDIC
WE ARE A LEADING PLAYER – ENABLED BY CONTENT
1st pay window
2nd pay window
25
26
PAY-TV EMERGING MARKETS
RUSSIA DRIVES GROWTH & INVESTMENTS
7% SALES GROWTH (Y-O-Y) AT CONSTANT FX EBIT (SEK MN) AND EBIT MARGIN (%)
EXPECT TO ACHIEVE A BETTER THAN BREAKEVEN EBIT RESULT FOR FY13
WITH RISING PROFITABILITY LEVELS IN 2014
0%
5%
10%
15%
20%
25%
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
17.9%
9.7%
0%
5%
10%
15%
20%
25%
0
10
20
30
40
50
60
70
80
Q3 2012 Q3 2013
EBIT EBIT margin
27
PAY-TV EMERGING MARKETS
CONTINUED STRONG SUBSCRIPTION GROWTH
SUBSCRIBERS / SUBSCRIPTIONS (‘000) INVESTING INTO THE HD MARKET IN THE CIS
= 395
RUB
($13)
ADDED ALMOST 16 MILLION MINI-PAY
SUBSCRIPTIONS SINCE LAST YEAR TO A TOTAL OF 91 MILLION
0
100
200
300
400
500
600
700
0102030405060708090
100
2004 2005 2006 2007 2008 2009 2010 2011 2012 9m2013
Mini-Pay subscriptions (million) DTH ('000)
28
PAY-TV EMERGING MARKETS
MARKETS DRIVEN BY PENETRATION & DIGITALIZATION
RUSSIA & UKRAINE: PREMIUM PAY REVENUES
EXPECTED TO THREEFOLD (MILLIONS USD)
DIGITAL PAY-TV HOUSEHOLDS (MILLIONS)
IN EASTERN EUROPE
Note: Measured by Average Monthly Reach
WE OWN 5 OUT OF THE TOP 20 PAY CHANNELS
IN RUSSIA INCLUDING THE TOP TWO
1 2 4
6 9
12 15
18
21 24
27 30
0
5
10
15
20
25
30
35
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
8 13 20 40
65 58 64 70
114
161
212
269
322 334
0
50
100
150
200
250
300
350
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Sales up 29% y-o-y at constant FX
Sales in MTG Studios up significantly driven by healthy underlying sales
growth boosted by acquisitions
Radio sales down - primarily due to Sweden
EBIT loss of SEK 46m compared to a profit of 15m last year
Healthy profitability in MTG Studios and Radio Norway
Heavy losses in Radio Sweden – restructuring ongoing
Investments in MTGx – expected to add up to SEK 70m of operating
costs in H2
Agreement to acquire Nice Entertainment Group
Nordic´s largest independent group of production companies
Expected to close this month
Following acquisitions of Paprika Latino, DRG & Novemberfilm
29
STUDIOS, MTGX, RADIO
NICE TO HAVE + THE X FACTOR
11% of Group sales 2012 2013
Jul-Sep Jul-Sep
Sales (SEKm) 297 367
Growth (at constant FX) -18% 29%
EBIT (SEKm) 15 -46
EBIT margin (excl. associates) 5.1% -12.5%
Accelerated sales growth with balanced mix of revenues
Investments on track in content, digital and geographical expansion
Leading satellite & OTT operator + recently launched MTGx digital accelerator
Established & expanding emerging market presence in Eastern Europe & Africa
Largest shareholder in leading independent Russian TV broadcaster
High cash conversion levels, low gearing & significant available funds
Commitment to growth + shareholder returns with dividend policy to pay out >30% of recurring net income
SUMMARY
SHAPING THE FUTURE OF ENTERTAINMENT
30
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MTG INVESTOR RELATIONS
FOR FURTHER INFORMATION, PLEASE VISIT
WWW.MTG.SE OR CONTACT:
TEL: +46 (0) 73 699 2714
EMAIL: [email protected]